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DeKalb County water, sewer rates may be increased: bond analysts, consultant

By David Pendered

Customers of DeKalb County’s water and sewer system may be facing a series of rate hikes that could begin next year and continue into 2026. The county’s revenues from customers need to increase by 40% by 2026 to cover expenses, according to a consultant’s report.

Future rate increases were cited by Wall Street analysts in their positive review of DeKalb County’s $732.7 million in debt for water and sewer upgrades. File/Credit: Kelly Jordan

The hikes loom as the county’s system has received three positive reports in the past six weeks.

The potential rate hikes were cited in a credit rating action issued Dec. 4. Moody’s Investors Service affirmed the existing investment-grade rating on $732.7 million in outstanding water and sewer bonds. The bonds have a stable outlook:

  • “The stable outlook reflects the expectation that the system will maintain satisfactory debt service coverage ratios and liquidity despite capital needs and future debt plans, due to future rate increases.”

Potential rate hikes are discussed in a Sept. 10 report to the county from a consultant, Arcadis.

The report cites a need to increase revenues from rates by 40% by 2026. Annual revenues generated by fees paid by customers are to increase from $240.6 million in 2020, to $337.9 million in 2026, according to the Arcadis report.

Since the report was issued, county officials and commissioners have discussed a range of issues related to the aged network of pipes that move water and sewage around the county.

As noted in Line 2 on the chart, revenues from rates charged to customers need to increase by 40% by 2026 to cover expenses of DeKalb County’s Department of Watershed Management, according to a consultant’s report. Credit: arcadis

The issues include the pending modification of the federal consent degree that was approved in 2011 and sets terms for renovated portions of the county’s leaking sewer system. The public comment period ended Dec. 4 and the matter is now pending in U.S. District Court in Atlanta, before U.S. District Court Judge Steven Grimberg.

The Arcadis report does not offer any specific rate hikes for the system’s residential and commercial customers.

The Arcadis report does provide the rate of additional money that will be needed to meet the needs of the county’s Department of Watershed Management for the coming years:

  • “The revenue requirements and financial goals of DWM during the forecast period necessitate the need for additional revenue. These revenue increases are quantified in Table 5 below. The forecasted water and sewer revenue increases include the following:
  • “April 1, 2021: 8.00% revenue increase
  • “January 1, 2022: 6.00% revenue increase
  • “January 1, 2023: 6.00% revenue increase
  • “January 1, 2024: 6.00% revenue increase
  • “January 1, 2025: 6.00% revenue increase
  • “January 1, 2026: 3.00% revenue increase.”

A federal loan of $265 million is intended to help halt the leaking of raw sewage into the South River, seen here at Panola Shoals. File/Credit: Kelly Jordan

The report’s authors highlight the fact that their document does not address the potential rate hikes that could be applied to residential and commercial customers. In bold text, the report observes:

  • “The Revenue Sufficiency Analysis does not include a determination of the actual rates and charges of the system, but provides a forecast of the total system rate revenue needs as well as increases in rate revenue, if any, that are projected for each year of the forecast.”

In doing so, the report avoids stepping into the realm of recommending any specific rate hikes. Such hikes roiled the county a decade ago.

A memo sent to county commissioners on Sept. 21, which is not directly related to the report from Arcadis, included the observation that, “poor communication resulted in misunderstanding by county residents” following rate hikes of 16% in each year between 2008 and 2011, and 11% in years 2012, 2013 and 2014.

Meanwhile, the county has received the following reports. Each is generally positive:

  • The Trump administration provided a $265 million federal loan to address the spills of raw sewage that finds its way into the South River. The award was announced the funding Oct. 26 at an event at the Callanwolde Fine Arts Center;
  • Moody’s Investors Service affirmed a top investment grade rating on $732.7 million in water and sewer bonds. The bonds are to be paid with revenues collected by the water and sewer system on fees charged to residential and commercial customers;
  • The pending modification of the consent decree provides for a period of public comment. The period was extended on Nov. 20 from the planned deadline of Nov.26 to Dec. 4. The lack of an additional extension means the federal judge can begin his deliberations.

 

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David Pendered

David Pendered, Managing Editor, is an Atlanta journalist with more than 30 years experience reporting on the region’s urban affairs, from Atlanta City Hall to the state Capitol. Since 2008, he has written for print and digital publications, and advised on media and governmental affairs. Previously, he spent more than 26 years with The Atlanta Journal-Constitution and won awards for his coverage of schools and urban development. David graduated from North Carolina State University and was a Western Knight Center Fellow.

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