Water & Sewer Committee

Sammy Rich, City Manager Mike Hackett, Director John Boyd, Assistant Director WATER AND SEWER DIVISION Customer Service Department Bryan Parris, Director Operations Department Brandon M. Cook, Director Water Reclamation Facilities Johnny Massingill, Director Water Treatment Facilities Wayne Stanley, Director WATER AND SEWER COMMITTEE MEETING City Hall, 601 Broad Street, Sam King Room Thursday, February 5, 2021 8:30 AM PRESENT: Chairperson Jim Bojo Commissioner Sundai Stevenson Commissioner Wendy Davis Mayor Craig McDaniel Commissioner Mark Cochran Mr. Sammy Rich, City Manger Mr. Mike Hackett, Water & Sewer Division Director Mr. John Boyd, Assistant Division Director Mr. Bryan Parris, Customer Service Director Mrs. Toni Rhinehart, Finance Director Mr. Brandon Cook, Operations Director VISITORS: Mr. Andy Davis, Brinson, Askew, Berry & Davis Mr. Doug Walker, Rome News Tribune Mr. William Zieburtz, Stantec Ms. Katie Morrissey, Stantec CALL TO ORDER Chairperson Jim Bojo welcomed everyone and called the meeting to order. REVIEW OF THE MINUTES No changes to the November 5, 2020 minutes were suggested. The minutes were approved by common consent. Minutes prepared by: Bryan Parris, Customer Service Director Water and Sewer Committee/ Commission Minutes, November 5, 2020 Page 1 of 3 FINANCIAL REPORT Mrs. Toni Rhinehart reported operating revenues were in line with this same time last year. Wholesale, connection fees, and interest income were all down. While these revenues were down they are comparable to last year. Expenses were up a little. Bond coverage is still very healthy. Cash is up by about 1.7 million and we are financially healthy. OLD BUSINESS Operations Update Mr. Hackett, Mr. Rich and Mr. Boyd gave the committee an overview of the history between the City and County and the sewer rate differential. The City currently charges a differential of 1.63, we are allowed up to a 2, to customers on Floyd County water who are on City sewer. In the overview the committee was informed the County has consistently stated they would be willing to pay a higher wholesale rate and purchase more water from the City if the City would lower the differential. However historical data presented to the committee shows this has not happened thus far even though the City is charging a lower wholesale rate than other utilities providing water to Floyd County. The data provided shows the County has continued to purchase water well in excess of the minimum requirement with Calhoun. In the past five years this come to an approximate loss of $1,168,000.00 for the City. Commissioner Davis asked for clarification, “this figure does not include any of the minimum usage Floyd County is required to purchase from Calhoun?” Mr. Hackett, “no”. Chairperson Bojo asked if water from Calhoun was being supplied to the line extensions in Northern Floyd County paid for with SPLOST funds. Mr. Hackett replied yes. Mr. Hackett also present figures showing what would be required to eliminate the sewer differential. The data showed an increase of approximately $1,009,741.96 in increased revenues to offset the differential. Hackett also made the committee aware that the City no longer depends on Floyd County to supply water to Stonebridge due to a new transmission main installed connecting Stonebridge to the City water system. PROJECT UPDATES Stantec- Water and Sewer Cost of Service Study Mr. Zieburtz presented the committee with an extensive presentation of the cost of service study he completed. Mr. Zieburtz stated this was a complicated study to evaluate a wholesale water rate with Floyd County to recover cost on investments and operations and secondly to calculate what the outside differential on waste water side should be. In the study Stantec calculated the portion of the City infrastructure was utilized by Floyd County customers and determined the proportion the County should be paying for. This included the volume of water and the demand requirements. The study showed a wholesale water related unit cost of $4.88 per thousand gallons however Floyd County related unit cost were at $5.55 and the City is currently charging $1.46. Mayor McDaniel asked who at the County makes the decision to buy from the City or Calhoun? Mr. Rich stated as all decisions that is a commission decision. The study then moved onto sewer services and the common factors resulting in differentials including; level of service, capacity and growth, lost taxes and burden of risk. The data presented included allocation of return between inside and outside city customers and the required differential to achieve 0% to 5.0% ROI to generate the $1,509,836.00 needed. At our current cost achieve a 0% ROI the resulting rate differential is 1.59 we are currently at a 1.63 differential. Typical business ROI are at 3% which would mean a 2.15 differential. Commissioner Davis wanted clarification on the reason for the differential. Her understanding was the differential was to cover the cost of the original purchase of the sewer system but what we are saying here is there is also an ongoing cost for this system. Mr. Zieburtz responded, exactly. Commissioner Cochran questioned, if we looked at this in business terms based on the 1.63 differential we are looking at approximately .25% ROI. Hackett responded it is about .35. Minutes prepared by: Bryan Parris, Customer Service Director Water and Sewer Committee/ Commission Minutes, November 5, 2020 Page 2 of 3 Mayor McDaniel commented our primary concern has to be the citizens of the City of Rome. We cannot burden our citizens to provide service to Floyd County and therefore should not be comparing wholesale water rates to the sewer differential. In conclusion Mr. Zieburtz study showed Rome would have to recover approximately $2.3M of additional revenue from Floyd County wholesale water sales. Under a full requirements agreement, the resulting rate of $6.07 per 1,000 gallons could offset the wastewater rate differential. However, if the County continues to purchase water at current levels from the City, the rate will have to be $11.76 per 1,000 gallons to offset the wastewater rate differential. Mr. Hackett commented he wanted to make sure the committee understood there is no advantage to the City for Floyd County to purchase more water from the City due to the increase costs to us in chemicals and wear and tear on the system. Mayor McDaniel commented these are two different discussions and wholesale water and sewer rates cannot be tied together. Commissioner Stevenson agreed with Mayor McDaniel. NEW BUSSINESS None OTHER None Adjourn There being no further business to discuss the meeting was adjourned Respectfully submitted Mike Hackett, Director Rome Water and Sewer Division Minutes prepared by: Bryan Parris, Customer Service Director Water and Sewer Committee/ Commission Minutes, November 5, 2020 Page 3 of 3