ACTION REQUESTED:
Title
Communication from City Manager and Director of Public Works with a Request to Approve the Following for All Council Districts:
A. A RESOLUTION Amending Resolution No. 14-036-A Setting Fees for the Peoria Combined and Sanitary Sewer District INCREASING the CITY’S SANITARY SEWER LATERAL FEE From 0.7629/CCF to 0.8773/CCF Effective May 1, 2016, and From 0.8773/CCF to 1.0089/CCF Effective May 1, 2017 for Property Owners who are Directly Served by City Sewers; and
B. A RESOLUTION Amending Resolution No. 14-036-B Setting Fees for the Peoria Sanitary Sewer Rehabilitation District INCREASING the CITY SEWER REHABILITATION RATE From 0.5938/CCF to 0.8016/CCF Effective May 1, 2016 and From 0.8016/CCF to 1.0822/CCF Effective May 1, 2017 for all City Property Owners who are Directly Served by Greater Peoria Sanitary District (GPSD) or City Sewers.
Body
BACKGROUND: Introduction
The current sewer rates charged by the City of Peoria were implemented on May 1, 2015. Revenue generated by these current rates will not cover the City’s 2016 or 2017 sewer costs.
Staff recommends raising City lateral sewer rates by 15%, effective May 1, 2016 and by 15% effective May 1, 2017 to match revenues and expenses for maintenance of City-owned sanitary and combined sewers. Staff recommends raising City rehabilitation sewer rates by 35%, effective May 1, 2016 and by 35% effective May 1, 2017 to match revenues and expenses for City capital sewer expenses, including construction and debt service for the Sanitary Sewer Rehabilitation Program, Annual Drainage Programs, the construction of a Green Infrastructure Pilot Project, and other 2016/2017 expenses associated with the mandated Combined Sewer Overflow Long Term Control Plan.
As the Greater Peoria Sanitary District (GPSD) bills sewer customers, rate increases are planned to occur on May 1 to coincide with GPSD’s fiscal year and billing cycles.
Note: The City is currently negotiating a settlement with the United States Environmental Protection Agency (USEPA) for the Long Term Control Plan to control Combined Sewer Overflows (CSOs). The cost for this mandated program could be as much as $250 million, and will likely need to be completed within approximately 18 years. The funding source for the total CSO program is unknown at this date, but will likely be several sources, including sewer rate adjustments and potentially stormwater utility fees. The proposed sewer rate adjustments discussed in this Council Communication relate only to our current expenses, and expected CSO capital expenses in 2016 and 2017. Additional revenues will be necessary in the future to fund the mandated, full CSO program, as well as the City’s overall Wet Weather program.
General Background Information
Description of Sewer Billing Methodology
• The fees for sewer service in Peoria are collected and billed by GPSD. Quarterly sewer bills are based on the amount of water consumed, using the water consumption records provided by Illinois American Water Company. The typical residential customer uses about 21 hundred cubic feet (CCF) of water per quarter (one CCF equals about 748 gallons).
• There are two main categories of customers and four common sewer rates. The GPSD adds a surcharge for capital improvements and replacement to the rates charged by GPSD. This GPSD surcharge is currently about 47%.
The two categories of customers are Residential and Non-Residential. Non-residential customers that use a large amount of water, typically industrial or medical customers, may also pay additional rates based on the pollutants generated in their sewage. Also included in this Non-Residential class of customers are Residential customers who have a separate meter for watering of lawns through their private irrigation systems.
Residential customers on City sewer lines currently receive a 7% discount on their overall sewer bill to account for water used in watering lawns, because this water does not enter the sanitary sewer system.
Description of the Rates and Surcharge
• GPSD Disposal Rate: A rate established by GPSD to fund the costs of treating sewage at the Wastewater Treatment Plant. This rate is paid by all GPSD customers, which includes all City customers.
• City Rehabilitation Rate: A rate established by the City to fund capital sewer improvements and associated debt service. This rate is paid by all City customers. This rate was last increased by 15% on May 1, 2015.
• GPSD Lateral Rate: A rate established by GPSD to fund the maintenance costs for the maintenance of the GPSD collection (pipe) system. In general, City customers located north of War Memorial Drive are connected to GPSD sewers and pay this rate.
• City Lateral Rate: A rate established by the City to fund the maintenance costs for the maintenance of the City collection (pipe) system. In general, City customers located south of War Memorial Drive are connected to City sewers and pay this rate. This rate was last increased by 5% on May 1, 2015.
• Capital Improvement Replacement surcharge: A surcharge established by GPSD and applied to all rates established by GPSD to fund the replacement of GPSD sewer infrastructure.
The components of customers’ sewer bills are depicted in the following schematic:
The City of Peoria only sets two sewer rates: the City Rehabilitation Rate and the City Lateral Rate. All other sewer rates are set by GPSD.
Proposed City Rate Increases
City Lateral Rate
This fee was established to provide revenue for contracted costs for maintenance work on the City owned sanitary sewers and the City owned combined sewers. The contracted maintenance is provided by GPSD. The budgeted needs for these funds include the GPSD contracted maintenance, and costs for staff time and equipment dedicated to sewer televising and maintenance.
The proposed 15% lateral rate increases on May 1, 2016 and May 1, 2017 will cover the budgeted expenses.
City Rehabilitation Rate
This fee was established to provide revenue for capital improvement costs and associated debt services. The capital costs include the Sanitary Sewer Rehabilitation program, the Annual Drainage Repair program, the Private Property Drainage Assistance program, and the Combined Sewer Overflow Long Term Control Plan current efforts.
The proposed 35% rehabilitation rate increases on May 1, 2016 and May 1, 2017 will cover the budgeted expenses subject to any increased expenditures as a result of a settlement with the USEPA.
Customer Impact
The overall impacts of the proposed City-controlled rate increases on the typical, residential, quarterly bill for customers connected to a City sewer and for customers connected to a GPSD sewer are shown below:
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Typical Residential* City Lateral Customer Impact summary: |
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(connected to a City sewer, generally south of War Memorial Drive) |
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Jan-16 |
May-16 |
May-17 |
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Proposed City Lateral increase: |
$2.23 |
$2.57 |
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Proposed City Rehab Increase: |
$4.06 |
$5.48 |
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Total proposed increase |
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$6.29 |
$8.05 |
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(City Sewer Lateral) |
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Typical Res. Quarterly Bill |
$51.48 |
$57.77 |
$65.82 |
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Proposed % increase: |
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12.2% |
13.9% |
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Typical Residential* GPSD Lateral Customer Impact summary: |
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(connected to a GPSD sewer, generally north of War Memorial Drive) |
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Jan-16 |
May-16 |
May-17 |
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Proposed City Lateral increase: |
N/A |
N/A |
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Proposed City Rehab Increase: |
$4.06 |
$5.48 |
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Total proposed increase |
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$4.06 |
$5.48 |
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(GPSD Sewer Lateral) |
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Typical Res. Quarterly Bill |
$58.48 |
$62.54 |
$68.02 |
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Proposed % increase: |
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6.9% |
8.8% |
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*3 person household using 21 CCF/3 months, 7% discount |
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FINANCIAL IMPACT: The increases in Sewer Rates will generate additional revenue in the Sewer fund to support the City’s 2016 and 2017 maintenance, capital, and debt service expenses for the sewer system.
NEIGHBORHOOD CONCERNS: The purpose of the Public Hearing is to provide an opportunity for public input.
IMPACT IF APPROVED: The rates will be increased, and revenues will increase in the Sewer Fund, per the approved 2016/2017 Biennial City Budget.
IMPACT IF DENIED: The rates will not be increased, and revenues will not meet expenses.
ALTERNATIVES: N/A
EEO CERTIFICATION NUMBER: N/A
WHICH OF THE GOALS IDENTIFIED IN THE COUNCIL’S 2014 - 2029 STRATEGIC PLAN DOES THIS RECOMMENDATION ADVANCE?
1. Financially Sound City Government, Effective City Organization
2. Attractive Neighborhoods with Character: Safe and Livable
3. Grow Peoria: Businesses, Jobs, and Population
WHICH CRITICAL SUCCESS FACTOR(S) FROM THE COMPREHENSIVE PLAN DOES THIS RECOMMENDATION IMPLEMENT?
1. Invest in our infrastructure and transportation.
2. Reinvest in neighborhoods.
3. Have an efficient government.
DEPARTMENT: Public Works