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The town of Frisco is pushing forward with plans to adopt a new water rate structure, hoping to introduce the new fees in an ordinance early next month and implement a change in the fourth quarter of this year.
The town completed a 10-year rate study in 2006, which remained in effect through 2016, meaning there’s been no changes to rates in more than two years. Though a new pay structure is in the offing as Frisco seeks a means to keep pace with rising operating expenses, fund conservation programs and capital improvements, and maintain a healthy fund balance.
At Frisco’s Town Council work session on Tuesday evening, town staff introduced a number of potential alternative rate structures the town could utilize, providing insights into the types of impact each would have on different types of water users. Additionally, staff detailed a number of conservation programs and capital projects the price hike will help to fund.
Conservation Programs
Before looking at the proposed rate structure, it helps to understand how the town’s water revenues will be spent. Over the next five years (the presumptive end date of the new structure), the town is planning on funding at least four separate conservation programs requiring an estimated $1.7 million.
“These conservation incentives are all tied directly to the water efficiency plan (the council) approved last fall,” said Jeff Goble, Frisco’s public works director. “All of these plans were in there in one form or another, and allow us to meet the water savings goals we want to have.”
The first conservation program aims to replace the 150 old analog meters left in town with new automatic meter reading systems. Because the old meters are no longer considered accurate, the new meters are expected to reduce water usage by three-to-five acre-feet of water a year (an acre foot is the equivalent of about 326,000 gallons of water). To complete the town’s meter upgrades will cost about $150,000.
“Slow the Flow” provides subsidized irrigation system audits to anyone requesting one. The town will continue the program this year under a 50/50 cost share with a grant implemented by Resource Central, but will be left to its own devices starting in 2020. The town estimates the program will cost about $10,000 over the next five years, and save 10 acre-feet of water a year.
The Water Smart Program will allow customers to see detailed usage reports in real time, allowing them to compare their usage to their neighbors and other customers, and get tips on reducing usage. The program is expected to save about 5 acre-feet of water a year, but cost about $10,000 a year.
The most significant conservation program, “Start at the Tap,” involves offering rebates to customers willing to replace old fixtures with new, Water Sense fixtures. The program is pricey, at an estimated $300,000 a year for the town, but should save between six and eight acre-feet of water a year.
Capital Improvement Projects
As part of the study, town staff also dove into what capital improvement projects would be needed to maintain the town’s water system over the next several years. “We went through knowing the council’s goals and vision to create a good infrastructure,” said Goble. “We reevaluated some things and got all of the water staff involved to figure out what needed to be done.”
While some are easy and relatively inexpensive — such as relocating a fire hydrant for the gap project, a $35,000 endeavor — others are considerably more involved and costly. The most significant project listed by the town is the Creekside Water Main Replacement, estimated to cost $1 million on its own.
In total — including abandoning wells, funding surveys, replacing mains and more — the town is prepared to pull the trigger on almost $4 million in capital investments into the water system by the end of 2023.
Proposed Rate Structure
With the town expecting to infuse about $5.7 million into its water system and conservation programs in the coming years, the new rate structure will help to accommodate that spending.
But if conservation efforts pay off, and residents and businesses are using less water, the town is also anticipating a substantial hit to it’s water revenues, meaning the town is hoping to create a rate structure that provides a more steady revenue stream.
Staff offered six different alternatives — essentially three different rate structures, differentiated by whether or not they include usage as part of the base rate. By the end of the meeting, both council and staff agreed to move forward with a structure that includes a $45 base rate per equivalent residential unit per quarter, $1.12 per 1,000 gallons for individuals using up to 8,000 gallons, $2.24 per 1,000 gallons for those using between 8,000 and 16,000 gallons, $4 per 1,000 gallons for those using between 16,000 and 50,000, and $5 per 1,000 gallons for anyone using more than 50,000 gallons.
The rates are expected to increase between 3%-to-5% per year, to be evaluated annually. Additionally, it’s expected that tap fees will increase by 10% each year, from $4,730 in 2019 to $6,925 in 2023.
“This encourages conservation, and it also doesn’t include usage in that base rate of $45,” said Bonnie Moinet, Frisco’s finance director. “I can’t tell you how strongly I feel about the fact that we would at least have a steady flow of income. If we are successful at getting people to conserve water our revenues will go down. So it seems like we probably need some stability in our revenue stream, and this would certainly be one way of doing that.”
An ordinance outlining the proposed rate structure is expected to make its way to the town council sometime next month.