McKinney sticks to incremental rise in water rates

Per its latest discussions with North Texas Municipal Water District officials, and in step with other member cities, McKinney knows water rates are going up and there's not much anyone can do about it.

Charles McKissick and Joe Joplin of the NTMWD on Monday spoke to the McKinney City Council about what methods, if any, could help assuage the rate hiking. But state legislature, a protested boundary redrawing and zebra mussels have left few options.

"There have been some very volatile meetings because of this...The staff and board of directors share your frustration," McKissick told the council, referring mainly to a pump station straddling the Texas-Oklahoma line that's forcing the district to build a $300 million pipeline extension.

The water district projects a 21-cent-per-1,000-gallon raise from last year's water cost, and about 18 cents of that is due in some way to the zebra mussels, McKissick said. When FY 2013 starts Oct. 1, the cost of water to 13 member cities and 41 nonmember customers will increase by about 14 percent.

The hikes are to help the water district pay for the pipeline, a 46-mile extension from Lake Texoma on the Red River to the water district's treatment plant south of Lavon Lake in Wylie. The district got about 28 percent of its water from Texoma before zebra mussels infested it and the Lacey Act, which forbids pumping invasive species across state line, shut the source down in hopes of preventing their spread into the Trinity River System.

One solution would be to get the state line back to where it reportedly was on earlier surveyed maps, which would put the pump station in Texas and eliminate the Lacey Act's effect.

City, state and district officials in recent years tried to convince the U.S. Army Corps of Engineers to re-survey the line in question, but McKissick said the Corps cannot find the original map on which the previous state line is drawn.

"It's a 30-foot mistake," Joplin said.

And one soon to be felt by cities like McKinney, which on Tuesday approved its FY 2013 budget to include a 2.5 percent increase in water rates (total water and sewer fees), the first of a five-year span of similar hikes. That will force the average residential customer to pay about $2 more a month this coming year, and a little more than $10 a month by the fifth year.

"We do have a significant fund balance right now and that's part of the reason why we're not suggesting to take a full rate increase to the citizens today, but rather utilize some of the fund balance that we have to mitigate that to the extent we possibly can and adjust annually as we go forward," City Manager Jason Gray told the council.

Other member cities are opting for larger rate increases of 10 to 15 percent this fiscal year, including Richardson which recently approved a 13 percent increase in its budget. Like McKinney plans to do, Frisco has absorbed rate increases in recent years to minimize the impact on its citizens, the Dallas Morning News reported earlier this month.

Gray emphasized the city's desire to maintain a "healthy fund balance reserve," as did Mayor Brian Loughmiller, who said the city won't benefit tax-wise from current and impending economic developments for at least a year or two. But more significant rate hikes are likely yet to come.

"There will be a time when we'll have to increase the fees, there's really no question in my mind about that," Gray said. "The question is when and how much."

At-large Councilman Roger Harris said that though the 2.5 percent jump may seem relatively insignificant to homeowners, "to large consuming businesses it's a substantial impact" that "certainly increases the cost of doing business in McKinney."

And Joplin said costs should start leveling off over the next 10 years, but Harris asked whether pipeline operation in future years - dealing with an almost inevitable spread of zebra mussels - would keep the rates high.

"I'm not so sure anybody knows where we're going to be," he said. "I'm not confident that we fully understand the cost of maintaining the water system if and when we have the zebra mussel issue to deal with."

Since 2006, the NTMWD has spent about $586 million on projects necessary "to take care of our growth and our water needs," McKissick said; thus, the pipeline extension is just one reason costs are going up. Expanding its number of water sources, building new plants and replacing 40-year-old infrastructure are already musts for rising rates.

The water district will continue to factor in the area's projected growth when determining its rates until "all cities are fully grown" and there "won't be need for capital like there is now," Joplin said.

"It doesn't serve anyone to have the lowest rate if you don't have the capacity to keep the water running, so there's a balance there," he said. "And I think we do a pretty good job of it."

The pipeline allows the water district to compartmentalize the water supply and avoid contamination of Lavon Lake and all other district water sources. It's been in the district's capital budget for about five years, the state line and zebra mussel issues have just forced its construction sooner and quicker than desired.

Each year member cities put off large rate increases, the harder it will be to take money from citizens when it's absolutely necessary, Gray said. They have to deal with the situation at some point.

"It's a tough pill to swallow," District 4 Councilman Ray Ricchi said. "But I don't think we have any other choice."

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