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Date: 4/17/2023
NORTHAMPTON — With Northampton’s Coca-Cola bottling plant on the brink of closing by December, the City Council has approved an increase in water and sewer quarterly base rates for the upcoming fiscal year to accommodate for lost revenue.
Back in 2021, the Coca-Cola bottling plant in the Northampton industrial park announced that it would shutter its doors in the summer of 2023 after serving six decades in Northampton. The plant then delayed the closing until December 2023.
“After careful consideration, the Coca-Cola Company has decided to close our production facility in Northampton, MA,” said Coca-Cola spokesperson Abby Peck, in a statement to Reminder Publishing in 2021. “We did not make this decision lightly and are grateful to have had the opportunity to have been a part of the Northampton community. Impacted employees will be encouraged to apply and be considered for jobs that they are qualified to perform within the Coca-Cola system and at other third-party manufacturer locations. The facility is targeting closure in the second quarter of 2023, and we will support our associates throughout the challenging transition.”
The plant’s closing is significant, according to the DPW and Mayor Gina-Louise Sciarra, since Coca-Cola takes up a large portion of the city’s water and sewer enterprise funds.
According to data provided by DPW Director Donna LaScaleia during a March 30 council meeting, Coca-Cola is the city’s largest water and sewer revenue source. It accounts for $1.6 million, or about a quarter of the $7 million Northampton takes in annually in water system revenue. Out of the $6 million the city receives in sewer revenue, the bottling plant brings in a little over $1 million, or about a fifth of the city’s sewer revenue.
The 455,000-square-foot building is Northampton’s largest industrial facility, and with its imminent closure comes the loss of 300 jobs and a general restructuring of water and sewer base payments that affects everyone in the city, from residents to businesses, to hospitals and schools.
To accommodate the significant loss in revenue, the city approved quarterly base rate increases for water and the implementation of base rates for sewer charges. Both of these changes will go into effect on July 1, when fiscal year 2024 begins.
The amount resident users pay is based on the size of their pipe. Most users in Northampton have five-eighths inch or three-quarter inch pipe. For users with a five-eighths-inch pipe, the water charge jumps from $15 each quarter of the year to $47, while users with a three-quarter-inch pipe will see their water base charge jump from $22.95 for each quarter of the year to $71.25.
Larger establishments that use more water in the city will see higher added costs since they use more water.
The loss of the Coca-Cola plant will also mean a new base sewer rate is implemented for the city. For users with a five-eighths inch pipe, this means that they will be paying $28.85 per quarter over the next fiscal year for base sewer charges. Those with a three-quarter inch pipe will be paying around $36.06 per quarter.
“We are just trying to stabilize revenue,” said Sciarra, during a March 30 council meeting. “If Coke wasn’t leaving, we would be discussing a smaller increase.”
Despite the increase in a quarterly base charge, Sciarra said the usage rates for water and sewer will stay the same for the next fiscal year.
During the March 30 meeting, Sciarra said the city is taking this route because it was the only way to ensure there are income exemption programs for low-income households and senior citizens. These exemptions are made under the state’s Community Preservation Act and their 41C property tax exemption clause. The water and sewer rate changes would not affect people under these exemptions.
According to LaScaleia, the base increases are important because the city’s utilities are considered a closed financial system, which means they are entirely user-funded. Therefore, expenses must be paid for in revenue.
LaScaleia has kept the city’s DPW budget level, and there have been no water and sewer rate increases over four of the past six years. But with the imminent loss of Coca-Cola, the increase in base charges had to happen.
“This is financially devastating,” said LaScaleia, of Coca-Cola’s imminent departure. “This has been a very difficult decision-making process for the mayor and for me,”
Sciarra said that she has tried to work with Coca-Cola to find a revenue replacement at the plant, but there has been no interest on Coca-Cola’s side in making this happen.
“I feel like the city has been remarkably accommodating to Coca-Cola, and it’s deeply disappointing they are leaving in this way,” Sciarra said.
April 13 meeting
After a positive recommendation was sent to the full council by the committee on Legislative Matters, the City Council unanimously approved these rate changes, though many expressed disappointment in Coca-Cola’s departure.
“We have to deal with an unfortunate situation here,” said Councilor Stan Moulton.
During the April 13 meeting, Moulton asked LaScaleia about fairly assessing the impact of Coca-Cola’s departure, and if she would factor that impact for future water and sewer rate increases. LaScaleia said she would, but it will most likely take a full 12 months before the city notices the true impact of the plant’s departure.
“[The closure] is going to require more assessment to see what that looks like and exactly what that means for our operation,” LaScaleia said. “It does not affect capital projects. It does not affect system as a whole. What this is going to effect is our operations on either end of the distribution.”
Council President Jim Nash said it is one of those votes that is “hard for us councilors” to do, but called the decision-making a very well-thought-out approach to a “tough situation.”
“I appreciate all of the presentations, all of the questions, the mayor’s office helping out with the low-income question,” Councilor Alex Jarrett. “It’s all difficult, and there’s a lot I don’t like about it, but I see the necessity of it and this is the best way forward with what we’ve got.”