R5L-Adjust Water And Sewer Rates Same Percentage Enacted By County -Weithorn-COMMISSION ITEM SUMMARY
Gondensed Title:
An Ordinance Of The Mayor And City Commission Of The City Of Miami Beach, Florida, Amending Chapter 1 10 Of
The Miami Beach City Code Entitled "Utilities," Amending Article lv, Entitled "Fees, Charges, Rates And Billing
Procedure;" Amending Division 2, Entitled "Rates, Fees And Charges," By Amending Section 110-166, Entitled"
Schedule Of Water Rates And Tapping Charges," And Section 1 10-168, Entitled "Sanitary Sewer Service Charge," To
Adjust Water And Sanitary Sewer Rates By The Same Percentage Enacted By Miami-Dade Water And Sewer
Department (WASD); And Also Amending Appendix A To Chapter 110, Entitled "Fee Schedule" To lncrease The
Water Rates And Sanitary Sewer Service Charges lmposed By The City Pursuant To Sections 1 1 0-1 66 And 1 1 0-168;
idinq For ilitv. And An Effective Date.
lntended Outcome Su rted:
Maintain the City's infrastructure.
Supporting Data (Surveys, Environmental Scan, etc.):
lssue:
Shall the Mayor and City Commission approve the amendment to the Ordinance on first reading and schedule a
second readinq public hearinq?
Item S ummary/Recommendation :
FIRST READING
The City's utility rates are structured to collect the necessary revenues to meet operating and maintenance costs of the
water and sewer infrastructure, to cover debt service for water and sewer bonds, to maintain adequate operating fund
reserves, and, to pay Miami-Dade County forwholesale water purchased, the treatment of the City's sewage and other
fees. ln the past, the City has evaluated each County rate increase and passed through some County rate increases to
its customers while subsidizing other rate increase.
The Miami-Dade Water and Sewer Department (WASD) has proposed water and sewer rate increases to allwholesale
customers. The proposed water rate of $1 .7816 per 1 ,000 gallons, is an increase of $0.0674 above the current rate of
$1 .7142. During the last fiscal year, WASD did not increase the water rate but did increase the sewer rate $0.2995 per
1,000 gallons, which was passed on to the City's rate payers. The proposed WASD sewer rate of $2.5600 for
FY2014115, is an increase of $0.1077 above the current rate of $2.4523 per 1 ,000 gallons. However, the cunent Miami
Beach rate of $6.34 per thousand gallons is insufficient to cover the cost of providing sewer service. Based on the FY15
budget proposed by the Administration, rates have to be increased by 1 9.1 5% to $7.55 per thousand gallons in FY1 5. A
significant portion of the deficit over the past few years is a result of both a rate increase of $0.1 1 per 1000 gallons that
was implemented by Miami-Dade County in FY10/1 1 and not passed through to the end users and minor operational
cost increases that were covered by the rate stabilization fund. The purpose of the rate stabilization fund is to cover
anomalies in the billing or revenues year over year and to accommodate some of these costs without the need for rate
increases. Unfortunately this fund has been depleted due to the reliance on this to cover inflation and County rate
increases. At the Finance & Citywide Projects Committee on August 29, the Committee recommended approval of the
respective water and sewer rate increases, as well as establishing a policy of automatically implementing the
percentage increases of water and sewer rates that are enacted by Miami-Dade WASD without further Commission
action.
The sewer rate increase for FY2014115 is $1 .21 per 1,000 gallons, and the water rate increase is $0.07 per 1,000
gallons. For the average 1 1,000 gallons per month customer, the combined water and sewer rates result in a monthly
increase of $14.08 in FY2014115. For the minimum usage customer (5,000 gallons or less per month), the monthly
impact would be a total of $6.40.
THE ADMINISTRATION RECOMMENDS APPROVING THE AMENDMENT TO THE ORDINANCE ON FIRST
READING AND SCHEDULING A SECOND READING PUBLIC HEARING.
Source of
Funds:
Amount Account Approved
1 $6,129,000 425-8000-343510 Sewer
2 $491,000 425-8000-343310 Water
OBP!Total $6,620,000
Glerk's Office islative Tracki
t:\agendaP0 1 4\september\fy1 5 water and sewer rate ordinance
i
!la
AGENDA ,rEil
-R
5 Lo^'iWaT
Financial lnformation :
Keith Wilder, ext 6192
(9 MIAMIBEACH 12
g MIAMIBEACH
Ciiy of Miomi Beoch, 1700 Convention Cenler Drive, Miomi Beoch, Florido 33,l39, www.miomibeochfl.gov
COMMISSION MEMORANDUM
TO: Mayor Phillip Levine and M of the Ci Commission
FROM: Jimmy L. Morales, City Manager
DATE: September10,2014
SUBJECT: 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 IV, ENTITLED ''FEES, CHARGES,
RATES AND BILLING PROCEDURE;" AMENDING DIVISION 2, ENTITLED "RATES,
FEES AND CHARGES," BY AMENDING SECTION 110.166, ENTITLED" SCHEDULE
OF WATER RATES AND TAPPING CHARGES," AND SECTION 110.168, ENTITLED..SANITARY SEWER SERVICE CHARGE," TO ADJUST WATER AND SANITARY
SEWER RATES BY THE SAME PERCENTAGE ENACTED BY MIAMI-DADE WATER
AND SEWER DEPARTMENT (WASD); AND ALSO AMENDING APPENDIX A TO
CHAPTER 110, ENTITLED "FEE SCHEDULE" TO INCREASE THE WATER RATES
AND SANITARY SEWER SERVICE CHARGES IMPOSED BY THE GITY PURSUANT TO
SECTIONS 110-166 AND f 10-168; PROVIDING FOR CODIFICATION, REPEALER,
SEVERABIL!TY, AND AN EFFECTIVE DATE.
ApMTNTSTRATTON RFCOMMENpATtON
The Miami-Dade Water and Sewer Department (WASD) has proposed water and sewer rate
increases to all wholesale customers of $.0674 for water and $.1 077 for sewer per 1000 gallons
respectively effective October 1,2014. ln the past, the City has evaluated each County rate
increase and passed through some County rate increases to its customers while subsidizing others.
During the last fiscal year, WASD did not increase the water rate but did increase the sewer rate
$0.2995 per 1,000 gallons which was passed on to the City's rate paprs.
ANALYST9
The City's utility rates for water and sanitary sewer services are structured to collect the necessary
revenues to meet annual operating and maintenance costs of the water and sanitary sewer
infrastructure, to cover debt service for water and sewer bonds to maintain adequate operating fund
reserves, and, to pay Miami-Dade Countyforwholesale water purchased, the treatment of the City's
sewage and other fees.
ln general, the rates for water supply and sanitary sewer services consist of
. Pass-through of the wholesale rate the City pays to Miami-Dade County for
the purchase of potable water and treatment of sewagqo Debt service for the Water and Sewer Revenue Ebnds;o Operating and maintenance costs for the water and sewer utili!;. 7.5o/o fee of previous year total revenue paid to the Miami-Dade County
Environmental Resource Management Department (DERM)
FY,?014{15 Miami Padg Countv Wholeqalq Y,Vatqr and,Fgwgf Bales
The Miami-Dade Water and Sewer Department has informed all wholesale customers that the
proposed water rate for FY2014115 would increase by $0.0674 to $1.7816 per 1000 gallons.
FIRST READING
13
Commission Memo
September 10, 2014
Water and Sewer Rate Ordinance Memo
Page 2 of 3
The operational expenditure increases for the County are due to projected operating expenses debt
service increases in FY2015, and other revenue, charges and adjustments such as reserve
requirements and decreased interest earnings.
WASD has also notified wholesale customers that their proposed sewer rate will be $2.56, an
increase of $0.1077 above the current rate of $2.4523 per 1000 gallons. The cost of the proposed
FY2014115 sewer rate increase to Miami Beach is approximately $887,000. The proposed
wholesale water and sewer rates are subject to approval by the Board of County Commissioners at
their Public Budget Hearings, scheduled for September 2014.
Water Revenue Review and Recommendation
All operational expenditure increases related to the proposed cost of living adjustment to salaries,
increased costs of health insurance and pension, and increases in other operating costs can be
absorbed without the requirement to increase the water rate. However, the increase proposed by
the County should be passed through to the water customers. This would result in the
recommendation to pass through the Miami-Dade County increase of $0.07 perthousand gallons for
water rates.
Sewer Revenue Review and Recommendation
Millian, Swain & Associates, lnc. (MSA) were retained to assist in evaluating the level of revenues
produced by current sewer rates and the potential need for rate adjustments. Their findings include
the following.
1. The sewer utility has been operating at a deficit since FY13.
2. lncrease in WASD Treated Sewer fees and scheduled increase in debt service payment for
existing bonds are the largest contributors to a risein the projected FY15 deficit of $6.44 million.
3. The current rate of $6.34 per thousand gallons is insufficient to cover the cost of providing sewer
service. Based on the proposed FY15 budget provided bythe City, rates would have to be increased
by 19.1 5o/o to $7.55 per thousand gallons in FY15.
4. Additional rate increases will likely be needed to cover debt service requirement of a proposed
$20 million debt issuance in FY15 and to coverfurther increases in costs (due to inflation, etc.)
beyond FY15.
5. MSA recommends that a detailed cost of service study be undertaken for the City's sewer utility.
6. Fees charged to Satellite Cities to transport wastewater to WASD appear to be insufficient to
cover the cost of providing this service. As part of the comprehensive cost of study, MSA also
recommends performing a detailed cost allocation study to address the proper charges to the
Satellite Cities.
7. During the detailed cost of service study the City, with the help of MSA, should investigate
various ratemaking strategies to ensure the financial stability of the sewer system. These strategies
may include the following:
o Rate increase to account for multiple years of anticipated cost increases. An annual pass-through mechanism for WASD feeso An annual inflation adjustment
A significant portion of the deficit over the past few years is a result of both a rate increase of $0.1 1
per 1000 gallons that was implemented by Miami-Dade County in FY10/1 1 and not passed through
to the end users and minor operational cost increases that were covered by the rate stabilization
fund. The purpose of the rate stabilization fund is to cover anomalies in the billing or revenues year
over year and to accommodate some of these costs without the need for rate increases.
Unfortunately this fund has been depleted due to the reliance on this to cover inflation and County
rate increases. The suggestion to codify the need to pass through County rate increases is a good
suggestion as it would then take an act of Commission to subsidize water and sewer rates for the
14
Commission Memo
September 10, 2A14
Water and Sewer Rate Ordinance Memo
Page 3 of 3
end users ratherthan the current condition where no action would keep the rates from being passed
through. Also the Administration feels that incorporating an adjustment for operating expenses
would serve to keep the rate stabilization fund healthy and user fees consistent with the cost of
providing
service.
At the Finance and Citywide Projects Committee (FCWPC) meeting of August 29,2014, the
consultants presented a summary of their findings and recommendations. At this meeting, the
Committee recommended approval of the pass through of the respective water and sewer rate
increases, as well as establishing a policy of automatically implementing the percentage increases
of water and sewer rates that are enacted by Miami-Dade WASD to the entire fund without further
Commission action. The Committee also directed the Administration to follow up with all appropriate
administrative actions to assure that fees are commensurate with the cost of service provided to the
Satellite Cities.
Conclusion
Fee (per
thousandqallons)
FY
2013t14
Fee
Proposed
FY15 M-D
County
!ncr-
Prop. FY
2014/15
Fee
Difference
Frorn FY
2013t14
Water $4.36 $o.07 $4.43 so.o7
Seurer s6.34 $o.1 1 s7.55 $1.21
Total lncrease
Cornbined Fee sl o.70 sl 1-9a s1.2a
Monthly Cost to
1 1,OOO gallon
Customer $117.70 :BO_OO $131 .7a $14,OAIvlontnly (-ost to
5,OOO gallon
Customer ss3.50 rDo.oo s59.90 s6.40
Based on the above, the Administration recommends that the City Commission approve a rate
increase for water customers of $0.07 and a rate increase for sewercustomers of $1.21 effective
October 1,2014. For the average 1 1,000 gallons per month customer, the combined water and
sewer rates result in a monthly increase of $14.08 inFY2014l15. Forthe minimum usage customer
(5,000 gallons or less per month), the combined rnonthly impact would be a total of $6.40.
ln addition, the Administration recommends moving fonuard with the recommended cost of service
study and implement the suggested modifications to the water and sewerfee ordinances including
allocation of appropriate costs to the Satellite Cities and implementation of recommendations to
address the financial stability of the utility by codifying the annual pass through of all percentage
increases as enacted by Miami-Dade WASD and increasing the operating budget consistent with
the County percentage increase.
lLMtMrEt€
t:\agenda\2O 1 4\septembeAfy 1 5 water and sewer rate ord i nance memo. doc
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ORDINANCE NO.
AN ORDINANCE OF THE MAYOR AND CITY COMMISSION OF THE
CITY OF MIAM! BEACH, FLORIDA, AMENDING CHAPTER 110 OF
THE MIAMI BEACH CITY CODE ENTITLED "UTILITIES," AMENDING
ARTIGLE IV, ENTITLED "FEES, CHARGES, RATES AND BILLING
PROCEDURE;" AMENDING DIVISION 2, ENTITLED "RATES, FEES
AND GHARGES," BY AMENDING SECTION 110.166, ENTITLED"
SCHEDULE OF WATER RATES AND TAPPING CHARGES," AND
SECTION 110.168, ENTITLED "SANITARY SEWER SERVICE
CHARGE," TO ADJUST WATER AND SANITARY SEWER RATES BY
THE SAME PERCENTAGE ENACTED BY MIAMI.DADE WATER AND
SEWER DEPARTMENT (WASD); AND ALSO AMENDING APPENDIX
A TO CHAPTER 110, ENTITLED "FEE SCHEDULE" TO INGREASE
THE WATER RATES AND SANITARY SEWER SERVICE CHARGES
IMPOSED BY THE CITY PURSUANT TO SECTIONS 110.166 AND
110-168; PROVIDING FOR CODIFICATION, REPEALER,
SEVERABILITY, AND AN EFFECTIVE DATE.
WHEREAS, the City implemented a Water and Sewer System lmprovement Program
("Program"), which is funded by Water and Sewer Revenue Bonds; and
WHEREAS, in 1995, the first series of Water and Sewer Revenue Bonds were issued
to construct Phase I improvements for the Program; and
WHEREAS, in 2000, the Series 2000 Water and Sewer Revenue Bonds were issued
to continue the Program; and
WHEREAS, the rate increases proposed herein are for the payment of the phased in
debt instruments to continue improvements to the water and sewer infrastructure; and
WHEREAS, the rate increases provided herein include the increases for water supply
imposed by Miami-Dade County; and
WHEREAS, with ongoing drought restrictions, the City anticipates a continuation of its
decrease in water consumption and its corresponding decrease in water and sewer revenues;
and
WHEREAS, the City Commission of the City of Miami Beach has deemed it to be in
the best interest of the citizens and residents of the City of Miami Beach to amend Chapter 110
entitled "Utilities", Article lV entitled "Fees, Charges, Rates and Billing Procedure, to periodically
adjust water and sewer rates for maintenance and fiscal responsibility purposes.
NOW, THEREFORE, BE IT ORDAINED BY THE MAYOR AND CITY COMMISSION
OF THE CITY OF MIAM! BEACH, FLORIDA, as follows:
SECTION 1.
That Chapter 110, Article lV, Division 2, of the Miami Beach City Code is hereby
amended as follows:
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Chapter 110
UTILITIES
Article lV. FEES, CHARGES, RATES AND BILLING PROCEDURE
Division 2. RATES, FEES AND CHARGES
Sec. 110-166. Schedute of water.ates ana t"pping "n"rn"".
(a) Every water supply service shall have a monthly minimum service charge on each service
installed, varying with and based upon the size of the service pipe required and installed in
accordance with the rules of the public works department. All monthlv minimum service
charqes and rates shall be adiusted bv the same percentaqe enacted bv the Miami-Dade Water
and Sewer Department (WASD). This minimum charge shall be in accordance with the
schedule set forth in appendix A and shall entitle the consumer to have supplied through the
meter the number of gallons of water set forth in appendix A. There shall not be a rental charge
on meters.
(b) For quantities of water supplied in excess of the amount set forth in subsection (a) of this
section based on the particular size of the service pipe, the water rate shall be as specified in
appendix A, which shall be prorated for each 100 gallons in the event of increments of less than
1,000 gallons for non-municipal consumers of water.
Sec. 110-168. Sanitary sewer service charge.
(a) There is hereby imposed, upon all premises within the city connected to or using the
facilities of the city's sanitary sewer system, a monthly sanitary sewer service charge. Such
sanitary sewer service charge shall be in an amount as specified in appendix A, which charge
shall be prorated for each 100 gallons of increments of less than 1 ,000 gallons, as shown by the
water bills rendered in accordance with this article. The sanitary sewer service charge shall be
and become effective and binding on October 5, 1997. The amount of such sanitary sewer
service charge shall be shown as a separate item on such water bills and shall be paid by the
owner, tenant or occupant in possession of such premises at the same time and in the same
manner as is provided in this article for the payment of water bills. All sanitary sewer rates shall
be adiusted bv the same percentaoe enacted bv the Miami-Dade Water and Sewer Department
(WASD). For the purpose of irrigation, the customer may apply for an irrigation meter. Sanitary
sewer charges will not be applied to consumption metered through irrigation maters.
SECTION 2.
That Appendix A to Chapter 110, entitled "Utilities," of the Miami Beach City Code is
hereby amended as follows:
17
APPENDIX A
FEE SCHEDULE
Chapter 1 10 Utilities
Article lll Stormwater Utility
Division 2. Rates, Fees and Charges
***
Section
this Code
1 10-166(a)
110-166 (b)
Gallons of
Water
per Month
5.000
7.000
11.000
17.000
40.000
80.000
120.000
200.000
Description
Minimum service charge:
Size of
Meter
%
1"
1.5"
2"
3"
4"
o
q
Minimum Monthlv Service
Charqe
(effective for billinqs on or
after October 1. 2014)
22.15
31.01
48.73
75.31
177.20
354.40
531.60
886.00
Water in excess of subsection 110-166(a), shall be as follows: $2.21
per 1,000 gallons, effective with billings on or after October 1, 2000;
$2.26 per 1,000 gallons, effective with billings on or after October 1,
2001; $2.31 per 1,000 gallons, effective with billings on or after
October 1, 2002; $2.44 per 1,000 gallons, effective with billings on or
after October 1, 2003; $2.49 per 1,000 gallons, effective with billings
on or after October 1,2004; and $2.54 per 1,000 gallons, effective
with billings on or after October 1, 2005; and $2.79 per 1,000 gallons,
effective with billings on or after October 1, 2006; and $3.23 per 1 ,000
gallons, effective with billings on or after October 1,2007; and $3.88
per 1,000 gallons, effective with billings on or after October 1, 2008;
and $4.36 per 1,000 gallons, effective with billings on or after October
1, 2009; and $4.43 per 1.000 qallons. effective with billinos on or after
October 1. 2014
18
1 10-168(a)Sanitary sewer service charge, shall be as follows: $3.73 per 1,000
gallons, effective with billings on or after October 1, 2000; $3.81 per
1,000 gallons, effective with billings on or after October 1, 2001; $3.90
per 1,000 gallons, effective with billings on or after October 1,20Q2;
$4.03 per 1,000 gallons, effective with billings on or after October 1,
2003; $4.12 per 1,000 gallons, effective with billings on or after
October 1, 2004; and $4.21 per 1 ,000 gallons, effective with billings on
or after October 1, 2005; and $4.25 per 1,000 gallons, effective with
billings on or after October 1, 2006; and $4.93 per 1,000 gallons,
effective with billings on or after October 1, 2007; and $5.62 per 1 ,000
gallons, effective with billings on or after October 1, 2008; and $6.04
per 1,000 gallons, effective with billings on or after October 1, 2009;
and $6.34 per 1,000 gallons, effective with billings on or after October
1, 2013; and $7.55 per 1.000 qallons. effective with billinqs on or after
October 1,2014.
SECTION 3. 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 4. REPEALER
All ordinances or parts of ordinances in conflict herewith are and the same are hereby
repealed.
SECTION 5. 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 6. EFFECTIVE DATE
This Ordinance shall take effect on the
PASSED and ADOPTED this
day of ,2014.
2014day of
ATTEST:
PHILLIP LEV!NE, MAYOR
RAFAEL E. GRANADO, CITY CLERK
Underline denotes additions
S++*e+nreugh d e notes de letion s
(Sponsored by Commissioner Deede Weithorn)
T:\AGENDA\201 4\Septem ber\FY1 5 Water and Sewer Rate Ordinance 1 stRdg.doc
APPROVED AS TO
FORM & LANGUAGE
& FOR EXECUTION
?/tuDote
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