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HomeMy WebLinkAboutH7 - Sewer Rates Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Anna Rosenberry, Finance Director Chris Kukulski, City Manager SUBJECT: Resolution No. 3930 – Wastewater Rates MEETING DATE: July 17, 2006 BACKGROUND: Facility Plans: The City Commission was recently adopted the Wastewater Facilities Plan. The plan identifies the design and construction of a new BNR Wastewater Treatment Plant (initial phases estimated at roughly $33M) as the City’s highest wastewater priority. The FY2007 budget anticipates $2.5M in BNR plant engineering and design costs paid from Wastewater Fund cash (with an additional $1.2M from the Wastewater Impact fees). Borrowing would occur in FY2008 and FY2009 to fund actual construction of the facility. Based on our current construction estimates and rate design, we expect that a minimum of 10% annual increases will need to be made over the next three years so that we can adequately fund the debt service on the initial phases of the BNR plant when they become due. Rate Study: The City is currently under contract for a Wastewater Rate and Impact Fee Study with HDR Engineering, Inc. HDR will be analyzing the revenue requirements, costs of service, and rate design for implementation of financing of the proposed Facility Plan improvements, including determining what portions would likely be funded with impact fees. Lift Station Charges: During the subdivision process, both the Laurel Glen and Baxter Meadows projects were identified as needing sewer lift stations to serve their future residents. It was determined that these lift stations would not be constructed or maintained by all system users. Pursuant to those subdivision conditions, the customers utilizing the lift stations will be billed monthly for the additional maintenance costs associated with their lift station. The charges are allocated based on water meter size and are listed under Section 3 – Special Charges. Total charges for the year are estimated at $5,000 for Baxter Meadows Lift Station and $3,000 for Laurel Glen Lift Station. Written Notice Charge: We are proposing a new billing procedure that charges a $25.00 fee on all accounts that must be hand delivered a written shut-off notice for non-payment of water/sewer bills. This procedure is an incredibly time-intensive process, requiring an estimated 40 hours of employee time per month to prepare, deliver, and field questions from these delinquent customers. We have found that nearly 85% of the customers on the monthly shut-off lists are “repeat offenders”. We believe that charging a fee at this point in the delinquent account collection will provide a disincentive for repeat delinquencies, where none exists today. It will also more accurately charge these customers for the employee time and resources they consume. RECOMMENDATION: Adopt Resolution No. 3930 which includes a 10% increase in wastewater rates for all users, to be reserved for capital improvements related to the facility plan recommendations. We also recommend implementation of the lift station charges and written shut-off notice charge. FISCAL EFFECTS: This increase is estimated to generate approximately $358,000 in FY2007 for the wastewater fund. For the average residential customer, monthly bills will increase by $1.93, to a monthly total of $21.25. ALTERNATIVES: As suggested by the City Commission. Respectfully submitted, _________________________________ ____________________________ Anna Rosenberry, Finance Director Chris A. Kukulski, City Manager Report compiled on July 12, 2006 Attachments: none NOTICE HEARING ON THE ADOPTION OF COMMISSION RESOLUTION NO. 3930 ESTABLISHING RATES FOR WASTEWATER CHARGES FOR THE CITY OF BOZEMAN. NOTICE IS HEREBY GIVEN, That said Commission Resolution No. 3930 is now on file in the office of the Clerk of the Commission of the City of Bozeman, subject to inspection of all persons interested, for a period of six (6) days from the date of first publication; that Monday, July 17, 2006, at 6:00 p.m. at a regular session of the Commission of the City of Bozeman, in the Community Room, County Courthouse, 311 W Main Street, Bozeman, has been designated as the time and place when and where the Commission will hear and pass upon any and all objections that may be made to the final passage and adoption of Commission Resolution No. 3930; and that said Resolution will be finally passed and adopted at said regular session of said Commission, subject to such corrections and amendments that may be made upon objections made and filed with the City Clerk as provided by law. Under Commission Resolution No. 3930, a 10% increase in wastewater (sewer) rates is proposed. For an average residential customer, wastewater service will increase from $19.32 per month to $21.25 per month. Dated this 26th day of June, 2006. ___________________________ Brit Fontenot City Clerk Legal Ad Publish: Sunday, July 2, 2006 Sunday, July 9, 2006 COMMISSION RESOLUTION NO. 3930 A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF BOZEMAN, MONTANA, ESTABLISHING RATES FOR WASTEWATER (SEWER) 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 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 2006 as follows, to wit: Section 1 – Metered Customers Effective on the September 2006 billing Customer Class/Service Rate A. Monthly Billing and Customer Charges All Metered Customers $10.87/customer/month B. Additional Charges for Metered Customers Residential $1.80/hundred cubic feet, based on average winter water usage* Commercial, Industrial, and MSU $1.80/hundred cubic feet, based on metered water usage. C. Charge for Extra Strength Waste Suspended Solids in excess of 200 ppm $0.383/pound Biochemical Oxygen Demand in excess of 250 ppm $0.318/pound * 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 charge (C). Section 2 – Unmetered Customers Effective on the September 2006 billing Monthly Billing and Customer Charges All Unmetered Customers $25.50/month Section 3 – Special Charges Effective on the September 2006 billing 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 – $4.20/month 1” – $5.46/month 1 ½” – $7.98/month 2” - $11.34/month 2. Users of the Laurel Glen Lift Station All Customers, based on meter size 5/8” meter – $2.27/month 1” – $2.96/month 1 ½” – $4.32/month 2” - $6.14/month *Estimate. Actual charge based on July 1, 2005 through June 30, 2006 expenses. Section 4 – Low Income Rate Assistance Effective on the September 2006 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 wastewater service charge of $10.87. 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 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 17th day of July, 2006; and effective beginning with that billing period which will first appear on the September 2006 wastewater billing. ________________________________________ Jeffrey K. Krauss, Mayor ATTEST: ____________________________________ Brit Fontenot, City Clerk APPROVED AS TO FORM: ____________________________________ Paul J. Luwe, City Attorney