City of Calistoga Frequently Asked Questions
Water and Wastewater Rate Study
In the existing rate structure, water bills do not have different groups or classes, but wastewater bills do. Currently, all water customers regardless of class (i.e., Residential, Transient Rates, Other nonresidential rates, and Industrial/Bottling & Groundwater) pay $10.76 / unit (1 unit = 748 gallons).
The only difference between water customer costs is the service fee that is based on water meter size – the larger the meter, the more customers are served, which incurs a higher cost based on the capacity the meter can draw on the water system).
Wastewater generation has different categories for Residential, Transient Rates, Other nonresidential rates, and Industrial/Bottling & Groundwater users because it is strength-based. In other words, wastewater levels of pollutants are higher or lower based on their category, with higher-strength waste being more expensive to treat. There are sub-category differences that can also be higher or lower based on volume or typical discharge amounts (i.e., higher volume higher cost, lower volume lower cost). The existing rate structure follows City Municipal Code section 13.18.020 for water billing and 13.18.030 for wastewater billing, linked here for reference.
14. Other similarly sized or even smaller towns in Napa Valley have lower rates both in service charges and unit costs. If economy of scale is the issue, why does Calistoga have the highest rates/cost per unit?
The most similar community comparison is St. Helena, as we have similar-sized communities and infrastructure that we own, operate, and maintain (water/wastewater treatment plants, lift stations, aging infrastructure, etc.). St. Helena currently has about 1,000 more metered services than Calistoga and sells about 1,500-acre feet (1 AF = 326,000 gallons) of water annually, more than double what Calistoga sells. Even with twice the amount of water sales, Calistoga’s rates are very similar to St. Helena’s (just slightly less), but St. Helena is also undergoing a rate study in 2022-23, and most likely will see its rates increase.
There are smaller communities with lower rates, such as Yountville, but this is because they do not have a similar infrastructure to Calistoga that they own, operate, and maintain. The State of California Department of Veterans Affairs owns, operates, and maintains Rector Reservoir, a dam and water treatment plant that supplies water to Yountville. The wastewater treatment plant is also a shared cost with the state. Additionally, Yountville has a lot less piping infrastructure and facilities because the city limits are about half the size of Calistoga, and the state owns, operates, and maintains the infrastructure for almost half of its city limit area. It’s important to note both Yountville and St. Helena have higher fixed costs for water ($55 & $70 respectively) and lower fixed costs for wastewater ($62 to $64 respectively).
15. Why does Calistoga have unusually high rates?
It’s mostly due to economies of scale and the fact that Calistoga has all the same infrastructure, including rules/regulations that the big cities have, with an extremely small community to cover these costs. Furthermore, Calistoga is in a remote area with water supplies coming in as far away as 65 miles. The costs of water transmission include multiple pump stations, paying into the State Water Project (SWP) system, and City of Napa costs to treat and wheel 70% of our water supply up to Calistoga. The SWP and City of Napa also have annual increases in their water supply transmission and treatment costs that Calistoga has to pay for and keep up with their increases.
Calistoga’s water system alone consists of over 40 miles of water mains, Kimball dam/reservoir and Water Treatment Plant, 2 water storage tanks (2.5 million gallons), and three water booster pump Item #8.2.
City of Calistoga Frequently Asked Questions
Water and Wastewater Rate Study
stations. The City’s wastewater system consists of over 18 miles of wastewater collection mains, 3,000 feet of force main, four lift stations, and a wastewater treatment plant. In addition, the City operates and maintains a recycled water system that consists of six miles of distribution piping throughout the city, two booster pump stations, and storage of over 46 million gallons.
Additionally, for the past 10 years across California and the U.S., water and wastewater bills have been rising faster than inflation. Cities across the country are grappling with aging systems that are costly to repair and have fewer resources. Climate change is also playing a role in higher treatment costs. In California, drought is straining water sources to critical levels, making it more expensive to find other sources of water or spend more on treatment and advanced purification, for instance.
16. How have recent building projects/developments helped our water rates or prevented them from being even higher?
We project the new developments will pay approximately $1,000,000 for water and $1,100,000 for wastewater when they are fully active in the next 3 to 5 years. However, it is always difficult to predict revenues from development projects because the projects may be abandoned or delayed.
17. Are the new resorts and developments adding to my residential rate? No, because the City is able to sell more water and wastewater services to more customers, generating more revenue than would have otherwise existed had these additional customers not been added to the system. More customers help spread the utility’s fixed costs across more ratepayers, therefore reducing total costs to existing customers. Resorts, not ratepayers, are also responsible for paying the costs of any utility extensions required to serve their projects.
Additionally, new development pays for connections that help reduce the costs of capital projects.
18. Why do service charges differ based on the size of the meter, but the price per unit of water is the same for all customers?
Larger meters have higher service charges because they typically service significantly higher populations and therefore must pay their proportional share of the larger volume of water they convey. Typically, commercial users and mobile home parks have larger-sized meters because they require more water on average, and in certain instances, to meet peak demands. Stated differently, larger meters have the potential to draw a larger share of capacity from the water system and the differential in fixed charges reflects this. The per-unit price is the same for everyone based on the cost-of-service analysis performed in 2017/2018. Water bills include the service meter charge, plus unit(s) consumed multiplied by the unit rate, currently set at $10.76.
19. I live in a single-family home and pay more for water than my friends living in a mobile home park. Am I paying a higher rate for water than residents in mobile home parks? Mobile home parks (MHPs) are on master meters, so their service charge is typically less because the meter charge is spread over more customers, otherwise, the usage cost is the same for everyone. These types of master-metered developments benefit from sharing capacity on one connection whereas a single-family home has a single connection to serve the property’s indoor and outdoor needs.
Item #8.2.
City of Calistoga Frequently Asked Questions
Water and Wastewater Rate Study
20. Why doesn’t Calistoga have tiered water rates that promote conservation like other cities in our region and across California?
At the time Calistoga last conducted its water rate study in 2017/18, several lawsuits were filed in California over tiered rates. We eliminated tiered rates at that time to avoid liability. The City Attorney’s office is actively involved in this current rate study and will be evaluating whether or not we can consider a tiered billing system.
21. Why is the service charge portion of my bill more than the volume charge for the water I use? How does this incentivize conservation?
This is typically not the case. Depending on water use, service charges for residential customers generally are less than the cost of the water. A typical single-family residential (SFR) water bill for a conserving household is around 7 units/month (about 5,400 gallons) or $75.32, plus a meter or service charge of $50.12/month on a normal SFR, so the service charge is 65% less than the usage charge. A utility needs to have a reasonably high service charge because there is a high fixed cost associated with running the utility. With fewer customers, this cost is higher in Calistoga due to economies of scale. The facilities’ costs do not decrease substantially if less water is produced.
Treatment plants run 365 days/year continually, 24/7, even as flows ebb and peak. The City operates and maintains the pipes and pumps used to convey resources to your tap or down your drain.
Service charges also capture the costs to serve vacation or second homes, which are fairly prevalent in Calistoga, and ensure that all accounts connected to the system are paying the City’s full costs of providing them capacity in the system, regardless of their water usage.
22. Does citywide conservation impact water prices?
Yes, less water used means less water sold and lower revenues for the Enterprise Fund.
23. If I conserved water, why didn’t my bill go down substantially? Even when water is conserved or use goes down, there is a meter service charge of $50/month for a typical ¾” or 5/8” diameter, single-family residential household meter. Based on the current rate structure, for every unit of water conserved/not used, the usage fee will go down by $10.76 per unit (748 gallons). For example, a three-person household averaging around 80 gal/day/person is equivalent to about 10 units/month with a volume cost of $108. If this same household conserves 20% per stage II water conservation requirements they would use 8 units/month at a cost of $86, saving $22/month.
24. Given the current drought, do you penalize or fine customers for high/excessive water use? The City of Calistoga currently warns customers of their high water use but has not issued fines.
25. Due to drought and water shortages, if the City had to buy additional water supplies, how would that affect my bill?
An essential purpose of the utility rate study is to project future cost and financial impacts on the water and wastewater utility to provide customers with predictable rates over multiple years. Utility rate studies provide transparency into what the City’s ratepayers can expect in the years ahead and the different risks our utilities face, including future drought conditions and water supplies.
Item #8.2.
City of Calistoga Frequently Asked Questions
Water and Wastewater Rate Study
26. Why is there a difference in price between water and wastewater? Typically, water costs are higher than wastewater. A typical single-family residential (SFR) water bill for a conserving household is around 7 units/month or about 5,400 gallons/month, which equates to a usage charge of $75.32 plus a meter or service charge of $50.12/month (standard SFR service charge) for a total water bill of $125.44/month. The total wastewater cost is currently $97.87/month.
Therefore, the water cost is 1.28 times higher than the wastewater cost. Furthermore, it’s important to note that we have two separate systems with separate costs, regulatory standards, system size, etc.
27. Is there a discounted rate for fixed and low-income customers? For individuals and families experiencing financial hardship, visit the City’s website and click on Low Income Rate Adjustment (LIRA).
28. Why are residential customers billed bimonthly when commercial customers are billed monthly? The City of Calistoga has a much higher number of residential meters than commercial meters.
Most of the residential meters are read manually, which takes more time to collect readings and issue bills through the Finance Department. Whereas most of the commercial meters have been converted to remote monitoring, reducing the time to process and thus enabling a monthly billing cycle for commercial customers. The City has been converting manual meters to remote, as budgets allow each year, and continues to seek grants that could help convert all of our meters.
Additionally, the billing software is fairly old and in need of an upgrade. Improving and automating billing becomes easier to do with technology advancements, which require funding, evaluation of software solutions to identify the right program, and training to implement a new invoice system in our Finance Department.
29. Can the City utilize other sources of revenue besides customer payments to help cover water/wastewater costs, for example Transient Occupancy Taxes (TOT), sales and property taxes?
TOT revenue supports the General Fund, which is a separate fund altogether from the water and wastewater Enterprise Funds. Enterprise Funds are intended to support themselves financially and not be subsidized or borrow from other funds. Although General Fund revenues can be loaned or used to subsidize Enterprise Funds with City Council approval, Enterprise Funds that are not financially self-sustaining eliminate the City from State Revolving Fund (SRF) loans and grants that can be used to help fund critical utility infrastructure projects, because they need to see a financially stable fund that can support themselves. In the past, the City has been prevented from obtaining funding from these sources because its Enterprise Fund was not self-sustaining and had unrepaid debt that it borrowed from the general fund. For these reasons, it is the City’s policy, and the policy of most cities across the state, to ensure that the water and wastewater Enterprise Funds are financially self-sustaining and able to pay for all expenses with the revenue generated by its customers.
30. What can be done to lower water rates?
Utility costs typically do not decrease, especially in a high inflationary environment. Therefore, water rates are not likely to decrease unless the utility brings on significantly more customers who generate more revenue while staying within supply, treatment, and resource limits.
Item #8.2.
City of Calistoga Frequently Asked Questions
Water and Wastewater Rate Study
31. The community was informed that new commercial developments like resorts and hotels will help spread costs (economies of scale) and thereby reduce pressure on rates; why then are rates increasing?
Several of the larger developments have experienced delays (specifically 400 Silverado and Calistoga Hills) that were initially anticipated to add revenues beginning in 2018/19. The total anticipated revenue to the water enterprise was $550,000 and $630,000 to the wastewater enterprise. 400 Silverado just began paying utility bills in 2021 and Calistoga Hills is still under construction and will not begin paying a utility bill for several years. These developments will add more revenue to both Enterprise Funds to help reduce increases from what they would have been without these developments.
32. What do recycle water users pay?
The City of Calistoga currently only charges for truck-out recycled water use. Customers have historically not been charged for recycled water because the high boron content in the water limits how this water can be used to irrigate. Since the City needs this water to be utilized as much as possible, it has been providing it at no charge.
33. Are there plans to charge more for recycled water?
This rate study will look into potential charges for use of this water. However, the City must balance the desire to raise revenues with the need to maintain recycled water consumption because the City has limited disposal and storage facilities for this large continuous volume of recycled water, so if recycled water use decreases, costs will increase.
34. Will higher rates result in a higher quality of water/fix problems with Haloacetic acids (HAAs)? Yes, that’s one of the objectives. Haloacetic acids (HAAs) are a type of chlorination disinfection byproduct (CDBP) that are formed when the chlorine used to disinfect drinking water reacts with naturally occurring organic matter or total organic compounds (TOCs) in water. HAAs are a relatively new regulation to reduce disinfection by-products in drinking water. The rate study will include funding projects like the Dunaweal Pump Station improvements that include advanced filtration with granulated activated carbon filters to reduce HAAs and improve overall water quality, including taste and odor issues.
35. Why do we pay so much for water yet have issues like Haloacetic acids (HAAs)? Chlorination disinfection by-products (CDBPs) are mostly out of our control as they are caused by higher concentrations of total organic compounds (TOCs) in the raw water (pre-treated source). The current drought and low reservoir water levels, along with fires, added organics to the watersheds resulting in increased raw water TOCs. Adjacent communities are having similar challenges.
Advanced treatment systems can be used to filter out these constituents, but they are expensive, and it is important that rates keep up so projects to improve water quality can be afforded. Calistoga has begun the design of granulated activated carbon advanced filtering that will reduce CDBPs, but it is critical rates cover these expensive costs to support these types of improvements.
Item #8.2.
1 City of Calistoga
Water & Wastewater Rate StudyCity Council Presentation May 2, 2023 Item #8.2.
Agenda
• Rate Study Process• Financial Planning
› Reserves Policies › Capital Improvement Program› Capital Financing • Rate Alternatives• Study Schedule
2 Item #8.2.
3 Start
Step 1: Rate Setting Framework• Financial goals and policies• Pricing objectives• Alternative rate structures for evaluation
Step 1: Rate Setting Framework• Financial goals and policies• Pricing objectives• Alternative rate structures for evaluation
Step 2: Financial Plan• Evaluation of operating
and capital costs
• Cash flow analysis for
financial sufficiency
• Scenario AnalysisStep 2: Financial Plan• Evaluation of operating and capital costs
• Cash flow analysis for
financial sufficiency
• Scenario Analysis
Step 3: Rate Design• Cost of Service Analyses
(Cost allocations)
• Alternative rates design• Rate calculations &
customer impact analyses
Step 3: Rate Design• Cost of Service Analyses
(Cost allocations)
• Alternative rates design• Rate calculations &
customer impact analyses
Step 4: Rate Plan Approval• Documentation• Study Report • Review by legal counsel Completion
Step 5: Rate Adoption –218 Procedures• Notice to City
customers
• Public HearingStep 5: Rate Adoption –218 Procedures• Notice to City customers
• Public Hearing
Rate Study Process
Stakeholder Engagement
We Are
Here
Item #8.2.
4 Utility Financial
Planning
Item #8.2.
Why Financial Planning?
• Financial Sufficiency for the Short- and Long-Term
› Operating expenses› Anticipated capital expenditures
• Prepare for the Future
› Identify knowns and unknown variables› Evaluate risks› Evaluate opportunities • Helps to minimize and smooth rate fluctuations from year to year 5 Item #8.2.
6 Inflationary Pressures Supply Sources and
Costs
Cash Reserves
Future Borrowing Terms
and Assumptions
Baseline Water
Sales Estimates
Long-Range Financial Plan Drivers
Capital Reinvestment
Item #8.2.
7 CAPITAL PROJECT FUNDING
Funding Mix
(Cash, Debt,
Grants)
Borrowing
Terms
ANNUAL CASH FLOW
FISCAL POLICIES AND TARGETS
Cash
Reserves
Debt Service
Coverage
FINANCIAL PLAN
INPUTS
• Customer connections• Billed water use• Other Revenues• Operating expenses• Long-term CIP• Beginning cash position
ANNUAL GROSS
RATE REVENUE
REQUIREMENTS
Financial Plan Elements
Item #8.2.
Financial Health Indicators
8 Healthy Reserves• Operating Reserve – results from positive cash flow
• Capital Reserve – can award contracts
quickly and speed up projects if necessary
• Rate Stabilization – funds used during
periods of revenue shortages
• Emergency – funds available in case of asset
failure
Healthy Reserves• Operating Reserve – results from positive cash flow
• Capital Reserve – can award contracts
quickly and speed up projects if necessary
• Rate Stabilization – funds used during
periods of revenue shortages
• Emergency – funds available in case of asset
failure
Debt Coverage• Exceed Official Statement requirements• Achieve/maintain good credit ratings• Borrowing capacity › How much debt is the enterprise able to
issue?
Debt Coverage• Exceed Official Statement requirements• Achieve/maintain good credit ratings• Borrowing capacity › How much debt is the enterprise able to
issue?
Item #8.2.
9 Reserves Policies
Item #8.2.
Goals of Financial Reserves Policies
• Mitigate financial risk
› Rate / revenue instability› Emergency with asset failure› Volatility in working capital • Maintain solvency • Achieve and/or maintain a specific credit rating• Determine the most opportune time to issue debt
• Enhance financial management transparency through a policy statement 10 Item #8.2.
Example Reserves Policies - Water
(Neighboring Agencies)
Agency O&M Capital Emergency Rate Stabilization
City of Calistoga 20% of O&MTown of Yountville 30% of O&M 5% Asset Value 5-10% of Water Sales
Revenue
5-10% Annual O&M
excluding debt
10-20% Annual CIP (CIP
Reserve)
10-20% Annual CIP (R&R
Reserve)
Target: 90 days of O&M
Minimum: 45 days of O&M City of Napa
Engineering earthquake
assessment (>$6M) City of Santa Rosa 15% of O&M
?
Target: 14 months of Operating
City of St. Helena Min: 10 months of Operating
11 Item #8.2.
Example Reserves Policies - Wastewater
(Neighboring Agencies)
Agency O&M Capital Emergency Rate Stabilization
City of Calistoga 20% of O&MTown of Yountville 30% of O&M 5% of Asset ValueNapa Sanitation 15% of O&M (excluding debt) $1 M Engineering earthquake assessment (>$7M) City of Santa Rosa 15% of O&M ?
Target: 8 months O&M
Minimum: 6 months O&M City of St. Helena
12 Item #8.2.
Reserve Policy Alternatives – Water
Operating Capital Emergency
Existing Policy 20% of Operating None None
$1M Minimum
$2M Target Alternative 1 33% (four months) of Operating None $1M Minimum
$2M Target Alternative 2 33% (four months) of Operating Average Cash-Funded CIP 13 Operating Capital Emergency Total Reserve Target
Existing Policy $900,000 - - $900,000
$2,500,000 to
$3,500,000
$1,000,000$2,000,000 Alternative 1 $1,500,000 -
$4,400,000 to
$5,400,000
$1,000,000$2,000,000 Alternative 2 $1,500,000 $1,900,000 Item #8.2.
Reserves Policy Recommendation
• Increase Operating reserve target for improved working capital• Include some reserve for emergencies • Consider a dedicated capital reserve given the magnitude of the Water CIP
• Any alternative would:
› Improve days cash on hand (a key metric for credit rating agencies) › Help ensure self-sustaining utility enterprises › Mitigate a greater degree of risk 14 Item #8.2.
15 Water/Wastewater CIP
Item #8.2.
Water CIP
• Funding Sources: Cash, Financing, Grants, and Impact Fees• Current CIP: $47 million over the next ten years• Assumed Grants: $15.8 million over the next ten years (33% of total CIP)• Remainder must be funded through a combination of cash rate revenues, bond proceeds, and/or impact fee contributions
• Forward looking CIP of $4.7 million per year on average relative to $1.7 million per year on average over prior five years
16 Item #8.2.
Wastewater CIP
• Funding Sources: Cash, Financing, Grants, Impact Fees• Current CIP: $32.2 million over the next ten years• Assumed Grants: $4.6 million over the next ten years (14% of total CIP)• Remainder must be funded through a combination of cash rate revenues, bond proceeds, and/or impact fee contributions
• Forward looking CIP of $3.2 million per year on average relative to $1.1 million per year on average over past five years
17 Item #8.2.
18 Capital Financing
Item #8.2.
External Debt Financing
(Lower Short-Term Rates versus Long-Term Obligations)
• More costly (in absolute dollars)
in the long term, relative to ratefunded financing
• Obliges the agency to maintain
minimum revenue/ liquidity levels for debt coverage requirements • Excessive debt limits financial
flexibility & may lower credit rating
• Cheaper short-term option
relative to rate-funded financing
• Provides intergenerational
equity
• Far less impactful on current
ratepayers
• Low-interest rate programs
available (SRF, USDA, etc.)
ADVANTAGES DISADVANTAGES
19 Item #8.2.
20 Water Rate
Alternatives
Item #8.2.
Water Use Rate Alternatives
21 Alternative #1 Alternative #2 Alternative #3
Two-Tiers based on Water Supply
Two-Tiers based on Water Supply Uniform
Commodity
Residential StructureNon-Residential Structure Uniform
Item #8.2.
Wastewater Rate Structure
22 • Maintain existing structure
› Residential service charges per dwelling unit› Non-Residential based on flow and strength of wastewater – Subject to minimum fixed charge
• Modest modifications may be proposed to simplify the schedule › Low, Medium, and High strength categories for non-residential dischargers • Evaluating geothermal discharger surcharges in addition to standard discharge rates
Item #8.2.
Next Steps
• Near-term:
› Community Meeting #2 › Rate Alternatives Modeling
• Mid-term:
› City Council Workshop #2
– Long-Range Financial Plan Results – Preliminary Rates • Longer-term:
› Revised/Final Rate Presentation (Rate Authorization)› Study documentation, noticing, continued outreach, and Public Hearing 23 Item #8.2.
Discussion / Comments / Questions
• Requesting feedback and direction on:
› Reserves Policies› Debt versus Cash Financing
• Questions on:
› Capital Improvement Programs › Water Rate Structure Alternatives for Evaluation 24 Item #8.2.
Contact:
Kevin Kostiuk213-262-9309 / [email protected] Wingfield213-262-9311 / [email protected] 25 Thank you
Item #8.2.
City of Calistoga
STAFF REPORT
To: Honorable Mayor and City Council
From: Laura Snideman, City Manager
Meeting: City Council - May 02 2023
Subject: Appointment to Blue Zones Steering Committee
DESCRIPTION:
Appointment to Blue Zones Steering Committee
RECOMMENDATION:
Make an appointment to the local Blue Zones Steering Committee BACKGROUND/SUMMARY:
Blue Zones refer to communities around the world that have been recognized as having exceptional health and extreme longevity. Blue Zones, LLC is an Adventist Health affiliated organization that seeks to improve the health and well-being of communities across the United States based on the lessons learned from the original Blue Zones. There are more than 75 communities on the West Coast with focused Blue Zones Projects.
The Upper Napa Valley Blue Zones Project is a multi-year effort to promote changes primarily in Calistoga, St. Helena, Yountville, and the surrounding unincorporated areas in support of their mission to "empower everyone, everywhere to live a better, longer life." They utilize a Steering Committee as one way to work closely with community leaders to understand key issues and identify possible policy changes at the local government level.
On August 17, 2021 the City Council affirmed support for the Upper Napa Valley Blue Zones Project, including appointing a representative to serve on the Upper Napa Valley Blue Zones Project Steering Committee. Then-Mayor Canning was the appointee.
Blue Zones is seeking a new appointee as designated by the City Council. The Committee currently meets for approximately 1-hour on the 4th Thursday of each month at 11:30 AM with the possibility of participating remotely.
CEQA STATUS:
This item is exempt.
FINANCIAL IMPACT:
No direct fiscal impact. Should the City Council wish to pursue Blue Zones-recommended policies and ordinances there will be impact on staff time and possibly trigger a need for contract services which could be evaluated in each individual instance prior to pursuing the work. Some staff time from more than one department is already devoted to certain marketing/outreach efforts for events, participation in various working groups, booking space for programs, and other similar activities.
Item #8.3.
APPROVAL(S):
Nitish Sharma Approved - Apr 24 2023
Marni Rittburg, City Clerk Approved - Apr 25 2023
Item #8.3.