HomeMy WebLinkAboutItem 02 Regional Wastewater User Fees for Fiscal Year 08-09
SPRINGFIELD
CITY COUNCIL
Meeting Date:
Meeting Type:
Department:
Staff Contact:
Phone:
Estimated Time:
April 7,2008
Work Session
Public Works Qj/l
Susie Smit~ /
726-3697
15 Minutes
AGENDA ITEM SUMMARY
ITEM TITLE: REGIONAL WASTEWATER USER FEES FOR FISCAL YEAR 08-09
ACTION REQUESTED: This is an information and discussion item only. No action is requested.
ISSUE STATEMENT: User fees for local and regional wastewater and for storm drainage were last
reviewed by the City Council in May of 2007, and staff is in the process of developing Fiscal Year (FY) 08-
09 local user fee options for consideration by Council later this. Spring. The Metropolitan Wastewater
Management Commission (MWMC) approved a schedule ofFY 08-09 regional wastewater user charges on
March 28th and is forwarding them to Springfield and Eugene for implementation.
ATTACHMENTS:
Exhibit 1 -- Memo to MWMC from Susie Smith; Proposed FY 08-09 Regional
Wastewater User Wastewater User Rates; March 20,2008
DISCUSSION:
Re!!ional Wastewater User Fees. The MWMC adopted an 11 % regional wastewater user fee increase
following a public hearing on March 2i\ and has forwarded the FY 08-09 rates to Eugene and Springfield
for implementation. The new rates will increase the average monthly residential bill by about $1.56, and
will generate about $2.2 million in increased revenue to MWMC annually.
As the Council is aware, the primary factor driving regional wastewater user fee increases is the
Commission's capital financing plan associated with construction of the 2004 MWMC Facilities Plan
projects. The twenty-year capital projects plan is intended to provide sufficient environmental performance
and treatment capacity to serve community growth through 2025, at an estimated cost of$196 million (in
2006 dollars). The Commission has taken a multi-year view of user rate funded revenue requirements.
Accordingly, the action taken for FY 08-09 anticipates an 11 % increase in FY 09-10, and then annual
increases of 5% for three years. More information on the Commission's rate action is provided in Exhibit
1. A graph showing a comparison of projected FY 08-09 wastewater user fees and system development
charges (SDCs) for several communities in Oregon is shown in Exhibit 1, Attachment B. For illustrative
purposes, Springfield's projected total average monthly residential bill (i.e., MWMC and City combined)
includes a 10% local rate increase as a place holder.
Local Wastewater and Storm Draina!!e User Fees. Staff typically takes local wastewater/storm
drainage user fee options to Council along with the new MWMC-adopted fees. This year is atypical in that
the City is currently finalizing new long-range facility master plans for the local wastewater and storm
drainage systems. Similar to MWMC's Facilities Plan, the local plans will specify significant lists of
capital projects needed to meet community growth and water quality objectives over the next twenty years.
Neither the City's current user fees nor the system development charges (SDCs) anticipate the significant
level of funding that will be required in the coming years to implement the forthcoming master plans.
Impacts of available capital financing strategies and capital project phasing options on user fees are
currently being evaluated. The goal of this evaluation is to scnedule capital projects in accordance with
City Council objectives and regulatory requirements in a manner that minimizes impacts to user fees. That
said, staff anticipates that significant increases in both user fee and SDC revenue will be required over the
next several years to fund capital programs.
Options for local wastewater and storm drainage user fees are scheduled for review by the City Council at
a work session on May 19th. Following this discussion, a draft schedule of user charges will be developed
for a public hearing scheduled for June 2nd.
V:\ENVIROSV\BUDGET09\RATES 4-07-08 AIS.DOC
Metropolitan Wastewater Management Commission
mr>r...
,i' "I
.. .. ....
=-_' e.
G
~iii
partners in wastewater management
MEMORANDUM
DATE:
March 20, 2008
TO:
Metropolitan Wastewater Management Commission (MWMC)
Susie Smith, Environmental ServiceslMWMC General Manager 7S
FROM:
Proposed FY 08-09 Regional Wastewater User Rates
ISSUE:
A public earing to review and discuss proposed FY 08-09 user charges is scheduled for the
Commiss on's March 27th meeting. The Commission will have the opportunity to consider .
adoption f new user charges for FY 08-09 at that time. A public hearing notice was published
in the Re ister Guard, and the meeting agenda was provided to the standing list of parties
interested in notification ofMWMC meetings. The notice provides the Commission with the
opportuni to adopt the schedule of user rates on March 27th if the Commission is prepared to do
so at that ime. If the Commission requests additional review time and/or any significant
modificat ons prior to taking action, this matter can be scheduled for final action on the April 17th
MWMC eeting agenda. Per the intergovernmental agreement (lGA), once the Commission
takes acti n, the recommended schedule of user charges will be forwarded to Eugene and
Springfie d for adoption and implementation.
BACKG OUND AND DISCUSSION:
As the C mmission is aware, the primary drivers of user rate increases over the last few years,
and projected for the next several years, are the costs associated with the 2004 MWMC Facilities
'Plan. In2005, MWMC updated its Financial Plan, with the professional assistance of West em
Financial Group, which continues to serve as MWMC's contracted Financial Advisor. The
Financial Advisor has provided ongoing review ofMWMC's budget and revenue status, and has
advised staff regarding the development of user charges that need to be developed to maintain
adequate "coverages" for scheduled future borrowing 2009 and beyond. This includes the
consideration and IGA guidance that the Commission must set rates necessary to maintain its
uninsured bond rating of A, meet the covenants associated with the 2006 bonds, and establish
revenue sufficiency in preparation for the 2009 bond sale.
At the February 28th MWMC meeting, the Commission reviewed several multi-year user rate
scenarios ranging from 8% to 11 % for FY 08-09. The Commission directed staff to prepare the
draft FY 08-09 Regional Wastewater Program Budget and Capital Improvements Program based
on an 11 % rate increase. The proposed schedule of user charges for FY 08-09, which is included
as Exhibit A to the attached draft Resolution 08-07, reflects the Commission's direction for an
11 % increase. This rate increase would result in a monthly increase on an average residential
sewer bill of about $1.56, increasing the total regional wastewater bill from $14.21 to $15.77 per
V:\ENVIROSV\BUDGET09\march MWMC User Rate Memo for fy OB-09.doc
EXHIBIT 1
Page 1 of 2
month for an average household using 5,000 gallons per month.
The longer term financial forecast shows the need for annual increases of approximately 11 % in
FY 09-10, followed by 5% increases for the following three years. This level of projected
increases is anticipated to correlate with projected inflationary increases in construction costs,
materials and supplies, personnel costs, permitting fees, and so on. It should be noted that these
current rate and associated revenue projections do not account for increased service levels or new
program costs the Commission might incur under a future wastewater discharge permit. For
example, as staff further develops a Total Maximum Daily Load (TMDL) implementation plan
for temperature, associated program costs will be developed and built into the fmancial forecast.
A survey of community wastewater user charges is attached (see Attachment B) for comparison
purposes. Even with the magnitude of the capital improvements MWMC is undertaking, the
combined (local plus regional) wastewater rates for Eugene and Springfield appear to remain
competitive ORa statewide basis.
RECOMMENDATION AND REQUESTED ACTION:
.The proposed increase in all regional wastewater user charges of 11 % for FY 08-09, applied to
the base charge and the flow charge, as well as septage charges, implements the
recommendations ofMWMC's Financial Advisor, and is consistent with the Commission's
capital financing plan. The FY 08-09 revenues predicted from these increased rates are projected
to meet the covenants of the 2006 Revenue Bonds, and to maintain an unenhanced credit rating
of A (as required by the IGA) by adequately funding operations, administration, capital financing
and reserves, as proposed in the FY 08-09 Regional Wastewater Program Budget and CIP. They
also will enable the Commission to issue an additional $50,000,000 in debt in FY 08-09.
The Commission is requested to revi~w and conduct a public hearing on the proposed schedule
of regional wastewater user rates, and to consider adoption of Resolution 08-07 (Attached).
V:\ENVIROSV\BUDGET09\march MWMC User Rate Memo for fy 08-09.doc
EXHIBIT 1
Page 2 of 2
METROPOLITAN WASTEWATER MANAGEMENT COMMISSION
RESOLUTION 08-07
) IN THE MATTER OF THE FY 08-09
) MWMC REGIONAL WASTEWATER SCHEDULE
) OF USER AND SEPTAGE CHARGES AND
) RECOMMENDATION TO THE GOVERNING
BODIES
WHEREAS, the Metropolitan Wastewater Management Commission ("MWMC"), pursu-
ant to the Intergovernmental Agreement ('IIGA") between the cities of Springfield and Eugene,
and Lane County (collectively "Governing Bodies"), is responsible for administration and opera-
tion of the regional wastewater system; and
WHEREAS, the IGA requires MWMC to recommend to the Governing Bodies a schedule
of sewer user charges; and
WHEREAS, MWMC's recommendation must set forth: 1) the rates and amounts MWMC
reasonably determines are necessary to meet MWMC's bond covenants aOnd to achieve and
maintain an unenhanced credit rating of A from at least one nationally recognized rating agency
("Goal 1") and 2) such additional rates and amounts MWMC determines are appropriate to
adequately fund the actions necessary to perform MWMC's functions under the IGA ('IGoaI2");
and
WHEREAS, on March 27, 2008, the MWMC held a public hearing on the levels of sewer
user and septage charges necessary to meet the requirements set forth abo"ve for Fiscal Year
2008-2009;
WHEREAS, MWMC has determined that the user charges proposed satisfy Goal 1 and
that additional funds, such as would satisfy Goal 2, are not necessary; and
WHEREAS, MWMC, having considered written and oral comments made at the public
hearing, the recommendation of staff, and being otherwise fully advised; .
NOW,THEREFORE, BE IT RESOLVED BY THE METROPOLITAN WASTEWATER
MANAGEMENT COMMISSION that the Metropolitan Wastewater Management Commission
Schedule of Regional Wastewater Sewer User and Septage Charges for Fiscal Year 2008-
2009, in the form attached as Exhibit A with the rates set forth therein increased by the amounts
that are necessary to reflect an overall rate increase of 11 %> over the rates currently in effect,
satisfies Goal 1 and is recommended to the appropriate Governing Bodies for implementation
(septage fees are implemented only in Eugene).
ADOPTED BY ~HE METROPOLITAN WASTEWATER MANAG~MENT COMMISSION
OF THE SPRINGFIELD/EUGENE METROPOLITAN AREA ON THE 27th DAY OF March,
2008.
~~
President
Approved as to form: ~
e. DO'v'id Jev\lett
~(~ c....." 111.. / h>-,:; J-sI,,\
~~~ft~
ATTACHMENT A to EXHIBIT 1
Exhibit A
Metropolitan Wastewater Management Com..rllission
Schedule of Regional Wastewater Sewer User Fees
Fiscal Year 2008-2009
Base Fee For All Users (excludes septage) $7.91
Flow Char2e
Residential $1.1 77
Low Strength $1.581
Medium Strength $2.305
High Strength $3.270
Very High Strength $4.237
Super High Strength $5.204
Septage $113.304
EXHIBIT A to ATTACHMENT A
o
o
c
UJ
~
(I)
~
(I)
UJ
~
cu
~
I:
cu
UJoo
"Co
1:0
cu"'..
0~
(I)~
(I) :::J
LL~
~ 0
(I) C/)
o co
~ C/)
~2
S ~
cu"'O
~2
CO
S.Q-
o .2
cu......
3:$
CU
;:;
I:
(I)
"C
o
(I)
0::
(I)
C)
f!
(I)
~
o
o
o
cD
ffl
o
o
o
I.{)
ffl
~
ffl
o
o
o
-q-~
ffl
o
o
o
M
ffl
o
o
o
N
ffl
o
o
o
U')
<0
to
'<t
~
N
C"")
o
C"")
~
I
I
I
I~
I....:
I~
I
.it
......
en
C"")
~
o
o
o
I.{)
ffl
o
o
I.{)
-q-
ffl
o
o
o
-q-
ffl
o
o
Lri
('t)
ffl
o
o
o
('t)
fJ7
o
o
Lri
N
ffl
o
o
o
N
ffl
o
o
I.{)
~
ffl
o
o
o
~
fJ7
o
o
I.{)
fJ7
I
ffl
all!AuoSI!M
UU!llsaM
elaUa^
Pla!J6updS
wales
puellJOd
all!AUU!II\PV\I
We4SeJ8
aua6n3
lIaMSaJ8
aAOJ8 a6en08
s,"eAJ08
puas
UOlJaAeas
puel4s'v'
Aueql'v'
I
fJ7
"C
Q)
Q) ro Q)
~ E ~
co +:i !D
+-' en _
o Q) 0
+-' c c
~ co co
.- en 0
...... Q) 0
C>"C -
.5 ::J ......0
L.. - 0'....
0.00
en .5 'r"
en
c
.Q
ro
0)
o
o
o
I.{)
c
o
"'0
a>
C/)
co
e
C/)
a>
a>
u..
L-
a>
C/)
::::>
L-
a>
......
ctl
3:
a> C/)
en ()
~ ~
o +
EXHIBIT 1, ATTACHMENT B
lJ)
x
:>.
Q)
2:
::J
en
c
'n;
o
E
(;
en
....1
Q)
~
Q)
en
en
:2:
c::::
o
u...
en
w
...J
u:
~
~co
cO
roO
Q)N
0;::
:::~