The Hastings Utilities Advisory Board on Aug. 14 recommended the City Council adopt ordinances to remove the payment-in-lieu-of-tax (pilot) from utility rate ordinances and make it a city-managed dividend, a change staff said will increase transparency and make Hastings’ rates more comparable with neighboring communities.

Staff said the proposal removes the dividend amount from utility rate calculations and instead places that percentage on the fee schedule (overseen by council) so City Council can set the annual percentage during the budget process. Staff cited draft percentages discussed in the meeting: 6.5% for gas, 5.7% for electric and 7.64% for water. The goal, staff said, is to separate the dividend from rates so that rates better reflect utility costs alone and the dividend is visible as a council decision.

Carl and Derek described practical implementation concerns tied to the city’s new billing software. Staff said the planned effective date is Oct. 1 but cautioned that integration issues with the billing/finance systems could delay implementation; staff said they would work with the finance department and council staff to set the final date if problems remain. “The goal is for this to take effect October 1... If for some reason something comes up, we’ll be working with Mark and Jesse in accounting to decide when would be the proper time for us to be able to implement this into the system,” Derek said.

Board members emphasized the need for a clear customer communication plan if council approves the change, because the move separates a fee that historically has been part of the rates. One board member suggested including an explanatory note on customer bills. Staff said the dividend would be set by council through the fee resolution each year and that council retains the authority to change the percentage at any time.

The board moved to recommend ordinances (identified in the meeting as 4742 and 4743 for gas and water rate code updates, and related electric ordinance language) to transfer the dividend into council control; the motion to recommend passed with recorded “yes” votes from Heitzman, Himji, Mieske and Kohl’s. Staff said they will prepare explanatory materials for council and for customer outreach if the council adopts the change.