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Home My WebLink About06/19/2007, PH1-B - ADOPTION OF SEWER RATES FOR 2007-09 AND VOLUME RATE STRUCTURE � 1 r council, D" June 19,2007 j ac En as RepoRt 1023 CITY OF SAN LUIS OBISPO FROM: John Moss, Utilities Direct Prepared.By: Kathe Bish enior Administrative Analyst SUBJECT: ADOPTION OF SEWER RATES FOR 2007-09 AND VOLUME RATE STRUCTURE CAO RECOMMENDATION Adopt a resolution increasing sewer service charges by eleven percent (I I%), effective July 1, 2007 and ten percent (10%)effective July 1, 2008 and establishing a revised volume based sewer rate structure for all customers, provided there is not a majority protest against such increases. DISCUSSION Background On May 31, 2007, the Council considered the comprehensive financial review of the Sewer Fund for 2007-09. At that time, Council approved the following four actions: 1. Review and accept the 2007 annual sewer fund financial review; and 2. Conceptually approve the proposed operating program changes and capital improvement plan requests contained in the preliminary 2007-09 Financial Plan,pending the June 19, 2007 final budget review and adoption; and 3. Conceptually approve the proposed volume based sewer rate structure as considered by Council on May 1, 2007, pending final budget review and rate structure adoption on June 19, 2007; and 4. Conceptually approve increasing sewer service charges by eleven percent (11%) effective July 1, 2007, and ten percent (10%) effective July 1, 2008, pending final budget review and rate setting adoption on June 19,2007. Public Participation Notification of a public hearing on the proposed sewer rate increases and change to the sewer rate structure was mailed on April 30, 2007 to all water and sewer customers in accordance with the Proposition 218 notification requirements. The notice includes proposed.sewer rate increases of 11% in 2007-08 and 10% in 2008-09, which are the final recommended sewer rate changes for Council consideration. Under Proposition 218, property owners or a tenant directly liable for payment of the fees subject to the proposed rate changes may submit a written protest against each proposed rate increase (water, sewer) and/or the proposed change to the sewer rate structure. A written protest must contain the service address and the water and sewer service account number. The party signing the protest must be listed on the account as the person responsible for n lam, ADOPTION OF SEWER RATES FOR 2007-09 AND VOLUME RATE STRUCTURE Page 2 payment of the water and sewer bills. If written protests are filed by a majority of the affected customers, the applicable proposed rate change would not be imposed. A majority is approximately 7,200 customers. At the June 19th City Council meeting, staff will provide an updated summary of the protests received to date. As of June 7, 2007, a total of 82 written protests were received by the Office of the City Clerk. Of the 82 written protests received, 35 protests are compliant with Proposition 218 requirements, as summarized below. Proposition 218 Validated.Protests as of June 7,2007 Proposed Fee Chane Number of Valid ftotests Water Rate Increases 35 Sewer Rate Increases 26 Sewer Rate Structure Change 13 Financial Impacts to Customers What does this mean to the average residential customer? For the average residential customer, assuming an average winter water consumption (AWWC) "sewer cap" of seven (7) units("ccf') monthly, the following illustrates the changes to the monthly bill with the recommended increases. Average Residential Sewer Customer Monthly Bill Sample Assuming Average wmter Water Consumption"Sewer Cap"of Seven(7)Units Fiscal Year: 2006-07 2007-08' 2008-09 ' Rate Structure: Fised Rate `Volume Based Volume Based -- __-Volume Based Volume Based Charge- Rates Char es Rates Charges Base Charge: $35.56 $5.00 5.00 $5.50 5.50 Volume Charge: n/a $5.05/ccf 35.35 $5.56/ccf 38.92 Total $3556 $4035 $44.42 t Includes general purpose sewer raze increase of 1.1%in 2007-08 and 10%in 2008-09 FISCAL IMPACT Moving from a fixed sewer rate structure to a volume based sewer rate structure based on the individual customer's usage is designed to be revenue neutral to the Sewer Fund, as presented to Council on May 1, 2007 during the sewer rate structure presentation. The recommended general purpose sewer rate increases of eleven percent (11%) effective July 1, 2007 and ten percent (10%) effective July 1, 2008 provide revenue adequacy to fully meet system operating and capital needs as presented to Council on May 31, 2007 with the annual sewer fund review. ADOPTION OF SEWER RATES FOR 2007-09 AND VOLUME RATE STRUCTURE Page 3 ALTERNATIVES 1. Not adopt the recommended volume based sewer rate structure. The goal for the recommended volume based sewer rate structure is to provide greater equity between customers based on their use of the sewer system — like we do for our water customers — while at the same time providing the same revenue adequacy as our current rate structure. In addition, the number one request from our customers was for the City to provide a volume sewer rate billing structure that is based on individual usage as opposed to the current fixed billing rate. Benefits of the proposed volume based sewer rate structure include: (1) encourages conservation; (2) provides equity and fairness between classes of customers; (3) allows customers choice and control of their utility costs, and; (4) ensures revenue adequacy to fully meet system operating and capital needs. Therefore, this alternative is not recommended. 2. Deny the recommended sewer rate increases. The recommended rate increases of 11% effective July 1, 2007 and 10% effective July 1, 2008 have been identified through the comprehensive fund analysis as necessary to meet the financial needs of the Sewer Fund in providing for the sewer service needs of the community. Staff believes that all of the services, operating programs and capital components of the Sewer 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 sewer systems. Therefore, this alternative is not recommended. ATTACHMENT Resolution Setting Sewer Rates and Establishing a Revised Volume Sewer Rate Structure GAUTEUKatheTiscalTINANCIAL PLANS\2007-09 Financial PLw\2007 Fund Analysis\Sewer\Adoption of Sewer Rates for 2007-09 and Volume Sewer Rate Structure.doc 1C3-�3 ATTACHMENT RESOLUTION NO. (2007 Series) A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO ESTABLISHING SEWER SERVICE RATES AND A REVISED VOLUME BASED SEWER RATE STRUCTURE 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 costs of providing services;and WHEREAS, a comprehensive analysis of sewer fund operating, capital and debt service needs has been performed for fiscal years 2007-08 through 2013-14; and WHEREAS, the Council has reviewed the sewer service rates necessary to meet system operating, capital and debt service requirements; and WHEREAS, a volume based sewer rate structure is established for customers without a separate irrigation meter; and WHEREAS, the Council has reviewed the volume based sewer rate structure to provide a rate structure that reflects the individual customer's usage; and WHEREAS, a public hearing was properly noticed and held on June 19, 2007; and WHEREAS, a majority protest, as contemplated by Article XIII D of the California Constitution, was not received by the conclusion of the public hearing. NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as follows: SECTION 1. Resolution No. 9688 (2005 Series) is hereby rescinded, effective 11:59 p.m. June 30, 2007. SECTION 2. The rates set forth in Exhibit "A" are hereby adopted, establishing rates effective July 1, 2007 and July 1, 2008, and establishing a revised volume based sewer rate structure. Upon motion of seconded by and on the following vote: AYES: NOES: ABSENT: The foregoing resolution was adopted this day of 2007. R !J t ATTACHMENT Resolution No. (2007 Series) Page 2 Mayor David F. Romero ATTEST: Audrey Hooper City Clerk APPROVED AS TO FORM: L Jo athanJ. well City"Affomey /Z3-s �.' C EXHIBIT A to Resolution No. (Series 2007) MONTHLY SEWER SERVICE RATES Account Type Effective July 1,2007 t Effective July 1,2008 mion.thly Sewer Rates: Residential Customers Single family Minimum charge: $5.00 per dwelling unit Minimum charge:$5.50 per dwelling unit dwelling, Volume charge per unit: $5.05 Volume charge per unit: $5.56 including single meter condominiums and Total monthly fee capped based on average Total monthly fee capped based on average townhouses winter water consumption(AWWC) winter water consumption(AWWC) Master-metered multi- Minimum charge: $5.00 per account Minimum charge: $5.50 per account family dwellings in Volume charge per unit: $5.05 Volume charge per unit: $5.56 any duplex,apartment house or rooming Accounts without separate irrigation meter. Accounts without separate irrigation meter. house Total monthly fee capped based on AWWC Total monthly fee capped based on AWWC Accounts with separate irrigation meter. Accounts with separate irrigation meter. No cap No cap Mobile home or Minimum charge:$5.00 per account Minimum charge: $5.50 per account trailer park Volume charge per unit: $5.05 Volume charge per unit: $5.56 Accounts without separate irrigation meter. Accounts without separate irrigation meter. Total monthly fee capped based on AWWC Total monthly fee capped based on AWWC Accounts with separate irrigation meter. Accounts with separate irrigation meter. No cap No cap Monthly Sewer Rates: Non Residential Customers Public,private,or $4.46 per ADA $4.91 per ADA parochial school, average daily attendance(ADA) at the school All Other Accounts Minimum charge:$5.00 per account Minimum charge: $5.50 per account Volume charge per unit: $5.05 Volume charge per unit:$5.56 Each Vehicle Discharaina Sewer into City Svstern Minimum charge $130.05 $143.06 Additional charge per $7.83 $8.61 100 gallons in excess of 1.500 gallons discharqed Volume based sewer rate structure charges implemented July 1,2007 will be reflected on customer sewer billings with bill dates between August 8ie and September 4h,to reflect charges for a full sewer service period after July I" implementation. L4 To: City Council Members of San Luis Obispo J From: Richard Russell Subject: Sewer Lateral Reimbursement Program Members, My family moved to 531 Ellen Way in 1969;my late parents and I lived in this home,and now I live here with a family of my own. Approximately three years ago,my neighbor had their Orangeburg sewer pipe replaced to the city main. I was not experiencing any problems with my line at this time,however,two summers ago,our sewer line began to plug. I called my usual plumber and the line was cleared. This problem continued with more frequency over time. I spoke with my neighbor that had her line recently done, she spoke of a City Reimbursement program. This information led me to Bud Nance on Prado Rd. Bud explained that there was no money in the funds for that year,but to keep in touch for next year. With periodic cleaning we made it to the following year. I went back to Bud Nance and he basically gave me the same story. After spending a large amount of money paying various plumbers,a kind plumber ids Plumbing)told me to buy a bladder-tool to fit on the end of a garden hose and run water through the lime to clear the sewer every so often. This worked for about six months. In late November 2006,our line took a turn for the worst. I went back to the utilities department on Prado Rd and met Dave Iliicks. Dave mentioned that there was a possibility that fimding would be approved in 2007 for the sewer line reimbursement program with the passage of measure"Y." During this conversation with Dave,I was led to believe that there was a real good chance that I would be reimbursed by the city when the program was funded. In mid December I began calling plumbers to receive bids on lateral replacements. By this time our line was at a crawl. I was shocked to find out that bids,including permits, ran between$6800 and$10,300! 1 contracted SLO Plumbing with Chris&Angelo as the lowest bidders. My neighbors were also concerned about how we were doing. In subsequent communication with Chris, I asked if he would give a group deal if some of the neighbors replaced their sewer lines. Chris agreed and lowered his price for a group deal. Chris also mentioned the possibility of one city permit for the street shared by the neighbors. I conveyed this information to my neighbors along with a good chance the city would reimburse us when the program is to be fimded this summer 2007. I also spoke with John Moss in late December about our situation and the city reimbursement program. John felt confident that the program was going to be fiuided in 2007. 1 too believed chances for the reimbursement were high based on conversation with the utilities department. In early January, five of my neighbors joined in on the sewer lateral replacement after their lines were evaluated by SLO plumbing. By sharing the cost of the permit and being reimbursed by the city this summer,they decided to take a leap of faith. I corresponded with John and Dave on any updates from the City Council Members. John told me a month ago that the Council was not planning on the reimbursement part for those in my situation the last couple of years. In conclusion,I am asking that the City Council members approve reimbursement to the families that have qualified for this recent time period. �� c- O