Sewer rate case headed to court
A lack of a vote on whether to allow a sewer rate increase for the Tri-Lakes Regional Sewer District will mean the issue will head to Circuit Court.
The two-person board designated to vote on the issue — comprised of a county commissioner from Whitley County and one from Noble County — failed to reach an agreement on how to vote, and therefore the issue will head to Circuit Court, if the sewer district or the petitioner files an appeal.
Tri-Lakes resident Steve Heaston, who lead the charge against the rate increase, said after the hearing Friday that an appeal will be filed in an attempt to prevent the $12.83 increase from taking effect.
Hal Stump, Noble County Commissioner, said an increase is probably needed, but more research needs to be done before he could support one.
“A lot of people need to do a lot more talking and asking questions before you nail down what you have to do,” he said, adding that his vote would be to support the petition.
Whitley County Commissioner Don Amber said he would vote for a smaller increase.
“I can’t buy a $12.83 increase,” he said.
Without an agreement though, no vote was taken and therefore the issue was no longer under the jurisdiction of the two-person sewer authority board.
During the hearing, sewer district attorney Matt Shipman said the large increase is needed because there hasn’t been one since 1992, the same year the sewer district started and $1 was added to the bills at that time.
“In the 18 years since that increase, there have been no rate increases at all,” he said, adding that the requested rate was appropriate.
The increase would have applied only to the operating and maintenance portion of the bills, not the debt service or billing portions.
He cited Indiana Code which says sewer districts must have rates high enough to meet the requirements of the district or the rates are deemed unlawful.
The district’s financial records from January to July 2010 also show $128,000 in lost income for operating and maintenance expenses, and the district’s financial reserves are being used to cover the difference.
Although he and the sewer district’s financial consultant, Steve Carter, said the only issue is the current operating and maintenance account, those against the rate increase said much more affected that fund.
They asserted that mismanagement of the district as a whole and poor foresight in refinancing a bond are some of the reasons the district is in such a financial state.
Josh Tourkow, who owns a house at Tri-Lakes and is the attorney for the petitioners, asserted that proper notification of the hearing Friday and other meetings was not met, and therefore the rate increase should be dismissed.
He also said the report used to create the rate was based on estimates and not real numbers and therefore had little validity.
“They were basing it on the wrong numbers,” Tourkow said.
As for the list of possible equipment repairs used to create the five-year plan for the district, he said much, if not all of it was unnecessary.
The list included new grinder pumps, backup generators for lift stations and other equipment replacements.
Carter said the report Tourkow referenced was not the one the district chose to follow.
Tourkow also said the district’s expenses do not match what was shown on one of the reports from the financial consultant and were among the many reasons he felt the rate was unjustified.
For Heaston, one of the biggest issues was the refinancing of a bond several years ago for one of the sewer district’s two phases.
Refinancing the bond shorted the life of it drastically and saved the district $2 million, according to Shipman, but Heaston said there were other negative outcomes.
More interest for each monthly payment than district could afford from its debt service account alone was one problem, according to Heaston.
“We have to look at the impact that this bond issue had on our financial condition,” he said.
With several thousand dollars being used from the district’s general fund to make up the difference in monthly bond payments, the district is hurting is operating and maintenance account, Heaston said.
A packed room at the Whitley County Government Center consisted mainly of sewer district residents opposed to the rate increase.
Of them, they questioned why there couldn’t be smaller rate increases phased-in over the years.
Others opposed to it said reports from other sewer districts with similar equipment as Tri-Lakes said the system is made of reliable equipment that doesn’t often need major repairs.