COMMISSION WORK SESSION/AWARD MEETING

May 16, 2012 Customer Care Team

Customer Care Team Item Number 1- Approve Chesapeake Bay Restoration Fee Financial Hardship Exemption Program for Residential Customers Table of Contents 1. Commission Summary P. 1 2. Overview P. 2 3. 4. 5.

Timeline Resolution Documents Previously Submitted to MDE

P. 4 P. 5 P. 9

Total Number of Pages -16 (without this cover sheet)

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WASHINGTON SUBURBAN SANITARY COMMISSION COMMISSION SUMMARY

AGENDA CATEGORY: Customer Care Team DATE: May 16, 2012 SUBJECT

Vote on Resolution #2012-1962, Chesapeake Bay Restoration Fee Financial Hardship Exemption Program for Residential Customers

SUMMARY SPECIAL COMMENTS

The Maryland Legislature has passed certain amendments to the Bay Restoration Fund Program statute. Effective July 1, 2012, all local billing authorities that collect the Bay Restoration Fee on behalf of the State Comptroller’s Office are required to have a program in place that exempts certain “residential” users who demonstrate “substantial financial hardship.” Although WSSC staff developed such a program in 2005 after passage of the law creating the Bay Restoration Fund Program which was approved by the Maryland Department of the Environment (MDE), the Program was not approved by the Commissioners. The General Counsel’s Office has therefore advised that the Commission formally adopt a Bay Fee Exemption Program and then submit the program for approval to MDE. The proposed WSSC program requires that two of the following four criteria be met, and that customers re-certify annually: 1) Receipt of energy assistance or WSSC Water Fund assistance within the last 12 months; 2) Receipt of public assistance or food stamps within the last 12 months; 3) Receipt of Veteran’s or Social Security disability benefits within the last 12 months; 4) Meet income criteria as defined by the MDE. Due to the anticipated demand for the Exemption, we will also be working on a long-term strategy to possibly outsource management of the program.

CONTRACT NO./ REFERENCE NO.

Not applicable.

COSTS Any costs for administering Bay Fee Collection and Exemption Program can be reimbursed by the State of Maryland.

AMENDMENT/ CHANGE ORDER NO. AMOUNT

Not applicable.

MBE PARTICIPATION Not applicable.

PRIOR STAFF/ COMMITTEE REVIEW

General Manager

General Counsel’s Office

Chief Financial Officer

Chief of Customer Care Team

RECOMMENDATION TO COMMISSION

Approve Resolution #2012-1962.

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OVERVIEW BACKGROUND

WSSC Program WSSC staff sought and received approval from MDE for a financial hardship exemption program in 2005. The Program was not formally approved by the Commissioners. The documents that WSSC submitted to MDE in 2005 are attached. The Program has never been advertised, and enrol1ment is low. Due to concerns expressed by our General Counsel’s Office regarding the approval process for the Program, we temporarily suspended processing exemptions.

SURVEY

Questions/Methodology Recently, we conducted an informal survey regarding Bay Fee Exemption Programs and how they are managed by other water agencies in the State of Maryland. The water agencies were asked to respond to the following:

1) Do you have a Bay Restoration Fee Exemption Program? 2) What criteria must the customer meet to qualify for the program? 3) How do you inform your customers about the program? 4) How many customers are currently exempt? 5) What is your process for granting an exemption? 6) Is the process managed in house or outsourced?

We discovered a list of 25 agencies that have Exemption Programs from Maryland’s Department of Environment (MDE) web site. We obtained information using three approaches: web research, phone calls, and letters to all 25 agencies. Qualification For Exemption Of the 25 agencies surveyed, 15 responded. Based upon those responses, there are four basic factors to consider for possible exemptions, and customers must recertify annually. The four criteria, the application of which varies somewhat from agency to agency are:

1) Receipt of energy assistance subsidy. 2) Receipt of public assistance – supplemental security income (SSI) or food stamps. 3) Receipt of Veterans or Social security disability benefits. 4) Meet income criteria.

Also, six of the 15 water utilities have an additional requirement: that a customer must receive State of Maryland Homeowner Property Tax Credit or a Disabled Veterans Real Estate Tax Exemption. Additionally, Carroll County requires that only owner-occupied residential properties will be eligible for Exemption and the property owner must also receive the Homeowner’s Property Tax Credit. Management of Program The process is managed in-house by all 14 of the 15 responding water utilities. The Exemption Program is advertised on the water utilities’ website, on quarterly bills, in newspaper advertising, on tax bills, and using direct mail to previous recipients. In one instance, the City of Hagerstown program is managed by the local CAC (Community Action Council). Each year, they send out application forms. A list of exempt customers is given to the city once a year and billing records are updated. Those exempted will not be billed the Bay Fee until the next list is generated by CAC, normally after one year. Any questions on exemptions are referred to CAC. The number of recipients varies for each company, from a low of 1 to a high of 375. From the information gathered, there is no formalized tracking method by any of the utilities.

RECOMMENDATIONS The new law requires that we have a formal Exemption Program by July 1, 2012. We recommend that the Commission pass the Resolution authorizing the current Exemption Program in May. We would then advertise the Program for 30 days while also submitting it to the MDE for formal approval. This would enable us to identify any public concerns that we may not have considered. Upon MDE’s approval, the Program would be advertised once more, with an effective date of July 1, 2012.

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Due to the expected increase in the number of requests, we will be exploring options for outsourcing the management of the Program, similar to the City of Hagerstown. In addition, we will be considering limiting the credit to homeowners, as is done in Carroll County.

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TIMELINE

April 2012 Completed survey May 1, 2012 GM/CEO Briefing May 16, 2012 Present to Commission for approval May 17, 2012 Transmit to MDE for approval Advertise on website; Gazettes July 1, 2012 Program Adopted (pending MDE approval)

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RESOLUTION NO.: 2012-1962 Adopted: May 16, 2012

Effective Date: June 25, 2012

WASHINGTON SUBURBAN SANITARY COMMISSION

Subject: A RESOLUTION approving a Chesapeake Bay Restoration Fee Financial Hardship Exemption Program for Residential Customers

WHEREAS, pursuant to the enactment of House Bill 446 during the 2012 session of the Maryland General Assembly, a local government who collects the Bay Restoration Fee on behalf of the State of Maryland is required to have a financial hardship exemption program in place for residential customers by July 1, 2012; and WHEREAS, pursuant to law, the financial hardship exemption program must be submitted for approval to the Maryland Water Quality Financing Administration (“the Administration”), a division of the Maryland Department of the Environment (“MDE”); and WHEREAS, Commission staff has proposed a financial hardship exemption program for residential customers based on the guidelines provided by the Administration; and WHEREAS, the proposed financial hardship exemption program and residential customer application for said program are attached hereto; and WHEREAS, the Commission wishes to adopt the proposed financial hardship exemption program proposed by staff; NOW, THEREFORE, BE IT RESOLVED, this 16th day of May, 2012, that the Washington Suburban Sanitary Commission hereby adopts the attached financial hardship exemption program for residential customers; and BE IT FURTHER RESOLVED, that the General Manager is delegated the authority to submit documentation of the program to the Administration for approval; and BE IT FURTHER RESOLVED, that notice of this Resolution and the actions taken hereunder be published in at least one (1) newspaper published in each county of the Washington Suburban Sanitary District as soon as practicable, but in any event not later than May 24, 2012; and BE IT FURTHER RESOLVED, that this Resolution hereby adopted shall take effect on June 25, 2012. A True Copy. ________________________________ Charlett Bundy Corporate Secretary

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