City Commissioners will be asked to set public hearings for May 7 for proposed rate increases for water, sewer, storm drain and sanitation.

If approved, the increased rates would become effective June 1.

City staff reviews and analyzes annually the expenses and capital needs for utilities and sanitation to make rate adjustments as needed.

Staff will present that analysis during the April 2 work session and commissioners will be asked to set the public hearings for May 7.

City approves budget, intent to raise taxes [2023]

The city contracted with Advanced Engineering and Environmental Services, Inc., or AE2S, for a water and sewer utility rate study in 2018 based on a comprehensive review of the city’s water and sewer funds and budgets, the water master plan, wastewater facilities plan, customer classes, current usage data and future planned growth.

The city did not adjust utility rates for three years during COVID.

“Due to the extended time that the utility rates were in effect during COVID without any rate increases…the city is struggling with having the operational funding to maintain services due to inflationary costs as well as completing all of the necessary capital improvements,” according to the city staff report.

The last utility rate increase was June 2023.

City reviews budget, financial position

“Adjustments in utility rates are necessary to provide adequate revenue to support operations, finance the capital improvements program, meet debt service coverage requirements, and to maintain appropriate reserves,” according to the city staff report. “The rate projections to meet future revenue requirements and gradually address cost of service for the various user classes have changed the way in which the proposed rates are being presented.”

The utility funds are enterprise funds and those divisions are largely funded by fees for service.

Staff is recommending a 15 percent increase for water, a 10 percent increase for sewer and a 15 percent increase for storm drain.

Staff is also recommending a 5 percent increase for standard residential and commercial sanitation rates.

Utility increases were included and discussed in the city budget process last summer.

City Commission approves increased utility fees [2023]

For residential customers, according to the staff report, the average monthly utility bill would increase $6.72, or 12.5 percent:

• water would increase $3.02 from $20.18 to $23.20.
• sewer would increase $2.62 from $26.29 to $28.91
• storm drain would increase $1.08 from $7.26 to $8.34

For commercial customers, an average monthly utility bill would increase $19.42, or 12.5 percent:

• water would increase $9.48 from $63.21 to $72.69
• sewer would increase $8.38 from $83.84 to $92.22
• storm drain would increase $1.56 from $10.40 to $11.96

The water rate increase is due to about $60.4 million in capital improvements needed over the next five and a half fiscal years.

The significant projects include:

• ongoing water main replacements, $16.3 million
• water treatment plant upgrades for $22.4 million

The water treatment plant projects currently underway include the sludge processor and corrosion control, followed by the head house floor repairs, according to staff, and the cost of completing projects has increased.

Staff wrote in their report that the solids handling project at the water treatment plant was initially budgeted for $8 million and came in just under $13 million due to inflationary increases.

City approves contract for stormwater master plan [2023]

The 33rd Street water tank is projected at $12 million for a new five million gallon tank, but Public Works staff found a repair solution that costs an estimated $2 million.

Projects identified for fiscal years 2028 and 2029 include the Sunnyside pump station design and construction at an estimated $2.2 million and the design and site acquisition for a new water storage reservoir on the south side at an estimated $10.3 million, according to city staff.

Regulatory projects not included in the capital improvements project list year include the lead service line rule coming from the U.S. Environmental Protection Agency, and disinfection byproducts at the water treatment plant and nutrient removal at the wastewater treatment plant.

City continuing effort to inventory water service lines ahead of new EPA rules

City staff are researching those requirements and guidelines to determine plans, but those regulations will affect the city as a whole, as well as individual property owners.

Operating expenses are projected to increase from $6.2 million to $9.8 million over the next decade at the water treatment plant due to increasing costs for chemicals, electricity, labor and general inflation, according to city staff.

Chlorine costs have increased by 300 percent over the last year and other chemicals used at the water treatment plant have increased by at least 30 percent, according to public works staff.

Electrical costs are also tripling at both the water and wastewater treatment plants, which are the biggest electricity consumers for the city.

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The annual electricity cost is estimated at $2.8 million for the water treatment plant and $1.2 million for the wastewater treatment plant, according to the city.

Fire hydrants are also part of the city water system and are included as a monthly charge within the rate structure rather than an annual special assessment. Staff is recommending an increase of 15 percent.

The sewer increase is due to about $126.6 million in capital improvements over the next five and a half fiscal years, including:

• ongoing sewer rehabilitation, $6.6 million
• wastewater treatment plant projects, $105.7 million
• lift station rehabilitation, $1.1 million; plus
• biological nutrient removal upgrades at the wastewater treatment plant may total up to $100 million depending on the outcome of potential new regulatory requirements.

Operating expenses at the wastewater treatment plant are similarly expected to increase over the next decade from $5.9 million to $8.6 million due to increases for chemicals, electricity, labor and general inflation, according to public works.

City considering landfill options [2023]

The storm drain increase is due maintaining the current system with cleaning and lining current trouble areas, and the city is anticipating about $27.5 million in needed capital improvements over the next five and a half fiscal years to improve the functionality of the storm drain system.

Significant projects include the south Great Falls storm drain improvement projects for $8.9 million and the Central Avenue and 3rd Street South drainage improvement projects for $6.7 million.

Staff is also recommending a five percent increase for sanitation fees, which were last increased in May 2023, due to increased operations expenses including equipment, fuel and landfill costs.

The city sanitation division handles garbage pickup for 18,784 residential and commercial customers, or 85.6 percent of all city customers.

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Republic Services serves the remaining customers and owns the landfill.

If approved, a regular residential sanitation bill would increase by 83 cents, from $16.50 to $17.33 monthly.

The current rate for Republic for city residents is $15.42, plus a fuel recovery fee, according to city data.

The senior rate would increase by 58 cents, from $11.55 to $12.13 monthly.

A commercial three-yard container would increase by $4 from $80 to $84 monthly.

Some charges will increase slightly more than 5 percent due to the increased cost of services, according to the city.

Cardboard recycling would increase from $24 to $25 and vacant business monthly pickups would increase from $6 to $7 to cover the costs of service, according to public works.

City approves contract for southern storm drain infrastructure project

Increased landfill fees are continuing to drive sanitation costs and city staff have been considering options to reduce those costs for several years, such as the possibility of opening its own landfill.

Chris Gaub, public works director, told The Electric this week that city officials had decided against a city-owned landfill because didn’t financially pencil out, plus there were potential environmental liabilities and other risks associated with landfills.

Landfill rates change on January 1 annually and the city sanitation division paid $1,185,759.90 for 38,462 tons in the last fiscal year that ended June 30, 2023, according to the city.

For the first six months of that budget year, the city was charged $30.31 per ton and the rate increased to $32.43 for the second half of that budget year.

So far for this budget year, the city paid $32.43 per ton for the first six months and for the second half of the budget year, the rate is $33.44.

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City staff is projecting a total of $1,208,647 for this budget year in landfill fees, or an increase of $35,541, according to staff.

A 4.75 wage increase through the collective bargaining agreement and fuel costs are also driving expenses and the need for a rate increase, according to staff.

The sanitation division has 20 full-time employees, who handle 939 customers each, according to city numbers.

The sanitation division is scheduled to replace two residential side loaders and one commercial side loader.

The two residential units are 2016 models, one with 15,269 hours and the other with 9,845 hours of operation, according to staff.

The new units are expected to cost $453,740 each, up from $259,650 in 2016.

The commercial unit is a 2013 with 12,063 hours and the new unit is expected to cost $391,760, up from $206,901 in 2013.