New water rates will not be determined until after the Sisters City Council has heard from the public. That decision came after the council reviewed recommendations of engineering firm H.G.E., Inc. during a workshop last week.

A public hearing is scheduled for the May 9 city council meeting.

If adopted by the council, the recommended rates for basic service to single family homes will not change--$16.50 a month for up to 10,000 gallons of water and $6 for the loan retirement. The price for each 1,000 gallons over 10,000 gallons would be reduced from the current $1.65 to $1.10.

Customers living outside the city limits and using city water pay a higher base rate. Under the recommendations, those rates would not change.

The most substantial change contained in the H.G.E. recommendations is how the levy for retirement of a FmHA loan is assessed. Presently, a flat rate of $6 is added to each user's monthly bill, regardless of the size of the water line or amount of consumption.

The recommendations would set up the $6 levy on the bases of "equivalent dwelling units" (EDUs). A single family residence consuming 10,000 gallons a month is equal to one EDU. Larger users, such as motels, apartment buildings and others with large meter sizes, would pay more.

H.G.E. recommends additional EDUs be assigned to meters ranging from 1-inch to 4-inch lines. A 1-inch line would pay 2.5 times $6 (2.5 EDUs), or $15 a month for the loan retirement. A 4-inch line would pay 25 times the $6 (25 EDUs)--$150 a month.

Richard Nored, representing H.G.E., said the increase in the amount levied for loan retirement is offset in some cases by an overall reduction in the price of water. He pointed out that in his firm's study it was determined, for example, that 4-inch line users currently are paying an average of $420.76 per month.

Even with the increase in loan payment charges, the reduced rate for overages would produce an average monthly bill for these users to $393.28, according to the report.

The report also indicated that the only increase in average bills would be for users with 1-inch lines--from $24.32 per month now to $28.48 if recommendations are approved.

Nored said the use of EDUs is required in the loan agreement with FmHA and the $6 per EDU is also established in the agreement.

City Councilor Gary Miller voiced concern, however, over the increase in EDU charges that would go to some commercial users. He also raised a question about the necessity for generating so much income in excess of the amount required to make the annual loan payment.

The agreement requires a $38,046 annual payment plus a deposit of $3,805 to go to a reserve fund which after 10 years would add up to the equivalent of one payment. This means the city must raise $41,851 per year from water users to pay off the loan.

The $700,000-loan, at this rate, would be paid off in about 40 years.

Under the recommended EDU charges of H.G.E., the annual collections would add up to $63,216--more than $20,000 in excess of the required annual payment to FmHA.

City Attorney Geoffrey Gokey studied the loan agreement and said it was clear that the city must use the EDU assessment formula and the rate is established at $6 per EDU. He said that it might be that an amendment to the agreement might be negotiated.

Mayor Dave Moyer also said he "had some concerns" over the increased loan retirement assessments, but he made the point that it would be beneficial to the city in the long term to retire the water system improvement loan early.

He said it would be less of a burden to users later on when other improvements must be made, or when Sister's residents would be asked to pay for a sewer system.

Nored said the recommended EDU schedule would build a reserve fund which the city might borrow from in the event of a major catastrophe. He also asked the council, in making its decision, to consider future water system needs. The system, he said, has a limited volume of water.

"As time goes by if the city continues to grow, the system may have to be expanded in 20 years," he said.

Mayor Moyer said there is talk of adding another school which could significantly impact the water system.

Nored also said that there may be an opportunity to buy back the loan at 82 percent of its remaining value. With that kind of saving the city might get a bank loan at a reasonable interest and save considerable money, he said.

A decision on the water rate package is expected following the public hearing May 9, according to City Administrator Barbara Warren.