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REGULAR MEETING OCTOBER 24, 2016 eliminates compact fees for sewer and water that were on the books before and adds a surcharge for sewer. That surcharge is phased in. It will be zero percent (0 %) until the end of 2016, then it becomes five percent (5 %) January 1St, 2017, then it becomes ten percent (10 %) January 1St, 2018 and finally fourteen (14 %) from January 1St, 2016 and on. It also has a provision which provides for a credit for Indiana Municipalities or Special Districts that have a sale for resale provision that is defined by the Indiana Code. The only two (2) cases like this in the City of South Bend are the St. Joseph County Regional Sewer District and the Town of New Carlisle. Councilmember Oliver Davis asked Mr. Horvath to explain the key reasons why we are doing this for the public's sake. Mr. Horvath responded the previous ordinance was inconsistently applied. We had compact fees on the book that weren't collected since 2002. We were either needing to start enforcing the ordinance or revise it. As we started looking at it we talked with financial and legal advisors to ask about what other communities are doing in Indiana and we drafted the new ordinance to have the system development charge instead of the assessments and had a surcharge instead of the compact fees for outside the City users. From there we had a number of meetings and this bill is the result of those meetings. Councilmember Davis asked if these programs have been successful in those cities that have them. Mr. Horvath responded the system development charge being based on the equity method is very defensible. We tried to create a formula that works the best it can for every situation and while there won't be a perfect formula, but using the equity method essentially means that the more impact a property has on the utilities the larger the system development charge will be. In terms of the surcharge, it makes it much easier for our staff to calculate it and figure it out. It is a much better system for everyone involved and should benefit them all. Councilmember Davis stated the key is this was already on the books back in 2002 and we are just fixing it and making it more equitable. Mr. Horvath responded that is correct. Councilmember Dr. Varner stated just for the record there was an examination of cost using the old method versus using the new method and in three (3) of four (4) projects it was significantly lower under this new bill. This is a solution that appears to be easier to calculate and applies more consistently. He asked Mr. Horvath to address the issue of special rate contracts and how they would be affected by this bill. Mr. Horvath responded by first thanking Councilmember Dr. Varner for pointing out that the assessments and system development charges are mostly cheaper under this ordinance. On the residential side the old average for a resident in the City was $3,000 for a sewer connection, it is now.$1,145. On the water side, our old average was $2,000 and it is now $500. In terms of special rate contracts, as a provision of the ordinance it allows for special rates. There are things built in that the City has to do and go through the Council. To his knowledge, there is one (1) such entity that has a special rate right now. Currently through the Legal Department we are reviewing that rate but in terms of this ordinance there is nothing in here that specifically talks about special rates. For the credit on the outside the City user's surcharge, it's only eligible for Indiana Municipalities or Regional Sewer Districts that fit within the Indiana Code for sale for resale customers. That credit would not be applicable to other large users, however having said that special rate contracts may have provisions in there that may impact it but in this ordinance there are no provisions for allowing for a credit except for those two (2) cases mentioned. Committee Chair Dr. Varner stated he would be more than willing to look at this again, sooner rather than later, if we can't find a solution that would perhaps include an amendment to it that precludes more than one (1) beneficial reduction by any entity or user. Mr. Horvath stated he agreed, we want to make sure you can only use one (1) coupon at a time. No one from the public spoke either in favor of or in opposition to the bill.