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Sewer district faces choice

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By Laura Hagan

Board members of the Oldham County Sewer District met Tuesday – the first time since Oldham County Fiscal Court offered a recommendation on how to deal with the district’s $16 million debt.

OCSD discussed the court’s proposal at their meeting. OCSD Executive Director Vince Bowlin said two of the court’s recommendations had been discussed by the sewer district before the proposal was made. He said the district has already looked into restructuring debt and dissolving the current organization structure. The third recommendation may prove more complicated.

The court recommended OCSD reduce expenses by $400,000. Bowlin said the district can’t reduce by that amount.

“We have too much to do,” he said.

Bowlin cited the cost of an upcoming agreed order with the Kentucky District of Water – which will deal with water overflows within OCSD – as well as other capital improvements as reasons cutting costs by that much wouldn’t be possible.

There are also options for outsourcing the district’s operations, which Bowlin discussed at the meeting. One option would require outsourcing to La Grange Utilities, the other to the Metropolitan Sewer District.

Bowlin said an OCSD customer who uses 6,000 gallons a month pays is $29.20, though he said a vast majority of customers use less.

By his assumptions, Bowlin said, with a 25 percent increase if outsourcing to LGU, the new rate would be $36.50. He said in previous years, LGU has increased rates by 2.5 percent each year. He said if that continued for the next five years, rates would be $41.30 in 2013.

With MSD, which has a consent decree fixed at $6.95 and a base rate of $22.50, customers with MSD pay $29.50. He said in previous years, MSD has increased their rates by 6.5 percent. With that increase, Bowlin said the rate in five years with MSD will be $37.85.

These numbers, Bowlin said are not guaranteed, they are simply his assumptions for comparison. He said the district has not been successful in setting up a meeting with LGU. The district has, however, met with MSD, who Bowlin said agreed to help explore the option. Bowlin encouraged the board to meet with both utilities and urged them “not to go into any agreement lightly.”

The board also discussed bond refinancing. Board Treasurer Amy Alvey offered two options for refinancing, one of which would keep the debt structured as it is and the second, which would amortize the debt over 20 years – as opposed to the previous proposal of 30 – with a balloon payment at year 13.

Alvey said the district anticipates refinancing before the 13th year, and this option would allow the district to fulfill the fiscal court’s recommendation of debt

restructuring.

Magistrates tabled the first reading of an ordinance allowing the City of Crestwood to withdraw from the Oldham County Sewer District during a fiscal court meeting July 1.

Judge-Executive Duane Murner said there is a dispute as to whether the current Oldham County Sewer District was legally or properly organized, because he said Crestwood voted on the merger but the fiscal court did not.

Crestwood officials approved the merger originally and will have a chance to look at the ordinance before it reaches fiscal court.

Last month, officials discussed the troubled finances of OCSD, which is currently $16 million in debt.

The court recommended the district increase rates, restructure debt, and cut expenses by $400,000.

Murner added that the court is not at the end of finding solutions to the sewer district’s debt problem that proposed at the last fiscal court meeting.

He said there may be other opportunities that may not have been explored yet.

E-mail us about this story at: lhagan@oldhamera.com.