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TO: Honorable Mayor and Members of the Common Council FROM: Julie Calmes, Finance Director DATE: December 10, 2024 SUBJECT: Res 24-684 Approve Fee Schedule for Storm Water 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. The City of Oshkosh (City) implemented a Storm Water Utility in 2003 to fund improvements to the City’s storm water management facilities.  Based on the initial Storm Water Utility study completed in September of 2002, the Common Council implemented a phased introduction of the rates.  There have been periodic subsequent rate increases, the most recent being to $19.81 per ERU per month in 2023.  The Storm Water Utility has funded several major projects to date, including:  Fair Acres Wet Detention Basin and Anchorage Channel Conveyance Upgrades  Tipler Middle School Area Dry Detention Basin and Conveyance Upgrades  North High School Area Wet Detention Basin  Melvin Avenue Storm Water Pump Station  Baldwin Avenue Dry Detention Basin  James Road Area Detention Basin  City Hall Underground Detention and parking lot project  Armory Area Wet Detention Basin  Westhaven Clubhouse Area Detention Basin  Sawyer Creek Dredging and Conveyance Upgrades  9th and Washburn Detention Basin  South Park Lagoon Retrofit  Fernau Watershed North Main Street Detention Basin  Libbey/Nicolet Watershed North Main Street Detention Basin  Stringham Watershed Outfall Reconstruction and Dredging  In addition to major projects, storm sewers are replaced/upgraded with each street reconstruction project. The City experienced significant flooding during numerous rainstorms between 1990 and 2012.  Localized areas also flood during smaller storm events.  Additionally, the City is regulated under a Municipal Separate Storm Sewer System (MS4) permit from the Wisconsin Department of Natural Resources (WDNR), as mandated by the Federal Clean Water Act, for discharge of storm water to local water bodies.  This permit requires the implementation of practices to reduce the amount of pollutants entering lakes and rivers.  The City has met the 20% total suspended solids (TSS) reduction requirement within the MS4 Permit.    The Federal Environmental Protection Agency (EPA), in conjunction with the WDNR, adopted targeted performance standards within the Total Maximum Daily Load (TMDL) report for the Upper Fox and Wolf Rivers Watershed.  That TMDL report requires an increased TSS reduction of 48% within the Sawyer Creek Watershed, in addition to City-Wide Phosphorus reduction of 83% as compared to a “no controls” situation. Brown and Caldwell was retained by the City to update the City-wide plan for pollution reduction in compliance with the EPA-approved TMDL  The updated storm water quality plan and TMDL Compliance Plan have been submitted to WDNR in accordance with the MS4 Permit requirements. The City has also completed several flood studies and is currently studying several watersheds to develop plans to reduce flooding in combination with pollution control. City staff, based on information from all studies, developed a schedule of projects needed to reduce flooding and implement pollution control measures. The City is approximately one-third (1/3) of the way through the original thirty-five (35) year plan to implement these watershed plans, as amended from time to time. The schedule calls for one (1) to two (2) major projects to be constructed per year, with an emphasis on flood control. Wherever possible, pollution control measures will be implemented with flood control measures.    The Cash Flow Analysis prepared by Ehler’s recommends a 2025 Storm Water Utility Rate at $20.32/ERU/month.

ANALYSIS

The City has worked with Ehlers (Financial Consultant) to perform a rate analysis to provide funding to implement the projects outlined in the schedule, to implement other Capital Improvement Projects, and to fund operational costs.  In order to support these activities, a rate of $20.32 per ERU per month ($243.84 per ERU per year) is recommended.  This rate will allow the City to complete all of the projects listed in the approved 2025 Capital Improvement Program (CIP) – Storm Sewer Section, and also maintain daily operations.   The rate is proposed to be in effect on January 1, 2025.  The Utility must retain adequate reserves to maintain favorable bond ratings and meet the operating needs of the Utility.    In the event grants or other monies are secured at more favorable rates than anticipated in the study, the rate increases for future years can be offset.   The intent is to review the rate annually to incorporate actual construction costs from the previous year and incorporate other funds that become available to the Utility.

FISCAL IMPACT

The effect of the increase on the average City residential user is approximately $6.12 per ERU on an annual basis, which equates to an 2.50% increase.  This rate increase is consistent with previous year’s cash flow analyses.

RECOMMENDATION

The Department of Public Works and Finance Department staff recommend establishing the 2025 Storm Water Utility rate at $20.32 per ERU per month ($243.84 per ERU per year) to fund all activities in the approved 2025 CIP Budget and the proposed 2025 Operating Budget.  It is recommended the rate go into effect on January 1, 2025.

Attachments RES 24-684 Res 24-684 2024 Oshkosh WSSW Utilities CF Analysis Final

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