G2. Water Rates Public HearingCITYOF
KALISPELL
MEMORANDUM
To: Doug Russell, City Manager
Cc: Johnna Preble, City Attorney
From: Susie Turner, Public Works Director
Subject: Public Hearing on Amendments to the Water Rate Schedules
Meeting Date: July 17, 2023
Kalispell's water service is funded by the Water Enterprise Fund and the current water rates were
developed as part of the 2019 Water Rate Study. The Study utilized a "Cash Basis" Revenue
Requirement Methodology (AWWA M1 Manual), where the total annual revenue required to
sufficiently manage a utility is the sum of the operating expenses and capital cost during a period
of time (see table 2-1 below).
+ D&M Expense
• Transfer Payments
• C I P Financed with Rate Revenues (2! Deprec. Exp,)
• Debt service (Principal + Interest)
= Total Revenue Requirement
Additionally, as part of the rate development process financial policies were incorporated to
ensure day-to-day and long term financial sustainability for the utility. Policies incorporated and
considered as part of the rate structure include annual reserve amount for maintenance and
operations (M&O), equipment replacement, bond reserve (restricted funds), and bond debt
coverage.
Upon receiving 2023 bids for planned infrastructure projects that were significantly higher than
the City forecasted as part of the rate development process in 2019, a review of the fund's
financial status for the next several years was performed. Results of the finacial reivew
highlighted the revenues generated from the current rates will not sustain the current level of
service expenditures beyond FY 25 and the City will not meet the debt coverage requirement
necessary to receive a State Revolving Fund loan for critical planned rehabilitation capital
proj ects.
The proposed water fund rate adjustment came before the City Council at the June 12, 2023
Work Session, and incorporates revenue requirements to generate adequate funds through fiscal
year 2027 in order to:
• Maintain the same quality of service
• Fund limited capital projects
• Fund an equipment replacement plan
• Maintain financial policy targets, i.e. reserve and operating balances, debt service
coverage
A public hearing date was established for July 17th, and an extensive effort was undertaken to
educate the public on the proposed water rate schedule. A legal notice of the proposed water rate
increase was sent to 8,361 utility customers, a public Open House meeting was held at City Hall
on July 6th, the City's website offered educational information on the subject, and multiple news
and social media venues advertised the proposed amendments. A summary of the comments and
City responses are provided as an attachment.
The July 17th Public Hearing is limited to listening to the public regarding Council's intent to act
upon the proposed water rate schedules. Action by the Council shall take place thereafter at a
subsequent Council meeting.
ATTACHMENTS: Water Rate Adjustment Legal Notice
Public Comments Log, Response, and Summary
CITY OF K4USPELL
NOTI+C'E OF PROPOSED WATER RATE EXCIZEASE
A proposal toincrease rates of the waterutdity and amend the waterregulations to reflect the
changes has been presented to Kalispell City Councaf. It is the intemtofthe City Council to con-aider
the adjustment of the water utility rates to rapport inflationary casts for routine maintenance and
operational sm-ices, planned capital improvement projects, and debt -sea vmi a coverage.
Over the past few years, water utilities have experienced significant cost increases due to
inflationary pressures outside of the utility's control. These pressures are not isolatedto Kalispell, as
water utilities acrossthe nation hal.T experienced sinular cha'llenees. The proposed rate increases
will proV-sdethe necessary re Tame tomeetthese challenges and enaintainthe reliable water serViCes
that are critical to the quality of life, economic development_ and the public health and safety} of the
residents, of Kalispell.
The proposed increase would begin September 1, 2023. Below are t}plcal bills for
customers with a 3/47 meter and use 6,000 ,gallons per month. Differences in water usage will
result in higher or lower charges.
FY 36 FY 27
24660 "s:7,96
Qi'f?rer�ter'••,ti,••:•� 54.91
$65�
��,ei
i] }g
A Public Hearing on the proposed rate increase and regulation amendments -a 11 be held
Mooday., July 1; ,, 1.023 in the Council Chambers of City Hall, 201 1 st Avenue East, Kalispell,
Montana- at 7: p-m. The increase in water rates and the amended water regulations will be
erTecti,°e Ai4 zest 17, 2023 (applied to the September usage on the October 2023 billing cycle)_
Any person wishing to address the proposed water rate increase may appear at this hearing
and make oral statements orpresent same 'in writing. The proposed documents canbe'Viewed onthe
Cityz S Website. at Wwv1'.k ali c ll coin-'j ; or iu the office o€the City Clerk
at 201 First Avenue East; Kalispell..
Written oomnient ,, may- also be submitted for council comsid,erationby deliwaing the Sam to
the City Clerk at 1-01 First Avenue East, Kalispell, 1'.+IT 59901: or by email to
publiccommentoii,kalispeIl.com prior to the hearing.
The City will also be hosting an Open. House to answer any, questions on the proposed rate
increases on Thursday, July 6, 2023 from 430 p.m. - 630 p.m. in the Council Chambers at City
Ball, or you may call �d 0 758-7720_
Dated this 19th day of June, 2023_
Publish_ June 25, 2023
July 2, 2023
July 9, 2023
Cri,ll`
` 1JL �.
City Clerk
The foEo ing table pro-Mes the proposed increase to the water rates. and example bill
comparlsom.
P4 l and PTC-13054d Monti*14AW Hates
Prarposcd
Fy Z024
FY 2+d2S
I'T2M
Raw
3311fiA
25.0%
204%
JI M
Current
lAfertfve
kntcs
Sept 1,.26n'
AAOparrdAer A:dlumvrernt
1, zoz-ij
Residential & Canrrnerd3l
FcroedChargelperacmuntj
$IjSA7
Meter Sae JRatcjiMcic}
$1.6fi
$1.92
$211
32.17
1'
2.2-4
1%
294
1-22
"1
i Vr
4.0a
4.62
S3&
992
6.io
2'
1.28
6.76
7_77
&M
"1
3•
19.19
19-62
]1.96
19e76
20.3S
4'
1Ek?,d
21.60
24.M
2732
22.14
6•
29.86
3434
39.4.
43.44
44.74
Ho-stlnX Fcc �p r mctedng system
0.89
0419
0.99
O.d9
M"
iansumptian Chargc Gal -I
$9.27
$3.76
$4.92
$+L7S
$429
SpnnkJmg
ions 14orr [ bpd "_1
$9.27
76
32
$4.7s
Pnvahe F#c Rrutecdan
Manthl4 Service Cannomtlnrh
21
$32.71
$37.62
W16
$47.59
$ A)2
3•
3&39
W3A
S53.04
M14
W182
4•
L2.87
$4930
M70
$6237
$64.24
5'
AN
$60M
$6994
S 7&93
$ 79.24
S'
0.27
$7736
W96
597.tt
$IW.AU
�0'
92.F9
$106 71
$122.72
$13499
$U''.i 4
'A4ur So:d from MVdr=ts
C=sraWtkm Chage [$jj I;xF7 c a1.I
$6.OG
$6:97
$obi
!;a-v
$!�f.A
rnopnaca
Fy 2cz4 FY 2132a Fry ZUZb FY ZaZf
Itflccbrvv R.1 23;.
Reui:.wW f coon"h"IMI
Ogals '.e -Li $1A,d1 $16a46 %3LS= $12.64
I'Dw als 19.'AJ. 21.A3 2914E 2710 21LA2
4,000FIs n.S2 29.93 39.74 37.10 M-W
6,OOOgals MA& 26.97 423U 46.60 479U
10,OW gals AS.14 S1.-ft 59-6& fA.60 VS4
bright
0 gals $12 A4 $143i S16A6 S1A.1O S13.64
2,13001P315 iff, • 21A3 25AO 27.m 2S 2
4,Cr001pls 25.52 29AS 33.74 37.101 UL20
6.Mbip is 32.06 36.V 4238 46.60 47-%
10A0[]"is 4S.14 S1.91 S9.66 6S.60 V-S4
Per M efxrl rg5ya t �n Charge; to a ne r H osc ^gtee ^omoukd he added atte• I tistal larton ata ar l u Li •mete•.
'Un of City race I I.B Times iw In Clcy race.
Public Comments Log, Response, and Summary
Water and Sewer Proposed Rates and Regulations
Water and Wastewater Impact Fees
Public Outreach Effort
An extensive effort was undertaken to educate the public on the proposed water rate schedules.
A legal notice for the proposed water rates adjustment was sent to 8,361 utility customers, one
public Open House meeting was held at City Hall on July 6th, the City's website offered
educational information on the subject, and multiple news and social media venues advertised
the proposed amendments.
Comments were received via email, phone calls, letters, and City office visits. All of the
comments and responses were logged and are provided as an attachment in a table format.
Overall Comments Received
As of July 12th, the City offices/Staff have received ten (10) comments on the water rate
amendment. All the comments were from residential customers.
Rates Comments
The comments received were categorized as For, Against, or Neutral based on the content of the
comment. In general, For represented comments that were not against a rate increase, and
Against represented comments that were outright against a rate increase. Neutral represented
interactions regarding questions on the rate development and how they as a customer would be
affected, etc., but gave no indication if they were For or Against the proposed rate increase.
Of the 10 comments logged, one was "For" and nine were "Against" the proposed rate increase.
The comments against the proposed increase included concerns regarding:
• Increase is too high for fixed income customers whether that be retirees or low income
• Increase is not reasonable, didn't believe the pandemic could be the reason for an increase.
• Poor planning and the faulting of the City for not being proactive and bidding the project sooner.
• Received two (2) comments opposing rate increase and suggested increasing the impact fee
decrease in -order to support new growth projects.
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