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Home My WebLink AboutA001 - Council Action Form dated April 9, 2024 ORDINANCE NO. AN ORDINANCE TO AMEND THE MUNICIPAL CODE OF THE CITY OF AMES, IOWA, BY AMENDING SECTION 28.304(3)THEREOF,FOR THE PURPOSE OF INCREASING SEWER RATES ESTABLISHED, REPEALING ANY AND ALL ORDINANCES OR PARTS OF ORDINANCES IN CONFLICT TO THEEXTENT 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 amending Section 28.304(3)as follows: "See. 28.304. SEWER RATES ESTABLISHED. (3) For each monthly billing on or after July 1,2422 2024, each customer shall be charged a minimum monthly charge. The minimum charge for each location shall be fie-thirteen dollars and sixteen one cents($12.16 13.01). The minimum monthly charge may be prorated,based on a 30-day billing period, for the customer's initial and/or final bills, provided that in no case shall the prorated minimum monthly charge be less than fotw-five dollars and sixty seven cents ($4-.67 5.00). In addition, for all water metered beginning with the first cubic foot each month,each user shall pay three dollars and ern%irty- three cents($3.4433)per 100 cubic feet. Section Two. All ordinances,or parts of ordinances,in conflict herewith are hereby repealed to the extent of such conflict,if any. Section Three. This ordinance shall be in full force and effect from and after its passage and publication as required by law. Passed this day of )2024. Renee Hall,City Clerk John A.Haila,Mayor 1 Water Treat ment Plant d City of Ames 1800 East 13th Street FY 2024-25 Sewer Rates March 26 , 2024 CITY OF Ame STM WATER & POLLUTION CONTROL 2 Outline National & State-wide Trends in Rates Projected Need for Revenue Increase Translating Revenue Needs to Rates Projected Future Rate Trends Customer Perspective Council Direction :.a 3 F tw ' t National and State Trends Data sources include: • 2022 Cost of Clean Water Index National Association of Clean Water Agencies t' l • 2022 INSIGHT Survey Association of Metropolitan Water Agencies • 2023 Water and Wastewater Rate Survey American Water Works Association • 2023 Iowa Water and Wastewater Rate Survey City of Ames Water and Pollution Control '- '4 1 4 National Trends Average annual wastewater bill has doubled nationally in last 17 years ($569 in 2022 versus $284 in 2005) Average annual wastewater charges increased by 4.5% from 2021 to 2022 After 21 straight years where sewer charges outpaced inflation, this was the second consecutive year where rates G increased at a lower rate than the CPI. 5 National Trends : Water utilities continue to shift away from declining block rate structures (14%) and towards inclining block structures (51%) Wastewater utilities are predominately uniform block structures (74%) Monthly billing intervals are most common (82%), followed by quarterly (10%) and bi-monthly (7%) '' 98% of Water systems and 97% of Sewer systems have a monthly base or minimum fee 6 National Trends 2019-2023 Water National Average Annual Increase: 3.87% Sewer National Average Annual Increase: 4.43% Average Annual Increase in CPI: 4.80% Sources: 2019 Water and Wastewater Rate Survey,AWWA/Raftelis Financial Consultants 2023 Water and Wastewater Rate Survey,AWWA/Raftelis Financial Consultants Nationwide average for residential service, 1,000 cf/mo.,5/8"meter, 6 7 N Iowa Trends — :MEs,— Percent of Iowa Utilities serving >10,000 with a rate increase in past two years: Drinking Water: 82% �- More than 5%: 61% More than 10%: 36% 1 t � Wastewater: 77% More than 5%: 61% More than 10%: 41% 2023 versus 2021 Iowa Water&Sewer Rate Survey, City of Ames, Iowa 7 Iowa vs. National Trends 2019-2023 Water National Average Annual Increase: 3.87% Iowa Average Annual Increase: 4.29% Sewer A c"'OF �� Ames National Average Annual Increase: 4.43% Water Plant Iowa Average Annual Increase: 3.30% GrCeebmonyeak1ng October 16,2014 Average Annual Increase in CPI : 4.80% Iowa Sources: 2019 Water and Sewer Rate Survey, City of Ames, IA 2023 Water and Sewer Rate Survey, City of Ames, IA Iowa average for residential service, 600 cf/mo.,518"meter, 9 "4 Recent Rate Adjustments in Ames Water Sewer FY 19/20 7% FY 20/21 2% 5% • FY 21/22 6% -- FY 22/23 -- 5% Annual Average 3.75% 2.50% 9 10 Ames vs . Iowa & National Trends 2019-2023 Water National Average Annual Increase: 3.87% Iowa Average Annual Increase: 4.29% Ames Average Annual Increase: 3.75/0 Water Treatment ` Plant ma o,r SM Sewer ..... :`: National Average Annual Increase: 4.43% Sm A«„„f1TR g M iO CDIry,AnON Iowa Average Annual Increase: 3.30/ tYa(amea.orqhater , Ames Average Annual Increase: 2.50% a..,. P,Otectin natural r Average Annual Increase in CPI : 4.80% 11 Iowa Trends in Water Rates 2003 - 2023, Cities with population > 10, 000 with lime softening, 600 cf per month $60 ' • 11 1 ■ 1 111 ■ ■ $50 .1 1 • - •- • $40 ■ ■ ■ ■ 00 t $30 ■ ■ ■ ��*�� 1 ■ ■ ■ ■ �• 1 ■ $20 ■ $10 $0 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 — — — — — — — — — Statewide Median Ames Rates **Ames is at the 22"d Percentile, based on 2023 rates ** 1� 12 Iowa Trends in Sewer Rates 2003 - 2023, Cities with population > 10, 000, 600 cf per month $90 ' • 11 1$80 ■ ■ 1 111 ■ $70 •1 1 • - •- lies a ■ $50 1$40 0000 $30 $20 �� ■ ■ ■ $10 1 1 1 ■ $0 2003 2008 2013 2018 2023 — — — — — — — — —0 Statewide Median Ames Rates **Ames is at the 191" Percentile, based on 2023 rates ** 12 13 Current Water Rates ($/cf) Existing Winter All customers; all consumption $0.0278 A Summer Residential - Block 1 (First 1,000 cf) $0.0278 Block 2 (Next 1,500 cf) $0.0490 Block 3 (Over 2,500 cf) $0.0737 Irrigation &Yard Water Block 1 (First 2,000 cf) $0.0401 Block 2 (Next 3,000 cf) $0.0737 ~ 1► I� rr Block 3 (Over 5,000 cf) $01227 �IF� Non-Residential 3-= # � All consumption $0.0364 Non-Peaking Industrial All consumption $0.0278 13 14 Current Sewer Rates Existing Minimum Charge $12.16 All customers, per month Prorated Minimum $4.67 Consumption, per 100 cubic feet $3.11 All customers, all consumption 15 Forces Impacting Projected Expenses Nutrient Reduction Modifications-Phase 1 Project Status: Cost Change cryv p5.1.a 1 9 calsui mcm:�r.0 w, De scription:J ustification In 2013,the Iowa Department of Natural Resources(DNR)released the Iowa Nutrient Reduction Strategy.This strategy requires the largest wastewater facilities in Increased Regulatory owa-both municipal and industrial-to install process changes to meet nutrient removal targets. A feasibility study for the Ames Water Pollution Control Facility was conducted In 2019. That study recommended a phased conversion of the facility to biological nutrient removal over a period of 20 years. Following Council approval,it was forwarded to the Iowa DNR who approved the plan and the tmelme.That timeline is now included as a'Special Condition'in the facility's discharge Requirements permit WPC Plant FacilityImprovements Project Status: Scope Change Cost Chan a P 1 P 9 9 aw ecrv..mrrrr ion De scriptionU ust if is atio n It is necessary to plan for the orderly repair,replacement,and upgrade of Water Pollution Control('WPC)Facility equipment in order to continue high-quality treatment and comply with environmental regulations This project involves annual equipment repairs,maintenance.replacement and upgrades at the plant.This facilely became fully operational in November 1989 life expectancies for plant equipment vary from five to six years to more than thirty years. Infrastructure Renewal/ Comments Cogeneration System Maintenance Protect Status: Delayed c>onx Yroro�emern our Replacement DescnptionUustification This project includes the ongoing major maintenance needs of the'Water Pollution Control(WPC)Facility's cogeneration system and hauled waste receiving infrastructure.The specrfic project planned at this time is the construction of a new a fats,oils.and grease(FOG)receiving station. Comments The FOG receiving station will improve the receiving capabilities of the facility by paving the unloading areas,changing to more appropriate pumping capabilities. inaly Increases in routine equipment Sancta Sewer System Improvements Project Status: Scope Change Cost Decrease n' Y P 1 Pe 9 cxaai and commodity prices DescriptionlJual pr gram TNs r5 the annual program for rehabiliW lion and reconstruction of deficient sanitary sewers and deteriorated manholes at various locations throughout the Cely.Most problem areas are insewers mat can be bundled into a construction package for cost efficiency.or in problem areas deeper than City crews are equipped to handle. This program provides for those repairs by outside firms.Activities include rehabilitating or replacing manholes.repairing,or lining pipe,and similar work.The goal of this program is to identify and remove major sources of mflowfinfiaration as a means of lowering the peak wet weather flow at the treatment plant. Comments System improvement locations have been identified through the Sanitary Sewer System Evaluation(SSSE)field investigation completed in 2012,Through manhole inspections smoke testing,and televising,severe structural defects(ratings of'4'or'5'I were identified as pnonties within this program.It was onginally estimated Add a footer 16 Sewer Fund Rate Model — No Adjustments 30,000 25,000 20,000 15,000 10,000 c 5,000 S,�o 0 c 0 t — «� 22-23 23-24 5,000 U -10,000 R m -15,000 a� -20,000 W -25,000 -30,000 -35,000 -40,000 -45,000 Ending Fund Balance Operating Reserve +Percentage Rate Increase 16 17 Ar Approach to Rates : � ! TimingMagnitude& _ Meet debt coverage requirements _ (SRF requires 110% coverage) , • Meet operating reserve target �. Gradual increase over time until achieve 25% of each Fund's annual operating expenses w • Smaller percentage increases on a more frequent basis, as opposed to larger increases on a less frequent basis • Ideally, less than 10% at a time 18 Water and Sewer Rate Projections Last Current Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year Year 22-23 23-24 24-25 25-26 26-27 27-28 28-29 29-30 30-31 31-32 32-33 33-34 Water Fund 8% 9% 9% 9% 8% 8% Sewer Fund 5% 7% 9% 9% 9% 9% 19 Water Fund Rate Model 20,000 15,000 N O O O 69 10,000 V C R R m c 5,000 LU 1- 22-23 23-24 24-25 25-26 26-27 27-28 28-29 29-30 30-31 31-32 32-33 33-34 -5,000 Ending Fund Balance Operating Reserve Percentage Rate Increase 19 20 Sewer Fund Rate Model 30,000 25,000 20,000 N O O O 15,000 m c m CO10,000 a� c =a w 5,000 I I ■ 5% 7% ■ 9% 9% 9% A 22-23 23-24 24-25 25-26 26-27 27-28 28-29 29-30 30-31 31-32 32-33 -5,000 Ending Fund Balance OOperating Reserve +Percentage Rate Increase 20 21 Projected Average Annual Rate Increase in the Text Five Years Utilities are projecting to increase rates by anlip average of 4.94% per year over the next five off g p Y yea rs.,, ., "While future expected rate increases are anticipated to be on average fairly moderate, the increases are anticipated to be higher than in previous years" Association of Metropolitan Water Agencies'2022 INSIGHT Survey Add a rooter 22 '1�� Rate Projections vs. Statewide Trends SS Projected Monthly Water and Sewer Bill 600 cubic feet per month $275.00 $250.00 $181.58 $171.85 $225.00 $162.65 $153.95 $200.00 $137.96 $145.73 $175.00 $130.61 $117.09 $123.66 $150.00 $105.00 $110.88 $125.00 $100.00 $75.00 III • _ $50.00 ♦ ,. 25.00 35.66 $3 $3 $41.20 $43.24 $45.38 $47.63 $49.99 $52.48 $55.10 $ $33.99 $ 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 IiiiiiiiiiiiiiiiiStatewide Range Ames Residential ••Statewide Median 22 23 Revised Water Rate 0% Existing Increase New / Winter • • All customers; all consumption $0.0278 $0.0000 $0.0278 Summer Residential Block 1 (First 1,000 cf) • Block 2 (Next 1,500 cf) $0.0278 $0.0000 $0.0278 aot t 4 Block 3 (Over 2,500 cf) $0.0490 $0.0000 $0.0490 rlaot P 'yriePOW smoh cost Irrigation &Yard Water $0.0737 $0.0000 $0.0737 � S , at�an vhotcopnof I. Block 1 (First 2,000 cf) berepmreaot Block 2 (Next 3,000 cf) $0.0401 $0.0000 $0.0401 o-Ada Ha by -Ada ydea; EP Block 3 (Over 5,000 cf) $0.0737 $0.0000 $0.0737 191 a ACOMMffM To Cr $0.1227 $0.0000 $0.1227 Non-Residential All consumption $0.0364 $0.0000 $0.0364 Non-Peaking Industrial All consumption $0.0278 $0.0000 $0.0278 � ��tin9° 23 �esoul• p 24 Proposed Sewer Rates 7.0% Existing Increase Total Minimum Charge $12.16 $0.85 $13.01 All customers, per month Prorated Minimum $4.67 $0.33 $5.00 Consumption, per 100 cubic feet $3.11 $0.22 $3.33 All customers, all consumption 24 25 "'q Associated Rates and Fees High strength surcharge rates and Fats, Oils, and � - Grease (FOG) rates will increase by the same 7% Meter setting fees and laboratory analysis feesF : would be adjusted based on actual cost recovery These would happen as a part of the City-wide fee schedule adjustment later in the spring 26 Sample Customer Bill Median Use Residential Electric Storm Water Electric / Water Use Summer Water Summer Sewer Total 600 kWh and 600 cf $81 .10 $5.20 $30.88 $30.82 $148.00 Electric ECA -$2.52 -$2.52 Totals $78.58 $5.20 $30.88 $30.82 $145.48 Increase Due to Rate Change $0.00 $0.00 $0.00 $2.16 $2.16 Totals $78.58 $5.20 $30.88 $32.98 $147.64 % Impact on Total Bill 1 .48% 27 Recommended Action & Timeline Staff will bring an ordinance on April 9 that will: . Adjust Sewer Rates b OFF AdJ Y 7% YNew rates effective for bills due on or after Jul 1, 2024 SYST Timeline First reading on April 9 Second reading on April 23 Third reading and adoption on May 14 28 CITY OF `� WATER b POLLUTION CONTROL ` 29 Sample Customer Bill Minimal Use Residential Electric Storm Water Electric / Water Use Summer Water Summer Sewer Total 100 kWh and 100 cf $20.45 $5.20 $16.98 $15.27 $57.90 Electric ECA -$0.42 -$0.42 Totals $20.03 $5.20 $16.98 $15.27 $57.48 Increase Due to Rate Change $0.00 $0.00 $0.00 $1 .07 $1 .07 Totals $20.03 $5.20 $16.98 $16.34 $58.55 Impact on Total Bill 1 .86% 30 Sample Customer Bill Median Use Residential Electric Storm Water Electric / Water Use Summer Water Summer Sewer Total 600 kWh and 600 cf $81 .10 $5.20 $30.88 $30.82 $148.00 Electric ECA -$2.52 -$2.52 Totals $78.58 $5.20 $30.88 $30.82 $145.48 Increase Due to Rate Change $0.00 $0.00 $0.00 $2.16 $2.16 Totals $78.58 $5.20 $30.88 $32.98 $147.64 % Impact on Total Bill 1 .48% 31 Sample Customer Bill Large Residential Electric Storm Water Electric / Water Use Summer Water Summer Sewer Total 1 ,000 kWh and 1 ,000 cf $129.62 $5.20 $42.00 $43.26 $220.08 Electric ECA -$4.20 -$4.20 Totals $125.42 $5.20 $42.00 $43.26 $215.88 Increase Due to Rate Change $0.00 $0.00 $0.00 $3.03 $3.03 Totals $125.42 $5.20 $42.00 $46.29 $218.91 % Impact on Total Bill 1 .40% 32 Sample Customer Bill Small Commercial ( GP ) Electric Storm Water Electric / Water Use Summer Water Summer Sewer Total 2,000 kWh and 600 cf $254.40 $5.20 $36.04 $30.82 $326.46 Electric ECA -$8.40 -$8.40 Totals $246.00 $5.20 $36.04 $30.82 $318.06 Increase Due to Rate Change $0.00 $0.00 $0.00 $2.16 $2.16 Totals $246.00 $5.20 $36.04 $32.98 $320.22 % Impact on Total Bill 0.68% 33 Sample Customer Bill Small Commercial ( GP ) Electric Storm Water Electric / Water Use Summer Water Summer Sewer Total 5,000 kWh and 1 ,000 cf $612.60 $5.20 $50.60 $43.26 $711 .66 Electric ECA -$21 .00 -$21 .00 Totals $591 .60 $5.20 $50.60 $43.26 $690.66 Increase Due to Rate Change $0.00 $0.00 $0.00 $3.03 $3.03 Totals $591 .60 $5.20 $50.60 $46.29 $693.69 % Impact on Total Bill 0.44% 34 Sample Customer Bill Small Commercial ( GP ) Electric Storm Water Electric / Water Use Summer Water Summer Sewer Total 10,000 kWh and 3,000 cf $1 ,209.60 $10.40 $137.60 $105.46 $1 ,463.06 Electric ECA -$42.00 -$42.00 Totals $1 ,167.60 $10.40 $137.60 $105.46 $1 ,421 .06 Increase Due to Rate Change $0.00 $0.00 $0.00 $7.38 $7.38 Totals $1 ,167.60 $10.40 $137.60 $112.84 $1 ,428.44 % Impact on Total Bill 0.52% 35 Sample Customer Bill Commercial ( LP ) Electric Storm Water Electric / Water Use Summer Water Summer Sewer Total 20,000 kWh and 5,000 cf $2,181 .81 $10.40 $210.40 $167.66 $2,570.27 Electric ECA -$84.00 -$84.00 Totals $2,097.81 $10.40 $210.40 $167.66 $2,486.27 Increase Due to Rate Change $0.00 $0.00 $0.00 $11 .74 $11 .74 Totals $2,097.81 $10.40 $210.40 $179.40 $2,498.01 % Impact on Total Bill 0.47% 36 Sample Customer Bill Commercial ( LP ) _ Electric Storm Water Electric / Water Use Summer Water Summer Sewer Total 60,000 kWh and 15,000 cf $6,221 .55 $15.60 $602.81 $478.66 $7,318.62 Electric ECA -$252.00 -$252.00 Totals $5,969.55 $15.60 $602.81 $478.66 $7,066.62 Increase Due to Rate Change $0.00 $0.00 $0.00 $33.51 $33.51 Totals $5,969.55 $15.60 $602.81 $512.17 $7100.13 % Impact on Total Bill 0.47% 37 Sample Customer Bill Commercial ( LP ) _ Electric Storm Water Electric / Water Use Summer Water Summer Sewer Total 100,000 kWh and 20,000 cf $10,284.95 $46.80 $841 .62 $634.16 $11 ,807.53 Electric ECA -$420.00 -$420.00 Totals $9,864.95 $46.80 $841 .62 $634.16 $11 ,387.53 Increase Due to Rate Change $0.00 $0.00 $0.00 $44.39 $44.39 Totals $9,864.95 $46.80 $841 .62 $678.55 $11 ,431 .92 % Impact on Total Bill 0.39% 38