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HomeMy WebLinkAboutItem 11- Wastwater and Stormwater User Fees FY 2024-25AGENDA ITEM SUMMARY Meeting Date: 5/6/2024 Meeting Type: Work Session Staff Contact/Dept.: Matt Stouder/DPW Staff Phone No: 541-726-3674 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: WASTEWATER AND STORMWATER USER FEES FY 2024-25 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 user fees for FY 2023-24 (FY 23-24). ATTACHMENTS: 1. Resolution 2. 4/22/24 Council Briefing Memorandum DISCUSSION/ FINANCIAL IMPACT: Each year, the City Council reviews and establishes the rates for local wastewater and stormwater user fees. Rates are established to provide adequate revenue to fund operation and maintenance (O&M) of Springfield’s wastewater (sanitary sewer) 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 fees at the April 22, 2024 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 provided a schedule of user charges for a public hearing based on a 5.0 % adjustment in the rates for local wastewater and a 3.0% adjustment in stormwater user fees. In addition, the Council was informed that the MWMC adopted a 5.5% adjustment in the regional wastewater user fees that also needs to be incorporated into the schedule of user charges for FY 24-25. Attachment 1, a resolution establishing the local and regional wastewater and local stormwater user fees for FY 24-25, is provided for Council consideration. Staff requests that the Council act on the resolution following the public hearing. CITY OF SPRINGFIELD, OREGON 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 24-04, adopting the Regional Wastewater Program Budget and Capital Improvements Program for fiscal year (FY) 2024-2025, and Resolution 24-03, adopting a schedule of user fees for FY 24-25 operations and capital programs, on April 12, 2024, after reviewing the proposed Resolutions in a series of public meetings and/or 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 24-25. NOW, THEREFORE, BE IT RESOLVED BY THE COMMON COUNCIL OF THE CITY OF SPRINGFIELD: Section 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, 2024. Section 2: This Resolution shall take effect upon its adoption by the Council. ADOPTED by the Common Council of the City of Springfield this _____ day of May, 2024, by a vote of _____ for and _____ against. ATTEST: ______________________________ City Recorder Attachment 1 Page 1 of 2 EXHIBIT A Wastewater (Sanitary Sewer) Beginning with bills rendered on or after July 1, 2024 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 $2.381 $3.199 $4.660 $6.614 $8.572 $10.526 City of Springfield $4.084 $4.084 $4.084 $4.084 $4.084 $4.084 Total $6.465 $7.283 $8.744 $10.698 $12.656 $14.610 * Average total biochemical oxygen demand and suspended solids in milligrams per liter (mg/L) Base Charge: A regional (MWMC) monthly base charge of $15.99 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, 2024 Stormwater charges shall be as follows: * Residential: $16.97 Very Heavy Heavy Moderate Light Undeveloped >70% 41-70%20-40%<20%0% Base Fee per 1,000 sq ft $1.972 $1.972 $1.972 $1.972 $0.000 Impact Fee per 1,000 sq ft $2.962 $1.727 $0.495 $0.000 $0.000 Total Rate per 1,000 sq ft $4.934 $3.699 $2.467 $1.972 $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 $1.959 per account is applied monthly Stormwater Monthly Fee Schedule ** Commercial Attachment 1 Page 2 of 2 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 2 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 2 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 2 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 2 Page 4 of 4 CITY OF SPRINGFIELD, OREGON 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 24-04, adopting the Regional Wastewater Program Budget and Capital Improvements Program for fiscal year (FY) 2024-2025, and Resolution 24-03, adopting a schedule of user fees for FY 24-25 operations and capital programs, on April 12, 2024, after reviewing the proposed Resolutions in a series of public meetings and/or 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 24-25. NOW, THEREFORE, BE IT RESOLVED BY THE COMMON COUNCIL OF THE CITY OF SPRINGFIELD: Section 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, 2024. Section 2: This Resolution shall take effect upon its adoption by the Council. ADOPTED by the Common Council of the City of Springfield this _____ day of May, 2024, by a vote of _____ for and _____ against. ATTEST: ______________________________ City Recorder Attachment 1 Page 1 of 2 EXHIBIT A Wastewater (Sanitary Sewer) Beginning with bills rendered on or after July 1, 2024 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 $2.381 $3.199 $4.660 $6.614 $8.572 $10.526 City of Springfield $4.084 $4.084 $4.084 $4.084 $4.084 $4.084 Total $6.465 $7.283 $8.744 $10.698 $12.656 $14.610 * Average total biochemical oxygen demand and suspended solids in milligrams per liter (mg/L) Base Charge: A regional (MWMC) monthly base charge of $15.99 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, 2024 Stormwater charges shall be as follows: * Residential: $16.97 Very Heavy Heavy Moderate Light Undeveloped >70% 41-70%20-40%<20%0% Base Fee per 1,000 sq ft $1.972 $1.972 $1.972 $1.972 $0.000 Impact Fee per 1,000 sq ft $2.962 $1.727 $0.495 $0.000 $0.000 Total Rate per 1,000 sq ft $4.934 $3.699 $2.467 $1.972 $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 $1.959 per account is applied monthly Stormwater Monthly Fee Schedule ** Commercial Attachment 1 Page 2 of 2 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 2 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 2 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 2 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 2 Page 4 of 4