Published: November 16, 2007 12:03 am      

Water authority votes against rate hike

Greater Johnstown Water Authority customers will not see a rate hike next year.

By a narrow margin, authority board members voted Thursday to restructure debt and borrow $5 million in lieu of raising water prices for the first time since 1998.

“We don’t want to raise rates unless we have to,” board member Mark Wissinger said.

The authority needs extra cash to meet debt obligations and to fund annual improvements for a system that serves nearly 22,000 customers.

Officials mulled rate increases ranging from 5 percent to 25 percent.

But on Thursday, board members rejected a proposal to refinance, borrow and also impose a 5 percent rate hike – which would have meant that an average customer paid about $1.25 more monthly.

Instead, on a 5-4 vote, the board approved a financing plan with no rate increase.

The move involves borrowing $5 million, refinancing a $1.4 million mortgage on the authority’s new headquarters and restructuring existing debt.

That plan, officials said, will lower annual debt payments and eliminate the need for an immediate rate boost.

But it also will mean that the authority will pay much more interest in the long term, a fact that did not sit well with some.

“I just think there could be other alternatives to issuing debt,” board member Jay Follansbee said. “There are costs involved with that.”

While the vote appeared to settle the issue, officials acknowledged that there is a chance that they may be forced to re-examine water prices next year if interest-rate projections do not pan out.

“We’ve made a decision tonight based on our best knowledge and information,” board member Don C. Hall II said during Thursday’s meeting.

Chris Kerr of RDM Inc., which manages the Greater Johnstown water system, endorsed the financing plan.

“I do think they picked a scenario that is a very viable option,” Kerr said.