HomeMy WebLinkAboutItem 3c - Adopt Resolution Nos. 6869 and 6970 - Water and Sewer RatesDATE: June 4, 2013
TO: Honorable Mayor and City Council
STAFF REPORT
Public Works Services Department
FROM: Tom Tait, Public Works Services Director
By: Ken Herman, Deputy Public Works Services Director
Maria Lourdes A. Taylor, Senior Management Analyst
SUBJECT: RESOLUTION NO. 6869 SETTING THE WATER RATE SCHEDULE FOR
FISCAL YEAR 2013 -14
Recommendation: Adopt
RESOLUTION NO. 6970 SETTING THE SEWER RATE SCHEDULE FOR
FISCAL YEAR 2013 -14
Recommendation: Adopt
SUMMARY
Based upon the Public Works Services Department's proposed Fiscal Year 2013 -14
Operating Budget, Capital Improvement Program, Water Master Plan, and Sewer
Master Plan, it is recommended that the City Council adjust the water and sewer rates
by the Consumer Price Index (CPI) of 2.3% for Fiscal Year 2013 -14. Even with the
proposed increase, water and sewer rates will continue to be among the lowest in the
San Gabriel Valley. The proposed rate adjustment of 2.3% will have the following
impact on water and sewer rates:
Water and Sewer Rates FY 2013 -14
Current Proposed
Water $1.37 /CCF $1.40 /CC F
Sewer
Residential (Single & Multi - Family) $4.11 /dwelling unit $4.21 /dwelling unit
Commercial 1 $12.30 + $0.12 /CCF $12.58 + $0.13 /CCF
*CCF = 100 Cubic Feet = 748 gallons
It is recommended that the City Council approve water and sewer rate adjustments for
Fiscal Year 2013 -14 by adopting Resolution No. 6869 (Exhibit 5) and Resolution No.
6970 (Exhibit 6).
Water and Sewer Rates Schedule FY 2013 -14
June 4, 2013
Page 2 of 5
BACKGROUND
On June 16, 2009, the City Council approved a five -year rate increase schedule for
water and sewer rates based on the previous year's Consumer Price Index (CPI). The
City took the necessary steps to be in compliance with Proposition 218, which included
public notification, balloting, and holding of a public hearing. Adopting a five -year rate
schedule based on CPI adjustments saves the City approximately $15,000 annually for
not having to print and mail notices and ballots. The proposed rate adjustment for
Fiscal Year 2013 -14 will be the fifth and final year of the approved water and sewer rate
structure.
In the Fiscal Year 2013 -14 Capital Improvement Program, Public Works Services
included a Budget -Based Water and Sewer Rates Study. Currently, both rate structures
use a uniform, or flat, rate. The Budget -Based Water Rate Study will look into the
feasibility of implementing an alternative rate structure that is more equitable while
encouraging water conservation. The Sewer Rate Study will examine different means
of assessing sewer charges and recommend a rate structure that is appropriate.
The cost of living adjustment for water and sewer rates followed the February 2012 —
February 2013 Los Angeles- Riverside - Orange County Urban Wage Earners and
Clerical Workers' California Consumer Price Index (CPI) change. CPI is reliable
statistical data published by the California Department of Industrial Relations. CPI is a
measurement of the cost of a good from one time period to another, which makes it an
acceptable practice to base rate adjustments on. Labor and materials are the main
components of operating the water and sewer system.
DISCUSSION
Water Rates
Water rates are determined by analyzing the current and projected annual cost to
operate and maintain the City's water supply and distribution system (Water System);
provide for improvements to the Water System infrastructure through capital
improvements; replace equipment used in the maintenance of the Water System; and
maintain reserve funds as directed by the City Council to make necessary repairs in the
event of a catastrophic event or emergency that would affect the Water System (Exhibit
1).
Operations and maintenance comprise the majority of the expense of the Water budget.
Of these costs, providing for the supply of water comprises the majority of the expense.
Water is supplied to the Water System entirely from groundwater pumped from two
underground aquifers referred to as groundwater basins. The groundwater basins that
the City of Arcadia pumps water from are the Raymond Basin and the Main San Gabriel
Basin (Main Basin). Pumping rights in the Raymond Basin have been established by
adjudication and are fixed annually. Recently, the City's pumping rights in the Raymond
Water and Sewer Rates Schedule FY 2013 -14
June 4, 2013
Page 3 of 5
Basin have been reduced by approximately 34% annually in order to protect the
sustainability of the Raymond Basin. The reduction in pumping rights in the Raymond
Basin has resulted in additional water being pumped from the Main Basin to meet the
City's annual water system demands.
Pumping rights in the Main Basin have also been established by adjudication, and the
City of Arcadia has a percentage of the Basin's Operating Safe Yield (OSY). The OSY
is the quantity of water which the Main Basin Watermaster determines may be pumped
from the Basin in a fiscal year, free of Replacement Water assessments. If an agency
pumps more than their allowed right in any given year, they are required to purchase
Replacement Water from the Watermaster. The Replacement Water is delivered to the
groundwater basin from the Metropolitan Water District (MWD) to supplement the
overproduction. The cost for Replacement Water has risen significantly over the past
five years. For Fiscal Year 2012 -13 the cost for Replacement Water was $673 per acre
foot or $1.55 per CCF (748 gallons). The cost of Replacement Water for Fiscal Year
2013 -14 is set at $773 per acre foot or $1.78 per CCF (748 gallons), an increase of
nearly 15 %.
In preparation of the Fiscal Year 2013 -14 Budget, each account has been evaluated
and, where possible, operation and maintenance expenditures have been reduced while
continuing to maintain the reliability of the Water System, complying with water quality
standards, and retaining the existing level of service.
The value of the City's water system is estimated at $200 million and industry standards
recommend a 10% reserve to offset costs in the event of a catastrophic event or
emergency that would affect the Water System's infrastructure. The proposed rate
adjustment will meet the financial requirements of the Fiscal Year 2013 -14 Water
Budget and is predicated on maintaining an Operating Fund reserve level of 25% of the
operations and maintenance budget; construction of Capital Improvement Projects as
outlined in the Water Master Plan; and maintenance of a Capital Reserve Fund of $20
million. Beginning in Fiscal Year 2015 -16, the Capital Reserve Fund balance begins to
dip below the $20 million goal. This is mainly due to the increased cost of Replacement
Water and Capital Improvement Projects.
In response to these factors, water rates are proposed to increase by the voter -
approved CPI factor. The proposed rate adjustment would change the existing water
rate from $1.37 per hundred cubic feet (CCF) to $1.40 /CCF, or $0.03 per unit.For a
typical household using 58 units per two -month billing cycle, the increase would equate
to $1.74, or $10.44 per year.
A survey of water rates has been conducted for neighboring and similar agencies and
found that even with the proposed water rate adjustment; the City of Arcadia's water
rates continue to remain the lowest (Exhibit 2).
Water and Sewer Rates Schedule FY 2013 -14
June 4, 2013
Page 4 of 5
Sewer Rates
The Sewer Master Plan is a comprehensive report outlining a long -range program of
capital improvements and preventative maintenance measures to upgrade and maintain
the City's sewer system. The Sewer Master Plan Update and Hydraulic Modeling
Report evaluates the adequacy of the City's wastewater collection system through the
Year 2026.
The City's sewer pipes are on average 50 years old and include 138 miles of pipe
throughout the City. Sewer rate adjustments are necessary to fund the operations and
maintenance activities of the sewer system to ensure that the City's sewer system is in
compliance with state regulations that mandate the elimination of sewer overflows. In
2006, the City was required by State law to develop and submit a Sewer System
Management Plan (SSMP) to the State Water Resources Control Board, which also
required the City to retain a permit for its sewer system. This Plan was approved by the
City Council in November 2007.
The Sewer Master Plan proposes annual rate adjustments in order to recover
operational sewer service costs, pay for the Waste Discharge Requirements (WDR)
permit fee, fund Capital Improvement Projects, and to attempt to build a $5 million dollar
Fund Balance to be used in case of an emergency or catastrophic event. The current
Fund Balance is approximately $2.6 million. In Fiscal Year 2017 -18 the Sewer Fund
Balance is expected to dip below $1 million. The major reason for the decrease in the
Fund Balance is due to several major sewer main replacement projects. In next year's
Capital Improvement Program there is a Sewer Rate Study that will evaluate the current
sewer rate structure and recommend modifications and /or alternative sewer rate
structures. The objective is to ensure that the proposed sewer rate structure is fair and
equitable to City customers and that it meets annual revenue requirements of the sewer
system (Exhibit 3).
The proposed sewer rate adjustment would change the existing residential rate from
$4.11 to $4.21 per month per dwelling unit, reflecting a $0.10 increase monthly, or $1.20
annually. The proposed rate adjustment for the commercial rate would change from
$12.30 per month for each sewer connection and an additional $0.12 per 100 cubic feet
of water used per month, to $12.58 per month for each sewer connection and an
additional $0.13 per 100 cubic feet of water used per month.
A survey of sewer rates has been conducted for neighboring and similar agencies and
found that even with the proposed sewer rate adjustment, the City of Arcadia's sewer
rates continue to remain the lowest (Exhibit 4).
Water and Sewer Rates Schedule FY 2013 -14
June 4, 2013
Page 5 of 5
FISCAL IMPACT
Water and sewer rate increases are necessary to fund the Capital Improvement
Program and the Operating Budgets, and to maintain a Reserve Fund balance in case
of a natural disaster or emergency. The proposed rate increases are within the annual
limits approved by the rate payers while still being the lowest in the region.
RECOMMENDATION
It is recommended that the City Council adopt Resolution No. 6869 setting the water
rate schedule for Fiscal Year 2013 -14 and Resolution No. 6970 setting the sewer rate
schedule for Fiscal Year 2013 -14.
Approved.
Dominic Lazzar
City Manager
Attachments: Exhibit 1
Exhibit 2
Exhibit 3
Exhibit 4
Exhibit 5
Exhibit 6
Water Fund Balance
Water Rates Survey
Sewer Fund Balance
Sewer Rates Survey
Resolution No. 6869
Resolution No. 6970
$30,000,000
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
Water Fund Balance
(2.3% Increase for FY 2013 -14 and 2% thereafter)
1 $1,615,526
$ �
0
FY 2013 -14
!,859,275
1,118,074
$1,623,603
FY 2014 -15
$2,91E
$18,321
$1,631,721
FY 2015 -16
X2,974,790
14,657,960
$1,639,880
FY 2016 -17
$3,034,286
$11,565,303
$1,648,079
FY 2017 -18
Exhibit 1
Operations
Capital (Facilities)
Equipment
$7.00
$6.24
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
5-
NZ
Water Rate Survey -April 2013 Exhibit Z
Unit Cost for Typical 1" Meter (58 CCF /Billing Cycle)
$4.31
OM $3.95
$3.30
$2.90 $2.86
52.23
$1.91
$1.81 $1.76 $1.48
$1.45 $1.40 $1.37
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$2,500,000
$210001000
$115001000
$1,000,000
$5001000
I
Sewer Fund Balance and Capital Improvement Expenditures
(23% increse for FY 2013 -14 and 20Yco thereafter)
FY 2013 -14
$2,082,786
$159,250
$1,362,927
FY 2014 -15 FY 2015 -16
Capital Project Expenditures
$2
$1,135,395
FY 2016-17
Sewer Fund Balance
$716,000
i
Exhibit 3
FY 2017-18
$40.00 { $36.86
$35.00
$30.00
$25.00
t
$20.00 I
$15.00 I
$10.00
$5.00
$22.24 $21.83
ec L to
Sewer Rate Survey -April 2013
Residential Monthly Rate
Exhibit 4
$ $14,18
$11.85 $10.10
$9.50 $9.02
$4.21 S4,11
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EXHIBIT 5
RESOLUTION NO. 6869
[ATTACHED BEHIND THIS PAGE]
RESOLUTION NO. 6869
A RESOLUTION OF THE CITY COUNCIL OF THE CITY ARCADIA,
CALIFORNIA, SETTING CITY WATER RATES AND FINDING THE
RATES WILL NOT EXCEED THE ESTIMATED AMOUNT
NECESSARY TO FUND OPERATION OF THE CITY WATER
SYSTEM
WHEREAS, pursuant to the Arcadia Municipal Code Section 7531.1, water rates
may be set and modified by resolution of the City Council; and
WHEREAS, it is the desire of the City Council to maintain flexibility so as to best
meet the needs of the City and water consumers; and
WHEREAS, proposed water rate changes were presented to the City Council at
its June 4, 2013 regularly scheduled City Council meeting; and
WHEREAS, a public notice concerning said rate changes was duly mailed to
residents in accordance with Proposition 218 noticing requirements in April 2009, and a
duly noticed public hearing concerning said rate adjustments was conducted by the City
Council on June 16, 2009 for Fiscal Years 2009110, 2010111, 2011112, 2012113 and
2013114.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF ARCADIA,
CALIFORNIA, DOES HEREBY FIND, DETERMINE AND RESOLVE AS FOLLOWS:
SECTION 1. RATES INSIDE THE CITY. The following rates are established for
the provision, delivery, and consumption of water for beneficial use inside the City
during each bimonthly period:
1
SIZE OF
MINIMUM BIMONTHLY
METER
SERVICE CHARGE
518"
$ 11.55
3/411
12.99
1 "
14.43
1 -112"
21.66
2"
30.32
3"
53.41
4"
79.40
6"
150.84
8"
237.35
All water consumption shall be charged at the rate of one dollar and forty cents
($1.40) per full one hundred (100) cubic feet registered on the consumer's meter.
SECTION 2. RATES OUTSIDE CITY. The bimonthly rates for metered services
and for all other purposes for which no other rate is specified for water put to or made
available for beneficial use outside the City and served or to be served through a meter,
shall be as follows:
SIZE OF
MINIMUM BIMONTHLY
METER
SERVICE CHARGE
5/8"
$ 17.33
3/4"
19.48
1"
21.65
1-1/2"
32.46
2"
45.46
3"
80.13
4"
119.09
6"
227.35
8"
357.26
All water consumption is to be charged at the rate of two dollars and seven cents
($2.07) per full one hundred (100) cubic feet registered on the consumer's meter.
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SECTION 3. FIRE HYDRANT SERVICE FOR CONSTRUCTION AND
PRIVATE USE. Fire hydrant meters and operating valves shall be subject to the
following charges:
Meter Installation $50.00
Meter Relocation $25.00
Meter Rental $40.00 /month
Eddy Valve Rental $25.001month
Hydrant Rental $15.00lmonth
Hydrant Permit $25.00
Water Usage* $2.071100 cu. ft.
*Applies only to metered water use. Unmetered water use will be charged at a
flat rate determined by the Water Section of the Public Works Services Department
based upon type of use.
SECTION 4. FIRE LINE SERVICE (NO CHARGE FOR WATER USE.) The
following rates are established for bimonthly charges for fire protection services:
SIZE OF MINIMUM BIMONTHLY
METER SERVICE CHARGE
2" $ 11.55
4" 23.10
6" 34.64
8" 46.18
10" 57.75
SECTION 5. All rates set forth in this Resolution shall be reflected on all
water bills issued on or after July 1, 2013.
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SECTION 6. Annually adjusted rates shall take effect for all water service
appearing on water bills issued on July 1 or thereafter of each year.
SECTION 7. The City Council hereby finds that the rates specified in this
Resolution will not produce an amount in excess of that necessary to fund the operation
of the City of Arcadia Water System.
SECTION 8. The City Council finds that this Resolution is exempt from the
requirements of the California Environmental Quality Act as specified in Title 14 Section
15273 of the California Administrative Code.
SECTION 9. The City Clerk shall certify to the adoption of this Resolution.
Passed approved and adopted this day of , 2013.
rsraI�015
City Clerk
APPROVED AS TO FORM:
Stephen P. Deitsch
City Attorney
Mayor of the City of Arcadia
EXHIBIT 6
RESOLUTION NO. 6970
[ATTACHED BEHIND THIS PAGE]
RESOLUTION NO. 6970
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
ARCADIA, CALIFORNIA, SETTING CITY SEWER RATES
AND FINDING THE RATES WILL NOT EXCEED THE
ESTIMATED AMOUNT NECESSARY TO FUND
OPERATION OF THE CITY SEWER SYSTEM
WHEREAS, pursuant to the Arcadia Municipal Code, sewer rates may be set and
modified by resolution of the City Council; and
WHEREAS, it is the desire of the City Council to set sewer rates in a reasonable
amount and so as to meet the capital improvement and service needs of the City and its
sewer service consumers; and
WHEREAS, proposed sewer rate changes were presented to the City Council at
its June 4, 2013 regularly scheduled City Council meeting; and
WHEREAS, a public notice concerning said rate changes was duly mailed to
residents in accordance with Proposition 218 noticing requirements in April 2009, and a
duly noticed public hearing concerning said rate adjustments was conducted by the City
Council on June 16, 2009 for Fiscal Years 2009110, 2010111, 2011112, 2012113 and
2013114.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF ARCADIA,
CALIFORNIA, DOES HEREBY FIND, DETERMINE AND RESOLVE AS FOLLOWS:
SECTION 1. RATES. The following new sewer rates are established and shall
supersede rates heretofore adopted for the following categories of sewer service:
(a) Single- Family Dwellings - $4.21 per month
(b) Multiple - Family Dwellings (e.g. - Apartments, Condominiums, Town
homes, etc.) - $4.21 per month, per dwelling unit.
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(c) Commercial Properties - $12.58 per month sewer connection charge and
an additional $0.13 per 100 cubic feet of water used per month.
(d) Premises where sewer connections are not available or are not connected
shall be exempt from said monthly charges.
SECTION 2. The City Council hereby finds that the rates specified in this
Resolution will not produce an amount in excess of that necessary to fund the operation
of the City of Arcadia Sewer System.
SECTION 3. All rates set forth in this Resolution shall be reflected on all sewer
bills issued on and after July 1, 2013.
SECTION 4. Annually adjusted rates shall take effect for all sewer service
appearing on sewer bills issued on July 1 or thereafter of each year.
SECTION 5. The City Council hereby finds that the adoption of this Resolution
and the establishment of the sewer rates set forth herein are categorically exempt from
the requirements of the California Environmental Quality Act, as specified in Title 14,
Section 15273 of the California Administrative Code.
SECTION 6. The City Clerk shall certify to the adoption of this Resolution.
[SIGNATURES ON NEXT PAGE]
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Passed approved and adopted this day of , 2013.
ATTEST:
City Clerk
APPROVED AS TO FORM:
(?, 6-6za-
Stephen P. Deitsch
City Attorney
3
Mayor of the City of Arcadia