Village of Ogden
Water and Sewer Rate Study
In order to promote responsible government of Ogden’s Water and Sewer departments, it is necessary to occasionally review the rates charged to Ogden users. In the fall of 2017 Village trustees began working on a rate study and consulted Don Wauthier from the engineering firm Berns Clancy & Associates.
From a budgetary perspective the village is divided into three main funds: the General Fund, Water Fund, and the Sewer Fund. The General Fund represents many different village services and functions, including drainage, sidewalks, trees, streets, and many others. The General Fund is funded by several different tax streams including property tax, income tax, sales tax and others.
The Water and Sewer Funds are independent Enterprise Funds. An Enterprise Fund is designed to operate solely based upon charges to customers. The General Fund should not be used to pay expenses in the Water and Sewer Funds, and vice-versa.
The Village obtained and reviewed accounting data from the last 5 years for the Water Fund and the Sewer Fund. For four out of the last five years the Water Fund has ended the year with a deficit. The largest and most variable expense is Repairs and Maintenance. For four out of the last six years the Sewer Fund has ended the year with a deficit. The largest and most variable expense is Repairs and Maintenance.
Current Rates and Comparisons
In August 2016 the engineering firm Berns Clancy, based out of Champaign, performed a rate study that compared water and sewer rates between communities in central Illinois. Ogden’s rates have been among the lowest in the area for many years; Ogden’s combined water and sewer rate of $30.42 per month was ranked the lowest out of 79 communities. This was calculated with an average usage of 5,250 gallons per month. For comparison the average combined water and sewer rate of Fithian was $63.23, Homer $82.76, and St. Joseph $77.79.
The water system is now more than 70 years old and the sewer system more than 35 years old. Funds will be needed soon, particularly for the water system to replace aging facilities.
What Happens When The Funds Are Depleted?
As repairs, maintenance, and infrastructure replacements are needed and there are insufficient funds, municipalities are faced with unfavorable options. Infrastructure replacements will cost millions of dollars.
One funding option is to borrow from the General Fund. This is not ideal because the General Fund is used to fund other basic operations of the village.
Another option is taking out a loan. Lower interest loans can be provided by the Illinois Environmental Protection Agency (IEPA) but the IEPA requires participating municipalities to undergo a rate test and elevate their rates to a level that the IEPA considers sufficient to cover current and future costs. The interest on loans is also an unnecessary expense that users have to pay for if a municipality is not properly saving and planning. IEPA funds were involved in both Homer and Fithian’s rates being significantly raised.
Another option is to sell the water and/or sewer systems to a third party. This happened in St. Joseph who sold their water system to Illinois American Water and saw their rates approximately triple. Often when these systems are sold to a third party the municipality receives less than market value for assets.
The Responsible Strategy
The responsible strategy is to anticipate future costs in advance and adjust rates to meet both current and future needs. Eventually all of Ogden’s water and sewer infrastructure will need to be replaced, so Ogden rates need to meet both the year to year operational requirements while having surplus to fund future capital outlays. In 2018 the Ogden board approved moderate raises to both the Water and Sewer Funds. The increases focus on usage rather than an increase in fixed fees for users. Please note Ogden’s billing system uses cubic feet; 133.7 cubic feet of water equals 1,000 gallons.
- The lowest tier consumer (38% of Ogden users) will see an increase of less than $2 per month
- The average (median) user will see an increase of approximately $4 per month
- The highest users will see an increase in water from $0.86 to $1.50 per 1,000 gallons and in sewer an increase from $0.77 to $1.50 per 1,000 gallons.
The Village Board voted on water rate increases to be effective May 1, 2018 and the sewer rate increases to be effective June 1, 2018. The Ogden board also voted to increase the sewer rate by $0.50 per 1,000 gallons each year in 2019, 2020, and 2021. The water rate will increase by $0.25 per 1,000 gallons in those same years.
It is difficult to project when and how much repairs, maintenance, and infrastructure will cost but these increases will attempt to responsibly address future concerns. The Village Board has the authority at any time to increase or decrease these rates. For any inquiries or requests for supporting data please contact the village.