Paradise Valley likely to pursue increase to wastewater fees

Paradise Valley Town Hall is at 6401 E. Lincoln Drive in the Town of Paradise Valley. (File photo)

Paradise Valley Town Hall is at 6401 E. Lincoln Drive in the Town of Paradise Valley. (File photo)

The Town of Paradise Valley appears likely to pursue a wastewater fee increase that could go into effect as soon as July.

Paradise Valley Town Council Thursday, April 14 hosted a study session on the results of a recent wastewater rate study conducted by Pat Walker Consulting where members of council gave the proverbial head nod to proceed with rate increase proposals to be presented at an April 28 public hearing.

Earlier this year the municipality announced its intentions to hold a public hearing to possibly adopt a resolution to impose a new or increased fees for wastewater utility services in an amount not to exceed 10 percent per year.

Town leaders say for some time now the municipality has been operating its sewer fund with a structural deficit as sewer tap growth has outgrown the current fee model while infrastructure needs and tenets of a new intergovernmental agreement with the city of Scottsdale must be met.

The Paradise Valley sewer system includes 70 miles of pipe servicing 2,098 parcels while 1,531 parcels are served with a septic service.

Paradise Valley first entered into an agreement with Scottsdale for sewer services in November 1998 at a rate of 820 gallons per day at a cost of $823,000 through fiscal year 2000, according to Paradise Valley Public Works Director Jim Shano.

In 2006, the municipality purchased an additional 146,479 gallons per day at a one time cost of $4 million, which gives the municipality a total capacity of 1,026,479 gallons per day.

While rates have not been released by the municipality, Mr. Shano says tenets of the proposed IGA would assess a 10 percent increase to Paradise Valley ratepayers compared to counterparts in Scottsdale.

Depending on where you live in the Town of Paradise Valley determines what entity handles the wastewater leaving your home. Paradise Valley residents have three options: Use a septic tank, use town services if within a certain geographical area, or sign up for the city of Phoenix sewer service.

Paradise Valley residents, who participate with the municipality sewer service, pay a minimum of $63.26 for the first 15,000 gallons of wastewater taken from the home. In addition, homeowners are charged .87 cents per 1,000 gallons above the monthly flow of 15,000 gallons.

Two options have come out of the wastewater rate study, which are:

  • An across-the-board increase of 8 percent for all ratepayers both residential and commercial;
  • A flat rate for residential with an 8 percent raise in fees for commercial rates.

There are 2,159 residential accounts connected to Paradise Valley sewer services while commercial accounts total 2,170, according to the wastewater study.

“We have currently posted on the website is our notice of intent to raise the rates,” said Paradise Valley Government Affairs Director Dawn Marie Buckland during the April 14 work study discussion.

“The council still has yet to make that policy decision. The simplest way to put it, is our revenues are not sufficient for operations.”

Kevin Burke

Kevin Burke

According to Town Manager Kevin Burke, the municipality’s sewer fund is — and has been over the last few years — operating at a structural deficit.

“The deficit is somewhat speculative on my part,” he said pointing out the issue was exacerbated when the Great Recession hit putting resort redevelopment on the municipal sidelines.

“The expectation was the town was growing by leaps and bounds and the impact fees would take care of that, no problem. Then, we stopped issuing taps and began to borrow from the General Fund.”

The main issue stems from debt service taken on by the town in 1998 but not its ratepayers. The added debt was needed to provide to fund capacity at the Scottsdale wastewater treatment plan, Mr. Burke says.

This fiscal year, Paradise Valley Town Council is scheduled to transfer $650,000 into the sewer fund to cover debt service of $9 million for bonds issued in 1998.

The current numbers illustrate the deficit, according to Ms. Walker.

“You need enough revenues to cover your expenses,” she said pointing out the purpose of the recent rate study.

“To evaluate the efficiency with anything associated with financial stability of the system. All of those things come into play — as more residents come in revenue goes up, but also the call for service.”

In her report, Ms. Walker says the Town of Paradise Valley sewer fund began this current fiscal year $122,000 in the hole.

“The picture did not look good,” she said pointing out annual customer growth hovers at 4.45 percent.

Paradise Valley Mayor Michael Collins acknowledges the sewer fund has been out of whack in recent years.

“This fund has been unbalanced for quite some time,” he said. “And, when we put that money back into the General Fund the extent of that deficit has now been exposed.”

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