LHDC chief states case against sewer-rate hike

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Kleeman says annual increase will be $4,000 for Cotton Mill Apartments

Managing Editor

CANNELTON – The executive director of the Lincoln Hills Development Corp. said April 8 he understood the need for a sewer-rate increase in Cannelton, but wanted to let the city’s common council know how it will affect his operations.

As the News has reported previously, city officials opted to conduct a sewer-rate study, then to increase those rates to bring them into line with costs of operating and upgrading the sewer lines. They said at past meetings their failure to do those things cost them points when applying for competitive grants. They also noted that current rates were sufficient for operating the system but didn’t provide revenue for improvements.

Larry Kleeman spoke up during a hearing on the rate increase conducted between the April 8 meetings of the city’s board of public works and safety and city council. He had met a week earlier with the city’s sewer-department superintendent, who “explained the rate increase and reviewed our billings,” he told the council.

His agency operates the Cotton Mill Apartments in Cannelton, “and when I looked at our usage, we use around 220,000 gallons of water a month,” he said, “and we’re currently paying a little over $2,300 a month on water and sewer.” He knew the hearing concerned only the sewer rates, he said, but to put the costs into perspective, he noted the agency also pays about $2,000 per month for electric service. Tenants pay their own utility bills, “but there’s some common usage, including the chillers that we operate, so between the electric and the water and sewer, Cotton Mill apartments is paying about $4,300 a month in utilities.”

“In looking at the 27-percent increase that’s proposed, that would cost us, based on our current usage, about an extra $4,000 a year, or if you break that down, that’s about $5 a month a unit that it will cost us. I understand that you’ve included in your ordinance … a 3-percent increase a year from now.”

The smaller increase would be imposed for each of two years, Mayor Mary Snyder said.

He wasn’t questioning the need for an increase, he said again, “but I wanted you to realize the impact it’s having on us. I did some figuring, and for electric utilities, water and sewer, and property taxes – we pay about $23,000 a year in property taxes – we’re spending about $78,000 a year just on those three items, or the equivalent of about $100 a month for (each of) the 70 units down there.”

He wondered aloud if instead of 27 percent this year and 3 percent next, a 15-percent increase could be imposed each of the first two years.

“That’s just a question,” he said, noting “it may be too late in the process.”

Councilman Emory Yaggi noted a similar situation exists for the Can-Do Apartments.

“We’ve got 24 units down there,” he said. “I never looked to see exactly how much we were going to increase our sewage (cost) down there.

“We looked over this thing pretty carefully,” Councilman Jack Harris said. “We’re in dire need of some money, just to make it plain.”

City attorney John Werner explained the federal government issued mandates to eliminate combined sewer overflows, places in city sewer systems that allow contents of sanitary sewers to be flushed into storm sewers when heavy precipitation occurs.

“That’s what’s driving this,” the lawyer said. “It’s called the trickle-down effect.”

Kleeman understood that, he said, noting, “we may not be the largest user (of city utilities), but I suspect we’re one of the largest users.”

Yaggi suggested the development corporation was probably also in the same situation as the Can-Do Apartments in that “you probably had your budget submitted. We didn’t allow for this increase.”

The council voted unanimously to adopt the ordinance changing the rates. Advertised in the News March 18, the monthly rates for Classes 1 through 4 users for this year are $5.83, $4.37, $5.83 and $4.89, respectively, per thousand gallons of water used. Monthly base rates are also charged based on the capacity of the water meter serving each building.

The council conducted a separate hearing concerning the Golden Years apartments.

Werner said he had been contacted by the Ice Miller law firm of Indianapolis, who told him the Wisconsin-based owner of the facility has it financed through a government-backed program in that state.

“They’re refinancing to have bonds issued from the state of Wisconsin,” Werner explained. A law in that state requires Snyder to approve the issuance of the bonds, he explained.

“These are not Cannelton bonds,” he emphasized. “It has absolutely nothing to do with the city of Cannelton.”

Golden Years offers rental housing at 125 S. Fourth St., for elderly and disabled people under regulation of the U.S. Department of Housing and Urban Development. It’s owned by Grandview Care Inc., according to county records. A legal notice published in the News March 21 announcing the hearing reported GMF-Indiana4 LLC intended to secure up to $14 million in bond financing to acquire, renovate and equip the 70-unit facility.

Attempts by the News to obtain further information about the plans were unsuccessful.

The council approved a motion to authorize Snyder to sign a document signifying her approval.