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3 PUBLIC HEARING/ORDINANCE : UTILITY RATES Mr. O'Connell explained that utility rates are set annually and the utilities ope rate on a break - even basis, with the costs driven largely by the purchase of water and gas. Mr. O'Connell thanked residents for their support during the drought, but acknowledged the catch 22 situation which increased the cost of water because of less usa ge. Mr. O'Connell said that Rivanna Water and Sewer Authority's budget includes $15.25 million for long - term water system improvements. Ms. Rita Scott, Director of Finance, reviewed cost categories for the utilities, the largest of which is cost of supp ly. Other costs include operating and maintaining the system and billing; capital and debt service. Ms. Scott said that the drought served to point out that when usage goes down, the City's and Rivanna's costs do not go down. Ms. Scott said the City is in the midst of a multi - year water improvements program, replacing lines in the City. Because of this, leakage has dropped dramatically. Regarding wastewater, replacing old pipes has reduced the inflow from ground water. Regarding gas, Ms. Scott said th at an analysis was done of the cost to the City for the service, and it was found that the fees were not covering the costs, and fee increases are proposed to cover the cost. Ms. Scott said that the monthly flat fee has not changed in 17 years. She said a n analysis was done of the actual fixed cost of operating the system regardless of the volume. She said the new fees proposed still will not cover this cost. Ms. Scott said that water conservation kits were provided to citizens, and 835 households receiv ed a toilet rebate for replacing toilets with low flow models. Since the drought, water consumption has remained lower. Ms. Scott reviewed the proposed rates, and noted that the water rates include additional funds for the toilet rebate program and for t he gas assistance program and rebate for programmable thermostats. The public hearing was opened. Ms. Michelle Mattioli, 1404 E. Market St., said she has learned a great deal about water while serving on the Rivanna Water and Sewer Advisory Committee. She said the plan to provide more water is being implemented and is very expensive. Ms. Mattioli said she feels the money being requested is valid. She said she supports the water and wastewater rates and feels they are necessary. Mr. Peter Kleeman, 4 07 Hedge Street, said that the debt service on the system seems high. Mr. Kleeman recommended that this be reduced, and that the adjustments should be limited to rates. He said the rates should be varied based on wholesale rates. Mr. Kleeman said he doe s not know why the City is advertising for consultants since the work can be done in - house. Mr. Kleeman said the issue for citizens should not be what the rates should be but how we set the rates. Mr. Kevin Kotlarski, Fontaine Avenue, said the message t o the public is that they are being charged for conserving water which is very confusing. He said dredging should have been done already and asked when it will be addressed. Mr. Kotlarski said there is not enough exchange of information. He asked for an explanation of why the University is paying less. Mr. Kotlarski said he has heard these concerns from other citizens. As there were no further speakers, the public hearing was closed. Mr. Lynch asked Mr. Tropea for more information on the water suppl y plan. Mr. Larry Tropea, Executive Director of Rivanna Water and Sewer Authority, said that the plan includes modernizing of Observatory Hill; completing work at Michum River pumping station, maintenance dredging of South Fork; engineering improvements to Ragged Mountain; repainting of water storage tanks; finish water pump station on Route 29 North; security improvements; Moore's Creek Treatment Center improvements; and study of future wastewater needs. Responding to a question from Mr. Schilling, Mr . Tropea said dredged soil could be used for farming once it is dewatered and tested, but he noted that the current contract calls for the contractor to keep the soil.