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Water and Sewer Rate Increase Frequently Asked Questions City of Kalispell is proposing to increase the City’s water and sewer rates. The following information is intended to answer questions about these increases. WHY ARE WATER AND SEWER RATES BEING INCREASED AT THIS TIME? The City recently completed an update to the Water and Wastewater System Facility Plans. The Facility Plans identified numerous critical improvements necessary to ensure the future sustainability and reliability of both systems. The critical needs include the replacement and rehabilitation of aging infrastructure and to ensure compliance of required regulatory mandates to protect public health and safety. If approved by City Council, the rate increases enable the City to make important investments in the systems over the next few years, while also keeping up with the impacts of inflation in the general operation of the systems, and maintain our commitment to the City’s future growth and sustainability. WHEN IS THE LAST TIME WATER AND SEWER RATES WERE INCREASED IN KALISPELL? Water rates were last adjusted in 2013 and sewer rates were last adjusted in 2014. IF APPROVED WHEN WOULD THE RATE INCREASES GO INTO EFFECT? The rates would become effective June 1, 2020 (with the July 2020 billing cycle). Increases would be phased in over a seven-year period. WHY IS THERE A DIFFERENCE IN WATER AND SEWER RATE INCREASES? The water and sewer utilities are two separate funds that do not overlap. The proposed increases are designed to fund maintenance, operations, and specific infrastructure improvement projects as they are scheduled to occur over the next several years. The cost of the maintenance, operations, and projects are specific to each fund and the rates per fund are adjusted accordingly. ARE SPRINKLING/IRRIGATION RATES INCREASING? Yes. The City of Kalispell currently has a reduced rate for sprinkling/irrigating of lawns. The proposed rate increase eliminates the reduced sprinkling/irrigation rate and proposes a consumption rate that is the same for household and sprinkling use alike. You will not be charged sewer on your sprinkling. WHAT IS THE FIXED CHARGE? The fixed charge supports recurring utility expenses such as electricity, fuel, natural gas, insurance, rent, debt service, and employee costs and benefits. ---PAGE BREAK--- Page 2 of 4 WHAT IS THE CONSUMPTION CHARGE? The consumption charge is based on your metered water usage each month. You are billed for every 1,000 gallons of usage you consume each month. The sewer consumption charge is also based on flow/usage through the water meter. WHAT IS THE METER CHARGE? The meter charge is based on the size of your water meter (normally a ¾” meter for residential). The fee pays for the cost of replacing water meters when they reach the end of their service life. WHAT IS A METER HOSTING FEE? The City will be transitioning to an Advanced Metering Infrastructure (AMI) system and as part of this project, will be installing new “smart” water meters. These meters provide both you and the City with many benefits, including better tools to monitor our system, enhancing proactive maintenance, and ensuring that very little water is wasted from costly leaks or breaks. When your current water meter is changed out with a “smart” meter you will incur a hosting fee of $0.89 and you will have access to your water usage data 24/7. The online customer portal will show you how much water you’re using on a daily and hourly basis. You can set up water alerts that will notify you about continuous water flow that could be from an undetected leak. Knowing your daily and hourly water use can help you make informed decisions about using water efficiently. This can help you save money on your next water bill. WE ONLY USE OUR HOUSE PART OF THE YEAR, WHY DO WE HAVE TO PAY THE FIXED CHARGE YEAR-ROUND? Our water and sewer systems operate service 24 hours a day, 7 days a week, 365 days a year. System operation, maintenance and improvements must be completed throughout the year and these fixed costs are funded by water and sewer base rates. The rate structure is based on a cost of service analysis that includes these fixed costs to cover non-consumption expenses such as customer service and billing, debt payments, and maintenance and operation (M&O) of the water and sewer systems that benefit all of our customers on a year-round basis. Additionally, water and sewer rates cover infrastructure improvement, rehabilitation and replacement projects that are necessary to ensure safe, reliable, and continuous operation of our systems. HOW DID THE CITY DETERMINE THE AMOUNT OF THE PROPOSED WATER AND SEWER RATE ADJUSTMENTS? In 2019, the City hired HDR an experienced, independent engineering consultant in the water and sewer utility industry to conduct a cost of service study that examined current and future revenues, as well as evaluate operation and maintenance expenses, and determine an adequate funding level for Kalispell’s utilities. HDR began a comprehensive cost of service study to determine whether existing rates were sufficient to meet the system rehabilitation and replacement needs as well as the City’s operational costs for the water and sewer systems. Our rate structure was also assessed for compliance with industry best practices. ---PAGE BREAK--- Page 3 of 4 With the study now complete, the City has determined annual rate increases are necessary over the next seven years in order to continue providing reliable and sustainable sewer and water services into the future. The proposed increases to sewer and water rates are triggered by many factors including: • Identified infrastructure improvements necessary to address rehabilitation, replacement, and new demand utility projects • Significant escalation of construction costs • Inflationary increases in supply, material, labor and utility costs WHAT HAPPENS IF THE WATER AND SEWER RATE ADJUSTMENTS ARE NOT APPROVED? If the rate adjustments are not approved, the City will stop progression of planned capital improvement projects and roll back the timeline by which these necessary investments can occur. The City will see more frequent equipment and infrastructure failures resulting in increased service outages, spills and operational impacts. Costly replacement and emergency repairs will increase, along with regulatory non-compliance which leads to fines and eventual increases in costs from the postponement of required projects. Additionally, construction of water system improvements specifically focused on firefighting flow, capacity and availability will be delayed or outright canceled. HOW DO THE WATER AND SEWER RATE ADJUSTMENTS BENEFIT MY FAMILY AND ME? You benefit from the assurance your wastewater will be conveyed to the wastewater treatment plant, maintenance will be performed to minimize sewer backups and overflows that can damage your property, structures and contents. You benefit from the assurance that your delivered safe, high quality water to your home, businesses, and schools, and the water mains are maintained to deliver water on demand and capable to be used for fire protection. The prudent operations and maintenance of the water and sewer utilities protect you, the environment, public safety, and our water resources. The rate increases also allow for the City to maintain the current level of service by allowing for the replacement of aging infrastructure. This will minimize the need for larger future rate increases as a result of deferring infrastructure improvements. HOW WILL RATE AND FEE REVENUES BE USED, AND CAN THEY BE USED FOR ANY OTHER PURPOSES? State law requires that customer-based fees/revenues must be used only to pay the costs associated with operating and maintaining the water and sewer utilities in compliance with State and Federal regulations. Revenues may not be used to pay for other City services such as streets, parks, or snowplowing. WHAT IS THE DIFFERENCE BETWEEN WATER AND SEWER UTILITY RATES AND IMPACT FEES? Revenue from utility rates support the costs of maintaining, operating and supporting our existing system, funding for capital projects, and covering debt service on the bonds issued to fund the capital improvement program. Impact Fees are a one-time fee applied to new construction to provide revenue to the utility to finance all or a part of the capital improvements needed to serve and accommodate new customer growth. ---PAGE BREAK--- Page 4 of 4 WHAT CAN I DO TO KEEP MY UTILITY BILL AS LOW AS POSSIBLE? The amount of water you use affects your usage charge. When you use less water, you pay less. For most households, the majority of the water is used indoors. You can get the biggest water savings in your home by installing efficient fixtures and fixing leaks. A constantly running toilet may waste about 8 gallons per hour, or 200 gallons per day. Left unnoticed, a running toilet could waste over 6,000 gallons per month. Ensure you are only watering the lawn when needed and adjust your sprinkler system, so you are not watering the gutters. WHAT IF I STILL HAVE QUESTIONS? The City will be hosting an Open House to answer any questions on the proposed rate increases on Tuesday, February 18, 2020 from 11:00 a.m. – 1:30 p.m. and 5:00 p.m. – 6:30 p.m. in the Council Chambers at City Hall, or you may call (406) 758-7720.