Chesterton Tribune



Utility recommends sewer rate hike for town residents of 3.01%

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The Chesterton Utility Service Board has voted unanimously to recommend a rate hike which would increase the bimonthly bill of an average Chesterton residential customer using 10,000 gallons by 3.01 percent.

The Service Board approved that recommended rate hike at a special meeting on March 12, as President Larry Brandt noted at the Service Board’s regular monthly meeting Monday night.

A 3.01-percent rate hike for an average Chesterton residential customer would increase the bimonthly bill from $85.84 to $88.42.

Recommended rate hikes for other classes of customer:

--The Town of Porter: 5.22 percent. Based on average usage, the town’s monthly payment to the Utility would increase from $56,598.10 to $59,552.34.

--The Indian Boundary Conservancy District: 5.21 percent. Based on average usage, the district’s monthly payment to the Utility would increase from $6,523.94 to $6,863.98.

--Fox Chase Farms residents: 0.66 percent. A Fox Chase Farms resident’s monthly payment would increase from $98.53 to $99.18.

As it happens, the recommended hike for Chesterton ratepayers is marginally higher than the original rate calculated by the Utility’s contracted financial consultant, London Witte Group. That’s because the original rate did not separate out from the other classes of customer the so-called Payment in Lieu of Taxes (PILT) made by the Utility to the Town of Chesterton’s General Fund, an annual payment of $152,000 which the Utility has agreed to provide in support of the wage increases granted last year by the Town Council to municipal employees.

As a public utility, the Chesterton Utility does not pay property taxes but under state law a municipality may collect from a utility an annual amount equivalent to what the utility would pay in property taxes if it were a private entity. Of course, the Chesterton wastewater treatment plant is located in Porter, so the Utility is making a Payment in Lieu of Taxes on its infrastructure installed in the Town of Chesterton only, that is, on its underground collection systems and the series of lift stations.

At a workshop held last month on the biennial rate study, President Larry Brandt made it clear that under no circumstances should the Utility’s outside users--the Town of Porter, the Indian Boundary Conservancy District, Fox Chase Farms, and Whispering Sands Mobile Home Park--be held responsible for any portion of the $152,000 PILT, inasmuch as that amount is going toward the wages and salaries of Town of Chesterton municipal employees and not in any way toward the treatment of those outside users’ wastewater.

As originally calculated by London Witte Group--with the PILT not separated out--Chesterton residents would have seen their rates increase somewhat less, by 1.88 percent; while the Utility’s two main outside users would have seen theirs increase somewhat more: the Town of Porter and the Indian Boundary Conservancy District, by 9.88 percent.

There are several reasons why a rate hike is necessary at this time, London Witte Group adviser Sue Sargent Haase noted at the workshop held last month. Under the Utility’s agreement with the State Revolving Fund--which provided financing for the 1.2-million gallon storage tank built to reduce combined sewer bypasses into the Little Calumet River during rain events--the Utility’s rates must generate net operating revenues equal to at least 125 percent of its maximum annual debt service. Rates need to be increased in order to meet this commitment, Haase told the Service Board.

Meanwhile, Haase said, without a rate increase the Utility would be very near the limit on its bonding capacity, and the recommended rate hike would go some way to funding and maintaining the Utility’s capital investment plan.

Finally, the Utility is subject--like any other public or private entity--to inflationary pressure, as its annual operating expenses continue to increase: wages, pensions, and benefits, for instance; purchased power; and to some extent health insurance.

“What we’re recommending to the Town Council I think can be swallowed by the town,” Member Scot McCord ventured at Monday’s meeting. “I hope so.”

The next step is for the Town Council to schedule a public hearing on the recommended rate hike. Should the council vote to approve it, the hike would take effect sometime later this year.

The last rate hike approved by the council took effect on Jan. 1, 2017. That hike increased the average household’s bimonthly bill by 5.64 percent: from $81.26 to $85.84.

Springdale PUD

In other business, members voted unanimously to grant the Olthof Homes LLC an allocation of the wastewater treatment plant for its planned unit development dubbed Springdale, located south of 1050N immediately west of the Abercrombie Woods subdivision.

Springdale will be comprised chiefly of single-family units with some duplexes as well.

February in Review

In February, Chesterton used 55.79 percent of its 3,668,000 gallon per day (gpd) allotment of the wastewater treatment plant; Porter, 62.68 percent of its 851,000 gpd allotment; the Indian Boundary Conservancy District, 86.88 percent of its 81,000 gpd allotment; and the plant as a whole, 57.61 percent of its capacity.

There were no bypasses of wastewater into the Little Calumet River last month, which saw a total of 1.77 inches of precipitation recorded at the plant.

In February, the Utility ran a deficit of $121,737.11 and in the year-to-date is running a surplus of $183,398.50.


Posted 3/20/2019




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