Crowd fills Riverchase Country Club to discuss potential sewer rate increases

It’s not every day that 150 people get together for 1½ hours to talk about sewage, but that’s exactly what happened tonight at the Riverchase Country Club.

A crowd filled most of the meeting room at the country club to hear Mayor Frank Brocato and his staff talk about potential rate increases for the sewer system that serves Riverchase, Southlake and numerous neighborhoods in the Inverness area.

The sewage system, which serves about 4,500 residential customers and 200 commercial customers, has not been taking in enough revenue to provide long-term support for the system’s future, city officials say.

Sewer rates have not increased since 2004 but need to be raised to keep the system functioning properly, Brocato said.

Revenues are strong enough to pay for current operations, pay off debt obligations and provide positive cash flows, but the sewer system has had negative retained earnings since 2008, Chief Financial Officer Melinda Lopez said.

City Administrator Allan Rice in March said city officials needed to decide if the City Council should raise rates itself, sell the system to another public utility that would raise rates or form a separate sewer board that could raise rates or sell to a private company that would do so.

Tonight, Mayor Frank Brocato reiterated that he emphatically opposes the sale of Hoover's sewer system to a private company or another public entity such as Jefferson County. “It would be a disaster,” he said.

He also doesn’t see the need for the formation of a separate sewer board to oversee the operation of the system. He wants the city to maintain control of it, he said.

However, city leaders must figure out how they can fund needed capital projects for the sewer system, Brocato said.

An engineering study by Goodwyn, Mills & Cawood indicates the Hoover sewer system has $7.23 million in capital projects needed in the next five years. A separate rate study done by utility consultant Jackson Thornton indicated Hoover’s sewer system needs about $6.5 million in revenue per year to get back on track and is currently $2.3 million short of that.

The reason for the shortage is that the current rate structure has not allowed the system to cover all of the depreciation costs on its assets and the city over the years has had to upgrade the two sewer plants and pipelines to meet stricter environmental regulations and reduce groundwater infiltration into the pipes, officials said.

The current average customer on the Hoover sewer system produces about 6,000 gallons of wastewater per month, which would cost a homeowner $36.66 per month, Lopez said.

To make up the $2.3 million shortfall, the average residential sewer bill would need to rise by $30.53 a month, Lopez said. However, Rice said that doesn’t mean everybody’s sewer bill would go up that much.

Most city officials are not in favor of a flat fee per residence but rather a sewer bill that factors in the amount of wastewater produced, Rice said. That way, a single person likely would pay much less than a household with five or seven people in it, he said.

The Hoover sewer system currently doesn’t charge a base fee. It’s all based on the amount of water each homeowner uses, Lopez said. One option city officials are considering would add a base fee for everyone to cover fixed costs such as pipes and then base the rest of the sewer bill on usage, Rice said.

Also, it’s possible that rate increases could be phased in over several years, but those are both decisions that would be made by the Hoover City Council, he said.

Former Hoover Councilman David Bradley, a Riverchase resident, said he doesn’t think city leaders should be so opposed to subsidizing the sewer system instead of making the customers make up all of the shortfall.

When Hoover annexed Riverchase in 1979 and took over the sewer system, the understanding was that the city would use tax revenues generated from the Riverchase Galleria and other commercial properties in Riverchase to help take care of the sewer system, Bradley said.

Similar thinking applied to the annexation of land in the Inverness area, which enabled the city to annex a lot of valuable commercial property along U.S. 280, he said. The city has always subsidized the system, he said.

Rice said a lot of residents in other parts of Hoover might not think it’s fair for the city to help pay for sewer costs in Riverchase, Southlake and Inverness, but not absorb sewer costs in other parts of the city.

Most of the city is on the Jefferson County sewer system, and people in the Greystone area are on the private sewer system operated by Southwest Water. The city pays nothing toward sewer costs in those areas.

Several residents said they think it’s understandable that rates need to go up.

“It’s been 14 years. That’s a reasonable thing,” Riverchase resident Dave Naefe said.

He’s glad to see the mayor setting up a meeting like this to explain the situation directly to the people most affected, he said. “So many times, rate increases are done behind closed doors.”

He and many other people also are very glad to see the mayor is not in favor of selling the system to a private company or another public entity or setting up a separate sewer board to run the system, he said. The people elected the mayor and council to deal with these kinds of things, he said.

One resident asked why rates were not raised the last time the city borrowed money for sewer system upgrades, and Rice said he didn’t know and couldn’t speak for previous city officials.

Some residents said the most important thing to them is that the system stay in working order.

“I trust the mayor and City Council to make good decisions,” Lynne Cooper said. She’s fine with a rate increase.

Guy Locker, a Bluff Park resident who was at the meeting and who works as an engineer in the water and sewer industry, said he’s constantly amazed at what little value place on water and sewer service. The potential rate increase being discussed is the equivalent of about five cups of Starbucks coffee a month, he said.

It may be close to doubling the current cost, but “it’s still pretty cheap,” he said.

One resident suggested the city hold a public hearing on the matter, and Brocato said he would talk with City Council President Gene Smith about setting one up.

In the meantime, another public meeting is scheduled for July 31 from 6 to 8 p.m. at Spain Park High School.