MAYORíS CORNER

MSD RATE CHANGES

BY: MAYOR SCOTT DOUGLASS  

Iím sure you have noticed recent increases in your MSD bill.  As a matter of fact, we have received several inquiries from you.  As the City does not regulate or provide any wastewater or stormwater services we are not involved in billing, collecting or setting of rates.  However, I will attempt to explain these increases for your information.  A more comprehensive explanation can be found at the MSD website, www.stlmsd.com

First, how do rate increases come about?  In 2000, changes to MSDís Charter were approved by area voters that required the creation of an independent Rate Commission.  Composed of 15 member organizations representing a broad cross-section of MSDís customers and the community it serves, the Rate Commission is designed to provide public input into how rates are set.  The Rate Commission process includes multiple public hearings and can last up to 165 days.  This process begins when a rate proposal is formally referred to the Rate Commission by MSD staff.  The Rate Commission reviews the proposed rate changes and holds public hearings to obtain customer input.  After these hearings, the Commission again reviews the proposal and makes a recommendation to the MSD Board of Trustees for final approval. 

This is the process for all rate changes.  In 2007 after this process was completed, a recommendation for a 15% increase in your wastewater charge to be effective January 1, 2008 was approved.  In addition the 2007 approved recommendation calls for a series of increases that will raise wastewater rates 64% from 2007 to 2011.  Driven by state and federal environmental regulations, wastewater rate increases are needed to continue improvements to a sewer system that ranks as the 4th largest in the United States.  An alternative proposal is being considered-- the sale of bonds to assist in financing these needs.  The sale of bonds to raise $275 million would hold the series of rate increases to 28% instead of the previously mentioned 64%.  This sale of bonds requires voter approval.  The Board of Trustees has not made a decision on when, or if they will ask for voter approval.  See the MSD web site for details. 

Another part of the 2007 recommendation called for a plan to change the method of charging for stormwater management.  Up to March 1st, 2008 it was funded by a 24 cent per month on each MSD bill and a variety of property taxes.  The funds collected were insufficient to properly handle the stormwater requirements.  Before authorizing any increases in these changes, the decision was made to find a more accurate method of determining the customerís stormwater charge.  This new charge from the 2007 proposal began March 1st, 2008. 

Now you know about how the increases were approved, how was the new stormwater charge calculated?  This new method is based on the amount of impervious area on each MSD customerís property.  Impervious areas refer to land that is covered by features such as cement, blacktop, or the footprint of buildings (rooftops) and cannot absorb rainwater.  The determination of the square footage of impervious area on your property was done by aerial imagery and it is updated ever two years.  The next update will be January 2009.  You are charged .12 for every 100 square feet of impervious area on your property.  It is believed this method reflects the demand put on area stormwater sewers by individual customers.  So, that other charge that went up on your bill from 24 cents is the stormwater charge.  Now the 2007 proposal included an annual increase in the 12-cent charge to 29 cents by 2014.  Should the bond issue pass there are indications these increases would be less. 

Hereís some good news in addition to better management of our stormwater, the MSD charge on your real estate property tax is eliminated.  Thatís 0.0187 per Hundred Dollar assessed valuation, or as shown by the example in the December 2007 edition of the Chronicle:  For a $600,000 assessed value home, MSDís portion was $19.04 a year.  This amount is eliminated.