HomeMy WebLinkAboutItem 01- Wastewater and Stormwater User Fees FY2024-25AGENDA ITEM SUMMARY Meeting Date: 4/22/2024
Meeting Type: Work Session
Staff Contact/Dept.: Matt Stouder/DPW
Staff Phone No: 541-726-3674
Estimated Time: 30 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: WASTEWATER AND STORMWATER USER FEES FY 2024-25
ACTION
REQUESTED:
Staff seeks Council direction establishing local wastewater and stormwater rates.
ISSUE
STATEMENT:
User fees for local and regional wastewater and local stormwater services are
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 6, 2024. Additionally, the Metropolitan
Wastewater Management Commission (MWMC) approved a schedule of Fiscal
Year 2024-25 (FY 24-25) regional wastewater user fees on April 12, 2024, 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/
FINANCIAL
IMPACT:
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, the MWMC develops regional user fees to support the
Regional Wastewater Program. On April 12, 2024, the MWMC adopted the
FY 24-25 regional user fees with a 5.5% rate change that will increase a residential
customer bill by $1.30 monthly (when assuming 6.684 units or 5,000 gallons).
For FY 24-25, 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 1 - Includes a (combined) 5.7% user fee rate adjustment in FY 24-25,
resulting in a $2.35 monthly increase, which includes a local wastewater increase at
$1.69 and a stormwater increase at $0.66 monthly, as discussed in Attachment 1.
Option 2 (Recommended) – includes a (combined) 4.1% user fee rate adjustment in
FY 24-25 resulting in a $1.82 monthly increase, which includes a local wastewater
increase at $1.33 and stormwater at $0.49 monthly, as discussed in Attachment 1.
A public hearing on the FY 24-25 user fees is scheduled for May 6, 2024.
M E M O R A N D U M City of Springfield
Date: 4/22/2024
To: Nancy Newton, City Manager COUNCIL
From: Matt Stouder, Environmental Services Division Director
Jeff Paschall, DPW Community Development Director
BRIEFING
MEMORANDUM
Subject: Wastewater and Stormwater User Fees FY 2024-25
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, 2024. Additionally, the
Metropolitan Wastewater Management Commission (MWMC) approved a schedule of Fiscal Year
2024-25 (FY 24-25) regional wastewater user fees on April 12, 2024, 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 24-25 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
local waterways, and are important to Springfield residents. Ongoing survey results indicate that
promoting economic development and maintaining a healthy environment and water quality are very
important in Springfield. A brief description of the City’s local wastewater and stormwater programs is
below:
Attachment 1
Page 1 of 4
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 250 miles of collection pipelines and 16
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.
The update of the Wastewater Master Plan is in the final stages with the final draft complete and Council
review and adoption consideration scheduled for June. The updated master plan identifies infrastructure
improvements and system expansion to support growth within the Urban Growth Boundary (UGB) and
meet mandated permit requirements. As part of the Wastewater Master Plan Update, a strategic financial
plan was developed to evaluate existing funds and future revenue needs to fund the 20-year plan as well as
ongoing Capacity, Management, Operations, and Maintenance (CMOM) Program capital needs. This
strategic financial plan was used to develop the recommended rate increase for FY25.
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 6,289 catch basins, 244 water quality facilities
(including the Mill Race Stormwater Facility), and approximately 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 24-25 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 – 5.7% adjustment.
The table below displays the proposed combined rate adjustment as a percentage and dollar amount
($2.35) 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 2.6% in 2023, and 2.9% in the first
four months of 2024. The ENR CCI rate of inflation is generally higher than the CPI inflation index and
more closely aligns with the City’s capital construction project costs.
Attachment 1
Page 2 of 4
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.
Fiscal Year 24-25 25-26 26-27
Proposed Projection Projection
Local Wastewater Services
Monthly Residential Bill $ 28.78 $ 30.33 $ 31.43
Local Rate Adjustment 6.0% 5.0% 4.0%
Residential Increase $ 1.69 $ 1.38 $ 1.10
Stormwater Services
Monthly Residential Bill $ 17.06 $ 17.57 $ 18.10
Local Rate Adjustment 3.5% 3.0% 3.0%
Residential Increase $ 0.66 $ 0.51 $ 0.53
Local Wastewater & Stormwater Combined
Monthly Residential Bill $ 45.84 $ 47.90 $ 49.53
Rate Adjustments Combined 5.7% 4.0% 3.3%
Residential Rate Increase $ 2.35 $ 1.89 $ 1.63
Option 2 (Recommended): Combined Local Wastewater and Stormwater User Fee – 4.1% adjustment.
The table below displays the recommended combined rate adjustment as a percentage and dollar amount
($1.82) for a residential monthly bill. The recommended rate changes represent the lowest responsible rate
change, given the stormwater and wastewater permit regulatory requirements, ongoing operation and
maintenance of the systems, and current and planned capital project work.
Fiscal Year 24-25 25-26 26-27
Proposed Projection Projection
Local Wastewater Services
Monthly Residential Bill $ 27.98 $ 29.10 $ 30.12
Local Rate Adjustment 5.0% 4.0% 3.5%
Residential Increase $ 1.33 $ 1.12 $ 1.02
Stormwater Services
Monthly Residential Bill $ 16.97 $ 17.56 $ 18.17
Local Rate Adjustment 3.0% 3.0% 3.5%
Residential Increase $ 0.49 $ 0.59 $ 0.61
Local Wastewater & Stormwater Combined
Monthly Residential Bill $ 44.95 $ 46.66 $ 48.29
Rate Adjustments Combined 4.1% 3.7% 3.4%
Residential Rate Increase $ 1.82 $ 1.71 $ 1.63
Attachment 1
Page 3 of 4
REGIONAL WASTEWATER USER FEES:
At the March 8, 2024, MWMC meeting, staff presented the Preliminary FY 24-25 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
12, 2024, for a public hearing where the Commission adopted resolutions recommending a 5.5% user fee
adjustment in FY 24-25, and the Regional FY 24-25 Budget for ratification by the cities of Eugene and
Springfield. The table below shows the adopted FY 24-25 regional wastewater user fees.
MWMC Regional Wastewater FY 24-25 Adopted Rates and Forecast
Fiscal Year 24-25 25-26 26-27
Adopted Projection Projection
Monthly Residential Bill (1) $ 31.91 $ 33.11 $ 34.35
Regional Rate Adjustment 5.5% 3.75% 3.75%
Residential Adjustment $ 1.66 $ 1.20 $ 1.24
(1) When applied to 6.684 billing units or 5,000 gallons
With the recommended Option 2 including a local wastewater rate adjustment of 5.0% ($1.33/month), a
proposed stormwater rate adjustment of 3.0% ($0.49/month), and the MWMC adopted regional
wastewater rate adjustment of 5.5% ($1.66/month), the residential bill (assuming 6.684 units or 5,000
gallons of wastewater generated) would increase by $3.48 monthly (assuming 5,000 gallons generated).
RECOMMENDED ACTION:
Staff has carefully considered the funding requirements associated with the proposed FY 24-25 budget
and recommends Council consider a local wastewater rate adjustment of 5.0% and a stormwater rate
adjustment of 3.0% (Option 2). If adopted, the proposed adjustments will provide sufficient revenues in
FY 24-25 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 24-25,
will be reviewed and considered at the public hearing currently scheduled for May 6, 2024.
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. Looking back to 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 $16.48. The table below includes the 4-
year rate history for stormwater residential monthly charges and rate changes.
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 $1.92) per month.
Commercial customer rates vary based on the size of the property and the amount of impervious area.
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
* Residential: $16.48
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
Stormwater Monthly Fee Schedule
** Commercial
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 1, 2024.
Attachment 3
Page 1 of 1