HomeMy WebLinkAboutRes2015-090 Sponsored by: Hunt
CITY OF SEWARD,ALASKA
RESOLUTION 2015-090
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, AMENDING THE SEWER TARIFF TO PROVIDE FOR A 4.3%
INCREASE IN THE 2016 CALENDAR YEAR AND A 4.4% INCREASE IN
THE 2017 CALENDAR YEAR,AND ALLOW AN AUTOMATIC ANNUAL
ADJUSTMENT THEREAFTER TO ALL RATES AND FEES BY AN
AMOUNT EQUAL TO THE FIVE PREVIOUS FULL YEARS' AVERAGE
INCREASE IN THE ANCHORAGE CONSUMER PRICE INDEX(CPI)FOR
ALL URBAN CONSUMERS
WHEREAS, the City of Seward's enterprise funds are operated in a manner similar to
private business entities, in that they establish charges intended to cover the full cost of providing
services (including direct and indirect costs) for operations and maintenance, overhead, system
expansion and charges for the use of capital facilities; and
WHEREAS,in 2015,the City executed loans in the amount of nearly$1.7 Million to pay for
the sludge removal and maintenance of the Lowell Point and Spring Creek wastewater treatment
facilities; and
WHEREAS,experienced has demonstrated the importance of setting aside funds annually to
dredge and maintain wastewater treatment facilities and lagoons in accordance with routine
schedules; and
WHEREAS,even after increasing wastewater rates by 4.3%in 2016 (2.3%CPI plus 2%),
the proposed 2016 budget projects a cash deficit of($86,129) in 2016; and
WHEREAS,even after increasing wastewater rates by 4.4% in 2017 (2.4% CPI plus 2%),
the proposed 2017 budget projects a cash deficit of($68,991) in 2017, and would require a further
increase of approximately 9%to generate a zero bottom line for the Enterprise Fund; and
WHEREAS,limiting the rate increases only by the Consumer Price Index(CPI)alone will
not sufficiently cover the cost of operations,critical capital infrastructure repairs and replacement or
demonstrate adequate financial health to qualify for low interest loans; and
WHEREAS, the administration expects to request future rate and fee schedule increases
beyond the CPI in order cover operating and non-operating costs,plus provide sufficient funding to
cover debt payments and capital repair and replacement.
CITY OF SEWARD,ALASKA
RESOLUTION 2015-090
1
NOW,THEREFORE,BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF SEWARD,ALASKA that:
Section 1. The Sewer Tariff for 2016 is hereby amended substantially in the form presented
at this meeting as"Sewer Rates and Charges—2016", and is effective January 1, 2016.
Section 2. The Sewer Tariff for 2017 is hereby amended substantially in the form presented
at this meeting as "Sewer Rates and Charges—2017", and is effective January 1, 2017.
Section 3. All previous Resolutions in conflict herewith are hereby repealed effective
December 31, 2015.
Section 5. This resolution shall take effect ten days following approval.
PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 26`h day of
October 2015.
THE CITY OF SEWARD,ALASKA
Jan Bardarson,Mayor
AYES: Keil, Butts, Altermatt, McClure, Bardarson
NOES: None
ABSENT: Squires, Casagranda
ABSTAIN: None
ATTEST:
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Agenda Statement
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Meeting Date: October 26, 2015 ; � /
To City Council
Through: City Manager, Jim Hunt
From: Public Works Director,W.C. Casey
Agenda Item: Amending the Sewer Rates and Charges in the 2016 and 2017 Tariff
BACKGROUND &JUSTIFICATION:
The Wastewater Fund does not generate sufficient revenues to cover its costs of operations and debt
service,nor set aside funding for future capital projects or major maintenance and repairs. In 2015,loans
in the amount of nearly $1.7 Million were authorized for the sludge removal and disposal project at the
Lowell Point and SMIC Wastewater Treatment Facilities. The annual cost of the loan repayments were
originally estimated at $95,561, but due to cost savings in the project, it is expected that the City will
borrow a total of $1.2 Million at an annual cost of approximately $72,518. The next scheduled
maintenance of the Sewer Lagoon is estimated within the next 7-10 years,and funding must be available
for those major repairs.
Given recent major capital repairs and associated capital debt, current rates are not sufficient to cover
operational and capital debt service costs. The proposed rate increase of 4.3%in 2016(2.3%CPI plus 2%)
is insufficient to avoid a projected cash deficit of($86,129)in 2016. The proposed rate increase of 4.4%in
2017(2.4%CPI plus 2%) is insufficient to avoid a further projected cash deficit of($68,991) in 2017.
INTENT:
The intent of this action is to improve the financial condition of the Wastewater Enterprise Fund in order to
cover the recent costs of new debt associated with major dredging and repairs to both the Lowell Point and
SMIC sewer lagoons.
CONSISTENCY CHECKLIST: Yes No N/A
1. Comprehensive Plan (document source here): X
2. Strategic Plan (document source here): X
3. Other(list): Design Study Report(CRW)June 2000 Pages 8-22 X
FISCAL NOTE: Even with the proposed rate increases of 4.3%in 2016 and 4.4%in 2017,rates will be
insufficient to cover operating costs and debt service without a further future rate increase of approximately
9%, exclusive of the need to fund major repair and replacement of assets in the future.
Approved by Finance Department:
ATTORNEY REVIEW: Yes No X Not Applicable
RECOMMENDATION:
Administration recommends Council approve Resolution 2015-090,amending the Sewer Rates in the 2016
and 2017 Tariff.