STORMWATER RATE TRANSITION - wycokck.org · Stormwater fee is designed to recover only the...

1/22/2019

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STORMWATER RATE TRANSITIONChamber of CommerceJanuary 22, 2019

11 JANUARY 2019 | PROPRIETARY AND CONFIDENTIAL

I. Context: Transition to Impervious Area

II. Program Costs: UG’s Needs

III. Cost Recovery: Equitable Approach

IV. Impact: Bill Impact

V. Stakeholder Outreach

AGENDA

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CONTEXT:TRANSITION TO IMPERVIOUS AREA

•Our top priority is protecting public health and our environment and complying with federal, state and local regulatory standards

• Commission requested evaluation of service area and solutions to address the following:

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Context: Why Focus on Stormwater?

•Reduce frequent flooding risks

• Improve water quality in our waterways

•Enhance and maintain drainage infrastructure in a 160 square mile service area

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• The Stormwater fund is fully funded by user fees; not taxes

• Only customers with an electric or water account pay $4.50 per month

• Current revenue is approximately $3.4M per year

Need to address equity of cost recovery in rate structureBlack & Veatch

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Context: What is the Significance of the Existing Stormwater Rate?

• Properties of different sizes pay the same fee

• The charge is not proportional to stormwater runoff from a property

• The current approach of a uniform fee contributes to significant inequities in cost recovery

•Under current stormwater fee, 93% of revenue is generated from Residential customers

•Non‐Residential customers make up 64% of impervious area

• As program costs increase to address operational needs, inequity in cost recovery will be exacerbated

Proposed rate structure reflects fair and equitable cost recovery from all propertiesBlack & Veatch

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Context: Why is UG focusing on transitioning to an impervious area based rate now?

Residential, 36%

Non-Residential, 64%

Impervious Area

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PROGRAM COSTS:WHAT ARE THE UG’S NEEDS?

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Program Costs Issues

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Approximately $2M of stormwater operation and maintenance costs are recovered from the wastewater fee

Current Situation Solution Needed

Operation & Maintenance

The services provided by the stormwater program should be funded from the revenue generated by the stormwater fee

Costs in the wastewater budget need to be moved to the stormwater budget

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Due to inadequate funding of maintenance, routine maintenance of the system has been deferred


Deferred Maintenance

Increase funding for enhanced and consistent annual maintenance activities

Provide funding to catch up on deferred maintenance

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Program Costs Issues

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Existing fee has only been able to fund 2 stormwater projects in the last 10 years for a total of $5M


Major Capital Expenditures

Significant investment necessary to address flooding and water quality issues

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The stormwater system has no emergency reserve set aside


Emergency Reserve

Industry best practice to maintain a operating reserve equal to 30‐90 days of operating expenses

A financial plan provides a reasonable forecast to design an evolving fee program10

What is included in the Financial Plan?

Projection of annual O&M costs

Projection of annual

existing and future debt service

Projection of annual cash financing of

capital

Projection of annual O&M

reserve requirements

Projection of annual mandatory transfers, if any

Stormwater O&M

Additional LOS

Deferred Maintenance

Existing G.O. Bonds

Proposed G.O. Bonds to fund

Capital

25% of Major Capital to be funded from Revenue

Achieve a 60‐day Reserve by Year 3

(2020)

PILOT

Indirect Costs

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Preview of Financial Plan

Revenue Requirements 2017 Prelim

2018 Budget

2019 Budget

2020 Projected

2021Projected

2022 Projected

2023 Projected

2024 Projected

Operation & Maintenance $697,800 $834,100 $849,000 $3,528,600 $3,626,500 $4,019,600 $4,365,500 $4,513,700

PILOT / Direct Costs 240,715 251,600 256,600 597,200 645,600 776,100 789,600 900,100

Debt Service 1,102,931 1,249,200 1,829,700 2,051,200 2,492,100 3,006,800 3,816,500 4,650,400

Capital Outlay 1,470,710 1,900,000 1,900,000 3,384,200 4,869,100 4,908,600 5,672,100 5,713,200

Transfer to Operating Reserve 0 0 0 135,200 141,500 331,400 56,000 16,100

Less: Miscellaneous Revenue ‐27,701 ‐17,600 ‐6,900 ‐4,100 ‐4,400 ‐5,700 ‐6,100 ‐5,100

Less: Use of Funds on Hand (a) ‐30,826 ‐817,300 ‐1,328,400 586,600 ‐557,000 753,600 ‐669,000 411,700

Net Revenue Requirements 3,453,629 3,400,000 3,500,000 10,278,900 11,213,400 13,790,400 14,024,600 16,200,100

(a) Proposed rate increases every other year

Fee Under Parcel Based Rate Structure:Estimated Billable ESUs 158,381 159,964 161,565 163,180 164,813

Monthly Fee per ESU (a) $5.90 $5.90 $7.35 $7.35 $8.55

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Priority Capital Investments Needed in the CommunityPrioritized on the basis of:

• Severity of flooding

• Property damage

• High visibility

• Potential to integrate with other community planning and funding

Over 80 problem locations identified and prioritized

47 of those 80 were located in 8 watersheds

Project Estimated Cost

Argentine 1 $5,572,900

Armourdale 3 $3,365,400

Armourdale 5 $23,105,700

Jersey Creek 1 $1,939,900

Little Turkey 2 $702,700

Mill Creek 3 $2,783,900

Mill Creek 5 $2,783,900

Mill Creek 6 $890,700

Muncie Creek 1 $3,358,500

Turkey Creek 4 $3,285,600

Asset Management Investment $5,000,000

Future Planning Investment $2,000,000

Engineering Design $4,622,400

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COST RECOVERY:EQUITABLE APPROACH

Impervious Area (IA)

• IA data layer in GIS (based upon 2012 LiDAR survey)

• Structures, Private Roadways, Parking Lots/Driveways

• 2017 Tax Parcel Polygons

• 2018 Tax Assessment Database

• Stormwater Customer Classes based on Tax Accessor Land Use Code

• No Exempt parcels

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Billable ESUs (Units of Service)

Bonner Springs, Edwardsville, Lake Quivira and Fairfax are not in the stormwater service area

Stormwater Customer Class

Number of Parcels

Allocation of Parcels

Allocation of Effective Impervious

Area

Allocation of Billable ESU (a)

Residential 47,520 74% 36% 39%

Cemetery 31 0% 0% 0%

Commercial 2,507 4% 30% 29%

Educational / Institutional

491 1% 7% 7%

Government 38 0% 0% 0%

Industrial 753 1% 18% 18%

Park / Recreation 30 0% 0% 0%

Undeveloped 5 0% 0% 0%

Utility 7 0% 0% 0%

Water Body 19 0% 0% 0%

Agricultural 814 1% 1% 1%

Vacant 11,581 18% 4% 3%

Unclassified 268 0% 2% 2%

Total 64,064 99% 98% 99%

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Preview of 2020 Rates – Single‐Family Residential

0

2000

4000

6000

8000

10000

12000

500 1000 1500 2000 2500 3000 3500 4000 4500 5000 5500 6000 7000 8000 9000 10000 15000 20000 More

PA

RC

EL

CO

UN

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IMPERVIOUS AREA (SQUARE FEET)

Residential Impervious Area Distribution

Residential Tier

Sq Ft of IA ESUsMonthly SW

FeeResidential Parcels

Tier 1 0 – 1,208 0.40 $2.36 6%

Tier 2 1,209 – 3,626 1.00 $5.90 76%

Tier 3 3,627 – 6,044 1.80 $10.62 13%

Tier 4 6,045 + 3.40 $20.06 5%

1 ESU = 2,420 square feet of Impervious Area

(based on median Residential IA)

ESU = Equivalent Stormwater Unit

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Preview of 2020 Rates – Non‐Residential

Sample Vacant Land Parcel

Gross Parcel Area (sf) 50,000

Impervious Area (sf) 0.10 X 50,000 = 5,000

Calculated ESUs 5,000/2,420 = 2.07

Proposed 2020 Monthly Fee $5.90 X 2.07 = $12.21

Sample Non‐Residential Parcel – Grocery Store

Impervious Area (sf) 91,311

Estimated ESUs 91,311 / 2,420 = 38

Proposed 2020 Monthly Fee 38 x $5.90 = $224

Vacant and Agricultural Parcels

• Application of 10% runoff coefficient to estimate stormwater runoff based on development of a site

• Cap gross parcel area at 2 acres (87,120 sf)

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•Factors to be considered in designing credits

•Quantity

•Quality

•Direct Discharge

•Magnitude of credits

•Maximum credit

•Technical & Administrative Requirements

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Credit Program – To be determined . . .

•In the context of this study, the following are not billable:

•Public Streets

•Public Medians

•Public Right‐of‐Way

•These areas are typically deemed an integral part of the overall stormwater conveyance system

•Hence, stormwater management costs associated with these areas are recovered equitably from all the customers

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What are not billable?

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IMPACT:BILL IMPACT

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Single Family Residential

Stats

# of Parcels 1


Gross Area (sf) 9,583

Residential Tier 2

Proposed 2020 Monthly Fee $5.90

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Medical Center

Stats

# of Parcels 5

Impervious Area (sf) 1,147,457

Gross Area (sf) 2,176,258

Estimated ESUs 1,147,457 / 2,420 = 474

Proposed 2020 Monthly Fee 474 x $5.90 = $2,797

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Church

Stats

# of Parcels 3



Estimated ESUs 65,420 / 2,420 = 27

Proposed 2020 Monthly Fee 27 x $5.90 = $159

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Retail Store

Stats

# of Parcels 1



Estimated ESUs 412,754 / 2,420 = 171


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Industrial

Stats

# of Parcels 3


Gross Area (sf) 1,287,198

Estimated ESUs 999,523 / 2,420 = 413


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• The difference in stormwater charges is largely due to user fees not reflecting the full “cost of service”

High equitable cost recovery

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Benchmarking: Program‐Cost‐Fee‐Customer Nexus

Example: Cost of Service Recovered Fully Through

User Fees

Seattle Public Utilities Philadelphia Water

Department

Bellevue, WA

Example: Cost of Service Recovered Through a

Combination of User Fees and Taxes

Kansas City, MO

San Diego

Example: Kansas City, MO

Stormwater fee is designed to recover only the

stormwater operating costs

Capital costs are recovered through taxes

Equity of recovery lower Challenge: Tax exempt don’t pay

Total Lot Size Based Fee

Total Lot Size Based Fee

Source: Black & Veatch 2018 Stormwater Utility Survey

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Benchmarking: The Stormwater Fee Structure

Flat Fee per Electric

Account

Flat Fee per Electric

Account

Impervious Area

Based Fee

Impervious Area

Based Fee

Flat Fee per Water

Account

Flat Fee per Water

Account

Fee Based on Meter Size

Fee Based on Meter Size

Flat Fee per Dwelling Unit Flat Fee per

Dwelling Unit

What do we see nationally with respect to Stormwater Fee

Structure?

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Benchmarking: Area Stormwater Charges

CommunityParcel Area

Based Basis

Average SF Residential Parcel $/Unit Note

Bonner Springs, KS No Flat Fee N/A $3.00 / Residential$5.50 / Non‐Residential

Kansas City, MO Yes IA 2,500 $0.50 / 500 sq feet

Lawrence, KS Yes IA 2,366 $4.37 / ERU

Lenexa, KS Yes IA 2,750 $9.08 / EDU

Olathe, KS Yes GA N/A $5.77 / 10,000 sq ft $5.77 / Residential

Overland Park, KS Yes IA 2,485 $2.75 / ESU

Shawnee, KS Yes IA 2,773 $6.00 / ERU

Topeka, KS Yes IA 2,018 $4.25 / ESU

Wichita, KS Yes IA 2,139 $2.00 / ERU

UG Existing NO Flat Fee N/A $4.50/ Water or Electric Account

UG Proposed Yes IA 2,420 $5.90 / ESU

STAKEHOLDER OUTREACH

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• Included in our Financial Plan:

•Multiple strategies to mitigate monthly bill impact:

• Rate Increases: Implement rate increases every other year

•Billable IA Units: Low runoff coefficient and gross area cap for Agricultural and Vacant Land customers

•Credit Program: Fee reduction for private stormwater management

•To Be Evaluated:

• Provide a phased in transition to equitable cost recovery to allow time for customers to budget for the new rate fee

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Financial Plan / Rate Refinement

• Refinement to policies, financial plan and rates based on feedback from

•Commissioners

• Targeted Stakeholder Meetings

•Public Open Houses

• Presentation of results to Commissioners in February

•Request for approval of impervious area based rates

•Request for approval to proceed with implementation tasks

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Refinement of Financial Plan and Rates

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