Lebanon — City officials are proposing new increases to Lebanon’s water and sewer bills, arguing an incremental approach is needed to protect customers from steep hikes in the future.

But the notion of new fees has some in Enfield worried. The town, which pays to send its wastewater to Lebanon, is grappling with a deficit in sewer funds and will soon be looking to raise its own rates.

“There’s a lot of concern about what will happen to our costs going forward,” Enfield Town Manager Ryan Aylesworth said in an interview last week. “We have basically started the process of considering alternatives.”

That consideration includes funding a study, which would look into whether it’s financially or logistically feasible for the town to build its own water treatment facility, according to Aylesworth, who cautioned that such discussions are in an early, “exploratory phase.”

The Lebanon City Council will take up a proposed 5 percent water rate increase and nearly 5 percent sewer rate increase during its Dec. 6 meeting.

If those are passed, the average household could see its combined sewer and water bill increase by nearly $70 to about $1,425 annually.

By comparison, households with similar water and sewer usage are charged $921 annually in neighboring Hanover or $1,202 in Canaan, under those towns’ current rates.

Both rate increases are necessary to prevent sharper ones in the coming years, when Lebanon is scheduled to begin making larger payments on the money it borrowed to upgrade its system, according to city Finance Director Len Jarvi.

Lebanon predicts its debt service obligations will total $7.5 million in 2018, a 3 percent increase over this year’s, according to the city manager’s proposed budget.

That number is scheduled to continue to rise into 2022, when the city estimates it will spend $11.7 million toward paying down its debt.

While nearly half that will by paid with property taxes, most of the remainder will come from revenue generated by water and sewer ratepayers, according to budget projections.

“I give the City Council a huge amount of credit for looking through 2018 and 2019 and having the wisdom to see that indeed (large payments) are coming,” Jarvi said during an interview last week.

Much of the debt is the result of Lebanon paying off the long-running combined sewer overflow project, a federally-mandated effort to separate sewer and stormwater in about 15 miles of city sewer, according to Jarvi.

Lebanon has so far appropriated $63 million to the project, which is expected to be complete in 2020, but another $10 million will likely be needed before work is done, according to budget documents.

Other capital and infrastructure projects also contributed to the debt, Jarvi said, including work to upgrade the water treatment plant in West Lebanon. However, the budget estimates don’t account for projects outside of the city’s capital improvements program, such as any fix for Lebanon’s current sewer capacity problems.

While a rate increase could help ease future increases in Lebanon households’ bills, officials in Enfield are mulling what to do about their customers’ bills.

Enfield currently pays about $311,000 to send the waste from some 477 water and sewer customers to Lebanon’s treatment plant, according to budget documents. But the town is finding itself increasingly strained by the arrangement.

Enfield ended its 2015 fiscal year with a deficit of $682,576, according to a town auditors report. Of that, $532,847 was the result of the town charging too little in sewer and water rates.

Since May, officials have brainstormed ways to reduce the deficit over the next five years, according to the town’s November newsletter.

A feasibility study exploring how Enfield building its own treatment plant likely will be included in next year’s budget, said Aylesworth, the town manager.

But the town couldn’t break away from Lebanon until their current agreement goes up for renewal in 2019, he said.

Officials are also hoping recent work to finish the Route 4A sewer extension project will help by bringing another 130 new customers to Enfield’s system, and the Selectboard recently mandated some property owners along Route 4 also hook up, Aylesworth said.

But those efforts cannot stand alone, and residents should expect higher rates next year, he said, adding officials will have an idea of what those will look like once Lebanon’s rates are finalized.

The Lebanon City Council is scheduled to discuss the sewer rates at 7 p.m. on Wednesday, Dec. 6, at City Hall.

Tim Camerato can be reached at tcamerato@vnews.com or 603-727-3223.