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Franchise fee passed on to water company

The Sherwood City Council Monday adopted a 4.25 percent franchise fee on Central Arkansas Water as a way to generate additional money to the city’s general fund. While the city’s coffers are expected to garner an extra $100,000 to $200,000 annually, the 4.25 percent fee is expected to be passed on to Sherwood water customers of the utility.

The franchise fee was passed by a 5-2 vote, with Alderwoman Marina Brooks abstaining. Aldermen Charles Harmon and Tim McMinn voted against the measure.

Alderwoman Mary Jo Heye made a motion to postpone the increase to October.

“The reason is we need to give them time for the implementation,” Heye said. Alderman Ken Keplinger seconded Heye’s motion.

McMinn questioned the timing of passing a franchise fee on Central Arkansas Water.

McMinn said it might be wise for the city to hold off on adopting a franchise fee until more progress is made in convincing CAW’s board of directors to lower Sherwood’s water rates.

CAW now charges Sherwood water users 60 percent higher rates than are paid by North Little Rock or Little Rock water customers.

“We already know we are paying 60 percent higher water rates than Little Rock or North Little Rock,” McMinn said. “Some would say that is two different issues but some would say it will have an impact on our citizens.”

McMinn said Sherwood residents don’t need an extra 4.25 percent added to their water bills.

Harmon echoed several sentiments of McMinn, saying Sherwood city has passed various new franchise fees on other utilities that are generating revenues for the city’s general fund.

“It affects our constituents to add another 4.25 percent to their bills,” Harmon said. “I don’t’ want to be responsible to increase their water rates any more than they already are.”

Keplinger said, “This should have been done years ago,” speaking about passing a franchise fee onto CAW. Harmon responded, “That is right, but timing is everything.”

Keplinger said Sherwood needs the tax revenue that the CAW franchise fee will generate.

“We do not have enough funds to do what the city needs to do,” Keplinger said. “The only way we do it is through taxation. We need to get our ducks in a row. We are lacking so many of the little things. We haven’t given our employees a raise for four years.”

Keplinger added, “We have to be fiscally responsible with the money we are in charge of and until we are able to have enough money this is the only way we are going to be able to do it. We have cut. But we still have to have money to do what the city needs done.”

Harmon said the city would garner about $380,000 from its natural gas franchise fee it recently enacted.

“People have never paid a franchise tax on water,” Harmon said. “This is only going to be $100,000 more to a $20 million budget. It is a drop in the bucket.”

Mayor Virginia Hillman said she has met with CAW officials recently. She does not anticipate any decrease in Sherwood water rates in 2013 or 2014.

“It will be a process that will not happen overnight,” Hillman said.

Harmon said he hopes to see CAW move into the direction of charging Sherwood’s customer rates that are closer to those in Little Rock and North Little Rock.

Alderman Kevin Lilly said he agreed with enacting the CAW franchise fee because this type of tax is done by many municipalities.

“As much as I would like to see Central Arkansas Water’s rates go down, this puts us in line with what is going on around us with other municipalities,” Lilly said. “I don’t think this is out of whack.”

Alderwoman Toni Butler said, “The rates charged in Sherwood have been 60 percent higher without a franchise fee.”

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