The City of Hutto took another step Thurs. night to balance the Utility Fund, which has been funding a new wastewater treatment plant since 2014 without effective revenue measures to cover the debt payments.
“The Utility Fund has been a struggle for the City for years. The 2014 action to build a new sewer plant without implementing effective revenue measures in the form of rate restructuring started the erosion of the fund’s reserves,” said Odis Jones, city manager. “That erosion was only exacerbated by the former 2007 Heart of Texas Water Contract, which called for water rate spikes.”
The sewer rate increase is needed in order to maintain utility fund reserve requirements, invest in new infrastructure and meet debt service obligations, such as the 2014 Hutto South Waste Water Treatment Plant. The amount borrowed to construct the plant was more than $24 million. The related annual debt service payment is $1.14 million.
In an effort to ensure the solvency and financial stability of the City, the city manager explained that the City has instituted several purposeful measures to correct the problem.
First, the City raised rates in June 2017 to begin addressing the underlying insolvency in the Utility Fund.
Second, three months ago the City moved to purchase Heart of Texas water assets. The purchase returned cost controls to the City and saves the citizens more than $150 million over the 40-year term of the previous agreement while avoiding the future water rate spikes that were called for in the original 2007 agreement.
Third, at the Jan. 4 Council Meeting, the Hutto City Council approved an increase in the sewer rates by 25% (approx. $15 per user per month) to ensure that the City can meet its 2018 debt requirements incurred by the construction of the 2014 sewer plant.
Finally, the City leadership has begun a development impact fee analysis that will culminate in March 2018 to ensure that private development occurring in Hutto will pay for itself, rather than shifting that burden to the existing residents and/or rate payers.
“I am confident that these measures taken all together will allow the City to correct the expense imbalance which began in 2014 when the new sewer plant expenses were encumbered without offsetting revenues,” added Jones.