Town Council Regular Session


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  Item # G.       
Meeting Date: 12/03/2014  
Requested by: Shirley Seng Submitted By: Shirley Seng, Water
Department: Water  

Information
SUBJECT:
Resolution No. (R)14-60, providing notice of intent to increase water rates, fees and charges for the Oro Valley Water Utility
RECOMMENDATION:
The Water Utility Commission and Water Utility staff recommend approval of Resolution No. (R)14-60, providing Notice of Intent to increase water rates, fees and charges for the Oro Valley Water Utility.
EXECUTIVE SUMMARY:
Pursuant to A.R.S. § 9-511.01, a municipality must adopt a Notice of Intent to increase water rates at least 30 days prior to the public hearing. The attached resolution meets the intent of that statute by:
  1. Making a copy of the Water Rates Report available for public review which will be placed in the Town Clerk’s Office and posted to the Water Utility website.
  2. Directing the Town Clerk to advertise the resolution in a newspaper of general circulation at least 20 days prior to the public hearing.
  3. Establishing a public hearing date for January 7, 2015.
Adoption of this resolution sets in motion the public process for providing notice of the public hearing required for a water rate increase. Residents and customers of the Water Utility may view the documents at the Town Clerk’s Office or on the Water Utility website.

If approved, the Notice of Intent does not increase any of the rates. The consideration of adoption of any rate increases or decreases will occur at the public hearing on January 7, 2015. However, once the Notice of Intent is approved and the report is published, the amount of the proposed rate increases that could be adopted at the public hearing cannot exceed the amounts that were published in the report.
BACKGROUND OR DETAILED INFORMATION:
In accordance with the Mayor and Town Council Water Policies, Water Utility staff review water rates and charges on an annual basis.  The Water Utility Commission evaluates staff recommendations based on a rates analysis to assure the recommendations meet Town policies and bond covenants. On November 10, 2014, the Commission voted unanimously on a recommendation for a Preferred Financial Scenario, which includes projections for five years; however, water rates are approved annually for the first year in the five year projection period.
 
The following information summarizes the proposed changes in water rates and service fees:
  • Decrease in the potable and reclaimed Groundwater Preservation Fee (GPF)
  • Increase in the potable and reclaimed commodity rates
  • No increase in the monthly base rates for potable and reclaimed water
  • Increase in the potable and reclaimed construction water rates
  • Increase in meter installation fees to recover costs
  • Increase in residential security deposits for non-property owner accounts
  • Increase in residential security deposits for landlord accounts
The combination of the proposed increase in commodity rates and the proposed decrease in the GPF will reduce the average residential customer’s bill by $0.03 per month. The average commercial customer will see a reduction of $0.60 per month. Residential and irrigation customers with high water use will experience increases in their monthly bills. There will be no impact to reclaimed water customers because the proposed increase and decrease are offsetting. Details of the impact to all customer classifications may be found in Appendix C of the attached Water Rates Analysis Report.

Residential security deposits for non-property owner accounts are proposed to increase from $100 to $150. Residential security deposits for landlord accounts are proposed to increase from $50 to $75. Meter installation fees are also proposed to increase to recover labor and material costs incurred to provide the service.

A significant change this year is that the revenue from the GPF is accounted for in the Operating Fund. In prior years, it was accounted for in the Alternative Water Resources Development Impact Fee Fund. This change is addressed in detail on page 10 of the Water Rates Analysis Report attached hereto.
 
The Notice of Intent does not authorize any rate increases, it establishes the date for public hearing and publishing of the Water Rates Analysis Report. If the Notice of Intent is approved, a separate resolution increasing water rates will be presented to the Town Council for consideration at the public hearing scheduled for January 7, 2015.
FISCAL IMPACT:
There is no fiscal impact associated with adopting a Notice of Intent to increase water rates. If the Council adopts the proposed rates at the January 7, 2015, public hearing, only high water use residential and irrigation customers will experience an increase in their monthly water bills. The financial impact to all customer classifications is detailed in Appendix C in the attached Water Rates Analysis Report.
SUGGESTED MOTION:
I MOVE to (approve or deny) Resolution No. (R)14-60, providing Notice of Intent to increase water rates, fees and charges for the Oro Valley Water Utility.
Attachments
(R)14-60 Notice of Intent to Increase Water Rates
Rate Report


    

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