Placement: Second Reading of Ordinances
Action Requested: Motion / Vote
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Ordinance 24-47, an Ordinance Adopting Rate Adjustments to Certain Utility Systems Department Rates, Fees, and Charges.
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Submitted By: Kevin R. Matyjaszek, Utility Systems Director
Strategic Plan Link: The City’s Mission to be financially responsible.
Executive Summary (General Business): Pursuant to the directive given by the City Council at their July 24, 2024, City Council Workshop, the Utility Systems Department (“USD”) prepared an Ordinance adjusting various utility rates provided in Chapters 61 and 62 of the City’s code of ordinances. This Ordinance adopts a 5.5% rate increase for water use rates and adjusts various rates, fees, and charges. The adjustments represent an equitable cost recovery to ensure sufficient revenue covers the USD’s operating expenses and debt coverage as recommended by the USD’s financial consultant and mandated by the USD’s bond covenants.
Presentation Information: N/A
Staff Recommendation: Move that the Council adopt the Ordinance which codifies adjustments to various USD fees, rates, and charges.
Alternate Recommendations:
1. Move that the Council amend the recommendation and adopt the Ordinance which codifies adjustments to various USD fees, rates, and charges.
2. Move that the Council not approve the Ordinance and provide staff with directive.
Background: The USD operates an enterprise fund, which is a fund that operates solely from the services provided by the USD to its customers. This enterprise fund is not supplemented by the general fund. Last year, the USD hired a rate consultant (Raftelis Financial Consultants, Inc.) to perform a detailed analysis of the USD’s rates, fees, and charges. As a result of the rate studies, to ensure the USD has the funding available to maintain operations, provide maintenance to current systems as well as plan for continued growth, the USD proposes adjustments to certain rates, fees, and charges as follows:
1. Utility Rate Study. In accordance with the Utility Rate Study, a 5.5% increase is proposed for water use rates (sewer rates are not slated to increase). This adjustment results in an increase of $1.86 per month to the average water/sewer customer (using 5,000 gallons per month) to bring the average residential bill from $93.17 to $95.03.
2. Capital Charge Study. A Capital Charge ensures the costs to design, build, and operate the water and wastewater treatment facilities as well as the infrastructure connecting the plants to the customer are fully recovered by its users. Adjustments to Capital Charges are based on projected capital improvement projects required to support the community's ongoing growth. These fees are charged to developers and new customers (existing customers already paid these fees when connection to the City’s water or wastewater system occurred).
3. Miscellaneous Fees and Rates. Adjustments to the USD’s miscellaneous fees and rates are derived from the analysis of the USD’s regular operating costs, generally applying only to "new customers." For example, a “new customer” includes those properties converting from private well or septic systems to City water and wastewater utility services or a scattered lot new construction home. This proposed increase includes the costs borne by the USD in connecting the customer to the City’s water or wastewater system.
Issues/Analysis: This Ordinance, if adopted, codifies proposed adjustments to certain USD rates, fees, and charges based upon the comprehensive study performed by the City's rate consultant. The proposed increase will ensure sufficient revenue to cover the USD’s operating expenses and the City’s utility debt coverage.
Financial Information: In accordance with the rate study, a 5.5% increase is proposed for water use rates (sewer rates are not slated to increase). This adjustment results in an increase of $1.86 per month to the average water/sewer customer (using 5,000 gallons per month) to bring the average residential bill from $93.17 to $95.03.
Special Consideration: If approved, the customer’s usage rates become effective after the close of the October 1 billing cycle. If a customer’s billing cycle includes October 1, the customer will not see an increase until the first full bill after the October 1 billing cycle. Each USD customer was notified of the public hearing in accordance with Section 180.136, Florida Statutes which states, before a local government water or sewer utility increases any rate, charge, or fee for water or sewer utility service, the utility shall provide notice of the proposed increase to each customer of the utility through the utility’s billing process. The notice shall state the date, time, and place of the meeting of the governing board of the local government at which such increase will be considered. The notice required by Section 180.136, Florida Statutes, is in addition to any notice and public meeting requirements for ordinance adoption as provided by general law. A copy of the sample notice which was sent to each customer is attached hereto.
Location of Project: Utility Service Area
Attachments:
1. Ordinance; and
2. Sample Bill
NOTE: All of the listed items in the “Attachment” section above are in the custody of the City Clerk. Any item(s) not provided in City Council packets are available upon request from the City Clerk.
Internal Reference Number: 24193-07
Legal Sufficiency Review:
Reviewed by Russell Ward, Deputy City Attorney. Approved as to Legal form and sufficiency by Richard Berrios, Interim City Attorney.