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5 DATE: June 3, 2024
TO: President and Members of the Estero Municipal Improvement District (EMID) Board of Directors
VIA: Stefan Chatwin, District Manager
Marlene Subhashini, Assistant District Manager
FROM: Andrew Brozyna, Public Works Director
DEPARTMENT: Public Works
SUBJECT: APPROVING EXTENSION OF ONE YEAR TO THE
WATER/WASTEWATER RATE ASSISTANCE PROGRAM
(W/WRAP) UNTIL JUNE 30, 2025
RECOMMENDATION
It is recommended that the EMID Board of Directors (District Board) adopt a resolution approving a one-year extension, expiring June 30, 2025, of the Estero Municipal Improvement District Water/Wastewater Rate Assistance Program (W/WRAP) and finding the approval of the extension exempt from review under the California Environmental Quality Act (CEQA) 15061(b)(3). The W/WRAP provides discounts for eligible applicants of $15 per water and wastewater account per month. Upon the conclusion of the extended year, W/WRAP shall sunset unless extended by the EMID Board.
EXECUTIVE SUMMARY
The District Board implemented W/WRAP starting in Rate Year 2020-2021 for customers who demonstrated financial need in response to projected rate increases in both water and wastewater rates. The District Board extended W/WRAP to June 30, 2024 and allowed further extensions by the District Board.
W/WRAP provides a flat $15/month credit for each eligible Water and Wastewater account, which is 16% to 18% of the total water and wastewater bills for two-person households with typical consumption. Based upon an estimated number of eligible
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5 customers, W/WRAP may fiscally impact EMID as much as $117,000 per year. As of April 30, 2024, there were thirty (30) customers enrolled in W/WRAP for a total combined annual fiscal impact of $10,800 for both Water and Wastewater services. Staff included $9,000 as line items in both water and wastewater preliminary budgets for FY 2024-2025 to fund the program. W/WRAP must be funded from non-rate sources.
Through the first ten (10) months of FY 2023-2024, revenue from delinquent water payments totaled $50,200 and revenue from delinquent wastewater payments totaled $51,500 which are sufficient to fund W/WRAP in each enterprise.
Staff has made minor adjustments to the program guidelines and updated the application form with qualifying income information for FY 2024-2025. The Application and Guidelines are Attachments 2 and 3 to this report.
BACKGROUND
As part of the FY 2024-2025 budget preparation, EMID engaged consultant Bartle Wells Associates (BWA) to develop financial projections for its Water and Wastewater Enterprises and make rate recommendations to cover maintenance, operations, and capital improvements for FY 2024-2025 and the following five-year period. The BWA report anticipates average water rate increases of 4.0% per year and wastewater rate increases of 2.0% per year for single family homes for the five-year period.
A complete discussion of water and wastewater rates is included as a separate agenda item for the June 3, 2024 City Council meeting.
In May 2020, the District Board approved W/WRAP for customers who demonstrated financial need. Per Resolution No. 3513, W/WRAP had a start date of July 1, 2020, and continued for one (1) year, until June 30, 2021, when W/WRAP would sunset unless extended by the District Board. The District Board subsequently approved Resolutions 3585, 3651, and 3727 extending W/WRAP through June 30, 2024.
ANALYSIS
W/WRAP utilizes the same financial need thresholds as the Pacific Gas and Electric Company (PG&E) California Alternate Rates for Energy (CARE) discount program. EMID customers fill out an application and provide documentation that they are enrolled in the PG&E CARE program or other proof of income.
Based on the 975 customers in Foster City that are enrolled in the PG&E CARE Program.
BWA estimates that approximately one-third, or 325 customers, could be eligible for W/WRAP. There are fewer eligible W/WRAP customers because multi-family units that are not separately metered and/or where the bill is not paid by the individual units are not eligible for W/WRAP.
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5 Based upon the estimated number of eligible customers, a $15/month discount per service could have a fiscal impact to EMID of as much as $117,000 per year for both Water and Wastewater accounts. Currently there are thirty (30) customers enrolled in W/WRAP for a total annual fiscal impact of $10,800.
A single-family account with a two-person household typically uses an average of fifty (50) gallons per person per day of potable water, which equals four (4) units of water per household per month. Under the proposed Rate Year 2024-2025 water rates, meters have a fixed charge of $28.85 and residential accounts using less than 20 units of water per billing cycle are billed $6.60 per unit of water. Therefore, the Water Meter Charge of $28.85 + the Water Consumption rate of $26.40 ($6.60 x 4 units) = $55.25/month water charge. The 2024-2025 single-family rate for wastewater collection is $133.49 per month and separately metered multi-family units rate is $112.13 per month.
As shown in Table 1, the total cost for an average household under this scenario for both water and wastewater is $188.74 for single family homes and $167.38 for multi- family units. The monthly program credit of $30 ($15 each for water and wastewater) will result in an approximate 16% to 18% reduction for qualifying customers in Rate Year 2024- 2025. Because it is a flat credit, homes that use less water receive a higher overall percentage benefit and customers that use more water receive a lower overall percentage benefit, which is consistent with EMID’s interest in encouraging water conservation.
Under Proposition 218, a non-rate revenue source must be used to offset the cost of W/WRAP. The District Board approved using delinquent payment fees (late charges) for this purpose. The level of collection of these fees is sufficient to satisfy the funding requirement. Other sources of non-rate revenues could include the Community Benefits Fund, Construction and Demolition forfeitures, or General Fund revenue.
Staff recommends continuing W/WRAP for an additional one-year term, which allows for the continued evaluation of both EMID’s revenue sources and community need. At the conclusion of the one-year extension, staff will bring a resolution back to the District Board to extend or discontinue W/WRAP.
CALIFORNIA ENVIRONMENTAL QUALITY ACT
The adoption of the resolution approving the extension of W/WRAP is covered by the common sense exemption that CEQA applies only to projects which have the potential for causing a significant effect on the environment. Where it can be seen with certainty
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5 that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. (CEQA Guideline Section 15061(b)(3)).
FISCAL IMPACT
Based upon the currently enrolled customers, the annual cost of W/WRAP is $10,800.
Based on the estimated number of potentially eligible customers, the discount of $15/month each per Water and Wastewater account could cost as much as $117,000 per year.
W/WRAP is required to be funded from non-rate sources. Through the first ten (10) months of FY 2023-2024, revenue from delinquent water payments totaled $50,200 and revenue from delinquent wastewater payments totaled $51,500 which are sufficient to fund the program in each enterprise.
CITY COUNCIL VISION, MISSION, AND VALUE/PRIORITY AREA
Public Safety and Social Equity
ATTACHMENTS:
Attachment 1 – Resolution
Attachment 2 – WWRAP Program Guidelines
Attachment 3 – W/WRAP Application FY 2024-2025