Fiscal Note

Each piece of legislation that is financial in nature requires a fiscal note. The fiscal note should be drafted by department staff and should identify operating, capital, revenue, and FTE impacts of the legislation. After preparation by departmental staff, the Department of Finance (DOF) will review and make necessary revisions before transmittal to Council.

Department: Seattle Public Utilities

Contact Person/Phone: Chris Potter, 6-1576

DOF Analyst/Phone: Cameron Keyes, 4-8048

Legislation Title:

AN ORDINANCE relating to water services of Seattle Public Utilities; revising water rates and charges and terms and conditions for service, and amending Seattle Municipal Code Chapter 21.04 in connection therewith; and revising credits to low-income water customers and amending Seattle Municipal Code Chapter 21.76.040 in connection therewith.

Summary of the Legislation:

This ordinance revises the water rates for residential, commercial and wholesale customers. It also adjusts the low-income assistance credits for water customers.

Background (Include justification for the legislation and funding history, if applicable):

The Water Fund’s projected revenue requirement is $132 million for 2003 and $145 million for 2004. The projected revenue requirement for 2003 is $19 million above the revenue that would be provided at the current rates and therefore requires a rate increase.

Capital requirements and operating costs of the Water Fund have increased in recent years in response to rehabilitation and repair needs, regulatory requirements, and environmental concerns. Debt service obligations have also increased. These factors result in higher revenue requirements for the Water Fund.

A rate increase in September 2002 and then again in January 2004 would improve the Water Fund’s financial performance. This in turn would increase the likelihood that the Water Fund would receive a solid bond rating. Since funding for the capital program is dependent on debt financing at favorable interest rates, a solid bond rating for the Water Fund is important to maintaining ready access to financial capital on favorable terms.

With a water rate increase, credits for qualified low-income customers need to be revised accordingly.

Public Private Partnership Review Status:

Is the project referenced in the legislation subject to P4 review? If yes, identify P4 review to date.

No.

Is the legislation subject to public hearing requirements? If yes, what public hearings have been held to date?

Yes. A public hearing is scheduled for July 18. In addition, three public forum meetings were held July 8, 9 and 10.

Fiscal Sustainability Issues (related to grant awards):

N/a

Estimated Expenditure Impacts:

FUND (List # and/or Account)	2002	2003	2004
Water
TOTAL

There are no Estimated Expenditures Impacts listed because this is a rate proposal, which only has revenue impacts. Additional budget authority for SPU’s water programs are being requested via the budget process.

One-time $

On-going $

Estimated Revenue Impacts:

FUND (List # and/or Account)	2002	2003	2004
Water	$5,300,000	$19,000,000	$33,000,000
TOTAL

Because new rates are proposed to be effective September 2002, 2002 revenue increases.

One-time $

On-going $

Estimated FTE Impacts:

FUND (List # and/or Account)	2002	2003	2004
Water
TOTAL

There are no Estimated Expenditures Impacts listed because this is a rate proposal, which only has revenue impacts. Additional FTE associated with higher budget authority for SPU’s water programs are being requested via the budget process.

# Full Time

# Part Time

# TES

Do positions sunset in the future? If yes, identify sunset date?

No

Other Issues (including long-term implications of the legislation):

N/a