The Havre de Grace City Council agreed Monday night to charge residents a fee of at least $25 each quarter to put toward the city's more than $1 million water and sewer debt.
The City Council passed the bill, 5-0, that would add $25 to each water and sewer bill sent by the city for water use between zero and 49,999 gallons. Councilman David Martin was not at Monday's meeting.
The staggered fee is expected to generate about $500,000 annually in additional revenue for the water and sewer fund, according to new Mayor Bill Martin. Martin said the new fee would generate revenue equal to what the construction of about 25 new builds would pay in water and sewer connection charges.
The water and sewer fund is anticipated to end FY15 with a $1.025 million deficit and to then start the new fiscal year July 1 with a $1.36 million shortfall, according to the budget former Mayor Wayne Dougherty introduced.
The fee would rise to a quarterly $30 for 50,000 to 75,999 gallons used, $40 for 76,000 to 99,999 used, $100 for 100,000 to 999,999 used and $250 for 1 million to 5 million used.
The staggered rate structure was one of several amendments recommended by new Council President Steve Gamatoria and approved by the rest of the council.
Gamatoria said the usage-based scale makes the fee more equitable, especially to small businesses.
"We wanted to watch out for our local businesses and we did not want to be non-business-friendly with this ordinance," he said. Gamatoria said the biggest rates would be paid by government and "high-end industrial-type users."
Mayor Bill Martin said the bill meant taking action on a concept he and other council members spent several years trying to avoid.
He reassured residents the decision to impose a temporary fee was not being taken lightly and promised the council and administration would work hard to solve the debt problem.
While for some residents $100 annually "might just seem like the cost of living," many others are on fixed incomes and "I know for many people, this is going to be a hardship for them," he said.
Martin asked residents to understand that their "sacrifice" would not be taken lightly by the council, which would keep "a very, very watchful eye" on operations and how the city uses water and treats wastewater.
"Just because we are asking you to step up, doesn't mean we are not going to step up," he said about the council and government. "On our end, we are going to do everything possible to get us out of this situation."
Councilman Dave Glenn added the city would not force residents to pay as much as some of the city's larger businesses.
Gamatoria said previous councils tried a variety of programs to entice construction, which would drive up water use, but none of them worked. The new council, meanwhile, has been "diligent" in trying to make the fee "as painless as possible."
"It's not going to make a lot of people happy," he said, but explained: "I think it's very equitable."
Councilman Randy Craig thanked Martin, Gamatoria and the city staff for "the courage to lead the way on this very tough issue."
The bill was supported by Garrett Lytle, of the water and sewer committee, who called it a "big assist" for the debt service. Both Lytle and council members warned the fee, which would be up for another vote after two years, is not a cure-all.
"This has been kicked down the road for nine years," Lytle said. "I think the plan will work and it will move us farther ahead."
Craig pointed out raising rates does not necessarily mean the city will sell more water; in fact, use often drops.
"It's just a step in a direction," he said about the fee. Craig added the city should be proud of having a state-of-the-art wastewater treatment plant, at the top of the Chesapeake Bay.
"The Bay is a big part of living in Havre de Grace and we are doing our part," he said. "This city is positioned for growth and I look forward to working with the administration, the rest of the council, on making that happen."
The new fee, which Mayor Bill Martin was determined to pass upon his election in an effort to stem the ongoing debt in the water and sewer fund, was passed along with the tax rates for Fiscal Year 2016.
The tax rates would all stay the same, and no residents spoke during a public hearing on the rates. The real property tax rate would remain 56 cents per $100 of assessable real property, the personal property tax rate would be $1.705 per $100 of assessable personal property and the critical area taxing district would still be charged 4.4 cents per $100 of assessable real property.