2013-20 AMENDING CITY CODE - CHAPTER 64 - RATE REVISIONS

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DEPARTMENT OF WATER MANAGEMENT Memorandum No. 2013-05 March 26, 2013 TO: Mayor Michael T. McElroy and City Council FROM: Ryan P. McCrady, City Manager Gregg D. Zientara, Director of Financial Management Keith D. Alexander, Director of Water Management SUBJECT: Ordinance Amending City Code Chapter 64 Water Ser�ice and Water System Improvement Plan During the March 18 City Council meeting a comprehensive water system: improvement plan was presented that solves what have been long term challenges and addressO an important City Council goal of providing a plentiful water supply while properly maintaining the water system. The plan consists of five components: • Securing Additional Water for Drought Conditions and Economia Development o The City needs to secure the almost 8 million gallons of additional water needed per day to survive a major drought lasting 10 months. By 2030 our community will need an additional 15 MGD per day. • Lake Decatur Dredging o Basins 1, 2, 3 and 4 will be dredged to reclaim large areas of the lake that are filled with sediment and to provide additional water supply. • Replacing our Antiquated Water System o Many components of our current system are 50-80 years qld. We need $2.8 million annually to maintain components that are below ;ground and $4.5M annually for above ground facilities. • Increasing Revenue to Balance the Water Fund Budget o The City is currently operating the water system at a deficit; Making 0.34 cents to produce a gallon and only generating revenue of 0.24 cents per gallon. o Water charges will increase 35% the first year, 30% the second year, and 25% the third year. Starting in the fourth year, an annual 2.5% inflation adjustment. o After these increases, the residential rate will be at the �verage of fourteen comparable Central Illinois communities and the commercJal rate will still be 14%below average. • Monthly Billing o Moving to monthly billing from quarterly billing will help our customers better manage these changes in their monthly budgets. I