#10 Introduce ordinance to amend wastewater rates (File Ord. #2009-442)
ADMINISTRATIVE SERVICES MEMORANDUM
October 16, 2009
TO: City Council
FROM: Patty Lynch, Comptroller
SUBJECT: Introduce and schedule a public hearing on a proposed Ordinance
Amending the City’s Wastewater Facility and Sewer Use Ordinance
in Order to Adjust Rates as Set Forth in Chapter 13.18 of the Code
of Ordinances of the City of Janesville (File Ord. No. 2009-442)
Summary
A Wastewater User Charge System was prepared as a result of the City’s
proposed wastewater treatment plant upgrade and the 2010 annual budget. The
user charge system is designed on a cash basis to meet projected expenses for
debt service, operations and maintenance, and provide funding for the
replacement of mechanical equipment at the treatment plant (maintain the
replacement fund).The user charge system revisions will enable the City to
collect revenue to meet the cash requirement of the Utility from customers in
proportion to their use of services. As such, adjustments in the rates have
occurred. This rate adjustment will generate an additional $2,125,200 in revenue
in fiscal year 2010, or an overall increase in rates of 30.3%, effective January 1,
residential
2010. The proposed rate adjustment will result in the average
wastewater bill increasing by 29.3%, or $18.05 per quarter.
Recommendation
The Administrative Services Department recommends that following the first
reading of Ordinance No. 2009-442 to amend the wastewater rates a public
hearing be scheduled on November 9, 2009.
City Manager Recommendation
The City Manager concurs with the Administrative Services Department based
on the wastewater treatment plant construction planned for the coming year. The
combined water/wastewater rate remains one of the lower rates among
Janesville’s peer cities.
Background
The wastewater rates were last adjusted on January 1, 2009, when an overall
increase of 8.8% was implemented. In 2010, there is a budgeted decline in user
charge revenue of 5% ($366,200) primarily due to the staggered removal of GM’s
wastewater flow and a decline in residential usage trends. Operations and
maintenance expenses have remained level with a $12,000 decrease from 2009.
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The largest impact on this rate increase is the cash required the fund the
$32,745,000 Wastewater treatment plant upgrade and expansion. Additional
funding is required for the annual debt service payments and equipment
replacement refunding. The treatment plant project is financed primarily by a
Wisconsin Department of Natural Resources Clean Water Fund Loan. The
annual debt service increase in the 2010 budget including this low interest loan
program is projected to be $1,570,000. The equipment replacement fund will also
need an additional annual deposit of $420,000.
Wastewater Rate Comparisons
Although our recommendation calls for an overall rate increase of 30.3%
effective January 1, 2009, the impact on “average” residential and “typical”
commercial and industrial consumers would be as follows:
Janesville Wastewater Utility Rate Comparison
Average Customer
Volume Existing Proposed Percentage
Meter Size
CCF/Qtr Qtrly Rate Qtrly Rate Increase
Residential
5/8” Meter 25 $ 61.60 $ 79.65 29.3%
Commercial 6”
Meter 1,250 $ 2,012.00 $ 2,663.50 32.4%
Industrial (9”
Flume) 50,000 $18,291.00 $24,309.00 32.9%
Overall 30.3%
Based upon this proposal, the average quarterly residential customer bill will
increase by $18.05. The fixed charges and flow charges are increasing
disproportionately which will cause the large users to experience a greater
increase. Under the new rates large volume users will experience a greater
increase than small volume customers because the volume (variable) charge is
increasing to a greater degree than the meter (fixed) charge.
In addition, the attached peer city comparison compares our average residential
water and wastewater utility bill to that of our peer cities. This table shows that
after the implementation of our proposed wastewater rate increase, an average
residential water and wastewater utility bill will be $120.40, which is still 17%
below the average of our peer cities.
Analysis
The wastewater utility rates are designed to generate sufficient cash to meet
projected operating and maintenance expenses, debt service payments, and
replacement of plant equipment. The wastewater user charge system has been
developed to collect revenue from the system users in direct proportion to their
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use and impact on costs. The proposed wastewater rate adjustment is
necessary to maintain the financial integrity of the Utility because of an upgrade
to the wastewater treatment plant facility and a decline in sales revenue. With
the proposed rate adjustment, it is projected that in 2010 the Utility will maintain
an adequate cash reserve and have adequate funds to make the revenue bond
payments to pay for the capital improvements.
/Attachments
cc: Jacob J, Winzenz, Director of Admin. Services / Assistant City Manager
Eric J. Levitt, City Manager
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ORDINANCE NO. 2009-442
An Ordinance Amending the City’s Wastewater Facility and Sewer Use Ordinance in
Order to Adjust Rates as Set Forth in Chapter 13.18 of the Code of Ordinances of the City
of Janesville
THE COMMON COUNCIL OF THE CITY OF JANESVILLE DO ORDAIN AS FOLLOWS:
SECTION I. Section 13.18.030 A. (“Fixed Charges (Minimum)”) of the Code of General
Ordinances of the City of Janesville is hereby amended in the manner set forth in the
attachment hereto.
SECTION II. Section 13.18.030 B. (“Volume Charges”) of the Code of General Ordinances of
the City of Janesville is hereby amended in the manner set forth in the attachment hereto.
SECTION III. Section 13.18.040 C. 1. and 2. (“Rates”) of the Code of General Ordinances of
the City of Janesville is hereby amended in the manner set forth in the attachment hereto.
SECTION IV. Section 13.18.060 B. of the Code of General Ordinances of the City of Janesville
is hereby amended to read as follows:
B. Revenue raised by the operation, maintenance and replacement (O. M.&
R.) rates are to be used only to defray utility expenses for O. M. & R. The
replacement fund is to be funded at the level of $887,000 per year. Monies
allocated for replacement are to be used only for replacement.
SECTION V. This ordinance and the above rates and local limits shall take effect on the
st
1 day of January 2010.
ADOPTED:
Motion by:
Second by:
APPROVED:
Councilmember Aye Nay Pass Absent
Brunner
McDonald
Eric J. Levitt, City Manager
Perrotto
Rashkin
ATTEST:
Steeber
Truman
Voskuil
Jean Ann Wulf, City Clerk-Treasurer
APPROVED AS TO FORM:
City Attorney, Wald Klimczyk
Proposed by: Accounting/Utilities
Prepared by: Finance
A. Fixed Charges (Minimum):
QUARTERLY CHARGES
SIZE
METER TYPE Present Rates* New Rates**
()
inches
Water 5/8 $26.10 $32.40
Water 3/4 $28.20 $35.30
Water 1 $33.00 $42.00
Water 1-1/2 $43.00 $54.00
Water 2 $56.00 $71.00
Water 3 $86.00 $109.00
Water 4 $129.00 $164.00
Water 6 $237.00 $301.00
Water 8 $368.00 $465.00
Water 10 $541.00 $684.00
Parshall Flume 3 $204.00 $257.00
Parshall Flume 6 $403.00 $509.00
Parshall Flume 9 $888.00 $1,123.00
Parshall Flume 12 $888.00 $1,123.00
B. Volume Charges:
QUARTERLY CHARGES
Present Rates* New Rates**
For all flow (per 100 cubic foot increment) $1.42 $1.89
* Effective 1/1/2009
** Effective 1/1/2010
13.18.040 Industrial and Commercial Surcharge
A. Imposition. All persons, firms, corporations, institutions, or organizations discharging
wastes into the public sewers shall, if their sewage has a concentration greater than “normal”
concentrations, be considered an industrial discharger and subject to the requirements of
Section 13.16.150 of this Chapter. The amount of surcharge shall reflect the cost incurred by
the City in removing the excess biochemical oxygen demand (BOD) and suspended solids.
B. Computation. The excess pounds of BOD and suspended solids will be computed by
multiplying the flow volume in million gallons per day (MGD) by the constant 8.345, and then
multiplying the product by the difference between the person’s concentrations of BOD and
suspended solids and the aforementioned “normal” concentrations in parts per million by weight.
This product will then be multiplied by the number of days in the billing period to determine the
surcharge.
C. Rates. The rates of surcharge for each of the constituents mentioned in the Subsection
B. of this section will be at the prevailing rate at the time. The prevailing rate at the time is as
follows:
1. For biochemical oxygen demand:
Present Rates* New Rates**
Per Pound $0.28 $0.34
2. For suspended solids:
Present Rates* New Rates**
Per Pound $0.20 $0.24
* Effective 1/1/2009
** Effective 1/1/2010