HomeMy WebLinkAboutItem 08 Setting Wastewater & Stormwater User Fee Adoption FY 19-20 AGENDA ITEM SUMMARY Meeting Date: 5/6/2019
Meeting Type: Regular Meeting
Staff Contact/Dept.: Matt Stouder
Staff Phone No: 541-736-1006
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: SETTING LOCAL AND REGIONAL WASTEWATER AND STORMWATER
USER FEES EFFECTIVE JULY 1, 2019
ACTION
REQUESTED:
1) Conduct a public hearing on local and regional wastewater and local stormwater
user fees.
2) Adopt A RESOLUTION OF THE CITY OF SPRINGFIELD SETTING LOCAL
AND REGIONAL WASTEWATER (SEWER) USER FEES AND LOCAL
STORMWATER (DRAINAGE) USER FEES AS SET FORTH IN THE
SPRINGFIELD MUNICIPAL CODE.
ISSUE
STATEMENT:
Each year, the City Council reviews and establishes the rates for local wastewater and
stormwater user fees and adopts regional wastewater user fees set by the Metropolitan
Wastewater Management Commission. Council action is needed to establish new
user fees for FY 19-20.
ATTACHMENTS: 1. Resolution
2. Council Briefing Memorandum from April 22, 2019 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 wastewater and stormwater
systems, a portion of the Capital Improvement Program (CIP) for each program, and
various other program related activities. 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 options for local wastewater and
stormwater user fee adjustments at the April 22, 2019 work session. Detail on the
options discussed is provided in Attachment 2. Council provided guidance to staff to
prepare a resolution based on Option 2 for both wastewater and stormwater services.
Staff has prepared a schedule of user charges for a public hearing based on a 2%
increase in the local wastewater user fees and a 2% increase in the local stormwater
user fees. In addition, the Council was informed that the MWMC adopted a 2%
increase in the regional wastewater user fees that also needs to be incorporated into
the schedule of user charges for FY 19-20.
Staff continues to explore options to reduce pressure on user fees while continuing to
meet environmental and regulatory standards. In mid-2017, the City refunded the
2009 sewer revenue bonds, resulting in the 2017 bonds that include a reduction in
financing costs over a 10-year term. In addition, a successful strategy, in part,
depends on the City’s ability to continue to increase capital reserves for capital
investments, and improve the ability of System Development Charge (SDC) revenues
to fund a greater portion of the capital investment. This strategy will help
reduce and/or defer the need to rely on future debt financing.
Attachment 1, a resolution establishing the local and regional wastewater and local
stormwater user fees for FY 19-20, is provided for Council consideration. Staff
requests that the Council act on the resolution following the public hearing.
ATTACHMENT 1
Page 1 of 2
RESOLUTION
NO.________
A RESOLUTION OF THE CITY OF SPRINGFIELD SETTING LOCAL AND REGIONAL
WASTEWATER (SEWER) USER FEES AND LOCAL STORMWATER (DRAINAGE) USER FEES AS
SET FORTH IN THE SPRINGFIELD MUNICIPAL CODE.
WHEREAS, the City of Springfield has established a system of wastewater and stormwater drainage
sewer systems; and
WHEREAS, under the Intergovernmental Agreement (IGA) entered into by the City of Springfield, the
City of Eugene and Lane County in February, 1977, and as subsequently amended, the Metropolitan
Wastewater Management Commission (MWMC) constructs, operates, and maintains the regional
sewerage facilities, as described in the IGA; and
WHEREAS, the costs related to operation, maintenance and certain capital improvements of the local
and regional wastewater sewer systems, and the local stormwater drainage systems are funded
through user fees; and
WHEREAS, Sections 4.206 (3) and 4.208 (2) (a) (i) and (ii) of the Springfield Municipal Code authorize
the setting of wastewater and stormwater charges by resolution of the Council; and
WHEREAS, the MWMC approved Resolution 19-06, adopting the Regional Wastewater Program
Budget and Capital Improvements Program for fiscal year (FY) 2019-2020, and Resolution 19-05,
adopting a new schedule of user fees for FY 19-20 operations and capital programs, on April 12, 2019,
after reviewing the proposed Resolutions in a series of public meetings and public hearings; and
WHEREAS, Section 8(c) of the MWMC IGA obligates the City to “adopt user charges required by 40
CFR 35.929 in an amount not less than adopted by the Commission”; and
WHEREAS, the schedule of sewer user fees, attached as Exhibit “A,” and incorporated herein, is
needed to collect revenues necessary to fund the operations, maintenance and certain capital
improvements of the local and regional wastewater (sewer) system and the local stormwater drainage
system in FY 19-20.
NOW, THEREFORE, BE IT RESOLVED by the City of Springfield as follows:
1. The City of Springfield Schedule of Local and Regional Wastewater (Sanitary Sewer) User and
Local Stormwater (Drainage) Fees, which is attached as Exhibit “A,” is hereby adopted and shall take
effect with bills rendered on or after July 1, 2019.
2. This Resolution shall take effect upon its adoption by the Council and approval by the Mayor.
ADOPTED by the Common Council of the City of Springfield this _____ day of May, 2019, with a vote
of _____ for and _____ against.
________________________________
Christine L. Lundberg, Mayor
ATTEST:
______________________________
AJ Ripka, City Recorder
ATTACHMENT 1
Page 2 of 2
EXHIBIT A
Wastewater (Sanitary Sewer)
Beginning with bills rendered on or after July 1, 2019
Wastewater charges shall be as follows:
Low Medium High Very High Super High
Strength Strength Strength Strength Strength
400*800*1200*1600*Over 1600*
MWMC $2.016 $2.708 $3.946 $5.600 $7.258 $8.912
City of Springfield $3.577 $3.577 $3.577 $3.577 $3.577 $3.577
Total $5.593 $6.285 $7.523 $9.177 $10.835 $12.489
* Average total biochemical oxygen demand and suspended solids in milligrams per liter (mg/L)
Base Charge: A regional (MWMC) monthly base charge of $13.55 is applied to each account
Wastewater Monthly Fee Schedule
Wastewater Flow-Based Fee (per unit - 748 gallons)
Residential
Customer
Commercial / Industrial Customers
Stormwater (Drainage)
Beginning with bills rendered on or after July 1, 2019
Wastewater charges shall be as follows:
* Residential: $15.24
Very Heavy Heavy Moderate Light Undeveloped
>70% 41-70%20-40%<20%0%
Base Fee per 1,000 sq ft $1.770 $1.770 $1.770 $1.770 $0.000
Impact Fee per 1,000 sq ft $2.658 $1.549 $0.445 $0.000 $0.000
Total Rate per 1,000 sq ft $4.428 $3.319 $2.215 $1.770 $0.000
* Residential includes single family residential and duplex households
** Commercial is based on percentage of property development (impervious surface)
** In addition to the Commercial rates above, an Administrative Fee of $1.758 per account is applied monthly
Stormwater Monthly Fee Schedule
** Commercial
ATTACHMENT 2
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M E M O R A N D U M City of Springfield
Date: 4/22/2019
To: Gino Grimaldi COUNCIL
From: Tom Boyatt, Interim Development and Public Works
Director
Matt Stouder, Environmental Services Manager
Katherine Bishop, ESD Program Manager
BRIEFING
MEMORANDUM
Subject: Wastewater and Stormwater User Fees FY 2019-20
ISSUE:
User fees for local wastewater and stormwater services are reviewed annually by the Council as part of
the City’s budget development process. Staff is in the process of updating user fees for Council
consideration and adoption. A public hearing is scheduled for May 6, 2019. Additionally, the
Metropolitan Wastewater Management Commission (MWMC) approved a schedule of Fiscal Year
2019-20 (FY 19-20) regional wastewater user fees on April 12, 2019 and will forward them to the Cities
of Springfield and Eugene for implementation.
COUNCIL GOALS/
MANDATE:
Provide Financially Responsible and Innovative Government Services
To fund services associated with the City’s wastewater and stormwater programs and adopted Capital
Improvement Program (CIP), a revenue plan that includes an increase in user fees for FY 19-20 has been
prepared for Council consideration. Revenues generated from user fees fund ongoing system maintenance,
investments in capital improvements to replace existing infrastructure and accommodate new
development, meet revenue bond covenants, ensure environmental and regulatory requirements are met,
and maintain operating and capital reserves.
BACKGROUND:
As part of the budget development process, the City develops an annual CIP and operating budget for the
local wastewater and stormwater programs. These programs face many challenges, including fixed
operating and maintenance costs based on the size of the system (regardless of usage), capital project
costs that often inflate at rates higher than the Consumer Price Index, and costs to comply with Federal
and State environmental mandates.
To meet these challenges, the City develops the CIP and operating budget, makes debt service payments
and sets reserve levels as established by the Council. This information is then used to determine annual
funding requirements. Primary funding sources include wastewater and stormwater user fees (for
operating and capital expenses), and system development charges (SDCs) for capital only expenses. In
addition to local fees, the MWMC establishes regional wastewater charges to fund the Regional
Wastewater Program.
The services the City provides are vital to economic development activity and the health and safety of the
City’s local waterways, and rank highly when discussed with Springfield residents. Recent survey results
indicate that “promoting economic development” and “maintaining a healthy environment and overall
ATTACHMENT 2
Page 2 of 5
water quality” are a very high priority. A brief description of the City’s local wastewater and stormwater
programs is discussed below:
Local Wastewater Program
The wastewater 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 237 miles of collection pipelines and 17 pump stations, which are owned and operated
by the City. Operations and maintenance of the local collection system is funded entirely by revenue from
local wastewater user fees. In addition, user fees are the primary source of funding for the City’s CIP,
which provides for system preservation, major rehabilitation, and expansion to support growth and
development. Through previous rate actions, revenues for this program have stabilized and current and
projected CIP priorities have been programmed based upon moderate and incremental rate increases.
Local Stormwater Program
Stormwater management services are an important part of the City’s effort to improve water quality,
protect aquatic habitat and recreational opportunities, and protect properties and infrastructure from
flooding. The City’s National Pollutant Discharge Elimination System (NPDES) Stormwater Permit and
Council adopted Stormwater Management Plan implement Federal and State water quality standards and
guide the delivery of stormwater services for the community. The City’s storm drainage system includes
about 188 miles of stormwater pipe, 6,520 catch basins, and over 30 public water quality facilities
(including the Mill Race Stormwater Facility), which require ongoing inspection, maintenance and
vegetation control. In addition, street sweeping and leaf cleanup support surface stormwater quality
activities that address permit compliance. Stormwater operations and maintenance services are funded
entirely by revenue from the stormwater user fees. User fees are a primary source of funding for the
maintenance, rehabilitation and preservation of the City’s stormwater capital infrastructure assets. The
current and projected stormwater CIP program is based upon moderate and incremental rate increases.
CURRENTLY ADOPTED RATES AND PRIOR YEAR PROJECTIONS
The table below provides a review of the FY18-19 rates adopted by Council, as well as the projection for
FY19-20 from last year:
18-19 19-20 20-21 21-22 22-23
Adopted Projection Projection Projection Projection
Local Wastewater Services
Avg. Monthly Residential Bill 23.44$ 24.14$ 24.86$ 25.73$ 26.63$
Local Rate Increase 2.5%3.0%3.0%3.5%3.5%
Avg. Mo. Residential Increase 0.57$ 0.70$ 0.72$ 0.87$ 0.90$
Stormwater Services
Avg. Monthly Residential Bill 14.94$ 15.31$ 15.77$ 16.32$ 16.89$
Local Rate Increase 2.5%2.5%3.0%3.5%3.5%
Avg. Mo. Residential Increase 0.36$ 0.37$ 0.46$ 0.55$ 0.57$
Local Wastewater & Stormwater Combined
Avg. Monthly Residential Bill 38.38$ 39.45$ 40.63$ 42.05$ 43.52$
Local Rate Increases Combined 2.5%2.8%3.0%3.5%3.5%
Local Rate Increases 0.93$ 1.07$ 1.18$ 1.42$ 1.47$
Combined Local Wastewater and Stormwater FY 18-19 Adopted Rates and Projections
Fiscal Year
ATTACHMENT 2
Page 3 of 5
PROPOSED LOCAL WASTEWATER AND STORMWATER USER FEE OPTIONS
Proposed FY 19-20 user fee options are discussed below for a typical residential monthly bill (assuming
6.684 units or 5,000 gallons of wastewater generated per month for comparison purposes). Note the
average Springfield residential customer uses less than 5,000 gallons of wastewater per month (~4,300
gallons) based on household size (however 5,000 gallons is used to normalize and compare with other
communities). The following options are presented for discussion and Council consideration.
Option 1: Combined Local Wastewater and Stormwater User Fee – 2.5% increase
The table below displays the proposed combined rate increase as a percentage (2.5%) and dollar amount
($0.96) for a typical residential monthly bill. The level of projected rate change for future years is also
displayed.
Option 1 fully funds existing system operations, maintenance and regulatory obligations, as well as the
Council approved CIP. Option 1 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 1 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 2018 compared to the prior
year. The ENR CCI rate of inflation is generally higher than the CPI inflation index, most closely aligning
with the City’s capital construction project costs.
Option 1 above allows for a slightly greater transfer to capital reserves to continue to position the City to
move 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 cash reserve requirements over a 20-year term.
Option 2 (Recommended): Combined Local Wastewater and Stormwater User Fee – 2.0% increase
The table below displays the recommended combined rate increase as a percentage (2.0%) and dollar
amount ($0.77) for a typical residential monthly bill. The recommended rate changes are the lowest
responsible rate change. Option 2 is $0.19 less monthly when compared to Option 1 for the typical
residential monthly bill in FY 19-20.
19-20 20-21 21-22 22-23 23-24
Proposed Projection Projection Projection Projection
Local Wastewater Services
Avg. Monthly Residential Bill 24.03$ 24.75$ 25.49$ 26.38$ 27.30$
Local Rate Increase 2.5%3.0%3.0%3.5%3.5%
Avg. Mo. Residential Increase 0.59$ 0.72$ 0.74$ 0.89$ 0.92$
Stormwater Services
Avg. Monthly Residential Bill 15.31$ 15.77$ 16.24$ 16.81$ 17.40$
Local Rate Increase 2.5%3.0%3.0%3.5%3.5%
Avg. Mo. Residential Increase 0.37$ 0.46$ 0.47$ 0.57$ 0.59$
Local Wastewater & Stormwater Combined
Avg. Monthly Residential Bill 39.34$ 40.52$ 41.73$ 43.19$ 44.70$
Local Rate Increases Combined 2.5%3.0%3.0%3.5%3.5%
Local Rate Increases 0.96$ 1.18$ 1.21$ 1.46$ 1.51$
Combined Local Wastewater and Stormwater FY 19-20 Rates and Forecast - Option 1
Fiscal Year
ATTACHMENT 2
Page 4 of 5
Option 2 funds system operations, maintenance and regulatory obligations, as well as the Council
approved FY 19-20 CIP. The proposed FY 19-20 rate increase is $0.77 or 2.0% monthly for local
wastewater and stormwater services combined. Stormwater rates consider the projected impact of the
pending NPDES permit renewal currently in progress, resulting in an increased service level to meet more
stringent regulatory and environmental requirements. Option 2 displays rate increases that will fund
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 takes into consideration the current capital reserves available for planned investments in
infrastructure improvements for local wastewater and stormwater services, including the right-of-way use
fee increase from 3% to 5% effective July 1, 2019.
WASTEWATER PROGRAM FUNDING AND RATE HISTORY:
Wastewater user fees on customers’ monthly bills include a local (Springfield) and regional (MWMC)
component. In FY 18-19, for a residence using 6.684 units or 5,000 gallons per month, the local
wastewater bill is $23.44. The combined typical wastewater bill, including the regional component is
currently $49.93. Residential customer bills are used as a benchmark for wastewater rates because the
volume and strength of the wastewater generated is similar within the customer class. The usage (and
therefore the bills) of commercial and industrial users vary significantly because their wastewater volume
and strength varies greatly.
In FY 19-20, the right-of-way use fee established and implemented in FY 11-12 at 3% (of total user fee
revenue collected), will increase from 3% to 5% effective July 1, 2019 and is assessed annually to the
local wastewater fund. In FY 18-19 the Council increased local wastewater user fees by 2.5%, which
followed a 2.5% increase in FYs 17-18, 16-17 and 15-16, and a 3.0% increase in FY 14-15. A history of
the local and regional user fees is provided in Attachment 2.
19-20 20-21 21-22 22-23 23-24
Proposed Projection Projection Projection Projection
Local Wastewater Services
Avg. Monthly Residential Bill 23.91$ 24.51$ 25.24$ 26.00$ 26.78$
Local Rate Increase 2.0%2.5%3.0%3.0%3.0%
Avg. Mo. Residential Increase 0.47$ 0.60$ 0.74$ 0.76$ 0.78$
Stormwater Services
Avg. Monthly Residential Bill 15.24$ 15.62$ 16.01$ 16.49$ 17.07$
Local Rate Increase 2.0%2.5%2.5%3.0%3.5%
Avg. Mo. Residential Increase 0.30$ 0.38$ 0.39$ 0.48$ 0.58$
Local Wastewater & Stormwater Combined
Avg. Monthly Residential Bill 39.15$ 40.13$ 41.25$ 42.49$ 43.85$
Local Rate Increases Combined 2.0%2.5%2.8%3.0%3.2%
Local Rate Increases 0.77$ 0.98$ 1.13$ 1.24$ 1.36$
Fiscal Year
Combined Local Wastewater and Stormwater FY 19-20 Rates and Forecast - Option 2
ATTACHMENT 2
Page 5 of 5
STORMWATER PROGRAM FUNDING AND RATE HISTORY:
In FY 18-19, the current residential stormwater fee is $14.94. 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), as well as an
impact fee based on the amount of impervious surface on the property.
In FY 19-20, the right-of-way use fee established and implemented in FY 11-12 at 3% (of total user fee
revenue collected), will increase from 3% to 5% effective July 1, 2019 and is assessed annually to the
stormwater fund. In FY 18-19, the Council increased stormwater user fees by 2.5% which followed a
3.5% increase in FYs 17-18 and 16-17, and a 3.7% increase in FY 15-16, and a 4% increase FY 14-15. A
history of the stormwater user fees over the last several years is provided in Attachment 2.
REGIONAL WASTEWATER USER FEES:
At the March 8, 2019 MWMC meeting, staff presented the Preliminary FY 19-20 Regional Wastewater
Program Budget and Capital Improvement Program, and proposed regional wastewater user fee rates.
Based on discussions and input provided by the Commission, staff returned to the Commission on April
12, 2019 at a public hearing where the Commission adopted resolutions recommending a 2.0% user fee
increase in FY 19-20, and the Regional FY 19-20 Budget for implementation by the cities of Eugene and
Springfield. The table below shows the adopted FY 19-20 regional wastewater user fees.
With the recommended Option 2 including a local wastewater rate change of 2.0% ($0.47/month), a
proposed stormwater rate change of 2.0% ($0.30/month), and the MWMC adopted regional wastewater
rate change of 2.0% ($0.53/month), the typical residential bill (assuming 6.684 units or 5,000 gallons of
wastewater generated) would increase by $1.30 monthly resulting in a combined overall increase of 2.0%.
RECOMMENDED ACTION:
Staff has carefully considered the funding requirements associated with the proposed FY 19-20 budget
and recommends Council consider a local wastewater rate increase of 2.0% and a stormwater rate increase
of 2.0% (Option 2). If adopted, the proposed increases will provide sufficient revenues in FY 19-20 to
continue to defer the need for future financing, maintain adequate debt service coverage, meet
environmental regulations and NPDES Permit requirements, fund necessary capital improvements and
system maintenance obligations, and provide quality services to existing customers and new development.
Staff requests Council’s consideration, comments and direction on the proposed rate changes. The
schedule of wastewater and stormwater fees, including the regional MWMC adopted rates for FY 19-20,
will be reviewed and considered at the public hearing currently scheduled for May 6, 2019.
19-20 20-21 21-22 22-23 23-24
Adopted Projection Projection Projection Projection
Avg. Monthly Residential Bill 27.02$ 27.83$ 28.80$ 29.81$ 31.00$
Regional Rate Increase 2.0%3.0%3.5%3.5%4.0%
Avg. Mo. Residential Increase 0.53$ 0.81$ 0.97$ 1.01$ 1.19$
MWMC Regional Wastewater FY 19-20 Adopted Rates and Forecast
Fiscal Year