H1. Res. 5968, Water-Wastewater Rates and Regulation Recommendation
MEMORANDUM
To: Doug Russell, City Manager
Cc: Charles Harball, City Attorney
From: Susie Turner, Public Works Director
Subject: Resolution 5968, Resolution to adopt the 2020 Water and Wastewater
Rate Study, Amend the Water and Sewer Rate Schedules, and Rules and
Regulations Governing Water and Sewer Service
Meeting Date: May 4, 2020
A Resolution to adopt the January 2020 Water and Wastewater Rate Study and amend the Water and
Sewer (wastewater) Rate Schedules and Regulations has been placed on the Council Agenda for the May
4, 2020 regular meeting.
Enclosed for reference is the March 16th Council Memo which includes the amended Water and
Wastewater Rate Schedules as presented in Resolution 5968 and provided in Exhibit A. In addition, two
alternatives were provided in Exhibit B and C.
In response to both the Public and Council comments over the past several months two additional
alternatives are provided for Council’s consideration in Exhibit D and E. These options, for both water
and sewer, accomplishes a lower increase in the first year and a transitional increase for the following
years. Exhibit D provides a rate adjustment utilizing impact fee revenues with impact fees at 50% of their
current value. Exhibit E provides rate adjustments utilizing impact fee revenues with impact fees
maintained at current value.
ACTION REQUESTED: A motion to approve Resolution 5968, a resolution to adopt the January 2020
Water and Wastewater Rate Study as findings of fact, amend the Water and Wastewater Rate Schedules
and updated Water and Sewer Regulations as provided in the resolution.
ALTERNATIVES: Council can elect to amend or reject the resolution.
ATTACHMENTS: Exhibit D and E - Alternative Water and Wastewater Rate Schedules
Options Summary Tables – Bill Comparison Options A through E
March 16, 2020 Council Memo
Resolution No. 5968
January 2020 Water and Wastewater Rate Study
Exhibit A – Proposed Water and Wastewater Rate Schedules and updated Water
and Sewer Regulations as provided in Resolution 5968.
Exhibit B and C - Alternate Water and Wastewater Rate Schedules and
Corresponding Water and Sewer Regulation updates
Exhibit D
This rate structure considers the following in comparison to the other proposed alternatives.
Water:
• Calculated using 50% of current impact fee value.
• Additional operating reserves are used to offset expenses, bringing the reserve amount to the 90-
day target values by 2023. 90-day target levels over the long-term period were still achieved.
• Proposed adjustments maintain a prudent debt service coverage level. If no rate adjustments are
made the debt service coverage ratios falls below the 1.25 coverage minimum and impacts
current debt obligations.
• One growth related project and two rehabilitation projects are moved (from FY24) to future years
(FY 26, 27, and 28) for construction. The growth project supports a larger main installation in the
downtown area, and the rehabilitation projects replaces ~15 blocks of 1926 elevated risk cast iron
water main (similar to 4 Ave E water main replacement).
• The first-year increase is as low as it can be adjusted while still supporting debt obligations
(reserves and debt credit) for current capital projects and future capital projects.
• Due to the lower first year increase, the second to fifth year increases are critical to continue the
support for all reserves, debt obligation, and service levels.
Wastewater:
• Calculated using 50% of current impact fee value.
• Additional operating reserves are used to offset expenses, bringing the reserve amount closer to
the 90-day target values by 2024. 90-day target reserves are at target levels for the projected
years, but there are less projected future reserves to support a large capital Wastewater Treatment
Plant project in the future.
• Debt service coverage ratios of 1.25 are met from FY 22 to FY 27. Debt service coverage ratios
will not be above the 1.25 minimum without proposed rate adjustments and will impacts current
debt obligations.
• Two sewer projects are moved to future years for construction. The Grandview Lift Station
Upgrade, considered a growth and rehabilitation project, is advanced one year, and the Rose
Crossing Lift Station, considered a growth-related project, is moved out one year to FY 25.
• The compost facility, considered a growth and rehabilitation project, is moved out two years to
FY 27.
• The first-year increase is as low as it can be adjusted and continue to be able to support debt
obligations (reserves and credit) for current capital projects and future capital projects.
• Due to the lower first year increase, the second to fifth year increases are critical to continue the
support for all reserves, debt obligation, and service levels.
• The rate schedule includes the Evergreen Cost of Service Allocation adjustment.
The tables below are the proposed water and wastewater rate schedules presented as Exhibit D.
Exhibit E
This rate structure considers the following in comparison to the other proposed alternatives.
Water:
• Calculated using current impact fee value.
• Additional operating reserves are used to offset expenses, bringing the reserve amount to the 90-
day target values by 2023. 90-day target levels over the long-term period were still achieved.
• Proposed adjustments just maintain the debt service coverage level. If no rate adjustments are
made the debt service coverage ratios falls below the 1.25 coverage minimum and will impact
current debt obligations.
• One growth related project and two rehabilitation projects are moved (from FY24) to future years
(FY 26, 27, and 28) for construction. The growth project supports a larger main installation in the
downtown area, and the rehabilitation projects replaces ~15 blocks of 1926 elevated risk cast iron
water main (similar to 4 Ave E water main replacement).
• The first-year increase is as low as it can be adjusted while still supporting debt obligations
(reserves and debt credit) for current capital projects and future capital projects.
• Due to the lower first year increase, the second to fifth year increases are critical to continue the
support for all reserves, debt obligation, and service levels.
Wastewater:
• Calculated using current impact fee value.
• Additional operating reserves are used to offset expenses, bringing the reserve amount closer to
the 90-day target values by 2024. 90-day target reserves are at target levels for the projected
years, but there are less projected future reserves to support a large capital Wastewater Treatment
Plant project in the future.
• Debt service coverage ratios of 1.25 are met from FY 22 to FY 27. Debt service coverage ratios
will not be above the 1.25 minimum without proposed rate adjustments.
• Two sewer projects are moved to future years for construction. The Grandview Lift Station
Upgrade, considered a growth and rehabilitation project, is advanced one year, and the Rose
Crossing Lift Station, considered a growth-related project, is moved out one year to FY 25.
• The compost facility, considered a growth and rehabilitation project, is moved out two years to
FY 27.
• The first-year increase is as low as it can be adjusted and continue to be able to support debt
obligations (reserves and credit) for current capital projects and future capital projects.
• Due to the lower first year increase, the second to fifth year increases are critical to continue the
support for all reserves, debt obligation, and service levels.
• The rate schedule includes the Evergreen Cost of Service Allocation adjustment.
The tables below are the proposed water and wastewater rate schedules presented as Exhibit E.
Wastewater Rates Option Considerations
Summary and Bill Comparisons
Options Present FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Option A 49.4%6.5%6.5%6.5%6.5%3.0%3.0%
Kalispell Fixed Charge (per account)$8.44 $12.61 $13.43 $14.30 $15.23 $16.22 $16.71 $17.21
Volume Charge ($ / 1,000 gallons)$4.78 $7.14 $7.60 $8.09 $8.62 $9.18 $9.46 $9.74Evergreen Rate Adjustment 18.4%6.4%6.4%6.5%6.5%3.0%3.0%
Fixed Charge $6.22 $7.37 $7.85 $8.36 $8.90 $9.48 $9.76 $10.05
Volume Charge ($ / 1,000 gallons)$2.50 $2.96 $3.15 $3.35 $3.57 $3.80 $3.91 $4.03
Average Bill (4,000 gallons/month)$27.56 $41.17 $43.83 $46.66 $49.71 $52.94 $54.55 $56.17
Monthly Change $0.00 $13.61 $2.66 $2.83 $3.05 $3.23 $1.61 $1.62
Cumulative Change $0.00 $13.61 $16.27 $19.10 $22.15 $25.38 $26.99 $28.61
Option B 43.2%5.5%6.5%6.5%6.0%3.0%3.0%
Kalispell Fixed Charge (per account)$8.44 $12.08 $12.74 $13.57 $14.45 $15.32 $15.78 $16.25
Volume Charge ($ / 1,000 gallons)$4.78 $6.84 $7.22 $7.69 $8.19 $8.68 $8.94 $9.21
Evergreen Rate Adjustment 15.6%5.5%6.5%6.5%6.1%3.0%3.0%
Fixed Charge $6.22 $7.19 $7.59 $8.80 $8.61 $9.13 $9.40 $9.68
Volume Charge ($ / 1,000 gallons)$2.50 $2.89 $3.05 $3.25 $3.46 $3.67 $3.78 $3.89
Average Bill (4,000 gallons/month)$27.56 $39.44 $41.62 $44.33 $47.21 $50.04 $51.54 $53.09
Monthly Change $0.00 $11.88 $2.18 $2.71 $2.88 $2.83 $1.50 $1.55
Cumulative Change $0.00 $11.88 $14.06 $16.77 $19.65 $22.48 $23.98 $25.53
Option C 45.2%5.5%6.5%6.5%6.5%3.0%3.0%Impact Fee at calculated less depreciation values.
Kalispell Fixed Charge (per account)$8.44 $12.25 $12.92 $13.76 $14.65 $15.60 $16.07 $16.55
Volume Charge ($ / 1,000 gallons)$4.78 $6.94 $7.32 $7.80 $8.31 $8.85 $9.12 $9.39
Evergreen Rate Adjustment 16.8%5.5%6.5%6.4%6.5%3.0%3.0%
Fixed Charge $6.22 $7.26 $7.66 $8.16 $8.69 $9.25 $9.53 $9.82
Volume Charge ($ / 1,000 gallons)$2.50 $2.92 $3.08 $3.28 $3.49 $3.72 $3.83 $3.94
Average Bill (4,000 gallons/month)$27.56 $40.01 $42.20 $44.96 $47.89 $51.00 $52.55 $54.11
Monthly Change $0.00 $12.45 $2.19 $2.76 $2.93 $3.11 $1.55 $1.56
Cumulative Change $0.00 $12.45 $14.64 $17.40 $20.33 $23.44 $24.99 $26.55
Option D 32.6%13.0%12.4%7.0%3.8%3.0%3.0%
Kalispell Fixed Charge (per account)$8.44 $11.19 $12.65 $14.22 $15.21 $15.80 $16.28 $16.77Volume Charge ($ / 1,000 gallons)$4.78 $6.34 $7.17 $8.06 $8.62 $8.95 $9.22 $9.50
Evergreen Rate Adjustment 18.5%5.0%5.0%3.5%3.0%3.0%3.0%Moved Capital Improvement Projects to the future.
Fixed Charge $6.22 $7.37 $7.74 $8.13 $8.41 $8.66 $8.92 $9.19 1.25 Debt Service Coverage met FY22-FY27
Volume Charge ($ / 1,000 gallons)$2.50 $2.96 $3.11 $3.27 $3.38 $3.48 $3.59 $3.70
Average Bill (4,000 gallons/month)$27.56 $36.55 $41.33 $46.46 $49.69 $51.60 $53.16 $54.77
Monthly Change $0.00 $8.99 $4.78 $5.13 $3.23 $1.91 $1.56 $1.61
Cumulative Change $0.00 $8.99 $13.77 $18.90 $22.13 $24.04 $25.60 $27.21
Option E 32.6%10.8%9.9%6.6%3.8%3.0%3.0%Transitional Smoothed Rate Increase.
Kalispell Fixed Charge (per account)$8.44 $11.19 $12.40 $13.63 $14.53 $15.09 $15.54 $16.01 Impact Fee at current fee values. See Chart in Option B.
Volume Charge ($ / 1,000 gallons)$4.78 $6.34 $7.03 $7.73 $8.24 $8.56 $8.82 $9.09
Evergreen Rate Adjustment 15.7%4.0%4.0%3.0%3.0%3.0%3.0%Moved Capital Improvement Projects to the future.
Fixed Charge $6.22 $7.20 $7.49 $7.79 $8.02 $8.26 $8.51 $8.77 1.25 Debt Service Coverage met FY22-FY27
Volume Charge ($ / 1,000 gallons)$2.50 $2.89 $3.01 $3.13 $3.22 $3.32 $3.42 $3.52
Average Bill (4,000 gallons/month)$27.56 $36.55 $40.52 $44.55 $47.49 $49.33 $50.82 $52.37
Monthly Change $0.00 $8.99 $3.97 $4.03 $2.94 $1.84 $1.49 $1.55
Cumulative Change $0.00 $8.99 $12.96 $16.99 $19.93 $21.77 $23.26 $24.81
*Bill comparison includes 4,000 gallon consumption for Kalispell residents.
Notes
Impact Fee at 50% of current fee values w/ 3% annual increase. See Chart in Option A.
Used additional reserves to offset expenses.
Impact Fee at current fee values.
Impact Fee at 50% of current fee values w/ 3% annual increase.
Transitional Smoothed Rate Increase.
Used additional reserves to offset expenses.
Water Rates Option Considerations
Summary and Bill Comparisons
Options Present FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Option A 16.5%10.0%9.5%9.5%3.0%3.0%3.0%
Fixed Charge (per account)$7.50 $8.74 $9.61 $10.52 $11.52 $11.87 $12.23 $12.60
Consumption Charge ($/1,000 Gal.)$2.43 $2.48 $2.73 $2.99 $3.27 $3.37 $3.47 $3.57
Sprinkling Charge ($/1,000 Gal.)$1.55 $2.48 $2.73 $2.99 $3.27 $3.37 $3.47 $3.57
Average Bill (6,000 gallons/month)*$22.88 $24.72 $27.20 $29.78 $32.59 $33.58 $34.58 $35.60
Monthly Change $0.00 $1.84 $2.48 $2.58 $2.81 $0.99 $1.00 $1.02
Cumulative Change $0.00 $1.84 $4.32 $6.90 $9.71 $10.70 $11.70 $12.72
Option B 16.5%9.0%8.5%8.5%2.0%3.0%3.0%
Fixed Charge (per account)$7.50 $8.47 $9.23 $10.01 $10.86 $11.08 $11.41 $11.75
Consumption Charge ($/1,000 Gal.)$2.43 $2.40 $2.62 $2.84 $3.08 $3.14 $3.23 $3.33
Sprinkling Charge ($/1,000 Gal.)$1.55 $2.40 $2.62 $2.84 $3.08 $3.14 $3.23 $3.33
Average Bill (6,000 gallons/month)*$22.88 $23.97 $26.15 $28.35 $30.75 $31.36 $32.27 $33.25
Monthly Change $0.00 $1.09 $2.18 $2.20 $2.40 $0.61 $0.91 $0.98
Cumulative Change $0.00 $1.09 $3.27 $5.47 $7.87 $8.48 $9.39 $10.37
Option C 16.5%9.0%8.5%8.5%2.0%3.0%3.0%Impact Fee at current fee values. See Chart in Option B.
Fixed Charge (per account)$7.50 $8.47 $9.23 $10.01 $10.86 $11.08 $11.41 $11.75
Consumption Charge ($/1,000 Gal.)$2.43 $2.40 $2.62 $2.84 $3.08 $3.14 $3.23 $3.33
Sprinkling Charge ($/1,000 Gal.)$1.55 $2.40 $2.62 $2.84 $3.08 $3.14 $3.23 $3.33
Average Bill (6,000 gallons/month)*$22.88 $23.97 $26.15 $28.35 $30.75 $31.36 $32.27 $33.25
Monthly Change $0.00 $1.09 $2.18 $2.20 $2.40 $0.61 $0.91 $0.98
Cumulative Change $0.00 $1.09 $3.27 $5.47 $7.87 $8.48 $9.39 $10.37
Option D 10.0%10.0%10.0%10.0%3.0%3.0%3.0%
Fixed Charge (per account)$7.50 $8.25 $9.08 $9.99 $10.99 $11.32 $11.66 $12.01
Consumption Charge ($/1,000 Gal.)$2.43 $2.33 $2.56 $2.99 $3.27 $3.37 $3.47 $3.57
Sprinkling Charge ($/1,000 Gal.)$1.55 $2.33 $2.56 $2.99 $3.27 $3.37 $3.47 $3.57 Moved Capital Improvement Projects to the future.
Average Bill (6,000 gallons/month)*$22.88 $23.33 $25.65 $29.25 $32.06 $33.03 $34.01 $35.01
Monthly Change $0.00 $0.45 $2.32 $3.60 $2.81 $0.97 $0.98 $1.00
Cumulative Change $0.00 $0.45 $2.77 $6.37 $9.18 $10.15 $11.13 $12.13
Option E 9.0%9.0%9.5%9.5%3.0%3.0%3.0%
Fixed Charge (per account)$7.50 $8.18 $8.92 $9.77 $10.70 $11.02 $11.35 $11.69
Consumption Charge ($/1,000 Gal.)$2.43 $2.30 $2.51 $2.75 $3.01 $3.10 $3.19 $3.29
Sprinkling Charge ($/1,000 Gal.)$1.55 $2.30 $2.51 $2.75 $3.01 $3.10 $3.19 $3.29 Moved Capital Improvement Projects to the future.
Average Bill (6,000 gallons/month)*$22.88 $23.08 $25.18 $27.58 $30.19 $31.09 $32.00 $32.99
Monthly Change $0.00 $0.20 $2.10 $2.40 $2.61 $0.90 $0.91 $0.99
Cumulative Change $0.00 $0.20 $2.30 $4.70 $7.31 $8.21 $9.12 $10.11
*Bill comparison includes 6,000 gallon consumption, meter replacement, fee, and hosting fee.
Impact Fee at current fee values. See Chart in Option B.
Used additional reserves to offset expenses.
Transitional Smoothed Rate Increase.
Impact Fee at 50% of current fee values. See Chart in Option A
Used additional reserves to offset expenses.
Impact Fee at 50% of current fee values w/ 3% annual increase.
Impact Fee at current fee values.
Notes
Transitional Smoothed Rate Increase.
MEMORANDUM
To:
From:
Subject:
Meeting Date:
Doug Russell, City Manager
Susie Turner, Public Works Director
Resolution 5968, Resolution to adopt the 2020 Water and Wastewater
Rate Study, Amend the Water and Sewer Rate Schedules, and Rules and
Regulations Governing Water and Sewer Service
March 16, 2020
A Resolution to adopt the January 2020 Water and Wastewater Rate Study and amend the Water
and Sewer (wastewater) Rate Schedules and Regulations has been placed on the Council Agenda for the March 16, 2020 regular meeting.
Upon completion of the facility plan updates for water, sewer collection, and the wastewater treatment plant (WWTP) in 2019, the Public Works Department initiated a water and sewer rate
study. This matter came before the City Council for four work sessions following a water and sewer rate study performed by HDR Engineering. The rate study incorporates financial policies, revenue requirement analysis, cost of service analysis, and development of corresponding rate structures to generate adequate funds in order to:
•Maintain the same quality of service for the utility’s facility and infrastructure operationand maintenance
•Ensure regulatory compliance
•Fund capital projects – rehabilitation, replacement, regulatory, and new growth projects
•Fund an equipment replacement plan
•Maintain financial policy targets, i.e. reserve and operating balances, and debt servicecoverage
An extensive effort was undertaken to educate and advise the public on the proposed water and
wastewater amendments. In addition, two Open House meetings were held at City Hall on February 18, and a public hearing was held at the March 2, 2020 Council meeting.
Presented in Exhibit A are the amended Water and Sewer Rate Schedules, and the Rules and
Regulations Governing Water and Sewer Service. The amended rules and regulations reflect the
proposed rate schedule adjustments and updates the payment requirements for the monthly fixed and meter charge. The proposed Water and Wastewater Rate Schedules are presented in Resolution 5968 as well as provided in Exhibit A.
Alternative considerations as reviewed in the work session for amending the Water and Wastewater Rate Schedules that have been noticed are provided in Exhibit B and C. Exhibit B
provides the water and wastewater rates incorporating the impact fees at present fee values.
Exhibit C provides the water and wastewater rates incorporating the water impact fees at present value and the wastewater impact fees at values equivalent to the calculation method for removing the fully depreciated sewer infrastructure as a component of the calculation.
ACTION REQUESTED: A motion to approve Resolution 5968, a resolution to adopt the
January 2020 Water and Wastewater Rate Study as findings of fact, amend the Water and Wastewater Rate Schedules and updated Water and Sewer Regulations as provided in the resolution.
ALTERNATIVES: Council can elect to amend or reject the resolution.
ATTACHMENTS: Exhibit A - Proposed Water and Wastewater Rate Schedules and updated Water and Sewer Regulations
Exhibit B and C - Alternate Water and Wastewater Rate Schedules and
Corresponding Water and Sewer Regulation updates
Resolution 5968 with Exhibit A
January 2020 Water and Wastewater Rate Study
Exhibit A
The tables below are the proposed water and wastewater rate schedules presented in Resolution 5968.
FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Proposed Rate Adjustment 16.5% 10.0% 9.5% 9.5% 3.0% 3.0% 3.0%
Residential & Commercial
Fixed Charge (per account)$8.74 $9.61 $10.52 $11.52 $11.87 $12.23 $12.60
Meter Size (Rate/Cycle)
3/4"$1.10 $1.21 $1.32 $1.45 $1.49 $1.53 $1.58
1"1.69 1.86 2.04 2.23 2.30 2.37 2.44
1 1/2"3.09 3.40 3.72 4.07 4.19 4.32 4.45
2"4.45 4.90 5.37 5.88 6.06 6.24 6.43
3"10.29 11.32 12.40 13.58 13.99 14.41 14.84
4"14.24 15.66 17.15 18.78 19.34 19.92 20.52
6"22.64 24.90 27.27 29.86 30.76 31.68 32.63
Hosting Fee (per metering system)0.89 0.89 0.89 0.89 0.89 0.89 0.89
Consumption Charge ($/1,000 Gal.)$2.48 $2.73 $2.99 $3.27 $3.37 $3.47 $3.57
Sprinkling
Consumption Charge ($/1,000 Gal.)$2.48 $2.73 $2.99 $3.27 $3.37 $3.47 $3.57
Private Fire Protection
Monthly Service Connection
2"$24.80 $27.28 $29.87 $32.71 $33.69 $34.70 $35.74
3"29.25 32.18 35.24 38.59 39.75 40.94 42.17
4"32.50 35.75 39.15 42.87 44.16 45.48 46.84
6"40.10 44.11 48.30 52.89 54.48 56.11 57.79
8"51.00 56.10 61.43 67.27 69.29 71.37 73.51
10"70.35 77.39 84.74 92.79 95.57 98.44 101.39
Water Sold from Hydrants to Trucks
Consumption Charge ($/1,000 Gal.)$4.82 $5.30 $5.80 $6.35 $6.54 $6.74 $6.94
*Meter Hosting fee would be added after installation of a metering system and meter. *Out of City rate 1.25 times the in-City rate.
Proposed Monthly Water Rates
Proposed Rates
FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Rate Adjustment 49.4% 6.5% 6.5% 6.5% 6.5% 3.0% 3.0%
Fixed Charge (per account)$12.61 $13.43 $14.30 $15.23 $16.22 $16.71 $17.21
Volume Charge ($ / 1,000 gallons)$7.14 $7.60 $8.09 $8.62 $9.18 $9.46 $9.74
Evergreen Rate Adjustment 18.4% 6.4% 6.4% 6.5% 6.5% 3.0% 3.0%
Fixed Charge $7.37 $7.85 $8.36 $8.90 $9.48 $9.76 $10.05
Volume Charge ($ / 1,000 gallons)$2.96 $3.15 $3.35 $3.57 $3.80 $3.91 $4.03
Strength Surcharge - Over Limit
Bio-chemical Oxygen Demand ($ / Lbs)$0.16 $0.17 $0.18 $0.19 $0.20 $0.21 $0.22Suspended Solids ($ / Lbs)0.71 0.75 0.80 0.85 0.91 0.94 0.97
Phosphorus ($ / Lbs) 6.10 6.49 6.91 7.36 7.84 8.08 8.32Nitrogen ($ / Lbs) 1.25 1.33 1.42 1.51 1.61 1.66 1.71
Proposed Monthly Wastewater Rates
Exhibit B
Exhibit B provides the water and wastewater rates incorporating the impact fees at present fee
values.
Exhibit C
Exhibit C provides the water and wastewater rates incorporating the water impact fees at present values and the wastewater impact fees at values equivalent to the calculation method for
removing the fully depreciated sewer infrastructure as a component of the calculation.
RESOLUTION NO. 5968
A RESOLUTION TO ADOPT THE FEES, SCHEDULES, RATES, CHARGES AND CLASSIFICATIONS IMPOSED ON THE CUSTOMERS OF THE CITY OF KALISPELL WATER AND WASTEWATER UTILITIES AND THEREFORE TO ALSO ADOPT CERTAIN AMENDMENTS TO THE REGULATIONS OF THE CITY WATER AND SANITARY SEWER UTILITIES THAT ARE REFLECTIVE OF AND CONSISTENT
WITH THE ADOPTION OF SUCH FEES, SCHEDULES, RATES, CHARGES AND CLASSIFICATIONS. WHEREAS, it is necessary and prudent, pursuant to authority granted to municipalities operating utility services by Section 69-7-101 et seq., MCA, for the City of Kalispell, from
time to time, to study and review the fees, schedules, rates, charges and
classifications it charges to its customers for water and wastewater utility services; and WHEREAS, for this purpose the City of Kalispell contracted the services of HDR Engineering,
Inc. to conduct such a rate study and to provide a report with recommendations to
the Kalispell City Council to consider in setting future fees, schedules, rates, charges and classifications it charges to its customers for water and wastewater utility services; and
WHEREAS, HDR Engineering, Inc. provided its rate study and recommendations to the City of
Kalispell which were fully reviewed and considered by Kalispell city staff, the Kalispell City Council and noticed and made available to its inhabitants and other persons served by the City of Kalispell Water and Wastewater Utilities; and
WHEREAS, on February 3, 2020 the City Council passed Resolution No. 5962 stating its intent
to adopt the rate study and recommendations of HDR Engineering, Inc. and set a public hearing for March 2, 2020 on the proposed amendments to the fees, schedules, rates, charges, classifications and regulations of the water and wastewater utility services of the City of Kalispell and gave the necessary Notice
thereof as required by Section 69-7-111, MCA; and
WHEREAS, said public hearing was duly held by the Kalispell City Council at a public meeting thereof in the Kalispell City Hall beginning at 7:00 o’clock P.M. on March 2, 2020, and all persons appearing at said hearing and expressing a desire to be heard were
heard, and all written comments thereon furnished to the City Clerk at said meeting
prior thereto were also given full consideration by the Council. WHEREAS, the Kalispell City Council hereby adopts the rate study of HDR Engineering, Inc. as its findings of fact and further finds the proposed amended fees, schedules, rates,
charges, classifications and regulations to be reasonable and just; and
WHEREAS, the Kalispell City Council therefore considers it proper and necessary at this time to amend the fees, schedules, rates, charges, classifications and regulations imposed
for utility services to its inhabitants and other persons served by the City of
Kalispell Water and Wastewater Utilities.
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF KALISPELL:
SECTION 1. That the fees, schedules, rates, charges, classifications and regulations applicable to the use of the City of Kalispell Water and Wastewater Utilities and other services performed by said utilities as set forth in Exhibit “A”, attached hereto and by this reference made a part hereof, are found to be
just and are hereby established and adopted to be imposed for water and
wastewater utility services to the inhabitants of the City of Kalispell and those other persons served by these utility services and applicable for each utility as set forth in Exhibit “A”.
SECTION 2. This decision is final ten (10) days after filing of this Resolution with the
City Clerk. The City Clerk shall file a copy hereof with the Public Service Commission of Montana at that time.
PASSED AND APPROVED BY THE CITY COUNCIL AND SIGNED BY THE MAYOR OF
THE CITY OF KALISPELL, THIS 6TH DAY OF APRIL, 2020.
______________________________ Mark Johnson
Mayor
Attest:
______________________
Aimee Brunckhorst, CMC
City Clerk
Exhibit A
Draft Report
Water and Wastewater
Rate Study
January 2020
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March 12, 2020
Ms. Susie Turner
Public Works Director
City of Kalispell
201 1st Avenue East
Kalispell, MT 59901
Subject: City of Kalispell Comprehensive Water and Wastewater Rate Study – Draft Report
Dear Ms. Turner:
HDR Engineering, Inc. (HDR) is pleased to present the draft report on the comprehensive water
and wastewater rate study recently conducted for the City of Kalispell (City). The overall objective
in conducting each utility rate study was to establish cost-based rates that provide adequate and
sustainable funding for the operational and capital needs of each utility. This report outlines the
approach, methodology, findings, and conclusions of the rate study process undertaken for the
City’s water and wastewater utilities.
This report was developed utilizing the City’s specific accounting, operating, and historical
customer billing records. HDR utilized this information to develop our analyses which shaped our
findings, conclusions, and recommendations. At the same time, this study was developed utilizing
generally accepted rate setting principles as outlined in the American Water Works Association
M1 and the Wastewater Environment Federation Manual of Practice No. 27 rate setting manuals.
The conclusions and recommendations contained within this report are intended to provide the
City with cost-based and equitable rates for its customers.
We appreciate the assistance provided by the City staff, management, and the City Council in the
development of this study.
Sincerely yours,
HDR Engineering, Inc.
Shawn Koorn
Associate Vice President
Table of Contents i
City of Kalispell – Water and Wastewater Rate Study
Executive Summary
Introduction .................................................................................................................. 1
Overview of the Rate Study Process .............................................................................. 1
Review of Financial Policies ........................................................................................... 2
Summary Results of the Water Rate Study .................................................................... 3
Water Revenue Requirement Analysis ................................................................. 3
Water Cost of Service Analysis ............................................................................. 6
Water Rate Design Analysis ................................................................................. 7
Summary Results of the Wastewater Rate Study ......................................................... 11
Wastewater Revenue Requirement Analysis ..................................................... 11
Wastewater Cost of Service Analysis ................................................................. 14
Wastewater Rate Design Analysis ...................................................................... 15
Summary of the Water and Wastewater Rate Study .................................................... 17
1 Introduction and Overview
1.1 Introduction ........................................................................................................ 18
1.2 Overview of the Rate Study Process .................................................................... 18
1.3 Report Organization ............................................................................................ 19
1.4 Summary ............................................................................................................. 19
2 Overview of the Rate Setting Process
2.1 Introduction ....................................................................................................... 20
2.2 Generally Accepted Rate Setting Principles ........................................................ 20
2.3 Prudent Financial Planning ................................................................................. 20
2.4 Determining the Revenue Requirement ............................................................. 21
2.5 Analyzing Cost of Service .................................................................................... 21
2.6 Designing Rates .................................................................................................. 22
2.7 Economic Theory and Rate Setting ..................................................................... 22
2.8 Summary............................................................................................................ 23
3 Review of Financial Policies
3.1 Introduction ....................................................................................................... 24
3.2 Objectives in Establishing Written Financial Policies ........................................... 24
3.3 Review of the City’s Financial Policies ................................................................ 24
3.3.1 Reserve Policies ........................................................................................ 24
3.3.2 Review of the Financial Policy for a Target Debt Service Coverage Ratio ... 26
Table of Contents
Table of Contents ii
City of Kalispell – Water and Wastewater Rate Study
3.3.3 Review of the Financial Policy for Rate Funding of Renewal and
Replacement Capital Projects ................................................................. 27
3.3.4 Review of the Financial Policy for Funding of Capital
Improvement Projects ............................................................................ 27
3.4 Summary............................................................................................................ 28
4 Development of the Water Rate Study
4.1 Introduction ....................................................................................................... 29
4.2 Determining the Water Utility Revenue Requirement ........................................ 29
4.2.1 Determining the Time Period and Methodology ..................................... 29
4.2.2 Projection of Water Utility Revenues ...................................................... 30
4.2.3 Projection of the Water Utility Operation and Maintenance Expenses ... 31
4.2.4 Projection of Water Utility Capital Improvement Projects and Funding .. 31
4.2.5 Projection of Debt Service ...................................................................... 34
4.2.6 Change in Reserve Funding ..................................................................... 34
4.2.7 Summary of the Water Revenue Requirement ....................................... 34
4.2.8 Key Financial Targets .............................................................................. 36
4.2.9 Consultant’s Water Revenue Requirement Recommendations ............... 37
4.3 Development of the Water Cost of Service Analysis ........................................... 38
4.3.1 Customer Classes of Service ................................................................... 39
4.3.2 Functionalization of Costs ....................................................................... 39
4.3.3 Allocation of Costs .................................................................................. 39
4.3.4 Functionalization and Allocation of Water Plant in Service ..................... 41
4.3.5 Functionalization and Allocation of Water Operating Expenses .............. 41
4.3.6 Development of Distribution Factors ...................................................... 42
4.3.7 Summary of the Water Cost of Servuce Results ...................................... 43
4.3.8 Summary Conclusions and Recommendations of the Cost of Service ...... 44
4.4 Development of the Water Rate Designs............................................................ 45
4.4.1 Rate Design Goals and Objectives ........................................................... 45
4.4.2 Review of the Overall Rate Adjustments ................................................. 45
4.4.3 Present and Proposed Water Rate Designs ............................................. 46
4.5 Summary of the Water Rate Study ..................................................................... 50
5 Development of the Wastewater Rate Study
5.1 Introduction ....................................................................................................... 51
5.2 Determining the Wastewater Utility Revenue Requirement ............................... 51
5.2.1 Determining the Time Period and Methodology ..................................... 51
5.2.2 Projection of Wastewater Uitlity Revenues ............................................ 52
5.2.3 Projection of Wastewater Operation and Maintenance Expenses .......... 52
5.2.4 Projection of Wastewater Capital Improvement Projects and Funding ... 53
5.2.5 Projection of Debt Service ...................................................................... 56
5.2.6 Reserve Funding ..................................................................................... 56
5.2.7 Summary of the Wastewater Revenue Requirement .............................. 57
5.2.8 Key Financial Targets .............................................................................. 58
Table of Contents iii
City of Kalispell – Water and Wastewater Rate Study
5.2.9 Consultant’s Wastewater Revenue Requirement Recommendations ..... 60
5.3 Wastewater Cost of Service Analysis .................................................................. 60
5.3.1 Customer Classes of Service ................................................................... 60
5.3.2 Functionalization of Costs ....................................................................... 61
5.3.3 Allocation of Costs .................................................................................. 61
5.3.4 Development of Distribution Factors ...................................................... 62
5.3.5 Functionalization and Allocation of Wastewater Plant in Service ............ 62
5.3.6 Functionalization and Allocation of Wastewater Operating Expenses ..... 63
5.3.7 Summary of the Wastwater Cost of Service Results ................................ 64
5.3.8 Summary Conclusions and Recommendations of the Cost of Service ...... 65
5.4 Development of the Wastewater Rate Designs .................................................. 65
5.4.1 Rate Design Goals and Objectives ........................................................... 66
5.4.2 Review of the Overall Rate Adjustments ................................................. 66
5.4.3 Present and Proposed Wastewater Rate Designs.................................... 66
5.4.4 Present and Proposed Evergreen Rates .................................................. 67
5.4.5 Present and Proposed Surcharge Rates .................................................. 68
5.5 Summary of the Wastewater Rate Study Update ............................................... 68
Technical Appendix A – Water Rate Study
Technical Appendix B – Wastewater Rate Study
Executive Summary 1
City of Kalispell – Water and Wastewater Rate Study
Introduction
HDR Engineering, Inc. (HDR) was retained by the City of
Kalispell (City) to perform a comprehensive water and
wastewater rate study. The development of these studies
determines the adequacy of the existing water and wastewater
utility rates. This study also provides the basis for adjustments
to maintain cost-based rates for each of the utilities. This
report describes the overall methodology used to conduct the
study, along with our findings, conclusions and
recommendations for each utility.
Overview of the Rate Study Process
A comprehensive water and wastewater rate study uses three interrelated analyses to address
the adequacy and equity of a utility’s rates. These three analyses are a revenue requirement
analysis, a cost of service analysis, and a rate design analysis. These three analyses are illustrated
below in Figure ES-1.
Figure ES – 1
Overview of the Comprehensive Rate Analyses
The City’s water and wastewater utilities were each evaluated on a “stand-alone” basis. That is,
no subsidies between the utilities or other City funds should occur. By viewing each utility on a
stand-alone basis, the need to adequately fund both O&M and capital infrastructure must be
balanced against the rate impacts to the utility’s customers.
Executive Summary
Revenue Requirement Analysis
Cost of Service Analysis
Rate Design Analysis
Compares the revenues to the expenses of
the utility to determine the overall
rate adjustment required
Allocates the revenue requirement to the
various customer classes of service in a “fair
and equitable" manner
Considers both the level and structure of
the rate design to collect the
target level of revenues
“This study also
provides the basis for
adjustments to
maintain cost-based
rates for each of the
utilities.”
Executive Summary 2
City of Kalispell – Water and Wastewater Rate Study
Review of the Financial Policies
Financial policies are intended to provide guidance in the financial planning and rate-setting
process, and in the day-to-day financial management of the City’s utilities. Adoption of financial
policies provides a strong foundation for the long-term financial sustainability of the utilities The
City currently has in place several financial/rate setting policies.
There are a variety of reasons or benefits for establishing
written financial policies. In particular, written financial
policies provide management with clear policy direction
and provides for consistent and logical financial/rate
(business) decisions. More importantly, written financial
policies provide a strong message to the outside financial
community (bond rating agencies) of the City Council’s
commitment to manage the utilities in a financially
prudent and responsible manner.
The City already has certain financial policies for the utilities which are written and well-
understood. In other cases, the City’s financial planning practices have not been formally
documented or adopted. As a part of this study, a number of financial/rate policies were
reviewed. These included the following:
x Reserve Policies:
9 Operating Reserve: 30 days of O&M expense minimum balance; 90 days target of
O&M expenses is recommended
9 Impact Fee Reserve: City utilizes a combined (buy-in plus future) methodology and
places impact fees in reserves; the impact fee revenue is reviewed annually for the
allotment of funds towards debt service payments and/or growth related capital; no
required minimum balance; no change or action recommended
9 Equipment Replacement Program Reserve: New in FY 2021; funding annual reserve
based on average of five year plan; policy should be formally documented.
9 Capital Improvement & Emergency Reserve: Minimum balance of $400,000
maintained for emergencies.
9 Bond Reserve: Based on legal requirements (bond covenants). No formal action
needed.
x Target Debt Service Coverage Ratio: City’s current minimum target for financial planning
purposes of 1.25 for an individual utility excluding impact fee revenue in the calculation.
x Rate Funding of Renewal and Replacement Capital Projects: Target, as a minimum, one
year’s annual depreciation expenses as renewal and replacement for each utility. The
study has established a phased in approach to increase the rate funding component for
capital renewal and replacement to prudent levels equal to a target of two year’s annual
depreciation or 2.0 for water and 1.5 for wastewater.
x Funding of Capital Improvement Projects – City’s practice of prudently using available
reserves, and rate funded capital improvement project funds to pay for capital
improvement projects. The City also reviews impact fee revenues annually for use of
“written financial policies
provide a strong message to
the outside financial
community (bond rating
agencies) of the City Council’s
commitment to manage the
utilities in a financially prudent
and responsible manner.”
Executive Summary 3
City of Kalispell – Water and Wastewater Rate Study
these funds towards growth related debt, or growth related capital improvement
projects. The use of long-term debt ony as needed.
A more detailed discussion of these financial/rate policies may be found in Section 3 of this
report. The financial/rate setting policies discussed herein have been used in the review of each
utility.
Summary Results of the Water Utility
The water rate study reviewed the overall adequacy of the existing water rates, at current
implemented (adopted) rates. The water utility was evaluated on a financially stand-alone basis.
That is, no funding sources other than those generated by the water utility, such as water sales
and other water-related fees and revenues, were considered or used to fund water utility
expenses.
Water Revenue Requirement Analysis
The starting point of the revenue requirement analysis was the proposed FY 2020 budget. In
addition to existing budget levels, additional projected operation costs were included in future
years such as additional staff to support operational and new capital infrastructure. The
projection of revenues and expenses for future years was based on estimated growth and
escalation (inflationary) factors. The study was developed for a six-year period to review future
rate needs based on identified operating and capital needs. The focus for rate setting purposes
was five-year rate setting period of FY 2021 – FY 2025, which is called the rate transition plan.
A major component within water utility’s revenue requirement analysis was the development of
the capital improvement funding plan. The development of the rate plan was based on the City’s
FY 2020 – FY 2025 CIP. The City’s water capital improvement plan totals approximately $30.0
million for the FY 2020 – FY 2025 period. Shown in Table ES–1 below is a summary of the water
utility capital improvement plan for the study period.
Executive Summary 4
City of Kalispell – Water and Wastewater Rate Study
[1] – Summation of table may reflect rounding errors due to decimal points.
A major component of the capital costs includes the annual renewal and replacement needs of
the water system. These are items such as the Lower Zone Reservoir Roof project, Noffsinger
Rehabilitation Alternative, and booster station upgrades. The CIP also includes a new cellular
metering reading system which will be implemented over a ten year period. There are also
several larger projects that impact the CIP related to the 1 MG Elevated Storage Tank, and
Northwest Well #1 which are primarily related to growth and expansion on the system. The
primary funding sources for these projects are assumed to be from a combination of capital
reserves, issuance of new long-term debt, and rate funded capital. In addition, future known
costs were included in the future years to reflect those changing costs of O&M expenses, staffing,
etc. A more detailed summary of the projected changes in overall O&M are included in Section
3 of this report.
The revenue requirement analysis sums the utility’s operating and capital expenses and
compares it to the total water revenues to determine the overall rate adjustment required. A
rate transition plan was developed for the water utility to smoothly implement the needed rate
adjustments. The proposed rate adjustments will also maintain debt service coverage ratios as
new long-term issuances occur for the funding of capital projects. This level of rate adjustment
will also provide the City financial flexibility, should the need arise, to issue additional long-term
debt to fund future capital improvements.
Based upon the revenue requirement analysis developed, HDR recommends the City increase
the overall water utility revenue levels by 16.5% in 2021, 10.0% in 2022, 9.5% in 2023, 9.5% in
2024, and 3.0% in 2025. The deficit in 2021 - absent any rate adjustments - is approximately
$527,000 and increases to approximately $1.6 million by 2025. It should be noted there are not
any proposed rate adjustment in FY 2020. Table ES-2 is a summary of the water revenue
requirement analysis.
Table ES – 1
Summary of the Water Capital Improvement Plan ($000s)
FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025
Renewal and Replacement $1,498 $1,415 $6,476 $1,774 $3,714 $1,829
Growth Related Projects 3,808 7,885 208 869 306 234
Transfer to Cash Reserve 0 0 0 0 0 0
Total Capital Projects $5,305 $9,300 $6,684 $2,644 $4,019 $2,063
Less: Outside Funding Sources
Operating Fund Reserves $238 $5,076 $249 $1,129 $839 $218
Impact Fee Funds 1,342 150 125 120 120 120
Meter Replacement Cash 151 309 79 0 0 0
Assumed SRF Loans 2,674 2,700 5,000 0 1,500 0
Total Outside Funding $4,405 $8,235 $5,454 $1,249 $2,459 $338
Rate Funded Capital $900 $1,065 $1,230 $1,395 $1,560 $1,725
Executive Summary 5
City of Kalispell – Water and Wastewater Rate Study
Table ES – 2
Summary of the Water Revenue Requirements ($000s)
Proposed Projected
FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025
Revenues
Rate Revenues $3,163 $3,194 $3,226 $3,259 $3,291 $3,324
Other Revenues 286 286 263 270 268 263
Total Revenues $3,449 $3,481 $3,490 $3,528 $3,559 $3,587
Expenses
O&M Expenses $2,491 $2,226 $2,293 $2,362 $2,484 $2,560
Equip. Replacement Program 45 119 119 119 119 119
Rate Funded Capital 900 1,065 1,230 1,395 1,560 1,725
Debt Service Payment 520 692 1,004 1,006 1,111 1,016
Less: Impact Fees to Debt (309) (122) (126) (130) (134) (138)
To / (From) Reserves (198) 27 0 0 0 0
Total Expenses $3,449 $4,008 $4,521 $4,752 $5,141 $5,282
Bal./(Defic.) of Funds ($0) ($527) ($1,031) ($1,224) ($1,582) ($1,695)
Bal. / (Def.) as % of Rate Rev 0.0% 16.5% 32.0% 37.6% 48.1% 51.0%
Proposed Revenue Adjustment 0.0% 16.5% 10.0% 9.5% 9.5% 3.0%
Add'l Revenue with Rate Adj. $0 $527 $908 $1,314 $1,765 $1,936
Bal. / (Def.) After Rate Adj. $0 $0 ($123) $89 $183 $242
Key Financial Targets
Ending Operating Balance $7,789 $2,740 $2,368 $1,329 $673 $697
Ending Operating Balance Target $625 $578 $595 $612 $642 $661
Rate Funded Capital $900 $1,065 $1,230 $1,395 $1,560 $1,725
Rate Funded Capital Target (2.00) 1.07 1.27 1.46 1.66 1.86 2.05
Debt Service Coverage (> 1.25)
Before Revenue Adjustment 1.75 1.64 1.07 1.04 0.86 0.89
After Proposed Adjustment 1.75 2.40 1.98 2.35 2.45 2.80
[1] – Summation of table may reflect rounding errors due to decimal points.
It should be noted that the balance or deficiencies in any single year are cumulative. That is, any
adjustments in the initial years will reduce the deficiency in the following years. Over the six-
year period, revenues need to be adjusted by approximately $1.7 million in order to adequately
and properly fund the City’s water utility O&M and capital infrastructure needs and meet the
financial policies and targets over the five year period.
As was noted in the capital section, the water utility is proposed to rely heavily on the reserve
funds and draws approximately $9.7 million, of both operating and impact fee reserves, over the
projected time period to fund capital projects and minimize overall rate impacts. This was
feasible given current reserve levels. However, the annual cash flow and ending reserve balances
should be monitored each year to make sure that the uses of funds does not place the reserve
below the minimum level. Additionally, as the water reserves approach the minimums, the need
Executive Summary 6
City of Kalispell – Water and Wastewater Rate Study
for rate adjustments should be evaluated so as to avoid future, large, rate adjustments for
customers.
To implement the needed adjustments, a water transition plan was developed. In addition to FY
2020 - FY 2025, the City Council included a recommended 3% rate adjustment beyond FY 2025
to maintain the current level of service for the water utility. Provided in Table ES-3 is the proposed
water utility rate transition plan.
Table ES – 3
Summary of the Water Rate Transition Plan
Recommended
FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Proposed Revenue Adjustment 16.5% 10.0% 9.5% 9.5% 3.0% 3.0% 3.0%
Water Cost of Service Analysis
A water cost of service analysis is concerned with the proportional and equitable distribution of
the total water revenue requirement to the various water customer classes of service. The
objectives of the water cost of service analysis are different from determining revenue
requirements. A revenue requirement analysis determines the utility's overall financial needs,
while the cost of service study determines the proportional and equitable manner to collect those
revenue requirements.
The customer classes were reviewed and reflect generally accepted customer classes of service
and City customer class characteristics. A key element of the study was the review of the
consumption patterns by customer type to equitably and proportionally allocate the City’s costs
of providing service. Based on the identified customer classes of service, each with their own
unique customer consumption characteristics, the cost of service can be developed based on
generally accepted methodologies (i.e., AWWA M1 Manual).
In summary form, the cost of service analysis began by functionalizing the revenue requirement
for the City’s water utility. The functionalized revenue requirement was then allocated into the
various cost components (e.g., average day, peak day, customer related). The individual
allocation totals were then proportionally distributed to the various customer classes of service
based on the appropriate distribution factor. The distributed expenses for each customer class
were then aggregated to determine each customer class’s overall revenue responsibility. As
noted, it was determined that the current customer classes were appropriate and are maintained
in this analysis. As a result, the cost of service proportionally allocated costs to residential,
commercial, and irrigation customer classes. Table ES-4 provides the summary of the cost of
service analysis for the FY 2021 test year.
Executive Summary 7
City of Kalispell – Water and Wastewater Rate Study
Table ES – 4
Summary of the Water Utility Cost of Service Analysis ($000’s)
Classes of Service
Present Rate
Revenues
Distributed
Costs
$
Difference
%
Difference
Residential $1,356 $1,316 $40 (3.0%)
Commercial 1,145 1,283 (137) 12.0%
Irrigation 598 1,038 (440) 73.5%
Private Fire 94 83 10 (10.9%)
Total $3,194 $3,721 ($316) 16.5%
[1] – Summation of table may reflect rounding errors due to decimal points.
The allocation of costs reflects the facilities and costs allocated to each customer class with their
respective benefit from services. It is important to understand that a cost of service analysis is
based on one year’s data and customer information. Water usage and the costs incurred by the
utility will change from year to year. As such, it is appropriate to determine whether these
findings are consistent over time, and adjust accordingly.
The results of the cost of service analysis show that there are differences between the customer
classes of service. Specifically, the irrigation (irrigation and sprinkling customers) class shows the
need to be increased greater than other customers’ classes given the peaking impact these
customer place on the system. In addition, the current rate for irrigation (and sprinkling) is less
than the consumption rate for all customers. Section 4 of this report provides a detailed
discussion of the cost of service analysis conducted for the City’s water utility. Given these results,
it is recommended that a movement to cost of service results be made as a results of this study.
Specifically, the level of the irrigation rate will adjusted to better reflect the cost of service results.
The Technical Appendix A contains the various water exhibits and additional details associated
with the cost of service analysis.
Water Rate Design Analysis
The final component of the rate study is the development of rates which reflect the overall
revenue needs, as developed in the revenue requirement analysis. Based on the review of
customer consumption patterns as well as the City’s goals and objectives, HDR is recommending
that the City maintain their current water rate structures for all customer classes of service (e.g.,
residential, commercial, irrigation).
In the establishment of rates, it is important to understand how the water utility generates
revenues from rates. Generally a majority of the water utility revenues are generated through
the consumption charge, which is variable and dependent on water use by customers. Given
this, the relationship between fixed and variable (consumption) charges should be reviewed as a
part of a rate study. As would be expected for the water utility, the current rates are generating
approximately 29.4% of the revenues through the fixed charge and 70.6% through the variable
charge. Given the proportion of charges collected through the variable (volumetric) portion of
Executive Summary 8
City of Kalispell – Water and Wastewater Rate Study
the rate, this further shows that the rate structure is designed to encourage conservation which
is growing increasingly important to the public.
The proposed residential and commercial rate design is based on holding the fixed charge to the
overall rate adjustment, updating the meter charge to updated meter replacement costs, and
remaining being collected through the consumption charge for FY 2021. A cost of service
adjustment in FY 2021 is recommended that would remove (eliminate) the sprinkling rate for
residential, and all consumption is charged at a single rate. In addition, the irrigation rate will be
set at the same rate as the rate for all other customer consumption charge. The option for a “skip
bill” on fixed and meter charges when customers are not home is also eliminated.
All the rate adjustments after FY 2021 are across the board increases, where all rate components
have been adjusted based on the overall percentage change in revenue needed as identified in
the revenue requirement. Table ES-5 summarizes the present and proposed rate structure for
residential and commercial monthly water rates from FY 2021 to FY 2027.
Table ES – 5
Present and Proposed Residential & Commercial-Monthly Water Rates
Present FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Proposed Adjustment 16.5% 10.0% 9.5% 9.5% 3.0% 3.0% 3.0%
Fixed Charge (per
meter/month) $7.50 $8.74 $9.61 $10.52 $11.52 $11.87 $12.23 $12.60
Meter Size (per
meter/month)
3/4" $0.80 $1.10 $1.21 $1.32 $1.45 $1.49 $1.53 $1.58
1" 1.38 1.69 1.86 2.04 2.23 2.30 2.37 2.44
1 1/2" 2.68 3.09 3.40 3.72 4.07 4.19 4.32 4.45
2" 3.75 4.45 4.90 5.37 5.88 6.06 6.24 6.43
3" 14.10 10.29 11.32 12.40 13.58 13.99 14.41 14.84
4" 19.88 14.24 15.66 17.15 18.78 19.34 19.92 20.52
6" 22.64 22.64 24.90 27.27 29.86 30.76 31.68 32.63
Hosting Fee (per metering
system)[1] 0.89 0.89 0.89 0.89 0.89 0.89 0.89
Consumption Charge
($/1,000 Gal.) $2.43 $2.48 $2.73 $2.99 $3.27 $3.37 $3.47 $3.57
Sprinkling
Consumption Charge
($/1,000 Gal.) $1.55 $2.48 $2.73 $2.99 $3.27 $3.37 $3.47 $3.57
[1] Fee subject to City’s metering system.
The proposed residential and commercial water rates maintain the current rate structure.
However, the sprinkling rate for residential is eliminated and all consumption will be charged at
the same rate. This includes a fixed charge, meter charge based on meter size, and a
consumption charge for all consumption.
Executive Summary 9
City of Kalispell – Water and Wastewater Rate Study
At present rates, a typical residential customer with a 3/4-inch meter and 6,000 gallons of
consumption per month would pay $22.88 monthly. Under the proposed rates, the same
customer would pay $24.72 in 2021, a $1.84 monthly increase. Table ES-6 shows the average
residential bill for the rate period of FY 2021 to FY 2027.
Table ES – 6
Summary of the Average Residential Water Bill
FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Proposed Revenue Adjustment 16.5% 10.0% 9.5% 9.5% 3.0% 3.0% 3.0%
Present Avg. Residential Bill[1] $22.88
Avg. Monthly Residential Bill $24.72 $27.20 $29.78 $32.59 $33.58 $34.58 $35.60
Monthly $ Change 1.84 2.48 2.58 2.81 0.99 1.00 1.02
Cumulative $ Change 1.84 4.32 6.90 9.71 10.70 11.70 12.72
[1] - Average bill based on 3/4-inch meter, 6,000 gallons per month.
The bill comparison graph provides a range of customer bill impacts assuming typical monthly
consumption at various times of the year for FY 2021.
Executive Summary 10
City of Kalispell – Water and Wastewater Rate Study
The proposed irrigation rate design is based on holding the fixed charge to the overall rate
adjustment, updating the meter charge to current replacement costs, and remaining being
collected through the consumption charge for FY 2021. All the rate adjustments after FY 2021
are across the board increases. Table ES-7 summarizes the present and proposed rate structure
for irrigation monthly water rates from FY 2021 to FY 2027.
Table ES – 7
Present and Proposed Irrigation-Monthly Water Rates
Present FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Proposed Adjustment 16.5% 10.0% 9.5% 9.5% 3.0% 3.0% 3.0%
Fixed Charge (per
meter/month) $7.50 $8.74 $9.61 $10.52 $11.52 $11.87 $12.23 $12.60
Meter Size (per
meter/month)
3/4" $0.80 $1.10 $1.21 $1.32 $1.45 $1.49 $1.53 $1.58
1" 1.38 1.69 1.86 2.04 2.23 2.30 2.37 2.44
1 1/2" 2.68 3.09 3.40 3.72 4.07 4.19 4.32 4.45
2" 3.75 4.45 4.90 5.37 5.88 6.06 6.24 6.43
Hosting Fee (per metering
system)[1] 0.89 0.89 0.89 0.89 0.89 0.89 0.89
Consumption Charge
($/1,000 Gal.) $2.43 $2.48 $2.73 $2.99 $3.27 $3.37 $3.47 $3.57
[1] Fee subject to City’s metering system.
The proposed irrigation water rates maintained the current rate structure. However, the
irrigation consumption rate is proposed to be the same level as residential and commercial
consumption. This
includes a fixed charge,
meter charge based on
meter size, and a
consumption charge
for all consumption. At
present rates, a typical
irrigation customer
with a 3/4-inch meter
and 6,000 gallons of
consumption per
month would pay
$17.60 monthly. Under
the proposed rates, the
same customer would
pay $24.72 in 2021, a
$7.12 monthly increase. The bill comparison graph provides a range of customer bill impacts
assuming typical monthly consumption at various times of the year.
Executive Summary 11
City of Kalispell – Water and Wastewater Rate Study
The proposed private fire protection rate structure is maintained and there is no adjustment in
FY 2021. All the rate adjustments after FY 2021 are across the board increases based on the
overall revenue adjustments identified in the revenue requirement analysis. Table ES-8
summarizes the present and proposed rate structure for private fire protection monthly rates.
Table ES – 8
Present and Proposed Private Fire Protection Monthly Rates
Present FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Proposed Adjustment 16.5% 10.0% 9.5% 9.5% 3.0% 3.0% 3.0%
Meter Size (Monthly
Service Connection)
2" $24.80 $24.80 $27.28 $29.87 $32.71 $33.69 $34.70 $35.74
3" 29.25 29.25 32.18 35.24 38.59 39.75 40.94 42.17
4" 32.50 32.50 35.75 39.15 42.87 44.16 45.48 46.84
6" 40.10 40.10 44.11 48.30 52.89 54.48 56.11 57.79
8" 51.00 51.00 56.10 61.43 67.27 69.29 71.37 73.51
10” 70.35 70.35 77.39 84.74 92.79 95.57 98.44 101.39
The proposed rate designs are further reviewed and discussed in Section 4 of this report.
Summary Results of Wastewater Utility
Similar to the water rate study, the wastewater rate study determined the overall adequacy of
the existing wastewater rates, on a financial stand-alone basis, at the current rate levels. That is,
no funding sources other than those generated by the wastewater utility were used to fund
wastewater utility expenses. For the wastewater rate study, a concerted effort was made to
minimize rate impacts over the five year review period. This was accomplished by using reserve
funds to finance the impact of increased expenses of, and to, the utility, slowly drawing down
reserves.
Wastewater Revenue Requirement Analysis
As with the water analysis, the starting point of the wastewater revenue requirement analysis
was the proposed FY 2020 budget. HDR developed a projection of revenues and expenses for
future years based on assumed escalation (inflationary) factors. The wastewater study developed
a 6-year period to review future rate needs based on operating and capital needs, however, the
focus for purposes of rate setting was the next five-year period (FY 2021 – FY 2025). The
wastewater utility includes a wholesale customer, Evergreen, which receives treatment services
and no collection services or costs. In order to adequately review the cost of service for this
customer the wastewater treatment and collection revenue requirement was split into these two
services. A rate transition plan was developed for this five-year time period in a way that creates
a smooth transition to fully funding the utility in the future.
Executive Summary 12
City of Kalispell – Water and Wastewater Rate Study
The wastewater capital funding plan was developed in a manner similar to the water utility. The
adopted FY 2020 – FY 2025 CIP was used as the starting point. HDR then worked with the City’s
staff to develop a funding plan that provided the needed revenue to construct the projects but
also minimized the long-term rate impacts to customers. The City’s wastewater capital
improvement plan totals approximately $20.5 million in treatment projects, and $22.5 million in
collection projects for the FY 2020 through FY 2025 rate setting period. A major component of
the capital costs includes treatment projects of construction of a new EQ basin converted to
future primary clarifier, install of dome covers for the secondary clarifiers, and construction of a
composting facility. Collection capital costs include lift station #3, Grandview lift station, and
gravity sewer replacement projects. Shown below in Table ES–9 is a summary of the wastewater
capital improvement plan.
[1] – Summation of table may reflect rounding errors due to decimal points.
Table ES – 9
Summary of the Wastewater Capital Improvement Plan ($000s)
FY2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025
Treatment
Renewal and Replacement $1,042 $117 $158 $507 $4,976 $156
Growth Related Projects 584 2,382 113 259 3,107 5
Regulatory Projects 0 403 3,199 1,621 150 1,786
Total Capital Improvement
Projects $1,626 $2,902 $3,470 $2,387 $8,233 $1,946
Less: Outside Funding Sources
Operating Fund Reserves $192 $325 $325 $325 $325 $0
Impact Fee Funds 584 112 112 112 112 796
Assumed SRF Loans 0 1,555 2,063 920 6,706 0
Total Outside Funding $776 $1,992 $2,500 $1,357 $7,143 $796
Treatment Rate Funded Capital $850 $910 $970 $1,030 $1,090 $1,150
Collection
Renewal and Replacement $1,368 $2,439 $2,389 $3,706 $2,252 $414
Growth Related Projects 3,235 1,890 1,032 2,005 1,359 423
Total Capital Improvement
Projects $4,603 $4,330 $3,420 $5,711 $3,612 $837
Less: Outside Funding Sources
Operating Fund Reserves $3,632 $0 $0 $0 $0 $0
Developer Contribution 0 0 0 0 1,041 0
Impact Fee Funds 451 275 375 375 425 17
Assumed SRF Loans 0 3,475 2,405 4,636 1,386 0
Total Outside Funding $4,083 $3,750 $2,780 $5,011 $2,852 $17
Collection Rate Funded Capital $520 $580 $640 $700 $760 $820
Total Rate Funded Capital $1,370 $1,490 $1,610 $1,730 $1,850 $1,970
Executive Summary 13
City of Kalispell – Water and Wastewater Rate Study
Table ES–9 shows the capital funding for the projects in the CIP are funded by either operating
or impact fee reserves, annually through rates, or assumed SRF loans. The City will need to
closely monitor the operating and impact fee fund reserve levels to make sure it is not severely
depleted due to over-use of reserve funds for capital. In addition, future known costs were
included in the future years to reflect those changing costs of O&M expenses, staffing, etc. A
more detailed summary of the projected changes in overall O&M are included in Section 4 of this
report.
Once the wastewater utility’s operating and capital expenses are summed, a comparison to the
total wastewater revenues can be made to determine the size and timing of any needed rate
(revenue) adjustments. The summary of the wastewater revenue requirement is shown below
in Table ES-10. It indicates the need for rate adjustments in order to properly fund the
wastewater utility.
Table ES – 10
Summary of the Wastewater Revenue Requirements ($000s)
Proposed Projected
FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025
Revenues
Rate Revenues $4,634 $4,634 $4,681 $4,727 $4,775 $4,822
Other Revenues 77 31 35 39 36 30
Total Revenues $4,711 $4,666 $4,716 $4,766 $4,810 $4,853
Expenses
O&M Expenses $3,365 $3,383 $3,444 $3,799 $3,958 $4,071
Equip. Replacement Program 44 169 169 169 169 169
Rate Funded Capital 1,370 1,490 1,610 1,730 1,850 1,970
Debt Service Payment 1,848 2,147 2,448 2,821 3,297 3,296
Less: Impact Fees to Debt (891) (245) (252) (260) (267) (307)
To / (From) Reserves (1,024) (141) 80 80 80 80
Total Expenses $4,711 $6,803 $7,499 $8,340 $9,087 $9,279
Bal./(Defic.) of Funds $0 ($2,138) ($2,783) ($3,574) ($4,277) ($4,426)
Bal. / (Def.) as % of Rate Rev 0.0% 46.1% 59.5% 75.6% 89.6% 91.8%
Proposed Revenue Adjustment 0.0% 46.1% 6.5% 6.5% 6.5% 6.5%
Add'l Revenue with Rate Adj. $0 $1,771 $2,611 $3,592 $4,031 $4,482
Bal. / (Def.) After Rate Adj. $0 ($367) ($171) $18 ($246) $56
Key Financial Targets
Ending Operating Balance $4,262 $3,349 $2,852 $2,545 $1,974 $2,030
Ending Operating Balance Target $840 $876 $891 $978 $1,018 $1,046
Rate Funded Capital $1,370 $1,490 $1,610 $1,730 $1,850 $1,970
Rate Funded Capital Target (2.00) 1.00 1.09 1.18 1.26 1.35 1.44
Debt Service Coverage (> 1.25) 0.70 1.34 1.52 1.56 1.43 1.55
[1] – Summation of table may reflect rounding errors due to decimal points.
Executive Summary 14
City of Kalispell – Water and Wastewater Rate Study
Table ES–10 shows the total deficiency of revenues before any wastewater rate adjustments
ranges from $2.1 million in FY 2021 to $4.4 million by FY 2025. The proposed revenue
adjustments are designed to provide sufficient revenue to fund the annual O&M and capital
needs of the wastewater utility, as well as maintaining strong financial metrics such as debt
service coverage ratios and ending reserve balances. The key financial targets are met during the
projected time frame based on the proposed revenue adjustments.
As was noted in the capital section, the wastewater utility is proposed to rely heavily on the
reserve funds and draws approximately $5.5 million over the projected time period to fund
capital projects and minimize overall rate impacts. This was feasible given adequate current
reserve levels and results in inflationary level rate adjustments. However, the annual cash flow
and ending reserve balances should be reviewed each year to make sure that the uses of funds
does not place the reserve below the minimum level. Additionally, as the wastewater reserves
approach the minimums, the need for rate adjustments should be evaluated so as to avoid future,
large rate adjustments for customers.
To implement the needed adjustments, a wastewater transition plan was developed. Provided
in Table ES-11 is the proposed wastewater utility rate transition plan. In addition to FY 2020 - FY
2025, the City Council included a recommended 3% rate adjustment beyond FY 2025 to maintain
the current level of service for the wastewater utility.
Table ES – 11
Summary of the Wastewater Rate Transition Plan
Recommended
FY
2021[1]
FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Proposed Revenue Adjustment 46.1% 6.5% 6.5% 6.5% 6.5% 3.0% 3.0%
[1] – The City (collection and treatment) portion is 49.4%, and Evergreen is 18.5%. In total this is 46.1%.
Wastewater Cost of Service Analysis
Similar to the water cost of service analysis, a wastewater cost of service analysis is concerned
with the proportional and equitable distribution of the total wastewater revenue requirement to
the various wastewater customer classes of service. The cost of service analysis allocates costs
between the various customer classes of service based on each customer classes proportional
share of volume, strength and customer-related costs. The customer classes for the City’s study
are the City’s customers, both residential and commercial, and Evergreen. Collection costs are
all borne by City customers while treatment costs are allocated and distributed proportionally
between the City and Evergreen based on the current agreement. In summary form, the cost of
service analysis began by functionalizing the revenue requirement for the City into the treatment
and collection components for City (treatment and collection) and Evergreen (treatment only).
The functionalized revenue requirement was then allocated into the various cost components
(e.g., volume, strength, customer related). The individual allocation totals were then
proportionally distributed to the various customer classes of service based on the appropriate
Executive Summary 15
City of Kalispell – Water and Wastewater Rate Study
distribution factor. The distributed expenses for each customer class were then aggregated to
determine each customer class’s overall revenue responsibility. As a result, the cost of service
proportionally allocated treatment and collection costs to the City’s customers and only
treatment costs to Evergreen. Table ES–12 provides the summary of the cost of service analysis
for the FY 2021 test year.
Table ES – 12
Summary of the Wastewater Utility Cost of Service Analysis ($000’s)
Classes of Service
Present Rate
Revenues
Distributed
Costs
$
Difference
%
Difference
City
Treatment $2,966 3,548 (582) 19.6%
Collection 1,180 2,645 (1,465) 124.1%
Total $4,146 $6,193 ($2,047) 49.4%
Evergreen 488 578 (90) 18.5%
Total $4,634 $6,772 ($1,964) 46.1%
[1] – Summation of table may reflect rounding errors due to decimal points.
The allocation of costs reflects the facilities and costs allocated to each customer class with their
respective benefit from services. It is important to understand that a cost of service analysis is
based on one year’s data and customer information. The usage volumes and the costs incurred
by the utility will change from year to year. As such, it is appropriate to determine whether these
findings are consistent over time, and adjust accordingly. Section 5 of this report provides a
detailed discussion of the cost of service analysis conducted for the City. Given the results of the
cost of service analysis, HDR would recommend the treatment rates be adjusted to reflect the
treatment cost of service. The Technical Appendix B contains the various wastewater exhibits
and additional details associated with the cost of service analysis.
Wastewater Rate Design Analysis
The proposed wastewater rate designs maintain their current rate structure. It is proposed that
only the level of the wastewater rates be adjusted based on the recommendations of the study.
All components of the rate structure – fixed and variable – are proposed to be increased to meet
the target revenue levels based on the rate transition plan. In addition to the FY 2020 - FY 2025,
the City Council included a 3% rate adjustment beyond FY 2025 to maintain the current level of
service for the wastewater utility. Table ES-13 summarizes the present and proposed rate
structure for all customers, combined treatment and collection.
Executive Summary 16
City of Kalispell – Water and Wastewater Rate Study
Table ES – 13
Present and Proposed Monthly Wastewater Rates
Present FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Proposed
Adjustment 49.4% 6.5% 6.5% 6.5% 6.5% 3.0% 3.0%
Fixed Charge
(per account) $8.44 $12.61 $13.43 $14.30 $15.23 $16.22 $16.71 $17.21
Volume
Charge
($/1,000 Gal.)
$4.78 $7.14 $7.60 $8.09 $8.62 $9.18 $9.46 $9.74
All components of the rate structure – fixed and variable – are proposed to be increased to meet
the target revenue levels based on the rate transition plan. At present rates, a typical residential
customer with 4,000 gallons of usage per month would pay $27.56 monthly. Under the proposed
rates, the same customer would pay $41.17 in FY 2021, a $13.64 monthly increase. Table ES-14
shows the average residential bill for the rate period of FY 2021 to FY 2027.
Table ES – 14
Summary of the Average Residential Wastewater Bill
FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Proposed Revenue Adjustment 49.4% 6.5% 6.5% 6.5% 6.5% 3.0% 3.0%
Present Avg. Residential Bill[1] $27.56
Avg. Monthly Residential Bill $41.17 $43.83 $46.66 $49.71 $52.94 $54.55 $56.17
Monthly $ Change 13.61 2.66 2.83 3.05 3.23 1.61 1.62
Cumulative $ Change 13.61 16.27 19.10 22.15 25.38 26.99 28.61
[1] - Average bill based on 4,000 gallons per month.
For Evergreen, the proposed adjustment is based on the cost of service results for FY 2021 of
18.5%. Provided below in Table ES–15 are the present and proposed monthly wastewater rates
for Evergreen, for treatment only.
Executive Summary 17
City of Kalispell – Water and Wastewater Rate Study
Table ES – 15
Present and Proposed Monthly Evergreen Wastewater Rates[1][2]
Present FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Proposed
Adjustment 18.5% 6.5% 6.5% 6.5% 6.5% 3.0% 3.0%
Fixed Charge
(per account) $6.22 $7.37 $7.85 $8.36 $8.90 $9.48 $9.76 $10.05
Volume
Charge
($/1,000 Gal.)
$2.50 $2.96 $3.15 $3.35 $3.57 $3.80 $3.91 $4.03
[1] – Evergreen present base rate is $6.22 [Base = $8.44; Evergreen is 73.7% of $8.44 = $6.22].
[2] – Evergreen present volume rate is $2.50 [Volume = ($4.78 - I/I $1.13 - Billing $0.26 = $3.39); Evergreen is
73.7% of $3.39 = $2.50].
In addition to the current rates the City has strength surcharges for when a customer goes over
set limit components. Provided below in Table ES – 16 are the present and proposed monthly
surcharge rates.
Table ES – 16
Proposed Wastewater Surcharge Rates[1]
FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Bio-chemical Oxygen
Demand > 250 mg/l
($ / Lbs.) $0.16 $0.17 $0.18 $0.19 $0.20 $0.21 $0.22
Suspended Solids > 250
mg/l
($ / Lbs.)] 0.71 0.75 0.80 0.85 0.91 0.94 0.97
Phosphorous > 7 mg/l
($ / Lbs.) 6.10 6.49 6.91 7.36 7.84 8.08 8.32
Nitrogen > 40 mg/l
($ / Lbs.) 1.25 1.33 1.42 1.51 1.61 1.66 1.71
[1] – BOD and SS currently assessed on a different approach. Phosphorus and Nitrogen are new surcharges in FY
2021.
Summary of the Water and Wastewater Rate Study
The adequacy of the City’s water and wastewater rates were reviewed based on the current
system and customer information of each utility. Based on the analyses developed herein, which
included the budgeted operating and capital expenses, a comprehensive set of revenue
recommendations for each utility has been developed. The following sections of the report
provide a more detailed discussion of the technical analyses undertaken, along with the findings,
conclusions and recommendations of the study.
Introduction and Overview 18
City of Kalispell – Water and Wastewater Rate Study
1.1 Introduction
The City of Kalispell (City) retained HDR Engineering, Inc. (HDR) to perform a comprehensive rate
study for its water and wastewater utilities. A comprehensive rate study determines the
adequacy of the existing rates and provides the basis for any needed adjustments to establish
cost-based rates. This report describes the methodology, findings, and conclusions of the rate
study process. The City has historically conducted comprehensive water and wastewater rate
studies and this study is consistent with the City’s past rate setting practices.
The importance of setting cost-based rates cannot be under-stated. Rates should be established
to adequately fund each utility’s operating and capital requirements. Rates set too low may
result in insufficient funds to maintain system integrity. This study provides a cost-basis and
rationale for making appropriate rate (revenue) adjustments, as well as identifying issues of
equity for some of each utility’s current rates and customers.
1.2 Overview of the Rate Study Process
A comprehensive study generally consists of three interrelated analyses performed for each
utility. Figure 1 - 1 provides an overview of these analyses.
Figure 1 – 1
Overview of the Comprehensive Rate Analyses
In a comprehensive rate study, a revenue requirement analysis is concerned with the overall
funding sources (revenues) and expenses (both operating and capital) of the utility. From this
analysis, a determination can be made as to the overall level of adjustment to rates. Next, a cost
of service analysis is performed to equitably allocate the revenue requirement to the various
types of customers served (e.g., residential, commercial). Finally, given the overall level of
Revenue Requirement Analysis
Cost of Service Analysis
Rate Design Analysis
Compares each utilty’s revenues to expenses
to determine the overall rate (revenue)
adjustment required
Allocates the revenue requirements to the
various customer classes of service of each
utility in a “fair and equitable" manner
Considers both the level and structure of
the rate design to collect the target
level of revenues for each utility
1.0 Introduction and Overview
Introduction and Overview 19
City of Kalispell – Water and Wastewater Rate Study
revenues to be collected, along with an equitable allocation of those costs, the last step of the
rate study process in the design of rates to collect the appropriate level of revenues while
considering the City’s rate design goals and objectives for each utility (e.g. revenue stability,
conservation, ease of administration, customer understanding).
In developing this study, HDR utilized generally accepted cost of service and rate setting
techniques (i.e., AWWA, WEF) and industry best practices in the development of the City’s utility
rate studies. This report discusses the methodology, findings and conclusions of the rate study
analysis conducted for each utility. This study has focused on the level of rate revenue needed
to fully fund each utility on a stand-alone basis, and the rate setting approach best generate that
level of funding, while meeting the City’s goals and objectives.
1.3 Report Organization
A detailed written report has been developed to document the analyses undertaken for each
utility. This report is organized as follows:
x Section 2 provides background information about the utility rate setting process.
x Section 3 reviews financial policies in rate setting.
x Section 4 reviews the development of the water rate analysis.
x Section 5 reviews the development of the wastewater rate analysis.
At the end of this report, a technical appendix for each utility is attached which provides a copy
of the technical analyses undertaken in the preparation of this report.
1.4 Summary
This report reviews the water and wastewater rate study prepared for the City of Kalispell. The
report has been developed utilizing generally accepted utility setting methodologies. This report
was prepared utilizing data, information and records provided by the City.
Overview of the Rate Setting Process 20
City of Kalispell – Water and Wastewater Rate Study
2.1 Introduction
Gaining an understanding of the overall rate setting process, and the specific rate setting
methodologies used within this study, is important to better understand the City’s approach to
these studies. This section of the report provides background information about the rate setting
process, including descriptions of generally accepted principles, types of utilities, methods of
determining the revenue requirement, and rate design. This should provide the reader with a
better understanding of the detailed analyses presented in following sections of the report and
the basis for our findings, conclusions and recommendations.
2.2 Generally Accepted Rate Setting Principles
As a practical matter, utilities should consider setting their rates around some generally accepted
or global principles and guidelines. In general, utility rates should be:
9 Cost-based, equitable, and set at a level that meets the utility’s full revenue requirement
9 Easy for the customer to understand and easy for the utility to administer
9 Designed to conform with generally accepted rate setting techniques
9 Stable in their ability to provide adequate revenues to meet the utility’s financial,
operating, capital infrastructure and regulatory requirements
9 Established at a level that is, from the customer’s perspective, stable from year-to-year
These general principles and guidelines have historically been used by the City to establish their
current water and wastewater rates. For this study, they were again applied, to the degree
possible, in the development of the rate analyses developed for the City.
2.3 Prudent Financial Planning
Financial rate-setting policies and guidelines are integral to the process of developing a utility
rate study. Financial policies are intended to provide guidance in the financial planning and rate-
setting process, and in the day-to-day financial
management of the City’s utilities. Adoption of financial
policies provides a strong foundation for the long-term
financial sustainability of the utilities and provides the
outside financial community with a better understanding
of the City’s commitment to managing the utilities in a
financially prudent manner. As a part of the City’s utility
rate studies, key financial and rate-setting policies/targets
were reviewed and established. These key financial
policies address issues such as maintaining minimum
reserves for cash flow and capital improvement purposes, required minimum debt service
coverage (DSC) ratios, and consistent and adequate rate funding of renewal and replacement
project for the City. Each of the key financial planning and rate setting objectives were carried
forward from the City’s prior water, and wastewater financial policies.
“Financial policies are intended
to provide guidance in the
financial planning and rate-
setting process…Adoption of
financial policies provides a
strong foundation for the long-
term financial sustainability of
the utilities...”
2.0 Overview of the Rate Setting Process
Overview of the Rate Setting Process 21
City of Kalispell – Water and Wastewater Rate Study
2.4 Determining the Revenue Requirement
Most public utilities use the “cash basis” methodology for establishing their revenue requirement
and setting rates. This revenue requirement methodology conforms to most public utility
budgetary requirements and the calculation is easy to understand. Under the “cash basis”
revenue requirement methodology, a public utility:
9 Adds operation and maintenance (O&M) expenses to any applicable transfer payments
to determine total operating expenses. Operation and maintenance expenses include the
materials, electricity, labor, supplies, etc. needed to keep the utility functioning.
9 Calculates capital costs by adding debt service payments (principal and interest) to capital
improvements financed with rate revenues. In lieu of including capital improvements
financed with rate revenues, a utility sometimes includes (i.e., substitutes) annual
depreciation expense to stabilize the annual revenue requirement from year-to-year.
Note that the two portions of the capital expense component (debt service and capital
improvements financed from rates) are necessary under the cash basis methodology because
utilities generally cannot finance all their capital facilities with strictly rates or long-term debt.
Under the cash basis revenue requirement methodology the sum of the operating expenses and
capital costs equals the utility’s total revenue requirement during any period of time (see Table
2 - 1).
Table 2 – 1
“Cash Basis” Revenue Requirement Methodology
+ O&M Expense
+ Transfer Payments
+ CIP Financed with Rate Revenues (ш Deprec. Exp.)
+ Debt service (Principal + Interest) .
= Total Revenue Requirement
The analyses developed within this report utilized the “cash basis” methodology. This is
consistent with past practices of the City’s utility rate-setting.
2.5 Analyzing Cost of Service
After the total revenue requirement is determined, for each utility, it is then equitably allocated
to the customer classes (rate schedules) of each utility. The allocation, usually analyzed through
a cost of service analysis, reflects the cost relationships for producing and delivering water
services or collecting and treating wastewater. A cost of service analysis requires three analytical
steps:
1. Costs are functionalized or grouped into the various cost categories related to providing
service (e.g., for water; supply, distribution, pumping, etc.). This step is largely
accomplished by the utility’s accounting system.
2. The functionalized costs are then allocated to specific cost components. Allocation refers
Overview of the Rate Setting Process 22
City of Kalispell – Water and Wastewater Rate Study
to the arrangement of the functionalized data into cost components. For example, a
water utility’s costs are typically allocated as being related to meeting commodity
(average use), capacity (peak use), customer, or fire protection-related needs. For a
wastewater, costs are typically allocated to volume (total flow), strength, and customer
related components.
3. Once the costs are allocated into cost components, they are proportionally distributed to
the customer classes of service (residential, commercial). The distribution is based on
each customer class’ relative contribution to the cost component (i.e., benefits received
from and burdens placed on the system and its resources). For example, customer-related
costs are distributed to each class of service based on the total number of customers in
that class of service. Once costs are distributed, the revenues from each customer class
of service required to achieve cost-based rates can be determined. At the conclusion of the cost of service study, two key pieces of information are provided. First,
the cost of service provides an understanding of the total revenues to be collected from each
class of service. In other words the water revenue requirement is, for example, $10.0 million and
the cost of service provides an equitable method to assign that total cost of $10.0 million
between the various water customer classes of service (e.g., residential, commercial). The other
important piece of information provided by the cost of service analysis is the average unit costs.
Average unit costs are the distributed costs divided by the appropriate consumption (billing)
units. This provides an understanding of the cost on a $/customer/month and $/gallon basis.
These average unit costs are cost-based rates and used to establish the proposed rates in the
initial rate study year.
Within this study, a cost of service analysis was conducted for both the water and wastewater
utility systems.
2.6 Designing Rates
In the design of rates for each utility, the initial starting point is a cost-based rate design.
However, the process of designing rates may also consider non-cost factors such as a customer’s
ability to pay, continuity of the City’s past rate setting philosophy, efficient use, encouragement
of economic development, ease of administration, and customer understanding. These other
non-cost factors that may be taken into account when designing final proposal rates are
considered but a utility should maintain rates as close to cost-based as possible to avoid subsidies
and inequities between customers.
2.7 Economic Theory and Rate Setting
One of the major justifications for a utility rate study is founded
in economic theory. Economic theory suggests that the price of
a commodity must roughly equal its cost if equity among
customers is to be maintained. This statement’s implications on
utility rate designs are significant. For example, a water utility
usually incurs capacity-related costs in meeting its peak day
requirements. It follows that the customers who cause
maximum peak day demands should pay for those demand-
related facilities in proportion to their contribution to maximum demands. Emphasis on seasonal
“...a utility should
maintain rates as close
to cost-based as
possible to avoid
subsidies and inequities
between customers.”
Overview of the Rate Setting Process 23
City of Kalispell – Water and Wastewater Rate Study
and marginal cost-based utility rates embraces this economic concept. When costing and pricing
techniques are refined, consumers have a more accurate picture of what the commodity costs to
produce and deliver. This price-equals-cost concept provides the basis for the subsequent
analysis and comments.
2.8 Summary
This section of the report has provided a brief introduction to the general principles, techniques,
and economic theory used to set water and wastewater utility rates. These principles and
methodologies have been the basis for the City’s past utility rate studies and continue to be the
basis for the City’s current rate study analyses. The next section of the report reviews the financial
policies of the rate setting process.
Review of the Financial Policies 24
City of Kalispell – Water and Wastewater Rate Study
3.1 Introduction
Financial policies are intended to provide guidance in the financial planning and rate-setting
process, and in the day-to-day financial management of the City’s utilities. Adoption of financial
policies provides a strong foundation for the long-term financial sustainability of each utility and
provides the outside financial community with a better understanding of the City’s commitment
to managing the utilities in a financially prudent manner. The City currently has in place several
financial/rate setting policies. This section of the report will provide a summary of the review of
financial policies undertaken as a part of this study.
3.2 Objectives in Establishing Written Financial Policies
There are a variety of reasons or benefits for establishing written financial policies. Among these
benefits are the following:
x Provides management with clear direction
x Provides consistent and logical financial/rate
(business) decisions
x Provide future City Council’s with the basis or
reasoning behind past decisions (documentation)
x Helps the City’s customers better understand the
City Council’s financial/rate setting philosophy
x Provides a strong message to the outside financial
community (bond ratings)
The last benefit noted above is a significant point. The outside financial community (i.e., rating
agencies) view written financial policies as a strong indicator of the City Council’s dedication and
commitment to managing the City’s utilities in a financially prudent and sound manner.
3.3 Review of the City’s Financial Policies
The City already has several financial policies in place for the utilities. These policies are intended
to guide the financial and management practices of the City’s utilities. While there are financial
policies/practices in place, in some instances, the policies or practices are not necessarily
documented or formally adopted. In other words, they are well-accepted financial planning
practices, but unwritten formal policies. Provided below is an overview of the review of the City’s
key financial policies.
3.3.1 Reserve Policies
From a very simplistic perspective, reserve funds may be thought of as the utility’s “savings”
account which can accumulate funds or utilize (i.e., draw down) funds as needed to manage
changes in cash-flow requirements. While that is a very simplistic perspective of a reserve fund
and its purpose, the actual practice of establishing and utilizing reserve funds is more complex.
Reserves policies often focus on two areas; the types of reserves to maintain and the minimum
level of funding to be maintained in each reserve.
3.0 Review of the Financial Policies
“The outside financial
community views written
financial policies as a
strong indicator of the
City Council’s dedication
to managing the City’s
utilities in a financially
prudent and logical
manner.”
Review of the Financial Policies 25
City of Kalispell – Water and Wastewater Rate Study
Typically utilities maintain several different types of reserve funds. These may include: an
operating (cash flow) reserve, a capital (replacement) reserve, a bond fund reserve, an
emergency or contingency reserve, and a rate stabilization reserve. Each of these reserves has
its own financial, operating or legal requirements which may set an established minimum reserve
level. At the same time, a reserve fund may be unrestricted or restricted.1 A key aspect of
reviewing reserve levels was determining target minimum levels for the City’s current reserves.
Much like a water reservoir, minimum reserve levels for a reserve fund are intended to meet
minimum operational requirements, but more importantly, to signal to management that a cash
flow issue may need to be addressed. Maintenance of minimum reserve levels should not, on its
own, trigger the need for a rate adjustment. However, after consecutive years of diminishing
reserves as a result of under-recovery of costs, rates should be reviewed. Provided below is a
discussion of the basis for the establishment of minimum reserve levels for each of the City’s
reserve funds.
Operating Cash Funding - The operating reserve is used to meet cash flow requirements. Cash
flow varies from month to month and the operating reserve is used to meet the difference
between revenues received and cash flow expenditures.
9 Establishing Minimum Operating Reserve Balance – A minimum balance for each utility
equal to 30 days O&M expense is currently City policy. This represents approximately 8% of
the O&M operating expenses (30 days/365 days). The City target policy for this fund is 90
days of O&M expense is a more “ideal” balance at 25% of the O&M expenses (90 days/365
days).
9 Other Operating Reserve Recommendations – For financial planning purposes, the City
currently strives to meet the 90 day operational cash reserve target. This policy should be
formally documented and reviewed on an annual basis.
Impact Fee Reserve - A growth-related capital reserve is related to capacity or expansion-related
capital projects. The City utilizes a combined (buy-in plus future) methodology and places impact
fees in reserves; the impact fee revenue is reviewed annually and funds are allotted towards debt
service payments and/or growth related capital. Generally a growth related reserve fund has no
required minimum balance given the fluctuations in sources and uses of impact fees on an annual
basis.
9 Establishing Minimum Impact Fee Reserve – There is no required minimum impact fee
reserve level.
9 Other Impact Fee Reserve Recommendations – The City should annually review the amount
in the impact fee reserve to make sure that the uses of funds does not place the reserve in a
negative situation for both water and wastewater.
1 An unrestricted reserve may be used for any operating or capital purpose. The operating reserve is an example of
an unrestricted reserve. A restricted reserve is a dedicated reserve fund and may only be used for the specified
purpose. For example, a bond fund reserve is a restricted reserve which must be set aside when a revenue bond is
issued.
Review of the Financial Policies 26
City of Kalispell – Water and Wastewater Rate Study
Equipment Replacement Program Reserve - The equipment replacement operating reserve is
used to meet cash flow requirements for equipment replacement.
9 Establishing Minimum Operating Reserve Balance – the equipment replacement reserve is
based on the average of five year equipment replacement program plan.
9 Other Operating Reserve Recommendations – For financial planning purposes, the City
should review annually during the budget process.
Capital Improvement and Emergency Reserve - The reserve fund is typically established in
relation to a major catastrophe of large equipment or infrastructure and immediate funding is
needed. The City currently has a policy in place for water but not wastewater.
9 Establishing Minimum Capital Improvement and Emergency Reserve – The minimum capital
improvement and emergency reserve is established for the water fund of $400,000 for each
utility.
9 Other Capital Improvement and Emergency Reserve Recommendations – The City should
annually review the amount for emergency purposes for both water and wastewater.
Bond Reserve - When debt is issued the bond covenants may require the establishment of a bond
reserve. The reserve fund is typically established in relation to the maximum annual debt
payments of the bond and the reserve is funded when the debt is issued and remains in place
and fully funded until full repayment of the debt. A bond reserve is a restricted reserve.
9 Establishing Minimum Bond Reserve – The minimum bond fund reserve is established within
the bond (issuance) documents and the bond covenants.
9 Other Bond Reserve Recommendations – The City currently complies with their bond reserve
requirements and no formal action or policy is necessary.
3.3.2 Review of the Financial Policy for a Target Debt Service Coverage Ratio
A debt service coverage ratio is an important financial measure that is reviewed by bond rating
agencies and banks to evaluate a utility’s ability to meet debt service obligations (payments). For
revenue bonds, there is generally a legal requirement (rate/bond covenant) to meet a minimum
debt service coverage ratio. The debt service coverage (DSC) ratio is calculated by subtracting
total O&M from total revenues. The resulting figure is the balance available for debt service
payment. The balance available for debt service is then divided by the annual debt service
obligations (payments) to determine the debt service coverage ratio.
For a revenue bond, most bond covenants require meeting a minimum coverage ratio of 1.25 –
1.30. While the City would have a legal obligation to meet the minimum, for financial planning
purposes it is prudent to plan around meeting a debt service coverage ratio that is above the
technical minimum. By financially planning around a higher DSC, the utility is providing a financial
buffer to meet the minimum DSC even if the utility has any negative financial fluctuations (e.g.
cool/wet summer, low sales/revenues). At the same time, by planning around a higher debt
service coverage ratio, the City will appear financially stronger to the bond rating agencies, which
may translate into a higher bond rating and lower interest rates on borrowing. Bond rating
agencies do not want utilities to financially plan around simply meeting the minimum.
Review of the Financial Policies 27
City of Kalispell – Water and Wastewater Rate Study
For internal financial planning purposes, the City currently has a 1.25 debt service coverage ratio
for each utility.
HDR Recommendation on Target DSC Ratio - The City currently has a financial plan target of a
1.25 debt service coverage ratio for each utility. This policy should be written and reviewed as
part of the annual target when evaluating rate adjustments for each utility.
3.3.3 Review of the Financial Policy for Rate Funding of Renewal and
Replacement Capital Projects
The maintenance and replacement of existing infrastructure is a major issue within the utility
industry. Having a strong policy statement to provide adequate funding for the renewal and
replacement of existing infrastructure (i.e. capital projects) is critical to maintain system
reliability and efficiency.
Prudent financial planning dictates that a utility should fund a certain portion of capital
improvement projects from rates on an on-going basis. Absent a formal asset management plan,
the general financial guideline that may be is used is that, at a minimum, a utility should fund an
amount equal to or greater than annual depreciation expense. Depreciation expense reflects the
level of investment in the existing system infrastructure.
It is important to note that there is an interrelationship between the level of funding for renewal
and replacement and debt service coverage. Coverage above a 1.00 DSC is essentially funding
for renewal and replacement capital.
There are three benefits for funding an amount greater than annual depreciation expense. First,
depreciation expense reflects the value of the investment when it was originally made (e.g.
average of 20 to 25 years ago). Funding an amount greater than annual depreciation expense
better reflects the replacement cost of that asset.2 Second, increasing the level of capital funding
from rates will help provide greater cash flow to fund the capital plan in future years, and
minimize any long-term borrowing needs. Finally, an increased level of capital funding will have
the added benefit of strengthening the utility’s debt service coverage ratio.
HDR Recommendation for the Level of Rate Funding for Renewal and Replacement Capital
Projects – The City should establish a policy of targeting, as a minimum, one (1) year’s annual
depreciation expense as repair and replacement for each of the utilities. For the City’s study this
has been phased into a 2.0 or 2 year’s annual depreciation for water by FY 2025 and 1.5 or 1 &
1/2 year’s depreciation for wastewater by FY 2025.
3.3.4 Review of the Financial Policy for Funding of Funding of Capital
Improvement Projects
The City uses available reserves, and rate funded capital improvement project funds to pay for
capital improvement projects. The City also reviews impact fee revenues annually for use of
these funds towards growth related debt, or growth related capital improvement projects. The
2 Original cost is the value of the asset when it went into service and replacement cost is the cost of replacement in
today’s dollars. For example, a truck that cost $25,000 in 2010 may cost $30,000 in today’s replacement cost. Annual
depreciation expense is reflective of the $25,000 value of the truck, and not of the cost to replace it in today’s dollars
($30,000).
Review of the Financial Policies 28
City of Kalispell – Water and Wastewater Rate Study
City uses long-term debt only as needed. The impact fee revenues may fluctuate year to year so
it is prudent for the City to evaluate the impact of these revenues on rates, should impact fee
funds not be available to offset debt service, or growth related capital projects.
Since the City derives the majority of their utility revenues from rates, it is the City’s practice to
annually review the status of their rates for each utility to verify adequate rate revenues. It is
the City’s practice to review their rates in a comprehensive manner every five (5) years, which is
a generally accepted recommended practice/policy. This approach updates revenues and costs,
while helping to maintain long-term financial sufficiency, sustainability and equity.
It should be acknowledged and noted that while the City uses a five-year rate plan for their five-
year rates, nothing should preclude the City from adjusting their rates mid-term should financial
conditions indicate such.
HDR Recommendation on Funding of Capital Improvement Projects – The City currently
establishes retail rates for a five-year period. This policy should be documented and the language
should be included within their rate ordinance for the ability to adjust rates on an annual basis
by the CPI if needed.
This concludes the summary of financial policies related to reserves, debt service coverage ratio,
rate funding of renewal and replacement capital projects, and funding of capital improvement
projects.
3.4 Summary
This section of the report has provided a review and discussion of various key financial/rate
setting policies. The financial/rate setting policies discussed herein have been used in the review
of each utility. The next section of the report will review the water rate study analyses.
Development of the Water Rate Study 29
City of Kalispell – Water and Wastewater Rate Study
4.1 Introduction
This section of the report details the development of the City’s water utility rate study. A
comprehensive water rate study is used to determine the adequacy of the existing water rates
and provide the basis and rationale for any needed adjustment to establish and maintain cost-
based water rates. This section describes the methodology, findings, and conclusions of the rate
study process conducted for the City’s water utility.
4.2 Determining the Water Utility Revenue Requirement
The first analytical step in the comprehensive rate study process is the revenue requirement
analysis. This analysis determines the adequacy of the overall
water rate revenues at current (presently adopted) rates. In
developing the water utility revenue requirement, it was
assumed the utility must financially “stand on its own” and be
properly funded. As a result, the revenue requirement as
developed herein assumes the full and proper funding needed
to operate and maintain the system on a financially sound and
prudent basis. This includes maintaining adequate reserve
levels, prudently funding annual renewal and replacement
needs (i.e., rate funded capital), and meeting other industry
standard financial metrics (e.g., minimum reserves, minimum
debt service coverage). Provided in the following subsections is a more detailed discussion of the
development of the revenue requirement analysis for the City’s water utility.
4.2.1 Determining the Time Period and Methodology
The first step in calculating the revenue requirement for the water utility was to establish a test
period or the time period to review the revenue requirement analysis. For this study, the revenue
requirement was developed for a six-year time period, with a focus on the development of a rate
transition plan for the next five years (FY 2021 – FY 2025). Reviewing a multi-year time period is
recommended to help identify any major expenses that may be on the horizon, but to also
identify any trends that may be occurring in revenues or expenses. By anticipating future financial
requirements, the City can begin planning for these changes sooner, thereby minimizing short-
term rate impacts and minimizing overall long-term rate volatility.
The second step in determining the revenue requirement was to decide on the basis of
accumulating costs. For the City’s water revenue requirement analysis, a “cash basis” approach
was utilized. This method is the most commonly used methodology by municipal utilities to set
their revenue requirement, and the method used by the City in prior rate studies. The revenue
requirement developed for the City was developed specifically for the City and customized to
follow their system of accounts (budget documents) while still maintaining the components of a
“cash basis” methodology.
4.0 Development of the Water Rate Study
“...the revenue
requirement as developed
herein assumes the full
and proper funding
needed to operate and
maintain the system on a
financially sound and
prudent basis.
Development of the Water Rate Study 30
City of Kalispell – Water and Wastewater Rate Study
The primary financial inputs into the water revenue requirement analysis were the City’s
historical billing records, operating budget, and capital improvement plan. The following
discussion details the key assumptions and steps contained in the development and projections
of the City’s water revenues and expenses.
4.2.2 Projection of Water Utility Revenues
The City receives revenue for the water utility from two primary sources; water (user) rates and
miscellaneous revenue. Water rate revenues are based on the current water rate structure and
collected on a monthly basis. Miscellaneous or other revenue includes items such as installation
fees, reconnect fees, tag fees, and other miscellaneous revenues.
The first step in developing the revenue requirement was to develop a projection of water rate
revenues, at present (currently adopted) rate levels. In general, this process involved developing
projected consumption and/or billing units for each customer group. The billing units were then
multiplied by the current applicable water rates. This method of independently calculating
revenues is used to help confirm that projected revenues used within the analysis tie to the
projected billing units used in the rate design analysis. The metered consumption assumed
within the study was based on historical consumption records.
As can be seen in the graph, the majority
of the City’s rate revenues are derived
from residential customers. There are a
number of customer classes of service:
residential, commercial,
irrigation/sprinkling, and private fire. In
total, at present water rates, the City is
projected to receive approximately $3.1
million in water rate revenues in FY 2021.
Over the planning horizon of this study,
customer growth is expected to be 1.0%
annually based on WFPU characterization
and past annual revenue analysis. This
assumed gradual customer growth over time results in projected total water rate revenue level
of approximately $3.3 million for 2025.
In addition to rate revenues, the City also receives a variety of miscellaneous or other revenues.
Other water revenues are projected to be approximately $286,000 million in FY 2021. The
projected miscellaneous revenue declines to approximately $263,000 by FY 2025.
When rate revenues and miscellaneous revenues are summed together, the City’s total water
revenues are projected to be approximately $3.4 million in FY 2021, increasing gradually to $3.5
million by FY 2025. This small increase in overall revenues is primarily a result of assumed
customer growth on the water system.
Development of the Water Rate Study 31
City of Kalispell – Water and Wastewater Rate Study
4.2.3 Projection of the Water Utility Operation and Maintenance Expenses
Operation and maintenance (O&M) expenses are incurred by the City to operate and maintain
the water system. The costs incurred in this area are expensed during the current year and are
not capitalized or depreciated. In general, operation and maintenance O&M expenses are
grouped into a number of different functional categories. To begin the process of projecting O&M
expenses over the review period, escalation factors were developed. Escalation factors were
developed for the basic types of expenses incurred such as salaries, benefits, materials and
supplies, utilities, etc. The City’s escalation factors were projected based upon recent inflationary
trends. The escalation factors were generally in range of 2.0% to 5.0% per year. Labor escalated
as average for last two years budget of 3.2% annually.
Given the development of escalation factors and the budgeted FY 2020 O&M expenses, HDR then
escalated the O&M expenses based on the escalation factors. In FY 2024 an additional O&M staff
is needed to support O&M and infrastructure needs, which will be shared 50/50 between the
water and wastewater utilities. In addition, starting in FY 2021, the water utility will also annually
fund an amount for Equipment Replacement Program Reserve based on the average of the five
year plan, of approximately $120,000 per year.
Total water operation and maintenance expenses for the City are projected to be approximately
$2.2 million in FY 2021. Water O&M expenses are projected to increase to approximately $2.5
million by FY 2025 based on the projection of inflationary impacts.
4.2.4 Projection of Water Utility Capital Improvement Projects and Funding
The City developed a water capital improvement plan (2020 – 2025) based on the recent master
planning process that was utilized for the rate study. A major component of the capital costs
includes the annual renewal and replacement needs of the water system. These are items such
as the Lower Zone Reservoir Roof project, Noffsinger Rehabilitation Alternative, and booster
station upgrades. The CIP also includes a new cellular metering reading system which will be
implemented over a ten year period. There are also several larger projects that impact the CIP
related to the 1 MG Elevated Storage Tank, and Northwest Well #1 which are primarily related
to growth and expansion on the system. As part of the study, the City reviewed the projects
outlined in the master planning process and included the critical projects during this rate setting
period.
The City’s water capital improvement plan totals approximately $30.0 million for the FY 2020 –
FY 2025 time period. Provided below in Table 4-1 is the projected capital improvement program
and funding sources. The actual capital projects completed during the time period will depend
on available funding sources and priority of the projects. The primary funding sources for these
projects are assumed to be from a combination of capital reserves, issuance of new long-term
debt, and rate funded capital.
Development of the Water Rate Study 32
City of Kalispell – Water and Wastewater Rate Study
[1] – Summation of table may reflect rounding errors due to decimal points.
There are a number of different methods that may be used to finance the capital improvement
projects which include long-term debt, reserve funds, and rates. A significant portion ($7.8
million) of the projects in the City’s capital improvement program are funded from current rate
revenues which is a very sound and prudent practice. Capital reserves will also be used in years
where rate funding does not provide sufficient funding for capital projects. With the level of cash
funding from the reserves that the plan assumes, it will be important for the City to pay close
attention to the annual cash flow and ending reserve balances so that they do not trend below
minimums and trigger additional rate adjustments in the future. The last funding source is from
the issuance of new long-term debt (assumed SRF loans). Provided below is a more detailed
discussion of the capital improvement funding sources the City has used, and/or will use, to fund
the planned improvements over the six-year period of FY 2020 – 2025. Rate Funding – As discussed in the financial policies in rate setting in Section 3 of this report, a
general financial guideline - at a minimum - a utility should annually fund from rates an amount
equal to, or greater than, annual depreciation expense. Annual depreciation expense reflects the
current investment in plant being depreciated or “losing” its useful life. Therefore, this portion
of plant investment needs to be annually funded to maintain the
existing level of infrastructure. If possible, the City should be
funding capital projects from rates in an amount greater than
annual depreciation expense to better reflect replacement cost.
For 2019, the annual depreciation expense of the water utility
was approximately $840,000. In FY 2020, it is proposed that the
City’s rate funded capital for the water utility be $900,000. Over
time, and with the help of rate revenue adjustments, the water
utility will be funding approximately $1.7 million per year by FY
2025. This is approximately 2.0 times the annual depreciation by
FY 2025. With the proposed level of rate funded capital included within this study, the water
Table 4 – 1
Summary of the Water Capital Improvement Plan ($000s)
FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025
Renewal and Replacement $1,498 $1,415 $6,476 $1,774 $3,714 $1,829
Growth Related Projects 3,808 7,885 208 869 306 234
Transfer to Cash Reserve 0 0 0 0 0 0
Total Capital Projects $5,305 $9,300 $6,684 $2,644 $4,019 $2,063
Less: Outside Funding Sources
Operating Fund Reserves $238 $5,076 $249 $1,129 $839 $218
Impact Fee Funds 1,342 150 125 120 120 120
Meter Replacement Cash 151 309 79 0 0 0
Assumed SRF Loans 2,674 2,700 5,000 0 1,500 0
Total Outside Funding $4,405 $8,235 $5,454 $1,249 $2,459 $338
Rate Funded Capital $900 $1,065 $1,230 $1,395 $1,560 $1,725
“If possible, the City
should be funding capital
projects from rates in an
amount greater than
annual depreciation
expense to better reflect
replacement cost.”
Development of the Water Rate Study 33
City of Kalispell – Water and Wastewater Rate Study
utility will be making a significant step towards prudent and adequate funding for the renewal
and replacement of the existing water infrastructure.
Operating Cash Funding - There will be approximately $7.5 million in operating cash reserves
used as a funding source for capital improvement projects over the review period (FY 2021 –
2025). Annually, the operating cash reserve fund is being funded through collections of rate
revenues as well as any surplus where capital projects may be less than rate funded capital. This
allows the City to reserve funds for capital projects in later years when more or larger projects
are undertaken. This approach helps to mitigate the need for future rate adjustments and it also
smooth’s rates over time.
The City policy is the minimum operating reserve level is set at a minimum of 90 days of O&M
expenses. A minimum balance provides the City with the flexibility to address any changes and
fluctuations with minimal financial or project schedule impact. The operating cash reserve is
maintained above this level for the rate setting period.
Impact Fee Reserve Funding - There will be approximately $635,000 in impact fee reserves used
as a funding source for capital improvement projects over the review period (FY 2021 – 2025).
Annually, the impact fee reserve fund is being funded through collections of impact fee revenues.
The City currently looks at the impact fee revenue on an annual basis and offsets 50% of the
revenue against debt service payments which are paid within the operating cash fund. The
remaining annual impact fee revenues are used to offset growth related capital improvement
projects. This allows the City to reserve funds for capital projects in later years when more or
larger projects are undertaken. However, close attention should be given to the impact fee
reserve balance as to not reduce it below a positive balance. The impact fee reserve is maintained
at a positive level for the rate setting period.
Long-Term Debt – The use of long-term debt is another potential source of funding for capital
projects. There are certain advantages and disadvantages with the issuance of any long-term
debt and it is important to weigh them when deciding whether to issue long term debt. Long-
term debt does have prudent applications, whereby, it acts as a financial device to spread the
costs of a larger project, such as the Four Mile Transmission Main, over multiple years to mirror
the time period that the benefits are felt by customers. Doing so then assigns the costs of the
new facility to the customers who benefit from it over the life of the facility. As mentioned
previously, there a number of large capital projects that HDR and the City have identified as
candidates to fund utilizing long-term debt. However, before issuing any new debt the City would
explore all options to secure the most favorable debt and schedule of debt service payments for
the customers. There will be approximately $9.2 million in long term debt over the review period
(FY 2021 – 2025). For purposes of this study, HDR is not acting as a municipal advisor but rather
is attempting to highlight the funding needs and working with City staff to develop the proposed
funding plan for the water utility capital projects and establish rates to support the anticipated
future debt the City may need to issue.
As can be seen, there are multiple methods by which the City may fund their capital projects.
Each method has an impact upon the revenue requirements of the water utility.
Development of the Water Rate Study 34
City of Kalispell – Water and Wastewater Rate Study
4.2.5 Projection of Debt Service
The next component of the City’s revenue requirement is debt service. At the present time, there
are five outstanding water debt obligations, the 2004 Water Revenue Refunding Bond, 2012
Water Refunding SRF, 2012 Refunding WRF-B, 2017 WRF, and the 2020 SRF loan. The debt
payment obligation for the outstanding debt averages $500,000, annually. As was mentioned
above, as a part of the capital funding plan, it was assumed the City will issue approximately $9.2
million in long-term debt which will result in an annual payment of around $614,000 for 20 years.
Additionally, the rate transition plan developed for the City aims to maintain the financial
capability to issue additional long-term debt, should it be deemed necessary. This is
accomplished by maintaining strong debt service coverage (DSC) ratios within the financial plan,
which is a financial indicator (i.e., a financial ratio) used to measure the financial strength or
ability of the utility to repay the current outstanding debt obligations.
It should be noted the debt service shown in the revenue requirement is assumed to have 50%
of annual impact fees offset the payments, or approximately $130,000 per year. It should be
noted that the impact fee for water was reduced by 50% in FY 2021, with annually 3% increases
in the following years based on an estimated Engineering News Record average construction cost
index (ENR-CCI). The reduction in the impact fee was a result of a policy decision by the City
Council while considering the proposed impact fees. The impact fee adjustment has been
included in the rate analysis in total impact fee revenues.
4.2.6 Reserve Funding
This study has used “change in working capital” or transfer to, or from, reserve funds to smooth
and mitigate the rate adjustments in any particular year. Change in working capital can also be
used to help build or replenish reserves if they have been drawn down in prior years. In the water
revenue requirement analysis, this category was primarily used to minimize the rate impacts to
the water revenue requirement by utilizing the available reserve levels to fund deficiencies.
4.2.7 Summary of the Water Revenue Requirement
Given the above projections of revenues and expenses, a summary of the revenue requirement
for the City’s water utility can be developed. In developing the revenue requirement,
consideration was given to the City’s key financial planning considerations (e.g. minimum
reserves, target DSC, etc.). In particular, emphasis was placed on attempting to minimize rate
impacts while still adequately funding the utility’s operational activities and capital projects
throughout the projected time period. Based upon the revenue requirement analysis developed,
HDR recommends the City increase the overall water utility revenue levels by 16.5% in FY 2021,
10.0% in FY 2022, 9.5% in FY 2023, 9.5% in FY 2024, and 3.0% in FY 2025. The deficit in FY 2021 -
absent any rate adjustments - is approximately $527,000 and increases to approximately $1.6
million by FY 2025. It should be noted there are not any proposed rate adjustment in FY 2020.
Presented below in Table 4-2 is a summary of the water revenue requirement analysis.
Development of the Water Rate Study 35
City of Kalispell – Water and Wastewater Rate Study
Table 4 – 2
Summary of the Water Revenue Requirements ($000s)
Proposed Projected
FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025
Revenues
Rate Revenues $3,163 $3,194 $3,226 $3,259 $3,291 $3,324
Other Revenues 286 286 263 270 268 263
Total Revenues $3,449 $3,481 $3,490 $3,528 $3,559 $3,587
Expenses
O&M Expenses $2,491 $2,226 $2,293 $2,362 $2,484 $2,560
Equip. Replacement Program 45 119 119 119 119 119
Rate Funded Capital 900 1,065 1,230 1,395 1,560 1,725
Debt Service Payment 520 692 1,004 1,006 1,111 1,016
Less: Impact Fees to Debt (309) (122) (126) (130) (134) (138)
To / (From) Reserves (198) 27 0 0 0 0
Total Expenses $3,449 $4,008 $4,521 $4,752 $5,141 $5,282
Bal./(Defic.) of Funds ($0) ($527) ($1,031) ($1,224) ($1,582) ($1,695)
Bal. / (Def.) as % of Rate Rev 0.0% 16.5% 32.0% 37.6% 48.1% 51.0%
Proposed Revenue Adjustment 0.0% 16.5% 10.0% 9.5% 9.5% 3.0%
Add'l Revenue with Rate Adj. $0 $527 $908 $1,314 $1,765 $1,936
Bal. / (Def.) After Rate Adj. $0 $0 ($123) $89 $183 $242
Key Financial Targets
Ending Operating Balance $7,789 $2,740 $2,368 $1,329 $673 $697
Ending Operating Balance Target $625 $578 $595 $612 $642 $661
Rate Funded Capital $900 $1,065 $1,230 $1,395 $1,560 $1,725
Rate Funded Capital Target (2.00) 1.07 1.27 1.46 1.66 1.86 2.05
Debt Service Coverage (> 1.25)
Before Revenue Adjustment 1.75 1.64 1.07 1.04 0.86 0.89
After Proposed Adjustment 1.75 2.40 1.98 2.35 2.45 2.80
[1] – Summation of table may reflect rounding errors due to decimal points.
It should be noted that the balance or deficiencies in any single year are cumulative. That is, any
adjustments in the initial years will reduce the deficiency in the following years. Over the six-
year period, revenues need to be adjusted by approximately $1.7 million in order to adequately
and properly fund the City’s water utility O&M and capital infrastructure needs and meet the
financial policies and targets over the five year period.
As was noted in the capital section, the water utility is proposed to rely heavily on the reserve
funds and draws approximately $9.7 million, of both operating and impact fee reserves, over the
projected time period to fund capital projects and minimize overall rate impacts. This was
feasible given current reserve levels. However, the annual cash flow and ending reserve balances
should be monitored each year to make sure that the uses of funds does not place the reserve
below the minimum level. Additionally, as the water reserves approach the minimums, the need
Development of the Water Rate Study 36
City of Kalispell – Water and Wastewater Rate Study
for rate adjustments
should be evaluated so as
to avoid future, large,
rate adjustments for
customers.
The key financial targets
are met during the
projected time frame
based on the proposed
revenue adjustments.
The operating balance by
FY 2025 is slightly above
the target operating cash
balance of $661,000 (90
days of O&M). The rate funded capital is at two years of annual depreciation by FY 2025 ($1,725
/ $840,000 annual depreciation = 2.0). The debt service coverage ratio is above the minimum
target of 1.25 during the projected time period.
4.2.8 Key Financial Targets
4.2.8.1 Review of Operating Reserve Levels
Reserves serve a variety of purposes and are an important part of a utility’s financial picture.
Currently, the water operating fund has a minimum target balance of 90 days of O&M expenses
or approximately $625,000. As can be seen in the graphic, the reserve levels maintain or exceed
this minimum target. The graphic does illustrate that the impact fee reserve funds have, in
general, a decreasing trend
line as the total funds are
transferred to the debt
service reserve and funds
are utilized for capital
projects.
As noted reserves are
available for many
purposes. Given the critical
nature of sufficient
reserves, the City will need
to routinely monitor and
analyze reserve funds to
maintain adequate levels.
Development of the Water Rate Study 37
City of Kalispell – Water and Wastewater Rate Study
4.2.8.2 Review of Rate Funded Capital
The rate funded capital increases over time to two times the annual depreciation. This makes
funds available for renewal and replacement projects. The proposed rate adjustments provide
the City with the ability to increase rate funded capital to industry standard levels
4.2.8.3 Debt Service Coverage Ratios
A DSC is a simple financial measure of the utility’s ability to repay its debt serve payments on
outstanding debt obligations. For the City, the DSC ratio is set at a level such that revenues minus
operating expenses will be 25% greater than the maximum annual debt service on the
outstanding debt (i.e. a DSC t 1.25). However, each specific debt issuance may have its own debt
covenants and target minimum coverage ratio. Given a minimum DSC, it is often prudent to plan
or set rates at a level which exceeds this minimum. This helps to provide greater assurance of
meeting the minimum DSC, and at the same time, provides a slight cushion for unexpected
changes. This should also strengthen the City’s ability to issue revenue bonds in the future, if
necessary, since bond rating agencies would review the past financial strength and ability to
repay the bonds. It is especially important given the City’s
assumed future long-term debt contained within this revenue
requirement analysis. The new debt issuances will put more
pressure on the DSC ratio and is a significant component of the
rate revenue increases in order to maintain the targeted
minimum. In FY 2020, the DSC is estimated at 1.75, which is well
above the minimum target of 1.25. However, over time and
assuming no revenue adjustments, the DSC drops to 0.86 by FY
2024 which means the water utility would not be able to meet the
required DSC with the additional proposed debt service for the critical capital improvement
needs. With the proposed revenue adjustments, the DSC remains above the targeted minimum
level at 2.80 by FY 2025.
4.2.9 Consultant’s Water Revenue Requirements Recommendations
Based upon the revenue requirement analysis developed herein, HDR recommends that the City
adjust the overall rate levels of the water utility. These proposed rate adjustments are projected
to provide sufficient funding for the City’s water utility to fully fund its operations and planned
capital improvements, as well as maintain and potentially strengthen its financial health going
forward.
To implement the needed adjustments, a water transition plan was developed. In addition to FY
2020 - 2025, the City Council included a recommended 3% rate adjustment beyond FY 2025 to
maintain the current level of service for the water utility. Provided in Table 4-3 is the proposed
water utility rate transition plan.
“A debt service coverage
ratio (DSC) is a simple
financial measure of the
utility’s ability to repay
its debt serve payments
on outstanding debt
obligations.”
Development of the Water Rate Study 38
City of Kalispell – Water and Wastewater Rate Study
Table 4 – 3
Summary of the Water Rate Transition Plan
Recommended
FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Proposed Revenue Adjustment 16.5% 10.0% 9.5% 9.5% 3.0% 3.0% 3.0%
4.3 Development of the Water Cost of Service Analysis
In the previous subsection, the revenue requirement analysis focused on the total revenues and
expenses required to adequately fund the City’s water utility. This section discusses the
development of the water cost of service analysis. A cost of service analysis is concerned with
the equitable allocation of the total revenue requirement between the various customer classes
of service (e.g., residential, commercial, irrigation). The revenue requirement developed in the
previous subsection was utilized in the development of the cost of service analysis.
In recent years, increasing emphasis has been placed on cost of
service studies by government agencies, customers, utility
regulatory commissions, and other parties. This interest has
been generated in part by continued inflationary trends,
increased operating and capital expenditures, and concerns of
equity in rates among customers. Following the generally-
accepted guidelines and principles of a cost of service analysis, as
outlined by the American Water Works Association (AWWA) will
inherently lead to rates which are equitable, cost-based, and not
viewed as arbitrary or capricious in nature.
There are two primary objectives in conducting a cost of service study:
x Allocate the revenue requirement among the customer classes of service
x Derive average unit costs for subsequent rate designs
The objectives of the water cost of service analysis are different from determining a revenue
requirement. As noted in the previous section, a revenue requirement analysis determines the
utility’s overall financial needs, while the cost of service study determines the proportional and
equitable manner to collect (allocate) the revenue requirement.
The second rationale for conducting a cost of service analysis is to allow a rate to be designed
such that it properly reflects the costs incurred by the City. For example, a water utility incurs
costs related to average day, peak day, fire protection, and customer cost components. For
example, a water utility must build sufficient capacity to meet summer peak capacity needs.
Therefore, those customers creating this summer peak requirement should pay their
proportional and equitable share of the cost incurred to meet their summer peak demand. Each
of these types of costs may be collected in a slightly different manner as to allow for the
development of rates that collect costs in the same manner as they are incurred.
“Following the generally-
accepted guidelines and
principles of a cost of
service analysis will
inherently lead to rates
which are equitable,
cost-based, and not
viewed as arbitrary or
capricious in nature.”
Development of the Water Rate Study 39
City of Kalispell – Water and Wastewater Rate Study
4.3.1 Customer Classes of Service
The first step in a cost of service study is to determine the customer classes of service. Currently,
the City has a separate water rate schedule for each individual class of service. Also, included in
the rate is a City versus rural rate differential of 1.25. Based on the current rate schedules the
classes of service used within the water study are:
9 Residential
9 Commercial
9 Irrigation
9 Private Fire Service
In determining classes of service for cost of service purposes, the objective is to group customers
together into similar or homogeneous groups based upon facility requirements and/or flow
characteristics.
In order to determine the cost to serve each customer class of
service on the City’s water system, a cost of service analysis is
conducted. A cost of service study utilizes a three-step
approach to review costs. These were previously discussed in
our generic discussion in Section 2, and take the form of
functionalization, allocation, and distribution. Provided below
is a detailed discussion of the water cost of service study
conducted for the City, and the specific steps taken within the
analysis.
4.3.2 Functionalization of Costs
The first analytical step in the cost of service process is called functionalization. Functionalization
is the arrangement of expenses and asset (plant) data by major operating functions within the
utility. For example, pumping, transmission, distribution, storage, etc. Within this study, the
functionalization of the cost data was largely accomplished through the City’s system of accounts.
4.3.3 Allocation of Costs
The second analytical task performed in a water cost of service study is the allocation of the costs.
Allocation determines why the expenses were incurred or what type of need is being met. The
City’s plant accounts and revenue requirement were reviewed and allocated using the following
cost classifiers:
Commodity Related Costs: Commodity related costs are those costs that tend to vary with
the total quantity of water consumed by a customer. The electric costs associated with
pumping water are an example of a commodity-related cost, since these costs tend to vary
based upon the total flow of water.
“A cost of service study
utilizes a three-step
approach to review costs.
These take the form of
functionalization,
allocation, and
distribution.”
Development of the Water Rate Study 40
City of Kalispell – Water and Wastewater Rate Study
Capacity Related Costs: Capacity costs are those costs
incurred to meet peak demand conditions. These costs
are a function of meeting maximum demand
requirements of the customers. Capacity may be defined
by the peak period event, but is typically defined as peak
day and/or peak hour requirements. Capacity related
costs are important since they are related to the sizing of
facilities needed to meet peak use requirements. For
example, portions of distribution reservoirs and mains
(pipes) must be adequately sized to meet peak use
demands.
Customer Related Costs: Customer costs are those costs
that vary with the number of customers on the water
system. They do not vary with system output or
consumption levels. These costs are also sometimes
referred to as “readiness to serve” or “availability” costs.
Customer costs may also sometimes be further classified
as either actual or weighted. Actual customer costs vary
proportionally, from customer to customer, with the
addition or deletion of a customer regardless of the size
of customer. In contrast to this, a weighted customer cost
reflects a disproportionate (i.e., higher or lower) cost,
from customer to customer, with the addition or deletion
of a customer.
Public Fire Protection Related Costs: Public fire
protection costs are those costs related to meeting public
fire protection requirements. Usually, such costs are
those related to public fire hydrants and the over-sizing of
mains and distribution storage reservoirs for the fire
protection purposes.
Revenue Related Costs: Certain costs associated with the
utility may vary with the amount of revenue received. An
example is a utility tax based upon the amount of
revenues received by the City.
Direct Assignments: Certain costs associated with
operating the system may be directly traced to a specific
customer or class of service (e.g., bad debt expenses). In
this case, these costs are then directly assigned to that
specific class of service. This assures that other classes of
service will not be allocated any costs for those significant
facilities from which they do not benefit.
For each of the allocated costs noted above, a distribution
factor must be developed to distribute each specific type of
Terminology of a
Water Cost of Service
Analysis
FUNCTIONALIZATION – The
arrangement of the cost data by
functional category (e.g. supply,
treatment, etc.).
ALLOCATION – The assignment of
functionalized costs to cost
components (e.g. base, extra-
capacity, customer, and fire
protection related).
DISTRIBUTION – Distributing the
allocated costs to classes of
service based upon each class’s
proportional contribution to that
specific cost component.
COMMODITY COSTS – Costs that are
classified as commodity related
vary with the total flow of water
(e.g. chemical use at a treatment
plant).
CAPACITY COSTS – Costs classified as
capacity related vary with peak
usage. Facilities are often
designed and sized around
meeting peak demands.
FIRE PROTECTION COSTS - Costs that
are related to fire protection
systems (e.g. hydrants).
CUSTOMER COSTS – Costs classified
as customer related vary with the
number of customers on the
system (e.g. metering costs).
DIRECT ASSIGNMENT – Costs that
can be clearly identified as
belonging to a specific customer
or group of customers.
CUSTOMER CLASSES OF SERVICE – The
grouping of customers into similar
groups based upon usage
characteristics and/or facility
requirements.
Development of the Water Rate Study 41
City of Kalispell – Water and Wastewater Rate Study
cost in an equitable manner to the customer classes of service (e.g. residential, non-residential,
etc.).
4.3.4 Functionalization and Allocation of Water Plant in Service
The City’s historical plant asset records were used in performing the functionalization of water
plant in service. The allocation process included reviewing each group of assets and determining
which cost classifiers the assets were related to, or what function the asset (facility) provided.
Provided below is a brief discussion of the allocation process used for the City’s water utility.
Source of supply was allocated as 100% to commodity. Storage was allocated 67% capacity and
33% fire protection related. This reflects the purpose of storage, to meet both peak day needs
and fire protection needs of the system.
Pumping facilities are typically sized around meeting overall customer consumption
requirements for both average and peak day needs. Therefore, pumping facilities were allocated
in the same manner as treatment at 43% commodity related and 57% capacity related.
Water transmission and distribution lines (mains) are typically assumed to meet three types of
needs on the system; commodity-related, capacity-related, and public fire protection-related
needs. First, a distribution system is a function of the number of customers that it serves, and
must also be in place to meet a customer’s minimum requirements for water. This portion of the
distribution main plant investment is considered commodity-related. Next, a portion of the
distribution main investment is considered a function of meeting peak flow demand
requirements on the system. Distribution mains must be sized to adequately meet the peak flow
(capacity) requirements of the customers. This portion of the distribution main plant investment
is considered capacity-related. Finally, even during a peak day or peak hour event, distribution
mains must also be over-sized for fire flow requirements. This final portion of over-sizing for
distribution main investment is classified as public fire protection-related. The analysis for the
City’s distribution mains resulted in an allocation of 54% commodity-related, 26% capacity-
related, and 20% public fire protection related.
A detailed summary of the functionalization and allocation of the water plant in service can be
found in Exhibit 12 of the Water Technical Appendix A.
4.3.5 Functionalization and Allocation of Water Operating Expenses
Operating expenses are generally functionalized and allocated in a manner similar to the
corresponding plant account. For example, maintenance of distribution mains is typically
allocated in the same manner (percentages) as the plant account for distribution mains. This
approach to allocation of operating expenses has been used for this analysis.
For the City’s study, the FY 2021 water revenue requirements were functionalized and allocated
utilizing the previously discussed methodology. The FY 2021 revenue requirement was utilized
since it would be a full year of costs based on the rate adjustment in FY 2021. A more detailed
review of the functionalization and allocation of the water revenue requirement can be found in
the Water Technical Appendix on Exhibit 14.
Development of the Water Rate Study 42
City of Kalispell – Water and Wastewater Rate Study
4.3.6 Development of Distribution Factors
Once the classes of service have been defined, and the allocation process is complete, the various
costs are then distributed to each of the classes of service based on equitable distribution factors.
The City’s allocated water costs were distributed to the various classes of service using the
following distribution factors.
x Commodity-Related Distribution Factor. Commodity-related costs vary with the flow of
water. Therefore, commodity-related costs were distributed to the various customer classes
of service using the City’s estimated FY 2021 water sales (consumption). The most recent
historical period with sales by customer class of service was utilized for this study. Water
sales were projected forward from this historical billed consumption. This information was
provided by the City from their billing system.
x Capacity-Related Distribution Factor. Capacity-related costs vary with peak use or maximum
demands on the system. Accordingly, the capacity distribution factor was developed based
upon each classes estimated contribution to the system peak day demand. The City provided
detailed consumption by individual customers in order to develop the peaking factors.
Peaking factors by class of service, were used to estimate the contribution of the each class
of service to the peak day event. The peaking factors were calculated (estimated) by taking
the ratio of the average month to peak month consumption. This approach is outlined in the
AWWA M1 Manual to provide a basis for establishing peaking factors by customer class and
tier.
x Customer Distribution Factors. Customer costs vary with the number of customers on the
system. Two basic types of customer distribution factors were identified - actual and
weighted. The distribution factors for actual customers were based upon the projection of
the number of customers developed within the revenue requirement. The weighted
customer distribution factor is also broken down further into two factors that attempt to
reflect the disproportionate costs associated with serving larger water users. The first
weighted customer factor is for customer service and accounting. This weighted customer
distribution factor takes into account the fact that it may take more time or effort to read a
meter and process a bill for a customer with a larger meter. The second weighted customer
distribution factor is for meters and services. This factor reflects the capacity differences
based on meter sizes and meter equivalency factors for each customer class of service.
x Public Fire Protection Distribution Factor. The distribution of public fire protection related
costs within the water cost of service analysis involved an analysis of each class of service and
the fire flow requirements associated with each. The analysis took into account the gallon
per minute flow requirements in the event of a fire, along with the required duration of the
flow. The fire flow rates used within the distribution factor were based upon the guidelines
in the City’s 2018 Water Master Plan. These minimum fire flow requirements are then
multiplied by the number of customers in each class of service, and the assumed duration, in
minutes, of the required flow, to determine the class’s prorated fire flow requirements.
x Revenue Related Distribution Factor. The revenue related distribution factor was developed
from each customer class’ projected annual rate revenues for FY 2021. This same amount of
revenue was used in the revenue requirement analysis. The water utility distribution factors noted above can be found in the Water Technical
Development of the Water Rate Study 43
City of Kalispell – Water and Wastewater Rate Study
Appendices, Exhibits 6 – 11. Shown below in Table 4-4 is summary of the distribution of the
revenue requirement.
Table 4 – 4
Summary of the Distribution of the Revenue Requirement ($000’s)
Total Commodity Capacity
Actual
Customer
Weighted
Equiv.
Meters &
Services
Public Fire
Protection
Revenue
Related
Direct
Assign.
Net Revenue
Requirement $3,721 $1,542 $985 $119 $449 $784 ($160) $0
Percentage % 100.0% 41.5% 26.5% 3.2% 12.1% 21.1% (4.3%) 0.0%
[1] – Summation of table may reflect rounding errors due to decimal places.
4.3.7 Summary of the Water Cost of Service Results
In summary form, the cost of service analysis began by functionalizing the revenue requirement
for the City’s water utility. The functionalized revenue requirement was then allocated into the
various cost components (e.g., average day, peak day, customer related). The individual
allocation totals were then proportionally distributed to the various customer classes of service
based on the appropriate distribution factor. The distributed expenses for each customer class
were then aggregated to determine each customer class’s overall revenue responsibility. As
noted, it was determined that the current customer classes were appropriate and are maintained
in this analysis. As a result, the cost of service proportionally allocated costs to residential,
commercial, and irrigation customer classes. Table 4-5 provides the summary of the cost of
service analysis for the FY 2021 test year.
Table 4 – 5
Summary of the Water Utility Cost of Service Analysis ($000’s)
Classes of Service
Present Rate
Revenues
Distributed
Costs
$
Difference
%
Difference
Residential $1,356 $1,316 $40 (3.0%)
Commercial 1,145 1,283 (137) 12.0%
Irrigation 598 1,038 (440) 73.5%
Private Fire 94 83 10 (10.9%)
Total $3,194 $3,721 ($316) 16.5%
[1] – Summation of table may reflect rounding errors due to decimal places.
The cost of service study proportionally and equitably distributes the operating and capital costs
to each customer class with their respective benefit received from and burdens placed on the
water system (proportional allocation). Given the range of assumptions that may be used in a
cost of service analysis, a general “guideline” that may be considered when viewing a cost of
Development of the Water Rate Study 44
City of Kalispell – Water and Wastewater Rate Study
service analysis is if a class is within +/- 5% of the overall required adjustment the class, than it
may be considered as being within a “reasonable range” of paying its “fair share”. It is important
to understand that a cost of service analysis is based on one year’s data and customer
information. Water usage and the costs incurred by the utility will change from year to year. As
such, it is appropriate to determine whether these findings are consistent over time, and adjust
accordingly.
The results of the cost of service analysis show that there are differences between the customer
classes of service. Specifically, the irrigation (irrigation and sprinkling customers) class shows the
need to be increased greater than other customers’ classes given the peaking impact these
customer place on the system. In addition, the current rate for irrigation (and sprinkling) is less
than the consumption rate for all other customers. Given these results, it is recommended that
a movement to cost of service results be made as a results of this study. Specifically, the level of
the irrigation rate will adjusted to better reflect the cost of service results. The fire protection
cost allocation is based on capacity, and public and private fire cost split, and it is recommended
to hold the rates flat for the first year of the rate setting period.
It is important to understand that a cost of service analysis is based on one year’s O&M expense
data and projected customer usage information. Given this, the results of the cost of service
analysis may change from year to year. As the City continues to monitor rates and cost of service
results through future studies, future cost of service adjustments may be necessary to reflect
costs and customer consumption patterns at that time. While the cost distribution is important
to the overall rate setting process, the basis for the proposed rates is the unit costs. The unit costs
are the allocated costs, by cost component, then distributed to each class by dividing by the
appropriate consumption unit. For example, commodity related costs are divided by the total
consumption by customer and tier. Provided in Table 4-6 is a summary of the cost of service unit
costs.
Table 4 – 6
Summary of the Cost of Service Unit Costs ($/1,000 gallons)
System Average Residential Commercial Irrigation
Average Cost - $/1,000 gals $3.65 $4.83 $3.29 $2.91
Present Revenue - $/1,000 gals $3.13 $4.98 $2.94 $1.68
The Technical Appendix A contains the various water exhibits and additional details associated
with the cost of service analysis.
4.3.8 Summary Conclusions and Recommendations of the Cost of Service
This section of the report has provided the recommendations resulting from the cost of service
analysis developed for the City’s water utility. This analysis was prepared using generally
accepted cost of service techniques as provided in the AWWA M1 Manual. The following section
of the report will provide a summary of the present and proposed rates for the City’s water utility.
Development of the Water Rate Study 45
City of Kalispell – Water and Wastewater Rate Study
It must be kept in mind that a cost of service analysis reflects costs and usage characteristics of a
specific point in time, and as time goes on, customer’s consumption patterns and usage
requirements change. Only over time, and through continual analysis, can one fully understand
the true cost of providing service. Given the results of the water cost of service analysis, the
focus will now shift to the development of the proposed water rate designs.
4.4 Development of the Water Rate Designs
The next step of the rate study process is the design of water rates to collect the targeted levels
of rate revenue, as established in the revenue requirement analysis. In reviewing the water rate
designs consideration is given to both the level of the rates and the structure of the rates. The
“level” of the rates refers to the amount of funds to be collected while the “structure” of the
rates is how the customers are billed to collect the targeted level of revenues.
4.4.1 Rate Design Goals and Objectives
Prudent rate administration dictates that several criteria must be considered when setting utility
rates. Some of these rate design goals are listed below:
x Rates which are easy to understand from the customer’s perspective
x Rates which are easy for the City to administer
x Consideration of the customer’s ability to pay
x Continuity, over time, of the rate making philosophy
x Policy considerations (encourage conservation, economic development, etc.)
x Provide revenue stability from month-to-month and year-to-year
x Promote efficient allocation of the resource
x Legally defendable
x Equitable and non-discriminatory (cost-based)
Many contemporary rate economists and regulatory agencies feel the last consideration, cost-
based rates, should be of paramount importance and provide the primary guidance to utilities
on rate structure and policy. It is important that the City provides its customers with a proper
price signal as to what their consumption is costing. This goal may be approached through rate
level and structure. When developing the proposed rate designs, all the above listed criteria were
taken into consideration. However, it should be noted that it is difficult, if not impossible, to
design a rate that meets all the goals and objectives listed above. For example, it may be difficult
to design a rate that takes into consideration the customer’s ability to pay, and one which is cost-
based. In designing rates, there are always trade-offs between the rate design goals and
objectives and, as a result, a balance must be struck.
4.4.2 Review of the Overall Rate Adjustments
The results of the water revenue requirement analysis indicated the need to adjust rates over
the next five years (FY 2021 – FY 2025). As a result, the priority for the City was to implement
rates that meet the overall funding needs for operating and capital over the review period. Based
on the discussion with City staff, water rates have been developed for the five-year period based
on the previously proposed and discussed rate transition plan and cost of service
Development of the Water Rate Study 46
City of Kalispell – Water and Wastewater Rate Study
recommendations. The proposed revenue adjustments are recommended to be implemented
to reflect cost of service results in the first year of FY 2021, then “across the board” in the
following four years, meaning that all components of the rate structure will be increased equally
by the overall proposed revenue adjustments in the later years of FY 2022 through FY 2025.
Table 4 – 7
Summary of the Water Rate Transition Plan
Recommended
FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Proposed Revenue Adjustment 16.5% 10.0% 9.5% 9.5% 3.0% 3.0% 3.0%
In the establishment of rates, it is important to understand how the water utility generates
revenues from rates. Generally a majority of the water utility revenues are generated through
the consumption charge, which is variable and dependent on water use by customers. Given
this, the relationship between fixed and variable (consumption) charges should be reviewed as a
part of a rate study. As would be expected for the water utility, the current rates are generating
approximately 29.4% of the revenues through the fixed charge and 70.6% through the variable
charge. Given the proportion of charges collected through the variable (volumetric) portion of
the rate, this further shows that the rate structure is designed to encourage conservation which
is growing increasingly important to the public.
4.4.3 Present and Proposed Residential/Commercial Water Rate Design
The residential and commercial rate structure includes a monthly fixed charge, a meter charge
based on the size of the meter, along with a consumption charge rate structure. Based on HDR’s
review of the residential and commercial consumption patterns, the present rate structure
continues to reflect the City’s key rate design goals of conservation and revenue stability. As
noted, cost of service adjustments in FY 2021 is recommended.
The proposed residential and commercial rate design is based on holding the fixed charge to the
overall rate adjustment, updating the meter charge to current costs, and remaining being
collected through the consumption charge for FY 2021. A cost of service transition in FY 2021
with the sprinkling rate, for residential, is eliminated, and all consumption is at same rate for all.
The option for a “skip bill” on fixed and meter charges when customers are not home is also
eliminated. All the rate adjustments after FY 2021 are across the board increases. Provided
below in Table 4-8 is a summary of the present and proposed water rates for the Residential and
Commercial customers.
Development of the Water Rate Study 47
City of Kalispell – Water and Wastewater Rate Study
Table 4 – 8
Present and Proposed Residential & Commercial-Monthly Water Rates
Present FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Proposed Adjustment 16.5% 10.0% 9.5% 9.5% 3.0% 3.0% 3.0%
Fixed Charge (per
meter/month) $7.50 $8.74 $9.61 $10.52 $11.52 $11.87 $12.23 $12.60
Meter Size (per
meter/month)
3/4" $0.80 $1.10 $1.21 $1.32 $1.45 $1.49 $1.53 $1.58
1" 1.38 1.69 1.86 2.04 2.23 2.30 2.37 2.44
1 1/2" 2.68 3.09 3.40 3.72 4.07 4.19 4.32 4.45
2" 3.75 4.45 4.90 5.37 5.88 6.06 6.24 6.43
3" 14.10 10.29 11.32 12.40 13.58 13.99 14.41 14.84
4" 19.88 14.24 15.66 17.15 18.78 19.34 19.92 20.52
6" 22.64 22.64 24.90 27.27 29.86 30.76 31.68 32.63
Hosting Fee (per metering
system)[1] 0.89 0.89 0.89 0.89 0.89 0.89 0.89
Consumption Charge
($/1,000 Gal.) $2.43 $2.48 $2.73 $2.99 $3.27 $3.37 $3.47 $3.57
Sprinkling
Consumption Charge
($/1,000 Gal.) $1.55 $2.48 $2.73 $2.99 $3.27 $3.37 $3.47 $3.57
[1] Fee subject to City’s metering system.
The proposed residential and commercial water rates maintain the current rate structure.
However, the sprinkling rate for residential is eliminated and all consumption will be charged at
the same rate. This includes a fixed charge, meter charge based on meter size, and a
consumption charge for all consumption.
At present rates, a typical residential customer with a 3/4-inch meter and 6,000 gallons of
consumption per month would pay $22.88 monthly. Under the proposed rates, the same
customer would pay $24.72 in 2021, a $1.84 monthly increase. Table 4-9 shows the average
residential bill for the rate period of FY 2021 to FY 2027.
Development of the Water Rate Study 48
City of Kalispell – Water and Wastewater Rate Study
Table 4 – 9
Summary of the Average Residential Water Bill
FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Proposed Revenue Adjustment 16.5% 10.0% 9.5% 9.5% 3.0% 3.0% 3.0%
Present Avg. Residential Bill[1] $22.88
Avg. Monthly Residential Bill $24.72 $27.20 $29.78 $32.59 $33.58 $34.58 $35.60
Monthly $ Change 1.84 2.48 2.58 2.81 0.99 1.00 1.02
Cumulative $ Change 1.84 4.32 6.90 9.71 10.70 11.70 12.72
[1] - Average bill based on 3/4-inch meter, 6,000 gallons per month.
The bill comparison graph provides a range of customer bill impacts assuming typical monthly
consumption at various times of the year for FY 2021.
The proposed irrigation rate design is based on holding the fixed charge to the overall rate
adjustment, updating the meter charge to current replacement costs, and remaining revenue
requirement being collected through the consumption charge for FY 2021. All the rate
adjustments after FY 2021 are across the board increases. Table 4-10 summarizes the present
and proposed rate structure for irrigation monthly water rates from FY 2021 to FY 2027.
Development of the Water Rate Study 49
City of Kalispell – Water and Wastewater Rate Study
Table 4 – 10
Present and Proposed Irrigation-Monthly Water Rates
Present FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Proposed Adjustment 16.5% 10.0% 9.5% 9.5% 3.0% 3.0% 3.0%
Fixed Charge (per
meter/month) $7.50 $8.74 $9.61 $10.52 $11.52 $11.87 $12.23 $12.60
Meter Size (per
meter/month)
3/4" $0.80 $1.10 $1.21 $1.32 $1.45 $1.49 $1.53 $1.58
1" 1.38 1.69 1.86 2.04 2.23 2.30 2.37 2.44
1 1/2" 2.68 3.09 3.40 3.72 4.07 4.19 4.32 4.45
2" 3.75 4.45 4.90 5.37 5.88 6.06 6.24 6.43
Hosting Fee (per metering
system)[1] 0.89 0.89 0.89 0.89 0.89 0.89 0.89
Consumption Charge
($/1,000 Gal.) $2.43 $2.48 $2.73 $2.99 $3.27 $3.37 $3.47 $3.57
[1] Fee subject to City’s metering system.
The proposed irrigation water rates maintained the current rate structure. However, the
irrigation consumption rate is proposed to be the same level as residential and commercial
consumption. This
includes a fixed charge,
meter charge based on
meter size, and a
consumption charge
for all consumption. At
present rates, a typical
irrigation customer
with a 3/4-inch meter
and 6,000 gallons of
consumption per
month would pay
$17.60 monthly. Under
the proposed rates, the
same customer would
pay $24.72 in 2021, a
$7.12 monthly increase. The bill comparison graph provides a range of customer bill impacts
assuming typical monthly consumption at various times of the year.
The proposed private fire protection rate structure is maintained and there is no adjustment in
FY 2021. All the rate adjustments after FY 2021 are across the board increases based on the
overall revenue adjustments identified in the revenue requirement analysis. Table 4-11
summarizes the present and proposed rate structure for private fire protection monthly rates.
Development of the Water Rate Study 50
City of Kalispell – Water and Wastewater Rate Study
Table 4-11
Present and Proposed Private Fire Protection Monthly Rates
Present FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Proposed Adjustment 16.5% 10.0% 9.5% 9.5% 3.0% 3.0% 3.0%
Meter Size (Monthly
Service Connection)
2" $24.80 $24.80 $27.28 $29.87 $32.71 $33.69 $34.70 $35.74
3" 29.25 29.25 32.18 35.24 38.59 39.75 40.94 42.17
4" 32.50 32.50 35.75 39.15 42.87 44.16 45.48 46.84
6" 40.10 40.10 44.11 48.30 52.89 54.48 56.11 57.79
8" 51.00 51.00 56.10 61.43 67.27 69.29 71.37 73.51
10” 70.35 70.35 77.39 84.74 92.79 95.57 98.44 101.39
This concludes the discussion of the development of the proposed water rates for the City for FY
2021 – 2025.
4.5 Summary of the Water Rate Study
This completes the rate study for the City’s water utility. Based on the operating and capital
needs, it is recommended that rates be increased 16.5% in FY 2021, 10.0% FY 2022, 9.5% in FY
2023, 9.5% in FY 2024, and 3.0% in FY 2025, 2026 and 2027 including cost of service adjustments
in FY 2021. The City should continue to monitor the need for future adjustments and implement
rates that reflect the costs incurred to provide water services. Full and complete technical
appendices of the development of the comprehensive water rate study and the proposed water
rate adjustments can be found in Technical Appendix A of this report.
Development of the Wastewater Rate Study 51
City of Kalispell –Water and Wastewater Rate Study
5.1 Introduction
This section of the City’s rate study report will discuss the development of the wastewater rate
analyses and proposed wastewater rates. Similar to the water rate study, the revenue
requirement, cost of service analysis, and rate design analyses were conducted for the City’s
wastewater utility. For the wastewater rate study, a concerted effort was made to minimize rate
impacts over the six year review period of FY 2020 -2025. This was accomplished by using
available reserve to fund the increased expenses of the utility, and slowly drawing down reserves.
Another of the main objectives of the wastewater rate study is to develop cost-based wastewater
rates while attempting to minimize the impacts to the utility’s customers. Provided below is a
detailed discussion of the technical analyses, along with our findings, conclusions and
recommendations.
5.2 Determining the Wastewater Utility Revenue Requirement
In developing the wastewater revenue requirement,
like the water utility, it was assumed that the
wastewater utility must financially “stand on its own”
and be properly funded. As a result, the wastewater
revenue requirement, as developed herein, assumes
the full and proper funding needed to operate and
maintain the system on a financially prudent basis.
5.2.1 Determining the Time Period and Methodology
The starting point of the wastewater revenue requirement analysis was the proposed FY 2020
budget. HDR developed a projection of revenues and expenses for future years based on
assumed escalation (inflationary) factors. The wastewater study developed a six-year period to
review future rate needs based on operating and capital needs, however, the focus for purposes
of rate setting was the next five-year period (FY 2021 – 2025). The wastewater utility includes a
wholesale customer, Evergreen, which receives treatment services but no collection or billing
related costs as outlined in the agreement between the City and Evergreen. In order to
adequately review the cost of service for this customer the wastewater treatment and collection
revenue requirement was split into these two separate cost of service analyses. A rate transition
plan was developed for this time period in a way that creates a smooth transition to fully funding
the utility in the future.
As discussed in the previous section, the water utility’s revenue requirement was established
using a “cash basis” approach. This same methodology was also used to develop the wastewater
utility revenue requirement analysis which will provide and maintain consistency between the
approaches for the City’s two utilities. This same revenue requirement methodology has been
used in the past to establish the City’s wastewater rates.
5.0 Development of the Wastewater Rate Study
“In developing the wastewater
revenue requirement, like the
water utility, it was assumed
that the wastewater utility must
financially “stand on its own”
and be properly funded.”
Development of the Wastewater Rate Study 52
City of Kalispell –Water and Wastewater Rate Study
The primary financial inputs in the wastewater rate analysis were the City’s historical wastewater
customer and billing records, proposed FY 2020 wastewater budget, and the wastewater capital
improvement plan from FY 2020 - 2025. Presented below is a discussion of the analytical steps
and key assumptions contained in the development of the wastewater revenue requirement
analysis.
5.2.2 Projection of Wastewater Utility Revenues
The first step in developing the wastewater revenue requirement was to develop a projection of
rate revenues, at present (currently adopted) rate levels. In general, this process involved
developing projected wastewater billing units for each customer class of service. The billing units
for each customer class were then multiplied by the applicable current wastewater rates. This
method of independently calculating wastewater rate revenues helps to confirm that the
projected revenues used within the analysis tie to the projected billing units. The projected billing
units by class of service were based on historical billing records.
Currently, there are two major wastewater customer classes of service: City (treatment and
collection), and Evergreen (treatment
only). The majority of the City’s
wastewater rate revenues are derived
from City treatment revenues. In total,
at present wastewater rates, the City is
projected to receive approximately
$4.6 million in total wastewater
revenue. Over the planning horizon of
this study, assuming moderate
customer growth and the previously
adopted revenue adjustment, the total
wastewater rate revenues are expected to increase to approximately $4.8 million by FY 2025.
In addition to rate revenues, the wastewater utility also receives a minimal amount of non-rate
or other revenues. This includes revenue such as fees, interest income, and other miscellaneous
revenue. The utility is projected to receive approximately $77,000 in other revenues in FY 2020.
Over the planning period, the wastewater utility’s other revenues are projected to slightly
decrease to approximately $30,000 by FY 2025.
In total, including both wastewater rate revenues and other revenues, the wastewater utility’s
total projected revenues are expected to be approximately $4.7 million in FY 2020 and, with
assumed growth, gradually increasing to $4.8 million by FY 2025.
5.2.3 Projection of Wastewater Operation and Maintenance Expenses
Operation and maintenance (O&M) expenses are incurred by the utility to operate and maintain
the existing system plant in service. The costs incurred in this area are expensed during the
current year and are not capitalized or depreciated. To begin the process of projecting O&M
expenses over the planning horizon, escalation factors were developed. Escalation factors were
developed for the basic types of expenses the City incurs: salaries, benefits, materials and
Development of the Wastewater Rate Study 53
City of Kalispell –Water and Wastewater Rate Study
supplies, utilities, and others. Consistent with the water utility, the escalation factors ranged from
2.0% to 5.0% per year.
Starting with the proposed FY 2020 budgeted O&M expenses, the O&M expenses were projected
over the based on the escalation factors described above. There are, however, additional
operating expenses projected based on known changes in operations and increases in cost
allocations to the wastewater utility. In FY 2024 an additional O&M collection staff is needed
which will be shared 50/50 with water and wastewater. In FY 2023, two new treatment FTEs. In
addition, starting in FY 2021, the wastewater utility will start annually funding an amount for
Equipment Replacement Program Reserve based on the average of the five year plan, of
approximately $169,000 per year. The total system operation and maintenance expenses are projected to be approximately $3.3
million in FY 2020. Over time, and based upon cost escalation and incurrence of additional costs
the FY 2025 O&M expenses are projected to be approximately $4.0 million.
5.2.4 Projection of Wastewater Capital Improvement Projects and Funding
The wastewater capital funding plan was developed in a manner similar to the water utility. The
adopted FY 2020 – 2025 CIP was used as the starting point. HDR then worked with the City’s staff
to develop a funding plan that provided the needed revenue to construct the projects but also
minimized the long-term rate impacts to customers. The City’s wastewater capital improvement
plan totals approximately $20.5 million in treatment projects, and $22.5 million in collection
projects for the FY 2020 - 2025 period. A major component of the capital costs includes treatment
projects of construction of a new EQ basin converted to future primary clarifier, install of dome
covers for the secondary clarifiers, and construction of a composting facility. Collection capital
costs include lift station #3, Grandview lift station, and gravity sewer replacement projects.
Shown below in Table 5-1 is a summary of the wastewater capital improvement plan.
Development of the Wastewater Rate Study 54
City of Kalispell –Water and Wastewater Rate Study
[1] – Summation of table may reflect rounding errors due to decimal points.
Similar to the water capital funding plan, cash funding helps to minimize rates by avoiding the
impact of capital funding through debt, the cash balances and annual cash balances should be
monitored so that ending balance do not end below minimum target levels. This could ultimately
lead to larger rate increases in the future if the replacement of reserve funds is outpaced by uses
of funds.
Table 5 – 1
Summary of the Wastewater Capital Improvement Plan ($000s)
FY2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025
Treatment
Renewal and Replacement $1,042 $117 $158 $507 $4,976 $156
Growth Related Projects 584 2,382 113 259 3,107 5
Regulatory Projects 0 403 3,199 1,621 150 1,786
Total Capital Improvement
Projects $1,626 $2,902 $3,470 $2,387 $8,233 $1,946
Less: Outside Funding Sources
Operating Fund Reserves $192 $325 $325 $325 $325 $0
Impact Fee Funds 584 112 112 112 112 796
Assumed SRF Loans 0 1,555 2,063 920 6,706 0
Total Outside Funding $776 $1,992 $2,500 $1,357 $7,143 $796
Treatment Rate Funded Capital $850 $910 $970 $1,030 $1,090 $1,150
Collection
Renewal and Replacement $1,368 $2,439 $2,389 $3,706 $2,252 $414
Growth Related Projects 3,235 1,890 1,032 2,005 1,359 423
Total Capital Improvement
Projects $4,603 $4,330 $3,420 $5,711 $3,612 $837
Less: Outside Funding Sources
Operating Fund Reserves $3,632 $0 $0 $0 $0 $0
Developer Contribution 0 0 0 0 1,041 0
Impact Fee Funds 451 275 375 375 425 17
Assumed SRF Loans 0 3,475 2,405 4,636 1,386 0
Total Outside Funding $4,083 $3,750 $2,780 $5,011 $2,852 $17
Collection Rate Funded Capital $520 $580 $640 $700 $760 $820
Total Rate Funded Capital $1,370 $1,490 $1,610 $1,730 $1,850 $1,970
Development of the Wastewater Rate Study 55
City of Kalispell –Water and Wastewater Rate Study
Rate Funding – As discussed in the financial policies in rate setting in Section 3 of this report, a
general financial guideline - at a minimum - a utility should annually fund from rates an amount
equal to, or greater than, annual depreciation expense. Annual depreciation expense reflects the
current investment in plant being depreciated or “losing” its useful life. Therefore, this portion
of plant investment needs to be annually funded to maintain the
existing level of infrastructure. If possible, the City should be
funding capital projects from rates in an amount greater than
annual depreciation expense to better reflect replacement cost.
For FY 2019, the annual depreciation expense of the wastewater
utility was approximately $1.3 million. In FY 2020, it is proposed
that the City’s rate funded capital for the wastewater utility be
$1.3 million. Over time, and with the help of rate revenue
adjustments, the wastewater utility will be funding
approximately $1.9 million year by FY 2025. This is 1.5 times the
annual depreciation by FY 2025. With the proposed level of rate funded capital included within
this study, the wastewater utility will be making a significant step towards prudent and adequate
funding for the renewal and replacement of the existing wastewater infrastructure.
Operating Cash Funding - There will be approximately $3.6 million in operating cash reserves
used as a funding source for capital improvement projects over the review period. Annually, the
operating cash reserve fund is being funded through collections of rate revenues as well as any
surplus where capital projects may be less than rate funded capital. This allows the City to
reserve funds for capital projects in later years when more or larger projects are undertaken. This
approach helps to mitigate the need for future rate adjustments and it also smooth’s rates over
time. The City also currently offsets 50% of impact fee revenue against the current debt service
payment. Impact fee revenue can fluctuate over time and therefore this annual offset needs to
be monitored to keep rates from fluctuating. In order to keep track of this fluctuation, close
attention should be given to the operating cash reserve balance as to not reduce it below the
minimum target.
The City policy is the minimum operating reserve level is set at a minimum of 90 days of O&M
expenses. A minimum balance provides the City with the flexibility to address any changes and
fluctuations with minimal financial or project schedule impact. The operating cash reserve is
maintained above this level for the rate setting period. Impact Fee Reserve Funding - There will be approximately $1.9 million in impact fee reserves
used as a funding source for capital improvement projects over the review period. Annually, the
impact fee reserve fund is being funded through collections of impact fee revenues. The City
currently looks at the impact fee revenue on an annual basis and has historically offset 50% of
the revenue against debt service payments which are paid within the operating cash fund. The
remaining annual impact fee revenues are used to offset growth related capital improvement
projects. This allows the City to reserve funds for capital projects in later years when more or
larger projects are undertaken. However, close attention should be given to the impact fee
reserve balance as to not reduce it below a positive balance. The impact fee reserve is maintained
at a positive level for the rate setting period.
“If possible, the City
should be funding capital
projects from rates in an
amount greater than
annual depreciation
expense to better reflect
replacement cost.”
Development of the Wastewater Rate Study 56
City of Kalispell –Water and Wastewater Rate Study
Long-Term Debt – The use of long-term debt is another potential source of funding for capital
projects. There are certain advantages and disadvantages with the issuance of any long-term
debt and it is important to weigh them when deciding whether to issue long term debt. Long-
term debt does have prudent applications, whereby, it acts as a financial device to spread the
costs of a larger project, such as the Westside Interceptor, over multiple years to mirror the time
period that the benefits are felt by customers. Doing so then assigns the costs of the new facility
to the customers who benefit from it over the life of the facility. As mentioned previously, there
a number of large capital projects that the City has identified as candidates to fund utilizing long-
term debt. However, before issuing any new debt the City would explore all options to secure
the most favorable debt and schedule of debt service payments for the customers. There will be
approximately $11.9 million in long term debt over the review period (2021 – 2025). For
purposes of this study, HDR is not acting as a municipal advisor but rather is attempting to
highlight the funding needs and working with City staff to develop the proposed funding plan for
the wastewater utility capital projects and establish rates to support the anticipated future
operating and capital needs of the wastewater utility.
As can be seen, there are multiple methods by which the City may fund their capital projects.
Each method has an impact upon the revenue requirements of the wastewater utility.
5.2.5 Projection of Debt Service
The next component of the City’s revenue requirement is debt service. At the present time, there
are five outstanding wastewater debt obligations, the Treatment Digester Lid SRF loan,
Treatment WWTP Improvement Refund SRF loan, Collection Highway 93S Refunding SRF loan,
and two Collection Westside Interceptor SRF loans. The debt payment obligation for the
outstanding debt averages $1.8 million, annually. As was mentioned above, as a part of the
capital funding plan, it was assumed the City will issue approximately $11.9 million in long-term
debt which will carry an annual payment of approximately $1.5 million by FY 2025. Additionally,
the rate transition plan developed for the City aims to maintain the financial capability to issue
additional long-term debt, should it be deemed necessary. This is accomplished by maintaining
strong debt service coverage (DSC) ratios within the financial plan, which is a financial indicator
(i.e., a financial ratio) used to measure the financial strength or ability of the utility to repay the
current outstanding debt obligations.
It should be noted the debt service shown in the revenue requirement is assumed to have 50%
of annual impact fees offset the payments, or approximately $266,000 per year. The analysis has
assumed that the impact fee for wastewater is reduced by 50% in FY 2021, with annually 3%
increases in the following years based on an estimated Engineering News Record average
construction cost index (ENR-CCI). The reduction in the impact fee was a result of a policy
decision by the City Council while developing the proposed wastewater rates and impact fees.
The impact fee adjustment has been included in the rate analysis in total impact fee revenues.
5.2.6 Reserve Funding
This study has used reserve funding, or transfers to and from wastewater reserve funds, to
smooth and mitigate the rate adjustments in any particular year. Funds can be drawn down to
mitigate the need for a rate adjustment, or increased to replenish reserves if they have been
drawn down in prior years. In this analysis, change in working capital is primarily used to balance
Development of the Wastewater Rate Study 57
City of Kalispell –Water and Wastewater Rate Study
revenue requirements to the proposed rate adjustments. From year-to-year, the use of these
reserves, or change in working capital, is very minimal.
5.2.7 Summary of the Wastewater Revenue Requirement
Given the above projections of wastewater revenues and expenses, a summary of the revenue
requirement for the wastewater utility can be developed. In developing the final revenue
requirement, consideration was given to the financial planning considerations of the City. In
particular, emphasis was placed on attempting to minimize rates, yet still have adequate funds
to support the operational and capital expenses throughout the projected time period.
Presented below in Table 5-2 is a summary of the wastewater revenue requirement. A detailed
analysis of the wastewater revenue requirement can be found in Technical Appendix B.
Table 5 – 2
Summary of the Wastewater Revenue Requirements ($000s)
Proposed Projected
FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025
Revenues
Rate Revenues $4,634 $4,634 $4,681 $4,727 $4,775 $4,822
Other Revenues 77 31 35 39 36 30
Total Revenues $4,711 $4,666 $4,716 $4,766 $4,810 $4,853
Expenses
O&M Expenses $3,365 $3,383 $3,444 $3,799 $3,958 $4,071
Equip. Replacement Program 44 169 169 169 169 169
Rate Funded Capital 1,370 1,490 1,610 1,730 1,850 1,970
Debt Service Payment 1,848 2,147 2,448 2,821 3,297 3,296
Less: Impact Fees to Debt (891) (245) (252) (260) (267) (307)
To / (From) Reserves (1,024) (141) 80 80 80 80
Total Expenses $4,711 $6,803 $7,499 $8,340 $9,087 $9,279
Bal./(Defic.) of Funds $0 ($2,138) ($2,783) ($3,574) ($4,277) ($4,426)
Bal. / (Def.) as % of Rate Rev 0.0% 46.1% 59.5% 75.6% 89.6% 91.8%
Proposed Revenue Adjustment 0.0% 46.1% 6.5% 6.5% 6.5% 6.5%
Add'l Revenue with Rate Adj. $0 $1,771 $2,611 $3,592 $4,031 $4,482
Bal. / (Def.) After Rate Adj. $0 ($367) ($171) $18 ($246) $56
Key Financial Targets
Ending Operating Balance $4,262 $3,349 $2,852 $2,545 $1,974 $2,030
Ending Operating Balance Target $840 $876 $891 $978 $1,018 $1,046
Rate Funded Capital $1,370 $1,490 $1,610 $1,730 $1,850 $1,970
Rate Funded Capital Target (2.00) 1.00 1.09 1.18 1.26 1.35 1.44
Debt Service Coverage (> 1.25) 0.70 1.34 1.52 1.56 1.43 1.55
[1] – Summation of table may reflect rounding errors due to decimal points.
It should be noted that the balance or deficiencies in any single year are cumulative. That is, any
adjustments in the initial years will reduce the deficiency in the following years. Over the six-
Development of the Wastewater Rate Study 58
City of Kalispell –Water and Wastewater Rate Study
year period, revenues need to be adjusted by approximately $4.5 million in order to adequately
and properly fund the City’s wastewater utility O&M and capital infrastructure needs.
The deficiencies shown are primarily driven by increased operating expenses and capital funding
plan. For O&M, there are impacts due to increased FTEs and equipment replacement program
which start in FY 2024 (FTEs) and FY 2021 (equipment replacement program), respectively. On
the capital side, the revenue requirement is impacted by annual debt service payments
(increased debt funding), maintaining strong DSC ratios, and increasing rate funded capital to
prudent renewal and replacement levels. The financial plan developed must meet the City’s
financial planning targets (e.g. debt service coverage, minimum reserve levels, etc.). Prior to any
rate adjustments, the cumulative deficiency is approximately $2.1 million in FY 2021 increasing
to approximately $4.4 million by FY 2025. As was noted in the capital section, the wastewater
utility is proposed to rely heavily on the reserve funds and draws approximately $5.5 million
(operating and impact fee) over the projected time period to fund capital projects to help
minimize overall rate impacts. This was feasible given adequate current reserve levels, however,
the annual cash flow and ending reserve balances should be scrutinized each year to make sure
that the uses of funds does not place the reserve below the minimum level. Additionally, as the
wastewater reserves approach the minimums, the need for rate adjustments should be
evaluated so as to avoid future, large rate adjustments for customers.
To meet the financial plan and the wastewater revenue requirements, revenue adjustments have
been proposed. The proposed wastewater adjustments are 46.1% in FY 2021, 6.5% the following
years through FY 2025. The proposed adjustments are projected to provide adequate funding for
annual operating, debt service and capital needs during this time period.
The key financial targets are met during the projected time frame based on the proposed revenue
adjustments. The operating balance by FY 2025 is above the target operating cash balance of
$1.0 million (90 days of O&M). The rate funded capital is at almost one and half years of annual
depreciation by FY 2025 ($2,030 / $1,046 annual depreciation = 1.44). The debt service coverage
ratio is above the minimum target of 1.25 during the whole projected time period.
5.2.8 Key Financial Targets
5.2.8.1 Review of Operating Reserve Levels
Reserves serve a variety of purposes
and are an important part of a utility’s
financial picture. Currently, the
wastewater operating fund has a
minimum target balance of 90 days of
O&M expenses or approximately
$840,000 in FY 2020. As can be seen in
the graphic, the reserve levels
maintain or exceed this minimum
target. As noted reserves are available
for many purposes. Given the critical
Development of the Wastewater Rate Study 59
City of Kalispell –Water and Wastewater Rate Study
nature of sufficient reserves, the City will need to routinely monitor and analyze reserve funds to
maintain adequate levels.
5.2.8.2 Review of Rate Funded Capital
The rate funded capital increases over time to one and half the annual depreciation. This makes
funds available for renewal and replacement projects. The proposed rate adjustments fund the
projected expenditures, debt, and rate funded capital, however should any of those parameters
change, additional rate adjustments may be needed. The graphic does illustrate that the
proposed rate adjustments just meet the proposed level of expenditures, debt, and rate funded
capital. Given the critical nature of sufficient reserves, the City will need to routinely monitor
and analyze reserve funds to
maintain adequate levels.
The operating reserve levels
will need to be monitored
annually to ensure the funds
are available for renewal
and replacement projects.
Impact fee reserve funds
will need to monitored for
impacts on rates should the
impact fee revenue levels
decrease.
5.2.8.3 Debt Service Coverage Ratios
A DSC is a simple financial measure of the utility’s ability to repay its debt serve payments on
outstanding debt obligations. For the City, the DSC ratio is set at a level such that revenues minus
operating expenses will be 25% greater than the maximum annual debt service on the
outstanding debt (i.e. a DSC t 1.25). However, each specific debt issuance may have its own debt
covenants and target minimum coverage ratio. Given a minimum DSC, it is often prudent to plan
or set rates at a level which exceeds this minimum. This helps to provide greater assurance of
meeting the minimum DSC, and at the same time, provides a slight cushion for unexpected
changes. This should also strengthen the City’s ability to issue long-term debt in the future, if
necessary, since bond rating agencies would review the past financial strength and ability to
repay the bonds. It is especially important given the City’s
assumed future long-term debt contained within this revenue
requirement analysis. The new debt issuances will put more
pressure on the DSC ratio and is a significant component of the
rate revenue increases in order to maintain the targeted
minimum. In FY 2020, the DSC is estimated at 0.70, which is below
the minimum target of 1.25. This is due to the $14.0 million SRF
loan in FY 2020. However, over time and assuming the proposed
revenue adjustments, the DSC is 1.55 by FY 2025 which means the
wastewater utility would be in a strong financial position.
“A debt service coverage
ratio (DSC) is a simple
financial measure of the
utility’s ability to repay
its debt serve payments
on outstanding debt
obligations.”
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City of Kalispell –Water and Wastewater Rate Study
5.2.9 Consultant’s Wastewater Revenue Requirements Recommendations
Based on the City’s revenue requirement analysis the proposed overall wastewater rate
adjustment should be annually adjusted. These proposed rate adjustments are needed to fully
fund the projected operating costs of the wastewater utility and the annual capital improvement
needs. In addition to FY 2020 - FY 2025, the City Council included a recommended 3% rate
adjustment beyond FY 2025 to maintain the current level of service for the wastewater utility. To
implement the needed adjustments, a wastewater transition plan was developed. Provided in
Table 5-3 is the proposed wastewater utility rate transition plan.
Table 5 – 3
Summary of the Wastewater Rate Transition Plan
Recommended
FY
2021[1]
FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Proposed Revenue Adjustment 46.1% 6.5% 6.5% 6.5% 6.5% 3.0% 3.0%
[1] – The City (collection and treatment) portion is 49.4%, and Evergreen is 18.5%. In total this is 46.1%.
5.3 Wastewater Cost of Service Analysis
The objectives of a cost of service analysis are different from determining the revenue
requirement. As noted in the previously, a revenue requirement analysis determines the utility’s
overall financial (revenue) needs, while the cost of service study determines the proportional and
equitable manner in which to collect the revenue requirement.
The second rationale for conducting a cost of service analysis is to design the rates such that they
properly reflect the costs incurred by the City to provide wastewater service. For example, the
City may incur costs related to flow or total volume, the strength of the wastewater flow, and
customer cost components. Each of these types of costs may be collected in a slightly different
manner to allow for the development of a rate that collects costs in the same manner as they are
incurred.
In order to determine the cost to serve each customer class on a system, three basic analytical
tasks are completed: functionalization, allocation, and distribution of the wastewater costs. Each
of these steps in the cost of service analysis is discussed in detail below.
5.3.1 Customer Classes of Service
One of the first tasks of a cost of service analysis is determine the classes of service for the
analysis. In determining classes of service, the objective is to group customers together into
similar or homogeneous groups based upon wastewater flow and strength characteristics and/or
wastewater facility requirements. Two (2) different classes of service were reviewed for the
City’s wastewater cost of service analysis. These customer classes of service were as follows:
9 City (treatment and collection)
9 Evergreen (treatment only)
Development of the Wastewater Rate Study 61
City of Kalispell –Water and Wastewater Rate Study
5.3.2 Functionalization of Costs
The first analytical step of the wastewater cost of service
study is called functionalization. Functionalization is the
arrangement of wastewater expenses and asset (plant)
data by major operating functions. This is generally
accomplished through the utility’s system of accounts
5.3.3 Allocation of Costs
The second analytical task performed is the allocation of
the functionalized expenses to cost components. This task
reviews each cost and attempts to determine why the
wastewater cost was incurred and what type of need was
being met (e.g., volume, strength, customer). If the cost
correlates to a specific plant asset then the same allocation
is used in the cost allocation for the expense. The cost
classifiers used for the wastewater utility cost of service
study are as follows:
Volume Related Costs. Volume-related costs are those
that tend to vary according to the quantity of
wastewater collected and treated. An example of a
volume related cost is electricity for pumping or
treatment of wastewater.
Strength Related Costs. Strength related costs are
those costs associated with the additional handling and
treatment of high “strength” wastewater. Strength of
wastewater is typically measured in biochemical
oxygen demand (BOD), and total suspended solids (SS).
In addition new plant regulatory items were included
for phosphorus (TP) and nitrogen (TN). Increased levels
of BOD or SS generally equate to increased treatment
costs. Pre-treatment is generally required if the
discharge is known to regularly exceed the typical (i.e.,
domestic level) waste strength.
Customer Related Costs. Customer-related costs vary
with the addition or deletion of a customer. Customer
related costs typically include the costs of billing,
collecting, and accounting. Customer-related costs
may also be further categorized as actual or weighted.
The differences in these costs are similar to those noted
for the water utility.
Revenue Related. Some costs associated with the
wastewater utility may vary with the amount of
revenue received by the utility. An example of a
revenue related cost would be a state utility tax which
Terminology of a Cost of
Service Analysis
Functionalization – The
arrangement of the cost data by
functional category (e.g.
treatment, collection etc.).
Allocation – The assignment of
functionalized costs to cost
components (e.g. volume,
strength, and customer related).
Distribution – Distributing the
allocated costs to each customer
class based on the proportional
contribution to that specific cost
component.
Volume Costs – Costs that are
classified as volume related vary
with the total flow of sewer (e.g.
chemical use at the treatment
facility).
Strength Costs – Costs classified
as strength related refer to the
wastewater treatment function.
Typically, strength-related costs
are further defined as
biochemical oxygen demand
(BOD) and suspended solids (SS).
Customers with higher
wastewater strength
characteristics cost more to
treat. Facilities are often
designed and sized around
meeting these costs.
Direct Assignment – Costs that
can be clearly identified as
belonging to a specific customer
class.
Development of the Wastewater Rate Study 62
City of Kalispell –Water and Wastewater Rate Study
is based on gross utility revenue.
Direct Assignment. Certain costs associated with operating the utility may be directly traced
to a specific wastewater customer or class of service. These costs are then directly assigned
to that specific class of service.
A more detailed discussion of the specific cost of service methodology used for the wastewater
utility is provided below.
5.3.4 Development of Distribution Factors
Once the allocation process is complete, and the customer groups have been defined, the various
allocated costs were distributed to all customers. The City’s allocated costs were distributed using
the following distribution factors:
Volume Distribution Factor: Volume-related costs are generally distributed on the basis of
contribution to wastewater flows. In order to develop this distribution factor, some
knowledge of the contribution to flows must be determined. The assumed wastewater
contribution by customer class for FY 2021 was the basis for the development of the volume
allocation factor.
Strength Distribution Factor: Strength-related costs are classified between biochemical
oxygen demand (BOD), suspended solids (SS), phosphorus (TP), and nitrogen (TN). These
strength related costs are allocated to the various classes of service based upon the relative
estimated strengths that each class of service contributed. The City’s strength characteristics
by class of service were the same for both the City and Evergreen and based on recent testing
and planning documents.
Customer Distribution Factor: Customer costs within the cost of service study are allocated
to the various customer classes of service based upon their respective customer counts. The
number of customers, by customer class of service, was developed within the revenue
requirement study. Two types of customer allocation factors were developed, actual and
weighted. Actual customer costs do not vary by the volume or strength characteristics of the
class of service and are based on the actual number of customers for each class of service. A
weighting factor was used to develop the weighted customer allocation factor. The weighted
customer allocation factor attempts to reflect the disproportionate costs associated with
serving larger customers. These customers are assigned a higher per customer cost because
they require additional administrative costs and possible monitoring.
Revenue Related Distribution Factor: The revenue related distribution factor was developed
from the projected rate revenues for FY 2021.
Given the development of the allocation factors, the final step in the cost of service study is to
allocate the classified costs to the various customer classes of service.
5.3.5 Functionalization and Allocation of Wastewater Plant in Service
The City’s historical plant asset records were used in performing the functionalization of
wastewater plant in service. The allocation process included reviewing each group of assets and
determining which cost classifiers the assets were related to, or what function the asset (facility)
provided. In this study, the City’s system wastewater plant was reviewed, at a high level, by type
Development of the Wastewater Rate Study 63
City of Kalispell –Water and Wastewater Rate Study
of plant asset and the design function of the asset into the categories of cost allocations for
volume, and strength characteristics for bio-chemical oxygen demand (BOD), suspended solids
(SS), phosphorus (P), and nitrogen (N,). The total plant cost was summed by total cost, and the
corresponding allocation percentages for a total plant allocation. Table 5-4 shows the results of
this analysis for the wastewater plant in service.
Table 5 – 4 Summary of the Distribution of Wastewater Plant ($000’s)
Total Volume
Bio-chemical
Oxygen Demand
(BOD)
Suspended
Solids
(SS)
Phosphorus
(TP)
Nitrogen
(TN)
Treatment Plant $41,008 $9,567 $4,642 $16,290 $4,846 $5,660
Percentage % 100.0% 23.3% 11.3% 39.7% 11.8% 13.8%
Collection Plant $26,982 $26,982
Percentage % 100.0% 100.0%
The collection plant which includes lift stations and collection lines is functionalized to volume,
and the City customers, only. A detailed summary of the functionalization and allocation of the
wastewater plant in service can be found in the Wastewater Technical Appendix B.
5.3.6 Functionalization and Allocation of Wastewater Operating Expenses
For the City’s study, the revenue requirement for FY 2021 was functionalized, allocated, and
distributed. As noted earlier, the City utilized a cash basis revenue requirement, which was
comprised of operation and maintenance expenses, debt service, and capital improvements
funded from rates. Operating expenses are generally functionalized and classified in a manner
similar to the corresponding plant account. For example, maintenance of collection lines is
typically classified in the same manner (classification percentages) as the plant account for
collection lines. This approach to classification of operating expenses was used for this analysis.
Table 5–5 below shows a summary of the cost of service allocation of the revenue requirement.
A more detailed review of the allocation of revenue requirements can be found in the Technical
Appendix B.
Development of the Wastewater Rate Study 64
City of Kalispell –Water and Wastewater Rate Study
Table 5 – 5 Summary of the Distribution of Wastewater Revenue Requirement ($000’s)
Total Volume
Bio-
chemical
Oxygen
Demand
(BOD)
Suspended
Solids
(SS)
Phosphorus
(TP)
Nitrogen
(TN) Customer Revenue
Treatment $4,126 $1,603 $334 $1,447 $349 $407 $0 ($15)
% 100% 38.9% 8.1% 35.1% 8.5% 9.9% 0.0% (0.4%)
Collection $2,645 $2,387 $266 ($7)
% 100% 90.2% 10.1% (0.3%)
Once the classes of service have been defined, and the allocation process is complete, the various
costs are then distributed to each of the classes of service based on equitable distribution factors.
The City’s allocated wastewater costs were distributed to the various classes of service using the
distribution factors.
5.3.7 Summary of the Wastewater Cost of Service Results
In summary, the cost of service analysis began by functionalizing the City’s operating expenses.
The functionalized expense accounts were then allocated into their various cost components. As
was noted previously, the treatment related expenses are proportionally allocated between the
City and Evergreen while the collection system costs are 100% City only costs. The individual
allocation totals were then distributed to each customer class based on the appropriate
distribution factor. Provided below in Table 5-6 is a summary of the total allocation of costs, by
cost component, to the customer classes of service.
Table 5 – 6
Summary of the Wastewater Utility Cost of Service Analysis ($000’s)
Classes of Service
Present Rate
Revenues
Distributed
Costs
$
Difference
%
Difference
City
Treatment $2,966 3,548 (582) 19.6%
Collection 1,180 2,645 (1,465) 124.1%
Total $4,146 $6,193 ($2,047) 49.4%
Evergreen 488 578 (90) 18.5%
Total $4,634 $6,772 ($1,964) 46.1%
[1] – Summation of table may reflect rounding errors due to decimal points.
As a point of reference, this is the first cost of service study for the City that has separated
Development of the Wastewater Rate Study 65
City of Kalispell –Water and Wastewater Rate Study
treatment and collection and developed a separate cost of service for each. This was done to
meet the approach as outlined in the agreement between the City and Evergreen. The cost of
service study proportionally and equitably distributes the operating and capital costs to each
customer class with their respective benefit received from and burdens placed on the
wastewater system (proportional allocation). Given the range of assumptions that may be used
in a cost of service analysis, a general “guideline” that may be considered when viewing a cost of
service analysis is if a class is within +/- 5% of the overall required adjustment the class, than it
may be considered as being within a “reasonable range” of paying its “fair share”. It is important
to understand that a cost of service analysis is based on one year’s data and customer
information. Volumes and the costs incurred by the utility will change from year to year. As such,
it is appropriate to determine whether these findings are consistent over time, and adjust
accordingly. Provided in Table 5-7 is a summary of the cost of service unit costs.
Table 5 – 7
Summary of the Cost of Service Unit Costs ($/1,000 gallons)
City Treatment Evergreen
City
Collection City Combined
Average Cost - $/1,000 gals $5.25 $4.25 $3.92 $9.17
Present Revenue - $/1,000 gals $4.39 $3.59 $1.75 $6.14
Given the results of the cost of service analysis, HDR would recommend cost of service
adjustments at this time for Evergreen and the City customers to reflect the overall results. A
more detailed discussion of the use of the cost of service results, and unit costs, is provided in
the Technical Appendix B.
5.3.8 Summary Conclusions and Recommendations of the Cost of Service
This section of the report has provided the recommendations resulting from the cost of service
analysis developed for the City’s wastewater utility. This analysis was prepared using generally
accepted cost of service techniques as provided in the Wastewater Environment Federation
Manual of Practice No. 27. The following section of the report will provide a summary of the
present and proposed rates for the City’s wastewater utility.
It must be kept in mind that a cost of service analysis reflects costs and usage characteristics of a
specific point in time, and as time goes on, customer’s consumption patterns and usage
requirements change. Only over time, and through continual analysis, can one fully understand
the true cost of providing service. Given the results of the wastewater cost of service analysis,
the focus will now shift to the development of the proposed wastewater rate designs.
5.4 Development of the Wastewater Rate Designs
The final step of the wastewater rate study process is the design of wastewater rates to collect
the desired levels of revenues, based on the results of the revenue requirement analysis. In
reviewing wastewater rate designs, consideration is given to both the level of the rates and the
structure of the rates.
Development of the Wastewater Rate Study 66
City of Kalispell –Water and Wastewater Rate Study
5.4.1 Rate Design Goals and Objectives
Prudent rate administration dictates that several criteria must be considered when setting utility
rates. These rate setting criteria were reviewed within the wastewater rate design subsection of
the report (Section 3.3.1). The wastewater utility utilized these same rate design goals and
objectives in reviewing the present and proposed wastewater rates.
5.4.2 Review of the Overall Rate Adjustments
The results of the revenue requirement analysis form the basis for establishing cost-based
wastewater rates. Shown below, in Table 5–8, is the wastewater rate transition plan previously
discussed and proposed. These overall rate adjustments, along with the cost of service results,
will be used in the design of the final proposed wastewater rates.
Table 5 – 8
Summary of the Wastewater Rate Transition Plan
Recommended
FY 2021[1] FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Proposed Revenue
Adjustment 46.1% 6.5% 6.5% 6.5% 6.5% 3.0% 3.0%
[1] – The City (collection and treatment) portion is 49.4%, and Evergreen is 18.5%. In total this is 46.1%.
The proposed rate adjustments in Table 5–8 reflect the level of the wastewater rates necessary
to sufficiently fund the operating and capital needs of the wastewater utility. In discussing the
wastewater rate structure with the City, it was determined that the rate structure would be
adjusted equally or “across the board”.
5.4.3 Present and Proposed Wastewater Rates
The proposed wastewater rate designs maintain their current rate structure. It is proposed that
only the level of the wastewater rates be adjusted based on the recommendations of the revenue
requirement and cost of service analysis. All components of the rate structure – fixed and variable
– are proposed to be increased to meet the target revenue levels based on the rate transition
plan. Provided below in Table 5-9 are the present and proposed monthly wastewater rates for all
customers, combined treatment and collection.
Development of the Wastewater Rate Study 67
City of Kalispell –Water and Wastewater Rate Study
Table 5 – 9
Present and Proposed Monthly Wastewater Rates
Present FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Proposed
Adjustment 49.4% 6.5% 6.5% 6.5% 6.5% 3.0% 3.0%
Fixed Charge
(per account) $8.44 $12.61 $13.43 $14.30 $15.23 $16.22 $16.71 $17.21
Volume
Charge
($/1,000 Gal.)
$4.78 $7.14 $7.60 $8.09 $8.62 $9.18 $9.46 $9.74
All components of the rate structure – fixed and variable – are proposed to be increased to meet
the target revenue levels based on the rate transition plan. At present rates, a typical residential
customer with 4,000 gallons of usage per month would have a bill of $27.56 monthly. Under the
proposed rates, the same customer would have a bill of $41.17 in FY 2021. Table 5-10 shows the
average residential bill for the rate period of FY 2021 to FY 2027.
Table 5 – 10
Summary of the Average Residential Wastewater Bill
FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Proposed Revenue Adjustment 49.4% 6.5% 6.5% 6.5% 6.5% 3.0% 3.0%
Present Avg. Residential Bill[1] $27.56
Avg. Monthly Residential Bill $41.17 $43.83 $46.66 $49.71 $52.94 $54.55 $56.17
Monthly $ Change 13.61 2.66 2.83 3.05 3.23 1.61 1.62
Cumulative $ Change 13.61 16.27 19.10 22.15 25.38 26.99 28.61
[1] - Average bill based on 4,000 gallons per month.
5.4.4 Present and Proposed Evergreen Rates
The current contract for Evergreen excludes the following:
x Collection/conveyance costs from properties within Kalispell to WWTP
x Treatment costs related to Kalispell’s inflow and infiltration (I/I)
x Billing expense for properties within the City of Kalispell
Along with these exclusions the contract states that a rate study which establishes individual
treatment rates (both volume and base) superseded the current rate method. The wastewater
rate study performed a cost of service analysis for just treatment which proportionately allocated
costs to Evergreen based on usage. For Evergreen, the proposed adjustment is based on the cost
of service results for FY 2021 of 18.5%. Provided below in Table 5–11 are the present and
proposed monthly wastewater rates for Evergreen, treatment only.
Development of the Wastewater Rate Study 68
City of Kalispell –Water and Wastewater Rate Study
Table 5 – 11
Present and Proposed Monthly Evergreen Wastewater Rates[1][2]
Present FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Proposed
Adjustment 18.5% 6.5% 6.5% 6.5% 6.5% 3.0% 3.0%
Fixed Charge
(per account) $6.22 $7.37 $7.85 $8.36 $8.90 $9.48 $9.76 $10.05
Volume
Charge
($/1,000 Gal.)
$2.50 $2.96 $3.15 $3.35 $3.57 $3.80 $3.91 $4.03
[1] – Evergreen present base rate is $6.22 [Base = $8.44; Evergreen is 73.7% of $8.44 = $6.22].
[2] – Evergreen present volume rate is $2.50 [Volume = ($4.78 - I/I $1.13 - Billing $0.26 = $3.39); Evergreen is
73.7% of $3.39 = $2.50].
5.4.4 Present and Proposed Surcharge Rates
In addition to the current rates the City has strength surcharges for when a customer goes over
set limit components. Provided below in Table 5–12 are the present and proposed monthly
wastewater surcharge rates. These surcharges will change as future Wastewater Treatment
Plant (WWTP) is updated for regulatory purposes.
Table 5 – 12
Proposed Wastewater Surcharge Rates[1]
FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Bio-chemical Oxygen
Demand > 250 mg/l
($ / Lbs.) $0.16 $0.17 $0.18 $0.19 $0.20 $0.21 $0.22
Suspended Solids > 250
mg/l
($ / Lbs.)] 0.71 0.75 0.80 0.85 0.91 0.94 0.97
Phosphorous > 7 mg/l
($ / Lbs.) 6.10 6.49 6.91 7.36 7.84 8.08 8.32
Nitrogen > 40 mg/l
($ / Lbs.) 1.25 1.33 1.42 1.51 1.61 1.66 1.71
[1] – BOD and SS currently assessed on a different approach. Phosphorus and Nitrogen are new surcharges.
5.5 Summary of the Wastewater Rate Study
This completes the analysis for the City’s wastewater rate study. The proposed wastewater
collection rates were developed using generally accepted rate making methods and principles.
The proposed wastewater rate adjustments for 2021 through 2025 are needed to adequately
support the operating and capital needs of the City’s wastewater utility. Adoption of the
proposed wastewater rates are projected to provide adequate funding for the wastewater utility
over the planning period, while financially positioning the utility for anticipated future capital and
Development of the Wastewater Rate Study 69
City of Kalispell –Water and Wastewater Rate Study
operation needs. Even with these proposed annual adjustments, it is prudent for the City to
annually revisit the rates to confirm their ability to cover expenses and maintain the identified
financial metrics (e.g., reserve targets, debt service coverage ratios).
Technical Appendix A – Water Rate Analysis
Budgeted Proposed
FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025
Revenues
Rate Revenues $3,131,489 $3,162,804 $3,194,432 $3,226,377 $3,258,640 $3,291,227 $3,324,139
Miscellaneous Revenues 319,000 286,128 286,147 263,126 269,428 267,224 262,956-----------------------------------------------------------------------------------------------------------------------Total Revenues $3,450,489 $3,448,933 $3,480,579 $3,489,503 $3,528,069 $3,558,450 $3,587,095
Expenses
Operations and Maintenance $2,120,683 $2,491,457 $2,225,972 $2,293,141 $2,362,417 $2,484,369 $2,559,682
Equipment Replacement Program 0 45,000 119,400 119,400 119,400 119,400 119,400
Rate Funded Capital 906,864 900,000 1,065,000 1,230,000 1,395,000 1,560,000 1,725,000
Net Debt Service Payment 195,782 210,969 570,157 878,420 875,510 977,078 877,757-----------------------------------------------------------------------------------------------------------------------Total Operations & Maintenance $3,223,329 $3,647,425 $3,980,530 $4,520,961 $4,752,327 $5,140,847 $5,281,840
To / (From) Reserves 227,161 (198,492) 27,131 0 0 0 0
Total Revenue Requirement $3,450,490 $3,448,933 $4,007,661 $4,520,961 $4,752,327 $5,140,847 $5,281,840
Bal. / (Def.) of Funds ($0)($0)($527,081) ($1,031,458) ($1,224,259) ($1,582,396) ($1,694,744)
Balance a % of Rate Adj. Req'd 0.0% 0.0%16.5% 32.0% 37.6% 48.1% 51.0%
Proposed Revenue Adjustment 0.0% 0.0%16.5% 10.0%9.5% 9.5% 3.0%
Add'l Revenue with Rate Adj.$0 $0 $527,081 $908,225 $1,314,022 $1,765,909 $1,936,800
Bal. / (Def.) After Rate Adj.($0)($0) ($0)($123,233) $89,763 $183,513 $242,056
Additional Rate Adjustment Required 0.0% 0.0% 0.0% 3.8% -2.8% -5.6% -7.3%
Debt Service Coverage Ratio Before Impact Fees 3.54 1.75 2.40 1.98 2.35 2.45 2.80
Ending Balance (Not including Bond Reserve)$10,368,131 $8,619,499 $3,234,274 $2,783,285 $1,754,236 $1,112,828 $1,155,608
Projected
Exhibit 1
Summary of the Water Revenue Requirement
Comprehensive Water Rate Study
City of Kalispell
Water - Page 1 of 24
D R A F T
City of Kalispell
Comprehensive Water Rate Study
Escalations
Exhibit 2
Budgeted Proposed
FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 Notes
Revenues
As Customer GrowthCustomer Growth Budget 1.0%1.0% 1.0% 1.0%1.0%1.0%City provided
As ENR Impact Fee EscalationENR Impact Fee Escalation 3.0% 3.0% 3.0%3.0%3.0%
As Miscellaneous RevenuesMiscellaneous Revenues Budget Budget 1.0% 1.0% 1.0%1.0%1.0%
As
Expenses
As LaborLabor Budget Budget 3.2% 3.2% 3.2%3.2%3.2%City provided
As Health BenefitsHealth Benefits Budget Budget 4.0% 4.0% 4.0%4.0%4.0%
As Other BenefitsOther Benefits Budget Budget 4.0% 4.0% 4.0%4.0%4.0%
As Materials & SuppliesMaterials & Supplies Budget Budget 3.0% 3.0% 3.0%3.0%3.0%
As EquipmentEquipment Budget Budget 3.0% 3.0% 3.0%3.0%3.0%
As MiscellaneousMiscellaneous Budget Budget 2.0% 2.0% 2.0%2.0%2.0%
As Utilities - Electric Utilities - Electric Budget Budget 2.0% 2.0% 2.0%2.0%2.0%City provided
As Utilities - Natural GasUtilities - Natural Gas Budget Budget 4.5% 5.0% 5.0%5.0%5.0%
As FlatFlat 0.0% 0.0%0.0% 0.0% 0.0%0.0%0.0%
As InsuranceInsurance Budget Budget 4.5% 4.5% 3.5%3.5%3.5%
As
Interest 0.5% 0.5%0.5% 0.8% 1.0%1.0%1.0%
New Debt Service
SRF Loan
Term in Years 20 20 20 20 20 20 20 City provided
Rate 2.5% 2.5%2.5% 3.0% 3.3%3.5%3.5%City provided
Revenue Bond
Term in Years 20 20 20 20 20 20 20
Rate 4.5% 4.5%4.5% 4.5% 4.5%4.5%4.5%
Projected
Water - Page 2 of 24
D R A F T
City of Kalispell Page 1 of 5
Comprehensive Water Rate Study
Revenue Requirement
Exhibit 3
Budgeted Proposed
FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 Notes
Revenues
Rate Revenues
Residential $1,330,081 $1,343,382 $1,356,816 $1,370,384 $1,384,088 $1,397,929 $1,411,908 As Customer Growth
Commercial 1,122,618 1,133,844 1,145,182 1,156,634 1,168,200 1,179,882 1,191,681 As Customer Growth
Irrigation 586,472 592,337 598,260 604,243 610,285 616,388 622,552 As Customer Growth
Private Fire Protection 92,318 93,242 94,174 95,116 96,067 97,028 97,998 As Customer Growth-----------------------------------------------------------------------------------------------------------------------Total Rate Revenues $3,131,489 $3,162,804 $3,194,432 $3,226,377 $3,258,640 $3,291,227 $3,324,139
Other Revenues
Meter Replacement Fee (10125)$99,000 $100,000 $101,000 $102,010 $103,030 $104,060 $105,101 As Miscellaneous Revenues
Impact Fee Admin (10100)27,000 25,000 25,000 25,000 25,000 25,000 25,000 Flat
Misc.-Tower Lease/Installation/Reconnect/Tag fees 150,000 120,000 121,200 122,412 123,636 124,872 126,121 As Miscellaneous Revenues
Interest Earnings (10100)43,000 41,128 38,947 13,704 17,762 13,291 6,734 Calculated on Oper. Beg. Balance-----------------------------------------------------------------------------------------------------------------------Total Other Revenues $319,000 $286,128 $286,147 $263,126 $269,428 $267,224 $262,956
Total Revenues $3,450,489 $3,448,933 $3,480,579 $3,489,503 $3,528,069 $3,558,450 $3,587,095
Projected
Water - Page 3 of 24
D R A F T
City of Kalispell Page 2 of 5
Comprehensive Water Rate Study
Revenue Requirement
Exhibit 3
Budgeted Proposed
FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 Notes
Projected
Water Operating Costs
Personal Services
Salaries & Wages $739,727 $774,817 $799,611 $825,198 $851,605 $929,356 $959,096 '24 1 FTE, 50/50 W/S As Labor
Seasonal Salaries 5,000 5,000 5,160 5,325 5,496 5,671 5,853 As Labor
Overtime/Call Outs 20,000 20,000 20,640 21,300 21,982 22,686 23,411 As Labor
Health Insurance 165,884 174,095 181,059 188,301 195,833 203,666 211,813 As Health Benefits
Retirement - PERD 55,082 58,417 60,753 63,184 65,711 68,339 71,073 As Health Benefits-----------------------------------------------------------------------------------------------------------------------Total Personal Services $985,693 $1,032,328 $1,067,223 $1,103,309 $1,140,626 $1,229,719 $1,271,246
Materials and Services
Office Supplies/Equip/Computers/ GIS $22,000 $22,000 $22,660 $23,340 $24,040 $24,761 $25,504 As Materials & Supplies
Equip. (non-capital)/Safety Equip & Supplies 8,500 8,500 8,755 9,018 9,288 9,567 9,854 As Equipment
Chlorine & Chemical 39,000 39,000 40,170 41,375 42,616 43,895 45,212 As Materials & Supplies
Other Supplies/Janitorial/Consumable Tools 4,500 4,500 4,635 4,774 4,917 5,065 5,217 As Materials & Supplies
Gas & Oil 35,000 35,000 36,050 37,132 38,245 39,393 40,575 As Materials & Supplies
Postage & Printing 1,000 1,000 1,030 1,061 1,093 1,126 1,159 As Materials & Supplies
Licenses / Public Water Supply Fee 18,500 18,500 18,870 19,247 19,632 20,025 20,425 As Miscellaneous
Electricity 158,000 160,000 163,200 166,464 169,793 173,189 176,653 As Utilities - Electric
Natural Gas 15,500 15,500 15,810 16,126 16,449 16,778 17,113 As Utilities - Electric
Communications 10,500 11,000 11,220 11,444 11,673 11,907 12,145 As Utilities - Electric
Lab Services 20,000 20,000 20,400 20,808 21,224 21,649 22,082 As Miscellaneous
Auditing 5,000 3,500 3,570 3,641 3,714 3,789 3,864 As Miscellaneous
Contract Services 55,000 55,000 56,650 58,350 60,100 61,903 63,760 As Materials & Supplies
Consultants-Wtr Rights/M/Review/Rate Study 105,000 125,000 67,000 68,340 69,707 71,101 72,523 As Miscellaneous
Repair/Maint./Equip Maint/Radios/Equip Rental 15,000 15,000 15,480 15,975 16,487 17,014 17,559 As Labor
Building & Grounds Maintenance 12,000 16,375 16,866 17,372 17,893 18,430 18,983 As Materials & Supplies
Dues & Training 9,000 11,000 11,220 11,444 11,673 11,907 12,145 As Miscellaneous
Medical/Drug Testing 600 600 612 624 637 649 662 As Miscellaneous
Construction Materials 35,000 35,000 36,050 37,132 38,245 39,393 40,575 As Materials & Supplies
Hydrants 10,000 10,000 10,200 10,404 10,612 10,824 11,041 As Miscellaneous
Materials - Mains 14,000 14,000 14,280 14,566 14,857 15,154 15,457 As Miscellaneous
Materials - Service lines 12,000 12,000 12,240 12,485 12,734 12,989 13,249 As Miscellaneous
Materials - Wells/Pumps 45,000 45,000 45,900 46,818 47,754 48,709 49,684 As Miscellaneous
Property & Liability Ins.21,500 30,000 30,600 31,212 31,836 32,473 33,122 As Miscellaneous
Uninsured Loss-Deduct./Goodwill Expenditures 10,000 10,000 10,200 10,404 10,612 10,824 11,041 As Miscellaneous
Office Rent/Lease Pymnt (Silverbrook Well)10,500 10,500 4,310 4,396 4,484 4,574 4,665 As Miscellaneous
Noffsinger Tran. Facility Condition Assessment 0 255,000 0 0 0 0 0 City provided-----------------------------------------------------------------------------------------------------------------------Total Materials and Services $692,100 $982,975 $677,978 $693,952 $710,319 $727,087 $744,268
Transfers
Central Garage Transfer $21,977 $27,002 $27,812 $28,646 $29,506 $30,391 $31,303 As Equipment
Administrative Transfer 109,988 122,069 125,975 130,006 134,167 138,460 142,891 As Labor
Information Tech. Transfer 33,457 33,112 34,172 35,265 36,394 37,558 38,760 As Labor-----------------------------------------------------------------------------------------------------------------------Total Transfers $165,422 $182,183 $187,959 $193,918 $200,066 $206,409 $212,953
Total Water Operating Costs $1,843,215 $2,197,486 $1,933,160 $1,991,179 $2,051,011 $2,163,215 $2,228,468
Water - Page 4 of 24
D R A F T
City of Kalispell Page 3 of 5
Comprehensive Water Rate Study
Revenue Requirement
Exhibit 3
Budgeted Proposed
FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 Notes
Projected
Water Billing Costs
Personal Services
Salaries & Wages $113,806 $117,187 $120,937 $124,807 $128,801 $132,922 $137,176 As Labor
Health Insurance 28,181 36,809 38,281 39,812 41,405 43,061 44,783 As Health Benefits
Retirement - PERD 8,813 9,182 9,476 9,779 10,092 10,415 10,748 As Labor-----------------------------------------------------------------------------------------------------------------------Total Personal Services $150,800 $163,177 $168,694 $174,398 $180,297 $186,398 $192,707
Materials and Services
Office Supplies/Computers $3,500 $7,000 $3,500 $3,605 $3,713 $3,825 $3,939 As Materials & Supplies
Auditing 2,000 2,000 2,040 2,081 2,122 2,165 2,208 As Miscellaneous
Billing Costs/Grizzly Sec. & Mail Room 40,000 40,000 41,280 42,601 43,964 45,371 46,823 As Labor
Billing Costs/bank & cc fees, CenturyLink 25,000 27,000 27,810 28,644 29,504 30,389 31,300 As Materials & Supplies
Billing costs/printing, shredding 2,500 1,500 1,545 1,591 1,639 1,688 1,739 As Materials & Supplies
Dues & Training 2,500 2,500 2,550 2,601 2,653 2,706 2,760 As Miscellaneous
Administrative Transfer 11,289 11,259 11,619 11,991 12,375 12,771 13,179 As Labor
Information Tech. Transfer 33,457 33,112 33,774 34,450 35,139 35,841 36,558 As Miscellaneous
Office Rent 6,422 6,422 0 0 0 0 0 Based on City input-----------------------------------------------------------------------------------------------------------------------Total Materials and Services $126,668 $130,793 $124,119 $127,564 $131,109 $134,756 $138,508
Total Water Billing Costs $277,468 $293,970 $292,812 $301,962 $311,406 $321,154 $331,215
Equipment Replacement Program $0 $45,000 $119,400 $119,400 $119,400 $119,400 $119,400 City Equip. Replacement Plan
Total Operations & Maintenance $2,120,683 $2,536,457 $2,345,372 $2,412,541 $2,481,817 $2,603,769 $2,679,082
Water - Page 5 of 24
D R A F T
City of Kalispell Page 4 of 5
Comprehensive Water Rate Study
Revenue Requirement
Exhibit 3
Budgeted Proposed
FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 Notes
Projected
Rate Funded Capital $906,864 $900,000 $1,065,000 $1,230,000 $1,395,000 $1,560,000 $1,725,000 See Exhibit 4
Debt Service
2004 Water Revenue Refunding $92,793 $94,643 $91,005 $92,368 $93,488 $94,365 $0 Debt Schedule
2012 Water Refunding SRF 52,270 51,270 26,260 0 0 0 0 Debt Schedule
2012 Water Refunding WRF-B 105,799 105,831 105,816 105,758 105,654 105,506 105,311 Debt Schedule
2017 WRF - Water 124,920 125,179 125,392 126,282 126,356 125,652 124,891 Debt Schedule
2020 SRF Loan 0 143,104 170,715 170,715 170,715 170,716 170,716 Debt Schedule
New SRF Loan Debt 0 0 173,219 509,298 509,298 614,839 614,839 Calculated @ 3.5% for 20 yrs-----------------------------------------------------------------------------------------------------------------------Total Debt Service $375,782 $520,027 $692,407 $1,004,420 $1,005,510 $1,111,078 $1,015,757
LESS: Impact Fees $180,000 $309,058 $122,250 $126,000 $130,000 $134,000 $138,000 50% of Impact Fees-----------------------------------------------------------------------------------------------------------------------Net Debt Service $195,782 $210,969 $570,157 $878,420 $875,510 $977,078 $877,757
To / (From) Reserves
To / (From) Operating Reserve $227,161 ($198,492) $27,131 $0 $0 $0 $0
To / (From) Capital Improvement Reserve 0 0 0 0 0 0 0
To / (From) Emergency Reserve 0 0 0 0 0 0 0-----------------------------------------------------------------------------------------------------------------------Total To / (From) Reserves $227,161 ($198,492)$27,131 $0 $0 $0 $0
Total Revenue Requirement $3,450,490 $3,448,933 $4,007,661 $4,520,961 $4,752,327 $5,140,847 $5,281,840
Bal. / (Def.) of Funds ($0)($0)($527,081) ($1,031,458) ($1,224,259) ($1,582,396) ($1,694,744)
Balance a % of Rate Adj. Req'd 0.0% 0.0% 16.5% 32.0% 37.6% 48.1% 51.0%
Proposed Revenue Adjustment 0.0% 0.0%16.5% 10.0%9.5% 9.5% 3.0%
Months of Adjustment 12 12 12 12 12 12 12
Add'l Revenue with Rate Adj.$0 $0 $527,081 $908,225 $1,314,022 $1,765,909 $1,936,800
Bal. / (Def.) After Rate Adj.($0)($0) ($0)($123,233) $89,763 $183,513 $242,056
Add'l Rate Adj. Req'd 0.0%0.0%0.0%3.8%-2.8%-5.6%-7.3%
Average Residential Customer Monthly Bill $22.88 (Residential 3/4" Meter Charge + Fixed Charge + 6,000 gallons)
Customer Bill on Proposed Adjustment $22.88 $24.72 $27.20 $29.78 $32.59 $33.58
Bill Difference - Monthly 1.84 2.48 2.58 2.81 0.99
Cumulative Bill Difference 1.84 4.32 6.90 9.71 10.70
Debt Service Coverage Ratio Before Impact Fees
Before Rate Adjustment 3.54 1.75 1.64 1.07 1.04 0.86 0.89 Minimum = 1.25
After Proposed Rate Adjustment 3.54 1.75 2.40 1.98 2.35 2.45 2.80
Debt Service Coverage Ratio with Impact Fees
Before Rate Adjustment 3.54 2.67 1.99 1.32 1.30 1.10 1.17 Minimum = 1.25
After Proposed Rate Adjustment 3.54 2.67 2.75 2.23 2.61 2.69 3.07Water - Page 6 of 24
D R A F T
City of Kalispell Page 5 of 5
Comprehensive Water Rate Study
Revenue Requirement
Exhibit 3
Budgeted Proposed
FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 Notes
Projected
Reserve Funds
Total Beginning Balance $0 $9,848,663 $8,251,294 $3,175,255 $2,803,755 $1,774,706 $1,133,298
Operating Cash (10100)
Beginning Balance $8,225,697 $7,789,386 $2,740,889 $2,368,286 $1,329,087 $673,427
Plus: To Reserve Fund (198,492) 27,131 0 0 0 0 From RR Exhibit 2
Less: Uses of Funds - CIP (237,819) (5,075,627) (249,371) (1,128,962) (839,173)(217,670) From CIP Exhibit 4
Total Balance/(Deficiency) of Funds (0)(0)(123,233) 89,763 183,513 242,056 From RR Exhibit 2
Ending Balance $8,225,697 $7,789,386 $2,740,889 $2,368,286 $1,329,087 $673,427 $697,813
Target = 90 Days O&M $523,000 $625,000 $578,000 $595,000 $612,000 $642,000 $661,000
Impact Fees (10120)
Beginning Balance $1,202,496 $41,438 $13,895 $14,999 $25,149 $39,401
Plus: Impact Fees 475,000 244,500 252,000 260,000 268,000 276,000 As ENR Impact Fee Escalation
Interest Earnings 15,000 207 104 150 251 394 Calculated on Beg. Balance
Less: CIP from Impact Fees (1,342,000) (150,000) (125,000) (120,000) (120,000)(120,000) From CIP Exhibit 4
Debt Service from Impact Fees (309,058) (122,250) (126,000) (130,000) (134,000)(138,000) From RR Exhibit 2
Impact Fee Reserves 0 0 0 0 0 0
Ending Balance $1,202,496 $41,438 $13,895 $14,999 $25,149 $39,401 $57,795
Meter Replacement Cash (10125)
Beginning Balance $539,938 $388,675 $79,489 $0 $0 $0
Plus: To Reserve Fund 0 0 0 0 0 0
Future CIP Funding 0 0 0 0 0 0
Less: Uses of Funds - CIP (151,263) (309,186) (79,489)0 0 0
Ending Balance $539,938 $388,675 $79,489 $0 $0 $0 $0
Capital & Emergency Reserve (10127)
Beginning Balance $400,000 $400,000 $400,000 $400,000 $400,000 $400,000
Plus: To Reserve Fund 0 0 0 0 0 0
Future CIP Funding 0 0 0 0 0 0
Less: Uses of Funds - CIP 0 0 0 0 0 0
Ending Balance $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000
Minimum Target = $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000
Bond Reserve Fund (10130)
Beginning Balance $420,470 $420,470 $420,470 $420,470 $420,470 $420,470
Plus: To Reserve Fund 0 0 0 0 0 0
Less: Uses of Funds 0 0 0 0 0 0
Ending Balance $420,470 $420,470 $420,470 $420,470 $420,470 $420,470 $420,470
Ending Balance (Not including Bond Reserve)$10,368,131 $8,619,499 $3,234,274 $2,783,285 $1,754,236 $1,112,828 $1,155,608
Water - Page 7 of 24
D R A F T
City of Kalispell
Comprehensive Water Rate Study Page 1 of 2
Capital Improvement Plan
Exhibit 4
Capital Improvement Projects FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 Notes
Growth Related Projects
Four Mile Transmission Main (Phase 1)$2,689,000 $0 $0 $0 $0 $0
West Reserve Transmission Main (Phase 1)0 0 0 654,518 0 0
Southeast Transmission Main 0 0 0 0 0 0 Developer 44%
Southwest Transmission Main 0 0 0 0 0 0 Developer 44%
Willow Glen Drive Loop 0 0 0 0 0 0
3rd Avenue Transmission Main 0 0 0 0 0 0
1st Avenue West Connection 0 0 0 0 146,605 0
South Main Street Transmission Main 0 0 0 0 0 0
Buffalo Hill Backbone Transmission Main 0 0 0 0 0 0
US Highway 2 Transmission Main 0 0 0 0 0 0 Developer 25%
Four Mile Transmission Main (Phase 2)0 0 0 0 0 0
West Reserve Transmission Main (Phase 2)0 0 0 0 0 0 Developer 25%
12th Street East Transmission Main 0 0 0 0 0 0 Developer 25%
1 MG Elevated Water Storage Tank (N Region UZ)447,917 5,950,895 0 0 0 0
Northwest Well #1 0 1,730,436 0 0 0 0
Northwest Well #2 0 0 0 0 0 0
New Meters (City Project) - cellular 45,600 53,580 58,303 64,948 73,552 84,154
Construct Grossweiler Well 185,000 0 0 0 0 0
Misc. Contract Main Upsize 440,000 150,000 150,000 150,000 150,000 150,000------------------------------------------------------------------------------------------------
Total Growth Related Projects $3,807,517 $7,884,911 $208,303 $869,466 $370,157 $234,154
Renewal and Replacement Projects
Water Distribution Control System Updates $305,000 $0 $0 $0 $0 $0
Buffalo Hills Flow Control Upgrades 0 137,815 0 0 0 0
Buffalo Hill Booster Station Upgrades 0 0 0 435,174 0 0
Noffsinger Spring Water Rights Change Application 0 0 0 0 0 0
Add'l Water Rights, Source Invest. U Pressure Zone 0 0 0 0 0 0
Water Rights Adjudication 0 0 0 0 0 0
North Town Center Water Rights 0 0 0 0 0 0
Small Diameter CA 0 0 0 138,342 0 0
Backbone CA 0 140,028 0 0 0 0
Shop Complex Pavement Restoration-Carryover 4,578 0 0 0 0 0
10th Ave W and 2nd St W R&R 535,000 0 0 0 0 0
1st Ave WN R&R 210,213 0 0 0 0 0
6th St W R&R 0 0 0 0 0 156,240
2nd Ave W (South) R&R 0 0 0 353,972 0 0
Conrad Drive R&R 246,511 0 0 0 0 0
2nd Ave W (North) R&R 0 301,432 0 0 0 0
1st Ave W R&R 0 0 0 0 279,912 0
7th Ave WN R&R 0 0 0 0 0 698,161
8th Ave W R&R (City Project)Coord. w/Street prj 0 0 0 0 3,014,539 0
Meters R&R (City Project) - cellular 151,263 316,540 323,090 338,770 354,565 370,490
Lower Zone Reservoirs Roof R&R (City Project)0 0 3,941,568 0 0 0
6th Street East R&R 0 0 0 508,238 0 0
3rd&4th St W(Storm Addn) R&R 0 0 939,196 0 0 0
Machinery & Equipment 45,000 0 0 0 0 0
Noffsinger Rehabilitation Alternative 0 519,428 1,271,703 0 0 0------------------------------------------------------------------------------------------------
Total Renewal and Replacement Projects $1,497,565 $1,415,243 $6,475,557 $1,774,496 $3,649,016 $1,224,891
Water - Page 8 of 24
D R A F T
City of Kalispell
Comprehensive Water Rate Study Page 2 of 2
Capital Improvement Plan
Exhibit 4
Capital Improvement Projects FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 Notes
Total Capital Improvement Projects $5,305,082 $9,300,154 $6,683,860 $2,643,962 $4,019,173 $1,459,045
Future Capital Projects $0 $0 $0 $0 $0 $603,625
TOTAL CAPITAL IMPROVEMENT PROJECTS $5,305,082 $9,300,154 $6,683,860 $2,643,962 $4,019,173 $2,062,670
Less: Outside Funding Sources
Developer Contributions $0 $0 $0 $0 $0 $0
Operating Cash (10100)237,819 5,075,627 249,371 1,128,962 839,173 217,670 Input
Capital Improvement Reserve (10107)0 0 0 0 0 0 Input
Impact Fees Fund (10120)1,342,000 150,000 125,000 120,000 120,000 120,000 Growth Related
Meter Replacement Cash (10125)151,263 309,186 79,489 0 0 0 Input
Grants 0 0 0 0 0 0 Input
SRF Loans 2,674,000 2,700,341 5,000,000 0 1,500,000 0 Input
New Revenue Bond 0 0 0 0 0 0 Calculated------------------------------------------------------------------------------------------------
Total Less Outside Funding Sources $4,405,082 $8,235,154 $5,453,860 $1,248,962 $2,459,173 $337,670
TOTAL CIP FROM RATES $900,000 $1,065,000 $1,230,000 $1,395,000 $1,560,000 $1,725,000 Depreciation $840,000
Water - Page 9 of 24
D R A F T
City of Kalispell
Comprehensive Water Rate Study
Debt Schedule
Exhibit 5
I. Debt Status:
Interest Rate Variable 2% 9 Year 2.25% 15 Year 2.5% 20 Year 2.5% 20 Year
Principal $1,840,000 $404,000 $1,340,000 $1,974,989 $2,674,000
II. Outstanding Principal Payments:Principal Interest Total Principal Interest Total Principal Interest Total Principal Interest Total Principal Interest Total
Total
Payment
2018-19 $70,000 $22,793 $92,793 $50,000 $2,270 $52,270 $87,000 $18,799 $105,799 $77,901 $47,019 $124,920 $0 $0 $0 $375,782
2019-20 75,000 19,643 94,643 50,000 1,270 51,270 89,000 16,831 105,831 80,126 45,053 125,179 51,933 33,425 143,104 520,027
2020-21 75,000 16,005 91,005 26,000 260 26,260 91,000 14,816 105,816 82,352 43,040 125,392 105,821 64,894 170,715 519,188
2021-22 80,000 12,368 92,368 0 0 0 93,000 12,758 105,758 85,319 40,963 126,282 108,483 62,232 170,715 495,123
2022-23 85,000 8,488 93,488 0 0 0 95,000 10,654 105,654 87,545 38,811 126,356 111,212 59,503 170,715 496,213
2023-24 90,000 4,365 94,365 0 0 0 97,000 8,506 105,506 89,029 36,623 125,652 114,010 56,706 170,716 496,239
2024-25 0 0 0 0 0 0 99,000 6,311 105,311 90,513 34,378 124,891 116,878 53,838 170,716 400,918
2025-26 0 0 0 0 0 0 102,000 4,062 106,062 92,739 32,106 124,845 119,818 50,897 170,715 401,622
2026-27 0 0 0 0 0 0 104,000 1,755 105,755 95,706 29,769 125,475 122,833 47,883 170,716 401,946
2027-28 0 0 0 0 0 0 0 0 0 98,674 27,358 126,032 125,923 44,793 170,716 296,748
2028-29 0 0 0 0 0 0 0 0 0 101,642 24,873 126,515 129,090 41,625 170,715 297,230
2029-30 0 0 0 0 0 0 0 0 0 103,867 22,313 126,180 132,338 38,378 170,716 296,896
2030-31 0 0 0 0 0 0 0 0 0 106,093 19,707 125,800 135,667 35,049 170,716 296,516
2031-32 0 0 0 0 0 0 0 0 0 109,061 17,036 126,097 139,080 31,636 170,716 296,813
2032-33 0 0 0 0 0 0 0 0 0 113,512 14,282 127,794 142,578 28,137 170,715 298,509
2033-34 0 0 0 0 0 0 0 0 0 116,480 11,425 127,905 146,165 24,551 170,716 298,621
2034-35 0 0 0 0 0 0 0 0 0 119,447 8,495 127,942 149,842 20,874 170,716 298,658
2035-36 0 0 0 0 0 0 0 0 0 123,157 5,490 128,647 153,612 17,104 170,716 299,363
2036-37 0 0 0 0 0 0 0 0 0 126,891 1,745 128,636 157,476 13,240 170,716 299,352
2037-38 0 0 0 0 0 0 0 0 0 0 0 0 161,437 9,278 170,715 170,715
2038-39 0 0 0 0 0 0 0 0 0 0 0 0 165,499 5,217 170,716 170,716
2039-40 0 0 0 0 0 0 0 0 0 0 0 0 84,305 1,054 85,359 85,359
2040-41 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Total $475,000 $83,660 $558,660 $126,000 $3,800 $129,800 $857,000 $94,492 $951,492 $1,900,054 $500,486 $2,400,540 $2,674,000 $740,314 $3,472,060 $7,512,552
Notes:
[1] Debt service schedules provided by City.
93 South Project
2020 SRF Loan (Estimate)
4 Mile Drive TransmissionMain & Idaho Water Well 4th Ave E-Water
2004 Water Revenue Refunding 2012 Water Refunding SRF 2012 Water Refunding WRF-B 2017 WRF - Water
Water - Page 10 of 24
D R A F T
City of Kalispell - Water Utility
Exhibit 6
Development of the Commodity Allocation Factor
FY 2021 Unbilled Net Water Base
Consumption Water/Losses [1]Delivered Consumption % of
Customer Class in 1,000 Gal 20.0%(Flow + Losses)(MGD) [2]Total
Residential [3]272,619 54,524 327,143 0.90 26.8%
Commercial [4]389,562 77,912 467,474 1.28 38.2%
Irrigation 356,808 71,362 428,169 1.17 35.0%
Private Fire 0 0 0 0.00 0.0%
--------------------------------------- -------------
Total Consumption 1,018,989 1,222,787 3.35 100.0%
FY 18/19 Production [5]3.70
Allocation Factor (COM)
NOTES:
[1] Kalispell Water Facility Plan Update, June 2018, page 51, average ten year water losses is 20% for planning purposes.
[2] = Consumption/365/1,000
[3] All Residential customer classes combined into "Residential", excluding irrigation and sprinkling.
[4] All Commercial customer classes combined into "Commercial", excluding irrigation.
[5] Kalispell Water Facility Plan Update, June 2018, page 41, 2017 average day demand of 3.7 mgd.
Water - Page 11 of 24
D R A F T
City of Kalispell - Water Utility
Exhibit 7
Development of the Capacity Allocation Factor
Average Peak
Consumption Peaking Day Use
Customer Class (MGD)Factors [1](MGD)% of Total
Residential 0.90 1.54 1.38 26.9%
Commercial 1.28 1.33 1.71 33.4%
Irrigation 1.17 1.74 2.04 39.8%
Private Fire 0.00 0.00 0.00 0.0%
---------------------------------------
Total 3.35 1.53 5.12 100.0%
Historical Peak Day [3]8.70
Allocation Factor (CAP)
NOTES:
[1] Based on FY 2019 Peak to Average Month.
[2] Private fire peak MGD calculated on 180,000 gallon demand for fire event (1,500 gpm X 180 minutes).
[3] Kalispell Water Facility Plan Update, June 2018, page 55, 2016 maximum monthly demand 8.7.
Water - Page 12 of 24
D R A F T
City of Kalispell - Water Utility
Exhibit 8
Development of the Customer Allocation Factor
Customer Service & Accounting
Number of % of Weighting Weighted % of Weighting Weighted % of
Customer Class Meters [1]Total Factor Customer Total Factor [2]Customer Total
Residential 6,778 59.6%1.00 6,778 59.6%$182 $1,235,785 47.9%
Commercial 1,661 14.6%1.00 1,661 14.6%391 650,109 25.2%
Irrigation 2,721 23.9%1.00 2,721 23.9%226 614,552 23.8%
Private Fire 209 1.8%1.00 209 1.8%391 81,807 3.2%
--------------------------------------- -------------------------- -------------
Total 11,370 100.0%11,370 100.0%$2,582,252 100.0%
Allocation Factor (AC)(WCA)(WCMS)
EQUIVALENT METER CALCULATION
Meter Size 3/4"1"1-1/2"2"3"4"6"8" 10"Total Meter Average
Capacity (GPM)20 50 100 160 300 500 1,000 1,600 2,300 Cost Weighted
Customer Class 3/4"$180 Cost
Residential 6,635 74 1 1 0 0 0 0 0 6,711 1"$375 Residential $182
Commercial 948 292 148 216 31 8 2 0 0 1,645 1-1/2"$600 Commercial $391
Irrigation 2,356 197 75 60 5 1 0 0 0 2,694 2"$910 Irrigation $226
Private Fire 0 0 0 0 0 0 0 0 0 0 3"$1,630
---------------------------------------------------- ------------- ------------- ------------- ------------- ------------- -------------4"$2,765
Total Meters 9,939 563 224 277 36 9 2 0 0 11,050 6"$2,765
Equivalency Factor [3]1.00 2.50 5.00 8.00 15.00 25.00 50.00 80.00 115.00
Equivalent Meters
Residential 6,635 185 5 8 0 0 0 0 0 6,833
Commercial 948 730 740 1,728 465 200 100 0 0 4,911
Irrigation 2,356 493 375 480 75 25 0 0 0 3,804
Private Fire 0 0 0 0 0 0 0 0 0 0
---------------------------------------------------- ------------- ------------- ------------- ------------- ------------- -------------
Total Equivalent Meters 9,939 1,408 1,120 2,216 540 225 100 0 0 15,548
NOTES:
[1] Meter count from City provided data
[2] Weighting factor based on average weighted cost from meter count and cost from City provided data.
[3] Based on AWWA meter equivalency factors.
Actual Customer Meters & Services
Water - Page 13 of 24
D R A F T
City of Kalispell - Water Utility
Exhibit 9
Development of the Public Fire Protection Allocation Factor
Fire Prot.Total
Number of Requirements Duration Fire Protection % of
Customer Class Meters (gals/min) [1](minutes)Requirements Total
Residential 6,778 1,500 180 1,830,090 53.4%
Commercial 1,661 4,000 240 1,594,992 46.6%
Irrigation 2,721 0 0 0 0.0%
Private Fire [2]0 1,500 180 0 0.0%
----------------------- ----------
Total 11,161 3,425,082 100.0%
Allocation Factor (FP)
NOTES:
[1] Kalispell Water Facility Plan Update, June 2018, page 94.
[2] Private fire allocated in COSA based on equivalent connection method.
Water - Page 14 of 24
D R A F T
City of Kalispell - Water Utility
Exhibit 10
Public & Fire Protection Using Equivalent Connection Method
Number of
Customers [1]
Demand
Factor [2]
Equivalent
Connection
Percentage
Allocation Allocation
Public Fire Hydrants 1,473 111.31 163,960 90.2% $707,261
Private Fire Service
Fire Hydrants 0 111.31 0
Fire Service Lines, Size of Connection, inches
2"3 6.19 19
3"1 17.98 18
4"108 38.32 4,139
6"72 111.31 8,014
8"22 237.21 5,219
10"1 426.58 427
Total Private Fire Protection 207 17,836 9.8%$76,938
Total Public and Private Equivalent Connections 181,796 100.0% $784,198 [3]
Notes:
[1] Kalispell Water Facility Plan Update, June 2018, page 18, 1,473 fire hydrants.
[2] Demand factors based on nominal size of connection raised to the 2.63. AWWA M1 Manual, Sixth Edition, page 147.
[3] Fire protection costs are based on Public Fire resulting cost of service capacity costs.
PRIVATE FIRE HYDRANT AND FIRE SERVICE
LINES
Water - Page 15 of 24
D R A F T
City of Kalispell - Water Utility
Exhibit 11
Development of the Revenue Requirement Allocation Factor
Projected % of
Customer Class FY 2021 Total
2 Residential $1,356,816 42.5%
3 Commercial 1,145,182 35.8%
4 Irrigation 598,260 18.7%
5 Private Fire Protection 94,174 2.9%
5 ----------------------------
Total Rate Revenues $3,194,432 100.0%
Allocation Factor (RR)
Water - Page 16 of 24
D R A F T
City of Kalispell - Water Utility Page 1 of 2
Exhibit 12
Functionalization and Classification of Plant in Service
Total Actual Cust.Meters &Public Fire Revenue Direct
Plant Commodity Capacity Customer Acctg.Services Protection Related Assign.
Account 6/30/2018 (COM)(CAP)(AC) (WCA)(WCMS)(FP)(RR)(DA)
Source of Supply
Property $16,539 $16,539 $0 $0 $0 $0 $0 $0 $0 100% Commodity
Wells & Springs 332,944 332,944 0 0 0 0 0 0 0 100% Commodity
----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------------------------
Total - Source of Supply $349,483 $349,483 $0 $0 $0 $0 $0 $0 $0
Storage
Reservoirs $4,548,526 $0 $3,047,512 $0 $0 $0 $1,501,014 $0 $0 0% COM 67% CAP 33% FP
----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------------------------
Total - Storage $4,548,526 $0 $3,047,512 $0 $0 $0 $1,501,014 $0 $0
Pumping
Lawrence Park $167,469 $71,224 $96,244 $0 $0 $0 $0 $0 $0 43% COM 57% CAP
Depot Park 18,974 8,070 10,905 0 0 0 0 0 0 43% COM 57% CAP
Buffalo Hill 975,225 414,763 560,462 0 0 0 0 0 0 43% COM 57% CAP
Armory 123,777 52,643 71,135 0 0 0 0 0 0 43% COM 57% CAP
Grandview 807,604 343,474 464,130 0 0 0 0 0 0 43% COM 57% CAP
Noffsinger 77,077 32,781 44,296 0 0 0 0 0 0 43% COM 57% CAP
Westview 883,724 375,848 507,876 0 0 0 0 0 0 43% COM 57% CAP
Grossweiler 1,402,231 596,369 805,862 0 0 0 0 0 0 43% COM 57% CAP
Old School Station 703,836 299,341 404,494 0 0 0 0 0 0 43% COM 57% CAP
Silverbrook 365,000 155,235 209,766 0 0 0 0 0 0 43% COM 57% CAP
----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------------------------
Total - Pumping $5,524,917 $2,349,747 $3,175,170 $0 $0 $0 $0 $0 $0
Water Distribution/Transmission
Mains $24,436,968 $13,158,178 $6,456,293 $0 $0 $0 $4,822,496 $0 $0 54% COM 26% CAP 20% FP
Meters 2,534,305 0 0 0 0 2,534,305 0 0 0 100% WCMS
Hydrants 3,919,138 0 0 0 0 0 3,919,138 0 0 100% FP
----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------------------------
Total - Distribution/Transmission $30,890,410 $13,158,178 $6,456,293 $0 $0 $2,534,305 $8,741,635 $0 $0
Plant Before General Plant $41,313,336 $15,857,408 $12,678,975 $0 $0 $2,534,305 $10,242,648 $0 $0
Percent Plant Before General Plant 100.0% 38.4% 30.7%0.0% 0.0% 6.1%24.8%0.0%0.0% Factor PBG
Customer Related
Weighted for:
Basis of Classification [1]
Water - Page 17 of 24
D R A F T
City of Kalispell - Water Utility Page 2 of 2
Exhibit 12
Functionalization and Classification of Plant in Service
Total Actual Cust.Meters &Public Fire Revenue Direct
Plant Commodity Capacity Customer Acctg.Services Protection Related Assign.
Account 6/30/2018 (COM)(CAP)(AC)(WCA)(WCMS)(FP)(RR)(DA)
Customer Related
Weighted for:
Basis of Classification [1]
General Plant
Land $0 $0 $0 $0 $0 $0 $0 $0 $0 As Factor PBG
Buildings 127,947 49,110 39,267 0 0 7,849 31,721 0 0 As Factor PBG
Vehicles 279,222 107,174 85,693 0 0 17,128 69,226 0 0 As Factor PBG
Equipment 775,507 297,665 238,001 0 0 47,572 192,268 0 0 As Factor PBG
----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------------------------
Total General Plant $1,182,676 $453,950 $362,961 $0 $0 $72,549 $293,216 $0 $0
TOTAL PLANT IN SERVICE $42,496,012 $16,311,358 $13,041,936 $0 $0 $2,606,854 $10,535,864 $0 $0
% Total Plant in Service 100.0%38.4% 30.7% 0.0% 0.0% 6.1% 24.8% 0.0% 0.0%
Note:
[1] See Minimum System Analysis, Exhibit 13.
Water - Page 18 of 24
D R A F T
City of Kalispell - Water Utility
Exhibit 13
Minimum System Analysis
STORAGE ANALYSIS
Max Gal Max Minutes Total
Fire Flow Requirements 4,000 240 960,000
Storage Capacity [1] -6,500,000
% Public Fire Protection 15%
% Capacity 85%
Capacity/Commodity
Average Day (MGD)3.70 COMM 42.5%
Peak Day (MGD)8.70 (1-COMM)=CAP 57.5%
PIPE ANALYSIS
Main Size Length (ft)[2]Replcmt $ [3]Total
2"0 $0.00 $0
4"10,044 156.06 1,567,467
6"162,607 234.09 38,064,673
8"336,508 312.12 105,030,877
10"28,972 390.15 11,303,426
12"128,262 0
14"36,360 0
15"142 0
16"8,427 0
18"24,403 0
20"6,220 0
24"153 0
-----------------------------
742,098 $155,966,442
Fire Protection
1-comm-cap 20%
Customer%
(1) Total @ 4" Equiv $83,980,724
/Total Cost 54%
Capacity
(2) Cost for 4-6"$39,632,139
(3) Equiv 6" for larger $85,555,213
1+2-3/4 26%
[1] Storage based on Table 2-4, page 10, of 2018 Water Facility Plan Update.
[2] Length of pipe, Table 2-7, page 15, of 2018 Water Facility Plan Update.
[3] Replacement cost based on 4" City replacement per inch of pipe.
Source of Supply
Fire Protection
Water - Page 19 of 24
D R A F T
City of Kalispell - Water Utility Page 1 of 2
Exhibit 14
Functionalization and Classification of the Revenue Requirement
Total Actual Cust.Meters &Fire Revenue Direct
Expenses Commodity Capacity Customer Acctg.Services Protection Related Assign.
Account FY 2021 (COM)(CAP)(AC)(WCA)(WCMS)(FP)(RR)(DA)
EXPENSES
Water Operating Costs
Personal Services
Salaries & Wages $799,611 $306,917 $245,399 $0 $0 $49,051 $198,244 $0 $0 As Plant Before General
Seasonal Salaries 5,160 1,981 1,584 0 0 317 1,279 0 0 As Plant Before General
Overtime/Call Outs 20,640 7,922 6,334 0 0 1,266 5,117 0 0 As Plant Before General
Health Insurance 181,059 69,496 55,567 0 0 11,107 44,889 0 0 As Plant Before General
Retirement - PERD 60,753 23,319 18,645 0 0 3,727 15,062 0 0 As Plant Before General
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total Personal Services $1,067,223 $409,635 $327,528 $0 $0 $65,467 $264,592 $0 $0
Materials and Services
Office Supplies/Equip/Computers/ GIS $22,660 $0 $0 $0 $22,660 $0 $0 $0 $0 100% WCA
Equip. (non-capital)/Safety Equip & Supplies 8,755 0 0 0 8,755 0 0 0 0 100% WCA
Chlorine & Chemical 40,170 40,170 0 0 0 0 0 0 0 100% COM
Other Supplies/Janitorial/Consumable Tools 4,635 1,779 1,422 0 0 284 1,149 0 0 As Plant Before General
Gas & Oil 36,050 36,050 0 0 0 0 0 0 0 100% COM
Postage & Printing 1,030 0 0 1,030 0 0 0 0 0 100% AC
Licenses / Public Water Supply Fee 18,870 18,870 0 0 0 0 0 0 0 100% COM
Electricity 163,200 163,200 0 0 0 0 0 0 0 100% COM
Natural Gas 15,810 15,810 0 0 0 0 0 0 0 100% COM
Communications 11,220 11,220 0 0 0 0 0 0 0 100% COM
Lab Services 20,400 20,400 0 0 0 0 0 0 0 100% COM
Auditing 3,570 1,370 1,096 0 0 219 885 0 0 As Plant Before General
Contract Services 56,650 21,744 17,386 0 0 3,475 14,045 0 0 As Plant Before General
Consultants-Wtr Rights/M/Review/Rate Study 67,000 25,717 20,562 0 0 4,110 16,611 0 0 As Plant Before General
Repair/Maint./Equip Maint/Radios/Equip Rental 15,480 5,942 4,751 0 0 950 3,838 0 0 As Plant Before General
Building & Grounds Maintenance 16,866 6,474 5,176 0 0 1,035 4,182 0 0 As Plant Before General
Dues & Training 11,220 4,307 3,443 0 0 688 2,782 0 0 As Plant Before General
Medical/Drug Testing 612 235 188 0 0 38 152 0 0 As Plant Before General
Construction Materials 36,050 13,837 11,064 0 0 2,211 8,938 0 0 As Plant Before General
Hydrants 10,200 0 0 0 0 0 10,200 0 0 100% FP
Materials - Mains 14,280 7,689 3,773 0 0 0 2,818 0 0 As Mains Plant
Materials - Service lines 12,240 6,591 3,234 0 0 0 2,415 0 0 As Mains Plant
Materials - Wells/Pumps 45,900 19,521 26,379 0 0 0 0 0 0 As Pumping Plant
Property & Liability Ins.30,600 11,745 9,391 0 0 1,877 7,587 0 0 As Plant Before General
Uninsured Loss-Deduct./Goodwill Expenditures 10,200 3,915 3,130 0 0 626 2,529 0 0 As Plant Before General
Office Rent/Lease Pymnt (Silverbrook Well)4,310 1,654 1,323 0 0 264 1,069 0 0 As Plant Before General
Noffsinger Tran. Facility Condition Assessment 0 0 0 0 0 0 0 0 0 As Plant Before General
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total Materials and Services $677,978 $438,240 $112,317 $1,030 $31,415 $15,777 $79,198 $0 $0
Transfers
Central Garage Transfer $27,812 $17,978 $4,607 $42 $1,289 $647 $3,249 $0 $0 As Operating Materials & Supplies
Administrative Transfer 125,975 48,353 38,662 0 0 7,728 31,233 0 0 As Plant Before General
Information Tech. Transfer 34,172 0 0 34,172 0 0 0 0 0 100% AC
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total Transfers $187,959 $66,331 $43,269 $34,214 $1,289 $8,375 $34,481 $0 $0
Total Water Operating Costs $1,933,160 $914,206 $483,115 $35,244 $32,704 $89,619 $378,272 $0 $0
Weighted for:
Basis of Classification
Water - Page 20 of 24
D R A F T
City of Kalispell - Water Utility Page 2 of 2
Exhibit 14
Functionalization and Classification of the Revenue Requirement
Total Actual Cust.Meters &Fire Revenue Direct
Expenses Commodity Capacity Customer Acctg.Services Protection Related Assign.
Account FY 2021 (COM)(CAP)(AC)(WCA)(WCMS)(FP)(RR)(DA)
Weighted for:
Basis of Classification
Water Billing Costs
Personal Services
Salaries & Wages $120,937 $0 $0 $34,896 $86,041 $0 $0 $0 $0 As Billing Costs Below
Health Insurance 38,281 0 0 11,046 27,235 0 0 0 0 As Billing Costs Below
Retirement - PERD 9,476 0 0 2,734 6,742 0 0 0 0 As Billing Costs Below
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total Personal Services $168,694 $0 $0 $48,676 $120,017 $0 $0 $0 $0
Materials and Services
Office Supplies/Computers $3,500 $0 $0 $0 $3,500 $0 $0 $0 $0 100% WCA
Auditing 2,040 0 0 2,040 0 0 0 0 0 100% AC
Billing Costs/Grizzly Sec. & Mail Room 41,280 0 0 0 41,280 0 0 0 0 100% WCA
Billing Costs/bank & cc fees, CenturyLink 27,810 0 0 0 27,810 0 0 0 0 100% WCA
Billing costs/printing, shredding 1,545 0 0 0 1,545 0 0 0 0 100% WCA
Dues & Training 2,550 0 0 0 2,550 0 0 0 0 100% WCA
Administrative Transfer 11,619 0 0 0 11,619 0 0 0 0 100% WCA
Information Tech. Transfer 33,774 0 0 33,774 0 0 0 0 0 100% AC
Office Rent 0 0 0 0 0 0 0 0 0 100% WCA
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total Materials and Services $124,119 $0 $0 $35,814 $88,304 $0 $0 $0 $0
Total Water Billing Costs $292,812 $0 $0 $84,491 $208,322 $0 $0 $0 $0
Equipment Replacement Program $119,400 $0 $0 $0 $119,400 $0 $0 $0 $0 100% WCA
Total Operations & Maintenance $2,345,372 $914,206 $483,115 $119,734 $360,425 $89,619 $378,272 $0 $0
Rate Funded Capital $1,065,000 $408,782 $326,846 $0 $0 $65,331 $264,041 $0 $0 As Plant Before General
$0
Debt Service
2004 Water Revenue Refunding $91,005 $34,931 $27,929 $0 $0 $5,583 $22,563 $0 $0 As Plant Before General
2012 Water Refunding SRF 26,260 10,079 8,059 0 0 1,611 6,511 0 0 As Plant Before General
2012 Water Refunding WRF-B 105,816 40,616 32,475 0 0 6,491 26,235 0 0 As Plant Before General
2017 WRF - Water 125,392 48,130 38,483 0 0 7,692 31,088 0 0 As Plant Before General
2020 SRF Loan 170,715 65,526 52,392 0 0 10,472 42,325 0 0 As Plant Before General
New SRF Loan Debt 173,219 66,487 53,161 0 0 10,626 42,946 0 0 As Plant Before General
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total Debt Service $692,407 $265,768 $212,498 $0 $0 $42,475 $171,666 $0 $0
LESS: Impact Fees $122,250 $46,924 $37,518 $0 $0 $7,499 $30,309 $0 $0 As Plant Before General---------------------------------------------------------------------------------------------------------------------------------------
Net Debt Service $570,157 $218,845 $174,980 $0 $0 $34,975 $141,357 $0 $0
To / (From) Reserves
To / (From) Operating Reserve 27,131 $10,414 $8,326 $0 $0 $1,664 $6,726 $0 $0 As Plant in Service
To / (From) Capital Improvement Reserve 0 0 0 0 0 0 0 0 0 As Plant Before General
To / (From) Emergency Reserve 0 0 0 0 0 0 0 0 0 As Plant in Service
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total To / (From) Reserves $27,131 $10,414 $8,326 $0 $0 $1,664 $6,726 $0 $0
Total Revenue Requirement $4,007,661 $1,552,247 $993,268 $119,734 $360,425 $191,590 $790,397 $0 $0
Miscellaneous Revenues
0 Meter Replacement Fee (10125)$101,000 $0 $0 $0 $0 $101,000 $0 $0 $0 As Meters
0 Impact Fee Admin (10100)25,000 9,596 7,672 0 0 1,534 6,198 0 0 As Plant Before General
0 Misc.-Tower Lease/Installation/Reconnect/Tag fees 121,200 0 0 0 0 0 0 121,200 0 As RR
0 Interest Earnings (10100)38,947 0 0 0 0 0 0 38,947 0 As RR
--------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total Miscellaneous Revenues $286,147 $9,596 $7,672 $0 $0 $102,534 $6,198 $160,147 $0
NET REVENUE REQUIREMENTS $3,721,514 $1,542,651 $985,595 $119,734 $360,425 $89,056 $784,198 ($160,147)$0
% Net Revenue Requirements 100.0%41.5% 26.5%3.2% 9.7% 2.4%21.1%-4.3%0.0%Water - Page 21 of 24
D R A F T
City of Kalispell - Water Utility
Exhibit 15
Allocation of Revenue Requirements
Net Revenue
Classification Components Requirement Residential Commercial Irrigation Private Fire Allocation Factor
Commodity $1,542,651 $412,719 $589,759 $540,173 $0 (COM)
Capacity $985,595 $264,800 $328,813 $391,982 $0 (CAP)
Customer Related
Actual Customer $119,734 $71,381 $17,497 $28,655 $2,202 (AC)
Weighted for Cust. Acctg.360,425 214,872 52,669 86,256 6,628 (WCA)
Weighted for Meters & Services 89,056 42,620 22,421 21,195 2,821 (WCMS)--------------------------------------------------------------------------------
Total Customer Related $569,216 $328,873 $92,587 $136,105 $11,651
Fire Protection Related
Public $707,261 $377,903 $329,357 $0 $0 (FP-Public)
Private 76,938 0 0 0 76,938 (FP-Private)--------------------------------------------------------------------------------
Total Fire Related $784,198 $377,903 $329,357 $0 $76,938
Revenue Related ($160,147) ($68,021) ($57,412) ($29,993)($4,721)(RR)
Direct Assignment $0 $0 $0 $0 $0 (DA)
NET REVENUE REQUIREMENT $3,721,514 $1,316,274 $1,283,105 $1,038,267 $83,867
% Net Revenue Requirement 100.0%35.4%34.5%27.9%2.3%
Water - Page 22 of 24
D R A F T
City of Kalispell - Water Utility
Exhibit 16
Summary of the Cost of Service Analysis
Total
Component FY 2021 Residential Commercial Irrigation Private Fire
Revenues at Present Rates $3,194,432 $1,356,816 $1,145,182 $598,260 $94,174
Less: Allocated Revenue Requirement 3,721,514 1,316,274 1,283,105 1,038,267 83,867
---------------- ---------------- ---------------- ---------------- ----------------
Balance/(Deficiency) of Funds ($527,081) $40,542 ($137,923) ($440,007) $10,307
Required % Change in Rates 16.5%-3.0% 12.0% 73.5%-10.9%
Water - Page 23 of 24
D R A F T
City of Kalispell - Water Utility
Exhibit 17
Average Unit Costs
Total
Component FY 2021 Residential Commercial Irrigation Private Fire
Commodity $/1,000 gal.$1.51 $1.51 $1.51 $1.51 $0.00
Capacity $/1,000 gal.$0.97 $0.97 $0.84 $1.10 $0.00
Fire/Revenue/Direct $/1,000 gal.$0.54 $1.14 $0.70 ($0.08) $0.00
------------------------------------------------------------
Total $/1,000 gal.$3.02 $3.62 $3.06 $2.53 $0.00
Customer Costs - $/account/month $4.17 $4.04 $4.64 $4.17 $33.43
Average Total Cost $/1,000 gal.$3.65 $4.83 $3.29 $2.91 $0.00
Average Present Revenue $/1,000 gal.$3.13 $4.98 $2.94 $1.68 $0.00
Basic Data:
Annual Water Consumption(/1,000 gal.)1,018,989 272,619 389,562 356,808 0
Number of Accounts 11,370 6,778 1,661 2,721 209
Water - Page 24 of 24
D R A F T
Technical Appendix B – Wastewater Rate Analysis
Budget Proposed
FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025
Revenues
Rate Revenues
Treatment $3,453,881 $3,453,881 $3,453,881 $3,488,420 $3,523,304 $3,558,538 $3,594,123
Collection 1,180,327 1,180,327 1,180,327 1,192,131 1,204,052 1,216,092 1,228,253-----------------------------------------------------------------------------------------------------------------------Total Rate Revenues $4,634,209 $4,634,209 $4,634,209 $4,680,551 $4,727,356 $4,774,630 $4,822,376
Other Revenues $123,880 $76,500 $31,413 $35,321 $38,832 $35,863 $30,258-----------------------------------------------------------------------------------------------------------------------Total Revenues $4,758,089 $4,710,709 $4,665,621 $4,715,872 $4,766,188 $4,810,493 $4,852,634
Expenses
Operation & Maintenance
Treatment $1,951,373 $2,118,227 $2,066,421 $2,090,236 $2,407,336 $2,475,790 $2,546,396
Collection 1,338,781 1,246,402 1,316,175 1,353,597 1,392,153 1,482,378 1,524,926
Equipment Replacement Program
Treatment $0 $0 $108,000 $108,000 $108,000 $108,000 $108,000
Collection 0 43,500 61,000 61,000 61,000 61,000 61,000
Rate Funded Capital
Treatment $850,000 $850,000 $910,000 $970,000 $1,030,000 $1,090,000 $1,150,000
Collection 520,000 520,000 580,000 640,000 700,000 760,000 820,000
Net Debt Service Payment
Treatment $856,913 $859,667 $1,087,819 $1,223,314 $1,281,398 $1,750,885 $1,714,876
Collection 0 97,059 814,975 972,650 1,280,207 1,279,018 1,273,568
To / (From) Reserves (758,978) (1,024,147) (141,000) 80,000 80,000 80,000 80,000
Total Revenue Requirement $4,758,089 $4,710,708 $6,803,390 $7,498,798 $8,340,094 $9,087,071 $9,278,767
Bal. / (Def.) of Funds ($0)$1 ($2,137,768) ($2,782,926) ($3,573,906) ($4,276,578) ($4,426,132)
Balance a % of Rate Adj. Req'd 0.0%0.0% 46.1% 59.5%75.6%89.6%91.8%
Proposed Treatment and Collection Revenue Adjustment 0.0% 0.0% 46.1% 6.5% 6.4% 6.5% 6.5%
Add'l Revenue with Rate Adj.$0 $0 $1,770,633 $2,611,459 $3,591,748 $4,030,625 $4,482,230
Bal. / (Def.) After Rate Adj.($0)$1 ($367,135) ($171,467) $17,842 ($245,953) $56,098
Add'l Rate Adj. Req'd 0.0% 0.0% 7.9% 3.7% -0.4% 5.2% -1.2%
Debt Service Coverage Ratio Before Impact Fees 1.25 0.70 1.34 1.52 1.56 1.43 1.55
Debt Service Coverage Ratio with Impact Fees 1.52 1.19 1.46 1.62 1.65 1.51 1.64
Total Ending Balance (Not including Bond Reserve)$0 $7,650,096 $6,687,618 $6,054,942 $5,623,415 $4,883,834 $4,533,001
Combined Sewer Rate
Fixed Charge $8.44 $8.44 $12.61 $13.43 $14.30 $15.23 $16.22
Volume Charge ($ / 1,000 gallons)$4.78 $4.78 $7.14 $7.60 $8.09 $8.62 $9.18
Avg Monthly Residential Bill (Admin. Charge + 4,000 gal)$27.56 $27.56 $41.17 $43.83 $46.66 $49.71 $52.94
$ Change in Average Monthly Residential Bill $13.61 $2.66 $2.83 $3.05 $3.23
$ Cumulative Change in Average Monthly Residential Bill $13.61 $16.27 $19.10 $22.15 $25.38
Projected
Exhibit 1
Revenue Requirement
Summary Comprehensive Sewer Rate Study - Treatment and Collection
City of Kalispell
Sewer - Page 1 of 33
D R A F T
City of Kalispell Page 1 of 4
Summary Comprehensive Sewer Rate Study - Treatment and Collection
Revenue Requirement
Exhibit 2
Budget Proposed
FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 Notes
Revenues
Rate Revenues
Residential $2,163,456 $2,163,456 $2,163,456 $2,185,091 $2,206,942 $2,229,011 $2,251,301 As Customer Growth
Commercial 1,982,561 1,982,561 1,982,561 2,002,387 2,022,411 2,042,635 2,063,061 As Customer Growth
Evergreen 488,191 488,191 488,191 493,073 498,004 502,984 508,014 As Customer Growth-----------------------------------------------------------------------------------------------------------------------Total Rate Revenues $4,634,209 $4,634,209 $4,634,209 $4,680,551 $4,727,356 $4,774,630 $4,822,376
Other Revenues
Miscellaneous $15,752 $10,000 $10,100 $10,201 $10,303 $10,406 $10,510 As Miscellaneous Revenues
Interest Earnings (10100)108,128 66,500 21,313 25,120 28,529 25,457 19,748 Calculated on Oper. Beg. Balance-----------------------------------------------------------------------------------------------------------------------Total Other Revenues $123,880 $76,500 $31,413 $35,321 $38,832 $35,863 $30,258
Total Revenues $4,758,089 $4,710,709 $4,665,621 $4,715,872 $4,766,188 $4,810,493 $4,852,634
Sewer Treatment Costs
Personal Services
Salaries & Wages $456,093 $454,195 $468,730 $483,729 $669,208 $690,623 $712,723 As Labor
Seasonal Salaries 5,000 5,000 5,160 5,325 5,496 5,671 5,853 As Labor
Severance 42,317 0 0 0 0 0 0 Based on City input
Overtime 22,500 22,500 23,220 23,963 24,730 25,521 26,338 As Labor
Health Insurance 89,087 90,736 94,366 98,140 102,066 106,149 110,395 As Health Benefits
Retirement - PERD 33,891 34,152 35,518 36,939 38,417 39,953 41,551 As Health Benefits-----------------------------------------------------------------------------------------------------------------------Total Personal Services $648,888 $606,584 $626,994 $648,097 $839,916 $867,917 $896,860
Materials and Services
Office Supplies/Equip/Computers $10,000 $10,000 $10,300 $10,609 $10,927 $11,255 $11,593 As Materials & Supplies
Safety Equipment & Supply 2,700 2,700 2,781 2,864 2,950 3,039 3,130 As Materials & Supplies
Alum 20,000 28,000 28,840 29,705 30,596 31,514 32,460 As Materials & Supplies
Chemicals 80,000 87,000 89,610 92,298 95,067 97,919 100,857 As Materials & Supplies
Other Supplies/Janitorial/Consumable Tools/Equip Rental 7,000 7,000 7,210 7,426 7,649 7,879 8,115 As Materials & Supplies
Gas & Oil 16,000 19,000 19,570 20,157 20,762 21,385 22,026 As Materials & Supplies
Postage & Shipping 400 400 412 424 437 450 464 As Materials & Supplies
Licenses and Fees 11,500 12,000 12,240 12,485 12,734 12,989 13,249 As Miscellaneous
Electricity 182,000 190,000 193,800 197,676 201,630 205,662 209,775 As Utilities - Electric
Water 7,500 7,500 7,838 8,229 8,641 9,073 9,527 As Utilities - Other
Natural Gas 60,000 82,000 85,690 89,975 94,473 99,197 104,157 As Utilities - Other
Telephone & Alarms 6,500 6,500 6,708 6,923 7,144 7,373 7,609 As Labor
Auditing 4,000 2,500 2,550 2,601 2,653 2,706 2,760 As Miscellaneous
Contract Services-Glacier Gold 124,000 135,000 137,700 140,454 143,263 146,128 149,051 As Miscellaneous
Other Contract Services / Land Fill 30,000 39,000 39,780 40,576 41,387 42,215 43,059 As Miscellaneous
Consultant-Elec Eng/Permit Asst /Site Specific Sampling 77,500 211,000 175,000 178,500 182,070 185,711 189,426 As Miscellaneous
Consultant/TMDL,WWTP Permit/Rates/Fermenter Assess.185,000 175,000 107,000 73,000 74,460 75,949 77,468 As Miscellaneous
Maintenance Service -Misc.30,000 30,000 30,960 31,951 32,973 34,028 35,117 As Labor
Building Maintenance 40,000 46,000 47,472 48,991 50,559 52,177 53,846 As Labor
Dues, Training & Training Materials 7,500 8,500 8,670 8,843 9,020 9,201 9,385 As Miscellaneous
Medical Services 500 500 510 520 531 541 552 As Miscellaneous
Property & Liability Insurance 37,342 42,000 42,840 43,697 44,571 45,462 46,371 As Miscellaneous
Phosphorus 0 0 0 0 0 0 0 New Cost
Nitrogen 0 0 0 0 0 0 0 New Cost
Composting 0 0 0 0 86,000 86,000 86,000 New Cost-----------------------------------------------------------------------------------------------------------------------Total Materials and Services $939,442 $1,141,600 $1,057,481 $1,047,905 $1,160,498 $1,187,854 $1,215,996
Projected
Sewer - Page 2 of 33
D R A F T
City of Kalispell Page 2 of 4
Summary Comprehensive Sewer Rate Study - Treatment and Collection
Revenue Requirement
Exhibit 2
Budget Proposed
FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 Notes
Projected
Transfers
Central Garage Transfer $22,489 $19,219 $19,796 $20,389 $21,001 $21,631 $22,280 As Equipment
Administrative Transfer 117,270 122,705 126,632 130,684 134,866 139,181 143,635 As Labor
Information Tech. Transfer 23,898 23,651 24,408 25,189 25,995 26,827 27,685 As Labor-----------------------------------------------------------------------------------------------------------------------Total Transfers $163,657 $165,575 $170,835 $176,262 $181,862 $187,639 $193,600
Total Sewer Treatment Costs $1,751,987 $1,913,759 $1,855,309 $1,872,264 $2,182,276 $2,243,410 $2,306,456
Laboratory Operations Costs
Personal Services
Salaries & Wages $110,917 $115,308 $118,997 $122,805 $126,735 $130,791 $134,976 As Labor
Health Insurance 17,608 16,872 17,547 18,249 18,979 19,738 20,527 As Health Benefits
Retirement - PERD 8,161 8,589 8,932 9,289 9,661 10,047 10,449 As Health Benefits-----------------------------------------------------------------------------------------------------------------------Total Personal Services $136,686 $140,768 $145,476 $150,344 $155,375 $160,576 $165,953
Materials and Services
Office Supplies $4,500 $4,500 $4,635 $4,774 $4,917 $5,065 $5,217 As Materials & Supplies
Equipment (Non-Capital)2,500 2,500 2,575 2,652 2,732 2,814 2,898 As Materials & Supplies
Lab Supplies 16,500 16,500 16,995 17,505 18,030 18,571 19,128 As Materials & Supplies
Lab Services/Newly Mandated Pretreatment Testing 30,000 30,000 30,960 31,951 32,973 34,028 35,117 As Labor
Equipment Maintenance 5,500 5,500 5,676 5,858 6,045 6,239 6,438 As Labor
School & Travel 3,700 4,700 4,794 4,890 4,988 5,087 5,189 As Miscellaneous-----------------------------------------------------------------------------------------------------------------------Total Materials and Services $62,700 $63,700 $65,635 $67,629 $69,685 $71,804 $73,987
Total Laboratory Operating Costs $199,386 $204,468 $211,111 $217,973 $225,060 $232,380 $239,940
Sanitary Sewer Operating Costs
Personal Services
Salaries & Wages $283,430 $297,006 $306,510 $316,318 $326,441 $387,387 $399,783 As Labor
Overtime 5,500 5,500 5,676 5,858 6,045 6,239 6,438 As Labor
Health Insurance 71,186 80,197 83,405 86,741 90,211 93,820 97,572 As Health Benefits
Retirement - PERD 21,197 22,509 23,410 24,346 25,320 26,333 27,386 As Health Benefits-----------------------------------------------------------------------------------------------------------------------Total Personal Services $381,313 $405,213 $419,001 $433,264 $448,017 $513,777 $531,180
Materials and Services
Office Supplies/Equip/ Computer Supplies/GIS $12,200 $12,200 $12,566 $12,943 $13,331 $13,731 $14,143 As Materials & Supplies
Equipment (Non Capital)/Safety Equip & Supplies 8,350 8,350 8,601 8,859 9,124 9,398 9,680 As Equipment
Other Supplies/Janitorial/Consumable Tools 2,300 2,300 2,369 2,440 2,513 2,589 2,666 As Materials & Supplies
Gas & Oil 12,000 12,000 12,360 12,731 13,113 13,506 13,911 As Materials & Supplies
Postage, Printing & Advertising 500 500 515 530 546 563 580 As Materials & Supplies
Electricity 55,000 57,000 58,140 59,303 60,489 61,699 62,933 As Utilities - Electric
Natural Gas 16,500 16,500 17,243 18,105 19,010 19,960 20,958 As Utilities - Other
Telephone & Comm., Alarms 25,000 26,000 26,520 27,050 27,591 28,143 28,706 As Utilities - Electric
Auditing 3,000 3,000 3,096 3,195 3,297 3,403 3,512 As Labor
Contract Services 24,000 24,000 24,720 25,462 26,225 27,012 27,823 As Materials & Supplies
Consultants-Review/Modeling/Facility Plan/Rate Analysis 335,000 185,000 236,000 240,720 245,534 250,445 255,454 As Miscellaneous
Equipment Maintenance/Buildings & Radios 7,000 11,375 11,739 12,115 12,502 12,902 13,315 As Labor
Dues & Training, Licenses 5,500 7,250 7,395 7,543 7,694 7,848 8,005 As Miscellaneous
Medical Services 500 500 510 520 531 541 552 As Miscellaneous
Construction Materials 10,000 10,000 10,300 10,609 10,927 11,255 11,593 As Materials & Supplies
Materials - Pumps/Lift Stations 50,000 50,000 51,000 52,020 53,060 54,122 55,204 As Miscellaneous
Property & Liability Ins 18,400 42,000 42,840 43,697 44,571 45,462 46,371 As Miscellaneous
$10,000 Uninsured Loss/$15,000 Goodwill Expenditures 25,000 25,000 25,500 26,010 26,530 27,061 27,602 As Miscellaneous-----------------------------------------------------------------------------------------------------------------------Total Materials and Services $610,250 $492,975 $551,413 $563,851 $576,590 $589,640 $603,008
Transfers
Central Garage Transfer $10,133 $9,435 $9,718 $10,010 $10,310 $10,619 $10,938 As Equipment
Administrative Transfer 59,359 48,854 50,417 52,031 53,696 55,414 57,187 As Labor
Information Tech. Transfer 19,118 18,921 19,526 20,151 20,796 21,462 22,148 As Labor
Office Rent 6,422 6,422 0 0 0 0 0 Based on City input-----------------------------------------------------------------------------------------------------------------------Total Transfers $95,032 $83,632 $79,662 $82,192 $84,802 $87,495 $90,273
Total Sanitary Sewer Operating Costs $1,086,595 $981,820 $1,050,076 $1,079,306 $1,109,409 $1,190,912 $1,224,461
Sewer - Page 3 of 33
D R A F T
City of Kalispell Page 3 of 4
Summary Comprehensive Sewer Rate Study - Treatment and Collection
Revenue Requirement
Exhibit 2
Budget Proposed
FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 Notes
Projected
Sewer Billing Costs
Personal Services
Salaries & Wages $96,132 $99,549 $102,735 $106,022 $109,415 $112,916 $116,530 As Labor
Health Insurance 22,864 27,602 28,706 29,854 31,048 32,290 33,582 As Health Benefits
Retirement - PERD 7,426 7,778 8,089 8,413 8,749 9,099 9,463 As Health Benefits-----------------------------------------------------------------------------------------------------------------------Total Personal Services $126,422 $134,929 $139,530 $144,289 $149,213 $154,306 $159,575
Materials and Services
Office Supplies/Computers $3,500 $7,000 $7,210 $7,426 $7,649 $7,879 $8,115 As Materials & Supplies
Auditing 2,000 2,000 2,040 2,081 2,122 2,165 2,208 As Miscellaneous
Billing Costs/Grizzly Sec. & Mail Room 40,000 40,000 40,800 41,616 42,448 43,297 44,163 As Miscellaneous
Billing Costs/bank & cc fees, CenturyLink 25,000 27,000 27,810 28,644 29,504 30,389 31,300 As Materials & Supplies
Billing Costs/printing, shredding 2,500 1,500 1,545 1,591 1,639 1,688 1,739 As Materials & Supplies
Dues & Training 2,500 2,500 2,550 2,601 2,653 2,706 2,760 As Miscellaneous
Administrative Transfer 10,385 10,119 10,443 10,777 11,122 11,478 11,845 As Labor
Information Tech. Transfer 33,457 33,112 34,172 35,265 36,394 37,558 38,760 As Labor
Office Rent 6,422 6,422 0 0 0 0 0 Based on City input-----------------------------------------------------------------------------------------------------------------------Total Materials and Services $125,764 $129,653 $126,569 $130,002 $133,531 $137,160 $140,891
Total Sewer Billing Costs $252,186 $264,582 $266,099 $274,291 $282,744 $291,466 $300,466
Equipment Replacement Program $0 $43,500 $169,000 $169,000 $169,000 $169,000 $169,000 Avg. $ City Equip. Plan
Total Operations & Maintenance $3,290,154 $3,408,129 $3,551,596 $3,612,834 $3,968,489 $4,127,168 $4,240,323
Rate Funded Capital $1,370,000 $1,370,000 $1,490,000 $1,610,000 $1,730,000 $1,850,000 $1,970,000
Debt Service
Debt Service $1,178,546 $1,847,752 $1,824,817 $1,825,002 $1,824,795 $1,731,577 $1,730,214 Debt Schedule
New Debt 0 0 322,602 622,926 996,333 1,565,634 1,565,634 Debt Schedule-----------------------------------------------------------------------------------------------------------------------Total Debt Service $1,178,546 $1,847,752 $2,147,419 $2,447,928 $2,821,128 $3,297,211 $3,295,848
Less: Impact Fees
Debt Service transfer from Impact Fees $321,633 $891,026 $244,625 $251,964 $259,523 $267,308 $307,405-----------------------------------------------------------------------------------------------------------------------Net Debt Service $856,913 $956,726 $1,902,794 $2,195,964 $2,561,605 $3,029,903 $2,988,444
To / (From) Reserves
To / (From) Operating Reserve ($758,978)($1,024,147)($221,000)$0 $0 $0 $0
To / (From) Capital Improvement Reserve 0 0 80,000 80,000 80,000 80,000 80,000-----------------------------------------------------------------------------------------------------------------------Total To / (From) Reserves ($758,978) ($1,024,147) ($141,000) $80,000 $80,000 $80,000 $80,000
Total Revenue Requirement $4,758,089 $4,710,708 $6,803,390 $7,498,798 $8,340,094 $9,087,071 $9,278,767
Bal. / (Def.) of Funds ($0)$1 ($2,137,768) ($2,782,926) ($3,573,906) ($4,276,578) ($4,426,132)
Balance a % of Rate Adj. Req'd 46.1% 59.5% 75.6% 89.6% 91.8%
Proposed Treatment and Collection Revenue Adjustment 0.0% 0.0%46.1%6.5% 6.4% 6.5% 6.5%
Add'l Revenue with Rate Adj.$0 $0 $1,770,633 $2,611,459 $3,591,748 $4,030,625 $4,482,230
Bal. / (Def.) After Rate Adj.($0)$1 ($367,135) ($171,467) $17,842 ($245,953) $56,098
Add'l Rate Adj. Req'd 0.0%0.0%7.9%3.7%-0.4%5.2%-1.2%
Debt Service Coverage Ratio Before Impact Fees 1.25 0.70 1.34 1.52 1.56 1.43 1.55 Minimum = 1.25
Debt Service Coverage Ratio with Impact Fees 1.52 1.19 1.46 1.62 1.65 1.51 1.64
Combined Sewer Rate
Fixed Charge $8.44 $8.44 $12.61 $13.43 $14.30 $15.23 $16.22
Volume Charge ($ / 1,000 gallons)$4.78 $4.78 $7.14 $7.60 $8.09 $8.62 $9.18
Avg Monthly Residential Bill (Admin. Charge + 4,000 gal)$27.56 $27.56 $41.17 $43.83 $46.66 $49.71 $52.94
$ Change in Average Monthly Residential Bill $13.61 $2.66 $2.83 $3.05 $3.23
$ Cumulative Change in Average Monthly Residential Bill $13.61 $16.27 $19.10 $22.15 $25.38
Sewer - Page 4 of 33
D R A F T
City of Kalispell Page 4 of 4
Summary Comprehensive Sewer Rate Study - Treatment and Collection
Revenue Requirement
Exhibit 2
Budget Proposed
FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 Notes
Projected
Operating Cash (10100)
Beginning Balance $4,262,500 $4,262,501 $3,349,365 $2,852,899 $2,545,741 $1,974,788
Plus: To Reserve Fund 0 (221,000)0 0 0 0 From RR Exhibit 2
Less: Uses of Funds - CIP 0 (325,000) (325,000) (325,000) (325,000)0 From CIP Exhibit 3
Total Balance/(Deficiency) of Funds 1 (367,135) (171,467) 17,842 (245,953)56,098 From RR Exhibit 2
Ending Balance $4,262,500 $3,349,365 $2,852,899 $2,545,741 $1,974,788 $2,030,886
Target = 90 Days O&M $840,000 $876,000 $891,000 $978,000 $1,018,000 $1,046,000
Impact Fees (10120)
Beginning Balance $3,664,142 $2,706,313 $2,576,969 $2,360,760 $2,156,391 $1,907,763
Plus: Impact Fees 950,000 489,250 503,928 519,045 534,617 614,809 As Customer Growth
Interest Earnings 18,321 13,532 19,327 23,608 21,564 19,078 Calculated on Beg. Balance
Less: CIP from Impact Fees (1,035,124) (387,500) (487,500) (487,500) (537,500)(813,413) From CIP Exhibit 3
Debt Service transfer Impact Fees (891,026) (244,625) (251,964) (259,523) (267,308)(307,405) From RR Exhibit 2
Impact Fee Reserves 0 0 0 0 0 0
Ending Balance $2,706,313 $2,576,969 $2,360,760 $2,156,391 $1,907,763 $1,420,832
WWTP Equip. Repl (10125)
Beginning Balance $681,283 $681,283 $681,283 $681,283 $681,283 $681,283
Plus: To Reserve Fund 0 0 0 0 0 0
Less: Uses of Funds 0 0 0 0 0 0
Ending Balance $681,283 $681,283 $681,283 $681,283 $681,283 $681,283
Capital & Emergency Reserve
Beginning Balance $0 $0 $80,000 $160,000 $240,000 $320,000
Plus: To Reserve Fund 0 80,000 80,000 80,000 80,000 80,000
Less: Uses of Funds 0 0 0 0 0 0
Ending Balance $0 $80,000 $160,000 $240,000 $320,000 $400,000
Bond Reserve Fund
Beginning Balance $1,561,043 $1,561,043 $1,561,043 $1,561,043 $1,561,043 $1,561,043
Plus: To Reserve Fund 0 0 0 0 0 0
Less: Uses of Funds 0 0 0 0 0 0
Ending Balance $1,561,043 $1,561,043 $1,561,043 $1,561,043 $1,561,043 $1,561,043
Total Ending Balance (Not including Bond Reserve)$7,650,096 $6,687,618 $6,054,942 $5,623,415 $4,883,834 $4,533,001
Sewer - Page 5 of 33
D R A F T
City of Kalispell Page 1 of 2
Comprehensive Sewer Rate Study
Capital Improvement Plan
Exhibit 3
Capital Improvement Projects FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 Future Notes
WWTP Capital Projects
Install Two New Influent Screens $0 $0 $0 $0 $0 $0 $0 Capital Plan
Replace Two Existing Influent Pumps with Higher Capacity Pumps 0 0 0 0 0 0 0 Capital Plan
Construct Two, 75-FT Diameter Primary Clarifiers 0 0 0 0 0 0 0 Capital Plan
Construct new EQ Basin to be converted to a Primary Clarifier in the future469,800 2,349,000 0 0 0 0 0 Capital Plan
Convert Secondary Treatment System to a 5-stage process 0 0 0 0 118,000 1,413,000 0 Capital Plan
Install Dome Covers on Secondary Clarifiers 0 403,000 3,199,000 1,621,000 0 0 0 Capital Plan
Construct Tertiary Membrane Filtration (TMF) process 0 0 0 0 0 0 0 Capital Plan
Modify Existing Reaeration Basin and Cover Structure 0 0 0 0 32,000 373,000 0 Capital Plan
Replace/Install Existing Heat Exchanger,Sludge Recirculation Pumps 0 0 0 0 0 0 0 Capital Plan
Construct Second Primary Digester 0 0 0 0 0 0 0 Capital Plan
Construct City Owned and Operated Composting Facility (Carry Over)291,889 0 0 631,000 7,565,000 0 0 Capital Plan
Sidestream Treatment 0 0 0 0 0 0 0 Capital Plan
Biofilter Bed Rehabilitation 0 0 0 6,000 70,000 0 0 Capital Plan
Chemical Room Modifications 0 0 0 29,000 348,000 0 0 Capital Plan
Additional Standby Power for Equipment 0 0 0 0 0 0 0 Capital Plan
Administration/Laboratory Building Expansion 0 0 0 0 0 0 0 Capital Plan
Digester Chemical Feed System 0 0 0 0 0 10,000 0 Capital Plan
Replace Belt Filter Press 0 0 0 0 0 50,000 0 Capital Plan
Influent Piping & Diversion Structure Rehabilitation 0 50,000 171,186 0 0 0 0 Capital Plan
Secondary Digester Lids Replcmnt (Carry Over)530,648 0 0 0 0 0 0 Capital Plan
East Secondary Clarifier Coating Rehabilitation (Carry Over)75,000 0 0 0 0 0 0 Capital Plan
Misc Replacement Items/Maintenance/Repair 118,000 100,000 100,000 100,000 100,000 100,000 0 Capital Plan
TWAS Roof Replacement (Carry Over & New Appr.)15,000 0 0 0 0 0 0 Capital Plan
Machinery & Equipment 125,500 0 0 0 0 0 0 Capital Plan
Secondary Digesters Mixing Rehabilitations 0 0 0 0 0 0 0 Capital Plan
WWTP 0 0 0 0 0 0 2,500,000 Based on City input----------------------------------------------------------------------------------------------------------------
Total WWTP Capital Projects $1,625,837 $2,902,000 $3,470,186 $2,387,000 $8,233,000 $1,946,000 $2,500,000
Future Capital Funding $0 $0 $0 $0 $0 $0
TOTAL TREATMENT CAPITAL IMPROVEMENT PROJECTS $1,625,837 $2,902,000 $3,470,186 $2,387,000 $8,233,000 $1,946,000
Less: Outside Funding Sources
Developer Contributions $0 $0 $0 $0 $0 $0 Developer Contributions
Operating Cash (10100)192,200 325,000 325,000 325,000 325,000 0 Input
Capital Improvement Reserve (10107)0 0 0 0 0 0 Input
Impact Fees Fund (10120)583,637 112,500 112,500 112,500 112,500 796,000 Growth Related
Grants 0 0 0 0 0 0 Input
New SRF Loan 0 1,554,500 2,062,686 919,500 6,705,500 0 Calculated
New Revenue Bond 0 0 0 0 0 0 Calculated------------------------------------------------------------------------------------------------
Total Less Outside Funding Sources $775,837 $1,992,000 $2,500,186 $1,357,000 $7,143,000 $796,000
TOTAL TREATMENT CIP FROM RATES $850,000 $910,000 $970,000 $1,030,000 $1,090,000 $1,150,000
Sewer - Page 6 of 33
D R A F T
City of Kalispell Page 2 of 2
Comprehensive Sewer Rate Study
Capital Improvement Plan
Exhibit 3
Capital Improvement Projects FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 Future Notes
COLLECITON PROJECTS
Lift Station #3 Main Improvements $0 $0 $407,361 $3,666,247 $0 $0 Capital Plan
Bluestone Upsize 0 0 0 0 0 187,510 Capital Plan
Westside Interceptor (WSI) Gravity Main Extension 0 0 0 0 0 0 Capital Plan
Lift Station #9 Improvements 0 1,738,378 0 0 0 0 Capital Plan
Rose Crossing West Improvements 0 0 0 0 2,081,737 0 Capital Plan
West Reserve Drive Improvements 0 0 0 0 0 0 Capital Plan
West Springcreek Road Improvements 0 0 0 0 0 0 Capital Plan
Lift Station #12 Improvements 0 0 0 0 0 0 Capital Plan
Lift Station #36 Improvements 0 0 0 0 0 0 Capital Plan
Lift Station #22 Improvements 0 0 0 0 0 0 Capital Plan
Rose Crossing East Improvements 0 0 0 0 0 0 Capital Plan
Stillwater Road Improvements 0 0 0 0 0 0 Capital Plan
Lift Station #33 Improvements 0 0 0 0 0 0 Capital Plan
Lift Station #34 Improvements 0 0 0 0 0 0 Capital Plan
Lift Station #39 Improvements 0 0 0 0 0 0 Capital Plan
Existing City CIP "SEW 16" (6th Alley E - South of 14th to 13th
Gravity Replacement)0 255,150 0 0 0 0 Capital Plan
Machinery and Equipment 43,500 0 0 0 0 0
Existing City CIP "SEW 20" (10" Clay Sewer Slipline in 1st Alley W. from Montana St. to Washington St.)82,000 0 0 0 0 0 Capital Plan
Existing City CIP "SEW 33" (Manhole Rehabilitation and Sewer Main Replacements/Repairs)50,000 50,000 50,000 50,000 50,000 50,000 Capital Plan
Existing City CIP "SEW 55" (Westside Interceptor - Three Mile Dr. and Spring Creek Project)2,934,965 0 0 0 0 0 Capital Plan
Existing City CIP "SEW 68" (12" Clay Sewer Slipline in 1st Alley E. & W.233,000 0 0 0 0 0 Capital Plan
Existing City CIP "SEW 70" (Slipline 8" Sewer Main in 6th Alley EN and E. Washington)80,000 0 0 0 0 0 Capital Plan
Existing City CIP "SEW 72" (Lift Station Communication Upgrades)20,000 0 0 0 0 0 Capital Plan
Existing City CIP "SEW 74" (Grandview Lift Station Relocation)0 0 1,314,604 0 0 0 Capital Plan
Existing City CIP "SEW 75" (Lift Station 5a Removal)0 334,714 0 0 0 0 Capital Plan
Existing City CIP "SEW 77" (Shop Complex Pavement Restoration)0 0 0 0 0 0 Capital Plan
Existing City CIP "SEW 78" (Gravity Sewer Replacement on 4th Alley WN)0 0 1,064,754 0 0 0 Capital Plan
Existing City CIP "SEW 79" (Gravity Sewer Replacement on 2nd Alley W)0 0 0 596,351 0 0 Capital Plan
Existing City CIP "SEW 80" (Gravity Sewer Replacement on 5th Alley WN)0 0 0 0 885,395 0 Capital Plan
Existing City CIP "SEW 82" (Gravity Sewer Replacement on 2nd Alley W.)0 0 0 809,281 0 0 Capital Plan
Existing City CIP "SEW 83" (Gravity on 1st and 2nd Ave. EN)0 1,203,825 0 0 0 0 Capital Plan
Existing City CIP "SEW 89" (Facility Plan/Rate Analysis)0 0 0 0 0 0 Capital Plan
Existing City CIP "SEW 91" (Repair and Replacement of Sewer Main)600,000 0 0 0 0 0 Capital Plan
Existing City CIP "SEW 92" (R/R, Upsize of Sewer Main in WWTP Complex)0 169,058 0 0 0 0 Capital Plan
Shop Complex Pavement Restoration - Carryover 4,673 0 0 0 0 0 Capital Plan
Risk-Based Annual Sewer Rehab and Repair 255,000 260,100 265,302 270,608 276,020 281,541 Capital Plan
Growth and Development (Oversize)300,000 318,362 318,362 318,362 318,362 318,362 Capital Plan------------------------------------------------------------------------------------------------
Total Collection Projects $4,603,138 $4,329,588 $3,420,383 $5,710,849 $3,611,515 $837,413
Future Capital Funding $0 $0 $0 $0 $0 $0
TOTAL COLLECTION CAPITAL IMPROVEMENT PROJECTS $4,603,138 $4,329,588 $3,420,383 $5,710,849 $3,611,515 $837,413
Less: Outside Funding Sources
Developer Contributions $0 $0 $0 $0 $1,040,869 $0 Developer Contributions
Operating Cash (10100)3,631,651 0 0 0 0 0 Input
Capital Improvement Reserve (10107)0 0 0 0 0 0 Input
Impact Fees Fund (10120)451,487 275,000 375,000 375,000 425,000 17,413 Growth Related
Grants 0 0 0 0 0 0 Input
New SRF Loan 0 3,474,588 2,405,383 4,635,849 1,385,646 0 Calculated
New Revenue Bond 0 0 0 0 0 0 Calculated------------------------------------------------------------------------------------------------
Total Less Outside Funding Sources $4,083,138 $3,749,588 $2,780,383 $5,010,849 $2,851,515 $17,413
TOTAL COLLECTION CIP FROM RATES $520,000 $580,000 $640,000 $700,000 $760,000 $820,000
TOTAL TREATMENT AND COLLECTION CIP FROM RATES $1,370,000 $1,490,000 $1,610,000 $1,730,000 $1,850,000 $1,970,000
Sewer - Page 7 of 33
D R A F T
City of Kalispell
Comprehensive Sewer Rate Study
Debt Schedule
Exhibit 4
I. Debt Status:
Interest Rate3%20 year 2.25%15 Year 2.25%12 Year 2.5%30 Year 2.5%30 Year
Principal $1,102,748 $12,827,000 Total $1,009,000 $7,000,000 $7,000,000 Total Total
II. Year Principal Interest Total Principal Interest Total
Treatment
Payment Principal Interest Total Principal Interest Total Principal Interest Total
Collection
Payment
Treatment
and Collection
Payment
2018-19 $47,000 $22,935 $69,935 $832,000 $179,978 $1,011,978 $1,081,913 $85,000 $11,633 $96,633 $0 $0 $0 $0 $0 $0 $96,633 $1,178,546
2019-20 48,000 24,510 72,510 851,000 161,157 1,012,157 1,084,667 87,000 9,709 96,709 163,000 170,013 333,013 163,000 170,363 333,363 763,085 1,847,752
2020-21 50,000 23,055 73,055 871,000 141,897 1,012,897 1,085,952 89,000 7,741 96,741 167,000 165,913 332,913 167,000 142,211 309,211 738,865 1,824,817
2021-22 52,000 21,540 73,540 890,000 122,198 1,012,198 1,085,738 91,000 5,726 96,726 171,000 161,713 332,713 171,000 138,611 309,611 739,050 1,824,788
2022-23 53,000 19,980 72,980 910,000 102,061 1,012,061 1,085,041 92,000 3,668 95,668 175,000 157,413 332,413 175,000 134,825 309,825 737,906 1,822,947
2023-24 55,000 18,375 73,375 931,000 81,461 1,012,461 1,085,836 94,000 1,587 95,587 180,000 153,013 333,013 180,000 131,154 311,154 739,754 1,825,590
2024-25 56,000 16,710 72,710 952,000 60,401 1,012,401 1,085,111 0 0 0 185,000 148,476 333,476 185,000 127,265 312,265 645,741 1,730,852
2025-26 58,000 15,015 73,015 973,000 38,857 1,011,857 1,084,872 0 0 0 189,000 143,825 332,825 189,000 123,278 312,278 645,103 1,729,975
2026-27 60,000 13,260 73,260 996,000 16,841 1,012,841 1,086,101 0 0 0 194,000 139,076 333,076 194,000 119,208 313,208 646,284 1,732,385
2027-28 63,000 11,430 74,430 0 0 0 74,430 0 0 0 199,000 134,188 333,188 199,000 115,018 314,018 647,206 721,636
2028-29 62,000 9,555 71,555 0 0 0 71,555 0 0 0 204,000 129,188 333,188 204,000 110,732 314,732 647,920 719,475
2029-30 65,000 7,665 72,665 0 0 0 72,665 0 0 0 209,000 124,050 333,050 209,000 106,328 315,328 648,378 721,043
2030-31 68,000 5,700 73,700 0 0 0 73,700 0 0 0 214,000 118,801 332,801 214,000 101,829 315,829 648,630 722,330
2031-32 69,000 4,700 73,700 0 0 0 73,700 0 0 0 220,000 113,413 333,413 220,000 97,211 317,211 650,624 724,324
2032-33 70,000 1,575 71,575 0 0 0 71,575 0 0 0 225,000 107,876 332,876 225,000 92,465 317,465 650,341 721,916
2033-34 0 0 0 0 0 0 0 0 0 0 231,000 102,213 333,213 231,000 87,611 318,611 651,824 651,824
2034-35 0 0 0 0 0 0 0 0 0 0 237,000 96,404 333,404 237,000 82,629 319,629 653,033 653,033
2035-36 0 0 0 0 0 0 0 0 0 0 243,000 90,438 333,438 243,000 77,518 320,518 653,956 653,956
2036-37 0 0 0 0 0 0 0 0 0 0 249,000 84,326 333,326 249,000 72,279 321,279 654,605 654,605
2037-38 0 0 0 0 0 0 0 0 0 0 255,000 78,063 333,063 255,000 66,911 321,911 654,974 654,974
2038-39 0 0 0 0 0 0 0 0 0 0 262,000 71,651 333,651 262,000 61,415 323,415 657,066 657,066
2039-40 0 0 0 0 0 0 0 0 0 0 268,000 65,063 333,063 268,000 55,768 323,768 656,831 656,831
2040-41 0 0 0 0 0 0 0 0 0 0 275,000 58,313 333,313 275,000 49,982 324,982 658,295 658,295
2041-42 0 0 0 0 0 0 0 0 0 0 282,000 51,400 333,400 282,000 44,057 326,057 659,457 659,457
2042-43 0 0 0 0 0 0 0 0 0 0 288,000 44,313 332,313 288,000 37,982 325,982 658,295 658,295
2043-44 0 0 0 0 0 0 0 0 0 0 296,000 37,063 333,063 296,000 31,768 327,768 660,831 660,831
2044-45 0 0 0 0 0 0 0 0 0 0 304,000 29,613 333,613 260,000 25,382 285,382 618,995 618,995
2045-46 0 0 0 0 0 0 0 0 0 0 312,000 21,963 333,963 0 0 0 333,963 333,963
2046-47 0 0 0 0 0 0 0 0 0 0 318,000 14,125 332,125 0 0 0 332,125 332,125
2047-48 0 0 0 0 0 0 0 0 0 0 326,000 6,125 332,125 0 0 0 332,125 332,125
$876,000 $216,005 $1,092,005 $8,206,000 $904,851 $9,110,851 $10,202,856 $538,000 $40,064 $578,064 $6,841,000 $2,818,031 $9,659,031 $5,841,000 $2,403,800 $8,244,800 $18,481,895 $28,684,751
Notes:
[1] Debt service schedules provided by City.
Collection Westside Interceptor -
EstimateTreatment Digester Lid - SRF Loan
Treatment WWTP Imp - 2012 Refund SRF
Loan
Collection Highway 93S - 2012
Refunding SRF Loan Collection Westside Interceptor
Sewer - Page 8 of 33
D R A F T
City of Kalispell
Comprehensive Sewer Rate Study
Allocation of Total Revenue Requirements
Exhibit 5
FY 2021 City Evergreen City Basis of
Classification Components Expenses Treatment Treatment Collection Allocation
Volume Related
VOL-1 - Operations $3,447,817 $913,508 $147,258 $2,387,051 (VOL-1)
VOL-2 - Capacity 543,074 462,116 80,958 0 (VOL-2)
---------------- ---------------- ---------------- ----------------
Total Volume Related $3,990,891 $1,375,624 $228,217 $2,387,051
Strength Related
Bio-chemical Oxygen Demand $334,515 $288,077 $46,438 $0 (BOD-1)
Suspended Solids 1,447,278 1,246,363 200,915 0 (SS-1)
Total Phosphorous 349,187 300,712 48,475 0 (TP-1)
Nitrogen 407,874 351,252 56,622 0 (TN-1)
---------------- ---------------- ---------------- ----------------
Total Strength Related $2,538,854 $2,186,404 $352,450 $0
Customer Related
Actual Customer $72,195 $0 $0 $72,195 (AC)
Weighted Customer 193,904 0 0 193,904 (WCA)
---------------- ---------------- ---------------- ----------------
Total Customer Related $266,099 $0 $0 $266,099
Revenue Related ($23,867) ($13,639) ($2,245) ($7,983)(RR)
Direct Assignment $0 $0 $0 $0 (DA)
$0
Total Revenue Requirements $6,771,977 $3,548,388 $578,422 $2,645,167
% Net Revenue Requirement - Treatment Only 100.0%86.0% 14.0%
% Net Revenue Requirement 100.0%52.4% 8.5% 39.1%
Sewer - Page 9 of 33
D R A F T
City of Kalispell
Comprehensive Sewer Rate Study
Summary of the Cost of Service Analysis
Exhibit 6
City Evergreen City City
FY 2021 Treatment Treatment Collection Combined
Revenues at Present Rates $4,634,209 $2,965,690 $488,191 $1,180,327 $4,146,018
Total Allocated Cost $6,771,977 $3,548,388 $578,422 $2,645,167 $6,193,556
---------------- ---------------- ---------------- ---------------- ----------------
Balance/(Deficiency) of Rates ($2,137,768) ($582,698) ($90,230) ($1,464,840) ($2,047,538)
Required % Change in Rates 46.1% 19.6% 18.5% 124.1% 49.4%
Sewer - Page 10 of 33
D R A F T
City of Kalispell
Comprehensive Sewer Rate Study
Average Unit Costs - Summary of the Cost of Service
Exhibit 7
City City Evergreen City
Combined Treatment Treatment Collection
Volume Costs - $/1,000 gals $5.57 $2.04 $1.68 $3.53
Strength Costs - $/1,000 gals
Bio-chemical Oxygen Demand $0.43 $0.43 $0.34 $0.00
Suspended Solids $1.85 1.85 1.48 0.00
Phosphorous $0.45 0.45 0.36 0.00
Nitrogen $0.52 0.52 0.42 0.00
Revenue/Direct/Other - $/1,000 gals ($0.03) ($0.02) ($0.02) ($0.01)
Customer Costs - $/Customer/Month $2.47 $0.00 $0.00 $2.47
Average Total Cost - $/1,000 gallons $9.17 $5.25 $4.25 $3.92
Average Present Revenue - $/1,000 gallons $6.14 $4.39 $3.59 $1.75
Basic Data:
Annual Flow - (1,000 gals)675,292 675,292 136,072 675,292
Number of Customers 8,980 8,980 1,983 8,980
Sewer - Page 11 of 33
D R A F T
City of Kalispell
Comprehensive Sewer Rate Study
Summary of Proposed Rates
Exhibit 8
Present
Rates FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Rate Adjustment 49.4%6.5% 6.5% 6.5% 6.5% 3.0% 3.0%
Fixed Charge (per account)$8.44 $12.61 $13.43 $14.30 $15.23 $16.22 $16.71 $17.21
Volume Charge ($ / 1,000 gallons)$4.78 $7.14 $7.60 $8.09 $8.62 $9.18 $9.46 $9.74
Evergreen Rate Adjustment 18.4%6.4% 6.4% 6.5% 6.5% 3.0% 3.0%
Fixed Charge $6.22 $7.37 $7.85 $8.36 $8.90 $9.48 $9.76 $10.05
Volume Charge ($ / 1,000 gallons)$2.50 $2.96 $3.15 $3.35 $3.57 $3.80 $3.91 $4.03
Strength Surcharge - Over Limit > than (mg/l)
of:
Bio-chemical Oxygen Demand ($ / Lbs)*250 $0.16 $0.17 $0.18 $0.19 $0.20 $0.21 $0.22
Suspended Solids ($ / Lbs)*250 0.71 0.75 0.80 0.85 0.91 0.94 0.97
Phosphorus ($ / Lbs) 7 6.10 6.49 6.91 7.36 7.84 8.08 8.32
Nitrogen ($ / Lbs) 40 1.25 1.33 1.42 1.51 1.61 1.66 1.71
* BOD and SS currently assessed on a different approach. Phosphorus and Nitrogen are new surcharges.
Average Bill at 4,000 Gallons $27.56 $41.17 $43.83 $46.66 $49.71 $52.94 $54.55 $56.17
Monthly Change $0.00 $13.61 $2.66 $2.83 $3.05 $3.23 $1.61 $1.62
Cumulative Change $0.00 $13.61 $16.27 $19.10 $22.15 $25.38 $26.99 $28.61
Proposed Rates
Sewer - Page 12 of 33
D R A F T
City of Kalispell
Comprehensive Sewer Rate Study
Summary of Proposed Rate Adjustments
Exhibit 9
Present Rates for FY 2019
FY 2024 FY 2025
Data Rate Rate Revenue Rate Revenue Rate Revenue Rate Revenue Rate Revenue Rate Revenue
Rate Adjustment Combined 0.0%49.4%6.5%6.5%6.5%6.5%
Rate Adjustment Evergreen COSA 0.0%18.5%6.5%6.5%6.5%6.5%
Combined
Inside
Number of Customers #####$8.44 $8.44 $899,063 $12.61 $1,343,268 $13.43 $1,430,617 $14.30 $1,523,293 $15.23 $1,622,361 $16.22 $1,727,819
Flow #####$4.78 $4.78 3,203,958 $7.14 4,785,828 $7.60 5,094,158 $8.09 5,422,598 $8.62 5,777,848 $9.18 6,153,207
$4,103,020 $6,129,095 $6,524,776 $6,945,891 $7,400,209 $7,881,026
Outside
Number of Customers 103 $10.56 $10.55 $13,040 $15.76 $19,479 $16.79 $20,752 $17.88 $22,100 $19.04 $23,533 $20.28 $25,066
Flow #####$5.98 $5.98 29,945 $8.93 44,718 $9.50 47,572 $10.11 50,627 $10.78 53,982 $11.48 57,487
$42,985 $64,197 $68,325 $72,727 $77,515 $82,553
Evergreen
Number of Customers #####$6.22 $6.22 $148,011 $7.37 $175,377 $7.85 $186,799 $8.36 $198,935 $8.90 $211,784 $9.48 $225,586
Flow #####$2.50 $2.50 340,180 $2.96 402,773 $3.15 428,627 $3.35 455,841 $3.57 485,777 $3.80 517,074
$488,191 $578,150 $615,425 $654,776 $697,561 $742,660
Total $4,634,196 $6,771,442 $7,208,526 $7,673,393 $8,175,285 $8,706,239
Overall Rate Adjustment 0.0%46.1%6.5%6.4%6.5%6.5%
Evergreen Rate Adjustment 0.0%18.4%6.4%6.4%6.5%6.5%
FY 2020 FY 2021 FY 2022 FY 2023
Sewer - Page 13 of 33
D R A F T
TREATMENT COST OF SERVICE ANALYSIS
Sewer - Page 14 of 33
D R A F T
City of Kalispell
Comprehensive Sewer Rate Study - Treatment
Development of Volume Allocation Factors
Exhibit 1
FY 2021 25.0%Avg. Daily Total Flow/ Avg. Daily
Annual flow Inflow and Total Annual Flow At % of Contractual Flow At % of
Customer Class in 1,000 Gal Infiltration [2]Flow at Plant Plant (MGD)Total Allowance Plant (MGD)Total
Residential [4]295,805 73,951 369,756 1.01 37.7%369,756 1.01 37.3%
Commercial [5]379,487 94,872 474,359 1.30 48.4%474,359 1.30 47.8%
Evergreen 136,072 0 136,072 0.37 13.9%0 0.00 14.9%
--------------- --------------- --------------- --------------- ------------------------------ --------------- ---------------
Total 811,364 168,823 980,187 2.69 100.0%844,115 2.31 100.0%
[6]2.81
Allocation Factor (VOL-1)(VOL-2)
NOTES:
[1] Flow data based on July 2018 to April 2019 billings, May and June estimates. Operating costs are allocated to Evergreen on actual/estimated flows and capital costs
are allocated on the basis of contractual capacity of 14.9% (0.0805/5.4 mg total capacity = 14.9%)
[2] I/I based on City estimates. Evergreen volumes are metered and they are not assigned I&I per contract.
[3] Evergreen VOL-2 flow based on maximum capacity (contractual flows allowed per contract) of 0.0805 mgd of total 5.4 mgd or 14.9% (0.0805/5.4 = 14.9%)
[4] All Residential customer classes combined into "Residential"
[5] All Commercial customer classes combined into "Commercial"
[6] Average annual flow of 2.81 based on Table 4-15 of Kalispell Wastewater System Plan.
Operating [1]Capital [3]
Sewer - Page 15 of 33
D R A F T
City of Kalispell
Comprehensive Sewer Rate Study - Treatment
Development of Customer Allocation Factors
Exhibit 2
Number of % of Weighting Weighted % of
Customer Class Units Total Factor Customer Total
Residential 7,335 66.9%1.0 7,335 81.7%
Commercial 1,645 15.0%1.0 1,645 18.3%
Evergreen [1]1,983 18.1%0.0 0 0.0%
--------------- ---------------------------------------------
Total 10,963 100.0%8,980 100.0%
Allocation Factor (AC)(WCA)
NOTES:
[1] Evergreen customer provides number of units.
Actual Customer Customer Service & Accounting
Sewer - Page 16 of 33
D R A F T
City of Kalispell
Comprehensive Sewer Rate Study - Treatment
Development of Strength Allocation Factors
Exhibit 3
Annual Flow Avg. Factor Calculated % of Avg. Factor Calculated % of
Customer Class in 1,000 Gal (mg/l)Pounds [1]Total (mg/l)Pounds [1]Total
Residential 369,756 250 771,403 37.7%250 771,403 37.7%
Commercial 474,359 250 989,630 48.4%250 989,630 48.4%
Evergreen 136,072 250 283,880 13.9%250 283,880 13.9%
------------------------------ ------------------------------ ---------------
Total 980,187 2,044,914 100.0%2,044,914 100.0%
Allocation Factor (BOD-1)(SS-1)
Annual Flow Avg. Factor Calculated % of Avg. Factor Calculated % of
Customer Class in 1,000 Gal (mg/l)Pounds [1]Total (mg/l)Pounds [1]Total
Residential 369,756 7 21,599 37.7%40 123,425 37.7%
Commercial 474,359 7 27,710 48.4%40 158,341 48.4%
Evergreen 136,072 7 7,949 13.9%40 45,421 13.9%
------------------------------ ------------------------------ ---------------
Total 980,187 57,258 100.0%327,186 100.0%
Allocation Factor (TP-1)(TN-1)
NOTES:
[1] Calculated Pounds = Annual Flow * Strength Factor * (8.345 lbs/One Million Gallons)
[2] BOD, SS, TP, TN were provided by the City.
NitrogenTotal Phosphorous
Bio-chemical Oxygen Demand Suspended Solids
Sewer - Page 17 of 33
D R A F T
City of Kalispell
Comprehensive Sewer Rate Study - Treatment
Development of Revenue Related Allocation Factors
Exhibit 4
Projected % of
Customer Class FY 2021 Total
2 Residential $1,555,020 45.0%
3 Commercial 1,410,670 40.8%
4 Evergreen 488,191 14.1%
--------------- ---------------
Total $3,453,881 100.0%
Allocation Factor (RR)
Sewer - Page 18 of 33
D R A F T
City of Kalispell
Comprehensive Sewer Rate Study - Treatment
Functionalization and Classification of Plant in Service
Exhibit 5
Weighted for:
Bio-oxygen Suspended Actual Customer
As of Volume Demand Solids Phosphorous Nitrogen Customer Acct/Svcs Revenue Direct
Account Name 06/30/18 (VOL-2)(BOD-1) (SS-1)(TP-1)(TN-1)(AC) (WCA)(RR)(DA)Basis of Classification
Treatment Plant
Land
Property $282,137 $282,137 $0 $0 $0 $0 $0 $0 $0 $0 100.0% VOL-2
----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
Total Land $282,137 $282,137 $0 $0 $0 $0 $0 $0 $0 $0
Treatment [1]
Plant $40,325,567 $9,194,229 $4,597,115 $16,130,227 $4,798,742 $5,605,254 $0 $0 $0 $0 22.8% VOL-2 11.4% BOD-1 40.0% SS-1 11.9% TP-1 13.9% TN-1
Equipment 400,368 91,284 45,642 160,147 47,644 55,651 0 0 0 0 22.8% VOL-2 11.4% BOD-1 40.0% SS-1 11.9% TP-1 13.9% TN-1
----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
Total Treatment $40,725,935 $9,285,513 $4,642,757 $16,290,374 $4,846,386 $5,660,905 $0 $0 $0 $0
TOTAL PLANT IN SERVICE $41,008,072 $9,567,650 $4,642,757 $16,290,374 $4,846,386 $5,660,905 $0 $0 $0 $0
% Total Plant In Service 100.0%23.3% 11.3% 39.7% 11.8% 13.8%0.0% 0.0% 0.0% 0.0%
[1] Plant classification based on review of City's plant and design components.
Strength Related
Sewer - Page 19 of 33
D R A F T
City of Kalispell Page 1 of 3
Comprehensive Sewer Rate Study - Treatment
Functionalization and Classification of Expenses
Exhibit 6
Total Bio-chemical Suspended Actual Customer
Expenses Operating Capacity Oxygen Demand Solids Phosphorous Nitrogen Customer Acct/Svcs Revenue Direct
Account Name FY 2021 (VOL-1) (VOL-2)(BOD-1)(SS-1)(TP-1)(TN-1)(AC)(WCA)(RR)(DA)Basis of Classification
Weighted for:Strength Related
Volume
Sewer Treatment Costs
Personal Services
Salaries & Wages $468,730 $109,360 0 $53,068 $186,202 $55,395 $64,705 $0 $0 $0 $0 As Treatment Plant
Seasonal Salaries 5,160 1,204 0 584 2,050 610 712 0 0 0 0 As Treatment Plant
Severance 0 0 0 0 0 0 0 0 0 0 0 As Treatment Plant
Overtime 23,220 5,417 0 2,629 9,224 2,744 3,205 0 0 0 0 As Treatment Plant
Health Insurance 94,366 22,017 0 10,684 37,487 11,152 13,027 0 0 0 0 As Treatment Plant
Retirement - PERD 35,518 8,287 0 4,021 14,110 4,198 4,903 0 0 0 0 As Treatment Plant
----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -------------------------------------------------------------------------------------
Total Personal Services $626,994 $146,285 $0 $70,986 $249,072 $74,099 $86,553 $0 $0 $0 $0
Materials and Services
Office Supplies/Equip/Computers $10,300 $10,300 $0 $0 $0 $0 $0 $0 $0 $0 $0 100% VOL-1
Safety Equipment & Supply 2,781 2,781 0 0 0 0 0 0 0 0 0 100% VOL-1
Alum 28,840 0 0 0 28,840 0 0 0 0 0 0 100% SS-1
Chemicals 89,610 89,610 0 0 0 0 0 0 0 0 0 100% VOL-1
Other Supplies/Janitorial/Consumable Tools/Equip Rental 7,210 7,210 0 0 0 0 0 0 0 0 0 100% VOL-1
Gas & Oil 19,570 19,570 0 0 0 0 0 0 0 0 0 100% VOL-1
Postage & Shipping 412 412 0 0 0 0 0 0 0 0 0 100% VOL-1
Licenses and Fees 12,240 0 2,856 1,386 4,862 1,447 1,690 0 0 0 0 As Treatment Plant
Electricity 193,800 193,800 0 0 0 0 0 0 0 0 0 100% VOL-1
Water 7,838 7,838 0 0 0 0 0 0 0 0 0 100% VOL-1
Natural Gas 85,690 85,690 0 0 0 0 0 0 0 0 0 100% VOL-1
Telephone & Alarms 6,708 6,708 0 0 0 0 0 0 0 0 0 100% VOL-1
Auditing 2,550 2,550 0 0 0 0 0 0 0 0 0 100% VOL-1
Contract Services-Glacier Gold 137,700 0 0 0 137,700 0 0 0 0 0 0 100% SS-1
Other Contract Services / Land Fill 39,780 0 9,281 4,504 15,803 4,701 5,491 0 0 0 0 As Treatment Plant
Consultant-Elec Eng/Permit Asst /Site Specific Sampling 175,000 0 40,829 19,813 69,518 20,682 24,158 0 0 0 0 As Treatment Plant
Consultant/TMDL,WWTP Permit/Rates/Fermenter Assess.107,000 0 0 0 107,000 0 0 0 0 0 0 100% SS-1
Maintenance Service -Misc.30,960 30,960 0 0 0 0 0 0 0 0 0 100% VOL-1
Building Maintenance 47,472 47,472 0 0 0 0 0 0 0 0 0 100% VOL-1
Dues, Training & Training Materials 8,670 8,670 0 0 0 0 0 0 0 0 0 100% VOL-1
Medical Services 510 510 0 0 0 0 0 0 0 0 0 100% VOL-1
Property & Liability Insurance 42,840 0 9,995 4,850 17,018 5,063 5,914 0 0 0 0 As Treatment Plant
Phosphorus 0 0 0 0 0 0 0 0 0 0 0 100% TP-1
Nitrogen 0 0 0 0 0 0 0 0 0 0 0 100% TN-1
Composting 0 0 0 0 0 0 0 0 0 0 0 100% SS-1
----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -------------------------------------------------------------------------------------
Total Materials and Services $1,057,481 $514,081 $62,961 $30,552 $380,741 $31,892 $37,252 $0 $0 $0 $0
Transfers
Central Garage Transfer $19,796 $19,796 $0 $0 $0 $0 $0 $0 $0 $0 $0 100% VOL-1
Administrative Transfer 126,632 126,632 0 0 0 0 0 0 0 0 0 100% VOL-1
Information Tech. Transfer 24,408 24,408 0 0 0 0 0 0 0 0 0 100% VOL-1
----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -------------------------------------------------------------------------------------
Total Transfers $170,835 $170,835 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Sewer Treatment Costs $1,855,309 $831,200 $62,961 $101,538 $629,813 $105,991 $123,805 $0 $0 $0 $0
Sewer - Page 20 of 33
D R A F T
City of Kalispell Page 2 of 3
Comprehensive Sewer Rate Study - Treatment
Functionalization and Classification of Expenses
Exhibit 6
Total Bio-chemical Suspended Actual Customer
Expenses Operating Capacity Oxygen Demand Solids Phosphorous Nitrogen Customer Acct/Svcs Revenue Direct
Account Name FY 2021 (VOL-1) (VOL-2)(BOD-1)(SS-1)(TP-1)(TN-1)(AC)(WCA)(RR)(DA)Basis of Classification
Weighted for:Strength Related
Volume
Laboratory Operations Costs
Personal Services
Salaries & Wages $118,997 $118,997 $0 $0 $0 $0 $0 $0 $0 $0 $0 100% VOL-1
Health Insurance 17,547 17,547 0 0 0 0 0 0 0 0 0 100% VOL-1
Retirement - PERD 8,932 8,932 0 0 0 0 0 0 0 0 0 100% VOL-1
----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -------------------------------------------------------------------------------------
Total Personal Services $145,476 $145,476 $0 $0 $0 $0 $0 $0 $0 $0 $0
Materials and Services
Office Supplies $4,635 $4,635 $0 $0 $0 $0 $0 $0 $0 $0 $0 100% VOL-1
Equipment (Non-Capital)2,575 2,575 0 0 0 0 0 0 0 0 0 100% VOL-1
Lab Supplies 16,995 16,995 0 0 0 0 0 0 0 0 0 100% VOL-1
Lab Services/Newly Mandated Pretreatment Testing 30,960 30,960 0 0 0 0 0 0 0 0 0 100% VOL-1
Equipment Maintenance 5,676 5,676 0 0 0 0 0 0 0 0 0 100% VOL-1
School & Travel 4,794 4,794 0 0 0 0 0 0 0 0 0 100% VOL-1
----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -------------------------------------------------------------------------------------
Total Materials and Services $65,635 $65,635 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Laboratory Operating Costs $211,111 $211,111 $0 $0 $0 $0 $0 $0 $0 $0 $0
Equipment Replacement Program 108,000 $108,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 100% VOL-1
Total Operations & Maintenance $2,174,421 $1,150,312 $62,961 $101,538 $629,813 $105,991 $123,805 $0 $0 $0 $0
Sewer - Page 21 of 33
D R A F T
City of Kalispell Page 3 of 3
Comprehensive Sewer Rate Study - Treatment
Functionalization and Classification of Expenses
Exhibit 6
Total Bio-chemical Suspended Actual Customer
Expenses Operating Capacity Oxygen Demand Solids Phosphorous Nitrogen Customer Acct/Svcs Revenue Direct
Account Name FY 2021 (VOL-1) (VOL-2)(BOD-1)(SS-1)(TP-1)(TN-1)(AC)(WCA)(RR)(DA)Basis of Classification
Weighted for:Strength Related
Volume
Rate Funded Capital $910,000 $0 $212,313 $103,026 $361,496 $107,545 $125,620 $0 $0 $0 $0 As Treatment Plant
Treatment Debt Service
Treatment Digester Lid - SRF Loan $73,055 $0 $17,045 $8,271 $29,021 $8,634 $10,085 $0 $0 $0 $0 As Treatment Plant
Treatment WWTP Imp - 2012 Refund SRF Loan 1,012,897 0 236,320 114,676 402,371 119,705 139,824 0 0 0 0 As Treatment Plant
New State Loans 99,717 0 23,265 11,289 39,612 11,785 13,765 0 0 0 0 As Treatment Plant
New Revenue Bond Debt 0 0 0 0 0 0 0 0 0 0 0 As Treatment Plant
----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -------------------------------------------------------------------------------------
Total Treatment Debt Service $1,185,669 $0 $276,630 $134,236 $471,005 $140,124 $163,674 $0 $0 $0 $0
Less: Impact Fees
Debt Service transfer from Treatment Impact Fees $97,850 $0 $22,830 $11,078 $38,871 $11,564 $13,508 $0 $0 $0 $0 As Treatment Plant
----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -------------------------------------------------------------------------------------
Net Treatment Debt Service $1,087,819 $0 $253,800 $123,158 $432,134 $128,560 $150,166 $0 $0 $0 $0
To / (From) Reserves
To / (From) Operating Reserve ($82,000) ($82,000)$0 $0 $0 $0 $0 $0 $0 $0 $0 100% VOL-1
To / (From) Capital & Emergency Reserve 60,000 0 13,999 6,793 23,835 7,091 8,283 0 0 0 0 As Treatment Plant
----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -------------------------------------------------------------------------------------
Total To / (From) Reserves (22,000) (82,000) 13,999 6,793 23,835 7,091 8,283 0 0 0 0
TOTAL REVENUE REQUIREMENT $4,150,239 $1,068,312 $543,074 $334,515 $1,447,278 $349,187 $407,874 $0 $0 $0 $0
Less: Miscellaneous Revenue
Miscellaneous $7,545 $7,545 $0 $0 $0 $0 $0 $0 $0 $0 $0 100% VOL-1
Interest Earnings (10100)15,884 0 0 0 0 0 0 0 0 15,884 0 100% RR
----------------- ----------------- ----------------- ----------------- ----------------- ----------------- -------------------------------------------------------------------------------------
Total Miscellaneous Revenues $23,429 $7,545 $0 $0 $0 $0 $0 $0 $0 $15,884 $0
NET REVENUE REQUIREMENTS $4,126,810 $1,060,767 $543,074 $334,515 $1,447,278 $349,187 $407,874 $0 $0 ($15,884)$0
% Net Revenue Requirements 100.0% 25.7% 13.2%8.1% 35.1% 8.5% 9.9% 0.0% 0.0% -0.4% 0.0%
Sewer - Page 22 of 33
D R A F T
City of Kalispell Page 1 of 2
Comprehensive Sewer Rate Study - Treatment
Functionalization and Classification of Expenses
Exhibit 6.1
City Evergreen City Evergreen City Evergreen City Evergreen City Evergreen City Evergreen City Evergreen City Evergreen City Evergreen City Evergreen
Sewer Treatment Costs
Personal Services
Salaries & Wages $93,057 $16,303 $0 $0 $45,701 $7,367 $160,353 $25,849 $47,705 $7,690 $55,723 $8,983 $0 $0 $0 $0 $0 $0 $0 $0
Seasonal Salaries 1,024 179 0 0 503 81 1,765 285 525 85 613 99 0 0 0 0 0 0 0 0
Severance 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Overtime 4,610 808 0 0 2,264 365 7,944 1,281 2,363 381 2,760 445 0 0 0 0 0 0 0 0
Health Insurance 18,735 3,282 0 0 9,201 1,483 32,283 5,204 9,604 1,548 11,218 1,808 0 0 0 0 0 0 0 0
Retirement - PERD 7,051 1,235 0 0 3,463 558 12,151 1,959 3,615 583 4,222 681 0 0 0 0 0 0 0 0
-------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
Total Personal Services $124,478 $21,807 $0 $0 $61,131 $9,854 $214,495 $34,577 $63,812 $10,287 $74,537 $12,015 $0 $0 $0 $0 $0 $0 $0 $0
Materials and Services
Office Supplies/Equip/Computers $8,765 $1,535 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Safety Equipment & Supply 2,366 415 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Alum 0 0 0 0 0 0 24,836 4,004 0 0 0 0 0 0 0 0 0 0 0 0
Chemicals 76,251 13,359 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Other Supplies/Janitorial/Consumable Tools/Equip Rental 6,135 1,075 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Gas & Oil 16,653 2,917 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Postage & Shipping 351 61 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Licenses and Fees 0 0 2,430 426 1,193 192 4,187 675 1,246 201 1,455 235 0 0 0 0 0 0 0 0
Electricity 164,909 28,891 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Water 6,669 1,168 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Natural Gas 72,916 12,774 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Telephone & Alarms 5,708 1,000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Auditing 2,170 380 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Contract Services-Glacier Gold 0 0 0 0 0 0 118,584 19,116 0 0 0 0 0 0 0 0 0 0 0 0
Other Contract Services / Land Fill 0 0 7,898 1,384 3,879 625 13,609 2,194 4,049 653 4,729 762 0 0 0 0 0 0 0 0
Consultant-Elec Eng/Permit Asst /Site Specific Sampling 0 0 34,743 6,087 17,062 2,750 59,868 9,651 17,811 2,871 20,804 3,354 0 0 0 0 0 0 0 0
Consultant/TMDL,WWTP Permit/Rates/Fermenter Assess.0 0 0 0 0 0 92,146 14,854 0 0 0 0 0 0 0 0 0 0 0 0
Maintenance Service -Misc.26,345 4,615 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Building Maintenance 40,395 7,077 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Dues, Training & Training Materials 7,378 1,292 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Medical Services 434 76 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Property & Liability Insurance 0 0 8,505 1,490 4,177 673 14,656 2,362 4,360 703 5,093 821 0 0 0 0 0 0 0 0
Phosphorus 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Nitrogen 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Composting 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
-------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
Total Materials and Services $437,444 $76,636 $53,575 $9,386 $26,311 $4,241 $327,886 $52,855 $27,465 $4,427 $32,081 $5,171 $0 $0 $0 $0 $0 $0 $0 $0
Transfers
Central Garage Transfer $16,845 $2,951 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Administrative Transfer 107,754 18,877 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Information Tech. Transfer 20,769 3,639 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
-------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
Total Transfers $145,368 $25,467 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Sewer Treatment Costs $707,290 $123,910 $53,575 $9,386 $87,442 $14,096 $542,381 $87,432 $91,277 $14,714 $106,618 $17,187 $0 $0 $0 $0 $0 $0 $0 $0
(VOL-1)(AC)(WCA)(RR)(DA)(VOL-2)(BOD-1)(SS-1)(TP-1)(TN-1)
Sewer - Page 23 of 33
D R A F T
City of Kalispell Page 2 of 2
Comprehensive Sewer Rate Study - Treatment
Functionalization and Classification of Expenses
Exhibit 6.1
City Evergreen City Evergreen City Evergreen City Evergreen City Evergreen City Evergreen City Evergreen City Evergreen City Evergreen City Evergreen
(VOL-1)(AC)(WCA)(RR)(DA)(VOL-2)(BOD-1)(SS-1)(TP-1)(TN-1)
Laboratory Operations Costs
Personal Services
Salaries & Wages $101,258 $17,739 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Health Insurance 14,931 2,616 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Retirement - PERD 7,601 1,332 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
-------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
Total Personal Services $123,790 $21,687 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Materials and Services
Office Supplies $3,944 $691 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Equipment (Non-Capital)2,191 384 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Lab Supplies 14,461 2,534 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Lab Services/Newly Mandated Pretreatment Testing 26,345 4,615 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Equipment Maintenance 4,830 846 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
School & Travel 4,079 715 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
-------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
Total Materials and Services $55,851 $9,784 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Laboratory Operating Costs $179,640 $31,471 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Equipment Replacement Program $91,900 $16,100 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Operations & Maintenance $978,830 $171,482 $53,575 $9,386 $87,442 $14,096 $542,381 $87,432 $91,277 $14,714 $106,618 $17,187 $0 $0 $0 $0 $0 $0 $0 $0
Rate Funded Capital $0 $0 $180,663 $31,650 $88,724 $14,302 $311,312 $50,184 $92,615 $14,930 $108,181 $17,439 $0 $0 $0 $0 $0 $0 $0 $0
Treatment Debt Service 0 0 0 0 0 0
Treatment Digester Lid - SRF Loan $0 $0 $14,504 $2,541 $7,123 $1,148 $24,992 $4,029 $7,435 $1,199 $8,685 $1,400 $0 $0 $0 $0 $0 $0 $0 $0
Treatment WWTP Imp - 2012 Refund SRF Loan 0 0 201,091 35,229 98,756 15,920 346,513 55,858 103,088 16,618 120,413 19,411 0 0 0 0 0 0 0 0
New State Loans 0 0 19,797 3,468 9,722 1,567 34,113 5,499 10,149 1,636 11,854 1,911 0 0 0 0 0 0 0 0
New Revenue Bond Debt 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
-------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
Total Treatment Debt Service $0 $0 $235,392 $41,238 $115,601 $18,635 $405,618 $65,386 $120,671 $19,452 $140,952 $22,722 $0 $0 $0 $0 $0 $0 $0 $0
Less: Impact Fees
Debt Service transfer from Treatment Impact Fees $0 $0 $19,426 $3,403 $9,540 $1,538 $33,475 $5,396 $9,959 $1,605 $11,632 $1,875 $0 $0 $0 $0 $0 $0 $0 $0
-------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
Net Treatment Debt Service $0 $0 $215,965 $37,835 $106,061 $17,097 $372,144 $59,990 $110,713 $17,847 $129,320 $20,846 $0 $0 $0 $0 $0 $0 $0 $0
To / (From) Reserves
To / (From) Operating Reserve ($69,776) ($12,224)$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
To / (From) Capital & Emergency Reserve 0 0 11,912 2,087 5,850 943 20,526 3,309 6,107 984 7,133 1,150 0 0 0 0 0 0 0 0
-------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
Total To / (From) Reserves ($69,776) ($12,224) $11,912 $2,087 $5,850 $943 $20,526 $3,309 $6,107 $984 $7,133 $1,150 $0 $0 $0 $0 $0 $0 $0 $0
TOTAL REVENUE REQUIREMENT $909,054 $159,258 $462,116 $80,958 $288,077 $46,438 $1,246,363 $200,915 $300,712 $48,475 $351,252 $56,622 $0 $0 $0 $0 $0 $0 $0 $0
Less: Miscellaneous Revenue
Miscellaneous $6,420 $1,125 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Interest Earnings (10100)0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 13,639 2,245 0 0
-------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
Total Miscellaneous Revenues $6,420 $1,125 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $13,639 $2,245 $0 $0
NET REVENUE REQUIREMENTS $902,634 $158,133 $462,116 $80,958 $288,077 $46,438 $1,246,363 $200,915 $300,712 $48,475 $351,252 $56,622 $0 $0 $0 $0 ($13,639) ($2,245)$0 $0
Sewer - Page 24 of 33
D R A F T
City of Kalispell
Comprehensive Sewer Rate Study - Treatment
Allocation of Total Revenue Requirements
Exhibit 7
FY 2021 Basis of
Classification Components Expenses Residential Commercial Evergreen Allocation
Volume Related
VOL-1 - Operations $1,060,767 $400,153 $513,355 $147,258 (VOL-1)
VOL-2 - Capacity 543,074 202,425 259,690 80,958 (VOL-2)
---------------- ---------------- ---------------- ----------------
Total Volume Related $1,603,840 $602,578 $773,045 $228,217
Strength Related
Bio-chemical Oxygen Demand $334,515 $126,189 $161,888 $46,438 (BOD-1)
Suspended Solids 1,447,278 545,957 700,406 200,915 (SS-1)
Total Phosphorous 349,187 131,724 168,988 48,475 (TP-1)
Nitrogen 407,874 153,862 197,389 56,622 (TN-1)
---------------- ---------------- ---------------- ----------------
Total Strength Related $2,538,854 $957,732 $1,228,671 $352,450
Customer Related
Actual Customer $0 $0 $0 $0 (AC)
Weighted Customer 0 $0 $0 0 (WCA)
---------------- ---------------- ---------------- ----------------
Total Customer Related $0 $0 $0 $0
Revenue Related ($15,884)($7,151) ($6,488) ($2,245)(RR)
Direct Assignment $0 $0 $0 $0 (DA)
$0 $0
Total Revenue Requirements $4,126,810 $1,553,159 $1,995,229 $578,422
% Net Revenue Requirement 100.0% 37.6% 48.3%14.0%
Sewer - Page 25 of 33
D R A F T
COLLECTION COST OF SERVICE ANALYSIS
Sewer - Page 26 of 33
D R A F T
City of Kalispell
Comprehensive Sewer Rate Study - Collection
Development of Volume Allocation Factors
Exhibit 1
FY 2021 25.0%Avg. Daily
Annual flow Inflow and Total Annual Flow At % of
Customer Class in 1,000 Gal [1]Infiltration [2]Flow at Plant Plant (MGD)Total
Residential 295,805 73,951 369,756 1.01 43.8%
Commercial 379,487 94,872 474,359 1.30 56.2%
--------------- --------------- --------------- --------------- ---------------
Total 675,292 168,823 844,115 2.31 100.0%
[3]2.44
Allocation Factor (VOL-3)
NOTES:
[1] Flow data based on July 2018 to April 2019 billings, May and June estimates. Operating costs are allocated to Evergreen on actual/estimated flows and capital costs
[2] I/I based on City estimates. Evergreen volumes are metered and they are not assigned I&I per contract.
[3] Average annual flow of 2.81 based on Table 4-15 of Kalispell Wastewater System Plan; less Evergreen of 0.41.
Sewer - Page 27 of 33
D R A F T
City of Kalispell
Comprehensive Sewer Rate Study - Collection
Development of Customer Allocation Factors
Exhibit 2
Number of % of Weighting Weighted % of
Customer Class Units Total Factor Customer Total
Residential 7,335 81.7%1.0 7,335 81.7%
Commercial 1,645 18.3%1.0 1,645 18.3%
--------------- ------------------------------ ---------------
Total 8,980 100.0%8,980 100.0%
Allocation Factor (AC)(WCA)
Actual Customer Customer Service & Accounting
Sewer - Page 28 of 33
D R A F T
City of Kalispell
Comprehensive Sewer Rate Study - Collection
Development of Revenue Related Allocation Factors
Exhibit 3
Projected % of
Customer Class FY 2021 Total
Residential $608,436 51.5%
Commercial 571,891 48.5%
--------------- ---------------
Total $1,180,327 100.0%
Allocation Factor (RR)
Sewer - Page 29 of 33
D R A F T
City of Kalispell
Comprehensive Sewer Rate Study - Collection
Functionalization and Classification of Plant in Service
Exhibit 4
Collection Actual Customer
As of Volume Only Customer Acct/Svcs Revenue Direct
Account Name 06/30/18 (VOL-3)(AC)(WCA)(RR)(DA)
Collection & Distribution
Lift Stations $5,294,863 $5,294,863 $0 $0 $0 $0 100% VOL-3
Collection Lines 20,594,036 20,594,036 0 0 0 $0 100% VOL-3
Total Collection Plant $25,888,899 $25,888,899 $0 $0 $0 $0
% Total Collection Plant 100.0% 100.0%0.0% 0.0% 0.0% 0.0%
General Plant
Equipment $1,093,771 $1,093,771 $0 $0 $0 $0 As All Other Plant
----------------- ----------------- ----------------- ----------------- ----------------- -----------------
Total General Plant $1,093,771 $1,093,771 $0 $0 $0 $0
TOTAL COLLECTION PLANT IN SERVICE $26,982,670 $26,982,670 $0 $0 $0 $0
% Total Plant in Service 100.0% 100.0%0.0% 0.0% 0.0% 0.0%
Weighted for:
Basis of Classification
Sewer - Page 30 of 33
D R A F T
City of Kalispell Page 1 of 2
Comprehensive Sewer Rate Study - Collection
Functionalization and Classification of Expenses
Exhibit 5
Weighted for:
Total Collection Actual Customer
Expenses Volume Customer Acct/Svcs Revenue Direct
Account Name FY 2021 (VOL-3)(AC)(WCA)(RR)(DA)Basis of Classification
Sanitary Sewer Operating Costs
Personal Services
Salaries & Wages $306,510 $306,510 $0 $0 $0 $0 As Total Collection Plant
Overtime 5,676 5,676 0 0 0 0 As Total Collection Plant
Health Insurance 83,405 83,405 0 0 0 0 As Total Collection Plant
Retirement - PERD 23,410 23,410 0 0 0 0 As Total Collection Plant
----------------- ----------------- ----------------- ----------------- ----------------- -----------------
Total Personal Services $419,001 $419,001 $0 $0 $0 $0
Materials and Services
Office Supplies/Equip/ Computer Supplies/GIS $12,566 $12,566 $0 $0 $0 $0 As Total Collection Plant
Equipment (Non Capital)/Safety Equip & Supplies 8,601 8,601 0 0 0 0 As Total Collection Plant
Other Supplies/Janitorial/Consumable Tools 2,369 2,369 0 0 0 0 As Total Collection Plant
Gas & Oil 12,360 12,360 0 0 0 0 As Total Collection Plant
Postage, Printing & Advertising 515 515 0 0 0 0 As Total Collection Plant
Electricity 58,140 58,140 0 0 0 0 As Total Collection Plant
Natural Gas 17,243 17,243 0 0 0 0 As Total Collection Plant
Telephone & Comm., Alarms 26,520 26,520 0 0 0 0 As Total Collection Plant
Auditing 3,096 3,096 0 0 0 0 As Total Collection Plant
Contract Services 24,720 24,720 0 0 0 0 As Total Collection Plant
Consultants-Review/Modeling/Facility Plan/Rate Analysis 236,000 236,000 0 0 0 0 As Total Collection Plant
Equipment Maintenance/Buildings & Radios 11,739 11,739 0 0 0 0 As Total Collection Plant
Dues & Training, Licenses 7,395 7,395 0 0 0 0 As Total Collection Plant
Medical Services 510 510 0 0 0 0 As Total Collection Plant
Construction Materials 10,300 10,300 0 0 0 0 As Total Collection Plant
Materials - Pumps/Lift Stations 51,000 51,000 0 0 0 0 As Total Collection Plant
Property & Liability Ins 42,840 42,840 0 0 0 0 As Total Collection Plant
$10,000 Uninsured Loss/$15,000 Goodwill Expenditures 25,500 25,500 0 0 0 0 As Total Collection Plant
----------------- ----------------- ----------------- ----------------- ----------------- -----------------
Total Materials and Supplies $551,413 $551,413 $0 $0 $0 $0
Transfers
Central Garage Transfer $9,718 $9,718 $0 $0 $0 $0 As Total Collection Plant
Administrative Transfer 50,417 50,417 0 0 0 0 As Total Collection Plant
Information Tech. Transfer 19,526 19,526 0 0 0 0 As Total Collection Plant
----------------- ----------------- ----------------- ----------------- ----------------- -----------------
Total Transfers $79,662 $79,662 $0 $0 $0 $0
Total Sanitary Sewer Operating Costs $1,050,076 $1,050,076 $0 $0 $0 $0
Sewer Billing Costs
Personal Services
Salaries & Wages $102,735 0 0 102,735 0 0 100% WCA
Health Insurance 28,706 0 0 28,706 0 0 100% WCA
Retirement - PERD 8,089 0 0 8,089 0 0 100% WCA
----------------- ----------------- ----------------- ----------------- ----------------- -----------------
Total Personal Services $139,530 $0 $0 $139,530 $0 $0Sewer - Page 31 of 33
D R A F T
City of Kalispell Page 2 of 2
Comprehensive Sewer Rate Study - Collection
Functionalization and Classification of Expenses
Exhibit 5
Weighted for:
Total Collection Actual Customer
Expenses Volume Customer Acct/Svcs Revenue Direct
Account Name FY 2021 (VOL-3)(AC)(WCA)(RR)(DA)Basis of Classification
Materials and Services
Office Supplies/Computers $7,210 $0 $0 $7,210 $0 $0 100% WCA
Auditing 2,040 0 2,040 0 0 0 100% AC
Billing Costs/Grizzly Sec. & Mail Room 40,800 0 40,800 0 0 0 100% AC
Billing Costs/bank & cc fees, CenturyLink 27,810 0 27,810 0 0 0 100% AC
Billing Costs/printing, shredding 1,545 0 1,545 0 0 0 100% AC
Dues & Training 2,550 0 0 2,550 0 0 100% WCA
Administrative Transfer 10,443 0 0 10,443 0 0 100% WCA
Information Tech. Transfer 34,172 0 0 34,172 0 0 100% WCA
Office Rent 0 0 0 0 0 0 100% WCA
----------------- ----------------- ----------------- ----------------- ----------------- -----------------
Total Materials and Services $126,569 $0 $72,195 $54,374 $0 $0
Total Sewer Billing Costs $266,099 $0 $72,195 $193,904 $0 $0
Equipment Replacement Program $61,000 $61,000 $0 $0 $0 $0 As Total Collection Plant
TOTAL SEWER O&M EXPENSE $1,377,175 $1,111,076 $72,195 $193,904 $0 $0
Rate Funded Capital $580,000 $580,000 $0 $0 $0 $0 As Total Collection Plant
Collection Debt Service
Collection Highway 93S - 2012 Refunding SRF Loan $96,741 $96,741 $0 $0 $0 $0 As Total Collection Plant
Collection Westside Interceptor 332,913 332,913 0 0 0 0 As Total Collection Plant
Collection Interceptor - Estimate 309,211 309,211 0 0 0 0 As Total Collection Plant
New State Loans 222,885 222,885 0 0 0 0 As Total Collection Plant
New Revenue Bond Debt 0 0 0 0 0 0 As Total Collection Plant
----------------- ----------------- ----------------- ----------------- ----------------- -----------------
Total Collection Debt Service $961,750 $961,750 $0 $0 $0 $0
Less: Impact Fees
Debt Service transfer from Sanitary (collection) Impact Fees $146,775 $146,775 $0 $0 $0 $0 As Total Collection Plant
----------------- ----------------- ----------------- ----------------- ----------------- -----------------
Net Collection Debt Service $814,975 $814,975 $0 $0 $0 $0
To / (From) Reserves
To / (From) Operating Reserve ($139,000) ($139,000)$0 $0 $0 $0 As Total Collection Plant
To / (From) Capital & Emergency Reserve 20,000 20,000 0 0 0 0 As Total Collection Plant
----------------- ----------------- ----------------- ----------------- ----------------- -----------------
Total To / (From) Reserves ($119,000) ($119,000)$0 $0 $0 $0
TOTAL REVENUE REQUIREMENT $2,653,150 $2,387,051 $72,195 $193,904 $0 $0
Less: Miscellaneous Revenue
Miscellaneous $2,555 $0 $0 $0 $2,555 $0 100% RR
Interest Earnings (10100)5,428 0 0 0 5,428 0 100% RR
----------------- ----------------- ----------------- ----------------- ----------------- -----------------
Total Miscellaneous Revenues $7,983 $0 $0 $0 $7,983 $0
NET REVENUE REQUIREMENTS $2,645,167 $2,387,051 $72,195 $193,904 ($7,983)$0
% Net Revenue Requirements 100.0%90.2% 2.7% 7.3%-0.3%0.0%
Sewer - Page 32 of 33
D R A F T
City of Kalispell
Comprehensive Sewer Rate Study - Collection
Allocation of Total Revenue Requirements
Exhibit 6
`
FY 2021 Basis of
Classification Components Expenses Residential Commercial Allocation
Collection Volume Related $2,387,051 $1,045,624 $1,341,427 (VOL-3)
Customer Related
Actual Customer $72,195 $58,970 $13,225 (AC)
Weighted Customer 193,904 158,384 35,520 (WCA)
---------------- ---------------- ----------------
Total Customer Related $266,099 $217,354 $48,745
Revenue Related ($7,983) ($4,115) ($3,868)(RR)
Direct Assignment $0 $0 $0 (DA)
$0
Total Collection Revenue Requirements $2,645,167 $1,258,863 $1,386,304
% Net Revenue Requirement 100.0%47.6% 52.4%
Sewer - Page 33 of 33
D R A F T
MARCH 2020
RULES AND REGULATIONS
GOVERNING WATER SERIVCE
PUBLIC WORKS DEPARTMENT
CITY OF KALISPELL, MONTANA
i
TABLE OF CONTENTS
Purpose of Rules and Regulations ............................................................................................................1
Definitions ...................................................................................................................................................1
Records and Reports..................................................................................................................................3
Preservation of Records .........................................................................................................................3
Filing of Rules, Regulations, and Rate Schedules .................................................................................3
Financial and Statistical Report .............................................................................................................3
Customer Information ...............................................................................................................................3
Rates .......................................................................................................................................................3
Rules and Regulations............................................................................................................................4
Posting....................................................................................................................................................4
Uses and Charges .......................................................................................................................................4
Free Water ..............................................................................................................................................4
Temporary Services ...............................................................................................................................4
Seasonal Service ....................................................................................................................................4
Private Fire Protection Line ...................................................................................................................4
Water Sprinkling ....................................................................................................................................5
No City Water But City Sanitary Sewer ................................................................................................5
Usage Restriction ...................................................................................................................................6
Turn-On or Turn-Off..............................................................................................................................6
Resale of Water ......................................................................................................................................6
Annexation Required for Initiation or Continuation of Water Service ..................................................6
Rate Establishment ....................................................................................................................................7
Application for Water Service ..................................................................................................................7
Refusal to Serve Customer ........................................................................................................................7
Billing ..........................................................................................................................................................8
Billing Periods .......................................................................................................................................8
Opening and Closing Bills .....................................................................................................................8
Billing Information ................................................................................................................................8
Adjustment of Bills ................................................................................................................................8
Error in Billing .......................................................................................................................................9
Dead Meters ...........................................................................................................................................9
ii
Complaints ..................................................................................................................................................9
Service Interruptions .................................................................................................................................9
Notification of Scheduled Interruption ..................................................................................................9
Emergency Interruption .........................................................................................................................9
Liability ................................................................................................................................................10
Adjustment of Rate for Interruption ....................................................................................................10
Discontinuance of Service........................................................................................................................10
Vacation of Premises ...........................................................................................................................10
Temporary Discontinuance ..................................................................................................................10
Discontinuance by Water Department .................................................................................................10
Charges for Reconnections Due to Water Department’s Discontinuance ...........................................11
Disconnected Services .........................................................................................................................11
Access to Property....................................................................................................................................11
Identification of Employees .....................................................................................................................11
Metering ....................................................................................................................................................12
Utility to Provide Meters .....................................................................................................................12
Location of Meters ...............................................................................................................................12
Meter Testing .......................................................................................................................................12
Meter Accuracy ....................................................................................................................................12
Changes in Character of Service ............................................................................................................13
Extension of Water Mains .......................................................................................................................13
Cost of Extensions ...............................................................................................................................13
Extension Agreement or Late-Coming Customer Fee .........................................................................13
Standards of Installation ......................................................................................................................13
Oversizing Mains .................................................................................................................................13
Additional Extensions ..........................................................................................................................14
Service Lines and Connections ...............................................................................................................14
Main Connections ................................................................................................................................14
Service Lines ........................................................................................................................................14
Maintenance of Service Lines ..............................................................................................................14
Interior Plumbing and Fixtures ............................................................................................................15
iii
Freezing and Prevention of Freezing .....................................................................................................15
Mains....................................................................................................................................................15
Service Lines ........................................................................................................................................15
Fire Hydrants ...........................................................................................................................................15
Abandonment of Service .........................................................................................................................15
Source Water Protection .........................................................................................................................16
Geothermal Injection Wells and Open-Loop Systems.........................................................................16
Cross Connection .................................................................................................................................16
Backflow Assemblies...........................................................................................................................16
Private Mains ...........................................................................................................................................16
Regulation Amendments .........................................................................................................................17
1
RULES AND REGULATIONS
FOR THE
KALISPELL WATER DEPARTMENT
Rule I Purpose of Rules and Regulations
The purpose of these rules and regulations is to set forth criteria to ensure adequate service, prevent
unfair charges to the customer, and to protect the Kalispell Water Department from unreasonable
demands.
The Kalispell Water Department is governed by the Kalispell City Council, hereinafter referred to
as the City Council, and is under the direct supervision of the Director of Public Works. The
adoption of these Rules and Regulations shall not preclude the City Council from altering or
amending them, in whole or in part, or from requiring other or additional service, equipment,
facility or standard, either upon complaint, upon its own motion or upon application of the
Kalispell Water Dept.
These Rules and Regulations do not in any way relieve the Kalispell Water Department from any
of its duties under the laws of the State of Montana. The authority requiring the Rules and
Regulations is contained in Title 69, Chapter 7, Montana Code Annotated.
Rule II Definitions
The words or phrases used hereinafter shall mean as follows:
1. "City Council" means the duly elected governing body of the City of Kalispell, to include the Mayor. 2. "City Manager" means the duly appointed City Manager of the City of Kalispell or any person authorized by him/her to perform acts in his/her behalf.
3. “City Sanitary Sewer” means the system operated by the Kalispell Sewer Department for the
collection, conveyance, and treatment of sewage.
4. “City Water” means water furnished by the Kalispell Water Department.
5. “Commercial Service” means any water usage other than solely for residential purposes except
in a residence in which the resident operates a neighborhood business occupying less than
thirty percent of the living area and which the water consumption for the business would be
insignificant. Where a single structure has a neighborhood business exceeding the foregoing
or has more than one business combined with a residence, the water service shall be considered
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“Commercial Service”. Commercial Service includes, but is not limited to: schools, hospitals,
nursing homes, churches, hotels, motels, trailer parks, apartments, condos, multi-plex units,
and rooming housing with two or more rooms on a rental basis are considered Commercial
services and not Residential.
6. “Customer” or “Consumer” means any individual, partnership, association, firm, public or
private corporation or government agency, or any other user receiving water. In the case of a
tenant or landlord, the property owner is considered the customer or consumer.
7. “Developer” means any person, firm, corporation, or other entity that causes improvements to
be made upon the land with said improvements requiring water service.
8. “Director of Public Works” means the Director of Public Works for the City Of Kalispell or
any person authorized by him/her to perform acts in his/her behalf.
9. “Distribution Main” or “Main” means a water pipe owned, operated and maintained by the
Water Department, which is used for the purposes of distributing water, and to which service
connections are attached.
10. “Extension Agreement/Latecomer Agreement” means an agreement between the City of
Kalispell and a Developer which allows the Developer to connect onto an existing main owned
by the City, and extend water service to the property of the Developer. The Agreement sets
forth the value of the extended main and the charges for new customer connections to the main
which are paid to the Developer. The said Agreement must be adopted by Resolution of the
City Council and signed by the Mayor and the Developer.
11. “Meter Pit or Vault” means the subsurface structure that houses a water meter, protecting the
meter from damage and allowing the City easy access to the meter for maintenance,
investigation, or reading. All new meter installations shall be in vaults or pits that meet
material and installation requirements as set forth in the standards.
12. “Permittee” means any person, firm, corporation or other entity which obtains a written permit
to cause construction work to be performed in accordance with the permit.
13. “Private Fire Protection Line” means a water service line extending from the distribution
system to and through a structure for which the sole purpose of such service is for
extinguishment of fire. A Private Fire Protection System is the property of the customer, and
the Water Department does not operate or maintain any component of the Private Fire
Protection System.
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14. “Private Main” means any water pipe not owned, operated and maintained by the City of
Kalispell to which more than one service line was originally connected.
15. “Public Service Commission” means the Montana Public Service Commission.
16. “Service Connection” means the connection and or the tap at the distribution main or collection
main which connects the customer’s service pipe to the main.
17. “Service Pipe or “Service Line” means the piping from the service connection and or tap at the
main to the customer’s premises being supplied with water.
18. “Standards” shall mean the current “Standards for Design and Construction”, as adopted by
the Kalispell City Council.
19. “Residential Service” means water usage solely for residential purposes.
20. “Water Department” means the City of Kalispell Water Department.
Rule III Records and Reports
1. Preservation of Records: All records required by these Rules shall be preserved by the Water
Department in accordance with the “Rules to Govern the Preservation of Records of Public
Utilities and Licensees”, as prescribed by the National Association of Regulatory Utility
Commissioners (NARUC), dated April, 1972.
2. Filing of Rules, Regulations, and Rate Schedules: No rules, regulations or schedules of rates
or modification of the same, shall be effective until adopted by the City Council.
3. Financial and Statistical Report: The Water Department shall file annually a Financial and
Statistical Report upon forms to be furnished by the Public Service Commission. This report
shall be filed on or before October 31 of each year as set forth in Section 69-3-203 MCA.
Rule IV Customer Information
1. Rates: The Water Department shall explain to the customer, during the application for service,
or whenever the customer requests to do so, the Water Department’s rates applicable to the
type of service furnished to the customer. The Water Department shall supply the customer,
when requested, with a copy of the Rate Schedule.
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2. Rules and Regulations: A copy of the Rules and Regulations of the Water Department and
any contracts and applications applicable to the Water Department shall be maintained in the
office for inspection by the public.
3. Posting: The Water Department shall exhibit, in a conspicuous location, a placard, in large
type, giving information to the customer that a copy of the Rules and Regulations of the Water
Department and the schedule of rates are kept for their inspection. The information shall state
that the Water Department is regulated by the Kalispell City Council and under the direct
supervision of the Director of Public Works.
Rule V Uses and Charges
1. Free Water: The Water Department shall not supply free water to any customer.
2. Temporary Services: Water for construction, special projects or other short term usages must
be applied for specially and shall be for a period no longer than six months. The usage charge
shall be based on a meter reading and the Rate Schedule.
In all cases, the customer must pay for all charges necessary to provide the temporary service,
including the removal of the service and meter, if required. Temporary water service, if
granted, may be terminated by the City after three days, when prior written notice of
termination has been personally delivered or mailed to the owner’s or the owner’s
representative’s last known address. Receipt of temporary service does not in any way entitle
a customer to permanent service.
3. Seasonal Service: Where water service is desired for only certain periods of each year, such
as vacation homes, or where the customer wants the service discontinued for a period of time,
the customer shall be considered receiving “seasonal service”. When such service is desired,
the customer shall notify the Water Department stating the date of water shut-off and the date
of water turn-on. During the full billing periods the water is turned off, the customer shall pay
the monthly fixed charge, meter charge and meter hosting fee, with the exception of separately
metered sprinkling service. Separately metered sprinkling services shall pay the monthly fixed
charge and meter charge during the sprinkling season, May through October. The meter
hosting fee will apply year-round. The Water Department shall charge the customer for turning
the water on and turning the water off in accordance with the Rate Schedule.
4. Private Fire Protection Line: For commercial services the pipeline used for the fire protection
system shall be separate, with no inter-connections, from the service pipe and any piping or
fixtures within or outside the structure. The customer shall pay the cost of installation of the
system, including the Water Department’s charge for tapping the main, the fittings at the main,
5
and all piping and appurtenances. The commercial private fire protection line will not be
metered, but a monthly charge will be levied in accordance with the Rate Schedule. For
residential service the fire protection pipeline shall use the residential tap, service pipe, curb
stop, and meter pit.
The extent of the rights of the private fire protection service customer is to receive, but only at
times of fire on his premises, such supply of water as shall be available from the water system.
The Water Department reserves the right to shut off residential fire protection line service as
defined in Rule XII Discontinuance of Service. The Water Department shall not be considered
in any manner an insurer of property or persons, or to have undertaken to extinguish fire or to
protect any persons or property against loss or damage by fire or otherwise, and it shall be free
and exempt from any and all claims for damages on account of any injury to property or
persons by reason of fire, water, failure to supply water or pressure, or for any other cause
whatsoever.
5. Water Sprinkling: Residential Services will receive a reduced water charge for usage above
the established winter average for sprinkling of lawns, gardens, and landscaping, during the
sprinkling season months of May through October in accordance with the Rate Schedule. The
winter average is determined from the average monthly usage during the four (4) month period
from November through February. Residential customers who have had their service
discontinued at any time, or have no usage during the four (4) month winter average period,
will receive a winter average of 6,000 gallons per month. Residential Customers who, at the
customer’s expense, install separate water sprinkling services, will be charged the monthly
fixed charge, and meter charge, during the sprinkling season, for the size of meter installed,
and all water usage will be billed at the water sprinkling rate. The meter hosting fee will apply
year-round to separately metered sprinkling services. The Water Department will furnish a
3/4” meter at no charge to the customer. The customer wanting a larger meter must pay the
additional cost of any meter furnished over the cost of a 3/4” meter.
Commercial Services may request a water sprinkling rate. To obtain such a rate, a separate
meter must be installed in accordance with the Rate Schedule. All such metered water shall be
billed the monthly fixed charge, and meter charge, for the appropriate size meter, and all water
usage will be billed at the water sprinkling rate. No fixed charge or meter charge will be
assessed during the monthly periods, November through April, which is outside of the
sprinkling season. A meter hosting fee will be applied year-round. Metered service installed
for sprinkling cannot be used for any other purpose and any usage outside of the sprinkling
season shall be billed at the normal water usage rates in accordance with the Rate Schedule.
6. No City Water But City Sanitary Sewer: Commercial or Residential customers which are not
connected to city water, but which discharge sewage into the city sanitary sewer, shall have
6
their water service metered. The metering shall be at the expense of the customer, including
the meter, and be compatible with the City’s metering system. The Water Department
personnel shall have access to the water meter for reading purposes. There will be no charge
made for the water used, but the meter reading will be used as a basis for a sewer service
charge. The Water Department reserves the right to check the customer’s meter for accuracy.
Meters which are found to be over 2% in error, in the customer’s favor, shall be replaced or
repaired by Water Department personnel, at the customer’s expense.
7. Usage Restriction: The Water Department agrees to furnish water for specified uses and for
specified fees. If a customer furnishes locations with water without written permission from
the Director of Public Works, or uses the water for other purposes than those for which the
customer is paying, it is a violation of the service contract. Upon discovery by the Water
Department of a violation of usage, the customer shall be mailed a written notice of such
offense. After 30 days from the date of mailing said written notice, the Department of Public
Works may have the water shut off and service discontinued until such a time as the additional
services furnished have been paid for or the violation rectified. A turn-on charge, if any, must
be paid by the customer in accordance with the Rate Schedule. In no case will the Water
Department furnish water from one meter to two or more houses, whether or not the same are
owned by one person or entity.
8. Turn-On or Turn-Off: New customers will not be charged turn on fees for existing services, if
the turn-on is made during regular working hours. Turn-on service required at times other than
regular working hours will be charged to the customer in accordance with the Rate Schedule.
Where no service line to the premise is in place, the new customer will be charged an impact
fee as provided in Rule VII and shall be paid before connection is made. Turn-Off will be made
when requested by existing customer, at no cost to the customer. See Rule XII for charges
made against the customer for Turn-Off necessitated for non-payment of service charges. Turn-
on and Turn-off service required at times other than regular working hours will be charged to
the customer in accordance with the Rate Schedule. Temporary and Seasonal services will be
charged for these services per the Rate Schedule.
9. Resale of Water: Water furnished by the Water Department shall not be resold or caused to be
resold by any customer unless the customer is engaged in the business of distributing water as
a public water supply defined by MDEQ, and a Memorandum of Understanding defining
responsibilities of the both public water systems has been signed and approved by the City
Manager.
10. Annexation Required for Initiation or Continuation of Water Service: Any customer now
receiving, or hereafter initiating, water service supplied by the Kalispell Water Department,
7
shall be deemed to have consented to, and waived the right to protest, annexation to the City
of Kalispell as a condition of continuing or initiating said water service.
Rule VI Rate Establishment
All rates and rate adjustments shall be adopted by the City Council through the Hearing
Process. The rates shall be in accordance with Exhibit “A” attached.
Rule VII Application for Water Service
All customers desiring water service must make written application at the Water Department
office on forms provided therefore, setting forth in said application all purposes for which
water will be used upon their premises. In cases where the customer is not the owner of the
premises, the owner is primarily liable for payment for water service and the customer is jointly
and severally liable for such payment. All applications for the introduction of water service to
any premise must be signed by the property owner. Any change in the identity of the
contracting customer at a premise will require a new application for water.
When the contracting consumer is a renter, leasee, or is not the property owner, an application
for water service shall be made in the consumer’s own name. The owner shall be primarily
liable for payment of the water service and the renter or lease shall be jointly and severely
liable for such payment. Billing in this manner will not release the liability of the owner and
in this instance the Water Department shall notify the property owner of the new service
application as an endorsement on the property owner’s application.
It is the responsibility of the applicant to contact the Director of Public Works or City
authorized representative, prior to making application to be sure that there is a water main
adjacent to the applicant’s property. If no main exists, it is the applicant’s responsibility to
install a main, in accordance with City Standards, at the applicant’s expense.
All premises to be served, which have not previously been served by the system, will be
assessed an impact fee. Impact fees are due and must be paid before service application may
be approved.
Rule VIII Refusal to Serve Customer
The Water Department may decline to serve an applicant:
(1) Until the applicant has complied with these Rules and Regulations governing water service,
or
8
(2) if, in the Water Department’s judgment, the applicant’s installation of piping, equipment,
or appurtenances is regarded as hazardous, of such character that satisfactory service cannot
be given, or
(3) if the applicant’s system could cause damage or harmful effects to the water system or
adjoining properties, or
(4) if the customer’s system or private water line serving the customer’s property is leaking
and the applicant or customer refuses to repair the leak.
In the event the Water Department refuses to serve an applicant under the provisions of this
rule, the Water Department shall inform the applicant that the applicant may submit the
question of refusal to serve to the City Council for their review and decision.
Rule IX Billing
1. Billing Periods: The charges for municipal water services and fireline charges shall be billed
at least monthly. To meet unusual conditions, such as discontinuances, the utility may render
bills for service at other than the aforementioned intervals. The date of the month for reading
any meter shall be, as close to practical, to the same date as the preceding reading. The billing
dates shall likewise be monthly, with a date of mailing of said bill as near as practical to the
date of mailing of the previous bill. In case of leased property, all billing shall be sent to the
tenant and property owner, unless the property owner agrees to be billed directly.
2. Opening and Closing Bills: Opening and closing bills for water service will be computed in
accordance with the rate applicable to the service, by amount of water used and the monthly
fixed meter charge, meter charge, and meter hosting fee , on a pro-rated basis of the number of
days in the period of question to the number of days in the normal billing period.
3. Billing Information: Bills shall show the meter readings at the beginning and the end of the
period for which the bill is rendered, the date of the meter reading, the number of gallons
supplied, and the date upon which payment is overdue.
4. Adjustment of Bills: If the customer believes the meter reading shown on the bill is incorrect
by comparing previous billings and current readings, the customer shall notify the Water
Department within five (5) days of receipt of the billing in question. In case of a dispute as to
the accuracy of the meter, the customer, upon depositing the amount set forth in the Rate
Schedule, may request that the meter be removed and tested for accuracy in the presence of the
customer. If the meter is found to be registering correctly within two percent (2%) of true
recording or in favor of the customer, the amount deposited shall be forfeited to the Water
Department. If the meter is found to be recording incorrectly (i.e. over two percent (2%) of
true recording) against the customer, the Water Department shall refund the deposit and refund
9
to the customer the overage, based on a true recording for a period of six (6) months or for a
lesser period, if the date of cause can be established from records related to the cause.
5. Error in Billing: If an error in billing or meter reading has been made, the City may recover
any undercharge or must refund any over-collections for the previous six months, as applicable.
6. Dead Meters: If a meter is found not to register for any period, the Water Department shall
compute the water used as follows:
a. For customers who have been served for over one year, the amount billed shall be based
on the same consumption use as occurred during the same period the previous year.
b. For customers who have been served for less than one year, the amount billed shall be
based upon water used for the last billing period.
Exceptions will be made to the rule if the facts reasonably show that either method does not
give the correct consumption for the period.
Rule X Complaints
The Water Department shall make a full and prompt investigation of all complaints made by
customers of the Water Utility, and report the results thereof to the customer. If the complaint is
not rectified to the satisfaction of the customer, the Water Department shall notify the customer of
the privilege of appeal to the City Manager or City Council.
Rule XI Service Interruptions
1. Notification of Scheduled Interruption: Every customer affected by an interruption in service
shall be notified in advance of all programmed work. Such notice shall be made at least 18
hours in advance in the form of personal contact, or a notification tag placed on the entrance
way for interruptions affecting 24 or fewer customers. For interruptions affecting a larger area
than the foregoing, the notification may be in the form of the forgoing or a notification over
the electronic media at least twice prior to 18 hours before interruption.
2. Emergency Interruption: In the event of an emergency interruption, the Water Department
shall re-establish service as soon as possible. When emergency repairs, such as main breaks,
fire hydrant damage, etc., becomes necessary, a concerted effort shall be made by the Water
Department to repair the cause without total disruption of service, except for that period when
complete shutoff may be required due to the nature of the damage. Notification of affected
customers may not be possible. However, every effort shall be made by the Water Department
10
to have an announcement sent over the electronic media if the period of total interruption is
expected to be more than a four (4) hour period.
3. Liability: The Water Department shall not be liable to customers or others for failure or
interruption of water service due to main breaks, routine maintenance and operations, acts of
God, governmental regulations, court or Public Service Commission orders, acts of a public
enemy, strikes or labor disputes, accidents, weather conditions, acts of third parties, droughts,
or, without limitation by the forgoing, any other cause beyond the reasonable control of the
Water Department Personnel.
4. Adjustment of Rate for Interruption: Interruptions of service due to any of the foregoing or for
the customer’s frozen facilities shall not render the City liable for any adjustment in the bill.
Rule XII Discontinuance of Service
1. Vacation of Premises: Any customer who is about to vacate any premise supplied with
service by the Water Department, or for any reason, wishes to have service discontinued,
shall give at least a 24 hour notice to the Water Department. Notice shall specify the date
on which discontinuance is desired. Discontinuance will not be made on Saturday,
Sunday, or Holiday unless the customer agrees, in writing, to pay the actual cost of turn
off. Until the Water Department receives such notice, the customer shall be held
responsible for all services rendered.
2. Temporary Discontinuance: Should the customer desire temporary discontinuance of
service, the Water Department when notified will shut off the water at the curb stop and
allowance will be made on the bill for such times as the water is not in use. If the customer
requests the service to be reconnected within six (6) months of the date of disconnect, the
customer shall pay the turn on charge, as set forth in the Rate Schedule, before the Water
Department will turn on the water. In the event the curb stop cannot be closed for reasons
beyond the control of the Water Department, the Water Department shall notify the
customer of the reasons for not discontinuing service.
3. Discontinuance by Water Department: The Water Department shall make a diligent effort
to induce the customer to comply with all applicable Rules and Regulations, including
payment of bills. When payment becomes delinquent as indicated by a past due notice on
current billing, the customer shall have ten days after the billing notice to comply by
making payment. If payment is not made, the Water Department is directed to place a
notice upon the premise advising that service will be shut off and stating the date when
this will be done and a tag fee will be levied in accordance with the Rate Schedule. The
Water Department shall not be liable for failure of the customer to see such notice or for
11
disappearance of the notice from the premises. The Water Department shall keep record
of all notices. The Water Department shall not discontinue service on Friday, Saturday or
Sunday, or a day prior to a holiday, or if an emergency affecting health exists. A written
statement from a physician or health agency must be presented to the Water Department
within five days, if such claim of emergency is made.
In the case of fraudulent use of water, or where the water utility’s regulating or measuring
equipment has been tampered with, or where a dangerous condition is found to exist on
the customer’s premises, the water may be shut off without advance notice. An example
of a dangerous condition is one which could cause damage to the water system or one
which could potentially allow contaminants to enter the water system.
4. Charges for Reconnections Due to Water Department’s Discontinuance: Whenever the
supply of water is turned off for violation of the Rules and Regulations, the Water
Department must receive payment for all charges, as determined in the Rate Schedule,
before the water will be turned on. After service has been turned off because of non-
payment of bills, the services shall not be turned on again until all back water bills have
been paid.
5. Disconnected Services: No plumber or other person shall be allowed to make connection
with any conduit pipe or other fixture or to connect pipes when they have been
disconnected, or to turn water on or off, on any premises served by the Water Department,
without permission from the Water Department.
Rule XIII Access to Property
Water Department Personnel shall, at all reasonable times, have access to meters, service
connections, curb boxes, and other property owned by the City, which is on the customer’s
premises, for purposes of maintenance, operation and inspection. The Water Department also
reserves the right to inspect all plumbing connected to and with the supply of water for
violation of use, or improper or illegal connections. The customer shall remove obstructions
and contain pets such that they do not impair ingress or egress or interfere with the work of
the Water Department personnel. Refusal on the part of the customer to allow access for such
purposes, remove obstructions or contain pets shall be deemed to be sufficient cause for
discontinuance of service by the Water Department. However, the customer shall have the
right to verify the identity of the person seeking access.
12
Rule XIV Identification of Employees
Every employee of the Water Department whose duties require the entering of the
customer’s premises shall carry an identification card which identifies the employee as a
representative of the Water Department. The identification card shall contain pertinent
information necessary to identify the employee including a photograph, together with the
telephone number of the Water Department. The customer may refuse access to the
customer’s premises while the customer calls the Water Department to check the
authenticity of the identification card and that the employee is working for the Water
Department.
Rule XV Metering
1. Utility to Provide Meters: All water furnished by the Water Department shall be metered,
except private fire protection lines and temporary services as approved by the Water
Department. The Water Department shall provide, operate and maintain all meters, except
as provided in Rule V (5) for water sprinkling. The customer is responsible for the cost of
testing and maintenance of all meters in excess of two inches. Under no circumstances
shall the customer remove, manipulate, or tamper with the meter.
The Water Department may replace any meter at such time as it may be judged necessary
by the Water Department.
2. Location of Meters: The customer shall provide adequate protection of the meter from frost
or other damage. The meter must be located in a horizontal position where it is easily
accessible for purposes of reading and repairing. When a meter is located inside a house or
building, the Water Department, at its own expense, may install a remote register for meter
reading on the exterior of the house or building. The cost of repairs to meters caused by
freezing or other damage shall be paid by the customer. All new meter installations shall
be in vaults or pits that meet material and installation requirements as set forth in the
standards.
3. Meter Testing: The Water Department shall have equipment for testing the accuracy of all
meters owned by the Water Department through two inches in size. For testing of meters
larger than 2 inches, the equipment may be owned and operated by the Water Department
or the meters may be sent to a qualified shop or laboratory for such testing. The Water
Department shall have a program for testing of all meters and shall keep an accurate record
of the date of testing of each meter.
13
4. Meter Accuracy: Water service sizing and fittings before a meter pit or vault shall follow
the requirements outlined in the Standards for Design and Construction. Whenever a meter
is found to exceed a limit of two percent fast or slow, it must be adjusted to register as
nearly one hundred percent as commercially practicable or replaced. A manufacturer’s
certified test will be acceptable for the accuracy of new meters.
Rule XVI Changes in Character of Service
In the event the Water Department makes changes in the system which would cause an
increase of 10 p.s.i.g., or more above routine operation, in the pressure of the system, or
portion of system thereof, the Water Department shall notify the customers who will be
affected by said increase. The customer shall be responsible for the adjustment of
appliances and equipment of installation and maintenance of pressure reduction devices to
accommodate the increased pressure.
Rule XVII Extension of Water Mains
1. Cost of Extensions: It shall be the responsibility of the developer or property owner to
extend and pay all costs thereof, for all main extensions from the existing city facilities to
the site of development in accordance with all City Standards. Under certain
circumstances, the Kalispell City Council may determine that it is appropriate to approve
and enter into a Developers Extension Agreement with the developer or property owner to
provide for the reimbursement of costs associated with construction of the infrastructure
which exceeds the size or capacity of Standard requirements for the development. This
agreement sets forth the value of the extended main, the charges for new customer
connections to the extension main, and allows the developer to recover costs associated
with the extension of said utility service for Standard improvements greater than required
to serve the development. The said Agreement must be adopted by Resolution of the City
Council and signed by the Mayor and the Developer.
2. Extension Agreement or Late-Coming Customer Fee: If the City has become contractually
obligated to collect a latecomer fee from a customer who connects to a main extension
associated with an agreement, the City may refuse to allow such customer to connect to the
extension until the fee is paid. If such customer fails or refuses to pay such fee when
required, it shall be sufficient cause for discontinuance of service. Customers who connect
to the system after the extension is complete and who did not share in the cost of the
extension shall pay the main extender a pro rata share of the costs as defined in the
agreement.
14
3. Standards of Installation: All mains, appurtenances and auxiliary piping shall be designed
and installed in accordance with the City Standards.
4. Oversizing Mains: A Developers Extension Agreement may be established, upon
approval of Council for main extensions that exceed the size and capacity as required for
the development in accordance with City Standards. However, if the City requires the
customer or developer extending the main to install a larger size main than required by
City Standards, the City shall pay the difference in cost between the larger main required
by the City, and the size of main required by said standards.
5. Additional Extensions: The City reserves the right to further extend the mains installed
by foregoing customers. The City also reserves the right to charge future main extenders,
for their pro-rated share of the cost for the oversizing of the City’s infrastructure. Such
pro-rated cost shall be based on volume of flow contributed by the development for
which the line was further extended, versus the volume of flow of which the oversized
portion of the existing main could handle.
Rule XVIII Service Lines and Connections
1. Main Connections: For services, the Water Department shall install a service saddle, a
service valve as well as tap the main. The customer shall bear the full expense for labor,
equipment and materials for such installations. The customer shall obtain a permit from the
Department of Public Works before making said excavation and connection. All work
shall be performed in accordance with City Standards.
2. Service Lines: The customer, at the customer’s expense, shall be responsible to install all
piping and appurtenances, except the meter, from the main connection to the point of usage,
and restore all surfaces to the condition which existed before the installation. The service
line, curb stop and curb box shall be as specified in the City Standards. The curb stop and
curb box shall be in the public right of way or an easement, in an accessible location
approved by the City. There shall be no branches made in the service line between the main
and the meter. All piping and appurtenances shall be installed, tested, chlorinated and
flushed in accordance with City Standards. Structures containing two or more residences
under separate ownership shall have separate service lines from the main, service valves,
curb stops, and meters for each residence. Structures containing two or more residences,
offices, or businesses that are rental units under common ownership shall have one service
line, valve, curb stop, and meter for all occupants within a single structure.
3. Maintenance of Service Lines: The customer shall maintain, at the customer’s expense, all
service piping and appurtenances in a good condition, free from leaks. Failure to do so shall
be cause for discontinuance of service. If curb boxes are not maintained to a condition that
15
the service can be shut off or turned on freely, the Water Department reserves the right to
make whatever repairs are necessary to be able to perform full functions and charge the
customer for labor, equipment and materials necessary to make the repair. It is the
customer’s responsibility to repair any leaks in the service line immediately upon
discovery.
4. Interior Plumbing and Fixtures: All plumbing connected, directly or indirectly, to the
supply or service of the City’s water system shall conform to the installation requirements
of the International Association of Plumbing and Mechanical officials “Uniform Plumbing
Code” and these rules and regulations.
Rule XIX Freezing and Prevention of Freezing
1. Mains: If there is a danger of freezing of the mains, the Water Department may request
customers individually or within a specified area, to run water sufficient to prevent
freezing. Customers thus requested will not be billed for the excess used and their billing
during the request period will be based on the same amount used during the same billing
period the previous year, or, in the case of new customers, their billing will be based on a
minimum charge. The Water Department shall notify the requested customers when the
period of freezing danger is over and the normal billing rate will become effective the next
billing period. In the event the main does freeze, the Water Department shall be responsible
for all costs in thawing the main and repairing any damage to the main.
2. Service Lines: The customer is responsible for the prevention of freezing of the service
line and appurtenances. If freezing does occur to the service line, the customer shall bear
the cost of thawing and replacement of any damaged piping, appurtenances and equipment.
It is the customer’s responsibility to properly drain all water lines to prevent freezing when
the service has been shut off for whatever reason.
Rule XX Fire Hydrants
Fire hydrants, except those on the Private Fire Protection Line, are the property of the City,
which shall have the responsibility for maintaining the same in good repair. The cost for
hydrant maintenance shall be included in the metered rates charged to the customer as set
forth in the Rate Schedule.
Rule XXI Abandonment of Service
When a lot or parcel is developed to a permitted use, all duplicate, excess, and/or unused
services and fire services, including stub-outs, shall be abandoned at the main at no cost to
16
the City. Aggregation of parcels will trigger abandonment of unused water and fire
services. Whenever a building served by water ceases to exist, water services and fire
services shall be abandoned at the main. At the discretion of the Water Department,
however, and depending upon whether water service is anticipated to be renewed within
one year, temporary removal from service may be controlled with an operative curb stop.
Rule XXII Source Water Protection.
1. Geothermal Injection Wells and Open-Loop Systems: All geothermal injection wells and
open-loop systems located within the City limits are required to submit a hydrologic
assessment report, performed by an experienced hydrologist, describing potential water-
quality effects to the City’s water production sources. The report will provide an evaluation
of the effect the injection water could have on a municipal well using a modular finite-
difference groundwater flow model, or approved equivalent model. The report will include
a location map of City water source and private wells, pumping and injection rates,
groundwater flow direction, and capture zone analysis with a particle tracking map. The
applicant will also provide a copy of either the EPA injection permit or the Authorization
Rule issued to the applicant by the EPA. If the report indicates there will be a detrimental
effect on the municipal water source, the City may refuse to service the applicant as defined
in Rule VIII Refusal to Serve Customer.
2. Cross Connection: No pipes or fixtures connected to the water supply of the Water
Department will be connected, directly or indirectly, to pipes or fixtures containing water
from any other source.
3. Backflow Assemblies: Backflow assembly testing shall be performed per manufacture
specifications and the certification made available to the City upon request.
Rule XXIII Private Mains
1. The City shall have no obligation to maintain, test, repair or replace private mains, and
the City shall not be liable or responsible for any damage caused by water leaking from
a private main.
2. All customers served by a private main are jointly and severally liable and responsible
for maintaining, testing, and repairing. All customers served by a private main are
advised to replace such line with a properly designed and installed main.
3. If in the judgment of the Water Department a private main has become hazardous, or
could damage or cause harmful effects to the water system, to customers, or to
neighboring property owners or residents, the Water Department shall give reasonable
17
notice of the problem and the needed maintenance, testing, repair or replacement. The
Water Department shall allow a reasonable time for such work, based on the severity of
the condition giving rise to such notice. If the Water Department determines that it is
not feasible or practical to remediate the private main, the Water Department shall give
reasonable notice to such customers of the need to install a new main, or connect to an
existing main, in the discretion of the Water Department. The Water Department shall
allow a reasonable time for such work, based on the severity of the condition giving rise
to such notice. The Water Department may, in their discretion, grant extensions of time.
If any customer fails or refuses to conduct the needed maintenance, testing, repair or
replacement, or fails or refuses to install a new main or connect to an existing main, it
shall be sufficient cause for discontinuance of service.
Rule XXIV Regulation Amendments
The City Council may adopt, establish or change policies which define and govern the action
of the Water Department personnel on specific and special conditions. The said policy shall
not be in conflict with any of the Rules and Regulations contained herein. The decision of
the City Council to adopt, establish or change such policies shall be made by a motion duly
adopted and approved and filed with the City Clerk.
CITY OF KALISPELL EXHIBIT “A”
KALISPELL, MONTANA
UTILITY SCHEDULE FOR WATER
EFFECTIVE June 01, 2020
PAGE NO. 1
SCHEDULE A RESIDENTIAL AND COMMERCIAL SERVICE
Available for: User premises located within the City Limits Fixed charge per meter per month FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 Charge: $7.50 $8.74 $9.61 $10.52 $11.52 $11.87 $12.23 $12.60
Meter charge: Meter Size Fee per Billing Cycle 3/4" $0.80 $1.10 $1.21 $1.32 $1.45 $1.49 $1.53 $1.58
1” 1.38 1.69 1.86 2.04 2.23 2.30 2.37 2.44
1 1/2” 2.68 3.09 3.40 3.72 4.07 4.19 4.32 4.45
2” 3.75 4.45 4.90 5.37 5.88 6.06 6.24 6.43 3” 14.10 10.29 11.32 12.40 13.58 13.99 14.41 14.84 4” 19.88 14.24 15.66 17.15 18.78 19.34 19.92 20.52 6” 22.64 22.64 24.90 27.27 29.86 30.76 31.68 32.63
> 6” determined at time of connection based upon 15-year replacement life
Hosting Fee (per metering system) $0.89 $0.89 $0.89 $0.89 $0.89 $0.89 $0.89 Rate: per thousand gallons/no minimum
All consumption $2.43 $2.48 $2.73 $2.99 $3.27 $3.37 $3.47 $3.57
MULTIPLE USERS Number of units will not be a factor in the rate formula.
Special Terms and Conditions 1. See Sheet 2 Schedule B for Sprinkling Terms, etc. 2. Out of City rate 1.25 times the in-City rate. 3. Meter Hosting Fee would be added after installation of a new metering system and meter.
CITY OF KALISPELL EXHIBIT “A”
KALISPELL, MONTANA
UTILITY SCHEDULE FOR WATER
EFFECTIVE June 01, 2020
PAGE NO. 2
SCHEDULE B RESIDENTIAL SPRINKLING SERVICE
Available for: Residential Users only Rate: Special summer rate -- Water used for sprinkling purposes.
All residential users who do not have separately metered sprinkling services will be charged during the
months of May, June, July, August, September and October (see rate) per thousand gallons on the amount of water used in excess of the average winter consumption (see Rule V.5) Rate: per thousand gallons FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 All consumption $1.55 $2.48 $2.73 $2.99 $3.27 $3.37 $3.47 $3.57
CITY OF KALISPELL EXHIBIT “A”
KALISPELL, MONTANA
UTILITY SCHEDULE FOR WATER
EFFECTIVE June 01, 2020
PAGE NO. 3
SCHEDULE B-1 SEPARATELY METERED SPRINKLING SERVICE
Available for: All users within the City limits Rate: per thousand gallons FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 All consumption $1.55 $2.48 $2.73 $2.99 $3.27 $3.37 $3.47 $3.57
All water users supplied through a separately metered sprinkling service as provided in the Rules and Regulations will be billed during the Sprinkling Season as defined herein for all water used during the Sprinkling Season. No fixed charge or meter charge will be assessed during the monthly periods when water sprinkling is not occurring, November through April. A meter hosting fee will be applied year-
round. No Sewer fees will be assessed against these separate sprinkling services unless water is used for other purposes (which are prohibited in the Rules and Regulations.) Where usage other than during the Sprinkling Season is indicated, this separate service may be cut off and charged per Schedule A rendered for that usage.
Separately metered Sprinkling Services are permitted only in conjunction with usage through a service to a dwelling or commercial account. Special Terms and Conditions
Separate Sprinkling Services will not be granted OUTSIDE THE CITY LIMITS.
CITY OF KALISPELL EXHIBIT “A”
KALISPELL, MONTANA
UTILITY SCHEDULE FOR WATER
EFFECTIVE June 01, 2020
PAGE NO. 4
SCHEDULE C SPECIAL SUMMER SPRINKLING
Available for: COMMERCIAL USERS AND SCHOOLS Rate:
Commercial users, including schools, will be granted Sprinkling Rates ONLY if Separately
Metered Services are installed for that purpose. Such services may be entirely separate from the main to the property or separated ahead of the principal meter serving the property. Users served in this manner for this purpose will be billed per thousand gallons on all water used for this purpose during the Sprinkling Season outlined under Residential Meters. No Sewer Fees will be assessed
against these Separate Sprinkling Services unless water is used for other purposes, which is
prohibited in the Rules and Regulations. The Utility will provide 3/4" meters for these Separately Metered Services. If larger meters are needed, the cost of said larger meter will be paid by the user. Rate: per thousand gallons FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 All consumption $1.55 $2.48 $2.73 $2.99 $3.27 $3.37 $3.47 $3.57
Special Terms and Conditions Separate Sprinkling Services will not be permitted OUTSIDE THE CITY LIMITS.
CITY OF KALISPELL EXHIBIT “A”
KALISPELL, MONTANA
UTILITY SCHEDULE FOR WATER
EFFECTIVE June 01, 2020
PAGE NO. 5
SCHEDULE D WATER ASSOCIATIONS SERVICE
Available for: SERVICE TO WATER ASSOCIATIONS, OTHER WATER UTILITIES FOR RESALE Rate: Service supplied for Water Associations or their Water Utilities will not be provided under Schedule A rates, but will be based on the service to be supplied and Rates
Negotiated at the time agreement is made to provide the services.
MISCELLANEOUS SALES OF WATER
Water sold from Hydrants to trucks by the load:
Rate: per thousand gallons FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 All consumption $4.14 $4.82 $5.30 $5.80 $6.35 $6.54 $6.74 $6.94
Minimum 10,000 gallons
$40.00 Hydrant Meter Setting and Removal Fee
CITY OF KALISPELL EXHIBIT “A”
KALISPELL, MONTANA
UTILITY SCHEDULE FOR WATER
EFFECTIVE June 01, 2020
PAGE NO. 6
SCHEDULE E
Available for: COMMERCIAL FIRE PROTECTION – NOT METERED
Rate: PER MONTH
Fee per Billing Cycle
Size of Service FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27
2 Inches $24.80 $24.80 $27.28 $29.87 $32.71 $33.69 $34.70 $35.74
3 Inches 29.25 29.25 32.18 35.24 38.59 39.75 40.94 42.17
4 Inches 32.50 32.50 35.75 39.15 42.87 44.16 45.48 46.84
6 Inches 40.10 40.10 44.11 48.30 52.89 54.48 56.11 57.79
8 Inches 51.00 51.00 56.10 61.43 67.27 69.29 71.37 73.51
10 Inches 70.35 70.35 77.39 84.74 92.79 95.57 98.44 101.39
CITY OF KALISPELL EXHIBIT “A”
KALISPELL, MONTANA
UTILITY SCHEDULE FOR WATER
EFFECTIVE June 01, 2020
PAGE NO. 7
SCHEDULE F FEES FOR SPECIAL SERVICES
Tag Fee Rate: A $20.00 fee will be added to delinquent accounts when City staff is required to notify residents of
potential water turn-off by leaving a written notice at their premises. This fee reimburses the City for the
costs associated with notification and delivery. Turn On Fee
Rate: When applicable as provided in Rules and Regulations each occurrence when made during regular working hours shall be billed $30.00. When required other than regular working hours will be billed at $95.00.
Meter Testing at Customer Request Deposits required as outlined in Rules and Regulations and refundable under conditions outlined herein.
Meters up to 2" $ 40.00 Deposit Larger than 2" 100.00 Deposit
CITY OF KALISPELL EXHIBIT “A”
KALISPELL, MONTANA
UTILITY SCHEDULE FOR WATER
EFFECTIVE June 01, 2020
PAGE NO. 8
SCHEDULE G OUT OF CITY SERVICES
Available for: Residential and Commercial services located outside the City limits, available only by contract approved by the City Council.
Rate: Rates per all Schedules where service is allocated,
PLUS SURCHARGE OF 25%.
MARCH 2020
RULES AND REGULATIONS
GOVERNING SEWER SERVICE
PUBLIC WORKS DEPARTMENT
CITY OF KALISPELL, MONTANA
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TABLE OF CONTENTS
Purpose Rules and Regulations ........................................................................................1
Definitions ...........................................................................................................................1
Records and Reports..........................................................................................................3 Preservation of Records ................................................................................................3 Filing of Rules, Regulations, and Rate Schedules ........................................................3 Financial and Statistical Report ....................................................................................4
Customer Information .......................................................................................................4
Rates .............................................................................................................................4 Rules and Regulations ..................................................................................................4 Posting ..........................................................................................................................4
Uses and Charges ...............................................................................................................4 Free Sewage .................................................................................................................4
Temporary Services ......................................................................................................4 No City Water But City Sanitary Sewer ......................................................................5 Usage Restriction .........................................................................................................5 Annexation Required for Initiation or Continuation of Sewer Service ........................5 Rate Establishment ............................................................................................................5 Application for Sewer Service ...........................................................................................6
Refusal to Serve Customer ................................................................................................6
Billing ..................................................................................................................................7 Method of Billing .........................................................................................................7 Billing Periods and Payment ........................................................................................7
Opening and Closing Bills ...........................................................................................7
Billing Information .......................................................................................................7 Adjustment of Bills ......................................................................................................8 Error in Billing .............................................................................................................8 Dead Meters .................................................................................................................8
Complaints ..........................................................................................................................8 Service Interruptions .........................................................................................................9 Notification of Scheduled Interruption .........................................................................9
Emergency Interruption ................................................................................................9
Liability ........................................................................................................................9 Adjustment of Rate for Interruption .............................................................................9
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Discontinuance of Service..................................................................................................9
Vacation of Premises ....................................................................................................9
Temporary Discontinuance ........................................................................................10 Discontinuance by Sewer Department .......................................................................10 Extension of Sewer Mains ...............................................................................................10
Cost of Extensions ......................................................................................................10
Extension Agreement or Late-Coming Customer Fee ...............................................11 Standards of Installation .............................................................................................11 Oversizing Mains .......................................................................................................11 Additional Extensions ................................................................................................11
Service Lines and Connections .......................................................................................11 Main Connections .......................................................................................................11 Service Lines ..............................................................................................................11 Maintenance of Service Lines ....................................................................................12
Abandonment of Service .................................................................................................12 Storm Drainage and Other Wastes Prohibited .............................................................12
Increased Concentration of Wastewater Pollutants .....................................................12
Private Mains ...................................................................................................................13 Regulation Amendments .................................................................................................13
1
RULES AND REGULATIONS
FOR THE
KALISPELL SEWER DEPARTMENT
Rule I Purpose of Rules and Regulations
The purpose of these rules and regulations is to set forth criteria to ensure adequate service,
prevent unfair charges to the customer, and to protect the Kalispell Sewer Department from
unreasonable demands.
The Kalispell Sewer Department is governed by the Kalispell City Council, hereinafter
referred to as the City Council, and is under the direct supervision of the Director of Public
Works. The adoption of these Rules and Regulations shall not preclude the City Council
from altering or amending them, in whole or in part, or from requiring other or additional
service, equipment, facility or standard, either upon complaint, upon its own motion or
upon application of the Director of Public Works.
These Rules and Regulations do not in any way relieve the Kalispell Sewer Department
from any of its duties under the laws of the State of Montana. The authority requiring the
Rules and Regulations is contained in Title 69, Chapter 7, Montana Code Annotated.
Rule II Definitions
The words or phrases used hereinafter shall mean as follows:
1. "City Council" means the duly elected governing body of the City of Kalispell, to include the Mayor. 2. "City Manager" means the duly appointed City Manager of the City of Kalispell or
any person authorized by him/her to perform acts in his/her behalf.
3. “City Sanitary Sewer” means the system operated by the Kalispell Sewer Department
for the collection, conveyance, and treatment of sewage.
4. “City Water” means water furnished by the Kalispell Water Department.
5. “Collection Main” means sewer pipe owned, operated and maintained by the Sewer
Department, which is used for the purposes of collecting and conveying wastewater
2
and sewage, and to which service connections are attached. A pressurized main or force
main is not considered to be a collection main.
6. “Commercial Service” means any sewer usage other than solely for residential
purposes except in a residence in which the resident operates a neighborhood business
occupying less than thirty percent of the living area and which the water consumption
for the business would be insignificant. Where a single structure has a neighborhood
business exceeding the foregoing or has more than one business combined with a
residence, the sewer service shall be considered “Commercial Service”. Commercial
Service includes, but is not limited to: schools, hospitals, nursing homes, churches,
hotels, motels, trailer parks, apartments, duplexes, condos, multi-plex units, and
rooming housing with two or more rooms on a rental basis are considered Commercial
services and not Residential.
7. “Customer” or “Consumer” means any individual, partnership, association, firm,
public or private corporation or government agency, or any other user receiving sewer
service. In the case of a tenant or landlord, the property owner is considered the
customer or consumer.
8. “Developer” means any person, firm, corporation, or other entity that causes
improvements to be made upon the land with said improvements requiring sewer
service.
9. “Director of Public Works” means the Director of Public Works for the City Of
Kalispell or any person authorized by him/her to perform acts in his/her behalf.
10. “Domestic Sewage” is defined as the liquid waste collected from customers, residences,
business buildings and institutions which contains organic matter associated with
products consumed by humans.
11. “Extension Agreement/Latecomer Agreement” means an agreement between the City
of Kalispell and a Developer which allows the Developer to connect onto an existing
main owned by the City, and extend water or sewer service to the property of the
Developer. The Agreement sets forth the value of the extended main and the charges
for new customer connections to the extension main which are paid to the Developer.
The said Agreement must be adopted by Resolution of the City Council and signed by
the Mayor and the Developer.
12. “Force Main” or “Pressurized Main” is a pressurized sewer pipe owned, operated, and
maintained by the Sewer Department, which is used for the purpose of conveying
3
sewage from lift stations to other sewer collection mains. No private sewer taps shall
be made on city force mains.
13. “Industrial Waste” is defined as the liquid waste which has any other consistency than
“Domestic Sewage”.
14. “Permittee” means any person, firm, corporation or other entity which obtains a written
permit to cause construction work to be performed in accordance with the permit.
15. “Private Main” means any sewer pipe not owned, operated and maintained by the City
of Kalispell to which more than one service line was originally connected.
16. “Public Service Commission” means the Montana Public Service Commission.
17. “Residential Service” means sewer usage solely for residential purposes.
18. “Service Connection” means the connection and or the tap at the collection main which
connects the customer’s service pipe to the main.
19. “Service Pipe or “Service Line” means the piping from the service connection and or
tap at the main to the customer’s premises.
20. “Sewer Department” means the City of Kalispell Sewer Department.
21. “Standards” shall mean the current “Standards for Design and Construction”, as
adopted by the Kalispell City Council.
22. “Water Department” means the City of Kalispell Water Department.
Rule III Records and Reports
1. Preservation of Records: All records required by these Rules shall be preserved by the
Sewer Department in accordance with the “Rules to Govern the Preservation of
Records of Public Utilities and Licensees”, as prescribed by the National Association
of Regulatory Utility Commissioners (NARUC), dated April, 1972.
2. Filing of Rules, Regulations, and Rate Schedules: No rules, regulations or schedules
of rates or modification of the same, shall be effective until adopted by the City
Council.
4
3. Financial and Statistical Report: The Sewer Department shall file annually a Financial
and Statistical Report upon forms to be furnished by the Public Service Commission.
This report shall be filed on or before October 31 of each year as set forth in Section
69-3-203 MCA.
Rule IV Customer Information
1. Rates: Sewer Department personnel shall explain to the customer, during the
application for service, or whenever the customer requests to do so, the Sewer
Department’s rates applicable to the type of service furnished to the customer. The
Sewer Department shall supply the customer, when requested, with a copy of the Rate
Schedule.
2. Rules and Regulations: A copy of the Rules and Regulations of the Sewer Department
and any contracts and applications applicable to the Sewer Department shall be
maintained in the office for inspection by the public.
3. Posting: A suitable placard in large type shall be exhibited in a conspicuous location,
giving information to the customer that a copy of the Rules and Regulations of the
Sewer Department and the schedule of rates are kept for their inspection. The
information shall state that the Sewer Department is regulated by the Kalispell City
Council and under the direct supervision of the Director of Public Works.
Rule V Uses and Charges
1. Free Sewage: The Sewer Department shall not supply free sewer service to any
customer.
2. Temporary Services: Sewage from construction, special projects, or other short term
usage must be applied for specially and shall be for a period no longer than six months.
The usage charge shall be based on a water meter reading and the current Rate
Schedule.
In all cases, the customer must pay for all charges necessary to provide the temporary
service, including the removal of the service and water meter, if required. Temporary
sewer service, if granted, may be terminated by the City after three days prior written
notice of termination has been personally delivered or mailed to the owner’s
representative’s last known address. Receipt of temporary service does not in any way
entitle a customer to permanent service.
5
3. No City Water But City Sanitary Sewer: Customers which are not connected to City
water, but which discharge sewage into the city sanitary sewer shall have their water
service metered. The metering shall be at the expense of the customer, including the
meter, and be compatible with the City’s metering system. Kalispell Water Department
personnel shall have access to the water meter for reading purposes. There will be no
charge made for the water used, but the meter reading will be used as a basis for a sewer
service charge. The Water Department reserves the right to check the customer’s meter
for accuracy. Meters which are found to be over 2% in error, in the customer’s favor,
shall be replaced or repaired by Water Department personnel, at the customer’s
expense.
4. Usage Restriction: The Sewer Department agrees to collect sewage from certain
specified locations for a certain specified fee. Usage shall be in accordance with the
City of Kalispell Ordinance No. 854 or its subsequent amending ordinance. If a
customer supplies sewer services to other locations without written permission from
the Director of Public Works, discharges sewage for other consistencies than those for
which the customer is paying, or discharges prohibited waste it is a violation of the
service contract. Upon discovery by the Sewer Department of a violation of usage, the
customer shall be mailed a written notice of such offense. After 30 days from the date
of mailing said written notice, the Department of Public Works may have the service
discontinued until such time as the additional services furnished have been paid for or
the violation rectified. In the case of fraudulent use or if a dangerous condition is found
to exist on the customer’s premises, services may be discontinued immediately, without
advance notice. An example of a dangerous conditions is one which could cause
damage to the city sanitary sewer system or one which could potentially allow
containments to enter the city sanitary sewer system.
5. Annexation Required for Initiation or Continuation of Sewer Service: Any customer
now receiving, or hereafter initiating, sewer service supplied by the Kalispell Sewer
Department, shall be deemed to have consented to, and waived the right to protest,
annexation to the City of Kalispell, as a condition of continuing or initiating said sewer
service.
Rule VI Rate Establishment
All rates and rate adjustments shall be adopted by the City Council through the Hearing
Process as provided by law. The rates shall be in accordance with Exhibit “A” attached.
6
Rule VII Application for Sewer Service
All customers desiring sewer service must make written application at the Sewer
Department office on forms provided therefore, setting forth in said application the type
of sewage to be discharged into the city sewage system. In cases where the customer is
not the owner of the premises, the owner is primarily liable for payment for sewer
service and the customer is jointly and severally liable for such payment. All
applications for the collection of sewage from any premise must be signed by the
property owner. Any change in the identity of the contracting customer at a premise
will require a new application.
While the contracting user is a renter, leasee, or is not the property owner, an
application for sewer service shall be made in the consumer’s own name. The owner
shall be primarily liable for payment of the sewer service and the renter or lease shall
be jointly and severally liable for such payment. In such instance, the Sewer
Department shall notify the property owner of the new service application and place
the contracting user’s name and date of service application as an endorsement on the
property owner’s application.
Special written applications, must be made for service other than strictly domestic
sewage.
It is the responsibility of the applicant to contact the Director of Public Works or City
authorized representative, prior to making application to be sure that there is a sewer
main adjacent to the applicant’s property. If no main exists, it is the applicant’s
responsibility to install a main, in accordance with City Standards, at the applicant’s
expense.
All premises to be served which have not previously been served by the system will be
assessed an impact fee. Impact fees are due and must be paid before service application
may be approved.
Rule VIII Refusal to Serve Customer
The Sewer Department may decline to serve an applicant:
(1) Until the applicant has complied with these Rules and Regulations governing sewer
service, or
7
(2) if, in the judgment of the Director of Public Works, the applicant’s installation of piping,
equipment, or appurtenances is regarded as potential health hazard or of such character that
it is considered industrial waste or,
(3) if the applicant’s system could cause damage or harmful effects to the Sewer
Departments ability to satisfactorily treat such sewage within the limitations of the
Kalispell Wastewater Treatment Plant.
In the event the Sewer Department refuses to serve an applicant under the provisions of
this rule, the Sewer Department shall inform the applicant that the applicant may submit
the question of refusal to serve to the City Council for their review and decision.
Rule IX Billing
1. Method of Billing: The billing for domestic sewage shall be based on the comparative
volume of flow, as determined by water meter readings, except that (1) fixed charges
will be assessed in accordance with the Rate Schedule , and (2) there will be no charge
for water passing through the meter which is reasonably determined to be used for
water sprinkling. The billing for industrial wastes and high strength wastes shall be
based on the water meter reading plus an increased amount, as determined by the City
of Kalispell ordinance to cover the special or increased cost of treating said waste at
the Wastewater Treatment Plant.
2. Billing Periods and Payment: The charges for municipal sewer services shall be billed
at least monthly. To meet unusual conditions, such as discontinuances, the utility may
render bills for service at other than the aforementioned intervals. The date of the month
for reading any meter shall be, as close to practical, to the same date as the preceding
reading. The billing dates shall likewise be monthly, with a date of mailing of said bill
as near as practical to the date of mailing of the previous bill. In cases of leased
property, all billing shall be sent to the tenant and property owner, unless the property
owner agrees to be billed directly. Except for customers covered by Rule V (3), the bill
for sewer service will be combined with the bill for water usage. Payment must be made
for the total due for both water and sewer to constitute full payment for either.
3. Opening and Closing Bills: Opening and closing bills for sewer service will be
computed in accordance with the rate applicable to the service, by amount of water
used and the fixed charge, on a pro-rated basis of the number of days in the period of
question to the number of days in the normal billing period.
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4. Billing Information: Bills shall show the water meter readings at the beginning and the
end of the period for which the bill is rendered, the date of the meter reading, the
number of gallons supplied, and the date upon which payment is overdue.
5. Adjustment of Bills: If the customer believes the meter reading shown on the bill is
incorrect by comparing previous billings and current readings, the customer shall notify
the Sewer Department within five days of receipt of the billing in question. In case of
a dispute as to the accuracy of the meter owned by the Water Department, the customer,
upon depositing the amount set forth in the City of Kalispell Water Rate Schedule, may
request that said meter be removed and tested in accordance with the Rules and
Regulations of the Kalispell Water Department.
If the meter is not owned by the Water Department, the customer, at the customer’s
expense, shall determine the accuracy of the water meter if the customer disputes the
accuracy of the meter. If the Sewer Department disputes the accuracy of said meter, the
Sewer Department, at the Sewer Department’s expense, may determine the accuracy
of said meter and if said meter is found to be inaccurate over two percent in favor of
the customer, the customer shall make the necessary repairs, at the customer’s expense,
to bring the meter into tolerance or replace said meter. Billing adjustments shall be
made for inaccurate meters in the same manner and in accordance with the Rules and
Regulations of the Kalispell Water Department.
6. Error in Billing: if an error in billing or meter reading has been made, the City may
recover any undercharge or must refund any over-collections for the previous six
months, as applicable.
7. Dead Meters: If a meter is found not to register for any period, the Water Department
shall compute the water used as follows:
a. For customers who have been served for over one year, the amount billed shall
be based on the same consumption use as occurred during the same period the
previous year.
b. For customers who have been served for less than one year, the amount billed
shall be based upon water used for the last billing period.
Exceptions will be made to the rule if the facts reasonably show that either method does
not give the correct consumption for the period.
Rule X Complaints
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The Sewer Department shall make a full and prompt investigation of all complaints
made by its customers, and report the results thereof to the customer. If the complaint
is not rectified to the satisfaction of the customer, the Sewer Department shall notify
the customer of the privilege to appeal to the City Manager or City Council.
Rule XI Service Interruptions
1. Notification of Scheduled Interruption: Every customer affected by an interruption in
service shall be notified in advance of all programmed work. Such notice shall be made
at least 18 hours in advance in the form of personal contact, or a notification tag placed
on the entrance way for interruptions affecting 24 or fewer customers. For interruptions
affecting a larger area than the foregoing, the notification may be in the form of the
forgoing or a notification over the electronic media at least twice prior to 18 hours
before interruption.
2. Emergency Interruption: In the event of an emergency interruption, the Sewer
Department shall re-establish service as soon as possible. When emergency repairs,
such as main breaks, plugged mains, etc., becomes necessary, a concerted effort shall
be made by the Sewer Department to repair the cause without total disruption of
service, except for that period when complete shutoff may be required due to the nature
of the damage. Notification of affected customers may not be possible. However, every
effort shall be made by the Sewer Department to have an announcement sent over the
electronic media if the period of total interruption is expected to be more than four
hours.
3. Liability: The Sewer Department shall not be liable to customers or others for failure
or interruption of service due to main breaks, routine maintenance and operations,
plugged mains, acts of God, governmental regulations, court or Public Service
Commission orders, acts of a public enemy, strikes or labor disputes, accidents, weather
conditions, acts of third parties, droughts, or, without limitation by the forgoing, any
other cause beyond the reasonable control of the Sewer Department Personnel.
4. Adjustment of Rate for Interruption: Interruptions of service due to any of the
foregoing or for the customer’s frozen facilities shall not render the City liable for any
adjustment in the bill.
Rule XII Discontinuance of Service
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1. Vacation of Premises: Any customer who is about to vacate any premise supplied with
service, or for any reason, wishes to have service discontinued, shall give at least a 24
hour notice to the Sewer Department. Notice shall specify the date on which
discontinuance is desired. When a customer receives water service from the Kalispell
Water Department, the notice for discontinuance to the Water Department is sufficient
notice for the Sewer Department.
2. Temporary Discontinuance: Notification to the Water Department of the desire to
temporarily disconnect water service will be sufficient notice to discontinue sewer
charges.
3. Discontinuance by Sewer Department: The Sewer Department shall make a diligent
effort to induce the customer to comply with all Rules and Regulations, including
payment of bills. When payment becomes delinquent as indicated by a past due notice
on current billing, the customer shall have ten days after the billing notice to comply
by making payment. If payment is not made, the Water Department or Sewer
Department will place a notice upon the premises that water furnished by the Water
Department cannot be wasted into the Sewer Department’s mains. Said notice shall
state the date when the water shall be shut off. The Water Department or Sewer
Department shall not be liable for failure of the customer to see such notice or for
disappearance of the notice from the premises. The Sewer Department shall keep record
of all notices. The Water Department or Sewer Department shall not discontinue
service for non-payment on Friday, Saturday, Sunday, a day prior to a holiday, or if an
emergency affecting health exists. A written statement from a physician or health
agency must be presented to the Sewer Department within five days, if such claim of
emergency is made.
Rule XIII Extension of Sewer Mains
1. Cost of Extensions: It shall be the responsibility of the developer or property owner
to extend and pay all costs thereof, for all main extensions from the existing city
facilities to the site of development in accordance with all City Standards. Under
certain circumstances, the Kalispell City Council may determine that it is
appropriate to approve and enter into a Developers Extension Agreement with the
developer or property owner to provide for the reimbursement of costs associated
with construction of the infrastructure which exceeds the size or capacity of
Standard requirements for the development. This agreement sets forth the value of
the extended main, the charges for new customer connections to the extension main,
and allows the developer to recover costs associated with the extension of said
utility service for Standard improvements greater than required to serve the
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development. The said Agreement must be adopted by Resolution of the City
Council and signed by the Mayor and the Developer.
2. Extension Agreement or Late-Coming Customer Fee: If the City has become
contractually obligated to collect a latecomer fee from a customer who connects to
a main extension associated with an agreement, the City may refuse to allow such
customer to connect to the extension until the fee is paid. If such customer fails or
refuses to pay such fee when required, it shall be sufficient cause for discontinuance
of service. Customers who connect to the system after the extension is complete
and who did not share in the cost of the extension shall pay the main extender a pro
rata share of the costs as defined in the agreement.
3. Standards of Installation: All mains, appurtenances and auxiliary piping shall be
designed and installed in accordance with the City Standards.
4. Oversizing Mains: A Developers Extension Agreement may be established, upon
approval of Council, for main extensions that exceed the size and capacity as
required for the development in accordance with City Standards. However, if the
City requires the customer or developer extending the main to install a larger size
main than required by City Standards, the City shall pay the difference in cost
between the larger main required by the City, and the size of main required by said
standards.
5. Additional Extensions: The City reserves the right to further extend the mains
installed by foregoing customers. The City also reserves the right to charge future
main extenders, for their pro-rated share of the cost for the oversizing of the City’s
infrastructure. Such pro-rated cost shall be based on volume of flow contributed by
the development for which the line was further extended, versus the volume of flow
of which the oversized portion of the existing main could handle.
Rule XIV Service Lines and Connections
1. Main Connections: The customer shall perform all necessary excavation over and
around the main, and make the service line connection to the main. The customer
shall obtain a permit from the Department of Public Works before making said
excavation and tap. All work shall be performed in accordance with City Standards
and accepted by Public Works prior to backfill.
2. Service Lines: The customer, at the customer’s expense, shall install all piping and
appurtenances, from the main connection to the point of usage, and restore all
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surfaces to the condition which existed before the installation. All piping,
appurtenances, and surface restoration shall be installed and tested in accordance
with City Standards. Installation of a back water apparatus may be required upon
review by the Sewer Department. Structures containing two or more residences
under separate ownership shall have separate service lines from the main for each
residence. Structures containing two or more residences or commercial uses that
are rental units under common ownership shall have one service line for all
occupants within a single structure.
3. Maintenance of Service Lines: The customer shall maintain, at the customer’s
expense, all service appurtenances, including the tap at the main, in a good
condition, free from inflow, infiltration, root intrusion, and exfiltration. Failure to
do so shall be cause for discontinuance of service. It is the customer’s responsibility
to repair all deficiencies in the service line immediately.
Rule XV Abandonment of Service
When a lot or parcel is developed to a permitted use, all duplicate, excess, and/or
unused services, including stub-outs, shall be abandoned at the main at no cost to
the City. Aggregation of parcels will trigger abandonment of unused services.
Whenever a building served by sewer ceases to exist, services shall be abandoned
at the main. At the discretion of the Sewer Department, however, and depending
upon whether sewer service is anticipated to be renewed within one year,
abandonment may not be required.
Rule XVI Storm Drainage and other Wastes Prohibited
No person shall make connection of roof downspouts, exterior foundation drains,
area drains, sump pumps, or other sources of surface runoff or groundwater to a
building sewer or building drain which in turn is connected directly or indirectly
to the city sanitary sewer. No commercial services shall discharge condensate
water to the city sanitary sewer. No person shall discharge or cause to be
discharged any storm water, surface water, groundwater, roof runoff or subsurface
drainage to the city sanitary sewer. No septic sewage shall be introduced into the
city sanitary sewer system. No prohibited wastes as defined in city code and
ordinances shall be discharged into the sanitary sewer system.
Rule XVII Increased Concentration of Wastewater Pollutants
The Department of Public Works considers the normal domestic strength
concentrations to be 250 parts per million (PPM) Bio-Chemical Oxygen Demand
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(BOD), 250 PPM Total Suspended Solids (TSS), 40 PPM Total Nitrogen (TN), 7
PPM Total Phosphorus (TP), 100 PPM Fats, Oils, and Grease (FOG). The Sewer
Department shall assess a surcharge rate for all non-residential customers
(including but not limited to Districts, commercial, and industrial) discharging
concentrations of BOD, TSS, TN, TP, and FOG greater than the normal domestic
strength in accordance with the City Ordinance and Rate Schedule.
Rule XVIII Private Mains
1. The City shall have no obligation to maintain, test, repair or replace private mains,
and the City shall not be liable or responsible for any damage caused by sewer
leaking from a private main.
2. All customers served by a private main are jointly and severally liable and
responsible for maintaining, testing, and repairing. All customers served by a
private main are advised to replace such line with a properly designed and
installed main.
3. If in the judgment of the Sewer Department a private main has become hazardous,
or could damage or cause harmful effects to the sewer system, to customers, or to
neighboring property owners or residents, the Sewer Department shall give
reasonable notice of the problem and the needed maintenance, testing, repair or
replacement. The Sewer Department shall allow a reasonable time for such work,
based on the severity of the condition giving rise to such notice. If the Sewer
Department determines that it is not feasible or practical to remediate the private
main, the Sewer Department shall give reasonable notice to such customers of the
need to install a new main, or connect to an existing main, in the discretion of the
Sewer Department. The Sewer Department shall allow a reasonable time for such
work, based on the severity of the condition giving rise to such notice. The Sewer
Department may, in their discretion, grant extensions of time. If any customer
fails or refuses to conduct the needed maintenance, testing, repair or replacement,
or fails or refuses to install a new main or connect to an existing main, it shall be
sufficient cause for discontinuance of service.
Rule XIX Regulation Amendments
The City Council may adopt, establish or change policies which define and govern
the action of the Sewer Department personnel on specific and special conditions.
The said policy shall not be in conflict with any of the Rules and Regulations
contained herein. The decision of the City Council to adopt, establish or change
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such policies shall be made by a motion duly adopted and approved and filed with
the City Clerk.
CITY OF KALISPELL EXHIBIT “A”
KALISPELL, MONTANA
UTILITY SCHEDULE FOR SEWER
EFFECTIVE June 01, 2020
PAGE NO. 1
SCHEDULE A RESIDENTIAL AND COMMERCIAL SERVICE
Available for: User premises located within the City Limits Fixed charge per meter per month FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 Charge: $8.44 $12.61 $13.43 $14.30 $15.23 $16.22 $16.71 $17.21
Rate: per thousand gallons/no minimum* All consumption $4.78 $7.14 $7.60 $8.09 $8.62 $9.18 $9.46 $9.74
*Water billed per Sprinkling rate or separately metered for Sprinkling not subject
to Sewer fee.
MULTIPLE USERS
Number of units will not be a factor in the rate formula. Special Terms and Conditions
1. Out of City rate 1.25 times the in-City rate.
CITY OF KALISPELL EXHIBIT “A”
KALISPELL, MONTANA
UTILITY SCHEDULE FOR SEWER
EFFECTIVE June 01, 2020
PAGE NO. 2
SCHEDULE B
RESIDENTIAL AND COMMERCIAL
Available for: Users of the system NOT SERVED by the City Water Utility but within the City limits of Kalispell Rate: Premises discharging sewage into the system from water service originating
from other than metered City Water must install a meter, at user’s expense, so as to
provide a measure of usage. This provision covers all outside sources of water including wells and outside water systems.
The charge for sewer services: same as Schedule A In the case of temporary absence of metering, usage will be estimated.
At the date of the adopting of this Schedule there are wells supplying commercial
and industrial premises, these are required to be metered. Until this metering is accomplished, the sewer discharge from those premises will be determined from the capacity of the pump delivering the water and hours of operation of the pump. In the case of restaurants and bars, etc., served in the same manner, sewer volume
may be determined by comparison with a like situation now metered.
MULTIPLE USERS Number of units will not be a factor in the rate formula.
Special Terms and Conditions 1. Out of City Rate 1.25 times the in-City rate.
CITY OF KALISPELL EXHIBIT “A”
KALISPELL, MONTANA
UTILITY SCHEDULE FOR SEWER
EFFECTIVE June 01, 2020
PAGE NO. 3
SCHEDULE C Where it has been determined that the analyte concentration of TP (Total Phosphorus), TN (Total
Nitrogen), BOD (Bio-Chemical Oxygen Demand) and TSS (Total Suspended Solids) are present
in sewage discharged by a District, Commercial, or Industrial User, a surcharge will be made as determined herein: The Utility will consider the normal domestic strength waste component of sewage to be 7 PPM
TP, 40 PPM TN, 250 PPM BOD and 250 PPM TSS. Surcharges will be assessed to all users
discharging at concentrations, which exceed the component of waste as indicated above:
Surcharge costs will be calculated based on the analyte strength (PPM) and wastewater rate of
flow. Flow used in the surcharge calculation shall be the total monthly flow. If an effluent flow
meter is not used or is not operational, the monthly water usage taken during the City’s water
meter reading will be used to determine flow. The total surcharge cost will be the summation of
each of the analytes surcharge costs and lab analytical costs for a monthly billing period.
If the concentration of these pollutants is less than that of normal domestic strength waste, the
User shall not receive a surcharge nor receive a credit.
Special Terms and Conditions 1. Out of City rate 1.25 times the in-City rate.
Strength Surcharge Costs – Over Limit > than (mg/L) of:
FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 Bio-Chemical Oxygen Demand ($/Lbs) > 250 $0.24 $0.16 $0.17 $0.18 $0.19 $0.20 $0.21 $0.22
Suspended Solids ($/Lbs) > 250 $0.22 $0.71 $0.75 $0.80 $0.85 $0.91 $0.94 $0.97 Phosphorus ($/Lbs) > 7 $0 $6.10 $6.49 $6.91 $7.36 $7.84 $8.08 $8.32 Nitrogen ($/Lbs) > 40 $0 $1.25 $1.33 $1.42 $1.51 $1.61 $1.66 $1.71