HomeMy WebLinkAbout10-17-2017 Item 11 - Public Hearing - Water and Wastewater Capacity and Connection Fees
Meeting Date: 10/17/2017
FROM: Carrie Mattingly, Director of Utilities
Prepared By: Jennifer Metz, Utilities Project Manager
SUBJECT: WATER AND WASTEWATER CAPACITY AND CONNECTION FEES
RECOMMENDATION
1. Consider options for water and wastewater capacity and connection fees; and
2. Adopt a resolution (Attachment B) amending the water and wastewater capacity and
connection fees selecting option 2 for water and option 4 for wastewater effective
January 1, 2018.
REPORT-IN-BRIEF
On February 7, 2017, staff conducted a Study Session with City Council (Attachment A). At the
Study Session, the City Council provided staff input on the update to what was formerly
identified as the City’s water and wastewater development impact fees. At that session, Council
supported the name change to “capacity and connection” fees to more clearly communicate what
the fees were paying for and directed staff to explore four options when completing the 2017
Water and Wastewater Capacity and Connection Fee Study (2017 Study).
Water and wastewater capacity and connection fees are recommended to increase consistent with
City policy (Land Use Element, Policy 1.13.9). The recommended fees are the maximum amount
allowed by law (Assembly Bill 1600) based on the capital improvements identified for each fee
and are tied to the cost of existing infrastructure and capital improvements serving future
development. This methodology equitably distributes
infrastructure costs to ensure both new development and
existing water and wastewater ratepayers pay their fair
share of infrastructure-related investments.
The completion of the study has been timed to align with
the City’s Capital Facilities Fee Program update so that the
City Council and community understand the effect of the
proposed capacity and connection fees in context with other
development-related fees charged by the City for public
infrastructure.
DISCUSSION
This staff report provides water and wastewater capacity
and connection fees options for Council consideration. This
report analyzes the costs and benefits of each option and
highlights the potential impacts to water and wastewater
rates because capital costs not recovered through capacity
City of San Luis Obispo
General Plan, Land Use Element
Policy 1.13.9. Costs of Growth.
The City shall require the costs of
public facilities and services
needed for new development be
borne by the new development,
unless the community chooses to
help pay the costs for a certain
development to obtain
community-wide benefits. The City
shall consider a range of options
for financing measures so that
new development pays its fair
share of costs of new services and
facilities which are required to
serve the project and which are
reasonably related to the new
growth attributable to the
development.
Packet Pg 295
11
and connection fees would then need to be recovered via monthly water and wastewater service
charges.
Chapter 4.20.140 of the City’s Municipal Code establishes water and wastewater development
impact fees, hereinafter referred to as capacity and connection fees. Water and wastewater
capacity and connection fees are recommended to increase consistent with City policy (Land Use
Element, Policy 1.13.9). The recommended fees are the maximum amount allowed by law based
on the capital improvements identified for each fee (Assembly Bill 1600) and are tied to the cost
of existing infrastructure and future capital improvements serving future development. This
methodology equitably distributes infrastructure costs to ensure both new development and
existing water and wastewater ratepayers pay their fair share of infrastructure-related
investments. If Council provides direction to adjust these fees, staff recommends continuing this
discussion so that staff can prepare the appropriate analysis and return with appropriate
recommendations at a future meeting.
For wastewater, the recommended capacity and connection fees eliminate catchment area fees.
The catchment area fee is described in detail below. This simplifies fee implementation;
however, because the overall cost of capital improvements remains the same, citywide, the fee
substantially increases. This change, combined with an increase tied to the data in the new 2017
Study, create the total proposed increase to the citywide wastewater fee. The proposed fees are
shown in Attachment B, Exhibits A and B.
Infrastructure Master Planning
Following the adoption of the General Plan’s updated Land Use Element in December 2014, the
City completed water and wastewater infrastructure master plans to identify and prioritize
necessary capital improvements, including those projects to provide capacity to serve future
growth. These include:
• Potable Water Distribution System Master Plan (2015)
• Wastewater Collection System Infrastructure Renewal Strategy (2015)
• Water Resource Recovery Facility Facilities Plan (2015)
• Recycled Water Master Plan (2017)
These master plan documents, along with the City’s Financial Plan and Capital Improvement
Plan, provide the basis for identifying future project capital costs.
2017 Study Methodology
Capacity and connection fees are developed under the requirements of Assembly Bill (AB) 1600,
Gov. Code §§ 66000 et seq., which require a nexus and rough proportionality between fees
imposed, the use of the fees, and the development projects on which the fees are levied. The
2017 Study, prepared by HDR Engineering, Inc. was prepared in accordance with the
requirements of AB 1600.
The methodology used for the 2017 Study divides the value and/ or cost of existing and future
capital improvement costs by the estimated number of future growth units. For water and
wastewater capacity and connection fees, a “growth unit” is represented by a quantity of water
demand and wastewater generation by one residential unit. The City updated the projections for
Packet Pg 296
11
future residential and non-residential development in “equivalent dwelling units,” or EDUs,
based on a reduction in average water use and wastewater generation, finding that 5,821 future
EDUs can be accommodated. This is based on capacity at the City’s Water Resource Recovery
Facility and infrastructure modeling conducted for recent master plans.
In the 2017 Study, the residential fee category was modified to add new categories to correspond
to residential units between 451 and 800 square feet and 801 square feet or more as water
demand and wastewater generation correlates more closely to unit size than a single- or multi-
family residential land use designation. Fees for non-residential EDUs in the 2017 Study are
based on water meter safe operating capacity ratios from the American Water Works Association
(AWWA) specifications.
Study Session Direction
At the February 7, 2017 Study Session, the City Council directed staff to explore four options
when completing the 2017 Study, described below and summarized in Table 1.
Table 1: Water and Wastewater Fee Options
Citywide Fee Existing 2017-18
Impact Fee Option 1 Option 2 Option 3 Option 4
Water $11,322.16 $11,872 $15,7803 N/A N/A
Wastewater $ 3,830.213 $ 8,1652 $9,5222 $10,721 $12,6023
NOTES:
1. All fees are per equivalent dwelling unit (or EDU).
2. Additional catchment area fees from Table 2, where applicable.
3. Represents the staff recommendation.
Option 1. The capacity and connection fees calculated in Option 1 include only debt-financed
water and wastewater assets and do not include a buy-in component to other existing water or
wastewater infrastructure. Under Wastewater Option 1, additional wastewater catchment area
fees would apply, where applicable (see Table 2).
Option 2. The capacity and connection fees calculated for Option 2 are based on a methodology
that values all existing and future water and wastewater assets. Under Wastewater Option 2,
additional wastewater catchment area fees from Table 2 would apply, where applicable.
Capital Improvement Costs ÷ EDUs to be Served = Cost per EDU
Option 1: Debt-Financed Capital Improvement Costs ÷ EDUs to be Served = Cost per EDU
Option 2: Capital Improvement Costs of all Assets ÷ EDUs to be Served = Cost per EDU
Packet Pg 297
11
Wastewater Catchment Area Fees. Of the over
5,800 future EDUs in the City, approximately 80
percent, or 4,600 future EDUs, are served by
wastewater lift stations and force mains. These
“catchment areas” include the Orcutt, Margarita,
Airport (Avila Ranch, Fiero, East Airport), San
Luis Ranch, and Froom Ranch specific plan areas.
These catchment areas are primarily located in the
southern portion of the City, except for the
Foothill catchment area located in the northeast
area of the City. The total cost of catchment area
improvements is over $34 million, with
approximately $15 million attributed to future
development. These costs are allocated based on
flow generation in each of the catchment areas.
Under Wastewater Options 1 and 2, these
additional catchment area fees would be added to
the fee, where applicable.
The Airport and Foothill catchment area fees support the replacement of existing lift station
infrastructure. The Buckley catchment area fee is applicable to development in the Airport Area
Specific Plan, including the Avila Ranch project and other development east of that project along
Buckley Road.
Options 3 and 4. The wastewater capacity and connection fees calculated for Option 3 uses the
methodology from Option 1 plus the catchment area improvement costs. This results in one
citywide wastewater capacity and connection fee. Option 4 uses the methodology from Option 2
plus the catchment area improvement costs resulting in one citywide fee.
FISCAL IMPACT
The City’s water and wastewater utilities are classified as enterprise funds. Fundamentally, the
revenue requirement to operate each utility is expected to be covered by system user rates.
General Fund revenues (such as property taxes, Measure G revenues, transient occupancy taxes,
etc.) are not used to support the work of the utility.
There are two significant sources of revenue for the water and wastewater utilities – system user
Table 2: Catchment Area Fees
Catchment
Area
2017-18
Development
Impact Fees
Option 1 & 2
Catchment
Area Fees
Calle
Joaquin $1,878.64 $2,898
Laguna $503.30 $434
Margarita $2,819.50 $3,830
Silver City $1,392.80 $2,429
Tank Farm $3,728.52 $3,192
Airport N/A $6,372
Buckley N/A $643
Foothill N/A $22,319
NOTE: All fees are per equivalent dwelling unit
(or EDU). Catchment area fees apply only under
Options 1 and 2.
Wastewater Option 3: Debt-Financed Capital Improvement Costs + Catchment Area Costs ÷
EDUs to be Served = Cost per EDU
Wastewater Option 4: Capital Improvement Costs of all Assets + Catchment Area Costs ÷
EDUs to be Served = Cost per EDU
Packet Pg 298
11
rates and capacity and connection fees. The main revenue source (approximately 90 percent) for
the water and wastewater utilities are system user rates. This is a relatively stable, predictable
source of funding. System user rates are set to meet the operations, maintenance, and long-range
capital infrastructure needs for each utility. Capacity and connection fees are a secondary
revenue source. The revenue from these fees is tied to the capital projects identified in the 2017
Study (prior capacity and connection fees were tied to prior studies). The capacity and
connection fee program ensures that existing ratepayers and new development equitably
apportion costs related to existing and future capital expenditures.
There is a correlation between capacity and connection fee revenue and system user rates. Fees
not collected through the capacity and connection fee program are supported by the water and
wastewater ratepayer through the rates. Most frequently, the capital expenditure for future
development is made before the total capacity and connection fee revenues are realized. Full
revenue collection can occur over several decades. However, assuming construction of 5,821
EDUs in 25 years, Table 3 and Table 4 present a comparison of the potential revenue from the
current fee and capacity and connection fee options. Over a 25-year period, an estimated $574
million in total water fund revenue would be collected toward capital improvements (including
debt service) of which $91.8 million would be the fair share from new development. Likewise,
an estimated $458 million in wastewater fund revenue for capital improvements (including debt
service) of which $73.4 million would be the fair share from new development. Without revenue
from capacity and connection fees under water Option 2 and wastewater Option 2 or 4, water
rates would increase approximately five percent and wastewater rates would increase
approximately ten percent to generate adequate revenue.
As described above, staff is recommending Water Option 2 and Wastewater Option 4, shown in
Attachment B, Exhibits A and B, which are the options that include valuation of all existing and
future water and wastewater assets and eliminate catchment area fees. These options represent
cost-based capacity and connection fees based on the fair share of existing infrastructure and
capital improvements needed to serve future development.
The water and wastewater capacity and connection fees were studied as a component of the total
fee burden for all AB 1600 fees which is detailed in the Study Session’s October 17, 2017 staff
report.
Table 3: Water Fund Revenue from Capacity and Connection Fees
Citywide Fee Fee Per EDU
Water Fund
Revenue
(over 25 years)
Annualized 25
Year Revenue
Assumption
Potential Rate
Impact if not
Collected
Existing Water Fee $11,322 $ 65,906,293 $ 2,636,251.73 -
Water Option 1 $11,872 $ 69,106,912 $ 2,764,276.48 ~0.5%
Water Option 2* $15,780* $ 91,855,380 $ 3,674,215.20 ~5%
NOTE: *Represents the staff recommendation.
Packet Pg 299
11
Table 4: Wastewater Fund Revenue from Capacity and Connection Fees
Citywide Fee Fee Per
EDU
Wastewater
Fund Revenue
(over 25 years)
Annualized 25
Year Revenue
Assumption
Potential Rate
Impact if not
Collected
Existing Citywide Wastewater Fee $3,830 $22,295,652 $891,826 -
Wastewater Option 1 / Option 3 $8,165 /
$10,721 $62,406,941 $2,496,278 ~8%
Wastewater Option 2 / Option 4* $9,522 /
$12,602* $73,356,242 $2,934,250 ~10%
NOTE: Assumes catchment area fees would yield total revenue requirement over 25 years.
*Represents the staff recommendation.
ENVIRONMENTAL REVIEW
Modification of rates and charges by public agencies is statutorily exempt from the California
Environmental Quality Act (CEQA) under Section 15273 of the Public Resources Code because
the change in fees is not intended to fund expansion of capital projects not otherwise evaluated
under CEQA. Both Wastewater and Water Treatment Master Plans were evaluated for their
respective impacts to the environment and this action to adjust fees merely provides a more
equitable distribution of costs associated with envisioned infrastructure.
CONCURRENCES
As the 2017 Capacity and Connection Fee Study supports the goals and policies found in the
City’s General Plan, the Community Development Department concurs with the
recommendation.
ALTERNATIVES
1. Water Fee Option 1 and Wastewater Fee Option 1. The Council could elect to approve
this option, which includes only debt-financed water and wastewater infrastructure in the
citywide fees plus wastewater catchment area fees. Option 1 is not recommended as it places
a greater portion of the capital improvement costs on existing water and wastewater
ratepayers.
2. Wastewater Option 2. The Council could elect to approve Wastewater Option 2, which
includes a citywide wastewater fee plus cat chment area fees. Wastewater Option 2 maintains
the same cost split between new and existing development as the recommended Option 4. It
reduces the citywide fee and increases fees in areas based on capital costs specific to those
catchment areas. This option is not being recommended for two reasons. One is having one
citywide fee simplifies fee administration. Reason two is current policy does not differentiate
among zones of service for existing system users. It applies the “one happy family” or
postage stamp approach as opposed to the train ticket approach used with catchment areas.
Packet Pg 300
11
3. Wastewater Option 3. The Council could elect to approve Wastewater Option 3, which
includes the Option 1 citywide wastewater fee plus catchment area fees, including three ne w
catchment areas (Airport, Buckley, and Foothill). This Option yields the same total impact
fee revenue as Option 1 with the catchment area lift station costs attributed to the area
served by that lift station. Option 3 is not recommended as it places a greater portion of the
capital improvement cost on the existing wastewater ratepayer.
Attachments:
a - February 7, 2017 Study Session Staff Report
b - Resolution Amending Water and Wastewater Impact Fees
c - Council Reading File - 2017 Water and Wastewater Capacity and Connection Fee
Study, by HDR Engineering, Inc
Packet Pg 301
11
Meeting Date: 2/7/2017
FROM: Carrie Mattingly, Utilities Director
Prepared By: David Hix, Deputy Director, Wastewater
Aaron Floyd, Deputy Director, Water
Jennifer Metz, Utilities Projects Manager
SUBJECT: STUDY SESSION REGARDING WATER AND SEWER CAPACITY AND
CONNECTION FEES
RECOMMENDATION
Receive a presentation on the development of a Water and Sewer Capacity and Connection Fee
Study in a study session and provide feedback on the proposed approach.
DISCUSSION
Report-in-Brief
The City’s Utilities Department is in the process of updating the fees charged to new
development for water and sewer service. Previously, the City calculated development impact
fees for water and sewer services using only major system assets (generally projects that were
debt financed). After the presentation on this subject, staff is requesting feedback on whether or
not to incorporate both existing and future assets that provide capacity for new growth is
desirable. Staff is also seeking direction on changing the name of the fee from development
impact to capacity and connection to more clearly communicate what the fee is assessed what the
fee actually is for, as well as eliminating sewer catchment area or “add-on fees.” The study may
result in higher fees depending on the guidance received. As a result, staff is seeking policy
direction as to the desired approach before the study takes place.
Background
In the City, customers are provided water service through a multi-source water supply, raw water
conveyance systems, the Water Treatment Plant, and a water distribution system that includes
treated water storage reservoirs and tanks, pump stations, and pipelines. Wastewater service is
provided through a collection system of pipelines and lift stations, and the Water Resource
Recovery Facility. The community has made an investment in its water sources and its water and
wastewater infrastructure incrementally over many years. These facilities require upgrades from
time to time to meet new regulatory requirements or replacement at the end of their service life.
These systems and facilities must be sized to provide necessary capacity as the City grows and
may need to be expanded over time, or relocated, to provide the capacity necessary to serve new
annexation areas or as densities increase through infill development.
The purpose of water and sewer development impact fees is to recover the cost of the portion of
those improvements that benefit future development. To impose a water or sewer development
impact fee, the City must determine the relationship between the need for the public facility, its
cost, and the amount attributed to future development. The City’s water and sewer impact fees
are based on growth under the General Plan used in conjunction with capital improvement
Packet Pg. 7
1
Packet Pg 302
11
planning to ensure adequate water supply, water treatment capacity, wastewater collection
infrastructure, and wastewater treatment capacity.
According to the 2015 Housing Element, the City’s
population has grown at a slow, steady pace since
1980, at an average rate of about one percent per year,
with periods of faster or slower growth reflecting
national and statewide economic cycles. The City
experienced a much slower annual average growth rate
of 0.3 percent between 1990 and 2013. Revenue from
water and sewer development impact fees varies with
this rate of growth, however the water and sewer
infrastructure needed to support growth in the City is
either already in place or has been planned.
Generally speaking, with a 2016 population of
approximately 46,000 residents and an estimated future
population of 57,200 residents, 80 percent of the City’s
population is existing and 20 percent is planned.
Past and Current Fee Studies
The City conducted previous water and wastewater development impact fee studies in 1991,
1994, 2004, and 2013 to identify the cost of serving future development. The 2013 fees used
population estimates, growth projections, project costs and the application of water and
wastewater policy available at that time. In the past, impact fees only included the costs of major
infrastructure and specific capacity expansion projects and did not include the existing water
distribution and wastewater collection systems. Also, under the existing sewer fees, “add-on”
fees are charged to development in areas that benefit from sewer lift station service.
Funding for the Water and Sewer Capacity and Connection Fee Study was approved by the City
Council as part of the 2015-17 Financial Plan, Significant Operating Program Change, Water and
Sewer Administration and Engineering Contract Services, and described on page 3-25.
The proposed fees will be based, in part, on growth anticipated under the General Plan Land Use
Element adopted in 2014 and water and wastewater master planning efforts completed in 2016.
In accordance with State law, existing approved tracts with “vested rights” will not be affected
by the update to these fees (approximately 600 housing units).
Current Approach
The terminology used for this fee – capacity and connection rather than development impact – is
proposed to better convey the concept of the facilities and systems associated with the provision
of water and wastewater service by the City. In some communities, these fees may be referred to
as system development charges, impact fees, capacity reserve charges, or infrastructure
investment fees. Regardless of the term used to identify them, their objective is the same. That is,
these charges or fees are intended to provide funds to the utility to finance all or a part of the
capital improvements needed to serve and accommodate future growth.
Water and wastewater
systems and facilities provide
capacity to serve:
80%
Existing population
20%
Planned growth
Packet Pg. 8
1
Packet Pg 303
11
This study identifies the cost to provide capacity for new development in the City’s existing
water and wastewater systems and facilities. In some cases, expansion costs are identified where
future improvements are necessary facilities to provide adequate capacity to serve new
development.
In establishing capacity and connection fees, there are differing methodologies.
The buy-in method is based on the value of the existing system’s capacity. This method is
typically used when the existing system has sufficient
capacity to serve new development now and into the
future.
The incremental cost method is based on the value or
cost to expand the existing system’s capacity. This
method is typically used when the existing system has
limited or no capacity to serve new development now
and into the future.
The combined approach is based on a blended value of
both the existing and expanded system’s capacity. This
method is typically used where some capacity is
available in parts of the existing system (e.g. source of
supply), but new or incremental capacity will need to
be built in other parts (e.g., treatment plant) to serve
new development at some point in the future.”
The City’s existing water development impact fee includes
the proportionate share of a limited list of water assets
including:
Nacimiento Pipeline Project,
Water Reuse Project,
1994 Water Treatment Plant Upgrade,
2006 Water Treatment Plant Improvements and
Sedimentation Process, and
2007 Bishop Tank replacement project.
The City’s existing sewer development impact fees include
the following wastewater assets:
1991 upgrade of Units 3 and 4 at the Water
Reclamation Facility (now referred to as the Water
Resource Recovery Facility, and
all phases of the planned upgrade of the Water
Resource Recovery Facility.
This study proposes to analyze those additional water and
Water Capital Assets not included
in current fees
Water - Source of Supply
Existing Whale Rock Reservoir
capital assets and planned capital
improvements
Existing ground water capital assets
and planned capital improvements
Water Treatment
Existing Water Treatment Plant
capital assets (prior to 1994
upgrade) and planned capital
improvements
Potable and Recycled Water
Storage/Distribution
Existing Potable Water
Storage/Distribution capital assets
Existing Recycled Water
Distribution capital assets
Planned Potable Water
Storage/Distribution capital
improvement
Planned Recycled Water
Storage/Distribution capital
improvement
Wastewater Capital Assets not
included in current fees
Wastewater Collection System
Existing and planned Wastewater
Collection System capital assets
Water Resource Recovery Facility
Existing Water Resource Recovery
Facility assets (prior to 1991
upgrade)
Planned Water Resource Recovery
Facility Upgrade
NOTE: Existing water and wastewater
assets are valued using the asset’s
replacement cost less depreciation.
Packet Pg. 9
1
Packet Pg 304
11
wastewater capital assets that provide capacity for future development, but were not included in
the prior fee study.
Attachment A provides an overview of the City’s present development impact fees and the
detailed methodology for the capacity and connection fee study.
Area-Specific Fees
Area-specific fees create charges of different amounts to new development in various parts of the
City. The City’s current sewer development impact fees include five area-specific catchment
area charges where an area is served by sewer lift stations. The catchment area fees are charged
to new development for its proportionate share of the City’s capital costs for sewer lift station
construction. For example, new development in the Calle Joaquin lift station catchment area is
charged the fee as the development is served by the lift station. In the City, these fees currently
range from approximately $500 per unit in the Laguna catchment area to approximately $3,700
per unit in the Tank Farm catchment area making the cost to develop in these areas higher. The
City has similar transportation area fees.
Although there may be technical justification to support area-specific fees, like the City’s sewer
catchment area fees, these fess can be more cumbersome to implement than applying one
citywide sewer impact fee. It is appropriate when updating these fees to consider whether the
catchment area fees remain as the most effective method of charging new development for sewer
service.
Outreach Efforts
In addition to this Study Session, staff has engaged the development community to discuss the
scope and schedule of the Capacity and Connection Fee Study at the Developer’s Roundtable on
October 20, 2016. Staff has scheduled another meeting with that group to discuss progress on the
Capacity and Connection Fee Study on February 13, 2017.
Legal Basis and Policy Nexus for Capacity and Connection Fees
In establishing capacity and connection fees, an important requirement is that they be developed
and implemented in conformance with state and local laws. The laws for the enactment of
capacity fees in California, passed by AB 1600, are codified in California Government Code
sections 66013, 66016, and 66022, which are interspersed within the ‘Mitigation Fee Act.’ The
Mitigation Fee Act is comprehensive legislation dealing mainly with impact fees, although the
above sections set forth the various requirements for imposition of capacity fees in California:
calculation of the fees, noticing, accounting and reporting requirements, and processes for
judicial review.
The City’s proposed capacity and connection fees are “capacity charges” as defined in the
California Government Code. The basic principle that needs to be followed is that the charge be
based on a proportionate share of the costs of the system required to provide the service and that
the requirements for adoption and accounting be followed in compliance with California law.
The City also has existing General Plan policies and programs related to the cost of growth and
development impact fees. Policy 1.13.9 (Costs of Growth) in the Land Use Element states:
Packet Pg. 10
1
Packet Pg 305
11
The City shall require the costs of public facilities and services needed for new
development be borne by the new development, unless the community chooses to
help pay the costs for a certain development to obtain community-wide benefits.
The City shall consider a range of options for financing measures so that new
development pays its fair share of costs of new services and facilities which are
required to serve the project and which are reasonably related to the new growth
attributable to the development.
Program 1.14.7 (Maintain Development Fee Program) in the Land Use Element states:
The City shall maintain a development fee program that covers the costs
associated with serving projects with City services and facilities. This maintenance
will include periodic review of the fees collected to ensure they are adequate to
cover City costs.
Total Fee Burden
As the City considers updates to its impact fee structure, it is important to keep the total fee
burden experienced by a given development project in context. As part of the infrastructure
financing strategies identified in the City’s Economic Development Strategic Plan, a series of
study sessions have been presented to the City Council that outline the various options available
for financing important infrastructure. For example, with single-family residential development,
a rule of thumb is that the fee burden should not exceed 15 percent of the cost of the unit. This is
illustrated in the following graphic. The City’s water and sewer capacity and connection fees will
include an analysis of the overall fee burden on various types of development projects to
maintain overall financial feasibility. The following graph illustrates the findings presented to the
City Council in 2015. The full report is included in the Council Reading File. While this
information is helpful as context, it is not the only but significant one in shaping future decisions.
Packet Pg. 11
1
Packet Pg 306
11
The City’s Community Development Department is concurrently preparing a Capital Facilities
Fee Program Nexus Study. This Study will update the City’s existing Transportation and Parks
development impact fee programs and consider new impact fee programs for General
Government and Public Safety facilities. City staff working on these program updates will
coordinate efforts to ensure consistency and compatibility across the fee program from the
standpoint of fee administration and financial feasibility.
Summary and Next Steps
The table below provides a summary of the approaches under consideration.
Current Water and Sewer
Development Impact Fees
Potential Water and Sewer
Capacity and Connection Fees
Meets legal requirements Meets legal requirements
Lower fee with buy-in of certain water
and sewer assets providing capacity for
new development
May result in higher fee with buy-in of
all water and sewer assets providing
capacity for new development
Includes area specific sewer catchment
area fees in locations served by lift
stations
One citywide water and sewer fee with
area specific water or sewer fees
The consideration of the Final Capacity and Connection Fee Study is on the Council Agenda for
May 2, 2017 with implementation of the new fees planned for July 1, 2017.
Packet Pg. 12
1
Packet Pg 307
11
ENVIRONMENTAL REVIEW
This is a study session, so staff is not recommending Council take any action on the Water and
Sewer Capacity and Connection Fee Study at this time. Modification of rates and charges by
public agencies is statutorily exempt from the California Environmental Quality Act (CEQA)
under Section 15273 of the Public Resources Code because changes in fees is not intended to
fund expansion of capital projects not otherwise evaluated under CEQA.
FISCAL IMPACT
This is a study session and there is no fiscal impact associated with it. Fiscal impacts will be
developed for consideration of the Final Capacity and Connection Fee Study for City Council
consideration.
Packet Pg. 13
1
Packet Pg 308
11
FOCUSED QUESTIONS FOR CITY COUNCIL DIRECTION
Staff has provided the following focused questions to facilitate City Council direction to help
guide the City Council in their deliberations:
Questions for City Council Direction
Yes No
1. Is the name change from Water and Sewer Development Impact
Fees to Water and Sewer Capacity and Connection Fees helpful
to more clearly communicate the service provided?
2. Should the City’s Water Capacity and Connection Fee include:
a. The water assets identified in the prior water development
impact fee study?
b. All existing and future water assets that provide capacity to
serve new development?
3. Should the City’s Sewer Capacity and Connection Fee include:
a. The wastewater assets identified in the prior sewer
development impact fee study?
b. All existing and future wastewater assets that provide
capacity to serve new development in the Sewer Capacity
and Connection Fees?
4. Should the City eliminate area-specific sewer Catchment Area
fees in favor of one citywide Sewer Capacity and Connection
Fee?
The presentation at the Study Session will include a similar decision matrix to help focus
Council direction.
Attachments:
a - WSC and HDR SLO Capacity Fee - Final
Packet Pg. 14
1
Packet Pg 309
11
City of San Luis Obispo 1
Water and Wastewater Capacityand Connection Fee Study
Technical Memorandum
To: Jennifer Metz – City of San Luis Obispo
From: Shawn Koorn – HDR
Judy Dean – HDR
Joshua Reynolds, PE - WSC
Date: 1/09/17
Subject: Water and Wastewater Capacity and Connection Fee Study
Introduction
Water Systems Consulting (WSC) with HDR Engineering Inc. (HDR) as a subconsultant was
retained by the City of San Luis Obispo (City) to develop water and wastewater capacity and
connection fees. The purpose of capacity and connection fees is to bring equity between existing
customers and new customers connecting to the City’s water and wastewater systems. By
establishing cost-based capacity and connection fees, the City will be taking an important step in
providing adequate infrastructure to meet growth-related needs, and more importantly,
providing this required infrastructure to new customers in a cost -based, fair and equitable
manner.
The City’s water and sewer development impact fees were last updated in 2013. As part of the
process, HDR was retained to provide a peer review of the 2013 study. Based on that peer review,
HDR was of the opinion that the City appears to be using a reasonable and appropriate
methodology to calculate the fees, given available data and that the fees are in compliance with
California State law. HDR further recommended that in the f uture the City consider including
existing water distribution and collection system infrastructure that will aide in providing service
to new customers and that the City consider collecting data that can facilitate developing the fee
on a cost per gallon/unit basis. The recommendations from this peer review in 2013 will be used
to develop the proposed capacity and connection fees for the City’s water and wastewater
utilities which will replace the City’s current Development Impact Fees for the water and se wer
utility.
In addition to the 2013 peer review recommendations, all capacity and connection fees should
be updated every five years or when planning documentsare updated to assure fees are updated
and based on a cost basis. In addition to the City’s General Plan being updated since the 2013
study the Utilities Department has also completed several key planningdocuments including the
Final Potable Water Distribution System Operations Master Plan which was completed in
December 2015, the City’s 2015 Urban Water Management Plan which was adopted in June of
2016 and the Wastewater Collection System Infrastructure Renewal Strategy which was
completed in December of 2015. In addition, the Recycled Water Master Plan is currently being
updated and will be incorporated into the analysis as needed and as available. These studies will
be used to update key growth and infrastructure planning components for both the water and
wastewater capacity and connection fees.
Packet Pg. 15
1
Packet Pg 310
11
City of San Luis Obispo 2
Water and Wastewater Capacityand Connection Fee Study
Overview of Capacity and Connection Fees
At some utilities, capacity and connection fees may be referred to as system development
charges, impact fees, capacity reserve charges, or infrastructure investment fees. Regardless of
the label used to identify them, their objective is the same. That is, these charges or fees are
intended to provide funds to the utility to finance all or a part of the capital improvements
needed to serve and accommodate new customer growth. The purpose of a capacity and
connection fee is to provide equity between existing customers and new customers connecting
to the system (i.e., new development). For the purposes of this discussion, the capacity and
connection fee is defined as follows:
System development charges are one-time charges paid by new development to finance
construction of public facilities needed to serve them.”1
Simply stated, capacity and connection fees are a contribution of capital to either reimburse
existing customers for the availablecapacity in the current system, or help finance planned future
growth-related capacity improvements. Absent these fees, many utilities may be unwilling to
build growth-related facilities (i.e., burden existing rate payers with the entire cost of growth-
related capacity expansion).
To understand why capacity and connection fees are an equitable method of assessing new
customers for the cost of available capacity (i.e., infrastructure) one must consider the issue of
time. As an example, consider a water facility that was built in 2006 and sized to accommodate
both existing customers and future anticipated growth. Now, consider the customer that
connects (develops) to the system in 2016. Up to this point, and for the last 10 years, the existing
water ratepayers have been paying for the value of the excess capacity (i.e., carrying costs/debt)
which is available for future development. When a new customer “connects” to the system in
2016, the capacity and connection fee must take into consideration the impact of the
development, the value of the available excess capacity, and potentially, the value of any other
needed (future) improvements required to accommodate customer growth. Depending upon
system characteristics and available excess capacity, a capacity and connection fee will likely have
a component related to reimbursing the existing customers for the value of the excess capacity
in system that they have been funding up to the current point in time, but also for the potential
future improvements needed to continue to accommodate growth.
Purpose of Capacity and Connection Fees
Capacity and connection fees are generally imposed as a condition of service. The objective of
capacity and connection fees is not to generate money for the utility, but to create fiscal balance
between existing customers and new customers so that all customers seeking to connect to the
utility’s system bear an equitable share of the cost of capacity that is invested in both the existing
and any future growth-related expansions. Through the implementation of equitable and cost -
based capacity and connection fees, existing customers will not be unduly burdened with the
cost of new development. If cost-based capacity and connection fees are not implemented by
the City, then the existing customers will bear (i.e., pay for) a greater portion of the costs
associated with new development. Ultimately, the adoption of the final capacityand connection
1 Arthur C. Nelson, System Development Charges for Water, Sewer, and Stormwater Facilities, Lewis Publishers,
New York, 1995, p. 1,
Packet Pg. 16
1
Packet Pg 311
11
City of San Luis Obispo 3
Water and Wastewater Capacityand Connection Fee Study
fees is a policy decision by the City Council regarding the sharing of costs between new
development and existing customers. The adoption of a cost-based capacity and connection fee
implies that “growth pays for growth”. Economic theory suggests that equity and fairness is
derived when those that create the costs, pay for the costs.
Legal Basis for Capacity and Connection Fees
In establishing capacity and connection fees, an important requirement is that they be developed
and implemented in conformance with local laws. In particular, many states have established
specific laws regarding the establishment, calculation and implementation of capacity and
connection fees. The main objective of most state laws is to assure that these fees are
established in such a manner that they are fair, equitable and cost -based. In other cases, state
legislation may have been needed to provide the legislative powers to the utility to establish the
fees.
The laws for the enactment of capacity and connection fees in California are codified in California
Government Code sections 66013, 66016, and 66022, which are interspersed within the
Mitigation Fee Act.’ The Mitigation Fee Act is comprehensive legislation dealing mainly with
capacity and connection fees, although the above sections set forth the various requirements for
imposition of capacity and connection fees in California: calculation of the fees, noticing,
accounting and reporting requirements, and processes for judicial review.
A summary of the relevant statutes required in the calculation of capacity and connection fees is
as follows:
66013 (a) Notwithstanding any other provision of law, when a local agency imposes fees
for water connections or sewer connections, or imposes capacity charges, those fees or
charges shall not exceed the estimated reasonable cost of providing the service for which
the fee or charge is imposed, unless a question regarding the amount of the fee or charge
imposed in excess of the estimated reasonable cost of providing the services or materials
is submitted to, and approved by, a popular vote of two-thirds of those electors voting on
the issue.”
66013 (b) (3) ‘Capacity charge’ means a charge for public facilities in existence at the
time a charge is imposed or charges for new public facilities to be acquired or constructed
in the future that are of proportional benefit to the person or property being charged,
including supply or capacity contracts for rights or entitlements, real property interests,
and entitlements and other rights of the local agency involving capital expense relating to
its use of existing or new public facilities. A “capacity charge” does not include a
commodity charge.”
The City’s proposed capacity and connection fees are “capacity charges” as defined in the
preceding provision. The basic principle that needs to be followed under California law is th at
the charge be based on a proportionate share of the costs of the system required to provide
service and that the requirements for adoptions and accounting be followed in compliance with
California law.
Packet Pg. 17
1
Packet Pg 312
11
City of San Luis Obispo 4
Water and Wastewater Capacityand Connection Fee Study
Proposition 218 and 26 and Capacity and Connection Fees
In 1996, the voters of California approved Proposition 218, which required that the imposition of
certain fees and assessments by municipal governments require a vote of the people to change
or increase the fee or assessment. Of interest in this particular study is the applicability of
Proposition 218 to the establishment of capacity and connection fees for the City.
In Richmond v. Shasta Community Services Dist., 32 Cal.4th 409 (2004), the California Supreme
Court held that water connection fees (capacity fees) are not “assessments” under Proposition
218 because they are imposed only on those who are voluntarily seeking water or wastewater
service, rather than being charged to particular identified parcels, and therefore such fees are
not subject to the procedural or substantive requirements of Proposition 218. The court also
held that such fees can properly be enacted by either ordinance or resolution.
In November 2010 the voters of California passed Proposition 26, an initiative based state
constitutional amendment that provided a new definition of the term “tax” in the California
Constitution. Under Proposition 26 a fee or charge imposed by a public agency is a tax unless it
meets one of seven exceptions. Capacity and connection fees fall within exception 2 – i.e., it is a
charge imposed for a specific government service. Provided that a capacity and connection fee
does not charge one fee payor more in order to charge another fee payor less (i.e., a cross -
subsidy), and it does not exceed the reasonable costs to the local government of providing the
service, the fee is not a tax within the meaning of Proposition 26. Under proposition 26, the local
government bears the burden of proving by a preponderance of the evidence that a levy, charge,
or other exaction is not a tax, that the amount is no more than necessary to cover the reasonable
costs of the governmental activity, and that the manner in which those costs are allocated to a
payor bear a fair or reasonable relationship to the payor’s burdens on, or benefits received from,
the governmental activity.
Methodology for Development of Capacity and Connection Fees
In establishing capacity and connection fees, there are differing methodologies. The AWWA M-1
Manual discusses three generally accepted methods;
The buy-in method is based on the value of the existing system’s capacity. This method is
typically used when the existing system has sufficient capacity to serve new development
now and into the future.
The incremental cost method is based on the value or cost to expand the existing system’s
capacity. This method is typically used when the existing system has limited or no capacity
to serve new development now and into the future.
The combined approach is based on a blended value of both the existing and expanded
system’s capacity. This method is typically used where some capacity is available in parts of
the existing system (e.g. source of supply), but new or incremental capacity will need to be
built in other parts (e.g., treatment plant) to serve new development at some point in the
future.”2
2 AWWA M-1 Manual, p 6th Edition, p. 265-266.
Packet Pg. 18
1
Packet Pg 313
11
City of San Luis Obispo 5
Water and Wastewater Capacityand Connection Fee Study
At the present time, both the water and wastewater system have available capacity to meet
present and future demands with identified improvements from the recent master planning
processes. Therefore, the “combined approach” methodology will be utilized for the
development of the capacity and connection fee. This will be a change in the approach to setting
cost-based capacityand connection fees as the City currently uses a modified combined approach
in the development of the current development impact fees. As noted in the 2013 peer review,
the City has historically only included the costs of major infrastructure and specific capacity
expanding projects, which does not include the total system value or costs associated with
providing service to new customersconnecting to the system.
There are “generally accepted” methodologies that are used to establish capacity and connection
fees. Withinthe “generally accepted” methodologies, there are a number of different stepsused
to establish cost-based and equitable capacity and connection fees. These steps are as follows:
1. Determination of system planning criteria
2. Determination of equivalent dwelling units (EDU)
3. Valuation of system component costs
4. Determination of any financing credits
Step 1 – Determination of System Planning Criteria
The first step in establishing capacity and connection fees is the determination of the system
planning criteria. This implies calculating the amount of water or wastewater capacity required
by a single-family residential customer. The use of an adopted facility plan or master plan for the
utility provides the basis for the fee’s system planning criteria. These plan documents provide
the rational planning basis and criteria for the facilities and investment needed to properly and
adequately operate and maintain the system.
Generally for a water system, two different criteria are determined due to differences in planning
criteria. The first planning criterion is the peak day water usage per EDU and the second is a
water storage requirement per EDU. These two different planning criteria are developed since a
majority of the water system infrastructure is sized to meet the peak day demand, and water
storage is sized to meet equalizing, emergency and fire flow requirements.
For wastewater systems, average daily demand (wastewater contribution) per EDU is most often
used, since this total flow represents the flow, imposed by the customer. Average inflow and
infiltration is added to the customer’s flow since this represents the total volumetric flow and
hence capacity requirement at the treatment plant.
As previously mentioned the City’s recently approved documents the 2015 Final Potable Water
Distribution System Operations Master Plan, the 2015 Urban Water Management Plan, the 2015
Wastewater Collection System Infrastructure Renewal Strategy, and the Water Resource
Recovery Facility plan will be used to develop key growth and infrastructure planning
components for both the water and wastewater capacity and connection fees.
Packet Pg. 19
1
Packet Pg 314
11
City of San Luis Obispo 6
Water and Wastewater Capacityand Connection Fee Study
Step 2 – Determination of Equivalent Dwelling Units (EDU)
The next step is the determination of the equivalent dwelling units or EDUs. An EDU provides a
common denominator” for assessing the impact on a utility system. The determination of the
total system EDUs is an important calculation in that it provides the linkage between the amounts
of infrastructure necessary to provide service to a set number of customers. This implies that if
the system is designed to provide service for demands up to the year 2035, then the
infrastructure costs are divided by the EDUs in 2035 to determine the equitable and
proportionate cost per EDU.
The City’s aforementioned planning documents will be used to update the EDU definition. The
capacity and connection fee will follow the time frame outlined in these documents for the
projected capital improvements needed and will be the basis for establishing both the existing
EDUs and future (new/additional) EDUs.
Step 3 – Valuation of System Component Costs
The next step in the analysis is to determine the valuation of the system infrastructure. There
are different methods for the valuation of the existing assets (buy -in component). A common
methodology for the valuation of existing assets is to use each asset’s ori ginal cost and place
them at current replacement value in order to more fairly reflect the carrying costs associated
with the excess capacity. By using this valuation method, all assets (existing and future) are
brought up to current day dollars. The inclusion of any expansion related assets (i.e., future
expansion-related capital projects) within the analysis are based upon an adopted capital plan or
master plan and valued at today’s cost, regardless of the timing of when the facility will be built.
The calculation of the capacity and connection fee generally includes both historical assets and
planned future assets. Essentially, the capacity and connection fee analysis determines the value
of the total assets and the capacity and connection fee is composed of a “buy-in” component
i.e., existing assets) and an expansion component. The expansion component is related only to
future capital projects which provide an expansion of capacity to accommodate future growth.
Given a value for capacity and the number of equivalent capacity units, the basic formula for
calculating the capacity and connection fee is relatively straight-forward. The basic formula for
calculating a capacity and connection fee appears as follows:
System Value (Existing or New Facilities) = Capacity and Connection
Fee/Equivalent Dwelling UnitSystemCapacity (Equivalent Units)
In the determination of the capacity and connection fee, the cost per equivalent dwelling unit as
shown above is the “gross capacityand connectionfee”. The “gross capacity and connectionfee”
is calculated before any credits for debt service.
The City’s asset inventory record listing will be used to establish existing assets and will be value d
at replacement cost based in 2016 base dollars. The only exception to this is the land assets will
be based on original asset costvalueand date put in service and escalated to current dollars using
a cost index (e.g. the Engineering New Record, Construction Cost Index; ENR CCI).
Packet Pg. 20
1
Packet Pg 315
11
City of San Luis Obispo 7
Water and Wastewater Capacityand Connection Fee Study
The updated planning documents for both water and wastewater detailed facilities that will be
decommissioned or facilities that may be upgraded. A review is being undertaken to make sure
the inventory record listing used to calculate the capacity and connection fee will only include
those assets considered part of the operations of the water and wastewater system. The capacity
and connection fee will follow the time frame outlined in these documents for the projected
capital improvements needed and will be the basis for establishing both the existing EDUs and
future (new/additional) EDUs.
Step 4 – Determination of Any Financing Credits
The last step in the calculation of the capacity and connection fee is the determination of any
credits. The provision of debt service credits, if applicable, is a calculation to prevent customers
from paying twice for an asset; once through the valuation of the asset contained in the capacity
and connection fee and then again through any debt service payments included within the
utility’s rates. A similar crediting mechanism is also utilized if general obligation or tax revenue
has been used to finance the infrastructure. In addition, any contributed capital through
developer contributed facilities or grant funded facilities will not be included in the capacity and
connection fee calculation.
Overview of the City’s Present Water and Wastewater Development Impact Fees
The City currently has water and wastewater development impact fee in place. The fees include
a fee class for secondary dwelling units (studio units less than 450 square feet) that is 30 percent
of one equivalent dwelling unit based on water demand and wastewater generation for similar
units. The fees also include an updated multi-family unit development impact fee that is 70
percent of one equivalent dwelling unit based on water demand and wastewater generation for
similar units. Provided below in Table 1 is a summary of the City’s present water development
impact fees.
Packet Pg. 21
1
Packet Pg 316
11
City of San Luis Obispo 8
Water and Wastewater Capacityand Connection Fee Study
Table 1
Summary of Present Water Development Impact Fees ($/EDU)
Land Use Type
Equivalent Dwelling Unit
EDU)
Water Development Impact Fee
Residential
Single family Unit 1.00 $11,023
Multi-family Unit 0.70 7,716
Mobile Home 0.60 6,614
Studio Unit, 450 square feet or less 0.30 3,307
Non-Residential (Meter Size)
3/4” inch 1.00 11,023
1” inch 1.70 18,739
1-1/2” inch 3.40 37,478
2” inch 5.40 59,523
3” inch 10.70 117,944
4” inch 16.70 184,081
6” inch 33.40 368,162
The current wastewater development impact fees are based on a city wide fee for service plus
additions for catchment areas. These catchment areas are regions with wastewater mains, lift
stations, and force mains that collect wastewater from identified areas of the City. Each
catchment area varies in the amount of flow contributions to the W RRF, due to its applicable
topography and land uses. The wastewater catchment areas are Margarita, Tank Farm, Silver
City, Calle Joaquin and Laguna, each corresponding to a lift station service area. All fees for the
various residential and non-residential land uses are determined by multiplying the single family
residential wastewater fee for the City wide and each catchment area by its applicable EDU
factor. Table 2 provides the citywide fee and summarizes the add-on fees for each catchment
area for both residential and non-residential development.
Packet Pg. 22
1
Packet Pg 317
11
City of San Luis Obispo 9
Water and Wastewater Capacityand Connection Fee Study
Table 2
Summary of Present Wastewater Development Impact Fees ($/EDU)
Land Use Type
Equivalent
Dwelling
Unit (EDU)
City
Wide Margarita
Tank
Farm
Silver
City
Calle
Joaquin Laguna
Residential
Single-family Unit 1.00 $3,815 $2,808 $3,713 $1,387 $1,871 $ 501
Multi-family Unit 0.70 2,670 1,966 2,599 971 1,310 351
Mobile Home 0.60 2,289 1,685 2,228 832 1,123 301
Studio Unit - 450 sq. ft or less 0.30 1,144 842 1,114 416 561 150
Non-Residential
3/4” inch 1.00 3,815 2,808 3,713 1,387 1,871 501
1” inch 1.70 6,485 4,774 6,313 2,358 3,181 852
1-1/2” inch 3.40 12,970 9,548 12,626 4,716 6,362 1,704
2” inch 5.40 20,600 15,164 20,053 7,490 10,104 2,707
3” inch 10.70 40,818 30,047 39,734 14,843 20,020 5,364
4” inch 16.70 63,707 46,896 62,015 23,166 31,247 8,371
6” inch 33.40 127,413 93,792 124,031 46,332 62,494 16,472
As a part of updating these fees, the City’s existing methodology is proposed to be revised and
updated for current costs and other planning parameters. There are a number of key
assumptions being reviewed as a part of the study as discussed in the memo. Among the key
assumptions currently being reviewed are the following:
The valuation of existing water and wastewater facilities (assets) will be based upon
replacement cost less their depreciation (booked) value.
The development of future equivalent dwelling units (EDUs) will be based on the City’s
annexation policy, planning maps, and land use designation.
Assumed future growth will be based on the growth assumptions as developed in the City’s
general plan.
Future expansion related water and wastewater capital projects will be based upon the City’s
current capital improvement plan and planned future capital improvements needed to
service future growth.
The capacity and connection fees for both water and wastewater will be reviewed based on
components for water of supply, reservoirs, treatment, storage, distribution and wastewater
treatment and collection.
Annual adjustments of the Capacity and Connection Fee should be based on an industry
standard index (e.g., ENR CCI).
The final report to be developed for this study will document these and any other key
assumptions of the study.
Packet Pg. 23
1
Packet Pg 318
11
City of San Luis Obispo 10
Water and Wastewater Capacityand Connection Fee Study
Summary
This discussion paper has provided an introduction and overview of the development of water
and wastewater capacity and connection fees. Development of capacity and connection fees is
an equitable method to finance the cost of growth and expansion facilities. The water and
wastewater capacity and connection fees will be updated to reflect the City’s current costs and
value of capacity. The intent is to provide a calculated cost-based water and wastewater capacity
and connection fees that are fair to both existing customers and future development. There are
no proposed changes to implementation or administration of the water or wastewater capacity
and connection fees when compared to the current Development Impact Fees.
Packet Pg. 24
1
Packet Pg 319
11
Packet Pg 320
11
Packet Pg 321
11
Packet Pg 322
11
Packet Pg 323
11
Packet Pg 324
11
Packet Pg 325
11
Packet Pg 326
11
Packet Pg 327
11
Packet Pg 328
11
Packet Pg 329
11
Packet Pg 330
11
Packet Pg 331
11
Packet Pg 332
11
Packet Pg 333
11
Packet Pg 334
11
Packet Pg 335
11
Packet Pg 336
11
Packet Pg 337
11
Packet Pg 338
11
Packet Pg 339
11
Packet Pg 340
11
Packet Pg 341
11
Packet Pg 342
11
Packet Pg 343
11
Packet Pg 344
11
Packet Pg 345
11
Packet Pg 346
11
Packet Pg 347
11
Packet Pg 348
11
Packet Pg 349
11
R ______
RESOLUTION NO. _____ (2017 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, AMENDING WATER AND WASTEWATER
CAPACITY AND CONNECTION FEES
WHEREAS, Chapter 4.20.140 of the City of San Luis Obispo Municipal Code established
water and wastewater development impact fees, herein after referred to as capacity and connection
fees, and provides for the setting of the fee amounts and other matters by resolution of the Council;
and
WHEREAS, the City Council has approved the 2017 Recycled Water Master Plan
including distribution system and storage improvements necessary to accommodate additional
recycled water demand anticipated under the City’s General Plan; and
WHEREAS, the City Council has approved the Water Resource Recovery Facility
Facilities Plan including regulatory requirements and capacity improvements necessary to
accommodate growth under the City’s General Plan; and
WHEREAS, the City Council has approved the Potable Water Distribution System
Operations Master Plan including distribution system, pump station, and storage improvements
necessary to accommodate growth under the City’s General Plan; and
WHEREAS, the City Council has approved the Wastewater Collection System
Infrastructure Renewal Strategy including capacity improvements necessary to accommodate
growth under the City’s General Plan; and
WHEREAS, on February 10, 2004 the Council for the City of San Luis Obispo directed
staff to proceed with participating in the Nacimiento Pipeline Water Supply Project to provide
additional water supplies for new development and service reliability for existing customers; and
WHEREAS, on March 7, 2006 the Council approved the Water Treatment Plant Master
Plan improvements which provided additional treatment process and capacity to meet General
Plan build-out; and
WHEREAS, updated cost information for proposed capital projects necessitate updated
fees to address new development’s share; and
WHEREAS, modification of rates and charges by public agencies is statutorily exempt
from the California Environmental Quality Act (CEQA) under Section 15273 of the Public
Resources Code because the change in fees in not intended to fund expansion of capital projects
not otherwise evaluated under CEQA. All Master Plans were evaluated for their respective impacts
to the environment and this action to adjust fees merely provides a more equitable distribution of
costs associated with envisioned infrastructure; and
Packet Pg 350
11
Resolution No. _____ (2017 Series) Page 2
R ______
WHEREAS, a public hearing has been noticed and held in accordance with the
requirements set forth in Government Code §§ 66016, 66017, 66018 and 66019; and
WHEREAS, an analysis of the required amendments to both the water and wastewater
capacity and connection fees to support the City’s operations, maintenance and debt service in the
Nacimiento Pipeline Water Supply Project, the facility and system improvements identified in the
2017 Recycled Water Master Plan, the Water Resource Recovery Facility Facilities Plan, the
Potable Water Distribution System Operations Master Plan, the Wastewater Collection System
Infrastructure Renewal Strategy, the Water Treatment Plant Master Plan, and updated cost
information for lift stations and other capital projects have been completed and amended fees
identified as included in the attached Exhibits A and B.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo
as follows:
SECTION 1. Findings
a) The purpose of capacity and connection fees is to protect the public health, safety,
and general welfare by providing adequate water supply, treatment, distribution and
wastewater collection and treatment facilities to satisfy the needs of new development
and to mitigate the impacts of new development on the City’s water and wastewater
facilities and improvements.
b) The capacity and connection fees collected pursuant to this Resolution shall be used
only to pay for facilities and improvements identified in the capacity and connection
fee analysis and shall not be in lieu of any other fee or tax as may be required by the
Municipal Code.
c) There is a reasonable relationship between the types of development on which the
capacity and connection fees are imposed and the use of the capacity and connection
fees and the need for the facilities and improvements. All new development requires
adequate water supply, treatment and distribution as well as wastewater collection
and treatment facilities to protect the public health and safety.
d) As required by Government Code Section 66001 et seq., there is a reasonable
relationship between the amount of the capacity and connection fee and the cost of
the facilities and improvements attributable to the developments on which the
capacity and connection fees are imposed. The estimated costs of facilities and
improvements, including financing costs, to be paid for as shown in the 2017 Water
and Wastewater Capacity and Connection Fee Study prepared by HDR Engineering,
Inc. the findings and analysis of which are hereby incorporated by reference, have
been allocated to new development on the basis of dwelling unit size and type
(residential) or water meter size (non-residential).
SECTION 2. Authority
This Resolution is and the water and wastewater capacity and connection fees being
established herein are adopted pursuant to San Luis Obispo Municipal Code § 4.20.140. For
purposes of this Resolution, the term “water and wastewater capacity and connection fees” shall
Packet Pg 351
11
Resolution No. _____ (2017 Series) Page 3
R ______
have the same meaning as water and wastewater development impact fees as set forth in said
section.
SECTION 3. Amount of Capacity and Connection fees
Effective January 1, 2018, water and wastewater capacity and connection fees shall be in
the amounts set forth in Exhibits A and B attached hereto. Unless otherwise acted upon by the
Council, the amount of the capacity and connection fees will automatically be adjusted on July 1
of each subsequent year by the U.S. Bureau of Labor Statistics consumer price index for all urban
consumers (CPI-U), all cities average for the prior year.
SECTION 4. Time of Payment
a) Capacity and connection fees for any development project or portion thereof shall be
payable prior to issuance of building permits required for that development or at a
later time as determined by the Community Development Director, and shall be
collected by the Building Official. Under Government Code § 66007(b), the City is
authorized to collect the capacity and connection fee at the time of building permit
issuance or at a subsequent date because the capacity and connection fees are for
public facilities and improvements for which an account has been established and
funds appropriated, and for which the City has adopted a proposed construction
schedule, or the capacity and connection fees are to reimburse the City for
expenditures previously made.
b) For any development project or portion thereof, capacity and connection fees shall
be assessed at the time of application and remain valid for as long as the application
is proceeding through valid processing.
SECTION 5. Exemptions
a) Fire Protection. Upgrading existing water services and/or meters for the sole purpose
of providing new or improved fire protection facilities shall be exempt from any
capacity and connection fee provided for in this Resolution.
b) Landscape Irrigation. Any water services and/or meters installed solely for landscape
irrigation purposes for properties with existing water service shall be exempt from
any capacity and connection fees provided for in this Resolution. However, if an
increase in water demand is required, the Utilities Director shall impose a water
capacity and connection fee consistent with the amounts set forth in this Resolution.
SECTION 6. Separate Accounts.
The Finance Director shall deposit fees collected under this Resolution in separate water
capacity and connection capacity and connection fee and wastewater capacity and connection
capacity and connection fee accounts as required by Government Code Section 66013(c). Within
one hundred eighty (180) days of the close of each fiscal year, the Finance Director shall make
available to the public an accounting of the fund as required by Government Code Section
66013(d).
Packet Pg 352
11
Resolution No. _____ (2017 Series) Page 4
R ______
SECTION 7. Severability.
Each capacity and connection fees established by this Resolution is severable from every
other capacity and connection fee. Should any capacity and connection fee be determined by a
court of competent jurisdiction to be invalid and unenforceable, the remaining capacity and
connection fees shall continue in full force and effect.
Upon motion of _______________________, seconded by _______________________,
and on the following roll call vote:
AYES:
NOES:
ABSENT:
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 353
11
Resolution No. _____ (2017 Series) Page 5
R ______
EXHIBIT A
WATER CAPACITY AND CONNECTION FEE
Effective January 1, 2018
Equivalent Dwelling
Unit (EDU)
Water Capacity
and Connection fee
Residential (by Unit Size)
Residential Unit (801 square feet or more) 1.0 $15,780
Residential Unit (451 to 800 square feet) 0.7 $11,046
Mobile Home 0.6 $9,468
Studio Unit (450 square feet or less) 0.3 $4,734
Non-Residential (by Meter Size)
¾” 1.0 $15,780
1” 1.7 $26,826
1.5” 3.4 $53,652
2” 5.4 $85,212
3” 10.7 $168,846
4” 16.7 $263,526
6” 33.4 $527,052
EXHIBIT B
WASTEWATER CAPACITY AND CONNECTION FEE
Effective January 1, 2018
Equivalent Dwelling
Unit (EDU)
Wastewater Capacity
and Connection Fee
Residential (by Unit Size)
Residential Unit (801 square feet or more) 1.0 $12,602
Residential Unit (451 to 800 square feet) 0.7 $8,821
Mobile Home 0.6 $7,561
Studio Unit (450 square feet or less) 0.3 $3,781
Non-Residential (by Meter Size)
¾” 1.0 $12,602
1” 1.7 $21,423
1.5” 3.4 $42,847
2” 5.4 $68,051
3” 10.7 $134,841
4” 16.7 $210,453
6” 33.4 $420,907
Packet Pg 354
11
Page intentionally left
blank.
Packet Pg 355
11
TENewspaper of the Central Coast
TMBLNE
OCT 16 201?
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
AD #3321511
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;
OCTOBER 7, 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.
v.
(Sig re of Principal Clerk)
DATE: OCTOBER 7, 2017
AD COST: $141.52
� C1P�QF
Wm L®UBBRPU
SAN LUIS OBISPO CITY COUNCIL
NOTICE OF PUBLIC HEARING
T! rFi San Luis Obispo City Council invites
all interested persons to attend a public
hearing on Tuesday, October 17, 2017,
at 6:00 p.m. in the City Hall Council
Chaniher. 990 Palm Street, San Luis Obl-
spo. California, relative to the following:
WATER AND LNASTEWATER CAPACM
ANDPONNtTION FEjc5
A public hearing to consider adoption of a
resolution amending the water and waste-
water capacity and connection fees effec-
tive January 1, 2018.
For more information on this item, you are
invited 10 Contact Jun mier Melt of the
Cfry's UINtles Department at (605) 781-
729.8 or by email at metzQst r
The City Council may also discuss other
hearings or business items before or after
the items listed above. If you challenge the
proposed project in court, you may be limit-
ed to raising only those issues you or
someone else raised at the public hearing
dascril:ed in this notice, or in written corre-
spondenrn delivered to the City Council at,
or prior to, the public hearing.
Reports far this meeting will be available
for review In the City Clark's Offfce.and on-
line at www,efUcltv.ora an Wednesday,
October 11, 2017. Please call the City
Clerk's Office at. (805) 701-7100 for more
Informaifon. The City Council meeting will
be televised live on Charter Cable Channel
20 and live streaming on www.slocity.org.
Carrie Gallagher
City Clerk
Cily of San Luis Obispo
GLLlgt�sr 7, 2017 3391511
Water and Wastewater Capacity and Connection FeesOctober 17, 201710/17/2017 Item 11, Staff Presentation
Presentation by:Shawn KoornAssociate Vice President, HDR Engineering, Inc.Water and Wastewater Capacity and Connection Fees10/17/2017 Item 11, Staff Presentation
Presentation Overview:Review February 7, 2017 Study SessionFinancial impactDefinitionFee calculationMethodology and componentsReview existing feesFee OptionsRecommendationWater and Wastewater Capacity and Connection Fees10/17/2017 Item 11, Staff Presentation
Recommendations1.Consider options for water and wastewater capacity and connection fees; and2.Adopt a resolution amending the water and wastewater capacity and connection fees selecting Option 2 for water and Option 4 for wastewater effective January 1, 2018.Water and Wastewater Capacity and Connection Fees10/17/2017 Item 11, Staff Presentation
February 7, 2017 Study Session - Questions for City Council DirectionYes No1. Is the name change from Water and SewerDevelopmentImpact Feesto Water and SewerCapacity and ConnectionFeeshelpful to more clearly communicate the serviceprovided?2. Should the City’s Water Capacity and Connection Feeinclude:a. The water assets identified in the prior water developmentimpact fee study?b. All existing and future water assets that provide capacity toserve new development?3. Should the City’s Sewer Capacity and Connection Feeinclude:a.The wastewater assets identified in the prior sewerdevelopment impact fee study?b.All existing and future wastewater assets that providecapacity to serve new development in the Sewer Capacityand Connection Fees?4. Should the City eliminate area‐specific sewer CatchmentArea fees in favor of one citywide Sewer Capacity andConnection Fee?Option #1Option #2Option #1 & #3 Option#2 & #4Option #3 & 4Water and Wastewater Capacity and Connection FeesIndicates City Council Direction provided at Study Session10/17/2017 Item 11, Staff Presentation
Financial ImpactsEstablish the reasonable relationship between system capacity and needs of development and the fee to be imposedCannot exceed the calculated maximum costAre restricted to use to growth related capital and debt serviceWater and Wastewater Capacity and Connection Fees10/17/2017 Item 11, Staff Presentation
Fee for new customer demand only Fee required of all new customers desiring water or wastewater service or existing customers requesting increased water or wastewater service capacityCharge based on the value of the utility’s capacity and the amount of capacity needed by the new customer Does not include operation and maintenance expenses DefinitionWater and Wastewater Capacity and Connection Fees10/17/2017 Item 11, Staff Presentation
Current assets, bringing them into current day dollars (replacement/cost indices) Plus the share of future capital related to growthBasic Formula:Fee CalculationValue of Available New Customer System Capacity X Capacity Demands=Available Capacity (EDU)Capacity and Connection FeeWater and Wastewater Capacity and Connection Fees10/17/2017 Item 11, Staff Presentation
Current Water Development Impact Fees (cost per equivalent dwelling unit) EquivalentExisting WaterDwelling Development Impact FeeLand Use TypeUnit (EDU)$/EDURESIDENTIAL (per unit)Single Family Residential1.0$11,322.16Multi-Family Residential0.77,925.51Mobile Home0.66,793.30Studio Unit (450 s.f. or less)0.33,396.65NON-RESIDENTIAL (Meter Size)3/4"-inch1.0$11,322.161-inch1.719,247.681-1/2 inch3.438,495.362-inch5.461,138.453-inch10.7121,145.004-inch16.7185,076.966-inch33.4378,153.92A single family home and 3/4" non-residential water meter equals oneequivalent dwelling unit.Fees shown are as of 7/1/201710/17/2017 Item 11, Staff Presentation
Current Water Development Impact Fees (cost per equivalent dwelling unit) Fee includes project cost plus financing:Nacimiento Pipeline and Water Reuse Project 2006 Water Treatment Plant Improvements2006 Water Treatment Plant Sedimentation Process2007 Bishop Tank 1994 Water Treatment UpgradeFee has been updated annually by CPI* Fee does not include the cost/benefit of the existing backbone infrastructure10/17/2017 Item 11, Staff Presentation
Option 1 – Current Fee plus future growth related improvements Current FeeIncludes specific future supply and treatment plantIncludes interest cost on future improvementsDivided by future EDUs at the timeFuture AssetsUse current capital improvement plan; no water distribution systemInclude only capacity fee eligible projectsDivided by future equivalent dwelling units* This option does not include buy-in to existing backbone system Water Capacity and Connection Fee Options10/17/2017 Item 11, Staff Presentation
Option 2 - “Combined Methodology” Buy-In (Existing assets)Use system asset inventory recordsReplacement cost new less depreciationUse only those costs that are capacity fee eligibleDivided by build-out equivalent unitsIncremental (Future assets)Use current capital improvement plan (adopted potable water and recycled water master plans)Include only capacity fee eligible projectsDivided by future equivalent dwelling unitsWater Capacity and Connection Fee Options10/17/2017 Item 11, Staff Presentation
Water Fee Summary - Options 1 and 2 Fee includes backbone infrastructureComponentBuy-in + Upgrade [2]Future [3] Debt ServiceTotal ($/EDU)Option 1 - (Current Fee + Future)Current Fee - Future Treatment [1] $0 $10,773 $0 $10,773Supply 0 254 0 254Treatment 0 845 0 845Distribution 0 0 0 0Debt Service 0 0 0 0Cash Reserves 0000------------ ------------ ------------ ------------Maximum Allowable Fee $0 $11,872 $0 $11,872Option 2- Existing + Future Supply $10,348 $243 $0 $10,591Treatment 1,999 809 0 2,808Distribution 2,932 471 0 3,403Debt Service 0 0 (1,459) (1,459)Cash Reserves 437 0 0 437------------ ------------ ------------ ------------Maximum Allowable Fee $15,716 $1,523 ($1,459) $15,780[1] Current Fee divided by 6,921 EDUs, Future divided by 5,821 EDUs.[2] Buy-in + Upgrade divided by existing and future EDUs of 36,791.[3] Future divided by future EDUs of 5,821.10/17/2017 Item 11, Staff Presentation
Water Capacity and Connection Fees(cost per equivalent dwelling unit) Option #1Option #2Land Use TypeEquivalent Dwelling Unit (EDU)Current Fee plus Future Portion of Project plus Financing CostExisting (Replacement Cost Less Depreciation) plus Future plus Financing CostRESIDENTIAL (per unit)Residential (greater than 800 s.f.) 1.0 $11,872 $15,780Residential (451 s.f. to 800 s.f.) 0.7 8,310 11,046Mobile Home 0.6 7,123 9,468Studio Unit (450 s.f. or less) 0.3 3,562 4,734NON-RESIDENTIAL (Meter Size)3/4"-inch 1.0 $11,872 $15,7801-inch 1.7 20,182 26,8261-1/2 inch 3.4 40,365 53,6522-inch 5.4 64,109 85,2123-inch 10.7 127,030 168,8464-inch 16.7 198,262 263,5266-inch 33.4 396,525 527,052A single family home and 3/4" non-residential water meter equals oneequivalent dwelling unit.10/17/2017 Item 11, Staff Presentation
Current Wastewater Development Impact Fees (cost per equivalent dwelling unit) Area Specific FeesEquivalentDwellingLand Use Type Unit (EDU) Citywide Margarita Tank Farm Silver Cityalle Joaquin LagunaRESIDENTIAL (per unit)Single Family Residential 1.0 $3,830.21 $2,819.50 $3,728.52 $1,392.80 $1,878.64 $503.30Multi-Family Residential 0.7 2,681.14 1,973.65 2,609.96 974.96 1,315.05 352.31Mobile Home 0.6 2,298.12 1,691.70 2,237.11 835.68 1,127.18 301.98Studio Unit (450 s.f. or less) 0.3 1,149.06 845.85 1,118.56 417.84 563.59 150.99NON-RESIDENTIAL (Meter Size)5/8" to 3/4"-inch 1.0 $3,830.21 $2,819.50 $3,728.52 $1,392.80 $1,878.64 $503.301-inch 1.7 6,511.35 4,793.15 6,338.48 2,367.76 3,193.69 855.611-1/2 inch 3.4 13,022.70 9,586.30 12,676.96 4,735.53 6,387.37 1,711.222-inch 5.4 20,683.11 15,225.30 20,134.00 7,521.13 10,144.65 2,717.813-inch 10.7 40,983.19 30,168.64 39,895.14 14,902.98 20,101.44 5,385.304-inch 16.7 63,964.42 47,085.64 62,266.25 23,259.79 31,373.27 8,405.096-inch 33.4 127,928.85 94,171.28 124,532.51 46,519.58 62,746.54 16,810.17A single family home and 3/4" non-residential water meter equals one equivalent dwelling unit.Fees shown are as of 7/1/2017Impact FeeAdditional Catchment Area Charges10/17/2017 Item 11, Staff Presentation
Current Wastewater Development Impact Fees (cost per equivalent dwelling unit) Fee includes project cost plus financing:1994 Upgrade included 1.039 MGD future of 5.079 MGD total plant Prior estimated construction cost for WRRF upgrade that expands capacity to 5.4 MGDFee has been updated annually by CPI*Fee does not include the cost/benefit of the existing backbone infrastructure10/17/2017 Item 11, Staff Presentation
Option 1 –Current Fee plus future growth related improvements Current FeeIncludes specific future treatment plantIncludes interest cost on future plantDivided by future EDUs at the timeFuture AssetsUse current capital improvement plan; no wastewater collection systemInclude only capacity fee eligible projectsDivided by future equivalent dwelling unitsSeparate Catchment Area Fees, where applicableWastewater Capacity and Connection Fee Options10/17/2017 Item 11, Staff Presentation
Option 2 - “Combined Methodology” for Determining Fees Buy-In (Existing assets)Use system asset inventory recordsReplacement cost new less depreciationUse only those costs that are capacity fee eligibleDivided by build-out equivalent unitsIncremental (Future assets)Use current capital improvement plan (adopted collection system master plan and WRRF Facilities Plan)Include only capacity fee eligible projectsDivided by future equivalent dwelling unitsSeparate Catchment Area Fees, where applicableWastewater Capacity and Connection Fee Options10/17/2017 Item 11, Staff Presentation
Option 3 – Current Fee plus future growth related improvements Option 1 plus catchment area costsCity wide fee; no separate catchment area feeOption 4 - “Combined Methodology” for Determining Fees Option 2 plus catchment area costsCity wide fee; no separate catchment area feeWastewater Capacity and Connection Fee Options10/17/2017 Item 11, Staff Presentation
Wastewater Fee Summary - Options 1, 2, 3, & 4Includes backbone infrastructure; One Citywide Wastewater FeeComponentBuy-in + Upgrade [2]Future [3] Debt ServiceTotal ($/EDU)Option 1 - Current Fee + Future (Catchment separate fee)Current Fee - Future Treatment [1]$0 $3,729 $0 $3,729Treatment0 4,436 0 4,436------------ ------------ ------------ ------------Maximum Allowable Fee$0 $8,165 $0 $8,165Option 2 - Existing + Future (Catchment separate fee)Treatment$1,145 $4,246 $0 $5,391Collection2,906 4,002 0 6,908Less: Catchment(523) (2,557) 0 (3,080)Debt Service00 (465) (465)Cash Reserves7680 0 768------------ ------------ ------------ ------------Maximum Allowable Fee$4,296 $5,691 ($465) $9,522Option 3- Current Fee + Future (includes Catchment)Current Fee - Future Treatment [1]$0 $3,729 $0 $3,729Treatment0 6,993 0 6,993------------ ------------ ------------ ------------Maximum Allowable Fee$0 $10,721 $0 $10,721Option 4- Existing + Future (includes Catchment)Treatment$1,145 $4,246 $0 $5,391Collection2,906 4,002 0 6,908Debt Service00 (465) (465)Cash Reserves7680 0 768------------ ------------ ------------ ------------Maximum Allowable Fee$4,819 $8,248 ($465) $12,602[1] Current Fee divided by 6,921 EDUs, Future divided by 5,821 EDUs.[2] Buy-in + Upgrade divided by existing and future EDUs of 36,791.[3] Future divided by future EDUs of 5,821.10/17/2017 Item 11, Staff Presentation
Wastewater Capacity and Connection Fees Option 1(cost per equivalent dwelling unit) Area Specific FeesEquivalentCapacity and Connection FeeDwellingAdditional Catchment Area ChargesLand Use TypeUnit (EDU)Citywide Margarita Tank Farm Silver CityCalle JoaquinLaguna Airport Foothill BuckleyRESIDENTIAL (per unit)Residential (greater than 800 s.f.) 1.0 $8,165 $3,830 $3,192 $2,429 $2,898 $434 $6,372 $22,319 $643 Residential (451 s.f. to 800 s.f.) 0.7 5,715 2,681 2,234 1,700 2,029 304 4,460 15,623 450 Mobile Home 0.6 4,899 2,298 1,915 1,457 1,739 261 3,823 13,391 386 Studio Unit (450 s.f. or less) 0.3 2,449 1,149 958 729 870 130 1,912 6,696 193 NON-RESIDENTIAL (Meter Size)3/4"-inch 1.0 $8,165 $3,830 $3,192 $2,429 $2,898 $434 $6,372 $22,319 $643 1-inch 1.7 13,880 6,511 5,426 4,129 4,927 738 10,833 37,943 1,093 1-1/2 inch 3.4 27,759 13,022 10,852 8,259 9,855 1,477 21,665 75,885 2,187 2-inch 5.4 44,088 20,683 17,236 13,117 15,651 2,345 34,409 120,523 3,473 3-inch 10.7 87,360 40,982 34,153 25,990 31,013 4,647 68,181 238,815 6,882 4-inch 16.7 136,347 63,963 53,304 40,565 48,403 7,253 106,414 372,730 10,741 6-inch 33.4 272,695 127,925 106,608 81,129 96,807 14,506 212,828 745,460 21,483 A single family home and 3/4" non-residential water meter equals one equivalent dwelling unit.10/17/2017 Item 11, Staff Presentation
Wastewater Capacity and Connection Fees Option 2(cost per equivalent dwelling unit) Area Specific FeesEquivalentCapacity and Connection FeeDwellingAdditional Catchment Area ChargesLand Use TypeUnit (EDU)Citywide Margarita Tank Farm Silver CityCalle JoaquinLaguna Airport Foothill BuckleyRESIDENTIAL (per unit)Residential (greater than 800 s.f.)1.0 $9,522 $3,830 $3,192 $2,429 $2,898 $434 $6,372 $22,319 $643 Residential (451 s.f. to 800 s.f.)0.7 6,666 2,681 2,234 1,700 2,029 304 4,460 15,623 450 Mobile Home0.6 5,713 2,298 1,915 1,457 1,739 261 3,823 13,391 386 Studio Unit (450 s.f. or less)0.3 2,857 1,149 958 729 870 130 1,912 6,696 193 NON-RESIDENTIAL (Meter Size)3/4"-inch1.0 $9,522 $3,830 $3,192 $2,429 $2,898 $434 $6,372 $22,319 $643 1-inch1.7 16,188 6,511 5,426 4,129 4,927 738 10,833 37,943 1,093 1-1/2 inch3.4 32,375 13,022 10,852 8,259 9,855 1,477 21,665 75,885 2,187 2-inch5.4 51,420 20,683 17,236 13,117 15,651 2,345 34,409 120,523 3,473 3-inch10.7 101,887 40,982 34,153 25,990 31,013 4,647 68,181 238,815 6,882 4-inch16.7 159,021 63,963 53,304 40,565 48,403 7,253 106,414 372,730 10,741 6-inch33.4 318,041 127,925 106,608 81,129 96,807 14,506 212,828 745,460 21,483 A single family home and 3/4" non-residential water meter equals one equivalent dwelling unit.10/17/2017 Item 11, Staff Presentation
Wastewater Capacity and Connection Fees Option 3(cost per equivalent dwelling unit) No Area Specific FeesEquivalentDwelling Full CostLand Use Type Unit (EDU) Capacity and Connection FeeRESIDENTIAL (per unit)Residential (greater than 800 s.f.) 1.0 $10,721 Residential (451 s.f. to 800 s.f.) 0.7 7,505 Mobile Home 0.6 6,433 Studio Unit (450 s.f. or less) 0.3 3,216 NON-RESIDENTIAL (Meter Size)Meter Size3/4"-inch 1.0 $10,721 1-inch 1.7 18,226 1-1/2 inch 3.4 36,452 2-inch 5.4 57,895 3-inch 10.7 114,718 4-inch 16.7 179,046 6-inch 33.4 358,092 A single family home and 3/4" non-residential water meterequals one equivalent dwelling unit.10/17/2017 Item 11, Staff Presentation
Wastewater Capacity and Connection Fees Option 4(cost per equivalent dwelling unit) No Area Specific FeesEquivalentDwelling Full CostLand Use Type Unit (EDU)Capacity and Connection FeeRESIDENTIAL (per unit)Residential (greater than 800 s.f.) 1.0 $12,602 Residential (451 s.f. to 800 s.f.) 0.7 8,821 Mobile Home0.6 7,561 Studio Unit (450 s.f. or less)0.3 3,781 NON-RESIDENTIAL (Meter Size)Meter Size3/4"-inch1.0 $12,602 1-inch1.7 21,423 1-1/2 inch3.4 42,847 2-inch5.4 68,051 3-inch10.7 134,841 4-inch16.7 210,453 6-inch33.4 420,907 A single family home and 3/4" non-residential water meterequals one equivalent dwelling unit.10/17/2017 Item 11, Staff Presentation
Public OutreachUtilities Department Fall Resource publicationCity Utilities Department WebsiteFacebook MessagingDevelopers’ RoundtableMeetings with Developers10/17/2017 Item 11, Staff Presentation
SummaryCitywide FeeExisting 2017‐18 Impact FeeOption 1 Option 2 Option 3 Option 4Water$11,322.16 $11,872 $15,780 N/A N/AWastewater$ 3,830.212$ 8,1652$9,5222$10,721 $12,602NOTES:1. All fees are per equivalent dwelling unit (or EDU).2. Additional catchment area fees, where applicable.WastewaterCatchment Area2017‐18 Development Impact FeesNew Catchment Area Fees Calle Joaquin$1,878.64 $2,898Laguna$503.30 $434Margarita$2,819.50 $3,830Silver City$1,392.80 $2,429Tank Farm$3,728.52 $3,192AirportN/A $6,372BuckleyN/A $643FoothillN/A $22,319Water and Wastewater Capacity and Connection Fees10/17/2017 Item 11, Staff Presentation
Questions?10/17/2017 Item 11, Staff Presentation
Recommendations1.Consider options for water and wastewater capacity and connection fees; and2.Adopt a resolution amending the water and wastewater capacity and connection fees selecting Option 2 for water and Option 4 for wastewater effective January 1, 2018.10/17/2017 Item 11, Staff Presentation
Water Capacity and Connection Fees(cost per equivalent dwelling unit) Land Use TypeEquivalent Dwelling Unit (EDU)Existing (Replacement Cost Less Depreciation) plus Future plus Financing CostRESIDENTIAL (per unit)Residential (greater than 1,200 s.f.) 1.0 $15,780 Residential (801 s.f. 1,200 s.f.) 0.8 $12,624 Residential (451 s.f. to 800 s.f.) 0.7 11,046 Mobile Home 0.6 9,468 Studio Unit (450 s.f. or less) 0.3 4,734 NON-RESIDENTIAL (Meter Size)3/4"-inch 1.0 $15,780 1-inch 1.7 26,826 1-1/2 inch 3.4 53,652 2-inch 5.4 85,212 3-inch 10.7 168,846 4-inch 16.7 263,526 6-inch 33.4 527,052 A single family home and 3/4" non-residential water meter equals oneequivalent dwelling unit.10/17/2017 Item 11, Staff Presentation
EquivalentDwelling Full CostLand Use Type Unit (EDU) Capacity and Connection FeeRESIDENTIAL (per unit)Residential (greater than 1,200 s.f.) 1.0 $12,602 Residential (801 s.f. to 1,200 s.f.) 0.8 $10,082 Residential (451 s.f. to 800 s.f.) 0.7 8,821 Mobile Home 0.6 7,561 Studio Unit (450 s.f. or less) 0.3 3,781 NON-RESIDENTIAL (Meter Size)Meter Size3/4"-inch 1.0 $12,602 1-inch 1.7 21,423 1-1/2 inch 3.4 42,847 2-inch 5.4 68,051 3-inch 10.7 134,841 4-inch 16.7 210,453 6-inch 33.4 420,907 A single family home and 3/4" non-residential water meterequals one equivalent dwelling unit.Wastewater Capacity and Connection Fees(cost per equivalent dwelling unit) 10/17/2017 Item 11, Staff Presentation