Riverhead Water District rate increase, new capital improvement surcharge proposed

Riverhead Water District customers will be paying more for water through rate increases and a new surcharge, if the town board approves a proposed rate structure presented by the district superintendent last week.

The increases are needed to cover increased operating costs and help fund capital improvements, Water District Superintendent Frank Mancini and district consultant John Collins of H2M Architects and Engineers told board members at their June 4 work session.

The district proposes to raise revenues by reducing the gallonage included in the minimum service charge, increasing the per-thousand gallon overage rate, and assessing a capital improvement surcharge of $80 per year on residential customers and $120 per year on commercial customers.

The quarterly minimum service charge for residential customers would remain essentially the same (increasing by 10 cents from $10.90 and $19.90, depending on meter size, to $11 and $20, respectively.) But the amount of water that quarterly minimum buys will be cut by roughly half.

Residential customers have 3/4-inch, 5/8-inch and 1-inch meters and are billed quarterly. Commercial customers have 1 1/2-inch, to 10-inch meters and are billed monthly.

The district’s 6,115 residential customers with 3/4” or 5/8” meters currently pay $10.90 per quarter for up to 4,000 gallons, and $1.73 per thousand gallons for amounts over 4,000 gallons.

Under the district’s proposal, these residential customers would pay an $11 minimum service charge per quarter but the water consumption included in that fee would be reduced to 2,000 gallons. The reduction from 4,000 to 2,000 gallons per quarter would result in an annual increase of $96. The overage rate of $1.73 per thousand gallons would remain the same for 2020.

The district’s 5,284 residential customers with 1” meters currently pay $19.90 per quarter for up to 9,000 gallons and and $1.73 per thousand gallons for amounts over 9,000 gallons.

Under the district’s proposal, these residential customers would pay a $20 minimum service charge per quarter but the water consumption included in that fee would be reduced to 5,000 gallons. The reduction from 9,000 to 5,000 gallons per quarter would result in an annual increase of $112. The overage rate of $1.73 per thousand gallons would remain the same for 2020.

Both types of residential customers would pay a capital improvement surcharge of $20 per quarter ($80 annually).

The district’s commercial customers pay monthly minimum service charges of $12.80 to $125 per month, depending on meter size. The gallons included in the monthly charge also vary with meter size. The district’s 78 customers with 1 1/2-inch meters pay $12.80 per month for up to 6,000 gallons per month. The district’s 11 customers with 10-inch meters pay $125 per month for up to 84,000 gallons per month. Most commercial customers — 278 of them — have 2-inch mains and pay $15.42 per month for 8,000 gallons.

Commercial customers would have the gallonage included in the minimum service charge reduced by 30% to 50%, depending on meter size.

Commercial customers pay the same $1.73 per thousand gallons overage rate as residential customers.

While the $1.73 per 1,000 gallons overage rate would not be increased in 2020, the district is proposing an 8.7% overage rate increase over the next three years — to $1.78 per thousand gallons on June 1, 2021, $1.83 per thousand gallons on June 1, 2022 and $1.88 per thousand gallons on June 1, 2023.

Customers outside the Riverhead Water District tax area are billed at a contracted flat rate of $1.98 per 1,000 gallons in addition to the minimum service charge. The flat rate would be raised to $2.15 per 1,000 gallons under the district’s proposal.

Storage tanks at a ‘critical point’ due to deferred maintenance

Revenues raised by the proposed capital improvement surcharge would be set aside to help fund capital bonds for projects needed to maintain or upgrade the water district’s capital facilities. The surcharge is projected to raise an estimated $970,000 per year.

“The problems the district has had are really long-standing,” Mancini told the board. “We’ve been able to survive but the only way that’s been able to be done is by deferring the maintenance of our really large expensive assets,” he said, citing specifically the district’s large elevated water storage tanks.

“The Route 58 tank… as per our engineering reports should have been rehabbed in 2010 and here we are a decade later,” Mancini said. “That went from a $2 million job to now over a $3 million job. Also Plant 10, another tank near the Northville tanks…It’s in need of maintenance immediately for a cost of about $1.5 million.”

These two “critical projects” will cost the district about $500,000 a year in debt service over the next 10 to 15 years, the superintendent said.

The projects have been deferred because of other capital needs that seem more pressing continually arise, he said.

“We don’t gain a drop of water from it, so it’s always deferred when something comes up,” he said, including meeting new regulatory requirements.

“But it’s gotten to a critical point where we need to address these problems,” Mancini said.

“If the Route 58 tank were to go down in the middle of July, we’d be in an incredible water emergency,” Mancini told the board. “We wouldn’t be able to supply water. We would immediately have to declare a water emergency for the entire downtown area,” he said.

“Even a small hole above the water line would be a ‘tier one’ emergency. We’d have to shut it down or issue a boil water alert,” he said.

“Same thing with tank 10 (in Northville). They happen to be in the same pressure zone,” he said.

The district can no longer defer this needed critical maintenance, he said.

“It would be a disaster for us,” Mancini said.

The Riverhead Water District commenced a multi-year capital improvement plan in 2016 to provide added source and storage facilities, rehabilitate older facilities, install distribution facilities and improve water quality, according to a report prepared for the district by H2M.

The district has completed $5.6 million in capital projects since then and the town has approved another $9.3 million for bonding, according to the H2M report. Capital projects totaling an estimated $11.1 million has not yet been approved.

The capital reserve fund would be used to fund the annual bond cost, which the district is currently paying out of property tax revenues. The current and projected tax base is not, by itself, sufficient to fund the district’s projected capital expenditures without exceeding the New York State 2% cap on tax levy increases, the report says.

The district also has to find and develop new water supply sites in order to meet growing demand, Mancini said.

“In the eyes of the DEC, in close to 20 years (we haven’t) been able to supply the amount of water we’re already committed to,” Mancini said.

Over the past decade, the Riverhead Water District has pumped an average of 2.6 million gallons of water per year.

Councilwoman Jodi Giglio said the town board already has a capital improvement plan.

“We labored through this last year and adopted a capital improvement plan when we were applying for the $3 million grant for the magnesium removal for one of our water tanks,” Giglio said.

“So the doom and gloom is really — we have plan in place and this is going to pay for it,” she said. “This was anticipated when we adopted the capital plan last year that we needed to move forward with this, so now is the time. And the improvements you’re proposing are in the first phase of the capital plan, correct?”

“Yes,” Mancini replied, “but those projects historically were there but had been pushed back. We can’t push it back any longer.”

“It’s great to know that we have a plan,” Supervisor Yvette Aguiar said. “Can you get that to me, to my office. I would like to review it. It’s always good to know what plans are in place and be cognizant of it,” she said.

Councilman Tim Hubbard said he supports the proposed increase, which he said “is not going to be painful to most people” and will still keep Riverhead’s rates well below those charged by the Suffolk County Water Authority, which supplies water to most of the county. Riverhead Water District rates have not been increased since 2016, Hubbard noted.

Councilman Frank Beyrodt agreed. “I’d like to call it more of an investment in our most important asset in our town instead of a rate increase,” Beyrodt said.

Mancini said the investment in the system is an investment in assets that will serve the town for many decades.

Councilwoman Catherine Kent said the town also needs to stress conservation.

”That’s an important point because it’s a lot easier for us to conserve water than find new water,” Mancini agreed. “You can still have the type of yard you have now, but you have to water your lawn more efficiently than you are now,” he said.

Giglio said she has been working on a code amendment that would reduce water consumption by requiring both commercial and residential new construction to use less “fertilizer-dependent vegetation.”

“I’ve been working with the town attorney actually since mid-last year — and then the pandemic and we were reviewing back and forth — on a code change,” Giglio said. “I hope to put that before the board as soon as we get out of the pandemic, because right now we have more pressing issues.”