HomeMy WebLinkAboutEstablishing a New Schedule of Rates and Charges for the Wastewater Treatment Plantr
• RDINANCE •
• .: • :
Passed by the Common Council of the City of South Bend, Indiana.
SQptember 15, xo 80
IRENE K. GAMMON
Attest:
Presented by me to the Mayor of the City of South Bend, Indiana
Approved and signed by
MA CAN -�..- .:�
0
r
City Clerk
of Common Council
IRENE K. GAMMON
a �
Clerk
ORDINANCE NO. 6828 -80
AN ORDINANCE ESTABLISHING A NEW SCHEDULE OF RATES
AND CHARGES FOR SERVICES RENDERED BY THE WASTEWATER
TREATMENT PLANT OF THE CITY OF SOUTH BEND AND AMENDING
CHARGES MADE FOR THE WATER SERVICE FUND BY AMENDING
CHAPTER 17, ARTICLE 5 AND 6 BY AMENDING SECTIONS 17 -47
AND 17 -49(a) AND ADDING SECTION 17 -47.1
STATEMENT OF PURPOSE AND INTENT
The Common Council of the City of South Bend last estab-
lished a schedule of rates and charges for services rendered by the
Wastewater Treatment Plant of the City of South Bend by Ordinance No.
5299 -71, adopted on June 14, 1971.
The charges for the water service fund to repair water ser-
vice line leaks were established by Ordiannce No. 5930 -75, adopted on
December 15, 1975.
Due to the passage of time and resultant increases in the
financial requirements of the Wastewater Treatment Plant and of the
water service fund, the Council now finds that the revenues provided
by the rates and charges established by said ordinances are insuffi-
cient to meet the financial requirements of the Wastewater Treatment
Plant and of the water service line fund.
The Council now finds that in order to meet such financial
requirements, it is necessary that the rates and charges be increased
for the services rendered by said Wastewater Treatment Plant and the
service charge be increased for the water service fund.
NOW, THEREFORE, BE IT ORDAINED by the Common Council of the City
of South Bend, Indiana, as follows:
SECTION I. Section 17 -47 of Article 5 of the Municipal Code of
the City of South Bend, shall be amended in its entirety to read as
follows:
17 -47 Definitions: As used in this article:
(a) A family dwelling unit means a building, vehicle or movable
structure or portion thereof designed or arranged to provide
temporary or permanent living facilities for a single family.
(b) Apartment complex means a building or portion of a building,
or a series of buildings designed or used as a residence for
three or more families or households living independently of each
other and which have a common water meter for three or more
Tam iIiPC_
(c) Hotel or motel means a building in which lodging, with or
without meals is provided and offered to the public for compensa-
tion, and which is open to transient guests.
Mobile home means any vehicle or portable structure designed
for long -term occupancy, containing sleeping accomodations, a
flush toilet, a bathtub or shower, kitchen facilities and plumbing
and electrical connections providing for attachment to outside
systems; designed to be transported after fabrication on its own
wheels, flatbed truck, other trailer or detachable wheels; which,
when arriving at the site where it is to be occupied as a complete
dwelling unit, including major appliances, is ready for occupancy
except for minor and incidental unpacking and assembly operation,
located on foundation supports, and is connected to external
utilities and electrical system.
(3) Mobile
necessary f
mobile home
home park means a tract of land developed with all
acilities and services to accomodate three (3) or more
S.
Section 17- 47.1(a). The water usage schedule on which the amounts
of sewage rates and charges shall be determined from October 1, 1980
and thereafter shall be as follows:
Quantity of Water Used per Month
Rate per 100
Cubic Feet
per Month
First
500
cubic
feet .
. . .
. . . . . . .
. . . . 1.16
From
501
to
2,000
cubic
feet . . . .
. . . 0.80
From
2,001
to
4,500
cubic
feet . . . .
. . . . 0.68
From
4,501
to
12,000
cubic
feet . . . .
. . . . 0.54
From
12,001
to
30,000
cubic
feet . . . .
. . . . 0.51
From
30,001
to
50,000
cubic
feet . . . .
. . . . 0.44
From
50,001
to
100,000
cubic
feet . . . .
. . . . 0.36
From
100,001
to
500,000
cubic
feet . . . .
. . . . 0.32
From
500,001
to 1,000,000
cubic
feet . . . .
. . . . 0.26
Over
1,000,000
cubic
feet .
. . .
. . . . . .
. . . . 0.19
(b) The above rates and charges are in addition to water rates
and charges and the minimum charge per month for each bill from
October 1, 1980, and thereafter shall be five dollars and eighty
cents ($5.80).
*(c) The Common Council shall review on a regular basis all rates
and charges established pursuant to this Article. Said review shall be
conducted at, at least four (4) year intervals, beginning with four
(4) years from the effective date of'this sub - section. The Director
of Utilities shall file all pertinent data needed by the Council, on
or before June 1st of the year in which the rates and charges shall
be reviewed.
(d) There shall be, and are hereby established for the use of
and the services rendered by the Wastewater Treatment Plant of the
City of South Bend for a family dwelling unit located in a apartment
complex, hotel or motel, or mobile home park the following rates and
charges.
A minimum charge shall be levied for each family dwelling unit
unit located in an apartment complex, hotel or motel or mobile home
park of five dollars and eighty cents ($5.80) per month per family
dwelling unit or of the metered cubic feet consumption for the apart-
ment complex, hotel or motel or mobile home park as computed in ac-
cordance with Section 17- 47.1(a), whichever is greater.
SECTION II. There shall be added to Chapter 17, Article 5, of
the Municipal Code of the City of South Bend, a Section 17 -47.1.
Section 17 -47.1. All bills for Wastewater Treatment Plant ser-
vices, not paid within fifteen (15) days from the due date thereof,
as stated in such bills, shall be subject to a colletion or deferred
payment charge of ten (10) percent on the first six dollars ($6.00)
and three (3) percent on the excess over six dollars ($6.00).
SECTION III. Section 17 -49(a) of Article 6 of the Municipal
Code of the City of South Bend, shall be amended in its entirety
to read as follows:
Section 17- 49(a). The sum of sixty -four cents (0.64) per month
shall be added to the water service charge of all water users.
SECTION IV. This Ordinance shall be in full force and effect
from and after its passage, approval b the Mayor, and legal pub-
lication. '14
Member of the Common Council
Passed, as amended, September 15, 1980.
Patrick M. McMahon, P.E.
Director, Public Works
CITY of SOUTH BEND
ROGER O. PARENT, Mayor
COUNTY -CITY BUILDING SOUTH BEND, INDIANA 46601
August 6, 1980
Members of the Common Council
441 County /City Building
South Bend, IN 46601
RE: Waste Water Treatment Ordinance
Dear Councilmen:
(219) 284 -9251
An ordinance is herewith submitted for rate increases in sewage
rates. As shown by the ordinance, the last rate increase was in 1971.
Exceptional cost increases, especially in the last three years,
threatened the Waste Water Treatment Plant with deficit operation
which jeopardizes the financial standing of the entity for possible
future financing.
Careful review has been made of the rate increase projections by
certified public accountants retained by the Waste Water Treatment
Plant. We believe that this rate increase is necessary to insure
future functioning of this service and to maintain the necessary
coverage on outstanding bond issues.
We will be pleased to furnish you with any materials or additional
information which you may request.
Ver ly yours,
•
t�
Patrick M. McMahon, P.E.
Director
PMMcM:amc
Attachment
COOPERS & LYBRAND
CERTIFIED PUBLIC ACCOUNTANTS
2200 AMERICAN NATIONAL BANK BUILDING.
P. O. BOX 4157
A.MEMBER FIRM OF.
SOUTH BEND, INDIANA 46624
(2191 234-4021
COOPERS & LYBRAND (INTERNATIONAL) -
407 ST-JOSEPH VALLEY.BANK BUILDING
121 WEST FRANKLIN STREET
ELKHART,- INDIANA 46514
(219) 294 -7441
. P. 0. BOX. 605'
.NILES, MICHIGAN 49120
(616) 683 -5720
August 5, 1980
Mayor Roger 0. Parent
City of South Bend
County City Building
South Bend, Indiana 46601
Dear Mayor Parent:
The City of South Bend has contracted with Coopers
& Lybrand to perform 'a cost of service and rate study for the
South Bend Waterworks and a rate study for the South Bend
Wastewater Treatment Department. We have performed a
preliminary survey of the financial condition of the municipal
Utilities in order to determine the adequacy of the present
rates .to provide services. The results of our preliminary
survey are indicated below.
The Waterworks has been operating at a loss since
1976 and Wastewater Treatment has been operating at a loss
since-1977.. The result has been a'severe cash requirement.
Consequently, the General Funds have shown the following
decreasing balances: Waterworks Wastewater
1977 $ 1,692 $1,149,8o6
1979 253,002 7863932
July, 1980 5535589 224,015
9883475 184,7o8
It is not anticipated that there will be any improve-
ments in the cash balances by the end of 1980. Because of the
large deficit balance in the Waterworks and no offsetting funds,
there is effectively a borrowing from the meter deposit fund
which appears to be improper.
'Kayor-..Roger 0. Parent -2- August 5
? ,
:..198:.
Projections prepared from information supplied by
management of the utilities indicates that there will not be
an appreciable increase in revenues, while increases in
expenditures may be expected. As a result, there would not
be expected to be an improvement in the cash and operating
status of the utilities under the present revenue structure.
Based on the apparent deteriorating financial condition of
the utilities, it is imperative that relief be sought by
means of a rate increase.
The present rate structure for the Waterworks was
established by Ordinance No. 5608, dated November.26, 1973,
and the Wastewater rates were established by Ordinance No. 5298,
dated May 25, 1971. As you know, approval of the Common
Council is required to change municipal utility rates. Further,
the Public Service Commission of Indiana must approve the.rates
of the .Waterworks•.
IC 8-1-2-96 (Amended by House Act No. 1019) requires
that the municipal utility must be maintained in sound physical
and financial condition. Reasonable and just charges are to be
made for services and should produce sufficient revenues to
pay maintenance costs, operating costs, depreciation, debt
service, applicable taxes, extensions and replacements, provide
adequate working capital and an adequate return on the invest-
ment in the utility plant. "Any rate too low to meet.the
foregoing requirements is unlawful." Therefore, because of
the operating and cash deficiencies, it appears that the utilities
may be in violation of this statute.
.At the present time there are several ordinances in
effect which govern the financial requirements of the utilities:
Ordinance No.
Waterworks:
Commentary
4321 Dated May 23, 1960 - Authorized the issuance
of $1,90,000 revenue bonds, which expire
in 1980. The ordinance requires the maintenance
of, and allocation of revenues to, an Operating
and Maintenance Fund, Depreciation Fund and
Bond and Interest Fund. Funds allocated to
the Depreciation and Bond and Interest Funds
are restricted as to use of funds. Also required
is maintenance of facilities, financial records
and adequate balances to retire bonded debt.
Wastewater:
3959 Dated February 8, 195+ - Authorized the issuance
of $8,500,000 revenue bonds, which expire in
1984. Requirements are similar to ordinance No.
4321 for allocation of revenues and funding of
reserves.
,i�layo;r Roger 0. Parent -3- August 5, lyb
Ordinance No. Commentary
5298 Dated May 25, 1971 - Authorized the issuance
of $3,190,000 revenue bonds which expire in
1990.
It is imperative, for the protection of the bondholders
and the maintenance of an appropriate bond rating, that there
be an adequate provision of revenues and maintenance of proper
reserve requirements. A deteriorating financial condition can
jeopardize the status of the utilities
The purpose of a cost of service study and rate -
setting is to allocate.the costs to each user class, dependent
upon the volume of usage and requirements of each customer.
An underlying assumption is that a certain level of quality
of service will be maintained. The process itself is a complex
one and is further complicated by the practices of the Public
Service Commission. By regulation, only "fixed, known and
measurable costs" are allowed in determining rates which are
substantially based on historical financial data. There is
generally no provision for anticipated, undocumented expenses;
i.e. cost increases due to inflationary effects are not consid-
ered in rate - setting. Additionally, there has not been acceptance
of an allowance for an adequate return on investment in utility
plant, because of the difficulty in determining a suitable
rate of return for a municipal utility. As you can see, in
the present economic times, it is difficult to maintain
adequate rates to compensate for cost increases for signifi-
cant length of time.
As indicated above, it is apparent that it is necessary
to seek a rate increase for the Waterworks and Wastewater
Treatment Departments. Based upon data we have presently
compiled, the rate increasesrequired would be an average of
approximately 84% for Waterworks and 74% for Wastewater Treatment.
These increases should provide adequate revenues to cover the
costs itemized above and maintain a quality level of service.and
capital improvements. Under current economic conditions, it appears
that the increase would be sufficient for a period of two to four
years. However, that is predicated on current economic trends
and no significant variance from these trends.
It is important to consider the composition of the
proposed rate increases. Because a cost of service study is
designed to determine the cost of service to various user
groups, certain groups will be bearing a higher percentage
increase than the average and certain groups will bear a lower
percentage. It is anticipated that the range from the average
will not be significantly large and will approximate 8o/ - 93 %.
RoF r u.
Parent
August
Another consideration in the presently proposed rates
is a reduction of the minimum monthly charge for low volume
users from the proposed water rate increase. The purpose of
.this is to compensate the low volume water users (i..e. those in
the 0 - 500 cu-ft. consumption level), who are characteristically,
but not.exclusively, the older citizens. The result is that the
minimum water rate would increase from $1.65 per month to $1.82
per month, a 10% increase. This would affect approximately
10,000 customers, or 25% of the total Waterworks customers.
The average cost per residential customer is $3.48
per month.for water and $6.21 for sewage. The effect of the
rate increase will be to increase these amounts to $6.41 and
$10.82, respectively.
Enclosed are schedules which compare present and
proposed rates and rates presently effective for Mishawaka,
Elkhart, Michigan City, Indianapolis, Evansville and Fort Wayne
all neighboring or similar communities.. Of importance in these
schedules is the relationship of South Bend rates to those
of the other cities, which is generally lower, and the effective
date of the present rates. South Bend currently has the oldest
effective rates. Even after the proposed increase, South Bend
compares very favorably to the other cities.
We will be pleased to discuss these items with you
and other representatives of the City of South Bend at your
convenience.
Very truly yours,
i
nac
Enclosures
con toe (Inu mnn Tounrd of t4v laity of oout4 fiend:
Your Committee OF THE WHOLE
to whom was referred
A BILL ESTABLISHING A NEW SCHEDULE OF RATES AND
CHARGES FOR SERVICE RNEDERED BY THE WASTEWATER
TREATMENT PLANT OF THE CITY OF SOUTH BEND AND
AMENDING CHARGES MADE FOR THE WATER SERVICE FUND
BY AMENDING CHAPTER 17, ARTICLE 5 AND 6 BY
AMENDING SECTIONS 14 -47 and 17 -49(a) AND ADDING
SECTION 17.47.1.
Respectfully report that they have examined the matter and that in their opinion this bill should be recommended
to the Council favorable, as amended:
per attached amendments
FREE PRESS 001,Maou PUBLISHING CO.
Walter M. Szymkowiak
Chairman