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HomeMy WebLinkAbout17 ADOPT WATER RATES 09-01-091. • Agenda Item .F AGENDA REPORT Reviewed: ~, City Manager Finance Director MEETING DATE: SEPTEMBER 1, 2009 TO: WILLIAM A. HUSTON, CITY MANAGER FROM: PAMELA ARENDS-KING, FINANCE DIRECTOR DOUGLAS S. STACK, ACTING PUBLIC WORKS DIRECTOR/CITY ENGINEER SUBJECT: ADOPTION OF RETAIL WATER RATES SUMMARY: At the August 4, 2009 meeting City Council directed staff to provide additional water rate options. To meet the current and future needs of the Water Enterprise System staff has developed one additional water rate increase option. Option 1 remains the same water rate increase as presented at the August 4, 2009 meeting. Option 2 flattens the water rate increases more uniformly over the proposed five year period. Each option essentially produces the same results after five years. However, Option 2 will delay, even further, needed capital improvement by 18-24 months. RECOMMENDATION: It is recommended that City Council take the following action: 1. Adopt Option 1 water rate increase resolution as presented on August 4, 2009. ALTERNATIVE RECOMMENDATION: The City Council may consider and take the following action: 2. Adopt Option 2 water rate increase resolution. If either recommendation is approved, rates will be effective September 2, 2009. FISCAL IMPACT: Option 1: The water rate increase would provide an adequate revenue stream to proceed with the debt issuance for major capital projects February 2010 and fiscal year 12/13; complete pay-as-you-go capital improvements and meet existing bond covenants. Option 2: The smoothed or flattened water rate increases will delay debt issuance for major capital projects to October 2010 and fiscal year 13/14, and defer pay-as-you-go capital improvements for two years. ADOPTION OF RETAIL WATER RATES RESOLUTION NO. 09-41 SEPTEMBER 1, 2009 Page 2 BACKGROUND: The City Council held a public hearing on the proposed water rate increases at its meeting on August 4, 2009. The rate increases presented to the City Council were based on the City's adopted 2000 Water Master Plan. The adopted 2000 Water Master Plan is one of four pillars of the City's "Water Business Plan", the other three include the Urban Water Management Plan, Seven-year Capital Improvement Plan, and the annual Operating & Maintenance budget. The Water Master Plan essentially serves as the short and long term strategic planning document that gives the basis and assurance that capital dollars/investment are prioritized in the most effective fashion. The Water Master Plan contains very detailed and descriptive evaluations of demand, supply, storage, distribution/production, system analysis, and water capital improvement. The Master Plan as well as previous engineering studies in evaluating the Foothill, Rawlings, and Simon Ranch reservoirs noted that these reservoirs have not and will not ever completely comply with current seismic and code requirements due to age, condition and dated construction/design practices. Seismic tends to be over shadowed by the threat of fire only until there is an earthquake. At the public hearing the City Council directed staff to return to Council with additional rate options; Option 1 (Attachment 1) is the original water rate increase presented on August 4, 2009. This option has higher increases for the first two years (10.83% and 10.49% for 40 units) and significantly lower increases for the last three years for the five year rate cycle (6.94% to 6.95% for 40 units). Option 2 (Attachment 2) is a smoothed water rate increase with increases of 9.57% and 9.59% for the first two years and 8.70% to 8.07% for the last three years of the rate cycle. Both options have the pass through provision to offset the increasing costs of purchasing and pumping water imposed by third party agencies. The pass through is restricted to not exceed 7% of the annual water charges to a "typical" residential user in any given fiscal year. Customers will be notified in advance on their bill of the pass through and the charge will be a separate item on the bill. Option 2 would reduce the Water Enterprise's ability to expeditiously obtain debt financing for the construction of Rawlings Reservoir and Tustin Avenue Well. Additionally, the reduced revenue capacity in the first two years necessitates the delay of non-debt finance capital improvement projects by two years to build the necessary cash reserves. The delay in the Water Enterprise's ability to proceed with critical capital infrastructure could lead to higher operating costs in terms of more expensive purchased water should the City's wells fail. The increased costs to provide water might also increase the pass through charges. ADOPTION OF RETAIL WATER RATES RESOLUTION NO. 09-41 SEPTEMBER 1, 2009 ~~`~G1a Pamela Arends-King Finance Director Page 3 S. Stack ablic Works Director/City Engineer Attachment(s): Attachment 1 -Water Rate Increase Option 1 Attachment 2 -Water Rate Increase Option 2 Attachment 3 -Construction Dates of Water Storage and Well Facilities Attachment 4 -Water Capital Projects Completed Attachment 5 -August 4, 2009 Water Rate PowerPoint Presentation RESOLUTION NO. 09-41 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUSTIN, CALIFORNIA, ADJUSTING WATER SERVICE RATES (OPTION 1) WHEREAS, the City Council of the City of Tustin finds and determines as follows: 1. An analysis of the Tustin Water Enterprise's water supply, storage, and distribution system improvements has been completed; and 2. The analysis revealed that major storage system improvements are required to maintain system reliability; and 3. The analysis determined that additional funding will be required in order to complete the necessary improvements; and 4. The Tustin Water Enterprise has experienced increase operational costs; and 5. A study of the Tustin Water Enterprise Rate Structure and Financing Plan has been completed; and 6. The study has determined that it has become necessary to adjust water service rates to maintain operations, meet bond covenants, and to finance the recommended capital improvements; and 7. It will be necessary to increase rates for next five years; and 8. The revised rates as set forth herewith are reasonable and are necessary to cover the costs of operations of the Tustin Water Service delivery for the next five years. NOW, THEREFORE, the City Council of the City of Tustin does hereby resolve as follows: The bi-monthly water usage tiers, rates, charges, and water demand reduction stages are hereby established as follows: WATER CONSUMPTION TIERS: Residential /Commercial Multiple Unit Tiers Units 1 S Tier 0-10 2" Tier 11-20 3~ Tier 21-30 4 Tier 31-40 5 Tier 41-50 6 Tier 51-60 7 Tier 61 + Tiers Units 1S Tier 0-8 2" Tier 9-16 3~ Tier 17-24 4 Tier 25-32 5 Tier 33-40 6 Tier 41-48 7 Tier 49 + FIXED CHARGE: Meter Size 8/5/2009 7/1/2010 7/1/2011 7/1/2012 7/1/2013 5/8" x 3/4" $24.50 $26.94 $29.64 $32.60 $35.86 1" $61.24 $67.36 $74.08 $81.50 $89.64 1 1 /2" $122.46 $134.70 $148.18 $163.00 $179.28 2" $195.92 $215.52 $237.06 $260.78 $286.86 3" $367.36 $404.08 $444.50 $488.94 $537.84 4" $612.24 $673.46 $740.82 $814.90 $896.38 6" or Lar er $1224.48 $1346.92 $1481.64 $1629.80 $1792.76 Multi le Unit $19.60 $21.56 $23.72 $26.08 $28.68 CAPITAL CHARGE: Meter Size 8/5/2009 7/1/2010 7/1/2011 7/1/2012 7/1/2013 5/8" x 3/4" $10 $10 $11 $11 $11 1" $12 $12 $13 $13 $14 11/2" $16 $16 $17 $17 $18 2" $22 $23 $23 $24 $25 3" $33 $34 $35 $36 $37 4" $53 $55 $56 $58 $60 6" or Lar er $90 $93 $95 $98 $101 Multi le Unit $8 $8 $9 $9 $9 CONSUMPTION CHARGE: Small Meter Consum tion Cha r a unde r 2" meter size .Tiers 1S Tier 2" Tier 3~ Tier 4 Tier 5 Tier 6 Tier 7 Tier Units 0-10 11-20 21-30 31-40 41-50 51-60 61 + 09/02/2009 $0.58 $1.01 $1.31 $1.61 $1.91 $2.21 $2.51 07/01 /2010 $0.65 $1.14 $1.47 $1.81 $2.15 $2.49 $2.82 07/01 /2011 $0.69 $1.21 $1.56 $1.92 $2.28 $2.64 $2.99 07/01/2012 $0.73 $1.28 $1.66 $2.04 $2.42 $2.79 $3.17 07/01/2013 $0.78 $1.35 $1.76 $2.16 $2.56 $2.96 $3.36 Lar a Mete r Consum tion Char a 2" meter size & reater Tiers 15 Tier 2" Tier 3~ Tier 4 Tier 5 Tier 6 Tier 7 Tier Units 0-10 11-20 21-30 31-40 41-50 51-60 61 + Hi h $0.70 $1.22 $1.59 $1.95 $2.31 $2.67 $3.04 09/02/2009 Normal $0.64 $1.11 $1.44 $1.77 $2.10 $2.43 $2.76 Low $0.58 $1.01 $1.31 $1.61 $1.91 $2.21 $2.51 Hi h $0.79 $1.38 $1.78 $2.19 $2.60 $3.01 $3.42 07/01/2010 Normal $0.72 $1.25 $1.62 $1.99 $2.36 $2.74 .$3..11 Low $0.65 $1.14 $1.47 $1.81 $2.15 $2.49. $2.82 Hi h $0.84 $1.46 $1.89 $2.32 $2.76 $3.19 $3.62 07/01/2011 Normal $0.76 $1.33 $1.72 $2.11 $2.51 $2.90 $3.29 Low $0.69 $1.21 $1.56 $1.92 $2.28 $2.64 $2.99 Hi h $0.89 $1.55. $2.00 $2.46 $2.92 $3.38 $3.84 07/01/2012 Normal $0.81 $1.41 $1.82 $2.24 $2.66 $3.07. $3:49 Low $0.73 $1.28 $1.66 $2.04 $2.42 $2,79 $3.17 Hi h $0.94 $1.64 $2.12 $2.61 $3.10 $3.58 $4.07 07/01/2013 Normal $0.86 $1.49 $1.93 $2.37 $2.82 $3.26 $3.70 Low $0.78 $1.35 $1.76 $2.16 $2.56 $2.96 $3.36 Hi h Greater t han 110% of rior ear consum tion Normal 90% - 110% of rior ear consum tion Low Less than 90% of rior ear consum tion WATER DEMAND REDUCTION STAGES: Residential /Commercial STAGES 15 2" 3` 4 5 6 7 Tier Tier Tier Tier Tier Tier Tier No Mandatory Reduction 0-10 11-20 21-30 31-40 41-50 51-60 61 + in units STAGE 1 -Water Watch 0-9 10-18 19-27 28-36 37-45 46-54 55+ Voluntary Compliance 10-20% Reduction STAGE 2 -.Water Alert 0-8 9-16 17-24 25-32 33-40 41-48 49+ Mandatory Compliance 20-30% Reduction STAGE 3 -Water 0-7 8-14 15-21 22-28 29-35 36-42 43+ Warning Mandatory Compliance 30-40% Reduction STAGE 4 -Water 0-6 7-12 13-18 19-24 25-30 31-36 37+ Emergency Mandatory Compliance 40%+ Reduction Multiple Unit STAGES 1S 2" 3` 4 5 6 7 Tier Tier Tier Tier Tier Tier Tier No Mandatory Reduction 0-8 9-16 17-24 25-32 33-40 41-48 49 + in units STAGE 1 -Water Watch 0-7 8-14 15-21 22-28 29-35 36-42 43 + Voluntary Compliance 10-20% Reduction STAGE 2 -Water Alert 0-6 7-12 13-18 19-24 25-30 31-36 37 + Mandatory Compliance 20-30% Reduction STAGE 3 -Water 0-6 7-12 13-18 19-24 25-30 31-36 37 + Warning Mandatory Compliance 30-40% Reduction STAGE 4 -Water 0-5 6-10 11-15 16-20 21-25 26-30 31 + Emergency Mandatory Compliance 40%+ Reduction PASSED AND ADOPTED at a regular meeting of the City Council of the City of Tustin, California, held on the 1St day of September, 2009. DOUG DAVERT, Mayor ATTEST: PAMELA STOKER, City Clerk STATE OF CALIFORNIA ) COUNTY OF ORANGE ) SS CITY OF TUSTIN ) I, Pamela Stoker, City Clerk and ex-officio Clerk of the City Council of the City of Tustin, California, do hereby certify that the whole number of the members of the City Council of the City of Tustin is five; that the above and foregoing Resolution No. 09-41 was duly assed and adopted at a regular meeting of the Tustin City Council, held on the 1St day of September, 2009, by the following vote: COUNCILMEMBER AYES: COUNCILMEMBER NOES: COUNCILMEMBER ABSTAINED: COUNCILMEMBER ABSENT: PAMELA STOKER City Clerk RESOLUTION NO. 09-41 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUSTIN, CALIFORNIA, ADJUSTING WATER SERVICE RATES (OPTION 2) WHEREAS, the City Council of the City of Tustin finds and determines as follows: 1. An analysis of the Tustin Water Enterprise's water supply, storage, and distribution system improvements has been completed; and 2. The analysis revealed that major storage system improvements are required to maintain system reliability; and 3. The analysis determined that additional funding will be required in order to complete the necessary improvements; and 4. The Tustin Water Enterprise has experienced increase operational costs; and 5. A study of the Tustin Water Enterprise Rate Structure and Financing Plan has been completed; and 6. The study has determined that it has become necessary to adjust water service rates to maintain operations, meet bond covenants, and to finance the recommended capital improvements; and 7. It will be necessary to increase rates for next five years; and 8. The revised rates as set forth herewith are reasonable and are necessary to cover the costs of operations of the Tustin Water Service delivery for the next five years. NOW, THEREFORE, the City Council of the City of Tustin does hereby resolve as follows: The bi-monthly water usage tiers, rates, charges, and water demand reduction stages are hereby established as follows: WATER CONSUMPTION TIERS: Residential /Commercial Multiple Unit Tiers Units 1S Tier 0-10 2" Tier 11-20 3~ Tier 21-30 4 Tier 31-40 5 Tier 41-50 6 Tier 51-60 7 Tier 61 + Tiers Units 1S Tier 0-8 2" Tier 9-16 3~ Tier 17-24 4 Tier 25-32 5 Tier 33-40 6 Tier 41-48 7 Tier 49 + FIXED CHARGE: Meter Size 8/5/2009 7/1/2010 7/1/2011 7/1/2012 7/1/2013 5/8" x 3/4" $24.50 $26.94 $29.64 $32.60 $35.86 1" $61.24 $67.36 $74.08 $81.50 $89.64 1 1 /2" $122.46 $134.70 $148.18 $163.00 $179.28 2" $195.92 $215.52 $237.06 $260.78 $286.86 3" $367.36 $404.08 $444.50 $488.94 $537.84 4" $612.24 $673.46 $740.82 $814.90 $896.38 6" or Lar er $1224.48 $1346.92 $1481.64 $1629.80 $1792.76 Multi le Unit $19.60 $21.56 $23.72 $26.08 $28.68 CAPITAL CHARGE: Meter Size 8/5/2009 7/1/2010 7/1/2011 7/1/2012 7/1/2013 5/8" x 3/4" $10 $10 $11 $11 $11 1" $12 $12 $13 $13 $14 11/2" $16 $16 $17 $17 $18 2" $22 $23 $23 $24 $25 3" $33 $34 $35 $36 $37 4" $53 $55 $56 $58 $60 6" or Lar er $90 $93 $95 $98 $101 Multi le Unit $8 $8 $9 $9 $9 CONSUMPTION CHARGE: Small Meter Consum tion Cha r a unde r 2" meter size Tiers 1S Tier 2" Tier 3` Tier 4 Tier 5 Tier 6 Tier 7 Tier Units 0-10 11-20 21-30 31-40 41-50 51-60 61 + 09/02/2009 $0.58 $0.99 $1.28 $1.57 $1.86 $2.15 $2.44 07/01/2010 $0.64 $1.10 $1.42 $1.74 $2.07 $2.39 $2.71 07/01 /2011 $0.70 $1.20 $1.55 $1.90 $2.25 $2.60. $2.96 07/01/2012 $0.76 $1.30 $1.68 $2.06 $2.44 $2.82 $3.20 07/01/2013 $0.82 $1.40 $1.81 $2.23 $2.64 $3.05 $3.46 Lar a Mete r Consum tion Char a 2" meter size 8~ reater Tiers 15 Tier 2" Tier 3` Tier 4 Tier 5 Tier 6 Tier 7 Tier Units 0-10 11-20 21-30 31-40 41-50 51-60 61 + Hi h $0.70 $1.19 $1.55 $1.90 $2.25 $2.60 $2.95 09/02/2009 Normal $0.63 $1.09 $1.40 $1.72 $2.04 $2.36 $2.68 Low $0.58 $0.99 $1.28 $1.57 $1.86 $2.15 $2.44 Hi h $0.7$ $1.33 $1.72 $2.11 $2.50 $2.89 $3.28 07/0.1/2010 Normal $0.71 $1.21 $1.56 $1.92 $2.27 $2.63 $2:98 Low $0.64 $1:10 $1.42 ,. $1.74 $2.47 $2.39 $2..71 Hi h $0.85 $1.45 $1.87 $2.30 $2.73 $3.15 $3.58 07/01/2011 Normal $0.77 $1.32 $1.70 $2.09 $2.48 $2.87 $3.25 Low $0.70 $1.20 $1.55 $1.90 $2.25 $2.60 $2.96 Hi h $0.92 $1.57 $2.03 `$2.49 $2.95 $3.41: $3.87 X7/01/2012 Normal $0.83 $1.43 $1.84 $2.26 $2.68 $3.10 $3.52 Low $0.76 $1...30. $1.68 $2.06 $2.44 $2.82 $3.20 Hi h $0.99 $1.70 $2.19 $2.69 $3.19 $3.69 $4.19 07/01/2013 Normal $0.90 $1.54 $2.00 $2.45 $2.90 $3.35 $3.81 Low $0.82 $1.40 $1.81 $2.23 $2.64 $3.05 $3.46 Hi h Greater t han 110% of rior ear consum tion Normal 90% - 110% of rior ear consum tion Low Less than 90% of rior ear consum tion WATER DEMAND REDUCTION STAGES: Residential /Commercial STAGES 15 2" 3` 4 5 6 7 Tier Tier Tier Tier Tier Tier Tier No Mandatory Reduction 0-10 11-20 21-30 31-40 41-50 51-60 61 + in units STAGE 1 -Water Watch 0-9 10-18 19-27 28-36 37-45 46-54 55+ Voluntary Compliance 10-20% Reduction STAGE 2 -Water Alert 0-8 9-16 17-24 25-32 33-40 41-48 49+ Mandatory Compliance 20-30% Reduction STAGE 3 -Water 0-7 8-14 15-21 22-28 29-35 36-42 43+ Warning Mandatory Compliance 30-40% Reduction STAGE 4 -Water 0-6 7-12 13-18 19-24 25-30 31-36 37+ Emergency Mandatory Compliance 40%+ Reduction Multiple Unit STAGES 15 2" 3` 4 5 6 7 Tier Tier Tier Tier Tier Tier Tier No Mandatory Reduction 0-8 9-16 17-24 25-32 33-40 41-48 49 + in units STAGE 1 -Water Watch 0-7 8-14 15-21 22-28 29-35 36-42 43 + Voluntary Compliance 10-20% Reduction STAGE 2 -Water Alert 0-6 7-12 13-18 19-24 25-30 31-36 37 + Mandatory Compliance 20-30% Reduction STAGE 3 -Water 0-6 7-12 13-18 19-24 25-30 31-36 37 + Warning Mandatory Compliance 30-40% Reduction STAGE 4 -Water 0-5 6-10 11-15 16-20 21-25 26-30 31 + Emergency Mandatory Compliance 40%+ Reduction PASSED AND ADOPTED at a regular meeting of the City Council of the City of Tustin, California, held on the 1St day of September, 2009. DOUG DAVERT, Mayor ATTEST: PAMELA STOKER, City Clerk STATE OF CALIFORNIA ) COUNTY OF ORANGE ) SS CITY OF TUSTIN ) I, Pamela Stoker, City Clerk and ex-officio Clerk of the City Council of the City of Tustin, California, do hereby certify that the whole number of the members of the City Council of the City of Tustin is five; that the above and foregoing Resolution No. 09-41 was duly assed and adopted at a regular meeting of the Tustin City Council, held on the 1St day of September, 2009, by the following vote: COUNCILMEMBER AYES: COUNCILMEMBER NOES: COUNCiLMEMBER ABSTAINED: COUNCILMEMBER ABSENT: PAMELA STOKER City Clerk s 0 N tD N W O !'I a ~. 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V .~ v~ ~, N O~ ~ ~ N ~-+ ..i N l~ 00 N ~+ ~O . ~ V1 00 O N ~' ~ ~ O ,--~ M ~ ~I') ~ ~ ~ ~ ~ ~ ~ ~ ~ .~ H " ~' \ M ~y N ~ ~ N ~ 00 .. r A U1 N ~ ~ ~ -~- ~ ~ ~ O ~--~ ~ N ~ M ~ ~ 0 0 ~ ~ ds ~ s9 Fn c w ~Q ~' N ~ ~ .--~ ~ ~ b 0 o N ~ _ +~ G ~ r bH ~ 6~9 ~ E/4 ~ 64 69 69 ^+ C~ O ~ N M ~ ~ O rl ~ ~ ~ ~ ~ 00 ~ O~ ~ O ~ .-i ~ N ~ M ~ ~ W ~ y A ~ ° o 0 0 ~ ~ ~ ~ ~ ~ y o o o I~ I~ M ~ O M 00 _ M _ ~--~ O ~ ~ 00 00 00 C~ h 0 ~ '^'~ ° . 1~ O ~t , _., v1 O a o O b~D ~, b A o 0 0 0 0 ~ ~ r~ ~ 01 N O~ O l~ M M O~ O U o a; o~ oo 00 00 \° 0 ~ y ~ o ~ ~ ~ o ~ ~ t~ O~ O O l~ I V7 ~ ~ M O O O~ O~ 00 00 00 C~ O ~-~+ N M !f ~ 00 ~ O~ ~ O ~ ~ ~ N ~ M O O ~ ~ ~ ~ W W m 0 m v CQ t0 a ATTACHEMENT 3 WATER STORAGE AND WELL FACILITIES • ~ Foothill . • .~ 1959 Rawlings 1971 Simon Ranch 1960 Newport Avenue (new roof in 1985) 1926 John Lyttle 1975 Main Street 2001 Newport Avenue • ~ ~• 1926 Walnut Avenue 1930 Tustin Avenue 1952 Prospect Avenue 1955 Yorba Avenue 1961 Main Street (#3) 1972 Main Street (#4) 1999 17t Street (#2) 1972 17t Street (#4) 2002 Beneta Way 1977 Columbus Tustin 1985 Vandenberg 1993 Pasadena Avenue 2008 Replacement of facilities is based on capacity needs, condition, system analysis and seismic code requirements Attachment 4 Water Capital Projects Completed Between Fiscal Years 06/07 and 08/09 CIP 6161 -Hewes Avenue water main replacment (793 ft) CIP 6130 -Pasadena Avene Well CIP 6147 -Edinger Avenue water main replacment CIP 6151 -Prospect Avenue water main replacement (1,450 ft) CIP 6154 - Liane, Valhala, water main replacement (2,620 ft) CIP 6157 -Main Street Treatment Plant Welt #4 rehabilitation Repair of 17th St. treatment plant, Well#4 Pump Repair Pumps at Walnut, Prospect, Yorba, and Beneta Wells; and Simon Booster Station Repair Motors at Columbuts-Tustin, Vandenberg, Prospect, and Newport Wells; and Simon Booster Station Project Cost 147,155.07 4,313,553.91 604,932.93 582, 955.96 677,053.29 142, 890.09 131,854.70 275,992.83 21,149.43 Total Project Costs $ 6,897,538.21 Z ,litF~M {i~ r-3' ~ h C/) z 9 ., ~ ~~ _ `;~fi~ti ~'~~; ~;:.:,~ w V w ~ N ~ w Z ~ w - ~ J ~ U ~ Q U ~ L~ T ~ _, { >. 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