HomeMy WebLinkAboutAgenda Report - June 5, 1996 PH (10)AGENDA TITLE: Postpone Public Hearing to Consider Increasing Water Rates
MEETING DATE: June 5, 1996
PREPARED BY: Public Works Director
RECOMMENDED ACTION: That the City Council postpone indefinitely the public hearing on water
rate increases.
BACKGROUND INFORMATION: Based on comments from members of the Chamber of Commerce
and internal discussions, staff has not prepared a complete package
for this scheduled public hearing. Staff is recommending another
course of action under a separate Consent Calendar item,
Authorize Water Utility Analysis, on the June 5, 1996 Council agenda.
FUNDING: Not applicable.
^1 tri
�f
Jac L. Ronsko
Publi Works Director
Prepared by Richard C. Prima, Jr., City Engineer
JLR/RCP/lm
cc: Water/Wastewater Superintendent
Electric Utility Director
APPROVED:
H. Dixon Flynn -- dty Manager
CNTPNWT2.DOC 0528196
CITY OF LODI NOTICE OF PUBLIC HEARING
Carnegie Forum Date: June 5, 1996
. 305 West Pine Street, Lodi Time: 7:00 p.m.
For information regarding this notice please contact:
Jennifer M. Perrin
City Clerk
Telephone: (209) 333-6702
NOTICE OF CONTINUED PUBLIC HEARING
NOTICE IS HEREBY GIVEN that on Wednesday, June 5, 1996 at the hour of 7:00 p.m.,
or as soon thereafter as the matter may be heard, the City Council will conduct a
continued Public Hearing at the Carnegie Forum, 305 West Pine Street, Lodi, to consider
the following matter:
a) Increasing water rates
All interested persons are invited to present their views and comments on this matter.
Written statements may be filed with the City Clerk 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, P.O. Box 3006, at or prior to the Public
Hearing.
By Order of the Lodi City Council:
1t1 _ J nnii�er M. Perrin
Cjty Clgrk
Dated: May 15, 1996
Approve s to form:
Randall A. Hays
City Attorney
JACITYCIRK%FORMS%NOTGEN.DOC 5114M
0 MEMORANDUM, City of Lodi, Public Works Department
To: City Manager
City Council
City Attorney,,
City Clerk
From: Public Works Director
Date: May 14, 1996
Subject: Public Hearing for Water Rate Increase
The public hearing for the water rate increase discussion is scheduled for the Council
meeting of June 5, 1996.
Because of the amount of background material we are providing the Council on this
item, we are forwarding this packet to you early. This packet includes Appendixes
through VI. As indicated in the Council Communication, the appendix is only being
provided to the City Council; however, copies of this material is available at the
Public Works Administration office.
The Council packet for the June 5 meeting will again include the Council Communication
and exhibits; however, the appendix will not be included at that time. Therefore, you
may want to save the appendix which is part of this submittal.
If you have any que s concerning this material, please contact me.
(
Jack L. Ronsko
Public orks Director
attachments
cc: Water/Wastewater Superintendent
MPHWTRRT.DOC
O
rt�oR
COUNCIL COMM[JNICATION
AGENDA TITLE: Public Hearing to Consider Increasing Water Rates Effective July 1, 1996
MEETING DATE: June 5, 1996 D)?4,Fr
PREPARED BY: Public Works Director
RECOMMENDED ACTION: That the City Council conduct a public hearing on the recommended
water rate increases described in this Council Communication and adopt
the attached resolution approving an increase in water rates of 15%, and
authorize the City Manager to amend the wastewater rate analysis
contract with Bartle Wells Associates to include a water rate analysis.
BACKGROUND INFORMATION: The condition and needs of the City's water system have been
reported to the City Council and to the public in a series of Council
meetings, written reports and public notifications over the past three
years. Shown below is a list of these meetings, reports and
notifications. These items are being provided to the Council as a separate appendix.
Date,
March 16, 1993
November 30
and
December 7,
April 1994
1993
Item
Town Meeting Report/Presentation
Presentation was made to show the need and
importance of providing for system replacement for
all of the systems and equipment maintained by the
Public Works Department.
November 1993 Water Utility Status Report
1993 Presented to Council at these Shirtsleeve Sessions.
This comprehensive report outlines the condition and
specific needs of the City's water system and the rate
of increases that would provide for these
deficiencies.
Annual Water Quality Report for 1993
This State -required annual report was sent to all of
our water customers. On Page 2 was a 1 -page
recap of the November 1993 Water Utility Status
Report entitled "(How Much) Should Your Water
Rates Be Increased?"
Appendix
Number
I
APPROVED:
H. Dixon Flynn — City Manager
PhiWTRRAT.DOC 0511356
Public Hearing to Consider Increasing Water Rates Effective July 1, 1996
June 5, 1996
Page 2
March 7, 1995 Memorandum discussing water rate adjustments and
DBCP update
At this Shirtsleeve Session, staff again discussed
with the City Council the contents of the November
1993 Water Utility Status Report and approach on
possible rate increases.
April 5, 1995 Council Communication discussing water rate IV
analysis
This document outlined different methods of
obtaining analysis of water rates.
April 19, 1995 Council Communication for public hearing on water V
rate increases
This document summarized the need for a major
water rate increase (74%), recommended a general
22% increase on flat rates and that a rate analysis be
done to plan subsequent rate increases starting in
1996. Council approved a 17.7% increase.
June 1995 Annual Water Quality Report for 1994 VI
This annual State report was sent to all of our water
customers. On Page 2 was an article entitled "About
the Recent Water Rate Increase". This article
emphasized that more increases will be needed in
order to keep pace with water -quality regulations,
inflation, and other water system needs.
Rate increase History
In the last 30 years, the City of Lodi has had only four water rate increases with the last one taking
effect June 1, 1995. The City has not routinely adjusted rates for inflation or for replacement of
equipment and infrastructure, thus, we have fallen behind in this regard. The bottom line is that the
City of Lodi needs to put more money into its water utility. The older pipes in the City's water system
need to be replaced on a regular basis. Regular replacement of other major facilities (i.e., wells,
generators, valves, fire hydrants) are also needed and should be undertaken on something other than
an emergency basis.
Prior discussions with the City Council have indicated that increases were needed to ensure
compliance with Federal and State drinking water standards for DBCP. Compliance with the DBCP
water -quality regulations is currently underway. It appears the City may be partially reimbursed for
costs related to DBCP compliance under a lawsuit the City has with DBCP manufacturers and
suppliers.
PHWTRRAT.DOC 5113M
Public Hearing to Consider Increasing Water Rates Effective July 1, 1996
June 5, 1996
Page 3
While some of the City's DBCP costs may be reimbursed, the City now has a new water -quality
problem to deal with—PCE/TCE contamination—which will cost even more than the DBCP
contamination. This new contamination has been documented by the State Department of Toxic
Substance Control (DTSC) and the City's cost of cleanup could range anywhere from $15 to $65
million. Assuming the cleanup could be accomplished at the very lowest estimate, this would require a
30% increase in water rates just to take care of this new groundwater contamination problem.
In addition to the future PCE/TCE cleanup costs, the City must still consider the following increases to
bring our water system up to a reasonable standard:
Rate Increase
Project or Program Required
System replacement 21%
Well and pumping equipment replacement 4%
Standby generator replacement 5%
Valve maintenance 1%
Total 31%
Even if we assume that last years entire 17.7% increase is not needed for DBCP and it is used toward
the above deficiencies, there is still approximately a 13% increase needed without taking into account
our PCE/TCE contamination problem (minimum 30% increase).
Rate Increase and Rate Study Issues
We feel it is clear the main issues are "how much" and 'when".
At the last public hearing on water rate increases, the larger industrial water users made it clear they
would prefer smaller annual rate increases rather than larger infrequent lump -sum increases as the City
has done in the past. Smaller increases can be absorbed as part of normal inflation estimates, while
large increases can attract unwanted "attention" at corporate headquarters.
A secondary issue has to do with the relationship between our metered rates (which affect all industrial
and the majority of our commercial customers) and our flat rates.
Starting in January 1992, in conformance with Senate Bill 229, the City began collecting funds for water
meters and their installation for all new water services. We presently have collected approximately
$117,000 and have a commitment to install 670 residential meters. We are committed to install these
meters as soon as the City develops a metered rate for residential customers. This metered rate for
residential customers was to be developed as part of the City's next water rate study. This will require a
detailed evaluation. Ultimately, the State of California is going to require that water purveyors meter all
water customers. Having all water customers metered is the most equitable way to reward water
customers for their conservation efforts and to charge those who waste water. Meters will also reduce
water production requirements and capital expenditures for new wells.
Therefore, as part of the next water rate analysis, the City may also want to look at alternative ways of
obtaining meters on all unmetered services. For example:
PHWTRRAT.DOC
snarls
Public Hearing to Consider Increasing Water Rates Effective July 1, 1996
June 5, 1996
Page 4
1. Establish a flat rate which is considerably higher than the metered rate for residential thus
providing an incentive for customers to request that meters be installed on their service at
their cost. (Refer to City of Escalon on attached Exhibit A.)
2. Charge flat -rate customers an additional amount per month to pay for a future retrofit meter
program. (Refer to City of Davis on attached Exhibit A.)
3. Require water meter installation as a condition of any sale of property.
In addition to a detailed evaluation of residential flat -rate and metered -rate customers, there are many
other areas which a water rate study should include. They are shown on the attached Exhibit B.
Based on the experience of Bartle Wells Associates, the firm doing the City's wastewater rate study, it
would make sense to have them do the water rate study concurrently with the wastewater study.
S15,000 is budgeted for the water rate study. Electric Utility Rates and Resources Division staff are
participating in the wastewater study in order that future rate analyses may be accomplished by the
Electric Utility Department. This same procedure could be used on any future water rate study that
would be undertaken.
Rate Comparison
Exhibit A is an updated water rate survey dated April 1996. In addition to updating the actual water
rates, we have included all cities within the County and have also confirmed which agencies have a
utility user tax. That tax, for the water bill only, was added to the monthly water costs shown for a
typical residence.
This survey shows (for all flat -rate water charges) Lodi is still approximately 22% below the average.
If you compare Lodi's residential rate to that paid in cities within San Joaquin County, Lodi's
residential rate is 67% below the average of these adjacent cities. (Refer to Exhibit C.)
Lodi's water charge ($0.296 per 100 cubic feet) is over 116% below the average of all of the cities.
(Refer to Exhibit D.) If you compare Lodi's water charge ($0.296 per 100 cubic feet) to that paid in
cities within San Joaquin County, Lodi's water charge is 129% below the average. (Refer to
Exhibit E.)
Listed below are the effects of possible increases on a 2-, 3-, or 4 -bedroom residence:
2 BEDROOMS 3 BEDROOMS
CURRENT MONTHLY $10.38 $12.45
FLAT RATE
Possible Increases
10% increase: Total
$11.42
$13.70
(Increase)
($1.04)
($1.25)
15% increase: Total
$11.94
$14.32
(Increase)
($1.56)
($1.87)
20% increase: Total
$12.46
$14.94
(Increase)
($2.08)
($2.49)
4 BEDROOMS
$14.95
$16.45
($1.50)
$17.19
($2.24)
$17.94
($2.99)
PKVVTRRAT.00c 5113196
Public Hearing to Consider Increasing Water Rates Effective July 1, 1996
June 5, 1996
Page 5
RECOMMENDED ACTION: Based on the above data, we are recommending that the
City Council .approve a 15% immediate increase and expand the tasks of the consultant doing the
wastewater rate study to include a water rate study.
The Lodi Municipal Code (LMC §13.08.010) provides for water rates to beset by resolution. The
attached resolution is written with the appropriate "blank" to be filled in depending on what action is
decided by the Council.
FUNDING: Funding for the water rate study is budgeted under 18-451.01-323.
J ck L. Ronsko
blic Works Director
JLR/Im
Attachments
cc: City Attorney
City Engineer
Electric Utility Director
Water/Wastewater Superintendent
PHWTRRAT.DCC 5/13196
City of Lodi Water Ra to Survey EXHIBIT
A
Typical Residence Criteria:
Units (agency affected)
Water Use:
Total for
Parcel Area:
City
Base Charge
Water Charge
typical
Comments
Bedrooms:
3 number (Lodi)
Lot Frontage:
residence
Davis
Flat Rate
$14.08 /mo.
n/a
$14.08 /mo.
$5.00 plus $0.0012473 per square foot let plus $2.84 to retrofit meter.
Metered
$11.23 /mo.
$0.63 /100 cu. ft.
$23.86 /mo.
Water charge increases to $0.68/100 cu. R for amount over winter use "base line•.
Escalon
Flat Rate
$33.09 /mo.
n/a
$33.09 /mo.
fiat rate includes $10.98 'Ready to serve" charge
Metered
$1 O.98 /mo.
$0.796111000 gal.
$22.92 Imo.
$0.8757/1,000 gal, for amount over 50,000 gal.
50.5955 /100 cu. ft.
Lathrop
Metered
$10.14 /mo.
$1.01 /1000 gal.
$15.19 /me.
Base charge includes first 10,000 gal.
50.7555/100 cu. ft.
Madera
Flat Rate
$9.50 /mo.
n/a
$9.50 /mo.
Increases $0.11 per additional front toot
Metered
$12.67 /mo.
$0.6711000 al.
$12.67 Imo.
Base charge includes first 15,000 gal.
$0.501 /100 cu. ft.
Manteca
Metered
$7.15Imo.
$0.35 /100 cu. ft.
$9.93' /ma.
for 5/84/4 meter, for 1, base charge is $10.751nw.; water charge Is 50.601100 cu. fL for amount
over 30,000 cu. R (Base inct. first 2,000 cu. (L) 38.5% user tax
Merced
Flat Rate
$14.34 Imo,
n/a
$14.34 /mo.
$14.34 for first 10,000 SF, per table up to $39.90 for 46,000 SF
Metered
$17.78 /mo.
$0.504 /100 cu. ft.
$17.78 /mo,
Base charge includes water allowance up to amount under quantity rate (26,390 gal. for 1W).
Ripon
Flat Rate
$14.75 /mo.
n/a
$14.75 /mo.
Lot size up to 14,375 SF.
Metered
$11.00 /mo.
$0.74 /100 cu. ft.
$14.74 /mo.
Bass charge includes first 1,500 cu. ft
Roseville
Flat Rate
$10.80 /mo.
n1a
$11.34' Imo,
For single family lot behNeen 4,901 and 8,900 SF; per table for other sizes
Metered
$8.25 Imo.
$0.331100 cu, ft.
$12.15' /mo.
First 1,000 cu. fL in base charge; rate increases over 5,000 cu. It (37,400 gal.) plus 5% user tax
Stockton (City)
Metered
$13.13 /mo.
$0.633 /100 cu. ft.
$27.89' Imo.
50.5391100 cu. R for amount over 30,000 cu. ft plus 8% user tax
Tracy
Metered
$8.60 fmo.
$0.751100 cu. ft.
$24.26 /mo.
Water charge increases to $1.05 over 1,200 winter/1,800 summer cu. R. 51.20 over 1,90OwQ900s
cu. R, $1.30 over 19.000w/28,000s cu. ft and decreases to $0.56 over 1,000,000 cu. R
Turlock
Flat Rate
$13.45 /mo.
We
$13.45 /mo.
$7.05 for 0 to 5 rooms, $7.90 for 6-8, $8.70 over 8 plus charge based on parcel area ($5.55 up to
5,500 SF, $0.85 for each add'12000 SF)
Metered
$9.45 Imo.
$0.47 /1000 gal.
$16.50 /mo.
Water charge decreases to $0.40 over 50,000 gal-, $0.17 over 150,000 gal.
$0.3516/100 cu. ft.
Vacaville
Metered
$7.62 Imo.
$0.691100 cu. ft.
$23.79 Imo.
Water charge increases to 50.% over 1,200 cu. R 15% discount for senior citizens on base and
consumption charge.
Woodland
Fiat Rate
$7.45 /mo.
n/a
$8.79' /mo.
For single family let 5,000 to 10,000 SF; $6.10 under 5,000 SF, $9.10 over 10,000 SF (18% user tax
reviewed every other year.)
Metered
$3.90/mo.
$1.051100 cu. ft.
$29.45' Imo.
Yuba City
Flat Rale
$18.75 Imo.
n/a
$18.75 Imo.
Metered
$10.00 /mo.
$0.6251100 cu. ft.
$12.53 /mo.
Includes 1,600 cu. R minimum quantity
Average
Flat Rate
$15.13 /mo.
nla
$15.34 Imo.
Metered
$10.14 /mo.
$0.608 /100 cu. ft.
$18.83 /mo.
rates per 1000 gal. adjusted to 100 cu. R
Lod/
Flat Rate
512.45 /Mo.
We
$12.451m.
ranges from 5965 for i bedroom to $25.84 for 7 hr's.
Metered
$11.43 /rrlo.
$0.296 /100 cu. It
$17.371m.
Base charge does not include any water allowance.
Typical Residence Criteria:
Units (agency affected)
Water Use:
15,000 gallons/month ( 2,005 cu. ft)
Parcel Area:
5,000 square feet (Davis, Merced, Roseville, Woodland)
Meter Size:
Y..' size of service pipe is typically 1' minimum, meter is usually smaller
Rooms:
6 number (Turlock)
Bedrooms:
3 number (Lodi)
Lot Frontage:
50 feet (Madera)
user tax added
RATECOMP3XLS
EXHIBIT B
AREAS TO BE EVALUATED
UNDER
WATER RATE STUDY
1) Revenue requirements - cash needs approach vs. Utility approach
2) Revenue requirement projections
3) Miscellaneous operating revenue projections
4) Non-operating revenue projections
5) Cost allocation - base/extra capacity method vs. commodity -demand method
6) Current and short-term financial conditions of water utility
7) Future cost projections - operations and maintenance, capital, other costs
8) Inside City/outside City service cost allocation
9) Establish customer classes
10) Special customer classes - fire service, wholesale, irrigation, other
11) Units of service - meter size, demand rates
12) Establish unit costs
13) Distribute costs to customer classes
14) Block rates - single vs. declining vs. inverted
15) Rate adjustment options - customer acceptance, revenue lag
16) Seasonal, peak period rates
17) Conservation issues
18) Fiat rates - equity with metered rates
19) Fire service rates
20) Lifeline rates
21) Connection charges
22) New capacity charges (impact fees)
23) Miscellaneous service charges such as tum on/off, construction water
24) Unauthorized water use charges
25) Cross connection/backflow device charges
26) Develop computer rate model to simplify future updates
27) Rate options/analysis and projections
28) Public education and input process - throughout above steps
29) Public presentation and Council action
PHWrREXB.DOC
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Lathrop
Tracy
Ripon
Vacaville
Stockton
Escalon
Davis
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Merced
Madera
Manteca
Turlock
Roseville
LODI
LODI (Proposed)
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Total Water Charge
$/100 cu. ft.
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Total Water Charge
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APPENDIX
TABLE OF CONTENTS
APPENDIX
NUMBER ITEM
Town Meeting Report/Presentation
II November 1993 Water Utility Status Report
III Annual Water Quality Report for 1993
IV Council Communication discussing water rate analysis
V Council Communication for public hearing on water rate increases
VI Annual Water Quality Report for 1994
The above items are being supplied only to the City Council. They are available
for review at the Public Works Department's administrative office.
PHWTRAPP.DOC
APPENDIX
Town Hall Meeting Handout
March 16, 1993
Page 2
faced with considering additional privatization, I wanted the Council to be aware of some
of the considerations our Department has used in evaluating the advantages and
disadvantages of contracting out.
5 -Year Budget and Staffing
As part of the description of responsibilities for each Division, we have included the
Division's budget amount and the number of full-time authorized positions over the past
five fiscal years. We have also provided an explanation of the major increases and
decreases in the budget amounts shown.
Training
In 1992/93, the Public Works Department reduced its budget for training, workshops and
conferences by almost 40%. With the exception of a 25% reduction in general
Departmental training, I am not proposing any further training reductions. I feel very
strongly that, as the work force is decreased and we are asked to take on additional
responsibilities, proper training becomes even more important to the Department's
Facility Maintenance
The allocation of funds for preventative maintenance programs and general maintenance
for the facilities we maintain is especially important during the times of tight budgets and
financial shortfalls. CUTTING BACK ON MAINTENANCE IS NOT A PRUDENT
WAY TO SAVE MONEY. If proper maintenance is not provided, the long-term costs
of repairing or rebuilding facilities appreciably increases. The City has major investments
in the following facilities, systems and plants maintained by the Public Works
Department:
City Facility, System. or Plant Approximate Replacement Value
Street System S 70,000,000
Storm System S 25,000,000
Sanitary System $ 50,000,000
Treatment Plant S 40,000,000
Water System $ 50,000,000
Vehicles and Equipment S 5,000,000
Buildings $ 20.000.000
TOTAL $260,000,000
*This includes only the equipment and buildings being maintained by the Public Works
Department and does not include buildings such as Hutchins Street Square, Parks and
Recreation, Library, and the larger Fire apparatus.
Since the City is not currently receiving or putting funds aside for equipment or facility
replacement, except in Streets and for the treatment plant, the maintenance of our
TOWNMEMODOC
-2-
Town Hall Meeting Handout
March 16, 1993
Page 3
facilities is even more important. A reasonable design life for the facilities shown above
would be 50 years. Even if we said the facilities would last 100 years (and most of them
will not), the City should be putting approximately 2.5 million dollars aside each year for
facility replacement. We must evaluate how we're going to replace these facilities in the
future. _
In prior years, we have evaluated the staffing of other agencies for street maintenance and
equipment maintenance and have determined what would be reasonable levels of service.
Our Department had not previously looked at administrative and clerical support,
engineering or water and wastewater. The comparable staffing evaluations we recently
completed in these other areas were very enlightening and we found that Lodi is using
less staff than comparable cities to perform the same functions. The City Council should
feel good about the high quality of service we provide the citizens with staffing that is
less than most other comparable agencies. I don't believe there is any question that, in
Lodi, the citizens are getting their money's worth.
Cost Reductions and Revenue Enhancements
Under each of the Divisions, we have recommended some possible cost reductions and
revenue enhancements. With the exception of the Water/Wastewater enterprise funds,
the amounts shown would have a direct effect on the City's General Fund and could be
used to help balance the 1993/94 operating budget. It is felt that any savings or revenue
enhancements made in Water/Wastewater should remain in those enterprise accounts to
provide for some of the deficiencies that presently exist; i.e., system replacement,
reasonable reserves, system upgrades, etc.
We have recommended that a number of additional revenue enhancements be considered.
Of those recommended, approximately $400,000 is simply charging out full overhead to
all non -General Fund accounts. Full overhead would include not only the appropriate
overhead in the Public Works Department, but also the full administrative overhead of the
City Manager's office, City Attorney, City Council, etc. If we are to truly compete with
private industry and evaluate additional privatization, it is important that we operate the
City as a business and charge the full cost of its operation.
The Public Works Department is looking forward to presenting this material to the City
Council on March 23 and 24 and answering any questions the Council and citizens may
have.
eacL.sko
ks Director
JLR/Am
attachment
TOVNMEMO.DOC
-3-
APPENDIX II
City of Lodi
City of Lodi
Water Utility Status Report
Public Works Department
November 1993
Water Utility Status Report
Introduction............................................................................................................................ 1
SystemOverview.................................................................................................................... 1
Water Treatment Needs.......................................................................................................... 2
Operation & Maintenance Needs............................................................................................. 4
CapitalImprovement Needs.................................................................................................... 5
SystemExpansion...................................................................................................... 5
Capital Maintenance - Production System................................................................... 6
Capital Maintenance - Distribution System................................................................. 7
Capital Maintenance - Services................................................................................... 8
Capital Maintenance - Equipment............................................................................... 9
Water Utility Revenue & Expenses......................................................................................... 10
WaterRates............................................................................................................................ 11
ExistingWater Rates.................................................................................................. 11
RateStructure Issues.................................................................................................. 11
Rate Increase Issues and Factors................................................................................. 12
Summary................................................................................................................................ 14
Water Utility Status Report
Introduction
One of the actions adopted by the City Council as part of the 1993/94 Capital Improvement
Program was to "Direct staff to prepare a comprehensive report on the status of the water utility,
addressing long term capital and operating needs and funding." Thus, this report is intended to
provide the necessary information to the City Council and the citizens of Lodi to establish a level of
maintenance and financial stability for the water utility to the end of this decade. The report
presents historical information and a description of the water system and follows with separate
sections on various system components and their specific needs. Revenue and expense history and
general projections are also presented. Some of the expenses are due to State and Federal
mandates and will have to be recovered through rate increases. Other major expenses will be the
result of policy decisions by the Council on replacement of older parts of the water system and
water meter retrofits. Finally, the financial condition of the «-ater fund is presented. The bottom
line is the water utility fund will be out of money this fiscal year. Hopefully, the report will show
that some level of rate increase is justified. However, in order to quantify and plan any rate
increases, a number of decisions must be made. These are presented at the end of the report. In
addition, water rates and methodologies are discussed. Public input and Council discussion and
direction are needed to provide staff with the information needed to prepare a more accurate and
detailed water rate and system improvement plan for Council consideration.
System Overview
The water system was originally acquired along with the electric system in the early 1900's when
the City was incorporated. In fact, this acquisition was one of the main reasons for incorporation.
Until the 1960's the system was operated under the Electric Utility Department. Early system
expansions and improvements were generally made by City employees. With rapid growth
following World War II, system operation was gradually converted to the Public Works
Department and system expansions to the private sector.
Presently the City water utility consists of wvells, an interconnected distribution system, water
services (some with meters), one elevated water tank, a portion of the Municipal Service Center
(MSC) facilities, various pieces of equipment and the equivalent of ten full time employees. The
system is operated by the Water/Waste%vater Division of the Public Works Department which also
operates the wastewater collection and treatment system. Many of the employees and equipment of
the Division are shared by the two utilities. In addition, the Division receives administrative,
electrical maintenance, dispatch, financial, legal and engineering support from other Public Works
Divisions and City Departments. However, each utility is funded separately and various
management and accounting methods are used to keep costs property allocated to the appropriate
utility. Traditionally all the City's utilities make money and provide substantial support to the
General Fund.
The system presently consists of 23 wells and 196 miles of distribution mains. A schematic map of
existing and future well locations is shown in Exhibit 1. Future wells to accommodate growth are
planned for the northern and central parts of the City in order to minimize the need for treatment
units to remove dibromochloropropane (DBCP) to meet State and Federal drinking water
standards. However, system hydraulics and the need for fire protection flows dictate that some
sources of supply must be located in all parts of the City. As discussed later in the report, future
improvements to accommodate growth are to be funded from the Water Development Impact
Mitigation Fee fund.
One-third of the existing wells are over 20 years old and will need to be replaced eventually.
Certain site constraints require that many replacement wells have to be built at new locations. The
oldest part of the distribution system consists of 4", 6" and 8" cast iron and 2" steel mains. During
the 1930's, an early type of asbestos -cement (AC) pipet was commonly used in the 3" and 6" sizes.
During the 1940's there was relatively little expansion of the system, however, we have found that
a variety of odd size and types of materials were used in that period. Most of the system installed
in the 1950's through 70's was modern AC pipe. Most recently, polyvinyl chloride (PVC) pipe has
been used almost exclusively. Ductile iron, a form of cast iron, is also used under certain
circumstances. The elevated tank is less than five years old and is in excellent condition. Well and
water main replacement issues are discussed in later sections of this report.
There are other long term issues that will have a financial impact on the water utility. These
include future water quality standards such as radon and arsenic and regular disinfection of the
system. In the long run, water supply (groundwater vs. surface water) may be an issue. Given the
speculative nature of these issues and the relatively near term focus of this report, they are not
discussed or analyzed at length.
Water Treatment Needs
Until recently, the water produced by City wells needed no treatment. Recent changes in Federal
and State water quality standards have changed this situation. The City has struggled to delay or
put off the State mandate to remove trace amounts of DBCP found in the water. In working with
the State on amending the City's drinking water permit, the City has secured a 20 year State bond
fund loan of just under $5,000,000 at 3.41 % interest to fund DBCP treatment capital
l Asbestos cement pipe used to convey drinking water should not be confused with other products containing asbestos
fibers which could be inlialed into the lungs. The Environmental Protection Agency (EPA) moved to ban the
manufacture of AC pipe due to estimated health hazards to workers, however this ban was overturned in the courts.
There has been no significant concern over the actual use of this type of pipe for conveying drinking water.
improvements. While we have worked on reducing demand and a special pumping schedule to put
off the majority of these improvements, over $600,000 has been spent on one granulated activated
carbon (GAC) filter and design for additional filters. An additional $300,000 has been spent on
testing, studies, loan interest and legal work.
Repayment of the loan proceeds received to date will mean an additional annual expenditure of
$5 1,000 beginning in 1994/95. If the full amount of the loan was borrowed, the payment would
increase to approximately $340,000 annually. In addition, the filters would substantially increase
operating and maintenance costs for routine operating checks, water quality monitoring and carbon
replacement. (The existing filter contains 66,000 pounds of activated carbon! Replacing and
disposing of the carbon is estimated to cost at least $1.00 per pound every three years2.) The
actual cost converted to an annual basis will depend on how long the GAC filters can actually go
between carbon replacements. The total estimated amount needed for DBCP compliance through
FY 98/99 was over $5,000,000 for the estimated total of six filters. This does not include the
capital costs paid by the loan and only includes the loan payments and O&M expenses through FY
98/99.
However, it no%v appears that the City may be able to defer four of the six filters indefinitely. State
regulations allow the City to place wells over the DBCP limit in `'standby" mode, allowing their
use for up to 15 days per year (each well). During the summer of 1993, the City was able to avoid
the use of the 4 Nvells3 that do not meet the DBCP standard by labor intensive system monitoring
and control and water conservation efforts. This involved allowing system pressure to fall to
minimum values which increases the flow from the running wells thereby increasing system
capacity.
As part of the 1993/94 Capital Improvement Program, staff recommended the installation of a
second GAC filter at the new Well 4R drilled in 1993 at the Reid electrical substation in the
industrial area east of Hwy 99 south of Lodi Ave. This well has both the highest DBCP
concentration of any City well and the highest capacity, equal to about two normal wells. The
estimated cost to install a permanent pump and complete this well site and install the filter is
slightly over $1,000,000. While this is a major expenditure that the City Council wanted to review
again, staff feels the City should proceed with the project for a number of reasons:
• We need another source of supply east of Hwy 99 now - Of the two existing wells in this
area, one (Well 10) is out of service due to bacteria and taste/odor problems. We will not be
able to place this well back in service Without a major investigative effort and the outcome of
such an effort is uncertain. We need capacity to serve potential industry in the area. For
example, a computer analysis of the existing system showed that we would have difficulty
2 Very recently, City staff leanted that other Central Valley water suppliers who have GAC filters are finding that
they are getting only 2 years out of their filters. We are researching this further. If this is the case, the DBCP O&M
figures will increase accordingly.
3 The number of wells out of compliance has changed over time. Another 8 wells have DBCP detected below the
maximum contaminant level of 0.2 parts per billion. One concern is that heavy use of the marginal wells might cause
DBCP to migrate to them and raise them out of compliance. On the other hand, removing DBCP from the
groundwater by pumping may eventually result in lower concentrations in all the wells.
providing another 1000 gallons per minute peak flow for a potential user of the Minton
building.
• We will need other sources of supply east of Hwy 99 in the future - The Water Master
plan calls for an additional 6 wells in this area to accommodate the build out of the industrial
area and to supply water for the southern residential areas of the City.
• Low cost funding is available - Interest on the State loan is only 3.41%. This is less than
what we would pay even if we borrowed the money internally for other new wells.
• The investment we have already made on Well 4R could be wasted - We have spent over
$132,000 on Well 4R and have been reimbursed nearly $79,000 to June 30, 1993 under the
State loan. If we do not use the well, the State may ask for the money to be repaid
immediately.
• Another filter will reduce dependence on marginal wells - With another source of clean
water, we can reduce the use of marginal wells and those over the DBCP limit. This
provides flexibility in the operating scheme described above and will allow us to maintain
this scheme for more time.
• We will be removing DBCP from the groundwater - Removing the high concentrations of
DBCP at this site will reduce the amount of DBCP that might migrate to other City wells.
In making this expenditure under the State loan, the total annual loan payment will increase by
SS 1,000 from the present $51,000 to S 132,000. This is significantly below the earlier estimates of
$340,000. There will also be a comparable difference in ongoing 0&M costs. Approximate
additional O&M costs for the existing filter at Well 16 and the proposed filter at Well 4R total
$475,000 over the next 5 years.
Alternatives to the Well 4R project are limited. One is to install a storage tank (roughly 500,000
gallons) and a booster pump station on the site. This would supply additional water during peak
demands and would be refilled from the system during low demand. The capital cost for such a
tank is approximately $430,000. Aside from probably not being eligible for the State loan, it
would also entail increases in maintenance costs for power (all tank water must be pumped twice),
repainting and may require continuous chlorination. The other option is to abandon the site, look
for a clean site near the River and install another well and the necessary water main extensions. It
is unlikely Nve could do all this before the Jan. I, 1995 deadline for the State loan.
A decision on Wel14R and DBCP needs to be made soon, preferably in the next 30 days, if the City
is to take advantage of the low cost financing available under the State loan.
Operation & Maintenance Needs
System operation and maintenance needs (other than for DBCP ) are not predicted to change
significantly through 1999. We assume water conservation activities, which have proven to be a
valuable tool in the operation of the water system, will continue at current levels. Power costs,
which account for nearly 30% of the 0&M budget, are expected to increase 9% in 1994/95 and
4% annually thereafter based on comments from the Electric Utility Dept. Other expenses for
labor and materials are expected to increase at the rate of 3% to 4% per year. Although these costs
have increased at higher rates over the last 5 years, we do not expect that to continue, at least not
of the magnitude of the other increases discussed in this report.
4
Expenses for "damage to property" have not budgeted in the past and have averaged about $9,000
per year. These expenses are typically due to fire hydrants being hit by vehicles and vandalism.
Given the uninsured motorist situation in California, it is assumed these costs will increase by 6%
per year.
Overhead costs for the water utility will increase some unknown amount as the City improves its
overall accounting methods for recovery of general administrative costs, work by other Divisions
and Departments and, in particular, equipment replacement costs. There are no dedicated accounts
within the City utilities for equipment replacement. Equipment replacement could be provided for
by transferring cash to a replacement account as the equipment is used.
Capital Improvement Needs
Capital improvements needs are broken down into two categories as shown in the Capital
Improvement Program: Capital Maintenance and System Expansion (new capacity). Capital
maintenance includes replacements or major repairs of existin facilities which cost over $10,000.
System expansion includes capital improvements needed to provide capacity for new buildings and
developments. These needs are discussed in the following sections.
System Expansion
Funding for system expansion is included in the City's Development Impact Mitigation Fee
Program. This includes the cost of new wells, oversize mains and expansions to the Municipal
Service Center. However, there is no guarantee that this fund will cover all the costs involved in
providing this capacity. There are at least three scenarios in which the fee program revenue will be
insufficient:
• Increased demand from existing uses -- If an industry or other customer increases their
operation or consumption habits and causes growth in total peak demands, the utility will
have to provide that capacity whether there is fee revenue or not. It is unlikely the fee
program will collect fees if an existing customer increases consumption unless they are
building upon a previously undeveloped portion of their property.
• Underestimated costs in the fee program -- The impact fee program included $9,300,000
in new wells, building expansion at the MSC and updates of the water master plan through
the year 2007. Five or ten years down the road, should we find these costs were
underestimated, the utility will have to make up the difference, at least for the portion of
development that occurred to that date. Fees could only be increased for the proportionate
share of future development. One example of a possible underestimate is the cost of GAC
filters on new. wells. The program assumed half (7) of the new wells needed over the next 15
years would need filters at a cost of $428,000 each. However, the one filter installed to date
cost over $500,000. Until we actually locate and construct ne%v wells including the GAC
filters, it is impossible to refine the number and cost of new filters needed.
• Staged development -- In many cases, particularly commercial developments, land is
developed, utilities installed and costs are incurred by the fee program, but the building
permits (which pay some of the fees) lag behind. In these cases, the fund could come up
short in the short term. Money could be borrowed from other impact fee or other City funds
if it is available, but interest must be paid, which increases the cost.
To help ease these possible shortfalls, as well as other emergencies, the water fund needs to have a
healthy cash reserve. The subject of a reserve is addressed later in the report.
Capital Maintenance - Production System
Water wells do not last forever. They eventually need to be replaced for a number of reasons,
including:
Failures - Older wells were drilled in segments of decreasing diameter and were partially
unlined. Often these segments are offset. Eventually these holes collapse or become
unserviceable due to water level.
Reduced Capacity -- Groundwater levels in the entire San Joaquin County area are
declining at rates up to 2 feet per year. Lodi is in somewhat of a better position due to the
close proximity of the Mokelumne River. As the water level decreases, pumps must be
lowered to maintain production. If the well is smaller at lower depths, a smaller pump must
be used (which decreases production and the lost capacity must be made up with new wells)
or the well becomes practically unusable due to alignment, lack of casing or other reasons.
Contamination -- Wells are sealed to various depths to prevent surface contamination from
entering the well. In years past, the main concern was leaking sewers and the seals were
relatively shallow. Now, in addition, concerns focus on leaking gasoline tanks, various
solvents and other contaminants. Often this problem combined with the age and construction
of the well lead to a decision to abandon the well.
Since 1918, the City has drilled seven replacement wells including Well 4R mentioned earlier. As
the City grows and needs additional wells, the replacement rate will increase. Replacement of
wells will often require the acquisition of a new site, as was the case for all seven mentioned above.
The reasons for a new site vary. In some cases, the old well was drilled in such away that large
underground cavities were developed. These cavities make subsequent drilling near the well
practically impossible. In most cases, the site is simply too small to accommodate the necessary
clearances to the property line or sewers or fit in new equipment. Other than relatively minor
repairs, rehabilitating wells produces less than satisfactory results.
The cost to replace a well will vary considerably depending on how much equipment can be reused
and whether a new site is needed. At a minimum, the cost will be roughly $150,000 for a new well
on the same site and reusing most of the equipment. At the high end, with a new site and most of
the equipment, the cost is roughly $300,000. If the site must be purchased, the cost will be higher.
To date, the City has been able to locate all but one of these replacement sites on City owned
property. In the future, that will be more difficult as suitable locations are used up.
Along with the actual well, a well site contains other major pieces of equipment that must be
periodically replaced or rehabilitated in a major way. The main pieces are the electrical panel
($25,000 to $30,000), the pump & motor ($25,000 to $35,000) and at some sites, standby
generators and chlorinators. Estimated future replacement of wells, pumps & motors and electrical
panels are shown in Exhibit 2. The assumptions used are shown in the Exhibit. In summary,
before the year 2000, the City will need to replace one additional well, four pumps & motors and
replace or rehabilitate six electrical panels at a total cost of approximately $513,000. In the past,
when the system has had more than enough wells available to meet peak demands, it has been
practical to operate pumps, motors and electrical panels until they failed, then replace or repair
them. In recent years, this policy has meant that the system is often operating at 100% of capacity
during peak demands in the summer months. Should another well fail or the system experience an
abnormal demand such as a large fire, system pressure would fall. Aside from possibly violating
Federal and State standards and being a nuisance for water customers, low main pressure can
disrupt industrial processes and lead to contamination of the water mains from surrounding soil or
from backflow from the on-site system. Prudent operating practices would be to schedule major
repairs during the winter months. In either case, funds must be available to do such costly
replacements.
According to the master water plan prepared as part of the General Plan, the City should have one-
third of the yells equipped with standby generators in addition to having 20% more wells than are
actually needed to meet peak demands. These safety factors allow for sustained power outages,
equipment failures and unplanned peak demands. The standby generators presently in place are
typically old, WWII government surplus type units that are unrepairable or at best, unreliable. The
City has appropriated funds for seven new units and is ready to go to bid_ The plan has been to bid
for a lease -purchase package including installation. This cost has been estimated at $236,000
annually for five years. Given the present state of the eater fund, we plan to arrange the bid such
that all or part of this cost is deferred until 1994/95. With this project, the need for future
replacement generators will be beyond the period of this study.
It should be noted that this report assumes that ground water will continue to be the sole source for
the City's water. The water master plan briefly discussed surface water as a source and estimated
the annualized cost of treatment facilities, operation and maintenance at $0.60 per 1000 gallons.
This was compared to the cost of producing ground water at $0.26 per 1000 gallons. The cost of
distribution system maintenance and other costs would be added to this. This would result in rates
considerably higher than the City's present retail water rate of approximately S0.38 per 1000
gallons ($0.285 per 100 cu. ft.) Of course, this assumes a reliable source of surface water supply
could even be obtained. The conclusion was that the City would be better off continuing to use
groundwater even if it meant subsidizing the cost of surface water use by others in the area
(primarily agriculture). Since no plan has been finalized for bringing additional surface water to
the area, no cost sharing plan has been developed. Thus no such cost has been included in this
report.
Capital Maintenance - Distribution System
The 196 miles of mains in the distribution system interconnect all the wells and transport water
from operating wells to the customer's service. The elevated water tank is also connected to the
system and acts like a minor source of supply or holding tank when customer demand is slightly
above or below well output. The tank provides stable system pressure and is used as a pressure
reference point for the automatic control system. The tank was replaced in 1988/89 and except for
repainting (which will cost roughly $50,000), should not need any substantial maintenance in the
near future.
A breakdown of the distribution system mains by size, length and replacement cost is contained in
Exhibit 3. While the majority of the mains are in good condition, the steel mains (mostly 2") and
the oldest AC pipe (mostly 3") are the source of most problems with the distribution system. First,
in most cases, these sizes are too small to carry the flows needed as more homes install automatic
sprinklers, dishwashers and other modern appliances. Second, the steel mains frequently leak
through corrosion pits or splits along the seams. Spot repairs that should be able to be made with a
repair clamp, tum into main replacements as the crews dig down the length of the pipe to find a
spot strong enough to make a new connection. The older AC pipe has shown a tendency to soften
and becomes a problem when new taps are needed or leaks at taps are repaired. The cast iron
pipes are in good condition, however, the joints are often a problem. These bell and spigot joints
were sealed with lead and oakum (a rope -like material), which does not do well with vibration or
other movement that can occur during street repairs or other adjacent excavations. We have also
found a few mains made of odd sized well casing or other steel pipe that is difficult and time
consuming, thus costly to repair. For all these reasons, it is desirable to be in a position to replace
old mains on a regular basis, certainly when the overlying street is being repaired to avoid having
to cut the street later. For example, the -main in Cherokee Lane is well over 40 years old. Given its
age and size (mostly 6", where it should be at least 8") it should be replaced if a major
improvement project is undertaken of Cherokee Lane.
Given the total system footage, average replacement costs and assuming a useful life of 70 to 100
years, the annual replacement cost for the present system ranges from $836,000 to $385,000. In
other words, if pipes lasted 100 years, we should be replacing 1% of the system each year at a cost
of $585,000. (See Exhibit 3) These amounts are six to four times what the City has been spending
on main replacements, thus it will be difficult to suddenly increase replacements to that level.
However, it is reasonable and is becoming imperative to replace the older mains that are exceeding
50 years of age. Unfortunately we do not have complete records on the age of each main. Thus we
do not have the footage of these old mains. To refine this number, the annexation map and
subdivision maps were matched to the water system to estimate the footage of pipe installed before
1940. Mains installed in the last 20 years or so were manually subtracted from these totals. It was
also assumed that the larger pipes will not need replacement in the short term. This analysis is
shown in Exhibit 4. The area, mainly the Central and Eastside portions of the City, is shown in
Exhibit 1. The result is that 21 % or roughly 511,100,000 worth of main replacements should be
considered in the near future. Even stretching out replacement of these mains over the next 20
years will require roughly 5550,000 per year. This would still leave some 21 miles of newer 2"
and 3" pipe still in the system.
The distribution system also includes valves of varying age and condition. Present design
standards provide for sufficient valves to isolate relatively small segments of main to allow repair
to be made with minimal customer outage and disruption to system capacity. Older installations
(pre 1970's) were made with fewer valves. In addition, the oldest valves often break when used
because the City has had insufficient personnel to carry out a regular valve "exercising" program.
Such a program would add roughly $30,000 per year to the O&M budget, mostly in additional
labor costs. Thus outages due to repairs on the older mains will "grow" as additional mains are
shut down to fix a valve broken as a result of the first shutdown. The main replacement costs
include an allowance for valve replacements to current standards.
Capital Maintenance - Services
In this context*services consists of fire hydrants and water services including meters. The older fire
hydrants in the system are the "dry -barrel" type. In these hydrants, there is only one valve for the
entire hydrant located at the bottom of the hydrant underground and the operating nut is on the top.
Present standards call for "wet -barrel" hydrants in which each outlet has its own valve and
operating nut on the side of the hydrant. A problem with the dry barrel type is that if the hydrant is
damaged (e.g., hit by a car) and not reported, the break can occur underground above the valve and
not be noticed until the hydrant is used, or rather, tried to be used. At best, no water comes out and
at worst, the hydrant breaks apart and gushes water until it is shut down from another valve. In
some cases the hydrant does not have a separate shut-off valve and the main(s) must be shut down.
In some of the older Central and Eastside areas, the hydrant spacing and location is not up to
current standards. In a few locations, the hydrant is fed from an undersized lateral or main. The
main replacement costs include an allowance for hydrant replacements.
Installation of water meters is now required by State law on all new services. As clean, potable
water becomes more scarce in other areas of the State, the pressure to conserve and restrict water
use through the use of meters will increase. It is a strong possibility the State will require the
retrofitting of meters. In addition, the disparity between low and high water users inherent in the
City's flat rate system will become more apparent as rates are increased and as the new residential
services are metered. The City was within two years of the end of a long range program to retrofit
water meters on all conunercial and industrial services. However, this program was discontinued
when the personnel were cut from the budget in 1993/94. The City still requires property owners,
including residential, to pay for a upgraded or new service plus meter on all building permits with a
project valuation over $25,000. However, this approach will never in all practicality achieve full
metering. To do so, some retrofit program is necessary. A separate residential retrofit program
would cost roughly $16 million. For a 30 year program the annual cost is approximately $550,000
in present day dollars.
The total cost of main replacements and meter retrofits considered separately overstates the actual
cost if both programs are undertaken at once. This is because the main replacements includes an
allowance for replacing services. However, the main replacement rate is much lower than the
meter retrofit program. If both programs are undertaken as described above, the meter program
cost could be reduced by approximately $194,000 per year. While it maybe tempting to undertake
the main replacements and only install meters on those services affected by the new main, this will
result in a hopscotch pattem of meter installations around the City. If meters are to be installed in
residential areas, the program should be planned on a systematic basis and the installations that
come with new mains should be used as a supplement. Also, as the meters get old, they must be
tested and eventually replaced. The costs of meter maintenance have not been estimated. Finally,
if a City--aide metering program is started, the process of meter reading should be automated.
Capital Maintenance - Equipment
The water utility's equipment (rolling stock and heavy tools) is mostly shared with that of the
wastewater utility. Assuming 50% of the purchase price on the shared equipment plus the total
price of the few pieces of equipment solely used by water, the value of this equipment is
approximately $244,000. The replacement of equipment based on the average expenses of the four
prior years is roughly 25% of the total value. It is reasonable to assume this level of expenditure
should continue for the foreseeable future with an allowance for cost increases. As noted earlier,
the establishment of an equipment replacement account within the utilities should be considered.
Water Utility Revenue & Expenses
Water utility revenues are nearly entirely (96%) derived from sale of water. Other revenue
includes tap fees, interest earnings charges for temporary construction backflow devices and meters
and miscellaneous sources. Total revenue for the past five years was as follows:
FY: 1988/89 $2,024,641
1989/90
2,755,951
1990191
2,791,318
1991/92
2,814,367
1992/93
2,786,017
Rates were increased 15% in 1988 to provide additional funds for capital improvements and
another 5% in 1991 for operating expenses. The Water Utility Fund contributes an amount to the
General Fund as do the Sewer and Electric utilities. This amount is included in the annual budget
and for the Water Utility has ranged from $500,000 in 1988/89 to just over $800,000; in 1990/91
and the budget amount is 5750,000 this year. Note that this does not include charges for
accounting, billing, legal and other administrative services which amounts to over $100,000 per
year. While the contribution amount is a Council decision, from the standpoint of the water utility,
it is important that the amount be based on some formula, so that it is predictable and can be
planned along with other expenses. It is recommended that the Council adopt a policy on the
contribution amount by setting it at a percentage of the previous year's actual revenue.
In addition to the 1988 rate increase, the Water fund borrowed $1,000,000 from the Electric Utility
for capital improvements. This has kept the fund in the black, however, total expenses have
exceeded revenues for all but one of the subsequent years. The average over the past 5 years is
that expenses exceeded revenue by 5340,000 per year. This year, with expenses cut to the
minimum and a budgeted expenses exceeding estimated revenues by 5200,000, the total fund will
finish approximately $60,000 in the red. A summary of the water fund prepared by the Finance
Dept. is shown in Exhibit 5. A more detailed 5 year history3 is shown in Exhibit 6.
Obviously the Water Utility needs to either raise revenue or cut expenses (or the General Fund
contribution) if it is to operate in the black. This year, expenses have been already cut by the City
Council in the adoption of the operating and capital budgets. Two positions were eliminated and
other expenses reduced in the operating budget. 'Be capital budget (not including impact fee
projects) includes only one major project, the replacement of the generators as discussed earlier in
this report. Two high priority projects, the enclosure for the new well at Hutchins Street Square
and a water main through Lodi Lake Park, along with other water main replacements, have been
deferred. Cutting the General Fund contribution could be considered, however, the General Fund
budget has already been cut significantly. Evaluating this option further is beyond the scope of this
report. Raising revenue through a water rate increase is discussed in the next section.
4 The budget amount was slightly lower, this figure includes Special Allocations for General Fund uses which
occurred during the fiscal year.
5 This history was prepared by the Public Works Dept_ and is organized very differently from the Finance Dept.
summary in order to show DBCP and other costs in more detail. The "bottom line" is the same.
Iff
Water Rates
The rate increases needed to correct the water utility deficit and provide adequate funding for
operations and projects will depend on what the public and the Council wish to accomplish. There
are many ways to handle water rates and any increases. Before these can be quantified, a number
of decisions must -be made. These are outlined at the end of the report. The following presents
general background material on rates and issues that should be considered in Lodi.
Existing Water Rates
The majority of the Water Utility revenue is from flat rate charges for water service. The majority
of the flat rates are based on the number of bedrooms in a residence. The remaining non-
residential flat rate customers are charged based on the size of the service or some other long
forgotten estimate of water use. Approximately 21% of the water produced is sold to metered
customers while the revenue from all non-residential accounts is just over 20%. The implications
of this are discussed in the next section.
The present rate structure is shown on the following table:
Residential Flat Rate (per month):
Single Family Unit (one bedroom)
$ 7.35
(two bedrooms)
$ 8.82
(three bedrooms)
$ 10.58
(four bedrooms)
$ 12.71
(five bedrooms)
$ 15.25
-
(six bedrooms)
$ 18.29
(seven bedrooms)
$ 21.95
Multiple Family Unit (one bedroom)
$ 6.30
(two bedrooms)
$ 7.56
(three bedrooms)
$ 9.07
+ 20% for ea. add'I bedroom
Metered Rate
$ 0.285
per 100 cu. ft. (approx. 380 per 1000 gal.)
monthly minimums:
$ 10.58
'/." meter, (approx. allowance: _28,000 gal.)
$ 15.87
1" meter, (42,000 gal.)
$ 21.16
1'/V meter, (56,000 gal.)
$ 26.46
2" meter, (70,000 gal.)
$ 37.04
3" meter, (97,000 gal.)
$ 48.52
4" meter, (125,000 gal.)
$ 68.79
6" meter, (181,000 gal.)
$ 89.96
8" meter, (237,000 gal.)
Rate Structure Issues
The metered rates have monthly minimums that include an allowance for water, thus there is no
additional charge if water usage is below a certain amount based on the water rate. The present
practice of including an allowance for water in the metered rate should be changed regardless of the
condition of the water utility. For example, with a 3/." meter, the allowance is approximately
28,000 gallons. For a 2" meter, the allowance is approximately 70,000 gallons. This arrangement,
11
aside from being non-standard in the industry, does little to encourage water conservation. It also
leads to a loss when meters are installed. The 28,000 gallon allowance on a residential sized
service actually exceeds the City's Design Standard amount of water for a single family residence.
Other factors have worked to make the metering program uneconomic. The City's meter retrofit
program focused on high water users in its early stages and increased revenue. Later, until the
program was discontinued this year, the remaining unmetered commercial and industrial services
were being metered on a geographic basis. Thus, relatively low water users were being fitted with
meters. Another factor is that as commercial parcels are metered, we are often placing one meter
on a service that may have two or more businesses that once were charged a flat rate individually.
These factors have led to the net result that metering has not increased revenue under out outdated
rate structure.
The common way to charge for metered water service is to have a base charge for the service (a
"ready to serve" charge) plus a cost for water based on usage. Strictly speaking, all the fixed costs
of operating the system should be in the base charge and the cost of water only includes the actual
costs to pump and treat water. This would prevent the common occurrence of having to raise rates
to compensate for water conservation. (The "we sold less, so we have to charge more" problem.)
A drawback to this is that in the City's system, the cost of water portion would be very cheap
compared to the base rate. This would discourage conservation.
There are other rate mechanisms and charges that could also be implemented including those listed
below. While in the big picture the potential revenue from these sources is relatively small, they
should be considered in fairness to all the customers who do not use or benefit from these activities.
• Charges for service calls -- This could include such activities as locating services and
service turn off/on. For example, if someone breaks their water line on a weekend and the
City has to send out someone to turn the water off, then back on again, there is no charge
under the present system.
• Charges for all construction water -- Presently, the City charges for water used to flush
new mains since the amount of water used can be substantial and will depend on the care
used by the Contractor in doing the installation. Water for dust control or other construction
purposes is now provided free of charge.
• Standby charges for fire services -- Fire services are unmetered, thus there is no monthly
charge for this service. A "readiness to serve" or "standby" charge is fairly common in the
water industry.
A comprehensive water rate study is a major undertaking and is often done by specialized
consultants. The matter would be simplified if the Council could provide some policy direction on
the above areas to be considered and those that should not. While staff could do a short analysis, a
more comprehensive study involving allocation of costs to different classifications of rate payers
(i.e. residential/non-residential, single family/apartment, etc.), the use of a consultant is
recommended. A consultant would also be useful to get fresh ideas and concepts and to allow
more time to be spent on the study than would be available from existing City staff.
Rate Increase Issues and Factors
Even after decisions are made as to how to charge for water and at what level we want to fund and
improve the water system, there are options as to how rates should be increased. One option is to
12
phase in the increases over a few years as was successfully done a few years ago with wastewater
rates.. Another is to "bite the bullet" and do one large rate increase. Either way, we should plan on
having yearly or biannual small adjustments to keep up with inflation, thus avoiding large increases
in the future. In conjunction with this, the water fund should have a healthy reserve to "smooth
out" the effect of any major expenses such as a well failure. The reserve should be at least
$300,000.
Either option has advantages and disadvantages. The one-time approach gets it done with one
round of public controversy. However, if the increase is large, that may be impractical. Local
industries have often requested that rate increases be phased to allow them to plan their budgets
accordingly. The phased wastewater rate increases produced very few complaints. One short term
option that could be considered would be to raise only the flat rates and the base meter charge,
leaving the charge for water the same. This would make the increase for large water users
negligible.
To provide some feel for the amount of increases that could be considered, the following table lists
the needs described earlier and relates them to existing water fund revenue. They are listed in the
order presented in the report. For example, funding a program that costs $280,000 per year means
a 10% increase in rates based on the estimated 1993/94 revenue of $2.8 million (rounded from
$2,780,900). This is only an approximation as the effects of timing on expenditures, loan
payments, interest and other factors should be taken into account.
Project or Program
Cost
Rate Increase
DBCP loan payment (existing loan amt.)
S51,000
1.8%
DBCP loan payment (Well 4R project)
81,000
2.9%
DBCP filter 0&M, including Well 4R
95,000
3.4%
(assuming $475,000 cost spread over 5 years)
Well & Pumping Equipment Replacement
102,000
3.6%
(assuming 5513,000 cost spread over 5 years)
Generator replacement lease payments
236,000
8.4%
Main replacements on 100 yr. cycle
585,000
20.9%
Valve maintenance program
30,000
1.1%
Meter retrofit program over 30 years
550,000
19.6%
Increase revenue to match current expenditures
200,000
7.1%
Increase revenue to match recent expenditures
340,000
12.1%
Build water fund reserve to $300,000 over 5 years
60,000
2.1%
The above percentages have purposely not been totaled (yes, it is over 80%). A total would be
very misleading as there is some overlap in the items and certainly it is not reasonable to take on
this much all at once. Again, a more detailed analysis would be needed to quantify the needed rate
increase depending on the answers to the questions summarized in the following section. The
issues involved in long range replacement of capital improvements is not new. A recent editorial in
a publication from the American Public Works Association discussed the issue and pointed out one
interesting example from England. A copy is included at the end of the report (Exhibit 7).
13
Summary
The above report describes a number of problems and associated costs and options for the water
utility. Over the long run we assume the City will establish a program of upgrading old mains and
wells, complying with DBCP regulations and possibly retrofitting residential water meters.
Certainly the level of effort in these areas is open to question and must be decided by the City
Council. Public Works staff considers the level of effort shown for replacing the oldest mains as a
reasonable amount. It could certainly be more and could be less, with additional risk of unplanned
interruptions of service, and cost. Compliance with DBCP regulations, however repugnant, is only
a matter of time. While compliance may be delayed, we will lose some very low cost financing and
over time, it is virtually certain the City will have to incur increased costs of the magnitude shown.
The residential meter retrofit program is a matter of City policy. The "fairness" of having a
partially metered system should be considered. Other decisions on water rate structure and
policies, a water fund reserve and the General Fund contribution also need to be made. Staff
recommends that the following actions and options be considered:
• Make a decision on DBCP as soon as possible - We suggest that the Council make a
decision, possibly at a special evening Council meeting to approve the Well 4R project or
provide other direction to staff.
• Decide on how to approach a rate increase - We see two options here:
• Adopt an immediate increase of 10 to IS percent6 on the flat rate and base meter
charge and follow up with decisions on the remaining issues and rate increases; or,
• Act quickly on the remaining issues and adopt a rate increase plan.
The remaining decisions and issues that need to be addressed are:
• Well equipment replacements
• Distribution system replacements & valve maintenance
• Appropriate level of reserve in the water fund
• Water meter retrofit program
• Policy on contributions to the General Fund
• Policy on minor rate adjustments for inflation
• Water rate study including
who should do the study
preference for rate mechanism
charges for additional services
Certainly the Council will have other questions and direction that staff will need to address. For
example, we contemplated doing a survey of other agencies, but have held off until we receive
Council direction. Past surveys have shorn the City is at or below average in water rates. To do a
survey properly takes time and the results are quickly out of date. Plus, we felt there may be other
factors besides base rates that the Council v6sh to have surveyed.
Finally, the Council may wish to discuss how to obtain public input on the service provided by the
water system before direction on the above items is given.
6 This will raise approximately $100,000 to $150,000 this fiscal year if implemented starting February, 1994.
14
CITY OF LODI
W ENT
. • PUBLIC ORKS DEPARTM
Water Production System Replacement Analysis - March 1993
Replacement
Pump/Motor Replacement
Exhibit 2
Electrical Panel Rehab/Rept.
Well #
Drilled
Well Repl.
Yr.
Well
Well Cost Notes
Pump Yr.
Inst.
Type
P/M
RIR Yr. P/M Cost
Panel Yr.
Inst.
Elec. Panel
R/R Yr.
Elec. Panel
E.P. Cost Notes
1R
1988
2038
$178,000
1988
Sub
2013
$35,000
1981
2011
$10,000 rehab
2
1921
1995
$283,000 new site
1995
DWT
2020
$25.000
1960
1995
$30.000 new
3R
1993
2043
$178,000
1993
Sub
2018
$35,000
1993
2023
$10,000 rehab
4R
1993
2043
$178,000
1993
DWT
2018
$25,000
1993
2023
$10,000 rehab
5
1956
2006
$178,000
1981
DWT
2006
$25,000
1966
1996
$10,000 rehab
6
1984
2034
$178,000
1984
DWT
2009
$25,000
1985
2015
$10,000 rehab
7
1978
2028
$178,000
1978
DWT
2003
$25,1)00
1962
1998
$30,000 new
8
1942
2012
$283,000 new site
1986
DWT
2011
$25,000
1972
2002
$10,000 rehab
9
1978
2028
$178,000
1993
Sub
2018
$35,000
1967
1997
$10,000 rehab
10
1987
2037
$178,000
1987
Sub
2012
$35,000
1983
2013
$10,000 rehab
11R
1991
2041
$178,000
1991
DWT
2016
$25,000
1992
2022
$10,000 rehab
12
1962
2012
$283,000 new site
1994
Sub
2019
$35,000
1994
2024
$10,000 rehab
13
1964
2014
$178,000
1964
Sub
1989
$35,000
1977
2007
$10,000 rehab
14
1968
2018
$178,000
1968
Sub
1993
$35,000
1969
1999
$10,000 rehab
15
1969
2019
$283,000 new site
1969
Sub
1994
$35,000
1969
1999
$10,000 rehab
16
1973
2023
$178,000
1973
DWT
1998
$25,000
1972
2002
$10,000 rehab
17
1973
2023
$283,000 new site
1992
DWT
2017
$25,000
1972
2002
$10,000 rehab
18
1975
2025
$283,000 new site
1975
Sub
2000
$35,000
1975
2005
$10,000 rehab
19
1980
2030
$283,000 new site
1980
Sub
2005
$35,000
1980
2010
$10,000 rehab
20
1982
2032
$283,000 new site
1982
DWT
2007
$25,000
1982
2012
$10,000 rehab
21
1985
2035
$178,000
1985
DWT
2010
$25,000
1985
2015
$10,000 rehab
22
1988
2038
$178,000
1988
DWT
2013
$25,000
1987
2017
$10,000 rehab
23
1989
2039
$178,000
1989
DWT
2014
$25,000
1989
2019
$10,000 rehab
24
1991
2041
$178,000
1991
DWT
2016
$25,000
1990
2020
$10,000 rehab
25
1994
2044
$178,000
1994
DWT
2019
$25,000
1994
2024
$10,000 rehab
$5,290,000
$725,000
I
$290,000
WELLREPL.XLS
Exhibit 3
Water Distribution Mains - Replacement Cost
Notes:
ENR"
Total Length in
Jan -90
Pipe only
4956
Jul -92
Valves & hydrants
Pipe Size
System (ft.)
%
Cost/ft.
Total (including valves, services, eng. & ENR update)
2"
109,175
11%
$16.00
$5,206,784
$47.69
avg. cosVft.
3"
92,963
9%
18.00
$4,680,082
$50.34
4"
34,348
3%
19.00
$1,774,733
$51.67
6"
353,321
34%
20.00
$18,724,208
$52.99
8"
260,185
25%
24.00
$15,168,186
$58.30
10"
140,128
13%
30.00
$9,283,746
$66.25
12"
28,049
3%
35.00
$2,044,222
$72.88
14"
20,561
2%
40.00
$1,634,783
$79.51
Total:
1,038,730
100%
Total:
$58,516,743
Annual Replacement Cost:
$836,000
$780,000
$585,000
based on:
70
75
100
year cycle
% of system replaced per year:
1.43%
1.33%
1.00%
Notes:
ENR"
4673
Jan -90
ENR, updated
4956
Jul -92
Valves & hydrants
$1,400
each (average)
one per
250 ft.
Services
$1,150
each (average)
one service per
80 ft.
Eng. & Cont.
25%
Unit prices per Nolte
estimates, Impact Fee Study with interpolation
Footages as of 6192
Engineering New Record, published by McGraw-Hill
11/23/93 WFACREP.XLS
Exhibit 4
Old Water Mains (Pre 1940) - Replacement Cost
based on:
% of old mains replaced per year:
°% of total system replaced per year:
approx. # of services replaced/year:
approx. cost of serviceslyear (included above):
Notes:
5 10 15 20
year cycle
20.00% 10.00% 6.67°x6 5.00°%
4% 2% 1% 1°%
538 269 179 135
$774,000 $387,000 $258,000 $194,000
ENR' 4673 Jan -90
ENR, updated 4956 Jul -92
Valves & hydrants $1,400 each (average)
one per 250 ft. avg, both valves & hydrants
Services $1,150 each (average) includes allowance for replumbing to house
one service per 80 ft. rough average allowing for intersections, large parcel 8 both sides of street
Eng. & Cont. 25°%
Unit prices per Nolte estimates, Impact Fee Study with interpolation
Footages as of 6192
Engineering New Record, published by McGraw-Hill
11/23/93 OLOMNREP.XLS
Approximate
Pipe only
Pipe Size
Length (ft.)
%
Cost1ft.
Total (including
valves, services, eng. & ENR update)
2"
65,235
30%
$16.00
$3,111,193
$47.69 avg. costtft.
3"
24,610
11°%
18.00
$1,238,953
$50.34
4"
9,950
5%
19.00
$514,108
$51.67
6"
87,750
41%
20.00
$4,650,302
$52.99
8"
27,830
13°%
24.00
$1,622,425
assumed 50% of 8" can be deferred
10'
0
0%
30.00
$0
assumed replacement of all lines
12'
0
0°%
35.00
$0
larger than 8" can be deferred
14'
0
0%
40.00
$0
Total:
215,375
100%
Total:
$11,136,982
Total System Footage:
1,038,730
Old Mains, % of system:
21%
Annual Cost:
$2,227,000
$1,114,000 $742,000 $557,000
based on:
% of old mains replaced per year:
°% of total system replaced per year:
approx. # of services replaced/year:
approx. cost of serviceslyear (included above):
Notes:
5 10 15 20
year cycle
20.00% 10.00% 6.67°x6 5.00°%
4% 2% 1% 1°%
538 269 179 135
$774,000 $387,000 $258,000 $194,000
ENR' 4673 Jan -90
ENR, updated 4956 Jul -92
Valves & hydrants $1,400 each (average)
one per 250 ft. avg, both valves & hydrants
Services $1,150 each (average) includes allowance for replumbing to house
one service per 80 ft. rough average allowing for intersections, large parcel 8 both sides of street
Eng. & Cont. 25°%
Unit prices per Nolte estimates, Impact Fee Study with interpolation
Footages as of 6192
Engineering New Record, published by McGraw-Hill
11/23/93 OLOMNREP.XLS
1993-94 Financial Sum
WATER FUND SUMMARY
Beginning Balance — Available Funds (Cash)
Revenues
Operating Charges
2,780,900
Other Revenues
107,000
Sub—Total
(47,086)
Operating Expenditures
(428,000)
Damage to Property
1,068,000
Water Loan Interest and Fees (State)
(200,000)
Administration
(191,827)
Water Conservation Program
(44,796)
Production
(644,706)
DBCP Monitoring
(294,075)
Distribution
(321,710)
Encumbrances
(9,634)
Fire Hydrants
(7,835)
Sub—Total
Capital Projects
Work In Progress
(231,467)
Appropriation Adjustments — PY
54,116
Encumbrances
(47,086)
Water Impact Fee Projects
(428,000)
State Loan Reimbursement
1,068,000
Loan (Electric)
(200,000)
Approved Budget/Expenditures
(1,367,000)
Sub—Total
Operating Transfers
General Fund Charges (Cost of Services)
(124,771)
General Fund Transfer
(750,000)
Special Allocations/Transfers
Water Impact Fee Transfer
428,000
Water Impact Fee Transfer
62,516
Insurance
(7,450)
Engineering Charges
(30,905)
Sub—Total
Other Sources/Uses
Ending Balance — Funds Available (Cash)
Budget
1994
140.493
2,657,035
128,981
Exhibit 5
(155,360)
(756,000)
45,961
Source: 1992-93 Financial Statements plus CIP adopted by City Council in November 1993
16
(9,200)
(92,070)
Water Fund Analysis
Fiscal Year
1988/89
1989/90
1990!91
1991/92
1992/93
1993/94
Revenue
(ACWaI)
(ACWW)
(Aetua)
(AcNal)
(AcIl1e4
(per get)
Water Sales - Public
$1,835,533
$2,488,720
$2,534,828
$2,646,844
$2,637,355
$2,764,600
Water Sales -City
$7,840
$10,651
$10,943
$12,849
$19,681
$16,300
Total Operating Revenue
$1,843,373
$2,499,371
$2,646,771
$2,669,693
$2,667,035
$2,780,900
Investment Earnings
$93,285
5137,944
$125,932
$12,073
$6,352
$0
Rent or City Property
$26,519
$51,517
$44,164
$59,362
$35,097
$30,000
Revenue, Misc
$40,078
$25,315
$48,016
538,537
$11,159
$8,000
Total Non -Operating Revenue
$181,268
$256,580
$246,647
$154,675
$128,981
$107,000
Rate Increase Revenue
$240,000
5183,658
$201,840
$176,352
$191,827
$0
%Increase
15%
$133,321
$143,539
5% MrAxled above
$56,376
Total Revenue
$2,024,641
$2,766,961
$2,791,318
$2,814,367
$2,786,017
$2,887,900
Contributions To Other Funds
Engineering Charges
prior 02W engineering Incl. In project costs above)
$70,555
InAum engineer,
Equipment, Miscellaneous
$101,510
General Fund
$500,000
$503,245
$804,460
$775,508
$764,572
$750,000
Insurance, mise
52,000
$8,035
$8,035
59,200
$9,200
$7,450
Total Contributions
$602,000
$611,280
$812,496
$784,708
$773,772
$767,460
Net Revenue
$1,522,641
$2,244,671
$1,978,823
$2,029,659
$2,012,245
$2,130,450
Expenses
Na
n/a
Na
Na
Impact Fee shortfall - estimated
$0
Operation & Maintenance
$11,484
$1,859
Commercial & Ind. Meter Retrofit
$41,829
Administration
5101,580
$118,768
5183,658
$201,840
$176,352
$191,827
Damage to City Property
$11,714
56,417
$22,957
(54,719)
$15,562
$76,162
Water Consenration
$16,939
$33,054
$50,632
$43,653
534,176
S44,796
Engineering
$16,560
$32,758
$32,220
$37,815
$37,501
530,905
Production
$515,290
$606,913
S685,107
$755,871
$800,606
$644,706
DBCP Monitoring
SO
$12,497
$23,852
$85,891
5207,666
$294,075
Distribution
S208,650
5209,569
5268,026
5265,384
$300,841
5321,710
Fire Hydrants
$9,130
$5,957
$10,667
$11,783
$2,737
$7,835
Subtotal O&M
$879,883
$1,025,934
51,277,119
$1,397,517
$1,575,640
$1,535,854
Subtotal O&M w/o DBCP
$879,883
$1,013,437
$1,253,267
$1,311,626
$1,367,974
$1,241,779
Interfund Transfers
$136,840
$154,628
5171,757
$174,175
5129,752
$124,771
Transfers & chg's in assets/liabiidies
($4,895)
51,725
$17,660
(51,760)
($19,319)
(54,331)
Total O&M
$1,011,828
$1,182,287
$1,466,536
$1,569,932
S1,686,074
$1,666,294
Total O&M w/o D8CP
$1,011,828
$1,169,790
$1,442,684
$1,484,041
$1,478,408
$1,362,219
DBCP Compliance
$1,504,949
Monitoring & O&M on ex finer
$0
$12,497
$23,852
$85,891
$207,666
$294,075
Ex filter & design of new, W4, mist
$1,747
523,329
538,687
$529,963
$162,614
545,350
Loan Proceeds
Na
rva
Na
($504,927)
($148,068)
($45,350)
Loan Pmts (amt, borrowed to date)
Na
Na
rva
$0
$20,020
Loan Payments based on:
$1,100,000 Newfifters
$0
$0
$0
$0
$0
O&M on new fitters on ex wells
Na
r/e
rJe
Na
Ne
rve
O&M on new fitters on new wells
Na
rVe
Ne
Na
Ne
ass,med none
Contingencies, legal, mist.
Na
Na
NO
Na
Na
Total DBCP Compliance
$1,747
$36,826
$62,739
$110,927
$242,232
$294,076
Capital Improvements
Capital Maintenance:
Distribution System
$192,353
$133,321
$143,539
$177,515
$56,376
$132,891
Production System
$769,131
$352,647
5381,236
$197,537
5310,941
5315,549
Engineering Charges
prior 02W engineering Incl. In project costs above)
$70,555
InAum engineer,
Equipment, Miscellaneous
$101,510
$60,918
$53,292
$88,955
$1,681
$13,618
Total Capital Maintenance
$1,062,994
$546,886
$578,067
$464,007
$439,553
$462,068
Miscellaneous Projects
Capital Loan Payments
$33,333
$91,759
$325,092
$264,000
$218,000
$209,000
Impact Fee revenue/project adis -
n/a
Na
n/a
Na
Na
Impact Fee shortfall - estimated
$0
s0
$11,484
$1,859
Commercial & Ind. Meter Retrofit
$41,829
$13,612
$101,002
$126,076
$135,118
55,233
Residential Meter Retrofit Program
$0
SO
SO
$o
$0
$0
Total Miscellaneous Projects
$76,162
$105,371
$437,678
$391,935
$363,118
$214,233
Total Capital Improvements
51,138,156
$652,257
$1,015,645
$856,942
$792,671
$676,291
Total Expenses
S2,151,732
$1,857,872
$2,521,068 $2,460,910
$2,613,311
$2,332,585
Net Revenue less Expenses ($629,090) $386,799 ($642,245) ($421.250) ($501,066) ($202,136)
Starting Balance: 519847,346 (Inch s31.000.000wenfrom EiecwcU")
Balance (Cummulative Net) $1,218,266 $1,605,054 $1,062,810 $641,569 $140,493 ($61,642)
Exhibit fi
CASHFLOWXS 111211W
+ EDITORIALS
Infrastructure, if you build it....
"London Bridge is falling down, fall-
ing down, falling down...." This first
line of a children's song is probably
known to us all. But a recent news story
reports that one of London's most fa-
mous bridges, the Tower Bridge, will
remain standing because funds from an
800 -year old trust fund are being used to
finance the cost of major repairs. It also
means that Londoners, while inconve-
nienced by the temporary closing of the
bridge, will not see any of their taxes
used to pay for the repairs.
Public works officials are veryfamil-
iar with . the difficulty of finding the
funds needed for major repairs of exist-
ing facilities. A new roof for City Hall,
replacement of the beating and air con-
ditioning:system in the county.courts
building, roadway and bridge deck re-
surfacing, and similar projects are items
that must be done in regular cycles that
often range from ten to twenty years.
However, theprice tag for even one such
project is often more than the annual
public works operations and mainte-
nance budget can absorb.
In many governmental agency bud-
gets, major repair projects are included
in the "Capital Projects" budget because
of their cost. But that does not always
mean that the funds will be available
when needed to make major repairs al-
though such repairs would minimize
annual operating costs and avoid loss of
the facility altogether. When resurfac-
ing of ten miles of arterial streets must
compete with a new fire station orpublic
park in a rapidly developing area, needed
major maintenance is likely to become
"deferred maintenance" foranotheryear.
Back in the 12th century, the rulers of
London established the "Bridge House
Estates Trust." That entity has accumu-
lated investments with a current value of
around $470 million and is responsible
for four bridges over the Thames River.
The repairs being made to the Tower
Bride are expected to gi ve the old struc-
ture another sixty years of life. Who
knows that the results would be if a
public referendum were needed to sell
bonds and earmark taxes for debt ser-
2 APWA REPORTER /JULY 1993
vice for those bonds for the bridge re-
pairs?
Establishing a trust fund for major
maintenance is a common feature in the
covenants of revenue bonds sold to fi-
nance construction of airport facilities,
or toll roads and bridges. The buyers of
those bonds want to know that the facil-
ity that generates the revenue for debt
service will be properly maintained so
that it attracts users and fee payers. But
that philosophy of setting an amount
aside every year in a special fund for
major repairs is not often used for facili-
ties built with general tax obligation
bonds or from annual tax revenues.
Budgeting for major maintenance
requires developing maintenance plans
for.each facility, identifying the work
that will be needed at intervals through-
out its useful life, establishing a sched-
ule for that work, and estimating the
costs. If the major maintenance fund is
unable to make investment income, in -
Exhibit
flations of costs must also be calculated.
And the fund must be untouchable for
expenses that do not fit the major repair
criteria.
Impossible, you say! Well, public
works managers can begin by separating
their major repair costs from their an-
nual operating and maintenance expenses
when they develop their annual budget.
And even if they are forced to merge
those projects into a long list of candi-
dates for capital project funding, they
should be identified for what they are—
an investment to preserve an asset of
major public need and value.
Public agencies need to adopt the
motto, "If we can't maintain it, we don't
build iL" Planning for major mainte-
nance and establishment of.:financial
structures to provide the funding for that
maintenance at the right time are essen-
tial ingredients of a public facility man-
agement program. DFK
Build bridges to elected officials
Who makes the case for sound infra-
structure in your community? Are you
shouldering the burden alone? Do you
often feel like yours is a "voice crying in
the wilderness?" Are you stymied by
the prospect of having to bring your
mayor or city council members up -to -
speed on infrastructure issues?
If any of these questions hit home,
you may find a much needed resource at
this year's International Public Works
Congress and Exposition. The Elected
Officials Program, now in its third year,
provides a one-stop opportunity for top
elected officials to learn about the latest
issues pertaining to public works while
networking with their peers from across
North America.
The Elected Officials Program offers
a variety of informative sessions and a
technical tour to acquaint mayors and
city council members with the public
works professional's point of view.
Slated for Sunday and Monday, Sep-
tember 19-20, the program includes a
presentation by a city engineer, informa-
tion on APWA resources, a tour of the
City of Phoenix solid waste manage-
ment facility, and a keynote address by
Lic. Benjamin Clariond Reyes-Retena,
Presidente Municipal, Monterey,
Mexico. This highly influential mayor
will discuss the infrastructure challenges
and innovations in Monterey, which has
a population of 1.9 million people.
Infrastructure solutions can only be
achieved adequately with a comprehen-
sive and cohesive approach from public
works professionals and public officials.
APWA's Elected Officials Program can
give your mayor or city council mem-
bers more of the information they need
to make decisions favoring sound infra-
structure management.
For more information or a complete
schedule of program events, call Jayne
Mixon at APWA headquarters, (816)
472-6100, ext. 594. CLH
MEMORANDUM, City of Lodi, Public Works Department
To: City Council
City Manager
From: City Engineer
Meeting Date: March 7, 1995 (Shirtsleeve Session)
Subject: Discussion of Water Rate Adjustment; DBCP Update
Introduction
The purpose of this report is to present background information to support specific actions on
spending and rate increases staff intends, unless the City Council directs otherwise, to place
on upcoming Council agendas in March and April. These actions are summarized at the
conclusion of this report. Staff feels past administrative and political efforts have not, nor will
they in the foreseeable future, allow us to continue to defer spending money on DBCP. The
rest of this report describes those efforts, updates our water supply situation, reviews solutions
and costs, and recommends a course of future actions in addition to these immediate actions,
Background
The City Council has been briefed on numerous occasions over the past few years on
problems with the water system's physical condition, water quality (DBCP) and financial
condition. The two most recent reports and their outcomes were:
1) November 1993 "Water Utility Status Report" presented on November 30 and
December 7, 1993.
This report provided background on the development of the water system, water
treatment and supply needs, operation and maintenance needs, capital improvement
(including equipment) needs, revenue and expenses, water rates and rate structure
issues. Staff recommended a number of actions and options for consideration. They
were, as stated in the report:
• Make a decision on DBCP as soon as possible -We suggest that the Council make a decision,
possibly at a special evening Council meeting to approve the Well 4R project or provide other
direction to staff.
• Decide on how to approach a rate increase - We see two options here:
• Adopt an immediate increase of 10 to 15 percent on the flat rate and base meter charge
and follow up with decisions on the remaining issues and rate increases; or,
• Act quickly on the remaining issues and adopt a rate increase plan.
The remaining decisions and issues that need to be addressed are:
• Well equipment replacements
• Distribution system replacements & valve maintenance
• Appropriate level of reserve in the water fund
• Water meter retrofit program
• Policy on contributions to the General Fund
• Policy on minor rate adjustments for inflation
• Water rate study including
who should do the study
. preference for rate mechanism
• charges for additional services
D3CPOU7.00C
Discussion of Water Rate Adjustment; DBCP Update
March 7, 1995 (Shirtsleeve Session)
Page 2
The Council was reluctant, because of uncertaincies, to make any decisions or provide
direction on addressing DBCP and the related financing and water rate issues. At that
time, there was an active political effort underway to either change the regulations or
find some favorable interpretation of the regulations related to DBCP that would be less
costly to Lodi. Staff was directed to perform a water rate survey of other cities and
check with a consultant on the cost of doing a formal rate analysis. Also, as part of the
following budget process, Council adopted policies that addressed the two policy items
listed above. The General Fund contribution (in -lieu tax) was set at 20% of prior year
revenues, down from roughly 27% to 29% in recent years; and, a policy on minor rates
adjustments was adopted; however, there were no rate adjustments made for the
current fiscal year.
2) May 24, 1994 Shirtsleeve Session
At this meeting, staff presented more information on the needs and benefits of
continuous replacement of old mains and other system components. Staff also
presented the results of a study on the use of large water storage tanks to provide peak
capacity rather than using additional wells that would require DBCP treatment units.
The benefits from building two, one million -gallon storage tanks, one on each side of
the City, were that we could eliminate the need for five new wells and save millions of
dollars compared to treatment. The down side was that the up -front cost was higher
and there was no guarantee that other treatment would not be needed in the future.
Also, there was the strong possibility the system would need routine disinfection
(permanent chlorination) at additional cost.
In addition, the Council was presented the results of the previously requested water
rate survey. Lodi's flat -rate water service charges were 44% below those of the
comparable cities surveyed and metered rates were between 45% and 68% lower for
typical residential uses.
Staff received no direction on the DBCP/water tank issue and was directed to continue
developing recommendations on system replacement and water rate increases. Our
administrative and political efforts to obtain relief were still underway; however, they
were soon to come to an end, as is described in the next section.
Political Efforts
On July 28, 1989, the State of California adopted 0.0002 parts per million (0.2 parts per billion)
as the Maximum Contaminant Level (MCL) for Dibromochloropropane (DBCP) in drinking
water. In 1990, the City faced the possibility of eight to ten wells being out of compliance with
the new MCL.
The California Department of Health Services, Office of Drinking Water (DHS), issued Lodi an
amended Drinking Water Permit which put Lodi on a compliance schedule including the
installation of Granular Activated Carbon (GAC) treatment systems at several well sites. The
City's first (and only) GAC system was put on line in April 1992..
With citizens and the City Council appalled at the high cost of the one treatment system
($470,000) for such a small theoretical health benefit, the City sought relief from the State
regulations. After numerous public meetings, the Mayor appointed an ad hoc citizen
committee to help obtain regulatory relief.
Discussion of Water Rate Adjustment; DBCP Update
March 7, 1995 (Shirtsleeve Session)
Page 3
The City developed a proposal to keep either the annual or six-month average DBCP exposure
to less than the MCL to every water customer. With the help of an environmental law
consulting firm, Lodi's proposal was prepared and presented to DHS. DHS ruled that the
proposal could not meet California current drinking water regulations unless they granted an
official variance or waiver, but they had never granted such a variance or waiver without
legislative direction.
State Senator Johnston was willing to sponsor legislation that would allow a variance or waiver
to Lodi based upon no opposition from DHS at that time. On January 12, 1993, a meeting was
set in Sacramento to review technical language in the bill and talk over strategy. At this
meeting, DHS representatives opposed Lodi's proposal. In subsequent meetings, DHS's main
argument was that Lodi's proposal would not be allowed under United States Environmental
Protection Agency (EPA) Federal regulations. A ruling from the EPA had previously been
requested in December 1992. A February 17, 1993 letter from the EPA Regional office in San
Francisco stated that Lodi's proposal did not meet EPA regulations. (The author of the letter
never spoke with Lodi staff before writing the letter.) Thus, legislation was not pursued.
In April 1993, Lodi met with officials at the EPA Headquarters in Washington to have the
Regional EPA opinion reevaluated. Lodi staff was encouraged by EPA's statements at that
meeting. However, an October 4, 1993 letter from EPA Headquarters gave a negative
response to Lodi's proposal based on the inability to meet Federal regulation technicalities.
We also felt there were some misunderstandings of Lodi's proposal. In a follow-up phone call
with an official at EPA Headquarters, Lodi was encouraged to rewrite the proposal addressing
the technicalities and to work with State of California officials first.
Lodi staff redrafted the proposal and contacted DHS officials to arrange for a meeting. At this
meeting, the Acting Director of DHS directed their staff to work directly with Lodi staff on the
new draft proposal before reapproaching EPA. However, without ever communicating with
Lodi in any way, a copy of Lodi's draft proposal was sent to EPA Headquarters along with a
letter asking for an opinion on Lodi's draft proposal meeting Federal regulations. EPA
Headquarters replied in five days with another negative opinion. After the meeting at which
cooperation was directed, DHS sent Lodi a letter denying the proposal without ever contacting
Lodi staff.
At this point, the new Director of DHS in Sacramento was contacted and a meeting was set up
on June 16, 1994 with Lodi presenting and explaining the proposal to DHS officials, Office of
Drinking Water staff, Califomia-EPA toxicologists, and staff from Lodi's State Senator and
Assemblyman's offices. Another person in attendance, without Lodi's forehand knowledge,
was the EPA Regional official who had written the February 17, 1993 negative response.
After Lodi's proposal was presented in detail, the next person to speak was the EPA Regional
official. He again gave the same response as in his earlier letter saying Lodi's proposal did not
meet Federal regulations, therefore, DHS could not approve it. The meeting went downhill
from there. In an August 11, 1994 letter, DHS denied Lodi's proposal due to EPA's objections.
No further contact has been made with EPA or DHS concerning Lodi's proposal. -
While the above was occurring, the City had DHS delay deadlines in the amended Drinking
Water Permit for further GAC treatment installations. City staff also came up with a strategy to
better utilize existing "in compliance" wells during peak hours and to use the remaining four to
six "out of compliance" wells as "standby sources"*. As a result of these efforts, along with the
good fortune of not having wells break down during summer months and Lodi's then -active
= , ....01
Discussion of Water Rate Adjustment; DBCP Update
March 7, 1995 (Shirtsleeve Session)
Page 4
water conservation program, the City of Lodi has, to date, delivered water without violating any
State or Federal drinking water regulations relating to DBCP.
*A "standby source" can only be used for emergency purposes for up to 15 days per year and cannot be used to
meet water demands from growth.
Water Supply Problems - Long Term
The City's Water System Master Plan provides for continued construction of new water wells to
meet increased peak demands due to additional growth. Funding for these wells and the
major water mains are included in the Development Impact Mitigation Fee Program. The Plan
provides for most of the new wells to be located near the Mokelumne River where no DBCP
contamination is expected. The remaining wells would be in the planned industrial area east of
Highway 99 and residential areas in the southwest to provide adequate fire flows. (See
Figure 1; all Figures are at the end of this report.) Wells also need to be spaced apart to avoid
pumping interference, as represented by the large circles on the map. The Master Plan and
Fee Program included the assumption that only half of the new wells will need GAC units.
However, it now appears this assumption may be too optimistic.
Figure 2 shows the same well locations as Figure 1 plus shaded areas that have chemical
contamination problems as of the beginning of this year. The contaminated areas are based
on readings from existing wells and various test wells and private wells sampled by the City.
At this point, seven of the fourteen planned wells are clearly located in contaminated zones.
Four additional planned wells (A, H. I and K) are bordering contaminated areas. Based on the
DBCP history of existing wells, it is very difficult to predict what will happen in the future with
these wells. For example, of the eight existing wells in the area with DBCP under the
Maximum Contaminant Level (MCL), six have had past readings that were over the MCL.
There is also a real possibility that placing new wells inside the "clean" area will pull in DBCP
and cause existing wells to go out of compliance.
The problem is particularly severe in the industrial area east of Highway 99. With the limited
number of water mains that cross Highway 99, the system needs wells in that area to meet
local industrial demands. We presently have constructed three of nine planned wells east of
Highway 99 and of those three, only one (Well 11) is now usable. Well 10 is out of service,
most likely permanently, due to bacteria and other problems and the other, Well 4, has high
DBCP levels.
These contamination problems are not limited to DBCP. The downtown area is also having
problems with contamination from other industrial chemicals, mainly Trichloroethene (TCE).
This problem has shut down Well 2 and threatens Well 24.
I. r �. ■ ._._.
Discussion of Water Rate Adjustment; DBCP Update
March 7, 1995 (Shirtsleeve Session)
Page 5
The DBCP and TCE contamination areas restrict the location of possible future planned wells
and replacement wells unless we install treatment units. Based on a rough analysis of the
uncontaminated area, there are only four potential sites available using City -owned property
and another four or five sites using other publicly -owned land, if they could be acquired.
Obviously, many more sites could be available if the City were to purchase private property,
although there is little vacant land within the uncontaminated area, and because of the
required clearances to sewers and other requirements, buying developed property would be
expensive.
While these problems are certainly ones to be reckoned with on a long-term basis, they have
also become a serious short-term problem due to recent events as described in the next
section.
Water Supply Problems - Short Term
As was described in the earlier reports, the City's water system has no significant water
storage aboveground. The groundwater table is our "storage" and, to get the water, we use
wells. Thus, we need to have enough wells to meet peak demands. These demands occur in
the early morning and late evening throughout the summer. According to the Water Master
Plan, we should have 25 wells available to meet current demands, allowing for a 20% safety
factor. Without the 20%, we should have 20 wells..
Last summer, only 17 to 19 "in compliance" wells were available. The number fluctuated due
to mechanical problems, construction schedules and changing contamination levels. The out -
of -service wells were:
Well Reason Comments/Remedy
(wells out all summer]
10 Bacteria, taste and odor
18 DBCP
22 DBCP
23 DBCP
25 Under construction
(wells out part of summer]
Drill new well at new site
GAC unit
GAC unit
GAC unit
Will be finished spring 1995
2 TCE Off after mid-July/drill new well at new site
4 Under construction Put on line in late July, off due to DBCP in
early September/GAC unit
6 Meter problem Only off a few days in July/meter fixed
9 Bacteria Used late July through late August/possible
disinfection unit
Last summer, we had 24 days in which during part of the day all available wells in DBCP
compliance were running. Had there been an increase in demand, a fire or a water main -
break, we would have had to tum on.one or more of the contaminated wells to maintain system
pressure at minimum levels. There were an additional 25 days in which all but one well was
running. Well availability last summer is summarized graphically in figure 3. We got through
the summer with careful system operation and monitoring and a strong water conservation
effort.
Discussion of Water Rate Adjustment; DBCP Update
March 7, 1995 (Shirtsleeve Session)
Page 6
We finished out last summer with 17 wells on line. Since then, Well 20 has again gone out of
DBCP compliance and new Well 25 is nearing completion. Well 9's bacterial problems are still
being investigated and we may or may not be in a position to use it this summer. Thus, we will
start the summer of 1995 still with 17, possibly 18, wells assuming nothing else goes wrong.
Last summer there were 31 days in which the demand exceeded 17 wells. This situation
is bordering on an emergency assuming the City intends to comply with the safe drinking
water standards.
Even if we had the same number of wells as were available last year, there is cause for
concern. While residential growth has been relatively slow, there has been some commercial
and industrial growth. Based on building permit data, this total demand from growth could
require the capacity of two-thirds of a well. A knocked over fire hydrant could easily use the
capacity of a whole well. Of more concern is the increased consumption we expect from the
drought -is -over mentality resulting from the wet winter. While winter and (hopefully) spring rain
will likely reduce total consumption, it will not reduce the peak demand for water we experience
in the hot summer months.
The consequences of running out of well capacity range from merely inconvenient to
disastrous. At low pressures, dishwashers, sprinklers and similar automatic water using
devices do not function properly. Industrial processes could be impaired to the point of
product damage. The threat of system contamination from backflow is increased. And, of
course, fire fighting could be severely impaired.
Solutions
There are no easy solutions to the problems faced by the Water Utility and its customers, the
citizens and businesses of Lodi. Staff firmly believes these customers automatically expect
that we provide water that meets their supply needs and the requirements of the law and that it
be done with a high degree of reliability at the lowest possible cost. Given that, the short-term
and long-term solutions described below are based on the following assumptions:
• We will take the necessary steps to start the summer with at least 20 wells in
service;
• We will take advantage of the lowest cost financing available, which is the
previously approved State Safe Drinking Water Bond loan of just under $5 million at
3.41% interest; and,
We will adjust water rates in tolerable increments to handle both the loan payments
and restore the Water Utility to proper operational and financial status.
The specific short-term actions that need to be. acted upon immediately are:
1) Appropriate $75,000 from the Water Fund for Well 9 disinfection equipment and
authorize staff to purchase and install the equipment on an emergency basis.
Well 9 has had intermittent bacteria problems over the past two years and we have
not been able to determine the source. While there is some small hope that it could
clear up in time for summer, we should plan to install a continuous disinfection
system. We could use an existing liquid/gas chlorination unit. However; customer
complaints and stringent monitoring and notification requirements due to storage
and use of hazardous chlorine suggest we consider alternatives.
Discussion of Water Rate Adjustment; DBCP Update
March 7, 1995 (Shirtsleeve Session)
Page 7
Other types of disinfection equipment include chlorine generators, other chlorine
systems, ozone generators and ultraviolet (UV) light. Given site constraints and
location (in. a residential neighborhood), and maintenance and cost issues, staff
selected UV as the best alternative. UV disinfection utilizes no chemicals and does
not change the water other than killing bacteria, viruses and molds. The unit
consists of a stainless steel vessel housing UV lamps and control panel. The unit
would fit in roughly a six-foot square area. Maintenance consists of periodic
cleaning and lamp replacement which can be done by City personnel.
2) Authorize staff to obtain bids for a GAC unit at Well 4
The entire Well 4 project, located at the Reid Industrial Substation, was approved in
a previous budget and the well was used last summer while DBCP compliance
testing was done; but, staff was directed not to proceed with the GAC purchase.
This GAC unit, approximately $810,000, is included in the State loan amount. We
would utilize the specifications for the previously designed units at other wells and
have the successful bidder supply detailed plans for Well 4. The ability to use this
high-capacity well will provide a much needed source of supply in the industrial area
east of Highway 99. It will also remove substantial amounts of DBCP from the
groundwater and may improve our chances of keeping Well 1 in compliance due to
the relative location of both wells in the contaminated zone.
3) Authorize staff to have plans and specifications prepared and obtain bids for a one
million -gallon water tank at the Well 4 site and complete the site improvements.
This tank is also included in the State loan project ($816,000). Completion of the
well and site improvements will total $433,000, some of which has already been
spent on drilling and utilities. The completed Well 4 and tank will eliminate the need
for three future wells in the DBCP-contaminated zone.
Staff will need to use outside engineering services for some of this work, mainly the
water tank and its appurtenances. Part of their work will be to address the
disinfection issue and find solutions that will not require chlorination of the water
discharged from the tank to the water distribution system.
4) Authorize staff to update and utilize plans and specifications we have "on the
shelf' to purchase GAC units for Wells 22 and 23.
Council earlier approved preparation of plans and specifications for GAC on a
number of wells, including Wells 22 and 23, however, we were not authorized to go
to bid. This work will be fundable under the State loan at a cost of approximately
$920,000.
5) Restore funding to the Water Conservation Program.
The adoption of the current budget reduced the Water Conservation Program by
$11,000, or approximately 25%. In order to help maintain our water supply during
the critical summer of 1994, water conservation efforts were kept up at earlier
levels. This has left practically no funding for the remainder of the fiscal year, at a
time when we need to start increased efforts for summer 1995.
6) Obtain specific Council designation of wells which exceed the DBCP MCL as
"standby sources" for use on an emergency basis.
Discussion of Water Rate Adjustment; DBCP Update
March 7, 1995 (Shirtsleeve Session)
Page S
To meet emergencies, State regulations allow the use of "standby sources" which
exceed MCL's for up to 15 calendar days, not exceeding five consecutive calendar
days and that the State. be notified of the use and reason. Even with the above
measures, due to construction time requirements and other unforeseen
circumstances, we may need to use these wells.
The long-temi solutions are only generally described below and will require more study and
.discussion. However, we see them as something we must pursue in the upcoming budget
process, and over the next year, if we are going to provide the citizens with a reliable water
supply:
1) Enhance water conservation efforts, both in terms of education and enforcement
programs and through the use of water meters and rate structure.
The cost effectiveness of a strong water conservation program has previously.been
demonstrated, including significant cost savings in wastewater treatment. This
program is not only vital for this summer but will help reduce long-term costs by
reducing the need for additional capacity if we can maintain lower water
consumption habits. Staff will include recommended increases in the Program in
the 1995/97 budget submittal.
Recognizing the unpopularity of water meters, staff feels the City should adopt a
water rate structure that encourages conservation and the use of meters.' The flat
rate should be relatively high compared to the base metered rate so that.a customer
who uses little water would pay less than someone who uses an unrestricted and
unknown amount of water.
Such a water rate structure should be developed by a professional experienced in
utility rates. An outside professional would bring more experience and fresh ideas
in rate setting. In additional to saving staff time, the work could be done in a more
timely manner. The cost would be about $10,000 to $15,000 depending on the
scope of work.
2) Increase our efforts in replacing the oldest parts of the water system and in . .
maintaining the rest of the system.
The November 1993 Report detailed a number of deferred maintenance problems.
These included well and equipment replacements, main replacements and valve
maintenance. The lack of valve maintenance alone contributed significantly to the
lengthy delay in shutting down a recent broken water main incident on
West Lodi Avenue.
3) Plan to install GAC units on future wells as they are needed for growth, funded by
impact fees.
New wells in the contaminated areas will be needed and they will almost certainly
need GAC units. Since the capital funding is included in the City's development
fees, this should not be an issue. We should not expect new residents to live with
water supply problems due to our reluctance to spend money on GAC units when
they have already paid for them.
4) Explore construction of a second water tank in the southwest area.
Before we decide on how to provide additional capacity to accommodate growth in
the southwest area, we will have experience with the tank at Well 4 and will know
Discussion of Water Rate Adjustment; DBCP Update
March 7, 1995 (Shirtsleeve Session)
Page 9 .
more about the fate of DBCP in the groundwater. Although we suspect the tank will
be the .best approach, we should evaluate that project further.
Finances
Excluding the $75,000 for Well 9, the total capital cost for the short-term action items
mentioned above will be approximately $2,985,000, all funded under the State Loan Program.
With that amount, plus the $822,000 the.City has already borrowed on the loan and the State's
5% administrative fee, our annual payments will be about $271,000 for 20 years. This item
alone represents 12% of the annual water utility revenue when the in -lieu tax is included.
While these costs of nearly $3 million seem high, we are gaining the equivalent capacity of
over six wells, which would cost over $2 million to construct even if we had uncontaminated
sites available. However, when financing.costs are considered, the annualized costs are
practically identical. Obtaining open market financing would mean an interest rate of about
8%. When compared to the State loan rate of 3.41 %, and the number of wells needed to
provide the equivalent capacity, the annual cost difference is less than $20,000 (see Figure 4).
The above costs are only capital items. Operating and maintaining the existing unit plus three
additional GAC units will add approximately $158,000 per year to the operating budget on the
average. This will require .an additional 7% increase in revenue.
In addition to DBCP contamination problems, maintenance and capital replacement needs
described in the November 1993 Report need to be addressed. This will add roughly
S700,000 to the annual budget. Financing that amount would mean an additional 26%
increase in revenue.
While the problems and costs related to DBCP and deferred maintenance are relatively well
established, the November 1993 Report mentioned other potential costs for water treatment to
meet possible new standards for such things as radon, arsenic and disinfection. While there is
some hope that new, costly regulations will be slow in forthcoming, there are still substantial
unknown costs for dealing with existing regulations covering known potential problems such as
TCE and PCE
Water Rate Comparison
Clearly, the above and past discussions have been leading to a water rate increase. While
one can make -a strong argument that what other agencies charge for water doesn't matter,
comparisons are always requested, either by the Council, the public, or even staff. Staff has
recently updated the last rate comparison requested by the Council and presented in May
1994. The average flat -rate charge, for those cities that have one, is still 43% over Lodi's flat
rate for a three bedroom home.
Since May, 1994 average metered rates have increased, both in the base charge and charges
for water, 5% and 16% respectively. While the average base charge is slightly below Lodi's,
when various estimates of water usage are considered, Lodi's rate is significantly lower, by
more than 60%, for typical residential customers, and over 110% for commercial and industrial
customers. A summary of the rate comparison is shown in Figure 5 and the details of other
cities' rates are shown in Figure 6.
Of the twelve cities surveyed, only five have base metered charges that include some
allowance for water to be. used. Lodi does this also, but the amount is unreasonably high as
was discussed in the November 1993 Report. Of those that include an allowance for water,
Discussion of Water Rate Adjustment; DBCP Update
March 7, 1995 (Shirtsleeve Session)
Page 10
the average amount is 15,000 gallons, slightly over half of that allowed in Lodi's rates (27,800
gallons -for a 3/. -inch meter). And, while their base charge is only 6% higher than Lodi's, their
water charge is 62% higher. In the final financial analysis, the amount, if any, of water
included in a base meter charge winds up being covered in the base rates. The choice of
having an allowance or not is more a matter of policy, and, given the discussion under Item 1
of long-term solutions above, staff would recommend that no water be included in the base
charge and the rates set accordingly.
Water Rate Increase
The November 1993 Report included discussion of a number of issues regarding water rate
increases. Some were minor (charges for service calls, construction water, and fire services)
and can be addressed in the long term. Others are more important, such as the metered water
issue discussed above and the phasing of rate increases since these can mean thousands of
dollars to high volume users, mainly industries. One of the main requests we have had from
industries is that we avoid large, infrequent increases without warning. In addition to the
assumptions mentioned earlier regarding the water system, the following assumptions were
made in developing the specific actions listed at the end of this report:
• Rate increases should be stepped six months to one year apart;
• The first increase should minimize the impact on large water userstindustries;
• The first increase should be implemented as soon as possible, thus, changes to the
existing rate structure should be minimal; and,
• Subsequent increases should consider improving equity between flat -rate and
metered customers and should be planned in'advance to minimize the impact on
large water users/industries.
oacaour.aoc
Discussion of Water Rate Adjustment; DBCP Update
March 7, 1995 (Shirtsleeve Session)
Page 11
Recommended Actions
At the March 15 City Council Meeting, staff will ask for the following authorizations and actions.
As usual, awards of -contracts will be brought back to the Council for approval.
1) Appropriate $75,000 from the Water Fund for Well 9 disinfection equipment and
authorize staff to purchase and install the equipment on an emergency basis.
2) Authorize staff to obtain bids for a GAC unit at Well 4.
3). Authorize staff to have plans and specifications prepared.and obtain bids for a one
million -gallon water tank at the Well 4 site and to complete the site improvements.
4) Authorize staff to update and utilize plans and specifications we have "on the
shelf" to obtain bids for GAC units for Wells 22 and 23.
5) Approve a special allocation of $11,000 for the Water Conservation Program.
6) Designate wells which exceed the DBCP MCL as "standby sources" for use on an
emergency basis.
7) Set a public hearing for April 19 to consider increasing water rates starting
June 1, 1995 to address the DBCP issue and start on the capital and maintenance
issues. The recommended rate adjustments are:
a) Increase flat rate charges 22%.
b) Increase base metered -rate charges 10%.
c) Increase the rate for metered water 5%.
d) Delete the allowance for water used in the metered base rate.
Staff welcomes any comments regarding these recommendations or other suggestions on
addressing the probl described in: Ci report or the previous reports.
tt
Richard C. Prima, Jr. 1 I•;o, 2813 3
City Engineer
RCP/Im
T�
cc: WaterlWastewater Superintendent `
'Chamber of Commerce
Lodi Industrial Group
DBCP Committee .
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Jun Jun Jul Jul Jul Jul Jul Jul Jul Jul Jul Jul Aug Aug Aug Aug Aug Aug Aug Aug Aug Aug Sep Sep Sep Sep Sep Sep Sep
26 29 02 05 08 11 14 17 20 23 26 29 01 05 09 12 15 18 21 24 27 30 02 05 08 11 14 17 20
Date
Figure 3
Figrire 4
Water :Supply Capacity Costs
Term:
Interest Rate:
CAF $.XLS
State Loan
20 yrs.
3.14%
Other Financing
20 yrs.
8.00%
Capital Cost for
Annual Payment
Annual
Equivalent
for Equivalent
Peak
Payment with
Capacity from
Capacity with
Annual
Source
Capacity
Capital Cost
State Loan
New Wells
Other Financing
Difference
Typical New Well
1,400 gpm
$ 330,000
VVe I l ,4 R: w/GAC & Tank
6,500 gpm
$2,065,000
$ 147,600
$ 1,532,000
$ 156,000
$ 8,400
Wells 22 & 23 GAC
2,775 gpm
$ 920,000
$ 65,800
$ 654,000
$ 66,600
$ 800
Wells 4R, 22 & 23
9,275 gpm
$ 2,985,000
$ 213,400
$ 2,186,000
$ 222,600
$ 9,200
Term:
Interest Rate:
CAF $.XLS
State Loan
20 yrs.
3.14%
Other Financing
20 yrs.
8.00%
FIGURE S
City of Lodi Water Rate Survey February 1995
Rate Comparison Summary
Quantity
Lodi
Survey Avg.
% Diff.
$ Diff.
Res. Metered/Mo.*
$10.58
$18.63
-76%
$8.05
Res. Flat Rate/Mo.
$10.58
$15.08
-43%
$4.50
Ind. 1 MGY**
$381
$906
7138%
$525
Ind. 10 MGY
$31810
$8,360
-119%
$4,550
Ind. 100 MGY
$38,100
$82,758
-117%
$44,658
• Uses averages of Lodi metered residential (for monitoring purposes only) for each month.
Lodi's metered residential uses Lodi's current commercial/industrial rate and a 3/4" meter.
" Million Gallons per Year
WAT SUR3.XLS
City of Lodi
City
Davis
Flat Rate
Metered
Escalon
Flat Rate
Metered
Madera
Flat Rate
Metered
Manteca
Metered
Merced
Flat Rate
Metered
Roseville
Fiat Rate
Metered
Stockton (City)
Metered
Tracy
Metered
Base Charge Water Charge
Water Rate Survey
Total for
typical Comments
residence
1*1UURE 6
February 1995
$13.44 /mo.
n/a
$13.44 /mo.
$7.61 plus $0.001166 per square foot lot
$10.78 /mo.
$0.61 /100 cu. ft.
$23.01 Imo.
Water charge increases to $0.66/100 cu. ft. for amount over winter use
parcel area ($5.55 up to 5,500 SF, $0.85 for each adds 2000 SF)
$18.00 /mo.
"base line'.
$32.92 /mo.
n/a
$32.92 /mo.
flat rate includes $11.39 "Ready to serve" charge
$11.39 Imo.
$0.739311000 gal.
$22.48 /mo.
$0.613211,000 gals. for amount over 25,000 gal.
$0.5455/100 cu. ft.
$9.50 Imo.
n/a
$9.50 /mo.
Increases $0.11 per additional front foot. (Recent increase of $0.50 for
Water capital fund)
$12.67 /mo.
$0.67 /1000 gal.
S12.67 /mo.
Base charge includes first 15,000 gal.
$0.501 /100 cu.Tftj
$7.15 /mo.
$0.35 /100 cu. ft.
$7.17 Imo.
for 518014 meter; for 1", base charge is $10.75/mo.; water charge is
$0.601100 cu. ft. for amount over 30,000 cu. ft. (Base inti. first 2,000 cu.ft.)
$14.34 Imo. n/a $14.34 Imo. $14.34 for first 10,000 SF lot, per table up to $39.90 for 46,000 SF
517.78 /mo. $0.504 /100 cu. ft. $17.78 /mo. Base charge includes water allowance up to amount under quantity rate
(26,390 gals for I%").
S 10.80 /mo. n/a $10.80 /mo. For single family lot between 4,901 and 8,900 SF; per table for other sizes
$8.25 /mo. $0.33 /100 cu. ft. 511.57 /mo. First 1,000 cu. ft. in base charge; rate increases over 5,000 cu. M. (37,400
gal.)
$13.13 /mo. $0.633 /100 cu, ft. $25.82 Imo. $0.539/100 cu. ft, for amount over 30,000 cu. it.
$8.60 Imo. $0.75 /100 cu. ft.
Turlock
Flat Rate $13.45 /mo. n/a
Metered
Vacaville
Metered
Woodland
Flat Rate
Metered
Yuba City
Flat Rate
Metered
$10.95 /mo. $0.47 /1000 gal.
$0.352/100 cu. ft.
$7.62 /mo. $0.69 /100 cu. ft.
$23.85 Imo.
Water charge increases to $1.05 over 1,200 winter/1,800 summer cu. ft.,
$1.20 over 1,900w12,900s cu. ft., $1.30 over 19,000w/28,000s cu. ft. and
decreases to $0.56 over 1,000,000 cu. ft.
$13.45 /mo.
$7.05 for 0 to 5 rooms, $7.90 for 6-8. $8.70 over 8 plus charge based on
parcel area ($5.55 up to 5,500 SF, $0.85 for each adds 2000 SF)
$18.00 /mo.
Water charge decreases to $0.40 over 50,000 gallons, $0.17 over 150,000
gallons
$23.79 /mo.
Water charge increases to $0.98 over 1,200 cu, ft.
$7.45 /mo. n/a S7.45 lmo. For single family lot 5.000 to 10,000 SF; $6.10 under 5,000 SF, $9.10 over
10,000 SF
$3.90 Imo. $1.051100 cu. ft. $24.96 lmo.
$18.75 lmo. n/a $18.75 /mo.
$10.00 Imo. $0.625 1100 cu. ft. $12.53 Imo. Includes 1,600 cu. ft. minimum quantity
Average
Flat Rale $15.08 /mo. n/a $15.08/mo.
Metered $10.19 /mo. $0.579 /100 cu, ft. $18.64 /mo. rates per 1000 gal. adjusted to 100 cu. ft.
Lodi
Flat Rate $10.58 /mo. n/a $10.58 /mo. ranges fmm $7.35 for 1 bedroom to $21.95 for 7 b/s.
Metered $10.58 /mo. $0.285 /100 cu. ft. 510.58 /mo. Base charge includes water allowance up to amount under quantify cafe
(27, 800 gals for Y.
Typical Residence Criteria: Units (agency affected)
Water Use: 15,000 gallons/month ( 2.005 cu. ft.)
Parcel Area: 5,000 square feet (Davis, Merced, Roseville, Turlock, Woodland)
Meter Size: 3/," size of service pipe is typically 1' minimum, meter is usually smaller
Rooms: 6 number (Turlock)
Bedrooms: 3 number (Lodi)
Lot Frontage: 50 feet (Madera)
RATECOM2.XLS
APPENDIX III
4%e PUE 'C WORKS DEPARTMENT
WATERIWASTEWATER DIVISION
Annual Water Quality Report for 1993
keep our water customers informed about the drinking water
-odi, the City of Lodi distributes this annual report The Water
Quality Report on Page 4 is required by State law and
summarizes the of water testing performed by State certified
laboratories. To better understand the report please note the
description of terms and abbreviations at the top of Page 4.
The City of Lodi supplies drinking water to the citizens of Lodi.
The source of Lodi's drinking water is high-quality groundwater
supplied through 24 City wells. These wells operate automatically
on water pressure demand so that when water use increases,
more wells come on line. There are plans to construct a new well
at Washington School this year. Another new well drilled east of
Highway 99 has not yet been completed due to the concerns for
costly treatment required by the State.
All 24 City wells are interconnected through approximately 196
miles of water mains. In 1993 4.566 billion gallons of water were
pumped to satisfy Lodi's water demands. This represents 7.1%
less than 1986 in spite of a population growth of 24% since 1986.
Your continuing water conservation practices have really paid
off! A 1993 report calculated savings to be far above the cost of
the Water Conservation Program. Maintaining your water
conservation efforts results in annual cost savings in operation
and maintenance and averts millions of dollars in capital
expenditures, helping water rate increases stay low as possible.
Please read the water conservation message on Page 3.
Drinking water provided in Lodi is of high quality and not only
meets but is better than all State and Federal drinking water
standards (listed on Page 4). Certain wells would individually
exceed the Dibromochloropropane (DBCP) standard if used.
Please see the "DBCP Update" below for more information.
Lodi takes 18 samples weekly from throughout Lodi's water
distributions system for bacterial water quality. Bacterial water
quality regulations were made much more stringent in November
1992 and have been difficult to meet for all non -chlorinated water
systems. Consequently, Lodi exceeded the standard for "total
coliforms" three months in 1993. While State health officials
agreed there was no health threat from this bacteria, Lodi
officials decided to chlorinate Lodi's drinking water system for a
week to cut down on these harmless bacteria. An official
notification was published in October 1993 and for a copy of
October 1993's official notification, please call the number below.
While your water rates have been kept as low as possible, the
water utility is unable to meet current funding needs. Please read
the important message on water rates on Page 2.
If you have any questions about this report or the quality of
Lodi's water, please call the Water/Wastewater Office at 333-6740.
DBCP UPDATE
The California Department of Health Services (DOHS) sets
drinking water standards, and has set a limit for Dibromo-
oropropane (DBCP). This organic chemical was once a
,ular pesticide used in and around Lodi by area farmers until
banned by the government in 1977. DBCP has been shown to
increase cancer nodules in rats and mice when exposed to very
high levels over their lifetimes. It is a theory these chemicals
may also increase the risk of cancer in humans who are exposed
over long periods of time to very minute amounts.
Although even the possibility of this theory being correct is
debated by leading scientists, the California DOHS has set the
drinking water standard for DBCP at 0.0002 parts per million
(ppm) or 0.2 parts per billion (ppb) to reduce the theoretical risk
of cancer. The theoretical risk of cancer is based on lifetime (70
years) exposure and drinking two liters (about two quarts) of
water per day. Water which meets this standard is considered
safe with respect to drinking water with this level of DBCP. The
limit of 0.0002 ppm equals one drop in 66,000 gallons of water (it
would take over 350 years to drink 66,000 gallons of water at 2
quartsiday). Theoretical risks associated with DBCP are based on
70 years of exposure, so levels in the water are not significant
provided exposure occurs for a relatively short time period.
14 City wells at some point exceeded the current limit for DBCP.
Of these 14 wells, the City has abandoned 4 wells, levels in 5
wells came back into compliance, 1 well has a treatment system,
and 4 wells remain out of compliance (standby).
The one well site treatment facility is in operation. Constructing
this one treatment facility cost over $500,000. This well site is
also a test model for construction at any other well sites.
Test wells were drilled at six potential well sites. Three sites
wed no DBCP and wells are completed and being used. One
showed unacceptable conditions for a new well. Two other
test sites in the north central area showed no DBCP and the site
at Washington School is planned for a well sometime in 1994.
Another new well site east of Highway 99 (Well 4R) has been
C.:y of Lodi. 1^,93 Annuai Water Qualr"y Report to Customers. April 1994
Page 1
drilled but it contains DBCP. That area needs a water source for
future demands, but all sites in that area have shown DBCP.
Well 4R would be the highest capacity well in the system, but has
shown the highest DBCP levels. The costs to install a permanent
pump and install treatment would be slightly over $1,000,000.
The Lodi City Council will decide on the fate of this well site.
For the remaining 4 wells (of Lodi's 24 wells) currently exceeding
the DBCP limit on an individual basis, treatment costs would
total roughly $2,000,000 for construction and $4,000,000 for 15
years of operation and maintenance.
These 4 wells over the DBCP limit are needed for relatively short
periods of time only during the peak water demand of the day
during the hottest parts of the year, yet they are being regulated
as if they were to run 24 hours a day, 365 days per year.
The City has proposed to the California DOHS and to the U.S.
Environmental Protection Agency an alternative treatment/
operation system that would save the citizens of Lodi millions of
dollars, yet meet the intent of the Federal regulations. Many
individuals at the two agencies have voiced support for the
concept in Lodi's proposal, but as yet the official word is that the
proposal just doesn't fit the regulations as written. The City is
currently attempting to work with the California DOHS and Lodi's
State legislators to resolve this issue.
For now, Lodi has approval from the California DOHS to put wells
containing these trace amounts of DBCP over the limit on a
"standby" status and they can be used for emergency purposes.
The City has also brought a lawsuit against the manufacturers of
DBCP. This lawsuit will attempt to recover some of Lodi's costs
including replacing wells and treating DBCP at the wells which
are over the limit
In the meantime you may consider your water safe to drink. The
City will keep you informed on a regular basis of progress made
to resolve this issue. If you have any questions regarding this
update, please call the WaterlWastewater Office at (209) 33346740.
U�F (How Much) Should Your Water Rates Be Increased? cr�l
The citizens of Lodi have come to expect clean, dependable
drinking water at a low price. Only you can judge if your
water utility meets these expectations, but as shown in this
annual report it meets stringent State and Federal
standards. In a survey of over California 350 water utilities,
Lodi's water rate is also among the lowest 6 percent. You
are also accustomed to many services provided by the City
free of charge; for example, shutting off your water when
you need to make repairs, helping you locating water leaks,
and quickly responding when there is a water quality
problem in your home pipes.
However, your City water utility cannot continue to do all
this at today's rates. The City water utility has been
operating at a deficit for the past three years, relying on
reserves. Either services and reliability will have to be
reduced or more revenues generated.
The City must operate and maintain your water system
which includes: 24 wells, 196 miles of distribution mains, an
elevated water tank, chlorination systems, emergency
generators, equipment needed for the installation and repair
of water lines, a laboratory for water quality analyses, and
a granular activated carbon treatment system on one well.
There are also ever mounting administrative and operational
costs to meet State and Federal regulations, including
increased costs for engineering, monitoring, treatment,
regulatory fees, etc.
Water utility revenues to operate and maintain the system
are derived nearly entirely (96%) from the sale of water. In
the 1993194 fiscal year, the City's water utility fund is
projected to fall $60,000 short because all reserves have
finally been depleted. This shortfall is in spite of belt
tightening measures, such as delaying needed capital
improvement projects, reducing training expenses,
eliminating two employees, and freezing all management
salaries since 1991.
There are also MAJOR deficiencies in our water system that
we must face:
o Many distribution mains are now over 70 years old and
are undersized. Currently, when a water main breaks, the
City repairs only the failed portion. In the long run, this is
a very expensive way to replace old deteriorating water
mains. Old and failing water mains should be systematically
replaced. If the life span of water mains were considered to
be 70 years, we should be spending about $836,000
annually to keep up. The sad fact is, however, that over the
past few years we have been able to spend less than
$150,000 per year in water main replacements.
Emergency standby generators at a number of well sites
are needed to provide water during power outages. The
current generators are WW 11 (50 years old) government
surplus units which are unrepairable, unreliable and are
failing. The City has appropriated funds for 7 units
estimated at $236,000 annually for 5 years. Due to the poor
state of the water fund, this project was delayed and the
bidding process for only 5 units is now under way.
< Wells have a limited lifespan and need to be replaced
for a variety of reasons. Since 1978, 7 City wells have
had to be replaced. (6 additional wells were to
accommodate new growth. Future growth -
accommodating wells will be funded by development
fees.) The costs to replace a well ranges from roughly
$200,000 to $300,000. Even when wells do not need to be
replaced, major components fail occasionally, such as
electric panels ($25,000-$30,000), and pumps and motors
($25,000 - $35,000). These items should be budgeted for
routine replacement and there should be a reasonable
reserve for extraordinary emergency repair needs.
Costs associated with the DBCP regulations are also
a major impact. The City is working hard to keep these
costs at a minimum while at the same time delivering
waterwhich meetsstrictStateand Federal standards. For
more information please read the "DBCP Update" on
Page 1.
A Water Utility Status Report was prepared as directed by
the City Council as part of the 1993/94 Capital
Improvement Program. The report more fully details the
long term financial requirements of Lodi's water utility.
The report discusses other areas of concern that will
need action in the near future, such as the water rate
structure for metered and unmetered customers, and r
fairness of having only a portion of businesses at._
residences metered. Also the contributions to the
General Fund need to be considered. It is reasonable
that City utilities make a profit (which is contributed to
the City's General Fund for other functions such as
public safety and recreational services). This amount
needs to be decided upon by the City Council and a
target for next year of 20% has been adopted.
The report lists a number of projects and programs that
need to be considered; however, we do not see all of
these programs being implemented in one year. Briefly
they are:
Project or Program
Costfyear
Rale increase'
DBCP Loan payment (existing amount)
$ 51,000
1.8%
S 0.19
DBCP loan payment (Well 4R project)
$ 81,000
2.9%
$ 0.31
DBCP filter O&M (incl. well 4R)
$ 95,000
3.41/
$ 0.36
Well & pumping equip. replacement
$ 102,000
3.6%
$ 0.38
Emergency generators
S 236,000
8.4%
S 0.89
Main replacement (70 yr cycle)
S 836,000
29.9%
$ 3.16
Valve maintenance program
$ 30,000
1.11/6
$ 0.12
Meter retrofit program over 30 yrs
3 550,000
19.6%
$ 2.07
Increase revenue to current expenditures
$ 200,000
7.1%
$ 0.75
Increase revenue to recent expenditures
3 340,000
12.1%
$ 1.28
Build eeserve of $300,000 in 5 yrs
3 60,000
2.1%
$ 0.22
The percent increase Is above existing rates and the dollar amount Is the
increase per month for a 3 bedroom home
(currently
310.58/month).
There are tough decisions to be made by the City
Council. They need your informed opinion. If you wot
like a full copy of the Water Utility Status Report, plea,
call the WaterlWastewater Office at 333-6740.
Cdy o1 Lodi. 1993 Annual Water Quality Report to Customers. April 1919.9
Page 2
******************** City of Loin's Water Conservation Program Benefits
The citizens of Lodi, in cooperation with the City's Water Conservation
Program, have significantly reduced their water usage. From 1970
_1hru 1976 the average water use was 359 gallons per person per day
id). The average since 1991 has been about 230 gpd. (Calculated
-sing total water production, including all uses, divided by population.)
Lodi's water supply, as with many valley communities, is taken from
groundwater aquifers. Although this resource is renewable, valley -wide
we are taking more water out than is being replaced.
Water tables in the San Joaquin Valley have declined noticeably.
During the 1986-1992 drought, Lodi lost about 12 feet in the water
table based on City well readings. In 1993, with the help of last
seasons rains, Lodi's water table level increased of about 12 foot.
How much has reduced water usage in Lodi slowed the depletion of
Lodi's groundwater table? This is difficult to determine considering the
many influences on the groundwater such as river flows, rain, other
municipal pumping, and agricultural pumping, in addition to Lodi's 22
wells. The fact is that the water table is dropping under Lodi. Pumping
less water due to your conservation efforts has slowed this depletion.
Water saved through conservation also saves money. The most direct
cost savings is in electrical costs to pump the groundwater. Other cost
savings include decreased maintenance, repair, and replacement
costs to wells, pumps, and motors.
To more accurately determine the reduced water usages, Lodi was
compared to 3 area communities which had only voluntary or
inconsistently enforced water conservation regulations. The average
reduction in water use for those communities was subtracted from
Lodi's total water savings. Your efforts resulted in a net savings of
3.52 billion gallons since 1980, or 293 million gallons per year.
The electrical cost savings alone for the water saved from 1980
+n 1992 is calculated at $404,856, using present costs. The cost
the entire Water Conservation Program, adjusted to today's
..,)Ilars from 19790 through 1991-92, totaled only $210,342.
The major cost savings however is in the number of wells needed to
meet the City of Lodes water demands. At today's rate each well costs
the City of Lodi up to $500,000 to explore, test, drill, develop, equip,
and lay connecting water mains (this does not include treatment costs).
The 1962 water master plan calculated the City needing 29 wells for
today's population. The 1976 and 1990 water master plans had Lodi
needing approximately 26 wells with a population of 54,000. Currently
the City is meeting Lodi's water demands with 22 wells, 18 active, 4
standby, and 2 out of service.
Therefore, if the City required the 26 wells projected in the 1976 and
1990 water master plans there would be four additional wells needed
at this time costing up to $2,000,000 (without treatment). Communities
abandoning water conservation efforts only delay these expenditures,
but those with ongoing programs may totally eliminate these costs.
The cost of a well treatment system for DBCP is approximately
$500,000. Construction of treatment systems on some existing wells is
being delayed and possibly avoided by Lodi's ability to keep current
DBCP wells in a "standby" mode due to reduced water usage. See the
DBCP Update on Page 1 for more details.
Another significant benefit of water conservation efforts has been
reduced wastewater flows. Calculations show savings of nearly
$240,000 from 1987 through 1992. More significant is the effect on
treatment plant capacity. Reduced wastewater, flows may extend the
life of the recent 510,000,000 treatment plant expansion 3 to 6 years.
Lodi's ongoing Water Conservation Program (your program) has
financially benefited the citizens of Lodi. After subtracting the cost of
the program, net savings to water and wastewater operating budgets
alone have been over $55,000 per year. Additionally, savings in capital
costs run in the millions of dollars. Your efforts have paid offl
For more information, or a copy of the full water conservation report,
call the Water/Wastewater Office at 333-6740.)
-------------------------CUT OUT AND SAVE --------------------------
..... .......... —.................................... ......................................................•------..........-----..._---•---------
City of Lodi -Water Conservation Ordinance Summary Call for information or reporting water waste: 333-6829.
Ordinance Requirements - Water waste includes but is not
limited to the following:
1. Allowing a controllable leak of water to go unrepaired.
2. Watering lawns, flower beds, landscaping, ornamental plants or gardens
except on watering days as follows:
Odd -numbered street addresses may water on Wednesday,
Friday and Sunday;
Even -numbered street addresses may water on Tuesday,
Thursday, and Saturday.
(WATERING IS NOT ALLOWED ON MONDAYS)
3. Watering lawns, flower beds, landscaping, ornamental plants or gardens
between the hours of 10 a.m. and 6 p.m. from May 1 through September
30 each year. (You may not water during these high evaporation times.)
4. Washing down sidewalk, driveways, parking areas, tennis courts, patios,
other exterior paved areas or buildings.
5. Washing any motor vehicle, trailer, boat, moveable equipment except
with a bucket. A hose shall be used for rinsing only and for not more than
three (3) minutes.
6. Use of an open hose. (All hoses must have a positive shut off nozzle when
in use.)
7. Allowing excess water to flow into a gutter or any drainage area for longer
than three (3) minutes.
verwatering lawns or landscapes from November 1 through February 28,
or watering during and/or immediately following a rain.
9. Allowing the unnecessary running of water in any residential, commercial
or industrial establishment onto the floor, pavement, ground or into any
drain or drainage area in any way for more than three (3) minutes.
Cly of Lodi. 1993 Annuel Wwer Cvallry Report to Customers. April 1994
Page 3
Water Wasting Rates and Enforcement - Education and
cooperation is our first goal, however the following
enforcement procedures and charges will be followed for
water waste.
1st Water Waste - City will leave an information sheet describing the
waste so that it may be corrected and the incident will be put on file.
2nd Water Waste'- City will give written notice requiring corrective
action. • within 12 months of a 1st water waste
3rd Water Waste`- City will give written notice, and a $35 charge will
be added to the next utility bill. ' within 12 months of a 2nd water waste
- 4th Water Waste*- City will give written notice, and a $75 charge will
be added to the next utility bill. • within 12 months of a 3rd water waste
- 5th and Subsequent Water Wastes'- City will give written notice, and
a $150 charge will be added to the next utility bill AND the City may
require a water meter and/or flow restrictor to be installed at the
waster's expense.
" Within 12 months of the most recent waste of water
If you have any questions, would like further information
concerning water conservation, or to report water waste,
please call the Water Conservation Office at 333-6829.
y OF ` CITY OF LODI
o,
Public Works Department
cq<rFORAnnual Water Quality Report for 1993
Definition of Terms and Abbreviations:
NA = Not Applicable
NS = No Standard (MCL) Set'
ND = None Detected at Minimum Detection Level
MCL = Maximum Contamination Level (State Standard)
< Means "Less Than" The Amount Shown
"Minimum Detection Level" = lowest amount a laboratory can accurately report
Unless noted, results given as mg/L (milligrams per Liter, or parts per million).
Regulated and Unregulatedimum
0.0005
mum
Average
Range
Organic Chemicals, mg/L
ConMaztaminanl
Detection
All Wells
High - Law
1993 data.
Leval MCL)
Level -
0.05
00
m L
Bromodichloromethene
Bromoform
Chloroform
D ibromOCh lorome tha ne
Total THM's
Benzene
Carbon tetrachloride
Ethylbenzene
14-Dichlorotlenzene (p -DCB)
1,2-Dichloroelhane (1,2 -OCA)
1, 1.Oichloroet"lene (1.1-OCE)
Total 1.3-Dichloropropene
Monchlorobenzene
1,1.2,2 -Tetrachloroethane
Tetrachloroethylene (PCE)
1,1,1 -Trichloroethene (1,1.1.T
CA
(1,1,2-TG
Tricnicroetnyiene (TCE)
Vinyl Chloride (VC)
m, p-
Xylene
04yiene
Total Xylenes (m, p b O)m
Dibroochloropropene (DBCP)
Ethylene Oibromide (EDB)
Atrazine (AAtrex)
Molinte (Odram)
Simazine (Princep)
Thiobencerb (Bulera)
Endrin
Linden (gemma-aHC)
MelhoxyClllor
Toxaphene
Chlordene
24-0ffi
Berzon (Basegran)
2.4,5 -TP (9ilvex)
Bronlogenzete
Bromochloro ethene
Bromomethane (Methyl Bromiden
n-Butylbezene
sec-Sutytbenzene
larFButytbenzene
Chloroethane
2-ChicroathyM.ry1 ewer
Chbronetharla (Methyl Chloride
2-Chloratoluene
4-Chlorow4usnent
Dibroornethene -0
1,2 -Dichlorobenzene (dCS)
1,3-DiMlaobenzene (m -DCB)
Dichloraditllloromethene
1,1-0ichloroethane (1,1-0r/1)
cit 1,2-0ichbroeth"ne
trans- l ,2-0ich loroetltylsn
1,2-0Icnloropropenee
1,3-Uichloroproper
2,2-0 e
ichloroproper
1,1-Dichlaropropane
Hexachlorobutadlene
Isopropytbenzene(Cumene)
p4sopropyltoluen
Methylene chloride
Naphthalene
n-Propylberize"
styrene
1,1,1,2-Tstrachloroelllans
Toluene
1.2.3-Trichbrobenzene
1,2, 4-Trichlorobe nze ne
Trichlorolluoromethan(Freon 1
1,2,3-Trichloropeopene
Tricnlorot itluoroetf ane(Fr 113)
1,2 4-Trinemyltenzene
1,3.5-Trinethylbenzen
Bronecil ("r)Diazinonm
Proetryn (Caparol)
NS
G)
1)
0.0005
NO
NS
0.0005
NO
NS
0-0005
NO
NS
0.0005
ND
100
0.05
00
NO
0.001
0.0005
NO
0.0005
0.0005
NO
0.680
0.005
ND
0.005
0.0005
ND
0.0005
0.0005
ND
0.006
0.0005
<0.0005
0.0005
0.0005
NO
0.03
0.001
NO
0.001
0.0005
NO
0.005
0.0005
NO
0.2
0.001
<0.001
0.032
0.001
NO
0.005
0.0005
<0.0005
0-0005
0.0005
NO
Ns
0.01
No
NS
0.01
NO
1.75
0.01
NO
0.0002
0.00001
0.0002
0.000°2
0.00002
NO
0.003
0.001
NO
0.02
0.002
NO
0.01
0-001
N O
007
0.001
NO
0.0002
0.0001
NO
0,004
0=2
No
0.1
0.01
NO
aDos
0=1
No
0.0001
0.0001
ND
0.1
0.01
NO
0.019
0.002
NO
0ml
0-001
NO
NS
0.0005
ND
NS
0.00°5
NO
NS
0.0005
NO
NS
0.0005
ND
HS
0.0005
NO
HIS
0.0005
NO
NS
0.0005
ND
Ns
0.001
ND
Ns
0.0005
NO
119
09005
ND
N9
0.0005
� NO
NS
0.0005
ND
N8
0.0005
ND
Na
O.o005
No
HIS
0.001
NO
0.005
0.0005
NO
0.0013
0.00105
ND
0.01
0.0005
NO
0-005
0-0005
No
Ns
°.0003
No
NS
0.0005
NO
NS
0.0005
ND
NS
0.00°5
ND
"S
0.0005
ND
Ns
0.0005
No
NS
0.001
NO
NS
0=5
NO
Ns
0.0005
NO
HS
0.00105
NO
NS
°.0005
ND
NS
0.01
NO
NS
0.0005
NO
NS
0.0005
ND
0.15
0.001
ND
113
0.0005
NO
1.2
0-001
ND
NS
0.0005
NO
HS
0.0005
No
NS
0.01
NO
HS
0.00002
ND
HS
0.002
No
(See top of next column for footnotes.;
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
0.003 -NO a)
NA
NA
NA
NA
O.0006 -ND a)
NA
OD07-ND b)
NA
NA
NA
NA
0.0013 -ND c)
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA .
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
In addition to regulated constituaritsi Lodl monitored wets for.
organic chemicals for which the California Department of Health
Services has not yet set a (MCL) and results were below mctitasn
detection levels.
a) Found only in Well #2 at trace levels below the MCL.
b) Found in Wells #2,12, 18, & 24 in trace levels.
c) No water from wells over MCL delivered. See the DBCP Update - pegs 1.
Regulated Inorganic
Maximum
Minimum
Average
Range
Chemicals, mg/L
Contaminant
Detection
All Welb
Nigh .Low
1991.1993 Data
Levsl(MfX
level-
L
m L
Aluminum 1.0 0.1 <0.05 0.1010 -ND
Arsenic 0.05 0.01 <0.004 0.006 -NO
Barium 1.0 0.1 0.084 0.15-0,031
Cadmium 0.010 0.001 <0.0001 0.0001 -NO
Chromium ODS 0D1 <0.01 0.01 -NO
Fluoride 14 0.1" 0.1 0.2 -ND
Lead o.060 oD05 <0D01 OD01e1N0
Mercury 0.002 0.001 ND NA
Nitrate as N 10 1 1.7 4.9 -ND
Selenium 0.01 0.005 ND NA
silver 0.05 0.01 NO NA
Secondary standards for
secondary
Wnimlxn
Average
Aesthetic Purposes only
Drink. Water
Detection
of
Range
1991.1993 data
Standard
Level
All Wens
H- h •Law
Chloride, mg/L 500 1 15 46-29
Color -Units 15 0.3 <3 3 -NO
Copper, mg/L /D 0D5 ND NA
Iron, mg/L OJ 0.1 <0.03 0.047 -NO
Manganese, mg/L 0.05 0.03 <OD3 0.025-1,10
Odor -Threshold Units 3 1 NO No
Specific Conductance uxnftos/c 19°0 1 341 570-129
Sulfate, mg/L 500 1 13 31-1-5
Surtectants(LAS,MBAS) mg/L OS 0.01 NO NA
Total Dissolved Solids, mg/L 1000 1 229 350-120
Turbidity, NTU Units 5 0.1 <0.1 0.3 -ND
Zinc. mg/L 5.0 0.05 <0.01 0.015-04110
Constituents
Ma -mum
Minimum
Average
lAoditional
Measured.
Contaminant
Detection
Of
Range
1991 data
Level (MCL)
Level
All Wells
High - LOw
PH, units NS MA 7.4 7.8-7,0
Calcium, mg/L Ns NA 28 49.42
Hardness as CaCO3, mg/L a) NS NA 128 270-38
Magnesium, mg/L NS NA 13 21-4,4
Nitrite as N. mg/L NS NA ND NA
Potassium, mg/L NS NA 5.0 7.6-1.6
Sodium, mg/L HS NA 20 36e4
a) To calculate grains per gallon, divide try 17.7 ,
Bacterial Water Duality.
Maximum
Minimum
Total
Monthly
Total Coliroml Bacteria
Contaminant
Detection
%
High -Low
I
1983 Data
Level (MCL)
Level
Positive
%Positive
Total Coliform, Positive % 5% /month NA 4.e% 14.1160%
Fecal Coliform <1 /month NA 0.00% NO
Lead 8 Copper Rule
Maxilttum
Minimum
Average
Range a�19woots
Customer Tap Monitoring
Contaminant
Detection
90th
Individu
Level MCL)
Level
rcerd,
Results
Lead. 90th percentile. mg/L 0-075 0-001 0.0015 0.008 -NO
Copper. Both percentile. mg/L 1.3 0-02 0-26 1.3410
Radioactivity,Maximum Minimum Average
pico Curies per Liter Contaminant I tection I of Retge
1992 Deta Level (MCL) Level All Wells Hi h -Low
Gross Alpha 15 NA 0.44 220 - NO
For any questions concerning these analytical results, contact tate
Assistant Water/Wastewater Superintendent at (209) 333-6740.
City of Lodi. 1993 Annual Water Quality Report to Customers, April 1994
Page 4
APPENDIX IV
J GF t
CITY OF LODI
COUNCIL COMMUNICATION
9<fFOP�
AGENDA TITLE: Water Rate Analysis
MEETING DATE: April 5, 1995
PREPARED BY: Public Works Director
RECOMMENDED ACTION: That the City Council review the courses of action on implementing a
water rate increase and provide the appropriate direction to staff. Staff
recommends Option A be selected.
BACKGROUND INFORMATION: At its March 15, 1995 meeting, the City Council set a public
hearing for April 19, 1995 to consider an increase in water rates
` to be effective June 1, 1995. More details of the proposed rate
increase were presented at the March 21, 1995
Shirtsleeve Session. In addition, future rate studies and increases were discussed. Toward the end
'of the Shirtsleeve Session, the discussion lead to some options suggesting that possibly the public
hearing should be canceled. The options involve two main issues: 1) implementing an "interim' rate
increase before doing a detailed rate analysis, and, 2) whether the analysis should be done by an
outside professional or by City staff.
On the first issue, it is certain we are looking at overall revenue needs that cannot be raised iri one rate
adjustment. Comments received from large industrial customers have supported planned, staged rate
increases rather than fewer large increases. Therefore, staff is recommending the series of increases
be started now.
On the second issue, some of the items that should be considered in a rate analysis are listed in
Exhibit A. For comparison purposes, an outside analysis would cost up to $15,000 and would entail
roughly 160 hours of professional services and at least 40 hours of staff time over the course of two
months. An in-house study would take 300 to 350 hours of staff time, although this is difficult to
estimate since Public Works staff has not done this type of study before. Also, since City staff time is
not available in weep long blocks due to other on-going tasks, the overall duration of the analysis would
be longer and the work accomplished less efficiently. This will also delay action on other projects
currently underway (see Exhibit B).
The two issues combine to make four options. They are:
A. Proceed with the public hearing on the recommended interim rate increase for June 1, 1995 and
plan to have a rate analysis performed by a qualified professional fine for implementation in 1996.
r►
APPROVED:
THOMAS A. PETERSON mcyciec oace,
` City Manager J
cc-
'.YTRRAT= 1 .CCC 3,2&95
Water Rate Analysis
April 5, 1995
Page 2
• Under this option, the only immediate Council action required will be to conduct the public
hearing on April 19. The Council could then adopt the rate increase or take some other action.
If the Council does not provide other direction, staff will include the necessary funds for a rate
analysis in the fiscal year 1995196 budget. A recommendation as to the firm to do the work
would be presented in summer 1995.
B. Proceed with the public hearing on the recommended interim rate increase and direct staff to
perform a rate analysis for implementation in 1996.
This is the same as Option A except the rate analysis would be done in-house.
• This option will take significantly mom time to implement and would not have the depth and
quality of analysis that could be provided by an outside professional.
• The in-house analysis will involve the Public Works and Finance departments and the
City Manager's office (including a new City Manager).
C. Cancel the public hearing and plan to have a rate analysis performed by a qualified professional
firm for implementation in late 1995.
• Under this option, we should start on the rate analysis as soon as possible in order to maintain
the financial health of the water utility. Using the recommended flat rate increase of 22%, a
6 -month delay means approximately $250,000 in lost revenue. -
• The rate analysis will be complicated by the issue of the inappropriate water allowance in the
metered rate if it is not addressed now.
• The rate increases coming out of the analysis will be somewhat higher and/or more prolonged
due to the time delay between June 1, 1995 and final action on the analysis.
D. Cancel the public hearing and direct staff to perform a rate analysis for implementation some time in
late 1995 or early 1996.
• This Option has all the disadvantages of both Options B and C.
• Staff sees no advantages in this Option.
FUNDING: None required at this time.
Jack L.
Public orks Director
Prepared by Richard C. Prima, Jr., City Engineer
JLR/RCP/lm
cc: WaterlWastewater Superintendent
City Engineer
6YrPRATE 1.DOC 329195
EXHIBIT A
1) Revenue requirements - cash needs approach vs. Utility approach
2) Revenue requirement projections
3) In -lieu tax policy
4) Miscellaneous operating revenue projections
5) Non-operating revenue projections
6) Cost allocation - base/extra capacity method vs. commodity -demand method
7) Current and short-term financial conditions of water utility
8) Future cost projections - operations and maintenance, capital, other costs
9) Inside City/outside City service cost allocation
10) Establish customer Gasses
11) Special customer classes - fire service, wholesale, irrigation, other
12) Units of service - meter size, demand rates
13) Establish unit costs
14) Distribute costs to customer classes
15) Block rates - single vs. declining vs. inverted
16) Rate adjustment options - customer acceptance, revenue lag
17) Seasonal, peak period rates
18) Conservation issues
19) Flat rates - equity with metered rates
20) Fire service rates
21) Lifeline rates
22) Connection charges
23) Miscellaneous service charges such as tum on/off, construction water
24) Unauthorized water use charges
25) Cross connection/backflow device charges
26) Develop computer rate model to simplify future updates
27) Rate options/analysis and projections
28) Public education and input process - throughout above steps
29) Public presentation and Council action
WTRRATE 1.QOC W28!95
EXHIBIT B
City Engineer 1995 Projects and Tasks
Projects (twelve to fifteen weeks minimum)
1) SP Kentucky House Branch abandonment - work with SP
2) ISTEA funding applications, next cycle
3) Central City revitalization - assessment district formation, design firm liaison
4) Water infrastructure/DBCP/rates presentation
5) Development Impact Mitigation Fee update
6) Encroachment Permit fees/policies, downtown sidewalk encroachments
7) Capital budget for FY 95/97
8) Lower Sacramento Road widening - outside engineering firm selection and management
9) Highway 12 Widening at Highway 99 - outside engineering firm selection and management
10) Water storage tank - outside engineering firm selection and management
Ongoing Tasks (average two to three weeks per month)
11) Public Works staff meetings
12) Council of Government Technical Advisory Meetings, brief Board representative
13) Multimodal Station - work with consultant and liaison to Central City Revitalization Task Force
14) Economic Development Meetings
15) Review responses to traffic complaints
16) Direct and review CIP project designs
17) Direct and review development project designs, preliminary requirements and inquiries
WTRRATE 1.QOC 0=8J95
APPENDIX V
G�D��F CpC
c(:P CITY OF LODE
qC/FpAA�
COUNCIL COiVIA
MUNK-D TION
AGENDA TITLE: Public Hearing to Consider Increasing Water Rates Effective June 1, 1995
MEETING DATE: April 19, 1995
PREPARED BY: Public Works Director
RECOMMENDED ACTION: That the City Council conduct a public hearing on the recommended water rate
increases described in the staff report and take the appropriate action.
BACKGROUND INFORMATION: The condition and needs of the City's water system have been reported to the
City Council and the public in a series of Council Shirtsleeve Sessions, written
reports and public notifications over the course of the past year and a half.
The November 1993 'Water Utility Status Report' contained most of this
information. A one-page summary of the report was included in the 'Annual Water Quality Report for 1993'
mailed to all water customers in April 1994. A report on water rates and the -Water Storage Tank Study' was
presented to the Council at a Shirtsleeve Session in May 1994. Additional Shirtsleeve and regular Council
Meeting presentations were made in March 1995:
Very briefly, the bottom line is that the City needs to put more money into its water utility. Old pipes in the City's
water system should be replaced on a regular basis. Regular replacement of other major parts — wells,
generators, valves and fire hydrants — are also needed and should be undertaken on something other than an
emergency basis. In addition, financial resources of the utility have been drained in complying with Federal and
State drinking water standards for DBCP, a pesticide found in minute quantities in the groundwater. To meet
customers' water demands in peak summer periods, new treatment and storage facilities will be needed. And,
while a State loan has been secured for these improvements, additional revenue is needed to repay the loan.
The issue of the water utility's rate structure has been discussed. There are problems with the City's metered
water rate, which affects most industrial and commercial customers. The major problem is that an unreasonable
amount of water is included in the minimum charge. In addition, the relationships between metered rates and flat
rates, and the minimum meter charges, have not been evaluated in over 20 years. Finally, State law now requires
installation of water meters on all new services. Thus, we will eventually have some metered residences and
some on flat rates. In the long run, these rate equity problems will need to be solved by installing water meters for
all customers.
The amount of additional revenue needed is complicated by the City's 'in -lieu' tax on utility revenue. Per
adopted Council policy, 20% of the water utility's revenue is transferred to General Fund in -lieu of taxes that might
be paid by a private utility. While the logic and details of the amount of this tax could be debated endlessly, it has
been a long-standing practice going back to the incorporation 'of the City when the citizens acquired the privately -
owned water and electric utilities.
el
APPROVED:
THOMAS A. PETERSON W 1W
requea pacer .
City Manager J
cc-?
Vv7R ,iNCFZ.CCC 4112195
Public Hearing to Consider Increasing Water Rates Effective June 1, 1995
April 19, 1995
Page 2
A summary of the revenue needs of the water utility is shown below:
Purpose Annual Amount Amount with 20% Tax % Increase
Repay State Loan
$
271,000
$
325,000
12%
O&M of DBCP Filters
$
158,000
$
190,000
7%
System Replacement, O&M Needs
$
717,000
$
860,000
31%
Meter Retrofit Program
$
550.000
S
660.000
24%
Total:
S 1,696,000
$ 2,035,000
74%
While surveys show Lodi's water rates are at least 43% below those of other cities, it is not recommended to raise
rates 74% all at once. Industries have requested rate increases be stepped over some number of years and that
they be planned in advance. Aside from customer acceptance, it would be impractical from staffing and
operational considerations to try and increase expenditures that much at one time. The last water rate increase
was made in 1991. it was an across-the-board increase of 5%.
Staff has recommended that a rate increase be adopted effective June 1, 1995, and that a rate analysis be done to
plan subsequent rate increases starting in 1996. The recommended rate increase is 22% on the flat rates, 10% on
the minimum metered rates, 5% on the metered charge for water, and eliminate the water allowance included in
the minimum metered rate. This recommendation is based on the present in -lieu tax policy and will provide
sufficient revenue to handle DBCP compliance in the short term and some funds for system replacement.
The flat -rate increase translates to $2.33 per month on a three-bedroom home and $3.04 per month on the
average non-residential account. The increase for the metered customers varies considerably. Twenty percent of
the 883 non-residential metered customers will have increases of less than $3.04 per month. The average
increase is 31 %, or $14.10 per month. Most of the increase is due to the elimination of the water allowance in the
minimum charge. To ease this increase, staff recommends that, upon request of the customer, the City install a
smaller meter at no charge, thereby reducing the minimum charge. Another option is to reduce the allowance
rather than eliminate it completely.
The recommended rate increase and the revenue produced is summarized in Exhibit A. Option 1, and detailed in
Exhibits B and C. Suggestions have been made that all or part of the rate increase revenue not be subject to the
in -lieu tax. One suggestion was that the portion pertaining to DBCP compliance not be subject to the tax. This is
shown as Option 2 in Exhibit A. Another suggestion was that none of the increased revenue be subject to the tax
which is shown as Option 3 in Exhibit A. In all cases, the net new revenue to the Water Fund is the same as that
of the recommended increase.
The City Code (LMC § 13.08.010) provides for water rates to be set by resolution. The attached resolution is
written with the appropriate "blanks' to be filled in depending on whicUption is selected by the Council.
FUNDING: None needed.
L. Ronsko
c Works Director
Prepared by Richard C. Prima, Jr., City Engineer
Attachments
cc: City Attorney
Water/Wastewater Superintendent
DBCP Committee
Chamber of Commerce
Lodi Industrial Group
WTRA:NCR.DOC 64/12!95
Water Rate Increase Options
Rate Changes
A. General Fund "In -lieu tax policy
B. Flat Rate Increase:
C. Metered Rate:
C1. Base Charge Increase:
C2. Water Charge Increase:
C3. Water Allowance
Estimated Revenue Changes
F
Flat Rate:
Metered Rate:
Total:
Total In -lieu Tax:
Net New Revenue to Water Fund:
Increase per month for 3 -
Exhibit A
Option 1
Option 2
Option 3
As is - 20%
No tax on increased
No tax on
revenue for DBCP
increased revenue
Option 1
(Reduce in -lieu tax
(Reduce in -lieu tax
I
to 17.4%)
to 16.8%)
22%
17.7%
16.7%
10%
8.0%
7.6%
5%
4.0%
3.8%
Eliminate
Eliminate
Eliminate
(or reduce)
resent Revenue
Increased Revenue
Option 1
I
Option 2
I
Option 3
$
2,327,000
$
2,839,000
$
2,738,000
$
2,716,000
$
480,000
$
624,000
$
617,000
$
615,000
$
2,807,000
$
3,463,000
$
3,355,000
$
3,331,000
$
561,000
$
693,000
$
585,000
$
561,000
$
-
$
524,000
$
524,000
$
524,000
►edroom home:
$
2.33
$
1.87
$
1.77
WTRAOPT2.XLS
Water Rate Analysis - Flat Rates
Proposed Rate Increase: 22%
Exhibit B
Present Annual Annual
Code Account Tvoe Rate Number Revenue % New Rate Revenue
A01 Apt. -1 Br.
S
6.30
1,646 S
124,437.60
5.3%
$
7.69
$
151,813.87
A02 Apt. - 2 Br.
$
7.56
2,968 $
269,256.96
11.6%
$
9.22
$
328,493.49
A03 Apt. - 3 Sr.
$
9.07
91 3
9,904.44
0.4%
$
11.07
$
12,083.42
A04 Apt. - 4 Br.
$
10.88
0 $
-
-
$
13.27
$
-
A05 Apt. - 5 Br.
$
13.06
0 $
-
-
S
15.93
$
-
A06 Apt. - 6 Sr.
$
15.67
0 $
-
-
$
19.12
$
-
A07 Apt. - 7 Sr.
S
18.81
0 S
-
$
22.95
$
-
H01 Residence -1 Sr.
S
7.35
598 S
52,743.60
2.3%
$
8.97
$
64,347.19
H02 Residence - 2 Br.
S
8.82
4,448 S
470,776.32
20.2%
$
10.76
$
574,347.11
H03 Residence -3 Sr.
$
10.58
7,908 S
1,003,999.66
43.1%
$
12.91
$
1,224,679.61
H04 Residence - 4 Br.
$
12.70
1,116 $
170,078.40
7.3%
S
15.49
$
207,495.65
H05 Residence - 5 Br.
$
15.24
93 S
17,007.64
0.7%
S
18.59
$
20,749.56
H06 Residence -6 Br.
$
18.29
5 $
1,097.40
0.0%
$
22.31
$
1,338.83
H07 Residence - 7 Br.
$
21.94
1 $
263.28
0.0%
S
26.77
$
321.20
011 Mufti Fam. pd by owner
$
14.70
0 S
-
-
S
17.93
$
-
012 Multi Fam. pd by owner
$
16.17
7 $
1,358.28
0.1%
S
19.73
$
1,657.10
013 Mufti Fam. pd by owner
$
17.93
0 S
-
-
$
21.87
$
-
014 Muftl Fam. pd by owner
$
20.05
0 S
-
-
$
24.46
$
-
022 Mutt! Fam. pd by owner
$
17.64
7 $
1,481.76
0.1%
$
21.52
$
1,807.75
023 Mufti Fam. pd by owner
$
19.40
3 S
698.40
0.0%
$
23.67
$
852.0$
024 Multi Fam. pd by owner
$
21.52
0 $
-
-
$
26.25
$
-
033 Mufti Fam. pd by owner
$
21.16
1 $
253.92
0.0%
$
25.82
S
309.78
034 Mufti Fam. pd by owner
S
23.28
0 $
-
-
$
28.40
$
-
044 Multi Fam. pd by owner
$
25.41
0 $
-
-
$
31.00
$
-
045 Mufti Fam. pd by owner
$
231.08
1 $
2,772.96
0.1%
$
281.92
$
3,383.01
11 Mufti Fam. pd by owner
$
14.70
0 $
-
-
S
17.93
$
-
111 Mufti Fam. pd by owner
$
22.05
5 $
1,323.00
0.1%
S
26.90
$
1,614.06
112 Multi Fam. pd by owner
$
23.52
2 S
564.48
0.0%
S
28.69
$
688.67
113 Mufti Fam. pd by owner
S
25.28
1 $
303.36
0.0%
$
30.84
$
370.10
114 Mutt! Fam. pd by owner
S
27.40
0 5
-
-
$
33.43
$
-
122 Multi Fam. pd by owner
$
24.99
4 S
1,199.52
0.1%
$
30.49
$
1,463.41
123 Mufti Fam. pd by owner
$
26.75
0 S
-
-
S
32.64
$
-
124 Mufti Fam, pd by owner
$
28.87
0 S
-
-
$
35.22
$
-
133 Mufti Fam. pd by owner
$
28.51
0 $
-
-
S
34.78
$
-
134 Mufti Fam. pd by owner
S
30.63
0 S
-
-
$
37.37
$
-
144 Mufti Fam. pd by owner
$
32.76
0 S
-
-
$
39.97
$
-
222 Mufti Fam. pd by owner
S
26.46
2 $
635.04
0.0%
S
32.28
$
774.75
223 Mufti Fam. pd by owner
$
28.22
0 S
-
-
$
34.43
$
-
224 Mufti Fam. pd by owner
S
30.34 -
0 S
-
-
$
37.01
S
-
233 Mufti Fam. pd by owner
$
29.98
0 S
-
-
$
36.58
$
-
234 Mufti Fam. pd by owner
$
32.10
0 S
-
-
S
39.16
$
-
244 Mufti Fam, pd by owner
S
34.23
0 $
-
-
3
41.76
3
-
245 Mufti Fam. pd by owner
S
31.75
0 S
-
-
$
38.74
$
-
246 Mufti Fam. pd by owner
S
33.87
0 $
-
-
$
41.32
$
-
247 Mufti Fam. pd by owner
$
35.99
0 S
-
S
_ 43.91
$
-
248 Multi Fam. pd by owner
S
38.11
0 S
-
$
46.49
$
-
249 Multi Fam. pd by owner
S
52.92
0 S
-
$
64.56
$
-
300 Mufti Fam, pd by owner
$
15.87
2 $
380.88
0.0%
$
19.36
$
464.67
301 Mutt! Fam. pd by owner
$
17.93
0 S
-
-
$
21.87
$
-
302 Multi Fam. pd by owner
S
26.46
0 $
-
-
S
32.28
$
-
303 Mutt! Fam. pd by owner
$
18.90
1 S
226.80
0.0%
$
23.06
$
276.70
304 Mufti Fam. pd by owner
$
113.40
0 $
-
-
S
138.35
$
-
305 Mufti Fam. pd by owner
S
88.20
0 S
-
-
S
107.60
$
-
306 Mufti Fam. pd by owner
S
163.80
0 $
-
-
S
199.84
$
-
307 Mufti Fam. pd by owner
$
223.02
0 $
-
$
272.08
$
-
308 Multi Fam. pd by owner
$
270.90
0 $
-
-
S
330.50
S
-
309 Mufti Fam, pd by owner
$
258.30
1 5
3,099.60
0.1%
$
315.13
$
3,781.51
310 Mufti Fam. pd by owner
$
1,512.00
0 $
-
-
S
1,844.64
$
-
311 Multi Fam. pd by owner
S
27.46
0 S
-
-
$
33.50
$
-
312 Multi Fam. pd by owner
$
25.20
7 S
2,116.80
0.1%
S
30.74
S
2,582.50
313 Mufti Fam. pd by owner
S
31.50
1 $
378.00
0.0%
S
38.43
$
461.16
314 Mufti Fam. pd by owner
$
30.24
4 $
1,451.52
0.1%
$
36.89
$
1,770.85
1 of 3 FLATRATE.XLS
Wafer Rafe Analysis - Flat Rates
Proposed Rate Increase: 22%
Exhibit B
2 o! 3 FLATRATE.XLS
Present
Annual
Annual
Code .. Account TypeRate
Number
Revenue
%
New Rate
Revenue
315 Multi am. pd by owner
60.40
3 $
1.814.40
.1%
S
61AS
S
2,23.57
316 Multi Fam, pd by owner
$
45.36
2 $
1,088.64
0.0%
S
65.34
S
1,328.14
317 Multi Fam. pd by owner
3
49.14
1 S
589.68
0.0%
$
59.95
$
719.41
318 Multi Fam. pd by owner
$
51.66
1 S
619.92
0.0%
3
63.03
S
756.30
319 Mufti Fam. pd by owner
$
66.70
2 $
1,360.80
0.1%
$
69.17
$
1,660.18
320 Mufti Fam. pd by owner
S
62.92
1 S
635.04
0.0%
$
64.56
S
774.75
321 Mufti Fam, pd by owner
S
63.00
2 $
1,512.00
0.196
$
76.86
S
1,844.64
322 Mufti Fam. pd by owner
$
69,30
1 $
831.60
0.0%
S
84.55
3
1,014.55
323 Mufti Fam. pd by owner
$
63.50
3 $
2.286.00
0.1%
$
77.47
$
2,788.92
324 Multi Fam, pd by owner
$
75,60
2 $
1,814.40
0.1%
$
92.23
$
2,213.57
325 Mufti Fam. pd by owner
S
88.20
1 S
1,058.40
0.0%
$
107.60
3
1,291.25
326 Mufti Fam. pd by owner
$
102.81
1 $
1,233.72
0.1%
$
125.43
3
1,505.14
327 Mufti Fam. pd by owner
S
105.84
0 $
-
-
$
129.12
$
-
328 Mufti Fam. pd by owner
$
120.96
0 $
-
-
S
147.57
$
-
329 Mufti Fam. pd by owner
$
257.04
0 $
-
-
$
313.59
S
-
330 Mufti Fam. pd by owner
S
480.81
1 S
5,769.72
0.2%
$
686.59
$
7,039.06
331 Mufti Fam. pd by owner
$
707.61
1 S
8,491.32
0.4%
$
863.28
3
10,359.41
332 Mufti Fam, pd by owner
S
1,121.90
1 $
13,462.80
0.6%
S
1,368.72
$
16,424.62
333 Mutt! Fam. pd by owner
S
51.66
2 3
1,239.64
0.1%
$
63.03
$
1,512.60
334 Multi Fam. pd by owner
S
211.68
1 $
2,540.16
0.1%
3
258.25
$
3,099.00
335 Mufti Fam. pd by owner '
S
13.23
0 S
-
-
S
16.14
S
-
336 Multi Fam. pd by owner
$
44.10
1 $
529.20
0.0%
S
53.80
$
645.62
337 Mufti Fam. pd by owner
$
34.02
1 S
408.24
0.0%
S
41.50
3
498.05
338 Multi Fam. pd by owner
$
90.72
1 $
1,088.64
0.0%
$
110.68
$
1,328.14
339 Mufti Fam. pd by owner
$
60.48
0 S
-
-
S
73.79
S
-
340 Mufti Fam. pd by owner
S
56.70
0 $
-
-
S
69.17
$
-
341 Mufti Fam. pd by owner
$
45.36
1 $
544.32
0.0%
3
55.34
3
664.07
342 Mufti Fam. pd by owner
$
73.08
1 $
876.96
0.0%
3
89.16
3
1,069.89
343 Mufti Fam. pd by owner
$
78.12
1 S
937.44
0.0%
S
95.31
3
1,143.68
344 Multi Fam, pd by owner
3
68.04
1 $
816.48
0.0%
S
83.01
S
996.11
345 Multi Fam. pd by owner
S
48.38
1 3
580.56
0.0%
$
59.02
S
708.28
346 Multi Fam, pd by owner
$
30.74
0 3.
-
-
S
37.50
S
-
347 Mufti Fam. pd by owner
3
27.72
1 S
332.64
0.0%
S
33.82
3
405.82
348 Multi Fam. pd by owner
3
40.32
1 S
483.84
0.0%
$
49.19
S
590.28
349 Mufti Fam. pd by owner
S
35.28
1 3
423.36
0.0%
$
43.04
5
516.50
350 Mufti Fam. pd by owner
3
34.02
1 $
408.24
0.0%
S
41.50
S
498.05
351 Mufti Fam_ pd by owner
S
37.80
2 S
907.20
0.0%
$
46.12
S
1,106.78
352 Mufti Fam. pd by owner
S
46.62
2 $
1,118.88
0.0%
$
56.88
S
1,365.03
353 Mufti Fam. pd by owner
3
48.38
1 $
580.56
0.0%
3
69.02
$
708.28
354 Mufti Fam. pd by owner
S
57.96
1 S
695.52
0.0%
S
70.71
S
848.53 .
355 Mufti Fam. pd by owner
3
70.56
0 S
-
-
S
86.08
$
-
356 Mufti Fam. pd by owner
$
74.34
0 S
-
-
S
90.69
S
-
357 Mufti Fam. pd by owner
$
64.26
1 $
771.12
0.0%
3
78.40
$
940.77
358 Mufti Fam. pd by owner
3
85.68
1 S
1,028.16
0.0%
3
104.53
S
1,254.36
359 Mufti Fam. pd by owner
3
95.55
2 $
2,293.20
0.1%
S
116.57
$
2,797.70
360 Multi Fam. pd by owner
$
100.80
1 S
1,209.60 '
0.1%
$
122.98
S
1,475.71
361 Multi Fam. pd by owner
$
88.20
2 3
2,115.80
0.1%
$
107.60
S
2,582.50
362 Mufti Fam. pd by owner
S
176.40
1 S
2,116.60
0.1%
$
215.21
S
2,582.50
363 Mufti Fam. pd by owner
$
252.00
0 $
-
-
$
307.44
$
-
364 Mufti Fam. pd by owner
$
226.80
1 3
2,721.60
0.1%
$
276.70
$
3,320.35
365 Mufti Fam, pd by owner
$
234.36
1 $
2,812.32
0.1%
S
285.92
$
3,431.03
366 Mufti Fam. pd by owner
S
325.08
1 $
3,900.96
0.2%
$
396.60
3
4,759.17
367 Mufti Fam. pd by owner
S
337.68
1 $
4,052.15
0.2%
5
411.97
$
4,943.64
368 Multi Fam. pd by owner
$
282.24
1 S
3,386.88
0.1%
S
344.33
$
4,131.99
369 Mufti Fam. pd by owner
$
336.42
1 $
4,037.04
0.2%
S
410.43
$
4,925.19
370 Mufti Fam. pd by owner
S
372.96
1 3
4,475.52
0.2%
S
455.01
$
5,460:13
371 Multi Fam. pd by owner
$
352.80
1 $
4,233.60
0.2%
3
430.42
3
5,164.99
372 Mufti Fam. pd by owner
$
679.60
1 $
6,955.20
0.3%
$
707.11
$
8,485.34
373 Mufti Fam. pd by owner
S
617.40
1 3
7,408.80
0.3%
3
753.23
$
9,038.74
374 Multi Fam. pd by owner
S
932.40
1 S
11,188.80
0.5%
3
1,137.53
$
13,650.34
375 Mufti Fam. pd by owner
$
403.20
0 3
-
-
S
491.90
$
-
376 Mufti Fam. pd by owner
$
30.87
1 5
370.44
0.0%
S
37.66
$
451.94
2 o! 3 FLATRATE.XLS
Water Rate Analysis - Flat Rates
Proposed Rate Increase: 22%
Exhibit B
Note: Deleted non-residential codes with no customers since all new ones will be metered.
3 of 3 FLATRATE.XLS
Present
Annual
Annual
Code . Account Type
Rate
Number
Revenue
%
New Rate
Revenue
37TTiv 615 Farn. pd by owner
3
29.46
1
31732
0.0%
$ 31.28
$
387.37T
378 Multi Fam. pd by owner
$
21.42
1 $
257.04
0.0%
$ 26.13
$
313.59
379 Multi Fam. pd by owner
$
13.86
0 $
-
-
$ 16.91
$
-
380 Mufti Fam. pd by owner
$
60.48
2 $
1,451.52
0.1%
$ 73.79
$
1,770.85
381 Mufti Fam. pd by owner
S
132.30
0 $
-
-
$ 161.41
$
-
382 Mufti Fam. pd by owner
$
15.12
0 $
-
-
$ 18.45
$
-
499 Mufti Fam. pd by owner
S
-
60 $
-
-
$ -
$
-
500 City Flat Rate Acct.
$
47.62
3 $
1,714.32
0.1%
$ 58.10
$
2,091.47
501 City Flat Rate Acct.
$
26.46
3 $
952.56
0.0%
$ 32.28
$
1,162.12
502 City Flat Rate Acct.
S
15.87
4 $
761.76
0.0%
$ 19.36
$
929.35
503 City Flat Rate Acct.
S
10.58
19 $
2,412.24
0.1%
$ 12.91
3
2,942.93
504 City Flat Rate Acct.
S
35.36
1 $
424.32
0.0%
$ 43.14
$
517.67
505 City Flat Rate Acct.
$
39.69
1 $
476.28
0.0%
$ 46.42
$
581.06
506 City Flat Rate Acct.
S
34.04
10 $
4,084.80
0.2%
$ 41.53
$
4,983.46
515 Non -Residential Flat Rate
$
10.58
270 $
34,279.20
1.5%
$ 12.91
$
41,820.62
524 Non -Residential Flat Rate
S
13.23
1 $
158.76
0.0%
$ 16.14
$
193.69
530 Non -Residential Flat Rate
$
14.02
8 $
1,345.92
0.1%
$ 17.10
$
1,642.02
536 Non -Residential Flat Rate
3
15.87
10 $
1,904.40
0.1%
$ 19.36
$
2,323.37
542 Non -Residential Flat Rate
$
17.46
10 $
2,095.20
0.1%
S 21.30
E
2,556.14
554 Non -Residential Flat Rate
S
21.16
13 $
3,300.96
0.1%
$ 25.82
$
4,027.17
557 Non -Residential Flat Rate
S
22.22
1 $
266.64
0.0%
$ 27.11
$
325.30
569 Non -Residential Flat Rate
$
26.46
1 $
317.52
0.0%
S 32.28
$
387.37
575 Non -Residential Flat Rate
S
28.04
1 $
336,48
0.0%
$ 34.21
$
410.51
581 Non -Residential Flat Rate
S
29.63
2 $
711.12
0.0%
$ 36.15
b
867.57
584 Non -Residential Flat Rate
$
31.75
1 $
381.00
0.0%
$ 38.74
$
464.82
589 Non -Residential Flat Rate
$
68.79
1 $
825.48
0.0%
$ 83.92
$
1,007.09
623 Non -Residential Flat Rate
S
42.33
1 $
507.96
0.0%
S 51.64
$
619.71
629 Non -Residential Flat Rate
S
44.45
1 S
533.40
0.0%
$ 54.23
$
650.75
638 Non -Residential Flat Rate
S
47.62
1 $
571.44
0.0%
$ 58.10
$
697.16
647 Non -Residential Flat Rate
$
52.12
1 $
625.44
0.0%
$ 63.59
$
763.04
665 Non -Residential Flat Rate
S
58.21
1 $
698.52
0.0%
S 71.02
$
852.19
692 Non -Residential Flat Rate
S
70.38
2 $
1,689.12
0.1%
S 85.86
b
2,060.73
698 Non -Residential Flat Rate
$
74.08
1 $
888.96
0.0%
$ 90.38
$
1,084.53
736 Non -Residential Flat Rate
$
120.96
1 $
1,451.52
0.1%
$ 147.57
b
1,770.85
746 Non -Residential Flat Rate
$
132.30
1 $
1,587.60
0.1%
S 161.41
$
1,936.87
Total:
19,421 S 2,327,298.36
100.0%
S 2,839,304.00
Net increase:
S
512,005.64
# Commercial/Industrial
Accounts:
329 S
54,476.64
S
66,461.50
Avg/Mo. S
13.60
Net increase:
$
11,984.86
Average
Increase/Mo.:
S
3.04
Note: Deleted non-residential codes with no customers since all new ones will be metered.
3 of 3 FLATRATE.XLS
Exhibit e
Metered Water Rate Changes
Existing Water Charge: $ 0.285 per 100 cubic feet ($0.38 per 1000 gallons)
Proposed increase: 5%
New Water Charge: $ 0.299 per 100 cubic feet ($0.40 per 1000 gallons)
Base Charge Increase: 10%
Monthly Base Charges:
# gallons included in base charge
Meter Size
Existing Charge
New Charge
Existing
New
S/."
$10.58
$11.64
27,800
0
1"
$15.87
$17.46
41,700
0
1'/2"
$21.16
$23.28
55,500
0
2"
$26.46
$29.11
69,400
0
3"
$37.04
$40.74
97,200
0
4"
$47.62
$52.38
125,000
0
6"
$68.79
$75.67
180,500
0
8"
$89.96
$98.96
236,100
0
MTR RATEXLS
APPENDIX VI
PUBLIC WORKS DEPARTMENT
WATERMASTEWATER DIVISION
Annual Water Quality Report for 1994
keep our water customers informed about the drinking water
in Lodi, the City of Lodi distributes this annual report_ The Water
Quality Report on Page 4 summarizes testing performed on
Lodi's water supply by State certified laboratories. To better
understand the report please note the description of terms and
abbreviations at the top of Page 4.
The City of Lodi supplies high-quality groundwater through
approximately 24 City wells. These wells operate automatically on
water pressure demand so that when water use increases, more
wells come on line.
All 24 City wells are interconnected through approximately 198
miles of water mains. In 1994 4.660 billion gallons of water were
pumped to satisfy Lodi's water demands. This represents 5.2%
less than 1986 in spite of a population growth of 25% since 1986.
Your continuing water conservation practices have really paid off!
A 1993 report calculated savings to be far above the cost of the
Water Conservation Program. Maintaining your water
conservation efforts results in annual cost savings in operation
and maintenance and averts millions of dollars in capital
expenditures, helping water rate increases stay low as possible
and conserving a valuable natural resource. Please read the
water conservation message on Page 3.
prinking water provided in Lodi is of high quality and not only
meets but is better than all State and Federal drinking water
standards (listed on Page 4). Certain wells would individually
exceed the Dibromochloropropane (DBCP) standard if used.
Please see the "DBCP Update" below for more information. Also,
one well is slightly above the State limit for Trichloroethylene
(TCE). This well is not being used.
Lodi takes 18 samples weekly from throughout Lodi's water
distribution system for bacterial water quality. Regulations allow
for 5% of all total coliform samples in a month to be positive. In
November 1995 Lodi had 6% positive and exceeded the standard
for "total coliforms". While State health officials agreed there was
no health threat from this bacteria, Lodi officials decided to
chlorinate Lodi's drinking water system for five days in December
1994 to cut down on these harmless bacteria that show up in the
testing procedure. Occasionally the City may have to chlorinate
your water, but we will make every effort to inform you in local
papers before the drinking water is to be chlorinated.
While your water rates have been kept as low as possible, water
rates have recently been raised to help meet funding needs.
Please read the important message on your water rates on Page
2 of this report
If you have any questions about this report or the quality of
Lodi's water, please call the City's Water/Wastewater Office
at 333-6740.
******************************* DBCP UPDATE
The California Department of Health Services (DHS) sets drinking
water standards, and has set a limit for Dibromochloropropane
(DBCP). This organic chemical was once a popular pesticide used
in and around Lodi by area farmers until banned by the government
in 1977. DBCP has been shown to increase cancer nodules in rats
and mice when exposed to very high levels over their lifetimes. It is
a theory that these chemicals may also increase the risk of cancer in
humans who are exposed over long periods to very minute amounts.
Although even the possibility of this theory being correct is debated
by leading scientists, the United States Environmental Protection
Agency (EPA) and DHS have set the drinking water standard for
DBCP at 0.0002 parts per million (ppm) or 0.2 parts per billion (ppb)
to reduce the theoretical risk of cancer. The theoretical risk of cancer
is based on lifetime (70 years) exposure and drinking about two
quarts of water every day.
Water which meets this standard is considered safe with respect to
drinking water with this level of DBCP. The limit of 0.0002 ppm
equals one drop in 66,000 gallons of water (it would take over 350
years to drink 66,000 gallons of water at 2 quarts/day). Theoretical
risks associated with DBCP are based on 70 years exposure, so
even EPA states that these levels in Lodi's water would not be
significant when exposed for a relatively short time.
City wells at some point exceeded the new limit for DBCP. Of
these 14 wel!s, the City has abandoned 4 wells, levels in 5 wells
came back into compliance, 1 well has a treatment system, and 4
wells remain out of compliance (standby). The one Granular
Activated Carbon (GAC) treatment system in use has cost the City
approximately $600,000.
The 4 wells over the DBCP limit could be used for relatively short
periods of time only during peak water demand hours in the hottest
parts of the year, yet they are regulated as if they were on 24 hours
a day, 365 days per year_ With that in mind, the City proposed an
alternative treatment/operation system that would save our citizens
millions of dollars, yet meet Federal regulations. However, it is
apparent that at this time DHS and EPA officials are not going to
allow Lodi's proposal.
Capacity of the City's water system has not kept pace with peak
water demands while the City has been trying to resolve the
DBCP issue. Therefore, to help meet the peak water demands
expected this summer, the City Council has approved the
installation of three more GAC treatment systems at a cost of
approximately one million dollars. Two systems are scheduled
for completion this summer and the third site, scheduled for
completion before the 1996 peak water season, will also have a
1 million gallon storage tank located east of Highway 99.
The City has also brought a lawsuit against the manufacturers of
DBCP. This lawsuit will attempt to recover some of Lodi's costs
including replacing and treating DBCP contaminated wells.
In the meantime you may consider your water safe to drink. The
City will keep you regularly informed of progress made to resolve
this issue. If you have any questions regarding this update, please
call the City of Lodi's Waterf Wastewater Office at (209) 333-6740.
City c, Lodi, Annual v ater Quadty Report to Customers. June 1995. Page I
About tlh- Kecent Water Kate Incre--�e 11:L-1
After a Public Hearing on April 19, 1995 the City Council raised
water rates to help meet increasing financial needs of the City's
Drinking Water System. The new water rates were approved
after much debate and several meetings at which the Public
Works Department detailed funding deficiencies for the water
system. This is the first of a series of needed water rate
increases.
The City operates and maintains your water system which
includes: 24 wells, 198 miles of distribution mains, an elevated
water tank, chlorination systems, emergency generators,
equipment for installing and repairing water lines, a laboratory
for water quality analyses, and a granular activated carbon
treatment system on one well. There are also ever mounting
costs to meet State and Federal regulations include increased
costs for engineering, monitoring, administration, treatment,
regulatory fees, etc. City policy also directed that 20% of the
Water Utility revenue go to the City's General Fund to help pay
for items such as Police and Fire Services, Parks and
Recreation, Hutchins Street Square, etc.
There are MAJOR deficiencies in our water system we must
face. For example, many distribution mains are 70+ years old.
These undersized and failing water mains, located chiefly in the
eastside and downtown areas, should be systematically
replaced. If water main life spans were considered to be 70
years, we should be spending about $836,000 annually to keep
up. The sad fact is, however, over the past few years we have
spend less than S150,000 per year in water main replacements.
Costs associated with the DBCP regulations are also a major
impact The City has worked hard to keep these costs at a
minimum while at the same time deliver water which meets strict
State and Federal standards. Also, the City has financed the
installation of DBCP treatment equipment with a low interest
(3.41%) State loan. For more information please read the
"DBCP Update" found on Page 1 of this report.
Public Works reports to the City Council have focused on water
system deficiencies requiring the most attention. Funding needs
discussed at the April 19, 1995 Public Hearing included:
• Protect or Program Cost/year Rate increase'
DBCP Loan payment $ 271,000 10%
Operation & Maint. of DBCP Filters $ 190,000 7%
System Replacement, O&M Needs $ 860,000 31%
Meter Retrofit Program 5 660.000 244
TOTALS: $ 1,216,000 72%
*The percent increase was above the rates at that time.
After the April 19, 1995 Public Hearing, City Council raised the
water rates as listed below effective June 1, 1995. This raise
starts funding a water main replacement program and repays
loans used for DBCP cleanup efforts. The old water rate
structure was also modified to adjust discrepancies between flat
rate and metered customers. Rates for flat rate customers were
raised 17.7%. Metered customer's base rates were raised only
8%, however the amount of water formerly included in the base
rate was deleted. Charges for the metered water was therefore
raised only 4%. If your water meter is larger than needed for
your peak water uses, the City may be able to install a smaller
meter to reduce your monthly base rate. City Council actions
also lowered the water utilities contribution to the General Fund
to 17.7% (from 20%).
This is only the third water rate increase since 1976, but more
increases will be needed to keep pace with the ever mounting
costs due to regulations, inflation and other water system
needs. Lodi's water rate structure will again be reviewed for
possible changes in the relationship between flat rate anc-
metered customer charges, and for possible changes to
encourage water conservation.
If you have any questions concerning these water rates or
your meter size please call the City of Lodi Water
/Wastewater Office at 333-6740.
City of Lodi Water Rates Effective June 1, 1995
Residential Customers:
Type Monthly Flat Rate
Customer Old New
Monthly Rate
Metered:
Residence -1 Sr. S 7.35 S 8.65
Sevice Size
Old
Residence -2 Sr. S 8.82 S 10.38
Sevice Size
Old
Residence -3 Br. s 10.58 S 12.45
314 inch
5 10.58
Residence -4 Sr. S 12.70 $ 14.95
314 inch
s 10.58
Residence -5 Sr. S 15.24 S 17.94
1 inch
S 15.87
Residence -6 Br. S 18.29 S 21.53
1 inch
S 15.87
Apartment -1 Sr. 5 5.30 S 7.42
1.5 inch
S 21.16
Apartment -2 Sr. S 7.56 S 8.90
1.5 inch
S 21.16
Apartment -3 Br. S 9.07 $ 10.68
2 inch
S 26.46
Apartment -4 Sr, s 10.88 $ 12.81
2 inch
$ 26.46
Apartment -5 Br. $ 13.06 $ 15.37
3 inch
5 37.04
Commercial/Industrial:
Flat Rate:
Monthly Rate
Metered:
Monthly Base Rate'
Sevice Size
Old
New
Sevice Size
Old
Jew
314 inch
5 10.58
5 12.45
314 inch
s 10.58
S 11.43
1 inch
S 15.87
5 18.68
1 inch
S 15.87
$ 17.14
1.5 inch
S 21.16
$ 24.91
1.5 inch
S 21.16
$ 22.85
2 inch
S 26.46
$ 31.14
2 inch
$ 26.46
S 28.58
3 inch
5 37.04
$ 43.60
3 inch
$ 37.04
$ 40.00
4 inch
S 47.62
S 56.05
4 inch
S 47.62
$ 51.43
6 inch
S 68.79
S 80.97
6 inch
S 68.79
S 74.29
8 inch
S 69.96
S 97.16
No longer includes any water allowance.
Metered Water:
Old
New
per 100 Cu. Feet'
S 0.285
$ 0.296
Appx. per 1000 gal
S 0.381
$ 0.395
• Approximately 748 gallons
City of Lodi. Annual WaterQueNlj P,e;cr to Customers. June 1995. Page 2
CITY COUNCIL
DAVID P. WARNER, Mayor
PHILLIP A. PENNINO
Mayor Pro Tempore
RAY G. DAVENPORT
STEPHEN J. MANN
JACK A. SIECLOCK
CITY OF LODI
Mr. Les Dabritz
Executive Director
Lodi Chamber of Commerce
P. O. Box 386
Lodi, CA 95241
CITY HALL, 221 WEST PINE STREET
P.O. BOX 3006
LODI, CALIFORNIA 95241-1910
(209) 333-6706
FAX (209) 333-6842
May 30, 1996
- mailinq list attached
SUBJECT: Postpone Public Hearing to Consider Increasing Water Rates
H. DIXON FLYNN
City Manager
JENNIFER M. PERRIN
City Clerk
RANDALL A. HAYS
City Attorney
Enclosed is a copy of background information on the subject item and an alternate
course of action being recommended to the City Council. Both items are on the
City Council agenda of Wednesday, June 5, 1996, at 7 p.m. The meeting will be held
in the City Council Chamber, Camegie Forum, 305 West Pine Street. You are welcome
to attend.
If you have any questions about the items, please call Richard Prima or me at
(209) 333-6706.
eacL.skos Director
JI-R/lm Cv a� Qu m�
Enclosure
cc: City Clerk Y'
City Engineer
�� �►-y, ,� M .
INC, C�MNAR
Mr. Les Dabritz, Exec. Dir.
Lodi Chamber of Commerce
P. O. Box 386
Lodi, CA 95241
Mr. Denny Perak, Co -Chairman
Lodi Industrial Group
c/o Lodi Chamber of Commerce
P. O. Box 386
Lodi, CA 95241
Mr. Ed Marchese, Co -Chairman
Lodi Industrial Group
c/o Lodi Chamber of Commerce
P. O. Box 386
Lodi, CA 95241
Mr. Kevin Van Steenberge
Lodi Iron Works
P. O. Box 1150
Lodi, CA 95241-1150
Mr. Eric Vanhove
General Mills
P. O. Box 3002
Lodi, CA 95241
Mr. Robert Paulat
Plant Manager
Pacific Coast Producers
P. O. Box 880
Lodi, CA 95241