by WES FERGUSON
With a wary eye on budget woes in Kyle, officials in Buda are mulling ways to pay for a string of costly water and wastewater improvements over the next five years.
A city-commissioned study recommends that Buda begin paying for the utility projects sooner rather than later. The study, by the consulting firm HDR Engineering, calls for five years of incremental rate increases for both residential and commercial customers.
Paying more now will soften the blow a few years down the road, said Buda Mayor Sarah Mangham.
“I would rather have very small rate increases than no increases at all for a few years, and then have to do double-digit increases,” Mangham said.
In neighbor city Kyle, Mangham noted, city officials are considering drastic rate hikes in the coming budget year. To help pay down municipal debt, a preliminary budget in Kyle is calling for a 30 percent increase in water rates and a 25 percent increase in wastewater rates.
By comparison, Buda’s consulting firm is suggesting a 3 percent hike beginning in October, followed by four years of 4 percent increases for residential customers and 5 percent increases for commercial customers.
The biggest water and wastewater expense looming in Buda’s near future is a $10 million project that would double the capacity of the city’s wastewater treatment plant. Other expenses in the city’s capital improvement plan call for nearly $8.8 million in debt to pay for water projects and an additional $10 million of debt for wastewater projects.
“That is really what is putting most of the increased pressure on water and wastewater rates,” Grady Reed, an HDR Engineering financial analyst, told Buda City Council members on July 19. “If you get through this period where you’re constructing lots of projects, at that point your expenses will become a little more stable” and rates can level off a bit.
Under Buda’s recommended rate increase, a residential customer who uses 5,000 gallons of water and 5,000 gallons of wastewater every month pays $68 under the current rate plan. If the city council approves the recommended increase, that customer would pay $3 more per month in the next fiscal year and $14 more per month in the 2016 fiscal year.
Commercial customers would be tapped a little harder.
A business that uses 50,000 gallons of water and 50,000 gallons of wastewater a month pays $482 under the current monthly rate plan. That customer’s bill would reach $492 in the next fiscal year and $603 per month by 2016 – 25 percent more than under the current rate.
The average residential customer in Buda uses 7,000 gallons of water a month, while the average commercial customer uses 36,000 gallons a month, according to Assistant City Manager Brian LaBorde.
Healthy population growth in Buda will offset some of the projected costs, Reed said. The city has been adding about 250 new water users every year.
In coming years, the city is expected to purchase less of its water from the increasingly sensitive Edwards Aquifer. Water from other sources, such as the Guadalupe-Blanco River Authority, is more expensive than water from the aquifer, and that will also put pressure on water rates, Reed said.
The city council will decide on new water and wastewater rates during the 2011-12 budget adoption process.
