DATE: October 6, 2014
TO: Board of Mayor and Aldermen
FROM: Eric Stuckey, City Administrator
SUBJECT:
Consideration of Addendum (COF Contract No. 2014-250) to the Agreement of April 12, 2011 between the City and Berry's Chapel Utility, Inc. ("BCU") for the Collection of Sewer Service Charges.
Purpose
The purpose of this memorandum is to provide information to the Franklin Board of Mayor and Aldermen (BOMA) concerning an addendum to the existing contract with BCU for utility billing and collection service charges.
Background
City of Franklin ("City") and BCU have between 300 and 400 mutual customers where the City provides water and BCU provides sewer services. Under an agreement originally approved on December 14, 1999 and subsequently modified on June, 19, 2007 and April 12, 2011, the City bills the charges for sewer provided by BCU to these mutual customers as a line item on our water bills. The City also collects the gross sewer payments and remits them to BCU, less a fee of 7.5% for performing the billing.
At its outset in 1999, the sewer rates for BCU customers were set at 85% of COF "Outside the City" Water Rates. Based on an estimated consumption of 7,000 gallons the average customer sewer bill would have been $23.61. With 275 customers, the service fee payable by BCU to the City would have averaged $486.96 per month. In 2014, the average customer pays $74.59 for 7,000 gallons. With 350 current customers, the service fee paid to the City averages $1,957.99 per month or approximately $24,000 per year.
BCU has made inquiry about modifying this agreement which initiated this review by staff. In addition to the background noted above, staff has determined that the average cost to the City for personnel and resources related to the contract approaches, but does not exceed, $500 per month.
Financial Impact
BCU has presented the City with a proposed addendum for your consideration which includes a fixed fee of $300 per month, plus a variable fee of $.50 per customer billed. Such fee not only covers and more closely aligns the fee to the actual cost of service provided, but also continues the benefit to our customers of receiving and paying a single monthly invoice for services.
Options
1) Continue under the current contract; or,
2) Accept the proposed addendum.
Recommendation
Considering the costs and benefits to our mutual customers, BCU and the City, staff recommends that the City adopt the proposed addendum.