The city's sewer rates and connection fees for new construction -- raised in 2006 to help pay for the wastewater treatment plant upgrade -- could fall because the plant's construction costs have come in far below what was projected, said Mike Conway, the city's spokesman.
"It's a lot better than usual, coming and saying we have to raise the rates," said Mike Wegley, Merced's director of water resources, about the proposed reductions.
A new sewer rate and connection study presented to the council Feb. 16 laid out new lower rates and why they're warranted. In some cases the proposed rates are 13 percent lower than existing rates.
Today a single-family home pays $45.93 a month for its wastewater bill. The new rates would reduce that cost to $40.30 by July 2010.
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The cost reduction for new hookups are even larger. A single-family home now pays $12,339 to hook up to the system. The new connection fee would be $4,935.
These proposals result from the reduced cost of the new wastewater treatment plant, originally projected to cost the city $200 million. Now the city projects that it will cost $112 million, said Wegley. He said the connection fee reduction could also bring more development to Merced.
The reasons the project's costs have been cut are many, said Wegley.
First, the city received bids on the project's most recent section far below the project's original estimates. The low bids were mostly because construction firms want work right now and are willing to work for less, said Wegley. "If there's a silver lining this is it," he said of the economic downturn.
Lower growth rates caused by economic doldrums have also lessened demand on the new plant, as well as the speed its expansion needs to move forward. This has also reduced costs, said Wegley.
The city also saved money because it was given a $2 million debt relief package from the state, which loaned the city funds for the project. In addition, the city got a 1 percent interest rate on its financing for the project, which will save money.
The City Council will hold hearings on the proposed rate changes in the coming months. No date has been set.
Reporter Jonah Owen Lamb can be reached at (209) 385-2484 or email@example.com.