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HomeMy WebLinkAbout09/14/2004 Adjourned Meeting i 341 ADJOURNED MEETING SEPTEMBER 14, 2004 - 5:30 P.M. - 7:00 P.M. YAKIMA CITY HALL - COUNCIL CHAMBERS 1. Roll Cali Present: Council: Mayor Paul George, presiding, Council Members Ron Bonlender, Dave Edler, Neil McClure, Mary Place, Bernard Sims, and Susan Whitman Staff: Dick Zais, City Manager, Glenn Rice, Assistant City Manager, Dave Brown, Water /Irrigation Manager, and City Clerk Roberts 2. Study Session regarding 2004 Domestic Water Utility Rate Study Dave Brown introduced Karyn Johnson, consultant with Financial Consulting Solutions Group, hired to perform a rate analysis. He stated they are proposing a 20% revenue increase in 2005 and a 3.5% increase each year through 2009. The last rate increase was in July 2001 and since then 6.2% buying power has been lost due to inflation. Other factors considered in the rate study were: • The need for capital improvements to our 100- year -old system • Increased costs of materials and treatment chemicals • Increase in fuel costs • Mandated improvements to protect public health • Improvements to maintain adequate fire flows and to meet increased population demand He noted that although the Capital Facilities Committee did not review the rate study in detail, they supported the idea of annual increases to keep pace with inflation. Karyn Johnson provided an overview of the considerations in the rate analysis: • How to fund projects in the six -year capital improvement program • Operating costs for 2004 -2009 • Revenue generated from existing rates compared to what should be (The revenue requirements analysis is on page 12 of the study report). The second part of the study was how to recover those costs from the different customer classes. Dave Brown referenced page 4 of the report relating to the rate design. In year one there is an increase in the ready -to -serve charge from $3.65 every two months to $7.30. The current charge no longer covers billing costs; we are dependent more on volume than the fixed rate. Calling Council's attention to page 18 of the report, he noted that out of 12 cities in the comparison chart, Yakima was number 12 (with the lowest rate). At the new rates, Yakima would 342 SEPTEMBER 14, 2004 — ADJOURNED MEETING rahk number 9. AWC's 2003 tax and user fee survey compares a 1,000 cubic foot average usage cost of $22.73, to Yakima's current cost of $14 and projected cost of $19.10 after the rate increase. Although 20% is "a big hit for the citizens ", Mr. Brown said the increase for the average customer is $2.25 a month. Mr. Brown next reviewed the proposed capital improvement projects projected for the years 2003 -2022, listed on page 8 -7, and described the following projects in detail: • The on -site chlorine storage facility currently under construction • The transfer of the Raney Well water rights to Kissel Well • Viola Avenue freeway crossing to a tunnel at Rudkin Road to avoid tunneling under the freeway • Filter rehabilitation currently underway • The water transfer from west side of SR 24 over the freeway through the steel main to K -Mart • East Mead, 1st to 10th Streets • Longfibre to S. 1st Street water main • Water Treatment Plant residuals handling - filters mud • Aquifer storage and recovery, • Water main replacements at Powerhouse Road Council Member Edler asked Mr. Brown to comment on the taxes included in the rates. Mr. Brown said there is a 14% utility tax; which will not be increased. City Manager Zais commented that the in- lieu -of tax has a long history. It is a revenue source that rises with growth. It is 14% on water and sewer utilities of which 10% is dedicated for General Fund support. The other 4% is divided to provide 3.5% for parks and .5% to support law and justice. These taxes were not factored into the rate increase. The discussion turned to the impact of this increase on residential users. Council Member Sims requested information on the number of users that have the different sizes listed on page 4. He also requested volume charges based on historic information for industries such as restaurants. Mr. Brown referred him to page 17 of the rate study, which provides a few scenarios with the impact from the proposed increase. He agreed to provide information on the number of water meters by size and customer size, and a comparison for Terrace Heights water. 3. Audience Comments (6:45 p.m. — 7:00 p.m.) Fred Millius, Facilities Manager of Yakima Regional Medical Center, commented that a 20% increase is a big hit for everyone. He suggested splitting the 20% over three years, prioritize what needs to be done, and then continue increasing 3.5% annually over the next few years. He then questioned the meter rental rate. After Mr. Brown commented on the low rental rate, Council Member Sims referred Mr. Millius to Mr. Brown for an estimate on the increase for his facility. 2 3 4 c3 SEPTEMBER 14, 2004 - ADJOURNED MEETING Clarence Barnett, representing the Central Washington Home Builders Association, asked questions regarding the aquifer storage, to which Mr. Brown responded that the City received approval from DOE and it will be part of the permit process. Mr. Barnett agreed with Council Member Sims in his desire to • have information on the impact to some industries available prior to the public hearing. Mike Fuerst, Del Monte Foods, asked Council to be equitable with the increase noting that a 20% increase on the $30,000 they currently spend is significant. Council Member Sims asked Mr. Brown to provide Mr. Fuerst with information on the potential cost increase and suggested that growers and shippers should be informed, too. Jar Arcand, Santiago Restaurant, commented that this is another hit on his business expenses and Council needs to be careful not to put restaurants out of business. In response to his question on whether the sewer rate would go up as well, Mr. Brown responded that the sewer bill is based on water consumption, not the billing amount. Raymond Hernandez, a student at YVC, commented that he was here to observe how people speak in public since he is taking a public speaking class. 4. Adjournment Mayor George adjourned the meeting at 7:00 p.m. READ AND CERTIFIED ACCURATE BY / — �S 0.S COUN EMBER DATE , 4 /--ST CO NCIL MEM DATE ATTEST: egerl-e- CITY CLERK PAUL P. GEORGE, MAYOR Minutes prepared by Karen Roberts. An audio and video tape of this meeting are available in the City Clerk's Office 3 ,