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SATURDAY, JANUARY 27, 2007
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Councilman asks DU to consider service restrictions

By Melanie B. Smith
msmith@decaturdaily.com 340-2468

What incentive does a business have to locate within Decatur's city limits or to agree to be annexed?

Not much, if the city provides utility services anyway, said a city councilman.

Councilman Ronnie Russell said council members' concerns prompted his letter to the Municipal Utilities Board, asking if utility extensions could be restricted to the city limits.

Russell, Decatur Utilities officials and board members discussed pros and cons at a work session Friday.

Russell said council members have wondered if sewer extension could be a "carrot" to entice retail businesses locating beyond city limits to agree to annexation.

Currently, sewer lines can be, and have been, extended beyond city limits with certain considerations such as system capacity, said DU General Manager Kem Carr.

He said extending sewer lines doesn't produce revenue as does extending water lines.

The wastewater department only breaks even, Carr said. Supplying water, however, generated about $1.5 million to the city last year through payments of 5 cents per thousand gallons used, the manager said.

Russell's concern is potential tax revenue being lost to Decatur if retail businesses locate just outside the city. Customers from Decatur could shop at such a business, and it could use city services, but no taxes would go to Decatur.

Bob Harris, DU's legal counsel, said any restrictions on utility service could not be arbitrary or discriminatory. He said that the City Council could choose to recommend specific action to the DU board, which is structured by state statute to operate city utilities. The city has the power to set rates and make contracts more than $100,000, Harris said. The DU board, however, sets policy.

Rate low

As part of discussions about other cities' practices, Carr said DU's research found its wastewater rates lower than those in Florence, Huntsville, Madison and others.

DU's rate is $1.94 per 1,000 gallons, plus a $4 customer charge. The rates are the same inside and outside city limits.

By comparison, Madison's proposed new rate is $3.66 per 1,000 gallons, plus a base charge of $1. Senior citizens, schools and municipal accounts would get a discount. Outside the city, Madison plans to charge 20 percent more.

DU's electric and water service areas are affected by factors such as agreements with other utilities, complicating decisions about utility extension restrictions, officials said.

Tax base

Russell said keeping the city's tax base intact is important.

"It would be a help to preserve our long-term economic growth," Russell said.

A work session with the council and the board should be scheduled within a month, he said.

Other discussion at Friday's work session at DU focused on a new contract that will be needed with Limestone Water and Sewer Authority.

Decatur will need the contract because the Limestone County Commission turned over its assets and debts to the authority, Carr said. Decatur has had agreements with the commission relating to Decatur's sewer plant's construction.

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