TO: Honorable Mayor & Members of the North Port Commission
FROM: A. Jerome Fletcher II, ICMA-CM, MPA
TITLE: Discussion and Possible Action Regarding the Capacity Fee Changes, Line Extension Charges and Acceptance of the 2022 Utility Rate Analysis Report Prepared by GovRates, Inc.
Recommended Action
Discussion and possible action regarding the capacity fee changes, line extension charges and acceptance of the 2022 utility rate analysis report prepared by GovRates, Inc.
Background Information
In 2019, Commission adopted Resolution No. 2019-R-16, which established a rate adjustment schedule for FY19, FY20 and FY21 as well as establish that subsequent adjustments thereafter would be based on the Engineering News Record (ENR) Construction Cost Index, unless replaced by Resolution.
This year, Utilities budgeted for and secured the services of GovRates, Inc. to perform a Rate Analysis to verify the sufficiency of the rates charged for water and wastewater services. Utilities has seen substantial cost increases for items such as insurance, chemicals, fuel, electricity, supplies, and the payment to the Peace River/Manasota Regional Water Supply Authority over the last two years, resulting in the recommended 8% increase in FY22 followed by a 4% increase in FY23 and FY24. The ENR index reflected an 8% increase this year, so the analysis supports this recommendation under the existing Resolution.
This adjustment will automatically apply to user rates effective October 1, 2022. For the average residential water and wastewater customer using 3,000 gallons per month, beginning October 1, 2022, the bill will increase from the current $85.34 by $6.82 to $92.16 a month. These changes will help the City maintain a healthy financial forecast by maintaining 150% overall debt service coverage with at least 120 days rate revenue, while fully utilizing internal funding sources. Utilities will continue to closely monitor changes in economic conditions, customer usage trends and regulatory requirements throughout the year and if necessary, will bring back changes to the Resolution during FY23, which would be effective for FY24.
The Rate Analysis also analyzed all miscellaneous fees and recommends the following increases to appropriately recover the costs for providing these specific services.
• Reuse Rate increase from $.55/1,000 to $.68/1,000
• West Villages Bulk Reuse Water Rate of $0.21 per 1,000 gallons increased to $0.31 per 1,000 gallons
• Inside-City Bulk Water Rate of $5.50 per 1,000 gallons increased by $0.50 per year over next three years
• Paper Bill Fee $1 per month with annual increase of $1 for next two years to support City's Green Initiatives
• Confirmed the sufficiency and competitiveness of changing the Water Line Extension Fee from $43.75 per linear foot to $7,500 per Equivalent Residential Connection
• Confirmed the sufficiency and competitiveness of the $15,000 Wastewater Line Extension Fee per Equivalent Residential Connection
Finally, the Rate Analysis also recommends the following adjustment to the Capacity Fees for both water and wastewater.
• Water Capacity Fee increase from $1,872 to $2,319
• Wastewater Capacity Fee increase from $2,213 and $2,255
All recommended changes are more fully explained in the Executive Summary of the Rate Analysis along with detailed backup and methodology within the full report.
Strategic Plan
Develop and promote City governance that fosters trust and utilizes departmental strengths and innovative philosophies to facilitate effective and efficient provision of all City services.
Financial Impact
There will be a negative financial impact if recommended changes are not instituted, such as the inability to complete necessary repair and replacement projects, maintain adequate debt coverage and/or maintain current level of service.
Procurement
Attachments:
1. North Port Utility Rate Analysis Report
2. Utility Rate Analysis Presentation
3. Resolution No. 2019-R-16
Prepared by: Michelle Tipp, Utilities Business Manager
Department Director: Nancy Gallinaro, Utilities Director