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Home My WebLink AboutAgenda Packet 03/16/2007 Utility Advisory Committee (Continued From March 13) Public Works Conference Room Port Angeles, W A 98362 March 16, 2007 1 :00 P.M. AGENDA I. Call To Order II. Roll Call III. Discussion Item Stormwater Utility Rates IV. Next Meeting Date: April 10, 2007 V. Adjournment N :\UAC\Final\031607. wpd Date: To: From: Subject: ~ORTANGELES WAS H I N G TON, U. S. A. Utility Advisory Committee Memo March 13,2006 Utility Advisory Committee Gary W. Kenworthy P.E., Deputy Director of Public Works/City Engineer Stormwater Utility Rates Summary: This is a continuation of discussions started in May 2006 regarding the need for added funding for the Stormwater Utility. Further discussions were delayed in view of the pending DOE decision on the inclusion of Port Angeles in the Phase II Municipal Stormwater permit. Now that the City has been included in Phase II an additional engineering position has been approved by Council to support the City's implementation efforts. Recommendation: Review the funding needs, capital program, and rate options and provide direction to staff for future action. Background/Analysis: The Stormwater Utility and associated rates were established in November 2003. The initial direction from Council was to focus on capital and small works projects and provide training of field crews in proper maintenance procedures to meet regulatory requirements. The basic rates established to fund the utility were $3.00 per month for single family and duplex properties, and $3.00 per month per 4000 sq. ft of impervious area ($30.00max.) for non-residential properties. Two major projects have been completed since establishment of the utility, the Crown Park Drainage Improve'ments Project and the Lincoln Avenue Stormwater Separation Project. In addition, Stormwater utility funds have been used to assist funding of street and sidewalk projects with stormwater facilities. Street crews have attended classes on proper maintenance to meet requirements of the Environmental Species Act (ESA) and Department of Ecology (DOE) best management practices. Since the establishment of the Stormwater Utility new unfunded mandate requirements have been imposed on the City by DOE. In addition, rising material and construction costs have effectively reduced the construction program. To meet these challenges, additional staff and funding are needed. Last May and August, presentations were made to the UAC regarding the need to adjust the Stormwater Utility Rates. In view of the uncertainty as to whether the City would be designated by DOE as requiring a Phase II Municipal Stormwater permit, it was recommended in August to delay action and revisit the issue in March 2007. Subsequently, the City has been designated by DOE as a municipality requiring a Phase II Municipal Stormwater permit. The City has joined other designated Cities in appealing some of the permit conditions. The City is also submitting a petition to DOE to include the surrounding UGA and other Clallam County area to be covered by the permit. The City is not challenging being included under Phase II and has submitted the Notice of Intent (NOl), as required by DOE, to be covered by the permit. Council recently approved the hiring of an additional Stonnwater Rates 2007 March 13,2007 Page 2/3 full time engineering position in Public Works to assist in implementation of the Phase II requirements. The estimated annual cost for this position is $100,000. The original projection ofthe rates in 2003 was estimated to produce a net annual revenue for projects in the amount of $225,000 per year. The Engineering News Record (ENR) Construction Cost Index for Seattle in 2003 was 7713. The current ENR index is 8621. This construction cost change since 2003 effectively requires $26,500 more now ($251,500 annually) to continue to fund the Stormwater capital project program at the same levels as 2003. Each $1 of base rate adjustment produces approximately $108,000 in net revenue. The estimated Stormwater Utility base rate adjustment required to fund the new engineering position ($100,000) and maintain a level construction program ($26,500) in the amount of$126,500 annually is $1.20. This would result in a base rate of $4.20 under the current rate structure. This rate will not cover the added efforts that will be required by Community and Economic Development for public involvement, education, training, and permitting, nor will it cover any added work required by the Utilities, Parks, and Street crews. Any added efforts which may be required of engineering beyond the one authorize position are also not included. Beyond the above staffing and adjustments for inflation discussion, the CFP for 2007 thru 2012 includes non-programmatic capital projects totaling $5,420,000 or $900,000 per year. To raise an additional $650,000 per year beyond the $250,000 proposed above would require adding $6.00 to the base rate for a total of $1 0.20 per month. This is not acceptable or affordable at this time for the ratepayers. Additional funding for general area stormwater improvements will need to be provided by developers, by formation of Local Improvement Districts, or by loans and grants when available. If Stormwater Utility rates are adjusted, a review of the commercial (35%) and residential (65%) contributions to the overall revenues may be needed. Based on impervious areas for commercial (52%) and residential (48%) customers, an adjustment may be needed to make the rates more equitable. Currently, monthly contributions from contiguous commercial properties are capped at 10 equivalent residential units (ERU) or $30.00. Adjusting or removing the cap limits and/or modifying the ERU impervious area from 4000 s.f. are alternate methods to bring the commercial and residential rates to equity. Removing the cap would provide an estimated additional 2600 ERUs or $90,000 in annual revenues at the current $3.00 ERU rate. Reducing the per ERU area from 4,000 s.f. to 3,500 s.f. would not increase the residential revenues but would raise the commercial revenues by $142,200 with cap or $290,000 without cap at the current $3.00 ERU rate. These options are shown in the following table: o tion Descri tion Residential Commercial Total 1 No Change (Current) $232,500, 65% $124,500,35% $357,000, 100% 2 Remove ERU cap $232,500, 52% $214,500,48% $447,000,100% 3 Reduce ERU to 3500 S.F. with $232,500,47% $266,700,53% $499,200, 100% ERU cap 4 Reduce ERU to 3500 S.F. $232,500, 36% $414,500,64% $647,000, 100% without ERU cap Measured Impervious areas 48% 52% 100% N:\UAC\FinaJ\Stonnwater Rates 2007.doc Stonnwater Rates 2007 March 13,2007 Page 3/3 These proposals are presented here to enable discussion with the UAC on Stormwater Utility Rate adjustments needed to meet the CFP program as well as pending NPDES Phase II unfunded requirements. For comparison the following table has been prepared showing the stormwater utility rates charged by similar sized cities and how they have changed (Highlighted) since 2004 to meet the ever increasing requirements: Monthly System Monthly System City Residential Development Residential Development Rate Char e Rate Char e 2004 2006 Port Angeles $3.00 None $3.00 None Anacortes $3.00 $1,126.00 $3.00 $1,126.00 Blaine $4.00 $200.00 $4.00 $200.00 The rates and system development charges shown in the table above are based on A WC 2004 and 2006 Surveys. The statewide average for all reporting cities is $9.00 per month. The following is a summary ofthe non-programmatic Stormwater Utility capital projects in the approved 2006 CFP (dollars in thousands): Priority Project 2007 2008 2009 2010 2011 2012 Total 1 10th & N $50 $250 $300 2 Stream Outfalls $50 $50 $50 $50 $50 $50 $300 3 Campbell/Porter $50 $200 $250 $500 4 Lincoln Culvert $100 $100 5 Canyon Edge/ Ahlve $50 $200 $250 $500 6 Lincoln Park/Big Bo $30 $270 $300 7 Bluff Outfalls $70 $120 $120 $120 $120 $120 $670 8 CSt. Extension $50 $200 $250 $500 9 Rose/Thistle $50 $200 $250 $500 10 LaureVI01 $50 $200 $250 $500 11 Upper Golf Course $50 $200 $250 $500 12 Milwaukee $50 $150 $500 $700 13 First Street $50 $50 I Totals $300 $920 $990 $570 $1,170 $1,470 $5,420 N:\UAC\Fina]\Stonnwater Rates 2007.doc