City adopts new water, sewer rates

The Sisters City Council approved adoption of new methodologies and rates for water and sewer system development charges (SDCs), effective May 10, that will recover the actual costs of providing the services. The City recently updated its water and sewer master plans, which provided an opportune time to update its SDCs.

Water and sewer SDCs were last updated 11 years ago in 2007, and were based on a "plumbing fixture unit" basis, a cumbersome and inaccurate method usually used when there are no meters. Donovan Enterprises was hired to conduct the new review and update.

A water- and sewer-rate study, conducted in November 2017 by FCS Group, resulted in proposed fee increases to both the water and sewer rates for existing customers of two percent per year for the funds as a whole, effective July 1, 2018.

A two percent increase in utility rates will result in an estimated $24,000 to the water fund. For the average residential customer with a three-quarter-inch meter (95 percent of city meters), the base water rate will increase from $15.50 per month to $16.05, with the same charge of $1 per 100 cubic feet volume rate. Larger meters will have proportionally higher base rates.

The key objectives of the study done by Donovan included analyzing capital project costs, existing fund balances, and required SDC revenues to keep up with growth, as well as determining the most appropriate and defensible fee methodology.

SDCs are one-time charges for new development or expansion of existing development, and are assessed at the time of development approval or increased usage of the system. The fees are designed to recover costs of infrastructure capacity needed to serve new development. SDCs ensure that development is paying its way by providing a proportionate share of the cost of existing and planned/future capital facilities that serve the development property.

Water and sewer are only two of the SDC categories for which fees are charged on new development. The others are streets and parks, which are also directly impacted by growth. Sisters' total SDC charges are currently the lowest in the tri-county area at $9,910. Bend charges $22,520 per unit and La Pine is $10,534.

The newly adopted methodology for determining water and sewer SDCs is meter-based, with a flat fee established for each size of meter from three-quarter-inch to eight-inch. For a single-family residential unit with a three-quarter-inch meter the water SDC will increase $2 to $3,338 and the sewer SDC will increase $97 to $4,463. The sum of these maximum fees amounts to $7,701 per unit, $99 more than the current amount of $7,602. These increases still keep the total SDCs below $10,000 per unit, less than half of Bend's charges.

Donovan also recommended the City adopt a policy of reviewing SDCs every five years, with the ability to apply a cost adjustment index to the SDC rates annually if necessary to reflect changes in land and construction costs.

Two components have been considered for over 20 years when establishing water and wastewater (sewer) SDCs. The reimbursement fee considers the cost of existing facilities, prior contributions by existing users of those facilities, the value of the unused/available capacity, and generally accepted ratemaking principles. The objective is future system users contribute no more than an equitable share to the cost of existing facilities. The reimbursement fee can be spent on capital costs or debt service related to the systems for which the SDC is applied.

The improvement fee portion of the SDC is based on the cost of planned future facilities that expand the system's capacity to accommodate growth or increase its level of performance. The improvement SDC is calculated as a function of the estimated number of additional equivalent residential units to be served by the City's facilities over the planning period. The improvement fee is intended to protect existing customers from the cost burden and impact of expanding a system that is already adequate for their own needs in the absence of growth.

"The advantage of having a robust capital plan for all City services is that the City is able to keep up with the needs of population growth," according to Public Works Director Paul Bertagna.