Berkeley might raise utility rates
New study foresees $6M budget shortfall
By Andy Paras
MONCKS CORNER — Berkeley County Water and Sanitation Authority customers who paid about $59 for water and sewer this month can expect to start paying nearly $78 in July if the county council adopts a proposal to increase rates and fees.
A new study says the county must increase rates by 30 percent to cover a projected $6 million budget shortfall brought on by increased bond debt. A team of attorneys and financial advisers told council members Wednesday night that without the increase, the Water and Sanitation Authority eventually will burn up its reserves, risk its credit rating and damage its ability to borrow money.
"If you do nothing, you're probably going to be about $6 million short of actual cash you're going to need next year," said Daryll Parker, a partner with Utility Advisors Network, which did the rate study. "If you keep doing that, you're going to be out of money in two to three years."
Shocked councilmen looked around for someone to blame — themselves, their
attorneys and the past administration — for what officials say would be the first increase in 14 years.
"I have to believe that somebody was looking the other way or somebody wasn't doing their job to actually see this coming down the track," said Councilman Tim Callanan, who has been on council for seven months. "Where does the responsibility lie? I think the residents or ratepayers need to know what happened here."
The advisers diplomatically pointed to an almost perfect storm of circumstances, including turnover, an unexpected downturn in growth and poor communication. Supervisor Dan Davis said he believes the past administration was so intent on not raising rates that it "led to bad decisions."
Robbie Metts, the former water and sewer authority director, blames the current administration's overspending.
Berkeley County's financial problems started in July 2005, when the council issued $105,750,000 in bonds to pay for 58 water and sewer projects.
A provision of the bond issue stated that it was "reasonable" to believe the council would have to increase rates about 20 percent, effective July 1, 2007, the date the interest on the bonds first came due.
The rates were not increased. In 2006 the county issued more bonds, worth $36 million, using a variable rate loan. That risky loan was intended to save the county money, but it backfired early this year when the company insuring that variable rate fell victim to subprime mortgage exposure and was stripped of its credit rating.
As of Wednesday the county's monthly interest payments on the loan, called a synthetic fixed-rate loan, have increased from about $100,000 to $210,000.
The county is trying to switch to a fixed-rate loan to stop the bleeding, but its advisers said it's not possible until the county finds a way to make up for its $6 million total shortfall without using all of its $17.5 million reserve.
Officials said slowing growth and the sluggish housing market took another bite out of the county's budget because some of its debt payments were tied to impact fees.
Advisers said that it's likely the county wouldn't be in the mess today had they passed a 20 percent rate increase by July 2007.
Councilmen, five of whom were on council when the loan was approved, said Wednesday that they were never told of the 2005 bond provision, despite the resolution they passed in July 2005 that references proposed changes in the fees and rates.
Councilmen said they only remember Metts, the former authority director, publicly stating in June 2006 that it would be another five years before customers should expect a rate increase.
Davis said he asked to study the rates late last year because the county had promised not to raise rates until 2011.
Davis didn't mention Metts or former Supervisor Jim Rozier by name but said the motivation for some of the people in the past was to do anything possible to not raise taxes.
"In my opinion, we have become so paranoid about raising rates because of public opinion that we did anything we could do to avoid a rate increase," he said.
But Metts and Rozier on Thursday defended their stance that the county did not require a rate increase while they were in office. Metts, who was fired by Davis after Davis beat Rozier in the 2006 primary, said Thursday that the provision was only a suggestion, not a mandate, and that their administration would have cut costs before they allowed a rate increase.
"Had Jim and I still been in office, we still wouldn't be talking about a rate increase," Metts said.
The councilmen, who took about a 45-minute break mid-meeting Wednesday to eat a catered barbecue chicken dinner, voted to discuss a proposed ordinance raising rates at Monday's meeting.
Councilman Bill Crosby cast the only dissenting vote. He said later that the county should explore all of its options before raising rates.
Reach Andy Paras at 745-5891 or aparas@postandcourier.com.
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Comments
pickledweed (anonymous) says...
sure raise the rates. but our salaries stay the same. its not like we are getting better service, so why should we have to pay more? just another example of greedy american companies!
March 21, 2008 at 2:28 a.m. ( permalink | suggest removal )
mac0cm4 (anonymous) says...
It's not exactly a company...as much as it is a utility. If it was a company then you can take your business elsewhere, no? It's not like they're trying to make a profit, sell stock, expand into other counties. Eish.
March 21, 2008 at 6:29 a.m. ( permalink | suggest removal )
tj66 (anonymous) says...
why should they raise the rates?? what happens to the 5 dollars they charge if u dont pay by th 15th ?
March 21, 2008 at 6:35 a.m. ( permalink | suggest removal )
prettywoman2457 (anonymous) says...
Who paid for the catered bbq chicken dinner? Why should we pay for new construction costs for new subdivisions or mistakes that the council made or overspending? One thing I can say: "At least the water doesn't stink any more". I see resignations coming and good riddence to those responsible. Good advice Councilman Crosby!
March 21, 2008 at 7:18 a.m. ( permalink | suggest removal )
prosperous_hb (anonymous) says...
I'd rather move out to the country and have my own sewer rather than pay this kind of money. This is flat out ridiculous.
March 21, 2008 at 7:25 a.m. ( permalink | suggest removal )
BobH1962 (anonymous) says...
Fixed rate versus variable rate, seems like a pretty easy financial decision that County Council didn't understand so now the customers have to pay for their financial ignorance. Make County Council members pay the 6 MILLION dollars after all they are the ones responsible for the rate increase. No one asked me as a customer which I would prefer. Make these politicians ACCOUNTABLE for their mistake rather than passing it on to the customers.
March 21, 2008 at 7:50 a.m. ( permalink | suggest removal )
besttm (anonymous) says...
Okay, so I receive City of Goose Creek water and BCW&S sewer. My sewer is a flat rate that no matter how much or little water I use, I pay the same amount. I pay more to BCW&S than I have ever paid to any utility for water and sewer combined! Between gas prices rising, electricy costs rising, grocery costs rising, and now my sewer bill rising, it's getting harder and harder to make a good living and provide for one's family.
March 21, 2008 at 8:43 a.m. ( permalink | suggest removal )
realityck (anonymous) says...
The variable rate bond Rozier and his cronies agreed to is what set all of this in motion. To read that Metts said "Had Jim and I still been in ofice, we still wouldn't be talking about a rate increase," is typial 20-20 hindsight talk.
It was not too long ago that BCWSA tried to ram their "re-imaging" down our throats, had spent several thousand dollars to look into it before council finally stepped up and put an end to that nonsense. They have money to waste on re-imaging, now this. It seems to me that there is plenty of people past and present who need to get a clue that its OUR money they are playing with!
March 21, 2008 at 8:46 a.m. ( permalink | suggest removal )
drkralc (anonymous) says...
The incompetence of the Berkeley County Council is once again exposed. "Councilmen, five of whom were on council when the loan was approved, said Wednesday that they were never told of the 2005 bond provision, despite the resolution they passed in July 2005 that references proposed changes in the fees and rates." Which ones are responsible for this gross negligence. They need to be exposed and replaced in November. I know if I was this competent at my occupation I'd be unemployed.
March 21, 2008 at 8:47 a.m. ( permalink | suggest removal )
moonpie (anonymous) says...
Take it from the BCWSA's coffers. At last count they had $25 million laying around waiting on a hurricane?
"Had Jim and I still been in office, we still wouldn't be talking about a rate increase," Metts said.
MAN THAT'S A BOLD DESPERATE STATEMENT ISN'T IT?
March 21, 2008 at 8:48 a.m. ( permalink | suggest removal )
tmetts (anonymous) says...
Bring back the former administration! They tried to run the Authority like a business and ended 2006 with a surplus of approximately $20 million, without earning more revenue, more than enough to take care of the $6 million loan increase. Davis and his parasites are spending the surplus like as if they won the lottery. If our Councilman approve the increase, we need to clean them out like we did with the school board.
March 21, 2008 at 8:54 a.m. ( permalink | suggest removal )
realityck (anonymous) says...
"Bring back the former administration!", are you kidding me?! The former administratior is the one that started this whole mess with the variable rate bond, and you want to go back to the Boss Hog days of Jim Rozier?!- The same Jim Rozier who is under investigation by the State Ethics Commission - what's so terribly tragic is, I think he is serious.
I would agree a change is needed but to suggest we need the former administration is evidence of just how backwards some people's thinking is!
March 21, 2008 at 9:15 a.m. ( permalink | suggest removal )
LMA324 (anonymous) says...
"sure raise the rates. but our salaries stay the same." You couldn't have said it better pickledweed.
THE RICH GET RICHER AND THE POOR GET POORER.
March 21, 2008 at 9:34 a.m. ( permalink | suggest removal )
eyfigueroa (anonymous) says...
lma324: i have to respectfully disagree.
the rich get richer because the continue to do the things that made them rich to begin with.
the poor either stay poor or get poorer because they continue to do the things that made them poor to begin with.
there are always exceptions, however we are the masters of our destiny. if you don't get an education and/or a viable trade then you will continue to be the 45 year old (not you specifically LMA324) making $10/hr.
March 21, 2008 at 11:41 a.m. ( permalink | suggest removal )
faelady (anonymous) says...
besttm - even crazier - I live in by Goose Creek High and have Berkeley County Water and Charleston County Sewer (or vice versa - who the hey knows!) - Both of which I pay more than $30/mth for! When I lived within GC City limits I paid $10 - 11 to the city and more than $30 to the BCW&SA - why such a big difference and why do I have different water and sewer providers? Isn't that why it's called the Berkeley County Water AND Sewer Authority? Now they want to increase my rates - HOGWASH!
March 21, 2008 at 1:26 p.m. ( permalink | suggest removal )
ave (anonymous) says...
after doing some math, i found out that the proposed hike on my bill to $78 is actually a 56% increase. 56%!!!!!! not 30%.
and tell me this: they need money from hardworking citizens, yet still have the funds for a catered dinner.
THESE PEOPLE NEED TO BE HELD ACCOUNTABLE.
March 21, 2008 at 2:29 p.m. ( permalink | suggest removal )
amylrod (anonymous) says...
Have they taken into account that if they do increase rates by 30%, most families would cut their use of water from 6000-7000 to 4000 and below? With drought conditions as they are, and very little effort being done to conserve water, residents could someday see water rationing. BCW&SA won't be getting their precious 30% if this scenario happens.
The presumption that the housing market would have offset the debt by increased impact fees shows that they were counting their eggs before they hatched. The statement by Davis, "In my opinion, we have become so paranoid about raising rates because of public opinion that we did anything we could do to avoid a rate increase," just confirms that Mr. Davis is not a good administrator. There is always going to be grumbling when the consumer has to pay more, but if it had been presented two years ago, a 20% increase would not have raised our ire as a proposed 30% does now.
We should not have to pay for the mistakes of our current county government, although, a modest increase in water rates is inevitable. I, for one, am not concerned with how this affects their credit rating and ability to borrow money in the future. Berkeley County government should dispose of real property; sell off what they can, and explore all ideas from the general public in order to keep the residents from bearing the burden they have brought about.
March 21, 2008 at 6:01 p.m. ( permalink | suggest removal )
tmetts (anonymous) says...
Yes! I am very serious! But, don't worry he wouldn't come back if the county was sinking into the Atlantic! The County and every citizen in it is far better because of Jim's 16 years of leadership than at anytime before and, for now, afterwards. The Ethics Commission has long finished their investigation of Jim and found him as clean as a hounds' tooth! Davis is spending mega bucks to contract with various companies to tell him what he wants to hear and thus act accordingly. He is not business intelligent enough to make meaningful competent decisions. He contracted with a Human Resources firm who suggested that we raise the pay of some HR Professionals which he and Council believed and did it. Now he contracted with a firm who recommended a rate increase which he and Council want to approve. There is NO sound business reason(s) for either of these increases. I can speak confidently about HR because I am a retired 40 plus year civil service HR Professional.
March 21, 2008 at 9:13 p.m. ( permalink | suggest removal )
tmetts (anonymous) says...
Harpo, I hope you are smarter than to think that the variable rate loan is the reason that they want to raise the rates. If not, you too have been had by Davis' scare tactics. Obviously, there is so much for you to learn about the operation of the Berkeley County Water and Sanitation Authority!
March 22, 2008 at 4:02 p.m. ( permalink | suggest removal )
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