Finlay warns of rate hikes

City Council member says tax districts could be costly for water, sewer customers

dhinshaw@thestate.comFebruary 17, 2010 

  • Who could get hit?

    The city of Columbia has 135,000 water customers, most of them living outside the city, and 68,900 sewer customers, roughly half of them living outside the city.

    The average water and sewer bill for an out-of-city home is $68.06 a month.

    That same customer living in the city pays $39.22 a month.

    Already, Columbia City Council is considering a 5 percent rate increase to pay for ongoing improvements to its water and sewer systems.

    If approved, the higher rates would go into effect July 1.

    Potential rate increases involving city debt for redevelopment projects would go into effect only as the money is borrowed.

    SOURCE: City of Columbia

A funding plan to redevelop two blighted parts of Columbia could force big rate hikes for the city's water and sewer customers, a critic of the plan said Tuesday.

City Councilman Kirkman Finlay said the $193.9 million borrowing plan is "financially shaky" and "could have some very destructive impacts" on the city's park maintenance, street repair and public safety budgets as well.

But because loans likely would be guaranteed by water and sewer revenues, Finlay said, it is monthly bills for water and sewer where residents will feel the first pinch.

A firmly divided council is expected to cast a final vote this morning to create the controversial tax districts, one for North Columbia and one for USC's riverfront Innovista district.

Finlay said water and sewer rate hikes as high as 40 percent will be the likely result of the city's decision to create the two redevelopment districts.

Supporters of the plan shot back.

"That number is completely unfounded," countered Councilwoman Tameika Isaac Devine, the plan's architect.

Mayor Bob Coble compared Finlay's 40 percent to the myth surrounding the president's birthplace.

"That's the Obama birth certificate," Coble said. "You just make up the fact, and keep repeating it."

Today's vote does not involve borrowing money or even settling on which projects to fund.

"All this does is approve the plan," Devine said. "Any bonds, any next steps, have to be voted on again by a majority of council."

Today's vote does put in place the method the city could use to pay for multimillion-dollar projects in the future.

The method is known as tax-increment financing, and it allows the city to set aside future property tax revenues within the designated districts to pay for improvements there.

The districts are designed to stimulate private-sector redevelopment in the areas after the city lays new streets, builds parks and improves utilities.

Devine acknowledged that a rate hike is "possible" if the city uses its water and sewer revenues to guarantee repayment of loans used to pay for public improvement projects. That hike would be on top of a 5 percent increase the council has already discussed to improve the city's utility system.

But as the principal architect of the plan, Devine said she's researching other ways to guarantee the tax district loans. Small loans may not require a guarantee of city revenues, she said. Developers involved in a city-backed project may be able to guarantee the loan.

All indications are the seven-member council will approve the measure on a 4-3 vote, with Finlay joined by opponents Belinda Gergel and Daniel Rickenmann.

The three say the districts are too ambitious and the economy too sickly to move ahead with plans that have been floated over the past two years.

Using admittedly "simplistic" calculations, Finlay came up with a 40 percent increase, based on the city borrowing the maximum amount of money all at once.

Advocates say they have been clear they won't do that.

Finlay, chairman of this year's budget committee and a candidate for mayor, said he hasn't seen water and sewer rate calculations as part of the debate over whether the city should create redevelopment districts in north Columbia and along the riverfront.

"I don't think anybody's done that math for the obvious reason: They don't want to know the math, in my opinion," he said.

Devine noted that Finlay has supported the proposed rate hike for system improvements, which could go into effect as early as July 1.

She and Coble said Finlay is making a wild allegation about the tax districts that he knows isn't true.

Reach Hinshaw at (803) 771-8641.

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