Timothy Watkins, Assistant Director of Public Works and Engineering Dorothy Wisniewski, Assistant City Manager/ Director of Finance

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1 1111 Joseph J. Schwab Road Des Plaines, IL P: desplaines.org Date: March 23, 2017 To: From: Mike Bartholomew, MCP, LEED-AP, City Manager Timothy Watkins, Assistant Director of Public Works and Engineering Dorothy Wisniewski, Assistant City Manager/ Director of Finance Subject: Amendment to the City s Water Amnesty Program Issue: For the City Council to approve the attached Resolution amending the current water amnesty program. Analysis: During the March 20, 2017 City Council meeting, the City Council discussed the current water amnesty program that was established in 2012 which deals with the water meter discrepancies due to mismatched reads between the water meter within the home and the analog display on the exterior of the building. During the discussion, and based on the analysis presented by staff, it was determined that approximately 10% of the accounts had usage over 100 units of consumption. Staff provided the City Council with three options that could be used in dealing with the discrepancies. From the discussions, the City Council reached a consensus to move forward with Option #2, which is the following: Option #2 - Modify the amnesty program and authorize staff to write off the lost water only when there is a mismatch read on analog meters for accounts that have greater than 100 units of water. Affected customers that were part of the amnesty program would receive a credit on the water portion of their account. The direct cost of this option to date would be approximately $45,000. With this option, the maximum amount that would be charged to a resident would be up to $285 given that the usage would be capped at 100 units. (Example, if there is a mismatch of 500 units the City would write off 400 units and the customer would pay for 100 units). Additionally, the City Council also reached a consensus on the following: - This amended amnesty program would be retroactive to the 103 accounts that are currently on an amnesty program. For the accounts that are currently active in the utility billing system, a credit will be placed on the utility billing account for the difference between the original amnesty and the amended amnesty program. - This amended amnesty program will only be valid for 60 days after a letter is mailed out by the City to the remaining accounts that have not had a meter change out. - Based on the results obtained from the letters being mailed out, Public Works will work to change out the meters that display a mismatch. Page 1 of 10

2 - During the 2018 Budget deliberations, the City Council will discuss the results received from the letters returned and look at the possibility of funding the water meter program at a higher level within a definitive timeframe should the need arise. Recommendation: We recommend that the City Council approve the attached Resolution amending the Water Amnesty Program. Attachments: Attachment 1 Resolution R Water Amnesty Program Update memo March 9, 2017 Page 2 of 10

3 CITY OF DES PLAINES RESOLUTION R A RESOLUTION AMENDING THE CITY S WATER METER AMNESTY PROGRAM. WHEREAS, the City s residential water meter system includes a water meter located inside a building ( Water Meter ) and an analog remote device located outside a building ( Remote Device ) (collectively, Water Meter Equipment ); and WHEREAS, due to weather conditions and general wear and tear, a Remote Device might, over time, record less than the actual amount of water used by a water customer ( Under- Recorded Water ), which is evident from a discrepancy between readings on a Water Meter and a Remote Device serving the same building; and WHEREAS, Under-Recorded Water causes the City to bill water customers for an amount less than the amount that they are obligated to pay based on actual water usage ( Under- Billed Amount ); and WHEREAS, on November 13, 2012, the City Council approved Resolution R , which approved the Water Meter Amnesty Program ( Water Meter Amnesty Program ), which permitted the City to recoup the Under-Billed Amount by adjusting the bills of water customers with Under-Recorded Water ( Adjusted Bills ) and authorized the City to replace the analog meters with new digital meters ( Digital Meters ); and WHEREAS, Staff has determined that the Digital Meters significantly reduce the amount of Under-Recorded Water and that only approximately ten percent of accounts with Adjusted Bills, had a discrepancy greater than 100 units of water; and WHEREAS, the City desires to amend the Water Meter Amnesty Program to cap the amount of Under-Recorded Water for which a water customer may receive an Adjusted Bill at 100 units and provide notice to water customers that might have Under-Recorded Water ( Amendments to the Water Meter Amnesty Program ); and WHEREAS, the Mayor and the City Council have determined that it is in the best interest of the City to approve the Amendments to the Water Meter Amnesty Program; NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Des Plaines, Cook County, Illinois, in the exercise of its home rule powers, as follows: SECTION 1: RECITALS. The foregoing recitals are incorporated into, and made a part of, this Resolution as findings of the City Council. SECTION 2: AMENDMENT TO WATER METER AMNESTY PROGRAM. The City Council hereby approves the Amendments to the Water Meter Amnesty Program, as Attachment 1 1 Page 3 of 10

4 presented to the City Council and as set forth in the memorandum dated March 23, 2017, which Water Meter Amnesty Program, as amended, is described generally as billing a water customer, after notice, for Under-Recorded Water up to a maximum of 100 units of water ( Amended Water Meter Amnesty Program ). SECTION 3: AUTHORIZATION FOR REBATE. The Finance Department is authorized to provide rebates to water customers who received Adjusted Bills for Under- Recorded Water in excess of 100 units ( Rebates ). The Rebates will be equal to the amount billed for any Under-Recorded Water in excess of 100 units. SECTION 4: NOTIFICATION TO CUSTOMERS. The City Council hereby directs the Finance Department to provide notice to water customers that might have Under-Recorded Water and provide the customers 60 days from the date of the notice to respond. SECTION 5: EFFECTIVE DATE. This Resolution shall be in full force and effect from and after its passage and approval according to law. PASSED this day of, APPROVED this day of, VOTE: AYES NAYS ABSENT MAYOR ATTEST: Approved as to form: CITY CLERK Peter M. Friedman, General Counsel Attachment 1 2 Page 4 of 10

5 PUBLIC WORKS AND ENGINEERING DEPARTMENT 1111 Joseph J. Schwab Road Des Plaines, IL P: desplaines.org MEMORANDUM Date: March 9, 2017 To: From: Mike Bartholomew, MCP, LEED-AP, City Manager Timothy Watkins, Assistant Director of Public Works and Engineering Dorothy Wisniewski, Assistant City Manager/ Director of Finance Subject: Water Amnesty Program Update Issue: The City Council requested additional information regarding the Water Amnesty program and water meters at its September 19, 2016 City Council meeting that would be discussed at a future Public Works Committee meeting. Analysis: Public Works has been actively replacing old water meters since 2013 and to date has replaced 5,366 of the 16,500 total water meters in the system. Replacement of old water meters eliminates the meter reading discrepancy and keeps the City in compliance with the EPA s no lead rules. We also implemented a water meter testing program in 2011 for larger meters. The water meters that are tested are meters larger than 2 and include all meters related to a customer dispute as well as a random sampling group of approximately 2% of the accounts. Since 2011, 282 water meters have been tested and have an average accuracy of 92%. This translates to an 8% average loss of unrecorded water use. Meter testing data is shown below. Meter Size Count Low flow % accuracy Mid flow % accuracy High flow % accuracy Combined Average 5/8" /4" " /2" " " " " Grand Total In November of 2012, the City Council passed resolution R This resolution provides assistance to homeowner s that have water meter discrepancies due to mismatched reads between the water meter within the home and the analog display on the exterior of the building. The discrepancy is from the analog display underreporting the volume of water delivered, most likely due to weather conditions and/or wear of the plastic components of the analog devise. Page 5 of 10

6 If a discrepancy exists, the Finance Department is authorized to adjust the bill to the interior meter reading at the current purchase rate for water from the City of Chicago. Additionally, the Finance Department can offer a payment plan to customers billed under this program if the discrepancy is large. To date, 1,033 customers have had amnesty adjustments of which 29 have opted for a repayment plan. The Amnesty Program is further described in Attachment 1. We further analyzed the accounts with the discrepancy and found that the greatest mismatch, 46% of the amnesty accounts is less than 10 units of water while 2% had a mismatch greater than 300 units of water. The table below provides the breakdown of this data. Amnesty Consumption Number of Accounts % of Accounts Cost of Water Cumulative Cost of Water % $9,854 $9, % $16,673 $26, % $18,402 $44, % $60,139 $105, % $21,332 $126,402 Total 1, % $126,402 The old water meter for many of these accounts was found to be under reading the amount of water used. The installation of a new water meter ensures accurate measurement that reduces water loss. Since the new water meter registers more accurately, on average, it decreases water loss by at least 8% per customer. Based on this information, we developed the following options: Option #1 - Maintain the current water amnesty program. Option #2 - Modify the amnesty program and authorize staff to write off the lost water only when there is a mismatch read on analog meters for accounts that have greater than 100 units of water. Affected customers that were part of the amnesty program would receive a credit on the water portion of their account. The direct cost of this option to date would be approximately $45,000. With this option, the maximum amount that would be charged to a resident would be up to $285 given that the usage would be capped at 100 units. (Example, if there is a mismatch of 500 units the City would write off 400 units and the customer would pay for 100 units). Option #3 - Eliminate the amnesty program and authorize staff to write off the lost water only when there is a mismatch read on the analog meters. Customers that were part of the amnesty program would receive a credit on the water portion of their account. The direct cost of this option to date would be approximately $127,000 plus any future adjustments that will need to be made. Conclusion: This information is provided to the City Council for a discussion at the March 20, 2017 City Council meeting. Attachments: Attachment Water Amnesty Memo Page 6 of 10

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