HomeMy WebLinkAboutItem 03 WW & SW User Fees FY 23-24AGENDA ITEM SUMMARY Meeting Date: 4/24/2023
Meeting Type: Work Session
Staff Contact/Dept.: Katherine Bishop/DPW
Staff Phone No: 541-726-3674
Estimated Time: 30 Minutes
SPRINGFIELD
Council Goals: Provide Financially
CITY COUNCIL Responsible and
Innovative Government
Services
ITEM TITLE:
WASTEWATER AND STORMWATER USER FEES FY 2023-24
ACTION
Staff seeks Council direction establishing local wastewater and stormwater rates.
REQUESTED:
ISSUE
User fees for local and regional wastewater and local stormwater services are
STATEMENT:
reviewed by the Council annually 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 1, 2023. Additionally, the Metropolitan
Wastewater Management Commission (MWMC) approved a schedule of Fiscal
Year 2023-24 (FY 23-24) regional wastewater user fees on April 14, 2023, and will
forward them to the Cities of Springfield and Eugene for implementation.
ATTACHMENTS:
1. Council Briefing Memo
2. Wastewater & Stormwater Program User Fees Rate Trends
3. Rate Comparison Charts
DISCUSSION/
Each year, staff presents proposed user fee rates for local wastewater and
FINANCIAL
stormwater programs to Council. These fees are established to provide adequate
IMPACT•
revenue to fund operations and maintenance, capital improvement programs, debt
service payments, and meet environmental permitting requirements for the City. In
addition to local user fees, the MWMC develops regional user fees to support the
Regional Wastewater Program. On April 14, 2023, the MWMC adopted the
FY 23-24 regional user fees with a 4.5% rate change that will increase a residential
customer bill by $1.30 monthly (when assuming 6.684 units or 5,000 gallons).
For FY 23-24, staff has prepared rate options for further discussion and Council
consideration, with Option 2 being the recommended option. The options show the
combined change to local wastewater (assuming 6.684 units or 5,000 gallons of
wastewater generated) and stormwater user fees for a residential customer:
Option I - Includes a 3.2% user fee rate adjustment in FY 23-24, resulting in a
$1.34 monthly increase, which includes a local wastewater increase at $0.86 and a
stormwater increase at $0.48 monthly, as discussed in Attachment 1.
Option 2 —Recommended includes a 2.8% user fee rate adjustment in FY 23-24
resulting in a $1.11 monthly increase, which includes a local wastewater increase at
$0.63 and stormwater at $0.48 monthly, as discussed in Attachment 1.
A public hearing on the FY 23-24 user fees is scheduled for May 1, 2023.
MEMORANDUM City of Springfield
Date: 4/24/2023
To: Nancy Newton, City Manager COUNCIL
From: Matt Stouder, Environmental Services Division Director BRIEFING
Katherine Bishop, ESD Program Manager MEMORANDUM
Subject: Wastewater and Stormwater User Fees FY 2023-24
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 1, 2023. Additionally, the
Metropolitan Wastewater Management Commission (MWMC) approved a schedule of Fiscal Year
2023-24 (FY 23-24) regional wastewater user fees on April 14, 2023, 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 adjustment in user fees for FY 23-24 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 permit
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, 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 among Springfield residents. Ongoing survey results indicate that
promoting economic development and maintaining a healthy environment and water quality are a very
high priority. A brief description of the City's local wastewater and stormwater programs is discussed
below:
Attachment 1, Page 1 of
Local Wastewater Program
The wastewater system serving Springfield has two components: (1) a local wastewater collection system
owned and operated by the City, and (2) a regional conveyance, treatment and disposal system owned and
operated by the MWMC. The local system is comprised of about 240 miles of collection pipelines and 17
pump stations. 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 are stable, and current and
projected CIP priorities have been programmed based upon moderate and incremental rate adjustments.
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 190 miles of stormwater pipe, approximately 5,523 catch basins, 128 water quality structures, 112
public water quality facilities (including the Mill Race Stormwater Facility), and 28.5 miles of surface
vegetated waterways, which require ongoing inspection, maintenance, and vegetation control. In addition,
306 curb miles of 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 adjustments.
PROPOSED LOCAL WASTEWATER AND STORMWATER USER FEE OPTIONS
Proposed FY 23-24 user fee options are discussed below for a residential monthly bill (assumes 6.684
units or 5,000 gallons of wastewater generated monthly for comparison with other communities). The
average Springfield residential customer uses 4,300 gallons monthly. Note 5,000 gallons is used to
normalize and compare with other communities. Options are presented for Council discussion and
consideration.
Option 1: Combined Local Wastewater and Stormwater User Fee — 3.2% adjustment.
The table below displays the proposed combined rate adjustment as a percentage (3.2%) and dollar
amount ($1.33) for a 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. This option 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 considers
the Engineering News -Record (ENR) Construction Cost Index (CCI) relative to inflation on construction
materials and labor cost increases, which increased by an average of 3.7% overall in 2021 thru 2022, and
in the first three months of 2023 inflation increased by an average of 4.8%. 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.
Lastly, this option positions the City to better meet new requirements related to environmental permitting,
including the existing Phase II General Stormwater permit and upcoming expected 2024 General permit.
It also allows for a greater transfer to capital reserves over the 5 -year period coinciding with the City's 5 -
year CIP, which may allow for deferral of future revenue bond issuance or loans that include financing
interest expenses and additional cash reserve requirements over a 20 -year term.
Attachment 1, Page 2 of 4
Combined Local Wastewater and Stormwater FY 23-24 Rates and Forecast - Option I
Fiscal Year
23-24
Proposed
24-25
Projection
25-26
Projection
26-27
Projection
27-28
Projection
Local Wastewater Services
Monthly Residential Bill
$
27.31
$
28.26
$
29.25
$
30.13
$
31.03
Local Rate Adjustment
3.5%
3.5%
3.5%
3.0%
3.0%
Residential Increase
$
0.86
$
0.95
$
0.99
$
0.88
$
0.90
Stormwater Services
Monthly Residential Bill
$
16.48
$
16.66
$
17.15
$
17.67
$
18.29
Local Rate Adjustment
3.0%
3.0%
3.0%
3.0%
3.5%
Residential Increase
$
0.48
$
0.49
$
0.50
$
0.51
$
0.62
Local Wastewater & Stormwater Combined
Monthly Residential Bill
$
43.79
$
44.92
$
46.40
$
47.80
$
49.32
Rate Adjustments Combined
3.2%
3.3%
3.3%
3.3%
3.2%
Residential Rate Increase
$
1.34
$
1.38
$
1.42
$
1.47
$
1.47
Option 2 (Recommended): Combined Local Wastewater and Stormwater User Fee - 2.8% adiustment.
The table below displays the recommended combined rate adjustment as a percentage (2.8%) and dollar
amount ($1.11) for a residential monthly bill. The recommended rate changes represent the lowest
responsible rate change, given the stormwater and wastewater permit renewals and regulatory
requirements, in addition to the ongoing operations and maintenance of the systems, and capital projects.
Combined Local Wastewater and Stormwater FY 23-24 Rates and Forecast - Option 2
Fiscal Year
23-24
Proposed
24-25
Projection
25-26
Projection
26-27
Projection
27-28
Projection
Local Wastewater Services
Monthly Residential Bill
$
26.65
$
27.31
$
27.99
$
28.68
$
29.54
Local Rate Adjustment
2.5%
2.5%
2.5%
2.5%
3.0%
Residential Increase
$
0.63
$
0.76
$
0.91
$
0.95
$
0.84
Stormwater Services
Monthly Residential Bill
$
16.48
$
16.66
$
17.15
$
17.67
$
18.29
Local Rate Adjustment
3.0%
3.0%
3.0%
3.0%
3.0%
Residential Increase
$
0.48
$
0.49
$
0.50
$
0.51
$
0.62
Local Wastewater & Stormwater Combined
Monthly Residential Bill
$
43.13
$
43.97
$
45.14
$
46.35
$
47.83
Rate Adjustments Combined
2.8%
2.8%
3.3%
3.3%
3.0%
Residential Rate Increase
$
1.11
$
1.16
$
1.40
$
1.46
$
1.45
REGIONAL WASTEWATER USER FEES:
At the March 10, 2023, MWMC meeting, staff presented the Preliminary FY 23-24 Regional Wastewater
Program Budget and Capital Improvement Program and the proposed regional wastewater user fee rates.
Based on discussions and input provided by the Commission, staff returned to the Commission on April
14, 2023, for a public hearing where the Commission adopted resolutions recommending a 4.5% user fee
adjustment in FY 23-24, and the Regional FY 23-24 Budget for implementation by the cities of Eugene
and Springfield. The table below shows the adopted FY 23-24 regional wastewater user fees.
Attachment 1, Page 3 of 4
MWMC Regional Wastewater FY 23-24 Adopted Rates and Forecast
Fiscal Year
23-24
Adopted
24-25
Projection
25-26
Projection
26-27
Projection
27-28
Projection
Monthly Residential Bill
$ 30.25
$ 31.61
$ 33.19
$ 34.85
$ 36.59
Regional Rate Adjustment
4.5%
4.5%
5.0%
5.0%
5.0%
Residential Adjustment
$ 1.30
$ 1.51
$ 1.58
$ 1.66
$ 1.74
(') When applied to 6.684 billing units or 5,000 gallons
With the recommended Option 2 including a local wastewater rate adjustment of 2.5% ($0.63/month), a
proposed stormwater rate adjustment of 3.0% ($0.48/month), and the MWMC adopted regional
wastewater rate adjustment of 4.5% ($1.30/month), the residential bill (assuming 6.684 units or 5,000
gallons of wastewater generated) would increase by $2.41 monthly assuming 5,000 gallons generated.
RECOMMENDED ACTION:
Staff has carefully considered the funding requirements associated with the proposed FY 23-24 budget
and recommends Council consider a local wastewater rate adjustment of 2.5% and a stormwater rate
adjustment of 3.0% (Option 2). If adopted, the proposed adjustments will provide sufficient revenues in
FY 23-24 to continue to defer the need for future financing, maintain adequate debt service coverage,
meet environmental regulations and permitting 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 23-24,
will be reviewed and considered at the public hearing currently scheduled for May 1, 2023.
Attachment 1, Page 4 of 4
WASTEWATER PROGRAM USER FEES AND RATE TREND:
Wastewater user fees on customers' monthly bills include a local (Springfield) and regional (MWMC)
component. In FY 23-24, based on a residence using 6.684 units or 5,000 gallons per month, the local
wastewater bill would be $26.00. Local wastewater charges are proposed at $3.890 per billing unit (748
gallons) for all customer types. The combined residential wastewater bill, including the regional
component is $56.25. 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 regional
wastewater charges vary significantly for commercial and industrial customers based on the wastewater
volume and strength of discharge to be treated and disposed, as such the bills vary greatly.
$ Monthly
Year
19-20
20-21
21-22
22-23
23-24
Regional
$27.02
$27.02
$27.97
$28.95
$30.25
Local
$23.91
$23.91
$24.63
$25.37
$26.00
Total
$50.93
$50.93
$52.60
$54.32
$56.25
% Change
Category
19-20
20-21
21-22
22-23
23-24
Regional
2.0%
0.0%
3.5%
3.5%
4.5%
Local
2.0%
0.0%
3.0%
3.0%
2.5%
Total
2.0%
0.0%
3.3%
3.3%
3.5%
$ Change
Category
19-20
20-21
21-22
22-23
23-24
Regional
$0.53
$0.00
$0.95
$0.98
$1.30
Local
$0.47
$0.00
$0.74
$0.74
$0.63
Total
$1.00
$0.00
$1.69
$1.72
$1.93
Attachment 2, Page 1 of 2
STORMWATER PROGRAM USER FEES AND RATE TREND:
In FY 23-24, the local residential stormwater service charge is proposed at $16.48. The table below
includes the 4 -year rate history for stormwater residential monthly charges and rate changes.
$2400
$2200
$20.00
$1800
$16.00
$14.00
$1200
$10.00
$800
$600
$4.00
$2.00
$000
Stormwater Residential Monthly Bill
19-20 20-21 21-22 22-23 23-24
Category
19-20
20-21
21-22
22-23
23-24
Monthly Bill
$15.24
$15.24
$15.62
$16.00
$16.48
% Increase
2.0%
0.0%
2.5%
2.5%
3.0%
$ Increase
$0.30
$0.00
$0.38
$0.38
$0.48
Commercial stormwater user fees are charged based on impervious area as shown in the chart below. For
example, a property that is categorized as a heavy user with an impervious area between 41 % to 70%
would pay $3.592 per 1,000 square feet of property (plus an administrative fee of $1.902) per month.
Commercial customer rates vary based on the size of the property and the amount of impervious area.
Stormwater Monthly Fee Schedule
* Residential: $16.48
** Commercial
Very Heavy
Heavy
Moderate
Light
Undeveloped
>70%
41-70%
20-40%
<20%
0%
Base Fee per 1,000 sq ft
$1.915
$1.915
$1.915
$1.915
$0.000
Impact Fee per 1,000 sq ft
$2.876
$1.677
$0.481
$0.000
$0.000
Total Rate per 1,000 sq ft
$4.791
$3.592
$2.396
$1.915
$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 $1.902 per account is applied monthly
Attachment 2, Page 2 of 2
RATE COMPARISON CHARTS:
The wastewater and stormwater fee comparison charts below reflect a residence using 6.684 units or 5,000
gallons of wastewater generated monthly. The fees are based on adopted rates as of February 01, 2023.
$35.00
$30.00
$25.00
$20.00
$15.00
$10.00
$5.00
$0.00
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Residential Stormwater Fee Comparison
Data based on adopted ratesas of January 15, 2023
Attachment 3, Page 1 of 1