At the March 30, 2017 Council Budget Study Session, staff presented an overview of the recommendations from the recent Water and Wastewater rate update performed City staff and discussed some of the operating budget and capital program factors that are influencing the recommended rate adjustments over the next five years. Council Communication Page 2 of 3 REV. 08/2011.

At the March 7, 2017 Council Meeting, Council adopted the statutorily-required Notice of Intention to adjust rates, notifying the public that rate adjustments would be considered at the May 16, 2017 Council Meeting in a Public Hearing. This Notice has been published twice in the Peoria Times newspaper on April 13th and April 20th to comply with state statutes applicable to water and wastewater rate setting. Staff have additionally complied with public notification requirements by publishing the Public Hearing Notice on the City’s website along with a link to the attached Rate Report on April 13, 2017.

A: That the Mayor and Council adopt the Resolution adjusting the water and wastewater rates, making the new rates and fees effective July 1, 2017 and July 1, 2018.

B: That the Mayor and Council may elect to not adopt the the Resolution adjusting the recommended water and wastewater rates and various administrative fees planned to be effective on July 1, 2017 and July 1, 2018. Not adopting all, or any portion of the recommended rates would continue the rates and fees currently in effect.

The proposed water and wastewater rate adjustments provide an appropriate level of revenue necessary in FY2018 and FY2019 for the utility system to meet operational requirements, fund capital projects and to enable both funds to comply with the City’s Principles of Sound Financial Management. The proposed water and wastewater adjustments are estimated to increase FY2018 water revenues by approximately $1,050,000 and wastewater revenues by $215,000 over the anticipated revenue increases from new customer growth in the two funds.

Water and wastewater rate adjustments are anticipated to impact a typical residential customer’s (10,000 gallons of monthly water consumption and a winter wastewater average of 8,000 gallons) monthly bill by 2.25%, or an additional $1.48 in FY2018 and by an additional 2.25% (or $1.51) in FY2019. Non-residential customers may experience different results and variances in water consumption can also change customer results.

Adoption of the recommended water and wastewater rates for FY2018 and FY2019 following the public hearing will complete the rate setting process that the City has conducted in accordance with state statute and will enable the rates and fees to take effect on July 1, 2017 and July 1, 2018, respectively.

Following discussions with Council to review FY2018 and FY2019 utility rate adjustments, Council provided staff with direction on the FY2018 and FY2019 water and wastewater rates at its March 30, 2017 Council Budget Study Session. The proposed water and wastewater rate adjustments provide appropriate level of revenue necessary in FY2018 and FY2019 for the utility system to meet operational requirements, fund capital projects and to enable both funds to comply with the City’s Principles of Sound Financial Management.

While modest water and wastewater rate adjustments are forecasted after FY2019 to support the system’s operational and capital funding requirements, staff will continue to review the Utility system’s financial position annually to update the water and wastewater financial forecasts and, if necessary, will communicate any recommendations to the Council.