HomeMy WebLinkAbout1998 03 23 Regular Item L
Date: 03231998
The following Regular Agenda Item L was
moved from 3/9/1998 Regular Meeting to
3/23/1998 Regular Meeting.
COMMISSION AGENDA
ITEM
L
REGULAR X
CONSENT
INFORMATIONAL
March 9,---1Q2.8
Meeting
MGR ~ lrr IDEPT /L/-
Authorization
REQUEST: Utility and Finance Departments are Requesting a Workshop to Review the
Proposed Rate and Policy Ordinance
PURPOSE: The purpose of this Board item is to request that the City Commission schedule a
workshop for March 30, 1998 at 6:30 P.M. to review the proposed revisions to
Chapter 19 of the Code of Ordinances pertaining to potable water rates for irrigation
and changes to the customer service policies, procedures, and practices.
CONSIDERATIONS:
This workshop is n'eeded to finalize the proposed changes to the Code of Ordinances
relating to potable water rates and customer service policies and practices. The need for the
rate changes became apparent last year during a review of complaints of high irrigation bills.
An inequity existed in our progressive rate structure between single family rates and master
and common area irrigation rates, It also provided an opportunity to reevaluate customer
service practices such as turn off notifications, turn off charges, late payments, deposit
amounts, etc.
Public Resource Management Group, Inc, was retained to perform the necessary
work at a cost of$6,000 as authorized at the May 12, 1997 City Commission meeting, A
draft redlined copy of the proposed ordinance will be provided one week prior to the
workshop,
March 9, 1998
Regular Agenda Item L
Page 2
RECOMMENDATION:
It is recommended that a workshop be scheduled for March 30, 1998,6:30 P,M" to
review the proposed revisions to Chapter 19 of the Code of Ordinances pertaining to potable
water rates for irrigation and changes to the customer service policies, procedures, and
practices.
ATTACHMENTS:
1. Irrigation Rate Structure Review
2, Customer Service Review
COMMISSION ACTION:
A TT ACHMENT NO. 1
~
Public Resources Management Group, .nc.
Utility, Rate, Financial and Management Consultants
August 13,1997
PRMG #1060-01
Mr. Ronald W. McLemore
City Manager
City of Winter Springs
1126 East S.R. 434
Winter Springs, FL 32708
SUBJECT: Irrigation Rate Structure Review
Dear Ron:
As requested by the City of Winter Springs (the "City"), Public Resources Management Group,
Inc, (PRMG) has performed a review of the water service rate structure associated with irrigation
meters which. is included in Section 19-102 of the Winter Springs Code of Ordinances. The
purpose of our review of the irrigation meter .service was to evaluate.the applicability of the
existing structure to the various users of such service and to offer recommendations to the City
which would meet the City's objectives of rate equitability, revenue stability, .arid the promotion
of the conservation of water in accordance with the policies established by the St. Johns River
Water Management District (SJRWMD) as part ofthe water use permitting process. This letter
swiUnarizes the results of our review and r.ecommendations for revision to the structure of the
. water rates for irrigation meter service for the City's consi~eration,
Existing Rates
The current rates for irrigation . meter service were approved by the City pursuant to
Ordinance No, 617 and became effective with bills .renderedon and. after June 1996 (the "Rate
Ordinance"), Based on our review of the City's ordinances and discussions with City staff,. the
primary purpose of Ordinance No, 617 was to modify the water conservation based rate structure
in order to increase the number of conservation blocks and promote greater pricing incentives to
meet the conservation goals of the SJR WMD, The Ordinance did not effectuate a rate increase
(i,e" the monthly rate for the water base facility charge and first and primary use consumption
block did not change nor were the sewer ra.tes adjusted), however an increase in revenue could
have resulted due to the change in pricing imposed by the City for excessive wqter use by some
of the City's water customers, It should be noted that the City adopted the water con~ation
based rate structure pursuant to Ordinance No. 563 on July 11, 1994 in order to meet the
Consumptive Use Permit (CUP) requirements of the SJR WMD which mandated the adoption of
a conservation based rate structure. It is our understanding that the last rate adjustment designed
. to increase the revenues of the System was adopted by the City on December 14,1992 pursuant
225 SOUTH SWOOPE AVENUE . SUITE 211 '. MAITLAND, FL 32751
TELEPHONE (407) 628.2600 · FAX (407) 628-5884
Mr. Ranald W. McLemare
August 13, 1997
Page 2
to.. Ordinance No.. 538 ar appraximately 5 years ago.. With respect to. the current rates fer
irrigatien metered service, the rates (and inverted rate.structurete premete water censervatien)
have been in .effect far just ever ene year, A summaryaf the current irrigatian meter service
rates are summarized below:
Base Facility Charge
Usage Charge (rate per 1,000 gallons of service)
o - 5,000 gallons
5,00 I - 10,000 gallons
10,00 I - 15,000 gallons
15,00 I - 20,000 gallons
Over 20,000 gallons
Irrigation Meter Service Rates
N/A [I]
$1.25
$1.50
$1.75
$2~00
. $2.50
[1] No !:lase facility is currently charged since assumed service is served from a single point of
connection and is assumed to be in addition to Domestic (primarily indoor) water use.
.' .
Based en discussiens with the City, amajer issue regarding the irrigatien meter service rate deals
with the applicability ef such rate to. the varieus irrigation custemers .lecated througheut the
City's service area. Specifically, it is eur understanding that the rate was primarily intended to.
be applicable to. those individually metered residential custamers who. have a dual meter fer beth
demestic and irrigatian service,. The City, he wever, has several general service irrigatien
custemers which use petable water exclusively fer cemmen area and greenspace irrigatien, The
rate is applied to. all general service irrigatien customers, regardless of service demander
capacity reservatiens en the same basis as the residential. irrigatien service, When the City
attempted to. apply this rate to such general service custemers, it became evident to. beth the City
and certain of the. affected custemers that the rate structure was nat adequate. Specifically,
several custemers served by larger meters (say. abeve 2. inches) were cencerned that since they
used large valumes af water" that'the majarity af the use wau1d be priced in the lastcansumptian
bleck which was theught to.. be unfair. Due to these cancerns, the City revised the rate
applicatien to. certain custamers receiving' irrigatien service, Specifically, the City currently
charges the standard valume charge ef $0,91 per 1,000 gallans far all metered water
consumptian assaciated with general irrigatien services for several homeowner associations
(which are large users af water and. are all served by a 4 inch service). All ather general service
. customers are still being charged the irrigation rate as referenced in the Rate Ordinance, Thus,
there exists an apparent inequity in rate application among those customers which receive
irrigatian service, Furthermare, the City has. recagnized that this type of service has been
designated by the SJRWMD as being non-essential and should be targeted with a pricing
incentive to. pramate the conservatian of water. As a result, the City requested that PRMG
review the current irrigation meter rates and suggest revisions to.. the applicability provisions af
such rates to. meet the overall geals and ebjectives efthe City, .
Mr. Ronald W. McLemore
August 13, 1997
Page 3
Rate StruCture Alternative
Based on discussions with the City, there exists three types of customer classes ,whi~h receive
irrigation meter service, These three classes include: i) separately metered irrigation service for
residential customers which have a single serVice line with dual metering facilities to measure
domestic (indoor) use and irrigation (outdoor) use ("residential irrigation meters"); ii) general
irrigation service which has a single service line with dual metering facilities similar to what was
discussed above for the residential irrigation service; and iii) general service irrigation which
includes a separate service distinct from any domestic use ("general irrigation meters"), General
irrigation meters (sirigle service) are used primarily by such customers as homeowner
associations for common area or 'greenspace irrigation, It is recommended that the City
recognize these three distinct classes of service in the ,Rate Ordinance and charge rates
accordingly to the level of service requested by such customers. The following is a discussion of
the recommended rate structure for these three classes of irrigation service,
Residential Irrigation Meters - This class of customer essentially consists of one service serving
the account with two meters, the first being a doinestic meter to measure indoor use and the
second being a separate irrigation meter to measure "water-only" use primarily for outdoor
irrigation used at the customers' convenience (i,e., serves as a "deduct" meter for sewer charge
determination). According to the City, the majority of dual service irrigation meters are for
residential use, For the purposes of "pricing" this service,,"we agree with the current rate
methodology of the City which recognizes this use as an addition to the indoor use and priced at
the higher rates. Essentially, this rate structure 'places all residential customers generally on an
equivalent basis relative to the charging for water consumption, This is shown in the example
below for a hypothetical residential customer with 5,000 gallons of domestic use and 15,000
gallons of irrigation use (total of 20,000, gallons of monthly water service which is a common
usage relationship' based on our experience ).
Mr. Ronald W. McLemore.
August 13, 1997
Page 4
Rate Component,
Base Facility Charge
Residential Customer Monthly Utility Bill at Assumed
20,000 Gallons of Use
Water Only Use Water and Sewer Use
Individually . DuaL Iridividuallt Dual
Metered Meter Metered Meter
$3.58 $3.58 $10.23 $10,23
Residential Use
First Block
Second Block
. Third Block
o to 10,000 gallons
10,901 to 15,000 gallons'
15,001 to 20,000 gallons
$9,10 $4.55 $35.00 [*] $17.50 [*]
$6.25 $6.25
$7.50 $7.50
$6.25 $6.25
$7.50 $7.50
$.U.i $U.5.
$26.43 . $30.63 $59.98. $50.23
Irrigation Use
First Block
Second Block
Third Block'
o to 5,000 gallons.
. 5,001 to 10,000 gallons
10,001 to 15,000 gallons
Total Monthly Bill
[*] Iricludes wastewater flow charge based on metered water consumption registered through do~estic use
meter.
As can be seen in the above example, the dual metered customer which receives water only
service.actually pays a higher charge due simply to the shift in water use among the consumption
blocks. However, the dual metered customer would avoid wastewater usage charges (if any)
which may have been billed for irrigation service received which would have occurred within the
wastewater billing threshold (use above the domestic needs) which would not be the case with
the individually metered customer. We are of the opinion that the "layering" .of the usage rates
for dual. metered residential customers is reasonable and should not be modified at this time,
Since the residential 'customers are considered as 1 ERC for the c;apacity reservation process
associated with the application of the service availability charges, any flow above the .threshold
use of the ERC factor should be targeted with the water conservation rates. Based on the Rate
Ordinance, an ERC is equivalent to 35.0' gallons of daily use or approximately 1.0,5.0.0 gallons per
month, Since the first block of the domestic use. is for use from .0 to .1.0,.0.0.0 gallons, any
irrigation use should be priced at the next increment of service which is how the current City
. rates are struct.ured, We agree with the current structure for residential customer pricing and
recommend that the City make a modification to the Rate Ordinance to specifically identify the
rates for irrigation use as residential irrigation meter service.
Non-Residential Irrigation Service - Based on discussions with the City staff, we were made
aware that there are some instances where a single service with a dual metering capability has
been installed for a non-residential or commercial account. Since the service demands and type.
of metering configuration are the same as discussed for the Residential Irrigation Service above,
Mr. Ronald W. McLemore
August 13, 1997
Page 5
we would recommend that the City bill for the irrigation service in the same manner as discussed .
above of the residential irrigation customers, Tllis is the current methodology for this particular
type of customer pricing and recommend that the City make a modification to the Rate
Ordinance to specifically identify ti;1e rates for such dual metered service relative to the irrigation
use for these particular non-residential customers,
General Irrigation Service - This class of service is different from the dual metered water service
discussed above since it represents a separate distinct connection to the water system and is not a
dual metered use originating from a single service line. It is our understanding that it is general
City policy that these customers requesting this service are required to pay a service availability
charge to the City prior to receiving service in order to allow the City to recover the pro rata cost
of the water capacity reserved on. the customers' behalf, The service availability fee as billed by
the City was based on the amount of capacity requested by the customer which generally links to
the size of the meter to service such customers,
In order to promote the conserva~ion goals of the City and SJR WMD and reflect rate equivalency
among all irrigation use customers, we would. recommend that the City adopt an' inverted
(blocked) rate structure applied on.a consistent basis with the implied capacity relationships used
in the development of the base facility charge, Under this approach, the customers' use would be
more closely tied to the capacity reserved, would recognize the minimum daily flow
, requirements for an equivalent residential connection (an ERC which equates to the average daily
use of ~n individually metered residential account), would correspond to the irrigation meter
rates for service of a typical residential user, and would attempt to place all customers on an
equal basis, The ERC factors recommended for use are consistent with the usage relationships
from information published by the American Water Works Association (A WW A) and used by
the City for the establishment of the base facility charge which is that component of rates
designed to recover. the "readiness-to-serve" costs of the system. These factors are also used by
the Florida Public Service Commission in the design of rates associated with the rate regulation
of private utilities in Florida, The recommended ERC factors by meter size are summarized
below. .
Meter Size (inches)
5/8 x 3/4 and 3/4 '
I
I 1/2
2
3
4
6.
ERC Ratio
1.0
2.5
5,0
8.0
16,0
25'.0
50,0
Mr. Ronald W. McLemore
August 13, 1997
Page 6
The proposed consumption blocks were then structured to be consistent with the ERCs reserved,
thus placing all customers on an equal basis relative to the capacity requirements. The following
table summarizes the consumption blocks recommended for each meter size,
Water Consumption by Meter Size
5/8 x 3/4 and
3/4 inch I inch [.1/2 inch 2 inch 3 inch 4 inch 6 inch
ERC Factor 1.0 2.5 5.0 8.0 16.0 25.0 50.0
Block I 0-10.000 0-25,000 0-50.000 0-80.000 0.160,000 0-250.000 o . 500,000
Block 2 10.001-15.000 25.001.37.500 50.001-75.000 80.001-120.000 160.001-240,000 250,00\.375,000 500.00 1.750.000
Block 3 15,001-20.000 37.501-50.000 75.001-100.000 120.001-160.000 240.001-320.000 375.001-500,000 750.001-1.000.000
Block 4 20.001-25.000 50.001-62.500 100.001-125.000 160.00 1-200.000 320,00 1-400.000 500.001-625.000 1.000.001-1.250.000
Block 5 25,001-30.000 62.501-75,000 125,001-150.000 200,001-240,000 400.001-480.000 625.001-750.000 1.250.001-1.500.000
Block 6 over 30.000 over 75,000 over 150,000 over 240.000 . over 480,000 over 750.000 over 1.500.000
Under this approach.all customers, whether a 3/4 inch metered user serving a small common area
to a customer witha 6 inch meter serving a large greenspace area, would be treated equally. It
should also be pointed out that a general irrigation customer' with a 3/4 inch service would
continue to pay an irrigation consumption charge fairly close to the individual residential user.
Normally, we would recorrimend that the conservation blocksbe similar in structure (per ERC)
as that of the residential irrigation meter service, However, because of the "rate shock" that will
result to the large irrigation lisers as discussed . later in this letter, we are recommending that the
residential domestic rate: blocks. be incorporated into the general i'rrigation meter service rates,
This would be acceptable since PRMG is also recommending the application of a base facility
charge which would be consistent with the capacity reservation process of the City and that such
customers represent an. illdividualconnection to the system (as opposed to the dual metering
service).
In addition to the consumption charge, PRMG.would recommend that the general service
irrigation users. be charged a base facility charge to recover the fixed costs associated with
. maintaining the system in a "state Of readiness" as well as the cost of metering and billing.
These customers are a separate and distinct connection to the utility system and have generally
paid a service availability charge associated with such connection. The recommended base.
facility charge would .be identical to the rates which are in .effect pursuant to the Rate Ordinance
which were structured using the A WW A equivalent factors discussed earlier.
Large User Impact Analysis
A concern usually expressed by all regulatory bodies such as the City Commission deals with the
financial impact that a rate structure change may place upon a customer. It is anticipated that
those general irrigation meter service customers currently being billed the water conservation
rates may experience a rate decrease since more usage will be priced at the lower consumption
blocks, However, for all of the general irrigation meter service customers which currently are
Mr. Ronald W, McLemore'
August 13, 1997
Page 7
billed a flat consumption charge (e.g" the Homeowner Associations), such customers will
experience an increase due to the application of the base facility charge as well as the increased
charges'for consumption. Pursuant to the proposed rate structure, excessive users - of water
should be charged the higher usage rates consistent with price incentive objectives of the City.
,Based on my discussions with representatives of the SJR WMD, this rate structure is considered
as being consistent with the conservation program goals of the District.
Currently, there ate three (3) customers considered as large users of general lITIgation meter
service which are billed the flat consumption charge, These customers include the Eagles Watch
Homeowner Association,. Grand Reserve' Homeowners Association, and the Howell Creek
- Reserve Homeowners AssQciation, All three of these customers receive service through a 4 inch
meter. Based on the proposed rate recommendations of PRMG reflected in this letter and the
actual metered water use of the customers fot the' 12 month period ended March 1997, these
customers would have received an increase in the irrigation water bill as shown below,
Existing Rates
$8,272,81
1 ;420:24
10,341.79
Computed Charges
Proposed
Rates [2]
$14,491.18
2,524,97
19,703.60
Difference
Homeowner Association
General Irrigation
Meter Account
_ Eagles Watch
Grand Reserve
Howell Creek
A verage Monthly
Water Use
(gallons) [I]
757,583
130,058
947,050
Amount
$6,218.37
1,104.73
9,361.81
Percent
75.2%
77.8%
90.5%
[1] Reflects average use for twelve month period ended March 1997 as provided by the City.
[2] Includes rates based on revised conservation block structure and application of a base facility charge (all
customers receive service through 4" meter).
It should be noted that although the increases in cost to these customers are quite significant, one
must realize that these customers are substantial users of water, Expressed on an ERC basis
(assuming 2,5 ERCsper four inch meter consistent" with meter, equivalent factors currently used'
by the City), these customers have historically' experienced an average monthly use of
approximately 24,329 gallons per ERC (which would result in an average monthly equivalent
water bill under the existing rates of $22.14 for these customers), The proposed rates would
result in an average monthly bill equivalent of approximately $40,80, A residential customer
,using the saine amount of water per month would be char'ged $34,01 which is comparable to the
average ERC cost for the general irrigation meters, The difference between the two levels of
average bills deals solely with where the consumption is charged for the general irrigation
metered service (i,e., 18.8% of the usage is priced in the last, and most costly, usage block).
Therefore, the rates incurred by the customers for similar service is essentially equivalent and
promotes a degree of ,fairness among all the water customers of the City. As previously
mentioned, for those general service customers receiving irrigation service billed on an inverted
block rate concept, the majority of these customers may experience a slight rate reduction,
Mr. Ronald W. McLemore
August 13, 1997
Page 8
Other Rate Considerations
In addition to the proposed changes to the Rate Ordinance, we are proposing other revisions to
the rates for water service, The change being recommended is to the residential class in order to
provide a level of consistency relative to the proposed general irrigation rates. Specifically, we
would recommend that all residential users be considered as 1 ERC and charged a base facility
charge equal to the charge for the smallest sized meter (i.e., 5/8 x ,3/4 inch and 3/4 inch), Since
the water conservation blocks and residential irrigation blocks are applied uniformly to all
residential users or accounts' without regard to meter size, it would be beneficial to consider all of
this class of customers uniformly. This would also be consistent with the proposed general
irrigation meter service rate application whereby the consumption blocks are adjusted based on
the ERCs implied per meter size, The net effect of this change from a revenue standpoint is
estimated to be immaterial since the City has indicated that the majority of the residential
customers receive service through the smallest meter.
Proposed Revisions to' Rate Ordinance
Since the City has adopted and codified the rates for water service by Ordinance, and the
recommendations outlined in this letter reflect changes to the water rates, the City will need to
revise. the Rate Ordinance by public hearing if such recommendations are acceptable. Included
on Attachment A at the end of this letter are proposed revisions to Section 19-1 02 "User Charge
Schedule General" for consideration by the City. Before adoption of the proposed changes and if
the City concurs with the recommendations reflected in this letter, the City should instruct the
City Attorney to review the changes to insure that no other sections of the Code of Ordinances
are in conflict with the proposed revisions,.
It should be noted that the rate recommendations presented herein were not based on a cost of
service analysis and no changes are being recommended relative to the level of charges being
applied to the customers, The proposed rate application changes were based on: .i) the general
rate relationships implied in the City's current rates; ii) experience of PRMG relative to the
establishment of rates; and iii) previous discussions held by PRMG with the SJRWMD, We
believe that the propos~d. rate application revisions presented herein promote the utility
objectives delineated in this letter.
Mr. Ronald W. McLemore
August 13, 1997
Page 9
We have appreciated this opportunity to provide rate consulting services to the City and look
forward to working with the City in the future. If you should have any questions or comments
with regards to the r~commendations expressed herein, please do not hesitate to give us a call.
Very truly yours,
Public Resources Management Group, Inc.
~4 ~ CL
Ro bert 1. Ori
President
Attachment
cc: Mr. Kipton D, Lockcuff, P.E" City of Winter Springs
Mr. Harry E, Martin, City of Winter Springs
Mr. Terry Zaudtke, Conklin Porter & Holmes Engineers
. letters/mc1em2.1et
ATTACHMENT A
PROPOSED REVISIONS TO SECTION 19-102
OF WINTER SPRINGS CODE OF ORDINANCES
Sec. 19-102. User charge schedule, general.
The following rates and charges shall apply to all systems unless otherwise specifically stated:
.e-. .
1, Monthly water service rates, The monthly water rate shall include the sum of the base
facility charge plus a volume charge per one thousand (1,000) gallons or a fraction thereof of
metered water consumption as set forth below: .
Monthly
Charge
Individually Metered Residential Service:
Base Facility Charge
All meter sizes .........,..:...,......................................................$3.58,
Charge per,
Thousand (1.000) Gallons
Vohime Charge - Domestic Service (gallons)
0-1 0,000 ................................................................................. $0.91
10,00 1-15,000 ..........................................................................1,25
15,00 1-20,000....:...................................................................:. 1.50
20,00 1-25,000 ......:..............................................'..................... 1.75
25,00 1-30,000 ,...........................................,...................,......... 2.00
Over 30,000 .,..............,.............................,.,..............,............. 2.50
Volume Charge - Irrigation Service (gallons) [*]
0-5,000 ........................ ........................................................... $1,25
5,001-1 0,000 .................................................................;.......... 1.50
10,00 1-15,000 ..........................................................................1.75,
15,001-20,000....... ........ ............... ...........:................... ............. 2.00
Over 20,000 ,.............,............................................. .,.. .........:... 2,50
, . .
[*] Reflects water use for residential irrigation service which is metered in addition to domestic service from a
single service connection to water system, For those customers which receive dual metered service from a
single service connection, the Base Facility Charge will only be applied to Do'mestic Service (one charge
per service connection).
1060-01/attach.a
ERC Factor
Monthly
Charge
Master Metered Residential
and Non Residential Service:
Base Facility Charge (meter size)
5/8 x 3/4 and 3/4 inch ................................1.0...................... $3.58
1 inch ..:.............,........................................2.5 ........................ 8.94
1 1/2 inch ..................,................................5.0.......................17.89
2 inch ...... ......... ..... ....................................,.8,0 ........... ............ 28.62
3 inch .............................,.............,...........16.0 ...........:.......... 57.23
4 inch .................................................,.....25.0 .~.................... 89.50
6 inch .......................................................50.0 ....,............... 178,85
Volume Charge - Domestic Service per 1,000 gaIlons...................0.91
Volume Charge - Irrigation Service per ERC (gallons) [*]
0-5,000..... ......;.. ..............,..........,... ................ ........................ $1.25
5,00 I-I 0,000 ............................................................................ 1.50
10,00 1-15,000 ......:................................................................... 1.75
15,001-20,000 .......... .......................................................... ...... 2.00
Over 20,000 ....................'...,.,........,..........................................2.50
ERC Factor
General Irrigation Meter Service: I"']
Base FaCility Charge (metefsize)
5/8 x 3/4 and 3/4 inch .........,.,....................1.0......................$3.58
I inch .........................................................2.5 .....:..................8.94
I 1/2 inch ............,......................................5.0 .,.................... 17.89
2 inch .,..,..,...,.......,....,.............:...........,.,.,....8.0 :......,......,.,..... 28.62
3 inch .......................................................16.0 ...................... 57.23
4 inch .......................................................25.0 ...................... 89.50
6 inch .......................................................50.0 .................... 178.85
Charge per
Thousand (1 000) Gallons
Volume Charge per ERC
0-1 0,000 .........,........................................................................ $0.91
10,00 1-15,000 ........................................................................... 1.25
15,00 1-20,000 .................................................................. ........ 1.50
20,001-25,000. .............................,........ ...,..........................:.... 1.75
25,001-30,000 .... .....,.......................,.,.....,...,.,................ ....... ... 2,00
Over 30,000 .....,.. ...............,............................,........,.......,....... 2.50
[*] Reflects water use for irrigation service which is metered from a separate and distinct service
connection to the water system.
1060-01/attach.a
2
. '. .
The base facility charge is t~e minimum monthly charge applied in each account and will not be
assessed if the service is discontinued,.
. 1060-0 I/attach.a
3 .
A TT ACHMENT NO. 2
w
. Public Resources Management Group, Inc.
Utility, Rate, Financial and Management Consultants
August 13, 1997
PRMG #1060-01
Mr. Ronald W, McLemore
City Manager
City of Winter Springs
1126 East S,R, 434
Winter Springs, FI;., 32708
SUBJECT: Customer Sen'ice Review
Dear Ron:
At the request of the City of Winter Springs (the "City"), Public Resources Management Group, .
rnc, (PRMG) has conducted a review of certain nite and customer billing policies associated with
the:: customer service function of the City's water and wastewater utility system. The pUIpose of
the customer service review was to identify issues and areas of concern where improvements
could be made, relative to: i) the billing and collection function; ii) rates to be charged for
specific customer-re.quested services; and iii) other related factors affecting the customer service
function. The review performed by PRMG should not be considered as an audit of the customer
service function but more of providing general assistance to management as it relates to certain
issues which could affect the overall performance of the customer service function relative to
utility billing and the recovery of costs from the customers of the utility.'system,
In the performance of the customer service rev'iew, PRMG reviewed the billing policies and rates
as delineated in Division 4. of. Chapter 19, entitled Rates,. Fees, and Charges, of the Winter
Springs' Code of Ordinances (the "Code") and conducted'interviews with City management and
members of the customer service staff of the utility system, The results of our review process as
well as our recommendatiQhs are summarized below for. the City's consideration:
1. Utility Payment Provisions - The payments made by the utility customers of the City for the
monthly water and wastewater service are paid in arrears which is common in the .utility industry. .
Specifically, the customer receives utility service for. a specific period (generally 30 days) and
subsequently must pay for such service within- a predetermined time frame after the receipt of
such service. Based' on Section 19-97 of the City's Code .and discussions with the customer
service staff of the City's utility system, the maximum allowable time that a customer has
relative to the payment for service received (i,e" for.a 30 day period) is 60 days as shown below:
225 SOUTH SWOOPE AVENUE' SUITE 211 . MAITLAND, FL 32751
TELEPHONE (407) 628-2600 . FAX (407)628-.5884
Mr. Ronald W, McLemore
August i 3, 1997
Page 2.
Description
. Days
Billing Payment Cycle
Period of Service
Period of Bill Process and Mailing (Initial Bill)
Allowable Payment Period
Period of Bill Process and Mailing (Second Bill Notification)
Service Period Until Discontinuance Recommended
Cut-off Extension/Convenience Period
30 days
5 days
30 days.
5 days
15 days
5 days
Total Period After Service Rendered
Total Risk Period
60 days
90 days
As can be seen above, the period of service from the date .ofuse to when service would be
discontinued (cut-off) can be as long as 60 days which is equivalent to nearly two months of
service, Technically, a customer could utilize up to three months of service (considering the first
billing period) at the risk to the City (for non-payment) which we believe.to be excessive,.
Although the City does have customer deposits to help defray the risk of non-payment, the total.
period which the City is at risk of 90 days is not typical. A telephone survey of the payment
pra~tices for other. neighboring utilities in the area further supports our concern .regarding the
period oftime: i} for. payment of the utility bill until considered. delinquent; and ii) when service
is discontinued for non-payment of the utility bill. A summary of the survey results is
summarized below, .
Approximately No, of. . Average Time from
No, of Days DaysUntil Service Delinquency to
Utility to Pay Bill [1] Disconnected. Disconnect
City of Winter Springs 30 days . 55 days 25 days
City of Altamonte Springs 28 days 40 days 12 days
City of Casselberry 30 days . 60 days 30 days.
City of Lake Mary 25 days 35 days 10 days
City of Longwood 14 days 25 days 11 days
City of Maitland 20 d~ys 30 days 10 clays
Orange County. 16 days 40 days 14 days
City of Oviedo 10 days 40 days 30 days
City of Sanford 21 days. 45 days 15 days
Seminole County . 30 days 40 days 10 days
City of Winter Garden 7 days 20 days ["'] 13 days
City of Winter Park 25 days 60 days 3 5 days
Utility Average 21 days 38 days 17 days
["'] Can vary, ifnot disconnect wit?in 60 days, City has right by ordinance to file a lien against the property.
[1] Represents number of days until considered delinquent.
Mr. Ronald W~ McLemore
August 13, 1997
Page 3
As can be on the seen above tabulation, the average time for the payment .of a utility bill and
when a customer is disconnected due to no~payment is significantly less when compared to the
City's current payment policies. As shown on the summary, once a customer is considered
delinquent, the elapsed time to disconnect a customer for non-payment is generally within
two weeks, For .those utilities which pro.vid'e" a longer "grace" period before disconnect (i,e"
similar to the City), the due date is relatively shorter, thus still condensing the time frame which
the utility is at risk, "
In order to compel payment prior to disconnect, many utilities will personally notify the
customer by the use of a "door hanger" or "other communication method. " Although this is an
effective notification procedure, it is more costly since field service personnel must physically
visit the site of the customer to personally notify "them. This increased cost would need to be
recovered from utility system revenues and could be part of anyreconnection after disconnection
fee imposed by the City. It is our understanding that the City doeS providen?tification on the
utility bill if a" customer is past due and when disconnection from the system could occur.
Essentially, it is the customer's responsibility to pay.
During the interview process,PRMG becamt'<" aware that Ordinance No, 538 adopted by the City
on December 14, 1992 referenced a payment period of 15 days after the billing date before being
considereci as delinquent. . It is' our understanding that the payment due date .as referenced in
- "
Ordinance No, 538 of 15 days was also consiste~t with the customer service policies of the North
Orlando Water and Sewer Corporation and Seminole Utility Company, Inc" the private utility
systems which were regulated by the" Florida Public Service". Commission (FPSC) and
" . subsequently acquired by the City. The City increased the' payment period to the current 30 day
period which has been the policy for several years,
Based on our review of the payment policies of the various utilities'in the Central Florida area,
the previous policies in effect for the City; "and the interviews with staff regarding current utility
billing practices, PRMG recommends that the City shorten the payment" and disconhect
requirement cycle, Specifically, we would recommend the following:
i) The bill for utility service should become due and payable 20 days after the meter
readi.ng date for the particular service period which the bill covers, This period of time
would include the' bill preparation and mailing period, If one were to assume a 5 day
bill processing period, then the net payment term would be 15 days,.
ii) Absent the use'.of "cut-off' notification at the customer site (by on-site staff visit), if a
customer is considered delinquent in the payment of a utility bill, notification should
appear on the sul;>sequent monthly service bill (a "second notice" for .payment) which is
rendered to the customer. For -the purposes of a time line of events, notification would
occur within approximately 10 days of being delinquent. As discussed in this letter, a
Mr. Ronald W. McLemore
August 13, 1997
Page 4
late payment fee should be included on the subsequent or "second notice" billing
statement since the customer is delinquent in payment.
iii) :rhe City should disconnect the customers 10 days after notification,. "Serv~ce should not.
be restored until ~ll past due charges,penalties, and fees are paid in full or an acceptable
payment arrangement is made between the customer and the City,
The proposed payment requirements will: i) reduc~ the overall risk to the City associated with
the non-payment of service by 22% (essentially from 90 days to 70 days); ii) be consistent with
the current notification provisions of the City; iii) allow sufficient time for a customer to make
arrangements to pay after delinquency (customer responsibility) and notification; and iv) be more
consistent with the payment policies of other neighboring utilities,
2. Customer Deposits - To defray the risk of non-payment for utility services until the negligent
customer is disconnected, public utilities such" as the City require all custo~ers to post adeposit
prior to the initiation of service. The City provides each customer a Customer's Guarantee
Deposit Receipt at the time of deposit which provides that the:
a). . Customer guarantee payment of any and, all" indebtedness for water, .sewer,and
stormwater managementfees;
b) Deposit will not preclude City from disconnecting th~ customer for non-payment of.
a!1y and all services, regardless of sufficiency of deposit; . .
" c). City shall accrue and pay interest at a rate of 6% on all deposits held for more than
six months; and
d) . The City shall refund the deposit upon completion of 25 months of service with no
delinquencies during the previous 24 months, .
. With respect to the deposit policies of the City, PRMG has several recommendations for the
City's consideration. These' recommendations range from the level of the deposit charged to the
policies regarding the payment of interest on such deposits, A discussion .of our observations
and recommendations follow:
. A. Residential Deposit Fee - Pursuant to Section 19-102 of the Code of Ordinances, the City
. charges a deposit of $65.00 for residential users of the system, Based on discussions with staff,
this deposit is applicable to all utility services, including water, sewer, stormwater management,
and solid waste collection, which are all included on the single combined monthly utility bill for
service, Assuming an average residential water and sewer customer' using 8,000 gallons per
month of service, the following deposit amount should be recovered from all users.
Mr. Ronald W. McLemore'
August 13, 1997
Page 5
Mont~lyUtilitySeryice Charges
Water [.] Wastewater [.] Stormwater . . Solid Waste Total
Average Monthly Bill $10.86 .$27.37 $2.04 $13.68 $53.95
Period of Risk
x 3 months (current City policy) $32,58 $82, II . $6.12 $41.04 $161.85
Rounded Rate . $30.00 $80,00 . $6.00 $40.00 $156.00
. . x 2 months (proposed PRMGpolicy) $21,72 . $54,74 .$4.08 $27.36 $107.90
Rounded Rate $20.00 $55.00 $4.00. $25.00 $104.00.
[.]. Based on' 8,000 gallons of serviCe, water charges do not include application of 8% Utility Tax,.
As can be seen above and recognizing either risk period assumed for the c~lculation, the existing
deposit of the City does not appear to be appropriate. In fact, the current deposit barely provides
sufficient funds to recover 30 days of utility service for the average residential customer using
8,000. gallons of montWy water and wastewater service, .
We recommend the f~llo,^:ing as it relates tothe depo'sit fee for residential users:
1) Increase the fees to the amounts. indicated above based on the
payment procedures recommended by PRMG to be used by the. City;
specifically increase 'the combined water and wastewater deposit
(exclusive of additional amounts. for any deposit. for stonnwatei:.
management or solid waste collection) to $90;00. per residential
account.. If a residential customer. requests all utility services from
the City, a deposit amount of $130.00 would be reas~:mable,
ii) Adopt a single deposit charge for the combined utility se,rvices billed
such that the City can properly match the deposit. to. such service
requested, .
iii) Adjust the Customer's Guarantee Deposit Receipt to include a
reference to solid waste collection service,
Mr. Ronald W, McLemore
August 13, 1997
Page 6
The proposed water and sewer deposit at $90,00 is representative of combined water and sewer
deposits collected by other neighboring utilities as sho,wn below: . .
. . Water and Sewer
Residential Deposit Amount
City of Winter Springs
Total Current Deposit
Net Current \Vater and Sewer Deposit [1]
Recoinmended Water and Sewer Deposit [2]
$65.00
49.28
90.0.0
Other Neighboring Utilities
City of Altamonte Springs
City of Casselberry
City of Lake Mary .
City of Maitland .
City of Longwood
Orange County
City of Oviedo.
City .of Sanford .
Seminole County
City of Winter Garden
City of Winter Park
$50,00
100.00
8~.00
40.00
.75.00
123.06
95,00
50.00
. 80.00
150.00
105,00 .
Other Utility Average
$86.64
[I] Assumes current deposit less cost for one month of stormwater management
and solid waste collection serviCes,
[2] Assume.s deposit at'proposed payment policy.
. B, .. Non-resi"dential Dep0sit Fee - Pursuant to Section 19-102 of the Code of Ordinances, the City
charges a deposit of $200,00 for all non~residential users of the system. Notwithstanding the
issues discussed above regarding the applicable deposit per utility system (e.g" solid waste), the"
deposit should be based on an average bill per customer basis, not a flat rate applicable to a
whole class of users. "For example, the water and wastewater requiremen~s of an office building
or convenience store is entirely different than a large restaurant or laundry and the deposit should
reflect such usage (billing) differences, Additionally our experience has taught us. that in many
instances, it is the non-residential customers which may account for the majority of the
"uncollectible revenues owed to a utility' due solely to the size of the bill (amount due) as a result
of higher service requirements (e,g" greater amount of water use), We would recommend that
the non-residential deposit.be determined individually by the City and beequal to two times the
'average monthly bill [assuming the recommended payment (billing) provisions discussed in issue
no. 1 above], Additionally, our experience dictates that the industry norm is not to refund the
non-residential deposit fee which appears to be consistent with the provisions of the City Code.
However, discussions with staff indicate that these deposits have been returned to the customer if
the payment practices meet the policy standards as delineated for residential users, We would
recommend that the City maintain the non-residential deposits for the term of service,
Mr. Ronald W. McLemore
August 13,1997
Page 7
'C, Rental Deposit Fees- Many utilities have experienced a lot of difficulty with transient
" customers stich as, renters, Due to the general nature of this type of user, many utilities have
imposed a higher deposit on rental units, We would recommend that the City. consider a review
of the uncollectibles and delinquent payme'nt patterns for this class of customer and, if there is an
issue, then determine a separate. deposit requirement for such users be determined on a basis
consistent with' the recommendations reflected herein,
D, Interest on Deposits - The City currently pays an annual rate of interest equal to 6% on all
deposits held for more than 6 months, . PRMG does not disagree with the payment of interest to
those customers which have a'deposit balance with the City. However, we do believe that the
amount of interest paid should be reevaluated, For the past several years, the City has not
historically earned 6% on'the deposits which have been invested yet has continued to pay 6%,
which results in a net loss to the utili~y 'system which must be funded by all utility customers,
Discussions with the City indicated' that .it does require programming charges to the current
billing system which are difficult to administer and present an issue 'to the City, PRMG would
recoI11ffiend that the City con~ider periodically adjusting the interest rate accrued to the customer
, ' '
to an amount equal to what is actually earned in order to properly match the benefits received to
the expense incurred (only if the cost' of the programming modification is less than ,t.he benefits,
received by the utility). '
. . 3. .' Late Payment Charges- In order to, encourage timely payment ot the monthly service
"charges and to compensate the utility for additional expenses associated with increased customer
service costs, a late payment or penalty charge ha~ been adopted by several utilities, This fee is
. usually assessed to customers which are delinquent in the payment of utility bills for Il10nthly
service. This fee is directly related to the payment and deposit policies of the City. This fee is
very common in the utility industry as well as other markets which extend credit or service in
advance to customers. Currently, the ,City does not charge a late payment fee on delinquent
accou'nts. The following is a survey of late payment fees charged by utilities in the Central
Florida area based on the results of a telephone survey conducted byPRMG,
Mr. Ronald W. McLemore
August 13, 1997
Page 8
City of Lake Mary _
City of Longwood .
City of Maitland
Orange CountY
City of Oviedo
City of Sanford
Late Payment Fee
10% of outstanding balance
1 1/2% of outstanding balance;
minimum of$5.00
10% of outstanding balance
$5.00 per outstanding bill
10% of outstanding balance
No late fee
10% of outstanding balance
5% of outstanding balance;
minimum of $4.00
No late fee
$5,00 per outstanding bill
No late fee
City of Altamonte Springs
Cityof Casselberry
Semii101e County ,
City of Winter G~rden
City of Winter Park
As can be seen ahove, 'the r~sults 'of the survey' indicate that late payment fees range from the
, application of no late paYIIlent charge to 10% of the monthly past due balance, In general, the
, fee is usually charged as a percentage of the outstanding bill and provides for: i) the lost
opportunity cost of interest 'earnings on cash balances; ii) recovery of increased administrative
costs associated with, notification to the delinquent customer, customer accounting, and data
, '
processing; iii) incurrence of additional costs associated with the need for utilities to have cash
working capital baiances in the excess of needed levels because qf non7payment of bills; and
iv) a monetary, incentive to compel prompt payment practices, It should be noted that the
imposition of a late payment fee is a policy d'ecision of the City Council since, while encouraging
prompt payment, may contribute to customer dissatisfaction towards the City" However, certain
'policies related, to the application of the' late payment fee could help to dampen any
, dissatisfaction which may occur, ,
Based on the. comparison of 'neighboring utility policies' and information derived during
discussions - with staff,PRMG would recommend the' imposition' of a late payment charge,
Further, we believe the approach used by the Cities of Sanford and Casselberry is the best since it
sends a strong payment incentive for customers \-vith low monthly bills (i.e" a flat charge) yet is'
structured to be applied on a variable basis such that, an increasing incentive is promoted as
utility bills increase (e.g., a commercial customer), Based on discussions with the City, we
would recommend a late payment fee which would be equal t.o the greater of $4,00 or 5% of the
outstanding bill be adopted as a late fee to be applied to delinquent pay customers if the policy is
deemed appropriate by the City Council. In addition, the City should recognize or consider the
following late'payment policies:
i) The la~e payment fee should be applied to all past due balances for all customers, except
public authorities. ,Exceptions may be approved by a customer service supervisor when a
billing error has been made or due to extreme hardship cases,
Mr. Ronald W, McLemore
August 13, 1997
Page 9
.
ii) The bill for an account with a previous balance should include the following information
. at a minimum:
a. Amount due;
b, Date payment to be posted to avoid disconnect; and
c, Date payment posted to avoid additional late payment fee (if different than
. disconnect period), . .
iii) The first time delinquent customer should be provided one notice during.a twelve (12)
month period that a late payment charge would normally have been charged, but since it
is a first time occurrence, the fee has been waived in lieu of b~ing charged, All other
delinquent payments in a twelve (12) month period will be charged, This policy should
be reviewed on an individual or case.by case basis by the customer service supervisor for
applicability provisions,
ivy The establishment of a policy that to the ext~nt a custo.mer does not pay the late payment
fees, but does pay for utility service, that the service. will be discontinued. at a certain
threshold (e.g" at an amount equal to one month of service), .
. .
v) The collection of late fee or penalty revenue should be allocated pro rata to the various
utilities for which billing is performed. . If adopted, this fee should be applicable to all
utility fees and cha~ges reflected on the utility bill.
vi) . Proper notification of the adoption of ~ late payment fee should be made to all customers
of the utility system in advance of the effective date so as to fully identify the purpose of
the fee and to allow customers to change payment habits. Another option would be to
provide a "grace period" on fee application for a period of time until the implementation
date of the fee (Le., charge fee but give a credit with notification to the customer for a .
certain time frame), .
4. Turn-On and Turn-Off Charges.~ A common service provided by all utilities is a response.
to a customer request for the turn-on and turn-off of utility services, The customer-requested
service can occur for a variety of reasons, including:
. initiation of service for a new customer;
. turn-onJoff due to customer request due to seasonal occupancy of residence; and
. delinquency in the paym.ent of a utility bill.
Many ~tilities charge a fee for such services since this .does represent specific customer requested
service for which the cost to perform is readilyidentifiable, As referenced in Section 19-1'02 of
Mr, Ronald W. McLemore
August 13, ,1997
Page 10
the Code, the current fees charged by the City for initiation of service, turn-on/turn-off for,
customer convenience, turn-on/turn-off' for delinquency, and after' hours turn-on after
delinquency are shown below: '
Initiation of Servic~ (Application Fee)
Turn-on/Turn-off for Customer Convenience
, Turn-on/Turn-off for Delinquency
After Hours Turn-on After Delinquency
$10.00
$0.00
$10.00
Not provided, '
One of the most common occurrences associated with these types of services deals with the
initiation or. application of service, This is a customer reqtlested service which is riecessary to
begin the billing, process and utility relationships with the c).lstcimer. This service should not be
confused with a seasonal turn-off which is considered temporary. The expenses generally
incurred for this serVice include customer service. cost~, field services, and finance and
administrative expenses, Essentially, most customers expect a charge to iliitiate a service, yet
, feel that the termination of service should be considered as a part of normal or routine service, It
is recommended that the City continue to maintain a separate charge for the initiation bf a new
service, whether it is at a new location or the re-establishment ofa service at an existing location
'with the prior customer terminating service, '
. .' .
In addition to the turn~on for the initiation of an account, the City also performs the turn-on/turn-
offfunction at the request of a customer on a temporary basis (e,g., seasonal customer request) or
by the City as a component of the delinquent bill/non-payment process. With respect to the turn'"
, off of service for non~payment (and assuming subsequent restoration of service), the costs
'incurred are generally greater than with the initiation of service, This is due primarily to the
higher level of customer service and accounting due to increased reporting and customer'
notification costs (e,g" work order generation and report amilys'is of non-paying accounts).
As can be seen, the City' only charges a fee for the initiation of servlce and if a customer has,
. service discontinued due to the non-payment of utility service. Based on our experience relative
to the design of these fees, PRMG believes that the fees may be understated and therefore no~
recover the total costs of service, Although the identification of the costs for these services was"
beyond the scope of this study, a comparison of fees charged by other utilities indicate that the
fees levied by the City may be understated. This is shown below:
Mr. Ronald W. McLemore
August 13, 1997
Page 11
Initiation of Turn-on Turn-off Delinquent Account
Service Charges Charges . .Turn-on/off Charges [*]
City of Winter Springs $10.00 $10.00
Other Neighboring Utilities
City of Altamonte Springs' 10,00 10.00 25.00
City of Casselberry 25.00 25.00 15.00 .
. City of Lake Mary 20.00 10.00 10.00 20.00
City of Longwood 15,00 15.00 15.00. .
City of Maitland 10,00 25.00
Orange County 21.50 21.50 21.50 27.50
City of Oviedo 10.00 10,00 10.00 22.00
. City of Sanford 10.00 10.00 10.00 10:00
Seminole County 10.00 10.00 10,00 25.00
City of Winter Garden 15,00
City of Winter Park 10.00 25.00
Other Utilities Average $11.05 $10.14 $8,77 . $19.05
[*] Reflects turn-on for re-establishment of service during nonnal working hours. Some utilities
have higher charge if work perfonned after nonnal hours or if perfonned more frequently than
once per year.
Based on: i) the fees charged by other utilities; ii) our knowledge regarding the actual cost to
provide such services; iii) the need to initiate these charges and to recognize a phase in of such
charges, especially without a cost of service analysis; iv) the need to provide additional revenues
to meet the overall revenue requirements of the City's utility system; and v) discussions with the
. City regarding customer service relationships, we would recommend that the' City consider the.
adoption of the following fees:
Initiation or Application of Service
Tum-on/Tum-off for Charge at Customer Request [*]
Turn-off for Non-Payment
Recom~ended Fees
$15,00
$0.00
. $25.00
[*] Reflects fee to be charged for any trip to disconnect water s~rvi~e for anything other
than non-payment (i.e'., temporary disconnection). .
With respect to the turn-off and subsequent turn-on of service at the' request of the customer, it
was determined that no fee should be charged at this time, Although many utilities charge a fee
for this service, the City's experience that this request is not typical. and could result in customer
. dissatisfaction. The City should r.eview the frequency or the number of occurrences of this
service and then revisit this policy relative to the application of a fee in the future; Furthern10re,.
ifthe City wereto adopt aturn-onlturn-off fee for disc?nnection (other .than for non-payment), in .
those instances whe~ a customer finalizes an account (terminates service), no turn-off fee should
Mr. Ronald W. McLemore
August 13, 1997
Page 12
be applied to such customer. Essentially, the Initiation of Service or Application Fee should
have a provision for the recovery of these costs, .
5. Seasonal Disconnection - An issue which faces many utIlities in the state deals with those
customers which are seasonal in nature. Specifically, a seasonal customer would be one which
would discontinue service for a long period of time (e.g" from 1 to 6 months) although would.
not be effectively terminating a service (e,g,; a final billed. account). Although it is our
u~derstanding that this is not a significant issue with the City, we would recommend thatthe
City consider adopting a policy that service cannot be discontinued on a seasonal basis (say in
excess of 30 continuous days), Since the Citymustbuild water and wastewater facilities for such
customers and maintain such facilities in a "state of readiness" at all times, the City needs to be
compensated for such costs (generally considered as.the "fixed" costs of operatjng the utility), If
. a customer is allowed to disconnect from the utility period for extended periods of time, then the
ability to recover the fixed costs from such customers is reduced. Our recommendation would be
that the City charge the base facility charge (minimum bill) for th(1t period of time the service has
been disconnected until when service is restored, This payment could be one either at the time of .
the customer request for service restoration or added as a component to the next bill rendered,
The application of the ba.se fa'cility'charge would be in addition to 'any' turn-on/off charges which
would be imposed by the City, Finally, if this policy were adopted by the City, i't is imperative
that procedures would be developed in order to properly notify the seasonal customers of the rate ..
application policy,
6. Enforcement Provisions - A concern expressed during our interview process with staff dealt
with the ability to enforce the collection of utility fees when it is difficult to discontinue the
service (e,g., in the event of a sewer only or stormwater management customer) as a result of
non-payment of the utility bill. One method used by several public utilities in Florida is to lien
the property for the amount of unpaid or delinquent utility fees and charges plus administrative
costs incurred relative to the liening process, As required by adoption of an ordinance, the.
amount subjec.t to collection would subsequently be deemed as a lien upon the real property or
premises which may be. foreclosed in accordance with the procedure similar for foreclosing
mortgages as provided by law, It has been our understanding that this has. been an effective tool.
in the collection of delinquent charges and does provide the utility the ability to collect past due
charges eventually, .
We would recommend that the City consider the use of property liens in the enforcement of
utility fee payments: This recommendation would also benefit the City where it is difficult to
.."turn-off' service where no.meter or utility connection exists (i,e., stormwater management and
solid waste collection). It is our understanding that the City has .se'v~ral. accounts
(approximately 30) which have delinquent bills covering periods as long as four years and there
currently exists no ability to enforce payment. Utilization of property liens would provide the
necessary enforcement provisions to promote the payment of the delinql.lent bills, Additionally,
Mr, Ronald W. McLemore
. August 13, 1997
Page 13
this process does not have to be limited solely to monthly utility rates .b~t could also be used in'
those .instances where. it becomes necessary for the City to repair, or cause to be repaired,. any
City utility facilities (e,g" a utility line, fire'hydrant, meter assembly, etc,) which was damaged
by the utility customer. .
If the City were to adopt the use ,of liens upon .real property to enforce collections of utility
payments, the City will need to work with its legal counsel to develop the proper policies and
procedures relative to the application process, Based on iriformation provided by the City, the
use of a lien to collect delinquent charges' embraces a special assessment concept because no
. .' .
forced sale of homestead property can occur except for the payment of taxes and ,assessments
thereon, If a lien enforcement mechanism is ,to be utilized, 'the charges where 'service is not
measured (e.g" stormwater management fees) sho~ld be structured to meet the legal sufficiency
tests for both a valid fee 'and a special assessment. The ordinance provisions should be reviewed
and clarified with appropriate legislative findings, where appropriatel. Other issues to be
considered by the City v!ould include:"
i) 'Priority status of liens' to other'lieris on such properties' (e,g" stat~, county, municipal
taxes );
ii) . Policy of monetary amount to be considere~ delinquent qeforelien is placed' on property;
iii) Notification procedures to customer relative to the. placement of a lien upon the real
property of such customer; .
iv) Costs to be recovered by City if any foreclosure action results (e,g" reasonable attorney's
fees, utility administration' costs, etc.); and
v) Preparation of the City Ordinance which would properly codify the procedures relative to
the application of the lien,
7. Other Customer Service Issues - During the interview process with the City staff, certain
other miscellaneous issues were discussed which warrant some disclosure or consideration, The
following is a discussion of these miscellaneous issues,
A Utility Subsistence Program - As we are all aware, there are many instances when customers
may have trouble paying the utility bill due to finanCial hardships, Under these cases, it'becomes
eve'n more difficult to impose additional financial costs due to the application"of increased fees
(e.g" late payment fee), thus further limiting their ability to pay the utility bill. A program that
many utilities have implemented is a "Care to Share" program, The purpose of this program
I Derived from letter to City of Winter Springs dated May 16, 1996 from Nabors, Giblin & Nickerson, P.A.,
Attorneys at Law.
Mr. Ronald W. McLemore
August 13, 1997
Page 14
would be to have a dedicated program and funding source available to assist those customers
\vhich have trouble paying the utility bill. Funding of the program' can be derived from many
sources, including: .
. .
i) Customer donations as referenced on a bill;
ii) Dedication of a specific revenue requirements in the annual budget of the utility system;
and .
iii) Transfer of funds from available (uncommitted) surplus earnings from prior years,
. .
. The program should be administered by an agency outside the utility which would have certain..
policies and rules (e,g., income threshold limits) relative to assistance applicability, Although
not the total answer to assisting delinquent customers pay their utility bills, this would .be a good
public relations program for the.utility system,: For the City's consideration, we do know that
Seminole County has. implemented such a program and would be \villing to share their ideas and
thoughts with the City. PilMG would "recommend the implementation ~f such a program if
considered feasible. by the City. Council..
".
B, Customer Service Policy and Procedures. Manual - We believe that the availability of a
Customer Service Policy and Procedures Manual is a very important document relative to.
meeting the needs of the utility customers.. This manual should describe: i) the policies of the
utility in terms of customer billing; ii) application of service charges; iii) discussions of special
credits or billing adjustments. which customer service representatives have authority to settle or
adjust; iv) utility customer grievance procedures; and v) builder programs and extension policies
and other required information, We believe that this manual would assist the customer service
representatives . in providing. consistent decisions and. solutions to customer inquiries,
Additionally, this manual could be expanded to include customer-related information such as
billing 'and payment options, location of payment drop-off.. centers,. water.. conservation
information (e.g,,. water irrigation restrictions), water. audit and quality listing programs,
customer deposit requirements, a sample of the utility bill with explanation, and .other related
information (which may not be codified by Ordinance but, ~s beneficial to have for customer
service administration policy). PRMG also feels that this manual should really be a chapter of an
overall utility policies arid procedures manual since there are other functions which should be
addressed which could affect the utility, including extension programs and builder/constructionl
inspection requirements, industrial pretreatment programs, reclaimed water and irrigation service.
requirements, standard and contract for agreements for capacity reservation, application of
guaranteed revenue charges; and other developer oriented programs.
As a result of-our review of the customer billing policies, we believ.e there are several policies
. which can be modified. to improve the collection of funds for providing utility service. Please
Mr. Ronald W. McLemore
August 13, 1997
Page 15
. . , '.
realize that the recommendations expressed herein were directed solely to the polici~s referenced
i.n the Code and do not suggest that an improvement in "the" customer: service department is
needed, " Based on ou'r interyiews with the customer service staff, we found the employees to be
"open wi~h ideas for ir:nprovement and dedicated to the utility "system,
We have appreciated thisopportimity to provide utility consulting service"s to the City and look
forward to working with the City in the future. If you ,should have any questions or comments"
with regards to the recorpmendations expressed herein, please do not hesitate to give us a call.
Very truly YOl,lrS,
. Public Resources Management Group, Inc. "
/J..~ I/-{)~'
Robert 1. Ori
President
"cc: Mr. Kipton D. Lockcuff, P .E:, City of Winter Springs "
Mr. Harry E, Martin, City of Winter Springs
Mr, Terry Zaudtke, Conklin Porter & Holmes Engineers
letters/mclem3.1et