Hastings utility staff told the advisory board they plan to propose converting three existing “pilot” payment-in-lieu-of-tax (PILOT) charges — for electric, gas and water — into a city dividend fee that would be shown separately on customer bills.

Staff framed the change as a transparency and budget-management move: instead of burying the pilot percentages inside utility rates, the equivalent amount would be removed from rates and listed as a fee that the city council could set each year.

Derek (staff member) described the proposal: “The proposal right now is, to convert the current pilot, which would include a gas pilot, an electric pilot, and a water pilot, into a city dividend fee.” Staff said the fee would be a pass-through from the utility to the city and recommended keeping the current percentages initially to avoid an immediate change in customers’ total bills.

Staff and consultants showed comparisons to other Nebraska cities that have taken similar steps. Grand Island and others moved equivalent amounts out of rates and put them on a fee schedule; staff said those utilities did not report major public confusion when they followed clear communications plans.

Board members and staff emphasized the need for public education. Derek said the practical benefit is budget flexibility: after the utility finishes budget work, the city council could adjust the dividend in the fee schedule before the budget is finalized, rather than the utility having to anticipate the council’s choice in advance.

Staff also said the change would not create new cost to customers by itself — it simply separates an existing embedded transfer from the rate into an explicit fee — and that a communications plan using the utility’s customer outreach channels would be required.

Discussion points
- Staff proposed a one-time conversion from embedded pilot percentages to a separate city dividend fee for electric, gas and water.
- Staff suggested initially holding the percentages constant so customer bills would stay essentially the same at the moment of conversion; council would set the fee schedule going forward.
- Peer utilities (Grand Island, LES, others) were cited as models for implementation; staff emphasized the need for clear public messaging.

Direction and next steps
- Staff said they will prepare a proposal and financial model showing the effect of removing the pilot from rates and placing an equivalent fee on the customer bill, then coordinate with city finance and city council for potential adoption in the budget process.

Ending
Board members asked staff to bring comparative numbers and a communications plan when the item returns; staff said they will ask the city to adopt the fee schedule through the normal ordinance and budget process rather than making ad hoc adjustments.