HomeMy WebLinkAbout04/25/2016 Work Session City of Springfield
Work Session Meeting
MINUTES OF THE WORK SESSION MEETING OF
THE SPRINGFIELD CITY COUNCIL HELD
MONDAY APRIL 25, 2016
The City of Springfield Council met in a work session in the Jesse Maine Meeting Room, 225 Fifth
Street, Springfield, Oregon, on Monday April 25, 2016 at 5:30 p.m., with Mayor Lundberg presiding.
ATTENDANCE
Present were Mayor Lundberg and Councilors Wylie,Moore, Ralston, Woodrow and Pishioneri. Also
present were City Manager Gino Grimaldi, Assistant City Manager Jeff Towery, City Attorney Mary
Bridget Smith, City Recorder Amy Sowa and members of the staff.
Councilor VanGordon was absent(excused).
1. Wastewater and Stormwater User Fees FY2016-17.
Matt Stouder, Environmental Services Manager, and Katherine Bishop, Environmental Services
Program Manager and presented the staff report on this item.
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 and adoption by Council later this spring. The Metropolitan Wastewater Management
Commission(MWMC)approved a schedule of Fiscal Year 2016-17 (FY 16-17) regional wastewater
user charges on April 8, 2016 and will forward them to the cities of Springfield and Eugene for
implementation.
Each year, staff presents proposed user fee rates for local wastewater and stormwater programs to
Council. These fees are established to provide adequate revenue to fund operations and maintenance,
capital improvement programs, debt service payments, and meet environmental permit requirements
for the City. In addition to local user fees,MWMC develops regional user fees to support the Regional
Wastewater Program. On April 8, 2016,the MWMC adopted the FY 16-17 regional user fees with a
2.0%rate change that will increase the typical residential customer's monthly bill by$0.49.
A public hearing on the option Council selects is scheduled for May 2, 2016.
The revenue goals of MWMC are:
1. Provide Adequate Operations and Maintenance
2. Fund the Adopted Capital Improvements Program
3. Maintain Debt Service Requirements
4. Increase Capital Reserves; Defer Future Financing
5. Maintain Fiscal Health and Favorable Credit Rating
Mr. Stouder referred to a map showing the two systems within the City which includes wastewater and
stormwater. A recent survey indicated that citizens value these systems and feel that maintaining
healthy environment and rivers, protecting water quality, providing recreational opportunities and
promoting economic development are all high priorities. The challenges faced include fixed operating
costs regardless of customer usage, large and continuing capital needs, cost inflation higher than the
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Council Work Session Minutes
April 25,2016
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CPI, stringent environmental requirements, and debt service. Staff is expecting the new stormwater
permit from Department of Environmental Quality(DEQ)by the end of this year which will likely
have more stringent requirements.
Ms. Bishop explained the proposed rates for FY16-17. She described the three scenarios being
presented. In Springfield,the average residential customer is using about 50 gallons less per month
from the prior year. Because our fee is usage based, we are seeing a decrease in revenue. Staff is
recommending Option 2 which has a slightly higher increase on wastewater and a slight decrease on
the stormwater compared to the forecast from last year. When the two city fees are combined,the rate
is about 2.9%. Including the regional rate in that calculation brings it to an overall 2.5% increase. The
options show the combined change to local wastewater(assuming 6.684 units or 5,000 gallons)and
stormwater user fees for a typical residential customer:
Option 1(basic service level) includes a 2.7% user fee rate increase in FY 16-17, resulting in a
$0.94 monthly increase, which includes a local wastewater increase at$.44 and a stormwater
increase at$0.50 monthly.
Option 2 (Recommended) (basic service level with pay-as-you go financing plan) includes a
2.9%user fee rate increase in FY 16-17 resulting in a$1.02 monthly increase, which includes
a local wastewater increase at$0.54 and stormwater at$0.48 monthly, as discussed in
Attachment 1.
Option 3 (basic service level with greater level ofpay-as-you go financing plan) includes a
3.2%user fee rate increase in FY 16-17 resulting in a$1.13 monthly increase,which includes
a local wastewater increase at $0.65 and stormwater at$0.48 monthly, as discussed in
Attachment 1.
Mr. Stouder noted some of the factors for local wastewater rates including a revenue bond,capital
improvement plan, ongoing system operations and maintenance, and planning for the future. He
reviewed some of the projects completed since 2009, some of the current projects and future projects.
Ms. Bishop reviewed a chart of rate comparison with neighboring communities showing current rates.
Springfield is just below average.
Councilor Ralston asked why Eugene and Springfield are at the same rate for wastewater.
Ms. Bishop said the regional wastewater rate structure is applied to both cities. The City of Springfield
benefits from having them applied the same. In the local fees,Eugene pays less because of economies
of scale. Eugene has a lot of commercial and industrial that generates a lot of waste.
Mr. Stouder said the cost to treat the waste is basically the same regardless of size.
Councilor Woodrow said in looking at a ten-year span, it would cost the average customer$240 a year
in increased costs. There may not be a way to avoid that, but was something to consider.
Councilor Wylie said there have been no increases in social security for the last few years. They may
need to look at holding the line for retired people who are not getting increases.
Ms. Bishop said they have discussed that in the past, and can consider looking at in the future. It is a
balance of meeting regulations and being sensitive to the needs of the community. They do have a
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reserve for unanticipated decreases due to closures of commercial and industry customers. There is
some large growth that will help.
Councilor Wylie said the government is supposed to be interactive between Federal and Local. We
need to let the other levels of government know our customers can't afford the rate increases.
Councilor Ralston said if they don't raise fees, another form of government would need to subsidize.
Mayor Lundberg said part of what drives our wastewater system is that we have old pipes. They need
to look at where those systems are located and check the laterals. Infiltration causes an increase in
capital investments. Getting rid of leaks could help the system overall and create a more efficient
system. They need to determine what kind of emphasis to put on economic development and
balancing a reserve if we lose a large company. It's important to look at how to keep the rates steady,
look at other options and not increase the rates for residential customers.
Councilor Pishioneri said MWMC is looking at pipes from the curb to homes which are private
property and the responsibility of the homeowner. They have looked at some programs where those
can be tested.
Mr. Stouder said they have looked at laterals, and received a recommendation from the consultant.
They are in the data analysis period at this time. In some of the survey work done,they have found
small increases annually rather than a spike after several years. The other way to fund these services is
through system development charges(SDC). Gresham is low on rates,but high on SDCs.
Mr. Stouder said in comparing Eugene and Springfield, Eugene has a larger base to spread the costs,
and have no debt. Springfield bonds paid for a number of rehabilitation and expansion projects.
Ms. Bishop added that these projects expanded the capacity of our local wastewater system to be ready
for future development. The City is well positioned from a capacity standpoint. Future projects are
more for rehabilitation.
Mr. Stouder said on the regional side,the federal regulations are becoming more stringent.MWMC is
doing their best to mitigate and plan for that now. They are very concerned about how to fund some of
those requirements. The bonds have been paid off on the regional side, but not the local side.
Mayor Lundberg asked how staff tracks the Environmental Protection Agency(EPA)regulations.
Council needs to track some of that so they can contact state and federal legislators. The EPA needs to
allow some flexibility.
Ms. Bishop noted the increases by other cities compared to the City of Springfield. Other communities
are beginning to increase rates to address regulations. The rate drivers for wastewater rates and
forecast include debt service requirements, investment of capital improvements, maintaining a strong
financial position, and inflation.
Mr. Stouder spoke regarding local stormwater rate factors including a$10M revenue bond,the capital
improvement plan, operations and maintenance, and planning for the future. He reviewed some of the
stormwater capital improvements that had been completed, current projects, and upcoming projects.
Ms. Bishop explained the rate comparison for residential stormwater. Eugene is slightly lower than
Springfield in its currently adopted rates. Staff is proposing a 3.5% increase in Springfield on July 1
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for residential stormwater. Eugene is proposing a 7.5% increase. Should both increases go forward, it
would bring us closer to Eugene's rate. She explained the option being recommended by staff and
what it would fund. She discussed the rate drivers for stormwater rates and forecast which includes
debt service requirements, investment of capital improvements, increased operating requirements,
maintaining a healthy financial position, and inflation.
Councilor Moore said some people are paying for stormwater when they don't have stormwater. She
asked if some of those funds would be going towards improvements or just maintaining what we have.
Mr. Stouder said a majority of the fee goes towards compliance and water quality.
Discussion was held regarding the advantage of not adding to the stormwater system.
Ms. Bishop further reviewed staff's recommendation on local wastewater and stormwater services.
Mr. Stouder said the MWMC regional rate would come to Council for a public hearing. They would
also be asked to ratify the MWMC budget. MWMC reissued two bonds that will save $15M over a ten
year period. The rates will continue to increase slightly due to a number of projects that are needed,
and to pay off their debt.
Councilor Pishioneri asked if there is a fiscal reason why staff is looking at front loading in Option 2.
Mr. Stouder said in the out-years for stormwater in Option 2,the increases are slightly larger in the
2020 projected.
Ms. Bishop explained the need for more funds for the requirements for higher standards on the
operating side. The proceeds from the revenue bond have been fully expended on the local wastewater
side. Many wastewater projects are rehabilitation and are not eligible for SDC revenues. To shore up
the local wastewater,they felt it would be good to come down on the stormwater rate to balance it out.
Councilor Pishioneri asked about programing costs for a new structure and if there was a portion of
this money that was helping pay for that project.
Ms. Bishop said the local revenues were completely separate.
Councilor Moore said knowing how much was in the capital fund and exactly where the funds were
going would help her justify rate increases.
Ms. Bishop said revenues generated today, are for planning for tomorrow. To avoid interest, it's
important to have a healthy reserve.
Discussion was held regarding reserves and capital project costs.
Ms. Bishop said over the five year forecast, each option would contribute the following estimated
amounts towards the capital reserve to be invested in the community's wastewater pipeline system.
• Option 1 —about $9.8M
• Option 2—about$10.2M; and
• Option 3 —about$10.6M
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Council consensus was to move forward with Option 2.
ADJOURNMENT
The meeting was adjourned at 6:25 p.m.
Minutes Recorder—Amy Sowa
Christine L. Lundberg
Mayor
Attest:
f?D'L7&L.
Amy Sow(e)
City Recorder