1. Resolution 5491 - Sewer, Water and Solid Waste Rate IncreasesCity of Kalispell
Post office Box 1997 - Kalispell, Montana 59903
Telephone: (406) 758--7701 Fax: (406) 758-7758
REPORT TO: Mayor Tammi Fisher and City Council
FROM: Jane Howington, City Manager
SUBJECT: Utility Rates
MEETING BATE: April 49 2011
BACKGROUND: Last year I declined to move forward the draft rate study information
provided in the preliminary budget meetings because I felt it was in need of further analysis.
Over the summer, after having an opportunity to further analyze the rate information and the
enterprise funds, it was obvious there is a need for short term relief for the sewer fund while we
work on a comprehensive utility rate proposal. A 5% rate increase was therefore presented to
council for consideration.
After reviewing the proposal, the council tabled the 5 % request on February 14 and directed staff
to bring forward the comprehensive proposal.
ANALYSIS: As our review began, it became clear that the current rate structure was upside
down and the base (administrative) rate was not covering fixed costs as is done with the standard
business model. volume rates should not cover fixed costs. We are attempting to fix this with
the proposed rate methodology.
The development of accurate rate analysis also depends on the development of sound growth
assumptions. To this end, we established three growth scenarios:
1. zero growth in the first two years and a half percent in years three through five.
2. Flat volume and customer count in each of the five years.
3. Increases in both volume and customer counts in each of the five years.
Based on our growth management review, the economic reports for the region and the actual
history of the system users, we established scenario #1 as the soundest assumption. The proposed
rate analysis and recommendation is therefore based on this assumption. Information on the other
two assumptions is provided in the detailed report, but we do not anticipate an in-depth review of
this information unless you have questions about them.
RECOMMENDATION: The sewer rate is divided into two rates: a base rate which should
cover fixed costs and a volume rate which covers consumption. This proposal recommends
adjustment to both types of rates over a multi -year period. We are recommending an increase to
the sewer base rate in the current fiscal year; an increase to the base rate in fiscal 2011112; and a
smaller increase to the volume rate in 2013/ 14.
The water rate is also divided into two rate types. we are recommending the base rate be adjusted
to be consistent with the sewer base rate in year 2012/1.3.
The solid waste rate is not out of line for the normal operations of the solid waste function, but it
does not adequately cover capital needs. As one of the financial policies recently endorsed by
council advocates, capital funds should be established to finance capital equipment replacement
needs. Therefore, we are proposing a $.25 increase to the monthly solid waste rate in 2011/12.
Respectively submitted,
Hc
a
Jane Howington
City Manager
A MSOLUTION TO ADOPT THE FEES, SCHEDULES, RATES, CHARGES AND
CLASSIFICATIONS
..i'. O
KALISPELL WATER, WASTEWATER AND SOLID WASTE UTILITIES.
WHEREAS, pursuant to authority granted to municipalities operating utility services by
Section 69-7-101 et seq., MCA., the City of Kalispell did consider it proper to
amend the fees, schedules, rates, charges and classifications imposed for utility
services to its inhabitants and other persons served by the City of Kalispell water,
Wastewater and Solid waste Utilities; and
WHEREAS, said proposed amended fees, schedules, rates, charges and classifications are
reasonable and just; and
WHEREAS, the City Council did, on February 22, 2011 by Resolution No. 5483 set a public
hearing to be held on March 21, 2011 on said proposed amendments to the fees,
schedules, rates, charges and classifications of the water, wastewater and Solid
Waste Utility services of the City of Kalispell and gave the necessary Notice
thereof as required by Section 69--7- 111, MCA; and
WHEREAS, due and proper Notice of said Public Hearing has been given by the City Clem by
publication and mailing as required by law; and
WHEREAS, said public hearing was duly held by the City Council at a public meeting thereof
in the Kalispell City Hall beginning at 7:00 o'clock P.M. on March 21, 2011, 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 Clem at said
meeting prior thereto were given consideration by the Council.
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
KALISPELL:
SECTION I. That the fees, schedules, rates, charges and classifications applicable to the
use of the City of Kalispell water, 'wastewater and Solid waste 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,
wastewater and solid waste 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 II. This decision is final ten (10) days after filing of this Resolution with the
City Clerk. The City Clerk shad 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 4TH DAY OF APRIL, 2011.
Tammi Fisher
Mayor
.Attest:
Theresa White
City Clerk
5-Fear
FY FY FY FY FY FY Total
09110 10/11 11/12 12/13 13/14 14115 Adjustment
SEWER
Bi-Monthly Administrative Charge
(base rate) $3.75 $15.00
Volume Charge (per Thousand
Gallons) $4.1.9
WATER
Bi-Monthly Administrative Charge
(base rate) $3.75
Volume Charge (per Thousand
Gallons) $2.43
$4.5 3
$15.00
SOLID WASTE
E
(Annual rate) $108.00 $111.00
Charges for all garbage service to increase $.25 per month, a $3.00 annual increase.
$1.6.88
Special Terns and Conditions
1. Out -of -City Water and Sewer Rate 1.25 times the in -City rate.
2. Current Sewer Flat Rate Customers (28 customers) FY 10/ 11 Bi-Monthly Flat Rate Charge = $72.03
$1.3.13
$0.59
$11.25
9►
$3.00