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Town reacts to county rate hike

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By Christopher Brooke, Reporter

HILLSVILLE — After seeing the proposed increases in the Carroll Public Service Authority's rates, Hillsville officials wondered why the county found the town's prices so unaffordable back when they considered combining forces on public utilities.

After Hillsville built a sewage treatment plant to process wastewater from both the town and the county and after years of negotiation, Carroll County decided to expand the amount of wastewater it sends to Galax for treatment, much to the consternation of town officials.

A handout from Carroll County showed proposed rate changes of:

• a $24 minimum for up to 2,000 gallons of residential water, plus $6.60 per each additional 1,000 gallons. That's compared to current rates of $22 for the first 2,000 gallons and $5.50 for each additional 1,000 gallons.

• $37.20 per month for up to 4,000 gallons and $6.60 for each additional 1,000 gallons for commercial water. Current rates are $32.29 plus $5.40 for each 1,000 gallons over.

• Non-user rates could change from $22 per month to $24.

• residential sewer rates are proposed as $25 per month for up to 2,000 gallons treated and $8 for each additional 1,000. That's up a dollar from the current minimum of $24 per month and $7.50 for each additional 1,000.

• commercial sewer rates would go from $30.75 for the minimum to $35. Plus, $8.50 for each additional 1,000 gallons, up from $7.50.

• non-user fees for sewer would go up $1 to $25 per month.

The authority will hold a public hearing on the proposed rate increases at its meeting Nov. 16.

In the meantime, town officials produced a comparison of its water and sewer rates against those proposed for the county.

The results showed that the PSA water rates top Hillsville's in-town rates, sometimes by large percentages. By the same token, the town report found that the authority's in-town sewer rates were higher in every case.

A note from Danny Webb, Hillsville's utilities director, compared one number for residential service to illustrate the difference in rates.

An average in-town residential usage is 6,000 gallons.

"With the town's rates, this results in a water/sewer bill of $59.97," the note said. "The same usage at the PSA's proposed rates would result in a water/sewer bill of $107.40. This would be 79 percent higher than the Town of Hillsville's rates."

These comparisons left Town Manager Larry South wondering about the county's decision to take its utilities business elsewhere.

"I think the town has seen it as very curious this process of pumping sewage 13 miles instead of letting it gravity flow two miles as somehow being less expensive as presented by the county," the town manager said.

The county's proposal seems to have significantly higher rates as compared to the town's. South believes the figures show that it would have been more economical for the PSA customers if the county had worked with Hillsville.

Comparing Hillsville's water and sewer rates with other systems in Virginia, the town's consistently fall in the middle of the pack, South said. That gives town officials confidence in their water and sewer efforts.

"We tried to negotiate fairly with the county, keeping our existing customers in mind, not setting a rate so low to the county that it would impact our other users negatively," South said.

Asked about the town's study, County Administrator and PSA Director Gary Larrowe had a different take on it.

Carroll's public water and sewer systems are undergoing rapid growth with the addition of the regional water project, the new Woodlawn sewer system and water and sewer service headed to three previously undeveloped Interstate 77 exits to promote growth there.

Federal agency Rural Development serves as a source of financing for many of the PSA's projects, Larrowe said. If Carroll County wants to continue working on developing new systems it must honor Rural Development's requirements.

Recently, the agency has told Carroll officials that they must increase rates, based on census data, in order to continue to be eligible for federal grants.

If not for these grants, projects like the recently announced work in Fancy Gap wouldn't be affordable, cutting off much of the potential growth that public water and sewer service will make possible.

"The rate increase is not something that the PSA wishes to do, however it is necessary to have projects funded..." Larrowe wrote in an e-mail. "If this does not happen, the 'tap' to the funds will be cut off!"

Having to qualify for a private bank loan with a shorter repayment term and higher interest rate would have steeply driven up the costs for the authority's projects, Larrowe said.

"Plus, would we have even qualified for the loans? In today's environment it would have been tough," he added.

About the failure of Carroll and Hillsville officials to come to a utilities agreement, Larrowe said that decision came from Rural Development, too.

The federal agency told Carroll that the rates offered by the town were out of line, the county administrator recalled. Once Rural Development decided, Carroll County had to find other options for treatment.

Galax had excess capacity, which led to negotiations and rates that Rural Development would agree to, he said.

"I find it unfortunate that at the time when the PSA needed good, solid, reasonable rates, Carroll County could not depend on the town and had to go to Galax to get the service," Larrowe said.

Carroll officials have seen what happens without water and sewer service being available, and the county administrator believes that the future for the county will be brighter with the ongoing utilities projects and funding from Rural Development to pay for them, he said.

And utility services in Carroll County are growing faster with more construction underway than in any other locality in Virginia, Larrowe said.