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07-16-84 v MINUTES OF THE SPECIAL CALLED MEETING OF THE ATLANTIC BEACH CITY COMMISSION HELD AT THE CITY HALL ON JULY 16, 1984 AT 7:15 P.M. PRESENT: William S. Howell, Mayor-Commissioner William I. Gulliford John W. Morris, Jr. Catherine G. Van Ness, Commissioners AND: A. William Moss, City Manager Claude L. Mullis, City Attorney Adelaide R. Tucker, City Clerk ABSENT: Robert B.Cook, Sr. , Commissioner The meeting was called to order at 7:15 p.m. by Mayor Howell to discuss a proposed agreement with Robert Stubbs, Inc. , Financial Advisers-Financial Analysts, to revise the City's wastewater user charges to meet EPA require- ments. Mr. Stubbs said that they were asked to give a proposal to convert the exist- ing plant wastewater user charges to a form of user charge that is approvable by the regulatory agencies. He was advised by Mr. Moss that the time for comple- tion of the project is approximately 10 days. Because of the short time frame Mr. Stubbs proposed a reduced-scope study from that which he would normally do. He recommended the reduced-scope study be undertaken immediately. That would involve the conversion of the existing flat rate to a flat rate plus a volume charge together with a maximum quarterly charge, which based on their other studies will pass EPA and DER's requirements. The proposal consisted of three parts: Part A. Study for Submission to EPA DER for a flat rate of $3,000 payable on completion of the study for submission to EPA-DER; Part B. To respond to any additional EPA-DER requirements on an as required basis of $45.00/hour, and Part C. Fine-tune user charge structure on as required basis of $45.00/hour. Following discussion, Commissioner Gulliford moved for the following: Motion: Enter into an agreement with Robert Stubbs, Inc. at the fees proposed on page five of his quotation. The motion was seconded by Commissioner Van Ness. Commissioner Gulliford asked specifically what was the requirement on the ten days. Mr. Moss explained that EPA-DER wants to see the structure of our charges within ten days. They do not expect us to pass the Ordinance first. Following discussion, the question was called and the motion carried unanimously. There being no further business to come before the Commissio , ye Mayo declared the meeting adjourned at 7:31 p.m. (SEAL) 2 Will - . 'owe 1 Mayor-Commission r d E�" 15��� e aide R. Tucker City Clerk NEW ADDRESS - 1250 South McDuff Avenue 32205, 384-4772 ROBERT STUBBS, INCORPORATED FINANCIAL ADVISORS — FINANCIAL ANALYSTS 701 Fisk Street • Suite 340 Jacksonville, Florida 32204 Telephone(904) 354-6350 July 14, 1984 Mr. Bill Moss City Manager, City of Atlantic Beach P.O Box 25 Atlantic Beach, Florida 32233 Re: Proposal for Revision of Wastewater User Charges to Meet EPA Requirements Dear Bill, We propose herein to perform an analysis to convert the City's current wastewater user charge structure to an equivalent structure that will meet EPA guidelines and regulations. The analysis, conclusions, and recommendations will be presented in a letter report appropriate for submission to the regulatory agencies as a basis for their evaluation of the City's user charge structure. There are several crucial features of the present study: 1 . ) Sensitive nature of converting from a flat rate to a volume-proportional rate that will produce approximately the same amount of revenue and leave most customer bills approximately the same as under existing rates. 2. ) The time allowed for completion of the project is very limited; i.e. , less than two weeks. 3.) In order to develop an approvable user charge structure in the form desired by the City, a quite substantial amount of documentation is required. To endeavor to satisfy all of these aspects while at the same time holding the cost of the study to a low level, we recommend that the following approach be taken: 11 First, perform the reduced-scope analysis proposed herein. This reduced-scope study is designed to develop a user charge structure that meets the City's requirements within the time requirement. This study will have somewhat limited documentation because of the time constraint, but it will be designed to be adequate as a basis for EPA-DER evaluation. 11 Second, subsequently perform any additional analysis and documentation that might be needed to achieve EPA-DER approval. 11 Third, subsequently fine-tune the user charge structure to ensure that it achieves the objective of limited disparity with existing user charges for the majority of customers. A trial computer run of the new structure is recommended prior to its implementation. NEW ADDRESS - 1250 South McDuff Avenue 32205, 384-4772 1 . Introduction. In order to conform to EPA requirements upon grantees under PL 92-500, the basic requirement is to levy adequate and equitable wastewater user charges. The concept of equity is as follows: Each user of the system should be charged for wastewater service in appropriate direct proportion to the benefit he receives form such service. We have performed approximately 40 such studies throughout the Southeast. Our experience in these studies and our knowledge of a large number of EPA-approved wastewater user charge structures indicates that the conversion of the EPA concept of equity to an appropriate cost recovery structure requires that the user charges for recovery of O&M costs be in some direct sense volume-functional. That is, each user should be charged based appropriately upon the volume of effluent he returns to the waste stream. In the City's case, it is necessary to convert the existing flat rate to an EPA-approvable system which is based upon the volume each user returns to the waste stream. There are three critical considerations: (a) The determination of the amount of effluent each user returns to the waste stream can be based upon estimates for each customer classification, but must be credibly documented in order to achieve approval by the regulatory agencies. (b)) The resulting volume-functional user charge structure should recover the same amount of revenue as existing user charges. (c) The charges levied upon each customer should not differ significantly form those under the current structure in order to avoid public disruption in special cases; however, it is likely that there will some differences in customer bills under the new and old systems. 2. User Charge Structural Alternatives. User charge structures approved by the regulatory agencies have been of the following general forms: (a) All-volume Charge Structure. Such structures are based upon the percentage of water consumption that is determined to be returned to the waste stream in each customer classification. The periodic charge levied upon each user is calculated as his cost per unit of water consumption; there are no additional charge components in this case. (b) Volume and Fixed Charge. This structure involves two charge components: (i) A fixed quarterly base charge per metered account that is designed to recover a portion of the fixed costs the utility incurs in providing the service; e.g. , administrative costs. (ii) A volume charge that recovers all other costs. An hypothetical illustration of such a charge for single-family residential users is: $10.00 per quarter per account plus $0.50 per thousand 2 NEW ADDRESS - 1250 South McDuff Avenue 32205, 384-4772 gallons of water consumption. This is not based upon an estimate of the City's requirements. (c) Above Forms with a Maximum Charge. Either of the above forms might have a maximum quarterly charge designed to protect users from disproportionately high wastewater charges resulting from high lawn irrigation water consumption. Such maximum must be documented by data showing that water consumption above that associated with the maximum is not likely to be returned to the waste stream. Such maximum quarterly charge is sometimes designed for applicability only during high irrigation periods. It is our opinion that the most equitable user charge for. the City will be that consisting of a fixed quarterly base charge per account plus a volume charge together with a maximum quarterly charge; the latter requires credible documentation based upon consumption/discharge patterns in order to achieve approval by the regulatory agencies. It is further felt that the fixed quarterly base charge should be maximized with respect to the volume charge in order that the new volume-functional user charge will be less of a departure from the existing flat rate user charge structure. Bob Bates has suggested that he can provide an engineering justification for treating the O&M expense allocable to infiltration/inflow (1/I) as a nonvolume-functional expense; hence, this portion of O&M expense could be recovered as a part of the fixed quarterly base charge rather than as a normal part of the volume charge. This feature will serve to increase the fixed quarterly base charge with respect to the volume charge as is desirable in the City's case. 3. Statement of Scope. We propose to perform the following tasks in order to develop and document a wastewater user charge structure designed to meet regulatory agency regulations and guidelines: PART A. STUDY FOR SUBMISSION TO EPA DER. Task No. 1 . Consumption/Discharge Data. Develop the needed data structure of water consumption of wastewater customers from utility records; basically, a customer distribution is required showing the number of customers within each water consumption increment for each quarter over a period of one year. Moreover, the quarterly consumption of specific customers (especially single-family residential) over the one-year period must also be available for analysis. Analyze the consumption/discharge data and determine the amount of effluent returned to the waste stream by each type of user. Determine whether or not the current customer classifications are consistent with the consumption/discharge data; revise customer classifications as appropriate. The City is expected to provide the needed data in the appropriate form for this part of the analysis. 3 NEW ADDRESS - 1250 South McDuff Avenue 32205 , 384-4772 Task No. 2. Justification of a Maximum Charge. Based upon the consumption /discharge data of Task No. 1 , identify and document support for a maximum wastewater volume of discharge per quarter for single-family residential users. Task No. 3. Customer and Volume Projections. Based upon the consumption/discharge data of Task No. 1 and the expected growth of the wastewater service population, project the number of customers and the billed volume over a five-year planning period. Note: The projected billed volume is the fundamental basis of the accuracy of the user charge conversion to a volume-functional charge from the current flat-rate charge. Task No. 4. Projected Revenue Requirements. Based upon historical revenue requirements of the wastewater utility, the proposed financing requirements, and projected O&M for the proposed wastewater facilities, develop projected revenue requirements over a five-year planning period. Task No. 5. Volume-functional User Charge Structure. Develop an adequate and equitable volume-functional user charge structure that is designed to conform to existing regulatory agency regulations and guidelines. Design such structure to produce approximately the same amount of revenue that would be produced by the existing user charges. Maximize the fixed quarterly base charge with respect to the volume charge by documenting the fixed costs that the utility incurs in provision of capacity to meet expected demand and by allocating the O&M cost corresponding to treatment of I/I to fixed expenses. This will require some engineering justification of the volume of Ill present in the system. Task No. 6. Letter Report. Present the analysis, documentation, conclusions and recommendations in a letter report for evaluation by the regulatory agencies. PART B. SATISFY ANY ADDITIONAL EPA-EPD REQUIREMENTS. Perform services as required to fulfill any additional requirements for analysis or documentation by EPA-DER. PART C. FINE-TUNE USER CHARGE STRUCTURE. Evaluate the recommended user charge structure to ensure that it achieves the objectives of: • (a) Producing approximately the same amount of revenue as that which would be produced by the existing structure. • (b) Minimizes the disparity between quarterly charges under the new system in comaprison with the old for all customers. 4 NEW ADDRESS - 1250 South McDuff Avenue 32205, 384-4772 4. Fees. -For the completion of the above Statement of Scope we propose to charge fees and rates as follows: PART A - a flat rate of $3,000 payable on completion of the study for submission to EPA-DER. PART B - hourly basis as required: $45.00/hour. PART C - hourly basis as required: $45.00/hour. 5. Time Requirements. PART A - the project will be completed within 10 days of receipt of Notice to Proceed. PART B - As required based upon instructions to proceed by the City Manager. PART C - As required based upon instructions to proceed by the City Manager. If you require further information or wish to discuss any aspect of our proposal, please advise. With good wishes, Bob Stubbs 5 fa� CITY OF 716 OCEAN BOULEVARD P.O.BOX 26 ATLANTIC BEACH,FLORIDA 32233 TELEPHONE(904)249-2395 July 13, 1984 MEMORANDUM TO: The Honorable Mayor and City Commission FROM: A. William Moss, City Manager SUBJECT: Special Called Meeting A Special Called Meeting has been scheduled for: 7:15 PM Monday, July 16, 1984 City Hall Atlantic Beach The purpose of the meeting is to discuss the requirements of Public Law 92-500 and its relation to the sewer construction grant application which must be submitted and approved prior to August 20, 1984. Specifically, the purpose of the Special Called Meeting is to discuss a proposed agreement with Robert Stubbs, Inc. , Financial Advisers-Financial Analysts, to revise the City's wastewater user charges to meet EPA requirements. DER has asked that the City submit its wastewater user charge structure to their office within the next two weeks. The "Committee of the Whole" meeting, originally scheduled for 7:15 PM on July 16, will convene immediately following the Special Called meeting to discuss the proposed FY 1984-85 budget. Respectfully, ,a4c-J7 A. William Moss City Manager AWWM:j1 POST News Media