Item 7EAGENDA ITEM i1 7E
SEPTEMBER 22, 2008
STAFF REPORT
City of Atlantic Beach
Commission Meeting
AGENDA ITEM: Utility Rate Increase ORDINANCE NUMBER 80-08-78
DATE: September 14, 2008
SUBMITTED BY: Nelson Van Liere, Finance Director
BACKGROUND: During the development of the Operating Budget for the fiscal year
ended September 30, 2007, staff estimated that at a minimum it would
be necessary to raise utility rates by ten percent for three years in a row.
This was to fund the ongoing operations of the utility and to provide
enough revenues for the additional debt service required for the planned
capital improvements. Those rate increases have already been adopted
and they include the outside city rates that are 1.25 times higher than the
inside city rates.
The rate increases previously adopted were what we call, "across the
board", meaning that all components of the rate are adjusted by the same
percentage. However, because our rate structure includes inclining
block rates for volume, a reduction in sales has a disproportionate
negative effect on volume charge revenues. The rate increases in place
assumed that the volume of water sold would increase over time, when
in fact, the sales have decreased. The rate structure in place was
designed to encourage conservation resulting in the high volume users
paying more per thousand gallons than the low volume users combining
to recover the total cost of providing the services. Increasing the lowest
block rate is an effective way to insure that the City gets the planned
revenue and all customers pay a fair share regardless of fluctuating
consumption volumes.
This proposed ordinance keeps in place the scheduled revenue increases,
but changes the structure so that those increases are obtained on the first
block of consumption for 2008 and 2009. The impact on the individual
customer varies depending on consumption. The largest increase for any
residential customer caused by this ordinance will be realized at the
three thousand gallon level of consumption. The amount of the increase
would be $2.25 for water and sewer combined. Below is a table
showing the differences between the October 1 , 2008 rate and the
proposed rate across a range of consumption levels. As indicated below,
customers with consumption above six thousand gallons would begin to
see decreases resulting in this proposal being revenue neutral to the City.
Gallons lk 2k 3k 4k Sk 6k 7k 8k 9k lOk
Existin 26.06 26.91 27.76 34.71 41.66 48.61 55.56 62.51 69.86 77.21
Pro osed 26.81 28.41 30.01 36.33 42.65 48.97 55.29 61.61 68.29 74.97
Difference .75 1.50 2.25 1.62 .99 .36 -.27 -.90 -1.57 -2.24
AGENDA ITEM # 7E
SEPTEMBER 22, 2008
Alternate Proposal:
At the first reading of this ordinance, the commission chose to
defer action on this proposal in favor of researching a proposal that
would keep the change in place for the lowest block, but make no
changes to the remaining blocks, thus generating additional
revenues. This option would increase revenues by an estimated
$265,000 in 2008 and $561,000 in 2009. If approved, this revenue
would initially be used to perform much needed sewer line
rehabilitation and would help generate revenues needed to support
the upcoming debt issuance for the planned sewer plant upgrades.
A chart showing how the individual residential rates would change
across a range of consumption is shown below:
Gallons lk 2k 3k 4k Sk 6k 7k 8k 9k lOk
Existin 26.06 26.91 27.76 34.71 41.66 48.61 55.56 62.51 69.86 77.21
Pro osed 26.81 28.41 30.01 36.96 43.91 50.86 57.81 64.76 72.00 79.46
Difference .75 1.5 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25
The chart above illustrates that once consumption reaches three
thousand gallons, the increase over the original proposal remains
constant for the rest of the consumption range.
BUDGET: The intent of this ordinance is to provide a revenue neutral
adjustment to the utility rates already scheduled to go into effect on
October 1, 2008 and October 1, 2009. This ordinance will increase
the bills of some customers while lowering others, having no
overall effect on the proposed budgeted revenues. If the alternate
provision is adopted, the city will realize an estimated $265,000 in
additional revenues in 2008 and $561,000 in 2009.
RECOMMENDATION: Approve Ordinance 80-08-78
ATTACHMENTS: Ordinance 80-08-78
Alternate Proposal Section I Ordinance 80-08-78
Water and Sewer Rate Comparison Chart
REVIEWED BY CITY MA
AGENDA ITEM # 7E
SEPTEMBER 22, 2008
ORDINANCE NO. 80-08-78
AN ORDINANCE AMENDING CHAPTER 22 UTILITIES,
ARTICLE II, WATERWORKS SYSTEM, SECTION 22-27
CHARGES FOR WATER SERVICE, TO PROVIDE A
REVENUE NEUTRAL SHIFT IN VOLUME CHARGES BY
INCREASING THE LOWEST BLOCK RATE AND
DECREASING THE UPPER BLOCK RATES EFFECTIVE
OCTOBER 14, 2008 AND AGAIN FOR OCTOBER 1, 2009:
AND AMENDING ARTICLE III WASTEWATER SYSTEM,
DIVISION SEVEN, SEWER USER RATES AND CHARGES,
SECTION 22-167 SCHEDULE OF WASTEWATER
VOLUME CHARGES TO PROVIDE A REVENUE
NEUTRAL SHIFT IN VOLUME CHARGES BY
INCREASING THE LOWEST BLOCK RATE AND
DECREASING THE UPPER BLOCK RATES FOR
RESIDENTIAL AND COMMERCIAL CUSTOMERS
EFFECTIVE OCTOBER 14, 2008 AND AGAIN OCTOBERl,
2009, AND PROVIDING FOR SEVERABILITY, AND
PROVIDING FOR AN EFFECTIVE DATE.
WHEREAS, the City has previously adopted increased water and sewer rates for
the purpose of generating sufficient revenues to fund current operating costs and
infrastructure improvements, and
WHEREAS, the proposed operating budget for the fiscal year ended September
30, 2009 reflects the already passed ten percent increase in the utility rates. The City's
code also includes an additional ten percent increase in utility rates for fiscal year 2010,
and
WHEREAS, the City has experienced declining sales due to conservation and a
reduction in customers causing the rates to be insufficient to generate the needed
revenues as projected, and
WHEREAS, the City has determined that a restructuring of the current rates
would better address the revenue requirements by concentrating the increase on the first
block of consumption, and
NOW, THEREFORE, BE IT ENACTED BY THE CITY COMMISSION ON
BEHALF OF THE PEOPLE OF THE CITY OF ATLANTIC BEACH, FLORIDA,
that;
SECTION I. Chapter 22 Utilities, of the Code of Ordinances of the City of Atlantic
Beach, Florida is hereby amended to read as follows:
Article II, Waterworks System:
Sec. 22-27. Charges for water service.
AGENDA ITEM # 7E
SEPTEMBER 22, 2008
The reasonable rates, rentals, fees and other charges for the use of the services and
facilities of the city waterworks system are hereby found and determined to be and are
hereby fixed and established as follows:
(2) Schedule of water volume charges for customers inside the city:
a. Single units. There are hereby-established inclining block volume charges for
single-family residential and single-family individual-metered mobile homes, per account
as follows:
Block Upper Limit
(Gallons per Month) Rate per Thousand
Gallons Effective
October 14, 2008 Effective
October 1, 2009
1 3,000 X9:2-5 ~8- 0.60 $A:-3~ 1.02
2 8,000 ~~ ~2-:2~ 2.02 X2:44 2.02
3 13,000 ~-3S 2.38 ~:8~ 2.38
4 18,000 X3-36 ~3-~ 3.56 ~~ 3.56
5 Over 18,000 $3:3-7 $~~ 5.37 ~Fr.30- 5.37
b. Multiple units and commercial accounts. There are hereby-established an
inclining block volume charge for all multiunit residential and multiunit commercial
accounts as follows:
Block Upper Limit
Gallons per Month Rate per Thousand Effective Effective
(per unit) Gallons October 14, 2008 October 1, 2009
1 2,000 ~A:~3 ~~ 0.60 $8-3~ 1.02
2 Over 2,000 ~$2 ~~ 2.02 ~?44 2.02
c. Single unit irrigation. There are hereby-established an inclining block irrigation
volume charge for all single-family residential and single-family individual-metered
mobile homes, per account as follows:
Block Upper Limit
(Gallons per Rate per Thousand Effective Effective
Month) Gallons October 14, 2008 October 1, 2009
1 13,000 ~?38 ~~- 2.38 ~.?SS- 2.38
2 18,000 ~3:3H ~3:-9~ 3.56 ~4~-}- 3.56
3 Over 18,000 ~-~ ~5-9-1- 5.37 ~b:-~ 5.37
d. Multiple unit and commercial irrigation. There are hereby established an
inclining block volume charge for all multiunit residential irrigation accounts and all
commercial irrigation accounts as follows:
Block Upper Limit
(Gallons per Rate per Thousand Effective Effective
Month) Gallons October 14, 2008 October 1.2009
1 3,000 ~~ $A~S- 0.60 ~A:3-1- 1.02
2 Over 3,000 ~2 ~~ 2.02 ~,?44 2.02
AGENDA ITEM # 7E
SEPTEMBER 22, 2008
ARTICLE III WASTEWATER SYSTEM
Division Seven, Sewer user rates and charges,
Sec. 22-167. Schedule of wastewater volume charges.
(a) Customers inside the city. There are hereby established block volume charges for
customers inside the city as follows:
(1) Single-family residential and single-family individual-metered mobile homes, per
account as follows:
Block Upper Limit
(Gallons per
Month) Rate per
Thousand
Gallons ~,~ ~"4:_ "
II'~"~`
""`~~_~ Effective
October 14,
2008 Effective
October 1, 2009
1 3,000 $A~ ~9-5~ 1.00 ~ 1.48
2 13,000 X4-39 ~3- 4.30 ~~ 4.30
3 Over 13,000 ~A:AA $0.00 $0.00
(2) Multiunit residential and all commercial units as follows:
lock Upper Limit
Gallons er
( P Rate per
Thousand
~ffeeti~e
Effective
Effective
Month, per
Gallons g".~ ,~T October 14, October 1.2009
Unit) 2008
1 3,000 $A:52 $9-~ 1.00 1.48
2 Over 3,000 X4:39 `64~-3- 4.30 ~A- 4.30
(b) Customers outside the city. The rates applicable to customers outside of the city
shall be one and one-quarter (1.25) times the rates above.
SECTION 2. Severability
If any section, sentence, clause, or phrase of this ordinance is held to be invalid or
unconstitutional by any court of competent jurisdiction, then said holding shall in
no way affect the validity of the remaining portions of this ordinance.
SECTION 3. Effective Date
This Ordinance shall take effect upon its final passage and adoption.
Passed by the City Commission on first reading this _ Day of September, 2008.
Passed by the City Commission on first reading this _ Day of October, 2008.
John S, Meserve
Mayor /Presiding Officer
AGENDA ITEM # 7E
SEPTEMBER 22, 2008
Approved as to form and correctness: ATTEST:
Alan C. Jensen, Esquire
City Attorney
Donna Bartle
City Clerk
AGENDA ITEM # 7E
SEPTEMBER 22, 2008
Alternate Section I of Ordinance 80-08-78
SECTION I. Chapter 22 Utilities, of the Code of Ordinances of the City of Atlantic
Beach, Florida is hereby amended to read as follows:
Article II, Waterworks System:
Sec. 22-27. Charges for water service.
The reasonable rates, rentals, fees and other charges for the use of the services and
facilities of the city waterworks system are hereby found and determined to be and are
hereby fixed and established as follows:
(2) Schedule of water volume charges for customers inside the city:
a. Single units. There are hereby-established inclining block volume charges for
single-family residential and single-family individual-metered mobile homes, per account
as follows:
Block Upper Limit
(Gallons per Month) Rate per Thousand
Gallons Effective
October 14, 2008 Effective
October 1, 2009
1 3,000 ~3 $A:~8- 0.60 ~A-3-1- 1.02
2 8,000 ~~ $2.22 $2.44
3 13,000 $~38 $2,62 $2 88
4 18,000 $3:SH $3.92 $4.31
5 Over 18,000 ~3~ $5.37 $6.50
b. Multiple units and commercial accounts. There are hereby-established an
inclining block volume charge for all multiunit residential and multiunit commercial
accounts as follows:
Upper Limit
Block
Gallons per Month Rate per Thousand Effective Effective
(per unit) Gallons October 14.2008 October 1.2009
1 2,000 $A~5 ~8- 0.60 - 1.02
2 Over 2,000 ~~ $2.22 $2.44
c. Single unit irrigation. There are hereby-established an inclining block irrigation
volume charge for all single-family residential and single-family individual-metered
mobile homes, per account as follows:
Upper Limit
Block
(Gallons per Rate per Thousand Effective Effective
Month) Gallons October 14.2008 October 1.2009
I 13,000 ~ $2,62 $2.88
2 18,000 $3,3H $3.92 $4.31
3 Over 18,000 X3-3-7 $5.91 $6.50
AGENDA ITEM # 7E
SEPTEMBER 22, 2008
d. Multiple unit and commercial irrigation. There are hereby established an
inclining block volume charge for all multiunit residential irrigation accounts and all
commercial irrigation accounts as follows:
Block Upper Limit
(Gallons per Rate per Thousand Effective Effective
Month) Gallons October 14.2008 October 1, 2009
1 3,000 ~A:~3 ~~ 0.60 ~0~ 1.02
2 Over 3,000 x:82 $2.22 $2.44
ARTICLE III WASTEWATER SYSTEM
Division Seven, Sewer user rates and charges,
Sec. 22-167. Schedule of wastewater volume charges.
(a) Customers inside the city. There are hereby established block volume charges for
customers inside the city as follows:
(1) Single-family residential and single-family individual-metered mobile homes, per
account as follows:
Block Upper Limit
(Gallons per
Month) Rate per
Thousand
Gallons
15€feefive
~'~~ Effective
October 14,
2008
Effective
October 1, 2009
1 3,000 $A:52 ~A~ 1.00 9:~r3- 1.48
2 13,000 $4:3A $4.76 $5.20
3 Over 13,000 ~8:9A $0.00 $0.00
(2) Multiunit residential and all commercial units as follows:
Upper Limit
Gallons er
P Rate er
p
.~ Effective
Block
Month
per
Thousand
„~~~~-_ ~ ~~~~
October 14, Effective
,
Gallons October 1, 2009
Unit) 2008
1 3,000 $A:52 $93~ 1.00 $9:63- 1.48
2 Over 3,000 $4:39 $4.73 $5.20
(b) Customers outside the city. The rates applicable to customers outside of the city
shall be one and one-quarter (1.25) times the rates above.
AGENDA ITEM # 7E
SEPTEMBER 22, 2008
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. 0 1 2 3 4 5 6 7 8 9 10
-~lacksonville Beach 16.60 22.77 28.94 35.11 41.28 49.26 57.24 65.22 73.20 81.18 89.16
-f-Neptune Beach 19.51 26.71 33.91 41.11 48.31 55.51 64.41 73.31 82.21 91.11 100.01
-~-Atlantic Beach 25.21 26.06 26.91 27.76 34.71 41.66 48.61 55.56 62.51 69.86 77.21
~E-JEA 13.84 19.48 25.12 30.76 36.40 42.04 47.68 53.32 58.96 64.60 70.24
~--Atlantic Bch Outside 31.51 32.58 33.64 34.70 43.39 52.08 60.76 69.45 78.14 87.33 96.51
-~-RAtlantic Beach Proposed 25.21 26.81 28.41 30.01 36.33 42.65 48.97 55.29 61.61 68.29 74.97