Increased costs to retire bond debt appear to make rate hikes for Commerce water and sewer customers inevitable by spring. Just how much that increase will be remains up in the air, however.
For the second consecutive month, the increase in debt service costs for water and sewer bonds was a topic of discussion at the Commerce City Council’s work session.
The increase is due to the fact that after paying interest only on the bonds for five years, the city must begin making payments on the principal as well. That raises the annual debt service by around $375,000. The bond regulations require that the debt be paid by the users — water and sewer customers, officials say.
“Sometime between now and the April council meeting we will have to have a rate increase,” city manager Clarence Bryant said.
Staff has considered several bond refinancing scenarios, as well as trying to re-write the next SPLOST ordinance so sales tax funds can be applied to the debt to keep the increase minimal.
Councilman Clark Hill suggested that the city consider incentives to broaden its customer base through a “promotional” reduction in water and sewer tap fees. The tap fees could be applied against the bond repayment, and additional customers would spread the debt load more, Hill pointed out.
“We know we’re going to have to raise rates,” Hill observed. “Anything we can do to eliminate that as much as possible would be helpful.”
The outstanding bond principal is $12.7 million. A previous story reported that amount at $20.6 million. The latter figure is actually the total the city would pay in principal and interest through 2029 under the current schedule.
Who elected Mr. Hill ! You use those tap fees for captial projects so you don't have to carry all the debt....
Wake up Jackson County and make the developers pay the cost of infrastructure up front.If Commerce would have doubled fees years ago we would not have the debt laiden issues not only in the city but county.
Politicians that are in bed with developers should face crimanal proscution and be put in jail.
You see if builders aren't offered incentives and cheaper tap fees they will go to another town that will give them incentives. This in turn would drive out any potential tax base, therefore; raising taxes for citizens. Investigate before you speak......