Item 7BAGENDA ITEM # 7B
OCTOBER 13, 2008
STAFF REPORT
City of Atlantic Beach
Commission Meeting
AGENDA ITEM: Utility Rate Increase ORDINANCE NUMBER 80-08-78
DATE: October 6, 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 akeady 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.
At the first reading of this ordinance, the commission chose to defer
action on this proposal in favor of 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 as a result of this ordinance 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
AGENDA ITEM # 7B
OCTOBER 13, 2008
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.
The chart below illustrates the total impact of the already adopted
October 1, 2008 rates and the proposed changes of this ordinance
combined compared to the rates that were in effect September 30,2008.
Gallons lk 2k 3k 4k 5k 6k 7k 8k 9k lOk
Rates 9/30/08 23.69 24.46 25.23 31.55 37.87 44.19 50.51 56.83 63.51 70
19
Pro osed 26.81 28.41 30.01 36.96 43.91 50.86 57.81 64.76 72.00 .
79.46
Difference 3.12 3.95 4.78 5.41 6.04 6.67 7.30 7.93 8.49 9.27
BUDGET: The budget impact of this ordinance is a projected increase in combined
water and sewer revenues of an estimated $265,000. This additional
revenue has not been included in the operating budget for 2009.
RECOMMENDATION: Approve Ordinance 80-08-78
ATTACHMENTS: Ordinance 80-08-78
Water and Sewer Rate Comparison Chart
REVIEWED BY CITY MANAGER:
.--
AGENDA ITEM # 7B
OCTOBER 13, 2008
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-•-Jacksonville 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
-1t-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
-4~-~~Atlantic Beach Proposed 25.21 26.81 28.41 30.01 36.96 43.91 50.86 57.81 64.76 72.11 79.46
AGENDA ITEM # 7B
ORDINANCE NO. 80-08-78 OCTOBER 13, Zoos
AN ORDINANCE AMENDING CHAPTER 22 UTILITIES,
ARTICLE II, WATERWORKS SYSTEM, SECTION 22-27
CHARGES FOR WATER SERVICE, TO INCREASE THE
WATER VOLUME RATES FOR THE FIRST BLOCK OF
CONSUMPTION AND AMENDING ARTICLE III
WASTEWATER SYSTEM, DIVISION SEVEN, SEWER
USER RATES AND CHARGES, SECTION 22-167
SCHEDULE OF WASTEWATER VOLUME CHARGES TO
INCREASE THE SEWER VOLUME RATES ON THE
FIRST BLOCK OF VOLUME CHARGES FOR
RESIDENTIAL AND COMMERCIAL CUSTOMERS, 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
WHEREAS, the City Commission has requested that the staff prepare an
ordinance addressing only the lowest block volume charges while maintaining the
existing adopted rates for all other consumption ranges, ensuring that the conservation
incentives are not decreased, and
WHEREAS, this proposed ordinance raises the lowest block of volume charges
for both water and sewer only.
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:
AGENDA ITEM # 7B
OCTOBER 13, 2008
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:
Rate per Thousand Rate per Thousand
Block Upper Limit
(Gallons per Month) Rate-per-1<heusand
&alleRa Gallons
Effective
Novem er 1 2008 Gallons
Effective
October 1 2009
1 3,000 ~5 $8.28- 0.60 ~- 1.02
2 8,000 1~2 $2.22 $2.44
3 13,000 $2-38 $2.62 $2.88
4 18,000 $3:56 $3.92 $4.31
5 Over 18,000 $3:3-~ $5.91 $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:
Rate aer Thousand Rate aer Thousand
Upper Limit
Block Gallons per Month ~'~~ Gallons Gallons
(per unit) 6nllees Effective Effective
Nov tuber 1 2008 October 1 2009
1 2,000 ~5 $9:28- 0.60 $0:3-t- 1.02
2 Over 2,000 ~2 $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:
Rate aer Thousand Rate oer Thousand
Upper Limit
Block (Gallons per Rate-pew Gallons Gallons
Month) Gallons Effective Effective
November 1 2008 October 1 2009
1 13,000 ~?38 $2.62 $2.88
2 18,000 $-3-36 $3.92 $4.31
3 Over 18,000 $-5.3-'~ $5.91 $6.50
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:
Rate aer Thousand Rate per Thousand
Upper Limit
Block (Gallons per Gatlons Gallons
Month) ~~ Effective Effective
November 1 2 08 October 1 2009
1 3,000 $9:2-5 $A:~~60 $A:3-t 1.02
2 Over 3,000 $2:92 $2.22 $2.44
AGENDA ITEM # 7B
OCTOBER 13, 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:
Rate ner Thousand Rate uer Thousand
Block Upper Limit
(Gallons per
Month) peg
Theasn~
6nllens tie
9etebe~-},j
~ Gallons
Effective
November 1 2008 Gallons
Effective
Octobe 1 2009
1 3,000 $A:S2 $8~-1.00 8:~3- 1.48
2 13,000 $4.39 $4.73 $5.20
3 Over 13,000 X98 $0.00 $0.00
(2) Multiunit residential and all commercial units as follows:
Upper Limit ~~
,
; Rate per Thousand Rate aer Thousand
Block (Gallons per „
,
,,,,
~"""` Gallons Gallons
Month, per ~ ~ Effec ive Effective
Unit) November 1.2008 October 1, 2009
1 3,000 $9:32 - 1.00 $9:~3- 1.48
2 Over 3,000 $4.3A $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.
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 October, 2008.
Passed by the City Commission on first reading this ~ Day of October, 2008.
John S, Meserve
Mayor /Presiding Officer
AGENDA ITEM # 7B
OCTOBER 13, 2008
Approved as to form and correctness: ATTEST:
Alan C. Jensen, Esquire Donna Bartle
City Attorney City Clerk