HomeMy WebLinkAboutA001 - Memo dated April 2, 1992 from City Manager to City Council on sewer rate adjustments AMES
TO: Mayor and City Council
FROM: Steven L. Schainker, City Manager
DATE: April 2, 1992
SUBJECT: Proposed Water and Sewer Rate Adjustments--Decision Time.'
Over the past two years, City staff has warned the City Council of the
impending need for a water rate adjustment. Over the past five years, liter-
ally hundreds of thousands of dollars of savings to our customers have been
realized by utilizing cash reserves in our Water Fund to pay for capital
improvement projects, thereby eliminating costly interest payments associated
with bond financing. Now that the cash reserves have depleted, water rates
need to be adjusted to replenish these reserves and provide for adequate
funds to cover projected operating expenditures over the next five-year plan-
ning horizon, as well as to cover needed capital improvement projects. Dur-
ing the last three months, staff has gone into great detail to justify these
proposed water and sewer adjustments. Based on final actions by the Council
regarding the operating budget and capital improvement plan, a final rate
study report has been updated and is attached for your review.
The one issue that still remains involves the structure of our water rates,
whether flat or declining block. It should be emphasized that the City staff
has no preference on this matter. Either structure will be designed to gen-
erate sufficient funds to cover our system needs for the five-year planning
horizon. However, the Council should be aware of the effect either option
will have on certain categories of our customers. Therefore, we have high-
lighted this effect on the three columns to the left on the last page of the
study.
In order that you can have sufficient time to review this very important mat-
ter, I am sending this information to you on April 3, even though I will not
ask for a final decision until April 14. Hopefully this extensive lead time will
allow you to discuss this issue with various groups in the City (which should
include large users as well as residential customers) .
I will bring this matter before the City Council on April 14 for an ordinance
adjusting both water and sewer rates. Hopefully on April 28 you can pass
this ordinance on second and third reading. It is our intent that a notifica-
tion letter be sent to all customers with bills mailed out beginning May 1, and
that the actual rate adjustments would take effect for consumption that
occurred during the monthly billing cycles beginning May 20 and thereafter.
This schedule will allow our customers to be notified approximately 2-1/2 to 3
weeks in advance of the rate adjustment effective date.
I would ask that you retain the copy of the attached report and bring it to
the April 14 meeting so that we will not have to reproduce another document
for you. If you have any questions, please do not hesitate to contact me. I
should emphasize that by adopting the attached report, we are merely commit-
ting to the first rate adjustment. Obviously in two years--with updated
numbers--the actual timing and magnitude of the second water rate increase
will have to be adjusted accordingly.
/lvz
attachment
c: Tom Neumann, Water/WPC Director
Steve Goodhue, EDC Chamber of Commerce
Mary Walter