The Fayette City Council on Tuesday gave unanimous approval to increase water usage rates for all customers, and base rates for customers outside Fayette.

The council at its previous meeting on Oct. 6 initially indicated it would raise rates by $1 for 1,000 gallons of water used. But the council on Tuesday chose instead to increase the rate by $1.75 per 1,000 gallons. 

The new rate now stands at $9.23 per 1,000 gallons of water. The base rate for in-town customers remains at $25. However, the base rate for customers living outside the city limits increased by $5 from $27.50 to $32.50. In addition, the usage rate for those customers incurrs the $1.75 increase and now stands at $10.01 per 1,000 gallons.

The new rates will go into effect at the end of November. Residents here can expect an average increase of around $6 a month.

The hike would put Fayette’s rates on average with other similarly-sized cities in Missouri, and would still be less than the usage rate of nearby Thomas Hill Public Water Supply District, explained East Ward Alderman Jeremy Dawson. “We’re staying pretty competitive with cities across the state that are our size,” he said. “We’re never going to be able to compete with Columbia or Hallsville…they just have tons of users compared to us.”

The city chose to increase water rates so it may fulfill its contract with the Howard County Regional Water District. As was reported in the Oct. 14 Fayette Advertiser, the 35-year, take-or-pay contract, which was signed in 2011, mandates that Fayette purchase a minimum of 115 million gallons of water per year from the district. But the city only uses about 63 million gallons a year. The minimum purchase was based on estimates made by the city at the time. Since then, Fayette has significantly curbed water losses, which means it is purchasing even fewer gallons. In addition, the decision by Central Methodist University to halt in-person classes in March due to the COVID-19 pandemic meant even less water would be used. CMU, which annually consumes around 22% of the water in Fayette, will also cease in-person classes following the Thanksgiving break.

The city currently owes around $100,000 to the HCRWD. The City of New Franklin is in an identical situation and owes approximately $40,000. However, the district will not likely either city to pay the debt. 

Fayette’s rate hikes should increase revenues by around $100,000 a year. It will also mean that for every dollar the city pays out for bills such as water consumption and debt service, it will bring in approximately $1.50. That profitability is necessary so the city may continue to hold its bonds, which Fayette is expecting to refinance.

The new rates also mean that Fayette will be able to absorb future price increases from the district, which has already done so twice this year, once in January and again in July. 

“You’re moving in the right direction with this, I believe,” said Joe McLiney of McLiney and Company, a family-owned bond underwriter based in Kansas that serves various municipalities and school districts.

“That should build up decent reserves and let you pay cash for things and not have to borrow, not have to go to the bond market,” Mr. McLiney explained to the council.