8EAGENDA ITEM #8E
'OCTOBER 13, 2003
CITY OF ATLANTIC BEACH
CITY COMMISSION MEETING
STAFF REPORT
AGENDA ITEM: ` Restructuring of Water/Sewer Rates
SUBMITTED BY: Jim Hanso
..DATE: October 2, 2003
BACKGROUND: The City Commission last discussed various options for restructuring the
City's water and sewer rates. at a workshop on April. 28, 2003. At that
time, the Commission reached a consensus on one of the plans proposed
bythe City's consultant with a 5-year phase in. The City then asked our
consuhant, Mike Burton; to submit the chosen alternative to the. St: Johns
River Water Management District (WMD) for their approval. The rate
information was then sent #o the WMD and several conference calls have
been held since that time.
Comments from the WMD employees and consultants working on their
behalf have now been finalized. The restructured water rate; when fully
implemented at the end of the proposed five-year phase in period, has
been determined to be adequate to meet the current requirements for a
water-conserving rate. However, the WMD has objected to phasing in the
rates. The WMD would prefer that these rates be implemented
immediately without any phase iu period. Their concern is that a gradual
phasing in of the increased rates for the irrigation users would not be as
..noticeable and may even get "lost" in the normal monthly fluctuations in
.their water bills. For the conservation measures to have maximum impact
reducing unnecessary water use, the big irrigation users have to
understand that there is a substantial savings through eliminating.
unnecessary use. The WMD did not object to phasing in the commercial
rate changes because commercial customers have much less ability to vary
their water use. The WMD has also advised that, after an adoption of a
revised rate structure, the City should continue to monitor consumption
and readjust the rates in firture yeazs if the new rate structture does not
achieve enough reduction.
With these comments from the WMD in mind, it appears that the City
Commission has three options; ;
l} .Eliminate the phase in for residential users; Adopt the water and
sewer rates as recommended in the Apri128, 2003 workshop with the
exception of eliminating the phase in of the residential changes. As a
resuh, the, full. impact of the restructuring would be felt by residential
users immediately.. The commercial customer's rates would be
.gradually changed over afive-year period. One possible downside of
this approach is that the City may receive less money through the
AGE~'DA ITEM #8E
OCTOBER 13, 2003
phase in period than underthe current rates. The proposed
restructuring with the five-yeaz phase in was to be revenue neutral.
However, if only a portion of that is phased in while other portions aze
implemented immediately; the effect on the City could be less
revenues in the first 4 years: Mi1ce Burton is re-calculating this option
andshould have an answer by the 10/13/03 meeting.
2) Eliminate the phase in of the rates and implement the full
restructuring immediately. The rates priginally planned for the 5~'
(final) year of the phase in would become effective immediately for.
both residential and commercial customers. This would be revenue
neutral to the City although many customers would see an increase or
a decrease in their monthly bi4s depending on their coiLSU.mption
patterns.
3) Redesign the proposed rate structure. There may be other options
for the. rate restructuring that would be acceptable to the WNID that
have not yet been discussed. Staff is not awaze of any other options at
this time: Additional consuhing fees would be spentto do evaluate
different alternatives.
BUDGET: The restructuring of the water and sewer rates was calculated to be
...revenue neutral to the city, which means that there. would be no budget
impact. Adoption of Option 2 where all rate changes were implemented
immediately would be revenue neutral. If Option l was adopted with a
five-year commercial phase m, then there would be some. effect on the
City's revenues, a&hough that amount has not yet been determined.
..RECOMMENDATION: Ask for a report from Mme Burton at the Commission meeting and choose
between Option 1 or Option 2. Staff would then prepare an ordinance for
Commission consideration.
ATTACHMENTS: 1) Memo from Mazk Soskin, consultant to the WNID, explaiuiug their
views an the proposed restructuring.
2) Minutes from April 28, 2003,Commission workshop and attachments
AGENDA ITEM #8E
OCTOBER 13; 2003
From: Mark Soskin; UCF, Consultant to- SJRWMD, September 30; 2003
Talking points for Oct. 2nd Teleconference with Atlantic Beachand their consultants
Recommended Responses. to Sept 16th inquiries from Donna Kaluzniak
The District is concerned with implementation of a new rate structure that produces immediate
overall net conservation. Pursuant to that objective:
• Since the composition of water usage is overwhelmingly residential in Atlantic Beach, The
city's request to " to retain a phased in approach for some of the customers,(commercial
customers); but change the water volume rates immediately (in the first year) for maximum
impact" is acceptable, provided that it is understood that no further "hardship" extensions or
delays will be tolerated for pommercial rates.
• A steep water-conserving residenfial rate structure is to be implemented without phase-in
because:..
• Phase-in cannot be justified on hardship grounds:. virtually all imnact of higher
billings will fall onhigh-usage. customers with the greatest ability to may.
• Furthermore; unlike commercial businesses, 'high-t~~a e residences always have the
option to reduce their water consumption to keep their bills from rising without
sacrificing any essential use requirements. Accordingto existing usage patterns,
virhiallv all usage reductions desired by the District can be accomplished
- reduction in residential irrigafion. '
• Residential rate hap se-in would severely diminish the overall conservation-inducing
mmpact of the new rate structure. `Besides sacrificine water'usage reductions during
the initial veazs of the new CUP permit, a series of smaller rate increases would not
produce as much overall usage'-reduction as immediate implemenation would. This
is because high-usage residents: would observe smaller increases in their monthly bills
that could easily go unnoticed amidst month-to-moirth seasonai variations in usage.
• ' In response to "Yhe wozeld like to determine exactly what the District would approve before
we spend additional time and money on consulting " an ahernative would be for Atlantic
Beach to ask the bistrict to have its consultants (UCF) redesign the residential rate structure.
• To do so however, Atlantic Beach would need to respond to the District's repeated
formal requests for the city's current residential user distribution Lby usage class).
The District requires that information in any case before it can awazd a CUP zenewal
ao Atlantic Beach
• The UCF consultants for the bistricf could quickly design a residential rate structure
that satisfies the District's requirements for water usage reductions as well as the city's
AGEiVDA ITEM #8E
OCTOBER 13, 2003
.priority concerns about revenue neutrality and insulating low-end users from dramatic
bill increases.
• In response to "... will the District require us to sharpen the incline even further, and if so, by
how much?" A steener residential rate structure (such as the one illustrated by the rate
,example sent to you last month) would be much more likely to achieve the desired levels of
water wnservation than the rate structure proposed by you from your. consultants.
• The applicable economic principle here is that the cost of additional capacity should
be shifted fully onto the users who create the need for that newcapacity, mthis case
the high-usage residents. Because overall gains in conservation are most easily
achieved from these high-usage residents it is they who should face the to~ginal
usa e charges associated with a more steeply increasing rate structure: Resulting
conservation would postpone or possibly even cancel. the long term need to
.developing new; high-cost alternative sources of water supply for the city.
From: Kaluzniak, Donna ~mailto:dkaluzniakna,ci.atlantic-beach.fl:us]
Sent: Tuesday;. September 16; 2003 2:23 PM
TO: Caroline Silvers
Cc: Hanson, Jim; Van Liere, Nelson; mburton@burtonandassociates:com
Sttbjecti Water rates
Caroline, we met with our consultant to discuss the District's most. recent comments on the water
and sewer rates.. .
We'would like to determine exactly what the District would approve before we spend additional
time and money on consulting and before we bring a revised rateproposal before the City
Commission:
* Is the 5th year rate in the structure we provided acceptable to the District as a sufficient water
conserving rate to meet our pernutting requirement? If not, will the District require us to sharpen
the incline even further, and if so, by how much? If the proposed. Sth year rate is acceptable, but
the District recommends more of an incline in future years, how much of an incline will be
required and by what date
* Wouid it be acceptable
Thanks for your help in clarifying these issues. -Donna
:AGENDA ITEM #SE
rOCTOBER 13; 2003.
MINUTES OF THE' CITY COMMISSION WORKSHOP. MEETING HELD IN ATLANTIC
BEACH COMMISSION CHAMBERS ON MONDAY, APRIL 28; 2003.
Present: John S. Meserve, Mayor
Mike Borno, Commissioner
Paul Parsons; Commissioner
J. Dezmond Waters, III, Commissioner
Also:. Jim Hanson; City Manager
Maureen King, CityClerk
Donna Kaluzniak, Utilities Director
Nelson VanLiere, Finance Director
Bob Kosoy, Publie Works Director
SonyaDoerr; Community Development Director
Don Ford; Building Official
Absent: Richard Beaver;' Mayor Pro Tem
The Mayor called the meeting to order at 5:00 p.m
1. Water and Sewer Rates: Follow-uo uresentation by Burton and Associates
Mike Burton of Burton and Associates; the firm hired to conduct a water and sewer rate structure
study, st~mari~ed the objectives of the study and briefly reviewedthe two rate structure scenarios
that: were presented to the City Commission at a previous meeting. He presented comparisons ofthe
current rates and the proposed Tales. Mr. Burton presented a plan to phase in the proposed new rate
structure over afive-year period and also provided a summary ofthe impact ofthe new rate stivctare
on both residential and' commercial customers with different meter sizes and different consumption
rates. Mr. Burton. pointed out that: the plan-was revenue-neutral and. a small .across-the-boazd
percentage increase could be added to the proposed rates if additional revenue was needed. He
pointed out that the impact of suchan increase would be felt less during. the first year as, under the
proposed. plan, many customers would experience a reduction in their utility bills in the first year. A
copy of Mr: Burton's Rate Structure Analysis is attached hereto as Exhibit A.
The. City Manager inquired regarding the proposed rates for irrigation meters and was advised that
the rate for irrigation meters would begin at the Block 3 (over 13,000 gallons) rate. He pointed out
that there would be no sewer charge for irrigation meters, but he felt the higher water rate should
achieve the objective of water conservation.
The Mayor inquired how ]abor-intensive the task would be to notify customers and adjust rates on an
annual basis if the new rates were phased in over afive-year period and the City Manager felt that it
'would be relatively easy to notify customers on their utility bill or by separate: mailing.
AGENDA ITEM #8E
ACTOBERI3, 2003
.Page Two
Minutes -City Commission Workshop
Apri128, 2003
The City Manager felt that small inflationary increases would be needed in the fixture and. pointed out
that the matter of the City of Jacksonville 5% franchise fee had not yet been resolved so he did not
know. at this time what impact that issue may have on total revenues. Discussion ensued regazding
.the type o£customer notification that would be required and it was pointed out that customers must
be given thirty days notice ofproposed rate adjustments and must benotified inthe same manner as
they aze billed. It was felt that because of the city's phased billing schedule it would be better to do a
`special mailing.
Following fixrther discussion it was the consensus of the City Commission to move ahead to
implement the plan aspresented and to handle it as a separate issue and not make it part of the budget
:process. The City Commission suggested that Mr. Burton proceed to bring the plan before .the St.
Johns River Water ManagemenYDistrict{SJRWMD) for their approval.
Comuissioner Waters inquired by what authority the SJRWMD required the city to adopt water
conservation rates. Donna Kaluziiak responded.that this was a condition of the consumptive use
permit and agreed to provide Commissioner Waters with. a copy of the ruling:
In discussionxegazding'the City of Jacksonville 5% franchise fee, the Mayor said he thought the
interlocal agreement would prohibit the levying. of such a franchise fee on the City, or at least require
that it be negotiated and not azbitrazily applied: He said he would discuss this. matter at his. neat
.meeting with Mayor Delaney and he would also try to get Jacksonville to return the money Atlantic..
Beach has ah~eady paid.
2. Strate¢ic Plan• Discussion of proposed proiects fo be included under Strateeic Plan
priorities established by the Mavor and Citv Commission in March 2003
The City Manager said previous strategic plans were more precise but the current plan was much
broader and not always clear and he needed fixrther Conunission input to finalize some projects. He
presented a list of recommendations for finalizing the strategic plan, a copy of which is attached.
hereto as Exhibit B.
The following items were discussed:
Mayport Road/Marsh Oaks -Water/Sewer Extensions
Commissioner Waters thought the city should install water and sewer lines in those areas where
public utilities did not currently exist, and following discussion it was agreed that staffwoutd develop
a map indicating where water and sewer lines aze currently located; .and also indicating which lots
were vacant. The City. Commission could then look into the feasibility and cost effectiveness of
installing fiu-ther utilities in Mazsh Oaks.
AGENDA ITEM #8E
OCTOBER 13, 2003
.Page Three
Minutes -.City Commission Workshop
April 28, 2003
Marsh Oaks Traffic Study
The Mayor pointed out that a traffic study of this area had already been done so no further action was
needed in this regazd.
Community Character/Ambiance.
:.The City Manager felt there would not be much community. support for: new regulations but
:Commissioner Waters thought that without adopting new regulations, the City could develop a list of
the types of construction materials they would like developers to use and then give incentives to
property owners who used construction materials included on the list. He felt there was a contiuiting -
problem with boats being pazked in front yazds and thought the City Commission should revisit this
matter. He thought established setbacks should be respected and he would like to see the tree
` planting program focus on planting trees that would create a canopy rather han palm trees.
Bike Paths
It was thought that the City should move ahead to construct bike paths on Plaza and Seminole Road.
following which other bike paths could be considered:
Recreation Center
Discussion ensued and Commissioner Waters suggested the city set aside a certain amount ofmoney
each year to eventually build a recreation center. Commissioner Parsons suggested purchasing land
now while large enough tracts are still available. The Mayor felt the city should not obligate all ofthe
ha]f--cent sales tax revenues for this project. He pointed out the city already has three.community
centers and he did not feel Atlantio Beach had the. population to support a recreation center. He
suggested this matter be discussed and voted on during the budget: process.
The City Manager said that the Finance Director. was working on ahalf--cent sales tax project listthat
would be discussed at a workshop in Mayor June.
There being no further discussion, the Mayor declared the meefing adjourned at 6:45 p.m.
Maureen King, CMC
City Clerk
AGENDA ITEM #8E
OCTOBER 13, 2003
:..City of Atlantic Beach
;Rate Structure Analysis
,~-- Customer Impact of Rate Phasing Plan ;
urrerrt Year t Year 2 Year 3 .Year 4 a r5
Ra es:
water HOw Hates t3V BIOCrc
Block 1- $0.00 $0.00 $0.05 $0:10. $0.15 $021
Block 2 $1.71 $1.71 $1.62 $1.53 $1.44 $1.34
Block 3 $1.71 $2.14 $2.11 $2.08 $2.05 $2.01
~-: Block 4 $1.71 $2.67 $2.76 $2.85 $2.94 $3.01
Block 5 $1.71 $3.34 $3.64. $3.94 $4.24 $4.53. .
Note: Conservation Rates o a livable to SFR
vvarer ~,uswmer t,na anq n i a c,nar e
Customer Charge NA $0:58 $0.69 $0.80' $0.91 $1.03 1
`RTS Charge
3/4". $626 $626. :$5.89 $5.52. $5.15. .$4.77
1•. '$626 :$6.26..' $6.19 $6.12.- ~$6.OS .$5.97
11/2° $626 $626 - $7.68 $9.10 $10.52 $11.93
2° $6.26 .$626. $9-4T $12.68 $15.89 $19.09.
3" $626; $6.26 $1424. $22.22 $3020 $38.19
4" - $626. $626 $19.51 $32.96 $45.31 $59.67
6" $626. $52S $34.53 $62.80 $91.07. $719.34
8° 6.26 $6.26 $52.43 ` 98.60 144.77 190.94
Qocer W ater Block Ranges
Block 1 3,000 3,000 3,000 3,000 3,000 3,000
Block2
- 8,000 8,000 8,000 8,000 8,000 8,000
-Block 3 13,000 13,000 13,000 13,000- - .:13,000 13,000
Block 4 18,000 18,000 t8,000 18,000 18,000 1:8,000
Block 5 and Over and Over and Over and Over and Over and Over
Sewer Customer Charge and RTS Chame
Customer Charge NA $0.58 $0.69 $'0:80 $0.91 $7.03
RTS Charge
314° ~ $12.07.' $12.07 $71.45 $10.83 - $1021 ,$9.57
1" $15.45' $15.45 $14.58. $13.71 $12.84 $11.97
11/2° $25.11 $25.11 :$24.81 $24.51 $2421 $23.92
2° - $34.76. - $34.77 $35.64. '. $36.52- $37.40 $38.28
3' $67:59 $67.59 `$69.83' $72.07 $74.31 $76.55
4' $12070 $i 20.70 $120.43 $120:16. $119.89 $119.61
6" $241.40
- $241.40 $240.86 $240.32 $239.78 $23922
8° $241.40 5241.40 $276.74 12.08 347.42 $382.75
Upper Sewer Block Ranges
Block 1 3,000. 3,000 3.000 3,000 3,000 3,000
Block 2 8,000 8,000 8,000 8,000 8,000 8,000
Block 3 13,000. 13,000 13,000 13,000 13,000 13,000
Btock 4 18,000 : 18,D00 18,000 18,000 18,000 18,000
Blockb and Over and Over and Over and Over _ and Over and Over
Sewer Flow Rates B Block
Block 1. $0.00 $0.00 $0.19 $0.38 $0:57 - $0.76
- Block 2. $3:64. ` $3.64 $3.99 $4.34 $4.69 $5.02
Block 3 ' - ~ $3.64 $3:64 ..: $3.99 $4.34 $4.69 $5.02
Block 4 $0.00 $0.00. $0.00. $0.00. $0.00 $0.00
Block 5 $0.00 $0.00. $0.00 $0.00 $0.00 $0.00
__Note: Sewer Cao only annlicable to SFR-
EXH AGENDA ITEM #8E
Workshop Minut OCTOBER 13, 2003
City of ALamic Beach
Rate Structure Analysis -- --- --~----
nmma R ~k of ~ tom r Impact of Rate PMs ng Phn
~,. -
Cult Class
Meter S¢e.
'Monthy
tlsa
Current Mo
Year 7 Water and Sewer BOt
Yeaz 2 Year 3
Y~r 4
Year 5
Single Famiy Resideniai 314' 3,000 $20.77 $79.48 $79.44 $7239 - $79.34 $78.31
Single Family Residential 314' .7,000.. $47.57 840.89 $47.88 - $4287 : $93.86 .$44.75
Single Family Residential 314° 15,000 $77.09 $80.48 -. $8357 $86,54 $89.57 $92.28
Multi-Famiy Residenial 314" 77,000 $98.88 $$5.90 $98.76 ~ 5700.45 $70272 $704.72
city Score 314" 13,000 $73.67 $72.99 $75.54. $78.09 $80.64 $8297
Dellis[ 1° 6,000 $40.12. $38.92 $39.70 540.46 $49.26 $47.99
Vetednarian 2" 42,000 5254.97 5250.84 $266.(10 - 5287.77 $296.34 , $370.38
Restaurant ~ 2° 109,000.. .5673.42.. . 5609 $647.87 8674.96.: $707.05 5736.50
Cult Class
Single Family Aesidemial
Meter Size
:314' Monthly ~
- llsa
3,000 Cumulative Percent Cha
Curtenr Year'1
NA .33796 a fm¢n Curreett MonOd
Year2 Year3
3.62% -3.87% Wafer and Sewer BiEI
Year4 Years
-4.72% -4.26%
Sing{e.Family Residential -. 3/4° 7,000 NA. -7.64% 0.75%. 3.73% 5.57% .7.65%
Single Family Residentai 3!4° 75,000 NA 4.40% &33% 72.26% - 76.79% 79.70%
Mu10 -Family Residential 3I4" 77,000 NA 3.07% - -0.72%. 7.58% 388% 5.90%
iffy SFOre .314° 73,000 ... NA -0.82% 254% 6.an%
.. 9A6°.5 7254%
Dentist _ t" 6,000 NA -2.9896. -7.04% 0.91% 285% ' 467%
Veterinadan . . 2' 42,000. NA ' -7.62%.. 4.33% 70.28% 76.2396 21.73%
Restaurant Y .709,000 NA -0.67%.. 4.64% 9.%% 7526% 20.06°.6
Cost Class
Simile i=arnifY Residentaf
- Meter Size
3!4°
Monody. -
e~
.3,000 Annual Percent
Current Year t
- NA 3.37% a from Prior Year M
Year 2 Year 3
-0.26% -0.2696
... Water and Sewer Bill
Y~ 4 Year 5
~ : -0.26% -0.70%
Single Family Residential 3!4" 7,000 -- NA -7.64% 242% 2.36% 237% 203%
SOtgte FamOy Residential. 314' 75,000 NA 440X - 3.76% 3.63% ~ 3.50% 3.03%
Multi-FamOy Residential 3/4° 77,000 NA 307% ...237% .237% 225% 7.94%
City Store 3/4' 73,W0 NA -0.4296 3.49% -3.38%. 327% 287%
Dentist ~ - t° :. 6,000 NA 298%. 200% 7.%% 7.93% 7.77%
Yeterinadan ... 2" - 42,000... _ NA -7.62% 6.04% 5.70% .5.40% 4.74%
Restaurant 2" 109.000 _. NA -0.67% 5.35% .5.08% 4.83% -4.77%
.Source: Burton & Associates
. 04/14/2003
r---:
Omer
lass ~Ae a Size - '
Monthly Ueage in 1,0005 0 1 2 $ 4 5 6 j 8 - 9 10 11 12 13
Bills issued R1 518 x 3/4 2,752 8,273 14,653 18,848 20,644 1B 209 15 521 - 12176 9,041 8,687 4,882 3,671 2839 B 182
Cumulative 81113 - 2;752 11,025 25,878 45,824 86,268 8547Y t00,B98 113,174 ,
122,215 128,812 133,774 137,445 140284 146476
Percentage Cumulatve 81118 . 1.78%. 7.04% 18.39% 29.12% 42.30% 54.56% 84.47% 72.24% 78.01% 82.28% 85.39% 87.73% 89.55% 94.77%
50%issuetl by fi,000
BO%issuetl by 8,000.
80%issuetl by 12,000
''.. _. O 1 2 3 4 . 5 8 7 8 B. '-10 ii 12 13
A D BILOt BIL02 BIL03 . BIL04 BIL05 BILO6 BIL07 BILOB BIL09 BIL10 BILii BIL12 BIL13 BILi4
Bills leaned C 2 26 22 8 i 5 2 2 4 70 2 2 . 5 8 71
Cumulative Bills 28 48 58 SY
' 82 -. 84 88 ° 70 80 B2 84 89 - BS 108
4.58% '. 6.45% 9.Bfi% 90.04% 10,82% - .11.27% 11.82% .. 12.32°k 14.08% 14,44% . 14.78% '15,87% 16.73% 18,66%
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