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HomeMy WebLinkAboutPublic Hearing for Resolution No. 4328, including a 7% increase to Wastewater rates effective 9-1-11 and 7% 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. 4328 – Wastewater Rates MEETING DATE: August 8, 2011 RECOMMENDATION: Adopt Resolution No. 4328 which includes a 7% increase to wastewater rates effective on September 1, 2011 and a 7% increase on September 1, 2012. BACKGROUND: Similar to Water Rates, The City Manager’s Recommended budget included an Option A and Option B for wastewater rate increases. These amounts were the result of an update to our 5-Year Comprehensive Wastewater Rate study, presented to the Commission on June 20, 2011. · Option A: 5% increase each year, with wastewater pipe replacements funded at an average of ~$600,000 each year. · Option B: 7% increase each year, with wastewater pipe replacements funded at an average of ~$900,000 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. A copy of the updated rate study for Option 163 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 Wastewater Fund revenue by approximately $407,000 in FY12 and an additional $441,000 in FY13. Wastewater charges are largely based on each customer’s consumption of water in the winter quarter. Average residential customers (current: $39.20/month) would see a monthly increase of $2.74 in FY12, and an additional $2.94 in FY13. ALTERNATIVES: Option C: During the June 20, 2011 Budget Work Session, Commissioners also asked about the how changing the amount of “Estimated Wastewater Impact Fee Revenues” would affect the rate model. · During the construction of the Water Reclamation Facility, we will have needed to borrow $4.5 Million for the plant that is attributed to Impact Fee eligible costs. · The rate model assumes we will collect approximately $400,000 annually from Impact Fees in FY12- FY16. o The Actual Wastewater Impact Fee collections in FY09-FY11 have averaged $820,000/year. · If we changed our estimate of annual revenues from Impact Fees to $820,000 for each of the years in rate study: $932,000 $879,000 $648,000 $400,000 $300,000 $400,000 $400,000 FY09 FY10 FY11* Est FY12 Wastewater Impact Fees Rate Study Amount Actual Revenues 164 o We could pay off the full $4.5 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 $322,000/year. o $322,000/year amounts to 5.2% of FY16 rate 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 7% to 6.0% 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 6% increase each year, Wastewater Fund revenue would increase by approximately $350,000 in FY12 and an additional $374,000 in FY13. Average residential customers (current: $36.78/month) would see a monthly increase of $2.35 in FY12, and an additional $2.49 in FY13. FISCAL EFFECTS Summary: The fiscal effects of these options are described above. To summarize their effect on Average Residential Customers: Wastewater Rates FY12 FY13 Average Residential Customer Monthly Increase Annual Increase Monthly Increase Annual Increase Option A - 5% $ 1.96 $ 23.52 $ 2.06 $ 24.72 Option B - 7% $ 2.74 $ 32.88 $ 2.94 $ 35.28 Option C - 6% $ 2.35 $ 28.20 $ 2.49 $ 29.88 Report compiled on July 26, 2011 Attachments: Resolution No. 4328 Slide 13, Option A & B 165 Page 1 of 4 COMMISSION RESOLUTION NO. 4328 A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF BOZEMAN, MONTANA, ESTABLISHING RATES FOR WASTEWATER (SEWER) SERVICE FOR THE CITY OF BOZEMAN, AND ADDING CHARGES FOR CATTAIL CREEK, LOYAL GARDENS, AND NORTON RANCH LIFT STATIONS. 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 Wastewater (Sewer) Fund. NOW, THEREFORE, BE IT RESOLVED by the City Commission of the City of Bozeman, Montana, that the new rates for wastewater 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 Customers * For service dates of April through October, based on average of November through March metered usage. Explanatory note: Each customer shall pay a minimum monthly bill which includes the monthly charge (A) plus an additional charge (B). For extra strength waste, a customer shall additionally pay the extra strength charges (C). Current Effective Effective Wastewater Sept. 1 Sept. 1 Rate 2011 2012 Residential $14.73 $15.76 $16.87 Multi-Family $15.11 $16.16 $17.30 Commercial $15.11 $16.16 $17.30 Government $15.11 $16.16 $17.30 Montana State University $15.11 $16.16 $17.30 Industrial $39.40 $42.15 $45.10 Residential $2.44 $2.61 $2.79 Low Income $2.44 $2.61 $2.79 Multi-Family $2.50 $2.68 $2.86 Commercial $2.50 $2.68 $2.86 Government $2.50 $2.68 $2.86 Montana State University $2.50 $2.68 $2.86 Industrial $6.00 $6.42 $6.87 City of Bozeman Wastewater Rates A. Service Charge B. Volume Charge - $/HCF 166 Page 2 of 4 Section 2 – Unmetered Customers Effective on the September 2011 billing Monthly Billing and Customer Charges Current Wastewater Rate Effective Sept. 1, 2011 Effective Sept. 1, 2012 All Unmetered Customers $30.96/month $33.13/month $35.45/month Section 3 – Special Charges In certain cases, subdivisions and/or annexations have been approved on the condition that the associated properties fund the operation of specific capital within the wastewater system, usually lift stations. These charges are made on an annual cost-recovery basis, and are charged in addition to all other account charges. 1. Users of the Baxter Meadows Lift Station All Customers, based on meter size 5/8” meter – $3.65/month 1” – $5.47/month 1 ½” – $18.23/month 2” - $29.17/month 3” – $58.34/month 2. Users of the Laurel Glen Lift Station All Customers, based on meter size 5/8” meter – $0.87/month 1” – $1.30/month 1 ½” – $4.33/month 2” - $6.93/month 3” – $13.86/month 3. Users of Cattail Creek Lift Station All Customers, based on meter size 5/8” meter – $1.08/month 1” – $1.63/month 1 ½” – $5.42/month 2” - $8.67/month 3” – $17.33/month 4. Users of Loyal Gardens Lift Station All Customers, based on meter size 5/8” meter – $1.54/month 1” – $2.32/month 1 ½” – $7.72/month 2” - $12.36/month 3” – $24.71/month 5. 5. Users of Norton Ranch Lift Station All Customers, based on meter size 5/8” meter – $1.02/month 1” – $1.53/month 1 ½” – $5.10/month 2” - $8.16/month 3” – $16.33/month 167 Page 3 of 4 Section 4 – Low Income Rate Assistance 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 wastewater service charge listed above. Section 5 – Billing Procedures Charges for wastewater 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. Section 6 – 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 7 – 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 8 – Protests In cases where wastewater service charges under this schedule are claimed to be unfair, unreasonable, or not in proportion to charges made to other wastewater 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 168 Page 4 of 4 representative, may make such adjustment of the wastewater 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 wastewater billing. ________________________________________ Jeffery K. Krauss Mayor ATTEST: ____________________________________ Stacy Ulmen, CMC City Clerk APPROVED AS TO FORM: ____________________________________ Greg Sullivan City Attorney 169 Wastewater Pipe Replacements Wastewater Pipe Replacements Wastewater Pipe Replacements Wastewater Pipe Replacements Option A – 5% 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 – 7% 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         SewerPipeReplacementProjects7%884 600886 0001 003 150952 700803 200905 930Projected13Sewer Pipe Replacement Projects7%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         170