HomeMy WebLinkAboutA5. Voluntary Affordable Housing Fee
Commission Memorandum
REPORT TO: Honorable Mayor and City Commission FROM: Chris Kukulski, City Manager
SUBJECT: Consideration of Affordable Housing Voluntary Fee on City of
Bozeman’s utility bill. MEETING DATE: September 21, 2015
AGENDA ITEM TYPE: Action
RECOMMENDATION: Please direct staff to either pursue or not pursue further research and
steps towards implementation of an Affordable Housing Voluntary Fee program.
SUGGESTED MOTION: Consider staff presentation and direct staff to pursue next course of action.
BACKGROUND: The City was asked to consider a voluntary utility fee to contribute to a
potential affordable housing donation program. Staff contacted nine communities with voluntary fee programs to find further data on participation, cost, etc.
Only one community responded with details about participation. Their response indicated a
participation rate anywhere from 3.4% to 6%. Therefore, I assumed 5% of our ~ 12,000
customer accounts would participate in order to calculate costs and revenues. A rough calculation would conclude that if 5% (600) customers donated one dollar monthly, the voluntary fee’s annual revenue would be ~ $7,200.
As for costs of implementation, costs ranged from utility bill redesign, to website construction, to
marketing. From this information received, we’ve determined that $2,500 is reasonable estimate for these anticipated start-up costs of a new program.
Additionally, staff time would include approximately an hour or so to set up codes, test, and
ensure they are correctly processing. Once forms are submitted, clerks would have to add the
“service” to the location then activate the customer (approximately 3 minutes per account). This could initially involve staff time if it was well received. Likely a fair amount of questions will be
asked of the utility clerks that could involve a substantial amount of time. In total, approximately
30 hours of staff time will be required to process the fee’s setup if 5% of customers participate.
As people want to stop the fee, again about 3 minutes per account to inactivate the service and
potentially another 3-5 minutes per account if adjustments were required. Because many customers receive E-statements, it is critical that our web page be tweaked to direct customers on
how to participate.
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In order to market a new program, staff has received a quote for 12,000 inserts printed and
stuffed with the monthly utility statements, which equals approximately $900. I’m suggesting we
would do this twice per year for an estimated cost of $1,800. As long as no other inserts were already “in line” to go into the utility statements, there should be no additional postage required.
Staff also contacted the main cities in Montana and NorthWestern Energy to determine if they
have considered any voluntary fees, as their websites didn’t indicate any such programs.
NorthWestern Energy participates in the Energy Share program, helping customers struggling to pay their utility bills. All proceeds are donated by NorthWestern Energy and not their customers.
We did not receive any significant responses from the Montana cities.
One of our limiting factors in participation will likely result because of the high number of
renters we have in our university town. As a result, many utility customers are renters who do not have the authority to add services to an account.
UNRESOLVED ISSUES: Round-up program – we determined that a “round-up” program
would be very difficult to implement with our software system and therefore didn’t pursue it.
However, some data indicates that a higher percentage of customers would participate in a program where they are simply asked to consider “rounding” their bill to the next dollar. Also
consider that under a round-up program each donation will likely be less than a dollar making it
difficult to estimate revenues without a few years of actual data.
ALTERNATIVES: Continue relying on the mill levy which effects all property taxpayers. Our current adopted budget includes three mills or approximately $260,000 to be added as
investment into the City’s affordable housing fund.
FISCAL EFFECTS: Based on an assumed 5% participation rate - I estimate we would net ~
$2,700 in the first year and ~ $5,200 in each subsequent year. ($7,200/yr - the original $2,500 in start up cost - ~$2,000/yr to market the program and update the web page.)
Attachments: None
Report compiled on: September 15, 2015
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