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Council Agenda Statement <br /> Meeting Date: November 9, 2009 e440 saitt <br /> Through: Phillip Oates, City Manager <br /> •;11 <br /> From: W.C. Casey, Public Works Director Ae. q � <br /> Agenda Item: Amending the Water Tariff and Providing for <br /> Automatic Annual Adjustments to All Rates <br /> BACKGROUND & JUSTIFICATION: <br /> Over the course of the past two months, the Seward City Council has held five work sessions to <br /> discuss the water tariffs, listen to staff feedback, and solicit public testimony regarding the 2010 and <br /> 2011 Water Enterprise Budgets. Funding strategy recommendations from the Bird Enterprise Fund <br /> Study, the public testimony comments, and staff input regarding various revenue enhancement <br /> options were all discussed at length. <br /> Since the time of the R.W. Beck Rate Study (1993), water rates have been amended three times: to <br /> adjust charges for ship's water; a 5% across - the -board increase to all water rates effective January 1, <br /> 2004; and a 35% increase in all water rates effective January I, 2005 (78% of which was solely <br /> dedicated to the repayment of the Third Avenue Water Main. ADEC Municipal Loan debt service). <br /> With the assumption that current demands on the water system will remain stable, revenue projections <br /> for the foreseeable future will continue to fall short of needed capital to operate and maintain the <br /> water system in a safe and efficient manner. <br /> In an effort to improve the financial viability of the water department, thus making the utility eligible <br /> for assistance through the Alaska Department of Environmental Conservation Municipal Matching <br /> Grant Program (70 % -30 %) and ADEC Municipal Loan Program (1.5% interest), adjusting rates is <br /> necessary. Small, incremental, upward adjustment of rates will enable the water utility to improve its' <br /> financial stability and allow the utility to become competitive in pursuing opportunities for grants and <br /> loans through ADEC. Items of "Critical" importance regarding repair, maintenance and improvements <br /> to the system were identified and will be addressed as financial viability is achieved. <br /> INTENT: <br /> The adoption of the proposed amendments to the Water Tariff and providing for automatic annual <br /> adjustments to all rates and fees will improve the financial condition of the Water Enterprise Fund. <br /> CONSISTENCY CHECKLIST: <br /> Where applicable, this resolution is consistent with the Seward City Code, Charter, Comprehensive <br /> Plans, Land Use Plans, Strategic Plan and City Council Rules of Procedures. <br /> Other: M.L. Foster Water Compliance Study <br /> FISCAL NOTE: <br /> Rates to he adjusted annually beginning the first billing of each calendar year to reflect the average of <br /> the five previous published years' annual increases in the Anchorage Consumer Price Index for all <br /> urban consumers. <br />