Tega Cay residents could see $3-per-month rate hike if city buys private utility system

04/14/2014 10:20 PM

04/14/2014 10:21 PM

If the city of Tega Cay buys a privately owned utility system that has frequent sewage overflows affecting many residents in the Lake Wylie area, some customers will see a sewer rate increase of about $3 per month, officials said Monday night.

City officials and the utility company, Tega Cay Water Service, have spent the past seven months negotiating a deal for the sale of the system.

A customer rate increase would be necessary to obtain and repay a $5.85 million loan – the cost to buy the utility system, Tega Cay officials said. The rate increase also would cover nearly $6.5 million in system repairs – improvements needed to reduce the frequency of sewage overflows.

The estimated $6.5 million would cover a range of system upgrades including replacing or repairing 60 percent of Tega Cay Water Service’s sewage lines and 11 of 19 of the company’s lift stations.

A $3 increase is better for residents’ wallets than a nearly $50-per-month rate hike that Tega Cay Water Service would need to make the necessary repairs, said City Manager Charlie Funderburk after a special called City Council meeting to address the proposed purchase.

Representatives from the company were not present at Monday’s meeting.

The move to buy the utility system – which serves about 1,700 customers in Tega Cay – is likely “the largest decision any City Council has made for this city,” Funderburk said. After months of due diligence and shaving nearly $2 million off Tega Cay Water Service’s asking price, he said, the city is in a good position to move forward.

Nearly 200 people attended Monday night’s meeting. Many residents thanked the council for listening to years of complaints about sewage service and a 40-year-old Tega Cay Water Service system that has often spilled sewage into Lake Wylie and surrounding neighborhoods.

Funderburk said Tega Cay residents are better off in dealing with a locally owned and operated water and sewage service than Tega Cay Water Service’s representatives and “absentee owner.”

Linda Stevenson, leader of a citizens group that organized around the issue, said she agreed. Residents likely won’t mind paying $3 more per month, she said, if an end is in sight to the sewage spills.

If Tega Cay buys the system, the city will negotiate with the S.C. Department of Health and Environmental Control to sign a consent order for making the repairs. DHEC already has a consent order with Tega Cay Water Service and the company has said it has made some system improvements this year.

A sale of the utility system also requires various state approvals and levels of review. Tega Cay council members still need to sign an agreement to purchase and authorize borrowing.

Officials are working quickly but some details still need to be resolved before plans are finalized, said Tega Cay attorney Jim Sheedy.

Tega Cay officials estimate the city will net about $811,000 annually from water and sewage services if it buys the privately owned system. That money could be used to pay down debt taken out to buy the system or to pay for repairs.

Operating Tega Cay Water Service’s current system, Funderburk said, will cost the city nearly $1 million. Additional city employees would be needed to serve Tega Cay Water Service’s current customers.

The city of Tega Cay already owns and operates a utility system that serves about 1,500 customers.

Funderburk and others reassured residents on Monday that current city utility customers’ rates will not be impacted by the purchase of the Tega Cay Water Service system. Other city services and the city’s ability to borrow money for other projects, he said, will not be negatively affected.

A full repair on the flawed sewage system, he said, would not happen overnight if the city buys the utility system.

But Funderburk and others said that under city ownership, the system would be better maintained and customers would see more prompt action if sewage overflows occurred.

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