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Townsend said the water and sewer rate increases are necessary to keep the city in compliance with a bond agreement with the state. “The Water Fund must maintain a substantial operating income because of the bonds the City sold through the State,” said Townsend. “The State requires the Water Fund to maintain operating revenues greater than 125 percent of the amount of debt service on the bonds. For Fiscal Year 2010, the City did not meet the 125 percent requirement.”
Both the water and sewer funds suffered significant revenue declines in Fiscal Year 2010. The Water Fund recorded an operating loss of $8.5 million and the Sewer Fund an operating loss of $17 million.
The City last raised water rates in June 2009. At the same time they restored sewer rates to their 2003 levels after several years of a rate decrease.