The town has made progress in paying off its utility service obligations since merging with the Raleigh system 10 years ago and is eyeing a return to rates level with the larger system.
“For the first time ever, there’s a light at the end of the tunnel,” Knightdale Development Services Director Chris Hills said Monday at a meeting of the Town Council’s Finance Committee.
Full recovery of merger costs is possible for fiscal year 2018-19, Hills said, earlier than previous estimates of 2020-21.
The Town Council, in 2006, merged its water and sewer utility system with Raleigh’s following nearly 15 years of study, and Knightdale customers have been paying higher rates since to make up the merger costs.
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When the town makes up that difference, Knightdale customers will be able to pay the same as Raleigh customers.
Right now, for a household using 5,100 gallons a month, for instance, Hills said, a Raleigh customer pays $65.20 while a Knightdale customer pays $90.
I don’t know that there’s a more important thing we can do for our citizens,” Hills said. “I mean that’s $25 a month.”
Hills said the town may want to look at adjusting rates for next fiscal year to go ahead and pay off the debt to Raleigh in 2018.
Once the debt is paid off, if more money continues to go to Raleigh through the higher rates, Knightdale would get the difference back in credits, but it would make more sense to get as close as possible to paying it off on a schedule that would allow rates to go back down so the money would stay with Knightdale residents in the first place, Hills said.
The exact time frame, though, Hills said, will depend on the economy and the level of development.
Administrative Services Director Suzanne Yeatts said her department will need to know rates for work on next year’s budget and fee schedule coming up this spring and summer.
“We’re so close to doing what we need to do for that ’18 mark,” said Councilor Pete Mangum, the committee chairman. “That’s what I would like to do.”
Knightdale had rate increases in 2011, 2012 and 2013 that were necessary because the town had fallen behind in paying off the debt, Hills said. Those increases were 14 percent, 9 percent and 8 percent respectively.
The town also had rate increases of 9 percent in 2014, 7 percent in 2015 and 3 percent this year.
Fast growth during the initial years of the agreement worked in the town’s favor, Hills said, but the recession in following years and the 2007 drought, as well as increases in Raleigh rates, put the town behind.
The Raleigh Public Utilities Department also provides water and sewer service for Zebulon, Wendell, Garner, Rolesville and Wake Forest.
Wake Forest, which merged with the Raleigh system in 2005, paid off its merger costs in December 2014 and now has the same rates as Raleigh customers. Garner, the first Wake County town to enter a merger agreement with Raleigh, completed its merger in 2010.
Matt Goad: 919-829-4826