HomeMy WebLinkAbout04/17/2017 Work Session City of Springfield
Work Session Meeting
MINUTES OF THE WORK SESSION MEETING OF
THE SPRINGFIELD CITY COUNCIL HELD
MONDAY APRIL 17, 2017
The City of Springfield Council met in a work session in the Jesse Maine Meeting Room,225 Fifth
Street, Springfield, Oregon,on Monday April 17,2017 at 6:15 p.m..,with Mayor Lundberg presiding.
ATTENDANCE
Present were Mayor Lundberg and Councilors Moore, Stoehr and Pishioneri.Also present were City
Manager Gino Grimaldi, City Attorney Mary Bridget Smith,City Recorder Amy Sowa and members
of the staff.
Councilors VanGordon,Wylie and Woodrow were absent(excused).
1. Wastewater and Stormwater User Fees FY2017-18
Matt Stouder,Environmental Services Department Manager, and Katherine Bishop,Environmental
Services Program Manager,presented the staff report on this item.
A power point was presented by staff.Ms. Bishop reviewed the following revenue goals:
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 gave an overview of the wastewater system and the stormwater system. Public opinion is
that healthy waterways are a priority,recreational opportunities are valued,and economic
development is dependent on available services.He discussed the challenges in paying for clean water
such as:
• Fixed operating costs
• Legacy replacement costs
• New capital costs
• New regulatory requirements
• Inflationary pressure
• Debt service obligations
• Significantly reduced federal funding
Mr. Stouder discussed the two discharge permits the City is required to maintain: Stormwater Permit
and Wastewater Permit.The Stormwater Permit was issued to Springfield by the DEQ and we have
been on an extension since 2012 while the DEQ updates their requirements. He will attend a public
meeting on this topic next week and they hope to have their final permit soon. The Stormwater Permit
is the foundation for all the programs the City has in place. It does contain specific limitations and
reporting requirements we have to meet. Springfield has their Wastewater Permit filed jointly with
Metropolitan Wastewater Management Commission(MWMC)and Eugene. That permit has been on
an extension since 2006. They are expecting renewal in about 2019. It will be a challenge to meet
those requirements.All permits are issued under the Clean Water Act.
City of Springfield
Council Work Session Minutes
April 17,2017
Page 2
Mr. Stouder reviewed some of the programs funded by user fees including operations&maintenance,
grading/erosion control, illicit discharge and detection,capital program, development review,pre-
treatment, and wastewater treatment.
Ms.Bishop reviewed the local wastewater rate factors such as the 2009 revenue bond,Capital
Improvement Plan(CIP), ongoing and system operations and maintenance,and planning for the
future.They are working more towards a pay as you go capital investment in the future.
Councilor Pishioneri asked if the $20M estimated in the CIP included construction of the upgrades for
MWMC.
Mr. Stouder said this is only for the local system.
Mayor Lundberg asked when the bond will be paid off.
Ms.Bishop said it would be paid off in 2029. She said they are growing the capital reserves in order to
make cash payments in the future.The inflation component is usually on the capital construction costs,
so they use the engineering news record cost index for construction related costs. This past year,the
construction inflation was at 3%. City staff, along with the Finance Department,are looking at the
local wastewater fund to see if it is viable to do an advance refunding of the revenue bonds. If so,they
may have the opportunity to reduce interest expenses in the future. That process will take several
months.
Mr. Stouder reviewed the wastewater capital improvements. He noted that of the$3.7M programmed
for this year,about$2.7M is going to our system repair,rehabilitation and preservation projects. The
balance is going for system upgrades and expansion. In the past,the City worked on rehabilitation
projects. They are currently monitoring the City's Capacity,Management,Operation and Maintenance
(CMOM)program to analyze our system for an upgraded Wastewater Master Plan project.
Ms.Bishop reviewed the rate comparison for wastewater fees. Springfield is slightly below the
average at$47.40.Eugene is slightly lower.
Mayor Lundberg asked why Eugene's amount is lower than Springfield's.
Ms.Bishop said Eugene doesn't have any financing or loans. Also,they have a larger population to
share the costs.
Mr. Stouder said Eugene has low SDCs. Some communities are higher in SDCs and lower in user fees.
Ms. Bishop said when there are development agreements,there may be the need to put in upgraded
facilities to develop on a system. Springfield's increase for the combined amount was 2.2%and
Eugene's was 2.6%. The average increase was 5.4%.
Discussion was held regarding Coburg's rate and new system.
Ms.Bishop reviewed the local stormwater rate factors such as the 2010 revenue bond, Capital
Improvement Plan(CIP),operations and maintenance,and planning for the future. Staff feels the City
of Springfield is positioned well financially for the upcoming renewal of the MS4 Permit.
City of Springfield
Council Work Session Minutes
April 17,2017
Page 3
Mr. Stouder said the stormwater capital improvements include completed projects,current projects
4 Permit and theyare makingprogress
and upcoming projects. Staff has been at the table for the MS P �'
with DEQ to get a product that is palpable. About 40%of improvements are in preservation and the
remaining in water quality.
Ms.Bishop reviewed the rate comparison for stormwater services. Springfield is slightly higher than
the average,as is Eugene.Although slightly higher, Springfield is moving ahead of the permits and are
positioned and ready for the new requirements. Some communities are just starting to catch up and
having larger percentages of increase,while ours remain fairly moderate and incremental.In FY14
there was a difference of rates between Springfield and Eugene of about$1.23,with Springfield being
higher. In 2015,that gap was narrowed, and in 2016 the gap was narrowed even further.With
Eugene's proposed rate change for stormwater services,Eugene will be above Springfield for the first
time in many years. With Council support and leadership, Springfield has been able to regulate our
rate to get our rates below Eugene's.
Mr. Stouder said Springfield was the first Phase 2 community to get their permit. Some other cities
will have significant increases as they implement programs to meet permit requirements.
Ms. Bishop reviewed the rate options presented:
Option 1(basic service level) includes a combined 2.6%user fee rate increase in FY 17-18,
resulting in a$0.94 monthly increase,which includes a local wastewater increase at$.045 and
a stormwater increase at$0.49.
Option 1 funds basic system operations,maintenance and regulatory obligations, as well as the
Council approved FY 17-18 CIP. The proposed FY 17-18 rate increase is $0.94 or 2.6%
monthly for local wastewater and stormwater services combined. Stormwater rates consider
the projected impact of an upcoming NPDES permit renewal currently scheduled for late
2017,resulting in an increased service level to meet more stringent regulatory and
environmental requirements.For the typical residential customer, Option 1 displays the lowest
rate increase that will fund basic program activities,meet current debt service obligations,
provide contributions necessary to fund the capital program, and continue programs required
to meet current and anticipated permit requirements.
Option 2—Recommended(basic service level with pay-as-you go financing plan) includes a
combined 2.9%user fee rate increase in FY 17-18 resulting in a$1.05 monthly increase,
which includes a local wastewater increase at$0.56 and stormwater at$0.49 monthly.
Option 2 fully funds existing system operations,maintenance and regulatory obligations,as
well as the Council approved CIP. Option 2 also provides a more responsive forecast to the
continued and projected decrease in wastewater volumes by users, and positions the City to
better mitigate revenue losses when significant system users make major modifications to their
business practices. Option 2 takes into consideration the Engineering News-Record(ENR)
Construction Cost Index(CCI)relative to inflation on construction materials and labor cost
increases,which increased by 3.0% in 2016 compared to the prior year. The ENR CCI rate of
inflation is generally higher than the Portland-Salem All Urban Consumers(CPI-U) inflation
index,most closely aligning with the City's capital construction project costs.
Option 2 allows for a slightly greater transfer to capital reserves(in wastewater)to position the
City to continue to delay future financing and moving towards a pay-as-you-go utility.Pay-as-
you-go(cash)investments in capital infrastructure projects are more cost effective than a
future revenue bond issuance or loans that include financing interest expenses and additional
City of Springfield
Council Work Session Minutes
April 17,2017
Page 4
cash reserve requirements over a 20-year term.For reference,the recent 2009 local sewer
revenue bond sale total expenses exceeded$34 million, for a principal amount of$23 million.
Option 2 includes a slightly greater rate increase for wastewater services in FY 17-18 followed
by a moderate and incremental rate forecast. The projected stormwater service rates in Option
2 remain the same as Option 1,anticipating an increase in stormwater permit standards within
the forecast and an increased level of service to meet future permit requirements.The City's
NPDES stormwater permit renewal is currently scheduled for late 2017.
Option 3 (basic service level with greater level of pay-as-you go financing plan) includes a
combined 3.3%user fee rate increase in FY 17-18 resulting in a$1.16 monthly increase,
which includes a local wastewater increase at$0.67 and stormwater at$0.49 monthly.
Option 3 includes a slightly greater rate increase and forecast for wastewater services,when
compared to options 1 and 2,reflecting a 3.0% increase which is aligned with the ENR
Construction Cost Index(CCI)for construction materials and labor. Stormwater service rates
remain the same in Option 3 for FY 17-18 and FY 18-19,with a slightly greater increase
projected in FY 19-20,when compared to options 1 and 2. Option 3 is($0.22)greater monthly
for local wastewater and stormwater combined than Option 1 and($0.11)greater monthly than
Option 2 for the typical residential monthly bill.
Mr. Stouder said MWMC proposed a 3%increase to the Commission.A public hearing was held on
Friday,April 14, and the Commission approved the increase and agreed to send it on to the cities of
Eugene and Springfield and Lane County for ratification. This will come to the Council for ratification
on May 1 along with the local rates.
Councilor Stoehr asked if the rates for residents was comparable to those charged to businesses.
Ms.Bishop said in Springfield it is purely volumetric, and also takes into consideration strength of the
discharge.
Councilor Stoehr said it looks like staff has done a good job of cost control.During their last work
session on this topic,they discussed filtration of the stormwater versus wastewater,and that sometimes
stormwater is subjected to the same treatment process as wastewater.He found some greener and less
expensive ways using natural filtration to clean the stormwater before it goes back into the public
waterways.He asked if any effort had been made to explore those options.
Mr. Stouder said there have been. He said some of the standards for treatment are similar. Some are
required currently and others can be employed. The new permit compels the City to require that—
some of which is appropriate and some which is not appropriate.
Councilor Pishioneri said the MWMC has been very engaged and aware of cost control, and he has
been very happy with how staff responded to the Commission.He is very proud of how MWMC paid
off the bonds and passed off the savings to the customers. There are more cost saving measures on the
horizon. He would like to see a couple of different scenarios of a rate we could charge to pay off our
bonds, similar to what was done at MWMC. The savings would need to be enough to stave off future
rate increases over the long term. He would like to see one or two scenarios with a fiscal plan to save
money.He would like to see some energy around the infiltration on the private side,and what the
types of programs cities are using. The less going into the plant,the less needs to be treated. It could
be helpful with meeting requirements of our permit. He asked if they were holding off on asking for
the permit for MWMC from the State.
City of Springfield
Council Work Session Minutes
April 17,2017
Page 5
Mr. Stouder said they are holding off until the State has completed their process. Springfield is
separate and is scheduled for renewal at the end of the year for stormwater. The stormwater permit
will affect only Springfield,but the wastewater permit could impact both cities.There is a financial
risk in the stormwater permit requirements, so staff is trying to stave that off. He explained.
Councilor Pishioneri said he supports Option 2.He thanked staff for their work.
Councilor Moore asked about rain gardens for new development to keep stormwater out of the system,
and if that might be part of the new development requirements. She asked if there would be an
advantage to the homeowner.
Mr. Stouder said there could be a potential advantage on the SDC side,but not on the user fee side.
There are a number of issues with requiring that, including manual inspections by the City which
increases the cost to the City. In addition,the homeowner would still be paying stormwater fees. There
are some places in Springfield where that won't work due to the high groundwater.
Councilor Moore said even though it is a lesser option,the rates continue to go up which concerns her
and the effect it has on those on a fixed income. She asked about the question from a previous meeting
regarding the administrative fee.
Councilor Pishioneri said those fees on the bill go to MWMC as a basic charge.If these fees go up
2%,that basic charge will also go up 2%.
Mr. Stouder said Springfield benefited from MWMC joining the National Association for Clean Water
Agencies(NACWA).They are advocating at the Federal level for low-income housing assistance for
utility fees, similar to what they have for electric.That is being discussed in Washington DC now.
There may be other topics that could go to Washington DC for discussion. There was a commitment
through the Clean Water Act to partner with local agencies to help provide assistance,and this might
be an opportunity for that to be realized.
Councilor Stoehr asked if there were projections of usage in the coming years.
Ms. Bishop said wastewater use is actually being reduced through more efficient plumbing fixtures.
The Plumbing Code is also more restrictive so new construction is tighter on water conservation.
Mayor Lundberg said she wants to continue to look at a program to assist homeowner with their
laterals as they do impact the bigger system. She asked if staff had a sense that there is going to be a
look at making it more reasonable.
Councilor Stouder said there have been discussions at the State level, and they are hoping to see a
more functional permit in the MS4.All groups, including environmental groups,have weighed in on
the permit and trying to keep is reasonable and not excessive. At the Federal level, it's hard to say. It
needs to be modernized by the Federal government,which might be a challenge in the near term.
Mayor Lundberg said the best option is to work towards the pay as you go and decrease what is going
into the system. She was fine with Option 2.
ADJOURNMENT
City of Springfield
Council Work Session Minutes
April 17,2017
Page 6
The meeting was adjourned at 6:58 p.m.
Minutes Recorder—Amy Sowa
Christine L. Lundberg
Mayor
Attest:
Amy Sow'
City Recorder