SAN BENITO — For years, homeowners in San Benito have been paying higher water rates than businesses.
Now, commissioners are planning to tweak rates while considering dipping into the city’s $9 million share of the American Rescue Plan Act to help offset the burden of any boost to some of the Rio Grande Valley’s highest water rates.
Earlier this week, commissioners met in closed session with City Attorney Mark Sossi to review a consultant’s recommendation for a “modest” rate hike spread out across a five-year period.
After 45 minutes behind closed doors Tuesday, commissioners took no action.
For about two weeks, commissioners have been reviewing the city’s water rates, focusing on trimming debt while offsetting water production fund shortfalls as high as $800,000.
“We looked at commercial users, residential users and multi-family,” Commissioner Pete Galvan said Wednesday. “Commercial’s getting a better deal on water rates than residential. We want to make sure everybody’s paying their share.”
So commissioners are considering adjusting rates to make them fair across town.
“We have to see that the water system configuration is fair and equitable to the community — both residential and commercial,” Commissioner Rene Garcia said.
Dipping into the American Rescue Plan account
Commissioners are considering pulling as much as $3 million from the city’s American Rescue Plan account “if necessary,” Garcia said, adding, “Hopefully, it won’t be that much.”
“We want to subsidize as much of the rate increase, if any, with ARPA funds,” Galvan said. “We don’t want the residents to take the brunt of the increase, if any. Our intention is not to burden residential more than they have been. We want to make sure they all pay their fair share.”
Trimming long-term debt
Meanwhile, commissioners are focusing on helping to pay off long-term debt, Garcia said,
“We’re going to address the debt because we have to,” he said. “This debt was incurred years back. I’m looking at the debt we have to pay in the next few years.”
The city’s long-term debt stood at $24.7 million during last year’s annual financial audit.
The year before, commissioners added to the debt when they borrowed $9 million through the sale of certificates of obligation.
At the time, 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 the $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.
Earlier that year, City Manager Manuel De La Rosa proposed commissioners call for a water rate study after warning them the water production run had run an $800,000 shortfall.
“We have to make sure the water system is self-sustaining and pays for itself,” Garcia said. “I don’t think the commission has addressed that in the past.”
Meanwhile, Garcia said commissioners are not planning budget cuts.
“I never thought of trimming the budget or cutting back on services,” he said. “We’re not going to do that.”
Water rate study
Earlier this month, commissioners began reviewing CAPEX Consulting Group’s water rate study, which Frisco-based consultant Jeff Snowden said called for a “modest” water rate hike carried out across a five-year period.
It’s the second time Snowden’s recommended a water rate hike in about 12 years.
The city’s last rate hike came in 2009, Galvan said.
A year later, a previous administration apparently failed to carry out Snowden’s recommendation calling on officials to steadily increase rates 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.
Background
From 2004 to 2009, the city steadily increased its water rates to help pay a $32 million debt stemming 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 upgrades.
During that time, previous administrations took on the projects after decades of neglect had 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.
