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HomeMy WebLinkAboutSSN052311CITY OF CENTRAL POINT City Council Study Session May 23, 2011 I. MEETING CALLED TO ORDER City Manager Phil Messina called the meeting to order at 6:00 p.m. II. ATTENDEES Council Members: Bruce Dingier, Allen Broderick, Carol Fischer, Kay Harrison, Kelly Geiger were present. Ellie George arrived at 7:00 p.m. Mayor Williams was absent. City Manager Phil Messina; Assistant City Manager Chris Clayton; Community Development Director Tom Humphrey; and Planning Secretary Didi Thomas were also present. Guests: Chris Peters, Public Works Management; Tom Hall, Commissioner, Medford Water Commission III. BUSINESS A. Medford Water Commission - 2011 Rate Analysis Chris Clayton, Assistant City Manager explained that the primary focus of the meeting this evening was to discuss some of the different components involved with an analysis ® of the rates that were being charged to Central Point by the Medford Water Commission (MWC). Last year, new rates were implemented and as the City's contracts with the MWC were expiring, several issues came to the surface, one of which was a rate analysis. Mr. Clayton explained how the customer groups were constructed, forming a water coalition group. Not only was concern expressed about other cities not conserving water, but that the region itself is not conserving water adequately. Based upon a current rate comparison, there appears to be a disparity in rates as consumption increases. Priorities involved with negotiating points of concern, Mr. Clayton stated, would include meaningful representation, allocation of costs distributed. regionally, rate of return should be reasonable and not used to subsidize Medford customers, calculation of SDC fees (rate of return and depreciation) and regional rate equity. Current concerns expressed by other cities involved in the process included agreements being changed without adequate communication, Eagle Point was being required to waste water resources, commitments to expensive improvements were being questioned, insufficient commitment to conservation reflected in the rate structure to impact customer use, prevention of inequities in rates and charges to ensure that they are not punitive to one customer class, and the issue of water rights. It would be preferred that we focus on more communication about agreement changes, a more efficient management of Medford systems, more involvement with capital improvement decisions and conservation strategies, a cost of service study and managing water rights for the benefit of all involved. Chris Peters with Public Works Management thanked Chris Clayton for the great job that he is doing for the City of Central Point anal advised the Council that he was a real. asset. Chris Peters explained to Council that a cost of service study is comprised of what makes up the water rates that are charged to Central Point and involve operations and maintenance costs, depreciation and infrastructure charges, a return on investment and franchise fees. These are the basic components. All costs are split between service charges (the base rate) and gallonage charges comprised of 67 cents per 1000 gallons. If a cost is designated to be a service charge, then the "other cities" group contributes approximately 1 % and if the charge is designated as a gallonage charge, the contribution is approximately 25%. So how are the costs allocated between customer groups. The other cities group feels that there are too many inequities and are trying to look more closely at depreciation allocation, reflecting more closely our current relationship with MWC. We are asking that MWC implement policies that accurately reflect the impact of each customer group on the water system. In addition, Chris added, we have been overpaying on the rate of return charged by the MWC and the City would like to revisit the additional monies collected. Right now, 15 cents of every 67 cents of the gallonage charge is attributable to the rate of return. Additional items brought up included the calculation of return on investment, depreciation, projects funded by SDC fees and depreciation of capital investments which are donated. Also up for discussion is current allocation of maintenance and repairs that benefit other customer groups for which the city of Central Point is likely subsidizing. Depreciation and rate of return account for approximately one-half of the gallonage charges to Central Point customers. It was suggested that operation and maintenance costs be reallocated and readjusted annually. All of these items are currently under negotiation with the MWC. Chris Clayton presented examples of the differences between a Central Point water bill and one from Medford, explaining that we need. to get the differences between the two groups to be more equitable and reasonable. Chris additionally pointed out the adverse economic impact on development to Central Point as opposed to Medford which was far more reasonable and. attractive. Mr. Clayton presented city water coalition considerations going forward which would include economic development, customer tolerance, conservation, adequate representation and a process for adjudication. Equitable solutions are sought. SDCs, water rights and the annual cost of service study are items. that still need to be addressed as well. Tom Hall, commissioner with the Medford Water Commission, encouraged the Council to think about where we are going to be l00 years from now and. said he is looking forward to open discussion with the City to resolve issues. Community Development Director Tom Humphrey stated that we are trying to do for Central Point what Medford has done for its citizens. We are trying to develop the vision for the future anal understand and convey our intentions honorably. Council generally agreed that more discussion needed to be had on the matters raised. IV. ADJOURNMENT The Study Session for May 23, 2011, was adjourned at 8:25 p.m.