HomeMy WebLinkAboutA001 - Council Action Form dated December 11, 2012 OLD CAF
ITEM #33
12-11-12
ITEM #
DA 10-23-12
COUNCIL ACTION FORM
SUBJECT: STORMWATER UTILITY SYSTEM RATES — TIER STRUCTURE
BACKGROUND:
After several previous discussions concerning a new impervious based stormwater
billing system, staff brought public feedback back to City Council on August 14, 2012. At
that meeting, City Council reviewed the feedback and asked staff to provide a simplified
three or four-tier system that still took impervious surface into account.
Storm Sewer Funding
The City's Storm Sewer Utility was established in FY 1994/95 to provide funding for the
routine maintenance of storm sewers. The need in the Storm Sewer utility has grown
over time as have regulations related to storm water management. Currently,
stormwater fees fund all operations and some capital improvement projects. In the past,
additional funding for stormwater management improvements has been provided
through grant programs and general obligation bond capital improvement funding.
Existing Billing
At present, the City charges a flat fee per utility account for stormwater. This charge is
currently $3.45. There are approximately 25,325 utility accounts in the City. These
accounts generate approximately $87,370 per month or $1,048,440 annually in
revenue.
Simplified Billing Structure for Impervious Surface
To provide a tier structure, staff used the GIS system to review impervious area by
parcel. To improve clarity of billing under the proposed tier structure, staff looked at the
amount of impervious area per existing utility account. This information was then used
as the basis to establish a simplified four-tier structure based on existing utility
accounts.
Goals
The goal of the simplified tier structure is to provide an understandable stormwater fee
that generates adequate revenue to fund the stormwater system serving Ames
residents. Customers having larger impervious areas generally pay more than those
with less impervious areas. Additionally, the cost to implement and administer the fee
should not exceed the value of the new rate structure.
Tier Structure Rate System
Staff used the impervious area per account to establish the four tiers shown below.
These ranges were then used to define the difference in cost for each tier as shown
below. Staff then used the data to calculate the fee for each tier, assuming that the new
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system was revenue neutral. The calculated values shown for Tier 1 were found to be
close in value to the current flat fee of $3.45 due to the high percentage of accounts in
that tier. It was decided to leave Tier 1 at the current rate of $3.45 and to use the
difference in cost for each tier as shown in the table below. This resulted in a small
overall increase in revenue, which may mitigate expected future rate increases.
The tier rate will be applied to all active accounts just as the current flat fee is
applied. This means that no account in the City will pay less than the Tier 1 rate.
This also means that apartment units and condos with individual accounts will
continue to be charged no less than this rate.
Current
Impervious Number Proposed Revenue Previous charge
Area/Account of Charge per $3.45 per per account
Tier Range (SF) Accounts Account Total Account with ERU*
1 150 -10,000 24,490 $ 3.45 $84,490.50 $84,490.05 $1.00 - $8.10
2 10,000.01 -30,000 688 6.90 4,747.20 2,373.60 $8.10 - $24.30
3 30,000.01 - 90,000 309 10.35 3,198.15 134.55 $24.30 - $72.90
4 90,000.01 - Max 89 $ 31.05 2,763.45 307.05 $72.90 - $699.84
$95,199.30 $87,305.25
*Assuming 5 th year commercial charge of $3.24 per ERU
Examples (per month char es
Number Tier Charge Total Tier ERU Charge Total ERU
Address Tier Of Per Charge Per Charge Per
Accounts Account Parcel gcPer Parcel
2500 Northwestern 1 1 $3.45 $3.45 $2.80 $2.80
Avenue to to
(Single Family $4.64 $4.64
Residential)
1921 Ames High Drive 2 16 $6.90 $110.40 $4.41 $70.56
Rear to to
(Ames High School) $10.53 $166.88
2801 Grand Avenue 2 69 $6.90 $469.20 $4.12 $284.28
(North Grand Mall) to to
$9.75 $672.75
2900 Hoover Avenue 3 3 $10.35 $31.05 $25.11 $75.33
(St. Cecilia Church) to to
$59.39 $178.17
3311 E. Lincoln Way 4 3 $31.05 $93.15 $96.59 $289.77
(Barilla) to to
$228.42 685.26
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Implementation Costs of Tier Structure Rate System
There will be some minimal administrative costs in switching from the current flat fee
system. Implementation of the tier structure rate system will require staff to update
parcels without planimetric (impervious) data. Staff time will also be required to verify
calculated values for contested valuations.
Ongoing Costs for Tier Structure Rate System
While minimal overall, some staff time and resources will be required to maintain the tier
structure rate system. This will be incorporated into existing work flow and will not
require additional funding from the new fees. Considerations are outlined as follows:
• Ongoing staff time to value newly constructed properties
o New construction impervious areas will be calculated by the
Stormwater Specialist as permits are issued.
o Tiers to be billed for new accounts will be provided to Utility
Customer Services staff for billing.
• Recurring updates and audits to tier valuations
o GIS Staff will carry out manual planimetric updates on an annual
basis or as new aerial photography is acquired.
o Whole system updates will be completed on an annual basis or as
warranted.
Additional Comments
In order to keep the administration of this new approach understandable to our
customers and to avoid additional administrative costs that would require higher rates,
the proposed tier structure rate system will not offer credits for tier structure rate
reduction. The only way to change the tier structure rate will be to reduce or increase
impervious area (e.g., by reducing paved parking area or installing additional impervious
surfaces) enough that a new tier is achieved.
As stated in the goals, the cost to implement and administer the new tier structure rate
system should not exceed the value of the new rate structure. No stormwater fee would
be applied to any impervious area without an associated utility account. This goal
resulted in a decision to not charge any stormwater fee to any impervious area
without an associated account. In reviewing the data, approximately 78% of
impervious area without a utility account would be in Tier 1. It is also important to note
that several of these parcels are homeowner association lots or park properties that
have trails and other public amenities on them. The cost of these impervious areas
would generally be covered by accounts that are already established.
Under the proposed fee structure, every property with impervious surface area
over 150 square feet will be charged a stormwater fee. Currently, only properties
with a utility account are charged the monthly fee. Currently 79 accounts show they
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have less than 150 square feet of impervious area. We will continue to review these
accounts to determine if they will have a storm water charge.
Iowa State University will not be charged stormwater fees, since the University is
legally under their own Municipal Stormwater (MS4) permit from Iowa Department
of Natural Resources.
ALTERNATIVES:
1. Direct staff to draft an ordinance amending the current stormwater code section
28.802 to:
a) Implement a four-tier based system based on impervious area as
presented above;
b) Implement a public relations campaign to notify the public of the
changes-land
c) Implement the new rates in February 2013.
2. Retain the existing stormwater flat-fee structure in place.
3. Proceed with the previously proposed ERU based fee structure.
MANAGER'S RECOMMENDED ACTION:
Since November 17, 2009, the City Council has reviewed at least seven different rate
structures. Most recently, Council listened to the concerns expressed by the public and
asked for a simpler fee system that still takes impervious area into account. The
proposed four-tier system creates a fee structure that will be easier for customers to
understand and for staff to manage.
Therefore, it is the recommendation of the City Manager that the City Council
approve Alternative No. 1, thereby directing staff to draft an ordinance creating
the four-tier storm water rate system described above.
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ORDINANCE NO.
AN ORDINANCE TO AMEND THE MUNICIPAL CODE OF THE CITY
OF AMES, IOWA, BY AMENDING CHAPTER 28 "UTILITIES",
DIVISION VIII "STORM WATER DRAINAGE SYSTEM", SECTION
28.802 "RATES ESTABLISHED"; REPEALING ANY AND ALL
ORDINANCES OR PARTS OF ORDINANCES IN CONFLICT TO THE
EXTENT OF SUCH CONFLICT; AND ESTABLISHING AN
EFFECTIVE DATE.
BE IT ENACTED,by the City Council for the City of Ames,Iowa,that:
Section One. The Municipal Code of the City of Ames,Iowa shall be and the same is hereby amended by
deleting st fig, thfaug=text and adding underline text as follows:
"SEC 28.802. RATES ESTABLISHED.
The rate charged for the storm water drainage system provided to customers of City utility
services to be billed on or after Tuly-:,2009,February 1,2013,is as follows:for each utility account which is billed
for one or more City utility services,a monthly rate of three dollars($3 nm shall be charged,paid and collected as a
rate for a storm water drainage system according to the followingtable:
able:
Tier Impervious Area/Account Range(SF� Charge per Account
1 150- 10,000 $3.45
2 10,000.01 -30,000 $6.90
3 30,000.01 -90,000 $10.35
4 90,000 and above $31.05
(2) For purpose of this section"impervious area"means areas that have been paved and/or covered
with buildings and materials,which include,but are not limited to,concrete,asphalt,rooftop, gravel and blacktop,
(3) A storm water utility customer may challenge their impervious area range calculation by filing an
appeal with the director of public works for adjustment thereof,stating in writing the grounds for the appeal. The
public works director shall cause appropriate investigation thereof and report the findings to the appellant. The
public works director shall consider the appeal and determine whether an adjustment is necessary,and make such
adjustment if appropriate. Said appeal must be filed within thirty days of notice of the initial establishment or
change of the city's calculation of a property's impervious area being mailed to the customer's billing address as
shown in the utility's records.
(4) A decision of the public works director which is adverse to an appellant may be further appealed
to the City Council within thirty days of receipt of notice of the adverse decision. The appeal shall include a survey
prepared by a registered Iowa land surveyor or professional engineer containing information on the total property
area,the impervious surface area and any other features or conditions which influence the hydrolo ig c response of
the property to rainfall events. Notice of the appeal shall be served on the City Council b, t�ppellant,stating the
grounds for the appeal. The City Council shall schedule a public hearing within thirtyddUs. All decisions of the
City Council shall be served on the appellant by registered mail,sent to appellant's billing address. All decisions of
the City Council shall be final.
(5) This section shall not apply to the utility accounts of a customer that has its own Storm Water
Permit for its Municipal Separate Storm Sewer System.
(Ord.No. 3265, Sec. 1, 3-8-94; Ord.No. 3434, Sec. 1, 5-27-97; Ord.No. 3564, Sec. 1, 5-23-00; Ord.No. 3833, 5-
24-05; Ord.No. 3917, 06-12-07; Ord.No. 3989, 05-12-09)"
Section Two. All ordinances,or parts of ordinances,in conflict herewith are hereby repealed to the extent
of such conflict,if any.
Section Three. If any section,provisions,sentence,clause,phrase,or part of this Ordinance shall be
adjudged invalid or unconstitutional,such adjudication shall not affect the validity of the Ordinance as a whole or
any provision,section,subsection,sentence,clause,phrase,or part hereof not adjudged invalid or unconstitutional.
Section Four. This ordinance shall be in full force and effect from and after February 1,2013.
Passed this day of
Diane R.Voss,City Clerk Ann H. Campbell,Mayor