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HomeMy WebLinkAboutItem 03 Stormwater Fees and Billiing Services Follow-up AGENDA ITEM SUMMARY Meeting Date: 2/10/2014 Meeting Type: Work Session Staff Contact/Dept.: Katherine Bishop/DPW Matt Stouder/DPW Staff Phone No: 541-726-3674 541-736-1006 Estimated Time: 20 minutes S P R I N G F I E L D C I T Y C O U N C I L Council Goals: Provide Financially Responsible and Innovative Government Services ITEM TITLE: STORMWATER FEES AND BILLING SERVICES FOLLOW-UP ACTION REQUESTED: After discussion, provide direction to staff with respect to: (1) the City’s stormwater SDC methodology for residential development; (2) moving to bi-monthly billing for stormwater and wastewater user fees, and; (3) implementation of a 27% reduction in user fees for customers who install qualifying rain gardens or other low impact development techniques. ISSUE STATEMENT: Based on earlier discussions with Council, staff is providing follow-up information on low impact development and residential stormwater user fees. ATTACHMENTS: 1. Council Briefing Memo DISCUSSION/ FINANCIAL IMPACT: The attached Council Briefing Memo (Attachment 1) provides background information summarizing recent discussions and activities on the City’s Stormwater Program including System Development Charges, bi-monthly billing and conceptual residential stormwater user fee incentives for low impact development. At the September 23, 2013 work session, Council asked for additional information on the City’s stormwater program with respect to: (1) how stormwater SDC’s are applied to new residential development; (2) information for consideration on bi- monthly billing for stormwater and wastewater fees, and; (3) how a 27% discount for residential users who install rain gardens or other low impact development systems would impact user rates and staffing. Attachment 1 provides additional information on the three items above, including fee incentives, program resources and associated program costs, and the fiscal impact to the stormwater fund and residential stormwater user fees based on the level of participation in a residential stormwater fee incentive program. In addition, information on the City’s wastewater and stormwater monthly billing cycle is provided to assist with further discussion on the benefits and constraints of a monthly or bi-monthly billing cycle. Included is information on the contractual relationship with the Metropolitan Wastewater Management Commission (MWMC) for further consideration and discussion. ATTACHMENT 1 Page 1 of 4 M E M O R A N D U M City of Springfield Date: 2/10/2014 To: Gino Grimaldi, City Manager COUNCIL From: Len Goodwin, Development and Public Works Director Matt Stouder, Environmental Services Manager Katherine Bishop, Senior Finance Analyst BRIEFING MEMORANDUM Subject: Stormwater Fees and Billing Services Follow-Up ISSUE: Based on earlier discussions with Council, staff is providing follow-up information on low impact development and residential stormwater user fees. COUNCIL GOALS/ MANDATE: Provide Financially Responsible and Innovative Government Services BACKGROUND: At the May 13, 2013 work session, staff presented a stormwater program and activities update to Council. Discussions included a status update on the City’s National Pollutant Discharge Elimination System (NPDES) Phase II MS4 stormwater discharge permit renewal currently in progress with the Oregon Department of Environmental Quality. Staff provided an overview of the City’s stormwater education and outreach program, which included examples such as rain garden demonstrations and classes the City has made available to the community. Council asked staff if a discount or incentive was considered for rate payers who install rain gardens on their property. As part of the June 17, 2013 Council meeting, staff provided a Correspondence item including a history of the City’s stormwater user fee program. This item included a letter dated May 21, 2013 to the City from Planned Parenthood of Southwestern Oregon, located at 3579 Franklin Boulevard, regarding stormwater user fees associated with green infrastructure at this location. Council accepted the correspondence for filing. At the September 23, 2013 Council Work Session, staff presented information on the City’s Stormwater Management Program, including a review of the user fee rate structure for commercial and residential accounts. Council discussed the commercial stormwater user fee rate structure and felt the design allowed for fees to be applied equitably on commercial property and directed staff to make no changes to the commercial methodology. Council provided helpful input to staff and commented on areas of further interest, including: (1) follow-up with information on how SDC’s are applied to new residential development; (2) follow up with information for consideration on bi-monthly billing for stormwater and wastewater, and; (3) provide Council with information on how a 27% discount for residential users who install rain gardens would impact user rates and staffing. DISCUSSION: The following presents a summary of the items requested for follow up by Council: System’s Development Charges (SDC’s) for new residential development New development for single family residential structures is governed by the International Building Code and reviewed by City staff. For new development where rain gardens or other ATTACHMENT 1 Page 2 of 4 low impact stormwater management systems are proposed, the City’s stormwater SDC methodology allows for a baseline 50% reduction in the stormwater SDC assessed. If the builder chooses to document the impact of the system by submitting calculations showing a greater reduction in a 10-year storm event, the reduction in the SDC is proportional to the amount of stormwater that does not enter the public system. For example, if supporting calculations show a 100% reduction in runoff, the corresponding stormwater SDC paid is $0. The current stormwater SDC rate is $0.616 per square foot, which equates to $1,232 for a new 2000 square foot home. Bi-Monthly Utility Billing The City provides monthly utility billing for local stormwater and local and regional wastewater services, with the billing services administered through the Springfield Utility Board (SUB). City services are included on the monthly SUB billing statement along with the SUB monthly water and electric service charges. At the September 23, 2013 work session, Council raised questions regarding costs associated with the billing services provided by SUB. Under a contractual agreement between SUB and the City, the current billing service rate is $1.11 per billing transaction, and includes stormwater and wastewater services on the same monthly bill. SUB’s billing rate methodology takes into consideration labor and operating costs, excluding overhead and capital costs. SUB and the City share costs associated with water meter reading since meter read information for individual customer usage is equally necessary in calculating the SUB water and the City wastewater charges, and in addition customer billing and cashier services which includes technology/application support are shared on an equivalent bill basis. Preliminary conversations with SUB staff indicate moving to bi-monthly billing would likely require renegotiation of the contractual agreement with SUB, along with upgrades/reprograming the current billing software system. The current $1.11 per monthly transaction fees has remained level since 2005. The $1.11 fee currently includes 57% or $0.63 for customer billing and cashier services, with 43% or $0.48 representing the meter reading services. The billing costs are shared proportionately by local stormwater, local wastewater, and regional wastewater. Monthly water meter read data is necessary for either a monthly or bi-monthly billing cycle, since wastewater charges are based on actual usage in the five (5) winter months of December through April, while May through November bills are based on the individual customer’s average of the winter usage or actual usage, whichever is less. As such, a bi-monthly billing cycle would not reduce SUB charges to the City for the meter reading services component, and the customer billing services may require additional prorating to account for a five (5) month winter usage period. Another factor to consider in discussion of bi-monthly billing is the contractual relationship with the Metropolitan Wastewater Management Commission (MWMC). The Intergovernmental Agreement (IGA) between MWMC and the Cities of Springfield and Eugene requires user fees to be billed and collected monthly. Accordingly, moving forward with bi-monthly billing could occur only with respect to local wastewater and stormwater bills, unless the IGA is amended to allow for a different billing cycle. This would require the mutual agreement of the City, the City of Eugene and Lane County. Until amendment of the IGA, regional wastewater user charges will be billed and collected monthly, and would result in customers receiving different billing amounts on alternating months (larger amount one month, lesser the next). This option could result in an increased burden on financial administration staff, and might be confusing for citizens. ATTACHMENT 1 Page 3 of 4 Discounts for residential stormwater user rates The last item Council requested follow up information on at the September 23, 2013 work session was how a 27% discount for residential users who install rain gardens or other low impact development techniques would impact user rates and staffing. This proposal has been evaluated on the assumption that the reduction is in addition to the SDC reduction described above. Currently, the City’s residential monthly stormwater user fee is $12.62 per month. If qualifying customers (who installed rain gardens or other green systems) received a 27% discount, their resulting monthly stormwater rate would be $9.21. In order to offset user fee reductions for customers who install green systems and provide the same level of stormwater program services (something the Council expressed concern for at the September work session), other customers monthly stormwater fee would need to proportionately increase. In addition, to ensure system functionality, and to meet future NPDES stormwater requirements, an increase in the amount of staffing time and resource would be needed. Table 1 below shows the fiscal impact to the Stormwater Fund and residential user rates, including how the overall residential monthly stormwater bill would be impacted depending upon how many customers qualify and maintain rain gardens or other green systems. Table 1 Table 2 below displays the fee incentive, along with the necessary resources to ensure the systems are maintained and working properly depending upon how many customers chose to install rain gardens or other green systems. The following revenue reduction and added expenses are incorporated in Table 1 above. Table 2 Impact to Rates and User Fees Fiscal Impact to Stormwater Fund Stormwater Residential User Fee Rate Impact Residential User Fee Monthly Increase Residential Stormwater User Fee Example Residential User Fee with 27% Incentive Participants 1 $40.92 0.00%$0.00 $12.62 $9.21 25 $1,023 0.00%$0.00 $12.62 $9.21 150 $23,692 0.41%$0.11 $12.73 $9.29 250 $45,410 0.78%$0.22 $12.84 $9.37 500 $73,500 1.26%$0.35 $12.97 $9.47 1,000 $148,200 2.51%$0.71 $13.33 $9.73 Fiscal Impact Impact to Residential User Fees Fee Incentive and Staffing Increase 27% Fee Incentive Monthly 27% Fee Incentive Annually FTE Staffing Increase Increased Staffing Expense Annual Participants 1 $3.41 $40.92 0.00 $0 25 $85 $1,023 0.00 $0 150 $516 $6,192 0.25 $17,500 250 $868 $10,410 0.50 $35,000 500 $1,750 $21,000 0.75 $52,500 1,000 $3,600 $43,200 1.50 $105,000 Additional ExpenseRevenue Reduction ATTACHMENT 1 Page 4 of 4 One important note which may inform the Council’s decision on timing and implementation of a residential stormwater user fee reduction program involves recent developments with respect to the City’s renewal of is NPDES stormwater permit. Preliminary conversations with the MS4 Stormwater Advisory Committee and Oregon Department of Environmental Quality indicate Springfield and other Phase II communities will be faced with much more stringent stormwater requirements upon permit renewal, including required incentives related to low impact development. Incentivizing low impact development with a fee reduction program prior to permit renewal might complicate the ability of the City to adjust to any new requirements, particularly if DEQ were to consider previous City incentives a baseline and impose additional requirements. The City currently anticipates permit renewal in 2015, and Council may wish to align the timing of a fee incentive program with the City’s permit renewal. An update of the City’s Stormwater Program, including the permit renewal process and status, is planned for the March 17, 2014 Council Work Session. RECOMMENDED ACTION: After discussion, provide direction to staff with respect to: (1) the City’s stormwater SDC methodology for residential development; (2) Bi-monthly billing for stormwater and wastewater user fees, and; (3) implementation of a 27% reduction in user fees for customers who install qualifying rain gardens or other low impact development techniques.