7. Staff Report-201 rate structure
Staff Report
Date of Meeting: April 8, 2014
To: Wastewater Advisory Committee
From: Kristina Handt, City Administrator
Re: 201 Sewer Rates
Background:
At the last meeting, Neil Swenson asked the committee to look into having two different rates for
the 201 system, one for year-round properties and one for seasonal properties. The committee
directed staff to put the issue on the next agenda for review and invited Mr. Swenson to return.
As mentioned at the meeting, the City recently reviewed this issue. Copies of the letter sent to
users in 2008 explaining the change as well as the background memo reviewed by the Council is
included in your packet. Much of the information still applies today.
Issue:
Should the Wastewater Advisory Committee recommend a change in rate structure for the 201
system?
Proposal Details:
Staff pulled up the property tax statements for each property on the 201 system. Of the 108
customers, 86 are classified as Residential, Residential-Non-Homestead and Disability
Residential and 22 are classified as Seasonal. Seasonal properties are less than one-quarter of the
users and this is a significant decline from the one-third that were classified as seasonal for the
2007 billings.
I spoke with the City Assessor and he said that Residential Non-Homesteads could be year-round
so that’s why staff has grouped them with Residential. As the 2008 memo points out, even if a
property is not classified as residential it may be rented out and used year-round. Furthermore,
there is no determination on the length of use for seasonal properties. Would someone who uses
the property 9 of 12 months be charged the same as someone who uses the property 5 of 12
months?
Also, as mentioned in the 2008 memo very little of the expenses for operating the 201 system are
related to volume (we also saw this with the Uptown System hence the high base charges).
Because of this fact and that it can be difficult to determine usage based on property tax
classification, staff would recommend staying with the current rate structure. A property has
value simply by being connected to the system.
Fiscal Impact:
NA-No impact to the overall fund, just a reallocation amongst users if a different rate structure is
adopted.
In 2008 examples, seasonal properties would have paid roughly 40% less than year-round
properties. If that same methodology would be applied, year-round rate would be $751.60 and
seasonal would be $450.96 in order to collect a similar amount of revenue.
Alternatively, if a similar approach was taken as with the Uptown System whereby there
constant charges are included in the base and there is only variability for volume charges (which
run 10-15% of budget), possible rates would be $705.85 for year-round and $641.68 for seasonal
properties.
The fund will charged an additional $65.42 each time the property listing is checked to verify tax
classification to compensate for the additional staff time.
Options:
1) Make no changes to current rate structure
2) Recommend two different rates, one year-round and one seasonal
3) Make some other changes to the 201 rate structure.