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HomeMy WebLinkAboutItem 3b: Resolution 6769: Setting Water Rate Schedule and Resolution 6768 Setting Sewer Rate Schedule ofAtt � �� . GAL 1F01t�, i 1 tow' \ Y /�• STAFF REPORT Public Works Services Department DATE: May 17, 2011 TO: Mayor and City Council FROM: Tom Tait, Public Works Services Director Prepared by: Ken Herman, Deputy Public Works Services Director SUBJECT: RESOLUTION NO. 6769 SETTING THE WATER RATE SCHEDULE FOR FISCAL YEAR 2011/12 Recommendation: Adopt RESOLUTION NO. 6768 SETTING THE SEWER RATE SCHEDULE FOR FISCAL YEAR 2011/12 Recommendation: Adopt SUMMARY Utility rates fund the operations and maintenance of the water system and the sanitary sewer system. Every year it is necessary to evaluate current utility rates to ensure proper funding to provide quality services to the residents of Arcadia. Based upon the Public Works Services Department's proposed 2011/12 Operating Budget, Capital Improvement Plan, Water Master Plan and Sewer Master Plan, it is recommended that the City Council consider adjusting the water and sewer rates by the 2010 California Consumer Price Index (CPI) (January to December) of 1.07 %. The proposed monthly rate adjustments are as follows: Current Proposed Water $1.33 /CCF $1.34 /CCF Sewer Residential (Single & Multi- Family) $3.99 /unit $4.03 /unit Commercial $11.93 + $0.12 /CCF $12.06 + $0.12 /CCF At the June 12, 2009 City Council meeting the Council approved staffs recommendation to automatically adjust water and sewer rates for five (5) fiscal years: 2009/10, 2010/11, 2011/2, 2012/13, and 2013/14 according to the Los Angeles - Riverside- Orange County Urban Wage Earners and Clerical Workers Consumer Price Index Page 1 of 5 Mayor and City Council May 17, 2011 Therefore, staff is recommending that the City Council adopt Resolutions No. 6768 and 6769 authorizing the proposed rate increases that include a 1.07% Cost of Living Adjustment (COLA) for fiscal year 2010/11. DISCUSSION To determine the amount of increase for utility rates, City staff uses the previous year's Consumer Price Index (CPI) because it 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 acceptable practice to base increases on. Labor and materials are the main components of operating the water and sewer system in Arcadia, therefore CPI has been accurate in determining the percent increase of delivering services. For the purposes of complying with the notification requirements of Proposition 218, the City Council, at the June 16, 2009 City Council meeting, approved automatic increases not to exceed the CPI for fiscal years 2009/2010, 2010/2011, 2011/2012, 2012/2013 and 2013/2014. Doing so eliminated the need to publicly notify the residents of proposed rate adjustments within CPI, which saved the City approximately $10,000 annually for not having to print and mail notices. Staff must still present proposed annual adjustments for Council's approval, to be adopted by resolution, as part of the budget process in each of these years. However, if an extraordinary increase that exceeds CPI is necessary, then the City will follow notice requirements as mandated by Proposition 218. Water Rates Staff schedules Capital Improvement projects and maintenance schedules through recommendations made by the Water Master Plan (updated in 2008). The proposed rate adjustment will provide for the cost of operating the water system, capital improvement projects, and maintaining a $20 million reserve to offset costs in the event of a catastrophic event or emergency that would affect the water system's infrastructure. In addition, the cost of operating the City's water system has increased as a result of the uncertainty of replacement water and the significant increased cost of treated surface water from Metropolitan Water District (MWD). Effective July 1, 2011 MWD will raise its water rates that include the cost of replacement water. Replacement water has increased from $450 per acre foot to $599 per acre foot ( +30 %) and the cost of treated surface water is equally expensive at the cost of $681 per acre foot. However, due to above average rainfall throughout the State this year and subsequent higher water levels in the State's major reservoirs, and less water being pumped from the Basin this past year, there has been speculation that MWD will be able to lower replacement water costs to $512 per acre foot. While this is still an increase, it is substantially less than what was approved and published. Staff will continue to be engaged in water issues Page 2of5 Mayor and City Council May 17, 2011 throughout the year and will report back to the Council with any news that may adversely affect the City's water fund balance as it relates to purchased water costs. The City of Arcadia relies on replacement water to supplement water pumped from the Main San Gabriel Basin and the Raymond Basin to meet annual water demands. In 2009, the groundwater levels in the Main San Gabriel Groundwater Basin reached an all -time low, resulting in a reduction in the annual operating safe yield. The annual operating safe yield is the amount of water the City can pump from the Main Basin free of replacement water charges. In FY 2010/11 the amount of water pumped from the Main Basin in excess of the City's available rights is projected to be 2,477 AF at a cost of $1,483,723. However, MWD has proposed a onetime lower cost for replacement water at $512 per acre foot. This would result in a savings to the City of approximately $215,499. Staff continues to explore new and innovative solutions to acquire and produce additional sources of potable water. For example, the City has saved over $200,000 for the past two (2) years by leasing water rights from surrounding cities at a lower rate than purchasing replacement water from MWD. In 2010, staff began working with Raftelis Financial Consultants (RFC) to study the feasibility of implementing a tiered water rate structure for the City of Arcadia. The results of this study were presented to the City Council on January 18, 2011 followed by recommendations to the City Council on April 20, 2011 of proposed rates for a three - tiered rate structure. However, at the April 20, 2011 Council meeting, the City Council directed staff to continue to look at the tiered water rate structure in order to see if there was a better approach. Staff will continue to look at different water rate structures and perhaps look at proposing a hybrid tiered water rate structure in the future. In preparation of the 2011/12 budget, staff has evaluated each account, and where possible, reduced operation and maintenance expenditures while continuing to maintain the reliability of the water system, complying with water quality standards and retaining the existing level of service. Staff recommends a 1.07% Cost of Living Adjustment (COLA) to the water rate for fiscal year 2011/12 which would change the existing water rate from $1.33 to $1.34 per 100 cubic feet (748 gallons). Staff conducted a survey of water rates for neighboring agencies with uniformed rate structure and found that even considering the proposed water rate adjustment; Arcadia's water rates continue to remain the lowest in the San Gabriel Valley. Water Agency Rate /CCF (748 Gallons) Difference City of Sierra Madre $1.79 + 34% East Pasadena Water Company $1.51 + 13% City of Monrovia $1.45 + 8% City of Arcadia $1.34 Page 3 of 5 Mayor and City Council May 17, 2011 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, fifty -years old and include 138 miles of pipe throughout the City. The 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 backups and overflows. Recently, the City was required by the State 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 also approved by the City Council at the November 7, 2007 Council meeting. Accordingly, the Sewer Master Plan proposes annual rate adjustments in order to recover operational sewer service costs, pay for the WDR permit fee, fund Capital Improvement Projects and to build a five (5) million dollar fund reserve to be used in case of an emergency or catastrophic event. Staff is recommending that the City Council approve a 1.07% Cost of Living Adjustment (COLA) in sewer rates for fiscal year 2010/11. This proposed rate adjustment would change the existing residential rate from $3.99 to $4.03 per month per dwelling unit, reflecting a $0.04 increase monthly or $0.48 annually. The proposed rate adjustment for the commercial rate would change from $11.93 per month for each sewer connection and an additional $0.12 per 100 cubic feet of water used per month to $12.06 per month for each sewer connection and the additional $0.12 per 100 cubic feet of water used per month. CONCLUSION Staff has taken the necessary steps to be in compliance with Proposition 218 balloting procedures for increasing water and sewer rates. Therefore, staff is recommending that the City Council approve the water and sewer rate schedule for fiscal years 2011/12, by adopting Resolution No. 6768 and Resolution No. 6769. FISCAL IMPACT Water and sewer rate increases are necessary to fund the Capital Improvement Program and the Operating Budget, and to maintain a reserve fund balance in case of a natural disaster or emergency. The lack of a rate increase would not allow the City to recover increasing operations and maintenance costs of running the City's water and sewer system. Page 4 of 5 Mayor and City Council May 17,2011 RECOMMENDATION Adopt Resolution No. 6768 and Resolution No. 6769 authorizing the proposed rate increases for water and sewer utilities that include a 1.07% Cost of Living Adjustment (COLA) for fiscal year 2011/12 Approved by: 3 rQ Donald Penman, City Manager TT:KH Page 5 of 5 RESOLUTION NO. 6768 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 May 17, 2011 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 FY 09/10, 10/11, FY 11/12, FY 12/13 and FY 13/14. • 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 - $4.03 per month (b) Multiple - Family Dwellings (e.g. - Apartments, Condominiums, Town homes, etc.) - $4.03 per month, per dwelling unit. 1 (c) Commercial Properties - $12.06 per month sewer connection charge and an additional $0.12 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, 2011. SECTION 4. Sewer rates for the succeeding two (2) fiscal years, 2012/13 and 2013/14, shall automatically be adjusted annually based on the Los Angeles- Riverside- Orange County Urban Wage Earners and Clerical Workers Consumer Price Index. 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] 2 Passed approved and adopted this day of , 2011. Mayor of the City of Arcadia ATTEST: City Clerk APPROVED AS TO FORM: c P , tg& , P 4 Stephen P. Deitsch City Attorney 3 RESOLUTION NO. 6769 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 May 17, 2011 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 FY 09/10, 10/11, FY 11/12, FY 12/13 and FY 13/14. 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 5/8" $ 11.07 3/4" 12.45 1" 13.83 1 -1/2" 20.75 2" 29.06 3" 51.18 4" 76.09 6" 144.56 8" 227.47 All water consumption shall be charged at the rate of one dollar and thirty -four cents ($1.34) 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" $ 16.61 3/4" 18.67 1" 20.75 1 -1/2" 31.11 2" 43.57 3" 76.79 4" 114.13 6" 217.88 8" 342.38 All water consumption is to be charged at the rate of one dollar and ninety -nine cents ($1.99) per full one hundred (100) cubic feet registered on the consumer's meter. 2 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 $25.00 /month Hydrant Rental $15.00 /month Hydrant Permit $25.00 Water Usage* $1.99/100 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" $ 11.07 4" 22.14 6 " 33.20 8" 44.26 10" 55.34 SECTION 5. All rates set forth in this Resolution shall be reflected on all water bills issued on or after July 1, 2011. 3 SECTION 6. Water rates for the succeeding two (2) fiscal years, 2012/13 and 2013/14, shall automatically be adjusted annually based on the Los Angeles—Riverside- Orange County Urban Wage Earners and Clerical Workers Consumer Price Index. 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 , 2011. Mayor of the City of Arcadia ATTEST: City Clerk APPROVED AS TO FORM: P 44red Stephen P. Deitsch City Attorney 4