Water and Sewer Rate Study
Summary
November 20, 2023
Alison Lechowicz
Project Manager
CITY OF GONZALES
Rate Study Timeline
▪ Rate study began a year ago November 2022
▪ Spring and summer 2023 the project team reviewed public financial data – budgets, audits, and capital improvement plans
▪ August 7, 2023 – presented preliminary rates to City Council for feedback ▪ September 18, 2023 – presented final rate recommendations to City Council
▪ September 29, 2023 – notices of public hearing were mailed to about 2,900 customers and property owners
▪ October 25, 2023 – a rates newsletter was included in customer bills ▪ November 20, 2023 – Proposition 218 public hearing to consider rate adoption
2 Background
▪ Last comprehensive water and sewer rate study was conducted in 1989 ▪ Last water and sewer increase was July 1, 2023 (+5.3%) for inflation ▪ Water and Sewer Funds are Enterprise Funds -> should be self-supported by rates
▪ Rate study will cover a 5-year period
▪ First rate change January 1, 2024
▪ January 1 of 2025, 2026, 2027, 2028
▪ Procedural requirements:
▪ Conduct a rate study
▪ Mail a notice to property owners and tenants
▪ Hold a public hearing a minimum of 45 days after notice is mailed ▪ Rates cannot be adopted if more than 50% of ratepayers submit written protests 3 Water System Costs
▪ Inflationary cost increases for services and supplies ▪ $6.1M over the next three years for pipeline replacements plus $1M for a new tank to continue to provide clean and safe water service and fire flow protection
▪ Up to $250,000 for vehicle replacements and repairs
▪ These major projects are proposed to be debt funded resulting in new debt service payments of about $450,000 annually
4 Review of Current Monthly Water Rates
5 Meter Fees July 1, 2023
Residential Per Meter
5/8" meter $22.12
1" meter $23.50
Multi-Family
1-1/2" meter $24.86
2" meter $26.26
2-1/2" meter $27.28
Commercial
3" meter $29.12
4" meter $30.53
6" meter $31.94
Unmetered Service
/Standby
$33.30
Review of Current Monthly Water Rates
6 Consumption Fees* July 1, 2023
Residential/Commercial Charge per Unit
0 - 25 ccf $2.27
26 - 30 ccf $2.35
31 - 49 ccf $2.56
50+ ccf $2.84
Industrial Users
All use $2.27
*One unit = 100 Cubic Feet (ccf) = 748 gallons
About 90% of single
family residential use
falls in Tier 1
The City’s current
tiered rates may not
comply with recent
court rulings and
legal requirements
Proposed Water Meter Fees
7 Proposed
Fiscal Year Current 2023/24 2024/25 2025/26 2026/27 2027/28 Effective Date Jan. 1, 2024 Jan. 1, 2025 Jan. 1, 2026 Jan. 1, 2027 Jan. 1, 2028 Meter Size +7% +7% +7% +7%
5/8" $22.12 $23.06 $24.68 $26.40 $28.25 $30.22
1" $23.50 $23.50 $24.68 $26.40 $28.25 $30.22
1-1/2" $24.86 $46.12 $49.36 $52.80 $56.50 $60.44
2" $26.26 $73.79 $78.98 $84.48 $90.40 $96.70
2-1/2" $27.28 $110.69 $118.46 $126.72 $135.60 $145.06
3" $29.12 $147.58 $157.95 $168.96 $180.80 $193.41
4" $30.53 $230.60 $246.80 $264.00 $282.50 $302.20
6" $31.94 $461.20 $493.60 $528.00 $565.00 $604.40
Proposed Water Volume Rates
8 Proposed
Fiscal Year Current 2023/24 2024/25 2025/26 2026/27 2027/28 Effective Date Jan. 1, 2024 Jan. 1, 2025 Jan. 1, 2026 Jan. 1, 2027 Jan. 1, 2028 Volume Rates ($/ccf charged to all usage)
Residential/Commercial +7% +7% +7% +7%
0 - 25 ccf $2.27 $2.41 $2.58 $2.76 $2.95 $3.16
26 - 30 ccf $2.35 $2.41 $2.58 $2.76 $2.95 $3.16
31 - 49 ccf $2.56 $2.41 $2.58 $2.76 $2.95 $3.16
50+ ccf $2.84 $2.41 $2.58 $2.76 $2.95 $3.16
Industrial Users
All use $2.27 $2.41 $2.58 $2.76 $2.95 $3.16
10% Water Cutback $2.61 $2.79 $2.98 $3.19 $3.42
25% Water Cutback $3.00 $3.21 $3.43 $3.67 $3.93
40% Water Cutback $3.58 $3.83 $4.10 $4.39 $4.69
Water Rate Survey – Typical Bills
9 Sewer Cost of Service Analysis FY2024
▪ The City’s current sewer treatment plant is having difficulty meeting environmental regulations
▪ Upgrades and expansion are needed to provide better service to existing customers, new housing developments, industrial expansion for job growth ▪ Discounted state loan will be used to construct a new industrial treatment plant ($25M)
▪ New debt service cost of $1.25M expected to begin in FY2026 ▪ In addition, the sewer utility will fund $3.6M of improvements to the existing treatment plant and collection system
10 Review of Current Sewer Rates
11 Customer Class Rates [1]
Residential $31.77 + $2.35 for Lift Pump Users (if applicable) Commercial $15.18 + $2.40 per unit
Industrial $312.62 + $2.40 per unit
Schools $0.91 per Student Average Daily Attendance [2]
1 - Effective July 1, 2023
2 - Schools are billed annually rather than monthly
Proposed Sewer Rates
12 Proposed
Fiscal Year Current 2023/24 2024/25 2025/26 2026/27 2027/28 Effective Date July 1, 2023 Jan 1, 2024 Jan 1, 2025 Jan 1, 2026 Jan 1, 2027 Jan 1, 2028 Fixed Charge per Month ($/account)
+20% +20% +6% +6%
Residential $31.77 $38.83 $46.60 $55.92 $59.28 $62.84
Commercial $15.18 $10.57 $12.68 $15.22 $16.13 $17.10
Industrial $312.62 $10.57 $12.68 $15.22 $16.13 $17.10
Schools $0.91 $1.04 $1.24 $1.49 $1.58 $1.67
Commercial & Industrial Volume Rate ($/ccf) (in addition to fixed charge) $2.40 $3.39 $4.06 $4.87 $5.16 $5.47
Note: Schools are billed annually rather than monthly based on reported average daily attendance (ADA) Sewer Rate Survey
13 Average Water + Sewer Utility Bill
14 Current
(July 1, 2023)
Proposed
(Jan 1, 2024) Increase
Water Meter Fee
(5/8”) $22.12 $23.06 $0.94
Current
(July 1, 2023)
Proposed
(Jan 1, 2024) Increase
Water Meter Fee
(5/8”) $22.12 $23.06 $0.94
Water Usage
Charges
(12 ccf)
$27.24 $28.92 $1.68
Current
(July 1, 2023)
Proposed
(Jan 1, 2024) Increase
Water Meter Fee
(5/8”) $22.12 $23.06 $0.94
Water Usage
Charges
(12 ccf)
$27.24 $28.92 $1.68
Sewer Charges $31.77 $38.83 $7.06
Total $81.13 $90.81 $9.68
Proposition 218 Procedures
▪ Open the public hearing
▪ List to public comments
▪ Collect any additional written protests
▪ Close the public hearing
▪ Tally the protests
▪ If less than 993 protests are received, City Council can consider adopting the rates which would go into effect January 1, 2024
15