Du Quoin to pass along 3.28% Rend water hike

The City of Du Quoin this spring will forego the once-necessary, but politically disastrous 18 percent water rate increase of two years ago, and instead in 2016 will only pass along Rend Lake's announced 3.28% increase effective with the June billing. Any future annual Rend Lake water rate increases will be passed along as they are announced.

The large one-time 2014 increase under the previous administration was necessary to offset a growing deficit in the water department, something that even the late City Clerk Blaine Bastien eluded to in a very well thought-out letter to the administration and council before his untimely death. The need was compounded by the city's $400,000-plus annual wastewater treatment plant bond payment from a once-larger surplus and other large financial obligations needed to install new water mains on Main and Washington Streets.

This administration has spent the past nine months fully identifying the city's resources and obligations and is within a year of restoring the sought-after integrity to city finances. The proprietary water and sewer fund is an all-important part of that formula and Mayor Guy Alongi is driven to eliminate as much city debt and borrowing as possible.

The city council at its meeting on Tuesday, Feb. 23 is expected to approve the 3.28% water rate increase. It will also consider an ordinance to increase the required water service deposit fee to $125. The reason is simple. Oft-times a renter or transient resident will ask for water service, then leave the rental property or home without paying the last water bill. This up-front security deposit covers any issues with respect to payment of the final bill.

The council will also consider an ordinance to raise the water re-connection fee to $40 for customers who have had their water service cut off.

The council will also approve an ordinance that passes along the actual cost of a water connection to a developer or homeowner. This ordinance takes the guesswork out of covering the cost of a connection.

Lastly, an ordinance will pare back over three years' time ($5 per month in each of the three years) the $15 monthly credit 59 residents of Mai Tai subdivision area have received on the Du Quoin sewer portion of their water bills which was designed to offset the higher water rate that the Village of Dowell charges.

In other words, even though Dowell is charging its customers somewhat more for water, Du Quoin wanted to charge no more than what Du Quoin residents pay in sewer fees.

The entire dynamic of what brings us to this point of where Du Quoin stands with respect to its water and sewer department finances is detailed in a summary that will be presented to the council a week from today.

It was written by Chuck Novak, the city's financial consultant. It reads:

"The primary purpose of the water rate structure and pricing should be to provide economical water and sewer services to area residents while annually saving enough revenue to address the infrastructure needs of the water and sewer systems.

"Unfortunately, current practices will not achieve that goal. Although the 2014 audit shows the proprietary funds (water and sewer) ended the year with a $111,615 surplus that is, however, deceiving. There was an operating transfer in of $187,858. The reality is that 2014 revenues were $2,508,583 and expenses were $2,584,826. Expenses outpaced revenues by $76,240 in 2014. In 2013 expenses outpaced revenues by $220,550. The audit is not done for 2015, but I am estimating an over expenditure of approximately $42,000+.

Du Quoin Has Not

Been Pricing Water

Based on Costs

"One of the primary reasons expenditures exceed revenues is because Du Quoin has not been pricing water based upon its actual cost. Du Quoin purchases anywhere from 18 to 24 million gallons of water each month from Rend Lake Conservancy District. Rend Lake publishes its water rates based upon a five-year cycle. Rend Lake's current rates were published in 2014 and run through April of 2018. Each year the rates increase--2015+1.1%, 2016=2.8%, 2017=3.28% and 2018=$2.65%.

"Ordinance 2016-002-01 ties Du Quoin's water rate per one thousand gallons to Rend Lake's rate for 1 million to 30 million gallons of consumption. The ordinance presents a formula which annually sets the Du Quoin water rate based upon the Rend Lake rate. The formula determines the percentage difference between the current and future year and applies that percentage to the Du Quoin rate per 1,000 gallons.

"For example, Du Quoin's current rate per thousand gallons is $5.88 in city and $7.84 outside city. The increase in the Rend Lake rate between 2016 and 2017 is 3.28%.

"Applying the formula in Ordinance 2016-002-001 would change Du Quoin's 2016 rate per thousand to $6.07 in city and $8.10 outside the city. The increase in the Rend Lake rate between 2017 and 2018 is 2.65 percent. Following the formula computation Du Quoin's 2018 rate per thousand would be $6.23 in city and $8.31 outside the city.

Du Quoin's Water

Rates Compared to

Other Communities

"As a matter of comparison, Mt. Vernon's minimum bill is $39.71 and the per 1,000 rate ranges from $8.85 to $9.16. Du Quoin's minimum bill is currently $22.74 in city and $27.81 outside the city. Christopher does not have meters, but their minimum bill is $41.30 for water and sewer.

"Tamaroa ranges from $8.49 to $9.92 per 1,000. Benton's minimum bill is $47.43 for 2,000 gallons. West Frankfort's minimum bill is $29.66 and water per 1,000 is $12.03; sewer is $7.63. Sesser's minimum bill is $33.54 and water is $21.79 per 2,000 gallons and $11.75 for sewer. Sesser is increasing these rates next year.

"Surveying the area water and sewer rates show that Du Quoin is very competitive even after applying the formula in Ordinance 2016-002-01.

"More important, however, the rate structure must achieve that simple purpose stated in the first paragraph. The water and sewer departments cannot continue to operate with a deficit. They must establish a rate structure that is competitive and economical for our customers while also establishing a pattern of saving a portion of annual revenues for infrastructure improvements."