Last week Monday there was a special council meeting to discuss the financing of the Capital Improvement Plan. The city has received grants and a USDA loan to help pay for the estimated $7.6 million project, which is expected to begin next summer.

Mike Bubany with David Drown and Associates, a financial expert that has been hired by the city to assist with this project, gave an in-depth presentation.

In 2021, the city made a significant increase to the tax levy, but held off on making large increases to water and sewer rates. Much of the discussion that night centered on how much should rates increase and when. 

The council looked at the average user in town and what the projected reserve is. The general fund has reserves, but those will probably be used for the extra costs for repairing streets after the infrastructure is installed. The sewer fund currently has reserves, but those will be quickly eaten up by construction costs.

Currently, the base water rate is $29.55 plus $4.54 for every 1,000 gallons, with the first 1,000 gallons included in the base price. The current base sewer rate is $14.95 plus $1.73 for every 1,000 gallons, with the first 3,000 gallons included in the base price. Edgerton’s tax rate and utility rates have historically been lower than average.

Based on current estimates and utility performance, Bubbany said that his financial model is indicating at least a 40 percent bump in all water rates and a 100 percent increase in all sewer rates (base rates and volume rates).  He said these increases should be followed by annual increases thereafter of at least 2 percent. That would result in a $40 to $45 initial monthly increase on average for households, depending on water usage.

The increase could be done all at once, or spread out over time. If the grants and costs are what the city and DGR are anticipating, the increase should cover all three phases of the project going forward.

However, at the regular council meeting two nights later, Clerk Joel Farrington had received additional information from Bubany. The city needs to have a short-lived asset reserve – a bucket of additional money that city’s need to have on hand when they have a USDA loan for infrastructure. The city must have $81,393 on reserve for the life of their USDA loan. That means that the water and sewer rates would need to go up an additional $10 per month per resident in order to come up with that amount.

The bids for phase 1 of the project will go out around March 2023 with work hopefully starting May 2023. Bubany suggested that the increase in rates should be in effect by the time bids go out.

Former Mayor Jason Snyder was at the meeting. He asked where things are sitting compared to the initial public meeting that was held two years ago. The answer is that the increase suggested at that time has been cut in half. This is primarily because the first phase of the project has been decreased in size.

Snyder commented that Edgerton residents have been using infrastructure that was put in place 100 years ago, and have never had to pay for infrastructure. “Now it’s time that we do need to pay for it, because it does need to be updated,” he said.

The council did not make any decisions at this informational meeting, but will be looking at the rates as they prepare the 2023 budget and fee schedules.