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
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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
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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
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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
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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
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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
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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
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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