ORDER-2016-159 : Water Enterprise Operating Budget for Fiscal Year 2017 in the amount of $5,337,495.08 (Five Million, Three Hundred and Thirty Seven Thousand, Four Hundred and Ninety Five Dollars and Eight Cents).

Transcript (~16 min @ 58:35)

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▶ 58:27 Peter D. Mortimer: It is the water enterprise operating budget, and next is the sewer enterprise operating budget. We have no less than ten orders regarding water and sewer tonight. We've already had an introductory presentation from the city's consultant, Ralph Tellis. There will be, in the upcoming weeks, another public hearing on the water and sewer rates. So I would respectfully recommend to the board, we're probably not going to pass anything this evening. We're going to have a good presentation, I'm sure, from our public works department and from our chief financial officer. So, let's keep in mind that we are in the relatively early days. President Kahn, please.

▶ 59:18 Speaker 2: Yeah, I'm going to make a motion for concurrent action. And I'm making the motion for the purpose of having all issues relative to water and sewer budget and rates be able to be discussed in one discussion this evening. Moving for concurrent action on 216.159, which is the water operating budget. 216-160 which is the sewer enterprise operating budget 216-163 which is the water rate water and 216-164 which is the sewer rate operating budget and finally 216 166 which is a proposed ordinance change to create a discount so I'm moving that all of those orders which is submitted by the administration relative to the water and sewer budgets and rates and ordinances relative there to be consolidated for the purpose of having a discussion with the consultants us and other city officials who wish to come forward tonight to discuss these issues.

▶ 1:00:30 Speaker 1: Second. Second the motion on concurrent action.

▶ 1:00:35 Peter D. Mortimer: President Kahn has made a motion to take orders four through eight on our agenda this evening concurrently. Those five orders were a motion to be taken concurrently by President Kahn. I think Alderman Lemmerman, by a thousandth of a second, made the second in front of Alderman Forbes. All in favor of taking those five aforementioned orders concurrently, please say aye. Aye. Aye. Any opposed? Hearing none, those five orders will be dealt with concurrently. There has been already made a motion to suspend for this committee for the evening by Alderman Forbes earlier. we were we are under suspension and with the appropriate city officials please come forward to address us regarding those five concurrent orders before us good evening mr shenna this is mr shenna

▶ 1:01:36 Speaker 1: the director of public works for the city of melrose good evening good evening everyone i just want to give a brief summary of of the orders that are before you and some of the major topics that we'll be presenting on and that are also open for discussion as Alderman Mortimer mentioned this is the first of possibly two to three nights of water and sewer discussion so if there are any questions that come out of this evening please feel free to forward them so that we can address them as well the the the water and sewer committee which consists of Alderman Scott Forbes this year in the past has consisted of alderman don khan alderman john tramitose also on the committee treasurer art flavin our new city engineer elena proakis ellis our cfo patrick del rosso and myself we respectfully submitted the five orders that are here before you this evening in fiscal 16 the committee contracted the services of rap tellers financial consultant and chris woodcock and associates to assist in preparation of these five orders and the backup and analysis that went into it they conducted a very extensive review of three fiscal years of budgets including revenues expenditures existing policies and billing history and most importantly three years of tiered bills every every year we distribute 25,000 to 30,000 bills in our department and they took nearly 100,000 bills and put them in a spreadsheet and analyzed it to determine customer classes customer groups and exactly how water is used and consumed in Melrose the orders before you

▶ 1:03:40 Speaker 1: address several issues first of all think it's important to to state right up front that the all of the options that are in the report that we forwarded

▶ 1:03:57 Speaker 1: to you have water our adjustments for water beginning water used beginning on june 27 2016 however these fy17 rates will not appear on bills until october 1st 2016. october 1st 2016 is the effective rate increase date that's very different than anything that we've proposed in the past so although you use water in july the water used in july will be at the new rates we'll be discussing this evening however you won't see a bill for that until october we'll continue to bill at the 16 fy 16 rates through the summer uh secondly the water enterprise operating budget is before you in the amount of 5 million 337 thousand four hundred ninety five dollars and eight cents and that includes all debt and interest that's owed

▶ 1:04:51 Speaker 1: the sewer enterprise operating budget is before you as well for fiscal 17 in the amount of seven million seven hundred eighteen thousand four hundred nineteen dollars and nine cents once again that also includes all debt and

▶ 1:05:10 Speaker 1: interest that's owed the rate options that are before you also account for the practice of not billing individual departments within the city for water and sewer consumption and included in your package is an updated opinion from powers and Sullivan date dated April 28 2016 provided to city auditor and CFO Patrick Del Russo which defines this policy as appropriate and a good

▶ 1:05:41 Speaker 1: practice part of the orders before you respectfully requests amending revised ordinances chapter 228 article 4 section 228 20 the elderly discount the intent of this order is to propose language so that the program is inclusive for all senior property owners throughout the city including those residing in individually owned condo units lastly the rates before you do not propose a

▶ 1:06:17 Speaker 1: number or a percent increase in general all things the same there is a five percent rate increase in water and sewer this year it's the lowest proposed increase in the last four years however there are several options there are

▶ 1:06:37 Speaker 1: seven groupings of options that were analyzed by a consultant they include up to ten individual options which are both legal and meet the financial commitments required in fiscal 17 inclusive of indirect costs direct costs MWRA debt interest reserves in the offset of starting the rate on October 1st so I would like to turn it over at this point to raft Ellis and associates the Dave Fox and Chris Wilcox from Wilcox and Associates to give a brief overview of of the technical memorandum that was circulated some of the proposals the budget that the rates will support and other members of the administration and myself will be here to answer questions after that thanks Thank You mr. Shanna

▶ 1:07:46 Speaker 7: good evening that while they're setting that up let me start off my name is Christopher Woodcock I'm the president of Woodcock and associates with me is Dave Fox, who you met, I think, earlier in April, senior consultant from Raftelis Financial Consultants. I understand that most of you were here for the initial presentation. For those that weren't, that are watching on television, I thought I'd give a brief introduction as to who we are. As I said, I am the president of Woodcock & Associates. We're a consulting firm that does just water, sewer, storm water rates, done them all over the world, but primarily here in the Northeast. I've done about 500, more than 500 water and sewer rate studies. It's included probably half of the MWRA communities and about two-thirds of the population of Massachusetts, so it's been very concentrated in the Northeast and in Massachusetts. Dave Fox, who's with Rafteles Financial Consultants. Rafteles Financial Consultants is the largest firm in the world, I believe, that does just water, sewer, and wastewater rates. They have over 50 consultants in probably 10 or so different offices throughout the country. Again, the largest one that focuses just on water and sewer and stormwater rates, financing and management of the water systems. For nearly a decade, George Raftelis, who was the chairman of Raftelis Financial Consultants, and I have been friends for 40 years. We've worked together. We've worked against each other reluctantly, but we have in the past. But for the last 10 years or so, we've actually had a formal working arrangement, an agreement whereby we work together on an awful lot of jobs, primarily in the Northeast, but some throughout the rest of the country. With that, the next thing I really wanted to talk about is why we're here tonight, talking about water and sewer rates. And I think sometimes in the discussions of these, the fact that we're talking about water and how important it is gets lost on people. Aside from air, water is the most important thing that you have. None of us are here if we don't have water. It's essential to health and public safety. In fact, the city of Melrose doesn't exist without the water system. You can imagine what the schools would do, what the fire department would do, what the larger buildings would do if there were no water system in Melrose. It's absolutely critical. We're also very fortunate that we end up in Melrose. I live in a community that gets MWRA water, too, that gets MWRA water. It comes from the Quabbin and the Wachusett Reservoirs. There's treatment in Marlborough. It gets distributed to communities throughout the eastern part of the state. And I'm pretty sure that most people don't realize that the MWRA water is among the best in North America, and I think in the world as well. Several years ago, there was a convention of the Water Works Association. They have a taste test every year, bringing water from all over Canada, Mexico, and the United States. and the MWRA water won as the best tasting water in North America. So the water you're drinking is not just good water, it's great water. I'll also mention that MWRA water has never, never lost a taste contest with any bottled water. It's not just some bottled water, but any bottled water. It's better than any bottled water that you can get. So we're talking about really good water involved here too. there's this slide here has a little bit of a showing of you know the value of water and it shows the the cost of different things that you can buy the water one you can't see because it's so small it's less than tenth of a cent a gallon and it compares it to other elements gasoline and Starbucks coffee things like that and I think sometimes we lose track of how inexpensive water is to people and sewer service that it goes along with it I used to be president of the New England Water Works Association and gave speeches all the time and one of the things that I often challenged people about was what the cost of water is asking people what their water bill is how much do you pay for water surprisingly very few people know what they pay for water and in a part it's because it's inexpensive in part it's because it's built quarterly Unlike anything else, you pay cable, you pay electric, you pay gasoline, you pay telephone, all of those things monthly. You pay water quarterly. It's starting to change, and there's starting to get to be some more that are being billed monthly. But for the most part, people get water bills quarterly on this. And I think as you start to look at the cost of water and what the value of water is, one of the things that I often mention is if you could go ahead and put an ad in a local newspaper and say what you want is somebody to deliver water to you not just any water good water drinking water last thing a surgeon touches at Mass General Hospital or the hospitals here in Melrose before they go into surgery is tap water rinse off with tap water after they've washed and cleaned it's so good you feed it to the baby as I said the water we have here in Melrose is among the best in the in the world there but you put an ad in the paper saying you'd like that delivered to you in quantities up to 20 gallons a minute that's what most meters will give you do it 24 7 365 days a year Christmas New Year's everything you do it during power outages the water still gets to you in power outages and deliver it to just about any room you want in your house on top of that have a large quantity of water 500 gallons a minute in a residential area more than that 2,000 3,000 gallons per minute in commercial areas of water available again anytime 24 7 to put out a fire and your ad asked to do that for about a

▶ 1:13:56 Speaker 7: dollar a day you couldn't touch that nobody would pick up on that ad but your public works department does the cost of water to a typical Melrose resident is about a dollar a day for water if you think about that again we're talking for about something that's essential for life. On the sewer side, you can put the same add-in. An add-in that says I want somebody to come and take away all the wastewater, all the sewage that I have in my house, all the garbage that I grind up and send down my garbage disposal, whatever quantities I do it, again 365 days, seven days a week, 24 hours a day, and take it and dispose of it in an environmentally sound way so that the sludge is treated, that the wastewater is treated and you're basically coming up with something that's nearly tap water by the time it's discharged into Boston Harbor and do that all for about two dollars a day that's what you get in Melrose it costs about two dollars a day for sewer service for the typical resident in Melrose to get service it's an amazing deal it really is and as I said I've traveled around the world of traveled around the country and parts of the world it's a it's frightening that they don't have the service that we have in parts of this country I've done a lot of work in Southern California and I think many of you probably seen heard about the droughts in Southern California they just don't have water we're very fortunate here in the Commonwealth of Massachusetts we do have pretty good water there's some comments earlier about the MWRA having extraordinary amounts of water there's no need to conserve water let me put that to bed right now that's not necessarily true it is true that today here in 2016 there is a lot of water the MWRA has but in 1980 early 1980s it didn't and some of you may be old enough to remember in the 1980s what was happening with all the headlines in the Globe and the Herald were the MWRA city of Boston everybody inside 128 is going to take all the water from the Connecticut River the Merrimack River and put it all into drinking water in Boston because the MWRA was at its limit at its capacity for its reservoirs so selling more than 300 million gallons of water a day. What happened in the early 1980s, and it started with the city of Boston, was people started putting in new rate structures to encourage water conservation. Boston Water and Sewer was one of the first to put in an increasing block system of water rates and sewer rates to encourage water conservation. And it succeeded. It succeeded very well so that the amount of water that's now pumped out of the MWRA system is in the order of 200 million gallons a day, far less than that 300 million gallon a day capacity