Tag Archives: Illinois American Water

City of Peoria

Garbage collection bill coming soon

14 Comments

PEORIA — You may have noticed that your water bill is $13 cheaper lately. That’s because the so-called “garbage fee,” which used to be collected for the City by Illinois American Water Company, is no longer included on your water bill.

But now a separate bill for garbage collection is coming soon to your mailbox.

“On October 30, 2012, the City Council approved an agreement with First Tech, a subsidiary of Busey Bank, to manage the billing services for the refuse collection fee,” City Manager Patrick Urich said via email. “We will be mailing out bills shortly, and they will be going to property owners (not tenants).”

Only residential property owners will receive garbage collection bills. Commercial, industrial and non-profit properties contract separately for garbage collection service, so they are not charged for residential waste service, which is provided by Peoria Disposal Company (PDC) under a contract with the City of Peoria. “This is why it wasn’t recommended to be a property tax-supported service,” Urich explained.

One question that has been raised by residents is how payment of this fee will be enforced. Under the old system, non-payment could result in water service being shut off. The new system doesn’t have such an obvious enforcement mechanism.

“We have been reviewing all of our options,” Urich said, “including stopping trash collection, placing liens, or including non-payment in the State Comptroller’s Local Debt Recovery Program that would allow us to intercept any income tax refund if monies are owed to us.”

Another question that has been voiced in the community is why PDC doesn’t bill residents for garbage collection directly, which would save the City money on the cost of billing, which is estimated to be as much as $160,000 per year.

Urich says that “the fee is ours (the City’s),” not PDC’s. “If we did not have a contract with PDC to collect waste and dispose of it, each individual would be responsible for it (like the unicorporated county).” In other words, the contract is between PDC and the City, not PDC and individual property owners. Thus, if the City wants to recoup its costs, it must bear the cost of billing property owners.

If individuals were to contract individually with a waste collection company, Urich added, “the cost could be considerably higher.”

City of Peoria, Illinois American Water

IAWC to stop collecting “garbage fee”

25 Comments

Your water bill is going to be $13 lower pretty soon.

Illinois American Water Company (IAWC) has informed the City of Peoria it will terminate billing services for the City’s so-called “garbage fee.” Peoria isn’t alone; IAWC’s parent company is terminating all municipal billing services in order to “focus on [its] core business,” according to a spokesman.

Of course, you’ll still have to pay that $13 per month, so the City will have to find another way to collect it. The most likely option is for the City to bill residents directly, though it’s possible the City could find another partner to pick up the billing services. City Manager Patrick Urich told the council in an e-mail, “We are working on several options for assuming the billing operations and I hope to have something to Council soon.”

Other cities are scrambling to assume billing operations, too, and it’s not a cheap alternative. Richmond (Ind.), for instance, used American Water to collect their sanitary sewer charges. Taking the operation in-house will cause the cost of collecting those fees to double, according to their city controller. Chattanooga (Tenn.), which also collected sewer fees on their water bills, charges residents an extra $3 per month now as a result of the billing being transferred to the City.

There are a few other options that could be considered by the City at this time of transition.

  • Replacing fee with property tax hikeOne option (unlikely to be entertained at all by the Council) is eliminating the fee and collecting the revenue through property taxes. With a flat fee, everyone pays the same amount: $13. With a progressive tax, those with higher property values would pay more than those with lower property values.According to the 2012 City budget, the “Refuse Collection Fee” brings in $6,271,932 to City coffers. And according to Peoria County’s Tax Computation Worksheet for the City of Peoria, the City’s residential rate-setting Equalized Assessed Valuation (EAV) for 2010 (latest worksheet posted on the County’s website) is $1,324,615,014. Given those numbers, in order to collect the $6.27 million through property taxes, the tax rate would have to be raised 0.004739.That would mean the owner of a $100,000 house would pay $157.83 more on their annual tax bill. That’s only about $1.83 more than they are paying now for the garbage fee ($13/month x 12 months = $156/year). The break-even point would be approximately $98,800. Those with property values above that amount would pay more than the current $13/month garbage fee. Those with property values below that amount would pay less. The fee will also depend on Dumposaurus dumpster sizes and the waste container type.

    The argument for this system is that the burden for City services is borne proportionately (and thus, more fairly) by the residents. Critics argue that higher taxes will keep people from moving into Peoria and may drive people to move out. Furthermore, they argue, everyone benefits equally from garbage collection, so everyone should pay equally for it as well.

    From a billing standpoint, the County would collect this tax just like all the others through the property tax bill, so there would be no increased costs to the City for billing.

  • Replacing fee with garbage stickersOther cities take a different tack regarding garbage fees: they base it not on property values or flat fees, but rather how much garbage residents throw away. In Aurora (Ill.), for instance, residents purchase garbage stickers for $2.68 each and affix one sticker to each bag or 32 gallon garbage can each week. This way, those with less garbage pay less in fees than those with more garbage. It could even be used as a way to incentivize recycling.However, since garbage without valid stickers do not get picked up, there could be unintended consequences. Garbage could pile up on the properties of negligent residents or in vacant lots as people try to get around the fees by doing illegal dumping, and that would obviously be a health hazard. It would also raise costs for the City for enforcement and cleanup.From a billing standpoint, the cost of printing, distributing, and collecting revenue raised by the stickers would have to be worked into the price of the stickers. These costs would likely be less than mailing a bill directly to each household.
  • Having PDC collect the fee directlyAccording to the City, this fee is solely for garbage pickup and tote rental. If that’s the case, then a reasonable question would be, why is the City handling the billing and collection of this fee? Why not have PDC collect the fee directly and cut out the middleman? Other utilities (water, electricity, cable) direct bill for their services without going through the City, even if their rate is negotiated by the City (e.g., electricity rates were recently negotiated by a number of municipalities).This doesn’t change anything about how the fee is assessed, but it does resolve the issue of finding a new way to bill the residents for the service. It also would allow the City to completely cut out the need to collect money and pass it on to PDC.
Uncategorized

You know that phone line that was cut?

5 Comments

I was wondering why I didn’t have any phone or DSL service the last two days. The Journal Star answered my question today when I was finally able to log on again:

Illinois American Water said Wednesday that an underground AT&T phone line was cut in the 500 block of Main Street during construction work.

Illinois American spokeswoman Karen Cotton said that information about the phone line’s location was inaccurate, and the line was cut once construction began.

They should have called Julie. My phone/DSL service went out Tuesday afternoon, and AT&T got the line reconnected at some point between midnight and 6:00 this morning.

City Council, City of Peoria, Illinois American Water

Water rates could skyrocket

4 Comments

Future water bills will be significantly higher if Illinois American Water Company and the City of Peoria get their way.

Illinois American Water Company (IAWC) wants to raise rates about 5% for infrastructure improvement, plus another 30.18% for a general revenue increase to cover higher operating expenses. The City, also in need of more revenue, is considering the possibility of imposing a 5% water utility tax to take effect next spring.

Let’s see, 5 plus 30.18 plus another 5 . . . that’s a 40.18% increase! That means a family that currently pays $30 a month for their water bill will be paying $42.05 (and this doesn’t include the $6 “garbage fee” that will remain on the water bill as well). That’s an increase of $144.60 per year. Wow!

Speaking of the garbage fee, they’re simultaneously looking at cutting the very services that fee supports. They’re suggesting the elimination of free landscape waste pickup — transferring the cost of that service to the users.

Meanwhile, downtown parking will continue to be subsidized. Priorities, you know….

Look for the exodus from Peoria to continue.

City Council, City of Peoria

Council Roundup 10/28/08

Leave a comment

Possibly the biggest news from Tuesday’s Peoria City Council meeting is that the council decided not to pursue purchasing the Peoria District waterworks. So, the clock starts ticking — the city has the option of buying back the waterworks every five years, so mark your calendars for 2013 when this will come up again. The vote, by the way, was 4-7. Voting in favor were councilpersons Manning, Sandberg, Montelongo, and Van Auken.

Naturally, the council approved a temporary change to the Form District portion of the Land Development Code (which I discussed in a previous post). The vote was 9-2, with councilmen Sandberg and Jacob voting against it.

A new Tax Increment Finance (TIF) district was created downtown. Sandberg was the lone “no” vote. This TIF is part of the new “Hospitality Improvement Zone Tax Increment Redevelopment Plan and Project” (HIZTIRPAP?), which, if I understand it correctly, is designed to help existing downtown hotels improve and encourage the development of new hotels downtown — especially a hotel near the Civic Center. I’ve heard unconfirmed rumors that the Pere Marquette is going to be one of the first hotels to take advantage of these incentives by planning an expansion.

The council made no decision on whether to raise elected officials’ salaries, deferring the item until next Monday’s special meeting. However, there was a last-minute attempt by councilperson Van Auken to tie any future raises to the Consumer Price Index instead of a flat percentage. This led to a six-and-a-half-minute sermon from councilman Nichting on the value of public service and the sacrifices of public servants.

The other two newsworthy items were that (a) they denied a liquor license to Target in the Glen Hollow shopping center, and (b) they appointed F. Eugene Rebholz to the Peoria Public Library Board of Trustees, replacing Frank Gold, chairman of the library’s building committee.

City Council, City of Peoria, Illinois American Water

Water company buyout on agenda for Tuesday

12 Comments

As my letter from Illinois American Water indicated, the council will be taking up the matter of whether to buy the water company at their Oct. 28 meeting.

Included in the council communication are (1) the March 1, 2005, letter of appraisal that set the value/purchase price of the Illinois American Water Peoria District at $220,000,000, and (2) the City’s Water Company Acquisition Financial Analysis. The financial analysis estimated that 2006 revenues would have been $29,360,000, based on actual revenue information acquired through the due-diligence process at that time. It also estimated that an operations contract to manage the water company would cost about $11,000,000 in 2006, increasing 3% each subsequent year.

The analysis showed that the water company would pay for itself — i.e., taxes would not have to be raised to cover the debt service — and water rate increases would only be 3% per year. Under this scenario, sufficient funds would be set aside for capital improvements as well.

Of course, things have changed since 2005. A new analysis would have to be done, as well as a new appraisal. According to the council communication, due diligence could cost as much as $2 million, and the city could find that it now can’t afford the water company when all is said and done.

Mayor Ardis is quoted in the paper today as saying, “To me, it will be very difficult to justify spending $2 million to do due diligence on this under the current budget constraints…. I don’t think that is a priority.” Ardis voted against the buyout last time, also.

Also of interest in the Journal Star’s article are some preliminary numbers from Illinois American Water Company’s telephone poll:

Company spokeswoman Karen Cotton said the research shows that of 400 registered voters in Peoria who were polled, 55 percent strongly opposed a city-backed buyout of the waterworks, while 89 percent believe City Hall has higher priorities.

In a 2005 referendum, 82% of voters were opposed to the water company buyout. Depending on how many were “somewhat opposed,” we may find that opposition is softening.

City Council, City of Peoria, Illinois American Water

Water buyout mania starts again

25 Comments

I got a letter from Illinois American Water today (as I’m sure many of you did, too). I thought it was going to be a report on water quality, but to my surprise, it’s the first volley in the quinquennial fight over the City’s attempt to take over the water company! The pertinent portion of the letter reads (underlining in original):

One other matter I would like to inform you of is that the Peoria City Council is expected this month to consider whether to pursue a buyout of Illinois American Water’s Peoria District water system. An 1889 franchise agreement gives the City the right every five years to pursue a buyout of the water system. As you may recall, in 2005 residents of Peoria voted against a buyout by a margin of 82-18. At that time, an independent panel determined the purchase price would be $220 million in addition to new capital investments made by the company.

If the City Council decides to again pursue the takeover of the water system, the study alone may cost taxpayers $1 million or more. In addition, the company has made significant capital improvements since 2005, which have increased the value of the water system. Some buyout proponents suggest that the takeover of Illinois American Water’s business in Peoria will provide new revenue for City projects not related to the water system. That would be a mistake. Revenue from water bills should be used to operate and invest in the water system, as we do, rather than to fund other City projects. We have encouraged members of Council not to pursue a buyout because there is no reason to do so. A buyout process will be very long, costly and divisive while distracting the City and the company from more important priorities.

I could be wrong, but if I were a betting man, I’d bet that this time we’re going to hear the biggest push ever to buy the water company. Why? Three letters: CSO. The city really, really wants to find a way to pay for the Combined Sewer Overflow project without raising taxes. Being able to take water company revenues and put them toward that effort may prove too hard for the council to resist.

I’ve always been against the water buyout in the past, chiefly because I fear the city will use water rates to raise revenue for other things — essentially a hidden tax that could be used for questionable things like Gateway Buildings and subsidized parking decks. And that’s the argument the water company is making as well in this letter.

But on the other hand, it’s not like Illinois American Water is a non-profit cooperative, putting all their revenue back into the company. They make over $6 million a year in profit for their shareholders. Why shouldn’t the City make that profit and be able to use it toward, say, the CSO project? Or to get rid of the so-called garbage fee?

I’m starting to change my mind. It’s not that I don’t still have the same concerns about a potential water company buyout. It’s just that desperate times call for desperate measures. Buying the water company might be a way for the City to mitigate potential tax increases and still have the money to take care of the CSO project and other basic services.