Over the last several months, the Virgin Valley Water District (VVWD) board has heard several presentations from staff and consultants on the need to raise revenue to fund bond debt and needed capital improvements on the district’s water system.  On Tuesday, the board heard from consultant Mike Chandler of Bowen Collins and Associates who suggested that the district consider changing the way it charges for water.

Currently, the VVWD charges are based mostly on the amount of water used, and not on the type of user or the size of the water meter.  Chandler told the board the current charging method is structured around what Mesquite and Bunkerville were in the past as a “more agrarian semi-urban rural area with a growing suburban area but mainly an area with agricultural roots.”

Chandler also told the board that the current system isn’t “equitable” as large water users in Mesquite and Bunkerville subsidize residential users.  “Those people who use a little are not paying their share of the system costs,” Chandler said.

Approximately 97 percent of the users of the connections to the system are residential homes that use about 6,000 gallons of water in winter months and average 16,000 gallons of water use during the summer months, according to district figures.

Typical large users of water include hotels, resorts, schools, condominiums, some homeowners associations who have master meters and some businesses.

Chandler told the board a new system could set up tiers where the first tier would reflect typical indoor usage, the second tier a portion of typical outdoor usage which would encourage conservation and a final tier that penalizes excessive water use.

To implement the new system, rates would be based on the size of water meters, which “reflect the hydrologic capacity of the user,” said Chandler. The board was then shown a rate schedule that would reflect meter size and the demand on the system.

As in past discussions, the new rate plan would include a base rate and a surcharge of $10 per month to retire bond debt for residential users with ¾ inch meters, and a sliding scale increasing the surcharge amount for larger meter sizes.

Chandler then gave the board examples of how consumption rates would change under the new system.  Including the bond debt surcharge, a typical ¾ inch residential meter user would see an increase of 55 percent.  If a consumer used as much as 100,000 gallons a month with a ¾ inch meter the rate increase would be 114 percent.

Most of the increase, Chandler noted, was because of the base rate changing from $18.09 per month to $35 a month as a result of the bond debt surcharge.

Resident Barbara Ellestad told the board that with the raise in the base rate, “it doesn’t matter if I conserve.”  Chandler replied that it “does matter,” but most of the pressure for conservation will come on the large water users not the residents who use low amounts of water.

Other residents in attendance argued that the high base rate penalized residents while favoring large water users.  Chandler noted that the base rate increase depending on the size of the meter, and the result is an increase that is “equitable across the board.”

Chandler concluded by telling the board that the “challenge we face is maintaining a green community on a sand hill.”  Chandler also suggested that if a rate schedule based on meter size was adopted by the board, several policy changes would be required.  For example, the district should prohibit master meters in future developments unless they were in multi-story structures.

Mesquite business owner Dave Ballweg suggested to the board that if this rate system is adopted, there should be a “grace period for people to change their meters” to a more appropriate size in order to avoid the higher charges for usage in tier three.

Under board discussion, Chair Ted Miller noted that VVWD last raised rates in 2010 and that “now we are proposing another huge increase.”  Miller asked Chandler if it wouldn’t be better to have smaller increases every year.  Chandler replied that the increase in 2010 didn’t include debt reduction or needed funding for capital improvements.

Director Kenyon Leavitt told the board that “we haven’t funded our system and we just can’t ignore that.”  Chandler suggested that once a new rate system was in place that recognized retiring the debt, future increases could be based on inflation and other factors that don’t require large rate increases.  “The key is getting that debt service paid down,” Chandler said.

The board then discussed whether or not the bond debt surcharge could be reduced as bonds are paid off.  District accountant Wes Smith told the board that they could “create a formula on the front end” that includes a provision in the rate to automatically reduce the bond surcharge as the bonds are retired or refinanced.

Ellestad told the board to segregate the funds because “it will be real easy to say that’s in the general fund,” and can be spent on other things.  Ellestad said the increase would be more palatable if people knew the money is all going to debt reduction.

General Manager Kevin Brown asked the board if they wanted staff to continue to look at the new proposal or to “continue to go down the road” on the previous proposals.

The board agreed to have staff continue to examine a meter based rate system, but also directed them to look at ways to reduce the impact on lower income residents and to propose a method for customers to replace existing meters that are not the proper size.

The board expects to make a final decision on how to change rates before the end of the year.

In other business the board rejected a request from the Canyon Crest Master Association board for the district to replace the laterals on Huntington Heights within the St. Andrews Village area.  The association plans to do crack and fill and seal coating of the street that has had a high rate of lateral failures in the past resulting in the street being torn up and patched.

The board rejected the request noting that the district policy is to replace lines only after a failure and not before.  The vote was 4 to 1, with director Sandra Ramaker voting no, saying the district should be more proactive in repairing lines before street work is done.  Manager Kevin Brown noted that if the district repaired all the lines in advance the district would not run short of funding for repairs in the future.

The board also cancelled their September 2 regular board meeting.  September 16 will be the date of the next board meeting.