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Herriman Journal

Inflation, maintenance are main culprits in water rate increase

May 09, 2024 12:59PM ● By Elisa Eames

As is expected, residents with secondary water will be affected less by the water rate increase. (Image courtesy Bowen Collins & Associates)

This fall, Herriman residents may notice higher water bills. 

A motion to amend the master fee schedule for water and secondary water rates passed at the March 27 city council meeting with a vote of 4-0, including a vote from Councilmember Jared Henderson, who attended the meeting online. The higher rates take effect Oct. 1. 

Intended to fund expenses with its own revenue, the water utility’s upcoming expenses are now expected to exceed its income. “If we don't make changes, we will run out of funds for water operations within about a year,” proclaims the city website, while a March 14 staff report declared, “Immediate revenue increases are needed to fund planned capital projects for culinary and secondary system growth and maintenance.” 

In February 2023, Herriman officials hired civil engineering firm Bowen Collins & Associates to complete a culinary and secondary water rate study. Per the firm’s recommendations, the city council authorized Bowen Collins in June 2023 to add possible tier rate, volume and rate structure changes to the study. Results suggested the city increase water rates annually for five years as follows:

July 1, 2024: 13.0% 

July 1, 2025: 13.0% 

July 1, 2026: 13.0% 

July 1, 2027: 9.5% 

July 1, 2028: 3.0%

However, on Feb. 28, the city council explored the option of pushing the effective date of the rate increase for this year back to October rather than the initial date of July 1. Though the delay will necessitate a 16.3% jump as opposed to only 13% were it to take effect July 1, residents will be spared an increase for this year’s high-water usage months during the summer. 

“The council didn’t want residents to be affected so immediately as this summer,” the city explained. “Only the October 2024 increase was approved. It's expected to be reviewed and reconsidered annually.” 

Bonding will supplement the rate increases. The resulting tentative rate increase schedule is as follows:

Oct. 1, 2024: 16.3%

July 1, 2025: 13.0%

July 1, 2026: 13.0%

July 1, 2027: 7.0%

July 1, 2028: 3.0%

Not surprisingly, inflation can be blamed for much of the higher bills that residents will see this fall. Historically, water rate increases have stayed below inflation rates, jumping only 2% each year. 

“Inflationary pressures affect nearly all budget categories of the utility including operation and maintenance costs as well as capital costs,” says the March 14 staff report. “Existing and future budgets have been increased to reflect these cost changes. With no changes to the city’s rate structure, the city’s water fund will be insolvent in fiscal year 2024.” 

With operating and personnel costs totaling approximately $14.8 million and revenue of only $14.1 million, the fund is already operating at a loss, some of which is being made up using reserves. However, should the city cancel all upcoming capital projects, the water fund would still run dry in 2028. 

Councilmember Sherrie Ohrn lamented, “There has been a 90% increase in [costs]. It’s just the reality of the world we’re living in right now. And until those costs come down, we have to pay them.”  

Another factor for the higher water prices is that past and current fee structures were not sufficient to cover future operating and maintenance costs, let alone the increases in costs and fees. Though a fair amount of water infrastructure within Herriman is comparatively new, every utility needs to make repairs. “The city is now starting to see the need for significant repair and rehabilitation projects,” the staff report states. 

While Herriman residents already use water from West Jordan’s Jordan Valley Water Conservancy District every time they turn on a faucet, one-fourth of the coming rate increase results from the city’s efforts to provide residents with better-quality water by buying more water from JVWCD during off-peak water usage months. 

“A chunk of this [increase] is… because our residents don’t like the hard water, and they’ve asked us not to utilize Herriman water during the winter…” Ohrn said. 

Herriman’s website reveals, “We're investing in better water quality… but [it] comes at a cost—about $500,000 more annually to the city.” 

Councilmember Teddy Hodges added, “Hopefully, residents can save money on appliances and clothes and washing dishes.”

At the meeting on March 27, council members wanted to make it clear the rate increases are not a result of the staggering growth Herriman is experiencing. 

“...The vast majority of the costs that are associated with these price increases are not to fund new water systems. It’s not to build out Olympia…” said Councilmember Steven Shields. “It is [primarily] the cost of providing water and upkeeping the system.” 

Keith Larsen of Bowen Collins echoed Shields’ thoughts. “We are making sure that new growth will pay for their fair share, so the rate increases that we’re looking at right now are not associated with existing users paying for new growth. We need to be very clear on that,” he said. A city representative further explained, “This is complicated and nuanced… The rate increase will help pay back some of the bonding needed for upgraded or new infrastructure, but new development generally pays for their own infrastructure.”

Per staff and consultant recommendations, the city will also make alterations to the volume tier structures. “Fiscal impact to individual customers will depend on water consumption, meter size, and if the property has access to secondary water,” the staff report affirms. “For an average residential customer without secondary access, the yearly average will increase from $595 to $668 ($73, or 12.2% per year). A high residential user without secondary access will see an increase from $1,300 to $1,558 ($258, or 19.8%).”

In addition, Herriman has announced that it will launch a new online dashboard tool in the next few months so residents can track their real-time water usage. “You'll be able to find and eliminate water overuse and help keep your bill down as much as possible,” the city’s website says. 

As the water increase comes on the heels of a relatively recent property tax increase to fund public safety, the city emphasizes that its officials are impacted by the rate increase as much as anyone else. “We understand the burden and frustration of increased costs. We are all feeling it…,” maintains the website. “Decisions that impact our residents so directly are not made lightly. But this is necessary to ensure we can sustain the vital service of delivering water to you.” 

At the March 27 council meeting, Hodges shook his head and said, “It’s a tough decision because it affects every citizen in the city and every business owner.” λ

NeuroHealth

 

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