2022 Water Rate Study
City Council Presentation
April 19, 2022
Summary of Key Points
2 • Water enterprise is a self-supporting enterprise
– Revenues must be adequate to fund the costs of providing service • Last rate study was in 2017; adopted 5 years of rates increases through January 1, 2022
• Water Master Plan has identified $147 MM of capital projects over the next 10 years
• $120 MM of projects are projected to be funded privately by developers and developer impact fees.
• $27 MM of projects are projected to be funded through water rates through a combination of debt issuances (state revolving fund loans or bonds) and cash
• 2022 Study includes rate increases for the next 5 years. Rate increases will be effective January 1 of each year, beginning in 2023 through 2027. • Recommendation is 2% annual increases.
Prop 218 Substantive Requirements
3 • Cost of Service: Fees cannot exceed the cost of service • Intended Purpose: Revenues derived from the fee or charge can only be used for the purpose for which the fee was
imposed
• Proportional Cost Recovery: The amount of the fee or charge levied on any customer shall not exceed the proportional cost of service attributable to that customer
Current Water Rates
4 Rate Effective 3/1/2018 1/1/2019 1/1/2020 1/1/2021 1/1/2022 Monthly Tiers
11.0% 11.0% 11.0% 11.0% 11.0%
Quantity Rates Use ($/ccf)
Tier 1 (0 to 13) $1.78 $1.97 $2.19 $2.43 $2.70
Tier 2 (>13) $2.54 $2.82 $3.14 $3.48 $3.86
Service Charges
Meter Size
5/8" $11.06 $12.27 $13.62 $15.12 $16.79
3/4" $11.06 $12.27 $13.62 $15.12 $16.79
1" $14.37 $15.96 $17.71 $19.66 $21.82
1 1/2" $17.69 $19.64 $21.80 $24.19 $26.86
2" $28.75 $31.91 $35.42 $39.32 $43.64
3" $110.57 $122.73 $136.23 $151.22 $167.85
4" $140.42 $155.87 $173.02 $192.05 $213.17
6" $211.19 $234.42 $260.20 $288.83 $320.60
8" $291.90 $324.01 $359.65 $399.22 $443.13
3/1/2018 1/1/2019 1/1/2020 1/1/2021 1/1/2022
Monthly Tiers
Quantity Rates Use ($/ccf)
Tier 1 (0 to 13) $1.51 $1.61 $1.71 $1.83 $1.97
Tier 2 (>13) $2.07 $2.21 $2.37 $2.54 $2.73
Service Charges
5/8" and 3/4" Meters $11.05 $11.66 $12.33 $13.08 $13.91 Low Income Senior Discount equals 50% of proposed water rate increase Monthly Discount Rate
Quantity Discount Rate
(Recommended increases)
Monthly Rate
Implemented Water Rates - With Low Income Senior Discount Why a Rate Increase is Needed
5 • Operations & maintenance expenses is
expected to increase 3% per year
• New projected staff for the water enterprise
• Equipment & vehicle replacements
• Capital improvement plan (CIP)
• $27 MM of rate payer funded projects over
the next 10 years
• To obtain future financing, City must adopt
rates to show ability to repay future debt
service and meet current debt rate
covenants (125%)
• Rates DO NOT pay for development’s
share of the CIP
Capital Projects – Next 5 Years
(Existing Rate Payer Projects)
6 5-Year Water Capital Improvement Plan Summary
Reference: City’s Approved Water Master Plan Table ES - 1:
Project Number Type of
Project Project Description
5-Year Estimated
Project Cost
FY22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27
ST-1
Storage
Tank
New 1.0 MG
Storage Tank (Zone 3) $200,000 $300,000 $1,370,000 $ 1,870,000.00 WT-1
Tank
Recoating Re-coat Storage Tank (Zone 1) -Orange Ave. $348,000 $ 348,000.00 WT-2
Tank
Recoating Re-coat Storage Tank (Zone 2)- PZ 2 $431,000 $ 431,000.00 WM-2 Water Main Replace 4,240 lf of existing pipe with 4- inch. 6-inch, 8-inch, 10-inch, 12-inch and 16-inch pipe Washburn, Webber, N 1st. $163,900 $1,475,100 $ 1,639,000.00 WM-3 Water Main
Replace 2,660 lf of existing pipe with 8- inch pipe and replace service lines along additional 2,000 lf of pipe (around 40 additional service lines) Colony Park I &II and Brook Hollow Subdivision
$98,000 $882,000 $ 980,000.00
WM-6A Water Main Replace around 10,180 lf of existing pipe with 4, 6, and 8-inch pipe. Bounded by El Circulo. $500,000 $2,325,000 $ 2,825,000.00 WM-6B Water Main Replace 17,750 lf of existing pipe with 4,6,and 8- inch pipe. Area bounded by W. Las Palmas, S. 9th St, Sperry Ave, Del Puerto, and S. El Circulo Ave. $500,000 $5,311,000 $ 5,811,000.00 WM-7 Water Main Replace around 150 service lines along 5,600 lf of existing pipe. California Palms $299,000 $ 299,000.00 WM-19B Water Main Retrofit 6,500 water meter; convert system from AMR to AMI; replace 1,000 meter boxes $4,000,000 $ 4,000,000.00 Total $5,048,000 $3,125,000 $6,942,900 $2,357,100 $730,000 $18,203,000 Cost Reduction Efforts
7 • City has postponed hiring of operations staff
and purchasing of equipment.
• City has obtained low interest (1.2%) SRF
loan for water meter replacement project.
• City replacing aging infrastructure through
Water Capital Improvement Plan.
• City implementing new technology to
improve efficiency.
• AMI metering project
• Mobile MMS (tablet-based
maintenance tracking system)
Proposed Rates
8 Current Rate CY 2023 CY 2024 CY 2025 CY 2026 CY 2027
Monthly Tiers
2.0% 2.0% 2.0% 2.0% 2.0%
Quantity Rates Use ($/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
9 Prop 218 Procedural Requirements
10 • Noticing Requirements: Must mail
notice of proposed rate increases &
info on public hearing to affected
property owners
• Public Hearing: Hold public rate
hearing at least 45 days after the
notice is mailed
• Rate Increases Subject to Majority
Protest: Rates cannot be adopted if
more than 50% of ratepayers submit
written protests
Schedule
11 April 2022 • 2-2-1 Meetings with Council
• Council Meeting - Council Approved Resolution of intention, Initiating April 19 Proceedings & Set the Public Hearing th, 2022
• City Council Meeting – Council Considers Final Approval of Rate, Counting June 21 Protest & Adopt Resolution Implementing Five Year Rates Schedule st, 2022
• Effective Date of New Water Rates January 2023
Questions and Comments?
All Capital Project Location Overview
13 4/12/2022
Project Locations Map (New Tank)
14 4/12/2022
ST-1: New 1.0 MG Storage Tank (Zone 3)
Project Locations Map (Tank Re-Coating)
15 4/12/2022
WT-2: Re-coat Storage Tank (Zone 2)-
PZ 2, Baldwin Road
WT-1: Re-coat Storage Tank
(Zone 1), Orange Ave.
Project Locations Map (Water Main)
16 4/12/2022
WM-2:Replace 4,240 lf of existing pipe with 4- inch. 6-inch, 8-inch, 10- inch, 12-inch and 16-inch pipe Washburn, Weber, N 1st.
Project Locations Map (Water Main)
17 4/12/2022
WM-3:Replace 2,660 lf of existing pipe with 8- inch pipe and replace service lines along additional 2,000 lf of pipe (around 40 additional service lines) Colony Park I & II and Brook Hollow Subdivision.
Project Locations Map (Water Mains)
18 4/12/2022
WM-6A: Replace around 10,180 lf of existing pipe with 4, 6, and 8-inch pipe.
Bounded by El Circulo.
WM-6B: Replace 17,750 lf of existing pipe with 4,6,and 8- inch pipe. Area bounded by W. Las Palmas, S. 9th St, Sperry Ave, Del Puerto, and S. El Circulo Ave.
Project Locations Map (Water Mains)
19 4/12/2022
WM-7: Replace around 150 service lines along 5,600 lf of existing pipe at California Palms Subdivision.
Project Locations Map (Meter replacements)
20 4/12/2022
WM-19B: Retrofit 6,500 water meters. Convert system from AMR to AMI.