HomeMy WebLinkAboutA002 - Council Action Form dated April 22, 2008 aap2z2 1a(o1 -*15-13 -orn
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ITEM #
DATE 04-22-2008
COUNCIL ACTION FORM
SUBJECT: SANITARY SEWER UTILITY RATE CHANGES
BACKGROUND:
As discussed during the FY 2008/09 budget process and in the Staff Report to the City
Council at the April 8, 2008 meeting; funding for the Ames sanitary sewer utility five-
year capital improvement plan will require rate increases. The first rate increase
anticipated to fund the capital improvement plan was a 10% increase for FY 09/10 with
an alternative of an 8% increase in FY 08/09. After discussion with City Council and
review of impact on the combined utility bills, staff received direction to prepare an
ordinance change to implement the alternative 8% increase for FY 08/09.
Future sanitary sewer rate increases will be driven primarily by the cost of the
disinfection capital improvement project and the increased cost of operations related to
disinfection. As of late March, the Iowa DNR has taken no action on the City's NPDES
permit application, and the possible regulatory requirements for this project have not
been fully determined. The rate increases for the sanitary sewer utility will be highly
dependent upon requirements for disinfection and future rate changes will be based on
the cost of the disinfection project.
Attached is the edited ordinance section reflecting the increased rates.
ALTERNATIVES:
1. Approve the proposed changes to the sanitary sewer utility rate ordinance to
increase metered revenue by 8.0% effective for monthly billing on or after July 1,
2008.
2. Refer the sanitary sewer utility rate ordinance back to staff with direction on changes
in rates or timing of the implementation.
3. Do not approve a rate increase at this time. The FY 08/09 budget does not include a
sanitary sewer utility rate increase, the rate increase could be delayed without
negatively impacting the FY 08/09 budget.
MANAGER'S RECOMMENDED ACTION:
The proposed rate increase will provide funding required for future capital projects for
the sanitary sewer utility. With the extensive capital improvement requirements for the
City of Ames utilities over the next five years, rate increases for multiple utilities in a
single year will be unavoidable. Rate increases are expected in FY 09/10 for the water,
electric, and storm sewer utilities. Implementing the sanitary sewer utility rate increase
in FY 08/09 will reduce the combined impact for City of Ames utility customers in FY
09/10.
Therefore, it is the recommendation of the City Manager that the City Council adopt
Alternative No. 1, thereby approving the proposed changes to the sanitary sewer utility
rate ordinance to increase overall metered revenue to the sanitary sewer utility by 8.0%
effective for monthly billing on or after July 1, 2008.