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Home My WebLink AboutAgenda Report - November 15, 2016 B-12 PH/SMAGENDA ITEM 80-12 CITY OF LODI COUNCIL COMMUNICATION • TM AGENDA TITLE: Set Public Hearing for December 21, 2016, to Consider Adopting Resolution Setting Pre - Approved Engineering News Record Adjustment Index for Usage -Based and Flat Water Rates for Residential, Commercial, and Industrial Customers MEETING DATE: November 15, 2016 PREPARED BY: Public Works Director RECOMMENDED ACTION: Set public hearing for December 21, 2016, to consider adopting resolution setting pre -approved Engineering News Record adjustment index for usage -based and flat water rates for residential, commercial, and industrial customers. BACKGROUND INFORMATION: The City Council has made numerous water rate decisions over the past few years. A summary of the past years water rate adjustments relative to the Engineering News Record (ENR) index change is provided in Attachment A. The purpose of this table is to demonstrate that past actual rate increases have frequently been below those approved. At the July 16, 2014 public hearing, City Council approved a restructured water rate schedule to be implemented over the three-year period from 2014 through 2016. Two principal elements of the restructuring were a decrease in residential (3/4 -inch meter size) monthly base charge and three -tiered residential commodity charge; and an increase in the single -tiered non-residential and multi -family commodity charge. On May 7, 2014, City Council approved a five-year program of rate adjustments for water, wastewater and solid waste services. For the water and wastewater utilities, the approved annual rate adjustment is the lesser of the ENR index change or three percent. The previous year's ENR index change was 3.36 percent and staff is recommending a water rate increase of three percent. A summary of current and proposed rates for flat rate and usage -based rate customers is provided in Attachment B. For a resident still on the flat rate, the monthly charge for a three-bedroom home will increase from $45.89 to $47.27 or $1.38 per month. A metered resident using an average of 1,800 cubic feet of water per month will see an increase from $40.63 to $41.89, or $1.26 per month. The drought conditions have resulted in a downward trend in water revenue received. In response, the City's consultant has analyzed the most current utility billing and water production data in an effort to update the rate revenue model to reflect the impacts of water conservation and the expected increase in water usage associated with relaxing water conservation measures. The reduction in sales revenue due to conservation coupled with increased construction costs (primarily associated with the Water Meter Program) is requiring the recommendation for the three percent rate increase. As reflected in the City's Financial Plan (Attachment C), fund balances rebound substantially starting in Fiscal Year 2019/20. This year corresponds with the completion of the City's multi-year Water Meter Program. FISCAL IMPACT: The Water Utility is requiring increased revenue to accommodate the impacts of conservation coupled with inflationary pressures in the construction industry resulting from an improving economy. KAWPWILITY RATES\W WW\2017 WWW Rate Increase\CCSetPH_WaterRates20l7.doc 11/3/16 Set Public Hearing for December 21, 2016, to Consider Adopting Resolution Setting Pre -Approved Engineering News Record Adjustment Index for Usage -Based and Flat Water Rates for Residential, Commercial, and Industrial Customers November 15, 2016 Page 2 FUNDING AVAILABLE: Not applicable. Charles E. Swimley, Jr. Public Works Director Prepared by Rebecca Areida-Yadav, Public Works Management Analyst CES/RAY/jr Attachments I(MMUTILITY RATES\W WW\2017 W WW Rate Increase\CCSetPH WaterRates20l7.doc 11/3/16 Attachment A Programmed and Implemented Rate Adjustments Water Year Programmed Implemented 2009 3.10(1) 0 2010 0.73(1) 0 2011 5.98 (z) 2.0 2012 2.53 (3) 2.2 2013 2.50 (3) 2.5 2014 3.30 (3) 2.5 2015 2.00 (3) 2.0 (4) 2016 1.975(3) 1.975 (4) 2017 1 3.36 (3) 3.0 (4) (1) Consumer Price Index change (2) Consumer Price Index change (December 2008 through December 2010) (3) Engineering News Record Index change (4) Recommended by Staff Attachment B City of Lodi Current and Proposed Flat Water Rates Notes: (1) Multi -family includes duplexes, triplexes, fourplexes, apartments, and condominiums. (2) These are the maximum rates for each year, without a formal rate -setting process. Actual water rate adjustments may be lower and would be tied to annual changes in the ENR index Future Rate Ceiling (2) Current Proposed Potential Potential (Jan.2016) (Jan.2017) (Jan.2018) (Jan.2019) Rate Increase --> 3.0% 3.0% 3.0% FLAT RATES Single Family Residential 1 Bedroom $ 31.88 $ 32.84 $ 33.83 $ 34.84 2 Bedroom $ 38.29 $ 39.44 $ 40.62 $ 41.84 3 Bedroom $ 45.89 $ 47.27 $ 48.69 $ 50.15 4 Bedroom $ 55.14 $ 56.79 $ 58.49 $ 60.24 5 Bedroom $ 66.13 $ 68.11 $ 70.15 $ 72.25 6 Bedroom $ 79.37 $ 81.75 $ 84.20 $ 86.73 7 Bedroom $ 95.17 $ 98.03 $ 100.97 $ 104.00 Multi -Family (1) 1 Bedroom $ 27.37 $ 28.19 $ 29.04 $ 29.91 2 Bedroom $ 32.83 $ 33.81 $ 34.82 $ 35.86 3 Bedroom $ 39.40 $ 40.58 $ 41.80 $ 43.05 Mobile Homes Any Size $ 27.37 $ 28.19 $ 29.04 $ 29.91 Non -Residential Existing unmetered Varies +3.0% +3.0% +3.0% Notes: (1) Multi -family includes duplexes, triplexes, fourplexes, apartments, and condominiums. (2) These are the maximum rates for each year, without a formal rate -setting process. Actual water rate adjustments may be lower and would be tied to annual changes in the ENR index City of Lodi Current and Proposed Usage -Based Water Rates Future Rate Ceiling (2) Current Proposed Potential Potential (Jan.2016) (Jan.2017) (Jan.2018) (Jan.2019) Rate Increase --> 3.0% 3.0% 3.0% USAGE -BASED RATES Monthly Service Charge Single Family Up to 3/4" meter $ 21.23 $ 21.87 $ 22.53 $ 23.21 1" meter $ 33.34 $ 34.34 $ 35.37 $ 36.43 1 1/2" meter $ 63.35 $ 65.25 $ 67.21 $ 69.23 2" meter $ 99.53 $ 102.52 $ 105.60 $ 108.77 Multi -Family and Non -Residential (1) Up to 3/4" meter $ 21.23 $ 21.87 $ 22.53 $ 23.21 1" meter $ 33.34 $ 34.34 $ 35.37 $ 36.43 1 1/2" meter $ 63.35 $ 65.25 $ 67.21 $ 69.23 2" meter $ 99.53 $ 102.52 $ 105.60 $ 108.77 3" meter $ 183.98 $ 189.50 $ 195.19 $ 201.05 4" meter $ 304.59 $ 313.73 $ 323.14 $ 332.83 6" meter $ 605.85 $ 624.03 $ 642.75 $ 662.03 8" meter $ 967.52 $ 996.55 $ 1,026.45 $ 1,057.24 10" meter $ 1,389.57 $ 1,431.26 $ 1,474.20 $ 1,518.43 Usage Rates ($/CCF) Single Family Tier 1 (0-10 CCF) $ 0.94 $ 0.97 $ 1.00 $ 1.03 Tier 2 (11-50 CCF) $ 1.25 $ 1.29 $ 1.33 $ 1.37 Tier 3 (>50 CCF) $ 1.55 $ 1.60 $ 1.65 $ 1.70 Multi -Family and Non -Residential (1) All water usage $ 1.12 $ 1.15 $ 1.18 $ 1.22 Notes: (1) Multi -family includes duplexes, triplexes, fourplexes, apartments, condominiums, and mobile home parks. (2) These are the maximum rates for each year, without a formal rate -setting process. Actual water rate adjustments may be lower and would be tied to annual changes in the ENR index Beginning Balance Revenues Water Sales Interest Earnings Other Revenues Transfer From/(To) RSF (18x) Transfer from Fund 182 for Debt Service Total Revenues Expenditures Transfer Out to General Fund (Cost of Services) Transfer Out to Capital Fund 181 for projects To Capital Fund 181 (Depreciation) Personnel Services Utilities Supplies, Mat'ls., Services & Other Debt Service 1991 CSDW Loan Payments Net 2010 Rev. Bond Payments Total Expenditures Ending Balance Operating Reserve (25%) Available Balance Debt Service Coverage (min. 1.25) Beginning Balance Revenues Operating Transfers In Interest Earnings Loan Repayment from EUD (City Hall Annex) DBCP Reimbursements Retrofit Meter Install. Charge Debt Proceeds Total Revenues City of Lodi -- Water Utility Financial Plan Summary FY 15-16 FY 16-17 FY 17-18 FY 18-19 FY 19-20 FY 20-21 1.975% 3.0% 3.0% 3.0% 3.0% 3.0% Jan. 2016 Jan. 2017 Jan. 2018 Jan. 2019 3an.2020 Jan. 2021 5,972,949 4,551,353 3,742,272 1,198,661 595,550 2,618,839 12,161,186 12,867,000 13,493,000 14,246,000 14,869,000 15,199,000 123,397 82,000 49,000 22,000 40,000 117,000 114,712 39,000 40,000 41,000 42,000 43,000 - 109,000 109,000 109,000 286,000 286,000 12, 399,294 13,097,000 13,691,000 14,418,000 15,237,000 15,645,000 780,000 780,000 780,000 780,000 780,000 780,000 4,750,000 3,850,000 6,000,000 4,550,000 2,500,000 500,000 2,659,000 2,761,000 2,854,000 2,951,000 3,051,000 3,123,000 496,000 762,000 794,000 828,000 863,000 892,000 2,781,000 3,400,000 3,501,000 3,605,000 3,712,000 3,800,000 2,354,890 2,353,080 2,305,611 2,307,111 2,307,711 2,305,911 13,820,890 13,906,080 16, 234,611 15,021,111 13,213,711 11,400,911 4,551,353 3,742,272 1,198,661 595,550 2,618,839 6,862,928 1,679,000 1,926,000 1,982,000 2,041,000 2,102,000 2,149,000 2,872,353 1,816,272 (783,339) (1,445,450) 516,839 4,713,928 2.61 2.41 2.86 2.82 3.07 3.10 735,242 1,447,432 303,597 146,621 81,621 126,621 4,750,000 3,850,000 6,000,000 4,550,000 2,500,000 500,000 41,500 15,000 (4,000) - (1,000) 1,000 - - 585,024 - - - 249,231 251,000 252,000 254,000 256,000 78,000 5,040,731 4,116,000 6,833,024 4,804,000 2,755,000 579,000 FY 15-16 FY 16-17 FY 17-18 FY 18-19 FY 19-20 FY 20-21 Expenditures Loan to EUD (City Hall Annex) - - - - - Water Meter/Main Install. Project 4,017,000 4,296,000 5,634,000 3,967,000 - - Water Taps 1,000 77,000 80,000 82,000 84,000 87,000 Miscellaneous Water Mains - 52,000 53,000 55,000 56,000 58,000 GAC & Meter Repl (DBCP) 272 300,000 300,000 300,000 300,000 - Meter Shop Design _ 50,000 200,000 - - - Southwest Gateway Water Tank - - - - 2,000,000 - Surface Water Treatment Plant PS Generator - - 300,000 - - - Finance Security Cameras - 30,000 - - - Info Systems Data Center 214,165 -Lodi Lake Boat Launch 29,319 - Well 10C 9,512 110,488 - - - Well 3 & 1OR Abandonment 9,652 55,348 - - - Well 14 -Pump Rehab/Rept - - 176,000 - - Well 15 -Pump Rehab/Rep[ _ - 186,000 - - Well 16 -Pump Rehab/Electrical Upgrade - - - 219,000 - Well 17 -Pump Rehab/Electrical Upgrade - - 202,000 Well 21 - - - - 225,000 Well 22 - 155,000 - - Well 23 - - - - - 214,000 Well 24 - Pump Rehab & Electrical Upgrade - - - - Well 25 - - - 232,000 Vehicles/Equipment 47,619 134,000 61 000 441090 45&000 461000. Total Expenditures 4,328,540 5,259,835 6,990,000 4,869,000 2,710,000 637,000 Ending Balance 11447L432 303,597 146621 81. 631 136.621 68,621 IMF WATER FACILITIES (562) Beginning Balance 164,051 330,561 337,561 344,561 353,561 362,561 Revenues Water Impact Mitigation Fees 165,098 109,000 109,000 109,000 286,000 286,000 Interest Earnings .1 ,411 7,000 7,000 21,000 9,000 9,000. Total Revenues 166,510 116,000 116,000 118,000 295,000 295,000 Expenditures Transfer to Fund 181 for Well 27 - -- - - - - Transfer to Operations Fund 180 for Debt Service - 109,000 109.000 109,00() 286 000 286,000 Total Expenditures - 109,000 109,000 109,000 286,000 286,000 Ending Balance 330,561 337,561 344,561 353,561 362,561 371,561 Owed Fund 180 for Debt Service 5,737,000 6,587,000 7,382,000 8,158,000 8,,7374000 9,295,000 FY 15-16 FY 16-17 FY 17-18 FY 18-19 FY 19-20 FY 20-21 City of Lodi -- Water Utility Financial Plan Assumptions Aggregate End -of -Year Balance * 7,859,000 5,913,000 3,220,000 2,561,000 4,638,000 8,833,000 Operating Reserve (25%) 1,679,000 1,926,000 1,982,000 2,041,000 2,102,000 2,149,000 Restricted DS Reserve 1,530,000 1,530,000 1,530,000 1,530,000 1,530,000 1,530,000 2010 COP Proceeds - - - - - - Rate Stabilization Fund - - - - - - Net Available for Capital Projects 4,650,000 2,457,000 (292,000)_ (1,010,000) 1,006,000 5,154,000 City of Lodi -- Water Utility Financial Plan Assumptions Financia/ Assumptions General Inflation 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% Labor Inflation 3.4% 3.4% 3.4% 3.4% 3.4% 3.4% Material/Energy Inflation 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% Construction Inflation 2.0% 3.0% 3.0% 3.0% 3.0% 3.0% Interest Earnings 2.0% 2.0% 2.0% 2.5% 2.5% 2.5% Customer Account Assumptions No. of DUs/Accounts 23,606 23,656 23,706 23,756 23,806 23,856 No. of 3/4" Eq. Mtrs. 25,654 25,704 25,754 25,804 25,854 25,904 No. of New Connections 50 50 50 50 50 50 Customer Growth Rate 0.19% 0.19% 0.19% 0.19% 0.19% 0.19% Water Mitigation Impact Fee $ 5,710 $ 5,710 Residential $ 1,263 $ 1,263 $ 1,263 $ 1,263 Non -Residential 3,103 3,103 3,103 3,103 Please immediately confirm receipt of thisfax by calling 333-6742 CITY OF LODI P. O. BOX 3006 LODI, CALIFORNIA 95241-1910 ADVERTISING INSTRUCTIONS. SUBJECT: PUBLIC HEARING TO CONSIDER ADOPTING RESOLUTION SETTING PRE -APPROVED ENGINEERING NEWS RECORD ADJUSTMENT INDEX FOR USAGE -BASED AND FLAT WATER RATES FOR RESIDENTIAL, COMMERCIAL, AND INDUSTRIAL CUSTOMERS PUBLISH DATE: SATURDAY, NOVEMBER 19, 2016 11 MR191 TEAR SHEETS WANTED: One (1) please SEND AFFIDAVIT AND BILL TO: JENNIFER M. FERRAIOLO, CITY CLERK LNS ACCT. #0510052 City of Lodi P.O. Box 3006 Lodi, CA 95241-1910 DATED: WEDNESDAY, NOVEMBER 16, 2016 ORDERED BY: JENNIFER M. FERRAIOLO CITY CLERK PAMELA M. FARRI DEPUTY CITY CLERK ELIZABETH BURGOS ADMINISTRATIVE CLERK Verify Appearance of this Legal in the Newspaper — Copy to File Emailed to the Sentinel at dianer@lodinews.com at l Towey vii . C affa = tpage ) 148 Phoned to confirm'Nft .of all p is. t [firti S PRF I &fS3• forms\advins.doc DECLARATION OF POSTING NOTICE OF PUBLIC HEARING TO CONSIDER ADOPTING RESOLUTION SETTING PRE -APPROVED ENGINEERING NEWS RECORD ADJUSTMENT INDEX FOR USAGE -BASED AND FLAT WATER RATES FOR RESIDENTIAL, COMMERCIAL, AND INDUSTRIAL CUSTOMERS On Wednesday, November 16, 2016, in the City of Lodi, San Joaquin County, California, a copy of a Notice of Public Hearing to consider adopting resolution setting pre -approved Engineering News Record adjustment index for usage -based and flat water rates for residential, commercial, and industrial customers (attached hereto, marked Exhibit "A") was posted at the following four locations: Lodi City Clerk's Office Lodi City Hall Lobby Lodi Carnegie Forum WorkNet Office I declare under penalty of perjury that the foregoing is true and correct. Executed on November 16, 2016, at Lodi, California. r PAMELA M. FARRIS DEPUTY CITY CLERK ORDERED BY: JENNIFER M. FERRAIOLO CITY CLERK ELIZABETH BURGOS ADMINISTRATIVE CLERK NAAdministration\CLERK\Public Hearings\AFFADAVITS\DECPOST3.DOC ' CITY OF LODI Carnegie Forum 305 West Pine Street, Lodi NOTICE OF PUBLIC HEARING Date: December 21, 2016 Time: 7:00 p.m. For information regarding this notice please contact: Jennifer M. Ferraiolo City Clerk Telephone: (209) 333-6702 NOTICE OF PUBLIC HEARING TEX�sor a NOTICE IS HEREBY GIVEN that on Wednesday, December 21, 2016, at the hour of 7:00 p.m., or as soon thereafter as the matter may be heard, the City Council will conduct a public hearing at the Carnegie Forum, 305 West Pine Street, Lodi, to consider the following matter: a) Adoption of resolution setting pre -approved Engineering News Record adjustment index for usage -based and flat water rates for residential, commercial, and industrial customers (as identified on the attached Exhibit A). Information regarding this item may be obtained in the Public Works Department, 221 West Pine Street, Lodi, (209) 333-6706. All interested persons are invited to present their views and comments on this matter. Written statements may be filed with the City Clerk, City Hall, 221 W. Pine Street, 2nd Floor, Lodi, 95240, at any time prior to the hearing scheduled herein, and oral statements may be made at said hearing. If you challenge the subject matter in court, you may be limited to raising only those issues you or someone else raised at the public hearing described in this notice or in written correspondence delivered to the City Clerk at, or prior to, the public hearing. By Order of the Lodi City Council: nifer Ferraiolo ity Clerk Dated: November 15, 2016 Appro : s to form: Qace D.;ee.y Bich Ct AVIiSO: Para obtener ayuda interpretativa con esta noticia, por favor flame a la oficina de la Secretaria Municipal, a las (209) 333-6702. J:CLERK\PUBLICHEARING\NOTICES\PH NOTICE publication WaterRates doc 11110/16 Exhibit A City of Lodi (1) Multi -family includes duplexes, triplexes, fourplexes, apartments, and condominiums. (2) These are the maximum rates for each year, without a formal rate -setting process. Actual water rate adjustments may be lower and would be tied to annual changes in the ENR index City of Lodi Current and Proposed 1.11sage$8>ised W Rates Future Rate Ceiling (2) Current Proposed Potential Potential Jan. 20141 JJ&n. 2017. Jan. 2018 .fan. 2018' Rata Increase --> 3.0% 3.0% 3.096 USAGE -BASED RATES Monthly Service Charge 34.34 1 S 35.37 1' 2" �Up to 314" m+3teY 21.23 21.87 22.53 23. 1" meter 33.34 34.34 S 35.37 39: 1 1 /2" etef 63.35 S 85.25 S 87.21 S 69. 90, 102.52 106so 5. 108. 3" Meter 180.50 496:19 241. 4" meter 304.5.9. 313.73 323--1 i- 332. 6" meter S 605.85 824.03 4. 1542.75 1 862. 8".mew 987.52 996.55 1 26:455 1 $ 1.037. 1D" meter S 1 389.57S 1 A31.26 4.474.26 1 S 1.818. Usage Rates ($/CCF) 0.971 S 1.00 1.37 tier 3 (>50 CCF) $ 1.55 Aif water efsage 1.12 1.15 1.18 $ Notes: (1) Multi -family includes duplexes, triplexes, fourplexes, apartments, condominiums, and mobile home parks. (2) These are the maximum rates for each year, without a formal rate -setting process. Actual water rate adjustments may be lower and would be tied to annual changes in the ENR index