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HomeMy WebLinkAbout06/15/2004, PH7 - WATER AND WASTEWATER IMPACT FEES QoUnC■L Mcfim Ju D.e 15, . .June 2004 acEnaa Report �N �1 CITY OF SAN LUIS O B I S P O FROM: John M tilittes Director, and Bill Statler,Director of Finance Prepared y: Sue Baasch, Utilities Administrative Analyst SUBJECT: WATER AND WASTEWATER IMPACT FEES CAO RECOMMENDATION Adopt a resolution amending water and wastewater impact fees effective September 1, 2004. DISCUSSION Background In 1991, the Council adopted impact fees in order to implement the City's General Plan policy that new development pays its fair share of the water and wastewater facilities needed to serve new development. Water impact fees were increased in 1994 to reflect modified assumptions regarding water supply costs. Water and wastewater fees have also been adjusted annually by increases in the consumer price index. In a public hearing on April 16, 2002 Council considered the February 25, 2002 Water and Wastewater AB 1600 Fee Study Update, prepared by David Taussig and Associates, and adopted amended water and wastewater impact fees based on information provided in the report and the previously adopted Water and Wastewater Facilities Master Plans. These revised fees had an effective date of July 1, 2002. The water impact fee was later reduced; effective July 1, 2002, following the elimination of the reliability reserve and adoption of a revised water supply strategy presented with the 2002 Annual Water Resources Status Report. On February 10, 2004 Council directed staff to pursue participation in the Nacimiento Water Supply Project (project) at a participation rate of 3,380 acre-feet per year (afy). At that time, preliminary information on the project was provided to the Council that identified the estimated impacts of the project on water rates and water development impact fees. The fee modifications proposed by this report are directly related to implementation of the adopted Water and Wastewater Facilities Master Plans and a water supply strategy incorporating Council's direction to participate in the Nacimiento Pipeline Project. Water and wastewater development impact fees are developed under the guidelines of AB 1600, which requires a nexus between fees imposed, the use of the fees and the development projects on which the fees are imposed. Facilities Master Plans Implementation of the Water and Wastewater Facilities Master Plans began with the 2003-05 Financial Plan approval. Specifically we have awarded contracts for the design of the required improvements to our water treatment plant and the design of improvements to our wastewater facilities including the design of the Tank Farm lift station and improvements to our water i Council Agenda Report—Water and Wastewater Impact Fees Page 2 reclamation facility (WRF). Water treatment plant (WTP) improvements are well underway with design nearly complete and bidding and construction anticipated to occur in 2005. Design of the Tank Farm lift station and gravity sewer is nearing completion and studies of the required improvements to the WU are well underway. A CIP request for additional funding for the Water Treatment Plant Master Plan Improvements has been presented to Council on June 1, 2004, however no adjustment to the water development impact fee based on this request is recommended at this time. Staff recommends that any fee adjustments associated with the Water Treatment.Plant Master Plan Improvements be considered at a later date when design is complete and Council has acted on all proposed/required project elements. A CIP request for additional funding for the Tank Farm lift station and gravity sewer main was also presented to Council on June 1, 2004 with the 2004-05 Budget. This project is much simpler and better defined at this stage than the Water Treatment Plant Master Plan Improvements. Therefore, the increased costs associated with the Tank Farm lift station have been analyzed and incorporated into the wastewater impact fee analysis to ensure that new development continues to pay its prorata share of the facilities required to serve new development. This analysis (Attachment 3) identifies that no adjustment to the city-wide wastewater impact fee of $3,377 per Equivalent Dwelling Unit (EDU); to be effective July 1, 2004 is required. However, the area specific or "add-on" fees previously identified for the Airport/Margarita/Islay and Orcutt areas should be increased to cover new development's share of the increased costs identified for the new Tank Farm lift station and gravity sewer main which will serve those areas. The methodology used to calculate the revised add-on fees for these areas follows that methodology identified in the February 25, 2002 Water and Wastewater AB 1600 Fee Study Update prepared by David Taussig and Associates, Inc. The updated information, and the application of the fee development and allocation methodology, is further explained in the June 2004 Wastewater Development Impact Fees analysis prepared by the City Utilities Department and included as Attachment 2 to this report. The proposed amended fees per "Equivalent Dwelling Unit" (EDU) are as shown in Table 1 below. Table 1 "Add-on"Area Current Proposed Cilange Airport, Margarita, Edna-Islay $760 $1,489 $729 Orcutt $1,763 $2,717 $954 Nacimiento Water Supply Project On February 10, 2004 Council considered a variety of options and information regarding the City's possible participation in the Nacimiento Pipeline Project. At that time Council directed staff to consider participation in the project at 3,380 afy and to notify the County of San Luis Obispo of the City's intended participation. At the February 10 meeting, Council was presented with a preliminary analysis of water rate and impact fee changes associated with the City's participation. Projected impacts to water rates were presented to Council for adoption on June 1, 2004. The'proposed increase to water rates is in part, to pay the cost of the existing resident's prorata share of the project. Council Agenda Report—Water and Wastewater Impact Fees Page 3 The projected impacts to water development impact fees associated with the City's participation in the project have been analyzed in the June 2004 Water Development Impact Fees study prepared by the City Department of Finance and Information Technology (Attachment 3). The methodology used to allocate the cost of the project between existing residents and new development is fully explained in the attached study. Development impact fees are calculated on an IDU basis to recover that portion of the new water supply cost that is attributable to new development. The result of the analysis shows that it will be necessary to increase the water development impact fee by $5,551 to $13,967 per EDU to fund new development's share of the project. Also provided in the study is a comparison of water development impact fees of other local agencies. The City, with this fee increase, will be higher than most other cities. Discussions with local agency water managers, whose agencies are also participating in the project, indicate that their water development impact fees are likely to increase to levels comparable to those being considered by the Council. Public Notice On May 27, 2004 a Notice Regarding Proposed Fee Increases was sent to a list of interested parties in the development community and others, notifying them of the proposed water and wastewater development impact fee increases and the date of Council's consideration of these fees. This notice is included as Attachment 4 to this report. FISCAL IMPACT There are no direct fiscal impacts associated with adopting the proposed impact fees. In fact, their purpose is to avoid adverse fiscal impacts on our ratepayers by ensuring that new development pays its fair share of the water and wastewater improvements needed to serve new development. For a full discussion of the methodology used to calculate the required impact fees and the revenues they are intended to recover, please refer to Attachments 2 and 3 to this report. ALTERNATIVES 1. Defer adopting the updated fees. The.recommended fees are based on Council-adopted policies and the best information available at this time. Deferring adoption of the proposed fees will result in the City possibly not collecting the full amount of fees from new development in the interim, and those costs then being shifted to general-purpose rates. 2. Adopt lower fees. The technical justification and analyses associated. with the recommended fee increases are consistent with City policy and adopted procedure. At this time, there is no prepared analysis to support adoption of lower fees. 3, Do not adopt any revisions to current fees. As with Alternative 2, this would also be inconsistent with adopted City policy that new development "pay its own way." n Council Agenda Report—Water and Wastewater Impact Fees Page 4 Additionally, given the high cost of this infrastructure, this option would also result in higher general-purpose rate increases in the future than would otherwise be required ATTACHMENTS 1. Resolution amending water and wastewater impact fees 2. June 2004, Wastewater Development Impact Fee analysis, prepared by the City Utilities Department 3. June 2004, Water Development Impact Fees, Prepared by the Department of Finance and Information Technology 4. Notice Regarding Proposed Fee Increases Attachment 1 RESOLUTION NO. (2004 Series) A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO AMENDING WATER AND WASTEWATER IMPACT FEES WHEREAS, chapter 4.20.140 of the City of San Luis Obispo Municipal Code establishes water and wastewater connection fees, hereinafter referred to as impact fees, and provides for the setting of fee amounts and other matters by resolution of the Council; and WHEREAS, the Council has approved the WASTEWATER SYSTEM MASTER PLAN which identify needed improvements to the City's sewer systems to meet General Plan build-out; and WHEREAS, implementation of the Wastewater System Master Plan requires the construction of a new wastewater lift station on Tank Farm Road to serve existing and new development in the Airport/Margarita, Orcutt and Broad Street areas, and WHEREAS, updated cost information for the Tank Farm lift station necessitates updating the area specific "add-on" fees to address new development's share of the increased cost for the lift station, and WHEREAS, on February 10, 2004 the Council for the City of San Luis Obispo directed staff to proceed with participation in the NACIMIENTO PIPELINE WATER SUPPLY PROJECT to provide additional water supplies for new development and service reliability for existing customers, and WHEREAS, an analysis of the required amendments to both the water and wastewater impact fees to support the City's participation in the Nacimiento Pipeline Water Supply Project and the implementation of the Wastewater Master Plan Tank Farm lift station has been completed and amended fees identified as included in the attached Exhibits A and B, NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as that: SECTION 1. Findings. a. The purpose of water and wastewater impact fees is to protect the public health, safety, and general welfare by providing adequate water supply, treatment, distribution, and wastewater collection and treatment facilities to satisfy the needs of new development and to mitigate the impacts of new development on the City's water and wastewater facilities and improvements. b. The water and wastewater impact fees collected pursuant to this resolution shall be used only to pay for facilities and improvements identified in the impact fee analysis and shall not be in lieu of any other fee or tax as may be required by the,Municipal Code. C. There is a reasonable relationship between the types of development on which the impact fees are imposed and the use of the impact fees and the need for the facilities and improvements. r All new development requires adequate water supply, treatment and distribution as well as wastewater collection and treatment facilities to protect the public health and safety. d. There is a reasonable relationship between the amount of the fee and the cost of the facilities and improvements attributable to the developments on which the fees are imposed. The estimated costs of facilities and improvements, including financing costs, to be paid for by connection fees as shown in the February 25, 2002, Water and Wastewater AB 1600 Fee Study Update prepared by David Taussig and Associates Inc., , and amended by the June 2004 Wastewater Development Impact Fees analysis prepared by City of San Luis Obispo Utilities Department, and the June 2004, Water Development Impact Fees study prepared by the City of San Luis Obispo Department of Finance and Information Technology, have been allocated to new development on the basis of dwelling unit type (residential) or water meter size and estimated strength of sewer system discharge (non-residential), which are reasonably related to the water and wastewater facility capacity consumed by a development project. SECTION 2. Cost Estimates. At any time that the actual or estimated costs of facilities identified in the impact fee analysis changes, the Finance Director shall review the impact fees and determine whether the change affects the amount of the impact fees. If the impact fees are significantly affected, the Finance Director shall, within thirty (30) days, recommend to the Council a revised fee for their consideration. SECTION 3. Amount of Impact Fees Effective July 1, 2004, water and wastewater impact fees shall be in the amounts set forth in Exhibits A and B attached hereto. Unless otherwise acted upon by the Council, the amount of the fees will automatically be adjusted on July 1 of each subsequent year by the annual percentage change in the U.S. Bureau of Labor Statistics consumer price index for all urban consumers (CPI-U), all-cities average for the prior calendar year. Since the facilities and improvements for which connection fees are charged will be financed through bonds or other form of debt, the annual adjustments are indexed to consumer prices rather than construction costs. SECTION 4. Time of Payment a. Impact fees for any development project or portion thereof shall be payable prior to issuance of building permits required for that development, and shall be collected by the Building Official. Under Government Code Section 66007(b), the City is authorized to collect the fees at the time of building permit issuance because the fees are for public facilities and improvements for which an account has been established and funds appropriated, and for which the City has adopted a proposed construction schedule; or the fees are to reimburse the City for expenditures previously made. b. For any development project or portion thereof, impact fees shall be assessed at the time of application and remain valid for as long as the application is proceeding through valid processing as per the Uniform Administrative Code. l SECTION 5. Exemptions a. Fire Protection. Upgrading existing water serves and/or meters for the sole purpose of providing new or improved fire protection facilities shall be exempt form any impact fee provided for in this resolution. b. Landscape Irrigation. Any water services and/or meters installed solely for landscape irrigation purposes for properties with,existing water service shall be exempt from any impact fees provided for in this resolution. However, if an increase in water demand is required, the Utilities Director shall impose a water impact fee. SECTION 6. Separate Accounts The Finance Director shall deposit fees collected under this resolution in a separate water connection fee and wastewater connection fee accounts as required by Government Code Section 66006. Within sixty (60) days of the close of each fiscal year, the Finance Director shall make available to the public an accounting of the fund, and the City council shall review that information at its next regular public meeting. Upon motion of , seconded by and on the following roll call vote: AYES: NOES: ABSENT: the foregoing resolution was adopted this day of , 2004. Mayor Dave Romero ATTEST: Dianne Reynolds, Acting City Clerk APPROVED AS TO FORM: Jonathan iQw I , City Attorney Exhibit A WATER DEVELOPMENT IMPACT FEE Effective September 1, 2004 Area-Specific "Add-0n" Airport EDU` Citywide Margarita Residential: Per Unit Single Family Residential 1.0 $ 13,967 $ 779 Multi-Family Residential 0.8 11,174 623 Mobile Home 0.7 9,777 545 Non=Residential:,Meter Size %Inch 1.0 13,967 779 1 Inch 2.0 27,934 1,558 1'/:Inch 4.0 55,868 3,116 21nch 6.4 89,389 4,986 31nch 14.0 195,538 10,906 41nch 22.0 307,274 17,138 16 Inch 45.0 1 628,515 1 35,055 ' Equivalent Dwelling Unit �1 ^g Exhibit B WASTEWATER DEVELOPMENT IMPACT FEES Effective September 1, 2004 Impact Area-Specific"Add-On" Airport Dalidio Margarita Madonna Irish EDU* Citywide Edna-Islay McBride Hills Orcutt Residential Per Unit Single Family Residential 1.0 3,413 1,489 218 387 2,717 Multi-Family Residential 0.8 2,731 1,191 175 310 2,174 Mobile Home 0.6 2,048 893 131 232 1,902 Non-Residential Meter Size** 3/4 Inch 1.0 3,533 1,489 218 387 2,717 1Inch 2.0 7,066 2,978 437 775 5,434 IYz Inch 4.0 14,132 5,956 873 1,549 10,868 2Inch 6.4 22,611 9,530 1,398 2,479 17,389 3Inch 14.0 49,461 20,846 3,057 5,422 38,038 4Inch 22.0 77,724 32,758 4,804 8,520 59,774 6Inch 45.0 158,981 67,005 9,826 17,428 122,265 * Equivalent dwelling unit ** Citywide non-residential EDU is adjusted upwards by about 3.5%to account for higher discharge strengths e-) -9 Attachment 2 Wastewater Development Impact Fees June 2004 Prepared by the Utilities Department city of San WIS OBISPO *�l - 10 Attachment 2 2004 Wastewater Impact Fees City of San Luis Obispo Wastewater Impact Fee Methodology TABLE OF CONTENTS OVERVIEW Background Reliance on Existing Policies and Plans Wastewater Impact Fees Methodology Table 1 Wastewater Master Plan Per Day Flow Generation by Land Use Table 2 Calculation of Flow Based on Estimated Square Footage of Land Use type Table 3 Wastewater Master Plan Apportionment of Tank Farm Lift Station Costs Table 4 2002 Calculation of Unit Cost (Cost per Gallon per Day) Table 5 2004 Apportionment of Increased Tank Farm Lift Station Costs Table 6 2004 Update of Unit Cost (Cost per Gallon per Day) Table 7. 2004 Update of"Add-on" Fees by Residential and Non-Residential Table 8. Comparison of Current and Proposed Fees Exhibit A Table 8 from the David Taussig & Associates 2002 AB 1600 Fee Study Attachment 2 2004 Wastewater Impact Fees city of _p san Luis oBispo Wastewater Impact Fee Methodology OVERVIEW This report describes the steps used to analyze, set and update City of San Luis Obispo wastewater impact fees. Background In 2002, Council reviewed the results of the Water and Wastewater Engineering Master Plans and the recommendations for infrastructure and treatment improvements to ensure continued high quality water and sewer service to the community as the City developed according the approved General Plan. Some of the recommended infrastructure improvements were necessary to continue to meet regulatory requirements, some were to replace aging and over-capacity pipes and lift stations; some were to strengthen the system's ability to respond and recover from emergencies; and some were to allow the orderly development of the city according to the adopted General Plan. One of the major collection system improvements recommended in Brown and Caldwell's Wastewater Master Plan was the replacing and upgrading of the over-capacity Tank Farm Lift Station. Brown and Caldwell's recommendation was to construct a new pumping station to replace both the Tank Farm lift station, and the Rock View Pumping Station and Airport Lift Station Station, which were also over-capacity. The proposed new Tank Farm station would serve the existing population in that area of San Luis Obispo as well as have the capacity to collect and pump the future flows from the Airport, Edna Islay, Margarita and Orcun Annexations. In 2000 Brown and Caldwell estimated the project costs at $5.1 million and stated the estimate was +30%1-15%. Design is well underway and the estimate has been refined to $7.795 million, which includes both design and construction costs. How will the City pay for Tank Farm Lift Station and other the master plan improvements? Council has a policy of ensuring that new development pay for those improvements necessary to serve it. Rates recover the costs.of improvements that serve the existing population. Since the new Tank Farm Lift Station will serve both existing and new populations, a method of correctly apportioning the costs to both populations and the appropriate planning area was developed. J Attachment 2 2004 Wastewater Impact Fees Setting the level of Impact Fees Using the Brown and Caldwell's Wastewater Master Plan engineering analysis of City area flow characteristics and necessary wastewater improvements, the southern California firm of David Taussig & Associates, Inc., developed a methodology of how to fairly set impact fees citywide and in specific areas uniquely served by certain improvements. These are called "add-on" fees because they are in addition to the city-wide impact fees. In July 2002, the new 'impact fees were adopted. The Taussig 2002 methodology is detailed in the tables in this report. Updating the Impact Fees to reflect increased Tank Farm Lift Station Costs The 2004 recommended increases to the wastewater impact fees affect only the Airport/Margarita/Edna Islay and Orcutt areas. The increased construction costs and debt financing costs are allocated according to the Brown and Caldwell and Taussig methodologies previously used to determine the existing impact fees. The recommended fee changes increase the Airport/Margarita/Edna Islay"add-on'' fees from the current $747 to$1,489 per single family residential unit. The Orcutt area "add-on" fees increases from $1,730 to $2,717 per single family residential unit. Reliance on Existing Policies and Studies This methodology is consistent with the City's policy that new development should pay its fair share of the cost of building the facilities necessary to serve it. On the other hand, improvements that benefit existing development must be funded through general purpose rates. The City's existing General Plan is the basis for the estimate of future growth in the annexation areas of the City. Brown and Caldwell's October 2000 Wastewater Master Plan studied the necessary infrastructure improvements and associated costs needed to serve the current and future populations of the City. The 2002 Taussig and Associates AB 1600 Fee Study Update converts the engineering analysis and project costs into the City's equivalent dwelling unit structure and sets impact fees to recover the costs citywide and area by area. Overview of Methodology The approved General and Specific Plans identify certain amounts of new development for each land use type in each of the six annexation areas. The number of new residential dwelling units or commercial/ industrial square feet in each annexation area was then multiplied by the number of gallons per day of wastewater flow that was assumed for each land use type. The flow rates for each land use type were then summed to determine the flow rate in gallons per day. The next step was to relate the flows to the improvement costs. Constructions costs for the wastewater facilities improvements for each annexation Area were determined by Brown and Caldwell. The cost was then divided by the flow rate (gallons per day) for each land use type to ascertain a unit cost (dollars per gallon per day). That unit cost becomes the basis for conversion to the City's equivalent dwelling unit structure. Attachment 2 2004 Wastewater Impact Fees Land Use Assumptions New development in the City is classified as single or multi-family residential or non-residential retail, industrial, office, or motel land use. Each land use type is assumed to generate a standard number of gallons per day of flow. Steps in the Methodology: Step 1. Wastewater Master Plan Per Day Flow Generation by Land Use The allocation of costs between existing population and new development areas is based on calculation of flows and the assumptions of flow from particular land uses. Table 1 identifies the Wastewater Master Plan's assumption regarding flow based on land use type. Step 2. Calculation of Flow based on Estimated Square Footage of Land Use Type Planning has estimated the square footage of each land use type in the development areas. Table 2 shows that square footage and then provides a sum of the gallons per day of flow based on the typical flows for that land use type. This information is used in the calculation of unit costs, costs per gallon of flow per day, in Table 4. Step 3. Wastewater Master Plan Apportionment of Tank Farm Lift Station Costs The Wastewater Master Plan apportioned the Tank Farm Lift Station osts based on the estimated flows from existing population and the future annexation (development) areas. This information is presented in Table 3. The Wastewater Master Plan estimated that 32.5% of the flow to the Tank Farm Lift Station will be from existing population; 44.5% from the Airport area; 9.8% from the Edna Islay area; 7.4% from Margarita; and 5.8% from the Orcutt area. The original estimated of$5.1 million was apportioned based on this allocation of flow. Step 4. 2002 Calculation of Unit Cost(Costs per Gallon per Day) Using the estimate of flow rates from Table 2 and the cost allocation from Table 3, Taussig and Associates derived a "unit cost" to be applied to the City's impact fee structure, which is based on a single family residential flow of 190 gallons per day. The unit costs shown in Table 4 reflect paying for all the master plan improvements, not just Tank Farm Lift Station. For ease of administration because the unit costs were very close, the Airport Area, Edna-Islay and Margarita areas were combined into one area for the final steps in setting "add-on" area impact fees. Step 5. 2004 Apportionment of Increased Tank Farm Lift Station Costs Steps 1 — 4 describe the original 2002 fee setting methodology. Step 5 allocates the updated Tank Farm costs based on that methodology. The increased Tank Farm Costs assumes debt- financing $7.795 million at 3.5% over 30 years through the California Infrastructure and Economic Bank. The interest charges are about$4,439,200. Step 6. 2004 Update of Unit Cost(Costs per Gallon per Day) Unit costs that are the basis of the impact fee structure are recalculated using the increased Tank Farm Lift Station costs. The average unit cost for the Airport/Edna-Islay/Margarita area is increased to 7.84. The unit cost for the Orcutt area is increased to 14.30. The unit costs are the multiplier for the assumed flow from a single family home, 190 gallons per day. When 7.84 is multiplied by 190 gallons, the Airport/Edna Islay/Margarita area add-on fee becomes $1,489. When 14.30 is multiplied by 190 gallons, the updated add-on fee for the Orcutt area becomes. $2,717.. e-104 Attachment 2 2004 Wastewater Impact Fees Step 7. 2004 Updated "Add-On Fees for Airport/Edna Islay/Margarita and Orcutt Areas. As stated in step 6, this table is based on the flow from a single family residential. Population census data is used to derive the population per household in multifamily and mobile homes. Step 8. Compare current and proposed fees for Airport/Edna Islay/Margarita and Orcutt Areas. The following tables are based on the David Taussig & Associates AB 1600 Fee Study. A copy of Table 8 from that study is an exhibit to this report to clarify the basis of the numbers included in this methodology and analysis. Tablel. Wastewater Master Plan Per Day Flow Generation by Land Use Land Use Unit of Measure Gallons Per Da Single Family Dwelling Dwelling Unit 190 Multi-Family Dwelling Dwelling Unit 120 Retail 1000 sf of floor area 200 Manufacturing 1000 sf of floor area 120 Office 1000 sf of floor area 190 Motel/Hotel Room 120 Table 2. Calculation of Flow based on Estimated Square Footage of Land Use Type Dalido Edna- Irish City Land Use Type Airport Madonna Margarita Orcutt McBride Islay Hills Wide Single Family(DU) @ 190 444 130 582 250 gal/day Multi-Family(DU) @ 120 220 162 370 653 251 gal/day Retail ®200 gal/day 420,000 129,000 237,000 Industrial ® 120 gal/day 2,212,000 440,000 Office @ 190 gaVday 2,270,000 20,000 Motel(rooms @ 120 gal/day) 100 FLOW RATE Gallons/Day 696,740 110,400 1 131,500 1 116,500 245,552 77,620 1,378,312 Table 3. Wastewater Master Plan Apportionment of Tank Farm Lift Station Costs Tank Farm Capital Improvement Costs Apportioned Based on Estimated Flows from Existing Population and Future.Annexation Areas Percentage of Pumping Station Connecting Pipe Area of the City Total Cost Conceptual Cost Conceptual Total Capital Cost City(Replace 32.5 360,000 1,300,000 1,660,000 Existing Airport 44.5 490,000 1,780,000 2,270,000 Edna Islay 9.8 110,000 390,000 500,000 Margarita 7.4 80,000 300,000 380,000 Orcutt 5.8 60,000 230,000 290,000 Total 100.0 1,100,000 4,000,000 5,100,000 Attachment 2 2004 Wastewater Impact Fees Table 4. 2002 Calculation of Unit Cost(Costs per Gallon per Day) Airport Edna-Islay_ Margarita Orcutt Flow Rate 696,740 131,500 245,552 77,620 Tank Farm Cost 2,270,000 500,000 380,000 290,000 Unit Cost-2002 3.95' 3.80' 3.75' 8.89' Airport/Edna Islay/Margarita 3.83' Average ' All Wastewater Master Plan projects are includes in this unit cost calculation. Tank Farm is the major component. Table 5. 2004 Apportionment of Increased Tank Farm Lift Station Costs Tank Farm Capital Improvement Costs Apportioned Based on Estimated Flows from Existing Population and Future Annexation Areas Area of the City Perceonttal Cost ooff Current Basis Updated Basis' Variance Airport 44.5 2,270,000 5,444,200 3,174,200 Edna Islay 9.8 500,000 11199,000 699,000 Margarita 7.4 380,000 905,300 525,300 Orcutt 5.8 290,000 709,600 419,600 Area Subtotal 67.5% 3,440,000 8,258,100 4,818,100 Existing Population 32.5% 1,660,000 3,976,100 2,316,100 Total 100.00/0 5,100,000 12,234,200' 7,134,200 ' Updated basis includes$7.795 million Tank.Farm Lift Station and associated debt financing costs of$4,439,200. Assumed terms are 3.5%interest over thirty years through the California Infrastructure and Economic Development Bank. Table 6. 2004 Update of Unit Cost(Costs per Gallon per Day) Airport Edna-Islay Margarita Oretitt Flow Rate 696,740 131,500 245,552 77,620 Tank Farm Cost 5,444,200 1,199,000 905,300 709,600 Unit Cost-2004 8.51 9.12 5.89 14.30 AiporVEdna Islay/Margarita 784 Average 1 r` Attachment 2 2004 Wastewater Impact Fees Table 7. 2004 Updated Area "Add-On Fees"by Residential and Non-Residential Unit Airport/ Orcutt Edna Islay/ Margarita .. .- Single Family @ 190 gal/day Per D.U. 1,489 2,717 Multi-family @ 0.80 D.U. Per D.U. 1,191 2,174 Mobile Home @ 0.7 D.U. Per D.U. 1,042 1,902 act Fees-Non-Residential—3/4"meter 1.00 1,489 2,717 1 inch meter 2.00 2,978 5,434 1-1/2 inch meter 4.00 5,956 10,868 2 inch meter 6.40 9,530 17,389 3 inch meter 14.00 20,846 38,039 4 inch meter 22.00 32,758 59,776 6 inch meter 45.00 67,005 122,270 Table 8. Current and Proposed Fees for Airport/Edna Islay/Margarita and Orcutt Areas "Add-On"Area Current Proposed Change Airport, Margarita, Edna Isla $760 $1,489 $729 Orcutt $1,763 1 $2,717 $954 Attached: EXHIBIT A -Table 8 from the David Taussig and Associates 2002 AB 1600 Fee Study 1 r Exhibit A. O o ry T O O o. O ON M I A N � Cl) CD OO LO eplM 1 J 00N NN � ru'iN vaoorw r� � Clin of vi 69 c»c»u3 69 69 ( uA L_.l 0 00 0 00 ocOoLo o 0 000 rn My MCOCOrv � o unwo Iq In w M 0 a) mho m rri & m 0 N N n N V 0 O r w r M f O N M S I� fA fA d9 w w�69 EA w O O O co 0 O LO r� O 00 00 NTI� N V I� (O w N e;ue6�eW m MA 0 0 0 L O 00 Oo I� CO 04 r � pcob0 (00 o IA co O O to r co m N CD M 69 w 69 N C o to N V V N N fA fA VD EA to C � y r- 00 O- C Q' Q 0 0 0 0 O O O Cl) A V O r R toD M 1� r .T. 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R m 0 0 0 V O O O r L i- ~ j O O V r N V' O V N IO N ITC C C 0 m m m G d Cl m N N c m m (D in cm m c m °mm0T oN-O @� y V a m CU c oV N Eco 'O CO IoE E ao T0 a- mU) LL E m U c = r CL(r o o E o CL oU ° y OEcoo u % Q ami m ro � E E mN 0,) ca E ° CL ° CO6 coraQ C ° Ma V � CL U u O)� -' yv � E m p Ov m - U m aci U) y > Ud m y m a`) 0) E o o� m e `m LL c m '- m 3 3 m ° a) LLm o � � ° moin3m ° C � mo mmTELLE 0 myo0 _ LLLL W �• r0 7 U co y E= co fn H O.d V m m V M N E 'm d 61 d N 11 11 .C.. cnn O o o oar � U ac'� o a� E � EEEE omp J LL U E fn � � '� in04iovm - I Attachment 3 WATER DEVELOPMENT IMPACT FEES June 2004 Prepared by the Department of Finance & Information Technology City Of SAn tuis OBISPO city of San Luis OBISPO Water Development Impact Fees TABLE OF CONTENTS Overview Purpose 1 Scope: Types of Improvements and Area 1 Reliance on Existing Policies 1 Proposed Water Development Impact Fees Water Supply 1 Water Treatment and Distribution 2 Combined Fee 2 Affect of Water Supply Projects on Existing Users Water Supply Projects Also Benefit Existing Users 2 Impact on General-Purpose Rates 2 Affect of Affordable Housing Policies 3 Water Supply Summary of the Financing Methodology 3 Key Assumptions 4 Calculation of Water Supply Impact Fees Step 1: New Water Supply Requirements 4 Step 2: Water Supply Solutions 5 Step 3: Cost of New Water Supplies 6 Step 4: Allocation of Costs Between Existing Users and New Development 6 Step 5:Funding Strategies 6 Step 6: Recommended Water Development Impact Fees 7 Comparison of Proposed Fees with Other Agencies 9 Affect of Proposed Fees on Sample Non-Residential Projects 10 �� '4 v I City Of san Luis OBISPO Water Development Impact Fees June 2004 OVERVIEW Purpose This report sets forth an approach for funding water system improvements that is consistent with the City's policy that new development should pay its fair share of the cost of building the facilities necessary to serve it. In this analysis, impact fees are the recommended method for achieving this financing goal. Scope: Types of Improvements and Area The proposed fees cover three types of water system improvements: supply; treatment and distribution. While this report includes the combined fee for all three of these components, it focuses on water supply and relies upon a separate analysis previously prepared in conjunction with the Water Master Plan for treatment and distribution costs, which was approved by the Council in April 2002. Additionally, the proposed fee only addresses improvements that meet new development's share of system-wide requirements. In most cases, new development will also be required to directly make system improvements as a condition of development, such as "in tract" water lines. Moreover, there are supplemental "add-on" fees in the Airport and Margarita Areas to fund water system improvements that are unique to these areas. In these cases, both the system-wide and area-specific fees will apply. Reliance on Existing Policies The City's existing General Plan policies as set forth in the Land Use and Water-Wastewater Elements, combined with our most recent demographic and project cost data, are the basis for the proposed fees. Proposed Water Development Impact Fees Water Supply. As discussed in greater detail below, the proposed fee for water supply projects for single-family residential (SFR) uses is $12,774 per unit. While this is a significant increase ($5,551) from the current fee for the supply component of $7,223, it is consistent with the comparable fee (in 2004 dollars)of$10,546 that the Council adopted in April 2002, before costs were subsequently reduced in June 2002 to account for eliminating the 2,000 acre foot "reliability reserve." Compared with the current fee, the proposed fee has an added cost for new development's share (about 20%) of the "secondary water supply" provided by the water reuse Water Development Impact Fees Page 2 and Nacimiento pipeline projects of 2,574 acre feet annually. While this analysis also reflects several changes in assumptions and methodology from the April 2002 analysis (largely due to updated information), the addition of the Nacimiento pipeline project in helping meet Secondary Supply - . secondary supply requirements is the primary driver The concept of secondary water behind the change. requirements was discussed in detail in the report presented to the Council on Water Treatment and Distribution. The current fee March 9, 2004, when the Council (as of July 1, 2004) for water treatment and approved notifying the County of our distribution improvements per SFR unit is $1,193. intent subscribe for acre feet annuallll y from the Nacimmienien to pipeline This reflects new development's fair share of the project. Of this amount, in conjunction costs for these types of system-wide improvements. with 1,000 acre feet annually from the No changes to these components of the water water reuse project, 806 acre feet is impact fee are recommended at this time. needed to meet water demand requirements,with the balance of 2,574 allocated to secondary supply Combined Fee. The proposed combined fee for requirements. new development's fair share of planned water supply, treatment and distribution system improvements is $13,929 per SFR unit compared with the current combined fee of$8,416. As noted above, this large increase is primarily driven by added costs for the Nacimiento pipeline project. Affect of Water Supply Projects on Existing Users Water Supply Projects Also Benefit Existing Users. As noted above, the purpose of the proposed revision in water development impact fees is to implement the City's policy that new development should pay its fair share of the cost of building the facilities necessary to serve it. On the other hand, water system improvements that are intended to benefit existing development must be funded through general-purpose rates. As discussed more fully below, a large share of the City's future water supply will not be incurred for new development,but for current users. Why? Because the single largest component of our future water supply costs is to help meet our secondary supply needs (2,574 acre feet), which benefits both existing users and new development. Prorating this cost between our current population (44,000) and the one projected at build-out (56,000) means that about 80% of the cost of developing secondary water supplies (2,031 acre feet) needs to be funded by existing users, not new development. (Note: As detailed below, new development will be responsible for paying for its share of developing the secondary supply,which is the main driver for the impact fee increase recommended in this report). Combined with its share of the cost of offsetting lost "safe annual yield" due to reservoir siltation, this means that existing users (via general-purpose rates) are responsible for about 41% of the planned water supply project costs (Table 1.3 on page 6). Impact on General-Purpose Rates. On June 1, 2004, the Council reviewed a comprehensive analysis of the multi-year impact of the Nacimiento pipeline project on general-purpose water q.-4A, f � Water Development Impact Fees Page 3 rates. That analysis indicated that in conjunction with the impact fees recommended in this report, general-purpose rate increases ranging from 5% to 8% annually will be required over the next eight years in phasing in the rate-based revenues needed to support the Nacimiento project as well as other projected capital and increased operating cost requirements. Affect of Affordable Housing Policies. Under the City's affordable housing incentive policies, low and moderate income housing units developed by non-profit organizations (such as the Housing Authority or People's Self-Help Housing) are exempt from system-wide development impact fees. Additionally, affordable dwelling units built by the private sector in excess of required inclusionary housing requirements are also exempt from system-wide development impact fees. No adjustments have been made for this in the impact fee calculations. As such, to the extent that this occurs, impact fee revenues will be less than projected, and general-purpose rates will have to be raised to offset any resulting losses. However, this is consistent with the General Plan policies regarding new development paying its own way: LU 1.14: Costs of Growth. The costs of public facilities and services needed for new development shall be borne by the new development, unless the community chooses to help pay the costs for a certain development to obtain community-wide benefits. In this case, the,Council has determined that providing affordable housing incentives is one of these"community-wide"benefit situations. WATER SUPPLY Summary of the Financing Methodology There are six basic steps in developing recommended water impact fees for supply projects: 1. Determine water supply requirements and allocate them between existing users and new development based on: a. Projected water demand at General Plan build-out. b. Secondary supply requirements. c. Loss of supply capacity in reservoirs due to siltation. 2. Identify water supply solutions that will meet the City's needs through build-out. 3. Determine the costs of developing these additional water supplies on an annual basis. 4. Allocate these costs between existing users and new development. 5. Develop appropriate funding strategies in financing new water supply projects: a. Development impact fees for costs related to new development. b. General-purpose rate increases for costs related to existing users. � , a3 Water Development Impact Fees Page 4 6. Set water impact fees attributable to new development for residential and non-residential users based on "equivalent dwelling units." Key Assumptions The Tables 1 through 5 below detail the recommended funding strategy based on the following key assumptions: General Plan 1. Build-out population of 56,000. 2. 1%annual growth rate. 3. New development must pay its fair share of the cost of facilities needed to serve it. Water Supply and Demand 1. Demand based on 145 gallons per day per capita. (Note: As described in the Water- Wastewater Element of the General Plan, this encompasses both residential and non- residential uses.) 2. Current safe annual yield of 7,790 acre feet(before adjusting for siltation). 3. Siltation allowance of 500 acre feet. 4. Secondary supply needs calculated at 2,574 acre feet annually, based on new sources of supply of 4,380 acre feet (1,000 acre feet from water reuse and 3,380 acre feet from the Nacimiento pipeline project), less 1,306 acre feet to meet water demand and 500 acre feet for siltation allowance. 5. Specific water sources are not allocated between existing users and new development in accordance with the City's multi-source water policy (Section 7.0 of the Water-Wastewater Element). Step 1: New Water Supply Requirements The following three tables outline the City's additional water supply requirements and allocate them between existing users and new development on a prorated basis. As set forth in this analysis, the City plans to develop a safe annual yield of an additional 4,380 acre-feet (AF) annually; of this amount, 1,811 (41.4%) is attributable to existing users and 2,569 (58.6%) is attributable to new development. These three tables do this by: 1. Projecting demand based on a per capita planning ratio of 145 gallons per day per capita (GPD/PC) for existing users and new development (Table 1.1). 2. Determining new water supply requirements based on the difference between the current safe annual yield of 7,790 AF and the: projected demand based on per capita planning ratios l . >4 CJ Water Development Impact Fees Page 5 (9,096 AF); siltation allowance (500 AF); and the balance remaining for secondary supply needs (2,574 AF) based on developing 4,380 AF in new water supplies (Table 1.2). 3. Allocating new water supply requirements between existing users and new development (Table 1.3). Projected Demand Based on Per Capita Planning Ratio Table 1.1 Annual AF @ 145 Percent Population- - GPD/PC of Total Existing Users(State Population Estimate as of January 2004) 44,176 7,176 78.9% New Development 11,824 1,920 21.1% Total 56,000 9,096 100.0% New Water Supply Requirements Table 1.2 Required Safe Annual Yield 9,096 Current Safe Annual Yield: Unadjusted for Siltation 7,790 Additional Safe Annual Yield Required Based on Per Capita Planning Ratio 1,306 Secondary Supply Requirements 2,574 Siltation Allowance Incurred to-date: 290 500 Future 210 Total 4,380 Allocation of New Supply Requirements Between Existing Users and New Develo ment Table 1.3 Existing New Users_ -Development Total New Supplies Based on Per Capita Planning Ratio(See Note 1) (614) 1,920 1,306 Secondary Supply Requirements(See Note 2) 2,031 543 2,574 Siltation Allowance(See Note 2) 394 106 500 Total 1,811 2,5691 4,380 Percent 1 41.4%1 58.6%1 100.0% 1. Existing users are provided with a credit for the amount that the current safe annual yield of 7,790 acre feet (unadjusted for siltation) exceeds demand based on gallons per day per capita of 7,176 acre feet. The 2002 analysis did not assume this credit, and the resulting allocation of new supply requirements to new development is proportionately higher as a result. Analytically, either approach can be supported, and this issue was raised in April 2002. Staff now recommends the "credit"approach in recognizing that 614 acre feet is available for allocation to new development from existing supplies, and existing users should be "credited"for this. 2. Secondary supply requirements and siltation allowance are allocated to existing users and new development based on their ratio to total projected demand: 78.9%and 21.1%respectively. Step 2: Water Supply Solutions The following table identifies the two most likely projects in meeting the City's additional supply requirements and the yields projected for each: water reuse and the Nacimiento pipeline. Safe Annual Yields from New Source of Supply Projects Table 2 AF SAY Water Reuse 1,000 Nacimiento Pipeline 3,380 Total 4,380 e—� ' Water Development Impact Fees Page 6 Step 3: Cost of New Water Supplies This step develops annualized costs for the two new water supply projects discussed above as well as the City's water conservation program. Summary of Annual Costs for New Water Supplies Table 3 Water Reuse 712,600 Nacimiento Pipeline 4,739,500 Conservation 515,800 Total $5,967,900 Water Reuse. Costs for this project are based on State revolving loan debt service payments of $573,100 (based on a principal amount of $8.8 million and a grant of $2.9 million) and amortization of"pay-as-you-go" financing of$4.2 million. Nacimiento Pipeline. Costs for this project are based on estimates provided by the County in February 2004 of total annual costs of$5,832,400 for 3,380 acre feet under the "hybrid" cost sharing method, of which $1,092,800 is for operations and maintenance (which cannot be recovered through impact fees) and$4,739,500 is for debt service. Water Conservation. Although the direct effect of an aggressive conservation program is to lower demand requirements, its costs are treated as a "supply" project since it reduces the amount of new water supplies that would otherwise have to be developed. This is consistent with the Water-Wastewater Element and with the approach taken in prior impact fee analyses. Step 4: Allocation of Costs Between Existing Users and New Development The following table allocates the costs of developing new supplies between existing users and new development based on the apportionment of costs developed in Table 1.3: Cost Allocation Summary Between Existing and New Users Table 4 Percent of Total Cost Existing Users 41.4% 2,467,700 New Development 58.6% 3,500,200 Total 100.0% $5,967,900 Step 5: Funding Strategies The following tables identify separate strategies for funding the costs of new water supplies for existing users and new development. New Development The use of impact fees is the primary method identified in this analysis for funding the portion of new water supplies related to new development. Three steps are involved in setting impact fees at appropriate levels: i Water Development Impact Fees Page 7 1. Identify "equivalent dwelling units" (EDU's). Impact fees are attributable to residential as well as non-residential uses. The concept of equivalent dwelling units is a useful one in allocating costs between different types of uses by establishing a "common denominator" based on a single family residential (SFR) dwelling. As set forth in the summary below, residential EDU's are based on existing single and multi-family units and 2000 Census data for population per housing unit. Based on 19,617 total dwelling units as of January 1, 2004, this results in 17,801 existing residential EDU's. 2. Project annual increases in residential EDU's. Based on 17,758 existing residential EDU's, annual increases are projected at I%per the City's General Plan growth management policies. This results in an increase of 178 residential EDU's per year through build-out. 3. Project annual increases in non-residential EDU's. Non-residential uses currently account for 35% of total water consumption. The annual growth in non-residential EDU's is projected proportionately, resulting in an additional 96 EDU's annually, for a total increase in EDU's per year of 274. The following table summarizes projected annual increases in equivalent dwelling units: Annual Growth in Equivalent DwellingUnits(EDU's) Table 5.1 _ Pop Per SFR Existing Annual EDU Housing Unit Equivalent_ _ ,: Units _ EDU's Growth @ I% Single Family Residential(SFR) 2.58 1.0 10,538 10,538 105 Multi-Family Residential MFR 1.92 0.8 9,079 7,263 73 Total Residential 19,617 17,801 178 Total Non-Residential 35%of Total Water Use 96 Total Estimated Annual Growth in Equivalent Dwelling Units 274 The next step in determining impact fees is to match the annual cost requirements for water supply improvements related to new development (Step 4) with the estimated annual growth in EDU's: Water Su I Im act Fee Re uirement Table 5.2 Itnpact Fee Per EDU Annual Supply Cost $3,500,200 Annual Equivalent DweUing Units 274 Water Supply act Fee $12,774 This analysis results in an EDU impact fee for water supply of$12,774. Step 6: Recommended Water Development Impact Fees As noted above, water impact fees are composed of three components related to servicing new development: supply, treatment and distribution. As noted above, fees for treatment and distribution system improvements have previously been approved by the Council, and no changes are recommended for these components at this time. Combining these with the water supply component and using the EDU concept for non-residential users based on meter size, the following summarizes current and proposed water impact fees. 1 , Y) Water Development Impad.Fees Page 8 Proposed System-Wide Water Development Impact Fee Table 6.1 Equivalent Water Treatment Total _ DwellingUnits Supply &Distribution.. Impact Fee Combined " ' Pro O__�sed Fee:Water,Su I ,Treatment.aiid Nit rtiution Residential Single Family Residential 1.0 $12,774 $1,193 $13,967 Multi-Family Residential 0.8 10,219 954 11,174 Mobile Home 0.7 8,942 835 9,777 Non-Residential Based on Meter Size 5/8 or 3/4 inches 1.0 12,774 1,193 13,967 1 inch 2.0 25,548 2,386 27,934 1 1/2 inches 4.0 51,096 4,772 55,868 2 inches 6.4 81,754 7,635 89,389 3 inches 14.0 178,836 16,702 195,538 4 inches 22.0 281,028 26,246 307,274 6 inches 45.0 574,830 53,685 628,515 Note: In addition to these system-wide fees, there is a special "add-on"fee of$779 per EDU in the Airport and Margarita areas. Comparison of Current and Proposed System-Wide as Table 6.2 Equivalent Water Devela went Impact Fees Dwelling Units CurrentProposed. Increase. Residential Single Family Residential 1.0 $8,416 13,967 5,551 Multi-Family Residential 0.8 6,733 11,174 4,441 Mobile Home(See Note Below) 0.7 4,040 9,777 5,737 Non-Residential Based on Meter Size 5/8 or 3/4 inches 1.0 8,416 13,967 5,551 1 inch 2.0 16,832 27,934 11,102 1 1/2 inches 4.0 33,664 55,868 22,204 2 inches 6.4 53,862 89,389 35,527 3inches 14.0 117,824 195,538 77,714 4 inches 22.0 185,152 307,274 122,122 6 inches 45.0 378,720 628,515 249,795 *As of July 1, 2004 Change in Methodology for Mobile Home EDU's. Current fees for mobile homes are set at "0.6" EDU's based on 1990 Census data(the most recent available when water impact fees were last reviewed) that indicated a lower population per housing unit for them (1.70) relative to single family residential (2.74) and multi-family residential (2.16). However, the more recent 2000 Census data no longer shows as significant a difference between mobile homes (1.83) and single family residential (2.58) and multi- family residential (1.92). Accordingly, we Pppulartion -Per Housing Unit recommend setting the mobile home EDU 1990 Census 2000Census at 0.7 EDU's, reflecting its narrowed Single Family Residential 2.74 2.58 relationship to single family and multi- Multi-Family Residential 2.16 1.92 family residential units. The sidebar Mobile Home 1.70 1.83 summarizes changes in population per housing unit between 1990 and 2000. 1 Water Development Impact Fees Page 9 COMPARISON OF PROPOSED FEES WITH OTHER AGENCIES Under the City's cost recovery policies, fee comparisons with other agencies should never be the sole (or even) primary criteria in setting City fees as there are many factors that affect how and why other communities have set their fees at their levels. For example: 1. What level of cost recovery is their fee intended to achieve compared with our cost recovery objectives? 2. What costs have been considered in computing the fees? 3. When was the last time that their fees were comprehensively evaluated? 4. What level of service do they provide compared with our service or performance standards? 5. What scope of services do they provide? 6. Is their rate structure significantly different than ours and what is it intended to achieve? Nonetheless, surveying the comparability of the City's fees to other communities provides useful background information. The following summarizes water impact fees for single-family residential units charged by other agencies in the County as well as by ten other cities in California we typically include in fee surveys because they share similar service and demographic characteristics with us. Other Agencies in San Luis Obispo County SFR Water Impact Fee Arroyo Grande $ 2,437 Atascadero Mutual Water Company (Based solely on meter size;in San Luis Obispo, many SFR accounts have a 1 inch meter) 5/8 Inch Meter 3,255 3/4 Inch Meter 4,882 1 Inch Meter 8,137 Cambria Community Services District 9,505 Grover Beach 1,793 Morro Bay 364 Paso Robles(Based solely on meter size;in San Luis Obispo,many SFR accounts have.a I inch meter) 5/8 or 3/4 Inch Meter 3,703 1 Inch Meter 6,685 Pismo Beach 5,822 San Luis Obispo County (Depends on service area;this reflects the highest rate.) 3,125 Templeton Community Services District 3,642 City of San Luis Obispo Current 8,416 Proposed 13,967 Note: Every local agency contacted indicated that their rates are currently under review and expected to recommend significant increases. r07 I Water Development Impact Fees Page 10 Other Cities in Califomia SFR.Water Davis $ 2,198 Monterey(Does not provide water service) ** Napa 2,117 Palm Springs(Does not include treatment and supply;provided by regional wholesaler) 700 Petaluma(Depends on service area;this reflects the highest rate.) 3,475 Santa Cruz 3;356 Santa Barbara 3,063 Santa Maria 1,020 Ventura 3,316 Visalia (Does not provide water service) ** City of San Luis Obispo Current 8,416 Proposed 13,967 AFFECT OF PROPOSED FEES ON SAMPLE NON-RESIDENTIAL PROJECTS Under the City's water impact fee rate structure, non-residential use fees are determined by meter size. Compared with other options—such as building square footage by land use type— this has the advantage of more closing tying likely water use on a case-by-casebasis to the fee amount. For example, a large automated assembly facility may have very little water demand, but would pay a large fee if it were based on building size. On the other hand, a smaller facility that uses large amounts of water in its manufacturing process would pay a smaller fee. Because of this, any samples must be based on meter size. However, samples can be developed based on"possible"meter sizes that might service various types of facilities. Using this approach, the following summarizes the impact of the proposed fees on three sample projects: retail project of 10,000 square feet requiring a 1 inch meter; office/business park project of 50,000 square feet requiring a 1.5 inch meter; and a manufacturing project of 100,000 square feet requiring a 2 inch meter. For each sample, the table below shows the current fee, the proposed fee and "add-on" amount if it were located in the Airport Area or Margarita Area (AA/MA). Non-Residential Water Impact Fee Samples Square Meter Size Water act Fee AA/MA Feet In Inches EDU Current Proposed Add-On Retail 15,000 1.0 2.0 $ 16,832 $ 27,958 $ 1,558 Office-Business Park 50,000 1.5 4.0 33,664 55,916 3,116 -Manufacturing 100,000 2.0 6.4 53,862, 89,466 4,986 G:Water and Sewer Impact Fees/2004 Nacimiento Project/Water Impact Fees,2004 Update Attachment 4 city of san tins OBISPO 990 Palm Street■San Luis Obispo,CA 93401 ■(805)781-7125■Fax:(805)781-74018 Email:.bstatler@slocity.org May 27,2004 Notice Regarding Proposed Fee Increases As part of the 2004-05 budget process, the Council will be considering enterprise fund service charge and development impact fee increases as follows. June 1,2004 Service Charge Rate Increases. Consideration of proposed water, sewer and 7:00 PM golf fund service charge increases to support operating, debt service and capital Council Chambers costs to be effective July 1, 2004, summarized.as follows: 990 Palm Street N Water Fund`. 8.0% ® Sewer Fund: 6.5% ■ Golf Fund: 25 Cents Per Round June 15,2004 Development Impact Fee Increases. Consideration of proposed increases in 7:00 PM water and sewer development impact fees to be effective September 1, 2004, Council Chambers summarized as follows: 990 Palm Street ■ Water Development Impact Fees. Significant increases will be proposed in order to fund new development's share of the cost of participating in the Nacimiento Pipeline (new water supply) project. The current fee per "Equivalent Dwelling Unit" (EDU) as of July 1, 2004 is $8,416. The recommended fee per EDU is$13,967,an increase of$5,551. ■ Sewer Development Impact Fees. No increases are being proposed in system-wide sewer impact fees, which are $3,377 per as of July 1, 2004. However, due to costs increases for the Tank Farm Gravity Sewer and Lift Station, the following increases per EDU are recommended as follows in existing fees in two special"add-on"areas: "Add-On"Area Current Proposed Chan e Airport,Margarita,Edna-Islay $760 $1,489 $729 Orcutt $1,763 $2,716 $953 For More Information. Copies of the full Council Agenda Reports providing comprehensive supporting documentation for these fee increases are available upon request. Please call me at 781-7125 if you have any questions about the proposed fee increases. City staff will be happy to meet with you or your organization at your convenience to fiuther discuss or answer questions about how these fee recommendations were prepared. Sincerely, Qi Bill Statler,Director of Finance&Information Technology ® The City of San Luis Obispo is committed to including disabled persons in all of our services, programs and activities. Telecommunications Device for the Deaf(805)781-7410. n RED FILE -- MEETING AGEN( RECEIVED p,ATE�ITEM # 0 council m Em oRAn cru JUN 15 2004 CLERK June 15, 2004 _ ,2eCOUNCI! TCDD DIR 2rCAO L'FIN DIR r2'ACAOIRE CHIEF TO: Mayor Romero and City Council e ATTORNEY .p'�Pw DIR �'CLERK/09I© .2-POLICE CHF VIA: Ken Hampian, City Administrative Officer. i ❑ bEpf mV D9 D-REC DIR 2'UTIL DIR y Ponn Dr! FROM- John Moss, Utilities DirecVpact SUBJECT: Wastewater Development Fee Schedule—Alternative Tonight as part of the Wastewater Development Impact Fees public hearing presentation, staff will present for Council consideration an alternative schedule of fees (see attached). The alternative schedule of fees separates the three planning areas (Airport, Margarita, Edna-Islay) and their respective "add-on" fees from their current average single fee into separate fees. In his June 15'h emails, Andrew Carter very correctly noted that the Margarita area "add-on" fee is no longer within a hundred dollars of the other two areas and it may not make sense to combine these planning areas and fees. In considering both the originally proposed and the alternative fee schedules, Council may wish to review the City's adopted goals for rates and fees: ■ Comply with legal requirements ■ Ensure revenue adequacy to fully meet financial needs ■ Provide equity and fairness between customers ■ Result in rates that are easy to understand by our customers and easy to administer Staff will be prepared to discuss the strengths and weaknesses of the two approaches, consistent with these goals, at tonight's presentation. If you have any question, please call John Moss at 781-7205. ATTACHMENTS Wastewater Development Impact Fee Schedules • Schedule with Airport, Margarita and Edna-Islay - add-on fees averaged (replaces schedule in staff report. Minor changes to correct mobile home edu to 0.7 rather than 0.6 of the single family rate and reductions to other fees, based on application of lower cost of living rate.) ■ Alternative Schedule—Airport, Margarita and Edna Islay—fees separated 1 Exhibit B WASTEWATER DEVELOPMENT IMPACT FEES Effective September 1, 2004 Area-Specific"Add-On" Airport Dalidio Margarita Madonna Irish EDU* Citywide Edna-Islay McBride IEM Orcutt Residential Per Unit Single Family Residential 1.0 3,377 1,489 216 383 2,717 Multi-Family Residential 0.8 2,702 1,191 173 306 2,174 Mobile Home 0.7 2,364 1,042 151 268 1,902 Non-Residential Meter Sue** 3/4 Inch 1.0 3,495 1,489 216 383 2,717 1Inch 2.0 6,990 2,978 432 766 5,434 lit Inch 4.0 13,980 5,956 864 1,532 10,868 2Inch 6.4 22,368 9,530 1,382 2,451 17,389 3Inch 14.0 48,930 20,846 3,024 5,362 38,038 4Inch 22.0 76,890 32,758 4,752 8,426 59,774 6Inch 45.0 157,275 67,005 9,720 17235 122,265 * Equivalent dwelling unit ** Citywide non-residential EDU is adjusted upwards by about 3.5%to account for higher discharge strengths C O C d E E 0 ria r-Nrwm0r- Nv > >y N N N iK O tZ o6 O\ N Ln ` C d Q M �o 00 M �c N --� N �o h 00 O \O 00 �o M V1 �O N M M M N M (— %n 7 Mll�r N N t/1 00 1- .G3 F'w ra r �o M �o N N a N 0 t� V1 . 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