City council OKs cheaper water rates to help lure industry

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By Meaghan Downs

New jobs plus increased city water use equals economic growth for Lawrenceburg.
That’s the proposed formula behind a new ordinance unanimously passed by the city council last Friday during a special-called meeting, effective immediately.
The ordinance, whose purpose is “stimulating the creation of new jobs and commercial development within the community,” authorizes Mayor Edwinna Baker to enter into an agreement offering savings in city water service in exchange for potential job growth.  
“I’m hoping this will encourage people to look at Lawrenceburg,” Baker said. “I think it’s a good thing the council voted to do this.”
Existing water customers and new industries wishing to expand or relocate in Lawrenceburg can now qualify to receive an economic development rate to be applied to a portion of their water bill.
This agreement, which will vary from customer to customer, would establish a specific rate for a certain volume of water used by the business. That rate then would only include the city’s variable cost, or realized expenses when producing additional volumes of water.
In exchange for this rate, any business must file an initial report with the council explaining its plans to increase permanent, minimum-wage jobs in Lawrenceburg.
The number of jobs this would create for Lawrenceburg, however, depends on the individual agreement between water customer and the city, according to Connie Allen, an engineer with Salt River Engineering in Harrodsburg who assisted the city with its 2011 cost of service study regarding the economic development rate.  
A hypothetical rate agreement between the city and a local business, Allen said in an e-mail interview, may require a business to introduce a minimum of 50 additional jobs physically performed within the Lawrenceburg water service area.
Another rate agreement scenario may require a business to provide at least four new jobs per 1 million gallons of average monthly water demand beyond the business’ usual monthly water use.  
“The savings are directly related to how much water [businesses] use,” Allen said via e-mail. “A wet industry will realize a significant benefit; a dry one, not so much.”
The rate agreement will also depend upon the capacity of the city’s water plant.
According to Danny Riley, assistant supervisor of the city’s water treatment facility, the Lawrenceburg water plant produces about 2.3 million gallons of water a day, meeting about 58 percent of its maximum daily capacity. Maximum water production capacity for the plant is about 4 million gallons a day.
Wild Turkey distillery, a city water customer with a high water use that plans to relocate a bottling facility in Lawrenceburg, currently uses about 300,00 gallons of water a day, City Clerk Robbie Hume said.
“That’s the whole reason why this EDR is possible,” Hume said of the plant’s water capacity. “We have capacity built in to the current rate structure.”
Including the initial jobs creation information, an annual report detailing any capital investments, as well as any increase or decrease in employment, will also be required by the city during the length of the agreement.
Agreements cannot exceed five years, the ordinance states, but they may be reviewed and renewed for a single extension for no more than five years.
The ordinance spells out conditions for the city to follow as well.
The city must demonstrate that other water customers will be no worse off if other businesses receive the economic development rate.
To do so, the city will need to show an absence of any future subsidy for other customers and that any business or industry receiving an economic development rate will not eat into more than 20 percent of the treatment plant’s reserve capacity.
The city must recoup any fixed costs — the overall expense accrued in the cost of producing water, regardless of volume, and any additional step costs  — upfront or as part of a minimum bill payment from the water customer upon entering the rate agreement.
If the city discovers it does not have adequate capacity to meet anticipated growth, it can unilaterally rescind the rate agreement with a water customer, according to the ordinance.
The ordinance states that the mayor may designate another individual to enter into rate agreements with water customers, but Mayor Baker said she would most likely not designate anyone for that responsibility during her term in office.