The Village of Algonquin, IL

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2016 Water/Sewer Rate Study - Additional Information - Frequently Asked Questions (FAQs)

Why is this rate increase necessary?

Maintaining safe drinking water and environmentally sound sewer services is one of the most important responsibilities of the Village of Algonquin. As providing Water & Sewer services becomes more expensive, the Village is faced with the constant challenge of balancing our interest in offering a fundamental public health service at an affordable price, against the necessity of managing our systems in a financially sustainable manner.

We owe it to you as ratepayers to run a competent, strong, logical and fair Water & Sewer utility that is always ready to serve you. It takes money - your money - to make that happen.

Adjustment of the Village’s existing rates was necessary to make up for current revenue shortages and address goals for continued system operation, maintenance, repair, and replacement.

What factors were considered when setting the rate?

The Village of Algonquin had two primary objectives when setting the water & sewer rates:

  1. Set and maintain utility rates and fees that are fairly structured for the ratepayers; and
  2. Set and maintain utility rates and fees high enough to adequately fund the system on a sustainable basis.
    1. Pay all the known short-term system costs
    2. Pay most long-term and unplanned costs
    3. Pay for capital improvement and debt costs
    4. Pay for equipment repair, refurbishment and replacement (R&R) costs; and
    5. Build prudent reserves

What sort of capital improvement projects are planned?

As part of rate setting process, Village staff updated its capital improvements plan for its water and sewer facilities. Significant capital improvements to the water and sewer system are required in the next six years.

Approximately $10,700,000 in improvements to the Village’s water supply, treatment, and storage facilities are proposed for FY 16/17 through FY 21/22. Approximately $12,100,000 in improvements to the wastewater treatment facilities are proposed for FY 16/17 through FY 21/22.

What sort of maintenance and replacement projects are planned?

The Village’s infrastructure continues to age, requiring increased maintenance and replacement. Addressing rehabilitation of aging underground infrastructure requires increased funding levels to our annual maintenance program.

Rehabilitation of the Village’s watermains requires estimated funding of $750,000 per year. Collection system and lift station rehabilitation is also needed at an estimated cost of $1,480,000 per year.

In addition to the above, projects for repairs, rehabilitation, and expansion of existing water supply, treatment, and storage facilities and wastewater treatment facilities totaling approximately $22,800,000 are proposed for FY 16/17 through FY 21/22.

Do my property taxes help pay for the water & sewer utilities?

No. The Water and Sewer Operating Fund is a separate enterprise account that does not receive any tax income. Its revenue is derived from the use of the Village’s water and sewer services via user charges.

The Village’s Water and Sewer Improvement and Construction Fund provides for the construction of improvements to the Village water and sewer distribution and infrastructure. The Water and Sewer Improvement and Construction Fund is financed solely from water and sewer tap-on fees and interest on fund balances. Until FY 14/15, the fund also benefited from home rule sales tax revenue, which is now dedicated solely to the road improvement fund.

Why didn’t you delay the rate increase and spread it over more years?

Deferring problems in our Water & Sewer systems for someone else, the next person, the next generation to fix, will make it more costly to fix than ever. Delay makes the problem worse. Changes in spending or revenue accumulate over time. The earlier changes are made, the more they contribute to a solution. 

Why do you ask me to conserve, and then raise my rates?

Like oil and gas, groundwater is a depletable resource. With our region facing water shortages in the years ahead, conservation is a core strategy for meeting present and future water demands.

In managing out water utility, we find ourselves in a conundrum: how to encourage households to reduce their water use without (1) losing vital revenue to maintain their water systems or (2) facing a public outcry over the raising of water rates.

We want and need our customers to conserve water, but when that happens, we lose much-needed funds to upgrade and repair critical infrastructure. Therefore we have implemented a balanced approach to the rate increase comprised of two components: (1) a per thousand gallon charge based on usage, and (2) a flat rate of $10 monthly for the water & sewer utilities. With this blended rate structure in place, even when can keep our conservation measures in place without worrying about the drop in revenue.