Loading...
HomeMy WebLinkAbout2008-01-16 - MinutesCity Council Water & Sewer Meeting Minutes January 16, 2008 Page I of 6 Member Aldermen Mayor Dan Coady Ward 1 Position 1 — Adella Gray V10 Ward 2 Position l - Kyle rt Cook CityAttorney Kit Williams � 1 Ward 3 Position 2—Robert Ferrell Ward 4 Position 2 - Lioneld Jordan City Clerk Sondra Smith ARKANSAS City of Fayetteville Arkansas City Council Water & Sewer Committee Meeting Minutes January 16, 2008 A meeting of the Fayetteville City Council Water & Sewer Committee was held on January 16, 2008 at 4:30 p.m. in Room 326 of the City Administration Building located at 113 West Mountain Street, Fayetteville, Arkansas. MEMBERS PRESENT: Alderman Kyle Cook, Chair; Alderman Lioneld Jordan; Alderman Robert Ferrell; Alderwoman Adella Gray STAFF PRESENT: David Jurgens; Gary Dumas; Susan Thomas; Paul Becker; Rainy Laycox; Kit Williams (for first 15 minutes) OTHERS PRESENT: Stephen Davis, Davis Business Planning (representing Elkins & Farmington); Mike Johnson, U of A; Darrell Froud, Tysons; Virgil Ward, Chamber of Commerce Alderman Cook called the meeting to order. Water and Sewer Rate Study Presentation and Discussion (with staff) Alderman Cook asked Alderman Jordan to explain an idea he had regarding the lifeline rate. Alderman Jordan suggested a plan that would charge residential customers a reduced rate for the first 2000 gallons and the regular rate for additional usage. He said this would cut down on paperwork for the staff. He said staff has told him that most elderly customers use 2000 gallons of water or less per month. This plan would effectively create a lifeline rate for the elderly. Kit Williams said something like this is doable. He said it is still a uniform rate which is what the law wants. He said he is concerned about some of the ramifications of trying to establish different rates based solely upon age or income or a combination of the two. It would also be a very complicated system to administer such a rate schedule. He said since this idea is uniform across the board, it would be much more legally defensible. Alderman Jordan said this method could also encourage conservation. Kit Williams said he envisions this being administered in a way that everyone pays the same rate up to the 2000 gallons. 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfayetteville.org City Council Water & Sewer Meeting Minutes January 16, 2008 Page 2 of 6 David Jurgens agreed that the first 2000 gallons would be billed at the reduced rate and anything over that amount would be billed at another rate for all residential customers Alderwoman Gray said this would seem to have a great deal of financial impact. David Jurgens said if we want to do this we would need to have HDR run the numbers again and determine what those rates would come out as and what the impact would be. Alderwoman Gray asked Alderman Ferrell if he hasn't had some experience with a structure like this. Alderman Ferrell said that he has had experience with something like this in the communications field. He said he likes the idea and it avoids having to get all the paperwork done to prove qualification for a lifeline rate. He said however that he would want to know what the financial impact would be. Alderman Jordan agreed. He said he had just come up with the idea because he knew there were many concerns on how a lifeline rate would be administered and how it would work. Alderwoman Gray wondered if the problem with the lifeline rates has to do with the fact that we are a municipality and not a regular utility. Kit Williams said there are different statutes that control various utilities and the government is always held to a very high standard in regard to fairness and equality. He said he thinks we could justify Alderman Jordan's idea because it could help reduce the need for increased capacity and save money for the City. Alderman Cook asked if we would give HDR the leeway to determine the number of gallons (cut off) or if we would just set it at 2000 gallons. David Jurgens said he doesn't think HDR could determine the number because we (the City) are the ones who know what our billing numbers are. In answer to a question from Alderman Ferrell, David Jurgens said there is currently a minimum billing of 1000 gallons. We always bill at least that. After that there is a flat rate for all residential. Kit Williams said this Committee needs to determine the kind of break we are talking about before we ask HDR to look at this. In response to a question from Alderman Cook, Kit Williams said we have to collect enough to pay all bonds. We cannot imperil any bonds we have out. Paul Becker agreed that we must collect sufficient revenues to operate the system. David Jurgens said in its research, staff has found no other city in Arkansas with a lifeline rate. He said Rogers has a separate organization to which people can donate money through their bill. That separate organization decides who is or is not qualified for help. He believes Alderman Jordan's plan is a lot easier and it also supports conservation. 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfayetteville.org City Council Water & Sewer Meeting Minutes January 16, 2008 Page 3 of 6 Mike Johnson suggested if the City is looking at an increasing block structure and wants to encourage conservation, in addition to the reduced rate for 2000 gallons and under we should create a third block at three times the average usage of 6000 gallons (or 18,000 gallons) at which the rates will be increased. This rate would offset the lower rate and would allow us to not increase the middle section. Gary Dumas said this would be very similar to what the City does with trash collection. The small container is charged at below cost and the largest container is above cost. Alderman Ferrell said it seems to be something we should look at. Paul Becker asked if it is the Committee's wish to look at the creation of three blocks as suggested by Mr. Johnson. There was general agreement to investigate three blocks for residential. Darrell Froud asked what would happen if that top third group goes away because all of a sudden they're getting the accelerated bill. He wondered if we would still have enough revenue to cover the bonds. David Jurgens said he doesn't think we will have very many residential customers who use 18,000 gallons a month. Gary Dumas said he doesn't think we would want to make the top amount 18,000 gallons. He suggested letting HDR look at where the break points are in the monthly utilization and let them find some typical break points. In response to a question from Alderman Cook, Kit Williams said he thinks this idea is a more legally defensible method of billing. Alderman Cook said the other discussion this Committee needs to have tonight is regarding the two options for rates on the sewer side. Paul Becker reminded the Committee that Option 1 is a phase-in to cost -of -service for industrial users. He said Option 2 is a quicker application of cost -of -service. David Jurgens asked if we want to use the same criteria for sewer as was just decided for water (the 2000 gallons and under rate). He said we have been looking at a lifeline rate for sewer customers also. Alderman Cook said he would like to see the information he asked for earlier today. He said he is curious as far as numbers are concerned. Alderman Jordan said he would like to see the same process followed for the smaller users of sewer as we are discussing for water. David Jurgens said that is the la and lb question. We still need to decide between Options 1 and 2. 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfayetteville.org City Council Water & Sewer Meeting Minutes January 16, 2008 Page 4 of 6 Paul Becker said in the water piece we have the rates and with sewer we have the two options plus the lifeline. Alderman Jordan said he wants to keep the lifeline in the sewer piece but he doesn't know how that will work. David Jurgens we would do it exactly the same way as with water. We'll let HDR determine the break points. Paul Becker said the scenario is Option 1 or Option 2 determining how we are going to allocate between the classes. Option 2 is application of cost -of -service right away within the classes. Option 1 phases in to cost -of -service. Alderman Jordan sought clarification that cost -of -service is what it takes to deliver the service. Paul Becker said that is correct. Alderman Cook opened the floor for public comment Mike Johnson wanted to verify if the University is considered non-residential rather than industrial. Paul Becker said the University is actually both, depending on the use of each building. Darrell Froud said from Tyson's perspective, they would prefer to phase in the cost -of -service over time because that allows them to budget more accurately. Virgil Neuroth said the industrial community wants the rates phased in over the longest period possible in order to budget. Alderman Ferrell said that we are looking at an adjustment to try to be equitable to the part of the population that is most vulnerable. In the past we have figured our rates for both water and sewer so that the more you are consuming, the cheaper it is to deliver. He said he would hate to see the rate cause any problems with loss of taxes or loss of jobs. He would prefer to go with the slower phase-in (Option 1). Alderman Jordan said he would prefer Option 2 because it would give the bigger break to the residential customers who have been carrying the ball a long time. Alderwoman Gray said she hears what the industrial users are saying about Option 1 giving them more time to budget. She thinks it is important to consider that. However, she does see what Alderman Jordan is saying also. She reasoned that if residential users have been carrying the industrial customers for awhile, maybe it is time to switch. Alderman Ferrell said he thinks we are switching. The question is how fast we switch. He thinks the industrial customers are making a reasonable request when they ask for the slower phase-in for a less dramatic impact. 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfayetteville.org City Council Water & Sewer Meeting Minutes January 16, 2008 Page 5 of 6 Alderman Cook argued that you can budget either way. He said he is leaning toward Option 2. Alderwoman Gray said she could go with Option 2. Paul Becker said the difference between Option 1 and Option 2 for the residential customer (assuming usage of about 5000 gallons) would be about $1 a month. In response to a question from Darrell Froud, Gary Dumas said for the industrial customer using 35 million gallons a year the difference between the monthly bill for Option 1 and Option 2 would be around $9,000 (Option 1 would be $101,000 and Option 2 would be $110,000). In answer to a question from Alderman Ferrell, David Jurgens said if the increase for industrial customers goes from 30% to 25%, other numbers in that option would have to go up in order to make up the difference. Alderman Ferrell asked if it could be argued that if the option that phases in the increase for the industrial customers (Option 1) would cost residential customers around $1 more a month, decreasing the 30% in the other option would cause the residential rate to go up less than $1. David Jurgens said that is correct. Paul Becker said we would have to put the numbers through the entire system to see exactly what the difference would be. Alderman Cook said the bottom line is we have to get roughly 20% in 2009 and the biggest revenue provider is the residential customer because of the number of customers. Alderman Ferrell moved for approval of Option 1. There was no second. Alderman Jordan moved for approval of Option 2. Alderman Cook seconded the motion. The vote was three in favor (Aldermen Jordan and Cook and Alderwoman Gray) and one against (Alderman Ferrell). Alderman Cook said this matter will be further debated at the Council level. David Jurgens said staff will get the information doing the rate reduction for usage of 2000 or less for both water and sewer from HDR. When staff receives this information, it will be distributed to the Committee. He said we could either have another meeting of this Committee or go forward to the City Council. Alderman Cook said we should have one more meeting after we have those numbers. Alderwoman Gray asked how long staff expected it to take to get the new numbers. David Jurgens said he doesn't expect it to take less than two weeks. 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfayetteville.org City Council Water & Sewer Meeting Minutes January 16, 2008 Page 6 of 6 Other Business David Jurgens said we received some good bids today on the Farmington WSIP. They came in below the rainbow sheet estimate. We will do a rebid on the Farmington Manhole Rehab next week. 2. The Next Water/Sewer Committee Meeting A meeting of the Water/Sewer Committee regarding the rate study will be scheduled at a later date. A Water/Sewer Committee meeting dealing with general topics is scheduled for Tuesday, February 12, 2008 at 5:15 p.m. (following the Council Agenda Session). 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfayetteville.org