Loading...
HomeMy WebLinkAbout10/09/2007 Adjourned Meeting / Study Session 4 3 ADJOURNED MEETING / STUDY SESSION OCTOBER 9, 2007 8:00 -9:30 A.M. COUNCIL CHAMBERS — YAKIMA CITY HALL 1. RoII CaII Present: Council: Mayor Dave Edler, presiding, Council Members Ron Bonlender, Micah Cawley, Norm Johnson, Bill Lover, Neil McClure, and Susan Whitman Staff: City Manager Zais; Dave Zabell, Assistant City Manager; Dave Brown, Water and Irrigation Manager, and Deputy City Clerk Watkins 2. 2007 Domestic Water System Rate Update and Cost of Service Study Dave Zabell, Assistanfi City Manager, introduced Dave Brown, Water and Irrigation Manager, and Karyn Johnson, consultant with Financial Consulting Solutions Group, hired to perform a rate analysis. Mr. Brown gave background information. In 2004 there was a rate study covering the period of 2004 through 2009. Because revenues have not kept pace as predicted, reserves are being used making it necessary to do another analysis earlier than 2009. Also, costs have gone up faster than planned, e.g. 67% increase in chemical costs, supplies and maintenance over 20 %. He referred to how critical the availability of water is for fire suppression and new development in the city. He also spoke about the need to adjust installation fees as there is a gap in actual installation costs versus what we charge (approximately $400 less than cost). He referred to paying B &O tax on all water that is not consumed by a city entity for irrigation purposes and how he hopes to talk to the Legislature about why utilities are paying this tax and request it be reduced. Mr. Brown then gave an overview of the material in the various appendices of the report. Karyn Johnson described what is involved in doing the rate study and that the rates are developed with the expectation that they will recover all the costs of the utility. She reviewed the Executive Summary and gave three scenarios: A) Continue the last two years of the prior rate study with 3.5% increases each of those years. Increases would need to be 9.5% for 2010 through 2012. This strategy results in a cumulative increase over the study period of 41%. B) Maintain the original proposed 3.5% increase for 2008 and increase by 5% in 2009 with future increases smoothed equally over the remaining three years of the forecast period. 8.5% increases each year are proposed for 2010 -2012. This strategy results in a cumulative increase over the study period of 39 %. C) Smooth the increases over the study period. This results in the lowest cumulative increase of 34% but higher increase would be in the earlier years. There was discussion with regard to the billing system and Council Member Lover asked about funding of the main that was replaced in the railroad underpass project. Mayor Edler expressed concern about having done a five -year study and 44 STUDY SESSION - DOMESTIC WATER SYSTEM RATES OCTOBER 9, 2007 three years into it again considering adjusting rates. He asked why we're looking at various scenarios rather than considering implementing a rate ordinance that provides for automatic increases based on indices that would be effective the first of each year. Ms. Johnson explained that the automatic adjustment would be something to consider following the five -year study period. During the years not covered by a study, it could be a minimum adjustment. In our current situation, though, inflationary increases in the indices would not cover what is required. Although it would keep up with the day -to -day, it would not keep up with major capital requirements. Council Member Lover asked if we are considering reprioritizing our public projects and Mr. Brown assured Council that many projects have been spaced out and only the essential items are in the proposal. • Council Member Bonlender asked what effect the Black Rock project would have on the City's water supply Mr. Zabell stated there may not be any direct benefit but there would probably be some indirect benefit if the project comes to fruition due to resource management. Also discussed was the status of the new billing system. A vendor has not yet been selected. Mr. Zais explained that the implementation costs are less than originally anticipated but if we include allowing the use of credit cards, there will be a service fee that could amount to as much as $100,000 a year. Those service fees have not been included in this rate study. Mr. Zabel) suggested Council study the information provided in the cover sheet from Ms. Johnson as this will come before Council again as a policy issue during the budget sessions and it will be then that a decision will have to be made on which scenario to implement. 3. Audience comments (9:15 — 9:30 a.m.) — No one came forward to speak. 4. Adjournment WHITMAN MOVED AND McCLURE SECONDED TO ADJOURN. The meeting adjourned at 9:06 a.m. , j. READ AND CERTIFIED ACCURATE BY co_uN. IL M MB R DATE 12 ,- 4 0 1 -0 G I NCIL MEMBER DATE ATTEST: int-Az5-L CITY CLERK DAVID EDLER, M ` ' •' Minutes prepared by Linda Watkins. A CD and DVD of this meeting are available in the City Clerk's Office 2