Study aims to pitch Mitchell leaders with 'equitable, cost-based' water rate fee structure, sparking pushback

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Jul. 28—MITCHELL — A water study that aims to recommend ways the city could implement a more equitable fee structure for water users has sparked some criticism.

The study that seeks to help the city of Mitchell develop "equitable and cost-based" water rates was approved by the Mitchell City Council in late June. Prior to approving the $97,620 study, Reed Bender, a Mitchell resident, spoke against the study and pointed to it as an investment not worth pursuing.

"I'm all for investing in sewer and water, but not spending another $100,000 to get somebody to do another study to make things equitable," Bender said during a late June council meeting.

Mayor Bob Everson said one particular element of the study city officials will delve into is potentially establishing a water rate fee structure based on customers' income levels.

"The low-income or fixed-income users may get a lower rate if we were to do something from this," Everson said.

Public Works Director Joe Schroeder said the study will conclude with a public presentation held by HDR project leaders to break down their findings and recommendations on the city's water rate fee structure.

"The analysis will also provide a cost-based system development charge associated with (water) tap fees or connection fees for new customers expanding their capacity requirements," Schroeder said. "It looks at your lowest water users to highest water users and how the fees should be distributed in those different user categories."

Harrisburg is one South Dakota community that has implemented a water rate fee structure that has an "equitable" fee structure. Schroeder said Harrisburg customers who used less water saw decreased water rates, while those who used more had higher rates.

Councilman Jeff Smith indicated he would back a fee structure that better adjusted rates based on water usage levels.

"It just makes perfect sense for some of the higher users to be charged more I guess," Smith said.

The city's water fee structure has a unit rate that's the same for every customer. However, residents pay more when their usage goes beyond the unit rate.

With that fee structure in place, Bender questioned whether a study on the city's water rate structure was necessary.

In response, Schroeder said the surcharge fees that are uniformly added onto water bills when the city takes on a large infrastructure project that needs some funding help are what could be adjusted to water users' income levels.

"You could look at it as a weighted scale that this person pays this piece of the pie, and this person pays this piece of the pie as it's distributed through the different user categories," Schroeder said.

The water rate analysis comes as the city is mulling over a significant water and sewer rate increase. For a resident using 5,000 gallons of water per month, the city is proposing to raise the base rate by $7.84 as early as this year. Broken down further, a resident using 5,000 gallons of water per month would be looking at a bill of $50.25, marking an 18% increase from the current monthly costs.