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Home My WebLink About06/00/1990, 2 - WASTEWATER RATE INCREASE p� 1 MEETING DATE MY of San L.,.IS OBISPO June 12 1990 COUNCIL AGENDA REPORT ITEM NUMBER: FROM: William T. Hetland PREPARED BY: Cassidy Rowland Utilities Director Administrative Analyst SUBJECT: WASTEWATER RATE INCREASE CAO RECOMMENDATION: ADOPT A RESOLUTION AUTHORIZING INCREASE IN SINGLE FAMILY RESIDENTIAL WASTEWATER RATE TO $1050 PER MONTH EFFECTIVE JULY 1, 1990 AND AN ADDITIONAL INCREASE OF $2.00 PER MONTH IN EACH JULY FOR THE NEXT THREE YEARS WITH A CORRESPONDING INCREASE IN ALL OTHER ACCOUNTS. DISCUSSION Ba un On May 8, 1990, City Council directed staff to bring back a wastewater rate increase proposal which would fund the Wastewater Management Plan Projects. A detailed financial plan and revenue program developed by Brown and Caldwell recommend rate increases of 15%, 50% and 12.5% to be implemented in 1991, 1992, and 1993 respectively. These increases represent about a 94% overall increase and would raise the existing single family resident rate of $850 per month to $1650 per month. At $1650 per month, revenues would be adequate to meet the projected capital and operating needs of 1993 -1994. The new projects for the Sewer Fund have been identified in the City's Wastewater Management Plan. On May 17, the State Water Resources Control Board approved a State Revolving Fund (SRF) Loan not to exceed $35.0 Million to finance these projects. The maximum dollar amount to be funded is determined at the contract award stage in the SRF loan process. This essentially guarantees low interest loan funding of the City's projects although the actual loan contracts will not be made until the construction contract for each phase is awarded. Rate Increase At the May 8 meeting, Council directed the rate increase be based on an even increase of $2.00 per month on each July 1 for this year and the next three years. This proposal will lessen the impact of any one rate increase on the community and still provide adequate funding to cover debts and expenses as they are anticipated to arise. Accordingly, the rate increases for SFR customers are as follows: New Rate % Increase July 1, 1990 $1050 23.5% July 1, 1991 12.50 19.1 July 1, 1992 14.50 16.0 July 1, 1993 16.50 13.8 I��y,��H�m�IIII�Ip j U city of san L.,-.,s oBi spo O COUNCIL AGENDA REPORT -Rate Eneresse Page 2 Rate Stru��re Issues New rates for all other users can be established by applying comparable percent increases to existing rates. This approach assumes that existing "equivalency" concepts are appropriate. Generally, the recommended rates provided in Exhibit A reflect this concept. However, the following changes in establishing SFR equivalencies for all other users are recommended: Multi-Family Residential Currently, monthly multi-family residential (MFR) rates, which include mobile homes, are set at 67% of the SFR rate ($5.70 compared with $850). Due to lower average household sizes, some difference in rates is appropriate, and it is standard sewer rate practice throughout the Country to reflect this concept. In determining the appropriate level of variance for the City of San Luis Obispo, it is recommended that census data for average household sizes be used summarized as follows based on the 1980 census: Population SFR Per Household Equivalent Single Family 2.65 1.00 Multi-Family 1.96 0.75 Mobile Home 1.59 0.60 I_ The recommended rate structure provided in Exhibit A reflects this approach, and accordingly, adds an additional category (Mobile Home) to the current rate structure. In accordance with this methodology for setting MFR sewer rates, it is recommended that the equivalencies be modified upon completion of the 1990 Census. Hotels and Motels The current rate structure establishes motel and hotel rates at the multi-family residential level, and this approach continues to be recommended. I Commercial Accounts The current rate structure identifies two types of commercial (non-residential) accounts: restaurants/bakeries; and all other non-residential customers. Typically, restaurants and bakeries have higher levels of suspended solids (SS) and biological oxygen demand (BOD) than other commercial users. Because these higher levels of SS's and BOD's are more costly to treat, it is standard practice for their rates to be higher than other commercial users. The relative difference between the rate between commercial account types based on flows is recommended to remain the same. However, the following changes from the existing rate structure are recommended and incorporated into Exhibit A: ■ Minimum charges for both types of users are set at the SFR rather than MFR equivalency rate in accordance with generally accepted industry practices. ■ The level of water usage at which flow charges are incurred has been set at 500 cubic feet monthly for both types of users. Previously, flow charges were set at 500 cubic feet for restaurants/bakeries and at 850 cubic feet for all other users. �IIj��HiIV�IIII�I�i=ill city of sant _ s oBispo COUNCIL AGENDA REPORT Ilse Page 3 As reflected above, only restaurants and bakeries have been classified into a higher rate category due to their higher discharges of SS's and BOD's. As the City's pre-treatment program expands, additional users in this category may be identified and changes recommended at that time as appropriate. Vehicle Discharges No changes in the basic method of assigning rates for vehicle waste discharges are recommended at this i time. Consequences of Not Taking Recommended Action The Wastewater Management Plan identified wastewater rate increase for funding the long term debt i financing Currently the Sewer Fund is in good condition with revenue exceeding expenditures. With the beginning of construction, higher revenues will need to be generated. The State Revolving Loan requires a contingency fund of 5% of the loan ($34,500,000) for a total of $1.73 Million for all three phases of construction, be set aside during the life of the project. The need for the reserve contingency fund drives part of the needed revenue as do operations, maintenance and replacement capital projects. Inadequate rate increases will cause revenue shortfalls in operations. CONCURRENCES The Finance Department concurs with the recommendations in this report. I i i FISCAL IMPACT The rate increase is intended to meet all sewer fund revenue requirements for operations and maintenance, and as such, no funding from the general fund is anticipated. As the major capital projects are required by consent decree, an increase in rate revenues is mandated to meet the i consent decree. I i Attachments Resolution Schedule A j I I i wwrates.606 i I Z' 3 RESOLUTION NO. (1990 Series) A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO ESTABLISHING NEW WASTEWATER SERVICE CHARGES BE IT RESOLVED by the Council of the City of San Luis Obispo as follows: SECTION 1. Resolution No. 6420 (1988 Series) is hereby rescinded. SECTION 2. The following fees are established in accordance with provision of Municipal Code Section 4 . 24. 010 - Wastewater Service Charges as follows: A. Every person whose premises in the city are served by a connection with the system of wastewater of the city, whereby the wastewaters are disposed of by the city through the wastewater treatment plant, or otherwise, shall pay monthly wastewater service charge per Schedule A. B. Quantity Usage. Restaurants and other commercial users shall be entitled to a water flow allowance for the service charge. Any excess over the entitlement allowance shall be charged at the rate specified in Schedule A. Any non-residential customer using substantial amounts of water that is consumed on landscaping or for other purposes not required wastewater facilities may appeal to the Utilities Director to determine an equitable ratio of wastewater use for billing purposes or the user may, at the user's own expense, install private measuring i Resolution (1990 Series) Wastewater Rates Page 2 devices in accordance with the specifications approved by the utilities director. On motion of , seconded by and on the following roll call vote: AYES: NOES: ABSENT: the foregoing resolution was passed and adopted this day of , 1990.. MAYOR RON DUNIN ATTEST: CITY CLERK PAM VOGES Resolution (1990 Series) Wastewater Rates Page 3 APPROVED: CITY A INISTRATIVE OFFICER TtiTT F NANCE DIRECTOR UTILITIES DIRECTOR W TEWATER DIVISION MANAGER I Resolution (1990 Series) Schedule A Wastewater Rates Page 4 SCHEDULE A MONTHLY WASTEWATER SERVICE CHARGES Type of Account effective date: 7/1/90 7/1/91 7/1/92 7/1/93 Single family dwelling, including single 510.50 $12.50 814.50 $16.50 meter condominiums and townhouses Multi-family dwelling unit 5n any duplex, 8 7.90 S 9.40 810.90 512.40 apartment house or room inghouse, per each dwelling unit Mobile Home or trailer park, per each S'6.30 $ 7.50 $ 8.70 S 9.90 dwelling wit Hotel, motel, or auto court, per each S 7.90 S 9.40 $10.90 812.40 unit Public, private or parochial school, each $ 1.20 S 1.40 S 1.65 S,1.90 average daily attendance at the school Each restaurant or bakery, minimum charge 810.50 812.50 $14.50 516.50 additional charge for every 100 cubic ft. in excess of 500 cubic ft. of water used. S 2.10 $ 2.50 S 2.90 S 3.30 Each business, church or other non:duelling commercial establishment, wholesale or retail, minimum charge 510.50 812.50 814.50 816.50 additional charge for every 100 cubic ft. in excess of 500 cubic ft. of water used S 1.30 S 1.50 S 1.75 $ 2.00 Each vehicle discharging wastewater into city system, for the first 1500 gallons, minimum charge $35.20 541.90 548.60 $55.30 additional charge per 100 gallons in excess of 1500 gallons S 2.10 S 2.50 $ 2.90 S 3.30 i P��