Payson council approves 10 percent water hike

By Matt Brabb
Connection Editor

Members of the Payson Town Council voted unanimously on Thursday to increase water rates by 10 percent, and were warned that additional increases in the near future will likely be necessary as well.

Dan Jackson, of Economists.com, worked with representatives from the Payson Water Department to study and report out on what adjustments to rates would be necessary to keep the department from losing money every year, and to provide funds for capital improvements.

During the current fiscal year the water department is expected to spend some $1.1 million more than it will take in, and that figure does not include the $1 million dollar loan the water department made to the town’s general fund.

“As a general rule, a utility can have low rates or high quality service, but not both,” said Jackson.

He noted that Payson had not had a rate increase since 2003, and that the average utility had been increasing rates five to six percent a year over that time frame. He further claimed that most of the town’s neighbors had either increased their rates in recent years or were planning to do so in the near future.

Jackson said that geographic location was a factor in the high cost of water in Rim Country.

“This area is water-challenged; water is hard to come by here,” he said. “(The Rim Country) has some of the most expensive water costs in the state.”

Jackson told the council that at present, Payson residents pay an average price for water compared with other communities in Central Arizona. He noted that residents in towns such as Holbrook, Prescott Valley, Prescott, Sedona, Chino Valley, and Show Low are paying less than Payson, but that those in Williams, Cottonwood, Pine, Strawberry, Clarkdale, and Camp Verde are paying more.

According to Jackson, the average household in Payson uses approximately 5,000 gallons per month, which is roughly half the national average. The rate increase passed by the council will increase the cost of 5000 gallons a month from $27.60 to $30.50.

Jackson and town staff advised the council to implement a plan that included a gradual series of rate hikes over the next several years. The plan will require the water department to use reserve funds to meet obligations in 2011, and will phase in capital outlays and payments on debt in 2012 and beyond.

A sample long-term rate plan was shown to the council that included rate increases ranging from $1.18 to $2.90 a month, to be adopted every year for the next six years.

Mayor Kenny Evans stressed the fact that future increases were not set in stone, and that the plan as presented to the council assumes a continued lack of impact fees from new construction and the extension of the bleak economic environment the town has been mired in for the past 18 months.

Resident Leon Keddington spoke against the proposed rate increase.

“Rates should be established that pay for operations and maintenance, and debt service," he said. "We should wait until the five to 10 year look ahead study (due to come out later this summer) is completed. That is the time we should figure out what to do with rates.”

“The public needs to be able to look into this and see what is behind it,” he added.

Payson Water Department manager Buzz Walker also addressed the council to explain why the rate hike was needed.

“The adjustment will keep us in a healthy financial position to replace parts that are up to 60 years old,” he said.

Walker displayed a map of the town to the council that showed that a significant portion of the town is being served by water mains that are close to, or have exceeded their expected life. A large section in the northeast of the community was highlighted.

He warned the council not to wait until systems fail to raise rates, and added that improvement to the town’s water infrastructure was necessary to prepare for the arrival of CC Cragin water in 2015.

In other news, the council voted to repeal the moratorium that limited the annual number of residential building permits issued by the town. Councilor Ed Blair was the only dissenting vote in a 6-1 decision.

The council also voted to repeal the prohibition on electric fences within town limits. Several local gardening enthusiasts had spoken to the council about the damage done to their plants that they believe can be prevented with electric fences.

Finally, despite some opposition from representatives from local hotels and motels, the council voted to increase the town’s “bed tax” from three to five percent. The increase will be effective after August 1.