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2012 Stormwater Rate StudyPreliminary ResultsCity Council Public Works Committee Work Session September 24, 2012

www.fcsgroup.com

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Agenda

• Background– History– Current customer classes and rate design– Key issues

• Forecast Assumptions• Projected Debt Level• Projected Rates• Summary of Recommendations/Next Steps

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Background - History

• Storm and Surface Water (“stormwater” or SSW) utility formed in 1990 with SDCs only

• Monthly rates began in March 2001

• Last rate study in 2004, no increases since 2007

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What is the Stormwater Utility?

• An enterprise fund like water and sewer.• It has physical infrastructure including

pipes, ditches, catch basins, manholes and water treatment facilities.

• It has employees to maintain, enhance and improve existing facilities and to review and approve new facilities.

• It is required to be protective of the environment and to meet standards that maintain health and safety for the public.

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Public Involvement/Education

-Education

-Volunteer Activities

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Illicit Discharge Program

-Scanning

-Mapping

-Water Quality Monitoring

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Construction Site

Runoff Control

• Review

• Permitting

• Inspection and

Enforcement

• Source Control

• Monitoring

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Good Housekeeping for Municipal Operations

-Street Cleaning

-Vactor Waste

-System Cleaning

-Citizen Inquiries

-Emergency Response

- System Maintenance

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Capital Program

•WQ Retrofitting

•Fish Passage

•System Repairs

•Replacement

•Flood Control

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Why is a Storm Utility Needed?Flooding

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Failing Infrastructure

Birchwood Culvert Before

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Birchwood Culvert Failure

Baker Creek

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Fish

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Water Quality

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Rate DesignThree customer classes:• Small footprint

– Less than 1,000 square feet of impervious surface area (ISA)

– Flat charge, currently $4.20– 14% of accounts

• Medium footprint– 1,000-3,000 s.f. ISA– Flat charge, currently $7.00– 69% of accounts (this class serves as benchmark)

• Large footprint– Over 3,000 s.f. ISA– “Per square foot” charge, currently $.00233/s.f.– 18% of accounts

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Medium-Footprint Rates by Year

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$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

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Stormwater*Graph Assumes Medium Footprint

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Credits

• Credits at 20%, 50%, and 70% levels• Credits apply to:

– Lots with qualified on-site stormwater facilities• Larger credit if there are discharge limits

– Institutions providing public education in environmental science

– Lots with partially pervious gravel or approved pervious surface

• In addition, low-income discounts - same thresholds and percentages as water/sewer

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Key Issues

• No change is proposed in customer classes, rate design, or credits– Exception: expansion of low-income discount– Less complicated than the water and sewer rate study

• Primary issue with this rate study is just catching up and keeping up with the costs– The system needs capital investment– Changes in staffing and other operating costs are

also proposed– Currently no outstanding stormwater debt, new

debt is proposed

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Forecast Assumptions

Policy/Topic Assumption(s)

Reserve Funding• Operating reserve policy – 45 days (≈ 12%) of

budgeted operating expenses• No rate stabilization reserve at this time

System Reinvestment

• Long-term target: 50% of depreciation, with phase-in (10% in 2013, 15% in 2014, 20% in 2015, 25% in 2016, etc.)

Growth• SFR: 0.7% – 1.3% per year plus annexations• Non-SFR: 1.3% – 2.3% per year

Inflation• CPI projections from State economic forecast• ENR index for capital

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2013 Changes in Operating Budget

Additional Personnel Costs: 294,872$

• Create new Natural Resources Division

• Shift existing positions into Stormwater

• Convert Limited-term & Part-time to Full-time

Shift Costs of Street Sweeping to Stormwater 240,900

Reallocation of Overhead Charges 139,698

Wetland Mitigation Banking Study (2 years only) 157,233

Other Changes and Inflationary Increases 197,418

Total O&M Budget Change above 2012 Level 1,030,121$

% Change in Operating Budget from 2012 21%

2013 Increases in Operating and Maintenance Budget

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2012-17 Capital Projects

CIP Projection - Inflated Dollars 2012 2013 2014 2015 2016 2017

Watershed Capital Projects 50,000 1,366,800 780,909 645,189 636,427 598,440

Watershed Grants - 959,000 100,000 - - -

Capital Projects less Grants 50,000 407,800 680,909 645,189 636,427 598,440

Other SWM Util ity Projects 787,500 2,302,757 5,918,843 1,935,568 3,102,322 3,203,148

Other SWM Grants - 728,000 1,200,000 - - -

Capital Projects less Grants 787,500 1,574,757 4,718,843 1,935,568 3,102,322 3,203,148

Total Capital Expenditures 837,500 3,669,557 6,699,752 2,580,757 3,738,749 3,801,588

Total Grants - 1,687,000 1,300,000 - - -

Total Capital less Grants 837,500 1,982,557 5,399,752 2,580,757 3,738,749 3,801,588

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Capital Funding Strategy1. Grants and watershed surcharge where

eligible2. SDCs/fund balance/interest earnings to the

extent available3. State loans where eligible4. Revenue bond issues every other year for

the remainderResulting bond issues:

2013: $2.975 million2015: $3.05 million2017: $2.93 million

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Debt Levels

2012 2013 2014 2015 2016 2017

Total Outstanding Debt - 3,264,378 5,421,697 8,533,292 9,317,684 13,181,465

Total Plant-in-Service 40,498,493 43,884,299 50,203,820 52,667,012 56,067,400 59,541,472

Debt as % of Total Plant-in-Service 0% 7% 11% 16% 17% 22%

Bonded Debt Service

as % of Net Revenues 0% 42% 30% 42% 33% 44%

Debt Service Coverage - Bonds Only n/a 2.40 3.32 2.37 3.00 2.29

Debt Service Coverage

including State Loans n/a 2.34 2.34 1.97 2.19 1.64

Debt Management Indicators

Even after funding capital program, projected debt levels are still moderate.

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Projected RatesMonthly Rate Schedule

Customer Class Existing 2012 2013 2014 2015 2016 2017

Small Footprint 4.20$ 5.08$ 5.39$ 5.71$ 6.05$ 6.42$

Medium Footprint 7.00$ 8.47$ 8.98$ 9.52$ 10.09$ 10.69$

ISA > 3,000 square feet 0.00233$ 0.00282$ 0.00299$ 0.00317$ 0.00336$ 0.00356$

Across-the-Board % Increase 21% 6% 6% 6% 6%

Average SFR Monthly Impact* -$ 1.47$ 0.51$ 0.54$ 0.57$ 0.61$

Cumulative Impact -$ 1.47$ 1.98$ 2.52$ 3.09$ 3.69$

*Average Single-family Residential (SFR) is assumed to be Medium Footprint.

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Total Monthly Charge – Water, Sewer, Stormwater

Water Bill $29.96 $32.66 $35.27 $38.09 $41.14

Watershed Surcharge 12.00 12.30 12.56 12.84 13.23Total Water Bill $41.96 $44.96 $47.83 $50.93 $54.37Sewer Bill 33.23 33.97 35.07 37.24 39.47Stormwater Bill (Medium) 7.00 8.47 8.98 9.52 10.09Total Water/Sewer/Stormwater Bill $82.19 $87.40 $91.88 $97.69 $103.93Change From Prior Year $5.21 $4.48 $5.81 $6.24% Change From Prior Year 6.3% 5.1% 6.3% 6.4%

Metered Single-Family Residence

(5/8" Meter, Monthly Usage: 6 ccf)

Water Bill $20.79 $22.58 $23.99 $25.44 $29.67 $31.25 $33.10Watershed Surcharge 8.84 9.09 9.25 9.43 9.77 10.05 10.34

Total Water Bill $29.63 $31.67 $33.24 $34.87 $39.44 $41.30 $43.44Sewer Bill 33.23 33.97 35.07 37.24 39.47 41.66 43.16Stormwater Bill (Medium) 7.00 8.47 8.98 9.52 10.09 10.69 11.01Total Water/Sewer/Stormwater Bill $69.86 $74.11 $77.29 $81.63 $89.00 $93.65 $97.61Change From Prior Year $4.25 $3.18 $4.34 $7.37 $4.66 $3.96% Change From Prior Year 6.1% 4.3% 5.6% 9.0% 5.2% 4.2%

Unmetered Single-Family Residence (metered in 2016)

2012 2013 2014 2015

2012 2013 2014 2015 2016

2017 20182016

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Total Monthly Charge – Water, Sewer, Stormwater

Apartment Building - 29,000 imp. sf(1" Meter, Monthly Usage: 25 ccf)

Water Bill $82.70 $88.60 $93.80 $99.26 $106.72 $113.03 $119.57Watershed Surcharge 21.00 21.63 21.98 22.35 23.26 23.92 24.59Total Water Bill $103.70 $110.23 $115.78 $121.61 $129.98 $136.95 $144.16Sewer Bill 92.56 103.50 114.29 122.07 131.78 140.26 146.35Stormwater 67.57 81.76 86.67 91.87 97.38 103.22 106.32Total Water/Sewer/Stormwater Bill $263.83 $295.49 $316.74 $335.55 $359.14 $380.43 $396.83Change From Prior Year $31.66 $21.25 $18.81 $23.59 $21.29 $16.40% Change From Prior Year 12.0% 7.2% 5.9% 7.0% 5.9% 4.3%

Commercial - 29,000 imp. sf(2" Meter, Monthly Usage: 80 ccf)

Water Bill $258.29 $276.68 $293.09 $310.34 $333.20 $352.47 $372.57Watershed Surcharge 56.20 57.93 58.83 59.75 62.31 64.07 65.84Total Water Bill $314.49 $334.61 $351.92 $370.09 $395.51 $416.54 $438.41Sewer Bill 309.01 328.45 370.59 396.52 430.43 459.26 480.20Stormwater 67.57 81.76 86.67 91.87 97.38 103.22 106.32Total Water/Sewer/Stormwater Bill $691.07 $744.82 $809.18 $858.48 $923.32 $979.02 $1,024.93Change From Prior Year $53.75 $64.36 $49.30 $64.84 $55.70 $45.91% Change From Prior Year 7.8% 8.6% 6.1% 7.6% 6.0% 4.7%

2017 20182012 2013 2014 2015 2016

2017 20182012 2013 2014 2015 2016

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Stormwater Rate Comparison(Monthly, medium footprint)

City 2012 PopulationSumas 1.50$ 1,307 Bellingham (Small) 2012 4.20 80,885 Blaine 4.37 4,684 Anacortes 5.00 15,778 Bellingham (Small) 2013 5.08 80,885 Arlington 5.82 17,926 Mount Vernon 6.05 31,743 Lynden 6.30 11,951 Burlington 6.30 8,388 Bellingham (Medium) 2012 7.00 80,885 Lynnwood 7.52 35,836 Mukilteo 8.32 20,254 Bellingham (Medium) 2013 8.47 80,885 Ferndale 10.00 11,415 Marysville 10.40 60,020 Kent 10.56 92,411 Renton 11.51 90,927 Stanwood 12.25 6,231 Seattle (< 3,000 sq. ft.) 12.44 608,660 Everett 12.80 103,019 Tacoma 17.82 198,397 Median 2012 (Medium-Footprint) 7.92$

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Combined Utility Rate Comparison(Monthly, billed at 8 CCF, medium footprint, 5/8”x3/4” meter)

*Excludes watershed surcharges

Jurisdiction Water Sewer Stormwater Total BillTax

Included

City of Seattle Seattle (Summer) $50.40 $85.44 $12.44 $148.28 $19.52 City of Seattle (Winter) $45.57 $85.44 $12.44 $143.45 $18.77 City of Blaine $19.75 $99.00 $4.37 $123.12 $11.08 City of Arlington $46.85 $68.15 $5.82 $120.82 $6.04 City of Stanwood $25.29 $75.97 $12.25 $113.51 $8.00 Lake Whatcom Water & Sewer District $47.67 $65.66 n/a $113.32 $0.00 City of Renton $36.73 $62.34 $11.51 $110.58 $7.19 City of Kent (Summer) $44.45 $52.71 $10.56 $107.72 $6.46 City of Kent (Winter) $36.91 $52.71 $10.56 $100.18 $6.01 City of Mount Vernon $39.80 $52.60 $6.05 $98.45 $3.68 City of Ferndale $32.17 $52.06 $10.00 $94.22 $6.12 City of Tacoma (Summer) $28.73 $46.41 $17.82 $92.96 $6.01 City of Lynden $34.84 $45.15 $6.45 $92.32 $5.88 City of Tacoma (Winter) $27.70 $46.41 $17.82 $91.93 $5.93 Mukilteo WSD $27.35 $54.14 $8.32 $89.81 $0.50 City of Nooksack $30.25 $45.22 n/a $75.47 $4.53 City of Bellingham - Unmetered, Proposed (2013) $32.66 $33.97 $8.47 $75.10 $10.84 City of Anacortes $16.87 $47.49 $5.00 $74.22 $4.86 City of Marysville $25.11 $38.26 $10.40 $73.77 $6.27 City of Bellingham - Unmetered, Existing (2012) $29.96 $33.23 $7.00 $70.19 $10.09 City of Everson $25.56 $43.00 n/a $68.56 $4.11 City of Bellingham - Metered, Proposed (2013) $25.74 $33.97 $8.47 $68.18 $9.58 City of Everett $21.36 $33.90 $12.80 $68.06 $4.08 City of Sumas $12.06 $53.93 $1.50 $67.49 $5.94 City of Bellingham - Metered, Existing (2012) $23.85 $33.23 $7.00 $64.08 $8.98 City of Lynnwood $19.21 $35.38 $7.52 $62.11 $3.73 Birch Bay Water & Sewer District $24.90 $30.20 n/a $55.10 $0.00

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Rate Comparisons• After rate increases, Bellingham stormwater rates

are in the middle of the comparison group.• After water, sewer, and stormwater rate increases,

combined utility bills in Bellingham are in the lower half of the comparison group. That remains true even if watershed surcharge is included.

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Lake WhatcomCapital Funding

Issue – Level of Capital Funding Desired• 2002 to 2011 average capital expenditure from

SSWU 256K/yr. • 30% of Watershed Fund after debt service

available for Capital. Thought to be 600K for near future but currently unknown.

• Current SSWU rate model assumes 600K/yrrevenue from Watershed to offset LW Capital expenditures.

• Unknown level of County Capital expenditures and need for work outside City.

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Historical SSWU Lake Whatcom Capital

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LW Project Expenditures*Average of $256K per year

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Lake WhatcomSSWU Capital Funding

Options –• Allow Watershed Fee to replace SSWU capital

contribution as in model. • Continue SSWU financing for Lake Whatcom at ½

current level (109K). Cost an additional $0.20/mo/ERU

• Continue SSWU financing for Lake Whatcom at current level (217K). Cost an additional $0.41/mo/ERU

• Other funding amount as desired. Additional LW Capital from SSWU would cost $0.16/mo/ERU/100K.

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Lake Whatcom 20 Year Capital

Lake Whatcom Projects List 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

Geotechnical Eval 100 100

Northshore Property A 550

Northshore Facility A-1 400

Hip Grant 100 200 100

Hip Grant Match 50

Northshore Rd Grant 375

City Portion NS Rd Grant 125

Bloedel Donovan Grant 384

City Portion Bloed. Don 128

Huntington & Shep.s/o Acad SF/Infilt 400

Northshore Facility A-2 (AHHS) 400

Park Place Alum Fac 100 10 10 10

Brentwood 4 Pond Forest System 50

Facility Prop Acquisition B 450

Facility B 400

North Shore Estates Fac "C" 500

Pre Treatment Facilities (5) 500

Pre Treatment Facilities (5) 500

SB Crk Easements & Imps 400

Mill Wheel Pond Purchase and Imp 500 300

Roadway SF/infilt/biof Misc 200

Home Owner Incentive Cont. 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100

Annual Watershed Program 500 500 500 500 500 500 500 500 500

Total Proposed Expenditures 953 1,359 750 600 560 510 510 600 600 600 600 600 600 600 600 600 600 600 600 600 600

Net Total Appropriations 853 400 650 600 560 510 510 600 600 600 600 600 600 600 600 600 600 600 600 600 600

Add'l WC Projects Needing Funding

Euclid Cedar Hills 380

North Shore Drive/Agate Estates 340

Beaver Ck/Stream Restoration 220

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Summary of Recommendations• Adopt proposed stormwater rates, which reflect:

– Updated costs and growth estimates– Increased staffing and other operating costs– Renewed program of capital investment– Moderate debt levels, with gradual transition to rate-funded

system reinvestment

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2012 Stormwater Rate StudyPresented by: Gordon WilsonFCS Group(425) 867 – 1802, ext. 224 gordonw@fcsgroup.com

www.fcsgroup.com