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CHAPTER XX

RATES OF WATER CHARGES

Average rates of water charges and comparisons by groups are of limited value from the standpoint of precise information. In the opinion of some they may be misleading if used without an appreciation of the conditions for which they are representative. Nevertheless information obtained from the average rates of charges is of interest and seems to serve an educational purpose for those not interested in fitting rate schedules to the individuality of a particular water works problem.

Under date of February 16, 1925, questionnaires were mailed to water departments and companies in all cities of the United States and Canada having a population of 15,000 or more, requesting information in reference to water rates, water main installations, water treatment, payment for fire protection, payment of taxes, etc.

Answers were received from 294 cities in the United States and 7 in Canada, having a total population of approximately 42,000,000. Included in this list are such cities as New York, Philadelphia, Chicago, Detroit, Minneapolis, St. Paul, Montreal, Toronto, San Francisco, Louisville, and New Orleans, together with smaller cities such as Bloomington and Evanston, Illinois; Kokomo, LaFayette, LaPorte and Muncie, Indiana; Shreveport, La.; Covington, Ky.; Boulder, Colorado; Auburn, N. Y.; Bay City, Ann Arbor and Adrian, Michigan, etc.

Basis of rate comparison

In the following table are four columns representing the charges which would be made on an average for each of the four groups below listed for water service as follows:

Column A-Charge per 1000 gallons for first 7500 gallons used in one month by domestic consumers, smaller stores, etc.

Column B-Charge for 75,000 gallons of water used in one month by apartment houses, stores, and smaller industries

Column C-Charge for first 1,000,000 gallons used in one month by factories, hotels, larger stores, etc.

Column D-Charge for 1,000,000 gallons used in excess of first 1,000,000 gallons by such industries as railroads, packing houses, factories and other leading industries.

GROUPS OF CITIES AVERAGED

A

B

C

D

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I. Average of rates in 295 cities representing all sections of the country and aggregating about 42,000,000 population with some plants municipally owned and others privately owned. II. Average of rates in 97 cities where the water supply is filtered and chlorinated... III. Average of rates in 66 cities where the works are privately owned and provide water main extensions and pay taxes, averaging for 60 cities in the United States 13 per cent of the gross revenue...

IV. Average of rates in 214 cities supplied by municipally-owned plants of which 202 do not pay local taxes and 70 make assessments covering part of the cost of water main extensions and with 93 receiving revenue from the city treasury

0.38

Free water

18.46 150.16 119.77

0.2275 12.93 113.54 98.01

The following are characteristic remarks concerning so-called "free water":

Water for public use should be paid for by the department that uses it, both as a matter of equity and to restrict a lavish use of water.

I believe that no service should be free as it tends to waste. "Free water" is a misnomer; somebody must pay the bill.

I am of the opinion that "free water" is a misnomer. Water used under pressure costs something, and if not paid for directly in cash by the immediate consumer, must be provided for in some other way.

The "free list" is the thief that robs and undermines business, and it cannot be maintained without deviation and discrimination and should be eliminated.

One hundred and twenty-seven cities furnish no "free water." One hundred and eight cities furnish a small amount, ranging from 0.1 to 2.5 per cent of the total pumpage.

Forty-seven cities furnish "freewater" in quantities ranging from 3 to 40 per cent of their total pumpage.

ASSESSMENTS FOR WATER MAIN INSTALLATIONS

Seventy of the municipally operated plants report special assessments, or revenue from tax budget, to cover a portion, or all, of the cost of water main installations. Many of these cities levy the assessExamples of such assessments

ment against the abutting property. are shown in table 23.

It should be clear from what is here presented on special assessments, taxation, "free water," etc. that considerable caution should be used in comparing rates of water charges as between different municipalities. Such bare comparisons may be specifically misleading in many instances, unless one keeps always in mind the local individuality of rates and the factors that are specifically incorporated therein. In the consideration of comparative rates, the very data presented in this chapter, because of their variation in detail and as a result of different fiscal policies, lead one to caution, although they are necessarily helpful as indicative of current, but not uniform, practice.

TAXATION OF WATER PLANTS IN VARIOUS STATES ON PHYSICAL PROPERTY, FRANCHISES, SECURITIES AND INCOME

Two principles underlie our tax laws as applied to business concerns; the first, that tangible property, however owned, should be taxed by the jurisdiction in which it is located and where it receives benefits and protection; the other, that business carried on for profit in any locality should be taxed for the benefits it receives. These principles are in many cases illogically and inconsistently applied, sometimes involving double taxation and often disregard of interstate comity, although the fact that comparatively few of our water plants do business in more than one state lessens these evils as applied to that class of business. It is evident that unincorporated concerns as a whole escape with a lighter tax than do successful corporations.

The National Tax Association, having a wide membership, has been earnestly engaged in an effort to bring about simplicity and uniformity in our tax laws and greater comity between states. It

TABLE 23

Long Beach, Cal..... Trunk mains paid out of water revenue. Service mains by district served

Hartford, Conn.... Assessment of $1.50 per lineal foot of abutting property New Britain, Conn. . The cost of laying a 6-inch main

Washington, D. C... Assessment of $2.00 per front foot each side of street. Exemption of 100 feet on corner lots

Bloomington, Ill.....Special assessments against properties benefited

Chicago, Ill..

Cicero, Ill..

Decatur, Ill.

Evanston, Ill.

Moline, Ill.

Special assessments and current revenues

Special assessment by board of local improvements
Frontage charge pro-rated according to benefits

Special assessments

.Special assessments

New Orleans, La. . . . Water main extensions are built from construction funds

Holyoke, Mass..

Ann Arbor, Mich..

Detroit, Mich..

derived exclusively from taxation

Assessment of $1.00 per front foot of abutting property

Assessment of $1.50 per front foot

.. Assessment of 50 cents per front foot

Minneapolis, Minn... Assessment covering cost of 6-inch main or equivalent

St. Paul, Minn.

Virginia, Minn...

Hannibal, Mo.
Camden, N. J..
Lockport, N. Y.

. Frontage tax of 10 cents per year for 10 years on abutting property

. Assessment of approximately $1.00 per foot

.Cost of water main

.Cost of laying pipe assessed against abutting property .. Local assessment on property benefited

Fargo, N. D. . . . . . . . Special assessment on abutting property or benefited

Grand Forks, N. D..

Cincinnati, Ohio.
Cleveland, Ohio.

Dayton, Ohio.

Kitchener, Ont...

Allentown, Pa...

Altoona, Pa..
Philadelphia Pa.

Sioux Falls, S. D.

Everett, Wash...

area

Cost of main tax against abutting property
Assessment to cover the cost of distribution main

.Cost of water main, with maximum charge of $2.00 per
foot on taxable property

Assessment of $1.00 per foot of mains laid on petition to
City Commission

Cost of 6-inch main assessed against property benefited
Assessment of $1.25 per front foot.

Assessment of 25 cents per front foot
Assessment of $2.00 per front foot

.. Assessment covering cost of 6-inch main

. Assessments through improvement districts

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