City may pass water surcharge to customers

The City Council on Tuesday night discussed how it plans to address a potential service charge from the Southern Nevada Water Authority at City Hall.

Boulder City has to pay the SNWA about $577,000 for the 2015 fiscal year, an increase of roughly $100,000 from the year before. According to Finance Director Shirley Hughes, that number is expected to exceed $1 million by the 2018 fiscal year.

Hughes said the SNWA had to refinance all of its debt after the economy went south in 2008, and it had to take a look at how it was allocating its costs. During the first five years of financing, the SNWA was only collecting interest; the first principle payments weren’t made until 2013, Hughes said. The SNWA then determined it needed an additional fee on top of the regular wholesale water delivery charge to cover the costs.

The additional charge could affect how much Boulder City residents pay for their water.

“My concern is that this goes up all the time, but are we really paying our share?” Councilman Cam Walker asked. “SNWA paid for a much bigger Las Vegas than they got.”

Hughes presented the Council with ways the charge could be paid off, explaining that the city’s utility fund wasn’t balanced by $760,000, with $577,000 stemming from the SNWA surcharge.

“The discussion now is how do we bring in enough revenue to cover the surcharge?” Hughes said. “Our rates for utilities aren’t covering the costs. In order to have a balanced budget, we have to do something.”

Hughes presented a chart showing the proposed service charge Boulder City residents would have to pay if the Council decided to take that option. With a proposed 63 percent increase to their bill, most residential homes would be charged an additional $4.73 per month until 2017 when the monthly rate would increase by an additional $2.57.

Commercial businesses also would have to pay more monthly, with a handful of them having to pay an additional $370 per month until 2017 when it could go up an additional $204.

According to Hughes, Boulder City residents would pay a little more than 50 percent of the $577,000 surcharge, but the rates for commercial businesses would be higher to cover the difference of the total surcharge.

The City Council is now left with two options to pay off the charge.

The first option, according to Hughes, is to raise the local service charge on water.

If council members decide to not raise the service charge, then they won’t make any transfers to reserves in the budget, Hughes said. They had scheduled to transfer about $600,000 into the reserves. The balance would then come out of the existing Rate Stabilization Reserve.

“We really have to address this,” said Councilman Duncan McCoy. “We’ve just been absorbing this and it’s the wrong thing to do.”

The proposed increase is 63 percent, but if the council decides to raise the service charge, it can choose to raise it only by half, 31.5 percent.

The city’s final budget will be passed Tuesday.