Memorandum

City of Lawrence

Utilities Department

TO:	David L. Corliss – City Manager Diane Stoddard – Assistant City Manager Casey Toomay – Assistant City Manager
FROM:	Beth Krishtalka – Assistant to Utilities Director
CC:	Dave Wagner – Utilities Director Philip Ciesielski – Assistant Utilities Director Mike Lawless – Deputy Utilities Director Melinda Harger – Utilities Engineer Bryan Kidney – Finance Director
DATE:	April 22, 2015
RE:	2015 Water and Wastewater Rates - Updated

Funding for the capital improvement program typically occurs in five-year increments based on infrastructure needs and rate plan forecasts. Annual rate increases are proposed for City Commission consideration each budget year, with a five-year forecast of future needs and anticipated costs. This memorandum provides updated capital project and comparative rate information related to the 2015 Rate Scenario 1 as approved by the City Commission on May 20, 2014 and planned future rate increases. This updated information is relevant to pending consideration of project funding for the new Wakarusa Wastewater Treatment Plant (Wakarusa WWTP).

Background

In March 2013, the Commission adopted the Water and Wastewater 2013-2017 Capital Improvement Plan (CIP), based on the 2012 Water and Wastewater Integrated Plans, to address City needs for replacement and maintenance of existing infrastructure, future regulatory compliance, and expanded wastewater capacity via the new Wakarusa WWTP. In September 2013, the Commission approved a Memorandum of Understanding between the City and the Kansas Department of Health and Environment, which acknowledged and formally accepted the City’s Integrated Municipal Wastewater Plan.

CIP projects addressing aging infrastructure and/or capacity needs are key to maintaining quality services, meeting customer service needs and complying with regulatory requirements. Project costs constitute significant investments. The 2015 approved rates and future rate changes support CIP projects, including multiple-year projects and programs for the Wakarusa Wastewater Treatment Plant, Rapid Inflow & Infiltration Reduction Program, and the Watermain Rehabilitation and Replacement Program.

CIP Projects

The following CIP projects started in or after 2013 and are complete:

• UT0701 Kaw WTP Transmission Main – January 2015.
• UT1105 BBP Watermain (Kasold to Quarry) – Complete Fall 2013.
• UT1201 & UT1202 Elec/Mech Contract 2 Kaw WTP Electrical and Low Service 2 Improvements; Clinton WTP MCC Replacement, Raw Water Transmission Main Repairs, Filter Influent Pipe and Master Backwash Valve Replacement – July 2014.
• UT1206 O’Connell Road Watermain Extension – October 2013.
• UT1209 Taste and Odor Study – January 2014.
• UT1211 Clinton Filter Media Rehabilitation – September 2013.
• UT1212 2013 Cured-In-Place-Pipe (CIPP) – December 2013.
• UT1302 Pumps Station PS04 Force Main – October 2014.
• UT1309 23^rd Street – Phase I (Louisiana to Alabama) – August 2014.
• UT1309 23^rd Street Watermain Rehabilitation – Phase III (Iowa Street to Ousdahl) – March 2014.
• UT1313 Mississippi Street Watermain Rehabilitation – November 2014.
• UT1314 Lawrence Avenue Watermain Rehabilitation – April 2015.
• UT1315 Arkansas Watermain Rehabilitation – January 2015.
• UT1316 Clinton WTP Concrete Transmission Main Assessment – August 2014.
• UT1415 Emergency Sanitary Sewer Repairs (1000 Block Connecticut) – September 2014.

The following CIP projects started in or after 2013 and are expected to complete as indicated below:

• UT1102 Kaw WTP Intake – New intake in service October 2014, dredging complete March 2015, final completion expected May 2015.
• UT 1205 South Lawrence Trafficway Water and Sanitary Sewer Relocations at 31^st and Haskell and 31^st and Louisiana – November 2017.
• UT1210 K10 and Bob Billings Parkway Interchange Sanitary Sewer Relocations – Fall 2016.
• UT1304 Wakarusa Wastewater Treatment Plant and Conveyance – Construction on access roads and force mains started Fall 2014. Preliminary work on access roads will be completed June 2015 with final surfacing added in 2018 at the completion of the Wakarusa WWTP facility.  Force mains will be completed in Fall 2015 dependent on the SLT project’s closing of Haskell Ave.
• UT1305 Rapid Inflow & Infiltration Reduction Program – Phase 1 – Substantially Complete May 2015.
• UT1307 Oread Tank Replacement – 2017.
• UT1308 North Iowa Watermain Rehabilitation – Substantially Complete July 2014.
• UT 1310 Booster Pump Stations Improvements – 2017.
• UT1312 Bob Billings Parkway (Bob White to GWW) – Expected Completion May 2015.
• UT1405 Large Valves Replacement – January 2015.
• UT1409 Avalon Road Watermain Rehabilitation – Under Construction; Expected Completion August 2015.
• UT1413 Homestead Road Watermain Rehabilitation – Out for bid; Expected Completion October 2015.
• UT1424 2014 Cured-In-Place-Pipe (CIPP) – Expected Completion May 2015.

The following CIP projects are planned through funding from Resolution #7062 or Resolution #7017, with anticipated start up in 2015 or later:

• UT1309 23^rd Street – Phase II (Alabama to Ousdahl) – To be coordinated with stormwater improvements.
• UT1417 Clinton Intake Electrical and Mechanical Modifications – In design, anticipate bidding June 2015.
• UT1418 Kaw Water Treatment Plant MCC Replacement – In design, anticipate bidding June 2015.
• UT1209 Phase I Taste & Odor Process Improvements – In design, anticipated bidding June 2015.
• UT1304 Wakarusa WWTP, PS10 and KS River WWTP improvements will start Summer 2015 and be completed by Spring 2018.
• UT1305 Rapid Inflow/Infiltration Reduction Program – Phase 2 – anticipated completion May 2016.
• UT1403 Stratford Elevated Tank Evaluation – Deferred.
• UT1416 Kaw WTP and Clinton WTP Roof Replacements – Under Construction; anticipated completion August 2015.
• UT1419 8^th Street Watermain Replacement, Indiana to Kentucky – Under construction; anticipated completion October 2015.
• UT1425 2016 – 2017 Watermain Replacement Basis of Design Report – In process; anticipated report delivery July 2015.
• UT1426 Cedarwood Watermain Replacement, 25^th to 26^th – Out for bid; anticipated completion October 2015.
• UT1427 Michigan & Arkansas Watermain Replacement, 2^nd to 9^th – In design; anticipated construction Fall 2015 – Winter 2016.
• UT1428 10^th & New York Watermain Relocation – Under construction; anticipated completion June 2015.
• UT1502 KU Power Plant Watermain – In design.
• UT1503 Kaw WTP Structural Analysis – Advertise RFP May 2015.
• In-House Watermain Replacement– Ongoing projects by department staff.

Comparative Water and Wastewater Municipal Rates

As surveyed by staff this month, most of the regional utilities have experienced rate increases for 2015. An updated summary of utility rates changes follows, with a graph comparing monthly regional residential utility bills for 4,000-gallon usage to current Lawrence rates.

· Gardner increased water rates by 8% and wastewater rates by 4% for 2015.

· Johnson County Wastewater increased rates for 2015 to pay for regulatory requirements, CIP, salaries, maintenance, and rate increases for wastewater treated by KCMO.

· Johnson County WaterOne implemented an overall 3.8% water rate adjustment for 2015.

· Lee’s Summit increased their water and sewer rates for 2015.

· Bonner Springs increased rates by 5%.

· Olathe increased their water and sewer rates for 2015.

· Manhattan increased water rates by 5% and increased sewer rates by 3% for 2015.

· Topeka increased water and wastewater volume charges by 6% for 2015.

· Independence, MO increased rates in 2014 and anticipates future increases. In addition to these increases there is a special charge funding work mandated by the EPA wet weather consent order, which is currently $9.00 per month and expected to increase to $12.00 per month in 2017.

· Unified Government, which provides wastewater services to Kansas City, Kansas, increased rates for 2015 and anticipates a 13% increase in rates for the fiscal year 2015 – 2016.

· BPU, which provides water to Kansas City, Kansas, did not increase rates for 2015.

System Development Charges (SDCs) also fund costs of service. Pursuant to Commission approval of Ordinance 8847, 2013-2017 SDCs have been approved through January 1, 2017.