Mayor and Council will Consider Rates as Part of Fiscal Year 2009 Budget
ROCKVILLE, Md., March 11, 2008 – At last night’s Mayor and Council meeting, the Mayor and Council directed City of Rockville staff to return with an analysis of the proposed water rates and additional options to achieve lower rate hikes in the early years of the City’s pipe replacement program. Staff presented several options to fund these improvements, which include replacing 33 miles of water pipe and upgrading the City’s water plant. The option involved replacing the 33 miles of pipe in 15, 20 or 25 years costing $67 – 81 million depending on the construction period. The Mayor and Council will consider rate increases as part of the 2009 fiscal year (FY) budget worksession on April 28. The FY 2009 budget will be adopted on May 19. View the presentation.
Last night’s presentation followed the February 11 meeting in which staff described the aging and deterioration of Rockville’s water pipes and needed upgrades to the City’s water plant. Installed before the mid 1970’s, Rockville’s cast iron pipes are now experiencing corrosion, which has led to decreased water flow from fire hydrants and increased water main breaks. This corrosion, known as “tuberculation,” reduces the interior pipe diameter, thereby lowering the flow in the pipe. “Water systems throughout the region and country also are experiencing the effects of aging infrastructure,” said Craig Simoneau, Rockville’s Director of Public Works. “We are not unique in needing to take care of this very important issue.”
Upgrades to the water plant are needed to comply with more stringent regulations set by the Environmental Protection Agency and the Maryland Department of Environment.
“This project is critical to the city,” said Scott Ullery, Rockville’s City Manager. “By systematically replacing deteriorating pipes, Rockville can improve the reliability of the water system and correct possible fire flow problems.”
A 20-year schedule to replace 33 miles of pipe is included by the city manager in the proposed FY 2009 budget. The average residential customer with a ¾ inch pipe would expect to pay $15.43 more each quarter for water the first year of the program under this proposal. Subsequently, the billing would increase about 14% each year until 2013, at which time the rate would increase less than 1% each year. By FY 2018, the average customer’s bill would have gone up about $45 per quarter.
Staff reviewed and presented several funding options to the Mayor and Council. Other options included the use of infrastructure renewal fees, and lengthening the program to 25 years. The City plans to utilize a combination of debt and pay-as-you-go financing, which is consistent with all other City utilities.
Staff will present additional options per the Mayor and Council’s direction at the FY 2009 budget worksession on April 28. Water rates will be adopted along with the FY 2009 budget on May 19.
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