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G-1142 - 12/11/2018 - WATER CHARGES - Ordinances Supporting DocumentsBOT AGENDA Page 1 BOARD OF TRUSTEES MEETING SAMUEL E. DEAN BOARD ROOM BUTLER GOVERNMENT CENTER 1200 OAK BROOK ROAD OAK BROOK, ILLINOIS 630-368-5000 AGENDA ITEM Regular Board of Trustees Meeting of December 11, 2018 SUBJECT: 2019 Water Rate Increase FROM: Jason Paprocki, Finance Director BUDGET SOURCE/BUDGET IMPACT: N/A RECOMMENDED MOTION: I move that the Village Board adopt Ordinance 2018-WA-G- 1142, “An Ordinance Amending Chapter 5 of Title 8 of the Village Code of The Village of Oak Brook, Illinois Relating to Water Charges” which increases water rates 10% for fiscal year 2019. Background/History: On October 27, 2015, a water rate study was presented to the Board by American Infrastructure Technologies, LLC (AIT). One of the main takeaways of the report was that prior water rates charged by Oak Brook were inadequate to maintain the water system financial health in the future. Starting in 2012, the City of Chicago announced a 4-year rate increase of 25%, 15%, 15%, and 15% annually. DuPage Water Commission similarly raised its rates to pass on the Chicago increase, as well as increases in its own expenditures. Over these years of incr eases, the Village did not raise its water rates enough to keep up with the increases. The overall cash reserve balance of the Water Fund did not meet future capital needs of the fund. The water rate study recommended increases of 10% in years 2016 and 2017, and increases of 7% in years 2018 through 2020. In October 2018, AIT began working on an update to the original water rate study. The results of the water rate study update presents the Village with two options: 1. No increase in water rates or a modest increase in rates (CPI) and pay for capital projects from Village’s funds by spreading the capital program over 7 or 8 years instead of 5 years; or 2. Increase rates substantially to pay for the capital projects in next 5 years. Rates may have to be lo wered at the end of the 5 year capital program ITEM 11.B.1 BOT AGENDA Page 2 Under option one, water rates would be increased 2.0% over the next five years. Capital expenditures would be capped at $2.5 million. This option would require the Village to potentially delay water main projects to align with available cash reserve balances. Under option two, water rates would increase 10.0% in 2019, 7.0% in 2020, 4.0% in 2021, 3.0% in 2022, and 2.0% in 2023. Capital expenditures would not be capped annually and projects would be completed as planned. The $10 fixed monthly charge remains unchanged for both options presented. Staff is recommending option two, which raises water rates 10% in 2019. This will allow the Village to be proact ive in maintaining and upgrading its water system without having to investigate issue debt to fund capital projects. The 2019 Annual Budget and Five-Year Plan were prepared using the future rate increases recommended by AIT, which include an increase of 10% for 2019 and 7.0% decreasing to 2.0% for years 2020-2023. Water rates in 2019 using a 10% increase would be: 2018 2019 Annual increase 7% 10% Fixed charge $/customer/month $10.00 $10.00 Resident rate $/1,000 gallons $10.00 $11.00 Non-resident rate $/1,000 gallons $11.81 $12.99 Hydrant at 3003 Jorie Blvd $/1,000 gallons $11.81 $12.99 Under the proposed increase, an estimated resident bill and non-resident bill assuming 10,000 gallons billed bimonthly would increase as follows: 2018 2019 Increase Resident $120.00 $130.00 $10.00 Non-Resident $138.10 $149.91 $11.81 A rate increase of 10% in 2019 would allow the Water Fund to maintain a healthy reserve balance to be used for future capital improvements. Recommendation: I move that the Village Board adopt Ordinance 2018-WA-G-1142, “An Ordinance Amending Chapter 5 of Title 8 of the Village Code of The Village of Oak Brook, Illinois Relating to Water Charges” which increases water rates 10% for fiscal year 2019. Additions are bold and double-underlined; deletions are struck through. ORDINANCE 2018-WA-G-1142 AN ORDINANCE AMENDING CHAPTER 5 OF TITLE 8 OF THE VILLAGE CODE OF THE VILLAGE OF OAK BROOK, ILLINOIS RELATING TO WATER CHARGES WHEREAS, the President and Board of Trustees of the Village of Oak Brook, Illinois have heretofore, by ordinance established rates, fees, and service charges for water usage; and WHEREAS, the President and Board of Trustees deem a revision of the water rates, fees, and charges, and the passage of this Ordinance to be in the best interest and in pursuance of the general welfare of the Village; NOW, THEREFORE, BE IT ORDAINED BY THE PRESIDENT AND BOARD OF TRUSTEES OF THE VILLAGE OF OAK BROOK, DU PAGE AND COOK COUNTIES, ILLINOIS as follows: Section 1: Recitals. The foregoing recitals are hereby incorporated into, and made a part of, this Resolution as the findings of the President and Board of Trustees of the Village of Oak Brook. Section 2: Section 8-5-2-G of Chapter 5, "Fees and Charges," of Title 8, "Public Works," of the Village Code is hereby amended further to read as follows: F.Water Consumption Charges 1. A monthly service charge of ten dollars and no cents ($10.00) per customer account is hereby imposed, effective for any billing periods after January 1, 2018 2019. 2. Effective January 1, 2018 2019 water shall be charged at the rate of ten eleven dollars and zero cents ($10.00 $11.00) per thousand gallons for customers in the corporate limits of the Village of Oak Brook and at the rate of eleven twelve dollars and eighty- one ninety-nine cents ($11.81 $12.99) for customers outside the corporate limits of the Village of Oak Brook. 3. Effective January 1, 2018 2019 water drawn from the hydrant at 3003 Jorie Boulevard shall be charged at a rate of eleven twelve dollars and eighty-one ninety-nine cents ($11.81 $12.99) per thousand gallons. Section 3: Severability. If any provision of this Ordinance or part thereof is held invalid by a court of competent jurisdiction, the remaining provisions of this Ordinance shall remain in full force and effect, and shall be interpreted, applied, and enforced so as to achieve, as near as may be, the purpose and intent of this Ordinance to the greatest extent permitted by applicable law. Section 4: Effective Date. This Ordinance shall be in full force and effect beginning on January 1, 2019 and after passage, approval and publication, as provided by law. [SIGNATURE PAGE FOLLOWS] Ordinance 2018-WA-G-1142 Water Rates 2019 Page 2 of 2 Additions are bold and double-underlined; deletions are struck through. APPROVED THIS 11th day of Decem ber, 2018. Gopal G. Lalmalani Village President PASSED THIS 11th day of Decem ber, 2018. Ayes: Nays: Absent: ATTEST: Charlotte K. Pruss Village Clerk