Meeting Summary
The city council held a study session on the Fiscal Year 2023 budget for enterprise funds, including sanitation, water, and water reclamation. Discussions highlighted that Norman's utility rates are significantly lower than comparable cities, leading to underfunding of critical infrastructure projects, particularly in the water fund, which faces a projected negative fund balance due to deferred maintenance and lack of rate increases. The need for future rate adjustments and the creation of a stormwater utility were emphasized.
Financial Matters
Sanitation Fund Operations
Discussion of waste collection (over 100,000 tons), yard waste (29,000 tons), and curbside recycling (over 5,000 tons, 90% participation). Norman's sanitation rate ($17.20/month) is 5% below the average of comparable cities and includes comprehensive services.
Sanitation Fund Financials
The sanitation rate was last increased in April 2011. Revenues for FY23 are estimated at a 1.8% growth rate. Major expenditures include almost $3M for fleet replacements, a 5% increase in the landfill tipping budget (totaling over $2.2M annually), and $1.56M for the recycling contractor. The ending fund balance for FY23 is projected at over $6M.
Sanitation Capital Projects
Major projects completed in FY22 include the household hazardous waste facility ($1.65M) and the container maintenance facility (over $1M). Major projects for FY23 include a new sanitation facility ($2.5M), compost facility scale house ($420k), and transfer station renovation ($1.3M).
Water Fund Operations and Rates
The water fund produces almost 5 billion gallons annually and maintains over 600 miles of pipe, 6,000 fire hydrants, and 41,000 water meters. Norman's water rate for 10,000 gallons ($44.75) is 25% below the average of comparable cities. An inverted block rate was adopted in 1999 to encourage conservation.
Water Fund Financials
User fees for FY23 are estimated at a 2% growth rate. Water connection charges were increased in April 2022. The FY23 budget includes $1.2M for an interim water purchase contract with Oklahoma City and $1.1M for COMCDA raw water line replacement (Norman's 43% share). Approximately $250k is budgeted for fleet replacements. The FY23 ending fund balance is projected at $1.4M, with a projected negative balance of $19.4M in FY24 due to construction timing and deferred projects.
Water Capital Projects
Major projects completed in FY22 include 15 water wells and supply lines (over $10M), Robinson water line phase 3 ($2.3M), and Gray and Tonawa street water line replacement ($2.3M). Major projects for FY23 include water line replacements (e.g., Flood to Robinson $4.2M, James Garner $1.1M, Porter $2.3M), Phase 1 of advanced water metering ($3.2M), and a line maintenance building ($7M, jointly funded).
Deferred Water Infrastructure Projects
Several critical water projects have been delayed due to lack of funding, including the Flood Avenue water line, an annual water line replacement program ($3.3M annually), the Robinson 30-inch water line ($9.7M), the Alameda 24-inch water line ($3.5M), the Southeast Norman water tower ($3.5M), and the Robinson water tower ($773k).
Water Reclamation Fund Operations and Rates
The water reclamation fund treats about 11 million gallons of sewage per day. It maintains over 520 miles of sewer lines and 12,000 manholes. Norman's sewer rate for 10,000 gallons ($32.10) is 45% below the average of comparable cities. Rates were last raised in November 2013.
Water Reclamation Fund Financials and Projects
User fee revenues for FY23 are budgeted at a projected 2% increase. The estimated FY22 ending fund balance is $1.7M, projected to be over $1M for FY23. Major projects for FY23 include a solar array ($3.2M), centrifuge replacement ($3M), and the reused pilot study ($3.1M).
Sewer Maintenance Fund
This fund is supported by a voter-approved $5/month sewer maintenance rate, established in 2001. Projects are on a pay-as-you-go basis, having rehabilitated over 461,000 feet of sewer line since its inception. Current projects include Sewer Maintenance Project 18 ($2.9M), 19 ($3.4M), and 22 ($2.6M), and Lift Station D force main ($1M).
New Development Excise Tax Fund
Revenue for this fund comes from new construction building permits based on wastewater generated. FY23 projected revenues are $1.4M, with $1.1M from residential projects and $300k from commercial projects. A future project is the Southeast lift station ($900k, with a full build-out cost of $6M).
Total Utility Rate Comparison
Norman's total utility bill (assuming 10,000 gallons water/sewer usage plus sanitation) is $94, which is 26% below the average of $127 among 16 comparable cities. Notably, 14 of these cities also include a stormwater fee, which Norman does not currently have.
Coming Up
Tabled
- Flood Avenue water line from Grade Robinson (delayed from FY21)
- Annual water line replacement program ($3.3M annually, delayed from FY21)
- Robinson 30-inch water line from 24th northeast to Flood ($9.7M, hoped for FY24, delayed from FY21)
- Alameda 24-inch water line 24th avenue to Carter ($3.5M, hoped for FY25, delayed from next FY)
- Hall Park waterline replacements ($440k, FY25, delayed from FY21)
- Southeast Norman water tower ($3.5M, to begin FY28, delayed from FY23)
- Robinson water tower ($773k, slated for FY24, delayed from FY23)
- Water Reclamation Fund Storage building ($1.1M, deferred to FY24)
- Water Reclamation Fund Main control building renovation with laboratory ($3.5M, deferred to FY24)
Deadlines
- Second and last budget hearing: May 10th
- Optional follow-up budget session: June 7th
- Preliminary budget presented for adoption: June 14th
- COMCDA board elected positions renewal: July 1st
- Lake Thunderbird augmentation pilot final report: This fall
Watch For
- London Copper Rule revisions and implementation
- Cost of service study for utility rates
- Results from ARPA money application (expected in approximately 8 weeks)
- Discussion on creating a stormwater utility
Agenda Summary
Fiscal Year Ending 2023 Budget Study Session: Enterprise Funds
Presentation and discussion of the budgets for sanitation, water, and water reclamation funds, including current rates, expenditures, and deferred capital projects.