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Mayor Ron Littlefield speaks during a March 29 press conference at City Hall.

While Chattanooga's proposed 2013 budget does not include a property tax hike, it does include higher fees for homeowners and businesses.

The budget submitted by Mayor Ron Littlefield on Tuesday reflects a 9.7 percent increase in the sewer rate and an 8.8 percent increase in stormwater fees for nonresidential properties.

The sewer fee increase, which will raise an additional $3 million for the city, is the seventh consecutive annual increase.

The stormwater -- or water quality -- hike will raise an additional $1.3 million, according to the budget. This is the third consecutive annual boost in these fees.

The sewer fee hike would tack on about $1.35 to average homeowners' monthly bills starting in October. But the fee is set to rise another $1.25 a month in April 2013.

A majority of this year's sewer fee hike is in preparation for an upcoming agreement between the city and the U.S. Environmental Protection Agency to deal with the city's aging, leaky sewer system, said Jerry Stewart, director of water resources.

Stewart said he could not yet talk in detail about how the extra money would be used because of a confidentiality agreement with the EPA. The agreement -- technically known as a consent order -- to repair the system is expected to come out midsummer and could cost hundreds of millions of dollars.

Stewart said the city must evaluate the order and decide next year if there needs to be another substantial sewer fee hike.

One-third of the 9.7 percent increase -- 3.25 percent -- is to pay a new contractor for water billing and fee collection. Tennessee American Water decided at the beginning of the year to drop that service for the city, Stewart said.

"We have to go out and find us a third party," he said. "It was a business decision on their part. They've been providing that service since 1952."

On stormwater fees, the nonresidential rate is scheduled to rise automatically when property tax bills go out in October. The hike is part of Littlefield's plan to ramp up the stormwater fee to the same as the residential rate within five years.

In April 2010, the City Council raised the residential rate to $115.20 a year from $24 or $36. Nonresidential rates, based on the size of the facility, cover businesses, churches and institutions such as schools.

Public Works Administrator Steve Leach said the increased fee revenue will pay for a variety of projects and debt service.

"It's going to be for capital projects," he said.

The list of proposed projects include work on the Brainerd levee, building an art park on Main Street and three drainage projects, he said.