AGENDA ITEM REPORT
TITLE:
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AN ORDINANCE AMENDING THE CITY’S CODE OF ORDINANCES, BY AMENDING CHAPTER 20, “UTILITIES,” ARTICLE V, “RATES AND CHARGES,” SECTION 20-82, “SCHEDULE OF RATES, FEES AND CHARGES,” SUBSECTION 20-82(9), “AUTOMATIC ANNUAL RATE ADJUSTMENT,” IN ORDER TO ALLOW FOR ANNUAL RATE ADJUSTMENTS EFFECTIVE JUNE 1 OF EACH YEAR BASED ON THE HIGHER OF TWO AND ONE-HALF PERCENT (2.5%), THE CONSUMER PRICE INDEX (CPI), OR BROWARD COUNTY WATER AND WASTEWATER SERVICES FEE ADJUSTMENTS AND TO PROVIDE THE CITY COMMISSION WITH THE ABILITY TO WAIVE SAID FEES IN WHOLE OR IN PART. (FIRST READING)
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BACKGROUND:
On March 9, 2017, the City Commission approved the current water and wastewater rate structure, which includes an automatic annual adjustment effective April 1 of each year. This adjustment is set at the greater of two and one-half percent (2.5%), or the inflation rate, as determined by the Consumer Price Index (CPI) published by the Bureau of Labor Statistics for the Miami-Fort Lauderdale Metropolitan Area.
The City does not operate its own water and wastewater treatment facilities but instead contracts with Broward County Water and Wastewater Services for the purchase of potable water and the transmission and treatment of wastewater. These contractual services constitute a significant portion of the City’s water and wastewater operating budget.
Broward County Water and Wastewater Services (BCWWS) adjusts its fees annually based on projected operational costs, which may fluctuate due to regulatory changes, capital investment needs, and other factors. In previous years, the City has exercised its discretion consistent with the City’s Code to either waive the annual rate adjustment or implement a lower adjustment than prescribed by the CPI, while still ensuring sufficient revenue to cover the annual fee adjustments imposed by BCWWS.
DISCUSSION:
For Fiscal Year 2025, while CPI increased by two and eight-tenths percent (2.8%), BCWWS approved an average fee increase of nine percent (9%) for water and wastewater purchases. This adjustment was necessary to address the increase in costs of various commodities, including chemical costs for water and wastewater services. As a result, an adjustment more closely aligned with BCWWS’s increase is necessary to ensure the financial stability of the City’s Water and Wastewater Fund.
To adequately cover future operating and capital costs, staff recommends amending the automatic annual adjustment to incorporate the annual fee adjustment approved by BCWWS for the prior fiscal year. Aligning the City's rate adjustments with those of the County will help maintain financial stability, account for inflation, and support essential infrastructure improvements, while ensuring the continued efficiency and reliability of the water and wastewater system without compromising service quality or long-term sustainability.
The proposed ordinance codifies the City’s ability to waive the rates in whole or in part and changes the effective date of the annual rate change from April 1 to June 1.
The proposed rate adjustment for Fiscal Year 2025 will be presented to the Commission at a future date as a resolution.
RECOMMENDATION:
Staff recommends approval of this ordinance.
FISCAL IMPACT:
REVENUES: TBD
EXPENDITURES: $ 0
BUDGETED? Yes
NOTES: Funds will be deposited to the following Revenue Accounts: 41-V34331, Water Sales, and 41-V34351, Sewer Sales.