“As far as the laws of mathematics refer to reality, they are not certain, as far as they are certain, they do not refer to reality.” Albert Einstein

There are 16 Port and Harbor Meters, They use 8.67% of the “Other” (which includes Commercial Users) water, or 5,780,182 Gallons of water annually. Annual water costs are approximately $71,000.

The Meters are tested at the factory. Each meter comes with a certification, which indicates conformance to industry standards, at high, intermediate and low flow rates. Meters do over time tend to lose their accuracy (usually measuring less water and not more). Over the past two years the City has replaced every meter in the system.

2011 Water Budget 2011 Sewer BudgetCombined Budget Expenses$1,782,288$1,746,622$3,528, Gallonage Used (Billable) 121,179, ,835,525 Cost Per Gallon

Excerpt from Thomas Klinkner memorandum dated 4/21/2011: ‘HE SAID YES!’ “ Although the setting of a different rate for sales of bulk water depending on whether the retail water customer is located inside or outside the City is not subject to judicial review for reasonableness, such a classification still must pass muster under the minimum level of equal protection scrutiny, the City :…only needs to show that the ‘challenged enactment was designed to achieve a legitimate governmental objective, and that the means bear a ‘fair and substantial’ relationship to the accomplishment of that objective.” The issue of practicality of imposing such a rate structure, “This issue might be addressed by establishing a higher rate for sales to bulk water haulers, subject to a discount for water that is resold to retail customers at locations within the City. This would put the burden on the bulk water hauler to demonstrate the extent to which their purchases are entitled to the discounted rate.”

EPA (ADEC now that the State has primacy), requires that individuals operating public water and wastewater systems be certified. The City’s water system certifications require Level II for the treatment plant and Level III for distribution. The number of employees is not regulated, because Homer’s system is relatively large and complex. We do have more employees than other communities with smaller, simpler systems.

Breakdown of Water / Sewer Employees Data Extracted from 2011 Budget DepartmentEmployees Water - Administration 1.85 Treatment 1.94 Testing 0.30 Pump Station 0.42 Distribution System 2.30 Reservoir 0.50 Water Meters Sewer - Administration 1.75 Plant Operations 2.69 Testing 0.60 Pumps/Lift Stations 1.45 Collection System Includes: Treatment Plant Supervisor 1.00 Lead Operator 1.00 Treatment Operation II 2.00 Treatment Maintenance Technician II 2.00 W/WW Utility Technician III 1.00 W/WW Utility Technician II 1.00 W/WW Utility Technician I 2.00

UTILITY BUDGET WATERSEWERTotal 2011 Anticipated Expenditures based on 2011 Budget Personnel 868, ,802 1,598,078 Operations & Maintenance 446, , ,228 Other Charges 200, , ,981 Depreciation Reserves 250, ,000 Leave Cash Outs 16,211 20,412 36,623 Total Expenditures to be covered 1,782,288 1,746,622 3,528,910 Water Rate Structure Analysis 2010 Actual%$1,782,288 Users Single Family Dwelling 1, % 306, Other % 148, Bulk 20.1% , , Gallonage Single Family Dwelling 33,084, % , Other 68,130, % , Bulk 19,963, % , ,179,200 1,325, $ 1,782,288 Using Current Rate Model, updated with user group

UTILITY BUDGET WATERSEWERTotal 2011 Anticipated Expenditures based on 2011 Budget Personnel 868, ,802 1,598,078 Operations & Maintenance 446, , ,228 Other Charges 200, , ,981 Depreciation Reserves 250, ,000 Leave Cash Outs 16,211 20,412 36,623 Total Expenditures to be covered 1,782,288 1,746,622 3,528,910 Sewer Rate Structure Analysis 2010 Actual%$1,746,622 Users Single Family Dwelling 1, % 277,680 Other % 119,040 1, ,720 Gallonage Single Family Dwelling 38,178, % ,398 Other 66,656, % , ,835,525 1,349,902 1,746,622 Uses Current Rate Model, Updated User Groups

UTILITY BUDGET WATERSEWERTotal 2011 EXPENDITURES TO BE COVERED BY USER FEES: Personnel 868, ,802 1,598,078 Operations & Maintenance 446, , ,228 Other Charges 200, , ,981 Depreciation Reserves 250, ,000 Leave Cash Outs 16,211 20,412 36,623 Total Expenditures to be covered 1,782,288 1,746,622 3,528,910 Water Rate Structure Analysis 2010 Actual%$1,782,288 Gallonage Single Family Dwelling 33,084, % , Other 68,130, % , Bulk 19,963, % , ,179,200 1,176, UsersMETHOD A Single Family Dwelling 1, % , Other % , Bulk 20.1% 1, , , , METHOD B - $606,024 / 1521 = $ / 12 = $ ,782, Leave the $ per Gallon alone, adjust the monthly customer charge to cover shortfall

UTILITY BUDGET WATERSEWERTotal 2011 EXPENDITURES TO BE COVERED BY USER FEES: Personnel 868, ,802 1,598,078 Operations & Maintenance 446, , ,228 Other Charges 200, , ,981 Depreciation Reserves 250, ,000 Leave Cash Outs 16,211 20,412 36,623 Total Expenditures to be covered 1,782,288 1,746,622 3,528,910 Sewer Rate Structure Analysis 2010 Actual%$1,746,622 Gallonage Single Family Dwelling 38,178, % , Other 66,656, % , ,835,525 1,223, UsersMETHOD A Single Family Dwelling 1, % , Other % , , , METHOD B $523,438 / 1653 = $317/12 $26.39 $1,746,622

UPDATED RATES, USING CURRENT RATE STRUCTURE Rate Comparison: Per Gallon Proposed Rates: Current Rate Model Current Rate Model, Adjusted Increase in Customer Charge Water Customers Single Family Dwelling Units ,000 Gallons ,500 Gallons ,750 Gallons ,000 Gallons ,500 Gallons Other (Includes Multi-Family, Business, B&B, Etc) ,000 Gallons ,500 Gallons ,750 Gallons ,000 Gallons ,500 Gallons ,000 Gallons ,000 Gallons ,000 Gallons ,000 Gallons ,000 Gallons 1, , , Bulk Water Users ,000 Gallons 6, , , ,400,000 Gallons 17, , ,444.49

UPDATED RATES, USING CURRENT RATE STRUCTURE Rate Comparision: Per Gallon Proposed Rates:Current Rate Model Current Rate Model, Adjusted Increase in Customer Charge Sewer Customers Single Family Dwelling Units ,000 Gallons ,500 Gallons ,750 Gallons ,000 Gallons ,500 Gallons Other (Includes Multi-Family, Business, B&B, Etc) ,000 Gallons ,500 Gallons ,750 Gallons ,000 Gallons ,500 Gallons ,000 Gallons ,000 Gallons ,000 Gallons ,000 Gallons ,000 Gallons 1, , ,309.03

WHERE DOES COUNCIL WANT TO GO FROM HERE? WHAT OTHER QUESTIONS DOES COUNCIL HAVE OF STAFF?