[Council Communication]  [Proposed Resolution]

Council Communication

Title:	A resolution increasing water rates.
Dept:	Finance Department
Date:	May 6, 2003
Submitted By:	Lee Tuneberg, Finance Director
Approved By: ...........................	Gino Grimaldi, City Administrator

Synopsis:	The proposed budget for FY 2003-04 calls for an increase of water rates in keeping with the rate model and projected operational costs. In 2002 staff used a consultant to do considerable rate analysis identifying the need for a significant increase or several smaller ones timed with annual reviews of revenues compared to costs. This is the second of possibly three annual 5% increases. The increase would be effective for bills prepared on or after July 1, 2003 beginning with Cycle one.
Recommendation:	Staff recommends approval of the attached resolution.
Fiscal Impact:	The resolution represents a $187,700 increase in revenues in the Water Fund. It balances current year revenues and operational needs within the approved FY 2003-2004 budget, providing adequate coverage to meet bond covenants. The increase for rates will also generate an additional $9,385 in franchise revenue which represents right-of-way payments to the General Fund.
Background:	The city last increased water rates 5% effective on bills in July 2002. Since that time Water Fund operational costs have increased 14.5% whereas revenue growth has been approximately 13%. Cost increases are primarily related to personnel, power, chemicals and supplies. Actual revenues and expenses vary with temperature, rainfall and customer use sometimes compromising financial forecasts and potentially jeopardizing fund balances and bond coverage compliance. A revenue reserve account is employed to minimize such variations but an increase is necessary to adequately fund years where revenues fall short of expenses. The average residential water bill using 1000 cubic feet in a month will increase $1.06 from $21.17 to $22.23 with this change. A commercial account using 3500 cubic feet in a month will increase $2.97 from $59.46 to $62.43. The intent is to raise rates July 2003 and continue to monitor the balance of operational revenue to operational expense, adjusting where necessary to provide adequate revenue to meet expenses and comply with bond coverage requirements. Additionally, Talent Irrigation District instituted $65/lot plus $45/acre administrative fees in 2001 that have not been passed through to our customers or included within the city rates. Increasing the TID unmetered charge from $58.43 to $75.00 will cover our maintenance and repair costs and get us closer to an appropriate rate. Even with this increase the user of TID water receives irrigation water at a very good price.

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RESOLUTION NO. 2003- _____

A RESOLUTION REVISING RATES FOR WATER SERVICE PURSUANT TO ASHLAND MUNICIPAL CODE SECTION 14.04.030 AND REPEALING RESOLUTION 2002- 08.

THE CITY OF ASHLAND RESOLVES AS FOLLOWS:

SECTION 1. The water rate charges and rates as shown on the water rate schedule attached as Exhibit "A" shall be effective with Cycle one billings prepared on or after July 1, 2003.

SECTION 2. One copy of this resolution shall be maintained in the Office of the City Recorder.

SECTION 3. Classification of the fee. The fees specified in Section 1 and Section 2 of this resolution is classified as not subject to the limits of Section 11b of Article XI of the Oregon Constitution (Ballot Measure 5).

SECTION 4. Resolution 2002-08 is repealed.

This resolution was read by title only in accordance with Ashland Municipal Code §2.04.090 duly PASSED and ADOPTED this 6th day of May, 2003.
Barbara Christensen, City Recorder

SIGNED and APPROVED this 6th day of May, 2003.
Alan W. DeBoer, Mayor

Reviewed as to form:
Paul Nolte, City Attorney