CC - Agendas - City Council - REGULAR - 1/26/2010

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TF-E COUNCIL AGENDA MEMO — January 26, 2010 DEPARTMENT: City Manager AGENDA ITEM: Water and wastewater rate setting process Approved By: Date: Regional Programs Director: Craig McConnell f - 21-10 Finance Director: Mark Woodfill City Manager: Steve Norwood / /v ITEM SUMMARY At the study session of January 19, 2010, Council discussed the need and procedure for considering changes to City water and wastewater rates as identified by the financial plan summarized by Dan Jackson, Economists.com, in his January 12th presentation. This document and supporting information are available via the "Water and Wastewater Rate Report" link on the City website, www.grescott-az.gov. Mr. Jackson cited various factors affecting the City's water and wastewater enterprises: slow growth in new customer accounts, much lower water use, reduced impact fee revenue, and most significantly, the City's extensive Capital Improvement Plan (CIP) which includes many projects to remedy existing system deficiencies. Funding required to keep the Sewer Fund on a stable financial footing continues to be a primary concern, in particular given the costs of extensive improvements to the Sundog and Airport Wastewater Treatment Plants required during the coming years which were detailed for Council on December 1, 2009. Current policy is to implement water rate increases, when necessary, during low -usage winter months, to provide a transition before the higher use summer period. Recognizing the Council's expressed interest in lengthening the rate setting public process to include additional informational workshops, continuing now would extend it into the upcoming summer. Considering the recent wastewater rate increase effective January 1, 2010, the fact that the next increment identified by the financial plan has been proposed for January 1, 2010, nearly a year from now, and interest in avoiding water rate adjustments in summer months, deferral of commencement of the rate setting process until Summer 2010 is suggested, tentatively to be concluded in Fall 2010, with any adjustments effective on a date to be selected between November 1, 2010, and January 1, 2011. Recommended Action: MOVE to defer commencement of the water and wastewater rate setting process until Summer 2010 according to a schedule to be established at that time.