Lexington has to pay for $590 million in sewer projects. Your part of the bill is coming.

The city of Lexington is proposing a sewage rate increase to pay for more than $590 million in sewer and stormwater upgrades needed to comply with a U.S Environmental Protection Agency agreement to fix the system.

If approved by the Lexington-Fayette Urban County Council, the rate would increase from 2 percent annually to 5 percent annually on July 1. The average residential bill would increase from $28.57 to $30, a $1.43 monthly increase. That five percent increase would continue the following year. By July 1, 2020, the average bill would climb to $31. 50, according to figures the city officials provided to the council on Tuesday.

That’s based on an average sewage usage of 4,000 gallons a month.

Increases will vary based on usage.

The council discussed the sewer rate increase at a work session on Tuesday. No vote was taken during that meeting. A final vote is expected sometime in early June.

The last time the city raised sewer rates was July 1, 2015, when rates increased by 12 percent. In 2008, when the city first entered into an agreement with the EPA, rates went up by 48 percent. The rate then increased 35 percent the following year. Bills have risen only slightly since July 2011, when annual rate increases were tied to the consumer price index, which has typically been about 2.0 percent.

In 2011, city officials predicted sewer rates would increase by five percent to 10 percent every year to pay the debt on all of the projects included in the agreement with federal environmental regulators. So far, those massive annual tax increases have been avoided, said Melissa Lueker, budget director for the city.

“We are much lower than we thought we were going to be,” Lueker said.

The city has been able to shave $95 million from the total cost over the past few years. Part, but not all of those savings, was generated after 10 wet weather storage tanks that hold stormwater overflows came in under budget. The city has also been able to use Kentucky Infrastructure Authority low-interest loans to finance some of the improvements needed, city officials said.

“We are still in debt to KIA by $140 million dollars,” said Charlie Martin, director of water quality. “But those loans have now translated to debt service, which we have to pay back.”

Councilman Fred Brown asked why the city didn’t continue to use KIA loans. Kentucky Infrastructure Authority loans interest rates are less than 2 percent, less than what it cost to borrow money from banks, Brown said.

To date, the city has spent more than $288.3 million.

Construction of the wet weather storage tanks, which is where the city has generated the most savings, is mostly completed. More complex and costly projects remain, said Martin.

The city will need at least $271. 4 million over the next three years for those sewer-line replacements and other projects.

More than $40 million in sewer line replacement projects will start this spring.

The bids for some of those sewer-line replacement projects have come in over budget, Martin told the council. A current sewer pipeline project on Midland Avenue and Main Street came in $2 million over budget, he said. The other issue starting to drive up costs is few contractors that do this type of work, he said.

The city agreed to the upgrades as part of a settlement with the EPA over storm and sewer overflows. Those upgrades include the storage tanks, improvements to pump stations and sewer treatment facilities, and replacement of sewer lines. The city must have those projects complete by 2026.

Lueker said if the council approves the 5 percent increase, Lexington’s sewage bill will still be lower than many surrounding cities. Based on an average sewage usage of 4,000 gallons a month, Louisville, Irvine, Lawrenceburg, Richmond, Winchester and Frankfort will still have higher monthly bills than Lexington, according to figures provided by the city. Many of those cities including Louisville, Winchester and Frankfort are also under EPA consent decrees to upgrade their sewer and stormwater systems.

Berea, Bowling Green and Harrodsburg average monthly bills will be lower. Those cities’ average monthly bills are less than $30. Georgetown’s monthly average bill is $18.98, the lowest in the region.

Martin said the upgrades to the system since 2007 “have eliminated 54 million gallons of sewer overflows.”

This story was originally published May 1, 2019 at 8:24 AM.