Hydrant Rental Fee

Watchdog Indiana Home Page Watchdog Lebanon Home Page  

Overview

Congratulations to all our current and prior Lebanon Mayors and City Council Members for using ample city funds to continue paying the Hydrant Rental Fee to our Lebanon Utilities!

The Hydrant Rental Fee is an annual charge per city fire hydrant that pays for the production, storage, transmission, and delivery of water for public fire protection purposes. The recent and future Hydrant Rental Fees adopted by our City Councils and approved by our Mayors are as follows:
2010 (Effective August 1) = $348.80
2011 (Effective August 1) = $380.19 (9.00 percent increase)
2012 (Effective August 1) = $410.61 (8.00 percent increase)
2013 (Effective August 1) = $443.46 (8.00 percent increase)
2014 (Effective August 1) = $478.94 (8.00 percent increase)
2015 = $478.94
2016 = $478.94
2017 = $478.94
2018 (Effective May 1) = $546.47 (14.10 percent increase)
2019 (Effective January 1) = $600.02 (9.80 percent increase)
2020 (Effective January 1) = $659.42 (9.90 percent increase)
2021 (Effective January 1) = $724.70 (9.90 percent increase)
2022 (Effective January 1) = $772.53 (6.60 percent increase)

The Hydrant Rental Fee increases listed above are included with corresponding increases in the water rates paid by all Lebanon Ratepayers to our Lebanon Utilities. The upcoming water rate increases, which were adopted by our City Council and approved by our Mayor on April 23 last year, will be significant for (a) our retired neighbors on fixed incomes and (b) those households of the 41.2 percent of our Lebanon school students who received free and reduced price lunches during the 2017-18 school year. The impact of the impending water rate increases would be worsened if our Mayor and City Council were to eliminate or cap the Hydrant Rental Fee.

If the Hydrant Rental Fee were eliminated, our city would be legally required to increase the water rates of all Lebanon Utilities Ratepayers to make up the lost revenue. If the Hydrant Rental Fee were capped, our Lebanon Utilities could not complete some proposed capital projects or could choose to increase the water rates of all ratepayers to recover the lost revenue. For example, if our city had paid no Hydrant Rental Fees in 2018, the water rates of all the Lebanon Utilities ratepayers would have been increased about thirteen percent so that almost $380,000 would remain available for capital projects.

Our city has ample funds to continue paying the Hydrant Rental Fees. Lebanon’s population grew 2.97 percent from 2011 to 2018. For the same time period, our city’s cash balance increased 177.39 percent from $9.13 million to $25.33 million. Much of the cash balance increase was the result of a new local income tax for public safety and the following increases in existing revenue sources: 57.54 percent from general property taxes, 130.94 percent from the county option income tax, 20.22 percent from the food and beverage tax, 93.77 percent from the motor vehicle highway distribution, and 228.54 percent from the local road and street distribution.

It is certainly hoped that our Mayor and City Council members will continue to make the Hydrant Rental Fee payments to our Lebanon Utilities from the ample city resources that we provide by all the various taxes we pay! Capping or eliminating the Hydrant Rental Fee would result in important capital projects not being completed, or increases in the water rates of all ratepayers would be triggered. We can surely be certain that any increases in our water rates would not be offset by any decreases in the taxes we pay.

Lebanon Mayor candidate Matt Gentry agrees that it is good public policy for the city to continue paying the Hydrant Rental Fees as adopted. It will be interesting to see if the other Mayor and City Council candidates agree with the Taxpayer Friendly conclusion that the Hydrant Rental Fee should not be eliminated or capped.

 

Outcome

There are 798 total Lebanon Utilities fire hydrants, which can be categorized as listed next.

(1) There are 58 fire hydrants on private fire lines that are owned and maintained by customers, and these customers do NOT pay hydrant rental fees.

(2) There are 13 fire hydrants in Ulen, and Ulen pays the current hydrant rental fee for each fire hydrant.

(3) There are 2 fire hydrants at the Sugar Creek Water Plant, and Lebanon Utilities does NOT pay hydrant rental fees because these two fire hydrants are considered "private."

(4) There are 725 non-private fire hydrants within the Lebanon city limits (including those in new subdivisions and the Elmwood annexation), but the current hydrant rental fee is paid by the City of Lebanon on only 649 of the fire hydrants (because there were 649 fire hydrants “at the time rates were determined”).

The current and future Hydrant Rental Fees include the following:
2019 (Effective January 1) = $600.02
2020 (Effective January 1) = $659.42
2021 (Effective January 1) = $724.70
2022 (Effective January 1) = $772.53

Since it has been determined that the hydrant rental fee is paid by the City of Lebanon on 649 of the city's fire hydrants, the city should budget the following Hydrant Rental Fee amounts:
2019 = (649 fire hydrants) X ($600.02 per fire hydrant) = $389,412.98
2020 = (649 fire hydrants) X ($659.42 per fire hydrant) = $427,963.58
2021 = (649 fire hydrants) X ($724.70 per fire hydrant) = $470,330.30
2022 = (649 fire hydrants) X ($772.53 per fire hydrant) = $501,371.97

 

Lebanon Utilities Water Rate Increases 2018-2022

Lebanon Utilities Water Rate Increases 2018-2022

(Compiled April 10, 2019)

SOURCE: Ordinance No. 18-06 adopted by the Lebanon City Council and approved by the Lebanon Mayor on 04/13/2018.

NOTES:

(1) 2018 rates effective May 1, 2018.

(2) 2019 and subsequent years rates effective January 1.

Annual Fire Protection

2018

% Incr.

2019

% Incr.

2020

% Incr.

2021

% Incr.

2022

Hydrant Rental (each per year)

$546.47

9.80%

$600.02

9.90%

$659.42

9.90%

$724.70

6.60%

$772.53

Monthly Consumption

Rate Per 100 Cubic Feet

2018

% Incr.

2019

% Incr.

2020

% Incr.

2021

% Incr.

2022

First 500 Cubic Feet

$5.35

9.72%

$5.87

9.88%

$6.45

9.92%

$7.09

6.63%

$7.56

Next 1,000 Cubic Feet

$4.76

9.87%

$5.23

9.94%

$5.75

9.91%

$6.32

6.85%

$6.74

Next 2,000 Cubic Feet

$4.10

9.76%

$4.50

10.00%

$4.95

9.90%

$5.44

6.62%

$5.80

Next 4,000 Cubic Feet

$3.45

9.86%

$3.79

10.03%

$4.17

9.83%

$4.58

6.55%

$4.88

Next 8,000 Cubic Feet

$2.68

9.70%

$2.94

9.86%

$3.23

9.91%

$3.55

6.48%

$3.78

Over 15,500 Cubic Feet

$2.13

9.86%

$2.34

9.83%

$2.57

9.73%

$2.82

6.74%

$3.01

Monthly Minimum Charge

Meter Size - Cubic Ft. Allowed

2018

% Incr.

2019

% Incr.

2020

% Incr.

2021

% Incr.

2022

5/8-3/4 Inch Meter - 300 Cu. Ft.

$16.05

9.72%

$17.61

9.88%

$19.35

9.92%

$21.27

6.63%

$22.68

1 Inch Meter - 614 Cubic Feet

$32.18

9.73%

$35.31

9.91%

$38.81

9.89%

$42.65

6.64%

$45.48

1 1/4 Inch Meter - 1,285 Cu. Ft.

$64.12

9.81%

$70.41

9.91%

$77.39

9.91%

$85.06

6.64%

$90.71

1 1/2 Inch Meter - 1,776 Cu. Ft.

$85.67

9.81%

$94.07

9.93%

$103.41

9.91%

$113.66

6.64%

$121.21

2 Inch Meter - 2,825 Cubic Feet

$128.68

9.79%

$141.28

9.95%

$155.34

9.91%

$170.73

6.63%

$182.05

3 Inch Meter - 6,422 Cubic Feet

$257.12

9.83%

$282.39

9.99%

$310.60

9.88%

$341.28

6.60%

$363.79

4 Inch Meter - 12,478 Cubic Ft.

$427.76

9.78%

$469.60

9.95%

$516.34

9.88%

$567.37

6.56%

$604.57

6 Inch Meter - 31,764 Cubic Ft.

$855.17

9.81%

$939.03

9.89%

$1,031.93

9.82%

$1,133.29

6.62%

$1,208.35

8 Inch Meter - 50,822 Cubic Ft.

$1,261.11

9.82%

$1,384.98

9.87%

$1,521.73

9.79%

$1,670.73

6.66%

$1,781.99

Annual Automatic Sprinklers

Rate Per Connection Size

2018

% Incr.

2019

% Incr.

2020

% Incr.

2021

% Incr.

2022

5/8 Inch Meter

$6.99

9.87%

$7.68

9.90%

$8.44

9.95%

$9.28

6.57%

$9.89

3/4 Inch Meter

$10.00

9.80%

$10.98

9.93%

$12.07

9.86%

$13.26

6.64%

$14.14

1 Inch Meter

$17.94

9.81%

$19.70

9.90%

$21.65

9.88%

$23.79

6.60%

$25.36

1 1/4 Inch Meter

$27.91

9.82%

$30.65

9.89%

$33.68

9.89%

$37.01

6.59%

$39.45

1 1/2 Inch Meter

$40.22

9.80%

$44.16

9.90%

$48.53

9.89%

$53.33

6.60%

$56.85

2 Inch Meter

$71.48

9.81%

$78.49

9.90%

$86.26

9.90%

$94.80

6.60%

$101.06

3 Inch Meter

$160.78

9.80%

$176.54

9.90%

$194.02

9.90%

$213.23

6.60%

$227.30

4 Inch Meter

$285.87

9.80%

$313.89

9.90%

$344.97

9.90%

$379.12

6.60%

$404.14

6 Inch Meter

$643.20

9.80%

$706.23

9.90%

$776.15

9.90%

$852.99

6.60%

$909.29

8 Inch Meter

$1,143.46

9.80%

$1,255.52

9.90%

$1,379.82

9.90%

$1,516.42

6.60%

$1,616.50

10 Inch Meter

$1,786.67

9.80%

$1,961.76

9.90%

$2,155.97

9.90%

$2,369.41

6.60%

$2,525.79

12 Inch Meter

$2,572.72

9.80%

$2,824.85

9.90%

$3,104.51

9.90%

$3,411.86

6.60%

$3,637.04

 

Hydrant Rental Fee Elimination

The following Indiana Code reference will be applicable if the City of Lebanon were to eliminate the Hydrant Rental Fee:
IC 8 TITLE 8. UTILITIES AND TRANSPORTATION
IC 8-1 ARTICLE 1. UTILITIES GENERALLY
IC 8-1-2 Chapter 2. Utility Regulation
IC 8-1-2-103 Rates and charges; discriminatory overcharges and undercharges; offense; free service or special rate exceptions
     (d) This subsection applies to a public utility or a municipally owned water utility that is not subject to subsection (c). Except as provided in subsection (e), in the case of a public utility or municipally owned water utility furnishing water, if the governing body of any municipality within the service area of the utility adopts an ordinance providing that costs shall be recovered under this subsection, the charges for the production, storage, transmission, sale and delivery, or furnishing of water for public fire protection purposes shall be included in the basic rates of all customers of the utility within the municipality. However, on or after a date specified in the ordinance, the construction cost of any fire hydrant installed at the request of a municipality, township, county, or other governmental unit that adopts an ordinance under this subsection shall be paid for by or on behalf of the municipality, township, county, or other governmental unit. The change in the recovery of current revenue authorized by the ordinance shall be reflected in a new schedule of rates to be filed with the commission at least thirty (30) days before the time the new schedule of rates is to take effect. The new schedule of rates shall:
        (1) eliminate fire protection charges billed directly to governmental units, other than charges for the construction cost for new hydrants installed on and after the date specified in the ordinance; and 
        (2) increase the rates charged each customer of the utility, based on equivalent meter size, by an amount equal to: 
            (A) the revenues lost from the elimination of such fire protection charges; divided by 
            (B) the current number of equivalent five-eighths (5/8) inch meters.
This change in the recovery of public fire protection costs shall not be considered to be a general increase in basic rates and charges of the utility and is not subject to the notice and hearing requirements applicable to general rate proceedings. The commission shall approve the new schedule of rates that are to be effective on a date specified in the ordinance.

If the City of Lebanon were to eliminate the Hydrant Rental Fee, the result would be that the eliminated Hydrant Rental Fee charges would be included in the basic rates of all the Lebanon Utilities water ratepayers.

The impact of a change in the Hydrant Rental Fee can be demonstrated by the example of about how much higher the water rates of all the Lebanon Utilities ratepayers would have been if our city had paid no Hydrant Rental Fees in 2018.

The Lebanon Utilities December 2018 Financial Statements show the following annual operating revenue amounts for the Water Utility:
$1,778,530 from Residential ratepayers
$ 890,820 from Commercial ratepayers
$ 205,891 from Industrial ratepayers
$ 380,609 from Fire Protection (Hydrant Rental Fees)
$3,255,850 SUBTOTAL 2018 OPERATING REVENUE

Almost all of the $380,609 revenue from the Hydrant Rental Fees was paid by our city (a small portion was paid by Ulen and Elmwood). Therefore, our city in 2018 paid about 11.69 percent of the subtotal operating revenue. Stated another way, the 2018 basic rates of all the Lebanon Utilities ratepayers would have been an average of about 13.24 percent higher if our city had paid no Hydrant Rental Fees.

 

Hydrant Rental Fee Caps

An April 4, 2019, opinion from the Lebanon City Attorney concludes that our city would be permitted to cap how much is paid in Hydrant Rental Fees. In order to accomplish this the city would need to follow the process set out in the Indiana Code which requires:
(1) the Lebanon Utility Service Board to recommend the Hydrant Rental Fee cap.to the City Council, and then
(2) the City Council must hold a public hearing regarding the change and subsequently adopt an ordinance.

If the Hydrant Rental Fee were capped, our Lebanon Utilities could (a) not complete some proposed capital projects or (b) choose to request our City Council approve an increase the water rates of all ratepayers to recover the lost revenue.

 

Lebanon Civil City Finances

Lebanon Civil City Detailed Receipts

Governmental Activities (Excluding Lebanon Utilities)

(Compiled April 4, 2019)

Source: "Detailed Receipts" Core Financial Report accessed through the "Annual Financial Report" link at https://gateway.ifionline.org/report_builder/ 

Receipt Category

2011

2018

% Increase

General Property Taxes

$3,990,299

$6,286,217

57.54%

County Option Income Tax

$2,248,843

$5,193,523

130.94%

Local Income Tax For Public Safety

$2,956,935

NEW TAX

Food And Beverage Tax

$346,569

$416,656

20.22%

Motor Vehicle Highway Distribution

$380,250

$736,810

93.77%

Local Road And Street Distribution

$85,552

$281,075

228.54%

2016 LOIT Special Distribution

$428,806

Payroll Fund Total Receipts

$5,268,356

$8,097,410

Other Receipts

$7,606,414

$11,532,858

Total Receipts

$19,926,283

$35,930,290

Lebanon Civil City Cash Balances

Governmental Activities (Excluding Lebanon Utilities)

(Compiled April 4, 2019)

Source: "Cash and Investments" Core Financial Report accessed through the "Annual Financial Report" link at https://gateway.ifionline.org/report_builder/ 

Local Fund Category

12/31/2011

12/31/2018

% Increase

General Fund

$1,755,694

$5,498,645

213.19%

Local Income Tax For Public Safety

$2,761,805

NEW TAX

Motor Vehicle Highway

$228,409

$1,565,834

585.54%

Local Road And Street

$48,131

$269,352

459.62%

Parks Department

$74,492

$1,235,816

1,558.99%

2016 LOIT Special Distribution (75%)

$272,796

2016 LOIT Special Distribution (25%)

$69,071

Rainy Day Fund

$1,709,291

$1,759,810

2.96%

Cumulative Capital Improvement

$67,814

$285,699

321.30%

Cumulative Capital Development

$616,442

$662,833

7.53%

Food And Beverage Tax

$849,187

$2,066,411

143.34%

Other Local Fund Categories

$3,783,432

$8,885,923

134.86%

Total Cash Balance

$9,132,892

$25,333,995

177.39%

Lebanon Civil City Population Growth

(Compiled April 4, 2019)

Source: http://www.finplaneducation.net/population_data.htm 

2011

2018

% Growth

Population

15,732

16,200

2.97%

Watchdog Indiana Home Page Watchdog Lebanon Home Page  

This page was last updated on 04/20/19 .