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Gainesville to start new utility rate study
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Historical rate differentials

Hall County water and wastewater customers pay for the service at a rate more than Gainesville city users. The following is the differential, with “2” meaning the county user pays twice what the Gainesville user does.

Differential suggested in study

Date: Water; Wastewater

1996: 1.95; 1.23

1999: 1.71; 1.07

2002: 1.82; 1.08

2006: 2.51; 1.02

2010: 2.13; 0.87

Differential approved by Gainesville City Council

Date: Water; Wastewater

1996: 1.95; 1.23

1999: 1.71; 1.07

2002: 1.82; 1.08

2006: 2; 1.02

2010: 2; 1

Source: Gainesville Public Utilities Department

The Gainesville Public Utilities Department plans to do a new study of its water and sewer rates later this month.

The city charges county customers double the rate that city residents are charged for water and the same rate for sewer. Gainesville does a study every four years to check the rates because it is the designated service delivery provider.

Rates are different because most of Gainesville’s work and money is spent serving residents in unincorporated areas, said Public Utilities Director Kelly Randall. County officials said the rates are unfair because most of the water usage is in the city limits and the study allocates too much debt and expense onto the county.

The city started building its utility system in the 1890s, Randall said. Those water pipes were installed a long time ago.

“The city, in essence, has already paid for the lines in the city,” Randall said. “They’re done.”

The city and county have signed at least two intergovernmental agreements where the city agreed to do a rate differential study every four years and the county agreed to a tax equity study.

Gainesville officials believe the county property taxes city residents pay should be modified because the county doesn’t provide some services in the city, such as police and fire services. Commissioner Scott Gibbs said the city uses county services, such as the Hall County Jail.

City residents pay both county and city property tax. County Administrator Randy Knighton said the city has never expressed that concern to him.

“I have not had any conversation with anybody from the city about this issue,” Knighton said.

The county has not done a tax equity study since 2002.

“I don’t see what that has to do (with it),” Gibbs said. “If you choose to live in the city, that’s your choice. If the city were to close tomorrow, the county would have to step up and do everything they do.”

A consultant does Gainesville’s study, which takes about six months, and uses methods approved by the American Water Works Association, a nonprofit group devoted to safe and sustainable water worldwide.

The 2009 study looked at several factors, including city operations and maintenance, depreciation and the value of fixed assets. The consultant’s results said the city spent about $5.8 million inside Gainesville and about $18.2 million outside city boundaries in 2008 providing water.

“When you look at those costs, most all of them are occurring in the county,” Randall said. That’s where the growth is. That’s probably who ought to be paying for it.”

Gainesville does take .07 percent of all fixed assets and that revenue is transferred to the general fund, Randall said.

The last study recommended a water rates difference of 2.13, more than double the city price, and a wastewater rate drop from 1.0 to 0.87. The study in 2005 put the water differential at 2.5, but the City Council kept it at 2.0.

A document presented at the workshop shows the change in the differential through the years. In 1999, the City Council approved a customer rate differential between city residents and county residents. The customers in unincorporated areas paid nearly double for water, 1.95, and slightly more than city residents for wastewater, 1.23. In 2006, the differential hit 2.0 for water, and the council has since capped it there. Gainesville also created a floor of 1.0 for wastewater, which means the rates are the same in or out of the city.

Gibbs said city officials didn’t approve the cap to be nice, they did it because state law requires more justification and further studies to raise it higher and the city can’t meet those standards.

“If they thought they could justify the 2.4 (differential), I can promise you they would be charging the 2.4,” Gibbs said. “They can’t justify it.”

The results of the new rate study are expected to be presented to the Gainesville City Council members at the public utilities retreat next March.

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