1. Report to Council, November 3, 2008

2. Sewer User Rate Increase October 6, 2008 City council set a public hearing to consider adopting a resolution amending the sewer user rates. October 17, 2008 a notice announcing the rate increase and date of the public hearing was mailed to all sewer users.

3. Sewer User Rate Increase The increase will be the first in 8 years: Mailed Public Hearing Notice Customer Class Effective 01/01/2009 Effective 01/01/2010 Effective 01/01/2011 Effective 01/01/2012 Single Family Residential: Semi-Annual Billing Increase$3.44$3.64$3.77$4.03 Percentage Increase5% Multiple Family Residential5% Commercial5% Restaurants5% Hospitals5% Schools5% Industrial5% At the end of 4-years, the total residential rate increase will equal $14.88 Current rate = $68.99 every 6-months Future rate = $83.87 every 6-months

4. Sewer User Rate Increase Montana Monthly Rate Comparison Source: 2007 AE2S North Central Utility Rate Survey

5. Sewer User Rate Increase

6. 2008 Facility Plan Update Established 20-year Capital Improvements Recommendations: Council heard a presentation about these on April 30, 2008. Headworks Replacement: Aging equipment replacement. Technology upgrade to improve downstream plant operations and maintenance. Cost-effective odor control improvements. Hydraulic capacity increase for 20+ years. Montana Department of Environmental Quality required influent flow metering. Replacement now is more cost effective than upgrades followed by replacement in 8-12 years.

7. Sewer User Rate Increase Collector Systems: Rattlesnake Neighborhood collectors (only remaining neighborhood without sewer under the Voluntary Nutrient Reduction Program) Opportunity Two (2) sewer revenue bonds sunset in 2012. 2012 increase may not become necessary. Will know before 2012 if increase can be dropped.

8. Headworks Upgrade Project Existing Headworks

9. 25 year old technology Limited expansion capabilities Expensive to manage odors

10. Existing Headworks Equipment age and corrosion must be addressed Open channels and bins complicate odor control

11. New Headworks Location FEATURES Technology upgrade to improve downstream plant operations and maintenance. Cost-effective odor control improvements. Hydraulic capacity increase for 20+ years. Montana Department of Environmental Quality required Influent flow metering. $ 6.7 million budget.

12. Sewer User Rate Increase Q&A Q – What are the sewer user rates used for? What happens to our dollars? A – Operations and maintenance (O&M) of the entire facility, replacement and depreciation (R&D) and bonded debt coverage (Debt).

13. Sewer User Rate Increase Q&A Q – Why 5% per year? That's too much. A – There hasn't been a rate increase for 8 years due to annual growth of new customers. Missoula has one of the lowest user rates in Montana.

14. Sewer User Rate Increase Q&A Q - Developers should pay costs to install new sewer lines. A – New development pays 100% to extend new sewer lines that serve the new development. Additionally new connections to the sewer line pay the sewer development fee. This sewer development fee is the fair share contribution of using the existing sewer facility. The City uses this fee revenue to help pay for expansion of the treatment plant and sewer collection system.

15. Sewer User Rate Increase Q&A Q – Why wasn't this done with the last upgrade? A – The Facility Plan identified multiple headwork's projects to be done after the upgrade. These projects were to be done over 10-years. The City is reducing costs by bundling the projects. One of the projects is the influent flow monitoring, which is required in our 2006 discharge permit. Another project is the odor control that has become a forefront issue as development gets closer to the treatment plant. A further project was identified after operating the new plant for a few years. It was discovered there is a need to increase removal of incoming debris to optimize treatment and protect the plant equipment.

16. Sewer User Rate Increase City Clerk's report about written comments received from citizens.