Hoover council raises sewer rates for Inverness, Riverchase, Southlake

The Hoover City Council on Monday night voted 5-1 to raise sewer rates for people who use the city’s sewer system, despite objections from some residents.

Hoover’s sewer system serves about 4,500 residential and 200 commercial customers in the Riverchase, Inverness and Southlake communities.

The action taken by the council Monday night over the next three years will raise sewer rates by 71% for the average residential customer and 15% for the average commercial customer to make up revenue shortfalls, according to information provided by city officials.

City officials decided to implement the rate increase over three years so sewer customers won’t be hit with the full increase at one time.

The result is that the monthly sewer bill for the average residential customer will rise from $36.64  to $45.39 in the first year, $54.07 in the second year and $62.82 for the third year, according to numbers provided by the city.

The monthly bill for the average commercial customer will rise from $904.23 to $949.24 the first year, $995.93 the second year and $1,040,94 the third year.

The problem is that the sewer system is not taking in enough revenue to cover its costs, which include regular operation and maintenance costs, debt service and capital projects needed to keep the system operational and meet newer water quality regulations set by the Environmental Protection Agency and the Alabama Department of Environmental Management, Hoover City Administrator Allan Rice said.

The city hasn’t raised its sewer rates since 2004 — 17 years ago, but the cost of running the system has increased, especially with significantly more stringent environmental regulations being enacted, said Jim Marshall, a consultant with the Jackson Thornton consulting firm.

As a result, the city is only taking in enough money to cover 60% of the costs for serving residential customers, who make up 96% of the customer base and account for at least half the volume of the sewer system, and 86% of the cost for serving commercial customers, Marshall said.

That results in a $1.8 million shortfall, of which $1.45 million comes from the residential side of the service and $355,000 of which comes from the commercial side, he said.

As of right now, the shortfall for fiscal 2021 is $2.2 million, Chief Financial and Information Officer Tina Bolt said.

The total increase needed to make up a $1.8 million annual shortfall is $26.12 a month for the average residential customer and $137.54 a month for the average commercial customer, Marshall said. He recommended spreading that increase over three years to ease the burden on customers.

Marshall also recommended the city change its rate structure to start charging a base fee to cover fixed costs and a usage fee that varies depending on the customer’s usage. Most sewer systems charge a base fee, he said.

Rice said the city doesn’t relish the idea of increasing sewer fees and this is not intended to make a profit or support any other part of city government. Not everything in government pays for itself, but certainly things like utility services should charge enough in fees to cover their costs, he said.

“We’re no longer bringing in the money on our rates that it costs to operate the system, and thus we have zero retained earnings to repair and maintain the system,” he said.

The Hoover sewer system has a looming list of capital projects that are expected to cost $9.6 million, and “at this point in time, we don’t have any way to pay for that,” Rice said.

Hoover Mayor Frank Brocato said residents and businesses that use the Hoover sewer system expect it to be maintained in a first-class way. If rates aren’t raised, that money would have to come out of the general fund, taking money away from the city’s ability to provide fire, police and other municipal services, Brocato said.

Councilman Casey Middlebrooks said he doesn’t think anyone wants to raise rates, but if the system is to remain sustainable, rates must be raised.

Brocato brought the matter to the public’s attention in community meetings in 2018, but no action to raise rates or approve an alternate means to fund the system has taken place until now.

Several residents on Monday night asked the council to delay action on this matter a little longer to give residents more time to consider the rate increases and provide input. Most residents didn’t hear anything about the proposal until this past weekend, and some of them didn’t find out until mid-day Monday, they said.

Lynn Phillips, a retired environmental engineer who is president of the Southlake Residential Association, said there are a lot of professionals who live in these communities who would like more time to review the information further and provide input.

Jackie Dillard, another Southlake resident, said the mayor promised residents in 2018 they would have an opportunity to see any proposed rate increases before the council took action, and she said this wasn’t enough time.

Lydia White, who moved to Riverchase nine months ago from Atlanta, said she’s already paying three times what she paid in Georgia and said this new increase is ridiculous.

Riverchase resident David Bradley, a former Hoover councilman, said the sewer system was never intended to be self-supporting. The city of Hoover is the one that wanted to expand the two sewer plants in Riverchase and Inverness, with the understanding that increased sales tax revenues would help pay for the system, he said.

Larry Densmore, another Riverchase resident, said the city’s general fund should help support the system.

Councilman Derrick Murphy was the only councilman who voted against the sewer rate increases. He asked the council to consider tabling the matter to give residents more time to review the information and provide input, but the rest of the council members present voted to move ahead with the increases.

Council President John Lyda said people have known long before 2018 that the Hoover sewer system was not taking in enough revenue to be self-sufficient.

“It’s really no surprise to the city that we’ve come to the point where we have to make some changes to keep it self-sufficient,” Lyda said. “We had a public hearing tonight where people expressed their opinions, and the council listened to those and made a decision that was best for the city.”

Phillips said he was surprised the council would ignore the request of residents for more time to review the matter.

These council members have no interest in the eastern part of Hoover,” Phillips said. “We’re expendable.”

Councilman Steve McClinton said about 90% of Hoover residents are not on the Hoover sewer system and don’t think the city’s general fund should subsidize a sewer system that hasn’t raised its rates in 17 years.

“We got elected for a reason — to be good stewards of the city,” McClinton said. “We’re trying to fix the problem. … Someone has to make a tough decision, and we just made it. It may not be popular, but it’s right.”