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HomeMy WebLinkAboutItem VII(C) Discussion re: Implementation of a Program for One-Time Relief of Exceptionally High Water Bills Agenda 09-21-04 Center of Good Liy Item VII.C. — CITY OF OCOEE AGENDA ITEM COVER SHEET Date: September 13, 2004 Meeting Date: September 21, 2004 Subject: Water Bills Issue: The City Commission has asked about the possibility of implementing a program to give customers a one-time relief of an exceptionally high water bill. Recommendation: It is staff's recommendation to not change the City Code or place into effect a policy to allow for a one-time relief to customers who use an excessive amount of water as it would have a significant effect on revenue generation and does not promote water conservation. Background Summary: The City Commission approved an amendment to Chapter 173 of the City Code in March of this year,to allow for relief in filling swimming pools and for leaks to customers plumbing. The City Commission has asked staff to study the viability of a possible one-time relief for a customer's excessive water usage. This one-time relief if taken advantage of by a moderate amount of water customers would have a significant effect on revenue generation over the coming years in the Water and Sewer Fund and decrease anticipated revenues to be allocated to capital improvements. Fiscal Impacts: Dependent on participation. Based on 25% of customers exercising this option, the City could experience a$600,000 shortfall in revenues. Commission Action: Reviewed by City Manager Reviewed by City Attorney Paul Rosenthal N/A Reviewed by Financ OiC, N/A Reviewed by Public Works y) �'i��r�i..� N/A Wheeler, David From: Rosenthal, Paul [PRosenthal@foley.com] Sent: Monday, September 13, 2004 8:02 PM To: Wheeler, David Subject: RE: Water Bill Staff Report OKAY. PLEASE TYPE MY SIGNATURE TO INDICATE MY SIGN-OFF. Paul E. Rosenthal Foley & Lardner LLP - Orlando prosenthal@foley.com Original Message From: Wheeler, David [mailto:dwheeler@ci.ocoee.fl.us] Sent: Monday, September 13, 2004 3 :22 PM To: Rosenthal, Paul Subject: Water Bill Staff Report IMPORTANT NOTICE: The preceding message may be confidential or protected by the attorney- client privilege. It is not intended for transmission to, or receipt by, any unauthorized persons. If you believe that it has been sent to you in error, do not read it. Please reply to the sender that you have received the message in error. Then destroy it. Thank you. 1 Mayor ceatei of Good L;y Commissioners S. Scott Vandergrift Danny Howell.District 1 Scott Anderson. District 2 City Manager . _ Rusty Johnson.District 3 Robert Frank Nancy J. Parker.District 4 STAFF REPORT TO: The Honorable Mayor and CityCommissioners FROM: David A. Wheeler,P. E. 000/I✓ Director of Public Works DATE: September 13,2004 RE: Water Bills ISSUE The City Commission has asked about the possibility of implementing a program to give customers a one-time relief of an exceptionally high water bill. BACKGROUND/DISCUSSION The new water, sewer, and reuse rates were placed into effect starting with the first utility bill issued after October 1, 2003. Since that date some members of the City Commission asked about adjustments to the utility bills for various options. Some of those requested adjustments were for the filling of swimming pools, new landscaping, plumbing leaks, pressure washing of houses or commercial buildings, and water to air heating ventilating and air conditioning systems. Staff members from the Finance, Customer Service, Public Works, and Legal Departments researched these possible situations to see if other Central Florida utilities allowed for a credit or adjustment of a customers utility bill. The only two options allowed for by other utilities were adjustments for filling swimming pools and for leaks. No credits were issued, but adjustments were allowed, because the utility treated the water and delivered it to the customer. The other options were deemed to fall within the parameters for water conservation and therefore were not considered for a utility bill adjustment. At the March 16, 2004 City Commission Meeting, the City Commission approved a change to Chapter 173 of the Ocoee City Code to allow for relief to customers who fill swimming pools or experience leaks in their plumbing. This relief is to bill the "swimming pool" customers at the rate of 1.05 per thousand gallons and for the "leak" customers to average their past twelve months usage and then to pay for the overage at 1.05 per thousand gallons. These two types of relief were deemed to have a deminimus effect on revenues. Since that meeting there has been discussion and a request about providing relief to customers who use excessive water for any number of reasons and allowing them a one-time relief to that month's bill. The same group of staff members met and discussed this option and determined that if this type of relief were put in place it would have a significant effect on revenues and would require a new rate study to determine the effects of this type of revenue reduction and an adjustment of the current rates to make up for this potential revenue loss. It is important to remember that current rates do not include these "discount" programs and implementation of one-time relief rates reduces funds available for needed capital projects. The implementation of a program to provide a one-time relief of a water bill will need to be reviewed for compliance with the bond covenants before a rate study would be performed to determine what type of an effect this potential revenue reduction would have on the Water and Sewer Fund. There are approximately 11,000 water customers in the Ocoee Utility service area. The excessive bills that customers have called about are ones where the customer has used in excess of 50,000 gallons of water above their average usage. Some of those customers have used over 100,000 gallons more than their average. If the City allowed a one-time relief of paying, say $1.05 per thousand gallons, instead of according to the rate structure, the City could see a loss of approximately $2,463,340 if every customer took advantage of this possible relief option (worst case scenario). RECOIVIIVIENDATION It is staffs recommendation to not change the City Code or place into effect a policy to allow for a one-time relief to customers who use an excessive amount of water as it could cause a significant reduction in revenues, does not promote water conservation, and would necessitate a new rate study to adequately fund operations, personnel costs, and necessary capital improvements.