HomeMy WebLinkAboutAgenda Report - January 17, 2018 G-01 PHTM
CITY OF LODI
COUNCIL COMMUNICATION
AGENDA ITEM
AGENDA TITLE: 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
MEETING DATE: January 17, 2018
PREPARED BY: Public Works Director
RECOMMENDED ACTION:
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.
BACKGROUND INFORMATION: City Council has made numerous water rate decisions over the
past several years. On May 7, 2014, City Council approved a
five-year program of rate adjustments for water, wastewater, and
solid waste services in accordance with the Proposition 218 rate setting process. For the water and
wastewater utilities, the approved annual rate adjustment is the lesser of the Engineering News
Record (ENR) index change or three percent. A summary of the past years' water rate adjustments
relative to the 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 the approved maximum.
The previous year's ENR index change was 3.98 percent. In response to the anticipated downward trend
in Water Fund balance, staff is recommending a water rate increase of three percent followed by three -
percent increases annually through completion of the Water Meter Program (WMP). Cash flow
requirements to fund WMP construction costs, and to a lesser extent water conservation, is driving the
recommendation for the maximum three -percent increase. A substantial portion of the costs to operate
the water utility are fixed since Lodi buys only a small fraction of its water supply. The bulk of the fixed
costs is related to the debt service associated with constructing the water treatment plant and fixed costs
to maintain the well production and delivery system. As such, conservation does not reduce fixed
operation costs. While a three -percent increase will allow for the planned construction of WMP Phase 8
in Fiscal Year 2017/18, it is expected the utility will dip into reserves by $759,000 this fiscal year and by
$1.65 million in Fiscal Year 2018/19. This short-term financial condition is tolerable because of the
overall good condition of the water system, and a minimum of $405,000 in Fiscal Year 2018/19 is
available to account for unforeseen conditions that may be experienced by the utility. All debt service
coverage requirements are being met during this period.
A summary of current and proposed rates for flat -rate and usage -based rate customers is provided in
Attachment B. The attachment includes the rate sunset scheduled in January of 2021 that will roll
water rates back to January 1, 2017 levels. This action was directed by Council at the February 15,
2017 meeting. For a resident still on the flat rate, the monthly charge for a three-bedroom home will
increase from $47.27 to $48.69, or $1.42 per month. A metered resident using an average of 1,800
cubic feet of water per month will see an increase from $41.89 to $43.17, or $1.28 per month. As
reflected in the City's Financial Plan (Attachment C), fund balances rebound substantially starting in
Fiscal Year 2020/21 due to WMP expenditures no longer being required. This year corresponds with
APPROVED:
VOX. OIT
• - c wa■.City Manager
K:\WP\UTILITY RATES= _WM2018 W.,WW Rate Increase\CCPH_WaterRates2018.doc 1/8/2018
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
January 17, 2018
Page 2
the rate sunset, as reflected in Resolution No. 2017-23 (Attachment D), and completion of the City's
multi-year WMP.
FISCAL IMPACT:
The Water Utility is requiring increased revenue to fund the remaining
phases of the WMP and to minimize declining fund balances until the
WMP is complete.
FUNDING AVAILABLE: Not applicable.
Charles E. Swimley, Jr.
Public Works Director
Prepared by Rebecca Areida-Yadav, Public Works Management Analyst
CES/RAY/tdb
Attachments
K:\WP\UTILITY RATES\W_WW\2018 W_WW Rate Increase\CCPH_WaterRates2018.doc 12/27/2017
Attachment A
Programmed and Implemented Rate Adjustments
Water
Year
Programmed
Implemented
2009
3.10 (1)
0
2010
0.73 (1)
0
2011
5.98 (2)
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
3.36 (3)
3.0 (4)
2018
3.98 (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
Future Rate Ceiling (2)
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
*Pending a Prop 218 approval
(3) Per Resolution No. 2017-23 adopted February 15, 2017.
Current
(Jan. 2017)
Proposed
(Jan. 2018)
Potential
(Jan. 2019)
Potential*
(Jan. 2020)
Sunset Rates
(Jan. 2021) (3)
Rate Increase -->
3.0%
3.0%
3.0%
FLAT RATES
Single Family Residential
1 Bedroom
$ 32.84
$ 33.83
$ 34.84
$ 35.89
$ 32.84
2 Bedroom
$ 39.44
$ 40.62
$ 41.84
$ 43.10
$ 39.44
3 Bedroom
$ 47.27
$ 48.69
$ 50.15
$ 51.65
$ 47.27
4 Bedroom
$ 56.79
$ 58.49
$ 60.24
$ 62.05
$ 56.79
5 Bedroom
$ 68.11
$ 70.15
$ 72.25
$ 74.42
$ 68.11
6 Bedroom
$ 81.75
$ 84.20
$ 86.73
$ 89.33
$ 81.75
7 Bedroom
$ 98.03
$ 100.97
$ 104.00
$ 107.12
$ 98.03
Multi -Family (1)
1 Bedroom
$ 28.19
$ 29.04
$ 29.91
$ 30.81
$ 28.19
2 Bedroom
$ 33.81
$ 34.82
$ 35.86
$ 36.94
$ 33.81
3 Bedroom
$ 40.58
$ 41.80
$ 43.05
$ 44.34
$ 40.58
Mobile Homes
Any Size
$ 28.19
$ 29.04
$ 29.91
$ 30.81
$ 28.19
Non -Residential
Existing unmetered
Varies
+3.0%
+3.0%
+3.0%
Varies
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
*Pending a Prop 218 approval
(3) Per Resolution No. 2017-23 adopted February 15, 2017.
City of Lodi
Current and Proposed Usage -Based Water Rates
Future Rate Ceiling (2)
Current
(Jan. 2017)
Proposed
(Jan. 2018)
Potential
(Jan. 2019)
Potential*
(Jan. 2020)
Sunset Rates
(Jan. 2021) (3)
Rate Increase -->
3.0%
3.0%
3.0%
USAGE -BASED RATES
Monthly Service Charge
Single Family
Up to 3/4" meter
$ 21.87
$ 22.53
$ 23.21
$ 23.91
$ 21.87
1" meter
$ 34.34
$ 35.37
$ 36.43
$ 37.52
$ 34.34
1 1/2" meter
$ 65.25
$ 67.21
$ 69.23
$ 71.31
$ 65.25
2" meter
$ 102.52
$ 105.60
$ 108.77
$ 112.03
$ 102.52
Multi -Family and Non -Residential (1)
Up to 3/4" meter
$ 21.87
$ 22.53
$ 23.21
$ 23.91
$ 21.87
1" meter
$ 34.34
$ 35.37
$ 36.43
$ 37.52
$ 34.34
1 1/2" meter
$ 65.25
$ 67.21
$ 69.23
$ 71.31
$ 65.25
2" meter
$ 102.52
$ 105.60
$ 108.77
$ 112.03
$ 102.52
3" meter
$ 189.50
$ 195.19
$ 201.05
$ 207.08
$ 189.50
4" meter
$ 313.73
$ 323.14
$ 332.83
$ 342.81
$ 313.73
6" meter
$ 624.03
$ 642.75
$ 662.03
$ 681.89
$ 624.03
8" meter
$ 996.55
$ 1,026.45
$ 1,057.24
$ 1,088.96
$ 996.55
10" meter
$ 1,431.26
$ 1,474.20
$ 1,518.43
$ 1,563.98
$ 1,431.26
Usage Rates ($/CCF)
Single Family
Tier 1 (0-10 CCF)
$ 0.97
$ 1.00
$ 1.03
$ 1.06
$ 0.97
Tier 2 (11-50 CCF)
$ 1.29
$ 1.33
$ 1.37
$ 1.41
$ 1.29
Tier 3 (>50 CCF)
$ 1.60
$ 1.65
$ 1.70
$ 1.75
$ 1.60
Multi -Family and Non -Residential (1)
All water usage $ 1.15
$ 1.18
$ 1.22
$ 1.26
$ 1.15
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
*Pending a Prop 218 approval
(3) Per Resolution No. 2017-23 adopted February 15, 2017.
City of Lodi -- Water Utility
Financial Plan Summary
FY 16-17
FY 17-18 FY 18-19
FY 19-20 FY 20-21
3.0%
Jan. 2017
WATER OPERATING FUND (560)
3.0%
Jan. 2018
3.0%
Jan. 2019
3.0%
Jan. 2020
0.0%
Jan. 2021
Beginning Balance 5,706,099 3,604,106 1,239,545 405,434 2,143,723
Revenues
Water Sales 12,473,679 13,493,000 14,246,000 14,869,000 14,993,000
Interest Earnings 48,276 59,540 20,000 31,000 98,000
Other Revenues 93,133 76,000 78,000 80,000 82,000
Transfer from Fund 562 for Debt Service - 109,000 109,000 155,000 155,000
Total Revenues 12,615,087 13,737,540 14,453,000 15,135,000 15,328,000
Expenditures
Transfer Out to General Fund (Cost of Services) 813,000 814,490 814,000 814,000 814,000
Transfer Out to Capital Fund 181 for projects 5,235,000 5,800,000 4,750,000 2,620,000 700,000
Personnel Services 2,763,000 2,851,000 2,949,000 3,048,000 3,120,000
Utilities 453,000 563,000 587,000 611,000 630,000
Supplies, Mat'Is., Services & Other 3,100,000 3,768,000 3,880,000 3,996,000 4,093,000
Debt Service
Net 2010 Rev. Bond Payments 2,353,080 2,305,611 2,307,111 2,307,711 2,305,911
Total Expenditures 14,717,080 16,102,101 15,287,111 13,396,711 11,662,911
Ending Balance 3,604,106 1,239,545 405,434 2,143,723 5,808,812
Operating Reserve (25%) 1,782,000 1,999,000 2,058,000 2,117,000 2,164,000
Available Balance 1,822,106 (759,455) (1,652,566) 26,723 3,644,812
Debt Service Coverage (min. 1.25) 2.81 2.60 2.81 3.00 2.93
WATER CAPITAL OUTLAY (561)
Beginning Balance
Revenues
Operating Transfers In
Interest Earnings
Loan Repayment from EUD (City Hall Annex)
DBCP Reimbursements
Total Revenues
Expenditures
Water Meter/Main Install. Project
Water Taps
Miscellaneous Water Mains
Public Improvement Reimbursements
GAC & Meter Repl (DBCP)
Meter Shop Design/Construction
Southwest Gateway Water Tank
Surface Water Treatment Plant PS Generator
MSC Security Improvements
Well 10C
Well 3 & 1OR Abandonment
Well 14 -Pump Rehab/Repl
Well 15 -Pump Rehab/Repl
Well 16 -Pump Rehab/Electrical Upgrade
Well 17 -Pump Rehab/Electrical Upgrade
Well 21
Well 23
Well 24 - Pump Rehab & Electrical Upgrade
Well 25
Vehicles/Equipment
Total Expenditures
FY 16-17
FY 17-18 FY 18-19
FY 19-20 FY 20-21
(1,371,678)
5,235,000
24,745
576,378
275,942
93,851 113,551
5,800,000
2,700
248,000
4,750,000
(1,000)
249,000
55,551 49,551
2,620,000
(2,000)
251,000
700,000
73,000
6,112,065 6,050,700
4,193,000
31,000
18,634
93,893
123,895
63,114
123,000
5,311,000
75,000
50,000
300,000
50,000
25,000
200,000
20,000
4,998,000 2,869,000
3,739,000
75,000
50,000
300,000
200,000
300,000
171,000
180,000
41,000
75,000
50,000
300,000
2,000,000
212,000
196,000
42,000
773,000
75,000
50,000
212,000
196,000
212,000
42,000
4,646,537 6,031,000
5,056,000 2,875,000
787,000
Ending Balance 93,851 113,551 55,55
1 49,551 35,551
FY 16-17
FY 17-18 FY 18-19
FY 19-20 FY 20-21
IMF WATER FACILITIES (562)
Beginning Balance 366,687 626,388 632,673 648,673 664,673
Revenues
Water Impact Mitigation Fees 206,847 109,000 109,000 155,000 155,000
Fire Station #4 Loan Payback 50,000
Interest Earnings 2,854 13,000 16,000 16,000 17,000
Total Revenues
Expenditures
IMF Update
Transfer to Operations Fund 180 for Debt Service
Total Expenditures
Ending Balance
Owed Fund 180 for Debt Service
259,701
122,000 125,000
171,000 172,000
6,715 - - -
109,000 109,000 155,000 155,000
115,715 109,000
155,000 155,000
626,388 632,673 648,673 664,673 681,673
6,696,000
7,491,000 8,267,000
8,977,000 9,666,000
Aggregate End -of -Year Balance *
Operating Reserve (25%)
Restricted DS Reserve
Net Available for Capital Projects
5,854,000 3,516,000 2,640,000 4,388,000 8,056,000
1,782,000 1,999,000 2,058,000 2,117,000 2,164,000
1,530,000 1,530,000 1,530,000 1,530,000 1,530,000
2,542,000 (13,000) (948,000) 741,000 4,362,000
City of Lodi -- Water Utility
Financial Plan Assumptions
Financial Assumptions
General Inflation
Labor Inflation 3.4% 3.4% 3.4% 3.4% 3.4%
Material/Energy Inflation 4.5% 4.5% 4.5% 4.5% 4.5%
Construction Inflation 3.0% 3.0% 3.0% 3.0% 0.0%
Interest Earnings 2.0% 2.0% 2.5% 2.5% 2.5%
Customer Account Assumptions
No. of DUs/Accounts 23,656 23,706 23,756 23,806 23,856
No. of 3/4" Eq. Mtrs. 25,704 25,754 25,804 25,854 25,904
No. of New Connections 50 50 50 50 50
Customer Growth Rate 0.19% 0.19% 0.19% 0.19% 0.19%
Water Mitigation Impact Fee $ 1,263 $ 3,103 $ 3,103 $ 3,103 $ 3,103
Residential $ 1,263 $ 1,263 $ 1,263
Non -Residential 3,103 3,103 3,103
3.0% 3.0% 3.0% 3.0% 3.0%
RESOLUTION NO. 2017-23
A RESOLUTION OF THE LODI CITY COUNCIL SETTING
PRE -APPROVED ENGINEERING NEWS RECORD
ADJUSTMENT INDEX FOR USAGE -BASED AND FLAT
WATER RATES FOR RESIDENTIAL, COMMERCIAL, AND
INDUSTRIAL CUSTOMERS
WHEREAS, Resolution No. 2014-75 approved annual water rate increases in an amount
not to exceed the percentage change in the Engineering News Record (ENR) Twenty Cities
Annual Average Index, or three percent, beginning 2015 through January 2019. A
Proposition 218 procedure was conducted that validated this action; and
WHEREAS, staff has regularly updated the Water Utility Financial Plan with the
assistance of the The Reed Consulting Group, Inc., of Sacramento; and
WHEREAS, the current water rate adjustment reflects a three -percent increase; and
WHEREAS, the adjustment includes a "rate sunset" at the end of the Water Meter
Program, which will eliminate this rate increase going forward from January 1, 2021.
NOW, THEREFORE, BE IT RESOLVED that the Lodi City Council does hereby set
pre -approved Engineering News Record adjustment index for usage -based and flat water rates
for residential, commercial, and industrial customers as outlined on Exhibit A, with the effective
date of the increase to be March 1, 2017; and
BE IT FURTHER RESOLVED that the adjustment includes a "rate sunset" at the end of
the Water Meter Program whereby water rates will be reset going forward from January 1, 2021,
to the applicable rate as if this resolution had never passed.
Dated: February 15, 2017
I hereby certify that Resolution No. 2017-23 was passed and adopted by the City
Council of the City of Lodi in a special meeting held February 15, 2017, by the following vote:
AYES: COUNCIL MEMBERS — Chandler, Johnson, and Mayor Kuehne
NOES: COUNCIL MEMBERS — Nakanishi
ABSENT: COUNCIL MEMBERS — Mounce
ABSTAIN: COUNCIL MEMBERS — None
2017-23
NNIFE
ity Clerk
Tril eUtC/A-te
RRAIOLO
Exhibit A
City of Lodi
Flat Water Rates
Notes:
(1) Mufti -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
(Jan. 2016)
Proposed
(Jan. 2017)
Potential
(Jan. 2018)
Potential
(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) Mufti -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
-Based Water Rates
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
Future Rate Ceiling (2)
Current
(Jan. 2016)
Proposed
(Jan. 2017)
Potential
(Jan. 2018)
Potential
(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
W.-- .................. !I I
4
Water Rate Setting
• May 2014 - Council Adopted Five -Year Schedule
of Rate Adjustments
• ENR Index or Maximum Three -Percent
• Proposition 218 Procedure Affirmed Schedule
• Financial Model Used to Analyze Rate Changes
Recommendation
• Recommendation Action
— Three -percent increase in FY 2017/18 followed by
annual three -percent increases through FY 2019/20
• Proposition 218 — Three -percent maximum
• 2017 ENR Index Change — 3.98 percent
• Pre -approved increase by 2014 Council Action
— Implement WMP Phase 8 per schedule
— Places some financial stress on utility in FY 2017/18
and FY 2018/19
— Rate sunset -January 1, 2021 (Resolution No. 2017-23)
Water Operating Balances
7,000,000
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
0
Water Operating Balances
i
FY 17/18 FY 18/19 FY 19/20 FY 20/21
f Ending Balance with 3% Rate Increase
t Ending Balance w/out Rate Increase &
defer Phase 8
♦ Operating Reserve (25%)
Water Meter Program Status
• Metered residential customers
• 87 -percent single-family residential as of January 1,
2018
• 14,400 meters
• Residential meters installed (incl. Phase 7)
• 92 -percent single-family residential
• 15,300 meters
• Flat -rate, single-family residential customers
• 2,060 as of January 1, 2018
7 -Year Summary
Year
Prop 218
Approved
ENR
Implemented
2012
2013
2.53
2.53
2.5 2.5
2.2
2.5
2014 3.3 3.3 2.5
2015 3.0 2.0 2.0
2016 3.0 1.975 1.975
2017 3.0 3.36 3.0
2018 3.0 3.98 3.0
*Consumer price index (use of ENR index became effective January 2012)
Recommended Water Flat Rates
Residential
January 2018
1 Bedroom
2 Bedroom
3 Bedroom
4 Bedroom
5 Bedroom
6 Bedroom
7 Bedroom
$32.84
$39.44
$47.27
$56.79
$68.11
$81.75
$98.03
$33.83
$40.62
$48.69
$58.49
$70.15
$84.20
$100.97
Recommended Metered Rates
Residential
Current
January 2018
Fixed Service Charge (3/4 inch)
$21.87
$22.53
Metered Charges:
Tier 1 (Up to 7,480 gals/month) $0.00130/gal $0.00134/gal
Tier 2 (7,480-37,400 gals/month) $0.00172/gal $0.00179/gal
Tier 3 (>34,000 gals/month) $0.00214/gal $0.00221 /gal
Three -Percent Increase Amounts
• Flat -Rate - 3 Bedroom Home
— Currently $47.27 / Month
— January 1St $48.69 / Month
— Difference $ 1.42 / Month
• Metered Rate — (1,800 CF / Month)
— Currently $41.89 / Month
— January 1St $43.17 / Month
— Difference $ 1.28 / Month
Average Bill
Rate Comparisons - Local
City of Tracy
City of Galt
City of Lodi
City of Manteca
City of Stockton
City of Lathrop
$29.70
$35.47
$43.17
$44.64
$77.29
$90.28
Based on 1,800 cubic feet per month
Recommendation
• Adopt a resolution setting pre -approved
Engineering News Record Adjustment Index for
usage -based and flat water rates for residential,
commercial, and industrial customers.
Questions?
Mike Lusk
2518 Colony Dr.
Lodi, Calif. 95242
209-339-8028
January 17, 2018
Prts 'M. Lusr.
G—1
NECEIVEO
JAN 1 7 2018
CITY CLER%
THE BASIS FOR THE THREE CLAIMS REVOLVES AROUND PROP. 218, XIIIC AND XIIID
IN THAT THE CITY HAS DIVERTED IMPACT MITIGATATION FEES AWAY FROM THE
UTILITIES TO THE GENERAL FUND IN A PROPERTY TAX SWITCH TO THE GENERAL
FUND. THEREBY CREATING A PROFIT FOR THE CITY THROUGH THE OPERATION
OF THE WATER UTILITY ENTERPRISE, THOSE SECTIONS OF ARTICLE XIII THAT DEAL
WITH PROPORTIONALITY, PARCEL RELATED SERVICES, STANDBY FEES FOR FUTURE
USE BUT NOT IMMEDIATELY AVAILABLE TO THE CUSTOMERS, AND REVENUE
NEUTRAL OPERATION OF THE WATER UTILITY ENTERPRISE RESTRICTING THE CITY
FROM MAKING A PROFIT OFF OF THE OPERATION OF THE WATER UTILITY.
I BELIEVE THE CITY OF LODI AND LODI PUBLIC FINANCING AUTHORITY VIOLATED
THE MANDATE OF PROP 218 AND ARTICLE XIIIC AND XIIID WHEN THEY FINANCED
AND OBLIGATED THE LODI WATER UTILITY ENTERPRISE TO PAY FOR THE 2010
SERIES A AND B BONDS WITH THE NET REVENUES WHEN PORTIONS OF THE NEW
SURFACE WATER TREATMENT FACILITY WAS NOT USED AND SHOULD HAVE BEEN
CONSIDERED "STANDBY" FOR FUTURE NEW DEVELOPMENT AND THE COSTS WERE
ADDED TO THE WATER UTILITY'S BUDGET IN VIOLATION OF ARTICLE XIIID SECTION 6
(B) (4).
DISPROPORTIONATE VERSES PROPORTIONAL SHARE OF CAPITAL EXPENSES.
IN ALL THREE OF THESE CLAIMS, THE ARGUMENT OF COST OF SERVICE BEING
PROPORTIONAL TO THE ACTUAL COST OF THE DELIVERY OF THAT SERVICE TO THE
PARCEL. WHEN RATE PAYERS ARE PAYING MILLIONS OF DOLLARS FOR CAPITAL
IMPROVEMENTS, CAUSED BY NEW DEVELOPMENT, WELL IN ADVANCE OF THE
UTILIZATION OF SUPPLY OR INFASTRUCTURE FOR THAT NEW DEVELOPMENT.
THE COST OF IT IS SUPPOSED TO BE SHARED BY THE DEVELOPERS BY WAY OF
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IMPACT MITIGATION FEES ON THAT NEW DEVELOPMENT AND THE CITY
ARBITRARILY REDUCES THE SHARE OF THAT BURDEN AND SHIFTS IT TO THE
CURRENT RATE PAYERS. THIS SHIFT UNFARILY CAUSES THE CURRENT RATE PAYER
TO PAY MORE THAN THEIR SHARE OF PROPORTIONAL COST OF SERVICE.
I OR ANY RATE PAYER MAY NOT LIVE LONG ENOUGH OR LIVE IN LODI CITY LIMITS
TO SEE THE DAY WHERE DEVELOPERS FINALLY CATCH UP WITH THERE
PROPORTIONAL SHARE OF COST. PROBABLY NEVER GOING TO HAPPEN.
THEREFORE UNTIL THE CITY STOPS MAKING THE CITIZENS OF LODI SUBSIDIZE
THESE DEVELOPMENTS, THERE EXISTS THE UNFAIR PROPORTIONAL COST OF
SERVICE. THEREFORE THE REASONING FOR THESE CLAIMS UNDER PROP. 218,
ARTICLE XIIIC AND XIIID OF THE CALIFORNIA CONSTITUTION.
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ARTICLE XIIID, SECTION 2, DEFINITIONS. AS USED IN THIS ARTICLE:
(e) "Fee" or "Charge" means any levy other than an ad valorem tax, a special
tax, or an assessment, imposed by an agency upon a parcel or upon a person as
an incident of property ownership, including a user fee or charge for a property
related service.
(g) "Property ownership" shall be deemed to include tenancies of real property
where tenants are directly liable to pay the assessment, fee or charge in question.
(h) "Property -related service" means a public service having a direct
relationship to property ownership.
ARTICLE XIIID, SECTION 6, PROPERTY RELATED FEES AND CHARGES. (a)
Procedures for New or Increased Fees and Charges. An agency shall follow the
procedures pursuant to this section in imposing or increasing any fee or charge as
defined pursuant to this article, including, but not limited to, the following:
(2) (b) Requirements for Existing, New or Increased Fees and Charges. A fee or
charge shall not be extended, imposed, or increased by any agency unless it
meets all of the following requirements:
(3) The amount of a fee or charge imposed upon any parcel or person as an incident of
property ownership shall not exceed the proportional cost of the service attributable to the
parcel.
(4) No fee or charge may be imposed for a service unless that service is actually
used by, or immediately available to, the owner of the property in question. Fees
or charges based on potential or future use of a service are not permitted.
Standby charges, whether characterized as charges or assessments, shall be
classified as assessments and shall not be imposed without compliance with
Section 4.
(5) No fee or charge may be imposed for general governmental services including,
but not limited to, police, fire, ambulance or library services, where the service is
available to the public at large in substantially the same manner as it is to
property owners. Reliance by an agency on any parcel map, including, but not
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limited to, an assessor's parcel map, may be considered a significant factor in
determining whether a fee or charge is imposed as an incident of property
ownership purposes of this article. In any legal action contesting the validity of a
fee or charge, the burden shall be on the agency to demonstrate compliance with
this article.
(Source: Legislative Analyst Office Report on Understanding Prop 218 dated
December 1996.)
(Source: League of California Cities Proposition 218 Implementation Guide 2007
Edition)
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California State
Board of Equalization
ARTICLE XIII D ASSESSMENT AND PROPERTY -RELATED FEE REFORM
[Sections 1 through 6 added by amendments adopted November 5, 1996.]
Section 1. Application. Notwithstanding any other provision of , the provisions of this
article shall apply to all assessments, fees and charges, whether imposed pursuant to state
statute or local government charter authority. Nothing in this article or Article XIII C shall be
construed to:
(a) Provide any new authority to any agency to impose a tax, assessment, fee, or charge.
(b) Affect existing laws relating to the imposition of fees or charges as a condition of
property development.
(c) Affect existing laws relating to the imposition of timber yield taxes.
Sec. 2. Definitions. As used in this article:
(a) "Agency" means any local government as defined in subdivision (b) of Section 1 of
Article XIII C.
(b) "Assessment" means any levy or charge upon real property by an agency for a special
benefit conferred upon the real property. "Assessment" includes, but is not limited to,
"special assessment," "benefit assessment," "maintenance assessment" and "special
assessment tax."
(c) "Capital cost" means the cost of acquisition, installation, construction, reconstruction,
or replacement of a permanent public improvement by an agency.
(d) "District" means an area determined by an agency to contain all parcels which will
receive a special benefit from a proposed public improvement or property -related service.
(e) "Fee" or "charge" means any levy other than an ad valorem tax, a special tax, or an
assessment, imposed by an agency upon a parcel or upon a person as an incident of
property ownership, including a user fee or charge for a property related service.
(f) "Maintenance and operation expenses" means the cost of rent, repair, replacement,
rehabilitation, fuel, power, electrical current, care, and supervision necessary to properly
operate and maintain a permanent public improvement.
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(g) "Property ownership" shall be deemed to include tenancies of real property where
tenants are directly liable to pay the assessment, fee, or charge in question.
(h) "Property -related service" means a public service having a direct relationship to
property ownership.
(i) "Special benefit" means a particular and distinct benefit over and above general
benefits conferred on real property located in the district or to the public at large. General
enhancement of property value does not constitute "special benefit."
Construction.—A ballot measure to amend a city charter to require a two-thirds vote of the electorate for
approval of any new general tax or an increase in an existing general tax was invalid because it directly
conflicted with subdivision (b) of this section. Howard Jarvis Taxpayers Assn. v. City of San Diego, 120
Cal.App.4th 374.
Procedure.—Property owners challenging assessments imposed on specific parcels of real property under the
Municipal Improvement Act of 1913, Streets and Highways Code Section 10000 et. seq. are not required to
comply with the requirements governing validation proceedings brought under Code of Civil Procedure
Sections 860 through 870.5. Bonanderv. Town of Tiberon, 46 Ca1.4th 646.
Assessment.—A city's business improvement district assessment imposed on businesses pursuant to the
Parking and Business Improvement Area Law of 1989, Streets and Highways Code Section 36500 et. seq., is
not an assessment within the meaning of Article XIII C and Article XIII D. The definition of "assessment" in
subdivision (b) unambiguously applies only to levies upon real property, and the assessment at issue was not
imposed upon real property but upon businesses. Howard Jarvis Taxpayers' Assn. v. City of San Diego, 72
Cal.App.4th 230. An assessment within the meaning of this article must not only confer a special benefit on real
property, but it also must be imposed on identifiable parcels of real property. Thus, when a local water district
did not impose a capacity charge on identifiable parcels of real property, but only on individuals who requested
a new service connection, the capacity charge was not an assessment within the meaning of this article.
Richmond v. Shasta Community Services Dist., 32 Ca1.4th 409.
Changes in methods of calculating taxes.—A city's increased cell phone service tax, which changed the
way the tax was calculated, violated Proposition 218 because the city failed to submit the increase to the voters
before implementing the new tax. A local government's methodology cannot evolve. Proposition 218 does not
allow a fluctuating local government tax even if the fluctuation is due to expanding constitutional boundaries.
AB Cellular LA, LLC v. City of Los Angeles, 150 Cal.App.4th 747.
Commodity charges.—Water service fees may be considered fees or charges under article XIII D, but only if
the fees are imposed upon a person as an incident of property ownership. For example, a fee for ongoing water
service through an existing connection is imposed as an incident of property ownership because it requires
nothing other than normal ownership and use of property. Thus, fees for ongoing service are subject to this
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article's voter approval requirements. On the other hand, a fee for making a new water connection is not
considered a fee or charge under Article XIII D because it is not imposed as an incident of property ownership,
but instead is imposed as a result of a voluntary act on the part of a property owner in applying for water
service connection. Richmond v. Shasta Community Services Dist., 32 Ca1.4th 409. Domestic water delivery
through a pipeline is a property -related service within the meaning of Articles XIII D and XIII C, section 3. Thus,
once a property owner or resident has paid the connection charges and has become a customer of a public
water agency, all charges for water delivery incurred thereafter are charges for a property -related service,
whether the charge is calculated on the basis of consumption or is imposed as a fixed monthly fee. Bighorn -
Desert View Water Agency v. Verjil, 39 Ca1.4th 205.
Inspection fee.—An inspection fee imposed upon landlords in their capacity as business owners, not in their
capacity as landowners, does not fall within the scope of this article, which applies only to exactions levied
solely by virtue of property ownership. Apartment Assn. of Los Angeles County, Inc. v. City of Los Angeles, 24
Ca1.4th 830.
Groundwater augmentation fee.—A groundwater augmentation fee to be charged to operators of wells who
extract water from the wells for the purposes of paying the costs of purchasing, capturing, storing, and
distributing supplemental water for use, while not a tax or assessment, is a property -related fee or charge
"imposed ... as an incident of property ownership," and, thus, subject to constitutional preconditions for the
imposition of such charges. Pajaro Valley Water Mgmt. Agency v. Amrhein, 150 Cal.App.4th 1364.
Sec. 3. Property taxes, assessments, fees, and charges limited.
(a) No tax, assessment, fee, or charge shall be assessed by any agency upon any parcel of
property or upon any person as an incident of property ownership except:
(1) The ad valorem property tax imposed pursuant to Article XIII and Article XIII A.
(2) Any special tax receiving a two-thirds vote pursuant to Section 4 of Article XIII A.
(3) Assessments as provided by this article.
(4) Fees or charges for property related services as provided by this article.
(b) For purposes of this article, fees for the provision of electrical or gas service shall not
be deemed charges or fees imposed as an incident of property ownership.
Construction.—A port district cannot impose an assessment to raise funds under Harbors and Navigation
Code Section 6365 to satisfy a judgment obtained against it, since the district's assessment would not specially
benefit the parcels upon which it would be imposed. Subdivision (a) provides that an assessment may not
exceed the reasonable cost of the proportional special benefit conferred on the parcel, and that only special
benefits are assessable. Ventura Group Ventures, Inc. v. Ventura Port District, 24 Ca1.4th 1089. A non -ad
valorem tax may be imposed upon real property if the tax is a "special" tax dedicated to specific purposes and
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approved "by a two-thirds vote of the qualified electors of" the city, county, or special district imposing the tax. A
special tax can be used for more than one purpose without losing its status as a special tax. Neilson v. City of
California City, 133 Cal.App.4th 1296.
Inspection Fee.—An inspection fee imposed upon landlords in their capacity as business owners, not in their
capacity as landowners, does not fall within the scope of this article, which applies only to exactions levied
solely by virtue of property ownership. Apartment Assn. of Los Angeles County, Inc. v. City of Los Angeles, 24
Ca1.4th 830.
Groundwater augmentation fee.—A groundwater augmentation fee to be charged to operators of wells who
extract water from the wells for the purposes of paying the costs of purchasing, capturing, storing, and
distributing supplemental water for use, while not a tax or assessment, is a property -related fee or charge
"imposed ... as an incident of property ownership," and, thus, subject to constitutional preconditions for the
imposition of such charges. Pajaro Valley Water Mgmt. Agency v. Amrhein, 150 Cal.App.4th 1364.
Water and sewer charges.—Under the rule of construction that the expression of some things in a statute
implies the exclusion of other things not expressed, since this section expressly excludes electrical and gas
service charges as not being within the category of property -related fees, such expression implies that similar
charges for other utility services, such as water and sewer, are property -related fees subject to the restrictions
of Article XIII D. Richmond v. Shasta Community Services Dist., 32 Ca1.4th 409.
Sec. 4. Procedures and requirements for all assessments. (a) An agency which
proposes to levy an assessment shall identify all parcels which will have a special benefit
conferred upon them and upon which an assessment will be imposed. The proportionate
special benefit derived by each identified parcel shall be determined in relationship to the
entirety of the capital cost of a public improvement, the maintenance and operation
expenses of a public improvement, or the cost of the property related service being
provided. No assessment shall be imposed on any parcel which exceeds the reasonable
cost of the proportional special benefit conferred on that parcel. Only special benefits are
assessable, and an agency shall separate the general benefits from the special benefits
conferred on a parcel. Parcels within a district that are owned or used by any agency, the
State of California or the United States shall not be exempt from assessment unless the
agency can demonstrate by clear and convincing evidence that those publicly owned
parcels in fact receive no special benefit.
(b) All assessments shall be supported by a detailed engineer's report prepared by a
registered professional engineer certified by the State of California.
(c) The amount of the proposed assessment for each identified parcel shall be calculated
and the record owner of each parcel shall be given written notice by mail of the proposed
assessment, the total amount thereof chargeable to the entire district, the amount
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chargeable to the owner's particular parcel, the duration of the payments, the reason for the
assessment and the basis upon which the amount of the proposed assessment was
calculated, together with the date, time, and location of a public hearing on the proposed
assessment. Each notice shall also include, in a conspicuous place thereon, a summary of
the procedures applicable to the completion, return, and tabulation of the ballots required
pursuant to subdivision (d), including a disclosure statement that the existence of a majority
protest, as defined in subdivision (e), will result in the assessment not being imposed.
(d) Each notice mailed to owners of identified parcels within the district pursuant to
subdivision (c) shall contain a ballot which includes the agency's address for receipt of the
ballot once completed by any owner receiving the notice whereby the owner may indicate
his or her name, reasonable identification of the parcel, and his or her support or opposition
to the proposed assessment.
(e) The agency shall conduct a public hearing upon the proposed assessment not less
than 45 days after mailing the notice of the proposed assessment to record owners of each
identified parcel. At the public hearing, the agency shall consider all protests against the
proposed assessment and tabulate the ballots. The agency shall not impose an assessment
if there is a majority protest. A majority protest exists if, upon the conclusion of the hearing,
ballots submitted in opposition to the assessment exceed the ballots submitted in favor of
the assessment. In tabulating the ballots, the ballots shall be weighted according to the
proportional financial obligation of the affected property.
(f) In any legal action contesting the validity of any assessment, the burden shall be on
the agency to demonstrate that the property or properties in question receive a special
benefit over and above the benefits conferred on the public at Targe and that the amount of
any contested assessment is proportional to, and no greater than, the benefits conferred on
the property or properties in question.
(g) Because only special benefits are assessable, electors residing within the district who
do not own property within the district shall not be deemed under this Constitution to have
been deprived of the right to vote for any assessment. If a court determines that the
Constitution of the United States or other federal requires otherwise, the assessment shall
not be imposed unless approved by a two-thirds vote of the electorate in the district in
addition to being approved by the property owners as required by subdivision (e).
Construction.—Proposition 218, Articles XIIIC and XIID, requires the use of weighted voting schemes in all
referenda on proposed assessments, defined to include "special assessments" and "benefit assessment,"
among others, in Article XIIID, Section 2. Not About Water Committee v. Solano County, 95 Cal.App.4th 982.
There is nothing in the language or the intent of Proposition 218 that would per se prevent an agency from
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levying an assessment to fund the future acquisition and maintenance of unspecified real property. Subdivision
(a) of this section does not prohibit the use of projected costs to calculate an assessment. Silicon Valley
Taxpayers' Association, Inc. v. Santa Clara County Open Space Authority (2005) 130 Cal.App.4th 1295.
Assessment.—An assessment within the meaning of this article must not only confer a special benefit on real
property, but it must also be imposed on identifiable parcels of real property. Thus, when a local water district
did not impose a capacity charge on identifiable parcels of real property, but only on individuals who requested
a new service connection, the capacity charge was not an assessment within the meaning of Art. XIII D.
Richmond v. Shasta Community Services Dist., 32 Ca1.4th 409.
Sec. 5. Effective date. Pursuant to subdivision (a) of Section 10 of Article 11, the
provisions of this article shall become effective the day after the election unless otherwise
provided. Beginning July 1, 1997, all existing, new, or increased assessments shall comply
with this article. Notwithstanding the foregoing, the following assessments existing on the
effective date of this article shall be exempt from the procedures and approval process set
forth in Section 4:
(a) Any assessment imposed exclusively to finance the capital costs or maintenance and
operation expenses for sidewalks, streets, sewers, water, flood control, drainage systems or
vector control. Subsequent increases in such assessments shall be subject to the
procedures and approval process set forth in Section 4.
(b) Any assessment imposed pursuant to a petition signed by the persons owning all of
the parcels subject to the assessment at the time the assessment is initially imposed.
Subsequent increases in such assessments shall be subject to the procedures and
approval process set forth in Section 4.
(c) Any assessment the proceeds of which are exclusively used to repay bonded
indebtedness of which the failure to pay would violate the Contract Impairment Clause of
the Constitution of the United States.
(d) Any assessment which previously received majority voter approval from the voters
voting in an election on the issue of the assessment. Subsequent increases in those
assessments shall be subject to the procedures and approval process set forth in Section 4.
Construction.—An annual streetlighting assessment levied by a city's streetlight assessment district, in
existence on the effective date of Article XIIID, came within the subdivision (a) exemption for streets and
sidewalks, one of the four specified classes of pre-existing assessments exempted from the procedures and
approval process set forth in Article XIIID, Section 4. Howard Jarvis Taxpayers' Assn. v. City of Riverside, 73
Cal.App.4th 679. A pre-existing standby charge on all property capable of receiving water from the district
came within the subdivision (a) exemption for water. Keller v. Chowchilla Water District, 80 Cal.App.4th 1006.
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Sec. 6. Property -related fees and charges. (a) Procedures for New or Increased Fees
and Charges. An agency shall follow the procedures pursuant to this section in imposing or
increasing any fee or charge as defined pursuant to this article, including, but not limited to,
the following:
(1) The parcels upon which a fee or charge is proposed for imposition shall be identified.
The amount of the fee or charge proposed to be imposed upon each parcel shall be
calculated. The agency shall provide written notice by mail of the proposed fee or charge to
the record owner of each identified parcel upon which the fee or charge is proposed for
imposition, the amount of the fee or charge proposed to be imposed upon each, the basis
upon which the amount of the proposed fee or charge was calculated, the reason for the fee
or charge, together with the date, time, and location of a public hearing on the proposed fee
or charge.
(2) The agency shall conduct a public hearing upon the proposed fee or charge not less
than 45 days after mailing the notice of the proposed fee or charge to the record owners of
each identified parcel upon which the fee or charge is proposed for imposition. At the public
hearing, the agency shall consider all protests against the proposed fee or charge. If written
protests against the proposed fee or charge are presented by a majority of owners of the
identified parcels, the agency shall not impose the fee or charge.
(b) Requirements for Existing, New or Increased Fees and Charges. A fee or charge shall
not be extended, imposed, or increased by any agency unless it meets all of the following
requirements:
(1) Revenues derived from the fee or charge shall not exceed the funds required to
provide the property related service.
(2) Revenues derived from the fee or charge shall not be used for any purpose other than
that for which the fee or charge was imposed.
(3) The amount of a fee or charge imposed upon any parcel or person as an incident of
property ownership shall not exceed the proportional cost of the service attributable to the
parcel.
(4) No fee or charge may be imposed for a service unless that service is actually used by,
or immediately available to, the owner of the property in question. Fees or charges based
on potential or future use of a service are not permitted. Standby charges, whether
characterized as charges or assessments, shall be classified as assessments and shall not
be imposed without compliance with Section 4.
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(5) No fee or charge may be imposed for general governmental services including, but
not limited to, police, fire, ambulance or library services, where the service is available to
the public at Targe in substantially the same manner as it is to property owners. Reliance by
an agency on any parcel map, including, but not limited to, an assessor's parcel map, may
be considered a significant factor in determining whether a fee or charge is imposed as an
incident of property ownership for purposes of this article. In any legal action contesting the
validity of a fee or charge, the burden shall be on the agency to demonstrate compliance
with this article.
(c) Voter Approval for New or Increased Fees and Charges. Except for fees or charges
for sewer, water, and refuse collection services, no property related fee or charge shall be
imposed or increased unless and until that fee or charge is submitted and approved by a
majority vote of the property owners of the property subject to the fee or charge or, at the
option of the agency, by a two-thirds vote of the electorate residing in the affected area. The
election shall be conducted not less than 45 days after the public hearing. An agency may
adopt procedures similar to those for increases in assessments in the conduct of elections
under this subdivision.
(d) Beginning July 1, 1997, all fees or charges shall comply with this section.
Construction.—The plain language of subdivision (c) of this section specifically excludes charges for water.
Howard Jarvis Taxpayers' Assn. v. City of Los Angeles, 85 Cal.App.4th 79. Under this section, the electorate
chose not to impose a voter -approval requirement for increases in water service charges. Bighorn -Desert View
Water Agency v. Verjil, 39 Ca1.4th 205. An in -lieu franchise fee imposed by a city on the annual budgets of
each of its utilities, paid by the utility ratepayers and transferred to the city's general fund, was subject to this
article, which requires voter approval of local government property -related assessments, fees, and charges,
and was invalid because it did not comply with either of the following requirements of subdivision (b): the fee or
charge revenues may not exceed what it costs to provide fee or charge services, and no fee or charge may be
imposed for general governmental services. Howard Jarvis Taxpayers Assn. v. City of Roseville, 97
Cal.App.4th 637. A storm drainage fee for the management of storm water runoff from the impervious areas of
each parcel in the city was a property -related fee that required voter approval under subdivision (c) of this
section. Howard Jarvis Taxpayers Assn. v. City of Salinas, 98 Cal.App.4th 1351. A city's assessment of a fee in
lieu of property taxes upon its own utility departments violated this section because of the restriction in
subdivision (b)(3), which states that the amount of a fee or charge imposed shall not exceed the proportional
cost of the service attributable to the parcel. Howard Jarvis Taxpayers Assn. v. City of Fresno (2005) 127
Cal.App.4th 914; 128 Cal.App.4th 426b.
The "immediately available" requirement of subdivision (b)(4) is logically focused on the agency's conduct, not
the property owner's. As long as the agency has provided the necessary service connections at the charged
parcel and it is only the unilateral act of the property owner (either in requesting termination of service or failing
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to pay for service) that causes the service not to be actually used, the service is "immediately available" and a
charge for the service is a fee rather than an assessment (assuming the other substantive requirements of a
fee are satisfied). Paland v. Brooktrails Township Community Services District Board of Directors, 179
Cal.App.4th 1358.
Groundwater augmentation fee.—A groundwater augmentation fee to be charged to operators of wells who
extract water from the wells for the purposes of paying the costs of purchasing, capturing, storing, and
distributing supplemental water for use, while not a tax or assessment, is a property -related fee or charge
"imposed ... as an incident of property ownership," and, thus, subject to constitutional preconditions for the
imposition of such charges. Pajaro Valley Water Mgmt. Agency v. Amrhein, 150 Cal.App.4th 1364.
Water and sewer base rates.—A minimum charge imposed on parcels with connections to a water district's
utility systems for the basic cost of providing water or sewer service, regardless of the owners' actual use, is
exempt from a requirement for ballot approval by a majority of affected property owners. Paland v. Brooktrails
Township Community Services District Board of Directors, 179 Cal.App.4th 1358.
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Agenda Item J-1
COUNCIL COMMUNICATION
TM
AGENDA TITLE: Approve Plans and Specifications and Authorize Advertisement for Bids for
Lodi Surface Water Treatment Facility Project
MEETING DATE: July 21, 2010
PREPARED BY: Public Works Director
RECOMMENDED ACTION: Approve plans and specifications and authorize advertisement for
bids for Lodi Surface Water Treatment Facility Project.
BACKGROUND INFORMATION: On December 16, 2009 City Council authorized HDR, Inc., of
Folsom,
to complete the final design work for the Surface Water Treatment
Facility and Transmission Project and approved the selection of the
Pall Membrane Filtration System. The design work is now complete,
and we are ready to proceed with the next phase of the project.
The project has been presented to and approved by the Parks and Recreation Commission and
the Site Plan and Architectural Review Committee.
Council is being asked to approve the plans and specifications and authorize advertisement for
bids for the Surface Water Treatment Facility Project, which includes:
• The construction of a raw water pump station in Woodbridge;
• Approximately 500 feet of 30 -inch raw water transmission pipe, an operations building,
chemical building, sedimentation structure, 3 -million -gallon treated water storage tank, and
treated water high service pump station at the treatment facility's 4.2 -acre site adjacent to Lodi
Lake;
• Approximately 4,000 feet of 36 -inch treated water transmission pipe and installation of chlorine
and chemical injection systems at approximately 25 well sites throughout the City;
• Traffic signals and intersection work at Mills Avenue and Turner Road; and
• All other site and utility improvements associated with the project.
A prequalification process is being used to determine eligible prime contractor, electrical and
instrumentation bidders to ensure contractors have the necessary experience to perform the
work. The prime contractor qualification process has already begun. Of 18 submissions
received, about 10 contractors will meet the requirements. Review of the qualifications and
reference checks are ongoing.
FISCAL IMPACT: Operation costs associated with the project are estimated to be $1,200,000
during the 12 -month start-up period and then $1,000,000 per year after that.
FUNDING AVAILABLE: This project will be funded by the Water Fund with bonded debt planned to
be sold in October 2010. A request for appropriation of funds will be made at
contract award.
F. Wally Sandelin
Public Works Director
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WHITE PAPER
Surface Water Treatment Facilities
City of Lodi
Public Works Department
June 30, 2010
K:\WP1ProJects\Water\SurfaceWaterPlant\White Paper
Page 15 of 33
on the loan with semi-annual payments of principal and interest at a 3.41 % interest rate. It is
recommended this loan be paid off from available cash or through the financing.
The essence of a water financing is the City's promise to charge rates sufficient to generate
minimum threshold of debt service coverage from net system revenues. Typical minimum
coverage ratios range from 110% to 150% for most utilities, depending upon the enterprise's
credit, desired ratings and need for debt capacity. A recommended coverage ratio will be
presented following a more detailed review of the rate model. The coverage ratio for the 2007
Wastewater Bonds is 110%. The coverage ratio used for the water fund model is shown on
Row 36 in Table 6.
New Development Share Of Costs
At the present time, existing water customers are provided high quality water on a highly reliable
basis. The annual demand of the existing customers averages around 17,000 acre feet. The
estimated annual safe yield of the groundwater aquifer underlying the City is 15,000 acre feet.
The existing customer base is being served but only by over pumping the groundwater resource
by 2,000 acre feet per year. At present, it is planned to reduce the long term pumping of
groundwater by committing a minimum of 2,000 acre feet per year of the WID water to cure the
current overdraft condition.
The WID Agreement provides the City with 6,000 acre feet per year. One could argue that
4,000 acre feet per year are designated for future development. For the Westside Annexation
and the Southwest Gateway Annexation, the City committed approximately 1,650 acre feet per
year to serve the water demands for these projects. For the Reynolds Ranch Annexation,
approximately 500 acre feet per year were committed to serve the demands of this project. The
remaining 1,850 acre feet per year of the WID water is uncommitted.
Staff recommends that the new development share of the surface water treatment plant facilities
be set at 66.7% (4,000/6,000 x 100) and existing customers share be set at 33.3% (2,000/6,000
x 100).
New Development Capacity Charge
A very preliminary calculation of the approximate capacity charge has been determined to be
$5,600 per equivalent dwelling unit. The actual charge will be set in latter 2011 as part of the
new Impact Mitigation Fee Program. The actual charge will be based upon the demand for
water service for the various types of uses that will develop in Lodi in the future. For
perspective, other communities in the region with surface water treatment plants have capacity
charges in the range of approximately $3,560 to $6,380.
New Development Debt Service
As is currently the condition with the 2007 Wastewater Bonds debt service, the rate of
development in Lodi does not generate sufficient cash to pay its portion of the total debt service
payments or about $2.7 million per year. As a result, the City Council decided to have the rate
53
Page 16 of 33
payers commit to making the debt service payments with new development contributing what it
can when it can.
The same condition will exist for the water treatment plant financing plan. This condition can be
found in the Draft Financial Plan Summary on Row 30 (Estimated 2010 COP Payments) and
Row 68 (Revenue Water Impact Mitigation Fees). If new development is responsible for paying
66.7% of the debt service, or $1.88 million per year, there will not be sufficient funds to make a
full payment for several years and the 10 year average annual impact fee revenues are only
slightly over $1.93 million.
54
Page 17 of 33
SOURCE 2010 SERIES A AND B BOND CITY OF LODI
California Constitution Articles XIIIA and XIIIB
Article XIIIA of the California Constitution limits the taxing powers of California public
agencies. Article XIIIA provides that the maximum ad valorem tax on real property cannot
exceed 1% of the "full cash value" of the property, and effectively prohibits the levying of any
other ad valorem property tax except for taxes above that level required to pay debt service on
voter -approved general obligation bonds. "Full cash value" is defined as "the County Assessor's
valuation of real property as shown on the 1975-76 tax bill under 'full cash value' or, thereafter,
the appraisal value of real property when purchased, newly constructed, or a change in
ownership has occurred after the 1975 assessment." The "full cash value" is subject to annual
adjustment to reflect inflation at a rate not to exceed 2% or a reduction in the consumer price
index or comparable local data, or declining property value caused by damage, destruction or
other factors.
The foregoing limitation does not apply to ad valorem taxes or special assessments to pay the
interest and redemption charges on any indebtedness approved by the voters before July 1, 1978
or any bonded indebtedness for the acquisition or improvement of real property approved by the
voters as required by law.
Under Article XIIIB of the California Constitution, state and local government entities have
an annual "appropriations limit" which limits their ability to spend certain moneys called
"appropriations subject to limitation," which consist of tax revenues, certain state subventions
and certain other moneys, including user charges to the extent they exceed the costs reasonably
borne by the entity in providing the service for which it is levying the charge. The City is of the
opinion that the water service and user charges imposed by the City do not exceed the costs the
City reasonably
35
DOCSOC/14 18056-16/022245-0212
bears in providing the water service. In general terms, the "appropriations limit" is to be based
on certain 1978-79 expenditures, and is to be adjusted annually to reflect changes in the
consumer price index, population, and services provided by these entities. Among other
provisions of Article XIIIB, if an entity's revenues in any year exceed the amount permitted to
be spent, the excess would have to be returned by revising tax rates or fee schedules over the
subsequent two years.
California Constitution Articles XIIC and XIIID
General. On November 5, 1996, California voters approved Proposition 21 8, the so-called
"Right to Vote on Taxes Act." Proposition 218 added Articles XIIIC and XIIID to the State
Constitution, which affect the ability of local governments to levy and collect both existing and
future taxes, assessments, and property -related fees and charges. Proposition 218, which
generally became effective on November 6, 1996, changed, among other things, the procedure
for the imposition of any new or increased property -related "fee" or "charge," which is defined
as "any levy other than an ad valorem tax, a special tax or an assessment, imposed by a [local
government] upon a parcel or upon a person as an incident of property ownership, including user
fees or charges for a property related service" (and referred to in this section as a "property -
related fee or charge").
Page 18 of 33
Specifically, under Article XIIID, before a municipality may impose or increase any
property -related fee or charge, the entity must give written notice to the record owner of each
parcel of land affected by that fee or charge. The municipality must then hold a hearing upon the
proposed imposition or increase at least 45 days after the written notice is mailed, and, if a
majority of the property owners of the identified parcels present written protests against the
proposal, the municipality may not impose or increase the property -related fee or charge.
Further, under Article XIIID, revenues derived from a property -related fee or charge may not
exceed the funds required to provide the "property -related service" and the entity may not use
such fee or charge for any purpose other than that for which it imposed the fee or charge. The
amount of a property -related fee or charge may not exceed the proportional cost of the service
attributable to the parcel, and no property -related fee or charge may be imposed for a service
unless that service is actually used by, or is immediately available to, the owner of the property
in question.
In addition, Article XIIIC states that "the initiative power shall not be prohibited or otherwise
limited in matters of reducing or repealing any local tax, assessment, fee or charge. The power of
initiative to affect local taxes, assessments, fees and charges shall be applicable to all local
governments and neither the Legislature nor any local government charter shall impose a
signature requirement higher than that applicable to statewide statutory initiatives."
Judicial Interpretation of Proposition 218.After Proposition 218 was
enacted in 1996, appellate court cases (such as Apartment Association v. City of Los Angeles
(2001) 24 Cal. 4th 830) and an Attorney General opinion initially indicated that fees and charges
levied for water and wastewater services would not be considered property -related fees and
charges, and thus not subject to the requirements of Article XIIID regarding notice, hearing and
protests in connection with any increase in the fees and charges being imposed. However, three
recent cases have held that certain types of water and wastewater charges could be subject to the
requirements of Proposition 2 18 under certain circumstances.
36
DOCSOC/1418056-16/022245-0212
In Richmond v. Shasta Community Services District (9 Cal. Rptr. 3rd 121), the California
Supreme Court addressed the applicability of the notice, hearing and protest provisions of Article
XIIID to certain charges related to water service. In Richmond, the Court held that connection
charges are not subject to Proposition 218. The Court also indicated in dictum that a fee for
ongoing water service through an existing connection could, under certain circumstances,
constitute a property -related fee and charge, with the result that a local government imposing
such a fee and charge must comply with the notice, hearing and protest requirements of Article
XIIID.
In Howard Jarvis Taxpayers Association v. City of Fresno (March 23, 2005), the California
Court of Appeal, Fifth District, concluded that water, sewer and trash fees are property -related
fees subject to Proposition 218 and a municipality must comply with Article XIIID before
imposing or increasing such fees. The California Supreme Court denied the City of Fresno's
petition for review of the Court of Appeal's decision on June 15,2005.
In July 2006 the California Supreme Court, in Bighorn -Desert View Water Agency v. Verjil
Page 19 of 33
(N27535, July 24, 2006), addressed the validity of a local voter initiative measure that would
have (a) reduced a water agency's rates for water consumption (and other water charges), and (b)
required the water agency to obtain voter approval before increasing any existing water rate, fee,
or charge, or imposing any new water rate, fee, or charge. The court adopted the position
indicated by its statement in Richmond that a public water agency's charges for ongoing water
delivery are "fees and charges" within the meaning of Article XIIID, and went on to hold that
charges for ongoing water delivery are also "fees" within the meaning of Article XIIIC's
mandate that the initiative power of the electorate cannot be prohibited or limited in matters of
reducing or repealing any local tax, assessment, fee or charge. Therefore, the court held, Article
XIIIC authorizes local voters to adopt an initiative measure that would reduce or repeal a public
agency's water rates and other water delivery charges. (However, the court ultimately ruled in
favor of the water agency and held that the entire initiative measure was invalid on the grounds
that the second part of the initiative measure, which would have subjected future water rate
increases to prior voter approval, was not supported by Article XIIIC and was therefore invalid.)
The court in Bighorn specifically noted that it was not holding that the initiative power is free
of all limitations; the court stated that it was not determining whether the electorate's initiative
power is subject to the statutory provision requiring that water service charges be set at a level
that will pay for operating expenses, provide for repairs and depreciation of works, provide a
reasonable surplus for improvements, extensions, and enlargements, pay the interest on any
bonded debt, and provide a sinking or other fund for the payment of the principal of such debt as
it may become due.
Proposition 218 and the City's Water System Rates. The City followed the procedural
requirements, including the public hearing and majority protest provisions, of Proposition 218 in
connection with its most recent Water System rate increases (which included approval for annual
ENR increases through 2016). See "THE WATER SYSTEM - Water Rates and Charges". The
City believes that its current water charges which are collected to pay the costs of Water System
operation and maintenance and debt service comply in all respects with the requirements of
Article XIIID and the City expects that any future water charges will comply with Article
XIIID's procedural and substantive requirements to the extent applicable thereto.
37
DOCSOC/14 18056-46/022245-0212
Conclusion. It is not possible to predict how courts will further interpret Article XIIIC and
Article XIIID in future judicial decisions, and what, if any, further implementing legislation will
be enacted.
Under the Bighorn case, local voters could adopt an initiative measure that reduces or repeals
the City's rates and charges, although it is not clear whether (and California courts have not
decided whether) any such reduction or repeal by initiative would be enforceable in a situation in
which such rates and charges are pledged to the repayment of bonds or other indebtedness. After
the City Council adopted increased water rates on September 21, 2005 to pay for the cleanup of
PCE and TCE in the City's groundwater (as described herein in "THE WATER SYSTEM —
Certain Environmental Conditions), an initiative was placed on the November 7, 2006 ballot to
repeal the increased rates. The resolution failed, with 63.9% of the voters rejecting the proposed
rate reduction and 36.1% of voters supporting it.
There can be no assurance that the courts will not further interpret, or the voters will not
Page 20 of 33
amend, Article XIIIC and Article XIIID to limit the ability of local agencies to impose, levy,
charge and collect increased fees and charges for utility service, or to call into question
previously adopted utility rate increases.
Page 21 of 33
LODI CITY COUNCIL
LODI CITY MANAGER
CITY COUNCIL MEETING OF JANUARY 17, 2018 AGENDA ITEM G-01
PUBLIC HEARING TO CONSIDER ADOPTING RESOLUTION SETTING PRE -APPROVED
ENGINEERING NEW RECORD ADJUSTMENT INDEX FOR USAGE -BASED AND FLAT
WATER REATES FOR RESIDENTIAL, COMMERCIAL, AND INDUSTRIAL CUSTOMERS.
THIS IS A CLAIM ON BEHALF OF THE CITIZEN RATE PAYERS OF THE LODI WATER
UTILITY ENTERPRISE TO HAVE BUDGET ITEM IN THE FY 2019/20 IN THE AMOUNT
OF $2,000,000 (TWO MILLION DOLLARS) FOR SOUTHWEST WATER TANK BE
REMOVED FROM THE BUDGET. THUS REDUCING THE NEED FOR THIS RATE
INCREASE.
This budget item for the Southwest Gateway Water Tank was included in the
2010 request for the Surface Water Treatment Plant located at Lodi Lake. This
item was identified as a capital improvement because of the future new
developments and the necessity to keep system water pressure up to standards
for fire protection as these new developments were completed.
It is now seven years later and you are requesting the Citizen Water Rate
Payers to pay for this capital improvement.
Since this is necessary because of the new development, then Impact
Mitigation Fees should be used or the Developers should come up with this
money for its installation. Especially since the City subsidized these new
developments with a 59 percent reduction in the Impact Fee schedule which
would have paid for this capital improvement.
lithe money is not currently available for this installation then the City should
wait until it is, and by not installing this tank it creates a public safety hazard.
A building moratorium should be issued and stop construction of any additional
units until monies are available and tank installed. Thus eliminating the safety
Page 22 of 33
issue. Otherwise we are doing fine now without it and the sole justification for it
is the new development.
During the Sept. 6, 2017 Regular Council Meeting I discussed how the City of
Lodi diverts money away from the Utilities when they reduced the Impact
Mitigation Fee schedule subsidizing the Building Industry's new developments.
I pointed out that the monies reduced back to the new developments comes back
to the City in the form of Property Taxes. This tax money goes to the General
Fund and not back to the individual Utilities, the IMF would have supported
Capital improvements. Therefore if the City wants to install this water storage
tank as a result of these new developments then it should pay for it out of
General Fund Revenue and not charge the Utility Rate Payers one cent for its
construction.
ARTICLE XIIID, SECTION 6, PROPERTY RELATED FEES AND CHARGES. (a)
Procedures for New or Increased Fees and Charges. An agency shall follow the
procedures pursuant to this section in imposing or increasing any fee or charge as
defined pursuant to this article, including, but not limited to, the following:
(2) (b) Requirements for Existing, New or Increased Fees and Charges. A fee or
charge shall not be extended, imposed, or increased by any agency unless it
meets all of the following requirements:
(3) The amount of a fee or charge imposed upon any parcel or person as an incident of
property ownership shall not exceed the proportional cost of the service attributable to the
parcel.
(4) No fee or charge may be imposed for a service unless that service is actually
used by, or immediately available to, the owner of the property in question. Fees
or charges based on potential or future use of a service are not permitted.
Standby charges, whether characterized as charges or assessments, shall be
classified as assessments and shall not be imposed without compliance with
Section 4.
Page 23 of 33
Refer to:
City of Lodi Water Master Plan August 2012
3. FUTURE DISTRIBUTION SYSTEM
3.2 NEW FACILITIES
The City of Lodi water system will require three new wells south of Harney Lane, a
1.5MG storage tank on Kettleman Lane and transmission lines on Mills Ave. and Lodi
Avenue as shown on Figure 5. The locations of the new wells and storage tank is based
on the projected peak hour demand deficiencies A total of 31 wells will be required to
meet the City's water demands through the year 2035.
3.5 FINANCE AND IMPLEMENTATION PLAN
Construction of the Master Plan Facilities will be dependent upon the rate and pattern of
development in the study area. The cost and financing of the improvements shall be
determined as part of the Impact Mitigation Fee Program that is being adopted
concurrently with this report. Financing alternatives include, but are not limited to,
developer financing on a pay-as-you-go basis or through a new City-wide development
impact fee program.
WATER AND WASTEWATER
CITY OF LODI IMPACT MITIGATION FEES
THE REED GROUP, INC. PAGE 3
SECTION II. WATER IMPACT MITIGATION FEES
WATER SYSTEM
The City's water system consists of twenty-seven groundwater wells, about 237 miles of
distribution pipelines, and two storage reservoirs totaling 1.1 million gallons (MG).
Groundwater currently serves as the sole source of water supply for the City. Studies have
determined the safe groundwater yield for the area underlying the City is approximately
15,000 acre-feet (AF) per year. Annual well production for the four-year period from 2006
through 2009 ranged from 16,052 AF to 17,164 AF.
In 2003, the City entered into a forty -year agreement with the Woodbridge Irrigation
District (WID) to purchase 6,000 AF per year of water from the Mokelumne River. In 2010
the City began construction of an 8 million gallon per day (mgd) water treatment plant with
an estimated total cost of about $40 million. In the fall of 2010, the City issued $38.665
million in water revenue bonds to help fund the construction of the new surface water
treatment plant necessary to treat water purchased from the WID.
The proposed water system impact mitigation fee (water IMF) is intended to reflect the
cost of water treatment capacity, including financing costs, and as well as costs to integrate
the surface water supply with distribution system operations. Additional facilities include a
new water storage tank and an additional groundwater well to help manage peak demands
throughout the distribution system. For water IMF calculation purposes, all customers
(existing and new) will receive a blended water supply of both groundwater and surface
water. The water IMF calculation reflects the costs associated with this blended water
supply.
Page 24 of 33
WATER AND WASTEWATER
CITY OF LODI IMPACT MITIGATION FEES
THE REED GROUP, INC. PAGE 9
New Water Facilities Component
New water facilities needed to ensure adequate water system pressure and fire flows
during peak water use periods include a 1.5 MG water storage tank and one additional
groundwater well. These planned new facilities are to be paid for entirely by anticipated
future new development. As indicated previously, the anticipated future new development
has been estimated to be 5,605 DUEs. As shown in Exhibit 11-4, dividing the estimated $4
million cost of planned new facilities by 5,605 DUE of new development results in a new
water facilities component of $714 per DUE.
Total Water Impact Mitigation Fee
Combining the surface water treatment component of $2,389 with the new water system
facilities component of $714 results in a total water IMF of $3,103 per DUE, as summarized
in Exhibit 11-5.
Exhibit II -5
City of Lodi
Proposed Water Impact Mitigation Fee Summary
Water System
IMF
Surface Water Treatment Component $ 2,389
New Water Facilities Component $ 714
Total Water IMF for Std. 3/4" Meter $ 3,103
THE REED GROUP, INC. PAGE 9
SOURCE: CITY OF LODI IMPACT MITIGATION FEE PROGRAM SUPPORTING DOCUMENTS
AUGUST 2012
Section 1 - Water and Wastewater Impact Mitigation Fees Back-up, The Reed
Group, Inc
Mike Lusk Note: Current IMF for a % inch connection is only $1,263 after the City
reduced fees by 59 percent of the old 2012 fee schedule. Far less than the
proposed fee to pay for these future Capital improvements!
Respectfully
Mike Lusk, Lodi
Page 25 of 33
LODI CITY COUNCIL
LODI CITY MANAGER
CITY COUNCIL MEETING OF JANUARY 17, 2018 AGENDA ITEM G-01
PUBLIC HEARING TO CONSIDER ADOPTING RESOLUTION SETTING PRE -APPROVED
ENGINEERING NEW RECORD ADJUSTMENT INDEX FOR USAGE -BASED AND FLAT
WATER REATES FOR RESIDENTIAL, COMMERCIAL, AND INDUSTRIAL CUSTOMERS.
THIS IS A CLAIM ON BEHALF OF THE CITIZEN RATE PAYERS OF THE LODI WATER
UTILITY ENTERPRISE TO REMOVE THAT PORTION OF THE SURFACE WATER
TREATMENT FACILITY ANNUAL BUDGETED COST EQUALLING 66.7 PERCENT THAT
REPRESENTS THE SHARE OF THE OVERALL COST ATTRIBUTED TO NEW
DEVELOPMENT. LEAVING 33.3 PERCENT OF THE EXISTING CUSTOMERS SHARE OF
COST.
EXAMPLE OF BUDGET REDUCTION BASED UPON 2017/18 BUDGETED COST
AMOUNTING TO $2,967,660.00 REDUCED BY 66.7% EQUALS $1,979,429.22 TO BE
REMOVED FROM THE BUDGET AND 66.7% IN FUTURE YEARS BUDGETS.
The overall cost including interest to pay off 2010 Series A and B Water Bonds for
plant construction is shown by the City of Lodi to be $71 Million over the
life of the loan. At the time of construction, only 33.3 percent of the use of and
cost to provide service was to the existing Customers. Leaving the balance to be
paid by future development that was expected by 2035.
Under Proposition 218 and provisions Article XIIIC and XIIID the City of Lodi can
only charge existing Utility Customers the actual cost of providing service to a
parcel. Therefore the 66.7% is considered a "standby charge" based upon the
need of future new development and cannot be considered as part of the current
cost of providing service to an existing parcel or Utility Customer.
ARTICLE XIIID, SECTION 6, PROPERTY RELATED FEES AND CHARGES. (a)
Procedures for New or Increased Fees and Charges. An agency shall follow the
procedures pursuant to this section in imposing or increasing any fee or charge as
defined pursuant to this article, including, but not limited to, the following:
Page 26 of 33
(2) (b) Requirements for Existing, New or Increased Fees and Charges. A fee or
charge shall not be extended, imposed, or increased by any agency unless it
meets all of the following requirements:
(3) The amount of a fee or charge imposed upon any parcel or person as an incident of
property ownership shall not exceed the proportional cost of the service attributable to the
parcel.
(4) No fee or charge may be imposed for a service unless that service is actually
used by, or immediately available to, the owner of the property in question. Fees
or charges based on potential or future use of a service are not permitted.
Standby charges, whether characterized as charges or assessments, shall be
classified as assessments and shall not be imposed without compliance with
Section 4.
Although the 2010 Series A and B bonds are guaranteed to be paid by the net
revenues of the Water Utility Enterprise the original cost of construction would
have been covered by 33.3% of Water Utility revenues and 66.7% to be paid for
by new development and Impact Mitigation Fees. Using the Cities DUE formulas
as the new development Customers come on line that portion of the 66.7% can
be added to the Utility Enterprise budget based on DUE in that current year. Until
then the developers or the City's General Fund is responsible for the payment of
the 66.7% even though the City has exempted themselves as responsible for the
payment of the bonds.
THAT 66.7% IS NOT PART OF THE COST OF PROVIDING SERVICE TO MY OR ANY
OTHER CURRENT UTILITY CUSTOMERS PARCEL SINCE WE CANNOT USE THAT
66.7%. The 29 INGOUND PUMPING WELLS AND THE 33.3% OF THE SWTF ARE
OUR CURRENT COST OF SERVICE.
AN ARGUMENT THAT THE ENTIRE PLANT PROCESSING IS AVAILABLE WILL NOT
HOLD WATER SINCE THERE ARE NO GARAUNTEES THAT WOODBRIDGE
IRRIGATION DISTRICT (WID) MAY NOT BE ABLE TO SUPPLY IT'S FULL YEARLY
Page 27 of 33
CONTRACT OF SURFACE WATER DEPENDING ON THEIR OWN CUSTOMERS
DEMANDS AND DROUGHT YEARS AFFECTING AVAILABE SURFACE WATER.
I BELIEVE THE CITY OF LODI AND LODI PUBLIC FINANCING AUTHORITY VIOLATED
THE MANDATE OF PROP 218 AND ARTICLE XIIIC AND XIIID WHEN THEY FINANCED
AND OBLIGATED THE LODI WATER UTILITY ENTERPRISE TO PAY FOR THE 2010
SERIES A AND B BONDS WITH THE NET REVENUES WHEN PORTIONS OF THE NEW
SURFACE WATER TREATMENT FACILITY WAS NOT USED AND SHOULD HAVE BEEN
CONSIDERED "STANDBY" FOR FUTURE NEW DEVELOPMENT AND THE COSTS WERE
ADDED TO THE WATER UTILITY'S BUDGET IN VIOLATION OF ARTICLE XIIID SECTION 6
(B) (4).
Agenda Item J-1
COUNCIL COMMUNICATION
TM
AGENDA TITLE: Approve Plans and Specifications and Authorize Advertisement for Bids for
Lodi Surface Water Treatment Facility Project
MEETING DATE: July 21, 2010 (see reference material included above).
INCLUDING THIS YEARS CURRENT CHARGES THE CHARGES PAID BY WATER
UTILITY CUSTOMERS SINCE THE SWTF CAME ON LINE IN 2012 ARE:
2011/12 $2,966,860.00
2012/13 $2,918,610.00
2013/14 $2,969,610.00
2014/15 $2,969,860.00
2015/16 $2,968,610.00
2016/17 $2,970,110.00
2017/18 $2,967,660.00
TOTAL $20,731,320.00 66.7% EQUALS $13,827,790.44 33.3% $6,903,529.56
Respectfully
Mike Lusk, Lodi
Page 28 of 33
LODI CITY COUNCIL
LODI CITY MANAGER
CITY COUNCIL MEETING OF JANUARY 17, 2018 AGENDA ITEM G-01
PUBLIC HEARING TO CONSIDER ADOPTING RESOLUTION SETTING PRE -APPROVED
ENGINEERING NEW RECORD ADJUSTMENT INDEX FOR USAGE -BASED AND FLAT
WATER REATES FOR RESIDENTIAL, COMMERCIAL, AND INDUSTRIAL CUSTOMERS.
REMOVE FROM THE BUDGET THAT PORTION OF THE WOODBRIDGE IRRIAGATION
DISTRICT WATER PURCHASE THAT IS NOT CURRENTLY BEING USED BY THE
SURFACE WATER TREATMENT FACILITY. REFUND, REMOVE, OR REDUCE THE
AMOUNTS THAT WERE PAID ($10,609,205.00) FOR WATER THAT WAS NOT
DELIVERABLE TO THE PROPERTY OWNERS FOR THE FIRST 9 YEARS OF THE
CONTRACT BECAUSE THE CITY DID NOT HAVE IMMEDIATE ACCESS TO OR THE
ABLILITY TO DELIVER THE WATER. REFUND THAT PORTION OF THE CONTRACT
FROM 2012 TO CURRENT BILLING THE AMOUNT OF THE WID CONTRACT THAT
HAS NOT BEEN USED AND PROCESSED THROUGH THE SURFACE WATER
TREATMENT FACILITY. REDUCE OR CANCEL PLANNED INCREASES AFTER MAKING
BUDGET ADJUSTMENTS.
ARTICLE XIIID, SECTION 6, PROPERTY RELATED FEES AND CHARGES. (a)
Procedures for New or Increased Fees and Charges. An agency shall follow the
procedures pursuant to this section in imposing or increasing any fee or charge as
defined pursuant to this article, including, but not limited to, the following:
(2) (b) Requirements for Existing, New or Increased Fees and Charges. A fee or
charge shall not be extended, imposed, or increased by any agency unless it
meets all of the following requirements:
(3) The amount of a fee or charge imposed upon any parcel or person as an incident of
property ownership shall not exceed the proportional cost of the service attributable to the
parcel.
(4) No fee or charge may be imposed for a service unless that service is actually
used by, or immediately available to, the owner of the property in question. Fees
Page 29 of 33
or charges based on potential or future use of a service are not permitted.
Standby charges, whether characterized as charges or assessments, shall be
classified as assessments and shall not be imposed without compliance with
Section 4.
Agenda Item J-1
COUNCIL COMMUNICATION
TM
AGENDA TITLE: Approve Plans and Specifications and Authorize Advertisement for Bids for
Lodi Surface Water Treatment Facility Project
MEETING DATE: July 21, 2010
New Development Share Of Costs
At the present time, existing water customers are provided high quality water on a highly reliable
basis. The annual demand of the existing customers averages around 17,000 acre feet. The
estimated annual safe yield of the groundwater aquifer underlying the City is 15,000 acre feet.
The existing customer base is being served but only by over pumping the groundwater resource
by 2,000 acre feet per year. At present, it is planned to reduce the long term pumping of
groundwater by committing a minimum of 2,000 acre feet per year of the WID water to cure the
current overdraft condition.
The WID Agreement provides the City with 6,000 acre feet per year. One could argue that
4,000 acre feet per year are designated for future development. For the Westside Annexation
and the Southwest Gateway Annexation, the City committed approximately 1,650 acre feet per
year to serve the water demands for these projects. For the Reynolds Ranch Annexation,
approximately 500 acre feet per year were committed to serve the demands of this project. The
remaining 1,850 acre feet per year of the WID water is uncommitted.
Staff recommends that the new development share of the surface water treatment plant facilities
be set at 66.7% (4,000/6,000 x 100) and existing customers share be set at 33.3% (2,000/6,000
x 100).
(Excerpt from City of Lodi's White Paper -Surface Water Treatment Facilities dated
June 30, 2010 included in Agenda Item J-1)
City of Lodi Water Master Plan
August 2012
2.2.2 SURFACE WATER SUPPLY
In 2003, the City entered into a 40 year agreement with the Woodbridge Irrigation
District to purchase 6,000 acre-feet per year of Mokelumne River water. On
January 16, 2008, the agreement was amended by extending the term of the
agreement by 4 years to 2047 and allowing a total of 42,000 acre feet of water to
Page 30 of 33
be banked for future use. The banked water is available to the City during wet
years and, by averaging the use of banked water over the term of the agreement,
the average annual delivery of surface water to the City would be 7,200 acre feet
per year or 2.345 billion gallons per year.
A surface water treatment facility is currently under construction to treat the
surface water and distribute it to the City's customers. The nominal capacity of
the plant is 8 million gallons per day while the peak capacity is 10 million gallons
per day.
The City has constructed a 36 inch diameter transmission pipeline beginning at
the intersection of North Mills Avenue and West Turner Road. The pipeline
extends south along North Mills Avenue to near the intersection with Elm Street,
and is connected to the existing distribution pipelines.
- 2015 Urban Water Management Plan City of Lodi
June 2016 24
Chapter 6 System Supplies
This chapter describes the current and future water supplies available to the City, including purchased
surface water and pumped groundwater.
6.1 Purchased or Imported Water
The City's surface water supplies include Mokelumne River water purchased from WID and NSJWCD,
as described below.
6.1.1 Purchased Water from Woodbridge Irrigation District
In May 2003, the City entered into an agreement with WID to purchase 6,000 AFY of surface water from
the Mokelumne River (with delivery via WID canal facilities near Woodbridge Dam) for a period of 40
years. An amendment approved in January 2008 extended the agreement to 2047. The agreement has
been included in Appendix G. Key provisions in the agreement include:
• Provisions allowing the City to "carryover", or bank, water that is not used during the first seven
years of the agreement (until October 2010) for use later, as water supplies are available. A
maximum of 42,000 AF can be banked. Note that this banked water is not physically stored,
rather it is agreed that WID will supply the banked water to the City when excess water is
available.
• During dry years when WID's supply is reduced, the City's allotment can be reduced down to
3,000 AFY. The City would add the remaining 3,000 AFY to its banked water described above
for use when water is available. Water banked due to reductions in dry years expires if not used
within 8 years from the period it is banked.
• Diversion of the water from the Mokelumne River is permitted only from March 1 through
October 15. However, an agreement with East Bay Municipal Utilities District (EBMUD) allows
for release of up to 1,000 AF between October 15 and the end of February. This facilitates the
usage of banked water and allows for year-round operation of the SWTP, except for up to one
month beginning February 1 when the plant is offline for WID fish screen and dam maintenance.
• If the City purchases additional water from another wholesaler on the Mokelumne River, WID's
conveyance canals can be utilized at a cost of $20 per AF If additional water is available from
WID, the City can purchase that at a cost of $100 per AF.
The City did not begin using this water until the completion of the Lodi SWTP in November 2012. The
City's banked supply is at its maximum potential allotment of 42,000 AF. As noted above, this banked
supply is not stored, but will be made available to the City when WID has excess supply. Since the
Page 31 of 33
completion of the SWTP in 2012, the plant has produced approximately 2,800 AF, 4,700 AF, and 4,900
AF for each of the three fiscal years of plant operation (part of 2013 and all of 2014 and 2015).
6.1.2 Purchased Water from North San Joaquin Water Conservation District
In October 2014, the City entered into an agreement with NSJWCD for up to 1,000 AFY of Mokelumne
River surface water from October 15th to March 30th, as long as NSJWCD has sufficient water available.
This agreement is also included in Appendix G. The water is diverted to the SWTP using the same intake
as the water purchased from WID. The agreement is for 5 years, with the possibility to renew up to a total
term of 40 years. The agreement went into effect in October 2015, after the end of fiscal year 2015, so
water purchased from NSJWCD is only applicable in future supply projections.
24
6.2 Groundwater
The City's primary source of water is groundwater that it pumps using 28 groundwater production wells
distributed throughout the water service area (Figure 6-1). Since the completion of the SWTP in
November 2012, an average of 26 percent of the monthly water supply comes from surface water instead
of groundwater and an average of 300 AF less water is pumped from the wells each month.
25
THE AMOUNT OF MONEY THE CITY OF LODI HAS PAID WID SINCE THE START OF
THE CONTRACT TO PURCHASE SURFACE WATER IN 2003.
2003/04 $900,000.00
2004/05 $1,200,000.00
2005/06 $1,200,000.00
2006/07 $1,200,000.00
2007/08 $1,200,000.00
2008/09 $1,200,000.00
2009/10 $1,212,000.00
2010/11 $1,236,240.00
2011/12 $1,260,965.00
2012/13 $1,286,184.00
9 YEAR SUB TOTAL TO 2012 $10,609,205.00
Page 32 of 33
2013/14 $1,311,908.00
2014/15 $1,338,146.00
2015/16 $1,364,910.00
2016/17 $1,392,210.00
2017/18 $1,420,050.00 Est LAST 6 YEARS SUB TOTAL $8,095,408.00
GRAND TOTAL $18,704,613.00 FOR 15 YEARS OF WATER PURCHASE FROM WID.
QUESTIONS: AT 6,000 AFY FOR 15 YEARS EQUALS 90,000 AF AT A COST OF
$18,704,613.00. HOW MUCH OF THIS SURFACE WATER FROM WID HAS THE CITY
USED?
HOW MUCH HAVE THE DEVELOPERS PAID INTO THE WATER IMPACT MITIGATION
FEE AND PAID ON THIS WID CONTRACT?
WHEN THESE INDIVIDUAL DEVELOPMENTS ARE FINISHED AND THE DEVELOPER
MOVES ON, HOW DOES THE CITY INTEND TO RECOUP THE IMF MONEY STILL
OWED ON THE CAPITAL INFASTRUCTURE COST CREATED BY THESE NEW
DEVELOPMENTS?
HOW DOES THE CITY EXPLAIN TO ME OR ANY OTHER CITIZEN OF LODI WHY THEY
PAID THE DEVELOPERS SHARE OF THESE CAPITAL EXPENDITURES AND CAN
EXPECT TO SEE PAID IN FULL BEFORE WE ALL DIE?
I WILL BE LUCKY IF I LIVE ANOTHER 10 OR 15 YEARS AND AT THE RATE THE CITY
COLLECTS IMF, IT WON'T HAPPENED BEFORE I AM GONE. BUT I HOPE MY
CHILDREN AND GRANDCHILDREN WILL NOT STILL BE FACED WITH THE SAME
PROBLEM.
Respectfully
Mike Lusk, Lodi
Page 33 of 33
4'4
SUBJECT:
Please immediately confirm receipt
of this fax by calling 333-6702
CITY OF LODI
P. O. BOX 3006
LODI, CALIFORNIA 95241-1910
ADVERTISING INSTRUCTIONS
CONTINUED 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 4, 2017
LEGAL AD
TEAR SHEETS WANTED: One (1) please
SEND AFFIDAVIT AND BILL TO:
LNS ACCT. #0510052
JENNIFER M. FERRAIOLO, CITY CLERK
City of Lodi
P.O. Box 3006
Lodi, CA 95241-1910
DATED: THURSDAY, NOVEMBER 2, 2017
ORDERED BY: JENNIFER M. FERRAIOLO
CITY CLERK
PAMELA M. ARRIS
DEPUTY CITY CLERK
ELIZABETH BURGOS
ADMINISTRATIVE CLERK
Verify Appearance of this Legal in the Newspaper — Copy to File
Emailed to the Sentinel at classified1@lodinews.com at (time) on (date) (pages)
LNS Phoned to confirm receipt of all pages at (time) EB PMF (initials)
forms\advins.doc
DECLARATION OF POSTING
NOTICE OF CONTINUED PUBLIC HEARING TO CONSIDER ADOPTING
RESOLUTION ADOPTING PRE -APPROVED ENGINEERING NEWS RECORD
ADJUSTMENT INDEX FOR USAGE -BASED AND FLAT WATER RATES FOR
RESIDENTIAL, COMMERCIAL, AND INDUSTRIAL CUSTOMERS
On Thursday, November 2, 2017, in the City of Lodi, San Joaquin County, California, a
Notice of Continued Public Hearing to consider adopting resolution adopting pre -
approved Engineering News Record adjustment index for usage -based and flat water
rates for residential, commercial, and industrial customers (attached and marked as
Exhibit A) was posted at the following 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 2, 2017, at Lodi, California.
ORDERED BY:
JENNIFER M. FERRAIOLO
CITY CLERK
PAMELA M. FARRIS ELIZABETH BURGOS
DEPUTY CITY CLERK ADMINISTRATIVE CLERK
N:\Administration\CLERK\Public Hearings\AFFADAVITS\DECPOSTPWI.DOC
CITY OF LODI
Carnegie Forum
305 West Pine Street, Lodi
NOTICE OF CONTINUED
PUBLIC HEARING
Date: January 17, 2018
Time: 7:00 p.m.
For information regarding this notice please contact:
Jennifer M. Ferraiolo
City Clerk
Telephone: (209) 333-6702
1
NOTICE OF CONTINUED PUBLIC HEARING
NOTICE IS HEREBY GIVEN that on Wednesday, January 17, 2018, 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:
hnifer Mi Ferraiolo
City Clerk
Dated: November 1, 2017
Approved as to form:
Janice D. Magdich
City Attorney
AVISO: Para obtener ayuda interpretativa con esta noticia, por favor Ilame ala oficina de la
Secretaria Municipal, a las (209) 333-6702.
J:CLERK\PUBLICHEARING\NOTICES\PH NOTICE continue WaterRates.doc 11/1/17
FLAT RATES
Single Family Residential
1 Bedroom $ 32.84 $ 33.83
2 Bedroom $ 39.44 $ 40.62
3 Bedroom $ 47.27 $ 48.69
4 Bedroom $ 56.79 $ 58.49
5 Bedroom $ 68.11 $ 70.15
6 Bedroom $ 81.75 $ 84.20
7 Bedroom $ 98.03 $ 100.97
Multi -Family (1)
1 Bedroom $ 28.19 $ 29.04
2 Bedroom $ 33.81 $ 34.82
3 Bedroom $ 40.58 $ 41.80
Mobile Homes
Any Size $ 28.19 $ 29.04
Non -Residential
Existing unmetered Varies +3.0%
Exhibit A
City of Lodi
Current and Proposed Flat Water Rates
Future Rate Ceiling (2)
Current Proposed
(Jan. 2017) (Jan. 2018)
Potential Potential*
(Jan. 2019) (Jan. 2020)
Rate Increase --> 3.0% 3.0% 3.0%
Sunset Rates
(Jan. 2021) (3)
$ 34.84 $ 35.89
$ 41.84 $ 43.10
$ 50.15 $ 51.65
$ 60.24 $ 62.05
$ 72.25 $ 74.42
$ 86.73 $ 89.33
$ 104.00 $ 107.12
$ 29.91 $ 30.81
$ 35.86 $ 36.94
$ 43.05 $ 44.34
$ 29.91 $ 30.81
+3 0% +3.0%
$ 32.84
$ 39.44
$ 47.27
$ 56.79
$ 68.11
$ 81.75
$ 98.03
$ 28.19
$ 33.81
$ 40.58
$ 28.19
Varies
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
*Pending a Prop 218 approval
(3) Per Resolution No. 2017-23 adopted February 15, 2017.
City of Lodi
Current and Proposed Usage -Based Water Rates
Current Proposed
(Jan. 2017) (Jan. 2018)
Future Rate Ceiling (2)
Potential Potential*
(Jan. 2019) (Jan. 2020)
Sunset Rates
(Jan. 2021) (3)
Rate Increase --> 3.0%
USAGE -BASED RATES
Monthly Service Charge
Single Family
Up to 3/4" meter $ 21.87 $ 22.53
1" meter $ 34.34 $ 35.37
1 1/2" meter $ 65.25 $ 67.21
2" meter $ 102.52 $ 105.60
Multi -Family and Non -Residential (1)
Up to 3/4" meter $ 21.87 $ 22.53
1" meter $ 34.34 $ 35.37
1 1/2" meter $ 65.25 $ 67.21
2" meter $ 102.52 $ 105.60
3" meter $ 189.50 $ 195.19
4" meter $ 313.73 $ 323.14
6" meter $ 624.03 $ 642.75
8" meter $ 996.55 $1,026.45
10" meter $1,431.26 $1,474.20
Usage Rates ($/CCF)
Single Family
Tier 1 (0-10 CCF) $ 0.97 $ 1.00
Tier 2 (11-50 CCF $ 1.29 $ 1.33
Tier 3 (>50 CCF) $ 1.60 $ 1.65
Multi -Family and Non -Residential (1)
All water usage $ 1.15 $ 1.18
3.0% 3.0%
$ 23.21 $ 23.91
$ 36.43 $ 37.52
$ 69.23 $ 71.31
$ 108.77 $ 112.03
$ 23.21 $ 23.91
$ 36.43 $ 37.52
$ 69.23 $ 71.31
$ 108.77 $ 112.03
$ 201.05 $ 207.08
$ 332.83 $ 342.81
$ 662.03 $ 681.89
$1,057.24 $1,088.96
$1,518.43 $1,563.98
$ 1.03 $ 1.06
$ 1.37 $ 1.41
$ 1.70 $ 1.75
$ 1.22 $ 1.26
$ 21.87
$ 34.34
$ 65.25
$ 102.52
$ 21.87
$ 34.34
$ 65.25
$ 102.52
$ 189.50
$ 313.73
$ 624.03
$ 996.55
$ 1,431.26
$ 0.97
$ 1.29
$ 1.60
$ 1.15
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
*Pending a Prop 218 approval
(3) Per Resolution No. 2017-23 adopted February 15, 2017.