HomeMy WebLinkAboutPublic Hearing for Resolution No. 4327, including a 5% increase to Water Rates effective 9-1-11 and 5% increase on 9-1-12.pdf
Commission Memorandum
REPORT TO: Honorable Mayor and City Commission
FROM: Anna Rosenberry, Finance Director
Chris Kukulski, City Manager
SUBJECT: Resolution No. 4327 – Water Rates
MEETING DATE: August 8, 2011
RECOMMENDATION: Adopt Resolution No. 4327 which includes a 5% increase to water
rates effective on September 1, 2011 and a 5% increase on September 1, 2012.
BACKGROUND: The City Manager’s Recommended budget included an Option A and
Option B for water rate increases. These amounts were the result of an update to our 5-Year
Comprehensive Water Rate study, presented to the Commission on June 20, 2011.
· Option A: 3% increase each year, with water pipe replacements funded at an average of
~$462,000 each year.
· Option B: 5% increase each year, with water pipe replacements funded at an
average of ~$1,000,000 each year.
To give the Commission maximum flexibility, we advertized and prepared the resolution with
consideration for the highest rate increase (Option B.) The Commission is free to adopt as-is, or
make adjustments to the rate increase this evening. We continue to operate with a tiered block of
rates for residences, to encourage water conservation. A copy of the updated rate study for
156
Option B can be found under Water & Wastewater Rate Studies online at
http://www.bozeman.net/Departments-(1)/Finance/Budgets-and-Financials.
This resolution, for Option B, is estimated to increase Water Fund revenue by approximately
$288,000 in FY12 and an additional $306,000 in FY13. Water charges are largely based on each
customer’s consumption of water. Average residential customers (current: $36.78/month)
would see a monthly increase of $1.84 in FY12, and an additional $1.93 in FY13.
ALTERNATIVES: Option C: During the June 20, 2011 Budget Work Session,
Commissioners asked about the how changing the amount of “Estimated Water Impact Fee
Revenues” would affect the rate model.
· The current rate model assumes that we will need to borrow $3 Million for the Water
Treatment Plant that is attributed to Impact Fee eligible costs at the plant.
· The rate model assumes we will collect $400,000 annually from Impact Fees in FY12-
FY14, and $500,000 annually in FY15 and FY16.
o The Actual Water Impact Fee collections in FY09-FY11 have averaged
$850,000/year.
$947,000
$880,000
$713,000
$-
$400,000
$300,000
$400,000
$400,000
FY09
FY10
FY11* est
FY12
Water Impact Fees
Rate Study Amount Actual Revenues
157
· If we changed our estimate of annual revenues from Impact Fees to $850,000 for each of
the years in rate study:
o We could pay off the full $3 Million loan at some time in FY16 (the last year of
this rate model.)
o Upon full payment, our debt service amounts would be reduced by a total of
$215,000/year.
o $215,000/year amounts to 3.3% of FY16 revenues.
If the Commission wanted to take this approach to budgeting for Impact Fees within the rate
model, we could reduce the recommended rate increases from 5% to 4.5% in each year of
the 5-year model. The risk would be if actual Impact Fee collections fell below their recent
annual average. We could monitor the situation on a year-to-year basis.
Under this alternative rate of 4.5% increase each year, Water Fund revenue would increase by
approximately $260,000 in FY12 and an additional $274,000 in FY13. Average residential
customers (current: $36.78/month) would see a monthly increase of $1.66 in FY12, and an
additional $1.73 in FY13.
FISCAL EFFECTS Summary: The fiscal effects of these options are described above. To
summarize their effect on Average Residential Customers:
Water Rates FY12 FY13
Average Residential Customer Monthly
Increase
Annual
Increase
Monthly
Increase
Annual
Increase
Option A - 3% $ 1.10 $ 13.20 1.14 13.68
Option B - 5% $ 1.84 $ 22.08 1.93 23.16
Option C - 4.5% $ 1.66 $ 19.92 1.73 20.76
Report compiled on July 26, 2011
Attachments: Resolution No. 4327
Slide 8, Option A & B
158
Page 1 of 3
COMMISSION RESOLUTION NO. 4327
A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF BOZEMAN,
MONTANA, ESTABLISHING RATES FOR WATER SERVICE FOR THE CITY
OF BOZEMAN.
WHEREAS, the City Commission of the City of Bozeman, following notice and public
hearing established a new Rate Schedule for the City of Bozeman’s Water Fund.
NOW, THEREFORE, BE IT RESOLVED by the City Commission of the City of
Bozeman, Montana, that the new rates for water services, based on a 30-day month, shall
become effective beginning with the bills due in September 2011 and September 2012 as
follows, to wit:
Section 1 – Metered Water Rates
Current Effective Effective
Water Sept. 1 Sept. 1
Rates 2011 2012
5/8"$13.42 14.09$ 14.79$
1"$17.78 18.66$ 19.60$
1 1/4"$22.28 23.39$ 24.56$
1 1/2"$27.96 29.35$ 30.82$
2"$40.66 42.70$ 44.83$
3"$70.28 73.79$ 77.48$
4"$112.72 118.36$ 124.28$
6"$210.09 220.59$ 231.62$
8"$332.17 348.78$ 366.22$
B. Minimum Charges - up to 200 Cubic Feet
Residential & Low Income*$4.37 4.58$ 4.81$
Multi-Family $3.34 3.51$ 3.69$
Commercial & Com Spec $2.94 3.09$ 3.24$
Government & Govt Spec $3.05 3.20$ 3.36$
Montana State University $3.79 3.98$ 4.18$
First 0 - 7 HCF $2.18 2.29$ 2.41$
8 - 15 HCF $2.34 2.46$ 2.58$
Over 15 HCF $2.77 2.91$ 3.05$
Multi-Family $1.67 1.76$ 1.84$
Commercial & Com Spec $1.47 1.54$ 1.62$
Government & Govt Spec $1.52 1.60$ 1.68$
Montana State University $1.90 1.99$ 2.09$
* Metered, Single Family Only
City of Bozeman
Water Rates
A. Meter Charge
C. Consumption Charge - $/HCF
Residential & Low Income*
159
Page 2 of 3
Explanatory note: Each customer shall pay a minimum monthly bill which includes
applicable amount according to meter size (A) plus the minimum water charge (B). For
water consumed in excess of 200 cubic feet, a customer shall pay the additional
commodity charge (C).
Section 2 – Flat Rate Customers
Section 3 – Low Income Rate Assistance
Effective on the September 2011 billing
Customers who apply for and qualify under the State’s Low Income Property Tax
Assistance Program, as set forth in Section 15-6-134 MCA, will receive a credit equal to
their monthly water service charge listed above.
Section 4 – Billing Procedures
Charges for water services under this schedule shall be made a part of the current
monthly water bill, to be shown by separate item on such bill. Separate payment of either
the charge for the water or the charge for the wastewater will not be accepted with prior
approval of the Director of Finance. Both charges must be paid at the same time; partial
payments will be applied to the wastewater charge first, with any remainder being applied
to the water charge.
Charges for water used and wastewater service charges become due and payable upon
receipt of the bill. If any bill is not paid on or before the fifteenth day of that month, it
will then become delinquent; and if not paid in full by the fifteenth day of the following
month, water service to the premises involved may be discontinued (shut-off), after a ten-
day written notice. A charge of twenty five dollars ($25.00) shall be made for any
account requiring written shut-off notice. An additional charge of twenty-five dollars
($25.00) during regular business hours or seventy-five dollars ($75.00) during non-
business hours shall be made for reinstating a water service which has been discontinued
for non-payment of water and/or wastewater service charges.
Current Effective Effective
Water Sept. 1 Sept. 1
Rates 2011 2012
Single Family, Unmetered $58.63/month $61.56/month $64.64/month
City Park Irrigation $1,641/acre/year $1,723/acre/year $1,809/acre/year
Fire Protection $140,620 Annually $147,651 Annually $155,033 Annually
Bulk, non-potable for construction use $3.25/1,000 gallons $3.41/1,000 gallons $3.58/1,000 gallons
Bulk, non-potable water is only available at the City Shops complex and is subject
to a $5.00 minimum purchase.
City of Bozeman
Unmetered Water Rates
160
Page 3 of 3
Section 5 – ACH Incentive
For those customers who choose the automatic clearing house (ACH) payment option, a
one dollar ($1.00) discount will be taken from the total utility bill (total of water, sewer,
garbage). Bills will be mailed by the first working day of the month; with the automatic
payment being deducted on the 15th of the following month.
Section 6 – Late Fee
For those accounts that become delinquent, a 1.5 percent (1.5%) late fee will be assessed
on the next bill. The minimum late fee shall be $1.00.
Section 7 – Protests
In cases where water service charges under this schedule are claimed to be unfair,
unreasonable, or not in proportion to charges made to other water customers, the person
or persons against whom such charges are made may apply to the City Manager for an
adjustment, stating the circumstances. The City Manager, or his designated
representative, may make such adjustment of the water charges as is deemed necessary,
fair and equitable.
PASSED AND ADOPTED by the City Commission of the City of Bozeman, Montana,
at a regular session thereof held on the 8th day of August, 2011; and effective beginning
with that billing period which will first appear on the September 2011 water billing.
________________________________________
Jeffrey K. Krauss
Mayor
ATTEST:
____________________________________
Stacy Ulmen, CMC
City Clerk
APPROVED AS TO FORM:
____________________________________
Greg Sullivan
City Attorney
161
Water Pipe Replacements Water Pipe Replacements Water Pipe Replacements Water Pipe Replacements Option A – 3% IncreaseOption A: ~$600,000/utility/yearRequired Rate Increase Each Year FY12 FY13 FY14 FY15 FY16Annual AverageWPiRlPj3%1 100 0001 210 000462 000ProjectedWater Pipe Replacement Projects3%‐ 1,100,000 ‐ 1,210,000 ‐ 462,000 Sewer Pipe Replacement Projects 5% 800,000 ‐ 1,000,000 ‐ 1,200,000 600,000 Total 800,000.00 1,100,000 1,000,000 1,210,000 1,200,000 1,062,000 ProjectedOption B – 5% IncreaseOption B: ~$900,000/utility/yearRequired Rate Increase Each Year FY12 FY13 FY14 FY15 FY16 Annual Average Water Pipe Replacement Projects 5% 922,555 1,205,720 974,165 947,720 969,435 1,003,919 Projected8Sewer Pipe Replacement Projects 7% 884,600 886,000 1,003,150 952,700 803,200 905,930 Total 1,807,155 2,091,720 1,977,315 1,900,420 1,772,635 1,909,849 162