BY TIMOTHY LA ROCHE
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CLAREMONT — With mounting depreciation on the city’s utilities, councilors adopted several measures this week to help mitigate any future sudden rate increase.
With the unanimous passage of emergency replacement and stabilization funds for the city’s infrastructure, city officials say they will have better control of water and sewer rates in the event of an emergency.
Upon creation of the funds, city staffers were given the authority to transfer more than $4 million from water and sewer enterprise funds to the replacement and stabilization funds.
Each subsequent year, the replacement funds will also have up to 10 percent of the total cost of replacing the infrastructure allocated. At the time of the last audit, the city had $2.7 million in undesignated water funds and $5.4 million in undesignated sewer funds.
“I think this is a forward-looking action that we’re going to be taking,” Assistant Mayor Allen Damren said. “It shows our commitment to having solid sewer and water funds in the various categories and being good stewards of the various assets and the rates that we charge for their usage.”
Talks to create the reserve funds began in early 2017 under then-Interim City Manager Pat McQueen. The idea behind the proposal was to establish dedicated funds that could be drawn from to replace the water and sewer systems without having to bond the full cost of the project.
As the infrastructure ages, city staff budget for depreciation costs. If money has not been set aside before a full replacement of the sewer or water system is necessary, residents would likely face a sudden rate spike. Other unexpected emergencies like a flooded wastewater treatment plant or equipment failure could also cause a price spike in the absence of a stabilization fund.
“It’s almost like taking what you have in fund balance and setting up buckets, and you can pull from those buckets,” Finance Director Mary Walter said. “One of those buckets is for stabilization of the rates. If at that point we decide that there is room for a $21 million upgrade … you can take money out of that stabilization rate to smooth out the rates.”
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