The City of Rochester on Wednesday released a statement on its website titled “City of Rochester Addresses Water and Sewer Bill Interest Charge Issue,” apologizing for a technical glitch that charged water/sewer customers four to six cents extra on their recent water/sewer bills.
When I first read this release I was surprised the city had even bothered to release such a statement considering the paltry sums that were overcharged. Beside that, the city noted that the four to six cents that were overcharged would be credited on their next bill. Yeah, so folks, you can start looking forward to that windfall.
But then I started to wonder, if the city can be so vigilant and transparent about four to six cents, where were they when the water/sewer enterprise account was practically insolvent to the tune of about a $7.5 million deficit, and they never said a word about it till an independent auditor told the city words to the effect of “you’re in deep doo-doo.”
Now an enterprise account is used for things like water/sewer systems, or a town ambulance service, that takes in money from fees etc. Now in theory, those fees are supposed to pay the expenses of maintaining the service.
But in the case of Rochester’s water/sewer situation, operational costs and mandated upgrades due to regulation forced the city to spend beyond what was being brought in, without raising rates proportionately over many years.
So the auditor put it kind of bluntly: If you don’t pay off about $7.35 million to bring the enterprise account current, the city’s is going to see its bond rating plummet, which means anytime the city needs to borrow money the interest is going to cost more, a lot more.
So the city took out a loan from a bank for $7.35 million to pay down the enterprise account deficit.
The interest rate is expected to be around 6.5 percent.
Here are some figures that show what the interest for a $7.35 million loan would be over various payment plans.
Estimated Payment Scenarios (at 6.25% Interest Rate)
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10-Year Term (120 months):
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Monthly Payment: $82,525.87
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Total Estimated Interest: $2,553,104.54
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15-Year Term (180 months):
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Monthly Payment: $63,020.58
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Total Estimated Interest: $3,993,704.52
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20-Year Term (240 months):
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Monthly Payment: $53,723.22
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Total Estimated Interest: $5,543,573.49
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30-Year Term (360 months):
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Monthly Payment: $45,255.21
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Total Estimated Interest: $8,941,877.12
To be clear, city officials have said that funding to pay the $7.35 million will be paid back by water/sewer users, not Rochester residents who are not on city water/sewer.
But why did it take several years for this financial debacle to be reckoned with?
Why did it take an outside auditor to sound the alarm earlier this year?
If it was a city employee who caused this fiasco to be foisted on water/sewer ratepayers, he or she should have been fired.
I can assure you that in the private sector they would have been kicked out the back door on their arse in a heartbeat, with no pension for malfeasance of office.
Whether that malfeasance came from the City Council, or city staff, I really don’t care. Maybe there should be an investigation, but don’t hold your breath.
So while I appreciate and admire the city’s quick issuance of an apology and explanation on residents getting charged an extra four to six cents on their most recent water/sewer bill, I say “where were you when it was $7.35 million on the line?
Where was the transparency then?