HomeMy WebLinkAboutItem 18 - Water and Sewer Rate ReviewItem 18
GtT Y O fiCouncil Agenda Report
ti
Department Name:
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FROM: Aaron Floyd, Utilities Director
Prepared By: Jennifer Thompson, Utilities Business Manager
SUBJECT: WATER AND SEWER RATE REVIEW
RECOMMENDATION
Utilities
6105
December 8, 2020
Business Item
20 minutes
Adopt a Resolution (Attachment A) establishing the Water and Sewer Rates for Fiscal Year
2020-21, effective February 1, 2021.
DISCUSSION
Background
As enterprise funds, the Water and Sewer Funds finance the City's water and sewer operations
almost entirely through rates charged for service. Water and sewer rates must be sufficient to
cover operations, capital asset maintenance and improvements, debt obligations, and appropriate
reserve levels to keep the Water and Sewer Funds healthy and prepared for unforeseen funding
needs.
In June 2019, the City Council approved two years of water and sewer rate increases
(Attachments B and Q. The adoption of these rate increases followed the legally required
notification and public hearing set forth by Proposition 218. Proposition 218 allows water and
sewer utilities to implement rate increases up -to the percent increase announced in the legal
notification.
Table 1: Adopted Rate Increases FY 2019-20 to FY 2020-21 and
Recommended Increase for FY 2020-21
Adopted Rate Increases
Water
Sewer
2019-20
5.5%
5.5%
2020-21 (deferred)
5.5%
5.0%
2020-21 (proposed Feb 1)
3.6%
3.6%
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Item 18
With adoption of the 2020-21 budget in June, the
Utilities Department recommended deferring the
approved 2020-21 water and sewer rate increases until
at least the October budget Council meeting
(Attachment D). The deferment was meant to
accommodate citizens who had been negatively
impacted by the Covid-19 related economic downturn.
The Utilities Department also implemented several
other customer accommodations at the beginning of
the Covid-19 crisis: (1) water is not being shut-off for
nonpayment; (2) delinquent accounts are not being
sent to collections; (3) late charges are being waived
on past due customer accounts• and (4) Industrial User
Customer Accommodations
during Covid-19
1. Deferred rate increase from July 1,
2020 to February 1, 2021.
2. Discontinued water shut offs for
non-payment.
3. Deferred sending past due
accounts to collections.
4. Waive four late charges every 12
months.
5. Waived industrial user fees.
fees were waived for one year. Since March 2020, the Utilities department has waived $34,700
in late charges for customers who are having difficulty paying their bills, approximately 400'
customers have not had their water service discontinued for non-payment, and 148 customer
accounts have not been sent to collections.
Moving forward, it is necessary to balance the current economic impacts of the pandemic with
the long-term needs of the City's water and sewer services. Both the water and sewer systems
are faced with the ongoing maintenance of hundreds of miles of aging pipes, pump stations, and
treatment facilities. To avoid the need for significant future rate increases, the Utilities
Department is recommending only implementing a portion of the previously approved rate
increase to both the base and volumetric water and sewer rates. The proposed rate increase is 3.6
percent for water service and 3.6 percent for sewer service. This lower than originally adopted
rate increase, combined with the eight months of deferment since July 2020, would allow for
some accommodation of the fiscal impacts to the community associated with the economic
downturn during the pandemic. While this increase is less than the previously approved 5.5
percent water rate increase and 5.0 percent sewer rate increase, it still allows the water and sewer
funds to continue to keep up with the inflationary cost increases observed in the infrastructure
construction industry and make progress toward continued fiscal health.
It is important to note that the recommended 3.6% is less than the authorized amount by 1.9% for
water and 1.4% for sewer and delayed rate increases will need to be made up over time in order
to maintain the financial health of the funds.
Water Rate Increase
The water rate increase is driven primarily by the need to maintain consistent and reliable water
treatment and delivery service, a high credit rating, and to maintain an adequate working capital
balance to cover unanticipated expenses associated with aging infrastructure.
' Approximately 50 customers per month are typically shut-off for non-payment.
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Item 18
Long Term Fiscal Health and Infrastructure Maintenance
Both the City's source water and treated drinking water infrastructure are aging and need to be
continually maintained. The amount of work needed to ensure continued service is high with
source water supplied to the City from reservoirs as far as 50 miles away and over 190 miles of
publicly owned drinking water pipelines inside the community, the majority of which have not
been replaced since their original construction.
The Water Fund has a bond issuance that .�
requires the Fund to be evaluated and �a
given a credit rating each year. The credit
rating ("Fitch Rating") is an indicator of
the Fund's overall health and its ability =
to meet its debt obligations and operating -�
costs. The credit rating is important�4
because it allows the City to access loans
for infrastructure projects more readily "
and at lower interest rates which in the
end is a saving to ratepayers. The Fitch
Rating considers, among other things,
whether the Water Fund is consistently Figure 1. Bishop Pump Station, built in the 1950's,
adjusting rates to keep up with inflation, remains in use today
whether it is maintaining its progress on capital improvements (maintenance and new), and its
capital reserve levels. Due to the unprecedented times, during its 2020 credit evaluation, the
credit rating agency understood the City's decision to defer the adopted water rate increase
temporarily. However, the credit rating agency noted in its report that future deferments of rate
increases would lead to insufficient revenues needed to maintain infrastructure and could result
in the Water Fund losing its AA credit rating.
The Water Fund also aims to maintain a working capital balance to prepare the Fund for
unforeseen emergencies. As mentioned above, the credit rating also considers reserve levels. If
the City forgoes in entirety the rate increase in 2020-21 the Water Fund's working capital
balance will drop below $10 million by 2023-24, This will jeopardize the Fund's ability to react
to emergencies and maintain its high credit rating. The Utilities Department strives to anticipate
upcoming capital improvement needs but aging infrastructure occasionally leads to unexpected,
emergency repairs. In recent years, working capital has been used for an emergency pipe gallery
repair at the Water Treatment Plant and to procure an emergency generator to ensure the Water
Treatment Plant can continue operating in the event of a Public Safety Power Shutoff (PSPS)
event.
Staff recommends water rates be increased 3.62 percent effective February 1, 2021 to maintain
the fund's credit rating, to mitigate the declining capital balance, and to continue to provide
reliable essential services.
z California Construction Cost Index December 2018 — December 2019
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Item 18
This rate increase would become effective on February 1" and would not be retroactive. This
action would increase the water portion of the average residential bill by $2.163 per month.
Sewer Rate Increase
The sewer rate increase is driven by the need to prepare for the cost of the Water Resource
Recovery Facility (WRRF) upgrade, to maintain consistent sewer collection infrastructure and
service and the production of reclaimed water and its distribution system, and to maintain an
adequate working capital balance,
Long Term Fiscal Health and Infrastructure Maintenance
Based upon aging wastewater infrastructure, the Sewer Fund needs to continue replacement of
sewer mainlines to reduce inflow and infiltration into the collection system, reduce scheduled
maintenance, increase capacity to allow for development, and reduce wastewater overflows. The
Sewer Fund is also preparing for the costs of near term projects including the potential relocation
of the Wastewater Collection shop as it is projected to be impacted by the City's Prado Road
Overpass project, operational costs associated with the WRRF upgrade, and a nearly $6 million
per year WRRF upgrade debt payment.
The Sewer Fund aims to maintain a minimum $15,000,000 working capital balance. This balance
was increased over the past several years to manage the cash flow and financing requirements of
the Water Resource Recovery Facility (WRRF) upgrade project. As the project nears completion,
this amount will return to the $15,000,000 target with the intent of using the reserve funds to
offset the final WRRF project loan amount.
Staff recommends sewer rates be increased 3.64 percent effective February 1, 2021 to maintain
the working capital balance for the WRRF upgrade, to prepare for the annual $6 million debt
payment, address the aging wastewater collection system, and to continue to provide essential
services. As with the proposed change in water rate, this increase would become effective on
February 1st and would not be retroactive. This will increase the sewer portion of the average
customers' bill by $2.495 per month.
Total Impact to Customer Water and Sewer Bill
With the recommended rate increases, the average customer's monthly bill for combined water
and sewer is expected to increase by about $4.76.
Table 2: Summary of Imuacts to Average Customer Bill
Summary of Impacts to Customer Bill
Water
$2.16
Utility Users Tax General Fund — 5% of Water
$0.11
Sewer
$2.49
Total
$4.76
a Based upon 6 units of consumption.
4 California Construction Cost Index December 2018 — December 2019
s Based upon 6 units of consumption and a sewer cap of 8.
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Item 18
Future Rate Increases
Water and sewer rate increases have historically occurred at the beginning of each fiscal year,
July 1. If the 2020-21 3.6 percent water and sewer rate increases are approved to be effective
February 1, 2021 there is a high likelihood, for the reasons discussed above, that another rate
increase will be necessary on July 1, 2021. These two rate increases will only be five months
apart; however, the February 2021 increase will be 19 months since the last increase on July 1,
2019.
Last Rate Increase Current Proposed Next Rate Increase
Increase Considered
JIIIJI
uly 1, 2019 February 1, 2021 July 1, 2021
The Utilities Department has recently hired a rate consultant to conduct a rate study in advance
of the 2021-23 financial plan process. The rate study will project future revenue needs of the
Water and Sewer Funds based upon projected operation and maintenance expenditures, and
capital funding needs. This includes analyzing current and projected water consumption, number
of accounts, the approved capital improvement plan, and future debt service. The process to
consider rate increases will follow Proposition 218 guidelines including significant customer
outreach prior to making recommendations to Council.
Policy Context
Water and sewer rates are subject to the requirements of Article XIII D, Section 6 of the
California Constitution (Proposition 218).
Public Engagement
In compliance with the Proposition 218 noticing schedule, the City of San Luis Obispo mailed a
notice to each property owner and water and sewer customer in the City in April 2019. The
notice included the two years proposed rate increases, a summary of the purpose of the increase,
and instructions on how to protest the proposed increase. Less than 800 of the 15,318 water and
sewer customers protested the proposed rate increase.
Customers were notified of the July 1, 2020 rate increase deferral via utility bill insert, social
media, and the City website.
If the rate increase is implemented effective February 1, 2021, customers will be notified again
of the upcoming increase via utility bill insert, social media, and the City website.
CONCURRENCE
The City's Finance Department concurs with the recommended action.
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Item 18
ENVIRONMENTAL REVIEW
Modification of rates and charges by public agencies is statutorily exempt from the California
Environmental Quality Act (CEQA) under Section 15273 of the CEQA Guidelines because the
change in fees is not intended to fund expansion of capital projects not otherwise evaluated under
CEQA. Therefore, no environmental review is required for this item.
FISCAL IMPACT
Budgeted: No
Funding Identified: N/A
Budget Year: 2021
Fiscal Analysis:
With an implementation date of February 1, 2021, the recommended 3.6 percent rate increase
will be effective for five months of the fiscal year so the total increase to revenue for fiscal year
2021 will be 1.50 percent. The net impact of these changes to the Water Fund is a $306,304
increase to the water sales revenue budget. The net impact of these changes to the Sewer Fund is
a $232,828 increase to the sewer sales revenue budget. Customers pay a five percent utility
user's tax on their water charges that will provide an increase of $14,635 to the City's General
Fund.
Funding
Current Rate
Recommended
Rate Revenue
FY 21
Sources
Revenue
Increase
Budget with
6Percent
Budget
Increase
Increase
Water Fund
$20,376,300
$306,304
$20,682,604
1.50%
Sewer Fund
$15,521,896
$232,828
$15,754,724
1.50%
General Fund
$973,500
$14,635
$988,135
1.50%
Total
$36,871,696
$553,767
$37,425,463
Had the original rate increases been implemented as previously approved on July 1, 2020, the
Water Fund would have collected $1,1162,000 more revenue in 2020-21 and the Sewer Fund
would have collected $1,570,000 more revenue in 2020-21. The Funds have absorbed this lost
revenue but cannot continue to maintain the infrastructure, the credit ratings, prudent working
capital balances, and provide essential services if they continue to defer rate increases.
6 The proposed fiscal year 2021 rate increase will be effective February 1, 2021 and will not be retroactive to the
beginning of the fiscal year.
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Item 18
ALTERNATIVES
1. Do not approve implementation of the water and sewer rate increases. This is not
recommended because the health of the Water and Sewer funds and their ability to provide
essential services relies upon rate increases.
2. Approve a rate increase that is less than 3.6%. This is not recommended because the health
of the Water and Sewer funds and their ability to provide essential services relies upon rate
increases. A lower rate increase now may drive the need for a higher rate increase in the
future.
3. Approve a rate increase that is greater than 3.6%. The City Council originally adopted a 5.5
percent water rate increase and a 5 percent sewer rate increase. The City Council could
choose to implement these previously approved rates.
Attachments:
a - Draft Resolution
b - Resolution No. 11023 Establishing Water Rates for Fiscal Year 2019-20 and 2020-21
c - Resolution No. 11024 Establishing Sewer Rates for Fiscal Year 2019-20 and 2020-21
d - Resolution No. 11126 Approving the 2020-21 Financial Plan Supplement and Budget
Appropriations
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Item 18
RESOLUTION NO. (2020 SERIES)
A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, APPROVING REVISIONS TO THE ADOPTED
2020-21 WATER AND SEWER RATES
WHEREAS, on June 18, 2019, the City Council approved a rate 5.5% water rate
increase to be effective July 1, 2020; and
WHEREAS, on June 18, 2019, the City Council approved a 5.0% sewer rate increase to
be effective July 1, 2020; and
WHEREAS, on June 2, 2020, the City Council authorized the Utilities Director to defer
approved water and sewer rate increases for 2020-2 Ito be reconsidered in October 20, 2020; and
WHEREAS, City staff evaluated 2020-21 revenue budget assumptions, work program
needs, capital improvement needs, and community priorities, and
WHEREAS, City staff determined a rate increase is necessary to maintain the fiscal
health of the water and sewer funds.
NOW, THEREFORE, BE IT RESOLVED, by the Council of the City of San Luis
Obispo as follows:
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Item 18
Resolution No. (2020 Series) Page 2
SECTION 1. The City Council authorizes the Utilities Director to implement a 3.6% water
rate increase and 3.6% sewer rate increase for Fiscal Year 2020-21 to be effective February 1,
2021.
Upon motion of Council Member , seconded by City Council Member
, and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this 8th day of December 2020.
Mayor Heidi Harmon
ATTEST:
Teresa Purrington,
City Clerk
APPROVED:
Christine Dietrick,
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City
of San Luis Obispo, California, on
Teresa Purrington,
City Clerk
f:7
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Item 18
Resolution No. (2020 Series) Page 3
Residential:
EXHIBIT A: 2020-21 Water Rates
Proposed 2020-21 Rates
Monthly Base Fee $22.52
Usage (per unit cost)'
Tier 1: 0 to 5 units
$6.44
Tier 2: 6 to 12 units
$7.51
Tier 3: 13+ units
$13.76
Multi -Family, Non -Residential, Irrigation:
Proposed 2020-21 Rates
Base Fee by Water Meter
Size
1/4 inch or less
$22.52
1-inch meter
$37.60
1.5-inch meter
$75.04
2-inch meter
$120.06
3-inch meter
$225.27
4-inch meter
$375.50
6-inch meter
$750.82
8-inch meter
$1201.35
Usage (per unit cost)'
Multi -Family — all use
$7.36
Non -Residential — all use
$8.93
Landscape Irrigation — all
use
$10.95
Water System Access $91.34
Charge
NOTES:
1. One Unit = 100 Cubic Feet or 748 Gallons
2. This charge applies where the City provides fire protection only to businesses
that utilize a private well for domestic purposes.
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Item 18
Resolution No. (2020 Series) Page 4
Residential:
EXHIBIT B: 2020-21 Sewer Rates
Proposed 2020-21 Rates
Monthly Base Fee $20.43
Usage (per unit cost)' $8.58
Multi -Family and Non -Residential:
Proposed 2020-21 Rates
Base Fee by Water Meter
Size
1/4 inch or less
$20.43
1-inch meter
$34.12
1.5-inch meter
$68.02
2-inch meter
$108.88
3-inch meter
$204.28
4-inch meter
$340.53
6-inch meter
$680.85
8-inch meter
$1,089.40
10-inch meter
$1,566.17
Usage (per unit cost)' 1 $8.58
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Item 18
RESOLUTION NO. 11023 (2019 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
❑BISPO, CALIFORNIA, ESTABLISHING WATER RATES FOR FISCAL
YEAR 2019-20 AND 2020-21
WHEREAS, it is the policy of the City of San Luis Obispo to review enterprise fund rates
on an ongoing basis and to adjust them as required to ensure that they remain equitable and
adequate to fully cover the cost of providing services; and
WHEREAS, a comprehensive water rate study was completed in May 2018 by HDR
Engineering, Inc including analysis of Water Fund operating, capital, and debt service needs for
fiscal years 2018-19 through 2022-23; and
WHEREAS, a water rate study update was completed in May 2019 by HDR Engineering,
Inc. including analysis of Water Fund operating, capital, and debt service needs for fiscal years
2019-20 through 2023-24; and
WHEREAS, on June 4, 2019 the City Council reviewed the Water Fund and preliminary
water rates based on updated revenue and expenditure information and necessary to meet system
operating, capital, and debt service requirements; and
WHEREAS, a public hearing was properly noticed and held on June 18, 2019; and
WHEREAS, a majority protest, as contemplated by Article XIII D of the California
Constitution, was not received by the conclusion of the public hearing_
NOW, TIIEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo
as follows:
R 1 1023
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Resolution No. 11023 (2019 Series)
Item 18
Page 2
SECTION 1. The water rates and water system access charges are set forth in Exhibit "A"
are hereby adopted, establishing water rates and water system access charges effective July 1,
2019. Resolution No. 10909 (2018 Series) is hereby rescinded effective 11:59 p-m. dune 30, 2019.
Upon motion of Vice Mayor Pease, seconded by Council Member Gomez, and on the following roll
call vote:
AYES: Council Members Christianson, Gomez, and Stewart,
Vice Mayor Pease and Mayor Harmon
NOES: None
ABSENT: None
The foregoing resolution was adopted this 18th day of June 2019.
ATTEST:
Teresa Purrington t
City Clerk
APPROVED AS TO FORM:
1ristine Dietrick
Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City
of San Luis Obispo, Califomia, this '2day of __j 3-2019.
vu
Teresa Purrington
City Clerk
R 1 1023
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Resolution No_ 11023 (2019 Series)
EXHIBIT A
EXHIBIT A: 2019-20 and 2020-21 Water Rates
Residential:
Item 18
Page 3
Proposed 2019-20 Rates Proposed 2020-21 Rates
Monthly Base Fee
$21.74 $22.94
Usage (per unit cost)'
Tier 1: 0 to 5 units
$6.22
$6.56
Tier 2: 6 to 12 units
$7.25
$7.65
Tier 3: 13+ units
$13.28
$14.01
Multi -Family, Non -Residential, Irrigation:
Proposed 2019-20 Rates
Proposed 2020-21 Rates
Base Fee by Water Meter Size
inch or less
$21.74
$22.94
1-inch meter
$36.29
$38.29
1.5-inch meter
$72.43
$76.41
2-inch meter
$115.89
$122.26
3-inch meter
$217.44
$229.40
4-inch meter
$362.45
$382.38
6-inch meter
$724.73
$764.59
8-inch meter
$1,159.60
$1,223.38
Usage (per unit cast)'
Multi -Family -all use
$7.10
$7.49
Non -Residential - all use
$8.62
$9.09
Landscape Irrigation -- all use
$10.57
$11.15
Water System Access Chargezi $88.17 1$93.02
NOTES:
1. one Unit = 748 Gallons
2. This charge applies where the City provides fire protection only to businesses that utilize a
private well for domestic purposes.
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Item 18
RESOLUTION NO. 11024 (2019 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, ESTABLISHING SEWER RATES FOR FISCAL
YEAR 2019-20 AND 2020-21
WHEREAS, it is the policy of the City of San Luis Obispo to review enterprise fund fees
and rates on an ongoing basis and to adjust them as required to ensure that they remain equitable
and adequate to fully cover the cost of providing services; and
WHEREAS, a comprehensive wastewater rate study was completed in May 2018 by HDR
Engineering, Inc including analysis of Sewer Fund operating, capital, and debt service needs for
fiscal years 2018-19 through 2022-23; and
WHEREAS, a wastewater rate study update was completed in May 2019 by HDR
Engineering, Inc including analysis of Sewer Fund operating, capital, and debt service needs for
fiscal years 2019-20 through 2023-24; and
WHEREAS, on June 4, 2019 the City Council reviewed the Sewer Fund and preliminary
sewer rates based on updated revenue and expenditure information and necessary to meet system
operating, capital, and debt service requirements; and
WHEREAS, a public hearing was properly noticed and held on June t8, 2019; and
WHEREAS, a majority protest, as contemplated by Article XIII D of the California
Constitution, was not received by the conclusion of the public hearing_
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo
as follows:
1Z 1 1024
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Resolution No. 11024 (2019 Series)
Item 18
Page 2
SECTION 1. The sewer rates set forth in Exhibit "A" are hereby adopted, establishing
rates effective July 1, 2019. Resolution No. 10010 (2018 Series) is hereby rescinded effective
11:59 p.m. rune 30, 2019.
Upon motion of Vice Mayor Pease, seconded by Council Member Gomez, and on the following roll
call vote:
AYES: Council Members Christianson, Gomez, and Stewart,
Vice Mayor Pease and Mayor Harmon
NOES: None
ABSENT: None
The foregoing resolution was adopted this 18''' day of June 2019.
ATTEST:
Teresa Purrington
City Clerk
APPROVED AS "LW-ORM:
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City
of San Luis Obispo, California, this 27 day of , 2019.
Q
Teresa Purrington
City Clerk
R 11024
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Resolution No. 11024 (2019 Series)
EXHIBIT A
EXHIBIT A: 2019-20 and 2020-21 Sewer Rates
Usage:
Item 18
Page 3
Proposed
Proposed
2019-20 Rates
2020-21 Rates
Single -Family and Multi -Family Residential
$$'28
$8'6�
Per Unit Cost (Up to Sewer Cap)'
Non -Residential
Per Unit Cast (for All Water Consumption)* $8.28 $5 69
Monthly Base Fee:
Proposed
2019-20 Rates
Proposed
2020-21 Rates
Single -Family Residential
$19.72
$20.71
Multi -Family and Non -Residential
By Water Meter Size:
YA inch or less
$19.72
$20.71
1-inch meter
$32.93
$34.58
1.5-inch meter
$65.66
$68.94
2-inch meter
$105.10
$110.36
3-inch meter
$197.18
$207.04
4-inch meter
$328.70
$345.14
6-inch meter
$657.19
$690.05
8-inch meter
$1,051.54
$1,104.12
10-inch meter
$1,511.75
$1,587.34
* One Unit = 748 Gallons
R 11024
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Item 18
RESOLUTION NO. 11126 (2020 SERIES)
A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO,
CALIFORNIA APPROVING THE 2020-21 FINANCIAL PLAN SUPPLEMENT
AND BUDGET APPROPRIATIONS
WHEREAS, in accordance with San Luis Obispo Charter Section 802, the City Manager
submitted the 2019-21 Financial Plan to the Council for review and consideration consistent with
budget policies and objectives established by the Council; and
WHEREAS, the City Council adopted the 2019-21 Financial Plan on June 4, 2019 and
appropriated the budget for 2019-20; and
WHEREAS, the City Council adopted the 2019-20 and 2020-21 water and sewer rates on
June 16, 2019: and
WHEREAS, City staff prepared the 2020-21 budget with appropriate revisions and
adjustments from the adopted budget to address changes in revenue assumptions, work program
needs, and community priorities; and
WHEREAS, based on public input, the City Council directed staff to augment the funding
allocation for diversity and inclusivity; and
WHEREAS, the 2020-21 Budget is now ready for consideration and appropriation: and
WHEREAS, the City Council adopted Resolution 10616 on May 19, 2015 requiring
annual prepayment of industrial users permit fees for the City Wastewater Collection and
Treatment Systems; and
WHEREAS, on June 18, 2019, the City Council approved a two-year increase for water
and sewer rates in accordance with Proposition 218; and
WHEREAS, more transactions are occurring electronically, and the City's fee schedules
do not currently recover the roughly proportional costs associated with Credit Card transactions
and the City General Fund has incurred substantial costs for this service; and
WHEREAS, the City desires to include in the applicable fees for the reimbursement of
credit card cost; and
WHEREAS, the City of San Luis Obispo also adjusts its fee schedule annually to include
increases per the consumer price index; and
WHEREAS, staffing costs make up a significant portion of the City's budget and short
and long-term savings may be realized through voluntary turnover allowing thoughtful
reorganization and reassessment of staffing needs.
R H 126
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Item 18
Resolution No. 11126 (2020 Series) Page 2
NOW, THEREFORE, BE IT RESOLVED, by the Council of the City of San Luis
Obispo as follows:
SECTION 1. The 2020-21 Financial Plan Supplement and budget is hereby approved and
that the operating, debt service, and capital improvement plan budget for the fiscal year beginning
July 1, 2020 and ending June 30, 2021 is hereby appropriated as presented in the 2019-20 Financial
Plan Supplement — 2020-21 Budget.
SECTION 2. The City Manager is hereby delegated authority to allocate funds from
assigned fund balances where assignment of funds for an intended use was previously approved
by the Council.
SECTION 3. The City's adopted fee schedule is hereby adjusted by 0.7%' which reflects
the All Urban Consumer Price Index, Los Angeles area from April 2019-April 2020 and by fee
increases to recover applicable credit card fees.
SECTION 4. The City Council authorizes the Utilities Director to defer approved water
and sewer rate increases for 2020-21 to be reconsidered in October 2020.
SECTION 5. The City Council approves suspending Class I and Class 2 industrial user
permit fees in 20-21.
SECTION b. The City Council approves allocating an additional $140,000 for a total of
$160,000 to the Human Relations program to support diversity, equity, and inclusion programs.
I https://www.bls.gov/regions/west/news-release/consumerpriceindex_losangeles.htm#chartt
1Z 11126
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Resolution No. 11126 (2020 Series)
Item 18
Page 3
SECTION 6. Council authorizes the City Manager to adopt and implement a limited
duration Voluntary Retirement Incentive Program with authority to modify as necessary to
complete the meet and confer process while achieving budgetary savings.
Upon motion of Council Member Pease, seconded by City Council Member Christianson,
and on the following roll call vote:
AYES: Council Member Christianson, Pease, Stewart, Vice Mayor Gomez and
Mayor Harmon
NOES: None
ABSENT: None
The foregoing resolution was adopted this 2nd day of June 2020.
Mayor Heidi Harmon
ATTEST:
Teresa Purrington,
City Clerk
APPROVED:
Christine Dietrick,
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City
of San Luis Obispo, California, on 6/16/2020
Teresa Purrington
City Clerk
R 11120
Packet Page 458
Water and Sewer Rate Review
Presented by Jennifer Thompson, Utilities Business Manager
■ December 8, 2020
Rate Chanqes
Fiscal Year
WATER
SEWER
2019-20
5.5%
5.5%
July 1, 2019
2020-21
July 1, 2020
5.5%
5.0%
2020-21
February 1, 2021
3.6%
3.6%
Implemented
Deferred
Proposed
Water
Supply as
far as 50
Miles Away
Maintenance Reduce I & I
�.
Increas
Capacity
01 S
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p
Water Fund Credit Rating
Fitch Affirms San Luis
Obispo, CA:s Water
Revs at'AA'; Outlook
Stable
Fri 24 Jul, 2020 - 2:26 PM ET
f'itchRatings
Indicates
overall Fund
health !I
Near Term Sewer Project Costs
e� WRRF Upgrade Debt
Payment
r% o
o WRRF Upgrade Operations
o
rO Wastewater Collections
Facility
Construction Costs
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Impact to Average Customer Bill
$2.16
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Customer• ••. •
�O
Suspended: I p�'
Water service
shut off for non-
payment &
Deferred: related fees Waived:
July 2020 Rate Four late charges
Increases to per year instead
February 2021 of one
Actions
Deferred: taken to Waived:
Sending past due Assist with Industrial User
accounts to Financial Fees
collections Hardships
Account Delinquencies
IONL ro
2019
$2151000
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2020
$3841600
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Additional Customer Servides
At no charge
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Reduced Customer Fees
Saved
customers
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Saved
customers :
$901000
Water &Wastewater Low Income Assistance
■ General Fund Subsidized to Comply with Proposition 218
■ 15% Discount
■ To Qualify Must Receive One:
1. Temporary Assistance for Needy Families (CalWORKS)
2. Cal Fresh (Food Stamps)
3. Supplemental Social Security Income
4. Veteran Survivor Pension Benefits
www.slowater.org
805-781-7133
Water and Sewer Grants Overview
Since 2018
Sewer
SRF Loan Forgiveness
WRRF Upgrade
$4,000,000
Sewer
CalOES
WRRF Upgrade
$2,077,100
Sewer
IRWM Implementation
WRRF Upgrade
$1,314,530
Sewer
IRWM DAC Involvement
WRRF Upgrade
$78,125
Water
CalOES
WTP Generator
$800,000
Water
Prop I
Groundwater Plume
$1,196,575
Characterization Study
Water
SGMA
Sustainable Groundwater
$256,395
Management Act
TOTAL
$9,002,725
Customer Outreach
0 City of San Luis Obispo
Utilities Department
JULY RATE INCREASE
DEFERRED
We understand the financial and health
impacts that the COVID-19 pandemic has
created for our community.
The Utilities Department is continuing to
serve you through this difficult time.
RATE INCREASE ON HOLD
an June 2019, the City Council adopted a twoyearwater
and wastewater rate increase. The 2019 increasevrae
implemented on July 1, 2019. The 2020 rate Increase
s scheduled for July 1, 2020, but will be deferred
for now.
The 2020 rate increase has already been subject to
the legally required Proposition 218 notification
process and approved by the City Council.
When can f expect an update?
The City will revisit whether to proceed with the
rate increase ata Council meeting in Octoben
any rase, customers would have at least two
months advance notice cf the increase.
Stay Safe!
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City of San Luis Obispo Utilities Department ■
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*July Rate Increase Deferred* We understand the financial and health
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impacts that the COVID-19 pandemic has created for our community.
The Utilities Department is continuing to serve you through this-------�----
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difficult time.
In June 2019, the City Council adopted a two year water and
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wastewater rate increase. The 2019 increase was implemented on July
11 2019. The 2020 rate increase was scheduled for July 1, 2020, but will
be deferred for now.
The 2020 rate increase has already been subject to the legally required
Proposition 218 notification process and approved by the City Council.
When can you expect an update? The City will revisit whether to
proceed with the rate increase at a Council meeting in October. In any
case, customers would have at least two months advance notice of the
increase. T_- k
Future Rate Increases
Last Rate Increase Current Proposed
Increase
July 1, 2019 February 1, 2021
19 5 012
�� ��
Hist~ 1 Number Number
number of of of
months months months
between between between
increases increases increases
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Next Rate Increase
Considered
July 1, 2021
Questions?
Recommendation
Adopt a resolution (Attachment A) entitled "A Resolution of the
Council of the City of San Luis Obispo, California, Establishing
the Water and Sewer Rates for Fiscal Year 2020-21," effective
February 1, 2021.