DISCUSSION
The Water Rate Study has identified the overall revenue needs for minimal financing of the operations, capital improvements and debt obligations for the Water Enterprise through:
- Evaluating existing policies and procedures affecting water rates.
- Evaluating adequacy of projected revenues under existing rates to meet projected revenue requirements.
- Developing a sound financial plan for covering a five-year study for ongoing operations, planned capital improvements and complying with federal and state mandates. Developing a suitable schedule of water rates that produce revenues adequate to meet financial needs and business principles adopted by the City Council.
The study concludes that additional funds are needed to meet the financial, regulatory, operational, public health and safety, and moral obligations entrusted to the City by the community. Upon the last year of the five-year implementation period, the proposed rate adjustment will amend the service charge for 5/8 x 3/4 meters (typical residential meter size) from $12.74 to $33.85 per month, the capital improvements charge from $1.47 to $7.00, and a usage charge of $3.07 to $2.86 per unit of water use per month up to a maximum use of 33 units. This would result in the water portion of the bill increasing from $106.31 to $126.65 for the average residential customer (30 units) per bi-monthly bill over the course of five years. Private fire service rates will also be adjusted for all meter sizes from 1.5” to 10”. These proposed rates will replace the existing private fire service rates and are shown on the attached draft ordinance.
The City is proposing the adoption of automatic annual adjustments to the first three water rate components (1. Minimum charge based on meter, 2. Capital improvement charge, and 3. Commodity charge) and the fire service rate over a five-year period. The City is also proposing to re-adopt the automatic adjustments to the commodity delivery charge for water usage that pass through future increases or decreases in wholesale water charges for a five-year period. Furthermore, residential customers with 5/8” x 3/4” meters who use six units or less of water in a billing period currently pay only the minimum charge. Under the proposed adjustments, low water users will pay the minimum charge and capital improvement charge.
These water rate components would be adjusted after the next regularly scheduled meter reading, following the date on which the City’s Ordinance establishing the rates becomes effective. Subsequent rate increases will become effective on January 1 of each year, commencing January 1, 2019, without further action by the City Council. However, a 30-day notice will be provided to each customer prior to each increase. The proposed rates are contained in the attached Ordinance.
The total fee charged is calculated based upon the funds required by the City to maintain and operate the City’s water system, repay bond indebtedness, and to comply with new and existing regulations imposed by state and federal agencies.
The basic procedure for increasing water rates is as follows:
a) A Public Hearing is held on the matter. Notice of Public Hearing on the water rate increase was given 45 days in advance of the Public Hearing to the record owners of each identified piece of real property within the Water Enterprise pursuant to Proposition 218;
b) Property owners within the Water Enterprise boundaries have the right to file a written protest against the increase; and
c) If more than a simple majority of the total number of property owners file protests against the water rate increase, then the increase may not be instituted (the total number of parcels is 34,317).