cover
TO: Mayor Richard C. Irvin
FROM: Christopher A Minick
DATE: May 19, 2023
SUBJECT:
An Ordinance Amending Article II of Chapter 48 of the City of Aurora Code of Ordinances Entitled “Municipal Utility Service” (Water and Sewer Rates) and establishing rates for said services.
PURPOSE:
To obtain the City Council’s approval of a proposed ordinance that would adjust the city’s rates for water and sewer service on July 1, 2023 and 2024.
BACKGROUND:
For the past several years, the city has adhered to the practice of adjusting its rates for water and sewer service moderately each year rather than imposing larger increases at irregular intervals. The City has a history of making rate adjustment decisions taking into account prevailing economic conditions. The City froze utility rates during 2020 and implemented a modest rate adjustment in 2021 to respect the financial hardships experienced by our residents and businesses during the COVID pandemic.
Operating and capital maintenance needs did not decline during that period, and in fact the City experienced significant cost increases in certain areas such as chemicals, electricity, and system maintenance. The cost of chemicals has increased by 90% since 2021 and budget adjustments are frequently necessary to account for these increases. The City needs to adjust rates to keep pace with the cost increases that have occurred since the pandemic when rates were frozen and adjustments kept to a very low level.
Staff is proposing modest rate adjustments that address operating needs of the system and provide for implementation of 70% of the Capital Improvement Plan. This rate structure allows for a prudent level of funding for system operations and maintenance while simultaneously respecting and acknowledging the recent inflationary trends that our residents have been experiencing. This structure is based on a cost of service model as described in the attached narrative. The cost of service model was provided by a previous rate study consultant.
A history of the city’s Class 1 water and sewer service rates per 100 cubic feet of water consumed (i.e., the consumption charge rate) since 2013 is shown below.
Amount of Percentage
Effective Date Rate* Increase Increase
September 1, 2013* $4.40 $0.03 0.69%
July 1, 2014* $4.65 $0.25 5.68%
July 1, 2015* $4.80 $0.15 3.23%
July 1, 2016* $4.95 $0.15 3.13%
July 1, 2017* $5.05 $0.10 2.02%
July 1, 2018* $5.15 $0.10 1.98%
July 1, 2019 $5.35 $0.20 3.88%
July 1, 2020** $5.35 $0.00 0.0%
July 1, 2021 $5.50 $0.15 2.80%
July 1, 2022 $5.80 $0.30 5.45%
July 1, 2023 $6.20 $0.40 6.90%
July 1, 2024 $6.60 $0.40 6.45%
*Applicable to residential customers.
**Rate Deferred due to COVID 19 pandemic
DISCUSSION:
In order to address the anticipated operating and capital needs of the water and sewer system, the Water & Sewer Fund requires an aggregate revenue increase of 6% for 2023-24 and 6% for 2024-25. The current water rate structure includes a basic fixed fee (availability charge) and a water use/consumption rate (volume rate). The current rates and proposed rates as of July 1, 2023 and 2024 for the availability and volume charges are as follows:
|
|
|
|
|
Current |
|
Proposed |
|
Proposed |
|
|
|
Rate Type |
|
7/1/22 |
|
7/1/23 |
|
7/1/24 |
|
|
|
|
|
|
|
|
|
|
|
Availability Charge |
|
|
|
$21.05 |
|
$21.05 |
|
$21.05 |
|
|
|
|
|
|
|
|
|
|
|
Class 1 Volume Charge |
|
|
|
|
|
|
|
|
|
|
Water Service |
|
|
|
|
|
|
|
|
|
|
Residential |
|
$4.30 |
|
$4.60 |
|
$4.90 |
|
|
|
Non-Residential |
|
$4.10 |
|
$4.55 |
|
$5.00 |
|
|
Sewer Service |
|
|
$1.50 |
|
$1.60 |
|
$1.70 |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
Residential |
|
$5.80 |
|
$6.20 |
|
$6.60 |
|
|
|
Non-Residential |
|
$5.60 |
|
$6.15 |
|
$6.70 |
A typical household water customer consumes approximately 12 ccf per bi-monthly billing period. Currently, this equates to a bill, on average, of about $90.65. With the proposed rates, this will increase by $4.80 to $95.45 per bi-monthly bill effective July 1, 2023. This customer would see their bill increase to $100.25 effective July 1, 2024 under the proposed rate structure.
Because the rate study is proposing no increase to the availability charge of $21.05, customers who use less than the average will see a lower impact to their bill. For instance a customer who uses 600 cubic feet of water will see their bill change from $55.85 to $58.25 which represents an increase of $2.40 per bill.
Seniors qualifying for the Senior Exemption would see an even smaller increase in their bills. The Senior Exemption provides a credit of 50% of volume charges for water and service. Beginning July 1, 2023 a qualifying senior would experience a bill changing from its current level of $38.45 to $39.65, an increase of $1.20 each 2 months. Effective July 1, 2024, the bill for qualifying senior citizens would increase to $40.85 every 2 months assuming 600 cubic feet of water use.
The proposed rates would provide an estimated $2.287 million additional revenue in the next year and $2.425 million in the following year.
Consistent with the City Council's efforts to remove "temporary" information such as water and sewer rates from the City Code, this ordinance will continue the practice of adopting the water and sewer rates by exhibit (which will not be codified) and remove all previously established water and sewer rates from the Code altogether. The attached Exhibit A sets forth the rates referenced herein for July 1, 2023 and July 1, 2024.
IMPACT STATEMENT:
Approval of this ordinance will provide for the equitable increase in water and sewer rates to properly fund water and sewer operations and prudently fund capital/infrastructure replacement.
RECOMMENDATIONS:
That the City Council approve the proposed, attached ordinance providing for adjustments to the city’s rates for water and sewer service on July 1, 2023 and 2024.
cc: Finance Committee
CITY OF AURORA, ILLINOIS
ORDINANCE NO. _________
DATE OF PASSAGE ________________
title
An Ordinance amending Section 48-57 of the Code of Ordinances, City of Aurora, effective July 1, 2023, and establishing the utility rates for water and sewer services provided within the City thereafter
body
WHEREAS, the City of Aurora has a population of more than 25,000 persons and is, therefore, a home rule unit under subsection (a) of Section 6 of Article VII of the Illinois Constitution of 1970; and
WHEREAS, subject to said Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs for the protection of the public health, safety, morals, and welfare; and
WHEREAS, in furtherance of its home rule powers, the City Council finds that it is necessary and desirable for the City to from time-to-time amend its ordinances regulating water and sewer rates and usage.
NOW, THEREFORE, BE IT ORDAINED by the City Council of the City of Aurora, Illinois, as follows: that the rates for water and sewer services set forth in Exhibit A shall be and hereby are established and shall take effect as described therein; and further
BE IT ORDAINED, that this ordinance shall be in full force and effect, and shall be controlling, upon its passage and approval; and further
BE IT ORDAINED, that all ordinances or parts of ordinances thereof in conflict herewith are hereby repealed to the extent of any such conflict; and further
BE IT ORDAINED, that any Section or provision of this ordinance that is construed to be invalid or void shall not affect the remaining Sections or provisions which shall remain in full force and effect thereafter.