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Minutes - 04/15/1996 Workshop TAPE READING 0001 0003 0020 0042 "11 COUNCIL WORKSHOP MEETING MINUTES April 15, 1996 DATE. COUNCIL CHAMBERS, CITY HALL, CITY OF WOODBURN, COUNTY OF MARION, STATE OF OREGON, APRIL 15, 1996. CONVENED. The Council met in a workshop session at 7:03 p.m.. The purpose of the workshop was to discuss wastewater rates for residential customers. ROLL CALL. Mayor Councilor Councilor Councilor Councilor Councilor Councilor Kirksey Chadwick Figley Hagenauer Jennings Pugh Sifuentez Present Present Present Present Present Present Present Staff Present: City Administrator Childs, Public Works Director Tiwari, Public Works Manager Rohman, Finance Director Gillespie, City Recorder Tennant Mayor Kirksey informed the audience that a staff report would be given on this issue. Following this report, the audience was invited to participate during the discussion WASTEWATER RESIDENTIAL RATES -- STAFF REPORT. Public Works Director Tiwari stated that the Wastewater Advisory Committee had met for approximately two years during which time they held 2 Open Houses. One of these Open Houses discussed the issue of wastewater rates and a division was made between residential, commercial, and industrial. The rates proposed by staff were flat rate, minimum + volume rate, and volume rate. The Committee found that at the level of 500 cubic feet, the monthly cost for a residential customer was almost the same for minimum + volume ($20.20) and volume only charge ($20.05). It was noted that the residential flat rate necessary to collect the same amount of revenue versus of volume charge was $27.38 per month. The Committee thoroughly reviewed the available options and recommended to the Council, based on a fair share concept, the implementation of a minimum + volume charge to residential customers. Ultimately, the Council adopted this concept which imposed a minimum charge of $20.20 for 500 cu. ft. of water usage plus $3.59 per 100 cu. ft. of water usage over the minimum. The rates were adopted in September 1995 with the first billing period under the new rates effective November 1995. He briefly explained the first-year billing process as it relates to charging customers each month for the months of November, December, January, and February on an actual use basis, then calculating an average Page 1 - Council Workshop Meeting Minutes, April 15, 1996 'r-'.' rrr I ""1 COUNCIL WORKSHOP MEETING MINUTES April 15, 1996 TAPE READING 1265 which will be charged over the next 12 months so that residents will not have to pay based on actual water use during the summer months. The winter months are being used to calculate the average since it more accurately provides for the volume of water actually being put through the system. Recently, the City Council modified the wastewater ordinance (#2157) changing the average calculation period to the 3 lowest months of the 4 listed above, and providing language relating to leak adjustments. Additionally, customers can elect to use an average of any other 3 consecutive months to replace higher winter months that they may have incurred. Adjustments will also be made in those cases where water to an unoccupied building has been shut off and locked. He reviewed the Task Force's method to determine the minimum rate and the amount to charge those customers who are not in residence in Woodburn during the winter months. He explained how adjustments for a high reading are accounted for in determining the average water use. In reviewing the monthly bills paid, approximately 50% of the single family residential customers paid between $20 and $21 per month, approximately 40% of the customers paid between $21 and $45 per month, with the remaining 10% paying over $45. It was noted that of the 4,025 customers, only 39 customers paid in excess of $80 per month. Director Tiwari explored various options available that would still provide adequate funding of facility construction and operations. Those options include: 1) keep the fair share concept with no changes; 2) keep the fair share concept with a minor adjustment by either (a) placing a cap of $55 per month and raising the minimum charge by $.55, or (b) reduce the 100 cu ft charge to $3.00 and increasing the monthly minimum charge by $1.15; or 3) adopt a flat rate or volume rate concept. In any event, dollars paid by one-half of the customers would have to increase under the options provided in order to receive approximately the same amount of dollars necessary to fund the wastewater facility. Preston Tack, 2197 Camilla Way, questioned how much of the base rate in the current rate structure represents construction versus operations. Director Tiwari stated that approximately 50% will be used to pay for construction, environmental upgrades, and bond costs with the remaining balance to fund operations. It was also noted that systems development charges will be paying for the portion of construction costs involving plant expansion since facility will need to be built to accommodate the City's needs over the next 20 years. Ashish Mistry, 1025 N Pacific Hwy., questioned the monthly water usage of the 2,013 customers who pay the minimum monthly bill. 1090 Page 2 - Council Workshop Meeting Minutes, April 15, 1996 '_.._._._'~' - . ,. TAPE READING 1835 2194 COUNCIL WORKSHOP MEETING MINUTES April 15, 1996 Director Tiwari stated that the breakdown of water usage by customers receiving the minimum bill is as follows: approximately 22.73% of the customers use between 0-300 cu ft; approximately 12.27% of the customers use between 300-400 cu ft; and approximately 13% of the customers use between 400-500 cu ft per month. Mr. Mistry expressed his opinion that the volume charge for wastewater makes more sense under the "fair share" concept. As a motel owner, he felt that they are carrying an extra charge under the minimum plus volume charge since they are charged on a hotel/motel unit cost whether that unit is occupied or not. Director Tiwari briefly explained that "fair share" was developed as a concept to integrate both the construction and operational costs. Mayor Kirksey suggested that consideration be given to place motel/hotel units on a commercial rate rather than the residential rate structure. Dement Brown, 3283 Nekia St, stated that he did not fully understand the reasons for the substantial increase in wastewater rates and he felt that the high cost for this service will be detrimental to larger families within the City. He suggested that the minimum rate should be increased to offset costs to larger families or to implement a flat rate concept. Martina Lopez, 767 Hall St., read a letter into the record (signed by 74 residents) requesting consideration of a flat rate system to more equitably distribute the costs for the new facility to all customers. She also questioned if refunds would be given if adjustments are made to a bill since, in her case, she did have two extra individuals living with her family for a portion of the time in which the average bill was calculated. Director Tiwari stated that the average establishes a consistent rate for a 12-month period. Customers can request that the average be re-calculated based on 3 consecutive months during a different time period. Any adjustment is for future billing periods unless the Council decide to make it retroactive. Laurel Zurlinden, 259 willow Ave., questioned if the most recent bill (received April 1996) is the average flat rate to be used for the next 12 months and Director Tiwari confirmed that the rate will now remain constant for a 12-month period. Ms. Zurlinden stated that she had canvassed the neighborhood in obtaining signatures on the petition and she heard many heart-breaking stories on the effect the new rates have been having on some of the families within the community. She Page 3 - Council Workshop Meeting Minutes, April 15, 1996 r ---~-_.-- m , TAPE READING 2400 2891 Tape 2 'II COUNCIL WORKSHOP MEETING MINUTES April 15, 1996 understands that the City is being forced by federal mandates to upgrade our current facility but feels that all should pay reasonable rates rather some families paying extremely high monthly rates. She also felt that a flat rate amount of approximately $27 would probably not have that great of an affect on most residential customers. Thukor Mistry, 2450 Country Club Ct., questioned if the City really considered the financial impact the rate structure would have on residents and the business community when plans were being made to upgrade the wastewater facility. Mayor Kirksey stated that the Wastewater Task Force started their project about 3 years ago during which time they reviewed numerous recommendations in order to accommodate federal mandates and growth. Even if the City experienced no growth, the City would still need to pay approximately $20 million on the upgrade of the facility to meet federal mandates. Of the 4,025 customers, approximately 250 customers are paying over $50 per month. She reiterated that something could still be done to lower the bills to those individuals, however, the majority of the customers pay less than $50 per month for their sewer bill. She also advocated water conservation during the months in which the average is calculated in order to keep the monthly rate down. Director Tiwari reviewed a chart listing 10 comparable cities to determine how the City's current rate, based on 1,000 cu ft, compares to the average of these 10 cities. It was noted that the average of the 10 cities was $36.70 per month while the City's rate is $39.03 per month. Tom Waggoner, 849 Woodland, stated that some cities also pay property taxes on general obligation bonds for wastewater facilities in addition to the monthly utility rates. In his opinion, the rate structure currently in place is fair to the customers. Rudy Castillo, 458 W. Cleveland, stated that his household uses an average of 1,000 cu ft per month and feels that customers do have some control over how much water is used in their household. In those cases where the bills are extremely high, indications would be that there is something wrong such as a leak or faulty meter. He also stated that the monthly bill in Silverton for wastewater is definitely higher than Woodburn and that he does have a family member who lives in Washington that also pays more for wastewater service. Preston Tack, speaking on behalf of the Senior Estates Community Relations Committee, stated that the financial impact of the rate increase is substantial and those customers Page 4 - Council Workshop Meeting Minutes, April 15, 1996 111 , , .l.-...----->~".--..,~~-----.."--..-,....-,.-"-.,--.-M- I TAPE READING 0185 0291 0381 0456 0560 1 COUNCIL WORKSHOP MEETING MINUTES April 15, 1996 using less than the 500 cu ft are in one way or another subsidizing other customers. He did state that residents of Senior Estates are supportive of the community, however, they do want to keep the "fair share" concept in tact. As a reminder, all other utilities are paid on an actual use basis, therefore, rates for wastewater service should be treated the same. He also suggested that the City go back and develop costs in more detail and place those costs on charts which are easier for the general public to understand. He also requested that if the Council considers a change to the ordinance, that the Council wait two months between the readings of the ordinance in order to give his committee an opportunity to solicit comments from homeowners within Senior Estates on the proposed change. Barbara Lucas requested an explanation of the volume rate charge since, under the chart comparing alternative rates, the volume rate to one-half of the customers is less than the minimum plus volume rate structure. Councilor Jennings briefly summarized the Task Force's rationale in determining which alternative should be forwarded to the Council for consideration. Councilor Pugh reviewed options that had been brought up during this workshop and he expressed his concern in keeping Woodburn as a competitive community for growth. At this point in time, he is leaning toward a flat rate charge or going back to the drawing board to find a rate structure that would lessen the impact on families. Councilor Figley stated that, in her opinion, the main concept is good but it may need fine tuning. She does support a cap on the dollar amount rather than adjusting rates based on family size. Councilor Jennings felt that the basic rate structure should not be changed, however, he was willing to look at establishing a cap on the monthly charge. Councilor Hagenauer felt that the current rate charge was fair and that high bills paid by customers may be an indicator that there is a problem with a water leak or the meter. Councilor Sifuentez agreed with the "fair-share" concept but realizes that there are many customers that are working minimum wage jobs or are low income families. She would like a win-win situation in which any adjustments would have a minimal effect on the customers and total revenue collected to pay for construction and operational costs. She suggested that we continue to get information out to the public on the Page 5 - Council Workshop Meeting Minutes, April 15, 1996 " ,.., ..--..-.- .. w ,. TAPE READING 0645 0674 1900 ~, 11 COUNCIL WORKSHOP MEETING MINUTES April 15, 1996 sewer rates and do whatever we can, such as putting them on a monthly payment plan, to assist families who cannot pay so that their water is not turned off. Councilor Chadwick stated that most of the individuals that she has spoken with are satisfied with the current rate structure and she feels that a single person who is on a fixed income should not subsidize families who use substantially more water. Mayor Kirksey felt that it is difficult to assess if an increase should be assessed to low users of water in order to cap the cost for high water users. She is concerned about the lack of water conservation in those cases where a cap on costs is imposed. She briefly mentioned that other utility services, such as PGE, charge higher rates as you use more electricity since they are actively trying to get customers to conserve electricity. She does feel that the Council should consider giving customers a retroactive credit in those cases where the customer has significantly reduced their bill over a 3 consecutive month period. Councilor Jennings questioned the difference between the hotel/motel unit residential rate structure versus commercial rates. Director Tiwari stated that hotel/motels would probably pay more under the commercial rate. Historically, the City has always treated hotel/motels and apartments under the residential rate structure. A lengthy discussion continued on what action, if any, the Council should direct staff to pursue along with different options that should be considered such as a rate structure tailored based on family size, minor adjustments to the existing rate structure which would lower the cost to high water users, and retroactive adjustments. Mayor Kirksey suggested that consideration be given to a 2- month average versus a 3-month average in those cases where customers have over a $50 wastewater bill along with a potential retroactive adjustment. It was noted that the more months used to calculate the average is a fairer representation of actual water used for billing purposes. Barbara Lucas questioned if the Council has considered how additional revenue will be generated if they reduce the calculation period of the average bill. Further discussion was held regarding methods which could be used to determine average such as using the 3 lowest out of 5 consecutive months. Page 6 - Council Workshop Meeting Minutes, April 15, 1996 '..--. .._- - - TAPE READING 2547 2726 2761 ATTEST ~. COUNCIL WORKSHOP MEETING MINUTES April 15, 1996 A suggestion was also made to put the issue of deciding the appropriate rate structure before the voters. Director Tiwari stated that the bills will continue to include inserts on the sewer rates and water conservation. It was a consensus of the Council that retroactive adjustments should possibly be allowed. Mayor Kirksey solicited opinions from the Councilors regarding their current position on the rates. Councilors Jennings, Figley, Hagenauer, and Chadwick stated that they would prefer to keep the minimum rate at $20.20. Councilor sifuentez and Mayor Kirksey were willing to slightly raise the minimum in order to offer some relief to those households having a higher water consumption. Councilor Pugh requested that the Council receive some input back from Senior Estates before any decision is made since he would still like to pursue a family size concept which still needs to be developed. Mayor Kirksey qualified her response in that she was willing to increase her own monthly bill, however, she was reluctant to increase the minimum bill for other residents who use less than the minimum allowable water consumption. Mayor urged staff and volunteers to put together a conservation workshop to educate consumers on wastewater rates and water conservation. The workshop could be televised on the community access channel and communicated in English, Spanish, and Russian. Director Tiwari briefly summarized the direction given to staff which is to advertise that lowering of any 3 consecutive month average could lower their bills, even after a winter average has been established, and a plan for making retroactive adjustments be investigated and it be brought back to the Council with other modifications approved previously. ADJOURNMENT. The meeting adjourned at 9:48 p.m.. APPROVED ~ NANCY A. MAYOR ~C"lV~r-'~~ Mary ~ant, Recorder City of woodburn, Oregon Page 7 - Council Workshop Meeting Minutes, April 15, 1996 . 'I