HomeMy WebLinkAboutItem 14 Proposed Resolution Setting Local and Regional Wastewater and Stormwater User Fees AGENDA ITEM SUMMARY Meeting Date: 5/7/2012
Meeting Type:Regular Meeting
Staff Contact/Dept.: Ron Bittler/DPW
Staff Phone No: 541-744-4170
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: Financially Responsible
and Stable Government
Services
ITEM TITLE: PROPOSED RESOLUTION SETTING LOCAL AND REGIONAL
WASTEWATER AND STORMWATER USER FEES
ACTION
REQUESTED:
1) Conduct a public hearing on local and regional wastewater and local storm water
user fees.
2) Adopt or not adopt A RESOLUTION OF THE CITY OF SPRINGFIELD
COMMON COUNCIL SETTING LOCAL AND REGIONAL SEWER USER FEES
AND LOCAL STORMWATER USER FEES AS SET FORTH IN THE
SPRINGFIELD MUNICIPAL CODE.
ISSUE
STATEMENT:
At current rates, the local and regional wastewater and local stormwater user fees will
not produce sufficient revenue to fully fund the proposed fiscal year (FY) 12-13
budgets for these funds. Council action is needed to establish new rates for FY 12-13.
ATTACHMENTS: 1. Proposed Resolution establishing a schedule of local and regional wastewater
and local stormwater user fees.
2. Council Briefing Memorandum reviewed by the Council at the April 23, 2012,
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 sanitary sewer and stormwater
systems, and a portion of the Capital Improvement Program (CIP) for each program.
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 the proposed local wastewater and
stormwater user fee increase at its April 23, 2012 work session. Staff has prepared a
schedule of user charges for a public hearing, based on a 4% increase in both the local
wastewater and local stormwater user fees. In addition, the Council was informed
that the MWMC adopted a 4% increase in the regional wastewater user fees that also
needs to be incorporated into the schedule of user charges for FY 12-13.
Given the Council’s input during the work session on future rate increases, staff has
begun exploring options for a long-term strategy for reducing pressure on user fees.
We expect that any successful strategy will take several years to implement and will
depend, at least in part, on the City’s ability to significantly reduce reliance on user
rates as a source of capital, by improving the ability of SDC revenues to take up the
burden of capital investment. This could reduce the need to rely on future debt
financing and reduce the importance of providing coverage for debt service as an
operating budget constraint.
Attachment 1, a resolution establishing the local and regional wastewater and local
stormwater user fees for FY 12-13, is provided for Council consideration. It is
requested that the Council consider acting on the resolution following the public
hearing.
Attachment 1
Page 1 of 2
RESOLUTION
NO.________
A RESOLUTION OF THE CITY OF SPRINGFIELD COMMON COUNCIL SETTING LOCAL
AND REGIONAL SEWER USER FEES AND LOCAL STORMWATER 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 sanitary sewer systems, and the local stormwater drainage sewer 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 sewer charges by resolution of the Council; and
WHEREAS, the MWMC approved Resolution 12-04, adopting the Regional Wastewater
Program Budget and Capital Improvements Program for fiscal year (FY) 2012-2013, and
Resolution 12-03, adopting a new schedule of user fees for FY 12-13 operations and capital
programs, on April 13, 2012, 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 sanitary sewer system and the local stormwater
drainage sewer system in FY 12-13.
NOW, THEREFORE, BE IT RESOLVED by the Common Council of the City of Springfield as
follows:
1) The City of Springfield Schedule of Local and Regional Sewer User and Local Stormwater
Fees, which is attached as Exhibit “A,” is hereby adopted and shall take effect with bills
rendered on or after July 1, 2012.
2) This resolution shall take effect immediately upon adoption by the Council and signature by
the Mayor.
Adopted by the Common Council of the City of Springfield this 7th day of May, 2012.
Mayor ________________________________
ATTEST: ______________________________
Amy Sowa, City Recorder
EXHIBIT A
Wastewater (Sanitary):
Beginning with bills rendered on or after July 1, 2012
sanitary sewer charges shall be as follows:
LocalRegionalTotal
Base Chargen/a$11.34$11.34
Residential$2.995$1.687$4.682
Low Strength$2.995$2.268$5.263
Medium Strength$2.995$3.305$6.300
High Strength$2.995$4.688$7.683
Very High Strength$2.995$6.077$9.072
Super High Strength$2.995$7.462$10.457
Stormwater (Drainage)
Beginning with bills rendered on or after July 1, 2012
storm water charges shall be as follows:
b. Single family dwellings shall each pay $12.13
a. All real property, with the exception of single family dwellings,
shall be charged $1.89 plus the product of the property area (in
square feet), runoff coefficient, and $3.525 per 1,000 square feet.
Volume Charge Per Unit
Attachment 1
Page 2 of 2
ATTACHMENT 2
Page 1 of 10
M E M O R A N D U M City of Springfield
Date: 4/12/2012
To: Gino Grimaldi COUNCIL
From: Len Goodwin, Development and Public Works Director
Jeff Paschall, Managing Civil Engineer
Katherine Bishop, Senior Finance Analyst
BRIEFING
MEMORANDUM
Subject: Wastewater and Stormwater User Fees FY12-13
ISSUE:
Wastewater and stormwater user fees are reviewed and updated by the City Council annually. This
process occurs in coordination with Council consideration and adoption of the Operating and Capital
budgets to ensure revenue adequacy. The Council also adopts the regional wastewater user fees, as set
annually by the Metropolitan Wastewater Management Commission (MWMC).
This Memo and the April 23, 2012 work session will focus on the local wastewater and stormwater user
fees, including the factors driving the revenue requirements as projected for Fiscal Year 2012-13 (FY
12-13) and options for Council consideration. In addition, information regarding the MWMC regional
wastewater fees as recommended by the Commission to the City Council is included.
At the April 23, 2012 work session, staff will be seeking Council comments and direction in preparing a
schedule of local wastewater and stormwater user fees for FY 12-13. A public hearing is scheduled for
May 7, 2012, when staff will return to Council with a schedule of local wastewater and stormwater fees
for FY 12-13 for Council consideration following the public hearing. The proposed FY 12-13
wastewater and stormwater revenue projection assumes that FY12-13 rates would be effective on bills
rendered on or after July 1, 2012.
COUNCIL GOALS/ MANDATE:
Financially Responsible and Stable Government Services
In order to implement the Council adopted Capital Improvement Program for local wastewater and
stormwater, a revenue plan that includes an increase in user fees for FY 12-13 and rate projections
increasing incrementally over multiple years is provided for Council review and consideration.
Revenues generated from a user fee increase in FY12-13 will fund ongoing system maintenance and
investments in capital improvements for wastewater and stormwater infrastructure and facilities, and
continue to deliver high quality uninterrupted services while continuing to meet revenue bond covenants,
increasing environmental standards and mandated regulatory requirements.
BACKGROUND:
Annually, as part of the budget development process, the City develops a Capital Improvement Program
(CIP) and operating budget for the local wastewater and stormwater programs. The CIP, operating
budget, debt service obligations, and reserve levels established by the City Council determine the annual
funding requirements. The primary funding sources include wastewater and stormwater user fees for
operating and capital expenses, and system development charges (SDCs) for capital expenses only. In
addition to the local fees, the total wastewater user fees include regional charges established by the
MWMC to fund the Regional Wastewater Program. Annually, the cities of Springfield and Eugene
implement the MWMC user charges consistent with the MWMC intergovernmental agreement (IGA).
A description of each utility system is provided below.
ATTACHMENT 2
Page 2 of 10
LOCAL WASTEWATER SYSTEM:
The local wastewater (or sanitary) 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 200 miles of collection pipelines and 17 pump stations, which is
owned and operated by the City of Springfield. Operations and maintenance of the local collection
system is funded entirely by revenue from local sewer user fees. User fees are currently the primary
source of funding for the local CIP, which provides for system preservation, major rehabilitation, and
expansion to support community growth. Through previous rate actions revenues for this program have
stabilized and current and projected CIP priorities have been programmed based upon incremental
inflationary rate increases.
REGIONAL WASTEWATER SYSTEM:
The regional (MWMC) wastewater system is comprised of numerous treatment facilities and a
conveyance system owned by the MWMC, as described in the MWMC IGA. The primary regional
wastewater facilities include the Water Pollution Control Facility (WPCF), the Biosolids Management
Facility (BMF), Biocycle Farm, the Beneficial Reuse Site, several major pump stations and associated
conveyances, and the large interceptor (“East Bank”) that carries wastewater from Springfield to the
WPCF.
Regional system operations and maintenance, provided by the City of Eugene, is funded entirely by
revenue from regional wastewater user fees. The MWMC administration and the Springfield Industrial
Pretreatment Program are both integral parts of the Springfield Development and Public Works and
Finance departments which are also funded through regional wastewater user fees. In addition user fees
fund a significant portion of the MWMC CIP.
REGIONAL WASTEWATER FEES:
At the March 9, 2012 MWMC meeting, staff presented the Preliminary FY12-13 Regional Wastewater
Program Budget and Capital Improvement Program and multiple user fee rate scenarios ranging from a
4% increase to a zero or no rate change and the associated fiscal impacts. Based on discussions and
input provided by the Commission, staff returned to the Commission on April 13, 2012 with the
proposed 4% user fee increase incorporated into the Regional FY 12-13 Budget. At the April MWMC
meeting and public hearing, the Commission adopted resolutions recommending a 4% user fee increase
in FY12-13, and the Regional FY12-13 Budget for implementation by the cities of Eugene and
Springfield.
The primary factors driving regional wastewater user fee increases includes the 2004 MWMC Facilities
Plan, which is a 20-year capital improvement projects plan intended to provide environmental
compliance and treatment capacity to serve the community including growth through 2025, at an
estimated cost of $196 million (in 2006 dollars). Funding sources for capital improvement projects
includes revenues from User Fees, System Development Charges, and financing through Revenue
Bonds, low interest State Revolving Fund (SRF) loans and grants. While major investments have been
made in capital infrastructure improvements in recent years, the 2004 Facilities Plan includes additional
capital improvement projects over multiple years. The regional capital improvement program budget
including asset management improvements is $23,573,100 in FY 12-13 for design and construction. The
regional five-year capital plan, FY 12-13 thru FY 16-17, includes $94 million in planned capital
improvements and asset management projects.
WASTEWATER PROGRAM FUNDING AND USER FEE RATE HISTORY:
The wastewater user fees on the customers’ monthly bills have a local (Springfield) and a regional
(MWMC) component. In FY 11-12, based on a typical residential household using 5,000 gallons per
month, the current local residential wastewater bill for Springfield residents is $19.24. The current
combined typical residential wastewater bill for Springfield residents is $40.98. Residential customer
bills are used as a benchmark for sewer 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 uses vary significantly because their wastewater volume and strength varies greatly.
Figure A below displays the rate history in local and regional user fees over the last several years with
incremental rate increases over the recent 10-year period beginning in 2003-04. The local wastewater
fees are represented in the bottom portion of the combined bar graph. Prior to this trend, rates for local
wastewater user fees were stable. Regional MWMC wastewater user fees remained stable with no rate
increases from 1997 through 2003. The annual rate increases for MWMC regional user fees since 2003
and as projected into the future, are driven primarily by: (1) covering the costs associated with financing
the 2004 MWMC Facilities Plan and improving the MWMC assets; (2) meeting the covenants
associated with the 2006 and 2008 Revenue Bonds and State Revolving Fund (SRF) loans, and; (3)
establishing revenue adequacy to fully fund reserves, and operating and maintaining the Regional
Wastewater Facilities, while continuing to position the MWMC for future bond sales.
Figure A
For the City of Springfield’s local wastewater program, the current user fees are projected to generate
about $6.32 million during the current FY11-12, which is about 98.6% of original revenue projections
(down about 1.4% or $88,600). Revenues from System Development Charges (SDC) are projected to
$10.15 $10.15 $10.56 $10.83 $11.61 $12.43 $13.24 $14.88 $14.88 $16.96 $18.50 $19.24
$8.53 $8.53 $9.09 $11.28 $11.96 $13.15 $14.22
$15.77 $16.87
$19.91
$20.91 $21.74
$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
$40.00
$45.00
01‐0202‐0303‐0404‐0505‐0606‐0707‐0808‐09Dec 0909‐1010‐1111‐12
RegionalLocal
$ Monthly
Year01-0202-0303-0404-0505-0606-0707-0808-09 Dec 0909-1010-1111-12
Regional$8.53$8.53$9.09$11.28$11.96$13.15$14.22$15.77$16.87$19.91$20.91$21.74
Local$10.15$10.15$10.56$10.83$11.61$12.43$13.24$14.88$14.88$16.96$18.50$19.24
Total$18.68$18.68$19.65$22.11$23.57$25.58$27.46$30.65$31.75$36.87$39.41$40.98
% Rate Increase
Category01-0202-0303-0404-0505-0606-0707-0808-09 Dec 0909-1010-1111-12
Regional-0%7%24%6%10%8%11%7%18%5%4%
Local-0%4%3%7%7%7%12.5%0%14%9%4%
Total-0%5%13%7%9%7%12%4%16%7%4%
$ Rate Increase
Category01-0202-0303-0404-0505-0606-0707-0808-09 Dec 0909-1010-1111-12
Regional-$0.00$0.56$2.19$0.68$1.19$1.07$1.55$1.10$3.04$1.00$0.83
Local-$0.00$0.41$0.27$0.78$0.82$0.81$1.64$0.00$2.08$1.54$0.74
Total-$0.00$0.97$2.46$1.46$2.01$1.88$3.19$1.10$5.12$2.54$1.57
Wastewater Residential Monthly Bill Trend
ATTACHMENT 2
Page 3 of 10
generate about $400,000 for capital projects in the current fiscal year. For years, the Council has
dedicated a significant portion of user fee revenues to capital infrastructure needs. The current fiscal
year budget includes $2.25 million dedicated to the Capital Improvement Program, plus just over $2
million in annual debt service payments.
PREVIOUS COUNCIL ACTIONS:
To fund operating and capital requirements for the wastewater program, the Council increased local
wastewater user fees by 4% in FY 11-12, which followed a 9% increase in FY 10-11 and 14% increase
in FY 09-10. A primary driver of the multi-year rate increases is a projected future bond issuance to
fund capital infrastructure priorities identified in the adopted Capital Improvement Program. Last year,
when Council adopted a 4% wastewater user fee increase for FY 11-12, the fiscal forecast projected a
multi-year rate strategy with moderate increases annually as displayed in Figure B below.
Figure B
CAPITAL PROJECT FUNDING AND WASTEWATER USER FEES:
At the March 5, 2012 Work Session, staff presented the 2013-2017 Capital Improvement Program (CIP).
At that time, Council reviewed and approved a CIP prioritized funding for projects that are identified in
the 2008 Wastewater Master Plan as necessary to maintain system integrity and meet regulatory
obligations, and deferred the majority of the discretionary expansion project work. Two expansion
projects are targeted for advancement, completion of phases 1 and 2 of the Jasper Trunk Sewer
Extension, and the design of the Franklin Sewer Expansion in Glenwood. In order to fund local
wastewater capital projects, a $23.1 million revenue bond was issued in March of 2009. An additional
$10 million bond is currently contemplated for FY 13-14. In order to maintain bond covenants, net
revenues (revenues minus operations and maintenance expenses) must be 125% of maximum debt
service for all existing bonds and planned or to be issued bonds.
At the FY 11-12 Council user fee discussion, staff presented four separate, five-year rate forecasts which
included annual rate changes ranging from a low of 3% to a high of 9%. Council adopted a 4% rate
increase in FY 11-12 as displayed in Figure B above.
Additionally, as part of the FY 11-12 Budget, a 3% Right-of-Way (ROW) fee expense was assessed
which is calculated at 3% of total local wastewater user fee revenues annually. The ROW fee is charged
to the local wastewater fund for the privilege of running the wastewater facilities (pipelines)
underground in the city streets or right-of-way. This expense to the wastewater fund provides revenues
to the street fund for street and right-of-way maintenance and pavement management.
PROPOSED WASTEWATER USER FEES:
The proposed user fees for FY 12-13 and the five-year rate forecast delivers incremental and moderate
rate changes over multiple years that is in line with the revenue plan implemented by Council in FY11-
12 (as displayed above in Figure B). The proposed user fees for FY 12-13 include a 4% rate increase on
the local wastewater user fees in FY 12-13, followed by a moderate rate forecast. It is valuable to note
11-1212-1313-1414-1515-16
AdoptedProjectionProjectionProjectionProjection
Avg. Monthly Residential Bill19.24$ 20.01$ 20.81$ 21.75$ 22.73$
Local Rate Increase4.0%4.0%4.0%4.5%4.5%
Avg. Mo. Residential Increase0.74$ 0.77$ 0.80$ 0.94$ 0.98$
Fiscal Year
ATTACHMENT 2
Page 4 of 10
that a 1% user fee rate increase is projected to generate an additional $63,200 annually beginning in FY
12-13, with the proposed 4% rate increase projected to generate an additional $252,800 annually
beginning in FY 12-13. The proposed revenue plan generates nearly $10 million over the next five years
to fund capital investments in the communities local wastewater system, to continue to deliver
uninterrupted high quality wastewater services and plan for system expansion, while meeting increasing
environmental standards and regulatory requirements. The proposed user fees and rate forecast provides
a revenue plan to meet the requirements for a currently projected $10 million revenue bond issuance in
FY 13-14 to further support the City’s 2013-2017 Capital Improvement Plan and 2008 Wastewater
Master Plan as adopted by Council. The prior year, 2011 fiscal forecast projected a $17 million revenue
bond in FY 13-14. Within the 2012 analysis the potential revenue bond in FY 13-14 is revised
downward to $10 million, with the focus on positioning the fund to be fiscally healthy to secure potential
revenue bonds, for system expansion CIP projects as planned for future development.
The proposed local wastewater user fees for FY 12-13 and the five-year rate forecast, relying on the
assumptions reviewed last year with Council, is displayed below, including the fiscal impact to the
typical residential customers assuming 5,000 gallons of usage monthly. As implemented in FY 11-12,
the right-of-way (ROW) use fees, which are based on 3% of total wastewater user fee revenues, are
included in the table below.
WASTEWATER USER FEES - ALTERNATIVE 1:
Alternative 1 as displayed below includes no rate change in FY 12-13. This alternative would require a
4.5% rate increase in FY 13-14 to continue to meet debt coverage requirements. Additionally, there is
risk in this plan as the debt coverage ratio in FY 12-13 includes a very narrow margin. In the event that
user fee revenues collected do not meet revenue projections, this would put the City at risk of not
meeting its debt coverage obligations. The City’s credit rating has been established and elevated in
recent years, based on the City’s long-term financial planning and the willingness of the Council to
maintain stable revenues by adopting moderate rate increases annually.
12-1313-1414-1515-1616-17
ProposedProjectionProjectionProjectionProjection
Avg. Monthly Residential Bill20.01$ 20.81$ 21.75$ 22.73$ 23.41$
Local Rate Increase4.0%4.0%4.5%4.5%3.0%
Avg. Mo. Residential Increase0.77$ 0.80$ 0.94$ 0.98$ 0.68$
Avg. Annual Residential Increase9.24$ 9.60$ 11.24$ 11.74$ 8.18$
ROW Use Fee (Expense)197,200$ 205,100$ 214,300$ 224,000$ 230,700$
Revenue Bond$10M
Debt Coverage Ratio (min 1.25)1.471.461.561.651.40
Fiscal Year
Proposed Wastewater User Fees
12-1313-1414-1515-1616-17
ProjectionProjectionProjectionProjectionProjection
Avg. Monthly Residential Bill19.24$ 20.11$ 21.01$ 21.96$ 22.94$
Local Rate Increase0.0%4.5%4.0%3.0%3.0%
Avg. Mo. Residential Increase-$ 0.87$ 0.90$ 0.95$ 0.99$
Avg. Annual Residential Increase-$ 10.39$ 10.86$ 11.35$ 11.86$
ROW Use Fee (Expense)189,600$ 198,200$ 206,100$ 212,300$ 218,600$
Revenue Bond$10M
Debt Coverage Ratio (min 1.25)1.371.361.451.601.34
Fiscal Year
Alternative 1 - Wastewater User Fees
ATTACHMENT 2
Page 5 of 10
ATTACHMENT 2
Page 6 of 10
WASTEWATER USER FEES - ALTERNATIVE 2:
Alternative 2 as displayed below includes a 2% rate change in FY 12-13, and annual rate changes
projected at 3% to 3.4% resulting in a lower level of revenue and a very narrow debt coverage ratio
margin in FY 13-14. Another constraint is a reduction in revenue dedicated for future investments in the
wastewater system capital assets.
COMPARISON OF WASTEWATER USER FEES:
Annually, as part of the user fee rate development process, staff updates a survey of wastewater user fees
to provide a comparison to other communities. Figure C displays residential monthly wastewater
charges for each city, based on currently adopted user fees (FY11-12) applied to a typical residential
usage of 5,000 gallons per month. The cities of Eugene and Springfield amounts include both the local
and regional wastewater fees.
The average residential wastewater bill of all cities surveyed is $39.14, which is $1.84 less monthly than
the City of Springfield residential wastewater bill including both local and regional charges for FY 11-
12.
12-1313-1414-1515-1616-17
ProjectionProjectionProjectionProjectionProjection
Avg. Monthly Residential Bill19.62$ 20.21$ 20.82$ 21.47$ 22.20$
Local Rate Increase2.0%3.0%3.0%3.1%3.4%
Avg. Mo. Residential Increase0.38$ 0.59$ 0.61$ 0.65$ 0.73$
Avg. Annual Residential Increase4.62$ 7.06$ 7.28$ 7.75$ 8.76$
ROW Use Fee (Expense)193,400$ 199,200$ 205,200$ 211,600$ 218,800$
Revenue Bond$10M
Debt Coverage Ratio (min 1.25)1.421.361.431.591.34
Fiscal Year
Alternative 2 - Wastewater User Fees
City
Typical Residential
Monthly Wastewater Bill
Albany$41.17
Beaverton$35.94
Bend$39.49
Corvallis$31.03
Cottage Grove$35.37
Creswell$42.58
Eugene $31.26
Gresham$26.30
McMinnville$46.91
Portland$50.37
Salem$48.32
Springfield$40.98
Veneta$45.43
West Linn$28.10
Wilsonville$43.91
Average$39.14
Figure C
STORMWATER PROGRAM FUNDING AND USER FEE RATE HISTORY:
In FY 11-12, the current local residential stormwater fee is $11.66. 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. Each commercial property is placed into one of five categories: Very Heavy, Heavy,
Moderate, Light or None, and based on the category there is a specific monthly charge per 1,000 square
feet of property plus a base fee of $1.35 per month.
A commercial stormwater customer with 40% to 70% of impervious area is categorized as a heavy user
and currently pays $2.542 per 1,000 square feet of property plus a base fee of $1.35 per month. A
monthly charge for a customer with 1.5 acres (approximately 65,340 square feet) would be $167.44.
Commercial customer rates will vary depending on the size of the property and the amount of
impervious area.
Figure D below displays the stormwater residential monthly bill trends and rate changes over the recent
10-year period.
Figure D
For the City of Springfield stormwater program, the current user fees are projected to generate about
$5.4 million during the current fiscal year (FY 11-12), which is on target with original revenue
projections. Revenues from System Development Charges (SDC) are projected to generate about
$120,000 for capital projects in the current fiscal year.
PREVIOUS COUNCIL ACTIONS:
Prior to FY 09-10, stormwater user fees had not increased since July 2006. In FY 09-10 residential
stormwater user rates increased by 14% to prepare for a stormwater revenue bond to fund capital
improvements included in the Stormwater Facilities Plan. Subsequently, in FY 10-11 the stormwater
user rates were increased 15% and in October 2010 the $10 million in revenue bonds were issued.
Similar to the local wastewater rates, stormwater rates were driven by the 125% net revenue to debt
service coverage ratio required to issue revenue bonds and to maintain ongoing bond covenants.
$6.86 $6.86 $7.46 $8.12 $8.63 $8.63 $8.63
$9.84
$11.32 $11.66
$0.00
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
$14.00
02‐0303‐0404‐0505‐0606‐0707‐0808‐0909‐1010‐1111‐12
Stormwater Residential Monthly Bill Trend
Monthly Bill
Category02-0303-0404-0505-0606-0707-0808-0909-1010-1111-12
Monthly Bill$6.86$6.86$7.46$8.12$8.63$8.63$8.63$9.84$11.32$11.66
% Increase0%0%9%9%6%0%0%14%15%3%
$ Increase$0.00$0.00$0.60$0.66$0.51$0.00$0.00$1.21$1.48$0.34
ATTACHMENT 2
Page 7 of 10
Last year, when Council adopted a 3% stormwater user fee increase for FY 11-12, the fiscal forecast
projected a multi-year rate strategy with moderate increases annually as displayed in Figure E below.
Based on the updated 2012 fiscal analysis and with new financial information available, a course
correction will be necessary before FY 14-15 to maintain debt service coverage requirements as
discussed further in this report.
Figure E
PRIOR YEAR RATE FORECAST AND PROJECTED COVERAGE RATIOS:
When applying the rate forecast presented to Council last year (Figure E above) to the currently
proposed FY 12-13 Budget and Capital Plan, it becomes clear that the debt service coverage ratio would
leave a very narrow margin of coverage in FY 12-13 and FY 13-14. The fiscal forecast beginning in FY
14-15 and thereafter reveals that the minimum debt coverage ratio beginning in FY 14-15 is currently
forecasted to fall below the debt service requirements of 1.25. The 2012 fiscal analysis provides a
moderate course correction to meet the currently projected operating budget level, while continuing to
ensure debt service coverage requirements for the City’s stormwater progam.
PROPOSED STORMWATER USER FEES:
The proposed local stormwater user fees for FY 12-13 and the five-year rate forecast is displayed below,
including the fiscal impact to a residential customer. A key consideration is the debt service coverage
ratio, and the proposed rate plan provides a prudent debt coverage ratio while also providing a multi-
year rate strategy with moderate and stable rate changes. As implemented in FY 11-12 the right-of-way
(ROW) use fees, which are based on 3% of total stormwater user fee revenues, are included in the table.
11-1212-1313-1414-1515-16
AdoptedProjectionProjectionProjectionProjection
Avg. Monthly Residential Bill11.66$ 12.01$ 12.37$ 12.74$ 13.12$
Local Rate Increase3.0%3.0%3.0%3.0%3.0%
Avg. Mo. Residential Increase0.34$ 0.35$ 0.36$ 0.37$ 0.38$
Fiscal Year
Prior Year Rate Forecast and Current Debt Coverage Projections
12-1313-1414-1515-1616-17
ProjectionProjectionProjectionProjectionProjection
Avg. Monthly Residential Bill12.01$ 12.37$ 12.74$ 13.12$ 13.52$
Local Rate Increase3.0%3.0%3.0%3.0%3.0%
Avg. Mo. Residential Increase0.35$ 0.36$ 0.37$ 0.38$ 0.39$
Debt Coverage Ratio (min 1.25)1.371.341.171.030.98
Fiscal Year
12-1313-1414-1515-1616-17
ProposedProjectionProjectionProjectionProjection
Avg. Monthly Residential Bill12.13$ 12.61$ 13.12$ 13.64$ 14.19$
Local Rate Increase4.0%4.0%4.0%4.0%4.0%
Avg. Mo. Residential Increase0.47$ 0.49$ 0.50$ 0.52$ 0.55$
Avg. Annual Residential Increase5.60$ 5.82$ 6.05$ 6.30$ 6.55$
ROW Use Fee (Expense)168,300$ 175,000$ 182,000$ 189,300$ 196,800$
Debt Coverage Ratio (min 1.25)1.531.561.501.451.51
Proposed Stormwater User Fees
Fiscal Year
ATTACHMENT 2
Page 8 of 10
STORMWATER USER FEES - ALTERNATIVE 1:
Alternative 1 as displayed below maintains the previously forecasted 3% increase in FY 12-13 and FY
13-14, followed by increased rate changes of 5% annually over the following two years to maintain a
minimum debt coverage ratio. It is important to note that while the debt coverage is met, the margin of
coverage is very narrow.
COMPARISON OF STORMWATER USER FEES:
Annually, as part of the user fee rate development process, staff updates a survey of stormwater user fees
to provide a comparison to other communities. Figure F displays residential monthly stormwater
charges for each city, based on currently adopted user fees (FY11-12). The average residential
stormwater bill of cities surveyed with adopted stormwater fees is $8.04, which is $3.62 less monthly
than the City of Springfield residential stormwater charges for FY 11-12.
12-1313-1414-1515-1616-17
ProjectionProjectionProjectionProjectionProjection
Avg. Monthly Residential Bill12.01$ 12.37$ 12.99$ 13.64$ 14.05$
Local Rate Increase3.0%3.0%5.0%5.0%3.0%
Avg. Mo. Residential Increase0.35$ 0.36$ 0.62$ 0.65$ 0.41$
Avg. Annual Residential Increase4.20$ 4.32$ 7.42$ 7.79$ 4.91$
ROW Use Fee (Expense)166,600$ 171,600$ 180,200$ 189,200$ 194,900$
Debt Coverage Ratio (min 1.25)1.371.341.311.331.31
Alternative 1
Fiscal Year
City
Typical Residential
Monthly Stormwater Bill
Albany$0.00
Beaverton$7.25
Bend$4.00
Corvallis$5.48
Cottage Grove$7.69
Creswell$0.00
Eugene $10.59
Gresham$8.60
McMinnville$0.00
Portland$22.37
Salem$0.00
Springfield$11.66
Veneta$2.00
West Linn$5.06
Wilsonville$3.72
Average$8.04
Figure F
ATTACHMENT 2
Page 9 of 10
ATTACHMENT 2
Page 10 of 10
RECOMMENDED ACTION:
As described above, staff has evaluated the funding requirements associated with the proposed FY 12-13
budget and the Council-adopted FY 13-17 Capital Improvement Plan for the local wastewater and
stormwater programs. The proposed local wastewater and stormwater user fee increases in FY12-13
will fund ongoing system maintenance and investments in capital improvements for wastewater and
stormwater infrastructure and facilities, to continue to deliver high quality uninterrupted services while
continuing to meet revenue bond covenants, increasing environmental standards and mandated
regulatory requirements.
Staff recommends that Council consider the wastewater rate increase of 4% in FY 12-13, as previously
forecasted. This recommendation provides a stable user fee rate change in FY 12-13 and within the rate
forecast. This recommendation is projected to generate a stable level of capital funding in pay-as-you-
go financing, reducing the potential need for future revenue bonds beyond the $10 million in FY 13-14.
Staff recommends that Council consider a stormwater rate increase of 4% in FY 12-13. This
recommendation generates the appropriate revenues to continue to meet the debt service coverage ratios
in FY 12-13, and within the rate forecast, while funding the requirements of the stormwater program.
Staff requests Council direction in order to prepare a draft schedule of local wastewater and stormwater
fees, which will include the regional MWMC-adopted rates for FY 12-13 and the Council’s selected
local wastewater user fee option. The draft schedule of wastewater and stormwater fees will be
reviewed and considered at a public hearing, which is currently scheduled for May 7, 2012.