2012 2:00:00 PM

Monday, May 14, 2012 2:00 PM
Sparks Council Chambers, 745 4th Street, Sparks, NV

General Business: 6.3

Title: Consideration and possible credit to the Sparks Nugget, Inc. sanitary sewer account (#025488000) in the amount of $132,234.36, including a refund payment of $22,039.06.

Petitioner/Presenter: John Martini, P.E., Assistant Community Services Director/Andrew Hummel, P.E., Utility Manager

Recommendation: Staff recommends that the City Council credit the Sparks Nugget, Inc. sanitary sewer account (#025488000) in the amount of $132,234.36, including a refund payment of $22,039.06.

Financial Impact: The refund will decrease anticipated revenues by $132,234.36 within the Sewer funds of the City during fiscal year 2012. Excess revenues were recorded in prior years due to the faulty meter. The impact to fiscal year 2012 will correct two prior years of excess collections.

Business Impact (Per NRS 237):
A Business Impact Statement is not required because this is not a rule.

Agenda Item Brief: : A faulty water meter tracking water usage within the Nugget hotel cooling towers has resulted in an overbilling of sewer charges for several years. While a new meter was installed to correct the problem, the old meter continued to be used for billing purposes. The error was discovered during an annual inspection, and records from both meters were used to determine an appropriate credit amount. A total credit of $132,234.36 representing two years of erroneous readings is requested, with $22,039.06 of that amount issued as a refund payment. Staff recommends approval.

Background: As with other commercial / industrial businesses in Sparks, the Nugget sewer billing is based on domestic water consumption. Unique to this business is the use of cooling towers which work through evaporation of water. A portion of the domestic water delivered to the Nugget through TMWA’s domestic water system is diverted to the cooling towers, and is subsequently not routed to the Sparks’ sanitary sewer system for treatment. In order to quantify this amount of water being evaporated, a secondary water meter exists within the Nugget to track water delivered to the cooling towers. This meter is read annually by Sparks’ staff for the purpose of crediting the Nugget for said cooling water. Several years ago it was determined by Nugget staff that the secondary water meter was not reading correctly, and an additional meter was placed in-line with the intent of providing accurate readings. For unknown reasons, this new meter was not being used for the purpose of determining the credit. During the annual reading in December of 2011, the additional meter was discovered. Review of meter readings maintained by Nugget staff for both meters provided verification that the original meter was reading incorrectly, and that the new meter should be used for the purposes of calculating the annual credit amount. Based on the finding that the old meter used for crediting has been providing inaccurate numbers for several years, the Nugget has requested a credit based on the readings from the new meter for a period of two years.

Analysis: Monthly readings of both meters provided by Nugget staff (verified by Sparks’ staff through visual inspection) were analyzed to determine the credit amount of $132,234.65. The Nugget initially requested a full refund of this amount, through negotiation the immediate refund amount was reduced to $22,039.06 with the remainder being applied to future billings. Monthly billings for the Nugget range between $10,000 and $30,000 per month; it is anticipated that the remaining credit will be used within 6 months.

Alternatives: 1. City Council could approve the credit to the Nugget sewer account as outlined by Staff. 2. City Council could reject the credit to the Nugget sewer account and provide direction to the City Manager.

Recommended Motion: I move to credit to the Sparks Nugget, Inc. sanitary sewer account (#025488000) in the amount of $132,234.36, including a refund payment of $22,039.06.

Attached Files:

nugget_request.pdf

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