Water & Wastewater Capacity Charge Work Shop City of Covington Water & Wastewater Capacity Charge Work Shop August 10, 2016 City Council Chambers 5:30 P.M.

Presentation Agenda What are capacity charges? Why are they needed? What are the future demands for infrastructure? What will the capacity charge per residence be? What will the capacity charge per commercial unit be? What is the anticipated revenue for the city? How will the revenue be used? How & when will capacity charges be applied? Are there any exemptions? Can I appeal the charge? Can the charges be refunded? How often will the capacity charge schedule be updated?

What are capacity charges? Capacity charges are one-time payments used for improvements to accommodate new development A capacity charge represents new growth’s proportionate share of capital facility needs By law, capacity charges can only be used for capital improvements – not operating, maintenance or rehabilitation costs Capacity charges cannot be used to repair infrastructure or correct existing deficiencies

Why are they needed? Based on a study performed for the city by TischlerBise, capacity charges are needed to: Ensure adequate public facilities are available to serve new development Promote growth & establish uniform standards in order to require payment for a proportionate share of the cost of system improvements needed to serve new development

What are the future demands for infrastructure? The projections of residential & commercial development for land use are for areas within the boundaries of the city (gray) & the Northern Growth Management Area (NGMA) (yellow) in St. Tammany Parish. Combined they form the future service area.

What are the future demands for infrastructure? The existing service area encompasses 4,629 acres. (This includes 815 undeveloped acres within the City & 923 developed acres in the NGMA). The future service area will include all acreage in the existing service area plus the 763 undeveloped acres in the NGMA.

What are the future demands of infrastructure? The TischlerBise study included demographic estimates & development projections for both residential & commercial development to calculate the capacity charges. (Development projections are used to calculate the level of service & the amount & cost of infrastructure needed for new development.)

What are the future demands for infrastructure? Demographic data - Projected annual increases by type of development

Future Demand for Water Residential demand averages 181 gallons per connection (83 gallons per person on an average day). Commercial demand averages 660 gallons per connection. 44% of Covington’s demand for water is attributable to commercial development.

Future Demand for Water

Future Demand for Water Base year consumption is 1.35 million gallons per day (MGD) with projected demand in 2034 of 2.32 MGD – an increase of approximately 97%. To handle demand, Covington will need to construct a water tower to serve future development in the northern growth management area. 100% of the demand for the planned water tower will come from future development; therefore, the total cost of the water tower is allocated to future development. To determine the cost per gallon of the water tower, the cost of $1,750,000 is divided by the 20-year increase in water demand of 968,769 gallons.

Future Demand for Waste Water Covington’s wastewater system consists of conventional mains & lift stations for delivery to the treatment plant. Currently, Covington’s treatment plant has a design capacity of 2.6 MGD (average daily flow). To meet anticipated demand, Covington will need to increase plant capacity from 2.6 to 4.1 MGD (average daily flow). The cost to increase capacity by 1.5 MGD is $10 million – a cost of $6.67 per gallon of capacity.

Future Demand for Waste Water Additionally, 3 major lift stations will be needed to service the area at a cost of $925,000 each. The total capital cost of $2,775,000 ($925,000 X 3) is allocated to future development. To determine the cost per gallon of the lift stations, the capital cost of $2,775,000 is divided by the 20-year increase in wastewater flows of 968,769 gallons. This calculation provides a capital cost per gallon of $2.86.

Future Demand for Waste Water

What will the capacity charge per residence be? The proposed capacity charge of $2,052 for a single family residence is based on the sum of the water & wastewater capacity charges ($328 + $1,724). The proposed capacity charge of $1,920 for multi-family residence is the sum of the water & wastewater capacity charges ($306 + $1,614).

What will the capacity charge per commercial unit be? For commercial unit with a one-inch meter, the proposed capacity charge of $3,488 is the sum of water & wastewater capacity charges ($557 + $2,931).

What is the anticipated revenue for the city? Water Capacity Charge Revenue Over the next 20 years, water capacity charges should yield approximately $1.75 million for construction of a water tower. The revenue forecast for water infrastructure improvements is based on the projected increase in water demand from 2014 to 2034.

What is the anticipated revenue for the city? Wastewater Capacity Charge Revenue Over the next 20 years, wastewater capacity charges should yield approximately $9.2 million for wastewater infrastructure improvements.

How will the revenue be used? The money may only be used: To acquire or construct improvements To pay debt service on any portion of any future general obligation bond issue or revenue bond issue used to finance improvements.

20 - Year Cash Flow Analysis Based on the projected increase in demand, proposed capacity charges should yield approximately $11 million in projected revenue. Needed projects total approximately $14.5 million. The City of Covington will need to identify sources of funding to cover the remaining $3.5 million of expenditures not covered by capacity charges.

How & when will capacity charges be applied? All permits for connection to the city water or waste water system or permits to expand or add to previously approved water connection, or any extensions of a permit issued before the effective date of the ordinance is required to pay capacity charges No permits for connection will be issued until payment of capacity charges The charge will be collected by the Building Permit Department

Are there any exemptions? Yes! The following qualify for exemptions: Alteration, expansion or replacement of an existing commercial building that does not require an additional or larger water meter Replacement of a residential unit that does not create any additional or larger residential units Citizens who are disabled or 65 years of age or older and whose total household income is less than $20,000 per year shall be considered “senior citizen/disabled users” & shall be exempt from capacity charges Exemption requests must be made at the time of application for permit

Can I appeal the charge? Yes! Appeals may be made within 10 working days after the determination to the Director of Administration by filing: A written notice on a form provided by the city A written explanation of why an exemption is warranted An appeal fee of $500.00

Can the charges be refunded? Yes! Upon application to the city, the city shall refund charges paid & not expended or encumbered within 25 years. Refunds shall be paid to the owner of the property at the time the refund is due. The city shall publish written notice within 30 days after the expiration of the 25 year period from the date capacity charge was paid.

How often will the capacity charge schedule be updated? City may update the Capacity Charge Schedule only when necessary to ensure that: The demand & cost assumptions are still valid The resulting fees do not exceed the actual cost of constructing improvements that are required to serve new development The money collected has been & will continue to be spent for improvements Improvements will benefit development

Planning for the Future “It is the intent of the City Administration, with the approval of the City Council, to place a majority of the financial burden of expanding our water and wastewater facilities on new construction and future development, not on our current residents and business owners.” --Mayor Mike Cooper

Questions