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R5F-Increase Stormwater Utility Service ChargeCOMMISSION IIEM SUMMARY Condensed Title: An Ordinance of the Mayor and City Commission of the City of Miami Beach, Florida Amending Chapter 110 of The Miami Beach City Code, Entitled "Utilities;" Amending Article lll, Thereof Entitled "Stormwater Utility;" Amending Section 110-109 Thereof Entitled "Stormwater Utility Fees," By Amending Appendix A Thereto Entitled "Fee Schedule" To lncrease the Stormwater Utility Service Charge lmposed by the City as of October 1, 2014; Providing for Codification, r, Severabilitv. and an Effective Date. Ke lntended Outcome S Ensure reliable Stormwater Management and resiliency against flooding by implementing select short and long-term solutions includinq addressino sea-level rise. Supporting Data (Surveys, Environmenta! Scan, etc.): Consistent with prior surveys,lhe 2014 community survey identified storm drainage as areas for improvemenl.TSo/o of residential respondents and 69% of business respondents Shall the Mayor and City Commission approve the amendment to the Ordinance on second Item Summary/Recommendation : SECOND READING.PUBLIC HEARING On June 9,2010, the City authorized development of a Citywide Comprehensive Stormwater Management Master Plan (SWMMP) which was adopted on November 14, 2012 to evaluate and update its Stormwater management practices, infrastructure, funding and regulatory policies. The SWMMP was intended to be a guide for improving the City's Stormwater management system performance for the next 20 years, with considerations to potential sea level rise over this time period. On February 12, 2014, the City of Miami Beach Commission approved the recommendation of the Flooding Mitigation Committee to amend the City's Stormwater Management Master Plan by modifying the design criteria to meet the continuing flooding conditions in the City. At the March 4,2014 meeting of the Mayor's Blue Ribbon Panel on Flooding and Sea Rise and the March 26,2014 meeting of the Flooding Mitigation Committee, Patricia Walker, Chief Financial Officer, discussed the necessity and process to raise Stormwater fees to cover the cost of financing the enhancements to the Stormwater System. At the Commission meeting of April 23, 2014, the Mayor and City Commission approved Resolution 2014-28580 accepting the recommendations of the Mayor's Blue Ribbon Panel on Flooding and Sea Rise to design and implement the upgrade of the City's storm drainage system to meet the new design criteria set by the City Commission with a potential estimated cost of $300 million and with a target completion timeframe between 3 to 5 years. ln order to be able to provide coverage to issue the first series of additional bonds, the Administration proposes a monthly Stormwater rate of $16.67 per Equivalent Residential Unit ("ERU") which represents an increase for a residential customer of $7.61 per month or 84Yo above the FY 2013114 rate of $9.06 per month. The Finance and Citywide Projects Committee (FCWPC) met on May 20, 2014 lo review the proposed Ordinance amendment, but elected to refer the item to the full Commission for its consideration. On July 23, 2014 the City Commission approved the Ordinance on First Reading and set a Second Reading Public Hearing for September 10,2014. Commissioner Steinberg asked that the City's Ombudsman Barbara Hawayek reach out to condominium associations to explain the impact of the Stormwater rate increase. THE ADMINISTRATION RECOMMENDS APPROVING THE AMENDMENT TO THE ORDINANCE. oJr*ro,rrrn RSF Board Recommendation: Financial Information : Finance and Citywide Projects Committee, Mayor's Blue Ribbon Panel on Flooding and Sea Rise, Flooding ion Committee. Source of Funds: Amount Account Approved 1 2 OBPI Total ina Echert. ext 6479 istant Gity Man AIY AAIAMIBTACH g,erc 1-lo-t4533 g MIAMIBEACH City of Miomi Beqch, 1700 Convention Center Drive TO:Mayor Philip Levine and Membersfof the Ci FRoM: Jimmy L. Morales, City Manage DATE: September 10,2014 SUBIECT: AN ORDINANCE OF THE MAYOR AND CITY COMMISSION OF THE CIry OF MIAMI BEACH, FLORIDA, AMENDING CHAPTER 110 OF THE MIAMI BEACH CITY CODE, ENTITLED "UTILITIES;" AMENDING ARTIGLE III THEREOF, ENTITLED "STORMWATER UTILITY;" AMENDING SECTION 110-109 THEREOF ENTITLED "STORMWATER UTILITY FEES,'' BY AMENDING APPENDIX A THERETO ENTITLED..FEE SCHEDULE," TO INCREASE THE STORMWATER UTILITY SERVICE CHARGE IMPOSED BY THE CITY AS OF OCTOBER 1, 2014; PROVIDING FOR CODIFICATION, REPEALER, SEVERABILITY, AND AN EFFECTIVE DATE. ADMINISTRATION RECOMMENDATION The Administration recommends approving the City Commission adopt the Ordinance. BACKGROUND On June 9, 2010, the City authorized development of a Citywide Comprehensive Stormwater Management Master Plan (SWMMP) which was adopted on November 14, 2012 to evaluate and update its Stormwater management practices, infrastructure, funding and regulatory policies. The SWMMP was intended to be a guide for improving the City's Stormwater management system performance for the next 20 years, with considerations to potential sea level rise over this time period. On February 12, 2014, the City of Miami Beach Commission approved the recommendation of the Flooding Mitigation Committee to amend the City's Stormwater Management Master Plan by modifying the design criteria to meet the continuing flooding conditions in the City. The sea level design criteria was changed to reflect seasonal high tides and this will require all drainage outfalls to be pumped and the discontinuance of the existing injection wells. The SWMMP provided a preliminary schedule of prioritized capital improvements based on earlier criteria but does not include the improvements associated with the revised criteria. Miomi Beoch, Florido 33 I 39, www.miomibeochfl.gov COMMISSION MEMORANDUM SECOND READING PUBLIC HEARING 534 September 10, 2014 City Commission Memo FY1 5 Stormwater Rate Ordinance MEMO Page 2 of 4 At the March 4, 2014 meeting of the Mayor's Blue Ribbon Panel on Flooding and Sea Rise and the March 26, 2014 meeting of the Flooding Mitigation Committee, Patricia Walker, Chief Financial Officer, discussed the necessity and process to raise Stormwater fees to cover the cost of financing the enhancements to the Stormwater System. At the Commission meeting of April 23,2014, the Mayor and City Commission approved Resolution 2014-28580 accepting the recommendations of the Mayor's Blue Ribbon Panel on Flooding and Sea Rise to design and implement the upgrade of the City's storm drainage system to meet the new design criteria set by the City Commission with a potential estimated cost of $300 million and with a target completion timeframe between 3 to 5 years. The estimate includes the Stormwater portion of future neighborhood projects, the retrofit of some previously constructed neighborhood Stormwater systems, and miscellaneous Stormwater upgrades that have been identified by the Public Works Department. The upgrades include the installation of 35 large and 30 small pump stations and the conversion of 21 injection pumps. At the Special Finance and Citywide Projects Committee (FCWPC) meeting of May 20, 2014 the Administration presented the funding strategy for this program recommending issuing three separate $100 million Stormwater bonds. The first issue would be in FY 14-15 and other issues would follow as funding was needed. The need for future bond issues may be reduced by the establishment of Stormwater impact fees, the removal of certain restrictions on capital funds currently held by the City and any grant funds for which the City may be eligible. The FCWPC elected to refer the item to the full Commission for its consideration. On July 23, 2014 the City Commission approved the Ordinance on First Reading and set a Second Reading Public Reading for September 10, 2014. The item was presented by Eric Carpenter, Public Works Director and Patricia Walker, Chief Financial Officer. Commissioner Steinberg asked that the City's Ombudsman Barbara Hawayek reach out to condominium associations to explain the impact of the Stormwater rate increase. Rate requirements for Additional Stormwater Bonds To determine the rates necessary to support the issuance of the first $100 million of Stormwater Revenue Bonds, the Administration completed a series of pro-formas to calculate the rate increases required to cover debt repayment of future Stormwater bonds. The calculation considered debt service coverage based on two requirements of the existing Stormwater Revenue Bond Resolution. The first requirement, termed the additional bonds test, requires that net revenues available for debt service be no less than 1 10 percent of the maximum annual debt service of the outstanding plus prospective debt to be issued, for at least 12 consecutive months of the 18 months prior to the issuance of additional bonds or, if prior to the issuance of the proposed additional bonds, the rates are increased, then such rates may be used to project the Net Revenues as though they were in place during the 535 September 10, 201 4 City Commission Memo FY1 5 Stormwater Rate Ordinance MEMO Page 3 of 4 period. The second requirement, which must be fulfilled annually, regardless of any prospective debt issue, is termed the rate covenant. Net revenues available for debt service in each fiscal year must not be less than 1 10 percent of the principal and interest requirements for such fiscal year to meet the rate covenant. ln addition to meeting the two debt service coverage requirements, annual revenues must be sufficient to meet other operating and maintenance expenditure requirements without resulting in a cash flow deficit. The Stormwater Enterprise fund is anticipated to need the capacity to issue tax-exempt debt in the amount of $100 million, plus issuance costs, by early FY 2014115to cover the costs of Stormwater improvement projects which will include any amounts committed from the line of credit. The second issue of $100 million could be issued in FY 2016117 and the third issue of $100 million could be issued in FY 2018119, as the funding is needed to support the Stormwater improvement projects. ln order to be able to provide coverage to issue the first series of additional bonds, the Administration proposes a monthly stormwater rate of $16.67 per Equivalent Residential Unit ("ERU") which represents an increase for a residential customer of $7.61 per month or 84o/o above the FY 2013114 rate of $9.06 per month. FY 2013t14 Rate FY 2014t15 Proposed Rate Difference from FY 2009t10 % Change Stormwater $9.06 $16.67 $7.61 840h The recommended rate is conservative in the area of needed bond coverage based on the information developed to date. The Administration will continue to work on the capital needs and anticipates having more information before it is necessary to actually issue the bonds. The table below projects increases from FY 2014115 through FY 2018/19 including increases for the second and third debt issuances, if needed; however, this Ordinance amendment only includes a rate increase proposal for FY 2014115. As with this year, we will refine these on an annual basis. Stormwater Proposed Fees Current Rate FY 2014t15 FY 2015t16 FY 2016t17 FY 2017 t18 FY 2018t19 Monthlv Charoe $ e.06 16.67 16.67 $ 2301 $ 23.01 $ 27.38 o/o Fee lncrease 84%o%38%0o/o 19o/o Monthlv lncrease $ 7.61 $ 6.34 $$ 4.37 536 September 10, 201 4 City Commission Memo FY1 5 Stormwater Rate Ordinance MEMO Page 4 of 4 CONCLUSION: The Administration recommends approving the Ordinance amendment. JLM/PDWGE T:\AGENDAVOI 4\August 1\RegulaAFYl 5 Stormwater Rate Ordinance MEMO.doc 537 ORDINANCE NO. AN ORDINANCE OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, AMENDING CHAPTER 110 OF THE MIAMI BEACH CITY CODE, ENTITLED "UTILITIES"; AMENDING ARTICLE lll THEREOF, ENTITLED ''STORMWATER UTILITY," AMENDING SECTION 110-109 THEREOF ENTITLED "STORMWATER UTIL!ry FEES," BY AMENDING APPENDIX A THERETO ENTITLED ..FEE SCHEDULE," TO INCREASE THE STORMWATER UTILITY SERVICE CHARGE IMPOSED BY THE CITY AS OF OCTOBER 1,2014; PROVIDING FOR CODIFICATION, REPEALER, SEVERABILITY, AND AN EFFECTIVE DATE. WHEREAS, the City owns and operates a Stormwater Utility System ("System"), which is currently funded by a stormwater utility service charge; and WHEREAS, a Capital lmprovement Program (the "Program") has been developed to implement stormwater improvements for the System; and WHEREAS, it is necessary to finance the Program through the issuance of Stormwater Revenue Bonds; and WHEREAS, the schedule of rate increases proposed her.ein will provide sufficient revenues for the payment of principal and interest on the proposed Stormwater Revenue Bonds; and WHEREAS, the rate increases proposed herein include funding for additional costs for operation and maintenance of the System. NOW, THEREFORE, BE IT ORDAINED BY THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, as follows: SECTION 1: That Appendix A to Section 1 10-109 (c) of Article lll of Chapter 1 10 of the Miami Beach City Code is hereby amended as follows: APPENDlX A FEE SCHEDULE 538 Secfion this Code 1 10-109(c) October 1, 2009 October 1,2014 PASSED and ADOPTED this ATTEST: :"u'':''on . Amount Stormwater utility service charge effective with billings on or after the following dates shall be as follows: $ e.o6 $16.67 SECTION 2. CODIFICATION It is the intention of the Mayor and City Commission of the City of Miami Beach, and it is hereby ordained that the provisions of this ordinance shall become and be made part of the Code of the City of Miami Beach, Florida. The sections of this ordinance may be renumbered or re-lettered to accomplish such intention, and the word "ordinance" may be changed to "section", "article" or other appropriate word. SECTION 3. REPEALER All ordinances or parts of ordinances in conflict herewith are and the same are hereby repealed. SECTION 4. SEVERABILITY lf any section, subsection, sentence, clause, phrase or portion of this Ordinance is, for any reason, held invalid or unconstitutional, such portion shall be deemed a separate, distinct and independent provision and such holding shall not affect the validity or constitutional, such portion shall be deemed a separate, distinct and independent provision and such holding shall not affect the validity or constitutionality of the remaining portions of this Ordinance. SECTION 5. EFFEGTIVE DATE This Ordinance shall take effect on the 1't day of October,2Ol4. day of ,2014 PHIL!P LEVINE, MAYOR RAFAEL E. 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