MEMORANDUM

 

To:

Mike Wildgen

 

City Manager

 

 

From:

Debbie Van Saun

 

Asst. City Manager

 

 

Re:

September 21st City Commission agenda item

 

water and wastewater rates

 

 

Date:

September 7, 2004

 

Background: Based on City Commission comments during and after the discussion of water and wastewater rates recommended for the August 10th agenda, staff has identified the areas needing additional information and/or clarification:

 

1)     Programs that might be available to assist homeowners in moving to a more water friendly environment. (Schauner)

2)     Does the Commission have a water shortage issue facing them? (Schauner)

3)     Commenting on the potential change in the rate structure, the question is how the costs associated with the Water and Wastewater Fund will be distributed among the different users. (Dunfield)

4)     Would like to see more data about how individuals are affected by change in rate structure, i.e. need to see several “typical” bills. (Highberger)

5)     Suggest that staff provide additional information of various options like ascending and flat rates and the long term effects of those different options. (Hack)

6)     Clarification of policy issues (Rundle)

 

Additional Information Attached: In an attempt to be responsive to these City Commission requests, we have asked Black & Veatch to work with staff to provide additional information and options.  Additionally, we have provided some information regarding the wastewater rate impact on customers of different classes. 

 

The first attachment is a summary of ongoing and planned efforts to educate our customers on the value of water as a natural resource and the importance of judicious use of that resource.  Particularly in the area of residential irrigation, there are many measures an informed public can take to avoid waste of this valuable resource.

 

The second attached memo speaks to Commissioner Schauner’s inquiry regarding the City’s water supply.  It’s important to note that throughout the years, City staff has endeavored to be proactive and far reaching in taking the necessary steps to process the water rights needed to meet projected demands into the foreseeable future.

 

The third attachment is a letter from Keith Barber (Black & Veatch) and speaks to Commission issues 3, 4, and 5.  Specifically, how costs will be distributed, how customers will be affected and what other rate options might be considered.

 

The fourth attachment is the presentation made by Black & Veatch at the June 9, 2004 study session.  During this presentation of the preliminary water and wastewater rate study results, Black & Veatch provided information leading to specific policy questions (see six items listed in “Requested Policy Guidance”).  It is my recollection that Black & Veatch received guidance from the City Commission at that study session, which was then used to complete the final report recommendations.

 

The fifth attachment is a chart illustrating the wastewater rates that will be charged to the various customer classes using the rates recommended for 2005.

 

Staff and Black and Veatch are seeking additional City Commission direction regarding the rate structure desired to fund the costs associated with the Water and Wastewater Fund for the period 2005 through 2009.  A summary of the recommended policy for a water/wastewater rate structure:

 

o     establish a monthly service charge for all customer classes and eliminate the minimum usage billing structure

o     switch to a uniform volume water charge in 2005 for all customer classes

o     beginning in 2006, begin a transition to a two tiered block rate structure for residential water customers, setting the breakpoint between the two residential block rates at 10,000 gallons/month

o     phase in the water rate increase for the second residential block rate from 2006 through 2009 in order to achieve better equity among residential users

 

If these recommendations are acceptable to the Commission, Black & Veatch will be directed to produce a rate structure that will follow this policy and provide a mechanism for funding the operating and capital costs for the Water and Wastewater Fund.  Please note that only the 2005 water and wastewater rates will be brought back to the Commission for approval this year.  We anticipate following our past practice of reviewing revenue requirements and appropriate rates for the utilities on an annual basis.

 

Action Request:  Receive additional information regarding public education and water conservation program, procurement of water rights, and options for water and wastewater rate structures.  Approve policy recommendations as outlined above and direct Black & Veatch to develop a rate structure following those recommendations for future City Commission consideration, as appropriate.

 

att:    

·      staff memo (public education efforts and conservation program)

·      staff memo with attachments (procurement of water rights and future water supply issues)

·      Black & Veatch letter (water and wastewater rate structures)

·      Black & Veatch 06/09/04 study session materials outlining policy issues

·      chart containing wastewater charges for various customer classes using proposed 2005 rates