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05/15/1996 - Minutes INTERGOVERNMENTAL WATER BOARD MEETING MINUTES MAY 15, 1996 Members Present: Chair Scheiderich, Beverly Froude, John Budihas, and Bob Rolhf Staff Present: Bill Monahan, Ed Wegner, Mike Miller, Wayne Lowry and Kathy Kaatz Visitors Present: Carolyn Houghton, Jack Polans, Bob Tomlinson, John Haunsperger 1. Call to Order The regular meeting of the Intergovernmental Water Board was called to order at 5 :40 p.m. 2 . Roll Call and Introductions Roll was taken with all members present with the exception of Paul Hunt and Bob Tydeman. The alternate representative from the City of Tigard, Mr. Bob Rohlf was present. There was no representative present from the City of Durham. Mr. Monahan stated that the new alternate for the City of Durham is Mr. Chris Hatfield. 3 . Visitor Comments Jack Polans stated that he was present at the meeting to find out what the citizens will be paging for water services and also is interested in knowing the measurement and consideration of the minimum amount. 4 . Approve April 10, 1996 Meeting Minutes A motion was made by Bob Rohlf to approve the minutes of the April 10 , 1996 IWB meeting which was seconded by Commissioner Budihas and voted upon unanimously. 5 . Letter for Adjustment Ms . Carolyn Houghton was in attendance at the meeting to request additional credit on a substantial water bill she received for $633 as a result of a water leak that occurred from the main to the residence. Accompanying Ms. Houghton was her tenant, Mr. Nick George. Mr. George stated that during some landscape work the leak was discovered. Mr. George stated as soon as the leak was discovered they contacted the City who came out and assisted him in determining where the leak was located and turned the service off . The leak was then repaired immediately. Mr. George stated that the leak was approximately 4 feet underground. Mr. Scheiderich questioned what the typical monthly billing for this residence was? Mr. George stated that the bill generally runs approximately $61-71 dollars per month. Commissioner Froude stated that policy allows for $165 . 00 credit to be applied which would leave a balance of $468 . 00 . Mr. Wegner stated that the policy does allow a credit amount $165 . 00 or to follow the appeal process by coming to the Board. Mr. Rohlf questioned the basis for the $165 credit allowance? Mr. Lowry stated that this is an existing policy that the Water District has always had with a slight increase. Ms . Houghton stated that she owns five properties in Tigard and has experienced three additional leaks this year with substantial repair bills . Mr. Rohlf questioned the purpose served by this policy? Mr. Wegner stated that it allows staff some latitude in applying this credit without bringing all issues less than this amount to the Board. Mr Rohlf questioned calculating the actual cost of the water loss? A motion was made by Commissioner Budihas that the Board examine the billing for this address and make a decision at the next meeting. Mr. Rohlf stated that the City only needs to recoup the actual costs of the water. Chair Scheiderich motioned that the Board delegate to staff to allow credit for the bill minus the City' s direct cost of the water or $165 . 00 whichever is greater. This motion passed unanimously. Mr. Lowry stated that the staff would be in contact with the property owner. 6 . Prater Rate Study - CH2M Hill Mr. Lowry stated that Bob Tomlinson was in attendance from CH2M Hill to discuss the proposed rate study. Mr. Lowry stated that Mr. Tomlinson was present at this meeting to make a brief overview of the report and the conclusion of the report as well as CH2M Hill ' s recommendations . Mr. Tomlinson distributed a short handout that outlined the rate study, recommendations and the rate design options . Mr. Tomlinson discussed the following briefly: • SDC Recommendation. (Table LS-5 , page FS-8) Recommendation to adopt the revised SDC charges . These charges were _calculated to adopt a reimbursement fee SDC. These fees as based upon the systems current fixed assets and will allow reimbursement of existing users for the investment in the Intergovernmental Water Board Meeting - May 15 , 1996 Page 2 current system. Also calculated was an improvement fee SDC. This is a calculation based upon the capital improvement plan for the next five year. Oregon State statue allows these fees to be added together to get a combined System Development Charge (maximum charge) . This fee calculated out to the figures outlined in table ES-5, page ES-8 . This recommendation is based upon current investment as well as planned investment for future users . Chair Scheiderich questioned whether the planned investment have any contingencies amount built into the projected costs? Mr. Tomlinson stated that they have inflated the capital improvement by 426 a year. Chair Scheiderich also questioned the construction costs estimates and contingencies? Mr. Tomlinson stated that he believed that those figures were also inflated. Mr. Scheiderich questioned the concern during year four or five of an annual revenue shortfall made up by excess revenue the first few years. Mr. Tomlinson stated that they calculated five year average rates . Mr. Tomlinson continued by stating that the organization needs to have some fiscal restrains so during the years of excess revenue that these funds are placed in a rate stabilization fund to allow for shortfall . Mr. Tomlinson continued to say that their recommendation is to continue the buyers service connection charge which is currently $1, 250 . 00 . • Rate Design Options . (Table ES-2 , page ES-5) Mr. Tomlinson stated that in examining the current revenue requirements, the current rate design is sufficient to allow for planned costs and expenditures for the next five years . Based upon the assumptions of this study, these rates should be sufficient for the next five years. CH2M Hill does recommend to go with cost of service rates which are more equitable and more defendable. These proposed costs of service rates are outlined in Table ES-2, page ES-5 . This table outlines two scenarios for both a based bi-monthly and a volume charge. The first scenario outlines a volume rate plus minimum customer charge. The minimum charge only includes the customer costs (fixed costs associated with billing and meter reading) . This second scenario includes 800 cf of initial demand in the base charge, with the same volume rates applying for usage c over 800 cf . Mr. Scheiderich questioned whether there would be a revenue loss while assessing all residential users a minimum of 800 cf . Mr. Tomlinson stated there might be a slight loss but are actually looking for revenue stability while adding an additional amount of demand into the base charge_. Mr. Scheiderich questioned the percentage of the demand by the various classes and the correlation between this and the 100ccf charge? Mr. Tomlinson stated the percentages are used to allocate the cost to the customer classes and these costs are divided by the estimated demand over the five years . The percentages are applied to the costs . Intergovernmental Water Board Meeting - May 15 , 1996 Page 3 Mr. Tomlinson stated that they also looked at the seasonal conservation surcharge which is summarized on Table ES-3 on page ES-6 . The breaking point on these figures was 50 cf so in the summer months someone in the residential class that uses more than 50 ccf would be charged an additional amount. The revenues collected from this charge are in addition to the cost of service revenues . It is the recommendation of CH2M Hill that these revenues are used to fund a comprehensive conservation education program. Mr. Scheiderich questioned the minimum annual amount of revenue to fund an adequate conservation program for this size service area? Mr. Tomlinson stated that $100, 000 minimum would be sufficient (table reflects $61, 000 minimum) . Mr. Scheiderich questioned whether an inverted block rate was considered? Mr. Tomlinson stated that it was considered although they had problems gathering the data which made it difficult to make this recommendation. Mr. Scheiderich asked if we know what Tualatin Valley Water District is increasing their SDC to? Commissioner Froude stated that they are increasing their charges from the current charge of $1, 860 to $2, 160 . Commissioner Froude stated that the residents on Bull Mountain are not happy with the additional booster charge and feel that it should be lowered. Mr. Tomlinson stated that this charge reflects the additional costs of pumping water to the higher elevations. Commissioner Budihas stated that the residents of King City are happy that their rates will be lowered. Mr. Wegner stated that it is important to understand that the rate only decreases if you change the way that you bill . Residents will pay for what they use, there is not a reduction in rates . Chair Scheiderich questioned whether there are any consumer price index factors that are figured into any future rate increases? Mr. Tomlinson stated that they have inflated costs for the next five years . He continued by saying that the inflation rate is based upon current inflation rates and if something would happen to increase the inflation rate, these rates would need to be re-visited. Mr. Scheiderich stated he thought it would be appropriate for the Board to state a consensus on the preference on a rate that begins with 100 cf. Mr. Scheiderich questioned how the 800 cf minimum was arrived at? Mr. Lowry stated that he believed this figure to be derived from a system average. Mr. Scheiderich requested clarification on the USA rates as they apply to water consumption. Mr. Lowry stated that these charges are based upon a winter average on water usage which becomes the users average for the next year and they apply a base charge plus a volume charge. Intergovernmental Water Board Meeting - May 15 , 1996 Page 4 Mr. Lowry stated that currently our minimum charges is $14 . 30 for 8 ccf on a bi-monthly basis . This is approximately $1. 78/ccf plus volume charge of $1. 32 . On the assumption that the first 8ccf were sold at $1.32/ccf then we would be charging $3 . 74 more for the 8ccf. This is the same logic as the proposed charges with the difference in charging only for what the user uses . Mr. Lowry referred to Table ES-2 , page ES-5 that lists the two scenarios a) base charge, no minimum water and users pay $3 . 89/bi-monthly (cost of billing) plus every unit used, b) same as currently using with minimum charge. Mr. Lowry stated that the staff prefers the no minimum charge since lower use customers are penalized for water not being used and have no incentive to conserve. Mr. Lowry stated if we choose the option with no minimum there is the potential for cash flow concerns although since the system is so large this will not be an issue. The staff prefers the no minimum charge since it promotes conservation without a complicated rate structure. Mr. Lowry referred to Table ES-1, page ES-2 which outlines the current rate structure, and its complexity. On Table ES-2 on page ES-5 this captures the simplicity of the no minimum charge and reflects a cost of service rate. Mr. Lowry emphasized that this a revenue neutral rate proposal . There is no increase or decrease in rates, just a change in rate structure based upon cost of service. On Table ES-4 Mr. Lowry pointed out the significant impact on certain users, although residential users will see virtually no change, higher volume users will see a significant change. Mr. Lowry stated that their are 526 commercial accounts and 8 industrial users . Commissioner Froude questioned the irrigation notation on the table? Mr. Lowry stated that certain customers have irrigation meters (Pac Trust) which are used for irrigation purposes . These irrigation charges will encourage conservation from these users . Mr. Lowry discussed the computer system that the Finance Department is utilizing for billing which was purchased prior to the merger of the District with the City and it is set up to deal with more complex billing practices . To incorporate changes to the current billing system will however take some time to transition. Mr. Lowry stated that if the Board decides to change the rate structure, it would be his recommendation to look at some other billing issues such as monthly billing versus bi-monthly, meter reading, even pay plans, automatic withdrawal, etc . Mr. Lowry felt that this should be able to be accomplished by January 1 . Intergovernmental Water Board Meeting - May 15 , 1996 Page 5 Mr. Haunsperger stated that on the issue of irrigation and conservation, this may place some incentive for the irrigation users to make use of gray water (effluent water) from USA. Chair Scheiderich stated that he thought this issue should be broke up in to a couple of topic issues for decision: • Whether to adopt the rate structure that charges only for amount used as opposed to minimum amount used (volume rate plus minimum customer charge) . • Proposed SDC charges . • Summer surcharge for excess consumption. What should it be? Mr. Polans asked the Chairperson if there would be a public hearing on this? Chair Schederich stated that not at this Board. Mr. Polans questioned whether a public hearing would be held at the Tigard City Council level, with Mr. Scheiderich response being that he assumed so. Chair Scheiderich questioned whether there was a consensus on the adoption of the volume rate plus minimum customer charge? Mr. Haunsperger stated that the Tigard Water Board recommendation was to initiate the charge only per use. Commissioner Froude stated that her concern in doing that is that there is enough time to get information out to the customers especially if users go over the 50ccf during the summer months . Ms. Froude is concerned about having a program in place prior to enacting a new rate structure. While polling the Board, it appeared that there was a consensus on the adoption of the volume plus minimum charge. Mr. Scheiderich questioned whether there was a consensus on the proposed System Development Charges including the high elevation? Mr. Wegner stated that Mr. Lowry is assuming the implementation to be January 1 therefore, the changes will not be seen during the summer months . On the SDC charges, Mr. Rohlf questioned whether these amounts were too low in comparison with surrounding communities . Mr. Tomlinson stated that the SDC need to be based upon actual system wide needs . Mr. Lowry stated the only way to charge a higher SDC would be to have more capital projects and this plan does reflect realistic needs . Chair Scheiderich stated that the Board reached a consensus on the SDC issue. On the issue of a summer surcharge, Mr. Rohlf stated he was opposed to that and he spoke with Commissioner Hunt and he was also opposed to that . Commissioner Froude stated she would be more comfortable to have this summer surcharge in effect this year and re-visit if users are not conserving. Mr. Rohlf stated that if charges are based upon usage, there is no need for punitive measures . Mr. Lowry stated that maybe it would Intergovernmental Water Board Meeting - May 15 , 1996 Page 6 be appropriate to hold the conservation thought until this time next year or wait until the proposed rate structure is in place. Mr. Wegner stated that the new budget has $17, 000 budgeted for a conservation program which is about all the staff can handle. Chair Scheiderich stated that the Board agreed to proceed with the program and then determine a rate. 7 . Director' s Report Mr. Wegner stated that we have entered into an agreement with City of Portland to take 1 mgd which will lower the rate by .50 . This new scheme of buying will reduce winter consumption buying with Lake Oswego. This proposal will go to Portland City Council this week. Mr. Wegner stated that we are currently in the process of negotiating a contract with Murray Smith and Associates on the Menlor Reservoir site and should be going to City Council within the next couple of weeks . Work is continuing on the Regional Water Supply Plan and incorporation of comments with a new draft out in 3-4 weeks . Mr. Wegner stated that we will have wellhouse #3 completed by June 1 which will allow an additional 1/2 mgd to the system. Murray Smith and Associates is working with TVWD on improvements to bring in another 4 mgd over the next year. Mr. Wegner stated that he and Mr. Monahan are continuing to ~-- work with the Willamette River Subregional group. This group is not only looking at the Willamette but also at new transmission systems . Mr. Scheiderich questioned the status of the Damasch site? Mr. Wegner stated that will not be a future water site. Mr. Wegner also stated that John Acker, Property Manager has resigned effective June 14 and Rusty Thomas unofficially announced his plans for retirement effective July 1. Mr. Monahan stated that an analysis was done on the lease rate for the monopole with Sprint and it was determined that $800 a month was appropriate however, other issues have raised the rate to $900 per month if the City will agree to a longer term before being able to terminate the lease. The corporate office for Sprint also wanted an additional five years before being able to terminate the lease for a lease rate of $950 . The lease that was signed today states that we can terminate the lease after twenty years which will allow revenue in the amount of $421, 000 . Intergovernmental Water Board Meeting - May 15 , 1996 Page 7 8. Non Agenda Items Chair Scheiderich stated that the major parties to the Regional Provider Plan are getting together next week to draft an actual intergovernmental agreement for shared projects . Commissioner Froude questioned whether the Board had completed discussion on the Rules, Rates and Regulations? Mr. Wegner stated that we had decided to wait until the rate study was in place and get information together on backflow before proceeding with this discussion. 9 . Adjournment The regular meeting of the Intergovernmental Water Board adjourned at 6 :50 p.m. Intergovernmental Water Board Meeting - May 15 , 1996 Page 8