HomeMy WebLinkAboutEstablishing a New Schedule of Rates and Charges for the Water WorksORDINANCE No 6829 -80
Passed by the Common Council of the City of South Bend, Indiana
Attest:
Ir
111,11(t
September 15
IRENE K. GAMMON
Presented by me to the Mayor of the City of South Bend, Ind*ana
September 16 �9 80
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Approved and signed by
0
[ 0
City Clerk
Of Common Council
City Clerk
IRENE K. GAMMON
ORDINANCE NO. 6829 -80
AN :ORDINANCE ESTABLISHING A NEW SCHEDULE OF
RATES AND CHARGES FOR SERVICES RENDERED BY
THE WATER WORKS OF THE CITY OF SOUTH BEND AND
BY AMENDING CHAPTER 17, ARTICLE 4 BY AMENDING
SECTIONS 17 -44, 17 -45, AND 17 -46 AND BY ADDING
SECTION 17.45.1.
STATEMENT OF PURPOSE AND INTENT
The Common Council of the City of South Bend last established a
schedule of rates and charges for services rendered by the Water Works
of the City of South Bend by Ordinance No. 5608 -73, adopted.on November
26, 1973.
Due to passage of time and resultant increases in the financial
requirements of the Water Works, the Council now finds that the revenues
provided by the rates and charges established by said ordinance are in-
sufficient to meet the financial requirements of the Water Works.
The Council now finds that certain inequities have heretofore existed
in water service to apartment complexes having a common meter in that the
residents therein have been paying less than residential users for a
similar service, and the Council now desires to correct this inequity.
The Council desires to provide a lesser rate increase than other-
wise provided in the rate schedule herein for certain users who have a
monthly water usage under a certain prescribed minimum.
The Council now finds that in order to meet such financial require-
ments, it is necessary that the rates and charges be increased for the
services rendered by said Water Works of the City of South Bend.
NOW, THEREFORE, BE IT ORDAINED by the Common Council of the City of
South Bend, Indiana, as follows:
SECTION I. There shall be added to Chapter 17, Article 4, Section
17 -44 of the Municipal Code of the City of South Bend a Subsection three
(3), four (4), five (5), six (6) and seven (7) which shall read as fol-
ows:
Sec. 17 -44 (3). A family dwelling unit means a building, vehicle
or moveable structure or portion thereof designed or arranged to
provide temporary or permanent living facilities for a single
family.
Sec. 17 -44 (4). 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
fa.mi 1 i Ps
Sec. 17 -44 (5). Hotel or motel means a building in which lodging
with or without meals is provided and offered to the public for
compensation, and which is open to transient guests.
Sec. 17 -44 (6). 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, flat-
bed 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 founda-
tion supports, and is connected to external utilities and electrical
systems.
Sec. 17 -44 (7). Mobile home park means a tract of land developed
with all necessary facilities and services to accomodate three (3)
or more mobile homes.
SECTION II. Section 17 -45 of Article 4 of the Municipal Code
of the City of South Bend, Indiana, shall be amended in its entirety
to read as follows:
(a) Consumption per Monthly
Billing Period
Rate per
100 Cubic Feet
(e) Fire Protection Service - Hydrants:
Private fire hydrants, per hydrant, per annum . $124.00
Public fire hydrants, per hydrant, per annum 124.00
(f) Private Fire Protection Service - Automatic Sprink
2 inch connection . . . . . . . . . . . . . . . . . . $ 25.00
3 inch connection . . . . . . . . . . . . . . . . . . 50.00
4 inch connection . . . . . . . . . . . . . . . . . . 100.00
6 inch connection . . . . . . . . . . . . . . . . . . 124.00
8 inch connection . . . . . . . . . . . . . . . . . 213.00
10 inch connection . . . . . . . . . . . . . . . . . 333.00
12 inch connection . . . . . . . . . . . . . . . . . 480.00
(g) Temporary Service (minimum charge payable in advance):
Temporary service where metered shall be calculated upon the regis-
tration of a meter or meters installed at the approved meter rates.
In such cases as the utility may deem it impracticable to install
a meter for temporary service, there shall be a minimum charge
of twelve dollars (12.00).. If the water consumption computed at
approved rates is known to be in excess of the twelve dollars
($1 2.00) minimum charge, an authorized agent of the utility shall
have the right to estimate said water consumption and the estimated
consumption shall be billed at the approved meter rates.
First 500 . . . .
. . . . . . . .
. . $ 0.60
Next 1,500 . . . .
. . . . . . . .
. . 0.52
Next 51500 . . . .
. . . . . . . .
. . 0.47
Next 22,500 . . . .
. . . . . . . .
. . 0.40
Next 90,000 . . . .
. . . . . . . .
. . 0.31
Over 120,000 . . . .
. . . . . . . .
. . 0.23
(b)
Consumption per Bimonthly
Rate per
Billing Period
100 Cubic Feet
First 1,000 . . . .
. . . . . . .. .
$ 0.60
Next 3,000 . . . .
. . . . . . .
0.52
Next 11,000 . . . .
. . . . . . . .
. 0.47
Next 45,000 . . . .
. . . . . . . .
. 0.40
Next 180, 000 . . . .
. . . . . . . .
. 0.31
Over 240,000 . . . .
. . . . . . . .
. 0.23
(c)
Minimum Charge
Monthly
Bimonthly
Meter Size
5/8 inch meter , , , , ,
$ 1.80
$ 3.60
3/4 inch meter , , . ,
4.32
8.64
,
1 inch meter
7.68
15.36
1 1/2 inch meter , , ,
17.28
34.56
,
2 inch meter. , . , , ,
30.72
61.44
3 inch meter
69.12
138.24
4 inch meter
122.88
245.76
6 inch meter
276.48-
552 -.96
8 inch meter.
491.52
983.041'
10 inch meter
768.00-
1,536.00
12 inch meter, , , , , , '1,105.92
2,- 211.84
(d)
If water consumption by a
user serviced by
a 5/8 inch meter is less
than 500 cu. ft. per month, then such user
shall be billed under the
minimum charge provisions
of subparagraph
(c) of this Section and
not under the consumption
per monthly billing provisions of sub -
Dara --raph (a) of this Section.
(e) Fire Protection Service - Hydrants:
Private fire hydrants, per hydrant, per annum . $124.00
Public fire hydrants, per hydrant, per annum 124.00
(f) Private Fire Protection Service - Automatic Sprink
2 inch connection . . . . . . . . . . . . . . . . . . $ 25.00
3 inch connection . . . . . . . . . . . . . . . . . . 50.00
4 inch connection . . . . . . . . . . . . . . . . . . 100.00
6 inch connection . . . . . . . . . . . . . . . . . . 124.00
8 inch connection . . . . . . . . . . . . . . . . . 213.00
10 inch connection . . . . . . . . . . . . . . . . . 333.00
12 inch connection . . . . . . . . . . . . . . . . . 480.00
(g) Temporary Service (minimum charge payable in advance):
Temporary service where metered shall be calculated upon the regis-
tration of a meter or meters installed at the approved meter rates.
In such cases as the utility may deem it impracticable to install
a meter for temporary service, there shall be a minimum charge
of twelve dollars (12.00).. If the water consumption computed at
approved rates is known to be in excess of the twelve dollars
($1 2.00) minimum charge, an authorized agent of the utility shall
have the right to estimate said water consumption and the estimated
consumption shall be billed at the approved meter rates.
(h) 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 Subsection. The
Director of Utilities shall file all pertinent data needed by the
Council, on or before June lst of the year in which the rates
and charges shall be reviewed.
SECTION III. There shall be added to Chapter 17, Article 4, of
the Municipal Code of the City of South Bend, a Section 17 -45.1 which
shall read as follows:
Section 17 -45.1. There shall be, and are hereby established for the
use of and the services rendered by.the Water Works system 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
located in an apartment complex, hotel or motel or mobile home
park of three dollars (3.00) per month per family dwelling unit
or of the metered cubic feet consumption for the apartment complex,
hotel or motel or mobile home park as computed in accordance with
Section 14 -45, whichever is greater.
SECTION IV. Section 17 -46 of Article 4 of the Municipal Code of
the City of South Bend, Indiana, shall be amended in its entirety to
read as follows:
Section 17 -46. All bills for water services not paid within fifteen
(15) days from the due date thereof, as stated in such bills, shall
be subject to a collection 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 V. This ordinance shall be in full force and effect from
and after its passage, approval by the Mayor and legal publication; pro-
vided, however, that this Ordinance shall not become effective unless and
until the schedule of rates and charges herein set forth shall have been
approved by the Public Service Commission of Indiana, or until such time
as said Commission shall direct; and until such approval by the Public
Service Commission of Indiana, and existing rates and charges of the
Water Works of the City of South Bend shall continue in effect.
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: Water Ordinance
Dear Council Members:
(219) 2849251
The last Water Works rate increase occurred in 1973. It is necessary
that the enclosed proposed rate increase receives your attention to
insure proper bond coverage and so as not to jeopardize the bond
rating of the City for possible future necessary bond issues of the
Water Works.
Approval of the Water Works rates must be obtained after hearing
before the Public Service Commission. Therefore, a considerable
delay will result between the passage of this ordinance and PSC
approval before the new rates can become effective.
Recitations are made in the purpose and intent clause of the ordi-
nance seeking to remedy inequities concerning bulk service to
apartment complexes and to attempt to shelter lower income people
and low water users from the effect of the considerable rate increase
which is now necessary.
We will be pleased to meet with you at any time and to provide
necessary backup documentation as well as comparisons with pre-
vailing rates for water service in other cities.
Very truly yours,
Patrick M. McMahon, P.E.
Director
PMMcM:amc
Enclosure
COOPERS & LYBRAN D
CERTIFIED PUBLIC ACCOUNTANTS
** 2200 AMERICAN NATIONAL BANK BUILDING
P. o. BOX 4157
SOUTH BEND, INDIANA 46624
A MEMBER FIRM OF - - (219) 234 -4021
COOPERS & LYBRAND (INTERNATIONAL) 407ST.JOSEPH VALLEY BANK BUILDING
121 WEST FRANKLIN STREET
ELKHART, INDIANA 46514
(219) 294 -7441
P. O. 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
1978 253,002 786,932
1979 5535589 2245015
July, 198o 988,475 184,7o8
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.
Mayor - Rck ;er '0. Parent -2- Augus -t 5, .'1980.
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 $1,9+0,000 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.
Parent -3-
Augus,t 5,. -19bO
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 a 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 increases required would be an average of
approximately 84% for Waterworks and 74% for Wastewater Treatment.
These increases should provide. adequate revenues to cover the
costs i.temized 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 80% - 93 %.
�.: : a. u . Parent - +- August 5 .
,_. 1 tiDu,
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'.
103000 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, Michigarr 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.
and
We will be pleased to discuss these items with you
other representatives of the City of South Bend at your
convenience.
Very truly yours,
nac
Enclosures
Tnmm Urr I rpnrt
010 #lie Tom= Tounrd of #lie (Itty of *out4 jjend:
Your Committee OF THE WHOLE
to whom was referred
A BILL ESTABLISHING A NEW SCH
CHARGES FOR SERVICES RENDERED
OF THE CITY OF OSUTH BEND AND
FOR WATER SERVICE BY AMENDING
4 BY AMENDING SECTIONS 17 -44,
BY ADDING SECTION 17.45.1.
EDULE.OF RATES AND
BY THE WATER WORKS
AMENDING CHARGES MADE
CHAPTER 17, ARTICLE
17 -45 and 17 -46 AND
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 amendements
FREE PRESS PUBLISHING CO.
Walter M. Szymkowiak
Chairman