HomeMy WebLinkAbout06/07/1994, C-11 - RECAP OF WATER AND SEWER FUND REVENUES �"c E IN AGENDA
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MEMORANDUM
June 3, 1994
TO: City Council
FROM: John Dunn, City Administrative Offic
SUBJECT: RECAP OF WATER AND SEWER REVENUES
Mayor Pinard requested the attached information regarding water and sealer revenues since
1987. With the upcoming review of water and sewer rates on the June 7, 1994 agenda, I
thought all Councilmembers would appreciate this material.
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�Illry�lyllln,llllln��n„III MEETING DATE:
NNW II�h���IIIIUI
CI-W o� san tal s OBISPO
COUNCIL AGENDA REPORT ITEM NUMBER:
FROM: William C. Statler, Director of Finance
Prepared by: Linda Asprion, Revenue Manager, ;
SUBJECT: WATER AND SEWER RATE REVIEWS
CAO RECOMMENDATION
Receive and file water and sewer rate reviews.
DISCUSSION
Summary of Key Water Rate Review Conclusions
■ The rate increase (6.5%) previously approved by the Council for July 1994, under our
multi-year rate setting strategy, will be adequate to support water operations for 1994-
95; no additional action by the Council is required.
■ Unreserved fund balance at the end of 1996-97 is projected to meet our 20% fund
balance requirement. However, it is anticipated that they will be temporarily less than
this target (16%) at the end of 1995-96.
■ A modest rate increase is projected after 1994-95 (3.5% in 1995-96).
Summary of Key Sewer Rate Review Conclusions
■ The rate increase (5.4%) previously approved by the Council for July 1994, under our
multi-year rate setting strategy, will be adequate to support sewer operations for 1994-
95; no additional action by the Council is required.
■ Unreserved fund balance at the end of 1996-97 is projected to meet our 20% fund
balance requirement. However, it is anticipated that they will be temporarily less than
this target (17%) at the end of 1995-96.
■ Modest rate increases are projected after 1994-95 (7.5% in 1995-96 and 7% in 1996-
97).
Background
Financial Plan policies require the City to perform an annual review of the financial needs of .
the water and sewer funds and adjust fees and rate structures as required to ensure that they
remain appropriate and equitable. Fees and rates are to be set at levels which will fully cover
the total cost of providing these services, including operations, capital outlay, and debt service.
This report analyzes the revenue requirements of the water and sewer funds based on 1993-94
approved budget changes and the preliminary 1994-95 budget.
����H�►�I►IIVI�II��u►j���U City Of San Luis OBISPO
COUNCIL AGENDA REPORT
The accompanying rate reviews reflect the Council's multi-year rate setting strategy. In June
of 1992, the Council reviewed an updated financial plan and adopted monthly rates for sewer
service charges through 1994-95. In September of 1993, the Council reviewed a water fund
analysis and again adopted rates for water service charges through 1994-95. These adopted
rates, as provided in Attachments A and B, remain valid and no changes in currently adopted
rates are recommended.
Water Fund Rate Review
As adopted by the Council in May of 1988, the City's water rate review should accomplish the
following objectives:
■ Comply with legal requirements
■ Ensure revenue adequacy to fully meet system operating and capital needs
■ Encourage conservation
■ Provide equity and fairness between classes of customers
■ Be easy to understand by our customers and easy to administer
■ Provide for ongoing review in order to facilitate rate stability
This review of the water fund has been performed with these goals and philosophy in mind.
Provided in Exhibit la is a summary projection of revenues, expenditures and changes in
financial position for the water fund through fiscal year 1997-98. Exhibit lb provides the
assumptions used in this financial position projection with Exhibit lc detailing the capital
improvement plan for the water fund.
Summary of Key Assumptions
The following is. a summary of key assumptions for expenditures and revenues:
■ Water conservation from 1987 levels is projected to be 27.5% in 1994-95, 22.5% in
1995-96, and 20 % in 1996-97 and 1997-98.
■ Operations and maintenance costs for 1994-95 are based on the 1993-95 Financial Plan
with annual increases based on an inflation rate .of 4% thereafter.
■ Debt service includes the 1993 Water Revenue Bond payment.
■ Water customer growth rate is projected at less than 1% until 1996-97.
■ Capital improvement charges are estimated as a percentage of the "base projection of
$688,400 at 1% growth rate and then discounted by 87% due to the retrofit credit
currently in place, which is projected to be discontinued with the construction of the
Salinas Reservoir expansion.
■ Connection and meter charges are projected at the inflation rate.
�/ -02
��►► ��i►►�VIIIII���h �����I11 City Of San LUIS OBISPO
i COUNCIL AGENDA REPORT
■ Account set-up fees, effective October 1, 1993, have been prorated for fiscal year
1993-94 with future years anticipated revenues of $75,000 annually.
■ Design costs in the amount of $1.3 million for the Salinas Reservoir expansion have
been rephased into 1994-95 and 1995-96.
■ Study costs in the amount of $384,000 for the Nacimiento project are included in the
1994-95 capital improvement plan.
Sewer Fund Rate Review
Exhibits 2a and 2b detail the rate requirements and assumptions used for the sewer fund
through 1997-98. Exhibit 2c details the capital improvement plan for the sewer fund and
reflects a $150,000 anticipated savings from the approved wastewater treatment plant budget.
Summary of Key Assumptions
The following is a summary of key assumptions for revenues and expenditures:
■ Expenditure requirements for operations, capital outlay, and debt service. Operating
expenditures are based upon the approved 1994-95 Preliminary Budget and increased
by 3.5% in 1995-96 and 4% each year for 1996-97 and 1997-98. Capital projects
included in the projection are those listed in the 1993-95 Financial Plan but reflect an
anticipated $150,000 savings on the wastewater treatment plant. Beginning in 1993-94,
debt service reflects the full amount of annual repayment of the State Revolving Fund
Loan.
■ Customer service growth. Since the City has not experienced the 1% growth adopted
in the growth management policy, we have assumed growth of.5% in 1994-95 and .7%
in 1995-96, and reverting to the 1% policy for 1996-97 and 1997-98.
■ Capital Improvement Charges. The projections used for capital improvement charges
reflect the indicated percentage of the "base projection" of $583,200 which would be
the revenue received with a 1% growth rate.
FISCAL IMPACT
Using the assumptions discussed above and the projected revenue and expenditures for 1993-94
and 1994-95, staff is recommending retaining the existing scheduled rate increases for 1994-95
for both the water and sewer funds. After 1994-95, a modest rate increase of 3.5% is projected
for the water fund. The sewer fund projections indicate a 7.5% rate increase will be required
for 1995-96 and a 7% rate increase for 1996-97.
Cri>3
��►►►i�► ►��IIIIIIIIIU ��lll city of San LUIS OBISpo
COUNCIL AGENDA REPORT
ATTACHMENTS
A. Current water service rate schedule
B. Current sewer service rate schedule
EXHIBITS
1. Water fund rate review
a. Changes in fund balance - water fund
b. Assumptions for water fund projections
C. Capital improvement plan for the water fund
2. Sewer fund rate review
a. Changes in fund balance - sewer fund
b. Assumptions for sewer fund projections
C. Capital improvement plan for the sewer fund
67
Resolution No. 8209 3 Series) Attachment.
RATES FOR WATER SERVICE
Monthly water service charges per hundred cubic feet of water (ccf) used per dwelling unit
for accounts classified as residential by the director of finance and per account for all other
users, are as follows:
Commoditv Charms Per CCF
Effective October 1, 1993 . Inside City Outside City
Construction Site Meters
0 to 1 ccf 5 2.45 S 4.90
In excess of 1 ccf thereafter $160.00 $325.00
All Others
1 to 5 ccf $ 2.45 $ 4.90
More than 5 ccf $ 3.05 S 6.10
Commodity Charges Per CCF
Effective July 1, 1994 Inside City Outside City
Construction Site Meters Only
0 to 1 ccf $ 2.60 $ 5.20
In excess of 1 ccf thereafter $170.00 $345.00
All Others
1 to 5 ccf S 2.60 5 5.20
More than 5 ccf S 3.25 $ . 6.50
4
Attachment: . .
MONTHLY SEWER SERVICE CHARGES.
Effective Dates
Type of Account 3/1/94 7/1/94
Single family dwelling, including $18.50 $19.50
single meter condominiums and townhouses
Multi-family dwelling unit in any duplex, $14.75 $1550
apartment house or roominghouse, per each dwelling unit
Mobile home or trailer park, per each dwelling unit $11.10 $11.70
Public, private, or parochial school, average daily S2.10 S 2.20
attendance at the school -
All other accounts
Minimum charge $18.50 519.50
Additional charge for every 100 cubic feet $ 2.20 S 2.30
in excess of 500 cubic feet of metered water
consumption
Each vehicle discharging sewer into City system
Minimum charge $62.00 S65.00
Additional charge per 100 gallons in excess $ 3.70 S3.90
of 1500 gallons discharged
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