Groveport plans to pay for the construction of its new $3.17 million water plant by substantially increasing the rates charged to approximately 1,200 customers.

Groveport plans to pay for the construction of its new $3.17 million water plant by substantially increasing the rates charged to approximately 1,200 customers.

Groveport City Council heard the first reading of an ordinance on July 23 that, if approved, would raise rates by 97 percent over a five-year period.

According to the proposed legislation, the current water rate of $4.24 per 1,000 gallons of use will increase 20 percent to $5.09 per 1,000 gallons in 2012.

Thereafter, water usage rates will increase 20 percent for a three-year period: to $6.11 per 1,000 gallons, effective the first billing cycle in 2013; to $7.33 per 1,000 gallons, effective the first billing cycle in 2014; and to $8.79 per 1,000 gallons, effective the first billing cycle in 2015.

In 2016, water rates will increase by 12 percent to $9.84 per 1,000 gallons; and rates will increase by 3 percent in 2017 to $10.14 per 1,000 gallons.

"The ordinance has to go through all three readings of council," City Administrator Marsha Hall said. "Assuming it stays on that schedule, you have the second reading Aug. 13, the Committee of the Whole meeting Aug. 20 and the third reading Aug. 27. Assuming it's voted on that evening and passed, there is a 30-day waiting period, so the earliest it would become effective is Sept. 27."

Groveport City Council approved construction of the water plant on June 25 by a 4-2 vote. The city was directed by the Ohio EPA in 2009 to take action to upgrade the deteriorating infrastructure at the city's existing plant on South Hamilton Road. That plant was built in 1936.

Council chose to build a new plant rather than connect with the city of Columbus through a full-service water agreement, estimated to cost $3.29 million. Approximately 1,500 Groveport residents get their water from Columbus.

All is not written in stone, however, as Hall said council will still be able to weigh the viability of pursuing other funding options to pay for the new plant.

"I think everything is still up in the air. The ordinance can always be amended if they do something different," she said.

Hall presented council with a list of those options at the Committee of the Whole meeting on July 16.

One would be to tap into the city's "rainy day fund" and use all or part of it to "drive down (the) costs of the project so the payback will be less."

City Finance Director Jeff Green said there is currently $1.5 million in Groveport's rainy day fund, but the city can only access the money if income tax receipts decline for a period of one year.

"Most communities structure (rainy day funds) where they can be used for a variety of uses. Ours is much more restrictive," he said.

Thus, in order to be able to use any of the rainy day fund, city council would first have to vote to amend the rainy day fund ordinance, passed in 1992, to make it less restrictive.

Hall said other options include the pursuance of general obligation bonds.

"A general obligation bond is when you go out and borrow money from a private financial (entity), you are guaranteeing that loan through the revenue that comes in from the general fund," said Hall, who added that the problem with that scenario is when the city pays out of the general fund, it takes away money that could be used to pay for other essential capital projects.

She said the city could also obtain a loan from the Ohio Water Development Authority (OWDA), an agency that provides financial assistance for environmental infrastructure to Ohio communities.

"Their interest rate is determined quarterly. We're still considering them," she said. The current OWDA interest rate, which was set to expire on July 31, is listed at 3.85 percent.

Hall said the rate increase formula presented as a first ordinance "was based on the interest rate from an OWDA loan for a 20-year payback."