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Stormwater Management Utility Fee RateMasterpiece on the Mississippi TO: Michael C. Van Milligen, City Manager FROM: Gus Psihoyos, City Engineer ,`>> DATE: February 19, 2013 SUBJECT: Stormwater Management Utility Fee Rate Change INTRODUCTION Dubuque kittati AEamalcac� 1 I 11 2012 The purpose of this memo is to outline the Engineering staff's recommendation to modify Section 13 -4 -5 (D) of the Code of Ordinances, thereby adjusting the stormwater utility fee rate as proposed with the Fiscal Year 2014 budget. BACKGROUND In February of 2003, Ordinance 7 -03 was passed establishing a Stormwater Management Utility and associated fee. At that time, the Stormwater Management Utility Fee helped fund the administration of the Stormwater Utility, NPDES Compliance Program, Storm Sewer Improvements /Extensions, Stream -bank Stabilization Assistance Program, Detention Basin Maintenance, and Stormwater Ditch Maintenance & Remediation. When the Stormwater Management Utility User Fee Fund was created in Fiscal Year 2004, stormwater management activities were funded from a number of sources: 15% from the stormwater utility fee, 22% from property taxes, 5% from sales tax, and 58% from DRA distribution funds. With the adoption of the FY2009 budget, the Stormwater Management Utility became for the first time a self - supporting enterprise fund; all stormwater management activities are now funded exclusively by the stormwater management utility and permit fees. In March of 2012, the City Council adopted Ordinance 21 -12 establishing the Stormwater Management Utility Rates for FY2013 to FY2033. DISCUSSION With the adoption of the Fiscal Year 13 CIP Budget, funding was established and supported by a stormwater utility fee rate structure to implement the first nine phases of the Bee Branch Watershed improvement projects and other various stormwater management activities. Since then, changes have occurred regarding both project costs and possible funding sources. As promised, the City has continued to seek outside funding in the form of grants and low interest loans to cover the cost of the stormwater management. As of Fiscal Year 2013, the City has successfully secured $11,865,500 in local, state, and federal grant funding. And three additional grant funding opportunities are being pursed and may be realized sometime in Fiscal Year 2014. In the fall of 2012, the City submitted a grant request to the Economic Development Agency (EDA) in the amount of $1.22 million. Feedback from the EDA to date has been positive. The City expects to find out if the application was successful in early 2013 and possibly prior to the adoption of the Fiscal Year 2014 budget. The State Flood Mitigation Program was created in 2012. It established two possible sources of funding for the Bee Branch watershed improvements: Flood Mitigation Fund and a Sales Tax Increment Fund. The Flood Mitigation Fund will consist of appropriations and other moneys and will likely be limited in scope. However, the Sales Tax Increment Fund will receive deposits of increased sales tax revenues from impacted areas, as calculated by the Department of Revenue. It established a 10 -year state flood mitigation program capped at $30 million annually in state sales tax revenue for a total of $300 million. It calls for a maximum award of up to $15 million a year for any qualifying single community to match local and federal funds that communities would spend on flood protection projects. A nine - member board is to be established in the spring of 2013. The board must first establish an application process and application procedures. Ultimately the board will scrutinize applications to allow qualifying local entities to capture a share of the growth in their sales tax collections to match state and federal financial assistance. The City is already taking steps to ready itself in anticipation of an application process. HDR Engineering has been hired to assist with updating the 2001 Drainage Basin Master Plan. The update will serve as the basis of the City's flood mitigation application. If successful, the award is expected by December of 2013. Such an award may significantly impact stormwater utility rates that are currently set per ordinance to increase from the current rate of $5.60 per month for an average household to $9.00 per month in Fiscal Year 2017. But adopting an ordinance to maintain the current rate at $5.60 per month starting into Fiscal Year 2014 and beyond is appropriate until the anticipated additional outside revenue is better defined. Even though the current rate of $5.60 will not support the borrowing for construction previously outlined for the project, due to the volatility of project costs associated with Phase VII of the project (the Bee Branch Creek Railroad Bridge /Culvert Project) and the anticipation of additional state and federal grant monies, the Stormwater Management Utility rate for Fiscal Year 2014 should remain at the current rate of $5.60 with the understanding that it may be adjusted at some point during Fiscal Year 2014 when the project costs and funding sources crystallize. Table 1 shows the proposed rate schedule proposed with the FY2014 budget compared to the rates adopted with the FY2013 budget. 2 Table 1. Proposed Stormwater Management Utility Fee rate versus the rate adopted with the FY2013 budget. RECOMMENDATION I recommend amending the City Code of Ordinances to maintain the current Stormwater Utility Fee rate of $5.60 indefinitely until an adjustment is warranted in the future. BUDGET IMPACT The rate changes will decrease the Stormwater Utility Management fee revenue by an estimated $1,100,000 in FY2014, $1,420,000 in FY2015, $1,750,000 in FY2016, $2,093,000 in FY2017, and $2,135,000 in FY2018 and beyond. REQUESTED ACTION respectfully request passing the attached ordinance amending Section 13 -4 -5 (D) of the City Code of Ordinances to maintain the current stormwater management utility fee rate of $5.60 indefinitely until an adjustment is warranted in the future. Prepared by Deron Muehring cc: Barry Lindahl, City Attorney Jenny Larson, Budget Director Ken TeKippe, Finance Director Deron Muehring, Civil Engineer II 3 FY13 FY14 FY15 FY16 FY17 FY18to FY33 Adopted $5.60 $7.50 $8.00 $8.50 $9.00 $9.00 Proposed $5.60 $5.60 $5.60 $5.60 $5.60 $5.60 RECOMMENDATION I recommend amending the City Code of Ordinances to maintain the current Stormwater Utility Fee rate of $5.60 indefinitely until an adjustment is warranted in the future. BUDGET IMPACT The rate changes will decrease the Stormwater Utility Management fee revenue by an estimated $1,100,000 in FY2014, $1,420,000 in FY2015, $1,750,000 in FY2016, $2,093,000 in FY2017, and $2,135,000 in FY2018 and beyond. REQUESTED ACTION respectfully request passing the attached ordinance amending Section 13 -4 -5 (D) of the City Code of Ordinances to maintain the current stormwater management utility fee rate of $5.60 indefinitely until an adjustment is warranted in the future. Prepared by Deron Muehring cc: Barry Lindahl, City Attorney Jenny Larson, Budget Director Ken TeKippe, Finance Director Deron Muehring, Civil Engineer II 3 ORDINANCE NO. 9 -13 AMENDING CITY OF DUBUQUE CODE OF ORDINANCES SECTION 13 -4 -5 (D) SFU RATE, CHARGES; UTILITY REVENUES. NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Section 1. That City of Dubuque Code of Ordinances Section 13 -4 -5 (D) is amended to read as follows: (d) The SFU rate to be applied to residential and nonresidential properties shall be $5.60 per SFU. Passed, approved and adopted this 28th day of February Attest: r /�`�7•>'/,, Kevin irnstahl, , 2013. y D. Buol, Mayor OFFICIAL PUBLICATION ORDINANCE NO. 9-13 AMENDING CITY OF DUBUQUE CODE OF ORDINANCES SEC- TION 13-4 -5 (D) SFU. RATE, CHARGES;I UTILITY REVENUES. NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA: Section 1. That City of Dubuque Code of Ordinances Section 13- 4-5 (D) is amended to read as follows: (d) The SFU rate to be applied to residential and nonresidential pro- perties shall be $5.60 per SFU. Passed, approved and adopted this 28th day of February, 2013. /s /Roy D. Buol, Mayor Attest: /s /Kevin S. Firnstahl, City Clerk . Published officially in the Telegraph Herald newspaper on the 8th day of March, 2013. /s /Kevin S. Firnstahl, CMC, City Clerk 1t 3/8 STATE OF IOWA {SS: DUBUQUE COUNTY CERTIFICATION OF PUBLICATION I, Suzanne Pike, a Billing Clerk for Woodward Communications, Inc., an Iowa corporation, publisher of the Telegraph Herald,a newspaper of general circulation published in the City of Dubuque, County of Dubuque and State of Iowa; hereby certify that the attached notice was published in said newspaper on the following dates: March 8, 2013, and for which the charge is $10.47. Subscribed to before me, a Notary Public in and for Dubuque County, Iowa, this g day of me, , 20 /3 . Notary Public in and for Dubuque County, Iowa.