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2007, 05-01 Special Joint Council/BOCC Meeting MinutesMINUTES Joint Meeting City Council /Spokane County Commissioners Tuesday, May 1, 2007 6:00 p.m. Spokane Valley City Hall Council Chambers 11707 E. Sprague Avenue, Spokane Valley, WA. Attendance. City of Spokane Valley Mayor Wilhite Deputy Mayor Taylor Councilmember Denenny Councilmember DeVleming Councilmember Gothmann Councilmember Munson City Manager Dave Mercier Deputy City Manager Nina Regor City Attorney Mike Connelly Police Chief Rick VanLeuven Public Works Director Neil Kersten Finance Director Ken Thompson Parks & Rec Director Mike Jackson PIO Carolbelle Branch IT Specialist Greg Bingaman City Clerk Chris Bainbridge Spokane County Commissioner Richard, Chair (arrived at 6:20) Commissioner Mager Utilities Director Bruce Rawls Utilities Section Manager Kevin Cooke Water Reclamation Manager Dave Moss County Auditor's Office Dave Stark Others: Angie Sanchez, FCS Consulting Ed Cebron, FCS Consulting Absent. Absent. Councilmember Schimmels Commissioner Miekle Mayor Wilhite called the meeting to order at 6:05 p.m. and asked City Clerk Bainbridge to call the roll. All councilmembers were present except Councilmember Schimmels. It was moved by Councilmember Munson, seconded, and unanimously agreed to excuse Councilmember Schimmels from tonight's meeting. Joint Council /Commissioners Agenda Item: 1. Discussion/Presentation: Wastewater Treatment Financial Planning, Rates Study — Bruce Rawls, Spokane County Utilities Director Mr. Rawls introduced Ed Cebron and Angie Sanchez from FCS Consulting, and said that Ms. Sanchez is the consultant for the project; and he also introduced County employees Kevin Cooke, Dave Moss, and Dave Stark. Mr. Rawls explained that one of the reasons for tonight's presentation, is that over the last several years of discussion, one of the key issues of importance to Council is having the opportunity to have input on rates, and to have dialogue about the financial decisions; and that we are on course to make a major change in the rate structure and financing on the project; and he felt it would be beneficial to have that dialogue with the Commissioners who set this up as a joint meeting, which allows the conversation to be direct rather than interpretative. Ms. Sanchez then gave the PowerPoint presentation, which focused on the purpose of a rate study now, how wastewater costs are funded, an overview of the process including financial planning assumptions and operating and maintenance, funding options and sources, and summary of proposed rates and charges. She explained that the presentation also focuses on new customers and existing ratepayers' fees; and mentioned the new slide showing the sewer rate comparison with other cities. Mr. Rawls added that they have a recommended option, but there are other options which could adjust the rates one way or the other; Special Joint Council /County Meeting May 1, 2007 Page 1 of 6 Approved by City Council: 05 -22 -07 and that the last year for the capital facilities rate will be 2011. Mr. Rawls also mentioned that the County has reserves in all funds, and that the $700,000 shown on slide 7 under "Projected Operating Fund: fund Balance to Levelize Rate Increase," (dealing with operations and maintenance and not the capital part) will come from the County's reserves; that in 2008 and 2009 they would borrow from those funds and restore those funds in the future, and that the reserves would not be totally depleted. In moving into the Capital Program revenue sources, Ms. Sanchez explained that this includes the wastewater treatment plant monthly charge, which is currently $6.68; and she explained the other revenue sources as shown on slide 8. Mr. Rawls also mentioned that in aquifer protection, the reserves amount to an estimated ten million dollars; and there are other reserves in other funds which will go toward this program. In reference to the STEP (septic tank elimination program), Mr. Rawls said their recommendation is to cap the GFC (general facilities charge) STEP at $1,885, which is $2510 less the 25% subsidy; and that they propose keeping it at $1885 as it is relatively consistent with what other recent customers have paid in the STEP, and they are concerned if they make a substantial adjustment to it in the last four years, there could be some issues related to that, but that this is a policy decision; and that a policy decision was made several years ago to keep it at that level, as the rationale was if the customer was not eliminating a septic tank, they should not get the subsidy for it but should pay the full cost for the capacity, and at that time it was $2510; and now that they have to use higher technology, the calculated rate if it were the full cost, would be $3632 for new development. Commissioner Richard added that this is something they would like Council's input on; as one could argue that drastic changes could be a cause of concern for those not yet connected to the sewer as to why they are paying a different rate, but the argument could be made as to why they are discussing increasing the GFC for other new connections, as the new technology is being paid for, the new DOE, the new federal requirements, and that all of this cutting -edge technology costs more then what people who previously signed on with the STEP program were paying; and before any decisions are made concerning rates, Commissioner Richard said they are seeking Council's feedback. Mr. Rawls said that rate options are included in an upcoming slide, but that this discusses the cost of service proposals, and once that is determined, there are numerous adjustments that can be made based on policy decisions. Ms. Sanchez continued the presentation, including the summary of capital costs shown on slide 12, which show an estimated total capital costs during the years 2007 through 2016, of $289,000. In response to Councilmember Munson's question asking for further discussion of the Saltese Flats Wetlands Projects, Mr. Rawls said there is an interest in pursuing acquisition of land in that area with the possibility of restoring wetland, which could be a future site for effluent disposal; and that project was included because if the project is going to occur, funds will be necessary. Commissioner Richard added that this leads to the possibility of recharging the aquifer, and keeping some of the effluent out of the river, but this project has not been decided. The topic of growth rate came up, and Mr. Rawls said that the figures used on these projections are based on a medium growth rate of approximately 1.1% per year; and if that growth rate is not achieved, then we don't get the general facilities charges anticipated, which means monthly rates for everyone else would have to be increased to cover the debt service. Mr. Rawls also mentioned building a safety factor into the model, which will be a major policy decision, as there is a $10 million placeholder for water reclamation; and if the treatment plant price were to increase by 10 %, they would examine whether they wanted to spend $10 million on water reclamation, or divert those funds to the plant and do away with the reclamation in lieu of raising the rates even higher; and he again stressed that would be a major policy decision. Mr. Rawls also stated that these figures are not based on today's dollars, but are a best estimated, inflated figure. Councilmember Munson asked regarding the capital costs, that he understands there are numerous reserve funds, and he asked what is the capacity of those funds to compensate for the unexpected increases in construction costs. Mr. Rawls said that the financial model assumes we would draw down all of the reserves to the lowest limit. Councilmember Munson responded that it appears one of the options to discuss is raising the CFR /GFC charges to keep the monthly charge at a lower level for everyone else. Slide 16 discussed "Non -Point Source Funding," and Mr. Rawls said that another point to consider is, do Special Joint Council /County Meeting May 1, 2007 Page 2 of 6 Approved by City Council: 05 -22 -07 we consider non -point sources a regional issue and not an issue only to be borne by wastewater customers; which decision could go in any direction. Deputy Mayor Taylor asked about those options, and if everyone in the County could be charged the $.98 ERU monthly fee. Mr. Rawls said that his choice would be a formula that determines all the people who contribute to non -point sources of pollution, then allocate that cost across them; and have it based on a fee structure rated to how much they contributed, perhaps by size of land or other ways. Ms. Sanchez mentioned that a consideration up for discussion is the low- income, senior, disabled discount; which the county is considering for the monthly sewer charges; that the eligibility will be tied to the city property tax exemption which is based on income less than $35,000, must be the property owner, and age 62 or disabled; and that the discount would be funded by existing rate payers; and of the alternatives they considered, they are recommending a 30% discount which would show a rate decrease from $33.47 to $23.83. Ms. Sanchez said there are approximately 2,500 customers eligible; and that this would result in a 56¢ monthly increase in the single - family rate; and about 1.7% increase in all the other rates. Mr. Rawls said this discount has been under discussion for over a year, and that they realized a major rate adjustment would be necessary, and it was felt that the best way to handle that would be to implement both at the same time so that the seniors /disabled would not get a discount immediately followed by a rate increase; and in putting this together, the bill has very little change. Commissioner Richard asked Mr. Rawls if there was the notion of giving autonomy to the City to set its own rates, and whether this is a policy issue that could be bifurcated between a County and a City policy, or is it Mr. Rawl's anticipation that whatever the rates are, they will be consistent across the board? Mr. Rawls said they have tried to keep rates consistent across the service area; that it is possible to have different rates, but that would be administratively more expensive, and could cause concern if general facility charges were set different at different places, as developers would choose development patterns accordingly; and if they were to consider bifurcated rates, an entire new analysis would be required to determine the eligible people, as 20 -25% of the customers are outside the Spokane Valley city limits. Commissioner Richard added that this is an important discussion which needs to take place, concerning the entire "balancing" issue, subsidies, discounts, etc., and that the Commissioners will look to the City for its viewpoint to discuss the needs of the Spokane Valley citizens. In response to Councilmember Munson's question about the general overhead costs, Mr. Rawls said that they don't break out general overhead, but simply calculate the actual revenue requirement; and that an analysis was completed previously for Mr. Kersten a year or more ago, and Mr. Rawls said he could research those statistics; and that it is his understanding that different parts of the County operate at different overhead rates; and that they had an outside consultant conduct an efficiency study about five or six years ago; and they measured up against every other major wastewater utility in the northwest. Deputy Mayor Taylor added that we want to make sure our rates are reasonable and affordable to our citizens; and Councilmember Munson said that assuming the County will own and operate the facility, something to consider is whether it might be more efficient to develop a public utility district; and even in the last Governance Committee, the topic of discussion was, what is the most efficient way to bring the service to the community, who will run it, how will it be run, and how will we pay for it; and that he feels this important discussion should take place and such discussion could take place in a parallel course. Deputy Mayor Taylor stated that the top priority is getting the plan on line, it makes sense for the County to take this on; and that it was his understanding we were not going to talk about assumptions, but were going to look at other options, perhaps something more regional. Commissioner Richard said that he is uncertain we could get Mr. Kersten to agree with the assertion that overhead is in the 50 -70% range and hard to get accountability for; that comparing these rates with other jurisdictions, the rates are extremely competitive keeping in mind the cutting -edge technology and that this system will be the envy of others; that the time for having that parallel discussion should have occurred long ago; and if Spokane Valley doesn't want to participate, the County needs to know as this model is built upon service of 70% of those providers in the Spokane Valley's boundary. Councilmember Munson said he feels the rates are reasonable; but he feels now is the time to have the Governance Special Joint Council /County Meeting May 1, 2007 Page 3 of 6 Approved by City Council: 05 -22 -07 Committee meet and discuss the options, using what we have as a model from which to begin those discussions. City Manager Mercier asked what would the discount rate have to be if the object was to shield the protected class from the increased rates, but maintaining the current rate of $27.68, as opposed to reducing that cost approximately $4.00 per month? Mr. Rawls answered that discount rate would be an estimated 20 %. Councilmember DeVleming said that rate would be more in line with what he is looking for; as the 20% would help stabilize the rates for that protected class without putting additional burden on the other ratepayers. In response to how the $35,000 income level was selected (see slide 20), Mr. Rawls said there is a program which deals with property taxes, and includes criteria such as over age 62, and less than $35,000 income; and using that criteria would keep it easier in determining eligibility for this project; and if that threshold were to change, it would change this analysis likewise, if it was decided to stay with that eligibility criteria. Ms. Sanchez said that the rate study should be completed early July; there will be public meetings May 16 and 17; a public hearing August 14; and rate implementation set for January 1, 2008. Mr. Rawls said the purpose of tonight's meeting was not to have Council make any decisions, but to have dialogue on the concerns and see if there were any areas they might have missed in their presentation; and that the Board will look for input between now and August 14. Mayor Wilhite asked if it is possible not to have the public hearing on a Tuesday evening as it would prevent them from attending due to council meetings. Mr. Rawls said that would be at the discretion of the Board; and Commissioner Richard said he would look into the possibility of changing that to another night, and will bring that suggestion to the Board's attention. Mr. Mercier said there are four policies identified for Council to discuss [1- charges for general facilities, monthly ERU, and non -point source funding; 2 -STEP costs; 3- including a safety factor into the model; 4- senior /other discount (20 %)]; and he asked if there were other policy issues to include, such as bifurcation. Commissioner Richard said something else to consider is the ERU and how that affects mobile homes, or commercial and industrial businesses; and that they are open to examining other options, suggestions, or models; and that Mr. Rawls said that it would be beneficial to hear any suggestions by the end of May, as something new would likely require additional research or analysis. Councilmember Munson asked what percentage of our population take advantage of the CDBG (Community Development Block Grant) funds; and asked if there were a cap on those funds. Councilmember Gothmann mentioned Tim Crowley as a source for that information. Mr. Mercier said that we are aware of the suspension of a County rule which would have required those in the STEP to make a connection within twelve months of installation of the line; and he asked if the applicable capital facilities rate would be the year they connect or the year their neighborhood was serviced? Mr. Rawls said when that policy for mandatory connection was suspended, the method of triggering the payment of capital facilities rates was not changed; so if they were in the 2007 program year, a notice would be sent to them once the sewer is completed, telling them they can pay a lump sum or pay over a 20 year period; and also tell them the sewer is available and they can connect now or when their septic tank fails; or in the future a notice will be sent to them making it mandatory to connect. Commissioner Richard added that it is their preference to keep the monthly increase to the user to no more than $10.00; and that will be a future policy decision whether to include injection, reclamation and alternative treatment options; and that such a project would amount to ten million dollars or more, and he would appreciate Council feedback on that issue as well. Mr. Richard also stated that the present model of the plant is a design -built model, and that the RFQ (request for quotes) has been issued for letters of inquiry on that model. Mr. Rawls added that the Saltese is a long -range project. Mayor Wilhite thanked Mr. Rawls for the presentation, and Commissioners for their time and assistance; and said that Council will get feedback to the Commissioners regarding the policy issues; and look forward to learning of a hearing date of other than a Tuesday so Councilmembers can attend. Special Joint Council /County Meeting May 1, 2007 Page 4 of 6 Approved by City Council: 05 -22 -07 Mayor Wilhite called for a recess at 7:40 p.m., and she reconvened the meeting at 7:50 p.m. Action Items: 2. Proposed Resolution 07 -005 Repealing Resolutions 03 -041 and 04 -012, Contract Limits — Cary Driskell It was moved by Deputy Mayor Taylor and seconded, to approve resolution 07 -005. City Attorney Connelly explained that with the recently adopted ordinance amending and cleaning up the City's regulations pertaining to contracting and purchasing, that Resolution 03 -041 and 04 -012 are no longer necessary. Mayor Wilhite invited public comment; no comments were offered. Vote by Acclamation: In Favor: Unanimous. Opposed: None. Abstentions: None. Motion carried. 3. Motion Consideration: CenterPlace Customer Service Improvement Plan — Nina Regor It was moved by Councilmember Munson and seconded to approve the CenterPlace Customer Service Improvement Plan. Deputy City Manager Regor went through her PowerPoint presentation explaining the Plan, and stated that this does not include implementation of the marketing plan, which is set for council consideration next week. Mr. Mercier added that if approved, the proposed grade 13 position would need to be added to the salary classification system. Mayor Wilhite invited public comment; no comments were offered. Councilmember Gothmann stated that he recognizes that it is the prerogative of the City Manager to organize city government in a manner he sees best, but that Mr. Gothmann has significant qualms about not having one individual in charge at CenterPlace, and offered the suggestion of separating Parks and Recreation from CenterPlace; but that he is content to see how this works. Mayor Wilhite added that she feels it is important to see how this works, and she looks forward to this being a successful program. Vote by Acclamation: In Favor: Unanimous. Opposed: None. Abstentions: None. Motion carried. Regular Study Session Items: 4. Discussion /Presentation: City Indicators — Patrick Jones Dr. Jones explained that this project is a type of "community indicator project" which can be found in many cities around the country; and that the intent of such a project is to raise the level of decision making; he mentioned this is not an Eastern Washington University project, but is a joint effort from others such as the United Way, the City of Spokane, and Spokane County Health District; and that universities generally do not take the lead in these projects; and he mentioned that Professor Linda Keiffer is the person who headed the team of computer science professors and students who produced an outstanding design. City Indicators, Dr. Jones explained, is a new resource for the Spokane Community; with a goal to facilitate better decision making; and could be used by businesses, non - profits organizations, leaders, the press, and citizens. Dr. Jones said the process starts by asking questions to help determine demographics and show the history and trends in about nine different areas, such as education, environment, health, housing, wages and income; and public safety. Dr. Jones further stated that the process in on going, that they are open to ideas, and that they continue to work on the website. Dr. Jones said it his hope to have the indicators for our city completed by the end of May. Discussion included questions about perhaps adding affordable housing, water consumption uses, and how we compare with other similar cities rather than with Seattle. 5. Discussion /Presentation: Proposed 2008 -2013 Transportation Improvement Program — Steve Worley [Deputy Mayor Taylor left the meeting at 8:35 p.m.] Public Works Director Kersten introduced the 2008- 2013 Transportation Improvement Program (TIP), and said that the City is required to prepare this TIP, and after the public hearing, adopt a revised and extended comprehensive transportation program, which must be submitted to the Washington State Secretary of Transportation before July 1 of each year. Director Kersten then briefed Council on the draft Plan; discussed the colored projects list, and mentioned that those projects in green are new; and that most of the FTA projects were tailored to match the grant requirements; and if left as is, if those projects were funded, that would result in approximately $19 million in funding; and pending the outcome of those funds, these projects will remain on the list until we Special Joint Council /County Meeting May 1, 2007 Page 5 of 6 Approved by City Council: 05 -22 -07 known for certain that the funding will not be forthcoming; and in that case, adjustments to the TIP would be made accordingly. Mr. Kersten said that in reference to the re- striping to three lanes on Broadway Avenue and a report in October concerning if that was a safer design than the previous one, Mr. Kersten said that they would not move ahead without bringing that information to Council; and that there is no manpower to do that project this year; and keeping the project on the plan is a means to include that in the financial plan now, and that it would be easier to remove the project later, rather than add the project later and deal with funding issues. Mr. Kersten mentioned the TIP is scheduled for a public hearing before Council at their June 5, 2007 meeting. 6. Discussion: Advance Agenda Changes — Mayor Wilhite Mr. Mercier brought Council attention to the closed record public hearing for June 5. In response to Councilmember DeVieming's question concerning the status of the Uniform Development Code, Deputy City Manager Regor said that Council finished Titles 17, 18 and 20; and that Title 24 can be brought forward separately to give Council more time to review the chapter; and Mr. Mercier said that although it is scheduled as an administrative report May 22, that chapter can be inserted in the May 8 packet as an information item. Mr. Mercier also mentioned that it is time to plan for the next legislative session; and that he intends to have a telephone conference with our lobbyist in about there weeks, then meet in Tacoma during the Association of Washington Cities session, and finalize that legislative agenda for the short session in July. Mr. Mercier added that policy issues associated with the Wastewater Treatment Plan rate issues model will be discussed during the May 15 meeting. It was moved by Councilmember Munson, seconded, and unanimously agreed to extend the meeting to 9:10 p.m. 7. Information Only: Items (a) Grant School Zone Flashing Signs, and (b) Customer Service Improvement Plan Administrative Support, were information only and not reported or discussed. 8. Discussion: Council Check -in — Mayor Wilhite Mayor Wilhite mentioned she has a book from her Washington D.C. trip available to council if they would like to see it. 9. Comments: City Manager Comments — Dave Mercier In reference to information only item 7b, Mr. Mercier said that staff met with the Finance Committee last week and they hope to bring this item before council next Tuesday. There being no further business, the meeting adjourned at 9:05 p.m. ATTEST: 6 C stine Bainbridge, City Clerk Diana Wilhite, Mayor Special Joint Council /County Meeting May I, 2007 Page 6 of 6 Approved by City Council: 05 -22 -07 Spokane County Library District Preliminary Project Budget: New Spokane Valley Library (04/10/07) Estimates based on • 58.600 gross square feet of space • 1 5 acre site • 02/05/08 LCFA/bond electron date All bond issuance costs are in addition to project costs Current Estimated Escalated Estimate Inflation / Increase Estimate Site Acquisition 1 1 5 acres in City Center area 792,000 0 0 792,000 Construction 2 Construction (2007 = $233 50/sf) 13,683100 18 19% 2,488.742 16,171.842 Change order contingency @ 5% 684.155 18 19% 124.437 808.592 Subtotal 14,367.255 18.19% 2,613,179 16.980,434 Sales tax @ 8.6% 1.235,584 18.90% 224.733 1.460,317 Total 15,602,839 18.19% 2,837,913 18,440,751 Non - Construction Architect/engineer 3.4 1,034,442 15 56% 160.980 1.195,423 Permits /fees 150,000 10 00% 15 000 165,000 FF&E (2007 = S19 /sf)) 1.141 767 10.00% 114 177 1,255.944 Library materials (52,000 items) `' 900.000 15.00% 135,000 1,035.000 Public art @ 0.5% 71,836 10.00% 7,184 79.020 Subtotal 3,298,046 13.11% 432,341 3,730.386 Contingency @ 5% 164,902 10 00% 21,617 186.519 Subtotal 3,462,948 13 11% 453,958 3,916,905 Sales tax @ 8 6% ' 175,592 1220% 21,429 197,021 Total 3,638,540 13.07% 475,387 4,113,927 Administration LCFA formation legal 20,000 500% 1.000 21,000 LCFA formation election 135,000 5 00% 6,750 141,750 Construction management 400.000 10 00% 40 000 440,000 Public Information 30,000 0.00% 0 30,000 SCLD reimbursement • 175.000 0 00% 0 175.000 Subtotal 760.000 6 28% 47 750 807 750 Contingency © 5% 38,000 5 00% 2,388 40 388 Total 798,000 6.28% 50,138 848,138 Grand total 20,831,379 16.15% 3,363,437 24,194.816 Purchase option agreement anticlpated in late 2007. assumes S12 /sf for prime retail site 2 Construction estimate based on October 2009 construction midpoint ' Uses State of Washington A/E fee schedule As maximum allowable construction cost increases A/E fee decreases from 7.20% to 7 04% 5 52,000 new items. includes staffing supply. storage, moving costs Sales tax applies only to FF&E and library materials Pre - election reimbursable planning costs, such as research pre - design public information Page 1 of 1 6' 1 SroKAruCaKIv WASTEWATER FINANCIAL PLAN AND RATE STUDY lam Ui ' SPOKANE COUNTY DIVISION OF UTILITIES Wastewater Financial Plan and Rate Study Preliminary Results Joint Meeting Spokane County Board of County Commissioners & City of Spokane Valley City Council May 1, 2007 t - CattrY WASTEWATER FINANCIAL PLAN AND RATE STUDY Why a Rate Study Now? Last comprehensive rate study in 2001 Faced with significant capital costs related to: Septic elimination system Water quality improvements at RPWRF Constructing treatment plant capacity for county Regulatory dissolved oxygen TMDL costs Replacement of collection system Rate study will evaluate sufficiency of funding required to meet wastewater financial obligations Page 2 4 -17 -07 Wastewater Program Costs Funding Method How are Wastewater Costs Funded? Funding `1 Source J Capital Program WWTP, Collection, Construction Program Bonds, Loans, Grants, Aquifer Protection Area Fee (APA) Outside Source Operation & Maintenance • General Facility Charge • Capital Facilities Rate New Customer Debt Repayment Capital Replacement • Sewer Service Charge • Wastewater Treatment Plant Charge Existing Ratepayer Page 3 4 -17-07 Spc Co' n WASTEWATER FINANCIAL PLAN AND RATE STUDY Overview of Financial Plan/ Rate Study Process Develop multi -year financial plan that evaluates sufficiency of current rates • Operating costs • Capital costs • Alternative funding methods • Rate implementation strategy Cost of Service • Equitable allocation of costs based on customer demands placed on the system • Cost based user rates Page 4 4 -17 -07 SPo AN Ccx NUY WASTEWATER FINANCIAL PLAN AND RATE STUDY Financial Planning Assumptions Growth: • STEP Program: Additional 9,700 ERUs (2007 — 2011) • New development ERUs assumed at 1.1% per year over 20 years Inflation 3% per year City treatment costs account for adjustment of excise (utility) tax County treatment costs begin in 2012 GFC Increases to full cost in 2008, held until 2012, annual inflation added thereafter CFR held at existing level + annual inflation Pages SPowfautrY WASTEWATER FINANCIAL PLAN AND RATE STUDY 4 ," or Operating and Maintenance Supported by ongoing monthly sewer service charge — currently $21.00 /month Supports • On -going operations & maintenance of the collection system • Treatment capacity payments to the city • O&M of county treatment facility in 2012 • TMDL oversight committee participation • Replacement projects — collection system • Water conservation /bio- solids mgmt plan /water reclamation study • Operating reserve = 10% of annual operating expenses Page 6 4 -17 -07 Revenues Operating Revenues (current rates) Interest & Miscellenous Revenue Total Operating Revenues Expenses City Treatment Cost County Treatment Costs Operations & Maintenance TMDL/Biosolids /Consery /Reclamation Replacement Reserve Total Operating Expenses Shortfall Required Rate Adjustment Fund Balance to Levelize Rate Incr. Revised Shortfall Required Rate Adjustment Proposed Rate Adjustments Proposed Rates Projected Operating Fund $10,726,380 $11,119,689 $11,561,342 $11,993,389 $12,888,574 951,100 1.048,873 1,039,070 1,043,982 1,068,785 $11,677,480 $12,168,562 $12,600,412 $13.037,371 $13,957,359 $4,947,923 0 6,550,968 600.000 0 2007 2008 2009 2010 2012 $5,271,622 0 7,183,847 1,325,000 0 $5,645,432 0 7,707,895 1,450,000 0 $12,098,891 $13,780,469 $14,803,327 ($421,411) ($1,611,907) ($2,202,915) 3.93% 14.50% 19.05% $0 $700,000 $225,000 ($421,411) ($911,907) ($1,977,915) 3.93% 8.20% 17.11% 0.00% 8.20% 8.23% $21.00 $22.72 $24.59 $6,032,093 0 8,237,620 1,250,000 300,000 $15,819,713 ($2,782,342) 23.20% $0 ($2,782,342) 23.20% 5.20% $25.87 $1,665,530 5,759,917 9,375,295 150,000 1,100,000 $ 18,050,742 ($4,093,383) 31.76% $0 ($4,093,383) 31.76% 3.55% $27.67 2015 $13,881,243 1,098,814 $14,980,057 $2,533,172 6,294,017 11,126,709 150,000 1,750,000 $21,853,898 ($6,873,841) 49.52% $0 ($6,873,841) 49.52% 4.47% $31.40 • City Treatment Costs 2007 $1,517 mgal increased by inflation (3 %) and adjusted for excise (utility) tax • County Treatment Costs 2012 $1,973 mgal increased by inflation (3 %) • Replacement reserve delayed short term to fund Biosolids /conservation /reclamation, phased back in during 2010 Page 7 • Fund balance used to ease rate transition in 2008 and 2009 4-17-07 WASTEWATER FINANCIAL PLAN AND RATE STUDY Capital Program — Revenue Sources WWTP monthly charge — Currently $6.68 State Grant of $3.75 million per year, ending in 2014 APA funding ending in 2025 — assumed at $2.5 million 2008-2011 (reserves spend down) and reduced to $1 million thereafter Bond /loan proceeds GFC revenue (new development) CFR revenue (septic elimination program) Page 8 4 -17-07 SPoKANI cow WASTE W Afl:R FINANCIAL. PLAN AND RATE STUDY Capital Program —Debt Funding STEP costs require an additional $24.5 million in G.0 band debt through 2011 SCWRF and RPWRF borrowings total $138.9 million through 2013 • $65.5 million G.0 Bond (5% interest) • $73.4 million SRF ($8 million 1.5% nterest, all other at 3 %) Program 2007 2008 2009 G.O. Bond $8,918 $5,193 $3,141 Treatment G.O. Bond SRF $9,160 $0 $0 $32,052 $1,900 $6,600 $12,980 $12,980 2010 2011 2012 2013 $4,883 $2,419 SO $0 $24,310 SO SO $12.980 $12,980 $12.980 Total Treatmt $11,060 $6.600 $12,980 $45,032 Total All $37,290 512,980 512.980 S19,977 511,793 $16,121 $49,915 $39,710 $12,980 $12,980 Total $24,554 $65.522 $73,400 $138.922 5163,476 Page 9 4-17-07 Sr crT CC * WASTEWA'I ER FINANCIAL PI.AN AND RATE STUDY Capital Program — GFC Funding Billed to each new customer connecting to the sewer system — Currently $2,510 /ERU Calculation includes both existing and new infrastructure capacity available to serve growth 90,000 ERUs supported by capacity (18mgd at 200gpd per ERU) • Growth ERUs applicable to GFC 45,326 Calculated GFC $3,632/ERU STEP GFC capped at $1,885 — ($2,510 less 25% subsidy) 10 year average of $2.1 million per year page 10 4 -17.07 CFR Program -STEP Billed to each new customer inside a program area • Includes program cost + GFC • Current charge $5,395 ($3,510 CFR +$1,885 GFC) 114 Fixed CFR at existing level plus inflation for remainder of program (2011) plus .. Capped GFC sNI: co.- WASTEWATER FINANCIAL PLAN AND RATE STUDY • Capping GFC @ $1,885 results in additional $0.75 on WWTP Charge Estimated Capital Costs 2007 - 2016 CFR Program Costs $87,871,000 Riverside Park Water Reclamation Facility Projects $47,170,000 Spokane County Regional Water Reclamation Facility $106,135,000 Influent Pumping Station and Force Mains, and Outfall Projects $27,542,000 TMDL Compliance, Water Conservation, and Water Reclamation P $10,000,000 Saltese Flats Wetlands Projects $1,700,000 Treatment Plant Depreciation $8,402,198 Total $288,820,198 Total Debt Service $98,411,011 Total Capital + Debt Service $387,231,209 SPOIM Qxt jY WASTEWATER FINANCIAL. PLAN AND RATE STUDY Summary of Capital Costs [a] Program ends in 2011 [a] Page 12 4 -17 -07 Estimated Capital Funding 2007 - 2016 State Grants (ends 2014) $30,000,000 Aquifer Protection Area (ends 2025) $16,500,000 Bond /Loan Proceeds $161,709,123 W W TP Charge $63,210,863 Capital Facilities Rate (CFR - Program) $91,104,653 General Facilities Rate (GFC - new development) $20,710,771 Interest/Misc. $5,180,443 Total $388,415,853 Less Capital Costs (previous page) $387,231,209 Difference (minimum funding $1.0 million) $1,184,644 SroxANE Cx WASTEWATER FINANCIAL. PLAN AND RATE STUDY Summary of Capital Funding Sources Page 13 4 -17 -07 Summary Proposed Rates /Charges* 2007 2008 2009 2010 2011 2012 2013 Monthly Rates Sewer Service Charge WWTP Charge Total Monthly Charge Monthly Difference $21.00 $22.72 $24.59 $25.87 $26.72 $27.67 $28.73 $6.68 $10.75 $10.75 $10.75 $10.75 $10.75 $10.75 $27.68 $33.47 $35.34 $36.62 $37.47 $38.42 $39.48 $5.79 $1.87 $1.28 $0.85 $0.95 $1.06 Capital Facilities Rate (CFR) Local Construction $3,510 $3,616 $3,724 $3.836 $3,951 GFC Program $1.885 $1,885 $1,885 $1,885 $1,885 Total CFR $5,395 $5,501 $5,609 $5,721 $5,836 CFR/Month $39.10 $39.41 $40.19 $40.99 $41.81 General Facilities Charge (GFC) New Development $2,510 $3,632 $3,632 $3,632 $3,632 $3,632 $3,740 * Rates listed are without the senior /low income discount rate Page 14 4 -17-07 2008 Proposed Rates Options for Consideration Page 15 4 -17-07 Option 1 - GFC Remains at Current 52,510; CFR Held at Existing Level Option 2 - GFC New Dev. at 53,100; CFR Held at Existing Level Option 3 - GFC New Dev. at $3,100 and CFR at 25% GFC Subsidy Option 4 - GFC New Dev. At 53,632 and CFR at 25% GFC Subsidy Option 5 - Only 50% Growth Occurs; CFR Held at Existing Level Monthly WWTP $6.68 $10.75 General Facilities Charge $12 00 $11.25 $11.00 $10.00 $12.75 General Facilities $5,395 $5.501 Charge (GFC) $2,510 $3.100 $3,100 $3,632 $3.632 Capital Facilities Rate (CFR) $5.501 $5,501 S5,943 $6,342 $5,501 2008 Proposed Rates Options for Consideration Page 15 4 -17-07 Current Rates Proposed Rates Monthly WWTP Charge $6.68 $10.75 General Facilities Charge (GFC) S2,510 $3.632 Capital Facilities Rate (CFR) $5,395 $5.501 2008 Proposed Rates Options for Consideration Page 15 4 -17-07 SPOKANE CO WY WASTEWATER FI NA NCI AI. PLAN AND RATE STUDY pooh Non -Point Source Funding Not included in the analysis Assumed other regional funding sources One year of Funding @ $500K from Sewer Fund = additional $0.98/ERU/month on 2008 rates Page 16 4 -17 -07 SPoKAI4 Cowry WASTEWATER FINANCIAL PLAN AND RATE STUDY Cost of Service What is the equitable share of costs to collect from different customer classes? • County statistics of usage and demand • Planning, engineering and design criteria 200 gpd /ERU used to design SCRWRF Current volumetric rate based on 225 gpd /ERU or 900 cubic feet (cf) Change to 200 gpd would trigger billed volume sooner (above 800 cf) Shift would decrease residential allocated costs and increase rates based on volume (mobile parks /commercial /industrial) Page 17 4 -17 -07 Class Current Rate Structure Revenue 2008 Cost of Service Revenue Difference $ Difference % Single Family $6,827,740 $7,340,908 $513,168 7.52% Duplex $574,391 $617,562 $43,171 7.52% Multi - Family $1,531,779 $1,615,791 $84,012 5.48% Mobile Park $18,343 $21,349 $3,006 16.39% Commercial and Industry $2,167,436 $2,435,987 $268,551 12.39% Total $11,119,689 $12,031,596 $911,907 8.20% Summary - Cost of Service Results • 2008 cost of service assumes 800 cubic feet of water per equivalent residential unit (ERU) • Actual billed flow provided for Mobile Park /Comm /Ind Classes • 8% of total costs related to customer billing /collection — allocated based on number of accounts • Remainder of costs allocated based on flow contribution Page 18 4 -17-07 Proposed 2008 Rates WASTFWAIER FINANCIAL PLAN AND RATE STUDY * Multi- family rate based on number of units in complex and charged @ .70 of single family rate. Base charge includes an account charged billed once for each account. Page 19 4-17-07 Current Rate COSA Base Volume Base Volume Single Family $27.68 - $33.08 - Duplex $55.36 - $66.15 - Multifamily/Unit* $20.04 - $23.99 - Mobile Home Parks $27.68 $2.84 $33.08 $3.78 Commercial $27.68 $2.84 $33.08 $3.78 Proposed 2008 Rates WASTFWAIER FINANCIAL PLAN AND RATE STUDY * Multi- family rate based on number of units in complex and charged @ .70 of single family rate. Base charge includes an account charged billed once for each account. Page 19 4-17-07 SroKnRT CU/NM' WASTEWATER FINANCIAL PLAN AND RATE STUDY Low Income Senior /Disabled Discount County considering discount to monthly sewer service charges for specific customer group Eligibility tied to city property tax exemption • Income < =$35K, property ownership, age 62 or disability Discount funded by existing rate payers 30% discount recommended • Rate decrease from $33.47 to $23.83 2,530 customers estimated to be eligible for participation Results in $0.56 increase in Single Family Rate 1.7% increase in all other rates Page 20 4 -17 -07 SPoicAll Coca WASTEWATER FINANCIAL. PLAN AND RATE STUDY Summary of Neighboring Utility Rates Single Family Monthly Rate GFC/ ERU Airway Heights Deer Park, City of Spokane, City of Liberty Lake Spokane County - Current Spokane County - 2008 $41.56 $39.03 $34.92 $23.00 $27.68 $33.47 $5,132 $3,080 $2,400 $4,552 $2,510 $3,632 Page 21 4 -17 -07 SPoKin .. WAS rF ATER FINANCIAL. PLAN AND RATE STUDY Policy Decisions Move forward with proposed sewer service charge and WVVTP Charge? Irnplernent new discount rate for senior/ low income? GFC at full cost for new development? Continue current practice to set CFR rates for balance of STEP program? Page 22 4 -17-07 Next Steps Public Meetings May 16 & 17 Rate Study Report Early July Public Hearing August 14 Rate Implementation January 1, 2008 Sewer Rate Comparison Colville. City of Airway Heights, City of Chewalah, City of Deer Park, City of Spokane, City of Post Falls ID, City of Coeur d'Alene ID, City of Liberty Lake Sewer and Water District Spokane County - Current Spokane County - 2008 Proposed Blain, City of Carnation, City of Bremerton, City of Sequim, City of Clark Regional Wastewater District, WA Monthly Base SFR $63.16 $41.56 $40.00 $39.03 $34.92 $24.48 $24.43 $23.00 $27.68 $33.47 GFC /ERU $300 $5,132 $1,600 $3,080 $2,400 $5,257 $2,788 $4,552 $2,510 $3,632 $59.80 $55.90 $53.04 $43.14 $34.00 $5.316 $2,604 $3,712 $4,350 $6,342 SPOKAru Cot KrY WASTEWATER FINANCIAL PLAN AND RATE STUDY Question and Answer Session Page 24 4 -17 -07 Table of Acronyms APA — Aquifer Protection Area BoCC — Board of County Commissioners CCF — One Hundred Cubic Feet (748 gallons) CF — Cubic Foot (7.48 gallons) CFR — Capital Facilities Rate COS — Cost of Service ERU — Equivalent Residential Unit GFC — General Facility Charge O &M — Operations and Maintenance RPWRF — Riverside Park Water Reclamation Facility SCRWRF — Spokane County Regional Water Reclamation Facility SRF — State Revolving Fund Loan STEP — Septic Tank Elimination Program TMDL — Total Maximum Daily Load WRF — Water Reclamation Facility WWTP Charge — Wastewater Treatment Plant Charge Wastewater Financial Plan and Rate Study Preliminary Results