Dagsboro opts for compromise in water rate hike dilemma

DAGSBORO — Town of Dagsboro’s water rate may soon double from a year ago, an emergency compromise following the unexpected shock of a substantial hike from its water supplier, the town of Millsboro.

In a proposal offered by councilwoman Theresa Ulrich, mayor and council plan to address the 80 percent water rate increase effective July 1 from Millsboro by maintaining its $35 base rate with a $6 charge per 1,000 gallons of water.

That will leave the town with an approximate $19,530 deficit, which town leaders plan to cover this fiscal year through internal revenue transfer from water impact fees.

“I think realistically for the town it’s the best thing at this point, that we are still contributing,” said Ms. Ulrich. “As much as I hate it, I don’t want my bills to go up. I can’t afford my bills to go up either and I understand other people can’t. But the town cannot cover the cost.”

The town would face a projected $41,000 water budget deficit at a $35 base rate and a charge of $5.40 per 1,000 gallons. Its projected deficit would be $117,359 at the $35 base and $4.15 per 1,000 gallons – the rate structure that went into effect Jan. 1 of this year.

Dagsboro, which purchases its water from Millsboro in a 20-year agreement signed in 2002, learned its rate from Millsboro had nearly doubled from $3 per 1,000 gallons to $5.40 upon receipt of its bill for July.
The next step is the ordinance resolution process with a public hearing to be held at the October council meeting.
“And again, please keep in mind this is only going to be for one year. We’re going to have to go back and revisit this,” said Dagsboro Mayor Brian Baull. “This is not a permanent increase by any stretch of imagination. We’ve got to put a Band-Aid on it to stop the bleeding.”

A new potential water source for Dagsboro looming over the horizon is Artesian Water Company. In June, town council approved an interconnect agreement with Artesian after in May approving Artesian’s plans for three new wells, a maintenance building and a one-million gallon elevated water tower on property off SR 20 near the SR 26 intersection.

However, it will likely be at least a year, probably more before Artesian is in operation.
Artesian’s project requires various permitting approvals, including the Public Service Commission, said Jean Holloway, State Program Manager for Delaware/Maryland Eastern Shore SERCAP (Southeast Rural Community Assistance Project).
“We don’t know if Artesian is going to get it up and running in a year,” said Ms. Ulrich.

At $6 per 1,000 gallons, the average water user would pay about $65 a month, as opposed to $55.75 under the current $4.15 per 1,000 rate with a $35 base rate.

The $35 base rate/$6 per 1,000 gallon option was one of six presented during the Sept. 18 council meeting. The others were presented by M. Holloway, who last fall worked with the town in establishing the adjusted rate that went into in January 2019.

“That was predicated on the $3 per 1,000 gallons. So, for it go from $3 to $5.40 made that budget line item purchase water alone go from $65,000 in the 2020 budget to $129,000. That gives you some idea of what the town is facing,” Ms. Holloway said. “And any of you who are in business recognize that you can’t possibly continue to sell something that you have pay more for than what you are selling it for. It is just not sustainable.”

The rate adjustment effective in January enabled Dagsboro to finally get out of the red in its water budget, Dagsboro Town Administrator Cindi Brought said.
That scenario changed with the arrival of July’s water bill.

According to Ms. Brought, for July 2019 Dagsboro used 2,681,467 gallons for the entire town. Under the new rate at $5.40 per 1,000 gallons the total bill was $14,479.92. At the old rate, it would have been $8,044.40, a difference of $6,435.52.
“We’re going to be at least $18,000 in the hole,” Ms. Brought said at Wednesday’s meeting, attended by about a dozen residents.

“Now we are facing an additional month so you could probably add anywhere between $4,000 to $6,000 more that the town is absorbing on its own.”

Mayor Baull said he wishes it didn’t have to come to this.
“But unfortunately, it was dropped in our lap. And it was something that had to be addressed,” said Mayor Baull. “We were given absolutely no notice. There was nothing on the town of Millsboro’s agendas for any of their meetings before they passed their budget that indicated they were going to do any kind of water rate increase, let alone an 80-percent increase.”

“Not only was there no notice after the bill was received, there was no forewarning,” said Dagsboro councilman William Chandler III. “The town of Dagsboro had received no inclination from the town of Millsboro at any point in time that they were contemplating, or studying, or examining, or thinking about any water rate increase. So, we couldn’t plan to address it.”

During her presentation, Ms. Holloway recommended the town consider transferring money from other funds in this interim.
“The town can’t possibly continue to sell water for less than what they are being charged,” she said.

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