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City of Whitefish Department of Public Works 1005 W. 10TH Street, PO Box 158 Whitefish, MT 59937 (406) 863-2460 Fax (406) 863-2419 August 13, 2019 Mayor Muhlfeld and City Councilors City of Whitefish Whitefish, Montana Council Order to Begin Utility Rate Hearing Process Consistent with 69-7-111(MCA) Introduction/History The City of Whitefish provides water service to approximately 3,250 residential customers and 320 commercial customers within City limits, as well as 68 residential and 7 commercial customers located outside of City limits. Wastewater service is provided to approximately 3,530 customer accounts within City limits and 106 customer accounts located outside of City limits. It is recommended that municipalities complete a comprehensive rate study every 3 to 5 years, or if a major change to utility operations or expenses are planned. Meeting both of these criteria, the City of Whitefish retained AE2S to complete a Water and Wastewater Financial Plan and Rate Structure Study in May 2015. The first rate increase from this rate study went into effect in October 2016. Current Report To evaluate the equitability of the existing rate structure, a Cost of Service Analysis (COSA) was completed by AE2S to measure the cost attributable to each user class against the amount of revenue provided by each user class. The COSA comparison is made based on cost and revenue percentages calculated for a representative Test Year. For the purpose of their analysis, FY16 budget and capital expenditures were used as the basis for the Test Year. The FY16 water rates were applied to projected account and flow figures to develop Test Year revenues. The results demonstrate the difference between cost and revenue and were used to develop a recommended rate approach that would work to align COSA allocated costs and revenues generated from each user class through the 2017 to 2021 planning period for water, and the 2017 to 2026 planning period for wastewater. ---PAGE BREAK--- Order to Begin Utility Rate Hearing Process August 13, 2019 Page I 2 of 2 Since that time, significant capital needs for water have been identified and a final funding arrangement for the WWTP has been solidified. As a result, the City has worked with AE2S over the past several months on updating the rate models for Water and Wastewater developed as part of the 2015 project. Financial Requirement To address cost of service inequities, support the funding of target reserve levels, and achieve overall revenue adequacy for the Water Utility, rate adjustments for the period of 2017 through 2021 were projected. To be conservative, reductions to irrigation water use were also assumed to recognize the increased rates. For the Wastewater Utility, rate adjustments for the period of 2017 through 2026 were projected. Based on preliminary engineering estimates, new debt associated with this wastewater facility upgrades are anticipated to be approximately $19M, and new debt related to water capacity and storage project are anticipated to be approximately $17M. The water and wastewater rates for the specified periods are shown on the attached handout. Recommendation 69-7-111(MCA) requires the City Council to order a public hearing when it is considering imposing a utility rate change to its customers. Based on the findings of the Water and Wastewater Financial Plan and Rate Studies, dated March 2016, and the recent evaluation conducted to update these findings, it is the recommendation of the Public Works Department and the Finance Department that Council pass motion to order that a public hearing be held on Monday September 16, 2019 to consider a rate increase. The following publication schedule is proposed in order to comply with 69-7-111(MCA): Direct Mailing: Monday August 26, 2019 Publication 1: Wednesday August 28,2019 Publication 2: Wednesday September 4, 2019 Publication 3: Wednesday September 11, 2019 The proposed rate increases will be distributed to council at the meeting on 8/19/2019. Sincerely, Craig Workman, P.E. Director of Public Works ---PAGE BREAK--- City of Whitefish Water Financial Plan and Rate Study Summary of Water Bill Impacts based on Rate Projections March 15, 2016 2017 2018 2019 2020 2021 $/Mth Increase from 2016 $/Mth Increase from 2016 $/Mth Increase from 2016 $/Mth Increase from 2016 $/Mth Increase from 2016 Residential - 5/8" Inside 4,000 40.53 $ 0.25 $ 0.55 $ 0.85 $ 1.15 $ 1.45 $ Inside Low Income 4,000 21.89 $ 0.09 $ 0.19 $ 0.19 $ 0.29 $ 0.39 $ PZ 5,500 55.81 $ 2.78 $ 5.72 $ 8.13 $ 10.71 $ 13.38 $ Outside 4,000 55.01 $ 0.35 $ 0.65 $ 0.95 $ 1.25 $ 1.55 $ Outside Low Income 4,000 31.05 $ 0.11 $ 0.21 $ 0.21 $ 0.31 $ 0.41 $ Residential - 3/4" Inside 5,000 56.28 $ 0.32 $ 0.72 $ 1.12 $ 1.52 $ 1.92 $ Inside Low Income 5,000 28.77 $ 0.13 $ 0.23 $ 0.33 $ 0.43 $ 0.53 $ PZ 6,000 72.50 $ 3.60 $ 7.37 $ 10.42 $ 13.55 $ 16.87 $ Outside 5,000 74.97 $ 0.45 $ 0.95 $ 1.45 $ 1.95 $ 2.45 $ Outside Low Income 5,000 40.35 $ 0.17 $ 0.27 $ 0.37 $ 0.47 $ 0.67 $ Commercial Inside - 1" 100,000 444.09 $ 0.54 $ 1.04 $ 1.54 $ 2.04 $ 2.54 $ Outside - 1" 70,000 472.11 $ 0.67 $ 1.37 $ 2.07 $ 2.77 $ 3.47 $ Inside - 2" 680,000 2,929.69 $ 0.02 $ 0.02 $ 0.02 $ 0.02 $ 0.02 $ Outside - 2" 1,100,000 6,648.02 $ 0.05 $ 0.05 $ 0.05 $ 0.05 $ 0.05 $ Irrigation Inside - 5/8" 10,000 35.48 $ 5.37 $ 7.28 $ 9.39 $ 10.98 $ 12.28 $ PZ - 5/8" 10,000 49.76 $ 12.49 $ 21.78 $ 30.18 $ 39.78 $ 50.76 $ Inside - 3/4" 10,000 40.21 $ 4.34 $ 6.25 $ 8.56 $ 10.25 $ 11.55 $ PZ - 3/4" 16,000 78.18 $ 16.03 $ 30.75 $ 44.25 $ 59.37 $ 76.80 $ Outside - 3/4" 33,000 164.53 $ 21.94 $ 32.31 $ 43.37 $ 51.13 $ 57.36 $ Inside - 1" 27,000 93.04 $ 10.12 $ 14.74 $ 19.64 $ 23.11 $ 25.91 $ PZ - 1" 18,000 99.50 $ 16.00 $ 32.01 $ 47.51 $ 64.67 $ 84.41 $ Outside - 1" 6,000 59.38 $ 4.01 $ 5.83 $ 7.75 $ 9.10 $ 10.16 $ Inside - 1.5" 105,000 325.67 $ 39.11 $ 57.10 $ 76.15 $ 89.62 $ 100.13 $ Inside - 2" 130,000 432.68 $ 48.45 $ 70.72 $ 94.31 $ 110.99 $ 124.00 $ Avg Gallons Existing Bill FY16 Page 1 of 4 ---PAGE BREAK--- City of Whitefish Water Financial Plan and Rate Study Summary of Water Bill Impacts based on Rate Projections March 15, 2016 2017 2018 2019 2020 2021 % Increase from 2016 % Increase from 2016 % Increase from 2016 % Increase from 2016 % Increase from 2016 Residential - 5/8" Inside 4,000 40.53 $ 0.6% 1.4% 2.1% 2.8% 3.6% Inside Low Income 4,000 21.89 $ 0.4% 0.9% 0.9% 1.3% 1.8% PZ 5,500 55.81 $ 5.0% 10.2% 14.6% 19.2% 24.0% Outside 4,000 55.01 $ 0.6% 1.2% 1.7% 2.3% 2.8% Outside Low Income 4,000 31.05 $ 0.3% 0.7% 0.7% 1.0% 1.3% Residential - 3/4" Inside 5,000 56.28 $ 0.6% 1.3% 2.0% 2.7% 3.4% Inside Low Income 5,000 28.77 $ 0.5% 0.8% 1.2% 1.5% 1.9% PZ 6,000 72.50 $ 5.0% 10.2% 14.4% 18.7% 23.3% Outside 5,000 74.97 $ 0.6% 1.3% 1.9% 2.6% 3.3% Outside Low Income 5,000 40.35 $ 0.4% 0.7% 0.9% 1.2% 1.7% Commercial Inside - 1" 100,000 444.09 $ 0.1% 0.2% 0.3% 0.5% 0.6% Outside - 1" 70,000 472.11 $ 0.1% 0.3% 0.4% 0.6% 0.7% Inside - 2" 680,000 2,929.69 $ 0.0% 0.0% 0.0% 0.0% 0.0% Outside - 2" 1,100,000 6,648.02 $ 0.0% 0.0% 0.0% 0.0% 0.0% Irrigation Inside - 5/8" 10,000 35.48 $ 15.1% 20.5% 26.5% 30.9% 34.6% PZ - 5/8" 10,000 49.76 $ 25.1% 43.8% 60.6% 79.9% 102.0% Inside - 3/4" 10,000 40.21 $ 10.8% 15.5% 21.3% 25.5% 28.7% PZ - 3/4" 16,000 78.18 $ 20.5% 39.3% 56.6% 75.9% 98.2% Outside - 3/4" 33,000 164.53 $ 13.3% 19.6% 26.4% 31.1% 34.9% Inside - 1" 27,000 93.04 $ 10.9% 15.8% 21.1% 24.8% 27.8% PZ - 1" 18,000 99.50 $ 16.1% 32.2% 47.7% 65.0% 84.8% Outside - 1" 6,000 59.38 $ 6.8% 9.8% 13.0% 15.3% 17.1% Inside - 1.5" 105,000 325.67 $ 12.0% 17.5% 23.4% 27.5% 30.7% Inside - 2" 130,000 432.68 $ 11.2% 16.3% 21.8% 25.7% 28.7% Avg Gallons Existing Bill FY16 Page 2 of 4 ---PAGE BREAK--- City of Whitefish Wastewater Financial Plan and Rate Study Summary of Wastewater Bill Impacts based on Rate Projections March 15, 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Increase from 2016 Increase from 2016 Increase from 2016 Increase from 2016 Increase from 2016 Increase from 2016 Increase from 2016 Increase from 2016 Increase from 2016 Increase from 2016 SC-1 Inside 3,000 31.82 $ 3.31 $ 7.29 $ 12.13 $ 17.20 $ 23.19 $ 24.53 $ 25.92 $ 27.33 $ 28.79 $ 30.28 $ Inside Low Income 3,000 15.94 $ 2.83 $ 6.32 $ 10.66 $ 15.21 $ 20.67 $ 21.45 $ 22.27 $ 23.10 $ 23.96 $ 24.83 $ Outside 3,000 41.11 $ 4.85 $ 10.74 $ 17.95 $ 25.48 $ 34.44 $ 35.30 $ 36.19 $ 37.10 $ 38.04 $ 39.01 $ Inside 6,000 42.47 $ 5.98 $ 13.29 $ 22.30 $ 31.75 $ 43.02 $ 44.96 $ 46.98 $ 49.02 $ 51.14 $ 53.29 $ Inside Low Income 6,000 26.59 $ 5.50 $ 12.32 $ 20.83 $ 29.76 $ 40.50 $ 41.88 $ 43.33 $ 44.79 $ 46.31 $ 47.84 $ Outside 6,000 57.49 $ 8.96 $ 19.98 $ 33.61 $ 47.86 $ 64.95 $ 65.81 $ 66.70 $ 67.61 $ 68.55 $ 69.52 $ SC-2 Inside 3,000 55.95 $ 3.39 $ 7.08 $ 11.11 $ 15.50 $ 20.32 $ 22.27 $ 24.29 $ 26.35 $ 28.48 $ 30.65 $ Inside Low Income 3,000 28.20 $ 2.56 $ 5.40 $ 8.55 $ 12.03 $ 15.91 $ 16.89 $ 17.91 $ 18.94 $ 20.01 $ 21.09 $ Outside 3,000 67.61 $ 4.39 $ 9.18 $ 14.43 $ 20.20 $ 26.55 $ 28.92 $ 31.34 $ 33.83 $ 36.40 $ 39.01 $ Inside 6,000 74.88 $ 5.67 $ 11.91 $ 18.79 $ 26.36 $ 34.75 $ 37.36 $ 40.07 $ 42.82 $ 45.67 $ 48.56 $ Inside Low Income 6,000 47.13 $ 4.84 $ 10.23 $ 16.23 $ 22.89 $ 30.34 $ 31.98 $ 33.69 $ 35.41 $ 37.20 $ 39.00 $ Outside 6,000 93.74 $ 7.54 $ 15.84 $ 25.02 $ 35.20 $ 46.50 $ 49.80 $ 53.15 $ 56.60 $ 60.16 $ 63.76 $ SC-3 Inside 3,000 69.75 $ 4.48 $ 8.78 $ 13.42 $ 18.44 $ 23.86 $ 27.97 $ 31.38 $ 34.89 $ 38.54 $ 42.30 $ Inside Low Income 3,000 37.37 $ 3.50 $ 6.80 $ 10.41 $ 14.36 $ 18.68 $ 21.66 $ 23.91 $ 26.23 $ 28.65 $ 31.14 $ Inside 6,000 96.33 $ 7.66 $ 14.93 $ 22.84 $ 31.46 $ 40.84 $ 47.56 $ 52.83 $ 58.26 $ 63.92 $ 69.75 $ Inside Low Income 6,000 63.95 $ 6.68 $ 12.95 $ 19.83 $ 27.38 $ 35.66 $ 41.25 $ 45.36 $ 49.60 $ 54.03 $ 58.59 $ Grinder Inside 3,000 94.35 $ 4.86 $ 10.01 $ 15.51 $ 21.36 $ 27.59 $ 33.04 $ 36.86 $ 40.80 $ 44.86 $ 49.04 $ Inside Low Income 3,000 53.90 $ 3.64 $ 7.54 $ 11.75 $ 16.27 $ 21.14 $ 25.18 $ 27.55 $ 30.00 $ 32.52 $ 35.12 $ Inside 6,000 134.76 $ 8.10 $ 16.73 $ 26.01 $ 35.94 $ 46.58 $ 55.60 $ 61.31 $ 67.20 $ 73.27 $ 79.52 $ Inside Low Income 6,000 94.31 $ 6.88 $ 14.26 $ 22.25 $ 30.85 $ 40.13 $ 47.74 $ 52.00 $ 56.40 $ 60.93 $ 65.60 $ STEP Inside 3,000 106.02 $ 6.69 $ 13.91 $ 19.32 $ 25.00 $ 30.97 $ 37.24 $ 43.84 $ 50.77 $ 52.90 $ 55.09 $ Resthaven 3,000 124.59 $ 8.26 $ 17.20 $ 23.80 $ 30.72 $ 38.00 $ 45.67 $ 53.74 $ 62.23 $ 64.52 $ 66.88 $ Inside 6,000 155.97 $ 11.70 $ 24.41 $ 33.45 $ 42.97 $ 53.02 $ 63.61 $ 74.80 $ 86.59 $ 88.72 $ 90.91 $ Resthaven 6,000 189.00 $ 14.71 $ 30.73 $ 42.01 $ 53.88 $ 66.41 $ 79.66 $ 93.64 $ 108.40 $ 110.69 $ 113.05 $ Big Mountain Big Mountain 1,470,000 12,876.28 $ 1,545.68 $ 3,267.82 $ 4,872.43 $ 6,638.81 $ 8,581.66 $ 9,863.08 $ 10,777.08 $ 11,720.56 $ 11,723.32 $ 11,726.16 $ Avg Gallons Existing Bill FY16 Page 3 of 4 ---PAGE BREAK--- City of Whitefish Wastewater Financial Plan and Rate Study Summary of Wastewater Bill Impacts based on Rate Projections March 15, 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 % Increase from 2016 % Increase from 2016 % Increase from 2016 % Increase from 2016 % Increase from 2016 % Increase from 2016 % Increase from 2016 % Increase from 2016 % Increase from 2016 % Increase from 2016 SC-1 Inside 3,000 31.82 $ 10.4% 22.9% 38.1% 54.1% 72.9% 77.1% 81.5% 85.9% 90.5% 95.2% Inside Low Income 3,000 15.94 $ 17.8% 39.6% 66.9% 95.4% 129.7% 134.6% 139.7% 144.9% 150.3% 155.8% Outside 3,000 41.11 $ 11.8% 26.1% 43.7% 62.0% 83.8% 85.9% 88.0% 90.2% 92.5% 94.9% Inside 6,000 42.47 $ 14.1% 31.3% 52.5% 74.8% 101.3% 105.9% 110.6% 115.4% 120.4% 125.5% Inside Low Income 6,000 26.59 $ 20.7% 46.3% 78.3% 111.9% 152.3% 157.5% 163.0% 168.4% 174.2% 179.9% Outside 6,000 57.49 $ 15.6% 34.8% 58.5% 83.2% 113.0% 114.5% 116.0% 117.6% 119.2% 120.9% SC-2 Inside 3,000 55.95 $ 6.1% 12.7% 19.9% 27.7% 36.3% 39.8% 43.4% 47.1% 50.9% 54.8% Inside Low Income 3,000 28.20 $ 9.1% 19.1% 30.3% 42.7% 56.4% 59.9% 63.5% 67.2% 71.0% 74.8% Outside 3,000 67.61 $ 6.5% 13.6% 21.3% 29.9% 39.3% 42.8% 46.4% 50.0% 53.8% 57.7% Inside 6,000 74.88 $ 7.6% 15.9% 25.1% 35.2% 46.4% 49.9% 53.5% 57.2% 61.0% 64.9% Inside Low Income 6,000 47.13 $ 10.3% 21.7% 34.4% 48.6% 64.4% 67.9% 71.5% 75.1% 78.9% 82.7% Outside 6,000 93.74 $ 8.0% 16.9% 26.7% 37.6% 49.6% 53.1% 56.7% 60.4% 64.2% 68.0% SC-3 Inside 3,000 69.75 $ 6.4% 12.6% 19.2% 26.4% 34.2% 40.1% 45.0% 50.0% 55.3% 60.6% Inside Low Income 3,000 37.37 $ 9.4% 18.2% 27.9% 38.4% 50.0% 58.0% 64.0% 70.2% 76.7% 83.3% Inside 6,000 96.33 $ 8.0% 15.5% 23.7% 32.7% 42.4% 49.4% 54.8% 60.5% 66.4% 72.4% Inside Low Income 6,000 63.95 $ 10.4% 20.3% 31.0% 42.8% 55.8% 64.5% 70.9% 77.6% 84.5% 91.6% Grinder Inside 3,000 94.35 $ 5.2% 10.6% 16.4% 22.6% 29.2% 35.0% 39.1% 43.2% 47.5% 52.0% Inside Low Income 3,000 53.90 $ 6.8% 14.0% 21.8% 30.2% 39.2% 46.7% 51.1% 55.7% 60.3% 65.2% Inside 6,000 134.76 $ 6.0% 12.4% 19.3% 26.7% 34.6% 41.3% 45.5% 49.9% 54.4% 59.0% Inside Low Income 6,000 94.31 $ 7.3% 15.1% 23.6% 32.7% 42.6% 50.6% 55.1% 59.8% 64.6% 69.6% STEP Inside 3,000 106.02 $ 6.3% 13.1% 18.2% 23.6% 29.2% 35.1% 41.4% 47.9% 49.9% 52.0% Resthaven 3,000 124.59 $ 6.6% 13.8% 19.1% 24.7% 30.5% 36.7% 43.1% 49.9% 51.8% 53.7% Inside 6,000 155.97 $ 7.5% 15.7% 21.4% 27.6% 34.0% 40.8% 48.0% 55.5% 56.9% 58.3% Resthaven 6,000 189.00 $ 7.8% 16.3% 22.2% 28.5% 35.1% 42.1% 49.5% 57.4% 58.6% 59.8% Big Mountain Big Mountain 1,470,000 12,876.28 $ 12.0% 25.4% 37.8% 51.6% 66.6% 76.6% 83.7% 91.0% 91.0% 91.1% Avg Gallons Existing Bill FY16 Page 4 of 4 ---PAGE BREAK--- $ ,-./.0001234567689:;<9=>;?>9<65@;<>A46<>B;..;5C=67>1DE ! 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