Okay, I'm gonna go ahead and call us to order for our May 18th, 2026 uh pre console.

Uh we've got two items on the agenda, and the one taken up the majority of the time is our C Worry Solid Waste Cost of Service Study.

So I'm gonna give, oh, and I'm gonna use the microphone because I always get mad at people that don't use the microphone.

I'm gonna give this over to Aaron Keys.

Aaron Keys, Utilities Director.

Uh, with me this evening, I have Kyle Stevens from Stantech.

Uh, they're the company that has helped us with our sewer and solid waste cost of service study.

Uh if you recall, they also did our water cost of service study last year.

Um, and I am just gonna turn it over to him because as you know, there's a lot of slides and a lot of information.

Thank you.

Well, thank you so much, Aaron.

Uh good evening, Mayor Council and City Administration.

Again, Kyle Stevens, and we've got a number of slides to cover tonight.

Uh, we've been working on this study for the last six months with the city subject matter experts.

And what I want to go over this evening is the recommendations of the study for both sewer and solid waste.

Uh, we've got a number of items to cover on both sides.

I've put our agenda up here real quickly.

On the sewer and solid waste side, we'll be first looking at the financial plan, cost of service, and then rate design modifications that are recommended as part of the study, and then one additional item on sewer, and we'll also be talking about the sewer capacity fee.

So before we jump into the analysis, I always start off with this slide that just talks about the process that we go through.

And it fundamentally is a series of interconnected investigations.

So we're first asking three questions, which is how much money do we need to run the system in not only next year, but the next five and ten years.

We then look at 2027 specifically and ask from whom?

Who how should we collect the money that we need to sustainably run the utility system?

And then finally, how do we collect?

And that's the rate design portion.

How do we design rates that are fair and equitable and proportional to the usage of these utility systems?

Well, first talk tonight about the sewer system, and up on our list is the financial plan.

And so, up with the financial plan, what we're doing is creating a model that effectively forecasts out for the next five and ten years the dynamics that are on the ground for the sewer system.

I put up here some of the data that goes into that financial model.

So we're using the latest and greatest audited financial balances, um, the adopted budget for fiscal year 26 when we created this model, and then we've also included the capital investment plans.

Capital investment plans are oftentimes one of the largest components of these forecasts because they tend to ebb and flow and they have large magnitudes in certain years.

And so we need to make sure we're properly forecasting those into the future.

Uh additionally, the last rate increase for sewer was in fiscal year 20 uh 2018.

So it's been a number of years since a rate increase has taken place on the sewer utility.

Uh, this next graphic here just starts to break down some of the numbers and shows the budget that we put into our model to start the forecasting process here for the sewer utility that's 26.4 million dollars broken down between personnel operating debt service.

So that's the ongoing payments of interest and principal on debt that's been taken out in the past, capital projects.

So there are some projects that we pay for on an ongoing basis with cash, and in 2027, that was 5.2 million, and then additionally some interfund transfers.

Uh this next slide here I've mentioned it's been a number of years since there's been a rate revenue adjustment on the sewer utility.

Here I've just taken since the that last rate increase and plotted on the blue line the consumer price index over that time.

So it's a measure of how prices have changed in the overall economy.

They've risen roughly cumulatively over that time, 27%.

Again, we haven't had an increase over time, and so we've seen a little bit of an erosion in buying power.

It's just one of the items we start off with as we think about the modeling here on the sewer side.

This first forecast here that I'm showing is the dashboard on our financial model.

And this is what I refer to as a diagnostic run.

And so this is if you go to your doctor and you ask, How am I doing?

What we do here is we hold the revenue steady where they're at today, and then we forecast the expenditures out into the future.

And there's a couple key dynamics that I'm gonna point out here.

So at the very top, that's zero percent across.

On the left graph is the operating fund.

So that's our fund balance in each and every year.

And the black line is the minimum target.

That minimum target is 20% of operations and maintenance plus next year's capital investment.

That's what we arrived at that black line.

What this shows you is with revenues flat over time, you'll have sufficient fund balances out into the future until we get into the early 2030s.

We show below policy target in 2032, and then we would deplete fund balance by 2033.

Uh, what you're seeing in the middle here is the cause of that, which is we expect over time the orange line, uh, the cash out to rise over the black line, which is the cash in, which means that we'd need to use fund balances in order to uh meet that gap.

And so current revenues would be unable to sustain the utility for this entire uh period that we forecasted.

What this next slide shows is a rate model of just in time rate increases, meaning as you saw, there's this kind of trajectory over time of using a fund balance, and we could go on for a number of years before we do a rate increase.

What this shows in this model is if we go on that path, we could go to 2032 with no rate increases, but then it would need to be a larger jump in order to get the cash in to match the cash out fundamentally over time and arrest that erosion of fund balance, keep us at that minimum fund balance over time.

Now that's obviously not a recommendation I would ever present to you.

This is just to show what would happen over time.

What rather we'd like to do is the recommended rate increases that are much more predictable and smaller in any given year, so that we're we're more matching that inflationary type increases over time.

What we're calculating right now in the recommended uh rate increases is no rate increase for fiscal year 27 upcoming, but then in 2028 going forward, inflationary increases around the 3% level would provide for ongoing sustainability.

And so you'll notice on that far left chart that operating fund balance, we're showing a little bit of a spin down there, but in every year we'll be above the black line now, the minimum fund balance target, and we'll be able to fully sustain the capital investment plan over time on the sewer utility.

So, next I'll talk about the cost of service.

And again, that's the deep dive into cost for just the one fiscal year 2027.

And this is the framework we've used as we've looked at the costs for the sewer utility.

Fundamentally, what we've we've gone through a process of doing is essentially looking at the big types of expenditures that are recovered in rates and figuring out how to best allocate that between the two ways we typically recover costs.

So on the utility rates, and I'll talk about that in a minute for the sewer.

Usually we think about it in two different parts.

One are fixed cost recovery.

So that's a monthly bill you pay before you use any sewer, and then you have volumetric recovery, and then you pay uh depend on how much you use on a monthly basis.

What we're recommending here on this analysis is to take debt service in the blue line and recover all of those ongoing debt service costs, principal and interest and fixed cost, 50% of cash funded uh capital as well.

And the thought processes behind there is um, regardless of ongoing usage of the system, those are two things that the utility has to do in any given year, has to pay for operations and maintenance transfers, some of those items, those more operational transfers, they're gonna tend to fluctuate a little bit more with ongoing usage.

So think about electricity and chemical.

Um, the more usage we have, the more we're gonna use of those two items.

And so those are better recovered on the volumetric side of the equation.

And down at the bottom here, you'll see how we we break down uh between the costs.

Now, this is really the slide for the cost allocation uh that has the recommendation in, which is on the left, when we look at the way that revenues are collected currently for the sewer utility, roughly 41% of all revenues are on that fixed portion of the bill, the fixed charges you pay before usage is considered.

59% is paid on that volumetric side.

When we do the allocation that we've just talked through, we're recommending 37% and 63%.

And so there's a fundamental trade-off here.

Um, if we're thinking about it from the utilities perspective, higher levels of fixed cost recovery are good.

That means the sewer utility gets more of its revenue on an ongoing reoccurring basis every month.

However, if you think about it on the other side of the coin, the customer's perspective, it's harder for the customer to control their bill because more costs that are fixed as your usage changes, less of the bill will change with the usage.

So, what we're really trying to strike here is a balancing act.

We've looked at certain expenditures.

Can you ask questions?

We go along.

Yeah, Valley has a question.

I was gonna wait until the end of the slide, but I do have a question about the um fixed part of the bill versus the um volumetric part of the bill and how that affects the customers themselves.

And I I get what you're saying about it's harder to anticipate what your bill will be on the volumetric and um how would I know that we have well, I might be wrong about this.

I might be reading into something else.

How would that affect all customers across the board?

And would it if the change to the fixed, if the changes to the fixed, will it affect lower users more than higher users?

Absolutely.

And you're gonna see that in the next few slides as I go through and show you some customer impacts, but you're absolutely headed in the right the right direction, which is the idea here is we're recommending lowering the fixed cost recovery.

And that would mean at usage levels that are lower, um, usually 10 CCF or lower, you're gonna see bill reductions uh and you're gonna see bill increases above that.

And so it tends to help affordability and it tends to help uh folks see in their bill more control over the bill on a monthly basis as their usage varies.

I guess I'll wait till the future.

Yeah, we'll see that on slide 20, I think, is when you kind of do those breakdowns.

You will absolutely see that.

All right, I've got Christina and then Vera, please use the micro.

Okay, Chris.

Oh, wait till okay.

Do you want to ask yourself you don't want to wait?

I think I'll go ahead and ask.

Um, and if if this is on a future slide, just stop me and we'll wait for the future slide.

Um is there a is everyone paying a volumetric level, or is there a point at which volumetric comes into like once you've used over a certain amount volumetric comes into play?

Everybody pays both the fixed and volumetric, assuming you have some kind of usage over time.

You'd only pay the fix if you had no usage whatsoever.

So maybe you're out of town for a month.

But we have tiers on this, right?

Yeah, it's a flat rate.

Water has tiers.

Water has tiers, wastewater is just a flat rate for all consumption, the same unit cost.

And I'll I'll bring those up in a second, I'll show you the rate structure.

Yeah, go.

So under rate design, and this is exactly where we're headed right now.

What we have is a set of two fees, and I've been referring to as fixed and volumetric.

On the top is the water meter size on the left.

And in the middle is the inside and outside fixed charges that are assessed on a monthly basis, depending on connection size.

The idea being with larger connections, they have a potential to place larger demands on the system.

So they tend to pay more than smaller connections.

So if you're comparing a 5.8 versus a 12 inch, and then down at the very bottom, that's the volumetric component.

So it's a unit rate per CCF per 100 cubic feet of usage in a monthly, and that's 255 currently if you're inside the city.

And Eric, this is a good time too for maybe Aaron for your examples.

I think in the past we've been like most residential are three quarters, like right home.

And then, like an example of who is a 10 inch, right?

I you don't have to have it exactly, but just kind of like the different levels.

Okay, yeah.

We use that.

Yeah, vast majority are gonna be up at that top on the residential.

So you're gonna be paying the 1237 currently on the inside rate.

So what we're recommending here, and I'll first talk through the fixed charges.

Um, as you would imagine, if we have a reduction in the fixed revenue recovery from the 41% down to 37%, those fixed charges in the calculated version here on the right side, you'll see reductions across the board.

So we're gonna reduce the amount of revenue that we're recovering from that side.

Now remember, there's no additional revenue we're forecasting 27.

This is just revenue neutral.

So we're decreasing the fixed cost recovery, and then correspondingly, it'll be equal, I should say, across the board.

So the dollars will change because they pay different fees, but the percent decrease will be roughly 10.3%.

What you'll see, however, on the other side is an increase.

So the volume metric will go up from where it currently is to a higher rate from 255 up to 268 if you're inside the city, which is the main rate that you have for your customers in your service area.

And so it's balancing two sides of the equation.

It's the exact same amount of revenue, we're just recovering it slightly different and providing a little bit more of a tilt on the affordability side.

So this really brings it together for me.

Um, because when we look at it separately, you see one going down 10.6%, you see another one rising.

This one brings it together in the full monthly bill.

For the average residential customer, you're looking at the five CCF level on the left side.

That's your average residential customer across the board.

However, each household will slightly vary depending on the number of people in the household, uh, their usage level might increase if they have more.

What you'll see here, the real breakdown is if you're under that 10 CCF level, your bill is either going to be very minimally impacted or will actually go down from where it currently is in fiscal year 26.

When you go to 10 or above CCF, you'll see a bill increase.

However, I'll note they're quite modest when you look at the percentage here.

So you really have to be using a lot to see that that look that increase on the volumetric side of these ways.

Betsy has a question.

Use the microphone, please.

Um I'm happy to see the fixed rate go down, I guess, except why?

And why are we not?

Why did you not leave that alone and just look at the volumetric rate?

Yeah, so where this came about is when we look at that, we think of a couple different things.

When we think about the level of fixed cost recovery, so when we calculate that and we saw it currently at 41%, um, from my perspective, that's quite high.

Um, in the industry for sewer utilities, we typically see 30 to 40% is considered the standard of high recovery.

And what's been happening over time in utilities, not only here in the city, but also across the US is consumption's declined over time.

So we've seen efficiencies in household usage, better washing machines, dishwashers means usage is going down, the level of fixed cost recovery is going up over time.

And so what I see really in this kind of a recommendation is just a rebalancing over time.

We've seen that rise over time, and this would just put us in that playing field, we're right at the industry average, slightly below 40%, provides a little bit more affordability in the rates, just how they've evolved over time.

Okay, thank you.

Absolutely.

This next slide just shows a comparison, taking that five CCF of average monthly usage within your service area and calculating both the current bill on the far left here and the new calculated bill.

And you'll notice there at that five CCF level, we actually would see a slight reduction.

So we go to the solid orange bar versus the uh the uh bar over here with the the hash D slashes through it.

Um however, I'll also note so that's one finding is your average will go down.

I'll also note here though the average in the pure municipalities that we put up on the screen is 43.40 cents a month.

So uh comparatively, Columbia has utility rates at that average usage level that represent very well on this chart.

And even with the uh suggested modifications here, we're in a very similar position to the overall average, um much lower cost provider as compared to some of the other ones we see here at the average or even as a higher as you go over to the right.

Do we have a way to make this?

I will never get used to this.

Um yeah, so I'm wondering if we have a way to um model what lower income households, what their water usage is.

Um I know that for I think it's electric utility.

I've seen a report before we used the usage from typical households that ask for utility assistance.

Was that right?

Do we have something like that for this?

I I can look it up.

Okay.

Yeah, I wonder whether since volumetric usage goes down with efficiencies, um, older houses and rental houses may not have control over their appliances to get the benefits of efficiencies.

Yeah, we'd absolutely agree.

We can follow up on that, see if the data exists.

Thanks.

Does it?

I'm wondering, I think the gist of my initial question was when we change the fix so it goes down and it goes down by the same amount for all of the levels.

The same percentage?

The same well, it's not total bill is not the same percentage.

Yeah, the same 10.3%.

10.3, yes.

Never mind.

This is making sense to me now that I'm looking at the slide again.

Yeah, the dollars will be larger for some of the the bigger meter sizes.

Okay.

Interesting.

Uh so the next part of the analysis that we looked at was just the Boone County charges.

So Boone County is a special part of the rate structure.

They actually receive a multiplier on the in-city rates, and that multiplier is currently 0.8.

And so essentially it's 80% of the in-city rate for the existing uh Boone County uh customers.

As part of our analysis, uh, we have looked at and and have a couple recommendations.

So the the first recommendation included in study is is that we've maintain that 0.8% for the existing customers.

However, when we look at that analysis and we do a deep dive, what we've done is essentially separated out the costs that are just city only and those that are also Boone County.

And the the big distinction here is the usage of the system.

And so treatment plant interceptors are the larger um wastewater collection means, those are gonna be used by everyone, the city and boone county.

It's gonna be the local collection system that's the main difference where it interconnects uh to the larger system on the city side.

What we've calculated here is that the relative ratio under with the current expenses is a 0.92 multiplier, meaning that it's higher than it currently is.

We see more usage by boom county than they are currently paying for under the existing agreements.

And so the recommendation would be, and the city already does this for new Boone County connections is to use a higher multiplier in alignment with this.

And I'll say we've calculated this twice twice now.

So we calculated this in 2021 and we've calculated it here tonight.

I'm showing it, it's come out to a very similar number.

So right at that, you know, 0.92 level would recommend is uh using that going forward for any new connections.

If however there was a chance to renegotiate the existing, I've just put over there in the notes.

That would be an additional roughly 200,000, moving from 0.8 up to 0.92 for the overall system for those existing customers that currently receive the 0.8 multiplier.

But you're not recommending for existing customers.

It's a little harder to do since they already have agreements in place with the city.

Um yeah, and so that I phrased it as definitely use it for the new ones.

If there's an opportunity to revisit those at some time, revisit it, it I see that as something harder to do, and not something that overnight you could potentially change.

So we haven't included it in in the analysis.

So we've got Christina and then uh Betsy.

Um do we have an idea of when that discrepancy occurred?

Like obviously we're looking at it today, but when did we start to see that shift to where from the 80 to the 92 percent?

And how do we identify that in the future and what kind of revenue was potentially lost because of that missed identification?

So I don't know before 2021 was the first time we looked at it uh in a deep analysis like this, and the fact and we've essentially been tracking in the model ever since.

And so I guess what I would say is we've seen exactly the same gap, if you will, from 21 till today.

So it's roughly been in place.

I I can't tell you how it opened up from that period forward, but it's definitely been in place over the last say five or six years.

Okay, and it's roughly 200,000 a year.

I would say the initial negotiations with the sewer district when we started doing these agreements.

Uh they just came up with that 80%.

Just they were like hold it out of the air or something.

Yes.

Oh, well, no, that's wrong to say.

So Tom was with the sewer district when it happened.

I don't know if you want to speak to the history of that.

You can have a microphone.

Sure.

I mean, here comes a microphone.

Some of these connection agreements go back to the late 90s or early 2000s.

And when they were worked out between the city of Columbia and the sewer district, the the thought was that there was um shared costs and costs that weren't shared, like administration and uh kind of the retail system, the eight-inch diameter pipes internal to the subdivisions.

And I think that 80% was maybe what Springfield was using at the time with some of their connection agreements.

Um that's what I've heard anecdotally over the years.

Okay, that's fine.

We don't have to speculate if we're not sure.

Um, and then uh I forgot my other two questions.

Um I rattled them off so fast and I didn't I'll think of it later.

You can I remind you.

Uh yes, you asked um how we catch a discrepancy in the future.

Thank you.

I think by doing cost of service studies more routinely.

Am I right?

I just uh wanted to hear it from the that's exactly what it's saying.

So it's it's now part of our modeling effort effectively.

So when we do this every year we're looking at that and updating the new budget data that goes in, and we've got all of this allocated, so we can perfectly track what's happened over the last two now.

So any additional one, um, we could essentially map that out to see how it's changed, and it's been relatively stable over time.

Thank you.

Absolutely.

Do we have initial connection fees in addition to the point eight?

And did yeah, and do those also help us um recover the shared cost.

Aaron, you can say yes instead of microphone.

Nothing your head, yes, yes.

Yes, asking the question in the wrong direction.

Okay.

Uh with the new connection agreements, part of that is they do pay a connection fee uh when they connect to our system.

Did the old connection agreements pay a fee when they connected as well?

Some that's some did and some did not.

Okay.

It just depended on the agreement.

We have more than 30 agreements.

Yeah.

Yeah.

With the sewer district.

Yeah, every time a new large group needs taxes.

But yep.

Okay.

Um, I know you already said this.

When was the last time we did a um rate analysis?

2021.

20 2021, we presented the findings of the most recent one.

Okay.

That was pretty close to when a lot of people were doing this.

Okay, thanks.

So next slide here, we're going to switch gears a little bit.

Um, we were asked this year to in addition look at a different part of the rate structure, which is the overstrense surcharges.

And so just the ground uh set over strength surcharges are where you have usually larger industrial or commercial customers that are sending the city wastewater that's above domestic strength.

And in ordinance, we define that as 300 milligrams per liter of either biochemical oxygen demand, BOD or total suspended solids, TSS.

So those are the two terms you'll hear me use here.

And on the left, what you'll see in orange are the current rates per pound of those two constituents.

So 32 cents for BOD, and then TSS is 22 cents.

What we did is we went through a detailed analysis, had a number of conversations with the city subject matter experts about wastewater treatment and how that extra strength wastewater affects the treatment cost.

So essentially there's additional cost for treating that above what's already in the normal rates.

And so what we're seeing in the results here is essentially BOD is very close to where the current rate is.

However, TSS is a little bit of a different story.

So the city has made a number of investments on the suspended solid side over the last 10 or 15 years, and we're clearly seeing that show up in the rate.

It just costs more to handle those as they're coming.

And the recommendation is to move this up to full cost of recovery to ensure that once someone sends you this higher strength wastewater, they're paying for their full fair share to treat those costs over time, which would be a larger jump on the TSS side here to get the calculated rates.

Yes.

How do we monitor this?

Or how do we identify the users that are sending us over straight?

Sampling.

So what you're doing is effectively you have agreements with these users where you're going out and you're monitoring what they're putting in there in the wastewater system that they're sending to the city, and it goes off to a lab and then it comes back with the constituent uh samples of how much BOD or TSS is actually in that wastewater.

But that's in our agreements with the users.

How do we know which users we need those agreements with?

Sure.

So it's actually a permit and it's uh mandated by the EPA that we have this pre-treatment program.

Uh and the industries that are or businesses, facilities, facilities, because University of Missouri is has had these as well.

Um it's based on one of two things.

Either they uh use a significant amount of water, they're a significant water user, or they're on the um significant standard industrial codes.

Yeah, they have one of those standard industrial codes where they're doing a process that could impact the wastewater uh if they didn't do pre-treatment and could impact our wastewater treatment plan.

So, like metal finishing is considered um one of these types of uh actions that would require us to give them a pre-treatment permit.

Thanks.

What we've prepared on the next slide here is just we've looked at the billing data for last year to see a number of these high users to give you uh an idea of if we move up to those calculated rates, what's some of the bill impacts would hear?

So there's only a small number of customers that actually were in this program last year and sending above uh domestic strength wastewater.

And what you'll see here are the full bill.

So oftentimes, as Aaron mentioned, they have a lot of usage.

So they're also paying the fixed charge, they're paying the volumetric charge, and then this fee would actually be on top of it for the measured amount over the domestic strength.

And what I'm showing here off to the right is the different percent change in the bill here.

I expect this to be relatively modest overall as you'll notice none of these are above five percent over uh to the right.

It really depends though, however, on how much TSS will be seeing.

That's the big one are changing.

And so if they're sending a lot of TSS, they'll often sound see a larger bill impact here off to the right.

Um, Eric, this shows both the fixed charge, the volumetric charge, and all three estimated TSS based on their past.

Total bill.

So you saw that TSS is jumping quite a bit.

Yeah, um, but as an overall percentage of the bill, oftentimes it's not that large because some of the can some consumption patterns here off the left, they have a really large bill of the volumetric and fix that's not changing with regards to that extra strength they're sending.

So need to look at the total bill to see the impact.

From your experience in other communities that have this, um, I mean, because like right, it's only 4.6%, but $19,000 changes like I don't I don't know.

I mean, yes, they have a lot of money, or they make a lot, you know, there's a big thing.

Yeah, is there any sort of I don't know, ums that the that we should be trying, yeah.

Well, you know, in electric and water, right?

We then offer conservation programs or we offer kind of like ways to lower things.

Do you ever see that and something for I don't know for uh sewer and sell the well it's based on their water usage, right?

So we do have uh key account managers that work with all the industries to reduce both their electric and their water use, yeah.

So by reducing your water use, you're gonna reduce your sewer bill as well.

Well, but for this one is the change.

I guess my question is is that like for Aurora, for instance, is that 19,000?

Do we know if the is it the TSS sounds like it's something that's kind of outside control because they could they could they could improve their pre-treatment program to reduce some of that that's that's coming to us.

Okay.

Um so for them it's a trade-off.

Do I spend it monthly with the utility, or do I invest that in upgrading my pre-treatment process so that I'm spending, you know, sending less to the utility.

And that's something that our key accounts work with they can just okay.

Yes, thank you.

I guess I only think I would add on to that is in other communities that they can invest that, but they'll only do it if they get the right price incentive that this is expensive, right?

But it is it just is it's expensive.

And then the only other thought for you is some communities don't have this, um, these high string surcharges, but the problem there is someone else is paying for it, right?

Because essentially, what they're rate effectively, yes, the zero sum game.

So somebody else is paying for this additional capacity that you have at the wastewater treatment plant.

Thank you.

In addition to the overstream program, there's an adjacent field as well that we took a look at, which is the hauled waste surcharge.

So this is effectively a program out of the wastewater treatment plant where folks can haul waste directly to the wastewater treatment plant for disposal.

And so think of this as uh septic tank waste, uh grease, portable toilets, those types of things uh out at the wastewater treatment plant.

Currently, I've put in this table up to the top.

There's two components to that rate currently.

So one is they pay a fixed charge when they show up, it is tied currently to the five eighths and three-quarter base charge.

So it's the 1237 that we saw up above and the current rates.

In addition, they pay on a per gallon basis for septic grease and portable toilets, that's roughly nine cents and two tenths, and then uh an additional rate for sludge that's slightly lower because that concentration is a little bit different.

So that's four uh cents and nine tenths.

Uh what we're recommending is two changes here.

So on the uh fixed charge, we're recommending an elimination of that that one-time fee that they pay when they show up.

That's not necessarily industry standard uh to have that one-time fee.

And so getting rid of that, what it is is the volumetric rate has the fully loaded cost.

So essentially they pay per gallon based on how many gallons they show up with.

Um, we have also up on the on the far right here in the black bars updated those rates, those are based on the exact same analysis that we just did in the last slide.

So it's the BOD and TSS cost.

All we're doing here is calculating for these types of haulways the very specific loadings that they bring to the wastewater plant and getting these fees in alignment with that.

And so we're updating to 10 cents and eight tenths, and then uh five cents and five tenths for the sludge rates here.

Okay, Christine.

Yes, I don't personally haul a lot of this stuff um from a person that's uh bringing that to us to uh dispose of it.

Um what might their perception be?

Are they gonna be uh you know, more satisfied with this approach, or is this gonna be something where we see like people trying to do something different that might not be what we want them to do, if that makes sense?

No, it does, it does.

I guess there's a couple of ways to answer that.

I mean, first is there's not many places that are gonna take this waste, right?

To part of your question, I think.

So you're one of the main receiving bodies around here locally that would take this.

Um, the second side is is back to our other discussion.

It should when what I'm showing you here is really what the cost of service is for this type of activity, what what the cost is of providing this.

Um I guess I don't have necessarily too much of a thought on on what the perception would be of it.

Um, but what I'm trying to show you is it it definitely is slightly under cost recovery right now and it should increase.

Um, I typically find in other communities I talked to just because of the lack of other alternatives.

They typically, if they're on above board business, they're gonna come to you and pay these rates to dispose of the waste.

Thank you.

Yeah, absolutely.

Uh finally on the sewer, um, our last topic for discussion is the capacity fees.

And so what we have here on the on the bottom here is uh three different methodologies that are often used to calculate capacity fees in the industry.

And so uh there's the buy-in method, uh, there's the incremental cost method and the combined method, and what are the differences here?

So the buy-in method, what we're saying is we have an existing system with additional capacity still in it right now.

So a new connection comes onto our system, we don't need to build a new plant or expand the system, they can already uh attach onto the system and we have the capacity to serve them.

Uh on the combined or the incremental down there, the next one under, what we're saying is we're essentially built out from a capacity standpoint.

If we need new growth, we likely need to upgrade the full treatment process or add on larger backbone parts of the system.

And so we want to price it based on that marginal cost of those assets.

And the combined is when we may have a little bit of both going on.

We've got an existing system, but maybe we have a big upgrade to the wastewater treatment plant coming up.

And so we want to capture both sides and come up with an average cost.

For the city of Columbia, the buy-in's going to be the appropriate approach in what we use for this analysis since we have existing capacity and we don't have large wholesale generational investments being made in wastewater treatment or expansion of the system happening in the next five or 10 years.

So the calculation, um, quite simple in the formula I put up here.

When you get in the analysis, it's more of a line by line digging into the actual assets over time that have invested in.

But really, what we're trying to say is there's a value of the system that's been invested in over time, and the current ratepayers have paid for that investment.

We need to subtract off of it debt.

And the reason we do that is because when you become when a new uh connection gets on the system, they're gonna pay debt on an ongoing basis.

And so we would have we would be charging twice for it if we didn't back that off.

And then we're simply just dividing by the system's capacity to come up with a unit cost.

Uh, what we've done here on this next slide is I've just put up some of the numbers here.

We've broken out the analysis into both the collection and the treatment uh components of the wastewater utility.

And you can see on the collections, I've got 158 million dollars in current value and 73 million on the treatment side.

The way we arrive at those numbers are a couple things.

So we're taking the original cost, we're inflating that to today's dollars, accounting for inflation, and then we're subtracting off depreciation, right?

So these assets have been in service for a number of years, it's not a brand new asset.

So we're essentially calculating what's that remaining life.

What I'll show on the next slide here is where we get to after the end of the day.

On the table to the left, we take that total system uh value, roughly 230 million dollars.

Um, its current capacity at the wastewater treatment plant, which is our limited capacity, is 25.2 million gallons per day.

And our estimated level of service for an average uh connection, a residential connection is 300 gallons per day.

Uh, when we calculate that, that means we can serve roughly 84,000 connections overall with the capacity we have.

Uh, what that uh essentially comes down to when we run the numbers is that the current full cost recovery for the sewer capacity fee is 2800 when we round it and get it for implementation in 2027.

The current fee is 2400.

And so showing there's roughly a 17% increase over the current uh 2400 uh fee that's set today.

And so we would recommend going to full cost recovery.

This again is one of those situations where uh essentially what we're trying to do is have growth pay for growth at the end of the day.

When a new connection comes on, pay that full cost of the investments that have been made over time.

If it's at anything below cost recovery, your ongoing rate payers are actually paying some of that cost.

So again, we have this this kind of trade-off in the utility system since it's all in one fund.

Any questions on that before we move on to next steps?

Um, sure.

And we have um just remind me, we have solid waste is next, right?

We do, we have solid waste.

And what time, how much time do we have for that?

We start our interviews at 627, 627.

Yes, that is a precise time.

Okay, yeah.

Um I'm going back to the Boone County rate option.

Regional sewer district.

This one.

Is there when we have people connecting to our sewer from the county?

They don't often, to my knowledge, have other routes that they can use.

Um, they're usually connecting to us because the county would require it of them, and they don't have any other options besides the lagoon.

Um I guess it's kind of heartless, but I'm wondering why we would charge 92 percent.

Why would we charge a multiplier and instead of 100% of the cost?

Oh, yeah.

So uh the main fundamental difference there is we're we're just accounting, they do have some local collection in the neighborhoods that the city's not installing that's owned on their side, and so that 92%, the 8%, if you want to think about it, is the discount because some of the assets are theirs that the city's not paying for.

And so it's not the same as an in-city customer where service is essentially coming right to the property line.

Okay, so they're carrying through Boone County infrastructure to where they tie into ours.

Correct.

That was not clear to me.

Glad we came back to it then and talked through that.

Yes.

That was not clear to me on plats.

That is exactly what we're trying to calculate is what percentage that is.

And that's so that's what we're trying to update here when we do the 0.92 is to say it's essentially 8% less to recognize some of those assets that are not the cities that are connected in that are doing the local collection function.

And do would we apply this to the same for properties that are adjacent to city and or like near the city boundary or a collector?

Do we charge the same 92 or would we charge the same 92 ratio or if they happen to be on the county but directly to our lines?

Would we charge them the same as a no?

I was gonna say you charge your outside city rate, which is 1.5 times the inside city.

Yeah.

Okay.

Thank you.

Absolutely.

So I'm just gonna recap real quick what we just talked about, and I'll get right over to Solid Waste.

So the financial plan, you know, we don't see a need for a rate increase in 27.

When we get outside of that, though, in 28, we do see uh a need to move to an inflationary type adjustment each year, 3%.

Doing those smaller adjustments earlier in time will save us from a future of a lot larger increase in one year.

And so we we see that as a very pragmatic recommendation.

Uh is the cost of service, the recommendation there, lower fixed cost recovery from 41% down to 37%.

And then as we talk about the capacity fee, uh increasing that to full cost recovery is recommended going forward in fiscal year 2027.

I would also recommend on both the hauled and the overstring to move to full cost of service rates on that to ensure that those folks are paying the full cost of treatment for that uh extra strength they are sending the city.

Next, we'll move on to solid waste.

The second part of the presentation got a very similar slide here to baseline us as we go into solid waste.

It breaks down the different components of cost for the solid waste utility.

35.3 million dollars overall for fiscal year 26 as we started this model.

Uh 20 million in personnel, capital projects, vehicles, repair and maintenance, uh, 13.2 transfers out of 900,000 in debt service of 472,000 in fiscal year 26, makes up uh that overall 35 million that we talked about.

Again, key assumptions.

We're starting the model with the latest and greatest data that the city has available.

So that's the audited financials ending in 25, the adopted buddy and uh budget in 26, and then on this utility, the actual the last rate increase was uh fiscal year 2023.

Additionally, we've included in this one a lot of conversations about vehicle replacements, right?

So vehicles are going to be the big cost here, as well as operations out of the landfill and the cell.

So that capital investment related to that is all captured in our financial modeling.

So this first run is going to be again that diagnostic picture looking out in the future.

So we're holding revenues flat, so no increases across, and we're looking at how we expect the future to unfold, given all the data points I just mentioned we've included in the model.

What you're gonna see in this middle chart is the orange line as we start off in 2026, is quite a bit above the black line.

So there's a structural deficit here built in that is maintained throughout this period as we go forward.

And what we see is we would be below the policy target, again, that 20% of OM expenditures and next year CIP in 2028, and we would be effectively out of fund balance by 2029.

So in this utility, it's a much closer picture as far as the reduction in fund balance if rates are held at current levels.

If we go for it again, uh solving for just in time rates, so what do we need if we wait till just when we need to do it?

Um, this next screenshot shows that we would need in 2028 a 17.4% increase in overall revenues, followed by a 6% increase right after that.

And then you'll notice it's much more inflationary as we go out into the future.

That will provide ongoing sustainability.

However, we know that that's a large rate increase in that year.

And so the recommendation that I'm making tonight is pull some of that out of 2028.

Do a 5% increase in 2027, and that way when you get to 2028, it's still gonna be double digits, but it's right at 10%, um, followed by in 2029 a 10%, and then it steps down to five and three.

And what that'll do is in the near term, fundamentally realign the revenues and expenditures on the solid waste side of the equation, so that we're sustainable going forward.

Um, much of that again, driven by uh when I do these solid waste rate studies, inflating operating costs, vehicle replacements, these things have gone up much much faster than inflation.

And so this is not uncommon, as I've done a number of these last two years to see pretty large pressures on the solid waste fund in order to keep revenue sustainable on an ongoing basis.

We were also asked as part of the analysis to look at the investment in the material recovery facility.

So what we've changed on this graphic is actually down on the far bottom here, you'll see this red bar here.

And so that's roughly 27 million dollars in debt, which reflects that investment in the phase two material recovery facility.

And what I've just done is rerun the model up here to calculate if that investment were to be made, that decision to be made to make that investment, what would the needed revenue increases look like?

And what you'll see there is again 5% in 27%, but we've added 4% in 2028.

So a 4% increase will essentially pay for that debt service over time of that investment out at the landfill in the material recovery facility.

Yes.

Was there a reason behind putting that additional 4% in 2028 rather than in 2027 to kind of even that out across the years?

There absolutely was.

So two thoughts come to my mind.

So one is that expenditure doesn't hit until the debt comes online, right?

So that debt is not going to be in place until 2028.

You'll probably make a partial year payment, and then you'll have the full debt service that following year.

So it matches exactly when the expenditure's in the fund.

If we push it forward, it's just going to put cash in the fund balance effectively.

I think the other thought in my mind, secondarily, is thinking about, and you'll see this on my very last slide today is your other utilities as well.

We're not operating in a vacuum in any one of these, you have a number of other increases.

And I'm thinking particularly of water.

That when I came here last year, we looked at an additional increase of 10% next year.

And so seeing that the expenditure is not till next year, knowing that water is this year, it makes some sense to stagger those two from one year to the next.

Cost of service.

So cost of service is a little bit different on the solid waste side.

So I've got in the back in the green color, the blue color, and the yellow color, the three primary functions that the city is providing when we provide solid waste services.

That is fundamentally going out, collecting either the refuse recycling, and then either diverting it for material recovery in blue or for final disposal at the landfill in yellow.

And then I've layered on top of that in the gray bars the different service provision that we're providing.

So it's residential, we've got commercial front load, rear load, recycling on the commercial side.

We've got roll off.

We also have folks that go directly to the landfill, and then finally the community improvement district downtown.

All of these are separate customer classes underneath the umbrella of the solid waste utility.

And we had to look at them all separately from a cost of service standpoint.

When I go forward here, I'm going to show you next the results of the cost allocation.

And I'm going to point you to a few items that come out of it.

So in these bars, what we're showing is the recommended allocation of cost in orange compared to in blue, the current cost.

It looks a little bit different than on sewer, and I'll just break it down.

So we're essentially siloing each customer class and looking at the individual cost to serve that, comparing to current revenues.

Residential is pretty close.

Again, we're going to need additional 5% overall.

Residential is very close.

It's slightly over 5% there from the orange bar to the blue bar.

Where you're really going to see this show up is on the commercial front load and rear load, commercial recycling, roll off in the community improvement district.

All of those three, we see the need for additional increases.

Essentially, there's a larger gap between the current revenues and the cost to provide those services.

And when I go through the next few slides, what we're going to do is use these orange bars as the targets for the revenue recovery for each of these lines to generate the rates, how high the rates need to be in the structure in order to bring in the revenue here.

So this is based on the units of service for each of these particular lines.

So rate design.

So first I'll talk residential, current and calculated.

So in between the 2021 study and this evening's presentation, the city changed the residential rates.

So we went from bags to containers, and we also went to a pay to pay as you throw model where essentially you see this scale.

So we have 35 gallons, 65 gallon, and 95 gallon carts.

And what you see there in the pricing differential is essentially a difference in disposal capacity at the end.

So the idea here is collections the same.

We're still sending out a truck, and we've got staff on that truck to go collect the waste, but you can only put in on the bottom side 35 gallons of waste, where as you get larger, you can dispose of larger amounts, and the rate should reflect that.

What I've gone through it and calculated is the most current disposal and collection cost for this line.

And I've added those two together in the orange bars to look at what the current cost is for these three different size containers.

What I find is is on the bottom side and the top side, we have a little bit of a larger gap.

So on the bottom of the 35, that rate is a little bit lower than what it should be to fully capture that cost.

Since the disposal costs are a little bit higher.

Well, we chose a need to increase that one 12.9%.

And I should mention the vast majority of your residential customers at 65 gallons.

So I think that's really helpful.

So you have a much smaller proportion of the service area that uses 35 or 95.

Majority of customers at 65.

The 65 customers, 5.2%, they'll be very close to the overall revenue needs of the utility.

Again, that was 5%.

And then the 95 gallon actually saw a slight reduction there.

So really what this analogy shows, it's on the edges.

It's a recalibration on the edges to make sure they're fully captured in disposal costs.

Currently, 95s are paying a little bit more, and 35s are not paying quite enough.

And so we're trying to do is rebalance that perfectly to cost of service.

So I think Eric, this has me a little bit concerned that it's getting way away from the pay as you go.

Like the idea of if you have a smaller cart, you're incentivized to um to theoretically throw away less drug reduced.

So it seems to me that the calculation is based on like the number of customers we have that have the 35 gallon versus the 95 gallon, because a truck is still going down that road, right?

And the stuff is still being thrown away or disposed of.

So I guess walk me through why it wouldn't be yeah, I how that is calculated.

Yeah, no, absolutely.

So we break it into, as I mentioned, a cost service, two different components.

One is collection, and as you mentioned, trucks going out, personnel's going out.

There is no difference between a 35 and 65 or the 95.

It's the exact same cost when we've modeled it here.

The difference is all in the disposal capacity.

And so we've calculated the current unit cost of disposal capacity.

And what we find is that with that current unit cost, the 35s aren't quite paying enough to fully capture that 35 gallons that they're sending you or can send you.

And the 95s are overpaid slightly.

And so what this is trying to do is get you to defensible rates at the end of the day that are based exactly on the cost to provide each one of these services.

So, like the cost to dispose of a gallon of waste.

Exactly.

Exactly.

Okay.

That's exactly what we're trying to do and make it defensible.

So we've got to tie it back to cost at the end of the day.

Again, this was uh this change was made in between rate studies.

And so what I really see fundamentally our analysis doing is just trying to perfectly calibrate it to make sure it's tied at the end of the day to the exact cost the utility has here in 2026 going into 2027.

Okay, yeah, Christina.

Uh new B question from maybe you can help me with this, but when we uh we didn't introduce the cans that long ago, right?

When was that?

23, 2023.

24, they rolled out, right?

Uh March of 2023.

Well, that's when we we gave permission to start that.

I thought we started in the ordinance changed.

Right, but we started them in like March of 2024, correct?

Once we finally had the roll cards.

Oh, we started in March of 23.

If we change the ordinance to the roll cart and the cost, do we have cards in 23?

All right, let's just start anyway.

Oh look at the thing that you see that I got 22, that's kind of in between, right?

Um, but the last time the study or cost of service was done is 2021, which you said at the time you did based on bags.

Um why were we off?

Like what what led to that?

So that we don't continue down this path of like, oh, we messed that up, you know.

What do we fix long-term March for 2024?

Yeah, as I have a picture of my role cart, so that's what it does.

Sorry, what did you actually say?

Oh, here I guess my.

I mean, we were going to, I mean, we were going to roll carts for bags.

You picked up every many bags were sitting outside a house or wherever how much 35 gallons can fit in there.

I guess I'm just right.

So that's that was very soon to be asking for a change.

Well, that's what the just got rolled out.

Uh our the original cost for the different roll carts wasn't based on a cost of service so much as a guesstimate on how many bags you could fit in a cart and what that cost would be.

So it wasn't as detailed as the study that Kyle has done.

So additional information has yeah.

Right.

This is a way more detailed study than what we did to determine the rates initially.

I guess it just seems weird because if trash cans have been around for a long time, like not really not rolling.

Not in closing.

I guess I don't feel like those are very different than what we had.

But it just feels like when we're asking the citizens to make those changes, you know what I mean?

But it just feels like when we're asking the citizens to make those changes, you know what I mean?

Like every time we ask that, it's oh there's change.

How can we figure that out?

Right.

You know, cost change uh gas is gonna be a big difference, how how that impacts our cost of service in the next five years.

You know, that's gonna be a big impact to how the rates are gonna change and that themselves get attributed.

The way that I saw it at the time was trying to be in the middle, because we didn't really change the rates when we got roll carts.

So we're like, let's just assume the rate rate now for residential is the middle one.

Yes, and then we are creating that process for a little bit less for a little bit smaller and a little bit more.

So I I agree that um getting now that we have a new collection system and with the cost of service study happening in a routine thing, it should be.

I've got Vera and then Valerie.

Um I think to kind of the previous point that the mayor was making about wanting to or or wondering about incentivizing less trash being thrown away, incentivizing the smaller cart option.

Um, and also wanting to understand how we can recuperate full costs.

I wonder if there is an option that is somewhere in the middle where we are looking at recuperating full costs, but this this change where the smallest trash can is getting the significantly largest increase, and then the our biggest trash users are actually seeing a little bit of a decrease.

That is a little bit concerning to me from a sustainability point of view for Columbia.

I mean at the same time, I I also understood the cost per gallon.

And yeah.

Yeah.

So I I guess the question is is there anywhere in the middle, or from your perspective, is this truly like the single path forward?

So this is a recommendation based on the cost to provide the service that is defensible.

Um council can choose to recommend something different.

Yeah, that one.

I mean, in terms of defensible, I think that we could defend conservation rates.

Um the thing that stood out to me, and this is completely tied into what Vera and Barbara were saying, yeah, I could see that clearly there's the biggest increase in the 35 gallon.

But when I think about the incentives to move down in size, because they are like finite tiers, right?

A65 or A35, not limiting your use incrementally.

Um there's still like there's still a saving between 65 and 35 that you know, it's maybe four dollars difference, 65 and 35.

If you're on a brink, you might want to go for the 35.

The thing that concerns me in terms of how are we incentivizing people to use less and dispose less is decreasing the rate at the 95 gallon.

If we're trying to incentivize um creating less waste, then I'm not sure why we would want to decrease the rate at the top.

Um, and that's like a dollar 70 difference-ish between the new rate for 95 and the new rate for 65.

There's certainly less push to try and use 65 if you're one of the top users.

Um yeah, I kind of wonder if we can not choose to incentivize 95 gallon and put a little incentive on 35.

Um I think it's remove that cost out of 95.

Yeah.

The 48 cents, though, that's where I'm kind of like, it's not I I for me.

I appreciate the knowledge about the costs, right?

The cost per gallon, like that calculation.

I I think one thing I want to think about is is um how does a cost of service study take into account the the not infinite um space at the landfill, right?

Like, so do you take into account like you know, the to the conservation incentives, right?

They're there for reducing waste that goes to the landfill in a way that hopefully we don't have to expand it and pay millions of dollars on that expansion.

You've got it.

So it's it's not direct in the sense that you know we can say there's uh X amount of savings, it's indirect in the sense that the more you throw out, the faster those costs come down the line, right?

And the rates go up faster because we've got to go to the next cell and we've got to invest more at the landfill in order to dispose of fast.

That's how it folds into the cost of source.

Well, we're tied to real cost in today's dollars and not a cost avoidance, if you will.

I think that's where you're headed on.

Is there any community that has that crystal ball ability to figure out?

I'm just trying to think of like how do we adequately value conservation and assign a dollar amount to it.

I hear you.

I I can't say that they have solved that one.

Um, all I can say is maybe uh it often comes up sometimes in the recycling pricing of what you do on recycling.

That's where I most see that conversation because you're diverting waste fundamentally, right?

And that's where there's more of a policy prescription and how big that incentive is in order to get folks to maybe uh move waste out of the landfill and over to material recovery.

I noticed in the upcoming slides, we're not talking about um kind of like the cost of service for recycling.

And I'm assuming you know, we're doing this right now.

Uh the cost to collect recycling though is included in your disposal or not disposal, um, collections.

Correct.

Included, I guess.

My question is if as we're talking about going to automated collection for recycling, are you gonna have to come back sooner to look at the cost of that?

Or is it forecasted in these proposals?

Because we're talking about doing that.

These are changes we're proposing for fiscal year 2728, and we're about to make these changes in 2728.

So are those costs, and Aaron, you might know more, like are they in this forecast for cost side loaders, right?

These aside loaders.

Yeah, the side.

Yeah, yeah, those are the side loads.

Yeah, we've got both of those in there.

Yeah, we've got both those projected.

So they are okay.

Just wanted to make sure, because I was like, I don't want to have another, like, well, we can have recycling.

Yeah, okay.

But you are correct on this side on residential, the rate includes both, right?

So you've got the refuse and you've also got the recycling in these rates.

So they're bundled together.

Okay, thank you.

Uh next, I was just comparing here, uh, much like before in sewer to just a peer survey here with Columbia.

Uh currently in the blue at the 1737 again, this is the 65 gallon cans.

We've moved to 1828.

We're right in that middle of the pack to lower middle of the pack from your average residential customer for solid waste service at that 65 gallon container.

And even with the the increase that uh I I've shown you here from the the calculated here, we would again remain right in that competitive position.

Uh so commercial rates, um, that's probably a a bit of a bigger discussion.

I'm gonna show you a few of these slides with these bigger matrices on here.

And so commercial rates, there's a couple recommendations that come out of this year's study.

Um, first of all, we've got two different tables as you see here.

One is rear load and front load, and what you're really discussing there is an apparatus change.

So it's just a different apparatus that's going up, either picking up on the front of the truck or on the rear of the truck.

The customer doesn't necessarily think about that, but the city makes that determination what makes most sense where we're picking up this refuse.

And currently there's two different rates for those two types of services.

Uh, just to go down these tables real quick, the front load one is probably the easiest.

As we go down from uh the top to bottom, we're increasing the container size.

And then as we go left to right, we're increasing the frequency.

So one time a week, two time a week pickup.

And so essentially what you're seeing is disposal costs going up, down, and you're seeing different collection costs going up again, back to that same discussion we're just having.

It's the two functions that we're providing, and these should scale based on how these services are changed.

So bigger containers should be more expensive just because you can throw out more.

But if we need to pick it up one time versus two times, that's essentially double the the times they're sending out a truck.

So that cost needs to multiply.

Uh that's the one of the items that it comes up for me as I think about this is while we have this distinction currently in the rate structure, the reload and front load.

That is not separated into a distinct budget category.

Those are both in the exact same commercial line.

So from a cost of service, it's not easy to separate those costs necessarily.

And in my mind, it's more not a distinction really the customer's making, it's more on the solid waste side.

How do we best serve our customer?

What apparatus do we use?

So you'll see one of my recommendations can be to essentially consolidate these two to one set of commercial refuse rates for both rear load and front load, effectively, just for the service you're providing based on this container size.

The so that's the what you're gonna see now is um effectively up at the top, this combined schedule for both front load and rear load.

And this is the schedule of calculated rates for different size containers again and the number of pickups going up to the right.

It is uh, you know, adjusted effectively here to scale for those two types two different dynamics.

What I should mention here, and I think the most illuminating part here is down on the bottom here, you're gonna see very differential impacts depending on the type of service a customer has.

And this came up in the 2012 study to a certain extent.

Um, we see a very big difference right now for the cost of service for, for instance, on an eight-yard, if you're only getting one uh time a week pickup, we see the need to raise that rate 24%.

Where if you're gonna be on the far right at six, it's actually down a little bit.

And so right now in the structure, there's this an inherent difference in cost of service between the number of pickups per week and how much you're paying for it.

We're seeing essentially if you have fewer, you're paying a lot more than those folks that have eight times.

Um it should be, if you think about it, eight times higher at the eight times.

Well, we don't see that currently in the rate structures.

What we're trying to do in this is reflect those dynamics on the ground that we are sending out, and we have additional costs that essentially multiplies times the number of times you go pick up.

And if you even think about it at six times, you're actually on a weekend, right?

So that's even a little bit different on the cost of that side.

And so this is essentially to true up those two dynamics.

Make this simpler, but then also make sure that it fully reflects the cost of service, which means you're gonna have very differential impacts depending on the exact type of service uh that the customer has in the container size that they have on this particular one.

So we mentioned uh commercial uh rates in recycling.

You do have a separate schedule for recycling.

Um, this is it up on the screen right here for a 95 gallon all the way up to an eight-yard and the number of pickups.

I'm gonna go to the next slide here to show you the change in the recommendation here.

So we haven't talked about as you mentioned, Mayor, the exact cost of service for recycling.

What I'm actually recommending as part of this study is a simplified approach to this.

And so the overall average incentive to recycle is roughly 90%, meaning the rate is about 90% of what the refuse rate is if you have the exact same container.

However, there's a lot of variation right now between the size of them.

It's probably based on the actual cost of service.

What I'm recommending is a simplification to across the board make this 90% for all containers at all different size and service configuration so that everybody gets the exact same incentive message in order to uh recycle.

Um, again, valuing recycling.

And what you'll notice down here at the bottom is some of these bill impacts, is a sum will need to come up.

So some get out if you see the increase there, but that means there's getting a much bigger uh discount than they should get.

So they're seeing a bigger incentive.

We see here over the right, the negative, they're not getting enough incentive.

And so I'm just trying to across the board make it an even playing field where they all see the same incentive, regardless of the exact container size that they pick or the number of pickups.

And so that they'll be uh thinking uh more holistically about their choices between the refuse bin and the recycling bin.

Is that like a best practice in the industry or so in the industry?

I would say in recycling rates, there's a lot of different ways.

This is where a lot more policy comes into play, in all honesty, in setting these.

Um, I just uh think in this particular situation that this simplification just makes it much easier for you to have that conversation with your customers to talk about and knowing this is a value in the community, the value of that recycling so that you can see some diversion, um, and also knowing you potentially have a decision coming up on uh additional uh infrastructure out there.

And so this just streamlines it on the front end a little bit so that folks understand exactly you know what that value is of getting that recycling container.

So we'll go to another one here.

As I mentioned, some of these you're gonna see larger increases.

So on the roll off, um, and give me one more slide because I think it'll put it all into perspective on this one.

So on roll-offs, what we have here is a price for pull.

And you have two different uh service offerings as a city right now.

One is a full standard size roll off, and what's a one's a mini roll off.

So think about this.

Uh, there's a number of different uses for this.

One I tend to think of the most is when you've got a construction project at home.

So they're demoing something in the house, they bring that portable container, they put it in the driveway and they fill it up.

That's what's going on here.

This is the price for the pull.

So the drop off, and then they come back to pick it up.

In addition, when it gets to the land flow, you're gonna pay for the tonnage as well.

So there's two components of this.

The city, however, charges this one as a standalone rate.

What you're seeing on both of these through the cost of service is a need to fundamentally increase those rates well above the overall 5% that we talked about here.

And so 36.4%, 33.6% on the mini roll off.

However, what we did as part of this, because we saw those increases, we had a conversation about, you know, because this is not just the city providing the service.

There are private haulers here.

What I put here is two tons, and we uh working with city staff, uh, got some quotes for two tons uh of roll off.

And what you can see here is the current fee and the purpose that we have here at two tons, still significantly under the private market.

My worry here is whenever you increase these rates, we always have to think about alternatives the customer may have, and you could affect demand on this side.

What we see here is you're gonna move to cost of service, you're still gonna be the lowest cost provider in the service area for this type of service.

Again, at the two tons level.

This this could vary depending on the exact tonnage, but that's a very common common level that they would send.

Uh the last big one to talk through is the uh community uh improvement districts, the ID rates.

There's a couple, and I know this is a massive table off to the right, so yes.

Do you want to explain it or do you have a quite do you want them to explain first?

I have a question, and it's not it is related to CID rates, but it's not on this slide.

Oh, okay.

Um and this is a question for Aaron.

Have we audited our list of users on this?

Our account lists.

So uh that is something we are working on.

So when we were doing this cost of service, we realized there was gonna be a significant could be a significant impact to the downtown district um as we saw those costs come in.

So I met with them initially or I met with their um well, I met with Kathy Becker, I don't know order operations manager or something, uh, about this and talked about what the increases were gonna look like.

And she was actually the one that suggested kind of consolidating some of these to simplify it.

But one of the things we talked about was that we do need to perform an audit to ensure that each of the uh individual properties, one are being charged and then two, they're being charged appropriately.

So that's something that our staff is gonna begin working on because that's not something we can do in like a week or something that's gonna take us some significant time to work on.

Yeah.

Um so that that is something that we're we're we've initiated.

Do we have an idea of how many users we were missing?

And is that built into our rates?

Like not built into our rates, but built in on uh into our calculation for the cost.

We have the current inventory of users that we've used to come up with the rates, but I think as Aaron mentioned, it it potentially needs to be updated or just audited to make sure that we have the right ones.

But we we have a current through the utility billing system estimate of customers that we're billing under these rates.

So if we are missing a significant number of users, are we overcalculating the cost of service?

I would say from all the analysis I've ever done on this, no.

This one continually shows to be well under cost recovery.

In fact, the rates I'm showing here are only a step toward cost recovery.

I actually think this one over time and the write-up I'll have in my analysis is likely um continued movement of higher rates on this one to fully pay for the cost of service.

This one shows as being uh from the last few studies, roughly 50% in total under cost recovery, just to give you a kind of magnitude.

So we are under cost recovery, but because we're not counting the number of customers, potentially not counting them accurately.

That would help, right?

If we have more absolutely are when we're calculating how much we need to change rates by, are we including recovering rates by charging everyone?

I I can only built in too.

I can only say I I I only know about the customers we're billing, right?

So that's the only way, but if we were to update and find additional customers, that would change the numbers around.

That would change the analysis.

So I I do think you'd have to find a lot though to get to full cost recovery.

So it would help, but it's it's a big big gap there on that one.

I don't think we're getting the full cost recovery by adding customers.

I'm just wondering if we need to the change needs to be different based on the true number of customers.

I I would almost recommend on this one that you get that audit first and we make sure we've got the right change because that might move the numbers or yeah, that that's where I'm headed my number.

So we we calculated with what we had to show you tonight, but I would absolutely after they we had that conversation and and you heard about the need for the audit, you know, once that's available to update these numbers so that you have a really good idea of exactly the kind of change we need in these rates.

We know it's in an upper direction, but how much is that?

So when are we anticipating um a vote on changes that come out of this study to come to us?

The budget, I imagine.

So will the audit be completed before the budget?

No.

What will audit?

So I think that's the question is if the recommendation is is it to and I I think the significance of the under cost recovery is that even by moving forward with this, even if we add a number of additional accounts, we're still gonna be under cost recovery.

So I would recommend for this year that that moving forward with this recommendation is fine.

And then once we have the audit the following year, then we can evaluate how big that that additional increase needs to be.

Yes.

Um and so would that then maybe once that audit is completed would we then recal you know revisit with the cost of service and you'd bring us back whenever that is done an update to these numbers or could would these numbers change based on those yeah and so I think that's the thing what's the timeline realistically knowing that I can't just not make a change because you don't have it done yet when when would all these things happen.

So I think I think maybe the way I would break this down is these these rates as presented are very solid step in the right direction.

They're gonna generate more revenue they're gonna bring the different charges in alignment with the underlying cost of service much like we've talked about with our other rates right disposal and collection capacity.

What the audit will do is help us determine the future how much more we need to do because we're under cost recovery here.

Well we don't know that exact level until we have the full billing units to figure out exactly what that is it may mean we don't have to go up as much in future years is the way I would think about it as one alternative.

Okay.

Uh Christina has a question yes I think I just need a little bit more background.

So the what I'm hearing and please correct me if I'm hearing wrong but we have users in the CID that are not paying for their services and do we have an idea the percentage of that how did we identify that and when did we identify that at this point I think it's just suspicion.

We haven't had time to dig into it.

Some of the examples that I do know about are when uh a place was established and their rate was established in the system they were maybe put in as a retail and now it's a restaurant and so it's changed.

And it and it and it didn't get changed in the system.

So that's that's the the main one that I'm worried about and maybe um and the the rest is speculative so I I don't know that we have that many missing accounts that's something that we're gonna do the audit and find out.

One of the things we have is through the CID they actually have a committee that's actually looking at the solid waste and so it'll be our step and the CID working collaboratively to actually do that audit.

And so that will ensure that we know exactly who their members are what are some of the things that are going on the some examples you you have a couple of storefronts where at one point you had several storefronts that was one business and now that's been subdivided into multiple businesses.

So it's just making sure that we have an account for everything that's going on and so this process will allow us to have one a mechanism for doing that audit but it's also for them we can do on a regular basis to make sure that we keep keep account.

So outside of the audit how could we implement this in our processes so like when platch change or like what what would the mechanism be in order to catch that so it's not just caught at an audit but like more simple well so the hardest part about the CID is it's it's not a so like for most of our business districts there's just a double set for the individual business.

For the CID it's all shared and so it's really have an AI account where we know exactly what businesses are what are they doing to see what their impact will be.

And so that's part of that process.

So I have a couple questions also I want to clarify I believe that at least Erin found out about this when she was meeting with the CID with Kathy Becker to go over these rates.

So I don't expect that if we need to do this by the budget she would have had enough time to respond to it.

But I do want to understand how that affects our numbers just because we'll finish an audit then we'll correct it and then we'll collect differently then we extrapolated.

So what will if you do an audit will that come back to us will we get to see the results um when will that come back yes we can provide results of uh how many facilities changed or were added things um I think my other question about like how can we stay on top of this um businesses restaurants have a licensure component right so when a new restaurant opens or changes location is that something that we can add to check on at the point of licensure um and I'm not sure what the other business and licensure tops are play types are offhand.

Um I'm I'm looking at the list that Kathy gave me, and I'm seeing a lot of restaurants.

Um that may be a useful catch net if we can implement that during our licensure process.

And similarly, we added something last year with when you get the online business license renewal, like if that's the sort of thing that comes in for the mailings too, you know, like like what is this business?

Just the question, you know, it might be able to help.

I don't know.

Yeah, I don't I don't think you're probably your restaurants with the easier, the easiest ones to identify a catch.

Okay.

It's the retail shit sizes that are whether you have a large retail space or medium rate also or small retail space, and that looks at the impact for on our review system.

And so those are the ones that are a little harder to to look at.

And so it's the same with the office space.

So those things where you want to actually look at the square footage to kind of say, here's how we determine what that bill should be.

The ones that they brought me were not ones that they're like, is this size right?

They're ones that were like, hey, our person says that they're not paying.

Like are they on your list?

Um this, yeah, they're ones that are missing, not sized right.

Yeah.

Looking forward to the audit on this.

And I'm mindful over the time, because I know you have a few more slides and then utility staff have some slides.

I had some slides, but I don't think we're gonna get to them.

It doesn't look like all right, I'm afraid.

Well, and hopefully they'll be part of also our budget discussions because that's what they're all related to, but you want to do them before I understand.

Yeah, I'll need some recommendations from you guys.

Yeah.

Okay.

So just before we leave CID, the the one big recommendation came out of here too is the green we mentioned, it's just consolidating.

So that'll help too in the audit to a certain extent, because there's less categories here.

There's a ton of categories here.

So the idea is in those green ones, those have very similar rates and expected trash generation potential.

And so the idea is there to just push them together into one category.

Effectively, they would all have the same three rates for a small, large and and uh uh medium establishment uh for those.

And then of course the the rates are at full cost of service there on the right for uh and increment essentially.

We're moving toward cost of service on these ones.

So uh finally just a recommendation here, uh financial plan, five percent increase in 2027, followed by two 10% increases, and then it would go to five percent after that is what we currently see when we run the financial model on cost of service and rate design.

You know, what we're doing is essentially balancing um the increases across customer classes here.

Uh so essentially trying to move everyone to cost of service in a measured way, um, with also a recycling, moving that to a uniform incentive across all of your different size containers and number of pickups per week.

Uh, and then uh consistent scaling for the commercial trash.

That's one of the bigger items.

I know that's a really big one.

We identified that in 21 as well.

Um, there's some bigger impacts associated with that, but it does need to be fixed in the rate structure as we see it.

Just a quick note, we did not implement the cost of service study in 2021.

We were not directed to do so.

So in 21 was the five percent, I think is what we were said, residential only increase.

Yes, and that was uh I believe yeah, residential only was 5.15% the the rate increase in 21.

And I think that was to pay the uh it was because they increased the pay for the um the drivers.

Okay and so we had the increase revenue in order to be able to pay the drivers.

Do you recall in 21 what the recommendations were or 20 for recommendations were for the cost of service?

Similar to what he's presenting.

Thank you.

Yeah, slight modifications, cost have obviously changed, but some of these are very similar um systematic uh changes that we see that need to be made to get alignment with cost of service.

So while the numbers have changed overall, some of the the larger uh recommendations are very similar.

Yeah, yeah.

This last slide, and we we can conclude in any other questions, but what I wanted to do here is just show the combined effects here.

And so what I'm stacking on top here is a 65 gallon uh container, that's your most common in purple, and then we're gonna have wastewater in green and we're gonna have water in blue.

Um, knowing that next year the water uh rate increase for 27, uh when I last presented was 10%.

Um this just shows that overall impact and how to a certain extent um these increases work together uh to make that bill impact not as large as it would otherwise seem when you look at each individually, right?

So your first uh columns off to the left for the five CCF level, that's your average user, right?

Um so what we're seeing down there is sixty-eight dollars and thirty-one uh thirty cents per month to seventy one nineteen, that's four percent uh four point two three percent.

Um I've also shown seven CCF and 10 CCF.

And as uh I mentioned with that wastewater change, you'll see as you get to higher levels of of usage there, um, a little bit larger of an impact.

However, overall, five percent a little over five percent here for those.

And so that sewer does help out when you combine these two together at some of these usage levels, these more average usage levels to to keep the bill impacts manageable as you think of all three utilities here that we've done studies for the last two years.

Eric, have you also done like then next year you have like that potential 14% for you know, sort of solid waste, yes.

You need to make some updated slides to help get us a feel for what would this look like next year at this meeting.

Yes, it's a lot of different options.

I mean, we can all calculate it on our own.

I'm just saying, yeah.

Okay.

Absolutely.

I think that's it.

So appreciate all your time tonight.

You still have a little bit of time, Eric.

If or uh Aaron, if you want to try to go to the staff slides really quick, uh you can try.

I think it's useful.

Let's see.

Okay, so let's see.

Uh and this is just summarizes what Kyle was talking about with uh water sewer and solid waste, but for electric, uh what we discussed the other night with the uh forecast was a six percent.

Um, so these slides show if we did a six percent uh increase on electric, uh, how that would roll out, and this is a residential bill impact for for like a low water user.

Uh all of these examples, we just use the 65 gallon cart since that's the most common cart.

Uh and for water, this is a three CCF and electric is a 750 kilowatt, and it shows a total bill impact difference uh of about eight dollars and ninety cents.

Uh if we move up to more of an average, and I know these it's it's difficult what average is, but you know, just trying to give you some idea of the numbers, uh thousand kilowatt uh monthly usage for electric and five CCF for water and sewer, again, the 65 gallon cart, about a ten dollars and seventy-five cent average.

That's for gas heat, uh, electric heat, it's the same, you know, thousand kilowatts.

Um, it's still a six percent difference.

Um then a high user 1250 kilowatt average and a five CCF, so we just kept it at the five CCF uh about 11.84.

So what's that range?

So between nine, eight dollars and ninety cents and the less than twelve dollars for residential user, uh, is what we're looking at.

And then we have some commercial examples.

Uh that's a three quarter inch meter uh grocery store which uses a lot of water.

Um their bill impacts, uh, and I probably should have put we should probably should have put percentages on here, but 626 dollars for all of them.

Um, but their monthly bills 14,000.

So and then another commercial example, uh downtown retail.

Uh they don't use a whole lot of water.

So the biggest difference is in their electric again, uh a percentage of an $800 bill.

And office building again, they don't use much water either.

So the biggest change for them is going to be the in the electric uh six percent.

So that's just kind of rough.

I think I sent these to you guys.

Yeah, and they were attacks.

Yeah, and so yeah, we we will need some recommendations, you know, based on Kyle's recommendations.

You know, uh, is there something specific you want to move forward for?

Kind of what I heard specifically on the roll carts is keeping the 95 gallon the same, and then maybe distributing those costs over the other two.

Would that be uh I think this is what I don't know it's hard because yes, right, but then at the same time, I appreciate having the defensible, this is the cost to pick up a gallon.

It does seem weird though to decrease the cost for the large like that just seems like the wrong direction, right?

When we're going to be increasing so many other things.

So I I feel like I kind of need to think about that.

And and yeah, think about the other uh increases, like particularly, I know one that we could get feedback on would be the connection fees for sewer uh going up uh above the 2400 dollars.

I know every time we raise connection fees, you know, there's always a uh, and that's just for a single family home is the 2400 dollars.

It's it's scale, we would scale it for all the others uh that same increase.

Um, but I know we always get a little input from the community that's out there building homes and stuff like that, that that impacts the cost.

So think about that one uh as well in particular, and then if there's something else that that for whatever reason you may not want to go with the recommendation, um, so that we can start bringing that back in July.

I think one thing that you you've done well in the past years when we've done that is even before we get into the budget discussions in July is doing both the mock-up bills as well as the calculators.

I think that's a good one to kind of see it helps us talk about the impacts and what it would be, and would you be doing something similar again?

Yes, uh, but I would need to know what percentages we're using.

So if we wanted to use a different percentage than what's been recommended, I would need to do that very soon.

I was just talking to IT this afternoon about how quickly we could get a calculator built and and put on the the internet, and uh I know we could do it probably by July, but yeah, and I I think this is my question question for council.

I think I think it was you've seen the history of not making decisions based on cost of service studies, and it's why over the last few years we've had to do these in like the bigger increases, and so I think like for us, it's kind of like we want to trust the data that's there.

I think the other thing that for me is I want to see partnered in what are we doing to then also help?

What conservation programs are we investing in to create you know opportunities for people not to have to spend, you know, what I know um in the round tables we talked about trying to continue the um insulation projects, you know, even after ARPA funds are expand.

Like, what are we doing to invest in that so that these impacts are hopefully lessened from those who don't have as much?

Um, so I'm interested in that.

I've got Valerie had our hand up, and then Jackie had our hand up.

Yeah, I was gonna ask about the six percent electric increase.

I know is that six percent for all tiers, all users?

Yes.

Is it and I know in the past when we've had larger increases, we we studied you doing that differently across tiers.

So with the cost with the last cost of service, there was uh he was trying to move towards the cost of service, and so some of those tiers uh changed differently.

They weren't it wasn't unilaterally across the tiers because he was trying to match that cost of service, so we we wouldn't change we it's much simpler if we just do six percent for everything, and then the next cost of service we can move towards the cost to provide that service.

Yeah, I understand that it's much simpler.

I just worry about the impact to citizens.

Um I'd like to see us, I'd like to see us look at other ways of covering that cost of service, um, like we have in the past.

So, yeah, at this point, I think I was hoping to hold off on a cost of service on electric, but I think I'm gonna recommend that maybe we do one next fiscal year.

Um, but the six percent is the minimum.

I mean, you saw on the forecast the other night how far behind we are.

That's the minimum for us to just even eek buy.

I am absolutely not advocating for getting further behind I'm advocating for recuperating those costs balanced differently than six percent across all tiers.

Um Jackie, and then it probably wouldn't be a bad idea if if the last cost of service study that we had done for electric could be shared since we have a lot of new council members.

Okay.

I would love that, yeah.

Yeah, Jackie.

It's kind of building off Valerie and Barbara's comments.

This might be a deferring question.

So we currently have utility assistance for some of our citizens.

Have has there been discussion on what that will do to our budget as these rates go up and if we are gonna need to change?

Because we've already spent that money very quickly, specifically through the winter.

So has that been part of the budget discussion uh as far as utility assistance program and how these rate increases may impact the demand on our utilities assistance.

Yeah, that's actually not necessarily part of this process.

So we we use our internal auditors to actually look at our utility assistance program to see what adjustments need to be made.

Um, and we need to make some adjustments.

Uh, that's probably report that's we're gonna bring back a little later to council account what that is.

Uh we spend a lot in utility assistance, and we compare it to other programs.

And so we may need to reduce that amount in order to actually balance the budget for it.

But that is something that was looked at through our internal audit process.

And so we're going to bring something back to the council exactly what that looks like.

Yeah.

I think I remember years ago doing that research into who the addresses that request utility assistance.

And I was like the amount of money that if we had just invested in the homes that you know what I mean they would have saved energy.

So I just yeah yeah I appreciate that that's happening.

Do you feel like direction I I feel like most of us we we want to go with the cost of I I appreciate Mallory's kind of questions like what can we do in the in in light of past cost of service studies maybe for that recommendation if it's not six percent if there is any sort of understanding in that to see what staff suggest.

But otherwise I mean following the recommendations we're trying to help dig ourselves out of this hole um in some cases literally sewers in a great spot we love sewers okay fantastic all right well thank you so much I do appreciate the information and the dedication put it by thank you.

Thank you.

All right we're going to move on to our planning and zoning applicants interviews.

We'll start this in about four minutes um and I'll you can we're moving the microphones so somebody can let Albert know to turn them off.