Loading...
HomeMy WebLinkAbout2003-001 Domestic Water System Base Irrig. Connection Charges ORDINANCE NO. 2003- 01 AN ORDINANCE relating to domestic water system connection charges of Chapter 7.56 of the City of Yakima Municipal Code, adding a definition of two - family dwellings to Section 7.56 020 of the City of Yakima Municipal Code, and modifying the base irrigation charge for certain parcels by amending Section 7.56 060 of the City of Yakima Municipal Code BE IT ORDAINED BY THE CITY OF YAKIMA. Section 1 Section 7.56 020 of the City of Yakima Municipal Code is hereby amended to read as follows. "7.56.020 Definitions. Unless the context specifically indicates otherwise, the meaning of terms m this chapter shall be as follows. 1 "Domestic water" means water conveyed by the domestic water system. 2. "Domestic water system" means that system of publicly owned waterworks that is the subject of YMC Chapter 7 68 3 "Domestic water treatment plant" means that portion of the domestic water system used for treatment of domestic water 4. "Distribution mains" means those domestic water system pipes used to convey domestic water from transmission mains to service lines. 5 "Distribution main system" means a series of distribution mams extending from transmission mains. 6 "Division manager" means the manager of the water /irrigation division of the city, or his or her authorized agent. 7 "Irrigation system" means the waterworks and all other city -owned property used for the purposes described in YMC Section 7.24.020 (as reenacted by Section 4 of Ordinance 97 -63). 8 "Irrigation system water" means water conveyed through irrigation system waterworks and used for the purpose of irrigation. 9 "Lot" shall have the same meaning as in YMC Chapter 15 02. 10 "Lot area" shall have the same meaning as in YMC Chapter 15 02. 11 "Parcel" shall have the same meaning as "lot." 12. "Parcel area" shall have the same meaning as "lot area." 13 "Service lines" means the pipes that extend from the distribution mains to the individual properties to be served. 14. "SFD" or "single - family dwelling" shall each have the same meaning as "dwelling, single - family" or "single - family dwelling" in YMC Chapter 15 02. 15 "Transmission mains" shall mean those domestic water system pipes twenty - four inches or greater in diameter, and related conduits, used to receive domestic water from the domestic water treatment plant and transmit it to a distribution main system. 16 "Two - family dwelling " shall have the same meaning as "two - family dwelling" or "duplex" in YMC Chapter 15.02. Page 1 • 17 "Water meter size" shall be determined by reference to the cnteria in the American Water Works Association Standards." Section 2. Section 7.56 060 of the City of Yakima Municipal Code is hereby amended to read as follows "7.56.060 Base irrigation charge. The base irrigation charge includes both an equitable share of the cost of the existing domestic water system and a reasonable estimate of the actual cost of connection of irrigation demand to the domestic water system (including costs associated with expanding the system) This charge is a function of the size of the irrigable portion of the lot to be connected. For single- family dwellings and two - family dwellings, tThe base irrigation charge shall be determined by multiplying the lot area (measured in square feet (sf)) by a rate of $0 09 /sf. For other parcels, the base irrigation charge shall be, at the property owner's option, determined either by multiplying the total lot area by a rate of $0.09/ sf. or by multiplying the permeable portion of the lot area by a rate of $0.15/sf. In no event shall the charge be applied to less than five percent of the total lot area for purposes of this subsection." Section 3 This ordinance shall be in full force and effect 30 days after its passage, approval, and publication as provided by law and by the City Charter PASSED BY THE CITY COUNCIL, signed and approved this 7th day of January, 2003 ATTEST ry Place, Mayor y 1- City Clerk Publication Date j40 3 Effective Date c1CTh Page 2 July 14, 1998 Mr Dueane Calvin Water & Imgation Manager City of Yakima 2301 Fnutvale Blvd. Yakima, WA 98902 Preliminary Report on Water Distribution Plant Connection Charges Dear Mr Calvin. We have completed our preliminary analysis of water distribution plant connection charges for the City's water utility The charge is designed to help recover the costs of the City's distribution system. This charge would apply to new customers connecting to the water system on existmg property that has not previously contributed a share of the cost of the distribution system either through a Local Improvement District (LID) assessment, developer contributions or other direct contributions. This charge would not apply to new development where the developer pays for the cost of connecting to the system. The methodology, assumptions and preliminary results of our analysis are presented herein. Background The principal purpose of water connection charges is to ensure that new customers pay an equitable share of the cost of the utihty's water system. State statutes and general guidelines for the development of water rates and charges allow a utility to recover the cost of the existing system, plus the actual cost of water system facihties necessary to meet the service requirements of new customers. In 1997, Black & Veatch developed "backbone" system water connection charges for the City's water utihty to help recover the cost of supply, treatment, pumping, transmission, and storage system facihties. The intent of this charge is to provide a means whereby "growth pays for growth" through front -end contributions apphcable to new connectors to the water system. Such a charge is implemented on a system -wide basis and, therefore, does not recognize the cost of local distribution facihties. Local distribution facilities are not typically included m system -wide "backbone" connection charges because it is difficult to equitably allocate such costs on a system -wide basis. In order to recover these costs, the City retamed Black & Veatch to develop a distribution system connection charge that would be assessed only on those properties benefiting from the distribution facilities that have not contributed their share of the costs of those facihties. Methodology There are several acceptable methodologies used m the development of connection charges that are commonly practiced m the industry which will provide Justifiable charges and also adhere to Washmgton state guidelines. The most appropnate methodology for a given utility is dependent upon the utility's specific circumstances. The methodology used to develop the "backbone water connection charges for the City was based on the existing and future capacity approach. This approach charges a Mr Dueane Calvin Jul} 14, 1998 City of Yakima Page 2 new customer for reserve capacity m the existing system and planned future capacity additions based on the quantifiable amounts and costs of reserve and future capacity This approach is appropnate for recovering the costs of supply, pumpmg, treatment, transmission, and storage components because the amount and cost of existing capacity and planned future capacity additions for these components can be readily identified. The distribution connection charge was developed usmg the system buy -m approach. This method is appropnate to use when data on the amount and pnce of existmg capacity and planned capacity additions m system components is difficult, if not impossible, to obtain. Under this approach, new customers pay their proportionate share of distribution facihties based on an amount equal to the average equity per customer m the existmg distribution system established by the existing customer base. The calculation of the distribution connection charge consists of the followmg four steps: • Determination of equivalent units, • Calculation of existing distribution system cost, • Calculation of credit for contributions to the cost of the distribution system, and • Determination of the connection charge. Results Table 1 summarizes existing distribution system costs. Costs presented m the table represent the distribution plant mvestinent as of December 31, 1997 It excludes mvestment m reservoirs and standpipes, which are mcluded m the "backbone" system water connection charge. Table 1 City of Yakima Water Utility Existing Distribution System Cost Description $ Land and Land Rights 62,088 Structures and Improvements 163 586 Water Mians 11,095 470 Hydrants 992,159 Water Services 4,177 484 Water Meters 1,050,353 Total 17,541,140 Table 2 presents the development of the distribution system connection charge for a 3/4 -inch meter The charge is calculated based on the distribution system investment from Table 1, less distribution contributions, divided by equivalent meters. Mr Dueane Calvin July 14 1998 City of Yakima Page 3 Table 2 City of Yakima Water Utility Distribution System Connection Charge Distribution System Investment $17,541,140 Less Distribution System Contributions $14 555,269 Net Distribution System Investment $2,985,871 Equr 3/4 -mch Meters (a) 24,976 Distribution Connection Charge per Equiv 3/4 -mch Meter $119 55 Table 3 presents the connection charges applicable for new customers served by water meter sizes up to 4- mches. These charges are determined by multiplymg the connection charge for a 3/4 -mch meter by a weighting factor representing the relationship of the flow capacity of each larger size water meter to that of a 3/4 -inch meter For meter sizes 6 -mches and larger, we suggest the City individually calculate the distribution connection charge using a weightmg factor based on the ratio of estimated actual water usage for the larger size meter to the average usage of a 3/4 -inch meter Table 3 City of Yakima Water Utility Distribution Connection Charge By Meter Size Meter Meter Connection Size Ratio Charge 3/4 1 00 $120 1 1 67 $199 11/2 3 33 $398 2 5.33 $638 3 10 00 $1,195 4 16 67 $1,992 After your review and comments. we will finalize our analysis. It has been a pleasure servmg you again. Please call me at (206) 224 -4609 or Karyn Johnson at (206) 224 -4678 if you have any questions or need additional information. ., Mr Dueane Calvm July 14, 1998 City of Yakima Page 4 Very truly yours, BLACK & VEATCHLLP Pamela R. Lemome, P.E. Project Manager L U 11 P R E S T O N G A T E S & E L L I S L L P ATTORNEYS VIA EMAIL. ORIGINAL TO BE MAILED MEMORANDUM To Dueane Calvin From Liz Thomas Date July 2, 1997 Subject: Connection Charges Introduction This memorandum summarizes the legal standards regarding charges that the City of Yakima ( "City ") may impose for connection to the domestic water system. We understand that the City wishes to establish charges both for wholly new connections to the domestic system and for conversion of irrigation demand to the domestic system. Charges for connection to water systems is addressed by RCW 35 92 025 The statute concerns who may be charged, when the charge may be imposed, and what costs the charge may cover Charge applies to property owners seeking to connect. The statute authorizes the City to impose a connection charge up "property owners seeking to connect" to the system. The charge may be imposed "as a condition to granting the right to so connect." This language leads us to make several recommendations "Property owner " It is probably fair to assume that the person requesting the connection is the property owner or is acting on behalf of the property owner unless the person indicates to the contrary You may wish to consult with Wastewater as to how they address this issue since their connection fee is established under the same statute "Seeking to connect." The ordinance establishing connection charges should specify that the charge we have sometimes described as a "conversion fee" is actually a charge that is imposed upon those who are seeking to connect an irrigation demand previously served through the irrigation system to the domestic system. "Condition of granting the right to so connect. Again, the ordinance should specify that a customer's right to connect either a new domestic demand, a new combined domestic /irrigation demand, or a new irrigation demand is conditioned upon the payment of the applicable fee If the customer is connecting only a new domestic demand, the ordinance should state that in the event the customer ceases to obtain service from a separate irrigation system, the customer will be subject to payment of the irrigation connection fee A PARTNERSHIP INCLUDING A PROFESSIONAL CORPORATION ANCHORAGE COEUR D ALENE LOS ANGELES PORTLAND SPOKANE TACOMA WASHINGTON D C Memorandum July 2, 1997 Page 2 Two types of costs may be included Statutes governing a city's connection fees for water and wastewater service authorize two types of charges 1 the "actual cost" of connecting the new customers 2 an "equitable share" of the cost of the existing system These elements are discussed in more detail below Because the Wastewater Division has recently performed a cost study to update its connection fees, you may wish to confer with them about the approach they have taken. Actual Cost of Connection. Under RCW 35 92 010, a city has full jurisdiction to fix water rates and charges, although rates must be uniform for each class of service, in classifying, the city may consider, among other factors, differences in cost of service and in capital contributions made to the system. This broad rate - setting authonty parallels the authonty of public utility districts to set rates and charges which was the basis for the court's approval of substantial water connection charges in Hillis Homes v Public Utility District No. 1 of Snohomish County, 105 Wn. 2d 288 (1986) (copy enclosed with the original of this memo) All actual costs, including the cost of adding treatment and transmission capacity to serve growth, may be included in this charge The Hillis Homes decision provides a good discussion of the range of costs that may be included here, and how future costs may be allocated between existing customers and connection charges for new customers. The charges approved in Hillis Homes were supported by a thorough cost of service study The study carefully allocated the cost of system improvements and expansion between existing and new customers, with costs allocable to existing customers to be covered through rates for monthly service The court rejected a claim that the charge was unlawful because it was calculated without regard the benefit received by various customers. The court reasoned that "the connection charges pay for only those improvements to the water system necessitated by the new customers, and hence will benefit them alone[ ]" The court also felt it was significant that the water system improvements would benefit customers by decreasing the fire insurance rating for the system, thus decreasing customers' insurance rates. Equitable Share of Existing System. RCW 35 92 025 authorizes a charge designed to make connecting property owners bear their equitable share of the cost of [the water] system. The equitable share may include interest charges applied from the date of construction of the system until the connection, or for a period not to exceed ten years, at a rate commensurate with the rate of interest applicable to the city at the time of construction or mayor rehabilitation of the system, or at the time of installation of the lines to which the property owner is Memorandum July 2, 1997 Page 3 seeking to connect but not to exceed ten percent per year; PROVIDED, That the aggregate amount of the interest shall not exceed the equitable share of the cost of the. system allocated to such property owners. Thus, in addition to charging new customers a connecting charge designed to cover the actual costs that the City will incur to serve growth, the City may also charge new customers an "equitable share" of the cost of the system. There are significant limitations on what may be included in the "equitable share " Only historic cost, not replacement cost or future cost may be considered. Boe v Seattle, 66 Wn. 2d 152 (1965) (Future costs may nevertheless be eligible for inclusion in the "actual cost" component of the connection charge) Only ten years of interest may be charged. The interest rate must reflect the City's actual rate, not the rate of inflation or the rate of increase in construction costs. Significance of GMA Comprehensive Plan. The capital facilities element of the City's current Comprehensive Plan may contain information regarding costs associated with improvements to the water system, anticipated connection charge levels, and anticipated revenues. Public comment on wastewater connection charges focused on similar Plan provisions. These provisions should therefore be reviewed. I hope this summary is useful. Please give me a call if you would like to discuss these issues further Enclosure cc Ray Paolella Forrest Walls Roger Wynne J:\ET\25739 -00.02 7V FM354.DOC BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No 1 For Meeting of 1/7/03 ITEM TITLE Domestic Water System Base Irrigation Charge Ordinance Revision SUBMITTED BY Dueane Calvin, Water /Irrigation Manager Dave Brown, Water /Irrigation Engineer Glenn Rice, Assistant City Manager CONTACT PERSON/TELEPHONE Dueane Calvin / 576 - 6480 SUMMARY EXPLANATION In 1997 City Council passed an ordinance that established the "Base Irrigation Charge" (Ordinance 97 -63 — YMC 7 56 060) The Base Irrigation Charge was established as part of the "domestic water connection charge" (Ordinance 97 -63 & amended by Ordinance 2001 -26 — YMC 7 56 040 YMC 7 56 060 "The base irrigation charge includes both an equitable share of the cost of the existing domestic water system and a reasonable estimate of the actual cost of connection of irrigation demand to the domestic water system (including costs associated with expanding the system) " The principal purpose of the domestic connection charges is to ensure that new customers pay an equitable share of the historic cost of the existing system, plus the actual cost of "backbone" water system facilities necessary to meet the service requirements of new customers. The intent of the connection charge is to reduce the magnitude of future financial impact on rates attributable to system growth This form of charge was chosen whereby some of the impacts are mitigated through front -end charges "growth pays for growth " Cont Resolution Ordinance _X Other (Specify) Contract Mail to Funding Source APPROVED FOR SUBMITTAL. �o City Manager STAFF RECOMMENDATION Staff recommends that Council approve the amendment YMC 7 56 060 BOARD /COMMISSION RECOMMENDATION COUNCIL ACTION Cont. Presently new connections are made utilizing system capacity paid for by existing customers, and this charge helps pay for expansions that will have to occur at some point in the future Please see attached memo from Black & Veatch and Preston Gates & Ellis outlining the methodology used to establish the domestic connection charges, including the base irrigation charge, and a memo from Elizabeth Thomas, Preston Gates & Ellis, providing an explanation of the thinking behind the development of this proposed ordinance change An example of the inequity experienced by a commercial development, is the WinCo property at the old Country Drive -In site The lot size is 13 9 acres or 605,484 square feet. When the base irrigation charge of $0 09 per square foot is applied to the development per YMC 7 56 060 the fee would be $54,493 56 However, they are only required to have 5% of the lot as landscaping, or approximately 30,274 square feet. When the base irrigation fee of $0 15 per square foot is applied to the actual landscaping portion of the development the fee would be $4,541 10, a fee much more reflective of the actual "infrastructure impact" on the domestic water system's capacity