Lebanon Utilities 2015 Sanitary Sewer (Wastewater) Rate Increase
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NOTE: The sources of the data referenced on this web page include the
“Umbaugh Report Proposed Wastewater Increase” online at http://www.lebanon-utilities.com/about/document-center/,
“Review of Lebanon Wastewater Utility” (send an E-mail to email@example.com to request a copy of this slide presentation),
Lebanon Utilities “2015 Budget” online at http://www.lebanon-utilities.com/about/document-center/,
“Lebanon Cash Reserves” online at http://www.finplaneducation.net/lebanon_cash_reserves.htm,
“Lebanon Property Tax Rates” online at http://www.finplaneducation.net/lebanon_tax_rates.htm,
“Cash and Investments” Lebanon Annual Financial Report online at https://gateway.ifionline.org/report_builder/Default2.aspx?rptType=afr&rptVer=a.
Lebanon Utilities has contracted with H. J. Umbaugh and Associates to prepare a sanitary sewer (wastewater) rate increase proposal for approval by the Lebanon City Council. The spreadsheet below lists the six alternative rate increases proposed by Umbaugh.
Lebanon Sanitary Sewer (Wastewater) Rate Increase Alternatives from H. J. Umbaugh and Associates
Operating expenses = annual spending to operate and maintain Lebanon’s sanitary sewer system
PILT = annual payment in lieu of taxes (typically referred to as PILOT)
Outstanding debt service = annual debt service for the existing Refunding Bonds of 2013 and 2014
Proposed debt service = annual debt service for a new $3,480,000 bond to pay for the following projects:
$1,300,000 Patterson St. (new 24-inch collector main line from North St. to SR 32)
$770,000 Elizaville Rd. (gravity system along Elizaville Rd. to John Bart Rd.)
$680,000 Grit Removal (new grit removal system at the sewage treatment plant head works)
Debt service reserve = annual debt service reserve for the new $3,480,000 bond
Water Utility loan = annual debt service to pay off in 5 years a water utility loan for the Northside Sewer
Improvements = allocated annual amount to pay for 2015-2020 capital projects
The suggestions listed next present a Ratepayer Friendly Alternative for a sanitary sewer (wastewater) rate increase that is based on fiscally responsible needs.
1. Eliminate the annual Lebanon Utilities Wastewater PILOT payment ($214,070 annual PILOT savings).The City of Lebanon General Fund receives an annual Payment In Lieu Of Taxes (PILOT) from each of the Lebanon Utilities operating units. The PILOT payments take the place of property taxes, and are apportioned to the Lebanon Utilities operating units based on property values. The 2015 Lebanon Utilities total PILOT payments of $487,421 were apportioned as follows: $214,070 from Wastewater; $134,296 from Water; $136,728 from Electric; and $2,327 from Telecom. On December 31, 2014, the City of Lebanon General Fund had a cash balance of $4,789,852 (59% of Lebanon’s 2014 General Fund budget) – and Lebanon’s 2015 General Fund budget was still increased a whopping 19%. In addition, Lebanon has a Taxpayer UNfriendly string of seven straight years with Lebanon municipal property tax rate increases that total an alarming 93 percent – the PILOT payments have not been used to decrease the Lebanon property tax burden. Eliminating the annual PILOT payment from just the Lebanon Utilities Wastewater operating unit will clearly NOT in any way jeopardize the solvency of Lebanon’s General Fund – Lebanon’s General Fund will every year continue to receive a total of at least $273,351 in PILOT payments from the Water, Electric, and Telecom Lebanon Utility operating units.
2. Do not include the Northside Sanitary Sewer System loan in the sanitary sewer (wastewater) rate increase ($289,433 savings).It has been proposed that repayment for a $1.43 million loan for the Northside Sanitary Sewer System be changed from repayment by availability fees to repayments included as part of the proposed rate increase. It is Ratepayer UNfriendly to change the annual loan repayments from availability fees income to a sanitary sewer (wastewater) rate increase.
3. Remove the portion of the Elizaville Road Project outside the Lebanon city limits from the proposed new bond issue to pay for selected capital projects ($13,306 annual Proposed Debt Service savings and $2,661 annual Debt Service Reserve savings).Part of the proposed sanitary sewer (wastewater) rate increase would pay for a 2017 Elizaville Road Project. This Project would construct a gravity system to serve 28 homes now on individual septic systems along Elizaville Road to John Bart Road, and also would include running a stub line into Winding Way. The Elizaville Road Project is estimated to cost $769,265, or about $26,500 per home served. It appears that 19 of the 28 homes can be served by laying sewer lines within the Lebanon city limits, while it would require laying sewer lines outside the city limits to serve the other 9 homes. It is poor public policy for Lebanon Utilities to raise the sanitary sewer rate to complete capital projects outside the Lebanon city limits. Lebanon Utilities is a municipal utility for the City of Lebanon, and homeowners who choose to live outside the city limits to avoid Lebanon’s high municipal property tax rate should not benefit from having utility ratepayers within the city provide them with free sanitary sewer infrastructure to replace their individual septic systems. The portion of the Elizaville Road Project outside the Lebanon city limits should NOT be completed by Lebanon Utilities – and the $240,000 portion of the Elizaville Road Project outside the city limits must NOT be used in the computation of any Lebanon Utilities sanitary sewer rate increase. Removing $240,000 for the Elizaville Road Project from the proposed new $3,480,000 bond issue would result in a new $3,176,290 bond that would be allocated as follows: $1,300,000 for the Patterson Street Project; $530,000 for the Elizaville Road Project; $680,000 for the Grit Removal Project; $502,000 for Contingencies; and $164,290 for Non-Construction.
4. Eliminate Phase 2 of the Indianapolis Avenue Project ($36,667 annual Improvements savings).Phase 2 of the Indianapolis Avenue Project between Hendricks Drive and State Road 32 is a costly road beautification project that should not be constructed. Eliminating the unneeded Indianapolis Avenue Phase 2 Project would also eliminate a $220,000 sanitary system lining project, thereby excluding the low priority $220,000 Indianapolis Avenue sewer lining from the proposed sanitary sewer (wastewater) rate increase.
5. Reduce the 2016 through 2020 Wastewater recurring capital projects by $30,000 a year ($30,000 annual Improvements savings).The proposed sanitary sewer (wastewater) rate increase includes $2,898,200 for recurring capital projects for the five years 2016 through 2020, . Reducing the recurring capital projects by $30,000 a year would decrease the total recurring capital projects amount by just 5.18 percent.
6. Do not use the sanitary sewer (wastewater) rate increase to repay the 2015 Wastewater capital projects ($282,475 annual Improvements savings).The 2015 Lebanon Utilities Wastewater capital projects were paid for by using $1,509,835 in Wastewater cash reserves and $185,017 in Wastewater operational cash flow. The 2015 Wastewater cash reserves will be reduced to $2,114,189 from $3,624,024 on December 31, 2014. The 2015 Wastewater cash reserves of $2,114,189 are 78 percent of the 2015 Wastewater total expenses budget of $2,726,013. The proposed rate increase would replenish the Wastewater cash reserves by repaying the $1,694,850 in 2015 Wastewater capital projects. The current Wastewater cash reserves are sufficient without repaying the 2015 Wastewater capital projects.
NOTE:Suggestions 3, 4, 5, and 6 result in a total of $3,568,200 in non-bonded capital projects for the five years 2016 through 2020 – and an annual Improvements amount of $713,640 in the sanitary sewer (wastewater) rate increase calculation.
The suggested Ratepayer Friendly Alternative can be
summarizes as follows:
The following is a comparison of average monthly sanitary sewer (wastewater)
Crawfordsville = $19.10
Plainfield = $20.95
Carmel = $22.57
Frankfort = $22.94
Brownsburg = $25.06
Lebanon (present) = $35.41
Noblesville = $37.68
Ratepayer Friendly Alternative = 18 percent increase from $35.41 to $41.89
Whitestown = $43.00
Jamestown = $44.62
Umbaugh Alternative E = 26 percent increase from $35.41 to $44.62
Umbaugh Alternative D = 32 percent increase from $35.41 to $46.77
Umbaugh Alternative C = 35 percent increase from $35.41 to $47.78
Pittsboro = $48.18
Umbaugh Alternative F = 37 percent increase from $35.41 to $48.51
Umbaugh Alternative B = 41 percent increase from $35.41 to $49.93
Westfield = $50.08
Umbaugh Alternative A = 49 percent increase from $35.41 to $52.75
It is hoped that the Lebanon City Council will favor the suggested Ratepayer Friendly Alternative over the needlessly high sanitary sewer (wastewater) rate increases proposed by Umbaugh. Seniors on a fixed income and the families of the 41.4 percent of Lebanon students receiving subsidized lunches cannot afford a needlessly high rate increase.
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This page was last updated on 10/12/15 .