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June 11, 2014

Duncan council to increase water rates

DUNCAN — The Duncan City Council agreed with the city manager on Tuesday that water rates need to be increased.

The question that remains is how much.

The last water rate hike was enacted in 2011 to pay for the city’s purchase of its remaining water rights to Waurika Lake, but revenue generated by that increase has fallen far short of expectations, City Manager Jim Frieda told the council at its regular meeting Tuesday evening.

The city needs to make up about $700,000 over the next two years with a water rate hike, Frieda said.

The city pays $610,000 per year for the Waurika Lake water.  

The decision to buy it carried a $9 million price tag in 2011,  and the city has had to dip into its operating budget to pay for it, Frieda said.

Duncan this year has been beset with cash flow problems to meet its payroll, taking $922,000 out of its capital improvements project fund earlier this year. On Tuesday, the council signed off on a request to transfer $750,000 from its Enterprise Fund to its Master Account should readily available cash be needed for pay expenses.

Payments for its Waurika Lake water have been a problem for the city’s finances, even though there is general agreement the city made the right move iwhen it exercised its option to buy its remaining water rights in the 562-square-mile reservoir, which is now at less than 40 percent capacity because of the drought.

The thinking at the time was Texas interests would buy the water rights if Duncan didn’t act and that the city’s future growth depended on reliable water.

Duncan’s city water rates are far lower than the average  $16.09 rate for Oklahoma municipalities, said Frieda, citing a recent survey by the Oklahoma Municipal League.

Duncan’s base water rate of $9.80 is lower than four other municipalities that are members of the Waurika Lake Master Conservancy District, he said.

He listed the base rates in those cities as $12.32 in Comanche, $17 in Temple, $14.50 in Walters and approximately $30 in Lawton, which includes surcharges and meter fees Lawton adds to its base charge.

Duncan owns about 30 percent of the water in the Waurika Lake while Lawton owns about 62 percent. The remainder is divided among the  smaller towns.

Frieda said he will bring a water rate hike proposal to council in two weeks that will remain in effect for two years, if approved.

The council could increase the base rate charged to customers, increase the existing $1 monthly surcharge on meters or both, he said.

The city manager said he’ll place a two-year limit on the increase,  but he said there is no guarantee the higher rates won’t remain after two years.

“The problem has to be addressed,” he said. “I think we have to face it.”

The four council members and mayor did not disagree.

Councilman Ricky Mayes said he realizes there will be complaints, particularly from Duncan residents who live on fixed incomes.

“We don’t take it lightly,” he said, but the city must recover its costs.

In other business, the City Council:

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