The Delaware Finance Committee approved Thursday evening a recommendation to City Council to increase rates for water and refuse utility rates.
The city has not raised utility rates since 2012. If approved, residents would see an increase of 2.86 percent in their utility bill. That would cost a family of four to five people, that would use about 800 cubic feet of water, $106.59 total per month compared with $103.63 in 2016.
The city looks to have the rate increases approved by May.
Due to the Ohio Environmental Protection Agency’s water quality standards and capacity needs, the city of Delaware expanded its water plant, 3080 U.S. Route 23. The estimated $32-million project was completed in 2015.
But treatment costs, mainly electrical, have caused expenditures to exceed revenues, according to the 2017 budget.
Finance Director Stelzer said treatment costs have jumped to more than $1.78 million last year, compared with more than $1.38 million in 2014.
“We are starting to trend up on the operating expense side … There are some operational issues associated with the new plant and how it functions,” he said. “… That’s pretty much what’s somewhat driving looking at bumping up our water rates.”
In addition, the increase for refuse is driven to help cover the growing cost of waste management. And the committee will discuss increases for storm and sewer utility rates in the summer.
In other business, the committee discussed issues with Ohio Auditor Dave Yost’s new tool for Ohio communities to assess their financial health.
Yost announced a new tool that generates “financial health indicators” for all 247 cities and 88 counties in Ohio. The initial release of information uses data from annual financial statements cities and counties have submitted through 2015.
The tool generates up to 17 financial indicators using data from a rolling four-year period. Depending on the data, each condition is designated as either having a critical, cautionary or positive outlook.
The indicators are “similar to standard financial ratios used in the private sector and also similar to ratio/trend analysis performed by Moody’s Investor Service as part of issuing a bond rating for the city,” Stelzer said in a memo to the committee.
Delaware has one critical and one cautionary outlook for the ratio of its debt service to total revenues, and total liabilities to net assets, respectively.
Delaware’s debt-revenues ratio was at 48.87 percent, above the auditor’s 11 percent benchmark in order for the indicator to have a positive outlook. The city’s debt service was at $18,022,669 with total revenues at $36,878,500 in 2015, according to the report.
Stelzer said the 2015 debt-service amount included as an annual debt service all of $11,695,000 of short-term notes paid off on behalf of the Glenn Road New Community Authority, a separate public body governed by a board of trustees, for road improvements.
“The amount that should have been used as an annual debt service amount would be closer to $1,000,000 representing the annual debt amount if we would issue long-term debt for the $11,695,000,” Stelzer said.
“Bottom line is the amount used in the calculation is not representative of the financial health factor this indicator is intending to depict. Furthermore, the Glenn Road NCA debt obligations do not come from the city’s revenue sources (budget) rather the debt service will be covered by the property tax collections of the Glenn Road NCA. The debt (short-term 1 year notes) shows up on the city’s books because we issued the debt in our name with the understanding that the NCA would pay off the debt.”
Stelzer said a recalculation by removing the notes would have the ratio at 8.16 percent below Yost’s benchmark.
In addition, Stelzer updated the ratio for total liabilities-net assets ratio. Under the auditor’s calculations, the city’s ratio is above 60 percent between the 50 to 70 percent benchmark to be labled as a cautionary outlook.
But Stelzer said the city’s figure includes the debt for the Glenn Road project and for recreation projects, which has a dedicated revenue after a levy passed.
Stelzer’s number for the city would be at 22 percent.
City Manager Tom Homan said Yost contacted him to reassure the city’s “financial conditions” were sound. Homan provided Stelzer’s information to the auditor. But he and some committee members said it was a good financial tool for elected officials, despite challenges for public relations.
“You can’t capture the nuances of all different intricacies of finance and that’s one of them,” Homan said.
The committee did not elect new officers as the current chairman, Councilman Joe DiGenova, was absent and “a little under the weather,” Councilman Chris Jones said.
Councilwoman Lisa Keller was at the meeting to fill in for DiGenova and other council members are expected to fill in for him until he returns, Jones said.
Gazette reporter Brandon Klein can be reached by email or on Twitter at @brandoneklein.