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Memo and ResolutionsCity of Kalispell Post Office Box 1997 - Kalispell, Montana 59903-1997 - Telephone (406)758-7700 Fax(406)758-7758 REPORT TO: Mayor and City Council FROM: Jim Hansz, Director of Public Works SUBJECT: Water and Sewer Rate Increases, Establishment of a Meter Replacement Fee MEETING DATE: October 16, 2000 BACKGROUND: Water and Sewer Rates: City water and sewer rates were last increased in 1991. In 1996 the rates were adjusted to eliminate the minimum monthly use component of the rate structure and, in order to maintain a revenue neutral position, the rates were reduced. Except for this downward adjustment, water and sewer rates have remained unchanged for ten years. Over this period of time City operating costs have increase substantially to the point that revenues are no longer adequate to cover the cost of providing service. The fiscal year 2000/2001 budget itemizes the operation, maintenance, repair and replacement needs for the water and sewer utilities owned by the City of Kalispell. The proposed expenditures are considered to be normal and routine. In the water fund there are two significant items of capital facility replacement: replacement of the 18 inch diameter main in Main Street at an estimated cost of $660,000.00, and replacement of failing roofs on the City's two underground reservoirs on Buffalo Hill at an estimated cost of $400,000.00. There are no items of similar size or significance in the sewer fund. However, it should be recalled that the City is presently engaged in a comprehensive analysis of the water, sewer and storm drainage utilities. The results of this work are expected to identify items in critical need of replacement and improvement. This may add significant cost to future utility fund budgets. The Finance Director has analyzed the financial condition of the water and sewer utilities with respect to the proposed budget. The Finance Director also provided the City Council with a five-year record of financial statements for the water and sewer utilities (August 31, 2000). On the basis of the Finance Director's analysis it is clear that an increase in rates is needed to cover the basic costs of providing utility services at their current levels. The changes needed are as follows: WATER FUND Current Rate Increase New Rate % $1.26 / 1,000 gal. $0.13 / 1,000 gal. $1.39 / 1000 gallons 10% SEWER FUND Current Rate Increase New Rate % $2.98 / 1,000 gal. $0.30 / 1,000 gal. $3.28 / 1,000 gal. 10% Although these recommended increases might appear to be high, over the ten year period since the last rate increase they amount to an annual rate of 0.75%. Meter Replacement: In addition to the recommended increases in water and sewer rates, we have reviewed the City's current procedures for meter replacement and the funding of these replacements. At the present time there is no comprehensive or systematic program for replacement of meters once they have reached the end of their useful life. At the present time, meters are replaced only when they actually fail to register or begin to register so slowly that the change is immediately obvious. The average age of meters in our system is 15 years. Industry- wide experience indicates that typical life expectancy of meters is 15 years, at which point accuracy quickly declines and they begin to register slowly. Our meter vendor has confirmed this. Inaccurate metering causes several problems, some obvious and some not so obvious. Significant costs are incurred to produce and deliver the water. Costs are again incurred to clean up the water at the wastewater treatment plant. Inaccurate meters result in lowered revenues to meet these required costs. In addition, inaccurate metering prevents us from knowing whether system losses are the result of poor measurement, leakage or other causes. Customers of the system are also inconvenienced when inaccurate meters eventually fail and are replaced. The new meter accurately records water use and the customer is then confronted with a sudden increase in the utility bill that may be difficult to manage. At the present time there is no dedicated revenue source to fund the purchase of replacement meters. We currently have specific replacement funds for other components of the system. Therefore we believe the most direct and efficient method of funding meter replacement is through the initiation of a specific meter replace fee rather than attempting to fund replacements via line item appropriation. The recommended annual replacement fee, based on a 15-year meter life, is shown in the following table. The fee per two -month billing cycle is also shown: Meter Size Annual Meter Fee Fee Per Billing Cycle 5/8" and 1/4" residential $6.00 $1.00 1" $10.00 $1.67 1 V2" $20.00 $3.33 2" $28.00 $4.67 3" $105.00 $17.50 4" $148.00 $24.67 The City's current connection schedule includes sizes and hook-up charges for service connections of 6", 8" 10" and 12". At this time there are no installations in these categories. Therefore, we recommend establishing a replacement fee based on a 15 year life the replacement cost determined at the time such connections are made. RECOMMENDATION: Implement the recommended water and sewer rate increases and the water meter replacement fees outlined above and in the accompanying resolutions. FISCAL EFFECTS: Annual increases in fund revenues sufficient to allow continuation of the present level of utility service and to cover the cost of providing the service. ALTERNATIVES: As suggested by the City Council Respectfully s � � James C. Hansz, P.E. Chris A. Kukulski Director of Public Works City Engineer City Manager Report compiled September 26, 2000 RESOLUTION NO. 4588 A RESOLUTION TO ADOPT THE FEES, SCHEDULES, RATES, CHARGES AND CLASSIFICATIONS IMPOSED ON THE CUSTOMERS OF THE CITY OF KALISPELL WATER UTILITY. WHEREAS, pursuant to authority granted to municipalities operating utility services by Section 69-7-101, 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 Utility; and WHEREAS, said proposed amended fees, schedules, rates, charges and classifications are reasonable and just; and WHEREAS, the City Council did, on August 21st, 2000 set a public hearing to be held on October 16th, 2000 on said proposed amendments to the fees, schedules, rates, charges and classifications of the Water 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 Clerk 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 October 16th, 2000, 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 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 Utility and other services performed by said utility 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 res\waterfees2001.wpd 1 adopted to be imposed for water utility services to the inhabitants of the City of Kalispell and those other persons served by its water utility service and applicable January 1st, 2001. SECTION II. This decision is final ten (10) days after filing of this Resolution with the City Finance Director. The Finance Director 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 16TH DAY OF OCTOBER, 2000. Wm. E. Boharski Mayor Attest: Theresa White City Clerk res\waterfees2001.wpd 2 CITY OF KALISPELL KALISPELL, MONTANA EXMIT "A" UTILITY SCHEDULE FOR WATER EFFECTIVE January 1.2001 PAGE NO. 1 SCHEDULE A RESIDENTIAL AND COMMERCIAL SERVICE Available for: User premises located within the City Limits Charge: $2.65 administrative cost per meter Meter charge: Meter Size Fee per Billing Cycle 5/8" and 3/4" residential $ 1.00 1" 1.67 1 1/2" 3.33 2" 4.67 311 17.50 4" 24.67 > 4" determined at time of connection based upon 15 year replacement life Rate: $1.39 per thousand gallons/no minimum $1.08 per thousand gallons/consumption over 30,000 gallons per billing period 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. CITY OF KALISPELL KALISPELL, MONTANA EXHIBIT "A" UTILITY SCHEDULE FOR WATER EFFECTIVE January 1, 2001 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 $.83 per thousand gallons on the amount of water used in excess of the average consumption for the preceding four months. Usage below the minimum in that base period will be computed at minimum to obtain the average. In as much as water bills are rendered bimonthly with the service area divided into two sections billed in alternate periods, this special sprinkling rate will be applied as follows: Section A (West Side) meters read in odd numbered months: Excess usage, defined above in the period after the March reading to the November reading, will be accorded Sprinkling Rate consideration. Section B (East Side) meters read in even numbered months: Excess usage, defined above in the period after the April reading to the December reading, will be accorded Sprinkling Rate consideration. CITY OF KALISPELL KALISPELL, MONTANA EXHIBIT "A" UTILITY SCHEDULE FOR WATER EFFECTIVE January 1.2001 PAGE NO. 3 SCHEDULE B-1 SEPARATELY METERED SPRINKLING SERVICE Available for: All users within the City limits Rate: $.83/per thousand gallons 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 fee will be assessed against these separate sprinkling services except during the Sprinkling Season. 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.) 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 and will not be provided for irrigation purposes. 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 January 1. 2001 SCHEDULE C SPECIAL SUMMER SPRINKLING Available for: COMMERCIAL USERS AND SCHOOLS Rate: PAGE NO. 4 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 $.83 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 5/8" meters for these Separately Metered Services. If larger meters are needed, the cost of said larger meter will be paid by the user. Special Terms and Conditions Separate Sprinkling Services will not be permitted OUTSIDE THE CITY LIMITS. CITY OF KALISPELL KALISPELL, MONTANA EXHIBIT "A" UTILITY SCHEDULE FOR WATER EFFECTIVE January 1, 2001 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: $2.24 per thousand gallons, Minimum charge $19.60 per load. CITY OF KALISPELL KALISPELL, MONTANA EXHIBIT "A" UTILITY SCHEDULE FOR WATER EFFECTIVE January 1. 2001 PAGE NO. 6 SCHEDULE E Available for: COMMERCIAL FIRE PROTECTION - NOT METERED Rate: SIZE OF SIZE OF SERVICE PER MONTH SERVICE PER MONTH 2 Inches $15.40 6 Inches $24.92 3 Inches 18.20 8 Inches 31.64 4 Inches 20.16 10 Inches 43.68 CITY OF KALISPELL KALISPELL, MONTANA UTILITY SCHEDULE FOR WATER SCHEDULE F EXHIBIT "A" EFFECTIVE January 1. 2001 FEES FOR SPECIAL SERVICES Turn On PAGE NO. 7 Rate: When applicable as provided in Rules and Regulations each occurrence when made during regular working hours shall be billed at 1.5 times the current hourly rate. When required other than regular working hours will be billed at overtime rate for hours involved with a minimum of two hours. 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 KALISPELL, MONTANA EXHIBIT "A" UTILITY SCHEDULE FOR WATER EFFECTIVE January 1, 2001 PAGE NO. 8 SCHEDULE H 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 %. RESOLUTION NO. 4589 A RESOLUTION TO ADOPT THE FEES, SCHEDULES, RATES, CHARGES AND CLASSIFICATIONS IMPOSED ON THE CUSTOMERS OF THE CITY OF KALISPELL SEWER UTILITY. WHEREAS, pursuant to authority granted to municipalities operating utility services by Section 69-7-101, 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 Sewer Utility; and WHEREAS, said proposed amended fees, schedules, rates, charges and classifications are reasonable and just; and WHEREAS, the City Council did, on August 21st, 2000 set a public hearing to be held on October 16th, 2000 on said proposed amendments to the fees, schedules, rates, charges and classifications of the Sewer 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 Clerk 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 October 16th, 2000, 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 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 Sewer Utility and other services performed by said utility 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 res\sewerfees2001.wpd 1 adopted to be imposed for sewer utility services to the inhabitants of the City of Kalispell and those other persons served by its sewer utility service and applicable January 1st, 2001. SECTION II. This decision is final ten (10) days after filing of this Resolution with the City Finance Director. The Finance Director 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 16TH DAY OF OCTOBER, 2000. Wm. E. Boharski Mayor Attest: Theresa White City Clerk res\sewerfees2001.wpd 2 CITY OF KALISPELL KALISPELL, MONTANA EXHIBIT "A" UTILITY SCHEDULE FOR SEWER EFFECTIVE January 1. 2001 PAGE NO. 1 SCHEDULE A RESIDENTIAL AND COMMERCIAL SERVICE Available for: User premises located within the City Limits Charge: $2.65 administrative cost per meter Rate: $3.28 per thousand gallons/no minimum * *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 KALISPELL, MONTANA EXHIBIT "A" UTILITY SCHEDULE FOR SEWER EFFECTIVE January 1.2001 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: $2.65 Administrative cost per meter AND $3.28 per thousand gallons/no minimum 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 KALISPELL, MONTANA EXHIBIT "A" UTILITY SCHEDULE FOR SEWER EFFECTIVE January 1.2001 PAGE NO. 3 SCHEDULE C Where it has been determined that concentration of BOD (Biological Oxygen Demand) and SS (Suspended Solids) are present in sewage discharged by a Commercial or Industrial user, a surcharge will be made as determined herein: The Utility will consider the average Residential component of sewage to be 200 PPM BOD and 250 PPM SS. Surcharges will be assessed to all users discharging wastes which exceed the component of residential waste as indicated above: For each 25 PPM BOD above 200 PPM - $.20 Per Thousand Gallons For each 25 PPM SS above 250 PPM - $.17 Per Thousand Gallons SEPTIC WASTES Septic sewage introduced into the sewage system shall be charged at the rate of $2.50 per hundred (100) gallons with a minimum charge of $15.00 per load for bulk loads. The volume charge will be based on the capacity of the hauling tank, not on the volume of the contents. Special Terms and Conditions 1. Out of City rate 1.25 times the in -City rate.