Carmel considers raising utility rates


Carmel Mayor Jim Brainard is asking the Carmel City Council to consider raising utility rates by as much as 10 percent next year as a result of a “revenue shortfall.”

Brainard said the rate was set too low last time and a rainy summer – which means less irrigation – has led to lower than expected revenue. He said debt associated with the city’s water and sewer system has been paid on time, but the lack of revenue has worried bond raters, causing a reduction in the Standard & Poor’s bond rating. The current rate is about $25 per household and Brainard is suggesting, “a dollar or two more.”

“Our base rates are half of what all our neighbors are, including Indianapolis,” he said. “When our rates were adjusted for inflation a couple years ago, we went to great lengths with outside fiscal advisors to determine the rate. But the council, without any input by a fiscal advisor, arbitrarily lowered the base rate from what we asked for.”

Council President Rick Sharp said he remembers the situation differently, when the council approved rates in 2011 that went into effect in 2012. Rates have not changed since then.

“That’s just not true,” Sharp said. “There was a great deal of discussion, and that’s been acknowledged by the mayor’s people. It’s just the facts sitting in the way of a good story.”

Sharp said the utility debt should be a concern.  There is more than $208 million in outstanding principal and interest in bonds associated with the water and sewer utilities. The bond rating was recently decreased from an A+ rating to BBB for 2012 bonds and from A+ to BBB+ for 2008 bonds. The sewage bonds rating fell from A+ to A-.

“The mayor always says the debt is manageable, whether or not that is true,” Sharp said. “All you have to do is go back and look.”

Brainard said he believes the debt is manageable.

“The rating agency said we need to raise it a little,” he said. “But the debt gets paid, and it gets paid first. We have cash and we have reserves. If we get that base rate up a dollar or two, we’ll be fine even in wetter years.”


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