City Council Agenda Report
TO: Mayor McCord and Members of the City Council
FROM: Ken Irwin, City Manager
BY: Mike Willett, Public Works Director
MEETING DATE: April 19, 2022
ITEM NO: 7.1
SUBJECT: Approve Water Rate Analysis Conducted by Bartle Wells Associates and Approve Resolution No. 2022-20 Authorizing Staff to Set the Public Hearing and Initiate the Prop 218 Proceedings for Adoption and Implementation of New Water Rates.
RECOMMENDATION
Motion to Approve Water Rate Analysis Conducted by Bartle Wells Associates and Approve Resolution No. 2022-20 Authorizing Staff to Set the Public Hearing and Initiate the Prop 218 Proceedings for Adoption and Implementation of New Water Rates.
BACKGROUND
The city provides water service to approximately 6,900 customers. The water utility is a financially self-sufficient enterprise fund that relies primarily on revenues from water service charges to fund the costs of providing service. As such, water rates must be set at levels adequate to recover operating costs and to fund necessary capital investments to keep the system in good operating condition.
During FY 2017/18 the city adopted increased water rates for five years (2018 through 2022).
The City approved a Professional Service Contract with Bartle Wells and Associates, who has completed various rate studies for the City, to complete a Water Rate Study that would analyze current and future operating/maintenance costs and needs including personnel, equipment, and supplies; capital improvement program (CIP) projects for water; and debt service/coverage obligations and come up with rates for the next five years (2023 through 2027/28). The city is currently on the last water rate increase that took effect January 1, 2022.
Under the current water rate structure customers pay a fixed service charge based on meter size plus a quantity rate per hundred cubic feet. The quantity charge is based on two tiers with use in higher tiers charged progressively more. Additionally, the city currently offers low-income senior discount rates to those that qualify. It is the city’s intention to continue to offer this discount.
ANALYSIS
Attached is a copy of the Water Rate Study prepared by Bartle Wells and Associates. The rate study identifies the need for 2% annual increases beginning in January 2023. The rate increase supports the following:
- Operation & maintenance of Water system.
- Operation & maintenance of nine groundwater wells, three storage tanks/pressure zones; and approximately 50 miles of water system mains.
- Equipment/vehicles/supplies for the next 5 years.
- Staffing needs for next 5 years.
- City’s share (existing deficiencies ONLY) of the Water CIP estimated $27 million. - The new rates DO NOT support development’s share of any CIP projects.
Proposed Rates
Current Rate CY 2023 CY 2024 CY 2025 CY 2026 CY 2027
Monthly Tiers
2.0% 2.0% 2.0% 2.0% 2.0%
Quantity Rates Use ($/ccf)
Tier 1 (0 to 13) $2.70 $2.80 $2.86 $2.92 $2.97 $3.03
Tier 2 (>13) $3.86 $3.89 $3.97 $4.05 $4.13 $4.21
Service Charges
Meter Size Monthly Rate
5/8" $16.79 $17.12 $17.46 $17.81 $18.17 $18.53
3/4" $16.79 $17.12 $17.46 $17.81 $18.17 $18.53
1" $21.82 $22.26 $22.70 $23.16 $23.62 $24.09
1 1/2" $26.86 $27.39 $27.94 $28.50 $29.07 $29.65
2" $43.64 $44.51 $45.40 $46.31 $47.24 $48.18
3" $167.85 $171.21 $174.63 $178.13 $181.69 $185.32
4" $213.17 $217.44 $221.78 $226.22 $230.74 $235.36
6" $320.60 $327.01 $333.55 $340.22 $347.03 $353.97
8" $443.13 $451.99 $461.03 $470.25 $479.66 $489.25
Current Rate CY 2023 CY 2024 CY 2025 CY 2026 CY 2027
Monthly Tiers
Quantity Rates Use ($/ccf)
Tier 1 (0 to 13) $1.97 $2.10 $2.14 $2.19 $2.23 $2.28
Tier 2 (>13) $2.73 $2.92 $2.98 $3.04 $3.10 $3.16
Service Charges
1" and below meters $13.91 $12.84 $13.10 $13.36 $13.63 $13.90 *Proposed 25% discount. Current discount is 27% on tier 1, 29% on tier 2, and 17% on meter charge.
Proposed Water Rates - With Low Income Senior Discount* (Recommended overall rate increases)
Quantity Discount Rate
Monthly Discount Rate
It is important to note that the proposed water rate adjustments take into consideration both the City’s ongoing operating costs and necessary capital improvements to our water system infrastructure. From an operating perspective, the proposed water rates take into consideration existing system deficiencies, capital improvement projects, personnel/equipment needed to maintain regulatory compliance.
If the resolution is approved, the City will begin the 45-day Prop 218 noticing as required by Article XIIID of the California State Constitution and the Proposition 218 Omnibus Implementation Act requires local government to notify property owners and/or rate payers of proposed water rate increases. The city will hold a Public Hearing on Tuesday, June 21, 2022, at 7:00 p.m., at No. 1 Plaza, Patterson, CA 95363 in the Council Chambers. At the time of the public hearing, the City Council will hear and consider all protests and objections concerning these matters and will consider and may adopt the increased rates. To oppose the proposed water rate increases, property owners or tenants may submit written protests prior to the close of the public hearing. Written protests must be signed and include identification of the property involved in the protest by assessor parcel number or address. If written protests against the rate adjustments are submitted by more than 50% of the affected properties, the proposed rate adjustments will not be adopted. Only one protest per property will be counted.
On June 21, 2022, the City will hold the public hearing as required and consider the final approval of the new rates by resolution.
FISCAL IMPACT
All costs associated with this item are paid for by the Water Enterprise Fund and have been approved in the FY 2021/22 budget. All revenues generated through water rate increases will fund all operations & maintenance and Capital Improvements for the water system only.
Attachments: Resolution No. 2022-20 Initiating Proceedings and Setting Public Hearing Bartle Wells Water Rate Study Presentation Report
Prop 218 Notice (English/Spanish)