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HomeMy WebLinkAboutItem 7a. Water and Sewer Rate HearingCouncil- Report Item 7a Department: Utilities Cost Center: 6105 For Agenda of: 6/15/2021 Placement: Public Hearing Estimated Time: 30 minutes FROM: Aaron Floyd, Utilities Director Prepared By: Jennifer Thompson, Utilities Business Manager SUBJECT: WATER AND SEWER RATE HEARING RECOMMENDATION Adopt a resolution entitled "A Resolution of the Council of the City of San Luis Obispo, California, Establishing Water and Sewer Rates for Fiscal Years 2021-22 and 2022-23," effective July 1, 2021 and July 1, 2022. 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. Recommended water and sewer rate increases for 2021-22 and 2022-23 are lower than originally projected. The Water Fund is requesting a rate increase of 3.5% effective July 1, 2021 and 3.5% effective July 1, 2022. The most recent rate study, conducted in 2018, projected the water rate increase would need to be 5.5% in 2021 and 5.5% in 2022. The Sewer Fund is requesting a rate increase of 3.5% effective July 1, 2021 and 3.5% effective July 1, 2022. The most recent rate study, conducted in 2018, projected the sewer rate increase would need to be 6.5% effective July 1, 2021 and 6.5% effective July 1, 2022. The City's rate consultant recently completed a rate confirmation study to confirm or modify the originally forecasted rate increase estimates. As a result of additional revenue from Cal Poly and refined investment and impact fee revenue projections, the rate consultant has now recommended lower than previously projected rate increases. Page 169 of 422 Item 7a Table 1: 2021-23 Proposed Rate Increases July 1, 2021 July 1, 2022 Water 3.5% 3.5% Sewer 3.5% 3.5% Proposed 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. 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 with 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 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 because it allows the City to access loans for infrastructure projects more readily and at lower interest rates which results in a saving to ratepayers. The Fitch Rating considers, among other things, whether the Water Fund is consistently adjusting rates to keep up with inflation, 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 2020 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 aims to maintain a minimum $10,000,000 working capital balance' to prepare the Fund for unforeseen emergencies. As mentioned above, the credit rating also considers reserve levels. 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 repair within the pipe gallery 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. 1 The minimum fund balance is 90 days operating & maintenance expense ($2.6 million) plus average annual capital investment ($7.2 million). Page 170 of 422 Item 7a An unreserved working capital that drops below minimum levels will jeopardize the Fund's ability to react to emergencies and maintain its high credit rating. Staff recommends water rates be increased 3.5% effective July 1, 2021 and 3.5% effective July 1, 2022 to maintain the fund's credit rating, to mitigate the declining capital balance, and to continue to provide reliable essential services. This action would increase the water portion of the average residential bill by $1.942 per month. Proposed 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 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 balance3. 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. Staff recommends sewer rates be increased 3.5% effective July 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. This will increase the sewer portion of the average customers' bill by $2.221 per month. Protest Procedures The City sent out 19,947 written notices of the proposed assessment and ballots (see Attachment B) in late April 2021 in compliance with Proposition 218 (Prop 218). Under Prop 218, property owners and/or customers directly responsible for the payment of the rate subject to the proposed increase may submit a written protest against the proposed rate increases. Based upon 5 units of consumption. a The minimum fund balance is 90 days operating & maintenance expense ($2.2 million) plus average annual rate - funded capital investment excluding the WRRF upgrade ($12.8 million). 4 Based upon 5 units of consumption and a sewer cap of 8. Page 171 of 422 Item 7a The protest must be submitted on the form provided by the City, received by the City Clerk at or before the June 15, 2021 public hearing, identify which rate, water and/or sewer, is being protested, and contain the address of the property receiving service. The party signing the protest must be listed on the account as the person responsible for payment of the water bill and/or the property owner. If a protest is submitted by the owner and by the tenant responsible for payment of the water bill, then one valid protest is counted for the account. If written protests are filed by a majority (50% + 1), the proposed water rate structure and rates may not be imposed. A majority of the City's 15,794 water customers is 7,898. As of May 13, 2021, a total of 192 water and 196 sewer written protests were received by the Office of the City Clerk. All protests will need to be validated regarding property ownership and duplicate addresses. The City Clerk will provide an updated summary of the protests received at the conclusion of the public hearing on June 15, 2021. Previous Council or Advisory Body Action In May 2018, the City Council reviewed the "Comprehensive Water & Wastewater Rate Study." In June 2020, the City Council deferred the adopted 5.5% water and 5.0% sewer 2020-21 rate increase. In December 2020, the City Council implemented the adopted 2020-21 rate increase at a lower level: 3.6% for water and 3.6% for sewer. Policy Context Water and sewer rates are subject to the requirements of Article XIIID, 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 2021. 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 15,794 water and sewer customers had protested the proposed rate increase as of May 13, 2021. If the rate increase is approved, customers will be notified of the July 1, 2021 rate increase via utility bill insert, social media, and the City website. CONCURRENCE The City's Finance Department concurs with the recommended action. Page 172 of 422 Item 7a ENVIRONMENTAL REVIEW 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: Yes Budget Year: 2022 and 2023 Funding Identified: N/A Fiscal Analysis: Current Rate Recommended Rate Revenue Funding Revenue Increase Budget with Sources Budget Increase Water Fund $22,482,863 $786,900 $23,269,763 Sewer Fund $17,395,214 $608,832 $18,004,046 Total $39,878,077 $1,395,732 $41,273,809 The proposed rate increase will increase water sales revenue by $786,900 in 2021-22 and will increase sewer sales revenue by $608,832 in 2021-22. This additional revenue was included in the water and sewer budget adopted on June 1, 2021. 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 for water or sewer, not both. This is not recommended because the health of both the Water and Sewer funds and their ability to provide essential services relies upon rate increases. 3. Approve a rate increase that is less than 3.5%. 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. ATTACHMENTS A — Draft Resolution B — Proposition 218 Notification Page 173 of 422 Page 174 of 422 RESOLUTION NO. (2021 SERIES) A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, ESTABLISHING WATER AND SEWER RATES FOR FISCAL YEARS 2021-22 AND 2022-23 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 and sewer rate study was completed in May 2018 by HDR Engineering, Inc including analysis of Water and Sewer Fund operating, capital, and debt service needs for fiscal years 2018-19 through 2022-23; and WHEREAS, a water and sewer rate study update was completed in March 2021 by HDR Engineering, Inc. including analysis of Water and Sewer Fund operating, capital, and debt service needs for fiscal years 2021-22 through 2022-23; and WHEREAS, on June 1, 2021 the City Council reviewed the Water and Sewer Fund based on updated revenue and expenditure information necessary to meet system operating, capital, and debt service requirements; and WHEREAS, a public hearing was properly noticed and held on June 15, 2021; 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: SECTION 1. The water rates, and water system access charges set forth in Exhibit "A" are hereby adopted, establishing water rates, and water system access charges effective July 1, 2021 and July 1, 2022. Resolution No. 11202 (2020 Series) is hereby rescinded effective 11:59 p.m. June 30, 2021. IV Page 175 of 422 Resolution No. (2021 Series) Page 2 SECTION 2. The sewer rates set forth in Exhibit "B" are hereby adopted, establishing sewer rates effective July 1, 2021 and July 1, 2022. Resolution No. 11202 (2020 Series) is hereby rescinded effective 11:59 p.m. June 30, 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 day of 2021. Mayor Heidi Harmon ATTEST: Teresa Purrington City Clerk APPROVED AS TO FORM: 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, on Teresa Purrington City Clerk IV Page 176 of 422 Resolution No. (2021 Series) Page 3 EXHIBIT A: 2021-22 and 2022-23 Water Rates Residential: Proposed 2021-22 Rates Proposed 2022-23 Rates Monthly Base Fee 1$23.31 $24.12 Usage (per unit cost)' Tier 1: 0 to 5 units $6.67 $6.90 Tier 2: 6 to 12 units $7.77 $8.04 Tier 3: 13+ units $14.24 $14.74 Multi -Family, Non -Residential, Irrigation: Proposed 2021-22 Rates Proposed 2022-23 Rates Base Fee by Water Meter Size 3/4 inch or less $23.31 $24.12 1-inch meter $38.92 $40.28 1.5-inch meter $77.67 $80.38 2-inch meter $124.26 $128.61 3-inch meter $233.15 $241.31 4-inch meter $388.64 $402.24 6-inch meter $777.10 $804.30 8-inch meter $1,243.40 $1,286.92 Usage (per unit cost)' Multi -Family - all use $7.62 $7.88 Non -Residential - all use $9.24 $9.57 Landscape Irrigation - all use $11.33 $11.73 Water System Access $94.54 $97.85 Charge 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. IV Page 177 of 422 Resolution No. (2021 Series) Page 4 EXHIBIT B: 2021-22 and 2022-23 Sewer Rates Residential: Proposed 2021-22 Rates Proposed 2022-23 Rates Monthly Base Fee 1$21.15 $21.89 Usage (per unit cost)' 1$8.88 $9.19 Multi -Family and Non -Residential: Proposed 2021-22 Rates Proposed 2022-23 Rates Base Fee by Water Meter Size 3/4 inch or less $21.15 $21.89 1-inch meter $35.31 $36.55 1.5-inch meter $70.40 $72.86 2-inch meter $112.69 $116.63 3-inch meter $211.43 $218.83 4-inch meter $352.45 $364.78 6-inch meter $704.68 $729.34 8-inch meter $1,127.53 $1,166.99 10-inch meter $1,620.99 $1,677.72 Usage (per unit cost)' 1$8.88 $9.19 NOTES: 1. One Unit = 748 Gallons IV Page 178 of 422 NOTICE OF PUBLIC HEARINGS FOR PROPOSED RATE INCREASES FOR WATER AND SEWER SERVICES This notice is provided to all property owners and customers who currently receive water and sewer services from the City of San Luis Obispo. The San Luis Obispo City Council will be holding public hearings to consider proposed adjustments to water and sewer rates. The hearings will be held on: DATE: June 15, 2021 TIME: 6:00 PM PLACE: Webinar https://www.slocity.org/government/mayor-and-city-council/agendas-and-minutes The public hearings will cover the proposed rate increases over two years (from July 1, 2021 to June 30, 2022 and from July 1, 2022 to June 30, 2023) for water and sewer services. If adopted, the proposed rate increases will become effective on July 1, 2021 and on July 1, 2022. This Notice of Public Hearings provides information about increases to the City's water and sewer rates pursuant to the requirements of California Constitution Article Xlll (commonly referred to as Proposition 218). This notice provides information on (1) reasons for the rate adjustments, (2) how water and sewer rates are calculated, (3) how customers can receive more information on the effect of the proposed changes to their water and sewer bills, and (4) how to file a protest against the proposed rate increases. What is Proposition 218? In November 1996, California voters approved Proposition 218. As a result, California agencies must comply with its requirements when setting utility rates. One provision requires that a noticed public hearing on utility rates be held and that rates not be increased if a majority of affected property owners protest the increased rates in writing. Why Are Increased Water and Sewer Rates Necessary? Several factors drive the need to increase the City's water and sewer rates, some of which are: • Infrastructure age and condition Regulatory requirements • Increased equipment, maintenance, and operational costs • Bond financing requirements (debt covenants) What Do Water and Sewer Rates Pay For? The City's water and sewer operations rely on rate revenue to pay for operation and maintenance, infrastructure replacement, and debt service. General funds (such as property tax or sales tax) do not support these essential services. Utilities must generate sufficient income through water and sewer rates to cover expenditures, debt service, and maintain a reasonable operating reserve. Water and sewer services are provided 24 hours a day, seven days a week, 365 days a year. Rates for both water and sewer service include maintaining and replacing critical infrastructure, meeting regulations related to public health, and paying the people who provide these essential services. Water rates pay for all costs associated with bringing water from surface reservoirs to the City's water treatment plant and distributing drinking water to over 15,000 connections. Sewer rates pay for all costs associated with the conveyance of disposed water from each connection to the facility where the wastewater is treated and valuable resources, such as energy, recycled water, and compost, are recovered. The treated water is used for irrigation or discharged into San Luis Obispo Creek for wildlife habitat. Page 179 of 422 The proportionate share of system expansion costs to serve new development is recovered through water and wastewater development impact fees imposed on the developer requesting City services. By State law (Assembly Bill 1600), the City may not collect more revenue than is necessary to recover the costs of providing services. Basis Upon Which Water and Sewer Rates Are Calculated The proposed rates are calculated to recover the cost of providing water and sewer services and to proportionately allocate the costs among the users. To derive the proportionality, the City completed a comprehensive Cost of Services Study in 2018 to look out five years. Additional analysis was conducted in 2021 to confirm revenue projections and expenses and determine the proposed water and sewer rates for the next two fiscal years. The water and sewer rate structures, updated in 2018, recognize different customer classes and their proportionate costs associated with the system. Based on the analysis, water rates are proposed to increase 3.5 percent in 2021-22 and 3.5 percent in 2022-23, and sewer rates are proposed to increase 3.5 percent in 2021-22 and 3.5 percent in 2022-23. If approved, the proposed water and sewer rates would become effective on July 1 of each fiscal year. WATER RATES Residential: Current Rates' Proposed Proposed 2021-22 Rates 2022-23 Rates Monthly Base Fee 1 $22.52 $23.31 $24.12 Usage (per unit cost)2 Tier 1: 0 to 5 units $6.44 $6.67 $6.90 Tier 2: 6 to 12 units $7.51 $7.77 $8.04 Tier 3: 13+ units $13.76 $14.24 $14.74 Multi -Family, Non -Residential, Irrigation: Current Rates' Proposed 2021-22 Rates Proposed 2022-23 Rates Base Fee by Water Meter Size Monthly Base Fee % inch or less $22.52 $23.31 $24.12 1-inch meter $37.60 $38.92 $40.28 1.5-inch meter $75.04 $77.67 $80.38 2-inch meter $120.06 $124.26 $128.61 3-inch meter $225.27 $233.15 $241.31 4-inch meter $375.50 $388.64 $402.24 6-inch meter $750.82 $777.10 $804.30 8-inch meter $1,201.35 $1,243.40 $1,286.92 Usage (per unit cost)2 Per Unit Cost Multi -Family -all use $7.36 $7.62 $7.88 Non -Residential - all use $8.93 $9.24 $9.57 Landscape Irrigation -all use $10.95 $11.33 $11.73 Water System Access Charge3 1 $91.34 1 $94.54 $97.85 WATER RATES NOTES: 1. Current rates effective February, 12021 (deferred July 2020) 2. One Unit = 748 Gallons 3. This charge applies where the City provides fire protection only to businesses that utilize a private well for domestic purposes. Page 180 of 422 SEWER RATES For single-family and multi -family residential customers, a winter water use average is the three-month average of water use during December, January, and February. This is also referred to as a "sewer cap" and is the basis of the usage portion of the customer's monthly sewer charges. For non-residential customers, all "usage" is based on monthly metered water consumption. Usage: Current Ratesl Proposed Proposed 2021-22 Rates 2022-23 Rates Single -Family and Multi -Family Residential $8.58 $8.88 $9.19 Per Unit Cost (Up to Sewer Cap)Z I Non -Residential Per Unit Cost (for All Water Consumption)z $8.58 I $8.88 $9.19 Monthly Base Fee: Current Ratesl Proposed Proposed 1 2021-22 Rates 2022-23 Rates Single -Family Residential $20.43 $21.15 f $21.89 Multi -Family and Non -Residential _ByWater Meter Size: _ 3/ inch or less _ $20.43 $21.15 $21.89 1-inch meter _ $34.12 $35.31 $36.55 1.5-inch meter $68.02 $70.40 $72.86 2-inch meter $108.88 $112.69 $116.63 3-inch meter $204.28 $211.43 $218.83 4-inch meter $340.53 $352.45 $364.78 6-inch meter $680.85 $704.68 $729.34 8-inch meter $1089.40 $1,127.53 $1,166.99 10-inch meter $1,566.17 $1,620.99 $1,677.72 SEWER RATES NOTES: Current rates effective February 1, 2021 (deferred July 2020) One Unit = 748 Gallons How would the Proposed Rate Increases Impact my Water and Sewer Bill? Under the proposed rate changes, a typical single-family home using six units of water per month can expect the water portion of their monthly bill to increase from $62.23 to $64.43 in July 2021, and to $66.66 in July 2022. A typical single- family home with a sewer cap of four units can expect the sewer portion of their monthly bill to increase from $54.75 to $56.67 in July 2021, and to $58.65 in July 2022. Average Monthly Residential Bill under Current Rates Average Monthly Residential Bill under Proposed Rates 2021-22 Rates, Effective July 1, 2021 2022-23 Rates, Effective July 1 2022 Water (base fee + six units) $62.23 $64.43 $66.66 Sewer (base fee +four units) $54.75 $56.67 $58.65 Total Monthly Bill: $116.98 $121.10 $125.31 How Can I Find Out More About the Proposed Rate Increases? To calculate how the proposed water and sewer rates affect your bill, visit www.slocity.org/waterservice and click on "Calculate My Bill". If you keep your monthly water and sewer bill, you can look back at the units of water used and your residential sewer cap to determine how the proposed rate will impact your bill. Look up your bill online by going to www.slocity.org/ub and click "Online Payments" followed by "Pay Utility Bill". Please call the City of San Luis Obispo Utilities Department at 805-781-7133 for assistance. Page 181 of 422 Utilities Department 879 Morro Street, San Luis Obispo, CA 93401 PRESORTED STANDARD U.S. POSTAGE PAID CENTRAL COAST PRINTING How Do I Protest the Proposed Water and/or Sewer Rate? Under Proposition 218, if you are the owner of record of a parcel or parcels or a tenant directly liable for payment of the water and sewer bill, you may submit a written protest against the proposed changes to the water or sewer rates presented in this notice. Only one written protest per affected property will be counted towards the majority protest. If written protests are filed by a majority of the affected parcel owners and/or customers, the proposed rate increases will not be imposed. Althoueh oral comments at the public hearine will not aualifv as formal nrotpsts unless accomnanied by a written protest, the Mayor and City Council welcome input from the community during the public hearing. It Is Important to Follow These Instructions for Your Protest to Be Valid: 1. The protest must be submitted and received by the City Clerk at or before the end of the public hearing on Tuesday, June 15, 2021. Written protests may be mailed or personally delivered to the City of San Luis Obispo, City Clerk Office, 990 Palm Street, San Luis Obispo, CA 93401. E-mail and fax protests will not be valid. 2. The box(es) identifying that you are protesting the water and/or sewer rates must be checked. 3. The written protest must contain the service address. 4. The protest must be signed by either the account holder or the property owner of the service address. The protest form provided below is your official form. This form can either be mailed or personally delivered to the City of San Luis Obispo, City Clerk Office, 990 Palm Street, San Luis Obispo, CA 93401. For owners of multiple properties, additional protest forms are available at the City Clerk Office. 9 ..--------- ------ ------ ............. .... --- -- j ----- PROPOSED WATER AND/OR SEWER RATE INCREASE PROTEST FORM NAME (please print): SERVICE ADDRESS (please print): DATE: o I am protesting the proposed Sewer Rate (check the box) ❑ 1 am protesting the proposed Water Rate (check the box) SIGNATURE (above) ❑ Property Owner o Account Holder Page 182 of 422 Water and Sewer Rate Review Presented by Jennifer Thompson, Utilities Business Manager ■ June 15, 2021 Rate Changes Fiscal Year WATER SEWER 2019-20 5.5% 5.5% July 1, 2019 2020-21 � 50-0 -`d July 1, 2020 2020-21 3.6% 3.6% February 1, 2021 2021-22 3.5% 3.5% July 1, 2021 2022-23 3.5% 3.5% July 1, 2022 Implemented Deferred Implemented at Lower Rate Proposed at Lower Rate Proposed at Lower Rate Slide 2 TJ1 Thompson, Jennifer, 6/7/2021 Rate Confirmation Study ■ Water & Sewer Comprehensive Rate Structure Study was completed by HDR in 2018 ■ Water & Sewer Rate Confirmation Study was completed by HDR in 2021 ■ Recommended lower than previously projected rate increases due to new revenue sources and refined budgeting methods New Revenue &Refined Revenue Budgets Capacity & Operational Resiliency 2% of previous year-end working capital r� Based upon average development activity over next five years Water and Sewer Grants Overview Since 2018 Sewer SRF Loan Forgiveness Sewer Flood Protection Sewer Nutrient Removal & Disinfection Sewer Value Engineering Water Energy Resiliency Water Groundwater Expansion Water Groundwater Sustainability Plan TOTAL WRRF Upgrade $4,000,000 WRRF Upgrade $2,077,100 WRRF Upgrade $1,314,530 WRRF Upgrade $78,125 WTP Generator $800,000 Groundwater Plume $1,196,575 Characterization Study Sustainable Groundwater $256,395 Management Act $9,002,725 Proposition 218 Notification Notice of Public Hearing ✓ Legal notification 45 days prior to public hearing ✓ June 15 hearing date, official notification date of May 1 ✓ April 28 the City mailed over 19,900 notices ✓ Notices are provided to property owners and account holders ✓ The form identified two potential protest items: 1) Water Rate 2) Sewer Rate City of San Luis Obispo Utilities Department IIa NOTIS OF P LIC IIEARINM FOR PROPOSED RATE INOlE S FOR WATER AND SEWER SEMICES ThY n.so YPnW1,. J..wy wrsM om.n„n xM.unn4 iwln wr, >✓ awx „nta Fw PA, —tmi wnr Y ProPni=iu, � Ier .�..ma.e r„ee..a�.>IY ,.. awc •,� �e«+. .wrm.w� n a;.. �.w;�,.a.e�+an..a.a.w.er.,.r.d�..,.w�.�w�w.I,e..+o•A..wwur . ,.... ro. w......w r..y..r r.rr„w..r.v...r r... d. Ya....a..,.. Y..N.e �Ar..«.. a.. b'r •,d 5ww Aw N.rwwryr wgiu,oNR� rnww,Mna�.«.n,o •«owr,w cox,Nnowrr,mnnl Proposition 218 Notification Protest Validation - Water ✓ A protest is valid when received from a property owner or an account holder responsible for water service charges ✓ One protest is valid per service address ✓ Customer may protest the water rate, the sewer rate, or both ✓ 15,835 active accounts ✓ 7,918 protests required to establish a successful protest (50% +1) City of San Luis Obispo Utilities Department ✓,U NOTW[ OF R11C1e EARMGS FOR RROROSEDRATEJNCkE ltlr A WA1ER AND SEWER SERVICES Tlr mb�. n v..k.d t. A waprh mnw.. wY md..na wAo avn.t4 r.aw. w.,w N.n..r .n.x.. Trwn w Gry d 5� IM. dwp. !hr Sw Im. 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Proposition 218 Notification Protest Validation - Sewer ✓ A protest is valid when received from a property owner or an account holder responsible for water service charges ✓ One protest is valid per service address ✓ Customer may protest the water rate, the sewer rate, or both ✓ 15,305 active accounts ✓ 7,653 protests required to establish a successful protest (50% +1) City of San Luis Obispo Utilities Department ✓IU NOTICE OF PL08LK HFARWC.S FOR PROPOSED RATE INCREASES FOR WATERANDSFWFRSER FS tl.. GrydS.,r.db.w�.5. nn��<a.d.�b.eWie. e,M,h..•em- .aK.e vsAcc w.bi.. ham../lw.�.bero'e,t/tw.......m/mm.-.nd<M-r..MilKn.d.•_..d _n.e.mn wh. 4 ONp.N�m 2M ,I�..w..oe E..z.....d A.....Pq.i.N...d rw.ay o...... a.a.n.A..z.....d.n.......� wM M tiw..r.e W.. ne S-. lbw NK—,? ti.cM'. wnw Na•.w...r.um+,.l.m r.b n.wum Vw bw.nb,s.,tl wnnnw..,�rna...u• �.c�+a.�w�t..A e.e. w..f Jrvd.IwAn peygweWnwlM N...9F.. tl..rx..+eJ w.un ..x w..t^[�......wmw,.....w...,...vNduAw.. M,....�M+...+.3ss a.n..... .a+W wM bry.e..aw Gem me.O.y.w .xn M.'..N Maibn.�ew�t 15p00 m.�4.a S.w nw pry W tlrww..N[:ro1.M e. om.w.rt.WMeoW ..w M1an ..m rrwmn uaA.lreq dw.. W w.e..nr nerved W ..lull. n.n.rrK...h n w.b...n..d...r.•+e .a..Ktw......rd e...e.w...w.e k..rs.W enl.bwly ue...wRGTr..+r h su.I.w U..�+b N IwPA eh. T+eT n..•n N..s..a.. n..�..nr� a..asry m..o-« a.awtl.ro-�.e...r.. Water Supply as far as 50 Miles Away Maintenance Reduce I & I �. Increas Capacity 01 S ` I 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 and WRRF Shop Facilities Impact to Average Customer Bill $1.94 $0.10 u Customer Assistance Program C 15% Water and Sewer Bill Discount www.slocity.org/ub Eligibility Requirements A. Individually Metered Residences B. Customer Occupied C. Meets Income Requirements: 1. CalWorks 2. CalFresh (food stamps) 3. Medi-Cal 4. Supplemental Security Income/State Supplementary Payment Program 5. Household income at the service address below 200% of the Federal Poverty line 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 Years 2021-22 and 2022-231" effective July 1, 2021 and July 1, 2022. Proposition 218 Official Protest Count —Water Rates Mayor Open the Public Hearing Call for any written protests from the public Receive public comments Close the Public Hearing City Clerk Confirm number of written protests received Confirm total number of valid protests Council may not adopt the proposed rates if 7,918 valid protests (50% plus 1) are filed. Proposition 218 Official Protest Count —Sewer Rates Mayor Open the Public Hearing Call for any written protests from the public Receive public comments Close the Public Hearing City Clerk Confirm number of written protests received Confirm total number of valid protests Council may not adopt the proposed rates if 7,653 valid protests (50% plus 1) are filed.