Staff Report: Fees and Charges Bylaw No. 958, 2016, Amendment Bylaw No. 1028, 2019
Report recommending a 3.8% decrease in sewer user rates to meet the 2019 revenue target without over-collecting.
TOWN OF VIEW ROYAL COUNCIL REPORT
TO: Council
DATE: August 29, 2019
FROM: Steven Vella, Manager of Accounting
MEETING DATE: September 3, 2019
RECOMMENDATION:
THAT Council approve a 3.8% decrease in sewer user rates and that the Fees and Charges Bylaw No. 958, 2016, Amendment Bylaw No. 1028, 2019 be given first, second, and third readings.
CHIEF ADMINISTRATIVE OFFICER’S COMMENTS:
I concur with the recommendation.
DIRECTOR OF ENGINEERING’S COMMENTS:
I concur with the recommendation.
PURPOSE OF REPORT:
To consider an amendment to Fees and Charges Bylaw No. 958, 2016 to permit the collection of sewer user fees in accordance with the 2019-2023 Financial Plan revenue target and to outline the subsequent impact to property owners.
TIME CRITICAL:
The amending bylaw must receive final reading and adoption prior to mailing the 2019 sewer user fee invoices. If the first three readings are completed at the September 3, 2019 Council meeting, adoption can occur at the September 17, 2019 Council meeting, with invoices mailed early October. Property owners will have until November 29, 2019 to pay the invoiced amount, with any balance remaining at December 31, 2019 transferred to taxes in arrears.
BACKGROUND/DISCUSSION:
Per Community Charter Section 194, Council may, by bylaw, impose a fee payable in respect of a municipal service. The municipality must make available to the public, on request, a report respecting how a fee imposed under this section was determined.
The 2019-2023 Financial Plan established a sewer user fee revenue target for 2019 of $842,450 representing an increase in the sewer operating budget of 1.5%. Sewer user fee rates are calculated so that 15% of the total revenue is collected through a flat rate per single family dwelling equivalent (SFE) and the remaining 85% through a cubic metre volumetric rate based on the water consumption from the preceding October to April period (inclusive).
The total billable water consumption for the period October 2018 to April 2019 is 472,688 m³ and the total number of single-family equivalents is 6,180. Analysis shows that total water consumption has increased by 6.2% while the total SFE units increased 3.3%. Since the incremental increase in the annual sewer operating budget is 1.5%, both rates must decrease to avoid collecting more revenue than is required on a cost-recovery basis.
The following table shows the sewer user fee for the typical single-family property owner from 2016 to 2018, with the 2019 projection based on a 3.8% rate decrease.
| Sanitary Sewer user fee | 2016 $ | 2017 $ | 2018 $ | Proposed 2019 $ | Change $ | Change % |
|---|---|---|---|---|---|---|
| Flat rate | 20.47 | 20.47 | 21.08 | 20.27 | -0.81 | -3.8 |
| Per cubic meter | 1.54 | 1.54 | 1.59 | 1.53 | -0.06 | -3.8 |
| Revenue per SFE (based on average consumption) | 164.77 | 159.84 | 160.73 | 156.90 | -3.83 | -2.4 |
| Total revenue | 793,451 | 836,546 | 833,773 | 848,481 | +14,708 | +1.8 |
An amendment to the Fees and Charges Bylaw (No. 958) Schedule A is required to update the rates. A draft bylaw is attached as Appendix A.
The 2019 capital plan included implementation of the Vadim Utility Billing module (UB) for administration of sewer user fee billing. This module will result in a new invoice format and provide many benefits to View Royal and its residents including: easily accessible information regarding seasonal water consumption and yearly variances, more detail as to how a fee was calculated, as well as the ability for customers to receive bills via email and access their account information online. Prior to issuing the annual bills in October, staff will inform utility customers through direct mail, the newsletter and social media of the change in their utility bills and the availability of electronic access to their utility bill and account information. Messaging would also include information about how their utility bill is calculated and how consumption affects the amount they pay.
ALTERNATIVES:
Council may choose to decrease sewer rates by 3.8%, keep rates at 2018 levels, or decrease by some other amount, such as 1.8%. Below are summaries of each suggested alternative rate scenarios.
3.8% rate decrease (recommended):
| Consumption (based on m³) | Flat rate (based on SFEs) | Total Revenue | |
|---|---|---|---|
| Quantity | 472,688 | 6,180 | |
| Rate | $1.53 | $20.27 | |
| Revenue | $723,212 | $125,269 | $848,481 |
| Budget target | $842,450 | ||
| Projected revenue surplus | $6,031 |
1.8% rate decrease:
| Consumption (based on m³) | Flat rate (based on SFEs) | Total Revenue | |
|---|---|---|---|
| Quantity | 472,688 | 6,180 | |
| Rate | $1.56 | $20.67 | |
| Revenue | $737,393 | $127,741 | $865,134 |
| Budget target | $842,450 | ||
| Projected revenue surplus | $22,684 |
No change to rates:
| Consumption (based on m³) | Flat rate (based on SFEs) | Total Revenue | |
|---|---|---|---|
| Quantity | 472,688 | 6,180 | |
| Rate | $1.59 | $21.08 | |
| Revenue | $751,573 | $130,274 | $881,847 |
| Budget target | $842,450 | ||
| Projected revenue surplus | $39,397 |
Staff recommends a 3.8% rate decrease in order to meet the budgeted revenue requirement for 2019 without collecting more revenue than required on a cost-recovery basis.
RECOMMENDATION:
THAT Council approve a 3.8% decrease in sewer user rates and that the Fees and Charges Bylaw No. 958, 2016, Amendment Bylaw No. 1028, 2019 be given first, second, and third readings.
SUBMITTED BY:
S. Vella, Manager of Accounting
REVIEWED BY:
D. Christenson, Director of Finance
Document Images
(3)
