HomeMy WebLinkAboutMinutes - 1/20/1997 - Finance and Personnel Committee (2) � AGENDA SUPPLEMENT
January 20, 1997
FINANCE COMMITTEE
TO: Mayor and City Council
FROM: Fred Batt
SUBJECT: Debt Service Charge - Sewer Rates
The present sewer service chazge method was established in accordance with IEPA regulations
pertaining to the grant received for the construction of the South Wastewater Treatment Plant in
1989. A user charge system was established pursuant to the Federal Clean Water Act in an
amount sufficient to recover the cost of operation, maintenance and replacement of the system.
At that time the costs were as follows:
`" 1. Operation and maintenance $0.86 per 1,000 gallons
2. Replacement cost 0.16 per 1,000 gallons
3. Debt service charge 0.33 ner 1,000 allons
$1.35
In addition, part of the debt service was included in the rate as a flat rate of$3.00 per month in
order to maintain the stated per gallon rate of$1.35.
At present we have 715 sewer only accounts and 6,570 metered water customers with sewer
service. The flat rate of$3.00/month generates about $264,000 per year in revenue. $264,000
could be translated into a metered rate per 1,000 gallons as follows:
$264,000
$590,000 (1,000's of gallons annually) = 45 cents/1,000 gallons
To eliminate the flat rate debt service charge and charge it to a fee per 1,000 gallons would result
in an increase in the sewer rate from $1.65 to $2.10 per 1,000 gallons.
\.-
The impact of this charge on the small user follows:
`" Based on 5,000 �allons/2 months
PRESENT SEWER CHARGE _ $11.25
REVISED SEWER CHARGE _ $10.50
The impact ot this charge on the average sewer user follows:
Based on 15,000 �allons/2 months
PRESENT SEWER CHARGE _ $30.75
REVISED SEWER CHARGE _ $31.50
The impact of the charge on a large user follows:
Based on 150,000 �allons/2 months
PRESENT SEWER CHARGE _ $250.50
REVISED SEWER CHARGE _ $315.00
Another option is to simply revise the term "debt service charge" to another term such as
"administrative fee". It is not necessary to use the term "debt service" or "debt service charge".
As a sidelight the present debt service for FY 1997-8 for the 1993 Revenue Bond Issue will be
$585,800 which is considerably more than the flat $3.00/month debt service charge generates.
`' The 1993 Revenue Bond issue debt will be retired in 2006.
FCB:ch
�