Longport water tower
LONGPORT – The borough has three aging wells that are stressed by high usage during the summer months, and a new well is needed, officials agree. That’s the easy part. The hard part is figuring out how to pay for it.
Borough commissioners discussed the issue at their April 4 work session meeting.
“We need a new well. We cannot continue to maintain the old wells,” borough engineer Richard Carter said.
The borough currently has three wells, two of which are between 60 to 70 years old. They have been relined, which reduces their output, he said. After the new well is sunk, two of the wells will come off-line.
Mike Garcia of the borough’s auditing firm, Ford-Scott Associates of Ocean City, provided the commissioners with a report on the rates for water and sewer service, which have not changed for more than 10 years. Users pay a flat fee of $180 a year for 75,000 gallons of water, and $310 for sewerage.
In his synopsis of current rates, Garcia said that 78% of Longport users pay only the flat fees charged for water and sewer service, which totals $490 a year, and use less than the 75,000 gallons allotted. Those who use more than 75,000 gallons of water are charged additional user fees which brings their bill averages to $532 for 75,000 to 100,000 gallons, and as much as $2,950 for more than 300,000 gallons of water a year.
The most efficient and cost-effective way to pay for the needed improvements is to raise the flat rates by $100 per year, Garcia said. That will allow the borough to cover the cost of bonding $2.5 million at 4% interest over 20 years to pay for the upgrades. The bond would not only cover the cost of the new well, but also refinance an outstanding $360,000 bond anticipation note that paid for previous repairs to the system.
The bond sale could happen during the summer months and go into effect for the 2020 billing cycle.
Garcia said the current rates charged are the lowest in the area, “lower than they should be,” he said.
After the rates are raised, Longport would still have one of the three lowest rates in the area, and be only $20 a year more than Margate, which has not raised its rates for more than six years, he said.
“The rate increase is reasonable,” he said.
Mayor Nicholas Russo noted that 82% of property owners are summer residents, but many of the remaining property owners are year-round senior citizens on fixed incomes.
“People don’t want to be forced out, so we try to keep our taxes and rates low,” he said, asking if the increase could be based on usage instead of the flat rate.
Garcia explained that heavy users of the system would likely engage in self-conservation to save money, thereby decreasing the revenue needed to pay debt service on the bond, which will be $185,000 a year.
After the borough instituted odd-even lawn watering regulations in 2017 to conserve on usage and reduce stress on the system during the summer months, revenue dropped from a high of $1.25 million to $923,000 last year, he said.
“We need to have a guarantee of our source of revenue,” he said. “The only way to do that is increase the base rate.”
“The borough has a severe well issue and it has to be addressed,” Commissioner Dan Lawler said.
Commissioner Jim Leeds, who attended the meeting by conference call, agreed.
“We’ve been discussing this for eight or nine years now. It’s time to move forward with it,” he said.
According to Carter, the borough will have to hire bond counsel at a cost of about $300,000, which will add to the cost of the bond.
In addition to sinking a new well at the Public Works yard, the commissioners should also consider consolidating several Public Works buildings into one building and relocate offices to the second floor of the well house, out of the way of potential flooding.
“The building could be funded through a capital bond ordinance,” he said.
Carter cautioned that the utility should be maintained by the borough to keeps costs to a minimum.
“Keep it public. Don’t go private,” he said.
