HomeMy WebLinkAbout06/11/2009, PH4 - 2009 WATER FUND REVIEW AND ADOPTION OF WATER RATES FOR 2009-11 council June 11,2009
acEnaa nEpoRt Ply
CITY OF SAN LUIS OBISPO
FROM: Came Mattingly, Utilities Director
Prepared By: Kathe Bishop, Senior Administrative Analyst
SUBJECT: 2009 WATER FUND REVIEW AND ADOPTION OF WATER RATES
FOR 2009-11
RECOMMENDATION
1. Review and accept the 2009 annual water fund financial review, and;
2. Adopt a resolution increasing water service charges by twelve percent (12%), effective July
1, 2009 and eleven percent (11%) effective July 1, 2010 provided there is not a majority
protest against such increases.
3. Conceptually approve the Water Fund budget for 2009-11, with final action on June 16, 2009
with adoption of the 2009-11 Financial Plan.
DISCUSSION
Report-In-Brief
This report presents the annual review of the financial position of the City's water fund and
makes recommendations for water rate increases. The 2009 water fund financial analysis
confirms the need for -incremental rate increases as forecast during consideration of the
Nacimiento water supply and the Water Master Plan improvement projects.
In the 2008 Water Fund Review presented to the Council in May 2008, water rate increases were
forecast at 12% in 2009-10 and 11% in 2010-11. The 2009 water fund analysis confirms the
2008 forecast indicating a need to increase water rates 12% effective July 1, 2009 and 11%
effective July 1, 2010. For the average residential water customer that uses 10 units of water per
month this means an increase of$5.65 per month for 2009-10 and $5.85 per month in 2010-11.
Pursuant to the requirements of California Constitution Article XIII (commonly referred to as
Proposition 218) the public was notified of the public hearing and the recommended rate
increases.
Overview of Capital Projects
The Nacimiento water supply project is currently under construction and scheduled for
completion in late 2010. The total cost of the Nacimiento pipeline water supply project is $176
million for design and construction, based on construction bid award amounts. The City of San
Luis Obispo's share of the Nacimiento project is approximately $83.7 million. In preparation for
the new water supply, the Water Treatment Plant Master Plan improvements were completed in
PR 4-1
2009 Water Fund Review and Adoption of Water Rates for 2009-11 Page 2
2008, at a cost of $16.9 million for design, construction, and related services. Additionally,
construction was completed on the Alrita Pump Station and the Bishop Water Tank.
Financial Analysis and Long-Range Forecast
The 2009 water fund analysis forecasts the water fund's financial position through 2016-2017.
The inputs associated with this analysis take into consideration current economic conditions,
significant reductions in short and long-term development impact fee revenues (Attachment 1,
page 8, A-3), regulatory requirements, and long-range planning. Included are significant
operating cost reduction options that produce the lowest responsible budget and associated water
service charges while ensuring high quality, safe, and reliable water services to the community.
Using a long-range forecast to inform the rate setting process enables the City to incrementally
adjust rates to achieve its long-term goal of securing adequate water supplies for the community
through participation in the Nacimiento water supply project and continued expansion of the
recycled water program. The analysis incorporates funding for long-term financing costs
associated with the Master Plan improvement projects at the Water Treatment Plant, and
includes an ongoing level of capital maintenance projects to maintain the City's water
infrastructure assets.
With the recommended water rate increases for 2009-11 and the ongoing incremental rate
increases in the long-term financial forecast, the water fund will be in a strong position to
maintain its fiscal health and stability, capable of supporting the continuing operations and
capital programs.
2009 Water Fund Analysis Report
The 2009 Water Fund Analysis report, including the details of the process, changes in financial
position, assumptions used to complete the analysis, and an update on major activities and
programs is attached. This year's analysis confirms the previously forecasted rate increases for
2009-11 water service charges and projects incremental annual rate increases through 2016-17.
As identified in recent years under the City of San Luis Obispo's multi-year rate strategy, the
adoption of the proposed 2009-11 water rates positions the Water Fund to have adequate
resources for the City's share of the Nacimiento Project, Water Reuse Master Plan
improvements, and the Salinas Reservoir booster pump station upgrade project. The proposed
rates support major equipment maintenance at the Water Treatment Plant, water distribution
system improvements, and technology upgrades to the City's water telerimetry system. The
proposed rates are necessary to adequately meet operational and maintenance demands, public
health standards, environmental and regulatory requirements, and ensure the water fund's fiscal
health.
2009-11 Financial Plan Operating Program Reductions
The operating program reductions included in this analysis are outlined in Attachment 1, page 3.
A detailed listing of all water fund operating program reduction options that were identified and
evaluated, including reduction options that were retained in the budget and those options that
2009 Water Fund Review and Adoption of Water Rates for 2009-11 Page 3
were reduced or eliminated from the budget, is provided in Appendix A of the Preliminary
Financial Plan, pages 102 to 106.
2009-I1 Financial Plan-Significant Operating Program Change Requests
The Significant Operating Program Change requests are summarized in Attachment 1, page 4
with detailed supporting documentation for each request provided in Appendix A of the
Preliminary Financial Plan, pages 18 to 39.
2009-11 Financial Plan- Capital Improvement Plan Requests
The Capital Improvement Plan requests are summarized in Attachment 1, page 5 with detailed
supporting documentation for each request provided in Appendix B of the Preliminary Financial
Plan, pages 3-68 to 3-107.
Public Participation
On April 27, 2009, pursuant to the requirements of California Constitution Article XIII
(commonly referred to as Proposition 218), a Notice of Public Hearing (Attachment 2) was
mailed to all water and sewer customers informing them of the proposed rate increases for the
water and sewer funds 45 days in advance of the public hearing. The Utilities Department
newsletter Resource, SLO City News, and the City website were also utilized to notify the
public of the proposed rate increases and the associated public hearing
The Notice of Public Hearing included proposed water rate increases of 12% in 2009-10 and
11% in 2010-11, which are the final recommended water rates for Council consideration. As
outlined in the Proposition 218 notice, the recommended rate increases will be discussed as a
public hearing item before the City Council on June 11, 2009, when the public will have an
opportunity to comment on the recommendations. Staff looks forward to Council and community
input on these issues.
Paying for Water Services
Water rates are commodity-based therefore bills are based on customer usage choices and
resulting demand on the water system. The service charge is wholly based on the volume of
water used.
The following table shows a summary of the current and proposed water rates for accounts inside
the City limits. Exhibit A of Attachment 3 provides the detailed list of the proposed rate
increases for 2009-10 and 2010-11. For the few accounts outside of the City limits, rates are
twice the amounts shown. Additionally, there are a couple of commercial accounts within the
City that do not have a water meter(served by private wells), but are attached to the City's water
system for emergency purposes such as fire protection as established in 1996 under Resolution
No. 8578, and included in the proposed water rate resolution (Attachment 3, section 3).
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2009 Water Fund Review and Adoption of Water Rates for 2009-11 Page 4
CURRENT AND PROPOSED WATER RATES
Proposed Proposed
USE CURRENT JULY 19 2009 JULY 19 2010
Single-Family Residential
I to 5 units* $ 4.19 $ 4.69 $ 5.21
6 to 25 units $ 5.24 $ 5.87 $ 6.52
26 or more units $ 6.57 $ 7.36 $ 8.17
All Other
1 to 5 units $4.19 $ 4.69 $ 5.21
6 or more units $ 5.24 $ 5.87 $ 6.52
*All rates shown are or one unit o water. A unitequals 748 gallons.
The impact of the proposed increase on the monthly water portion of the bill of a typical
residential customer who uses 10 units of water per month is shown below. Proposed water rate
increases for the typical residential customer are $5.65 monthly starting July 1, 2009 and $5.85
monthly starting July 1, 2010.
SAMPLE RESIDENTIAL WATER BILL—Assumes 10 units*of water usedper month
Proposed Proposed
USE CURRENT JULY 1, 2009 JULY 19 2010
Residential Water Service $ 47.15 $ 52.80 $58.65
*A unit of water equals 748 gallons
Water Rate Protests
Under Proposition 218, customers directly responsible for the payment of the fee subject to the
proposed rate increase may submit a written protest against each proposed rate increase (water
and/or sewer). The protest must be in writing, received by the City Clerk at or before the public
hearing on June 11, 2009, identify what is being protested, and contain the service address and
the water and/or 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/or sewer bills.
If written protests are filed by a majority of the affected customers, the applicable proposed rate
may not be imposed. A majority is approximately 7,463 customers. As of May 22, 2009, a total
of 22 written protests were received by the Office of the City Clerk. Of the 22 written protests
received, 17 protests are valid, as summarized below. The City Clerk will provide an updated
summary of the protests received at the June 11, 2009 City Council meeting.
Proposition 218 Validated Protests as of May 22,2009
Proposed Fee Chane Number of Valid Protests
Water Rate Increases 17
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2009 Water Fund Review and Adoption of Water Rates for 2009-11 Page 5
FISCAL IMPACT
The recommended general purpose water rate increases of twelve percent (12%) effective July 1,
2009 and eleven percent (11%) effective July 1, 2010 will allow the City to fund the operating
and capital needs of the City's water system as presented to Council on June 11, 2009 during a
public hearing on the annual water fund review.
ALTERNATIVES
Deny the recommended rate increases. The Council could choose to enact rates less than those
recommended or it could choose to enact no rate increases.
Through the fund analysis, numerous rate scenarios were analyzed in a rate model that was
affected by multiple factors (i.e. capital improvements, debt service, long-term fiscal health,20%
reserve policy) to ensure the lowest responsible rates were recommended to Council for
adoption.
In modeling the rates, many alternatives were reviewed seeking to minimize impacts to the
customers in particularly difficult economic times.
As an example, a six percent alternative in FY 2009-10 (as opposed to the recommended 12
percent) would result in about a $3.00 reduction to the average monthly water bill.
This alternative would have one or more of the following impacts:
• Reduced revenues in FY .2009-10 by $750,000 and $1.5 million in FY 2010-11 when
compounded.
• Inability to meet debt obligations and operating costs for Nacimiento project while
maintaining a 20% operating reserve policy.
• Essential capital projects deferred. In order to lessen the rate impacts during this
economic downturn, capital projects have already been reprogrammed out as far as
possible considering infrastructure needs and regulatory compliance.
• Further staffing reductions. Three regular positions are currently recommended for
elimination in the Utilities Department— further reductions would have additional severe
impacts to staff and service deliveries.
• If the ,fund were to "handle" this lower rate in this two year financial plan, an
approximate 22% rate increase would be required (as opposed to 10% in the current rate
projections) in year three (FY 2011-12) in order to meet 20% policy reserve
requirements. This conflicts with the City's current philosophy of long-term planning and
a multi-year rate strategy that avoids rate spikes.
The recommended rate increases of 12 % effective July 1, 2009 and 11 % effective July 1, 2010
have been identified through the comprehensive fund analysis as being necessary to meet the
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2009 Water Fund Review and Adoption of Water Rates for 2009-11 Page 6
financial needs of the Water Fund in providing for the water service needs of the community.
Staff believes all remaining services, operating programs, and capital components of the Water
Fund represented by the recommended rates for service are necessary, appropriate, and
consistent with prior and current policy/program direction of the City Council, and are consistent
and necessary for compliance with state and federal laws regulating the City's water system.
Therefore,these alternatives are not recommended.
ATTACHMENTS
1. 2009 Water Fund Analysis
Exhibit A — Updated Financial Schedules
A.1. Changes in Financial Position
A.2. Assumptions for Fund Projections
A.3. Capital Improvement Plan
2. Paying for Water and Sewer Services Proposition 218 Notice of Public Hearing
3. Resolution Establishing Water Service Rates for 2009-11
G:\Admin\Kathe\Fiscal\FINANCIAL PLANS\2009-11 Financial Plan\2009-I0 Fund Analysis\1. Water\3.Staff Reports—Water\l.2009 Water
Fund CAR and 2.2009 Water Fund Report_Attachment 1
ATTACHMENT 1
2009 Water Fund Analysis
June 11, 2009
Prepared by the
Utilities Department
city of san tuis oBi spo
P�4- 3-
Attachment I
Paget
city of san Luis oBispo
2009 Water Fund
TABLE OF CONTENTS
I. OVERVIEW
II. 2009-10 FINANCIAL PLAN
A. Operating Program Reductions
B. Summary of Operating Programs
C. Significant Operating Program Changes
D. Capital Improvement Plan
III. RATE SETTING
A. Methodology
B. Water Rate Structure
C. Water Rate History
IV. ASSUMPTIONS
A. Revenues
B. Expenses
C. Debt Service Payments
V. MAJOR ACTIVITIES AND PROGRAMS
A. 2008-09 Update
B. 2009-10 and Forecast
EXHIBIT A— FINANCIAL SCHEDULES
A.1. Changes in Financial Position
A.2. Assumptions for Fund Projections
A.3. Capital Improvement Plan
T��-$
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Attachment 1
Page 3
city of
san LUIS OBIspo
2009 Water Fund Analysis
I. OVERVIEW
This report presents the financial condition of the Water Fund, based on the 2009-11 Financial
Plan operating and capital programs, taking into consideration current economic conditions,
while addressing the identified needs in the Water Master Plan, regulatory requirements, and
adopted City financial and infrastructure maintenance policies and major City goals.
II. 2009-11 FINANCIAL PLAN
The 2009-11 Financial Plan development process included identifying operating.cost reduction
options to further tighten the on-going operating program budgets for water service, in an effort
to recommend the lowest responsible budget.and associated water charges, while ensuring high
quality, safe and reliable water services to the community. A total of 31 reduction options were
identified in the water programs resulting in short and long-term impacts to water customers and
the community. The recommended operating program reductions for water services are outlined
in Table A. The recommendations represent a savings of $163,500 annually, including a
reduction in temporary staffing and a reduction of 1.10 full-time equivalent positions
representing the water fund's proportionate share of three regular benefited positions that are
recommended for elimination. Of the $163,500 annual savings in the Water Fund, 75%
($122,800) is staffing related and 25% ($40,700)reflects non-staffing operating savings.
A. Operating Program Reductions
Temp Regular 2009-10 2010-11
FTE(11 FTE 111 SAVINGS SAVINGS
I. Eliminate Utilities Engineer position-50°x,share(r) 0.50 73,700 73,600
2. Eliminate Water Customer Service position-50%share(3) 0.50 39,700 39,600
3. Eliminate Laboratory Analyst position- io%share 1'1 0.10 9,400 9,700
4. Reduce Operating Materials and Supplies 1,000 1,000
5. Reduce Outreach to Landscape Professionals 7,000 7,000
6. Reduce Professional Association Dues 400 400
7. Reduce in Publications and Subscriptions 200. 200
8. Reduce in Printing and Reproduction Services 3,000 3,000
9. Reduce in Office Supplies 100 100
10. Reduce in Conservation Temporary Salaries 0.20 4,000 4,000
11. Reduce in Public Outreach and Education 25,000 25,000
TOTAL WATER SERVICES OPERATING REDUCTIONS 0.20 1.10 163,500 163,660
cn FTE represents full time equivalent
(2)Engineer position savings is shared 50%water,40%sewer and 10%whale tock
(3)Customer Service position savings are shared 50%water and 50%sewer
(°)Lab Analyst position savings is shared 90%sewer and 10%water
Operating program reductions are provided in the Preliminary Financial Plan,pages 102 to 106
Attachment 1
Page 4
Water Division operating programs are summarized in Table B. The summary of operating
programs includes the operating budget reductions from Table A and reflects the net operating
program base budget amounts for 2009-11.
B. Summary of Operating Programs
Includes Operating Program Reductions as outlined in Table A. 2009-10 2010-11
BUDGET BUDGET
Water Source of Supply ltl 1,274,700 5,511,700
Utilities Conservation 427,500 432,300
Water Treatment 1,926,000 1,983,800
Water Distribution 1,084,000 1,123,600
Water Customer Service (z) 269,800 281,600
Water AdministradomEngineering 597,500 603,800
Water Franchise Fees 527,300 570,700
TOTAL WATER SERVICES OPERATING PROGRAMS 6,106,800 10,507,500
"'Source of Supply costs include$4,069,100 in 2010-11 for the Nacimiento Water Project
tzt Customer Service is funded 50%Water Customer Service and 50%Wastewater Collection
Significant operating program change requests are necessary to continue to meet the operating
requirements to deliver high quality water services to the community including: operational and
maintenance service levels, increasing productivity, improving customer.services, and continuing
to meet environmental and public health regulations. The most significant operating program
change requests are due to increased costs associated with electric utility service, chemicals for
water treatment, and on-going maintenance of the ozone system at the water treatment plant. The
requested increase for Salinas Reservoir operations reflects the City's costs associated with the
booster pump station upgrade project. This capital improvement project does not reflect an on-
going expense; it is a one-time cost that the City will pay for over the next several years through
the source of supply operating program budget, with the majority of costs in 2010-11.
C. Significant Operating Program Changes 2009-10 2010-11
BUDGET BUDGET
Water Source of Supply
Salinas Reservoir Operations 25,000 1,235,900
Water Reuse Electric Utility and Lab Supplies 45,000 47,500
Water Treatment
Contract Services 16,200 18,600
Electric Utility,Chemical and Operating Materials 108,700 159,600
Ozone System Maintenance 84,500 84,500
Water Distribution
Operating Materials&Supplies 30,000 33,000
Productivity Improvements-share 22,000 0
Water Customer Service
Productivity Improvements-share 0 32,000
Operating Materials&Supplies 23,000 28,500
TOTAL WATER SERVICES SOPC REQUESTS 354,400 1,639,600
Detailed supporting documents for each request is provided in Appendix A of the
Preliminary Financial Plan,pages 18 to 39.
Pit 4-I0
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Attachment 1
Page 5
Capital Improvement Plan requests are based upon projections to the end of the 2008-09 fiscal
year and the Preliminary 2009-11 Financial Plan, including capital projections through 2012-13.
Thereafter, capital expenses are forecast based on infrastructure maintenance and repair history
and regulatory requirements. Maintaining the water system infrastructure, including major
equipment and technology is critical for the delivery of uninterrupted high quality water services
to the community. During the current and forecasted downturn in the construction industry and
given the competitive construction bidding climate, investing resources in the water system
capital improvement plan makes fiscal sense. The improvements are vital to infrastructure health
and supporting capital investment at this time will result in value added to the City, its water
customers, the community, and for local businesses in construction related services. Table D
outlines the Capital Improvement Plan for the Water Division.
D. Capital Improvement Plan
2009-10 2010-11 2011-12 2012-13
BUDGET BUDGET PROPOSED PROPOSED
Source of Supply
Water Reuse Master Plan 250,000 250,000 250,000 250,000
Water Treatment Plant
Major Facility Maintenance 200,000 250,000 100,000 100,000
Fleet Replacement: 1/2 Ton 4x4 Pickup 31,700
Fleet Replacement: Compact Pickup 24,700
Water Distribution
Distribution MasterPlan Implementation 250,000 250,000 250,000 250,000
Distribution System Improvements 1,180,000 1,375,000 1,400,000 1,425,000
Polybutylene Water Service Replacement 450,000 250,000 350,000 350,000
Emergency Generator Replacement-50%share 33,800
Fleet Addition: Valve Exercise Equipment 87,700
Water Customer Service
Fleet Replacement: Two Compact Pickups 49,500
Administration and Engineering
Exterior Painting of 879 Morro-50%share 9,000
Fleet Replacement: Sedan 22,200
Fleet Replacement:Compact Pickup 25,500
Total Water Services CIP Requests 2,483,200 2,375,000 2,381,200 2,474,700
Shared City Information Technology
Utilities Telemetry System Upgrade 325,000 1,500,000
Technology Infrastructure 7,500 24,000
IT Disaster Prevention and Recovery Plan 2,300
Office Application Software Replacement 14,700
SharePoint Enterprise Content Management 3,800
FoxPro Application Conversion 17,000 17,000
IT Strategic Plan 16,000
Total Share of Technology CIP Requests 325,000 1,507,500 61,800 33,000
TOTAL WATER FUND CIP REQUESTS 2,808,200 3,882,500 2,443,000 2,507,700
Detailed supporting documents for each request is provided in Appendix B of the Preliminary Financial Plan,
pages 3-68 to 3-107
Attachment 1
Page 6
M. RATE SETTING
A. Methodology
In determining water revenue requirements and setting recommended rates, the following general
methodology is used:
Step 1: Determine Water Fund revenue requirements for:
a. Operations and maintenance
b. Capital improvements and replacements
c. Debt service obligations (existing and projected)
Step 2: Subtract from this amount"non-rate revenues"such as:
a. Interest earnings
b. Development impact fees and meter sales
c. Revenues from other agencies(Cal Poly)
d. Other service charges (service start-up fees, late charges, etc.)
Step 3: Identify water rate requirements:
a. Revenue needed to be generated from water rates is the difference between
water revenue requirements (Step 1) and"non-rate"revenues (Step 2).
Step 4: Determine new rates:
a. Model the rate base(consumption and customer account assumptions)against
the existing rate structure and rate requirements identified in Step 3.
Because this analysis is performed over a multi-year period, other factors are considered, such as
working capital available to support capital projects, debt service coverage requirements, and
minimum working capital policy.
B. Water Rate Structure
Current policies to guide rate structure setting:
• Comply with legal requirements
• Encourage conservation
■ Ensure revenue adequacy to fully meet system operating and capital needs
■ Provide equity and fairness between customers
■ Be easy to understand and administer
■ Facilitate ongoing review to maintain rate stability
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The current water rate structure is commodity-based with charges based on the volume of water
used. The table below shows the water rate structure with the current 2008-09 water rates.
lCuMstomer e Single Family
Residential Customers] All Other Customers
Inside the City Rates I -5 Units $4.19/Unit 2 1 -5 Units $4.19/Unit
6-25 Units $5.24/Unit 6+ Units $5.24/Unit
26+ Units $6.57/Unit
Outside the City Rates 3 1 -5 Units $8.38/Unit 1 -5 Units $8.38/Unit
6-25 Units $10.48/Unit 6+ Units $10.48/Unit
26+ Units $13.14/Unit
Third tier charges for more than 25 units am applicable for Single Family Residential(SFR)customers only to
encourage water conservation.
Z 1 unit =100 Cubic Feet=748 gallons of water
'For service to customers outside the City,the water rates are two times the"in-City"rate.
C. Water Rate History
The table below displays the proposed water rates for 2009-10 and 2010-11, as well as a five
year history of water rates.
Proposed 1-5 units 5.21
2010-11 6-25 units 6.52
more than 25 units 8.17
Proposed I-5 units 4.69
2009-10 6-25 units 5.87
more than 25 units 7.36
1-5 units 4.19
2008-09 6-25 units 5.24
more than 25 units 6.57
1-5 units 3.71
2007-08 6-25 traits 4.64
more than 25 units 5.81
1-5 units 3.28
2006-07 5-25 units 4.11
more than 25 units 5.14
2005-06 1-5 units 2.93
more thm.5 units 3.67
2004-05 1-5 units 2.71
more than 5 units 3.40
pRq-13
Attachment t
Pages
IV. ASSUMPTIONS
The following provides more detail for the key assumptions in Exhibit A.1. and A.2. to this
report, the financial schedules showing the water fund's changes in financial position and the
listing of assumptions.
A. Revenues
1. Sales are calculated based on the percentage increase in rates and a one percent
growth rate, applied to an analysis of water deliveries.
2. Sales to Cal Poly are based on historic use and the 2007 Agreement between the
City and the University. This agreement, covering the period beginning July 1, 2007
and extending through June 30, 2012, set the proportion (66%) of the non-
residential rate the University pays to account for the University's difference from
other customers (the University owns its own water supply and capacity interest at
the Water Treatment Plant associated with the 1994 WTP upgrade).
3. Development impact fee collection is calculated according to the base set by the
impact fee study in 2004 and adjusted by the one percent growth rate and inflation.
Annually, this calculation is evaluated and proportionately adjusted due to lower
than one percent growth as well as development occurring under maps vested prior
to current impact fee establishment. Developments in those areas pay only those
fees in place at the time of approval plus an annual adjustment based on the
consumer price index.
As a result of the current significant and anticipated continued downturn in
development, development impact fee revenue projections have been significantly
reduced relative to past budgets. Revenues are not projected to reach2007-08 levels
again until 2014-15.
Water development impact fees are currently being reviewed and updated to reflect
updated costs for the Nacimiento Water Supply project, Water Treatment Plant
upgrade, and Water Master Plan amendments which include water distribution
improvements to serve the Airport and Margarita planning areas. Adjustments to
the development impact fees are not projected in this fund analysis and are not
anticipated to have a significant affect on the water rate recommendations. Water
development impact fees, updated in the 2004 impact fee study, are adjusted
annually based on the consumer price index.
B. Expenses
The operating and maintenance costs for 2009-10 and 2010-11 are based on historical
trends and projected changes in expenses. Operating and maintenance costs forecasted for
2011-12 through 2016-17 are adjusted assuming an inflation rate of 3% annually. Recent
trends in the consumer price index reflect relatively flat inflationary rates. However, the
most significant non-staffing operating costs for water services are for electric utility
services to pump raw water from the reservoirs and chemicals and electricity for water
treatment processes and distribution. Projected electric utility rate increases range from
nine to eleven percent annually depending on the type of metered account. Chemical cost
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increases from 2008 to 2009 range from a 22% increase for sodium hypochlorite
(chlorine) from $0.79 to $0.96 per gallon to a 67% increase for sodium hydroxide from
$0.88 to $1.47 per gallon.
With the Nacimiento water supply project debt financing facilitated through the County,
the City's share of the project debt service costs are accounted for as an operating
expense. The City's share of the Nacimiento project annual costs begin in 2010-11.
Nacimiento expenses are reflected in Exhibit A on the listing of assumptions and
included with the Public Utilities operating expenses listed in the Change in Financial
Position worksheet (Attachment 1, Exhibit A). Nacimiento expenses total $4,069,100 in
2010-11, which includes $875,600 (a one-time payment for prior capital expenses),
$1,279,800 for operations and maintenance, and $1,913,700 representing the City's share
of an interest-only payment for the debt financing.
Capital expenses are based upon projections to the end of the 2008-09 fiscal year and the
Preliminary 2009-11 Financial Plan, including capital projections through 2012-13.
Thereafter, capital expenses are forecast based on infrastructure maintenance and repair
history and regulatory requirements.
C. Debt Service Payments
1. Debt service for the 1994 upgrade of the Water Treatment Plant, the 2002
Refunding Water Revenue Bond debt payment, is $690,100 in 2009-10 and
$687,200 in 2010-11.
2. Debt service for the 2006 upgrade of the Water Treatment Plant, the 2006 Water
Revenue Bond, is $1,035,300 in 2009-10 and $1,032,700 in 2010-11.
3. Debt service for the repayment of the State Revolving Loan Fund for the
construction of the Water Reuse system is $525,500 annually in 2009-11.
4. Debt service to pay for the Water Fund's proportionate share of the energy
conservation project is $29,000 annually in 2009-11.
V. MAJOR ACTIVITIES AND PROGRAMS
A. 2008-09 Update
1. Nacimiento Pipeline Water Supply Project
Participation in the Nacimiento Pipeline Water Supply Project is the most
significant water supply achievement in terms of both cost and benefit. The project
will provide for secure and reliable supplies in times of drought or catastrophic loss
of one of the City's major water supply sources providing the community with an
additional 3,380 acre-feet per year of additional potable water supply. It will also
provide the water needed to achieve the City's General Plan goals. The project is
currently under construction and on schedule, with construction approximately 70
percent complete. Water deliveries are estimated to begin in late 2010. The total
project cost for the Nacimiento Project is $176 million for design and construction,
based on bid award amounts. The City's share of that cost is estimated at $83.7
million. An operating and maintenance payment to the County for the City's share
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of project costs is estimated at $4.1 million (prorated) in 2010-11 and $6.4 million
annually thereafter.
2. Water Reuse Project
The Water Reuse project was approved by Council in 1997. Construction of the
backbone distribution system was completed in August of 2004 and improvements
at the Water Reclamation Facility for the project were completed in 2006. Recycled
water deliveries began in November 2006 and the system now serves:
■ Damon Garcia Sports Complex ■ Laguna Lake Golf Course
o Medians on Los Osos Valley Road ■ Laguna Middle School
e Parkways on Calle Joaquin Road ■ Laguna Hills Park
■ The Courtyard by Marriott Inn a Laguna Lake Park
■ Costco and Irish Hills Plaza ■ French Park
■ Laguna Village Shopping Center ■ Islay Park
Recycled water is utilized for City street sweeping and will be available for
construction water uses (dust suppression and compaction) by permit beginning in
July 2009. The retrofit of the irrigation system at DeVaul Park and the connection
of irrigation systems serving landscaped areas of two homeowner associations will
be completed by the end of 2009. In coordination with the construction work for the
Tank Farm Gravity Sewer, Lift Station, and Force Main Project the recycled water
distribution line on Broad Street was extended approximately 1,000 feet north to
Capitolio Road. The City is also working with Caltrans in an effort to serve
recycled water to a portion of the Highway 101 corridor landscaping between
Madonna Road and Los Osos Valley Road and other areas.
The Water Reuse project is the first significant water supply added for the City
since the completion of the Whale Rock Reservoir and transmission facilities in
1961. The project was funded through a combination of State Grant ($2.6 million)
and State Revolving Fund loan funds ($8.1 million) with annual debt service
payments for the Water Reuse project at$525,500. Additionally, $250,000 has been
committed annually for capital improvement projects to expand the system to serve
new customers.
B. 2009-10 and Forecast
1. Infrastructure Replacements
The City has adopted a goal for annual infrastructure replacements at approximately
two percent of system value (based on a fifty year replacement cycle) for the water
distribution system. For previously approved distribution system improvements
projects that are pending construction and for proposed projects this equates to an
expenditure of $2,070,000 in 2009-10 and $1,396,000 in 2010-11. Repair and
upgrade at major facilities such as the Water Treatment Plant and pump stations is
based on maintenance and repair history.
PAq -1�
Attachment I
Page 11
2. Salinas Reservoir Infrastructure Upgrades
The San Luis Obispo County Flood Control and Water Conservation District
operates the Salinas Reservoir under contract with the Army Corps of Engineers.
Through payments in the City's source of supply program, the City pays for the
total cost of operating and maintaining Salinas Reservoir and delivery system for
transporting raw water to the City's water treatment plant. In 2007, City and County
staff began forecasting budgetary needs for a booster pump station upgrade at the
reservoir. The booster pump station upgrade is estimated to costs $238,800 in 2009-
10 for design and $1,052,200 for construction in 2010-11. This results in an
increase in the City's payment for Salinas Reservoir operations over the next
several years, which was previously forecasted in the 2007 and 2008 water fund
reviews.
3. Telemetry Upgrade Project - On April 7, 2009, the City Council received a
presentation on the "SCADA System Upgrade Assessment Report" which was
prepared by DLT&V consultants. The report identified an immediate need to
implement upgrades to the control and monitoring systems for the Whale Rock and
the city-wide water distribution system. The report identified that these were the
two most outdated systems in the Utilities Department and had reached the end of
their service life. The design of the telemetry upgrade is estimated to cost $400,000
in 2009/10 and construction is estimated to cost $1,850,000. The costs associated
with the upgrades to the Whale Rock system are shared with the other Whale Rock
Commission agencies (California Men's Colony and Cal Poly).
f
Attachment 1
Page 12
EXHIBIT A
2009 WATER FUND
FINANCIAL SCHEDULES
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ATTACHMENT
citylor
san fths o�,spo
NOTICE OF PUBLIC HEARING
Paying For Water and Sewer Services
Thursday, June 11 , 2009
7: 00 p,m,
1 How Are Water And Sewer Rates Calculated?
Annually the City prepares detailed analyses of the revenues and expenditures for the Water and Sewer funds to ensure
sufficient revenues are collected to effectively provide for the short and long-term water and sewer service needs of the
community. Revenues received from water and sewer charges are restricted solely for these purposes.
M U LT I-Y E A R R AT E S E T T I N G S T R AT E G Y -The in-depth analyses that are conducted include a minimum five-
year look ahead at operating and capital program costs in order to adequately prepare the funds for upcoming expenses and
avoid significant unexpected increases in rates.To achieve planned service goals, incremental rate increases over a number of
years are the preferred method for ensuring rate stability.Tables 1 and 2 of this notice show the proposed rates. The proposed
rates are consistent with or slightly below those forecasted in the prior year.
RATES BASED ON CUSTOMER USAGE CHOICES — Under the City's water and sewer rate structures,
bills are based on customer usage choices and resulting demand on the sewer and water systems.The City has a commodity-
based water rate —the service charge is wholly based on the volume of water used.The sewer rate contains two components
— a minimum base charge and a service charge based on the volume of water used. For residential customers, a"sewer cap" is
established based on the individual customer's three-month average of winter water use,when little or no irrigation should occur,
to establish the individual customer's demand on the sewer system.
1 What Action Has Been Taken To Control Costs?
Keeping costs down is one of our main concerns, especially during these difficult economic times.While open positions are
not being filled, interns and volunteers are helping get the work done, All employees were asked to provide ideas on ways to
reduce expenses, many of which have been implemented.All water and sewer work programs worked on zero-based budgets:
The existing budget was not increased by some percentage, but was essentially rebuilt from scratch. Cuts were made in every
program.
On the other hand, costs for the electrical power needed to run treatment plants and pumps, as well as costs for disinfectant
and process chemicals, have significantly increased.The water treatment plant and water reclamation facility have focused on
further energy efficiencies,as electrical costs are some of the major operating expenses.We are exploring ways to reduce
chemical use and still meet regulatory requirements. Broken pipes and failed equipment create extraordinary expenses in
emergency contract work and staff overtime.The bidding climate for capital projects is good right now, and necessary capital
projects are continuing in order to reduce emergency situations.
ATTACHMENT 2
1 Why Are The Water And Sewer Rates Being Increased?
W AT E R. There area number of factors driving the need to increase water rates,one of which is the need to
develop new and more reliable sources of water.These new sources will provide for secure and reliable supplies in
times of drought or catastrophic loss of one of the City's major water supply sources.They will also provide the water
needed to achieve the City's General Plan goals.The new supply projects include the Water Reuse project, which will
generate over 1,000 acre-feet per year of drought-proof supply suitable for irrigation and other non-potable uses; and
the Nadmiento Pipeline project,which will provide the community with 3,380 acre-feet per year of additional potable
water supply when it is completed during the latter part of 2010.
In addition to water supplies,the proposed rate increases will support ongoing maintenance and operating programs
needed to ensure that the water treatment and delivery systems meet all federal and state water treatment
regulations—,provide adequate fire flow protection and are operated and maintained to provide reliable service.
S E W E R. The proposed increase to sewer rates is needed to fund required upgrades to the City's water
reclamation facility in order to meet added regulatory requirements for protection of San Luis Obispo Creek. In
addition, the proposed rates will assist in funding repairs to the wastewater collection system.The proposed rates are
needed to fund ongoing operations and maintenance costs of an aging infrastructure in both the water reclamation
facility and the wastewater collection system.
For questions regarding the City's water and sewer operations and maintenance programs,or inquiries about specific
water or sewer projects, please contact the Utilities Department at(805) 781-7215.
How Can I Find Out More About The Proposed Increases?
Information to help you calculate how the proposed rates will affect your bill is on the Web at www.slocity.org/utilities;
click on "How to Calculate Your Water and Sewer Bill." If you keep your old water and sewer bills,you can look back
at the units of water you used and your sewer cap to determine how the proposed rate may impact you.You can also
look up your bills on-line by going to www.slocity.org and clicking "Pay Utility Bill."You may also call Utility Billing at
(805) 781-7097 or the Utilities Department at(805) 781-7215 for assistance:
How Do I Protest The Proposed Water And/Or Sewer.Rate?
Proposition 218 mandates how protests to water and/or sewer rates are conducted. Customers directly responsible for
the payment of the fee subject to the proposed rate increase may submit a written protest against the proposed rate. If
written protests are received from a majority of the affected customers,the proposed rate will not be imposed.
It is important to follow these instructions in order for your protest to be valid:
1. The protest must be in writing and received by the City Clerk at or before the public hearing on June 11,2009.
Those who protest must specifically identify what is being protested - the water rate increase,the sewer rate
increase or both.Written protests may be mailed or personally delivered to the City Clerk at 990 Palm Street,
San Luis Obispo, CA 93401.
2. All written protests must contain the service address and the water and sewer service account number.
3. The protest must be signed, and the party signing the protest must be listed on the account as the person
responsible for the payment of the bill.
y-a3
ATTACHMENT
What Are The Proposed Rates?
The following shows current and proposed rates for accounts inside the City limits. For accounts outside of the City limits,rates are
twice the amounts shown.
CURRENT AND PROPOSED WATER RATES (TABLE r)
USE CURRENT ProposedJULY1, 2009 Proposed JULY 1, 20 10
� ��(( c{}'R•'Y"- 'L qA. �.• .f1... ry`S'? S�%3'w i. •Y<a `�
01
1 to 5 units $ 4.69
Sr
ryernrc
,,,- ... '•' - 5 t',:< r, 'w , x ?k'.•.�t rJ8'�:-:,'Q? r�.•E� �, ?'y. 'O "x: .n, =�
.� 3�..d"'.r
26 or more units $ 6 57k $ 7.36
r
SJ
1 to 5 units $'4 19 ' `a $ 4.69 $4521_
h10�eklT3Yt:0
< Gi �� � e7'gy. v z4'•�y'g+�e x•-.- �. 1P.
�.i* 4-, t✓�•�,.^' � .�f"ha..k
`fb �rz'� 4 ar-1 1'i'L.._urv+ I <`1<'• a A'S f < Ste•
*All rates shown are for one unit of water. A unit equals 748 gallons.
CURRENT AND PROPOSED SEWER RATES (TABLE 2)
USE CURRENT Proposed JULY 1, 2009 Proposed JULY 1, 2010
�Fa � r €>if `��,rY din ''`le- '"�:a �"ary' r s.,�a� �•
Base fee per dwelling unit
$ 5 50 $ 6.00
(minimum charge) ,
"�"{,S Cj��lI7,iQt � e (e'ipfse('C;�nit s* .c.•i sy`r' a Fwh'C�, 6` W` .rYtd' Li'."!£s X 36 6 cy'- _" 1'u�'�•'t n ,'` cw• S<X
asAr
�.x '1 } A r €R.» F jyy-t.•Z+ ma�.�as�.o.-^�s•_ ({+,3'^rTr� ,..r'xY -v, 4 -.
NOTE'-total monthly charge Is capped;based on,average winter water use-r �
ecwf o i1 I g• x F ,
T t, o" srn uriA fir± .
Base_ fee per account(minimum charge) &50' ; h^ $ 6.00
6 $
�` ,_«
.J_.l.✓ L0..`'%i'; T
NOTE For accounts without a separate Irngat-lon meter,the total monthly charge is capped;;based op average wmtec•:water use
Accounts with aseparate imgte
ation;mer havemo cap:
fIG lil 2-l'J-IAY.c11'OCITf3 'd ti' v „4 ,<• f`�k •�:.�'' -+ "` .P+ti'F`� b ° .:K
i
Per average daily attendance(ADA) P $ 491e' $ 5.37
at the school << '
✓..?�_.-..-.'. .. ..�....u.z_...z.ac_w: �- `...:_... ..._..�_..X54+�._-:.>.
Minimugm charge per account $ 5 50 $ 6.00
`r _� 'VOIUme`52r.ViCe�char e Ef U Its., Fu j$r6 06 ' 'F - r s '.t9 .s.
n P. ,_ ,• ., ,.�.�,,_ � „ $t 663a
*For single family residential and for those master-metered multifamily dwellings and mobile homes or trailer parks without a
separate irrigation meter, the sewer service charge is based on the volume of water used during a three-month period during
the winter months (December, January and February, depending on when your meter is read). This is known as the average
winter water use. The average volume of water used during this period is used to calculate your sewer cap for the next year.
What Is The Impact On A Typical Residential Customer?
The following shows the impact of the increase on a typical residential customer, which assumes 10 units of water use per month
and a sewer cap of seven units per month:
SAMPLE RESIDENTIAL WATER AND SEWER BILL (TABLE 3)
CURRENT Proposed JULY 1, 2009 Proposed JULY 1,2010
Water Service '$'4715'11 $ 52.80
$'58 65
Sewer Base Fee $ 5.50''' $ 6.00 $ 6.55'
Sewer Service Use Fee $ 42:42 $ 46.41 $.50.54�j` ��
ATTACHMENT 2
Cl 0� Presorted Standard
SAI I fths OBIy SPO U.S.Postage
PAID
Permit No.7
Utilities Department San Luis Obispo
CA,93401
879 Morro Street
San Luis Obispo,CA 93401
Printed on Recycled Paper
�j with Soy-based Ink
Notice of Public Hearing
A public hearing on proposed water and sewer rate increases will be held on:
Date: Thursday, June 11, 2009
Time: 7.00 p.rim.
Place: City of San Luis Obispo, Council Chambers
990 Palm Street, San Luis Obispo,CA 93401
The hearing will cover the proposed 2009 and 2010 rate increases for water and sewer services.This notice
has been sent to all customers who currently receive either of these services provided by the City of San Luis
Obispo.If adopted,the proposed rate increases will become effective July 1,2009 and July 1,2010.
This Notice of Public Hearing provides information regarding proposed rate increases to the City's water
and sewer service customers pursuant to the requirements of California Constitution Article XIII(commonly
referred to as Proposition 218).The proposed rate increases will be presented to the Council for adoption on
Thursday,June 11,2009,at 7:00 p.m.in the Council Chambers.This notice also provides information on how
rates are calculated,the reasons for the required rate increases,how customers can receive more information
on the effect of the proposed rate increases on their water and sewer bills and how to file a protest against the
proposed.rate increases.
� S
ATTACHMENT 3
RESOLUTION NO. (2009 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 2009-11 through 2016-17; and
WHEREAS, this comprehensive analysis has been revised based on updated revenue and
expenditure information; and
WHEREAS, the Council has reviewed the water service rates necessary to meet system
operating,capital and debt service requirements.
WHEREAS, a public hearing was properly noticed and held on June 11, 2009; 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. 9911 (2007 Series) is hereby rescinded, effective 11:59 p.m.
June 10, 2009.
SECTION 2. The rates set forth in Exhibit "A" are hereby adopted, establishing water rates
effective July 1, 2009 and July 1, 2010.
SECTION 3. The water system access charges for emergency purposes, such as fire protection
are increased from $34.11 per month to $38.20 per month, effective July 1, 2009 and $42.40 effective
July 1, 2010 to reflect the increase in water rates.
Upon motion of seconded by
and on the following vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this day of 2009.
Mayor David F. Romero
R
V t-1q -�
Resolution No. (2009 Series) ATTACHMENT 3
Page 2
ATTEST:
Audrey Hooper
City Clerk
APPROVED AS TO FORM:
Jonathan P. Lowell
City Attorney
et+L4 -a-�
Resolution No. (2009 Series) ATTACHMENT 3
Page 3
EXHIBIT A
MONTHLY WATER SERVICE RATES
Rates Effective July 1, 00•
Customer Type Single Family All Other Customers
Residential Customers
Inside the City Rates 1 -5 Units $4.69/Unit 1 5 Units $4.69/Unit
6-25 Units $5.87/Unit 6+ Units $5.87/Unit
26+ Units $7.36/Unit
Outside the City Rates' 1 -5 Units $9.38/Unit 1 -5 Units $9.38/Unit
6-25 Units $11.74/Unit 6+ Units $11.74/Unit
26+ Units $14.72/Unit
'For service to customers outside the City,the rates are two times the in City rate.
Rates Effective July 1, 2010
Customer Type Single Family All Other Customers
Residential Customers
Inside the City Rates 1 -5 Units $5.21/Unit 1 -5 Units $5:21/Unit
6-25 Units $6.52/Unit 6+ Units $6.52/Unit
26+ Units $8.17/Unit
Outside the City Rates' 1 -5 Units $10.42/Unit 1 -5 Units $10.42/Unit
6-25 Units $13.04/Unit 6+ Units $13.04/Unit
26+ Units $16.3NUnit
For service to customers outside the City,the rates are two times the in City rate.
1 Unit=100 Cubic Feet=748 Gallons of Water
f ,oa v+q-
6 ►►� lo �
Commentary 11 June 2009 o/ y
During the last 6 weeks I have spoken to about 100 people and none
had read the City flyer. Therefore, it does not seem exactly fair that
the SLO City Council is demanding that 507o of users must protest in
writing or the Council will go ahead with DBL-Digit increases in
WATER/Sewer for the next five years, especially after we citizens
have reduced our water-use by about 3570 since the late 1980's. It
seems that if there can be a ballot for the Mosquito Abatement then
the Water/Sewer increases could have been determined by a vote, a
much fairer assessment of the Public's opinion.
In 2006, we were paying for water and sewer bi-monthly. I was
paying $90 for two months, then $60 per month. That is an increase of
$180/year. Since then there have been other increases.
Following my Tribune article, Closer look into SLO fee raises, I
received a call from Bill Olson, Chair of the Public Works Advisory
Board in Morro Bay. He sent formulas that determine costs for the
citizens of Morro Bay. Installation/maintenance of water meters is
$38.50 per month. State Water is 40(r/unit and Well Water is
8k/unit. For users of 1 to 3 units they charge a flat $16.00 Courtesy
Rate and they do not pay the $38.50. At 4 units and more, the $38.50
is included in the bill.
Recently an NPR program revealed that water is NOT metered in
many and Central Valley towns but they pay the same flat rate and it
includes garbage pickup for $40.
A May 5, Tribune article, states that a current "household of four is
paying $47.15 per month.
I checked with two neighbors who each have three adults in their
homes with yards.
One's bills vary from $70 to $164
the other totaled $138, water-$57 and sewer-$72.
Three families with small children are paying from $120 to $200
Another with five children is paying $210. They have chosen not to
do a vegetable garden this year because of the cost of water.
The family costs quoted in the May 5 article sound unrealistic when
compared to these six families frugally using water while meeting the
demands of the Homeowners Association.
Another article in New Times brings up the possibility that new
monies received by the City may not even be used for a previously
stated cause. Evidently, the City is not using the Measure Y funds the
way a citizens' survey requested. Citizens wanted:
#1 —Street Repair
#2 —Traffic Congestion
#3 —Open Space
#8 —Downtown Beautification
The City is using $800,000 for Downtown Beautification
The disparity between costs to citizens in Morro Bay and Central
Valley towns and SLO is alarming and cries for an explanation from
SLO City officials. Further exploration should take place before we
are subjected to this five-year increase.
I would like to see the City:
* have more clarity and transparency in the costs for water/sewer.
* begin a Water Bill Review Board made up of citizens.
* reconsider using State Water as it is already just North of town.
* institute a review of Homeowner Associations demands, pursue a
reduction in lawns, and the use of drought resistant landscaping.
With the 'build, build, build' mentality of the recent City
Administration we have lost our way bringing about the problems
that we now face.
Sincerely,
Sandra Davis Lakeman
Professor Emeritus of Architecture
1677 Foreman Court
San Luis Obispo, CA 93405
805 5413223 www.sandralakeman.com
COMMENTARY
�J
taking
Closer look at SLO fee raises
debt BY SANDRA DAvrs After that,we were all October-April,2008-09. able people spoke about
LAxEMAN paying every month,and The other for April totaled the lack of water percola-
smut from the my costs Were$50 to$60 $138,$57 for water and tion in the hills around us
I delusional I t is important to get in- per month.Using the up- $72 for sewer. that contributed to our
0 is still too expen- formation to the public 'per numbers of and The family costs quoted lack of water and our need
ll sell for$450k") that the City Council of $90,that is an increase of by The Tribune sound un- to conserve mid not over-
ug and obnoxious San Luis Obispo is propos- $15 per month and$180 realistic when compared build.With the"build,
a 10 million peo- ing to enact double-digit per year. to these two neighbors, build,build"mentality of
huge population increases in water/sewer Recently,an NPR pro- who frugally use water the recent city administra-
imb and very rich rates for each of the next gram revealed that water while meeting the de- tion,we have lost our way
id NOT A SINGLE five years.If more than is not metered in many of mands of the Homeowners and and now face new
THEM has been 50 percent of the users re- the and Central Valley/ Association. problems.
)ugh to buy that spond in protest by Thurs- Fresno area towns,but A May 7 to 14 New In your letters of
me users look up day,the graduated increas- they pay the same flat rate. Tunes article titled,"Y this protest, include the fol-
nt the home last es can be prevented from No matter how much wa- and not that?"mentioned lowing:"Notice of Public
o they can spear taking place.City Adminis. ter homes or businesses "New trashcans and maga- Hearing, Paying for Water
t how much the tiative Analyst Kathy Bish- use or how much flows zine racks downtown.The and Sewer Service,
eller stands to lose . op said 7,201 verified through the sewers,they repainting of light posts. Thursday,June 11, 2009
bubble market protests are necessary to all pay a reasonable flat Tearing out and replacing at 7 p.m."
rming as this chat block the rate increases. rate. sidewalk-lifting trees in the • The protest in writing
most intense I am totally against in- In the"Resource"Byer 'urban forest'downtown." must be received by the
,ude is saved for •• creases in water/sewer from the city(Spring 2009, This brings up the possi- city clerk at or before the
M enough to adrates.I am using as little Volume 13,Issue 21 the bility that new monies re- public hearing on June 11
financial misstep3 water as possible,and my article entitled"No.Water ceived by the city may not and specifically identify
h du jour on th–m . rates are too high.With- Shortage Here Today" even be used for a what is being mg protested—
ew York Times the economic situation the states,"the city of SLA has previouslystated cause. the water rate increase.
round Andrews, way it is,I am surprised reduced its water use by For example,citizens the sewer rate increase,or
ay 14 Sunday that the City Council about 35 percent since the voted in a half-cent in- both.It may be mailed or
cover story about would consider raising late 1980s.A pretty amaz- crease in taxes with 2006 delivered to the City
nal journey into costs at this time. ing feat... The exception, Measure Y.In anmral sur- Clerk,990 Palm Street,
mortgage default It does not seem fain- not the norm,in Califor- veys residents requested San Luis Obispo,CA
pt from his new that the City Council is de- nia." that:first,street repair, 93401.
irked so much cel, manding that 50 percent of The disparity between second,traffic congestion •All protests must list
k-risking that mon- users must protest or the the costs to the citizens in and third,open space service address and wa-
)pears to be the council will go ahead.It Central Valley towns and preservation be ad- ter/sewer account num-
is problems. seems that if they can San Luis Obispo is alarm dressed ber.
McCardle,blo g- have a ballot for the mos- ing and cries for an expla- Instead,we were in- •The person
uito abatement,then the nation from city officials. formed in this article that ble for payment
of the si-
e Atlantic,after ini- 4 a' p yment of the bill
ing Andrews arn. water/sewer increases Further exploration the city intends to spend must sign it
e bravest thing I ve could have been deter- should take place before $800,000 of Measure Y
i long,long time," mined by a vote—a much we are subjected to this money on number.eight Sandra Davis Lakeman
er assessment of fairer assessment of the five-year increase. downtown beautification, is Professor Emeritus of Ar-
ig into court public's opinion. In a May 5 article by while priorities ranked chitecture at Cal Poly and
hat suggested An- Too obvious to mention, The Tribune,OSLO water, higher by citizenry will go resident of San Luis obis-
tubles,which he but perhaps the City Coun- sewer rates may increase," unfunded Po.
ized as"not all cil does not want a fair as- the reporter states that a Hopefully,any removal
uav were actually sessment of the public,but current household of four of downtown trees will
rrant(his wife had wants to surreptitiously using 7,480 gallons of wa- cause a landslide of
I for bankruptcy). enact these new costs, ter per month...is paying protest as our Ficus Mi-
,gospheric re- which would mean a dou- $47.15 per month,and this crocarpa trees provide the
this news has bling of our water/sewer will increase to$52.80 this natural beauty that is
)m sanctimonious bills. summer.The water rate downtown.
d have lived in an In 2006,we were paying for this household in 2006 The Council has madeT RUNE•
ve town...and had bi-monthly for water and was$33. poor decisions by allowing THEZ
ome school his sewer services.I had my I checked with two developers to build to their
iismissive('Zltat records checked by the neighbors who each have hearts'content and have
ound is his jour- city's Water/Sewer Billing three adults in their exacerbated the problems Call rod for home deliver/
edibility going Department and was told I homes with yards.One's of insufficient water re
mapper,forever-). was paying$80 to$90 for bills vary from$70 to$164 sources in this area 1.800-288-4128.
ithout the added two months. during rainy months from In the'80s,knowledge-
Andrews'sin of Y ��
I think ifs fair to
ie stir his story LETTER TO THE EDITOR
s less to do
itself with Fi'� a Fictitious
effect o the Toxic pesticides pesticide produces high �IISIIess Name
:ties(and atten- rates of thyroid cancer
i am deeply disappointed ,,.,a L__,,,,,,,,,;,,,. .j __ �„ . .Aft
UTILITY FEES
SLO warter, sewer rates may increase
BY SAus Comae The City Council will hold a required
San Luis Obispo resi- public hearing on its proposal June 11
dents could soon pay more ��++//��
n3mily
and sere= COMMENTIMO summer, and to$58.60 in
the summer of 2010 if the j
t family of four's Do you plan to protest the . increases are passed The
could go up 12 osed water rates? water rate for such a i
s y��an ad. amment at household in 2006 was$33
perceat in 2010, per month.
to cdy water divi- 7.15 for a household of Henderson said double-
ger Gary He four using 7,480 gallons of digit increases will CDIrt� j
water per month would be 1
The current rate of increased to $52.80 this See SLO WATER AS o
A
SLO .■.,.�„�., said, given that wildlife
W such as steelhead trout rive
Fly pg� in the creek.
In the city of Paso Rob-
ue until 2012,13 les,a citizens'group has
year,wh he the jected one water rate&w
rates to let off hire the City Council adopt TUESDAY, MAY 5, 2009
The incr are pro- ed to help pay for the
posed to pay for improve- Nacimiento Project. An
meats to San Luis Obispo's election is looming for late
water system and for the' simmer or fall on the corns
city's portion of the cirs most recent proposal
Nacimiento Water Project, to structure rtes to pay for
a 4&mlelong pipeline that its portion of the project.
will deliver water from the The San Luis Obispo City
North County lake to the Council will hold a public
city.Five communities in all hearing on June 11 on its .
twM he pi tocaeaseS,
did watei from proposed utility in
project which is are 'rement un.
Sewer rates could also d osaroa '
go up with increase 4 If more than half of the
appradmately9.3 affected water or sewer
On the same house u ' users protest the fee in.
the same amount creases,the council cannot
potable water.rates woul them
increase from$47.92 cur. In recently
rently to$52.41 this year. mailed to ratepayers,city
Henderson said the sew- officials stress that all writ
er increase is needed be- ten protests must be given
cause of the high cost of to the City Clerk's Office at
constantly upgrading the or before the hearing.
city's treatment plant. Those who protest must
Wastewater that is released identify whether they are
into San Luis Obispo protesting the water rate
Creek must be treated to a increase,the sewer rate in.
very high standard, he crease or both.
• - 2D �/77/4i�
j E�POUNCIL 2CIDD DIP
13 C*CC `r IMO- 3`rIIN DIP
From: Mattingly, Carrie Pr4We"al'AQ2'FIRE CHIEF
`9TrORNEY 2 Pw DIR
Sent: Wednesday, June 10, 2009 8:35 AM p'CLERWRIO *OLICE CHF
To: Carter, Andrew Q DEPT HEADS EC DIA
Cc: Hampian, Ken; Statler, BillZOLJTIL DIR
Subject: RE: Water & Sewer Questions Iy -- 12-�RDIP -
AAEVVIV65 eeuaee�
el fy /hGH
Hi Andrew, eLH2�
My responses are below your questions. Attached is the PowerPoint we
presented to Council on the telemetry system. A link to get to the consultant's
report on the telemetry (or SCADA— Supervisory Control and Data Acquisition)
system is below. Thank you for the opportunity to address these in advance of
the Council meeting. I believe we will be sending these responses out today as a
red file.
Sincerely, RED FILE
Carrie Mattingly
Utilities Director MEETING AGENDA
PATE 6////Of ITEM # $
From: Carter, Andrew
Sent: Monday, June 08, 2009 7:48 PM
To: Mattingly, Carrie
Cc: Hampian, Ken
Subject: Water & Sewer Questions
1) Have we thought of converting to every other month meter reading even with
monthly billing? One month is actual. Next month is estimate. Following month
is actual. And soon.
Yes, this was seriously considered two years ago prior to Council approving the
move to monthly billing.
The calculations required to pull this off would be complex, cumbersome, and
extremely difficult to administer. The variability of individual customer water use
in the City is wide. With the high level of turnover and intermittent vacancies we
experience estimating every other month would be problematic. A real life
example we saw when looking at the most recent winter water use period was 64
units of water use one month, 0 units of use the next month, and 18 units the
next month. This is extreme, but there are close to one thousand accounts that
have water use that significantly swings up and down. If we did attempt to
estimate water use, we could potentially find ourselves issuing credits to some
folks. The opportunities for errors to occur would be significant.
Additionally, there is a link between the bills people receive and actual water use
— people tend to "get it" when the bill reflects extra water use —our rates
encourage conservation. People get the bill and they take action to reduce.
r
Estimating water use would eliminate this opportunity. We have been so
successful in this area —we want this success to continue.
Reading meters monthly helps our in-house conservation efforts. When there is a
significant spike in water use our conservation staff oftentimes takes action even
before the bill gets to the citizen to get that leak fixed as soon as possible.
Our sewer bills are tied to water use. Estimating water use could negatively
impact sewer monthly revenues based on the same logic as for water use.
Based on our analysis, staff would not recommend estimating every other month
water use.
2)What does the telemetry system do? How does it provide $2.2 million worth of
value over time?
This telemetry system will allow for remote monitoring and control of facilities
(such as our 10 reservoir tanks, multiple pressure relief valves, and 8 pump
stations). These facilities will be "talking" to water treatment and distribution
computers. When things go wrong in the system the telemetry system sends out
an alarm to the operators who can take swift action to correct the problem.
Routine surveillance will be done through telemetry to look at how a pump station
or tank is operating. Operators can see if there are indicators of potential
problems and fix them on-line or go to the site. Much like we have information
technology that runs City functions, our City utilities also need technology to
better do their jobs. Telemetry is that technology and is the industry standard.
Recently Council Member Ashbaugh commented at a Council meeting his
pressure was low at his home and Council Member Howell-Marx said she had
citizens telling her there was low water pressure in their area of the City. These
are good examples of why we need telemetry. These water pressure issues
could have been avoided with a telemetry system. Right now we have to rely on
the "highest person on the hill" to call and complain about water pressures.
Additionally, when over-pressurization of the system (such as was experienced
about 8 months ago in the downtown where 4 sections of pipe burst), a telemetry
system would have alarmed staff and most likely have reduced the number of
breaks(and the associated cost of emergency repairs).
The cost of the system is an investment in properly operating and protecting our
utility systems which are conservatively reported to be worth $83 million. It is a
cost of doing business. The telemetry will help us effectively operate our utilities
and adequately protect public health..We do expect some savings in overtime
and emergency response but it won't be near the cost of the system. Also, it
difficult to quantify the worth of providing adequate fire protection and
uninterrupted water services to the community.
i
J'r
Staff presented the final "SCADA (supervisory control and data acquisition)
System Upgrade Report" by our consultant DLT&V to Council on April 7, 2009.
This report details the telemetry system upgrades required for all the utilities.
Attached is a copy of staffs PowerPoint presentation. Here is a link to get to the
consultant's report. http://www.slocity.org/utilities/documents.asp Go down to the
very bottom of the list to the report entitled Scada System Upgrade Report.
3) $5 million in design for the WRF Master Plan? Yikes. What does that
specifically entail?
Yikes is right! That was my response as well when I saw this number. This
budget number was provided to us by our engineering consultant. It is based on
about a 12% design cost for an extremely complicated $40+ million upgrade to
the Water Reclamation Facility (the design dollar estimate is in the ball park for
costs for these services). The end result will be plans and specifications ready to
go to bid for the project.
This budget number was used in our fund analysis and is a worst-case scenario
driven by the MUN designation of San Luis Obispo Creek and resultant Regional
Board requirements. We must prepare the fund to meet these requirements.
There is an alternative presented on page 3-131 of Appendix B, Preliminary
Capital Improvement Plan, for infrastructure improvements to the WRF that
assumes the designation is removed. Design costs are estimated at $2 million for
this alternative and, again, are about 12% of the total estimated project cost of
$17 million.
Thank you for the opportunity to address your questions in advance of the public
hearing. Please let me know if you have further questions on these or other
issues related to the Utilities 2009-11 Financial Plan.
Andrew Carter
Council Member
City of San Luis Obispo