The Baldwin City Council approved Monday an ordinance establishing a new wholesale water rate structure that accounts for the city’s increasing costs.

The new rate structure was developed after two years of negotiations with Wellsville, which is by far the city’s biggest wholesale water customer. Nonetheless, the rate will be applied to the city’s other wholesale water customers of the city of Edgerton, Douglas County Rural Water District No. 4 and some private customers.

Brad Smith, Baldwin City financial director, told the council the rate formula will charge wholesale customers 15 percent of the Baldwin City Water Department’s expense to treat 1,000 gallons of water minus its transfers to the city general fund. The wholesale rate will be applied on top of the $2.91 per 1,000 gallons Baldwin City pays to purchase wholesale water from Lawrence. Also added into the fee will be the 10 cents per 1,000 gallons the state of Kansas charges for using water from Clinton Lake, he said.

The rate formula has been shared with Wellsville officials, who were pleased with it, Smith said. The next step would be both cities entering into a wholesale water purchase contract based on the new formula. The new contract will replace a current 40-year-old wholesale water agreement, which expires Dec. 31, 2017, he said.

The wholesale water rate will be adjusted at the first of each year, Smith said. It should be expected to increase, because the city’s expenses would increase, he said.

Baldwin City is the city of Lawrence’s second largest water customer behind the University of Kansas and bought 165 million gallons in 2015. Wellsville purchased 45 million gallons of that amount.

The council also approved a mutual aid agreement with the Wellsville fire district. Baldwin City Fire Chief Terry Baker said the agreement was needed after the Wellsville city fire department consolidated with the surrounding fire district. The Baldwin City Fire Department can respond to fires in areas of the Wellsville fire district in three minutes, while it takes eight minutes for units from Wellsville to get to the scene, the chief said. The benefit for Baldwin City is the guarantee of a Wellsville truck with from four and eight firefighters in the event of a fire, he said.

In other business, the council:

• Approved a revised ordinance authorizing a referendum on a half-cent sales tax, which would provide half of the $5 million needed to build a community recreation center. The city first passed the sales tax ordinance last month, which set a Feb. 7, 2017, date for the referendum. The revision was needed because a provision establishing a 25-year sunset for the sales tax was omitted in the first ordinance.

The Baldwin City school board is to consider Sept. 19 a request to approve a 2.75 mill levy for the Baldwin City Recreation Commission, which would provide the other $2.5 million needed to build the community center.

• Heard from Smith that Baldwin City utility customers will no longer receive their bills on a postcard after this month. Starting in October, the city will use a new machine for utility billing, which allows bills to be stuffed into envelopes with a monthly newsletter, he said.