HomeMy WebLinkAbout04/05/1988, 1 - WASTEWATER RATE INCREASE MEETING DATE:
11111111$lJlPIJ� city of San IDIS OBIspo April 5 1988
COUNCIL AGENDA REPORT ITEM NUMBER:
FROM: Dave Romero, Director Prepared by: William T. Hetland
Public Works Department, ITHlitipq Manager
SUBJECT:
Wastewater Rate Increase
CAO RECOMMENDATION:
Council adopt resolution authorizing a 140% increase in
the Wastewater rates to be effective May 1, 1988
BACKGROUND:
On February 16, 1988 City Council approved an engineering contract
for the Implementation of the Wastewater Management Plan. Council
also directed staff to bring back a wastewater rate increase
proposal which would fund the contract on a pay-as-you-go basis.
Staff is presenting two proposals involving rate increases of 90%
and 140%. Wastewater rate increases were originally identified in
the 1987-89 Financial Plan and Approved 1987-1988 Budget and the
Wastewater Management Plan adopted by the Council on October 26,
1987.
Staff originally proposed four funding options. Two of the options
included short term loans and one of the options looked at
"pay-as-you-go" with an immediate sewer rate increase. The last
option was a combination of a rate increase and loans. The Council
expressed their preference for an immediate rate increase as the
preferred funding alternative. This report addresses the
combination and the "pay as you go" alternatives.
The cash flow requirements for the engineering contract have been
revised since the last council report. The change primarily
related to the time to complete the work. Originally I estimated
that the work would be completed around December 1988 but after the
consultant did the project schedule and the cash flow projection,
the completion date moved to May 1989.
Combination Alternative
The combination alternative initially included a rate increase of
90% and a loan from the sewer fund to cover the short fall in
revenue. Because of the extension in contract time, a short term
loan is not now required under this alternative. It is proposed
that sewer rates be increased by 90%, effective on all bills issued
after May 1, 1988. The single family rate would be increased by
$4. 00/month to a total monthly bill of $8.50/month.
The attached graph (Attachment #1 WWMP Implementation) shows the
proposed cumulative total costs for the contract, peaking out at a
little over a million dollars in May 1989. The first revenue plan
estimate curve shows the cummulative revenue the City would receive
at the 90% increase in rates. This increase would generate
41111111111I 1�P° city of San LUIS OBISpo
COUNCIL AGENDA REPORT
Page 2
approximately $1.0 million between May 1988 and May 1989. Under
this alternative, the sewer fund would have to provide
approximately $375, 000 during the first three months to meet cash
flow requirements. Once the revenue from the rate increase begins,
it will basically meet the cash flow needs plus generate additional
funds to pay back the $375,000 by the completion of the contract.
Adequate funds are available in the sewer fund to meet the cash
flow requirements.
"Pay-as-You-Go" Alternative
Staff analyzed a "pay-as-you-go" revenue plan which proposes an
immediate rate increase of 140% or $6.30/month for single family
homes. This would bring the single family rate to $10.80/month.
The rate would again be effective for all bills issued after May 1,
1988.
The 140% rate increase would generate about $1, 500, 000 between May -
1988 and May 1989. This would cover the cost of the engineering
contract and begin to accumulate additional funds for construction
or long term debt financing. The proposed second year rate
increase could be reduced, since the first year increase was
greater than proposed. Like the previous rate increase
. alternative, funds from the sewer fund would be needed up front to
cover cash flow requirements. By about the beginning of next year,
everything will be balanced out to cover the cost of the contract
and additional funds would then be generated.
The attached graph (Attachment #2 WWMP Implementation) also shows
the proposed cumulative total costs for the contract, peaking out
at a little over a million dollars in May 1989. The second revenue
plan estimate curve shows the cumulative revenue the City would
receive at the 140% increase in rates. This would generate about
$.1.5 million by May 1989. The additional funds generated and not
used to pay for the engineering contract will be available to fund
any additional studies that may be required or used to begin paying
for the long term debt the City will need to issue to finance the
project.
Comparison
The Wastewater Management Plan identified wastewater rate increases
for funding the long term debt financing, beginning in July 1988 .
Subsequent increases are proposed for July 1989 and July 1990. The
proposed increases, without grant funding, would be 85%, 75% and
20%. The 90% rate increase alternative would require another
increase in rates in July 1989 of about 70% while the 140% rate
increase alternative would only need an increase of 34% depending
on the final recommended project.
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'iuN�bNI�IINl�II�I► II�III-city of San LUIS OBISPO
Nii% COUNCIL AGENDA REPORT
Page 3
Though the proposed rate increases of 90% to 140% are significant
for San Luis Obispo, the actual monthly rates are similar to other
rates charged by surrounding communities. The following is a brief
list of some single family sewer rates per month in San Luis Obispo
County.
1. San Luis Obispo
a. Current $4.50
b. 90% Increase $8.50
C. 140% Increase $10.80
2. Paso Robles $7.76
3 . Templeton $10.00
4 . Atascadero $10.54
5. Morro Bay $12.30
CONCURRENCE
This report has been reviewed and received the concurrence of the
City Administrative Officer, City Attorney and Finance Director.
RECOMMENDATION
Staff recommends Council approve the 140% rate increase alternative
and adopt the attached rate resolution. (Alternative 2)
attachments
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ATTACHMENT #2
ALTERNATIVE 1
RESOLUTION NO. (1988 Series)
A RESOLUTION OF THE COUNCIL OF THE
CITY OF SAN LUIS OBISPO ESTABLISHING
NEW WASTEWATER SERVICE CHARGES
BE IT RESOLVED by the Council of the City of San Luis Obispo
as follows:
SECTION 1. The following fees are established in accordance
with provision of Municipal Code Section 4 .24 . 010 - Wastewater
Service Charges as follows:
A. Every person whose premises in. the city are served by a
connection with the system of wastewater of the city, whereby the
wastewaters are disposed of by the city through the wastewater
treatment plant, or otherwise, shall pay wastewater rental charge
based as follows:
1. For each single-family dwelling, the sum of $8. 50 per
month;
2. For each multifamily dwelling unit in any duplex,
apartment house, roominghouse, or trailer park, the sum of $5 .70
per dwelling unit, per month;
3 . For each dwelling unit in any hotel, motel or auto court,
the sum of $5.70 per unit, per month;
4. For each restaurant or bakery, the sum of $5. 70 plus
$1. 14 per hundred cubic feet of water used in excess of 500 hundred
cubic feet per month;
5. For each public, private or parochial school, the sum of
$ 0. 95 per month for each average daily attendance at the school ;
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6. For each business, church or other nondwell.ing commercial
establishment, wholesale or retail, the minimun sum of $5. 70 per
month plus $ 0. 66 per hundred cubic feet of water used in excess of
850 cubic feet per month
7. For each vehicle discharging wastewater into the city
system $28.50 for the first 1,500 gallons or less plus $1. 71 per
100 gallons for all wastewater in excess of 1,500 gallons. The
city may require an analysis by a recognized laboratory or by the
city wastewater laboratory of constituents of the wastewater being
diacharged. The fee schedule for laboratory services performed by
the city shall be as follows:
Test Fee
PH. . . . . . . . . . . . . . . . . . . . . . . . . . $ 6. 50
BOD. . . . . . . . . . . . . . . . . . . . . . . . . . 55. 00
NFR (suspended solids) . . . . . . . 20. 00
Settleabe solids. . . . . . . . . . . . . 15. 50
8. Quantity Usage. Restaurants and other commercial users
shall be entitled to a water flow allowance for the service
charge. Any excess over the entitlement allowance shall be charged
for at the rate specified in subsection A4 , A6, and A7 of this
section. Any nonresidential customer using substantial amounts of
water that is consumed on landscaping or for other purposes not
required wastewater facilites may appeal to the city engineer to
determine an equitable ratio of wastewater use for billing purposes
or the user may, at the user's own expense, install private
measuring devices in accordance with the specifications approved by
the city engineer. /w-7
B. The rates set forth in subsection A of this section for
service shall become effective May 1, 1988.
On motion of seconded by
and on the following roll call vote:
AYES:
NOES:
ABSENT:
the foregoing resolution was passed and adopted this day
of , 1988.
ATTEST:
MAYOR RON DUNIN
CITY CLERK PAM VOGES
* * * * * * * * * * *
APPROVED:
C y Adm nistrative Officer
City A s6rne, '
Finance Director
Q I
Public Works Director
Utilites Manager
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ALTERNATIVE 2
RESOLUTION NO. (1988 Series)
A RESOLUTION OF THE COUNCIL OF THE
CITY OF SAN LUIS OBISPO ESTABLISHING
NEW WASTEWATER SERVICE CHARGES
BE IT RESOLVED by the Council of the City of San Luis Obispo
as follows:
SECTION 1. The following fees are established in accordance
with provision of Municipal Code Section 4.24 .010 - Wastewater
service charges as follows:
A. Every person whose premises in the city are served by a
connection with the system of wastewater of the. city, whereby the
wastewaters are disposed of by the city through the wastewater
treatment plant, or otherwise, shall pay wastewater rental charge
based as follows:-
1. For each single-family dwelling, the sum of $10. 80 per
month;
2 . For each multifamily dwelling unit in any duplex,
apartment house, roominghouse, or trailer park, the sum of $7 . 20
per month, per dwelling unit;
3 .. For each dwelling unfit in any hotel, motel or auto court,
the sum of $7. 20 per unit, per month;
4 . For each restaurant or bakery, the sum of $7 . 20 plus
$1.44 per hundred cubic feet of water used in excess of 500 hundred
cubic feet per month;
5. For each public, private or parochial school , the sum of
$1. 20 per month for each average daily attendance at the school ;
6. For each business, church or other nondwelling commercial
establishment, wholesale or retail, the minimun sum of $7 . 20 per
month plus $ 0.84 per hundred cubic feet of water used in excess of
850 cubic feet per month
7 . For each vehicle discharging wastewater into the city
system $36.00 for the first 1, 500 gallons or less plus $2 . 16 per
100 gallons for all wastewater in excess of 1,500 gallons. The
city may require an analysis by a recognized laboratory or by the
city wastewater laboratory .of constituents of the wastewater being
diacharged. The fee schedule for laboratory services performed by
the city shall be as follows:
Test Fee
pH. . . . . . . . . . . . . . . . . . . . . . . . . . $ 6. 50
BOD. . . . . . . . . . . . . . . . . . . . . . . . . . 55. 00
NFR (suspended solids) . . . . . . . 20. 00
Settleabe solids. . . . . . . . . . . . . 15.50
8 . Quantity Usage. Restaurants and other commercial users
shall be entitled to a water flow allowance for the service
charge. Any excess over the entitlement allowance shall be charged
for at the rate specified in subsection A4, A6, and A7 of this
section. Any nonresidential customer using substantial amounts of
water that is consumed on landscaping or for other purposes not
required wastewater facilites may appeal to the city engineer to
determine an equitable ratio of wastewater use for billing purposes
or the user may, at the user's own expense, install private
measuring devices in accordance with the specifications approved by
the city engineer. NO
B. The rates set forth in subsection A of this section for
service shall become effective May 1, 1988.
On motion of seconded by
and on the following roll call vote:
AYES:
NOES:
ABSENT:
the foregoing resolution was passed and adopted this day
of , 1988.
ATTEST:
MAYOR RON DUNIN
CITY CLERK PAM VOGES
APPROVED:
City A inistrative Officer
City At ey
V a e Director
Lo
Public Works Director
Utilites Manager
swrres2/lh#3 / /
F'7TING AGENDA
DH i E ana 5 � nM #
0lo(Mision c5cA001 OC; 0711))at7
761 BROAD STREET
SAN LUIS OBISPO, CALIFORNIA 93401 Vn (/(�f( ',�L
(805) 543-6019 K • (/G'
March 28, 1988
City of San Luis Obispo
P. 0. Box 8100
San Luis Obispo, CA 93403-8100
Dear Council Members:*
I recently received a letter regarding an increase in wastewater
service charges from Pam Voges, City Clerk. After reading the
proposed increases, I felt it was necessary to share my concerns
with you.
_ The projects identified in the City' s Wastewater Management Plan
are necessary improvements, but the sudden increase in fees is,
in my opinion, a bit exorbitant. As a parochial school, our fees
would nearly double starting May 1, 1988.
Perhaps some consideration could be given to .phasing in an increase
over a period of months (or years) . This would enable our school
and others like it to pay the increased cost without incurring a
sudden hike in wastewater rates.
Thank you for considering this request.
Sincerely,,,
Jim Gentilucci, Princi.apal
jb
MAR 3 0 1988
ory CLERK
SAN Luis orm
p0.Ca
M ;, VG AGENDA /
�QII��IIIuIIIIIIpI�IIII @IIIIIIIIIIIII
DATE � 5 'Ie ITEM #
IIIII�IIII city � Sal'11�,115 OBISPOa .
990 Palm Street/Post Office Box 8100 • San Luis Obispo, CA 93403-8100
CITY COUNCIL PUBLIC HEARING NOTICE 3-24-88
WASTEWATER RATES
TUESDAY, APRIL 5, 1988
The San Luis Obispo City Council will hold a public hearing for the
purpose of determining an increase in wastewater service charges.
Wastewater rates have not been increased since 1982 and is necessary to
help fund the improvement projects identified in the City's Wastewater
Management Plan. The proposed ranges for increase effective May 1, 1988,
are as follows:
1. For each single-family dwelling - from $4.50 per month to
$8.50-$10.80 per month;
2. For each multifamily dwelling unit in any duplex, apartment house,
roominghouse, or trailer park - from $3.00 per month to $5.70-$7.20 per
month;
3. For each dwelling unit in any hotel, motel or auto court - from
$3.00 to $5.70-$7.20-
4. For each restaurant or bakery - from $3.50 per month plus $.60 per
100 cu. ft. of water used in excess of 500 cu. ft. per month to .
$5.70-$7.20 plus $1.14-$2.40 per 100 cu. ft. ;
5. For each public, private or parochial school - from $.50 per month
for each average daily attendance at the school to $.95;
6. For each business,' church or other nondwelling commercial
establishment, wholesale or retail - from $3.00 per month plus $.35 per
100 cu. ft. of water used in excess of 850 cu. ft. per month to
$5.70-$7.20 plus $.66-$.84 per 100 cu. ft- ,-
7.
t. ;7. For each. vehicle discharging wastewater into the city system =
from $15 for the first 1,500 gallons or less plus $.90 per 100 gallons for
all wastewater in excess of 1,500 gallons to $28.50-$38.00 plus
$1.71-$2.16 per 100 cu. ft.
The Council will,also consider amending water connection fees. for
construction purposes from $1,160 to $1,900 per o9nnee44-en QCre'-
The hearings will be held on Tuesday, April 5, 1988, beginning at
7:00 p.m. in the Council Chambers of City Hall, 990 Palm Street, San Luis
Obispo. The public is welcome to attend and comment and written comments
are also encouraged. The reports, including recommendation by staff, will
be available on the Friday before the meeting. For more information,
please contact: Bill Hetland, Utilities Manager, at 549-7210.
Pam Voges, City Clerk