HomeMy WebLinkAboutCOM 0089.002 2002-2004 JNty as
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Harry Kim Harbara Hell
Mayor - Director
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DEPARTMENT OF ENVIRONMENTAL MQ'NAGEMENT
25 Aupuni Street, Room 208 • Hilo, Hawaii 967201'232
(808) 961-8083 • Fax (808) 9fi1-8086
January 30, 2003
HONORABLE CHAIRMAN AND MEMBERS
HAWAII COUNTY COUNCIL
25 AUPiJNI STREET
HILO, HI 96720
Subject: Bill No: 37
Related to Wastewater Service Charge Rates
Dear Council members,
I am writing this letter to clarify some of the issues regarding the subject Bill. Most
importantly, it should be understood that the total annual costs associated with
maintaining our wastewater collection, treatment and disposal system is approximately
eleven million dollars ($11M) per year. There are five components which contribute to
these annual costs, operation (O), maintenance (M), replacement of equipment (R),
administration (A), and debt service (D).
In order to maintain compliance with EPA Grant conditions for the Hilo and Kealakehe
Wastewater Treatment Plants, the County is required to maintain a User Charge System
designed to produce adequate revenue required for operation, maintenance, and
replacement (OM&R) in accordance with 40 CFR sec. 35.2140 (copy attached). Annual
costs for OM&R average approximately $7.1M over the next five years or 65% of the
total cost.
According to Gary Takamura, the Budget Administrator, debt service for the various
loans used to finance capital improvements for the wastewater system is paid from the
general fund. Debt service (D) accounts for approximately $3.3M per year or 30% of the
total cost. Cost for administration (A) of the wastewater system is approximately $600k
per year or 5% of the total cost. This is currently being funded through sewer user fees
by prematurely drawing down our equipment replacement fund which has been built up
over the past ten years.
The existing rate structure was developed with the understanding that only OM&R would
be funded through sewer user fees since this was the precise amount that it cost to operate
the system. If property owners were not accessible to the sewer, they would not be
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charged the user fee, but would be responsible to construct, operate and maintain their
own individual wastewater system in accordance with Dept of Health rules.
We believe that it is a fair distribution of costs to require those property owners who have
sewer service available to pay for the OMR&A of the system which would then account
for approximately 70% of the costs. The additional 30% would be funded through the
general fund since all property owners on the island benefit from having a cleaner
environment. This is how our current budget was prepared and how the administration
will present it to council.
Should the Council decide not to fund the sewer user fee increase as requested, it is
expected that the equipment replacement fund will be depleted by FY05-06. At that
point, in order to continue with critical equipment replacement projects, loans would need
to be obtained or bonds floated to fund the improvements. Should this fail to occur, we
could expect equipment breakdowns, sewage spills, DOH citations, and an exodus of
discouraged employees.
Please help us by supporting the requested sewer user fee increase.
Sincerely,
~a Bell,
DIRECTOR