The City of Fayette has a new contract in place with the Howard County Regional Water District. City Administrator Tyler Griffith announced to the city council during its regular meeting on March 2 that the new contract better reflects actual water usage.

It was revealed last fall that Fayette was falling short in its water usage as stipulated in a 35-year take-or-pay contract signed in 2011 with the water district. The shortfall put the city in arrears of about $100,000. While the city did not have to pay back that money, adjustments to the contract were necessary.

Fayette was originally contracted to buy a minimum of 115 million gallons of water from the district. That amount was based on inaccurately high estimates made by the city at the time. Since then, Fayette has significantly curbed water losses, which means it is purchasing even fewer gallons. The gap was widened further when Central Methodist University was forced to suspend in-person classes for nearly two months of its spring 2020 semester due to COVID-19. The university annually consumes around 22% of the water in Fayette.

Under the new contract, Fayette is required to purchase a minimum of 94 million gallons. For any usage over the minimum, the city will pay a rate of $3.50 per 1,000 gallons of water used. Griffith said water usage for the first two months of 2021 is already trending upward.

The new rates keep the water district running and maintains its debt obligations, explained Griffith, who also serves on the district’s board.

The city council in October voted to raise water rates. Current rates now stand at $9.23 per 1,000 gallons of water. The base rate for in-town customers remains at $25. However, the base rate for customers living outside the city limits increased by $5 from $27.50 to $32.50. In addition, the usage rate for those customers incurred the $1.75 increase and now stands at $10.01 per 1,000 gallons.

The new rates went into effect at the end of November 2020.

Fayette is not the only city to have issues with water usage estimates factored into the take-or-pay contract. The City of New Franklin found itself owing around 40,000 to the water district. Like Fayette, the city did not have to pay that money back. New Franklin aldermen approved two rate hikes during their February meeting.