HomeMy WebLinkAbout06/20/2006, PH 5 - ADOPTION OF WATER RATES FOR 2006-07 council ".°'D& 6-20-06
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CITY OF SAN LUIS OBISPO
FROM: John Moss, Utilities Director
Bill Statler,Director of Fin &Information Technology
SUBJECT: ADOPTION OF WATER RATES FOR 2006-07
CAO RECOMMENDATION
Adopt a resolution rescinding Resolution #9463 (2005 Series) increasing water service charges
by 8%, effective July 1, 2006, and adopting revised rate increase of 12%, effective July 1, 2006
and establishing a third tier water rate for single family residential customers using greater than
25 units per month.
DISCUSSION
Background. On June 6, 2006, the Council considered the financial review of the Water Fund
for 2006-07. At that time, the Council approved the following three actions:
1. Reviewed and accepted the 2006 annual water fund financial review.
2. Conceptually approved the budget for 2006-07, including the proposed operating program
and capital improvement plan requests.
3. Adopted a resolution revising water meter and adaptor costs, effective July 1, 2006.
However, the Council did not act on the recommended rate increases for 2006-07, with the vote
tied at 2:2 (Vice Mayor Settle and Council Member Mulholland voting no; Council Member
Ewan absent). Based on their comments at the meeting, Vice-Mayor Settle's vote was based on
his prior opposition to previously approved rate structure modifications; and Council Member
Mulholland's vote was based on her prior opposition to participation in the Nacimiento project,
which is a key factor in the recommended fee increase (about 8% of the 12% recommended rate
increase is attributable to participation in the Nacimiento project as part of a multi-year funding
and rate strategy.)
The Council unanimously directed that this item be continued to June 20, 2006, for re-
consideration by the full Council.
Findings. The need for the proposed rate increase is detailed in the June 6, 2006 agenda report.
We believe that the proposed rate increase is necessary in meeting the water system's operating
and capital needs, meeting our objectives of developing reliable long-term water supplies through
participation in the Nacimiento pipeline project, and in providing the enhancements to our
customer service and water conservation programs through monthly billing and providing a
volume based residential sewer rate. Accordingly, we continue to recommend that the Council
approve the proposed water rate increases as detailed in the June 6,2006 report.
Adoption of Water Rates for 2006-07 Page 2
FISCAL IMPACT `
The proposed rate increase will allow the City to fund the operating and capital needs of the
City's water system. What does this mean to the average residential customer? For the average
residential customer using 10 units("ccf') of water monthly, the following illustrates the changes
to the monthly bill with the recommended increase.
Average Residential Water Customer Monthly Bill
Assuming 10 units of water.use per month
CCF 2005-06 2006-07
1 -5 $2.93/ccf 14.65 $3.28/ccf 16.41
5-25 $3.67/ccf 18.35 $4.11/ccf 20.55
25+ n/a n/a $5.14/ccf n/a
$33.06 $36.96
ALTERNATIVE
Deny the recommended rate increase. The recommended rate increase of 12% has been
identified through the comprehensive fund analysis as necessary to meet the financial needs of
the Water Fund in providing for the water service needs of the community. Staff believes that all
of the services, operating programs and capital components of the Water Fund represented by the
recommended rates for service are necessary, appropriate and consistent with prior
policy/program direction of the City Council, and are consistent and necessary for compliance
with state and federal laws regulating our water systems. The recommended rate increase is
necessary to fund the 2006-07 Budget and capital improvements conceptually approved by
Council on June 6, 2006. Therefore,this alternative is not recommended.
ATTACHMENT
Resolution setting water rates for 2006-07
AVAILABLE FOR REVIEW IN THE COUNCIL OFFICE
June 6, 2006 Council Agenda Report: 2006 Water Fund Review
GAUTB.\2005-07 Financial Plan\2006-07 Budget\2006 Fund Analysis\Water\AdoptionofWaterRates2006-07 v2.doc
ATTACHMENT 1
RESOLUTION NO. (2006 Series)
A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO
ESTABLISHING WATER SERVICE RATES
WHEREAS, it is the policy of the City of San Luis Obispo to review enterprise fund fees and rates
on an ongoing basis and to adjust them as required to ensure that they remain equitable and adequate to fully
cover the cost of providing services; and
WHEREAS, a comprehensive analysis of Water Fund operating, capital and debt service needs has
been performed for fiscal years 2006-07 through 2012-13; and
WHEREAS, this comprehensive analysis has been revised based on updated revenue and
expenditure information; and
WHEREAS, a third tier water pricing structure is established for single family residential customers
using greater than 25 units per month; and
WHEREAS, the Council has reviewed the water service rates necessary to meet system operating,
capital and debt service requirements.
NOW,THEREFORE,BE IT RESOLVED by the Council of the City of San Luis Obispo as follows:
SECTION 1. Resolution No.9463 (2005 Series) is hereby rescinded,effective July 1, 2006.
SECTION 2. The rates set forth in Exhibit "A" are hereby adopted, establishing rates effective
July 1, 2006.
SECTION 3. The water system access charges are increased from $23.86 per month to $26.72
per month,effective July 1, 2006, to reflect the increase in water rates.
Upon motion of seconded by and on the following roll call vote:
AYES:
NOES:
ABSENT:
the foregoing resolution was adopted on June 20, 2006.
Mayor Dave Romero
ATTEST:
Audrey Hooper,City Clerk
APPROVED AS TO FORM:
Jo Lowell, City Attorney
EXHIBIT A to Resolution No. (Series 2006)
MONTHLY WATER SERVICE RATES
2006Rates Effective July 1,
Customer Type Single Family All Other Customers
Residential Customers
Inside the City Rates 1 -5 CCF $3.28/CCF 1 -5 CCF $3.28/CCF
5-25 CCF $4.11/CCF 5+ CCF $4.11/CCF
25+ CCF $5.14/CCF
Outside the City Rates' 1 -5 CCF $6.56/CCF 1 -5 CCF $6.56/CCF
5-25 CCF $8.221CCF 5+ CCF $8.22/CCF
25+ CCF $10.28/CCF
'For service to customers outside the City,the rates are two times the City rate.
CCF: Per Hundred Cubic Feet