CITY PURCHASE OF WATER SYSTEM WOULD COST THE SCHOOL DISTRICT

If Cape Girardeau buys Union Electric Co.'s water system, it will cost the school district $135,000 in tax revenue.

But City Manager J. Ronald Fischer said that if the measure is successful at the polls the city is willing to wean the school district off the money over a five-year period.

Fischer attended Monday afternoon's Cape Girardeau Board of Education meeting.

Superintendent Neyland Clark said the arrangement is acceptable. "We want what is good for the general welfare of the city," said Clark.

Voters will decide Nov. 5 if the city will sell $8.5 million in revenue bonds to purchase the water system from UE.

Fischer told the board Union Electric intends to sell the water system. The city got the first chance to buy it, but another company has expressed interest in buying it, he said.

"If another company buys it, they are eligible for a 49 percent rate increase," Fischer said.

"If the city operates the water system, there is not an automatic profit built into the cost," he said. "If we need a water-rate increase, the city council will decide."

Fischer said the city, as a governmental entity, does not pay property or real-estate taxes. Thus the purchase would cost the school district an anticipated $135,000 a year.

"The city council has authorized me to, for the first year, pay 100 percent and then reduce by 20 percent each year the payment over a five-year period," said Fischer.

He also pointed out that the school district is one of the city's top-10 water users. Business manager Larry Dew confirmed that the district pays $19,000 to $20,000 a year for water. The school district would continue to pay for water under city ownership of the system.

Board member Lyle Davis asked Fischer if the $135,000 could be built into the operating costs of the water system.

Fischer replied, yes, but the cost would be passed along to customers.