SAN BENITO — The review of the city’s water rates aims at helping to pay off long-term debt while offsetting shortfalls in the utility system.
During a special meeting Tuesday, city commissioners are set to meet in closed session with City Attorney Mark Sossi to discuss developing plans around a consultant’s recommendation for a “modest” water rate hike carried out over a five-year period.
The meeting’s agenda calls for possible action after the meeting, but Mayor Rick Guerra says that won’t happen.
“It’s not for voting,” he said Monday, referring to the meeting. “It’s to throw some ideas out there. All the commissioners should be giving up some ideas. We’re trying to look at everything. Hopefully, we can come up with a good idea to not hurt people and hopefully benefit them.”
Reviewing all water rates
As they review the city’s water rates, commissioners are focusing on rates set for residential, commercial and multi-family units such as apartment complexes, Commissioner Rene Garcia said.
“We have to make sure the configuration is fair to everyone so there may be a need to adjust different rates,” he said. “We’re definitely going to be crunching numbers to see what’s the best plan. We’re going to find out what is the best option for the residents — for the city.”
Mulling budget cuts
Like Guerra, Commissioner Pete Galvan pointed to possible budget cuts as commissioners consider CAPEX Consulting Group’s recommendation for what consultant Jeff Snowden described as a “modest” water rate hike.
As part of their discussions, commissioners are focusing on taking steps to help to pay off a long-term debt that stood at $24.7 million during last year’s annual financial audit along with offsetting water production shortfalls as high as $800,000.
“It’s a debt,” Guerra said. “Sometimes you’ve got to cut costs to make ends meet. Can we cut costs?”
‘Subsidizing the system’
For about three years, City Manager Manuel De La Rosa has warned commissioners they were facing a possible water rate hike.
Then in mid 2020, he proposed the water rate study after warning the water production fund had run an $800,000 shortfall.
Now, Garcia is calling for a “self-sustaining system.”
Later in 2020, Don Gonzalez, the city’s financial advisor with Estrada Hinojosa and Company in San Antonio, recommended officials consider a water rate hike to help pay off debt stemming from a $9 million bond issue largely aimed at overhauling the sewer system to comply with a 2012 Texas Commission on Environmental Quality order requiring the city to meet a March 2023 deadline or face severe fines and corrective action.
Meanwhile, Galvan said he is considering “subsidizing the system.”
“I want to look at making budget cuts from different departments,” he said.
Galvan also said he is considering dipping into the city’s cash reserve fund while taking some money from the city’s $9 million share of the American Rescue Plan Act.
“Everyone’s got to put their solutions on the table and weigh our options,” he said. “We need to do what’s fair. We need to make the best educated decision we can. That’s why we brought on the consultant. It’s not a decision we’re taking lightly. It’s weighing heavy on all of us.”
City’s last rate hike
The city’s last water rate hike came in 2009, Galvan said.
Then in 2010, a previous administration apparently failed to carry out Snowden’s recommendation calling on officials to steadily increase the water rate during a five-year period through 2014, he said.
At the time, Snowden was recommending a hike that would boost customers’ utility bills by 1- to 3-percent to offset a $1.6 million shortfall in the utility department.
“We haven’t had a good increase in a couple of years so we’ve got to do something,” Guerra said. “We need to look at it and get it taken care of. Hopefully, we won’t hurt anyone.”
Background
From 2004 to 2009, the city steadily increased its water rates to help pay a $32 million debt that stemmed from construction of a $17.7 million water plant opened in 2009, a $13 million sewer plant, a $1.6 million water tower and other water and sewer improvements.
During that time, previous administrations took on the projects after decades of neglect that left the city with archaic water and sewer plants.
Now, San Benito’s base residential water rate stands at $20.59 for up to 2,000 gallons for homes with 5/8 inch meters while its sewer rate is $29.09 for up to 2,000 gallons.
