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Mayor proposes $16.3 million budget that includes investment in downtown, water rate increase, elimination of debt service fee

Havre de Grace Mayor William T. Martin holds a piece of a city water pipe, filled with mineral buildup that makes water flow more difficult. The city will begin replacing some of those aging pipes this spring, the first of a multiyear project, Martin said.
Havre de Grace Mayor William T. Martin holds a piece of a city water pipe, filled with mineral buildup that makes water flow more difficult. The city will begin replacing some of those aging pipes this spring, the first of a multiyear project, Martin said. (Erika Butler/The Record)

For the first time in 10 years, the City of Havre de Grace won’t have to borrow money from its general fund to balance either of its enterprise funds, the city’s mayor said.

With that money staying in the general fund, Mayor William T. Martin is proposing in his $16,253,400 million budget for FY2019 projects to continue to improve the downtown area to attract more visitors.

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The proposed budget, unveiled by Martin Monday, calls for spending $1.6 million more in the fiscal year beginning July 1 than in the current fiscal year.

The real property tax rate is proposed to stay the same at 56.5 cents per $100 of assessed value, slightly more than the constant yield tax rate of 56.05 cents, Martin said. A constant yield rate is one that would yield the same property tax revenue as in the existing budget.

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The mayor is proposing to eliminate the $25 debt service fee in the water and sewer enterprise fund, while raising the water usage rate by 6 percent, he said.

Public work sessions on the proposed budget are scheduled for April 10 (to discuss the general fund), April 23 (enterprise funds) and April 30 (a final review), all at 6 p.m. in the council chambers.

Water/sewer Fund 9

During Monday night’s City Council meeting, Martin held up a small piece of a city water pipe that was discolored and filled with mineral buildup: “This is not a sewer pipe. This is a drinking water pipe,” he said.

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The city’s water infrastructure is very old, he said — 70 to 80 years old, according to public works director Tim Whittie.

“This is what we are going to attack this year, aggressively attack. We’re going to get rid of things like this,” Martin said. “We don’t want to lose the opportunity to take care of what is most important — the infrastructure of our city.”

Councilman Michael Hitchings made sure to point out the buildup in the pipes isn’t dangerous to consumers.

“Just because you see the buildup, certainly doesn’t mean Havre de Grace’s water is any less great than it really is,” he said.

What is in the pipes is a buildup of minerals and calcium — “what you see isn’t anything bad,” he said.

The problem with the buildup is it makes it more difficult for water to move through the lines, Hitchings said.

The city isn’t waiting until the new fiscal year begins to start fixing the problem.

Revenue is increasing in the water and sewer fund this fiscal year from significantly more water connections from new development than was expected, Martin said. The city had planned for 60 hookups to its system this fiscal year and, as of mid-March, there already have been 93, he said, generating additional revenue from the capital cost recovery charges, which are $17,200 per residential connection.

When it was implemented, the capital cost recovery charge was $21,200; when Martin took office, the fee was lowered by $4,000 but a $25 debt service fee was added to all water bills. The intent was to reduce the water and sewer fund’s operating deficit while encouraging more new connections.

The additional hookups and debt service fee revenue have covered the city’s debt obligations and provided an additional $564,200 which Martin is proposing to use to start tackling replacement of the city’s aging water lines.

An amendment to this year’s budget, which the council approved by a 5-0 vote Monday (Council member Jason Robertson was absent) calls for allocating $490,000 for two water lines replacement projects — 700 feet of 2-inch galvanized line along Alliance Street and Lafayette Street between Union Avenue and Strawberry Lane. The 2-inch pipe will be replaced with an 8-inch line, according to a memorandum from Martin.

“We’ll redouble our efforts next year on fixing our infrastructure, especially downtown,” Martin said, when the city has budgeted 80 new home hookups.

The revenue from those hookups in addition to the proposed 6 percent water rate increase will enable the city to meet its debt target and have additional funds to continue with the pipe replacement, Martin said.

“It hasn’t gone up in two years, so it’s really 3 percent over two years,” Martin said of the water rate.

The increase will add 84 cents to 85 cents per 1,000 gallons of water used, he said.

While he proposes to increase the water rate, Martin is proposing to eliminate the $25 debt service fee, which was supposed to be applied for two years, but ended up being used for three, he said.

“This was a promise made to our citizens and one I intend to honor,” Martin said.

General fund

Because the city won’t need to cover a deficit in its water fund, it will have extra money available in the general fund budget, which Martin said he proposes to reinvest in downtown, the historic and business district.

Martin plans to fund a trolley project, which he said is in the hands of the Maryland legislature – needing approval of a state grant. He plans to replace the docks in Hutchins Park, install new loudspeakers on light poles along St. John and Washington streets and redeck the remainder of the promenade.

“We have invested in downtown, to bring people here,” Martin said. “The initiatives we’ve done are beginning to bear some fruit.”

Additional revenue in this year’s budget also came from a one-time payment of the Admission and Amusement tax for fiscal years 2014 through 2017 from Bulle Rock Golf Course, Martin said.

In January, the city received $240,000 to cover the golf course’s tax for the last three years. The estimate for the tax in fiscal year 2019 is expected to be about $80,000.

Martin has proposed to direct that revenue toward public safety.

The Susquehanna Hose Company and the Havre de Grace Ambulance Corps will get additional city money, and some will be used to begin an auxiliary police force through the Havre de Grace Police Department, Martin said.

“The way I wanted the public to perceive it is you play a round of golf, it goes to public safety,” Martin said. “The first responders are fully funded, and then some.”

Havre de Grace had an auxiliary force years ago, he said, but it fell by the wayside.

“With the events we have in the city, in the park, 5Ks, the wind storm, it would be handy to have them to help with traffic, light safety issues,” Martin said.

Also in the new general fund, Martin proposes three infrastructure projects — the next phase of addressing flooding in Lilly Run, completing remediation work on the Water Street parcels the city bought in fiscal year 2017 and replacing the roof on city hall.

Martin also proposes to commit $780,000 to road paving, he said, and to fully fund the city employees’ compensation package.

Havre de Grace Mayor William T. Martin holds a piece of a city water pipe, filled with buildup that makes water flow more difficult.
Havre de Grace Mayor William T. Martin holds a piece of a city water pipe, filled with buildup that makes water flow more difficult. (Erika Butler / Baltimore Sun)

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