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2012-01-12

City plugs longstanding water leak

By Judith Pannebaker BCC Editor

By a unanimous vote, Bandera City Council plugged a leak that had apparently caused the municipality to bleed money since 1998.

At that time, a former city council had inexplicably approved a motion giving senior citizens living in the Bandera extraterritorial jurisdiction (ETJ) substantially reduced rates for water and wastewater services. The 1998 decision enabled people ages 65 and over living in the county to pay the same base rates as citizens of the City of Bandera. At the current rates, the decision now costs the municipality nearly $22,500 a year in uncollected revenues.

Lavish discounts

According to City Administrator Mike Cardenas, 64 citizens living in the ETJ pay a 62 percent discounted rate for their water utility - from $39.70 to $15 a month. Regarding wastewater services, 23 out-of-city consumers pay only 12.50, discounted from a base rate of $25 - a 50 percent discount. Senior citizens living within the city limits do not receive any discount on their utilities.

The revelations about the out-of-city consumers' "big breaks" came during the first meeting of the New Year, Thursday, Jan. 5.

"We still have an additional 36 customers living outside the city who could also ask for the discount," Cardenas said. "Granting them a discount would cost the city an additional $16,070 annually."

Cardenas also ran the numbers for seniors living within the city limits. "If we gave the 133 citizens eligible for a discount just a 10 percent discount on their water and wastewater utilities, it would cost the city nearly $4,400 a year," Cardenas said.

If all discounts were honored, the city could potentially lose $42,900 of utility revenues per year in a worst-case scenario.

The matter came to a head when city officials began receiving requests from citizens for discounted utilities. "Apparently they had learned from friends living outside the city limits on city utilities that they were receiving discounts."

Attorney, bond company 'not happy'
Cardenas said that when the discounts were conveyed in 1998, none were offered to seniors living in the city, who must also pay municipal property taxes.

"Our bond company suggested we can't give away services," he added. "I talked with our attorney, Barbara Boulwell-Wells about the situation and she said that the bond company 'wasn't happy' with the situation."

Additionally, if the city applies for grants to fund improvement projects such as replacing water lines, offering a discount on utility services "would not look good," Cardenas said. "This is just not a good practice. Maybe the city didn't have a bond in 1998." Later it was stated that this, in fact, turned out to be the case.

The best explanation available for the lavish discounts to county residents was that "they asked council for them." The minutes of the Sept. 14, 1998, city council meeting stated: "(Former City Administrator) Mr. Reddout received a letter from a senior citizen outside the city limits who was having trouble paying bills because he was living on Social Security income only. Recently the water and sewer rates increased for residents outside the city to a $50 per month base rate for water and sewer. This increase tremendously affects the senior citizens who are living on a fixed income. They were seeking an equitable solution."

Ask & ye shall receive

"That's the reason they were granted a discount. They just asked," noted Mayor Pro Tem Maggie Schumacher. "Apparently, no one living in the city did." She added, "This (ETJ discount) should have come out when we were discussing discounting utilities for the nonprofits, but it didn't."

Schumacher also noted that no records exist regarding the incomes of the county residents who were granted a discount on their utilities. "We don't even know if these 64 people are on a fixed income," she said. "And certainly, no one checked to see if these people were going above the base rate of water use.

This is a difficult situation that we set up."

"They might not even be the original 64 people," added Councilman Brandi Morgan.

"This situation is hard to manage," Cardenas said. He recommended that the seniors living in the ETJ who receive city water and wastewater services be given 60 days notice that their rates would increase - a plan suggested by Boulware-Wells.

"I don't feel we have to give residents a discount on water rates," Schumacher said. "I think it's inappropriate to offer further discounts. We just gave seniors a tremendous break by freezing their property taxes."

Noting that a new water treatment facility would be necessary in the not-so-far future, Pallaske said, "A couple of pennies in the pockets of the residents is not that much, but it is a huge amount for the city. As a senior, my feeling is to stay away from further discounts."

Paying fair share?

Pallaske, however, thought a more gradual rate increase would be in order.

Councilman John Hegemier, however, took essentially the same tack, saying, "I agree with Horst. Adding an extra $37 a month to their utility bills is harsh. He added, "I think we should just be breaking even on the utilities. What is the cost to provide (the ETJ residents) with water?"

"We are elected by the citizens of this town and those are the ones we should be responsible for," Pallaske said. On the other hand, he suggested the increase in utility fees occur over a three-year period - a recommendation that failed to impress his colleagues.

Rather than raise rates, Morgan suggested making utility payments even across the board - presumably for both seniors and others living in the ETJ.

Disagreeing, Schumacher said, "Then there would be no benefit for those people to be annexed by the city. If we're already giving them a break, what advantage would there be?"

"Paying city property taxes," someone quipped.

No more discounts

Cardenas reiterated Boulware-Wells' recommendation, regarding the timetable for getting everyone on the same utility-payments page.
Councilman Nancy Montgomery made a motion to give those living in the ETJ who are receiving discounted water and wastewater utilities 60 days notice and then increase the rates incrementally in two consecutive billings.

The motion to discontinue utility discounts passed unanimously.
When Pallaske mentioned leniency, Cardenas said that it would be more efficient to work with residents on a case-by-case basis rather than to discount services across the board. "We can set up a payment plan and waive late fees," he explained.

Schumacher noted that residents could also apply for assistance with their utility bills to the Methodist and Catholic churches, as well as to the Helping Hand Crisis Center.