NOTIFICATION OF PROPOSED WATER AND SEWER RATE ADJUSTMENTS
This is an updated notice for the public hearing on the proposed water and sewer rate adjustments. The previous date of March 21, 2017 has been rescheduled; the new date for the public hearing is April 18, 2017.
The City of Lynwood (“City”) is considering a five-year water and sewer rate adjustment for all residential and non-residential customers. The proposal will be considered by the City Council at a Public Hearing on April 18, 2017 at 6:00 pm. If adopted, the proposed rate changes will become effective on or after June 1, 2017.
WHY INCREASES TO RATES?
The City is required by State law and City policy to collect revenues sufficient to cover the costs of operating the water and sewer systems. These revenues allow the City to protect public health; and safely and reliably treat and convey water and sewer. Costs that must be recovered through rate revenue include purchased water, electricity, equipment, supplies, treatment chemicals, debt service, along with salaries and benefits. Additionally, revenues generated from the water and sewer rate increases would be used to finance the repair and renovation of the City’s aging water and sewer infrastructure, and restore depleting reserve funds that have been drawn down to compensate for lower levels of water consumption. Currently, the City water system relies on five water wells to provide water; 4 out of the 5 wells are older than 66 years, with the oldest being in service for 85 years. Water and Sewer pipeline infrastructure is equally aged, resulting in increased water main breaks and sewer backups.
Additionally, Section 6.07 of the Indenture of Trust Agreement regarding the 2009 Water and Sewer Bonds (the debt covenants), dated May 1, 2009, established the requirements to collect sufficient revenue to annually pay expenses, capital improvements and debt service payments, while maintaining adequate reserves. However, water and sewer rates were last increased in 2012, and revenues have dropped due to the State mandated water conservation goals, causing non-payment default of the debt covenant. The City’s non-compliance with its debt covenants could cause a downgrade of the City’s bond rating and may prove to be a significant obstacle to the issuance of additional debt necessary to maintain and rebuild the City’s water and sewer systems, or such additional debt would be issued with significant increases in interest costs to the City. The proposed rate increases are essential to restoring compliance with the debt covenants.