CHARLESTON, W.Va. -- Water and sewer rates would increase significantly in many cities and towns across West Virginia, if a state agency carries out sweeping changes to limit public financing of utility projects, the proposal's critics said Wednesday.
Municipal officials said the proposal -- introduced by the state Infrastructure and Jobs Development Council at a Wednesday meeting in Charleston -- would block their agencies from securing low-interest loans through two state programs and drive up water and sewer project costs.
Charleston, St. Albans, Dunbar, Huntington, Morgantown, Beckley and other cities would be shut out of the programs, said Mike Johnson, a council member who oversees the State Clean Water Revolving Fund at the Department of Environmental Protection.
"This resolution is going to take us backward," said Johnson, who urged his colleagues to vote against the proposal. "This would preclude us from funding these projects. This would severely harm the program."
With a motion and a second on the floor, the council was poised to vote on the change Wednesday.
But council member Chris Jarrett abruptly withdrew his motion to approve the
financing limitation and suggested that board members and the utilities file written objections by June 25. The council will likely reconsider the proposal at a July 2 meeting.
Water and sewer board officials said the council's proposal would penalize utilities that offer lower rates.
Larry Roller, director of the Charleston Sanitary Board, said the change would tack millions of dollars in interest payments onto projects.
For instance, the cost of a $20 million sewer project in the Kanawha Two-Mile area would increase by $9 million because of a higher interest rates, he said.
"It means a lot of money over the life of a bond," Roller said.
Jarrett, who heads the state Water Development Authority, said municipal water and sewer boards have been taking advantage of the council for years.
"We've given money to communities that could have easily gone to the private market and denied communities that didn't have that ability," Jarrett said. "We're supposed to be a funding resource of last resort."
Jarrett wants to require cities and public service districts to seek private financing for projects, if they charge less than $35 per 4,000 gallons of water and sewer use (or 1.5 percent of the median household income in the service area).
Jarrett said larger utilities -- which typically charge less than $35 per 4,000 gallons (the amount a typical household uses each month) -- keep their rates low by securing low-interest state loans for improvement projects, even though they could get private financing.
Jarrett said the proposal could free up an estimated $100 million for cash-strapped utilities to use to improve water and sewer service. About 300,000 West Virginians don't have access to public water, and another 500,000 state residents don't have public sewer service, he said.
CHARLESTON, W.Va. -- Water and sewer rates would increase significantly in many cities and towns across West Virginia, if a state agency carries out sweeping changes to limit public financing of utility projects, the proposal's critics said Wednesday.
Municipal officials said the proposal -- introduced by the state Infrastructure and Jobs Development Council at a Wednesday meeting in Charleston -- would block their agencies from securing low-interest loans through two state programs and drive up water and sewer project costs.
Charleston, St. Albans, Dunbar, Huntington, Morgantown, Beckley and other cities would be shut out of the programs, said Mike Johnson, a council member who oversees the State Clean Water Revolving Fund at the Department of Environmental Protection.
"This resolution is going to take us backward," said Johnson, who urged his colleagues to vote against the proposal. "This would preclude us from funding these projects. This would severely harm the program."
With a motion and a second on the floor, the council was poised to vote on the change Wednesday.
But council member Chris Jarrett abruptly withdrew his motion to approve the
financing limitation and suggested that board members and the utilities file written objections by June 25. The council will likely reconsider the proposal at a July 2 meeting.
Water and sewer board officials said the council's proposal would penalize utilities that offer lower rates.
Larry Roller, director of the Charleston Sanitary Board, said the change would tack millions of dollars in interest payments onto projects.
For instance, the cost of a $20 million sewer project in the Kanawha Two-Mile area would increase by $9 million because of a higher interest rates, he said.
"It means a lot of money over the life of a bond," Roller said.
Jarrett, who heads the state Water Development Authority, said municipal water and sewer boards have been taking advantage of the council for years.
"We've given money to communities that could have easily gone to the private market and denied communities that didn't have that ability," Jarrett said. "We're supposed to be a funding resource of last resort."
Jarrett wants to require cities and public service districts to seek private financing for projects, if they charge less than $35 per 4,000 gallons of water and sewer use (or 1.5 percent of the median household income in the service area).
Jarrett said larger utilities -- which typically charge less than $35 per 4,000 gallons (the amount a typical household uses each month) -- keep their rates low by securing low-interest state loans for improvement projects, even though they could get private financing.
Jarrett said the proposal could free up an estimated $100 million for cash-strapped utilities to use to improve water and sewer service. About 300,000 West Virginians don't have access to public water, and another 500,000 state residents don't have public sewer service, he said.
"We've got to do something differently than what we've done historically," Jarrett said.
Water and sewer board officials said the change would unfairly penalize utilities that manage their finances wisely and keep rates low.
"To deny a community the utilization of a loan because their rates are too low, that doesn't make sense to me," said Jim Green, general manager of the Morgantown Utility Board, which has some of the lowest sewer and water rates in West Virginia. "You need to preserve funds for communities that have lower rates because they're doing a good job."
Johnson of the DEP and Robert DeCrease, who manages the state Drinking Water Revolving Fund, said West Virginia would also likely receive less federal funding for state loan programs, if the council passes the proposal.
Several speakers at Wednesday's meeting criticized the council for not releasing the proposal until late Tuesday -- a possible violation of the state Open Meetings Law.
"You need to reach out and involve the local communities," said Mark Henne, Wellsburg city manager. "You're crunching numbers. We're dealing with real people."
Also Thursday:
| The council voted 4-3 to reject water and sewer board project proposals that request no-interest loans from the council. The change takes effect July 1.
"We're getting out of the zero-percent interest business, basically," Jarrett said. "I don't know how many times someone has come in and said, 'So and so got zero-percent interest rate, and so do I.'"
Council members who voted against the change said it didn't make sense to bar no-interest loans, if the agency continues to distribute grants for water and sewer projects.
Jarrett suggested that critics of the change submit written comments, and that the council could reconsider its vote at a later time.
| The council voted 5-2 to approve new guidelines that limit the fees engineers charge on state-funded water and sewer projects.
Jarrett said the guidelines are needed to ensure the council complies with a new law passed during the last legislative session. He said he knew of cases in which engineers charged excessive fees for elaborate offices at construction sites.
Engineers said the council's guidelines include stipulations not found in the new law.
| Council Executive Director Angela Chestnut announced her resignation. The agency has hired Jim Ellers, an engineer with the state Public Service Commission, to replace her.
Reach Eric Eyre at erice...@wvgazette.com or 304-348-4869.
