Item Coversheet

AGENDA DATE:October 10, 2017

Conduct a Public Hearing and Adopt a Resolution Establishing Commercial and Residential Drainage Fees.


Steve Massey, Director of Community Services

Eric Cannon, Chief Financial Officer


On October 27, 2015, City Council adopted Resolution No. 3334-10-15(R) setting the current rates and fees for Drainage Services.


Conduct a Public Hearing and Adopt a Resolution Establishing Commercial and Residential Drainage Fees.


The City established a Municipal Utility Drainage System by adopting an Ordinance in March 1993.  The City updated the Drainage Ordinance and associated fees in January 2009 and then again in October 2015.


The 2009 fee adjustments took commercial drainage fees up by about nine percent.  In addition to this nine percent increase, commercial rates for existing properties that City Ordinance had previously capped at a maximum drainage fee of $50 per month were raised by nine percent and uncapped.  The uncapping of the commercial fee for existing customers was implemented at a rate of a $50 per month increase per year until the full calculated rate was attained.  In a few cases where commercial customers had large impervious areas, it took until the last few years for the drainage fee to reach their full-uncapped commercial cost per month. 


The City increased the residential drainage fee from $2.75 to $3.00 per month in 2009 when commercial rates were increased by the same percentage and uncapped.  This represented an annual residential drainage fee increase of $3 per year.


In 2015, the City again increased the residential drainage fee from $3.00 to $3.25 per month.  This represented an annual residential drainage fee increase of $3 per year.  At that time commercial rates were not changed because the City was still in the process of "uncapping" the fees paid by some commercial properties.


The drainage utility fund has realized increased operating costs due to:


  • The requirements of complying with the Texas Pollution Discharge Elimination Program (TPDES).  These costs include program development and maintenance, staff to manage the program, and equipment to support the program.
  • Increases in street sweeping requirements as the City grows.  Street sweeping is also a TPDES program component.
  • Increases in both the mowed area and the cost to mow drainage areas as part of the Citywide contracted mowing program.
  • Increasing costs associated with the City public health program to monitor and treat mosquito populations based upon the rising concerns about the mosquito borne West Nile and Zika viruses.
  • Increases in dollar contributions to the Vehicle and Equipment Replacement Fund (VERF). These are necessary due to the much greater than expected increases in costs for replacement construction equipment.
  • Beginning the appropriate enterprise fund contributions to the technology replacement fund.
  • Specific technology support to field and maintain the "City Works" asset management and work order system that interfaces with the City Geographic Information System (GIS).


The Drainage Fund was projected to drop to 90 days of fund reserve during Fiscal Year 2017-2018 under the existing rate structure.  This is the lowest end of the City's day of reserve range band from 90 to 120 days of fund reserve.


The recommendation is to increase residential rates from $3.25 to $3.50 per month, a total of $3 per year.  The commercial rate recommendation is to increase commercial rates by the same percentage as our residential recommendation, 7.7 percent.  The City sets commercial rates based on either total impervious surface area or total developed surface area.  This increase would make our commercial impervious monthly fee rise from 5.2 to 5.6 cents per 100 square feet of impervious surface area. This would also make our commercial total developed area monthly fee rise from 4.7 to 5.05 cents per 100 square feet of total developed surface area.  For example, a typical family restaurant with average size parking lot (impervious coverage) currently pays $25 per month would now pay $26.92 per month. A similar comparison of a restaurant with larger parking lot currently pays $60 per month would now pay $64.62 per month.


Residential Rate Comparison:

Our immediate neighboring communities of Plano, Richardson, McKinney, and Frisco have similar TPDES and drainage fund requirements as Allen.  A survey of their current residential rates shows Allen would continue to be lower than the average monthly residential fee of all five cities of $4.00 per month, which still leaves Allen with the lowest residential rate and below the average residential rate.


Commercial Cost Comparison:

Our "comparison city" analysis of commercial rates reflects that our 5.2 cent per 100 square feet of impervious area commercial rate is lower than the average of our comparison cities which is 8.6 cents per 100 square feet of impervious area.   Even with a 7.7 percent increase, our commercial rates remain substantially lower than the monthly fee charged by Richardson, McKinney, Plano, and Frisco.


It is prudent financial management to modestly increase fees beginning early in Fiscal Year 2018 in order to assure the drainage enterprise fund can fund its operational costs and end the year with a reasonable fund reserve.


In this agenda communication, we speak in terms of commercial fees per 100 square foot of area per month in order to properly compare our fee to those of other cities.  The Allen City ordinance is written as a fee per Acre.  One acre is 43,560 square feet or 435.6 hundred square feet.  The commercial fee increases in the proposed rate resolution are computed to be a 7.7 percent increase in the previous fees expressed as a cost per acre.


When the original Ordinance was developed the City assigned Day Cares and Religious Facilities a slightly lower Base Rate (all acres) than commercial and multi-family properties.  However, the Alternate Rate using impervious surface area is identical to all rate classes.  This Ordinance maintains the slight Day Care and Religious Facility difference in the Base Rate although it was increased the identical 7.7 percent increase as all other non-single family commercial properties. 


The proposed drainage fee adjustments will generate about $111,032 in additional revenue in Fiscal Year 2017-2018 for the Drainage Fund.  This amount will result in the end of year fund reserve to improve to about 113 days from the 90 days that staff projected without the rate increase.


Staff recommends the City Council conduct a public hearing and adopt a resolution establishing commercial and residential drainage fees.


I make a motion to adopt Resolution No. _______________ establishing Commercial and Residential Drainage Fees.