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TO: Honorable Mayor and Members of the Common Council FROM: Julie Calmes, Finance Director DATE: December 10, 2024 SUBJECT: Res 24-683 Approve Fee Schedule for Sanitary Sewer Use Charges

BACKGROUND

Each year the City requests that Ehlers Financial Advisors review the Long Range Cash Flow Analysis for each of our utilities to make sure rates are sufficient to provide for operations and to plan for issuance on revenue debt necessary to finance capital projects. Attached is the Long Range Cash Flow Analysis for the Water, Sanitary Sewer, and Storm Water Utilities. In September 2023, the City Council approved non-contractual rates for wholesale customers that the City is currently providing sanitary sewer (wastewater) services to.  The wholesale customers are neighboring sanitary districts including the Town of Algoma Sanitary District No. 1, the Blackwolf Sanitary District No. 1, the Town of Oshkosh Island View Sanitary District, the Town of Oshkosh Sunset Point Sanitary District, the Town of Edgewood-Shangri La Sanitary District, and the Town of Oshkosh Winnebago Sanitary District (districts shall be individually referred to as a “Wholesale Customer”).  The Non-Contractual rates are based on the assets used by each sanitary district and a rate for each district is based on the assets the district is benefiting from.  The updated Interim Sanitary Sewer Rate Analysis for Wholesale Customers/ Sanitary Districts, prepared by Ehlers is attached for your review.

ANALYSIS

SANITARY SEWER UTILITY The increase is needed due to the following reasons: Moderate increase in expenses from 2020 to the present; Large Capital Improvement Program in 2025 and beyond with regard to sewer infrastructure projects; and Funds needed to meet bond covenant requirements with regard to debt payments (i.e. Debt Coverage). As enumerated above, the rate increases for direct City customer rates and interim wholesale customer rates are necessary to fund operations and debt service needs in 2025. WATER UTILITY The Long Range Cash Flow Analysis for the Water Utility has previously projected a substantial increase in rates in 2025.  However, due to capital projects not being completed as quickly as previously anticipated, the City is expecting a more modest increase in 2025.  Rates for the Water Utility are governed by and established by the Wisconsin Public Service Commission (PSC). The City will complete a rate case with the PSC in 2025.

FISCAL IMPACT

If approved, the wholesale customer revenue would increase by approximately $143,500.  The effect of the increase on the average City residential user is approximately $30.35 on an annual basis, which equates to a 6.20% increase in sewer rates.

RECOMMENDATION

Staff recommends that Council pass the sewer rate schedule for 2025, including the non-contractual rates.

Attachments RES 24-683 Attachment to Res 24-683 - Sewer Use Charges Fee Schedule Cash Flow Analysis Non-Contractual Rates for Wholesale Customers - Revised 2025 Sewer Rate Model

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