City Council
	Agenda Request
Agenda Of:	December 16, 2008	Agenda Request No:		iv-a
Initiated By:	Donna Svatek Treasury Manager SuEllen Staggs, Dir Of Utilities	Responsible Department:		Treasury Utilities
Presented By:	SuEllen Staggs Director Of Utilities	Department Head:		Linda Symank , Director of Fiscal Services
		Additional Department. Head (s):		SuEllen Staggs, Director of Utilities
Subject / Proceeding:	Second Consideration of ordinance 1720 revising wastewater billing calculation for new customers and creating groundwater reduction plan pumpage fee, Grease Trap Inspection Fee, and wastewater pretreatment program fees ordinance
Exhibits:	Ordinance No. 1720
Clearances			Approval
Legal:	Eugenia Cano, Assistant city Attorney		Executive Director:	N/A
Purchasing:	N/A		Asst. City Manager:	Karen Daly
Budget:	N/A		City Manager:	Allen Bogard
Budget
Expenditure Required: $			N/A
Current Budget: $			N/A
Additional Funding: $			N/A
Recommended Action
Approve Second Consideration of Ordinance No. 1720 amending provisions regarding calculation of wastewater volume charges for new and existing residential customers and adding Groundwater Reduction Plan and wastewater pretreatment permit fees.
Executive Summary
The City’s Financial Management Policy Statements require periodic reviews of rates within the Utility Fund to assure that the City is recovering costs appropriately from ratepayers. Based on the review, several fees are being recommending as well as changes to the wastewater volume charge for new customers. It is being recommended that a Groundwater Reduction Plan (GRP) pumpage fee and two new fees due to the City’s pretreatment program - a grease trap inspection fee and a pretreatment fee for industrial users, be established. The User Fee policy was approved by Council in 2003 and its intent was to establish fees to cover the cost of services that benefit specific users. Where services provide a general public benefit, the City subsidizes those services through property and sales tax. In order to apply a user fee, services must be provided in discrete units and non- buyers should be effectively excluded from enjoying the benefits of the service. Each of the recommended changes is reviewed in more detail below. Wastewater Volume Charges The City contracted with R.W. Beck, Inc. to conduct a water and wastewater rate and cost of service study in May 2006. One of the recommendations of the study resulted in a change in the period used by the City to calculate the winter average for residential wastewater billing. The residential wastewater average is calculated using the average water usage billed on a customer’s February and March bills each year. This average sets the wastewater volume charge for the following 12 months, and is capped at maximum of 12,000 gallons. New and existing customers who have no water usage billed in the latest February and March are currently assigned an average of 9,600 gallons of wastewater billing until they can establish their own winter average. This average has historically been utilized by the City for new customers, but in the past it set a “cap” for wastewater charges instead of setting the amount to be billed. Because new customers have no history with the City, a standard volume charge must be used to bill wastewater charges for these customers. In November 2007, the ordinance was changed to allow the City to prorate bills for partial month services based on the number of days the service is connected during the billing period. Ten cities were surveyed based on how the wastewater average was calculated for new customers. Cities contacted included Frisco, Richardson, Odessa, Lewisville, Round Rock, San Angelo, College Station, Pearland, Allen and Longview. Of the ten cities surveyed, four charge customers for wastewater based on the actual number of gallons consumed for water, four cities used the overall city average (most commonly 6,000 – 7,000 gallons), and the two other cities had a flat minimum bill that the customer was charged. Based on this research and a goal to create a system for recovering revenue based on demands placed on the system, it is recommended to charge new residents for wastewater volume based on the overall residential winter average for the City (currently 6,700 gallons) instead of the 9,600 gallons which was based on AWWA standards. Each year, this amount would be adjusted to reflect the current winter average for the City’s residential customers, rounded to the nearest hundred gallons. The wastewater volume changes for new customers will be effective for billings after the ordinance is approved; the new average will be applied for all customers who are currently being billed based on the 9,600 gallons (about 2,048 customers). The impact will be a reduction in the customer’s bill of $8.12 per month. Based on the number of new customers over the last 12 months, the revenue reduction could range a month from $1,220 starting in April, when the new winter average is calculated, to $19,900 ending in March. The impact would be approximately $129,000 for the year. The revenue reduction would increase each month depending on the number of new customers that moved into the City. Groundwater Reduction Plan Fees To implement the City’s mandated reduction in groundwater withdrawals, the City developed a Groundwater Reduction Plan (GRP). The plan includes 17 participants, including the City, which fund the mandated reduction through the collection of GRP Fees or pumpage fees. The individual GRP contracts anticipated a pumpage fee would be specified in Sugar Land’s code of ordinances and amended from time to time as needed. This proposed ordinance includes the new fee as required in our GRP contracts. As reviewed during the Council workshop, the fee is currently $0.25 per 1,000 gallons of water either produced or supplied to a participant. The fee is charged to the water supplier based on the volume of water produced at each well. The fee is collected and deposited into the Surface Water Fund and is used to pay for implementation of the GRP. The GRP pumpage fee is not the fee our retail customers pay. The retail rate is determined by each participant and may vary from the GRP pumpage fee ordinance rate. Wastewater Program Fees Grease Trap Inspection Fees The City has established a user fee policy that requires cost recovery for services that benefit specific users. In reviewing the utility services provided, two categories of users were identified that create expenses for the Utility Fund that specifically benefit the user. The first is the grease trap inspection fee. There are over 280 grease traps in the City. Grease traps are required on any establishment where food is prepared. Also due to the nature of retail shopping centers and the flexibility in the type of establishment that may be included in a shopping center, all shopping centers must provide a grease trap and sampling well. Grease traps are an important preventive measure for the City’s wastewater system. Fats, grease and oils are the main cause of wastewater collection line blockages. They are also difficult to treat at the wastewater plant. Consequently, large producers are required to install grease traps that effectively separate the grease from their wastewater discharges. The establishment must remove the accumulated grease periodically. The City established a Grease Trap Inspection Program years ago to assure that grease trap owners are managing the removal of the grease from the trap timely. Staff completes approximately 900 grease trap inspections per year of which approximately 8 percent are re-inspections. The grease trap inspection program is an integral part of our Texas Commission on Environmental Quality (TCEQ) Sanitary Sewer Overflow Outreach Program. The TCEQ does not allow sanitary overflows and can fine a wastewater system owner for not managing and reducing overflows as much as possible. The Grease Trap Inspection Program is one method we use to manage grease accumulation in the collection system which can cause sanitary overflows. The City staff determined the actual cost of inspections and reviewed the fees charged by other wastewater providers in the area. We are recommending a grease trap inspection fee of $50.00 per inspection and re-inspection which is comparable to the fees others charge. This new fee would generate approximately $45,000 per year towards the cost of the program. Wastewater Pretreatment Permit Fees The City’s wastewater discharge permits issued by the TCEQ include an industrial pretreatment component to the discharge permit. Industries whose processes include specific constituents that can have a negative impact on the wastewater treatment process and the environment have limits placed on those constituents. The limits are established and approved by TCEQ for the wastewater plant discharge and the City must then determine what amount each industrial user can discharge to assure the plant meets its permit parameters. The approved pretreatment program includes at least annual inspections of each industrial facility along with periodic sampling requirements. There are currently eight industries that are required to have pretreatments permits with the City. The actual cost of implementing the program was calculated and a three-tier cost recovery is being recommended. The cost recovery was based on staff time, flow volume of the permitted business, complexity of their process, and sampling and lab analysis costs. The categories were created to ensure the each permitted business was charged according to the expenses they incur. We are recommending the following annual charges: Category I - $9,000 Category II - $7,000 Category III - $5,000 Staff requests approval of Ordinance No. 1720 amending provisions regarding calculation of wastewater volume charges for new and existing residential customers, and adding Groundwater Reduction Plan, grease trap inspection and wastewater pretreatment permit fees.

ORDINANCE NO. 1720

AN ORDINANCE OF THE CITY OF SUGAR LAND, TEXAS, AMENDING THE CODE OF ORDINANCES BY REVISING CHAPTER 5, ARTICLE VIII, WATER AND WASTEWATER, TO ADD PERMIT FEES FOR INDUSTRIAL DISCHARGERS AND GREASE TRAP INSPECTION FEES UNDER THE WASTEWATER PROGRAM AND TO ESTABLISH PROVISIONS REGARDING CALCULATION OF WASTEWATER VOLUME CHARGES FOR RESIDENTIAL CUSTOMERS AND PUMPAGE FEES FOR GROUNDWATER REDUCTION PLAN PARTICIPANTS.

WHEREAS, the City operates under a federal- and state-mandated wastewater pretreatment program that establishes the maximum limits of pollutants that are discharged into the City’s north wastewater treatment plant; and

WHEREAS, Section 5-356 of the Code of Ordinance provides that the City may adopt wastewater program fees for inspections and permit applications and fees; and

WHEREAS, the City wishes to revise the wastewater volume charges for new and existing residential customers with no water usage billed in the latest preceding February and March; and

WHEREAS, the City further wishes to establish a pumpage fee for groundwater reduction plan participants; NOW, THEREFORE,

BE IT ORDAINED BY THE CITY COUNCIL

OF THE CITY OF SUGAR LAND, TEXAS:

Section 1. That Chapter 5, Sec.5-247 (4) of the Code of Ordinances is amended to read

as follows:

(4) New and existing residential customers with no water usage billed in the latest preceding February and March will be charged a wastewater volume charge based on the average water usage billed to residential customers in the latest preceding February and March. In a new residential customer’s first billing cycle, the wastewater volume charge will be prorated based on the number of days for which water service was received through a meter.

Section 2. That Chapter 5, Section 5-250 of the Code of Ordinances is amended to read as follows:

Sec. 5-250. Schedule of service fees and charges. The following fees and charges apply to the water and wastewater services provided under this article:

Delinquent process fee (section 5-279)

To continue service if payment not received by 9:00 a.m. on termination date: . . . . . $25.00

Deposits. (section 5-269)

Single-family . . . . . 50.00

Multi-family two months average usage based on prior tenant's usage. For first time occupancy, usage will be based on usage tables.

Commercial: Two months' average usage based on standard projected usage tables.

Sprinkler . . . . . 100.00

Additional deposit if termination for nonpayment . . . . . 25.00

Beginning with the second termination, up to a maximum of $100.00 additional deposit.

Grease trap inspection fee. . . . . . . . . . . . . . . . . . . . . . . . . . . 50.00

Grease trap reinspection fee. . . . . . . . . . . . . . . . . . . . . . . . . .50.00

Transient meters:

1"/230.00

2"/850.00

Meter tampering (section 5-280)

Administrative fee/50.00

Reinstallation fee/50.00

Meter test fees (section 5-311)/40.00

Return check fee--See section 2-136(g)(7)

Service initiation fee

24 hours notice or more/0.00

Less than 24 hours' notice/25.00

Additional service call (If meter shows water running and new service cannot be initiated per request)/10.00

Sewer tap fees:

4" residential/200.00

6" commercial tap/300.00

8" commercial tap/400.00

Temporary water service charge (30 days or less)/10.00

Water connections (section 5-310)

Meter Size	Set
3/4"	$615.00
1"	965.00
1 1/2"	1,270.00
2"	1,370.00

Meter downsizing (section 5-310) . . . . . 125.00

Section 3. That Chapter 5 of the Code of Ordinances is amended by adding a new section 5-251 to read as follows:

Sec. 5-251. Groundwater reduction plan pumpage fees. Each entity that participates in the City’s groundwater reduction plan must pay a monthly pumpage fee in the amount of $0.25 per 1,000 gallons of:

(a) groundwater that the entity pumps from a well operating under a permit issued by the Fort Bend Subsidence District, and

(b) water supplied by the City to the entity as part of the groundwater reduction plan.

Section 4. That Chapter 5, Sec. 5-356 is amended to read as follows:

Sec. 5-356. Charges and fees.

(a) The City may adopt charges and fees which may include:

(1) Fees for reimbursement of costs of setting up and operating the city's pretreatment program;

(2) Fees for monitoring, inspections and surveillance procedures;

(3) Fees for reviewing accidental discharge procedures and construction;

(4) Fees for permit applications;

(5) Fees for filing appeals;

(6) Fees for consistent removal (by the city) of pollutants otherwise subject to federal pretreatment standards; and

(7) Other fees as the city may deem necessary to carry out the requirements contained herein.

These fees relate solely to the matters covered by this division and are separate and apart from all other fees chargeable by the city.

(b) The following annual permit fees apply to industrial dischargers:

1. Industrial Discharger Category I 1. . . . . . . . . . . . . . 9,000.00

2. Industrial Discharger Category II 2 . . . . . . . . . . . . . 7,000.00

3. Industrial Discharger Category III 3 . . . . . . . . . . . . 5,000.00

[1]. Category I Industrial Dischargers: City inspection once per year, City monitoring twice per year, self-monitoring twice per month, and self reporting twice per year.

2.Category II Industrial Dischargers: City inspection once per year, City monitoring twice per year, self-monitoring once per quarter, and self reporting once per quarter

3.Category III Industrial Dischargers: City inspection once per year, City monitoring twice per year, self-monitoring twice per year, and self reporting twice per year.

Section 5. That the provisions of this ordinance are severable and the invalidity of any part of this ordinance will not affect the validity of the remainder of the ordinance.

APPROVED on first consideration on __________________________, 2008.

ADOPTED upon second consideration on _______________________, 2008.

__________________________

James A. Thompson, Mayor

ATTEST: Reviewed for Legal Compliance:

____________________________

Glenda Gundermann, City Secretary