By Lynne Hendricks
AMESBURY — On the heels of announcing its intention to raise water and sewer rates in the new year, the town is anticipating a second increase of approximately 30 to 40 percent will be necessary sometime next year in order to afford repayment on the note for the new water treatment plant.
This week, the town announced a rate hike of about $72 annually for residents fitting the "typical" usage profile, though a family of four might triple that amount. But town leaders are estimating that another increase of $172 to $230 annually for typical usage will be needed within six months after the first increase, Department of Public Works director Rob Desmarais said.
"We met about it already," said Desmarais of the expected second rate increase, which he said must cover a debt service payment totalling as much as $1 million annually for a period of 20 years.
Construction on the treatment plant is slated to begin Jan. 1 with the first of the bond payments coming due in spring 2010, so that means the town must have money in the town coffers by that time to start repaying on the debt.
Desmarais and Mayor Thatcher Kezer said the first rate hike is meant to lessen the blow of the second anticipated hike, so that residents don't feel the effects of the peak in the bond repayment schedule.
"If we raised the rate now, we can use that to offset that peak," Desmarais said. "In year one, we might pay $1 million, and in year two we might pay $750,000."
The town's first proposed rate increase seeks to bring the typical $576 annual water and sewer bill to about $648 for 22,400 gallons of water used. For the average family of four that uses closer to three times that amount of water, the increase rises proportionally. The proposed water usage increases take the current cost of $4.50 per 100 cubic feet to $5.20 and bring sewer costs up from a rate of $5.05 to $5.60.
While the initial increase is aimed at relieving an annual $150,000 maintenance shortfall within the Water and Sewer Department, both Kezer and Desmarais are hoping the proposed first increase will result in a small surplus in the department to lessen the blow when the water treatment facility bond comes due.
"What we don't want to do is raise the rate 40 percent (immediately)," Desmarais said. "Part of the advantage of raising the rate now is banking that money."
The 25-year-old water plant was slated for rebuild in 2006, having surpassed its useful life span of 20 years. A total of $20 million in bond money for the project was approved by the Municipal Council in 2008, with $15 million being appropriated for rebuilding the plant and $5 million slated toward updating the plant's distribution network. Amesbury is expected to be forgiven of approximately 16.5 percent of the total debt through the American Recovery and Reinvestment Act.
