HADLEY — With water storage tank and water treatment plant projects totaling $25 million to begin by the end of the decade, along with millions of dollars in additional work expected on water mains, Hadley may need to significantly increase its water rates.
That recommendation for water rate adjustments is included in a Drinking Water Asset Management Plan, presented to the Select Board by representatives from Tighe & Bond on Sept. 2.
“To afford all of these recommended projects, it is recommended that the rate structure be adjusted,” said Joshua Bouchard, project engineer for Tighe & Bond.
Because of the large expenses, both in the short term and over the next 20 years, the plan shows that the current $614 yearly water bill for a three-person family, using 55 gallons of water per day, should more than double, to a $1,551 annual water bill.
The consultant is also recommending that the agricultural rate, which is set for irrigation by farmers, be increased more aggressively to catch up to the residential rate.
Currently, the agricultural rate is set at $4.25 per 100 cubic feet, while the residential rate is $7.50 per 100 cubic feet and the commercial rate is $8.95 per 100 cubic feet.
With residential and commercial going up 22% annually, starting in fiscal year 2028, the agricultural rate would go up about 40% annually, until it aligns with the residential rate in fiscal year 2030, with both at $13.62 per 100 cubic feet and the commercial at $16.25 per 100 cubic feet. By fiscal year 2032, the rates would be $18.16 per 100 cubic feet for residential and agricultural, and $21.67 per 100 cubic feet for commercial.
The report is structured so that some projects that need to be funded are considered immediate, meaning they will be started within the next year, and others are high priority, or to start within the next five years. Medium and low priority projects are pushed off 10 or 15 years.
The plan identifies $28 million worth of so-called vertical projects, with the two main drivers being the storage tank replacement at $9 million and the Mount Warner water treatment plant at $16 million.
On what are called horizontal projects, there is a longer list, with cost of all projects about $69 million. Already underway is the Bay Road Bridge water main, at a cost of $100,000, while the Middle Street water main, at a cost of $1.5 million, is expected to start next year.
Rate evaluation is to balance expenses and revenues so that customers can afford the rates, Bouchard said.
In fiscal years 2025 and 2026, the rates brought in about $1.4 million for operating expenses, about $80,000 for capital needs and covered debt between $300,000 to $350,000 per year. The rates need to go up to cover an increase in operating expenses, up to $1.9 million by fiscal year 2032, and debt up to nearly $4.2 million at that time.
To ensure that the rate adjustments would not be too much of a burden, the consultant looked at the lowest quartile income bracket in Hadley, at $57,800 per year, and basing the increase on the American Water Works Association view that bills shouldn’t make up more than 3.5% of a low-income resident’s expenses. By fiscal year 2032, Bouchard said the town would be looking at this being 2.3% of a low-income resident’s expenses, so impact would be considered low burden.
The next steps for the water asset management plan are to seek grant funding to offset capital project costs. The plan also recommends to continue water storage tank replacement, which is in the design phase.
The advice is to also continue planning for the Mount Warner water treatment plant to provide additional redundancy.
While the board will have a public hearing on any rate adjustments before they are voted on, members said they understand concerns about expenses.
Select Board Chairwoman Amy Parsons said there will have to be “gentle balance” on how to do this, observing that all agricultural increases will also affect people who are living in town.
Coming off approval of a Proposition 2½ tax-cap override, people are already being hit with a larger increase in property taxes.
Board member Molly Keegan said officials need to do what is possible to reduce the costs of the overall water program.
Bouchard said the plan should be seen as the worst-case scenario, and any grants would offset costs.
But for the water tank replacement, Tighe & Bond was unable to secure a grant due to the relative wealth of the community, but instead are likely to go with a low-interest loan, said Tighe & Bond Vice President Jeffrey Faulkner.
Town Administrator Nate Malloy said he hopes the grant atmosphere changes in the future, so more grants are available, but what isn’t factored into the calculations is if the Mount Warner Treatment Plant comes online, ongoing expenses at the Callahan Treatment Plant may be reduced.
