Public Works engaged CDM Smith to conduct a cost of service rate study to review and recommend appropriate water and wastewater user rates, system development fees, the resale water rate for the County Water District of Billings Heights, and wholesale rates for the Lockwood Water and Sewer District.  The methodology used in the study follows industry standard approaches and recommends rates for each class of customer that allows the Public Works Department to adequately recover costs in proportion to the cost of providing service to each class of customer.  The following is a summary of the proposed changes:  

  1. Increase the monthly water volume charges to include the charge for fire hydrant fees which were previously included on the annual Yellowstone County tax bill.  The fire hydrant fee includes costs of on-going maintenance, but is primarily for the cost of capital-related infrastructure that Public Works must have in place to ensure that the City is able to meet fire-fighting needs at all times.  If approved, this fire hydrant fee will no longer be assessed on the annual tax statement and will be included on the monthly utility bill.
  2. Increase private fire hydrant protection charges by approximately 4% to reflect the current cost of services.
  3. Increase the wastewater volume rate and minimum monthly charges for all customer classes for upcoming wastewater treatment plant reconstruction required to meet new Federal regulations.
  4. Create a new class of wastewater customer called "large residential" which includes residences of four or more families, condominiums, apartment buildings and mobile home parks and bill this new class based on a winter quarter average to ensure that these users are not unfairly charged for irrigation and landscaping purposes that does not go back into the sewer system.
  5. Increase the resale rate for County Water District of Billings Heights to reflect current cost of services. 
  6. Adjust the volume charge, fixed monthly fee, and System Development Fee (SDF) for Lockwood Sewer District. 
  7. Increase the water SDFs for residential and non-residential classes. The proposed structure for water includes a separate charge for an irrigation meter to reflect the different usage pattern of these customers and their impact on the system. 
  8.  Decrease the wastewater SDFs for all meter sizes.   
  9. Adjust water and wastewater fees and charges for various permits and miscellaneous special fees.

The attached resolution specifies the proposed rates and fees.  A comparison of current versus proposed rates is also attached.  A public hearing is required per MCA 69-7-111 and if the proposed resolution is approved, rates will be effective July 1, 2013.
 

The City Council must hold a public hearing and then may:

  • approve the resolution
  • not approve the resolution.  If Council does not approve the resolution, the rates and fees will continue to be charged at current rates and a resolution to assess the fire hydrant fees on the annual tax statement will need to be considered at a future City Council meeting.  System Development Fees must be updated at least every two years to be in compliance with MCA 7-6-1602 and they were last updated July 1, 2011.

The proposed rate and fee amendments will generate approximately $245,000 additional water revenues and $754,000 additional wastewater revenues for FY 2014.

No additional background is available.

• MCA 7-6-1604 requires governmental entities to have an advisory committee to review the calculating, assessing, and spending of system development fees.  The advisory committee must include at least one representative of the development community and one certified public accountant.  The City’s SDF committee is comprised of the Public Works Board and Public Works staff.  The individuals involved in the group are shown on Attachment A.  The committee met in April 2013 to review the proposed changes to the SDFs.  The SDF committee supports the recommendations being made to the Council.

• The Public Works Board also reviewed the overall financial picture of the water and wastewater utilities, which included the user rates.  This board supports all of the water and wastewater rates, fees, and charges being recommended to the Council.