HomeMy WebLinkAboutItem 3b: Resolution 6769: Setting Water Rate Schedule and Resolution 6768 Setting Sewer Rate Schedule ofAtt
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\ 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
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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
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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.
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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.
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(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.
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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
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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:
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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.
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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 $25.00 /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.
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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
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