No formal action is expected at this work session, but staff is seeking feedback from the Council on the proposed rates.

Annual reviews of public works rates ensure alignment with operational costs; capital improvement, technology replacement and equipment replacement plans; regulatory requirements; and long-term financial sustainability. Staff has conducted a comprehensive analysis of each service area, considering factors such as inflationary impacts, infrastructure needs, service demand, and equity.

The purpose of this work session is to provide City Council with an overview of proposed adjustments to various public works-related rates and fees. Staff will present information on rate options and cost drivers for the following areas:

• Street Maintenance Districts
• Water Utility Rates
• Wastewater Utility Rates
• System Development Fees
• Solid Waste Collection and Disposal
• Stormwater Utility Rates

Staff discussed rates and rate options for all rates except System Development Fees at the Budget and Finance Committee meetings on March 26 and April 9, 2025.  The presentation includes two options for street maintenance district fees, water rates, wastewater rates, and solid waste fees.  The first option includes the rates and fees calculated to maintain the current service level and cost of service methodology.  The second option includes the rates and fees that the Budget and Finance Committee voted to bring to the full Council.  The Budget and Finance Committee voted to implement year two of staff's recommendations for the stormwater program and corresponding rates, which were discussed with Council in depth last year so there is only one rate option being presented for stormwater rates. 
 
Public works engaged AE2S Nexus to conduct a cost-of-service rate study to review and recommend appropriate water and wastewater user rates, the resale rate for the County Water District of Billings Heights, and wholesale rates for Lockwood Water and Sewer District, Philips 66 Billings Refinery and Par Montana, as well as the System Development Fees (SDFs) for water and wastewater.  These rate study reports are attached.

This meeting is a work session, and as such, no formal action will be taken at this time. However, staff is seeking direction from the City Council regarding the proposed rate adjustments. Based on Council feedback, staff will finalize the rate proposals and prepare the required materials to notify all water and wastewater customers. This includes mailing a letter outlining the proposed water and wastewater rate changes and providing notice of the upcoming public hearing. Formal Council action is expected to take place following the public hearings at the May 27, 2025, business meeting.

There are no direct fiscal effects for the discussion.