KENT COUNTY, MARYLAND
COUNTY COMMISSIONER'S

PUBLIC HEARING - 12/02/2003

Cost of Service/Rate Study for Water and Sewer Systems

A Public Hearing was held on Tuesday, December 2, 2003, at 6:00 p.m. in the Board of Education Building in Chestertown, Maryland to solicit comments on potential water and sewer rate increases in all County public service areas as a result of the Cost of Service/Rate Study for Water and Sewer Systems, prepared by the Municipal and Financial Services Group, and made available to the public by the County Commissioners and the Department of Water and Waste Water Services. The following recommendations were included in the Study:

- To adopt a single district rate structure.

- Uniform minimum quantity for all districts.

- Continue to use current rate design.

- Increase the Fiscal Year 2004 rates per "EDU" (equivalent dwelling unit) immediately:

Fiscal Year 2004:

Quarterly Fixed Charge - Water $81, Sewer $102, Combined $183

Consumption (In excess of 10,000 gallons/quarter) - Water $2.40, Sewer $0.00, Combined $2.40

Vacant Lot Charge - Water $40, Sewer $51, Combined $91

Fiscal Year 2005:

Quarterly Fixed Charge - Water $106, Sewer $147, Combine $253

Consumption (In excess of 10,000 gallons/quarter) - Water $3.20, Sewer $0.00, Combined $3.20

Vacant Lot Charge - Water $53, Sewer $74, Combined $127

* Smaller increases (4% per year) required after Fiscal Year 2005.

For the record, an Efficiency Study was also conducted in Spring, 2001 by the Maryland Center for Environmental Training which concluded with recommendations. Among them was the recommendation to conduct a rate study to identify an adequate rate schedule, given the fact that revenues over the past years were not sufficient to maintain the financial viability of the Department of Water and Waste Water Services.

Also, for the record, three public informational meetings were held in mid-November in the following communities prior to this formal hearing: Rock Hall, Worton, and Millington.

County Commissioners William W. Pickrum, Roy W. Crow, and Scott D. Livie were in attendance as well as Susanne Hayman, County Attorney, Edward T. Robinson, County Administrator, Wayne Morris, Director, Department of Water and Waste Water Services, (henceforth referred to as the "Department") and Edward Donohoe, representative of the Municipal and Financial Service Group (consultants), and approximately 100 interested persons. Commissioner Crow indicated that he would have to take his leave prior to the end of the meeting due to a concurrent commitment.

Notice of public hearing was read into the record by Commissioner Pickrum. He welcomed everyone present and thanked everyone for their attendance. Commissioner Pickrum also stated that written testimonies other comments would be accepted by the Commissioners' office until noon, December 5, 2003. Ms. Hayman read the procedure for testifying. Copies of the Cost of Service/Rate Study for Water and Sewer Systems were made available for distribution.

Mr. Morris introduced Mr. Donohoe who gave a power point presentation on the Rate Study recently conducted.

Following the presentation, the following people came forward with the respective testimonies and questions:

- James Coleman of Worton conveyed his opinion that there is a need for greater efficiency in the Department for Water and Waste Water Services. He also indicated that the County should subsidize a percentage of the expenses required.

- Jim McFadden of Fairlee stated his understanding that the following mistakes were made in the Department 25 years ago: the removal of the water tanks, and the closing of the lagoons. He pointed as comparison out the cost for water and waste water services per quarter in Centreville ($107), Elkton ($62), and Easton ($37). He also indicated that the County needs to be more protective of its citizens.

- Michael Brown of Millington stated that, being on a fixed income, he would be considering a postponement of his retirement because of the financial burden that would be incurred as a result of the proposed rate increases.

- Franklin Davis of Broad Neck/Quaker Neck noted that in other districts residents have much lower rates. He appealed to the Commissioners to reconsider increasing the rates to the extent proposed, citing the present as "hard times."

- Lance M. Motley of Worton asked the Commissioners what their plans would be for the excess funds which the County, he believed, would receive as a result of the rate increases. He inquired whether or not they would return that money to the citizens.

- Toni Davis of Broad Neck/Quaker Neck stated that a couple of years ago, the County Commissioners decided that the County needed a marina property in Rock Hall, and that now the County has no money for necessities such as water and waste water services. She conveyed her opinion that the County should set its priorities differently, that a marina was not a necessity for most of the residents of the County.

- Jack Christian of Rock Hall expressed his belief that there are alternative ways for generating money other than raising taxes and rates and encouraged the Commissioners to explore them. After suffering the aftermath of Hurricane Isabel, he stated that the proposed rate increases would be a hardship for the residents of Rock Hall. He also felt that the County should be addressing the need for more employment opportunities.

- Charles Williams of Edesville described the proposed rate increases as a poor response to a "10 year old mistake" and indicated his opinion that there must be better alternatives. He raised the question as to what period of time the 4% increase would be in effect.

- Frank Butler of Caulks Field, District 6, expressed his belief that the Commissioners had already made their decision to increase the rates. He appealed to the Commissioners to listen to and heed the opinions expressed at this Public Hearing, for example, that there are alternative means for putting money in the general reserve to assist payments for water and waste water services.

- Dottie Smith of Worton inquired of the Commissioners whether or not they had considered the County residents who have fixed incomes and are financially dependent upon their social security checks; that these people would have to sell their homes because they would be unable to pay for their water and waste water services bill.

-Robert Dempsey of Kennedyville indicated that he would have to move out of the County should the proposed rate increases go into effect. He conveyed that he was born in this County in 1922. He recommended that the County continue to borrow money and lengthen the terms of the loan to 40 years if necessary.

- Sue Brown of Tolchester indicated that it was her opinion that, given a 4% increase each year, many current residents would have to sell their homes and move outside of the County. She further stated that she thought the increase was much too large. Also, she reported that, as an employee of Washington College, she received only a 2% increase. It was her belief that it is too easy an answer to increase rates and that there must be other solutions to deficit spending. She further expressed her opinion that there are many residents who are paying for only one allocation when, in fact, they should be paying for two. With more careful scrutiny, more monies would be generated. She suggested that one option for generating money would be to cut the salaries of County employees. She appealed to the Commissioners that they refrain from putting the entire burden of deficit spending on the County's tax-payers.

- Robert Miller of Edesville questioned the purpose of this meeting. Commissioner Livie responded by saying that the Commissioners were holding the Public Hearing in order to listen to and learn from the County's citizens, and that the Commissioners were trying to find an alternative to deficit spending. Mr. Miller continued to ask the Commissioners in what way they determined to pay for the deficit. Given that they hired a consultant to research and prepare the Rate Study, Mr. Miller asked the Commissioners for their ideas as to resolving deficit spending.

- Commissioner Livie assured all present that the Commissioners had not made any decision regarding the rate increase recommendations and reiterated that the rate increases were a proposal. He pointed out that much of the Water and Waste Water Services are maintained by an antiquated system, requiring repairs. He further reported that the Environmental Protection Agency has more stringent regulations which must be met by the County. All of the above, he added, represent increases in the County's expenditures. He conveyed that the Commissioners are struggling to determine whether or not to continue taking money out of the General Fund to pay for these increased expenditures. He further conveyed that it would be a disservice to the County residents for the Commissioners to allow the current problem to continue.

- Steve Lochary of Piney Neck stated that there are members of his family that must financially survive on fixed incomes and that they would not be able to pay the proposed rate increases.

- Rex Kershaw of Rock Hall expressed his belief that the current Commissioners did, in fact, inherit the problem of deficit spending. He indicated that, after reviewing the minutes of Commissioners' meetings, he learned that the County was operating "in the black" prior to January 24, 2000, and that after that date, the County "nose-dived" into the beginning of its current financial woes. He appealed to everyone gathered not to "shoot the messenger" - in other words, the current Board of Commissioners. Mr. Kershaw praised the sitting Commissioners for their encouragement of citizens to speak and be addressed at Commissioners' meetings and that the Commissioners return their calls.

- Ronald Hickman of Rock Hall expressed his belief that the answer to the deficit-spending is not to stop subsidizing water and sewer services, citing the fact that all citizens contribute to the subsidizing of the County's schools and parks and recreation program even though some do not have children in the schools or take advantage of the park programs. He questioned the wisdom of the County's expenditures towards the purchase of a marina in Rock Hall. He also asked how property owners are going to pay for the increased rates.

- Robin Dulin of Kennedyville inquired as to what long-term improvements in water and sewer services were being planned that would necessitate the rate increases. She expressed her opinion that many property owners in the County were forced to participate in the water and sewer system and, therefore, forced to close their wells. She stated that if the proposed rate increases go into effect, she would probably be late with her payments. She suggested that a more moderate increase be established, and one that would take place over a long period of time. Further, she suggested that, given that time span, opportunities would be available to research more efficient options for the water and sewer systems.

- Myra Butler of Fairlee asked, if she was not able to pay her water bill under the proposed rate increases, would her water service be terminated. She appealed to the Commissioners to please consider carefully all of the opinions expressed at the Hearing.

- Loretta Whitford of Tolchester stated that there are a lot of senior citizens in Tolchester. She reported that her septic system worked well but she was required to participate in the public service system. She further inquired whether or not the water and sewer services financial records have been audited and, if so, was the audit done by an independent auditor. Having been informed by the Commissioner Pickrum that the water and sewer financial records were indeed audited each fiscal year by an independent auditor, she requested a copy of that audit. Commissioner Pickrum indicated that she would receive a copy and that all citizens are welcomed to receive one upon request. Mrs.Whitford continued her statements by expressing her belief that the water and sewer systems could be efficiently managed. She recalled that Tolchester had gotten a grant of over $6 Million to put in a sewer system, which she believed was enough money to cover the cost of the system's installation. She expressed her frustration having learned that the system is now antiquated.

- Leif Gulbrendsen of Fairlee reported that he has been following the concerns and needs related to water and sewer system in Fairlee for 25 years and that the system has been very problematic for the smaller communities in contrast to Chestertown. He expressed his opinion that many people could not afford to live in Chestertown and, therefore, moved to the smaller, surrounding communities. He described many of these people as living on fixed incomes. He felt that the proposed rate increases would be a tremendous burden on these people.

Mr. Gulbrendsen continued by stating that, given that current operating costs of water and sewer systems are high (and that the citizens did not complain), he felt that the citizens should be willing to pay for those costs, so long as the quality of water and services are good. What he felt he could not agree with was the capital costs, and that the County should be held responsible for what type of equipment was installed. He felt that the citizens should hold the Commissioners more accountable and, therefore, he asked that the County share some of the capital costs. He advised that the citizens be responsible for the operating costs. It was also his feeling that the County needs more innovative processes, ideas, and research towards an effort to reduce the County's debt.

-Robert Raleigh of Fairlee began his comments by addressing Mr. Donohoe, quoting him by describing the Rate Study plan as similar to the way people handle their cash flow at home. Mr. Raleigh describing it in his words said that people handle their cash flow at home by slowing their expenditures down and cutting back on their purchases. He expressed his opinion that Mr. Morris had described the installed water and sewer system in Fairlee as "state of the art." He does not agree with this, stating that the water and sewer systems are not working well. He also indicated that he believed that it was a mistake to dismantle the water towers. He felt that the older citizens have struggled to be able to pay for the allocations. Another problem he cited was his opinion that there are not enough jobs available in the County and, therefore, people cannot afford to buy homes and locate here. Without growth, there will be no development and without development, the cost to existing property owners bhas been a burden.

- John Nunn of Worton stated that he does not understand why the County should not draw from the General Fund to support the water and sewer expenditures. He noted that for the past 14 years, water and sewer rates have been increased each year. He stated that he does not understand why it is considered "wrong" to subsidize water and sewer system services, citing that the County subsidizes its public education and parks and recreation programs, etc. The County subsidizes the latter because "it is the right thing to do" and that the policy should not differ regarding water and sewer services.

Correspondence was received from Carol Rybicki of Kennedyville and Frank A. Tarbutton of Quaker Neck opposing the proposed rate increases.

Commissioners Pickrum and Livie once again thanked everyone for their attendance and for the testimonies presented. Commissioner Pickrum reiterated his earlier statements that a decision had not yet been made by the Board of Commissioners. He acknowledged their receipt of the concerns and testimonies given, and he reminded everyone that written comments and testimonies would be received by the Commissioners' office until noon, December 5, 2003.

Commissioner Livie stated that the Commissioners were faced with a very tough decision and that he understood that they were hired to make tough decisions.


This hearing was taped for reference and adjourned at 8:00 p.m.


THE COUNTY COMMISSIONERS
OF KENT COUNTY, MARYLAND


Janice F. Fletcher Executive Assistant


Approved: William W. Pickrum, President