DATE: September 30, 2014
TO: Board of Mayor and Aldermen
FROM: Eric Stuckey, City Administrator
Russ Truell, Assistant City Administrator
Mark Hilty, Water Director
SUBJECT
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Consideration of Ordinance 2014-32, To Be Entitled: "An Ordinance Amending The City of Franklin Municipal code, Appendix A - Comprehensive Fees and Penalties, Chapter 18 - Water & Sewers For The Purpose of Updating Water and Sanitary Sewer User Rates". (11/11/14 BOMA 7-0) THIRD AND FINAL READING
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Purpose
The purpose of this memorandum is to introduce the discussion of water and sanitary sewer rate design based on Resolution 2014-57 as adopted by the Board of Mayor and Aldermen on August 26, 2014.
Background
The City of Franklin Water Management Department, through a cost of service analysis, has developed a five year financial plan to establish the necessary expenditures and revenues for operations. The plan considers the long term effect of capital projects and upgrades of facilities, and operational costs including projected increases in personnel, utilities, and other expenses that scale with changes in system size or customer base. Also, the plan incorporates the estimated effects of inflation and customer growth on revenues and expenses to allow the Board and staff to better plan for future system needs.
On August 26, 2014, the Board of Mayor and Aldermen adopted the plan (Resolution 2014-57), indicating that rate designs should reflect consistent rate adjustments over a five-year period to achieve required revenues. A consistent five year approach include adjustments of 3.5% annually for water and 6.75% annually for sanitary sewer.
Options
Two options were presented during the September 23, 2014 BOMA Work Session. The options included:
§ Option A: Adjustments to the consumption charges per thousand gallons for FY 2015 and 2016 to achieve 3.5% and 6.75% increases in revenues for water and sanitary sewer respectively.
§ Option B: Adjustment to the consumption charges per thousand gallons for FY 2015 and adjustment to the consumption charges and reducing the amount of water included in the minimum monthly charge for FY 2016.
Based on feedback received during this meeting, the BOMA has recommended Option A for further consideration. This option provides for rate adjustments as follows:
§ Water
o Inside of the City Limits: increase of $0.24/1,000 gallons on January 1, 2015 and January 1, 2016.
o Outside of the City Limits: Annual Increase of $0.37/1,000 gallons on January 1, 2015 and January 1, 2016.
§ Sanitary Sewer
o Inside of the City Limits: Annual increase of $0.46/1,000 gallons on January 1, 2015 and January 1, 2016.
o Outside of the City Limits: Annual Increase of $0.72/1,000 gallons on January 1, 2015 and January 1, 2016.
Financial Impact
The financial impact associated with Ordinance 2014-32 are projected annual revenue increases of approximately $330,000 for water and approximately $975,000 for sanitary sewer.
Recommendation
Staff recommends that the BOMA adopt Ordinance 2014-32 based on the five year financial plan.