The Clearwater City Council has been debating for months whether to restructure a 2007 bond used to upgrade the wastewater facility.

 

Last week, the council tabled the issue again, so the next city council members will have to deal with the issue in January.

 

The discussion focuses around the best way to make the sewer fund viable without rasing rates or infusing money into the fund from another source.

 

Last week during a one-hour workshop before the start of the city council meeting, Clearwater Mayor Pete Edmonson reviewed  the current situation with the fund.

 

The city is currently paying annual debt service of about $605,000 on two loans for the sewer treatment facility. But base sewer fees only bring in $360,000. Edmonson said by refinancing the debt and extending it another 10 years, debt service payments would drop to about $292,000 a year, reducing the amount the city has to make with sewer base rates.

 

The debate has been whether it is worth paying an additional $780,000 in interest over the life of the bond, or whether the restructure would actually prevent sewer rates from increasing.

 

Different scenarios presented by AEM, the city’s financial advisor, show rates would have to increase anywhere between, five, seven or 15%, depending on how much outside money was infused into the fund to cover the shortfall.

 

The city has been transferring money from the general fund and Local Government Aid (LGA) to break even.

 

Councilman Kris Crandall said he doesn’t like the idea of adding more time and more interest to the loan.

 

“I’m not for kicking the can down the road,” he said. “I have a hard time making the next councils and generations pay for this debt.”

 

Mike Gohman of Clearwater Development, Inc. said the city has to structure the debt in accordance with the usage on the sewer facility. Less than half of the facility’s capacity is being used, and the current rate of growth has been about two new homes a year.

 

“You’re running at 40% capacity. To some extent, you have to grow your way out of this problem,” he said. “If we’re only forecasting two units a year, you won’t be at 50% in 20 years.”

 

Edmonson said the lack of growth is the problem. 

 

“It was built with growth projection in mind,” he said. “If growth would have continued and 100 people would have shown up a year, we would never have a problem.”

 

He said without restructuring, there was no way to keep the fund in the black, and if rates increased, there would be no growth.

 

Clearwater Hardware owner Ed Goff agreed.

 

“If you raise those rates you’re never going to be able to grow,” he said. “You’re never going to be able to attract businesses. You almost have to restructure that to have the opportunity to grow.”

 

“It’s just a no-brainer to restructure,” said Wendy Johnson of the Clearwater Travel Plaza. “You’re looking at a 15% (increase) for the next two years and seven percent on the third?

 

Start paying that and see who’s still here.”

 

She said the Travel Plaza’s base fees are about $2,600 a month. In heavy months, the water and sewer bill is over $15,000.

 

Councilman Mike Ranum, who owns the laundromat, a home in Clearwater, said he wasn’t convinced about the benefit of extending the loan another 10 years if the rates weren’t lowered.

 

“Instead of seeing some relief in 10 years, we’re going to wait 20 years to see some relief because you’re not saving anything within the rates,” he said. “We’re just going to keep them the same.”

 

Councilman Chris Ritzer said he pays high rates like everyone else in the city. But he’s not in favor of taking on more debt.

 

“I grow weary of paying over $160 a month,” he said. “But I’m not going to refinance my house to buy a new car.”

 

Edmonson said the numbers show the city isn’t taking in enough with the current rates to cover the debt. That means either raise more or lower the debt.

 

“The only way to match our income is to jack the rates or restructure,” he said.

 

Members of the council decided not to do either last week, and set up another workshop for Jan. 9 at 6 p.m. that will include more scenarios by AEM.

 

Beginning next year,  Mike Ranum and Chris Ritzer will no longer be on the council. They are being replaced by Richard Petty and Andrea Lawrence. It will be up to them to make the decision about restructuring the debt, raising rates or some other alternative.