HomeMy WebLinkAboutAgenda Report - April 15, 2009 K-04 PHAGENDA ITEM V\Ooq
M1 CITY OF LODI
COUNCIL COMMUNICATION
TM
AGENDA TITLE: Set Public Hearing for June 17, 2009 to Consider Adopting Resolution Adjusting
Wastewater Rates
MEETING DATE: April 15, 2009
PREPARED BY: Public Works Director
RECOMMENDED ACTION: Set a Public Hearingfor June 17, 2009 to consider adopting a
resolution adjusting wastewater rates.
BACKGROUND INFORMATION: The Wastewater enterprise fund is operating at a deficit. The
existing rate structure no longer covers the cost of operating the
utility. Therefore, it is recommended that wastewater rates be
increased to provide a positive cash balance, revenue earmarks be
eliminated to make revenue correspond with need, and the Engineering News Record (ENR) Index
replace the Consumer Price Index (CPI) when determining annual cost adjustments. Otherwise, all
sub -funds within the enterprise will be drained by 2011.
The fund's deficit is due to several factors:
1) Annual operating costs increase faster than the indexed rate of inflation;
2) The decline of new development has decreased the amount of revenue required to pay
towards the principle and interest of Wastewater Improvement bonds, which were used to
expand/upgrade the White Slough Water Pollution Control Facility and to cover a
$7.5 million emergency repair of the wastewater transmission main in 2008;
3) Annual revenue has been overestimated annually by approximately $1.5 million since
2004;
4) One of the accounts from which debt service is paid was not backfilled with any revenue
from 1991 to 2004. It needs to be replenished.
To reverse the ongoing operational deficit, the following course of action is proposed:
1) Adjust base rates pursuant to the following schedule: 25 -percent increase effective
July 1, 2009, for FY 2009110; 20 -percent increase for FY 2010111; 10 -percent increase for
FY 2011/12; and 5 -percent increasefor FY 2012/13.
2 Adjust rates for inflation using the ENR Index instead of the CPI.
3� Budget and execute a $2 million infrastructure project biannually, but eliminate the
infrastructure line item on utility bills.
This is not a recommendation the Public Works Departmenttakes lightly. Therefore, the department
plans an outreach campaign that will help residents understand the regulatory environment and other
issues that result in the recommendationfor a rate increase. Not only will additional information be
APPROVED: /
Blair' ,City Manager
K MMUTILITY RATESNW Wre
WVM009 WW Rate kncaaelCCSetPH WWR Rev' .d0C 04110!2009
Set Public Hearing for June
April 15, 2009
Page 2
17, 2009 to ConsiderAdopting Resolution Adjusting Wastewater Rates
placed on the City's website, the Public Works Department will hold a publicworkshop in the weeks
before the hearing so the community can discuss this issue one-on-one with staff.
In addition, it is proposed that the City Council at the public hearing:
1) Backfill the $3,955,688 in the Wastewater Capital Reserve Fund to account for the
13 years that expenditures were made without being restored with revenue from any
source;
2) Support the future plant operations plan that anticipates several new positions to deal with
the increasingly complex nature of operating a modern, 8.5 -million -gallon -per -day
treatment plant. This includes a Compliance Engineer, Plant Equipment Mechanic,
Environmental Compliance Inspector, additional Plant Operators, and a variety of position
reclassifications needed for the City to comply with the requirements of its state -issued
discharge permit.
Lodi's Wastewater system consists of 186.5 miles of wastewater mains, seven pump stations and the
White Slough Water Pollution Control Facility. Many wastewater plants constructed in the 1960s and
1970s, such as the White Slough facility, were built with federal funds through programs designed to
reduce water pollution. The state Legislature in 2000 forced the State Water Board to pass regulations to
prevent the discharge of pollutants into ground and surface water, but unlike previous decades, federal
funding has not been widespread to accomplish this goal.
Meanwhile, Lodi has faced increasingly strict standards in the past decade. Now, not only is wastewater
clarified (primary treatment) and aerated and further clarified (secondary treatment), it is filtered and
disinfected using ultraviolet light (tertiary treatment). In January 2005, Lodi's plant became the first city in
San Joaquin County to reach tertiary stage treatment. The City's most recent discharge permit, issued in
2007, imposed stricter requirements on the plant. Even then, that has not stopped a local environmental
group from trying to force the state to require Lodi to make even more costly upgrades.
The need to raise wastewater rates is not unique to Lodi. Neither are the proposed rates. Some cities
charge less, others more. Staff will provide additional information to the public at the workshop and at
the public hearing.
FISCAL IMPACT: Increased revenuesto the wastewater utilitywhich is required to keep up
with cost of service increases and mandated costs.
FUNDING AVAILABLE: Not applicable
4",
Wally Sart lin
Public Works Director
FW51pmf
cc: Steve Mann. Information Services Manager
Charlie Swimley, Water Services Manager
K:IWPUJTILITY RATESIW VVW=09 W WW Rate lncrease\CCSetPH WWRates Revised.doc 0411012009
The City of Lodi
Public Works
Water Services
St
Wastewater
April 15, 2009
f
-^� Recommended Action
➢Set Public Hearing for June 17, 2009
➢ Issue Public Notification Pursuant to
Proposition 218
➢ Conduct Public Workshop
f
�� Background
Annual operating costs increasing faster than
indexing factors
Slowdown in new development has decreased
the amount of revenue for debt service
)i. Changed regulatory environment — new
regulations & strict enforcement
Old debt from 1991 - 2004
f
1.
2.
3.
r � Wastewater Funds Overview
(Estimated June 30, 2009)
Operations Fund (170)
Utility Capital (171)
Capital Reserve Fund (172)
Subtotal
➢ White Slough COP Proceeds
$17,077,554
$ 2,842, 742
$ 4,625,945
➢ Impact Mitigation Fees (173) $ 246,766
t
10
9
Cn
C 5
0
4
3
2
1
0
� Operating Costs Increasing Faster
than Indexina Factors
FY '03/'04 FY '04/'05 FY '05/'06 FY '06/'07 FY '07/'08
0 Wastewater Operating Expense Wastewater Operating Revenue
$40
$35
$30
$25
CO
C
o $20
$15
$10
$5
$0
lC� Slowdown in New Development
Year -Ending Reserve Balance - Impact Fund (173)
--m— Reserve Total Target Balance
New Development = 52.5%
2007-08 2008-09 2009-10
2011-12 2012-13 2013-14 20 - - 2016-17 2017-18
--m— Reserve Total Target Balance
�� Regulatory Environment
Tertiary Treatment
Groundwater Protection
Surface Water Protection
Salinity
Odor and Nuisance Control
Third Party Litigation
Ten Year Proposed Expenditure Plan
Current Rates Plus Rate Adjustments
);. $10 Million Infrastructure Replacement Program
• 70,000 feet of rehabilitated mains
$4.6 Million White Slough Improvements
Fix Operation Deficit In 5 years -
Pay Pre -2004 Debt In 4 years -
)i. Future Development Debt Service -
)i. Support future plant operations plan
);. Create 25% Operating Reserve - $1,800,000
f
Rate Adjustments
25% FY 08/09
20% FY 09/10
10% FY 10/11
5% FY 11/12
0% FY 12/13
Monthly Rate Effective July 1
3 Bedroom Home
Current
Base $19.73
Infrastruct. 8.01
Replace.
Total $27.74
Increase
Percent
2009 2010
$34.68 $41.61
n/a n/a
25%
2011
$45.77
n/a
$41.61 $45.77
20%
$4.16
10%
2012
n/a
$2.29
0%
$50.00
S4,. -OD
$45.00
53,5.OD
$30.00
�
g5 -m
�
S15.00
5am
S:5 -OD
Figure 2
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-y
City of Lodi - City Hall
221 W. bine Street
Phone: (209) 333-6700
Fax: (2091333-6807"
Ram- 3313M69W
MEMORANDUM
From $t Xjr Upw: I" Manager
TO: Mayor and Council Members
DATE: April 15,2009
SUBJECT: Increased Costs of Wastewater Regulation —Lodi is not Alone
This memorandum is intended to give the City Council a sense of the regulatory
environment that is causing a number of California cities to raise wastewater
rates.
The Regional Water Board executive officer called 2008 "a banner year for
enforcement" in his February report. The Board issued more than 600 formal
enforcement actions, including 106 Administrative Civil Liability complaints and
orders for more than $18.6 million. At the April 23-24 Regional Water Board
meeting, fines totaling $168,000 will be considered against the communities of
Tracy, Stockton and Mountain House, as well as other fines against other
wastewater plant operators in the region. A slowing economy has not caused
the regulatory agencies to back away from enforcement efforts.
Residents in many nearby cities already pay more than Lodi and their rates are
heading higher in order to bring their plants into compliance with new discharge
requirements. Existing rate structures are not sufficient to pay the costs
associated with meeting more stringent environmental regulations.
According to Placer District 3 SupervisorJim Homes, sewage treatment plant
costs have increased threefold over the last 10 to 15 years due to more stringent
regulations, inflation and rising construction costs
California agencies' calendars are full of public hearings regarding wastewater
rates. Here's a snapshot of issues in other cities in our area:
■ Galt: On April 7, the Galt City Council approved a 4.1 percent rate
increase. Single-family residents now pay $51.87 a month for wastewater
service. Additionally, Galt's Public Works staff recommends removing the
$25 wastewater treatment plant upgrade line item and eliminating
segregated accounts so that the utility can use all available revenue to
meet needs for operations, maintenance and capital improvements.
■ Rio Vista: This city, which operates two treatment plants, is facing rapidly
escalating costs. An engineering study released March 30 recommends
that residents served by a newer plant have their rates increase from
$27.67 to $51.60 on July 1, while other residents facing a $77.36 monthly
rate on July 1 eventually pay $110.92 a month in 2013.
■ Lathrop: On March 3, the Lathrop City Council approved roughly 50
percent in wastewater rate hikes over a three-year period. The current
monthly rate of $34 is scheduled to increase steadily to $52 in January
2011.
■ Manteca: Fined $463,000 by the Regional Board in September 2005.
Now charging $39.50 per month for single-family residents, increasing to
$51.25 in January 2013.
■ Placer County: Residents in North Auburn currently pay $67.84 a month,
with the rate going up to $82 on May 12. Other communities served by
Placer County's Public Works Department are facing rate increases that,
within a few years, will push their monthly sewer bills in excess of $100.
■ Across the State: Marin County Sewage Agency paid $1.6 million in
fines for spilling sewage into Richardson Bay. Rohnert Park raised rates
to $59.30 per month for average residential units. Santa Rosa's rates are
$66.55 per month. Wastewater rates in excess of $40 per month appear
to be the standard throughout the state.
confirm i
Wing 333-6702
CITY OF LODI
P. 0.130X 3006
LODI, CALIFORNIA 95241-1910
ADVERTISING INSTRUCTIONS
SUBJECT: PUBLIC HEARING TO CONSIDER RESOLUTION ADJUSTING
WASTEWATER RATES
PUBLISH DATE: SATURDAY, MAY 16,2009
SATURDAY, JUNE 20,2009
TEAR SHEETS WANTED: One (1) please
SEND AFFIDAVIT AND BILL TO
DATED: MAY 1 1,2009
ORDERED B Y RANDI JOHL
CITY CLERK
J (FER M. FERRIN, CMC
A5 ISTANT CrrY CLERK
RANDI JOHL, CITY CLERK
City of Lodi
P.O. Box 3006
Lodi, CA 95241-1910
MARIA BECERRA
ADMINISTRATIVE CLERK
Faxed to the
Sentinel at 569-1 4 at (tire} ate) Gies}
LNS Phoned to confirm receipt of all pages at; f ': '1J MP (initials)
forms\advins.doc
DECLARATION OF POSTING
PUBLIC HEARINGTO CONSIDER RESOLUTION ADJUSTING
WASTEWATER RATES
On Friday, May 15 2009, in the City of Lodi, San Joaquin County, California, a Notice of
Public Hearing to consider resolution adjusting wastewater rates (attached and marked
as Exhibit A) was posted at the following locations:
Lodi Public Library
Lodi City Clerk's Office
Lodi City Hall Lobby
Lodi Carnegie Forum
declare under penalty of perjurythat the foregoing is true and correct.
Executed on May 15, 2009, at Lodi, California.
JEvT1FZ71VJ1 PERRIN, CMC
ASSISTANT CITY CLERK
N:1Administration\CLERK\Fomis\DECPOSTP W.DOC
ORDERED BY:
RANDIJOHL
CITY CLERK
MARIA BECERRA
ADMINISTRATIVE CLERK
CITY OF LODI
4D Carnegie Forum
305 West Pine Street, Lodi
NOTICE OF PUBLIC HEARING
Date: July 15, 2009
Time: 7:00 p.m.
For information regarding this notice please contact:
Randi Johl EXHiBIT
City Clerk
Telephone: (209) 333-6702
NOTICE OF PUBLIC HEARING
NOTICE IS HEREBY GIVEN that on Wednesday, July 15, 2009, at the hour of
7:00 p.m., or as soon thereafter as the matter may be heard, the City Council will
conduct a public hearing at the Carnegie Forum, 305 West Pine Street, Lodi, to
consider the following matter:
a) Resolution adjusting wastewater rates (as identified on the attached
Exhibit A).
Information regarding this item may be obtained in the Public Works
Department, 221 West Pine Street, Lodi, (209) 333-6706. All interested persons
are invited to present their views and comments on this matter. Written
statements may be filed with the City Clerk, City Hall, 221 W. Pine Street, 2nd
Floor, Lodi. 95240, at any time prior to the hearing scheduled herein, and oral
statements may be made at said hearing.
If you challenge the subject matter in court, you may be limited to raising only
those issues you or someone else raised at the public hearing described in this
notice or in written correspondence delivered to the City Clerk at, or prior to, the
public hearing.
At said hearing, any person interested, including any person owning property in
the City, may be heard as to whether said charges are discriminatory or
excessive, or will not be sufficient under Government Code Section 54515, or will
not comply with the provisions or covenants of any outstanding revenue bonds of
the City payable from the revenues of the respective enterprise, or will not
comply with the provisions of Title 5, Division 2, Part 1, Chapter 6 "The Revenue
Bond Law" of the Government Code, or an any other matter related to the
proposed charges or their method of adoption.
By er of the Lodi City Council:
40—
City Clerk
Dated: April 15,2009
ate•.'"'=_.;;�► �
JACITYCLRMFORMSIPH NOTICE publicationWWRates.doc 4117109
1EXHIBIT A
RESOLUTION NO. 2009-
A RESOLUTION OF THE LODI CITY COUNCIL ADJUSTING
WASTEWATER DISPOSAL SERVICE RATES
WHEREAS, the Council of the City of Lodi finds as follows:
1. The City of Lodi provides wastewater disposal service to its citizens;
2. The City charges customers of this utility a charge to fund the on-going
operation and maintenance of the wastewater disposal service;
3. The City Public Works Director and staff have prepared a plan outlining
the cost of operating the wastewater disposal service;
4. The Wastewater Enterprise Fund is operating at a deficit and the existing
rate structure no longer covers the cost of operating the utility;
5. The City Public Works Director has recommended increases to the
current wastewater disposal rates;
6. The City Public Works Director also recommends that the revenue
earmarks be eliminated to make revenue correspond with need and that
the Engineering News Record (ENR) Index replace the Consumer Price
Index (CPI) when determining annual cost adjustments;
7. The Council directed that notice of a hearing thereon be given to the
property owners and wastewater disposal utility customers in the City,
with such notice to include, among other matters, the information required
to be included pursuantto California law;
8. Pursuant to California Constitution, Article XIIIC and Government Code
53755, such notice has been mailed to those property owners and
account holders, at least 45 days before the hearing, as evidenced by a
Certificate of Mailing on file with the City Clerk;
9. The Council also directed that notice of a hearing thereon be given with
such notice to include the information required to be included pursuant to
Government Code section 54354.5;
10. Such notice has been published once each week for two weeks, in
accordance with Government Code section 54354.5, in the Lodi News -
Sentinel as evidenced by Proofs of Publication on file with the City Clerk:
11. On July 15, 2009, the City Council conducted said public hearing, at
which time the City Council heard all objections and protests to the
proposed increased rates;
12. Written protests against the proposed increased rates were not presented
by a majority of the property owners and wastewater disposal utility
customers; and
follows:
13. The proposed wastewater disposal service rates are not discriminatory or
excessive, are sufficient under Government Code section 54515, comply
with the provisions or covenants of any outstanding revenue bonds of the
City payable from the revenues of the enterprise, comply with the
provisions of Title 5, Division 2, Chapter 6 of the Government Code, and
are in compliance with all other applicable law.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Lodi as
Section 1. Recitals. The foregoing recitals are true and correct.
Section 2. Levy of Charges. Pursuant to Sections 13.08.010, 13.12.240, and
13.16. 110 of the Lodi Municipal Code, the increased wastewater disposal service rates
as attached hereto as Exhibit A are hereby approved.
Section . Subsequent Adiustments. As provided by Government Code
Section 53756, the rates shown in ExhibitA may be adjusted annually for a period of five
years by resolution beginning July of 2010 through July of 2015, with Council approval
following a public hearing, in an amount not to exceed the percentage change in the
Engineering News Record (ENR) Twenty Cities Annual Average Index or other index as
approved by the City Council by resolution. The adjustment shall not be made if it
causes rates to exceed the cost of service and Notice of the Adjustment shall be mailed
to each account not less than 30 days before the effective date of the adjustment.
Section 4. Effective Date. This resolution shall take effect from and after the
date of its passage.
Dated: July 15, 2009
I hereby certify that Resolution No. 2009- was passed and adopted by the
City Council of the City of Lodi in a regular meeting held July 15, 2009, by the following
vote:
AYES: COUNCIL MEMBERS -
NOES: COUNCIL MEMBERS -
ABSENT: COUNCIL MEMBERS -
ABSTAIN: COUNCIL MEMBERS-
RANDI JOHL
City Clerk
2009-
EXHIBIT A
Moderate Strength (annual per SSU)
�urrent nates
nates Effective
natesEffective
Rates Effective
Rates Effective
High Strength User:
07/16/2009
07/16/2010
07/16/2011
07/16/2012
Flow (per MG. annual basis)
Monthly
Monthly
Monthly
Monthly
Monthly
Residential
Base Infr. Total
Total
Total
Total
Total
1 BR
$11.84 $4.81 $16.65
$20.81
$24.97
$27.4
$28.8
2 BR
15.78 6.41 22.19
27.7
33.29
36.62
38.45
3 BR
19.73 8.01 27.74
34.68
41.61
45.7
46.0
4 BR
23.67 9.62 33.2
41.6
49.9
54.9
57.6
51311
27.62 11.22 38.84
48.5
56.2
64.09
67.29
6 BR
31.56 12.82 44,
55.4
66.58
73.2
76.
7 BR
35.51 14.42 49.93
62.4
74.9
62.4
86.51
Moderate Strength (annual per SSU)
$266.28
5332.88
399.46
439.44
461.40
High Strength User:
Flow (per MG. annual basis)
2,247.10
2,808.88
3,370.66
3,707.73
3,893.12
BOD (per 1,000[bs.,annual basis)
370.83
463.54
556.25
611.88
642.47
S5 (per 1,000b., annual basis)
231.86
289.83
347.60
382.58
401.71
Grease Incepter 8 Septic Holding
196.35
245.44
294.53
323.98
340.16
Tank Waste within City Limits (per
1,000gal.)
Septic (only) Holding Tank Waste
416.82
521.03
625.24
687.76
722.15
Outside City limits (per 1,000 gal.)
IDlsposal to Storm Drain System (per MG)
206.24
257.80
309.36
340.30
357.32
Disposalto industrial System:
nla rates adjusted
n/a rates adjusted
ma rates adjusted
n/a rates adjusted
Flow (per MG. annual basis)
2,218.78
annually per
annually per
annually per
annually per
BOD (per 1.0001 bs., annual basis)
20.34
LMC § 13.12.210
LMC § 13.12.210
LMC § 13.12.210
LMC § 13.12.210
Winery Waste (ner 1.000 aal.)
198.82
248.53
298.24
328.06
344.46