HomeMy WebLinkAboutAgenda - 04-05-2011 - 8dRES-foil-o34
ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: April 5, 2011
Action Agenda
Item No. -~
SUBJECT: Efland Sewer Rate Schedule Amendments
DEPARTMENT: Planning PUBLIC HEARING: (Y/N) NO
ATTACHMENTS}:
1. Proposed Efland Sewer Rate
Increase Schedule
2. Existing Efland Sewer Rate Increase
Schedule, Excerpt Directly from the
Efland Sewer Resolution
3. City of Mebane Current vl~ater and
Sewer Rate Schedule
INFORMATION CONTACT:
Kevin Lindley, PE, Staff Engineer, 245-
2583
Craig Benedict, Planning Director, 245-
2592
PURPOSE: To consider amendments to the existing Efland sewer rate increase schedule.
BACKGROUND: In the Spring of 2009, the BnCG approved an amendment to the Efland
Sewer Resolution outlining a new rate structure and afour-year series of increases to the
Efland sewer rate. In July of 2009, the first of the four-year series of increases went into effect,
marking the first time the sewer rate had changed in approximately twenty years. The
increasing rate structure is currently in year two of the four-year cycle. The rate projected for
year four was designed to provide sufficient revenue to cover the operational costs of running
the system, in addition to providing minimal additional revenue to set aside for future capital
projects or pay future debt service.
RATE SCHEDULE ADJUSTMENTS
While the rate schedule that is currently approved would bring, the system to sufficiency by year
four, the rate that sewer customers in Efland would be charged by year four of the schedule
would be one of the highest rates in the State. County staff has met with Efland customers and
with Justice United, a social justice organization based in Chapel Hill, to discuss ways to avoid
the Efland sewer rate rising to that level, While the Efland customers and County staff
generally agree that the rates needed to rise after twenty years of operation, the question has
been over how much and how fast.
In light of these discussions, County staff has investigated several ways to keep the rates lower
than projected. Since treatment of the wastewater typically represents about to°lo of the
operational costs, staff has investigated ways to reduce treatment casts. One idea that has
been discussed is to send the wastewater from the Efland system to the City of Mebane for
treatment rather than to the Town of Hillsborough. The City of Mebane typically charges its
customers several dollars less per 1,000 gallons of usage than does the Town of Hillsborough
x$10.92 per 1,000 gallons for Mebane out-of-town customers versus $15.52 per 1,000 gallons
for Hillsborough out-of town customers}. Discussions with Mebane staff regarding this idea are
ongoing and there has been na formal agreement drafted, but the idea of switching the flow to
2
Mebane does provide a useful benchmark for the rate structure. The City of Mebane's current
water and sewer rate schedule is provided at Attachment 3.
ANNUALCGMPARISGNS
As shown in Attachment 2, the current rate customers in Efland pay for sewer consists of a
base charge of $10.16 and a commodity, or usage, charge of $8.82 per 1,000 gallons. This
rate is scheduled to increase in July 2011 to a base charge of $14.12 and a commodity charge
of $12.26 per 1,004 gallons. The scheduled rate change represents an increase of
approximately 40% compared to the current rate. To place this increase into context, the
increase in July 2009 and the increase in July 2010 were each 40°/° increases as well. The
sewer bill for someone using 5,000 gallons per month in fiscal year 2008-2009 original rate,
before any increases was $24.20. The current sewer bill for someone using 5,000 gallons per
month is $54.26. If the increase in July 2011 follows the currently approved schedule, the
sewer bill for someone using 5,000 gallons per month would increase to $`5.42.
GPERATING FUND DEFICIT
It was suggested by Justice United that the Efland sewer rate be frozen at the current level until
an agreement can be reached with Mebane to accept the flow or some other solution is
developed to lower operating costs. Staff believes that freezing the rates is not the solution far
a number of reasons. First, the rates were frozen for the first twenty years of operation, which
has led to the need to implement such dramatic rate increases to bring the system back into
acceptable fiscal shape. Second, the costs to operate the system cannot be frozen, so the
system would become less financially stable as revenue stayed constant and operating costs
rose over time. Finally, even if the operating costs were to remain relatively stable over the next
few years, the system is currently operating with a revenue deficit of approximately $95,000 per
year in the operating budget. This means that the revenue collected based on the current rates
provides approximately 56°/° of the operating budget for the system, with the remainder of the
operating cost provided from the County General Fund. Since the revenue collected does not
provide enough money to cover the operating budget for the system, the General Fund must
also provide funds far any capital expenditures required by the Efland sewer system.
PR~PC~SAI
County staff does recognize, however, that continuing to follow the approved schedule of rate
increases would represent a hardship to the average Efland sewer customer who has already
experienced two 40% rate increases over the last two years. To lessen the burden of the
projected increases, yet continue to work towards good fiscal health for the system, staff
proposes the following alterna#ive to the existing rate increase schedule. "Proposal 1" in
Attachment ~ is to hold the base charge at $10.16, and increase the commodity charge over
the next two years to equal Mebane's out-of town rate, which is projected to be $12.50 per
1,000 gallons by fiscal year 2012-2413.
This would be accomplished in two steps. The first increase from $8.82 per 1,000 gallons to
$10.86 per 1,000 gallons would increase the commodity charge to equal the amount the County
is currently being charged by Hillsborough to treat the wastewater from Efland, The sewer bill
for someone using 5,000 gallons per month would increase from $54.26 to $64.46. This
increase represents roughly an 18% average increase to the total bill across all customers. The
second step would occur in July 2012 and would increase the commodity charge from $10.86
per 1000 gallons to $12.50 per 1,ODO~gallons, which is the projected Mebane out-of-town sewer
usage rate at that time. For a sewer customer using 5,OD0 gallons per month, this would
increase a sewer bi11 from $64.46 to $72.66, ar an average increase of 12°/° to the total bill
across all customers. Based on current budget projections, the increase to $12.50 per 1,000
gallons would result in a revenue to operating expense ratio of approximately 6~°/a, with the
remainder of the operating budget, approximately $80,000, being provided by the General
Fund. After these two increases have occurred, the Efland rates would be reviewed on an
annual basis and adjusted as necessary to account fior inflation or other cost increases. The
Mebane out-of-town rate could continue tv be a useful benchmark against which to compare
the Efland sewer rate.
UNIQUE FEE
As the rates have gone up, there has been much discussion regarding the Richmond Hills
pump station perpetual maintenance fee of $13.00 per month, which is charged to every sewer
customer in the Richmond Hills subdivision in addition to the normal sewer bill. This fee was
approved and established by the BUCC in December 2001 as a way to have the residents who
use the pump station pay to maintain the pump station. This perpetual maintenance fee was
created in lieu of having the developer, Habitat for Humanity, pay aone-time, lump sum amount
upfront to cover the maintenance of the Richmond Hills pump station. Because the residents in
the Habitat for Humanity subdivision have low incomes, the suggestion has been made to
eliminate this fee from the bills. An alternative, but revenue neutral, option to the proposed rate
schedule would be to increase the base charge from $10.15 to $12.68 per month. This
essentially distributes the $13.00 per month fee that 43 customers were paying to the entire 222
customer base. It results in an increase of $2.52 per month for all customers who do not live in
Richmond Hills subdivision, as outlined in "Proposal 2, Alternate Rate increase Schedule" in
Attachment ~.
Finally, as part of this amendment to the Efland sewer rates, staff suggests removing the rate
schedule from the Efland Sewer Resolution and simply including the Efland sewer rate as part
ofi the County's existing rate and fee schedule. The Efland sewer rate currently exists in both
places, so when a change is made the rate must be changed in both places. The current
Efland Sewer Resolution will need to be amended to refer to the County's rate schedule rather
than "Attachment A", which is where the rate schedule is located in the Resolution. Thereafter,
the only place the rate will need to be amended will be in the County's rate schedule and this
can be accomplished during the normal, annual budget adoption process.
FINANCIAL IMPACT: Based on the existing sewer rate increase schedule provided at
Attachment 2, the Efland Sewer Fund is currently scheduled to be subsidized by the General
Fund in the amount of $54,000 for fiscal year 2011-2012 and $7,000 for fiscal year 2012-2013.
However, revising the rate schedule as proposed would result in an additional subsidy of
$98,000 x$25,000 for FY 2411-2012, $3,000 for FY 2412-2013} over the next two years when
compared with projected revenues based on the existing rate increase schedule. Eliminating
the Richmond Hills perpetual maintenance fee and distributing this cost to all customers would
have no financial impact on the County. There is no financial impact associated with removing
the rate schedule from the Efland Sewer Resolution.
RECQMMENDATI4N~S~: The Manager recommends the Board:
1. Approve the "Proposal 1" revision to the Efland sewer rate increase schedule;
2. Provide direction on the elimination and re-distribution of the Richmond Hills perpetual
maintenance fee as outlined in Attachment 1, Proposal 2, Alternate Proposed Rate
increase Schedule
3. Approve the amendment #o remove the Efland Sewer rate schedule from the Efland
Sewer Resolution, with the rate schedule to remaindee addressed as part of the
County's annual fee schedulelbudgetopproval.
__ _ ___
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Attachment 2 ~
NOTE: This is an excer t directs from the Efland Sewer Resolution
ATTACHMENT A
Amended 6102109
NOTE: This rate schedule is subject to change based on up~to-date projections of the
actual co st of operations and capital needs.
Date of
Im lementation
Rate Jules July 2010 Jul. July 2012 and
beyond
Base Charge - $7.25 $10.16 $14.12 $19.62
Every customer
pays this
regardless of
usage (minimum
charge)
Charge per 1000 $6.30 $8.82 $12.26 $17.04
gallons (or any
portion thereo f
15
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G~TY ~F M~BA~E ~VA~TER AN'D 5EWE1~ RATS ~C~EDLJLE
EFF~GT~11E A~ aF,~U~.Y ~, ~a~a
TOTAL TQTA~
iN$ID~ [5[81DE 1~1CATE~ tOUT$If1E OUTSIDE VIfATEI~
GA~.i.DMS WATER [NSiDE 5E1N~R ~ Auld WATER OUTSIDE ~~1~ER ~ AND
l~~Ed PEI SATE PER WATER 15,4 PER SEWER RAC`E' PER MATER X10.92 PER SEII~E~
MdN~I '1,p08 GAS., GOST 1,80!4 EAU, 1N~IC~~} 1,Q40 CAL.. Ca~T 1,04 GAL., OUTSIDE
2,000 $5.08 $1x. t6 $10.92 $21,08 $1 i.i8 $22.36 X24.84 $44..20
3,t}DO $5.08 X15,24 ~#@.38 ~~1,62 $1116 133,54 ~ $32,78 $66.30
4,4D0 15.08 X20.32 ~ X21,84 $42.18 $11,18 $44,72 ~~43,$$ $~~.~44 .
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7,QQ4 15.09 125.56 $218,22 X73,78 X11,18 574,2 ~78.4d $164.70
6,00 15.OS $40,64 $49.88 $84.22 $11.19 $89,44 X87',3$ $i7~.8~
9,UgU ~~.~~ 545.72 149,14 X94,68 11,18 ~i00.9~ X08,28 ~198,9a
'10,U00 $5,08 $8x.80 154.60 X105,44 ~11.1$~ $111.80 $t09.2D 1221.00
11,OD0 16.08 X58.88 180.09 $115.94 $11.16 $122,06 $120.12 $~43.1x
12,00 55.Q8 X0,99 1G5,52 $126,49 $11.1$ $134,1 $133,04 X265.20
13,004 $5.06 $8$.04 170,99 X131,02` $11,18 $145.34 5141 >96 $26?.3Q
14,Oa0 $5.46 $71,12 17fi.44 $147',56 ~11.t8 $18.52 1152..89 $30.40
15,Ofl0 '5.08 X76,20 $81.gx $158.14 $11,18 $167Y7D $19.90 ~331.5Q
16,00 15,x8 ~1,~8 $67,36 $189.84 $11.18 1178,89 $174.72 $353.5D
t7,p0~ 15,08 18G,36 192.82 $1 ~$.1B $11,18 $i 9x.45 5165.64 $37S.7D
16000 55.E $91.44 198,28 $180,72 $1 1.18 $201.24 1195.56 $397,80
19,000 15,0& ~ $96.52 1103,74 $2a~,~fl $11.18 $212.42 $207,49 1419.9D
20,000 $5.08 1101,40 1109.20 $~9a,8a X11.18 $~23.8~ $218.4a 4,42.x0
21,000 ~5.OS 1189-68 X114.64 $221.34 X11,18 X234.7'8 $228.32 $4&4,10
22,x00 $5,48 $111.7'6 112D,t2 $231,8$ $11.16 $245,96 1244,24 $486.20
23,D04 X5.08 5116.54 ~1 Z5,58 $42,42 $11.18 $257'.14 $251,1fi $545.30
24,OD4 58.08 5121.92 X131,04 $252,96 $11,1$ $269,2 1282,06 159G.4D
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31,000 $'5,08 $15T,4$ 1169.29 $329.74 $11,18 $348.68 $33$•62 $685.10
X2,404 55.U~i 11fi2,~ X974.72 x,937.28 X11.19 $351.75 X349.44 $707,2D
33,~4b $5.08 $~187,G4 X160.18 $347.42 $11.18 $36$,94 8340.38 $72~~30
94,44U $5.08 1t'T2.72 X165.64 $358,39 $11.1$ $38p.12 53it.29 $751.40
25,000 X5,08 $177.$4 1191.10 $368,90 $1116 $391,30 $38220 177.54
38F~40 $5,08 1182.88 ~1 A9.8$ $97'x,44 $11 ~ 18 $4Q2,48 $393.12 ~7~,80
37,4x0 X5.08 ~ra7.9s $z0Z.02 ~384.~8 $11.18 $413,66 X404,04 181770
38,040 $a,0$ 1103.04 1207.48 ~ $400,52 $11,19 $424.84 $4t4.~'i ~83~.80
39,000 X5.08 $198,12 . $212.94 $41tA6 $11,18 $438.02 145.88 $841,80
40~OOQ 55.08 $203,24 ~218.~4a 1421.6p ~11.t6 ~r~44r,20 $439.80 ~884.~
41,040 55,08 1248.28 ~~3.88 $43.14 3.11.18 $458.38 5441.7`2 ~906Y i o
4z,c~oa ~~,as ~~~~.~~ ~~~,~z ~4az.~~ $11+8 ~a8g.58 $45B.Od $928.2D
43,440 55.OS ~216,~4+4 124.78 $453.22 X11.18 $480,74 $40,56 $$84,~
aa,x00 $5,09 1223,52 ~a~a.~4 ' 3~463.7t'1 ~ti,18 X491,92 X450,48 ~9~'~,40
45,000 15,08 5229,50 $~~5.rp • ~a74~~o ~~ i . ~~ $8Q3.1Q 5494,40 $994.50
4fi,000 ~~5.08 X233,98 x251,16 1484,$4 $11,18 ~514.2~ $52.32 $1,x19.80
47,0x0 16.Q8 1238.76 $25G.62 $495.39 $11.18 ~5Z5,4~ X513,24 51,Q38,74
4$,040 $5,Q0 5243.84 $2&2.08 1505,2 $11,x@ $x3$,84 $524.14 11,Q60.84
4~+400 X5,08 $248,82 $287.aA 1596,46 ~11Y18 ~547,8~ 155.48 $1,b62.,~0
50,000 $8.f~8 $254AU X273,00 $5~7'.QD $11.19 X559,44 ~a4BAa 51,145,00
Ai! ~a~~g~ ~var 50,DOD 4apans
I€~slde W~t~r-$S.Q6J1000 g~ll~ns Oufsid~ W~ter» 11"1,1811000 gatl~n~
!~~lde so~#~ ~5.461i440 g~lf~r~s Ouiside Saws ~14,9~11000 g~11~nG
2004 gallo~~ r~intm~m ~sa,~~
~atere~ s~,nrer users not v~i~1~g M~~~r~~ w~f~r~ 3,3 5 x ~nsi~e ra ts
~nr~~t~r~d resl~i~rrffal sew er users $6t ,Qfl insld~ $82.40 ~~t~ld~
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