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REQUEST FOR COUNCIL ACTION Date: 9/23/2024 Item No.: 7.c. Department Approval City Manager Approval Item Description: Consider Refunding Water Meter Deposits through Transfer from Sanitary Sewer Fund Balance 1 2 Background 3 At the March 18, 2024, meeting, the City Council adopted an ordinance to eliminate the 4 collection of water meter deposits. Previously, the City Code required a meter deposit to be 5 charged for all new meter installations and new customers. When customers changed as 6 homes were sold, the old meter deposit was returned, and a new meter deposit was 7 required from the new customer. This created a lot of accounting and tracking as meter 8 deposit costs change over time. 9 10 As part of the council report, the Public Works Director noted that it would likely take 40–50 11 years to deplete the deposit account if the city refunded the deposit when the property was 12 sold. The City Council asked staff to come up with a plan to refund these water meter 13 deposits sooner than 40–50 years. 14 15 The water meters measure the consumption of water, which is then billed to the customer 16 for water and sanitary sewer consumption. Historically, the water fund has paid for any 17 costs associated with the meters and the sanitary sewer fund has not paid anything 18 towards these costs. The sanitary sewer fund receives revenue based on the metered 19 water and should have been allocated a portion of the cost of the meters. 20 21 The current balance of the water meter deposits is $1.44 million. The water fund had a 22 cash balance of $837,986 and the sewer fund had a cash balance of $3,780,483 as of 23 December 31, 2023. 24 25 Staff have analyzed a couple of options, one being to split the refunds over a period of 26 time, such as 3–5 years. This would result in more staff time to apply the refunds to the 27 accounts but would allow for the cash in the water fund to build up enough to refund these 28 deposits. The other option, given the fact that the sanitary sewer fund derives revenue 29 from water consumption, would be to tap the cash balance in that fund and transfer the 30 dollars over to the water fund. The following chart shows the estimated impact of 31 transferring cash from the sanitary sewer fund to the water fund and then refunding the 32 meter deposits. The sewer fund has sufficient cash to make this transfer and still cover 33 current year's operations and capital needs. If this option is approved, Finance staff would 34 apply the deposits as credits to the fourth quarter utility bill. 35 Page 1 of 2 Qbhf!289!pg!345