Department of Public WorksPUBLIC HEARING TO APPROVE RECOMMENDED SEWER USE FEE RATE STRUCTURE AND RATE ADJUSTMENTSCity Council Meeting April 8, 2024 Item #15 Department of Public WorksRecommendation
2 1.Find proposed actions exempt from California Environmental Quality Act (CEQA);2.Open Public Hearing to receive public comment on Sewer Use Fee Rate Structure and Adjustments;3.Consider all protests in accordance with Prop. 218;4.Close Public Hearing and Approve Recommended Sewer Use Fee Rate Structure and Adjustments; and5.Direct City Attorney to prepare Amendment to Sewer Use Charge Ordinance Department of Public WorksBackground •325 miles of sewer pipelines, 3 pump stations, and 7,430 manholes•Expenditures exceed revenuesNeed rate increase to:>Maintain & operate sewer system>Prevent blockages and remove clogs>Protect public health and environment Completed Sewer Line Replacement
Sewer RepairSewer Relining
Department of Public WorksBackground•In March 2023, City hired Raftelis Financial Consultants to perform a cost-of-service study•Scope included sewer use fee calculationmethodology and financial plan•Rate study recommends a series of rate adjustments over the next five years in order to properly fund and maintain the City's sewer system4 City of PasadenaSewer Rate Study Public HearingApril 8, 2024City of PasadenaSewer Rate Study Public HearingApril 8, 2024
Why Do Rates Need to be Adjusted?•City has not raised sewer rates by more than CPI since 2007›Nationally, sewer rates have outpaced general inflation1(CPI) across the nation – therefore City has slowly been falling behind•Fund has negative cash flow in FY 2024•Operational deficit estimated at $1.1M•No reserve balance•Capital improvement projects have been delayed to continue operations 21Water costs are rising across the U.S. — here's why - CBS News Current & Proposed Rate Structure•Water use can vary based on drought/rainfall and cause fluctuations in revenue•A fixed charge will promote fixed revenue (approximately 28% fixed revenue)3hcf = hundred cubic feet of water Rate Structure DescriptionRate StructureCurrent structure is a volumetricrate based on water use for all customers($0.35 / hcf for SFR, $0.67 / hcf for commercial )CurrentA fixed charge and a volumetric rate for allcustomersProposed 4 Reserve goals:•Operating reserve = 10% of yearly operating expenses•Capital reserve = 50% of typical yearly capital expensesCapital spending:•Assumes $3.5M per year, from FYE 2025 to FYE 2029, (before inflation) in sewer rehabilitation Financial Plan - Planning for Reserves & CapitalFinancial Plan - Planning for Reserves & Capital Financial Plan – Revenue vs Expenses and Reserve Funding 5 Current & Proposed Monthly Rates
6 5-Year Monthly Rates
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•Bill Increases will depend on sewer discharge•Current Average Bill = $4.55 (Current average water use is 13 hcf x $0.35 / hcf)•Proposed Average Bill = $11.37 ($6.16 + 8 hcf x $0.65)Propose to cap water use at 13 hcf to reflect that water use beyond 13 hcf is for irrigation•Average Commercial Bill Increase = about $131 Average Bill IncreasesAverage Bill Increases
Monthly Bill Comparison (for Sewer Collection only)
9 Summary
10 •City has not raised sewer use fees (above CPI increases) since 2007•Recommended revenue adjustments will fund needed capital improvements & cover operating costs •City charges would still be lower than most peers Department of Public WorksActions to Date
15 ACTION ITEMDATEPresented Proposed Rate Adjustments to Municipal Services CommitteeJanuary 23, 2024City Council Set Public Hearing for April 8, 2024February 5, 2024Mailed public hearing notice to all parcel owners and account holders (per Prop 218)February 21, 2024Held Community Meeting at Robinson Park Recreation CenterMarch 19, 2024Held Community Meeting at Victory ParkMarch 20, 2024Public Hearing and Protest Vote TallyApril 8, 2024 Department of Public WorksConsideration of Other Rates
16 Online Rate Calculator:https://egov1.cityofpasadena.net/BillEstimator
Department of Public WorksNext Steps
17 ACTION ITEMDATEConduct Public HearingApril 8, 2024(If rate adjustment approved) First Reading of Updated Sewer Use Charge OrdinanceApril 29, 2024(If rate adjustment approved) Second Reading of Updated Sewer Use Charge OrdinanceMay 6, 2024Effective Date of New Sewer Use Fee RatesJuly 1, 2024, or as soon as practicable thereafter Department of Public WorksQuestions – Sewer
18 QR Code for Online Rate Calculator