HomeMy WebLinkAbout10/30/2007 Adjourned Meeting / Study Session 55 -1
ADJOURNED MEETING / STUDY SESSION
OCTOBER 30, 2007
8:00 - 9:45 A.M.
COUNCIL CHAMBERS - YAKIMA CITY HALL
1. Roll CaII
Present:
Council: Mayor Dave Edler, presiding, Council Members Ron Bonlender,
Micah Cawley, Bill Lover, Neil McClure, and Susan Whitman (present
after 8:06 a.m.)
Absent: Council Member Johnson
Staff: City Manager Zais, Assistant City Manager Zabell, Wastewater
Manager Doug Mayo, and City Clerk Moore
2. A. Wastewater Cost of Service Study and Rate Report
Assistant City Manager Zabell described the documents that had been distributed to
Council. As part of last year's budget process, Council received a memo dated
October 4, 2006. That memo summarized the 2004 -2007 Capital Improvement
Program (CIP). The projects listed are now completed and used $11 million from the
Wastewater Treatment reserve funds. As projected in that report, the cash balances
in those utility funds are now depleted to minimal levels. Today, our resources to
address any major emergency, let alone any mandated improvements, are
inadequate. The 2006 memo was intended to update Council of the financial status,
our obligations, major expenditures of capital, and convey that there is no money for
significant investment.
Over the past several years, we have done a large amount of work to enable us to
serve new and existing customers more efficiently, and to retrofit, upgrade, and
bypass sections of our current system not worth saving. The most important goal of
that memo was to advise the Council of staff's intent to initiate an update to our
financial planning model, which is what was distributed. The study's conclusion is to
increase retail rates. What is proposed is to phase in the increase at 3.5% each year
for three years for residential customers. The increase amount will vary in the other
classifications. The four -party agreement sets up how rates are established for
wholesale customers. Rate increases are necessary to allow us to meet our
mandated obligations, fiscal and contractual obligations, and to maintain an
adequate level of service to our residential base. To a typical residential user it
would mean an increase of $1.27 per month in 2008, $1.38 per month in 2009, and
$1.30 in 2010.
Much of the 2004 -2010 Capital Improvement Plan has been built, but because of
escalations in construction costs, about $23 million remains to be built over the next 3
to 4 years. Additional capital needs for 2011 -2016 represent about $40 million in
today's dollars. Although we may be able to obtain Public Works Trust Fund loans,
most of that money will come from our rate payers. We don't have the choice of not
building most of that infrastructure as it is either federally mandated or required by our
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ADJOURNED MEETING ,— OCTOBER 30, 2007
system due to its age. While CIP costs have escalated, it is notable that our
maintenance and operation costs have held the line. Those costs, from 2001 to 2006,
are $2 million under projections. Doug Mayo, the Wastewater Manager, can be
complimented for increasing productivity while maintaining costs. Expenses have
risen at a rate of 8.5% (chemicals, power, construction materials), while Payroll
expenses increased at only 3.7% a year. Both the City Manager and Wastewater
Manager deserve credit for building a financing plan over the last few years to serve
the community well yet control rates while costs skyrocket.
Doug Mayo, Wastewater Manager, answered Council's questions. With regard to
expanding our customer base,•growth is 1.5% per year. Wholesale customers are
billed based on cost and the percent of impact they have on the plant. How much is
spent by the plant affects their rate; also, how much and how strong the total flow is
affects their rates. But, the amount we charge our residential customers does not
affect their rates; there is no direct relationship. Mr. Mayo spoke about details in the
various sections of the study document and how they related to the cost increases.
He pointed out that if something isn't mandated, it is the first thing on the cutting
block when costs need to be reduced and those decisions slow down or stop
development of the city. Mr. Mayo went on to describe the strong waste component
of wastewater.
B. Wastewater Connection Charge Study
Mr. Mayo explained how connection charges are currently established noting that the
entire city is in the same rate class. With our large growth to the west, they propose
breaking the City into zones at 40 Avenue, creating Zones 1A and 1B. In this
manner, Zone 1B (to the west of 40 Avenue) will pay for their new pipes rather than
all new City customers. There would be no change to our existing Zone 2, those
areas outside of the city but within the 1985 grant applications. As we annex those
areas, they will become Zone 1 B. Based on construction costs, this proposal lowers
rates in Zone 1A by 22% and raises Zone1 B rates by 11%. They are also trying to
encourage `people to develop Local Improvement Districts (LID) within the city by
giving waivers. The proposal is to now give them a waiver for a year meaning that
after the LID is complete, they would have a year to either hook up to the sewer pipe
or pay $10 a month to hold the waiver. Although, by RCW, it is a requirement that
we "shall compel" people to connect to the sewer, we have chosen not to do that.
We feel allowing them to continue the waiver would be an incentive to hook up. This
would also avoid having the waivers sit there forever.
City Manager Zais explained that this study session is the beginning of the public
review process. It may or may not be something Council is ready to act on when we
do the budget policy issue. Mr. Zais reiterated that this is a big operation and it is
managed prudently.
3. Audience Comments — No one came forward to speak
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ADJOURNED MEETING — OCTOBER 30, 2007
4. Adjournment
McCLURE MOVED AND CAWLEY SECONDED TO ADJOURN TO 8 :30 A.M. ON
NOVEMBER 6, 2007 FOR A BUDGET REVIEW STUDY SESSION. The motion
carried by unanimous voice vote; Johnson absent. The business portion of the
meeting adjourned at 9:10 a.m.
5. Introduction of Morelia Delegation
Mayor Edler gave a warm welcome to the Morelia delegation expressing honor for
their visit to Yakima to engage with our citizens. A video presentation of Michoacan
was shown. Mayor Edler read a proclamation about our sister city relationship with
Morelia, Michoacan, Mexico, and declared the week of October 28 - November 3rd
as Morelia /Yakima Sister City Week.
Rogelio Diaz Ortiz, Morelia City Council Director, spoke to the Yakima City Council
through interpretation by Juven Garcia. On behalf of the delegation and the Mayor of
Morelia, he thanked the Yakima Mayor and City Council for their reception. He
described Morelia and presented a Coat of Arms of the City of Morelia to Mayor
Edler. He also gave him a DVD of Morelia, a music CD of both Morelia's and
Mexican music. He closed by extending an open invitation to the Mayor and Council
members to a visit. Following introductions and gift exchange, the session ended at
9:45 a.m.
READ AND CERTIFIED ACCURATE BY % ` �— ' I�
Cri CIL MEMBER DATE B
COUNCIL MEMBER DATE
ATTEST:
A if e�
CITY CLERK / 111111w DAVID E i LER, MAYOR
Minutes prepared by Linda Watkins. A CD and DVD of this meeting are available in the City Clerk's Office
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