Slim crowd shows up for second Hoover meeting on potential sewer rate increases

Only about 15 people showed up tonight for a second public meeting about a potential sewer rate increase in Hoover — much different than the 150 or so people who packed the Riverchase Country Club last month.

The low turnout at Jefferson State Community College’s Shelby-Hoover campus could have been due to the rainy weather, but one resident said people may now simply understand the necessity of a sewer rate increase after 14 years without one.

“When you understand what they’re saying, it’s a no-brainer,” said Sarah Moseley, who lives in The Sanctuary at Caldwell Crossings off Caldwell Mill Road.

Hoover’s sewer system, which serves about 4,500 residential customers and 200 commercial customers in and around the Riverchase, Inverness and Southlake communities, 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 more revenue is needed to keep the system functioning properly, Chief Financial Officer Melinda Lopez told those in attendance tonight.

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, Lopez said.

City leaders must figure out how they can fund needed capital projects for the sewer system, Mayor Frank 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 current average residential 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, City Administrator Allan 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 would likely 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.

Mayor Frank Brocato tonight emphasized that no decisions have been made. City leaders are simply explaining the situation to residents and getting feedback, he said.

Mary Hayes, another resident of The Sanctuary at Caldwell Crossings, tonight said that if rates haven’t been raised in 14 years and costs have increased, “something’s going to have to give at some point.”

Dan Murchison, another resident of that community, said nobody wants a rate increase, but it looks like they have to have it. He said he's just glad to see Hoover doing something about it before it gets into a worse situation like Jefferson County had.

Lynn Phillips, president of the Southlake Residential Association and a civil engineer and licensed wastewater operator who has been in the utility business 35 years, said he believes some level of rate increase is needed, but he recommended the city consider using some property tax money to help supplement the money paid directly by sewer customers.

When the Riverchase and Inverness communities were annexed, former city leaders made commitments for the city to help pay for sewer operations, he said. The thinking was that adding the Riverchase and Inverness communities into Hoover would serve as a economic catalyst for the city and help increase the city’s property and sales taxes, he said.

Rice said there probably are many opinions about whether the city should subsidize the sewer system with other city revenues, but he would guess that a majority of Hoover residents who now are paying much higher sewer rates on the Jefferson County system would not be in favor of the city giving a subsidy to only those 4,500 people on the city sewer system. That’s especially considering that some of the people on the Hoover sewer system live in unincorporated Shelby County, he said.

Phillips said it may be a hard sell, but using property taxes to help pay for sewer systems is common in some parts of the United States.

Phillips also recommended that city leaders develop a strategic plan for the sewer system and long-range financial plan that goes beyond five years.

Brocato said the final decision lies with the Hoover City Council, and he expects the council to have a public hearing and address the matter later this year.

One key piece of feedback he has heard so far is that people want the city to take action and not linger on this decision too long.

“We’re committed to moving rapidly on this,” he said. “Hopefully by Christmas we can have this all ironed out.”

Moseley said she appreciates the mayor and his staff holding the public meetings to keep residents informed of what’s happening. She’s glad to see the mayor, City Council and staff looking ahead to the future, she said. “I think we’re all very indebted to you.”