HomeMy WebLinkAbout06-06-2017 Item 15 2017 Water Fund Review & 2017-18 Water Rate Adoption Meeting Date: 6/6/2017
FROM: Carrie Mattingly, Utilities Director
Prepared By: Aaron Floyd, Water Division Manager
Brigitte Elke, Utilities Business Manager
SUBJECT: 2017 WATER FUND REVIEW AND 2017-18 WATER RATE ADOPTION
RECOMMENDATION
1. Review and approve the 2017 Water Fund Review; and
2. Conceptually approve the 2017-19 Water Fund financials and budget with final action on
June 20, 2017, with the adoption of the City’s 2017-19 Financial Plan; and
3. Adopt a resolution (1) increasing the water base fee and volumetric rates provided there
is no majority protest against such increases; and (2) increasing the water system access
charges for emergency purposes; and
4. Adopt a resolution increasing/decreasing the cost for residential and commercial water
meters.
DISCUSSION
Overview
Managing water utilities has likely never been more complex than in current times. The volatility
related to regulations, climate, water rights, groundwater management, aging infrastructure,
environmental protection, regionalization, funding and costs is unprecedented. In light of the
experience of going through the most recent drought, the
way the City administers the business of providing water
services must be critically assessed and debated to develop
appropriate funding stability for the services the Utilities
Department provides.
Background
The City of San Luis Obispo’s Water Fund financials are
recognized as an enterprise fund and its operating, capital
and debt service expenditures are covered by rates and fees
paid for the services it renders. The Water Fund financials
for the upcoming City budget are reviewed and approved by
the City Council together with the City’s overall two-year
Financial Plan.
Currently, the Water Fund collects fees from approximately
15,100 accounts to cover the cost for water services
operation and infrastructure. The Fund is comprised of five
programs (Source of Supply, Utilities Services, Water
Treatment, Water Distribution, and Administration) that support the different elements involved
in providing water services to San Luis Obispo customers.
City Water at a Glance
Programs 5
Employees 28
Water Reservoirs 3
Distribution Pipes 145 miles
Storage Tanks 10
Pressure Zones 16
Water Treated per year
1.9 billion gallons
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Current Challenges
After six years of drought, California has finally experienced a wet winter. The City’s surface
reservoirs largely recovered and the State rescinded its drought declarati on in April 2017. The
community has proven to be an excellent steward of its water resources, exceeding the required
twelve percent water reduction mandated by the State by eight percent. Water conservation is a
mind set and a way of life for San Luis Obispo and California. For the Water Utility, this means
adjusting to a new reality in which water sales might pick back up during wet years, but will
likely never return to 2013-14 levels from which the reduction was measured. It also highlights
the challenge associated with a water rate structure/revenue plan tied predominantly to the
number of gallons of water sold. Eighty percent of costs associated with running a water utility
are fixed and do not change regardless of how much water is delivered.
Fund Review
The Water Fund Review (Attachment A) presents the Water Fund’s proposed 2017-18 budget,
its work program and capital investments considering continued fiscal uncertainty. Despite the
challenges, the budget process and the allocation of resources keeps the Utilities Department’s
core purpose in mind:
“To provide essential services that support the community’s health, well-being, and quality of
life” Utilities Department Strategic Plan
As a result, it defines the work program with forecasts and financial positions for the upcoming
two years to:
Continue to deliver safe and reliable water services to the community; and
Sustain an ongoing level of capital improvement projects to maintain the
community’s water treatment and delivery infrastructure assets; and
Maintain a positive fiscal position in the Water Fund; and
Maintain sufficient working capital and a revenue plan forecast to position the Water
Fund to secure favorable financing terms for possible debt financing of treatment,
storage, and delivery assets.
The 2017 Water Fund Review provides an in-depth look at changes in financial position, revenue
and operational assumptions, an update on major activities and programs, and incorporates key
financial impacts. To arrive at the proposed budget, the fund analysis looks at the past as well as
into the future to determine the financial resources needed to fulfill all obligations.
Revenues
As the community began responding to California’s drought, water sales declined rapidly. In
order to avoid mid-year rate adjustments, the rate stabilization reserve was used in 2014-15 to
offset the shortfall. With the 2015-17 Financial Plan, in accordance with Proposition 218
notification to the community, Council approved a drought surcharge to counter-act the
reduction of water sales. The surcharge allowed for revenues to be stabilized at 2014-15 levels.
Water Fund revenues are collected from multiple sources, but approximately 90 percent are
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directly tied to water service charges including the base fee. Another element of water revenues
is development impact fees – costs for water infrastructure improvements that support new
development. San Luis Obispo has been experiencing significant development activity over the
past few years which was reflected in the levels of impact fees collected. However, last fiscal
year as well as in the current fiscal year, impact fee revenues are coming in much lower than the
high of 2014-15. Staff therefore continues the forecast with conservative assumptions relative to
this volatile revenue.
In 2017-18, sales to Cal Poly are expected to remain flat as the University’s effort to conserve
water continues. Sales in future years will most likely increase due to the opening of new
housing projects. This will be analyzed for the revised revenue projections for the 2018 -19
Budget Supplement. Cal Poly pays a portion of the applicable rate as it has its own water supply
in Whale Rock and pays the City for water treatment and distribution only.
The Water Fund’s operating and capital budgets are evaluated by looking at past expenditures
and assessing the upcoming need for infrastructure and the five operating programs that maintain
and service it.
Operating Expenditures
The operating costs include salaries, benefits, contract services, operating material (including
utilities and chemicals), training, and minor capital. They encompass:
● Water Distribution ● Water Treatment Plant
● Water Source of Supply ● Water Administration & Engineering
● Utilities Services
For the upcoming fiscal year, the operating budget also includes an allocati on for one significant
operating program change (SOPC) for continued temporary staffing at the Water Treatment
Plant. The diameter of the Nacimiento pipeline requires water delivery to occur over longer
periods than the standard operational shifts at the Water Treatment Plant. This SOPC provides
continuation of additional staffing needed to receive the City’s entire allocation of water from the
Nacimiento project. These positions provide additional support staff and safety during extended
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operational hours as well as providing opportunities for succession planning.
Capital Expenditures
The Capital Improvement Project plan addresses the needs of the City’s water infrastructure that
includes the Water Treatment Plant and the system that works to store, pump and distribute water
to the community. On May 5, 2015, the City Council adopted the Potable Water Distribution
System Master Plan that identifies zone consolidations that will ultimately allow a reduction in
needed infrastructure assets. However, to consolidate the system and improve system quality and
efficiencies, several large projects, such as the replacement of Reservoir 2 located at the Water
Treatment Plant and the upgrade of the plant itself, will require significant capital investments.
The Water Distribution system will also see significant investments due to needed upsizing of
pipes and to accommodate pressure zone consolidation.
Debt Obligations.
The Water Fund carries obligations for four debt services includin g the recycled water system.
The debt for the Nacimiento pipeline is carried in the operating program under Source of Supply
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and therefore not showing under debt obligations. The fund is programmed to seek additional
debt for an energy efficiency project and upgrade of the Water Treatment Plant in 2018-19 and
the replacement of Reservoir 2 in 2019-20. The presented financials include this assumption.
Total Fund Revenue & Expenditures
Below is a comparison of the Fund’s collected or anticipated revenue and the total expenditures.
Fiscal year 2016-17 includes carryover of CIP and encumbered money for contracts that were
budgeted but not expended during fiscal year 2015-16. In 2018-19, the revenue includes
$8,500,000 in debt financing and the corresponding capital expenditure for the Water Treatment
Plant project.
$-
$7,000,000
$14,000,000
$21,000,000
$28,000,000
$35,000,000
2015-16 2016-17 2017-18 2018-19
Revenue & Expenditures
Revenue Expenditures
Proposed Water Rates
Under the City’s water rate structure, bills are based mainly on customer usage and resulting
demand on the water systems. The City currently applies a base fee (minimum charge) and a unit
rate based on the volume of water used. The City applies a two-tier rate structure with water
usage over eight units charged at a higher rate than the first eight units.
Why are Water Rates proposed to be increased?
There are several factors driving the need to increase water rates, including:
1. Cost of a multi-source water supply;
2. Ongoing maintenance and operations costs;
3. Debt covenants;
4. Need to recover fixed costs of operating the water system. Our rate structure is highly
dependent on revenues associated with how much water is sold. Eighty percent of the
costs for providing clean water are fixed. When water use goes down, associated fixed
costs do not.and
5. Declining revenues due to reduced water consumption based on new water use patterns;
Having several sources of water avoids dependence on any one source that may not be available
during a water supply reduction or emergencies. This strategy has served the City well
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considering recent drought conditions and uncertainties. The City’s reliable multi-source water
supply provides the water needed to achieve the City’s General Plan goals. Maintaining different
types of sources (surface water from Salinas, Whale Rock, and Nacimiento Reservoirs, recycled
water for irrigation, and limited ground water) provides valuable reliability and flexibility.
In addition to water supply, the proposed rates 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 and are operated and
maintained to provide safe and reliable service. The fixed cost
to do so is about eighty (80) percent of the water utility’s cost
of service.
Additionally, water rates must provide enough revenue to cover the costs of debt payments.
Because of obligations and covenants to bondholders, the City must maintain a healthy debt
coverage ratio to continue its favorable bond rating which in the short and long run helps
stabilize costs for customers.
Considering the recent winter rains and the recovery of the City’s reservoirs, the Utilities
Director, as authorized by the City Council at the June 2015 fund review, eliminated the drought
surcharge on the base fee in March 2017. The current rate proposal for 2017-18 recommends the
elimination of the drought surcharge on the volumetric rate, but requests an increase of five
percent on the volumetric rates. The third of a successive three-year base fee increase, as directed
by the City Council on March 31, 2015, is also recommended.
PROPOSED WATER RATES FOR 2017-18
Rate Basis Current July 1, 2017
Base Fee $9.98 $12.33
Drought Surcharge $0.74 $0.00
Volume Charge
0 – 8 units $6.92 per unit $7.27 per unit
Tier 1 Drought Surcharge $1.10 per unit none
9+ units $8.65 per unit $9.08
Tier 2 Drought Surcharge $1.37 per unit none
1 unit = 748 gallons
Monthly Residential Water Bill Comparison
Consumption 3 units 6 units 12 units 20 units
Current 34.04$ 58.10$ 114.22$ 194.38$
Proposed 34.14$ 55.95$ 106.81$ 178.45$
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Proposition 218
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 received by the City Clerk at or before the public hearing on
June 6, 2017, identify what is being protested, and contain the service address and be signed by
the person protesting. 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 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 15,100 customers is 7,551. As of May 8, 2017, a total of
425 written protests were received by the Office of the City Clerk. All protests will 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
Water Fund Review public hearing on June 6, 2017.
OTHER FEE INCREASES:
Water system access charges
Section 13.04.230 of the City’s Municipal Code authorizes the City to impose water system
access charges for some unique circumstances where certain properties in the City do not receive
domestic water service but do have a water line solely for fire protection purposes (i.e.
sprinklers, etc.). Staff recommends that the water system access charge for emergency purposes
be increased from $79.59 to $83.57. This increase reflects the volumetric rate change being
proposed.
Water Meter Charges:
The amount the City charges for its water meters is also being proposed. For clarity, the water
meter fee is not an impact fee. Rather, this amount is the cost the City pays for this piece of
equipment. The proposed increase and decrease is to account for increases and decreases in the
price of equipment.
ENVIRONMENTAL REVIEW
Not applicable to this action.
ALTERNATIVES
1. Do not adopt the proposed water rates. Even if a majority of protests is not received, the
City Council could decide the water rates remain unchanged from current rates. Additionally,
assuming a majority of protests are not received, the City Council could choose to direct staff to
lower the proposed base fee or volumetric fees or both. The rate structure cannot be changed
without a Proposition 218 notification process.
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In alignment with the City’s fiscal health contingency plan, the proposed rates are the minimum
required to provide debt coverage and see the fund through the upcoming 2017 rate structure
study and another Proposition 218 process. Should Council select this alternative staff would
request conceptual approval of the water fund be delayed until June 20.
2. Do not adopt the new fees for water meters. Should Council choose this alternative, it
would result in cost subsidies or overcharging for services/infrastructure. This Resolution simply
passes on the cost of the services/infrastructure to those receiving those services.
Attachments:
a - 2017 Water Fund Review
b - Water Rate Resolution
c - Water Fixture Charges Resolution
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WATER FUND
REVIEW
2017
June 6, 2017 City of San Luis Obispo
Utilities Department
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City of San Luis Obispo 2017 Water Fund
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TABLE OF CONTENT
I. OVERVIEW
II. Key Assumptions
III. 2017-19 FINANCIAL PLAN
a. Revenue
i. Water Service Charges
ii. Cal Poly
iii. Development Impact Fees
b. Fund Expenditures
i. Operating Programs
ii. Capital Improvement Plan
iii. Debt Service
iv. Fund Summary
IV. MAJOR ACTIVITIES AND PROGRAMS
a. 2016-17 Update
b. 2017-18 and Forecast
V. WATER RATE SETTING
a. Water Rate Structure
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b. Proposed Water Rate Changes
EXHIBIT A – FINANCIAL SCHEDULES
A.1 Fund Analysis
A.2 Assumptions for Fund Projections
A.3 Capital Improvement Plan
A.4 Proposition 218 Notification
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| The Business of Water
With the arrival of the much‐appreciated rainfall this winter, the City’s three surface water reservoirs began to fill.
Within a few months, the reservoirs were replenished, marking the end of the current drought. For the City, as
the sole water purveyor to the community, this resulted in some short‐term relief, some long‐term perspectives,
and the opportunity to focus on upcoming work efforts. The future can be roughly divided into the categories of
“known” and “lesser known”. The increase in regulatory requirements is a continuing fact of the water industry.
Infrastructure that allows for reliable treatment and delivery of water continues to annually draw nearer to the
end of its functional lifespan. Lesser known, but only in the sense of the impacts it will bring, is the phenomenon
of climate change. We know changes in precipitation patterns will have impacts on the City’s water supplies. We
therefore keep close taps on several climate change models to better inform present decision making. We can be
sure that another drought will come and that we need to be prepared with a resilient and diversified water
portfolio. Expanding of the groundwater program will provide immediate results of more available water, while
exploring opportunities for recycled water expansion. Continued conservation will enable the City to better
understand and fulfill the community’s needs. Finally, as we look to the future, we are positioning the water utility
to realize the use of highly treated wastewater as a new drinking water source.
| Overview
The City of San Luis Obispo’s water services are administered, serviced, and maintained through the Utilities’
Department’s Water Division. The financials are recognized as an enterprise fund as all facets of the operation
and maintenance of capital assets are financed through rates charged for services.
The Water Division is responsible for:
Operating Program Number of
Employees
Core Function
Water Source of Supply This program provides the funding for the City’s three surface
reservoirs: Nacimiento, Salinas, and Whale Rock. Recycled
Water is also included as one of the water sources for
irrigation and 0.7 FTEs are allocated to this effort.
Water Treatment 12 Treating 1.9 billion gallons of raw water annually from three
surface reservoirs.
Water Distribution 12 Maintaining 145 miles of distribution lines, 10 water tanks, 16
pressure zones, 15,1000 water meters, and 2,000 fire
hydrants.
Utilities Services 4 Provides water conservation and customer service assistance
to Utilities’ customers.
Water Administration and Engineering 6.5 Oversight of 34.5 employees, capital projects, engineering,
safety, and overall fund administration.
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| Key Assumptions
When preparing the budget, the Water Division analyzes past financial results, reviews upcoming operational and
capital needs, current and future debt obligations to assess the financial position of the fund for its continued
health. The budget prepared for the two‐year financial plan follows a “zero based budgeting” approach,
considering each line item and its future needs anew. Asset condition, infrastructure age, and future capacity
needs are driving factors in determining the Capital Project plan and debt financing evaluations.
The needed revenue is then evaluated based on current rates and income levels, analysis of current water use
and effects on future revenue potential to provide a rate recommendation and possible increases.
| 2017‐18 Financial Plan
REVENUE
As an enterprise fund, the Water Division finances its operation mainly with rates charged for water 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 which include:
Water Service Charges combining a base fee and volumetric charge per unit
Sales to Cal Poly
Development Impact Fees
Miscellaneous charges such as account set‐up fees, late charges, meter sales, and connection fees.
Investment and Property Revenue
As illustrated in this chart, approximately 90% of the fund’s revenue comes from water services charges of which
the base fee amounts to 11.4% of revenue in 2016‐17, growing to 13.75% in 2017‐18.
$‐
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
2015‐16 2016‐17 2017‐18 2018‐19
Projected
Water Revenue
Investment and Property Revenues Water Service Charges
Water Base Fee Development Impact Fees
Other Revenue Total Revenue
Does not include proceeds from debt financing.
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Water Service Charges: Revenue projections for Water service charges are based on a water rate analysis that
includes a review of approximately 15,100 active water accounts (including dedicated irrigation accounts) using
the most recent 12‐month period. 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 to
capture the most recent usage trends by customer account type and by individual residential accounts. Historical
data for all customer types are analyzed to assess revenue stability in the current fiscal year, to forecast usage,
and to gauge the previously forecasted water rates for revenue adequacy in the rate setting process.
As the community began responding to California’s drought, water use declined and the water fund ended the
fiscal year 2014‐15 with a revenue loss of one million dollars. To avoid mid‐year rate adjustments, the rate
stabilization reserve was activated and used to offset the shortfall. With the 2015‐17 Financial Plan, the City
Council approved a drought surcharge to counter‐act the loss in water sales.
Ultimately, the City reduced its water use by 20%, far exceeding the State mandated 12% reduction. The further
downturn in the average winter water use that measures residential indoor water consumption during the winter
months is indicative of a new norm for water use in San Luis Obispo. Though water sales are expected to increase
due to the recent rains, they will likely remain below 2014‐15 levels as water saving devices, drought resistant
landscaping, and a conservation oriented mindset have become a way of life for Californians.
In order to develop a rate structure that considers the new usage patterns and conservation mindset, staff is
embarking on a rate structure study as approved by the City Council on April 18, 2017.
Cal Poly: Revenue projections for Cal Poly are based on the 2012 Agreement between the City and the University.
This agreement set the methodology of the non‐residential rate the University pays to account for the University’s
own water supply in Whale Rock. For 2017‐18, the rate will be 49% of the regular volumetric rate.
Development Impact Fees: These fees become due when new development “buys” into the Water system that
was sized and constructed to accommodate population growth. After the Great Recession, San Luis Obispo
continues to experience a construction boom with unprecedented development activity. However, collection of
impact fees has greatly diminished from a 2014‐15 high of $2,471,502 and the fund analysis takes a conservative
approach as to future income levels based on 2016‐17 collection of $1,031,900 as of April 2017.
$819,477
$2,471,502
$1,542,268 $1,031,900 $800,000
2013‐14 2014‐15 2015‐16 2016‐17 2017‐18
DEVELOPMENT IMPACT FEES
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Revenue Summary with revised 2016‐17 budget and Financial Plan Assumption
2017‐19
Revenues Budget* Projected
2016‐17 2017‐18 2018‐19
Investment & Property
Revenues $ 50,000 $ 50,000 0% $ 50,000 0%
Water Service Charges $ 16,673,100 $ 16,255,366 ‐3% $ 16,743,027 3%
Water Base Fee $ 1,904,000 $ 2,234,196 17% $ 2,316,462 4%
Development Impact Fees $ 900,000 $ 800,000 ‐11% $ 800,000 0%
Other Revenue $ 406,000 $ 668,000 65% $ 670,900 0%
Proceeds from Debt $8,500,000
Total Revenue $ 19,933,100 $ 20,007,562 0.4% $ 29,080,389 45%
*as approved at mid‐year
| FUND EXPENDITURES
| Operating Programs
The Water Division’s five operating program costs are summarized below. The summary reflects the net operating
program budget amounts for the 2017‐19 Financial Plan. A rigorous and thorough review of operating cost was
conducted in collaboration with each program supervisor to derive the budget necessary to provide the
community with safe and reliable drinking water.
$‐
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
$18,000,000
Expenditures 2016‐17 Expenditures 2017‐18 Expenditures 2018‐19
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Proposed Changes to Operating Programs
There is one proposed significant operating program change for the Water Treatment Plant program to continue
the funding for two temporary employees to process the full allocation of water from the Nacimiento Reservoir.
Due to the smaller diameter pipe size that delivers water from Nacimiento, the Water Treatment Plant must
operate for a longer duration each day. The request is for $130,870 and pursues the following objectives:
Maximize the use and resiliency of the City’s multi‐source water supply;
Maintain operational flexibility; and
Succession planning opportunities for Water Treatment Plant Operators.
The request is for 2017‐18 while staff evaluates the long‐term operational needs of the Water Treatment Plant.
Operating and Maintenance Expenses
The most significant non‐staffing operating costs for water services are: (1) Nacimiento debt and operation cost;
(2) chemicals for raw water treatment; (3) electric utility services for water treatment and distribution; and (4)
cost of service paid to the General Fund.
1. The City of San Luis Obispo’s portion in Nacimiento including its debt obligation is included in the Water
Fund’s operating budget under Source of Supply. The annual payment will amount to:
2017‐18 $7,266,952
2018‐19 $7,390,386
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% for both fiscal
years.
3. The cost for General Government is assessed with the City’s annual cost allocation plan and will be
reflected as a transfer between the Water and the General Fund
Expenditures Budget Projected
2016‐17 2017‐18 2018‐19
Water Admin $ 1,267,924 $ 705,751 ‐44% $ 748,253 6%
Source of Supply $ 9,771,604 $ 9,381,572 ‐4% $ 9,534,626 2%
Water Treatment $ 3,025,277 $ 2,791,977 ‐8% $ 2,770,864 ‐1%
Water Distribution $ 1,419,144 $ 1,835,800 29% $ 1,890,020 3%
Utilities Services $ 896,253 $ 515,893 ‐42% $ 533,834 3%
Total $ 16,380,203 $ 15,230,994 ‐7% $ 15,477,596 2%
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| Capital Improvement Plan
The City of San Luis Obispo Water Division maintains a complex infrastructure including:
Water Treatment Plant treating 1.9 billion gallons of raw water from three surface reservoirs
145 miles of water distribution pipes
10 storage tanks, and 16 pressure zones
15,300 water connections
2,000 fire hydrants
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 water
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
water services for the community.
Capital Improvement Plan Project Expenses 2017‐22
Project budget estimates in the capital plan forecast include inflationary adjustments assuming a moderate
increase in material costs over time (e.g., price per foot of pipe). The 2017‐22 five‐year CIP program continues
investments in the City’s water infrastructure and begins the pressure zone consolidation per the new water
model findings. Also, included in the capital plan is the large‐scale replacement of water meters and fire hydrants.
A detailed listing of the capital improvement projects can be found in Exhibit A.3.
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| Debt Service
The following is a summary of the current debt obligations of the Water Fund. The largest debt obligation which
is its share in Nacimiento is not listed here as it is part of the Fund’s operating budget under Source of Supply.
1. Debt service for 2012 Refunding Water Revenue Bond amounts to $569,600 in 2017‐18 and
$571,600 in 2018‐19.
2. Debt service for the 2006 upgrade of the Water Treatment Plant, the 2006 Water Revenue Bond, is
$1,033,547 in 2017‐18 and $1,035,347 in 2018‐19.
3. Debt service for the repayment of the State Revolving Fund loan for the construction of the Water
Reuse system is $525,456 annually for 2017‐19.
4. Debt service for the Water Fund’s proportionate share of the City’s Public Safety Communications
Center is $28,600 annually for 2017‐19. In addition, the Water Fund’s share of the Public Safety
Radio System Upgrade is $36,800 annually in 2017‐19.
5. Debt service is currently projected in the long‐term financial forecast at $875,000 annually
beginning in 2020‐21 for Ozone Generation and Energy Efficiency Upgrades at the Water Treatment
Plant, based on total project costs currently estimated at $14.3 million. Study and design of the
upgrade will be paid for by the Fund.
6. The 2017‐19 Financial Plan also includes debt service for the replacement of Reservoir 2 to begin
the pressure zone consolidation of the Water Distribution system. The annual debt service cost for
the $10.5 million project is estimated at $642,000 with design being paid for by the fund.
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| Fund Summary
The fiscal condition of the Water Fund is currently sound and will remain so through 2021‐22. However, the
long‐range forecast predicts a different outlook beginning in 2022‐23. Reduced revenues due to the recent
drought and the resultant compounding impacts along with significant capital infrastructure needs, require a re‐
evaluation in how to do business long‐term. The long‐term fund analysis also incorporates the debt financing
and resulting debt payments for the replacement of Reservoir 2, and the upgrade to the Water Treatment plant
including an energy efficiency project.
Expenditure by Category
2016‐17 2017‐18 2018‐19
Budget Budget Budget
Salaries & Benefits $4,169,597 $4,303,352 3% $4,363,850 1%
Operating Expenditures $12,210,606 $10,927,642 ‐11% $11,113,746 2%
Capital Outlay $7,514,756 $3,303,762 ‐56% $9,435,850 186%
Debt Service $2,193,791 $2,194,005 0% $2,955,652 35%
Transfers Out $2,038,842 $2,426,787 19% $2,563,174 6%
Total $28,127,592 $23,155,547 ‐18% $30,432,272 31%
$‐
$7,000,000
$14,000,000
$21,000,000
$28,000,000
$35,000,000
2015‐16 2016‐17 2017‐18 2018‐19
Revenue & Expenditures
Revenue Expenditures
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Expenditure by Function
2016‐17 2017‐18 2018‐19
Budget Budget Budget
General Government $2,104,229 $2,492,187 18% $2,628,078 5%
Water Source of Supply $11,819,041 $9,907,029 ‐16% $10,060,083 2%
Water Treatment $5,349,678 $5,245,125 ‐2% $14,033,255 168%
Water Distribution $6,503,801 $4,263,300 ‐34% $2,355,020 ‐45%
Utilities Services $925,453 $515,893 ‐ 44% $533,834 3%
Water Administration & Eng. $1,425,389 $732,013 ‐49% $822,003 12%
Total $28,127,592 $23,155,547 ‐18% $30,432,272 31%
| MAJOR ACTIVITIES AND PROGRAMS
2016‐17 Update
1. Potable Water Distribution System Operations Master Plan
The Water Master Plan was received by City Council in May of 2015 and updates the 2000 Water
Master Plan. The Master Plan update includes the development and calibration of a hydraulic
model. The model further helps to identify system improvements to address modern fire and
plumbing codes. In addition, the hydraulic model will inform infrastructure required to serve the
Orcutt and Airport Specific Plan areas, as well as San Luis and Avila Ranch, including distribution
system expansion.
2. Johnson Avenue Waterline Replacement
Construction of the Johnson Avenue Water Main Replacement project was completed in 2016. This
sixteen‐inch waterline is the main transmission pipe from the Mill Street to Bishop Street along
Johnson. The old cast iron pipeline along Johnson had experienced repeated breaks in the past years
causing businesses in the area to be without water. The replacement of the cast iron with a ductile
iron pipe has increased reliability and operational efficiencies for the services in the vicinity, which
includes the hospital along Johnson Avenue.
3. Telemetry System Upgrade Design
An upgrade to the Utilities Department telemetry system for the water distribution and the Whale
Rock water conveyance systems was approved in the 2009‐11 Financial Plan. The telemetry systems
provide oversight and operation of the facilities which are critical for the efficient and reliable
delivery of water. The current systems are over 20 years old and have far exceeded the normal life
for this type of system. The project is currently in construction and is anticipated to be completed
in the of Fall 2018.
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City of San Luis Obispo 2017 Water Fund
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2017‐19 and Forecast
1. Water Distribution System Improvements
With the completion of the Water Master Plan in 2015, several necessary projects have been
identified to maintain the water distribution system. These projects will replace over five miles of
the highest priority waterlines. These improvements will help reduce the amount of waterline
breaks related to aging infrastructure and address fire‐flow deficiencies within the system. In
addition, these projects will facilitate the consolidation of water distribution pressure zones, allow
for tanks to be removed, and improve the reliability of the system. Water distribution system
replacement projects over the five‐year capital forecast (2017‐19 through 2021‐22) total $4.2
million or about $2.1 million per year for two years. The remaining three years will be augmented
by zone consolidations in the water system that are a part of the Reservoir 2 replacement project,
and maintenance programs for Terrace Hill and Slack Zone tanks.
2. Water Storage Reservoirs
Reservoir #2, one of the City’s treated water storage reservoirs was also part of the 2015 Water
Master Plan. Initially this project looked at replacing the deteriorating floating covers. It was
determined that the entire distribution system would be better served and reliability improved by
constructing two smaller tanks that could operate independently to allow for maintenance. The
feasibility study is scheduled to be completed in the summer of 2017, and the design phase will
occur in 2017‐18. The capital forecast currently assumes $10.5 million for construction of Reservoir
2 during the 2019‐20 fiscal year.
3. Water Treatment Plant
The Water Treatment Plant serves the drinking water needs of the City, Cal Poly, and the County
Airport. The plant was originally constructed in 1961 and was last upgraded in 2008. The upcoming
energy efficiency project will ensure the plant’s future ability to continue to meet stringent drinking
water quality standards in a cost‐effective manner by upgrading the ozone treatment unit. The
capital forecast currently assumes $14.75 million for construction of the energy efficiency project
during the 2018‐20 fiscal years.
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City of San Luis Obispo 2017 Water Fund
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| WATER RATE SETTING
Water Rate Structure
Under the City’s water rate structure, bills are based mainly on customer usage choices and resulting demand on
the water systems. The City currently applies a base fee (minimum charge) and a unit rate based on the volume
of water used. The City applies a two‐tier rate structure with water usage over eight units charged at a higher rate
than the first eight units.
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
The number of active water 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. Per the last read schedule, the City currently has 15,285 service connections including dedicated
irrigation accounts.
There are a number of factors driving the need to increase water rates, including:
1. Cost of a multi‐source water supply;
2. Ongoing maintenance and operations costs;
3. Debt covenants;
4. Reduced water consumption due to recent drought conditions and adopted water conservation.
Having several sources of water avoids dependence on any one source that may not be available during a water
supply reduction or emergencies. This strategy has served the City
well, provided the current drought conditions and uncertainties. The
City’s reliable multi‐source water supply provides the water needed to
achieve the City’s General Plan goals. Maintaining different types of
sources (surface water from Salinas, Whale Rock, and Nacimiento
Reservoirs; recycled water for irrigation; and limited ground water)
provides valuable reliability and flexibility.
In addition to water supply, 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 and are operated and maintained to provide safe and reliable service. The fixed cost to do
so is about eighty (80) percent of the water utility’s cost of service.
80%
20%Fixed
Cost
Variable
Cost
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City of San Luis Obispo 2017 Water Fund
14
Additionally, water rates must provide enough revenue to cover the costs of debt payments. Because of
obligations and covenants to bondholders, the City must maintain a healthy debt coverage ratio to continue its
favorable bond rating.
The recent drought showcased the need to do things differently to avoid the ongoing sales/rate cycle the
community is currently subject to. Staff received permission from Council on April 18, 2017, to embark on a rate
structure study to investigate how to best charge for water services. It is under that purview that only a one‐year
rate adjustment is recommended. This deviates from the usual 2‐year rate recommendation.
On April 17, 2017, the City of San Luis Obispo released its Proposition 218 notification (Exhibit A.4). Under
Proposition 218, the owner of record of a parcel or a tenant directly liable for payment of the water may protest
the proposed changes to the water rates presented in the notice. If written protests are filed by a majority (50%
+1) of the affected parcel owners and / or customers, the proposed rate increases will not be imposed. The rates
would revert to the latest adopted rates until a new recommendation can go forth.
PROPOSED WATER RATES FOR 2017
Rate Basis Current July 1, 2017
Base Fee $9.98 $12.33
Drought Surcharge $0.74 Eliminated
Volume Charge
0 – 8 units $6.92 per unit $7.27
Tier 1 Drought Surcharge $0.98 per unit Eliminated
9+ units $8.65 per unit $9.08
Tier 2 Drought Surcharge $1.23 per unit Eliminated
1 unit = 748 gallons
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WATER FUND ANALYSIS
2016-17 2017-18 2018-19 2019-20 2020-21 2021-22
Budget (Current)Budget Budget Budget Budget Budget
REVENUES BY TYPE
Water Services Charges 13,000,300$ 14,989,116$ 15,438,789$ 15,901,953$ 16,379,011$ 16,870,382$
Drought Surcharge Volumetric 2,197,800$ -$ -$ -$ -$ -$
Base Fee Revenue 1,772,500$ 2,234,196$ 2,316,462$ 2,401,653$ 2,489,870$ 2,581,219$
Drought Surcharge - Base Fee 131,500$ -$ -$ -$ -$
Cal Poly Sales 825,000$ 866,250$ 892,238$ 919,005$ 946,575$ 974,972$
Recycled Water 650,000$ 400,000$ 412,000$ 424,360$ 437,091$ 450,204$
Development Impact Fees 900,000$ 800,000$ 800,000$ 800,000$ 800,000$ 800,000$
AB 939 Reimbursement 142,000$ 145,000$ 147,900$ 150,858$ 153,875$ 156,953$
Investment & Property Revenue 50,000$ 50,000$ 50,000$ 50,000$ 50,000$ 50,000$
Proceeds from Debt 8,500,000$ 16,300,000$
Miscellaneous Revenue *264,000$ 523,000$ 523,000$ 523,000$ 523,000$ 523,000$
TOTAL 19,933,100$ 20,007,562$ 29,080,388$ 37,470,828$ 21,779,422$ 22,406,729$
EXPENDITURE BY CATEGORY
Salaries & Benefits 4,169,597$ 4,303,352$ 4,363,850$ 4,525,990$ 4,628,714$ 4,847,167$
Operating Expenditures 12,210,606$ 10,927,642$ 11,113,746$ 11,168,472$ 11,267,996$ 11,363,188$
Capital Outlay 7,514,756$ 3,303,762$ 9,435,850$ 17,165,287$ 2,785,848$ 2,178,419$
Debt Service 2,193,791$ 2,194,005$ 2,955,652$ 2,955,561$ 3,718,787$ 3,766,571$
Transfers Out 2,038,842$ 2,426,787$ 2,563,174$ 2,280,452$ 2,323,940$ 2,368,297$
TOTAL 28,127,592$ 23,155,547$ 30,432,272$ 38,095,762$ 24,725,284$ 24,523,643$
EXPENDITURE BY FUNCTION
General Government 2,104,229$ 2,492,187$ 2,628,078$ 2,308,845$ 2,352,196$ 2,396,730$
Water Source of Supply 11,819,041$ 9,907,029$ 10,060,083$ 10,138,034$ 10,214,381$ 10,333,324$
Water Treatment 5,349,678$ 5,245,125$ 14,033,255$ 21,953,649$ 6,255,798$ 6,361,811$
Water Distribution 6,503,801$ 4,263,300$ 2,355,020$ 2,310,899$ 4,547,367$ 3,992,037$
Utilities Services 925,453$ 515,893$ 533,834$ 550,909$ 562,462$ 584,754$
Water Administration 1,425,389$ 732,013$ 822,003$ 833,425$ 793,080$ 854,986$
TOTAL 28,127,592$ 23,155,547$ 30,432,272$ 38,095,762$ 24,725,284$ 24,523,643$
CHANGES IN FINANCIAL POSITION
Working Capital - Beginning 22,571,449$ 14,376,957$ 11,228,971$ 9,877,087$ 9,252,153$ 6,306,291$
Revenues over (under) Expenditure (8,194,492)$ (3,147,986)$ (1,351,884)$ (624,934)$ (2,945,862)$ (2,116,914)$
Working Capital - Year End 14,376,957$ 11,228,971$ 9,877,087$ 9,252,153$ 6,306,291$ 4,189,378$
Operating Reserve 3,683,809$ 3,531,556$ 3,608,154$ 3,594,983$ 3,644,130$ 3,715,731$
Rate Stabilization 1,382,530$ 1,585,537$ 1,633,103$ 1,682,096$ 1,000,000$
Unreserved Working Capital - Year End 9,310,618$ 6,111,878$ 4,635,830$ 3,975,075$ 1,662,162$ 473,647$
A.1
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A.2
FUND ANALYSIS ASSUMPTIONS
Categorie 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22
Cost Inflators
MCI 2.7%2%2%2%2%2%
CCI 3.9%
CPI 3.1%
PPI 1.3%
Salary Increases 2.5 2.5 2.5 2.5
Rate Increases
Base Fee $9.98 12.33 12.70 13.08 13.47 13.88
Base Fee %30.8%23.5%3%3%3%3%
Volumetric 0.0%5.0%3.0%3.0%3.0%3.0%
Drought Surcharges
Base Fee 0.74$
Tier 1 1.10$ 1.18$ 1.22$ 1.25$ 1.29$ 1.33$
Tier 2 1.37$ 1.47$ 1.52$ 1.56$ 1.61$ 1.66$
8%3%3%3%3%
Estimated # of meters 15,000 15,100 15,200 15,300 15,400 15,500
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A.3
CAPITAL IMPROVEMENT PROJECTS
2016-17 2017-18 2018-19 2019-20 2020-21 2021-22
Revised Budget Budget Budget Budget Budget
SOURCE OF SUPPLY
Groundwater
ER 75,000$
Study 70,000$
Design 175,000$
Construction 1,000,000$
Construction Mgmt 150,000$
Water Reuse Automation Improvements 51,980$
TOTAL 1,521,980$ -$ -$ -$ -$ -$
WATER TREATMENT
PROJECTS
Major Facility Maintenance 35$ 360,000$ 163,000$ 171,000$ 179,000$ 189,000$
Ozone System 191,523$
Enc-Xylem 44,610$
Chemical System 54,000$
Air Compressor & Dryer Maintenance 50,000$
Air Compressor Replacement
Design 10,000$
Construction
Stenner Canyon Waterline Replacement
Study 7,123$
Design 35,000$
Construction 100,000$
Package Thickener 50,000$
Wash water tank #2 - construction
Wash water tank #1
Design 40,000$
Construction 250,000$
Construction Management 25,000$
Reservoir 2 Replacement
Study 110,763$
Design 118,400$ 200,000$
Construction 10,000,000$
Construction Management 500,000$
Energy Efficiency Project
Study 150,000$
Design 300,000$
Hydro & Ozone Construction 8,000,000$ 5,000,000$
Hydro & Ozone Construction Mgmt 500,000$ 800,000$
Forebay and Culvert Rehab
Study
Design
Construction
Construction Mgmt
IT
LAN Tablet System 34,100$
FLEET
Compact Pickup
Service Body Truck 40,000$
General Forecast
TOTAL 721,454$ 850,000$ 8,897,100$ 16,746,000$ 229,000$ 229,000$
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A.3
CAPITAL IMPROVEMENT PROJECTS
2016-17 2017-18 2018-19 2019-20 2020-21 2021-22
Revised Budget Budget Budget Budget Budget
WATER DISTRIBUTION
PROJECTS
Casa, Stenner, Chorro, Murray, Pacific
Design 150,000$
Construction 1,492,219$ 1,700,000$
Construction Mgmt 150,000$ 170,000$
Mt. View, Hill, West, Lincoln
Design 125,000$
Construction
Construction Mgmt
Craig, Christina, Jaycee
Design 180,000$
Construction 1,800,000$
Construction Mgmt 180,000$
Chorro, El Paseo, El Cerrito
Design 130,000$
Construction 1,300,000$
Construction Mgmt 130,000$
Recycled Water Sys Pilot Study 70,000$
Trench Repairs 299,789$ 200,000$ 200,000$ 200,000$ 200,000$ 200,000$
Fredericks Paving 67,781$
Raise Valve Covers 50,765$ 25,000$ 30,000$ 30,000$ 30,000$ 30,000$
Water Meters and Boxes 115,477$ 165,000$ 180,000$ 180,000$ 180,000$ 180,000$
Water Meters and Boxes (from sewer)(82,500)$ (90,000)$ (90,000)$ (90,000)$ (90,000)$
Fire Hydrants 28,348$ 40,000$ 40,000$ 40,000$ 40,000$ 40,000$
Water Model Maintenance 20,000$ 20,000$
Wash Water Tank "2 Constr. @ WTP
Foothill/Chorro PRV Replacement
Design 3,751$
Construction 86,950$
Tank Maintenance
Study 13,600$
Design 5$
Construction 900,000$
Construction Mgmt
Terrace Hill Tank Maintenance 65,635$
IT
Telemetry System Provements 50,000$ 50,000$
Telemetry System Upgrade
Design 51,291$
Construction 1,465,613$
Cityworks Upgrade 17,354$
FLEET
Portable Generators
Pickup 70,000$ 35,000$ 35,000$
Extended cab pickup truck 1,079$
TOTAL 5,084,657$ 2,427,500$ 465,000$ 360,000$ 2,555,000$ 1,920,000$
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A.3
CAPITAL IMPROVEMENT PROJECTS
2016-17 2017-18 2018-19 2019-20 2020-21 2021-22
Revised Budget Budget Budget Budget Budget
UTILITIES SERVICES
Fleet
Compact Pickup 29,200$
TOTAL 29,200$ -$
ADMINISTRATION
Projects
879 Morro Refurbishment 4,447$
HVAC 3,600$ 21,600$
Fleet
Sedan 35,000$
Control Systems Trucks 40,090$
General assumption for future planning
TOTAL 44,537$ 3,600$ 21,600$ 35,000$ -$ -$
SHARED IT
MS Office Replacement 12,400$ 9,620$
Network Firewalls 15,259$
Network Switch Infrastructure Repl.
Radio Handhelds Repl.
S.Hill Radio Site Upgrade 22,662$ 16,363$
Server Operating System 1,848$ 1,848$
Tait Radio System 24,282$
UB System Upgrade 1,667$
UPS Battery Replacement 1,885$ 1,885$ 1,885$
Virtual Private Network Replacment 9,028$
VM Infrastructure 8,945$
VoIP 20,360$
Wireless System Citywide 7,174$
TOTAL 26,745$ 22,662$ 52,150$ 24,287$ 1,848$ 29,419$
COMPLETED PROJECTS
Available Balance 86,183$
GRAND TOTAL - WATER FUND 7,514,756$ 3,303,762$ 9,435,850$ 17,165,287$ 2,785,848$ 2,178,419$
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The San Luis Obispo City Council will be holding a public hearing to consider
proposed adjustments to water rates. The hearing will be held on:
DATE: JUNE 6, 2017
TIME: 6 :00 PM
PLACE: CITY OF SAN LUIS OBISPO, COUNCIL CHAMBERS
990 PALM STREET
SAN LUIS OBISPO, CA 93401
The public hearing will cover the proposed rate increases from July 1, 2017 to June 30, 2018 for water
services only. This notice is provided to all property owners and customers who currently receive
water services provided by the City of San Luis Obispo. If adopted, the proposed rate increases will
become effective July 1, 2017.
This Notice of Public Hearing provides information about proposed rate increases to the City’s water service pursuant to the
requirements of California Constitution Article XIII (commonly referred to as Proposition 218). This notice provides information
on (1) the amount of the fee, (2) the reasons for the required rate increases, (3) how water rates are calculated, (4) how
customers can receive more information on the effect of the proposed changes to their water bills, and (5) how to file a protest
regarding the proposed rate increases.
SEWER RATES – INFORMATIONAL ONLY
There will be no changes to the sewer rates. They will remain at 2016-17 levels.
NOTICE OF PUBLIC HEARING
PROPOSED RATE INCREASE FOR
WATER SERVICE
NOTICE OF PUBLIC HEARING RATE INCREASE FOR WATER SERVICE 1
SEWER 2016–17 2017–18 VARIANCE
Base Fee $8.57 $8.57 0%
Volumetric Rate $9.44 $9.44 0%
WATER RATES - IS THE DROUGHT OVER?
After a six-year drought, California has finally received rain. Most of the state is no longer under severe
drought conditions. However, several southern parts, including San Luis Obispo’s south county and
Santa Barbara county continue to struggle with water supply. The State Water Board has continued its
drought declaration through May to better gauge the winter season’s total precipitation.
Exhibit A.4
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2
WHAT DOES THIS MEAN FOR WATER RATES AND DROUGHT SURCHARGES?
NOTICE OF PUBLIC HEARING RATE INCREASE FOR WATER SERVICE
HOW CAN I FIND OUT MORE ABOUT THE PROPOSED INCREASES?
To calculate how the proposed rates affect your bill, visit slocity.org/waterservice and click on “Calculate My Bill”.
If you keep your old water bill, you can look back at the units of water used to determine how the proposed rate
will impact your bill. Look up your bill online by going to slocity.org and click “Online Payments”. Please call the
Utilities Department at 805-781-7133 for assistance.
HOW ARE WATER RATES CALCULATED?
Under the City’s water rate structure, bills are based mainly on customer usage and resulting demand on the
water treatment and delivery systems. The City currently applies a base fee for fixed cost and a unit rate based
on the volume of water used. The City applies a two-tier rate structure with water usage over eight units charged
at a higher rate than the first eight units.
The City receives the majority of its water supply
from three surface reservoirs. All three sources have
recovered to 75% to 100% of capacity.
Before the drought, water users consumed roughly
5,100 acre feet of potable water for indoor use and
outdoor irrigation. Through an extraordinary ef fort by
the community, water usage was reduced to 4,100
acre feet of water per year; a stellar 20% reduction
which is 8% over the State-mandated target of 12%.
The City’s water utility is entirely financed by rates
and fees associated with water services. The
utility must generate sufficient income to cover
expenditures, debt service, and maintain a reasonable
operating reserve. Over 80% of its cost is directly
connected to operations and the infrastructure
maintenance required to produce and deliver safe
drinking water. While revenues drop due to reduced
water consumption by the community, the expenses
to maintain the utility remain. To address the loss
of revenue, in 2015, the City enacted a drought
surcharge to cover the revenue gap for the water
utility.
With the winter rainfall, State-mandated emergency
water restrictions should be lifted in May with the City
following suit to declare the end of the City’s water
emergency declaration. In recognition of the health
of the water supply, the City eliminated the drought
surcharge from the base fee in March 2017 (for
February water use) and will eliminate the volumetric
drought surcharge starting July 1, 2017 (which will
apply to June water use).
However, as a result of the severe drought,
community values and state and local laws and policy
governing water use has been significantly altered
resulting in what is anticipated to be a long-term, if
not permanent, change in the community’s water use.
While this shift in our water culture is appropriate and
prepares the City well for water sustainability, the
reduction in water consumption directly impacts utility
revenue based on the method the City charges for its
water ser vices.
The Utilities Department will soon be working with
the City Council on a water and sewer rate structure
study. The study’s purpose is to evaluate what the
best rate structure is to provide sufficient revenue for
each utility in the face of changing climate and water
use. It is critical the City’s rate structures provide
suf ficient funding to continue serving the community
with safe drinking water and sewer service. Because
the outcome of the study will be known by the end
of 2017, a single year rate adjustment, instead of
the usual two-year adjustment, for the water utility
is being proposed at this time. The proposed water
rates take into account the anticipated revenue based
on a decreased per capita water use for the one year
period. Sewer rates will not increase and will remain
at 2016-17 levels for 2017-18.
Exhibit A.4
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3
WHY ARE WATER RATES BEING INCREASED?
There are a number of factors driving the need to
increase water rates, including:
1. Cost of a multi-source water supply;
2. Major infrastructure repair and replacement
projects;
3. Ongoing maintenance and operations costs;
4. Debt covenants;
5. Drought surcharge elimination/revenue stability; and
6. Community-wide reduction in water consumption.
Having several sources of water avoids dependence
on any one source that may not be available during a
water supply reduction or emergencies. This strategy
has served the City well and kept its water supply
safe during the drought years as it provides valuable
resiliency as proven during this last drought.
In addition to water supply, 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 and are operated and maintained
to provide safe and reliable service. Combined with the
water supply expenditures, the fixed cost accounts for
about 80% of total cost.
Additionally, water rates must provide enough revenue
to cover the costs of debt payments. Because of
obligations and covenants to bondholders, the City
must maintain a required debt coverage ratio to
continue its favorable bond rating.
NOTICE OF PUBLIC HEARING RATE INCREASE FOR WATER SERVICE
Rate Basis Current July 1, 2017 Variance
Base Fee $9.98 $12.33 23.5%
Drought Surcharge
(eliminated March 2017)$0.00 $0.00
Volume Charge
0 – 8 units $6.92 per unit $7.27 per unit 5%
Tier 1 Drought Surcharge $1.10 $0.00
9+ units $8.65 per unit $9.08 per unit 5%
Tier 2 Drought Surcharge $1.37 $0.00
1 unit = 748 gallons
FIXED COST VARIABLE COST
80%
20%
PROPOSED WATER RATES FOR FISCAL YEAR 2017-18
MONTHLY RESIDENTIAL WATER BILL COMPARISON
CONSUMPTION 3 UNITS 6 UNITS 12 UNITS 20 UNITS
Current $34.04 $58.10 $114.22 $194.38
July 1, 2017 $34.14 $55.95 $106.81 $179.45
Exhibit A.4
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PROPOSED RATE INCREASE FOR WATER SERVICE PROTEST FORM
Date:
Name:
(please print)
Service Address:
(please print)
I am protesting the proposed water rate (check the box)
Signature Property Owner Account Holder
Under Proposition 218, if you are the owner of record of a parcel or parcels or a tenant directly liable for payment
of the water bill, you may submit a written protest against the proposed changes to the water rates presented in this
notice. Only one written protest per affected property will be counted towards the majority protest. If written protests
are filed by a majority of the affected parcel owners and/or customers, the proposed rate increases will not be
imposed. Although oral comments at the public hearing will not qualify as formal protests unless accompanied by a
written protest, the Mayor and City Council welcome input from the community during the public hearing.
It is important to follow these instructions in order for your protest to be valid:
1. The protest must be submitted on the form provided and received by the City Clerk at or before the end of
the public hearing on June 6, 2017. Written protests may be mailed or personally delivered to the City Clerk at
990 Palm St., San Luis Obispo, CA 93401. E-mail and fax protests will not be valid.
2. The box identifying that you are protesting the water rate must be checked.
3. The written protest must contain the service address.
4. The protest must be signed by either the account holder or the property owner of the service address.
The protest form provided below is your official form. It can either be mailed or personally delivered to the City Clerk
at 990 Palm St., San Luis Obispo, CA 93401.
4 NOTICE OF PUBLIC HEARING RATE INCREASE FOR WATER SERVICE
HOW DO I PROTEST THE PROPOSED WATER RATE?
Exhibit A.4
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R ______
RESOLUTION NO. (2017 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, ESTABLISHING THE WATER RATES FOR
FISCAL YEAR 2017-18
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 2017-18 through 2021-22; and
WHEREAS, this comprehensive analysis has been revised based on updated revenue and
expenditure information; and
WHEREAS, current citywide water use information influenced by the recent drought
conditions have been taken into consideration when evaluating consumption and water sales
revenue; and
WHEREAS, the Council has reviewed the water service rates necessary to meet system
operating, capital and debt service requirements; and
WHEREAS, the Council desires to modify the existing base fee and per-unit water rate,
and eliminate the currently applicable drought surcharge; and
WHEREAS, a public hearing was properly noticed and held on June 6, 2017; 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. 10637 (2015 Series) is hereby rescinded, effective 11:59
p.m. June 30, 2017.
SECTION 2. The water rates set forth in Exhibit “A” are hereby adopted, establishing
water rates effective July 1, 2017.
SECTION 3. The water system access charges for emergency purposes are hereby
increased from $79.59 to $83.57 effective July 1, 2017.
Upon motion of _______________________, seconded by _______________________,
and on the following vote:
AYES:
NOES:
ABSENT:
Packet Pg 273
15
Resolution No. _______________ (2017 Series) Page 2
R ______
The foregoing resolution was adopted this _____ day of _____________________ 2017.
____________________________________
Mayor Heidi Harmon
ATTEST:
____________________________________
Carrie Gallagher
City Clerk
APPROVED AS TO FORM:
_____________________________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City
of San Luis Obispo, California, this ______ day of ______________, _________.
____________________________________
Carrie Gallagher
City Clerk
Packet Pg 274
15
Resolution No. _______________ (2017 Series) Page 3
R ______
EXHIBIT A
MONTHLY WATER SERVICE RATES
Proposed Rate Structure July 1, 2017
Base fee (minimum charge) $12.33
Volume Charges
0-8 units $7.27 per unit
9+ units $9.08 per unit
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.
Recycled water charges are 90% of potable water charges.
Packet Pg 275
15
R ______
RESOLUTION NO. (2017 Series)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, SETTING CHARGES FOR WATER METERS,
CUSTOMER VALVES, AND ADAPTERS
WHEREAS, it is the policy of the City of San Luis Obispo to review charges 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 fixtures; and
WHEREAS, based on Assembly Bill 1953, effective January 1, 2010 the amount of lead
in specific plumbing fixtures was reduced from a regulated amount of no more than 8%, to a new
standard not to exceed 0.25%; and
WHEREAS, the City’s costs of procuring compliant equipment have and continue to
increase as a result of the new standard; and
WHEREAS, the charges set forth herein represent the actual costs to the City of procuring
compliant equipment.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo
as follows:
SECTION 1. The charges set forth in Exhibit “A” are hereby adopted, effective July 1, 2017
Upon motion of _______________________, seconded by _______________________,
and on the following vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this 20th day of June, 2017
____________________________________
Mayor Heidi Harmon
ATTEST:
____________________________________
Carrie Gallagher
City Clerk
Packet Pg 276
15
Resolution No. _____ (2017 Series) Page 2
R ______
APPROVED AS TO FORM:
_____________________________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City
of San Luis Obispo, California, this ______ day of ______________, _________.
____________________________________
Carrie Gallagher
City Clerk
Packet Pg 277
15
Resolution No. _____ (2017 Series) Page 3
R ______
EXHIBIT A
WATER CUSTOMER VALVES, ADAPTERS, METER BOXES AND LIDS CHARGES
Water Fixture Charges
Current Proposed
Customer Valve Costs Customer Valve Costs
1.0 inch $ 104.00 1.0 inch $ 80.00
2.0 inch $ 330.00 2.0 inch $ 265.00
Adapter Costs (Per Pair) Adapter Costs (Per Pair)
1.0 inch service / .75 inch meter $ 19.00 1.0 inch service / .75 inch meter $ 17.80
2.0 inch service / 1.0 inch meter $ 143.00 2.0 inch service / 1.0 inch meter $ 134.00
Water Meter Charges – Material only
Current
Proposed
Water Meter Size Cost Cost
¾" meter $138.55 $198
1" meter $186 $216
2" meter $868.00 $715
3" meter $1,532.00 Time and Material
4" meter $1,755.00 Time and Material
6" meter $2,586.00 Time and Material
Installation cost will be added to the meter material charges identified above based on time and
applicable labor rates.
Packet Pg 278
15
Tj_E Newspaper of the Central Coast
3825 South Higuera • Post Office Box 112 • San Luis Obispo, California 93406-0112 • (805) 781-7800
In The Superior Court of The State of California
In and for the County of San Luis Obispo
AFFIDAVIT OF PUBLICATION
AD # 3095387
CITY OF SAN LUIS OBISPO
OFFICE OF THE CITY CLERK
STATE OF CALIFORNIA
SS.
County of San Luis Obispo
I am a citizen of the United States and a resident of the
County aforesaid; I am over the age of eighteen and not
interested in the above entitled matter; I am now, and at
all times embraced in the publication herein mentioned
was, the principal clerk of the printers and publishers of
THE TRIBUNE, a newspaper of general Circulation,
printed and published daily at the City of San Luis
Obispo in the above named county and state; that notice
at which the annexed clippings is a true copy, was
published in the above-named newspaper and not in any
supplement thereof — on the following dates to wit;
MAY 27, 2017 that said newspaper was duly and
regularly ascertained and established a newspaper of
general circulation by Decree entered in the Superior
Court of San Luis Obispo County, State of California, on
June 9, 1952, Case #19139 under the Government Code
of the State of California.
I certify (or declare) under the penalty of perjury that the
foregoing is true and correct.
6W E_ - ILA�
(Sighature of Principal Clerk)
DATE: MAY 27, 2017
AD COST: $148.48
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L7dl..lG�/El�►70B1SP0
SAN LUIS OBISPO CITY COUNCIL
NOTICE OF PUBLIC HEARING
The San Luis Obispo City Council invites
all interested persons to attend a public
hearing on Tuesday. June 6, 2017. at
6:00 p.m. in the City Hall Council Cham-
ber, 990 Palm Street, San Luis Obispo,
California, relative to the following:
A public hearing to consider adopting a
Resolution of the City Council of the City
of San Luis Obispo, California, establishing
the water rates. (This Resolution would in-
crease the water base fee and volumetric
rata and remove the drought surcharge as-
sociated with both the water base fee and
volumelrlc rates, effective July 1, 2017.)
more information, you are invited to
'acl Utility Billing of the City's Utilities
anment at (805) 781-7133.
The City Council may also discuss other
hearings or business items before or after
the items listed above. If you challenge the
proposed projects in court, you may be lim-
Ited to raising only those issues you or
someone else raised at the public hearing
described in this notice, or in written corre-
spondence delivered to the City Council at,
or prior to, the public hearings.
Reports for this meeting will be available
for review in the City Clerk's Office and on-
line at www.slocity.org on Wednesday,
May 31, 2017. Please call the City Clerk's
Dolce at (805) 781-7100 for more iniorma-
lion, The City Council meeting will be tele-
vised live on Charter Cable Channel 20
and live streaming on www.slocity.org.
fe Gallagher
Clerk
of San Luis Obispo
27.2017 3095387
2017-19 Budget Review2017-19 Budget ReviewCity Council MeetingWater Fund Review2017-19 Financial PlanJune 6, 2017
Overview – Water and Sewer Utilities1.Water Fund Review•Expenditures and Revenues2.2017-18 Water Rate Public Hearing3.Sewer Fund Review•Expenditures and Revenues2One
Overview –Water and Sewer Utilities3One
Overview – Water and Sewer Utilities4OneGraphic courtesy of One Water Alliance
One Water Administration and EngineeringProviding foundational support systems for the Business of Water5One10DirectorDeputy Director - WaterDeputy Director – WastewaterBusiness ManagerAnalystSafety & Technical Training EngineerUtilities EngineerProjects ManagerSupervising Administrative AssistantAdministrative Assistant
Water Utility Fund1.Water Fund Review•Expenditures and Revenues2.2017-18 Water Rate Public Hearing3.Sewer Fund Review•Expenditures and Revenues6One
Programs Funded by City’s Water Utility•Source of Supply•Treatment•Distribution•Utilities Services•Administration and Engineering7One
Source of SupplyManaging Reservoirs, Groundwater, Recycled WaterProgram DescriptionThe Water Source of Supply program procures raw water from the City’s threeprimary surface sources: Whale Rock Reservoir, Salinas Reservoir (Santa MargaritaLake), and Nacimiento Reservoir to provide a clean, dependable supply of raw waterfor treatment at the City’s water treatment plant. An additional source of supply offershighly treated recycled water from the City’s Water Resource Recovery Facility thatis used for irrigation and other approved purposes.8Whale Rock January 2017Whale Rock March 2017See Financial Plan Page D11-5 One
Source of SupplyBy the numbers…The people that work to supply our water 365 / 79Pump motor replacementMowing Whale Rock DamWhale Rock Reservoir3Recycled Water0.7Salinas / Nacimiento5 CountySee Financial Plan Page D11-5 One
Source of Supply102017-19 Work Program•Deliver raw water supplies in a reliable,cost-effective manner•Operate, maintain, and repair supplyfacilities•Maximize production of recycled water•Reliability Analysis of the 18-mile WhaleRockpipeline to pinpoint future failurepoints and identify pipeline CIP needs forfuture considerationPipeDiverinspection toolSee Financial Plan Page D11-5
Source of Supply – 2017-18 Budget*Capital projects are carried in operation costs1148%Operation $ 9,381,572CIP 0.00*Debt 525,457Total $ 9,907,029Total Water Fund ExpendituresOneSee Financial Plan Page D11-5
Water TreatmentManaging Water Treatment Processes and Systems12Program DescriptionThe Water Treatment program receives raw water fromthree surface reservoirs, treats it to meet potable waterstandards, and delivers it into the water distributionsystem. The Water Treatment Plant produces anaverage of 4.5 million gallons of potable water per dayfor the City of San Luis Obispo and Cal Poly.See Financial Plan Page D11-6 OneThe program goal is to provide an adequate water supply, treated to State and Federal standards, for domestic consumption and firefighting.
Water Treatment13By the numbers…The people that work to treat our water 365 / 7Operators7Chief Operator1Supervisor1Maintenance Technician1See Financial Plan Page D11-6 One
Water Treatment142017-19 Work Program•Continue to provide uninterrupted supply of high qualitywater to distribution system.•Continue to meet all treatment standards as required byEPA, SWRCB’s Division of Drinking Water, APCD, andother regulatory agencies.•Continue with succession planning goals of developmentof standard operating procedures, internship program, etc.•Continue development of computerized maintenancedatabase and work order system.•Continue development of Capital Improvement ProjectsOneSee Financial Plan Page D11-6
Water Treatment – 2017-18 Budget1534%Operation $ 2,791,977CIP 850,000Debt 1,603,148Total $ 5,245,125Total Water Fund ExpendituresOneSee Financial Plan Page D11-6
Water DistributionManaging Water Delivery SystemsProgram DescriptionThe Water Distribution Program is responsible for the maintenance and repair of thesystems that convey potable and recycled water from the respective treatment plants tothe system users.The program goal is uninterrupted water flow at adequate pressure with minimum waterleakage.16Storage Tank MaintenancePump Station MaintenanceWater Main ReplacementOneSee Financial Plan Page D11-7
Water Distribution17Isolation Valve ExercisingWater Main RepairFire Hydrant RepairBy the numbers…The people that work to deliver our water 365 / 7Operators9Chief Operator1Supervisor1Utilities Locator1See Financial Plan Page D11-7 One
Water Distribution2017-19 Work Program•Continue the water distribution system improvements inaccordance with the Capital Improvement Plan•Design, construct, and implement the recommendationsin the Water System Master Plan•Maintain compliance with all applicable regulations18Fire Hydrant ReplacementSystem FlushingOneSee Financial Plan Page D11-7
Water Distribution – 2017-18 Budget1928%Operation $ 1,835,800CIP 2,427,500Debt 0.00Total $ 4,263,300Total Water Fund ExpendituresOneSee Financial Plan Page D11-7
Utilities ServicesCoordinating Water Resource Programs20Program DescriptionThe Utilities Services program coordinates the planning, development, andimplementation of programs and services related to water conservation, publicoutreach, solid waste management and recycling, storm water pollutionprevention, and recycled water.OneSee Financial Plan Page D11-8 Promoting Water Conservation Food Waste Program
Utilities Services21By the numbers…The people that work to connect community with responsible solutionsTechnicians3Water Resources Program Manager1See Financial Plan Page D11-8 One
Utilities Services222017-19 Work Program•Food waste recycling program expansion•Recycled water system expansion•Implementation of new water conservation regulations•Expansion of public education and engagement OneSee Financial Plan Page D11-8
Utilities Services – 2017-18 Budget233%Operation $ 515,893CIP 0.00Debt 0.00Total $ 515,893Total Water Fund ExpendituresSee Financial Plan Page D11-8 One
Administration and EngineeringProviding Foundational Support SystemsProgram DescriptionThe Water Fund’s Administration program provides guidance and direction for effective water resource management for the various Water Fund programs. It evaluates and provides strategic and long-term planning and engineering for the water system. Program goals are 1) efficient management of Water enterprise objectives and 2) well-planned and effective implementation of capital improvement plans. 24OneSee Financial Plan Page D11-4
Administrationand Engineering25The people that work to provide the foundational support structure that empowers overall employee and program excellenceOne Water shared resourcesSee Financial Plan Page D11-4
Administration and Engineering2017-19 Work Program•Continue Sustainable Groundwater Management Act work with formation of aGroundwater Sustainability Agency and the creation of a GroundwaterSustainability Plan•Continue regional dialogue related to water supply and resiliency•Monitor water enterprise fund financials operations, recommended rates andrevenues needed to support program and service objectives•Continue organizational analysis to consistently improve customer service•Continue implementation and tracking of strategic planning activities26OneSee Financial Plan Page D11-4
Administration and Engineering2017-18 Budget275%Operation $ 705,751CIP 26,262Debt 0.00Total $ 732,013Total Water Fund ExpendituresSee Financial Plan Page D11-4 One
Water Fund 2017-18 Expenditures28O&M Capital DebtSource of Supply 9,381,572$ 525,457$ Water Treatment 2,791,977$ 850,000$ 1,603,148$ Distribution 1,835,800$ 2,427,500$ Utilities Services 515,893$ ‐$ Administration/Engineering 705,751$ 26,262$ General Government 2,426,787$ 65,400$ Total Expenditure 17,657,780$ 3,303,762$ 2,194,004$ OneTotal Fund Expenditure: $23,155,546
2017-18 Water Fund Expenditures29Operating CostsOperating Costs66%CIP14%Debt Service 9%General Gov.9%Water Fund Total ExpendituresStaffing28%Contract Services63%Other Operating9%Operating CostsOne
2017-18Significant Operating Program Change30Water Treatment PlantTemporary Staffing $130,870Continue the Water Treatment Plant operating budget to allow for treatment plant operational flexibility and maximum water deliveries from the Nacimiento Project. OneSee Financial Plan Page A1-25
2017-18 Water FundCapital Improvement Plan Summary31Water Treatment Plant•Energy Efficiency Project $ 450,000•Major Facility Maintenance $ 360,000•Tank Maintenance $ 40,000Water Distribution System•Distribution System Improvements $2,307,500•Telemetry System Improvements $ 50,000Administration/Engineering•Facilities Maintenance Project $ 3,600•IT Projects $ 22,662TOTAL CAPITAL INVESTMENTS - 2017-19 $ 3,303,762OneSee Financial Plan Page E2-146 – E2-160
Water Utility Capital Investments32One $- $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 $18,000,0002012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22Treatment/Distribution CIPTreatmentDistribution
Water Fund Revenue33Water Salesa.Service Chargesb.Base Feec.Sales to Other AgenciesWater Service Charges77%Sales to Other Agencies4%Dev Impact Fees4%Misc Revenue4%Base Fee 11%One
Water Use Graph34One
Water Fund 10-Year Trend35One $‐ $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 $35,000,000 $40,000,000 $45,000,0002012‐13 2013‐14 2014‐15 2015‐16 2016‐17 2017‐18 2018‐19 2019‐20 2020‐21 2021‐22RevenueExpenditureWCUse of Rate Stabilization Fund
Water Fund 2017-18 Revenue36Revenues 2017-18Service Charges16,255,366 Base Fee 2,234,196 Development Impact Fees 800,000Investment and Property Revenue 50,000Other Revenue 668,000 Total Revenue $ 20,007,562 One
Recommended Water Rates37Rate Basis Current July 1, 2017Base Fee $9.98 $12.33Drought Surcharge $0.74 N/A*Volume Charges0 – 8 units $6.92 per unit $7.27 per unitDrought Surcharge $0.98 per unit N/A9+ units $8.65 per unit $9.02 per unitDrought Surcharge $1.23 per unit N/AOnly one-year rate change proposed due to upcoming rate structure studyOne*City Council authorized the Utilities Director to remove drought surcharge when circumstances warranted. Drought surcharge on base fee was removed March 2017; drought surcharge on volume will be removed July 2017.
Water Bill Comparison38Consumption 3 units 6 units 12 units 20 units Current $ 34.04 $ 58.10 $ 114.22 $ 194.38 Proposed $ 34.14 $ 55.95 $ 106.81 $ 178.45 One
Recommendations391. Reviewand approve the 2017 Water Fund Review;2. Conceptuallyapprove the 2017-19 Water Fund budgets, with final action on June 20, 2017, with the adoption of the 2017-19 Financial Plan;3. Adopta resolution increasing the water base fee and volumetric rates; and4. Adopta resolution setting the cost for residential and commercial water meters and adapters.One
Questions40One
Proposition 218Official Protest Count – Water Rates41Mayor•Open the Public Hearing•Call for any written protests from the public•Receive public comments•Close the Public HearingCity Clerk•Confirm number of written protests received•Confirm total number of valid protestsCouncil may not adopt the proposed rates if 7,551 valid protests (50% plus 1) are filed.One
Recommendations421. Reviewand approve the 2017 Water Fund Review;2. Conceptuallyapprove the 2017-19 Water Fund budgets, with final action on June 20, 2017, with the adoption of the 2017-19 Financial Plan;3. Adopta resolution increasing the water base fee and volumetric rates; and4. Adopta resolution setting the cost for residential and commercial water meters and adapters.One
2017-19 Budget Review2017-19 Budget ReviewCity Council MeetingSewer Fund Review2017-19 Financial PlanJune 6, 2017
Tonight’s Presentation Overview44One1.Water Fund Review•Expenditures and Revenues2.2017-18 Water Rate Public Hearing3.Sewer Fund Review•Expenditures and Revenues
Programs Funded by City’s Sewer Utility45•Wastewater Collection•Water Resource Recovery Facility•Water Quality Laboratory•Environmental Programs•Utilities Revenue•Administration and EngineeringOne
Wastewater CollectionProgram DescriptionThe Wastewater Collection program is responsible fortransporting wastewater to the Water Resource RecoveryFacility via 8 pump stations and 138 miles of gravity mainline.The program goal is to operate the wastewater collectionsystem to provide uninterrupted sewage flow without healthhazard, effluent leakage, or water infiltration and inflow.46OneSee Financial Plan Page D11-10 Managing Used Water Transport Systems
WastewaterCollection47See Financial Plan Page D11-10 By the numbers…The people who work to transport used water for treatment 365/7Construction Inspection Hydro-Cleaning OneOperators8Supervisor1
2017-19 Work Program•Evaluate & optimize the sewer main maintenance hydro-cleaningprogram•Evaluate the operation and maintenance of the sewer lift stations•Complete the wastewater collection main replacement CIP projects•Inflow and Infiltration•Meet all regulatory requirements•Training and Safety48Wastewater CollectionOneSee Financial Plan Page D11-10 Tank Farm Lift Station
Wastewater Collection – 2017-18 Budget4914%Operation $ 1,126,925CIP 2,542,500Debt 741,160Total $ 4,140,585See Financial Plan Page D11-10 OneTotal Sewer Fund Expenditures
Water Resource Recovery FacilityManaging Resource Recovery Processes and SystemsProgram DescriptionThe Water Resource Recovery Facility (WRRF) is responsible for treating influentwastewater to protect public health by meeting all State and Federal Standards.The WRRF receives and treats an average of 3 million gallons of wastewater perday and produces recycled water, biosolids, and biogas.50OneSee Financial Plan Page D11-12
Water ResourceRecovery Facility51Operators7Chief Operator1Maintenance Technicians3Chief Technician1Supervisor1By the numbers…The people who work to create reusable water 365 / 7See Financial Plan Page D11-12 One
Water Resource Recovery Facility522017-19 Work Program• Assist in study and design of Water Resource Recovery Facility project based onnew permit limits and projected capacity goals.• Meet increased demand for recycled water.• Participate in community outreach by giving tours and providing avolunteer/internship program.• Continue with succession planning goals in the development of standardoperating procedures.• Continue to develop and implement Emergency Response Plans and SafetyPrograms.OneSee Financial Plan Page D11-12
Water Resource Recovery Facility2017-18 Budget5378%Operation $ 3,812,256CIP 19,500,000Debt 618,363Total $ 23,930,619OneSee Financial Plan Page D11-12 Total Sewer Fund Expenditures
Water Quality LaboratoryPerforming with Precision and AccuracyProgram DescriptionThe Water Quality Laboratory (WQL) is an EnvironmentalLaboratory Accreditation Program (ELAP) State CertifiedLaboratory which performs sampling and/or analyses forapproximately 100,000 samples annually.54OneSee Financial Plan Page D11-14
Water QualityLaboratory55Analysts4Manager1See Financial Plan Page D11-14 OneBy the numbers…The people who work to ensure regulatory compliance.
Water Quality Laboratory562017-2019 Work Program• Continue work related to the NPDES permit and 303d Integrated List for impaired water bodies• Coordinate and implement any special studies including the WRRF project • Continue participation in community outreach programs including the WQLInternship program• Conduct investigative projects such as urban catchment basins and Laguna Lake characterization study.OneSee Financial Plan Page D11-14
Water Quality Laboratory –2017-18 Budget573%Operation $780,277CIP 0.00Debt 0.00Total $780,277See Financial Plan Page D11-14 OneTotal Sewer Fund Expenditures
Environmental ProgramsProtecting Infrastructure and EnvironmentProgram DescriptionEnvironmental Programs’ primary function is complyingwith non-domestic wastewater and various aspects of theClean Water Act. This involves the coordination, planning,development, and implementation of programs andservices related to Stormwater and industrial wastesdischarged from commercial and industrial sources thathave the potential to damage the Wastewater CollectionSystem, inhibit proper treatment at the Water ResourceRecovery Facility (WRRF), or harm the environment.58OneSee Financial Plan Page D11-11
59Inspectors 2Program Manager1See Financial Plan Page D11-11 OneBy the numbers…The people who work to protect the environmentEnvironmental Programs
Environmental Programs602017-19 Work Program• Implement all Best Management Practices related to theMunicipal Stormwater Permit• Conversion of section database to electronic format withfield input and retrieval capability• Revise and implement WRRF Industrial Stormwater Planto reflect changes in General Industrial Permit• Implement Wasteload Allocation Attainment Plan forPathogen TMDLOneSee Financial Plan Page D11-11
Environmental Programs – 2017-18 Budget611%Operation $265,608CIP 0.00Debt 0.00Total $ 265,608See Financial Plan Page D11-11 OneTotal Sewer Fund Expenditures
Utilities RevenueEnsuring Financial ViabilityProgram DescriptionThe Utilities Revenue program is responsiblefor the accurate and timely collection ofrevenues that support the City's water and wastewater programs. It provides thecustomer interface for billing questions and service requests. It provides accountauditing and data analysis that supports other programs.62OneSee Financial Plan Page D11-13
Utilities Revenue63Accounting Assistants2Supervisor1See Financial Plan Page D11-13 By the numbers…The people who work to collect 90% of revenueOne
Utilities Revenue642017-19 Work Program• Continue account audits for appropriate rate application.• Monitor usage trends and analyze water consumption data for usein multiple studies and reports.• Meter Exchange ProgramSee Financial Plan Page D11-13 One
Utilities Revenue – 2017-18 Budget652%Operation $ 509,532CIP 0.00Debt 0.00Total $ 509,532See Financial Plan Page D11-13 OneTotal Sewer Fund Expenditures
Administration and EngineeringProviding Foundation Support Services Program DescriptionThe Wastewater Administration program leads, evaluates, and provides guidance anddirection for effective water resource management for the various wastewater programs.It provides strategic and long-term planning and engineering for the wastewater andrecycled water systems. Program goalsinclude 1) efficient management andachievement of wastewater enterprise objectives, and 2) well-planned and effectiveimplementation of capital improvement plans.66OneSee Financial Plan Page D11-9 Sewer Farm1960’s
Administration and Engineering67See Financial Plan Page D11-9 OneThe people who work to provide thefoundational support structure that empowers overall employee and program excellence10DirectorDeputy Director - WaterDeputy Director – WastewaterBusiness ManagerAnalystSafety & Technical Training EngineerUtilities EngineerProjects ManagerSupervising Administrative AssistantAdministrative Assistant
Administration & Engineering2017-19 Work Program•Complete design and financing of the Water Resource Recovery Facility (WRRF) Project. •Implement capacity and connection fee update. •Monitor sewer enterprise fund financial operations and recommend rates and revenues needed to support program and service objectives.•Continue implementation and tracking of strategic planning activities. 68OneSee Financial Plan Page D11-9
Administration and Engineering2017-18 Budget693%Operation $ 823,258CIP 18,523Debt 0.00Total $ 841,781See Financial Plan Page D11-9 OneTotal Sewer Fund Expenditures
Sewer Fund 2017-18 Expenditures70*includes WRRF Upgrade projectO&M Capital DebtWastewater Collection 1,126,925$ 2,542,500$ 741,161$ Environmental Programs 265,608$ Water Resource Recovery* 3,812,256$ 19,500,000$ 618,363$ Utilities Revenue 509,532$ Water Quality Lab 780,277$ Adminstration/Engineering 823,258$ 18,523$ General Government 2,494,262$ 74,186$ Total Expenditure 9,812,118$ 22,061,023$ 1,433,710$ Total Fund Expenditure: $33,306,851One
2017-18 Sewer Fund Operating Expense71Operating costsOperating Costs22%CIP66%Debt Service 4%General Government8%Staffing59%Contract Services14%Other Operating27%One
722017-18 Water FundCapital Improvement Plan SummaryOneWastewater Collection•Wastewater Collection System Improvements $ 1,332,500•Lift Station Replacement $ 1,085,000•Telemetry System Improvements $ 100,000•Fleet $ 25,000Water Resource Recovery Facility•Upgrade Project $19,500,000Administration/Engineering• Facilities Maintenance Project$ 3,600•IT Projects $ 14,923TOTAL CAPITAL INVESTMENTS - 2017-19 $22,061,023
Sewer Utility Capital Investments73 $- $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,0002012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22WW Collection/Water Resource Recovery CIPWastewater CollectionWater Resource RecoveryOne
Sewer Fund Revenue74Sewer Service Charges 82%Sewer Base Fee, 9%Sales to Other Agencies, 5%Dev Impact Fees, 2%Misc. Revenue, 2%OneSewer Salesa.Service Chargesb.Base Feec.Sales to Other Agencies
Sewer Fund 2017-18 Revenue75Revenue Sources 2017-18Sewer Service Charges $ 13,675,000 Sewer Base Fee $ 1,501,464 Development Impact Fees $ 300,000 Other Revenue $ 458,000 Investment and Property Revenues $ 50,000 Proceeds from Debt Financing $ 19,500,000 Total Revenue $ 35,484,464 One
Sewer Rates76For 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. No changes are recommended to current sewer rates for 2017-18.Base Fee $8.57Volumetric Rate $9.44 per unitOne
Recommendations771. Reviewand approve the 2017-18 annual Sewer Fund financial review;2. Conceptuallyapprove the 2017-18 Sewer Fund budget, with final action on June 20, 2017, with the adoption of the 2017-19 Financial PlanOne
Questions78One
Recommendations791. Reviewand approve the 2017-18 annual Sewer Fund financial review;2. Conceptuallyapprove the 2017-18 Sewer Fund budget, with final action on June 20, 2017, with the adoption of the 2017-19 Financial PlanOne