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Public WorksCitv of Kalispell Post Office Box 1997 • Kalispell, Montana 59903-1997 • Telephone (406) 758-7700 • FAX (406) 758-7758 MEMORANDUM January 5, 2000 To: Chris Kukulski, City Manager From: Jim Hansz, Director of Public Subject: Proposed Sewer Bill Surcharge for Damage Rkyrhbursement As our recent experience with the unfortunate Mr. Windauer has shown, there is a potentially serious cost to the public if and when a sewer blockage occurs on a main line that results in sewage flooding the home. When there is City negligence involved, the City's insurance pays the repair bill. When the service line blocks, then the homeowner's insurance usually pays the bill. However, when there is no City negligence, and the cause is not on the service line, then the homeowner is left to pay the full bill, unless he has obtained extra insurance, which is available, for this purpose. Our records indicate that, on average, there are six to eight sewer main blockages each year. Not all of them result in flooding damage to homeowners. In fact, there is typically only one back up every two or three years that results in flooding damage. Nonetheless, every sewer main blockage has the potential to cause damage and a financial loss for the homeowner. Owen Voigt of NMA mentioned that Billings and some other cities have instituted a fee that is added to the monthly sewer bill. This fee funds a reimbursement account just for these "uninsured" situations. If a blockage occurs on a main line, not the service line, and the blockage is not due to City negligence, then the fund reimburses the homeowner a fined amount for the clean up and repairs. In Billings this amounts to $500.00 per occurrence. Even if the homeowner has supplemental insurance the fund would issue the check which could cover the insurance deductible amount. This is essentially user funded "no-fault" insurance that is managed by the City. I looked into this to determine the feasibility of beginning a similar program in Kalispell. Presently there are 5,919 sewer service accounts. Of this total, there are 5,448 inside the City and 471 outside the City. The service accounts inside the City are further divided into 4,230 residential and 1,218 commercial accounts. A monthly fee of $1.00 per month on every account would generate a total of $71,028.00 per year. This is probably much more than would be needed to reimburse for uninsured damages. In particular, this would be far more than needed to reimburse a typical number of claims for insurance deductible of $1,000.00. In fine tuning the idea the City could consider several refinements for the program. 1. The City could limit the program to in -City accounts, perhaps as an incentive to annex to the City. 2. The City could limit the program to residential accounts and exclude commercial accounts that usually have business insurance to cover losses. Also, the typical residential apartment dweller would have a low potential to be impacted, and these apartments are carried as commercial accounts. 3. The City could set the surcharge at $0.25 per month on in -City residential accounts. This would generate about $10,000.00 per year and could easily reimburse several damage claims while building up a reserve for the occasional bad year. 4. The City may be able to use the reserve funds to cover its deductible amounts when there is a claim with City liability. It should be remembered that this proposal is made for only those damage situations that involve no City liability and that are not covered by the homeowner's insurance for the service line. Also, as you know, supplemental insurance is available to the homeowner. State Farm has a policy rider that offers $10,000.00 coverage with a $1,000.00 deductible. I believe it costs about $10.00 per year. Therefore, this program would be providing the equivalent of insurance amounting to $1,000.00 (the amount of the deductible) for about S3.00 per year. Please let me know whether this should be developed further and then offered to the City Council for their consideration. 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: Meter Upgrade Program, Information MEETING DATE: March 11, 2000 Goal Setting Session BACKGROUND: At the present time the City has a diverse collection of water meters in service, many of which are more than 30 years old. All these varied types of meters share one common trait, they are extremely labor intensive when they must be read. The PWD is researching the new metering options open to the City to improve metering accuracy, increase revenues and reduce the amount of labor involved in reading and billing. Presently, the reading process involves looking at a remote register, or plugging in a handheld reader, then transferring this reading into a book. The book is then read and reading is entered by hand into the billing department computer system to produce a mailed bill. The most promising option appears to be the Neptune Pro Read system. The City now uses the Neptune meter as its standard meter. The conversion of existing Neptune meters to the Pro Read system is fairly simple but other brand older meters must be replaced. The Pro Read system involves a remote fixture that is touched by a hand held reader. The reader automatically transfers the electronic reading to a hand held computer where it is stored. The stored readings are then down loaded into the main billing computer and the bills are calculated automatically. The attractive aspect to this system is that not all the meters must be concerted to the remote Pro Read style. As the conversion progresses the unconverted meters can still be read manually and the reading input to the same hand held computer. This saves the steps of manual input to the meter book and manual calculation of the bills. We are continuing to research this option and to develop a good estimate of the cost to make the change. The initial cost is approximately $17,000.00 for the handheld reader and computer interface units. Meter conversion kits are $61.00 each and curbside remotes for areas with restricted access are an additional $100.00. Our new meter purchases are the kind needed to support the Pro Read system. The finance Department has indicated that our billing software data indicates it is compatible with this remote reading and down load system. Complete conversion of the City's metering system will require several years to complete. Nonetheless, we believe this change offers an excellent opportunity to improve manpower efficiency and to enhance revenues from more accurate metering of water sales, even if it goes no further than the change to the Pro Read reader and computer interface system. RECOMMENDATION: Continue with meter upgrade effort. FISCAL EFFECTS: Initial cost of 17,000.00 for basic meter reading and computer interface equipment, and variable annual costs each year to upgrade existing metering system. All new meter purchases will be compatible. ALTERNATIVES: As suggested by the City Council R Chris A. Kukulski City Manager Report compiled March 6, 2000 City 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: Street Upgrade Program, Information MEETING DATE: March 11, 2000 Goal Setting Session BACKGROUND: At the present time the City funds the street maintenance program from three basic sources: the general fund street budget, the special street assessment, and the gas tax reimbursement. All these funding sources provide for a maintenance effort. At this time there is no dedicated funding for the upgrade of streets to reflect the changed demands of a growing community. Each time a project is needed to improve a street, such as Sunny View Drive, it must be funded as a special effort through an SID or it must use funds that directed away from maintenance activities. There are two exceptions to this general maintenance / upgrade situation: Special MDOT projects that are funded from time to time via the Urban Highway program (Meridian Road is funded in this way), and projects that can be funded within Urban Renewal Districts, such as the Downtown TIF District. The maintenance funds are now barely adequate to fund the required work. Nonetheless, after several years of effort our streets are approaching a reasonable condition. This has been due in no small measure to the budget assistance available from the Downtown TIF that has paid for substantial amounts of pavement preservation within the district. This assistance will go away when the district sunsets and the full street maintenance burden for streets within the TIF district will fall on the street maintenance budgets. Likewise, the Meridian Road project is an Urban Highway project that has committed local area urban funds for many years into the future. Other urban highway projects have been identified (i.e. Whitefish Stage Road) that will obligate future funding for many years after the Meridian Road job is finished. This means that there is little probability for this funding source to pay for other urban road projects within the City in any reasonable time frame. The City presently can identify at least two significant upgrade projects: Sunnyview Lane and Two Mile Drive from Meridian Road to Greenbriar. Both these projects will require major improvements at a large cost. With virtually no hope to fund Two Mile Drive with Federal Urban Highway funds, the Two Mile project could consume all the gas tax allocation for the next three to four years. Sunnyview is not on the Urban System, therefore it would involve all local dollars to complete, and it too would require virtually all the gas tax budget for several years. The alternative for this project that has been discussed is to fund the improvement via an SID. In order not to jeopardize the huge maintenance investment made over the last several years, staff strongly recommends that a new funding mechanism be initiated to deal with the need to make upgrade improvements to local streets. A specific street upgrade J improvement assessment, along the lines of the City's Storm Drainage assessment, could accomplish this. RECOMMENDATION: For discussion only, consider the creation of, or an increase to the City Street Assessment to fund upgrade projects. FISCAL EFFECTS: Substantial. ALTERNATIVES: As suggested by the City Council Respectfully C",4({�� 3s C. Hansz, P.E. Chris A. Kukulski Director of Public Wor City Engineer City Manager Report compiled March 7, 2000 of Kalispell Post Office Box 1997 • Kalispell, Montana 59903-1997 - Telephone (406) 758-7700 - FAX (406) 758-7758 MEMORANDUM March 9, 2000 To: Chris Kukulski, City Manager From: Jim Hansz, Director of Public orks Subject: Water and Sewer Rate Studies The City is presently developing a major facility planning project for the water, sewer and storm drainage systems throughout the City. This work will identify the deficiencies within those systems and the infrastructure needed to correct the deficiencies. Once these needs are identified the next step will be to determine the appropriate method for paying for the improvements. The facility planning study includes an analysis of the existing rate and fee structure to determine its ability to generate the revenues needed to fund improvements. Based on this analysis there may be a need to consider performing a detailed rate and fee analysis to establish the rates necessary to support operations, maintenance, and needed capital improvements identified by the studies. We do not expect this to be an item for Council consideration in the near future, but once the facility planning study is complete it may become an important consideration.