When Grove Municipal Service Authority customers get a bill in the near future, they will notice a change in the wording on a fee.
In the past, the billing listed a surcharge, of $1.25 per utility - gas, water and sewage, meant GMSA customers paid up to $3.75 per month, into a designated account for improvements related to the three utilities.
Now, following the July 18 Grove City Council meeting, the surcharge has been increased and re-named, to signify it's purpose as a capital improvement fund for GMSA.
The fee, is designed to provide an ongoing source of revenue for the city, for repairs - and replacement - of various parts of the utility infrastructure.
The fee collected will be $3.25 per utility. If a customer uses water, sewer and gas, the fee will go from $3.75 per month to $9.75, a $2 increase per utility.
"It was an older fee or a surcharge we dedicated some years ago to the capital improvement fund," explained City Manager Bill Keefer. "At that time, it was $1.25 for each utility.
"We didn't have another dedicated source of revenue for GMSA to fund capital projects, other than the three service charges."
Keefer said this is because the funds raised through monthly utility bills, and the GMSA's .4 percent sales tax, primarily serves as the monies needed to retire the existing debt from past GMSA projects.
In the past, the $1.25 fee raised approximately $170,000 for capital projects - such as repairs to water lines and lift stations.
Keefer said the limited funding did not leave much wiggle room for the city to conduct upgrades to aging equipment.
With the funding increase, the GMSA is expected to add, conservatively, $250,000 to the capital improvement fund.
This will allow GMSA officials to complete some upgrades and make some repairs which, in Keefer's words, are "desperately" needed.
"A lot of our lift stations are 30 to 40 years old," Keefer said. "Suddenly in the last year or two, we've had a lot of pumps go down. We replaced one this month at $15,000."
Keefer said many of the lift stations contain technology that has aged, meaning city officials can no longer obtain parts to make certain repairs.
Another need, an auger system for the wastewater process, will take $55,000 to replace. Keefer said the auger - which is designed to breakdown solids before it reaches the pumps - will help extend the life of other equipment.
"The lift stations are our biggest priority," Keefer said. "They are literally falling apart. We need to redo parts of our gas system, that is now steel pipes, with PVC pipes in some of the older areas of town."
Keefer said other repairs, to the way the sewer system collects storm water, are needed as well.
GMSA currently has a $2 million debt. Keefer said this comes from repairs and upgrades at the Wastewater Treatment Plant, repairs to the vehicle maintenance building, and the implementation of an automatic meter reading system - put in more than four years ago.
Keefer said the meter system, installed before he became city manager in 2013, has presented issues from the start. The company went out of business shortly after the city acquired the system, and staff has struggled to make repairs without the previously promised support.
"We are legally obligated to pay the debt," Keefer said. "We also have a challenge with taking care of a system that is old, but driven by regulations and agencies.
"We can see the light at the end of the tunnel. In four to five years, we should see some of the debt begin to roll off. It's a vicious cycle. The revenue generated through sales, goes to the debt, and the capital [fund] gets left out in the cold. We're doing what we can to make a difference."
Why the increase
For Robert Plunk, Grove Municipal Services Authority chairman, the $2 per utility increase in the surcharge - now known as the capital improvement fund - is a needed step to bring improvements to Grove's infrastructure.
"I grew up in the business world, where if you borrowed money, you paid a lot of interest," Plunk said. "So we're trying to plan ahead, so we don't have to borrow money in the future."
Plunk said like equipment at most businesses, everything GMSA owns has a life expectancy.
In the business world, he said, administrators begin setting aside funds from day one, in order to replace the equipment using cash - rather than credit - years down the road.
"The way we do things now, is that we borrow the money, spend it, and then pay it back along with interest," Plunk said, adding that the interest often means the city pays double the cost of the item.
"The city has not looked 20 years down the road," Plunk said. "We have expenses coming. Our water and gas lines are getting older. There's never been a plan in place to replace them.
"We want to start a process, a discipline, so that down the road, we can operate on a cash basis so we don't have to borrow money."
Plunk said the new capital improvement fee will allow GMSA to begin to build up a reserve - which can then be tapped for the infrastructure projects.
Plunk hopes the $3.25 fee per utility/per month, will take care of GMSA's needs now, and into the future.
"We're just trying to live, like we run a household," Plunk said. "We save money, because we know maintenance and upkeep is going to be needed. We save a few pennies now, so that there's enough in the kitty to go out and buy [something] without paying interest.
"It's not logical to borrow money. You pay it back twice. First for the item, then for the interest."
Plunk sees this new effort as GMSA's way of developing a preventative maintenance strategy, because it will help officials cut waste, keep equipment maintained and help take care of issues without borrowing funding.
The capital improvement fee, formerly known as a utility surcharge, on the GMSA bills, means each customer will see a $2 increase per month, per utility they use.
For example, a customer who has water, sewage and gas previously paid $1.25 per utility or $3.75 per month.
Now, with the increase, the same customer will pay $3.25 per utility or $9.75 per month.
GMSA officials estimate the fee, which previously generated approximately $170,000 will increase - using conservative estimates - to $420,000 (a $250,000 increase).