City of Hanford Page 50 Water, Wastewater, and Stormwater Utility Rate Study 2023
The commercial bill impacts to each customer class were also surveyed in comparison to other local agencies, see Figure 9. For each strength category, a sample level of water usage was chosen and compared to the corresponding charge that the same customer would face in another local agency.
Though all agencies surveyed charge variable rates per unit of water consumed by commercial customers, it should be noted that the subcategories used in other cities do not directly mirror those used by the City of Hanford. Some agencies do not have different charges based on wastewater strength, whereas others have more than four categories for commercial customers.
Figure 9: Commercial Monthly Wastewater Bill Surveys by Strength Category
City of Hanford Page 51 Water, Wastewater, and Stormwater Utility Rate Study 2023
SECTION 7: STORM DRAINAGE REVENUE REQUIREMENT
The storm utility’s cost of service and revenue requirement is comprised of operating costs, capital improvement costs, and the need to maintain reasonable reserves. Storm drain fees are intended to fund capital improvement programs, operations and maintenance, clean water programs to mitigate the pollutants in stormwater, and other environmental services related to storm water. Ongoing maintenance of storm drain pipes is important in reducing risks of flooding and sink holes in local neighborhoods.
7.1 Storm Drainage System Overview
The City operates and maintains a storm drainage system that covers the majority of the area within the City limits. The storm drainage system consists of 30 pump stations, 56 miles of pipeline ranging in size from 6 to 60 inches, 138 inverted siphons, 974 drainage inlets, and 181 acres of drainage basins and drainage ditches. The storm drainage system removes rainfall from surface streets and disposes of the accumulated stormwater in drainage basins and canals that are located throughout the City.
7.2 Storm Drainage Reserves
The City maintains two storm drainage reserve funds – 1) an operating fund reserve and 2) a capital reserve fund reserve. As of the beginning of FY 2023/24, the storm drainage utility had operations fund reserves of approximately $5.72 million and capital and reserve fund reserves of negative $730,000. The proposed fund balance target for the operations fund is equal to 50% of annual operating expenses per City policy. This is in line with industry standards that recommend an operating reserve target of at least 25% of annual expenses to account for the time (at least 4 months) that it would take an agency to approve new rate increases to comply with Proposition 218.
Adequate fund reserves protect the City when faced with unforeseen financial challenges such as emergency expenses or revenue deficits. Fund reserves allow the City to maintain its financial health and positive credit ratings, especially during emergencies. Moreover, funding can be drawn from reserves to supplement rate revenues lost during emergencies or other unexpected situations. The City can also choose to use reserves to smooth cash flows and mitigate impacts to ratepayers.
7.3 Storm Drainage Capital Improvement Plan
Table 29 provides the storm drainage utility’s capital improvement plan by year for the rate study period, totaling $3.58 million. All storm capital projects will be funded with rate revenues. Major projects include widening streets, removing trees, and repairing basins.
City of Hanford Page 52 Water, Wastewater, and Stormwater Utility Rate Study 2023
Table 29: Storm Drainage Capital Improvement Program (CIP) City of Hanford UƟlity Rate Study
Project Title FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 5-Year
Total
Courthouse Parking Lot
Reconstruction
- $310,000 - - - $310,000
Utility Customer Payment Kiosks (2) $27,000 $14,000 $14,000 $14,000 $14,000 $83,000 Houston Av Pipeline/Sand Slough $111,390 - - - - $111,390 Storm Drain Pump #39 $70,000 - - - - $70,000
Lacey Blvd Widen/Reconst Magna
Carta To 13th
- - - $500,000 - $500,000
2062 Lift Station Rehab - - $50,000 - - $100,000
2062 Portable Pumps 6" / 4" - $65,000 - - - $65,000
2050 Vacuum Truck (Repl 174) - $129,400 - - - $129,400
Tree Trim/Removal Program $75,000 $75,000 $75,000 $75,000 $75,000 $375,000 2062 Brown St Main Addition-Hwy
198 To Brown St Basin
- - $250,000 - - $250,000
1750 Public Works Enclosed
Warehouse
- - $75,000 - - $75,000
Lacey Widen/Recon/10th-Sierra $305,020 $487,210 $186,570 - - $978,800 Stonecrest Basin Pump Eq $45,930 - - - - $45,930
Lift Sta 23 & 56 Panel Repl $48,000 - - - - $48,000
Incr Flow Cap/People Ditch - $35,440 - - - $35,440
Gate Crossing Security/Locks $18,450 - - - - $18,450
Curb And Gutter Install $47,205 $20,000 $20,000 $20,000 $20,000 $127,205 Bonneyview Basin/Sand Slough Basin $256,200 - - - - $256,200 TOTAL STORMWATER CIP $1,004,195 $1,136,050 $670,570 $609,000 $159,000 $3,578,815
7.4 Storm Drainage Cash Flow Projection
The storm drainage fund cash flow for the five-year period beginning in FY 2023/24 through FY 2027/28 is provided in Table 30. Revenue increases of 5.0% annually over the rate study period are needed to keep up with operating cost inflation and to fund necessary capital projects. It should be noted that this level of increase is applied to the City’s total storm drainage fee revenues and does not necessarily reflect the level of increase for individual customers. The impacts to each customer will vary depending on customer class and parcel size.
7.4.1 Stom Drainage Revenues
The City’s main revenue source for the storm drainage utility is Storm Drain Fees. Fee revenues are estimated at about $1.48 million in FY 2023/24, comprising 97% of total storm drain revenues. Other revenues include Interest Income, Late Charges, and Other Miscellaneous Income.
City of Hanford Page 53 Water, Wastewater, and Stormwater Utility Rate Study 2023
7.4.2 Storm Drainage Operating Expenses
Operating expenses are based on the City’s FY 2023/2024 and 2024/2025 Budget. Major expenses include Salaries and Benefits, Administrative Expenses, Supplies and Equipment, Outside Services, and Utilities. Beginning in FY 2025/26, Salaries & Benefits are escalated by 7.0% each year while all other operating expenses are escalated by 3.0% annually. In total, storm drainage operating expenses are estimated to increase by 5.0% each year beginning in FY 2025/26 through FY 2027/28.
7.4.3 Loan to Wastewater Fund
The storm drainage fund will lend the wastewater fund $1.3 million in FY 2023/24 to eliminate the wastewater fund’s operating deficit and assist the wastewater fund with meeting its debt coverage requirements. The wastewater fund will pay back the loan in four equal installments of $325,000 beginning in FY 2024/25 through FY 2027/28.
7.4.4 Five-Year Summary
Figure 10 graphically shows the storm drainage cash flow projection for the five-year rate study period including both operating and capital expenses. The City will use existing reserves to fund capital projects and the interfund loan to the wastewater fund in FY 2023/24.
Figure 10: Storm Drainage Cash Flows
City of Hanford Page 54 Water, Wastewater, and Stormwater Utility Rate Study 2023
Table 30: Storm Drainage Cash Flow ProjecƟon City of Hanford UƟlity Rate Study
Years 1 -5: Proposition 218
FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
Rate Revenue Increase 5.0% 5.0% 5.0% 5.0% 5.0%
Rate Increase Effective Jan 1, 2024 Jul 1, 2024 Jul 1, 2025 Jul 1, 2026 Jul 1, 2027 BEGINNING FUND BALANCE [1] $5,721,000 $3,542,000 $2,708,000 $2,374,000 $2,053,000 REVENUES Rate Revenues 1,477,000 1,597,000 1,677,000 1,761,000 1,849,000 Non-Rate Revenue Late Fees 5,000 5,000 5,000 5,000 5,000 Interest Income 43,000 43,000 43,000 43,000 43,000
Bad Debts 1,000 1,000 1,000 1,000 1,000
Subtotal Non-Rate Revenues 49,000 49,000 49,000 49,000 49,000
Transfer from Wastewater to Repay Transfer 0 325,000 325,000 325,000 325,000
Total Revenue 1,526,000 1,971,000 2,051,000 2,135,000 2,223,000 EXPENSES Operating Expenses
Salaries and Benefits 581,000 600,000 642,000 687,000 735,000 Supplies and Equipment 317,000 316,000 325,000 335,000 345,000 Outside Services 71,000 71,000 73,000 75,000 77,000
City Services Allocation 381,000 381,000 392,000 404,000 416,000 Utilities 51,000 51,000 53,000 55,000 57,000
Subtotal O&M 1,401,000 1,419,000 1,485,000 1,556,000 1,630,000 Net Operating Revenue 125,000 552,000 566,000 579,000 593,000
Transfer to Capital Fund 1,004,000 1,386,000 900,000 900,000 900,000 Transfer to Wastewater for Interfund Loan 1,300,000 0 0 0 0 OPERATIONS ENDING FUND BALANCE 3,542,000 2,708,000 2,374,000 2,053,000 1,746,000
Operating Reserve Fund Target [2] 701,000 710,000 743,000 778,000 815,000 Operating Reserve Target Met? yes yes yes yes yes CAPITAL & RESERVE BEG. FUND BALANCE [3] ($730,000) ($730,000) ($480,000) ($251,000) $40,000 Revenues Transfer from Operations Fund 1,004,000 1,386,000 900,000 900,000 900,000 Capital Expenses Capital Plan 1,004,000 1,136,000 671,000 609,000 159,000 Subtotal Capital Expenses 1,004,000 1,136,000 671,000 609,000 159,000 Net Capital Revenues 0 250,000 229,000 291,000 741,000 CAPITAL & RESERVE ENDING FUND BALANCE ($730,000) ($480,000) ($251,000) $40,000 $781,000 1 - Estimated cash fund balance of Storm Drainage Operations Fund provided by City staff 2 - Recommended target: Operating Reserve target is 6 months O&M Expenses 3 - Estimated cash fund balances of Storm Drainage Capital and Reserve Fund provided by City staff
City of Hanford Page 55 Water, Wastewater, and Stormwater Utility Rate Study 2023
SECTION 8: STORM COST ALLOCATION AND RATE DESIGN
Proposition 218 requires that municipalities providing “property-related services” (including storm drain service) set rates and charges that are based on the cost of providing those services. The revenue requirements detailed in the previous section determine the amount of revenue to be recovered from the storm drain rates. In this section, the cost of service allocation develops an equitable means of allocating utility costs among its customers based on their estimated runoff burden to the storm drain system.
The primary storm drainage service provided by the City is the collection, conveyance, and management of stormwater runoff from parcels. All parcels2 that contribute runoff into the City’s system, either directly or indirectly, take stormwater service from the City. This service is needed due to property improvements resulting in impervious area such as rooftops, paved driveways and walkways, and landscaping that prevents storm water percolation into the ground. Open space, raw land, and agricultural parcels that are akin to natural conditions (i.e. percolation into the groundwater), are not charged a fee.
Another stormwater service provided by the City is compliance with water quality requirements through the City’s NPDES permit. The City monitors all parcels in the City including parcels that may drain directly to non-City receiving waters. Thus, all parcels are included in the fee structure except street parcels that are considered part of the storm system, open space or agricultural parcels that percolate stormwater, and parcels that full contain their own stormwater runoff.
8.1 Storm Drainage Cost Allocation
The proposed storm drain rate will only be levied on properties that shed water, directly or indirectly, into the City’s storm drain system. Moreover, the amount of use attributed to each parcel is proportionate to the amount of stormwater runoff contributed by the parcel, which is, in turn, proportionate to the amount of impervious surface area on a parcel. According to the California Storm Water Quality Association (CASQA), the most widespread storm water fee structure across the United States is based on the amount of impervious area on a parcel. Impervious surfaces are surfaces that allow little or no storm drainage to permeate into the ground, including rooftops, paved driveways, and walkways.
Measuring impervious area is conducted using aerial photography and geographic information system (GIS). For residential properties, a representative sampling is sufficient to determine an average for a typical single family parcel. Unlike residential parcels, non-residential parcels differ widely in size and characteristics which makes sampling impractical. For a simplified alternative, runoff coefficients can be used to estimate stormwater runoff by land use classification. This concept can be used to estimate the
2 Street parcels are considered part of the storm drain system and do not take service
City of Hanford Page 56 Water, Wastewater, and Stormwater Utility Rate Study 2023
relative load from a single parcel by multiplying the total area of the lot type by the runoff coefficient.
The City’s 2017 Storm Drainage Master Plan includes runoff coefficients by land use types.
Table 31 includes an estimate of impervious area within the City. Parcels within the City are divided into one of seven land use categories: 1) Single Family Residential, 2) Business, 3) Industrial, 4) Low Density, 5) Multi-Family Residential, 6) Public Agency, and 6) Schools. A runoff coefficient from the 2017 Storm Drainage Master Plan is applied to the acreage of each land use category to estimate the total land area that is impervious.
The Public Agency category refers to buildings and structures owned by governmental agencies and includes City Hall, City offices, libraries, post offices and fire/police stations. The Low Density category is new and is applied to industrially zoned parcels that were either a) entirely farmland, b) occupied by some industrial use but mostly vacant, or c) a single-family home that also contains active farmland. The properties in which parcel size is unknown will be charged a base fee based on customer class.
Additionally, the City has identified 68 potential industrial parcels that will be added to the total acreage count once they have been annexed into the City in the future. Parcels that meet any of the following conditions are excluded from Table 31 and are not proposed to be charged storm drain fees:
1) Parcels that solely comprise a street or roadway (either publicly or privately owned) and are considered to be part of the Storm Drain conveyance system. 2) Parcels comprised of an area which is part of the City’s storm drain system. 3) Parcels that do not receive service.
4) Parcels which detain all runoff on site.
To provide more context to exemption number 1 listed above, the Environmental Protection Agency notes that “a municipal separate storm sewer means a conveyance or system of conveyances (including roads with drainage systems, municipal streets, catch basins, curbs, gutters, ditches, man-made channels, or storm drains): (i) Owned or operated by a State, city, town, borough, county, parish, district, association, or other public body (created by or pursuant to State law)... that discharges into waters of the United States. (ii) Designed or used for collecting or conveying stormwater; (iii) Which is not a combined sewer; and (iv) Which is not part of a Publicly Owned Treatment Works (POTW) as defined at 40 CFR 122.2.” (EPA Stormwater Phase II Final Rule Fact Sheet). Therefore, street parcels are considered part of the City’s storm drain infrastructure. Street parcels are assumed to collect and convey their own onsite stormwater. Storm drain expenses incurred related to the service of street parcels are deemed to benefit all parcels of the City and these costs are spread among non-street parcels based on the cost allocation described in this section.
City of Hanford Page 57 Water, Wastewater, and Stormwater Utility Rate Study 2023
Table 31: EsƟmated of Acreage & Impervious Area City of Hanford UƟlity Rate Study
Service Type
Number
of Parcels
[1]
% of Total
Parcels
Total
Acres
Average
Parcel Size
(acres)
Runoff
Coefficient
[2]
Total
Impervious
Area
% of Total
Impervious
Area
R Residential 16,041 93.6% 3,047.8 0.19 0.50 1,523.9 57.8% B Business 559 3.3% 702.5 1.26 0.90 632.2 24.0%
I Industrial [3] 66 0.4% 281.9 4.27 0.80 225.5 8.6%
LD Low Density 31 0.2% 255.5 8.24 0.10 25.5 1.0%
M Multi-Family 397 2.3% 171.0 0.43 0.60 102.6 3.9%
P Public Agency 11 0.1% 104.7 9.52 0.90 94.2 3.6%
S Schools 29 0.2% 220.5 7.60 0.15 33.1 1.3%
Total 17,134 100.0% 4,783.9 2,637.1 100.0%
1 - Only includes storm accounts that have matched APNs 2 - Source: Storm Drainage Master Plan 2017
3 - Includes 50% of matched acreage to be conservative
8.2 Storm Drainage Fee Design
Table 32 allocates the annual revenue requirement from the storm drainage cash flow to each customer class using the percent of total impervious area to calculate the proposed storm drainage fees. Single family residential customers will continue to be charged on a “per account” basis, with the monthly fee being lowered from $5.04 to $4.57. The most common method of establishing storm drainage rates is to use the average single-family residential parcel size as the basic unit of measure. The single family residential fee is based on an average parcel size of 0.19 acres. All other customers will be charged on a “per acre” basis. Parcel size and impervious area are more indicative of the impact each customer places on the City’s storm drainage system.
For all other non-residential customers, the methodology in which these customers will be charged is based on parcel size, rather than consumption. Therefore, the actual bill impacts to each customer will vary depending on customer class and parcel size.
City of Hanford Page 58 Water, Wastewater, and Stormwater Utility Rate Study 2023
Table 32: Storm Drainage Fee CalculaƟon City of Hanford UƟlity Rate Study
FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
Total Revenue Requirement (from Cash Flow) [1] $1,520,820 $1,596,861 $1,676,704 $1,760,539 $1,848,566
Customer Class Allocation
% of Total
Impervious Area
Single Family Residential 57.8% $878,830 $922,771 $968,910 $1,017,355 $1,068,223 Business 24.0% $364,606 $382,837 $401,979 $422,078 $443,181 Industrial 8.6% $130,062 $136,565 $143,393 $150,563 $158,091 Low Density 1.0% $14,734 $15,471 $16,245 $17,057 $17,910 Multi-Family 3.9% $59,175 $62,134 $65,241 $68,503 $71,928 Public Agency 3.6% $54,339 $57,055 $59,908 $62,904 $66,049 Schools 1.3% $19,074 $20,027 $21,029 $22,080 $23,184 Total 100.0% $1,520,820 $1,596,861 $1,676,704 $1,760,539 $1,848,566
Rate Calculation for Single Family Residential
Total Revenue Requirement $878,830 $922,771 $968,910 $1,017,355 $1,068,223 Total Number of Residential Accounts 16,041 16,041 16,041 16,041 16,041 Monthly Single Family Residential Rate (per account) $4.57 $4.79 $5.03 $5.29 $5.55
Rate Calculation for Business
Total Revenue Requirement $364,606 $382,837 $401,979 $422,078 $443,181 Total Acres 702.5 702.5 702.5 702.5 702.5
Monthly Storm Drain Rate per Acre $43.25 $45.42 $47.69 $50.07 $52.57
Rate Calculation for Industrial
Total Revenue Requirement $130,062 $136,565 $143,393 $150,563 $158,091 Total Acres 281.9 281.9 281.9 281.9 281.9
Monthly Storm Drain Rate per Acre $38.45 $40.37 $42.39 $44.51 $46.73
Rate Calculation for Low Density
Total Revenue Requirement $14,734 $15,471 $16,245 $17,057 $17,910 Total Acres 255.5 255.5 255.5 255.5 255.5
Monthly Storm Drain Rate per Acre $4.81 $5.05 $5.30 $5.56 $5.84
Rate Calculation for Multi-Family
Total Revenue Requirement $59,175 $62,134 $65,241 $68,503 $71,928 Total Acres 171.0 171.0 171.0 171.0 171.0
Monthly Storm Drain Rate per Acre $28.84 $30.28 $31.79 $33.38 $35.05
City of Hanford Page 59 Water, Wastewater, and Stormwater Utility Rate Study 2023
FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28
Rate Calculation for Public Agency
Total Revenue Requirement $54,339 $57,055 $59,908 $62,904 $66,049 Total Acres 104.7 104.7 104.7 104.7 104.7
Monthly Storm Drain Rate per Acre $43.25 $45.42 $47.69 $50.07 $52.57
Rate Calculation for Schools
Total Revenue Requirement $19,074 $20,027 $21,029 $22,080 $23,184 Total Acres 220.5 220.5 220.5 220.5 220.5
Monthly Storm Drain Rate per Acre $7.21 $7.57 $7.95 $8.35 $8.76
1 – Assumes 12 months of rate increases
8.3 Cost Allocation Results
Based on the cost allocation, the revenue recovery by customer class has been updated so that each customer class is paying their share of costs per the total percentage of impervious area as shown on Table 31. Figure 11 below compares the current revenue allocation with the proposed allocations based on acreage.
Figure 11: Current vs. Proposed Storm Drainage Revenue Recovery
City of Hanford Page 60 Water, Wastewater, and Stormwater Utility Rate Study 2023
8.4 Proposed Storm Drainage Rates
The proposed five-year rate plan is shown in Table 33. The February 1, 2024 rates reflect the new cost allocation and rate structure described herein. The following years reflect 5.0% annual increases consistent with the proposed cash flow.
Table 33: Proposed Storm Drainage Fees City of Hanford UƟlity Rate Study
CURRENT
PROPOSED
Fiscal Year FY2023/24 FY2024/25 FY2025/26 FY2026/27 FY2027/28 Effective Date Jul 1, 2011 Feb 1, 2024 Jul 1, 2025 Jul 1, 2026 Jul 1, 2027 Jul 1, 2028
Single Family Residential (per account) $5.04 $4.57 $4.79 $5.03 $5.29 $5.55
All Other Customers (per acre)
Business
$43.25 $45.42 $47.69 $50.07 $52.57
Industrial $38.45 $40.37 $42.39 $44.51 $46.73
Low Density $4.81 $5.05 $5.30 $5.56 $5.84
Multi-Family $28.84 $30.28 $31.79 $33.38 $35.05
Public Agency $43.25 $45.42 $47.69 $50.07 $52.57
Schools $7.21 $7.57 $7.95 $8.35 $8.76
Base Charge (per account) [1]
Business
$8.65 $9.08 $9.54 $10.01 $10.51
Industrial $7.69 $8.07 $8.48 $8.90 $9.35
Low Density $0.96 $1.01 $1.06 $1.11 $1.17
Multi-Family $5.77 $6.06 $6.36 $6.68 $7.01
Public Agency $8.65 $9.08 $9.54 $10.01 $10.51
Schools $1.44 $1.51 $1.59 $1.67 $1.75
1 - Charge for accounts that the City does not have parcel size information for.
8.5 Storm Drainage Survey
Figure 12 provides a bill survey comparing the City’s current and proposed storm drain bills for a 1,700 square foot single family home.
City of Hanford Page 61 Water, Wastewater, and Stormwater Utility Rate Study 2023
Figure 12: Storm Drainage Residential Monthly Bill Survey
8.6 Annual Parcel Database Review
To develop the storm drainage parcel database, L&T matched the City’s current storm drainage accounts with parcel size information and assessor parcel numbers (APN) provided by Kings County. The City will need to make adjustments to the parcel database on an annual basis as parcels are developed, undergo a change of use, or when parcel size data becomes available for those without acreage currently available. The following accounts will need to be updated each year:
Accounts with No Acreage
Of the 17,453 storm drainage accounts, L&T was able to match 14,489 with their corresponding acreage and APNs. Accounts without parcel size information will be charged a base storm drainage charge based on customer class. Once parcel size is confirmed, the account can be charged the corresponding per acre rate.
Hand-Billed Industrial & School Accounts
The City currently bills several schools and industrial accounts separately for sewer use, and therefore, L&T did not find an existing account number. The City can either continue to hand bill these customers or add them to the billing system.
City of Hanford Page 62 Water, Wastewater, and Stormwater Utility Rate Study 2023
Potential Industrial Parcels
The City has identified 68 industrial parcels for a total of 1,318 acres that will likely be annexed into the City in the future. Because it is unknown when they will be annexed, these parcels are not included in the current rate study but can be included in the next rate study once they have established a utility billing account.
Low Density Parcels
The Low Density category is a new storm rate category and is applied to industrially zoned parcels that were either a) entirely farmland, b) occupied by some industrial use but mostly vacant, or c) a single-family home that also contains active farmland. The City has identified 31 Low Density parcels for a total of 511 acres. The majority of these parcels do not have an existing utility account number and will have to be added to the billing system.
Site Planning & Impervious Area Reductions
Certain parcels may have storm water detention and/or retention facilities or perform other best management practices that decrease or eliminate storm water runoff. While every effort has been made to account for these parcels, a parcel owner may present information to substantiate an exemption to the charges. The City will need to establish a process for individual property owners to appeal their storm drain charges on a case-by-case basis and update the parcel database as needed.
City of Hanford
Utility Division
315 N Douty Street
Hanford, CA 93230
Customer Name
Address
City, State ZIP
NOTICE OF PUBLIC HEARING ON PROPOSED WATER, WASTEWATER, & STORM DRAIN RATE INCREASES Hearing Date & Time: January 16, 2024 at 7pm
Hearing Location:
Hanford Civic Auditorium
400 N Douty Street
Hanford, CA 93230
Dear Customer or Property Owner,
You are receiving this notice because you are either a utility customer or you own property receiving services of the City of Hanford (City). The City Council will hold a public majority protest hearing on January 16, 2024, at 7pm at 400 N Douty Street, Hanford, CA 93230 to consider increases in the water, wastewater, and storm drain rates, effective February 1, 2024. At the hearing, the City Council will review the amount of the proposed rates as well as the methodology used to calculate the rates. If the proposed maximum rates are adopted, the City may collect rates at or below the proposed maximum as needed to meet the City’s water, wastewater, and storm drain needs over the next five years.
In compliance with article XIII D of the California Constitution, which was added to the Constitution pursuant to Proposition 218, this notice provides you with information regarding the services provided by the City, the reasons for the changes in the water, sewer, and storm drain service rates, and the methods by which you can protest this rate increase if you so desire.
System Overview
The City provides water, wastewater, and storm drain services to approximately 17,000 accounts including homes, businesses, and industrial facilities. The City’s sole water source is groundwater from within the San Joaquin Valley Groundwater Basin which is distributed through a system of wells, pipelines, storage reservoirs, and pumping facilities. The City owns and operates a local wastewater plant to treat and dispose of customer discharge. The storm drainage system removes rainfall from surface streets and disposes of the accumulated stormwater in drainage basins throughout the City. The City also complies with strict government clean water standards regulating the removal of pollutants from stormwater prior to it entering local waterways.
Current Water, Wastewater, & Storm Drain Rates
Water, wastewater, and storm drain rates are billed monthly. The prior water rate study was completed in 2015, and the last water rate increase went into effect over 5 years ago on July 1, 2018. For water service, customers are billed 1) a flat charge according to the size of their meter and 2) a volume rate based on metered water usage.
All customers pay a uniform volume rate that is the same rate per 100 cubic feet (ccf) of water consumed. One hundred cubic feet (ccf) equates to 748 gallons.
The prior wastewater and storm drain rate study was completed in 2009, and the last rate increases went into effect over 12 years ago on July 1, 2011. For wastewater and storm drain service, residential customers are billed a flat charge per account. Commercial customers are billed based on metered water use. Industrial customers are billed based on metered water use and for the amount of pollutants released into the wastewater system.
Schools are billed annually based on a flat charge per student (measured using average daily attendance).
Why are rate adjustments needed?
The water, wastewater, and storm drain utilities rely entirely on rate revenues to fund operations. The proposed rates are based on a comprehensive cost of service study to ensure that utility rates pay for increasing operating and maintenance expenses, debt service payments, capital projects, and emergency reserves. Water, wastewater, and storm drain operations are not funded by property tax or any other tax revenue.
The proposed rate increases are needed for the three utilities to maintain balanced budgets and to fund necessary infrastructure improvements. Water rates are proposed to be adjusted to keep up with inflationary cost increases and to fund $43.7 million in capital projects over the next five years. Major water capital projects include meter replacements, well upgrades, tank repairs, and water supply projects.
In recent years, the wastewater utility has spent down its reserves to fund expenses. Wastewater rate increases are needed to keep up with operating costs, maintain strong debt coverage, and to fund $7.4 million in capital projects over the next five years. Major wastewater capital projects include funding for the wastewater treatment expansion project, lift station repairs, and rehabilitating miles of sewer pipeline.
The proposed storm drain rate increase reflects needed improvements to the City’s aging storm drainage system, including $3.5 million in capital projects over the next five years. Major storm drainage capital projects include removing trees, basin repairs, and pipeline replacements.
Proposed Rates and Rate Structure Adjustments
The proposed rates are designed to cover the costs of planned capital projects and operating and maintenance expenses and will not result in any profits to the City. Current and proposed water rates are provided in Table 1.
Table 1: Current and Proposed Monthly Water Rates
Current
Rates [1]
PROPOSED
Fiscal Year 2023/24 2024/25 2025/26 2026/27 2027/28
Effective Date July 1, 2018 Feb 1, 2024 July 1, 2024 July 1, 2025 July 1, 2026 July 1, 2027
METER CHARGES
5/8", 3/4", & 1" $15.41 $17.42 $19.85 $21.64 $22.52 $23.44 1-1/2" & 2" $21.88 $31.89 $36.34 $39.62 $41.23 $42.91 3" & 4" $34.83 $95.56 $108.90 $118.73 $123.55 $128.58 6" $54.26 $292.35 $333.16 $363.26 $378.01 $393.37
8" $80.17 $465.99 $531.04 $579.02 $602.53 $627.01
CONSUMPTION CHARGES ($/CCF)
All Customers $1.34 $1.94 $2.24 $2.44 $2.54 $2.64
CCF - hundred cubic feet; one CCF = 748 gallons
1 - Current rates shown are for Inside City customers. Inside & Outside City customers are proposed to be billed the same rates going forward. Current meter charges shown are the sum of the service connection charge and the meter fee.
The proposed water rates also include a schedule of drought rates, which would only be implemented during a water shortage emergency. The City does not currently have a schedule of drought rates. Under drought conditions, the meter charges would remain the same, but the volume rate would increase according to the level of water cutback, as shown in Table 2. A detailed analysis of drought rates is provided in the City’s Water, Wastewater, and Stormwater Utility Rate Study 2023.
Table 2: Proposed Drought Rates
Current
Rates
PROPOSED [1]
Fiscal Year 2023/24 2024/25 2025/26 2026/27 2027/28
Effective Date July 1, 2018 Feb 1, 2024 July 1, 2024 July 1, 2025 July 1, 2026 July 1, 2027 DROUGHT CONSUMPTION CHARGES ($/CCF) [1]
10% Water Cutback - $2.10 $2.42 $2.64 $2.75 $2.86
20% Water Cutback - $2.30 $2.65 $2.89 $3.01 $3.13
35% Water Cutback - $2.72 $3.13 $3.41 $3.55 $3.69
50% Water Cutback - $3.38 $3.89 $4.24 $4.41 $4.59
CCF - hundred cubic feet; one CCF = 748 gallons
1 - Only to be implemented temporarily during water shortage emergencies.
Current and proposed wastewater rates are provided in Table 3. It should be noted that under the current billing system, wastewater and storm drain fees are combined into a single charge. 22% of the combined charge is for storm drain services. For a single family customer, the current combined fee is $22.90 per month which is made up of $17.86 for wastewater service and $5.04 for storm service. In the future, wastewater and storm rates are broken out into separate charges. Wastewater rates are determined based on customer service costs as well as the amount of wastewater flow and pollutants flushed into the sewer system.
Table 3: Current and Proposed Monthly Wastewater Rates
Current PROPOSED
Customer Class Rates 2023/24 2024/25 2025/26 2026/27 2027/28 Effective Date July 1, 2011 Feb 1, 2024 July 1, 2024 July 1, 2025 July 1, 2026 July 1, 2027 RESIDENTIAL (Per dwelling unit)
Single Family $17.86 $24.67 $27.63 $30.95 $32.50 $34.13 Multi-Family/Duplex $16.93 $18.51 $20.73 $23.22 $24.38 $25.60
NON-RESIDENTIAL
Metered Water (Per CCF)
Group A: Domestic $1.54 $3.08 $3.45 $3.86 $4.05 $4.25 Group B: Low Strength $1.44 $2.81 $3.15 $3.53 $3.71 $3.90 Group C: Medium Strength $2.15 $3.95 $4.42 $4.95 $5.20 $5.46 Group D: High Strength $2.88 $5.34 $5.98 $6.70 $7.04 $7.39
Schools (per student ADA) [1] $0.51 $0.74 $0.83 $0.93 $0.98 $1.03 Septage (per 1,000 gallons) $26.19 $35.03 $39.23 $43.94 $46.14 $48.45 Industrial
Flow (per mg) $1,561.56 $2,497.17 $2,796.83 $3,132.45 $3,289.07 $3,453.52 BOD (per lb) $0.173 $0.557 $0.623 $0.698 $0.733 $0.770 SS (per lb) $0.167 $0.558 $0.625 $0.700 $0.735 $0.772 No storm drain fees are included in this table. CCF - hundred cubic feet; one CCF = 748 gallons 1 - ADA - average daily attendance
Non-residential Sewer Customer Groups are defined as:
Group A: Mobile home parks, motels, public buildings, hospitals, nursing homes, churches, fraternal lodges, service stations and automotive centers
Group B: Car washes, laundromats, retail, commercial and professional establishments Group C: Mixed use commercial centers including food services with single water service Group D: Restaurants, supermarkets, grocery stores, mortuaries
Current and proposed storm drain rates are provided in Table 4. The proposed storm drain rates are based on land use type and parcel size as these parameters more closely reflect how customers generate stormwater runoff and take service from the City’s storm drain system. Single family residential customers are proposed to be billed a fixed fee based on the average parcel size while all other customer types will be charged an individual rate based on their parcel’s acreage. Parcels with indeterminate acreage will be billed a base charge according to their customer class. It should be noted that street parcels contain culverts, drains, and other stormwater facilities and are thus considered part of the storm drain system and are not billed for service.
Table 4: Current and Proposed Monthly Storm Drain Rates
Current PROPOSED
Rates 2023/24 2024/25 2025/26 2026/27 2027/28
Effective Date July 1, 2011 Feb 1, 2024 July 1, 2024 July 1, 2025 July 1, 2026 July 1, 2027
SINGLE FAMILY RESIDENTIAL
(per account) $5.04 $4.57 $4.79 $5.03 $5.29 $5.55
ALL OTHER CUSTOMERS (per acre)
Business
varies
$43.25 $45.42 $47.69 $50.07 $52.57
Industrial $38.45 $40.37 $42.39 $44.51 $46.73
Low Density $4.81 $5.05 $5.30 $5.56 $5.84
Multi-Family $28.84 $30.28 $31.79 $33.38 $35.05
Public Agency $43.25 $45.42 $47.69 $50.07 $52.57
Schools $7.21 $7.57 $7.95 $8.35 $8.76
BASE CHARGE (per account) [1]
Business
varies
$8.65 $9.08 $9.54 $10.01 $10.51
Industrial $7.69 $8.07 $8.48 $8.90 $9.35
Low Density $0.96 $1.01 $1.06 $1.11 $1.17
Multi-Family $5.77 $6.06 $6.36 $6.68 $7.01
Public Agency $8.65 $9.08 $9.54 $10.01 $10.51
Schools $1.44 $1.51 $1.59 $1.67 $1.75
No wastewater fees are included in this table.
1 - Parcels with indeterminate acreage will be billed a base charge according to their customer class.
Parcels that meet any of the following conditions are not proposed to be charged storm drain fees:
1. Parcels that solely comprise a street or roadway (either publicly or privately owned) and are considered to be part of the Storm Drain conveyance system per Environmental Protection Agency guidelines.
2. Parcels comprised of an area which is part of the City’s storm drain system.
3. Parcels that do not receive service.
4. Parcels which detain all runoff on site.
How do I file a protest or participate in the public hearing? The provisions of Proposition 218 provide that certain types of “Property Related Fees” such as water, sewer, and storm drain rates are subject to a “majority protest” process. Under the majority protest process, any property owner or customer of record may submit a written protest for the proposed increases; provided, however, that only one protest will be counted per identified parcel. If protests are filed on behalf of a majority of the parcels subject to the rates, the City cannot adopt the proposed rates.
Every written protest MUST include ALL of the following to be counted:
1. A statement against the proposed water rates, wastewater rates, storm drain rates or all three rates;
2. Name of the recorded owner or customer of record who is submitting the protest;
3. Identification of assessor’s parcel number, street address, or utility account number of the parcel with respect to which the protest is made; and
4. Original signature and legibly printed name of the record owner or customer of record who is submitting the protest.
Written protests may be submitted by:
1. Mail to - Prop 218 Protest, 315 N Douty Street, Hanford, CA 93230; or
2. In-person delivery during normal business hours to 315 N Douty Street, Hanford, CA 93230; or
3. In-person at the Public Hearing, prior to the conclusion of the Public Hearing.
Regardless of how the written protest is submitted, it must be received by the City prior to the conclusion of the public comment portion of the Public Hearing on January 16, 2024. (Postmark dates will not be accepted.) Any protest submitted via e-mail or other electronic means will not be accepted. Please identify on the front of the envelope for any written protest, whether mailed or submitted in person to the City, that the enclosed protest is for the Public Hearing on the Proposed Water, Wastewater, and Storm Drain Rate Increases. Oral comments at the Public Hearing will not qualify as formal protests unless accompanied by a written protest.
The City will hold the Public Hearing on January 16, 2024 at 7pm. The City Council will review the amount of the rates as well as the methodology for calculating the proposed rates. At the conclusion of the hearing, protests will be counted and validated. If protests are filed on behalf of a majority of the parcels subject to the rates before the end of the Public Hearing, the City cannot adopt the proposed rates. If a majority of the parcels do not protest the proposed increase, the City has the authority to adopt the proposed rates. The first rate change, if enacted, could go into effect as early as February 1, 2024.
Additionally, pursuant to California Government Code 53759, there is a 120-day statute of limitations for challenging any new, increased, or extended fee, adopted, modified, or amended after January 1, 2022.
Notice of a Public Hearing on Proposed Water, Wastewater, and Storm Rate Increases The City of Hanford will hold a Public Hearing on the proposed water, wastewater, and storm drain rates on Tuesday, January 16, 2024 at 7:00 p.m. in the Hanford Civic Auditorium at 400 N Douty Street, Hanford, CA 93230
Council Future Agenda Items
Originated
Date Item Originator Staff Lead Date Estimate
5/16/2023 Municipal Code Amendments to the
Cannabis Tax Structure for non-retail
businesses and the Application Process
Community
Development
Jason Waters 11/21/2023
8/15/2023 Municipal Code Amendments to
modify the chapter related to murals
and consider and adopt a policy to
approve murals at the administrative
level.
Council
Direction
Jason Waters 11/21/2023
10/17/2023 Review and Discussion of the various
elements and criteria of the Historic
Overlay Zone and direction from
Council on potential amendments
Council
Direction
Jason Waters 11/21/2023