Woodard Curran Memo_2019-03-26_FY20-FY22 Water and Sewer Rates_Final — File 207768

COMMITME DRIVE RES March 26, 2 Mr. Edward Director of F City Hall 93 Highland Somerville, Mr. John De Director of W 17 Franey R Somerville, Re: Re Dear Mr. Be Working wit been used needed in b ensure its lo 1. A wh 2. Tw an 3. Th eli 4. Th gu 5. Th (D ho 6. Th ad Discussion Since the co capital inve sewer capit replacemen needs of th developmen escalated to ENT & INTEG SULTS 2019 Bean Finance d Avenue MA 02143 eLuca Water & Sewer Rd MA 02143 ecommended ean and Mr. De th City staff, W successfully fo both the water ong-term accur more robust p hich included th wo more years alysis on trend he Fire Suppres minated; he methodolog idance from th he rate calcula iscount) tier de useholds likely he option to al ded, allowing t of the Capital P ompletion of th estments in the tal programs w nt. The progra he City’s aged nt called for in o ensure the C GRITY 40 S A w r Water and Se eLuca: Woodard & Cur or setting rates and sewer sy racy for setting rojection of ca he addition of s of billed consu ds in volumetric ssion Charges y for projectin e MWRA Advis tion was redes esigned to help y to be on a fixe llocate infrastr the City to cons Program he original rate e water and s with expected ams are design d utility infrast SomerVision. ity is planning 0 Shattuck Roa uite 110 ndover, Massa www.woodardcu wer Rates for ran has compl over the past ystems in the c water and sew apital projects a several projects umption records c billings; and associate ng future MWR sory Board; signed to allow p control utility ed budget, as w ucture investm sider a stormw model in 2015 ewer systems overall spend ned to better a tructure as we From the stan appropriately f ad achusetts 0181 urran.com r FY2020 throu eted the rate s four fiscal cyc coming years, wer rates: and the related s to the Capita s were incorpo ed revenues fro RA costs was w the City to c costs for both well as all resid ments between water utility in th 5 and 2016, the . The financia ding in excess address long-d ell as meet re ndpoint of finan or the probable 0 T 866.7 T 978.5 F 978.5 ugh FY2022 study update o cles. Given the the model wa d financing cos l Program. orated into the om the Water E updated using consider the in the smallest u dential custome n sewer and s he future. e City has subs al model now of $300 Millio deferred repairs equirements fo ncial projection e costs that wil 702.6371 557.8150 557.7948 of the financial expected capi s updated in s sts were added model to allow Enterprise rate g the most re nstitution of a use customers, ers; and stormwater infr stantially upda contains ten-y on in system s, upgrades an or on-going gr s, all capital p ll be incurred. model that ha ital investment several ways to d to the mode w for an updated e structure wer cent budgetar new lower-cos such as senio rastructure wa ted its plans fo year water and upgrades and nd other critica owth, including roject costs ar s s o l, d e y st or s or d d al g e

Somerville W Impact of E As part of t implement suppression suppression generate ad After further with this cha revenue str from volume Lower-Cost Given the e Curran reca residential c tier is prima customers o discounted rate increas Recommen The followin the operatio recommend D W&S (230225. liminating the F the rate design a fire suppre n system conn n charge was dditional revenu r review and di arge, and the m eam, the volum etric water billin t /Discount Tier expected impac alculate the ra customers a d arily to reduce t on fixed or lim rate on their fir ses for all resid ded Rates ng tables provi ons and capit ding that the cu Tier Ti Rate Increa iscount 1 2 3 4 01) Fire Suppressio n/revenue gen ession charge nections plumb to increase eq ue to the Wate scussion with t model has bee metric rates re ngs. r ct on rates of ates structure iscounted rate the impact of ra mited incomes, rst 8 units of us ential users. de our recomm al investment urrent base cha ier Range ase (%) 0-8 9-13 14-67 68-133 >133 on Charge eration model to be levied bed directly in quitability in th r Enterprise Fu the community n updated to re commended in the City’s capi to include a for the first 8 ate increases o such as senio sage in each b mendation for t needs of the arges and all ot 2019 0.0% n/a $4.14 $5.97 $6.26 $6.50 from the origi on water sy nto the City wa e billing struct und. y, the City has eflect this chan n this memo ha ital investment new discount units per billin over time on th ors. Additionally billing period, th the water and City’s utilities ther fees be ke Rates - 2020 6.0% $3.95 $4.39 $6.33 $6.64 $6.89 inal study in 2 ystem custom ater mains. T ture by chargin indicated that i nge. As this ch ave been adju t plans, the Cit t tier. The ne ng cycle. The he smallest use y, as all reside he rate will also sewer volume s for the next ept at their curr Water ($/unit) 2021 6.0% $4.19 $4.65 $6.71 $7.03 $7.30 March 016, the City ers who had The intent of t ng for this serv it no longer wis hange permane sted to genera ty has asked t ew discount ti intention of th ers, which often ential users wo o reduce the o tric rates need three fiscal y rent levels. ) 202 6.0 9 $4.4 5 $4.9 $7.1 3 $7.4 0 $7.7 h 2019 had planned to dedicated fir the original fir vice as well a shes to proceed ently removes ate this revenu hat Woodard & ier provides a e new discoun n coincides wit ould receive th overall impact o ded to fully fund years. We ar 22 % 44 93 11 46 74 o e e s d a e & ll nt h e of d e

Somerville W D In closing, t the Water a 1. Fu 2. Pa sew 3. Fu If you have contact me Very truly yo Toby Fedde Vice Presid Cc: Ale Jes W&S (230225. Tier T Rate I Discount 1 2 3 4 the rates recom and Sewer Ente ully fund operat ay the City’s M wer utility costs ully cover the co e any further q at tfedder@wo ours, er, P.E. ent / Senior Pr ex Lessin, Some ssica Richard, W 01) Tier Range Increase (%) 0-8 9-13 14-67 68-133 >133 mmended in th erprise Funds t tional costs; MWRA Annual s); and osts of the cap questions conc oodardcurran.c rincipal erville Water and W&C 2019 5.0% n/a $8.20 $10.46 $10.97 $11.36 he tables abov to: Assessments ital programs d cerning the rat com or via cell a d Sewer Rates - 2020 7.5% $7.93 $8.82 $11.24 $11.79 $12.21 ve are projecte (which constit developed by t te study or ou at 603-817-744 Sewer ($/unit 2021 7.5% $8.52 $9.48 $12.09 $12.68 $13.13 d to provide a tute the majori he City for both ur projection o 41. March ) 202 7.5% 2 $9.1 8 $10. 9 $12. 8 $13. 3 $14. dequate reven ity of overall w h utilities. of expected rev h 2019 22 % 16 19 99 63 11 nues needed b water utility and venues, pleas y d e