As construction begins on their new water system, Linn Creek residents and businesses might see some relief on their next water bill as rates were decreased this week.


City Engineer Matt Marschke, of Midwest Engineering, said the city dedicated $70,000 to water funds, causing the rates to go down by 17 percent.


As construction begins on their new water system, Linn Creek residents and businesses might see some relief on their next water bill as rates were decreased this week.

City Engineer Matt Marschke, of Midwest Engineering, said the city dedicated $70,000 to water funds, causing the rates to go down by 17 percent.

This news comes at a time when some business owners and residents have expressed their concern over the rates. In a previous Lake Sun story, Tonka Hills owner Matt Rollheiser said his bill went from $190 per month to more than $650 per month in a few month’s time.

Last November, the rates increased to a flat fee of $10.86 per 1,000 gallons for all users as the plan for the new system was approved.

The potential for another decrease in the future is there should more users connect to the system or if the city successfully passes a 1/2-cent sales tax this spring.

Water expense formula factors
According to city ordinance 09-006, passed last October, that rate determination was made based on the number of users compared to the amount of money needed for the three funds set up to maintain the system and pay back the $300,000 loan at 1.5 percent interest over the next 20 years.

The city predicts that 107 users will be on the system by the time construction is finished - 58 residential, 44 commercial and 5 tax-exempt.

Estimating they will need $5,809.74 in total monthly overhead for loan repayment and system maintenance, they divided the cost by number of users, giving them the base water rate of $54.30.

This is based on the premise that every household averages 5,000 gallons of water per month, which Marschke said was a widely-accepted national standard.

Dividing the base water rate by five to come up with what users should pay per 1,000 gallons, the city ended up with $10.86.

Marschke said it was not considered that commercial users like Tonka Hills, using about 60,000 gallons per month, could potentially use more water than residential users. Instead the rate will be balanced out once the construction is finished and all users are connected.

“If we find that we’re selling more water than we expected, we’ll adjust and the rates will go down,” he said.

How DNR factors in
In addition to the loan borrowed to install the new system, Missouri’s Department of Natural Resources granted $850,000 in stimulus funds to the city, Marschke said, making them party to the system’s construction and financial decisions.

Stating in an earlier interview that the rate was “mandated” by DNR, Linn Creek Mayor Jack Thornhill clarified that they simply review and approve the rate proposals submitted by the city.

“They approved the formula that is used to arrive at this rate,” he said. “DNR has to be assured that the city has the money to make the payments.”

The city, engineers and DNR officials will reassess the rates after the construction ends, which, the mayor said, will be six months from now at minimum.

Following the money
Making up the monthly overhead referred to earlier, three funds are necessary to pay for and maintain this system over the next 20 years, according to the ordinance - the Operation and Maintenance, Replacement Costs and Debt Service funds.

The Operation and Maintenance fund will pay for materials, labor and utilities and is expected to accrue $40,216.85 per year.

The Replacement Costs fund will go toward activities such as repainting the new water tower every 10 years, inspecting the tank and replacing the well pump every five years, replacing the chlorine pump every three years and replacing the city’s meters six times over 20 years. It is expected to accrue $11,500 per year.

Finally, the Debt Services fund will repay the loan and its interest over 20 years and is expected to accrue $18,000 per year.