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Town approves sewer rate increase

By Staff | May 20, 2010

Another hike in the municipal sewer rate has been approved Shepherdstown’s Town Council. Hoy Shingleton, Shepherdstown’s utilities lawyer, says the rate increase is needed to qualify for a $9 million low interest bond needed to replace the wastewater treatment plant on E. High Street.

Less than a year ago, the Town Council voted to raise sewer rates expecting to qualify for the very same low interest bond program. Unfortunately the West Virginia Infrastructure and Jobs Council, which administers the bond program, has since raised the minimum sewer rate requirements to levels which exceed the council’s prior rate increase.

Shingleton explained in last months Town Council meeting that the Infrastructure and Jobs Council doesn’t guarantee a municipality loan money the moment it meet a set of requirements. “When the initial loan letter came out, it was not a binding loan letter,” said Shingleton. “It basically says ‘we’ll probably give you the money’, but that’s about as good as it gets.”

Shingleton said Shepherdstown was left with two options. One was to not raise rates further and take the $9,000,000 bond at 3 percent interest. The other option was to raise rates 5 percent, bringing the sewer rate to 1.5 percent of median household incomes, and qualifying for a half percent bond interest rate.

Here’s where it gets tricky. If Shepherdstown didn’t raise rates to qualify for the low interest bond and instead took the bond at three percent interest, then future rate increases would still be necessary to pay off the increased interest expenses.

At those rates, said Shingleton, Shepherdstown would end up paying $4,577,000 in interest over the course of the 30 year life of the loan. If Shepherdstown raises rates to meet the Infrastructure and jobs development council’s revised rate-to-income requirements to qualify for the half percent loan, then the interest expenses over the next 30 years would total only $684,700.

“As painful as it may be to raise the rate a little bit, it’s the best option that they had,” said Shingleton.