UTILITY MANAGEMENT/Avoiding sewer rate hikes
National City, Calif., avoided a significant hike in sewer service rates last year by working with San Diego County to change billing procedures and by coordinating sewer bills with a geographic information system (GIS). The city’s new fee collection system has saved enough money to cover increasing costs for wastewater treatment and to fund capital improvements.
Sewer charges are the primary source of revenue for National City. For years, the city used its own staff to directly bill approximately 16,000 accounts. Over time, the billing database became outdated, new accounts sometimes were missed and returned bills often never reached their intended recipients. The city had no means to collect rising bad debt. Sewer service could not be cut off, and collection agencies would return only a portion of recovered fees.
Those factors led to a decrease in city revenue at the same time costs for wastewater treatment were increasing. For fiscal year 2004, the city projected it would need 7 percent more revenue to cover treatment costs alone, yet $300,000 in capital improvement projects (CIP) were needed as well.
A consultant hired to study sewer rates and help design a fair and competitive rate structure also looked for ways to collect all revenue and address bad debt. The consultant suggested placing sewer fees on the San Diego County tax roll, which would eliminate the $400,000 cost of the in-house billing system and allow the city to collect 100 percent of billed charges. The annual cost to bill customers through the county tax roll would be $0.10 per parcel, or approximately $900 per year, plus a $30,000 consultant fee to manage the billing database. That change would yield a 90 percent savings — enough to fund the utility’s CIP so that an additional rate increase would not be necessary.
In 2003, the city approved the change and set out to meet San Diego County’s annual deadline for adding charges to parcel taxes. A typical six-month implementation process had to be completed in three months.
The consultant built the city’s billing database using GIS to better match parcel information to sewer service charges. First, water bill information was used to connect addresses to tax rolls. Where matches could not be made, a digital parcel map was used to coordinate water meters with addresses.
Then, the existing city sewer bill database was matched to the parcel data. The GIS provided a visual connection where bill data did not align. Only 5 percent of parcels had to be visited for confirmation. Ultimately, all parcels were linked to billable accounts. Once all water and sewer accounts could be tied to the tax roll base, new sewer fees were calculated for each parcel, considering both water use data and specific land use.
The city collected an additional $560,000 in sewer service revenue in the first year following the new fee system’s completion. Combined with eliminating the direct billing system, the city saved $960,000, which is 18 percent of its annual budget.
“The change in fee collection mode brought about an immediate financial benefit to National City,” says Mayor Nick Inzunza. “Positive results like this energize both leaders and citizens and pave the way for future projects that will make National City’s vision of a more streamlined, efficient local government a reality.”
The city’s new billing database now connects with the San Diego County property appraiser’s GIS base map. Quarterly updates in county information and any changes in land use or account status are automatically reflected in the levied sewer fee. The city also has started using parcel data to collect bad debt where the statute of limitations has not expired.
Using a Web-based interface developed by the consultant, city staff reviews billing information visually by clicking on a parcel map. The application allows staff to search the GIS without special training or expensive software.
Karyn Keese, manager of Client Financial Services for PBS&J’s Environmental Services Group in the Encinitas, Calif., office, and Brad Scott, program manager for the company’s Information Services Division.