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Home My WebLink About2024-12-02 Study Session MINASHLAND CITY COUNCIL STUDY SESSION MINUTES Monday, December 2, 2024 Mayor Graham called the meeting to order at 5:30 p.m. Mayor Graham and Councilors Hyatt, Dahle, Bloom, DuQuenne, Hansen, and Kaplan were present. Public Input (15 minutes - Public input or comment on City business not included on the agenda) None II. Water Cost of Service and Rate Study Scott Fleury Public Works Director introduced Josiah Close from HDR Engineering who provided a presentation (see attached). Topics included: • Use of the American Waterworks Association Ml Manual to develop proportional and cost -based rates across customer classes to cover operating and capital costs • 'Cash -Basis' methodology as a generally accepted method for municipal utility • Revenue requirement based on FY 2025 for the utility projected through 2030 with inflationary factors and long-term borrowing for capital needs including reinvestment • Major capital improvements include the water treatment plant, dam safety improvements, east & west fork transmission lines and Granite storage replacement • Average customer bill comparison for years 2025-2030. • Cost of service examples for residential, multi -family, and non-residential customers • Overview of rate design alternatives Bloom clarified with Fleury that increased efficiencies anticipated with SMART metering and/or the new treatment plant will be factored into the next phase of rate study once realized. Graham asked how potential grant awards were factored into this study. Fleury spoke that the study accounts for $9 Million of BIL (Bipartisan Infrastructure Law) funding with access anticipated in the calendar year of 2025. Future grant awards would change the revenue base and be provided to Council when reviewing rates in the biennium budget cycle basis moving forward. DuQuenne asked if the City has received the BIL funding. Fleury clarified that Business Oregon is working on allocating those funds and would verify expenditures while the project moves forward. Bloom asked for an update on the WIFIA (Water Infrastructure Finance and Innovation Act) Loan. Fleury articulated the next steps needed to close the loan and anticipated closing in the spring of 2025. DuQuenne asked about the difference in water rates between Ashland and neighboring cities. Fleury explained the differences between various local water systems adding that Medford has raised rates. Kaplan clarified that Ashland's conservation ethic applied to rates yields lower low -use rates than Grants Pass or Phoenix. Hyatt clarified with Fleury that the Federal Energy Regulatory Commission requires the dam project, and Fleury spoke of potential changes to that City Council Study Session December 2, 2024 Page I of 3 requirement and potential funding for discussion in the spring. Kaplan and Dale asked about the potential to add institutional rate tiers. Graham confirmed with Close that institutional irrigation use is metered separately. Close spoke that next steps include incorporating Council feedback, reviewing study results with City staff, develop a draft written report, and present final study results, findings, and recommendations by March 2025 with implementation of new rates for July 1, 2025. Bloom and Kaplan asked about the affordability program. Fleury spoke that the study considered an increased allocation to the low-income utility assistance program and that updated resolutions that include all utilities are forthcoming. Kaplan asked about an extension of peak -pricing model to include October. Fleury spoke that shoulder season use also includes TAP (Talent Ashland Phoenix) intertie usage and may be a policy discussion for Council in the future based on environmental changes affecting water usage from April through October. Council requested to see a larger rate differential between the lowest necessary tier and higher use tiers while remaining revenue -neutral. Fleury spoke that rates will continue to be reviewed on a biennium basis as revenue is realized. Graham confirmed with Fleury that the Conservation Fund was incorporated into the rate study. Hansen clarified with Fleury and Cotta that a totalized bill comparison with neighboring municipalities that includes the electric charges will be made available and brought back. Council considered that future rate studies could include elevation as a potentially significant variable for rate consideration as in Medford, and that affordability programs would be discussed in the spring with budget considerations prior to adoption. Council discussed options for funding such affordability programs such as proposing a 5% meals tax for ballot consideration in the future. Council provided staff direction to extend peak -use months, identify ways to increase conservation, review tier differentials, low-income assistance programs, Food and Beverage taxes, comparison of neighboring communities' rates, and alternatives that were excluded. III. Update to the Council on Next Steps for Enhanced Law Enforcement Area (ELEA) Chief of Police Tighe O'Meara and Assistant City Attorney Carmel Zahran reviewed the proposed ELEA language. Language regarding dog licensing and accumulating junk has been removed from qualifying violations, and an expulsion order will include an option for appeal to the municipal court Judge. Hyatt clarified with O'Meara that expulsion would be upon receiving three qualifying violation citations. Bloom clarified with Zahran that an appeal would stay the expulsion order until heard by the municipal court. Council discussed options for hearing from other professionals on this topic at the February Study Session, such as the Criminology department from SOU, Law enforcement from other jurisdictions, Judge Mulkins, or others. Zahran explained the legal department researched a range of similar ordinances in other municipalities and would be happy to answer any questions. O'Meara spoke that the City Council Study Session December 2, 2024 Page 2 of 3 City of Medford has an ordinance very similar to this proposed ordinance that was held up when challenged in federal court. The City's legal team incorporated the language from the federal ruling into the proposed ordinance. Council discussed how to handle outdoor and indoor burning restrictions and clarified that under the ordinance there are still permitted activities for an expelled person for essential activities such as grocery shopping, doctors' appointments, pharmacy access, etc. Council further clarified with O'Meara that the proposed trespass ordinance is on hold until this ordinance is clarified; however, trespass remains a crime and is a qualifying violation for expulsion criteria. Graham summarized that the Council would like to know what issues the suggested changes to the ordinance are intended to address and suggested Councilors submit questions prior to the Study Session in February for staff to address. IV. Adjournment of Study Session The meeting was adjourned at 7:35 p.m. Respectfully Submitted by: IA I a I M�1I �� City Recorder Alissa Kolodzinski Attest: Mayor Tonya Graham City Council Study Session December 2, 2024 Page 3 of 3 City of Ashland Water Rate Study — Draft Results December 2, 2024 I FN Purpose of the Study Overview of the Rate Study Process Draft Study Results Summary & Next Steps Questions & Discussion 1, E .. Zr- aB n r "4M w -0 ^..* 3 • Provide sufficient revenue to operate and maintain the City's water infrastructure • Develop proportional and cost -based rates that reflect customer and system characteristics • Reflect prudent financial planning criteria • Funding capital improvement needs * Maintain target minimum reserve levels * Meet debt service coverage requirements • Develop the Study using generally accepted methodologies tailored to the City's system and customer characteristics REVENUE REQUIREMENT Compares the revenue of the utility to the expenses to evaluate the level of the current rates COST OF SERVICE Proportionally distributes the revenue requirement to the customer classes of service RATE DESIGN Design rates for each class of service to meet the revenue requirement, cost of service results, and rate design goals and objectives Provide sufficient funding for operational costs • Major capital project funding . Water Treatment Plant • Dam Safety Improvements • East & West Fork Transmission Line Develop cost -based and proportional water rates Promote efficient water use Based on each customer class's demands on the system s • Determines the level of rate revenue adjustment necessary • Adequate funding of renewal and replacements • Maintaining sufficient ending reserve balances • Typically, five -to -ten-year period • Rate setting is often 2 — 5 years • No transfer of funds from other City funds • Rates need to support operations and capital • Generally accepted method for municipal utilities 7 • Revenues independently calculated based on the specific customer characteristics of the utility • Expenses based on FY 2025 budget for the utility • Projected through FY 2030 based on annual inflationary factors Capital funding plan addresses need for improvements as well as renewal and replacement Target annual rate funding of capital • In crease significantly over the review period (FY 2025 — FY 2030) • $800,000 - $3,350,000 • Long-term borrowing for a portion of capital needs • Water Treatment Plant • Dam Safety Improvements 8 Water Treatment Plant (FY 2026 — FY 2028) • WIFIA loan (-$61.8 million) • Grant (-$9.3 million) Dam Safety Improvements (FY 2026 & FY 2027) • Funded through Dam Safety Improvements debt issuance) East & West Fork Transmission Line (FY 2026 & FY 2027) • Fund through available cash and reserves Granite Storage Tank Replacement (FY 2030 & FY 2031) • Fund through anticipated long-term debt issuance 9 Capital Improvement Plan Summary ($000s) $50,000 $47,483 $42,924 $45,000 $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $s.496 $3,2DO $4,703 $3,707 $0 FY 2025 FY 2026 FY 2027 FY 2028 F Y 2029 FY 2030 ■ Rate Funded Capital ■ Unrestricted Reserves ■ 5DC s Reserve ■ long -Term Debt Proceeds s Additional Revenue Bonds Grant Proceeds 10 $18,000 $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 11 Revenue Requirement Summary ($000s) FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Total Operations & Maintenance Net Debt Service Taxes & Transfers — — — Proposed Revenue Rate Funded Capital Total Reserve Funding Current Revenue Ending Reserve Fund Balances ($000s) $10,000 $9,000 $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 --- — —— — —— --- $1,000 $0 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Unrestricted Reserves SDCs Reserve — — —Target Reserve Balance 12 • Annual rate adjustments are necessary to prudently fund the water utility • O&M —fund current and future inflationary increases • Capital — increase rate funding for annual renewal and replacement and necessary system improvements • Reserves— maintain adequate funds for cash flow, emergency situations, and strong financials for credit ratings Residential Customer Bill Avg Customer Bill [1] $51.27 $58.96 $67.80 $77.98 $89.67 $96.85 Annual Monthly Change -- $7.69 $8.84 $10.17 $11.70 $7.17 [1] — Customer Charge + Meter Charge + 700 Cf; no cost of service or rate structure changes are included 13 What is Cost of Service? • Analysis to proportionally distribute the revenue requirement to the customer classes of service of each utility Why- - • Generally accepted industry approach • Avoids subsidies between classes • Revenues reflect costs • Determine if subsidies exist • Develop average unit costs 15 Residential Multi -Family Non -Residential Residential Multi -Family Non -Residential Residential Multi -Family Non -Residential 16 Cost of Service Summary ($000s) $10,000 $8,000 $6,000 $4,000 $2,000 $0 MM __ Res / MF / Res Irr J Com/Inst Irr Institutional Com ■ Current Revenues ■ Distributed Costs 17 Cost of Service Summary- Percentage I t i I I I 0.0% s.0% 10.0% 15.0% ■ Res / MF / Res Irr / Com ■ Com / Inst hr u Institutional -Analysis reflects facility and service requirements of each customer class -Results in proportional rates for each customer class of service -Provides the City with information for rate structure policy decisions -Should be reviewed periodically to reflect changes in customer and system characteristics -Snapshot in time based on current costs and system usage 20.0% is Based on the results of the revenue requirement and cost of service analyses Meet the rate design goals and objectives of the city Produce sufficient revenues to meet the target revenues of the utility, and each class of service Are cost -based and proportional 20 Status Quo ■ Maintains current rate structure for all customers Alternative • Customer Charge structure maintained and increased greater to reflect increase in personnel costs • Meter Charge transition to reflect AWWA safe operating capacity meter ratios • Moderate increases in tier differentials • No change to Institutional class Alternative 2 • Customer and Meter Charge are the same as Alternative 1 ■ More significant increases in tier differentials • No change to Institutional class 21 Status Quo Alternative 1 & 2 Present Proposed Rates Present Proposed Rotes Rates FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 $/Acct. /Mo. $/Acct. / Mo. All Customers $13.33 $15.33 $17.63 $20.27 $23.31 $25.17 All Customers $13.33 $17.50 $20.50 $23.75 $27.60 $30.00 Meter Charge $/ACCL I Mo. Meter Charge $/ACCt /Mo. 0.75" $15.62 $17.96 $20.66 $23.76 $27.32 $29.51 0.75" $15.62 $16.00 $1&40 $21.16 $2433 $26.28 1" 16.29 18.73 21.54 24.77 28.49 30.77 1" 16.29 18.69 23.80 30.03 37.58 43.89 1.5" 74.52 85.70 98.55 113.33 130.33 140.76 1.5" 74.52 71.72 77.18 82.66 8&03 87.51 2" 118.41 136.17 156.60 180.09 207.10 223.67 2" 118.41 114.09 122.92 131.83 140.63 140.07 3" 237.45 273.07 314.03 36L13 415.30 448.52 3" 237.45 226.58 24143 255.63 268.61 262.80 4" 376.59 433.08 49&04 572.75 658.66 71135 4" 376.59 361.95 388,86 415.70 441.78 438.09 6" 741.01 85216 979.99 1,126.99 1,296.04 1,399.72 6" 741.01 713.89 769.04 824.69 879.58 875.91 8" 1,174.75 1,350.96 1,553.61 1,786.65 2,054.65 2,219.02 8" 1,174.75 1,133.32 1,222.81 1,313.64 1,403.98 1,401.51 22 Present Proposed Rates Present Proposed Rates Rates FY 2026 FY =7 "2028 FY 2029 FY 2030 Rates FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Status Quo October- May $/cf June - September $/cf 0-300 $0.0280 $0.0322 $0.0370 $0.0426 $0.0490 $0.0529 0-300 $0.0280 $0.0322 $0.0370 $0.0426 $0.0490 $0.0529 301- 1,000 0.0348 0.0400 0.0460 0.0529 0.0608 0.0657 301- 1,000 0.0348 0.0400 0.0460 0.0529 0.0608 0.0657 1,001-2,500 0.0472 0.0543 0.0624 0.0718 0.0826 0.0892 1,001- 2,500 0.0472 0.0543 0.0624 0.0718 0.0826 0.0892 Over 2,500 0.0609 0.0700 0.0805 0.0926 0.1065 0.1150 2,501-3,600 0.0609 0.0700 0.0805 0.0926 0.1065 0.1150 Over 3,600 0.0784 0.0902 0.1037 0.1193 0.1372 0.1482 Alt 1 October- May $/ cf June -September $/cf 0-300 $0.0280 $0.0300 $0.0345 $0.0397 $0.0457 $0.0494 0-300 $0.0280 $0.0300 $0.0345 $0.0397 $0.0457 $0.0494 301- 1,000 0.0348 0.0410 0.0472 0.0543 0.0624 0.0674 301- 1,000 0.0348 0.0410 0.0472 0.0543 0.0624 0.0674 1,001- 2,500 0.0472 0.05% 0.0640 0.0736 0.0846 0.0914 1,001- 2,500 0.0472 0.0556 0.0640 0.0736 0.0846 0.0914 Over 2,500 0.0609 0.0718 0.0825 0.0949 0.1091 0.1178 2,501- 3,600 0.0609 0.0718 0.0825 0.0949 0.1091 0.1178 Over3,600 0.0784 0.0924 0.1063 0.1222 0.1405 0.1517 Alt 2 October -May $/cf June -September $/cf 0-300 $0.0280 $0.0263 $0.0302 $0.0347 $0.0399 $0.0431 0-300 $0.0280 $0.0263 $0.0302 $0.0347 $0.0399 $0.0431 301- 1,000 0.0348 0.0425 0.0489 0.0562 0.0646 0.0698 301- 1,000 0.0348 0.0425 0.0489 0.0562 0.0646 0.0698 1,001-2,500 0.0472 0.0576 0.0663 0.0762 0.0876 0.0946 1,001-2,500 0.0472 0.0576 0.0663 0.0762 Q0876 0.0946 Over 2,500 0.0609 0.0744 0.0855 0.0983 0.1130 0.1220 2,501- 3,600 0.0609 0.0744 0.0855 0.0983 0.1130 0.1220 Over 3,600 0.0784 0.0957 0.1101 0.1266 0.1456 0.1572 23 Present Proposed Rotes Present Proposed Rates Rates FY 2026 FY =7 "2= FY 2029 FY 2030 Rates FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Status Quo October -May $/cf June -September $/cf 0- 1,000 $0.0348 $0.0400 $0.0460 $0.0529 $0.0608 $0.0657 0- 1,000 $0.0348 $0.0400 $0.0460 $0.0529 $0.0608 $0.0657 1,001-2,500 0.0472 0.0543 0.0624 0.0718 0.0826 0.0892 1,001-2,500 0.0472 0.0543 0.0624 0.0718 0.0826 0.0892 Over2,500 0.0609 0.0700 0.0805 0.0926 0.1065 0.1150 2,501-3,600 0.0609 0.0700 0.0805 0.0926 0.1065 0.1150 Over 3,600 0.0784 0.0902 0.1037 0.U93 0.1372 0.1482 Alt J October- May $/ cf June -September $/cf 0 - 1,000 $0.0348 $0.0410 $0.0472 $0.0543 $0.0624 $0.0674 0 -1,000 $0.0348 $0.0410 $0.0472 $0.0543 $0.0624 $0.0674 1,001- 2, 500 0.0472 0.0556 0.0640 0.0736 0.0846 0.0914 1,001- 2,500 0.0472 0.0556 0.0640 0.0736 0.0846 0.0914 Over 2,500 0.0609 0.0718 0.0825 0.0949 0.1091 0.1178 2,501- 3,600 0.0609 0.0718 0.0925 0.0949 0.1091 0.1178 Over 3,600 0.0784 0.0924 0.1063 0.1222 0.1405 0.1517 Alt 2 October -May $/cf June -September $/cf 0- 1,000 $0.0348 $0.0425 $0.0489 $0.0562 $0.0646 $0.0698 0- 1,000 $0.0348 $0.0425 $0.0489 $0.0562 $0.0646 $0.0698 1,001-2,500 0.0472 0.0576 0.0663 0.0762 0.0876 0.0946 1,001-2,500 0.0472 0.0576 0.0663 0.0762 0.0876 0.0946 Over 2,500 0.0609 0.0744 0.0855 0.0983 0.1130 0.1220 2,501- 3,600 0.0609 0.0744 0.0855 0.0983 0.1130 0.1220 Over 3,600 0.0784 0.0957 0.1101 0.1266 0.1456 0.1572 24 Present Proposed Rates Rates FY 2026 FY 2027 FY 2028 FY =9 FY 2030 Status Quo Less than 2"Meter $/cf 0- 2,500 $0.0348 $0.0400 $0.0460 $0.0529 $0.0608 $0.0657 Over2,500 0.0472 0.0543 0.0624 0.0718 0.0826 0.0892 Alt 1 Less than 2" Meter $ / cf 0- 2,500 $0.0348 $0.0410 $0.0472 $0.0543 $0.0624 $0.0674 Over 2,500 0.0472 0.0556 0.0640 0.0736 0.0846 0,0914 Alt 2 Less than 2" Meter $/cf 0-2,500 $0.0348 $0.0425 $0.0489 $0.0562 $0.0646 $0.0698 Over2,500 0.0472 0.0576 0.0663 0.0762 0.0876 0.0946 25 Present Proposed Rates Rates FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 2" Meter or Larger $/ cf 0-15,000 $0.0348 $0.0400 $0.0460 $0.0529 $0.0608 $0.0657 Over15,000 0.0472 0.0543 0.0624 0.0718 0.0826 0.0892 2" Meter or Larger $/cf 0- 15,000 $0.0348 $0.0410 $0.0472 $0.0543 $0.0624 $0.0674 Over15,000 0.0472 0.0556 0.0640 0.0736 0.0846 0.0914 2" Meter or Larger $/ cf 0-15,000 $0.0348 $0.0425 $0.0489 $0.0562 $0.0646 $0.0698 Over 15,000 0.0472 0.0576 0.0663 0.0762 0.0876 0.0946 Present Proposed Rates Rates FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Status Quo $/Cf All Consumption $0.0334 Alt $1d All Consumption $0.0334 Alt $/Cf All Consumption $0.0334 $0.0384 $0,0442 $0.0508 $0.0584 $0.0631 $0.0420 $0.0483 $0.0555 $0.0638 $0.0689 $0.0420 $0.0483 $0.0555 $0.0638 $0.0689 26 Present Proposed Rates Rates FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Status Quo October- May $/Cf Non -Peak Consumption $0.0376 $0.0432 $0.0497 $0.0572 $0.0658 $0.0711 June - September Peak Consumption $0.0510 $0.0587 $0.0674 $0.0775 $0.0891 $0.0962 Alt 1 October - May $/cf Non -Peak Consumption $0.0376 $0.0373 $0.0429 $0.0493 $0.0567 $0.0612 June - September Peak Consumption $0.0510 $0.0625 $0.0719 $0.0827 $0.0951 $0.1027 Alt 2 October- May $/Cf Non -Peak Consumption $0.0376 $0.0373 $0.0429 $0.0493 $0.0567 $0.0612 June - September Peak Consumption $0.0510 $0.0625 $0.0719 $0.0827 $0.0951 $0.1027 i•�] Residential Bill Comparison (Peak Rates) $160.00 $140.00 $120.00 $100.00 $80.00 $60.00 $40.00 $20.00 ' 'II $0.00 0 300 500 1,100 1,500 2,500 ■ Present Rates $28.95 $37.35 $44.31 $66.43 $85.31 $132.51 ■ Status Quo $33.29 $42.95 $50.96 $76.39 $98.11 $152.39 ■ Alt $33.50 $42.50 $50.70 $76.77 $99.02 $154.65 ■ Alt 2 $33.50 $41.39 $49.89 $76.90 $99.95 $157.59 Assumes 314" meter 28 Local Residential Comparison (700 CF) $70.00 $60 00 $58.96 $58.91 $58.39 $51.27 / $50.00 � $46.26 545.85 $41.48 540.00 $32.98 $30.00 $28.41 $24.58 $20.00, $10.00 $0.00 Ashland - Ashland - Ashland - Alt Ashland - Alt Phoenix Talent (2025) Medford Eagle Point Grants Pass Klamath Falls Present status Quo 1 2 (2024) (2024) (2024) (2023) (2024) Assumes 314" meter 29 a Receive Council feedback and input Update the Study to reflect Council direction • Review study results with City staff a Develop draft written report a Present final study results, findings, and recommendations (Feb / Mar 2025) a Implement new rates July 1st, 2025 30 Thank you for your input! Questions?