Mr. Bennett, Deputy Director for Support Services, asked WMAC and
audience members to let him know during his presentation if they
had questions/comments. He first provided background information
on the County's sewerage facilities and conveyance system, capacity
expansion projects and information about the Departments FY 2003-04
Operating and Capital Budgets. Mr. Bennett outlined what had been
issued to date from the 1997 $105 million Bond Authorization.
The Department has basically met the 1997 Schedule for bond sales.
To date, WWM has spent approximately $81.1 million of the voter
authorized bond money on Capital Improvement Program (CIP) projects,
and will use the remaining $23.9 million of bond authorization
to finance specific projects through low interest loans with the
Water Infrastructure Finance Authority (WIFA). Mr. Bennett said
the County's Bond Advisory Committee recommended approval of the
Department's $150 Million request to address future funding needs
in a proposed 2004 Bond Authorization Election to the Board of
Supervisors. If approved by the Board, the voter bond election
would take place sometime in May 2004. The Department is proposing
to spend approximately $30 million per year of bond funds in each
of the next five years split equally between projects to rehabilitate
the existing sewerage system and projects to expand sewer capacity,
if voters approve the 2004 bonds.
Mr. Bennett then provided background information on the Department's
analysis and identification of current sewerage system rehabilitation
needs.
He stated that repair of the Speedway sinkholes and the accelerated
rehabilitation of the Northwest Outfall Interceptor (NWOI) had
a negative impact on the Department's budget and depleted its
cash reserves. The Financial Plan recommends establishment of
an emergency reserve to reduce the financial affect of any future
such events.
Mr. Bennett also advised that Environmental Protection Agency (EPA)
regulations, including the Capacity Management Operations and
Maintenance Guidance (CMOM), requires WWM to prevent all sanitary
sewer overflows (SSOs) from the County's sewers. In order to minimize
the potential for overflows, the Financial Plan recommends establishment
of an internal sewer system inspection/conditions assessment and
rehabilitation program for the County's sewerage facilities and
conveyance system. This program would include prioritized/routine
Closed Circuit Televised (CCTV) inspections of the sewer lines
and inventorying of manholes. Mr. Bennett noted that WWM had already
CCTV'd 230 miles of the County's older 15-inch and larger sewer
lines. The Plan also recommends increasing vector/root-control
inspections in order to reduce SSOs.
A representative of the Sunnyside Neighborhood Association
and Southside Neighborhood Association Presidential Partnership,
Yolanda D. Herrera (La Fond), 942 West Calle Antonia, Tucson asked
staff to clarify the location of these inspected 230 miles of
sewer line. Jon Schladweiler, Deputy Director for Engineering
and Operations, replied that these lines are primarily located
along the Santa Cruz and Rillito Rivers.
Mr. Bennett said WWM also identified $162 million worth of potential
rehabilitation projects at its wastewater treatment facilities.
The Department has approximately $600 million of treatment facilities
and conveyance system assets that are depreciating more each year
and need rehabilitation. Jon Schladweiler noted that sanitary
sewage is a difficult commodity to transport, treat and store
because it contains bacteria that produce chemicals (e.g., sulfuric
acid) that cause concrete sewer lines, metal pipes and pumps at
treatment facilities to deteriorate.
Mr. Bennett requested WMAC and audience members to continue to
make comments/ask questions at any time during his presentation
of the five rate alternatives (scenarios) included in the 2003-04
Financial Plan for funding the Department's Operations and Maintenance
(O&M) and Capital Programs (CIP).
Doug Pickrell, 4045 East 4th Street, Tucson, asked
staff to clarify the general principles the Department used in
developing the suggested Connection/User Fee rate increase scenarios
to meet its funding needs in regard to funding for expanding treatment
capacity versus rehabilitation of the sewerage conveyance system
and facilities. Mr. Pickrell said he thought system expansion
should be paid for by growth. Mr. Bennett responded that under
the rate increase scenarios included in the Financial Plan, the
Sewer User Fees would pay for maintaining, operating and rehabilitating
the existing wastewater sewerage system. Individuals making new
connections to the sewer system would pay for building of any
additional treatment capacity, on-site sewers for new developments
and interceptors to move sewage to treatment facilities.
Ms. Chavez added that Wastewater's over-riding principle is that
User Fee revenues pay for the operation, maintenance and repair
of the sewer system, and Connection Fee revenues pay for additional
capacity increases for growth to the system. Ms. Chavez said developers
are also required to build on-site public sewer systems to Department
specifications for any new development, and turn them over to
the County once built. She added that Connection Fee rates significantly
increased through three separate 12 percent increases in 2003,
and now are at the appropriate level to pay for new treatment
capacity. The Department's Financial Plan recommends a small increase
in Connection Fee rates to continue paying for expansion of the
system.
Mr. Pickrell asked staff to clarify whether User Fees, up until
about one year ago, were paying for expansion of the sewer system.
Ms. Chavez responded the Department's philosophy has been that
growth pay for itself. She added that the County's User Fee rates
have consistently remained low, and WWM is recommending a rate
increase sufficient to address rehabilitation needs of the sewerage
system.
In addition, Mr. Bennett added that in developing the 2003-04
Financial Plan, Department staff analyzed WWM's 1997 Voter Authorized
Bond projects, allocated costs associated with new system capacity
to Connection Fees and costs associated with system rehabilitation
to User Fees. He said the Department collects about $49 million
per year in User Fees, and its O&M costs approximate $46 million.
Mr. Bennett noted that Pima County's User Fees are sixth from
the lowest of 49 major municipalities from across the United States.
Ms. Herrera asked staff to clarify whether the County ultimately
reimbursed developers for their costs for building new capacity/sewers.
Mr. Bennett said no, that homeowners pay these costs as part of
the purchase price of a new home.
Ms. Herrera then asked staff to clarify whether the Department
was using improved concrete material that is more resistant to
damage in constructing new sewer lines. Ms. Chavez responded that
WWM uses the best technology/materials available at the time.
Ms. Chavez noted that the contractor for the NWOI Rehabilitation
Project relined the sewer with a material that is more resistant
to damage from sulfuric acid. Ms. Herrera asked staff to clarify
whether the County requires developers to use this same technology
when building new sewer lines. Mr. Bennett said the County requires
developers use the most current available technology when building
sewers.
Mr. Carlson of the WMAC asked for further explanation of who was
responsible for building new on-site sewers within a development
and the larger off-site trunk sewers to which these lines connect.
Ms. Chavez responded that developers build the on-site sewers,
and WWM constructs major off-site public sanitary sewer lines.
At this point in the meeting, Mr. Bennett outlined the Financial
Plan's five possible scenarios for Connection and User Fee rate
changes.
• The "No Action" Alternative "A" provides for no
increases in User, Administrative or Connection Fees. Ms. Chavez
asked Mr. Bennett to explain how this Alternative would affect the
Department if approved by the Board of Supervisors. He responded
that under this scenario, the Department would discontinue its sewer inspection
program; recovery from the cash deficit would take about two
years; and there would be no new capital construction. Mr. Membrila
of the Committee, asked staff whether this would mean WWM had
a reactive as opposed to a proactive program. Mr. Bennett agreed
that it would be reactive. Mr. Membrila further commented that
approval of this alternative would mean there could be more Speedway
type incidents. Mr. Bennett noted that, under this alternative,
the average residential monthly sewer bill would remain $13.11.
The average Connection Fee for a single-family residence would
remain $2,441.28.
• The “Normal Operating Program” Alternative “B”
would provide the Department with sufficient revenues to return
to more normal operations and maintain expenditures. This alternative
also assumes approval of the 2004 Bond Authorization with bond
expenditures each year on rehabilitation and capacity expansion
projects. User Fees and the Administrative Fee would increase
by eight percent or $1.01 per month. In addition, sewer users
would have a monthly charge of 50-cents added to their sewer bills
to generate funding for future emergency circumstances. Connection
Fees would increase by three percent. The Connection Fee Participating
Rate would increase from $101.72 to $104.77. The average residential
monthly sewer bill would increase from $13.11 to $14.62 per month
under this alternative. The average residential Connection Fee
would increase from $2,441.28 to $2,514.44 or $73.20.
• The “Immediate Enhanced Rehabilitation Program” Alternative
“C” would increase User Fees to provide additional
revenues for enhanced O&M, Capital and Rehabilitation Programs.
User Fees would increase an additional 35 percent for the Enhanced
Programs for a total of $4.20 per month in FY 2004-05. This alternative
also includes the 50-cent monthly charge for emergency funding.
The average residential monthly sewer bill would increase from
$13.11 to $19.69 in FY 2004-05. Connection Fees would increase
by three percent. The average residential Connection Fee would
increase from $2,441.28 to $2,514.44.
• The “Modified Enhanced Rehabilitation Program” Alternative
"D" would increase User Fees to provide additional
revenues for the Enhanced O&M, Capital and Rehabilitation
Programs in four steps. User Fees and the Administrative Fee
would increase by eight percent, and User Fees would increase
an additional eight percent for the Enhanced Programs for a
total of $2.41 per month in FY 2003-04. The Alternative also
includes the 50-cent monthly charge for emergency funding. The
average residential monthly sewer bill would increase from $13.11
to $15.52. Connection Fees would increase by three percent in
FY 2003-04. The average residential connection would increase
from $2,441.28 to $2,514.44.
• The “Accelerated Modified Enhanced Rehabilitation Program”
Alternative ”E” would significantly increase User
Fees to provide revenues for the Enhanced O&M, Capital and
Rehabilitation Programs in two steps. User Fees and the Administrative
Fee would increase by eight percent, and User Fees would increase
an additional 20 percent for the Enhanced Programs for a total
of $2.40 per month in FY 2004-05. The Alternative also includes
the 50-cent monthly charge for emergency funding. The average
residential monthly sewer bill would increase from $13.11 to $17.89
in FY 2004-05. Connection Fees would increase by three percent
in FY 2003-04. The average residential connection would increase
from $2,441.28 to $2,514.44.
Mr. Bennett added that the Department should be spending approximately $26 million per year
on rehabilitation of the County's sewerage conveyance system and facilities
based on Environmental Protective Agency requirements and recommendations from
outside consultants.
At the request of Mr. Carlson, Mr. Bennett clarified that the
monthly 50-cent charge for creating a source of emergency funding
would stop being added to sewer bills once a specified level of
funding was reached. Conversely, the charge would be re-instituted
when funding was reduced or depleted because of an emergency circumstance.
Mr. Stratton asked how Pima County's Connection Fee rates compare
with other municipal wastewater providers in the southwestern
region of the United States. Ms. Chavez responded Pima County
is unique in having separate Connection Fees, most municipalities
charge sewer users for expansion/rehabilitation of their sewer
systems.
Ms. Herrera asked staff to clarify whether the User Fee increase
would also apply to businesses, apartment complexes and school
districts. Mr. Bennett replied the increases would apply to all
classes of customers.
Mr. Bennett said the Financial Plan also includes the Department's
Connection and User Fee Ordinances, which were revised for improved
clarity of language, processes and procedures.
Mr. Bennett concluded his presentation, and asked for comments
from WMAC and audience members. Mr. Membrila asked whether the
County had a program for fixed-income households to off-set
any rate increases. Mr. Bennett said WWM could consider establishment
of such a program, as many utilities have "life-line" programs.
Mr. Membrila suggested this kind of program might be off-set
by increasing the Connection Fees by more than three percent.
Mr. Stratton asked Ms. Chavez the last time User Fees were specifically
increased to provide revenues for the Department's O&M budget
- not just to pay debt service for financing projects. Ms. Chavez
responded some previous User Fee increases were used to both address
inflation and to pay debt service associated with financing sewer
repairs. Mr. Stratton also asked what the Department currently
paid in debt service payments. Mr. Bennett responded the Department's
debt service payments approximate $16 million per year.
Mr. Carlson asked what additional Connection and User Fee increases
the Department was projecting if the 2004 Bond Authorization was
approved by voters. Mr. Bennett answered based on the cost of
debt financing, increases of approximately five percent to seven
percent in User Fees and ten percent to twelve percent in Connection
Fees were projected/included in the Financial Plan. Mr. Stratton
then commented that the Plan projects WWM to have $25 million
of debt service in FY 2007-08.
Mr. Stratton thanked audience members for attending the Public
Meeting. He said Department staff would forward the proposed 2003-04
Financial Plan to the Board of Supervisors for their official action
at a future meeting. Comments from tonight's meeting will be forwarded
to the Board as well.
Gail Hackney, 8181 E. Irvington, Tucson commented that the County's
only choice is to raise User Fees in order to meet EPA regulations
and to address critical sewerage system rehabilitation needs -
avoiding future events like the Speedway sinkholes.
Mr. Stratton pointed out the Department has raised very valid
concerns about meeting EPA's continually tightening regulations
and rehabilitating the County's aging sewerage system, a problem
all of the Nation's utilities are facing. He observed WWM has
tried to be proactive to avoid any future sewer line failures,
and has repaired much of the Santa Cruz interceptor system along
that line. He added that being reactive to problems is always
more costly.
Mr. Carlson expressed support for the Financial Plan and increasing
User Fees to address the Department's O&M and rehabilitation
funding needs - emphasized the need to replace the Department's
depreciating assets. He also supported establishment of the additional
50-cent charge to create funding for future emergency circumstances.
He added that WWM staff has assured WMAC members the emergency
funding will be capped at a specified level.
Mr. Membrila said Pima County was "spoiled" and used to
having very low User Fees, and added the challenge will be to
inform the community of the importance/ need for the increase.
He expressed support for increasing the Connection and User
Fees and the Four-Step Rate Increase Alternative. In addition,
he requested audience members to comment and/or suggest other
possible alternatives. He then asked audience members to support
the Committee's recommendation on the 2003-04 Financial Plan
to the Board of Supervisors if they had no other suggested alternatives.
Chris Leverenz, Tucson Water staff, 310 West Alameda, Tucson,
asked staff to clarify whether any of the Financial Plan's suggested
alternatives included funding to address possible future EPA regulatory
changes (e.g., the amount of nitrogen that may be discharged from
treatment facilities.) Mr. Bennett responded Attachment 6A of
the Plan, Capital Rehabilitation Projects at Roger Road, includes
potential costs of $42.6 million to meet anticipated more stringent
standards for nitrification/de-nitrification of effluent. Any
new wastewater plants would be built to include the best available
technology, and funding sources would need to be determined. Ed
Curley, Manager for Capital Development, added the proposed 2004
Bond Authorization Program also includes $17 million for a de-nitrification
program at the Ina Road Water Pollution Control Facility.
Ms. Herrera asked staff to clarify whether a "sunset clause"
would be included for the 50-cent charge. Mr. Stratton responded
WMAC members have previously expressed support for establishing
the 50-cent charge to create a specified amount of funding (and
to be capped when that level is reached) for emergency circumstances.
Ms. Herrera asked Mr. Stratton to clarify whether the WMAC would
recommend a ceiling for the emergency funding. He responded
the Board of Supervisors would determine the actual level of
emergency reserve funding. Mr. Curley said the Financial Plan
projects that the charge would raise about $1.5 million per
year with the goal of suspending the 50-cent charge after raising
$12 million in eight years.
Arthur T. Brown, Junior, 3464 East Via Guadalupe, Tucson, said
technology exists to convert residential sewer users over to individual
units and reuse of the effluent on-site, or a sewer line could
carry the effluent to the river for disposal. He then asked staff
to clarify why the County could not work in that direction. Mr.
Stratton replied that at this point in time, the Arizona State
Department of Environmental Quality would probably not approve
this kind of system. Mr. Brown added that we should work on getting
ADEQ approval.
Mr. Stratton asked Ms. Hackney, who is a member of the WIFA Advisory
Board, to respond. Ms. Hackney answered that WIFA has found in
very small communities installing individual systems is not feasible
because WWM would have to perform extensive maintenance on these
systems and would have to maintain an even bigger system than
previous. Mr. Bennett also expressed concern that the Department
would see problems with the recent increase in septic tank use
and nitrogen into the aquifer right below these locations. He
noted that the City of Tucson Water Department shut down one of
its production wells in the Nogales Highway area because of this
problem.
Mr. Stratton again thanked members of the audience for their
comments and participation in the public meeting.
