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CITY OF SAN LUIS OBISPO
FROM: John Moss, Utilities Directottilities
Prepared By: Kathe Bishop, Admin Analyst
SUBJECT: AMENDMENT TO CAL POLY WATER AND SEWER RATE AGREEMENT
CAO RECOMMENDATION
Approve Amendment No. 1 to the Water and Sewer Rate Agreement between the City and
California Polytechnic State University establishing water and sewer rate structures for the Bella
Montana development and authorize the Mayor to execute the Amendment.
DISCUSSION
Background
The City and California Polytechnic State University have a long-standing relationship, with the
City providing water treatment and wastewater services to the University dating back to the 1960's.
Since 1993 the City and California Polytechnic State University have applied a mutually-approved
methodology for calculating the University's appropriate water and sewer rates, based on the
University owning its own source of supply and making capital contributions to the Water
Treatment Plant and Water Reclamation Facility upgrade projects. The methodology reviews five
years of financial data to determine the University's appropriate percentage of water and sewer
rates. This process recognizes the University's unique customer profile while charging the
University its fair share of water and sewer expenses and results in a Water and Sewer Rate
Agreement that covers a five-year period.
Amendment to Water and Sewer Rate Agreement
The City's current water and sewer rate agreement with the University covers the five-year period
ending June 30, 2007. Amendment number one outlines the rate structure for water and sewer
services for the Bella Montana housing development located off-campus at the northwest comer of
Highland Drive and North Santa Rosa Street on University owned land. Phased occupancy at
Bella Montana(previously referred to as Housing Unit 8 or 118)begins in December 2006, with full
occupancy planned for December 2007. The development will have 69 condominium homes set
in tri-plex and four-plex building configurations. As outlined in the Amendment the water rate
structure for the Bella Montana housing development remains the same as the on-campus water
rate structure, with the single metered usage times the established University's rate per unit. For
sewer,the effluent flow is not metered at Bella Montana. Based on a review of landscape plans and
estimated outdoor water use for irrigation, the City and University have determined an agreed upon
percentage, 70%, of metered water that will be assumed to be the sewer flow during the
construction phase. The rate of 70% will be applied to the metered water reading and will be billed
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Amendment To Cal Poly Water And Sewer Rate Agreement Page 2
at the then current industrial user sewer rate per unit. Amendment number one addresses the water
and sewer rate structure for the Bella Montana off-campus housing development only.
Next Steps
In April 2006, Council approved a plan to move to a volume based sewer rate structure for
residential customers and directed staff to return to Council with the final recommended residential
sewer rate structure prior to a proposed July 2007 implementation. As part of the 2006-07 budget
process Council approved Monthly Utility Billing to enhance customer service while obtaining the
accurate monthly water use data necessary to implement a sewer rate structure that is based on an
individual customer's water usage as measured during the winter months of December,January and
February. In October 2006, Utilities and Finance and Information Technology staff implemented
monthly utility billing; all meters are now read monthly with billing statements reflecting a monthly
service period. Utilities staff are working with HDR Consultants to finalize the sewer rate
structure, which will be tested using actual winter water monthly use data obtained this winter.
Staff will return to Council in early-Spring 2007 with the final recommended volume based sewer
rate structure prior to the proposed July 2007 implementation date.
Once the Bella Montana housing development is completed and fully occupied, it is planned that
the University's rate structure for Bella Montana will change with sewer charges based on the
conceptually approved volume based sewer rate structure for single metered multi-family
complexes adjusted for the then established University's rate per unit. City and University staff are
in discussions to renew the five year water and sewer rate agreement, which will incorporate the
Bella Montana development and staff will be returning to Council with the recommended five year
water and sewer rate agreement renewal in Spring 2007.
FISCAL IMPACT
There is no negative fiscal impact. Based on the Bella Montana project construction schedule
and phased occupancy, new water and sewer revenues from this development are projected at
$10,000 in fiscal year 2006-07.
ATTACHMENT
Amendment to Agreement No. 1
AVAILABLE FOR REVIEW IN THE COUNCIL OFFICE
Water and Sewer Rate Agreement—current through June 30, 2007
G:\UTI.\CAR-CAO Reports\2006 Council Agenda Reports\Cal Poly Rate Agreement-Amendment I.DOC
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ATTACHMENT1
AMENDMENT TO AGREEMENT NO. 1
THIS AMENDMENT TO AGREEMENT is made and entered in the City of San Luis Obispo on
by and between the CITY OF SAN LUIS OBISPO, a municipal corporation, herein after
referred to as City, and the CALIFORNIA POLYTECHNIC STATE UNIVERSITY hereinafter referred
to as University.
WITNESSETH:
WHEREAS, the City and University are parties to the original Agreement Regarding Water and
Sewer Rates,dated March 10, 2003 (Agreement); and
WHEREAS, the University has leased land to the Cal Poly Housing Corp (CPHC) for the
purposes of planning and building the common interest development commonly know as Bella Montana
for qualified Cal Poly faculty and staff,and
WHEREAS, the City and University, at no direct cost to the City, have worked jointly to design
and construct the project so that the sewerage from the project flows directly into the existing sewer
system and to reroute the water main line servicing this project and other city recipients;and
WHEREAS, it is the intent of the parties to incorporate this project under the existing Agreement
between the parties regarding water and sewer rates,and any amendments thereto; and
NOW THEREFORE, in consideration of their mutual promises, obligations and covenants
hereinafter contained,the parties hereto agree as follows:
WATER AND SEWER RATE STRUCTURE FOR BELLA MONTANA
Prior to project completion and full occupancy, projected,to be December 2007, the City and
University agree to base water and sewer billings for Bella Montana on the following
methodology.
1. WATER
For water usage the calculation is the same during construction as it is upon completion,
using the existing Agreement methodology of metered usage times the established University
rate per unit of measure. Water bills will be submitted to the Cal Poly Housing Corp
(CPHC) for payment at the same interval as those issued to the University.
ATTACHMENT 1
2. SEWER
Since the sewerage from the project is not metered like the University's California Blvd.
interceptor, the City and University have determined an agreed upon percentage, 70%, of
metered water that will be assumed to be the sewer flow during the construction phase. The
rate of seventy percent will be applied to the metered water reading and will be billed at the
then current sewer rate per unit of measure. The first sewer billing service period will begin
December 2006, with the first sewer billing,statement issued January 2007. Sewer bills will
be submitted to the CPHC for payment at the same interval as those issued to the University.
Once the project is completed (projected December 2007) and fully occupied (Certificate of
Occupancy issued for all units) the University's sewer rate structure for Bella Montana will
change. After project completion and with accurate monthly winter water usage data based
on full occupancy for the months of December,January and February,the Sewer will then be
charged based on the then current volume based sewer rate structure beginning in March for
single metered multi-family complexes adjusted for the percentage discount established for
the University under the then current sewer rate agreement, currently at 74% of the non-
residential rate.
3. All other terms and conditions of the Agreement remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed the day
and year first written above.
ATTEST: CITY OF SAN.LUIS OBISPO
By:
Audrey Hooper,City Clerk David F. Romero,Mayor
APPROVED AS TO FORM: CALIFORNIA POLYTECHNIC STATE UNIVERSITY
By:
Jon Dwell, City Attorney Matthew Roberts, Director
Contract and Procurement Services
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