Minutes 02/08/1977 - Laserfiche WebLink

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134 February 8, 1977 assistance formula for State relief. A copy of the letter from the Sal~aZio~army requesting assistance is attached for your information. The City Manager recommends adoption." Motion of Mr. Holley and seconded by Mr. Barnes, to concur in the recommendation of the City Manager, was adopted by unanimous vote. ?7-52 - "Report from the City Manager on the sewage treatment rates for the City of area) as compared to the sewer rates for those areas currently served Sanitation District Commission." Portsmouth (Pre-1968 by the Hampton Roads "At the January 25, 1977, meeting of the City Council, the City Manager was directed to prepare a report concerning sewage treatment charges. At that meeting, the City Manager had recommended that sewer treatment charges for areas outside the City of Portsmouth be in- creased to 52¢ per hundred cubic feet, in order for the rate to coincide~With that charged by the Hampton Roads Sanitation District. Several members of the City Council expressed a de- sire for the charges to be uniform throughout the City--both in areas served by HRSD and in areas served by the Portsmouth Treatment Plant. The attached Appendix 1 reflects the HRSD rates, the City of Portsmouth rates and rates for areas outside the City of Portsmouth wR~hh are served by Portsmouth's treatment plant, since July, 1973. As you can see, the HRSD rates and the Portsmouth rates ~or area~outside Portsmouth have been the same for the entire period, except where changes in the rates out- side Portsmouth lagged behind HRSD increases for short periods of time required to institute the changes. Except for the period of July, 1976, through November, 1976, the HRSD rates and the Portsmouth rates haveinot been equal. During last year's budget proposal, you will recall, I recommended that the Portsmouth sewage treatment rate be increased to,4S¢, effective July~l, 1976. The proposed increase was predicated on the need for additiona~ revenue in the utility system in order for the utility system to earn sufficient income to provide to the General Fund a seven percent re- turn on the utility system's investment, it was stated that the water system was earning suf- ficient income to provide a seven percent return, but that the sewage operations were not. During the budget presentation, I pointed out that the 45¢ treatment rate would, for the first time, mean that all areas of Portsmouth would be paying the same rate for sewage treatment. My recommendation for the rate increase was based primarilycon the needs of the utility system for additional revenue; secondarily, on the desire for a proportionate distribution of earnings between the sewer and water divisions; and coincidentally, on the equalization of Portsmouth and HRSD rates. It was not my intention to recommend that the Portsmouth rates be tied to the HRSD rates on any continuing basis, nor did I interpret the Council's action in adopting the rate increase to be an indication of its intent to establish a policy of permanently equalizing the two rates. Moreover, I feel that the main determing factor in setting the Portsmouth rates should be the revenue needs of the Portsmouth system, not an equalization of the two rates. The HRSD serves less than ~,000 customers in Portsmouth whereas the Portsmouth treatment facility serves more than 2S,000. To ignore the revenue meeds of our sewage system and set Portsmouth rates equal to HRBD rates ~ould be pmrmitting the 'tail to wag the dog'. Although the 1977-78 budget preparation is in a preliminary stage at this time, it does not appear that it will be necessary to recommend any utility rate increases for the utility system for the 1977-78 fiscal y~ar. (Although, I do wish to leave this possibility open, pend- ing further budget development.) Also, it appears that we have been quite successful in achieving a temporary equilibrium of the revenues of the water and sewer systems. As shown in Appendix 2, the sewer system constitutes 41 percent of the investment in the utility system and is projected to produce 40 percent of the atility system revenue. Although I do not antic{pate the necessity for any overall utility rate increases in the 1977-78 budget recommendation, an approximately offsetting adjustment to the sewer service an~ sewer treatment charges may be recommended. Further review of the sewer service versus sewer treatment revenues and expenses will be necessary before any recommendation in this regard can be made. The City Manager's office will continue to evaluate the sewer treatment cha~ge rat~s. It is anticipated that rate increases will be required as the investment in the §ewer system grows, as a result of the upcoming sewer treatment plant construction. The possibility of purchasing the sewer facilities located in Portsmouth but owned by HRSD will also continue to be investigated, especially when the n~w treatment capacity comes on ~ine. In conclusion, it is my recon~endation that the rates outside of the City of Portsmouth continue to be set at the same level as the HRSD rates, but that the Portsmouth rates continu to be set based on the operating needs of the Portsmouth sewer system." Motion of Mr. Oast and seconded by Mr. Elliott, the report to be received as information, was adoPted by unanimous vote. 77-53 - "Submission of the second quarterly Financial Report covering all operating fund of the City for the period ending December 31, 1976. This report is submitted in accordance with the requirements of the City Code for your information." Motion of Mr. Barnes and seconded by Mr. Oast, second quarterly Financial Report for period ending December ~1, 1976 to be received as information, was adoptedbby unanimous vote. 77-54 - On motion of Mr. Barnes and seconded by Mr. Elliott, the following ordinance was approved on first reading, and by unanimous votei 'lAN ORDINANCE TO APPROPRIATE $17,467 FROM THE GENE~RL FUND IN ORDER TO ESTABLISH FIFTY EMERGENCY PUBLIC SERVICE EMPLOYMENT JOBS WITHIN THR~ET~ITY AGENCIES FOR THREE WEEKS."