There’s no such thing as a free flush.
But Lake Tapawingo Mayor Rocky Queen and others think they’re paying the Little Blue Valley Sewer District a little too much for the privilege.
That flush comes down to only one part of the bill: an annual fee of about $75,000, which the district charges each of its 14 wholesale customers for the fixed cost of service, regardless of the customer’s size or the volume of wastewater, or “flow,” it puts into the system.
For each of Lake Tapawingo’s 372 households, that fixed cost charged to the city translates to $201 a year, says Queen. By comparison, each household of the sewer district’s largest customer, the City of Lee’s Summit, pays $2.58 a year to cover its share of the fixed cost of service.
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Therein lies Queen’s assertion that the fixed cost the district charges is unfair to its smaller customers. Lake Tapawingo resident Doug Hall and Sugar Creek Mayor Matt Mallinson concur.
“You’re dividing (the fixed fee) by 14 but not by population,” Queen said. “We’re paying the same (fixed) cost as Kansas City, Independence, Blue Springs (and every other district customer). We don’t get to vote, either. That makes no sense to me.”
Each of the district’s customers also pays a fee based on its flow, in addition to the fixed fee; Queen has no quibble with the flow-based fee.
After some recent procedural starts and stops among the district’s technical advisory committee, mayors advisory board and board of trustees, the trustees voted at their Jan. 14 meeting to hire an independent rate consultant. The district earmarked as much as $39,500 to hire Kansas City-based Raftelis Financial Consultants Inc., to study the district’s rate structure and make recommendations on whether to change it and, if so, specifically how.
“At this point, I believe (the rate structure) is a proper methodology,” said Greg Boettcher, the district’s executive director. “It was developed about 10 years ago … by the customers themselves. Historically, there’s been broad agreement. At the most recent vote in August, the only dissenting vote was Lake Tapawingo. It seems appropriate to look at it again to see if it’s still equitable.”
Boettcher said he anticipated having the consultant’s report within four months.
“Every year, the technical committee makes a recommendation to the mayor’s advisory board, which makes a recommendation to the board of trustees,” he said. “I think ‘fair’ is a very relative measure, but … is the cost reasonable that each customer pays? There’s none of them that could build a service and run it cheaper on their own than they can as a group. There are economies of scale in every operation. They are benefitting (from a lower) cost per gallon.”
The district recovers about 93 percent of its budget – $21.58 million for its current fiscal year – in per-gallon flow charges, Boettcher said.
“We’re a wholesale entity, and we are part of the cost that every other city charges their wastewater customers,” he said. “Our customers have their own collection lines that run down streets, and their own meters. A larger or smaller operation will have different costs.
“Our responsibility stops at that meter,” he said. “Sugar Creek has four commercial customers, and their cost per customer is large. We cannot begin focusing on only one piece of the rate structure and call it unfair. We have to look at all of the components that go into what they pay: the customer charge, the meter charge, the flow charge and the industrial pretreatment charge.”
Queen said that he had proposed a new rate structure at a mayor’s advisory board meeting on Dec. 10. His proposal considered population, flow, and “the true cost of doing business for the district.”
“What the district says it needs as fixed cost to maintain day-to-day business is $1,048,500 (the fixed cost per wholesale customer multiplied by 14 customers) a year,” Queen said. “We said divide that by the per-customer cost – we call it a fixed cost-per-connection basis – which would be $9.09 a year per (end user) throughout the district.”
Hall said that some kind of change is needed in how the district’s fixed cost is divided.
“We have attempted to make a change over the last year, and it hasn’t happened yet,” he said. “They are giving what looks like movements toward change, now that the mayor’s committee in December put in a vote of no confidence on the old way of doing it. I think it’s probably bureaucratic slowness (that’s delayed the process).”
Mallinson said the current fixed-cost rate structure has inequity the way it’s now set up.
“Somewhere in the middle is a happy medium that we’re looking for,” he said. “I don’t think it’s fair to subsidize another city, but I do want to pay my fair share. … I am very comfortable that our board of trustees will wind up with a fair and equitable conclusion.”
Lee’s Summit Mayor Randy Rhoads said he had no opinion on whether the rate structure was fair.
“We’ve hired a consultant to take a look at that,” Rhoads said. “We need to define a methodology.”
Blue Springs Mayor Carson Ross, secretary of the district’s board of trustees and chairman of its mayor’s advisory board, said he didn’t know whether the rate structure was fair.
“We have a rate structure that’s fair in relation to flow,” Ross said. “It’s the fixed cost that’s being questioned. I’ve been on the board almost seven years, and you’re not going to make everybody happy on that.
“Nobody wants to gore anybody’s goat.”
Sean Hennessy, CFO of the Kansas City Water Services Department and a member of the Little Blue Valley Sewer District’s mayors advisory committee, said that using fixed fees for the cost of service is a common practice. Kansas City Water Services starts with a fixed fee and then multiplies it by a variable that’s based on technical specifications of each of its wholesale customer.
“It costs as much to service a small customer as a large customer,” Hennessy said. “We have to have a treatment plant, a director, an attorney. What (smaller cities) want is larger customers of the district to subsidize the smaller customers. Then it becomes like a tax, and it’s no longer a fee for service. And if it’s a tax, voters have to approve raising taxes under Missouri’s Hancock (Amendment). We feel it’s very important to keep it a cost of service.”
Hennessy said he’d proposed having the Little Blue Valley Sewer District hire a rate consultant.
“I do that every year for Kansas City, Missouri, customers,” he said.
Missouri law requires that sewer districts impose reasonable charges recommended by advisory boards to trustee boards and that the charges provide adequate revenue to operate and maintain their systems, and keep up with payments on outstanding revenue bonds.
Costs in other cities
The sewer district’s service territory comprises about 278 square miles. In addition to Lake Tapawingo and Lee’s Summit, customers and their annual fixed-cost obligations per end user include:
All or parts of the cities of Belton ($18.93), Blue Springs ($7.73), Grandview ($9.60), Independence ($3.42), Kansas City ($4.74), Raymore ($14.44), and Raytown ($7.57).