Title
Amend City Code - Proposed Wastewater Service Revenue Increase (Ordinance G-7129)
Description
Request the City Council amend Sections 28-39 and 28-92 of the Phoenix City Code to adjust rates for wastewater service to increase rate revenue by 20 percent over the next two fiscal years.
Report
Summary
The Finance Department, in conjunction with the Water Services Department, develops a Financial Plan, as necessary to generate revenue required to invest in the future of the City of Phoenix by offsetting financial pressure imposed by substantial increases in costs to supplies and materials due to inflation and maintain an adequate fund balance to retain a AAA bond rating. To support these needs, changes are proposed to the wastewater rates to be implemented October 2023, March 2024 and March 2025. These changes are estimated to produce $16 million in additional revenue in Fiscal Year (FY) 2023-24, $33.3 million in additional revenue in FY 2024-25, and $45 million in additional revenue in FY 2025-26.
The proposed wastewater rate changes for October 2023 will be applied to the volume and environmental charges. On average, customer bills for wastewater will increase 6.5 percent. Depending upon the actual amount of water consumption, some customers may pay more or less than this average.
The proposed wastewater rate changes for March 2024 will be applied to the volume and environmental charges. On average, customer bills for wastewater will increase 6.5 percent. Depending upon the actual amount of water consumption, some customers may pay more or less than this average.
The proposed wastewater rate changes for March 2025 will be applied to the volume and environmental charges. On average, customer bills for wastewater will increase 7 percent. Depending upon the actual amount of water consumption, some customers may pay more or less than this average.
An independent rate consultant has reviewed and evaluated the Water Financial Plan and determined that the financial plan information supports rate adjustments that are reasonable and consistent with rating agency standards (Attachment A).
Concurrence/Previous Council Action
On April 18, 2023, the City Council adopted the Notice of Intention (NOI) to consider an increase in wastewater rates and/or rate components and set a public hearing date to consider the proposed increase:
- Council approved NOI and set public hearing date for June 28, 2023.
On Feb. 15, 2023, the Transportation, Infrastructure, and Innovation Subcommittee:
- Heard information on the proposed revenue increase that included updates on the financial plans, inflationary pressures, and advanced water purification.
On Jan. 26, 2023, the Citizens' Water/Wastewater Rate Advisory Committee recommended:
- Wastewater rate increases of 6.5 percent effective October 2023, 6.5 percent effective March 2024, and 7 percent effective March 2025.
Public Outreach
In accordance with Arizona Revised Statute 9-511.01, the City Council will conduct a public hearing on June 28, 2023, to receive comments on the proposed increase in water rates. Additional information regarding public outreach efforts is detailed in the Council Report for the public hearing agenda item. Following the hearing, Council may act upon the proposed amendments to Sections 28-39 and 28-92 of the Phoenix City Code to adjust the rates for wastewater service.
Information detailing the proposed wastewater rate revenue increase is available to the public in the City Clerk Department of the City of Phoenix located at 200 W. Washington St., 15th Floor. Additional information can be found on the City of Phoenix website: phoenix.gov/public-notice-tax-and-free-changes.
Department
Responsible Department
This item is submitted by Deputy City Manager Ginger Spencer, and the Water Services and Finance departments.