City Council

CITY OF FREDERICKSBURG, VIRGINIA HON. THOMAS J. TOMZAK, MAYOR HON. MARY KATHERINE GREENLAW, VICE MAYOR CITY COUNCIL HON. KERRY P. DEVINE, AT-LARGE HON. BRADFORD C. ELLIS, WARD ONE HON. GEORGE C. SOLLEY, WARD TWO HON. FREDERIC N. HOWE, III, WARD THREE Council Chambers, 715 Princess Anne Street HON. BEATRICE R. PAOLUCCI, WARD FOUR Fredericksburg, Virginia 22401 Council Work Session January 24, 2012 Water and Sewer Management Study The Council of the City of Fredericksburg, Virginia held a work session on Tuesday, January 24, 2012, beginning at 5:30 p.m. in City Hall Conference Room. Council Present. Mayor Thomas J. Tomzak, Presiding. Vice-Mayor Mary Katherine Greenlaw. Councilors Kerry P. Devine, Bradford C. Ellis, Frederic N. Howe, III, Beatrice R. Paolucci and George C. Solley. Also Present. City Manager Beverly R. Cameron, Assistant City Manager Mark Whitley, City Attorney Kathleen Dooley, Budget Manager Amanda Lickey, Public Works Director Doug Fawcett, Assistant Public Works Director David King, Fiscal Affairs Director and Clerk of Council Tonya B. Lacey. Others Present. David Hyder, Vice-President of Municipal and Financial Services Group, Anthony Dunams, Senior Manager of Municipal and Financial Services, and Tracy Muller of Municipal and Financial Services. Water and Sewer Management Study. City Manger Cameron stated that the consultants had completed the draft water and sewer rate and management study. The consultants are from the Municipal and Financial Services Group of Annapolis, Maryland. They were hired nine to ten months ago. There are two components to the study: the rate study and a management and organizational study and structure. Mr. Hyder begin the presentation with a PowerPoint that covered: the Scope of Work, Operating and Maintenance Forecast for the Water Fund and the Sewer Fund, Existing Debt Service Payments for the Water and Sewer Fund, Capital Improvement Projects for the Water and Sewer Fund, Repair, Replacement and Rehabilitation Reserve, Revenue Requirements for Water and Sewer Fund, Baseline Financial Plan, Current Rate Structure, Recommended 1 Alternative, Sample Bi-Monthly Water and Sewer Bills, Water and Sewer Availability Fees, Alternative Implementation of Water and Sewer Availability Fees, Water and Sewer Connection Fees, Management Study Analysis, Management Study Findings, Staffing Analysis, Organizational Structure current and alternate, Business Processes and Management Techniques, and Recommendations. Councilor Ellis asked if the revenue requirements factor in the growth of housing. Mr. Hyder said it does, but not on the expense side. Mr. Hyder said he would not recommend any changes to the rate structure. The current rate structure is commonly used, but he did recommend increasing the water and sewer fixed collection fee to 30 percent of the total water and sewer revenues. Discussion ensued on how Stafford County charge water and sewer and Mayor Tomzak asked for clarification on the Stafford water usage. Mr. Hyder explained that the more water a customer uses the more expensive it gets. Councilor Howe asked if the City could offer tiered rates to different classes such as residential and commercial. Mr. Hyder said it could be done but there are industry standards in terms of American Waterworks Association (AWWA) which has a base excess capacity measure. It would take a look at how the customer peaks the system and it would charge a customer that uses less water, such as a residence, more than the customer who uses more such as a commercial business. He said he did not recommend it because of administrative complexities. Councilor Howe explained that it could be done by having tiers like the electric utilities, but tier it by the gallons used. He felt it was industry standard to use tiered rates. Mr. Hyder said it used to be popular to use tiered rates, but the industry was moving away from it and he said if tiers were used there would need to be 10 percent more revenue. The smaller user would most likely get hit with the additional cost. Councilor Solley felt that would encourage more water use. Councilor Howe said it would benefit those businesses such as car washes and laundromats and it would not penalize them for there business. Mr. Hyder recommended going to calculated connection fees for water and sewer because currently the City is charging below what it cost for a connection fee. Using the calculated connection fee would help to recover the labor cost and materials to provide the connection. Council had a brief discussion on the connection fees and some of the Council members thought that increasing the connection fee might be seen as unfriendly. Mr. 2 Cameron explained that there is a recommendation to charge by meter size and he said it would be more business friendly than the current procedure. Mayor asked if there was any comparison on what Spotsylvania charges the City to treat the water and what other jurisdictions may charge. Mr. Hyder said they did not benchmark that but he could if the City needed him to. Mr. Fawcett said the City was paying cost plus 10% of what it cost Spotsylvania to treat and transmit the water to the City and the cost is 47% of the budget. Mr. Dunams said he had done some work in San Francisco and the cost was 75% of the total charges. He said this was the only reference point he had. During the discussion on the business process Councilor Devine stated that she dislikes the short window between billing and cutoff and wanted to know the process in other localities. The consultants stated that most localities bill quarterly and the bills are due within 30 days and they give a 60 day notice and a 90 day cutoff. Mr. Hyder stated that the City has one of the lowest late fee charges which could be factor in why so many people have multiple cut offs. Council stated that maybe they should consider raising the penalty fee so it would encourage people to pay their bill before their water is disconnected. Mr. Robinson stated that in the past they used to collect bills on a quarterly basis and by going to bi-monthly they found it was easier to go after customer who had skipped their payments. Councilor Ellis asked if it would be a burden to charge monthly. Mr. Robinson said reading and collecting bills monthly wouldn’t be too burdensome but there were a number of other factors that would need to be considered. Mr. Hyder noted that one of the main concerns he has for the City is that it will be facing a lot of capital renewal going forward and because of the current staffing needs the City is completely dependent on consultants to provide the engineering expertise. He said as the City grows there would be more of a need for a house engineer. He also noted that there was no one in house that has the ability to take on that role. Councilor Ellis said he’s not sure if it would be as profitable and he would like to see a business case to compare. He said there is much more flexibility with consultants. Councilor Howe said he would like to compare outsourcing the entire operations from billing, engineering, and collections. Adjournment. There being no further business to come before the Council at this time, the meeting was declared officially adjourned at 6:46 p.m. 3 Tonya B. Lacey____ Tonya B. Lacey Clerk of Council City of Fredericksburg 4