TO: Mayor and City Council
THROUGH: Steve Powers, City Manager
FROM: Peter Fernandez, PE, Public Works Director
SUBJECT:
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Actions to Offer Immediate Financial Relief to City of Salem Utility Customers
Ward(s): All Wards
Councilor(s): All Councilors
Neighborhood(s): All Neighborhoods
Result Area(s): Strong and Diverse Economy; Welcoming and Livable Community
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ISSUE:
Shall City Council adopt resolution 2020-22 approving actions to offer immediate financial relief to qualified City of Salem utility customers experiencing economic hardship during the 2020 COVID-19 pandemic?
RECOMMENDATION:
recommendation
Adopt resolution 2020-22. The recommended actions offer immediate financial relief to qualified single-family residential and commercial customers upon request.
1. Increase total Utility Fund support to $500,000 from $10,000 for the Emergency Utility Assistance Program.
2. Pre-qualify applicants for increased emergency utility assistance:
a) Utility Rate Relief Program - 574 currently enrolled,
b) Emergency Utility Assistance Program - 222 approved on or after July 1, 2019,
c) Section 8 Housing - 2,952 Salem Housing Authority (SHA) clients, and
d) SHA Tenant - 218 individually metered.
3. Temporarily increase the maximum available Emergency Utility Assistance Program credit per residential account to $500 from $150 per rolling 12-month period beginning July 1, 2019.
4. Provide a grant of $25,000 to Mid-Willamette Valley Community Action Agency to continue processing applications for the City’s Utility Rate Relief Program and provide a grant of $12,500 each to St. Vincent de Paul and the Salvation Army to assist with processing additional Emergency Utility Assistance Program requests.
5. Pursuant to SRC 20J.080, review emergency Administrative Rule 109-800-2(1.5)(h)(2) adopted by the City Manager on April 21, 2020, under his authority as described in SRC 20J.060. Administrative Rule 109-800-2(1.5)(h)(2) applies to businesses closed during the pandemic and allows for suspension of commercial accounts and waiver of the $25 reactivation fee.
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SUMMARY:
The recommendations increase the City’s assistance to residents and businesses impacted by the COVID-19 pandemic without damaging the financial stability of the Utility Fund. City Council’s prudent fiscal oversight has secured the financial stability of the Utility Fund. Small annual rate increases have maintained services, funded capital improvements, and built up adequate reserves. The reserves enabled the City to respond to cyanotoxins without the need for an emergency rate increase. Fiscal oversight and management have maintained the Utility’s bond rating of Aa2 and allowed the successful $60 million bond sale on March 19, 2020, during historically uncertain market conditions.
There are many unknowns regarding the duration and severity of economic conditions and hardships caused by the COVID-19 pandemic. Staff will be evaluating the impact on the Utility Fund. The evaluation will include maintaining the fiscal stability of the fund and aiding utility customers. The evaluation will be completed over the next one to three months.
FACTS AND FINDINGS:
The most efficient way for the Utility to aid customers is through existing programs and processes. Temporary changes are proposed to be effective immediately upon City Council approval and shall remain in place until July 31, 2020, funding is exhausted, or Council acts to continue or terminate these temporary changes.
Access to Water Service
The City of Salem suspended shut-off of utility accounts beginning March 13, 2020, and has restored services, upon request, to accounts that had been recently shut off before March 13, to ensure residents and businesses had access to water during the pandemic.
Emergency Utility Assistance Program
The Emergency Utility Assistance Program is available to help income-eligible recipients in financial crisis. The program is designed to provide short-term relief in the form of a credit to the utility account of up to $150 per rolling 12-month period. Applicants are qualified by the Salvation Army and St. Vincent de Paul using United States Department of Agriculture income guidelines for the Emergency Food Assistance Program. To qualify for assistance, applicants must have a delinquent single-family residential utility account.
Increase the maximum credit to $500 per account during a 12-month period. This would allow an individual account to receive three to six months of support, depending on their usage. Customers would call for assistance each time a credit is requested, and credits would be granted incrementally over time up to the maximum.
Expand qualification requirements to include clients of the SHA who have been approved for Section 8 Rental Housing Assistance or reside in a unit owned by the Salem Housing Authority. SHA clients are pre-qualified for federal programs based on income. Although a utility allowance is provided to SHA clients, it does not cover the full cost of service. Additional assistance is needed and would benefit residents served by the Salem Housing Authority.
Assistance to Non-Profit Partners
St. Vincent de Paul and the Salvation Army currently administer the Emergency Utility Assistance Program. Any expansion of the program will place a burden on their staff and agencies during an already demanding time. The program provides additional assistance to families who are served by the agencies. The proposed grants of $12,500 are for administrative support and are an acknowledgement of the impact on their agencies and to assist them financially during this emergency.
Mid-Willamette Valley Community Action Agency (MWVCAA) has been qualifying customers to the Utility Rate Relief Program, relieving the City of the responsibility to review and maintain confidential financial records. When the program was expanded this year, no additional administrative support was provided to MWVCAA. The proposed grant of $25,000 is for administrative support and is an acknowledgement of the impact on the agency and their partnership in addressing other issues in our community during this emergency.
Temporary Suspension of Service
Per Administrative Rule Chapter 109, Division 800-2, 1.5(h), residential customers planning for an extended period of absence may request to have their utility billing suspended. During this suspended period, utility service is deactivated and charges for all services cease. The account is reactivated upon notification by the customer, or when water usage is detected during monthly meter reading. The customer account is subject to a reactivation fee of $25 once service resumes.
Expand the Temporary Suspension of Service to Include Commercial Accounts. This Administrative Rule expansion allows commercial customers who have had to temporarily close their business due to the pandemic to suspend service during the closure. Once the business reopens, the utility account is reactivated upon notification by the customer or when water usage is detected.
Waive Reactivation Fee. Waiving the $25 reactivation fee provides additional relief to commercial account holders impacted by the 2020 pandemic.
Restoration Process After Stay at Home Orders Area Lifted
None of the recommendations involve or anticipate debt forgiveness. Credits are provided to qualified customers based on need. All remaining amounts will be considered due and payable. When normal utility processes are restored, City Council will receive a report with recommendations that may include options such as no-interest payment plans for delinquent accounts.
Alicia Blalock
Administration Division Manager
Attachments:
1. Resolution 2020-22
2. Exhibit A - Emergency Utility Assistance Program
3. Emergency Administrative Rule 109-800-2-1.5(h) dated April 21, 2020