Letter on Rate Notice Change

Open Letter to all Lake Kiowa Special Utility District Constituents

By now you have received the latest water rate increase notice from the LKSUD. We would like to take this time to give you a broader picture of the situation.

Our old water lines are 55+ years old and because they are basically constructed with concrete are subject to movement in the ground and deterioration. In 2013 the LKSUD Board began the process of replacing our existing water lines. The new pipes are more flexible and have an expected life of 100 years. This project was divided into 6 phases, and we have completed 4 phases. Each phase has a debt burden due to the issuance of bonds to cover the planned expenses. We work closely with the Greater Texoma Utility Authority (GTUA) for the issuance of these bonds which range from 20 to 27-year maturity dates. By working with GTUA, we enjoy lower interest rates than the open market but are currently affected negatively by the current market rates. The current estimate for phase 5 is $6.2 million. Since approval for these bonds takes several months, we are hoping that interest rates will have decreased by the time these are issued for phase 5. Our current debt service is approximately $625,000 per year. This project will add in the neighborhood of an additional $360,000-$390,000 a year in debt service.

In addition, over the past 18 months we have incurred the following abnormal expenditures:

Complete overhaul of our largest well                     $370,579
Complete overhaul on the well behind the dam $109,015
Cost of state mandated generator                              $137,268
                                                                                          TOTAL $616,862

We are currently in the process of building an additional storage tank at the water well located at the dam site. Its estimated cost is $165,525. This will help with capacity issues during heavy usage and outages.

There have been suggestions that we should have smaller projects. The smaller the project the less efficient it becomes.  The original estimate for the whole waterline replacement project was $14 million. As of today, we have replaced a little over 50% of the water lines and have already spent $14 million! Our last phase was $5.47 million, and it covered 26,805’. The next phase will cover 21,980’ and cost $6.2 million. That is like paying 13% more for your favorite cereal and getting 18% fewer corn flakes. Small projects cost more in the long run.

We want to assure you that a lot of thought went into this decision, and we did not take it lightly. However, we strongly believe that this decision is necessary for the future of the LKSUD.

The Communique, at the direction of LKPOA leadership, has taken the liberty to post all our names and phone numbers. We welcome the opportunity to answer any questions we can. Also, they listed the time and place of our next meeting, and we would be happy to listen to your concerns. Our board meetings are always open to our constituents. You can always find the meeting time and planned agenda on the LKSUD website as well as posted on the front door of our offices.

Sincerely,
LKSUD Board of Directors