CITY OF HALLANDALE BEACH
MEMORANDUM
DATE: August 13, 2008
TO: D. Mike Good, City Manager
FROM: William M. Brant, P.E., Director, Public Works, Utilities and Engineering
SUBJECT: Consideration of Endorsement of Water and Wastewater Impact Fee
Study CAD# 23/06
PURPOSE:
Request Commission endorsement of impact fee study for the water impact fees and for the wastewater transmission component of the wastewater impact fees to fund the cost of water and sewer improvements required for growth and redevelopment.
BACKGROUND:
In recent years the City of Hallandale Beach has been impacted by growth and redevelopment. One of the most crucial and costly area of impact entails the water and sewer utilities. Rather than require all taxpayers to shoulder the costs for such growth, it is appropriate that those developers who most affect the water and sewer systems bear their fair portion of the costs. In Fiscal Year 2005, Public Resources Management Group (PRMG) was retained by the City to calculate the appropriate impact fees for the water utility. The recommendations made as a result of its study were adopted by the Commission pursuant to Ordinance No. 2005-11 on September 26, 2005.
With the completion of the Membrane Treatment Plant, coupled with proposed implementation of several major water distribution improvements, staff deemed it appropriate to update the water impact fee rates.
Staff also deemed it appropriate to perform a study of the impact of growth on the wastewater system in order to develop an impact fee for the wastewater utility. The City retained the services of PRMG to perform a water and wastewater impact fee study.
DISCUSSION
In July 2008, PRMG completed the impact fee study for the City of Hallandale Beach water and wastewater systems and presented a draft report summarizing its analysis, assumptions and recommendations. While the cost impacts of the transmission component of the wastewater system has been completed, the treatment component entails more intricate analysis based upon calculations made by the City of Hollywood. Accordingly, the scope of analysis for the PRMG study is limited to the transmission component of wastewater.
The report summary includes the following key points:
- The existing water impact fees do not recover all identifiable costs. They should be increased by 6.3% to $1,318 per ERU (equivalent residential unit).
- The transmission portion of the wastewater impact fee is calculated to be $572 per ERU.
- The City would be better served by adopting an attribute based method for non-residential water and wastewater customers.
- The City should consider charging new customers Accrued Guaranteed Revenue Charges (AGRCs).
A more complete explanation of items 3 and 4 above is as follows:
Item 3: Currently the City charges non-residential customers impact fees based solely upon the water meter size. PRMG discussed other methodologies of charging for fees with the City staff. A consensus was reached that an attribute based method, which estimates water and wastewater demands based upon the characteristics of each specific enterprise, would provide better equity between non-residential customers when estimating total demand upon each system.
Item 4: The Accrued Guaranteed Revenue Charge represents the City’s investment in facilities in advance of and reserved for future growth and the annual carrying cost associated with such investment. These funds can be used as operating expenses since they represent a reimbursement to existing rate payers for the carrying costs of unused capacity. This amount would be minimal for new customers in the first few months, but would grow month by month. By the end of FY 2014, the cost would be $376.84 per ERU for water system impact and $163.54 per ERU for wastewater system impact.
The following table provides a comparison of the proposed impact fees with those of other local municipalities.
Comparison of Impact Fees (1)
Water Wastewater Combined
Proposed Rates (2) $1,318 $572 (3) $1,890
City of Boca Raton $5,195 $4,168 $9,363
City of Dania Beach 1,557 725 2,282
City of Deerfield Beach 1,150 540 1,690
City of Delray Beach 788 1,084 1,872
City of Hollywood 624 1,770 2,394
City of Margate 390 1,610 2,000
City of Pembroke Pines 2,120 1,980 4,100
City of Pompano Beach 700 700 1,400
City of Sunrise 1,500 1,350 2,850
City of Tamarac 1,700 2,200 3,900
City of West Palm Beach 2,190 1,270 3,460
Village of Royal Palm Beach 1,425 2,000 3,425
Other Utilities’ Average $1,612 $1,616 $3,228
(1) Amounts reflect charges anticipated to be collected for the typical residential unit or
1 ERU derived from a survey of Florida utilities obtained in July 2008.
(2) Amount proposed to be effective ninety (90) days from the date of the first hearing.
(3) Amount reflects only transmission component of wastewater system.
While the proposed water impact fee of $1,318 per ERU is comparable to the average of $1,612, the proposed wastewater impact fee of $572 per ERU is significantly lower than the average of $1,616. The reason for this disparity is the fact that the study only addresses the transmission portion of the wastewater system and not the treatment portion. Typically the treatment component is substantially greater than the transmission component.
The City of Hallandale Beach and the City of Hollywood have very comparable wastewater systems. Not only are they comparable in age and geography, but they also utilize the same treatment plant. In order to account for both the transmission and the treatment components of wastewater, staff recommends adoption of the Hollywood Wastewater Reserve Capacity Impact Fee of $1,770 per ERU.
The water and the wastewater impact fees Ordinance will be presented for Commission consideration when ready.
RECOMMENDATION:
The City Commission endorse the impact fee study for the water impact fees and for the wastewater transmission component of the wastewater impact fees toward preparation of the amended Water and Sewer Fees Impact Ordinance.
Reviewed:
_______________________________ __________
D. Mike Good, City Manager Date
_____Approved _____Disapproved _____Hold for Discussion