HomeMy WebLinkAbout6/15/2021 Item 7a, Floyd/Thompson Staff Agenda Correspondence
Council Agenda Correspondence
City of San Luis Obispo, Council Memorandum
DATE: June 15, 2021
TO: Mayor and Council
FROM: Aaron Floyd, Utilities Director
Jennifer Thompson, Utilities Business Manager
VIA:Derek Johnson, City Manager
SUBJECT: Item 7.a WATER AND SEWER RATE HEARING
Attachedarecomments and correspondence enclosed with Proposition 218water and
sewer rate protests. The table on the first page contains comments written on Proposition
218 protest ballots. The following pages are correspondence received separate from
protest ballots.
Staff wishes to clarify some of the concerns raised in the attached correspondence:
Fixed vs. Volumetric Costs
In 2018, the City conducted a comprehensive water and sewer rate study. The primary
goal of that study was to ensure that the water and sewer rate structure is compliant with
the Proposition 218 proportionality requirement: the amount of a fee or charge imposed
upon a parcel or person as an incident of property ownership shall not exceed the
proportional costs of the service attributable to that parcel. The current rate structure was
specifically developed to focus on the proportional cost of service to each customer class
and the proportionality between the fixed and volumetric costs of service for each
customer class. Fixed rates are approximately 25% of water and sewer rate revenue and
volumetric rates are approximately 75% of water and sewer rate revenue. Rate increases
are equally applied to both fixed and volumetric costs to maintain the proportionality
between the two types of rates.
Development Contribution to Water and Sewer through Impact Fees
The comprehensive rate study also assumed that a portion of existing and future water
and sewer system improvements will be funded by new development through water and
wastewater development impact fees. Water and wastewater development impact fees
collected from new development offset rate increases because additional revenue from
development means that less revenue is needed from current rate payers. The improved
ability to project development impact fees, as discussed in the Council Agenda Report, is
one of the primary reasons that the current rate increase is less than originally projected.
Staff Agenda Correspondence for Item 7a Page 2
Sewer Caps (Average Winter Water Use)
but residential property sewer charges
tracked from December through February when irrigation systems should be off. The
average usage during those months becomes the maximum number of units that
customer will pay each month for sewer for the next year. The sewer cap should be close
to the amount that a property discharges into the sewer system because it does not
include irrigation use.
Customers are notified each year prior to the winter average period beginning so that they
are prepared to turn their irrigation water off or down.
Affordability and Customer Assistance Program
The Utilities department is aware that the water and sewer bill is a large expense for some
households. Proposition 218 requires that water and sewer rates not exceed the
reasonable cost to provide the service and that each customer only be charged what it
costs to provide their individual service. In short, one customer cannot subsidize another.
As such, it is difficult to legally offer customers discounted rates or fee waivers.
That being said, the City Council did adopt a revised, non-rate funded Customer
Assistance Program (CAP) on June 1. The purpose of the revised CAP is to allow more
customers to qualify for a 15% discount on their water and sewer bill. This program is
funded through late fees collected from customers who do not pay their bills on time. It is
important to note that all types of customers across the City are subject to the same,
already established, late fees. This includes large corporate customers, other businesses,
and all types of residential customers. All eligible customers are welcome to apply online
now at slocity.org/ub.