HomeMy WebLinkAbout06/14/2011, PH 1 - 2011 SEWER FUND REVIEW AND 2011-13 SEWER RATE ADOPTION council M.-timD� June 14,2011
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CITY O F SAN LUIS O B I S P O
FROM: Carrie Mattingly, Utilities Directore�
Prepared By: Kathe Bishop, Senior Administrative Analyst 1b
SUBJECT: 2011 SEWER FUND REVIEW AND 2011-13 SEWER RATE ADOPTION
RECOMMENDATIONS
1. Review and accept the 2011 annual sewer fund financial review, and;
2. Adopt a resolution increasing sewer service charges by seven percent (7%) effective July 1,
2011 and six percent (6%) effective July 1, 2012 provided there is not a majority protest
against such increases.
3. Conceptually approve the Sewer Fund budget for 2011-13, with final action on June 21, 2011
with adoption of the 2011-13 Financial Plan.
REPORT IN BRIEF
This report presents the annual review of the Sewer Fund. The outcome of the 2011 Sewer Fund
Analysis confirms the revenue forecast as presented in the 2010 Sewer Fund Analysis. 2010-11
revenues were budgeted at $13.4 million. At year-end revenues are projected to slightly exceed
budget at $13.54 million (up by 1%). Projected revenues for the 2011-13 Financial Plan and
forecast are on-target or slightly above revenue projections made in the.2010 Analysis.
The Sewer Fund is in a healthy financial position. Based on the 2011 Analysis and the
Preliminary 2011-13 Financial Plan, the Sewer Fund is positioned to invest $8.1 million in the
community's wastewater system infrastructure and capital assets over the next two years. The
City's wastewater services programs are positioned to continue to deliver safe and reliable
wastewater services to the community, within the proposed sewer service rate changes in 2011-
13 as previously forecasted in the 2009 and 2010 sewer fund analyses presented to the City
Council over the past two years.
DISCUSSION
Within the 2011 Sewer Fund Analysis (Attachment 1), which forecasts the financial position of
the Sewer Fund through 2016-17,the City is able to:
1. Meet the 2010-11 sewer revenue target of$13.4 million, as projected in the 2010 Sewer Fund
Analysis, with total sewer revenues at 2010-11 year-end projected at $13.54 million (up by
1%);
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2011 Sewer Fund Review and 2011-13 Sewer Rate Adoption Page 2
2. Maintain an ongoing level of capital improvement projects to maintain the community's
wastewater infrastructure assets, including an $8.1 million capital investment over the two
year 2011-13 Financial Plan;
3. Maintain and improve the financial position of the Sewer Fund, by retiring long-term debt
service obligations that will be met with-final payments in September 2011 (about $250,000)
and August 2012 (about$1.9 million);
4. Maintain a healthy working capital balance and revenue plan to further position the Sewer
Fund to secure favorable financing terms for the forecasted $64.3 million Water Reclamation
Facility Upgrade project, with project design beginning in 2012-13 and construction planned
for 2014-15, and;
5. Continue to deliver safe and reliable wastewater services to the community with proposed
sewer service rate changes in 2011-13 that are the same as previously forecasted in the 2009
and 2010 sewer fund analyses presented to the City Council over the past two years.
2011 Sewer Fund Analysis Report
The 2011 Sewer Fund Analysis report, including the details of the process, changes in financial
position, assumptions used to complete the analysis, and an update on major activities and
programs is attached. The 2011 Analysis takes into consideration current economic conditions,
proposes significant operating program changes including budget reductions and projected cost
increases that result in a net operating program change increase of $39,000 in 2011-12 and
$32,800 in 2012-13. With proposed operating budget changes, the total wastewater operating
expenditure budget for Public Utilities is approximately $6 million in 2011-12 and $6.1 million
in 2012-13. A summary of the wastewater operating programs is displayed in Attachment 1 on
page 3.
In the 2011 Sewer Fund Analysis, the proposed sewer fund capital plan includes an $8.1 million
investment in the community's wastewater system infrastructure and capital assets over the next
two years, including about $3.7 million in 2011-12 and about $4.1 million in 2012-13. The
proposed capital plan budget is on-target with the 2010 Sewer Fund Analysis and capital
forecast, which projected an $8.2 million capital investment in the wastewater system for 2011-
13.
The proposed sewer rate changes for 2011-12 and 2012-13 are the same rates that were
previously forecasted in the 2009 and 2010 sewer fund analyses. Sewer rate increases for the
average residential sewer customer, assuming a six (6) unit sewer cap, include increases of$3.52
monthly in 2011-12 and an additional $3.18 monthly in 2012-13.
2011-13 Financial Plan
Operating Program Changes
The proposed significant operating program changes, including reductions and increases, are
summarized in Attachment 1 on page 4. The wastewater services operating program reductions
total $62,000 in 2011-12. In 2012-13, $30,000 in reductions that are ongoing in nature as
opposed to one-time"stop gap"measures are identified.
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2011 Sewer Fund Review and 2011-13 Sewer Rate Adoption Page 3
Projected wastewater services operating program cost increases total $101,000 in 2011-12,
including $83,000 in one-time expenses. The remaining $18,000 is based on a cost increase for
biosolids composting that is driven by the increase in diesel fuel costs. Additional ongoing cost
increases are projected to begin in year two of the financial plan (including biosolids composting
and projected cost increases for electrical utility services and chemicals) for a total increase of
$62,800 in 2012-13. When considering the operating program reductions and increases together,
the net wastewater operating program changes include increased costs of $39,000 in 2011-12,
with ongoing cost increases of$32,800 beginning in 2012-13. The proposed operating program
changes are incorporated in the Sewer Fund Change in Financial Condition (Exhibit A.1.) as
projected through 2016-17.
Capital Improvement Plan
The five-year capital forecast is displayed in Attachment 1 on page 5. The proposed 2011-13
Capital Improvement Plan includes a total of$3,711,500 in 2011-12 and $4,370,000 in 2012-13.
This is an $8.1 million investment in the community's wastewater system infrastructure and
capital assets over the next two years.
The $8.1 million, includes about $5.4 million (67%) in infrastructure replacements and
improvements in the wastewater collection system including the replacement of the Laguna
Sewer Lift Station, the Calle Joaquin Lift Station and sewer pipeline improvements on about
5,130 feet (almost a mile) of wastewater collection pipelines. In addition, about $2.7 million .
(33%) is proposed in the capital plan for the Water Reclamation Facility, including major
equipment replacements and improvements at the plant, replacement of energy cogeneration
equipment, and design services for the planned Water Reclamation Facility Upgrade project.
Detailed supporting documentation for each wastewater capital improvement plan request is
provided in Appendix B of the Preliminary 2011-13 Financial Plan,pages 3-77 to 3-114.
Community Engagement
On April 22, 2011, pursuant to the requirements of California Constitution Article XIII
(commonly referred to as Proposition 218), a Notice of Public Hearing (Attachment 2) was
mailed to all water and sewer customers informing them of the proposed rate increases for the
water and sewer funds 45 days in advance of the public hearing.
The Notice of Public Hearing included proposed sewer rate increases of 7% in 2011-12 and 6%
in 2012-13, which are the final recommended sewer rates for Council consideration. As outlined
in the Proposition 218 notice, the recommended rate increases will be discussed as a public
hearing item before the City Council on June 14, 2011, when the public will have an opportunity
to comment on the recommendations. Staff looks forward to Council and community input on
these issues.
The Utilities Department notified the public of the proposed rate increases and the associated
public hearing, utilizing a number of outreach methods including: Utilities Resource newsletter,
The Tribune, SLO City News, the City website and provided information and scripts to local
media outlets for community calendars and for public service announcements. In addition, the
Utilities Department held "Open House" hours from 5-7 pm, once weekly over a four week
period to meet with community members in an informal setting to provide educational
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2011 Sewer Fund Review and 2011-13 Sewer Rate Adoption Page 4
information about the City's water and wastewater services and proposed rate changes, and to
assist with specific information to answer individual questions.
Sewer Service Charges
The sewer rate structure includes two components, a minimum base charge and a service charge
based on the volume of water used. For residential customers, a"sewer cap" is established based
on the individual customer's three-month average of winter water use, when little or no irrigation
should occur, to establish the individual customer's year-round demand on the wastewater
system. The following table displays a summary of the current and proposed sewer rates. Exhibit
A of Attachment 3 provides a detailed list of the proposed rates for 2011-12 and 2012-13.
Current and Noposed Sewer Service Rates
Account Type Current Proposed Proposed
July 1,2011 July 1,2012
Monthly Sewer Rates: Residential Customers
Single family dwelling, Minimum charge:$6.55 Minimum charge:$7.01 Minimum charge:$7.43
including single meter per dwelling unit per dwelling unit per dwelling unit
condominiums and
townhouses Volume charge per Volume charge per Volume charge per
unit:$7.22 unit:$7.73 unit:$8.19
Total monthly fee Total monthly fee Total monthly fee
capped based on capped based on capped based on
average winter water average winter water average winter water
use(AWWU) use(AWWU) use(AWWU)
Master-metered multifamily Minimum charge:$6.55 Minimum charge:$7.01 Minimum charge:$7.43
dwellings in any duplex, per account per account per account
apartment house or rooming
house Volume charge per Volume charge per Volume charge per
unit:$7.22 unit:$7.73 unit:$8.19
Mobile home or trailer park
Accounts without Accounts without Accounts without
separate irrigation separate irrigation separate irrigation
meter: Total monthly meter: Total monthly meter: Total monthly
fee capped based on fee capped based on fee capped based on
AWWU AWWU AWWU
Accounts with a Accounts with a Accounts with a
separate irrigation separate irrigation separate irrigation
meter: No cap meter: No cap meter: No cap
Monthly Sewer Rates: Non:Residential Customers
Public,private,or parochial $5.85 per ADA $6.26 per ADA $6.64 per ADA
school,average daily attendance
(ADA)at the school
All Other Accounts Minimum charge:$6.55 Minimum charge:$7.01 Minimum charge:$7.43
per account per account per account
Volume charge per Volume charge per Volume charge per
unit:$7.22 unit:$7.73 unit:$8.19
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2011 Sewer Fund Review and 2011-13 Sewer Rate Adoption Page 5
2010-11 Winter Water Use Analysis and 2011-12 Residential Sewer Cap
The 2011 sewer rate analysis included a review of all 14,700 accounts using the most recent 12-
month period (ending March 2011), including monthly usage data and billed dollar amounts. The
winter water use sewer caps established in December 2010, and January and February 2011, are
implemented during the first full service period after July 1, 2011, thereby "capping" billable
units and associated sewer revenues. The volume/use data is analyzed to evaluate revenue
stability in the current fiscal year, to forecast usage, and to test the previously forecasted sewer
rates against the current usage trends. Sewer caps for 2011-12 are used to validate or revise the
2011-12 revenue projections.
Based on the 2010-11 winter water use, the City's average single family residential (SFR) sewer
cap is 6-units for 2011-12. For comparison purposes, the average SFR sewer cap was 6-units in
2010-11, 7-units in 2009-10 and 2008-09. In 2007-08, with implementation of the residential
volume based sewer rate structure,the average SFR sewer cap was 8-units.
Fiscal Impact on the Average Residential Customer Bill
The proposed sewer rate increases for 2011-12 and 2012-13 are the same rates as previously
forecasted in the 2009 and 2010 sewer fund analyses. The table below displays the current and
proposed sewer rates for the average residential customer, assuming an average winter water use
(AWWU) "sewer cap" of six (6) units monthly. The following illustrates the changes to the
monthly bill with the proposed sewer rate increases. The fiscal impact to the average residential
customer is $3.52 monthly in 2011-12 and an additional $3.18 monthly in 2012-13.
Average Residential Sewer Customer Monthly Bill Sample
Assuming An Average Winter Water Use"Sewer Cap"of Six(6)Units
Fiscal Year: 2010-11 2011-121 2012-131
Fiscal Year: Charges Rates Charges Rates Charges
Base Charge: $6.55 $7.01 $7.01 $7.43 $7.43
Volume Charge 2: 43.32 $7.73/unit 2 46.38 $8.19/unit 2 49.14
Total 1 $49.87 1 $53.39 $56.57
1 Sewer rate increases for the average residential customer are$3.52 monthly in 2011-12,plus$3.18 monthly in 2012-13.
Z Volume charge is per unit. 1 Unit=748 Gallons
Sewer Rate Protests
Under Proposition 218, customers directly responsible for the payment of the fee subject to the
proposed rate increase may submit a written protest against the proposed rate increases. The
protest must be in writing, received by the City Clerk at or before the public hearing on June 14,
2011, identify what is being protested, and contain the service address for the water and/or sewer
service account. The party signing the protest must be listed on the account as the person
responsible for payment of the water and sewer bill, and/or the property owner. In the event that a
protest is submitted by the property owner and also by the tenant responsible for payment of the
bill, then one valid protest is counted for the account.
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2011 Sewer Fund Review and 2011-13 Sewer Rate Adoption Page 6
If written protests are filed by a majority, the applicable proposed rate may not be imposed. The
City serves approximately 14,700 water and sewer customers, with Proposition 218 requiring a
majority protest (about 7,351) to stop a sewer rate change from moving forward. As of May 25,
2011, a total of 118 written protests were received by the Office of the City Clerk. Of the 118
written protests received, 106 protests are valid as summarized below. The City Clerk will
provide an updated summary of the protests received at the June 14, 2011 City Council meeting.
Proposition 218 Written Protests as of May 25, 2011
Proposed Fee Chane Protests Submitted Number of Valid Protests
Sewer Rate Increases 118 106
FISCAL IMPACT
The recommended general purpose sewer rate increases of seven percent (7%) effective July 1,
2011 and six percent (6%) effective July 1, 2012, are the same rates as previously forecasted in
the 2009 and 2010 sewer fund analyses. The outcome of the 2011 Sewer Fund Analysis confirms
the revenue forecast as presented in the 2010 Sewer Fund Analysis. Revenues are currently
projected to meet or slightly exceed the 2010-11 sewer revenue target of$13.4 million, with total
sewer revenues at 2010-11 year-end currently estimated at $13.54 million (up by 1%), and
projected revenues for 2011-13 and the forecast on-target or slightly above revenue projections in
the 2010 Analysis.
The recommended sewer rate increases will allow the City to fund the operating and capital
needs of the City's wastewater system as presented to Council on June 14, 2011 during a public
hearing on the annual sewer fund review.
ATTACHMENTS
1. 2011 Sewer Fund Analysis
Exhibit A — Updated Financial Schedules
A.1. Changes in Financial Position
A.2. Assumptions for Fund Projections
A.3. Capital Improvement Plan
2. Proposition 218 Notice of Public Hearing
3. Resolution Establishing Sewer Service Rates for 2011-13
AVAILABLE FOR REVIEW IN THE COUNCIL OFFICE
2011 Sewer Fund long-term financial forecast thru 2020-21
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ATTACHMENT I
2011 Sewer Fund Analysis
June 14, 2011
Prepared by the
Utilities Department
city of san tui s oB, spo
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Attachment 1 '
Page 2
city o� san Luis osispo
2011 Sewer Fund
TABLE OF CONTENTS
I. OVERVIEW
II. 2011-13 FINANCIAL PLAN
A. Summary of Operating Programs
B. Operating Program Reductions
C. Operating Program Increases
D. Capital Improvement Plan
III. SEWER RATE SETTING
A. Sewer Rate Structure
B. Proposed Sewer Rate Changes
IV. ASSUMPTIONS
A. Revenues
B. Expenses
C. Debt Service
V. MAJOR ACTIVITIES AND PROGRAMS
A. 2010-11 Update
B. 2011-12 and Forecast
EXHIBIT A—FINANCIAL SCHEDULES
A.1 Changes in Financial Position
A.2 Assumptions for Fund Projections
A.3 Capital Improvement Plan
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Attachment I
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city Of
son LUIS OBISPO
2011 Sewer Fund Analysis
I. OVERVIEW
This report presents the financial condition of the Sewer Fund, based on the 2011-13 Financial
Plan operating and capital programs,taking into consideration current economic conditions while
addressing the identified needs in the Wastewater Master Plan, the Water Reclamation Facility
Master Plan, regulatory requirements, infrastructure maintenance, Major City Goals, and adopted
City financial policies.
II. 2011-13 FINANCIAL PLAN
Wastewater Division operating programs are summarized in Table A. The summary of operating
programs reflects the net operating program budget amounts for 2011-13, which includes the
proposed operating budget reductions and increases, as further discussed in this report and
displayed in Table B and Table C on the following page.
A. Summary of Operating Programs
Includes Operating Program Reductions and Increases 2011-12 2012-13
BUDGET BUDGET
Wastewater Collection 1,103,100 1,081,600
Pretreatment 235,300 239,600
Water Reclamation Facility 3,235,700 3,302,100
Water Quality Laboratory 476,800 482,100
Wastewater AilministratiomEngineering 505,400 503,100
Wastewater Franchise Fees 489,700 522,800
TOTAL WASTEWATER SERVICES OPERATING PROGRAMS 6,046,000 6,131,300
(')Wastewater Collection program includes funding for 50%of the Water Customer Service progran
The 2011-13 two-year financial plan development process included identifying operating cost
reduction options to further tighten the ongoing operating program budgets for wastewater
services, in an effort to recommend the lowest responsible budget and associated sewer charges,
while ensuring safe and reliable wastewater services to the community. Operating budget
reductions were identified in the wastewater programs resulting in both one-time and ongoing
cost savings with minimal service impacts to wastewater customers and the community.
As outlined in Table B, the significant operating program change reductions ($5,000 or greater)
for wastewater services include a total savings of$62,000 in 2011-12 which includes $32,000 in
one-time savings and $30,000 in ongoing savings, resulting in a savings of$30,000 in 2012-13
that is ongoing in nature.
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Attachment 1
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As displayed in Table C, significant operating program change increases are necessary to
continue to meet the operational requirements to provide safe and reliable wastewater services
for the community. Proposed significant operating program changes include a total increase of
$101,000 in 2011-12. The increase includes $83,000 in one-time cost increases which are
directly related to equipment and building maintenance, and minor capital improvements to
wastewater system operations. The remaining $18,000 is based on a cost increase for biosolids
composting that is driven by the increase in diesel fuel costs. Diesel fuel is used in both the
transport (hauling) of biosolids and in the processing of biosolids into compost material. With
additional ongoing cost increases projected to begin in year two of the financial plan, including
biosolids composting and projected cost increases for electrical utility services and chemicals for
a total increase of$62,800 in 2012-13.
When considering the 2011-13 operating cost reductions and increases together, the net
wastewater operating program changes include increased costs of $39,000 in 2011-12, with
ongoing cost increases of$32,800 beginning in 2012-13. The net operating budget changes are
incorporated in the Sewer Fund Change in Financial Condition(Exhibit A.1).
B. Significant Operating Program Changes-Reductions
Appendix A of the Preliminary Financial Plan includes detailed supporting documents 2011-12 2012-13
SAVINGS SAVINGS
1. Reduction in Chlorine at the Water Reclamation Facility(WRF) 17,000 0
2. Reduction in Chemicals at the WRF 15,000 79000
3. Reduction in Laboratory Supplies and Materials 12,900 12,900
4. Reduction in Natural Gas Utility Service at the WRF 7,000 0
5. Reduction in Contract Laboratory Services 5,100 5,100
6. Reduction in Electric Utility Usage for Wastewater Collections 5,000 5,000
Wastewater Services Operating Program Cost Reductions 62,000 309000
C. Significant Operating Program Changes-Increases
2011-11 2012-13
BUDGET BUDGET
Wastewater Collection
Laguna Sewer Lift Station Pump Maintenance 46,000 0
Water Reclamation Facility
Plant Minor Capital Maintenance Projects 30,000 0
Biosolids Composting Contract 18,000 33,000
Electric Utility Service 0 20,800
Chemicals(Sodium Bisulfite) 0 9,000
Wastewater Administratdon/Engineering
Exterior Painting of 879 Morro Street Building(50°/u share) 7,000 0
Wastewater Services Operating Program Cost Increases 1019000 62,800
2011-13 Wastewater Services Net Operating Program Changes 1 39,000 32,800
Detailed supporting documents for each request is provided in Appendix A of the Preliminary 2011-13
Financial Plan,pages 25 to 28,and 41 to 57.
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Attachment 1
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Capital Improvement Plan requests are based on the Preliminary 2011-13 Financial Plan. Table
D displays the proposed five-year Capital Improvement Plan for wastewater services. The
proposed sewer fund capital plan includes a total of$3,711,500 in 2011-12 and $4,370,000 in
2012-13. The proposed capital plan is an $8.1 million investment in the community's wastewater
system infrastructure and capital assets over the next two years. This is on-target with the 2010
Analysis and capital forecast, which projected an$8.2 million capital investment for 2011-13.
D. Capital Improvement Plan
2011-12 2012-13 2013-14 2014-15 2015-16
BUDGET BUDGET PROPOSED PROPOSED PROPOSED
Wastewater Collection
Collection System Improvements 1,380,000 500,000 1,575,000 800,000 1,470,000
Infrastructure Replacement Strategy 200,000 100,000
Laguna Lift Station 1,200,000
Calle Joaquin Lift Station 500,000 1,500,000
Madonna Lift Station 100,000 500,000
Margarita Lift Station 100,000 500,000
Foothill Lift Station-Design 100,000
Fleet Particulate Matter Trap Retrofit 12,000
Fleet Replacement: 1/2 Ton Pickup 20,000
Fleet Replacement:Hydro-Cleaner 255,000
Equipment Replacement:Generator(50%share) 55,000
Fleet Replacement:CCTV Van 120,000
Water Reclamation Facility
Major Maintenance 310,000 370,000 575,000 320,000 505,000
Energy Cogeneration 100,000 400,000
Water Reclamation Facility Upgrade($64.3 M)
Design 1,500,000 2,000,000
Construction-Infrastructure 16,840,000
Construction-Nutrient Removal 39,460,000
Construction Management 4,500,000
Fleet Replacement:Mid-Size Pickup 15,000
Fleet Replacement:3/4 Ton Service Bed Truck 25,000
Total Wastewater Services CIP 3,702,000 4,370,000 4,525,000 62,615,000 2,695,000
Shared City Information Technology
Office Application Software Replace(4%share) 7,600
City Website Upgrade(4%share) 1,900
Network Firewalls 8,500
Virtual Private Network(VPN)Appliances 6,500
Web Filter,Network Security Upgrades 5,500
Network Equipment Replacement 33,500
Total Share of Technology CIP 9,500 0 20,500 33,500 0
TOTAL SEWER FUND CAPITAL PLAN 3,711,500 1 4,370,000 1 4,545,500 62,648,500 2,695,000
Detailed supporting documents are provided in Appendix B of the Preliminary 2011-13 Financial Plan,pages 3-77 to 3-114.
Capital expenses are forecast based on infrastructure maintenance and repair history, individual
project budget estimates, regulatory requirements, and projected changes in community
demographics. Maintaining the wastewater system infrastructure, including major equipment
upgrades, ongoing treatment processes, technology, and long-term infrastructure upgrade and
replacement planning is essential to providing safe and reliable wastewater services for the
community.
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Attachment I
Paget '
III. SEWER RATE SETTING -
A. Sewer Rate Structure
Current policies to guide rate structure setting:
■ Comply with legal requirements
■ Encourage conservation
■ Ensure revenue adequacy to fully meet system operating and capital needs
• Provide equity and fairness between customers
• Be easy to understand and administer
■ Facilitate ongoing review to maintain rate stability
The City Council approved the residential volume-based sewer rate structure effective July 1,
2007 delivering a sewer rate structure with a base fee and volume charge to reflect the individual
customer's usage and associated sewer charges. The volume-based sewer rate structure- =
encourages efficient water use and achieves fairness and equity among residential customer
classes —customers with low use pay less and customers with higher usage pay more. Prior to
2007, the single family residential sewer rate structure was a fixed charge which did not reflect
the individual customer's water use and associated demand placed on the wastewater system.
With the residential volume-based sewer rate structure, the individual customer's metered water
use during the winter months of December, January, and February has been determined to be
most reflective of the demand placed on the wastewater system for sewer charges. The water use
during the winter months, when outdoor irrigation should be turned down or off, is averaged to
establish a "sewer cap". Residential sewer caps are implemented with the first full sewer service
period after July I St. Sewer charges are based on actual water usage up to the customer's sewer
cap.
The number of active water and sewer customers (accounts) changes daily with service turn-on
and turn-offs due to move-in and move-outs. A large volume of account changes directly
correlate with the academic schedules at the University and Cuesta College.
When a new customer account is activated, single family residential (SFR) accounts start with an
8-unit sewer cap and multi-family residential (MFR) accounts start with a 6-unit sewer cap until.
the customer establishes their individual sewer cap based on their average winter water use, as
established in the winter months of December, January, and February. For new accounts the
initial 8-unit sewer cap for SFR and 6-unit sewer cap for MFR is based on the customer class
average established during the first winter water use period when the City implemented the
volume-based sewer rate structure.
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The City's sewer rate structure includes a minimum base charge plus a volume fee based on the
volume of water used. The following table displays the sewer rate structure with the current
sewer rates.
2010-11 Monthly Sewer Charges
TYPE OF ACCOUNT Monthl Rates
Base Fee Volume Fee
Residential—minimum base charge+volume charge
Single family dwelling, including single meter condominiums and
townhouses, per dwelling unit. Total monthly fee capped based on $6.55 $7.22/per unit
Average Winter Water Use(AWWU)
Multi-family dwelling in any duplex,apartment house or rooming house,
per account. Accounts without separate irrigation meter: Total monthly fee $6.55 $7.22/per unit
capped based on Average Winter Water Use(AWWU). Account with
separate irrigation meter. No cap
Mobile home or trailer park,per account. Accounts without separate
irrigation meter: Total monthly fee capped based on Average Winter Water $6.55 $7.22/per unit
Use(AWWU). Account with separate irrigation meter: No cap
Non-Residential—minimum base charge+volume charge
All non-residential accounts, per account $6.55 $7.22/per unit
Schools
Public or private school, based on per average daily attendance(ADA)at N/A $5.85/ADA
the school
Each Vehicle Discharging into the City Sewer System $10.26
Minimum base fee includes 1,500 gallons discharge. Volume fee per 100 $170.43 per 100
gallons in excess of initial 1,500 gallons discharged gallons
AWWU as established for December,January and February. 1 Unit=748 Gallons
B. Proposed Sewer Rate Changes
The proposed sewer rate increases for 2011-12 and 2012-13 are the same rates as previously
forecasted in the 2009 and 2010 sewer fund analyses presented to the City Council over the past
two years. The table below displays the current and proposed sewer rates for the average
residential customer, assuming an average winter water use (AVVWU) "sewer cap" of six (6)
units monthly. The following illustrates the changes to the monthly bill with the proposed rate
increases.
Average Residential Sewer Customer Monthly Bill Sample
Assuming An Average Winter Water Use"Sewer Cap"of Six(6)Units
Fiscal Year: 2010-11 2011-12' 2012-131
Fiscal Year: Charges Rates Charges Rates Charges
Base Charge: $6.55 $7.01 $7.01 $7.43 $7.43
Volume Charge Z: 43.32 $7.73/unit Z 46.38 $8.19/unit Z 49.14
Total $49.87 $53.39 $56.57
' Sewer rate increases for the average residential customer are$3.52 monthly in 2011-12,plus$3.18 monthly in 2012-13.
Z Volume charge is per unit. I Unit=748 Gallons
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Attachment I
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IV. ASSUMPTIONS
The following provides more detail for the key assumptions in Exhibit A.1. and A.2. to this
report. The financial schedules include the Sewer Fund changes in financial position and
assumptions for the Sewer Fund projections included in the Analysis.
A. Revenues
1. Revenue projections for sewer service charges are based on a sewer rate analysis
that includes a review of all 14,700 sewer accounts using the most recent 12-month
period (ending March 2011), including monthly usage and billed amounts. The total
monthly usage and billed amounts are compared against actual revenues received
for the same period. The data sets are pulled from the City's utility billing software
program at the end of the winter water use period, to capture the most recent usage. .
trends by customer account type and the average winter water usage established by
individual residential accounts. Historical data for all customer types and the=
established winter water sewer caps for residential accounts to be implemented in
July are analyzed to evaluate revenue stability in the current fiscal year, to forecast
usage, and to test the previously forecasted sewer rates for revenue adequacy in the
rate setting process.
2. Revenue projections for Cal Poly sewer service charges are based on effluent flow
trends and the 2007 Agreement between the City and the University. This
agreement, covering the period beginning July 1, 2007 and extending through June
30, 2012, set the proportion (82%) of the non-residential rate the University pays to
account for the University's difference from other customers (prepaid capital share
in the wastewater system). Utilities staff and University staff will enter into
discussions in summer 2011 to negotiate and develop the 2012 Agreement between
the City and the University. Utilities staff develops the proposed sewer rate
methodology which reviews five years of financial data to determine the
University's appropriate ratio of the adopted sewer rates.
3. Development impact fee collection is calculated according to the actual 2009-10
base year revenues and adjusted by projected inflation based on consumer price
index (CPI) and growth. Current assumptions, which are intended to be
conservative, include no significant growth in 2011-13, with CPI projected at 1.5%
in 2011-12 and 1.8% in 2012-13 to be applied to the current development impact
fee amount effective July 1 st of each year, respectively.
Annually, this calculation is evaluated and proportionately adjusted due to changes
in growth as well as development occurring under maps vested prior to current
impact fee establishment. Development in those areas pay those fees in place at the
time of approval plus an annual adjustment based on the consumer price index. For
2010-11 sewer development impact fee revenues are projected at $149,400, which
is 51% ($50,700) greater than the prior year actual of $98,700 in 2009-10. The
increase in 2010-11 includes impact fees from development activity, including
commercial developments in the Los Osos Valley Road and Calle Joaquin areas.
Sewer development impact fee revenues for 2011-12 are projected at $102,900.
PRI
Attachment.1.
Page 9+ -.
B. Expenses
Operating and Maintenance Expenses
Total operating and maintenance costs for 2011-13 are based on the proposed 2011-13
Financial Plan. Forecasted operating and maintenance costs assume an inflationary rate of .
2% for non-staffing (1.5% for staffing) in 2013-14, with 2.5% for non-staffing (2% for
staffing) in 2014-15, and 2.5% for both staffing and non-staffing in 2015-16.
The most significant non-staffing operating costs for wastewater services are for: (1)
chemicals for wastewater treatment; (2) electric utility services for wastewater collection
and treatment processing, and; (3) sewer franchise fees paid to the general fund. In the
two-year 2011-13 Financial Plan when annualized, chemical costs are projected at over
$600,000 annually, electric utility services at over $550,000 annually, and sewer
franchise fees paid to the general fund at almost$500,000 annually.
1. Chemicals go out to bid on an annual basis. Annual chemical contracts are from
February 1 st through January 31 st. This analysis assumes the February 2011 chemical
contract amounts in 2011-12, with a projected 5% increase in chemical costs in 2012=
13. In addition, treatment processes are evaluated, and the dosage amounts for
chemicals are calculated. Based on projected chemical product costs and the
measured chemical quantity, projected costs are calculated for budget development
purposes.
2. Electric utility rate assumptions, as provided by PG&E, include a rate increase of
3.6% in 2011-12 and 4.0% in 2012-13 for commercial and industrial accounts. In
addition, Utilities staff conducted a detailed analysis of recent electrical usage trends
for wastewater services. The outcome from this analysis resulted in an electrical
budget reduction in wastewater collection annually in 2011-13 due to increased
energy efficiencies. The Water Reclamation Facility (WRF) electric budget remains
level in 2011-12 (compared to 2010-11 and when considering a 3.6% rate increase)
based on current wastewater treatment process and flow levels, with a 4% budget
increase in 2012-13 at the WRF due to the projected PG&E rate increase. A team of
WRF staff are currently working with PG&E engineers, and together have conducted
energy audits at the plant identifying potential approaches to implementing energy
savings at the WRF. At this time, the energy savings options are being further
discussed, evaluated, and calculated for energy savings over time, acquisition and
implementation costs, lifecycle, financing mechanisms, return on investment, and,
overall viability.
3. Sewer franchise fees are calculated based on 3.5% of audited gross revenues from the
previous year, excluding investment and property revenues, other revenues, and bond .
proceeds. Public Utilities Code Sections 6001 et seq. and 6201 et seq.; and Section .
39732 of the Government Code, provides cities with the authority to impose fees ori
privately owned utility companies and other businesses for the privilege of using the
City's infrastructure in the course of daily business. Given that the City's sewer pipes
and wastewater services are within the City's streets (infrastructure) to collect
wastewater, a franchise tax is charged to the sewer fund and payable to the general
fund. The 3.5% rate of gross revenues was changed July 1, 2003 from 2%to 3.5%.
PH1-15
i
I I
Attachment 1
Page 10
Capital Improvement Plan Project Expenses
Project budget estimates, in the capital plan forecast, include inflationary adjustments. .
assuming a moderate increase in material costs over time (e.g., price per foot of pipe).
During the past three years, with the downturn in the construction industry, the
construction bidding climate has remained competitive. Based on many factors, but
particularly with changes in oil prices, this year (2011) the City is beginning to see .
increased costs for construction-related materials. For 2011, on the whole, oil prices are
expected to be higher than 2010 levels. Higher oil prices result in increased costs for
petroleum-based products that are used in construction related materials (pipe, asphalt,
cement, plastics, synthetic rubber, solvents, lubricating oils, etc.) and transportation fuels
such as gasoline and diesel used in vehicles, construction related equipment, and the
transport (freight) of construction materials. In addition, metal prices are steadily
increasing including copper, nickel, aluminum, and other metals used in construction
materials and equipment.
Key assumptions for capital projects are that the actual cost of completing any particular
project will vary from the preliminary "budgetary" cost estimate. While cost estimates
are intended as a budgetary guide, it is anticipated that all of the projects listed for each
year will be completed.
C. Debt Service Payments
1. Debt service payment to repay the State Revolving Loan Funds received by the City
for the collection system improvement ("Relief Sewer Main") and for construction
of the Unit 3 and 4 improvements to the Water Reclamation Facility is $2,135,600
in 2011-12. This includes the collection system improvement final debt service
payment ($249,800) in September 2011. The final debt service payment for
construction of Unit 3 and 4 improvements to the Water Reclamation Facility is
$1,885,800 in 2012-13 and scheduled for August 2012, when the State Revolving
Loan debt obligation will be retired!
2. Debt service for the Sewer Fund's proportionate share of the energy conservation
projects is $283,300 annually in 2011-13, with the final debt payment in 2012-13.
3. Debt service for the Sewer Fund's proportionate share of the City's Public Safety
Communications Center is $32,900 in 2011-12 and $32,700 in 2012-13. In addition,
the Sewer Fund's share of the Public Safety Radio System Upgrade is $43,200 in
2011-12 and $42,800 in 2012-13. When combined, the Sewer Fund's share is
$76,100 in 2011-12 and $75,500 in 2012-13.
4. Debt service for the Tank Farm Gravity Sewer, Lift Station, and Force Main project
financed by the California Infrastructure and Economic Development Bank
revolving fund loan is $562,700 in 2011-12 and$561,900 in 2012-13.
5. Debt service for the Tank Farm Gravity Sewer, Lift Station, and Force Main project
portion financed through the SunTrust private placement is $187,500 in 2011-12 .
and $187,900 in 2012-13.
PHI-16
Attachment 1
Page-11:
6. Debt service is currently projected at $4,234,900 annually beginning in 2014-15 for
the Water Reclamation Facility (WRF) Upgrade, based on total project costs
currently estimated at $64.8 million including $500,000 previously allocated for the
study phase. Of the $64.3 million identified in capital plan, the Analysis assumes
$56.3 million to be financed over a 20-year term, with a total of$8 million in pay-
as-you-go financing.
V. MAJOR ACTIVITIES AND PROGRAMS
A. 2010-11 Update
1. Regulatory Requirements
City and Regional Water Quality Control Board staff continue to work together to
resolve the Municipal and Domestic (MUN) beneficial use designation for San Luis
Obispo Creek. The MUN designation is a driver of significant treatment costs for
the Water Reclamation Facility (WRF). The City has been addressing the MUN
designation for San Luis Obispo Creek for some time and in May the Regional
Water Quality Control Board (RWQCB) agreed to continue that process. Staff plans
to return to the RWQCB late this year or early 2012 to receive policy direction from
the Board on the dedesignation issue.
2. Water Reclamation Facility Master Plan
The WRF Master Plan was completed and presented to Council in May 2011. The
plan will provide a guide to assist the City in planning for future needs to
accommodate growth, the replacement of aged infrastructure, and possible
treatment upgrades. The Master Plan now includes the disinfection modification
project previously identified separately in past financial plans due to recent
regulatory actions deferring the trihalomethane (THM) compliance deadline.
3. Infiltration and Inflow Reduction Study
The wastewater collection system flow monitoring and Infiltration and Inflow (I/I)
Reduction Study will be completed in early summer 2011. This study was approved
in the 2009-11 Financial Plan, including $150,000 in flow monitoring services.
Study results will allow Utilities staff to better evaluate and quantify infiltration and
inflow in the collection system and determine cost effective methods and strategies
to reduce infiltration and inflow.
4. Voluntary Lateral Rehabilitation Program
The lateral program will not be funded this coming fiscal year. When the results of
the wastewater collection system flow study become available in summer 20111
Utilities staff will be able to further evaluate the effectiveness of the lateral program
and determine if it will be continued and/or modified to better align with the
Infiltration and Inflow(I/I) Reduction Study results and recommendations.
5. Sewerline Replacements at Railroad Crossings
Replacement of critical sewer lines under the Union Pacific Railroad will be under
construction in summer of 2011. The McMillan crossing project was completed in
December 2010 to meet the railroad's accelerated schedule for replacement of a
drainage culvert. This project came in under budget and ahead of schedule.
PH147
Attachment 1
Page 12
B. 2011-12 and Forecast
1. Laguna Lift Station
Design for Laguna Lift Station will begin this summer, with construction planned in
the spring of 2012. This project will replace the lift station only, and will continue
to utilize the existing force main and control building. Total project costs are
estimated at $1.2 million, including $200,000 for design and $1 million for
construction and related services with total project funding programmed in 2011-12.
2. Calle Joaquin Lift Station
This project had been replaced by the proposed Los Verdes Lift Station in the
Airport Area Master Plan Update as an alternative to replacing infrastructure under
San Luis Obispo Creek. The Los Verdes Lift Station was dependant upon
discharging to the proposed Buckley Lift Station that will now be deferred several
years based on the anticipated timing of development in the Airport Area. This
project will replace the need for the Los Verdes Lift Station by replacing the
existing Calle Joaquin station and utilize trenchless technology to replace the
infrastructure under San Luis Obispo Creek. Total project costs are estimated at $2
million, including $500,000 for design in 2011-12 and $1.5 million of construction
and related services in 2012-13.
3. Wastewater Collection System Infrastructure Replacement Strategy
The City's wastewater collection system is impacted by aging infrastructure that has
led to excessive maintenance, capacity issues, and inflow and infiltration of
stormwater. While considerable progress has been made over the last 20 years,
significant issues still remain. This study will analyze the recent Inflow and
Infiltration Reduction Study findings, collection system maintenance records,
infrastructure assets, and short and long range planning documents to provide a
strategy and guide for the most effective and efficient replacement and upgrade of
the wastewater collection system. Total funding requested for this study is
$300,000, including $200,000 in 2011-12 and $100,000 in 2012-13, as identified in
the 2011-13 Financial Plan.
4. Energy Cogeneration at the Water Reclamation Facility
Replacement of the out of service micro turbine cogeneration facility will allow the.
City to resume generation of electricity from the methane gas produced at the Water
Reclamation Facility. This replacement project will provide a more reliable and
efficient system that requires lower maintenance and operation hours. The capital
plan includes a total of$500,000 for this project, including $100,000 for design in
2011-12 and $400,000 for construction in 2012-13. Presently, Utilities staff and
PG&E are evaluating wastewater processes to determine the viability of energy
savings projects and possible financing. If cogeneration at the Water Reclamation
Facility is identified as a project, a portion or this entire funding request may not be
expended.
Attachment 1
Page 13
5. Water Reclamation Facility Upgrade
Design for the upgrade of the Water Reclamation Facility is assumed for 2012 to
ensure compliance with specific discharge requirements by 2015. City staff is
continuing discussions with State regulators to determine if current deadlines may
be extended to better align with the City's ongoing efforts for the MUN
dedesignation of San Luis Obispo Creek. Staff will continue to monitor a variety of
factors and utilize the WRF Master Plan to determine the most appropriate time to
begin design. Total project costs are currently estimated at $64.3 million, including
$3.5 million for design, and$60.8 million for construction and related services.
6. Infrastructure Maintenance
Ongoing pipeline replacement for the wastewater collection system and equipment
replacement and process maintenance at the WRF are required to ensure the
efficient and compliant conveyance and treatment of wastewater. To avoid costly
failures or excessive maintenance before replacement, these projects were
identified, evaluated, and prioritized. Sewerline replacement projects over the five
year capital forecast (2011-12 thru 2015-16) total $5.725 million or about $1.145
million per year when annualized.
7. Madonna, Margarita, and Foothill Li Stations
These smaller aging lift stations have reached the end of their useful lifespan and
will require replacement. The lift stations are planned to be replaced over three
years with prefabricated units to accommodate space restrictions and reduce costs
and maintenance. The capital forecast currently assumes $1.8 million to replace all
three lift stations at $600,000 per station, with one lift station replaced each year
beginning in 2014-15.
8. Buckley Lift Station
Identified in the Airport Area Wastewater Master Plan Update, this lift station has
been scheduled for construction to correspond with the predicted development.
Staff will work closely with property owners to determine the most effective way to
bring sewer services to this southwest corner of the Airport Area. In the long-term
capital forecast, the Buckley Lift Station is currently planned for design in 2017-18
and construction in 2018-19.
The capital improvement plan forecast will be further evaluated, based on additional
information and factors, and updated as part of the 2012 Sewer Fund Analysis and the
2011-13 Financial Plan Supplement: 2012-13 Budget review process.
PH1-19
Attachment 1
Page 14
EXHIBIT A
2011 SEWER FUND
FINANCIAL SCHEDULES
PHl-20
Attachment 1
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CTtyOr ATTACHMENT 2
I
sAn Lor
omp0
NOTICE OF PUBLIC HEARING
PROPOSED RATE INCREASES FOR
WATER AND SEWER SERVICE
A public hearing on proposed water and sewer rate increases will be held on:
DATE: TUESDAY, JUNE 145 2011
TIME: 7:00pm
PLACE: CITY OF SAN LUIS OBISPO, COUNCIL CHAMBERS
990 PALM STREET
SAN LUIS OBISPO, CA 93401
The hearing will cover the proposed 2011 and 2012 rate increases for water and sewer services. This notice has
been sent to all customers who currently receive either of these services provided by the City of San Luis Obispo.
If adopted, the proposed rate increases will become effective July 1, 2011 and July 1, 2012.
This Notice of Public Hearing provides information regarding proposed rate increases to the City's water and sewer service customers
pursuant to the requirements of California Constitution Article Xlll(commonly referred to as Proposition 218). The proposed rate increases
will be presented to the City Council for adoption on Tuesday,June 74, 2071,at 7.•00 p.m.,in the Council Chambers. This notice also provides
information on how rates are calculated, the reasons for the required rate increases,how customers can receive more information on the
effect of the proposed rate increases on their water and sewer bills,and how to file a protest against the proposed rate increases.
HOW ARE WATER AND SEWER RATES CALCULATED?
Annually, the City prepares detailed analyses of the revenues and expenditures for the Water and Sewer Funds to ensure
that sufficient revenues are collected to effectively provide for the water and sewer service needs of the community. These
analyses include a minimum five-year look ahead in order to adequately prepare the funds for upcoming expenses and to avoid
significant unexpected increases in rates.
The long-term rate analyses look at projected operating costs including electricity, chemicals, staffing, supplies, minor
equipment and repairs, contract services, debt service, reserves, and capital program costs which include replacing pipes,
tanks, pump stations, vehicles, master planning and system studies, major treatment plant upgrades and repair projects. When
there is a large capital project needed to support the community's service needs out in the future, incremental rate increases
over a number of years is the preferred method for ensuring rate stability.
Water and sewer services are operated as enterprise funds, which means revenues to support operations and capital
improvements must be funded by the rate payers receiving the services. Projected revenues from sources in addition to user
rates, such as development impact fees, loan proceeds, and investment earnings are also included in the annual analyses.
NOTICE=Crv�,017 WA
OF
ATTACHMENT 2
WHAT HAPPENS TO THE REVENUES THAT ARE COLLECTED?
Revenues received from water and sewer charges are restricted solely for the programs and services related to the community's
water and sewer service. This chart shows how the revenues are used.
Capital
Investments
Operating
Programs
Utilities
Staffing
The primary uses of revenue go to pay for capital projects (investing the money directly back into the system); electricity,
chemicals, parts, and equipment to maintain operations of the treatment plants, and the distribution and collection systems,
and staff to operate and maintain the systems to ensure the community has water and sewer services 24 hours a day.
WHY ARE THE WATER AND SEWER RATES BEING INCREASED?
Y iP b A. There are several reasons water rates need to be increased. The major driver is assumptions made when current water
rates were set two years ago that did not anticipate the unprecedented drop in water use by the community, especially in the last
year. Cool weather, plentiful rain, outstanding conservation practices, a fully volume-based water rate, recessionary pressures, and
changing demographics all have contributed to the decrease in water sales. The resulting decrease in revenues has been significant
and rates need to increase in order to continue to pay for the community's investment in securing its new water supply sources, to
continue meeting the ongoing operating and maintenance program needs, and to maintain prudent reserves.
The proposed increase to sewer rates is needed to fund required upgrades to the City's water reclamation facility in
order to meet added regulatory requirements for protection of San Luis Obispo Creek. This is a very large capital project and the
fund is being prepared through incremental rate increases to be able to pay the future debt service for this project. In addition,
the proposed rates will assist in funding several other major capital projects in the wastewater collection system including
replacing two failing lift stations and a pipe crossing a creek. Finally, the proposed rates are needed to fund ongoing operations
and maintenance costs of an aging infrastructure in both the wastewater collection system and the water reclamation facility.
For questions regarding the City's water and sewer operations and maintenance programs, or inquiries about specific water or
sewer capital projects, please contact the Utilities Department at (805) 781-7215.
WHAT ACTIONS ARE BEING TAKEN TO CONTROL COSTS?
Work to control costs is continuous and the City remains focused on keeping rate increases to a minimum. Interns and
volunteers are used extensively in order to get the job done. In 2009, three positions were eliminated; one from water
operations, one from sewer operations, and one management position. Employees are empowered to take action to reduce
expenses and especially focus on ways to reduce energy and chemical costs. Two extensive, no-cost energy audits have been
conducted at the Water Reclamation Facility and energy reduction projects are actively being explored. Efficiency measures,
like the low-cost local purchase of three-wheeled scooters that helped to reduce the walking time to read meter routes by one
hour each day and reduced fuel use have been successfully implemented.
All water and sewer work programs started with zero-based budgets: the existing budget was not increased by some
percentage but was essentially rebuilt from scratch. Vehicles scheduled to be replaced will continue to be used for at least two
more years to further reduce expenditures in 2011-13.
NOTICEOF
ATTACHMENT 2
WHAT ARE THE PROPOSED RATES?
Under the City's water and sewer rate structures, bills are based on customer usage choices and resulting demand on the water
and sewer systems. The City has a commodity-based water rate-the service charge is fully based on the volume of water used.
The sewer rate contains two components-a minimum base charge and a service charge based on the volume of water used.
Residential sewer accounts include a cap on the volume, set at the 3-month average of winter water use (also referred to as the
.,sewer cap").
The following shows current and proposed rates for accounts inside the City limits. For the few accounts outside of the City
limits, rates are twice the amounts shown..
TABLE 1. CURRENT AND PROPOSED WATER RATES
USE CURRENT PROPOSED JULY 1, 2011 PROPOSED JULY 1, 2012
Single Family Residential
1 to 5 units' $5.21 $5.73 $6.25
6 to 25 units $6.52 $7.17 $7.82
26 or more units $8.17 $8.99 $9.80
(All Other
...........
1 to 5 units $5..21 $5.73 $6.25
6 or more units $6.52 $7.17 $7.82
'Lill rates shown are for one unit of water. A unit equals 748 gallons.
TABLE 2. CURRENT AND PROPOSED SEWER RATES
USE CURRENT PROPOSED JULY 1, 2011PROPOSED JULY 1, 2012
Single Family Residential including single metered condominiums and townhomes
Base fee per dwelling unit (minimum charge) $6.55 $7.01 $7.43
Volume (service) charge per unit $7.22 $7.73 $8.19
NOTE: Total monthly charge is capped based on average winter water use'
Master-metered Multifamily Dwellings in any duplex, apartment house, or rooming house -
Mobile Home or Trailer
Base fee per account (minimum charge) $6.55 - $7.01 $7.43 -
Volume (service) charge per unit $7.22 $7.73 $8.19
NOTE: For accounts without a separate irrigation meter, the total monthly charge is capped based on average winter water use.
Accounts with a separate irrigation meter have no cap.
LPublic, Private, or Parochial School
Per average daily attendance (ADA)
at the school $5.85 $6.26 $6.64
All Other Accounts
_ --- _-.- .__----____ .__ ____-- _ _ - -_ i
Minimum charge per account $6.55 $7.01 $7.43
Volume (service) charge per unit $7.22 $7.73 $8.19
'For single family residential and for those master-metered multifamily dwellings and mobile home or trailer parks without a
separate irrigation-meter, the sewer service charge is based on the volume of water used during a 3-month period during the
winter months (December-March, depending on when your meter is read). This is known as the average winter water use. The
volume of water used during this period-is used to calculate your sewer cap.
NOTICEOF
� ATTACHMENT 2
PRESORTED STANDARD
C" J U.S.POSTAGE PAID
��{�-,y�/�0f SAN LUIS MAILING SERVICE�.� son LUIS 0s1sp0 53401
UTILITIES DEPARTMENT
879 Morro Street
San Luis Obispo, CA 93401
WHAT IS THE IMPACT ON A TYPICAL RESIDENTIAL CUSTOMER?
The following shows the impact of the increase on a typical residential customer, which assumes 9 units of water use per month
and a sewer cap of 6 units per month. Even though current water rates are proposed to increase, the average water bill would
decrease slightly in the first year. This is because the amount of water the average residential customer is using has decreased
from 10 to 9 units and the average sewer cap has decreased from 7 to 6 units per month.
SAMPLE RESIDENTIAL WATER AND SEWER BILL
JULY 1, 2011 PROPOSED JULY 1, 2011PROPOSED JULY 1i 2012
Water Service $58.65 $5733' $62.53
Sewer Base Fee $6.55 $7.01 $7.43
Sewer Service Use Fee $43.32 $46.38 $49.14
Average water use for a typical residence has decreased from 10 units to 9 units
HOW CAN I FIND OUT MORE ABOUT THE
PROPOSED INCREASES?
Information to help you calculate how the proposed rates affect your bill is on the Web at www.slocity.org/utilities; click on "How
to Calculate Your Water and Sewer Bill." If you keep your old water and sewer bill, you can look back at the units of water you
used and your sewer cap to determine how the proposed rate may impact you. You can also look up your bill online by going
to www.slocity.org and clicking "Pay Utility Bill". You may also call Utility Billing at (805) 781-7097 or the Utilities Department at
(805) 781-7215 for assistance.
HOW DO I PROTEST THE PROPOSED WATER AND/OR
SEWER RATE?
Proposition 218 mandates how protests to water and/or sewer rates are conducted. Customers directly responsible for the
payment of the fee subject to the proposed rate change or the property owner of the service address may submit a written
protest against the proposed rate. If written protests are received from a majority of the affected customers or the property
owners, the proposed rate will not be imposed.
IT IS IMPORTANT TO FOLLOW THESE INSTRUCTIONS IN ORDER FOR.YOUR PROTEST TO BE VALID:
1. The protest must be in writing and received by the City Clerk at or before the public hearing. Written protests may be
mailed or personally delivered to the City Clerk at 990 Palm Street, San Luis Obispo, CA 93401.
2. All written protests must contain the service address.
3. The protest must be signed by either the account holder or the property owner of the service address..
NOTICEOF D• by:Verdm Maiketing Ink PrinteO t y.'ed)ape, -7,
ATTACHMENT 3
RESOLUTION NO. (2011 Series)
A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO
ESTABLISHING SEWER SERVICE RATES
WHEREAS, it is the policy of the City of San Luis Obispo to review enterprise fund fees
and rates on an ongoing basis and to adjust them as required to ensure that they remain equitable
and adequate to fully cover the costs of providing services; and
WHEREAS, a comprehensive analysis of sewer fund operating, capital and debt service
needs has been performed for fiscal years 2011-13 through 2016-17; and
WHEREAS, this comprehensive analysis has been revised based on updated revenue and
expenditure information; and
WHEREAS, the Council has reviewed the sewer service rates necessary to meet system
operating, capital and debt service requirements; and
WHEREAS, a public hearing was properly noticed and held on June 14, 2011; and
WHEREAS, a majority protest, as contemplated by Article XIII D of the California
Constitution, was not received by the conclusion of the public hearing.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis
Obispo as follows:
SECTION 1. Resolution No. 10095 (2009 Series) is hereby rescinded, effective 11:59
p.m. June 30, 2011.
SECTION 2. The rates set forth in Exhibit "A" are hereby adopted, establishing rates
effective July 1, 2011 and July 1, 2012.
Upon motion of , seconded by
and on the following vote:
AYES:
NOES:
ABSENT:
R
PH1-28
ATTACHMENT 3
Resolution No. (2011 Series)
Page 2
The foregoing resolution was adopted this day of 2011.
Mayor Jan Marx
ATTEST:
Elaina Cano
City Clerk
APPROVED AS TO F
CChristine Dietrick
City Attorney
R
PH1-29
ATTACHMENT 3
Resolution No. (2011 Series)
Page 3
EXHIBIT A
MONTHLY SEWER SERVICE RATES
Account Type Effective July 1,2011 Effective July 1,2012
Monthlv Seiver Rates- Residential Customers
Single family Minimum charge: $7.01 per dwelling unit Minimum charge: $7.43 per dwelling unit
dwelling, Volume charge per unit: $7.73 Volume charge per unit: $8.19
including single meter
Total monthly fee capped based on average Total monthly fee capped based on average
condominiums and winter water use(AWWU) winter water use(AWWU)
townhouses
Master-metered Minimum charge: $7.01 per account Minimum charge: $7.43 per account
multi-family Volume charge per unit: $7.73 Volume charge per unit: $8.19
dwellings in any
duplex, apartment Accounts without separate irrigation Accounts without separate irrigation
house or rooming meter.* meter.
house Total monthly fee capped based on AWWU Total monthly fee capped based on AWWU
Accounts with separate irrigation meter. Accounts with separate irrigation meter.
No cap
No cap
Mobile,home or Minimum charge: $7.01 per account Minimum charge: $7.43 per account
trailer park Volume charge per unit: $7.73 Volume charge per unit: $8.19
Accounts without separate irrigation Accounts without separate irrigation
meter. meter.
Total monthly fee capped based on AWWU Total monthly fee capped based on AWWU
Accounts with separate irrigation meter. Accounts with separate irrigation meter.
No cap No cap
Public,private,or $6.26 per ADA $6.64 per ADA
parochial school,
average daily
attendance(ADA)at
the school
All Other Accounts Minimum charge: $7.01 per account Minimum charge: $7.43 per account
Volume charge per unit: $7.73 Volume charge per unit: $8.19
1
Minimum charge $182.36 $193.30
Additional charge per $10.98 $11.64 .
100 gallons in excess
of 1,500 gallons
discharged
R
PHI-30
, 1
IIIIIIIIIII����IIIIIII�IIIIII
Council Red File
lCity of San Luis Obispo
June 8, 2011
TO: Mayor Marx & Members of the City Council
FROM: Elaina Cano, City Clerk
VIA: Katie Lichtig, City Manager
SUBJECT: Correction to the Page Numbering for Items PH1 and PH2 on the June 14,
2011, Council Agenda
Items PH1 and PH2 were inadvertently reversed in the agenda packet. The agenda is
correct, and the Water Fund Review will be the first item presented on Thursday night. You
may wish to switch the Water Fund Review report (currently under the PH1 tab)to PH2 and
the Sewer Fund Review report (currently under the PH2 tab) to PH1.
Thank you!
hard co : email:
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From: Jeff Whitener[SMTP:JEFF.MCNAMARAREALTY@CHARTER.NETj
Sent: Tuesday, June 14, 2011 11:37:36 AM
To: Council, SloCity
Subject: Water Department billing practices
Auto forwarded by a Rule
Dear Madam Mayor and Council Members,
I am requesting that, during your utility rate discussions, you ask the water department billing staff
to develop a plan to allow water users the option to alter the billing dates of the water and sewer
invoices delivered by the city.
The City is the only local utility company that is not willing to work with their customers regarding
billing dates. During communications that have occurred over the past 2-3 years, the billing staff
has insisted that invoices must.be mailed in sequence with the reading of the meters and that due
dates are calculated to land on the 4th Monday after the billing date. These billing/due dates
change from month to month. Various staff members have indicated that these dates cannot(or
will not) be altered. Other staff members, though, have indicated over the years that new billing
software was coming soon that would have the capability to make changes to billing/due dates. I
just recently learned that there are no plans to allow customers to make such changes even if the
capability exists.
I would like to make two comments:
1)There is ample computing and programming power these days to make account by account
changes to anything your staff chooses to change. The reading of the meters does not have to
match the billing periods as long as all utility use is captured accurately and billed at some point
in time. Allowing customers to choose their billing periods allows them to pay bills at a time each
month that is more in line with revenue streams.
2) Billing periods should remain consistent. Invoices should have consistent terms and be billed
consistently on the same date each month.The current system of changing billing/due
dates each month leads to lots of late fees for our clients. The practice of changing payment
terms every month seems predatory.
It is disappointing, after hearing for years that a new system was coming, to be told now that
staff is not inclined to make changes even with new software("it would be a lot of work" I was
told). As water rates continue to rise, even in the face of reduced usage, I think it would be
very kind gesture to allow customers more billing flexibility. I, and the nearly 100 property owners
we work with in this city, would be appreciative if you would ask staff to develop a plan that would
give water and sewer customers the ability to change their water&sewer billing dates.
As always, thank you for your time and all you do for our city.
Sincerely,
Jeff Whitener
11 Mariposa Drive, S.L.O.
herd cour. email:
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From: Kelda Wilson [mailto:keldave@sbcglobal.net] RED FILE
Sent:Tuesday, June 14, 20113:29 PM
To: Cano, Elaina MEETING AGENDA
Subject, Water Rates DATE ro//V/I/ITEM # � 1
"Please forward to all City Council Members"
Dear City Council,
We are unable to make it to tonight's meeting but wanted to ask each of you to support
dropping the 25%conservation penalty now that Lake Nacimiento Water is being used
by the City of San Luis Obispo. We planted a yard filled with Organic fruit trees,berries,
and seasonal garden items over the last 11 years and don't feel it is fair to be penalized by
the situation we find ourselves in. A National movement of growing your own food has
been going strong over the last few years and it seems like you should be lowering rates
to support such a movement and not penalizing people such as us and our family which
includes two small children.
Thank you for your support.
Sincerely, herd coyr. mnat1.
n COUNCIL o CDD DIR
Kelda and Dave Wilson o CITY MGR G FIT DER
c ASSTCM o FIRE CHIEF
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From: marie[SMTP:CCMSLO@,ATT.NET]
Sent: Tuesday, June 14, 2011 7:06:23 PM
To: Council, SloCity
Auto forwarded by a Rule 7d : /llG2 G°C; 44A7rl"Z-Y
616 Mission AsTDlL4J6-1
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S.L.O., Ca. 93405 OLEO
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Dear Mayor and SLO Council members:
I am writing this to protest the proposed increase in water rates that you are considering tonight. I
strongly object to being penalized for conserving water. Please forward this to the Water
Department, if its necessary to be tallied along with other people against the rate increase.
Sincerely,
Cheryl McLean