HomeMy WebLinkAbout06-16-2015 PH1C Sewer Fund Review and Sewer Rate AdoptionCity of San Luis Obispo, Council Agenda Report, Meeting Date, Item Number
FROM: Carrie Mattingly, Utilities Director
Prepared By: Dave Hix, Wastewater Division Manager
Brigitte Elke, Utilities Business Manager
SUBJECT: 2015-16 SEWER FUND REVIEW AND 2015-17 SEWER RATE ADOPTION
RECOMMENDATION
1. Review and approve the 2015-16 annual Sewer Fund financial review;
2. Conceptually approved the 2015-16 Sewer Fund budget, with final action on June 23,
2015, with the adoption of the 2015-17 Financial Plan; and
3. Adopt a resolution increasing the wastewater service charge by 4.6 percent effective July
1, 2015 and three percent effective July 1, 2016 provided there is no majority protest
against such increases.
4. Authorize the amendment of the Sewer Enterprise Fund 2014-15 budget to reflect the
revised values shown in the fund review documents.
DISCUSSION
Background
The City of San Luis Obispo’s Sewer Fund (Wastewater
Division) is run as an enterprise fund and its operating,
capital, and debt service expenditures are covered by rates
and fees paid for the services. The Wastewater Division’s
financials for the upcoming City budget are reviewed and
approved by the City Council together with the City’s overall
budget with the two-year Financial Plan.
Currently the Wastewater Division collects service fees from
approximately 14,500 accounts (not including dedicated
irrigation meters). The Division is comprised of five operating
programs that support the different tasks required in
wastewater treatment that are highly regulated by state and
federal mandates.
Fund Review
This report presents the Sewer Fund’s proposed 2015-16
budget, its work programs and capital investments. When
beginning the budget process, analysis for the allocation of
resources always keeps the fund’s core purpose in mind:
“To provide essential services that support the community’s health, well-being, and
quality of life”
June 16, 2015
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City Wastewater at a
Glance
Programs 5
Employees 29
Sewer Lines 138 miles
Pump Stations 9
Sewage Treated
1.1 billion gallons
Recycled Water produced
63.8 million gallons
Water Returned to Creek*
1.04 billion gallons *As a condition of its recycled water program, the City is required to release water into the creek to maintain year-round habitat for endangered species such as steelhead trout and red-legged frog.
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2015-16 SEWER FUND REVIEW Page 2
As a result, it defines the work program with forecasts and financial positions for the upcoming
two years to:
• Sustain an ongoing level of capital improvement projects to maintain the
community’s wastewater infrastructure assets;
• Maintain a positive fiscal position in the Sewer Fund;
• Maintain sufficient working capital and a revenue plan forecast to position the Sewer
Fund to secure favorable financing terms for Water Resource Recovery Facility
Improvements in the wastewater capital program forecast; and,
• Continue to deliver protective, reliable wastewater services to the community within
projected sewer service rates.
The attached 2015-16 Sewer Fund Analysis Report (Attachment 1), provides an in-depth look at
changes in financial position, fiscal and operational assumptions, an update on major activities
and programs, and incorporates key financial impacts. In order to arrive at the proposed budget,
the fund analysis takes a look at the past as well as into the future to determine the budget needed
to fulfil all obligations.
1. Revenues
Each year, the Wastewater Division’s analysis determines the revenue needed to cover upcoming
expenses and obligations. Revenues are collected from multiple sources and approximately 95%
are directly tied to sewer service
provided to the community. San
Luis Obispo is currently
experiencing high development
activity. This is reflected in the
Sewer Fund under development
impact fees that for 2014-15 will
reach much higher levels than
originally budgeted. However, it
is not expected that the current
level of development will
continue into the future and
revenue forecasts take a
conservative approach as to projected impact fee collection. Sewer service charge revenue is on
track in 2014-15 due to the established sewer cap. Lower indoor use (likely due to drought
response) during the winter months that established the 2015-16 sewer caps necessitate the
proposed rate increase of 4.6 percent. Previous budget forecasts had anticipated a three percent
increase.
2. Operating and Capital Expenses
The Wastewater Division’s operating and capital budgets are evaluated by looking at past
expenditures and assessing upcoming needs of the infrastructure and the five operating programs
that maintain and service it. The operating costs include salaries, benefits, contract services,
operating material (including utilities and chemicals), training, and minor capital. The costs
encompass:
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2015-16 SEWER FUND REVIEW Page 3
● Water Resource Recovery Facility ● Environmental Compliance
● Wastewater Collection ● Water Quality Lab
● Wastewater Administration & Engineering
For the upcoming fiscal year, the operating budget also includes allocations for six significant
operating program changes for additional staff to support the Division’s process control systems,
a Health and Safety Engineer, a Utilities Engineer, a Lab Analyst as well as additional funding
for contract services, minor capital in the Wastewater Collection program, and funding for
mandated testing required by the new National Pollutant Discharge Elimination System Permit.
The Capital Improvement Project plan addresses the needs of the City’s wastewater
infrastructure and supports its wastewater collection lines, lift and pump stations and the Water
Resource Recovery Facility (WRRF). The WRRF site includes the City’s accredited Water
Quality Lab as well as the production of recycled water. The WRRF’s last upgrade was 22 years
ago and it is in need of upgrade to fulfill the City’s National Pollutant Discharge Elimination
System Permit and the capacity for General Plan build-out. The 2015-20 Capital Plan forecast
includes this $83 million project.
Debt Service. In 2012-13, the Wastewater Division paid off most of its debt preparing the fund
for the debt financing of the Energy Efficiency project in 2013-14 and the upcoming debt
financing for the WRRF upgrade. This debt obligation is likely to begin in 2016-17 significantly
increasing the Fund’s overall debt service obligation. This obligation has been anticipated and
the Sewer Fund continues its preparation to carry the debt and maintain its long-term fiscal
health.
Expenditure Projected
2012-13 2013-14 2014-15 2015-16 2016-17
Operating Programs 6,332,300 6,050,545 6,620,418 6,947,909 7,102,636
General Government 1,394,100 1,609,600 1,961,904 2,019,099 2,055,700
Capital Plan 3,317,800 6,137,018 20,670,639 8,268,945 79,765,275
Debt Service 2,932,800 974,251 1,405,300 1,437,820 6,182,744
Debt Proceeds (7,249,000) (74,000,000)
Total Expenditures 13,977,000 7,522,414 30,658,261 18,673,773 21,106,355
Proposed Sewer Rates
In order to maintain its service operation, its capital infrastructure, and to fulfill its debt
obligations, the Wastewater Division must assess service charges to cover its costs and guarantee
the long-term fiscal health of the fund.
1. How are Sewer Rates calculated?
Under the City’s sewer rate structure, bills are based mainly on water usage and resulting
demand on the sewer systems. The City currently applies a base fee (minimum charge) and a unit
rate based on the volume of sewer discharged. The sewer rates are further refined by a residential
cap based on the average volume of water used during a three-month period during winter
months when outdoor irrigation is turned off (also referred to as the “sewer cap”). Non-
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residential sewer customers are charged based on the volume of water used during the billing
cycle in addition to the base charge.
Each year, the City’s rate consultant analyzes the consumption data gathered during the winter
water use period to determine the applicable sewer cap. The 2014-15 data showed that the
average sewer cap has decreased probably based on drought driven water conservation measures
having influenced indoor usage as well. The previous cap was 5.5 units and the current data
shows a decrease to 4.9 units.
2. Why are Sewer Rates proposed to be increased?
The proposed increases to sewer rates are needed to fund:
1. State mandated and capacity upgrades to the Water Resource Recovery Facility.
The City’s Water Resource Recovery Facility requires upgrades to meet added
regulatory requirements for protection of San Luis Obispo Creek. This is a very large
project, scheduled to begin construction in 2016-17. The fund continues to prepare for
the project through incremental rate increases to afford upcoming debt service for this
project.
2. Repairs and replacement to the wastewater collection system.
The 138 miles of wastewater collection system needs constant repairs, replacement,
upkeep, and maintenance in addition to the fund’s overall maintenance of an aging
infrastructure including nine sewer pump stations.
3. Ongoing operation and maintenance costs.
29.5 employees service and maintain the Sewer Fund’s 24/7 operation, facilities, and
infrastructure.
4. Offset reduced wastewater generation due to indoor water conservation.
The fourth year of drought conditions and the Governor’s declaration and executive
order to reduce water consumption has influenced the indoor water use and sewer
discharge. Though a much lesser impact, since only indoor water is contributing to
the Sewer Fund revenue, the reduced volume requires an increase 1.6% higher than
originally forecasted in 2013-15; from 3% to 4.6%. Given the average sewer cap in
place for 2014-15, revenues are expected to meet the previously forecasted revenue
requirements. However, the new sewer cap evaluation shows a lower cap to be
applied with fiscal year 2015-16 hence lowering revenue projections.
PROPOSED SEWER RATES FOR 2015 AND 2016
Basis Current Effective
July 1, 2015
Effective
July 1, 2016
Rate Increase 4.6% 3%
Base Fee $7.96 $8.32 $8.57
Volume
Charge*
$8.77 $9.17 $9.44
*per unit – 1 unit = 748 gallons
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3. Sewer Rate Protests
Under Proposition 218, property owners and/or customers directly responsible for the payment
of the fee subject to the proposed rate increase may submit a written protest against the proposed
rate increases. The protest must be on the form provided, received by the City Clerk at or before
the public hearing on June 16, 2015, identify what is being protested, and contain the service
address. The party signing the protest must be listed on the account as the person responsible for
payment of the water bill and/or the property owner. In the event that a protest is submitted by
the owner and also by the tenant responsible for payment of the bill, then one valid protest is
counted for the account.
If written protests are filed by a majority (50% + 1), the proposed rate increases may not be
imposed. A majority of approximately 14,500 customers is 7,250. As of May 15, 2015, a total of
400 written protests were received by the Office of the City Clerk. All protests will need to be
validated regarding property ownership and duplicate addresses.
The City Clerk will provide an updated summary of the protests received at the conclusion of the
Sewer Fund Review public hearing on June 16, 2015.
ATTACHMENTS
1. 2015-16 Sewer Fund Review
2. Resolution establishing Sewer Service rates for 2015-17
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Attachment 1
SEWER FUND
REVIEW
2015
June 16, 2015 City of San Luis Obispo
Utilities Department
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Attachment 1
City of San Luis Obispo 2015 Sewer Fund
Page 1
Table of Contents
I. OVERVIEW
II. KEY ASSUMPTIONS
III. 2015-17 FINANCIAL PLAN
a. Revenue
i. Sewer Service Charges
ii. Cal Poly
iii. Development Impact Fees
b. Fund Expenditures
i. Operating Programs
ii. Capital Improvement Plan
iii. Debt Service
IV. MAJOR ACTIVITIES AND PROGRAMS
a. 2014-15 Update
b. 2015-16 and Forecast
V. SEWER RATE SETTING
a. Sewer Rate Structure
b. Proposed Sewer Rate Changes
EXHIBIT A – FINANCIAL SCHEDULES
A.1 Changes in Financial Position
A.2 Assumptions for Fund Projections
A.3 Capital Improvement Plan
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Attachment 1
City of San Luis Obispo 2015 Sewer Fund
Page 2
| OVERVIEW
The City of San Luis Obispo’s wastewater services are administered, serviced, and maintained through the
Utilities’ Department’s Wastewater Division. The financials are recognized as an enterprise fund as it finances all
facets of its operation, maintenance of capital assets, and debt obligations through rates charged for services.
The Wastewater Division is responsible for:
Operating Program Core Function
Wastewater Collection 138 miles of sewer mains connecting to approximately
14,500 sewer laterals, 9 Pump Stations, 2,000
manholes.
Water Resource Recovery Facility Treating 1.1 billion gallons of wastewater annually;
producing 63.8 million gallons of recycled water.
Water Quality Lab Analyzing 136,000 water and wastewater samples
Environmental Compliance Regulatory compliance with water quality
requirements
Wastewater Administration and Engineering Oversight of 30.7 employees, capital projects, and
overall fund administration
| KEY ASSUMPTIONS
When preparing for the budget, the Wastewater Division analyzes past financial results, upcoming operational
and capital needs, reviews debt obligations as well as future need for additional debt financing, the financial
position of the fund and its continued health. The budget prepared for the two-year financial plan follows a
“zero based budgeting” approach, considering each and every line item and its future needs informed by past
expenditures. The condition, infrastructure age, and future capacity needs are driving factors in determining the
Capital Project plan presented in this report.
The revenue need is then evaluated based on current rates, analysis of current use and effects on future
revenue to provide a recommendation as to rate levels and possible increases.
| 2015-16 FINANCIAL PLAN
REVENUE
As an enterprise fund, the Wastewater Division finances its operation mainly with rates charged for sewer
services. According to its mandate, rates have to be sufficient to cover operation, capital asset improvements
and maintenance, debt obligations, and appropriate reserve levels to keep the fund healthy and prepared for
unforeseen and future funding needs.
Revenues are collected from multiple sources with include:
• Sewer Service Charges combining a base fee and volumetric charge per unit
• Sales to Cal Poly
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City of San Luis Obispo 2015 Sewer Fund
Page 3
• Development Impact Fees
• Industrial User Fees
• Misc. Charges such as account set-up fees, late charges, meter sales, and connection fees
• Investment and Property Revenue
As illustrated below, approximately 95% of the fund’s revenue comes from sewer services charges of which the
base fee amounts to 10% of revenue.
Sewer Service Charges: Revenue projections for sewer service charges are based on a sewer rate analysis that
includes a review of all 14,500 sewer accounts (this number of accounts differs from the number of water
accounts as that number includes dedicated irrigation accounts) using the most recent 12-month period (ending
March 2014), including monthly usage and billed amounts. The total monthly usage and billed amounts are
compared against actual revenues received for the same period. The data sets are pulled from the City’s utility
billing software program at the end of the winter water use period to capture the most recent usage trends by
customer account type and the average winter water usage by individual residential accounts. Historical data for
all customer types and the established sewer caps for residential accounts to be implemented in July are
analyzed to evaluate revenue stability in the current fiscal year, to forecast usage, and to test the previously
forecasted sewer rates for revenue adequacy in the rate setting process.
Due to current drought conditions and water conservation efforts, the analyzed data showed a reduction of
indoor water use from 5.5 units to 4.9 units effectively lowering the sewer cap applicable for 2015-16. This
reduction will provide the Wastewater Division with lower revenue than anticipated previously. Prior fund
assessments assumed a rate increase of three percent to continue preparing the fund for upcoming capital
expenses. The new sewer cap now necessitates a further increase. The proposed rate is now providing for a 4.6
percent increase for 2015-16, followed by a three percent increase in 2016-17.
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City of San Luis Obispo 2015 Sewer Fund
Page 4
Cal Poly: Sewer service charges for Cal Poly are based on effluent flow trends and the 2012 Agreement between
the City and the University. This agreement was entered into due to the University prepaying its share of capital
improvements therefore receiving a reduced service rate. For 2015-16, the applicable rate is 94% of the non-
residential rate; in 2016-17 it will increase to 97% and reach 100% of the non-residential rate in fiscal year 2017-
18.
Development Impact Fees: These fees become due when new development “buys” into the sewer system that
was sized and constructed to accommodate population growth. After the Great Recession, San Luis Obispo is
experiencing a construction boom with unprecedented development activity. Provided the volatility of
development, the fund analysis took a conservative approach as to future income levels as future activity will
not likely keep pace with 2014-15 collection of fees.
Revenue Summary with revised 2014-15 budget and Financial Plan Assumption 2015-17
2014-15 2015-16 2016-17
Revised
Budget Projection Variance Projection Variance
Revenues
Investment and Property
Revenues
97,600 50,000 -48.8% 50,000 0.0%
Service Charges
Customer Sales
Sewer Service
Charges
13,139,000 13,748,145 4.6% 14,160,600 3.0%
Sewer Base Fee 1,400,000 1,464,400 4.6% 1,508,300 3.0%
Sales to Cal Poly 875,000 915,300 4.6% 942,800 3.0%
Late charge and credit card
fees
70,000 70,000 0.0% 70,000 0.0%
Development Impact Fees 850,000 350,000 -58.8% 250,000 -28.6%
Account Set-Up Fees 103,400 105,800 2.3% 108,200 2.3%
Industrial User
Charges
67,900 69,500 2.4% 71,100 2.3%
Connection Charges and Meter
Sales
45,000 46,000 2.2% 47,100 2.4%
Other
Revenue
36,400 37,200 2.2% 38,100 2.4%
Total Revenue 16,684,300 16,856,345 1.0% 17,246,200 2.3%
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City of San Luis Obispo 2015 Sewer Fund
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| FUND EXPENDITURES
| Operating Programs
The Wastewater Division’s five operating programs costs are summarized in Table A. The summary of operating
programs reflects the net operating program budget amounts for 2015-17, which includes the proposed
operating budget increases, as further discussed in this report and displayed in Table B on the following page. A
rigorous and thorough review of operating costs and trends was conducted in development of the proposed
budget. As outlined in Table B, the significant operating program change increases are necessary to meet
regulatory requirements and continue to provide protective, reliable wastewater services to the community.
A. 2014-15 2015-16 2016-17
Revised
Budget Projection Variance Projection Variance
Summary of Operating Programs
Wastewater Administration 799,704 800,649 .1% 797,829 .1%
Wastewater Collection 922,400 1,218,428 32.1% 1,232,041 1.1%
Environmental Compliance 235,100 272,150 15.8% 280,210 3.0%
Water Resource Recovery
Facility
3,684,646 3,508,252 -4.8% 3,625,551 3.3%
Water Quality Lab 543,060 735,565 35.4% 750,164 2.0%
Utilities Services 298,300* 412,865 416,841 1.0%
Total Wastewater Division Operating 6,483,210 6,947,909 7.2% 7,102,636 2.3%
*Sewer Customer Service
Proposed Changes to Operating Programs
Proposed significant operating program changes include a total increase of $412,007 in 2015-16 and $378,077 in
2016-17.
B. Significant Operating Program Changes
2015-16 2016-17
Wastewater Collection
Minor Cap 37,400 20,000
Control Systems Staffing 118,750 117,900
Water Quality Lab
Lab Analyst 77,157 81,227
WRRF Studies and Analysis 17,000 17,000
Wastewater Administration
Staffing due to Dept. Reorganization 136,700 136,950
Contract Services 25,000 5,000
Total Significant Operating Program Changes 412,007 378,077
Operating and Maintenance Expenses
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City of San Luis Obispo 2015 Sewer Fund
Page 6
Total operating and maintenance costs for 2015-17 are based on the proposed 2015-17 Financial Plan.
The most significant non-staffing operating costs for wastewater services are for: (1) chemicals for wastewater
treatment; (2) electric utility services for wastewater collection and treatment processing, and; (3) cost of
service for right-of-way and public safety paid to the General Fund. In the two-year 2015-17 Financial Plan when
annualized, chemical costs are projected at over $500,000 annually, electric utility services at over $600,000
annually, and cost of service for right-of-way and public safety paid to the General Fund at over $440,000
annually.
1. Chemicals go out to bid on an annual basis with chemical contracts running from February 1 through
January 31. For budget development purposes, any potential changes to treatment processes are
evaluated and dosage amount for chemicals calculated. The measured chemical quantity is used to
develop the budget.
2. Electric utility rate assumptions, as provided by PG&E, include a rate increase of 5.5% to 6.4% in
2015-16 and 2016-17 for commercial and industrial accounts. Utilities staff, in conjunction with
PG&E, have been working together to identify and implement measures that will reduce energy
costs at the Water Reclamation Facility. These measures will be complete in August of 2015 and
assist in controlling electrical costs.
3. Sewer cost of service for right-of-way and public safety are calculated based on 1) investments in
street surfacing and Public Works Street division and 2) a sewer fund asset valuation for the cost of
Public Safety to the sewer fund. The cost is assessed with the City’s annual cost allocation plan and
will be reflected as a transfer between the sewer and general fund.
| Capital Improvement Plan
The City of San Luis Obispo Wastewater Division services, maintains, and upgrades a complex infrastructure
including a Water Resource Recovery Facility, 138 miles of sewer lines, 9 pump stations, and 2,000 manholes.
Each year, the infrastructure’s needs are prioritized which includes previous projects that have yet to be started.
Capital expenses are forecast based on infrastructure maintenance and repair history, individual project budget
estimates, regulatory requirements, and projected changes in community demographics. Maintaining the
wastewater system infrastructure, including major equipment upgrades, ongoing treatment processes,
technology, and planning for long-term infrastructure upgrade and replacement is essential to providing
protective and reliable wastewater services for the community.
Table C displays the proposed five-year Capital Improvement Plan for wastewater services. The proposed Sewer
Fund capital plan includes a total of $8,268,945 in 2015-16 and $79,765,275 in 2016-17.
Part of the plan is the much needed and anticipated Water Resource Recovery Facility upgrade which is
estimated to cost $87.6 million dollars. The project is needed due to the age of the facility, the new State and
federally mandated requirements for effluent under the City’s National Pollutant Discharge System Permit and
the needed capacity increase to accommodate General Plan build-out.
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City of San Luis Obispo 2015 Sewer Fund
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Capital Improvement Plan Project Expenses
Project budget estimates in the capital plan forecast assume a moderate increase in material costs over time
(e.g., price per foot of pipe). The 2015-20 five-year CIP program continues investments in maintaining the City’s
infrastructure.
It is anticipated the actual cost of completing capital projects will vary from the budgeted cost estimate. These
cost estimates are generally conservative, therefore it is expected sufficient funding will be available and those
projects listed for each year will be completed. Should the bidding climate change dramatically, and costs
increase above those estimated, project timelines will be amended.
C-1 WATER RESOURCE RECOVERY FACILITY
Capital Improvement Plan 2015-16 2016-17 2017-18 2018-19 2019-20
Major Maintenance
430,000 155,000
-
-
WRRF Upgrade
Study/Environmental
600,000
Project Management
1,824,000
1,500,000
Design
2,500,000
1,300,000
Construction
Infrastructure
20,156,800
Disinfection
13,860,800
Nutrient Removal
19,214,400
Contingency
13,300,000
Flood Control
1,500,000
Construction Management
6,000,000
IT - iFix Replacement
250,000
IT - HachWims
30,000
IT - MP2 Replacement
30,000
Fleet Replacement: Utility Truck
57,600
Fleet Replacement: Sedan
33,000
Fleet: Pickup Truck w/Flat Bed & Crane
71,500
Fleet Replacement: Decanter Trailer
8,500
5,387,000 76,987,000 57,600 80,000 310,000
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City of San Luis Obispo 2015 Sewer Fund
Page 8
C-2 WASTEWATER COLLECTION
Capital Improvement Plan 2015-16 2016-17 2017-18 2018-19 2019-20
Collection System
Improvements
1,526,000
875,000
1,385,000
825,000
1,540,000
Telemetry System Improvements
100,000
Margarita Lift Station
Easement Acquisition
50,000
Construction
800,000
Construction Management
100,000
Foothill Lift Station
Easement Acquisition
50,000
Construction
1,100,000
Construction Management
125,000
Airport Lift Station
Study
50,000
Design
100,000
Construction
1,400,000
Construction Management
150,000
Silver City Lift Station
Design
100,000
Construction
1,400,000
Construction Management
150,000
Marsh St Siphon (PW project)
240,000
Fleet Replacement: Hydro-Cleaner
375,000
Fleet Replacement: CCTV Van
169,100
Fleet Replacement: 1 1/2 Ton Service
Trucks
144,000
Fleet Replacement: Portable Sewage
Pump
36,900
Fleet Replacement: Caterpillar Mini Excavator
78,000
2,795,100 2,670,900 3,035,000 2,453,000 1,915,000
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City of San Luis Obispo 2015 Sewer Fund
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C-3 ENVIRONMENTAL COMPLIANCE
Capital Improvement Plan 2015-16 2016-17 2017-18 2018-19 2019-20
Fleet Replacement: Pickup Truck
39,000
0 0 0 39,000 0
C-4 ADMINISTRATION AND ENGINEERING
Capital Improvement Plan 2015-16 2016-17 2017-18 2018-19 2019-20
Fleet Replacement: Sedan
38,500
0 0 0 38,500 0
C-5 SHARED COSTS
Capital Improvement Plan 2015-16 2016-17 2017-18 2018-19 2019-20
INFORMATION AND TECHNOLOGY
Office Application Software Repl.
11,045
Server Operating System
4,260
VOIP
15,789
Network Firewalls
8,918
Finance System Replacement
125,000
Virtual Private Network (VPN) Repl.
18,958
Network Switching Infrastructure Repl.
27,252
Radio Handhelds and Mobile Repl.
42,960
Tait Radio System
42,960
VM Infrastructure
20,615
20,615
UPS Battery Replacement
4,345
4,345
DISTRIBUTION
Water Meters and boxes
82,500 82,500
85,000
87,500 90,000
86,845 107,375 143,749 134,805 301,788
| Debt Service
The Sewer Fund’s debt obligation had previously been paid down in anticipation of two projects described in
paragraph 4 and 5. The following is a summary of the current debt payments the fund has to secure within its
annual budget.
1. Debt service for the Sewer Fund’s proportionate share of the City’s Public Safety Communications
Center is $32,400 in 2015-16 and 2016-17. In addition, the Sewer Fund’s share of the Public Safety
Radio System Upgrade is $42,000 in 2015-16 and $41,700 in 2016-17.
2. Debt service for the Tank Farm Gravity Sewer, Lift Station, and Force Main project was financed by
the California Infrastructure and Economic Development Bank through a revolving fund loan. The
annual debt payment is $559,300 in 2015-16 and $558,400 in 2016-17.
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City of San Luis Obispo 2015 Sewer Fund
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3. Debt service for the Tank Farm Gravity Sewer, Lift Station, and Force Main project portion
financed through the SunTrust private placement is $185,000 in 2015-16 and $184,500 in 2016-17.
4. Debt service for the Water Resource Recovery Facility (WRRF) energy efficiency project approved
by Council May 7, 2013, will result in annual debt payments of $618,700 in 2015-16 and $618,500
in 2016-17.
5. Debt service is currently projected at $4,746,900 in annual debt payments beginning in 2016-17
for the Water Resource Recovery Facility (WRRF) upgrade, based on total project costs currently
estimated at $87.6 million. Of the $87.6 million identified in capital plan, the analysis assumes $74
million to be financed over a 20-year term, with a total of $13.6 million in pay-as-you-go funding.
| MAJOR ACTIVITIES AND PROGRAMS
2014- 15 Update
1. Regulatory Requirements
After meetings and discussions with the City’s water quality consultant and the Central Coast Water
Board (CCWB), a reasonable National Pollutant Discharge Elimination System (NPDES) was negotiated.
The WRRF’s NPDES permit was adopted by the CCWB on September 25, 2014 and became effective
December 1, 2014. The requirements set forth in this permit significantly drive the design of the WRRF
upgrade.
2. Wastewater Collection System Infrastructure Replacement Strategy
The Strategy has been presented to Council and will provide important guidance in the on-going
operations, maintenance and replacement of the wastewater collection system. The strategy developed
a system model that will prioritize system replacement while coordinating the Land Use and Circulation
Element Update and the Economic Development Strategic Plan to ensure projects are prioritized and
balanced for maximum effectiveness and to best meet the community’s future needs.
Calle Joaquin Force Main
The Calle Joaquin force main project was accelerated to coordinate with the construction schedule of
the Los Osos Valley Road Overpass Project. The forcemain was completed in May and will connect to the
upcoming Calle Joaquin Lift Station Project.
Sewer Liner Projects
The Santa Rosa Siphon project that repaired a leaking siphon at Stenner Creek and the Point Repair
project which involved a number of important repairs at numerous locations throughout the City were
completed in 2014-15.
PH1C - 17
Attachment 1
City of San Luis Obispo 2015 Sewer Fund
Page 11
3. Energy Cogeneration at the Water Resource Recovery Facility
This public private partnership with PG&E to replace inefficient equipment at the WRRF is nearing
completion. The project is continuing smoothly and is currently 85% complete with a finish date of
summer of 2015. Project savings are already being realized and exceeding original estimations.
2015- 16 and Forecast
1. Calle Joaquin Lift Station
Design environmental work and land acquisition is scheduled to be completed in summer of 2105 with
bidding to begin in the fall. Construction should begin late in spring of 2015. This lift station replacement
project includes a new siphon under San Luis Obispo Creek, a gravity sewer line under Highway 101, a
new lift station with emergency power and updated controls. The forcemain component has already
been completed. Construction costs are estimated to be $3.3 million.
2. Water Resource Recovery Facility Upgrade
Environmental and design work will begin in the summer and late fall respectively. The Water Resource
Recovery Facility will meet all regulatory requirements, required future capacity as identified in the
General Plan, replace aged infrastructure, maximize recycled water production while being an asset to
the community. Staff will continue to focus on the triple bottom line for its facility upgrade, continue
pilot testing of various technologies, and explore alternatives. Construction is anticipated to begin in
2017 with a 2020 completion date. Total project costs are currently estimated at $87.6 million, including
$7.9 million for environmental and design phases, $5.7 million for program management, and $74
million for construction and related services.
3. Infrastructure Maintenance
Ongoing pipeline replacement for the wastewater collection system and equipment replacement and
process maintenance at the WRRF are required to ensure the efficient and compliant conveyance and
treatment of wastewater. To avoid costly failures or excessive maintenance before replacement, these
projects were identified, evaluated, and prioritized. Sewerline replacement projects over the five year
capital forecast 2015-16 through 2019-20 total $6.15 million or about $1.2 million per year. WRRF Major
Maintenance will be minimized during the construction of the upgrade, but will resume in 2020-21.
4. Margarita, Foothill, Madonna and Airport Lift Stations
Margarita lift station is at 90 % design with construction anticipated to begin in the fall of 2015. Foothill
is at 30% design and will require additional design because of the siting issues. The City and the
Madonna Inn are working in partnership for the replacement of the Madonna Lift Station and transfer of
ownership. The lift stations are planned to be using upgraded design and technology to reduce
maintenance or operational costs, improved communications and back-up power The capital forecast
currently assumes $5.5 million to replace all four lift stations at about $1.0 to $1.6 million per station,
with one lift station replaced each year beginning in 2015-16.
PH1C - 18
Attachment 1
City of San Luis Obispo 2015 Sewer Fund
Page 12
| SEWER RATE SETTING
Sewer Rate Structure
The City Council approved the residential volume-based sewer rate structure effective July 1, 2007, delivering a
sewer rate structure with a base fee and volume charge to reflect the individual customer’s usage and
associated sewer charges. The volume-based sewer rate structure encourages efficient water use and achieves
fairness and equity among residential customer classes — customers with low use pay less and customers with
higher usage pay more. Prior to 2007, the single family residential sewer rate structure was a fixed charge which
did not reflect the individual customer’s water use and associated demand placed on the wastewater system.
Current policies to guide rate structure setting:
1. Revenue Stability and Predictability
2. Stability and Predictability of Rates
3. Simple and Easy to Understand and Administer
4. Fair Allocation of Total Cost
5. Discourage Wasteful Use
With the residential volume-based sewer rate structure, the individual customer’s metered water use during the
winter months of December, January, and February was determined to be most reflective of the demand placed
on the wastewater system for sewer charges. The water use during the winter months, when outdoor irrigation
should be turned down or off, is averaged to establish a “sewer cap”. Residential sewer caps are implemented
with the first full sewer service period after July 1st. Sewer charges are based on actual water used up to the
customer’s sewer cap.
The number of active water and sewer customers (accounts) changes daily with service turn-on and turn-offs
due to move-in and move-outs. A large volume of account changes directly correlate with the academic
schedules at Cal Poly University and Cuesta College. When a new customer account is activated, single family
residential (SFR) accounts start with an 8-unit sewer cap and multi-family residential (MFR) accounts start with
an 6-unit sewer cap until the customers establish their individual sewer cap based on their average winter water
use, as established in the winter months of December, January, and February. For new accounts the initial 8-unit
sewer cap for SFR and 6-unit sewer cap for MFR was established when the City implemented the volume-based
sewer rate structure.
The proposed increases to sewer rates are needed to fund:
1. State mandated and capacity upgrades to the Water Resource Recovery Facility;
2. Repairs to the wastewater collection system;
3. Ongoing operation and maintenance costs; and
4. Offset reduced wastewater generation due to indoor water conservation.
PH1C - 19
Attachment 1
City of San Luis Obispo 2015 Sewer Fund
Page 13
The 2014 Winter Water Use evaluation and analysis provided by the City’s rate consultant showed that the
current drought conditions have influenced indoor water use on which the sewer volume is based. The drop
from 5.5 units to 4.9 units necessitates an increase of 4.6 percent which is higher than the previously assumed
three percent that will be necessary in 2015-16.
On May 1, 2015, the City of San Luis Obispo released its Proposition 218 notification. Under Proposition 218, the
owner of record of a parcel or parcels or a tenant directly liable for payment of the water and sewer bill may
submit a written protest against the proposed changes to the water or sewer rates presented in this notice. If
written protests are filed by a majority of the affected parcel owners and/ or customers, the proposed rate
increases will not be imposed.
PROPOSED SEWER RATES FOR 2015 AND 2016
Rate Basis Current July 1, 2015 July 1 2016
Rate Increase 4.6% 3%
Base Fee $7.96 $8.32 $8.57
Volume Charge $8.77 per unit $9.17 per unit $9.44 per unit
1 unit – 748 gallons
PH1C - 20
CHANGES IN FINANCIAL POSITION - SEWER FUND
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
Revised
Budget Projection Variance Projection Variance Projection Variance Projection Variance Projection Variance
Revenues
Investment and Property Revenues 97,600 50,000 -48.8%50,000 0.0%50,000 0.0%50,000 0.0%50,000 0.0%
Service Charges
Customer Sales
Sewer Service Charges 13,139,000 13,748,145 4.6%14,160,600 3.0%14,585,400 3.0%15,023,000 3.0%15,323,500 2.0%
Sewer Base Fee 1,400,000 1,464,400 4.6%1,508,300 3.0%1,538,500 2.0%1,569,300 2.0%1,600,700 2.0%
Sales to Cal Poly 875,000 915,300 4.6%942,800 3.0%971,100 3.0%1,000,200 3.0%1,020,200 2.0%
Late charge and credit card fees 70,000 70,000 0.0%70,000 0.0%70,000 0.0%70,000 0.0%70,000 0.0%
Development Impact Fees 850,000 350,000 -58.8%250,000 -28.6%257,500 3.0%265,300 3.0%274,000 3.3%
Account Set-Up Fees 103,400 105,800 2.3%108,200 2.3%110,900 2.5%113,700 2.5%116,500 2.5%
Industrial User Charges 67,900 69,500 2.4%71,100 2.3%72,900 2.5%74,700 2.5%76,600 2.5%
Connection Charges and Meter Sales 45,000 46,000 2.2%47,100 2.4%48,300 2.5%49,500 2.5%50,700 2.4%
Other Revenue 36,400 37,200 2.2%38,100 2.4%39,100 2.6%40,100 2.6%41,100 2.5%
Total Revenue 16,684,300 16,856,345 1.0%17,246,200 2.3%17,743,700 2.9%18,255,800 2.9%18,623,300 2.0%
Expenditures
Operating Programs
Public Utilities 6,483,210 6,947,909 7.2%7,102,636 2.2%7,280,202 2.5%7,462,207 2.5%7,648,762 2.5%
General Government 1,838,282 2,019,099 9.8%2,055,700 1.8%1,985,250 -3.4%1,985,250 0.0%1,985,250 0.0%
Total Operating Programs 8,321,492 8,967,008 9,158,336 9,265,452 9,447,457 9,634,012
General Carryover 123,622
Capital Improvement Plan 20,670,639 8,268,945 -60.0%79,765,275 864.6%3,236,349 -95.9%2,745,305 -15.2%2,526,788 -8.0%
Debt Service 1,405,300 1,437,820 2.3%6,182,744 330.0%6,180,663 0.0%6,178,077 0.0%6,134,285 -0.7%
Total Expenditures 30,521,053 18,673,773 -38.8%95,106,355 409.3%18,682,464 -80.4%18,370,839 -1.7%18,295,085 -0.4%
Other Sources (Uses)
Operating Transfer In
Other Operating Adjustments (109,334) (111,521) (113,751)
PERS employer rate increase (22,200)(27,200)(27,900)(28,600)
Proceeds from Debt Financing 74,000,000
Cashflow adj
Other Sources (Uses)
Other Sources (Uses)(115,008)
Total Other Sources (Uses)(137,208)0 74,000,000 (136,534)(139,421)(142,351)
Revenues and Other Sources Over (Under)
Expenditures and Other Uses (13,973,961)(1,817,428)(3,860,155)(1,075,298)(254,459)185,864
fund balance to adj to CAFR
Working Capital, Beginning of Year 26,700,798 12,726,836 10,909,408 7,049,253 5,973,955 5,719,496
Working Capital, End of Year 12,726,836 10,909,408 7,049,253 5,973,955 5,719,496 5,905,360
Reserve (20% of operating)1,664,300 1,793,400 - 1,831,700 - 1,853,100 - 1,889,500 - 1,926,800 -
Rate Stabilization Reserve (5% of sales)700,700 733,200 - 755,200 - 777,800 - 801,200 - 817,200 -
CJPIA designated Reserve 135,062
Capital Reserve for WRF upgrade
Unreserved Working Capital 10,361,836 8,247,746 - 4,462,353 - 3,343,055 - 3,028,796 - 3,161,360 -
Attachment 1 Exhibit A
PH1C - 21
PROJECTION ASSUMPTIONS - SEWER FUND
CATEGORIES 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
Utilities Service Fees CPI Projections 2.0%2.3%2.3%2.5%2.5%2.5%
Debt Service - State Revolving Fund Loan $0 $0 $0 $0 $0 $0
Debt Service - Energy Conservation Projects $0 $0 $0 $0 $0 $0
Debt Service - 2009 Public Safety Radio System Upgrade $42,600 $42,100 $41,800 $41,800 $41,300 $0
Debt Service - 2009 Public Safety Communications Center $32,500 $32,500 $32,500 $32,400 $32,400 $32,300
Debt Service - I-Bank Loan for Tank Farm Lift Station $560,300 $559,400 $558,500 $557,500 $556,600 $555,600
Debt Service - Private Placement for Tank Farm Lift Station $185,400 $185,100 $184,500 $183,700 $182,700 $181,500
Debt Service - Water Resource Recovery Facility Upgrade $0 $0 $4,746,900 $4,746,900 $4,746,900 $4,746,900
Debt Service - WRRF Energy Efficiency Project (15 Years)$584,500 $618,720 $618,544 $618,363 $618,177 $617,985
Development Impact Fee Growth Rate 0.50%0.50%0.50%0.50%0.50%0.75%
Working Capital Requirement @ 20% of operating expenditures $1,659,400 $1,793,400 $1,832,400 $1,853,900 $1,890,300 $1,927,600
Debt Service Coverage at 110% of Net Revenues (2)548%524%127%133%138%142%
Sewer Service Rate Increase 3.0%4.6%3.0%3.0%3.0%2.0%
Attachment 1 Exhibit A
PH1C - 22
CAPITAL IMPROVEMENT PLAN - SEWER FUND
PROJECT DETAIL AND PHASING - PUBLIC UTILITIES
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
BUDGET PROPOSED PROPOSED PROPOSED PROPOSED PROPOSED
Wastewater Collection
Collection System Improvements 1,974,547 1,526,000 875,000 1,385,000 825,000 1,540,000
Telemetry System Improvements 100,000
CN-Sewerline Improvement 09-10
CM-Sewerline Improvement 09-10
Collection System Infrastructure Replacement Strategy 68,977
Laguna Lift Station
Design 40,915
Construction 168,663
Construction Management 445
Calle Joaquin Lift Station
Design 121,048
Construction 2,985,821
Construction Management 300,000
Madonna Lift Station
Design 620,454
Construction
Construction Management
Margarita Lift Station
Easement Acquisition 50,000
Design 97,684
Construction 800,000
Construction Management 100,000
Foothill Lift Station
Easement Acquisition 50,000
Design 57,838
Construction 1,100,000
Construction Management 125,000
Buckley Lift Station
Design
Construction
Construction Management
Airport Lift Station
Study 50,000
Design 100,000
Construction 1,400,000
WASTEWATER SERVICES
Attachment 1 Exhibit A
PH1C - 23
CAPITAL IMPROVEMENT PLAN - SEWER FUND
PROJECT DETAIL AND PHASING - PUBLIC UTILITIES
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
BUDGET PROPOSED PROPOSED PROPOSED PROPOSED PROPOSEDWASTEWATER SERVICES
Construction Management 150,000
Silver City Lift Station
Study
Design 100,000
Construction 1,400,000
Construction Management 150,000
Sewerline Repl Rachel 2,867
Sewerline Repl Stafford 16,010
Marsh St Siphon (PW project)40,000 240,000
SY-JENNIFER RR/HIG-MARSH 39,334
DN-SANTA ROSA SWRLINE REPL 28
CN-SANTA ROSA SWRLINE REPL 239,563
CM-Santa Rosa Sewerline Repl 4,507
RR Safety Trail Hath/Taft
SCADA Upgrade Integration 32,153
Roadway Sealing 2014 25,500
IT - CityWorks 23,815
Fleet Particulate Matter Trap Retrofit
Fleet Replacement: 1/2 Ton Pickup 29,500
Fleet Replacement: Hydro-Cleaner 375,000
Fleet Replacement: Portable Generators (50% share)152,900
Equipment Replacement: Generator (50% share)
Fleet Replacement: CCTV Van 169,100
Fleet Replacement: 1 1/2 Ton Service Trucks 144,000
Fleet Replacement: Portable Sewage Pump 36,900
Fleet Replacement: Caterpillar Mini Escavator (pooled)78,000
Total Collection 7,042,571 2,795,100 2,670,900 3,035,000 2,453,000 1,915,000
Water Resource Recovery Facility
Major Maintenance 890,412 430,000 155,000 - -
Emergency Dig - Chloride Leak
WRRF Energy Efficiency .
Design 1,325
Construction 6,800,054
WRRF Upgrade
Study/Environmental 50,000 600,000
Attachment 1 Exhibit A
PH1C - 24
CAPITAL IMPROVEMENT PLAN - SEWER FUND
PROJECT DETAIL AND PHASING - PUBLIC UTILITIES
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
BUDGET PROPOSED PROPOSED PROPOSED PROPOSED PROPOSEDWASTEWATER SERVICES
Program Management 1,814,247 1,824,000 1,500,000
Design 3,499,918 2,500,000 1,300,000
Construction
Infrastructure 20,156,800
Disinfection 13,860,800
Nutrient Removal 19,214,400
Contingency 13,300,000
Flood Control 1,500,000
Construction Management 6,000,000
WRRF Fiber Optic Impr 99,676
Digester 2 Cleaning 0
WRF Sludge Bed 0
WRRF Cooling Towers 0
IT - iFix Replacement 250,000
IT - HachWims 30,000
IT - MP2 Replacement 30,000
Telemetry System Improvements
Fleet Replacement: Utility Trucks (3)36,800 57,600
Fleet Replacement: Sedan 33,000
Fleet Replacement: Sedan
Fleet Replacement: 4-Wheel Drive Loader 30,200
Fleet Replacement: Pickup Truck w/Flat Bed & Crane 71,500
Fleet Replacement: Top-Kick Dump Truck (pooled)0
Fleet Replacement: Compact Pickup Truck 26,800
Fleet Replacement: Decanter Trailer 8,500
Fleet Replacement: Dump Truck 74,778
Total WRRF 13,324,209 5,387,000 76,987,000 57,600 80,000 310,000
Total without CIPs under Debt Financing
Pretreatment
Fleet Replacement: Pickup Truck 39,000
Total Pretreatment 0 0 0 0 39,000 0
Distribution
Water Meters and boxes 82,500 82,500 85,000 87,500 90,000
Total Pretreatment 0 82,500 82,500 85,000 87,500 90,000
Water Quality Laboratory
Attachment 1 Exhibit A
PH1C - 25
CAPITAL IMPROVEMENT PLAN - SEWER FUND
PROJECT DETAIL AND PHASING - PUBLIC UTILITIES
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
BUDGET PROPOSED PROPOSED PROPOSED PROPOSED PROPOSEDWASTEWATER SERVICES
Fleet Replacement: Pickup Truck
Total Quality Laboratory 0 0 0 0 0 0
Administration and Engineering
From Creek Decom
Street Reconstruction 2013 0
EA-UB SYSTEM UPGRADE
Fleet Replacement: Sedan 16,200 38,500
Corp Yard Security-PW Project
Shared - Mobile Equipment Lifts & Safety Stands 13,200
Total Admin 29,400 0 0 0 38,500 0
Total Wastewater Services CIP Requests 20,396,180 8,264,600 79,740,400 3,177,600 2,698,000 2,315,000
Total Wastewater CIP without Debt Financing 7,071,971 2,795,100 2,670,900 3,035,000 2,530,500 1,915,000
Shared Information Technology
Office Application Software Replacement (4% share)11,045
Server Operating System 4,260
VOIP 15,789
City Website Upgrade (4% share)
UB System Upgrade 1,667
Network Firewalls 20,200 8,918
Finance System Replacement 125,000
Virtual Private Network (VPN) Replacement 0 18,958
Network Switching Infrastructure Replacement 33,500 27,252
Radio Handhelds and Mobile Replacements 42,960
Tait Radio System 42,960
Document Management System 3,800
Office Application Software Replacement 9,000
VM Infrastructure 20,615 20,615
Enterprise Storage Growth
CA-FOX PRO REPLACE
CA-LASERFICHE 310
GPS System replacement 2,719
UPS Battery Replacement 4,345 4,345
Total Share of Information Technology CIP 71,196 4,345 24,875 58,749 47,305 211,788
Attachment 1 Exhibit A
PH1C - 26
CAPITAL IMPROVEMENT PLAN - SEWER FUND
PROJECT DETAIL AND PHASING - PUBLIC UTILITIES
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
BUDGET PROPOSED PROPOSED PROPOSED PROPOSED PROPOSEDWASTEWATER SERVICES
Completed Projects 203,263
TOTAL SEWER FUND CAPITAL PLAN 20,670,639 8,268,945 79,765,275 3,236,349 2,745,305 2,526,788
Attachment 1 Exhibit A
PH1C - 27
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blank.
PH1C - 28
R ______
RESOLUTION NO. (2015 Series)
A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO
ESTABLISHING 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 analysis of sewer fund operating, capital, and debt service
needs has been performed for fiscal years 2015-17 through 2019-20; and
WHEREAS, this comprehensive analysis has been revised based on updated revenue
need and expenditure information; and
WHEREAS, the Council has reviewed the sewer service rates necessary to meet system
operating, capital, and debt service requirements; and
WHEREAS, a public hearing was properly noticed and held on June 16, 2015; 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. 10441 (2013 Series) is hereby rescinded, effective 11:59
p.m. June 30, 2015.
SECTION 2. The rates set forth in Exhibit “A” are hereby adopted, establishing rates
effective July 1, 2015 and July 1, 2016.
Upon motion of _______________________, seconded by _______________________,
and on the following vote:
AYES:
NOES:
ABSENT:
ATTACHMENT 2
PH1C - 29
ATTACHMENT 2
Resolution No. _______________ (2015 Series)
Page 2
R ______
The foregoing resolution was adopted this _____ day of _____________________ 2015.
____________________________________
Mayor Jan Marx
ATTEST:
____________________________________
Anthony Mejia
City Clerk
APPROVED AS TO FORM:
_____________________________________
J. Christine Dietrick
City Attorney
PH1C - 30
ATTACHMENT 2
Resolution No. _______________ (2015 Series)
Page 3
R ______
EXHIBIT A
MONTHLY SEWER SERVICE RATES
Basis Current Effective
July 1, 2015
Effective
July 1, 2016
Rate Increase 4.6% 3%
Base Fee $7.96 $8.32 $8.57
Volume
Charge*
$8.77 $9.17 $9.44
*per unit – 1 unit = 748 gallons
PH1C - 31
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blank.
PH1C - 32
THENewspaper of the Central Coast j °
MBUNE
3825 South Higuera • Post Office Box 112 • San Luis Obispo, California 93406-0112 • (805) 781 -7800
In The Superior Court of The State of Cal ifornia
ss.
In and for the County of San Luis Obispo
County of San Luis Obispo
A public hearing to consider:
AFFIDAVIT OF PUBLICATION
f. A Resolution of the City Council of file
City of San Luis Obispo, California, estatr
�iT OF
lishing sewer service rates: (This Resole•
lion would Increase the wastewater service
interested in the above entitled matter; 1 am now, and at
FU
all times embraced in the publication herein mentioned
SAM LUiF�5 OBISPO CITY COUNCIL
AD # 1773541
NOT 9CE OF PUBLIC HEARING
CITY OF SAN LUIS OBISPO
The Sari Luis Obispo City Council Invi
OFFICE OF THE CITY CLERK
ail interested persons to attend a pu
hearing on Tuesday, June 16; 2015,
Obispo in the above named county and state; that notice
6 :00 p.m. in the City Hall Council Cho
at which the annexed clippings is a true copy, was
bar, 990 Palm Street, San Luis Mal
published in the above -named newspaper and not in any
California, relative to the following:
STATE OF CALIFORNIA
.2-0.1.5-1.7 WATER RATE AND SEWER
ss.
RATT9 ADOPTION
County of San Luis Obispo
A public hearing to consider:
I am a citizen of the United States and a resident of the
f. A Resolution of the City Council of file
City of San Luis Obispo, California, estatr
Count, aforesaid; I am over the age of eighteen and not
`� � g g
lishing sewer service rates: (This Resole•
lion would Increase the wastewater service
interested in the above entitled matter; 1 am now, and at
charge by 4.6 percent effective July 1,
2015 and three percent effective July T,
all times embraced in the publication herein mentioned
2016 provided there is no majority protest
was, the principal clerk of the printers and publishers of
against such increases.
THE TRIBUNE, a newspaper of general Circulation,
2, A Resolution of the City Council of the
City of San Luis Obispo, California, estab-
printed and published daily at the City Of San Luis
Ilshfng the water rates and drought sur-
Obispo in the above named county and state; that notice
charge." (This Resolution would increase
the water base fee and adding a drought
at which the annexed clippings is a true copy, was
surcharge associated with both the water
published in the above -named newspaper and not in any
base fee and volumetric rates, effective Ju-
ly 1, 2015 and July 1, 2016.)
supplement thereof — on the following dates to wit;
For more information, you are invited to
JUNE 5, 2015 that said newspaper was duly and
contact Ron Munds of the City's Utilities De-
regularly ascertained and established a newspaper of
partment at (805) 781 -7215 or by emall at
rmunds@slocity.org.
general circulation by Decree entered in the Superior
The City Council may also discuss other
Court of San Luis Obispo County, State of California, on
hearings or business items before or'atter
June 9, 1952, Case #19139 under the Government Code
the Items listed above. If you challenge the
proposed projects in court, you may be lim-
of the State of California.
Iled to raising only those Issues you or
someone else raised at the public hearing
described In this n0flca, or In written corre-
I certify (or declare) under the penalty of perjury that the
spondence delivered to the City Council at,
or prior to, the public hearings.
foregoing is true and correct.
Reports for this meeting will be available
for review in the City Clerk's Office and on-
line at Www_sfocity.crg on Wednesday,
June Please
10, 2015. call the City Clerk's
/SI Principal
Office at (805) 781 -7100 for more Informa-
lla t'L' Of Clerk
1 g p )
lion. The City Council meeting will be tele-
DATED: JUNE 5, 2015
vised live on Charter Cable Channel 20
AD COST: $171.60
and live streaming on www.slocity orq
Anthony J. Melia
City Clerk
City of San Luis Obispo
Juno 5, 2015 1773541
The Journey of San Luis Obispo’s Water Continues
Preliminary Budget Review 1
Sewer Fund 2015-16 Expenditures
Preliminary Budget Review 2
O&M Capital
Wastewater Collection $ 1,218,428 $ 2,795,100
Environmental
Programs
$ 272,150
Water Resource
Recovery Facility
$ 3,508,252 $ 5,391,345*
Water Quality Lab $ 735,565
Administration/Eng $ 800,649
Utilities Services $ 412,865 $ 82,500
General Government $ 2,019,099
Debt Service $ 1,437,820
Total Expenditure $10,404,828 $8,268,945
80%
20% Fixed
Cost
Variable
Cost
*includes WRRF Upgrade project
2015-16 Sewer Fund Expense
3
Operating
costs
Preliminary Budget Review
O&M
37%
CIP
44%
Debt
Service
8%
General
Gov.
11%
Staffing
61% Contract
Services
14%
Other
Operating
25%
2015-16 Significant Operating Program
Changes
4
Wastewater Collection & Treatment
Control Systems Technician $118,750
Minor Capital $ 37,400
Water Quality Lab
Laboratory Technician $ 77,157
NPDES Studies & Analysis $ 17,000
Wastewater Administration / Engineering
Update to Development Impact fee $ 25,000
Staffing - Department Reorganization $136,700
(Utilities Engineer , Health & Safety Engineer,
¼ -time Administrative Assistant) ________
Total $412,007
Sewer Fund Revenue
Preliminary Budget Review 5
1.Sewer Sales Revenues (96% of
total Sewer Fund Revenue):
a.Sewer Service Charges
b.Sewer Base Fee
c.Sales to Other Agencies
2.Other Revenue
a.Development Impact Fees
b. Industrial
Users/Pretreatment Fees
c.Connection Fees & Meter
Sales
d.Account Set-Up
e.Investments & Property
Revenue
Sewer
Service
Charges,
82%
Sewer
Base Fee,
9%
Sales to
Other
Agencies,
5%
Dev
Impact
Fees, 2%
Misc.
Revenue,
2%
Recommended Sewer Rates
6
Rate Basis Current July 1, 2015 July 1, 2016
Rate Increase 4.6% 3%
Base Fee (minimum charge) $7.96 $8.32 $8.57
Volume Charges $8.77 per unit $9.17 per unit $9.44 per unit
For single family residences and those master-metered dwellings and mobile home or
trailer parks without a separate irrigation meter, the winter water use – sewer cap applies.
1 unit = 748 gallons
Recommendations
7
1.Review and approve the 2015-16 annual Sewer
Fund financial review;
2.Conceptually approve the 2015-16 Sewer Fund
budget, with final action on June 23, 2015, with the
adoption of the 2015-17 Financial Plan; and
3.Adopt a resolution increasing the wastewater
service charge by 4.6 percent effective July 1, 2015
and 3 percent on July 1, 2016 provided there is no
majority protest against such increases.
4.Authorize the amendment of the Sewer Fund 2014-
16 budget to reflect the revised values shown in the
fund review document.
Questions
8
Proposition 218
Official Protest Count – Sewer Rates
9
Mayor
•Open the Public Hearing
•Call for any written protests from the public
•Close the Public Hearing
City Clerk
•Confirm number of written protests received
•Confirm total number of valid protests
Council may not adopt the proposed rates if 7,210 valid
protests (50% plus 1) are filed