Proposed Water and Wastewater Rate Update
Public Hearing
June 14, 2022
2 Agenda
1. Water Financial Plan
• Financial inputs
• Capital Spending Forecast
• Proposed Rates
• Survey
2. Sewer Financial Plan
• Financial inputs
• Capital Spending Forecast
• Proposed Rates
• Survey
3. Project Schedule
4. Receive direction from Council to mail 218 Notices for Public Hearing.
5. Adopt resolution approving draft financial plan and setting Public Hearing date.
3 Legal Requirements
for Setting Water and Sewer Rates In California
Proposition 218 (Article XIIID, Section 6 of California Constitution) • Revenues shall not exceed funds required to provide service; nor used for another purpose
• Amount shall not exceed the proportional cost of the service attributable to the parcel
• Service must be actually used or immediately available • Approval process includes 45-day notice, public hearing, and written majority protest. Does not require a voting process (unlike taxes). 4 Water Rates
Water Operating Expenses
FY2021/22 Budget
5 Salaries and Benefits $499,000
Supplies $22,000
Professional Services $191,000
Maintenance $75,000
Utilities $150,000
Conservation $59,000
Taxes, Insurance and Other $451,000
SCWA Water Purchases $515,000
Debt $105,000
Total Budget: $2,067,000
Projected Water Capital Spending
6 Recent average Capital:
$4K Forecasted average Capital:
$780K
Cypress Storage Tank
Water Proposed Capital Funding Strategy
7 FY2022 FY2023 FY2024 FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 FY2031 FY2032 $0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0
$4.5
Millions
Internal Loan
Bond or Grants (TBD)
Cash Funded
Proposed Water Financial Plan
Debt Proceeds: $0.9M $3.4M 8
$0
$1
$2
$3
$4
MILLIONS
Combined Ending Fund Balance
Target Reserve Level
Minimum Reserve Levels
$0
$1
$1
$2
$2
$3
$3
$4
$4
FY2022 FY2023 FY2024 FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 FY2031 FY2032 Total Revenue / Expenses ($M)
Non-Rate Revenue Existing Rate Revenue Additional Rate Revenue Operating Expenses Debt Cash Capital Revenues Expenses
9 Water Rate Increase Drivers
• 2017 Study anticipated similar annual rate increases during this period. • Operating costs have increased more than projected by the 2017 study
1. Water purchase costs from Sonoma Water (now expected to increase 6% per year)
2. Utility costs have doubled (PG&E rates + increase in groundwater pumping)
3. Additional emergency operations and vehicle replacement costs
4. Increase in contract and chemical costs
• Balloon payment for debt to Sewer Fund is recommended 10 Proposed 5-Year Water Rate Schedule
Proposed Water Rates 2
Current 2022 2023 2024 2025 2026
Bi-Monthly Service Charge
3/4" meter $47.63 $50.49 $53.52 $56.73 $60.13 $63.74
1" meter $77.87 $82.54 $87.49 $92.74 $98.30 $104.20
1 1/2" meter $152.77 $161.94 $171.66 $181.96 $192.88 $204.45 2" meter $243.01 $257.59 $273.05 $289.43 $306.80 $325.21 3" meter $453.71 $480.93 $509.79 $540.38 $572.80 $607.17 4" meter $754.66 $799.94 $847.94 $898.82 $952.75 $1,009.92 Water Usage Rates ($/TGAL)
Residential
Tier 1 (0 to 10 TGAL)1 $4.06 $4.30 $4.56 $4.83 $5.12 $5.43 Tier 2 (10 to 20 TGAL) $5.21 $5.52 $5.85 $6.20 $6.57 $6.96 Tier 3 (over 20 TGAL) $6.49 $6.88 $7.29 $7.73 $8.19 $8.68 Multi-Family, Non-Resid., & Irrigation
All Water Usage $4.51 $4.78 $5.07 $5.37 $5.69 $6.03
1 "TGAL" means thousand gallons
2 New rates implemented on the June 15th of the indicated year 11 Example of Water Bill Impacts with Year 1 Rates
Meter
Bi-Monthly
Water Use Current
Proposed
Bill Change per Change per
Size (TGAL) Bill (Year 1) Statement Month
Single Family
Low Use 3/4" 6 $71.99 $76.29 $4.30 $2.15
Average Use 3/4" 10 $88.23 $93.49 $5.26 $2.63
High Use 3/4" 24 $145.07 $153.69 $8.62 $4.31
Multifamily
Duplex 3/4" 12 $101.75 $107.85 $6.10 $3.05
Apartment (8 units) 1.5" 40 $333.17 $353.14 $19.97 $9.99 Non-Residential
Retail Business 1" 8 $113.95 $120.78 $6.83 $3.42
Restaurant 1" 20 $168.07 $178.14 $10.07 $5.04
Institution 3" 200 $1,355.71 $1,436.93 $81.22 $40.61
Irrigation 2" 100 $694.01 $735.59 $41.58 $20.79
12 Sewer Rates
Sewer Operating Expenses
FY2021/22 Budget
13 Salaries and
Benefits
14.0% Supplies
0.2%
Professional
Services
4.1%
Maintenance
1.3%
Utilities
0.4%
Subregional O&M & Debt
Service
64.8%
Taxes, Insurance
and Other
13.1%
Debt
2.0%
Salaries and Benefits $469,000
Supplies $7,000
Professional Services $137,000
Maintenance $45,000
Utilities $15,000
Subregional O&M & Debt Service $2,165,000
Taxes, Insurance and Other $437,100
Debt $68,000
Total Budget: $3,343,100
Needs-Based Sewer Capital Plan
14 Recent average Capital:
$307K
Forecasted average Capital:
$517K
Revised Sewer Capital Spending
15 Recent average Capital:
$307K
Forecasted average Capital:
$392K
Proposed Sewer Financial Plan
FY2022 FY2023 FY2024 FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 FY2031 FY2032 16 $0
$1
$2
$3
$4
MILLIONS
Combined Ending Fund Balance Target Reserve Level
$0
$1
$2
$3
$4
$5
$6
$7
FY2022 FY2023 FY2024 FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 FY2031 FY2032 Total Revenue / Expenses ($M)
Non-Rate Revenue Existing Rate Revenue Additional Rate Revenue Operating Expenses Debt Cash Capital Expenses Revenues
17 Sewer Rate Increase Drivers
• Previous study anticipated similar annual rate increases during this period • Operating costs have increased more than projected by the 2017 study
1. Increase in Subregional costs due to change in meter readings
2. Subregional costs are escalating at 6% per year (previously assumed 5%)
3. Additional emergency operations and vehicle replacement costs
4. Increase in contract and chemical costs
• Keeping pace with streets paving program
18 Proposed Sewer 5-Year Rate Schedule
Proposed Sewer Rates 2
Current 2022 2023 2024 2025 2026
Bi-Monthly Service Charge
3/4" meter $82.23 $89.63 $97.70 $106.49 $116.07 $126.52 1" meter $135.45 $147.64 $160.93 $175.41 $191.20 $208.41 1 1/2" meter $267.36 $291.42 $317.65 $346.24 $377.40 $411.37 2" meter $426.26 $464.62 $506.44 $552.02 $601.70 $655.85 3" meter $797.31 $869.07 $947.29 $1,032.55 $1,125.48 $1,226.77 4" meter $1,327.26 $1,446.71 $1,576.91 $1,718.83 $1,873.52 $2,042.14 Sewer Usage Rates ($/TGAL) 1
All Customers $9.60 $10.46 $11.40 $12.43 $13.55 $14.77
2 New rates implemented on the June 15th of the indicated year 1 Residential customers without separate irrigation meters will be charged based on the lesser of the estimated actual use and the actual water usage. All other customers will have sewer service charges based on the metered water consumption from all sources except those sources that are not discharged to the city sewer as determined by the City Engineer.
19 Example of Sewer Bill Impacts with Year 1 Rates
Meter
Bimonthly
Sewer Use Current Proposed Change per Change per
Size (TGAL) Bill Bill Statement Month
Single Family
Low Use 3/4" 4 $120.63 $131.47 $10.84 $5.42
Average Use 3/4" 6 $139.83 $152.39 $12.56 $6.28
High Use 3/4" 16 $235.83 $256.99 $21.16 $10.58
Multifamily
Duplex (2 units) 3/4" 10 $178.23 $194.23 $16.00 $8.00
Apartment (8 units) 1.5" 20 $459.36 $500.62 $41.26 $20.63 Non-Residential
Retail 3/4" 4 $120.63 $131.47 $10.84 $5.42
Restaurant 1" 20 $327.45 $356.84 $29.39 $14.70
Hotel 2" 50 $906.26 $987.62 $81.36 $40.68
Survey
Combined monthly water & sewer bill for Single Family Homes assumes 3/4” meter, 5 TGAL of monthly water usage and 3 TGAL of sewage 20 21
1. Public comment
2. Tally protest ballots (if more than 50% of property owners have protested then the Council may proceed with rate increases)
3. Council deliberation
4. Council vote
Rates would be implemented June 15, 2022
Next Steps
(the following should be done twice… once for water rates and again for sewer rates)
22 Adopt a Resolution accepting the Draft Water and
Sewer Rate Study and directing staff to proceed
with the Prop 218 public noticing process for the
proposed water and sewer rate adjustments and to
set a date for the Public Hearing and Adoption of
the Rates for June 14, 2022
Recommendation