Board defeats ordinance that would have revised water/sewer tap fee rate schedule

Alderman Kelly Rector

Alderman Kelly Rector

The Oakland Board of Mayor and Aldermen has unanimously defeated an ordinance on final reading that would have revised the rates for water/sewer tap fees and meter installation.
Board members took the action during their regular monthly meeting.
The ordinance had been passed on first reading by a 3-1 vote during the board’s Feb. 19 meeting, with Alderman Billy Ray Morris the lone dissenter.
Section 4 of the Town Charter and Title 18 of the Municipal Code authorize the board to adopt rate schedules by ordinance for all water and sewer services.
The defeated ordinance was designed to establish charges that had a “reasonable relationship” to the cost of providing those services for residential and commercial customers.
It proposed a water tap fee of $1,000 for residential and $2,000 for commercial. The sewer tap fee would have been $1,500 for residential and $2,500 for commercial.
A schedule of charges on water meter installation for residential and commercial customers would have been $350 for ¾ of an inch, $500 for 1 inch, $800 for 1.5 inches and $1,200 for 2 inches or above.
The installation costs would have applied to water meter replacements not applicable under the “automated” meter replacement schedule.
The charges for meter “deposits” would have been $50 for residential and $150 for commercial.
The ordinance also noted that those charges would be reviewed after The University of Tennessee’s Municipal Technical Advisory Services concludes a water and wastewater rate study.
During discussion shortly before the vote, Alderman Kelly Rector cited the “shortfall” that Oakland is experiencing in its Water Department. And because the rate study will probably not be conducted until the water loss is “repaired,” he said it would be difficult for him to vote for the ordinance.
“Without any numbers,” he said, “I just don’t want the residents to end up footing a bill that, normally, they wouldn’t have to.”
Because the ordinance was designed to lower the tap fees, Alderman John Troncone asked whether taxes would have to be raised to offset the reduction in revenue.
Mayor Chris Goodman said there will be no tax increase during the current fiscal year. But he noted that the administration is “getting ready” to prepare a budget for next year.
“When we finish this budget cycle and go into the new one,” he acknowledged, “we’ll have to look at the expected revenue.”
The mayor said that includes fees, as well as sales and property tax, and the other things that generate income for the town. He noted that the necessary fee income will be determined based on Oakland’s growth rate, which is “typically” at 3 or 4 percent.
“Do we have enough to continue with where we are?” he asked rhetorically. “Do we cut something, or do we raise taxes?”
When Troncone asked whether the loss of income would hurt the town in the long run, Goodman said “a couple of different philosophies” can be considered.
One is to continue to make it “attractive” for the builders and developers to construct the houses, which will bring in new residents and increase the sales and property tax revenue to offset the loss.
The other is to “keep it the way it is” and hope that the building and developing will not stop.
The mayor noted that it is important for Oakland to offer a “good product,” so the builders will want to continue to offer houses to the residents.
Calling it “a lot more than just fees,” he said it is the “whole process” of making sure that the town is as “clean” as possible, that its roads are maintained, and that businesses will want to move into the community.
Goodman said Oakland has not raised its water rates in years, but the cost to produce that water continues to increase.
Calling it kind of a “Catch-22” situation, Morris said it is like a “seesaw.” Although the board members want more “rooftops” and businesses, he said they do not want to raise the residents’
taxes.
“I don’t have a degree in finance,” he acknowledged. “But surely somebody can tell us what’s fair or not. Is there an outside source that can come and maybe give us guidance on what to do here?”
Goodman said there are lots of sources who would “love” to do that for a fee. But he wondered whether the board would want to spend money to see what that is.
“In my opinion, what was recommended and what was done in the first reading is fair and equitable,” he said. “But that’s what this board has to determine.”
Alderman Karl Chambless noted that John Smith, southwest regional president of First Citizens Bank, had previously presented some information he gathered on sewer tap fees from municipalities in Fayette and Tipton counties.
Chambless recalled that, although Piperton has a “nominal” $500 hookup fee, it also has a $1.75 property tax rate. He noted that Oakland’s tax rate is .2975 cents on each $100 of assessed valuation.
“We’re the lowest in the county,” he said. “So, we do charge a reasonably higher fee to developers.”
Town Recorder Tammie Hightower said the fees were established in 2004. They were reduced in 2010 for a one-year period, and they were supposed to revert back.
Noting that the board members were talking about two different funds, she said the property tax goes into the General Fund and the water/sewer tap fees into the Water Fund.
“You can’t intermingle these funds,” she said. “You have to make sure you cover your operating costs with your water and sewer.”
Hightower said an “expert” will be “comparing towns” for the rate study, which she hopes will be completed within three months.
“You all seem to be struggling with the accuracy of everybody giving you different things,” she concluded. “Let that expert tell you.”