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Home My WebLink About09/02/2008, PH 1 - ADOPTION OF SEWER RATE CHANGE council ""RSept September 2008 , CA acEnoa RepoRt . CITY O F SAN LUIS OBISPO FROM: David Hix, Acting Utilities Director Prepared By: Kathe Bishop, Senior Administrative Analyst SUBJECT: ADOPTION OF SEWER RATE CHANGE CAO RECOMMENDATION Adopt a resolution increasing the sewer volume charges $0.50 from $5.56/CCF to $6.06/CCF effective September 3, 2008, provided there is not a majority protest against such increase. DISCUSSION Background On'May 1, 2008, the City Council considered the comprehensive financial review of the Sewer Fund for 2008-09 in which staff reported that for 2007-08 sewer fund revenues had fallen below prior projections. At that time, Council approved the following actions: 1. Review and accept the 2008 annual sewer fund financial review. 2. Direct staff to return in July 2008 with a report on sewer rate structure and/or rate modifications needed to close the projected sewer revenue shortfall upon completion of the sewer rate structure analysis, with implementation of any recommendations in September 2008. 3. Approve the amended Capital Improvement Plan (CIP) for 2007-08 and 2008-09, and rephasing of the Calle Joaquin Lift Station project. On July 1, 2008, staff presented a detailed review of sewer use and revenues to the Council, which included data components that contributed to revenues being below earlier revenue projections. At that time, the City Council approved the following actions: 1. Review and accept the sewer consumption and revenue analysis, and; 2. Direct staff to provide notice to all sewer rate customers, of the proposed $0.50 increase to the sewer volume charge from $5.56/CCF to $6.06/CCF to be effective September 3, 2008, pending completion of the Proposition 218 notification and protest period and final rate adoption at a public hearing to be held on September 2, 2008. Public Participation Notification of a public hearing on the proposed sewer rate increase was mailed on July 9, 2008 to all water and sewer customers in accordance with the Proposition 218 notification Adoption of Sewer Rate Change Page 2 requirements. The notice includes a proposed rate change to the sewer portion only of the water and sewer bill, which is the final recommended sewer rate change for Council consideration as outlined below: 1. A $0.50 increase to the sewer volume charge from $5.56/CCF to $6.06/CCF Note: CCF = 100 cubic feet= 748 gallons 2. No change to the sewer rate structure 3. No change to the sewer base rate In addition to the Proposition 218 notification mailed directly to all customers, the Prop 218 notice and July 1, 2008 staff report on sewer use and revenues are posted on the City's website. Inserts were included in the utility customer bills for the month of August notifying rate payers of the September 2, 2008 public hearing, the proposed sewer rate change, and directing customers to the City's website for the Proposition 218 notice and the sewer rate report and/or the Utilities Department for additional information. Under Proposition 218, property owners or a tenant directly liable for payment of the fees subject to the proposed rate change may submit a written protest against the proposed rate increase. 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 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. On September 2, 2008, at a public hearing before the City Council, staff will provide an updated summary of the protests received to date. As of August 14, 2008, a total of 57 written protests were received by the Office of the City Clerk. Of the 57 written protests received,43 protests are compliant with Proposition 218 requirements. FISCAL IMPACT The recommended sewer rate increase of$0.50 to the volume sewer charge from $5.56/CCF to $6.06/CCF effective September 3, 2008 provides revenue adequacy to meet wastewater operating program needs, the amended Capital Improvement Plan (CIP) and debt service requirements as approved by Council on May 1, 2008 with the annual sewer fund review. ALTERNATIVE Deny the recommended sewer rate increase. The recommended $0.50 increase to the sewer volume charge from $5.56/CCF to $6.06/CCF effective September 3, 2008 has been identified in the review of sewer fund revenues and the comprehensive fund analysis as necessary to meet the financial needs of the Sewer Fund in providing for the sewer service for the community. Staff believes that all of the services, operating programs and amended CIP 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. i� Adoption of Sewer Rate Change Page 3 ATTACHMENT 1. Resolution Setting Sewer Rates G:\UTIL\CAR Reports\2008 Council Agenda Reports\Adopfion of Sewer Rate Change-Sept 2008.doc Attachment 1 RESOLUTION NO. (2008 Series) A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO SETTING SEWER 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 costs of providing services; and WHEREAS, a comprehensive review and analysis of sewer use by customer class and revenues over the past two years has been performed for fiscal years 2006-07 and 2007-08; and WHEREAS, a comprehensive analysis of sewer fund operating, capital and debt service needs has been performed for fiscal years 2008-09 through 2014-15; and WHEREAS, the Council has reviewed the sewer service rates necessary to meet system operating needs, amended capital improvement plans and debt service requirements; and WHEREAS, a public hearing was properly noticed and held on September 2, 2008; 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. The rates set forth in Exhibit "A" are hereby adopted,*establishing rates effective September 3, 2008. Upon motion of , seconded by and on the following vote: AYES: NOES: ABSENT: The foregoing resolution was adopted this day of 2008. Mayor David F. Romero R Attachment 1 Resolution No. (2008 Series) Page 2 ATTEST: Audrey Hooper City Clerk APPROVED AS TO FORM: J athan P owell C rney R Attachment 1 EXHIBIT A to Resolution No. (Series 2008) MONTHLY SEWER SERVICE RATES Account Type Effective September 3,2008 Month1v Sciver Rates: Residential Customers Single family dwelling, Minimum charge: $5.50 per dwelling unit including single meter Volume charge per unit: $6.06 condominiums and townhouses Total monthly fee capped based on average winter water consumption(AWWC) ' Master-metered multi-family dwellings Minimum charge: $5.50 per account in any duplex,apartment house or Volume charge per unit: $6.06 rooming house Accounts without separate irrigation meter. Total monthly fee capped based on AWWC Accounts with separate irrigation meter. No cap. Mobile home or trailer park Minimum charge: $5.50 per account Volume charge per unit: $6.06 Accounts without separate irrigation meter: Total monthly fee capped based on AWWC Accounts with separate irrigation meter: No cap iNlonthly SeNver Rates: Non-Residential Customers Public,private,or parochial school, $4.91 per ADA average daily attendance(ADA)at the school All Other Accounts Minimum charge: $5.50 per account Volume charge per unit: $6.06 Each Vehicle Dischar.aing Sewer into City Systern Minimum charge $143.06 Additional charge per 100 gallons in $8.61 excess of 1,500 gallons discharged ' The Average Winter Water Consumption(AWWC)is established in December,January and February. The AWWC sewer cap is implemented in July. R