HomeMy WebLinkAbout06-12-2013 ph3 2013-14 sewer fund review & 2013-15 sewer rate adoptcouncrL
âqenòâ pepoRt
Meeting Date
I.une 12 2013
Item Number
PH3
FROM:
Prepared By:
CITY OF SAN LUIS OBISPO
Carrie Mattingly, Utilities Director
David Hix, Wastewater Division Manager
Cheryl Blair, Administrative Analyst
SUBJECT: 2013-14 SEWER FUND REVIEW AND 2013-15 SEWER RATE ADOPTION
RECOMMENDATIONS
1. Review and accept tbe 20I3-I4 annual Sewer Fund f,rnancial review.
2. Conceptually approve the 2013-14 Sewer Fund budget, with final action anticipated on June 17,
2013 with the adoption of the 2013-15 Financial Plan; and
3. Adopt a resolution increasing sewer service charges by four percent (4%) effective July I,2013
and three percent (3%) effective July I,2014 provided there is no majority protest against such
increases.
DISCUSSION
This report presents the annual Sewer Fund review. It highlights major adjustments made to the
Sewer Fund analysis since the preparation of the 20II-13 Financial Plan Supplement and the 2012-
13 budget.
As outlined in the 2013-14 Sewer Fund Analysis, which forecasts the financial position of the
Sewer Fund through2024-25, the City is able to:
1. Sustain an ongoing level of capital improvement projects to maintain the community's
wastewater infrastructure assets;
2. Maintain a positive fiscal position in the Sewer Fund;
3. Maintain sufficient working capital and a revenue plan forecast to position the Sewer Fund
to secure favorable financing terms for Water Reclamation Facility Improvements in the
wastewater capital program forecast; and,
4. Continue to deliver protective, reliable wastewater services to the community within
previously projected sewer service rates.
2013-14 Sewer Fund Analysis Report
The attached 2013-14 Sewer Fund Analysis Report (Attachment 1), includes changes in financial
position, analysis assumptions, and an update on major activities and programs, and incorporates
the following key financial impacts.
1. Agreement between the City and Cal Poly with updated sewer rates commencing on July 1,
20t3.
2. 2012-13 salary and benefit updates.
PH3.1
2013-14 Sewer Fund Review Page 2
3. Increased City PERS contributions commencing on July 1, 2013
4. Six proposed Significant Operating Program Changes.
5. Proposed Capital Improvement Plan.
2013-15 Financial Plan: 2013-14 Budget
Revenues
Overall revenues are projected to increaseby 35% ($535,500) in20I3-I4 from the prior fiscal year.
This reflects an increase in sewer rates of 4o/o and a conseryative outlook on development impact
fees. Revenue from sewer services, including sales to Cal Poly, reflect historic trends as well as the
proposed rate increases. Development impact fee revenues are estimated at approximately $155,000
annually during 20I3-I5. They are projected to grow from 2011-12 actual amounts by $2,500
(I.65%), and are less than the 2012-13 projection of $240,000. The assumptions about development
impact fees reflect a strongly conservative approach based on an economy that is still recovering
and inherent volatility in the building industry.
Operøting Progrøm Expenses
The Sewer Fund's operating program budgets were developed in order to provide the community
with protective, reliable wastewater seryices. The budget includes six Significant Operating
Program Change requests as summarized on page 4 of Attachment 1. Of the total operating program
cost increases, $58,800 is attributable to a temporary need for additional project management to
assist in delivering important capital projects to the community in a timely manner. This is a short-
term need driven by the anticipated volume of capital project workload and available resources in
Public Works at this time. The additional resources will be used to accomplish both water and sewer
projects.
Capitøl Improvement Plan
The 2013-18 five-year Capital Improvement Plan identifies nearly $80 million in infrastructure
improvement and replacement projects over the next five years. As summarized in Table C of
Attachment 1, the Sewer Fund will be investing in four signif,rcant lift station replacements, pipeline
replacements averaging $1 million per year, and major maintenance at the Water Reclamation
Facility. In addition, the Fund is being prepared to support a 563.2 million upgrade at the Water
Reclamation Facility in the five-year period.
Debt Service Updute
As described in more detail in Attachment 1, two upcoming debt financings are anticipated in the
Fund; the recently approved energy efficiency project at the Water Reclamation Facility and the
upcoming Water Reclamation Facility upgrade.
Debt service is currently projected at 5629,500 arurually beginning in 2013-14 for the energy
efficiency project based on 57.25 million financed over a l5-year term. Debt service is currently
projected at $3,817,500 annually beginning in2016-17 for the Water Reclamation Facility upgrade,
based on total project costs currently estimated at $63.2 million. Of the $63.2 million identified in
the capital plan, the analysis assumes $50.8 million to be financed over a 2}-year term, with atotal
of $12.4 million funded from working capital.
PH3 .2
2013-14 Sewer Fund Review Page 3
Proposed Sewer Rate Changes
Pursuant to the requirements of California Constitution Article XtrI (commonly referred to as
Proposition 2I8), a Notice of Public Hearing was mailed to all sewer customers informing them of
the proposed rates increases to sewer rates and their opportunity to protest the changes.
Based on this year's analysis and projecting forward for at least five additional years, rates are
proposed to increase four percent (4%) effective July 1,2013 and three percent (3%) effective July
I, 2014. For an average residential customer with a 6-unit cap, this translates into to a $2.28
monthly increase for July I,2013 anda $1.75 monthly increase for July I,2014. The proposed
sewer rate increases for 2013-14 and2014-15 are as forecasted in the 20lI and 2012 Sewer Fund
analyses presented to the City Council.
The proposed increases to sewer rates are 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 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 repairs to the wastewater collection system. Finally, the proposed rates are
needed to fund ongoing operations and maintenance costs of an aging infrastructure in both the
water reclamation facility and the wastewater collection system.
Current and Sewer Rates
* For single family resídential and for those master-metered multifamily dwellings and mobile home or traíler parks
withoul a separate irrígation meter, the sewer service charge is based on the volume of water used during a three-
month period during the winter months (December through March, depending on when the meter is read). Thís is
lçtown as the average winter water use. The volume of water used during this period is used to calculate the sewer cap.
Accounts with a separate irrigation meter have no cap.
The average residential sewer customer has a cap of 6 units per month. The following shows the
impact of the increase on a residential sewer customer:
Use Current 1 20r3
Proposed o/
./ tJ
J 1 20r4
Proposed o,/,/o
Base fee per dwelling unit s7.43 s7.73 4%s7.96 3%
Volume unit $8.1 9 $8.s2 4%$8.77 3%
schools*All custonrers. ex
Per average daily attendance (ADA)
at the school
$6.64 $6.91 4%$7.11 3%
Publìc, Privale. or Parochral School
Consumption 6 units
Sewer Current $s6.s7
Sewer Proposed July 1, 2013 s58.85 4%
Sewer Proposed July 1,2014 $60.s8 3%
Residential Monthh Sewer Bill C artson ttÁt ch
PH3.3
2013-14 Sewer Fund Review Page 4
Sewer Røte Protests
Under Proposition 218, property ov/ners andlor 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 12, 2013, identify what is being protested, and contain the service address. The party
signing the protest must be listed on the account as the person responsible for payment of the water
bill and/or the property owner. In the event that a protest is submitted by the owner and also by the
tenant responsible for payment of the bill, then one valid protest is counted for the account.
If written protests are filed by a majority (50% + 1), the applicable proposed rate may not be
imposed. Amajorityof approximately 14,700 customers is 7,351. As of I|l4ay7,2013,a total of 10
written protests were received by the Office of the City Clerk. All protests will need to be validated.
The City Clerk will provide an updated summary of the protests received at the J:une 12,2013 City
Council meeting.
ATTACHMENTS
1. 2013-14 Sewer Fund Anal)¡sis
2. Resolution Establishine Sewer Service Rates for 2013-15.
PH3.4
ATTACHMENT 1
2013 Sewer Fund Analysis
June 12,2013
Prepared by the
Utilities Department
)
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PH3-5
Attachment I
Page2
cúy oÊ sân Lurs oBtspo
2013 Sewer Fund
TABLE OF CONTENTS
I. OVERVIEW
II 2013-15 FINANCIAL PLAN
A. Summary of Operating Programs
B. Significant Operating Program Changes
C. Capital Improvement Plan
ilI. 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
12-13 Update
13-14 and Forecast
EXHIBIT A - FINA}ICIAL SCHEDULES
4.1 Changes in Financial Position
A.2 Assumptions for Fund Projections
4.3 Capital Improvement Plan
A. 20
B. 20
PH3.6
Attachrrent I
Page 3
-t crty oF
sân Luls oBtspo
2013 Sewer Fund Analysis
I. OVERVIEW
This report presents the financial condition of the Sewer Fund, based on the 2013-15 Financial
Plan operating and capital programs, addressing regulatory requirements along with the highest
priority capital and infrastructure maintenance needs.
II. 2013-15 FINANCIAL PLAN
Wastewater Division operating programs are summarizedin Table A. The summary of operating
programs reflects the net operating program budget amounts for 2013-15, which includes the
proposed operating budget increases, as further discussed in this report and displayed in Table B
on the following page.
For the first time in many years, the 2013-15 two-year financial plan development process did
not include identifying operating cost reductions. That said, a rigorous and thorough review of
operating costs and trends was conducted in development of the proposed budget. As outlined in
Table B, the significant operating program change increases are necessary to meet regulatory
requirements and continue to provide protective, reliable wastewater services to the community.
Proposed significant operating program changes include a total increase of $231,400 in 2013-14
and $137,600 in 2014-15. The increase includes $58,800 in one-time cost increases which are
attributable to a temporary need for additional project management to assist in delivering
important capital projects to the community in a timely manner. This is a short-term need driven
by the anticipated volume of capital project workload and available resources in Public Works at
this time. The additional resources will be used to accomplish both Water and Sewer projects.
The operating program changes are incorporated in the Sewer Fund Change in Financial
Condition (Exhibit A. 1).
, ll/astewater F ra nc hi se Fees
TOTAL WASTEIWATER SERVI CES OPERATING PROGRAMS
Summary of Operating Programs
6,63
A.
06,65
2013-14
BT]DGET
2014-15
BI.]DGE'T
: Wøstewater C o llect io n
: Utí lit íes C ust o m9r S e m i ce..
:Pretreatment :
: VV'øt e r Re cl a ma ti o n F ø cilíty
2/'øler QualÍly Labo røto ry
ll/ ø stew a I e r A d mi nísl rat ío n/E ng ì nee rí ng
914,300
295,OOO
492,300
770,500
PH3.7
Significant Operating Pro gram Change s
Wøstewøter Collection
iAnnual software licensing and maintenance
Utilities C ustomer Service
tReplacement ofElectric Scooters (50% share)
Wøler Reclamatìo n Facilìty
: Minor Capital Maintenance Projects
ll/at e r Qu a I ìly La b o røto ry
INPDES permit s arrpling and_analys is
lVat er A d mì ni stra t ì o n/E ng.iy9 e rì yg
Water quality studies
i Temporary project management__(50% share)
Wøstewøter Semices Operating Program Cost Increases
.i
1l
Detailed supporting documents for each request is provided in App endix A of the
18,600
B
0
137,600
2014-15
B
Financial XX to XX
0
25,000
19,000
75,000
23l,4OO
Attachment 1
Page 4
Capital Improvement Plan requests are based on the Preliminary 2013-15 Financial Plan. Table
C displays the proposed five-year Capital Improvement Plan for wastewater services. The
proposed Sewer Fund capital plan includes atotal of $6,801,000 in 2013-14 and $4,710,400 in
2014-15. The proposed capital plan is an $11.5 million investment in the community's
wastewater system infrastructure and capital assets over the next two years. This is $1.5 million
more than was projected in the 2012 fund analysis and capital forecast for 2013-15.
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 planning for long-term infrastructure
upgrade and replacement is essential to providing protective and reliable waste'water services for
the community.
PH3.8
0 55,300
1 0 7l
C.Capital Improve me nt Plan
Vl/a stewater C o I lecti o n
Co llection Sys tem Implovements
Infias tructule Replacernent Strategy
[-aguna Lift Station
Calle Joaquin Lift Station
Madonna Lifl Station
Margadta Lift Station
Foothill Lift Station
Marsh Street Siphon
Fleet Particulate Matter Trap Retrofit
Fleet Replacemenl: l/2 Ton Pickup
Fleet Rep lacement: Hydro-Cleaner
Equipmen! !,9pla.cement: Crenerator (50% share)
.
Fleet Rep lacement: CCTV Van
Fleet Replacement: 1 7/2Ton Service Trucks
úl/ater RecIømøtion Facilìty ,
Major Maintenance
Water Reclamation Facility Upgrade ($63.2 M)
Study/Envilonmental
Des ign
Cons truction - Inû'as tructure
Construction - Nutrient Removal
Construction Management l
Fleet Replacement: Cornpact Pickup
Fleet Replacement: 4-Wheel Drive Ioqdql
Fleet Replacement: Service Body Truck
Fleet Replacement: Utility Trucks.(3)
Fleet Replacement: Sedan .
Fleet 314Ton Service Bed Truck
Pl/qstewøler Admínistration and Engineering
Fleet Replacement : Sedan
Mobile Equipment Lifts & Safety Stands
Total Wastewater Services CIP.
Shared City Inþrmation Technology
E_4lgprise..$!orage G'orvth I
Document Management System
Network Firewalls
Vttu_al Priv ate Netwo rk (VPN) App lian ces-
Network Security Upgrades ;
Oflice Application Software Replacement
N.q_1yot-B-Pqqipmeg! Replacery._e¡! . .._.
Radio Handhelds and Mobile Replacements
Storage Capacity Upgrade an_d_Repla_cement
Total Share of Technology çIP.: -_
TOTAL SEIWER FTIND CAPITAL PROGRAM
2017-18
SED
280,000
2074-15 2015-16
BI.IDGE'T PROPOSED PROPOSED
33,700 .
495,000 ,205,000 000))\135,000 1 ,285,000
100,000 :
100,000: 900,000
100,000
40,000
6,775,000 4,667,900
2,000
3,800
8,500
6,200
5,500
33,500
26,000 42,500
of the P
3,496,700 62,476,400 1,620¡00
pages
1,000,000
240,000
152,900
360,000
0069,
77s,OOO
54,600
,000JJ
,565,00076,40062,4700,496,
82,700
,000675
2,000,000
6,800
15,590,000
39,460,000
4,500,000
3
3
9,000
0
ln
Attachment 1
Page 5
PH3.9
Attachment I
Page 6
SEWER RATE SETTING
A. Sewer Rate Structure
Current policies to guide rate structure setting
1. Revenue Stability and Predictability
2. Stability and Predictability of Rates
3. Simple and Easy to Understand and Administer
4. Fair Allocation of Total Cost
5. Discourage Wasteful Use
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 faimess 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 f,rxed 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 ìù/as 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 fulI sewer service
period after July lst. Sewer charges are based on actual water used 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 was established when the City implemented the
volume-based sewer rate structure.
PH3 - 10
Attachment 1
PageT
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 cunent
sewer rates.
B. Proposed Sewer Rate Changes
The proposed sewer rate increases for 2013-14 and 2014-15 are the same rates as previously
forecast in the 20II and 2012 Sewer Fund analyses presented to the City Council over the past
two years. The table below displays the cunent and proposed sewer rates for the average
residential customer, assuming an ùveÍage winter water use (AWWU) "sewer cap" of six (6)
units monthly. The following illustrates the changes to the monthly bill with the proposed rate
increases.
I Sewer rate increases for the average residential customer a¡e $2.28 monthly in 2013-14, plus $1.73 monthly tn2014-15.
'Volume charge is per unit. I Unit: 748 Gallons
Monthlv Rates
Base Fee Volume Fee
TYPE OF ACCOUNT
$8.19/per unit
$8.'19/per unit
$8.19/per unit
Residential - minimum base charge + volume charge
Single family dwelling, including single meter condominiums and
townhouses, per dwelling unit. Total monthly fee capped based on
Average WinterWater Use (AWWU)
Multi-family dwelling in any duplex, apartment house or rooming house,
per account. Accounts without separate irrigation meter: Total monthly fee
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
Use (AWWU). Account with separate irrigation meter: No cap
$7.43
$7.43
$7.43
$7.43 $8.1 9/per unit
Non-Residential - minimum base charge + volume charge
All non-residential accounts, per account
N/A $6.64/ADA
Schools
Public or private school, based on per average daily attendance (ADA) at
the school
$177.25 $10.67 per'100
gallons
Each Vehicle Discharging into the City Sewer Sysfem
Minimum base fee includes 1 ,500 gallons discharge. Volume fee per 100
gallons in excess of initial 1,500 gallons discharged
AWWU as established for December, January, and February 1 Unit = 748 Gallons
2012-13 Monthly Sewer Charges
Average Residential Sewer Customer Monthly Bill Sample
Assuming An Average Winter Water Use "Sewer Cap" of Six (6) Units
Fiscal Year:2012-13 2013-t4l 2014-151
Fiscal Year:Charges Rates Charges Rates Charges
Base Charge:
Volume Chargez
Total
$1.43
49.14
$s6.s7
s7.13
$8.52lunit 2
s7.13
s1.12
ss8.8s
s7.96
$8.71lunit2
$ 7.96
52.62
$60.s8
PH3-11
A.
Attachment 1
Page 8
IV. ASSUMPTIONS
The following provides more detail for the key assumptions in Exhibit 4.1. and A.2. (financial
schedules) 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.
Revenues
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 l2-month
period (ending March 2013), 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 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.
Revenue projections for Cal Poly sewer service charges are based on effluent flow
trends and the 2012 Ãgreement between the City and the University. This
agreement, covering the period beginning July 1, 2013, set the proportion of the
non-residential rate the University pays (89%) to account for the University's
difference from other customers (prepaid capital share in the wastewater system).
Development impact fee collection is calculated by taking the actual 20II-12 base
year revenue and adjusting it by projected inflation fbased on consumer price index
(CPI) and growthl. CPI is projected at I.4Yo in 20I3-I4 and 2.0o/o in 2014-15;
growth is assumed at 0 .25o/o in 2013-14 and 0.50o/o in 2014-15 .
For 2012-13 sewer development impact fee revenues are projected at $240,000,
which is 58% ($88,100) greater than the prior year aclual of $151,900 in20lI-I2.
Development impact fee revenues for 2013-15 are estimated at about $155,000
annually.
B. Expenses
Operøting snd Maintenance Expenses
Total operating and maintenance costs for 2013-15 are based on the proposed 2013-L5
Financial Plan. Forecasted operating and maintenance costs assume an inflationary rate of
2.8o/o for non-staffing (2.5% for staffing) in 2015-16, with 2.8Yo for non-staffing (2.5%
for staffing) in20l6-I7, and3.0Yo for both staffing and non-staffingin}}l7-18.
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 2013-15 Financial Plan when annualized, chemical costs are projected at over
$650,000 annually, electric utility services at over $550,000 annually, and sewer
PH3 - 12
I
2
aJ
Attachment I
Page 9
franchise fees paid to the General Fund at over $550,000 annually.
1. Chemicals go out to bid on an annual basis with chemical contracts running ftom
February l through January 31. For budget development purposes, any potential
changes to treatment processes are evaluated and dosage amount for chemicals
calculated. The measured chemical quantity is used to develop the budget. The fund
analysis assumes the February 2013 chemical contract costs for 2013-14 with a 5o/o
increase in chemical costs for 20I4-I5.
2. Electric utility rate assumptions, as provided by PG&E, include a rate increase of
5.0% in 2013-14 and 5.0o/o itt 2014-15 for commercial and industrial accounts.
Utilities staff, in conjunction with PG&E, have been working together to identiSr and
implement measures that will reduce energy costs at the Water Reclamation Facility.
Many of these measures will be implemented in the 20I3-I5 Financial Plan period.
3. Sewer franchise fees are calculated based on 3.5o/o 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 Govemment Code, provides cities with the authority to impose fees on
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 sewff fund and payable to the general
fund.
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).
The 2013-18 five-year CIP program continues investments in maintaining the City's
infrastructure including over $5.0 million for three lift stations and pipeline replacements.
Council recently approved a $9.5 million energy efficiency project at the Water
Reclamation Facility (WRF). In addition, the Sewer Fund continues to prepare financially
for a major upgrade at the V/RF, estimated to cost $63.2 million.
It is anticipated the actual cost of completing capital projects will vary from the budgeted
cost estimate. These cost estimates are generally conservative, therefore it is expected
those projects listed for each year will be completed. Should the bidding climate change
dramalically, and costs increase above those estimated, project timelines will be
amended.
C. Debt Service Payments
Debt service for the Sewer Fund's proportionate share of the City's Public Safety
Communications Center is $32,800 in2073-14 and $32,500 in20l4-I5. In addition,
the Sewer Fund's share of the Public Safety Radio System Upgrade is $42,600 in
2013-14 and 542,600 in 2014-15. When combined, the Sewer Fund's share is
$75,400 in 2013-14 and $75, 100 ]n 2014-15.
2. 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 $561,100 in20l3-I4 and $560,300 in 2014-15.
PH3 - 13
1
Attachment 1
Page 10
Debt service for the Tank Farm Gravity Sewer, Lift Station, and Force Main project
portion f,rnanced through the SunTrust private placement is $185,600 in 2013-14
and $185,400 in 2014-15.
Debt service is currently projected at 9629j00 annually beginning in 2013-14 for
the Water Reclamation Facility (WRF) energy efficiency project approved by
Council }rlay 7,21013, based on total project costs of $9.5 million. Of the $9.5
million identified in capital plan, the Analysis assumes $7.25 million to be hnanced
over a l5-year term, with a total of $2.3 million in pay-as-you-go funding and
energy rebates.
Debt service is currently projected at $3,817,500 annually beginning in2016-17 for
the Water Reclamation Facility (WRF) upgrade, based on total project costs
curently estimated atS63.2 million. Of the $63.2 million identified in capital plan,
the analysis assumes $50.8 million to be financed over a 2}-year term, with atotal
of $12.4 million in pay-as-you-go funding.
MAJOR ACTIVITIES AND PROGRAMS
2012-13 Update
1. Regulatory Requirements
After meetings and discussions with the Central Coast Water Board (CCWB) resulted in
the conclusion there were no viable regulatory options for removal of the surface water
Municipal and Domestic (MIIN) beneficial use designation for San Luis Obispo Creek,
the City is moving forward with upgrading the 'Water Reclamation Facility (WRF) to
meet the discharge requirements for MUN.
The WRF's National Pollutant Discharge Elimination System (NPDES) permit is
curently being revised and is tentatively scheduled to be heard by the CCWB in
September. City staff and its water quality consultant and special Counsel are working
closely with CCWB staff to the secure the most reasonable permit for the WRF.
Requirements set forth in this permit significantly inform the design of the WRF upgrade.
2. Wastewater Collection System Infrastructure Replacement Strategt
Work will begin Summer 2013 on evaluating and modeling the City's wastewater
collection system. City staff and the consultant will be working together to collect data,
study, and build a model of the system to quantify capacity, deficiencies, and
maintenance issues. This information, along with the recently completed sewer system
flow study, will be used to produce a replacement strategy that will prioritize system
replacement. The replacement strategy will coordinate with the Land Use and Circulation
Element Update and the Economic Development Strategic Plan to ensure projects are
prioritized and balanced for maximum effectiveness and to best meet the community's
future needs.
3. Laguna Lift Station
Construction of Laguna Lift Station is scheduled to be completed mid-June 2013. This
new station will significantly reduce operations and maintenance costs.
PH3 - 14
J
4
5
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A.
Attachment 1
Page I I
4. Monterey to San Luis Drive Sewer Line and Siphon Project
Replacement of this critical sewer that lies entirely in easements on private property or
under San Luis Obispo Creek was recently completed. This line required emergency
repairs several times and frequent maintenance.
5. Sewer Liner Projects
Several sewer lines were rehabilitated using this trenchless method. Projects include Mid-
Higuera, the Southwood easement from the railroad tracks to Johnson Avenue, an
easement near the Vet's Hall, and an emergency repair that stopped significant inflow
into the serwer on Madonna Road near Laguna Lake.
B. 2013-14 and Forecast
1. Calle Joaquin Lift Station
Design is scheduled to be completed in Fall 2013 with environmental work and land
acquisition complete in Spring 2014. Construction should begin late Summer 2014. This
lift station replacement project includes a new siphon under San Luis Obispo Creek, a
gravity se\/er line under Highway 101, a new lift station with emergency power and
updated controls, and a new forcemain. An update to the Airport Area Wastewater
Master Plan will be completed soon and define the service area and size requirements for
this lift station to ensure adequate capacity for existing customers and future growth.
Construction costs are estimated to be $3.3 million.
2. Energy Efficiency Project at the Water Reclamation Facility
The recent Council approval of the energy efficiency project will allow design to be
completed and construction to begin in Fall 2013. The project includes nine measures that
will allow the City to generate electricity from the methane gas produced at the Water
Reclamation Facility and replace aged infrastructure with eff,rcient, modern equipment.
This project will provide a reliable and efficient system. The total project will cost $9.5
million with $7.2 million of the amount being debt financed.
3. Water Reclamation Facility Upgrade
Somewhat dependent on NPDES permit issuance, design services for the upgrade of the'Water Reclamation Facility will begin in Fall 2013 to ensure compliance with specific
discharge requirements by 2018. City staff is continuing discussions with State regulators
to determine if the proposed deadlines will be adequate to ensure the needed time for
design and construction of an efficient and compliant facility. Staff will continue to focus
on the triple bottom line for its facility upgrade, pilot test various technologies, and visit
other plants successfully treating wastewater with these technologies to help determine
the best design for the new facility. Total project costs are currently estimated at $63.2
million, including $3.65 million for environmental and design phases, and $59.55 million
for construction and related services.
4. 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
PH3 - 15
""*ïiJl;
prioritized. Sewerline replacement projects over the five year capital forecast (2013-14
thru 2017-18) total $5.3 million or about $1.1 million per year.
5. Madonna, Margarita, and Foothill Lift 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 $3.1 million to replace all three lift stations at
about $1.0 million per station, with one lift station replaced each year beginning in2014-
15.
6. 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 2018-19 and construction in 2019-
20.
The capital improvement plan forecast will be continually evaluated and, based on
additional information and factors, updated as part of the 2014 Sewer Fund Analysis and
the 2013-15 Financial Plan Supplement:2014-15 Budget review process.
PH3 - 16
Attachment I
Page 13
EXHIBIT A
2OI3 SEWERFUND
FINANCIAL SCHEDULES
PH3 - 17
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.
PH3 - 19
Attachment 1 Exhibit 4.3
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ATTACHMENT 2
RESOLUTION NO.(2013 Series)
A RESOLUTION OF THE COT]NCIL OF THE CITY OF SAN LUIS OBISPO
ESTABLISHING SEWER SERVICE RATES
\ryHEREAS, 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 2013-15 through 2017-18; and
\ryHEREAS, 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 14,2013; 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. 10272 QÙll Series) is hereby rescinded, effective 11:59
p.m. June 30,2013.
SECTION 2. The rates set forth in Exhibit "Ã" are hereby adopted, establishing rates
effective July 1, 2013 andJuly 1, 2014.
Upon motion of seconded by
and on the following vote:
AYES:
NOES:
ABSENT:
R
PH3 - 22
ATTACHMENT 2
Resolution No
Page2
(2013 Series)
The foregoing resolution was adopted this _ day of _ 2011
Mayor Jan Manç
ATTEST:
Maeve Kennedy Grimes
City Clerk
APPROVED AS TO FORM
J. Christine Dietrick
City Attorney
R
PH3 - 23
Resolution No
Page 3
(2013 Series)
MONTHLY SEWER SERVICE RATES
ATTACHMENT 2
EXHIBIT A
R
PH3 - 24
Account Type Effective July 1, 2013 Effective July 1, 2014
Single family
dwelling,
including single
meter
condominiums and
townhouses
Minimum charge: $7.73 per dwelling unit
Volume charge per unit: $8.52
Total monthly fee capped based on average
winter water use (AWWU)
Minimum charge: $7.96 per dwelling unit
Volume charge per unit: $8.77
Total monthly fee capped based on average
winter water use (AWWU)
Minimum charge: $7.73 per dwelling unit
Volume charge per unit: $8.52
Acco unts wilho ul separate iruigalion
meler:
Total monthly fee capped based on
A'WWU
Accounls y::!!h sepørøle irrigalion meter
No cap
Minimum charge: $7.96 per dwelling unit
Volume charge per unit: $8.77
Acco unts wÍthoul sepsrøte irrigation
meter:
Total monthly fee capped based on
AWWU
Accounts y!!h separate itigøtion meler:
No cap
Master-metered
multi-family
dwellings in any
duplex, apafiment
house or rooming
house
Mobile home or
trailer park
Minimum charge: $7.73 per dwelling unit
Volume charge per unit: $8.52
Accounts witho ul sepørate irrigation
meter:
Total monthly fee capped based on
AWWU
Acco unts y!fusepørøle ìruigølion meter:
No cap
Minimum charge: $7.96 per dwelling unit
Volume charge per unit: $8.77
Acco unts witho ul separale iwigøtion
meler:
Total monthly fee capped based on
AWWU
Acco unts y!þsepørate iruigalion meter:
No cap
$6.91 per ADA $7.11 per ADAPublic, private, or
parochial school,
average daily
attendance (ADA) at
the school
Minimum charge: $7.43 per account
Volume charge per unit: $8.19
All Other Accounts Minimum charge: $7.01 per account
Volume charge per unit: $7.73
Minimum charge
Additional charge per
100 gallons in excess
of 1,500 gallons
discharged
$ l 89.65
$11.42
$ 195.34
$11.76
Sewer Rates: Residential Customers
Selver Rates: Non-Residential Customers
Each Vehicle Disch n Sewer into
M
Monthl