Politics & Government

Second Water, Sewer Rate Increases Get Initial OK

An amended version of the proposed increases that would build reserve funds over five years rather than three, while addressing the sewer deficit, received a recommendation from the aldermen's Appropriations Committee.

After another lengthy meeting filled with strident voices from both residents and city officials, and with an amended proposal to soften the impact this coming year, a second round of increased water and sewer rates received an initial OK from the Melrose Board of Aldermen on Monday night.

City officials proposed the second round of rate increases—which still require a final vote of the full board—after the first set of increases were approved in June, to address a $158,771 deficit caused by lower than projected consumption in the sewer budget at the close of the fiscal 2012 year, which ended on June 30.

Officials also sought to implement a three-year plan to save 10 percent of both the water and sewer budgets in reserve accounts to mitigate any future deficits caused by lower consumption or increased assessments from the Massachusetts Water Resources Authority (MWRA), which account for 52 and 83 percent of the city's water and sewer budgets, respectively.

Find out what's happening in Melrosewith free, real-time updates from Patch.

The proposal recommended by the aldermen's Appropriations Committee on Monday night stretches the savings plan out over five years instead, meaning smaller rate increases than originally proposed.

Instead of increasing the residential water rate to $5.85 as under the three-year plan, the rate under the five-year plan would increase to $5.75. The commercial water rate would increase to $7.10, instead of $7.20, and the sewer rate would increase to $9.90, instead of $10.02.

Find out what's happening in Melrosewith free, real-time updates from Patch.

Under the rates originally approved in June, the average Melrose homeowner would see a $42.50 increase in their water and sewer bill next year. Based on information previously provided by the Melrose Department of Public Works, if the additional rate increases are approved by the full Board of Aldermen, the average homeowner would see a $67.66 increase in their bill next year, for an average combined bill of $996.88.

The Appropriations Committee voted 7-2 to recommend the proposed rate increases, with Ward 2 Alderman Monica Medeiros and Ward 4 Alderman Bob Boisselle opposed. A request to reduce the sewer budget by $61,011 due to a lower final MWRA assessment was recommended unanimously.

Because the next full Board of Aldermen meeting isn't scheduled until August, city officials will likely request a special meeting held before the end of July so the new rates, if approved, would go into effect on July 30. Any water or sewer used between July 1 and July 29 would be billed at the rates previously approved in June.

Article continues below.

See more Melrose Patch coverage of the water and sewer rates for the coming year:

  • The aldermen held a public hearing on the second rate hikes proposed within the past month. [July 17]
  • A deficit in the city's sewer budget, combined with a desire to start saving more to account for potential deficits, means City Hall is proposing to further increase the water and sewer rates for this coming year. [July 12]
  • City Auditor and Chief Financial Officer Patrick Dello Russo tells the aldermen that there's a possibility that Melrose will cover its cost in water this year, but a possibility that the fiscal year will end with the sewer budget still in the red and the city would return with a request to further adjust the rates. [June 21]
  • The presentation given to the aldermen's Appropriations Committee regarding the proposed water and sewer rates for the coming year. [June 8]
  • Also before the aldermen for fiscal 2013: a 7.75 percent commercial water rate increase and a 2.67 percent increase for the combined residential and commercial sewer rate. [June 6]

MWRA Debt and Lower Consumption

After several residents and during public participation at Monday night's hearing about the proposed additional rate hikes and about its financial planning, city officials defended their accounting and the need for reserve accounts.

During public participation, after a resident asked how the aldermen didn't see the deficit coming, Appropriations Committee Chairman Don Conn said he heard similar comments during last week's public hearing and that in April, the aldermen were told there was a potential for a deficit this year. Conn filed an order asking for weekly updates, and said that the aldermen did not know what, if any, deficit would exist until after the books were closed on the fiscal year.

"There have been several speakers who have acted like this dropped out of the sky," he said. "Well, we discussed it all in the spring and the people who spoke apparently missed those meetings and missed those discussions."

City Engineer Bob Beshara first rehashed topics covered at previous meetings and answered some questions raised by members of the public, ranging from how the MWRA calculates assessments, to how water and sewer is metered coming into the city and going out, to accounting for city's water usage at fields and in municipal buildings.

Regarding the deficit, Beshara said the sewer budget has never ended with a deficit since he has been in the Melrose Department of Public Works, but the water budget did in 2006 and 2007. The difference between then and now, he said, is that consumption was expected to increase the year after those deficits, thus negating the need to readjust the rates.

Now, however, Beshara said residential consumption continues to trend downward, adding that 37 out of 56 communities served by the MWRA have shortfalls compared to last year. He also said it's "not true" that Melrose residents are punished for conservin water.

"It’s hard to see that, but the less water we use, the less share of the MWRA we have," he said. "The MWRA goes up. Always. If you conserve water use, our flow share is less on the water side and it’s less ... it does effect our rate. It’s real."

When consumption is lower, the city bills less units of water and sewer, meaning less revenue comes in, but assessments from the MWRA—which account for 95 percent of the MWRA's revenue—continue to rise as the MWRA budget is largely driven by debt.

Debt comprises approximately $377.5 million, or 59 percent, of the MWRA's total $639.9 million budget. (The MWRA fiscal 2013 budget is available on its website.) In 1990, debt accounted for 36 percent of the MWRA's budget.

The most costly (and now completed project) accounted for in the MWRA's debt is a $3.8 billion project on Deer Island to clean up Boston Harbor, mandated by a federal court order.

As pointed out by Alderman at-Large Ron Seaboyer, the state previously provided debt relief funding to MWRA cities and towns, including Melrose, to mitigate any hit taken by the ratepayers due to the MWRA's debt. That funding  reached a high of $52.9 million in fiscal 2002, according to the MWRA's budget.

That debt relief was cut the following year due to a recession, restored in fiscal 2005 to the tune of $8 million, and fluctuated over the next few years until it was eliminated again in fiscal 2009.

"MWRA's capital spending, from its inception, has been dominated by court-mandated projects, which in total have accounted for 80 percent of capital spending to date," the MWRA budget says. "Going forward, the majority of capital spending will be geared towards asset protection and water redundancy initiatives."

Steeper MWRA Assessment Increases Projected In Coming Years

During public participation, resident Patricia Wright pointed out that the MWRA's assessment to Melrose for the coming fiscal year, an overall increase of 2.4 percent, is lower than the assessment increase last year, which was an increase of 4.4 percent.

On the other hand, Boisselle pointed out that the MWRA implemented a three-year strategy, which comes to an end this fiscal year, to keep rate increases lower during the recession. Fiscal 2011's overall increase was 1.49 percent , followed by a 3.49 percent increase in fiscal 2012 and a 3 percent increase for the current fiscal 2013 year.

According to the MWRA's budget, overall assessment increases in coming years—starting in fiscal 2014—are projected at 4.6 percent, then 8.3 percent, 6.1 percent, 8.8 percent, 1.4 percent and 8.3 percent.

Patrick Dello Russo, city auditor and chief financial officer, after starting with the MWRA assessments, strenously pushed back in a broad way against residents chiding the city's financial planning.

Dello Russo read from the most recent report on Melrose from Standard & Poor's rating services firm, which assigned the city its highest rating for general obligation bonds and its second highest rating for its long-term debt.

The report read, Dello Russo said, that the city maintains a "very strong capacity to pay principal and interest when the bill comes due" and that Melrose's financial  position has improved over the past several years "despite fiscal pressures," with growing reserve accounts.

"We cannot be more prudent in the way we manage our finances," Dello Russo said, adding that calling the city's financial planning "'deficient' is an insult to everyone in the city, to this board and to this administration."

Mederios pushed back against the city's assertion, included in its memos to the board, that creating the reserve fund is a requirement, citing guidance from the state Department of Revenue to the town of Hadley that suggested creating reserve accounts, and reading from the Mass. General Laws that talked about prior year receipts being applied to reserve funds, suggesting that the city's proposal wouldn't be allowed under the law.

Dello Russo said he had met and spoken with the Department of Revenue regarding the city's proposal, that he wouldn't have brought the proposal before the board if he did not believe it adhered to state law, and apparently took umbrage with Medeiros' questions.

"I’ve been doing this for 20 years. I’m an expert in municipal finance," he said. "I would suggest that the  comments are not appropriate."

"I respectfully asked if you had anything in writing from them saying we need to have a reserve fund," Medeiros replied. "I haven’t seen anything in that regard yet, so I went looking on my own. This is their publication."


Get more local news delivered straight to your inbox. Sign up for free Patch newsletters and alerts.

We’ve removed the ability to reply as we work to make improvements. Learn more here