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The water and sewer rate increases Metro apparently has needed for nearly two years are likely on the way starting July 1. A resolution clearing the way for Metro Council to raise rates should be on the table by mid-May, Metro Councilwoman Emily Evans said. Depending on how many years the rate hikes are spread out over, the increase could be in the neighborhood of 20 percent.

“It’s my hope we have a recommendation to take to the Council before July 1,” Metro Finance Director Richard Riebeling said. “Whether we get there or not we’ll see. There’s still a lot of work to be done.”

A 2006 water and sewer study suggested Metro increase its rates by 18.5 percent for 2007 and continue with double-digit increases for the next three years. Those suggestions were never enforced.

Then came a report released Tuesday by Fitch Ratings, which downgraded Metro’s $375 million water and sewer bonds to an AA- rating. The Fitch report again called for double-digit rate increases over the next several years.

Riebeling said he hoped to have the 2007 rate report in time for Mayor Karl Dean’s operating budget presentation before Metro Council on March 25.

“Receiving the 2007 update to the previous rate report is a major piece of [figuring out the rate increases],” he said.

Evans said although Council knew for some time rate hikes were in order, it was difficult to act on the recommendations in 2007 because it was an election year. Metro hasn’t introduced water and sewer rate increases since 1996.

“Starting late 2005, early 2006, it was apparent there needed to be a rate increase,” Evans said. “I think rate increases can be difficult to get done in an election year. This is too important an issue to be politicized by people running for office, so deferring the increase until 2008 was probably a smart decision.”

The rate increases — which are based on consumption — are needed to cover $556 million in capital projects to be carried out over the next five years. The projects are on the table to expand, repair and replace the existing water and sewer system. Evans said a $100 million-per-year budget for capital projects on the water and sewer system was a typical amount for a city of Nashville’s size.

Furthermore, Evans said Metro wanted to avoid a repeat of the situation Atlanta found itself in a decade ago when extensive upgrades to its wastewater and drinking water systems totaled $3.9 billion.

“We need to keep the system updated so that sewage doesn’t leak into the Cumberland River, so water mains won’t break — things we all don’t want to see,” Evans said. “It’s nothing out of the ordinary.”

Riebeling cautioned that the $556 million projection was by no means set in stone, besides $149 million in funding for projects to meet regulatory requirements.

“Just because a department says they need a [$556 million capital plan], that doesn’t mean they can’t live with less,” Riebeling said, adding the plan could be spread out over more years to help keep the rate hikes at a minimum.

The capital projects for the water and sewer systems are separate from the $84 million in stormwater upgrades Metro will have to spend over the next five years. To pay for that project, Metro residents and businesses were hit with fees ranging from $2.49 per month to $4.98 per month.



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