from The Des Moines Register
August 3, 2009
Large Xenia users fear bills will triple or worse
By GUNNAR OLSON and DANNY VALENTINE
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Even 4-H campers could feel a pinch in their wallets in the far-reaching financial crisis facing a struggling central Iowa water district.
The manager of the Iowa 4-H Center in rural Madrid figures the cost of water at the sprawling camp with 45 buildings and a pool will triple - from roughly $6,900 to $20,700 annually - if a substantial rate increase is passed as proposed by the Xenia Rural Water District.
"It's hard to swallow that much money," manager John Roosa said. The $13,800 difference might have to be passed on to the roughly 900 people who pay to camp at the center each summer, he added.
The camp is not alone. Dozens of large water users - among them businesses, farms, a mobile home park, a care center and a golf club - could see their monthly water bills increase 300 percent or more. Few of Xenia's more than 9,000 customers - predominantly rural residents in 11 counties west and north of Des Moines - would escape the substantial rate increase that leaders have proposed.
The proposed increase has created an uproar in the past two weeks among many angry customers who called for the ouster of the district board's eight members. Xenia's staff attorney, Brian McCormac, said that the customers' concerns have been clearly heard and that district officials are exploring ways of not raising rates so steeply. Still, some rate increases are still needed, he said.
The district has $141 million in debt, much of it accumulated since 2006 as part of an aggressive effort to expand pipelines and add treatment facilities. But the improvements have thus far failed to attract enough new customers to make the debt payments.
Many big users exempt
A Des Moines Register review of the contracts of the district's 30 largest water users found that four of the district's five largest users would be immune from any rate increase for paying down debt. Those include a casino and three ethanol plants.
The casino's contract specifies that any rate increases should be tied to inflation, and the ethanol plants' contracts only allow for rate increases related to the cost of delivering water to the plants.
Other large water users, meanwhile, are likely to be hit especially hard under the proposal, because officials are considering charging a flat rate for water regardless of how much customers use beyond their monthly minimums. That would be a significant change for big operations that typically pay less for water.
McCormac acknowledged that some residents may think it's unfair that some companies will be exempt from the increase. However, he noted, the ethanol plants paid large connection fees, which ranged from $850,000 to $1 million.
He deferred further comment to board Chairman Tom Pierce, who did not return phone calls Friday.
Roosa, the camp manager, said he doesn't blame plants for negotiating such contracts. But he said he believes the rate hike will be unfair to everyone else.
"If it's offered to them, I think it should be offered to everybody," he said.
Two cities that buy water from Xenia, Stuart and Minburn, would be spared from the immediate rate increases because the board didn't look into adjusting them as part of the current proposal, McCormac said. Nothing in their contracts would protect them from increases in the future, beyond a requirement that they receive 120 days' notice. McCormac said a rate increase is likely.
No rate talks scheduled
The next regular meeting of the district's board is Aug. 20 at the district's headquarters in Bouton, but a date for the panel to consider rate increases has not yet been set.
District officials already postponed a meeting to consider the current proposal, originally set for July 23, after hundreds of angry customers protested the increases at a public hearing earlier that week.
The original proposal was selected by the board last month out of several recommendations by an outside consultant.
Officials are appealing for financial relief from the U.S. Department of Agriculture, one of its largest debt holders. No deals have been announced.
Among the district's 30 largest users facing potential rate increases are multiple cattle or hog farms, Ledges State Park near Madrid, the Hidden Acres Christian Center near Dayton and the Dallas County Care Facility.
Xenia officials did not have complete estimates for the top 30 users, but they offered examples of the proposed monthly rate increases on three large-scale users:
- Iowa State University Dairy Farm near Ames: $1,533 to $5,897, a 285 percent increase.
- Boston Hog Farm near Earlham: $565 to $2,267, or 301 percent.
- Beneventi Chevrolet (and its car wash) of Granger: $508 to $1,868, or 268 percent.
Xenia officials stressed that they were considering the effects on large-scale users as they reviewed the proposed increases.
The manager of the Ames Golf and Country Club said he doesn't know what the rate increases would mean for the private course outside Ames city limits.
Xenia figures show the club uses an average of 102,250 gallons monthly. Manager Cory Strait said the club just added a six-lane swimming pool.
"I'm in an awkward situation to even try to budget for next year," he said, adding that he hoped to not pass on the costs to members. "I'll have to make up the difference somewhere through budget cuts."
The rate increases would hit one business squarely in its marketing campaign.
The Picket Fence Creamery of Woodward has its dairy cows drinking Xenia's treated water, a fact the company highlights in promotional materials to the grocery stores and restaurants that carry its milk line.
Company officials said the increase would mean a nearly 400 percent increase in their water bill.
"We can't get our heads around this totally unfair and outrageous rate increase," they wrote to the board in July 22 letter.
Additional Facts
The story so far
More than 9,000 customers in the Xenia Rural Water District could see their monthly water bills increase 300 percent or more. The district is located in 11 counties west and north of Des Moines. The district plunged into debt after an aggressive expansion program failed to yield enough new customers. Recently, customers protested the increases at a public meeting.
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