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HomeMy WebLinkAboutComparative Rate Study - Water, Sewer and Stormwater Umbaugh 2012HSOVSIA111 Il's all Hhoul ey ei me. H. 1. Umba ugh & Associates Certified Public Accountants. LLP 8365 Keystone Crossing Suite 300 P.O. Box 40458 Indianapolis. IN 46240-0458 Phone: 317-465-1500 Fax: 317-465-1550 www.umhaugh.com Indiana Water, Sewer and Stormwater Utilities Comparative Rate Studies Enclosed are your complimentary copies of our 2012 Comparative Water, Sewer and Stormwater Rate Studies Mr the State of Indiana. Over the years, we periodically update this information to provide a current reflection of the water and sewer rates charged by Indiana municipalities. As you know, the need to replace aging facilities, reduced grant funding, expanded environmental regulations and increases in operating expenses all conspire to pressure utility rates upward. This year we have included our inaugural analysis of stormwater rates across Indiana. Over the past several years an increasing number of communities have implemented stormwater rates as a way to help pay for projects associated with long term control plans and combined sewer overflows as well as help relieve the burden on the local general fund for street cleaning, drain and culvert maintenance and similar items. The enclosed studies arc our most comprehensive to date and reflect rates and charges that were in effect last year. As the State's leading financial advisory fine, we feel it is part of our professional responsibility to provide this resource information. To ensure that these studies are as comprehensive as possible, we have invested a significant amount of time to incorporate information from approximately 350 different communities. As a result, the enclosed studies reflect the majority of municipal water and sewer rates across the State. The Stonnwater report contains information from 63 entities which also represents the majority of Indiana communities that have implemented such rates. To aid you in your efforts, we have presented the data by population. In most cases, additional information is also available by county or locality upon request. We hope that you find these reports informative and useful in your endeavors. If you have any questions or if we can be of assistance in this or other matters, please do not hesitate to contact us via e-mail at ratestudy cr,umbaugh.com. Enclosures Very truly yours, UMI3AUGH Indiana Comparative Rate Study Water January 2012 c 3 W Prepared by Mall aboutcxperienoe. In cooperation with PlatTiklui tndianaAtiStciation of Cities. as crowns Its all about experience. To the Reader: This report summarizes a study of rates and charges for water service provided by many municipally owned systems in Indiana. The survey is based upon information provided by municipal utilities as of October 2011. Table of Contents Preface 2 - 4 Comparison of Rates and Charges October 2007 - October 2011 5 Comparison of Expenses May 2007 - August 2011 6 Schedule of Rate Variances and Averages 7 Average Statistics by 2010 Population 8 - 10 Average Statistics by Effective Date of Current Rates 11 - 20 Preface Umbaugh has been the leader in financial advisory services for governmental entities in Indiana for more than 60 years. With the completion of hundreds of rate studies, Umbaugh is uniquely qualified to provide this analysis of municipal water rates and charges. This report covering 350 communities is our most extensive survey to date. We thank the Mayors, Clerk -Treasurers, Office Managers and Billing Clerks throughout the state for their extra efforts and cooperation as they took the time to provide us with the rate information for their communities. Although this study required many hours of research, compilation and data analysis, we at Umbaugh are happy to provide this study because we feel it is a vital resource to local government decision makers around the state. Accurately comparing local rates and charges with those of similar utilities is an important tool to assist utility managers and decision makers. From our perspective, it is interesting to periodically evaluate what, in many cases, is the result of our work. This analysis allows us to better determine the issues facing local governments and how best to solve them. General Information All volume statistics in this report are stated in gallons. The majority of municipal systems record meter readings based on gallons used. For conversion purposes, a per -one -hundred - cubic -foot price should be multiplied by 1.333 to obtain a per -one -thousand -gallon price. Example: Charge per 100 cubic feet $ 0.75 Times conversion constant x 1.333 Charge per 1,000 gallons $ 1.00 Similarly, the number of cubic feet of water multiplied by 7.5 yields the volume of water in gallons. Example: Number of cubic feet 175 Times conversion constant x 7.5 Number of gallons 1,313 2 Preface (Con [d) The following briefly explains some of the basic characteristics of rate structures and the terminology used in this report. Charges to customers are of five general types: 1. Metered Rates Metered Rates are based on water consumption. In general, as the volume of usage increases (gallons or cubic feet), the price per unit (usually thousands of gallons or hundreds of cubic feet) decreases. The "rate brackets" and pricing might appear as follows: First Next Next Next 3,000 gallons per month - 7,000 gallons per month - 20,000 gallons per month - 70,000 gallons per month - $1.50 per 1,000 gallons (1) $1.25 per 1,000 gallons $1.00 per 1,000 gallons $0.75 per 1,000 gallons Over 100,000 gallons per month - $0.60 per 1,000 gallons (2) For purposes of this survey (1) is the "first bracket price" and (2) is the "last bracket price." 2. Base Charge A Base Charge, or Service Charge, is a fixed monthly amount that is usually determined by a customer's meter size. Normally the base charge is designed to recover the costs of serving each customer, such as meter reading and billing and does not cover the sale of any water to the customer. These are costs incurred by the utility regardless of the quantity of water used. This type of charge might appear as follows: Water Meter Size 5/8" - 3/4" 1" 2" 4" BaseCharge $ 5.70 per month 13.00 per month 47.00 per month 200.00 per month 3. Minimum Charge A Minimum Charge is similar to a base charge in that it is typically a fixed amount based on meter size. A minimum charge, however, includes a certain level of water usage for which the customer is billed whether they use the water or not. For example, a typical minimum charge might be $5.00 for any level of consumption from 0 gallons through and including 3,000 gallons. 3 Preface (Canto) 4. Flat Rates "Flat rates" are based on estimated consumption of water and are used where metered water usage is not available. An example of a flat rate system follows: Single family residence $12.75 per month Apartment complex 9.60 per unit/month Laundromat 9.60 per washer/month School 0.55 per student/month This report includes rate schedules and charges from all of the types detailed above. Disclaimers In our work around the state, we are frequently asked how a community's sewer rates compare to those in the next community. It is natural that both government officials and citizens ask this question, and this report will help answer that question. This report and the question it answers, however, do have limitations. Comparing a residential bill for 5,000 gallons of monthly water usage between two different utility systems tells you what a customer on each system pays for the same amount of water usage. But comparing the bills for similar customers on two different water utilities doesn't tell the complete story. Differences in operating characteristics, staffing, customer makeup and usage levels and many other factors all impact the utility's cost structure and therefore its rate structure as well. In addition, the type of ownership impacts the operating cost and rate structure. In many cases, user rates for privately held investor- owned utilities are higher than the rates for municipally owned utilities because of the need to provide for shareholder return and taxes. Without taking these factors into consideration, the user could reach incorrect conclusions regarding the differences in customer billings for the same amount of water usage from one utility to the next. As we mentioned previously, preparing this report requires collecting and analyzing large amounts of rate data that to some extent is in a perpetual state of change. The information contained in this report is as accurate as we are able to make it as of the data collection cut-off date. 4 Indiana Comparative Water Rate Study Comparison of Rates and Charges from October 2007 to October 2011 (Monthly Billings) As we will discuss in more detail on the next page, much has changed over the past few years concerning water rates in the state of Indiana. On average, water rates and charges have increased approximately 25% over the last four years. There are a multitude of reasons, including increases in operating expenses and the number of capital improvement projects that have been completed over this time frame. The cost of these improvement projects is generally the biggest driver impacting rates and charges. Communities undertake these projects for a variety of reasons. Certainly, the relatively low cost of obtaining debt financing has spurred capital spending. In addition, utilities are continually faced with unfunded government mandates and regulations, such as the Safe Drinking Water Act, as well as the need to increase the capacity of plant facilities to accommodate customer growth. On average, water rates and charges have increased approximately 25% over the last four years. From October 2007 to October 2011 (Monthly Billings) = Approximate single-family residential average. 5 October 2007 Average October 2011 Average Percent Increase First bracket price (per 1,000 gallons) $4.47 $5.42 21.3% Last bracket price (per 1,000 gallons) $ I.95 S2.37 21.5% Gallons iven for minimum .rice 2,588 2,511 -3.0% Minimum charge for 5/8"meter $11.53 $13.71 18.9% Minimum charge for 6" meter $442.93 $443.72 0.2% Annual charge for 6" sprinkler $515.27 $640.56 24.3% Annual charge for 12" sprinkler $1,808.41 $2,488.89 37.6% Annual hydrant charge $500.26 $564.58 12.9% Monthly bill based on 2,000 gallons usage $1 1.75 $14.97 27.4% Monthly bill based on 3,000 gallons usage $14.16 $18.02 27.3% Monthly bill based on 4,000gallons usage $17.83 $22.35 25.4% Monthly bill based on 5,000 gallons usage $21.58 $26.60 23.3% Monthly bill based on 10,000 gallons usage $39.23 $47.66 21.5% = Approximate single-family residential average. 5 Indiana Comparative Water Rate Study Comparison of Expenses from May 2007 to August 2011 Since we issued our last Comparative Rate Study in October 2007, the world has seen dramatic changes affecting the day-to-day operations of the communities in which we live. The economic downturn due to the financial market "meltdown" has caused municipalities to face tough decisions resulting from increased job loss, job relocation and businesses closing. The federal government stepped in to assist by passing the American Recovery and Reinvestment Act of 2009 in February 2009 which injected billions of dollars back into the country to save and create jobs, as well as provide funding for investment in long -tern growth.(I) At the local level, this Act created attractive lending rates for capital improvement projects and pushed up the timetable for numerous projects which otherwise would not have commenced for many years. As a result, municipalities were sent into a "spending binge" that has had a direct impact on the community general funds and the utility rates and charges. In addition to national legislation, state legislation passed during this time period has created a strain on local governments. House Enrolled Act (HEA) 1001-2008 entitled property owners to a cap on the amount of property taxes to be paid based on a percentage of their property's gross assessed value. The consumer receives the direct benefit of this cap, because it means less tax to be paid on an annual basis. Since property owners are paying fewer dollars in property tax, municipalities have had to scramble to change their operations to function with less revenue. One way local governments are coping with this change is by using utility dollars to subsidize municipal operations. As a result, municipalities are in- creasing utility rates and charges to help replace some of the revenue lost to property tax caps. Local governments are also faced with increases in expenses. For example, communities are continuing to report significant increases in the cost of employee health insurance. In addition, many utilities have experienced increases in the cost of purchased power and gasoline. These increases -- coupled with the increases associated with improvement projects -- have contributed to the 25% increase in water rates and charges throughout the state. 25.0% 20.0% 15.0% 10.0% 0.©% -5.0% -10.0% -15.0°0 -20.0° o PERCENT INCREASE IN TYPICAL.. EXPENSES 17.5% 14.4% Medical-care—Electricity---N as—Gasoline— Steel - 15.5°/v (1) "rhe Recovery Act." <http://www.recovery.gov/About/Pages/The Act.aspx> (accessed October 6, 2011). * Source data comes from the Bureau of Labor Statistics website (www.bls.gov). 6 Indiana Comparative Water Rate Study Schedule of Rate Variances and Averages The schedule below shows pricing variances of several common rate components. The comparison includes the lowest, average* and highest prices as determined from the study data. As expected, there are large variances in what municipal systems charge for water service and fire protection service. These variances are, in part, attributable to factors such as population, geographic location and the number of years the rates have been in effect. Each of these factors will be explored later in this report. The price per thousand gallons in the first bracket varies from $.44 to $26.80 per thousand gallons, approximately 61 times as much as the lowest price. The monthly billing for 4,000 gallons of water, which is often considered to approximate average household usage, varies from a low of $3.00 per month to a high of $73.91. In this case, the highest price is over 24 times the lowest price. The chart below summarizes our findings for water rate information across the state of Indiana. All references to average in the report are mean averages. 7 Monthly Billing_ Minimum Charge Average Charge Maximum Charge First bracket price (per 1,000 gallons) $0.44 $5.42 $26.80 Last bracket price (per 1,000 gallons) $0.31 $2.37 $10.20 Gallons given for minimum price 1,000 2,511 10,400 Minimum charge for 5/8"meter $3.00 $13.71 $39.96 Minimum charge for 2"meter $14.18 $70.97 $321.67 Minimum charge for 4"meter $31.50 $211.28 $1,290.38 Minimum charge for 6" meter $13.62 $443.72 $4,305.00 Annual charge for 6" sprinkler $37.51 $640.56 $2,123.40 Annual charge for 12" sprinkler $60.01 $2,488.89 $6,142.32 Annual hydrant charge $18.00 $564.58 $23,228.00 Tap fee $55.00 $536.66 $1,608.00 Monthly Consumption (5/8" Meter): 2,000 gallons $3.00 $14.97 $53.60 3,000 gallons $3.00 $18.02 $64.91 4,000 gallons $3.00 $22.35 $73.91 5,000 gallons $3.00 $26.60 $82.91 10,000 gallons $4.40 $47.66 $146.25 All references to average in the report are mean averages. 7 Indiana Comparative Water Rate Study Average Statistics by 2010 Population The graph below shows the correlation between a community's size and its water rates and charges. With relatively few exceptions, charges for water service generally follow a pattern of higher rates in small communities and lower rates in large communities. In addition, the number of gallons allowed for minimum monthly bills follows a similar pattern. Smaller communities tend to offer fewer gallons with their minimum bills while larger communities tend to offer more gallons. These variations are reasonable when you consider that the cost of operating a utility must be spread over its customer base. A larger customer base means that a smaller portion of the total costs of operation is allocated to each individual customer. In addition, as the volume of water increases, the average cost to treat that water decreases. Average Monthly Charge for 4,000 Gallons by Population Compared to Statewide Average ($22.35) $30.00 00 $25 $171-5-5-----------2II E • $9? 74 $20.00 $2x.98 O +--------r7119. $19.30 $18.80 $15.00 $17.30 $10.00 $5.00 $0.00 1 1 1 Less than 1,000 1.000 to 3,000 3,001 to 6,000 6,001 to 10,000 10,001 to 15,00015,001 to 25,000 Over 25,000 8 Indiana Comparative Water Rate Study Average Statistics by Municipality Based on 2010 Population (Monthly Billings) See Graphs on previous ambler, page. 9 Ifs all about experience, Population Less than 1.000 1,000 to 3.000 3,001 to 6.000 6,001 to 10.000 10,001 to 15.000 15,001 to 25,000 Over 25.000 Municipalities in study croup 96 121 34 30 16 19 34 First bracket price (per 1,000 gallons) 5697 55.75 55.03 54.29 53.41 53.81 53.21 Last bracket price (per 1,000 gallons) 52.86 52.62 52.26 51.77 51.58 51.79 51.52 Gallons given for minimum price 2.477 2,484 2,572 2,389 2.780 2,819 2,542 Minimum charge for 5/8"metcr 515.98 514.19 513.61 511.17 511.25 510.50 510.96 Minimum charge for 6" meter 5503.01 5517.82 5391.74 5533.43 5446.40 5325.41 5200.64 Annual charge for 6" sprinkler 5618.11 5636.69 5604.86 5580.45 5895.32 5652.78 5623.20 Annual charge for 12" sprinkler 52.266.58 52,202.65 52.413.82 52,105.94 $3.005.32 52,619.31 52.550.15 Annual hydrant charge 5592.93 5650.36 5488.52 5505.47 5564.02 5434.19 5391.75 Tap fee 5503.38 5521.30 5568.85 5668.37 5661.75 5383.59 5537.85 Monthly bill based on 2,000 gallons usage 517.36 514.45 514.98 511.95 S13.35 513.82 514.34 Monthly bill based on 3,000 gallons usage 520.69 518.02 517.56 514.56 514.31 516.29 516.66 Monthly bill based on 4,000 gallons usage 525.55 522.74 521.98 S18.80 517.30 519.71 519.30 Monthly bill based on 5,000 gallons usage 530.35 527.59 526.29 523.03 520.65 52225 S21.17 Monthly hill based on 10,000 gallons usage 553.15 550.30 548.03 543.29 536.85 540.81 535.17 See Graphs on previous ambler, page. 9 Ifs all about experience, Average?irst Bracket Price by Population Compared to Statewide Average ($5.42) ($564.58) $8.00 $16.00 $14.00 $7.00 • ' bu.3o $6.00 $14.19 1 U a ❑---0 ❑ �'� • ❑ $5.00 $4.00 •• W.,.75 $5.03 $400.00 $300.00 • $10.00 S434.19 $391.75 $4.29 $11.25 e $10.96 $3.00 $200.00 $3.41 $3.21 $2.00 $100.00 50.00 $1.00 $0.00 Less than 1,000 1,000 to 3,000 3,001 to 6,000 6,001 to 10,000 Less than 1,000 1,000 to 3,000 3,001 to 6,000 6,001 to 10,000 10,001 to 15,000 , 15,001 to 25,000 Over 25,000 Average Monthly $18.00 Minimum Charoe518" Meter by Population Compared to Statewide Average ($13.71) ($564.58) $16.00 $14.00 R7 u bu.3o S592.93 $14.19 Ly U a Li $12.00 39.61 $505.47 •• $400.00 $300.00 • $10.00 S434.19 $391.75 $11.1/ $11.25 $10.50 $10.96 $8.00 $200.00 $6.00 $100.00 50.00 $4.00 Less than 1,000 1,000 to 3,000 3,001 to 6,000 6,001 to 10,000 $2.00 15,001 to 25,000 Over 25,000 $0.00 Less than 1,000 1,000 to 3.000 , 3,001 to 6,000 6,001 to 10,000 10,001 to 15,000 15,001 to 25,000 Over 25,000 Average $700.00 Annual Hydrant Charge by Population Compared to Statewide Average ($564.58) $600.00 bu.3o S592.93 ❑ ❑ 0501.02 ❑ ❑ $500.00 S488.52 $505.47 $400.00 $300.00 S434.19 $391.75 $200.00 $100.00 50.00 Less than 1,000 1,000 to 3,000 3,001 to 6,000 6,001 to 10,000 10,001 to 15,000 15,001 to 25,000 Over 25,000 10 Indiana Comparative Water Rate Study Average Statistics by Effective Date of Current Rates The following pages examine average charges for service based upon both the current rate structure and size of the community. The first schedule provides statistics for all municipalities sorted by the date the rate structure was adopted. Fifty two municipalities are using rates adopted prior to 2000, representing approximately 15% of the communities included in this survey. This is important to note because it indicates these communities will likely experience larger rate adjustments to compensate for normal changes in operating costs that were absorbed over the past 10 years rather than passed on by the utility in the form of minor rate adjustments. Communities should strongly consider an analysis of their rates and charges at least every three to five years. Effective Date of Water Rates Effective Date Utilities Prior to 2000 52 2000 17 2001 16 2002 21 2003 6 2004 15 2005 30 2006 22 2007 23 2008 30 2009 27 2010 58 2011 and after 33 Total 350 Average Monthly Charge for 4.000 Gallons by Year of Rates Compared to Statewide Average ($21.86) $30.00 $25.00 • -�-- $256 $20.00 $20.76 $15.00 $17.38 $10.00 $5.00 $0.00 Prior to 2000 2000 to 2005 After 2005 11 Indiana Comparative Water Rate Study Average Statistics by Effective Date of Current Rates (Monthly Billings) All Populations See Graphs on previous and next page. 12 0 1 In all above experi rm. Year Current Rates Were Adopted Prior to 2000 2000 to 2005 After 2005 Municipalities in study group 52 105 193 First bracket price (per 1,000 gallons) $4.68 $5.32 $5.68 Last bracket price (per 1,000 gallons) $1.96 $2.20 $2.58 Gallons given for minimum price 2,524 2,643 2,421 Minimum charge for 5/8"meter $11.47 $13.14 $14.56 Minimum charge for 6" meter $310.26 $573.11 $41 1.91 Annual charge for 6" sprinkler $436.44 $621.56 $680.44 Annual charge for 12" sprinkler $1,487.24 $1,665.42 $2,764.16 Annual hydrant charge $341.40 $586.21 $600.89 Tap fee $416.29 $519.14 $586.14 Typical Billings: 2,000 gallons $11.62 $14.04 $16.33 3,000 gallons $14.00 $16.66 $19.84 4,000 gallons $17.38 $20.76 $24.56 5,000 gallons $20.86 $25.01 $29.00 10,000 gallons $37.46 $44.93 $51.89 See Graphs on previous and next page. 12 0 1 In all above experi rm. $6.00 Average First Bracket Price by Year of Rates Compared to Statewide Average ($5.42) $600.00❑ ❑ -• $14.00 0- S 68 $5.00 S4 SA 55.32 $13.14 $4.00 $10.00 311.47 53.00 $8.00 $2.00 $6.00 $1.00 $4.00 50.00 Prior to 2000 2000 to 2005 After 2005 $16.00 Average Monthly Minimum Charge for 518" Meter by Year of Rates Compared to Statewide Average ($13.71) $600.00❑ -• $14.00 0 $1•.56 $12.00 .-------. $13.14 $500.00 $10.00 311.47 $400.00 $8.00 5300.00 $6.00 $200.00 $4.00 $100.00 $0.00 52.00 $0.00 Prior to 2000 Prior to 2000 2000 to 2005 After 2005 $700.00 Average Monthly Hydrant Charge by Year of Rates Compared to Statewide Average ($564.58) $600.00❑ ❑O $586.21 $600.89 $500.00 $400.00 5300.00 5341.40 $200.00 $100.00 $0.00 Prior to 2000 2000 to 2005 After 2005 13 Indiana Comparative Water Rate Study Average Statistics by Effective Date of Current Rates Population Less Than 1,000 Monthly Billings It' all about exlxi nee. 14 Year Current Rates Were Adopted Prior to 2000 2000 to 2005 After 2005 Municipalities in study group 24 44 28 First bracket price (per 1,000 gallons) $5.80 $6.61 $8.58 Last bracket price (per 1,000 gallons) $2.60 $2.32 $3.94 Gallons given for minimum price 2,262 2,610 2,472 Minimum charge for 5/8"meter $12.37 $15.03 $20.68 Minimum charge for 6" meter $298.56 $613.52 $451.67 Annual charge for 6" sprinkler $313.87 $624.84 $777.80 Annual charge for 12" sprinkler $627.00 N/A $3,359.64 Annual hydrant charge $326.48 $819.57 $468.1 1 Tap fee $371.56 $488.98 $656.81 Typical Billings: 2,000 gallons $13.15 $16.27 $22.67 3,000 gallons $16.27 $19.07 $27.01 4,000 gallons $20.54 $23.48 $33.09 5,000 gallons $24.83 $27.93 $38.87 10,000 gallons $44.57 $48.48 $67.87 It' all about exlxi nee. 14 Indiana Comparative Water Rate Study Average Statistics by Effective Date of Current Rates Population 1,000 to 3,000 Monthly Billings Itk all about cxperict . 15 Year Current Rates Were Adopted Prior to 2000 2000 to 2005 After 2005 Municipalities in study group 16 34 71 First bracket price (per 1,000 gallons) $4.32 $5.17 $6.36 Last bracket price (per 1,000 gallons) $L55 $2.51 $2.91 Gallons given for minimum price 3,012 2,537 2.354 Minimum charge for 5/8"meter $11.61 $13.15 $15.20 Minimum charge for 6" meter $312.38 $514.51 $547.65 Annual charge for 6" sprinkler $672.79 $593.75 $651.47 Annual charge for 12" sprinkler $2,591.88 $1,558.05 $2,395.72 Annual hydrant charge $323.87 $410.58 $820.44 Tap fee $414.90 $590.67 $517.29 Typical Billings: 2,000 gallons $11.55 $13.89 $15.36 3,000 gallons $13.75 $16.90 $19.52 4,000 gallons $16.47 $21.30 $24.85 5,000 gallons $19.53 $25.88 $30.22 10,000 gallons $34.82 $47.15 855.30 Itk all about cxperict . 15 Indiana Comparative Water Rate Study Average Statistics by Effective Date of Current Rates Population 3,001 to 6,000 Monthly Billings c 3 03 a 16 It's all nbotn ea7x riena. Year Current Rates Were Adopted Prior to 2000 2000 to 2005 After 2005 Municipalities in study group 4 8 22 First bracket price (per 1,000 gallons) 54.15 53.72 $5.66 Last bracket price (per 1,000 gallons) $1.41 $1.73 52.60 Gallons given for minimum price 2,778 2,542 2,546 Minimum charge for 5/8"meter 513.30 59.83 $14.92 Minimum charge for 6" meter $353.16 5447.00 5378.83 Annual charge for 6" sprinkler $484.34 5511.82 $658.83 Annual charge for 12" sprinkler $1,361.00 51,005.63 53,205.09 Annual hydrant charge $353.49 5538.95 5497.44 Tap fee 5463.00 5585.00 5601.50 Typical Billings: 2,000 gallons 511.86 $10.21 $17.28 3,000 gallons 512.96 $12.08 520.40 4,000 gallons 516.55 515.83 525.21 5,000 gallons 520.06 519.59 529.85 10,000 gallons $36.87 538.38 553.57 c 3 03 a 16 It's all nbotn ea7x riena. Indiana Comparative Water Rate Study Average Statistics by Effective Date of Current Rates Population 6,001 to 10,000 Monthly Billings Ifs all about rxpcn tee. 17 Year Cunent Rates Were Adopted Prior to 2000 2000 to - 2005 After 2005 Municipalities in study group 2 8 20 First bracket price (per 1,000 gallons) $2.93 $4.25 $4.45 Last bracket price (per 1,000 gallons) $0.97 $ 1.74 $1.86 Callous given for minimum price 2,017 2,428 2,414 Minimum charge for 5/8"meter $5.91 $10.24 $12.03 Minimum charge for 6" meter $451.78 $834.23 $414.37 Annual charge for 6" sprinkler $302.59 $618.33 $598.61 Annual charge for 12" sprinkler N/A $1,045.53 $2,238.50 Annual hydrant charge $302.59 $450.07 $542.38 Tap fee $340.00 $625.88 $721.40 Typical Billings: 2,000 gallons $5.91 $11.87 $12.58 3,000 gallons S8.43 $14.80 $15.08 4,000 gallons $10.65 $18.97 $19.54 5,000 gallons $12.87 $23.28 $23.96 10,000 gallons $22.27 $43.48 $45.31 Ifs all about rxpcn tee. 17 Indiana Comparative Water Rate Study Average Statistics by Effective Date of Current Rates Population 10,001 to 15,000 Monthly Billings C ❑4 all about omen n«. 18 Year Current Rates Were Adopted Prior to 2000 2000 to 2005 After 2005 Municipalities in study group 2 3 I 1 First bracket price (per 1,000 gallons) $2.87 S2.97 $3.63 Last bracket price (per 1,000 gallons) $1.46 $1.20 $1.71 Gallons given for minimum price 3,000 3,677 2,364 Minimum charge for 5/8"meter $9.72 $12.63 $10.99 Minimum charge for 6" meter $161.20 $619.78 $422.91 Annual charge for 6" sprinkler $557.63 $1,290.03 $844.44 Annual charge for 12" sprinkler $2,230.49 $1,206.35 $3,423.90 Annual hydrant charge $557.63 $659.70 S533.55 Tap fee $825.00 $539.01 $667.71 Typical Billings: 2,000 gallons $8.92 $12.63 $12.90 3,000 gallons $10.17 $12.63 $15.53 4,000 gallons $13.03 $14.04 $18.97 5,000 gallons $15.90 $17.39 $22.40 10,000 gallons $29.47 $34.54 $38.82 C ❑4 all about omen n«. 18 Indiana Comparative Water Rate Study Average Statistics by Effective Date of Current Rates Population 15,001 to 25,000 Monthly Billings Its Wl al]Uut cxperi •`ax. 19 Year Current Rates Were Adopted Prior to 2000 2000 to 2005 After 2005 Municipalities in study group 0 4 15 First bracket price (per 1,000 gallons) $2.20 $4.23 Last bracket price (per 1,000 gallons) $1.25 $1.93 Gallons given for minimum price 3,292 2,609 Minimum charge for 5/8"meter $7.79 $11.22 Minimum charge for 6" meter $391.52 $307.78 Annual charge for 6" sprinkler $333.60 $737.89 Annual charge for 12" sprinkler $984.06 $2,916.62 Annual hydrant charge $394.76 $444.71 Tap fee $250.00 $472.64 Typical Billings: 2,000 gallons $7.79 $15.43 3,000 gallons $8.05 $18.49 4,000 gallons $10.15 $22.26 5,000 gallons $12.37 $24.88 10,000 gallons $23.78 $45.35 Its Wl al]Uut cxperi •`ax. 19 About Umbaugh Average Statistics by Effective Date of Current Rates Population Over 25,000 Monthly Billings Ili all about experience. 20 Year Current Rates Were Adopted Prior to 2000 2000 to 2005 After 2005 Municipalities in study group 4 4 26 First bracket price (per 1,000 gallons) $1.79 $2.91 $3.47 Last bracket price (per 1,000 gallons) $1.08 $1.69 $1.56 Gallons given for minimum price 2,250 2,917 2,464 Minimum charge for 5/8"meter $6.73 $9.83 $11.66 Minimum charge for 6" meter $277.39 S478.64 $168.39 Annual charge for 6" sprinkler $273.1 1 $768.08 $648.85 Annual charge for 12" sprinkler $869.04 $3,246.48 $2,531.61 Annual hydrant charge $363.04 $474.26 $378.77 Tap fee $218.00 $228.00 $642.24 Typical Billings: 2,000 gallons $6.70 $10.11 $16.17 3,000 gallons $7.10 $12.54 $ 18.76 4,000 gallons $8.39 $15.28 $21.59 5,000 gallons $9.69 $18.32 $23.38 10,000 gallons $17.59 $32.13 $38.34 Ili all about experience. 20 About Umbaugh Umbaugh is now in its seventh decade of providing financial advisory services to local governments, municipal and not-for-profit utilities, school corporations, libraries and a variety of other governmental clients. Our firm has constantly grown to meet this demand and changed with the increasing complexities of public financing, but we remain committed to our initial vision of personal attention, integrity and providing high quality service to each client. Indianapolis Plymouth Lansing 8365 Keystone Crossing 925 Dora Lane 6639 Centurion Drive Suite 300 P.O. Box 697 Suite 100 Indianapolis, Indiana 46240 Plymouth, Indiana 46563 Lansing, MI 48917 (317) 465-1500 (574) 935-5178 (517) 321-0110 Financial Advisors to: Cities and Towns Municipal Sewage Works Conservancy Districts Municipal Water Utilities Counties Not-For-Profit-Utilities Electric Utilities Regional Water & Sewer Districts Gas Utilities Rural Water Companies Investor-Owned Utilities Schools Libraries Stortnwater Utilities Indiana Association of Cities and Towns Services Accounting Systems Analysis GASB 34 Implementation Assistance Annexation Studies General Obligation Bonds Availability Fees Income Tax Financing Bond Refinancing Lease Financings Buy/Sell Analysis Management Advisory Services Capital Asset Accounting Organization of New Utilities Capital Planning Privatization Studies City and Town Budgeting Revenue Bond Issues Cost-of-Service Studies Rural Development (RD) Financing Customized Client Training Stormwater Rates Economic Development State Revolving Fund (SRF) Assistance Financing Expert Testimony Tax Increment Financing Utility Rate Consulting For a comprehensive list of services visit www.umbaugh.com Indiana Comparative Rate Study — Water January 2012 Copyright © 2012 Umbaugh All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information or retrieval system, except in the form of brief excerpts or quotations for review purposes, without the written permission of Umbaugh. Indiana Comparative Rate Study Sewer January 2012 Prepared by h] all about caztcricmr. In cooperation with Association of Citics andrintwns IIs all alxwut experience. To the Reader: This report summarizes a study of rates and charges for sewage treatment by many municipally owned systems in Indiana. The study is based upon information provided by municipal utilities as of October 2011. Table of Contents Preface 2 - 4 Comparison of Rates and Charges October 2007 - October 2011 5 Comparison of Expenses May 2007 - August 2011 6 Schedule of Average Rates 7 Schedule of Rate Variances and Averages 8 Average Statistics by 2010 Population 9 - 11 Average Statistics by Effective Date of Current Rates 12 - 21 Preface Umbaugh has been the leader in financial advisory services for governmental entities in Indiana for more than 60 years. With the completion of hundreds of rate studies, Umbaugh is uniquely qualified to provide this analysis of municipal sewage rates and charges. This report covering 358 communities is our most extensive survey to date. We acknowledge the extra efforts and cooperation of the Mayors, Clerk -Treasurers, Office Managers and Billing Clerks throughout the state who took the time to provide us with the rate information for their communities. Although this study required many hours of research, compilation and data analysis, we at Umbaugh are happy to provide it because we feel it is a vital resource to local government decision -makers around the state. Accurately comparing local rates and charges with those of similar utilities is an important tool to assist utility managers and decision makers. From our perspective, it is interesting to periodically evaluate what, in many cases, is the result of our work. This analysis allows us to better determine the issues facing local governments and how best to solve them. General Information Please note that all volume statistics in this report are stated in gallons. The majority of municipal systems record meter readings based on gallons used. For conversion purposes, a per - one -hundred -cubic -foot price should be multiplied by 1.333 to obtain a per -one -thousand -gallon price. Example: Charge per 100 cubic feet $ 0.75 Times conversion constant x 1.333 Charge per 1,000 gallons $ 1.00 Similarly, the number of cubic feet of water multiplied by 7.5 yields the volume of water in gallons. Example: Number of cubic feet 175 Times conversion constant x 7.5 Number of gallons 1,313 Preface (Cont d) The following briefly explains some of the basic characteristics of rate structures and the terminology used in this report. Charges to customers are of five general types: 1. Metered Rates Metered Rates are based on water consumption. In general, as the volume of usage increases (gallons or cubic feet), the price per unit (usually thousands of gallons or hundreds of cubic feet) decreases. The "rate brackets" and pricing might appear as follows: First 3,000 gallons per month - Next 7,000 gallons per month - 20,000 gallons per month - 70,000 gallons per month - 100,000 gallons per month - $1.50 per 1,000 gallons (1) $1.25 per 1,000 gallons Next $1.00 per 1,000 gallons Next $0.75 per 1,000 gallons Over $0.60 per 1,000 gallons (2) For purposes of this survey (1) is the "first bracket price" and (2) is the "last bracket price." 2. Base and Flow A Base Charge or Service Charge is a fixed monthly amount that is usually determined by a customer's meter size. Normally the base charge is designed to recover costs of serving each customer, such as meter reading and billing as well as a portion of the collection system costs. For sewer systems, a base charge is normally coupled with a treatment rate (flow rate). The flow rate is normally a single rate per unit designed to recover the cost to treat the sewage, including debt service on the wastewater treatment plant. This type of rate stnicture might appear as follows: Meter Size BaseCharge 5/8" - 3/4" $ 5.70 per month 1" 13.00 per month 2" 47.00 per month 4" 200.00 per month Plus a treatment flow charge of $4.20 per 1,000 gallons. For purposes of this survey the "first bracket price" and the "last bracket price" would be the same. In this example: $4.20 per 1,000 gallons. 3. Minimum Charge A Minimum Charge is similar to a base charge in that it is typically a fixed amount based on meter size. A minimum charge, however, includes a certain level of flow for which the customer is billed whether they use the water or not. For example, a typical minimum charge might be $5.00 for any level of flow from 0 gallons through 3,000 gallons. Minimum Charges are not as common with sewer utilities as they are with water utilities. 3 Preface (Cont d) 4. Flat Rates "Flat rates" are based on estimated consumption of water and are used where metered water usage is not available. An example of a flat rate system follows: Single family residence $12.75 per month Apartment complex 9.60 per unit/month Laundromat 9.60 per washer/month School 0.55 per student/month This report includes rate schedules and charges from all of the types detailed above. Disclaimers In our work around the state, we are frequently asked how a community's sewer rates compare to those in the next community. It is natural that both government officials and citizens ask this question, and this report will help answer that question. This report and the question it answers, however, do have limitations. Comparing a residential bill for 5,000 gallons of monthly water usage between two different utility systems tells you what a customer on each system pays for the same amount of water usage. But comparing the bills for similar customers on two different sewer systems doesn't tell the complete story. Differences in operating characteristics, staffing, customer makeup and usage levels and many other factors all impact the utility's cost structure and therefore its rate structure as well. In addition, the type of ownership impacts the operating cost and rate structure. In many cases, user rates for privately held investor-owned utilities are higher than the rates for municipally owned utilities because of the need to provide for shareholder return and taxes. Without taking these factors into consideration, the user could reach incorrect conclusions regarding the differences in customer billings for the same amount of water usage from one utility to the next. As we mentioned previously, preparing this report requires collecting and analyzing large amounts of rate data that to some extent is in a perpetual state of change. The information contained in this report is as accurate as we are able to make it as of the data collection cut-off date. 4 Indiana Comparative Sewer Rate Study Comparison of Rates and Charges from October 2007 to October 2011 (Monthly Billings) As we discuss in more detail on the next page, much has changed over the past few years concerning sewage rates in the state of Indiana. On average, sewer rates and charges have increased approximately 20% over the last four years since our prior study. There are a multitude of reasons for this outcome, including increases in operating expenses and the number of capital improvement projects completed over the past four years. The cost of capital improvement projects is generally the biggest driver impacting rates and charges. Communities undertake these projects for a variety of reasons. Certainly, the relatively low cost of obtaining debt financing has spurred capital spending. In addition, utilities are continually faced with unfunded government mandates and regulations, such as stormwater separation and the Clean Water Act. Communities that have addressed sewer and stormwater separation are experiencing a burden on sewage rates and charges to offset the costs of these projects. Finally, many utilities have expanded treatment facilities to accommodate customer growth. On average, sewer rates and charges have increased approximately 20% over the last four years. From October 2007 to October 2011 (Monthly Bil ings) =Approximate single-family residential average. 5 October 2007 AveraHe October 2011 Average Percent Increase First bracket price (per 1,000 gallons) $4.83 $5.76 19.3% Last bracket price (per 1,000 Qalions) $3.77 $4.57 21.2% Gallons given for minimum price $2,738.34 $2,670.00 -2.5% Minimum charge for 5/8"meter $16.70 $19.53 16.9% Monthly bill based on 2,000 gallons usage $19.60 $23.57 20.3% Monthly bill based on 3,000 gallons usage $22.86 $27.31 19.5% Monthly bill based on 4,000 gallons usage S26.81 $32.01 19.4% Monthly bill based on 5,000 gallons usage $30.93 $37.28 20.5% Monthly bill based on 10,000 gallons usage $51.41 $60.90 18.5% =Approximate single-family residential average. 5 Indiana Comparative Sewer Rate Study Comparison of Expenses from May 2007 to August 2011 Since we issued our last Comparative Rate Study in October 2007, the world has seen dramatic changes affecting the day-to-day operations of the communities in which we live. The economic downturn due to the financial market "meltdown" has caused municipalities to face tough decisions resulting from increased job loss, job relocation and businesses closing. The federal government stepped in to assist by passing the American Recovery and Reinvestment Act of 2009 in February 2009 which injected billions of dollars back into the country to save and create jobs, as well as provide funding for investment in long-term growth.(1) At the local level, this Act created attractive lending rates for capital improvement projects and pushed up the timetable for numerous projects which otherwise would not have commenced for many years. As a result, municipalities were sent into a "spending binge" that has had a direct impact on the community general funds and the utility rates and charges. In addition to national legislation, state legislation passed during this time period has created a strain on local governments. House Enrolled Act (HEA) 1001-2008 entitled property owners to a cap on the amount of property taxes to be paid based on a percentage of their property's gross assessed value. The consumer receives the direct benefit of this cap, because it means less tax to be paid on an annual basis. Since property owners are paying fewer dollars in property tax, municipalities have had to scramble to change their operations to function with less revenue. One way local governments are coping with this change is by using utility dollars to subsidize municipal operations. As a result, municipalities are increasing utility rates and charges to help replace some of the revenue lost to property tax caps. Local governments are also faced with increases in expenses. For example, communities are continuing to report significant increases in the cost of employee health insurance. In addition, many utilities have experienced increases in the cost of purchased power and gasoline. These increases -- coupled with the increases associated with improvement projects -- have contributed to the 20% increase in sewer rates and charges throughout the state. The following table represents the increase in typical expenses from May 2007 to August 2011. PERCENT INCREASE IN TYPICAL EXPENSES 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% -5.0`iu 10.0% -15.0% -30.0% (1) 1 192" 17.5% 14 .S% 14.4% 1 I I --Medical-caro-1Jcotrioity--1•3 1 gac—(rasetinc Steel= -r----r- 15.8% r (1) "The RecoN ery Act," <http://www.recoveiy.gov/About/Pages/The Act.aspx> (accessed October 6, 2011). * Source da a comes from the Bureau of Labor Statistics website Nvww.bls.gov). 6 Indiana Comparative Sewer Rate Study Schedule of Average Rates Based on Date of Umbaugh Rate Studies The chart below compares the average data derived from the past 10 rate surveys covering the last 30 years with the data compiled as part of the new January 2012 survey. A residential bill of 4,000 gallons increased 19.4% from October 2007 to January 2012 and 284.3% since 1981. $35.00 $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 Sampling of Average Monthly Sewage Bills Based on Date of Umbaugh Rate Survey (Assumes 4,000 gallons usage) 32.01 $26.81 $23.46 $13.99 $10.34 $8.33 $8.92 N.�9�^ , 1%% N ^ ti ti ti �ar �oe�' a7\' �,pe�' JaA' dr <11" 5��`, COG Sac 0 tae 7 Indiana Comparative Sewer Rate Study Schedule of Rate Variances and Averages The schedule below shows the pricing variances of several common rate components. The comparison includes the lowest, average* and highest prices as determined from the study data. As expected there are large variances in what municipal systems charge for sewage treatment and disposal services. These variances are, in part, attributable to factors such as population, geographic location and the number of years the rates have been in effect. Each of these factors will be explored later in this report. The price per thousand gallons in the first bracket varies from $1.06 to $21.93 per thousand gallons, approximately 20 times as much as the lowest price. The monthly billing for 4,000 gallons of water, which is often considered to approximate average household usage, varies from a per -month low of $10.00 to a high of $85.21. The chart below summarizes our findings for sewage rate inforrnation across the state of Indiana. Sewer Rate Variances and Averages * All references to averages in the report are memo. 8 Monthly Billing Minimum Charge Average Charge Maximum Charge First bracket price (per 1,000 gallons) $1.06 $5.76 $21.93 Last bracket price (per 1,000 gallons) $0.50 $4.57 $13.02 Gallons given for minimum price 750 2,670 10,000 Minimum charge for 5/8"meter $3.26 $I9.53 $65.79 Base charge 5/8" meter $0.43 $15.55 $50.40 Tap fee $100.00 $720.00 $2,530.00 2,000 gallons $5.44 $23.57 $74.12 3,000 gallons $8.16 $27.31 $74.12 4,000 gallons $10.00 $32.01 $85.21 5,000 gallons $10.00 $37.28 $108.90 10,000 gallons $10.00 $60.90 $162.89 * All references to averages in the report are memo. 8 Indiana Comparative Sewer Rate Study Average Statistics by 2010 Population The graph below shows the correlation between a community's size and its sewer rates and charges. With relatively few exceptions, charges for sewer service generally follow a pattern of higher rates in small communities and lower rates in large communities. These variations are reasonable when you consider that the cost of operating a utility must be spread over its customer base. A larger customer base means that a smaller portion of the total costs of operation is allocated to each individual customer. In addition, as the volume of treated flow increases, the average cost to treat that flow decreases. $40.00 $35.00 $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 Average Monthly Charge for 4,000 Gallons by Population Compared to Statewide Average ($32.01) $3 $29.96 $29.02 $29.13 $23.71 $24.58 Less than 1,000 to 3,001 to 6,001 to 10,001 to 15,001 to Over25,000 1,000 3,000 6,000 10,000 15,000 25,000 9 Indiana Comparative Sewer Rate Study Average Statistics Based on 2010 Population (Monthly Billings) See Graphs on pre1Y101(s and ner( page. 10 Less than 1,000 1,000 to 3,000 3,001 to 6,000 Population 6,001 to 10,000 10,001 to 15,000 15,001 to 25,000 Over 25,000 93 125 38 30 19 17 36 First bracket price (per 1,000 gallons) 85.83 86.87 55.55 i 55.11 54.75 53.27 54.28 Last bracket price (per 1,000 gallons) 54.72 55.04 54.37 54.35 84.24 53.15 53.91 Gallons given for minimum price 2,696 2,441 2,771 2,789 3,324 2,847 2,873 Minimum charge for 5/8"meter 521.79 519.84 S18.14 819.58 515.22 510.82 519.10 Base charge 5/8" meter S 19.57 S 16.03 S12.58 S12.52 r 816.25 1 S9.48 S10.98 Tap fee $562.53 5626.31 S760.42 5978.57 5955.83 81,100.00 81,065.00 Monthly bill based on 2,000 gallons usage 527.04 525.18 521.50 520.04 521.73 516.96 S18.27 Monthly bill based on 3,000 gallons usage 529.97 529.93 S25.29 S2.83 S25.16 519.96 520.57 Monthly bill based on 4,000 gallons usage 534.09 535.51 529.96 829.02 1 529.13 823.71 524.58 Monthly bill based on 5,000 gallons usage 538.85 541.77 S34.79 534.28 S33.19 527.50 529.57 _Monthly hill based on 10,000 gallons usage 559.01 568.63 S59.39 560.94 S53.73 546.32 S51.21 See Graphs on pre1Y101(s and ner( page. 10 Indiana Comparative Sewer Rate Study Average $8.00 First Bracket Price by Population Compared to Statewide ($5.76) Average $7.00 $6.00 56.87 $5.00 ❑ $5.83 ❑ ! S5 55 ❑ ❑ ❑ $4.00 55.11 54.75 $3.00 $4.28 $2.00 53.27 $1.00 $0.00 Less than 1,000 1,000 to 3,000 3,001 to 6,000 6,001 to 10,000 10,001 to 15,000 15,001 to 25,000 Over25,000 $25.00 $20.00 $15.00 $10.00 $5.00 50.00 Average Monthly Base Charge 5/8" Meter Size by Population Compared to Statewide Average ($15.55) $19.57 0 0 59.48 0 510.98 Less than 1,000 to 3,001 to 6,001 to 10,001 to 15,001 to Over25,000 1,000 3,000 6,000 10,000 15,000 25,000 Indiana Comparative Sewer Rate Study Average Statistics by Effective Date of Current Rates The following pages examine average charges for service based upon both the current rate structure and size of the community. The first schedule provides statistics for all municipalities sorted by the date the rate structure was adopted. Sixty four municipalities are using rates adopted prior to 2000, representing approximately 18% of the communities included in this survey. This is important because it indicates these communities will likely experience larger rate adjustments to compensate for normal changes in operating costs that were absorbed over the past 10 years rather than passed on by the utility in the form of minor rate adjustments. Communities should strongly consider an analysis of their rates and charges at least every three to five years. Effective Date of Sewer Rates Effective Date Utilities Prior to 2000 64 2000 12 2001 17 2002 19 2003 9 2004 30 2005 26 2006 35 2007 14 2008 35 2009 43 2010 38 2011 and after 16 Total 358 ux an ahwt mncnca¢. 12 Indiana Comparative Sewer Rate Study Average Statistics by Effective Date of Current Rates (Monthly Billings) All Population See Graphs on precious and necl page. 13 It allalxwt apt nencc. Year Current Rates Were Adopted Prior to 2000 2000 to 2005 After 2005 Municipalities in study group 64 113 181 First bracket price (per 1,000 gallons) $4.70 $5.84 $6.04 Last bracket price (per 1,000 gallons) $3.36 $4.63 $4.92 Gallons given for minimum price 2,342 2,560 2,840 Minimum charge for 5/8"meter $15.09 $18.05 $21.97 Base Charge 5/8" Meter $14.50 $15.00 $ 1625 Tap fee $658.13 $704.78 $776.30 Typical Billings: 2,000 gallons $20.24 $22.76 $25.26 3,000 gallons $22.88 $26.68 $29.29 4,000 gallons $26.18 $31.33 $34.50 5,000 gallons $29.61 $36.20 $40.67 10,000 gallons $46.23 $60.36 $66.43 See Graphs on precious and necl page. 13 It allalxwt apt nencc. $40.00 Average Monthly Charge for 4.000 Gallons by Year of Rates Compared to Statewide ($5.76) Average ($32.01) - 0 $35.00 $30.00 n - $6.04 O 1 �� ba -50 $4.00 $31.33 $15.00 $25.00 $26.18 $14.50 $20.00 $2.00 $15.00 $1.00 . 2000 to 2005 After 2005 $10.00 $0.00 Prior to 2000 2000 to 2005 After 2005 $5.00 $0.00 Prior to 2000 2000 to 2005 After 2005 14 Average First Bracket Price By Year of Rates Compared to Statewide Average ($5.76) $7.00 $6.00 - 0 $16.00 n � 5.84 $6.04 $5.00 °'✓1.78 $4.00 $15.00 $3.00 $14.50 $2.00 $1.00 . 2000 to 2005 After 2005 $0.00 Prior to 2000 2000 to 2005 After 2005 14 Average Monthly )lase Charge for 5/8" Meter By Year of Rates Compared to Statewide Average ($15.55) $16.50 $16.00 n n $10.2, n $15.50 $15.00 $15.00 $14.50 $14.50 $14.00 $13.50 Prior to 2000 . 2000 to 2005 After 2005 14 Indiana Comparative Sewer Rate Study Average Statistics by Effective Date of Current Rates Populations Tess than 1,000 Monthly Billings HDf1VE W(1 15 tri�uahovl ewerienct Year Current Rates Were Adopted Prior to 2000 2000 to 2005 After 2005 Municipalities in study group 31 31 31 First bracket price (per 1,000 gallons) $4.49 S6.32 $6.57 Last bracket price (per 1,000 gallons) $3.48 $5.05 $5.53 Gallons given for minimum price 2,422 2,373 3,436 Minimum charge for 5/8"meter $17.24 $20.48 $28.16 Base Charge 5/8" Meter $17.65 $19.89 $21.23 Tap fee $590.38 $561.54 $504.33 Typical Billings: 2,000 gallons $21.58 $25.93 $33.60 3,000 gallons $23.87 $29.51 $36.55 4,000 gallons $26.93 $34.08 $41.26 5,000 gallons $30.12 $38.65 $47.76 10,000 gallons $45.81 $61.40 $69.82 HDf1VE W(1 15 tri�uahovl ewerienct Indiana Comparative Sewer Rate Study Average Statistics by Effective Date of Current Rates Population 1,000 to 3,000 Monthly Billings 16 It allalxwt matinee. Year Cunt it Rates Were Adopted Prior to 2000 2000 to 2005 After 2005 Municipalities in study group 20 48 57 First bracket price (per 1,000 gallons) $5.98 $6.49 $7.48 Last bracket price (per 1,000 gallons) $3.66 $5.01 $5.54 Gallons given for minimum price 2,125 2,222 2,690 Minimum charge for 5/8"meter $14.16 $18.80 $22.48 Base Charge 5/8" Meter $11.57 $14.93 $19.14 Tap fee $465.94 $694.21 $625.88 Typical Billings: 2,000 gallons S18.92 $24.43 $28.00 3,000 gallons $22.81 $29.17 $33.07 4,000 gallons $27.42 $34.11 $39.54 5,000 gallons $32.00 $39.52 $47.09 10,000 gallons $53.65 $66.16 $75.96 16 It allalxwt matinee. Indiana Comparative Sewer Rate Study Average Statistics by Effective Date of Current Rates Population 3,001 to 6,000 Monthly Billings 17 10 ,1111 about exnent . Year Current Rates Were Adopted Prior to 2000 2000 to 2005 After 2005 Municipalities in study group 3 14 21 First bracket price (per 1,000 gallons) $3.61 $5.55 $5.75 Last bracket price (per 1,000 gallons) $3.08 $4.11 $4.66 Gallons given for minimum price 2,000 2,919 2,720 Minimum charge for 5/8"meter $6.64 $15.77 $21.94 Base Charge 5/8" Meter $6.97 $11.62 $13.46 Tap fee $1,425.00 S630.00 $425.00 Typical Billings: 2,000 gallons $30.19 $19.39 $21.67 3,000 gallons $32.24 $22.63 $26.06 4,000 gallons $34.29 $27.37 $31.06 5,000 gallons ' $36.34 $32.11 $36.35 10,000 gallons $46.59 $55.62 $63.74 17 10 ,1111 about exnent . Indiana Comparative Sewer Rate Study Average Statistics by Effective Date of Current Rates Population 6,001 to 10,000 Monthly Billings HJf1V8Wf1 18 Year Current Rates Were Adopted Prior to 2000 2000 to 2005 After 2005 Municipalities in study group 3 7 20 First bracket price (per 1,000 gallons) $3.39 $4.32 $5.65 Last bracket price (per 1,000 gallons) $3.28 $3.86 $4.70 Gallons given for minimum price 2,625 2,435 2,892 Minimum charge for 5/8"meter 514.63 $17.40 $21.23 Base Charge 5/8" Meter $8.35 $11.81 $13.16 Tap fee $1,200.00 $950.00 $800.00 Typical Billings: 2,000 gallons $13.77 S18.48 $21.52 3,000 gallons $15.61 $21.54 $25.87 4,000 gallons $17.86 $26.21 $31.68 5,000 gallons $21.55 $30.89 $37.38 10,000 gallons $40.01 $54.24 $66.42 HJf1V8Wf1 18 Indiana Comparative Sewer Rate Study Average Statistics by Effective Date of Current Rates Population 10,001 to 15,000 Monthly Billings IIS all about esperi ace. 19 Year Current Rates Were Adopted Prior to 2000 2000 to 2005 After 2005 Municipalities in study group 1 2 16 First bracket price (per 1,000 gallons) N/A $2.37 $5.09 Last bracket price (per 1,000 gallons) N/A $2.06 $4.55 Gallons given for minimum price N/A 5,482 2,245 Minimum charge for 5/8"meter N/A $12.52 $15.90 Base Charge 5/8" Meter N/A $7.10 $17.01 Tap fee N/A N/A $955.83 Typical Billings: 2,000 gallons $48.00 $12.34 $21.27 3,000 gallons $48.00 $13.60 $25.17 4,000 gallons $48.00 $14.86 $29.74 5,000 gallons $48.00 $16.97 $34.30 10,000 gallons $48.00 $30.39 $57.00 IIS all about esperi ace. 19 Indiana Comparative Sewer Rate Study Average Statistics by Effective Date of Current Rates Population 15,001 to 25,000 Monthly Billings II\ all Myth ex7eKicnce. 20 Year Current Rates Were Adopted Prior to 2000 2000 to 2005 After 2005 Municipalities in study group 1 6 10 First bracket price (per 1,000 gallons) $2.48 $3.49 $3.22 Last bracket price (per 1,000 gallons) $1.26 $3.49 $3.13 Gallons given for minimum price 3,143 3,000 2,622 Minimum charge for 5/8"meter $10.40 $10.98 $10.86 Base Charge 5/8" Meter N/A $8.48 $10.12 Tap fee $100.00 $1,233.33 $1,250.00 Typical Billings: 2,000 gallons $10.40 $15.02 $18.78 3,000 gallons $10.40 $18.35 $21.88 4,000 gallons $13.22 $22.40 $25.55 5,000 gallons $16.53 $26.45 $29.22 10,000 gallons $31.51 $46.70 $47.58 II\ all Myth ex7eKicnce. 20 Indiana Comparative Sewer Rate Study Average Statistics by Effective Date of Current .Rates Population Over 25,000 Monthly Billings liknll ahan wen no. 21 Year Current Rates Were Adopted Prior to 2000 2000 to 2005 After 2005 Municipalities in study group 5 5 26 First bracket price (per 1,000 gallons) $I.94 $4.76 $4.57 Last bracket price (per 1,000 gallons) $1.94 $3.99 $4.22 Gallons given for minimum price N/A 2,417 2,987 Minimum charge for 5/8"meter N/A $14.52 $20.24 Base Charge 5/8" Meter $10.12 $10.66 $I 1.24 Tap fee $250.00 $762.50 $1,420.00 Typical Billings: 2,000 gallons $ I I.53 $15.89 $20.02 3,000 gallons $13.25 $18.88 $22.86 4,000 gallons $14.96 $23.12 $26.70 5,000 gallons $16.68 $27.36 $32.48 10,000 gallons $25.26 $48.55 $56.71 liknll ahan wen no. 21 About Umbaugh Umbaugh is now in its seventh decade of providing financial advisory services to local governments, municipal and not-for-profit utilities, school corporations, libraries and a variety of other governmental clients. Our firm has constantly grown to meet this demand and changed with the increasing complexities of public financing, but we remain committed to our initial vision of' personal attention, integrity and providing high quality service to each client. Indianapolis Plymouth Lansing 8365 Keystone Crossing 925 Dora Lane 6639 Centurion Drive Suite 300 P.O. Box 697 Suite 100 Indianapolis, Indiana 46240 Plymouth, Indiana 46563 Lansing, MI 48917 (317) 465-1500 (574) 935-5178 (517) 321-0110 Financial Advisors to: Cities and Towns Municipal Sewage Works Conservancy Districts Municipal Water Utilities Counties Not -For -Profit -Utilities Electric Utilities Regional Water & Sewer Districts Gas Utilities Rural Water Companies Investor -Owned Utilities Schools Libraries Stormwater Utilities Indiana Association of Cities and Towns Services Accounting Systems Analysis GASB 34 Implementation Assistance Annexation Studies General Obligation Bonds Availability Fees Income Tax Financing Bond Refinancing Lease Financings Buy/Sell Analysis Management Advisory Services Capital Asset Accounting Organization of New Utilities Capital Planning Privatization Studies City and Town Budgeting Revenue Bond Issues Cost -of -Service Studies Rural Development (RD) Financing Customized Client Training Stormwater Rates Economic Development State Revolving Fund (SRF) Assistance Financing Expert Testimony Tax Increment Financing Utility Rate Consulting For a comprehensive list of services visit www.umbaugh.com Indiana Comparative Rate Study — Sewer January 2012 Copyright © 2012 Umbaugh All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information or retrieval system, except in the form of brief excerpts or quotations for review purposes, without the written permission of Umbaugh. Establishing Stormwater Rates January 2012 Prepared by Iii all stout exrcn nm. In cooperation with reim Indiana Association of Cities ai drowns Charging for stormwater You wouldn't think of operating a municipal water utility without charging for the water. And although they may complain about them, customers are now accustomed to being billed a separate user fee to handle sanitary wastewater treatment. Initiating a charge for handling stormwater may be next. It is part of the trend to identify the services local governments provide to residents and businesses and recapture the actual costs of providing each service. EPA and IDEM mandates Stormwater quality and pollution prevention may not be something your average constituent thinks about. The people in your community tend to take it for granted as part of the group of general services their municipality handles for them. But the costs of handling stormwater have increased as the EPA and IDEM have mandated compliance with the Phase 11 Rule that requires Municipal Separate Storm Sewer System (MS4) entities to develop Stormwater Quality Management Programs and apply for stormwater permits. IDEM has designated more than 180 MS4s in hldiana, including cities, towns, counties and universities. It is likely your community may be among those 180+. Even if it is not, your community may get drawn into it, plus more progressive communities have the opportunity to consider implementing stormwater services and fees. Alleviate stress on your general fund budget Your community, like many others, has probably experienced general fund reductions due to economic conditions or property tax caps. Additionally, there is a macro trend toward finding revenue sources to reduce reliance on property taxes. Before reducing services or overhead to balance budgets, consider implementing stormwater rates and charges to pay for the stormwater-related costs. Removing the MS4 mandate costs from the general fund budget can be a great help, freeing up funds for other budget expenditures such as police or fire. Removing MS4 mandate costs from the general fund can free up funds for other budget expenditures such as police or fire. Setting up the stormwater utility There are a several ways to set up a stormwater utility. Your community can set up a separate stormwater utility or district or use the existing sanitary sewage works or sanitary district to operate and fund the stormwater system. There are advantages and disadvantages to each. Depending on the set up of the utility, there is limited ability to pay for capital expenditures and debt service from property tax revenues. Property taxes cannot be used to pay for operation, maintenance and repair expenses, so these costs need to be paid from stormwater user fees. Although the costs to provide stonnwater services can be funded from a combination of property taxes and user fees, it is more common for all costs to be funded with stormwater user fees. '/ ' / i i / i / i i i i / Determining the cost of handling stormwater As you begin considering how to set stormwater rates, you need to determine the actual costs of providing the service. Stonnwater rates and charges are subject to the same statutory requirements as other utilities; they must be fair, just and non-discriminatory. The costs of MS4 mandates you will want to cover with a special rate include implementing best management practices to reduce stormwater runoff and pollution, such as street sweeping and stormwater inlet cleaning. Other costs include public education and outreach, reporting requirements, erosion and sediment control plan reviews, site inspections and illicit discharge inspections. Most common in Indiana: One rate for residences A second rate for non-residential You have several options for setting a stormwater utility fee. Some communities have adopted a flat fee for all users and properties, regardless of size or characteristic. This is more prevalent when setting initial rates and when the monthly fee is very small. It is most common in Indiana to institute a flat monthly charge for all residential households (known as an Equivalent Runoff Unit or ERU) and establish a non-residential property charge based on the amount of impervious area. This is a fair way to assess costs since a Targe commercial building has more rain runoff than a residence. If you are worried about schools, industries, commercial and shopping malls paying large monthly stormwater bills, you can make credits available to Targe non-residential properties that assist with public education or construct improvements to help reduce stormwater, such as sediment ponds, swales or detention or retention facilities. Six Minimum Control Measures Many of the stormwater operational costs stem from the required Best Management Practices and the achievement of measurable goals to satisfy each of the six minimum control measures as mandated by EPA and IDEM. Below are the required six minimum control measures: • Public education and outreach • Public involvement and participation • Illicit discharge detection and elimination • Construction site runoff control • Post construction runoff control • Pollution prevention/good housekeeping. What's a reasonable rate? It is good idea to benchmark your proposed stonnwater rate to nearby communities and similar -size municipalities. Umbaugh has worked with many cities, towns and counties over the past 10 years as they have implemented stormwater rates and developed stormwater projects. Based on a sample size of 63 Indiana stonnwater utilities, the average residential rate is $5 per month, with residential rates ranging from $1 to $12 per month. Average Monthly Residential Rate by Population - Statewide Average - $5 - $8.00 $ 7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 Average residential rate: $5 per month $6.91 $5.03 $3.77 $4.13 Less than 5.000 5.001 to 10.000 10.001 to 25.000 More than 25.000 How many communities have stormwater rates? There are 63 communities with stormwater rates based on our client base and research. Below is the number of communities with stormwater rates by population. Number of Communities 25 20 15 10 5 0 Stormwater Rate Communities by Population - 63 Communities - Less th n 5,000 5,001 to 10,000 10,001 to 25,000 Population More than 25,000 22 20 14 7 Less th n 5,000 5,001 to 10,000 10,001 to 25,000 Population More than 25,000 Need help? Please contact Umbaugh if you would like help with: • working as a team with your staff and consulting engineers to create a financial plan for stormwater projects and to comply with MS4 mandates • relieving the stress in your general fund budget • assist with stormwater utility management options • establishing the actual costs for stormwater • setting stormwater rates Glossary of Stormwater Acronyms S W Q M P — Stormwater Quality Management Plan C WA — Clean Water Act MS4 — Municipal Separate Storm Sewer System BMP — Best Management Practices ERU — Equivalent Runoff Unit E PA — Environmental Protection Agency IDEM — Indiana Department of Environmental Management Financial Advisors to: Cities and Towns Conservancy Districts Counties Electric Utilities Gas Utilities Investor -Owned Utilities Libraries Municipal Sewage Works Municipal Water Utilities Not -For -Profit -Utilities Regional Water & Sewer Districts Rural Water Companies Schools Stormwater Utilities Indiana Association of Cities and Towns Accounting Systems Analysis Annexation Studies Availability Fees Bond Refinancing Buy/Sell Analysis Capital Asset Accounting Capital Planning City and Town Budgeting Cost -of -Service Studies Customized Client Training Economic Development Assistance Expert Testimony Services GASB 34 Implementation Assistance General Obligation Bonds Income Tax Financing Lease Financings Management Advisory Services Organization of New Utilities Privatization Studies Revenue Bond Issues Rural Development (RD) Financing Stormwater Rates State Revolving Fund (SRF) Financing Tax Increment Financing Utility Rate Consulting For a comprehensive list of services visit www.umbaugh.com About Umbaugh Umbaugh is now in its seventh decade of providing financial advisory services to local governments, municipal and not-for-profit utilities, school corporations, libraries and a variety of other governmental clients. Our firm has constantly grown to meet this demand and changed with the increasing complexities of public financing, but we remain committed to our initial vision of personal attention, integrity and providing high quality service to each client. Indianapolis 8365 Keystone Crossing Suite 300 Indianapolis, Indiana 46240 (317) 465-1500 Plymouth 925 Dora Lane P.O. Box 697 Plymouth, Indiana 46563 (574) 935-5178 Lansing 6639 Centurion Drive Suite 100 Lansing, MI 48917 (517) 321-0110 Stormwater Report January 2012 Copyright © 2012 Umbaugh All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information or retrieval system, except in the form of brief excerpts or quotations for review purposes, without the written permission of Umbaugh.