The Reading City Council voted unanimously Monday to override Mayor Vaughn Spencer's veto of the new amendment to the city's Water Lease Agreement.
The Council and Reading Area Water Authority jointly announced the Amendment to the Water Lease on July 28, 2014. The mayor submitted his veto last Thursday.
The Amendment states that the Reading Area Water Authority will pay $8 million a year for five years for the city-owned water system.
The rate, while not sufficient to solve the budget crisis in the city, will allow for the avoidance of a significant rise in water rates for residents.
The authority has increased rates by 3% per year for the last three years, and the new lease rate will not require a rate increase above that for the next five years, although it does not prohibit one.
The deal also requires the council to repeal its earlier vote to dissolve the current board of RAWA.
The previous deal with RAWA was for nearly $10 million in annual lease payments and gifts, but a new state law forbids the gifts.
Mayor Spencer's veto was primarily due to the amount of the lease.
"I believe the amount negotiated is not enough for the city at this time," Spencer said Monday night. He acknowledged, "We all know that anything over $8 million is going to mean an increase in water rates."
He went on to say that, even with this new lease agreement, the city is still facing a $6 million deficit and the water lease needs to do more to alleviate that. "I think it's disingenuous for some people to think that we might not have to [raise water rates] in this process."
The mayor previously supported a lease with RAWA for 30 years in exchange for an up-front payment of $200 million, an agreement that would have raised water rates by 25%.
However, council maintained that it would not approve any long term lease that doesn’t allow for an open request for proposals from anyone.
Council President Francis Acosta argued, “We cannot keep using RAWA as a way to get out of debt,” and explained, “I think one of the reasons we decided on the number is because that number will not force RAWA to raise the water rates to our citizens."
A number of council members agreed with the mayor that something must be done about the city’s deficit, and that the solution may be increasing water rates.
"Let's be realistic. We're $6 million in debt again according to the latest numbers that we got, and somewhere we are going to have to raise revenue, and we don't want to cut services again. We're already cut to the bone. Something is going to go up, taxes or water rates,” Councilman Dennis Sterner said.
Councilman Christopher Daubert agreed. “I do not want to raise taxes and I do not want to cut our services. I personally feel that a slight raise in the water bill would be the best solution.”
He went on to clarify, “Why I believe water rates are the fairer way to approach this is that it is spread among many more people. If we're going to have to raise one of the two, taxes or water, it's going to have to be water."
In addition to overriding the mayor’s veto, the council also unanimously agreed to increase the number of members on the RAWA board from five to seven in order to help share the responsibility of the board and will be looking for people with significant expertise to assist the board in its decisions.
Monday night marked the second override of a mayoral veto in the RAWA discussions.
On June 9, 2014 the council voted five to one to override Mayor Spencer’s veto to dissolve RAWA.