BELLE — Missouri Rural Water Association’s Liz Grove informed the Belle Board of Aldermen on Aug. 9 that while the sewer rates looked good, the town needed to raise water rates to become compliant with the state or they would not be eligible for bonds.

Grove explained that the city of Belle is a member of the association and she has been working with Public Works Director Tony Baretich to complete the rate study for water and sewer.

“We looked at your water rates,” Grove began. “We looked at your sewer rates. Your sewer rates are ok, but the water was the main concern and that is what we spent a lot of time on.”

The city didn’t have a budget prepared during the rate study, but they had year-to-date for the previous 11 months and she used that as a guide.

“We annualized those figures for the rate base and increased — I thought I doubled them — the fuel costs, as well as left room for some raises,” Grove said. “I don’t count in penalties and late fees as revenue for rate studies. That is pretty volatile. It’s not dependable.”

However, renting out the water tower to the internet and satellite companies can be used as an income.

“Your current rates do not cover your expenses by a little over $9,500 a year,” Grove said. “You are about $9,500 in the red. So you do need to raise your water rates.”

She gave the board three options to consider when using a cost per gallon for 5,000 gallons, which is the average residential use.

Option one would raise the minimum for the first 1,000 gallons to $8.03, and the cost per each additional 1,000 gallons would $1.65. Under this plan, the city would break even. — This would increase the minimum by 39 cents and the overage by 29 cents.

“There is not any cushion there,” Grove said.

Option two would increase the minimal amount per the first 1,000 gallons to $8.78 with a $1.78 overage per any additional 1,000 gallons and build in enough income to give about 10 percent of cushion in the operating expenses.

“That’s not alot Right now your out-of-city limits customers pay an average of $4.38 more minimum. If you just added that on top, I took that into consideration,” Grove said. “The golf course has a minimum like residential but their volume rate is 62 cents.”

Options one and two were to maintain basic services at the lowest rates. Option three raises additional rates for other entities.

“Ten percent isn’t enough, really, when you think about things you have to maintain over the long term,” Grove said. “So I did a calculation. You still have to pay for a new water tower, even with grant money, in 15-20 years you will still need a new water tower.”

She asked for estimations on how much it would be to maintain the water tower, and have it sandblasted and painted. Alderman Jeanette Struemph said $300,000. Grove said it depends on how big and what type it is.

“That’s not money you are going to raise in one year, you are going to have to put money away,” Grove said. “You also need to account for vehicles that you are going to replace every 10 years, which is stretching it. That alone is an additional $35,000 a year to put away. You need to think about that. To raise another $35,000, these rates would have to go up by $1 to raise another $35,000.”

She encouraged aldermen to think about what they want to do with the rate increase because many towns don’t charge enough and can’t cover the basic expenses to repair and maintain the current system.

“Those are all big ticket items that you have to put money away for and build into your rates,” she said.

Options one and two were break-even rates to get the city out of operating in the red. The third option is charging at least $1 a gallon over to be able to save at least $35,000 a year.

“If you get the ARPA money, that is great, you don’t need to worry about it,” Grove said about the board’s conversation with city engineer Terris Cates earlier in the meeting. “You still need to put money away to take care of it over the long-term. That money is very competitive.”

Grove said if they have to issue bonds or acquire debt to complete the project, she did not take it into account in their rates study.

“Who knows where interest rates are going to be on a bond when you close? They are going up,” she said.

The city gets its bonds from SRF which has the ability to get a portion of the grant along with the bond. It also has one-third of the interest rate of the state’s Tripple A rating that they can get.

“Before interest rates started going up they were at one percent,” Grove said. “They can go out 30 years.”

She added that if they get to the point that they plan to ask for bonds, they can look at its closure.

Baretich said Grove the number of water customers they had — 725 total, however, not everyone pays for water.

“Where we have meters at, we have places that have meters that are not billed,” he said. “Meters billed number 698 and varies.”

Grove built the rate study off of 725 customers.

“You don’t charge the churches?” she asked and the board confirmed that was right. “That is something SRF is going to have some issues with if you go that way. They think every customer should have a bill.”

Grove told the board they need to bump it up a little more based on the inaccurate number.

Her last statement was on affordability. 

“State and federal funding agencies look at affordability and the rule of thumb is an affordable water bill and an affordable sewer bill should be two percent of the median household income,” Grove said. “That number is for each water and sewer for 5,000 gallons of usage.”

Belle residents have a medium household income of $38,266 according to the latest Census data. Two percent of $38,266 would be about $64 for each service — a total of $168 a month. That would be for a 5,000-gallon bill. 

“What they do is they look at that and say if you are below that you can afford to raise your rates and take more loan,” Grove said. “Your water rates are well below the two percent median household income.”

The city’s engineer gave aldermen hope earlier in the meeting that they may be able to receive a 90 percent grant for a water project that would not require a rate change if they receive it.

“I don’t want to raise the rates or look at the rates until we find out if we gent this grant,” Mayor Daryl White said.

The board did not take any action on the rate study.