CITY OF
FARMERSVILLE Farmersville City Council
Regular Meeting
Tina Hernandez, Mayor
Danny Valdovinos, Mayor Pro Tem Monday, February 12, 2024 6:00 PM Gregorio Gomez, Council Member Meeting held in Civic Center Council Chambers Paul Boyer, Council Member - 909 W. Visalia Road Farmersville, California Armando Hinojosa, Council Member
Pending no technical difficulties, the City Council meeting will also be streamed (for observation only) via Zoom and accessed as follows:
Please dial 1-669-900-6833
Meeting ID: 89650089380
Password: 459727
Call to Order:
2. Roll Call:
3. Invocation:
Pledge of Allegiance:
5. Public Comment:
Provides an opportunity for members of the public to address the City Council on items of interest to the lublic within the Council
City Manager's office. Speakers should limit their comments to not more than two (2) minutes. No more than twenty (20) total minutes will be allowed for Public Comment. For items which are on the agenda this evening, members of the public will be provided an opportunity to address the council as each item is brought up for discussion. Comments are to be addressed to the Council as a body and not to any individual Council Member.
Presentations:
A. Business License Analysis & Ordinance Review - HdL Companies B. Water & Sewer Utility Rate Study - Willdan Financial Services
7. Consent Agenda:
Under a CONSENT AGENDA category, a recommended course of action for each item is made. Any Council Member or Member of the Public may remove any item from the CONSENT AGENDA in order to discuss and/or change the recommended course of action, and the Council can approve the remainder of the CONSENT AGENDA.
A. Authorization to waive full reading of ordinances and resolutions and to identify by title only.
Recommend that the City Council approve the full reading of all ordinances and resolutions be waived and to identify by title only.
B. Minutes of Regular City Council Meeting of January 22, 2024 Recommend approval of minutes.
Documents: Draft Action Minutes of January 22, 2024
C. Notice of Completion of the Farmersville ADA Improvement Project Recommend that the City Council accept the Farmersville ADA Improvements Project, and the City Council authorize the City Manager sign the Notice of Completion and the City Clerk file the Notice of Completion with the County Clerk's office.
Documents: Notice of Completion
General Business
Cooperative Agreement between the City of Farmersville and the County of Tulare for Avenue 280 Widening Project - Segment 2 Recommend that the City Council authorize the City Manager to sign the Cooperative Agreement.
Documents: Cooperative Agreement
B. 4Creeks Proposal for Construction Management Services and Inspection Services for the Fire Station 83 Project
Recommend that the City Council authorize the City Manager to contract with 4 Creeks for Construction Management Services and Inspection Services for the Fire Station 83 Project for an estimated Time and Materials amount of $160,770.
Documents: 4Creeks Proposal
Council Reports
A. City Council Updates and Committee Reports
10. Staff Communications:
11. Future Agenda Items
1. Amend Ordinance - Temporary Outdoor Use Permits
2. Review of Cannabis Cultivation
3. Site Visits to Woodlake, Exeter, and Lindsay
4. Water Restrictions
5. Update City Ordinances related to Code Enforcement
6. Reopening Two-way Traffic on E. Citrus at Freedom Drive
7. Transit Services with Visalia Transit and TCRTA
12. Adjourn to Closed Session:
A. CONFERENCE WITH LABOR NEGOTIATORS
Pursuant to Government Code Section 54957.6
Agency designated representative:
Jennifer Gomez, Steve Huntley, Teqia Velyines, and Michael Schulte
Employee organization:
Miscellaneous Employees
Police Officers Association
International Brotherhood of Teamsters Local 517
Mid-Management Employee Association
Department Heads
B. PUBLIC EMPLOYMENT
Pursuant to Government Code Section 54957
Title: City Attorney
13. Reconvene to Open Session:
14. Closed Session Report (if any):
15. Adjournment:
NOTICE TO PUBLIC
The City of Farmersville Civic Center and City Council Chambers comply with the provisions of the Americans with Disabilities Act (ADA). Anyone needing special assistance please contact City Hall at (559) 747-0458 please allow at least six (6) hours prior to the meeting so that staff may make arrangements to accommodate you.
Materials related to an item on this agenda submitted to the Council after distribution of the agenda packet are available for public inspection in the City's offices during normal business hours.
Drafted by: J. Gomez
Strong Roots..... Growing Possibilities
CITY OF
FARMERSVILLE
Business License Analysis & Ordinance Review
Version 4
January 3, 2024
Hdl® Companies
SUBMITTED BY CONTACT
HdL Companies Eric Myers
120 S. State College Blvd., Ste 200 T: (424) 228-8517 Ext. 1022 Brea, CA 92821 E: [email protected]
hdicompanies.com
Table Of Contents
TABLE OF CONTENTS 2
EXECUTIVE SUMMARY 3
SECTION 1 - CITY OF FARMERSVILLE & COMPARATIVE JURISDICTIONS 4 BUSINESS TAX - ANALYSIS 4
BUSINESS TAX - EQUITY OF CONTRIBUTION 4
CITY OF FARMERSVILLE: BUSInESS TAX - BusInESS TYPE SUMMARY 5 CITY OF FARMERSVILLE: COMPARISON TO NEIGHBORING CITIES 6 COMPARISON CITIES SUMMARY TABLE (UsIng FY 18-19 DATA) 7 RATE COMPARISON - CITY OF FARMERSVILLE VS. NEIGHBORS 10 SECTION 2 - CATEGORY & TAX ANALYSIS 11
TAX MODEL REVENUE AND EQUITY COMPARISON
MODEL 1: EXISTING CATEGORIES WITH SIMPLE INCREASES
MODELS 2 AND 3: GROSS RECEIPTS TAX
MODEL 3: GROss RECEIPTS TAX - CLASSIFICATION-BASED RATES
PROPOSED RATES COMPARISONS
APPENDIX A 19
LICENSE CLASSIFICATION AND RATE TYPES 19
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Executive Summary
Background
The City of Farmersville (City) requires all businesses operating within the City to obtain a business license and pay business license taxes. (City's Municipal Code (Code) section 5.04.050). This revenue is locally controlled and fund essential services. The City commissioned the HdL Companies ("HdL" or "we," "us," "our," or similar terms) to prepare thi:
tax study to review the administrative efficiency of the current structures, to review options for improving the equity of the business license tax structure, if any, and to investigate the possibilities for additional revenue generation.
The models and recommendations in this study should be evaluated not only on whether they increase revenue but, ideally, also on whether they move the City's business license structure up and to the right in the four quadrants presented below in Chart 1.
Chart 1: Key attributes of modern business tax structures Tax Structure Simplification
*
Unequal Effective Tax Rate Equitable Effective Tax Rate Complex Tax Implementation
Recommendation
The City's current structure is a tiered gross receipts structure. Gross receipts-based structures typically produce well when compared to other structures, however the city has a lower revenue compared to other similar jurisdictions. The likely cause of this underperformance is the inherent cap for larger businesses and an overall lower effective tax rate. If the City were to consider updating its tax structure, we recommend that the City consider adopting a gross receipt tax structure like Model
3. That model keeps the tax structure simple to administer and could increase revenue for the future. It would also eliminate the current structures cap.
Report Structure
We have divided this report into two major sections and one appendix.
Section 1 - Pages: 4 to 11
In the first section, we review the City's current revenue and tax structures to describe the City's current situation.
Section 2 - Pages: 12 - 19
In this section, we review three alternative tax structures. Model 1 is a simple percentage increase applied to the existing tax structure. Model 2 explores a single flat gross receipts rate. Model 3 explores the impact of increase rates by category.
Appendix A
Appendix A outlines the categories of businesses that model 3 uses and gives basic statistics for those categories.
Companion Code Review
We will also provide in a separate document a code review. 3| :36
Hdl® Companies
SECTION 1 - City of Farmersville & Comparative Jurisdictions Business Tax - Analysis
The City currently has approximately 734 businesses that are paying a business license tax. Businesses in Farmersville contribute around $45,000 to $60,000 in business license revenue yearly. In recent years Farmersville has seen increased revenues with the addition of the cannabis businesses in the city.
Business Tax - Equity of Contribution
The City currently uses primarily gross receipts to calculate the tax on businesses, although the city does have a per unit tax on rentals and an additional tax on Cannabis provided through Measure Q.
Table 1: Current Tax Structures
Business Category Type Total Count Primary Tax Type
General Business 273 Tiered Gross Receipts
Rental 347 Per Unit
Contractors 111 Tiered Gross Receipts
Cannabis 3 Council Resolution
TOTALS 734
As you can see in chart 4a, the City's current gross-receipts tax rates result in a large spread of effective tax rates across business sizes. This appears to be the result of having a capped gross receipts tax. This has caused the largest businesses to pay significantly less proportionally than the smaller businesses in the community.
Chart 2a: Examples of Current Tax Rate as Percent of Estimated Gross Receipts • Large Business a Medium Business Small Business
0.036%
Business 0.097%
- 0.218%
0.00% 0.05% 0.10% 0.15% 0.20% 0.25%
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Chart 2b: Count of Current Business by Size and Category Distribution of Business by Size within Category
350
300
250
200
150
100
50 Contractor General/Retail Services Professionals Rental Properties Is Small Medium Large
City of Farmersville: Business Tax - Business Type Summary As you can see below, the City's economy, at least as reflected in its business tax revenue, is primarily based in contractors, rental, Cannabis, and Service - General.
Pie Chart 1:
Total Share of Tax Revenue Generated by Business Type
= CONTRACTOR - GENERAL
• RENTAL UNIT
2%
2% = CANNABIS
4% 28%
• SERVICE - GENERAL
# RESTAURANT - WITH
ALCOHOL SALES
• RETAIL SALES - GENERAL
15%
• GASOLINE & SERVICE
STATIONS
AUTOMOTIVE - SERVICE &
REPAIR
= AUTOMOTIVE - SALES
16% 24% • BEAUTY - PARLORS &
SALONS
* All Other
Hdl° Companies
City of Farmersville: Comparison to Neighboring Cities
Below you can see the comparison jurisdictions that the City and HdL chose as a baseline. They were chosen because they were: (1) in similar geographic regions, (2) were like the City in median income, and (3) were relatively similar in population density. With the exception of Visalia who is included because of the extreme geographic proximity and has a particularly strong influence on the choice businesses make of where to establish themselves.
As you can see below, the City is at the lower end of household income and on the higher end of population density.
Chart 5
Household Income (Vertical) with Population Density (Horizontal) $80,000
Kingsburg •
$70,000 Visalia e
$60,000 Tulare e
Sanger e
Exeter • ®Reedley
$50,000 Dinuba •
Selma •
Farmersville
$40,000 Woodlake •
$30,000
$20,000
$10,000
1,000.00 1,500.00 2,000.00 2,500.00 3,000.00 3,500.00 4,000.00 4,500.00 5,000.00 The table below highlights population, the estimated number of licensed businesses, and estimated annual revenue for quick Continued on next page.
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Comparison Cities Summary Table (Using FY 18-19 data)
Table 2: Comparison Data
Est. Median
Est.
Est. Household Est, Businesses in Tax Schedules Est. Revenue in FY Jurisdiction Name Square
Population income FY 18-19* (general) 18-19
Miles
Visalia 37.94 142,978 $69,252 8,525 Gross Receipts $2,658,360.00 Tulare 20.39 70,733 $62,050 2,591 Gross Receipts $638,141.00 Dinuba 6.51 25,139 $50,186 755 Gross Receipts $237,357.00 Selma 5.81 24,625 $47,644 1,026 Gross Receipts $217,452.00 Kingsburg 3.72 12,662 $73,349 821 Gross Receipts $184,623.00 Sanger 5.77 26,716 $59,650 Tiered Gross $130,647.00
932 Receipts
Reedley 5.51 25,232 $55,498 1,064 Flat Tax $118,031.00
Woodlake 2.61 7,577 $41,532 254 Gross Receipts $68,195.00 Exeter 2.46 10,324 $55,519 828 Flat Tax $56,806.00
Farmersville 2.2 10,382 $48,262 734 Gross Receipts $45,450.00 Continued on the next page
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Chart 6: Est. Count of Businesses
Est. Count of Businesses
FY18/19 by Jurisdiction
VisaliaR 8,525
Tulare 2,591
Reedley 1,064
Selma 1,026
Sanger 932
Exeter 828
Kingsburg 821
Dinuba 755
Farmersville • 734
Woodlake | 254
4,000 8,000 12,000 16,000 20,000 24,000
Chart 7: Business Tax Per Capita Comparison
Est. FY 18/19 Business Tax Revenue
Per Capita
Visalia $19
Kingsburg $15
Dinuba $9
Tulare $9
Woodlake 1$9
Selma $9
Exeter $6
Sanger $5
Reedley • $5
Farmersville 1 $4
$0 $5 $10 $15 $20
Hdl® Companies
Chart 8: Business Tax per Business Comparison
Est. FY 18/19 Business Tax Revenue
Per Business
Dinuba $314.47
Visalia $311.82
Woodlake $268.58
Tulare $246.26
Kingsburg $224.91
Selma $211.92
Sanger $140.15
Reedley $110.90
Exeter $68.62
Farmersville $61.92
$- $50.00 $100.00 $150.00 $200.00 $250.00 $300.00 $350.00 Continued on the next page.
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Rate Comparison - City of Farmersville vs. Neighbors
Current Rate Comparison (Table 3)
Sample Business Farmersville Dinuba Exeter Kingsburg Reedley Sanger Beauty Parlor: 1 employee / <$55,789 $109.00 $140.00 $80.00 $69.74 $75.00 $25.00 Restaurant: 3 Employees / $150,000 $234.00 $392.00 $80.00 $50.00 $75.00 $111.55 General Retail Store: 10 Employees /
$254.00 $440.00 $80.00 $891.45 $75.00 $185.42
Residential Rental: 8 Employees /
$304.00 $516.00 $80.00 $400.00 $75.00 $163.49
Dental Office: 20 Employees / $850,000 $254.00 $640.00 $80.00 $50.00 $75.00 $221.00 Professional Firm: 15 Employees /
$215.00 $392.00 $80.00 $50.00 $75.00 $92.73
Small Contractor: 1 Employee / $75,000 $462.00
$82.25 $80.00 $100.00 $75.00 $120.00
Contracting Firm: 3 Employees /
$225,000 (outside) $795.00 $82.25 $80.00 $100.00 $75.00 $120.00 Sample Business Farmersville Selma Tulare Visalia Woodlake Restaurant: 3 Employees 150,009 5204,00 $55.79 $75.00 $69.00 $110.00 $429.03 $232.50 $300.32 $350.00
General Retail Store: 10 Employees / $254.00
$700.00 $387.50 $499.21 $575.00
Residential Rental: 8 Employees /
$304.00 $628.80 $212.50 $628.80 $550.00
Dental Office: 20 Employees/$850,000 $254.00 $700.00 $870.00 $1,062.50 $800.00 Professional Firm: 15 Employees / $215.00
$356.67 $984.00 $445.83 $375.00
Small Contractor: 1 Employee / $75,000
$462.00 $55.00 $92.00 $198.00 $125.00
(outside)
Contracting Firm: 3 Employees /
$225,000 (outside) $795.00 $55.00 $150.00 $198.00 $150.00 SECTION 2 - Category & Tax Analysis
The City requested that HdL conduct an analysis of the current license structures and explore options for modifying the rates and categories. In Section 1, we summarized the current structure of the City's business tax and compared the City to neighboring jurisdictions to give an idea of how the various tax structures and markets in nearby municipalities are creating different revenue outcomes.
In this section, we provide options for modifying the City's business tax rates and classifications. Using the data compiled in section 1 of this report on current license revenues, we developed models to estimate potential fiscal impacts to the City from the different models. You can find summary charts on pages 17-19 that provide a quick look at each proposed model's impact on the City revenues and the business community.
Tax Model Revenue and Equity Comparison
The three models below illustrate different frameworks the City can adopt to better meet the needs of the city and possibly achieve greater equity in the taxation of the business community. Model one is a straight increase in the current rates and structure of the tax code. It adds some additional revenue but does nothing to address any inequities inherent in the current structure of the taxation. Model two helps in three areas, it provides equality in the taxation of the whole business community, increases revenue, and simplifies the tax structure making it the easiest to administer and calculate. Model 3's focus is on maximizing equity by structuring the rates for business industries or categories in a way that considers other revenue contributions to the city like sales tax and property tax. Model 3 allows businesses who contribute in other ways a tax break in the Business License portion of their total city taxation. For example, a business who contributes to sales tax or property tax may have a lower business license tax. Below is an illustration comparing each model's effect on revenue and equity. Total equity as represented below is a heuristic estimate of the potential additional equity to be expected with the proposed models.
Chart 9: Model Revenue to Equity Comparison
• Model Revenue to Equity Comparison
3a
2a
Total Revenue 1
→
Total Tax Code Equity
C - Current Tax Structure
(Continued on Next Page)
11| Page
Hdl® Companies
Model 1: Existing Categories with Simple Increases
The City may elect to retain the existing structure while modifying the tax amounts for each category. Keeping the current structure in place would eliminate the need to create different categories and allow for a much simpler implementation for the City and the business community.
Table 5: Estimated revenue from a simple percentage increase Number of Businesses Current 20% 40%
Revenue Increase Increase
734* $121,849.00 $146,218.80 $170,588.60
*Business counts and total revenues used in the models represent businesses which are active, have payment history, and have a business type assigned. These totals are meant to show the effects of policy change in the city and give valuable insight to the activity in the city.
Model 1 - Highlights and Impact Review
As indicated in the model above, a simple increase could keep the existing structures in place while yielding higher revenues to the City. A 20%-40% increase across all sectors of industry is easy to implement but it does nothing to address equity or ease of administration.
Models 2 and 3: Gross Receipts Tax
We now turn to consider two models that are additional variations on the theme of a gross-receipts-based tax.
Many California cities use some form of gross receipts tax structure. Many of those cities use a standard rate multiplier to determine the tax amount owed, or by setting the rate for each business category. For example, a city may choose to charge $1 per thousand dollars of gross receipts (0.001 x Gross) for a retail business while charging a rate of $3.00 per thousand dollars of gross receipts (0.003 x Gross) for service or professional businesses.
The benefits of gross receipts-based taxes are the potential equity of their effective tax rate, ease of calculation, and potential for capturing revenue from growth in the economy. The drawback is that it exposes City revenues to the fluctuations of gross receipts in the economy.
Gross Receipts Tax - Estimates
Since we do not have complete information on gross receipts for the City's current businesses, we used multiple assumptions in the options below, which are meant to provide an estimate of the possible impact and should not be relied upon for precise budgeting. The following information was used as a basis for the tax tables and models in the options below. Gross receipts were determined by first calculating it from payment history and assigned rate. Secondly, if that was not viable such as in the non-gross receipts-based business categories we used rent estimates or sales tax to calculate the estimated gross receipts.
Table 6: Key estimates used in the gross-receipts models Total Business Taxable Gross
Number of Businesses
Receipts (Est.)
734 $120.7 Million
12 Page
Hdl® Companies
Model 2: Gross Receipts Tax - Single Gross Receipts Rate Model 2 reflects the potential revenues for converting the City tax to a single-rate, gross-receipts model. This model is simple to administer-as everyone is charged the same rate-but it allows the City to increase revenue. Model 2 also creates an annual base rate of a uniform $25, to provide some tax relief for very small businesses within the business community.
Table 7: Model 2-Potential Tax Structure
Tax Basis Tax Rate
Flat Rate $25 Flat Rate (up to $25,000 Gross Receipts)
Gross Receipts Tax + $1.25 per thousand dollars of Gross Receipts (0.00125 x Gross Receipts)
Model 2 Estimates Table
The table below indicates the potential revenues from implementing a gross receipts tax with two options, $1.25 per thousand and $1.50 per thousand. Information for the estimates comes from the data in the section above. Please note that this model and model three do not include the actual gross receipts. These models use estimated gross receipts based on the business classification which may overestimate or underestimate the actual gross receipts in the city. We believe however, it gives an accurate representation of the potential impact of the proposed tax structures. While these numbers should not be used for precise budgeting there are useful insights contained within the estimates.
Table 8: Model 2 - Rough Estimates from a simple gross receipts structure Taxable Gross Tax Amount Tax Amount
Number of Accts Current Revenues
Receipts $1.25/ thousand $1.50/ thousand
734 $119.5 Million $121,849.00 $148,076.53 $174,021.84
*These estimates are heavily dependent on the estimated taxable gross receipts being close to the actual gross receipts in the city.
Model 2 - Highlights and Impact Review
The "single rate" method of taxing on gross receipts provides an even distribution of the effective tax rate because all businesses subject to the tax will pay the same rate. Under this method, no cap is put in place, and therefore most of the revenues are received from the highest-grossing businesses. In the case of $1.50 per thousand in gross receipts approximately 24% of total revenue is generated by the 18 businesses in the large category. Model 2 expands revenue while keeping the tax structure simple and easy to understand for businesses, while asking larger businesses to pay a proportionally equivalent share. It does, however, significantly raise the tax rate for some businesses and would likely face significant opposition from the business community. In the case of the smallest businesses the base minimum of $25 up to $25,000 in gross receipts places the effective tax rate slightly below equal. This is however a small sum of money and the economic impact would be minimal.
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Chart 10: Estimated Effective Tax Rates Under A Simple Gross Receipt Model Current vs. Proposed Effective Tax Rates • Current Tax Structure = $1.25 per $1,000
• $1.50 per $1,000
0.217%
Small Business 0.114%
- 0.122%
0.071%
Medium Business 0.124%
- 0.147%
0.036%
Large Business 0.125%
- 0.149%
0.00% 0.05% 0.10% 0.15% 0.20% 0.25%
Continued on the next page
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Model 3: Gross Receipts Tax - Classification-Based Rates Model 3, as indicated below, would create different rates for different business classifications. For example, the City might choose to implement a rate for the retail/wholesale/miscellaneous business activities at a base rate of 0.001, recognizing the higher costs of goods sold and lower profit margins for these types of business as well as their contribution to other City revenues such as sales tax. At the same time, the City could consider implementing a higher rate for professionals due to the nature of their business model. This model affords the most flexibility for increasing revenues while accommodating certain business categories.
We have tailored Model 3 to provide a revenue increase and to focus on shifting more of the tax to property rentals and professional services.
Tax Structure and Estimated Revenue
The structure provided in the table below is just one example of how the City might utilize a gross receipt model to improve the equity of rates and increase revenue. Should the City decide to use a gross receipts model like model 3, HdL will work with City staff to finalize a structure that best serves the City's goals. Categories are defined and summary statistics are available in Appendix B below. It is important to remember that like model 2 these models use estimated gross receipts based on the business classification which may overestimate or underestimate the actual gross receipts in the city. We believe however, it gives an accurate representation of the potential impact of the proposed tax structure. While these numbers should not be used for precise budgeting there are useful insights contained in the industry averages for the business classifications.
Table 9: Basic tax structure for classification-based gross receipts Categories Minimum Rate Tax Rate BA Tax Rate 3B
CONTRACTOR 0.002 X Gross 0.0025 X Gross
GENERAL COMMERCE/RETAIL 0.001 X Gross 0.0015 X Gross
$25 (GR less
RENTAL (COMMERCIAL & RESIDENTIAL) 0.002 X Gross 0.0025 X Gross than $25,000)
SERVICE 0.002 X Gross 0.0025 X Gross
PROFESSIONAL 0.003 X Gross 0.0035 X Gross
Table 10: Estimated revenue from classification-based gross receipts Est. Annual Est, Annual
Number Est. Taxable Gross Gross Gross
Business Type Current Taxes
of Accts Receipts* Receipts Tax Receipts Tax
Model 3А Model 3В
Contractors 110 $13,030,000.00 $35,650.00 $24,200.00 $29,562.50 General Business 46 $25,780,328.30 $27,587.00 $25,860.33 $38,215.49 Rental 347 $21,733,056.00 $29,428.00 $35,291.11 $41,945.14 Service 222 $56,072,840.00 $26,761.00 $107,795.68 $133,357.10 Professional $4,140,000.00 $2,423.00 $11,970.00 $13,927.50 734 $120,756,224.30 $121,849.00 $205,117.12 $257,007.73 *These estimates are heavily dependent on the estimated taxable gross receipts being close to the actual gross receipts in the city.
Model 3- Highlights and Impact Review
This option has the benefit of spreading the burden of an increase across multiple business types. This model retains some administrative efficiency by having a simple structure of 5 categories and would increase revenue and, as the City will see in the charts that follow, there would be greater equity in the effective tax rates. 15 | Page
HaL® Companies
Proposed Rates Comparisons
Table 11: Comparing Gross-Receipt Models By Hypothetical Business Type Model 2
Model 3A
City's Gross Tulare's Exeter's Visalia's Woodlake's
Gross
Sample Business Current Receipt Current Current Current Current Receipts Rates
Rates $1.50 / Rates Rates Rates
Thousand
Beauty Parlor: 1
$109.00 $71.18 $55.79 $75.00 $80.00 $69.00 $110.00
employee /<$55,789
Restaurant: 3
Employees / $150,000 $234.00 $212.50 $150.00 $232.50 $80.00 $300.32 $350.00 General Retail Store: 10 $254.00 $716.16 $387.50
Employees / $716,163 $1,061.74 $80.00 $499.21 $575.00
Residential Rental: 8
Employees / $628,800 $304.00 $930.70 $1,232.60 $212.50 $80.00 $628.80 $550.00 Dental Office: 20 $254.00 $2,500.00
Employees / $850,000 $1,262.50 $870.00 $80.00 $1,062.50 $800.00 Professional Firm: 15 $215.00 $1,637.50 $3,250.00 $984.00 $445.83 $375.00 Employees / $1,100,000 $80.00
Small Contractor: 1
Employee / $75,000 $462.00 $100.00 $125.00 $92.00 $80.00 $198.00 $125.00 (outside)
Contracting Firm: 3
Employees / $225,000 $795.00 $325.00 $425.00 $150.00 $80.00 $198.00 $150.00 (outside)
Estimated Totals $2,627.00 $5,601.13 $8,454.55 $3,003.50 $640.00 $3,401.67 $3,035.00 16|P:10
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Chart 11: Average Revenue Yield Per Model By Business Category $1,400.00
• Current Model 2 ($1.25/$1000) : Model 3A
$1,200.00
$1,000.00
$800.00
$600.00
$400.00
$200.00
$-
CONTRACTORS GENERAL PROFESSIONAL RENTAL (COMMERCIAL & SERVICE
COMMERCE/RETAIL RESIDENTIAL
1712330
Hdl® Companies
Chart 12: Equity of Models
Current vs. Proposed Effective Tax Rates
Current Tax Structure Model 2 Tax Rate Structure ($1.50/1000) •Model 3A Tax Rate Structure
0.218%
Small Business 0.124%
- 0.138%
0.097%
Medium Business 0.147%
- 0.180%
0.036%
Large Business 0.149%
— 0.164%
0.00% 0.05% 0.10% 0.15% 0.20% 0.25%
Hdl® Companies 18|F280
Appendix A
License Classification and Rate Types
In Model 3, we use five basic categories of businesses. These are five basic structures that are common across municipalities.
The definitions below are general and not meant to be the complete definitions that would appear in a municipal code.
Contractors: These are persons or firms that are carrying on the business of a contractor, subcontractor, or builder particularly the construction or repair of any buildings. Examples include but are not limited to construction, plumbing, HVAC, etc.
General Commerce/Retail: These are retailers, wholesalers, hoteliers, restaurateurs, and manufacturers. All these businesses are likely to contribute to your tax base in other ways (i.e., property tax and sales tax) and often have lower profit margins.
Rental (Commercial & Residential): This category includes any business that leases, rents, or provides use of real property to another individual or entity for compensation. Examples include but are not limited to commercial leasing, residential rental, parcel leasing, etc. This would also be a category where the City could include language and rates for taxing short-term rentals.
Service: This is the offering of services that require minimal to no higher education training. This is also the default category for any business that is not specifically defined in one of the other five categories. Examples include but are not limited to hair stylists, gardeners, nail salons, etc.
Professional: These businesses offer services that require a rigorous amount of training through any type of higher education, or vocational institutions that exclusively certifies, complete obtainment of skills and the ability to offer such professional services. Examples include but are not limited to a doctors' office, a law office, a consulting firm, etc.
Please note that in the table below we have excluded the non-profit businesses along with the "revenue" attributable to their fees to give a clearer picture of the tax revenue producing businesses in the City.
Approximate grouping of City's Businesses by the proposed categories Business Category Type Total Count Total Current Taxes
CONTRACTOR 110 $35,650.00
GENERAL COMMERCE/RETAIL 46 $27,587.00
RENTAL (COMMERCIAL & RESIDENTIAL) 222 $26,761.00
SERVICE 347 $29,428.00
PROFESSIONAL 9 $2,423.00
TOTALS 734 $121,849.00
Hdl® Companies 19|P:30
CITY OF
CITY OF FARMERSVILLE
FARMERSVILLE
Business License Analysis & Ordinance
Review
January 3, 2024 Hdl® Companies
SECTION 1 - CITY OF
FARMERSVILLE &
COMPARATIVE JURISDICTIONS
Hal® Companies
BUSINESS TAX - EQUITY OF CONTRIBUTION
Table 1: Current Tax Structures
Business Category Type Total Count Primary Tax Type
General Business 273 Tiered Gross Receipts
Rental 347 Per Unit
Contractors 111 Tiered Gross Receipts
Cannabis Council Resolution
TOTALS 734
Hal®
Companies
BUSINESS TAX - EQUITY OF CONTRIBUTION
Chart 2a: Examples of Current Tax Rate as Percent of Estimated Gross Receipts a Large Business a Medium Business a Small Business
0.036%
Business 0.097%
0.218%
0.00% 0.05% 0.10% 0.15% 0.20% 0.25%
Hal®
Companies
« BUSINESS TAX - EQUITY OF CONTRIBUTION
Chart 2b: Count of Current Business by Size and Category Distribution of Business by Size within Category
350
300
250
200
150
100
50 Contractor General/Retail Services Professionals Rental Properties = Small a Medium Large
Hal®
Companies
CITY OF FARMERSVILLE: BUSINESS TAX - BUSINESS
TYPE SUMMARY
Pie Chart 1:
Total Share of Tax Revenue Generated by Business Type
• CONTRACTOR - GENERAL
• RENTAL UNIT
• CANNABIS
28%
• SERVICE - GENERAL
• RESTAURANT - WITH
ALCOHOL SALES
• RETAIL SALES - GENERAL
• GASOLINE & SERVICE
STATIONS
= AUTOMOTIVE - SERVICE &
REPAIR
• AUTOMOTIVE - SALES
16% 24% 38 BEAUTY - PARLORS &
SALONS
* All Other
Hal®
Companies
CITY OF FARMERSVILLE: COMPARISON TO
NEIGHBORING CITIES
Chart 5
Household Income (Vertical) with Population Density (Horizontal) $80,000
Kingsburg •
$70,000
Visalia •
$60,000 Tulare e
Sanger o
Exeter • "Reedley
$50,000 Dinuba •
Selma a Farmersile
$40,000 Woodlake •
530,000
$20,000
$10,000
0,00 500.00 1,000.00 1.500.00 2,000.00 2,500.00 3,000.00 3,500.00 4,000.00 4,500.00 5,000.00 Hal®
Companies
COMPARISON CITIES SUMMARY TABLE(USING
FY 18-19 DATA
Table 2: Comparison Data
Est. Median
Jurisdiction Household Est. Businesses Tax Schedules Est Revenue in in FY 18-19*
Visalia 37.94 142,978 $69,252 8,525 Gross Receipts S2,658,360.00 Tulare 20.39 70,733 $62,050 2,591 Gross Receipts $638,141.00 Dinuba 6.51 25,139 $50,186 755 Gross Receipts $237,357.00 Selma 5.81 24,625 $47,644 1,026 Gross Receipts $217,452.00 Kingsburg 3.72 12,662 $73,349 821 Gross Receipts $184,623.00 Sanger 5.77 26,716 $59,650 932 Tiered Gross $130,647.00 Receipts
Reedley 5.51 25.232 $55,498 1,064 Flat Tax $118,031.00
Woodlake 2.61 7,577 $41,532 254 Gross Receipts $68,195.00 Exeter 2.46 10,324 $55,519 828 Flat Tax $56,806.00
Farmersville 2.2 10,382 $48,262 734 Gross Receipts $45,450.00 Hale
Companies
COMPARISON CITIES SUMMARY TABLE(USING
FY 18-19 DATA)
Chart 6: Est. Count of Businesses Chart 7: Business Tax Per Capita Comparison Est. Count of Businesses Est. FY 18/19 Business Tax Revenue FY18/19 by Jurisdiction Per Capita
Visalia 18,525 Visalia $19
Tulare || 2,591 Kingsburg $15
Reedley 11,064 Dinuba $9
Selma 1,026 Tulare $9
Sanger 932 Woodlake 1$9
Exeter 828 Selma $9
Kingsburg 821 Exeter I)S6
Dinuba $ 755 Sanger $5
Farmersville • 734 Reedley 11$5
Woodlake 1254 Farmersville I54
4,000 8,000 12,000 16,000 20,000 24,000 $O $5 $10 $15 $20 Hdl®
Companies
COMPARISON CITIES SUMMARY TABLE(USING
FY 18-19 DATA)
Chart 8: Business Tax per Business Comparison
Est. FY 18/19 Business Tax Revenue
Per Business
Dinuba | $314.47
Visalia $311.82
Woodlake $268.58
Tulare $246.26
Kingsburg $224.91
Selma $211.92
Sanger $140.15
Reedley $110.90
Exeter $68.62
Farmersville $61.92
$50.00 $100.00 $150.00 $200.00 $250.00 $300.00 $350.00
Hal®
Companies
RATE COMPARISON - CITY OF FARMERSVILLE
VS. NEIGHBORS
Current Rate Comparison (Table 3)
Farmersville
Sample Business Dinuba Exeter Kingsburg Reedley Sanger
Beauty Parlor: 1 employee / <$55,789 $109.00 $140.00 $80.00 $69.74 $75.00 $25.00 Restaurant: 3 Employees / $150,000 $234.00 $392.00 $80.00 $50.00 $75.00 $111.55 General Retail Store: 10 Employees /
$716.163 $254.00 $440.00 $80.00 $891.45 $75.00 $185.42
Residential Rental: 8 Employees / $304.00
$628,800 $516.00 $80.00 $400.00 $75.00 $163.49
Dental Office: 20 Employees / $850,000 $254.00 $640.00 $80.00 $50.00 $75.00 $221.00 Professional Firm: 15 Employees /
$1,100,000 $215.00 $392.00 $80.00 $50.00 $75.00 $92.73
Small Contractor: 1 Employee / $75.000
$462.00 $82.25 $80.00 $100.00 $75.00 $120.00
outside!
Contracting Firm: 3 Employees / $795.00
$225.000 (outside) $82.25 $80.00 $100.00 $75.00 $120.00 Sample Business Farmersville Selma Tulare Visalia
Woodlake
Beauty Parlor: 1 employee / <$55.789 $109.00 $55.79 $75.00 $69.00 $110.00 Restaurant: 3 Employees / $150,000 $234.00 $429.03 $232.50 $300.32 $350.00 General Retail Store: 10 Employees / $254.00 $700.00 $499.21 $387.50 $575.00
Residential Rental: 8 Employees / $628.80
$304.00 $212.50 $628.80 $550.00
Dental Office: 20 Employees / $850,000 $254.00 $700.00 $870.00 $1.062.50 $800.00 Professional Firm: 15 Employees /
$215.00 $356.67 $984.00 $445.83 $375.00
Small Contractor: 1 Employee / $75.000 $462.00 $55.00 HaL® $92.00 $198.00 $125.00
Contracting Firm: 3 Employees / Companies
$225.000 (outside) $795.00 $55.00 $150.00 $198.00 $150.00 SECTION 2 -
CATEGORY & TAX
ANALYSIS
Hal® Companies
MODEL 1: EXISTING CATEGORIES WITH SIMPLE
INCREASES
Table 5: Estimated revenue from a simple percentage increase Current 20% 40%
Number of Businesses
Revenue Increase Increase
734* $121,849.00 $146,218.80 $170,588.60
Hal®
Companies
MODELS 2 & 3: GROSS RECEIPTS TAX -
ESTIMATES
Table 6: Key estimates used in the gross-receipts models Number of Businesses Total Business Taxable
Gross Receipts (Est.)
734 $120.7 Million
Hal®
Companies
MODEL 2: GROSS RECEIPTS TAX - SINGLE
GROSS RECEIPTS RATE
Table 7: Model 2-Potential Tax Structure
Tax Basis Tax Rate
Flat Rate $25 Flat Rate (up to $25,000 Gross Receipts)
+ $1.25 per thousand dollars of Gross
Gross Receipts Tax Receipts
(0.00125 x Gross Receipts)
HaL®
Companies
MODEL 2: GROSS RECEIPTS TAX - SINGLE
GROSS RECEIPTS RATE
Table 8: Model 2 - Rough Estimates from a simple gross receipts structure Taxable Gross Tax Amount Tax Amount
Number of Accts Current Revenues
Receipts $1.25/ thousand $1.50/ thousand
734 $119.5 Million $121,849.00 $148.076.53 $174.021.84
*These estimates are heavily dependent on the estimated taxable gross receipts being close to the actual gross receipts in the city.
Hdl®
Companies
MODEL 2: HIGHLIGHTS & IMPACT REVIEW
Chart 10: Estimated Effective Tax Rates Under A Simple Gross Receipt Model Current vs. Proposed Effective Tax Rates • Current Tax Structure = $1.25 per $1,000
# $1.50 per $1,000
0.217%
Small Business 0.114%
0.122%
0.071%
Medium Business 0.124%
- 0.147%
0.036%
Large Business 0.125%
0.149%
0.00% 0.05% 0.10% 0.15% 0.20% 0.25%
Hd®
Companies
MODEL 3: GROSS RECEIPTS TAX -
CLASSIFICATION-BASED RATES
Table 9: Basic tax structure for classification-based gross receipts Categories Minimum Rate Tax Rate 3A Tax Rate 3B
CONTRACTOR 0.002 X Gross 0.0025 X Gross
GENERAL COMMERCE/RETAIL 0.001 X Gross 0.0015 X Gross
$25 (GR less than
RENTAL (COMMERCIAL & RESIDENTIAL) 0.002 X Gross 0.0025 X Gross $25,000)
SERVICE 0.002 X Gross 0.0025 X Gross
PROFESSIONAL 0.003 X Gross 0.0035 X Gross
HdL®
Companies
MODEL 3: GROSS RECEIPTS TAX -
CLASSIFICATION-BASED RATES
Table 10: Estimated revenue from classification-based gross receipts Est. Annual Est. Annual
Number Est. Taxable Gross Current Taxes Gross Gross
Business Type
of Accts Receipts* Receipts Tax Receipts Tax
Model 3B
Contractors 110 $13,030,000.00 $35,650.00 $24,200.00 $29.562.50 General Business 46 $25.780.328.30 $27.587.00 $25,860.33 $38.215.49 Rental 347 $21,733,056.00 $29,428.00 $35.291.11 $41,945.14 Service 222 $56.072.840.00 $26,761.00 $107.795.68 $133.357.10 Professional $4,140,000.00 $2,423.00 $11,970.00 $13.927.50 734 $120,756,224.30 $121,849.00 $205,117.12 $257,007.73 *These estimates are heavily dependent on the estimated taxable gross receipts being close to the actual gross receipts in the city.
Hal®
Companies
PROPOSED RATES COMPARISONS
Table 11: Comparing Gross-Receipt Models By Hypothetical Business Type Model 2 Model BA
City's Gross Receipt
Sample Business Current Gross Tulare's Exeter's. Visalia's Woodlake's Rates $1.50/ Receipts Current Rates Current Rates Current Rates Current Rates Thousand
Beauty Parlor: 1 employee /
<$55,789 $109.00 $71.18 $55.79 $75.00 $80.00 $69.00 $110.00 Restaurant: 3 Employees /
$150,000 $234.00 $212.50 $150.00 $232.50 $80.00 $300.32 $350.00 General Retail Store: 10
Employees / $716,163 $254.00 $1,061.74 $716.16 $387.50 $80.00 $499.21 $575.00 Residential Rental: 8
Employees / $628,800 $304.00 $930.70 $1,232.60 $212.50 $80.00 $628.80 $550.00 Dental Office: 20 Employees
/$850,000 $254.00 $1,262.50 $2,500.00 $870.00 $80.00 $1,062.50 $800.00 Professional Firm: 15
Employees/$1,100,000 $215.00 $1,637.50 $3,250.00 $984.00 $80.00 $445.83 $375.00 Employee 1373,000
(outside) $462.00 $100.00 $125.00 $92.00 $80.00 $198.00 $125.00 Contracting Firm: 3
Employees/$225,000 $795.00 $325.00
(outside) $425.00 $150.00 $80.00 $198.00 $150.00
Estimated Totals $2,627.00 $5,601.13 Hal®
$8,454.55 $3,003.50 $640.00 $3,401.67 $3,035.00
Companies
PROPOSED RATES COMPARISONS
$1.400.00
• Current = Model 2 ($1.25/$1000) = Model 3A
$1.200.00
Chart 11: Average
Revenue Yield Per Model
|$1.000.00
By Business Category
$800.00
$400.00
$200.00
Hdl®
CONTRACTORS GENERAL PROFESSIONAL RENTAL I COMMERCIAL & SERVICE
COMMERCE/RETAIL RESIDENTIAL
Companies
PROPOSED RATES COMPARISONS
Current vs. Proposed Effective Tax Rates
Current Tax Structure * Model 2 Tax Rate Structure ($1.50/1000) = Model 3A Tax Rate Structure
0.218%
Chart 12: Equity
Small Business 0.124%
of Models
-0.138%
0.097%
Medium Business 0.147%
- 0.180%
0.036%
Large Business 0.149%
- 0.164%
Hdl®
0.00% 0.05% 0.10% 0.15% 0.20% 0.25%
Companies
Hdl® Companies
Q&A
City of Farmersville, CA
Repori
Comprehensive Water & Sewer
Utility Rate Study
CITY OF
FARMERSVILLE
FARMERSVILLE
CITY HALL
M WILLDAN
estran City of
FARMERSVILLE
FARMERS VILLE
TABLE OF CONTENTS
TABLE OF CONTENTS ... i
Section 1 - Executive Summary.. ..1
1.1 Introduction. ...1
1.2 Overview of the Rate Study Process.. 1
1.3 Summary of Proposed Rates.. ................3
Section 2 - Revenue Sufficiency Analysis... ....6
2.1 Financial Planning Principles. 6
2.2 Existing Rates. 6
2.3 Revenue Sufficiency Process. 9
2.3.1 Budget 9
2.3.2 Capital Improvement Plan (CIP) 9
2.3.3 Debt Service ...10
2.3.4 Gross and Net Revenue Requirement 11
2.4 Customers & Billable Flows.... ...12
2.4.1 Customer Billing Analysis... ...12
2.5 Financial Projections Under Existing Rates... ...13 Section 3 - Cost-of-Service (COS) Analysis. ..16
3.1 General ...16
3.2 Water Cost-of-Service.... ...16
3.2.1 Peaking Factors...... 16
3.2.2 Functional Unbundling of Revenue Requirements.. ..18
3.2.3 Classification of Water System Costs .19
3.2.4 Allocation to Customer Classes and Unit Cost Development ..20
3.2.5 Rate Design by Unit Cost.. ..22
3.2.6 COS and Revenue Check.. . 25
3.3 Sewer Cost-of-Service............ ..26
3.3.1 Functional Unbundling of Revenue Requirements .26
3.3.2 Classification of Revenue Requirements ..27
W WILLDAN Water & Sewer Rate Study - Draft Report
FINANCIAL SERVICES
February 7, 2024
City of
Сонания FARMERSVILLE
3.3.3 Allocation to Customer Classes and Unit Cost Development ...28
3.3.4 COS and Revenue Check.. ...30
Section 4 - Proposed Test Year Rates ..... ...31
4.1 General.... ...31
4.2 Typical Monthly Bill Comparison... ..34
4.3 Rate Comparison with Other Utilities ..36
Section 5 - Projected Operating Results ...38
5.1 General... ...38
5.2 Projected User Rate Revenues ..38
5.3 Debt Service Coverage ..41
5.4 Summary of Projected Operating Results ...42
Section 6 - Conclusions and Recommendations ..46
6.1 Disclaimers. ...46
6.1.1 General Disclaimer ..... ..46
6.1.2 Municipal Advisory Disclaimer.. ...46
6.2 Conclusions. ..47
6.3 Recommendations ...48
WWILLDAN ii Water & Sewer Rate Study - Draft Report
INANCIAL SERVICE
February 7, 2024
City of
FARMERSVILLE
FARMERSVILLE
Section 1 - Executive Summary
1.1 Introduction
Willdan Financial Services (Willdan) is pleased to submit to the City of Farmersville (the "City") the Water and Sewer Rate Study report (the "Report") for your consideration. Willdan has completed the study of the City's water and sewer rates and summarized the results of the investigations, analyses, and conclusions in this Report.
The City owns and operates water wells, storage tanks, and transmission and distribution facilities, and also provides sewer treatment and collection services to residential and nonresidential customers within its incorporated limits. The City has focused a significant amount of attention and effort on strategic planning measures in all areas of utility operations to ensure that it is able to provide uninterrupted service to its customers, and so that it remains prepared for the future. As part of its ongoing strategic planning efforts, the City commissioned Willdan to perform a water and sewer rate study to analyze the revenue sources and expenditures of the utility system and provide recommendations for proposed rate and/or rate structure adjustments to meet the financial and administrative goals and objectives of the City. The primary objectives of the rate study include:
• Full recovery of costs related to utility operations (i.e., operating and maintenance costs, debt, and other expenditure requirements):
• Cost-based rate structures;
• Consistency with American Water Works ("AWWA") and Water Environment Federation ("WEF") guidelines;
• Equity among customer classes;
• Meeting substantive and procedural Proposition 218 requirements; • Administrative efficiency (i.e., easy to understand and implement); and • 5-Year capital funding plan.
1.2 Overview of the Rate Study Process
This study develops water and sewer financial plans for a 5-year planning period and includes the development of cost-based rates through a cost-of-service and rate design analysis. Utility rates must be set at a level such that operating, maintenance, debt, and capital expenses are funded with the revenues received from customers. In addition, the revenues generated from utility rates must only be used for this purpose and for each system separately. This is a significant point, as failure to achieve the needed revenues can lead to unacceptable service levels and inadequately maintained facilities. Therefore, a rate study typically consists of following three interrelated analyses:
1 Page
City of
FARMERSVILLE
1. Financial Planning/Revenue Requirement Analysis: Creates a five-year plan to support an orderly, efficient program of on-going maintenance and operating costs, capital improvement and replacement activities, debt financing, and retirement of outstanding debt. In addition, the plan should fund and maintain appropriate reserve balances based on industry standards, as well as the City's fiscal policies and specific needs.
Il. Cost-of-Service Analysis: Identifies and apportions annual revenue requirements (i.e., expenditures) to operational and functional cost components based on the demand placed on the utility system. The purpose of this analysis is to develop rates that generate revenues relatively proportionate to the share of each utility's costs. This objective is consistent with industry standards as well as the requirements of Proposition 218.
IlI. Rate Design: Develops an equitable and proportionate fixed/variable schedule of rates for the City's customer base. The policy objectives are coordinated with Proposition 218 (Prop 218) requirements and cost-of-service objectives to achieve a balance between customer equity and financial stability goals. The balance of fixed and variable charges considers the need for a stable revenue source (the fixed charge and the variable component of the rate structure such that customers placing higher costs on the system (through higher water and sewer use) incur a higher bill reflective of their impact on the system.
Revenue Requirement Analysis
Compares the revenues to the expenses of the utility
to determine the overall rate adjustment required
Cost of Service Analysis
Allocates the revenue requirements to the fixed/variable cost components based on cost of service.
Rate Design Analysis
Considers both the level and structure of the rate design to collect the appropiate and targeted level of revenues.
This rate study utilizes generally accepted rate-making principles and standards established by industry experts such as the AWWA in its "MI - Principles of Water Rates Fees and Charges" manual and WEF in its "Financing and Charges for Sewer Systems, Manual of Practice No. 27". The principles established by these entities are used as guidelines in the development of the proposed rates for water and sewer. A discussion of some of the key principles of ratemaking is presented in the following subsection of this Report. 2| Page
City of
FARMERSVILLE
FARMERSVILLE
1.3 Summary of Proposed Rates
The rate study methodology applied in the development of updated water and sewer rates, outlined in this Report, consisted of reviewing the historical operating results of the water and sewer utility systems, historical customer billing and consumption data, analyzing the budget to identify the net revenue requirements to be recovered from user rate revenues, performing general cost-of-service allocations based on the rate components and functional cost categories, and revising the rates based on the applicable costs and expenditures to be recovered from user rates. In addition, an analysis of the system customers and usage characteristics was performed to identify the rate determinants since they drive the recommended rates, which are the primary sources for generating revenues.
The allocated revenue requirements were utilized in conjunction with the rate determinants and rate structure to develop proposed rates for water and sewer.
The findings and conclusions of the rate analysis, as well as the resulting revised rate recommendations, were utilized to develop a projection of future operating results for a 5- year planning period from Fiscal Year (FY) 2024 (beginning July 1, 2023) through FY 2028 (ending June 30, 2028), herein referred to as the "Projection Period". The purpose for developing the 5-year projections is to demonstrate the financial capability of the water and sewer revenues to support system operations and fund planned capital improvements. The analyses, findings and accompanying recommendations are presented in the subsequent sections of the Report.
The water and sewer rate analyses described in the Report are performed based on the general guidelines of the defined objectives, as well as common industry standards for setting utility rates. In addition to focusing on these major objectives, the rate analyses performed herein will consider other factors in designing rates. As will be discussed in detail later in the Report, such other rate considerations generally include sensitivity to the impact on existing customers, the relative comparability with neighboring utilities and the City's existing rate structure. The proposed water and sewer rates for assumed implementation effective May 1, 2024 (or other such date as determined by the City) for FY 2023/24 (FY 2024, herein referred to as the "Test Year") are provided in Tables 1 and 2, respectively. The existing rates are provided in Tables 3 and 4, respectively.
3 | Page
City of
FARMERSVILLE
FARMERSVILLE
Table 1 - Proposed Monthly Water Rates
Description Rate
Monthly Base Charge by Meter Size:
Single-Family Residential (3/4 Inch and 1 Inch) $ 24.38 3/4 Inch 24.38
1.0 Inch 40.63
1.5 Inch 3 81.26
2.0 Inch $ 130.01
3.0 Inch 243.77
4.0 Inch $ 406.28
6.0 Inch $ 812.55
8.0 Inch $ 1,300.08
10.0 Inch $ 1,868.87
Volumetic Rates Per 100 Cubic Feet - Residential:
0 - 1,500 Cubic Feet $ 0.3230
Over 1,500 cubic feet $ 0.6945
Volumetric Rates Per 100 Cubic Feet - All Other:
All Flow 0.4875
4| Page
City of
FARMERSVILLE
FARMERSVILLE
Table 2 - Proposed Monthly Sewer Rates
Description Rale
Monthly Base Charge:
Residential ''!
Single-Family Residential 56.76
Multiple-Dwelling Unit $ 49.75
Non-Residential
Service Stations, Garages, Churches, Social,
Fraternal, Non-Profit, Other Retail/Service $ 31.91
Restaurants, Cafes, Drive-Ins, Grocery Stores,
$ 31.91
Bars, Car Washes, Laundromats
Hotels (per unit), Motels (per unit), Rooming
Units (per unit), Camps (per unit), Auto Courts $ 31.91 with Cooking Faclities (per unit)
Hotels (per unit), Motels (per unit), Rooming
Units (per unit), Camps (per unit), Auto Courts $ 31.91 without Cooking Facilities (per unit)
Public Schools 31.91
Professional Offices or Other Business $ 31.91
Volumetric Rates Per 100 Cubic Feet:
Residential
Single-Family Residential $ 0.00
Multiple-Dwelling Unit $ 0.00
Non-Residential
Service Stations, Garages, Churches, Social,
$ 3.33
Fraternal, Non-Profit, Other Retail/Service
Restaurants, Cafes, Drive-Ins, Grocery Stores,
$ 3.33
Bars, Car Washes, Laundromats
Hotels (per unit), Motels (per unit), Rooming
Units (per unit), Camps (per unit), Auto Courts $ 3.33
with Cooking Facilities (per unit]
Hotels (per unit), Motels (per unit), Rooming
Units (per unit), Camps (per unit), Auto Courts $ 3.33
without Cooking Facilities (per unit)
$ 1.91
Professional Offices or Other Business $ 3.33
Notes:
[!] All single-family and multi-family customers pay only a flat monthly fee per dwelling unit regardless of usage.
5| Page
City of
FARMERSVILLE
Section 2 - Revenue Sufficiency Analysis
2.1 Financial Planning Principles
While the individual rates for each of the utility systems vary based on a variety of factors, rates should be consistent with common rate-making principles within the utility industry. The guiding principle is that rates designed for any utility should provide a reasonable balance between several key factors. In general, the utility rates should:
> Generate a stable revenue stream that, when combined with other sources of funds, is sufficient to meet the expenditure requirements and goals of the system; › Be based upon the proportionate cost of providing the service and not exceed the cost of providing the service - in compliance with California Proposition 218; • Be equitable - that is, they should generate revenue from customer classes in a manner which is reasonably in proportion to the cost to provide service to that customer class;
• Be easy to understand by customers; and
• Be easy to administer by the utility.
Striking the appropriate balance between the principles of ratemaking is the result of a detailed process of evaluation of revenue requirements and cost-of-service, and how those translate into the rate design alternatives which meet legal requirements and the specific objectives of the utility under the circumstances in which it operates.
2.2 Existing Rates
The City has established user rates for water and sewer service that are applied to retail customers of the system. The rates charged for water and sewer service are approved by the City Council and are not subject to administrative review or approval by any other local or state agency. The City has historically adjusted rates, as necessary, to provide for recovery of financial obligations including operating expenses, debt service, capital expenditures and any other expenses and transfers.
The existing water rates consist of 1) a monthly base rate that designates the minimum amount a customer will pay, which includes 1,500 cubic feet of water, and 2) a volumetric rate per 100 cubic feet based upon the amount of monthly metered water usage over 1,500 cubic feet. The monthly base rate varies based on meter size. The volumetric rates apply a uniform rate structure for all water usage over 1,500 cubic feet, such that the rate per 100 cubic feet remains the same regardless of the amount of water usage. The existing rates for water service are provided in Table 3.
6 Page
City of
FARMERSVILLE
(FARMERSVILLE
Table 3- Existing Monthly Water Rates
Description Rate
Monthly Base Charge by Meter Size:
Single-Family Residential (3/4 Inch and 1 Inch) $ 27.32 3/4 Inch 27.32
1.0 Inch 27.32
1.5 Inch $ 43.71
2.0 Inch 43.71
3.0 Inch $ 68.29
4.0 Inch 68.29
6.0 Inch 109.26
8.0 Inch 109.26
10.0 Inch N/A
Volumetric Rates Per 100 Cubic Feet - Residential:
0 - 1,500 Cubic Feet $ 0.0000
Over 1,500 cubic feet $ 0.9300
Volumetric Rates Per 100 Cubic Feet - All Other:
0 - 1,500 Cubic Feet 0.0000
Over 1,500 cubic feet 0.9300
The existing sewer rates consist of 1) a monthly base rate (flat monthly fee) that applies to all single-family residential and multi-family residential customers by dwelling unit regardless of their usage, 2) a monthly fixed service charge that designates the minimum amount a non- residential customer will pay by account and 3) a non-residential volumetric rate component that recovers the costs of treatment and disposal of wastewater. Residential customers pay only a monthly flat fee, and therefore, do not pay a volumetric rate based on their respective sewer discharge such as the non-residential customer classes. The existing rates for sewer service are provided in Table 4.
7| Page
City of
FARMERSVILLE
FARMERSVILLE
Table 4 - Existing Monthly Sewer Rates
Description Rate
Monthly Base Charge:
Residential ''
Single-Family Residential 56.61
Multiple-Dwelling Unit $ 56.6l
Non-Residential
Service Stations, Garages, Churches, Social, 56.61
$
Fraternal, Non-Profit, Other Retail/Service
Restaurants, Cafes, Drive-Ins, Grocery Stores,
$ 13.00
Bars, Car Washes, Laundromats
Hotels (per unit), Motels (per unit), Rooming
Units (per unit), Camps (per unit), Auto Courts $ 14.53 with Cooking Facilities (per unit)
Hotels (per unit), Motels (per unit), Rooming
Units (per unit), Camps (per unit), Auto Courts $ 11.53 without Cooking Facilities (per unit)
Public Schools $ 13.00
Protessional Offices or Other Business 53.03
Volumetric Rates Per 100 Cubic Feet:
Residential
Single-Family Residential $ 0.00
Multiple-Dwelling Unit $ 0.00
Non-Residential
Service Stations, Garages, Churches, Social,
0.00 Fraternal, Non-Profit, Other Retail/Service
Restaurants, Cafes, Drive-Ins, Grocery Stores,
$ 1.15
Bars, Car Washes, Laundromats
Hotels (per unit), Motels (per unit), Rooming
Units (per unit), Camps (per unit), Auto Courts $ 0.00
with Cooking Facilities (per unit)
Hotels (per unit), Motels (per unit), Rooming
Units (per unit), Camps (per unit), Auto Courts $ 0.00
without Cooking Facilities (per unit)
Public Schools $ 1.79
Professional Offices or Other Business $ 0.00
Notes:
[1] All single-family and multi-family customers pay only a flat monthly fee per dwelling unit regardless of usage.
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2.3 Revenue Sufficiency Process
In evaluating whether the existing rates will generate sufficient revenue to meet the expenditure requirements of the water and sewer systems, the annual expenditures required (herein referred to as the "Revenue Requirements") must be developed. The Revenue Sufficiency Analysis compares the forecasted revenues of each system under existing rates (including customer growth) to the projected Revenue Requirements.
2.3.1 Budget
The revenue sufficiency analysis performed as part of this study utilizes the City's budget for FY 23/24 (the "Budget" for FY ending June 30, 2024) as one variable to determine the gross Revenue Requirements to be recovered from user rates over the Projection Period. The Budget, as prepared by the City, is provided on a line-item basis, and is used for projecting the budgeted financial needs for the Test Year and the remainder of the Projection Period.
In developing the rate analysis, certain adjustments are made such that the expenditures are categorized into either Operating and Maintenance (O&M) expenses or non-operating expenses. The O&M expenses are primarily those ongoing costs for labor, materials, supplies, services, etc., required to manage and operate the utility system on a day-to-day basis while maintaining a dependable level of service. The O&M requirements are generally a function of a budgetary process and are directly related to the level of service provided to customers of the utility system. The non-operating expenses include such items as capital outlay and any other expenses & transfers.
The Budget also identifies estimated revenues to be derived from sources other than the retail water and sewer user rates. Such other revenue sources include interest earnings on investments, water meter sales and various other miscellaneous service charges. The revenues generated from the other sources are applied to the gross Revenue Requirements to reduce the amount of revenue required from user rates. The result is the net Revenue Requirement.
2.3.2 Capital Improvement Plan (CIP)
The City provided a list of anticipated capital projects to be funded over the Projection Period. These are also included in the development of the gross Revenue Requirements. The capital projects provided by and identified by the City in the CIP are required in order to maintain uninterrupted service to customers by investing in improvements, repairs, or replacements of aging system components as they wear over time. The City provided cost estimates for the identified capital projects by the fiscal year in which they are estimated to be undertaken for each system. These capital costs were then used in the analysis, along with O&M and non-operating expenses, to determine the gross revenue requirements for both the water and sewer systems. The capital projects included in the CIP, along with their assumed funding sources, for the Projection Period are provided in Tables 5 and 6. 9 Page
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Table 5 - Water CIP
Description Funding Fiscal Year Ending June 30,
Source 2024 2025 2026 2027 2028
Water projects
Birch Water Line Relocation Cash $ 35,000 $ 326,000 $ $ Master Plans for Sewer, Water, and Storm Drain Cash 70,000 Water Storage Tank (pending future grant) Grant 18,000 3,400,000 Urban Water Management Plan Cash 53,000
New Corporation Yard for Public Works Cash 83,250 83,250 Skid Steer Loader (Bobcat) Cash 49,000
Digital Sign Cash 15,000
Public Works Backhoe Cash 57,333
Pick Up Trucks (F-150 x2) Cash 26,656
Downtown Specific Plan Cash 15,000
General Plan Update Cash 58,666 43,175
Line Replacement Program Cash 250,000 250,000
Vehicle Replacement Cash 75,000 75,000
Total Water projects $ 311.655 $ 470,425 $ 3,551,250 $ 325,000 325,000 Table 6 - Sewer CIP
Funding Fiscal Yeor Ending June 30%
Description
Source 2024 2025 2026 2027 2028
Sewer projects
Master Plans for Sewer, Water, and Storm Drain Cash 70,000 $ $ $ $ Solar Plant at WWTP (pending future grant) Grant 5,000,000 New Corporation Yard for Public Works Cash 83,250 83,250 Skid Steer Loader (Bobcat) Cash 49,000
Digital Sign Cash 15,000
Vacuum Truck Cash 384,500
Public Works Backhoe Cash 57,333
Pick Up Trucks (F-150 x2) Cash 26,656
Downtown Specific Plan Cash 15,000
General Plan Update Cash 58,666 43.175
Line Replacement Program Cash 250,000 250,000
Vehicle Replacement Cash 75,000 75,000
De-Watering System Asset Purchase Cash 934,341
Total Sewer projects $ 6,595,496 $ 126,425 $ 98,250 $ 325,000 $ 325,000
2.3.3 Debi Service
The City currently has outstanding debt for the sewer utility only. There is no current outstanding debt or assumed future debt issuances relating to the water system. A debt service coverage ratio of 1.10 times is required to be maintained on an annual basis, based on the City's current bond covenants associated with this existing debt. In simple terms, this means the utilities must have $1.10 in net operating revenues for every $1.00 of debt service they are committed to pay on existing debt. The debt service coverage is calculated by dividing net operating revenues (revenues less operations and maintenance expenses) by annual debt service. The annual existing debt payments over the Projection Period are provided in Table 7.
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Table 7 - Annual Debt Service Payments
Description Projected for Fiscal Year Ending June 30
2024 2025 2026 2027 2028
Water Annual Debt Service !!!
Annual Debt Service $
Total Water Annual Debt Service $ $
Sewer Annual Debt Service
2018 WWTP Project - SRF 491,214 491,214 $ 491.214 $ 491,214 491,214 2018 WWTP Proiect - USDA 207,674 208,125 207,843 $ 207,505 $ 208,436 Total Sewer Annual Debt Service 698,888 699,339 699.057 $ 698,719 $ 699,650 Total Annual Debt Service $ 698,888 $ 699,339 $ 699.057 $ 698,719 $ 699,650 Notes:
(1) There is no outstanding debt service associated with the water system; therefore, the annual debt service payment is $0.00.
2.3.4 Gross and Net Revenue Requirement
The proposed water and sewer rates developed in the Report are designed for assumed implementation for FY 2023/24 (the Test Year as previously defined). The projected Test Year gross and net Revenue Requirements are estimated by utilizing the Budget, actual debt service requirements as provided in the applicable debt service schedules, capital estimates and assumed funding sources of capital projects as provided by the City, and transfers. The Test Year Revenue Requirements that are used for developing the user rates proposed herein are detailed in Appendix A at the end of this report and summarized in Table 8.
Table 8 - Test Year Revenue Requirements - FY 2024
Descriphon Water Wastewater Total
Total O&M $ 1,267,913 1,850,203 3,118,116
Debt Service 698,888 698,888
Other Expenditures & Transfers 1,168 (327,856) (724,433) Gross Revenue Requirement $ 1,269,081 $ 2,221,235 $ 3,092,571 Less Other Revenues (37,549) (138,817) (176,366)
Net Revenue Requirement $ 1,231,532 $ 2,082,418 $ 2,916,205 The projected Revenue Requirements for the water and sewer systems over the entire Projection Period are provided in Tables 9 and 10.
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Table 8 - Water Revenue Requirements for the Projection Period Description Projected for Fiscal Year Ending June 30
2024 2025 2026 2027 2028
Total O&M $ 1,267,913 $ 1,331,312 $ 1,397,880 $ 1,467,777 1,541,170 Existing Debt Service
Future Debt Service
Other Expenditures & Transfers 1,168 32,794 125,289 232,428 355,888 Gross Revenue Requirement $ 1,269,081 $ 1,364,106 $ 1,523,169 $ 1,700,205 $ 1,897,058 Less Other Revenues (37,549) (37,549) (37,549) (37,549) (37,549) Net Revenue Requirement $ 1,231,532 $ 1.326,557 $ 1.485,620 $ 1.662,656 $ 1,859,509 Table 10 - Sewer Revenue Requirements for the Projection Period Description Projecled for Fiscal Year Ending June 30
2024 2025 2026 2027 2028
Total O&M $ 1,850,203 $ 1,732,713 1,819,35l 3 - 1,910,316 $ 2,005,831 Existing Debt Service 698,888 699,339 699,057 698,719 699,650 Future Debt Service
Other Expenditures & Transfers (327,856) (61,680) 70,210 167,204 269,596 Gross Revenue Requirement $ 2,221,235 $ 2,370,372 $ 2,588,618 $ 2,776,239 $ 2,975,077 Less Other Revenues (138,817) (138,817) (138,817) (138,817) (138,817) Net Revenue Requirement $ 2,082.418 $ 2,231,555 $ 2,449,801| $ 2,637,422 $ 2,836,260
2.4 Customers & Billable Flows
The rate study performed herein is heavily reliant upon a detailed analysis of system customers and accompanying usage and demand characteristics. The existing utility customer base and metered/billable flows provide the determinants utilized in the cost-of- service analysis, and ultimately in calculating the monthly user rates and charges, which become the foundation for projecting future revenues generated by the water and sewer systems.
It is important to note that the customer and flow analysis focuses primarily on the customer classifications that will be subject to and impacted by the user rates and charges to be developed in the Report. This consists of the general service (retail) customers that currently pay for utility services pursuant to the existing user rates and charges as previously detailed.
For the purposes of the rate study, it is these customers and their accompanying usage characteristics that will generate revenues based upon the proposed user rates and charges.
2.4.1 Customer Billing Analysis
For the rate study, detailed monthly billing information was provided for each individual customer. This data offered a breakdown of water and sewer customers by class, usage characteristics and billed charges. The historical billing data was queried from the City's electronic billing records. An analysis of the billing data was conducted to obtain an understanding of existing customers, customer classes, and metered usage per customer 12 Page
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class. In accordance with the data, as well as discussions with the City staff, the utility system provides service to various identifiable retail customer classes consisting of:
• Single-Family Residential
• Multi-Family Residential
• Commercial/Non-Residential
• Government, and
• Schools.
Each of these customer classes embodies certain common characteristics in their utility use and service demand profiles that provide the basis for establishing an equitable allocation of system costs. The billing data was utilized to identify the number of customer accounts within each class, the applicable equivalent residential units (ERUs) based on meter size, the metered/billable usage profiles, and strength characteristics.
The historical customer data was also utilized to establish growth trends for each customer classification. The growth trends were then used to project the average number of customers within each class for the Test Year plus the remaining years of the Projection Period.
2.5 Financial Projections Under Existing Rates
The projected customers and accompanying billable flows are applied to the existing rates to develop a projection of user rate revenues that would be generated under existing rates.
The revenues are then compared to the projected revenue requirements/expenditures to determine if revenue adjustments are needed. Based on this comparison, it is projected that under the existing rates, neither the water nor sewer systems would meet their projected operating (0&M) financial obligations, debt service payment or coverage requirements, cover costs of capital projects, and be able to make transfers that are anticipated to be funded with cash reserves. Therefore, revenue increases are required to generate additional cash to fund projected costs of operations and capital projects, meet debt service requirements, and maintain adequate cash reserves. In addition, the City has established an objective of maintaining a target of at least 180 days of cash reserves to help fund ongoing operations in the event of periodic fluctuations in cash flow, and to address unexpected needs that may need to be funded with cash. The cash-flow statements outlining the projected operating results under existing rates are summarized in Tables 11 and 12 for the water and sewer systems, respectively. The proposed rates and projected financial results are addressed in the subsequent sections of this Report. 13 | Page
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Table 11 - Water System Projected Operating Results Under Existing Rates Projected for Fiscal Year Ending June 30, (S1.0005)
Description Existing Proposed
2025 2026 2027 2028
2024 2024
Revenues:
Water Sales 1,162 1,162 1,296
Other Revenues
Total Revenues $ 1,199 1,199 $ 1,235 $ 1,268 $ 1,301 1,334 O&M Expenses (1,268) (1,268) (1,331) (1,398) (1,468) (1,54l] Nef Income For Debt $ (69) $ (69) $ (96) $ (130) $ (167) $ (207) Debt Service ':
Existing $ - $ - $
Future
Total Debt Service $ - $ • $ • $ - $ - $
Balance After Debt (69) $ (69) $ .. (96) $ (130) $ (167) $ (207) Other Expenditures & Transfers:
Capital Outlay - $ - $ - $
Transfers In
Transfers Out
Total Other Expenditures & Transfers $ - $ - $ - $ - $
Net Results $ (69) $ (69) $ (96) $ (130) $ (167) $ (207) Fund Balance Activity:
Operating Fund
Beginning Balance $ 1,252 $ 1.252 872 $ 323 $ 42 $ (450) Deposit/(Withdrawal) from Operations (69) (69) (96) (130) (167) (207) Capital Projects From Capital Improvement Plan (312) (312) (453) (151) (325) (325) Total Operating Fund Balance $ 872$ 872$ 323 $ 42 $ (450) $ (982) Debt Coverage '" N/A N/A N/A N/A
Notes:
[1] There is no outstanding debt service associated with the water system; therefore, the annual debt service payment is $0.00 and there is no applicable debt service coverage ratio calculation. 14 | Page
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Table 12 - Sewer System Projected Operating Results Under Existing Rates Projecled for Fiscal Year Ending lune 30 ($1.000s
Description Exiling Proposed
2025 2026 2027 2028
2024 2024
Revenues:
Wastewater Sales $ 2,025 2,025 2,087 2,163 2,239 2,315
Other Revenues 139 139 139 139 139
Total Revenues 2,164 2,164 $ 2,226 $ 2,302 $ 2,378 $ 2,454 O&M Expenses (1,850) (1,850) (1,733) (1,819) (1,910) (2,006) Net Income For Debt $ 314 $ 314 $ 493 $ 482 $ 468 $ 448 Debt Service:
Existing $ 699 $ 699$ 699 s 699 $ 699 $ 700
Future
Total Debt Service $ 699 $ 699 $ 699 $ 699 $ 699 $ .700 Balance After Debt $ (385) $ (385) $ 207) $ (217) $ (231) $ (251) Other Expenditures & Transfers:
Capital Outlay - $ - $ - $ - $ - $
Transfers In
Transfers Out
Total Other Expenditures & Transfers $ - $ • $ • $ •: $ •$ Net Results $ 385) $ (385) $ (207) $ (217) $ (231) $ (251) Fund Balance Activity:
Operating Fund
Beginning Balance $ 5,524 $ 5,524 $ 3,543 $ 3,210 $ 2,896 $ 2,339 Deposit/(Withdrawal) from Operations (385) (385) (207) (217) (231) (251) Capital Projects From Capital Improvement Plan (1,596) (1,596) (127) (98) (325) (325) Total Operating Fund Balance 3,543 3,543 3,210 $ 2,896 $ 2,339 $ 1,763 Ending Fund Balance $ 3,543 3,543 3,210 2,896 2,339 $ 1,763 Debt Coverage 0.45 0.45 0.70 0.69 0.67 0.64
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Section 3- Cost-of-Service (COS) Analysis
3.1 General
In accordance with the American Water Works Association (AWWA) Manual Ml, the costs incurred in a water utility system are generally driven by specific service requirements imposed on the system by its customers. The primary service requirements that drive costs include annual flow volumes, peaking flow volumes (i.e., peak day, peak hour), the number of customers and the types of customers served. The water cost-of-service analysis performed for this rate study utilizes a common industry approach known as the base-extra capacity method. The sewer cost-of-service analysis involves an examination of flows, strength factors, the number and type of customers served in accordance with the California State Water Resources Control Board (SWRCB) Revenue Program Guidelines for Wastewater Agencies.
3.2 Water Cost-of-Service
The COS utilizes the revenue requirements for the Test Year as the cost basis. The Test Year revenue requirements as identified in the previous section of the Report are functionally unbundled, classified and allocated to customer classes to determine the proportionate cost of service by class. More detail relating to the water COS approach can be found in Appendix B.
3.2.1 Peaking Factors
System-wide peaking factors are used to derive the cost component allocation bases for Base (Delivery), Max Day, and Max Hour costs. Base represents average daily demand during the year, which has been normalized to a factor of 1.00. Based on data provided by City staff, the average water demand was 1.25 million gallons per day (MGD) and the Max Day water demand was 2.36 MGD in the most recent full year. The Max Day peaking factor shows that the system-wide Max Day demand is 1.89 (2.36 Max Day MGD divided by 1.25 Base Delivery) times greater than the average daily demand. The City does not track Max Hour demand; therefore, Max Hour demand is not factored into this analysis. The system- wide peaking factors are shown in Table 13.
The Max Day allocations are calculated as follows:
Base Delivery: 1.25 / 2.36 × 100% = 52.95%
Max Day: (2.36 - 1.25) / 2.36 x 100% = 47.05%
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Table 13 - Peaking Factors System-Wide
Demand
Descripion Factor Base Max Day Total
(MGD)
Avg Day 1.25 1.00 100.00% 0.00% 100.00%
Max Day 2.36 1.89 52.95% 47.05% 100.00%
Max Day Customer specific peaking factors are then developed, based on the maximum monthly usage divided by average monthly usage for each customer class and tier. Since daily peaking statistics are not available for individual customer classes, the maximum month peaking factor from the customer/billing data is used as a proxy for the class-specific Max Day peaking factors. Using the customer billing data, peaking factors by customer class and fier were calculated as shown in Table 14.
Table 14 - Peaking Factors by Customer Class
Description Max Day
Peaking Factor
Single-Family Residential
Tier 1 - 0 - 1,500 Cubic Feet 1.24
Tier 2 - Over 1,500 Cubic Feet 2.24
All Other Classifications
All Flow 1.69
Once peaking factors are determined, the Max Day demand of each customer class is calculated and shown in Table 15. Total annual usage is derived from the customer data and then converted to an average daily usage by dividing the total annual usage by 365 days in a year. Total Max Day capacity is developed by multiplying the customer-specific peaking factor (from Table 14) by the average daily usage to arrive at the total capacity required to meet each class's Max Day demand. The extra capacity required to meet Max Day demand is calculated by subtracting the average daily usage from the total required capacity for Max Day. The calculation of additional capacity to meet the Max Day demand for each customer class is shown in Table 15.
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Table 15 - Usage and Extra Capacity
Flows Max Day
Descriphon Total Annual Average Total Additional
Peaking
Daily Flow Capacity Capacity
Flow (CCF) Factor
(CCF) (CCF/Day) (CCF/Day)
Single-Family Residential
Tier 1 - 0 - 1,500 Cubic Feet 339,556 930 1.24 1,157 227 Tier 2 - Over 1,500 Cubic Feet 127,799 350 2.24 786 436 All Other Classifications
All Flow 142,018 389 1.69 656 267
Total 609,373 1,670 2,599 929
3.2.2 functional Unbundling of Revenue Requirements
The water system costs are unbundled into operating components consisting of Supply/Treatment, Transmission, Distribution, Customer, and Administration functions. These are the primary services provided by most water utility systems to its customers. A brief description of each component is as follows:
• Supply/Treatment - the costs associated with obtaining and converting raw water to potable water;
• Transmission - the costs associated with major pumping and large diameter line facilities that transmit potable water throughout the system at-large; • Distribution - the costs associated with smaller diameter lines that carry water to individual customer properties;
• Customer - the costs associated with metering, billing, and providing other services to customers (e.g., printing, delivering and collecting utility bills, recordkeeping, etc.);
• Administration - various overhead and other non-operating costs.
The allocation of the functionally unbundled revenue requirements for the Test Year are summarized in Table 16.
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Table 16 - Functionally Unbundled Cost Allocations
Descriphon Tesi Year
Total O&M $ 1,267,913
Existing Debt Service
Future Debt Service
Other Expenditures & Transfers 1,168
Gross Revenue Requirement $ 1,269,081
Less Other Revenues (37,549)
Net Revenue Requirement $ 1,231,532
Functional Unbundled Revenue Requirement
Treatment $
Transmission & Distribution 90,840
Pumping
Customer Service
Admin 924,573
Source of Supply 252,500
Transfers
Existing Bond DS
New Bond DS
CIP 311,700
Non-Rate Revenue (37,549)
Fund Balance M (310,532)
Total $ 1,231,532
Notes:
[I] Represents a transfer from reserves to provide funding for capital outlay and CIP costs.
3.2.3 Classification of Water System Costs
As previously addressed, the functionally unbundled water system revenue requirements are then classified using the base-extra capacity cost allocation method. Applying this methodology, costs are classified into the following categories:
• Base Costs - capital costs and O&M expenses associated with service to customers under average demand conditions. This category does not include any costs attributable to variations in water use resulting from peaks in demand. Base costs tend to vary directly with the total quantity of water used. • Maximum Day/Extra Capacity Costs - costs attributable to facilities that are designed to meet peaking requirements. These costs include capital and operating costs for additional plant and system capacity beyond that required for average usage. For the purposes of this analysis, the max/extra capacity costs are further separated into systemwide facilities and distribution facilities. • Customer Costs - costs associated with any aspect of customer service including billing, accounting, recordkeeping, and meter services. These costs are independent of the amount of water used and the size of the customer's meter and are not subject to peaking factors.
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As the name would indicate, using the base-extra capacity method, the costs are separated between those attributed to base capacity (and demand) and those attributed to extra capacity (and demand). Other components such as treatment, transmission and distribution are allocated based on flows and peaking factors. All customer service-related costs are allocated 100% to customer billing.
Based on discussions with City staff, the general makeup of the customer base is not expected to change, so it is anticipated that the allocation percentages and factors will not change materially during the Projection Period. However, it is important to note that COS analyses are based on the data at a specific point in time (i.e., the most recent fiscal year).
To the extent that weather conditions, economic conditions and customer usage characteristics change during the Projection Period, the cost allocators can be impacted.
The system-wide costs by service characteristic are shown in Table 17.
Table 17 - Classification of Unbundled Revenue Requirements Meters &
Component Base Max Day Total
Services
Treatment $ $ $ $
Transmission & Distribution 48,098 42,742 90,840
Pumping
Customer Service
Admin 924,573 924,573
Source of Supply 133,693 118,807 252,500
Transfers
Existing Bond DS
New Bond DS
CIP 311,700 311,700
Capital Outlay
Non-Rate Rev & Fund Balance (272,423) (40,059) (35,599) (348,081) Total $ 963,850 141,732 125,950 $ 1,231,532
3.2.4 Allocation to Customer Classes and Unit Cost
Development
The functionalized and classified revenue requirements are allocated to customer classes utilizing a unit cost approach as follows:
• Base Costs - Based on relative percentage of Base Annual Usage. • Maximum Day/Extra Capacity System Costs - Based on relative percentage of Extra Capacity for the entire system.
• Maximum Day/Extra Capacity Distribution Costs - Based on relative percentage of Extra Capacity for the distribution system. • Customer Costs - Based on relative percentage of Equivalent Residential Units (ERUs).
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The units of service for each component of cost by customer class (if applicable) are provided in Table 18. The units of service consist of the number of accounts and/or units, ERUs, annual flows in 100 cubic feet and Max Day extra capacity. Accounts and/or units are based on the number of customers as provided in the customer data. ERUs are based on meter equivalencies in accordance with AWWA standards. For reference, Table 21, showing meter equivalency factors follows in the next section (3.2.5) of this report. Base is the total annual usage projected for the test year based on historical customer data. Max Day is the extra capacity demand result as previously developed in Table 15.
Table 18 - Units of Service
Monthly
Rate Class Base (CCF) Max Day
Accounis/ ERUS (CCF/Day)
Unis
Single-Family Residential 2,559 2,563 467,355 662
Tier 1 - 0 - 1,500 Cubic Feet 339,556 227
Tier 2 - Over 1,500 Cubic Feet 127,799 436
All Other Classifications 228 732 142,018 267
All Flow 142,018 267
Total 2,787 3,295 609,373 929
The revenue requirement for each cost component is divided by its respective unit of service to calculate a unit cost. The unit cost for each cost component is demonstrated in Table 19.
Table 19 - Cost Per Unit
Description Meters &
Base Max Day Total
Services
Total Revenue Requirement $ 963,850 $ 141,732 $ 125,950 $ 1,231,532 Units of Service 3,295 609,373 929
ERUs/Month CCF CCF/Day
Cost Per Unit $ 24.38 $ ..0.2326 $ 135.54
ERU/Monthly CCF CCF/Day
The allocation of the revenue requirement to each customer class is determined by multiplying the Units of Service for each customer class (from Table 18) by the Cost per Unit for each cost component (from Table 19). The resulting total cost to be recovered from each customer class by cost component is shown in Table 20. To calculate the Account/Units and ERU Cost of Service by Customer Class, the monthly Units of Service from Table 18 are first multiplied by 12 to determine the total annual Accounts/Units and ERUs being served, then that result is multiplied by the Cost per Unit shown in Table 19. For the Base and Max Day Costs, the Units of Service from Table 18 are multiplied by the Costs per Unit from Table 19. 21 | Page
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Table 20 - Cost of Service by Customer Class and Cost Component Rate Class Max Day
ERUS Base (CCF) Total costs
(CCF/Day)
Single-Family Residential $ 749,824 108,701 89,742 $ 948,266 Tier 1 - 0 - 1,500 Cubic Feet 78,976 30,710
Tier 2 - Over 1,500 Cubic Feet $ 29,724 59,033
All Other Classifications $ 214,026 $ 33,031 $ 36,208 $ 283,266 All Flow $ 33,031 $ 36,208
Total $ 963,850 $ 141,732 $ 125,950 $ 1,231,532
3.2.5 Rate Design by Unit Cost
The unit costs developed in the previous section are used to develop the proposed rates for the Test Year. The fixed rate components are based on accounts, ERUs and the allocated customer-related costs. The volumetric rate component is based on the annual usage and extra capacity requirements (Max Day).
The meter charge is calculated on an ERU basis. It is common practice in the utility rate- making industry to establish a rate structure that includes an incremented service availability charge (monthly meter charge, sometimes also called a base charge) such that customers placing a greater potential demand requirement on the system (those with larger meters) will pay proportionately more for the service availability component.
The methodology for incrementing the availability charge is based upon standardized meter/capacity criteria established by the AWWA relative to the size and capacity of the water meter. The AWWA equivalent meter capacity criteria are commonly used to establish a standard unit of measure for customers referred to as an ERU. Based upon the established standards, an ERU is equal to one single-family residential connection with a 3/4-inch water meter (the typical standard meter size for a single-family residential customer). The applicable ERU factors for larger water meters are based upon the incremental increase in potential capacity of those meters as compared to the standard meter size. These factors are derived from actual flow testing results as performed and defined by the AWWA, and commonly utilized by the water and sewer utility industry. The AWWA equivalency factors can be applied to the meter charge for a 3/4-inch meter to calculate the applicable meter charges for each meter size.
While the service availability charge (base charge) may be incremented based upon standardized meter/capacity criteria established by the AWWA relative to the size and capacity of the water meter, this methodology was modified for single-family residential customers whose meter size is 1-inch or smaller. Due to California Residential Code section R313.2, automatic residential fire sprinkler systems that can produce a minimum of 30 gallons per minute (gpm) are required. Based on meter tests, 5/8-inch and 5/8x3/4-inch meters are only rated for approximately 20-25 gpm. Also, several manufacturers who produce 3/4-inch 22| Page
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meters have indicated that those meters cannot meet the 30-gpm requirement. Therefore, 1-inch meters are now the new standard single-family residential meter being installed since these meters can meet the 30-gpm requirement under California Residential Code section R313.2. Since a 1-inch meter is required to meet the state requirement of 30 gpm for fire suppression purposes, and not because a 1-inch single-family customer is truly placing more demand on the water system, relative to a 5/8-inch or 3/4-inch meter customer, these 1-inch single-family residential customers are assumed to place the same demand on the water system as a 5/8-inch or 3/4-inch residential customer. As such, both the 3/4-inch and 1-inch meters are normalized with a factor of 1.00 as shown in Table 21. A full summary of the AWWA and single-family residential meter-size equivalency factors are provided in Table 21. The proposed monthly base charges for the Test Year are shown in Table 22.
Table 21 - AWWA & Single-Family Residential Meter Equivalency Factors Single-Family
Description AWWA Factors !!!
Residential Factors RI
Meter Size
3/4 Inch 1.00 1.00
1.0 Inch 1.67 1.00
1.5 Inch 3.33 3.33
2.0 inch 5.33 5.33
3.0 Inch 10.00 10.00
4.0 Inch 16.67 16.67
6.0 Inch 33.33 33.33
8.0 Inch 53.33 53.33
10.0 Inch 76.67 76.67
Notes:
[!] Meter-size equivalency factors established by the AWWA and identified in AWWA Standards C700, MI and M22.
[2] Due to the fire supression requirements under California Residential Code section R313.2, it is assumed that 3/4-inch and 1-inch single-family residential customers place the same demand on the system. 23 Page
City of
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FARMERSVILLE
Table 22 - Monthly Base Charge Calculation
Meter Size!!! Capacity Meter Proposed
Ratio Charge Charge
General Service
3/4 Inch 1.00 24.38 $ 24.38
1.0 Inch 1.67 40.63 $ 40.63
1.5 Inch 3.33 $ 81.26 $ 81.26
2.0 Inch 5.33 130.01 130.01
3.0 Inch 10.00 243.77 243.77
4.0 Inch 16.67 406.28 $ 406.28
6.0 Inch 33.33 $ 812.55 $ 812.55
8.0 Inch 53.33 1,300.08 $ 1,300.08
10.0 Inch 76.67 1,868.87 $ 1,868.87
Notes:
[1] 3/4-inch and 1-inch single-family residential customers pay the 3/4-inch monthly meter charge of $24.38. All other customers pay the monthly meter charge shown for their respective meter size.
The water volumetric rates are made up of two different rate components. The first component is for base usage and related costs. The second component represents peak usage and peaking costs (the Max Day cost component). The Max Day peaking costs for each customer class (from Table 20) are divided by the annual usage to calculate the peaking unit costs shown in Table 23.
Table 23 - Peaking Unit Cost Calculation
Peaking Annual Use Peaking Unit
Rate Class COSIS (CCF Cost
[A] [B] [C]=[A]/[B]
Single-Family Residential
Tier 1 - 0 - 1,500 Cubic Feet 30,710 339,556 0.0904
Tier 2 - Over 1,500 Cubic Feet 59,033 127,799 $ 0.4619
All Other Classifications
All Flow $ 36,208 142,018 $ 0.2550
Total $ 125,950 609,373
The peaking unit costs are then added to the base unit cost of $0.2326 per 100 cubic feet as previously identified in Table 19 to calculate the proposed volumetric rates for each customer class and tier shown in Table 24.
24 | Page
City of
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(FARMERSVILLE
Table 24 - Volumetric Rate Calculation
Proposed Tier
Base Peaking
Rate Class Rate (S/CCF Differential
[A] [B] [C]=[A]+[B]
Single-Family Residential
Tier l - 0 - 1,500 Cubic Feet 0.2326 $ 0.0904 0.3230 1.00 Tier 2 - Over 1,500 Cubic Feet 0.2326 $ 0.4619 0.6945 2.15 All Other Classifications
All Flow 0.2326 0.2550 $ 0.4875 1.00
3.2.6 COS and Revenue Check
Once the rates are developed from the unit cost analysis, as shown in Sections 3.2.4 and
3.2.5, they are then applied to the customer service units identified in Table 18 above. The unit cost rates are applied to the customer service units to ensure that the rates calculated under the base-extra capacity method generate revenues from each customer class equitably and in a manner that reflects the costs associated with serving them. The revenues generated by customer class and the cost allocated to each customer class are provided in Table 25.
Table 25 - Proposed Rate Revenues vs COS
Total Fixed
Monthly Meier Annual Use
Monthly ERUs Charge/ERU Charge
(CCF)
Descriphon Revenues
[A1) [B1] [C1]=([A1[B1D) [D1]
*12
Single-Family Residential 2,563 $ 24.38 $ 749,824 467,355 Tier 1 - 0 - 1,500 Cubic Feet 339,556
Tier 2 - Over 1,500 Cubic Feet 127,799
All Other Classifications 732 24.38 214,026 142,018
Total 3,295 S 963,850 609,373
Total
Proposed Rale Total Allocated
Description Volumetric
(S/CCF) Revenues Costs
Revenues
[A2] [B2]=[A2] [D1] [C2]=[C1]+[B2) [D2]
Single-Family Residential 198,443 S 948,266 $ 948,266
Tier 1 - 0 - 1,500 Cubic Feet 0.3230 109,686
Tier 2 - Over 1,500 Cubic Feet 0.6945 $ 88,757
All Other Classifications $ 0.4875 69,239 $ 283,266 $ 283,266 Total 267,682 $ 1,231,532 $ 1,231,532
25 Page
City of
, FARMERSVILLE
PAMELLE
3.3 Sewer Cost-of-Service
As with the water system, the COS analysis for the sewer utility utilizes the revenue requirements for the Test Year as the cost basis. The Test Year revenue requirements are functionally unbundled, classified and allocated to customer classes to determine the cost- of-service by class. More detail relating to the sewer COS approach can be found in Appendix C.
3.3.1 Functional Unbundling of Revenue Requirements
The sewer system costs are unbundled into Collection, Treatment, and Customer functions.
A brief description of each component is as follows:
• Collection -costs associated with lines and facilities that transport wastewater from customer properties to the plants for treatment;
• Treatment - costs associated with treating wastewater for disposal reclamation and/or discharge;
• Customer - costs associated with metering, billing, and providing other services to customers (e.g., printing, delivering and collecting utility bills, recordkeeping, etc.).
The allocation of the functionally unbundled revenue requirements for the Test Year are summarized in Table 26.
26 | Page
City of
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FARMERSVILLE
Table 26 - Functional Unbundled Cost Allocations
Description Tesl Year
Total O&M 1,850,203
Existing Debt Service 698,888
Future Debt Service
Other Expenditures & Transfers (327,856)
Gross Revenue Requirement $ 2,221,235
Less Other Revenues (138,817)
Net Revenue Requirement 2,082,418
Functional Unbundled Revenue Requirement
Treatment $ 862,000
Collection 313,340
Administration 674,863
Pumping
Customer Service
Transfers
CIP 1,595,500
Capital Outlay
Existing Bond DS 698,888
New Bond DS
Non-Rate Revenue (138,817)
Fund Balance !!! (1,923,356)
Non-Rate Rev & Fund Balance $ 2,082,418
Notes:
[I] Represents a transfer from reserves to provide funding for capital outlay and CIP costs.
3.3.2 Classification of Revenue Requirements
The functionally unbundled revenue requirements for the sewer system are classified into fixed and volumetric customer components based on methodology consistent with the Water Environmental Federation (WEF), Manual of Practice No. 27. As discussed for the water COS analysis, it is anticipated that the allocation percentages will not change materially during the Projection Period. However, it is important to note that COS analyses are based on the data at a specific point in time (i.e., the most recent fiscal year). To the extent that weather conditions, economic conditions and customer usage characteristics change during the Projection Period, the cost allocators can be impacted. The system-wide costs by service characteristic are shown in Table 27.
27 | Page
City of
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Table 27 - Classification of Unbundled Revenue Requirements component Strengih -
Volume Capacity Strengih - SS Customer Tota
BOD
Treatment 99,647 99,647 338,114 324,592 862,000
Collection 156,670 156,670 313,340
Administration 674,863 674,863
Pumping
Customer Service
Transfers
CIP 1,595,500 1,595,500
Capital Outlay
Existing Bond DS 349,444 349,444 698,888
Non-Rate Rev & Fund Balance (301,40l) (301,40)) (168.231) (161,503) (1.129,637)) (2.062, 173) $ 304,360 $ 169,883 $ 163,089 $1,140,726| $2,082,418
3.3.3 Allocation to Customer Classes and Unit Cost
Development
The functionalized and classified revenue requirements are allocated to customer classes utilizing a unit cost approach as follows:
• Collection - Based on relative percentage of annual sewer usage; • Treatment - Based on relative percentage of sewer strength discharge (BOD and SS):
• Customer - Based on relative percentage of units by customer class.
The units of service for each component of cost by customer class (if applicable) are provided in Table 28. The units of service consist of the number of customer units, annual flows in 100 cubic feet, and sewer strength discharge. Customer units are based on the number of customers as provided in the customer data. Collection is the total annual sewer flows projected for the test year. BOD and SS reflect the strength per pound of the sewer discharge collected by the City from each customer class. 28 Page
City of
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FARMERSVILLE
Table 28 - Units of Service
Total CCH BOD BOD TSS TSS
Descrption
Units Flow Factor 11) Pounds Factor U Pounds
Residential Classes 12)
Single-Family Residential 2,424 309,237 250 482,281 250 482,281 Apartment 419 38,367 250 59,837 250 59,837
Non-Residential Classes 131
Commercial Class
Commercial 109 27,601 481 110,721 380 87,472
Government 3 692 130 75l 100 577
Church 15 175 175 255 175 255
Sub-Total Commercial 127 28,468 111,727 88,305
Schools
Schools 9 17,959 130 14,565 100 11,204
Total 2,979 394.032 668,409 641,625
Notes:
[1] Average strength factors for BOD and TSS are based on the State Water Resources Control Board Revenue Program Guidelines, Appendix G.
(2] Assumed annual residential sewer flows were calculated by taking the average winter consumption for the lowest three months of the most recent full fiscal year of water customer data provided, then determining the factor of the winter average usage to the total annual average monthly water usage for the most recent full fiscal year of water customer data provided. This factor was then applied to the projected monthly average "Test Year" water flows to determine the "Test Year" annual sewer flows. [3] All non-residential flow was provided from sewer biling data.
The revenue requirement for each cost component is divided by its respective unit of service to calculate a unit cost. The unit cost for each cost component is demonstrated in Table 29.
Table 29 - Cost Per Unit
Description Strengih -
Volume Capacity Strengin - SS Customer Total
BOD
Total Revenue Requirement $ 304,360 $ 304,360 $ 169,883 $ 163,089 $ 1,140,726 $ 2,082,418 Units of Service 394,032 394,032 668,409 641,625 2,979
CCF CCF Pound Pound Units/Month
Cost Per Unit $ 0.77 $ 0.77 $ 0.25 $ 0.25 $ 31.91
CCF CCF Pound Pound Units/Month
The allocation of the revenue requirement to each customer class is based on the unit costs for each component multiplied by the units of service for each customer class. The total costs to be recovered from each customer class by rate component are shown in Table 30. 29 | Page
City of
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FARMERSVILLE
Table 30- Cost of Service by Customer Class and Cost Component Rate Class Volume Shength -
Capacily Srengin - S5 Customer Total
BOD
Residential
Single-Family Residential 238,863 238,863 1,651,093
Apartment 15,209 160,445 250, 133
Non-Residential
Commercial Class
Schools - 0 3 0250 120 в 130т ча 2021
Total
3.3.4 COS and Revenue Check
Once the unit costs are developed and the costs associated with each customer class based on the units of service are determined in Section 3.3.3, rates can be developed to ensure that each customer class is generating sufficient revenues to cover their allocated cost of service. The proposed rate structure for the sewer rates are as follows:
• Residential Customers - For single-family and multi-family residential customers, the proposed rates will consist of a flat monthly charge based on the number of dwelling units for single-family and multi-family, respectively. • Commercial/Non-Residential Customers - For commercial customers, the proposed rates will consist of a fixed monthly charge and a volumetric rate per 100 cubic feet based on each customer class's respective sewer strength discharge (commercial and school classifications).
The revenues generated by customer class vs the cost allocated to each customer class is provided in Table 31.
Table 31 - Proposed Rate Revenues vs COS
Monthly: Proposed Total Fixed Proposed Total
Annual Volumetic Total COS
Descrphon Dwelling Monthly Volumelic Calculated
Volume Revenues
Fixed Fee Revenue Revenues
(CCF) I Revenues
(C)=[A)[B)*12 [G)-(C)+Fl [H]
Residential
Single-Family Residential 2,424 56.76: $ 1,651.093 N/A N/A $ 1.651,093 1,651,093 Apartment 419 49.75 $ 250,133 N/A N/A $ 250,133 $ 250, 133 Non-Residental
Commercial Class
Schools
Total
30 | Page
City of
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FARMERSVILLE
Section 4 - Proposed Test Year Rates
4.1 General
The methodology used to calculate the water and sewer rates proposed herein involves applying the projected customers and flows to the user rates in order to develop the estimated revenues (separately for water and sewer), comparing the projected revenues to the estimated Test Year revenue requirements, and adjusting the water and/or sewer rates on a percentage basis as necessary to generate the revenues sufficient to meet the revenue needs of the utility system. In addition, there are other factors that must be considered in designing rates to satisfy the City's objectives. Such other rate considerations include, but are not limited to:
1. Sensifivity to existing customers - the proposed rates must consider the impact on existing customers and avoid putting an inequitable financial burden on any particular customer class.
2. Comparability with neighboring utilities - the proposed rates should consider the rates and charges applied to customers of neighboring utilities of relatively similar size for similar service.
3. Existing rate structure - the proposed rates must consider the logistics and cost/benefit implications of instituting changes to the existing rates and rate structure.
4. Economic development - the proposed rates must consider the potential for future development within the City's service area and ensure that the rates do not make it cost-prohibitive for future development.
The proposed rates developed herein utilize these considerations, as well as discussions with the City staff, professional judgment, and prior experience with comparable utility systems.
When reviewing potential rate structure options in conjunction with the need for additional revenues, it was determined that revenue adjustments are needed, and the existing rate structure needs to be adjusted based on the cost-of-service analysis.
In conjunction with the existing rate structure, the proposed water and sewer rates for the upcoming fiscal year are composed of two rate components consisting of a monthly base charge and a volumetric rate for both water and sewer. The proposed water and sewer rates for the Test Year are provided again in Tables 32 and 33, respectively. 31| Page
City of
FARMERSVILLE
(FARMERSVILLE
Table 32 - Proposed Monthly Water Rates
Description Rate
Monthly Base Charge by Meter Size:
Single-Family Residential (3/4 Inch and 1 Inch) $ 24.38 3/4 Inch 24.38
1.0 Inch 40.63
1.5 Inch 81.26
2.0 Inch $ 130.01
3.0 Inch $ 243.77
4.0 Inch $ 406.28
6.0 Inch $ 812.55
8.0 Inch 1,300.08
10.0 Inch $ 1,868.87
Volumetric Rates Per 100 Cubic Feet - Residential:
0 - 1,500 Cubic Feet $ 0.3230
Over 1,500 cubic feet 0.6945
Volumetric Rates Per 100 Cubic Feet - All Other:
All Flow $ 0.4875
32 | Page
City of
FARMERSVILLE
(FARMER SVILLE
Table 33 - Proposed Monthly Sewer Rates
Descriphon Rate
Monthly Base Charge:
Residential '"'
Single-Family Residential 56.76
Multiple-Dwelling Unit $ 49.75
Non-Residential
Service Stations, Garages, Churches, Social,
$ 31.91
Fraternal, Non-Profit, Other Retail/Service
Restaurants, Cafes, Drive-ins, Grocery Stores,
$ 31.91
Bars, Car Washes, Laundromats
Hotels (per unit), Motels (per unit), Rooming
Units (per unit), Camps (per unit), Auto Courts $ 31.91 with Cooking Facilities (per unit)
Hotels (per unit), Motels (per unit), Rooming
Units (per unit), Camps (per unit), Auto Courts $ 31.91 without Cooking Facilities (per unit)
Public Schools $ 31.91
Professional Offices or Other Business $ 31.91
Volumetric Rates Per 100 Cubic Feet:
Residential
Single-Family Residential $ 0.00
Multiple-Dwelling Unit 0.00
Non-Residential
Service Stations, Garages, Churches, Social, 3.33
Fraternal, Non-Profit, Other Retail/Service $
Restaurants, Cafes, Drive-Ins, Grocery Stores,
$ 3.33
Bars, Car Washes, Laundromats
Hotels (per unit), Motels (per unit), Rooming
Units (per unit), Camps (per unit), Auto Courts $ 3.33
with Cooking Facilities (per unit)
Hotels (per unit), Motels (per unit), Rooming
Units (per unit), Camps (per unit), Auto Courts $ 3.33
without Cooking Facilities (per unit)
Public Schools $ 1.91
Professional Offices or Other Business $ 3.33
Notes:
[1] All single-family and multi-family customers pay a flat monthly fee per dwelling unit regardless of usage.
33 | Page
City of
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FARMERSVILLI
4.2 Typical Monthly Bill Comparison
Figure 1 In addition to
Bill Comparison @ Various Units of Flow reviewing the effect Combined Water & Sewer Bill that a change in the
rates will have on the
system revenues, it is
also important for City
utility management to
understand the
impact that a change
will have on the
existing customers.
Tables 34, 35 and 36
$- $20 $40 $60 $80 $100 provide a comparison
al Proposed @ Existing
of several monthly bills
at various flow levels for water and sewer, as well as the combined utility bills under the existing and proposed rates. A graphical illustration of a bill comparison at various units of flow is provided in Figure 1 for a residential customer with both water and sewer service. It was determined after conducting a historical billing analysis that an average residential customer uses 1,600 cubic feet monthly. Based on the proposed rates, a typical City residential customer will experience an increase of $1.82 in their combined monthly water and sewer bill.
Table 34 - Residential Water Rate Impact
Monthly Monthly Charges $ Amount
Description
Flow Existing Proposed Difference
Residential
3/4 Inch & 1.0 Inch 0 $ 27.32 $ 24.38 3 (2.94)
3/4 Inch & 1.0 Inch 200 $ 27.32 25.02 (2.30)
3/4 Inch & 1.0 Inch 400 $ 27.32 $ 25.67 (1.65)
3/4 Inch & 1.0 Inch 600 $ 27.32 26.31 $ (1.01)
3/4 Inch & 1.0 Inch 800 $ 27.32 $ 26.96 $ (0.36)
3/4 Inch & 1.0 Inch ,000 27.32 $ 27.61 0.29
3/4 Inch & 1.0 Inch 1,200 27.32 28.25 0.93
3/4 Inch & 1.0 Inch ,400 27.32 28.90 1.58
3/4 Inch & 1.0 Inch 1,600 28.25 29.92 $ 1.67
3/4 Inch & • 1.0 Inch 1,800 30.11 31.31 1.20
3/4 Inch & 1.0 inch 2,000 31.97 32.69 $ 0.72
3/4 Inch & : 1.0 Inch 2, ,400 35.69 $ 35.47 $ (0.22)
3/4 Inch & 1.0 Inch 2,800 39.41 38.25 (1.16)
3/4 Inch & 1.0 Inch 3,200 43.13 41.03 (2.10)
3/4 Inch & 1.0 Inch 3,600 46.85 43.81 (3.04)
34 | Page
City of
FARMERSVILLE
(FARMERSVILLE
Table 35 - Residential Sewer Rate Impact
Monthly Monthly Charges S Amount
Description
Flow Existing Proposed Difference
Residential
3/4 Inch & 1.0 Inch 0 $ 56.76 $ 0.15
3/4 inch & 1.0 Inch $ 56.76 $ 0.15
3/4 Inch & 1.0 Inch $ $ 56.76 $ 0.15
3/4 Inch & 1.0 Inch $ 56.76 0.15
3/4 Inch & 1.0 Inch $ $ 56.76 $ 0.15
3/4 Inch & 1.0 Inch $ 56.76 $ 0.15
3/4 Inch & 1.0 Inch $ $ 56.76 $ 0.15
3/4 Inch & 1.0 Inch $ 56.76 0.15
3/4 Inch & L0 Inch $ 56.76 0.15
3/4 Inch & 1.0 Inch 1,800 $ 56.76 0.15
3/4 Inch & 1.0 Inch 2,000 $ $ 56.76 0.15
3/4 Inch & 1.0 Inch 2,400 $ $ 56.76 $ 0.15
3/4 Inch & 1.0 Inch 2,800 $ 56.76 $ 0.15
3/4 Inch & 1.0 Inch 3,200 $ 56.76 $ 0.15
3/4 Inch & 1.0 Inch 3,600 $ $ 56.76 $ 0.15
VU.
Table 36 - Residential Combined Rate Impact
Description Monthly Monthly Charges $ Amount
Flow Existing Proposed Difference
Residential
3/4 Inch & 1.0 Inch $ 83.93 $
3/4 Inch & 1.0 Inch $ 83.93 $ $
3/4 Inch & 1.0 Inch 83.93 $
3/4 Inch & 1.0 Inch 83.93
3/4 Inch & 1.0 Inch 83.93 $ $
3/4 Inch & 1.0 Inch 83.93
3/4 Inch & 1.0 Inch 83.93 $
3/4 Inch & 1.0 Inch 83.93 $
3/4 inch & 1.0 Inch 84.86
3/4 Inch & 1.0 Inch 86.72 $
3/4 Inch & 1.0 Inch 2,000 88.58 $ $
3/4 Inch & 1.0 Inch 2,400 92.30 $ $
3/4 Inch & 1.0 Inch 2,800 96.02 (1.01)
3/4 Inch & 1.0 Inch 3,200 99.74 (1.95)
3/4 Inch & 1.0 Inch 3,600 103.46 (2.89)
35 | Page
City of
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FARMERSVILLE
4.3 Rate Comparison with Other Utilities
In order to provide the City with additional insight regarding the proposed rate levels, the analysis includes a comparison of both the existing and proposed user rates relative to the user rates imposed by other water and sewer utility systems located in same region. A summary analysis is provided comparing the cost of monthly water and sewer service for a typical residential customer (assumed to have a 3/4-inch or 1-inch water meter) calculated under the existing and proposed rates of the City with those of the other utilities. The rates utilized for the other neighboring utilities shown were in effect as of December of 2023 and are exclusive of local taxes, outside surcharges, franchise fees, regulatory fees, or other rate adjustments. A summary comparison with other utilities for a residential customer using 1,600 cubic feet per monthly billing is illustrated in Figure 2.
Figure 2
Neighboring Utility Comparison
Combined Water & Sewer Bill
$180.00 $169.29
Assumes an inside residential customer receiving 1,600 CF (or = 12,000 Gallons) of service per month.
$160.00
$140.00
$120.00 $113.41 $115.10 $116.91
$100.60
$100.00
$100.00 $90.80 $92.75
$83.16 $84.86 $85.02 $85.43 $86.59 $86.68 $86.74
$80.00 $74.20
$60.00
$40.00
$20.00
$-
Dinuba. Farmersville Existing Tulare, CA Lemoore, CA Delano, CA Farmersville Proposed Exeter, CA Mcfarland, CA Lamont, CA Woodlake, CA Clovis, CA Porterille, CA Cutler, CA Callfomla City, CA Rosamond, CA Monthly Water Bill @ 1600 Cubic Feet F Monthly Wastewater Bill @1600 Cubic Feet - Average Monthly Bill 36 | Page
City of
FARMERSVILLE
(FARMERSVILLE
It should be noted that when making comparisons for water and sewer service, several factors affect the level of rates and charges. Such factors may include:
Terms of wholesale service agreements;
2) Time since last rate update for comparison providers; 3) Level of treatment required before the distribution of water to the ultimate customers;
Level of treatment and effluent disposal methods of sewer service; Anticipated capital improvement programs and capital financing methods; Plant capacity utilization, age of facilities, and assistance in construction by federal or state grants, connection fees, developer contributions, etc.:
General Fund and/or administrative fee transfers made by other systems which may account for differences in the level of rates charged; and 8) Bond covenants and funding requirements of the rates.
For the utilities included in the rate comparisons, no analysis has been performed with consideration of the above-mentioned factors as they relate to the reported water and sewer rates currently being charged.
37 | Page
City of
FARMERSVILLE
FARMERSVILLE
Section 5 - Projected Operating Results
5.1 General
As a conclusion to the study, individual proforma operating statements are developed for both the water and sewer systems. The statements summarize the projected financial results based on the system revenues, expenses and other revenue requirements anticipated in future years.
The individual operating statements cover the 5-fiscal year Projection Period through June 30,2028 and are prepared on a cash-flow basis. In addition, the individual statements include the applicable annual percentage rate adjustments necessary to meet the projected revenue requirements. The annual rate adjustments are considered separately for both water and sewer and further separated by the base charge and volumetric rate components. The following discussions describe the development of the major components of the projected operating results.
5.2 Projected User Rate Revenues
The user rate and charge revenues are estimated by applying the existing and proposed rates to the projected customers and flows. The revenues for the Projection Period are estimated separately for both water and sewer. The resulting revenues are then compared to the projected revenue requirements (i.e., O&M expenses, debt service, capital outlay, transfers, etc.) in each fiscal year to determine if the revenues are sufficient to satisfy the expenditure needs of the system. To the extent that there are revenue shortfalls in any given year of the Project Period, the water and/or sewer rates developed from the Cost-of-Service and Rate analysis outlined in Section 3 of this report are adjusted on a percentage basis as necessary to generate the required level of revenues. The projected water, sewer and combined user rate revenues are provided in Table 37.
Table 37 - Projected User Rate Revenues
Existing Proposed Projected FY
System
Total Water Revenue $ 1,161,798 $ 1,231,532 $ 1,326,557 $ 1,485,620 $ 1,662,656 $ 1,859,509 Total Sewer Revenue $ 2,025,057 $ 2,082,418 $ 2,231,555 $ 2,449,801 $ 2,637,422 $ 2,836,260 Total Combined Revenue $ 3,186,855 $ 3,313,950 $ 3,558,112 $ 3,935,421 $ 4,300,078 $ 4,695,769 38 | Page
City of
FARMERSVILLE
The projected revenues include the annual water and sewer rate adjustments anticipated for the remaining years of Projection Period beyond the Test Year. The proposed user rates from which the projected operating results are developed for the entire 5-fiscal year Projection Period are provided in Tables 38 and 39. The rates identified in the tables reflect the cost of providing service to individual customer classes based on peaking factors, volume of flow, and strength characteristics.
Table 38 - Proposed Monthly Water Rates
Description Existing Projected For Fiscal Year Ending June 30:
Rates 2024 2025 2026 2027 2028
Monthly Base Charge by Meter Size:
Single-Family Residential (3/4 Inch and 1 Inch) $ 27.32 $ 24.38 26.57 $ 28.96 $ ..31.57 34.41 3/4 Inch 27.32 $ 24.38 $ 26.57 28.96 31.57 34.41
1.0 Inch 27.32 40.63 44.28 $ 48.27 $ 52.62 57.35
1.5 Inch 43.71 81.26 $ 88.57 $ 96.53 105.23 114.70
2.0 inch 43.71 $ 130.01 $ 141.71 154.45 $ 168.37 $ 183.52
3.0 Inch 68.29 243.77 265.70 289.60 315.70 344.10
4.0 Inch 68.29 406.28 442.83 $ 482.67 526.17 $ 573.50
6.0 Inch 109.26 812.55 $ 885.67 $ 965.33 $ 1,052.33 $ 1,147.00
8.0 Inch 109.26 $ 1,300.08 $ 1,417.07 $ 1,544.53 $ 1,683.73 $ 1,835.20
10.0 Inch N/A $ 1,868.87 $ 2,037.03 $ 2,220.27 $ 2,420.37 $ 2,638.10 Volumetric Rates Per 100 Cubic Feet - Residential:
0 - 1,500 Cubic Feet 0.0000 0.3230 $ 0.3521 0.3838 0.4183 0.4559 Over 1,500 cubic feet 0.9300 $ 0.6945 $ 0.7570 0.8251 0.8994 0.9803 Volumetic Rates Per 100 Cubic Feet - All Other:
0 - 1,500 Cubic Feet 0.0000 0.4875 $ 0.5314 $ 0.5792 0.6313 $ 0.6881 Over 1,500 cubic feet 0.9300 0.4875 $ 0.5314 $ 0.5792 0.6313 0.6881 39 | Page
City of
FARMERSVILLE
(FARMERSVILLE)
Table 39 - Proposed Monthly Sewer Rates
Descriplion Existing Projected For Fiscal Yeor Ending June 30 Rates 2024 2025 2026 2027 2028
Monthly Base Charge:
Residential"
Single-Family Residential 56.61 $ 56.76 61.30 63.75 $ 66.30 $ 68.95 Multiple-Dwelling Unit $ 56.61 49.75 3 53.72 $ 55.87 $ 58.11 $ 60.43 Non-Residential
Service Stations, Garages, Churches, Social,
56.61 $ 31.91 $ 34.46 $ 35.84 $ 37.27 38.76
Fraternal, Non-Profit, Other Retail/Service
Restaurants, Cafes, Drive-Ins, Grocery Stores,
$ 13.00 31.91 $ 34.46 $ 35.84 $ 37.27 $ 38.76
Bars, Car Washes, Laundromats
Hotels (per unit), Motels (per unit], Rooming
Units (per unit), Camps (per unit), Auto Courts $ 14.53 $ 31.91 $ 34.46$ 35.84 $ 37.27 $ 38.76 with Cooking Facilities (per unit)
Hotels (per unit). Motels (per unit), Rooming
Units (per unit), Camps (per unit), Auto Courts 11.53 $ 31.91 $ 34.46 $ 35.84 $ 37.27 38.76 without Cooking facilities (per unit]
$ 13.00 31.91 34.46 35.84 37.27 $ 38.76
Professional Offices or Other Business 53.03 31.91 $ 34.46 $ 35.84 37.27 $ 38.76 Volumetric Rates Per 100 Cubic Feel:
Residential
Single-Family Residential 0.00 0.00 $ 0.00 $ 0.00 0.00 0.00 Multiple-Dwelling Unit 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 0.00 Non-Residential
Service Stations, Garages, Churches, Social,
$ 0.00 $ 3.33 $ 3.60 $ 3.74 $ 3.89 $ 4.05
Fraternal, Non-Profit, Other Retail/Service
Restaurants, Cafes, Drive-Ins, Grocery Stores,
$ 1.15 $ 3.33 $ 3.60 3.74 $ 3.89 4.05
Bars, Car Washes, Laundromats
Hotels (per unit), Motels (per unit), Rooming
Units (per unit), Camps (per unit), Auto Courts $ 0.00 $ 3.33 $ 3.60 $ 3.74 $ 3.89 4.05 with Cooking Facilities (per unit)
Hotels (per unit), Motels (per unit), Rooming
Units (per unit), Camps (per unit), Auto Courts 0.00 3.33 $ 3.60 3.74 $ 3.89 $ 4.05 without Cooking Facilities (per unit)
Public Schools 1.79 1.91 2.06 $ 2.14 $ 2.23 $ 2.32
Professional Offices or Other Business 0.00 3.33 $ 3.60 $ 3.74 $ 3.89 $ 4.05 Notes:
[!] All single-family and multi-family customers pay only a flat monthly fee per dwelling unit regardless of usage.
The projected user rates provided herein for the periods beyond the Test Year are intended for strategic planning purposes, and to provide the City with the estimated future rates that may be needed to satisfy the projected cash flow requirements. The rates are developed in accordance with the assumed customer, flow, expenditure, and revenue estimates projected in this rate study. It is important to note that, since it is necessary to utilize numerous assumptions to develop the projected operating results, to the extent that actual customers, flows and/or system expenditures differ from those assumed herein, additional rate adjustments may be required. For informative purposes, a calculation of the typical monthly bill for a representative City residential customer based on the projected rates, as well as the accompanying change in the monthly bill for each year of the Projection Period is included herein. An illustration of the projected typical bill rate path is provided in Figure 3. 40 Page
City of
FARMERSVILLE
Figure 3
Projected 5-Year Bill Path
1,600 Cubic Feet Per Month
$120
$100 $111.18
$105.04
$99.30
$80 - $84,86 $86.68 $93.91
$60
$40
$20
$-
Existing 2024 2025 2026 2027 2028
• Water •Sewer
5.3 Debt Service Coverage
The water and sewer operating statements also include a calculation of the annual debt service coverage. It should be noted though, that all current outstanding debt is associated with the sewer system only. There is no current outstanding debt or assumed future debt issuances associated with the water system throughout the Projection Period. Debt service coverage is generally viewed as an indicator of the financial strength of the utility. The debt service coverage ratio is broadly calculated by dividing the net revenues by the annual debt service requirement. For the purposes of the debt service coverage calculation developed herein, the net revenues consist of the total operating revenues (user rate revenues plus other revenues) less the O&M expenses. In accordance with the requirements of the outstanding loan agreements, the City must maintain coverage of at least 110% (1.10 times) of the annual debt service payment. The pro-forma operating statements indicate that the sewer system is expected to meet or exceed the minimum level of debt service coverage in each fiscal year of the Projection Period. It is important to note that the coverage results are provided for informative purposes only and not intended as a legally supportable calculation for representation to bondholders. The debt service coverage for the water and sewer enterprise systems respectively over the projection period is provided in Table 40.
41 | Page
City of
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FARMERSVILLE
Table 40- Water and Sewer Utility System Projected Debt Service Coverage Water Enterprise !!! Sewer Enterprise
Fiscal Year
Projected Minimum Projected Minimum
2024 N/A N/A 1.10 1.10
2025 N/A N/A 1.10 1.10
2026 N/A N/A 1.10 1.10
2027 N/A N/A 1.24 1.10
2028 N/A N/A 1.39 1.10
Notes:
[1] There is no outstanding debt service associated with the water system; therefore, there is no applicable debt service coverage ratio calculation. [2] The rate stabilization fund established by the City is being utilized to meet the minimum debt service coverage requirement of 1.10x through FY 2025. The sewer system is able to meet the minimum debt service coverage requirement of 1.10x without utilizing the rate stabilization fund starting in FY 2026.
5.4 Summary of Projected Operating Results
The cash-flow statements outlining the projected operating results are summarized in Tables 41 and 42 for the water and sewer systems, respectively. The projected results are graphically illustrated in Figure 4 for the water and sewer systems, respectively. The results demonstrate that the proposed rates and charges along with the other system revenues are anticipated to be sufficient to satisfy the projected revenue requirements and capital needs of the combined utility system.
42 Page
City of
FARMERSVILLE
FARMERSVILLE
Table 41 - Water System Projected Operating Results
Projected for Fiscal Year Ending June 30 ($1.000s)
Description Existing Proposed
2025 2026 2027 2028
2024 2024
Revenues:
Water Sales 1,162 1,232 $ 1,327 1,486 $ 1,663 $ 1,860
Other Revenues 38 38 38 38 38 38
Total Revenues $ 1,199 $ 1,269 $ 1,364 $ 1,523 $ 1,700 : $ 1,897 O&M Expenses (1,268) (1,268) (1,331) (1,398) (1,468) (1,54l) Net Income For Debt $ (69) $ $ 33 125 $ 232 $ 356
Debt Service ''!:
Existing - $ - $ $ :$ - $
Future
Total Debt Service - $ - $ - $ • $ - $
Balance After Debt $ (69) $ 1 $ 33 $ 125 $ 232 $ 356
Other Expenditures & Transfers:
Capital Outlay $ - $ - $ $ - ; $
Transfers In
Transfers Out
Total Other Expenditures & Transfers $ $ - $ • $
Net Results $ (69) $ 1 $ 33 $ 125 $ 232 $ 356
Fund Balance Activity:
Operating Fund
Beginning Balance $ 1,252 1,252 $ 941 $ 522 $ 496 $ 403 Deposit/(Withdrawal) from Operations (69) 1 33 125 232 356 Capital Projects From Capital improvement Plan (312) (312) (453) (151) (325) (325) Total Operating Fund Balance $ 872 $ 941 $ 522 $ 496 $ 403 $ 434 Debt Coverage '' N/A N/A N/A N/A N/A •N/A
Notes:
[l] There is no outstanding debt service associated with the water system; therefore, the annual debt service payment is $0.00 and there is no applicable debt service coverage ratio calculation. 43 | Page
City of
FARMERSVILLE
FARMERSVILLE,
Table 42 - Sewer System Projected Operating Results
Projected for Fiscal Year Ending June 30 ($1 000g)
Description Existing Proposed
2025 2026 2027 2028
2024 2024
Revenues:
Wastewater Sales $ 2,025 2,082 2,232 2,450 2,637 $ 2,836 Other Revenues 139 139 139 139 139 139
Total Revenues 2,164 $ 2,221 $ 2,370 $ 2,589 $ 2,776 $ 2,975 O&M Expenses (1,850) (1,850) (1,733) (1,819) (1,910) (2,006) Net Income For Debt S 314 $ 371 $ 638 $ 769$ 866 $ 969
Debt Service:
Existing 699 $ 699 $ 699 $ 699 $ 699 $ 700
Future
Total Debt Service $ 699 $ 699 $ 699 $ 699 $ 699 $ 700
Balance After Debt $ (385) $ (328) $ (62) $ 70 S 167 $ 270 Other Expenditures & Transfers:
Capital Outlay $ $ $ - $
Transfers In
Transfers Out
Total Other Expenditures & Transfers $ - $ - $ - $ • $
Net Results $ (385) $ (328) $ (62) $ 70 $ 167 $ 270
Fund Balance Activity:
Operating Fund
Beginning Balance $ 5,524 $ 5,524 $ 3,203 $ 3,281 $ 3,385 3,227 Deposit/ (Withdrawal) from Operations (385) (328 (62) 70 167 270 Rate Stabilization Fund Transfer (455) (398) 266 132
Capital Projects From Capital Improvement Plan (1,596) (1,596) (127) (98) (325) (325) Total Operating Fund Balance $ 3,088 $ 3,203 $ 3,281 $ 3,385 $ 3,227 $ 3,171 Rate Stabilization Fund !!!
Beginning Fund Balance $ $ 398 $ 132 $ $
Net Transfers In/(Out) 455 398 (266) (132)
Total Rate Stabilization Fund Balance $ 455 $ 398 $ 132 $ $ Ending Fund Balance $ 3,543 $ 3,601 $ 3,413 $ 3,385 $ 3,227 $ 3,171 Debt Coverage '"! 1.10 1.10 1.10 1.10 1.24 1.39
Notes:
[i. The City established a rate stabilization fund to effectively manage additional fund balance and to help meet the minimum debt service coverage requirement. The rate stabilization fund is utilized to meet the minimum lebt service coverage requirement through FY 2025. The sewer system is able to meet the minimum debt service overage requirement without utilizing the rate stabilization fund starting in fy 202e 44 | Page
City of
FARMERSVILLE
(FARMERSVILLE
Figure 4
Projected Operating Results Under Proposed Rates ($1,000s) $700
$500
$300
$100
$100
$300
$500
Existing Proposed 2025 2026 2027 2028
2024 2024
WE Water BE Wastewater -Combined
45| Page
City of
FARMERSVILLE
(FARMERSVILLE
Section 6 - Conclusions and Recommendations
6.1 Disclaimers
6.1.1 General Disclaimer
In the development of the proposed user rates and charges, certain historical reviews and analyses have been performed, together with the application of assumptions based on prudent financial, operational, and ratemaking relationships. The cost criteria and customer usage characteristics associated with general ratemaking procedures are representative of averages and are not intended as indicators of any individual customer.
In the preparation of the rate study, certain assumptions have been made with respect to conditions that may occur in the future. While it is believed that these assumptions are reasonable for the purpose of this update, they are dependent upon future events and actual conditions may differ from those assumed. In addition, the study has used and relied upon certain information that was provided by other parties not associated with Willdan.
Such information includes, among other things, the City's audited financial statements, annual operating budgets, periodic reports, and other information and data provided by the City, its independent auditors, and other sources. While the sources are believed to be reliable, there has been no independent verification of the information, and no assurances are offered with respect thereto. To the extent that future conditions differ from those assumed herein or provided by others, the actual results may vary from those projected.
6.1.2 Municipal Advisory Disclaimer
Unless the City of Farmersville, California (the "City") has a written engagement from Willdan Financial Services ("Willdan") for municipal advisory services, Willdan is not advising or recommending any action be taken by the recipient of this information with respect to any prospective, new, or existing municipal financial products or issuance of municipal securities (including with respect to the structure, timing, terms and other similar matters concerning such financial products or issues). The City shall discuss any such information and material contained in Willdan's work product with any and all internal and/or external advisors and experts, including its own municipal advisor, that it deems appropriate before acting on the information and material.
For the avoidance of doubt and without limiting the foregoing, in connection with any revenue projections, cash-flow analyses, feasibility studies and/or other analyses Willdan may provide the City with respect to financial, economic or other matters relating to a prospective, new or existing issuance of municipal securities of the City, (A) any such projections, studies and analyses shall be based upon assumptions, opinions or views (including, without limitation, any assumptions related to revenue growth) established by the City, in conjunction with such of its municipal, financial, legal and other advisers as it deems appropriate; and (B) under no circumstances shall Willdan be asked to provide, nor shall it 46| Page
City of
FARMERSVILLE
provide, any advice or recommendations or subjective assumptions, opinions or views with respect to the actual or proposed structure, terms, timing, pricing or other similar matters with respect to any municipal financial products or municipal securities issuances, including any revisions or amendments thereto.
6.2 Conclusions
As previously addressed, the purpose of this study is to provide a review of the City's existing utility rates to determine if rate adjustments are necessary to meet the budgeted and/or projected financial needs in future years. This Report is the result of the collaborative efforts of representatives from both the City and Willdan. City staff were diligent and cooperative in their efforts to ensure the availability and quality of source data on financial and operating matters. Based on the reviews, analyses and assumptions discussed herein, it is concluded that:
1. The proposed user rates and charges are anticipated to generate sufficient revenues to meet the revenue requirements of the system based upon the projected expenditures, transfers, customers, and billable flows estimated for the Test Year. The proposed rates are based on an assumed implementation date of May 1, 2024 (or other such date as determined by the City). To the extent that the implementation date is postponed, additional rate adjustments and/or appropriations from existing reserves may be necessary.
2. The estimated revenues and resulting rate adjustments for the remaining years of the Projection Period beyond the Test Year are developed based on the customer growth assumptions generated from the historical analyses and discussions with City staff. If the customer growth projections are not realized, additional rate adjustments may be necessary.
Customer growth for the water and sewer systems is projected based on historical customer data as provided by the City as well as discussions with the City staff regarding developer activity and anticipated construction. If it turns out that the customer growth assumptions are not realized, the resulting revenues could be different than projected.
The projection of billable water and sewer flows is based on historical trends regarding the average flow per user for each customer class. The average water and sewer flow per account is developed from historical customer data and is assumed to remain relatively constant for the Projection Period. The historical billing data provided by the City was utilized to identify the average flow statistics for system customers. For the analyses developed herein, it is assumed that the average usage statistics for the Projection Period will be consistent with recent historical average usage levels as realized in recent years, or as otherwise assumed based on discussions with staff. When applying the estimated average usage statistics, it is assumed that the water and sewer 47 | Page
City of
FARMERSVILLE
(FARMERSVILLE
sales will increase with the estimated growth in customers. However, it is important to note that annual variations in rainfall and other climatological factors may influence the level of future water demands and the accompanying billable sewer flows for the City.
5. Future capital improvement projects are assumed to occur as reported by the City in its CIP. To the extent that the timing of such projects may change from that estimated herein, the cost of such projects and resulting impact on future rates and charges may vary from those indicated.
6. The proposed rates and rate structure are consistent with industry standards for rate-setting practices, comply with Proposition 218 and conform to the City's financial policies with respect to:
a. Equitably recovering costs;
b. Being based upon the proportionate cost of providing services; and C. Generating sufficient revenue to recover system revenue requirements, meet debt service coverage requirements, fund capital needs, and meet reserve requirements.
6.3 Recommendations
Based on the reviews, analyses and assumptions addressed herein, as well as the resulting conclusions provided above, it is respectfully recommended that the City:
1. Adopt the proposed water and sewer rates.
2. Enact the proposed rates to become effective as of May 1, 2024 (or other such date as determined by the City. Based on the timing of the project and the required public hearing notice procedures, it is expected that the effective date will occur on the recommended date.
3. Readdress the cost-of-service analysis portion of this study every three to five years to ensure costs are recovered consistent with cost-of-service principles and customer characteristics.
We appreciate the opportunity to be of service to the City in this engagement. In addition, we would like to thank City staff for the valuable assistance provided during the completion of the rate study.
Respectfully Yours,
WILLDAN FINANCIAL SERVICES
48 | Page
APPENDIX
DETAIL FOR THE COMPREHENSIVE WATER &
SEWER UTILITY RATE STUDY
CITY OF City of
FARMERSVILLE
FARMERSVILLE
CALIFORNIA
COMPREHENSIVE WATER & SEWER UTILITY RATE STUDY FOR THE
CITY oF FARMERSVIlLe, CALIFORNIA
W WILLDAN
APPENDIX A
Revenue Requirement
from User Rates
APPENDIX - A
CITY OF FARMERSVILLE, CA
Development of Rate Revenue Requirements
Test Year for Rate Revenue
Line No: Requirement
FY 2024 % to Water Water % to Sewer Sewer
Total Operating Revenue Requirement 3,490,316 1,269,081 2,221,235 Less:
Other Operating Revenues
Water User Fees 100% 0%
Reconnection Fees 5,000 100% 5,000 0%
Investment Eamings 32,049 100% 32,049 0%
Retumed Check Fee 500 100% 500
Misc Income 100%
State Grant - Sb2 100%
Equipment 100%
Transfer-In 100%
10 Sewer User Fees 0%
11 Investment Eamings 138,817 0% 100% 138,317
12 State Revolving Fund 0% 100%
13 State Revolving Fund 100%
14 USDA 100%
15 Increase/(Decrease) in Revenues
16 Total Other Operating Revenues 176,366 37,549 138,17 17 Total Rate Revenue Requirement 3,313,950 37% 1,231,532 63% 2,082,418 A -1
APPENDIX B
Water Cost-of-Service
Analysis
Novination
APPENDIX - B
CITY OF FARMERSVILLE, CA
Wator Calculation of Fixed Charge Rates/ Revenue - Test Your FY 2024 Water
Singlo-Family Apartment/Dupl
Residential Commercial Church Govemment Industries School Calculation of Equivalent Meters / Units - Inside Meter Size Units Single Femily Inside/ Equivaient Equivalent Blimo Bets-> Units Units Units Units Units Units Meters Unita Units
0.75 1,500 1,473
1,085 1.115
33.33 53.33
Total Monkly Customers 2.787 2,559
110 =
B-1
APPENDIX - B
CITY OF FARMERSVILLE, CA
Water Max Day/Hour Allocation Factors - Test Year FY 2024 [A] [B] [C] [D] [E] [F]
Max Day Total Max Day Extra
Peak Month Average Month Max Day/Avg Capacity Capacity
Line No: Description Flow (CCF) (CCF) Day Factor (CCF/Day) (CCF/Day) Operating Statistics: MGD Factor
Avg Day Flow (MGD) 1.25 1.00
Max Day Flow (MGD) 2.36 1.89
Cost Allocation Factors: Base Max Day
Base/Max Day 52.95% 47.05%
Peaking Factors:
Single-Family Residential
Tier 1 - 0 - 1,500 Cubic Feet 32,910 26,465 1.24
Tier 2 - Over 1,500 Cubic Feet 29,230 13,026 2.24
All Other Classifications
All Flow 20,278 12,023
Maximum Day
[E] - [B]
Total Annual Average Daily
Estimated Max Day/Hour Flows: Flow (CCF) Flow (CCF) Peaking Factor Total Capacity Extra Capacity Single-Family Residential
Tier 1 - 0 - 1,500 Cubic Feet 339,556 930 1.24 1,157 227 Tier 2 - Over 1,500 Cubic Feet 127,799 350 2.24 786 436 All Other Classifications
All Flow 142,018 389 1.69 656 267
10 Total 609,373 1,670 2,599 929
B - 2
APPENDIX - B
CITY OF FARMERSVILLE, CA
Water Units of Service by Cost Component - Test Year FY 2024 [A] [B] IC]
Monthly Max Day
Line No: Description ERUS Accounts/Units Base (CCF) (CCF/Day) Single-Family Residential 2,563 2,559 467,355 662
Tier 1 - 0 - 1,500 Cubic Feet 339,556 227
Tier 2 - Over 1,500 Cubic Feet 127,799 436
All Other Classifications 732 228 142,018 267
All Flow 142,018 267
Total 3,295 2,787 609,373 929
B - 3
APPENDIX - B
CITY OF FARMERSVILLE, CA
Allocation of Water Costs - Test Year FY 2024
Extra Capacity
Meters &
Line No: Description Water Costs Base Max Day Services Total Allocation Factors:
Treatment 52.95% 47.05% 0.00% 100.00%
Transmission & Distribution 52.95% 47.05% 100.00%
Pumping 52.95% 47.05% 100.00%
Customer Service 0.00% 0.00% 100.00%
Admin 0.00% 0.00% 100.00% 100.00%
Source of Supply 52.95% 47.05% 100.00%
Transfers 75.00% 0.00% 25.00% 100.00%
Existing Bond DS 0.00% 0.00% 100.00% 100.00%
New Bond DS 0.00% 0.00% 100.00% 100.00%
10 CIP 0.00% 0.00% 100.00% 100.00%
11 Capital Outlay 0.00% 0.00% 100.00% 100.00%
Allocation of Costs:
12 Treatment
13 Transmission & Distribution 90,840 48,098 42.712 90,840 14 Pumping
15 Customer Service
16 Admin 924,573 924,573 924,573
17 Source of Supply 252,500 133,693 118,807 252,500
18 Transfers
19 Existing Bond DS
20 New Bond DS
21 311,700 311,700 311,700
22 Capital Outlay
23 Tota-Rate Rev & Fund Balance (348,081) (40,059) (35,599) (272,423) (348,081) 24 1,231,532 141,732 125,950 963,850 1,231,532
Units of Service 609,373.42 929.27 3,295.00
CCF CCF/Day ERUs/Month
Cost Per Unit 0.2326 135.5365 24.3766
CCF CCF/Day ERU/0n376
B-4
APPENDIX - B
CITY OF FARMERSVILLE, CA
Water Cost of Service by Cost Component and Customer Class - Test Year FY 2024 Max Day
Line No: Description Base (CCF) (CCF/Day)
Single-Family Residential 749,824 948,266
Tier 1 - 0 - 1,500 Cubic Feet
Tier 2 - Over 1,500 Cubic Feet 29,724
All Other Classifications 214,026 33,031 36,208 283,266 All Flow 33,031 36,208
Total 963,850 141,732 125,950 1,231,532
B-5
APPENDIX - B
CITY OF FARMERSVILLE, CA
Water Rate Calculation - Test Year FY 2024
[A] [B] IC] [DJ (E]
Proposed Existing
Line No: Description Capacity Ratio Meter Char 38- Charge Charge Difference 3/4 Inch 24.38 27.32 $ (2.94)
1.0 Inch 1.67 40.63 $ 40.63 $ 27.32 $ 13.31
1.5 Inch 3.33 81.26 81.26 $ 43.71 $ 37.55
2.0 Inch 5.33 130.01 130.01 $ 43.71 $ 86.30
3.0 Inch 10.00 243.77 $ 243.77 $ 68.29$ 175.48
4.0 Inch 16.67 406.28 $ 406.28 $ 68.29$ 337.99
6.0 Inch 33.33 812.55$ 812.55 $ 109.26 $ 703.29
8.0 Inch 53.33 1,300.08 $ 1,300.08 $ 109.26 $ 1,190.82
10 10.0 Inch 76.67 1,868.87 1,868.87 N/A N/A
[B] [EL [F]
Proposed Rate Existing Rate
Line No: Customer Class Base Peaking ($/CCF) ($/CCF) Difference Tier Differential Single-Family Residential
Tier 1 - 0 - 1,500 Cubic Feet 0.2326 0.0904 0.3230 $ 0.3230 1.00 Tier 2 - Over 1,500 Cubic Feet 0.2326 0.4619 0.6945 0.9300 (0.2355) 2.15 All Other Classifications Existing ate structure in dudes 1,500 cubic 75 of flow for 0 sher Cosications" All Flow 1.00
Annual Use Peaking Unit
Line No: Customer Class (CCF) Peaking Costs Cost
Single-Family Residential
Tier 1 - 0 - 1,500 Cubic Feet 339,556 30,710 0.09
Tier 2 - Over 1,500 Cubic Feet 127,799 59,033 0.46
All Other Classifications
All Flow 142,018 36,208 0.25
Total 609,373 125,950
B -6
Navigation
APPENDIX - B
CITY OF FARMERSVILLE, CA
Water Rate Design and Revenue Requirement Check - Test Year FY 2024 Single-Family Residential Rates - Cost of Service Component $948,266 Service Charge, $ per Bill Rate 4,38 Units Revenue
0.625 $o
0.75 24.38 1,473 430,880
1.00 24.38 1,085 317,383
1.50 81.26 0
2.00 130.01 1,560
3.00 243.77 0
4.00 406.28
6.00 812.55
8.00 1,300.08 0
10.00 1,868.87 0
Total Service Charge Revenue $749,824
Volume Charge Revenue to be Recovered $198,443
% Volume in Billed Cumulative Volume Rate
Block Block Volume Factor Rate Revenue
15 HCF 72.7% 339,556 1.00 0.3230 $109,686
All Over 15 HCF 27.3% 127,799 2.15 0.6945 88,757
Total 100% 467,355 $198,443
Factor Adjusted Flow 614,322
Annual Surplus/(Deficiency) $0
All Other Classifications Rates - Cost of Service Component $283,266 Service Charge, S per Bill Rate Units Revenue So
0.625 16.25
24.38 117 34,225
1.00 30 14,626
15,601
130.01 49 76,445
243.77 5 14,626
4.00 406.28 10 48,753
6.00 812.55 1 9,751
8.00 1,300.08
10.00 1,868.87
Total Service Charge Revenue $214,026
Volume Charge Revenue to be Recovered $69,239
% Volume in Billed Cumulative Volume Rate
Block Block Volume Factor Rate Revenue
All Flow HCF 100.0% 142,018 1.00 $ 0.4875 $69,239
Total 100% 142018 $69,239
Factor Adjusted Flow
Annual Surplus/(Deficiency) 50
Variance From
Customer Class Proposed FY 2022 COS COS Percent Variance Single-Family Residential 5948,266 5948,266 $0 0.00%
All Other Classifications $283,266 $283,266 0.00%
1,231,532 1,231,532 0.00%
B-7
APPENDIX C
Sewer Cost-of-Service
Analysis
Navigation
APPENDIX-C
CITY OF FARMERSVILLE, CA
Calculation of Fixed Chargo Rates/ Rovenue - Sower FY 2024 Sewer
Inside
Single-Family
Residential Apartment Commercial Government School Church Meter Size Billing Basis→> Units Units Units Units 15 Total 2979 All Customers 109 3
0-1
Navigation
APPENDIX - C
CITY OF FARMERSVILLE, CA
Customer Account & Stength Characteristics by Customer Class - Sewer FY 2024 Total Total CCF BOD BOD TSS TSS
Units Bills Flow Factor '' Pounds Factor'"' Pounds
Residential Classes (2)
Single-Family Residential 2,424 29,088 309,237 250 482,281 250 482,281 Apartment 419 5,028 38,367 250 59,837 250 59,837
Non-Residential Classes 1)
Commercial Class
Commercial 109 1,308 27,601 481 110,721 380 87,472
Government 3 36 692 130 751 100 577
Church 15 180 175 175 255 175 255
Sub-Total Commercial 127 1,524 28,468 111,727 88,305
Schools
Schools 9 108 17,959 130 14,565 100 11,204
Total 2,979 35,748 394,032 668,409 641,625
Notes:
[1] Average strength factors for BOD and TSS are based on the State Water Resources Control Board Revenue Program Guidelines, Appendix G. [2] Assumed annual residential sewer flows were calculated by taking the average winter consumption for the lowest three months of the most recent full fiscal year of water customer data provided, then determining the factor of the winter average usage to the total annual average monthly water usage for the most recent full fiscal year of water customer data provided. This factor was then applied to the projected monthly average "Test Year" water flows to determine the "Test Year" annual sewer flows. [3] All non-residential flow was provided from sewer billing data.
C-2
APPENDIX - C
CITY OF FARMERSVILLE, CA l
Allocation of Sewer Costs FY - 2024
Allocation to Volume and Customer Service - Sewer FY 2024 Readiness to Serve
Sewer Costs Volume Capacity Strength - BOD Strength - SS Customer Total Allocation Factors:
Treatment 11.56% 11.56% 39.22% 37.66% 0.00%
Collection 100.00%
50.00% 50.00% 0.00% 0.00% 0.00% 100.00%
Administration 0.00% 0.00% 0.00% 0.00% 100.00% 100.00%
Pumping 11.56% 11.56% 39.22% 37.66% 0.00% 100.00%
Customer Service 0.00% 0.00% 0.00% 0.00% 100.00%
100.00%
Transfers 50.00% 50.00% 0.00% 0.00% 100.00%
CIP 0.00% 0.00% 2.0% 0.00% 100.00% 100.00%
Capital Outlay 11.56% 11.56% 39.22% 37.65% 0.00% 100.00% Existing Bond DS 50.00% 50.00% 0.00% 0.00% 0.00% 100.00% 10 New Bond DS 11.56% 11.56% 39.22% 37.65% 0.00%
100.00%
Allocation of Costs:
11 Treatment 862,000 99,647 $ 99,647 $ 338,114 $ 324,592 s 862,000 Collection 313,340 156,670 156,670 313,340
Administration 674,863 674,863
14 Pumping
Customer Service
Transfers
CIP 1,595,500 1,595,500
1,595,500
Capital Outlay
Existing Bond DS -
698,888 349,444 349,444 698,888
New Bond DS
Totan-Rate Rev & Fund Balal. 2,062,173) (301,401) (301,401) (161,503) 2,082,418 304,360 S 304,360 118,81 , 41,120,137) (2,062.173) 163,089 2,082,418
Fixed Charge Component 1,140,726 1,140,726
Toll Charge Component. 304,360 098 t 169,883 163,089
304,360 S 09C t0E 888 69L 163,089 1,740,726 $ 2063472
Units of Service 394,032 60₺'899 641,625 2,979
100 punod Pound Units/Month
Cost per Unit 0.77 $ 0.77 $ 0,25 $ 0.25 $ 31.91
0-3
APPENDIX - C
CITY OF FARMERSVILLE, CA
Sewer Cost of Service by Cost Component and Customer Class - Test Year FY 2024 [E]
Line No: Description Volume Capacity Customer
Single-Family Residential 238,863 238,863 strength BoD Stron th. 8 928,204 1,651,093 Apartment 160,445 250,133
Commercial Class 143,452
Schools
Total 304,360
C - 4
APPENDIX - C
CITY OF FARMERSVILLE, CA
Sewer Rate Calculation - Test Year FY 2024
Bilable
Monthly Existing Monthly Proposed Volumetric
Fixed Rate Dwelling Monthly Fixed Fee Volumetric Volumetric Volumetric Line No: Customer Class Fixed Fee Fixed Fee Difference Rate Costs Difference Residential Classes
Single-Family Residential 1,651,093 56.76 $ 56.61 $
Apartment 250,133 49.75 $ 56.61 $
Non-Residential Classes
Commercial Class 48,631 127 31.91 $ 13.00 18.91 $ 94,820 28,468 $ 3.33 $ 1.15 $ 2.18 Schools 3,446 31.91 $ 18.91 $ 34,294 17,959 $ 1.91 1.79 0.12 C - 5
Navigation
APPENDIX - C
CITY OF FARMERSVILLE, CA l
Sewer Revenue vs Cost of Service by Customer Class Check - Test Year FY 2024 [A] [E] [FI [G]
Proposed Billable Proposed Volumetric
Monthly Monthly Fixed Total Fixed Annual Volumetric Calculated Total COS Difference Line No: Description Dwelling Units Fee Revenue Volume (CCF) Revenues Revenues Calc vs COS Single-Family Residential 2,424 $ 1,651,093
Apartment 419 250,133 250,133 $
Commercial Class 127 48,631 28,468 94,820 $
Schools
Total 2,979
C - 6
CITY OF
FARMERSVILLE
FARMERSVILLE
MAMISHEO O INCOR E CO
CITY HALL
WWILLDAN
27368 Via Industria, Suite 200
Temecula, CA 92590
800.755.6864 | Fax: 888.326.6864
www.willdan.com
City of Farmersville
Water & Sewer Utility Rate Study
February 12, 2024
Willdan Financial Services
• Chris Fisher, Vice President
Michael Cronan, Project Manager
CITY OF City of
WILLDAN FARMERSVILLE
FARMERSVILLE
FINANCIAL SERVICES
CALIFORNIA
Rate Study Objectives
• Primary goals and objectives of the rate study include:
• Development of a 5-year financial plan
• Funding current and future operations, capital
• Debt repayment, compliance with bond covenants
• Maintaining adequate operating reserves
• Equitable, cost-based rate structure
• Proposition 218 compliance
W WILLDAN
FINANCIAL SERVICES
Factors Driving Financial Plans & Recommendations
• Rising operating costs (equipment, supplies, treatment, etc.) • Rising personnel costs (labor, benefits, pensions, etc.) • Effectively manage additional fund balance - sewer fund • Establishment of rate stabilization fund reserve
• Meeting debt service coverage to maintain compliance with debt covenants
• Sludge De-Watering Equipment asset purchase and equipment rental
• Last Rate Adjustments: Water - Jan. 1, 2022; Sewer - Oct. 1, 2017
W WILLDAN
FINANCIAL SERVICES
City of Farmersville
Water & Sewer Utility Rate Study
Methodology & Projections
WILLDAN
FINANCIAL SERVICES
General Rate Study Methodology
Customer
Accounts Usage/Volumes
Customer Billing/Revenue Reconciliation
Revenue Sufficiency under
Existing Rates
Other Revenues Rate Design
Total Revenue Requirements
Debt Service & Debt Liquidity
O&M Expenses Capital Expenditures
Requirements
W WILLDAN
FARMERSVILLE
FINANCIAL SERVICES
Status Quo Projections: Water
Revenues over Expenditures (excluding Capital Expenses) $2.00
Millions
$1.50
$1.00
$0.50
$0.00
2024 2025 2026 2027 2028
-$0.50
JAI Expenditures •Net Results
Number of Days O&M in Cash Reserves Debt Service Coverage 300 1.2
200 There is no outstanding debt
100 0.8
associated with the water system.
0.6 2024 2025 2026 2027 2028 0.4
(100)
0.2 (200)
(300) 2024 2025 2026 2027 2028
Days → Target a Ratio - Target
W WILLDAN
FINANCIAL SERVICES
Status Quo Projections: Sewer
Revenues over Expenditures (excluding Capital Expenses) $3.00
Millions
$2.00
$1.00
$0.00
2074 2025 2026 2027 2028
-$1.00
Revenues I Expenditures •Net Results
Number of Days O&M in Cash Reserves Debt Service Coverage 800 1.20
1.00 600
0.80 400 0.60
0.40 200
0.20 2024 2025 2026 2027 2028 2024 2025 2026 2027 2028
-Target a Ratio •Target
WILLDAN
FINANCIAL SERVICES
Capital Improvement Plan: Water
Funding Fiscal Year Ending June 30,
Description
Source 2024 2025 2026 2027 2028
Water projects
Birch Water Line Relocation Cash 35,000 326,000 $
Master Plans for Sewer, Water, and Storm Drain Cash 70,000 Water Storage Tank (pending future grant) Grant 18,000 3,400,000 Urban Water Management Plan Cash 53,000
New Corporation Yard for Public Works Cash 83,250 83,250 Skid Steer Loader (Bobcat) Cash 49,000
Digital Sign Cash 15,000
Public Works Backhoe Cash 57,333
Pick Up Trucks (F-150 x2) Cash 26,656
Downtown Specific Plan Cash 15,000
General Plan Update Cash 58,666 43,175
Line Replacement Program Cash 250,000 250,000
Vehicle Replacement Cash 75,000 75,000
Total Water projects 311,655 $ 470,425 $ 3,551,250 $ 325,000 325,000
WILLDAN
FINANCIAL SERVICES
Capital Improvement Plan: Sewer
Funding Fiscal Year Ending June 30,
Description
Source 2024 2025 2026 2027 2028
Sewer projects
Master Plans for Sewer, Water, and Storm Drain Cash 70,000 Solar Plant at WWTP (pending future grant) Grant 5,000,000 New Corporation Yard for Public Works Cash 83,250 83,250 Skid Steer Loader (Bobcat) Cash 49,000
Digital Sign Cash 15,000
Vacuum Truck Cash 384,500
Public Works Backhoe Cash 57,333
Pick Up Trucks (F-150 x2) Cash 26,656
Downtown Specific Plan Cash 15,000
General Plan Update Cash 58,666 43,175
Line Replacement Program Cash 250,000 250,000
Vehicle Replacement Cash 75,000 75,000
De-Watering System Asset Purchase Cash 934,341
Total Sewer projects $ 6,595,496 126,425 $ 98,250 325,000 325,000
WILLDAN
FINANCIAL SERVICES
• 5-year water & sewer rate path
• Existing vs proposed monthly bill at various units of flow • Comparison with neighboring utilities
• Projected financial metrics & operating results over the 5- year financial plan including rate adjustments
5-Year Financial Plan
WILLDAN
FINANCIAL SERVICES
5-Year Rate Path: Water
Description Existing Proiected For Fiscal Year Ending June 30:
Rates 2024 2025 2026 2027 2028
Monthly Base Charge by Meter Size:
Single-Family Residential (3/4 Inch and 1 Inch) 27.32 24.38 26.57 28.96 31.57 34.41 3/4 Inch 27.32 24.38 26.57 28.96 31.57 34.41
1.0 Inch: 6A 27.32 40.63 44.28 48.27 52.62 57.35
1.5 Inch 43.71 81.26 88.57 96.53 105.23 114.70
2.0 Inch 43.71 130.01 141.71 154.45 168.37 183.52
3.0 Inch 68.29 243.77 265.70 289.60 315.70 344.10
4.0 Inch 68.29 406.28 442.83 482.67 526.17 573.50
6.0 Inch 109.26 812.55 885.67 965.33 $ 1,052.33 $ 1,147.00
8.0 Inch 109.26 1,300.08 $1,417.07 $ 1,544.53 $ 1,683.73 $ 1,835.20
10.0 Inch N/A $ 1,868.87 $ 2,037.03 $ 2,220.27 $ 2,420.37 $ 2,638.10 Volumetric Rates Per 100 Cubic Feet - Residential:
0 - 1,500 Cubic Feet 0.0000 0.3230 0.3521 0.3838 0.4183 0.4559 Over 1,500 cubic feet 0.9300 0.6945 0.7570 0.8251 0.8994 0.9803 Volumetric Rates Per 100 Cubic Feet - All Other:
0 - 1,500 Cubic Feet 0.0000 0,4875 0.5314 $ 0.5792 0.6313 0.6881 Over 1,500 cubic feet 0.9300 0.4875 0.5314 0.5792 0.6313 0.6881
W WILLDAN
FINANCIAL SERVICES 11
5-Year Rate Path: Sewer Monthly Base Charge
Description Existing Projected For Fiscal Year Ending June 30:
Rates 2024 2025 2026 2027 2028
Monthly Base Charge:
Single-Family Residential [1] 56.61 56.76 61.30 63.75 66.30 68.95 Multiple-Dwelling Unit (1] 56.61 49.75 53.72 55.87 58.11 60.43 Service Stations, Garages, Churches, Social,
56.61 $ 31.91 $ 34.46 $ 35.84 $ 37.27 $ 38.76
Fraternal, Non-Profit, Other Retail/Service
Restaurants, Cafes, Drive-Ins, Grocery Stores,
13.00 31.91 $ 34.46 $ 35.84 $ 37.27 38.76
Bars, Car Washes, Laundromats
Hotels (per unit), Motels (per unit), Rooming
Units (per unit), Camps (per unit), Auto Courts 14.53 31.91 34.46 $ 35.84 37.27 38.76 with Cooking Facilities (per unit)
Hotels (per unit), Motels (per unit), Rooming
Units (per unit), Camps (per unit), Auto Courts 11.53 31.91 34.46 $ 35.84 37.27 $ 38.76 without Cooking Facilities (per unit)
Public Schools 13.00 31.91 34.46 35.84 37.27 GA 38.76
Professional Offices or Other Business 53.03 31.91 34.46 35.84 37.27 GA 38.76 Notes:
[l] All single-family and multi-family customers pay a flat monthly fee per dwelling unit regardless of usage.
WILLDAN
FARMERSVILL
FINANCIAL SERVICES 12
5-Year Rate Path: Sewer Volumetric Charge
Description Existing Projected For Fiscal Year Ending June 30:
Rates 2024 2025 2026 2027 2028
Volumetric Rates Per 100 Cubic Feet:
Single-Family Residential [1] GA 6A
Multiple-Dwelling Unit [1] tA
Service Stations, Garages, Churches, Social, 3.33
3.60 $ 3.74 $ 3.89 4.05
Fraternal, Non-Profit, Other Retail/Service
Restaurants, Cafes, Drive-Ins, Grocery Stores,
1.15 3.33 3.60 3.74 $ 3.89 4.05
Bars, Car Washes, Laundromats
Hotels (per unit), Motels (per unit), Rooming
Units (per unit), Camps (per unit), Auto Courts - $ 3.33 3.60 3.74 3.89 4.05 with Cooking Facilities (per unit)
Hotels (per unit), Motels (per unit), Rooming
Units (per unit), Camps (per unit), Auto Courts 3.33 3.60 3.74 3.89 4.05 without Cooking Facilities (per unit)
Public Schools 1.79 1.91: 2.06 2.14 2.23 2.32
Professional Offices or Other Business 3.33 $ 3.60 $ 3.74 3.89 4.05 Notes:
[1] All single-family and multi-family customers pay a flat monthly fee per dwelling unit regardless of usage.
W WILLDAN
FINANCIAL SERVICES 13
Existing vs Projected W&S Bill @ Various Units of Flow
$120
$99.74 $97.79
$100
$83.93 $82.43 $83.93 $83.72 $83.93 $85.66 $84.86 $86.68 $80
$60
$40
$20
$-
400 CF 800 CF 1,400 CF 1,600 CF 3,200 CF
I Existing Bill $83.93 $83.93 $83.93 $84.86 $99.74
Proposed Bill $82.43 $83.72 $85.66 $86.68 $97.79
Difference $(1.50) $(0.21) $1.73 $1.82 $(1.95)
Existing Bill = Proposed Bill Difference WILLDAN
FINANCIAL SERVICES 14
Neighboring Utility Comparison @ 1,600 Cubic Feet
$180
$169.29
$160
$140
$120 $113.41 $115.10 $116.91
$100.00 $100.60
$100 - $86.59 $86.74 " $90.80 - $92.75.
$83.16 $84.86 $85.02 $85.43 $86.68
$80 $74.20
$60
$40
$20
CA CA CA CA CA CA
Dinuba, CA Tulare, CA Farmersville Existing Lemoore, ( Delano, Farmersville Proposed Exeter, CA McFarland, CA Lamont, Woodlake, CA Clovis, Porterville, Cutler, California City, CA Rosamond, CA = Total Water & Sewer Bill - Average of Comparison Utilities
WILLDAN
FINANCIAL SERVICES 15
Adjusted Financial Metrics: Water
Revenues over Expenditures (excluding Capital Expenses) $2.00
$1.50
$1.00
$0.50
$0.00
2024 2025 2026 2027 2028
Expenditures •Net Results
Number of Days O&M in Cash Reserves Debt Service Coverage 300 1.2
250 There is no outstanding debt
200 0.8
associated with the water system.
150 0.6
100 0.4
50 0.2
2024 2025 2026 2027 2028 2024 2025 2026 2027 2028
ma Days •Target a Ratio → Target
W WILLDAN
FARMERSVILLE
FINANCIAL SERVICES 16
Adjusted Financial Metrics (Includes RSF): Sewer
Revenues over Expenditures (excluding Capital Expenses) $4.00
Millions
$3.00
$2.00
$1.00
$0.00
2024 2025 2026 2027 2028
-$1.00
• Expenditures Net Results
Number of Days O&M in Cash Reserves Debt Service Coverage 800 1.50
600
1.00 400
0.50 200
2024 2025 2026 2027 2028 2024 2025 2026 2027 2028
m Days Target a Ratio Target
W WILLDAN
FINANCIAL SERVICES 17
Including RSF vs Excluding RSF: Sewer
• Below are the differences between revenue adjustments that would be necessary - with and without the option of establishing a sewer rate stabilization fund
Description Fiscal Year Ending June 30,
2024 2025 2026 2027 2028
Revenue Adjustments
Including Rate Stabilization Fund 8.50% 8.00% 4.00% 4.00% 4.00% Excluding Rate Stabilization Fund 15.50% 15.50% 3.00% 3.00% 3.00%
W WILLDAN
FINANCIAL SERVICES 18
City of Farmersville
Water & Sewer Utility Rate Study
NEXT STEPS
WILLDAN
FINANCIAL SERVICES
• Set Prop 218 public hearing date
• Mail out Proposition 218 Notices
• Conduct Public Hearing, receive testimony/comments
• Tabulate written protests
• Council discussion and consideration
• Adopt and implement the utility rates
Next Steps WILLDAN
FINANCIAL SERVICES: 20
City of Farmersville
Water & Sewer Utility Rate Study
QUESTIONS
WILLDAN
FINANCAAL SERVICES
CITY OF
FARMERSVILLE Farmersville City Council
Regular Meeting
Tina Hernandez, Mayor Monday, January 22, 2024 6:00 PM
Danny Valdovinos, Mayor Pro Tem
Gregorio Gomez, Council Member Meeting held in Civic Center Council Chambers Paul Boyer, Council Member - 909 W. Visalia Road Farmersville, California Armando Hinojosa, Council Member
Pending no technical difficulties, the City Council meeting will also be streamed (for observation only) via Zoom and accessed as follows:
Please dial 1-669-900-6833
Meeting ID: 856 6245 6860
Password: 710665
Call to Order: 6:00 pm.
Roll Call:
Attendee Name Title Status Arrived
Tina Hernandez Mayor Present 6:00 pm
Danny Valdovinos Mayor Pro Tem Present 6:00 pm
Greg Gomez Council Member Present 6:00 pm
Paul Boyer Council Member Present 6:00 pm
Armando Hinojosa Council Member Present 6:00 pm
Invocation: Mayor Hernandez
4. Pledge of Allegiance: Mayor Pro Tem Valdovinos
5. Public Comment:
Provides an opportunity for members of the public to address the City Council on items of interest to the public within the Council's jurisdiction and which are not already on the agenda this evening. It is the policy of the Council not to answer questions impromptu. Concerns or complaints will be referred to the City Manager's office. Speakers should limit their comments to not more than two (2) minutes. No more than twenty (20) total minutes will be allowed for Public Comment. For items which are on the agenda this evening, members of the public will be provided an opportunity to address the council as each item is brought up for discussion. Comments are to be addressed to the Council as a body and not to any individual Council Member.
Brian Thoburn from Southern California Edison thanked the City of Farmersville for their continuous support. During the Council meeting, he provided an update on upcoming projects, particularly addressing the non-functional streetlights along Farmersville Blvd.
Mr. Thoburn informed the Council that the repair process might be extended for some streetlights due to cable failures. To address the lighting issue promptly, Southern California Edison is exploring the option of deploying temporary lights until the necessary cable repairs can be completed.
The coaches of the Farmersville Youth Cheer shared concerns about the challenges they are encountering in raising funds for their cheerleaders. They desired better alignment between their fundraising initiatives and the City's support. The coaches requested that the City consider accommodating their fundraising ideas to facilitate a smooth fundraiser.
Don Goforth from Crown Valley Youth Ranch delivered a presentation on the services offered to youth. The Ranch supports individuals aged 6-18 through personalized 1-on- 1 mentorship, instilling work ethics, and engaging in extracurricular activities such as horseback riding, gardening, fishing, and more. Notably, it was emphasized that these services are accessible to all youth.
Jose Prado of 1915 N. Virginia Ave inquired about the completion date of the new park.
Additionally, he expressed interest in the possibility of installing a soccer field if the existing baseball fields will be removed someday, with the intention of utilizing the existing field lights for soccer activities.
6. Presentations:
A. Downtown Specific Plan: Analysis of Road Diet and Streetscape Concept for Farmersville Blvd. in the Downtown
A representative from Ruettgers & Schuler conducted a presentation on the Road Diet for Downtown Farmersville. During the presentation, the speaker outlined the potential impacts on the community, specifically addressing concerns related to traffic, parking, travel, and pedestrian considerations.
Discussion took place.
Mayor Pro Tem Valdovinos has concerns that it will affect response time from the Fire and Police Department.
Councilmember Boyer expressed apprehensions about the potential impact on residential side streets, anticipating changes in traffic patterns as drivers seek alternative routes to avoid slower traffic resulting from the reduction in lanes.
Additionally, he voiced concerns about the potential adverse effects on businesses, particularly regarding customer accessibility; he has concerns that customers may encounter difficulties entering and exiting businesses under the proposed changes.
Mayor Hernandez is in favor of the Road Diet, stating that it gives a more "Downtown" feel.
Councilmember Gomez supports the Road Diet concept. Furthermore, he highlighted that the Fire Department would be relocated to Front Street, alleviating any concerns he might have had about potential impacts on response times.
The Council has requested larger drawings of the proposed plan and has expressed a desire for a work session to conduct a thorough review and gather additional information. Additionally, the Council seeks more input from the businesses that would be affected and wishes to involve residents in the decision-making process.
Consent Agenda:
Under a CONSENT AGENDA category, a recommended course of action for each item is made. Any Council Member or Member of the Public may remove any item from the CONSENT AGENDA in order to discuss and/or change the recommended course of action, and the Council can approve the remainder of the CONSENT AGENDA.
A. Authorization to waive full reading of ordinances and resolutions and to identify by title only.
Recommend that the City Council approve the full reading of all ordinances and resolutions be waived and to identify by title only.
B. Minutes of Regular City Council Meeting of January 8, 2024 Recommend approval of minutes.
Documents: Draft Action Minutes of January 8, 2024
C. Finance Update for November and December 2023: Warrant Register and Investment Summary
Recommend that the City Council:
1. Approve the Warrant Register as presented for the period. This reporting period represents warrants issued for the current Fiscal Year (2023/2024);
2. Accept the Investment Summary as presented for the period. This reporting period represents investment summary for the previous month.
Documents: November & December 2023 Warrant Register
Investment Summary November & December 2023
D. Adopt Ordinance 521 amending the existing zoning designations for the Kaweah Pointe residential development project pertaining to 37₺ acres of land on the north side of Visalia Road, west of the Virginia Avenue alignment, proposing 151 single family residential lots, 3.7‡ acres of parks/open space, 1.4-acres of land zoned for future multi- family residential development
Recommend that the City Council adopt Ordinance 521 amending the existing zoning designations for the site.
Documents: Ordinance 521
E. Adopt Ordinance 522 approving a zone change for the Gardenia Courtyards multi-family residential and commercial project pertaining to 6.6t acres of land on the east side of N. Farmersville Boulevard, north of Walnut Avenue, proposing 82 multi-family residential units, and 2.7tacres of land zoned for future commercial development
Recommend that the City Council adopt Ordinance 522 approving a zone change for the site.
Documents: Ordinance 522
F. Adopt Ordinance 523 to regulate the development of Accessory Dwelling Units (ADU's) and Junior Accessory Dwelling Units (JADU's)
Recommend that the City Council adopt Ordinance 523, an amendment to Title 17 (the Zoning Ordinance) of the Farmersville Municipal code to establish standards to regulate the development of Accessory Dwelling Units (ADU's) and Junior Accessory Dwelling Units (JADU's).
Documents: Ordinance 523
G. Designation of Applicant's Agent Resolution for Non-State Agencies Recommend that the City Council designate the City Manager to be the Authorized Agent to complete and submit forms to engage with FEMA and CalOES for grant funds.
Documents: Designation of Applicant's Agent Resolution for Non- State Agencies
Councilmember Boyer abstained from warrant register items from Self Help and Kiwanis.
Motion to approve as presented.
RESULT APPROVED (UNANIMOUS)
MOVER Councilmember Gomez
SECONDER Mayor Pro Tem Valdovinos
AYES Hernandez, Valdovinos, Gomez, Boyer Hinojosa
ABSENT
ABSTAIN Councilmember Boyer on Warrants to Self Help and Kiwanis.
General Business
A. Potential City Development Adjacent to Linnel Farm Labor Center Recommend that the City Council receive the information contained in this report regarding interest in development adjacent to the Linnel Farm Labor Center and provide comments and direction to staff.
City Planner Karl Schoettler delivered a PowerPoint presentation addressing the interest in development near the Linnel Farm Labor Center. A key focus of Mr.
Schoettler's discussion was the proximity of the wastewater treatment plant at Linnel Farm Center to potential residential areas. He highlighted that the City had previously discussed this matter but abandoned it due to various concerns.
There were several concerns and comments from the Council.
The Council directed the staff to contact the Developer and facilitate communication with the Housing Authority to explore potential measures for mitigating concerns related to the sewer plant. They also requested the developer conduct an environmental review to address odor issues, given the location.
Council Reports
A. City Council Updates and Committee Reports
Councilmember Hinojosa inquired about cleaning the benches inside the City Museum.
He also asked about a sign for Roy's Park.
Councilmember Boyer provided an update on the status of the chimes at the Clock Tower in the City of Lindsay.
Mayor Hernandez inquired about the feasibility of ordering Polo shirts with the City logo for the Planning Commissioners. City Manager Jennifer Gomez expressed her concerns about allowing the Planning Commissioners to wear City logo shirts.
10. Staff Communications:
City Manager Jennifer Gomez advised the Council about the Compost Giveaway. She also informed the Council that the City recently had an emergency purchase of a Bucket Lift Truck. The Public Works Director advised the Council that our current Bucket Lift Truck needs maintenance. However, the manufacturer is no longer in business, making getting parts complicated. After having a meeting with the Finance Director and City Manager, the decision was made to purchase a new Bucket Lift Truck.
Public Works Director Jeff Dowlen talked about the free compost, stating that the State mandates the purchase of compost through Cal Recycle. Mr. Dowlen also told the Council that local farmers can purchase the compost, and Cal Recycle will provide the City with credit. Furthermore, he updated the Council on ongoing projects, including installing curb and gutter, electrical, and irrigation work at Roy's Park.
Battalion Chief Thomas informed the Council that Code Enforcement is currently taking their first module class, which is certified by the State.
11. Future Agenda Items
1. Amend Ordinance - Temporary Outdoor Use Permits
2. Review of Cannabis Cultivation
3. Site Visits to Woodlake, Exeter, and Lindsay
4. Water Restrictions
5. Update City Ordinances related to Code Enforcement
6. Reopening Two-way Traffic on E. Citrus at Freedom Drive
7. Transit Services with Visalia Transit and TCRTA
12. Adjourn to Closed Session:
Mayor Hernandez adjourned to closed session at 7:45 pm.
A. PUBLIC EMPLOYMENT
Pursuant to Government Code Section 54957
Title: City Attorney
13. Reconvene to Open Session:
Mayor Hernandez reconvened to open session at 8:55 pm with nothing to report
14. Closed Session Report (if any):
15. Adjournment:
Mayor Hernandez adjourned the meeting at 8:55 pm.
Respectfully submitted,
Rochelle Giovani, City Clerk
Strong Roots..... Growing Possibilities
CITY OF
FARMERSVILLE
City Council
Staff Report 7C
TO: Honorable Mayor and City Council
FROM: Jennifer Gomez, City Manager
DATE: February 12, 2024
SUBJECT: Notice of Completion of the Farmersville ADA Improvements Project RECOMMENDED ACTION:
It is recommended that the City Council accept the Farmersville ADA Improvements Project, and the City Council authorize the City Manager sign the Notice of Completion and the City Clerk file the Notice of Completion with the County Clerk's office.
BACKGROUND and DISCUSSION:
Clean Cut Landscape Inc, the contractor on the project, began construction on September 18, 2023, and completed the work on February 5, 2024. Work involved demolition, clearing and grubbing, grading, concrete and pavement improvements, fence relocations, SD installation, pavement delineation, mitigation measures, and clean up. Completion was delayed due to the required timeframe to complete all necessary paperwork.
The project had four (4) change orders that included: Revision in Bid quantity amount to reflect reduction in scope of removing Shasta Drive Improvements from the project plans. Additional modifications.
Base Contract Amount: $250,749.50
Change Order 001-004: ($90,586.78)
Final Contract Sum: $160,162.72
FISCAL IMPACT:
This project was funded by Measure Q.
ATTACHMENT(S):
Notice of Completion
RECORDING REQUESTED
AND RETURN TO:
City of Farmersville
909 W. Visalia Road
Farmersville, CA 93223
FREE RECORDING: Govt. Code 6103
NOTICE OF COMPLETION
NOTICE IS HEREBY GIVEN:
That the City of Farmersville, California, a Municipal Corporation, whose address is 909 West Visalia Road Farmersville, California, is the owner of the real property, public works or structure hereinafter described.
2. That on the 5th day of February 2024, a work of improvement on real property hereinafter described was completed pursuant to a contract to which Division 2, Part 3, Chapter 1, Article 4, of the Public Contract Code applies.
That the name of the contractor who performed said work of improvement pursuant to such contract with the City of Farmersville is Clean Cut Landscape whose whose address is N. Fowler Ave #116, Clovis, CA 93619 and that Everest Reinsurance Company is the surety on said contract.
That the real property or public work or structure is described as follows:
Farmersville ADA Improvements.
That the Nature of the owner's interest or estate is: In Fee Dated: City of Farmersville
A Municipal Corporation
Benifer Gomez, Cily Manager
STATE OF CALIFORNIA)
)ss
COUNTY OF TULARE
The undersigned being duly sworn says: That she is the City Manager of the City of Farmersville, a Municipal Corporation, and gives notice for and on behalf of said Municipal Corporation, that she has read the foregoing notice and knows the contents thereof, and the same is true of her own knowledge.
By: _
lEgnyteDrivelProjectsProjects|2022\220372\CONSTRUCTION MGMT\ContractsINOC\220372-Notice of Comp_Draft.doc A Notary Public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
STATE OF CALIFORNIA)
)sS
COUNTY OF TULARE)
Subscribed and sworn or affirmed to before me on this _ _day of _ who proved to me on the basis of satisfactory evidence to be the person(s) who appeared before me.
Notary Public in and for the County of Tulare, State of California Commission Expiration Date
Attached to Notice of Completion for Farmersville ADA Improvements Project:
(Insert name of project on line above)
1lEgnyteDrivelProjectslProjects|2022\220372\CONSTRUCTION MGMT\ContractsINOC\220372-Notice of Comp_Draff.doc
CITY OF
FARMERSVILLE
City Council
Staff Report 8A
TO: Honorable Mayor and City Council
FROM: Jennifer Gomez, City Manager
DATE: February 12, 2024
SUBJECT: Cooperative Agreement between the City of Farmersville and the County of Tulare for Avenue 280 Widening Project - Segment 2
RECOMMENDED ACTION:
It is recommended that the City Council authorize the City Manager to sign the Cooperative Agreement.
BACKGROUND and DISCUSSION:
This agreement outlines the roles and responsibilities of the County of Tulare and the City of Farmersville to achieve the widening of Avenue 280 and other related improvements as identified by the Tulare County Association of Government's (TAG) Regional Transportation Improvement Program and the City's General Plan Circulation Element. This project will widen Avenue 280 between Lover's Lane in Visalia and Virginia Avenue in Farmersville in order to increase mobility, reduce congestion, and improve traffic flow.
South Virginia Avenue will also be realigned at Visalia Road in order to align with a future street in the Kaweah Pointe subdivision to create a safer intersection. Additionally, a storm basin will be constructed on the south side of Visalia Road next to South Virginia in lieu of a large storm basin that was originally proposed to be located north of Visalia Road in the Comprehensive Infrastructure Master Plan.
In addition to these improvements, the City has requested that the County also install water and sewer infrastructure during their widening project that will support the future development of the Kaweah Pointe subdivision to be built on the north side of Visalia Road (Avenue 280). With the widening project scheduled to be completed first, no one wants to see a newly constructed street to be ripped up shortly thereafter to install utilities for the subdivision. The City will be seeking reimbursement from the parties that will benefit from the utility extensions as this area gets developed.
FISCAL IMPACT:
The cost estimates to reimburse the County is $476, 101.00 and will be funded from the Water and Sewer funds.
ATTACHMENT(S):
Cooperative Agreement
COOPERATIVE AGREEMENT
for
AVENUE 280 WIDENING PROJECT - SEGMENT 2
This Cooperative Agreement ("AGREEMENT") is made and entered into this _day of _, 2023 by and between the COUNTY OF TULARE (hereinafter referred to as "COUNTY"), and the CITY OF FARMERSVILLE (hereinafter referred to as "CITY") for the Avenue 280 Widening Project - Segment 2 (herein referred to as "PROJECT"). An individual signatory agency in this AGREEMENT is referred to as "PARTY." Collectively, the signatory agencies in this AGREEMENT are referred to as "PARTIES."
RECITALS
WHEREAS, the Tulare County Association of Governments identifies the widening of the Avenue 280 corridor as a component of the Regional Transportation Improvement Program; and
WHEREAS, PARTIES recognize the need to widen the Avenue 280 (Visalia Road) corridor to increase mobility, reduce congestion, and improve traffic flow; and WHEREAS, COUNTY is the lead agency for the PROJECT; and WHEREAS, a portion of the PROJECT is part of the current CITY General Plan Circulation Element, the PROJECT matches the street improvements at the PROJECT limit within the CITY at Virginia Avenue, and by this AGREEMENT CITY is stating that it intends to cooperatively work with COUNTY to fulfil CITY street improvement goals; and WHEREAS, PROJECT is of general interest to PARTIES and a portion of PROJECT is within each PARTIES' geographic boundaries; and
WHEAREAS, Avenue 280 (Visalia Road) from Road 140 (Lovers Lane) to approximately 1,325 feet East of Road 156 (Mariposa Avenue) is located within COUNTY'S JURSIDICTION (limits shown on "Exhibit A"); and
WHEAREAS, Avenue 280 (Visalia Road) approximately 1,325 feet West of Road 160 (Virginia Avenue) is located within CITY'S JURSIDICTION (limits shown on "Exhibit A"); and WHEREAS, COUNTY is lead agency for the design and construction management of PROJECT; and
WHEREAS, PROJECT is scheduled for construction in fiscal year 2024/2025 and CITY will continue to operate and maintain the roadway system within CITY'S JURISDICTION upon PROJECT completion; and
Tulare County Agreement No.
WHEREAS, this AGREEMENT provides the framework for the collaboration between COUNTY and CITY defining the terms, conditions, and responsibilities of each PARTY for the design and construction of PROJECT; and
WHEREAS, PARTIES are authorized to enter into this AGREEMENT per the California Government Code sections 6500 and 23004, et seq., and the California Streets and Highways Code sections 1685 and 1803; and
NOW, THEREFORE, it is mutually understood and agreed by PARTIES as follows:
ARTICLE 1. DEFINITIONS
A. CEQA (California Environmental Quality Act) is the act (California Public Resources Code, sections 21000 et seq.) that requires state and local agencies to identify the significant environmental impacts of their actions and to avoid or mitigate those significant impacts, if feasible.
B. CONSTRUCTION, as referred to in this AGREEMENT, is the project phase of completing the construction of PROJECT. Work includes, but is not limited to, construction contract administration, construction inspection, materials testing, construction survey, traffic detour, construction engineering, utility relocation, changes and modifications of plans and specifications for PROJECT necessitated by unforeseen or unforeseeable field conditions encountered during construction of PROJECT, construction contingencies, and all other necessary work after advertisement of PROJECT for construction bids to cause PROJECT to be constructed in accordance with said plans and specifications approved by PARTIES.
C. IMPLEMENTING AGENCY, as referred to in this AGREEMENT, is defined as the PARTY responsible for managing the scope, cost, and schedule of a project phase to ensure completion of said phase.
D. JURISDICTION, as referred to in this AGREEMENT, is defined as the area within the geographic boundary of CITY and the unincorporated areas of COUNTY.
E. NEPA (National Environmental Policy Act) is the act that requires federal agencies to assess the environmental effects of their proposed actions prior to making decisions.
F. NOTICE OF COMPLETION, as referred to in this AGREEMENT, is defined as COUNTY acceptance of construction work for the PROJECT.
G. PRELIMINARY ENGINEERING, as referred to in this AGREEMENT, is the project phase consisting of the preparation of plans, specifications, and cost estimates for PROJECT. Work includes, but is not limited to, topographic survey, environmental surveys and document preparation, hydraulics analysis, soils report, traffic index and Tulare County Agreement No.
geometric investigations, civil and structural design, utility engineering, and all other necessary work prior to advertisement of PROJECT for construction bids.
H. RIGHT-OF-WAY, as referred to in this AGREEMENT, is defined as the project phase of acquiring real property interests for PROJECT.
ARTICLE 2. COMPLETE AGREEMENT
This AGREEMENT, including any attachments incorporated herein and made applicable by reference, constitutes the complete and exclusive statement of the terms) and conditions) of this AGREEMENT between PARTIES and supersedes all prior representations, understandings, and communications between the PARTIES relating to the subject matter of this AGREEMENT. The invalidity in whole or in part of any term and condition of this AGREEMENT shall not affect the validity of other terms) and condition(s) of this AGREEMENT. The above referenced Recitals are true and correct and incorporated herein by reference.
ARTICLE 3. WAIVER
A. COUNTY's failure to insist on any instance(s) of CITY'S performance of any terms) or condition(s) of this AGREEMENT shall not be construed as a waiver or relinquishment of COUNTY'S right to such performance or to future performance of such terms) and condition(s), and CITY'S obligation in respect thereto shall continue in full force and effect. Changes to any portion of this AGREEMENT shall not be binding upon COUNTY except when specifically confirmed in writing by an authorized representative of COUNTY by way of a written amendment to this AGREEMENT and issued in accordance with the provisions of this AGREEMENT.
B. CITY'S failure to insist on any instance(s) of COUNTY'S performance of any terms) or condition(s) of this AGREEMENT shall not be construed as a waiver or relinquishment of CITY'S right to such performance or to future performance of such terms) or condition(s), and COUNTY'S obligation in respect thereto shall continue in full force and effect.
Changes to any portion of this AGREEMENT shall not be binding upon CITY except when specifically confirmed in writing by an authorized representative of CITY by way of a written amendment to this AGREEMENT and issued in accordance with the provisions of this AGREEMENT.
ARTICLE 4. SCOPE OF AGREEMENT
This AGREEMENT specifies the roles and responsibilities of the PARTIES as they pertain to the subjects and projects addressed herein. PARTIES agree to cooperate and coordinate with the other in all activities covered by this AGREEMENT and any amendments to this AGREEMENT.
Tulare County Agreement No.
ARTICLE 5. RESPONSIBILITIES
A. Environmental Findings and Approvals/Permits
a. COUNTY is the CEQA Lead Agency and Caltrans is the NEPA Lead Agency for the PROJECT.
b. CEQA and NEPA documentation for the PROJECT are complete. The Final Environmental Impact Report (CEQA) was approved in May 2012, and the Environmental Assessment with Finding of No Significant Impact (NEPA) document was approved in August 2012. COUNTY will revalidate CEOA prior to construction
c. COUNTY will ensure that qualified personnel remain available to help resolve environmental issues and perform any necessary work to ensure that the PROJECT remains in environmental compliance.
d. CITY will review, comment, and concur on all environmental documentation (including, but not limited to, studies, reports, public notices and public meeting materials, determinations, administrative drafts, final environmental documents, and revalidation) at appropriate stages of development prior to approval and public availability.
e. If COUNTY makes any changes to the environmental documentation, COUNTY will allow CITY to review, comment, and concur on those changes prior to the COUNTY'S (or Caltrans) approval at appropriate stages of development prior to public availability.
f. If COUNTY makes any changes to environmental-related public notices (if any), then the COUNTY will allow CITY to review, comment, and concur on those changes prior to publication and circulation.
g. COUNTY will attend all environmental-related public meetings (if any). h. COUNTY is responsible for coordinating, obtaining, implementing, renewing, and/or amending the PROJECT's permits, agreements, and/or approvals whether they are identified in the PROJECT's scope of work or become necessary while completing the PROJECT.
B. Preliminary Engineering
a. COUNTY is the PRELIMINARY ENGINEERING IMPLEMENTING AGENCY.
Tulare County Agreement No.
b. CITY will make available to COUNTY all necessary CITY regulations, policies, procedures, manuals, standards, plans, and specifications required for the construction of PROJECT when requested by COUNTY.
c. COUNTY will prepare Utility Conflict Maps identifying the accommodation, protection, relocation, or removal of any existing utility that conflicts with construction of the PROJECT.
d. COUNTY will determine the cost to positively identify and locate, accommodate, protect, relocate, or remove any utility facilities whether inside or outside the PARTIES' rights-of-way in accordance with federal and California laws and regulations.
e. CITY will delegate authority to COUNTY to act on behalf of CITY on all utility relocation related matters in CITY right-of-way.
f. Any necessary CITY reviews of project studies, submittals, etc., shall be completed within 21 days of COUNTY submittal. If a response is not received within this time, CITY will be deemed to have completed its review.
C. Right-of-Way
a. COUNTY is the RIGHT-OF-WAY IMPLEMENTING AGENCY.
b. As RIGHT-OF-WAY IMPLEMENTING AGENCY, COUNTY is responsible for all RIGHT-OF-WAY work except those activities and responsibilities that are assigned to CITY.
c. The selection of personnel performing RIGHT-OF-WAY work will be in accordance with federal and California laws and regulations. d. If COUNTY acquires any RIGHT-OF-WAY within CITY'S JURISDICTION, COUNTY will first acquire it in its own name. Title to the RIGHT-OF-WAY within CITY'S JURISDICTION will ultimately be vested in the CITY. CITY'S acceptance of title will occur after Notice of Completion for the PROJECT is recorded.
e. CITY agrees to accept those rights-of-way or easements that are acquired within the existing CITY limits and/or immediately adjacent to CITY limits including any rights-of-way or easements required for drainage facilities. f. RIGHT-OF-WAY conveyances must be completed within 180 days after filing of the NOTICE OF COMPLETION unless PARTIES mutually agree to other arrangements in writing.
Tulare County Agreement No.
D. Construction
a. COUNTY is the CONSTRUCTION IMPLEMENTING AGENCY.
b. COUNTY will advertise, open bids, award, and approve the construction contract in accordance with the California Public Contract Code, California Labor Code, and Federal guidelines.
c. COUNTY will not advertise the construction contract for PROJECT until CITY accepts the final plans, specifications, and estimate packages. d. CITY will grant to COUNTY, at no cost to the COUNTY, permission to occupy or use public roads in CITY and any temporary RIGHT-OF-WAY that CITY owns or has an easement for, that is necessary for the construction of PROJECT. e. COUNTY will implement changes to the construction contract through change orders.
f. COUNTY will require the construction contractor to furnish payment and performance bonds naming COUNTY as obligee, and CITY as additional obligee, and to carry liability insurance in accordance with the PROJECT's specifications. g. Upon completion of PROJECT, CITY will operate and maintain at CITY'S expense, all improvements constructed as part of PROJECT within CITY'S JURISDICTION.
h. COUNTY will file the NOTICE OF COMPLETION upon PROJECT'S written acceptance by CITY and approval by COUNTY Board of Supervisors.
ARTICLE 6. FUNDING
As the lead agency, COUNTY will fund project in its entirety, excepting any work requested to be performed by the COUNTY on behalf of the CITY. CITY hereby agrees to reimburse the COUNTY for actual design and construction costs to extend existing sanitary sewer and potable water infrastructure as shown on Exhibit B (attached). The estimated costs are shown on Exhibit C (attached). Actual construction costs will be determined based on the actual installed quantity at the bid price for the sewer and water related work that were paid to the contractor. Design costs shall be fixed at the cost shown on Exhibit C. Upon PROJECT completion, the COUNTY shall invoice the CITY within six (6) months of the recorded Notice of Completion date for the improvements. The CITY shall pay the COUNTY within ninety (90) days of the invoice date.
Tulare County Agreement No.
ARTICLE 7. NO RIGHTS IN THIRD PARTIES
Nothing in the provisions of this AGREEMENT is intended to create duties or obligations to or rights in third parties that are not parties to this AGREEMENT or to affect the legal liability of either PARTY to the AGREEMENT by imposing any standard of care with respect to the maintenance of the CITY's property different from the standard of care imposed by law.
ARTICLE 8. INDEMNIFICATION
A. Neither COUNTY nor any officer or employee thereof is responsible for any damage or AGREEMENT. It is understood and agreed that, pursuant to Government Code Section 895.4, CITY shall fully indemnify and save harmless COUNTY and its officers and employees from all claims, suits or actions of every name, kind and description brought for or on account of injury (as defined by Government Code section 810.8) occurring by reason of anything done or omitted to be done by CITY under or in connection with any work, authority, or jurisdiction delegated to CITY under this AGREEMENT.
B. Neither CITY nor any officer or employee thereof is responsible for any damage or liability occurring by reason of anything done or omitted to be done by COUNTY under or in connection with any work, authority or jurisdiction delegated to COUNTY under this AGREEMENT. It is understood and agreed that, pursuant to Government Code Section 895.4, COUNTY shall fully indemnify and save harmless CITY and its officers and employees from all claims, suits, or actions of every name, kind and description brought for or on account of injury (as defined by Government Code section 810.8) occurring by reason of anything done or omitted to be done by COUNTY under or in connection with any work, authority, or jurisdiction delegated to COUNTY under this AGREEMENT.
ARTICLE 9. DISPUTE RESOLUTION
A. The PARTIES shall negotiate in good faith and attempt to resolve any dispute, controversy or claim arising out of or relating to this AGREEMENT (a "Dispute") within 30 days after the date that a PARTY gives written notice of such Dispute to the other PARTY.
B. If, after such negotiation in accordance with subsection A., above, the Dispute remains unresolved, either PARTY may require that a non-binding mediation take place. In such mediation, representatives of the PARTIES with authority to resolve the dispute shall meet for at least two (2) hours with a mediator whom they choose together. The PARTIES shall share the costs of the mediator equally.
Tulare County Agreement No.
ARTICLE 10. TERMINATION
This AGREEMENT shall terminate upon filing of the Notice of Completion, payment of tinal invoice, and transter of RIGHT-OF-WAY to CITY, unless the PARTIES agree through an amendment to this AGREEMENT to an extension of time.
ARTICLE 11. SEVERABILITY AND CONSTRUCTION
If any provision of this AGREEMENT is held to be illegal, invalid, or unenforceable under present or future laws, such provisions shall be fully severable. This AGREEMENT shall be construed and enforced as though such illegal, invalid, or unenforceable provision had never comprised a part of this AGREEMENT and the remaining provisions of this AGREEMENT shall remain in full force and effect.
ARTICLE 12. VENUE
This AGREEMENT shall be construed in accordance with the laws of the State of California without consideration of conflict of law principles. PARTIES agree to submit themselves to the JURISDICTION of the court venue in COUNTY in any action relating to this AGREEMENT or the enforcement of interpretation thereof.
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IN WITNESS WHEREOF, the undersigned PARTIES have executed this AGREEMENT on the day and year first written above:
CITY OF FARMERSVILLE
Date By.
Jennifer Gomez - City Manager
ATTEST: Rochelle Giovani,
Chief Deputy City Clerk
of the City of Farmersville
By_
Approved as to Form:
City Attorney
By
COUNTY OF TULARE
Date By.
Chair, Board of Supervisors
ATTEST: JASON T. BRITT
County Administrative Officer/Clerk of the Board
'of Supervisors of the County of Tulare
By.
Deputy Clerk
Approved as to Form:
County Counsel
By.
Deputy
Matter #
Tulare County Agreement No.
Exhibit A
City Limits Exhibit
2041220 H
WW.TUARECOUNTY.CA.COM/RU TULARE COUNTY
359)624-7000 SEGMENT 2
PROJECT AVENUE 280 WIDENING
RESOURCE MANAGEMENT AGENCY
COUNTY OF TULARE
REVISIONS CITY LIMITS
_S VIRGINIA AVENUE
ITY LIMITS
0-1-13-12
CITY OF FARMERSVILLE
AVENUE 280 (VISALIA ROAD) CITY LIMITS
i CITY LIMITS
COUNTY OF TULARE
Exhibit B
Existing Sanitary Sewer and Portable
Water Infrastructure
128-320-002
Manuel Souza
128-320-003
Monual Sauza
AVENUE 280
Harold D. Clements
S. VIRGINIA AVE.
PREPARED BY:
324 S. SANTA FE. STE.A
VISALIA, CA 93292
TEL: 559 802 3052
FAX: 559.802.3215
4CREEKS
www.4-creeks.com
Exhibit C
Preliminary Engineer's Cost
Estimate
Project: Avenue 280 Widening, Segment 2 Date: 1/10/2024 Preliminary Engineer's Estimate -Utilites in City of Farmersville Spere of Influence per CIMP 2012 By: K. Chavez Checked: E. Mejia
Item Description of Work Qty Unit Unit Price Total
8-Inch C900 (DR-18) PVC Water Main 120 $110.001 $13,200.00 10-Inch C900 (DR-18) PVC Water Main 1,050 LF $165.00 $173,250.00 8-Inch Water Valve EA $2,000.00 $6,000.00
10-Inch Water Valve $3,000.00 $18,000.00
Blowoff Assembly EA $1,200.00 $1,200.00
Adjust Water Valves to Finish Grade EA $750.00 $6,750.00 8-Inch PVC Sanitary Sewer Pipe 151 LF $10.00 $1,510.00
15-Inch PVC Sanitary Sewer Pipe 730 LF $225.00 $164,250.00 48-Inch Sanitary Sewer Manhole EA $5,750.00 $17,250.00
Adjust Sanitary Sewer Manhole to Finished Grade EA $1,500.00 $4,500.00 11 Sanitary Sewer Plug EA $500.00 $1,000.00
Construction Subtotal $406,910.00
Contingency (10%) $40,691.00
Estimated Design Fees $28,500.00
Total $476,101.00
*Note unit prices for material and labor are priced according to the current market rates and values and they are subject to change in the future.
1/10/2024 Page 1
CITY OF
FARMERSVILE
City Council
Staff Report 8B
TO: Honorable Mayor and City Council
FROM: Jennifer Gomez, City Manager
DATE: February 12, 2024
SUBJECT: 4Creeks Proposal for Construction Management Services and Inspection Services for the Fire Station 83 Project
RECOMMENDED ACTION:
It is recommended that the City Council authorize the City Manager to contract with 4Creeks for Construction Management Services and Inspection Services for the Fire Station 83 Project for an estimated Time and Materials amount of $160,770.
BACKGROUND and DISCUSSION:
The Fire Station 83 Project is currently in the design phase, and construction is expected to begin in a few months. Therefore, the City now needs to contract for Construction Management Services and Inspection Services for the construction phase. Pursuant to the Procurement Policy, as the City Engineer, 4Creeks can provide these services without the City going through a competitive process.
4Creeks has provided a proposal which is attached to include the following tasks:
Task 1: Construction Management Services
Task 2: Public Works Inspection Services
Task 3: Materials Testing & Special Inspections
Each task will be provided for a Time and Materials Fee with a total estimate of $160,770.
FISCAL IMPACT:
These services will be funded from the $7,000,000 received from the State for this project.
ATTACHMENTS):
4Creeks Proposal
February 8, 2024
Mrs. Jennifer Gomez
City Manager 4CREEKS
City of Farmersville
909 W. Visalia Road
Farmersville, CA 93223
Subject: City of Farmersville Fire Station 83 Project, Limited Public Works Inspection and Construction Management Services
Dear Mrs. Gomez,
Our understanding is that the City would like to utilize our services on a limited part-time basis to perform inspection services and construction management for the Fire Station 83 Project. Our understanding is that these services will be needed starting around the end of April or early May 2024 and will continue for the 230 working day duration as listed in the preliminary construction schedule. We expect the project will end around March or April 2025. Listed below is the scope of services that we anticipate performing for this project. Additionally, per your request attached is a fee estimate for these services.
Task 1: Construction Management Services
• Attend weekly project progress meetings
• Perform periodic site visits to resolve unforeseen field issues.
Review materials testing reports and verify that materials comply with City of Farmersville requirements. • Review key change orders and provide recommendations for City acceptance or rejection. • This estimate assumes an average of 6 hours per week spent on CM tasks for the 230 working day or 46 week duration
We estimate that the Task 1 services can be provided for a Time and Materials Fee of $52,670.
Task 2: Public Works Inspection Services
• Coordinate with the City's project manager or directly with the materials testing company to schedule testing for the project.
• Perform periodic Inspections of the work performed by the contractor. Take pictures of construction progress.
• Periodically inspect contractor's work throughout construction visually and using normal hand tools smart levels, soil probes, tape measures, measuring wheels, etc. • Inspector will be on site part time for an average of 8 hours per week during this period to observe the improvements being constructed to verify compliance with City requirements. • Perform field measurements to verify key progress payment quantities.
We estimate that the Task 2 services can be provided for a Time and Materials Fee of $55,200.
Task 3: Materials Testing & Special Inspections
The materials testing & special inspections have been estimated based on a percentage of the overall construction cost. Once final construction plans have been approved, 4Creeks will reassess this portion of the proposal to finalize the fee.
• Provide construction material sampling
324 S. Santa Fe, Suite A
Visalia, California 93292
www.4-creeks.com
• Field and lab testing for construction materials testing to verify contract and City Quality Assurance Plan compliance.
• Perform Reinforcing steel, concrete & other special inspections required.
We estimate that the Task 3 services can be provided for a Time and Materials Fee of $52,900.
Contractor Responsibilities
• Completing all other tasks required by the contract documents.
City of Farmersville Responsibilities
• Retain the design engineer to provide submittal review and assist with RFI review on an as needed basis during construction.
• Provide a project DIR number.
• Process invoices for all parties.
Utilize their on-call lists to retain other subconsultant to perform work that is not in the 4Creeks scope of Total Estimated Fee for Tasks 1-3 = $160,770
The above services will be billed on a Time and Materials basis in accordance with the on-call contract and attached fee schedule. We will not exceed the fee estimate without prior authorization or direction from the City.
Services Not Included in the Fee Estimate
• Building and Electrical Inspections
• Labor Compliance
• Survey Staking
• Any work not specifically included in the scope of services While the services above are excluded from this fee estimate, 4Creeks would be happy to provide some of these services on an additional time and materials basis if the City needs assistance If you have any questions or need any additional information, please feel free to give us a call to discuss.
Sincerely,
PanD.Com
lan Williams, PE 86546 Matthew D. Ainley, PE 66233
Sr. Construction Manager Principal-In-Charge
encl: Fee Estimate
Approval:
-
City Manager Signature Date
324 S. Santa Fe, Suite A
Visalia, California 93292
www.4-creeks.com