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WORLAND — About 245 residents outside the Worland city limits but connected to city water lines received a letter earlier this week notifying them of a proposed rate increase.

The rate increase for a depreciation reserve requirement, would be used for major maintenance and line replacement.

The Worland City Council approved a motion to have City Attorney Kent Richins send the letters, which were mailed out on Friday, Oct. 18.

Letter were sent to 115 residents in Hillcrest, Packerville, Ponderosa and Anderson subdivisions; an additional 245 residents on West River Road, Sorensen Industrial area, and from the city limits to the east tank.

The areas were separated due to difference in rate increases based on how far out the lines are from the city limits.

Letters for rates to set up a depreciate reserve fund for residents outside the city limits on city sewer were also mailed out Friday, with 136 residents in Hillcrest, South Flat, Packerville, Sunset, Mountain View, Sorensen Industrial and Lane 14 receiving letters.

Richins explained to the council that residents in the outlying areas had been in districts that had agreements with the city in order to obtain loans to install the lines to their respective areas. He said once the loans were paid off, per the agreements the city would take over ownership of those lines.

Most of the agreements ended years ago and some areas never had agreements.

Now the city requires any new subdivision wanting city services to annex into city limits, this was not a requirement for the subdivisions currently paying out-of-resident fees.

For the sewer lines the oldest agreement was in Sunset in 1982. There were no agreements for Sorensen or Lane 14.

According to the letter to sewer and water users in the outlying areas, all loans associated with the original agreement. “The city has been operating and maintaining these lines at no additional expense to the customers. The operation, maintenance and replacement costs incurred by the city are essentially being subsidized by city residents.”

According to the city’s letter, Wyoming statutes require that the city fix rates to “secure income sufficient to pay” for salaries and wages, materials and supplies, and a depreciation fund.

Richins told the council, and noted in the letter to the residents, that the city’s auditor, certified public accountant James Seckman, came up with the figures for the depreciation reserve fund rates.

For outlying residents currently on city sewer without a current agreement, the rate for the depreciation reserve would be $12.88 per month in addition to the base and usage charges.

For water users in Hillcrest, Packerville, Ponderosa and Anderson, the depreciation reserve rate would be $10.72 monthly. The city’s letter notes that Ponderosa does still have a viable district.

For the residents in districts further away from the city, the rate would be $20.85. Seckman’s initial study recommended a rate of $27.40, but the city staff opted to decrease the rate to the $20.85, Richins said.

Richins said the city’s concern is that the lines are at least 30 years old and have a 50-year life expectancy, so the current rate structure will not be able to replace the lines in the future.

Richins noted in last Tuesday’s meeting, and in the letter that the city will seek grant funding for any replacement line project but it is not guaranteed.

Repair costs for water lines range from $2,500 to $17,000. Sewer repairs range dramatically from $3,500 to $45,000.

State statute requires that the depreciation fund “shall” be used specifically for repair and replacement to those lines.

Currently the outlying sewer customers pay a base fee that goes into the city’s sewer fund where all repairs in and outside the city are paid. Water users in the outlying areas are charged a base fee as well as a rate fee 1.25 times that of the in-city water rate. Those funds are placed in the city’s water fund for repair costs within and outside of the city.

Mayor Jim Gill said, “I would like to commend the staff and assure the citizens of Worland and those outlying district constituents that the City of Worland has done its due diligence to thoroughly research this matter in regard to when those districts were formed, when they expired, and to follow up on determining what rate we needed to charge to establish these depreciation reserve accounts.”

That money will accumulate and be available to replace lines in those districts at a later time, Gill said. He added, “This is something that should have been done prior to this. This is the best thing for the city of Worland and in the end the best thing for the constituents in the outlying areas we feel.

“I’m proud of the teamwork that has went into this and it has been thoroughly looked at.”

In a separate motion, the council moved to put a limit on maintenance funding for the outlying areas before funds from the depreciation reserve would be used.

The council put the limit on water line repair at $17,000 and tabled a decision on sewer until the Nov. 5 meeting awaiting a recommendation from Public Works Superintendent Brian Burky.

The limit means any repairs in the outlying areas costing under $17,000 would be paid by the city through the water fund.

The rate increases must be approved by ordinance, which requires three readings.

The first reading is slated for the Nov. 5 meeting.