By a 3 to 1 margin, with Alderman Cecil Anderson casting the lone dissenting vote, the Oneida City Council voted Thursday night to allow the Oneida Water and Wastewater Department to borrow $300,000. The money, stated city auditor Dennis Jeffers, was needed to alleviate the Department’s short term cash flow problem. “Currently, (the department) is behind by about $115,000,” stated Jeffers. The shortfall was largely attributed to a dramatic increase in operational expenses. Over the last six to eight months, the department has reportedly experience a sharp rise in the cost of the chemicals used to treat raw water. The rise in other utility costs was also cited as a factor.
In the absence of the note, Jeffers indicated the water department would be heavily reliant on credit policies of its creditors. “If (the water department) doesn’t borrow it, they are going to ride their creditors,” he remarked.
The Town agreed last month to tack on a $4.50 surcharge to all water district customers, a measure designed to increase revenues and satisfy grant assurances made to other state and federal agencies. While the increase will net about $20,000 a month in additional revenue, it will take time before the department can overcome its current situation and stabilize. “(It will take) about five months to catch up to where they are now,” added Jeffers.
While
most officials reluctantly supported the measure, Alderman Anderson was
vehemently against it. “I’m not for
it. I wouldn’t sign anything from them,”
he asserted.
In retrospect, Mayor Jack Lay suggested the Town (and the water department) shouldn’t have waited so long before taking action. “(We were) hoping things would get better,” Lay remarked. “If we had been doing (this) every two or three years, we wouldn’t be doing it (now),” he added.
Alderperson Sharon Miller opined the Council erred when it removed an earlier fuel surcharge added to the water district customers in 2007; implying the additional revenue might have offset some of the cost increases and improved the department’s cash flow situation. If the department’s situation stabilizes, Alderman David Lowe suggested the department might consider other benefits for customers in the future, suggesting the department recalculate its base rate using 3,000 gallons instead of the present 2,000—which would make up for a threshold reduction made by the department in the early 1990s to offset the cost associated with dredging the Oneida City Park Lake for a raw water supply.
As presented, the water department will have up to twelve years to retire the note, the maximum life of a capital outlay issue. While the department could have floated the loan for three years, Jeffers noted the monthly payments, estimated at $10,000 to $12,000, would be difficult for it to handle at the present time. At twelve years, those monthly installments were reduced to between $1,200 and $3,000. In addition, the first payment on the note was deferred for up to 45 days. The term of capital outlay notes issued by governments are typically issued between three and twelve years.