Service charge structure evaluation
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- Last Updated: April 25, 2017 April 25, 2017
The Albany City Council reviewed funding requirements and rate structure options. Because sewer and street funds are currently used to fund stormwater activities, Council also reviewed how implementing stormwater service charges might impact sewer and water rates and the capacity to complete street improvements. The Council provided guidance on these items, as outlined below, and in more detailed memos, presentations, and minutes at Past Presentations and Public Meetings. You may also find helpful information at Questions and Answers.
The first step in considering stormwater service charges is to determine how much the stormwater program will cost. Staff identified a range of possible funding levels for Council consideration. The lowest level would recover what is currently spent on the stormwater program (primarily funded by sewer and street funds) plus a share of account maintenance and billing costs (currently funded through water and sewer funds): total of $1.75 million per year. The higher funding level reflects the minimum funding level required to respond to regulatory requirements and to do basic maintenance, a total of $3.45 million per year. The $3.45 million was presented to Council as the amount of funding that would be needed five years from now assuming achievable stormwater permit requirements from the Oregon Department of Environmental Quality (DEQ) and does not account for inflation, expanding service, or increasing the capacity of the stormwater system.
The Council’s direction was to consider initial monthly stormwater rates based on collecting $1.75 million per year as described below.
Council reviewed and approved a rate structure with two components: a base charge and an impervious surface charge. The base charge is the same for all accounts; everyone pays the same charge to recover the costs of billing and general stormwater system use. The impervious surface charge is based on the amount of impervious surface (roofs, pavement and gravel) on each property. For single-family residential properties, the impervious surface charge is the same for all customers and is based on the typical amount of impervious surface on single-family residential properties (Equivalent Residential Unit or ERU). The Council approved tiered rates for single-family residential customers where those customers with smaller structures pay slightly less and those with larger structures pay slightly more.
For non-single family residential properties, (businesses, apartment complexes, government properties, etc.) the impervious surface charge is based on the number of Equivalent Residential Units (ERUs) of impervious surface present on the property. The number of ERUs is determined by calculating the amount of impervious surface on the property and dividing it by the typical impervious area found on residential properties in Albany (3,200 square feet). The number of ERU’s is then multiplied by the impervious surface rate per ERU. A sample bill calculation is below. The Council also approved specific credits that non-single family residential customers can pursue in order to help reduce their bill.The approved stormwater rate resolution can be found here. Stormwater rates became effective March 1, 2017.
Tiers and credits are discussed further under Residential Tiers & Non-Single Family Residential Credits.
Sewer and Water Rate Reductions
Concurrent with the implementation of the new stormwater service charge, the City Council approved a reduction of sewer and water service charges. This reduction is to account for the fact that some of the new stormwater revenues are paying for some activities that are currently funded by sewer and water revenues. This will reduce a customer’s sewer bill by 6% and reduce a customer’s water bill by 2%. This results in approximately a $4 reduction in an average residential customer’s monthly sewer and water bill. These water and sewer rate reductions became effective March 1, 2017.
Sample Single Family Residential Bill Calculation (for typical residential lots)
|+||Impervious Surface Charge/1 ERU||$1.95|
|=||Total Stormwater Bill||$6.74*|
*Net impact to a typical residential customer would be just under $3, after approximately a $4 reduction in sewer and water rates.
Sample Non-Single Family Residential (NSFR) Bill Calculation
This illustration shows an NSFR bill calculation for a property that has 26,136 square feet of impervious surface. The financial impact to the customer is less than the identified $20.72 per month due to reductions in sewer and water service charges, 6% and 2% respectively. NSFR sewer and water charges vary widely by customer and therefore aren’t adaptable to this sample bill calculation.
Based on a preliminary screenings of NSFR properties, the graph below shows anticipated monthly stormwater bills for Albany’s non-single family customers (businesses, apartment complexes, government properties). These figures are based an initial $1.75 million annual revenue target and do not account for any offsetting reductions in water and sewer bills. Sample NSFR monthly bills based on various use types are also provided. It is important to remember that each NSFR bill will be property specific and calculated based on the impervious surfaces on each respective parcel. Consequently, not every gas station will receive an $11 bill as the sample shows, but a bill based on the impervious surface area on their specific site. This situation is applicable to all of the examples.
NSFR Account Examples*:
|Typical gas station||$11/month|
|Sample apartment complex||$65/month|
|Large retailers (3 examples)||$266, $333, $422/month|
|Large care facility||$762/month|
*The examples shown above do not represent either the lowest or highest bills that might be received by a NSFR property type.
For single-family residential customers, the City Council approved a three-tiered rate structure. Most single-family customers will pay $6.74 per month in stormwater charges while customers with smaller homes would pay slightly less and customers with larger homes would pay slightly more. How much a customer pays is based on the impervious area of the main structure on the property. The rate difference between the different classifications is 50 cents per month. Residential customers with main structures of 1,350 square feet of impervious surface or less are in Tier 1 and will pay $6.24 per month. Most residential customers will be in Tier 2 and will be charged $6.74 per month. Residential customers with main structures of 3,151 square feet or more are in Tier 3 and will pay $7.24 per month.
The City Council also approved a credit program in the stormwater rate structure for non-single-family properties. The credit program provides these customers with an opportunity to reduce their bill by constructing stormwater control facilities that either reduce stormwater volume or improve stormwater quality. Credits for non-single-family properties – such as apartments, commercial enterprises and industries – can help reduce a customer’s bill and provides a financial incentive to help manage stormwater.
Council has provided credits for approved, on-site, structural stormwater controls that either reduce stormwater volume or improve stormwater quality. Examples of structural stormwater controls include bio-retention, vegetated filtration, infiltration, or media filter facilities. For new development or re-development projects to qualify for the credit, the installed BMP would have to exceed what is normally required as part of the development. All facilities would require prior approval by the City, and the maximum credit available will be 25% of the impervious surface charge. General information about the credit application and approval process can be found in the stormwater rate resolution.
More about the proposed tiers and credit program can be found in the approved stormwater rate resolution.