Customers receiving water through the Albany water system will likely see a somewhat sizeable increase in water bills for city and county customers this fall following action taken by Albany City Council last week.

The council met in call session last Wednesday afternoon with David Bowles of Monarch Engineers for follow up discussions on the city’s water and sewer utilities and rates. All members were present for the half hour meeting.

Following information presented by the engineer and several questions being asked and scenarios discussed, the council voted 5-1 to increase rates by 25 percent across the board.

The action was taken and approved on first reading in response to the dire financial situation the water department is facing, having lost revenue annually over the past years, as well as suffering up to a 40 percent “water loss” which is costing the city money.

The city apparently had the option to do nothing and face losing grant revenue to do needed upgrades, raise the rate by 15 percent now and 10 percent in about three years, or the full 25 percent at one time, which the council chose.

The motion to increase the rates was made by councilman Reed Sloan, seconded by councilman Gene Ferrill and also saw council members Tonya Thrasher, Steve Lawson and Rene York voting in favor. Councilman Tony Delk cast the only no vote.

The council had discussed the water system’s woes, as well as the problems with no water or low pressure in the Duvall Valley and Bald Rock areas at their previous regular meeting a week earlier.

The city has obtained a $3 million, 100 percent grant from AML (Department of Abandoned Mine Lands) to be used to make the Duvall Valley and Bald Rock area repairs, but will need about an additional $300,000 to complete, according to Bowles.

However, the additional funding will likely come from a $2.5 million KIA (Kentucky Infrastructure Grant) which has a low interest rate of one-half of a percent over a 30 year period.

Bowles noted the KIA funds could only be used in relation to the Duvall Valley water improvement project, such as repairs to the existing tank, new meters or any other project related to that work.

He said the city was about a 99 percent lock for the latter $2.5 million grant, since the $3 million AML grant has been approved.

The annual principal and interest payments on the KIA grant is estimated at $102,300.

Another KIA half-percent interest loan the city is in desperate need of is also possible in the amount of $2,680,000 for water plant improvements. This would also be on a 30 year basis with annual principal and interest of $109,700.

Finally, an important, but less crucial grant/loan of $2,109,000 could be applied for through USDA for a Bypass Water Line project. That, if received, would be over a 38 year period with a $632,0000 grant and $1,477,000 loan for 38 years at a two percent rate. The annual principal and interest would be $55,900.

According to figures Bowles presented from the city’s most recent audit, the water department showed an almost $98,000 shortfall in revenue and is estimated to exceed that amount in calendar year 2020. (A graph of estimates can be found elsewhere.)

During the discussion, Bowles recommended to the council a rate increase across the board.

Councilman Delk noted that if water rates went up, then sewer rates would also increase. The estimated additional cost on the sewer would be around $1.50 per month.

Delk also noted his main concern was people in the city and county that were on fixed income. He further added that one business in the county, with the hike, could see their bill go up by $15,000 a month.

It was also noted that people in Cumberland County who purchase water from the local system would also see the 25 percent increase.

“I’m not saying they (rates) should not be raised, but that’s a big chunk at one time,” Delk added.

Councilwoman Thrasher noted there was no money to operate on right now, considering the cost to operate the water plant and other factors.

It was also noted during the meeting that part of the $2.5 million KIA grant could go toward a meter exchange program, a project the city has been trying to implement for some time.

Delk also said that although we need water on the bypass, water to people in the Duvall Valley area is the top priority right now.

Bowles told the council, “the city is bleeding. If we don’t do something now, the (debt) is just going to rise more.”

Mayor Lyle Pierce said the bottom line is, if there is no revenue to pay back the loans, we will not get any grant funding.

Councilman Sloan then asked Bowles, “What would you do?” Bowles replied, “I would take the beating all at once and get it over with and start generating cash to pay bills.”

Prior to the vote on first reading of the increase, the council also briefly discussed the bad shape of the sewer plant equipment and need for a fire truck.

The increase would be based on the average current monthly water bill, with the lowest average users increase being estimated at least $5.80 per month in the city (just over $7 counting sewer) and lowest county user rates at around $7.67 per month, but higher for customers who use more water on a monthly basis.

Prior to the meeting being adjourned, the mayor said, “If we don’t increase rates, all city and county customers will be like Duvall Valley currently is.”

At the August regular meeting, it was estimated that work on the Duvall Valley and Bald Rock area water system repair project would likely begin next spring and should be completed by the end of next summer.

Second reading of the water rate ordinance is expected to take place at the council’s next regular meeting scheduled for Tuesday, September 1, at 5 p.m. at City Hall.