Loading...
HomeMy WebLinkAboutItem 12 Proposed Resolution Setting Local and Regional Wastewater and Stormwater User Fees AGENDA ITEM SUMMARY Meeting Date: 5/5/2014 Meeting Type: Regular Meeting Staff Contact/Dept.: Katherine Bishop Staff Phone No: 541-726-3674 Estimated Time: 10 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: PROPOSED RESOLUTION SETTING LOCAL AND REGIONAL WASTEWATER AND STORMWATER USER FEES ACTION REQUESTED: 1) Conduct a public hearing on local and regional wastewater and local stormwater user fees. 2) Adopt or not adopt A RESOLUTION OF THE CITY OF SPRINGFIELD COMMON COUNCIL SETTING LOCAL AND REGIONAL WASTEWATER (SEWER) USER FEES AND LOCAL STORMWATER USER FEES AS SET FORTH IN THE SPRINGFIELD MUNICIPAL CODE. ISSUE STATEMENT: At current rates, the local and regional wastewater and local stormwater user fees will not produce sufficient revenue to fully fund the proposed fiscal year (FY) 14-15 budgets for these funds. Council action is needed to establish new rates for FY 14-15 ATTACHMENTS: 1. Proposed Resolution establishing a schedule of local and regional wastewater and local stormwater user fees. 2. Council Briefing Memorandum as reviewed by the Council at the April 28, 2014 work session. DISCUSSION/ FINANCIAL IMPACT: Each year, the City Council reviews and establishes the rates for local wastewater and stormwater user fees. These rates are established to provide adequate revenue to fund operation and maintenance (O&M) of Springfield’s sanitary sewer and stormwater systems, and a portion of the Capital Improvement Program (CIP) for each program. The Council also adopts the user fees set by the Metropolitan Wastewater Management Commission (MWMC) for the Regional Wastewater Program. The City Council reviewed and discussed two options for local wastewater and stormwater user fee adjustments at its April 28, 2014 work session and selected the proposed rate scenario which provides for a greater level of funding to be invested in capital improvements. Staff has prepared a schedule of user charges for a public hearing, based on the 3% increase in the local wastewater user fees and a 4% increase in the local stormwater user fees. In addition, the Council was informed that the MWMC adopted a 3.5% increase in the regional wastewater user fees that also needs to be incorporated into the schedule of user charges for FY 14-15. Staff will continue to explore options for a long-term strategy to further reduce pressure on user fees while continuing to meet environmental and regulatory standards. A successful strategy will take multiple years to implement and will, in part, depend on the City’s ability to significantly reduce reliance on user rates as a source of capital, by improving the ability of System Development Charge (SDC) revenues to fund a greater portion of the capital investment. This could reduce and/or defer the need to rely on future debt financing and reduce the importance of providing coverage for debt service as an operating budget constraint in the long-term financial forecast. Attachment 1, a resolution establishing the local and regional wastewater and local stormwater user fees for FY 14-15, is provided for Council consideration. Staff request that the Council act on the resolution following the public hearing. ATTACHMENT 1 Page 1 of 2 ATTACHMENT 1 Page 2 of 2 M E M O R A N D U M City of Springfield Date: 4/16/2014 To: Gino Grimaldi COUNCIL From: Len Goodwin, Development and Public Works Director Matt Stouder, Environmental Services Manager Katherine Bishop, Senior Finance Analyst BRIEFING MEMORANDUM Subject: Wastewater and Stormwater User Fees FY 2014-15 ISSUE: User fees for local and regional wastewater and local stormwater are reviewed by the Council annually as part of the City’s budget development process. Staff is in the process of developing user fees for consideration by Council later this spring. The Metropolitan Wastewater Management Commission (MWMC) approved a schedule of Fiscal Year 2014-15 (FY 14-15) regional wastewater user charges on April 11, 2014 and will be forwarding them to the cities of Springfield and Eugene for implementation. This memo and the April 28, 2014 work session will focus on the local wastewater and stormwater user fees, including the factors driving the revenue requirements as projected for FY 14-15, for Council consideration. At the April 28, 2014 work session, staff will be seeking Council comments and direction in preparing a schedule of local wastewater and stormwater user fees for FY 14-15. A public hearing is scheduled for May 5, 2014, when staff will return to Council with a FY 14-15 schedule of local wastewater and stormwater fees for Council consideration following the public hearing. The proposed FY 14-15 wastewater and stormwater revenue projections assume that rate changes would be effective on bills rendered on or after July 1, 2014. COUNCIL GOALS/ MANDATE: Provide Financially Responsible and Innovative Government Services In order to implement the Council adopted Capital Improvement Program for local wastewater and stormwater, a revenue plan that includes an increase in user fees for FY 14-15 and a multi-year rate forecast is provided for Council review and consideration. Revenues generated from a user fee increase in FY 14-15 will fund ongoing system maintenance and investments in capital improvements for wastewater and stormwater infrastructure and facilities to continue to deliver high quality uninterrupted services, while continuing to meet revenue bond covenants, increasing environmental standards and mandated regulatory requirements. BACKGROUND: Annually, as part of the budget development process, the City develops a Capital Improvement Program (CIP) and operating budget for the local wastewater and stormwater programs. The CIP, operating budget, debt service obligations, and reserve levels established by the City Council determine the annual funding requirements. The primary funding sources include wastewater and stormwater user fees for operating and capital expenses, and system development charges (SDCs) for capital expenses only. In addition to the local fees, the total wastewater user fees include regional charges established by the MWMC to fund the Regional Wastewater Program. Annually, the cities of Springfield and Eugene implement the MWMC user charges consistent with the MWMC intergovernmental agreement (IGA). A description of each utility system is provided in this report. ATTACHMENT 2 Page 1 of 10 LOCAL WASTEWATER SYSTEM: The local wastewater (or sanitary) system serving the City of Springfield has two components: (1) a local wastewater collection system, and; (2) a regional conveyance, treatment and disposal system. The local system is comprised of over 200 miles of collection pipelines and 17 pump stations, which is owned and operated by the City of Springfield. Operations and maintenance of the local collection system is funded entirely by revenue from local wastewater user fees. User fees are currently the primary source of funding for the local CIP, which provides for system preservation, major rehabilitation, and expansion to support community growth. Through previous rate actions revenues for this program have stabilized and current and projected CIP priorities have been programmed based upon incremental and moderate rate increases. REGIONAL WASTEWATER SYSTEM: The regional wastewater system is comprised of numerous treatment facilities and a conveyance system owned by the MWMC, as described in the MWMC IGA. The primary regional wastewater facilities include the Water Pollution Control Facility (WPCF), the Biosolids Management Facility (BMF), Biocycle Farm, the Beneficial Reuse Site, several major pump stations and associated conveyances, and the large interceptor (“East Bank”) that carries wastewater from Springfield to the WPCF. Regional system operations and maintenance, provided by the City of Eugene, is funded entirely by revenue from regional wastewater user fees. The MWMC administration and the Springfield Industrial Pretreatment Program are both integral parts of the Springfield Development and Public Works and Finance departments which are also funded through regional wastewater user fees. In addition user fees fund a significant portion of the regional capital program. REGIONAL WASTEWATER FEES: At the March 14, 2014 MWMC meeting, staff presented the Preliminary FY 14-15 Regional Wastewater Program Budget and Capital Improvement Program, and proposed user fee rates. Based on discussions and input provided by the Commission, staff returned to the Commission on April 11, 2014 at a public hearing where the Commission adopted resolutions recommending a 3.5% user fee increase in FY14-15, and the Regional FY14-15 Budget for implementation by the cities of Eugene and Springfield. The primary factors driving regional wastewater user fee increases includes the 2004 MWMC Facilities Plan, which is a 20-year capital improvement projects plan intended to provide environmental compliance and treatment capacity to serve the community including growth through 2025, at an estimated cost of $196 million (in 2006 dollars). Funding sources for capital improvement projects includes revenues from user fees, system development charges, financing through revenue bonds and low interest Clean Water State Revolving Fund (SRF) loans and grants. While major investments have been made in capital infrastructure improvements in recent years, the 2004 Facilities Plan includes additional capital improvement projects over multiple years. The regional capital improvement program budget including asset management improvements is $14,939,647 in FY 14-15 for design and construction. The regional five-year capital plan, FY 14-15 thru FY 18-19, includes $71.6 million in planned capital improvements and asset management projects. COMBINED LOCAL WASTEWATER AND STORMWATER PROPOSED USER FEES A summary of the local wastewater and stormwater FY 14-15 proposed rates and forecast is displayed in the following table for a typical residential monthly bill when assuming 5,000 gallons for wastewater. In FY 12-13 Council provided policy direction to staff to try, over the next 5-7 years, to lower the level of rate changes to an inflationary level. The lower portion of the table displays the proposed combined rate increase as a percentage (3.4%) and dollar amount ($1.12) for a typical residential monthly bill, the level ATTACHMENT 2 Page 2 of 10 of rate change is continuing to trend downward incrementally. Additional details on the proposed rates and forecast option 1 are displayed in this report. COMBINED LOCAL WASTEWATER AND STORMWATER USER FEE SCENARIO: As part of the rate development process, staff evaluated rate scenarios in an effort to lower the proposed rates. When attempting to lower the stormwater rate change from 4% to 3.5% or 3%, the result includes negative fiscal impacts requiring greater stormwater rate increases in the following years to maintain program service levels and a positive financial position throughout the five year forecast, which is counter to Council’s direction to staff. The following local wastewater and stormwater rate and forecast scenario option 2 reduces the local wastewater rate change from 3.0% to 2.5% in FY 14-15 and slightly reduces the stormwater rate changes from 4.0% annually over the next three years to 3.8% annually over the next two years followed by 3.7% in year three, resulting in a combined 3% or $1.00 monthly increase. 14-15 15-16 16-17 17-18 18-19 Proposed Projection Projection Projection Projection Local Wastewater Services Avg. Monthly Residential Bill 21.23$ 21.76$ 22.19$ 22.63$ 23.09$ Local Rate Increase 3.0%2.5%2.0%2.0%2.0% Avg. Mo. Residential Increase 0.62$ 0.53$ 0.43$ 0.44$ 0.46$ Stormwater Services Avg. Monthly Residential Bill 13.12$ 13.64$ 14.19$ 14.69$ 15.20$ Local Rate Increase 4.0%4.0%4.0%3.5%3.5% Avg. Mo. Residential Increase 0.50$ 0.52$ 0.55$ 0.50$ 0.51$ Local Wastewater & Stormwater Combined Avg. Monthly Residential Bill 34.35$ 35.40$ 36.38$ 37.32$ 38.29$ Local Rate Increases Combined 3.4%3.1%2.8%2.6%2.6% Local Rate Increases 1.12$ 1.05$ 0.98$ 0.94$ 0.97$ Combined Local Wastewater and Stormwater FY 14-15 Proposed Rates and Forecast Option 1 Fiscal Year 14-15 15-16 16-17 17-18 18-19 Scenario Projection Projection Projection Projection Local Wastewater Services Avg. Monthly Residential Bill 21.13$ 21.66$ 22.10$ 22.54$ 22.98$ Local Rate Increase 2.5%2.5%2.0%2.0%2.0% Avg. Mo. Residential Increase 0.52$ 0.53$ 0.44$ 0.44$ 0.44$ Stormwater Services Avg. Monthly Residential Bill 13.10$ 13.60$ 14.10$ 14.59$ 15.10$ Local Rate Increase 3.8%3.8%3.7%3.5%3.5% Avg. Mo. Residential Increase 0.48$ 0.50$ 0.50$ 0.49$ 0.51$ Local Wastewater & Stormwater Combined Avg. Monthly Residential Bill 34.23$ 35.26$ 36.20$ 37.13$ 38.08$ Local Rate Increases Combined 3.0%3.0%2.7%2.6%2.6% Local Rate Increases 1.00$ 1.03$ 0.94$ 0.93$ 0.95$ Combined Local Wastewater and Stormwater FY 14-15 Rates and Forecast Scenario Option 2 Fiscal Year ATTACHMENT 2 Page 3 of 10 WASTEWATER PROGRAM FUNDING AND USER FEE RATE HISTORY: The wastewater user fees on the customers’ monthly bills have a local (Springfield) and a regional (MWMC) component. In FY 13-14, based on a typical residential household using 5,000 gallons per month, the current local residential wastewater bill for Springfield residents is $20.61. The current combined typical residential wastewater bill for Springfield residents is $43.91. Residential customer bills are used as a benchmark for wastewater rates because the volume and strength of the wastewater generated is similar within the customer class. The usage, and therefore the bills, of commercial and industrial uses vary significantly because their wastewater volume and strength varies greatly. The City of Springfield wastewater fee is currently $3.085 per unit (748 gallons) for all residential and commercial/industrial accounts. The table below displays the rate history for local and regional user fees over the last several years with incremental rate changes. The local wastewater fees are represented in the bottom portion of the combined bar graph. The annual rate increases for MWMC regional user fees, and as projected into the future, are driven primarily by: (1) covering the costs associated with financing the 2004 MWMC Facilities Plan and improving the MWMC assets; (2) meeting the covenants associated with the 2006 and 2008 Revenue Bonds and Clean Water State Revolving Fund (SRF) loans; (3) establishing revenue adequacy to fully fund reserves, and operating and maintaining the Regional Wastewater Facilities, and (4) building capital reserves to work towards pay-as-you-go capital funding, while continuing to defer potential future revenue bonds. $13.24 $14.88 $14.88 $16.96 $18.50 $19.24 $20.01 $20.61 $14.22 $15.77 $16.87 $19.91 $20.91 $21.74 $22.61 $23.30 $0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00 $40.00 $45.00 $50.00 07-08 08-09 Dec 08 09-10 10-11 11-12 12-13 13-14 Regional Local $ Monthly Year 07-08 08-09 Dec 08 09-10 10-11 11-12 12-13 13-14 Regional $14.22 $15.77 $16.87 $19.91 $20.91 $21.74 $22.61 $23.30 Local $13.24 $14.88 $14.88 $16.96 $18.50 $19.24 $20.01 $20.61 Total $27.46 $30.65 $31.75 $36.87 $39.41 $40.98 $42.62 $43.91 % Rate Increase Category 07-08 08-09 Dec 08 09-10 10-11 11-12 12-13 13-14 Regional 8%11%7%18%5%4%4%3% Local 7%12.5%0%14%9%4%4%3% Total 7%12%4%16%7%4%4%3% $ Rate Increase Category 07-08 08-09 Dec 08 09-10 10-11 11-12 12-13 13-14 Regional $1.07 $1.55 $1.10 $3.04 $1.00 $0.83 $0.87 $0.69 Local $0.81 $1.64 $0.00 $2.08 $1.54 $0.74 $0.77 $0.60 Total $1.88 $3.19 $1.10 $5.12 $2.54 $1.57 $1.64 $1.29 ATTACHMENT 2 Page 4 of 10 For the City of Springfield’s local wastewater program, the adopted user fees are projected to generate about $6.8 million during the current FY 13-14. Revenues from System Development Charges (SDC) are projected to generate about $300,000 for capital projects in the current fiscal year. For years, the Council has dedicated a significant portion of user fee revenues to capital infrastructure needs. The current fiscal year budget includes $1.75 million dedicated to the local capital program, plus just over $2 million in annual debt service payments. PREVIOUS COUNCIL ACTIONS: To fund operating and capital requirements for the wastewater program, the Council increased local wastewater user fees by 3% in FY 13-14, which followed a 4% increase annually in FY 12-13 and FY 11-12. Last year, when Council adopted a 3% wastewater user fee increase for FY 13-14, the fiscal forecast projected a multi-year rate strategy with increases annually as displayed in the table below. CAPITAL PROJECT FUNDING AND WASTEWATER USER FEES: At the March 3, 2014 Work Session, staff presented the 2015-2019 Capital Improvement Program (CIP). At that time, Council reviewed and approved a CIP with prioritized funding for projects that are identified in the 2008 Wastewater Master Plan as necessary to maintain system integrity and meet regulatory obligations, while continuing to defer the majority of the discretionary expansion project work. The Franklin Boulevard Wastewater System Expansion project is currently in the planning and design phase, with the construction phase programmed in FY 14-15. In order to fund local wastewater capital projects, a $23.1 million revenue bond was issued in March of 2009. In order to maintain bond covenants, net revenues (revenues minus operations and maintenance expenses) must be 125% of maximum debt service for all existing bonds and planned or to be issued bonds. In FY 13-14, a projected $10 million revenue bond was deferred beyond the five-year forecast. Based on customer account and flow activity data, and revised capital project cost estimates and construction timelines, additional future revenue bonds are not anticipated in the current five-year financial forecast. Additionally, beginning with the FY 11-12 Budget, a 3% Right-of-Way (ROW) fee expense was assessed which is calculated at 3% of total local wastewater user fee revenues annually. The ROW fee is charged to the local wastewater fund for the privilege of running the wastewater facilities (pipelines) underground in the city streets or right-of-way. This expense to the wastewater fund provides revenues to the street fund for street and right-of-way maintenance and pavement management. 13-14 14-15 15-16 16-17 17-18 Adopted Projection Projection Projection Projection Avg. Monthly Residential Bill 20.61$ 21.23$ 21.66$ 22.09$ 22.53$ Local Rate Increase 3.0%3.0%2.0%2.0%2.0% Avg. Mo. Residential Increase 0.60$ 0.62$ 0.43$ 0.43$ 0.44$ Avg. Annual Residential Increase 7.20$ 7.44$ 5.16$ 5.16$ 5.28$ Fiscal Year Wastewater User Fee Forecast from Prior Year ATTACHMENT 2 Page 5 of 10 PROPOSED WASTEWATER USER FEES: In FY 12-13 Council provided policy direction to staff to try, over the next 5-7 years, to lower the level of rate changes to an inflationary level. The proposed user fees for FY 14-15 and the five-year rate forecast continues to implement that direction and delivers incremental and moderate rate changes over multiple years. The proposed user fees for FY 14-15 include a 3% rate increase on local wastewater user fees The proposed rates and forecast are displayed below, and includes the fiscal impact to a typical residential customer assuming 5,000 gallons of usage monthly. As implemented in FY 11-12, the right-of-way (ROW) use fees which are based on 3% of total wastewater user fee revenues are included in the table below. In addition, the projected transfers from operating funds to the capital fund are displayed. The proposed revenue plan generates about $9.7 million during the next five years to fund capital investments in the community’s local wastewater system, to continue to deliver uninterrupted high quality wastewater services and to plan for system expansion while meeting increasing environmental standards and regulatory requirements. The proposed user fees and rate forecast provides a revenue plan to support the City’s 2015-2019 Capital Improvement Plan and 2008 Wastewater Master Plan as adopted by Council. Within the 2014 fiscal forecast a key objective is to continue to increase Capital Reserves to allow for an increased level of pay-as-you-go financing, allowing for continued deferral of potential future revenue bonds. At the same time, it is prudent to position financially to maintain a favorable credit rating and to be able to secure potential future revenue bonds, if needed, which would result in increased debt service obligations and coverage requirements. COMPARISON OF WASTEWATER USER FEES: Annually, as part of the user fee rate development process, staff updates a survey of wastewater user fees to provide a comparison to other communities. The following table displays residential monthly wastewater charges for each city, based on currently adopted user fees (FY 13-14) applied to a typical residential usage of 5,000 gallons per month. The cities of Eugene and Springfield amounts include both the local and regional wastewater fees. The City of Springfield local and regional wastewater rates applied to a typical monthly residential usage of 5,000 gallons is $43.91. 14-15 15-16 16-17 17-18 18-19 Proposed Projection Projection Projection Projection Avg. Monthly Residential Bill 21.23$ 21.76$ 22.19$ 22.63$ 23.09$ Local Rate Increase 3.0%2.5%2.0%2.0%2.0% Avg. Mo. Residential Increase 0.62$ 0.53$ 0.43$ 0.44$ 0.46$ Avg. Annual Residential Increase 7.44$ 6.36$ 5.16$ 5.28$ 5.52$ ROW Use Fee (Expense)212,000$ 215,500$ 218,700$ 222,000$ 225,300$ Revenue Bond - - - - - Capital Transfer 1,500,000$ 2,020,000$ 2,040,000$ 2,060,000$ 2,080,000$ Debt Coverage Ratio 2.01 2.01 2.00 1.99 1.98 Fiscal Year Wastewater FY 14-15 Proposed Rates and Forecast ATTACHMENT 2 Page 6 of 10 STORMWATER PROGRAM FUNDING AND USER FEE RATE HISTORY: In FY 13-14, the current local residential stormwater fee is $12.62. For commercial customers, rates are calculated on the percentage of impervious area on the property as well as the total square footage of the property. Commercial properties include a base fee per 1,000 square feet of property, and each commercial property is placed into one of five categories: Very Heavy, Heavy, Moderate, Light or Undeveloped, and based on the category there is a specific base fee and impact fee charged per 1,000 square feet of property, plus an administrative fee of $1.456 per month. The stormwater monthly fee schedule is displayed below reflecting currently adopted fees. A commercial stormwater customer with 41% to 70% of impervious area is categorized as a heavy user and currently pays $2.75 per 1,000 square feet of property plus an administrative fee of $1.456 per month. A monthly charge for a customer with 1.5 acres (approximately 65,340 square feet) would be $181.14. Albany $48.02 Beaverton $38.26 Bend $44.37 Corvallis $33.24 Cottage Grove $40.46 Creswell $42.82 Eugene $33.11 Gresham $26.30 McMinnville $50.25 Portland $58.12 Salem $40.85 Springfield $43.91 Veneta $46.26 West Linn $33.62 Wilsonville $59.49 Average $42.61 Typical Residential Monthly Wastewater Bill City * Residential: $12.62 Very Heavy Heavy Moderate Light Undeveloped >70% 41-70%20-40%<20%0% Base Fee per 1,000 sq ft $1.466 $1.466 $1.466 $1.466 $0.000 Impact Fee per 1,000 sq ft $2.200 $1.284 $0.368 $0.000 $0.000 Total Rate per 1,000 sq ft $3.666 $2.750 $1.834 $1.466 $0.000 *Includes Single Family Residental and Duplex Households **Commercial is based on percenatge of property development (impervious surface) **In addition to the total Commercial rate displayed above, an Adminitrative Fee of $1.456 per account is applied Stormwater Monthly Fee Schedule ** Commercial ATTACHMENT 2 Page 7 of 10 Commercial customer rates will vary depending on the size of the property and the amount of impervious area. The table below displays the rate history for stormwater residential monthly charges and incremental rate changes over the last several years. For the City of Springfield stormwater program, the current user fees are projected to generate about $5.6 million during the current FY 13-14. Revenues from System Development Charges (SDC) are projected to generate about $85,000 for capital projects in the current FY 13-14. PREVIOUS COUNCIL ACTIONS: Prior to FY 09-10, stormwater user fees had not increased since July 2006. In FY 09-10 residential stormwater user rates increased by 14% to prepare for a stormwater revenue bond to fund capital improvements included in the Stormwater Facilities Plan. In FY 10-11 the stormwater user rates were increased 15% and in October 2010 the $10 million in revenue bonds were issued. Subsequently, in FY 11-12 the stormwater user rates were increased 3%. The stormwater rates were driven by the 125% net revenue to debt service coverage ratio required to issue revenue bonds and to maintain ongoing bond covenants. Last year, when Council adopted a 4% stormwater user fee increase for FY 13-14, the fiscal forecast projected a multi-year rate strategy with increases annually displayed as follows. $8.63 $8.63 $8.63 $9.84 $11.32 $11.66 $12.13 $12.62 $0.00 $2.00 $4.00 $6.00 $8.00 $10.00 $12.00 $14.00 $16.00 06-07 07-08 08-09 09-10 10-11 11-12 12-13 13-14 Stormwater Residential Monthly Bill Trend Monthly Bill Category 06-07 07-08 08-09 09-10 10-11 11-12 12-13 13-14 Monthly Bill $8.63 $8.63 $8.63 $9.84 $11.32 $11.66 $12.13 $12.62 % Increase 6%0%0%14%15%3%4%4% $ Increase $0.51 $0.00 $0.00 $1.21 $1.48 $0.34 $0.47 $0.49 ATTACHMENT 2 Page 8 of 10 PROPOSED STORMWATER USER FEES: In FY 12-13 Council provided policy direction to staff to try, over the next 5-7 years, to lower the level of stormwater rate changes to an inflationary level. Based on input provided by the Council the proposed revenue plan continues with the 4% rate change annually over the next three years, followed by a 3.5% rate change in the following two years of the five year forecast. The proposed local stormwater user fees for FY 14-15 and forecast is displayed below, including the fiscal impact to a typical residential customer. A key consideration is the debt service coverage ratio, and the proposed rate plan provides debt coverage ratios above the required 125%. It is important to note the capital transfer dollar amounts reflect a lower and declining amount when compared to recent trends. In addition, the beginning cash (reserves) are projected to be reduced with the projected lower rate changes in the forecast. Staff is proposing the stormwater user rates as the lowest responsible revenue plan based on current capital and operating budget levels, debt service and reserve requirements. As implemented in FY 11-12 the right-of-way (ROW) use fees, which are based on 3% of total stormwater user fee revenues, are included in the table. COMPARISON OF STORMWATER USER FEES: Annually, as part of the user fee rate development process, staff updates a survey of stormwater user fees to provide a comparison to other communities. The following table displays residential monthly stormwater charges for each city, based on currently adopted FY 13-14 user fees. The City of Springfield residential stormwater fee is currently $12.62 monthly. 13-14 14-15 15-16 16-17 17-18 Adopted Projection Projection Projection Projection Avg. Monthly Residential Bill 12.62$ 13.12$ 13.64$ 14.19$ 14.76$ Local Rate Increase 4.0%4.0%4.0%4.0%4.0% Avg. Mo. Residential Increase 0.49$ 0.50$ 0.52$ 0.55$ 0.57$ Avg. Annual Residential Increase 5.88$ 6.00$ 6.24$ 6.60$ 6.84$ Fiscal Year Stormwater User Fee Forecast from Prior Year 14-15 15-16 16-17 17-18 18-19 Proposed Projection Projection Projection Projection Avg. Monthly Residential Bill 13.12$ 13.64$ 14.19$ 14.69$ 15.20$ Local Rate Increase 4.0%4.0%4.0%3.5%3.5% Avg. Mo. Residential Increase 0.50$ 0.52$ 0.55$ 0.50$ 0.51$ Avg. Annual Residential Increase 6.00$ 6.24$ 6.60$ 6.00$ 6.12$ ROW Use Fee (Expense)181,300$ 187,800$ 194,300$ 200,200$ 206,200$ Revenue Bond - - - - - Capital Transfer 1,000,000$ 850,000$ 800,000$ 750,000$ 700,000$ Debt Coverage Ratio 1.57 1.60 1.66 1.69 1.71 Stormwater FY 14-15 Proposed Rates and Forecast Fiscal Year ATTACHMENT 2 Page 9 of 10 RECOMMENDED ACTION: As described above, staff has evaluated the funding requirements associated with the proposed FY 14-15 budget and the Council adopted FY 15-19 Capital Improvement Plan for the local wastewater and stormwater programs. The proposed local wastewater and stormwater user fee increases in FY 14-15 will fund ongoing system maintenance and investments in capital improvements for wastewater and stormwater infrastructure and facilities, to continue to deliver high quality uninterrupted services, while continuing to meet revenue bond covenants, increasing environmental standards and mandated regulatory requirements. Staff recommends that Council consider the wastewater rate increase of 3% in FY 14-15, as forecasted a year ago. This recommendation provides a moderate user fee rate change in FY 14-15 and within the rate forecast which continues to implement policy direction. This recommendation is projected to generate a stable level of capital funding in pay-as-you-go financing, deferring the potential need for a future revenue bonds beyond the current five-year forecast. Staff recommends that Council consider a stormwater rate increase of 4% in FY 14-15, as forecasted a year ago. This recommendation takes into consideration Council input and delivers a revenue plan that generates adequate revenues to continue to meet the debt service coverage ratios in FY 14-15, and the operational and maintenance standards of the stormwater program. Staff requests Council’s consideration, comments and direction to staff on the proposed rate changes for local wastewater and stormwater fees. The schedule of wastewater and stormwater fees including the regional MWMC adopted rates for FY 14-15 will be reviewed and considered at a public hearing, which is currently scheduled for May 5, 2014. Beaverton $8.25 Bend $4.00 Corvallis $6.27 Cottage Grove $7.47 Eugene $11.39 Gresham $9.84 Portland $24.88 Springfield $12.62 Veneta $2.20 West Linn $5.58 Wilsonville $5.25 Average $8.89 City Typical Residential Monthly Stormwater Bill ATTACHMENT 2 Page 10 of 10