City Council

Agenda Request

Agenda Of:

05-05-09

Agenda Request No:

III-A

Initiated By:

Razeeda Boochoon

Senior Budget Analyst

Responsible Department:

Budget & Research

Presented By:

SuEllen Staggs

Director of Utilities

Department Head:

Jennifer Brown

Budget & Research Director

Additional Department. Head (s):

SuEllen Staggs

Director of Utilities

Subject / Proceeding:

Water and Wastewater Charges for Districts Served by the Utility System

Second Consideration of Ordinance No. 1736

Exhibits:

Ordinance No. 1736

Clearances

Approval

Legal:

Joe Morris,

City Attorney

Executive Director:

n/a

Purchasing:

n/a

Asst. City Manager:

n/a

Budget:

n/a

City Manager:

Allen Bogard

Budget

Expenditure Required: $

n/A

Current Budget: $

n/a

Additional Funding: $

n/a

Recommended Action

Second consideration of ordinance no. 1736 revising charges for Utility Districts served by the utility system.

Executive Summary

On April 7, 2009 a workshop was held with City Council to discuss proposed revisions to the rates for water and wastewater services provided to utility districts served by the City’s utility system. Municipal utility districts (MUDs) located in the City’s extraterritorial jurisdiction have requested through developers and utility agreement to be served by the City’s system. Council concurred with staff recommendation and the rates recommended have been incorporated into the proposed ordinance no.1736.

The current rates were adopted in July 2001 through ordinance no. 1299. At the time the rate was adopted in 2001, only one district was being provided services, Fort Bend MUD 113- Avalon and Brazos Landing, and the rates were sufficient to recover the cost of providing those services. In February, the City started billing Fort Bend MUD 128 for utilities services when development in Riverstone was connected to the utility system. Staff evaluated the existing rates to determine whether the cost of service is being recovered from the current rates, and recommended revisions where needed.

Background

The City only provides water supply and wastewater treatment and does not provide the full range of utility services such as meter reading, billing, customer service, water distribution, wastewater collection and maintenance and repairs. Consequently, to determine the appropriate rates we deduct the cost of those services from our revenue requirements. The revenue requirement for providing the service is then divided by the total volume of water supplied to obtain the rate per 1,000 gallons. The revenue requirement does include a small percentage of the operations costs, distribution, collection and customer service (as it relates to water quality issues) to coincide with the percentage of lines needed to serve the districts. We include the total operations costs for water production and wastewater treatment, including a percentage of overhead costs. Also included in the revenue requirement is a percentage of debt service. We then divided the revenue requirement by the volume of water produced to determine the rate needed to recover costs for the services provided. Wastewater charges are billed for all metered water usage, so the volumetric rate is lower than the one charged to in-city customers, most of which are residential and have their wastewater bill based on their winter average water usage.

Recommended Rates (per 1,000 gallons)

	Current	Proposed	Increase
Water	$0.83	$1.04	25%
Wastewater	$1.37	$1.43	4%
Surface Water	n/a	$0.32	new

The proposed ordinance establishes a $0.32 per 1,000 gallon surface water pumpage fee based on the City’s required reduction in groundwater usage and the district’s contractual obligation to join the City’s GRP. The rate is based on the City’s surface water fee plus a 20% out of city service charge, consistent with the method used for other ETJ participants in the City’s GRP.

Since the wholesale utility rates were adopted, the City has increased the overall water and wastewater rates for City customers by 32%, excluding surface water fees. Wholesale rates have not been adjusted; however the City has not had any wholesale customers since the annexation and dissolution of Fort Bend MUD113 in December 2005.

Riverstone Development Agreement:

Wholesale water rates for Riverstone Municipal Utility Districts are subject to the provisions of the Utility Agreement previously approved as “Exhibit E” to the Riverstone Development Agreement. Accordingly, the rates imposed on Riverstone Districts must:

· Be the same as rates imposed on all Sugar Land Extra-territorial jurisdiction districts;

· Be the City’s actual and reasonable costs to operate and maintain the City’s Water System and Wastewater System to serve the District; and,

· Will not include any costs related to debt service on bonds issued to finance initial capital improvements.

Additionally, the Utility Agreement allows Riverstone Districts to re-use effluent from the City’s South Waste Water Treatment Plant for:

· Recharging amenity lakes;

· Golf Course Irrigation;

· Landscape irrigation for the major thoroughfares in Riverstone; and,

· All other lawful purposes, subject to conditions

The Riverstone Districts will be part of the ground water reduction plan (“GRP”) that includes the City and will not undertake to develop District GRPs. The Districts will receive surface water conversion credits for effluent re-use, up to the full District conversion requirement. The City will not charge a pumpage fee for effluent re-use water.

The Riverstone Districts have not constructed the effluent re-use system, and thus are not receiving any conversion credits at this time. The City’s agreement with Riverstone requires 60-day notice for any rate changes, so the new rates will be billed effective for MUD 128 in June 2009.

Exhibits

ORDINANCE NO. 1736

AN ORDINANCE OF THE CITY OF SUGAR LAND, TEXAS, AMENDING CHAPTER 5, ARTICLE VIII (WATER AND WASTEWATER) OF THE CODE OF ORDINANCES BY AMENDING WATER AND WASTEWATER RATES AND ADDING A FEE FOR SURFACE WATER FOR DISTRICTS SERVED BY THE UTILITY SYSTEM.

BE IT ORDAINED BY THE CITY COUNCIL

OF THE CITY OF SUGAR LAND, TEXAS:

Section 1. That Section 5-249 of the Code of Ordinance is amended to read as follows:

Sec. 5-249.  Water and wastewater charges for districts served by the utility system.

(a) Application.  This section provide for usage and connection charges to any district located in the city's extraterritorial jurisdiction that contracts with the city to receive water or wastewater services from the city’s utility system. 

(b) Quantity charges.  The city will bill and the district must pay monthly water and wastewater quantity charges, in the same manner as provided for in this chapter for retail customers, in the following amounts: 

(1)   Water:  $1.04 per 1,000 gallons of metered water. 

(2)   Wastewater:  $1.43 per 1,000 gallons of metered water. 

(3) Surface water fee: $0.32 per 1,000 gallons of metered water (the metered volume of reclaimed water produced and used by the District will be deducted from the metered volume used to determine the Surface water fee).

Section 2. 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 __________________________, 2009.

ADOPTED upon second consideration on _______________________, 2009.

__________________________

James A. Thompson, Mayor

ATTEST:

____________________________

Glenda Gundermann, City Secretary

Reviewed for Legal Compliance: