WG's Sewer Lateral Repair Program Needs Changes To Get Out Of Red
January 12, 2018
With the sewer lateral insurance program in the red, Webster Groves officials are trying to figure out what steps to take to rescue it from a deficit.
The program began in the mid-1990s after a vote of residents. The annual fee was $28 paid by homeowners. In 2016, voters approved a fee increase of up to $50 per year. For 2016, the rate was $42 per year; in 2017 it went up to $50.
Assistant City Manager/Finance Director Joan Jadali said the city plans to charge $50 per year going forward, but that still won't be enough due to escalating expenses.
"In about 2013, we started receiving a significant increase in requests for sewer lateral diagnostics and subsequent repairs," Jadali said at the council's Jan. 2 work session.
She said real estate agents had started recommending that laterals be cabled as a part of home sales. About 70 to 75 percent of such homes inspected are eligible for the repair program.
The city now funds 80 percent of repair costs; the homeowner funds 20 percent. There is no cap on repair costs.
In 2014, 106 repairs were done, at a total cost of $220,405. The average cost of a repair was $2,080, with the city paying $1,664 of that.
But, for 2017, 135 repairs were done, at a total cost of $409,758. The average cost of a repair was $3,035, with the city paying $2,428 of that.
The program reserve fund balance, at the end of the 2014 fiscal year, was $204,532. That balance at the end of the 2017 fiscal year was minus $175,764.
Loans were provided to the reserve fund from the city's general fund in 2016 and 2017 totaling $180,000 to bring the fund out of a deficit.
Recommendations are to change the percentage to 65 percent paid by the city and 35 percent by the homeowner, and to cap any repair at $4,000, Jadali said.
In a year when 132 repairs are needed, the budget required under the current system would be $427,251, compared to $346,203 with recommended changes, she said.
Other local cities now have a cap on repairs – $3,000 in Glendale, $7,500 in Des Peres and $4,500 in Rock Hill. Kirkwood has no cap but its split is 75/25, Jadali said.
Jadali said a decision needs to be made soon, to avoid the city having to make another loan to the fund reserve.
Council Member Greg Mueller said he was "not inclined to recommend changes that could hurt property owners."
Mayor Gerry Welch said the city might consider picking up the cost of street repairs that are part of a project and serve to raise homeowners' costs. She also suggested the fee somehow could be attached to a home's closing costs.
But Council Member Ken Burns said he didn't want the city to act as a contractor on projects, versus the current practice of the homeowner contracting for all of the work and then be reimbursed by the city.
The council is expected to discuss the program at an upcoming meeting, possibly in February.