Corry City Manager Jason Biondi, at Thursday’s City Council meeting, proposed an 11-percent increase to 2020 water rates to begin paying back a low-interest loan for a two-phase water project to update the city's aging water infrastructure. 

The first date of repayment is June 2020.

The water project started in 2018 with phase one, which is closing out soon, and work on phase two will be starting in the spring of 2020.

PENNVEST is the Pennsylvania Infrastructure Investment Authority that helps fund sewer, storm water and drinking water projects through grants and low cost loans to communities in Pennsylvania.

The city of Corry was approved for an $11.2 million low-interest loan from PENNVEST in June 2017.

The second phase, which has been recently approved, incurred a loan for $6.59 million.

"We have been slowly increasing over the years as we've led into this program, to better position ourselves for paying this debt service," Biondi said.

In the city’s application for a loan for phase one from PENNVEST, an increase of 12 percent for two years in a row was laid out to cover costs to repay the PENNVEST loan. 

To avoid such a steep increase all at once, rates were increased around 5 percent over a couple of years to prepare for the year 2020 — the first year on the PENNVEST loan requiring the 12 percent increase.

The latest projections, which includes phase two and phase one together, shows a 15 percent increase on water rates is needed to repay the debt, Biondi said.

In signing an agreement for a low-interest loan with PENNVEST, part of the agreement is that repayment is guaranteed, no matter what the city has to do to repay it, Biondi said.

Biondi proposed an 11 percent increase in 2020 water rates for the average customer.

"That would take your average customer who currently pays $26.90 to $29.90," Biondi said.

Those figures are taking into account that the average customer uses five units of water, Biondi said.

Minimums would go from $11.10 to $13.12. 

Minimum is a base rate plus the first unit of water.

Another proposal is to pass an ordinance to change water billing measurements from units and cubic feet to gallons in order to make measurements more clear for everyone. 

Confusion arises because the city bills in units, but measurements are printed on bills in cubic feet, Biondi said. 

New meters installed in residences as part of the water project show measurements in gallons.

One hundred cubic feet equals one unit, which is 750 gallons.

Biondi’s proposal is not a final decision. Before any ordinance can be put into effect, it must be read twice at a public City Council meeting.  

Biondi explained that going forward, the city is looking at three years of substantial increases and anything following would be increases from maintenance costs and inflation.

If Council agrees to go forward with these proposals, the ordinances will be read during the two meetings scheduled for December, which are Dec. 2 and 16.

(1) comment

pjpw2320

"We have been slowly increasing over the years as we've led into this program, to better position ourselves for paying this debt service," Biondi said.







"In the city’s application for a loan for phase one from PENNVEST, an increase of 12 percent for two years in a row was laid out to cover costs to repay the PENNVEST loan.







To avoid such a steep increase all at once, rates were increased around 5 percent over a couple of years to prepare for the year 2020 — the first year on the PENNVEST loan requiring the 12 percent increase."







Comment:



And yet here we are with an 11% increase, just 1 percentage point below the projections that were originally calculated and which were supposed to have been alleviated by smaller increases in the years leading up to the Project! Those original projections are linked to here.







https://drive.google.com/file/d/1qGQi6gNCg-iOzJwTEe3TPXP8Eq8tVn2x/view?usp=sharing







"The latest projections, which includes phase two and phase one together, shows a 15 percent increase on water rates is needed to repay the debt, Biondi said."







Comment:



The original projections provided to PENNVEST required a cumulative increase over the life of the Phase 1 water loan (2018 - 2041) of 69% as can be seen from the above link. And that does not even take into account the compounding effect of increase on increase over that time, the effect of which amounts to a 94.9% increase over the 2018 base.







To be fair, this does represent just a 2.94% average annual increase over that time.







Now that was only for Phase One. So what period is the 15 percent increase over that Biondi is talking about and which he states is for both Phases?







"Confusion arises because the city bills in units, but measurements are printed on bills in cubic feet, Biondi said."







"One hundred cubic feet equals one unit, which is 750 gallons."







Comment:



So what happens when someone uses 3,150 gallons compared to someone who uses 3,850 gallons? How much is each billed?







Keeping in mind that 3,000 gallons is 4 units, is one billed 4 units and the other 5 units or are they both billed 5 units? Under unit billing, is it whole units rounded up or down or are decimal units used, which would be 4.2 and 5.13 units respectively for billing?


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