Modesto residents used to seeing their utility rates climb every year are in for a break this summer: The city is putting off a scheduled hike in sewer fees and it's not going to ask for a water rate increase -- yet.
Sewer rates were expected to increase by as much as 31 percent this summer as part of a five-year program intended to raise enough cash for $454 million in waste-water system improvements.
But a depressed economy has city leaders delaying another big rate hike until 2010. Modesto can manage by postponing some of the sewer projects and accepting a lower debt-to-earnings ratio on the bonds it took out to finance the work.
City Council members also want to see if they can persuade the state to give Modesto more time to comply with increasingly stringent environmental standards that are driving the rate increases.
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"These aren't things we're doing because we like doing them -- it's state mandated," Councilman Brad Hawn said Monday at a city Finance Committee meeting.
Modesto began a series of water rate hikes in 2005 that were intended to pay for a plant that treats water from the Tuolumne River and other projects. The last fee increase from that program took effect in July.
Shortly after setting the rates in 2005, the city identified errors in the numbers it used to calculate fee increases. They contributed to what was expected to be a $29.5 million shortfall for the water system improvements.
Some city leaders have said a rate increase would be on the table this year because of that gap.
The down economy has council members reluctant to ask residents for another rate hike. A new evaluation of the city's water fund determined the city could meet its required debt coverage through July 2012 without going to voters to seek another round of rate hikes.
"We feel confident that, absent a major growth spurt, we can hold everything together," Deputy Public Works Director Richard Ulm said.
Bee staff writer Adam Ashton can be reached at email@example.com or 578-2366.