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04/16/2007-CC-Minutes-Work SessionMINUTES: CITY COUNCIL WORKSHOP APRIL 16, 2007 PRESENT: Mayor Joe Higgs, Councilman Andy Garza, Councilman Glenn Ervin, Councilman Robert Patton, Councilman Mike Walker, Councilman James OTHERS PRESENT: City Manager Jack Smith, City Secretary/Assistant City Manager Rose Chavez, Water/Wastewater Superintendent Eddie Branham, Electric Superintendent Eddie Branham 1. Mayor Joe Higgs called meeting to order. 2. Discussion Regarding Utility Rates and Rate Study City Manager advised that he would like to establish a procedure quarterly or semiannually for reviewing all the City's rates and fees. This will allow City Council to review rates and make necessary adjustments. City Manager indicated that changing multi -units on one meter is not unique to Sanger. He explained the method in calculating the bill which a customer is billed for multi -units and that a customer is given credit for each 1,000 gallons for each unit to determine the calculation. The same formula is used for the sewer rates. City Manager advised that staff did get the information from the City of Denton since Mr. Bucklew did reference this when he addressed the City Council at the last meeting. The City of Denton's calculation is more complicated since they have certain businesses in different categories. Restaurants are charged more and a formula is used to determine the cost for sewer based on treatment analysis. City Secretary indicated that the City of Corinth recently conducted a rate study since they needed to simplify their billing process. Corinth's rate study determined a fair rate to charge based on the size of meters. Currently, Sanger does not bill water by the size of the meter. City Secretary continued to explain the different rate structure of the cities that submitted information. Gainesville charges a fee by each door that is occupied in a multi -unit complex. Bridgeport and Pilot Point's billing structure is the same as Sanger. Councilman Garza indicated that everyone is looking at their utility bills due to the electric rates being higher than they have ever been. He expressed that in the use of a single meter servicing multi -units, the City is already billing the master meter and when we bill additional units he indicated it was redundant. City Secretary indicated that she agrees; however, the City does not have a rate structure for these size meters. An example would be a residential home that has a 3/4 inch meter and a multi -unit that might have a 2 inch or 4 inch and that needs to be considered in establishing the rate structure. The commercial sewer rates, when they were set in place about five years ago are not adequate compared to what other cities charge for their rates based on the size of the meter. Councilman Garza indicated if the City is going to charge more, then the fee should have been established at the time the meter was set. Mayor explained that when this was brought up years ago it was determined that a family in an apartment would use the same amount of water as a family in a house. The Council at that time determined that it should be billed the same. In a business that serves more than one unit, there is one meter, the rates are so low they have to charge a minimum for each unit. If this is changed in the middle of a budget year, there will be shortfalls in revenues as staff indicated. Councilman Garza indicated that he understands that it needs to be done at the appropriate time. Discussion followed concerning rates and the billing of a master meter, mobile home and the size of a meter and considering debt and bond obligations in arriving at a rate. City Manager continued to explain the billing and calculation process. City Secretary explained that staff would like a rate structure that is fair for each of the businesses and residential multi -units that would not cause a revenue loss that would impact the budget this year. Councilman Ervin indicated that the rates for Corinth seem fair based on the size. Councilman Patton indicated he felt a rate study needs to be done to determine a reasonable solution in what to charge. Councilman James asked why does the City need to pursue a study when the City has documentation that staff can utilize. Councilman Walker expressed if we implemented something like the City of Corinth then it could possibly make the City come in at the "short end." Discussion continued on how this would affect this fiscal year's budget. Councilman James indicated that he would like calculations of multi -units using Corinth's rates to determine the difference in the billing. Discussion on the water/sewer rate structure in place based on 1,000 gallons of water metered. Councilman Garza indicated he would like staff to pull samples of apartments and commercial multi -units and use Corinth's rate structure to determine fairness and uniformity and let the customers know when this will be put into place. Discussion continued on multi -unit occupancy and that it should not be responsibility of staff to determine what to charge. Staff was instructed to prepare some calculations based on Corinth's rates for the multi -units to determine the impact. Councilman Ervin advised this could be decided at the time a business pulls a building permit. Councilman Garza indicated this would also impact all businesses since we are determining a rate based on the size of the meter. 3. Meeting Adjourned.