Agenda Index City of Vancouver

ADMINISTRATIVE REPORT

TO:

Vancouver City Council

FROM:

General Manager of Corporate Services
General Manager of Engineering Services

SUBJECT:

Implementation of 2000 Sewer Utility Fees and BOD/TSS/Flow Charges

 

RECOMMENDATION

GENERAL MANAGER COMMENTS

COUNCIL POLICY

On March 9, 2000, the Standing Committee on City Services and Budgets approved the rate structure and implementation schedule of BOD/TSS/Flow direct charges.

On April 4, 2000, Vancouver City Council approved the phased implementation of user fees for sanitary sewer services effective July 1, 2000.

PURPOSE

The purpose of this report is to seek Council approval of the 2000 BOD/TSS/Flow direct charges to permitted industries and of the user fees for sanitary sewer services for 2000.

BACKGROUND

On March 9, 2000, the Standing Committee on City Services and Budgets approved the rate structure and implementation schedule for setting BOD/TSS/Flow charges to permitted industrial sewer users. Fifty percent of the annual charges are to be collected in 2000 and 100% of the charges collected beginning in 2001. BOD/TSS/Flow charges are structured to ensure that the sanitary component of regional (GVS&DD) sewer costs are direct charged to permitted industrial users.

On April 4, 2000, Council approved the phased implementation of user fees for consumption based sanitary sewer costs. Effective July 1, 2000, the user fees will be applied to all sanitary sewer system users such that 50% of the costs will be recovered through user fees in 2000 and the balance distributed in the general purposes tax levy. Effective January 1, 2001, 100% of consumption based sanitary costs will be distributed as user fees.

DISCUSSION

The Sewer Utility and BOD/TSS/Flow component will function in a manner similar to the City's existing Waterworks Utility and Solid Waste Utility. However, while the Water Utility and Solid Waste Utility are self-sustaining operations with fee structures based on full cost recovery, the Sewer Utility will function as a partial utility with fees structured to recover the portion of annual costs related to consumption-based sanitary services. During the implementation phase, program costs will be removed from the general purposes tax levy and replaced with fees based on consumption of services rather than assessed value. As required for all City utilities, rates are to be reviewed annually by Council.

The phased implementation of Sewer Utility fees and BOD/TSS/Flow charges in 2000 will result in half of the program costs recovered through user fees and charges and the balance of costs distributed in the general purposes tax levy. The following table presents the major cost components for determining 2000 sewer fees and BOD/TSS/Flow charges.

 

2000 Budget

  

Distributed in General Levy

Distributed in
Fees and Charges

 

($millions)

  

($millions)

($millions)

         

BOD/TSS/Flow Component

$ 1.3

  

$ 0.65

$ 0.65

Sanitary Component Costs

24.9

  

12.47

12.47

Tax Supported Sewer Costs

31.5

  

31.5

--

         

Total Sewerage Costs:

$ 57.7

  

$ 44.6

$ 13.1

The total sewer costs for 2000 is $57.7 million of which $1.3 million is allocated to BOD/TSS/Flow program costs, $24.9 million is allocated to consumption-based sanitary costs and $31.5 million is allocated to tax supported program costs. Sewerage costs to be distributed in the general purposes levy total $44.6 million and $13.1 million will be recovered through direct user charges in 2000.

1. Implementation of BOD/TSS/Flow Charges

At the time Council approved the implementation of BOD/TSS charges, staff were instructed to look at ways of bringing the effluent measurement and billing periods closer together. Based on the most recent measurements available with a time frame of January 1, 1999 to December 31, 1999, BOD/TSS charges will be $1.29 million in 2000, 50% of which ($645,000) will be direct charged to permitted industry and the balance left on the property tax levy. This charge is lower than the $1.7 million calculated at the time the charge was approved by Council which was based on discharge data collected for the period from July 1, 1998 to June 31, 1999. The lower charges reflect concerted effort by permitted industry to reduce their impact on the sewer system through the development of on-site treatment programs and the reduction of sanitary discharges.

Appendix 1 summarizes the BOD/TSS/Flow rates for 2000.

2. Implementation of Sanitary User Fees

Appendix 1 also summarizes the charges for the sanitary sewer use in 2000. These user fees were developed on the basis of the 2000 sewer budget and the pricing model approved by Council on April 4, 2000. A summary of the fees is provided below:

Sanitary sewer service fees for 2000 will recover $12.47 million. This recovery is higher than the estimate developed for the utility report, which was based on 1999 sewer costs and 1998 water consumption, and is largely due to increased regional costs. Accordingly, sanitary rates have been upgraded to reflect the 2000 budget and 1999 water consumption.

The rates included in Appendix 1 have been revised from those developed in the original rate modelling to reflect the following factors that affect pricing:

i. Increase in Sanitary Sewer Costs in the 2000 Operating Budget.

ii. Lower BOD/TSS Charges Shift Costs to Other Users.

iii. Reduced city-wide water consumption (units) AND a shift of water consumption from metered users to non-metered users in 1999 compared to 1998.

iv. It is estimated that between 5% to 10% of billable consumption volume may be subject to a rebate of charges as a result of special circumstances (see below) which affect discharges into the sewer system. Accordingly, meter rates have been upgraded to reflect 5% of billable volume that may be exempt from sewer charges upon special application to the General Manager of Engineering.

3. Sewer User Fee Billing

Sewer charges will be administered through existing revenue collection mechanisms. For properties with a water meter account, metered sewer charges will be added to periodic water utility bills as a separate line item. Properties that do not have a water meter installed will be billed on their property tax notice as is currently done for water utility and solid waste utility service.

There are a number of special circumstances that will influence billings to some properties. In accordance with the rationale outlined in the previous report to Council, staff is establishing an appropriate measure to address each of these special circumstances for incorporation into the Sewer Bylaw.

· Where the water supply to a property is metered and a user of the sanitary sewer system can establish that less than 85% of the water delivered by the water utility to the property is discharged into the sanitary sewer system, the user may make a written request for a review of the volume of sewage output. At the direction of the General Manager of Engineering Services, the user can either provide a report with technical substantiation certified by a Professional Engineer to prove the lesser flow volumes or the user may install a sewage effluent meter or second water meter to determine actual sewer discharges for billing purposes.

· Properties with wells or groundwater collection systems used for cooling purposes will be charged a sewage volume fee for discharging into the system. At the discretion of the General Manager for Engineering Services, heavy users may have their sewage volume discharges either estimated by a Professional Engineer or they may install a effluent meter to measure discharges for billing purposes.

· Non metered properties that are on their own septic system will be charged the vacant lot rate and those with a water meter account will be charged the minimum monthly metered charge based on 8 units per month.

4. Creation of a Sewer Rate Stabilization Reserve

A number of factors will affect the actual revenue to be collected during this implementation phase of the sewer utility, including the timing of billings to metered customers, the actual water consumption on which fees are charged and the uncertainty surrounding sewer fee revenue collections impacted by special billing circumstances. On an ongoing basis, it is important to provide a mechanism so that sewer system costs assigned to user fees do not impact on the Operating Budget when there are revenue shortfalls or surpluses.

As a result, it is recommended that Council authorize the creation of a Sewer Rate Stabilization Reserve that will function in a similar manner to the Water and Solid Wastereserves. In the first year of operation, any deficits or surpluses in user fees will be carried forward to the following year with appropriate rate adjustments applied at that time. In subsequent years, the reserve will serve to ensure the integrity of the rate setting process and to stabilize rates.

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ag000516.htm

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