Helper council raises utility rates to cover theater grant
Helper residents will see an increase on water and electrical bills after the city council approved a rate increase last week.
Helper officials voted in favor of the increase at the council's Feb. 1 meeting. All or part of the revenue generated will be used to pay back a Utah Community Development Block Grant for the Rio Theater.
Two weeks prior to the meeting, Keith Heaton, who administers the state's CDBG funding program, told Helper officials that the city needed to meet the terms of the grant or refund $107,000 which the city received some 10 years ago.
The terms of the grant required the city to hire the equivalent of three full time permanent employees whose job functions were directly tied to the theater.
However the city has not hired the employees, primarily because of the expense.
The council pointed out that, in a single year, three full-time employees with benefits could cost the city in excess of $90,000.
Even if Helper were to hire six part-time employees without benefits, the related wages of would likely cost the city $60,000 or more.
The other option for Helper was to pay back the grant funds.
Heaton told city officials they would need to repay the funds in a minimum of 10 years.
At slightly less than $11,000 annually, the city can stretch payment out during the 10-year period.
During that time, the Helper will be ineligible for CDBG funding and the default status of the grant could impact other grants or loans which are contingent on the fiscal solvency of the district.
"We're not going to see a penny [of CDBG funding] until this balance is paid off," said Armstrong.
He added that granting agencies may be interested in the status of the grants and loans the city has received. And while not all grants and loans will be affected, the city's default status could mean that some funding agencies turn Helper away.
"This is onerous on the city," said Armstrong. "A 10-year repayment plan is a significant burden on this city because by stretching out the amount over 10 years - even though it's zero percent interest - we are in fact penalized as a community in anywhere from $50,000 to $100,000 in CDBG grants."
Armstrong indicated that he preferred to pay back the grant as quickly as possible. By moving quicker, Helper would not only become eligible for CDBG funds, but avoid the possibility of jeopardizing other grant funds.
In order to generate the revenues to cover a minimum annual payment, the council voted to increase the city's existing water rates and electrical rates.
Water rates for Helper's customers will go up 50 cents per 1,000 gallons on the summer rates.
The winter rate, which includes 10,000 gallons per month, will jump from $14 to $15 per month.
Electrical rates for residents in Helper will increase a flat 5 percent.
The actual amount of money generated by the rate increases remains uncertain.
However, the increase could put the city in a position to pay back the grant for the Rio Theater in as little as two years.
It also allows Helper to generate funds to start doing more preventative maintenance and proactive management of city infrastructure compared to the reactive management and emergency maintenance which Helper is accustomed to.
Meanwhile, Helper's utility rates will still be competitive against other municipalities and utility agencies in the county.
However, the rate increase was opposed by both the mayor and members of the general public that were in attendance at the meeting.
Mayor Mike Dalpiaz told the members of the Helper council that raising rates without a firm plan on how the funds will be spent is irresponsible.
One of the most vocal opponents of the proposed rate hike, Robert Strong, accused the Helper council of hiding behind a rate increase when the funds would go to pay for the theater.
Cities are allowed to transfer surpluses from their sewer, water, electrical and other utility funds into the general fund.
Most cities use utility revenues to finance the other operations of the city, which often do not generate the revenues which utilities do.
Strong also said that it would make more sense to use the funds to pay for the employees required by the grant.
"You guys want to take this money and give it to Uncle Sam," claimed Strong.
Strong pointed out that wages earned by employees at the Rio Theater would largely stay in the community, which would in turn mean more funds for the city and local businesses.
Despite opposition from members of the public and the mayor's recommendation against the rate increase, the council approved the utility rate increase.
The council also approved a repayment plan for the CDBG grant which would extend repayment over the course of 10 years.
However, some members of the Helper City Council indicated that they would work to pay back more than the amount on the repayment schedule in an effort to eliminate the debt sooner.