Rate Commission

MSD’s Rate Commission was created in 2000 when 70% of voters in the City of St. Louis and St. Louis County, combined, approved changes to MSD’s Charter.  Said changes are reflected in Article 7 of MSD’s Charter.  Per the 2000 Charter changes and minor changes made in subsequent years, the Rate Commission and the process it utilizes to review rate proposals are meant to provide MSD customers – and the public in general – with an unfettered voice in MSD’s rate-setting process.  

The Rate Commission itself is composed of 15 member organizations that, collectively, represent the broadest possible cross-section of MSD customers and the community it serves.  Rate Commission member organizations are selected by MSD’s Board of Trustees through a public self-nomination and selection process.  Each member organization serves a six (6) year term and appoints an individual to represent the organization on the Rate Commission.  Per the voter-approved changes made to MSD’s Charter in 2000, the Board of Trustees shall select member organizations “so as to ensure a fair representation of all users of the District’s services.”  Specifically, Rate Commission member organizations “shall represent commercial-industrial users, residential users, and other organizations interested in the operation of the District, including by way of example but not by way of limitation, organizations focusing on environmental issues, labor issues, socio-economic issues, community-neighborhood organizations, and other nonprofit organizations.” Independent by design from MSD staff, the Rate Commission has at its direct employ the necessary legal, engineering, rate setting, public engagement, and other professional resources it requires to fulfill its voter-approved mandate. 

Rate Commission member organizations and their designated representatives for the 2023 Rate Commission are:

• Associated General Contractors (AGC), Leonard Toenjes, Rate Commission Chair
• City of Florissant, Lou Jearls
• City of Ladue, Lloyd Palans
• Education Plus, Paul Ziegler
• Greater St. Louis Labor Council, AFL-CIO, Patrick Moynihan
• Home Builders Association of St. Louis (HBA), Brad Goss, Technical Committee Chair
• Missouri Coalition for the Environment (MCE), Stephen Mahfood, Public Affairs Chair
• Missouri Industrial Energy Consumers (MIEC), Jack Stein
• Mound City Bar Association, Celestine Dotson
• City Administrator for the City of Creve Coeur, Mark Perkins
• St. Louis Council of Construction Consumers (SLC3), Ryan Berry
• The Engineers Club of St. Louis, Bill Clarke, Rate Commission Secretary
• The League of Women Voters, Mickey Croyle
• St. Louis Realtors, Matt Muren, Rate Commission Vice-Chair
• North America’s Building Trade Unions, Jim Faul

Please read on to learn more about the Rate Commission process and MSD staff’s 2023 Wastewater and Stormwater Rate Change Proposal.

Per MSD’s Charter, Rate Commission proceedings may take up to 165 days from the date MSD staff submits a rate proposal for review and consideration.  During this time, the Rate Commission will conduct multiple Technical Meetings, where Commissioners and the Commission’s legal, engineering, rate setting, and other experts will seek testimony from MSD staff and vet the proposal.  The Rate Commission process also includes multiple Public Hearings that are held throughout MSD’s service area (all of the City of St. Louis and approximately 80% of St. Louis County).  These hearings are designed for the public to hear firsthand from MSD staff about proposed rates; ask questions of MSD staff; and provide feedback to the Rate Commission.  The hearings are arranged and presided over by the Rate Commission.  All meetings – be they Technical Meetings or Public Hearings – are open to the public and conducted in accordance with Missouri Sunshine Law.

By the end of 165 days, the Rate Commission is required to submit a report to MSD’s Board of Trustees containing recommendations in response to the staff proposal.  Known as a Rate Recommendation Report, it contains formal findings and determinations voted upon by the Rate Commission.  As the Rate Commission conducts its business and develops the Rate Recommendation Report, it is guided by five (5) criteria regarding the proposed rate change(s).  These criteria are:

• Is the proposed rate change consistent with constitutional, statutory, or common law as amended from time to time?
• Does the proposed rate change enhance MSD’s ability to provide adequate sewer and drainage systems and facilities, or related services?
• Is the proposed rate change consistent with and not in violation of any covenant or provision relating to any outstanding bonds or indebtedness MSD?
• Does the proposed rate change impair MSD’s ability to comply with applicable Federal or State laws or regulations as amended from time to time?
• Does the proposed rate change consider the financial impact on all classes of customers in determining a fair and reasonable burden?  

Once submitted by the Rate Commission, the Board of Trustees shall accept the Rate Recommendation Report unless it finds the report:

• Is contrary to constitutional, statutory, or common law as amended from time to time.
• Substantially impairs MSD’s ability to provide adequate sewer and drainage systems and facilities or related services to the point where public health or institutional safety may be jeopardized.
• Is contrary to or in violation of any covenant or provision relating to any outstanding bonds or indebtedness. 
• Fails to meet an existing or new standard contained in applicable Federal or State laws or regulations as amended from time to time.
• Imposes an unfair or excessive burden on one or more classes of customers.

If the Board accepts the Rate Commission Report, the Board is required to pass an ordinance(s) implementing the report.  If the report is rejected by the Board, the Board is required to submit a written response to the Rate Commission explaining the reasons the Rate Recommendation Report was rejected.  Rejection of the Rate Recommendation Report does not prevent the Board from enacting an ordinance establishing new rates.  (Please note, if the Board fails to accept or reject the Rate Recommendation Report within 100 days of its issuance, the report will automatically be deemed accepted by the Board, and the Board is required to pass an ordinance(s) implementing the report.)

On March 24, 2023, the 2023 Wastewater and Stormwater Rate Change Proposal was formally received by the Rate Commission from MSD staff.  The proposal included both wastewater and stormwater rates.  The proposal covers MSD fiscal years 2025 through 2028. (Please note that MSD’s fiscal year (FY) begins on July 1 and ends on June 30.  Thus, the time frame covered by the rate proposal is July 1, 2024, through June 30, 2028).  Said proposal contains changes to both MSD’s wastewater rates and stormwater rates.

Wastewater Rates:  From FY2025 through FY2028, MSD proposes spending nearly $1.65 billion on construction and related work.  To pay for this work, MSD proposes a combination of rate increases and the issuance of $750 million in voter-approved debt funding, primarily in the form of wastewater revenue bonds.  If voters approve the use of debt at a future election – and as they have on five previous occasions – the monthly rate schedule for the average single-family residential household with a water meter will be as follows:

• FY2024:  Current Monthly Bill is $57.04 per month
• FY2025:  An increase of 7.0% to $61.04 per month 
• FY2026:  An increase of 7.6% to $65.66 per month
• FY2027:  An increase of 7.5% to $70.60 per month
• FY2028:  An increase of 6.6% to $75.23 per month

If voters do not approve the use of debt at a future election, the monthly rate schedule for the average single-family residential household will be as follows:

• FY2024:  Current Monthly Bill is $57.04 per month
• FY2025:  An increase of 35.4% to $77.26 per month 
• FY2026:  An increase of 35.1% to $104.34 per month
• FY2027:  A decrease of 20.0% to $83.50 per month
• FY2028:  An increase of 5.1% to $87.72 per month

(For the actual dollar increase related to individual household water usage, please see pages 6-2 and 7-5 of the Wastewater and Stormwater Rate Change Proposal)

Stormwater Rates:  MSD pays for the operation and maintenance of its stormwater system through a property tax of $0.10 per $100 of assessed valuation.  MSD pays for regulatory-required stormwater activities through a property tax of $0.02 per $100 of assessed valuation.  Known, respectively, as the “10-cent tax” and the “2-cent tax” these are the only revenue streams currently available to MSD to pay for stormwater-related services.

Per the proposal MSD staff submitted to the Rate Commission, additional revenue would be raised to fund a stormwater capital program.  The stormwater capital program would primarily address flooding and erosion issues.  The proposed revenue for the stormwater capital program would be raised through two new, but separate, sources of funding:

• A real estate tax of $0.075 per $100 of assessed valuation is levied against only residential property.
• A fee of $1.05 per 1,000 square feet of impervious area – the area of a property that does not absorb stormwater – is charged against only non-residential property.

The new residential stormwater tax and the new non-residential impervious fee would require voter approval.  The timing of said election will be determined by the Board of Trustees. 

To ensure that MSD customers and the public at large had ample opportunity to register their opinions, the Rate Commission hosted an unprecedented 14 Public Hearings.  The Public Hearings were designed solely for the public to hear firsthand from MSD staff about the Rate Change Proposal; ask questions of MSD staff; and provide feedback directly to the Rate Commission.  The Public Hearing dates and locations were as follows, along with the number of attendees at each meeting:

Round One of Public Hearings:

• June 21, 2023 – City of Creve Coeur City Hall – 5 attendees
• June 22, 2023 – City of Brentwood City Hall – 5 attendees
• June 26, 2023 – City of Bridgeton City Hall – 6 attendees
• June 27, 2023 – MSD Headquarters (City of St. Louis) – 5 attendees
• June 28, 2023 – City of Kirkwood City Hall – 8 attendees
• June 29, 2023 – City of Chesterfield City Hall – 7 attendees

Round Two of Public Hearings:

• July 19, 2023 – North County Recreation Center (Unincorporated St. Louis County) – 7 attendees
• July 20, 2023 – City of Ballwin City Hall – 4 attendees
• July 25, 2023 – Thomas Dunn Learning Center (City of St. Louis) – 2 attendees
• July 26, 2023 – St. Simon the Apostle Catholic Church Lower Church Hall (Unincorporated St. Louis County) – 1 attendee
• July 27, 2023 – St. Louis County Department of Public Health (City of Berkeley) – 2 attendees
• July 29, 2023 – O’Fallon Park Recreation Complex YMCA (City of St. Louis) – 0 attendees
• August 2, 2023 – City of Fenton City Hall – 4 attendees
• August 7, 2023 – MSD Headquarters (City of St. Louis) – 12 attendees

Through the sheer number of meetings and by being strategic about where meetings were held, the Rate Commission ensured that no MSD customer lived more than 10 miles from a Public Hearing location.  Furthermore, the Rate Commission provided a shuttle service to each Public Hearing for those individuals who did not have their own transportation.

To ensure that attendance at a Public Hearing was not the sole means of learning about the rate proposal and offering feedback, the Rate Commission arranged for all Public Hearings to be live-streamed via Facebook or YouTube.  A video recording of the presentation given at the Public Hearings was also made available through the MSD website.  Furthermore, comments, questions, and other feedback were accepted through telephone voicemail; email; direct messaging on Twitter (now known as X); and written correspondence delivered to MSD Headquarters.

To help make the public aware of the Wastewater and Stormwater Rate Change Proposal and the Public Hearings, a comprehensive public awareness and engagement campaign was undertaken.  Highlights of the campaign included:

• Three editions of an email newsletter were distributed to more than 900 elected officials and other key stakeholders throughout MSD’s service area.
• Extensive organic social media activity on Facebook, Twitter (now known as X), Instagram, and YouTube.
• The issuance of two press releases and proactive engagement with print, television, and radio news outlets before and throughout each round of Public Hearings.
• 721 radio ads on KMOX, WFUN, WHHL, and KTRS, plus digital advertising on each station’s website.
• Print advertising in the St. Louis American, Webster-Kirkwood Times, St. Louis Chinese News, Call Newspapers, Red Latina, and West News Magazine before each round of Public Hearings.

Additionally, a paid digital advertising campaign that included:

• 400 posts to Facebook.
• 368 posts to Instagram.
• 265 tweets on Twitter/X.
• 702,790 Digital Display Ads.
• 12,231 Digital Billboard Views.

The Rate Commission’s formal deliberations began when MSD staff submitted the 2023 Wastewater and Stormwater Rate Change Proposal on March 24, 2023.  Between the date of submission and August 7, 2023, the Rate Commission and its consultants reviewed numerous exhibits, discovery requests, and discovery request responses.  At the end of the fourteenth and final Public Hearing held on August 7, 2023, the Rate Commission moved to formally receive these materials into evidence, along with transcripts of the Technical Meetings and Public Hearings, and other materials.  All total, 112 exhibits were entered into the public record.  At the August 7, 2023, meeting, final questions were also asked of MSD staff by the Rate Commission.

After the final Public Hearing on August 7, 2023, the Rate Commission held public meetings where it developed findings and determinations that were adopted by a Resolution of the Rate Commission.  The referenced Resolution of the Rate Commission was approved on August 25, 2023.  The findings and determinations were developed into the Rate Commission’s Rate Recommendation Report.  The Rate Recommendation Report, the Resolution of the Rate Commission, and a transmittal letter were submitted to the MSD Board of Trustees on September 5, 2023. 

While the Rate Recommendation Report finds that the proposal from MSD staff does comply with the five (5) criteria found in MSDS’s Charter, the Rate Commission is concerned with the potential impact on ratepayers already facing multiple utility rate increases.  As such, the Rate Commission believes MSD should consider expansion of existing assistance programs.  Furthermore, the Rate Commission recommends that MSD take a leading role in the establishment of a task force on utility ratepayer financial impact issues.  Such issues may include expansion of metering at a reduced cost to assist individuals in older homes – particularly in St. Louis City, where the number of rooms and bathrooms determines rates, rather than usage – to allow individuals to reduce their utility costs; or pursuing access to funds from the National Football League (NFL) settlement recently received by the City of St. Louis and St. Louis County.

As part of its new stormwater capital program, MSD staff intends to use a Municipal Stormwater Grants program to distribute 30% of the new stormwater funds.  The Rate Commission supports this decision.  However, members of the Rate Commission recognize that grouping municipalities solely by population to determine grant eligibility could pose problems, noting that doing so:

• Does not take into account the actual stormwater needs of each community.
• Does not consider the cost/benefit of each project.
• Could lead to arbitrary classifications and divisions of communities.
• Does not consider that the smallest municipalities by population may lack the appropriate staff and infrastructure to adequately assess and plan for their stormwater needs.
• The size of grants ($30,000) for the smallest municipalities by population could be inadequate to address stormwater problems that may extend beyond the boundaries of a particular municipality.

Alternatively, the Rate Commission recommends that MSD modify the proposed Municipal Stormwater Grants program to account for factors other than population, such as:

• The amount of impervious area in a community.
• The extent to which a community has done long-term planning for stormwater needs.
• Whether the municipality has engaged in an appropriate cost-benefit analysis.
• Whether a community has municipal or third-party funding available.
• The degree to which a municipality has considered collaborative or intergovernmental cooperation to address stormwater needs.

In summary, the Rate Commission recommends that MSD seek input from the Municipal League of Metro St. Louis and other interested parties to develop a Municipal Stormwater Grants program that considers these factors in addition to population.

The Rate Recommendation Report also includes four minority reports.

If the Rate Recommendation Report is accepted by the Board of Trustees, the issuance of $750 million in debt funding, new residential stormwater tax, and the new non-residential impervious fee will be submitted to voters for approval.  The timing of the election will be decided by the Board of Trustees.