HomeMy WebLinkAbout06/01/1992, 1B - WATER FUND RATE REVIEW I��NII���II(�II'lllllll �lul�l •h/ f MEETING DATE:
Uj cl o san L.Ai s os�spo Z-/-
COUNCIL AGENDA REPORT . 'TEM NUMBER:/
-1-
FROM: William C. Statler, Director of Financd " �=
Prepared by: Linda Asprion, Revenue Managerj:
SUBJECT: WATER FUND RATE REVIEW
CAO RECOMMENDATION
1. Retain the existing rate structure for 1992-93 . Although no
rate increases for revenue purposes are required for 1992-93 ,
modest rate increases of approximately 6% annually are
projected for 1993-94 through 1996-97.
2 . Consider adopting a resolution that would modify the existing
rate structure as follows:
a. Establish a separate rate classification for construction
accounts under which each such account would receive a
water allocation of two units per billing period at a
cost of $1.20 per unit plus the usual readiness to serve
charge based on meter size, with any water usage over the
two unit allocation to be billed at $150. 00 per unit.
b. Set readiness to serve rates at the 5/8 inch meter level
for all single meter residential accounts, which would
require increasing the rate for consumption over 10
units of water from $2.40 per unit to $2 .55 per unit
effective July 1, 1992 in order to offset the revenue
losses from this change.
DISCUSSION
Overview
No Rate Increase Required for 1992-93. The last water rate j
increase was implemented in July of 1990. As such, with this
recommendation to retain existing rates for 1992-93, there will
have been no rate increases for three years. It is anticipated
that this "no rate increase" period will be followed by four years
of moderate rate increases estimated at 6% annually.
Rate Structure Changes. Although no rate increases are recommended
for revenue purposes, rate changes will be required if the Council
wants to modify the existing basis for single meter residential
minimum charges in order to address concerns relating to meter
oversizing for fire protection purposes and establish a separate
rate classification for construction accounts in order to provide
limited amounts of potable water to construction sites. Overall
revenues will remain the same if these changes are approved by the
Council; however, depending on their current rate classification,
some customers will experience slight decreases or increases in
their billing.
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��������►►i��►fIIIIIIIP1° lllllll city of San l 3 OBISpo
COUNCIL AGENDA REPORT
Background
The 1991-93 Financial Plan policies require the City to perform an
annual review of the financial needs of the Water Fund and adjust
fees and rate structures as required to ensure that they remain
appropriate and equitable. Fees and rates are to be set at levels
which will fully cover the total cost of providing water services,
including operations, capital outlay, and debt service (page B-5
of the 1991-93 Financial Plan) . This report analyzes the revenue
requirements of the Water Fund based on the adopted 1991-93
Financial Plan and recommended 1992-93 Budget changes, as well as
proceeding with the State Water Project and implementing the low
income assistance program.
Water Rate Review
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As stated in Resolution No. 6447, the primary goals of the City's
water utility are to provide quality water service to its citizens
and to function as a self-sufficient enterprise. The water should
meet all health standards, be free of bad taste and odors, provide
adequate fire protection, and assure reliability and continuity of
service to users.
This annual review of the Water Fund has been performed with these
goals and philosophy in mind. As adopted by the Council in May of
1988 , the City' s rate structure should also accomplish the
following objectives:
■ Comply with legal requirements
■ Ensure revenue adequacy to fully meet system operating and
capital needs
■ Encourage conservation
■ Provide equity and fairness between classes of customers
■ Be easy to understand by our customers and easy to administer
■ Provide for ongoing review in order to facilitate rate
stability
Provided in Exhibit 1 is a summary projection of revenues,
expenditures and changes in financial position for the Water Fund
through fiscal year 1996-91. This projection outlines the existing
operations and capital improvement budget for the Water Fund as
approved in the 1991-93 Financial Plan and incorporates the charges
for State Water which will begin in 1992-93 and continue through
1996-97. The assumptions used in this Water Fund financial
position projection are detailed in Exhibits 2a and 2b.
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���h����iii�i►i�►IllillP1° �iIIIIU city of San ;s OBISp0
COUNCIL AGENDA REPORT
Based upon this analysis, no rate increases for revenue purposes
are proposed for fiscal year 1992-93 . This projection is based
upon a 30% conservation rate from our customers from 1987
consumption levels and approximately $250, 000 in costs for the
State Water Project. While no increase is proposed for the 1992-
93 fiscal year, the projections indicate a modest level rate
increase of 6% over the next four years.
Nov that the drought is over.. why aren•t rates going down?
When the last rate increase was approved by Council in June of !
1990, it was clear that the basis for this rate increase was not
reduced revenues from water conservation but the need to fund the
construction and operation of new facilities that would bring
dependable, quality water to our community. As reflected in the
Water Rate Fact Sheet prepared at that time (Exhibit 3) , the
difficulty of explaining rate increases to our customers in the i
middle of a drought was recognized, as was the possible perception
that rates should come down after the drought. However, as stated
in the fact sheet regarding water rates after the drought is over.
"Although the new rate increase will give us a good basis for
the future, modest increases can be anticipated over time to
continue this commitment. "
As noted in the fact sheet, revenue losses resulting from mandatory
water conservation were projected at $700, 000 annually. With
current rates remaining in place, the following is a summary of the
key projects that this revenue will finance:
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■ Construction and operation of the water treatment plant
improvements estimated to cost $1, 013 , 000 on an annual basis.
■ Expansion of the Salinas Reservoir estimated to cost $600, 000
on an annual basis.
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■ Operation of ground water wells estimated to cost $300, 000
annually.
These three programs alone total over $1. 9 million annually, more
than offsetting the $700, 000 revenue shortfall resulting from
mandatory water conservation.
In summary, the conclusions of this rate review are consistent with
our earlier estimates from two years ago: although rates will not
be coming down, only moderate increases over the next four years
are projected.
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Il�lll►�►►►I�illllllll�1° �IIIIIII city of San IL.,S OBISPO
MiN COUNCIL AGENDA REPORT
What do the projections indicate for the future?
Based upon the assumptions in Exhibit 2, the financial position
projections indicate that water rates will require modest increases
of 6% annually from fiscal year 1993-94 through fiscal year 1996-
97 . The following is a summary of key assumptions for expenditures
and revenues:
■ Participation in State Water estimated to cost $1. 8 million
annually by 1996-97.
■ Construction and operation of an upgraded water treatment
plant estimated to cost $1. 01 million annually for debt
service ($763, 500 based on current construction cost estimates
of $7 . 6 million) and operations ($250, 000 for increased power
costs) . i
■ Expansion of Salinas Reservoir estimated to cost $600, 000
annually for debt service on a projected construction costs
of $6 million.
■ Operations and maintenance inflation rate of 5%.
■ Annual decreases in water conservation from 1987 levels over
the next five years ranging from 30% in 1992-93 to 10% in
1996-97 .
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■ Rate increases for other agencies who receive their water from
the City. Staff is currently negotiating with Cal Poly to
increase their water rates based upon the percentage of costs
attributable to treatment and distribution compared to total
water costs. (Cal Poly should not be charged for costs
associated with source of supply as they own their own water
supply, Whale Rock Reservoir) . It is anticipated that this
increase will be stepped in over a three year period beginning
in 1992-93 . Thereafter, Cal Poly rates would increase
concurrently with other customers. We anticipate submitting
a new agreement with Cal Poly reflecting this approach for
Council approval in July of 1992.
■ Water customer growth at 1% annually.
■ Capital improvement charges increasing annually by changes in
the Engineering News Record (ENR) construction cost index
estimated to be 4%. The projection is based on construction
activity in 1993-94 generating one-half of the original
revenue estimate when the Council approved water impact fees
in August of 1991. In 1994-95, these charges are estimated
to increase to the original revenue estimate plus the annual
ENR 4% increase.
■ Connection and meter charges at a 4% ENR rate.
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41111$11111 111011111111 city of San , Js OBISpo
80miiN COUNCIL AGENDA REPORT
As reflected above, these assumptions include a construction cost
of $7, 635, 000 for the new water treatment plant (1991-93 Financial
Plan, page E-7) . Based upon preliminary engineering estimates,
construction of this upgrade may be greater than our current cost
projections. However, an increase in the cost of the new water
treatment plant would not affect water rates for 1992-93 , although
it would impact future water rate increases as necessary to cover
any additional debt service requirements. It is anticipated that
final plans and specifications for this project, along with a
detailed engineer's cost estimate, will be submitted for Council
approval in August of 1992 . Any required modifications to existing
projections for future rate increases will be presented at that
time.
Single Meter Residential Rates
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On July 6, 1990, Ordinance No. 1170 became effective requiring all
new residential units to have fire sprinklers. With this new
requirement came the need to have a larger water meter (usually 1
inch) which would provide for the additional pressure needed if the
fire sprinklers were activated. Without a sprinkler system, a 5/8
inch or 3/4 inch meter would normally be adequate.
The City's current readiness to serve charge is a flat rate based
upon the size of the meter, with the rate increasing as the size
of the meter increases. As such, some customers may be paying a
higher readiness to serve charge based primarily on fire protection
rather than water service needs. Below is a chart showing the
three levels of readiness to serve charges currently in effect for
all customers:
Meter Size Readiness to Serve Charge
5/8 Inch $ 5.90 Monthly
3/4 Inch $ 8.85 Monthly
1 Inch $14 .75 Monthly
Concerns with the impact of this rate structure on some of our
customers have been recognized by staff and voiced by affected
customers as well as by the Council. Provided in Exhibit 4 is a
memorandum from the Fire Chief to the Director of Finance
summarizing this issue.
After reviewing several options, staff believes that the best way
of addressing this concern is to charge all single meter
residential (SMR) accounts the same readiness to serve charge
regardless of the meter size (up to the 1" level) . Since 70% of
our residential customers have 5/8" meters, it is recommended that
this become the base rate for this new service classification.
However, decreasing the readiness to serve charge on our current
SMR accounts with 3/4" and 1" meters will reduce Water Fund
revenues by approximately $155, 000 per year.
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i�IN11�IIIIVIIIIIIIIIIUI��IIIIIII city of San t 143) OBISPO
COUNCIL AGENDA REPORT
To compensate for this reduced revenue, a $ .15 increase per unit
of consumption (one hundred cubic feet) over 10 units (bimonthly)
would be required. Accordingly, the per unit price of $1. 20 for
the first ten units of consumption will remain the same, with the
per unit price of $2 .40 increasing to $2. 55 for consumption over
ten units. This modest increase will affect all water customers
with consumption over 10 units in a billing period.
The following is a summary of the monthly change in costs for
residential customers based upon using 22 units of water during a
standard billing cycle (which is 90% of the household average in
1987) at different meter size rates if this revised rate structure
is adopted:
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Meter Current Revised Increase
Size Rate Rate (Decreasel
5/8 inch $26. 30 $27. 20 $ . 90
3/4 inch $29. 25 $27.20 ($ 2 . 05)
1 inch $35. 15 $27. 20 ($ 7 . 95)
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This adjustment to the over 10 unit consumption commodity rate tier
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would have a modest impact on the average customer yet will provide
the necessary revenue to compensate for the reduction in readiness
to serve charges.
Impact of this Rate Change
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As discussed in the rate analysis above, no rate increases for
revenue purposes are required for 1992-93 . However, with this rate
structure change, some customers will see increases (or decreases)
in their billing, although total revenues will remain the same.
Effectively communicating this rate structure change in the general
context of "no rate increases" for 1992-93 will be difficult.
Alternatives for Single Meter Residential Accounts
■ Leave the Existing Rate Structure in Place. This alternative
would leave the Water Fund revenue structure as it currently
exists. This has the advantage of avoiding the communication
problems noted above, but does not address equity concerns.
Based on our goal of rate stability and customer
understanding, the Council may wish to defer making this kind
of change to the next rate review period.
■ Adjust All SMR Minimums to a "Composite" Rate. This
alternative would leave the commodity charges at the current
rate, but would average the $155, 000 revenue loss among all
SMR accounts, setting the monthly minimum charges for SMR
accounts at a composite level of $6. 60. The following is a
summary of the monthly change in costs based upon using 22
units of water at the different meter size rates under this
alternative:
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����►I�►�����IIIIIIIIIii ���lll city of san . ..s OBlspo
COUNCIL AGENDA REPORT
Meter Current Revised Increase
Size Rate Rate (Decrease)
5/8 inch $26.30 $27.00 $ .70
3/4 inch $29.25 $27.00 ($ 2.25)
1 inch $35. 15 $27.00 ($ 8. 15)
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This example shows that there is only a $ .20 difference
between changing the commodity rate or averaging the readiness
to serve charge at the 5/8" meter level. However,
consideration should be given to the fact that 6,400 customers
will be receiving the $ .70 increase and only 3 , 000 customers
will be receiving a decrease on their bills. By increasing
minimum charges for most of our residential customers while
leaving the existing commodity charge in place, this approach
is less supportive of water conservation than the recommended
rate structure. Conversely, increasing the commodity charge
for consumption over 10 units of. water as proposed will have
less of an affect on customers with low consumption and may i
encourage customers with higher consumption levels to become
more water conscious.
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More Fundamental Rate Structure Alternatives
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The rate structure alternatives presented above are intended to
only address the fire sprinkler oversizing concerns for SMR
accounts. However, there are a broad range of alternatives
available in designing a rate structure that will generate adequate
revenues. Possible alternatives to our existing rate structure
include less reliance on minimum charges (which currently account
for about 25% of water rate revenues) as well as additional
commodity rate tiers.
Although there are no "perfect" rate structures, staff believes
that our existing rate structure does a good job of balancing the
potentially conflicting objectives of generating adequate revenues,
providing rate stability, encouraging conservation, and being easy
for our customers to understand. Accordingly, no major changes in
our current rate structure are recommended at this time.
Rate Structure for Construction Sites
At the April 21, 1992 Council meeting, staff was directed to
consider ways of supplying limited amounts of potable water at
construction sites. Currently, water meters are not allowed to be
installed until foundation and rough plumbing work is completed due
to conservation restrictions. However, based on health and safety
concerns, the Council indicated their desire for limited amounts
of potable water to be available on site at the beginning of a
project. Accordingly, the following rate structure is proposed
which will achieve this goal:
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ll�l��i�►►►�u►�Illlill� �ll�lll city of San t�.,s osispo
COUNCIL AGENDA REPORT
■ Each construction account will receive a water allocation of
two units per billing period (approximately 25 gallons of
water per day) at a cost of $1.20 per unit plus the usual
readiness to serve charge based on meter size (or account
type) .
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■ Any water usage over the two unit allocation will be billed
at $150. 00 per unit.
For the average single meter residential account under
construction, this would result in a billing of $164. 20 if 3 units
of water were used compared with a billing of $15.40 under our i
standard rates.
The per unit charge for excess water over the two unit allocation
was calculated at a cost over and above that charged for tankered
non-potable water. Establishing the excess water rate over and
above tankered water charges discourages using the potable water
for any compaction or other site preparation work.
This guideline was developed after discussions with contractors on
the amount of potable water required for health and safety
purposes, and with joint concurrence among the Utilities, Community
Development, and Finance Departments. Because there is a limited
amount of computer programming and procedural changes required to
establish this new rate structure, implementation can occur
immediately.
SUMMARY
This report has addressed three distinct issues:
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■ Water Fund rate review. Details the assumptions and
projections for five fiscal years. This review indicates that
no rate increase is required for fiscal year 1992-93 , but
modest rate increases are projected for fiscal years 1993-94
through 1996-97 .
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■ Single meter residential rate review. Proposes that the
Council consider one readiness to serve charge for all single
metered residences. Implementing the proposed change will
decrease water Fund revenue by approximately $155, 000 per
year. This reduced revenue would be offset by a $ . 15
increase in the over 10 unit water consumption charge.
■ Rate structure for construction sites. Proposes a two unit
water allowance on a bi-monthly basis for health and safety
needs, which will be billed at the current charge of $1. 20 per
unit plus the readiness to serve charge. Additional units of
water will cost $150. 00 per unit. This high second-tier rate
is to ensure that potable water is not used for compaction or
any other site preparation work.
jI����ll city Of San L_.Os OBispO
fifflMME
maize COUNCIL AGENDA REPORT
ATTACHMENT
Resolution amending water service rates
EXHIBITS
1. Projected revenues, expenditures, and changes in financial
position for the Water Fund through 1996-97
2 . Assumptions for Water Fund projections
a. Summary of key revenue and expenditure assumptions
b. Summary of the Water Fund rate base
3 . Water rate fact sheet - June 1990
4 . Memorandum from the Fire Chief concerning single meter
residential accounts
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RESOLUTION NO. (1992 SERIES)
A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO
AMENDING WATER SERVICE RATES
WHEREAS, a comprehensive review of water system operating and
capital needs has been performed and reviewed by the Council; and
WHEREAS, based on this review the Council has determined that:
single metered residences should be charged the same readiness to
serve charge regardless of meter size; the commodity charge for
over ten units of water needs to be increased in order to offset
revenue shortfalls from this change in readiness to serve charges;
and meters should be set at construction sites under a new rate
structure; and
WHEREAS, it is the City's policy that water rates and charges
fully recover the operating and capital costs of the water system.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of
San Luis Obispo as follows:
SECTION 1. Chapter 4.20.060 of the Municipal Code (Rates for
service per bi-monthly billing cycle) is hereby amended as set
forth in Exhibit A attached hereto.
SECTION 2. The rates set forth in Exhibit A shall be
effective July 1, 1992.
SECTION 3. All other provisions of Chapter 4.20 remain in
full force and effect.
On motion of , seconded by
and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing Resolution was adopted on the day of
1992 .
Mayor Ron Dunin
ATTEST:
City Clerk Pam Voges
APPROVED:
City A inistrative Officer
U4 )j QO
t t ney
Director of Finance
Exhibit A
RATES FOR WATER SERVICE PER BIMONTHLY BILLING CYCLE '
Rates for water service per bimonthly billing cycle consist of
readiness to serve and commodity charges as follows:
A. Readiness to Serve Charges. Minimum charges on a bimonthly
basis shall be as. follows:
Bimonthly Minimum Charge
Meter Size Inside City Outside City
Single Meter Residential
5/8, 3/4, or 1 inch $11.84 $23 . 60
All Others
5/8 x 3/4 inch $11.80 $23 . 60
3/4 inch $17.70 $35. 40
1 inch $29. 50 $59 . 00
1 1/4 inch $47.20 $94 .40
1 1/2 inch $71. 00 $142. 00
2 inch $118. 00 $236. 00
3 inch $212. 00 $424. 00
4 inch $375.90 $751.80
6 inch $568. 30 $1, 136. 60
8 inch $896.20 $1,792.40
10 inch $1,136. 60 $2,273 .20
Greater than 10 inches to be determined by the Director of Finance
B. Commodity Charges. In addition to the bimonthly readiness to
serve charge, commodity charges per hundred cubic feet of water
consumed shall be as follows:
Commodity Charge
Water Usage Inside City Outside City
1. Construction Site Meters Only
0 to 2 ccf $1. 20 $2 .40
In excess of 2 ccf thereafter $150. 00 $300. 00
2 . All Other Accounts
0 to 10 ccf $1.20 $2.40
In excess of 10 ccf thereafter $2.55 $4 .95
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EAiblt-
Summary of the Water Fund Rate Base
The following is a summary of the Water Fund rate base. After determining water rate
revenue requirements (operating, capital, and debt service obligations less non—rate
revenues such as capital improvement charges and interest earnings) this model assists in
determining the rates necessary to meet water rate requirements under our existing rate
structure. It can also be used to project the impact of alternative rate structures in
generating the same amount of revenue.
This model was used in analyzing rates for 1992-93. Similar models were prepared for
fiscal years through 1996-97 based on the assumptions detailed in Exhibit 2(a).
Current Rate Projected
Rates Base Revenue
Minimum Charges By Meter Size
5/8 $11.80 7,714 546,200
3/4 17.70 2,500 265,500
1 29.50 1,062 188,000
11/2 71.00 305 129,900
2 118.00 321 227,300
3 212.00 16 20,400
4 375.90 44 99,200
6 568.30 13 44,300
8 896.20 6 32,300
10 1,136.60 2 13,600
Total Minimum Charges 11,983 1,566,700
Commodity Charges
Block 1 — 17,974 equivalent
units at 10 ccf allwance per
billing cycle 1.20 1,078,400 1,294,100
Block 2 — All other water
consumed 2.40 1,157,246 2,777,400
Total Commodity Charges 2,235,646 4,071,500
Total Revenues from
Water Rates $5.638200.
* Based on overall consumption at 70% of 1987 levels
Exhibit—
CITY OF SAN LUIS OBISPO FACT SHEET
WHY A WATER RATE INCREASE NOW?
Facts about our water system and the cost to maintain it
Wouldn't it be easier to explain water rate increases to residents if we
weren't currently in the middle of a drought?
Of course it wouldf
Wouldn't it be better to wait for the drought to end to invest in our water
system?
Definitely Not!'
The fact is, the majority of the monies raised through the rate increases
will be used to pump more water into the system now. Investment today
will secure our tomorrow - in both water quality and quantity. The time
is now.to invest in our water system and our future.
The City of San Luis Obispo has prepared the following Fact Sheet to
answer some of the most commonly asked questions about water rates
and our water system. If you would like additional information or have
questions, contact the Water Conservation Hotline at 549-7132.
IT ' S UPS TO US !
EVERY DRt- P COUNTS
SEE REVERSE FOR MORE INFORMATION
CITY OF SAN LL OBISPO FACT SHE; Exhibit—
Why is a rate increase necessary? How much more will this cost me?
Bringing dependable, quality water to our customers
costs more now than in the past. For example, Obviously, the cost will depend on how much water you
developing groundwater resources to bring water to our use. But our "average" residential customer will pay
community now will cost S3.6 million,and pumping this about $4.00 more per month — or about 13 cents more
water and delivering it will cost $500,000 annually. Our per day. Your total monthly cost for water will be
existing rates simply don't generate this level of funding. about $19.00 — or 63 cents per day for 200 gallons of
water delivered directly to your tap, a cost of 1/3 cent
per gallon.
But aren't revenues down because of
conservation? How does this compare to other utilities?
Yes, by about $700,000 annually. However, if this was Average monthly utility service costs range as follows:
our only financial need, we could address it through
existing resources, and a rate increase would not be Telephone S20 - S75
necessary. But the cost of constructing and operating Cable TV $20 - S40
new facilities to bring additional water to the Gas $25 - S70
community is far greater than existing resources, and Electricity $25 - S70
additional money is needed to fund these projects. City Water $15 - $25
Why can't we use other revenues? What are we doing to get more water?
The City has a long-standing policy — and a wise one, The City has already brought on an additional 2,000
of running the water operation on a businesslike basis, acre feet per year of new groundwater sources. Plans
with revenues fully recovering costs. Under this policy, are underway to increase this to a minimum of 3,000
all water revenues are used only for water purposes. acre feet by the end of 1990. Studies are currently
The City does not use its "General Fund" revenues such underway to determine how long we can pump
as sales and property tax revenues for water because groundwater at this rate, but we are confident that
these revenues are needed for essential municipal adequate reserves are available through the drought.
services that have no other source of funding.
Longer term, the City is evaluating a number of water
supply options, including expanding the capacity of the
Doesn't this mean.we're paying more for less? Salinas Reservoir, increasing the run-off into the Whale
Rock Reservoir, developing the use of sea water
It's easy to understand why our customers would believe through the process of "Desalinization", utilization of
this. But unfortunately, it simply costs more to produce water from Naciemento Reservoir, and the state water
and deliver the water we're providing today. project.
Until very recently, the City relied solely on local
reservoirs as its source of water. The Salinas Reservoir, Will water rates come down after the drought
the City's primary source of water, was donated to the is over9
community at no cost by the Federal Government in
the 1940's. The Whale Rock Reservoir was constructed Building and operating the facilities necessary to bring
in the late 1950's, at 50's construction costs and 50's dependable, quality water to our community will require
interest rates. Unfortunately, new water supplies new, ongoing financial commitments. Although the
secured in the 90's will be paid for and operated at new rate increase will give us a good basis for the
1990's prices, and this will require new revenues to future, modest increases can be anticipated over time
finance them. to continue this commitment.
U��7
MEMORANDUM Exhibit_
TO: Bill Statler, Finance Department
FROM: Bob Neumann, Fire Chief
DATE: May 12, 1992
SUBJECT: Fire Sprinkler Systems in Single-Family Residences
As you know, the City has a sprinkler ordinance which requires all new residences built within the
City to be equipped with a fire-sprinkler system. These systems require a larger water meter than
would normally be needed for domestic use. A 5/8" or 3/4" meter would normally be adequate in a
residence. Because of the sprinkler system, a 1" meter is usually required.
On a monthly basis, a 1" meter costs about three times as much as a 5/8" meter and almost twice as
much as a 3/4" meter. At the time the monthly meter rates were established they were based on
water usage; fire-flow was never a consideration in the past.
An inequity exists for the homeowners who would normally need only a 3/4" meter but, because of
the sprinkler requirement, must pay the higher rate of the 1" meter.
Council has directed Staff to investigate this inequity. Therefore, we are requesting a rate change
that would not penalize those homeowners who are contributing to a reduction of fire protection
costs in the City through the ownership of a fire-sprinkler system.
The Fire Department has provided Utilities with a list of the residences in the City that currently
have sprinkler systems installed.
If you have any further questions concerning this issue, please contact me or Fire Marshal Ken
McCool. Thanks.
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