City of Selah Public Information Meeting

SEWER RATE ANALYSIS SEWER CONNECTION FEES

Prepared by

March 5, 2019

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City of Selah Public Information Meeting

SEWER RATE ANALYSIS

SEWER CONNECTION FEES

March 5, 2019 Background HLA prepared the City of Selah General Sewer Plan to guide the expansion of the City of Selah's wastewater collection, treatment, and disposal facilities. The existing collection system was reviewed and evaluated for its capacity to meet existing and future flow demands. Deficient pipelines and high maintenance areas identified by City Public Works staff were prioritized to develop a capital improvement plan. Means of financing the recommended improvements were considered and a long-term financial plan was developed to determine revenue needs. Long-Term Financial Plan The long-term financial plan for the City of Selah Fund 415 Sewer and Fund 465 Sewer Reserve Fund was developed based on the following:

• Past revenues and expenditures were updated through 2017, so the previous trends could be reviewed and considered. 2018 revenues and expenditures are taken from the 2018 budget.

• Existing annual sewer system expenses are assumed to increase by 3% annually.

• Maintenance- and capacity-related collection system improvements recommended in the General Sewer Plan are as proposed in Table 7-3 (copy attached) and as shown on the attached Figure 7-1. Adjustments to the schedule may be needed to coordinate construction with street improvements and developer extension of service into new areas.

• Maintenance-related improvements were assumed to be paid by user charge revenue. Existing users have been using the system, so having them pay for maintenance is reasonable.

• Capacity-related improvements are assumed to be paid for using connection fees. New users require additional capacity and upgrades needed to support growth should be paid for by the new connections.

• Connection fee revenue is estimated from the growth rates and service area population. Though growth could result in 30 to 35 new connections annually, the financial model used a conservative connection rate of 20 additional connections per year. Connection fees are also assumed to increase at the same percentage as the charges for service to account for inflation of collection system improvement costs.

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• Connection fees are transferred to the sewer reserve fund each year to pay for future growth-related improvements.

• The analysis includes yearly transfers out for street maintenance ($20,000 per year), and public works equipment reserve ($40,000 per year), which is consistent with City practices during the last five years.

• A future treatment plant improvement project will be needed to address long-term capacity

needs and possible regulatory requirements. Though the scope of the project has not been specifically identified, the connection fee calculations consider the cost of treatment plant improvements. However, no specific project is included in the schedule of improvements, but sewer fund reserves are allowed to build for this future project.

The City raised sewer rates 5% in 2019, with the understanding that future rate increases may be needed. Based on the proposed financial plan, revenue increases of 5% in 2020, followed by 3% per year thereafter, are recommended. These rate increases will generate revenue for operation and maintenance of the existing system and will pay for maintenance-related improvements. Connection fees are used to pay for growth-related improvements and reduce the burden on the existing system users. The method used to determine the connection fee is discussed below. Proposed Connection Fee Adjusting sewer connection fees was recommended as a method to pay for the improvements to the existing infrastructure as a result of growth-related impacts. This money could be set aside so the improvements would be funded and constructed when the capacity of various system components is reached. An advantage to this approach is that when new users connect to the system, they would contribute to the cost of improvements to the existing system regardless of where the improvements are needed. Furthermore, existing system users do not pay the cost for system upgrades to serve new users, revenue is collected at the time a connection is made, and collected fees can be set aside in a reserve fund for future use. Two parameters are needed to calculate the connection fee – the estimated cost of system improvements, and the number of connections served by those improvements. Improvement costs include both collection system and treatment costs to serve full build-out of the City and UGA. Capacity-related collection system deficiencies at full build-out are shown on the attached Figure 4-3. Determining the necessary treatment facility upgrades is more complicated, but the cost can be estimated based on the increase in flow at full buildout. The resulting estimated costs of system improvements to serve growth are as follows: Collection System Improvements $4,183,000 Treatment Facility Upgrades $28,800,000 Total Estimated Cost $32,983,000 The estimated number of future connections within the City and UGA are directly related to the full buildout flows. Therefore, the number of future connections can be calculated as follows:

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Estimated additional flow from full build-out = 1,600,000 gallons per day Divided by the average flow per connection = 300 gallons per day Equals the number of future connections = 5,333 connections By dividing the total estimated cost for system upgrades to serve City and UGA build-out of $32,983,000 by the 5,333 future connections, yields a connection fee of $6,185. In the General Sewer Plan, average daily flow from an equivalent residential unit (ERU) was estimated at 300 gallon per day. Since a variety of land uses were considered in the General Sewer Plan, using the number of ERUs, rather than connections is more equitable. Therefore, the connection fee would be based on ERUs at $6,185 per ERU. It is recommended the City adopt a sewer connection fee of $6,185 to be set aside in a reserve fund for improving the existing system components needed to meet the demands imposed on the system by future growth. The connection fee would be charged based on equivalent residential units ($6,185 per ERU) and would be in addition to the Sewage System Plant Investment Fee. Proposed Implementation The long-range financial plan allows some flexibility in the implementation of the proposed connection fee. Phased implementation is proposed in the following table:

Year Proposed Fee

2019 $4,000

2020 $4,500

2021 $5,000

2022 $5,500

2023 $6,000

2024 $6,500

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97 G:\PROJECTS\2017\17044E\October 2018 Report Update\General Sewer Plan Update - Final.doc

TABLE 7-3 SCHEDULE OF RECOMMENDED

MAINTENANCE AND CAPACITY RELATED IMPROVEMENTS

Improvement No.

Improvement Description Estimated

Cost in 2017 Dollars

Completion Year

Estimated Improvement Costs in

Dollars

Funding Source

C3

630 LF of new 12-inch sewer beginning in Wixson Park heading south to Selah Avenue traveling east to South Third Street

$133,000 2019 $141,000 City

M2

Connect new 15-inch sewer to existing sewer under South First Street at Southern Avenue to collection system

$72,000 2019 $76,000 City

M4 Replacement of 5 manholes $35,000 2019 $35,000 City

C4 New 21-inch sewer from Naches Avenue and Railroad Avenue south to Third Avenue

$390,000 2019 $414,000 City

C5 New 10-inch sewer West of Wixson Park Southwest of Lince Elementary School

$48,000 2020 $54,000 City

C1

New 10-inch, 12-inch, and 15-inch sewer starting at Fremont Avenue and North Fourth Street (end of M3 project), to Third Avenue, south to Naches Avenue, and east until intersection of Naches Avenue and Railroad Avenue

$1,000,000 2020 $1,093,000 City

M1 New 15-inch Industrial Pretreatment Sewer in Railroad Avenue

$238,000 2021 $268,000 City

C2B

New 15-inch sewer at the intersection of Eleventh Avenue and an alley east of South First Street north to Tenth Avenue and east towards the Burlington Northern Santa Fe (BNSF) Railroad right-of-way traveling north to the wastewater treatment plant

$791,000 2027 $1,063,000 City

M3

Install 1,920 LF of 10-inch sewer beginning at Tenth Street and Fremont Avenue continuing down Fremont Avenue to the manhole at North Fourth Street. Install six manholes along Fremont Avenue

$365,000 2025 $462,000 City

L1 Lift Station Improvements – Refurbish and increase capacity of the South Lift Station

$627,000 2029 $894,000 City

$3,699,000 $4,500,000

These recommended improvements are shown on Figure 7-1 – Collection System Recommended Maintenance and Capacity Related Improvements.

DRAFT

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FIGURE 7-1

COLLECTION SYSTEM

RECOMMENDED

MAINTENANCE AND

CAPACITY RELATED

IMPROVEMENTS

General Sewer Plan Update

12-13-17

P:\Projects\2017\17044\FIGURES.dwg

CITY OF SELAH

LEGEND

EXISTING RETAIL SERVICE AREA

BOUNDARY (CITY LIMITS)

FUTURE RETAIL SERVICE AREA

BOUNDARY (UGA)

EXISTING SEWER LINE

AREA NUMBER CORRESPONDING

TO TEXT DISCUSSION

C1

C5

C3

C4

M1

M2

C2B

L1

EXISTING LIFT STATION

RECOMMENDED MAINTENANCE

IMPROVEMENT

RECOMMENDED CAPACITY

IMPROVEMENT

M3

M4

M4

M4

MANHOLE REPLACEMENT/INSTALLATION

HLA 2803 River RoadYakima, WA 98902

509.966.7000Fax 509.965.3800www.hlacivil.comEngineering and Land Surveying, Inc.

M4

DRAFT

JOHN

CAMPBELL

SCHOOL

SELAH

JR. HIGH

SCHOOL

YAKIMA

VALLEY

SCHOOL

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SELAH

INTERMEDIATE

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ELK'S

COUNTRY

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ELEMENTARY

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TOP

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WORKS

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EN

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S

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T

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HILLS DR.

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ST

.

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ORCHARD AVENUE

FREM

ON

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VE

NT

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BARTLETT AVENUE

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FREMONT AVENUE

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OU

RT

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T.

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RT

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IR

ST

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ILLS

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N. 17T

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.

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2

DAUGHERTY

LACEY AVENUE

TERRACE DRIVE

F

A

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O

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S

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T

H

S

T

.

RIDGEVIEW AVE.

RIVERVIEW AVE.

W. SEVENTH AVE.

W. SIXTH AVE.

W. FIFTH AVE.

HILLC

RE

ST

D

RIV

E

SO

UT

H F

IR

ST

S

TR

EE

T

SOUTHERN AVENUE

PLACE

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VALLEY VIEW AVENUE

E. ORCHARD AVE.

MARU AVE.

GOODLANDER ROAD

TAYLOR LOOP

W

E

N

A

S

R

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D

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LA

NC

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.

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N

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HOME AVE.

SECOND AVENUE

R

A

IL

R

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A

D

A

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.

NACHES AVENUE

FIRST AVENUE

ELEVENTH AVE.

TENTH AVE.

SE

CO

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IT

MA

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DRIVE

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TERRY PL.

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TE

RR

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RLO

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TW

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TH

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T.

P

L

A

C

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ST

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ET

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UR

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EN

TH

TW

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T.

CHERRY AVE.

TH

IR

TE

EN

TH

S

T.

SE

NT

ER

P

L.

SAGE AVE.

HILLVIEW AVE.

PEAR AVENUE

NIN

TH

S

T.

CHERRY AVE.

LYLE AVE.

S

H

A

N

N

O

N

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D

F

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R

T

H

ST

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PEAR AVE

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R

C

H

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R

D

A

V

E

N

U

E

CITY LIMITS

CITY LIMITS

CITY LIMITS

N. 18T

H S

T.

D

IX

IE

D

R

.

CR

ES

TV

IE

W C

OU

RT

PEAR AVENUE

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GE

L C

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CRESTVIEW

DRIVE

TE

RR

Y LA

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KR

IS

TIN

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L

G

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L

A

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D

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R

D

R

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V

E

CR

ES

TV

IE

W D

R.

PLACE

WHITE BLUFFS

N. 15

TH

S

T.

N. 15T

H S

T.

N

O

R

T

H

P

A

R

K

D

R

I

V

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S. S

EV

EN

TH

S

T

WEST FIRST AVE.

S

O

U

T

H

P

A

R

K

D

R

I

V

E

BR

AE

BU

RN

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PLE

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AY

WEST YAKIMA AVE.

S

P

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Y

E

R

S

R

O

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D

C

R

U

S

H

E

R

C

A

N

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N

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O

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D

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O

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A

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D

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R

C

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R

T

P

L

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A

S

A

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T

S

P

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Y

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R

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R

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D

B

U

R

L

I

N

G

T

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N

N

O

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E

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S

A

N

T

A

F

E

R

A

I

L

R

O

A

D

6

6

10

5

3

1

FIGURE 4-3

EXISTING COLLECTION

SYSTEM DEFICIENCIES

AT PROJECTED

ULTIMATE BUILD-OUT

General Sewer Plan Update

12-13-17

P:\Projects\2017\17044\FIGURES.dwg

CITY OF SELAH

LEGEND

EXISTING RETAIL SERVICE AREA

BOUNDARY (CITY LIMITS)

FUTURE RETAIL SERVICE AREA

BOUNDARY (UGA)

UNDER CAPACITY

AREA NUMBER CORRESPONDING

TO TEXT DISCUSSION

1

8

11

EXISTING SEWER LINE

7

4

2

1

NOTE:

SEE FIGURE 3-2 FOR ADDITIONAL

OPERATION AND MAINTENANCE

RELATED SYSTEM DEFICIENCIES.

9

12

HLA 2803 River RoadYakima, WA 98902

509.966.7000Fax 509.965.3800www.hlacivil.comEngineering and Land Surveying, Inc.

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