By, The Town of Queen Creek
From lowering wastewater rates to paying off debt, at its June 5 meeting the Queen Creek Town Council took a series of strategic financial actions that benefit the Town’s water and wastewater systems and reduce costs for users.
The Town Council approved paying off a $20.8 million loan for the Town’s portion of the Greenfield Wastewater Reclamation Plant (GWRP), which is a joint ownership with the City of Mesa and Town of Gilbert. The debt is being repaid early with the following sources:
- Release of lender’s requirement to have a year’s worth of payments in reserve – $2.5 million
- Accumulated cash balance in the capacity fee fund- $17 million
- Wastewater fund operating cash – $1.3 million
Not only will paying off the debt early save $3.7 million in future interest payments, it eliminates the $2.5 million annual payment, allowing for reduced monthly rates for wastewater customers. Since wastewater use is not metered, rates are based on users’ average water consumption during the winter months of December, January and February. Currently, wastewater rates are calculated using a 90% flow factor, which assumes 90% of the water consumed during this period is entering the sewer system. However, due to low flow technology and other factors driving water conservation, residential sewer flows have decreased on average. As a result, the flow factor is being reduced from 90% to 70%, saving customers an average of 15%. The new rates will be effective on the July 2019 bill.
“The Town is committed to providing safe and reliable water and efficient wastewater services,” stated Queen Creek Mayor Gail Barney. “As a Council, we are pleased to provide these quality services while also being able to reduce rates. We continue to evaluate opportunities for improvement, particularly those that will save our residents and customers money.”
The Town Council also approved the following financial policies related to utilities at the June 5 meeting:
- With the reduction in debt for the GWRP, the Town Council adopted lower water and wastewater capacity fees, which will be effective in July 2019. Capacity fees are one-time fees assessed to new development to pay for new growth’s proportionate share of necessary public services.
- Compensating the wastewater fund for the annual value of treated effluent. After wastewater is treated, it is returned to the aquifer. The treated effluent helps the Town meet its 100-year assured water supply requirements and represents a valuable water resource. The value of the recharged water is $700,000 which will be transferred from the water fund to the wastewater fund annually.
- Setting the operating reserve target at 100% for water and wastewater ($22.5 million and $4.2 million) and the repair and replacement reserves at 1.5 times the annual depreciation for both systems ($3.4 million and $1.5 million). It is anticipated to take approximately five years to fully fund the target reserves for both systems.
For more information about the Town’s water and wastewater systems, visit QueenCreek.org.
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