Table of Contents
2-20-2024 Regular Meeting Agenda.pdf
Item 2 - Draft Action Minutes Regular Meeting 2-5-2024.pdf Item 3 - List of Demands.pdf
Item 5 -Amendment to Agreement for Council Retreat Facilitation Services.pdf Item 6 - EP23-094 Resolution of Approval.pdf
Item 7- City Manager Compensation Adjustment.pdf
Item 8 - Measure Q Reappointment.pdf
Item 9 - Sidewalk Cafe Permit SCP23-003.pdf
Item 10 - Water Wastewater Rate Study.pdf
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Del Mar City Council Meeting Agenda
City of Del Mar, Town Hall
1050 Camino del Mar, Del Mar, California
And via teleconference
1317 Irving Avenue, Colonial Beach, VA 22443
1050 Camino del Mar, Del Mar, CA 92014 www.delmar.ca.us Civility Works: The Del Mar Code of Civil Discourse: Together we will promote inclusion; listen to understand; show respect; be clear and fair; and focus on the issue.
Regular Meeting
Tuesday, February 20, 2024 at 4:30 PM
Public Participation/Comment: Members of the public can participate in City Council meetings in-person or via Red dot.
Anyone may address the City Council for up to three minutes, at the Mayor’s discretion, on items on the agenda. Members of the public wishing to speak on items not on the agenda may do so under Public Oral Communications. Agenda items may be addressed in any order at the discretion of the Mayor. When addressing the Council, please state your name for the record. Any electronic presentations must be received before 9 a.m. on the date of the Council meeting. No PowerPoint presentations can be loaded during the meeting.
In-Person Participation: Please submit a completed “Speaker Slip”, including the item number you wish to speak on, to the City Clerk prior to the Mayor announcing the agenda item. The forms are located near the door at the rear of the Meeting Room. When called to speak, please approach the podium and state your name for the record.
Written Comments: Members of the public can participate in the meeting by submitting a written red dot comment via email to [email protected]. The deadline to submit written comments is 12 p.m. on the day of the meeting and the subject line of your email should clearly state the agenda item you are commenting on.
Remote Participation: Due to technical issues, remote
participation will not be offered at this City Council meeting.
Viewing the Meeting and Access to Agenda Materials: Members of the public can watch the meeting live on the City’s website at: http://delmar.12milesout.com/Video/Live and on Cable TV Spectrum Ch. 24, AT&T Ch. 99 starting at 4:30 PM. Agenda materials and communications from the public on agenda items, “Red Dots”, are available on the City’s website:
http://www.delmar.ca.us/AgendaCenter and a hard copy of the agenda materials are available at Del Mar City Hall and the Del Mar Library during their business hours.
Assistance for Persons with Disabilities: In compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting, please contact the Administrative Services Department at 1050 Camino del Mar or by calling (858) 755-9313.
Notification of at least 48 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting.
Dave Druker
Mayor
Terry Gaasterland
Deputy Mayor
Tracy Martinez
Council Member
Dan Quirk
Council Member
Dwight Worden
Council Member
Ashley Jones
City Manager
Leslie E. Devaney
City Attorney
Sarah Krietor
Administrative Services
Manager/City Clerk
Del Mar City Council Regular Meeting February 20, 2024
Agenda Page 2
1050 Camino del Mar, Del Mar, CA 92014 www.delmar.ca.us I. CALL TO ORDER/ROLL CALL
II. CITY ATTORNEY CLOSED SESSION REPORT
III. PLEDGE OF ALLEGIANCE
IV. PUBLIC ORAL COMMUNICATIONS
Each person wishing to speak before the City Council on any matter not on the agenda shall submit a “Speaker Slip” to the City Clerk when Public Oral Communication is announced. Each speaker will have up to three (3) minutes to speak at the discretion of the Mayor and may be asked clarifying questions. Information received during Public Oral Communication may be received, placed on a future agenda, or referred to the City Manager by the City Council. State law generally precludes the City Council from discussing or acting upon any topic presented during oral communications that is not described on the posted agenda.
Note: there is a time limit of 30 minutes for this section of public communications and each speaker will be heard in the order of the submission of their speaker slip. Speakers who have turned in a speaker slip prior to the time oral communications was called on the agenda, but were not heard during the initial time period shall be called to speak at the end of the agenda.
V. CITY COUNCIL COMMENTS
VI. COMMUNITY ANNOUNCEMENTS
VII. CITY MANAGER’S REPORT
VIII. PRESENTATIONS
1. San Diego County Water Authority Representative Update Recommended Action: Receive update from San Diego County Water Authority Board Chair and Del Mar Representative Mel Katz.
Reference: Clerk’s File No. 1506-3
IX. CONSENT CALENDAR
All items listed on the Consent Calendar are considered to be routine and will be acted upon with one motion. There will be no separate discussion of these items unless a member of the City Council or the public so requests, in which event, the item will be pulled from the Consent Calendar and considered separately after the motion to approve the Consent Calendar. If you wish to remove an item from the Consent Calendar, please submit a “Speaker Slip” to the City Clerk.
2. Approval of Minutes: February 5, 2024 Regular and Special Meeting Recommended Action: Approve Minutes.
Reference: Clerk’s Minutes Book
Del Mar City Council Regular Meeting February 20, 2024
Agenda Page 3
1050 Camino del Mar, Del Mar, CA 92014 www.delmar.ca.us
3. Ratification of List of Demands, dated February 20, 2024 Recommended Action: Ratify the List of Demands.
Reference: Clerk’s File No. 201-3
4. Waiver of Reading of Ordinances on Agenda
Recommended Action: Waive Reading of Ordinances.
Reference: Clerk’s File No. 401-4
5. Approval of First Amendment to Agreement for City Council Retreat Workshop Facilitation Services
Recommended Action: Staff recommends that the City Council: 1) Approve a First Amendment to the Agreement for City Council Retreat Workshop Facilitation Services with The Centre for Organization Effectiveness to extend the term of the Agreement for an additional 6-month period terminating September 5, 2024 (Attachment A); and 2) Authorize the City Manager to execute the First Amendment.
Reference: Clerk’s File No. 406-1
6. A Resolution of the City Council Conditionally Approving Encroachment Permit EP23-094 to retain and maintain private vegetative, structural, and drainage-related encroachments installed within a portion of unimproved public right-of-way (alley) adjacent to 919 Klish Way, 1035 Klish Way, and 964 Crest Road
Recommended Action: Staff recommends that the City Council adopt the draft resolution “Attachment A” conditionally approving EP23-094, consistent with Council direction on January 8, 2024.
Reference: Clerk’s File No. 802-1
7. Recommended Compensation Adjustment Related to the City Manager’s Performance Evaluation and First Amendment to Employment Contract Recommended Action: The City Council Human Resources Subcommittee recommends that the: 1) City Council adopt the Resolution (Attachment A) approving changes to the City Manager’s compensation effective December 13, 2023, and updating the Management, Professional Confidential salary schedule to reflect the change (Exhibit A to Attachment A); 2) Approve the First Amendment to the City Manager’s Employment Agreement (Attachment B) extending the term to December 13, 2030, and increasing deferred compensation; and 3) Amend the Del Mar City Council Regular Meeting February 20, 2024
Agenda Page 4
1050 Camino del Mar, Del Mar, CA 92014 www.delmar.ca.us Fiscal Year 2023-24 Operating and Capital Budget as indicated in the Fiscal Impact Section of this report.
Reference: Clerk’s File No. 102-8, 406-1, 502-1
8. Reappointment to the Measure Q Citizen Oversight Committee Recommended Action: The Council Liaisons to the Measure Q Citizen Oversight Committee recommend that the City Council reappoint K. Alan Lonbom to serve on the Committee as a voting member for a second three-year term from February 20, 2024, through February 28, 2027.
Reference: Clerk’s File No. 401-5
X. PUBLIC HEARING
9. Sidewalk Café Permit SCP23-003 – Application request to install a new Sidewalk Café in the public right-of-way, adjacent to Suites 105-107 at the Del Mar Plaza (1555 Camino del Mar).
Applicant: Valley Farm Market
Owner: Brixton Capital (Del Mar Plaza)
APN #: 300-030-86
Recommended Action: Staff recommends that the City Council adopt a Resolution approving Sidewalk Café Permit SCP23-003 (Attachment A).
Reference: Clerk’s File No. 701-2
XI. COUNCIL MEETING RECESS
XII. CITY COUNCIL OTHER BUSINESS
10. Overview of Water and Wastewater Rate Study and Proposed Rate Schedule and Recommendation to Initiate the 218 Public Noticing Process Recommended Action: Staff recommends that the City Council receive a presentation from City staff and HF&H Consultants and direct staff to proceed with the required Proposition 218 public noticing process for recommended water and wastewater rates effective July 1, 2024.
Reference: Clerk’s File No. 907-4
Del Mar City Council Regular Meeting February 20, 2024
Agenda Page 5
1050 Camino del Mar, Del Mar, CA 92014 www.delmar.ca.us XIII. REGIONAL ORGANIZATION REPORTS
A Councilmember assigned as a liaison to a regional organization may make a written or oral report. State law precludes the Council from commenting on, discussing, or acting on a report unless the item of business within the report is described in the agenda.
A. 22nd District Agricultural Association Community Relations Committee (Martinez/Worden)
B. Clean Energy Alliance JPA (CEA) Board of Directors (Druker/Worden) C. CSA-17 Ambulance District Advisory Board (Martinez/Quirk) D. Fire Governance Board, Solana Beach/Del Mar/Encinitas (Martinez/Druker) E. League of California Cities – San Diego Chapter (Martinez/Worden) F. League of California Cities – Coastal Cities Group (Worden) G. North County Transit District (NCTD) (Martinez/Druker) H. Regional Solid Waste Association (Worden/Quirk)
I. San Diego Association of Governments Board (SANDAG)
(Gaasterland/Martinez/Druker)
J. SANDAG Borders Committee (Druker)
K. SANDAG Regional Planning Committee (Gaasterland)
L. SANDAG Shoreline Preservation Working Group
(Worden/Gaasterland/Martinez)
M. SANDAG LOSSAN Executive Task Force (Druker/Gaasterland) N. San Diego Metropolitan Wastewater Commission/JPA (Worden/Quirk/Druker) O. San Dieguito River Valley Regional Open Space Park JPA –Executive Committee (Worden/Quirk)
P. Other Regional Organization Reports
XIV. COUNCIL COMMITTEES/SUBCOMMITTEES/COMMUNITY ORG REPORTS A Councilmember assigned as a liaison to a City Committee, Council Subcommittee OR Community Organization may make a written or oral report. State law precludes the Council from commenting on, discussing, or acting on a report, unless the item of business within the report is described in this agenda.
A. Arts Advisory Committee (Druker)
B. Clean Water Rate Project
C. Del Mar Community Connections (Martinez/Worden)
D. Del Mar Village Association (Gaasterland/Martinez)
E. Finance Committee (Druker/Worden)
F. Housing Subcommittee (Gaasterland/Martinez)
G. Human Resources Subcommittee (Druker/Worden)
H. Legislative Subcommittee (Gaasterland/Martinez)
I. Measure Q Citizen Oversight Committee (Gaasterland/Quirk) J. Parks and Recreation Committee (Martinez/Gaasterland) K. Del Mar Railroad Committee (Druker/Gaasterland)
L. Lagoon Committee (Quirk/Worden)
M. Sea-Level Rise Adaptation Plan Implementation Subcommittee (Gaasterland/Martinez)
N. Shores Advisory Committee
O. Sustainability Advisory Committee (Martinez/Worden)
P. Traffic and Parking Advisory Committee (Quirk/Worden) Q. Undergrounding Project Advisory Committee (Druker/Gaasterland) Del Mar City Council Regular Meeting February 20, 2024
Agenda Page 6
1050 Camino del Mar, Del Mar, CA 92014 www.delmar.ca.us R. Other Committee-Subcommittee Reports
XV. UPCOMING AGENDA ITEMS
The following topics/items are tentatively planned for upcoming agendas. The title, wording, and planned date for these items are subject to change. Final agendas are posted at City Hall 72 hours in advance of the meetings and are also posted on our web site with the accompanying staff report. Please watch our web site:
www.delmar.ca.us for City Council Agendas.
March 4, 2024
Fire Department 2023 Service Delivery Overview
SANDAG Bluff 5 Presentation
TPAC Appointment
Interviews and Appointment to the Design Review Board (Tentative pending sufficient applications received.)
Safety Concerns at 13th Street Intersection (Tentative) Pavement Condition Assessment Results
Creation of Rail Realignment NOP Citizen Task Force
Proposed FY 2024-25 Committee Work Plans
XVI. CERTIFICATION
I, Sarah Krietor, Administrative Services Manager/City Clerk for the City of Del Mar, hereby certify that a copy of this agenda was posted at City Hall on the 14th day of February, 2024 at approximately 5:45 p.m.
___________________________________________ 2/14/2024
Sarah Krietor, Administrative Services Manager/ Date
City Clerk
CITY OF DEL MAR
CITY COUNCIL REGULAR MEETING MINUTES
FEBRUARY 5, 2024
City of Del Mar Town Hall
1050 Camino del Mar, Del Mar California 92014
The minutes set forth the actions taken by the City Council on the matters stated. Audio/video recordings of the City Council proceedings are retained for a period of ten years, in accordance with the City's Records Retention Schedule. Audio/video recordings, as well as written materials presented to the City Council, including Red Dots (materials provided to the City Council after the agenda has published), are available on the City’s website at www.delmar.ca.us/AgendaCenter or by contacting the Administrative Services Department at (858) 755-9313.
CALL TO ORDER
Mayor Druker called the Regular Meeting to order at 4:30 p.m.
ROLL CALL
Present: Mayor Dave Druker; Deputy Mayor Terry Gaasterland; Councilmembers Tracy Martinez, Dan Quirk, and Dwight Worden
CITY ATTORNEY CLOSED SESSION REPORT
City Attorney Leslie Devaney reported that there were no recusals or reportable actions for the February 5, 2024, City Council Closed Session meeting. She reported that all members were present with Councilmember Quirk arriving after the start of the meeting at 3:15 p.m.
PLEDGE OF ALLEGIANCE
Deputy Mayor Terry Gaasterland led the Pledge of Allegiance.
PUBLIC ORAL COMMUNICATIONS
Mayor Druker opened the item to public comment and the following people spoke:
1. John Stahl
2. Suren Dutia with a donation of time from Jas Grewal
3. Camilla Rang
4. Julie Maxey-Allison
Mayor Druker closed the item to public comment.
CITY COUNCIL COMMENTS & COMMUNITY ANNOUNCEMENTS
Councilmember Worden reported on his participation in the Regional Taskforce on Homelessness Point in Time Count that occurred on January 25, 2024, and vendor selection for the RE:BEACH Oceanside Sand Replenishment Project that was finalized and approved at the Oceanside City Council meeting on January 31, 2024. Deputy Mayor Gaasterland reported on the first bi-national yearlong celebration of design held by the World Design Organization that will honor the San Diego/Tijuana region by hosting a number of events throughout the year. The public can visit https://wdo.org/calendar to learn more. Deputy Mayor Gaasterland also reported on the website vesselfinder.com as a resource to monitor the Bayport barge which is currently off the shore in the Del Mar dredging sand related to the Army Corp of Engineers sand replenishment project in Solana Beach and Encinitas. 1 February 20, 2024 Item 02
City Council Regular Minutes
February 5, 2024
CITY MANAGER’S REPORT
In the City Manager’s absence, Assistant City Manager Clem Brown reported on the City’s efforts related to the significant rain event which include resources available on the City’s website and City’s sandbag program; ballot drop boxes for the March 5, 2024, Primary Election placed by the San Diego Registrar of Voters (ROV) at the Del Mar Civic Center and Del Mar Library; ongoing recruitment to fill a voting member vacancy on the Design Review Board; and presentation of required housing element implementation project related to code amendments for the Central Commercial Zone and Public Facilities Zone which to the Planning Commission on Tuesday, February 13, 2024, the City Council on March 18 and April 1, 2024, in advance of the April 2024 adoption Housing Element.
PRESENTATIONS
ITEM 1: 2023 LAW ENFORCEMENT SUMMARY/2024 FORECAST (CLERK’S FILE NO. 1101-2) Mayor Druker introduced the item. A presentation was provided by Sheriff Captain Christopher Lawrence.
City Council questions and discussion focused on whether additional costs for Sheriff services associated with the activities for the Fairgrounds are covered by the City or the 22nd District Agricultural Association; whether the increase in crime associated with increased attendance at the Fairgrounds has been communicated to the Fairgrounds board or Chief Executive Officer; appreciation for the responsiveness of the Sheriff to calls for service in Del Mar; catalytic converter thief decrease; and enforcement activities related to traffic and bicycle regulations.
Mayor Druker opened the item to public comment and Greg Rothnem spoke. Mayor Druker closed the item to public comment.
Council discussion focused on enforcement activities related to traffic and bicycle regulations.
ITEM 2: SAN DIEGO ASSOCIATION OF GOVERNMENTS (SANDAG) LOSSAN RAIL REALIGNMENT PROJECT UPDATE (CLERK’S FILE NO. 1005-2, 1506-1) Mayor Druker introduced the item. A presentation was provided by SANDAG staff including Chief Executive Officer Coleen Clementson, Director of Public Affairs Robyn Wapner, Manager of Environmental Compliance Keith Greer, and Rail Planning Program Manager Danney Veeh.
City Council questions focused on the types and amount of freight (including hazardous materials) that will be transported on the rail line and whether SANDAG has inquired with BNSF Railway to receive more specific information about freight; clarification on whether the speed target is a requirement or an objective; whether SANDAG has conducted a feasibility study; clarification on the community impact and other criteria previously used by SANDAG to prioritize alignment options; who has authority to retire the rail line; what alignments will be included in the Environmental Impact Report (EIR) and whether the “Lagoon Alignment” will be included; clarification on SANDAG’s obligation related to transportation planning for rail; considerations related to safety of residents and visitors as related to rail speeds; whether BSNF is required to contribute financially to relocating the train; whether SANDAG could send postcards to every resident in Del Mar regarding this project; timing for the Notice of Preparation (NOP) for the EIR; NOP comment period and location of the public hearing; whether the NOP will include the alignments that will be considered; potential federal funding for the project; military use and operations related to the rail line and Port of San Diego; and timing for the EIR related to the tussle bridge replacement project.
2 February 20, 2024 Item 02
City Council Regular Minutes
February 5, 2024
Mayor Druker opened the item to public comment and the following people spoke:
1. Mac McLoughlin
2. John Stahl
3. Peter Crampton with a donation of time from Catherine Crampton
4. Kevin Patrick
5. Camilla Rang
6. Angelina Neglia with two donations of time from Ann Marie Streihich and Lucy Eskeland
7. Michael Boyle with a donation of time from Judy Pettigrew-Boyle
8. John Spelich
9. Bill Carpenter
10. JP McDermott
11. Edmond Perkins, representing the Port of San Diego
12. Carol Kerridge
13. Betsy Milich
14. Mike (speaker did not provide a last name)
15. Jeremy Bloom
16. Karen Lare
17. Patricia Brutten
Mayor Druker closed the item to public comment.
Assistant City Manager Clem Brown and Deputy Mayor Gaasterland summarized the questions raised during public comment.
Council discussion focused on the importance of public engagement on this project; SANDAG’s next presentation to City Council tentatively scheduled for April 2024; NOP and EIR comment period and contents of the NOP; and desire to form a citizen taskforce to inform the City’s response to the NOP.
City Council consensus was for Mayor Druker and Deputy Mayor Gaasterland to return to City Council on February 20, 2024, with a proposal to form a citizen Taskforce to inform the City’s response to the NOP for the SANDAG LOSSAN Rail Realignment project.
Additionally, Deputy Mayor Gaasterland and Councilmember Martinez will return to City Council with a proposal to confirm the City’s support for SANDAG to study a “Lagoon Alignment” as part of the environmental review process.
CONSENT CALENDAR
Administrative Services Manager/City Clerk Sarah Krietor read the titles of the items included on the Consent Calendar. There were no public speakers for the consent calendar items.
IT WAS MOVED BY COUNCILMEMBER DEPUTY MAYOR GAASTERLAND, SECONDED BY COUNCILMEMBER MARTINEZ TO APPROVE THE CONSENT CALENDAR ITEMS 3 THROUGH 5 WITH AMENDMENT TO ITEM 3 PER RED DOT SUBMITTED BY STAFF. (VOTE 5-0) Ayes: Mayor Druker, Deputy Mayor Gaasterland, and Councilmembers Martinez, Quirk and Worden; Noes: 0; Recuse: 0; Absent: 0; Abstain: 0.
ITEM 3: APPROVAL OF MINUTES: JANUARY 22, 2024 REGULAR AND SPECIAL MEETING (CLERK’S MINUTES BOOK)
Council approved the minutes as amended by the Red Dot from staff, on consent. 3 February 20, 2024 Item 02
City Council Regular Minutes
February 5, 2024
ITEM 4: RATIFICATION OF LIST OF DEMANDS, DATED FEBRUARY 5, 2024 (CLERK’S FILE NO. 201-3)
Council approved the list of demands, on consent.
ITEM 5: WAIVER OF READING OF ORDINANCES ON AGENDA (CLERK’S FILE NO. 401-4) Council waived the reading of ordinances, on consent.
ITEM 6: APPROVAL OF THE 2024 LEGISLATIVE POLICY GUIDELINES (CLERK’S FILE NO. 401-1, 401-7, 401-8)
The item was removed from the consent calendar for discussion. Council discussion focused on a proposed amendment to the housing section related to affordable housing at the Fairgrounds. Council consensus was to support the amendment proposed by Councilmember Martinez.
IT WAS MOVED BY COUNCILMEMBER MARTINEZ, SECONDED BY DEPUTY MAYOR GAASTERLAND TO APPROVE PROPOSED UPDATES TO THE CITY’S LEGISLATIVE POLICY GUIDELINES FOR 2024 AS AMENDED. (VOTE 5-0)
Ayes: Mayor Druker, Deputy Mayor Gaasterland, and Councilmembers Martinez, Quirk and Worden; Noes: 0; Recuse: 0; Absent: 0; Abstain: 0.
COUNCIL MEETING RECESS:
The City Council took a meeting recess from approximately 7:30 to 7:40 p.m.
REGIONAL ORGANIZATION AND COUNCIL COMMITTEES/SUBCOMMITTEES/COMMUNITY
ORGANIZATION REPORTS
City Council representatives reported on the 22nd District Agricultural Association – Community Relations Committee; Del Mar Community Connections; Del Mar Village Association; SANDAG Regional Planning Committee; SANDAG Borders Committee; SANDAG Board of Directors; Finance Committee; Sustainability Advisory Committee; SANDAG Sediment Management Taskforce- Oceanside Littoral Cell; San Dieguito River Valley Regional Open Space JPA; Clean Energy Alliance; and League of California Cities-Coastal Cities.
ADJOURNMENT
Mayor Druker adjourned the meeting at 8:28 p.m.
________________________________________
Sarah Krietor, Administrative Services Manager/
City Clerk
4 February 20, 2024 Item 02
DEL MAR CITY COUNCIL
SPECIAL MEETING MINUTES
CLOSED SESSION
FEBRUARY 5, 2024
City of Del Mar Town Hall
1050 Camino del Mar, Del Mar, California
CALL TO ORDER
Mayor Druker called the meeting to order at 2:45 P.M.
ROLL CALL
Present: Mayor Dave Druker; Deputy Mayor Terry Gaasterland; Councilmembers Tracy Martinez, Dan Quirk (arrived at 3:15pm), and Dwight Worden
CLOSED SESSION
A) Real Property Negotiations
Property: San Diego County Fairgrounds property west of Jimmy Durante Blvd Negotiating Parties: City of Del Mar and 22nd District Agricultural Association Under Negotiation: Terms and conditions for real property acquisition Authority: Government Code Section 54956.8
Reportable Action: None.
B) Public Employee Performance Evaluation
Title: City Manager
Authority: Government Code Section 54957
Reportable Action: None.
ADJOURNMENT
Mayor Druker adjourned the meeting at 4:13 P.M.
__________________________________________
Sarah Krietor, Administrative Services Manager/
City Clerk
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City of Del Mar
Agenda Report
________________________________________________________________________________________________________ City Council Action:
TO: Honorable Mayor and City Council Members
FROM: Emily Torres, Management Analyst
Clem Brown, Assistant City Manager
Via Ashley Jones, City Manager
DATE: February 20, 2024
SUBJECT: Approval of First Amendment to Agreement for City Council Retreat Workshop Facilitation Services
REQUESTED ACTION/RECOMMENDATION:
Staff recommends that the City Council: 1) Approve a First Amendment to the Agreement for City Council Retreat Workshop Facilitation Services with The Centre for Organization Effectiveness to extend the term of the Agreement for an additional 6-month period terminating September 5, 2024 (Attachment A); and 2) Authorize the City Manager to execute the First Amendment.
DISCUSSION/ANALYSIS:
During the City Council’s 2023 Goals and Priorities Workshop in February 2023, the City Council decided to hold a Council retreat in the fall. To assist Council with the initial retreat workshop process, staff solicited proposals from professional organizations to provide facilitation services for the retreat. The City Council then approved an Agreement for City Council Workshop Facilitation Services with The Centre for Organization Effectiveness on September 5, 2023, for an initial 6-month term ending on March 5, 2024 (Attachment B).
The workshop facilitation services include facilitation of a six-hour, in-person workshop with the City Council. The Centre’s services also include pre-planning and development of the agenda, pre-retreat interviews and post-retreat debriefs with the City Council and City Manager. Due to unforeseen circumstances, the Council retreat was deferred from occurring in the fall of 2023 to spring of 2024 on a date still to be determined. As such, staff recommends the City Council approve the First Amendment (Attachment A) to the Agreement with The Center for Organization Effectiveness extending the term of service from March 5, 2024, to September 5, 2024, to accommodate the later retreat date.
FISCAL IMPACT:
There is no fiscal action to be taken by the City Council related to this agenda item. There are sufficient funds available in the Fiscal Year 2023-2024 Operating and Capital Budgets 1 February 20, 2024 Item 05
City Council Agenda Report
First Amendment to Agreement for Council Retreat Facilitation Services February 20, 2024
as a budget amendment was already completed to ensure funds were properly allocated for the retreat workshop.
ENVIRONMENTAL IMPACT:
The proposed City Council action does not constitute a “project” under the definition set forth in California Environmental Quality Act (CEQA) Guidelines Section 15378 because it will not have a potential to result in a direct or indirect physical change in the environment and is, therefore, not subject to CEQA. No further action under CEQA is required.
NEXUS TO COUNCIL GOALS AND PRIORITIES:
In February 2023, the City Council identified holding a facilitated Council retreat as a City Council priority.
ATTACHMENTS:
Attachment A - First Amendment to Agreement for Council Retreat Facilitation Services Attachment B – Original Agreement with The Centre for Organization Effectiveness 2 February 20, 2024 Item 05
FIRST AMENDMENT TO AGREEMENT BETWEEN THE CITY OF DEL MAR
AND THE CENTRE FOR ORGANIZATION EFFECTIVENESS
FOR CITY COUNCIL WORKSHOP FACILITAION SERVICES
THIS FIRST AMENDMENT to the Agreement (First Amendment) is made and entered into effective the 20th day of February, 2024, by and between the City of Del Mar, a Charter City and municipal corporation (“City”), and The Centre for Organization Effectiveness (“Consultant”) (collectively “Parties”).
RECITALS
WHEREAS, on September 5, 2023, the City and Consultant entered into an Agreement (Agreement), by which the City and Consultant established the terms and conditions for providing facilitation services in the form of a six-hour, in person City Council Workshop for a 6-month period terminating March 5, 2024; and WHEREAS, the Parties now desire to extend the term of the Agreement for an additional six-month period as provided for in Section 2.1 of the Agreement; and WHEREAS, the First Amendment is necessary in order to extend the term of the Agreement.
NOW, THEREFORE, the Parties hereby agree to amend the Agreement as follows:
Section 1. Section 2.1 of the Agreement is amended as follows:
2. DURATION OF AGREEMENT
2.1 Term, Time for Performance. The term of the Agreement is for a period commencing on September 5, 2023, and terminating September 5, 2024, (“Termination Date”) unless terminated earlier as set forth herein.
Section 2. Except as otherwise provided in this First Amendment, all terms and conditions, and attachments and exhibits thereto, of the Agreement shall remain in full force and effect.
[SIGNATURES ON THE FOLLOWING PAGE]
ATTACHMENT A
3 February 20, 2024 Item 05
City of Del Mar
First Amendment to Council Workshop Facilitation Services Agreement
IN WITNESS WHEREOF, the parties have caused this First Amendment to be effective as of the date first written above.
CITY OF DEL MAR,
a municipal corporation
By:
Ashley Jones, City Manager
THE CENTRE FOR ORGANIZATION
EFFECTIVENESS
By:
Sommer Kehrli, Chief Executive
Officer
ATTEST:
By:
Sarah Krietor, Administrative
Services Manager/City Clerk
APPROVED AS TO FORM:
By:
Leslie E. Devaney, City Attorney
4 February 20, 2024 Item 05
PROFESSIONAL SERVICES AGREEMENT BETWEEN
THE CITY OF DEL MAR AND THE CENTRE FOR ORGANIZATION EFFECTIVENESS
FOR CITY COUNCIL WORKSHOP FACILITATION
This Professional Services Agreement (“Agreement”) is made and entered into this 5 th day
of September 2023 by and between the City of Del Mar, a Charter City and a municipal corporation (“City”), and The Centre for Organization Effectiveness (“Consultant”) (collectively “Parties”).
WHEREAS, the City desires to employ a consultant to provide facilitation services in the form of a six-hour, in person City Council Workshop (“Consulting Services”). Said work is to be performed in accordance with the terms and conditions set forth below and as described in the scope of services, attached hereto as Exhibit “A” and incorporated herein; and WHEREAS, the City has initially determined that Consultant is qualified by experience and ability to perform the services desired by City, and Consultant is willing to perform such services; and
WHEREAS, Consultant will conduct all the work as described and detailed in this Agreement to be provided to the City.
NOW, THEREFORE, the Parties hereto mutually covenant and agree with each other as follows:
1. CONSULTING SERVICES.
1.1 Scope of Services. The Consultant shall perform the Consulting Services as set forth in the written Scope of Services, attached hereto as Exhibit “A” and incorporated herein. Such services shall be provided at the direction of the City.
1.2. City Modification of Scope of Services. City may order changes to the Scope of Services within the general scope of this Agreement consisting of additions, deletions, or other revisions. If such changes cause a change in the Consultant’s cost of, or time required for, completion of the Scope of Services, an equitable adjustment to Consultant’s compensation and/or contract time shall be made, subject to the City’s approval. All such changes shall be authorized in writing, executed by Consultant and City. If such a change results in an extension of the term of this Agreement or increases the maximum amount to be paid under this Agreement, no such change shall have any force or effect unless an amendment to this Agreement is approved by the City Council.
2. DURATION OF AGREEMENT.
2.1 Term, Time for Performance. This Agreement shall be effective for a period of six-months from the date first written above, which may be extended for an additional six-month period upon written agreement of the Parties.
Time is of the essence for this Agreement and each provision of this Agreement, unless otherwise specified in this Agreement.
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2.2 Delay. Any delay resulting from causes beyond the control of Consultant may merit an extension of time for the completion of the Scope of Services. When such delay occurs, Consultant shall immediately notify the Project Coordinator in writing of the cause and the extent of the delay, whereupon the Project Coordinator shall ascertain the facts and the extent of the delay and grant an extension of time for the completion of the Consulting Services when justified by the circumstances provided that no extension of time shall be granted which would extend the time for performance beyond the date specified in section 2.1 above.
2.3 City’s Right to Terminate for Default. Should Consultant be in default of any covenant or condition hereof, City may immediately terminate this Agreement for cause if Consultant fails to cure the default within ten (10) calendar days of receiving written notice of the default.
2.4 City’s Right to Terminate without Cause. Without limiting its rights in the event of Consultant’s default, City may terminate this Agreement, without cause, by giving written notice to Consultant. Such termination shall be effective upon receipt of the written notice.
Consultant shall be compensated for all effort and material expended on behalf of City under the terms of this Agreement, up to the effective date of termination. All personal property remaining in City facilities or on City property thirty (30) days after the expiration or termination of this Agreement shall be, at City’s election, considered the property of City.
3. PERFORMANCE AFTER TERMINATION. Upon termination of this Agreement as provided herein, Consultant shall, within such reasonable time period as may be directed by City Manager, complete those items of work which are in various stages of completion and which City Manager determines are necessary to be completed by Consultant to allow the project to be completed in a timely, logical, and orderly manner. Upon termination, all finished or unfinished documents, data, studies, surveys, drawings, models, photographs, reports, and other materials prepared by Consultant shall be delivered to the City Manager, upon his request, as property of City.
4. COMPENSATION.
4.1 Total Amount. Compensation to Consultant shall be provided in accordance with the rates described in the Fee Schedule contained in Exhibit “B”. Consultant shall bill the City for work provided and shall present a written request for such payment. City shall pay all invoices in arrears and shall in no event be required to pay for any services provided by Consultant in advance. Consultant acknowledges that it is not guaranteed any particular amount of work.
4.2 Additional Services. City may, as the need arises or in the event of an emergency, request additional services of Consultant. Should such additional services be required, Compensation therefore shall be paid to the Consultant in accordance with Scope of Services contained in Exhibit “A.” City and Consultant shall agree to the costs prior to commencement of such work.
5. INDEPENDENT CONTRACTOR. Consultant is, for all purposes arising out of this Agreement, an independent contractor. The Consultant has and shall retain the right to exercise full control and supervision of all persons assisting the Consultant in the performance of said services hereunder, the City only being concerned with the finished results of the work being performed. Neither Consultant nor Consultant’s employees shall in any event be entitled to any benefits to which City employees are entitled, including, but not limited to, overtime, any 6 February 20, 2024 Item 05
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retirement benefits, workers’ compensation benefits, any injury leave or other leave benefits, Consultant being solely responsible for all such matters, as well as, compliance with social security and income tax withholding and all other regulations and laws governing such matters.
6. STATEMENT OF EXPERIENCE. Consultant agrees and represents by executing this Agreement that it has the financial resources, service experience, completion ability, personnel, and experience in dealing with public agencies necessary for performing the Scope of Services and that such performance shall be in accordance with the standards customarily adhered to by an experienced and competent Consultant using the degree of care and skill ordinarily exercised by reputable Consultants practicing in the same field of service in the State of California. Additionally, Consultant and all of Consultant’s employees or agents shall secure and maintain in force such permits and licenses as are required by law in connection with the furnishing of services pursuant to this Agreement.
7. AUDIT OF RECORDS.
7.1 At any time during normal business hours and as often as may be deemed necessary, the Consultant shall make available to a representative of City for examination all of its records with respect to all matters covered by this Agreement and shall permit City to audit, examine, and/or reproduce such records. Consultant shall retain such financial and program service records for at least four (4) years after termination or final payment under this Agreement.
7.2 The Consultant shall include the City’s right to audit under this section in any and all of their subcontracts and shall ensure that these sections are binding upon all subcontractors.
8. CONFIDENTIALITY. All Consulting services performed by Consultant, including, but not limited to, all drafts, data, correspondence, proposals, reports, research and estimates compiled or composed by Consultant, pursuant to this Agreement, are for the sole use of the City, its agents and employees. Neither the documents nor their contents shall be released to any third party without the prior written consent of the City. This provision does not apply to information that (a) was publicly known, or otherwise known to Consultant, at the time that it was disclosed to Consultant by the City, (b) subsequently becomes publicly known through no act or omission of Consultant or (c) otherwise becomes known to Consultant other than through disclosure by the City. Except for any subcontractors that may be allowed upon prior agreement, neither the documents nor their contents shall be released to any third party without the prior written consent of the City. The sole purpose of this section is to prevent disclosure of City’s confidential and proprietary information by Consultant or subcontractors.
9. CONFLICTS OF INTEREST.
9.1 Consultant shall at all times comply with all federal, state and local conflict of interest laws, regulations, and policies applicable to public contracts and procurement practices, including, but not limited to, California Government Code §§ 81000 et seq. (Political Reform Act) and §§ 1090 et seq. Consultant shall immediately disqualify itself and shall not use its official position to influence in any way any matter coming before the City in which the Consultant has a financial interest as defined in Government Code § 87103. Consultant represents that it has no knowledge of any financial interests, which would require it to disqualify itself from any matter on which it might perform services for the City. 7 February 20, 2024 Item 05
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9.2 Consultant shall comply with all of the reporting requirements of the Political Reform Act. The Consultant shall file a Fair Political Practices Commission Form 700 (Assuming Office Statement) within thirty (30) calendar days of the City’s determination that the Consultant is subject to a conflict of interest code, if applicable. The Consultant shall also file a Form 700 (Annual Statement) on or before April 1, disclosing any financial interests held during the previous calendar year for which the Consultant was subject to a conflict of interest code.
9.3 If, in performing the Consulting Services set forth in this Agreement, the Consultant makes, or participates in, a “governmental decision” as described in Title 2, section 18701(a)(2) of the California Code of Regulations, or performs the same or substantially all the same duties for the City that would otherwise be performed by a City employee holding a position specified in the department's conflict of interest code, the Consultant shall be subject to a conflict of interest code requiring the completion of one or more statements of economic interests disclosing the Consultant’s relevant financial interests.
10. OWNERSHIP OF DOCUMENTS. All documents, data, studies, drawings, maps, models, photographs and reports prepared by Consultant under this Agreement shall be considered the property of City. Consultant shall be permitted to reference and use said materials for use in future studies, work, and marketing so long as said materials are considered “public documents” and are not subject to attorney-client privilege, or the subject of pending closed or executive session discussions.
11. INSURANCE
11.1 Consultant shall procure and maintain for the duration of the Agreement insurance against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the work hereunder and the results of that work by the Consultant, their agents, representatives, employees or subcontractors. Insurance shall be placed with insurers with a current A.M. Best’s rating of no less than “A” and “VII” and are admitted to do business in the State of California, unless otherwise approved in writing by the City’s Risk Manager.
11.2 Consultant’s liabilities, including but not limited to Consultant’s indemnity obligations, under this Agreement, shall not be deemed limited in any way to the insurance coverage required herein. All policies of insurance required hereunder must provide that the City is entitled to thirty (30) days prior written notice (ten (10) days for cancellation due to non-payment of premium) of cancellation or non-renewal of the policy or policies. Maintenance of specified insurance coverage is a material element of this Agreement.
11.3 Types and Amounts Required. Consultant shall maintain, at minimum, the following insurance coverage for the duration of this Agreement:
11.3.1 Commercial General Liability (CGL). Insurance written on an ISO Occurrence form CG 00 01 07 98 or equivalent providing coverage at least as broad which shall cover liability arising from any and all personal injury or property damage in the amount of $1,000,000 per occurrence and subject to an annual aggregate of $2,000,000. There shall be no endorsement or modification of the CGL limiting the scope of coverage for either insured vs. insured claims or contractual liability. All defense costs shall be outside the limits of the policy. 8 February 20, 2024 Item 05
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11.3.2 Commercial Automobile Liability. For all of the Consultant's automobiles including owned, hired and non-owned automobiles, automobile insurance written on an ISO form CA 00 01 12 90 or a later version of this form or an equivalent form providing coverage at least as broad for bodily injury and property damage for a combined single limit of $300,000 per occurrence. Insurance certificate shall reflect coverage for any automobile (any auto).
11.3.3 Workers' Compensation. For all of the Consultant's employees who are subject to this Agreement and to the extent required by applicable state or federal law, a Workers' Compensation policy providing at minimum $1,000,000 employers' liability coverage.
The Consultant shall provide an endorsement that the insurer waives the right of subrogation against the City and its respective elected officials, officers, employees, agents and representatives.
11.3.4 Consulting Liability. Consulting liability (errors and omissions) coverage with a limit of $1,000,000 per claim and $2,000,000 annual aggregate. The Consultant shall ensure both that (1) the policy retroactive date is on or before the date of commencement of the Scope of Services; and (2) the policy will be maintained in force for a period of three years after substantial completion of the Scope of Services or termination of this Agreement whichever occurs last. The Consultant agrees that for the time period defined above, there will be no changes or endorsements to the policy that increase the City's exposure to loss. All defense costs shall be outside the limits of the policy.
11.4 Deductibles and Self-Insured Retentions. Any deductibles or selfinsured retentions are the responsibility of the Consultant and must be declared to and approved by the City. At the option of the City, either (1) the insurer shall reduce or eliminate such deductibles or self-insured retentions as respects the City, its officers, officials, employees, and volunteers, or (2) the Consultant shall provide a financial guarantee satisfactory to the City guaranteeing payment of losses and related investigations, claim administration, and defense expenses.
11.5 Additional Required Provisions. The commercial general liability and automobile liability policies shall contain, or be endorsed to contain, the following provisions:
11.5.1 The City, its officers, officials, employees, and representatives shall be named as additional insureds. The City's Additional Insured status must be reflected on additional insured endorsement form which shall be submitted to the City.
11.5.2 The policies are primary and non-contributory to any insurance that may be carried by the City, as reflected in an endorsement which shall be submitted to the City.
11.6 Verification of Coverage. Consultant shall furnish the City with original certificates and amendatory endorsements effecting coverage required by this Section 11. The endorsement should be on forms provided by the City or on other than the City’s forms provided those endorsements conform to City requirements. All certificates and endorsements are to be received and approved by the City before work commences. The City reserves the right to require complete, certified copies of all required insurance policies, including endorsements affecting the coverage required by these specifications at any time.
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12. DEFENSE AND INDEMNIFICATION.
12.1 Consultant agrees to indemnify, defend (with attorneys approved by City), and hold harmless the City, and its officers, officials, agents and employees (the “Indemnified Parties”) from any and all claims, demands, costs or liability that arise out of, or pertain to, or relate to the Consultant, its employees, agents, and subcontractors performance of services under this Agreement. Consultant’s duty to indemnify under this section shall not include liability for damages for death or bodily injury to persons, injury to property, or other loss, damage or expense arising from the sole negligence or willful misconduct by the City or its elected officials, officers, agents, and employees. Consultant's indemnification obligations shall not be limited by the insurance provisions of this Agreement. The Parties expressly agree that any payment, attorney's fees, costs or expense City incurs or makes to or on behalf of an injured employee under the City's self-administered workers' compensation is included as a loss, expense, or cost for the purposes of this section, and that this section will survive the expiration or early termination of this Agreement.
12.2 This indemnity is in addition to any other rights or remedies which City may have under the law or this Agreement. In the event of any claim or demand made against any party which is entitled to be indemnified hereunder, City may, at its sole discretion, reserve, retain or apply any monies due to Consultant under this Agreement for the purpose of resolving such claims; provided however, that City may release such funds if Consultant provides City with reasonable assurances of protection of the City's interest. The City shall, in its sole discretion determine whether such assurances are reasonable.
12.3 Consultant agrees that its duty to defend arises upon an allegation of liability based upon the performance of services under this Agreement by Consultant, its officers, agents, representatives, employees, sub-consultants, or anyone for whom Consultant is liable and that an adjudication of Consultant’s liability is not a condition precedent to Consultant's duty to defend.
13. SUBCONTRACTORS.
13.1 The Consultant’s hiring or retaining of third parties (i.e. subcontractors) to perform services related to the Project is subject to prior approval by the City.
13.2 All contracts entered into between the Consultant and its subcontractor shall also provide that each subcontractor shall obtain insurance policies, which shall be kept in full force and effect during any and all work on this Project and for the duration of this Agreement.
The Consultant shall require the subcontractor to obtain all policies described in section 11 of this Agreement in the amounts required by the City, which shall not be greater than the amounts required of the Consultant.
13.3 In any dispute between the Consultant and its subconsultants, the City shall not be made a party to any judicial or administrative proceeding to resolve the dispute. The Consultant agrees to defend and indemnify the City as described in section 12 of this Agreement should the City be made a party to any judicial or administrative proceeding to resolve any such dispute or should the City incur any costs in responding to third-party discovery requests.
14. NON-DISCRIMINATION. Consultant shall not discriminate against any employee or applicant for employment because of race, color, religion, sex, national origin, ancestry, 10 February 20, 2024 Item 05
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physical or mental disability, medical condition, genetic information, marital status, military or veteran status, gender, gender identity, gender expression, sexual orientation, or any other class protected under state, federal, or local law. Consultant shall take affirmative action to insure that applicants are employed and that employees are treated during employment without regard to any class or category protected under state, federal, or local law and shall make reasonable accommodation to qualified individuals with disabilities. Such action shall include, but not be limited to, the following: employment, upgrading, demotion, transfer, recruitment, or recruitment advertising, layoff or termination, rates of pay or other forms of compensation, and selection for training, including apprenticeship. Consultant agrees to post in conspicuous places available to employees and applicants for employment any notices provided by City setting forth the provisions of this non-discrimination clause.
15. NOTICES. All communications to either party by the other party shall be delivered to the persons listed below. Any such written communications by mail shall be conclusively deemed to have been received by the addressee five (5) calendar days after the deposit thereof in the United States Mail, postage prepaid and properly addressed as noted below.
If to City: If to Consultant:
City of Del Mar The Centre for Organization Effectiveness City Clerk Sommer Kehrli, Chief Executive Officer
1050 Camino del Mar 3914 Murphy Canyon Road A164
Del Mar, CA 92014 San Diego, CA 92123
16 ASSIGNABILITY. This Agreement and any portion thereof shall not be assigned or transferred, nor shall any of the Consultant’s duties be delegated or sub-contracted, without the express written consent of the City.
17. RESPONSIBILITY FOR EQUIPMENT. City shall not be responsible nor held liable for any damage to persons or property consequent upon the use, misuse, or failure of any equipment used by Consultant or any of Consultant’s employees or subcontractors, even if such equipment has been furnished, rented, or loaned to Consultant by City. The acceptance or use of any such equipment by Consultant, Consultant’s employees, or subcontractors shall be construed to mean that Consultant accepts full responsibility for and agrees to exonerate, indemnify and hold harmless City from and against any and all claims for any damage whatsoever resulting from the use, misuse, or failure of such equipment.
18. CALIFORNIA LAW; VENUE/MISC. This Agreement shall be construed and interpreted according to the laws of the State of California. Any action brought to enforce or interpret any portion of this Agreement shall be brought in the county of San Diego, California.
Consultant hereby waives any and all rights it might have pursuant to California Code of Civil Procedure section 394.
19. COMPLIANCE WITH LAWS. The Consultant shall comply with all laws, ordinances, regulations, and policies of the federal, state, and local governments applicable to this Agreement, including California Labor Code section 1720, et seq., relating to payment of prevailing wages for public works projects, if applicable. Consultant shall indemnify and defend the Indemnified Parties from and against any liability incurred due to any failure on the part of Consultant to comply with any applicable Laws.
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To the extent Consultant is required to comply with prevailing wage requirements, Consultant does hereby acknowledge that they are aware of, have read, and understand the terms and implications of SB 854 and Consultant and any subconsultants ensure that they are familiar with and comply with its requirements. Such requirements include, but are not limited to, the registration requirement with the Department of Industrial Relations, State of California (DIR), pursuant to Labor Code section 1725.5. As of March 1, 2015, in compliance with SB 854, the City requires all affected contractors and consultants to be registered with the DIR prior to submitting a bid or proposal on any eligible District project. As of April 1, 2015, failure to comply with the requirements of SB 854 by any contractor or consultant, including registration with the DIR pursuant to Labor Code section 1725.5, shall be a material breach of this Agreement which may be terminated by the City in its sole and absolute discretion. Where applicable, this project is subject to compliance monitoring and enforcement by the DIR.
20. CONSULTANT’S CERTIFICATION OF AWARENESS OF IMMIGRATION REFORM AND CONTROL ACT OF 1986. Consultant certifies that Consultant is aware of the requirements of the Immigration Reform and Control Act of 1986 (8 USC §§ 1101-1525) and has complied and will comply with these requirements, including, but not limited to, verifying the eligibility for employment of all agents, employees, subcontractors, and consultants that are included in this Agreement.
21. ENTIRE AGREEMENT. This Agreement sets forth the entire understanding of the Parties with respect to the subject matters herein. There are no other understandings, terms or other agreements expressed or implied, oral or written, except as set forth herein.
22. AMENDMENTS. This Agreement may be modified or amended only by a written document executed by both Consultant and City and approved as to form by the City Attorney.
No change, alteration, or modification of the terms or conditions of this Agreement, and no verbal understanding of the Parties, their officers, agents, or employees shall be valid unless agreed to in writing by both Parties.
23. NO WAIVER. No failure of either the City or the Consultant to insist upon the strict performance by the other of any covenant, term or condition of this Agreement, nor any failure to exercise any right or remedy consequent upon a breach of any covenant, term, or condition of this Agreement shall constitute a waiver of any such breach of such covenant, term or condition.
24. SEVERABILITY. The unenforceability, invalidity, or illegality of any provision of this Agreement shall not render any other provision unenforceable, invalid, or illegal.
25. DRAFTING AMBIGUITIES. The Parties agree that they are aware that they have the right to be advised by counsel with respect to the negotiations, terms and conditions of this Agreement, and the decision of whether or not to seek advice of counsel with respect to this Agreement is a decision which is the sole responsibility of each Party. This Agreement shall not be construed in favor of or against either Party by reason of the extent to which each Party participated in the drafting of the Agreement.
26. LEGAL FEES. In the event of the bringing of any action or suit by either party hereto against the other party hereunder to enforce or interpret any of the provisions, covenants or conditions of this Agreement, or arising out of any tortious conduct by either party incident to this Agreement, the prevailing party in such action or suit shall be entitled to recover all costs and expenses of suit, including reasonable attorneys' fees. In any action or suit brought to enforce this 12 February 20, 2024 Item 05
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Agreement, the damages available shall be limited to specific performance or other such equitable relief that the court may order.
27. CONFLICTS BETWEEN TERMS. If an apparent conflict or inconsistency exists between the main body of this Agreement and the Exhibits, the main body of this Agreement shall control. If a conflict exists between an applicable federal, state, or local law, rule, regulation, order, or code and this Agreement, the law, rule, regulation, order, or code shall control. Varying degrees of stringency among the main body of this Agreement, the Exhibits, and laws, rules, regulations, orders, or codes are not deemed conflicts, and the most stringent requirement shall control. Each Party shall notify the other immediately upon the identification of any apparent conflict or inconsistency concerning this Agreement.
28. EXHIBITS INCORPORATED. All Exhibits referenced in this Agreement are incorporated into the Agreement by this reference.
29. SIGNING AUTHORITY. The representative for each Party signing on behalf of a corporation, partnership, joint venture, or governmental entity hereby declares that authority has been obtained to sign on behalf of the corporation, partnership, joint venture, or entity and agrees to hold the other Party or Parties hereto harmless if it is later determined that such authority does not exist.
[SIGNATURES ON FOLLOWING PAGE]
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EXHIBIT “A”
SCOPE OF SERVICES
Consultant shall provide facilitation services to the City as further described, but not limited to, below:
• Intake and planning meeting with City Manager and leadership • 30-minute interviews with Council members and City Attorney (up to 6) • Administration of the Gallup, CliftonStrengths 34 Assessment for all workshop participants
• 30-minute Strengths debrief session (before or after workshop) • Design and facilitation of a six hour, in-person City Council workshop prior to the end of 2023, based on Council availability
• Debrief meeting with City Manager
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EXHIBIT “B”
FEE SCHEDULE
BILLING SCHEDULE
Installment Date Amount
1 of 1 Upon completion of work $8,286
• Support requested by the Client that extends beyond the scope of this proposal will be billed at an hourly rate of $320. Additional materials and expenses, if any, will be billed at cost.
• If additional support is requested beyond this scope, a new proposal will be required. • If additional materials are requested, those will be billed at cost. • The City will provide the location, all A/V equipment, flipchart stand/paper, and food as needed.
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City of Del Mar
Staff Report
________________________________________________________________________________________________________ City Council Action:
TO: Honorable Mayor and City Council Members
FROM: Matt Bator, AICP, Principal Planner
Karen Brindley, Planning and Community Development Director Via Ashley Jones, City Manager
DATE: February 20, 2024
SUBJECT: A Resolution of the City Council Conditionally Approving Encroachment Permit EP23-094 to retain and maintain private vegetative, structural, and drainage-related encroachments installed within a portion of unimproved public right-of-way (alley) adjacent to 919 Klish Way, 1035 Klish Way, and 964 Crest Road
REQUESTED ACTION/RECOMMENDATION:
Staff recommends that the City Council adopt the draft resolution “Attachment A” conditionally approving EP23-094, consistent with Council direction on January 8, 2024.
BACKGROUND:
Encroachment Permit EP23-094 involves the (private) property at 919 Klish Way, an irregularly shaped lot developed with a single-family residence, and the adjacent portion of an unimproved “paper” alley that runs along the western side of the property. A vicinity map has been included for reference as Attachment B. The alley connects Klish Way with Amphitheatre Drive to the east and adjoins seven properties. The portion of alley subject to this request is also bordered by 1035 Klish Way to the west and 965 Crest Road to the north, but the owners of those two properties are not applicants of EP23-094.
In August of 2022, the City received a complaint regarding installation of vegetation (hedges, rose bushes, and other ornamental plants), a stone and decomposed granite patio with associated patio furniture, and other private encroachments/improvements without City authorization within the unimproved public alley adjacent to 919 Klish Way.
The unauthorized improvements were planted/installed in an approximately 70-foot-long span of the alley located to the north of driveway and retaining wall improvements in the alley that were approved by the City Council in 1997 through an Encroachment Permit EP-97-41. The driveway and wall improvements provide vehicular access to the home at 919 Klish Way.
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City Council Staff Report
Resolution Approving EP23-094
February 20, 2024
On October 23, 2023, Tanya Young and Michael McManus, the owners of 919 Klish Way, filed a Long-Term “Major” Encroachment Permit application (EP23-094) requesting City approval to retain the above-discussed alley improvements/encroachments.
On January 8, 2024, the City Council conducted a public hearing to consider Encroachment Permit application EP23-094. After receiving staff’s presentation, a presentation from the Applicant’s legal counsel, and public testimony, the City Council deliberated the findings required to approve EP23-094 and accordingly were able to determine, based on the public testimony and new evidence received, that approval findings could be made if Council added a condition requiring that every other Pittosporum shrub making up a hedgerow along the western extent of the subject alley be removed.
The purpose of requiring the removal of five Pittosporum shrubs is to ensure the vegetation along this section of the alley does not create a “walled off” appearance.
Therefore, the Applicant will be required to maintain (trim) the remaining Pittosporum shrubs at a height no more than 15-feet-tall and must ensure that the shrubs remain separated and clearly spaced apart. The Council also confirmed that two Pittosporum shrubs removed prior to the hearing could be included in the removal order, resulting in a requirement to remove five out of the original fourteen shrubs making up the hedge.
With a 3-2 vote (Druker/Quirk opposed) to approve the application, the City Council directed staff to return with a resolution with findings for approval and conditions requiring the previously mentioned modifications and maintenance requirements for the existing Pittosporum hedge.
DISCUSSION:
Consistent with City Council direction, staff has prepared a resolution for Council consideration, which is included as Attachment A. To memorialize the Council’s requirements regarding the Pittosporum removals and determine exactly which Pittosporum shrubs would be removed, staff met with Applicant Tanya Young and her legal counsel Matt Peterson at the alley location on January 17, 2024. Based on the outcome of that meeting, the site plan associated with the Applicant’s submittal of EP23- 094 has been revised to depict the encroachments that would remain as conditionally allowed, and an additional page has been added to the plan that depicts which Pittosporum shrubs would be removed (Attachment C).
Additional conditions have been included in the proposed resolution to ensure that the approved encroachments remain consistent with the City Council’s findings for approval.
The conditions require that the public would continue to have safe pedestrian access through that portion of the public right-of-way (alley) and that no additional private improvements (permanent or temporary) would be allowed without further City authorizations. Additionally, to make certain that the any future property owners of 919 Klish Way are made aware of the conditions and restrictions associated with the limited encroachment allowances and maintenance responsibilities of EP23-094, the applicants will be required to record a covenant restriction running with the land on their property. 2 February 20, 2024 Item 06
City Council Staff Report
Resolution Approving EP23-094
February 20, 2024
The approval and recordation of this Encroachment Permit approval will not affect or disrupt the approval or (separate) covenant restrictions associated with EP-97-41.
FISCAL IMPACT:
There is no fiscal impact related to this agenda item, as this is a private development proposal. All fees associated with entitlement processing and long-term maintenance are paid for by the Applicant.
ENVIRONMENTAL IMPACT:
This project is exempt from environmental review pursuant to California Environmental Quality Act (CEQA) Guidelines Section 15304 (b), Class 4 – Minor Alterations to Land, and it has been further determined that none of the six exceptions to the use of a Categorical Exemption are applicable (Guidelines Section 15300.2.
ATTACHMENTS:
Attachment A – Resolution Conditionally Approving EP23-094 Attachment B – Vicinity Map
Attachment C – EP23-094 Revised Site Plan and Shrub Removal Exhibit 3 February 20, 2024 Item 06
ATTACHMENT A
RESOLUTION NO. 2024-XX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DEL MAR, CALIFORNIA, APPROVING ENCROACHMENT PERMIT EP23-094, A
REQUEST TO RETAIN PRIVATE VEGETATIVE, STRUCTURAL, AND
DRAINAGE-RELATED ENCROACHMENTS WITHIN A PORTION OF
UNIMPROVED PUBLIC RIGHT-OF-WAY (ALLEY) ADJACENT TO 919
KLISH WAY, 1035 KLISH WAY, AND 964 CREST ROAD IN DEL MAR,
CALIFORNIA
WHEREAS, the City of Del Mar (City) is the lawful owner of a right-of-way (referred to as an “alley”) adjacent 919 Klish Way; and
WHEREAS, the City granted an Encroachment Permit (EP-97-41) to the owners of 919 Klish Way to improve the southernmost potion of the alley with driveway, retaining wall and landscaping improvements, with a condition that pedestrian access through the alley not be impeded; and
WHEREAS, on August 24, 2022, the City received a citizen complaint regarding the planting of vegetation (hedges, rose bushes, and other ornamental plants), installation of a stone and decomposed granite patio which included patio furniture, and other nonpermitted private improvements within a portion of the unimproved public alley north of the area subject to EP-97-41; and
WHEREAS, the owners of 919 Klish Way, Tanya Young and Michael McManus (“Applicant”), filed an Encroachment Permit application (EP22-101) on November 3, 2022, requesting City permission to retain the alley private improvements, which they installed; and
WHEREAS. on August 7, 2023, the applicant’s representative, Bokal and Sneed Architects, provided the City with a revised site plan for EP22-101, requesting approval to perform work within the alley to remove all unauthorized vegetation and improvements depicted on the plan; and
WHEREAS, on August 17, 2023, EP22-101 was approved as “Long-Term Minor Encroachment Permit” with specific conditions to ensure that the removal of the vegetation and patio improvements would not result in erosion and storm water-related impacts in the public alley; and
WHEREAS, on August 23, 2023, the Applicant filed an appeal of EP22-101 and as part of the appeals process proposed to revise their application to retain all encroachments they had previously agreed to remove; and WHEREAS, on October 16, 2023, the City Council conducted an Initial Consideration of the Appeal, at which time a report was presented by staff, testimony was provided by the Applicant, and interested residents were provided an opportunity to speak and provide evidence; during the hearing, the Applicant requested that the City Council 4 February 20, 2024 Item 06
Resolution 2024-XX
consider a “Long-Term Major Encroachment Permit” as part of the appeals process, which was denied as not being properly submitted; and
WHEREAS, on October 23, 2023, the Applicant filed a new application for a LongTerm Major Encroachment Permit (EP23-094) seeking approval to retain unpermitted and existing vegetation, irrigation, a stone and gravel patio, and subgrade drainage improvements within the public right-of-way adjacent to 919 Klish Way, 1035 Klish Way, and 964 Crest Road; and
WHEREAS, the location of encroachments identified in EP23-094 are located north of the encroachments that were authorized by EP-97-41 and extends the length of the authorized encroachments as measured from improved Klish Way, and WHEREAS, Del Mar Municipal Code (DMMC) Chapter 23.28 requires an Encroachment Permit (EP) for any private improvements on City property, and specifically any improvements that would alter the intended use of public right-of-way, and requires City Council approval; and
WHEREAS, DMMC Section 23.28.070 provides that an Encroachment Permit may be approved or conditionally approved only if the City Council makes all required findings as set forth in Section 23.28.070(C); and
WHEREAS, in accordance with requirements of the California Environmental Quality Act (CEQA), this project is exempt from environmental review pursuant to California Environmental Quality Act (CEQA) Guidelines Section 15304 (b), Class 4 – Minor Alterations to Land, and it has been further determined that none of the six exceptions to the use of a Categorical Exemption are applicable (Guidelines Section 15300.2); and WHEREAS, on January 8, 2024, the City Council of the City of Del Mar held a duly noticed public hearing to review the subject encroachment permit at which time all persons desiring to be heard were heard; and
WHEREAS, evidence was submitted and considered to include without limitation:
a. Plans submitted by the applicant;
b. Written information submitted with the application;
c. Agenda Report, dated January 8, 2024;; and
d. Additional written and oral evidence submitted during the hearing. 5 February 20, 2024 Item 06
Resolution 2024-XX
WHEREAS, on January 8, 2024, the City Council voted 3-2 to approve EP23-094 and directed staff to return with a revised resolution and CEQA determination for Council consideration and action; and
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Del Mar that Encroachment Permit EP23-094 is hereby conditionally approved based on the following findings in DMMC Section 23.28.070 (C):
1. As conditioned, proposed Encroachments will not endanger the public health, safety, or welfare, or the surrounding property.
2. As conditioned, the proposed Encroachments will not unreasonably interfere with the intended use of a City Right-of-Way or Easement as an unobstructed, traversable clear public pathway shall be always maintained.
3. As conditioned, the proposed Encroachments will not have an adverse impact on the welfare of the community or on the community's appearance or aesthetics, as five (5) specific individual Pittosporum shrubs will be removed to ensure that the alley is not “walled off” or inaccessible from adjacent private property and the approval does not authorize any planting on additional vegetation or installation of permanent or temporary improvements within the subject portion of the alley.
4. A conditioned, the proposed Encroachments will not cause an unnecessary change in the character of the community as specific individual Pittosporum shrubs will be removed as shown on the approved plans for EP23-094 dated February 13, 2024, to eliminate an appearance of public right-of-way improvement for private use.
5. As conditioned the proposed Encroachment will not be a detriment to the interests of the general public in that the Encroachments do not prohibit public use of the alley and through passage of pedestrians.
6. As conditioned, the proposed Encroachment will not convert significant areas of public property to private use as public access will be maintained and the appearance of private use will be mitigated through the removal of five (5) Pittosporum shrubs.
NOW, THEREFORE, BE IT FURTHER RESOLVED by the City Council that EP23- 094 shall be subject to the following conditions:
General Conditions:
GC-1 [Business License]
Prior to commencement of any further work on site, all contractors and subcontractors shall obtain a valid City of Del Mar Business License. A copy of the approved Encroachment Permit shall be kept on site at all times, along with copies of the required Business Licenses for all contractors and subcontractors. 6 February 20, 2024 Item 06
Resolution 2024-XX
GC-2 [Development Authorization Limited to Plan Set]
This permit is granted based on submitted plans dated February 13, 2024 and so identified by the staff of the Del Mar Planning Department. Revisions to these plans and/or any proposals for modification to the project shall require review and prior authorization from the appropriate entities of the City of Del Mar.
GC-9 [Requirement for Building Permits]
Prior to commencement of work, the applicant or agent shall obtain any required Building Permits.
GC-21 [No Transfer in Property Interest]
The granting of an encroachment permit pursuant to this chapter shall not constitute the transfer or relinquishment of any ownership or interest held by the City over the public right-of-way, nor shall such permit confer any vested or proprietary rights upon the holder of the permit beyond the right to utilize the encroachment area in the manner authorized by the permit and subject to all of the conditions set forth herein.
The applicant/owner agrees to protect all survey markers and monuments in the vicinity of the work and agrees to replace any markers or monuments, if damaged, to the satisfaction of the Public Works Director.
General Planning Encroachment Conditions:
GEP-2 [EP – Indemnification]
By accepting this permit and implementing the development authorized herein, the Applicant agrees to the fullest extent of the law, to indemnify, defend and save the City of Del Mar, Councilmembers, Commissioners, board members, its authorized agents, officers, representatives and employees (“Indemnified Parties”) to provide for legal defense costs as a separate promise and harmless from and against any and all penalties, liabilities, annoyances, or loss resulting from claims or court action and arising out of any accident, loss or damage to persons or property happening or occurring as a proximate result of any work undertaken under the permit granted pursuant to the application or by reason of the permittee's installation, operation, maintenance or removal of the encroachments, unless Indemnified Parties engage in willful misconduct or active negligence.
GEP-3 [EP - Removal of Improvements]
The Applicant agrees that if any planting or structure for which this permit is issued is, at any point in the future, determined by the City to interfere with the use, repair or improvement of the subject right-of-way, the applicant/owner or his or her successors or assigns, shall remove the development within ten (10) days after the receipt of a written notice from the Director of Public Works to do so. The removal shall be accomplished at the expense of the applicant or his or her successors or assigns and shall be removed or relocated to the satisfaction of the Director of Public Works. 7 February 20, 2024 Item 06
Resolution 2024-XX
GEP-4 [EP - Compliance with Conditions]
The Applicant hereby agrees to do all work and otherwise comply with the terms and conditions of this permit, and all applicable rules and regulations of the City of Del Mar and/or other public agency.
GEP-5 [EP - Revocation of Permit]
This permit may be revoked by the City if noncompliance is noted to the applicant/owner and satisfactory action is not taken by the applicant or his/her agents to achieve compliance within twenty-four (24) hours of notice. Further, this permit may be revoked if the City ever has a need for the portion of the right-of-way, currently utilized by the private improvements, in the future, or if noncompliance is noted to the applicant and satisfactory action is not taken by the applicant or his/her agents to achieve compliance within twentyfour (24) hours of notice.
Special Conditions:
SP-1 [Pittosporum Removals]
Within thirty (30) days of final EP approval, the applicant shall remove five (5) Pittosporum shrubs as identified on approved plans. The subject shrubs shall be removed to a minimum of six (6) inches below adjacent grade. Once removed, the void from the removal shall be filled in to be level with existing adjacent grade. Exposed portions/trunks of the two (2) Pittosporum shrubs that where previously removed, shall also be removed so as to be no higher than six (6) inches below existing adjacent grade. The remaining Pittosporum (as identified as trees 1, 3, 6, 8, 10, 12, and 14 on approved plans) shrubs shall be maintained in accordance with Condition SP-2.
SP-2 [Pittosporum Maintenance]
No Pittosporum shrub authorized by this Permit shall be allowed to grow higher than fifteen feet above existing adjacent grade. All Pittosporum shrubs shall also be maintained to retain the minimum distances of separation created by the removal as identified in Condition SP-1, in order to prevent the establishment of solid vegetation along the rightof-way boundary.
SP-3 [Provision and Maintenance of Public Pathway]
Applicant shall ensure that a public pathway at least three (3) feet in width shall be consistently maintained in the alley section subject to this Permit.
SP-4 [Limited Use of Alley]
Improvements and vegetation shall be consistent with the approved plans. Additional improvements, modifications, or new vegetation is prohibited within the area identified by EP23-094 without additional City authorization.
SP-5 [No Conflict with EP-97-41]
The City’s authorization and conditions of EP-97-41 remain in full force and effect and are hereby not modified by EP-23-094. Any planting or improvements (i.e.: Pittosporum 8 February 20, 2024 Item 06
Resolution 2024-XX
shrubs and pedestrian access stairs) within the portion of the alley subject to EP-97-41 shall be allowed as separately approved by EP-23-094.
Document Conditions:
DC-1 [Recordation of a Covenant Running with the Land]
Within thirty [30] days of final EP approval, the Applicant shall record a covenant (at the Applicant’s expense) against the deed for the property benefited by the approved Encroachment Permit setting forth the terms and conditions of the Permit, including the requirement for applicant’s maintenance/responsibility and removal of the encroachment upon demand by the City. The covenant shall include the approved plans and shall run with the land and shall be binding on future owners and assigns. The City Manager shall approve the form and content of the covenant and sign on behalf of the City of Del Mar.
PASSED, APPROVED, AND ADOPTED by the City Council of the City of Del Mar, State of California, at a Regular Meeting held on the 20th day of February 2024. ____________________________
Dave Druker, Mayor
City of Del Mar
APPROVED AS TO FORM:
________________________
Leslie E. Devaney, City Attorney
City of Del Mar
ATTEST AND CERTIFICATION:
STATE OF CALIFORNIA
COUNTY OF SAN DIEGO
CITY OF DEL MAR
I, SARAH KRIETOR, Administrative Services Manager/City Clerk of the City of Del Mar, California, DO HEREBY CERTIFY, that the foregoing is a true and correct copy of Resolution No. 2024-XX, adopted by the City Council of the City of Del Mar, California, at a Regular Meeting held the 20th day of February 2024, by the following vote:
9 February 20, 2024 Item 06
Resolution 2024-XX
AYES:
NOES:
ABSENT:
ABSTAIN:
_________________________________
Sarah Krietor, Administrative Services
Manager/City Clerk
City of Del Mar
10 February 20, 2024 Item 06
Attachment C
11 February 20, 2024 Item 06
MAJOR ENCROACHMENT PERMIT 23-094 LONG TERM Scale: 1-1/2" = 1'-0" & SNEED ARCHITECTS BOKAL MAJOR ENCROACHMENT PERMIT 23-094 LONG TERM 919 KLISH WAY 13 FEB 2024 YOUNG- MCMANUS RESIDENCE & SNEED ARCHITECTS BOKAL APN: 300-263-20 ENCROACHMENT SCOPE PROJECT CONTACT SHEET 1 12 February 20, 2024 Item 06
TREE REMOVAL PLAN 919 KLISH WAY 13 FEB 2024 YOUNG-MCMANUS RESIDENCE Scale: 1-1/2" = 1'-0" & SNEED ARCHITECTS BOKAL APN: 300-263-20 SUMMARY SHEET 2 13 February 20, 2024 Item 06
City of Del Mar
Agenda Report
________________________________________________________________________________________________________ City Council Action:
TO: Honorable Mayor and City Council Members
FROM: Mayor Dave Druker and Councilmember Dwight Worden Human Resources Subcommittee of the City Council
DATE: February 20, 2024
SUBJECT: Recommended Compensation Adjustment Related to the City Manager’s Performance Evaluation and First Amendment to Employment Contract REQUESTED ACTION/RECOMMENDATION:
The City Council Human Resources Subcommittee recommends that the: 1) City Council adopt the Resolution (Attachment A) approving changes to the City Manager’s compensation effective December 13, 2023, and updating the Management, Professional Confidential salary schedule to reflect the change (Exhibit A to Attachment A); 2) Approve the First Amendment to the City Manager’s Employment Agreement (Attachment B) extending the term to December 13, 2030, and increasing deferred compensation; and 3) Amend the Fiscal Year 2023-24 Operating and Capital Budget as indicated in the Fiscal Impact Section of this report.
DISCUSSION/ANALYSIS:
The City Council began the annual process for evaluating the City Manager in January 2024. As part of the evaluation process, the City Council met as a group during closed session to review the City Manager, including her input on accomplishments during the year, and to discuss the City Manager’s performance for the period December 13, 2022, through December 13, 2023. Through this collaborative effort, the City Council concluded that the City Manager’s overall performance was highly favorable and met the City Council’s expectations.
Below are some examples of the City Manager’s significant accomplishments during the evaluation period:
Excellent oversight and support throughout a long and difficult process was essential to the City’s successful completion of the City’s 6th Cycle Housing Element and to receiving state certification thereof.
Essential leadership in pursuit of a Del Mar housing program at the Fairgrounds. Excellent oversight and leadership on the City Undergrounding Program. Successful negotiation of a resolution of disputes with the Winston School which has greatly served the City.
1 February 20, 2024 Item 07
City Council Agenda Report
City Manager Compensation Adjustment
February 20, 2024
Successfully maintained stable City finances, built and maintained a productive management team, and fostered strong staff and morale.
Consumer Price Index Adjustment
As part of the standard annual evaluation process, Human Resources staff conducted a market analysis of city managers’ salaries across the San Diego region. Based on the results of this research, the City of Del Mar City Manager’s pay is approximately 10% below the regional median. The City Council’s compensation goal is to target salaries for all employees within 5-7% of the median.
Additionally, Section 7(c) of the City Manager’s employment agreement provides that:
Upon satisfactory performance, the City Council shall adjust the Manager’s compensation annually (“Annual Adjustment”), which will be based upon the San Diego Regional Consumer Price Index (CPI) as reported by the Bureau of Labor Statistics and regional compensation data, in an amount generally not less than 3% (unless CPI is less than 3%, in which case the increase may be less, consistent with CPI) nor more than 5% (even if CPI exceeds 5%). The City Council has the discretion to implement the Annual Adjustment as a base salary adjustment, one-time bonus, or a combination thereof. The Annual Adjustment will take place annually on Manager’s anniversary date (December 13), and shall be subject to taxes and other required withholdings.
Based on the City Manager’s performance, and regional compensation and CPI data, the Human Resources subcommittee is recommending a 4% base salary increase for the City Manager, which would be retroactively effective December 13, 2023, as required by the City Manager’s employment agreement. The CPI for the San Diego region for the calendar year 2023 fluctuated between roughly 4 and 6+%. The City Manager’s current salary is 10.7% below the regional median. A 4% increase is consistent with her contract calling for compensation increases between 3-5% annually and would effectively reflect a cost-of-living increase. Additionally, if the proposed 4% CPI adjustment is approved, the City Manager’s base salary would be 6.5% below median, which aligns with the City Council’s compensation goal of maintaining employee salaries within 5-7% of the median.
Agreement Extension & Deferred Compensation Adjustment
The Human Resources Subcommittee recommends the City Council approve a First Amendment to the City Manager’s Employment Agreement (Attachment B) extending the initial term of the Agreement from December 13, 2026, to December 13, 2030. The extension will serve to give the City Manager more job security while allowing for more effective long-term planning for the City. Overall, it serves the City’s interest to retain the City Manager for a longer period. The recommended adjustments are modest but we believe will serve both parties well.
The City Manager’s annual deferred compensation contribution of $12,000 is currently more than 38% below the San Diego area median. As such, it is recommended that the City Manager’s Employment Agreement be amended to increase deferred compensation to $17,500 annually which would be about 11% below the median. 2 February 20, 2024 Item 07
City Council Agenda Report
City Manager Compensation Adjustment
February 20, 2024
FISCAL IMPACT:
Approval of this item will impact the Fiscal Year 2023-24 Operating and Capital Budget in the amount of $8,680. However, due to salary savings in the department budget resulting from a temporary vacancy, there are sufficient funds in the program to cover the proposed salary increase in Fiscal Year 2023-24. The Fiscal Year 2024-25 Budget Update Report that will be presented to the City Council in June 2024, will reflect this adjustment.
ENVIRONMENTAL IMPACT:
The proposed City Council action does not constitute a “project” under the definition set forth in California Environmental Quality Act (CEQA) Guidelines Section 15378 because it will not have a potential to result in a direct or indirect physical change in the environment and is, therefore, not subject to CEQA. No further action under CEQA is required.
NEXUS TO COUNCIL GOALS AND PRIORITIES:
This is an operational item and does not relate to the City Council’s Goals and Priorities.
ATTACHMENTS:
Attachment A- Resolution Adjusting the City Manager’s Compensation Exhibit A to Attachment A- Amended Management, Professional, Confidential Salary Schedule
Attachment B- First Amendment to the Employment Agreement 3 February 20, 2024 Item 07
RESOLUTION NO. 2024-XX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DEL
MAR, CALIFORNIA, AUTHORIZING COMPENSATION
ADJUSTMENT FOR ASHLEY JONES AS CITY MANAGER FOR
THE CITY OF DEL MAR AND ADOPTING THE AMENDED
MANAGEMENT, PROFESSIONAL, AND CONFIDENTIAL
SALARY SCHEDULE
WHEREAS, on December 13, 2021, the City, by and through its City Council, appointed Ashley Jones (“City Manager”) to serve as City Manager for the City of Del Mar and entered into an agreement with City Manager for such services (the “Agreement”); and
WHEREAS, the Agreement requires that at least annually the City Council conduct an evaluation of the City Manager’s performance; and
WHEREAS, the Agreement requires that upon satisfactory performance, the City Council shall adjust the City Manager’s compensation annually, based upon regional salary data and the San Diego Regional Consumer Price Index (CPI) in the amount generally not less than 3% nor more than 5%; and
WHEREAS, through the performance evaluation process, which began in January 2024, the City Council determined that the City Manager’s overall performance for the period December 13, 2022 through December 13, 2023, was highly favorable and met the City Council’s expectations.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Del Mar, California, that the City Council hereby approves the following:
Section 1: The City Council of the City of Del Mar hereby approves a 4% compensation adjustment to the City Manager’s current base salary, effective December 13, 2023, as provided for in Section 7.C of the employment Agreement; Section 2: The City Council adopts the amended Management, Professional, and Confidential salary schedule as shown in Exhibit A to this resolution.
PASSED, APPROVED AND ADOPTED by the City Council of the City of Del Mar, California, at a Regular Meeting held the 20th day of February 2024. ____________________________
Dave Druker, Mayor
City of Del Mar
4 February 20, 2024 Item 07
Resolution No. 2024-XX
__________________________
Leslie E. Devaney, City Attorney
City of Del Mar
ATTEST AND CERTIFICATION:
STATE OF CALIFORNIA
COUNTY OF SAN DIEGO
CITY OF DEL MAR
I, SARAH KRIETOR, Administrative Services Manager/City Clerk of the City of Del Mar, California, DO HEREBY CERTIFY, that the foregoing is a true and correct copy of Resolution 2024-XX, adopted by the City Council of the City of Del Mar, California, at a Regular Meeting held the 20th day of February 2024, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
______________________________________
Sarah Krietor, Administrative Services
Manager/City Clerk
City of Del Mar
5 February 20, 2024 Item 07
CITY OF DEL MAR
MANAGEMENT AND PROFESSIONAL COMPENSATION PLAN
SALARY INCREASE 2.5%
POSITION TITLE RANGE
City Manager* M500 Contract 257,088.00
Assistant City Manager M900 - 212,258.10 161,771.40
Department Directors M850 - 189,516.16 144,438.75
Deputy Directors/Managers M800 - 148,586.86 113,244.70
Finance Officer M780 - 135,926.48 103,595.65
Project Manager II M780 - 135,926.48 103,595.65
Information Technology Manager II P287 - 132,979.98 101,350.00 Public Works Operations Manager II P287 - 132,979.98 101,350.00 P276 - 119,193.12 90,842.41
Project Manager I P276 - 119,193.12 90,842.41
Information Technology Manager I P274 - 116,844.54 89,052.45 Senior Management Analyst P274 - 116,844.54 89,052.45
Senior Planner P274 - 116,844.54 89,052.45
Public Works Operations Manager I P274 - 116,844.54 89,052.45 Maintenance & Construction Superintendent I P269 - 111,173.57 84,730.36 Associate Management Analyst P259 - 100,643.98 76,705.29 Associate Planner P259 - 100,643.98 76,705.29
-
Management Analyst P244 - 86,689.65 66,070.07
Assistant Planner II P244 - 86,689.65 66,070.07
Assistant Management Analyst P233 - 77,701.99 59,220.17 Parking Enforcement Sergeant P233 - 77,701.99 59,220.17 Lifeguard Sergeant P233 - 77,701.99 59,220.17
Assistant Planner I P229 - 74,670.07 56,909.41
*Amended on 2/2/2024 by Resolution 2024-XX
EFFECTIVE JULY 1, 2023
ANNUAL SALARY
Maintenance & Construction Superintendent II
6 February 20, 2024 Item 07
CITY OF DEL MAR
MANAGEMENT AND PROFESSIONAL COMPENSATION PLAN
SALARY INCREASE 2.0%
POSITION TITLE Grade A B C D E F G H I J K L
Assistant City Manager M900
-Hourly 75.8778 77.7747 79.7191 81.7121 83.7549 85.8487 87.9949 90.1948 92.4497 94.7609 97.1300 99.5582 -Bi-Weekly 6,070.22 6,221.98 6,377.53 6,536.96 6,700.39 6,867.90 7,039.60 7,215.59 7,395.98 7,580.87 7,770.40 7,964.66 -Monthly 13,152.15 13,480.95 13,817.97 14,163.42 14,517.51 14,880.45 15,252.46 15,633.77 16,024.61 16,425.23 16,835.86 17,256.76 -Annual 157,825.76 161,771.40 165,815.69 169,961.08 174,210.11 178,565.36 183,029.49 187,605.23 192,295.36 197,102.75 202,030.32 207,081.07 Department Directors M850
-Hourly 67.7480 69.4417 71.1777 72.9572 74.7811 76.6506 78.5669 80.5311 82.5444 84.6080 86.7232 88.8913 -Bi-Weekly 5,419.84 5,555.34 5,694.22 5,836.58 5,982.49 6,132.05 6,285.35 6,442.49 6,603.55 6,768.64 6,937.85 7,111.30 -Monthly 11,742.99 12,036.56 12,337.48 12,645.91 12,962.06 13,286.11 13,618.27 13,958.72 14,307.69 14,665.38 15,032.02 15,407.82 -Annual 140,915.85 144,438.75 148,049.72 151,750.96 155,544.73 159,433.35 163,419.19 167,504.67 171,692.28 175,984.59 180,384.20 184,893.81 Deputy Directors/Managers* M800
-Hourly 53.1167 54.4446 55.8057 57.2008 58.6308 60.0966 61.5990 63.1390 64.7175 66.3354 67.9938 69.6936 -Bi-Weekly 4,249.33 4,355.57 4,464.45 4,576.07 4,690.47 4,807.73 4,927.92 5,051.12 5,177.40 5,306.83 5,439.50 5,575.49 -Monthly 9,206.89 9,437.06 9,672.98 9,914.81 10,162.68 10,416.75 10,677.17 10,944.09 11,217.70 11,498.14 11,785.59 12,080.23 -Annual 110,482.63 113,244.70 116,075.82 118,977.71 121,952.15 125,000.96 128,125.98 131,329.13 134,612.36 137,977.67 141,427.11 144,962.79 Finance Officer M780
Project Manager II
-Hourly 48.5908 49.8056 51.0507 52.3270 53.6352 54.9761 56.3505 57.7592 59.2032 60.6833 62.2004 63.7554 -Bi-Weekly 3,887.27 3,984.45 4,084.06 4,186.16 4,290.82 4,398.09 4,508.04 4,620.74 4,736.26 4,854.66 4,976.03 5,100.43 -Monthly 8,422.41 8,632.97 8,848.80 9,070.02 9,296.77 9,529.19 9,767.41 10,011.60 10,261.89 10,518.44 10,781.40 11,050.93 -Annual 101,068.92 103,595.66 106,185.55 108,840.19 111,561.19 114,350.22 117,208.98 120,139.20 123,142.68 126,221.25 129,376.78 132,611.20 Information Technology Manager II P287
Public Works Operations Manager II
-Hourly 47.5375 48.7260 49.9441 51.1927 52.4725 53.7843 55.1290 56.5072 57.9199 59.3679 60.8521 62.3734 -Bi-Weekly 3,803.00 3,898.08 3,995.53 4,095.42 4,197.80 4,302.75 4,410.32 4,520.57 4,633.59 4,749.43 4,868.16 4,989.87 -Monthly 8,239.84 8,445.83 8,656.98 8,873.40 9,095.24 9,322.62 9,555.69 9,794.58 10,039.44 10,290.43 10,547.69 10,811.38 -Annual 98,878.05 101,350.00 103,883.75 106,480.85 109,142.87 111,871.44 114,668.23 117,534.93 120,473.31 123,485.14 126,572.27 129,736.57 Maintenance & Construction Superintendent II P276
Project Manager I
-Hourly 42.6090 43.6742 44.7661 45.8852 47.0324 48.2082 49.4134 50.6487 51.9149 53.2128 54.5431 55.9067 -Bi-Weekly 3,408.72 3,493.94 3,581.29 3,670.82 3,762.59 3,856.65 3,953.07 4,051.90 4,153.20 4,257.03 4,363.45 4,472.54 -Monthly 7,385.56 7,570.20 7,759.46 7,953.44 8,152.28 8,356.09 8,564.99 8,779.11 8,998.59 9,223.55 9,454.14 9,690.50 -Annual 88,626.74 90,842.41 93,113.47 95,441.31 97,827.34 100,273.02 102,779.85 105,349.35 107,983.08 110,682.66 113,449.72 116,285.97 Information Technology Manager I P274
Senior Management Analyst
Senior Planner
Public Works Operations Manager I
-Hourly 41.7694 42.8137 43.8840 44.9811 46.1057 47.2583 48.4397 49.6507 50.8920 52.1643 53.4684 54.8051 -Bi-Weekly 3,341.56 3,425.09 3,510.72 3,598.49 3,688.45 3,780.66 3,875.18 3,972.06 4,071.36 4,173.14 4,277.47 4,384.41 -Monthly 7,240.04 7,421.04 7,606.56 7,796.73 7,991.65 8,191.44 8,396.22 8,606.13 8,821.28 9,041.81 9,267.86 9,499.56 -Annual 86,880.44 89,052.45 91,278.77 93,560.73 95,899.75 98,297.25 100,754.68 103,273.54 105,855.38 108,501.77 111,214.31 113,994.67 * Deputy Directors/Managers
Deputy Chief Lifeguard/Community Services Director
Principal Engineer
Environmental Sustainability & Special Projects Manager Finance Manager/City Treasurer
Principal Planner/Planning Manager
Administrative Services Manager/City Clerk
EFFECTIVE JULY 1, 2022
7 February 20, 2024 Item 07
CITY OF DEL MAR
MANAGEMENT AND PROFESSIONAL COMPENSATION PLAN
SALARY INCREASE 2.0%
POSITION TITLE Grade A B C D E F G H I J K L
EFFECTIVE JULY 1, 2022
Maintenance & Construction Superintendent I P269
-Hourly 39.7422 40.7357 41.7541 42.7980 43.8679 44.9646 46.0888 47.2410 48.4220 49.6326 50.8734 52.1452 -Bi-Weekly 3,179.38 3,258.86 3,340.33 3,423.84 3,509.44 3,597.17 3,687.10 3,779.28 3,873.76 3,970.60 4,069.87 4,171.62 -Monthly 6,888.65 7,060.86 7,237.38 7,418.32 7,603.78 7,793.87 7,988.72 8,188.44 8,393.15 8,602.98 8,818.05 9,038.50 -Annual 82,663.76 84,730.35 86,848.61 89,019.83 91,245.32 93,526.46 95,864.62 98,261.23 100,717.76 103,235.71 105,816.60 108,462.02 Associate Management Analyst P259
Associate Planner
-Hourly 35.9781 36.8775 37.7995 38.7445 39.7131 40.7059 41.7236 42.7666 43.8358 44.9317 46.0550 47.2064 -Bi-Weekly 2,878.25 2,950.20 3,023.96 3,099.56 3,177.05 3,256.47 3,337.88 3,421.33 3,506.86 3,594.54 3,684.40 3,776.51 -Monthly 6,236.20 6,392.11 6,551.91 6,715.71 6,883.60 7,055.69 7,232.08 7,412.88 7,598.21 7,788.16 7,982.87 8,182.44 -Annual 74,834.42 76,705.28 78,622.92 80,588.49 82,603.20 84,668.28 86,784.99 88,954.61 91,178.48 93,457.94 95,794.39 98,189.25 Facilities Supervisor P249
-Hourly 32.5705 33.3848 34.2194 35.0749 35.9517 36.8505 37.7718 38.7161 39.6840 40.6761 41.6930 42.7353 -Bi-Weekly 2,605.64 2,670.78 2,737.55 2,805.99 2,876.14 2,948.04 3,021.74 3,097.29 3,174.72 3,254.09 3,335.44 3,418.83 -Monthly 5,645.55 5,786.69 5,931.36 6,079.64 6,231.63 6,387.42 6,547.11 6,710.79 6,878.56 7,050.52 7,226.78 7,407.45 -Annual 67,746.63 69,440.30 71,176.30 72,955.71 74,779.60 76,649.09 78,565.32 80,529.45 82,542.69 84,606.26 86,721.42 88,889.45 Management Analyst P244
Assistant Planner II
-Hourly 30.9897 31.7645 32.5586 33.3725 34.2068 35.0620 35.9386 36.8370 37.7580 38.7019 39.6695 40.6612 -Bi-Weekly 2,479.18 2,541.16 2,604.69 2,669.80 2,736.55 2,804.96 2,875.09 2,946.96 3,020.64 3,096.15 3,173.56 3,252.89 -Monthly 5,371.55 5,505.84 5,643.48 5,784.57 5,929.19 6,077.42 6,229.35 6,385.08 6,544.71 6,708.33 6,876.04 7,047.94 -Annual 64,458.60 66,070.06 67,721.82 69,414.86 71,150.23 72,928.99 74,752.21 76,621.02 78,536.54 80,499.96 82,512.46 84,575.27 Assistant Management Analyst P233
Parking Enforcement Sergeant
Lifeguard Sergeant
-Hourly 27.7768 28.4712 29.1830 29.9126 30.6604 31.4269 32.2126 33.0179 33.8433 34.6894 35.5567 36.4456 -Bi-Weekly 2,222.15 2,277.70 2,334.64 2,393.01 2,452.83 2,514.15 2,577.01 2,641.43 2,707.47 2,775.15 2,844.53 2,915.65 -Monthly 4,814.65 4,935.01 5,058.39 5,184.85 5,314.47 5,447.33 5,583.52 5,723.10 5,866.18 6,012.84 6,163.16 6,317.23 -Annual 57,775.77 59,220.17 60,700.67 62,218.19 63,773.64 65,367.98 67,002.18 68,677.24 70,394.17 72,154.02 73,957.87 75,806.82 Assistant Planner I P229
-Hourly 26.6930 27.3603 28.0443 28.7454 29.4640 30.2006 30.9557 31.7295 32.5228 33.3359 34.1693 35.0235 -Bi-Weekly 2,135.44 2,188.82 2,243.54 2,299.63 2,357.12 2,416.05 2,476.45 2,538.36 2,601.82 2,666.87 2,733.54 2,801.88 -Monthly 4,626.78 4,742.45 4,861.01 4,982.54 5,107.10 5,234.78 5,365.65 5,499.79 5,637.28 5,778.22 5,922.67 6,070.74 -Annual 55,521.37 56,909.40 58,332.14 59,790.44 61,285.20 62,817.33 64,387.77 65,997.46 67,647.40 69,338.58 71,072.05 72,848.85 8 February 20, 2024 Item 07
FIRST AMENDMENT TO AGREEMENT EMPLOYING ASHLEY JONES
AS THE CITY MANAGER FOR THE CITY OF DEL MAR
THIS FIRST AMENDMENT to the Employment Agreement (First Amendment) is made and entered into effective the 20th day of February, 2024, by and between the City of Del Mar, a Charter City and municipal corporation (“City”), and Ashley Jones (“Manager”) (collectively “Parties”).
RECITALS
WHEREAS, on December 13, 2021, the City and Manager entered into an Employment Agreement (Agreement) to serve as City Manager for the City, by which the City and Manager established the terms and conditions of employment for a five-year period continuing until December 13, 2026; and
WHEREAS, the Parties now desire to amend Section 4 of the Agreement to extend the term of the Agreement for an additional four-year period until December 13, 2030; and
WHEREAS, the Parties now desire to increase the City’ deferred compensation contribution under Section 8 of the agreement to be more aligned with deferred compensation benefits being provided to other city managers in the region.
NOW, THEREFORE, the Parties hereby agree to amend the Agreement as follows:
Section 1. Section 4 of the Agreement is amended as follows:
4. TERM
Manager’s employment commenced on December 13, 2021, and will continue to December 13, 2030, or the date of earlier termination in accordance with the provisions in this Agreement.
On December 13, 2030, and on each succeeding December 13th while this Agreement is in effect, this Agreement shall automatically be extended for one (1) additional year unless prior to that date the City Council notifies the Manager of its intent not to extend the Agreement for one (1) additional year. City elections not to extend this Agreement shall not entitle the Manager to Severance pursuant to Section 6 of this Agreement. Where the City elects not to extend the Agreement, the City must give the Manager written notice of non-renewal at least six (6) calendar months prior to the initial termination date or any succeeding termination date, unless such notice is waived by the Manager. Unless such notice of non-renewal is timely given, this Agreement shall automatically renew for an additional oneyear term, and a new termination date shall be accordingly established.
ATTACHMENT B
9 February 20, 2024 Item 07
City of Del Mar
First Amendment to City Manager’s Employment Agreement
Section 2. Section 8 of the Agreement is amended as follows:
8. DEFERRED COMPENSATION
City will make, in equal proportionate amounts each pay period, an annual contribution of Seventeen Thousand and Five Hundred Dollars ($17,500) into one of the City’s qualified Deferred Compensation Plans. Amounts contributed under this section shall be to the benefit of the Manager in accordance with the Deferred Compensation Participation Plan Agreement.
Section 3. Except as otherwise provided in this First Amendment, all terms and conditions, and attachments and exhibits thereto, of the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have caused this First Amendment to be effective as of the date first written above.
CITY OF DEL MAR,
a municipal corporation
By:
Dave Druker, Mayor
MANAGER
By:
Ashley Jones
ATTEST:
By:
Sarah Krietor, Administrative Services
Manager/City Clerk
APPROVED AS TO FORM:
By:
Leslie E. Devaney, City Attorney
10 February 20, 2024 Item 07
City of Del Mar
Agenda Report
________________________________________________________________________________________________________ City Council Action:
TO: Honorable Mayor and City Council Members
FROM: Councilmembers Dan Quirk and Terry Gaasterland, Liaisons to the Measure Q Citizen Oversight Committee
Prepared by Denise Galvan, Management Analyst
DATE: February 20, 2024
SUBJECT: Reappointment to the Measure Q Citizen Oversight Committee REQUESTED ACTION/RECOMMENDATION:
The Council Liaisons to the Measure Q Citizen Oversight Committee recommend that the City Council reappoint K. Alan Lonbom to serve on the Committee as a voting member for a second three-year term from February 20, 2024, through February 28, 2027.
DISCUSSION/ANALYSIS:
The purpose of the Measure Q Citizen Oversight Committee (Committee) is to review, provide oversight, and report to the City Council on Measure Q revenues and expenditures. The Committee meets bi-annually or as-needed. A primary responsibility of the Committee is verifying that revenues from Measure Q are properly reserved for projects approved by the City Council and that related expenditures are accurately tracked.
The Committee is composed of five members, including two (2) Finance Committee Members and three (3) at-large community residents of Del Mar with the goal that one (1) member is from the Del Mar business community.
There are currently three vacancies on the Committee due to the term expiration of K. Alan Lonbom on February 19, 2024, Michael Chiappetta’s term expiration on December 17, 2023, and one historical vacancy. City staff advertised the vacancies, and one Citizen Interest Form was received during the recruitment period from K. Alan Lonbom (Attachment A). The Council Liaisons to the Committee have reviewed the application and recommend that the City Council reappoint K. Alan Lonbom as a voting at-large member for a second three-year term starting on February 20, 2024, and ending on February 28, 2027.
If the recommended appointment is approved by the City Council, the Committee will have two remaining vacancies, one Finance Committee vacancy and one at-large vacancy targeted to the Del Mar business community that has historically remained vacant due to a lack of interested applicants. A copy of the current Committee roster is included as Attachment B for Council’s reference.
ATTACHMENTS:
Attachment A - Citizen Interest Form
Attachment B – Committee Roster
1 February 20, 2024 Item 08
2 February 20, 2024 Item 08
3 February 20, 2024 Item 08
4 February 20, 2024 Item 08
5 February 20, 2024 Item 08
6 February 20, 2024 Item 08
City of Del Mar
Measure Q Citizen Oversight Committee
Appointing Authority City Council
Position Chair
Category Finance Committee Member(Resident)
K. Alan Lonbom
1st Term Feb 19, 2020 - Feb 19, 2024
Appointing Authority City Council
Position Secretary
Category At-Large (Resident)
Tom McGreal
2nd Term Nov 19, 2021 - Nov 15, 2025
Position Vice Chair
Category At-Large (Resident)
Steven Mcdowell
2nd Term Dec 04, 2023 - Dec 31, 2026
Category Business Owner/Representative
Vacancy
Appointing Authority City Council
Category At-Large (Resident)
Vacancy
Board Roster
Measure Q Citizen Oversight Committee Page 1 of 1
7 February 20, 2024 Item 08
City of Del Mar
Agenda Report
________________________________________________________________________________________________________ City Council Action:
TO: Honorable Mayor and City Council Members
FROM: Adriana Jaramishian, Associate Planner
Karen Brindley, Planning and Community Development Director Via Ashley Jones, City Manager
DATE: February 20, 2024
SUBJECT: Sidewalk Café Permit SCP23-003 – Application request to install a new Sidewalk Café in the public right-of-way, adjacent to Suites 105-107 at the Del Mar Plaza (1555 Camino del Mar).
Applicant: Valley Farm Market
Owner: Brixton Capital (Del Mar Plaza)
APN #: 300-030-86
REQUESTED ACTION/RECOMMENDATION:
Staff recommends that the City Council adopt a Resolution approving Sidewalk Café Permit SCP23-003 (Attachment A).
BACKGROUND:
In July of 2008, the City Council adopted Ordinance No. 810 establishing Chapter 23.30 in the Del Mar Municipal Code (DMMC) to accommodate and regulate sidewalk cafés.
The Council's goal in establishing the Ordinance was to create a streamlined process for the review and approval of sidewalk café proposals as a means by which to assist in the revitalization of the Del Mar Village. The result was an Ordinance that requires a single Sidewalk Café Permit rather than multiple permits that would include other review procedures such as an Encroachment Permit and a Design Review Permit. The review and approval process were further streamlined by bringing the application directly to the City Council as the issuing authority for a Sidewalk Café Permit. A copy of DMMC Chapter
23.30 is included in Attachment B to this report.
In reviewing an application for a Sidewalk Café Permit, the City Council is to consider the proposed project's consistency with the provisions of the Sidewalk Café Ordinance. Some of these provisions involve the location and extent of the sidewalk café area relative to the Main Restaurant and the public right-of-way, the design and method of securing the outdoor furnishings and other improvements, and the preservation of adequate pedestrian circulation. The Ordinance also includes operational parameters to protect against potential 1 February 20, 2024 Item 09
City Council Agenda Report
SCP23-003 (1555 Camino del Mar)
February 20, 2024
health and safety impacts, nuisance issues, mitigate environmental concerns, and preserve the City's visual character.
Proposed Sidewalk Café Improvements
This application involves the Del Mar Plaza at 1555 Camino del Mar, located on the northeast corner of the intersection of 15th Street and Camino del Mar. A vicinity map has been included for reference as Attachment C. On September 7, 2023, an application for tenant improvements was submitted by Valley Farm Market for Suites 105-107 of the Plaza. The proposed improvements involve mostly interior work and minor exterior changes to the existing suites, but also included installation/construction of a new sidewalk café. The Applicant was notified that approval of a separate sidewalk café permit would be required by the City Council and on November 29, 2023, an application for a sidewalk café permit was submitted.
The Applicant is proposing to install a new 242 square-foot sidewalk café adjacent to Suites 105-107, on the first floor (street level) of the Del Mar Plaza. The proposed sidewalk café would be approximately 34.5 feet long, would project into the public rightof-way by approximately 7 feet, and would directly align with the previously approved sidewalk café at the adjacent suite to the north. The Applicant is proposing to have four, two-person metal tables, for a total of 8 chairs, and 3 umbrellas. The required barrier to separate the seating from the pedestrian travel area of the sidewalk would consist of 36- inch-tall IPE wood planter boxes with matte black metal frames that are joined together, with a proposed pedestrian gate on the south side of the sidewalk café. The proposed location of the sidewalk café will also maintain a minimum unobstructed five foot sidewalk width along the perimeter of the café in order to ensure pedestrian access is maintained along this portion of the sidewalk. A plan set with photographs, site plan, and elevations has been included as Attachment D to this report.
Sidewalk Café Permit Application Review Process
Del Mar Municipal Code Chapter 23.30.100 provides the findings that the Council is required to make to approve a Sidewalk Café Permit. The findings are set forth below:
Finding 1. That the issuance of the Sidewalk Café Permit will endanger public health, safety, or welfare of the surrounding property.
Finding 2. That the issuance of the Sidewalk Café Permit will unreasonably interfere with the intended use of a City Right-of-Way or Easement.
Finding 3. That the issuance of the Sidewalk Café Permit will have an adverse impact on the welfare of the community or on the community’s appearance or aesthetics.
2 February 20, 2024 Item 09
City Council Agenda Report
SCP23-003 (1555 Camino del Mar)
February 20, 2024
Finding 4. That the issuance of the Sidewalk Café Permit will cause an unnecessary change in the character of the community.
Finding 5. That the issuance of the Sidewalk Café Permit will be to the detriment of the interests of the general public.
Staff has analyzed the application materials for the Valley Farm Market Sidewalk Café and its consistency with DMMC Chapter 23.30. Based on the findings and the recommended conditions contained in the Resolution (Attachment A), it is staff’s recommendation that the proposed Sidewalk Café be approved by the City Council.
The recommended conditions of approval ensure consistency with DMMC Chapter 23.30.
The project has been conditioned to a three year term (with the ability for an administrative approval of an additional three-year term), requires the installation of signage to inform the public of their right to use the seating in the sidewalk café, requires the payment of user fees, and requires the café be maintained and operated in a manner that does not create a public nuisance. In addition, the Applicant will be required to record a covenant that will require removal of the improvements upon vacating the operation of the café or if the City deems it necessary, and the deed restriction also provides notice to future property owners that the Sidewalk Café permit may be revoked. The location of the sidewalk café will ensure an unobstructed accessible path of travel will be maintained along the perimeter of the café, and will require that the property owner at the time would be responsible for restoring the right-of-way to its prior condition upon vacation of the sidewalk café operation.
FISCAL IMPACT:
There is no fiscal impact or action to be taken by the City Council related to this agenda item. As a private development proposal, all fees associated with entitlement processing are paid for by the Applicant.
ENVIRONMENTAL IMPACT:
The proposed project is categorically exempt from the provisions of the California Environmental Quality Act (CEQA) pursuant to Section 15301(e) (Existing Facilities) in that the proposed project consists of a minor addition of a 242 square foot exterior sidewalk café that will include tables, chairs, and umbrellas and is designed with wooden planter boxes with gated access for the enclosure.
NEXUS TO CITY COUNCIL GOALS AND PRIORITIES:
This is an operational item and unrelated to the City Council Goals and Priorities.
ATTACHMENTS:
Attachment A – City Council Resolution Approving SCP23-003 Attachment B – DMMC Chapter 23.30 (Sidewalk Cafes in the Downtown Area) Attachment C – Vicinity Map
Attachment D – SCP23-003 Site Plan
3 February 20, 2024 Item 09
ATTACHMENT A
RESOLUTION NO. 2024-XX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DEL
MAR, CALIFORNIA, APPROVING SIDEWALK CAFE PERMIT
SCP23-003, TO ALLOW THE INSTALLATION OF A NEW
SIDEWALK CAFÉ IN THE PUBLIC RIGHT-OF-WAY ADJACENT TO
THE DEL MAR PLAZA AT 1555 CAMINO DEL MAR IN DEL MAR,
CALIFORNIA
WHEREAS, the City of Del Mar (City) is the lawful owner of the right-of-way adjacent to 1555 Camino del Mar; and
WHEREAS, the owner of the Del Mar Plaza at 1555 Camino del Mar, Brixton Capital, authorized their tenant Valley Farm Market (Applicant) to prepare an application for a proposed sidewalk café adjacent to Suites 105-107 on the first floor (street level) of the Plaza; and
WHEREAS, on November 29, 2023, the Applicant submitted an application and paid the appropriate fees for a Sidewalk Café Permit; and WHEREAS, Del Mar Municipal Code (DMMC) Chapter 23.30 requires a Sidewalk Café Permit prior to engaging in commercial uses of the public right-of-way, which requires City Council authorization; and
WHEREAS, DMMC Section 23.30.100 provides that an application for a Sidewalk Café permit shall be approved by City Council; unless the Council makes one or more of the findings of fact set forth in Section 23.30.100(A); and WHEREAS, in accordance with requirements of the California Environmental Quality Act (CEQA), the proposed project is categorically exempt from the provisions of the CEQA pursuant to Section 15301(e) (Existing Facilities) in that the project proposes a 242 square-foot outdoor sidewalk café which is within the exemption threshold; and WHEREAS, on February 20, 2024, the City Council of the City of Del Mar held a duly noticed public hearing to review the sidewalk café permit, and at which time all persons desiring to be heard were heard; and
WHEREAS, evidence was submitted and considered to include without limitation:
a. Plans and photographs submitted by the applicant;
b. Written information submitted with the application;
c. Oral testimony from staff, the applicant, and the public; d. Agenda report, dated February 20, 2024, incorporated by reference as though fully set forth herein;
4 February 20, 2024 Item 09
Resolution 2024-XX
e. Additional information submitted during the hearing.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Del Mar that based upon the substantial evidence presented at the public hearing on February 20, 2024, including written and oral staff reports, public written and oral testimony, and in accordance with Del Mar Municipal Code (DMMC) Section 23.30.100, the City Council of the City of Del Mar finds that:
1. As designed, the issuance of the Sidewalk Café Permit will not endanger public health, safety, or welfare of the surrounding property; and
2. As designed, the issuance of the Sidewalk Café Permit will not unreasonably interfere with the intended use of a City Right-of-Way or Easement in that the Sidewalk Café location will ensure an unobstructed five foot sidewalk width along the perimeter of the Sidewalk Café area.
3. As designed, the issuance of the Sidewalk Café Permit will not have an adverse impact on the welfare of the community or on the community’s appearance or aesthetics in that the proposed sidewalk café is designed to incorporate planter boxes that are architecturally compatible with the Plaza.
4. As designed, the issuance of the Sidewalk Café Permit will not cause an unnecessary change in the character of the community since the design elements incorporate wood and natural plants that complement architectural features of the Plaza; and
5. The issuance of the Sidewalk Café Permit will not be to the detriment of the interests of the general public in that all seating areas in the Sidewalk Café will be made available for the reasonable use and enjoyment of the public, including persons who are not patrons of the restaurant in accordance with DMMC Chapter
23.30. NOW, THEREFORE, BE IT FURTHER RESOLVED by the City Council that SCP23- 003 is approved subject to the following conditions:
[Note: The conditions listed below may have gaps in numbering or lettering. These gaps are intentional.]
Special Conditions:
SC-1 [Limitation on Service of Alcohol/Compliance with ABC License] The service, sale or consumption of alcohol shall be limited to the hours of allowable alcohol service, as identified in Del Mar Municipal Code Chapter 23.30.
Additionally, the Sidewalk Café shall be operated in compliance with a valid Alcohol Beverage Control (ABC) License. Failure to comply with the terms of the 5 February 20, 2024 Item 09
Resolution 2024-XX
required ABC License shall constitute a violation of this Permit, potentially resulting in the revocation of the Sidewalk Café Permit. As part of compliance with this condition, service of alcohol to any individual in the sidewalk café area shall only be allowed as an accompaniment to the service of food.
SC-2 [Prohibition on Amplification or Live Entertainment] No live entertainment shall occur in the Sidewalk Café area and no amplification or sound system speakers, either temporary or permanent, shall be installed in the Sidewalk Café area.
SC-3 [Prohibition on Smoking]
Smoking shall be prohibited at all times and in all portions of the Sidewalk Café.
SC-5 [Payment of Sidewalk Café User Fee]
The Sidewalk Café Operator shall be responsible for payment of a yearly Sidewalk Café User Fee as identified in DMMC Chapter 23.30 and as such Fee is set, and may be modified, by Resolution of the City Council.
SC-6 [Term of Permit - Option for Renewal]
This Sidewalk Café Permit shall be valid for a period of three years from the date of approval (to expire on February 20, 2027). Prior to the expiration of the Permit, the applicant shall have the option to request a renewal of the term of the Permit, with such request to be processed in accordance with the provisions of DMMC Chapter 23.30.
SC-7 [Revocation of Permit]
This Sidewalk Café Permit may be revoked upon a written finding by the Planning Director that the Sidewalk Café is being operated in violation of one or more of the conditions of the Sidewalk Café Permit or that the Sidewalk Café is being operated in violation of one or more of the provisions of DMMC Chapter 23.30.
A Sidewalk Café Permit may also be revoked upon a written finding by the Planning Director that the Sidewalk Café is being operated in a manner that constitutes a nuisance, or unduly impedes or restricts the movement of pedestrians. The decision of the Planning Director shall be appealable to the City Council in accordance with the provisions of the Del Mar Municipal Code.
SC-8 [Compliance with DMMC Chapter 23.30, the Sidewalk Café Ordinance] The Sidewalk Café authorized in this Permit shall comply with all of the regulations of DMMC Chapter 23.30, including but not limited to all of the following:
A. No signage shall be allowed in the Sidewalk Café, except as approved in this Sidewalk Café Permit, or as authorized under separate permit or pursuant to the Municipal Code.
6 February 20, 2024 Item 09
Resolution 2024-XX
B. The Sidewalk Café operator shall keep the sidewalk Café area and the adjacent sidewalk area in a clean and safe condition at all times, and shall properly dispose of all trash and water generated by operation of the Sidewalk Café. The operator shall ensure there is no water runoff into the adjacent sidewalk as a result of maintaining the plant material in the planters.
C. The Sidewalk Café operator shall comply with all applicable laws and local ordinances regarding the sale and service of food and beverages to the public.
D. No food preparation, fire or fire apparatus shall be located in the Sidewalk Café area.
E. The Sidewalk Café Permittee shall be responsible for maintaining the Sidewalk Café area in a quiet and good order. The Permittee shall not cause or create any noise or other nuisance in the outdoor area where the quiet and good order of the premises or the neighborhood are disturbed.
SC-10 [Responsibility for Maintenance of Sidewalk Café, Sidewalk and Sidewalk Amenities]
The Sidewalk Café operator shall be responsible for maintenance of all of the Sidewalk Café improvements authorized in this Permit and for all curbs, trees, tree gates, benches, planters and sidewalks along with the Camino del Mar Sidewalk Café frontage. The requirement for sidewalk maintenance shall include the periodic pressure washing of the sidewalk with such pressure washing to be accomplished in compliance with the City’s storm water regulations, including full capture of cleaning water. The frequency of the sidewalk pressure washing shall be coordinated with the Public Works Director.
SC-11 [Removal of Improvements from Right-of-Way Upon Demand from City] The applicant agrees that if any structure, wall, railing, pipe, conduit, or other improvement for which this Permit is issued is at any point in the future determined by the City to interfere with the use, repair or improvement of the subject right-of-way, the applicant shall remove the development within ten (10) days after the receipt of a written notice from the Public Works Director to do so.
The removal shall be accomplished at the expense of the applicant or his or her successors or assigns and shall be removed or relocated to the satisfaction of the Public Works Director.
SC-12 [Review of additionally proposed Sidewalk Café Furniture Materials] This Permit authorizes use of the sidewalk café improvements and related furniture and amenities, as shown in submitted application materials. Any future proposals for installation of other furniture or amenities shall be subject to the review and written approval of the Planning and Community Development Director based on 7 February 20, 2024 Item 09
Resolution 2024-XX
the standards of review in DMMC Chapter 23.30 and to address public health and safety concerns.
SC-13 [Measures to Ensure Option for General Public Use of the Sidewalk Café Area] A. As required under DMMC Section 23.30.140, all seating areas in the Sidewalk Café authorized in this Permit shall be available for the reasonable use and enjoyment of the public, including persons who are not patrons of the restaurant.
B. Concurrent with operation of the Sidewalk Café, the Operator shall install signage notifying members of the public, patrons and employees of the restaurant, of the public’s right to use and enjoy the seating in the Sidewalk Café.
At the same time, the Operator shall also submit a plan for the education of employees of the establishment on the rights of the general public, including persons who are not patrons, to use the Sidewalk Café seating area.
SC-14 [Compliance with City of Del Mar’s Fat, Oils and Grease Program] Prior to use of the Sidewalk Café authorized herein, the applicant shall provide evidence of compliance with the City of Del Mar’s Fats, Oils and Grease (FOG) Program. The evidence required herein shall be subject to the review and written approval of the City’ Public Works Director.
PUBLIC WORKS CONDITIONS:
PW-1 [Notification of Public Works Department Prior to and After Completion of Work] The applicant agrees to notify the Director of Public Works in writing at least forty eight (48) hours in advance of time when work authorized in this permit will be started. Applicant shall state the permit number, original date of approval, and a short description of the work. Submit via email to [email protected].
Additionally, upon completion of the work, the applicant agrees to immediately notify the Director of Public Works in writing of such completion. Any improvement or modification of the right-of-way shall be subject to inspection and approval of work from the Public Works Director’s representative.
PW-2 [Bulk Pallet Storage]
Unless prior written authorization has been received from the Planning and Community Development Director, no materials shall be stored in bulk pallet form in a City right-of-way.
PW-19 [Construction-Phase Pedestrian Crossing]
During construction, applicant shall provide a protected pedestrian pathway along Camino del Mar frontage. Alternatively, if the sidewalk must be closed to pedestrian travel due to construction impacts, the applicant shall prepare and implement a plan for re-routing of pedestrians. The required plan shall be subject to the review and written approval of the Public Works Director. 8 February 20, 2024 Item 09
Resolution 2024-XX
PWSC-1 [Detailed Drawings for Review]
Prior to the commencement of operation of the Sidewalk Café, the applicant shall provide a detailed drawing for the review and approval by the Public Works Director. The drawing shall describe the method of fastening the planter boxes and drip pans to catch irrigation water to the existing pavement. Fastening equipment shall not penetrate the existing pavement by more than 4".
ACCESSIBILITY CONDITIONS:
A-1 [Improvements subject to Title 24 regarding accessibility] All improvements approved herein shall be subject to review for and shall be implemented in compliance with the applicable regulations of Title 24 of the California Building Code and the Americans with Disability Act regarding accessibility.
FINANCE DEPARTMENT CONDITION:
FC-1 [Requirement for Certificate of Insurance and General Liability Insurance] Concurrent with operation of the Sidewalk Café authorized herein, the permittee shall file a certificate of insurance naming the City of Del Mar as an additionally insured entity and showing evidence of coverage of bodily injury or property damage liability throughout the duration of the project. The coverage shall provide a minimum of five hundred thousand dollars ($500,000.00) of liability insurance and shall include an Additional Insured Endorsement form CG-20-10-11-85. The Certificate of Insurance shall not contain any special limitations on the scope of protection afforded to the City, its officers, officials, or agents.
The form and content of the certificate of insurance shall be prepared to the satisfaction of the City Treasurer. The policy shall expressly provide that coverage thereunder shall be primary with respect to any other liability insurance maintained by the City and shall not be reduced or canceled without at least twenty (20) days prior written notice to the City.
The permittee shall include all subcontractors as insured under its policies or shall obtain separate certificates and General Liability for each subcontractor.
DOCUMENT CONDITION:
DC-1 [Recordation of a Covenant]
Prior to the commencement of work, the applicant shall record a covenant against the deed for the property benefited by the approved Sidewalk Café Permit setting forth the terms and conditions of the Permit, including the requirement for removal of the sidewalk café improvements upon demand by the City. The covenant shall run with the land and shall be binding on future owners and assigns. The form and 9 February 20, 2024 Item 09
Resolution 2024-XX
content of the covenant shall be to the satisfaction of the Planning and Community Development Director.
GENERAL CONDITIONS:
GC-1 [Business License]
Prior to commencement of any work on site, all contractors and subcontractors shall obtain a valid City of Del Mar Business License. A copy of the approved Sidewalk Café Permit shall be kept on site at all times, along with copies of the required Business Licenses for all contractors and subcontractors.
GC-2 [Development authorization limited to plan set]
This permit is granted based on material submitted with the project application and so identified by the staff of the Del Mar Planning Department. Revisions to the improvements authorized herein and/or any proposals for modification to the project shall require review and prior authorization from the appropriate entities of the City of Del Mar.
GC- 4 [Indemnification]
By accepting this permit and implementing the development authorized herein, the applicant agrees to indemnify, defend and save the City of Del Mar, its authorized agents, officers, representatives and employees harmless from and against any and all penalties, liabilities, annoyances, or loss resulting from claims or court action and arising out of any accident, loss or damage to persons or property happening or occurring as a proximate result of any work undertaken under the permit granted pursuant to the application or by reason of the permittee's installation, operation, maintenance or removal of the encroachment.
GC-19 [Permit Transferrable]
This Permit may be transferred from the applicant to another party subject to the prior submittal to the City of a written acknowledgement from the receiving party that he/she has read and will comply with all of the terms and conditions of the Permit.
PASSED, APPROVED, AND ADOPTED by the City Council of the City of Del Mar, State of California, at a Regular Meeting held on the 20th day of February 2024. ____________________________
Dave Druker, Mayor
City of Del Mar
10 February 20, 2024 Item 09
Resolution 2024-XX
APPROVED AS TO FORM:
________________________
Leslie E. Devaney, City Attorney
City of Del Mar
ATTEST AND CERTIFICATION:
STATE OF CALIFORNIA
COUNTY OF SAN DIEGO
CITY OF DEL MAR
I, SARAH KRIETOR, Administrative Services Manager/City Clerk of the City of Del Mar, California, DO HEREBY CERTIFY, that the foregoing is a true and correct copy of Resolution No. 2024-XX, adopted by the City Council of the City of Del Mar, California, at a Regular Meeting held the 20th day of February, 2024, by the following vote:
AYES:
NOES:
RECUSE:
ABSENT:
ABSTAIN:
_________________________________
Sarah Krietor, Administrative Services
Manager/City Clerk
City of Del Mar
11 February 20, 2024 Item 09
TITLE 23 - BUILDING CONSTRUCTION
Chapter 23.30 SIDEWALK CAFÉS IN THE DOWNTOWN AREA
Chapter 23.30 SIDEWALK CAFÉS IN THE DOWNTOWN AREA
23.30.010 Purpose.
The Del Mar Community Plan calls for the City's downtown area to serve the cultural, social, recreational and material needs of the community. In order to help achieve this goal, this Chapter of the Municipal Code is established to accommodate and regulate the safe operation of Sidewalk Cafés that encroach onto City rights-ofway. The City finds that Sidewalk Cafés encourage a pedestrian-oriented environment and helps to create a visually attractive atmosphere and streetscape. This Chapter identifies the design, operation and permitting requirements for the commercial use of a public right-of-way that a Sidewalk Café entails. The user fee, which is set by separate resolution of the City Council, is designed to secure fair and reasonable compensation to the City and its residents for permitting private use of the public rights-of-way. This Chapter also recognizes that public rights-of-way should continue to be available for use by the general public, including areas improved and shared for use for the patrons and employees of Sidewalk Cafés. (Ord. No. 810)
23.30.020 Definitions.
The following words and terms are defined for the purpose of applying the provisions of this Chapter:
A. Downtown Area shall mean the commercial district of the Village Center District as defined and shown in the Del Mar Community Plan.
B. Director shall mean the Director of Planning and Community Development.
C. Main Restaurant shall mean that restaurant operation located on adjoining private property to which a Sidewalk Café is an attendant part.
D. Permittee shall mean the person or persons to whom a valid Sidewalk Café Permit is issued.
E. Sidewalk Café shall mean the activity and improvements associated with the sale and/or service of food or beverages for immediate on-site consumption in a portion of a public right-of-way where such activity is conducted by the operators of a lawfully established restaurant located on adjoining private property. Sidewalk Café shall also mean that portion of an outdoor dining area of a restaurant that extends over a private property line into a public right-of-way.
23.30.030 Sidewalk Café Permit Required/Allowed Location.
A. No person shall operate a Sidewalk Café without first obtaining a Sidewalk Café Permit in accordance with the provisions of this Chapter.
B. With authorization, as required in this Chapter, a Sidewalk Café may be located in the Downtown Area.
23.30.040 Required Application Materials.
An application for a Sidewalk Café Permit shall include all of the following materials:
A. An application, submitted on a form provided by the City, along with such information and drawings as required by the Director to accomplish the purposes of this Chapter.
B. A permit application processing fee, as set forth by resolution of the City Council. 12 February 20, 2024 Item 09
C. A description of the proposed operation of the Sidewalk Café, including but not limited to the hours of operation, number of tables and the services to be rendered.
D. Plans for the improvements to be installed in the right-of-way and a plan for maintenance of such improvements.
E. The written consent of the owner of the real property located immediately adjacent to and street-ward of the right-of-way area subject to the application.
F. A copy of the licenses and authorizations required for operation of the Main Restaurant, including a City of Del Mar Business License.
23.30.050 Issuing Authority and Application Procedure for a Sidewalk Café Permit.
A. The City Council shall serve as the issuing authority for an application for a Sidewalk Café Permit. Upon receipt, the application shall be routed to each City Department, as deemed appropriate by the Director, for comment and suggested conditions. After receipt of comments and suggested conditions, the Director shall cause the application to be placed on the first available agenda of the City Council.
B. A staff report shall be prepared for the City Council, to include a recommendation from staff.
C. The City Council shall take action to approve, conditionally approve, or deny the application based on the standards of review contained in this Chapter. The City Council may also continue the application, as deemed necessary, in order to gain additional information to be used as the basis for making a determination on the application.
D. Provided all proposed improvements to be located in the public rights-of-way are included in the Sidewalk Café Permit application, a separate Encroachment Permit shall not be required for installation of the improvements or for conducting the activity authorized in the Sidewalk Café Permit.
23.30.060 Provision of Notice.
A. Notice of a Sidewalk Café Permit application shall contain the date, place, and time set for the scheduled City Council review of the application. The required notice shall also include all of the following:
1. The number assigned to the application;
2. A description of the proposed Sidewalk Café and its location; and
3. A brief description of the purpose of the City Council review and of the review process.
B. Notice of an application for a Sidewalk Café Permit shall be provided as follows:
1. Published once in a newspaper of general circulation within the City;
2. Mailed to all owners of real property within 300 feet of the location of the proposed Sidewalk Café, with ownership as identified on County Tax Assessors' rolls; and
3. Posting at City Hall by staff and posting at the site of the proposed Sidewalk Café by the applicant using a notification card provided by the City.
23.30.070 Sidewalk Café Design and Operation Parameters.
A Sidewalk Café shall comply with all of the following requirements:
A. The Sidewalk Café shall be located street-ward and adjacent to the Main Restaurant through which it is authorized to provide the sale/service of on-site consumption of food or beverages; 13 February 20, 2024 Item 09
B. No Sidewalk Café shall be sited so as to block the direct perpendicular visibility of display windows or signage of a separate, adjacent business unless written authorization is provided from the owner of such adjacent business.
C. The authorized perimeter of the Sidewalk Café area shall be demarcated by planter boxes, railings or other measures deemed acceptable to the Director to visually define and secure the Sidewalk Café area. The demarcation measures shall be designed to ensure opportunities for use of the Sidewalk Café area by the general public as intended in this Chapter.
D. A Sidewalk Café area may be furnished with chairs, tables, and umbrellas which shall either be secured to the sidewalk pavement or removed when the Café is not open. The method of securing furniture to the sidewalk shall be subject to the prior approval of the City's Public Works Director. The furniture to be used shall be specified and described in the application for the Sidewalk Café Permit.
E. No portion of any Sidewalk Café furniture or amenity shall be affixed to any streetlights, trees or other improvements in the public rights-of-way unless prior written authorization is received from the City's Public Works Director.
F. The Sidewalk Café shall be located so as to provide an unobstructed sidewalk width of a minimum of five feet along the perimeter of the Sidewalk Café area. The required sidewalk width may be increased, if found necessary by the City, to ensure compliance with State and Federal accessibility regulations.
G. The Sidewalk Café shall be located so as to provide a minimum, unobstructed walkway with a ten-foot radius at corner intersections of public rights-of-way; H. A Sidewalk Café shall be designed with a minimum five-foot-wide clearance from City planters, bus shelters and/or trash containers.
I. No signage shall be allowed in a Sidewalk Café except as proposed and approved in the Sidewalk Café Permit application.
J. The Sidewalk Café operator shall maintain the site and adjacent area in a clean and safe condition at all times, and shall properly dispose of all trash and water generated by operation of the Sidewalk Café.
The operators shall maintain all furnishings, planters and signs in safe and good condition.
K. Sidewalk Café operator shall comply with all applicable laws and local ordinances regarding the sale and service of food and beverages to the public.
L. No service, sale or consumption of alcohol shall be permitted within the Sidewalk Café area between the hours of 10:00 p.m. and 9:00 a.m. daily.
M. No food preparation, fire or fire apparatus shall be permitted in the Sidewalk Café area.
N. No live entertainment, amplification or sound system speakers shall be permitted in the Sidewalk Café area.
O. It shall be the duty of the Sidewalk Café operator to maintain the Sidewalk Café area in a quiet and good order. The Permittee shall not cause or create any noise or other nuisance in the outdoor area where the quiet and good order of the premises or the neighborhood are disturbed.
P. The placement or maintenance of a Sidewalk Café shall not obstruct or interfere with the installation or maintenance of underground utilities.
Q. All aspects of the Sidewalk Café shall be designed and maintained to comply with applicable State and Federal laws regarding the provision of access for disabled persons.
R. The Sidewalk Café shall comply with provisions of Sidewalk Café guidelines as may be adopted or amended by resolution of the City Council.
14 February 20, 2024 Item 09
23.30.080 Design of Sidewalk Café Furniture.
A. Tables and chairs shall be made of a safe, sturdy, durable material such as wrought iron, wood, steel or cast aluminum. All tables and chairs shall be commercial grade, manufactured for outdoor commercial use.
B. All furniture shall be properly maintained and cleaned regularly.
C. All tablecloths shall be stored indoors nightly and shall be cleaned on a regular basis. No vinyl tablecloths shall be permitted.
D. Individual canvas or other non-vinyl umbrellas are permitted. Umbrellas shall be designed for outdoor commercial use and maintained in a clean manner.
E. Each umbrella may include display of the name of the Sidewalk Café business so long as the name does not exceed six inches in height. The total umbrella signage shall not cover more than ten percent of the area of each umbrella and shall contain no advertising other than the name of the associated Main Restaurant.
23.30.090 Exemption for Requirement for Design Review of Sidewalk Café Improvements and Amenities.
Provided an application for a Sidewalk Café Permit contains detailed information to allow the Issuing Authority for the Permit to make a determination that the proposed Sidewalk Café demarcation measures and Sidewalk Café furniture and amenities will be in compliance with the parameters set forth in this Chapter, no Design Review Permit shall be required for installation of such improvements or amenities.
23.30.100 Standards of Review for Applications.
A. An application for Sidewalk Café shall be approved by the issuing authority identified in this Chapter unless the issuing authority makes one or more of the following findings of fact:
1. That the issuance of the Sidewalk Café Permit will endanger public health, safety or welfare of the surrounding property;
2. That the issuance of the Sidewalk Café Permit will unreasonably interfere with the intended use of a City right-of-way or Easement;
3. That the issuance of the Sidewalk Café Permit will have an adverse impact on the welfare of the community or on the community's appearance or aesthetics;
4. That the issuance of the Sidewalk Café Permit will cause an unnecessary change in the character of the community; or
5. That the issuance of the Sidewalk Café Permit will be to the detriment of the interests of the general public.
B. An approved Sidewalk Café Permit shall be subject to such conditions as the issuing authority deems necessary to protect the public health, safety and welfare and to preserve the intended use of the City rightof-way or Easement. Such conditions may include a requirement for recordation of a covenant against the deed for the adjacent property on which the Main Restaurant is located acknowledging that the property owner agrees to remove the Sidewalk Café improvements installed within the right-of-way upon notice of request for removal from the City.
23.30.110 Term of Permit.
A. A Sidewalk Café Permit shall be valid for a period of three years from the date of approval. 15 February 20, 2024 Item 09
23.30.120 Renewal of Sidewalk Café Permits.
A. Notwithstanding the other provisions of this Chapter, the Permittee may request a renewal of the term of a Sideway Café Permit. The request shall be submitted on a form provided by the City and shall be accompanied by a processing fee, as established by resolution of the City Council.
B. Upon submittal, the Director shall review the request the Sidewalk Café Permit Renewal to determine if the circumstances and findings under which the original Sidewalk Café Permit application were issued are still applicable and can support findings for approval of a renewal of the Permit.
C. A Sidewalk Café Renewal shall be valid for a period of three years from the date of approval.
D. Within three months of the end of the period of a valid Sidewalk Café Permit Renewal, the Permittee may request another Sidewalk Café Permit Renewal.
23.30.130 Sidewalk Café User Fee.
A. As a condition of approval of a Sidewalk Café Permit, the applicant shall pay to the City a Sidewalk Café user fee for commercial use to the City's public right-of-way.
B. The amount of the Sidewalk Café user fee shall be set by resolution of the City Council.
C. The Sidewalk Café user fees collected by the City shall be deposited in an account to be used specifically and solely for installation and/or maintenance of streetscape improvements in the City's Downtown Area rightsof-way.
23.30.140 Public Use of Sidewalk Café.
A. All seating areas in a Sidewalk Café shall be available for the reasonable use and enjoyment of the public, including persons who are not patrons or employees of the Main Restaurant.
B. The Permittee shall be responsible for installing and maintaining signage to notify members of the public, patrons and employees of the Main Restaurant of the public's right to use and enjoy the seating in the Sidewalk Café. The required signage shall be subject to review by the Director, prior to installation, to ensure that the signage will adequately and conspicuously carry out the intent of this Section.
C. A Sidewalk Café operated in a manner consistent with the provisions and intent of this Chapter for general public use of the public right-of-way shall not be required to provide off-street parking spaces.
23.30.150 Insurance and Indemnification Requirements.
A. Prior to the issuance of a Sidewalk Café Permit, the Permittee shall provide the City with a certificate of insurance showing that the applicant is covered by general liability insurance in the amount of not less than, $1,000,000.00 per occurrence and $2,000,000.00 in the aggregate, for personal injury (including death) and property damage. The certificate shall include an endorsement naming the City of Del Mar, its Council, boards, commissions, officers, employees, volunteers and agents as additional insured. The general liability insurance shall cover the property on which the Main Restaurant is located and the area for which the Sidewalk Café Permit is authorized.
23.30.160 Requirement for Security Deposits.
A. As determined by the Director, the Permittee may be required to deposit with the City: cash, a certified or cashier's check, or an approved surety bond, as sufficient to assure performance with any permit conditions regarding the manner of installation of the authorized Sidewalk Café and to ensure removal of improvements from the right-of-way when deemed necessary by the City. 16 February 20, 2024 Item 09
B. Any bond or cash deposit required pursuant to this Chapter shall be payable to the City. Upon satisfactory completion of all work authorized in the Permit, and fulfillment of all conditions of the Permit, the bond or cash deposit shall be released, save for any funds necessary to offset City costs in administering the bond or cash deposit, or for any work performed by the City to satisfactorily restore the public right-of-way to its condition prior to the installation of the improvements authorized under the Sidewalk Café Permit.
23.30.170 Revocation of Permit.
A Sidewalk Café Permit may be revoked upon a written finding by the Planning Director that the Sidewalk Café is being operated in violation of one or more of the conditions of the Sidewalk Café Permit or that the Sidewalk Café is being operated in violation of one or more of the provisions of this Chapter. A Sidewalk Café Permit may also be revoked upon a written finding by the Planning Director that the Sidewalk Café is being operated in a manner that constitutes a nuisance, or unduly impedes or restricts the movement of pedestrians.
The decision of the Planning Director shall be appealable to the City Council in accordance with the provisions of the Del Mar Municipal Code.
17 February 20, 2024 Item 09
Attachment B - Vicinity Map
C
18 February 20, 2024 Item 09
VALLEY FARM DEL MAR
SIDEWALK CAFE PACKAGE
FEBRUARY 6, 2024
1555 CAMINO DEL MAR
DEL MAR, CA 92014
PROJECT DESCRIPTION
TENANT IMPROVEMENT TO COMBINE MULTIPLE EXISTING SUITES INTO ONE TENANT FOR A NEW GROCERY.
SCOPE OF WORKS: EXTERIOR WORK TO INCLUDE NEW PAINT AND PARTIAL FINISH MATERIAL UPDATE, REPLACEMENT OF SOME STOREFRONTS WHERE OCCUR, NEW ANWINGS, AND NEW SIGNAGES; ADDITIONALLY, A SMALL OUTDOOR PATIO IS PROPOSED SEPARATED FROM SIDEWALK BY PLANTER BOXES.
NO CHANGE TO BUILDING HEIGHTS OR FLOOR AREA.
SHEET INDEX
P1 - COVER PAGE / DESCRIPTION / SHEET INDEX
P2 - EXISTING SITE PLAN
P3 - PROPOSED FLOOR PLAN
P4 - SECTION
VICINITY MAP
19 February 20, 2024 Item 09
SIDE WALK CAFE SUBMITTAL 2024-02-06
DEL MAR, CA 92014
VALLEY FARM DEL MAR
2 EXISTING SITE PLAN
STREET LEVEL
UP UP UP UP
TO PARKING
CAMINO DEL MAR
UP
SCOPE OF WORK
N.A.P. N.A.P. N.A.P. N.A.P.
3865 S.F. 3092 S.F.
SUITE 105
SUITE 105
SUITE 106 SUITE 107
EXISTING VIEW 01 EXISTING VIEW 02
PROPOSED PATIO LOCATION
01 02
20 February 20, 2024 Item 09
SIDE WALK CAFE SUBMITTAL 2024-02-06
DEL MAR, CA 92014
VALLEY FARM DEL MAR
3 PROPOSED
FLOOR PLAN
NOTE: PATIO UNDER “SIDEWALK CAFE PERMIT”
(E) DOOR TO BE REPLACED WITH NEW DOOR
SCALE: 1’-0” = 1/4”
21 February 20, 2024 Item 09
SIDE WALK CAFE SUBMITTAL 2024-02-06
DEL MAR, CA 92014
VALLEY FARM DEL MAR
4 COLOR ELEVATIONS
22 February 20, 2024 Item 09
SIDE WALK CAFE SUBMITTAL 2024-02-06
DEL MAR, CA 92014
VALLEY FARM DEL MAR
5 PROPOSED INTERIOR SECTION
SECTIONS
KEY PLAN
SECTION - B
B
DN
DAIRY
60X18
SHELVING
107
UP UP UP UP
115
100
102
101
105
113
114
103
119
121
125 124
123
126
104
108
109 110
112 111
118
116 117
DN
122
106
120
(N) GATE
(N) PLANTER BOXES W/
OUTDOOR SEATING
& UMBRELLA
(N) VERTICAL
FOLDING
DOORS (N) SLIDERS
(N) STOREFRONT
W/ (N) PLANTER BOX
(E) STOREFRONT
W/ (N) PLANTER BOX
(N) DOOR
DELI +
PREPARED
FOODS
POKE +
CEVICE
10FT COLD
DISPLAY
10FT COLD
DISPLAY
PROPOSED KITCHEN LAYOUT BY
KITCHEN DESIGNER
SCALE: 1’-0” = 1/2”
23 February 20, 2024 Item 09
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Boulevard Planters
Tournesol.com | 800.542.2282 | 2
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When selecting cladding options for your planters, you should specify cladding to cover visible sides.
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3-sided 2-sided 1-sided 2-sided
Corner without
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Corner with
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BVC-2S Wood Caps – 2-sided planters ≤ 48” L
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25 February 20, 2024 Item 09
Tournesol.com | 800.542.2282 | 3
Boulevard Planters, Rectangle & Square
26 February 20, 2024 Item 09
Tournesol.com | 800.542.2282 | 4
WIDTH
LENGTH
HEIGHT
PRODUCT SHAPE LENGTH WIDTH HEIGHT WEIGHT
(LBS.)
VOLUME
(CUBIC FT.) INTERIOR DIMS. IRRIGATION
BV-1800 Square 18” 18” 24” 70 3.5 16” x 16” x 23.5” CWC-R1100 BVT-1800 Square 18” 18” 35” 100 5.2 16” x 16” x 35.5” CWM-R1114-2k BV-241236 Rectangle 24” 12” 36” 47 5.3 22” x 10” x 35.5” CWM-R1120-MS BV-241818 Rectangle 24” 18” 18” 55 3.5 22” x 16” x 17.5” CWM-R2014-MS BV-241824 Rectangle 24” 18” 24” 85 5.2 22” x 16” x 23.5” CWM-R2020-MS BV-241830 Rectangle 24” 18” 30” 87 5.9 22” x 16” x 29.5” CWM-R2020-MS BV-241836 Rectangle 24” 18” 36” 120 7.9 22” x 16” x 35.5” CWM-R2020-MS BV-2400 Square 24” 24” 24” 85 6.6 22” x 22” x 23.5” CWM-R1120-2k BVT-2400 Square 24” 24” 41” 145 11.3 22” x 22” x 40.5” CWM-R1120-2k BV-361236 Rectangle 36” 12” 36” 63 7.9 34” x 10” x 35.5” CWM-R1120-2K BV-361818 Rectangle 36” 18” 18” 70 5.4 34” x 16” x 17.5” CWM-R2014-2K BV-361824 Rectangle 36” 18” 24” 105 7.8 34” x 16” x 23.5” CWM-R2020-MS BV-361830 Rectangle 36” 18” 30” 109 9.1 34” x 16” x 29.5” CWM-R2020-2K BV-361836 Rectangle 36” 18” 36” 150 11.8 34” x 16” x 35.5” CWM-R2020-MS BV-362418 Rectangle 36” 24” 18” 78 7.5 34” x 22” x 17.5” CWM-R2014-2K BV-362424 Rectangle 36” 24” 24” 115 10.8 34” x 22” x 23.5” CWM-R2020-MS BV-362430 Rectangle 36” 24” 30” 121 12.6 34” x 22” x 29.5” CWM-R2020-2K BV-362436 Rectangle 36” 24” 36” 142 15.1 34” x 22” x 35.5” CWM-R2020-2K BV-362442 Rectangle 36” 24” 42” 164 17.7 34” x 22” x 41.5” CWM-R2020-2K BV-363018 Rectangle 36” 30” 18” 86 9.5 34” x 28” x 17.5” CWM-R2014-3K Boulevard Planters
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27 February 20, 2024 Item 09
Tournesol.com | 800.542.2282 | 5
WIDTH
LENGTH
HEIGHT
PRODUCT SHAPE LENGTH WIDTH HEIGHT WEIGHT
(LBS.)
VOLUME
(CUBIC FT.) INTERIOR DIMS. IRRIGATION
BV-363024 Rectangle 36” 30” 24” 110 12.8 34” x 28” x 23.5” CWM-R2020-3K BV-363030 Rectangle 36” 30” 30” 134 16 34” x 28” x 29.5” CWM-R2020-3K BV-363036 Rectangle 36” 30” 36” 157 19.3 34” x 28” x 35.5” CWM-R2020-3K BV-363042 Rectangle 36” 30” 42” 180 22.5 34” x 28” x 41.5” CWM-R2020-3K BV-363618 Rectangle 36” 36” 18” 96 11.6 34” x 34” x 17.5” CWM-R2014-4K / CWM-R2914-2K BV-363624 Rectangle 36” 36” 24” 123 15.5 34” x 34” x 23.5” CWM-R2020-4K / CWM-R2920-2K BV-3600 Square 36” 36” 30” 170 19.7 34” x 34” x 29.5” CWM-R2020-4K / CWM-R2920-2K BV-363636 Rectangle 36” 36” 36” 177 23.4 34” x 34” x 35.5” CWM-R2020-4K / CWM-R2920-2K BV-363642 Rectangle 36” 36” 42” 204 27.4 34” x 34” x 41.5” CWM-R2020-4K / CWM-R2920-2K BV-481236 Rectangle 48” 12” 36” 78.5 10.5 46” x 10” x 35.5” CWM-R1120-2K BV-481818 Rectangle 48” 18” 18” 87 7.3 46” x 16” x 17.5” CWM-R2014-2K BV-481824 Rectangle 48” 18” 24” 125 10.4 46” x 16” x 23.5” CWM-R1620-2k BV-481830 Rectangle 48” 18” 30” 135 12.3 46” x 16” x 29.5” CWM-R2020-2K BV-481836 Rectangle 48” 18” 36” 175 15.8 46” x 16” x 35.5” CWM-R1620-2k BV-482418 Rectangle 48” 24” 18” 96 10.1 46” x 22” x 17.5” CWM-R2014-2K BV-482424 Rectangle 48” 24” 24” 135 13 46” x 22” x 23.5” CWM-R1620-2k BV-482430 Rectangle 48” 24” 30” 149 17 46” x 22” x 29.5” CWM-R2020-2K BV-482436 Rectangle 48” 24” 36” 177 20.5 46” x 22” x 35.5” CWM-R2020-2K BV-482442 Rectangle 48” 24” 42” 202 23.9 46” x 22” x 41.5” CWM-R2020-2K BV-483018 Rectangle 48” 30” 18” 106 12.9 46” x 28” x 17.5” CWM-R2014-4K Boulevard Planters
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28 February 20, 2024 Item 09
Tournesol.com | 800.542.2282 | 6
WIDTH
LENGTH
HEIGHT
PRODUCT SHAPE LENGTH WIDTH HEIGHT WEIGHT
(LBS.)
VOLUME
(CUBIC FT.) INTERIOR DIMS. IRRIGATION
BV-483024 Rectangle 48” 30” 24” 134 17.3 46” x 28” x 23.5” CWM-R2020-4K BV-483030 Rectangle 48” 30” 30” 163 21.7 46” x 28” x 29.5” CWM-R2020-4K BV-483036 Rectangle 48” 30” 36” 193 26.1 46” x 28” x 35.5” CWM-R2020-4K BV-483042 Rectangle 48” 30” 42” 221 30.5 46” x 28” x 41.5” CWM-R2020-4K BV-483618 Rectangle 48” 36” 18” 114 15.7 46” x 34” x 17.5” CWM-R2014-4K BV-483624 Rectangle 48” 36” 24” 145 21.1 46” x 34” x 23.5” CWM-R2020-4K BV-483630 Rectangle 48” 36” 30” 177 26.4 46” x 34” x 29.5” CWM-R2020-4K BV-483636 Rectangle 48” 36” 36” 208 31.8 46” x 34” x 35.5” CWM-R2020-4K BV-483642 Rectangle 48” 36” 42” 240 37.1 46” x 46” x 41.5” CWM-R2020-4K BV-4800 Square 48” 48” 35” 260 42.2 46” x 46” x 34.5” CWM-R2920-2k BV-601236 Rectangle 60” 12” 36” 94 13.2 58” x 10” x 35.5” CWM-R1120-3K BV-601818 Rectangle 60” 18” 18” 101 9.2 58” x 16” x 17.5” CWM-R2014-2K BV-601824 Rectangle 60” 18” 24” 140 13 58” x 16” x 23.5” CWM-R2020-2k BV-601830 Rectangle 60” 18” 30” 157 15.6 58” x 16” x 29.5” CWM-R2020-2K BV-601836 Rectangle 60” 18” 36” 205 19.8 58” x 16” x 35.5” CWM-R2020-2k BV-602418 Rectangle 60” 24” 18” 111 12.8 58” x 22” x 17.5” CWM-R2014-2K BV-602424 Rectangle 60” 24” 24” 160 18 58” x 22” x 23.5” CWM-R2020-2k BV-602430 Rectangle 60” 24” 30” 172 21.5 58” x 22” x 29.5” CWM-R2020-2K BV-602436 Rectangle 60” 24” 36” 203 25.8 58” x 22” x 35.5” CWM-R2020-2K BV-602442 Rectangle 60” 24” 42” 232 30.2 58” x 22” x 41.5” CWM-R2020-2K Boulevard Planters
Rectangle & Square
• Commercial-grade planters
• Suitable for indoor or outdoor use
• Fiberglass liner with wood cladding
• A variety of cladding and top cap options
• 1-5/8” drain holes available upon request
29 February 20, 2024 Item 09
Tournesol.com | 800.542.2282 | 7
WIDTH
LENGTH
HEIGHT
PRODUCT SHAPE LENGTH WIDTH HEIGHT WEIGHT
(LBS.)
VOLUME
(CUBIC FT.) INTERIOR DIMS. IRRIGATION
BV-603018 Rectangle 60” 30” 18” 122 16.3 58” x 28” x 17.5” CWM-R2014-4K BV-603024 Rectangle 60” 30” 24” 154 21.9 58” x 28” x 23.5” CWM-R2020-4K BV-603030 Rectangle 60” 30” 30” 186 27.4 58” x 28” x 29.5” CWM-R2020-4K BV-603036 Rectangle 60” 30” 36” 220 33 58” x 28” x 35.5” CWM-R2020-4K BV-603042 Rectangle 60” 30” 42” 252 38.5 58” x 28” x 41.5” CWM-R2020-4K BV-603618 Rectangle 60” 36” 18” 131 19.8 58” x 34” x 17.5” CWM-R2014-4K / CWM-R2914-3K BV-603624 Rectangle 60” 36” 24” 166 26.6 58” x 34” x 23.5” CWM-R2020-4K / CWM-R2920-3K BV-603630 Rectangle 60” 36” 30” 202 33.3 58” x 34” x 29.5” CWM-R2020-4K / CWM-R2920-2K BV-603636 Rectangle 60” 36” 36” 237 40.1 58” x 34” x 35.5” CWM-R2020-4K / CWM-R2920-3K BV-603642 Rectangle 60” 36” 42” 272 46.9 58” x 34” x 41.5” CWM-R2020-4K / CWM-R2920-3K BV-6000 Square 60” 60” 41” 329 76.4 58” x 58” x 40.5” CWM-R2920-4k BV-721236 Rectangle 72” 12” 36” 110 15.6 70” x 10” x 35.5” CWM-R1120-4K BV-721818 Rectangle 72” 18” 18” 116 11.2 70” x 16” x 17.5” CWM-R2014-3K BV-721824 Rectangle 72” 18” 24” 160 15.6 70” x 16” x 23.5” CWM-R1620-3k BV-721830 Rectangle 72” 18” 30” 180 18.8 70” x 16” x 29.5” CWM-R2020-3K BV-721836 Rectangle 72” 18” 36” 235 23.7 70” x 16” x 35.5” CWM-R1620-3k BV-722418 Rectangle 72” 24” 18” 128 15.4 70” x 22” x 17.5” CWM-R2014-3K BV-722424 Rectangle 72” 24” 24” 185 21.6 70” x 22” x 23.5” CWM-R1620-3k BV-722430 Rectangle 72” 24” 30” 196 26 70” x 22” x 29.5” CWM-R2020-3K BV-722436 Rectangle 72” 24” 36” 234 31.2 70” x 22” x 35.5” CWM-R2020-3K Boulevard Planters
Rectangle & Square
• Commercial-grade planters
• Suitable for indoor or outdoor use
• Fiberglass liner with wood cladding
• A variety of cladding and top cap options
• 1-5/8” drain holes available upon request
30 February 20, 2024 Item 09
Tournesol.com | 800.542.2282 | 8
WIDTH
LENGTH
HEIGHT
PRODUCT SHAPE LENGTH WIDTH HEIGHT WEIGHT
(LBS.)
VOLUME
(CUBIC FT.) INTERIOR DIMS. IRRIGATION
BV-723018 Rectangle 72” 30” 18” 140 19.7 70” x 28” x 17.5” CWM-R2014-4K BV-723024 Rectangle 72” 30” 24” 176 26.4 70” x 28” x 23.5” CWM-R2020-3K BV-723030 Rectangle 72” 30” 30” 212 33.1 70” x 28” x 29.5” CWM-R2020-3K BV-723036 Rectangle 72” 30” 36” 253 39.8 70” x 28” x 35.5” CWM-R2020-3K BV-723042 Rectangle 72” 30” 42” 288 46.6 70” x 28” x 41.5” CWM-R2020-3K BV-723618 Rectangle 72” 36” 18” 148 23.9 70” x 34” x 17.5” CWM-R2914-3K BV-723624 Rectangle 72” 36” 24” 188 32.1 70” x 34” x 23.5” CWM-R2920-3K BV-723630 Rectangle 72” 36” 30” 228 40.3 70” x 34” x 29.5” CWM-R2920-3K BV-723636 Rectangle 72” 36” 36” 268 48.4 70” x 34” x 35.5” CWM-R2920-3K BV-723642 Rectangle 72” 36” 42” 309 56.6 70” x 34” x 41.5” CWM-R2920-3K BV-961236 Rectangle 96” 12” 36” 141 21 94” x 10” x 35.5” CWM-R1120-5K BV-961818 Rectangle 96” 18” 18” 148 15 94” x 16” x 17.5” CWM-R2014-4K BV-961824 Rectangle 96” 18” 24” 200 20.8 94” x 16” x 23.5” CWM-R1620-4k BV-961830 Rectangle 96” 18” 30” 229 25.3 94” x 16” x 29.5” CWM-R2020-4K BV-961836 Rectangle 96” 18” 36” 290 31.6 94” x 16” x 35.5” CWM-R1620-4k BV-962424 Rectangle 96” 24” 24” 220 28.8 94” x 22” x 23.5” CWM-R1620-4k BV-962430 Rectangle 96” 24” 30” 247 34.9 94” x 22” x 29.5” CWM-R2020-4K BV-962436 Rectangle 96” 24” 36” 295 42 94” x 22” x 35.5” CWM-R2020-4K BV-962442 Rectangle 96” 24” 42” 336 49 94” x 22” x 41.5” CWM-R2020-4K BV-963018 Rectangle 96” 30” 18” 176 26.4 94” x 28” x 17.5” CWM-R2020-4K Boulevard Planters
Rectangle & Square
• Commercial-grade planters
• Suitable for indoor or outdoor use
• Fiberglass liner with wood cladding
• A variety of cladding and top cap options
• 1-5/8” drain holes available upon request
31 February 20, 2024 Item 09
Tournesol.com | 800.542.2282 | 9
WIDTH
LENGTH
HEIGHT
PRODUCT SHAPE LENGTH WIDTH HEIGHT WEIGHT
(LBS.)
VOLUME
(CUBIC FT.) INTERIOR DIMS. IRRIGATION
BV-963024 Rectangle 96” 30” 24” 220 35.5 94” x 28” x 23.5” CWM-R2020-4K BV-963030 Rectangle 96” 30” 30” 265 44.5 94” x 28” x 29.5” CWM-R2020-4K BV-963036 Rectangle 96” 30” 36” 316 53.5 94” x 28” x 35.5” CWM-R2020-4K BV-963042 Rectangle 96” 30” 42” 360 62.6 94” x 28” x 41.5” CWM-R2020-4K BV-963618 Rectangle 96” 36” 18” 184 32.2 94” x 34” x 17.5” CWM-R2914-4K BV-963624 Rectangle 96” 36” 24” 232 43.1 94” x 34” x 23.5” CWM-R2920-4K BV-963630 Rectangle 96” 36” 30” 282 54.1 94” x 34” x 29.5” CWM-R2920-4K BV-963636 Rectangle 96” 36” 36” 331 65.1 94” x 34” x 35.5” CWM-R2920-4K BV-963642 Rectangle 96” 36” 42” 381 76.1 94” x 34” x 41.5” CWM-R2920-4K Boulevard Planters
Rectangle & Square
• Commercial-grade planters
• Suitable for indoor or outdoor use
• Fiberglass liner with wood cladding
• A variety of cladding and top cap options
• 1-5/8” drain holes available upon request
32 February 20, 2024 Item 09
City of Del Mar
Agenda Report
________________________________________________________________________________________________________ City Council Action:
TO: Honorable Mayor and City Council Members
FROM: Joe Bride, Public Works Director
Monica Molina, Finance Manager/Treasurer
Via Ashley Jones, City Manager
DATE: February 20, 2024
SUBJECT: Overview of Water and Wastewater Rate Study and Proposed Rate Schedule and Recommendation to Initiate the 218 Public Noticing Process REQUESTED ACTION/RECOMMENDATION:
Staff recommends that the City Council receive a presentation from City staff and HF&H Consultants and direct staff to proceed with the required Proposition 218 public noticing process for recommended water and wastewater rates effective July 1, 2024.
DISCUSSION/ANALYSIS:
The City of Del Mar maintains separate Water and Wastewater Enterprise Funds, each with its own rate stabilization, operating, capital and pension reserves. The City’s water and wastewater utilities are funded from water and wastewater rates and fees are charged to the City’s customers based on their use of the respective utility services. The rate structures of both the water and wastewater rates consist of a fixed service charge and a variable, flow-based, charge for which customers are billed bi-monthly.
Proposition 218 requires utility agencies to forecast future expenditures over the rate study period and set the appropriate rates to generate an equal amount of revenues. Typical fund expenditures are estimated based on historical costs, including operations and maintenance, capital improvements, capital equipment replacement, emergencies, and reserve funding. Additional factors include recent and actual water consumption patterns (by customer-type, meter size, and the associated impact on water and wastewater revenues) and inflation forecasts.
The City of Del Mar does not have a direct connection to a water supply or own a potable water filtration plant, therefore water system external expenditures include the costs for buying raw water from the San Diego County Water Authority (SDCWA), and the costs of contracting with the City of San Diego to treat the raw water to potable drinking water quality standards and transport the water to Del Mar. Also, Del Mar does not own a wastewater treatment facility, therefore wastewater system expenditures include contracting with both the San Elijo Wastewater Joint Powers Authority (JPA) and the City of San Diego Metropolitan Wastewater System (Metro) for wastewater treatment services and the City of San Diego and Solana Beach for wastewater transportation services.
Internal expenditures include Capital Projects and Operation and Maintenance (O&M) expenditures. O&M expenditures for the water and wastewater enterprises include fuel, salaries, 1 February 20, 2024 Item 10
City Council Agenda Report
Water and Wastewater Rate Study and Proposed Rate Schedule February 20, 2024
benefits, analytical sampling/analysis, materials, supplies, insurance, vehicle maintenance, utilities and administrative expenses.
The Public Works Department oversees Capital Improvement Programs for the Water and Wastewater Systems to meet the City’s critical water and wastewater demands (ensuring functioning reliable water and wastewater infrastructure) as well as achieving regulatory health and safety requirements. Specific projects are prioritized and scheduled based on risk analysis, life cycle expectations, and input from system operators and residential feedback. Project cost estimates are developed based on unit costs of similar projects and forecasted escalation rates.
Both programs are designed to only invest funding in the City’s most critical needs and non-critical projects are deferred to provide funding for the critical projects.
The wastewater fund is also subject to debt service expenses. The 21st Street pump station was funded through a state revolving loan program. Annual payments of $344,017, which began on August 1, 2013, are to be paid through August 2032 at an interest rate of 2.9% per annum. In addition, the City entered into a finance agreement in June 2015 with the California Infrastructure and Economic Development Bank (iBank) for the replacement of a sewage pipeline. Annual payments of approximately $218,000, which began on August 1, 2016, are to be paid through August 2035 at an interest rate of 2.17% annum.
In 2019, the City adopted a five-year rate schedule for water and wastewater rates for Fiscal Years (FYs) 2019-2020 through 2023-2024. The City is in the fifth year of the five-year rate schedule. The current rate period ends on July 1, 2024. The current rate schedule has produced sufficient revenues to cover overall expenses, however, unforeseen high inflation rates have increased external costs higher than expected. For example, potable water supply and treatment costs from the San Diego County Water Authority and City of San Diego have increased 27% since 2019, whereas the prior rate study only assumed an increase of approximately 16.2 %.
Other expenses that have been subject to higher-than-expected inflation are equipment, supplies, fuel, and vehicle repairs/replacements.
The City has compensated for these unexpected external cost increases by implementing internal cost savings measures such as utilizing streamlined meter reading software to increase efficiencies and reduce labor costs and maximizing wastewater pump efficiencies and lower energy usage. Also, the City has reduced Capital Improvement Project costs by bundling water and wastewater projects into larger bid packages which has resulted in lower mobilization and unit costs.
The current rates are not set to generate sufficient revenue needed to cover anticipated future increases in fixed and variable costs associated with the City’s water and wastewater systems. In order to collect sufficient revenue for covering the cost of these utility services, a rate adjustment is required. In May 2023, the City of Del Mar administered a Request for Qualification (RFQ) process and awarded a professional services agreement to HF&H Consultants, LLC (HF&H) for Water and Wastewater Utility Rate Studies. Attachment A details the analysis to perform a costof-service study and set proposed water and wastewater rates for FYs 2024-2025 through FY 2028-2029. The information was presented to the Finance Committee on January 23, 2024, and the feedback provided by the Committee was incorporated into the presentation. 2 February 20, 2024 Item 10
City Council Agenda Report
Water and Wastewater Rate Study and Proposed Rate Schedule February 20, 2024
Next Steps
Following the introduction of the proposed five-year rates and the cost of service study to the City Council on February 20, 2024, the next step will be to send a notice with the proposed rates to all property owners and utility customers 45-days in advance of a public hearing that will be scheduled for May 6, 2024, in accordance with the process set forth by Proposition 218. The purpose of the public hearing on May 6, 2024, will be for the City Council to adopt the proposed rates by ordinance, unless there is a majority protest (in writing). A second reading will be scheduled for May 20, 2024, and the new rates would take effect on July 1, 2024.
FISCAL IMPACT:
There is no fiscal action to be taken by the City Council related to this agenda item. In order to collect sufficient revenue to cover the cost of providing water and wastewater service, it is necessary for a rate adjustment to take effect July 1, 2024, and on July 1 of the subsequent four years. The proposed five-year rate adjustments allow the Water and Wastewater Fund to balance its annual operating budget while building-up available funds for future capital costs and stabilizing rates for customers. Approval of this item does not require a budget adjustment to the Fiscal Year 2023-24 Operating and Capital Budget.
ENVIRONMENTAL IMPACT:
The action being considered is exempt from the California Environmental Quality Act (CEQA) because it is not a “project” per Section 15378(b)(5) of CEQA Guidelines. The action involves an organizational or administrative activity of government that will not result in the direct or indirect physical change in the environment.
ATTACHMENTS:
Attachment A – Water and Wastewater Rate Cost of Service Study – HF&H Consultants 3 February 20, 2024 Item 10
February 8, 2024
CITY OF DEL MAR
Water and Wastewater Rate
Cost-of-Service Study
4 February 20, 2024 Item 10
CITY OF DEL MAR
1050 Camino Del Mar
Del Mar, CA 92014
WATER AND WASTEWATER RATE COST-OF-SERVICE
STUDY
February 8, 2024
HF&H CONSULTANTS, LLC
590 Ygnacio Valley Rd, Suite 105
Walnut Creek, CA 94596
© HF&H CONSULTANTS, LLC All rights reserved.
5 February 20, 2024 Item 10
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HF&H CONSULTANTS, LLC
Managing Tomorrow’s Resources Today
590 Ygnacio Valley Road, Suite 105 John W. Farnkopf, PE Walnut Creek, California 94596 Laith B. Ezzet, CMC
Tel: (925) 977-6950 Richard J. Simonson
Fax: (925) 977-6955 Marva M. Sheehan, CPA
hfh-consultants.com Robert C. Hilton
February 8, 2024
Joe Bride
Public Works Director, City Engineer
City of Del Mar
1050 Camino Del Mar
Del Mar, CA 92014
Subject: Water and Wastewater Rate Cost-of-Service Study – Draft Report Dear Joe Bride:
HF&H is pleased to submit this cost-of-service report to the City of Del Mar (City). The report summarizes the analysis that was conducted to develop the recommended water and wastewater rates for FY 2024- 25 through FY 2028-29. The rates proposed in this report reflect the current and projected cost of providing water and wastewater service for the next five years.
We greatly appreciate your assistance in developing the cost-of-service analysis.
Sincerely,
HF&H CONSULTANTS, LLC
Rick Simonson
Senior Vice President
7 February 20, 2024 Item 10
City of Del Mar Water and Wastewater Rate Cost-of-Service Study Draft Report Table of Contents
HF&H Consultants, LLC Page i February 8, 2024
TABLE OF CONTENTS
I. EXECUTIVE SUMMARY ............................................................................................. 3 Study Objectives ........................................................................................................... 3 Findings and Recommendations ..................................................................................... 3 II. INTRODUCTION ...................................................................................................12 Study Purpose .............................................................................................................13 Study Process ..............................................................................................................13 Report Organization .....................................................................................................14 III. WATER REVENUE REQUIREMENTS .....................................................................15 Revenue Requirement Assumptions and Projections .......................................................15 O&M Expenses .......................................................................................................16 Raw Water Purchases .............................................................................................16 Water Treatment Expenses .....................................................................................16 Capital Project Costs ...............................................................................................17 Reserves .....................................................................................................................17 Operating Reserve ..................................................................................................18 Self-Insurance Reserve ...........................................................................................18 Pension Reserve .....................................................................................................18 Capital Reserve ......................................................................................................18 Equipment Replacement Reserve .............................................................................18 Rate Stabilization Fund ...........................................................................................18 Revenue Increases ......................................................................................................18 Reserve Fund Balance ..................................................................................................19 IV. WATER RATE COST OF SERVICE ANALYSIS .........................................................21 Methodology ...............................................................................................................21 Customer Classes ........................................................................................................22 Cost-of-Service Allocations ...........................................................................................22 Fairgrounds Allocation Factors .................................................................................23 Staff Allocation .......................................................................................................23 Hydraulic Capacity ..................................................................................................24 Distribution System Sizing ......................................................................................24 Total Water Use......................................................................................................24 Operations & Maintenance Composite ...................................................................25 Results of Initial Allocation ......................................................................................25 Demand Service Allocation Factors ...........................................................................25 Average (Base) Day demand..................................................................................25 Maximum Day demand ...........................................................................................25 Maximum Hour demand .........................................................................................26 Load Factors ..........................................................................................................26 Cost-of-Service Allocations and Allocation Factors .....................................................27 V. WATER RATE DESIGN ...........................................................................................32 Current Rates ..............................................................................................................32 8 February 20, 2024 Item 10
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Current Service Charges..........................................................................................32 Current Commodity Charges ....................................................................................32 Service Charge Design .................................................................................................33 Water Use Charge Design .............................................................................................35 Single Family Residential Commodity Charges ...........................................................36 Uniform Commodity Charges ...................................................................................37 Commodity Charges Summary .................................................................................37 Drought Rate Factors ..............................................................................................38 Analysis ..................................................................................................................39 Implementation .......................................................................................................43 VI. COMPARISON TO WATER AGENCIES ...................................................................45 Neighboring Agency Comparison .............................................................................45 VII. WASTEWATER REVENUE REQUIREMENTS ........................................................46 Operating & Maintenance (O&M) Expenses ...............................................................46 Wastewater Transportation Expenses .......................................................................46 Wastewater Treatment Expenses .............................................................................47 Debt Service ..........................................................................................................47 Capital Project Costs ...............................................................................................48 Reserve Contributions .............................................................................................48 Reserves .....................................................................................................................48 Operating Reserve ..................................................................................................49 Self-Insurance Reserve ...........................................................................................49 Pension Reserve .....................................................................................................49 Debt Service Reserve ..............................................................................................49 Capital Reserve ......................................................................................................49 Equipment Replacement Reserve .............................................................................49 Rate Stabilization Fund ...........................................................................................49 Revenue Increases ......................................................................................................50 Debt Service Coverage .................................................................................................50 Reserve Fund Balance ..................................................................................................51 VIII. WASTEWATER RATE COST OF SERVICE ANALYSIS .........................................53 Methodology ...............................................................................................................53 Customer Classes ........................................................................................................53 Volumetric Rates Modifications ......................................................................................53 Cost-of-Service Allocations ...........................................................................................54 Fairgrounds Allocation Factors .................................................................................55 Staff Allocation .......................................................................................................55 Hydraulic Capacity ..................................................................................................55 Collection System Sizing ........................................................................................56 Wastewater Flow ....................................................................................................56 Operations & Maintenance Composite ...................................................................57 Results of Initial Allocation ......................................................................................57 Cost-of-Service Allocations and Allocation Factors .....................................................57 Units of Service ......................................................................................................59 Unit Costs of Service ...............................................................................................60 IX. WASTEWATER RATE DESIGN ..............................................................................62 9 February 20, 2024 Item 10
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Current Rates ..............................................................................................................62 Current Service Charges..........................................................................................62 Current Volumetric Rates ........................................................................................62 Service Charge Design .................................................................................................63 Volumetric Rates Design ...............................................................................................64 X. COMPARISON TO WASTEWATER AGENCIES .........................................................65 Neighboring Agency Comparison ...................................................................................65 XI. COMBINED UTILITY BILL IMPACTS ....................................................................66
TABLE OF FIGURES
Figure I-1. Water Enterprise Reserve Fund Balance .............................................................. 4 Figure I-2. Cost-of-Service Water Rates Revenue Summary .................................................. 5 Figure I-3. Current and Proposed Service Charge Rates ........................................................ 5 Figure I-4. Current and Proposed Commodity Charge Rates .................................................. 6 Figure I-5. Sample Rates With Drought Rate Factors – FY 2024-25 Rates .............................. 7 Figure I-6. Wastewater Enterprise Reserve Fund Balance ..................................................... 8 Figure I-7. Cost-of-Service Wastewater Rates Revenue Summary .......................................... 9 Figure I-8. Current and Proposed Service Charge Rates ........................................................ 9 Figure I-9. Current and Proposed Volumetric Rates .............................................................10 Figure III-1. Projection Assumptions ..................................................................................15 Figure III-2. Total Annual Projected Revenue Requirement for Water Enterprise ...................16 Figure III-3. Water Enterprise Five-Year Capital Improvement Plan ......................................17 Figure III-4. Rate Increase Calculations .............................................................................19 Figure III-5. Projected Year-End Fund Balance ...................................................................20 Figure IV-1. Allocation of FY 2024-25 Revenue Requirement to Fairgrounds ..........................23 Figure IV-2. Fairgrounds Allocation Factors ........................................................................23 Figure IV-3. Capacity Calculations of City’s Water Meters .....................................................24 Figure IV-4. Water Use Analysis ........................................................................................25 Figure IV-5. Service Level Demands and Load Factors .........................................................26 Figure IV-6. Demand Service Levels ...................................................................................27 Figure IV-7. Cost-of-Service Allocation Factors ....................................................................28 Figure IV-8. Fairgrounds Cost-of-Service Allocations ............................................................28 Figure IV-9. City Customers Cost-of-Service Allocations .......................................................29 Figure IV-10. Customer Class Cost-of-Service Allocations for Demand Service Levels .............30 Figure IV-11. Cost-of-Service Revenue Summary ................................................................31 Figure V-1. Current Service Charges ..................................................................................32 Figure V-2. Current Commodity Charges ............................................................................33 Figure V-3. Service Charge Units of Service ........................................................................34 Figure V-4. Service Charge Unit Costs ................................................................................34 Figure V-5. Proposed Bi-Monthly Service Charge Rates – FY 2024-25 ...................................35 Figure V-6. Current and Proposed Service Charge Rates ......................................................35 Figure V-7. Breakpoint Locations – Single Family Residential ................................................36 Figure V-8. Calculation of Proposed Commodity Charge Rates – Single Family Residential ......37 Figure V-9. Calculation of Commercial/Multi Family Uniform Commodity Charges ...................37 Figure V-10. Current and Proposed Commodity Charges ......................................................38 10 February 20, 2024 Item 10
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Figure V-11. WSCP Required Water Use Reductions by Class ...............................................39 Figure V-12A. Calculation of 10-30% Shortage Reductions by Stage and Customer Class .......40 Figure V-12B. Calculation of 40-56% Shortage Reductions by Stage and Customer Class .......41 Figure V-13. Drought Rate Factors by WSCP-Defined Shortage Stage ...................................42 Figure V-14. Sample Rates With Drought Rate Factors – FY 2024-25 Rates ...........................43 Figure VI-1. Neighboring Agency Water Bi-Monthly Bill Comparison ......................................45 Figure VII-1. Key Modeling Assumptions ............................................................................46 Figure VII-2. Total Annual Projected Revenue Requirements for Wastewater Enterprise .........47 Figure VII-3. Wastewater Five-Year Capital Improvement Plan .............................................48 Figure VII-4. Rate Increase Calculations .............................................................................50 Figure VII-5. City Debt Coverage Ratio Calculations (with rate adjustments) .........................50 Figure VII-6. Projected Year-End Fund Balance...................................................................52 Figure VIII-1. Allocation of FY 2024-25 Revenue Requirement to Fairgrounds .......................55 Figure VIII-2. Fairgrounds Allocation Factors ......................................................................55 Figure VIII-3. Capacity Calculations for City Wastewater Service ..........................................56 Figure VIII-4. Wastewater Flow Analysis ............................................................................56 Figure VIII-5. Cost-of-Service Allocation Factors .................................................................57 Figure VIII-6. Fairgrounds Cost-of-Service Allocations .........................................................58 Figure VIII-7. City Customers Cost-of-Service Allocations ....................................................59 Figure VIII-8. Wastewater Flow Analysis ............................................................................60 Figure VIII-9. Summary of Units of Service by Customer Class .............................................60 Figure VIII-10. Unit Costs of Service (City) ..........................................................................60 Figure VIII-11. Cost-of-Service Revenue Summary ..............................................................61 Figure IX-1. Current Service Charges .................................................................................62 Figure IX-2. Current Volumetric Rates ................................................................................63 Figure IX-3. Proposed City Customers Bi-Monthly Service Charge Rates – FY 2024-25............63 Figure IX-4. Current and Proposed Service Charge Rates .....................................................64 Figure IX-5. Current and Proposed Volumetric Rates ...........................................................64 Figure X-1. Neighboring Agency Wastewater Bi-Monthly Bill Comparison ...............................65 Figure XI-1. Single Family Residential Bill Comparison .........................................................66 Figure XI-2. Multi-Family Residential Bill Comparison ...........................................................67 Figure XI-3. Commercial/Institutional Customer Bill Comparison ...........................................67 Figure XI-4. Hotels with Restaurant Customer Bill Comparison .............................................68 Figure XI-5. Restaurant Customer Bill Comparison ..............................................................68 Figure XI-6. Fairgrounds Customer Bill Comparison .............................................................69 Figure XI-7. Annual Single-Family Residential Customer Combined Bill Adjustments ...............69 Figure XI-8. Annual Multi-Family Residential Customer Combined Bill Adjustments ................70 Figure XI-9. Annual Commercial Customer Combined Bill Adjustments ..................................70
GLOSSARY
AMI - advanced metering infrastructure.
AWWA – American Water Works Association.
Breakpoint – The volume of water per billing period separating tiers in tiered rate structures.
City – City of Del Mar and/or the City’s Water or Wastewater Enterprise CCF – Hundred cubic feet (see HCF below).
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CIP - Capital Improvement Program.
Commodity Charges – The product of rates per unit of metered water use multiplied by a customers metered water use during the billing period.
CY – Calendar Year.
Drought Rate Factors – Factors applied to Commodity charges to stabilize revenue to meet the City’s water revenue requirement during periods of conservation when there are significant reductions in water usage, and hence in water revenues.
EMU – Equivalent Meter Unit.
Fairgrounds – 22nd Agricultural Association Fairgrounds in Del Mar. This is the largest water and wastewater customer served by the City of Del Mar.
FY - Fiscal Year.
Flat rates - Fixed charges per account that do not vary based on metered water use. Flat rates are found in unmetered water systems and in wastewater rates. Flat rates are not uniform rates (see below).
GPD - Gallons Per Day.
HCF - Hundred cubic feet of metered water; 748 gallons; a cube of water 4.6 feet on edge. One HCF per month is about 25 gallons per day.
Meter charges - One-time charges for the purchase of a meter. Meter charges are not Service Charges (see below).
Multi-Family Residential – Refers to the current Multi Family Residential customer class. Includes all multi-family customer accounts, including those receiving irrigation from the same potable meter.
O&M - Operating and Maintenance, in reference to the costs of running facilities.
PAYGo - Pay-As-You-Go, in reference to funding capital improvements from cash rather than from borrowed sources such as bonds or loans.
SDCWA – San Diego County Water Authority.
SEJPA – San Elijo Joint Powers Authority.
Service Charges – Fixed charges paid by City customers per meter size, regardless of the amount of water used. The charge is proportionate to the capacity of the customer’s service.
Study Period – Five-year planning period analyzed in this study, which includes fiscal year 2024-25 to fiscal year 2028-29.
Uniform rates - Constant charges per unit of water use that do not change depending on the amount used. Uniform rates are not flat rates (see above).
Volumetric Rates – The rates assessed per unit of metered water use during the billing period to determine the volumetric portion of a wastewater bill.
WSCP – Water Shortage Contingency Plan.
ACKNOWLEDGEMENTS
City Council
Dave Druker, Mayor
Terry Gaasterland, Deputy Mayor
Tracy Martinez, Councilmember
Dan Quirk, Councilmember
Dwight Worden, Councilmember
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City Staff
Ashley Jones, City Manager
Joe Bride, Public Works Director, City Engineer
Monica Molina, Finance Manager, Treasurer
HF&H Consultants, LLC
Rick Simonson, Senior Vice President
Gabe Sasser, PE, Project Manager
LIMITATIONS
This document was prepared solely for the City of Del Mar in accordance with the contract between the City and HF&H and is not intended for use by any other party for any other purpose.
In preparing this study, we relied on information from the City, which we consider accurate and reliable.
Our analysis is based on the best available information at the time of the study.
Rounding differences caused by stored values in electronic models may exist.
This document represents our understanding of relevant laws, regulations, and court decisions but should not be relied upon as legal advice. Questions concerning the interpretation of legal authorities referenced in this document should be referred to a qualified attorney. 13 February 20, 2024 Item 10
WATER AND WASTEWATER RATE
COST-OF-SERVICE STUDY
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I. EXECUTIVE SUMMARY
This study documents the process by which the City’s water and wastewater rates were analyzed to ensure that rates continue to meet the cost of service. This report describes how the revenue requirement (expenses) is apportioned between customer classes receiving water and wastewater service, the appropriate changes in the respective classes’ rates to cover their costs, and the proposed water and wastewater rate designs that are appropriate to ensure that customers continue paying their proportionate share.
The Executive Summary presents the findings and recommendations in this report.
STUDY OBJECTIVES
The City undertook this rate study to meet the following key objectives.
1. Provide revenue sufficiency and financial stability - Ensure revenues from future water and wastewater rates continue covering costs without depleting reserves and maintaining necessary debt service coverage requirements. Revenue requirement projections (i.e., expenses) are increasing with expanded capital program expenses to upgrade aging infrastructure.
2. Maintain adequate reserves to meet City policies – Confirm future rates will continue to generate revenues that will keep the City’s reserve balance in line with its target threshold to have sufficient reserves on hand for operational cash flow, debt service payments, unplanned emergencies, retirement funding liability, and capital project funding.
3. Rate payer equity - Revisit allocation of City’s costs to verify each customer class pays their proportionate share of expenses for each utility. Each customer within each customer class must pay their proportionate share of expenses via volumetric and service capacity charges.
FINDINGS AND RECOMMENDATIONS
The following discussion summarizes HF&H’s findings and recommendations for both the Water and Wastewater Enterprises.
1. Water rate revenue increases are necessary. Recent historically high, nationwide inflation rates, increases to water treatment and water supply expenses, as well as funding for capital improvement projects are driving the need to increase water rates beginning FY 2024-25. Water treatment and water supply expenses together comprise more than 50% of the City’s water expenses and these costs are set by third-party agencies. A revenue increase of 3% in FY 2024-25 and 2% annual increases each fiscal year FY 2025-26 through FY 2028-29 are recommended. Refer to Section III for further details.
2. The City will continue to meet all Water Enterprise reserve targets with recommended revenue increases. Increasing water rate revenues will allow the City to continue to maintain sufficient reserves to meet all adopted operating and capital reserve targets. Beyond FY 2028-29, the City will be required to use more reserves in combination with larger revenue increases, if cost projections hold.
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re-analyze rates within five years to ensure rates are providing enough support so that reserves continue to meet the target threshold. See Figure I-1 for reference and refer to Section III for further information.
Figure I-1. Water Enterprise Reserve Fund Balance
3. Water rates are recommended for realignment to the cost of service. The cost-of-service analysis of the FY 2024-25 revenue requirement indicates adjustments are required to realign water rates to reflect the proportional benefits each customer class receives. With the recommended adjustments, rate revenues for each customer class would adjust based on Figure I-2.
Based on the cost-of-service analysis, overall revenue from Commodity Charges would increase by
4.8% and revenue from Service Charges would increase by 0.6%. The Fairgrounds received a larger cost allocation than during the previous study, as their proportionate share grew from 14.9% to 17.6%.
The increase can be attributed to an increased share of the raw water supply costs allocated to the Fairgrounds based on recent water demand patterns. This expense is the largest expense category in the cost allocation exercise. The Fairgrounds share of the revenue requirement to be recovered through the FY 2024-25 rates will be $850,661 (17.6%) and the remaining City customer’s share will be $3,978,871 (82.4%). Refer to Section IV.
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Figure I-2. Cost-of-Service Water Rates Revenue Summary
4. Updated Fixed Service Charges are recommended. Figure I-3 shows the current and cost-of-service Fixed Service Charges during the period of FY 2024-25 through FY 2028-29. The customers with a 5/8” meter will see a 0.7% increase, while customers served by meters ranging between ¾” to 4” will see a decrease. The Fairgrounds will see a 12.3% increase to their existing Fixed Service Charge. Refer to Section V.
Figure I-3. Current and Proposed Service Charge Rates
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5. Updated Commodity Charges are recommended. Figure I-4 shows the current and cost-of-service Commodity Charges during the period of FY 2024-25 through FY 2028-29. Single Family Residential tiers were adjusted to reflect updated patterns of demand. As a result, the Tier 1 breakpoint would increase from 20 to 22 HCF. All Commercial, Multi-Family, Irrigation customers and the Fairgrounds will see increased rates. Refer to Section V.
Figure I-4. Current and Proposed Commodity Charge Rates
6. Drought Rate Factors are recommended to replace Demand Management. In place of the City’s current practice of assessing a surcharge to Service Charges and Commodity Charges during times of drought when water use, and therefore revenues, decrease, HF&H recommends a set of drought rate factors that would be applied solely to the Commodity Charges to cover fixed costs when water shortage reduces water demand and water sales decrease in response. The factors would be implemented during declared water shortage stages in accordance with the City’s Water Shortage Contingency Plan (WSCP), state mandated reductions in the level of potable water usage, or other natural disaster or event that results in a water shortage and an unforeseen drop in water demand that requires reductions in water use. Figure I-5 shows the Drought Rate Factors that would be applied to the proposed FY 2024-25 rates that would normally be in effect absent declared shortages. Refer to Section V. 19 February 20, 2024 Item 10
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Figure I-5. Sample Rates With Drought Rate Factors – FY 2024-25 Rates
7. Wastewater rate revenue increases are necessary. Recent historically, high nationwide inflation rates, increases to wastewater treatment and conveyance expenses, as well as funding for capital improvement projects are driving the need to increase wastewater rates beginning FY 2024-25. Water treatment and water supply expenses together comprise more than 26% of the City’s wastewater expenses and these costs are set by third-party agencies. A revenue increase of 4% in FY 2024-25 and 2% annual increases in each fiscal year for FY 2025-26 through FY 2028-29, are recommended. Refer to Section VII for further details.
8. The City will continue to meet all Wastewater Enterprise reserve targets with recommended revenue increases. Increasing water rate revenues will allow the City to continue to maintain sufficient reserves to meet all adopted operating and capital reserve targets. Beyond FY 2028-29, the City will be required to use more reserves in combination with larger revenue increases, if cost projections hold. Cost increases should be monitored to ensure modeled rate increases are sufficient. The City should re-analyze rates within five years to ensure rates are providing enough support so that reserves continue to meet the target threshold. See Figure I-6 for reference and refer to Section VII for further information.
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Figure I-6. Wastewater Enterprise Reserve Fund Balance
9. Wastewater rates are recommended for realignment to the cost of service. The cost-of-service analysis of the FY 2024-25 revenue requirement indicates adjustments are required to realign wastewater rates to reflect the proportional benefits each customer class receives. With the recommended adjustments, rate revenues for each customer class would adjust based on Figure I-7.
Based on the cost-of-service analysis, overall revenue from Volumetric Rates would decrease by 0.3% and revenue from Service Charges would increase by 8.9%. The Fairgrounds allocation has decreased since the previous cost-of-service study, which yielded an overall allocation of 17.25%. The decrease can be attributed to a reduced proportionate share of flow-related costs allocated to the Fairgrounds.
Because of the Fairgrounds reduced volumetric share of contributed wastewater relative to all other City customers. Fairgrounds flow rebounded in 2023, but the proportionate share of flows they send to SEJPA has not returned to pre-pandemic levels yet. The Fairgrounds share of the revenue requirement to be recovered through the FY 2024-25 rates will be $670,430 (15.1%) and the remaining City customer’s share will be $3,784,186 (84.9%). Refer to Section VIII. 21 February 20, 2024 Item 10
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Figure I-7. Cost-of-Service Wastewater Rates Revenue Summary
10. Update Service Charges are recommended. Figure I-8 shows the current and cost-of-service Service Charges during the period of FY 2024-25 through FY 2028-29. All City customers, aside from the Fairgrounds, will see an increased Service Charge. The Fairgrounds will see a 3.6% decrease to their existing Service Charge. Refer to Section IX.
Figure I-8. Current and Proposed Service Charge Rates
11. The Volumetric Rates may be simplified. The City’s wastewater treatment and conveyance charges do not vary based on wastewater strength. Therefore, there is no longer a nexus to charge high 22 February 20, 2024 Item 10
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strength customers a higher volumetric rate than other commercial customers. As a result, the recommendation will reduce the number of volumetric rates from six to two. Refer to Section VIII for further explanation.
12. Updated Volumetric Rates are recommended. Figure I-9 shows the current and cost-of-service Volumetric Rates during the period of FY 2024-25 through FY 2028-29. All Commercial, Multi-Family, and Single-Family Residential customers will be assessed the same rate for billed wastewater flows. This change results in significant decreases to the rates assigned to Hotels with Restaurants, Restaurants, and Shopping Center customers. The Fairgrounds will continue to pay a separate rate. Refer to Section IX.
Figure I-9. Current and Proposed Volumetric Rates
13. Combined water and wastewater bill increases will vary by customer type and level of water use.
Sample bi-monthly bill comparisons, for FY 2024-25, are provided in Section XI. Using 2022 as a test year, bills at current rates (which reflects rates implemented on January 1, 2024) were compared to bills under the proposed rates, effective July 1, 2024, to determine the level of adjustment customers could pay annually for water and wastewater service.
Residential bill impacts vary. 75% of single family households will see an increase of at least 3% in their combined water and wastewater payments, based on the rate shown in the figure above, with the largest annual increase being 7% for the year. For the customers facing larger increases, these adjustments are attributable to the increased fixed service charge for wastewater service. Multi-family accounts can expect an annual increase between 4-7% for the year.
Commercial customer bills demonstrate the highest order of variability due to the adjustment in wastewater rates. Previously, customers charged more to account for their wastewater strength will see a significant decrease. Accounts connected to shopping centers, restaurants, and hotels with a restaurant (or providing food service) will see the largest decrease in their combined utility bills, with some seeing a decrease of as much as 22%. There are 19.2% of Commercial customers that would see a decrease. While these customers will likely see lower utility bills, the majority of customers (80.8%) 23 February 20, 2024 Item 10
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can expect an increase of up to 7% of their annual utility bills for water and wastewater services. The increases capture the increases to fixed service charges for all wastewater customers and the increases to volumetric rates for customers previously categorized as Commercial or Institutional. The increases in bills reflect the higher Commodity Charges proposed, as well.
Refer to Section XI for further analysis.
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II. INTRODUCTION
The City provides water service to its residential and commercial accounts, including 1,433 Single Family Residential meters, 183 Multi-Family Residential meters, 139 Irrigation meters, 114 combined Commercial and City meters, and the 22nd Agricultural Association Fairgrounds (Fairgrounds). As a member of San Diego County Water Authority (SDCWA), the City receives raw water that is then treated by the City of San Diego for potable use.
The City provides wastewater collection service to a population of 3,830, including 1,395 Single Family Residential accounts, 184 Multi-Family accounts, 11 non-residential (e.g. Commercial, Institutional, and City) accounts, and the Fairgrounds. Most City wastewater is conveyed through the City’s network and is transported via a force main operated by Solana Beach for treatment overseen by San Elijo Joint Powers Authority (SEJPA). Occasionally, a small portion of wastewater is conveyed to the San Diego Metro System for treatment, when necessary (during operation challenges or system maintenance).
Separate enterprise funds are maintained for the wastewater and water programs provided by the City’s Public Works Department. As such, each enterprise fund maintains its own rate stabilization, operating, capital, equipment, debt service, self-insurance, and pension reserves.
The water rates in this study were developed using rate-making principles set forth by the American Water Works Association (AWWA) in Principles of Water Rates, Fees and Charges (M1 Manual). This Manual’s cost-of-service principles endeavor to distribute costs to customer classes (also referred to as classes) and to individual customers in proportion to customers impacts on the water system. Pursuant to the M1 Manual, rate studies generally contain three elements: (1) a revenue requirements analysis, which determines how much revenue is needed from rates to recover a utility’s projected costs; (2) a cost-of-service analysis, which allocates the revenue requirements to the rate components;1 and (3) a rate design analysis, which determines any modifications that are required to align the rate structure with the cost of service.
Similarly, the wastewater rates in this study were developed using rate-making principles in compliance with Proposition 218. Therefore, the wastewater rate analysis employs the same three elements as the water rate analysis: (1) a revenue requirements analysis; (2) a cost-of-service analysis; and (3) a rate design analysis.
Rate studies always include a revenue requirements analysis. A cost-of-service analysis is typically only conducted periodically. It is recommended that a cost-of-service analysis be conducted at least every five years to account for any material differences in the costs of providing service and in the water usage among customer classes, which will affect their respective shares of the cost of service. The City last conducted a cost-of-service study in 2019 for each of the respective utilities. 1 The cost-of-service analysis in the current study tailors the base/extra capacity method to account for unique conditions, circumstances, and factors related to the City’s cost of providing water service, which the M1 Manual does not specifically address. The adjustments to the M1 base/extra capacity method of allocating costs are described in more detail in Chapter IV.
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The City hired HF&H Consultants (HF&H) to conduct a cost-of-service study to set water and wastewater rates for FY 2024-25 through FY 2028-29 (Study Period). Since the previous study, changes in usage patterns among customer classes has occurred, which affects the factors that are used to allocate costs. The costs to which the allocation factors are applied also changed. Hence, there will be differences between the previous and current cost-of-service analyses. Adjustments are made to reflect the differences and rates are set accordingly.
The cost-of-service analysis proportionately allocates the revenue that is required from rates to the components of the rate structure and to the customer classes. Costs are classified corresponding to the function they serve. Each function’s costs are further allocated to each component of the rates in proportion to the level of service required by customers. The levels of service are related to volumes of peak and nonpeak demand, infrastructure capacity, and customer service. A cost-of-service analysis ensures that the rates yield charges that are proportional to the cost of providing service to each customer.
STUDY PURPOSE
The purpose of this study is to conduct a cost-of-service analysis that will determine rates that proportionally recover the cost of providing the City’s water service. Toward that end, the cost-of-service analysis determines how much revenue should be generated by each component of the rate structure so that rate payers within each customer class are charged for their proportionate share of the cost of providing service on a parcel basis. The cost-of-service analysis is tailored specifically to the City’s customer classes and the rate structures that are appropriate for each class.
STUDY PROCESS
In 2023, the City contracted with HF&H to perform a cost-of-service study to set water and wastewater rates for FY 2024-25 and FY 2028-29. A ten-year analysis provided support for long-term planning. The primary goal of this study is to ensure that rates continue to reflect the current cost of providing water and wastewater service, as required by Proposition 218.
A comprehensive rate study comprises three steps: 1) revenue requirement projections; 2) cost-of-service analysis; and 3) rate design. Revenue requirement projections identify how much revenue is needed from rates. The cost-of-service analysis determines how much of the revenue should come from the fixed and variable charges. This step also confirms the proportionate amount to be paid by each customer class.
The final step, rate design, establishes the structure of the fixed service charges and the variable volume charges for each customer class.
The water cost-of-service analysis was conducted following industry practices promulgated by the American Water Works Association.2 At the outset of the analysis, the types of customer classes were reviewed, as were the types of rate structures that are appropriate to the City’s customer classes.
The wastewater cost-of-service analysis was conducted following industry practices promulgated by the Water Environment Federation Manual of Practice No. 27, Financing and Charges for Wastewater Systems, 2004. At the initial stages of the project, HF&H reviewed the types of customer classes and the types of rate structures that are appropriate to the City’s customer classes. 2 Principles of Water Rates, Fees, and Charges. American Water Works Association Manual M1. 2017. 26 February 20, 2024 Item 10
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REPORT ORGANIZATION
The report includes both the water rates study and wastewater rates study. The report is bifurcated to cover the analysis associated with each study. Therefore, the report is divided into four initial sections addressing the water rate study: Water Revenue Requirements, Water Rate Cost of Service Analysis, Water Rate Design, and Comparison to Water Agencies. Next, there are four subsequent sections addressing the wastewater rate study: Wastewater Revenue Requirements, Wastewater Rate Cost of Service Analysis, Wastewater Rate Design, and Comparison to Wastewater Agencies. Finally, the closing section is the Combined Utility Bill Impacts, which looks at the overall impacts to customers when both water and wastewater rate adjustments are considered.
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III. WATER REVENUE REQUIREMENTS
The revenue requirements analysis starts by determining the FY 2024-25 revenue requirements based on the budgeted O&M and capital expenditures. Revenue requirements for each fiscal year are then projected over the Study Period. Revenue increases needed to cover the projected revenue requirements are then determined.
REVENUE REQUIREMENT ASSUMPTIONS AND PROJECTIONS
Expense projections become the revenue requirements. The City’s operating and capital budgets were relied on for FY 2024-25 expenses in the first-year revenue requirement. The operating and maintenance (O&M) expenses were projected over a ten-year period, through FY 2033-34, using appropriate escalation factors. Capital expenses were projected according to the City’s current capital improvement program (CIP). While a ten-year model was built, for brevity, Figure III-1 reflects the assumptions which were used to project revenue requirements through FY 2028-29 in order to set rates for the next five-year period.
All assumptions were reviewed with City staff. Purchased water cost increases reflect the projected average annual increase from 2024-2029, made by San Diego County Water Authority (SDCWA). HF&H worked with City staff to project expenses for additional years where approved budgets were not available.
Figure III-1. Projection Assumptions
The application of these projections to O&M and capital expenses are summarized graphically in Figure III-2 and are described below in more detail.
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Figure III-2. Total Annual Projected Revenue Requirement for Water Enterprise O&M Expenses
The City’s O&M expenses include salaries, benefits, materials, supplies, insurance, vehicle maintenance, utilities, and administrative expenses, and City administrative charges. Expense projections were calculated using assumptions reviewed with City staff. No additional headcount has been projected through the five-year rate setting period. Collectively, this category represents approximately 40% of the total revenue requirement. These O&M expenses are projected to increase annually by an average of 4% over the five-year period, averaging $2.0 million per fiscal year from FY 2024-25 through FY 2028-29. Individual expense line items present in both water and wastewater studies were escalated by the same factor for consistency.
Raw Water Purchases
Raw water costs, purchased from SDCWA, make up the largest portion of the annual revenue requirement. Based on SDCWA projections, raw water costs are assumed to increase by an average of 5% annually. This expense averages $2.1 million per fiscal year from FY 2024-25 through FY 2028-29. Increases to water purchase expenses have not accounted for any supplemental water demand due to new connections, as the City does not anticipate additional growth.
Water Treatment Expenses
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requirement and are projected to increase to keep pace with inflation through FY 2028-29. The average annual cost of treatments is estimated to be $490,000 during the period of study. When combined, raw water purchases and treatment and delivery expenses, costs controlled by external agencies, account for more than half of the overall expenses to be recovered through water rates.
Capital Project Costs
CIP expenditures projections average $465,551 annually during the five-year period. All projects have been assumed to be cash funded. Figure III-3 provides a detailed listing of the Water Enterprise five-year CIP. The City’s focus continues to be on addressing risk-based sections of its system through the Annual High Priority 1 Improvements program. Also, an Automated Meter Infrastructure (AMI) Study has been included to evaluate the feasibility of replacing the City’s existing, manually-read, meter infrastructure with AMI. The project costs exclude previously considered recycled water projects after discussions were held with staff (and with the Finance Committee in January 2024) in an effort to reduce potential rate increases. All project costs shown have been escalated using an assumed Construction Cost Index of 3.8% for FY 2024-25 and 3.4% thereafter based on historical changes in the Engineering News Record-Construction Cost Index.
Figure III-3. Water Enterprise Five-Year Capital Improvement Plan
RESERVES
The City uses its reserves to stabilize rates against annual fluctuations in capital expenditures, variances between projected and actual water demands, and unanticipated expenditures and other expenditure variances. In some years, there is surplus revenue that is available to replenish reserves. In other years, reserves are drawn down to cover the cost of service.
Reserves are required to stabilize rates and to provide for contingencies. Reserves can be drawn on in years when the City’s Water Enterprise Fund experiences above average costs and augmented during years when costs are below average. The City’s reserves are used for operating and capital purposes. Each of these purposes has its own requirements that lead to a minimum and optimum target balance. Rates must be set so that the fund balance achieves the target balance. 30 February 20, 2024 Item 10
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Operating Reserve
The operating component of the reserves provides working capital for month-to-month O&M expenditures. With sufficient working capital, the City can operate without cash flow constraints. The City’s approved reserve policy is 45 days of operating expenses The City’s Reserves should never drop below this minimum balance.
Self-Insurance Reserve
The City maintains a Self-Insurance Fund for the Water utility with a targeted minimum balance of $50,000. The purpose of the reserve is solely to pay out claims related to Water utility damage.
Pension Reserve
The City has a fully funded Pension Reserve to pay for the Water Enterprise’s share of staff costs. The targeted minimum balance is set to $200,000.
Capital Reserve
The capital improvement component of the reserves provides working capital for the City’s capital improvement program. The fund balance needs to be sufficient to at least pay contractors without delays caused by cash flow limitations. The fund balance can be larger so that the City can fund larger construction projects on a pay-as-you-go basis, thereby eliminating financing costs. The City’s approved policy requires a reserve threshold of $350,000. This total is less than the five-year average of annual capital improvement expenses, $465,551. The City could contemplate increasing this reserve to account for rising construction costs.
Equipment Replacement Reserve
This reserve is maintained to fund capital outlay projects, such as the replacement or purchase of new vehicles, large maintenance items, machinery, and equipment. An approved policy reserve target of $200,000 is maintained. The reserve provides an emergency source of funding in the event of an unanticipated breakdown or failure.
Rate Stabilization Fund
The Rate Stabilization Fund provides funding which the City can draw upon prior to passing funding for unanticipated events onto its customers. For example, in the event of a water shortage, the City could utilize reserves from the Rate Stabilization Fund prior to enacting Demand Management Rates. The reserve helps to offset the financial burden ratepayers might experience when the City is required to raise rates. The current approved reserve target is set at $200,000.
REVENUE INCREASES
Rates are set to generate sufficient revenue to cover annual expenses. In addition, rates are set to maintain adequate reserves. Figure III-4 summarizes the projected revenue from current rates, annual revenue requirements, annual variances, and the rate increases necessary to cover the City’s costs. 31 February 20, 2024 Item 10
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Figure III-4. Rate Increase Calculations
Rate increases account for rate revenue and future revenue requirements. As shown in Figure III-4, the City’s reserves have been used to keep the revenue increases low (i.e., there are projected revenue shortfalls in FY 2026-27 through FY 2028-29 after accounting for the revenue increases, which will be covered by reserves). The revenue requirement (shown in greater detail in Figure III-2) increases due to increasing water supply costs and capital expenditures. The proposed revenue increases serve to decrease the projected shortfalls facing the City.
The rates are derived in Chapter V. With these rate increases, the City is able to pay for its annual O&M and capital expenses and maintain adequate reserves, as further discussed below.
RESERVE FUND BALANCE
Figure III-5 shows the annual fluctuations (solid green line) in the fund balance that are caused by the differences between the revenue requirement and revenue from rates with the rate increases; the dashed green line is the projected fund balance without rate increases. The revenue and rate increases in Figure III-4 were derived to balance increasing rates while maintaining a level of reserves that continues to meet the City’s reserve target (blue line) through FY 2028-29.
For purposes of rate setting, the following combined reserve target balances were established. The red line labeled, “Minimum Balance” represents the target balance for the Operating Reserve, Self-Insurance Reserve, and the Pension Reserve. The blue line labeled, “Total Target Reserve” is the sum of the Minimum Balance plus the Capital Reserve, Equipment Replacement Reserve, and Rate Stabilization reserve targets.
The ten-year projection in Figure III-5 demonstrates the use of reserves beyond FY 2028-29 as expense projections outpace revenue increases. Initially, revenue increases are kept between 2-3% annually through FY 2028-29. However, the cumulative growth of expenses, driven by 5% projected increases in water supply costs, overtakes revenue growth, requiring a greater share of reserves to support rate revenues. Consequently, reserves project to decline beginning in FY 2028-29, despite larger revenue increases.
The reserve fund balance projects to fall below the Target Reserve by FY 2033-34. The inflationary increases recommended in FY 2024-25 through FY 2028-29 serve as an “ounce of prevention” to possible, larger increases in the future. In contrast, the dashed green line, reflects that without revenue increases, 32 February 20, 2024 Item 10
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the year-end fund balance of $2.8 million in FY 2022-23 is projected to drop below the City’s Minimum Reserve by FY 2028-29.
Figure III-5. Projected Year-End Fund Balance
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IV. WATER RATE COST OF SERVICE ANALYSIS
METHODOLOGY
The revenue requirement analysis establishes how much revenue is required from rates. The next step in the analysis is determining the cost of service. Cost-of-service analysis is used to derive rates that proportionally allocate the cost of service. The cost-of-service analysis performed in this study follows a procedure described by the AWWA, which is referred to as the “base/extra capacity method.” This method allocates the revenue requirements to the components of the rate structure.
A cost-of-service analysis determines the unit cost of the services provided to the City’s water customers.
Each customer class is charged the same unit cost for its share of the services that it requires. In this way, the total revenue requirement is proportioned between the Service Charges and the Commodity Charges.
This methodology is consistent with industry standards promulgated by the American Water Works Association and referred to as the “base/extra capacity method.” The City provides demand services and customer services to water customers. Demand services include the costs related to meeting average and peak levels of demand. Customer services include the costs related to customer accounts and the capacity that customers require.
The analytical procedure contains the following steps:
1. Cost classification - Costs in the FY 2024-25 revenue requirement are classified into the service categories related to providing for customer demands and for customer service. FY 2024-25 costs are used for the cost-of-service analysis because they are the most recent budget year.
2. Cost allocation - The classified costs are allocated to the functions associated with each service.
For demand services, the functions are levels of service that comprise average day, maximum day, and maximum hour demands. For customer services, the functions are customer accounts and customer capacity.
The classifications of major costs are summarized as follows:
Demand services
Base day – non-seasonal daily demand based on winter water use. Average day – average daily demand utilizing base supply plus a small portion for peaking beyond winter water use levels.
Maximum day – peaking on the maximum day: peak supply, transmission mains to distribution storage, booster pumps.
Maximum hour – peak hour on the maximum day: a portion of distribution storage, distribution mains to customers, hydrants, conservation programs.
Customer services
Accounts: meter reading, billing, accounting, customer service, fire services. Capacity: a portion of distribution storage, distribution mains to customers, hydrants, conservation programs. 34 February 20, 2024 Item 10
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Composite services: indirect allocations for costs that are not directly related to either the demand or customer service functions: reserves transfers, debt service.
Working with City staff, the individual line items in the revenue requirements were classified into either the demand or customer service categories. Certain costs, however, are not directly related to either demand or customer services. Such costs are considered to be composite in function and are allocated based on a composite of the direct allocations to the demand and customer service categories.
CUSTOMER CLASSES
The cost-of-service analysis distributes the revenue requirements among customer classes in proportion to their service requirements. There is no industry standard that specifies which customer classes should be used. The law allows utilities to exercise discretion in determining the appropriate customer classes provided the rates yield charges that are proportional to the cost of providing service for each category.
As a result, the base/extra capacity method needs to be tailored to the customer classes.
The City currently has multiple customer classes: Single Family Residential, Multi-Family Residential, Commercial/Institutional, Irrigation, and Fairgrounds. These classes were last reviewed as part of the previous cost-of-service study in 2019. The segregation into separate customer classes stems from the typical pattern of usage by each class. For example, Single-Family Residential use produces periods of peak demands during summer months, for which the system must be designed to meet to address these customers indoor and outdoor water needs. No revisions to the number of types of customer classes are recommended at this time.
The Fairgrounds are the largest customer in terms of demand and service-related capacity placed on the City’s water system. Based on historical methodology, costs are allocated separately between the Fairgrounds and all other City customers. This methodology is further discussed below.
COST-OF-SERVICE ALLOCATIONS
A cost-of-service analysis is a process of determining how much services cost for each customer class. To provide water service, infrastructure must be constructed, operated, and maintained, which must be paid for from cash or debt. The type and size of infrastructure depends on how much service customers require. Water systems are designed to provide sufficient capacity to meet customer demands for service wherever, whenever, and for as long as demanded.
Although each customer places unique demands on the system, water system design is based on the maximum or peak demand for service placed on the system by all customers during the peak demand period.
The size of the infrastructure that is needed will depend on the maximum demand. Higher demands will require larger, more costly infrastructure as well as increased operating and O&M costs. The goal of a cost-of-service analysis is to allocate the cost of the capacity to meet the peak demand in proportion to how much of the capacity is required by each customer. The proportions correspond to the maximum amount of capacity provided by the infrastructure. This means that customers that place greater demands on the infrastructure – customers with greater service needs will be apportioned a greater share of the operating and capital costs of the infrastructure required to meet that demand. This reasoning drives the practice of allocating costs separately between the Fairgrounds and remaining City customers.
Figure IV-1 allocates the FY 2024-25 revenue requirement between the Fairgrounds and the City customers. Figure IV-2 summarizes the percentage allocations used in apportioning the revenue requirement 35 February 20, 2024 Item 10
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between the Fairgrounds and the City customers. A discussion of the methodology behind the allocation of costs follows.
Figure IV-1. Allocation of FY 2024-25 Revenue Requirement to Fairgrounds Figure IV-2. Fairgrounds Allocation Factors
Fairgrounds Allocation Factors
Staff Allocation
The City estimates roughly 26% of personnel staffing costs can be attributed to serving the Fairgrounds.
This allocation was used in the previous 2019 study and confirmed with City staff as part of the current analysis.
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Hydraulic Capacity
The City’s water system provides water to 1,869 metered connections. Of these meters, the Fairgrounds receive water and requires available capacity for one – 8” meter and two - 10” meters. Connections are converted to Equivalent Meter Units (EMUs) to apportion the revenue requirement costs for operations and maintenance (O&M) administrative expenses, water supply expenses, and capital improvement costs.
An EMU represents the number of 5/8-inch meters to which a larger meter is equivalent. For example, a 1-inch meter provides 2.50 times as much capacity as a 5/8” meter. The capacity multipliers are based on the meter data provided by the City of the manufacturer’s nominal capacity. The Fairgrounds make up 320 EMUs of the total 3,327 EMUs served by the system, as shown in Figure IV-3. This accounts for 9.6% of the overall hydraulic capacity.
Figure IV-3. Capacity Calculations of City’s Water Meters Distribution System Sizing
The City’s water distribution system sizing was calculated assuming 39.5% of the peak demand of the system was due to the Fairgrounds. The revenue requirement costs for O&M tools, supplies, and insurance, O&M variable costs (e.g. fuel and electricity), and capital outlay (e.g. machinery and vehicle replacement) were allocated, using the assumption Fairgrounds accounted for 39.5% of these overall costs. This allocation was used in the previous 2019 study and confirmed with City staff as part of the current analysis.
Total Water Use
The Fairgrounds average water use accounts for 12.1% of the overall water demand recorded for calendar years 2020-2022. Figure IV-4 summarizes the average annual consumption by water customers over the three-year period. This allocation was applied to raw water supply and contractual services expenses, which vary based on the level of water demanded.
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Figure IV-4. Water Use Analysis
Operations & Maintenance Composite
Non-operating revenue and transfers to reserves were allocated to the Fairgrounds and City customers based on each’s proportionate share of the total O&M costs, as derived in Figure IV-1.
Results of Initial Allocation
Fairgrounds was apportioned 17.6% of the overall revenue requirement. The Fairgrounds allocation has increased since the previous cost-of-service study, which yielded an overall allocation of 14.9%. The increase can be attributed to an increased share of the Fairgrounds share of the raw water supply costs.
This expense is the largest expense category in the cost allocation exercise and the Fairgrounds share increased from the previous study’s share of 10.9% to 12.1%. Thus, the Fairgrounds share of the revenue requirement to be recovered through the FY 2024-25 rates will be $850,661 (17.6%) and the remaining City customer’s share will be $3,978,871 (82.4%).
Demand Service Allocation Factors
A cost-of-service analysis categorizes costs between the demand and customer service functions. Within the demand service function, further allocations are made to varying levels of service ranging from base, non-seasonal, indoor demand, which are the least discretionary, to the highest level of seasonal peak demand for outdoor water use and irrigation during the peak hour of the peak day, which are the most discretionary. With these further allocations, rates can be designed for each customer class’s Water Use Charges.
The costs allocated to the customer service function are differentiated between those that are related to accounts and those that are related to capacity. Those two categories are used in deriving the Service Charges.
As described below, there are three levels of demand used for the demand service function cost-of-service analysis.
Average (Base) Day demand
Average Day demand is the average of calendar year (CY) 2020-2022 customer billing data. The City’s Average Day demand represents only 44% of the current peak demand.
Maximum Day demand
Maximum Day demand includes Average Day demand plus peak day demand in the irrigation season. The Maximum Day demand for each customer class relies on the maximum monthly demand averaged over the three year period of CY 2020-22. The monthly demand was prorated to a daily volume by dividing by 38 February 20, 2024 Item 10
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the number of days in the subject month. If peaking did not exceed Maximum Day demand, the City’s facilities could be sized at 67% of current peak demands.
Maximum Hour demand
Maximum Hour demand represents the Maximum Hour demand on the Maximum Day. The City does not maintain data on its Maximum Hour demand. Hence, this value is estimated based on the State of California’s design requirements for new and existing source capacity.3 Facilities that are needed for Maximum
Hour demands are sized at a minimum of 1.5 times Maximum Day Demand.
Allocation percentages were calculated for each demand service level using load factors derived from customer billing data for CY 2020-22 (Average and Maximum Day) and engineering design criteria (Maximum Hour). Load factors are the ratio of higher levels of demand to the Average Day demand. Figure IV5 summarizes the units of service and load factors for each of the service levels.
Load Factors
The load factors are the ratio of the flows for the peak service levels (i.e., Maximum Day, and Maximum Hour) compared to the Average Day, non-seasonal flow. The load factors represent how much higher Maximum Day and Maximum Hour flows are compared with Average Day demand.
Figure IV-5. Service Level Demands and Load Factors
Note: Daily totals are shown
3 “If daily water usage data are available, identify the day with the highest usage during the past ten years to obtain Maximum Daily Demand (MDD); determine the average hourly flow during MDD and multiply by a peaking factor of at least 1.5 to obtain the [peak hour demand].” 22 CCR § 64554. 39 February 20, 2024 Item 10
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The load factors indicate how much additional capacity is required to supply higher levels of service and serve as the source of the allocation percentages that are needed to allocate costs. They are derived in Figure IV-6. For example, the Maximum Day load factor for the system is 1.52. Of that total 1.52 load, 0.52 is in excess of Average Day demand and is related to the Maximum Day peak, which is 34% of the total Maximum Day load (i.e., 0.52/1.52 = 34%). For purposes of allocating costs associated with meeting Average Day demands, 34% is allocated to the Maximum Day service and 66% is allocated to the Average Day service.
Figure IV-6. Demand Service Levels
Maximum Day demand includes Average Day, and Maximum Day components. And Maximum Hour demand has all three service levels of demand. While system capacity is essentially designed to meet peak demands, and peak users should assume cost responsibility for the capacity required to serve this peak demand, it is important to understand that the cost of facilities that are sized for peak demands is not borne by only customers that peak, all levels of demand utilize the facility.
Using distribution pipelines as an example, they are sized to meet Maximum Hour demands. Even though they are sized for the highest level of service, lower peak demands are also accommodated by these pipelines. Hence, the cost of the pipelines is not allocated 100% to the Maximum Hour service level. The cost is apportioned across the lower service levels, too. Thus, the costs of peaking are shared by all customers and not exclusively allocated to those who peak the most.
Cost-of-Service Allocations and Allocation Factors
The allocation factors in Figure IV-7 were used to apportion the Fairgrounds allocation of costs in Figure IV-8 and to apportion the City customers’ allocation of costs in Figure IV-9. Figure IV-7 includes the demand service level factors previously derived in Figure IV-6, in addition to Customer Service and Composite allocations. The Customer Service factors are either 100% customer account or 100% capacity allocations. The CIP Composite and O&M Composite allocations are based on the subtotals of the O&M and capital costs that were directly allocated to either the demand or customer service categories. 40 February 20, 2024 Item 10
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Figure IV-7. Cost-of-Service Allocation Factors
Figure IV-8. Fairgrounds Cost-of-Service Allocations
Source: Fairgrounds revenue requirement from Figure IV-1. 41 February 20, 2024 Item 10
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Figure IV-9. City Customers Cost-of-Service Allocations Source: City customers revenue requirement from Figure IV-1.
The expenses that are allocated to the Demand Service Levels are recovered from the City’s Commodity Charges. Further, the allocations to individual customer classes are proportioned in Figure IV-10 to each customer class’s water demand levels in each category of service. For example, the Single Family Residential class is allocated 58.76% of the Average Day costs based on its share of 58.76% of the Average Day flow (570 HCF of the total flow of 971 HCF).
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Figure IV-10. Customer Class Cost-of-Service Allocations for Demand Service Levels Figure IV-11 summarizes the small shift in the Service Charge revenues to the Commodity Charge revenues to align with the cost-of-service. The exercise performed indicates the proportion of Service Charge revenues will decrease from 43% to 42% of total rate revenues, while the share of Commodity Charge revenues will increase from 56% to 57%.
Rates need to be designed to generate each class’s share of the revenue requirement related to volumetric charges. The next section provides the recommended modifications to the Service Charge and Commodity Charges needed to meet the cost of service. 43 February 20, 2024 Item 10
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Figure IV-11. Cost-of-Service Revenue Summary
Note: FY 2023-24 revenues assume 12 months of rates implemented on January 1, 2024. 44 February 20, 2024 Item 10
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V. WATER RATE DESIGN
The City has historically charged water customers the combination of a fixed Service Charge and a variable Commodity Charge based on metered water use. As previously discussed, this is a common set of charges that is prevalent throughout the water industry. This chapter explains the derivation of the Commodity and Service Charge rates that reflect the projected cost of service.
CURRENT RATES
The City’s current water rate structure is composed of two components: Service Charges and Commodity Charges.
Current Service Charges
The Service Charges are fixed rates that are charged on a fixed rate graduated in proportion to the capacity of the service provided for all customers. All customers are billed on a bi-monthly basis. Figures V-1 summarizes the current Service Charges, which were last increased on January 1, 2024.
Figure V-1. Current Service Charges
Current Commodity Charges
The Commodity Charges are the product of rates per unit of metered water use multiplied times the metered water use during the bi-monthly billing period. Water is metered in “units” of HCF of metered water use, whereby one unit or HCF equals 748 gallons. Commodity Charges are charged to five distinct customer classes, Single Family Residential, Multi-Family Residential, Commercial/Institutional, Irrigation, and Fairgrounds customers.
For Single Family Residential customers, the Commodity Charges consist of two tiers that charge higher rates as the level of consumption increases. For all other customers, the Commodity Charge is a uniform rate per HCF of metered water use. Figure V-2 reflects all current Commodity Charge rates. 45 February 20, 2024 Item 10
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All components of the rate structure were reviewed, including the composition of the customer classes, the structures of the Service Charges, Commodity Charges, and Demand Management Rates.
Figure V-2. Current Commodity Charges
SERVICE CHARGE DESIGN
Service Charges are fixed rates that are billed each billing period to recover the cost of the service functions. The cost-of-service analysis determined how much of the revenue requirement is attributable to the customer service function. The function has two components – customer services (accounts) and customer capacity – each of which is itemized in the cost-of-service analyses in Figure IV-8 and Figure IV-9.
Costs attributable to customer services are allocated to customers in proportion to the number of meters.
Costs attributable to customer capacity are allocated to customers in proportion to the capacity of their services. The sum of the two components equals the Service Charge rate per connection.
Figure V-3 lists the units of service corresponding to each of the cost components. Capacity costs associated with the distribution system are apportioned among the connections in proportion to the capacity associated with each connection. Connections are converted to Equivalent Meter Units (EMU’s) to apportion the customer capacity cost component. An EMU represents the number of 5/8-inch meters to which a larger meter is equivalent. For example, a 1-inch meter provides 2.50 times as much capacity as a 5/8- inch meter. The capacity multipliers are based on the meter data provided by the City of the manufacturer’s nominal capacity. There are 3,327 total EMUs. In effect, the 1,869 services of assorted sizes have the equivalent capacity as 3,327 5/8-inch meters. Specifically, there are 1,866 meters providing 3,007 total EMUs of capacity for City customers, excluding the Fairgrounds. 46 February 20, 2024 Item 10
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Figure V-3. Service Charge Units of Service
Note: Capacity multiplier assumes 5/8” meter = 1 EMU = 20 gallons per minute.
Figure V-4 derives the unit costs for the customer service and customer capacity cost components for City customers. Each service is allocated $7.29 per bi-monthly period for the customer service cost component. That amount represents the costs the City incurs to maintain each meter regardless of the capacity of the service (e.g., customer billing, administration overhead). Each service is also allocated $81.41 per bi-monthly period per EMU. That amount represents a portion of the cost of providing distribution system capacity for each account, and increases based on the capacity of the meter.
Figure V-4. Service Charge Unit Costs
Figure V-5 combines the customer service and capacity components into a single Service Charge for each size service and compares proposed rates to the current rates. 47 February 20, 2024 Item 10
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Figure V-5. Proposed Bi-Monthly Service Charge Rates – FY 2024-25 Note: Rounding differences caused by stored values in electronic models may exist.
With the proposed rates, all meter sizes would see an increase. The increase in rates reflects the 3.2% increase to service charge revenues to be collected from Single-Family Residential, Multi-Family Residential, Commercial, and Irrigation customers, shown in Figure IV-11. The proposed rates reflect a change from the previous methodology by which Service Charges were calculated only based on the capacity ratio of each meter. In contrast, the proposed rates include a service component assessed equally to all City customers, regardless of meter size to recover service-related costs and a capacity component to recover capacity-related costs.
Figure V-6 shows the proposed five-year schedule of Service Charge rates. The Fairgrounds Service Charge for FY 2024-25 is result of dividing the Service Charge cost allocation in Figure IV-8, $457,792, into equal bi-monthly increments to generate the charge shown below.
Figure V-6. Current and Proposed Service Charge Rates
WATER USE CHARGE DESIGN
As previously discussed, the City’s Commodity Charges are different for its customer classes. Single Family Commodity charges are tiered, which is appropriate because of the variation in demands within a comparatively homogenous class of customers. The tiered rate structure corresponds to levels of service that range from low, essential needs to high, discretionary needs. The rate for each tier is set to reflect the 48 February 20, 2024 Item 10
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cost of providing for the amount of peaking that is required. Calculating the tiered rates for residential customers needs to ensure that the rates reflect the cost of providing service across the range of tiers.
All other customers pay uniform Commodity charges, which is appropriates because these customers each have varying levels of demand and less predictable peaking patterns of demand.
Single Family Residential Commodity Charges
The City’s Single Family Residential customers are currently charged a two-tier increasing block rate structure.4 Tier quantity and the location of the breakpoint between tiers results from evaluating the City’s historical water consumption. The breakpoint was calculated using the total Single Family Residential daily demand consumption divided by the number of accounts, as shown in Figure V-7.
Figure V-7. Breakpoint Locations – Single Family Residential The Average Day breakpoint of 22 HCF per bi-monthly period was set as the breakpoint between the first and second tier to delineate peaking and average levels of demand, following the City’s current practice.
With breakpoints that correspond to the service levels in the cost-of-service analysis, it is possible to calculate the rate per tier by dividing the cost of service per tier by the water demand in each tier. The resulting rates represent the unit cost of service for each tier.5 Figure V-8 shows the calculations of the incremental cost per tier. The costs in each column were determined in Figure IV-10, such that the allocation of $1,418,687 for Single-Family Residential is distributed to the three demand service levels. To maintain the two-tier structure, the Maximum Day and Maximum Hour service level volumes and allocations were added together. The unit costs are the result of the cost of service at each tiered demand service level divided by the level of respective demand. The incremental rates are additive. In other words, demand in Tier 1 only pays the Average Day rate. Demand in Tier 2 pays the Average Day rate plus the Maximum Day and Maximum Hour increments. The bi-monthly rates for Single Family Commodity Charges resulting from the cost-of-service are shown in Figure V-8. 4 For simplicity, we use the term “tiered rates” synonymously with “increasing block rates.” “Inclining block rates” is commonly used for “increasing block rates.” However, because an incline can slope both up or down, it is ambiguous in this context and therefore is not used in this study. 5 In this report, “rates” and “unit costs” are synonymous. 49 February 20, 2024 Item 10
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Figure V-8. Calculation of Proposed Commodity Charge Rates – Single Family Residential Note: Rounding differences caused by stored values in electronic models may exist Uniform Commodity Charges
We recommend the City apply the same uniform rate structure for all Multi-Family, Commercial/Institutional, Irrigation, and Fairgrounds customers. The proposed adjustments for FY 2024-25 are intended to increase the uniform rate to re-align with the cost of service for each customer class. Figure V-9 derives the uniform Commodity Charge for each class based on their respective share of water demand and the cost allocations derived in Figure IV-8 for Fairgrounds and Figure IV-10 for City customers.
Figure V-9. Calculation of Commercial/Multi Family Uniform Commodity Charges Commodity Charges Summary
The five-year schedule of proposed Commodity Charges for Single Family Residential, Multi-Family Residential, Commercial, Irrigation, and Fairgrounds customers is shown in Figure V-10. After rates are revised to meet the cost-of-service in FY 2024-25, all rates will increase uniformly by 2% each of the next four fiscal years.
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Figure V-10. Current and Proposed Commodity Charges
Drought Rate Factors
During prolonged shortages, customers are required to conserve or even ration their water use. The magnitude of the water savings can significantly reduce water sales revenue from commodity charges.
Currently the City has Demand Management Rates in place which go into effect during declared water shortages. The rates apply a surcharge to both the Service Charges and Commodity Charges. The Demand Management Rates applied to Service Charges are graduated by meter size. The surcharge applied to all Commodity Charges is a uniform rate per HCF, which is the same for all customer classes.
HF&H recommends a set of drought rate factors that would be applied solely to the Commodity Charges and implemented during declared water shortage stages in accordance with the City’s Water Shortage Contingency Plan (WSCP), state mandated reductions in the level of potable water usage, or other natural disaster or event that results in a water shortage and an unforeseen drop in water demand that requires reductions in water use.
The drought rate factors were developed to reflect variations in the level of outdoor and discretionary water use of each customer class. Customer classes with more discretionary water use for landscaping and irrigation activities would be required to reduce demand more during periods of shortage. As a result, customer classes with larger discretionary water use habits, and a greater ability to conserve water, would see larger increases via the proposed drought rate factors. It is proposed that the shortage reductions would vary by customer class, based on their respective abilities to conserve water. A customer class’s ability to conserve is directly related to the proportion of their current water use which is highly discretionary and considered a non-beneficial use (e.g., water used for landscape purposes, “outdoor” water use) and less discretionary use for health and safety (e.g., water used for cooking, cleaning, bathing, “indoor” water use). Each class’s reduction was determined by reducing their proportion of water that is for “outdoor” water use (seasonal water use) 3.0 times more than their “indoor” (average winter water use) water use. At Stage 6, it is assumed all Irrigation use would be suspended. A three-year analysis of 2020- 2022 water use data informed the proposed factors associated with each water conservation stage.
The drought rate factors would be applied to each of the Commodity Charges. The higher rates will generate the revenue which was lost due to conservation and has been calculated to keep the City revenue neutral so they can cover the portion of fixed costs paid through the consumption rate revenues. 51 February 20, 2024 Item 10
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Analysis
Based on CY 2020-2022 metered water use data, the resulting reductions are summarized in Figure V-11.
The reductions shown represent the customer class reductions required to achieve the reduction associated with each shortage stage. The customer class reductions are greater or less than the overall average for each stage depending on how much of each class’s water demand is seasonal.
Figure V-11. WSCP Required Water Use Reductions by Class Figure V-12A and Figure V-12B show the calculation of each customer class’s respective shortage reduction required during each shortage stage. The annual demand for each class is separated into indoor and outdoor water use where indoor water use is defined as the minimum average monthly period multiplied times 12 to get the annualized indoor water use over 12 months. Subtracting indoor water use from the total annual water use determines the seasonal outdoor water use. March represented the lowest period of use for the City’s customers.
The percentage reductions for each customer class required to achieve the overall reduction for a particular stage are derived so that outdoor water use is reduced 3.0 times indoor water use. In a Stage 1 shortage, a 5.7% reduction in indoor water use and a 17.2% reduction in outdoor water use are required to achieve an overall 10% reduction. Applying the same reduction factors to each class results in different overall reductions for the class based on the relative proportions of their indoor and outdoor water use.
In each stage reduction each customer class is required to conserve different percentages. This is because of the variation in water use patterns among the customer classes. Note, the larger reduction for MultiFamily versus Single Family customers is due to the inclusion of Multi-Family Residential accounts with irrigation. These customers are identified separately by the City but their potable irrigation water is recorded on the same meter as domestic use. 52 February 20, 2024 Item 10
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Figure V-12A. Calculation of 10-30% Shortage Reductions by Stage and Customer Class The service charges are fixed and generate 41.6% of the total rate revenue regardless of shortages. The remaining 58.4% of revenue is generated by the volumetric rates. In deriving the Drought Rate Factors, the factors will only apply to the volumetric rates because short-term reductions in water use correlate with short-term fluctuations in variable costs. Conversely, short-term reductions in water use would not affect fixed costs, or costs that would require a long-term change in customer demand (e.g. population decline) to be affected. Each customer class has its own set of Drought Rate Factors corresponding to its reduction in each stage of shortage.
The formula for the Drought Rate Factors comprises conservation and variable cost components. The conservation component adjusts to account for the required reduction in water demand. A portion, not all, of the costs (e.g., power, water purchases) covered by Commodity Charge rates are variable and will not be incurred when less water is used during short-term demand reductions. To ensure the Drought Rate Factors do not result in excess revenue collection, the variable cost component of the calculation reduces the factor to account for the portion of variable costs, which is covered by the quantity charges, and will not be incurred when demand decreases.
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Figure V-12B. Calculation of 40-56% Shortage Reductions by Stage and Customer Class The Drought Rate Factors are the product of the conservation component multiplied by the variable cost component. Each component is defined as follows:
Drought Rate Factor = Conservation Component multiplied times Variable Cost Component, where
Conservation Component = 1/(1 - a), where
a = required percentage reduction, which varies by customer class.
Variable Cost Component = (b - (c * a))/b, where
a = required percentage reduction, which varies by customer class. b = percentage of revenue from total service charges and volumetric rates for all customer classes that is attributable to volumetric rates, an amount that is 58.4% based on the costof-service analysis. 54 February 20, 2024 Item 10
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c = percentage of total revenue requirement covered by service charges and volumetric rates that varies based on fluctuations in demand, an amount that is currently 49.5%.6 The following example illustrates how the formula determined the 1.028 Drought Rate Factor in Figure V13 for the Single Family Residential customer class in a Stage 2 shortage in which an overall conservation goal of 20% if required.
Conservation Component: 1/(1 - a) = 1/(1 - 0.15647) = 1.18549, where a = required percentage reduction is 15.647% for the Residential customer class (see Figure V-13 where a rounded 16% is shown).
Variable Cost Component: (b - (c * a))/b = (0.58423 - (0.49524 * 0.15647))/0.58423 = 0.867365, where
a = 15.647% reduction for Residential customers in a Stage 2 shortage. b = 58.423% of total rate revenue is generated by quantity charges; and c = 49.524% of revenue requirement is related to variable costs.
Drought Rate Factor = 1.18549 * 0.67365 = 1.028, as it is shown in Figure V-13 (Single Family, Stage 2 Shortage).
The Single Family Residential Water Use Charge rates in effect under non-shortage conditions would be multiplied by 1.028 (or an additional 2.8%) to derive the Commodity Charge rates to be in effect during a Stage 2 water shortage. Figure V-13 shows the Drought Rate Factors that would be applied to the rates that would normally be in effect absent declared shortages. The Stage 6 value for Irrigation customers is shown as ”n/a” because all Irrigation water use is assumed to be suspended at this shortage stage. Hence, a factor would be applied.
Figure V-13. Drought Rate Factors by WSCP-Defined Shortage Stage 6 The cost of SFPUC water is the largest example of a variable cost, which varies with water demand. 55 February 20, 2024 Item 10
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Implementation
The recommended Drought Rate Factors in Table V-13 are implemented only during periods of declared water shortage emergencies. Once a mandatory shortage is declared, the City Council has discretion to enact Drought Rate Factors corresponding to the level of shortage reduction implemented using the factors provided in Table V-13 or calculated using the formula for a specific level of reduction. The adjustments can go in either direction from stage to stage depending on whether the level of reduction is increasing or decreasing during the shortage. At least 30 days prior to making the adjustment, notice must be provided to rate payers, which can be included in the customer’s bills. No protest process is required.
These adjustments would be temporary, and rates would return to the regular schedule at the conclusion of the water shortage emergency.
The Drought Rate Factors could be applied when the City requires its customers to reduce water use. At such times, the Drought Rate Factors would be multiplied times the Commodity Charges proposed in the current rate study. The City can choose to enact Drought Rate Factors when the water emergency demand levels will fall short of the respective year of modeled demand.
The Drought Rate Factors only apply to the tiered and uniform Commodity Charges and not to Service Charge rates, which are independent of water demand. The Drought Rate Factors are multiplied times the non-water shortage, normal-year Water Use Charge rates proposed in this report. The Drought Rate Factors would be adopted as part of the rate notification in the Proposition 218 implementation process.
Once adopted, the City could apply the Drought Rate Factors as needed during conservation stages.
As a further example, Figure V-14 has Commodity Charge rates after applying the Drought Rate Factors to the rates proposed for FY 2024-25. The table shows the proposed Drought Rate Factors followed by the rates that correspond to each stage of conservation.
Figure V-14. Sample Rates With Drought Rate Factors – FY 2024-25 Rates Note that if reductions in water use are higher or lower than the specified stages set in the WSCP due to state mandated reductions in the level of potable water usage, or other natural disaster or event that 56 February 20, 2024 Item 10
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results in a water shortage and an unforeseen drop in water demand, the Drought Rate Factors will be adjusted in accordance with the formula above.
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VI. COMPARISON TO WATER AGENCIES
Neighboring Agency Comparison
The Finance Committee (January 2024) asked to take a closer look at comparing water rates to similar agencies. Figure VI-1 compares single-family customer water rates of smaller coastal cities in the San Diego region, assuming water use totaling 22 HCF in a bi-monthly period, the average bi-monthly water use of the city’s single family residential customers. The current and recommended FY 2024-25 rates for Del Mar are included.
Figure VI-1. Neighboring Agency Water Bi-Monthly Bill Comparison Note: All agencies compared received water via SDCWA.
Some factors that are likely to contribute to the City having the highest water rates are as follows:
1. All agencies aside from the City have their own water filtration plants, providing them with more control over their water treatment costs. In contrast, Del Mar must rely on the City of San Diego to treat the water at the Miramar filtration plant before it is pumped to Del Mar for its use.
2. A population per miles of water mains ratio was developed to compare each agency. The City has the lowest ratio. Therefore 3,830 people must pay for the maintenance and eventual replacement of 27 miles of water mains. In other words, the City population is less concentrated along the miles of water mains maintained compared to other agencies and the costs of water service are spread over the smallest population of agencies compared.
While the City currently has the highest water bills, the variance between the City bill and neighboring agencies should decrease in the future as other agencies increase their rates more rapidly. Based on this study, proposed increases in the next five years will be only 2-3%. In contrast, other agencies are proposing 5% to 10 % per year rate increases in part to address neglected CIP programs needing critical financing.
The City has been taken a proactive approach to its CIP program over the years of addressing critical needs without having to suddenly raise rates.
Also, during the proposed rate period, the City is scheduled to investigate an automated meter reading program which may reduce future rate increases. Santa Fe Irrigation District, who installed an automated meter reading system previously, benefits from this infrastructure as their rates are lower within the comparison. 58 February 20, 2024 Item 10
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VII. WASTEWATER REVENUE REQUIREMENTS
A spreadsheet model was developed to derive revenue requirements for a ten-year planning period, FY 2024-25 through FY 2033-34. The revenue requirements represent the costs that must be covered by revenue from rates and other sources. The City’s budget for FY 2024-25 served as the starting point for projecting the City’s expenses and revenues. The escalation factors summarized in Figure VII-1 were incorporated in the model for projecting expenses and revenues for the duration of the Study Period. For brevity, only the first five years of modeling assumptions are shown. Factors driving these annual increases are discussed in more detail following Figure VII-2.
Figure VII-1. Key Modeling Assumptions
The application of these projections to O&M and capital expenses are summarized graphically in Figure VII-2 and are described below in more detail.
Operating & Maintenance (O&M) Expenses
The City’s Collection System Operations and Maintenance (O&M) expenses include salaries, benefits, materials, supplies, insurance, vehicle maintenance, utilities, and administrative expenses, and City administrative charges. Expense projections were calculated using assumptions reviewed with City staff. Collectively, this category represents approximately 50% of the total revenue requirement. These O&M expenses are projected to increase annually by an average of 5% over the five-year period, averaging $2.4 million per fiscal year from FY 2024-25 through FY 2028-29. No additional headcount in staffing is assumed during the five-year rate setting period.
Wastewater Transportation Expenses
The City pays Solana Beach and San Diego Metro for conveyance of wastewater to their respective treatment plants. These costs are determined by the respective agency and billed to the City for reimbursement. Transportation expenses attributable to San Diego Metro service comprise approximately 10% of the total amount of this categorical expense. Future San Diego Metro service expenses were assumed to remain flat as the City relies more on the Solana Beach force main to deliver wastewater to the SEJPA treatment plant. Transportation costs resulting from the Solana Beach force main are assumed to increase 5% annually, based on input from City staff. Wastewater transportation expenses make up approximately 3% of the total revenue requirement and average $153,000 per fiscal year. 59 February 20, 2024 Item 10
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Figure VII-2. Total Annual Projected Revenue Requirements for Wastewater Enterprise Wastewater Treatment Expenses
San Diego Metro and SEJPA charge the City for its share of wastewater treatment expenses. according to the City’s share of flow contributed to each treatment plant. Like transportation expenses paid to San Diego Metro, treatment expenses have also been assumed to remain constant during the five-year period.
The City’s treatment expenses paid to SEJPA account for 95% of the categorical expense. Based on input from City staff, SEJPA treatment expenses are assumed to increase 5% annually. Note, increases to future costs have not accounted for any increases due to growth, as the City does not anticipate an expansion of its ratepayers.
Treatment expenses make up the second largest portion of the revenue requirement paid for with City wastewater rates. Across both treatment agencies, annual projected expenses will average more than $1.1 million. The combined sum of wastewater transportation and treatment expenses accounts for more than 25% of the total revenue requirement. In other words, more than one-quarter of all City wastewater expenses are controlled by third parties, which are passed on to ratepayers.
Debt Service
The City has existing debt service that was previously issued to fund various capital infrastructure improvements. The pump station at 21st street was funded through a Clean Water State Revolving Fund (CWSRF) Loan in 2013. This debt service is scheduled to conclude in 2032. In 2015, the City issued debt service to fund the San Elijo pipeline, through IBank. This debt service will be repaid over a 20-year period, ending in 2035. Annual debt service payments average $567,700 during the five-year period. 60 February 20, 2024 Item 10
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No future debt service issuance has been assumed in this study.
Capital Project Costs
Capital Improvement Program (CIP) expenditure projections average $499,361 annually during the fiveyear period. All projects have been assumed to be cash funded. Figure VII-3 provides a detailed listing of the Wastewater Enterprise five-year CIP. The City’s focus continues to be on addressing risk-based sections of its system through the Annual High Priority 1 Repairs and Annual Medium Priority Repairs programs to maintain system reliability. All project costs shown have been escalated using an assumed Construction Cost Index of 3.8% for FY 2024-25 and 3.4% thereafter based on historical changes in the Engineering News Record-Construction Cost Index.
Reserve Contributions
Based on conversations with the City, it was assumed the City would spend nearly all the $300,000 balance in this reserve during FY 2024-25. The City plans to replenish this amount in FY 2025-26 to satisfy the target balance.
Figure VII-3. Wastewater Five-Year Capital Improvement Plan
RESERVES
The City uses its reserves to stabilize rates against annual fluctuations in capital expenditures, variances between projected and actual water demands, and unanticipated expenditures and other expenditure variances. In some years, there is surplus revenue that is available to replenish reserves. In other years, reserves are drawn down to cover the cost of service.
Reserves are required to stabilize rates and to provide for contingencies. Reserves can be drawn on in years when the City’s Wastewater Enterprise Fund experiences above average costs and augmented during years when costs are below average. The City’s reserves are used for operating and capital purposes.
Each of these purposes has its own requirements that lead to a minimum and optimum target balance.
Note, the types of reserves held by the Wastewater Enterprise mirror the reserves held by the Water Enterprise, including the target balance.
Rates must be set so that the fund balance achieves the target balance. 61 February 20, 2024 Item 10
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Operating Reserve
The operating component of the reserves provides working capital for month-to-month O&M expenditures. With sufficient working capital, the City can operate without cash flow constraints. The City’s approved reserve policy is 45 days of operating expenses The City’s Reserves should never drop below this minimum balance.
Self-Insurance Reserve
The City maintains a Self-Insurance Fund for the Water utility with a targeted minimum balance of $50,000. The purpose of the reserve is solely to pay out claims related to Wastewater utility damage.
Pension Reserve
The City has a fully funded Pension Reserve to pay for the Water Enterprise’s share of staff costs. The targeted minimum balance is set to $200,000.
Debt Service Reserve
A target balance of $561,800 is maintained to satisfy the City’s current debt obligations. Once each of the obligations is paid off, the funds will become available to the City. The obligations are scheduled to mature in FY 2032-33 and FY 2035-36. This reserve is unique to only the Wastewater Enterprise as the Water Enterprise has no existing obligations.
Capital Reserve
The capital improvement component of the reserves provides working capital for the City’s capital improvement program. The fund balance needs to be sufficient to at least pay contractors without delays caused by cash flow limitations. The fund balance can be larger so that the City can fund larger construction projects on a pay-as-you-go basis, thereby eliminating financing costs. The City’s approved policy requires a reserve threshold of $350,000. This total is less than the five-year average of annual capital improvement expenses, $465,551. The City could contemplate increasing this reserve to account for rising construction costs.
Equipment Replacement Reserve
This reserve is maintained to fund capital outlay projects, such as the replacement or purchase of new vehicles, large maintenance items, machinery, and equipment. An approved policy reserve target of $300,000 is maintained. The reserve provides an emergency source of funding in the event of an unanticipated breakdown or failure.
Rate Stabilization Fund
The Rate Stabilization Fund provides funding which the City can draw upon prior to passing funding for unanticipated events onto its customers. For example, in the event of a water shortage, the City could utilize reserves from the Rate Stabilization Fund as a short-term solution while flows remain lower. The reserve helps to offset the financial burden ratepayers might experience when the City is required to raise rates. The current approved reserve target is set at $200,000. 62 February 20, 2024 Item 10
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REVENUE INCREASES
Rates are set to generate sufficient revenue to cover annual expenses. In addition, rates are set to maintain adequate reserves. Figure VII-4 summarizes the projected revenue from current rates, annual revenue requirements, annual variances, and the rate increases necessary to cover the City’s costs.
Figure VII-4. Rate Increase Calculations
Rate increases account for rate revenue and future revenue requirements. The revenue requirement (shown in greater detail in Figure VII-2) increases due to wastewater transportation and treatment costs and capital expenditures. The proposed revenue increases serve to decrease the projected shortfalls facing the City. As shown in Figure VII-4, the City’s reserves have been used to keep the revenue increases low (i.e., there are projected revenue shortfalls in FY 2025-26 through FY 2028-29 after accounting for the revenue increases, which will be covered by reserves.
The rates are derived in Chapter V. With these rate increases, the City is able to pay for its annual O&M and capital expenses and maintain adequate reserves, as further discussed below.
DEBT SERVICE COVERAGE
Figure VII-5 shows the debt service coverage provided by the revenue increases in Figure VII-4. The City is required to maintain a minimum coverage ratio of 1.20. A higher ratio provides a greater margin of safety to bondholders and enhances the credit rating on bonds. Moreover, a higher credit rating benefits ratepayers by reducing the cost of future borrowing, if needed.
Figure VII-5. City Debt Coverage Ratio Calculations (with rate adjustments) Note: Revenue sources includes sewer rate revenues, non-operating revenues, and investment interest. 63 February 20, 2024 Item 10
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RESERVE FUND BALANCE
Figure VII-6 shows the annual fluctuations (solid green line) in the fund balance that are caused by the differences between the revenue requirement and revenue from rates with the rate increases; the dashed green line is the projected fund balance without rate increases. The revenue and rate increases in Figure VII-4 were derived to balance increasing rates while maintaining a level of reserves that continues to meet the City’s reserve target (blue line) through FY 2028-29.
For purposes of rate setting, the following combined reserve target balances were established. The red line labeled, “Minimum Balance” represents the target balance for the Operating Reserve, Self-Insurance Reserve, Pension Reserve, and Debt Service Reserve. The blue line labeled, “Total Target Reserve” is the sum of the Minimum Balance plus the Capital Reserve, Equipment Replacement Reserve, and Rate Stabilization reserve targets.
The ten-year projection in Figure III-6 demonstrates the use of reserves beyond FY 2028-29 as expense projections outpace revenue increases. Initially, after the 4% increase in FY 2024-25, revenue increases are kept to 2-3% annually through FY 2033-34. However, the cumulative growth of expenses, driven by 5% projected increases in water supply costs, overtakes revenue growth, requiring a greater share of reserves to support rate revenues. Consequently, reserves project to decline beginning in FY 2028-29, despite larger revenue increases. The reserve fund balance projects to fall below the Target Reserve by FY 2032-33.
While this is a similar scenario to the reserve fund balance projection of the Water Enterprise discussed in Section III, the maturity of the City’s SRF loan obligation in FY 2032-33 reduces wastewater expenses and the overall target reserve threshold (see blue line). Therefore, the forecast for future wastewater rate increases is more positive when compared to the Water Enterprise. Over the ten-year period, wastewater rates would be increased cumulatively by 25.5% while water rates would be increased cumulatively by
38.3%. Further, the Wastewater Enterprise fund balance projects to meet the target reserve balance while the Water Enterprise fund balance would fall short of the target reserve by $200,000, or 11%.
If revenue levels remain stagnant, the dashed green line reflects that without revenue increases, the yearend fund balance of $2.2 million in FY 2022-23 is projected to drop below the City’s Minimum Reserve by FY 2028-29.
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Figure VII-6. Projected Year-End Fund Balance
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VIII. WASTEWATER RATE
COST OF SERVICE ANALYSIS
METHODOLOGY
The revenue requirement analysis establishes how much revenue is required from rates. The next step in the analysis is determining the cost of service. Cost-of-service analysis is used to derive rates that proportionally allocate the cost of service. This is achieved by allocating the revenue requirements to the components of the rate structure.
A cost-of-service analysis determines how much each customer and customer class should pay based on its respective share of service-related expenses and flow. The volume of wastewater discharged influences the design of the collection and treatment systems. The cost-of-service analysis allocates expenses to “cost components on the basis of operating considerations or design capacity of each facility.” Therefore, a larger proportion of expenses associated with wastewater flow on the sewer system are allocated to customers who place a greater burden on the system.
Note, the City’s agreements with its wastewater conveyance and treatment providers align costs with wastewater volume. Costs for these services are not affected by the strength of wastewater. Hence, the cost of service accounts only for flow and service-related expenses.
CUSTOMER CLASSES
The cost-of-service analysis distributes the revenue requirements among customer classes in proportion to their service requirements. Like water rates, there is no industry standard that specifies which customer classes should be used. The law allows utilities to exercise discretion in determining the appropriate customer classes provided the rates yield charges that are proportional to the cost of providing service for each category. As a result, the allocation of costs needs to be tailored to the customer classes.
The City currently has multiple customer classes: Single Family Residential, Multi-Family Residential, Commercial, Institutional, Hotels/Motels without Restaurants, Hotels/Motels with Restaurants, Restaurants, Shopping Centers, Fairgrounds, and Fats, Oils, and Greases (FOG) Non-Compliance Customers.
These classes were last reviewed as part of the previous cost-of-service study in 2019.
VOLUMETRIC RATES MODIFICATIONS
Changes to the customer classes affect how costs are allocated among all wastewater customers. HF&H recommends reducing all current Non-Residential customer classes to two classes: 1) Commercial; and 2) Fairgrounds. Simplifying the customer classes is possible because the third-party agencies, who bill the City for transportation and treatment of wastewater, charge for services according to the volume of wastewater. There is no distinction for these charges to reflect wastewater strength, as was considered under previous service agreements. Because these agencies do not make a wastewater strength distinction in their billing, there is no nexus for the City charging high strength wastewater customers a higher rate for sewer service. Therefore, all Commercial, Multi-Family, and Single-Family customers will be charged a uniform rate per volume of metered water use. Single-Family Residential bills will continue the practice of the sewer bill cap, set by winter water use. Also, Multi-Family Residential and Commercial 66 February 20, 2024 Item 10
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customers will continue to be charged for 90% of metered water use to account for volumes of water recorded that do not return to the sewer. The method for how sewer flows are calculated for billing purposes would remain, but how customers are charged would be revised from current practices.
Note, the proposed rates exclude revisions to the (FOG Non-Compliance surcharges. HF&H recommends the surcharges assessed FOG Non-Compliance customers be converted into miscellaneous fees charged to customers who are out of compliance with City requirements for its FOG program. The surcharges would recover the additional costs incurred by the City for non-compliance.
The result of these modifications to the volumetric rates affects the cost of service allocations discussed below.
COST-OF-SERVICE ALLOCATIONS
The cost-of-service analysis allocation process follows the same process as the one performed for the allocation of water costs. The FY 2024-25 revenue requirement was summarized by function and these functional costs were allocated between the Fairgrounds and City customers. The proportionate shares of the revenue requirement were then further allocated among the fixed and variable components for cost recovery.
Figure VIII-1 allocates the FY 2024-25 revenue requirement between the Fairgrounds and the City customers. Figure VIII-2 summarizes the percentage allocations used in apportioning the revenue requirement between the Fairgrounds and the City customers. A discussion of the methodology behind the allocation of costs follows. 67 February 20, 2024 Item 10
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Figure VIII-1. Allocation of FY 2024-25 Revenue Requirement to Fairgrounds Figure VIII-2. Fairgrounds Allocation Factors
Fairgrounds Allocation Factors
Staff Allocation
The City estimates roughly 26% of personnel staffing costs can be attributed to serving the Fairgrounds.
This allocation was used in the previous 2019 study and confirmed with City staff as part of the current analysis.
Hydraulic Capacity
The City has reported a count of 1,693 water meters tied to City sewer accounts. Of these water meters, the Fairgrounds receive water and requires available capacity for 1 – 8” meter and 2 -10” meters. The size of the water service and the capacity afforded to the service serves as a proxy for the capacity of 68 February 20, 2024 Item 10
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wastewater flow to be discharged into the City’s collection system. Connections are converted to Equivalent Meter Units (EMUs) to apportion the revenue requirement costs for operations and maintenance (O&M) administrative expenses. The capacity multipliers are the same as used in the water rate study and this aligns with historical practice. The Fairgrounds make up 320 EMUs of the total 2,512 EMUs served by the system, as shown in Figure VIII-3. This accounts for 12.7% of the overall hydraulic capacity.
Figure VIII-3. Capacity Calculations for City Wastewater Service Collection System Sizing
The City’s wastewater collection system sizing was calculated assuming 16.7% of the peak flows of the system were attributable to the Fairgrounds. The revenue requirement costs for debt service, capital outlay (e.g. machinery and vehicle replacement), and capital improvements were allocated, using the assumption Fairgrounds accounted for 16.7% of these overall costs. This allocation was used in the previous 2019 study and confirmed with City staff as part of the current analysis.
Wastewater Flow
The Fairgrounds average wastewater flow over the past five years accounts for 14.5% of the overall conveyed and treated. Figure VIII-4 summarizes the average annual flows between the Fairgrounds and other City customers from 2019-2023. City flows are the difference of the flows from the Fairgrounds wastewater meter subtracted from the total flows recorded by SEJPA. This allocation was applied to wastewater treatment, conveyance and utility expenses, which vary based on the level of wastewater volume. Based on previous studies, personnel and supplies costs were also allocated using this factor.
Figure VIII-4. Wastewater Flow Analysis
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Operations & Maintenance Composite
Non-operating revenue and transfers to reserves were allocated to the Fairgrounds and City customers based on each’s proportionate share of the total O&M costs, as derived in Figure VIII-1.
Results of Initial Allocation
Fairgrounds was apportioned 15.1% of the overall revenue requirement. The Fairgrounds allocation has decreased since the previous cost-of-service study, which yielded an overall allocation of 17.25%. The decrease can be attributed to a reduced proportionate share of flow-related costs allocated to the Fairgrounds. While the five-year period of wastewater flows analyzes accounts for pre-pandemic, pandemic, and post-pandemic wastewater discharge patterns, the share of the Fairgrounds flow decreased from
16.5% to 14.5% from the previous study. The expenses allocated according to share of contributed wastewater flow are the largest portion of costs allocated. Therefore, it stands to reason that Fairgrounds is receiving a smaller share of costs because their proportionate burden placed on the system, the largest cost driver, decreased. Thus, the Fairgrounds share of the revenue requirement to be recovered through the FY 2024-25 rates will be $670,430 (15.1%) and the remaining City customer’s share will be $3,784,186 (84.9%).
Cost-of-Service Allocations and Allocation Factors
The allocation factors in Figure VIII-5 were used to apportion the Fairgrounds allocation of costs in Figure VIII-6 and to apportion the City customers’ allocation of costs in Figure VIII-7. The CIP Composite, Expense Composite, and Fairgrounds O&M Composite allocations are based on the subtotals of the O&M and capital costs that were directly allocated to either the service or flow categories.
Figure VIII-5. Cost-of-Service Allocation Factors
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Figure VIII-6. Fairgrounds Cost-of-Service Allocations
Source: Fairgrounds revenue requirement from Figure VIII-1. 71 February 20, 2024 Item 10
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Figure VIII-7. City Customers Cost-of-Service Allocations Source: City Customers revenue requirement from Figure VIII-1.
Units of Service
The units of service provided by the City to its customers are the sum of the services provided to each of the City’s customer classes.
Estimates of City customer flows (excluding the Fairgrounds) associated with each customer class are shown in Figure VIII-8. Flow volumes were calculated using recorded water use for CY 2022. Flow volumes were adjusted based on the City’s current rate structure such that the billed sewer flows were used. Single Family Residential flow volumes accounted for the cap of the maximum of the lowest two-month bill period or 8 HCF while all Multi Family and Commercial flow volumes were adjusted to 90% of the total water use. All Commercial customers were grouped together based on the volumetric rate modification described previously. The Fairground’s billed flow was generated from the CY 2023 metered data, recently made available, shown in Figure VIII-4, and shown as Figure VIII-8 for convenience.
At the time the analysis was performed, 2023 water use data was not available so that City customers’ flows could be analyzed independently from the flow volumes read by SEJPA. The Fairgrounds usage increased significantly during 2023, constituting a three-year high. Further, the proportionate share of the 72 February 20, 2024 Item 10
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Fairgrounds’ wastewater volumes relative to the total flows recorded grew closer to the 2019 proportion, aligning with pre-pandemic patterns, when more events were held, which caused the Fairgrounds to have higher flows. Post-pandemic, we assume the Fairgrounds share of wastewater volumes will continue to normalize such that their proportionate share will return closer to 20% of the overall volume. These assumptions are reflected in the cost of service and the rates derived.
Figure VIII-8. Wastewater Flow Analysis
Note: 2021 includes only ten months of recorded volumes due to instrument failure.
Figure VIII-9 summarizes the units of service by customer class.
Figure VIII-9. Summary of Units of Service by Customer Class Unit Costs of Service
The functionalized costs in Figure VIII-6 and Figure VIII-7 are divided by the respective units of service in Figure VIII-9 to determine the unit costs. The Fairgrounds service charge is exclusive to a single account.
The flow-related cost allocation of $352,160 is divided by 30,645 HCF to determine a unit cost of $11.49 per HCF.
The derivation of the unit costs applicable to the City customers is shown in Figure VIII-10. These unit costs are the costs of providing the units of service to all customer classes without exception, thereby ensuring that all customers pay their share in proportion to their respective units of service.
Figure VIII-10. Unit Costs of Service (City)
Figure VIII-11 summarizes the small shift away from the overall Volumetric Rate revenues to the Service Charge revenues to align with the cost-of-service. The exercise performed indicates the proportion of 73 February 20, 2024 Item 10
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Service Charge revenues will increase from 46.7% to 49.0% of total rate revenues, while the share of Volumetric Rate revenues will decrease from 53.3% to 51.0%. Similarly, the cost-of-service indicates the proportion of Fairgrounds Volumetric Rate revenue relative to total revenue will decrease slightly while the Service Charge revenue proportion increases.
Rates need to be designed to generate each class’s share of the revenue requirement related to volumetric charges. The next section provides the recommended modifications to the Service Charges and Volumetric Rates needed to meet the cost of service.
Figure VIII-11. Cost-of-Service Revenue Summary
Note: FY 2023-24 revenues assume 12 months of rates implemented on January 1, 2024.. 74 February 20, 2024 Item 10
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IX. WASTEWATER RATE DESIGN
The City has historically charged water customers the combination of a fixed Service Charge and a variable volumetric charge based on the product of metered water use and the Volumetric Rates. As previously discussed, this is a common set of charges that is prevalent throughout the wastewater industry. This chapter explains the derivation of the Volumetric Rates and Service Charges that reflect the projected cost of service.
CURRENT RATES
The City’s current wastewater rate structure is composed of two components: Service Charges and Volumetric Rates.
Current Service Charges
The Service Charges are fixed rates that are charged on a fixed rate graduated in proportion to the capacity of the water meter serving each customer. The City assumes all single-family accounts are served by a 5/8” meter, recognizing that certain customers have larger water meters due to fire flow requirements, which is immaterial to sewer flow impacts. All customers are billed on a bi-monthly7 basis. Figures IX-1 summarizes the current Service Charges, which were last increased on January 1, 2024.
Figure IX-1. Current Service Charges
Current Volumetric Rates
Customers are billed based on metered water use per bi-monthly period multiplied by their respective Volumetric. Water is metered in “units” of HCF of metered water use, whereby one unit or HCF equals 748 gallons. Volumetric Rates are charged to the following customer classes: Single Family Residential, Multi-Family Residential, Commercial, Institutional, Irrigation, Hotels/Motels without Restaurants, Hotels/Motels with Restaurants, Restaurants, Shopping Centers, and Fairgrounds customers. 7 Bi-monthly periods assume a billing period of 60 days. 75 February 20, 2024 Item 10
City of Del Mar Water and Wastewater Rate Cost-of-Service Study Draft Report IX. Wastewater Rate Design
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The Fairgrounds have a wastewater flow meter and their bill reflects the volume of water recorded. Unless sub-metered, the City bills all other customers according to metered water use. Single Family Residential customers bills are subject to the maximum of the minimum bi-monthly water use or 8 HCF, for which the current volumetric rate of $8.98 is applied. For Multi-Family Residential and all other types of commercial customers, the City bills based on 90% of metered water use, assuming 10% of flow does not return to the sewer.
No adjustments are recommended to the City’s current practices of a wastewater cap or to the 90% return to sewer factor applied to Multi-Family and commercial customers sewer bills.
Figure IX-2. Current Volumetric Rates
SERVICE CHARGE DESIGN
The bi-monthly Service Charges for City customers are calculated using the unit cost determined in Figure VIII-10. The charge is graduated in proportion to the water meter capacity, as is current practice. The unit cost is divided by 6 to generate the bi-monthly amount per meter.
Figure IX-3. Proposed City Customers Bi-Monthly Service Charge Rates – FY 2024-25 The bi-monthly Service Charge for Fairgrounds customers is the bi-monthly rate of the cost allocation calculated in Figure VIII-6, $318,270. The bi-monthly rate of $53,045.02 would be charged to each bill. 76 February 20, 2024 Item 10
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With the proposed rates, all Service Charges billed to City customers would see an increase, while the Fairgrounds would see a decrease. The increase in rates reflects the increase to service charge revenues calculated in Figure VIII-9. The Fairgrounds Service Charge is decreasing as the nominal share of Service Charge revenue is decreasing based on the cost of service, as previously identified in Figure VIII-11. Figure IX-4 shows the proposed five-year schedule of Service Charges.
Figure IX-4. Current and Proposed Service Charge Rates
VOLUMETRIC RATES DESIGN
The Volumetric Rates were determined via the unit cost exercise in the previous Section. The resulting Volumetric Rate for each of the revised customer classes is shown in Figure IX-5, as well as the proposed rates for FY 2025-26 through FY 2028-29, assuming 2.0% annual increases are applied. Volumetric Rates are increasing to reflect the additional burdens placed on the sewer system.
Figure IX-5. Current and Proposed Volumetric Rates
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X. COMPARISON TO WASTEWATER AGENCIES
In the previous chapter, the Service Charges and Volumetric Rate structures were compared for the current and proposed rates. A further understanding of the differences between the two structures can be gained by comparing bills for each customer class.
NEIGHBORING AGENCY COMPARISON
The Finance Committee (January 2024) asked to take a closer look at comparing wastewater rates to similar agencies. Figure X-1 compares single-family customer wastewater rates of smaller coastal cities in the San Diego region, assuming a bi-monthly sewer flow volume of 16 HCF. The current and FY 2024- 25 rates for Del Mar are included.
Figure X-1. Neighboring Agency Wastewater Bi-Monthly Bill Comparison Some factors that are likely to contribute to the City having the highest water rates are as follows:
1. The City must contract with the City of Solana Beach and the City of San Diego to transport wastewater to treatment plants. However, most of the other agencies are in close proximity to their wastewater treatment plants, saving them the expense of conveying wastewater.
2. A population per miles of water mains ratio was developed to compare each agency. The City has the lowest ratio. Therefore 3,830 people must pay for the maintenance and eventual replacement of 25 miles of sewer mains. In other words, the City population is less concentrated along the miles of sewer mains maintained compared to other agencies and the costs of water service are spread over the smallest population of agencies compared.
While the City currently has the highest wastewater bills, we anticipate other agencies will raise rates to be more in line with the City’s rates in the near future. Based on this study, proposed increases in the next five years will be only 2-4%. In contrast, other agencies are proposing 5% to 19% per year rate increases, (i.e. the City of Encinitas) in part to address neglected CIP programs needing critical financing. Fairbanks Ranch CSD will be raising fees 24% on July 1, 2024. The City has been taking a proactive approach to its CIP program over the years of addressing critical needs without having to suddenly raise rates.
Also, during the proposed rate period, the City will continue to pursue cost saving measures, such as contracting out sewer cleaning services. Solana Beach contracts out sewer cleaning services and this may allow them to charge lower rates.
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City of Del Mar Water and Wastewater Rate Cost-of-Service Study Draft Report XI. Combined Utility Bill Impacts
HF&H Consultants, LLC Page 66 February 8, 2024
XI. COMBINED UTILITY BILL IMPACTS
In the previous sections, the proposed water and wastewater rates were compared for the current and proposed rates. However, a customer’s level of water demand may fluctuate throughout the year and bill amounts correspond accordingly. Comparing bills provides customers with further understanding of how both water and wastewater bills may adjust under the proposed rates for their specific meter size. Figure XI-1 through Figure XI-6 show how combined water and wastewater bills at current rates compare to bills at the proposed rates across a range of water usage. The final difference rows in each figure state the nominal change the and percentage change that customers can expect at the billed levels of water use for a given meter size.
Figure XI-1. Single Family Residential Bill Comparison
Percentage of bills based on 2022 billing data.
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Figure XI-2. Multi-Family Residential Bill Comparison
Percentage of bills based on 2022 billing data.
Figure XI-3. Commercial/Institutional Customer Bill Comparison 80 February 20, 2024 Item 10
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Figure XI-4. Hotels with Restaurant Customer Bill Comparison Figure XI-5. Restaurant Customer Bill Comparison
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Figure XI-6. Fairgrounds Customer Bill Comparison
The figures above provide information as to how a customer’s bi-monthly bill will increase or decrease for a single combined water and wastewater bill. Annually, customers can expect bills to modulate based on seasonal water demands or changing water needs. Figure XI-7 through Figure XI-9 provide additional context as to how City customers could see their combined utility bill payments for these services adjust over a full year. The analysis compares prospective bills at proposed rates for FY 2024-25 with bills at current rates, using recorded water use from CY 2022.
Figure XI-7. Annual Single-Family Residential Customer Combined Bill Adjustments If customers use water at the same levels of past demand, their bills will likely increase. The majority of single family households will see an increase of at least 3% in their combined water and wastewater payments, based on the figure above, with the largest annual increase being 7% for the year. Increases greater than 5% are attributable to the increased fixed service charged for wastewater service. All accounts regardless of water use will be required to pay the fixed service charge. 82 February 20, 2024 Item 10
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Figure XI-8. Annual Multi-Family Residential Customer Combined Bill Adjustments Assuming future water usage follows 2022 patterns, multi-family accounts can expect an annual increase between 4-7% for the year.
Figure XI-9. Annual Commercial Customer Combined Bill Adjustments Commercial customer bills demonstrate the highest order of variability due to the adjustment in wastewater rates. Previously, customers charged more to account for their wastewater strength will see a significant decrease, as shown in Figure XI-4 and Figure XI-5. Accounts connected to shopping centers, restaurants, and hotels with a restaurant will see the largest decrease in their combined utility bills. While these customers will likely see lower utility bills, the majority of customers (80.8%) can expect an increase of up to 7% of their annual utility bills for water and wastewater services. The increases capture the increases to Fixed Service charges for all wastewater customers and the increases to Volumetric Rates for customers previously categorized as Commercial or Institutional. The increases in bills reflect the higher Commodity Charges proposed, as well.
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