Sewer debt a complicated issue
Letter to the Editor, Sewer Debt
There has been a lot of misinformation and political rhetoric flying around about the debt the New Milford Sewer Commission has with the town. This “debt problem” is entirely a manufactured crisis and is no different than any past upgrade of the wastewater plant this town has done. I would like to clarify how the process works.
Our old plant was under the required capacity with an outdated treatment process that allowed a large amount of pollution generated in the town to pass through the plant and into the Housatonic River. The state Department of Energy & Environmental Protection (DEEP) mandated an upgrade and the process to be utilized, as well as the size of the plant we had to build. The residents of the town voted to build the new plant and after receiving Clean Water Fund grants of approximately $7 Million, our cost was approximately $26 million for construction, engineering, and permits.
The town took out bonds to pay for this $26 million, as they have with past plant upgrades, and the principal and interest for these bonds is paid for from the general fund, i.e., our taxes. The Sewer Commission pays back these bonds as money is collected from connection fees from residents and businesses that connect to, or expand their usage of, the sewer system. A connection charge is probably not the best word: capacity charge is a more accurate description, since each user pays for the typical sewer usage of their property. The upgrade prior to this one, the Sewer Commission was able to pay back approximately 75 percent of the cost of the plant and the town paid for the remaining 25 percent.
The poor economic conditions of the past 8 years resulted in the Sewer Commission owing more than was collected from connection charges each year and a debt was created with the town for the difference between the bond payments and collections. This is the $4 million debt you have been hearing about, the difference between what the town has paid on the bonds and what the Sewer Commission has been able to pay back.
This “debt problem” was not created by mismanagement at the sewer plant; rather it was created by the poor economic conditions that resulted in little growth in the town for the past 8 years. I want to emphasize this debt is related ONLY to paying back the debt for building the new plant and has absolutely nothing to do with operations and maintenance of the plant or the debt the town holds for the Route 7 pump stations and collection system that is being paid each year.
The issue now is how to pay for the bonds the town holds for construction of the plant, as well as the accrued debt, and this is a political question that the taxpayers must have input on and not decided solely by the mayor or an appointed sewer commission.
The previous administration asked the sewer commission to pay what we could from connection charges without raising rates and driving business out of town. The sewer commission repeatedly asked for a letter of agreement from Mayor Murphy detailing the obligations the sewer commission had to repay the debt, which was never received. Our current mayor is taking the opposite position,and has stated he wants the sewer users to pay for 100 percent of the debt each year. This can be verified by reading sewer commission meeting minutes. Mayor Gronbach is proposing a radical departure from past precedent.
The decision now is, What do the taxpayers in New Milford want to do with the bond debt? Do we increase rates on current sewer users so we can pay 100 percent of our annual debt, plus what has been accrued? That would cause rates to increase from the current $6.30 to approximately $12.70 depending on how long the payments are stretched out.
A family of four could expect to see their sewer bill increase $700 per year over and above the last increase, and our two largest sewer users could see their taxes increase by $295,000 and $275,000 respectively. That is a lot of jobs they could pay for.
I have been searching and have not yet found a town that requires their sewer users to pay for 100 percent of a plant upgrade; the costs are simply too high for a limited number of sewer users to pay for, and most pay for the upgrade from the general fund. Perhaps the mayor can find one the sewer commission can talk with and find out how they do it without bankrupting their residents and businesses.
Do we recognize the sewer plant is a town asset such as our roads, bridges, schools, etc. that should be funded like any other town asset from the general fund as we are currently doing? This currently costs each taxpayer $37 per $100,000 in assessed property value.
Do we spend tens of millions of dollars running new sewer lines to every home and business in the sewer service area and force them to connect? Do we want Route 7 looking like Federal Road in Brookfield to get enough connects to make a difference in the debt?
Do we let the mayor raid the sewer commission’s fixed asset replacement account, which is required by the state to replace equipment as it fails, and trust the town council will give them funds for equipment when they need to replace it?
Maybe I am a bit cynical, but I have no confidence elected officials from either party will vote to spend money on a sewer plant when our schools, roads, parks, etc., also need funding for improvements.
It is important to point out the fixed asset replacement account is used to replace equipment as it wears out and some projects are very expensive, such as the Westside pump station that needs replacement of all of the equipment that has reached the end of its life and will cost approximately $1.3 million. Should we give money that has been saved for this project to pay off our current debt and then turn around and add to the debt for that project? That just does not make any sense to me.
So now you have a better idea of what the sewer commission has been dealing with and why there is not a simple solution. Someone is going to pay for the plant upgrade and the sewer commission needs a commitment from the mayor, the town council, and most importantly the taxpayers, on a solution to this problem that is agreeable to ALL parties.
I was called an obstructionist to the mayor’s proposals because I feel placing the burden of paying for the sewer plant on a small number of users is a bad idea. As a septic user, that would save me money, but I support all of the taxpayers paying for a town asset the entire town benefits from, by protecting our environment and allowing the businesses in our town to flourish. We cannot keep changing policies with different administrations and expect to have any kind of long-term stability for our residents and businesses.
I encourage you to attend sewer commission meetings and make your position known to the new leadership before they make decisions that will affect your wallet.
Bensema, P.E., is a former member of the town Sewer Commission.