HomeMy WebLinkAbout6 - Water Utility Rate IncreaseCITY OF NEWPORT BEACH
CITY COUNCIL STAFF REPORT
Agenda Item No. 6
November 24, 2009
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Utilities Department
George Murdoch, Utilities Director
949 - 644 -3011 or gmurdoch @newportbeachca.gov
SUBJECT: Water Utility Rate Increase and Ordinance Amendment
ISSUE
Should the City Council approve a water utility rate increase and amend the City of
Newport Beach Municipal Code Chapter 14.12 "Water Rates and Charges" Section
14.12.020 "Water Rates Established "?
RECOMMENDATION
1. Affirm the tabulated results of the water rate increase protest count from
property and non - property owning customers and;
2. Introduce Ordinance No. 2009 -_ amending the City of Newport Beach
Municipal Code Chapter 14.12 "Water Rates and Charges" Section 14.12.020
"Water Rates Established" and pass to second reading on December 8, 2009.
DISCUSSION:
Background:
At the July 28, 2009 meeting the City Council adopted Resolution 2009 -58 which
established a uniform set of procedures applicable to Proposition 218 in connection
with water and wastewater rate - setting proceedings pursuant to Article XIIID of the
California Constitution. To comply with the established procedures concerning the
proposed water rate increases presented to Council on September 8, 2009, the
Utilities Department mailed 31,963 notices to property and non - property owning
customers on September 25, 2009. At the November 10, 2009 meeting the City
Council conducted a public hearing to conclude the 45 -day written notice period
regarding the proposed water rate increase.
Under the Proposition 218 requirements, the rates cannot be increased if a majority of
the property owning customers submits a valid written protest to the City Clerk by the
close of the 45 -day notice period. If the total number of protests is less than half of the
number of properties served by the City, then the Clerk may advise the City Council of
the absence of a majority protest without determining the validity of all protests.
Additionally, notices were sent to non - property owning customers and City Council
may consider their protests; however they will not be counted as part of the
requirement.
Proposition 218 Notice Results
There are approximately 26,400 property owning customers served by the City of
Newport Beach. The City Clerk reports sixty (60) property owning customers have
submitted protests and fifteen (15) non - property owning customers have submitted
protests. This falls short of the majority of protests required by Proposition 218 to
restrict the Council from raising the water rates.
Amendment to the Municipal Code
The results indicate that there are an insufficient number of protests, therefore staff
recommends the Amendment to the City of Newport Beach Municipal Code Chapter
14.12 'Water Rates and Charges" specifically Section 14.12.020 'Water Rates
Established." Attachment A is a redlined version of the amendments showing the
existing code. Attachment B is a final version of the code for approval and signature. If
the Ordinance Amendment is introduced at the November 24, 2009 meeting, staff
recommends a second reading be held at the December 8, 2009 meeting. The
effective date of the water rate increase would be January 7, 2010.
Environmental Review:
Staff recommends the City Council finds the Proposition 218 results and Code
amendment is not subject to the California Environmental Quality Act ( "CEQA'
pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably
foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is
not a project as defined in Section 15378) of the CEQA Guidelines, California Code of
Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical
change to the environment, directly or indirectly.
Prepared and Submitted by:
M dock, Utilities Director
Attachments: Attachment A — Redlined version of the amended ordinance
Attachment B — Final version of the amended ordinance
FIN ar_Tyatl,lakq rr_1
AN ORDINANCE OF THE CITY OF NEWPORT BEACH CALIFORNIA AMENDING
CHAPTER 14.12 "WATER RATES AND CHARGES" SECTION 14.12.020 "WATER
RATES ESTABLISHED"
The City Council of the City of Newport Beach ordains as follows:
Section 1: Section 14.12.020 of the Newport Beach Municipal code is hereby
amended to read as follows:
14.12.020 Water Rates Established.
The following rates, fees and charges are established and shall be charged and
collected in accordance with the provisions of this chapter:
A There shall be charged and collected a monthly fixed water service charge from
each customer for each meter. The fixed water service charge recaptures the City's
costs to operate and maintain the water system, including required capital infrastructure
improvements. Fixed water service charges shall be effective January 15t of each year
and charged according to the following schedule:
Fixed Water Service Charges
Water Meter Size FY2010 FY2011 FY2012 FY2013 FY2014
518" or 3/4"
8.27
$13.09
15.11
16.63
17.27
1"
112.78
21.82
25.19
JZ7.72
$28.79
11/2"
$27.55
$43.64
$50.38
$55.43
$57.58
2"
$44.08
$69.82
$80.61
$88.69
$92.12
3"
$82.65
$130.91
$151.14
$166.30
$172.73
4"
$137.75
$218.18
$251.90
$277.16
$287.88
6"
$275.50
$436.37
$503.81
$554.32
$575.76
8.1
440.80
$698.19
$806.09
$886.91
$921.22
10"
792.34
$1,254.99
$1,448.95
$1,594.22
$1,655.90
12"
$1,274.47
$2,018.64
$2,330.61
$2,564.27
$2,663.48
For each living unit in excess of one per water meter, per month
1.00
For each hotel or motel unit and each hospital or convalescent home bedroom in
0.50
excess of one per water meter, per month
Commodity Charge
ie r:�ssr_ir�an�ss en�rr_rrr_�a_rrsr..r_*rse rs�n_�: ------
---- --:- --
FY2012
FY2013
•� ••
Commodity Charge
B The commodity charge for water supplied to consumers throuah a meter. other
than pursuant to a written contract approved by the City Council, shall be effective
January 15t of each year. The commodity charge primarily recovers the cost of
purchased water by the Citv for its customers and shall be charaed according to the
followinq schedule
Commodity Charges (cost per hundred cubic feet or 748 gallons)
FY2010
FY2011
FY2012
FY2013
FY2014
Commodity Charge
2.20
2.46
2.73
ja .96
3.08
r �t�: �rmrsr_
r. �r. �rt7r_ rsa�y�►_ �7�r7�rtzr .�[.f�sr_ra■irs�7rszrrri
�, _ _
.._ ._ .._.
_.
___• _
..............
■
■
SECTION 2: If any section, subsection, sentence, clause or phase of this ordinance is, for any
reason, held to be invalid or unconstitutional, such decision shall not affect the validity or
constitutionality of the remaining portions of this ordinance. The City Council hereby declares
that it would have passed this ordinance, and each section, subsection, clause or phrase
hereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses
and phrases be declared unconstitutional.
SECTION 3: The Mayor shall sign and the City Clerk shall attest to the passage of this
ordinance. The City Clerk shall cause the same to be published once in the official newspaper
of the City, and it shall be effective thirty (30) days after its adoption.
SECTION 4: This ordinance was introduced at a regular meeting of the City Council of the City
of Newport Beach held on the day of 2009, and adopted on the day of
, 2009, by the following vote, to wit:
AN ORDINANCE OF THE CITY OF NEWPORT BEACH CALIFORNIA AMENDING
CHAPTER 14.12 "WATER RATES AND CHARGES" SECTION 14.12.020 "WATER
RATES ESTABLISHED"
ATTACHMENT B
Ordinance No. 2009-
AN ORDINANCE OF THE CITY OF NEWPORT BEACH CALIFORNIA AMENDING
CHAPTER 14.12 "WATER RATES AND CHARGES" SECTION 14.12.020 "WATER
RATES ESTABLISHED"
The City Council of the City of Newport Beach ordains as follows:
Section 1: Section 14.12.020 of the Newport Beach Municipal code is hereby
amended to read as follows:
14.12.020 Water Rates Established.
The following rates, fees and charges are established and shall be charged and
collected in accordance with the provisions of this chapter:
A There shall be charged and collected a monthly fixed water service charge from
each customer for each meter. The fixed water service charge recaptures the City's
costs to operate and maintain the water system, including required capital infrastructure
improvements. Fixed water service charges shall be effective January 1St of each year
and charged according to the following schedule:
Fixed Water Service Charges
Water Meter Size FY2010 FY2011 FY2012 FY2013 FY2014
518" or 3/4"
$ 8.27
$ 13.09
$ 15.11
$ 16.63
$ 17.27
1"
$13.78
$21.82
$25.19
$27.72
$28.79
11/2"
$27.55
$43.64
$50.38
$55.43
$57.58
2"
$44.08
$69.82
$80.61
$88.69
$92.12
3"
$82.65
$130.91
$151.14
$166.30
$172.73
4"
$137.75
$218.18
$251.90
$277.16
$287.88
6"
$275.50
$436.37
$503.81
$554.32
$575.76
8"
$440.80
$698.19
$806.09
$886.91
$921.22
10"
$792.34
$1,254.99
$1,448.95
$1,594.22
$1,655.90
12"
$1,274.47
$2,018.64
$2,330.61
$2,564.27
$2,663.48
For each living unit in excess of one per water meter, per month
$1.00
For each hotel or motel unit and each hospital or convalescent home bedroom in
excess of one per water meter, per month
$0.50
B The commodity charge for water supplied to consumers through a meter, other
than pursuant to a written contract approved by the City Council, shall be effective
January 1" of each year. The commodity charge primarily recovers the cost of
purchased water by the City for its customers and shall be charged according to the
following schedule:
Commodity Charges (cost per hundred cubic feet or 748 gallons)
FY2010 FY2011 FY2012 FY2013 FY2014
Commodity Charge $2.20 $2.46 $2.73 $2.96 $3.08
SECTION 2: If any section, subsection, sentence, clause or phase of this ordinance is, for any
reason, held to be invalid or unconstitutional, such decision shall not affect the validity or
constitutionality of the remaining portions of this ordinance. The City Council hereby declares
that it would have passed this ordinance, and each section, subsection, clause or phrase
hereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses
and phrases be declared unconstitutional.
SECTION 3: The Mayor shall sign and the City Clerk shall attest to the passage of this
ordinance. The City Clerk shall cause the same to be published once in the official newspaper
of the City, and it shall be effective thirty (30) days after its adoption.
SECTION 4: This ordinance was introduced at a regular meeting of the City Council of the City
of Newport Beach held on the — day of , 2009, and adopted on the _ day of
. 2009, by the following vote, to wit:
AYES, COUNCILMEMBERS
NOES, COUNCILMEMBERS
ABSENT COUNCILMEMBERS
MAYOR
ATTEST:
CITY CLERK
APPROVED AS TO FORM:
OFFICE OF THE CITY ATTORNEY
by:
MptM WUQHAW
ASSISTANT CITY ATTORNEY
CITY OF NEWPORT BEACH
CITY COUNCIL STAFF REPORT
Agenda Item No. 15
November 10, 2009
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Utilities Department
George Murdoch, Utilities Director
949 - 644 -3011 or gmurdoch @newportbeachca.gov
SUBJECT: Water Utility Rate Increase
ISSUE
In accordance with City policy in Resolution No. 2009 -58, (Proposition 218
Procedures), the City Council shall conduct a public hearing at the conclusion of the
45 -day notice period regarding proposed water rate increases presented to Council at
the September 8, 2009 meeting.
RECOMMENDATION
1. Conduct a public hearing to accept comments on the proposed water rate
increase and at the conclusion of the hearing close the 45 -day Proposition 218
written protest period;
2. Direct staff to prepare a report for November 24, 2009 to announce the
results of the Proposition 218 procedure as tabulated by the City Clerk;
3. Introduce Ordinance No. 2009 -_ on November 24, 2009 amending
Chapter 14.12 Water Rate and Charges of the Newport Beach Municipal Code,
and pass to second reading on December 8, 2009.
DISCUSSION:
Background:
At the September 8, 2009 meeting, staff presented a report which discussed the Water
Enterprise Fund financial condition based on a comprehensive August 2009 Water
Utility Financial Plan completed for the City by Red Oak Consulting. The financial
study determined that existing water rates do not provide enough revenue to operate
the water system to provide a safe and reliable water supply to the City's customers.
The City has not raised its water rates since 2005. Since then the City has seen a
29% increase in the average unit cost of purchased water from the Municipal Water
Water Utility Rate Increase
November 10, 2009
Page 2
District of Orange County (MWDOC) and a 37% increase in the average unit cost of
purchased water from the Orange County Water District (OCWD). In addition,
significant capital expenditures are required to maintain the water delivery system and
funding is necessary to keep a satisfactory contingency emergency reserve.
Based on Council direction at the September 8, 2009 meeting, staff sent rate increase
notices as required by Proposition 218 to City property owners and non - property
owning customers (Attachment A). The notice includes the proposed water rates as it
was recommended at the September 8, 2009 meeting.
This report summarizes the status of the Proposition 218 notice procedures which will
close upon conclusion of the public hearing and outlines the next steps should the rate
increase be passed in the absence of a majority written protest.
Proposition 218 Notice and Procedures
At the July 28, 2009 meeting the City Council adopted Resolution 09 -58 which
established a uniform set of procedures applicable to Proposition 218 in connection
with water and wastewater rate - setting proceedings pursuant to Article XIIID of the
California Constitution. To comply with the established procedures concerning the
proposed water rate increases, on September 25, 2009 the Utilities Department
mailed 31,963 notices to property owners and non - property owning customers of the
City. According to the Proposition 218 procedures a 45 -day notice period is required.
The 45 -day notice period will conclude at the end of the public hearing on November
10, 2009.
To date the Utilities Department has received about 40 calls in regards to the water
rate notice. A majority of the callers wanted additional information on the need for the
water rate increase. Most of the callers were satisfied with the information that was
provided.
At the conclusion of the public hearing on November 10, 2009, the City Clerk shall
complete the tabulation of all written protests received, including those received during
the public hearing and shall report the results to the City Council upon completion. If
review of the written protests demonstrates the number received is manifestly less
than one -half of the parcels served by the City with respect to the water rate fee, then
the Clerk may advise the City Council of the absence of a majority protest without
determining the validity of all protests.
It is recommended that staff return to Council at the November 24, 2009 meeting to
announce the tabulation results of the City Clerk. If there is an absence of a majority
written protest, staff will recommend the introduction of an Ordinance amending
Chapter 14.12 Water Rate and Charges of the Newport Beach Municipal Code, and
pass to second reading on December 8, 2009. Should the new water rates be
approved they would be effective January 8, 2009.
Water Utility Rate Increase
November 10, 2009
Page 3
Environmental Review:
Staff recommends the City Council finds that the public hearing regarding Proposition
218 procedures is not subject to the California Environmental Quality Act ( "CEQA ")
pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably
foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is
not a project as defined in Section 15378) of the CEQA Guidelines, California Code of
Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical
change to the environment, directly or indirectly.
Prepared and Submitted by:
George Murdoch, Utilities Director
Attachments: Attachment A — Proposition 218 Notice
FIN ar_Tyatl,lakq rr_1
AN ORDINANCE OF THE CITY OF NEWPORT BEACH CALIFORNIA AMENDING
CHAPTER 14.12 "WATER RATES AND CHARGES" SECTION 14.12.020 "WATER
RATES ESTABLISHED"
The City Council of the City of Newport Beach ordains as follows:
Section 1: Section 14.12.020 of the Newport Beach Municipal code is hereby
amended to read as follows:
14.12.020 Water Rates Established.
The following rates, fees and charges are established and shall be charged and
collected in accordance with the provisions of this chapter:
A There shall be charged and collected a monthly fixed water service charge from
each customer for each meter. The fixed water service charge recaptures the City's
costs to operate and maintain the water system, including required capital infrastructure
improvements. Fixed water service charges shall be effective January 15t of each year
and charged according to the following schedule:
Fixed Water Service Charges
Water Meter Size FY2010 FY2011 FY2012 FY2013 FY2014
518" or 3/4"
8.27
$13.09
15.11
16.63
17.27
1"
112.78
21.82
25.19
JZ7.72
$28.79
11/2"
$27.55
$43.64
$50.38
$55.43
$57.58
2"
$44.08
$69.82
$80.61
$88.69
$92.12
3"
$82.65
$130.91
$151.14
$166.30
$172.73
4"
$137.75
$218.18
$251.90
$277.16
$287.88
6"
$275.50
$436.37
$503.81
$554.32
$575.76
8.1
440.80
$698.19
$806.09
$886.91
$921.22
10"
792.34
$1,254.99
$1,448.95
$1,594.22
$1,655.90
12"
$1,274.47
$2,018.64
$2,330.61
$2,564.27
$2,663.48
For each living unit in excess of one per water meter, per month
1.00
For each hotel or motel unit and each hospital or convalescent home bedroom in
0.50
excess of one per water meter, per month
Commodity Charge
ie r:�ssr_ir�an�ss en�rr_rrr_�a_rrsr..r_*rse rs�n_�: ------
---- --:- --
FY2012
FY2013
•� ••
Commodity Charge
B The commodity charge for water supplied to consumers throuah a meter. other
than pursuant to a written contract approved by the City Council, shall be effective
January 15t of each year. The commodity charge primarily recovers the cost of
purchased water by the Citv for its customers and shall be charaed according to the
followinq schedule
Commodity Charges (cost per hundred cubic feet or 748 gallons)
FY2010
FY2011
FY2012
FY2013
FY2014
Commodity Charge
2.20
2.46
2.73
ja .96
3.08
r �t�: �rmrsr_
r. �r. �rt7r_ rsa�y�►_ �7�r7�rtzr .�[.f�sr_ra■irs�7rszrrri
�, _ _
.._ ._ .._.
_.
___• _
..............
■
■
SECTION 2: If any section, subsection, sentence, clause or phase of this ordinance is, for any
reason, held to be invalid or unconstitutional, such decision shall not affect the validity or
constitutionality of the remaining portions of this ordinance. The City Council hereby declares
that it would have passed this ordinance, and each section, subsection, clause or phrase
hereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses
and phrases be declared unconstitutional.
SECTION 3: The Mayor shall sign and the City Clerk shall attest to the passage of this
ordinance. The City Clerk shall cause the same to be published once in the official newspaper
of the City, and it shall be effective thirty (30) days after its adoption.
SECTION 4: This ordinance was introduced at a regular meeting of the City Council of the City
of Newport Beach held on the day of 2009, and adopted on the day of
, 2009, by the following vote, to wit:
AN ORDINANCE OF THE CITY OF NEWPORT BEACH CALIFORNIA AMENDING
CHAPTER 14.12 "WATER RATES AND CHARGES" SECTION 14.12.020 "WATER
RATES ESTABLISHED"
ATTACHMENT B
Ordinance No. 2009-
AN ORDINANCE OF THE CITY OF NEWPORT BEACH CALIFORNIA AMENDING
CHAPTER 14.12 "WATER RATES AND CHARGES" SECTION 14.12.020 "WATER
RATES ESTABLISHED"
The City Council of the City of Newport Beach ordains as follows:
Section 1: Section 14.12.020 of the Newport Beach Municipal code is hereby
amended to read as follows:
14.12.020 Water Rates Established.
The following rates, fees and charges are established and shall be charged and
collected in accordance with the provisions of this chapter:
A There shall be charged and collected a monthly fixed water service charge from
each customer for each meter. The fixed water service charge recaptures the City's
costs to operate and maintain the water system, including required capital infrastructure
improvements. Fixed water service charges shall be effective January 1St of each year
and charged according to the following schedule:
Fixed Water Service Charges
Water Meter Size FY2010 FY2011 FY2012 FY2013 FY2014
518" or 3/4"
$ 8.27
$ 13.09
$ 15.11
$ 16.63
$ 17.27
1"
$13.78
$21.82
$25.19
$27.72
$28.79
11/2"
$27.55
$43.64
$50.38
$55.43
$57.58
2"
$44.08
$69.82
$80.61
$88.69
$92.12
3"
$82.65
$130.91
$151.14
$166.30
$172.73
4"
$137.75
$218.18
$251.90
$277.16
$287.88
6"
$275.50
$436.37
$503.81
$554.32
$575.76
8"
$440.80
$698.19
$806.09
$886.91
$921.22
10"
$792.34
$1,254.99
$1,448.95
$1,594.22
$1,655.90
12"
$1,274.47
$2,018.64
$2,330.61
$2,564.27
$2,663.48
For each living unit in excess of one per water meter, per month
$1.00
For each hotel or motel unit and each hospital or convalescent home bedroom in
excess of one per water meter, per month
$0.50
B The commodity charge for water supplied to consumers through a meter, other
than pursuant to a written contract approved by the City Council, shall be effective
January 1" of each year. The commodity charge primarily recovers the cost of
purchased water by the City for its customers and shall be charged according to the
following schedule:
Commodity Charges (cost per hundred cubic feet or 748 gallons)
FY2010 FY2011 FY2012 FY2013 FY2014
Commodity Charge $2.20 $2.46 $2.73 $2.96
SECTION 2: If any section, subsection, sentence, clause or phase of this ordinance is, for any
reason, held to be invalid or unconstitutional, such decision shall not affect the validity or
constitutionality of the remaining portions of this ordinance. The City Council hereby declares
that it would have passed this ordinance, and each section, subsection, clause or phrase
hereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses
and phrases be declared unconstitutional.
SECTION 3: The Mayor shall sign and the City Clerk shall attest to the passage of this
ordinance. The City Clerk shall cause the same to be published once in the official newspaper
of the City, and it shall be effective thirty (30) days after its adoption.
SECTION 4: This ordinance was introduced at a regular meeting of the City Council of the City
of Newport Beach held on the — day of , 2009, and adopted on the _ day of
, 2009, by the following vote, to wit:
AYES, COUNCILMEMBERS
NOES, COUNCILMEMBERS
ABSENT COUNCILMEMBERS
MAYOR
ATTEST:
CITY CLERK
APPROVED AS TO FORM:
OFFICE OF THE CITY ATTORNEY
by:
MYNETTE BEAUCHAMP
ASSISTANT CITY ATTORNEY
CITY OF NEWPORT BEACH
CITY COUNCIL STAFF REPORT
Agenda Item No. 15
November 10, 2009
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Utilities Department
George Murdoch, Utilities Director
949 - 644 -3011 or gmurdoch @newportbeachca.gov
SUBJECT: Water Utility Rate Increase
ISSUE
In accordance with City policy in Resolution No. 2009 -58, (Proposition 218
Procedures), the City Council shall conduct a public hearing at the conclusion of the
45 -day notice period regarding proposed water rate increases presented to Council at
the September 8, 2009 meeting.
RECOMMENDATION
1. Conduct a public hearing to accept comments on the proposed water rate
increase and at the conclusion of the hearing close the 45 -day Proposition 218
written protest period;
2. Direct staff to prepare a report for November 24, 2009 to announce the results of
the Proposition 218 procedure as tabulated by the City Clerk;
3. Introduce Ordinance No. 2009 - on November 24, 2009 amending Chapter
14.12 Water Rate and Charges of the Newport Beach Municipal Code, and pass
to second reading on December 8, 2009.
DISCUSSION:
Background:
At the September 8, 2009 meeting, staff presented a report which discussed the Water
Enterprise Fund financial condition based on a comprehensive August 2009 Water
Utility Financial Plan completed for the City by Red Oak Consulting. The financial
study determined that existing water rates do not provide enough revenue to operate
the water system to provide a safe and reliable water supply to the City's customers.
The City has not raised its water rates since 2005. Since then the City has seen a
29% increase in the average unit cost of purchased water from the Municipal Water
Water Utility Rate Increase
November 10, 2009
Page 2
District of Orange County (MWDOC) and a 37% increase in the average unit cost of
purchased water from the Orange County Water District (OCWD). In addition,
significant capital expenditures are required to maintain the water delivery system and
funding is necessary to keep a satisfactory contingency emergency reserve.
Based on Council direction at the September 8, 2009 meeting, staff sent rate increase
notices as required by Proposition 218 to City property owners and non - property
owning customers (Attachment A). The notice includes the proposed water rates as it
was recommended at the September 8, 2009 meeting.
This report summarizes the status of the Proposition 218 notice procedures which will
close upon conclusion of the public hearing and outlines the next steps should the rate
increase be passed in the absence of a majority written protest.
Proposition 218 Notice and Procedures
At the July 28, 2009 meeting the City Council adopted Resolution 09 -58 which
established a uniform set of procedures applicable to Proposition 218 in connection
with water and wastewater rate - setting proceedings pursuant to Article XIIID of the
California Constitution. To comply with the established procedures concerning the
proposed water rate increases, on September 25, 2009 the Utilities Department
mailed 31,963 notices to property owners and non - property owning customers of the
City. According to the Proposition 218 procedures a 45 -day notice period is required.
The 45 -day notice period will conclude at the end of the public hearing on November
10, 2009.
To date the Utilities Department has received about 40 calls in regards to the water
rate notice. A majority of the callers wanted additional information on the need for the
water rate increase. Most of the callers were satisfied with the information that was
provided.
At the conclusion of the public hearing on November 10, 2009, the City Clerk shall
complete the tabulation of all written protests received, including those received during
the public hearing and shall report the results to the City Council upon completion. If
review of the written protests demonstrates the number received is manifestly less
than one -half of the parcels served by the City with respect to the water rate fee, then
the Clerk may advise the City Council of the absence of a majority protest without
determining the validity of all protests.
It is recommended that staff return to Council at the November 24, 2009 meeting to
announce the tabulation results of the City Clerk. If there is an absence of a majority
written protest, staff will recommend the introduction of an Ordinance amending
Chapter 14.12 Water Rate and Charges of the Newport Beach Municipal Code, and
pass to second reading on December 8, 2009. Should the new water rates be
approved they would be effective January 8, 2009.
Water Utility Rate Increase
November 10, 2009
Page 3
Environmental Review:
Staff recommends the City Council finds that the public hearing regarding Proposition
218 procedures is not subject to the California Environmental Quality Act ( "CEQA ")
pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably
foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is
not a project as defined in Section 15378) of the CEQA Guidelines, California Code of
Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical
change to the environment, directly or indirectly.
Prepared and Submitted by:
Geor Mu doch, Utilities Director
Attachments: Attachment A — Proposition 218 Notice
t �wi 6q�
City of Newport Beach
r P.O. Box 1768
Newport Beach, CA 92658 -8915
City of Newport Beach
Information and Notice of Public Hearing
And Protest Procedure
Proposed Water Rate Charges
TO: Doe, John & Jane
12345 Main Street
Newport Beach, CA
94590
Attachment A
- - - - - -- - - - -- - -- - - - - -- - -- -- - - - - -- -- - - - - - -- ------- - - - - -- -- ---- - - - - -- - - -- - -- - - - -- --- - - - - -- ---- - - - - -- - -- - - - - -- -- - - -- - -- ----- - - - - -- ----- - - - - --
EXTRA SPACE
Notice of Public Hearing and Protest Procedure
NOTICE IS HEREBY GIVEN that on Tuesday, November 10, 2009, at 7:OOPM, a public hearing will be
conducted in the City Council Chambers (Building A) at 3300 Newport Boulevard, Newport Beach.
This will be a Public Hearing before the City Council to allow public testimony and discussion of the proposed
water rate increases described below. The City Council will take written and oral comments, and will consider
all written protests against the proposed charges, determine if a majority protest exists, and consider
resolutions to adopt the water rate charges.
Written protests must be filed with the City of Newport Beach City Clerk. Written protests may be hand
delivered or mailed to the City Clerk at 3300 Newport Boulevard, Newport Beach, California 92663. To be
valid, written protests must state opposition to the proposed water rate increase, identify the Parcel (by
assessor's parcel number or street address), and include the original signature of the record water service
customer or parcel owner, A written protest may be submitted up to the conclusion of the public testimony at
the public hearing.
About Proposition 218
In November 1996, California voters approved Proposition 218. As a result, California agencies must comply
with its requirements in setting utility rates. One provision requires that a noticed public hearing on utility rates
be held and that rates not be increased if a majority of affected utility customers protest the increased rates in
writing.
Frequently Asked Questions
Q. What does my water bill pay for?
A. Your water bill covers the following categories costs and services:
Annual operation and maintenance of the water system. Including well and pump station
operations, water treatment and testing, and water system employee salaries.
• City water purchase costs. The City purchases water from the Municipal Water District of Orange
County and from the Orange County Water District.
Capital improvement projects to repair and replace facilities and equipment to improve the water
system safety, efficiency and reliability. No additional debt for this purpose is proposed and all
improvements will be paid for with rate revenue.
Q. Why do the rates need to be raised?
A. Newport Beach is not immune to the increasing cost and scarcity of water over the past several years.
Operating expenses, including chemical and electrical costs, have increased by an average of 6% over
the last four years. In the last year alone, the cost of imported water increased by 20% on September
1st and will increase by another 22% on January 1, 2011. In addition, capital expenditures are required
to maintain the water delivery system. The City has not raised its Water Rates since 2005. The existing
rates do not provide enough revenue to meet the expenses necessary to operate the water system to
provide a safe and reliable water supply to City customers for the next 5 years.
Q. How is my water bill calculated?
A. A customer's water bill (which is a component of the municipal services statement sent to City water
customer's periodically) is calculated by the sum of a fixed service charge, which is based on the
customer's meter size, and the water usage fee, which is calculated based on the amount of water
used by the customer. See rate tables below.
The rate structure in the table below is designed to spread the costs of providing water system among
the system's users fairly and equitably. The costs associated with City's water system are made up of
expenses associated with operating and maintaining the system, capital costs associated with
rehabilitating and expanding the system, and commodity charges associated with acquiring water
supplies. The City's rate structure is designed to encourage conservation by including a portion of
operations and maintenance costs in the commodity charge, even though many of these expenses may
not be directly dependent on water usage. Thereby, a greater proportion of a customer's bill reflects
water usage, which encourages conservation because a customer can reduce his or her bill by using
less water. This proposed blend of the costs between variable and fixed revenues (70% fixed / 30%
variable) ensures revenue stability while also encouraging conservation. The following is a breakdown
of each component:
I. Water Usage Fee (Variable): Shown on the bill as "Water Usage HCF ", this charge is geared
primarily towards recovering the costs associated with City water purchases, treatment, and
distribution costs. In the proposed rate, 70% of the total revenue will come from this charge. This
charge is based on the amount of water used and is calculated by multiplying the number of
hundred cubic feet units (HCF) of water used by the unit rate per HCF.
2. Water Service Charge (Fixed): This charge is designed to recover (a) the costs of reading,
maintaining, and replacing the meters and (b) the costs of capital improvements. The revenues
derived from the capital component are to be used for repairs and improvements to the water
system identified in the water master plan. In the proposed rate, 30% of the total revenue will come
from this charge. The charge is based on the customer's water meter size. Most single - family
residential properties have a 518 -inch or 314 -inch meter.
Proposed Water Rates
Current & Proposed Water Usage Fee (cost per HCF)
Current 1 2 3 4 5
FY2009 FY2010 FY2011 FY2012 FY2013 FY2014
Commodity Charge $2.08 $2.20 $2.46 $2.73 $2.96 $3.08
Current & Proposed Water Service Charge
Combined Fixed Charges
Current
FY2009
1
FY2010
2
FY2011
3
FY2012
4
FY2013
5
FY2014
518" or 314"
$ 4.50
$ 8.27
$ 13.09
$ 15.11
$ 16.63
$ 17.27
1"
$5.50
$13.78
$21.82
$25.19
$27.72
$28.79
1112"
$7.00
$27.55
$43.64
$50.38
$55.43
$57.58
2"
$9.50
$44.08
$69.82
$80.61
$88.69
$92.12
3"
$18.00
$82.65
$130.91
$151.14
$166.30
$172.73
4"
$25.50
$137.75
$218.18
$251.90
$277.16
$287.88
6"
$38.50
$275.50
$436.37
$503.81
$554.32
$575.76
8"
$45.00
$440.80
$698.19
$806.09
$886.91
$921.22
10"
$45.00
$792.34
$1,254.99
$1,448.95
$1,594.22
$1,655.90
12"
$45.00
$1,274.47
$2,018.64
$2,330.61
$2,564.27
$2,663.48
Need More Information? If you have questions, please call George Murdoch, Utilities Director at the following number:
(949) 644 - 30111287778.1
CK"J`'L ";-' -' A
-7-1-::-
1: �- Oct
CITY OF NEWPORT BEACH
CITY COUNCIL STAFF REPORT
Agenda Item No. 25
September 8, 2009
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Utilities Department
George Murdoch, Utilities Director
949- 718 -3401 or gmurdoch@newportbeachca.gov
SUBJECT: Water Utility Financial Plan and Water Rate Increase
ISSUE
Should the City Council approve the Water Utility Financial Plan and direct staff to begin
the Proposition 218 rate increase notification process with the rates proposed in the
financial plan?
RECOMMENDATION
1. Approve the Water Utility Financial Plan;
2. Set public hearing on water rate increase for November 10, 2009; and
3. Direct staff to send rate increase notices as required by Proposition 218 with the
rates proposed in the Financial Plan.
DISCUSSION:
Background:
The increasing cost and scarcity of water has been in the news more and more over
the past several years and the City has not been immune to the effects of this
situation, The City has not raised its water rates since 2005. Since then the City has
seen a 29% increase in the average unit cost of purchased water from the Municipal
Water District of Orange County (MWDOC) and a 37% increase in the average unit
cost of purchased water from the Orange County Water District (OCWD).
In order to provide a plan to ensure the adequate funding of the Water Enterprise
Fund, the City retained the services of Red Oak Consulting to complete a five -year
Financial Plan and a Water Rate Study (Attachment A). This staff report briefly
summarizes their findings. A representative of Red Oak will be present at the Council
Meeting to present their analysis and recommendations, as well as to answer
questions.
Water Rate Increase
September 8, 2009
Page 2
Current Financial Outlook
Based on the City's increasing operations and maintenance (O &M) expenditures,
capital financing needs, and proposed reserve requirements, current water revenues
are insufficient. Under the current rate structure, the Water Fund will be unable to
maintain a positive cash balance by fiscal year 2010 -11. By 2013 -14, the fund deficit
is projected to grow to nearly $30 million.
Financial Plan:
As the basis for the rate study, Department staff and Red Oak developed a five -year
financial plan (FY 2010 - 2014). This plan includes an estimate of the Department's
annual projected operating expenses, a funding plan for the updated Water Master
Plan (on the September 8 study session agenda) and recommended Reserve Policy
revisions for City Council consideration.
Projected Operating Expenses
The Financial Plan revealed that anticipated operating expenses will increase from
$16.7 million in 2009 to $24.1 million by 2014, an increase of approximately 45 %, as
illustrated in the following table:
Projected Operations & Maintenance Expenditures (in thousands)
Current 1 2 3 4 5
Description FY2009 FY2010 FY2011 FY2012 FY2013 FY2014
Purchased Water- MWDOC
$ 3,354
$ 4,931
$ 5,991
$ 6,440
$ 6,762
$ 7,100
Purchased Water- OCWD
$3,857
$3,922
$3,947
$4,081
$4,232
$4,351
Utilities
$1,325
$1,322
$1,440
$1,549
$1,692
$1,851
Salaries & Benefits
$4,152
$4,319
$4,491
$4,671
$4,858
$5,052
Equipment Maintenance & Replacement
$423
$444
$467
$490
$514
$540
Other O &M
$3,579
$3,856
$4,159
$4,491
$4,853
$5,250
Total $ 16,690 $18,794 $ 20,494 $ 21,722 $ 22,911 $ 24,144
Capital Improvement Plan (C1P) Funding
The City has developed a 30 -year capital improvement plan as part of the 2009 Water
Master Plan. The contemplated CIP totals approximately $168 million, which includes
a project cost escalation assumption of 4% per annum. Due to the long -term funding
demands of an improvement plan of this magnitude, the financing plan contemplates a
capital charge (assessed by meter size) as the primary source of revenue for the
capital plan. Effective July 1, 2009 the City created a subsidiary Water Capital Fund
to more fully segregate the resources dedicated to water capital improvements
separate and apart from Water Division operating activities.
Water Rate Increase
September 8, 2009
Page 3
Reserve Policy Recommendations
To insulate the Water Fund from financial volatility, City staff and Red Oak
recommend the City maintain an Operating Stabilization Reserve equivalent to 180
days of its operating budget, or 50 %. This reserve level also provides a buffer period
of 24 months at a 25% loss rate. Funds collected in excess of the operations
stabilization reserve target would be available to offset future rate adjustments while
extended reserve shortfalls would be recovered from future rate increases.
Although it is difficult to determine an appropriate level for a Capital Contingency
reserve without conducting an expensive and extensive criticality assessment of
system facilities which are particularly at risk to catastrophic failure, Red Oak has
evaluated a contingency reserve level contemplated by staff that parallels the annual
contribution requirement necessary to fund the Water Master Plan. Red Oak concurs
that this amount should provide a sufficient reserve against unanticipated
replacements or repairs. By fiscal year 2013 -14, the target contingency reserve will be
approximately $4 million.
In total, the reserve policy recommendations change reserve levels from 60% of
operations to approximately 65% of operations.
Finance Committee Review:
This information was presented to the City's Finance Committee on March 20h and
April 24th of 2009. The Committee directed staff and Red Oak to adjust the Financial
Plan and rate increase structure to accommodate three issues: 1) minimize "rate
shock" to customers with a rate increase, 2) investigate financing the CIP using cash
(pay -as- you -go) or optional debt issuance (General fund loan), and 3) fully fund
reserves by 2014.
As directed by the Finance Committee, staff and Red Oak investigated two scenarios
in an attempt to reduce rate shock and compare debt issuance or cash financing.
Scenario one was to borrow funds from the General Fund or issue debt in the amount
to equal at least two years of CIP funding. Scenario two was to use cash financing or
a pay -as- you -go method. Although adding funds to the reserves in scenario one
initially did bring the rates down for the first year, by 2014 the rates would actually be
higher due to the additional interest cost burden (example below). Additionally, due to
potential State budget actions, the General Fund loan option seems less plausible
than when originally contemplated in April of 2009. Staff recommends scenario two
be selected. The rates proposed in this report meet the Finance Committee's goals
and fully fund the reserves by 2014.
Example:
Scenario one — Commodity rate FY2010 $2.18 /HCF by FY 2014 $3.22
Scenario two — Commodity rate FY2010 $2.20 /HCF by FY 2014 $3.08
Water Rate Increase
September 8, 2009
Page 4
Rate Increase:
There are three elements to the water rates: 1) the commodity or "variable" charge, 2)
the meter or "fixed" charge, and 3) the capital charge. The rate study looked at each
of these charges and determined jointly at what level they should be set, and how they
should be structured, in order to fairly and equitably recover the cost of providing
water to our customers. As directed by the Finance Committee, the rate study also
includes means of mitigating "rate shock" to customers.
The commodity charge is geared primarily towards recovering the cost of the water
itself; this charge currently generates about 90% of the. water enterprise's revenue.
The rate study revealed that not only does this charge need to increase from the
current rate of $2.08 per hundred cubic feet (HCF or 748 gallons), but the percentage
of revenue generated by this charge needs to decrease from 90% to 70% of total
revenue. This means that the commodity charge would increase to $2.20
immediately, and then, so as to avoid "rate shock ", continue to increase each year
until it reaches $3.08 in 2014 as follows:
Current & Proposed Commodity Charges (cost per HCF)
Current 1 2 3 4 5
FY2009 FY2010 FY2011 FY2012 FY2013 FY2014
Commodity Charge $2.08 $2.20 $2.46 $2.73 $2.96 $3.08
The fixed charge was designed to recapture the costs of reading, maintaining and
replacing the various sizes of meters. Presently the remaining 10% of the revenue
received doesn't cover these costs, a situation that is partially due to the basis upon
which the charges are allocated. As a result of the rate study, staff is recommending a
significant restructuring of the fixed charge structure. This new structure would shift
an additional 20% of the revenue requirements onto the fixed charge. After a slight
decrease in 2010 in order to mitigate "rate shock ", customers would see an increase in
the fixed charge. The majority of customers (those with %" meters) would see an
increase of less than $1.50 per month due to this charge. However, customers with
meters sized 2" and above would see larger increases to their fixed charges — in most
cases the charges would be tripled.
Staff is also proposing the establishment of a capital charge that would also be
assessed based upon the size of the customer's meter. The capital charge funds the
repair, replacement and/or construction of expensive facilities such as pipelines,
reservoirs and wells. Again, for the large diameter meter customer, these increases
will be substantial; however, the average customer will realize a $7.00 -$8.00 a month
increase.
Water Rate Increase
September 8, 2009
Page 5
Below is the summary table of the combined fixed rates proposed:
Combined Fixed C'
578" or 314"
1"
1 1/2"
2"
3"
4"
6"
8"
10"
12"
Current & Proposed Combined Fixed Charges
Current 1 2 3 4 5
FY2009 FY2010 FY2011 FY2012 FY2013 FY2014
$4.50 $8.27 $13.09 $15.11 $16.63 $17.27
$5.50 $13.78 $21.82 $25.19 $27.72 $28.79
$7.00 $27.55 $43.64 $50.38 $55.43 $57.58
49.50 $44.08 $69.82 $80.61 $88.69 $92.12
$18.00 $82.65 $130.91 $151.14 $166.30 $172.73
$25.50 $137.75 $218.18 $251.90 $277.16 $287.88
$38.50 $275.50 $436.37 $503.81 $554.32 $575.76
$45.00 $440.80 $698.19 $806.09 $886.91 $921.22
$45.00 $792.34 $1,254.99 $1,448.95 $1,594.22 $1,655.90
$45.00 $1,274.47 $2,018.64 $2,330.61 $2,564.27 $2,663.48
It is important to note that under this proposal, 67% of our customers will realize an
increase in their monthly bill of less than $10; however there will be significant
increases for the remaining 33 %.
Proposition 218 Requirements
Proposition 218 amended the California Constitution, Articles XIIIC and XIIID, to require
property owner notification of proposed increases in property related fees and give
property owners the right to protest. Attachment B is a draft Proposition 218 Notice that
would be sent to all property owners and non - property owning customers of the City.
The notice provides background information, advises customers of the proposed water
rates described in this report, notifies customers of the public hearing, and describes the
protest procedure.
Environmental Review:
Staff recommends the City Council finds that approving the financial plan is not subject
to the California Environmental Quality Act ( "CEQA ") pursuant to Sections 15060(c)(2)
(the activity will not result in a direct or reasonably foreseeable indirect physical change
in the environment) and 15060(c)(3) (the activity is not a project as defined in Section
15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3,
because it has no potential for resulting in physical change to the environment, directly
or indirectly.
Funding Availability:
Funding for the Proposition 218 Notice will come from the water enterprise fund.
Water Rate Increase
September 8, 2009
Page 6
Prepared and Submitted by:
neorgvNurd6ch, Utilities Director
Attachments: Attachment A — Draft Water Utility Financial Plan
Attachment B — Draft Proposition 218 Notice
City of Newport Beach, CA
949 W 16th Street • Newport Beach, CA 92663
Water Utility Financial
Plan
August 2009
Report Prepared By:
REBDAK
• •' CONSULTING
w omsiox ar w•�co�x wax¢
888 W 6th Street
Third Floor
5317004 Los Angeles, CA 90017
(213) 326 -1600
Contents
Executive Summary .......
Table of Contents
............. ............................... ES -1
1. Introduction ...................................................................... ............................1 -1
1.1. Scope........................... ................................................................................................. 1 -1
1.2. Background .......... ............................... ................................... ............................... .1 -1
2. Financial Plan ............................................................... ............................... 2 -1
2.1.
Funds ......................................................................................... ...............................
2 -1
2.2.
Revenue Requirement .................................................. ............................... ..............2
-1
2.2.1. Operations & Maintenance ........................ ............................... ..............2
-1
2.2.1.1. Purchased Water Costs ..................... ............................... ..............2
-2
2.2.1.2. Utilities ..................................................................... ............................2
-3
2.2.1.3. Other O &M ........................................................... ...............................
2 -3
2.2.1.4. Projected Operations & Maintenance Expenditures ...........................2
-3
2.2.2. Capital Improvement Program Financing ......................... .............................2-4
2.2.2.1. Historical Capital Improvement Program Financing ............................
2.4
2.2.2.2. Water Master Plan ................................................ ...............................
2-4
2.2.2.3. Future Capital Improvement Program Financing . ...............................
2 -5
2.2.2.4. Historical and Future Debt Service Payments ..... ...............................
2 -5
2.3.
Reserve Requirements ...................................................................... ............................2
-6
2.3.1. Operating Stabilization Reserve (Operating Fund) ........... ............................2
-6
2.3.2. Contingency Reserve (Capital Fund) ............................. ...............................
2 -7
2.4.
Five -Year Financial Plan ............................................................... ..................- ............
2 -7
2.4.1. Current Financial Outlook .................................................. ............................2
-7
2.4.2. Proposed Five -Year Financial Plan ................................ ...............................
2 -8
3. Current Water Rates ........................................................ ............................3
-1
3.1.
Monthly Service Charge ............................................ ............................... . ..............
3 -1
3.2.
Commodity Charge ......................... ..............................................................................
3 -1
4. Fixed ! Variable Revenue ................................................ ............................4
-1
4.1.
Current Fixed /Variable Rate Revenue ......................................... ...............................
4 -1
4.2.
California Urban Water Conservation Council Best Management Practice 11 .............4
-1
4.3.
Proposed Fixed / Variable Revenue .............................................. ...............................
4 -1
5. Monthly Service Charge Meter Equivalency
5.1. Current Meter Equivalency Schedule ...................
5.2. Proposed Meter Equivalency Schedule ...............
6. Proposed Water Rates
7. Bill Comparisons & Impacts.......
t REE DAK City of Newport Beach, CA
CONSULTING Water utility Financial Plan
......... .. 5317004
5 -1
......................... ............................... 5 -1
........................................................ 5 -1
`c°'
6 -1
7 -1
Table of Contents
List of Tables
Table 2 -1: Historical Operations & Maintenance Expenditures (in thousands) .......
Table 2 -2: Historical Average Unit Cost of Purchased Water per AF ......................
Table 2 -3: Projected Average Unit Cost of Purchased Water per AF ......................
Table 2-4: Projected Operations & Maintenance Expenditures (in thousands).......,
Table 2 -5: Historical Capital Improvement Program Financing (in thousands) .......
Table 2.6: 30 -Year Capital Improvement Program (in thousands ) ...........................
Table 2 -7: Capital Improvement Program Financing (in thousands ) ........................
Table 2 -8: Debt Service Payments (in thousands) .................... ...............................
Table 2 -9: Projected Debt Service Payments (in thousands) .... ...............................
Table 2 -10: Operating Fund Five -Year Financial Plan (in thousands) .....................
Table 2 -11: Capital Fund Five -Year Financial Plan (in thousands ) ..........................
Table 2 -12: Combined Water Fund Five -Year Financial Plan (in thousands)..........
Table 3 -1: Current Monthly Service Charge by Meter Size ....... ...............................
Table 4 -1: Current (FY2009) Fixed / Variable Rate Revenue ($ in thousands) .......
Table 4 -2: Proposed Fixed /Variable Revenue ($ in thousands ) .............................
Table 5 -1: Current Monthly Service Charge & Meter Equivalency Schedule...........
Table 5 -2: Current & Proposed Meter Equivalency Schedules . ...............................
Table 6 -1: Current & Proposed Commodity Charges ................ ...............................
Table 6 -2: Current & Proposed Monthly Service Charges ........ ...............................
Table 6 -3: Proposed Capital Charges ..................................._.. ...............................
Table 64: Current & Proposed Combined Fixed Charges ........ ...............................
List of Figures
............. 2 -2
............. 2 -2
......... 2 -3
............. 24
............. 2-4
............. 2 -5
............. 2 -5
............. 2-6
............. 2-6
............. 2 -9
- .......2 -10
..........2 -11
............. 3-1
............ 4 -1
............ 4 -2
............ 5 -1
............ . 5 -2
............ 6 -1
------------ 6 -1
......6 -2
. 6 -2
Figure 2 -1: Five -Year Financial Outlook with No Revenue Increases (in thousands) .................. 2-8
Figure 2 -2: Five -Year Financial Plan (in thousands) ....................................... ...........................2 -12
Figure 5 -1: Meter Equivalency Schedule Regional Comparison ( FY2009) ... ............................... 5 -2
Figure 7 -1: FY2010 Single Family Residential Customer Monthly Bill Impact ............................. 7 -1
Figure 7 -2: Monthly Regional Bill Comparison - 18 HCF ............................... ............................... 7 -2
REj3DAK City of Newport Beach, CA
CONSULTING water utility Financial Plan ii
...., >. o, ....o.. .,.... 5317004
Acronyms
Used in the Report
AF
Acre Feet
AWWA
American Water Works Association
BMP
Best Management Practice
BPP
Basin Pumping Percentage
CUWCC
California Urban Water Conservation Council
CIP
Capital Improvement Program
ENR
Engineering News Record
FY
Fiscal Year
HCF
Hundred Cubic Feet
MET
Metropolitan Water District of Southern California
MWDOC
Municipal Water District of Orange County
OCWD
Orange County Water District
O &M
Operations & Maintenance
: RE[1DAK City of Newport Beach, CA
••' CONSULTING Water Utility Financial Plan
.... ...... 5317004
Executive Summary
Executive Summary
Scope
The City of Newport Beach Utilities Division (the City) retained Red Oak Consulting to
conduct a water rate study (the Study). This study includes the development of a five-
year financial plan, cost -of- service analysis, and development of a conservation rate
structure. For purposes of expediting the adoption of new rates, the Study has been
divided into two phases:
1. The development of the financial plan, the allocation of fixed and variable
revenue, and the proportioning of the monthly service charge by meter size; and
2. The redesign of the commodity charge from a uniform rate to a conservation rate
structure.
This report documents the first phase of the Study, including the methodology used to
develop the financial plan, the policy decisions reached, the proposed water rates, and the
customer bill impacts. A separate report will be prepared for the second phase of the
study upon its completion.
Financial Plan
In order to maintain the financial viability of the City water system, Red Oak, with the
assistance of City staff, prepared a financial plan for the five -year period from fiscal year
ending (FY) 2010 through FY2014. This financial plan includes the development of the
City's annual revenue requirement, a financing plan for its capital improvement program
(CIP), and review and recommendations for the City's reserve policies.
Red Oak used its proprietary electronic financial planning model, eForecast, to determine
the appropriate amount of revenue necessary for the City to meet all of the above
requirements.
Funds
The City currently maintains a single fund for its water operations, capital improvement
financing, and reserves. Based on direction from the City's staff, Red Oak created a
separate fund for capital- related expenditures, which is referred to as the `Capital Fund.'
The financial planning model isolates this fund from the City's Operating Fund in order
to evaluate the financial viability of each fund separately. The City, with the assistance of
RE@DAK City of Newport Beach, CA
CONSULTING Water Utility Financial Plan [ES-1]
. e,... •. I-- 5317004
Executive Summary
Red Oak, has developed target reserve levels for each fund, which will be explained in
detail below.
Revenue Requirement
The City's revenue requirement is the total amount of revenue it must collect in order to
meet its operations and maintenance (O &M) expenditures, debt service payments, and
cash - financed capital expenditures. This revenue is collected through water rates and
does not include revenue from incidental fees, charges, or other non - operating revenue.
The City's O &M expenditures are accounted for in the Operating Fund while debt
service payments and cash - financed capital are accounted for in the Capital Fund.
Operations & Maintenance
The City's operations & maintenance expenditures have steadily increased over the past
four years, since its most -recent rate increase in FY2005. Table ES -1 presents the City's
historical O &M expenditures for FY2005 through FY2008.
Table ES -1: Historical Operations & Maintenance Expenditures (in thousands)
Description
FY2005
FY2006
FY2007
FY2008
Purchased Water - MWDOC
$ 3,350
$ 3,800
$ 3,350
$ 3,400
Purchased Water- OCWD
2,929
2,880
3,280
3,280
Utilities
1,094
922
872
922
Salaries & Benefits
3,302
3,712
3,827
3,799
Equipment Maintenance & Replacement
345
341
348
417
Other O &M
3,013
3,453
3,444
3,593
Total
$14,033
$15,108
$15,121
$15,411
The City has seen a 29% increase in the average unit cost of purchased water from the
Municipal Water District of Orange County (MWDOC) and a 37% increase in the
average unit cost of purchased water from the Orange County Water District (OCWD)
since 2005. O &M expenditures apart from purchased water and utilities include salaries
and benefits, equipment maintenance and replacement, and other O &M. Other O &M
includes the general fund service charge, minor capital expenditures, chemicals, and other
supplies.
Table ES -2 presents the projected O &M expenditures for the City for the current fiscal
year and the financial plan period FY2010 through FY2014.
REBDAK. city of Newport Beach, CA
CONSULTING Water Utility Financial Plan ES -2
•. •' .o..,.,e. ,....�,,.. w, 5317004
Executive
Table: ES -2: Projected Operations & Maintenance Expenditures (in thousands)
Current 1 2 3 4 5
Description
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
Purchased Water - MWDOC
$ 3,354
$ 4,931
$ 5,991
$ 6,440
$ 6,762
$ 7,100
Purchased Water- OCWD
3,857
3,922
3,947
4,081
4,232
4,351
Utilities
1,325
1,322
1,440
1,549
1,692
1,851
Salaries & Benefits
4,152
4,319
4,491
4,671
4,858
5,052
Equipment Maintenance & Replacement
423
444
467
490
514
540
Other O&M
3,579
3,856
4,159
4,491
4,853
5,250
Total
$16,690
$ 18,794
$ 20,494
$ 21,722
$ 22,911
$ 24,144
The City's O &M expenditures are projected to increase by over $7 million, or 45 %, from
FY2009 to FY2014. Purchased water costs alone account for 57% of this increase.
Purchased water costs are projected to increase by $3.7 million from MWDOC and $0.5
million from OCWD from FY2009 through FY2014. These costs, combined with Other
O &M, which is partially determined by the total amount of water purchased, account for
nearly 80% of the total increase.
Capital Improvement Program Financing
Since FY2005, the City has cash - financed all of its capital improvement needs. The City
has developed a 30 -year capital improvement program as part of its 2009 Water Master
Plan. This CIP totals approximately $167.6 million in escalated dollars at 4% per annum.
The City will continue to finance its CIP on a pay -as- you -go basis during the financial
plan period. Table ES -3 presents the financing plan for the City's CIP for the current
fiscal year and the financial plan period FY2010 through FY2014. Future capital
financing will be accounted for in the City's Capital Fund. An additional monthly capital
charge will be assessed by meter size. This capital charge will be the primary source of
revenue for the Capital Fund and be used to pay for cash - financed capital and debt
service.
Table ES -3: Capital Improvement Program Financing (in thousands)
Current 1 2
3 4
5
Description FY2009 FY2010 FY2011
FY2012 FY2013
FY2014
Capital Projects $ 1,600 $ 3,210 $ 1,830
$ 3,542 $ 2,700
$ 1,033
Cash - Financed Capital Projects 1,600 3,210 1,830
3,542 2,700
1,033
Debt- Financed Capital Projects - - -
-
-
Total Capital Projects Funded $ 1,600 $ 3,210 $1,830
$ 3,542 $ 2,700
$1,033
Table ES -4 presents the two remaining debt service payments for the 1999 Refunding of
Water Revenue Bonds for the financial plan period FY2010
through FY2014.
. •.; REFDAK City of Newport Beach, CA
CONSULTING Water Utility Financial Plan
-^
[ES-3]
.......... 5317004
`.�../
Executive Sum
Table ES-4: Projected Debt Service Payments (in thousands)
Current
5
Description FY2009 FY2010 FY2011 FY2012 FY2013 FY2014
Debt Service $ 1,618 $ 130
Reserve Requirements
The following reserves are commonly maintained by utilities, and are recommended by
Red Oak —at a minimum —to insulate the City from financial volatility.
Operating Stabilization Reserve (Operating Fund)
The City does not currently maintain an operating stabilization reserve. Red Oak
recommends that the City maintain a reserve equivalent to 180 days of its operating
budget, or 50 %. This reserve level also provides a buffer period of 24 months at a 25%
loss rate. Funds collected in excess of the operations stabilization reserve target would be
available to offset future rate adjustments while extended reserve shortfalls would be
recovered from future rate increases.
Contingency Reserve (Capital Fund)
The City currently maintains a contingency reserve equivalent to 35% of its annual
budget, which is based on a historical approximation of capital replacement needs in the
event of a catastrophe. In order to determine the appropriate level of emergency capital
replacement reserves, the City should conduct a criticality assessment of its system
facilities. This assessment involves quantifying the probability of its facilities being
impaired, the level of impairment, and the cost of replacement should a catastrophe
occur. Red Oak recommends that the City conduct such an assessment; however, if
resources are limited, the City may wish to set its contingency reserve level based on an
alternative method. Based on direction from the City's staff, Red Oak has evaluated a
contingency reserve that parallels the annual revenue anticipated to be recovered through
the proposed capital charge. Red Oak believes this amount may provide a sufficient
reserve against unanticipated replacements or repairs. By FY2014, the target
contingency reserve will be approximately $4 million.
Current Financial Outlook
Based on the City's increasing O &M expenditures, capital financing needs, and proposed
reserve requirements, current revenue are insufficient. Figure ES -1 presents the current
fiscal year and the five -year financial outlook for FY2010 through 2014 with no rate
revenue increases. Under current rate revenue, the City will be unable to maintain a
positive balance in the combined Operating Fund and Capital Fund by FY2011.
REMAK
City of Newport Beach, CA
•• • �' CONSULTING water Utility Financial Pla<.. n ES-0
• • .. • ..,..,,......,....... 5317004
Executive Summary
Figure ES -1: Five -Year Financial Outlook with No Revenue Increases (in thousands)
$30.000
120.000
110,000
10
-110,000
420.BW
430.00D
440.000
2009 2010 2wi 2012 2013 2014
^'A
ssas�CashFa`gedcapkal Erhtlng DeN 3arvlce —PUrchasedVM* -03M a a—PurthasetlNbter -MWDOG
s�OperaUnp E.panANrcs — - �Rr�enuro — I —T.Md Reserves —t EnAng Balance
Proposed Five -Year Financial Plan
Red Oak, with the assistance of the City's staff, has developed a five -year financial plan
for the period FY2010 through FY2014. Based on the direction of the City's Finance
Committee, this financial plan has been developed such that rate shock to customers is
minimal, capital projects are financed only through cash, and reserves are met by
FY2014. Figure ES -2 presents the Combined Water Fund's five -year financial plan.
The City is anticipating an annual deficiency of approximately $2.6 million for the
current fiscal year. The proposed financial plan eliminates this annual deficiency by
FY2011. Reserves are drawn down in FY2009 and FY2010 in order to minimize the rate
shock associated with the necessary rate revenue increases.
• . ; REDDA K City of Newport Beach, CA
CONSULTING water Utility Financial Plan ESS
...,,........o.. -... . 5317004
535.0:0
530.0:0
525.000
520.000
S15,oro
S10.000
$5.000
$0
Executive Summary
Figure ES -2: Five -Year Financial Plan (in thousands)
2G09
®Cash.FundwdCaptlal
—Op.re n9EVpnndM .
–r-
i
2010 2011 2012 2013 2014
Etk$n9Dahl Svnica Purchased Watat -OCvVD Pmchasad Wat« -MW000
�F Ra•Mnuec ��� TWQA Racetvae Endngaalance
Current Fixed / Variable Rate Revenue
The City currently collects approximately 90% of its rate revenue through its commodity
charge and the remaining 10% through its monthly service charge. Table ES -5 presents
the current composition of the City's rate revenue. A high proportion of variable revenue
is potentially favorable in terms of affordability and conservation as customers that use
less water are rewarded with lower bills. A high proportion of variable revenue,
however, is less favorable in terms of revenue stability as less revenue is secure when
water use is volatile.
Table ES -5: Current (FY2009) Fixed I Rate Variable Revenue
Rate Revenue Source
FY2009 Percent Share
Commodity Charge
Monthly Service Charge
$14,938 90%
1,640 10%
Total Rate Revenue
$ 16,578
Proposed Fixed /Variable Revenue
The City is currently exceeding the requirements of California Urban Water Conservation
Council's (CUWCC) Best Management Practice (BMP) 1 l by 20 %. BMP 11 states that
RE ®AK City of Newport Beach, CA
CONSULTING Water Utility Financial Plan ES-6
. ,...e. o....�......... 5317004
Executive Summary
in order for water rates to qualify as `conservation rates,' variable revenue must be at
least 70% of total rate revenue. Red Oak recommends that in order to reduce revenue
instability generated by the City's disproportionate share of variable revenue, the City
should gradually reduce the commodity charge's share of total rate revenue to slightly
more than 70% by FY2014.1 Table ES -6 presents the proposed blend of fixed and
variable rate revenue for the financial plan period FY2010 through FY2014. The
proposed blends of fixed and variable revenue will help the City maintain revenue
stability while still meeting the requirements of California CUWCC's BMP 11. Further,
by increasing the proportion of revenue that is collected through fixed charges, the City
can reduce its reliance on revenue collected through more aggressive conservation -based
rates that it is planning to adopt in the future.
Table ES -6: Proposed Fixed I Variable Revenue ($ in thousands)
Rate Revenue
Total Rate Revenue
Fixed Revenue Share
Variable Revenue Share
Fixed Revenue - Monthly Service Charge
Variable Revenue - Commodity Charge
Projected Water Sales (Million HCF)
Current
FY2009 FY2010 FY2011 FY2012 FY2013 FY2014
$ 16,578
$ 19,479
$ 23,723
$ 26,569
$ 28,916
10%
21 %
27%
28%
28%
90%
79%
73%
72%
72%
$ 1,640
$ 4,084
$ 6,469
$ 7,469
$ 8,218
$ 14,938
$ 15,394
$ 17,253
$ 19,100
$ 20,698
7.182
Variable Rate ($ /HCF) $ 2.08
Note: Projected Water Sates assumes 6% water loss rate.
7,002 7,002 7,002 7,002
$2.20 $2.46 $2.73 $2.96
$ 30,130
28%
72%
$ 8,536
$ 21,594
7,002
$ 3.08
Variable revenue projections rely on the City's projected sales of approximately 7 million
HCF for FY2010 through FY2014. Projected sales, however, will be revised to account
for a conservation rate structure, during the second phase of the Study. Adjustments to
these projections will vary according to how aggressive the conservation rate structure is.
Proposed Meter Equivalency Schedule
The current meter equivalency schedule for the City's monthly service charge does not
adequately reflect the relative costs of reading, maintaining, and replacing different meter
sizes. Further, the current schedule does not account for the relative flow capacities of
different meter sizes, which often serves as a basis for the relative amounts of meter -
based charges. Red Oak recommends using the American Water Works Association's
(AW WA) estimate of meter flow capacity from the M6 manual as the basis for the City's
meter equivalency schedule. These flow estimates indicate the relative amounts of water
To meet the requirements of BMP 11, the City should closely monitor its revenue to ensure that fixed charges do not
exceed 30 percent of its revenue. This is important since the effects of conservation will reduce volume - related
charges. As the City implements tiered water rates, it may consider requesting and exemption from the requirements of
KE ®AK City of Newport Beach, CA
CONSULTING Water Utility Financial Plan ES -7
...... . 5317 004
Executive Summary
that can flow through each meter size, expressed in gallons per minute. These relative
capacities serve as an empirical basis for allocating costs among different meter sizes and
provide a more defensible rationale for the determination of relative meter charges.
California's Proposition 218 and Government Code §54999 both require proportionality
in the determination of water rates, which the proposed meter equivalency schedule helps
to address. Table ES -7 presents the current and proposed meter equivalency schedules.
Table ES -7: Current & Proposed Meter Equivalency Schedules
Meter Size
Number of
Meters
Meter Equivalency Ratio
Current Proposed
314"
17,445
1.00
1.00
1"
6,762
1.22
1.67
1112"
495
1.56
3.33
2"
1,373
2.11
5.33
3"
48
4.00
10.00
4"
80
5.67
16.67
6"
28
8.56
33.33
8"
14
10.00
53.33
10"
0
10.00
95.87
12"
0
10.00
154.20
Proposed Rates
In order to implement the proposed financial plan, the City should adjust its current
monthly service charge and commodity charge to the rates presented below for the
financial plan period FY2010 through FY2014. These rates will allow the City to meet
the revenue targets presented in the five -year financial plan, which will cover its rising
expenditures for purchased water and other O &M items, capital improvement financing
needs, and proposed reserve requirements. These rates will also meet the proposed
transition to a composition of rate revenue in which fixed charges account for slightly
less than 30% of total rate revenue, allowing for more revenue stability. Tables ES -8
through ES -11 present the proposed rates for the financial plan period FY2010 through
FY2014. Note that.these rates are anticipated to be implemented on January 1 of each
year.
Table ES-8: Current & Proposed Commodity Charges
Current 1 2 3 4 5
FY2009 FY2010 FY2011 FY2012 FY2013 FY2014
Commodity Charge $ 2.08 $ 2.20 $ 2.46 $ 2.73 $ 2.96 $ 3.08
RE13DAK City of Newport Beach, CA
CONSULTING Water Utility Financial Plan F��]
. --i.. o .............. 5317004
Executive Summary
Table ES -9: Current & Proposed Monthly Service Charges
Table ES -11: Current & Proposed Combined Fixed Charges
Current
1
2
3
4
5
Monthly Service Charge
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
3/4"
$ 4.50
$ 1.18
$ 5.76
$ 7.53
$ 8.78
$ 9.15
1"
5.50
1.97
9.60
12.55
14.63
15.24
11/2"
7.00
3.94
19.20
25.09
29.26
30.49
2"
9.50
6.31
30.72
40.14
46.81
48.78
3"
18.00
11.83
57.61
7527
87.77
91.46
4"
25.50
19.71
96.01
125.45
146.28
152.43
6"
38.50
39.42
192.02
250.91
292.57
304.85
8"
45.00
63.07
307.23
401.45
468.10
487.76
10"
45.00
113.36
552.25
721.60
841.42
876.75
12"
45.00
182.34
888.28
1,160.69
1,353.41
1,410.24
Table ES -10:
Proposed
Capital Charges
Current
1
2
3
4
5
Capital Charge
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
314"
-
$7.08
$7.33
$7.59
$7.85
$8.13
1"
-
11.80
12.22
12.65
13.09
13.55
11/2"
-
23.61
24.43
25.29
26.18
27.09
2"
-
37.77
39.10
40.46
41.88
43.35
3"
-
70.83
73.30
75.87
78.53
81.27
4"
-
118.04
122.17
126.45
130.88
135.46
6"
-
236.09
244.35
252.90
261.75
270.91
8"
-
377.74
390.96
404.64
418.80
433.46
10"
-
678.98
702.75
727.34
752.80
779.15
12"
-
1,092.13
1,130.35
1,169.92
1,210.86
1,253.24
Table ES -11: Current & Proposed Combined Fixed Charges
Current
1
2
3
4
5
Combined Fixed Charges FY2009
FY2010
FY2011
FY2012
FY2013 FY2014
314"
$ 4.50
$ 8.27
$ 13.09
$15.11
$ 16.63 $ 17.27
1"
5.50
13.78
21.82
25.19
27.72
28.79
11/2'
7.00
27.55
43.64
50.38
55.43
57.58
2"
9.50
44.08
69.82
80.61
88.69
92.12
3"
18.00
82.65
130.91
151.14
166.30
172.73
4"
25.50
137.75
218.18
251.90
277.16
287.88
6"
38.50
275.50
436.37
503.81
554.32
575.76
8"
45.00
440.80
698.19
806.09
886.91
921.22
10"
45.00
792.34
1,254.99
1,448.95
1,594.22 1,655.90
12"
45.00
1,274.47
2,018.64
2,330.61
2,564.27 2,663.48
RE®AlC
CONSULTING
City of Newport Beach. CA
Water Utility Financial Plan
[ES-9]
'.. •' . a...e... ...<o........
5317004
Executive Summary
Customer Bill Impact
Figure $S -3 presents the single— family residential monthly bill impact distribution for
FY2010 rates. This bill distribution is based on the City's calendar year 2007
consumption history. The blue columns indicate the percentage of single - family
residential monthly bills that will increase by the corresponding amount on the horizontal
axis, assuming consumption is similar to calendar year 2007. The red line indicates the
cumulative percentage of monthly bills at each amount of change in bill. For example,
the figure shows that 67% of monthly bills will increase by no more than $10. It also
shows that approximately 15% of monthly bills will increase by between $4 and $5.
Note that over 90% of monthly bills will increase by no more than $15.
Figure ES-3: FY2010 Single - Family Residential Customer Monthly Bill Impact
16% IDO-A
14%
12%
10%
m
4
N
a
e%
O
C
u
6%
6
4%
2%%.
0%
00%
60%
70%
67% of mondity bills will
inaeasaby nolnaetlian 60%
510
s0Y
40%
30%
20%
II�I�IIe■..._ -- --- -._�
0%
o%
.o ��unammnm �mm
N N VVl N T N N tlV1 N N' N N N N N N N N N N N
mange Inmomhry Bin
u
C
e
6
i
U
RE ®AK City of Newport Beach. CA
CONSULTING Water Utility Financial Plan ES -10
' • _ . • , I ... 1. 5317004
Section 1
Introduction
1. Introduction
1.1. Scope
The City of Newport Beach Utilities Division (the City) retained Red Oak Consulting to
conduct a water rate study (the Study). This study includes the development of a five-
year financial plan, cost -of- service analysis, and development of a conservation rate
structure. For purposes of expediting the adoption of new rates, the Study has been
divided into two phases:
L The development of the financial plan, the allocation of fixed and variable
revenue, and the proportioning of the monthly service charge by meter size; and
2. The redesign of the commodity charge from a uniform rate to a conservation rate
structure.
This report documents the first phase of the Study, including the methodology used to
develop the financial plan, the policy decisions reached, the proposed water rates, and the
customer bill impacts. A separate report will be prepared for the second phase of the
study upon its completion.
1.2. Background
The City of Newport Beach Utilities Division currently serves a population of over
86,000 within a service area of approximately fifty square miles. It is located on the
Pacific coast of California, in Orange County, and surrounded by Huntington Beach and
Costa Mesa to the north, Laguna Beach to the South, and Irvine to the east. The City
currently has over 26,300 active connections and delivers over 18,000 acre feet (AF) of
water per year on average. The City owns and operates three reservoirs: Big Canyon
Reservoir (600 AF), Spyglass Hill Reservoir (45 AF), and 16'h Street Reservoir (9.2 AF).
REIIDAK City of Newport Reach. CA
"•• CONSULTING Water utility Financial Plan 1 -1
..,.,.......... ... 5317004
Section 2
Financial Plan
2. Financial Plan
In order to maintain the financial viability of the City's water system, Red Oak, with the
assistance of the City's staff, has prepared a financial plan for the five -year period from
fiscal year ending (FY) 2010 through FY2014. This financial plan includes the
development of the City's annual revenue requirement, a financing plan for its capital
improvement program (CIP), and review and recommendations for the City's reserve
policies.
Red Oak used its proprietary electronic financial planning model, eForecast, to determine
the appropriate amount of revenue necessary for the City to meet all of the above
requirements.
2.1. Funds
The City currently maintains a single fund for its water operations, capital improvement
financing, and reserves. Based on direction from the City's staff, Red Oak has created a
separate fund for capital- related expenditures, which will be referred to as the `Capital
Fund.' The financial planning model isolates this fund from the City's Operating Fund in
order to evaluate the financial viability of each fund separately. The City, with the
assistance of Red Oak, has developed target reserve levels for each fund, which will be
explained in detail below.
2.2. Revenue Requirement
The City's revenue requirement is the total amount of revenue it must collect in order to
meet its operations and maintenance (O &M) expenditures, debt service payments, and
cash - financed capital expenditures. This revenue is collected through water rates and
does not include revenue from incidental fees, charges, or other non- operating revenue.
The City's O &M expenditures are accounted for in the Operating Fund while debt
service payments and cash - financed capital are accounted for in the Capital Fund.
2.2.1. Operations & Maintenance
The City's operations & maintenance expenditures have steadily increased over the past
four years, since its most - recent rate increase in FY2005. Table 2 -1 presents the City's
historical O &M expenditures for FY2005 through FY2008:
RE ®AK City of Newport Beach, CA
• CONSULTING Water Utility Financial Plan 2 -1
• .. • .., >. >........>........ 5317004
Section 2
Financial Plan
Table 2 -1: Historical Operations & Maintenance Expenditures (in thousands)
Description.
FY2005
FY2006
FY2007
FY2008
Purchased Water - MWDOC
$ 3,350
$ 3,800
$ 3,350
$ 3,400
Purchased Water -OCWD
2,929
2,880
3,280
3,280
Utilities
1,094
922
872
922
Salaries & Benefits
3,302
3,712
3,827
3,799
Equipment Maintenance & Replacement
345
341
348
417
Other O &M
3,013
3,453
3,444
3,593
Total
$14,033
$15,108
$ 15,121
$15,411
2.2.1.1. Purchased Water Costs
The largest components of the City's O &M expenditures are its purchased water costs
and associated O &M, which are encompassed by the `Other O &M' category in Table
2 -1. The City currently obtains its water from two major sources: the Municipal Water
District of Orange County ( MWDOC), which imports its water from the State Water
Project and the Colorado River Aqueduct through the Metropolitan Water District of
Southern California (MET), and the Orange County Water District (OCWD), which
manages the Orange County groundwater basin. Variations in purchased water costs
occur year -to -year based on the City's basin pumping percentage (BPP), which is the
percentage of the City's annual demand that can be pumped from the basin; weather
conditions; and to a lesser extent, the economy and growth.
Table 2 -2 presents the average unit cost of purchased water per AF by the City's two
major sources for FY2005 through FY2008. Note that the average cost per AF is the
total amount of charges paid to each agency, divided by the amount of water purchased.
The total amount of annual charges for MWDOC includes the cost of treated water, the
capacity charge, the readiness -to -serve charge, and the meter charge. The total amount of
annual charges for OCWD includes the cost of the replenishment assessment and
annexation fee.
Table 2 -2: Historical Average Unit Cost of Purchased Water per AF
Description FY2005 FY2006- FY2007 FY2008
Purchased Water - MWDOC ($ /AF) $ 492 $ 514 $ 616 $ 597
Purchased Water- OCWD ($ /AF) 233 255 344 279
The City has seen a 29% increase in the average cost of purchased water from MWDOC
and a 37% increase in the average cost of purchased water from OCWD since 2005.
Based on information obtained from MWDOC and OCWD, Red Oak projects the
following average unit costs of purchased water per AF in Table 2 -3. These projected
unit costs are based on a projected purchased water amount of 17,100 AF per year.
REBQAK City of Newport Beach, CA
CONSULTING Water Utifity Financial Plan 2 -2
......... ar ...call .�..�. 5317004
Section 2
Financial Plan
Table 2-3: Projected Average Unit Cost of Purchased Water per AF
Current
Description FY2009 FY2010 FY2011 FY2012 FY2013 FY2014
Purchased Water— MWDOC ($ /AF) $ 633 $ 759 $ 922 $ 966 $1,014 $ 1,065
Purchased Water —CCWD ($ /AF) 319 361 364 382 397 408
Note that the projected unit cost of purchased . water from MWDOC increases by over
65% and the projected unit cost of purchased water from OCWD increases by over 25%
from FY2009 through FY2014. Rising MWDOC costs can partially be attributed to the
State of California's third consecutive year of drought and diminished supplies from the
Bay Delta as part of efforts to protect endangered species. Purchased water costs from
OCWD vary year -to -year based on the City's BPP, which is a function of the Orange
County Groundwater Basin's rate of recharge. The unit costs also fluctuate due to the
proportions of total water purchased from each of the City's two sources.
2.2.1.2. Utilities
Utilities costs include electricity costs and telecommunications costs. The majority of
these costs depend on the total amount of water pumped from the Orange County
groundwater basin and have therefore been projected based on the projected amount of
water that will be pumped.
2.2.1.3. Other O &M
O &M expenditures apart from purchased water and utilities include salaries and benefits,
equipment maintenance and replacement, and other O &M. Other 0 &M includes the
general fund service charge, minor capital expenditures, chemicals, and other supplies.
Based on the historical changes in costs for these items and discussion with City staff,
Red Oak estimates the following annual escalation factors for these O &M expenditures:
• Salaries & Benefits — 4%
• Equipment Maintenance & Replacement — 5%
• Other O &M
• General Fund Service Charge — 4%
• Minor Capital Expense — 0%
• Chemicals & Supplies— 11%
2.2.1.4. Projected Operations & Maintenance Expenditures
Table 2 -4 presents the projected O &M expenditures for the City for the current fiscal
year and the financial plan period FY2010 through FY2014.
REIIDA K City of Newport Beach, CA
CONSULTING Water Utility Financial Plan 2 -3
. ,...e. e...,�e,..,..,. 5317004
Section 2
Financial Plan
Table 24: Projected Operations & Maintenance Expenditures (in thousands)
Description
Current
FY2009
1
FY2010
2
FY2011
3
FY2012
4
FY2013
5
FY2014
Purchased Water - MWDOC
$ 3,354
$ 4,931
$ 5,991
$ 6,440
$ 6,762
$ 7,100
Purchased Water- OCWD
3,857
3,922
3,947
4,081
4,232
4,351
Utilities
1,325
1,322
1,440
1,549
1,692
1,851
Salaries & Benefits
4,152
4,319
4,491
4,671
4,858
5,052
Equipment Maintenance & Replacement
423
444
467
490
514
540
Other O &M
3,579
3,856
4,159
4,491
4,853
5,250
Total
$ 16,690
$18,794
$ 20,494
$ 21,722
$ 22,911
$ 24,144
The City's O &M expenditures are projected to increase by over $7 million, or 45 %, from
FY2009 to FY2014. Purchased water costs alone account for 57% of this increase.
Purchased water costs are projected to increase by $3.7 million from MWDOC and $0.5
million from OCWD from FY2009 through FY2014. These casts, combined with Other
O &M, which is partially determined by the total amount of water purchased, account for
nearly 80% of the total increase.
2.2.2. Capital Improvement Program Financing
2.2.2.1. Historical Capital Improvement Program Financing
Since FY2005, the City has cash - financed all of its capital improvement needs. Table 2 -5
presents a summary of capital improvement financing from FY2005 through FY2008.
Table 2 -5: Historical Capital Improvement Program Financing (in thousands)
Description
FY2005
FY2006
FY2007
FY2008
Capital Projects
$ 8,634
$ 7,794
$ 4,924
$ 5,363
Cash - Financed Capital Projects
8,634
7,794
4,924
5,363
Debt - Financed Capital Projects
-
-
-
-
Total Capital Projects Funded
$ 8,634
$ 7,794
$ 4,924
$ 5,363
2.2.2.2. Water Master Plan
The City has developed a 30 -year capital improvement program as part of its 2009 Water
Master Plan. Table 2 -6 presents the 30 -year CIP for the City as indicated in the 2009
Water Master Plan. The CIP is presented in annually escalated dollars to account for
rising construction costs. Red Oak believes that the escalation rate of 4 %, used by the
City to develop its CIP is reasonable and consistent with Engineering New Record (ENR)
construction cost index. Note the average annual capital expenditure for the 30 -year CIP
is approximately $5.6 million compared with $2.5 million for the five -year financial plan
period FY2010 through FY2014.
RE ®AK city of Newport Beach, CA
• CONSULTING Water Utility Financial Plan 2 4
�.............. 5317004
Section 2
Financial Plan
Table 2-6: 30 -Year Capital Improvement Program (in thousands)
Year
Capital
Expenditure
Year
Capital
Expenditure
FY2009
$ 1,600
FY2024
$ 5,279
FY2010
3,210
FY2025
7,905
FY2011
1,830
FY2026
7,090
FY2012
3,542
FY2027
10,534
FY2013
2,700
FY2028
1,643
FY2014
1,033
FY2029
12,458
FY2015
3,610
FY2030
7,694
FY2016
8,408
FY2031
5,518
FY2017
4,890
FY2032
7,255
FY2018
5,382
FY2033
-
FY2019
5,597
FY2034
4,315
FY2020
5,821
FY2035
- 7,645
FY2021
4,933
FY2036
7,950
FY2022
4,975
FY2037
8,268
FY2023
7,584
FY2038
8,599
15 -Year Total
$ 65,115
30 -Year Total
$167,268
Note: Project costs are escalated at a rate of 4% annually
2.2.2.3. Future Capital Improvement Program Financing
The City will continue to finance its CIP on a pay -as- you -go basis during the financial
plan period. Table 2 -7 presents the financing plan for the City's CIP for the current fiscal
year and the financial plan period FY2010 through FY2014. Future capital financing will
be accounted for in the City's Capital Fund. An additional monthly capital charge will be
assessed by meter.size. This capital charge will be the primary source of revenue for the
Capital Fund and be used to pay for cash - financed capital and debt service.
Table 2 -7: Capital Improvement Program Financing (in thousands)
Current 1 2 3 4 5
Description
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
Capital Projects
$ 1,600
$ 3,210
$1,830
$ 3,542
$ 2,700
$ 1,033
Cash - Financed Capital Projects
1,600
3,210
1,830
3,542
2,700
1,033
Debt - Financed Capital Projects
-
-
-
-
-
Total Capital Projects Funded
$1,600
$ 3,210
$ 1,830
$ 3,542
$ 2,700
$1,033
2.2.2.4. Historical and Future Debt Service Payments
Table 2 -8 presents the City's debt service payments from FY2005 through FY2008.
These payments are among the six final payments for the 1999 Refunding of Water
Revenue Bonds.
REQDAK City of Newport beach, CA
CONSULTING Water Utility Financial Plan 25
..,.,..... .., 5317004
Section 2
Financial Plan
Table 2-8: Debt Service Payments (in thousands)
Description FY2005 FY2006 FY2007 FY2008
Debt Service $ 1,653 $ 1,650 $ 1,649 $ 1,619
Table 2 -9 presents the two remaining debt service payments for the 1999 Refunding.
Table 2 -9: Projected Debt Service Payments (in thousands)
Current
Description FY2009 FY2010 FY2011 FY2012 FY2013 FY2014
Debt Service $1,618 $ 130 - - - -
2.3. Reserve Requirements
Reserve requirements are funds set aside for precautionary purposes such as for revenue
stabilization, rate stabilization, or emergency capital replacement. These funds are
typically required to maintain a predetermined balance or an amount based on annual
operating results. The City currently maintains two reserves and a minimum capital
contribution, referred to as the `designated reserve':
• System Reserve– 35% of annual budget
• Stabilization Reserve – 25% of annual budget
• Designated Reserve –10% of annual budget
The following reserves are commonly maintained by utilities, and are recommended by
Red Oak —at a minimum —to insulate the City from financial volatility.
2.3.1. Operating Stabilization Reserve (Operating Fund)
An operating stabilization reserve is established primarily to maintain adequate levels of
cash between the time expenses are incurred and revenue are received. It may also be
used to insulate a utility from volatility in some operating expenditures such as for
energy, and provide time for the utility to adjust rates. Utilities that bill monthly typically
maintain a reserve equivalent to 45 to 90 days of operating expenditures, while utilities
that bill bimonthly typically maintain a reserve equivalent to 90 to 180 days of operating
expenditures. Seasonality is also a factor in determining the appropriate reserve level;
utilities that have strong seasonal influences to their demand typically maintain larger
reserves.
The City does not currently maintain an operating stabilization reserve. Red Oak
recommends that the City maintain a reserve equivalent to 180 days of its operating
budget, or 50 %. This reserve level also provides a buffer period of 24 months at a 25%
loss rate. Funds collected in excess of the operations stabilization reserve target would be
available to offset future rate adjustments while extended reserve shortfalls would be
recovered from future rate increases.
RE ®AK city of Newport Beach, CA
CONSULTING Water utility Financial Plan 2 -6
... . ,,.. .... ............. 5317004
Section 2
Financial Plan
2.3.2. Contingency Reserve (Capital Fund)
A contingency reserve is established to fund the replacement or repair of system facilities
in the event that these facilities are impaired due to a catastrophe. The reserve may also
be used to insulate against early and/or unanticipated capital replacement costs.
The City currently maintains a contingency reserve equivalent to 35% of its annual
budget, which is based on a historical approximation of capital replacement needs in the
event of a catastrophe. In order to determine the appropriate level of emergency capital
replacement reserves, the City should conduct a criticality assessment of its system
facilities. This assessment involves quantifying the probability of its facilities being
impaired, the level of impairment, and the cost of replacement should a catastrophe
occur. Red Oak recommends that the City conduct such an assessment; however, if
resources are limited, the City may wish to set its contingency reserve level based on an
alternative method. Based on direction from the City's staff, Red Oak has evaluated a
contingency reserve that parallels the annual revenue anticipated to be recovered through
the proposed capital charge. Red Oak believes this amount may provide a sufficient
reserve against unanticipated replacements or repairs. By FY2014, the target
contingency reserve will be approximately $4 million.
2.4. Five -Year Financial Plan
2.4.1. Current Financial Outlook
Based on the City's increasing O &M expenditures, capital financing needs, and proposed
reserve requirements, current revenue are insufficient. Figure 2 -1 presents the current
fiscal year and the five -year financial outlook for FY2010 through FY2014 with no rate
revenue increases. Each column is broken into individual annual expenditures, indicated
by a different color (see legend). The red line represents annual revenue, the black line
represents ending balances, and the orange line represents target reserves. Under current
rate revenue, the City will be unable to maintain a positive balance in the combined
Operating Fund and Capital Fund by FY2011.
RE ®AK City of Newport Beach, CA
CONSULTING Water Utility Financial Plan 2 -7
. ,...... , ......... 5317004
Section 2
Financial Plan
Figure 2 -1: Five -Year Financial Outlook with No Revenue Increases (in thousands)
$30.000
120.000
$10.000
$0
410,000
-E20p00
- $30.000
-f40.000
2009 2010 2W11 2012 2013 2014
r�
'E
—C.5MFuiWedCapital Eckdng Debt S_wice �PerchoadWatsr -OCM eeee mhpsed VVt -MWDOO
�Operating Erpendtures y— P,r+enues — ►— Tergdaesenes —t Endm913^1ence
2.4.2. Proposed Five -Year Financial Plan
Red Oak, with the assistance of the City's staff, has developed a five -year financial plan
for the period FY2010 through FY2014. Based on the direction of the City's Finance
Committee, this financial plan has been developed such that rate shock to customers is
minimal, capital projects are financed only by cash, and reserves are tnct by FY2014.
Table 2 -10 presents the five -year financial plan for the City's Operating Fund.
RE ®AK City of Newport Beach, CA
• CONSULTING Water Utility Financial Plan F2 8
.. ,...1., ......... 5317004
Section 2
Financial Plan
Table 2 -10: Operating Fund Five -Year Financial Plan (in thousands)
Current 1 2 3 4
5
Operating Fund FY2009 FY2010 FY2011 FY2012 FY2013
FY2014
Commodity Charge Revenue $ 14,938 $ 15,394 $ 17,253 $ 19,100 $ 20,698
$ 21,594
Monthly Service Charge Revenue 1,640 584 2,847 3,720 4,337
4,519
Miscellaneous Revenue 439 439 439 439 439
439
Interest Income 291 117 120 143 239
377
Total Revenue 17,309 16,535 20,660 23,403 25,714
26,930
Operations & Maintenance 9,480 9,941 10,557 11,201 11,917
12,693
Purchased Water- MWDOC 3,354 4,931 5,991 6,440 6,762
7,100
Purchased Water -OCWD 3,857 3,922 3,947 4,081 4,232
4,351
Total O &M 16,690 18,794 20,494 21,722 22,911
24,144
Capital Contribution (3,300) - - - -
-
Annual Surplus / (Deficiency) (2,682) (2,258) 166 1,681 2,803
2,785
Beginning Balance 9,665 6,983 4,725 4,891 6,572
9,374
Ending Balance $ 6,963 $ 4,725 $ 4,891 $ 6,572 $ 9,374
$ 12,160
Target Reserves $ 8,345 $ 9,397 $ 10,247 $ 10,861 $ 11,456
$ 12,072
Note that cash - financed capital and debt service are accounted for in the Capital Fund.
The removal of these items has a corresponding decrease in the rate revenue required and
accounted for in the Operating Fund, as seen in FY2010. Total rate revenue for the
combined Operating Fund and Capital Fund, however, increases year -to -year to meet
increasing O &M expenditures, capital improvement financing needs, and the proposed
reserve requirements. The City's proposed Operating Stabilization reserve is met by
FY2014.
Table 2 -11 presents the five -year financial plan for the City's Capital Fund.
REQDAK City of Newport Beach, CA
CONSULTING Water Utility Financial Plan 2 -9
...... ., ....... ... .,, 5317004 0 F
Section 2
Financial Plan
Table 2 -11: Capital Fund Five -Year Financial Plan (in thousands)
Current 1 2 3 4 5
Capital Fund FY2009 FY2010 FY2011 FY2012 FY2013 FY2014
Capital Charge Revenue - $ 3,500 $ 3,623 $ 3,749 $ 3,881 $ 4,016
Capital Contribution 3,300 - - -
Interest Income 1 3 29 55 89 181
Total Revenue 3,301 3,503 3,651 3,804 3,969 4,198
Cash - Funded Capital 1,600 3,210 1,830 3,542 2,700 1,033
Existing Debt Service 1,618 130 - - - -
New Debt Service - -
Total Debt Service 1,618 130 -
Annual Surplus /(Deficiency) 84 163 1,821 262 1,269 3,165
Beginning Balance - 84 247 2,069 2,331 3,601
Ending Balance $ 84 $ 247 $ 2,069 $ 2,331 $ 3,601 $ 6,765
Target Reserves $ 4,000 $ 3,500 $ 3,623 $ 3,749 $ 3,881 $ 4,016
Rate Revenue generated by the proposed Capital Charge is accounted for in the Capital
Fund. This source of revenue, which begins in FY2010, is collected to recover the costs
of cash - financed capital projects and debt service for the 1999 Refunding of Water
Revenue Bonds. The target contingency reserve, which is met by FY2014, is based on
the anticipated annual capital charge revenue, which will be approximately $4 million in
FY2014.
Table 2 -12 presents the five -year financial plan for the City's combined water fund.
REBDAK City of Newport Beach, CA -
' CONSULTING Water Utility Financial Plan 2 -10
.......o. o . ... ......... 5317004 �/
Section 2
Financial Plan
Table 2 -12: Combined Water Fund Five -Year Financial Plan (in thousands)
The City anticipates an annual deficiency of approximately $2.6 million for the current
fiscal year. The proposed financial plan eliminates this annual deficiency by FY2011.
Reserves are drawn down in FY2009 and FY2010 in order to minimize the rate shock
associated with the necessary rate revenue increases.
Figure 2 -2 presents a graphical representation of the Combined Water Fund's five -year
financial plan. Each column is separated into individual annual expenditures, indicated
by a different color (see legend). The red line represents annual revenue, the black line
represents ending balances, and the orange line represents target reserves. Note that
target reserves are not met until FY2014. Rate revenue is gradually increased throughout
the five -year financial plan such that `rate shock' to customers is reduced.
: RE ®AK City of Newport Beach, CA
• CONSULTING Water Utility Financial Plan 2 -11
. ,� .1- e ............. 5317004
Current
1
2
3
4
5
Combined Water Fund
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
Rate Revenue
$ 16,578
$ 19,479
$ 23,723
$ 26,569
$ 28,916
$ 30,130
Miscellaneous Revenue
439
439
439
439
439
439
Interest Income
293
120
149
198
328
558
Total Revenue
17,310
20,039
24,311
27,207
29,683
31,127
Operations & Maintenance
9,480
9,941
10,557
11,201
11,917
12,693
Purchased Water - MWDOC
3,354
4,931
5,991
6,440
6,762
.7,100
Purchased Water- OCWD
- 3,857
3,922
3,947
4,081
4,232
4,351
Total O&M
16,690
16,794
20,494
21,722
22,911
24,144
Cash - Funded Capital
1,600
3,210
1,830
3,542
2,700
1,033
Existing Debt Service
1,618
130
-
-
New Debt Service
-
-
-
-
-
-
Total Debt Service
1,618
130
0
0
0
0
Total Expenditures
19,908
22,133
22,324
25,264
25,611
25,177
Annual Surplus / (Deficiency)
(2,598)
(2,095)
1,987
1,943
4,072
5,950
Beginning Balance
9,665
7,067
4,973
6,960
8,903
12,975
Ending Balance
$ 7,067
$ 4,973
$ 6,960
$ 8,903
$12,975
$18,925
Target Reserves
$ 12,345
$12,897
$ 13,870
$ 14,610
$ 15,336
$ 16,088
The City anticipates an annual deficiency of approximately $2.6 million for the current
fiscal year. The proposed financial plan eliminates this annual deficiency by FY2011.
Reserves are drawn down in FY2009 and FY2010 in order to minimize the rate shock
associated with the necessary rate revenue increases.
Figure 2 -2 presents a graphical representation of the Combined Water Fund's five -year
financial plan. Each column is separated into individual annual expenditures, indicated
by a different color (see legend). The red line represents annual revenue, the black line
represents ending balances, and the orange line represents target reserves. Note that
target reserves are not met until FY2014. Rate revenue is gradually increased throughout
the five -year financial plan such that `rate shock' to customers is reduced.
: RE ®AK City of Newport Beach, CA
• CONSULTING Water Utility Financial Plan 2 -11
. ,� .1- e ............. 5317004
505.000
$30,000
525.000
520.070
S150A
S1o,0o0
$5,070
$0
Figure 2 -2: Five -Year Financial Plan (in thousands)
Section 2
Financial Plan
2009
2010 2011
2012
2013 2016
—Cash .0 edCapM
- &kMp DebtSenkc
Ptacha: Wata -0%VD
NrdlasMVkter -MW000
.0pemtn9EKp dwrce
�Rvmuaa
— +•— TafgHReurves
Endin9Bahnce
RE ®AK City of Newport Beach, CA
CONSULTING Water Utility Financial Plan [2 -121
...... ............. 5317604
Section 3
Current Water Rates
3. Current Water Rates
As part of the first phase of the Study, Red Oak reviewed the City's current water rates.
These rates must be adjusted in order to follow Red Oak's proposed financial plan as they
are currently insufficient to meet the City's rising O &M expenditures, capital
improvement needs, and the proposed reserve requirements.
3.1. Monthly Service Charge
Table 3 -1 presents the current monthly service charge for water accounts by meter size.
Table 3 -1: Current Monthly Service Charge by Meter Size
Meter Size
Monthly
Service
Charge
314"
$ 4.50
1"
5.50
1 112"
7.00
2"
9.50
3"
18.00
4"
25.50
8"
38.50
a"
45.00
10"
45.00
12"
45.00
3.2. Commodity Charge
The current commodity charge is $2.08 per HCF. The City's commodity charge is a
uniform rate and does not vary by meter size, customer class, or season.
RE ®AK City of Newport Beach, CA
CONSULTING water Utility Financial Plan 3 -1
'...� .,..,. o...,<........ 5317004
Section 4
Fixed / Variable Revenue
4. Fixed / Variable Revenue
4.1. Current Fixed / Variable Rate Revenue
The City currently collects approximately 90% of its rate revenue through its commodity
charge and the remaining 10% through its monthly service charge. Table 4 -1 presents the
current composition of the City's rate revenue. A high proportion of variable revenue is
potentially favorable in terms of affordability and conservation as customers that use less
water are rewarded with lower bills. A high proportion of variable revenue, however, is
less favorable in terms of revenue stability as less revenue is secure when water use is
volatile.
Table 4 -1: Current (FY2009) Fixed f Variable Rate Revenue ($ in thousands)
Rate Revenue Source FY2009 Percent Shan:
Commodity Charge
$14,938 90%
Monthly Service Charge
1,640 10%
Total Rate Revenue
$16,578
4.2. California Urban Water Conservation Council Best
Management Practice 11
The California Urban Water Conservation Council (CUWCC) has developed fourteen
best management practices (BMPs) to reduce long -term urban water demand in
California. Implementation of these BMPs can aid water agencies in receiving regional
and/or state grants, in addition to reducing long -term demand.
CUWCC's BMP 11 concerns retail water service rates. It states that in order for water
rates to qualify as `conservation rates,' variable rate revenue must be at least 70% of total
rate revenue. BMP 11 clarifies that uniform rates, seasonal rates, tiered rates, and
allocation -based rates are all types of rates that can be used to meet its requirements.
4.3. Proposed Fixed / Variable Revenue
The City is currently exceeding the requirements of CUWCC's BMP I 1 by 20 %. Red
Oak recommends that in order to reduce revenue instability generated by the City's
disproportionate share of variable revenue, the City should gradually reduce the
commodity charge's share of total rate revenue to slightly more than 70% by FY2014. t
To meet the requirements of BMP 11, the City should closely monitor its revenue to ensure that fixed charges do not
exceed 30 percent of its revenue. This is important since the effects of conservation will reduce volume - related
: REQDAK City of Newport Beach, CA
' CONSULTING Water Utility Financial Plan 4 -1
' • .. ...................�..�. 5317004
Section 4
Fixed / Variable Revenue
Table 4 -2 presents the proposed blend of fixed and variable rate revenue for the financial
plan period FY2010 through FY2014. The proposed blends of fixed and variable revenue
will help the city maintain revenue stability while still meeting the requirements of BMP
11. Further, by increasing the proportion of revenue that is collected through fixed
charges, the City can reduce its reliance on revenue collected through more aggressive
conservation -based rates that it is planning to adopt in the future.
Table 4 -2: Proposed Fixed f Variable Revenue ($ in thousands)
Rats Revenue
Current
FY2009
1
FY2010
2
FY2011
3
FY2012
4
FY2013
5
FY2014
Total Rate Revenue
$ 16,578
$ 19,479
$ 23,723
$ 26,569
$ 28,916
$ 30,130
Fixed Revenue Share
10 °/U
21%
2r /a
28%
28%
28%
Variable Revenue Share
90%
79%
73%
72%
72%
72%
Fixed Revenue - Monthly Service Charge
$1,640
$ 4,084
$ 6,469
$ 7,469
$ 8,218
$ 8,536
Variable Revenue - Commodity Charge
$ 14,938
$15,394
$ 17,253
$ 19,100
$ 20,698
$ 21,594
Projected Water Sales (Million HCF)
7,182
7,002
7,002
7,002
7,002
7,002
Variable Rate ($1HCF)
$ 2.08
$ 2.20
$ 2.46
$ 2.73
$ 2.96
$ 3.08
Note: Projected Water Safes assumes 61Y. waterless rate
Note that the total rate revenue in the. above table matches the rate revenue presented in
Table 2 -12. Variable revenue projections rely on the City's projected sales of
approximately 7 million HCF for FY2010 through FY2014. Projected sales, however,
will be revised to account for a conservation rate structure, during the second phase of the
Study. Adjustments to these projections will vary according to how aggressive the
conservation rate structure is.
charges. As the City implements tiered water rates, it may consider requesting and exemption from the requirements of
BMP 11.
•�,� ; RH DAK City of Newport Beach, CA
CONSULTING Water Utility Financial Plan 4 -2
,...,.e...,.... 5317004
Section 5
Monthly Service Charge Meter Equivalency
5. Monthly Service Charge Meter Equivalency
5.1. Current Meter Equivalency Schedule
Table 5 -1 presents the current monthly service charge and the corresponding meter
equivalency ratio for each meter size.
Table 5 -1: Current Monthly Service Charge & Meter Equivalency Schedule
Meter Size
Monthly
Service
Charge
Meter
Equivalency
Ratio
314"
$ 4.50
1.00
V
5.50
1.22
1 112"
7.00
1.56
2"
9.50
2.11
3"
18.00
4.00
4"
25.50
5.67
61,
38.50
8.56
8"
45.00
10.00
W..
45.00
10.00
12"
45.00
10.00
5.2. Proposed Meter Equivalency Schedule
The current meter equivalency schedule for the City's monthly service charge does not
adequately reflect the relative costs of reading, maintaining, and replacing different meter
sizes. Further, the current schedule does not account for the relative flow capacities of
different meter sizes, which often serves as a basis for the relative amounts of meter -
based charges. Red Oak recommends using the American Water Works Association's
(AWWA) estimate of meter flow capacity from the M6 manual as the basis for the City's
meter equivalency schedule. These flow estimates indicate the relative amounts of water
that can flow through: each meter size, expressed in gallons per minute. These relative
capacities serve as an empirical basis for allocating costs among different meter sizes and
provide a more defensible rationale for the determination of relative meter charges.
California's Proposition 218 and Government Code §54999 both require proportionality
in the determination of water rates, which the proposed meter equivalency schedule helps
to address. Table 5 -2 presents. the current and proposed meter equivalency schedules.
�• • ; RE@DA K City of Newport Beach, CA
• CONSULTING Water Utility Financial Plan 5 -1
5317004 •..
Section 5
Monthly Service Charge Meter Equivalency
Table 5 -2: Current & Proposed Meter Equivalency Schedules
Meter Size
Number of
Meters
Meter Equivalency Ratio
Current Proposed
314"
17,445
1.00
1.00
1"
6,762
1.22
1.67
11/2"
495
1.56
3.33
2"
1,373
2.11
5.33
3"
48
4.00
10.00
4"
80
5.67
16.67
6"
28
8.56
33.33
8"
14
10.00
53.33
10"
0
10.00
95.87
12"
0
10.00
154.20
Figure 5 -1 presents the current and proposed meter equivalency schedules in comparison
to other utilities within the region. Note that the current meter equivalency schedule for
the City is conservative in its escalation compared to other water agencies in the region,
with the exception of the City of Anaheim.
140
120
100
80
60
Figure 5 -1: Meter Equivalency Schedule Regional Comparison (FY2009)
40
2D
B
—A
NewpW Beach Newpcd Beach
A.4em Irvine Ranch Laguna Beach
(Qmem) (Proposed)
.3J4' .1' .111T .Y •3' •4' .T .6
RE ®A K City of Newport Beach, CA
CONSULTING Water Utility Financial Plan
53171H14
Huntinglm M"a
Beach cm cidaw
Carden Grove
�
Section 6
Proposed Water Rates
6. Proposed Water Rates
In order to implement the proposed financial plan, the City should adjust its current
monthly service charge and commodity charge to the rates presented below for the
financial plan period FY2010 through FY2014. These rates will allow the City to meet
the revenue targets presented in the five -year financial plan, which will cover its rising
expenditures for purchased water and other O &M items, capital improvement financing
needs, and proposed reserve requirements. These rates will also meet the proposed
transition to a composition of rate revenue in which fixed charges account for slightly
less than 30% of total rate revenue, allowing for more revenue stability. Tables 6 -1
through 6 -4 present the proposed rates for the financial plan period FY2010 through
FY2014. Note that these rates are anticipated to be implemented on January 1 of each
year.
Table 6 -1: Current & Proposed Commodity Charges
Current
FY2009
1 2 3 4
FY2010 FY2011 FY2012
FY2013
5
FY2014
Commodity Charge 2.08 2.20 2.46 2.73 2.96 3.08
Table 6 -2: Current ,& Proposed Monthly Service Charges
Current 1 2 3 4 5
Monthly Service Charge
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
314"
$ 4.50
$ 1.18
$ 5.76
$ 7.53
$ 8.78
$ 9.15
V
5.50
1.97
9.60
12.55
14.63
15.24
1112"
7.00
3.94
19.20
25.09
29.26
30.49
2"
9.50
6.31
30.72
40.14
46.81
48.78
3"
18.00
11.83
57.61
75.27
87.77
91.46
4"
25.50
19.71
96.01
125.45
146.28
152.43
6"
38.50
39.42
192.02
250.91
292.57
304.85
8"
45.00
63.07
307.23
401.45
468.10
487.76
10"
45.00
113.36
55225
721.60
841.42
876.75
12" 45.00 182.34 888.28 1,160.69 1,353.41 1,410.24
REIIDAK City of Newport Beach, CA
CONSULTING Water Mlity Financial Plan 641
. >,.,• >. o ............. 5317004 -
Section 6
Proposed Water Rates
Table 6 -3: Proposed Capital Charges
RERDAK City of Newport Beach, CA
CONSULTING Water Ulilily Financial Plan 6 -2
.....,.., 5317004
Current
1
2
3
4
5
Capital Charge
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
314"
-
$7.08
$7.33
$7.59
$7.85
$8.13
1•'
-
11.80
12.22
12.65
13.09
13.55
11/2"
-
23.61
24.43
2529
26.18
27.09
2"
-
37.77
39.10
40.46
41.88
43.35
3"
-
70.83
73.30
75.87
78.53
81.27
4"
-
118.04
122.17
126.45
130.88
135.46
6"
-
236.09
244.35
252.90
261.75
270.91
8"
-
377.74
390.96
404.64
418.80
433.46
10•1
-
678.98
702.75
727.34
752.80
779.15
12"
1,09213
1,130.35
1,169.92
1,210.86
1,253.24
Table 6-4: Current &
Proposed
Combined Fixed Charges
Current
1
2
3
4
5
Combined Fixed
Charges FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
314"
$4 .50
$ 8.27
$ 13.09
$ 15.11
$ 16.63
$ 17.27
1"
5.50
13.78
21.82
25.19
27.72
28.79
11/2'
7.00
27.55
43.64
50.38
55.43
57.58
2••
9.50
44.08
69.82
80.61
88.69
92.12
3"
18.00
82.65
130.91
151.14
166.30
172.73
4"
25.50
137.75
218.18
251.90
277.16
287.88
6"
38.50
275.50
436.37
503.81
554.32
575.76
8"
45.00
440.80
698.19
806.09
886.91
92122
101,
45.00
792.34
1,254.99
1,448.95
1,594.22
1,655.90
12"
45.00
1,274.47
2,018.64
2,330.61
2,564.27
2,663.48
RERDAK City of Newport Beach, CA
CONSULTING Water Ulilily Financial Plan 6 -2
.....,.., 5317004
Section 7
Bill Comparisons & Impacts
7. Bill Comparisons & Impacts
Figure 7 -1 presents the single family residential monthly bill impact distribution for
FY2010 rates. This bill distribution is based on the City's calendar year 2007
consumption history. The blue columns indicate the percentage of single family
residential monthly bills that will increase by the corresponding amount on the horizontal
axis, assuming consumption is similar to calendar year 2007. The red line indicates the
cumulative percentage of monthly bills at each amount of change in bill. For example, the
figure shows that 67% of monthly bills will increase by no more than $10. It also shows
that approximately I S% of monthly bills will increase by between $4 and $5. Note that
over 90% of monthly bills will increase by no more than $15.
Figure 7 -1: FY2010 Single Family Residential Customer Monthly Bill Impact
1646 1 - 100%
14%
`12%
1G°b
W
m
3
15- ax
O
L
V
4 °m
2 °.b
0%
67% of monthly bills will
increase by no more em
$10
w0.-Nq NY NO FO,WOe- '!1 "O'wW0 Nt"Y���VVVVOtiNWOrN mAN��6W0V
N N g q q N N q w w q q w w N N q K w M N N w q p w q L4 N N N w w w w N M H N
Change In monitdy 6111
90%
80%
70%
m
60% `o
a
Z
s0% Y
6
40% F�
3
u
3W,
20%
10%
Figure 7 -2 presents the current monthly bill for %" meters that consume 18 HCF per
month, compared with the bill under the proposed rates for FY2010, and the bills at other
agencies within the region. Note that it is anticipated that several, if not all of the regional
agencies presented below, will likely increase their rates in FY2010 to address rising
purchased water costs.
KE ®AK City of Newport Beach, CA
CONSULTING water Utility Financial Plan 7 1
.— ..... o..... °....w,. 5317004
Section 7
Bill Comparisons & Impacts
Figure 7 -2: Monthly Regional Bill Comparison -18 HCF
S76
565.97
560
S50 $47.64
941.94
$40
$3676
E31.8
536
$36.93
$61.07
(45.35
NevryMBeach Ne t;WBeach Anaheim Irene Randy Laguna Beach Huntington Mesa Garpm Grove
(Gtatent) (Propoead! Beach Conwll0atee
t Fwed tlladable
)��AK City of Newport Beach, CA
CONSULTING water utility Financial Plan
•' • . ..........,,........,. 5317004
EMMI
City of Newport Beach
f P.O. Box 1768
r Newport Beach, CA 92658 -8915
°glnMi`e
City of Newport Beach
Information and Notice of Public Hearing
And Protest Procedure
Proposed Water Rate Charges
TO: Doe, John & Jane
12345 Main Street
Newport Beach, CA
94590
Attachment B
- --------- - - - - -- - - - - -- - -- --- - - - - -- - -- - - - -- - ----- - - - - -- -------------- - - - - -- ----------- - - - - -- - -- - -- - -- - - - -- - -- - -- --- - - - - -- - -- - -- - - - - -- ------ - - - - --
EXTRA SPACE
Notice of Public Hearing and Protest Procedure
NOTICE IS HEREBY GIVEN that on Tuesday, November 10, 2009, at 7:0013M, a public hearing will be
conducted in the City Council Chambers (Building A) at 3300 Newport Boulevard, Newport Beach.
This will be a Public Hearing before the City Council to allow public testimony and discussion of the proposed
water rate increases described below. The City Council will take written and oral comments, and will consider
all written protests against the proposed charges, determine if a majority protest exists, and consider
resolutions to adopt the water rate charges.
Written protests must be filed with the City of Newport Beach City Clerk. Written protests may be hand
delivered or mailed to the City Clerk at 3300 Newport Boulevard, Newport Beach, California 92663. To be
valid, written protests must state opposition to the proposed water rate increase, identify the Parcel (by
assessor's parcel number or street address), and include the original signature of the record water service
customer or parcel owner. A written protest may be submitted up to the conclusion of the public testimony at
the public hearing.
About Proposition 218
In November 1996, California voters approved Proposition 218. As a result, California agencies must comply
with its requirements in setting utility rates. One provision requires that a noticed public hearing on utility rates
be held and that rates not be increased if a majority of affected utility customers protest the increased rates in
writing.
Frequently Asked Questions
Q. What does my water bill pay for?
A. Your water bill covers the following categories costs and services:
Annual operation and maintenance of the water system. Including well and pump station
operations, water treatment and testing, and water system employee salaries.
City water purchase costs. The City purchases water from the Municipal Water District of Orange
County and from the Orange County Water District.
Capital improvement projects to repair and replace facilities and equipment to improve the water
system safety, efficiency and reliability. No additional debt for this purpose is proposed and all
improvements will be paid for with rate revenue.
Q. Why do the rates need to be raised?
A. Newport Beach is not immune to the increasing cost and scarcity of water over the past several years.
Operating expenses, including chemical and electrical costs, have increased by an average of 6% over
the last four years. In the last year alone, the cost of imported water increased by 20% on September
1st and will increase by another 22% on January 1, 2011. In addition, capital expenditures are required
to maintain the water delivery system. The City has not raised its Water Rates since 2005. The existing
rates do not provide enough revenue to meet the expenses necessary to operate the water system to
provide a safe and reliable water supply to City customers for the next 5 years.
Q. How is my water bill calculated?
A. A customer's water bill (which is a component of the municipal services statement sent to City water
customer's periodically) is calculated by the sum of a fixed service charge, which is based on the
customer's meter size, and the water usage fee, which is calculated based on the amount of water
used by the customer. See rate tables below.
The rate structure in the table below is designed to spread the costs of providing water system among
the system's users fairly and equitably. The costs associated with City's water system are made up of
expenses associated with operating and maintaining the system, capital costs associated with
rehabilitating and expanding the system, and commodity charges associated with acquiring water
supplies. The City's rate structure is designed to encourage conservation by including a portion of
operations and maintenance costs in the commodity charge, even though many of these expenses may
not be directly dependent on water usage. Thereby, a greater proportion of a customer's bill reflects
water usage, which encourages conservation because a customer can reduce his or her bill by using
less water. This proposed blend of the costs between variable and fixed revenues (70% fixed / 30%
variable) ensures revenue stability while also encouraging conservation. The following is a breakdown
of each component:
1. Water Usage Fee (Variable): Shown on the bill as "Water Usage HCF ", this charge is geared
primarily towards recovering the costs associated with City water purchases, treatment, and
distribution costs. In the proposed rate, 70% of the total revenue will come from this charge. This
charge is based on the amount of water used and is calculated by multiplying the number of
hundred cubic feet units (HCF) of water used by the unit rate per HCF.
2. Water Service Charge (Fixed): This charge is designed to recover (a) the costs of reading,
maintaining, and replacing the meters and (b) the costs of capital improvements. The revenues
derived from the capital component are to be used for repairs and improvements to the water
system identified in the water master plan. In the proposed rate, 30% of the total revenue will come
from this charge. The charge is based on the customer's water meter size. Most single - family
residential properties have a 5/8 -inch or 3/4 -inch meter.
Proposed Water Rates
Current & Proposed Water Usage Fee (cost per HCF)
Current 1 2 3 4 5
FY2DD9 FY2010 FY2011 FY2012 FY2013 FY2014
Commodity Charge $2.08 $2.20 $2.46 $2.73 $2.96 $3.08
Combined Fixed C
5/8" or 3/4"
1"
1 1/2"
2"
3"
4"
6"
8"
10"
12"
Current & Proposed Water Service Charge
Current
1
2
3
4
5
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
$4.50
$8.27
$13.09
$15.11
$16.63
$17.27
$5.50
$13.78
$21.82
$25.19
$27.72
$28.79
$7.00
$27.55
$43.64
$50.38
$55.43
$57.58
49.50
$44.08
$69.82
$80.61
$88.69
$92.12
$18.00
$82.65
$130.91
$151.14
$166.30
$172.73
$25.50
$137.75
$218.18
$251.90
$277.16
$287.88
$38.50
$275.50
$436.37
$503.81
$554.32
$575.76
$45.00
$440.80
$698.19
$806.09
$886.91
$921.22
$45.00
$792.34
$1,254.99
$1,448.95
$1,594.22
$1,655.90
$45.00
$1,274.47
$2,018.64
$2,330.61
$2,564.27
$2,663.48
Need More Information? If you have questions, please call George Murdoch, Utilities Director at the following number:
(949)644- 30111287778.1
City of Newport Beach
Water Utility Financial Plan
September 8, 2009
Pathways to Lasting Solutions
Why do we need to increase rates?
":. Last rate increase was in 2005
Operating expenses have increased on
average by ~6% annually for the last 4
years
■ Chemicals and electricity are a major driver
s 2009 through 2014 CIP totals $13.9
million
2 Pathways to tasting Solutions
Why do we need to increase rates?
== : Purchased water costs are rising rapidly
■ Imported Water (MWDOC)
• Average unit cost of imported water has
risen 29% since last rate increase
• 20% MET rate increase 9/09, 22% 1/11
■ Groundwater (OCWD)
• Average unit cost of groundwater has risen
38% since last rate increase
■ Basin Pumping Percentage to be
reduced
• City will have to rely on more expensive
imported water
3 Pathways to Lasting Solutions
Projected Purchased Water Average Unit
Costs
MWDOC ($ /AF)
$ 633
$ 759
$ 922" .
$ 965
$ 1,014:1
$ 1;065
OCWD ($ /AF)
319
361
364
382
397
408
Weighted Average 59%
AF = Acre Feet; 325,850 gallons
El
Pathways to Lasting Solutions
Projected Operating Expenditures
Purchased Water
- MWDOC
Purchased Water
- OCWD
Utilities
Salaries &
Benefits
Equipment
Maintenance &
Replacement
Other O &M
Total
Percent Change
$ in thousands
5
FY2009
FY2010
FY2011
FY2012
FY2613
IFY2014
$ 3,354
$ 4,931
$ 5,991
$ 6,440
$ 6,762
$ 7,100
3,857
3,922
3,947
4,081
4;232
4,351.
1,325
1,322
1,440
1,549
1,692
1,851
4,152
4,319
4;491.
4,671
4,858
5,052
423
444
467
490
514
540
3,579
3;856
41159
4,491
4,853
5,250
$ 16,690
$ 18,794
$ 20,494
$ 21,722
$ 22,911
$ 24,144
6%
-5%
Pathways to Lasting Solutions
Current Financial Outlook
$30,.000
$20.000
$10.000
$0
2009
- $10,000
- $20.000
- $30,000
- $40.000
s Cash - Funded Capital
M_ Operating Expenditures
$ in thousands
2010 "Ali 2012 2013 2014
.y
`may
Existing Debt Service
t Revenues
($27.9 million)
asp Purchased Water. OCWD Purchased Water -MWDOC
.. — Target Reserves —! Ending Balance
6 Pathways to Lasting Solutions
Current. Financial Outlook
*r $2.6 million loss anticipated for
FY2009
Reserves will be exhausted by end
of FY2011
a CIP not adequately funded
7 Pathways to Lasting Solutions
Financial Planning Objectives
Directed by Finance Committee to:
■Draw down reserves to minimize
"rate shock"
■ Meet reserves by FY2014
■Increase fixed charge revenue to
improve revenue stability
Ensure CIP is adequately funded
■Establish dedicated capital charge
8 Pathways to Lasting Solutions
Proposed Financial Plan
$35.000
$30,000
$25.000
$20,000
$5,000
$0
$ in thousands
1s on; pj,,g�
2009 2010 2011
maswee Cash-Funded Capital Exisfing Debt Service
� Operating Expenditures
18.9 million
2012 2013 2014
Purchased Water- OCVVD Purchased Water. MVVDOC
Target Reserves —A— EndingBalance
9 Pathways to Lasting Solutions
Proposed Financial Plan
* Loss is eliminated by FY2011
Target reserves are met by FY2014
on CIP adequately funded beyond 5-
year financial plan
10 Pathways to Lasting Solutions
Proposed Rates
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
Commodity Charge $ 2.08
$ 2.20
$ 2.46
$ 2.73
$ 2.96
$ 3.08
$ 16.63
$ 17.27
V.
5.50
13.78
21.82
Monthly Meter Charge
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
3/4"
$ 4.50
$ 8.27
$ 13.09
$ 15.11
$ 16.63
$ 17.27
V.
5.50
13.78
21.82
25.19
27.72
28.79
1 1/2"
7.00
27.55
43.64
50.38
55.43
57.58
2"
9.50
44.08
69.82
80.61
88.69
92.12
3"
18.00
82.65
130.91
151.14
166.30
172.73
4"
25.50
137.75
218.18
251.90
277.16
287.88
6"
38.50
275.50
436.37
503.81
554.32
575.76
8"
45.00
440.80
698.19
806.09
886.91
921.22
10"
45.00
792.34
1,254.99
1,448.95
1,594.22
1,655.90
12"
45.00
1,274.47
2,018.64
2,330.61
2,564.27
2,663.48
Effective January 1 of each year
11 Pathways to Lasting Solutions
Single Family Bill Impact
16%
14%
12%
10%
m
4
N
N
H 8%
0
`C
U
d 6%
4%
2%
o%
100%
12 Pathways to Lasting Solutions
T
m
0
a
m
m
d
V
90%
80%
70%
67% of monthly bills will
increase by no more than
60%
$10
50%
40%
30%
20%
%
0%
--------- h W W O N M N N N N N m O N O O N M O N O� O O
N N N N N N N N lh M (") f'1 Cl C'! Cl ['1 CJ �'1 C O
!A M (A f9 q M fA f9 fA lA N.M W Vf W N A f9 fA fA (9 W f9 fR f9 IR fR W W tlf f9 $"'
Change in Monthly Bill
12 Pathways to Lasting Solutions
T
m
0
a
m
m
d
V
Regional Water Bill Comparison
$70
$65.97
$01.07
$60
13 Pathways to Lasting Solutions
Questions &Answers
September 8, 2009
Pathways to Lasting Solutions
•
•
•
Attachment A
City of Newport Beach, CA
949 W 16th Street • Newport Beach, CA 92663
Water Utility Financial
Plan
August 2009
Report Prepared By:
' RE ®A K
CONSULTING
• A OIVILION 01 MALLOL. IIIINIL
888 W 6th Street
Third Floor
Los Angeles, CA 90017
5317004 (213) 326 -1600
Table of Contents
Contents •
ExecutiveSummary ...................................................... ............................... ES -1
1. Introduction ...................................................................... ............................1 -1
1.1. Scope ............................................................................................. ............................... 1 -1
1.2. Background ....................................................................................... ............................1 -1
2. Financial Plan .................................................................. ............................2
-1
2.1.
Funds ............................................................................................. ...............................
2 -1
2.2.
Revenue Requirement ...................................................................... ............................2
-1
2.2.1. Operations & Maintenance ................................................ ............................2
-1
2.2.1.1. Purchased Water Costs .......................................... ............................2
-2
2.2.1.2. Utilities ..................................................................... ............................2
-3
2.2.1.3. Other O &M ........................................................... ...............................
2 -3
2.2.1.4. Projected Operations & Maintenance Expenditures ...........................2
-3
2.2.2. Capital Improvement Program Financing .......................... ............................2
-4
2.2.2.1. Historical Capital Improvement Program Financing ...........................2
-4
2.2.2.2. Water Master Plan .................................................. ............................2
-4
2.2.2.3. Future Capital Improvement Program Financing .... ............................2
-5
2.2.2.4. Historical and Future Debt Service Payments ........ ............................2
-5
2.3.
Reserve Requirements .................................................................. ...............................
2.3.1. Operating Stabilization Reserve (Operating Fund) ........... ............................2
2 -6
-6
2.3.2. Contingency Reserve (Capital Fund) ................................ ............................2
-7
2.4.
Five -Year Financial Plan ................................................................... ............................2
-7
2.4.1. Current Financial Outlook .................................................. ............................2
-7
2.4.2. Proposed Five -Year Financial Plan ................................... ............................2
-8
3. Current Water Rates ........................................................ ............................3
-1
3.1.
Monthly Service Charge ................................................................. ...............................
3 -1
3.2.
Commodity Charge.. .....................................................................................................
3 -1
4. Fixed
/ Variable Revenue ................................................ ............................4
-1
4.1.
Current Fixed/ Variable Rate Revenue ............................................ ............................4
-1
4.2.
California Urban Water Conservation Council Best Management Practice 11 .............4
-1
4.3.
Proposed Fixed / Variable Revenue .............................................. ...............................
4 -1
5. Monthly Service Charge Meter Equivalency ................. ............................5 -1
5.1. Current Meter Equivalency Schedule ............................................... ............................5 -1
5.2. Proposed Meter Equivalency Schedule ............................................ ............................5 -1
6. Proposed Water Rates .................................................... ............................6-1
7. Bill Comparisons & Impacts ........................................... ............................7 -1
. ; REBDA K City of Newport Beach, CA
CONSULTING Water Utility Financial Plan O
•..• ..�.,,�............,.... 5317004
Table of Contents
• List of Tables
Table 2 -1: Historical Operations & Maintenance Expenditures (in thousands)
............................2 -2
Table 2 -2: Historical Average Unit Cost of Purchased Water per AF ............ ...............................
2 -2
Table 2 -3: Projected Average Unit Cost of Purchased Water per AF ........... ...............................
2 -3
Table 2 -4: Projected Operations & Maintenance Expenditures (in thousands)
............................2 -4
Table 2 -5: Historical Capital Improvement Program Financing (in thousands)
............................2 -4
Table 2 -6: 30 -Year Capital Improvement Program (in thousands) ...................
............................2 -5
Table 2.7: Capital Improvement Program Financing (in thousands) ................
............................2 -5
Table 2 -8: Debt Service Payments (in thousands) ...........................................
............................2 -6
Table 2 -9: Projected Debt Service Payments (in thousands) ........................... ............................2
-6
Table 2 -10: Operating Fund Five -Year Financial Plan (in thousands) ............. ............................2
-9
Table 2.11: Capital Fund Five -Year Financial Plan (in thousands) ................. ...........................2
-10
Table 2.12: Combined Water Fund Five -Year Financial Plan (in thousands) . ...........................2
-11
Table 3 -1: Current Monthly Service Charge by Meter Size ........................... ...............................
3-1
Table 4.1: Current (FY2009) Fixed / Variable Rate Revenue ($ in thousands)
........................... 4 -1
Table 4.2: Proposed Fixed / Variable Revenue ($ in thousands) .................. ...............................
4 -2
Table 5.1: Current Monthly Service Charge & Meter Equivalency Schedule ...............................
5 -1
Table 5.2: Current & Proposed Meter Equivalency Schedules ........................ ............................5
-2
Table 6 -1: Current & Proposed Commodity Charges .................................... ...............................
6 -1
Table 6 -2: Current & Proposed Monthly Service Charges ............................ ...............................
6 -1
Table 63: Proposed Capital Charges ........................................................... ...............................
6 -2
Table 6 -4: Current & Proposed Combined Fixed Charges ............................ ...............................
6 -2
List of Figures
• Figure 2 -1: Five -Year Financial Outlook with No Revenue Increases (in thousands) .................. 2 -8
Figure 2 -2: Five -Year Financial Plan (in thousands) ................................................ .................. 2 -12
Figure 5 -1: Meter Equivalency Schedule Regional Comparison ( FY2009) ...... ............................5 -2
Figure 7 -1: FY2010 Single Family Residential Customer Monthly Bill Impact . ............................7 -1
Figure 7 -2: Monthly Regional Bill Comparison - 18 HCF .................................. ............................7 -2
•
R ®AK City of Newport Beach, CA
CONSULTING Water Utility Financial Plan Ij
... 5317004
Acronyms
Acronyms Used in the
AF
Acre Feet
AWWA
American Water Works Association
BMP
Best Management Practice
BPP
Basin Pumping Percentage
CUWCC
California Urban Water Conservation Council
CIP
Capital Improvement Program
ENR
Engineering News Record
FY
Fiscal Year
HCF
Hundred Cubic Feet
MET
Metropolitan Water District of Southern California
MWDOC
Municipal Water District of Orange County
OCWD
Orange County Water District
O &M
Operations & Maintenance
REIDA K City of Newport Beach, CA
CONSULTING Water Utility Financial Plan Eiii
• .. • . ,.. ................... 5317004
•
•
•
Executive Summary
Executive Summary
Scope
The City of Newport Beach Utilities Division (the City) retained Red Oak Consulting to
conduct a water rate study (the Study). This study includes the development of a five -
year financial plan, cost -of- service analysis, and development of a conservation rate
structure. For purposes of expediting the adoption of new rates, the Study has been
divided into two phases:
1. The development of the financial plan, the allocation of fixed and variable
revenue, and the proportioning of the monthly service charge by meter size; and
2. The redesign of the commodity charge from a uniform rate to a conservation rate
structure.
This report documents the first phase of the Study, including the methodology used to
develop the financial plan, the policy decisions reached, the proposed water rates, and the
• customer bill impacts. A separate report will be prepared for the second phase of the
study upon its completion.
•
Financial Plan
In order to maintain the financial viability of the City water system, Red Oak, with the
assistance of City staff, prepared a financial plan for the five -year period from fiscal year
ending (FY) 2010 through FY2014. This financial plan includes the development of the
City's annual revenue requirement, a financing plan for its capital improvement program
(CEP), and review and recommendations for the City's reserve policies.
Red Oak used its proprietary electronic financial planning model, eForecast, to determine
the appropriate amount of revenue necessary for the City to meet all of the above
requirements.
Funds
The City currently maintains a single fund for its water operations, capital improvement
financing, and reserves. Based on direction from the City's staff, Red Oak created a
separate fund for capital- related expenditures, which is referred to as the 'Capital Fund.'
The financial planning model isolates this fund from the City's Operating Fund in order
to evaluate the financial viability of each fund separately. The City, with the assistance of
. ; REMA K City of Newport Beach, CA
CONSULTING Water Utility Financial Plan E :l
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Red Oak, has developed target reserve levels for each fund, which will be explained in •
detail below.
Revenue Requirement
The City's revenue requirement is the total amount of revenue it must collect in order to
meet its operations and maintenance (O &M) expenditures, debt service payments, and
cash - financed capital expenditures. This revenue is collected through water rates and
does not include revenue from incidental fees, charges, or other non - operating revenue.
The City's O &M expenditures are accounted for in the Operating Fund while debt
service payments and cash-financed capital are accounted for in the Capital Fund.
Operations & Maintenance
The City's operations & maintenance expenditures have steadily increased over the past
four years, since its most - recent rate increase in FY2005. Table ES -1 presents the City's
historical O &M expenditures for FY2005 through FY2008.
Table ES-1: Historical Operations & Maintenance Expenditures (in thousands)
Description
FY2005
FY2006
FY2007
FY2008
Purchased Water - MW DOC
$ 3,350
$ 3,800
$ 3,350
$ 3,400
Purchased Water -OCWD
2,929
2,880
3,280
3,280
Utilities
1,094
922
872
922
Salaries & Benefits
3,302
3,712
3,827
3,799
Equipment Maintenance & Replacement
345
341
348
417
Other O &M
3,013
3,453
3,444
3,593
Total
$14,033
$15,108
$15,121
$15,411
The City has seen a 29% increase in the average unit cost of purchased water from the
Municipal Water District of Orange County (MWDOC) and a 37% increase in the
average unit cost of purchased water from the Orange County Water District (OCWD)
since 2005. O &M expenditures apart from purchased water and utilities include salaries
and benefits, equipment maintenance and replacement, and other O &M. Other O&M
includes the general fund service charge, minor capital expenditures, chemicals, and other
supplies.
Table ES -2 presents the projected O &M expenditures for the City for the current fiscal
year and the financial plan period FY2010 through FY2014.
•; RE13DA K City of Newport Beach, CA
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The City's O &M expenditures are projected to increase by over $7 million, or 45%, from
FY2009 to FY2014. Purchased water costs alone account for 57% of this increase.
Purchased water costs are projected to increase by $3.7 million from MWDOC and $0.5
million from OCWD from FY2009 through FY2014. These costs, combined with Other
O &M, which is partially determined by the total amount of water purchased, account for
nearly 80% of the total increase.
Capital Improvement Program Financing
Since FY2005, the City has cash - financed all of its capital improvement needs. The City
• has developed a 30 -year capital improvement program as part of its 2009 Water Master
Plan. This CIP totals approximately $167.6 million in escalated dollars at 4% per annum.
•
The City will continue to finance its CIP on a pay -as- you -go basis during the financial
plan period. Table ES -3 presents the financing plan for the City's CIP for the current
fiscal year and the financial plan period FY2010 through FY2014. Future capital
financing will be accounted for in the City's Capital Fund. An additional monthly capital
charge will he assessed by meter size. This capital charge will be the primary source of
revenue for the Capital Fund and be used to pay for cash - financed capital and debt
service.
Table ES-3: Capital Improvement Program Financing (in thousands)
Current 1 2 3 4 5
Description FY2009 FY2010 FY2011 FY2012 FY2013 FY2014
Capital Projects $1,600 $ 3,210 $ 1,830 $ 3,542 $ 2,700 $ 1,033
Cash - Financed Capital Projects 1,600 3,210 11830 3,542 2,700 1,033
Debt - Financed Capital Projects - - - - - -
Total Capital Projects Funded $1,600 $ 3,210 $1,830 $ 3,542 $ 2,700 $1,033
Table ES-4 presents the two remaining debt service payments for the 1999 Refunding of
Water Revenue Bonds for the financial plan period FY2010 through FY2014.
• .' REIDA K City of Newport Beach, CA
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• Table: ES-2: Projected Operations & Maintenance Expenditures (in thousands)
Current
1
2
3
4
5
Description
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
Purchased Water- MWDOC
$ 3,354
$ 4,931
$ 5,991
$ 6,440
$ 6,762
$ 7,100
Purchased Water - OCW D
3,857
3,922
3,947
4,081
4,232
4,351
Utilities
1,325
1,322
1,440
1,549
1,692
1,851
Salaries & Benefits
4,152
4,319
4,491
4,671
4,858
5,052
Equipment Maintenance & Replacement
423
444
467
490
514
540
Other O &M
3,579
3,856
4,159
4,491
4,653
5,250
Total
$ 16,690
$18,794
$ 20,494
$ 21,722
$ 22,911
$ 24,144
The City's O &M expenditures are projected to increase by over $7 million, or 45%, from
FY2009 to FY2014. Purchased water costs alone account for 57% of this increase.
Purchased water costs are projected to increase by $3.7 million from MWDOC and $0.5
million from OCWD from FY2009 through FY2014. These costs, combined with Other
O &M, which is partially determined by the total amount of water purchased, account for
nearly 80% of the total increase.
Capital Improvement Program Financing
Since FY2005, the City has cash - financed all of its capital improvement needs. The City
• has developed a 30 -year capital improvement program as part of its 2009 Water Master
Plan. This CIP totals approximately $167.6 million in escalated dollars at 4% per annum.
•
The City will continue to finance its CIP on a pay -as- you -go basis during the financial
plan period. Table ES -3 presents the financing plan for the City's CIP for the current
fiscal year and the financial plan period FY2010 through FY2014. Future capital
financing will be accounted for in the City's Capital Fund. An additional monthly capital
charge will he assessed by meter size. This capital charge will be the primary source of
revenue for the Capital Fund and be used to pay for cash - financed capital and debt
service.
Table ES-3: Capital Improvement Program Financing (in thousands)
Current 1 2 3 4 5
Description FY2009 FY2010 FY2011 FY2012 FY2013 FY2014
Capital Projects $1,600 $ 3,210 $ 1,830 $ 3,542 $ 2,700 $ 1,033
Cash - Financed Capital Projects 1,600 3,210 11830 3,542 2,700 1,033
Debt - Financed Capital Projects - - - - - -
Total Capital Projects Funded $1,600 $ 3,210 $1,830 $ 3,542 $ 2,700 $1,033
Table ES-4 presents the two remaining debt service payments for the 1999 Refunding of
Water Revenue Bonds for the financial plan period FY2010 through FY2014.
• .' REIDA K City of Newport Beach, CA
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Table ES -4: Projected Debt Service Payments (in thousands) •
Current 1 2 3 4 5
Description FY2009 FY2010 FY2011 FY2012 FY2013 FY2014
Debt Service $ 1,618 $ 130
Reserve Requirements
The following reserves are commonly maintained by utilities, and are recommended by
Red Oak —at a minimum —to insulate the City from financial volatility.
Operating Stabilization Reserve (Operating Fund)
The City does not currently maintain an operating stabilization reserve. Red Oak
recommends that the City maintain a reserve equivalent to 180 days of its operating
budget, or 50 %. This reserve level also provides a buffer period of 24 months at a 25%
loss rate. Funds collected in excess of the operations stabilization reserve target would be
available to offset future rate adjustments while extended reserve shortfalls would be
recovered from future rate increases.
Contingency Reserve (Capital Fund)
The City currently maintains a contingency reserve equivalent to 35% of its annual
budget, which is based on a historical approximation of capital replacement needs in the
event of a catastrophe. In order to determine the appropriate level of emergency capital •
replacement reserves, the City should conduct a criticality assessment of its system
facilities. This assessment involves quantifying the probability of its facilities being
impaired, the level of impairment, and the cost of replacement should a catastrophe
occur. Red Oak recommends that the City conduct such an assessment; however, if
resources are limited, the City may wish to set its contingency reserve level based on an
alternative method. Based on direction from the City's staff, Red Oak has evaluated a
contingency reserve that parallels the annual revenue anticipated to be recovered through
the proposed capital charge. Red Oak believes this amount may provide a sufficient
reserve against unanticipated replacements or repairs. By FY2014, the target
contingency reserve will be approximately $4 million.
Current Financial Outlook
Based on the City's increasing O &M expenditures, capital financing needs, and proposed
reserve requirements, current revenue are insufficient. Figure ES -1 presents the current
fiscal year and the five -year financial outlook for FY2010 through 2014 with no rate
revenue increases. Under current rate revenue, the City will be unable to maintain a
positive balance in the combined Operating Fund and Capital Fund by FY2011.
•
• �.; R ®AK City of Newport Beach, CA
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Figure ES -1: Five -Year Financial Outlook with No Revenue Increases (in thousands)
sa0.)-C
s2oaw
s10a00
$o
- st0.000
-s2o.oc0
530.000
- 540 .)CT.
2049 '',? _ 2012 2013 2014
A.
� IL
� y
..�G.e CundeEC.Ift E.13• ,NWZ5 1.e PwchooedWma OCWD .....•Purcha • W -MWDOC
O.,.tng E:pena ,a, Ending9•I•nw
Proposed Five -Year Financial Plan
Red Oak, with the assistance of the City's staff, has developed a five -year financial plan
for the period FY2010 through FY2014. Based on the direction of the City's Finance
Committee, this financial plan has been developed such that rate shock to customers is
minimal, capital projects are financed only through cash, and reserves are met by
FY2014. Figure ES -2 presents the Combined Water Fund's five -year financial plan.
The City is anticipating an annual deficiency of approximately $2.6 million for the
current fiscal year. The proposed financial plan eliminates this annual deficiency by
FY2011. Reserves are drawn down in FY2009 and FY2010 in order to minimize the rate
shock associated with the necessary rate revenue increases.
• •' R DAK City of Newport Beach, CA
CONSULTING Water Utility Financial Plan
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Figure ES -2: Five -Year Financial Plan (in thousands)
$35.000
*Y Aoo
$25000
$20.000
$15.000
$1,000
?'. 000
50
2009 201) 2a1/
�Caah =unded Capual EeIRnq Debt Sanka
aaaaa� pp.wng Ex PendN- �Pe+enuec
2012
i
lj –
2013 2014
—PUrelneadWrtr -OCWD —Purchawd Wear -MWOOC
— • —T.,qw R"awas —� En0119B619n.
Current Fixed / Variable Rate Revenue
The City currently collects approximately 90% of its rate revenue through its commodity
charge and the remaining 10% through its monthly service charge. Table ES -5 presents
the current composition of the City's rate revenue. A high proportion of variable revenue
is potentially favorable in terms of affordability and conservation as customers that use
less water are rewarded with lower bills. A high proportion of variable revenue,
however, is less favorable in terms of revenue stability as less revenue is secure when
water use is volatile.
Table ES -5: Current (FY2009) Fixed / Rate Variable Revenue
Rate Revenue Source
FY2009 Percent Share
Commodity Charge
Monthly Service Charge
$ 14,938 90%
1,640 10%
Total Rate Revenue
$ 16,578
•
0
Proposed Fixed /Variable Revenue
The City is currently exceeding the requirements of California Urban Water Conservation
Council's (CUWCC) Best Management Practice (BMP) 11 by 20 %. BMP 11 states that •
RE ®A K City of Newport Beach, CA
CONSULTING Water Utility Financial Plan ES66
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Executive Summary
. in order for water rates to qualify as `conservation rates,' variable revenue must be at
least 70% of total rate revenue. Red Oak recommends that in order to reduce revenue
instability generated by the City's disproportionate share of variable revenue, the City
should gradually reduce the commodity charge's share of total rate revenue to slightly
more than 70% by FY2014.1 Table ES -6 presents the proposed blend of fixed and
variable rate revenue for the financial plan period FY2010 through FY2014. The
proposed blends of fixed and variable revenue will help the City maintain revenue
stability while still meeting the requirements of California CUWCC's BMP 11. Further,
by increasing the proportion of revenue that is collected through fixed charges, the City
can reduce its reliance on revenue collected through more aggressive conservation -based
rates that it is planning to adopt in the future.
Table ES-6: Proposed Fixed / Variable Revenue ($ in thousands)
Current 1 2 3 4 5
Rate Revenue FY2009 FY2010 FY2011 FY2012 FY2013 FY2014
E
Total Rate Revenue
Fixed Revenue Share
Variable Revenue Share
Fixed Revenue - Monthly Service Charge
Variable Revenue - Commodity Charge
Projected Water Sales (Million HCF)
$ 16,578
10%
90%
$ 19,479 $ 23,723 $ 26,569 $ 28,916 $ 30,130
21%
79%
$ 1,640 $ 4,084
$ 14,938 $ 15,394
27%
28%
73%
72%
$ 6,469
$ 7,469
26%
28%
72%
72%
$ 8,218
$ 8,536
$ 17,253 $19,100 $ 20,698 $ 21,594
7,182 7,002 7,002 7,002 7,002 7,002
Variable Rate ($/HCF) $ 2.08 $ 2.20 $ 2.46 $ 2.73 $ 2.96 $ 3.08
Note: Projected Water Sales assumes 6% water loss rate.
Variable revenue projections rely on the City's projected sales of approximately 7 million
HCF for FY2010 through FY2014. Projected sales, however, will be revised to account
for a conservation rate structure, during the second phase of the Study. Adjustments to
these projections will vary according to how aggressive the conservation rate structure is.
Proposed Meter Equivalency Schedule
The current meter equivalency schedule for the City's monthly service charge does not
adequately reflect the relative costs of reading, maintaining, and replacing different meter
sizes. Further, the current schedule does not account for the relative flow capacities of
different meter sizes, which often serves as a basis for the relative amounts of meter -
based charges. Red Oak recommends using the American Water Works Association's
(AWWA) estimate of meter flow capacity from the M6 manual as the basis for the City's
meter equivalency schedule. These flow estimates indicate the relative amounts of water
To meet the requirements of BMP 11, the City should closely monitor its revenue to ensure that fixed charges do not
exceed 30 percent of its revenue. This is important since the effects of conservation will reduce volume - related
• charges. As the City implements tiered water rates, it may consider requesting and exemption from the requirements of
BMP 11.
R ®A K City of Newport Beach, CA
CONSULTING Water Utility Financial Plan ES-7
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Executive Summary
that can flow through each meter size, expressed in gallons per minute. These relative
•
capacities serve as an empirical basis for allocating costs among different meter sizes and
provide a more defensible rationale for the determination of relative meter charges.
California's Proposition 218 and Government Code §54999 both require proportionality
in the determination of water rates, which the proposed meter equivalency schedule helps
to address. Table ES -7 presents the current and proposed meter equivalency schedules.
Table ES -7: Current & Proposed Meter Equivalency Schedules
Meter Equivalency Ratio
Meter Size Number of Current Proposed
Meters
3/4" 17,445 1.00 1.00
1" 6,762 1.22 1.67
11/2" 495 1.56 3.33
2" 1,373 2.11 5.33
3" 48 4.00 10.00
4" 80 5.67 16.67
6" 28 8.56 33.33
8" 14 10.00 53.33
10" 0 10.00 95.87
12" 0 10.00 154.20
•
Proposed Rates
In order to implement the proposed financial plan, the City should adjust its current
monthly service charge and commodity charge to the rates presented below for the
financial plan period FY2010 through FY2014. These rates will allow the City to meet
the revenue targets presented in the five -year financial plan, which will cover its rising
expenditures for purchased water and other O &M items, capital improvement financing
needs, and proposed reserve requirements. These rates will also meet the proposed
transition to a composition of rate revenue in which fixed charges account for slightly
less than 30% of total rate revenue, allowing for more revenue stability. Tables ES -8
through ES -11 present the proposed rates for the financial plan period FY2010 through
FY2014. Note that these rates are anticipated to be implemented on January 1 of each
year.
Table ES-8: Current & Proposed Commodity Charges
Current 1 2 3 4 5
FY2009 FY2010 FY2011 FY2012 FY2013 FY2014
Commodity Charge $ 2.08 $ 2.20 $ 2.46 $ 2.73 $ 2.96 $ 3.08
•
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CONSULTING water Utility Financial Plan ES -8
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•
Table ES -9: Current & Proposed Monthly Service Charges
Current
1
2
3
4
5
Monthly Service Charge
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
3/4"
$ 4.50
$ 1.18
$ 5.76
$ 7.53
$ 8.78
$ 9.15
11.
5.50
1.97
9.60
12.55
14.63
15.24
11/2"
7.00
3.94
19.20
25.09
29.26
30.49
2"
9.50
6.31
30.72
40.14
46.81
48.78
3"
18.00
11.83
57.61
75.27
87.77
91.46
4"
25.50
19.71
96.01
125.45
146.28
152.43
V.
38.50
39.42
192.02
250.91
292.57
304.85
8"
45.00
63.07
307.23
401.45
468.10
487.76
10"
45.00
113.36
552.25
721.60
841.42
876.75
12"
45.00
182.34
888.28
1,160.69
1,353.41
1,410.24
Table ES -10: Proposed Capital Charges
Current
1
2
3
4
5
Capital Charge
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
3/4"
$ 7.08
$ 7.33
$ 7.59
$ 7.85
$ 8.13
1 "
11.80
12.22
12.65
13.09
13.55
11/2"
23.61
24.43
25.29
26.18
27.09
•
2"
37.77
39.10
40.46
41.88
43.35
3"
i
70.83
73.30
75.87
78.53
81.27
4"
118.04
122.17
126.45
130.88
135.46
6"
236.09
244.35
252.90
261.75
270.91
8"
-
377.74
390.96
404.64
418.80
433.46
10"
-
678.98
702.75
727.34
752.80
779.15
12"
1,092.13
1,130.35
1,169.92
1,210.86
1,253.24
Table ES -11: Current
& Proposed Combined Fixed Charges
Current
1
2
3
4
5
Combined Fixed Charges FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
314"
$ 4.50
$ 8.27
$ 13.09
$ 15.11
$ 16.63
$ 17.27
1 "
5.50
13.78
21.82
25.19
27.72
28.79
1112"
7.00
27.55
43.64
50.38
55.43
57.58
2"
9.50
44.08
69.82
80.61
88.69
92.12
3"
18.00
82.65
130.91
151.14
166.30
172.73
4"
25.50
137.75
218.18
251.90
277.16
287.88
6"
38.50
275.50
436.37
503.81
554.32
575.76
8"
45.00
440.80
698.19
806.09
886.91
921.22
10"
45.00
792.34
1,254.99
1,448.95
1,594.22
1,655.90
12"
45.00
1,274.47
2,018.64
2,330.61
2,564.27
2,663.48
•
R MA K
CONSULTING
City of Newport Beach, CA
Water Utility Financial Plan
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ES-9
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5317004
Executive
Customer Bill Impact
Figure ES -3 presents the single — family residential monthly bill impact distribution for
FY2010 rates. This bill distribution is based on the City's calendar year 2007
consumption history. The blue columns indicate the percentage of single- family
residential monthly bills that will increase by the corresponding amount on the horizontal
axis, assuming consumption is similar to calendar year 2007. The red line indicates the
cumulative percentage of monthly bills at each amount of change in bill. For example,
the figure shows that 67% of monthly bills will increase by no more than $10. It also
shows that approximately 15% of monthly bills will increase by between $4 and $5.
Note that over 90% of monthly bills will increase by no more than $15.
Figure ES -3: FY2010 Single - Family Residential Customer Monthly Bill Impact
16% _ - - - _ _ _ - = 100%
14%
12%
10%
c
a
E A -%
b
4
i 6%
4%
2%
0%
O fV P Y
N O h N<
N N N N N
N N N N 1
?0%
80%
70%
67% of nwntllly bills will
increase by w more Dian 60%
S10
'0%
40 -A
30%
20%
1 0 Ml 1 N O A 9 P O M O N A m (qy O N {y.1 N ro 0 O V
1 N P N N N P N N 'Jl N N N N A N P Nr N
NV N N 51 2 VI N N 4 (^'1 N N
2
change in Mordity Bill
m
e
q
m
6
u
�.; RERDA K City of Newport Beach, CA
CONSULTING water Utility Financial Plan O ES-10
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•
Section 1
Introduction
•
1. Introduction
1.1. Scope
The City of Newport Beach Utilities Division (the City) retained Red Oak Consulting to
conduct a water rate study (the Study). This study includes the development of a five -
year financial plan, cost -of- service analysis, and development of a conservation rate
structure. For purposes of expediting the adoption of new rates, the Study has been
divided into two phases:
1. The development of the financial plan, the allocation of fixed and variable
revenue, and the proportioning of the monthly service charge by meter size; and
2. The redesign of the commodity charge from a uniform rate to a conservation rate
structure.
This report documents the first phase of the Study, including the methodology used to
develop the financial plan, the policy decisions reached, the proposed water rates, and the
• customer bill impacts. A separate report will be prepared for the second phase of the
study upon its completion.
•
1.2. Background
The City of Newport Beach Utilities Division currently serves a population of over
86,000 within a service area of approximately fifty square miles. It is located on the
Pacific coast of California, in Orange County, and surrounded by Huntington Beach and
Costa Mesa to the north, Laguna Beach to the South, and Irvine to the east. The City
currently has over 26,300 active connections and delivers over 18,000 acre feet (AF) of
water per year on average. The City owns and operates three reservoirs: Big Canyon
Reservoir (600 AF), Spyglass Hill Reservoir (4.5 AF), and 16'h Street Reservoir (9.2 AF).
•,• RE®AK City of Newport Beach, CA
% CONSULTING Water Utility Financial Plan 1 -1
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Section 2
Financial Plan
•
2. Financial Plan
In order to maintain the financial viability of the City's water system, Red Oak, with the
assistance of the City's staff, has prepared a financial plan for the five -year period from
fiscal year ending (FY) 2010 through FY2014. This financial plan includes the
development of the City's annual revenue requirement, a financing plan for its capital
improvement program (CIP), and review and recommendations for the City's reserve
policies.
Red Oak used its proprietary electronic financial planning model, eForecast, to determine
the appropriate amount of revenue necessary for the City to meet all of the above
requirements.
2.1. Funds
The City currently maintains a single fund for its water operations, capital improvement
financing, and reserves. Based on direction from the City's staff, Red Oak has created a
separate fund for capital- related expenditures, which will be referred to as the 'Capital
Fund.' The financial planning model isolates this fund from the City's Operating Fund in
order to evaluate the financial viability of each fund separately. The City, with the
assistance of Red Oak, has developed target reserve levels for each fund, which will be
explained in detail below.
2.2. Revenue Requirement
The City's revenue requirement is the total amount of revenue it must collect in order to
meet its operations and maintenance (O &M) expenditures, debt service payments, and
cash - financed capital expenditures. This revenue is collected through water rates and
does not include revenue from incidental fees, charges, or other non - operating revenue.
The City's O &M expenditures are accounted for in the Operating Fund while debt
service payments and cash - financed capital are accounted for in the Capital Fund.
2.2.1. Operations & Maintenance
The City's operations & maintenance expenditures have steadily increased over the past
four years, since its most- recent rate increase in FY2005. Table 2 -1 presents the City's
historical O &M expenditures for FY2005 through FY2008.
•
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2.2.1.1. Purchased Water Costs
The largest components of the City's O &M expenditures are its purchased water costs
and associated O &M, which are encompassed by the `Other O &M' category in Table
2 -1. The City currently obtains its water from two major sources: the Municipal Water
District of Orange County ( MWDOC), which imports its water from the State Water
Project and the Colorado River Aqueduct through the Metropolitan Water District of
Southern California (MET), and the Orange County Water District (OCWD), which
manages the Orange County groundwater basin. Variations in purchased water costs
occur year -to -year based on the City's basin pumping percentage (BPP), which is the
percentage of the City's annual demand that can be pumped from the basin; weather
• conditions; and to a lesser extent, the economy and growth.
Table 2 -2 presents the average unit cost of purchased water per AF by the City's two
major sources for FY2005 through FY2008. Note that the average cost per AF is the
total amount of charges paid to each agency, divided by the amount of water purchased.
The total amount of annual charges for MWDOC includes the cost of treated water, the
capacity charge, the readiness -to -serve charge, and the meter charge. The total amount of
annual charges for OCWD includes the cost of the replenishment assessment and
annexation fee.
Table 2 -2: Historical Average Unit Cost of Purchased Water per AF
Description FY2005 FY2006 FY2007 FY2008
Purchased Water — MWDOC ($/AF) $ 492 $ 514 $ 616 $ 597
Purchased Water — OCWD ($ /AF) 233 255 344 279
•
The City has seen a 29% increase in the average cost of purchased water from MWDOC
and a 37% increase in the average cost of purchased water from OCWD since 2005.
Based on information obtained from MWDOC and OCWD, Red Oak projects the
following average unit costs of purchased water per AF in Table 2 -3. These projected
unit costs are based on a projected purchased water amount of 17,100 AF per year.
REBDA K City of Newport Beach, CA
CONSULTING Water Utility Financial Plan F2--2]
•.••.. 5317004
Section 2
Financial Plan
• Table 2 -1: Historical Operations & Maintenance
Expenditures (in thousands)
Description
FY2005
FY2006
FY2007
FY2008
Purchased Water - MWDOC
$ 3,350
$ 3,800
$ 3,350
$ 3,400
Purchased Water -OCWD
2,929
2,880
3,280
3,280
Utilities
1,094
922
872
922
Salaries & Benefits
3,302
3,712
3,827
3,799
Equipment Maintenance & Replacement
345
341
348
417
Other O &M
3,013
3,453
3,444
3,593
Total
$ 14,033
$ 15,108
$ 15,121
$ 15,411
2.2.1.1. Purchased Water Costs
The largest components of the City's O &M expenditures are its purchased water costs
and associated O &M, which are encompassed by the `Other O &M' category in Table
2 -1. The City currently obtains its water from two major sources: the Municipal Water
District of Orange County ( MWDOC), which imports its water from the State Water
Project and the Colorado River Aqueduct through the Metropolitan Water District of
Southern California (MET), and the Orange County Water District (OCWD), which
manages the Orange County groundwater basin. Variations in purchased water costs
occur year -to -year based on the City's basin pumping percentage (BPP), which is the
percentage of the City's annual demand that can be pumped from the basin; weather
• conditions; and to a lesser extent, the economy and growth.
Table 2 -2 presents the average unit cost of purchased water per AF by the City's two
major sources for FY2005 through FY2008. Note that the average cost per AF is the
total amount of charges paid to each agency, divided by the amount of water purchased.
The total amount of annual charges for MWDOC includes the cost of treated water, the
capacity charge, the readiness -to -serve charge, and the meter charge. The total amount of
annual charges for OCWD includes the cost of the replenishment assessment and
annexation fee.
Table 2 -2: Historical Average Unit Cost of Purchased Water per AF
Description FY2005 FY2006 FY2007 FY2008
Purchased Water — MWDOC ($/AF) $ 492 $ 514 $ 616 $ 597
Purchased Water — OCWD ($ /AF) 233 255 344 279
•
The City has seen a 29% increase in the average cost of purchased water from MWDOC
and a 37% increase in the average cost of purchased water from OCWD since 2005.
Based on information obtained from MWDOC and OCWD, Red Oak projects the
following average unit costs of purchased water per AF in Table 2 -3. These projected
unit costs are based on a projected purchased water amount of 17,100 AF per year.
REBDA K City of Newport Beach, CA
CONSULTING Water Utility Financial Plan F2--2]
•.••.. 5317004
Section 2
Financial Plan
Table 2 -3: Projected Average Unit Cost of Purchased Water per AF
Note that the projected unit cost of purchased water from MWDOC increases by over
65% and the projected unit cost of purchased water from OCWD increases by over 25%
from FY2009 through FY2014. Rising MWDOC costs can partially be attributed to the
State of California's third consecutive year of drought and diminished supplies from the
Bay Delta as part of efforts to protect endangered species. Purchased water costs from
OCWD vary year -to -year based on the City's BPP, which is a function of the Orange
County Groundwater Basin's rate of recharge. The unit costs also fluctuate due to the
proportions of total water purchased from each of the City's two sources.
2.2.1.2. Utilities
Utilities costs include electricity costs and telecommunications costs. The majority of
these costs depend on the total amount of water pumped from the Orange County
groundwater basin and have therefore been projected based on the projected amount of
water that will be pumped.
2.2.1.3. Other O &M
O &M expenditures apart from purchased water and utilities include salaries and benefits,
equipment maintenance and replacement, and other O &M. Other O &M includes the
general fund service charge, mirror capital expenditures, chemicals, and other supplies.
Based on the historical changes in costs for these items and discussion with City staff,
Red Oak estimates the following annual escalation factors for these O&M expenditures:
• Salaries & Benefits — 4%
• Equipment Maintenance & Replacement — 5%
• Other O &M
• General Fund Service Charge — 4%
• Minor Capital Expense — 0%
• Chemicals & Supplies — 11%
2.2.1.4. Projected Operations & Maintenance Expenditures
Table 2-4 presents the projected O &M expenditures for the City for the current fiscal
year and the financial plan period FY2010 through FY2014.
::• RE®A K City of Newport Beach, CA
CONSULTING Water Utility Financial Plan 2 -3
.................,..,, 5317004
•
r1
LJ
\J
Current 1 2 3 4 5
Description
FY2009 FY2010 FY2011 FY2012 FY2013 FY2014
Purchased Water - MWDOC ($ /AF)
$ 633 $ 759 $ 922 $ 966 $ 1,014 $ 1,065
Purchased Water- OCWD($ /AF)
319 361 364 382 397 408
Note that the projected unit cost of purchased water from MWDOC increases by over
65% and the projected unit cost of purchased water from OCWD increases by over 25%
from FY2009 through FY2014. Rising MWDOC costs can partially be attributed to the
State of California's third consecutive year of drought and diminished supplies from the
Bay Delta as part of efforts to protect endangered species. Purchased water costs from
OCWD vary year -to -year based on the City's BPP, which is a function of the Orange
County Groundwater Basin's rate of recharge. The unit costs also fluctuate due to the
proportions of total water purchased from each of the City's two sources.
2.2.1.2. Utilities
Utilities costs include electricity costs and telecommunications costs. The majority of
these costs depend on the total amount of water pumped from the Orange County
groundwater basin and have therefore been projected based on the projected amount of
water that will be pumped.
2.2.1.3. Other O &M
O &M expenditures apart from purchased water and utilities include salaries and benefits,
equipment maintenance and replacement, and other O &M. Other O &M includes the
general fund service charge, mirror capital expenditures, chemicals, and other supplies.
Based on the historical changes in costs for these items and discussion with City staff,
Red Oak estimates the following annual escalation factors for these O&M expenditures:
• Salaries & Benefits — 4%
• Equipment Maintenance & Replacement — 5%
• Other O &M
• General Fund Service Charge — 4%
• Minor Capital Expense — 0%
• Chemicals & Supplies — 11%
2.2.1.4. Projected Operations & Maintenance Expenditures
Table 2-4 presents the projected O &M expenditures for the City for the current fiscal
year and the financial plan period FY2010 through FY2014.
::• RE®A K City of Newport Beach, CA
CONSULTING Water Utility Financial Plan 2 -3
.................,..,, 5317004
•
r1
LJ
\J
The City's O &M expenditures are projected to increase by over $7 million, or 45 %, from
FY2009 to FY2014. Purchased water costs alone account for 57% of this increase.
Purchased water costs are projected to increase by $3.7 million from MWDOC and $0.5
million from OCWD from FY2009 through FY2014. These costs, combined with Other
O &M, which is partially determined by the total amount of water purchased, account for
nearly 80% of the total increase.
2.2.2. Capital Improvement Program Financing
2.2.2.1. Historical Capital Improvement Program Financing
• Since FY2005, the City has cash - financed all of its capital improvement needs. Table 2 -5
presents a summary of capital improvement financing from FY2005 through FY2008.
Table 2 -5: Historical Capital Improvement Program Financing (in thousands)
Description FY2005 FY2006 FY2007 FY2008
Capital Projects $ 8,634 $ 7,794 $ 4,924 $ 5,363
Cash - Financed Capital Projects 8,634 7,794 4,924 5,363
Debt - Financed Capital Projects - - - -
Total Capital Projects Funded $ 8,634 $ 7,794 $ 4,924 $ 5,363
E
2.2.2.2. Water Master Plan
The City has developed a 30 -year capital improvement program as part of its 2009 Water
Master Plan. Table 2 -6 presents the 30 -year CIP for the City as indicated in the 2009
Water Master Plan. The CIP is presented in annually escalated dollars to account for
rising construction costs. Red Oak believes that the escalation rate of 4% used by the
City to develop its CIP is reasonable and consistent with Engineering New Record (ENR)
construction cost index. Note the average annual capital expenditure for the 30 -year CIP
is approximately $5.6 million compared with $2.5 million for the five -year financial plan
period FY2010 through FY2014.
,•� R)r ®ill'` City of Newport Beach, CA
CONSULTING Water Utility Financial Plan 72-4]
..,. ..... ..... ...... 5317004
Section 2
Financial Plan
• Table 2-4: Projected Operations &
Maintenance Expenditures (in thousands)
Current
1
2
3
4
5
Description
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
Purchased Water - MW DOC
$ 3,354
$ 4,931
$ 5,991
$ 6,440
$ 6,762
$ 7,100
Purchased Water -OCWD
3,857
3,922
3,947
4,081
4,232
4,351
Utilities
1,325
1,322
1,440
1,549
1,692
1,851
Salaries & Benefits
4,152
4,319
4,491
4,671
4,858
5,052
Equipment Maintenance & Replacement
423
444
467
490
514
540
Other O&M
3,579
3,856
4,159
4,491
4,853
5,250
Total
$16,690
$18,794
$ 20,494
$ 21,722
$ 22,911
$ 24,144
The City's O &M expenditures are projected to increase by over $7 million, or 45 %, from
FY2009 to FY2014. Purchased water costs alone account for 57% of this increase.
Purchased water costs are projected to increase by $3.7 million from MWDOC and $0.5
million from OCWD from FY2009 through FY2014. These costs, combined with Other
O &M, which is partially determined by the total amount of water purchased, account for
nearly 80% of the total increase.
2.2.2. Capital Improvement Program Financing
2.2.2.1. Historical Capital Improvement Program Financing
• Since FY2005, the City has cash - financed all of its capital improvement needs. Table 2 -5
presents a summary of capital improvement financing from FY2005 through FY2008.
Table 2 -5: Historical Capital Improvement Program Financing (in thousands)
Description FY2005 FY2006 FY2007 FY2008
Capital Projects $ 8,634 $ 7,794 $ 4,924 $ 5,363
Cash - Financed Capital Projects 8,634 7,794 4,924 5,363
Debt - Financed Capital Projects - - - -
Total Capital Projects Funded $ 8,634 $ 7,794 $ 4,924 $ 5,363
E
2.2.2.2. Water Master Plan
The City has developed a 30 -year capital improvement program as part of its 2009 Water
Master Plan. Table 2 -6 presents the 30 -year CIP for the City as indicated in the 2009
Water Master Plan. The CIP is presented in annually escalated dollars to account for
rising construction costs. Red Oak believes that the escalation rate of 4% used by the
City to develop its CIP is reasonable and consistent with Engineering New Record (ENR)
construction cost index. Note the average annual capital expenditure for the 30 -year CIP
is approximately $5.6 million compared with $2.5 million for the five -year financial plan
period FY2010 through FY2014.
,•� R)r ®ill'` City of Newport Beach, CA
CONSULTING Water Utility Financial Plan 72-4]
..,. ..... ..... ...... 5317004
Section 2
Current
FY2009
Financial Plan
2
FY2011
Table 2 -6: 30 -Year Capital Improvement Program (in thousands)
•
Year Capital Year Capital
Capital Projects
Expenditure Expenditure
$ 3,210
FY2009 $ 1,600 FY2024 $ 5,279
$ 3,542
FY2010 3,210 FY2025 7,905
$ 1,033
FY2011 1,830 FY2026 7,090
1,600
FY2012 3,542 FY2027 10,534
1,830
FY2013 2,700 FY2028 1,643
2,700
FY2014 1,033 FY2029 12,458
Debt - Financed Capital Projects
FY2015 3,610 FY2030 7,694
-
FY2016 8,408 FY2031 5,518
-
FY2017 4,890 FY2032 7,255
-
FY2018 5,382 FY2033
$1,600
FY2019 5,597 FY2034 4,315
$1,830
FY2020 5,821 FY2035 7,645
$ 2,700
FY2021 4,933 FY2036 7,950
FY2022 4,975 FY2037 8,268
FY2023 7,584 FY2038 8,599
15 -Year Total $ 65,115 30 -Year Total $167,268
Note: Project costs are escalated at a rate of 4% annually
2.2.2.3. Future Capital Improvement Program Financing
•
The City will continue to finance its CIP on a pay -as- you -go basis during the financial
plan period. Table 2 -7 presents the financing plan for the City's CIP for the current fiscal
year and the financial plan period FY2010 through FY2014. Future capital financing will
be accounted for in the City's Capital Fund. An additional monthly capital charge will be
assessed by meter size. This capital charge will be the primary source of revenue for the
Capital Fund and be used to pay for cash - financed capital and debt service.
Table 2 -7: Capital Improvement Program Financing (in thousands)
Description
Current
FY2009
1
FY2010
2
FY2011
3
FY2012
4
FY2013
5
FY2014
Capital Projects
$ 1,600
$ 3,210
$ 1,830
$ 3,542
$ 2,700
$ 1,033
Cash - Financed Capital Projects
1,600
3,210
1,830
3,542
2,700
1,033
Debt - Financed Capital Projects
-
-
-
-
-
-
Total Capital Projects Funded
$1,600
S3,210
$1,830
$ 3,542
$ 2,700
$1,033
2.2.2.4. Historical and Future Debt Service Payments
Table 2 -8 presents the City's debt service payments from FY2005 through FY2008.
These payments are among the six final payments for the 1999 Refunding of Water
Revenue Bonds.
E
• •.' RE®AIC City of Newport Beach, CA
CONSULTING water Utility Financial Plan 2-5
..• 5317004 O
Section 2
Financial Plan
• Table 2 -8: Debt Service Payments (in thousands)
Description FY2005 FY2006 FY2007 FY2008
Debt Service $ 1,653 $ 1,650 $ 1,649 $ 1,619
Table 2 -9 presents the two remaining debt service payments for the 1999 Refunding.
Table 2 -9: Projected Debt Service Payments (in thousands)
Current
Description FY2009 FY2010 FY2011 FY2012 FY2013 FY2014
Debt Service $ 1,618 $ 130 - - -
2.3. Reserve Requirements
Reserve requirements are funds set aside for precautionary purposes such as for revenue
stabilization, rate stabilization, or emergency capital replacement. These funds are
typically required to maintain a predetermined balance or an amount based on annual
operating results. The City currently maintains two reserves and a minimum capital
contribution, referred to as the `designated reserve':
• System Reserve – 35% of annual budget
• Stabilization Reserve – 25% of annual budget
• • Designated Reserve– 10% of annual budget
The following reserves are commonly maintained by utilities, and are recommended by
Red Oak —at a minimum —to insulate the City from financial volatility.
2.3.1. Operating Stabilization Reserve (Operating Fund)
An operating stabilization reserve is established primarily to maintain adequate levels of
cash between the time expenses are incurred and revenue are received. It may also be
used to insulate a utility from volatility in some operating expenditures such as for
energy, and provide time for the utility to adjust rates. Utilities that bill monthly typically
maintain a reserve equivalent to 45 to 90 days of operating expenditures, while utilities
that bill bimonthly typically maintain a reserve equivalent to 90 to 180 days of operating
expenditures. Seasonality is also a factor in determining the appropriate reserve level;
utilities that have strong seasonal influences to their demand typically maintain larger
reserves.
The City does not currently maintain an operating stabilization reserve. Red Oak
recommends that the City maintain a reserve equivalent to 180 days of its operating
budget, or 50 %. This reserve level also provides a buffer period of 24 months at a 25%
loss rate. Funds collected in excess of the operations stabilization reserve target would be
available to offset future rate adjustments while extended reserve shortfalls would be
• recovered from future rate increases.
• .' RMA K City of Newport Beach, CA
CONSULTING Water Utility Financial Plan F27-6
• . ........................ 53170114
Section 2
Financial Plan
2.3.2. Contingency Reserve (Capital Fund) •
A contingency reserve is established to fund the replacement or repair of system facilities
in the event that these facilities are impaired due to a catastrophe. The reserve may also
be used to insulate against early and/or unanticipated capital replacement costs.
The City currently maintains a contingency reserve equivalent to 35% of its annual
budget, which is based on a historical approximation of capital replacement needs in the
event of a catastrophe. In order to determine the appropriate level of emergency capital
replacement reserves, the City should conduct a criticality assessment of its system
facilities. This assessment involves quantifying the probability of its facilities being
impaired, the level of impairment, and the cost of replacement should a catastrophe
occur. Red Oak recommends that the City conduct such an assessment; however, if
resources are limited, the City may wish to set its contingency reserve level based on an
alternative method. Based on direction from the City's staff, Red Oak has evaluated a
contingency reserve that parallels the annual revenue anticipated to be recovered through
the proposed capital charge. Red Oak believes this amount may provide a sufficient
reserve against unanticipated replacements or repairs. By FY2014, the target
contingency reserve will be approximately $4 million.
2.4. Five -Year Financial Plan
2.4.1. Current Financial Outlook
Based on the City's increasing O &M expenditures, capital financing needs, and proposed
reserve requirements, current revenue are insufficient. Figure 2 -1 presents the current
fiscal year and the five -year financial outlook for FY2010 through FY2014 with no rate
revenue increases. Each column is broken into individual annual expenditures, indicated
by a different color (see legend). The red line represents annual revenue, the black line
represents ending balances, and the orange line represents target reserves. Under current
rate revenue, the City will be unable to maintain a positive balance in the combined
Operating Fund and Capital Fund by FY2011.
• .' RE ®A K City of Newport Beach, CA ,-
CONSULTING Water Utility Financial Plan 2 -7
• .. .... ..... .I ............1 5317004
•
•
•
•
•
Section 2
Financial Plan
Figure 2 -1: Five -Year Financial Outlook with No Revenue Increases (in thousands)
530.000
S20,000
510.0.0
$0
- 510,000
- S20A00
- 530,000
540.000
2i {5 2010 gym" _gin_ 2019 2014
` IL
. cllh- FUn]a: Pur- hII3tlVplal OCAM PurehaWMt*,_WVDoc
�Jpmetng L:�sneYN =a— Fevenuea -•-`ayetFnervee —t EOtliny Beinee
2.4.2. Proposed Five -Year Financial Plan
Red Oak, with the assistance of the City's staff, has developed a five -year financial plan
for the period FY2010 through FY2014. Based on the direction of the City's Finance
Committee, this financial plan has been developed such that rate shock to customers is
minimal, capital projects are financed only by cash, and reserves are met by FY2014.
Table 2 -10 presents the five -year financial plan for the City's Operating Fund.
�.' RE®AK City of Newport Beach, CA
CONSULTING water Utility Financial Plan
....... ........,.., 5317004
Section 2
Financial Plan
Table 2 -10: Operating Fund Five -Year Financial Plan (in thousands)
Operations & Maintenance
Current
1
2
3
4
5
Operating Fund
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
Commodity Charge Revenue
$ 14,938
$ 15,394
$ 17,253
$ 19,100
$ 20,698
$ 21,594
Monthly Service Charge Revenue
1,640
584
2,847
3,720
4,337
4,519
Miscellaneous Revenue
439
439
439
439
439
439
Interest Income
291
117
120
143
239
377
Total Revenue
17,309
16,535
20,660
23,403
25,714
26,930
Operations & Maintenance
9,480
9,941
10,557
11,201
11,917
12,693
Purchased Water -MWDOG
3,354
4,931
5,991
6,440
6,762
7,100
Purchased Water - OCWD
3,857
3,922
3,947
4,081
4,232
4,351
Total O&M
16,690
18,794
20,494
21,722
22,911
24,144
Capital Contribution
(3,300)
Annual Surplus / (Deficiency)
(2,682)
(2,258)
166
1,681
2,803
2,785
Beginning Balance
9,665
6,983
4,725
4,891
6,572
9,374
Ending Balance
$ 6,983
$ 4,725
S4,891
$ 6,572
$ 9,374
$12,160
Target Reserves
$ 8,345
$ 9,397
$ 10,247
$ 10,861
$ 11,456
$ 12,072
Note that cash- financed capital and debt service are accounted for in the Capital Fund.
The removal of these items has a corresponding decrease in the rate revenue required and
accounted for in the Operating Fund, as seen in FY2010. Total rate revenue for the
combined Operating Fund and Capital Fund, however, increases year -to -year to meet
increasing O &M expenditures, capital improvement financing needs, and the proposed
reserve requirements. The City's proposed Operating Stabilization reserve is met by
FY2014.
Table 2 -11 presents the five -year financial plan for the City's Capital Fund.
•'� .' R EDDA K City of Newport Beach, CA
CONSULTING Water Utility Financial Plan 2 -9
,..,.,..., ............. 5317004
•
u
•
•
Annual Surplus / (Deficiency)
84 163
1,821
262
1,269
Section 2
Beginning Balance
- 84
247
2.069
2,331
Financial Plan
• Table 2 -11:
Capital Fund Five -Year Financial Plan (in thousands)
$ 2,069
Current
1
2
3
4 5
Capital Fund
FY2009
FY2010
FY2011
FY2012
FY2013 FY2014
Capital Charge Revenue
$ 3,500
$ 3,623
$ 3,749
$ 3,881 $ 4,016
Capital Contribution
3,300
-
-
-
Interest Income
1
3
29
55
89 181
Total Revenue
3,301
3,503
3,651
3,804
3,969 4,198
Cash - Funded Capital
1,600
3,210
1,830
3,542
2,700 1,033
Existing Debt Service
1,618
130
-
-
- -
New Debt Service
-
-
-
-
- -
Total Debt Service
1,618
130
•
Annual Surplus / (Deficiency)
84 163
1,821
262
1,269
3,165
Beginning Balance
- 84
247
2.069
2,331
3,601
Ending Balance
$ 84 $ 247
$ 2,069
$ 2,331
S3,601
$ 6,765
Target Reserves
$ 4,000 $ 3,500
$ 3,623
$ 3,749
$ 3,881
$ 4,016
Rate Revenue generated by the proposed Capital Charge is accounted for in the Capital
Fund. This source of revenue, which begins in FY2010, is collected to recover the costs
of cash - financed capital projects and debt service for the 1999 Refunding of Water
Revenue Bonds. The target contingency reserve, which is met by FY2014, is based on
the anticipated annual capital charge revenue, which will be approximately $4 million in
FY2014.
Table 2 -12 presents the five -year financial plan for the City's combined water fund.
,•.; R QAK City of Newport Beach, CA
CONSULTING 'Hater Utility Financial Plan
• 5317004
2 -10
Section 2
Financial Plan
Table 2 -12: Combined Water Fund Five -Year Financial Plan (in thousands)
Current 1 2 3 4
Combined Water Fund
FY2009 FY2010 FY2011 FY2012 FY2013 FY2014
Rate Revenue
$ 16,578
$ 19,479
$ 23,723
$ 26,569
$ 28,916
$ 30,130
Miscellaneous Revenue
439
439
439
439
439
439
Interest Income
293
120
149
198
328
558
Total Revenue
17,310
20,039
24,311
27,207
29,683
31,127
Operations & Maintenance
9,480
9,941
10,557
11,201
11,917
12,693
Purchased Water - MWDOC
3,354
4,931
5,991
6,440
6,762
7,100
Purchased Water - OCWD
3,857
3,922
3,947
4,081
4,232
4,351
Total O&M
16,690
18,794
20,494
21,722
22,911
24,144
Cash - Funded Capital 1,600 3,210 1,830 3,542 2,700
1,033
Existing Debt Service 1,618 130 - - -
-
New Debt Service - - - - -
Total Debt Service 1,618 130 0 0 0
0
Total Expenditures 19,908 22,133 22,324 25,264 25,611
25,177
Annual Surplus / (Deficiency) (2,598) (2,095) 1,987 1,943 4,072
5,950 •
Beginning Balance 9,665 7,067 4,973 6,960 8,903
12,975
Ending Balance $ 7,067 $ 4,973 $ 6,960 $ 8,903 $12,975
$18,925
Target Reserves $ 12,345 $ 12,897 $ 13,870 $ 14,610 $ 15,336
$ 16,088
The City anticipates an annual deficiency of approximately $2.6 million for the current
fiscal year. The proposed financial plan eliminates this annual deficiency by FY2011.
Reserves are drawn down in FY2009 and FY2010 in order to minimize the rate shock
associated with the necessary rate revenue increases.
Figure 2 -2 presents a graphical representation of the Combined Water Fund's five -year
financial plan. Each column is separated into individual annual expenditures, indicated
by a different color (see legend). The red line represents annual revenue, the black line
represents ending balances, and the orange line represents target reserves. Note that
target reserves are not met until FY2014. Rate revenue is gradually increased throughout
the five -year financial plan such that 'rate shock' to customers is reduced.
•
RMAK City of Newport Beach, CA
CONSULTING Water Utility Financial Plan 2 -11
5317004
•
•
Figure 2 -2: Five -Year Financial Plan (in thousands)
$35.000
$30.000
325.000
$20000
-�
315.000
$10000
$5.000
so
2009
]aa FundWophol
agar• JP*,.09 E.Pendbrm
Section 2
Financial Plan
201) 2_11
ExlAn9 )ept:er: ke
Rvsnuea
REIIDAK City of Newport Beach, CA
• CONSULTING water Utility Financial Plan
5317004
2012 2013 2014
Purahaaa9V*tx -OCAL �Purdmsei Waler -Mw00C
— —Targe Raoarvaa —a- Enamp BPbrPs
2 -12
Section 3
Current Water Rates
3. Current Water Rates
As part of the first phase of the Study, Red Oak reviewed the City's current water rates.
These rates must be adjusted in order to follow Red Oak's proposed financial plan as they
are currently insufficient to meet the City's rising O &M expenditures, capital
improvement needs, and the proposed reserve requirements.
3.1. Monthly Service Charge
Table 3 -1 presents the current monthly service charge for water accounts by meter size.
Table 3-1: Current Monthly Service Charge by Meter Size
Meter Size
Monthly
Service
Charge
3/4"
$ 4.50
1"
5.50
1 1/2"
7.00
2"
9.50
3"
18.00
4"
25.50
6"
38.50
8"
45.00
10"
45.00
12"
45.00
3.2. Commodity Charge
The current commodity charge is $2.08 per HCF. The City's commodity charge is a
uniform rate and does not vary by meter size, customer class, or season.
' •: R ®Ali City of Newport Beach, CA
CONSULTING Water Utility Financial Plan 3-1
..................... 5317004 ._
•
•
E
Section 4
Fixed / Variable Revenue
•
4. Fixed / Variable Revenue
4.1. Current Fixed / Variable Rate Revenue
The City currently collects approximately 90% of its rate revenue through its commodity
charge and the remaining 10% through its monthly service charge. Table 4 -1 presents the
current composition of the City's rate revenue. A high proportion of variable revenue is
potentially favorable in terms of affordability and conservation as customers that use less
water are rewarded with lower bills. A high proportion of variable revenue, however, is
less favorable in terms of revenue stability as less revenue is secure when water use is
volatile.
Table 4 -1: Current (FY2009) Fixed / Variable Rate Revenue ($ in thousands)
Rate Revenue Source FY2009 Percent Share
Commodity Charge $ 14,938 90%
Monthly Service Charge 1,640 10%
Total Rate Revenue $ 16,578
4.2. California Urban Water Conservation Council Best
Management Practice 11
The California Urban Water Conservation Council (CUWCC) has developed fourteen
best management practices (BMPs) to reduce long -term urban water demand in
California. Implementation of these BMPs can aid water agencies in receiving regional
and/or state grants, in addition to reducing long -term demand.
CUWCC's BMP 11 concerns retail water service rates. It states that in order for water
rates to qualify as 'conservation rates,' variable rate revenue must be at least 70% of total
rate revenue. BMP 11 clarifies that uniform rates, seasonal rates, tiered rates, and
allocation -based rates are all types of rates that can be used to meet its requirements.
4.3. Proposed Fixed / Variable Revenue
The City is currently exceeding the requirements of CUWCC's BMP 11 by 20 %. Red
Oak recommends that in order to reduce revenue instability generated by the City's
disproportionate share of variable revenue, the City should gradually reduce the
commodity charge's share of total rate revenue to slightly more than 70% by FY2014.1
. I To meet the requirements of BMP 11, the City should closely monitor its revenue to ensure that fixed charges do not
exceed 30 percent of its revenue. This is important since the effects of conservation will reduce volume - related
,'� P- REIIDA K City of Newport Beach, CA
CONSULTING Water utility Financial Plan 4 -1
> ... ............. 5317004
Section 4
Fixed / Variable Revenue
Table 4 -2 presents the proposed blend of fixed and variable rate revenue for the financial
plan period FY2010 through FY2014. The proposed blends of fixed and variable revenue
will help the city maintain revenue stability while still meeting the requirements of BMP
11. Further, by increasing the proportion of revenue that is collected through fixed
charges, the City can reduce its reliance on revenue collected through more aggressive
conservation -based rates that it is planning to adopt in the future.
Table 4 -2: Proposed Fixed / Variable Revenue ($ in thousands)
Current 1 2 3 4 5
Rate Revenue FY2009 FY2010 FY2011 FY2012 FY2013 FY2014
Total Rate Revenue
$ 16,578
$ 19,479
$ 23,723
$ 26,569
$ 28,916
$ 30,130
Fixed Revenue Share
10%
21%
27%
28%
28%
28%
Variable Revenue Share
90%
79%
73%
72%
72%
72%
Fixed Revenue - Monthly Service Charge
$ 1,640
$ 4,084
$ 6,469
$ 7,469
$ 8,218
$ 8,536
Variable Revenue - Commodity Charge
$ 14,938
$ 15,394
$ 17,253
$ 19,100
$ 20,698
$ 21,594
Projected Water Sales (Million HCF)
7,182
7,002
7,002
7,002
7,002
7,002
Variable Rate ($ /HCF)
$ 2.08
$ 2.20
$ 2.46
$ 2.73
$ 2.96
$ 3.08
Note: Projected Water Sales assumes 6% water loss rate.
Note that the total rate revenue in the above table matches the rate revenue presented in
Table 2 -12. Variable revenue projections rely on the City's projected sales of
approximately 7 million HCF for FY2010 through FY2014. Projected sales, however,
will be revised to account for a conservation rate structure, during the second phase of the
Study. Adjustments to these projections will vary according to how aggressive the
conservation rate structure is.
charges. As the City implements tiered water rates, it may consider requesting and exemption from the requirements of
BMP 11.
,••� It ®AK City of Newport Beach, CA
• • • CONSULTING Water Ublity Financial Plan 4-2
' • . •' ..,.,,,................. 5317004
•
•
J
Section 5
Monthly Service Charge Meter Equivalency
•
5. Monthly Service Charge Meter Equivalency
•
5.1. Current Meter Equivalency Schedule
Table 5 -1 presents the current monthly service charge and the corresponding meter
equivalency ratio for each meter size.
Table 5 -1: Current Monthly Service Charge & Meter Equivalency Schedule
Meter Size
Monthly
Service
Charge
Meter
Equivalency
Ratio
314"
$ 4.50
1.00
1 "
5.50
1.22
11/2"
7.00
1.56
2"
9.50
2.11
3"
18.00
4.00
V
25.50
5.67
6"
38.50
8.56
8..
45.00
10.00
10"
45.00
10.00
12"
45.00
1 0.00
5.2. Proposed Meter Equivalency Schedule
The current meter equivalency schedule for the City's monthly service charge does not
adequately reflect the relative costs of reading, maintaining, and replacing different meter
sizes. Further, the current schedule does not account for the relative flow capacities of
different meter sizes, which often serves as a basis for the relative amounts of meter -
based charges. Red Oak recommends using the American Water Works Association's
(AWWA) estimate of meter flow capacity from the M6 manual as the basis for the City's
meter equivalency schedule. These flow estimates indicate the relative amounts of water
that can flow through each meter size, expressed in gallons per minute. These relative
capacities serve as an empirical basis for allocating costs among different meter sizes and
provide a more defensible rationale for the determination of relative meter charges.
California's Proposition 218 and Government Code §54999 both require proportionality
in the determination of water rates, which the proposed meter equivalency schedule helps
to address. Table 5 -2 presents the current and proposed meter equivalency schedules.
'•,• RMAK City of Newport Beach, CA
CONSULTING Water utility Financial Plan 5-1
5317004
Figure 5 -1 presents the current and proposed meter equivalency schedules in comparison
to other utilities within the region. Note that the current meter equivalency schedule for
the City is conservative in its escalation compared to other water agencies in the region,
with the exception of the City of Anaheim.
Figure 5 -1: Meter Equivalency Schedule Regional Comparison (FY2009)
,4c
uo
100
80
60
40
20 sIDC
0
Newport Reach Newport Beech Anaheim
icurrent) (Proposed)
"a Ranch Laguna Beach
Hun ingtm
Beads
•314" a1' a11r2' •2• 03' 64' 6" .8'
Mesa Garden Grove
Cmsdidated
i FMA K City of Newport Beach, CA
4 CONSULTING Water Utility Financial Plan 5-2
'•. •' 5317004
•
is
Section 5
Monthly Service Charge Meter Equivalency
Table 5 -2: Current
& Proposed Meter Equivalency Schedules
.
Meter Equivalency Ratio
Meter Size
Number of
Current Proposed
Meters
3/4"
17,445
1.00 1.00
1"
6,762
1.22 1.67
11/2"
495
1.56 3.33
2"
1,373
2.11 5.33
3"
48
4.00 10.00
4"
80
5.67 16.67
6"
28
8.56 33.33
a"
14
10.00 53.33
10"
0
10.00 95.87
12"
0
10.00 154.20
Figure 5 -1 presents the current and proposed meter equivalency schedules in comparison
to other utilities within the region. Note that the current meter equivalency schedule for
the City is conservative in its escalation compared to other water agencies in the region,
with the exception of the City of Anaheim.
Figure 5 -1: Meter Equivalency Schedule Regional Comparison (FY2009)
,4c
uo
100
80
60
40
20 sIDC
0
Newport Reach Newport Beech Anaheim
icurrent) (Proposed)
"a Ranch Laguna Beach
Hun ingtm
Beads
•314" a1' a11r2' •2• 03' 64' 6" .8'
Mesa Garden Grove
Cmsdidated
i FMA K City of Newport Beach, CA
4 CONSULTING Water Utility Financial Plan 5-2
'•. •' 5317004
•
is
•
Section 6
Proposed Water Rates
6. Proposed Water Rates
In order to implement the proposed financial plan, the City should adjust its current
monthly service charge and commodity charge to the rates presented below for the
financial plan period FY2010 through FY2014. These rates will allow the City to meet
the revenue targets presented in the five -year financial plan, which will cover its rising
expenditures for purchased water and other O &M items, capital improvement financing
needs, and proposed reserve requirements. These rates will also meet the proposed
transition to a composition of rate revenue in which fixed charges account for slightly
less than 30% of total rate revenue, allowing for more revenue stability. Tables 6 -1
through 6 -4 present the proposed rates for the financial plan period FY2010 through
FY2014. Note that these rates are anticipated to be implemented on January 1 of each
year.
L I
�.' RMAK City of Newport Beach, CA
CONSULTING Water Utility Rnancial Plan
5317004 6 1
..,.,.................
Table 6 -1: Current & Proposed Commodity Charges
Current
1
2
3
4
5
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
Commodity Charge
2.08
2.20
2.46
2.73
2.96
3.08
•
Table 6-2: Current &
Proposed Monthly Service Charges
Current
1
2
3
4
5
Monthly Service
Charge FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
3/4"
$ 4.50
$ 1.18
$ 5.76
$ 7.53
$ 8.78
$ 9.15
1 "
5.50
1.97
9.60
12.55
14.63
15.24
11/2"
7.00
3.94
19.20
25.09
29.26
30.49
2"
9.50
6.31
30.72
40.14
46.81
48.78
3"
18.00
11.83
57.61
75.27
87.77
91.46
4"
25.50
19.71
96.01
125.45
146.28
152.43
6"
38.50
39.42
192.02
250.91
292.57
304.85
8..
45.00
63.07
307.23
401.45
468.10
487.76
10°
45.00
113.36
552.25
721.60
841.42
876.75
12"
45.00
182.34
888.28
1,160.69
1,353.41
1,410.24
L I
�.' RMAK City of Newport Beach, CA
CONSULTING Water Utility Rnancial Plan
5317004 6 1
..,.,.................
Section 6
Proposed Water Rates
Table 6-3: Proposed Capital Charges
Current 1 2 3 4 5
Capital Charge FY2009 FY2010 FY2011 FY2012 FY2013 FY2014
3/4"
$ 7.08
$ 7.33
$ 7.59
$ 7.85
$ 8.13
ill
- 11.80
12.22
12.65
13.09
13.55
11/2"
23.61
24.43
25.29
26.18
27.09
2"
37.77
39.10
40.46
41.88
43.35
3"
- 70.83
73.30
75.87
78.53
81.27
4"
- 118.04
122.17
126.45
130.88
135.46
6"
- 236.09
244.35
252.90
261.75
270.91
8"
- 377.74
390.96
404.64
418.80
433.46
10"
- 678.98
702.75
727.34
752.80
779.15
12"
1,092.13
1,130.35
1,169.92
1,210.86
1,253.24
Table 6-4: Current & Proposed Combined Fixed Charges
• •.' R ®%K City of Newport Beach, CA
CONSULTING Water Utility Financial Plan 6 -2
5317004
•
E
Current
1
2
3
4
5
Combined Fixed Charges
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
3/4"
$ 4.50
$ 8.27
$ 13.09
$ 15.11
$ 16.63
$ 17.27
1"
5.50
13.78
21.82
25.19
27.72
28.79
11/2"
7.00
27.55
43.64
50.38
55.43
57.58
2"
9.50
44.08
69.82
80.61
88.69
92.12
3"
18.00
82.65
130.91
151.14
166.30
172.73
4"
25.50
137.75
218.18
251.90
277.16
287.88
6"
38.50
275.50
436.37
503.81
554.32
575.76
8"
45.00
440.80
698.19
806.09
886.91
921.22
10"
45.00
792.34
1,254.99
1,448.95
1,594.22
1,655.90
12"
45.00
1,274.47
2,018.64
2,330.61
2,564.27
2,663.48
• •.' R ®%K City of Newport Beach, CA
CONSULTING Water Utility Financial Plan 6 -2
5317004
•
E
Section 7
Bill Comparisons & Impacts
•
7. Bill Comparisons & Impacts
•
•
Figure 7 -1 presents the single family residential monthly bill impact distribution for
FY2010 rates. This bill distribution is based on the City's calendar year 2007
consumption history. The blue columns indicate the percentage of single family
residential monthly bills that will increase by the corresponding amount on the horizontal
axis, assuming consumption is similar to calendar year 2007. The red line indicates the
cumulative percentage of monthly bills at each amount of change in bill. For example, the
figure shows that 67% of monthly bills will increase by no more than $10. It also shows
that approximately 15% of monthly bills will increase by between $4 and $5. Note that
over 90% of monthly bills will increase by no more than $15.
Figure 7 -1: FY2010 Single Family Residential Customer Monthly Bill Impact
16% 100%
N
3
m
'c
m
e'
4
9
U
Figure 7 -2 presents the current monthly bill for 3/4" meters that consume 18 HCF per
month, compared with the bill under the proposed rates for FY2010, and the bills at other
agencies within the region. Note that it is anticipated that several, if not all of the regional
agencies presented below, will likely increase their rates in FY2010 to address rising
purchased water costs.
•'• ; RE ®,q K City of Newport Beach, CA
• CONSULTING water Utility Financial Plan F7-1
so%
14%
80%
12%
70%
10%
67" of monlhl' tills vnl
mcreasebv no mope flan
60%
�
S'0
N
7
t sew
w'w
y
40%
y e96
30%
4%
20%
IIIII
0%
• - - - - - - _ - ......I
0%
o —n nxnArorne —nn +m m2 me nwenX AR n,oAm -AAA
NMNN N NNMNNNNNNNNNNNM NMN MNNNNN�
NN M..NMNNP
ChwW inYoMlly Yll
N
3
m
'c
m
e'
4
9
U
Figure 7 -2 presents the current monthly bill for 3/4" meters that consume 18 HCF per
month, compared with the bill under the proposed rates for FY2010, and the bills at other
agencies within the region. Note that it is anticipated that several, if not all of the regional
agencies presented below, will likely increase their rates in FY2010 to address rising
purchased water costs.
•'• ; RE ®,q K City of Newport Beach, CA
• CONSULTING water Utility Financial Plan F7-1
=7:
$60
$58
$41.94
$4C
$3C
$2C
Section 7
Bill Comparisons & Impacts
Figure 7 -2: Monthly Regional Bill Comparison - 18 HCF
$95.97
$47.84
$31.82
536.76
$38.93
$61.97
$4535
Nl pM Bench rlewpM Benrh Anahe,m Irvmne Rnnph Laguna Peuh Hunbngten Ales. Gerden:ro
'curenu (Pmposedl Beach Conaclldated
-Fixed -Variable
• • ; REEDA K City of Newport Beach, CA
CONSULTING Water Utility Financial Plan 77-2]
••• •••• 5317004
• I
• I
•1
esCity of Newport Beach
P.O. Box 1768
Newport Beach, CA 92658-8915
City of Newport Beach
Information and Notice of Public Hearing
And Protest Procedure
Proposed Water Rate Charges
TO: Doe, John & Jane
12345 Main Street
Newport Beach, CA
94590
E
Attachment B
---------------------------------------------------- -------------------------------------------------------------------------------------------
EXTRA SPACE
-
---------------------------------------------- ------ --------------------------------------------------- --------------------------------------
Notice of Public Hearing and Protest Procedure
NOTICE IS HEREBY GIVEN that on Tuesday, November 10, 2009, at 7:OOPM, a public hearing will be
conducted in the City Council Chambers (Building A) at 3300 Newport Boulevard, Newport Beach.
This will be a Public Hearing before the City Council to allow public testimony and discussion of the proposed
water rate increases described below. The City Council will take written and oral comments, and will consider
all written protests against the proposed charges, determine if a majority protest exists, and consider
resolutions to adopt the water rate charges.
Written protests must be filed with the City of Newport Beach City Clerk. Written protests may be hand
delivered or mailed to the City Clerk at 3300 Newport Boulevard, Newport Beach, Califomia 92663. To be
valid, written protests must state opposition to the proposed water rate increase, identify the Parcel (by
assessor's parcel number or street address), and include the original signature of the record water service
customer or parcel owner. A written protest may be submitted up to the conclusion of the public testimony at
the public hearing.
About Proposition 218
In November 1996, Califomia voters approved Proposition 218. As a result, Califomia agencies must comply
with its requirements in setting utility rates. One provision requires that a noticed public hearing on utility rates
be held and that rates not be increased if a majority of affected utility customers protest the increased rates in
writing.
Wquently Asked Questions
Q. What does my water bill pay for?
A. Your water bill covers the following categories costs and services:
Annual operation and maintenance of the water system. Including well and pump station
operations, water treatment and testing, and water system employee salaries.
• City water purchase costs. The City purchases water from the Municipal Water District of Orange
County and from the Orange County Water District.
Capital improvement projects to repair and replace facilities and equipment to improve the water
system safety, efficiency and reliability. No additional debt for this purpose is proposed and all
improvements will be paid for with rate revenue.
Q. Why do the rates need to be raised?
A. Newport Beach is not immune to the increasing cost and scarcity of water over the past several years.
Operating expenses, including chemical and electrical costs, have increased by an average of 6% over
the last four years. In the last year alone, the cost of imported water increased by 20% on September
1st and will increase by another 22% on January 1, 2011. In addition, capital expenditures are required
to maintain the water delivery system. The City has not raised its Water Rates since 2005. The existing
rates do not provide enough revenue to meet the expenses necessary to operate the water system to
• provide a safe and reliable water supply to City customers for the next 5 years.
Q. How is my water bill calculated?
A. A customer's water bill (which is a component of the municipal services statement sent to City water
customer's periodically) is calculated by the sum of a fixed service charge, which is based on the
customer's meter size, and the water usage fee, which is calculated based on the amount of water.
used by the customer. See rate tables below.
The rate structure in the table below is designed to spread the costs of providing water system amo,
the system's users fairly and equitably. The costs associated with City's water system are made up IN,
expenses associated with operating and maintaining the system, capital costs associated with
rehabilitating and expanding the system, and commodity charges associated with acquiring water
supplies. The City's rate structure is designed to encourage conservation by including a portion of
operations and maintenance costs in the commodity charge, even though many of these expenses may
not be directly dependent on water usage. Thereby, a greater proportion of a customer's bill reflects
water usage, which encourages conservation because a customer can reduce his or her bill by using
less water. This proposed blend of the costs between variable and fixed revenues (70% fixed 130%
variable) ensures revenue stability while also encouraging conservation. The following is a breakdown
of each component:
1. Water Usage Fee (Variable): Shown on the bill as 'Water Usage HCF ", this charge is geared
primarily towards recovering the costs associated with City water purchases, treatment, and
distribution costs. In the proposed rate, 70% of the total revenue will come from this charge. This
charge is based on the amount of water used and is calculated by multiplying the number of
hundred cubic feet units (HCF) of water used by the unit rate per HCF.
2. Water Service Charge (Fixed): This charge is designed to recover (a) the costs of reading,
maintaining, and replacing the meters and (b) the costs of capital improvements. The revenues
derived from the capital component are to be used for repairs and improvements to the water
system identified in the water master plan. In the proposed rate, 3046 of the total revenue will come
from this charge. The charge is based on the customers water meter size. Most single - family
residential properties have a 5/8 -inch or 3/4 -inch meter. •
Proposed Water Rates
Current & Proposed Water Usage Fee (cost per HCF)
Need More Information? If you have questions, please call George Murdoch, Utilities Director at the following number:
(949)644 - 30111287778.1
•
Current
1
2
3
4
5
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
Commodity Charge
$2.08 $2.20 $2.46
$273
$2.96
$3.08
Current & Proposed Water Service Charge
Current
1
2
3
4
5
Combined Fixed Charges
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
518° or 314"
$ 4.50
$ 8.27
$ 13.09
$ 15.11
$ 16.63
$ 17.27
1"
$5.50
$13.78
$21.82
$25.19
$27.72
$28.79
1 112"
$7.00
$27.55
$43.64
$50.38
$55.43
$57.58
2"
49.50
$44.08
$69.82
$80.61
$88.69
$92.12
3"
$18.00
$82.65
$130.91
$151.14
$166.30
$172.73
4"
$25.50
$137.75
$218.18
$251.90
$277.16
$287.88
6"
$38.50
$ 275.50
$436.37
$503.81
$554.32
$575.76
8"
$45.00
$440.80
$698.19
$806.09
$886.91
$92122
10"
$45.00
$792.34
$1,254.98
$1,448.95
$1,594.22
$1,655.90
12"
$45.00
$1,274.47
$2,018.64
$2,330.61
$2,564.27
$2,663.48
Need More Information? If you have questions, please call George Murdoch, Utilities Director at the following number:
(949)644 - 30111287778.1
•
• • 0
City of Newport Beach
Water Utility Financial Plan
September 8, 2009
Pathways to Lasting Solutions
2
Why do we need to increase rates?
1. Last rate increase was in 2005
4s. Operating expenses have increased on
average by ~6% annually for the last 4
years
■ Chemicals and electricity are a major driver
" 2009 through 2014 CIP totals $13.9
million
Pathways to Lasting Solutions
Mp.
11
0
Why do we need to increase rates?
4. Purchased water costs are rising rapidly
■ Imported Water (MWDOC)
• Average unit cost of imported water has
risen 29% since last rate increase
• 20% MET rate increase 9/09, 22% 1/11
■ Groundwater (OCWD)
• Average unit cost of groundwater has risen
38% since last rate increase
■ Basin Pumping Percentage to be
reduced
• City will have to rely on more expensive
imported water
3 Pathways to Lasting Solutions
Projected Purchased Water Average Unit
Costs
MWDOC ($/AF)
OCWD ($ /AF) 319 361 364 382 397 408
Weighi,
Average
41,E ,_. ,:.1Q' I. 62 .61� 633 669.
OCWD 28%
111h�ttl1r�Fa$��.
AF = Acre Feet; 325,850 gallons
4 •
Pathways to Lasting Solutions
•
0 0
Projected Operating Expenditures
E
Purchased Water
- MWDOC
Purchased .Water
-OCWD
Utilities
Salaries &
Benefits
Equipment
Maintenance &
Replacement
Other O &M
Total
Percent Change
$ in thousands
5
F Y-20.09
FY Qf0
FY2091
FY Dh2
FY2013
$ 3,354
$ 4,931
$ 5,991
$ 6,440
$ 6,762
3,857
.3,922
31947
4,081
4,232
1,325
1,322
1,440
1,549
1,692
4,319
4,491 ,
4167.1
4,858
423
444
467
490
514
3;529
3,$56
419
4,x'91:
4.;$53
$ 16,690
$18,794
$ 20,494
$ 21,722
$ 22,911
Pathways to Lasting Solutions
FY-9014,
$ 7,100
4,351.
1,851
.5,052
-MOI
5,250
$ 24,144
5%
I
Current Financial Outlook
$30.000
520.D00
5, 0.000
50
2009
410.000
420.000
.530.000
- 540.000
Cash•fund.dCaptU
siamoss Ope+etlng Expenditures
$ in thousands
2010 ` ` „ 2012 2013 2014
_y
_
_
`may
E.tsdng D.btSsNIa
t R.v.nua
($27.9 million)
COMMON PurchesedWater• OCWD rear purchased Water• MWDOC
—e — Target Res.nes —..- Ending B.t.nce
I MF
. .
,Pathways to
CI
0 0
Current. Financial Outlook
$2.6 million loss anticipated for
FY2009
Reserves will be exhausted by end
of FY201- 1
CIP not adequately funded
7 Pathways to Lasting Solutions
Financial Planning Objectives
me Directed by Finance Committee to:
■Draw down reserves to minimize
"rate shock"
■Meet reserves by FY2014
■Increase fixed charge revenue to
improve revenue stability
Ensure CIP is adequately funded
■Establish dedicated capital charge
8 •Pathways to Lasting Solutions
C�
0 0
Proposed Financial Plan
535,000
$30,000
s2s.000
520,000
—
$15.000
510.000
$5,000
so
$ in thousands
9
98.9 million
2009 2010 2011 2012 2013 2014
Cash- Funded Capbal Eklsdnp Dablsarvka r ra PurChasad Watlr -OCVJD arses PurChatad VVatsr -MV=C
��0Paratlny ExP4ndturas — 41--Ravanuoa Target Rnuves —A- Ending B4unoa
Pathways to Lasting Solutions
10
Proposed Financial Plan
• Loss is eliminated by FY2011
• Target reserves are met by FY2014
• CIP adequately funded beyond 5-
year financial plan
0 0 Pathways to Lasting Solutions
•
Proposed Rates
• 0
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
Commodity Charge $ 2.08
$ 2.20
$ 2.46
$ 2.73
$ 2.96
$ 3.08
Monthly Meter Charge
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
3/4"
$ 4.50
$ 8.27
$ 13.09
$ 15.11
$ 16.63
$17.27
1"
5.50
13.78
21.82
25.19
27.72
28.79
11/2"
7.00
27.55
43.64
50.38
55.43
57.58
2"
9.50
44.08
69.82
80.61
88.69
92.12
3"
18.00
82.65
130.91
151.14
166.30
172.73
4"
25.50
137.75
218.18
251.90
277.16
287.88
6"
38.50
275.50
436.37
503.81
554.32
575.76
8"
45.00
440.80
698.19
806.09
886.91
921.22
10"
45.00
792.34
1,254.99
1,448.95
1,594.22
1,655.90
12"
45.00
1,274.47
2,018.64
2,330.61
2,564.27
2,663.48
Effective January 4 of each year
11 Pathways to Lasting Solutions
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Percent of Taal SFR Bills
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$3
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$7
$8
$9
210
211
212
213
$14
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215
$16
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3 $20
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238
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$39
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•
•
Questions &Answers
September 8, 2009
MP Pathways to . .
19
0
The City of Newport Beach receives its water from two primary wtrI771VE D
1. Groundwater from the four City owned wells in Fountain I C
2. Import water supplied by the Metropolitan Water DistricH� I ff , rcy ��dg�lrough the Municipal
Water District of Orange County (MWDOC) !
Currently 62% of the City's water supply is from our groundwater sm�ceds�.while the remaining 38% is
purchased from MWDOC. The percentage of water from our groWdwateFesource is based on water
available in the underground water basin managed by the Orang%ouhty Weter'Dks dct (OCWD). Facing a
third year of below average rainfall, the basin levels continue to ddrop. The amount of water we pump from
the basin has been reduced this year by 7 %, following a reduction of 5% from the previous year.
MET has experienced water supply issues not only from the lack of rainfall but by a court ordered pumping
restriction from the Sacramento -San Joaquin Delta in an effort to protect endangered species. Prior to the
cutbacks from the Delta, MET received nearly half of its water from Northern California through the
California Aqueduct and the remainder from the Colorado River through the Colorado River Aqueduct. As a
result of these cutbacks and lack of rainfall, MET has imposed water allocations (set at 15% reduction) for
the first time to all agencies it serves in Southern California. These allot ns took effect July 1, 2009.
Should the City not meet these reductions, MET will charge approximate' nreen times the standard rate for
water. /
How is my water bill calculated? � , 16 .55 -t,,
A customer's water bill is ap component of the nicipal se A ement t tq City a customers.
Each bill will have two components: �f�
Water Service Charge (Fixed): This char4sors/bas>sd i
single - family residential properties have a 3/4, r 1 inch
the costs of reading, maintaining, and replac a wat
a capital component. The capital compon s to b;
water system identified in the Water Master P p.
2. Water Usage Fee (Variable): This charge is sed on the
by multiplying the number of hundred cubic units WC
One HCF is equal to 748 gallons. This ge is r
associated with City water purchases, treat nt, an istril
In an effort to promote water conservation, the
water conservation rate structure as a structure
Most
designed to
amount of water used and is calculated
t r use it er HCF.
tow r cos s
ution costs.
onservation Council defines a
i' um %70%- af•� total revenue from
water usage fees. The idea behind the structure is tjaMs bus ome 's usage increases, so does the cost;
thus incentivizing and encouraging conservation. Approximately 70% of the proposed total r e e
collected from the water bill comes from the Water Usage Fee and 30% of tole) revenue comes fr�m1he
Water Service Charge. The following table displays y s for ,pac compgflent u it th 1 f m1
he
How can I find out how the rate change affect m J(�// 1
A. Start by looking at your Municipal Services Statement (a sample h een provided). You'll see a notation
like "W ater meter ur home or business is %" meter.
Next, ok at the "Current and Proposed W er Rates" c a on this n a %"
met , the rate will go from $9.00 for ea 01 d to
Us' g the same sample provided, if you used a me 18 H of w t our tot far at r
(" ATER USE HCgF "), would up from $37 $ fo twl�io nl�!/
m nthl meter charge will o u more than t{{����p �aaaa care un r the ¢o os r t s. ��II
If ou still have questions about how your bill might d, call ore the ity using the n mber or
a ress at the end of this notice.
3v ff,4,0"1 .2`' .
e: 00 �/)01,
r
Pao osed Water Rate Increase
Notice of Public Hearing and Protest Procedure
NOTICE IS HEREBY GIVEN that on Tuesday, November 10, 2009, at 7:00 p.m., a public hearing will be
conducted in the City Council Chambers (Building A) at 3300 Newport Boulevard, Newport Beach, CA
92663.
This will be a public hearing before the Newport Beach City Council to allow public testimony and discussion of
the proposed water rate increases described within this notice. The City Council will take written and oral
comments that evening. They will also consider all written protests against the proposed charges, determine if
a majority protest exists, and consider resolutions to adopt the water rate charges.
How to File a Written Protest
Written protests must be filed with the City of Newport Beach City Clerk. Written protests may be hand
delivered or mailed to the City Clerk at 3300 Newport Boulevard, Newport Beach, California 92663. To be
valid, written protests must state opposition to the proposed water rate increase, identify the parcel (by
assessor's parcel number or street address), and include the original signature of the water service customer
or property owner. Written protests may be submitted up to the conclusion of the public testimony at the public
hearing on November 10, 2009.
About Proposition 218
In November 1996, California voters approved Proposition 218. As a result, California agencies must comply
with its requirements when setting utility rates. One provision requires that a noticed public hearing on utility
rates be held and that rates not be increased if a majority of affected property owners protest the increased
rates in writing.
Frequently Asked Questions
Q. What does my water bill pay for?
A. Your Newport Beach water bill covers the following categories costs and services:
• The annual operation and maintenance of the water system, including well and pump station
operations, water treatment and testing, and water division employee salaries.
• The cost the City incurs to purchase imported and groundwater. The City purchases imported water
from the Municipal Water District of Orange County and groundwater from the Orange County
Water District.
• The repair and replacement of pipes, pump stations, facilities and equipment to improve the water
system safety, efficiency and reliability. No debt for this purpose is proposed and all improvements
will be "paid as we go" with rate revenue.
Q. Why do the rates need to be raised?
A. Newport Beach is not immune to the increases in delivery costs and the scarcity of water seen throughout
California over the past several years. Operating expenses, particularly chemical and electrical costs, have
increased by an average of 6% over the last four years. This year the cost of imported water increased by
20% on September 1, 2009 and will increase by another 22% on January 1, 2011. In addition, capital
expenditures are required to maintain the water delivery system. The City has not raised its water rates
since 2005. The existing rates do not provide enough revenue to meet the expenses necessary to operate
the water system to provide a safe and reliable water supply to City customers for the next five years.
The need to balance the revenues with the purchase water costs, operations, maintenance, and capital
improvement expenditures is a necessity. In addition, reserve levels have fallen below Council policy
levels. It is the goal to establish full reserve levels by the year 2014.
(, /1,I/o�
RECEIVED
3bo�
zm9 ��� 10 �� 9: 19
C.=F ]E OF
THE tY CLER
�,�QF " e
47te Altet-iu,01� A4714
9 Riw �iG� �iD Gtr .itcE
Vitt
`L�Gea �?�fr�raiL��ix" !3p/Gc4�D �iyto
C�
Covenant Group 2, LLC
RECEIVED
20 NOV 10 PM 2: 09
C'fiwE OF
TF'-= CITY CLERK
CITY C"' ' "''.FORT BEACH
November 3, 2009
City Clerk
City of Newport Beach
3300 Newport Blvd.
Newport Beach, CA 92663
Re: Protest of Proposed Water Rate Increases
1724 E. Oceanfront Ave.
1735 E. Ocean Blvd.
2156 E. Ocean Blvd.
Dear City Clerk:
As property owners, we hereby protest the proposed water rate increases by the City of
Newport Beach for the above referenced property locations.
Our position is that the City government must be fiscally responsible for managing its
costs in other areas and not rely on rate increases that place a burden on property owners.
We sincerely hope that the City Council will avoid these types of increases now and in
the future. Thank you.
Since a} ,
ep -E. horn
Man Bing Member
2860 Michelle Drive, 2nd Floor, Irvine, CA 92606
Tel: (714) 508 -3600 Fax: (714) 368 -2060
City Clerk
City of Newport Beach
3300 Newport Blvd.
Newport Beach, CA. 92663
November 10, 2009
RECEIVED
2w 110V 10 P3 4* 30
OFFICE OF
T C, ilY CLEW
CITY CF _ .= ?.T PRAH
This letter is to protest the proposed monthly water service charge increase. My name and
address is as follows: Eugene S. Rhodes, 3900 Park Green Drive, Corona del Mar, CA.
92625. It's obvious that there is necessity for an increase, but your proposed increase is
ridiculous, particularly considering the difficult financial times that we are currently in. I
also see this increase as another way to chase businesses out of Newport Beach.
Sincerely,
Eugene S. Rhodes
j0;3-oq o v �
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RECEIVED
CAROL KEILIN
2f9 OCT 20 PM 9:4& P. O. BOX 7082
PORT BEACH, CA 92658
OFFICE OF (949)760 -8582
THE CITY CLERK
CITY C. t`,_,!PORT BEACH
City of Newport Beach
3300 Newport Blvd.
Newport Beach, CA 92663
Re: Proposed Water Rate Increase - Protest
2042 Vista Cajon
Parcel 440- 352 -08
DearSirs:
RECEIVED
70 OCT I' PM 9. 57
OFFICE OF
THE CITY CLERK
CITY OF 1d_;. M E=ACH
This letter is written in protest to the proposed water rate increases due to be discussed at the public hearing on November
10, 2009. 1 would expect and would be comfortable with a moderate increase, but those outlined in the notice I received
seem to me to be extremely high and abusive.
In the example given in the notice, the Illustration of current usage was a sample usage of 18 HCF, yielding a 2 month total
charge of $46.44. Under the proposed water rates, the same usage in 2 years would yield a 2 month charge of $70.46, a
51.7% INCREASE of $24. And in the 5th year, the same 18 HCF usage would cost $89.98 -- $43.54 and 93.7% ABOVE and
ALMOST DOUBLING current charges.
Perhaps the City Council will reconsider the dollars involved and mitigate the damage with a reasonable increase. I certainly
hope that you will give this serious thought.
Your truly,
Carolyn B. Kellln
2042 Vista Cajon
Newport Beach, CA 92660
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OCT 3 2009
214 Via Dijon Newport Beach
parcel number 423 - 155 -04
Dear Sir:
RECEIVED
2919 OCT -8 AM 9- 06
OFFICE OF
THE CITY CLERK
CRY OF NBIRORT BEACH
I am writing to protest per Proposition 218 the very substantial increase in water rates
as many of the property owners are already facing significant hardship.
William) t> e
RECEIVED (t�
Brian H. Ouj a$ pM g: 06
P.O. BOX 54, Newport Beach, CA 92662 -0054
Email brian.oci sbc loW
Tel to -8 8- Fax II
3 3 3571 ®rO , �B�CH
October 6, 2009
City Council Members
And City Clerk
City of Newport Beach
33oo Newport Blvd.
Newport Beach, CA 92663
RE: Proposed Water Rate Increase
Dear Council Members and City Clerk:
This is to OBJECT to the proposed water rate increased proposed in your recent notice.
The rates are ill- timed, misguided, and excessive. I own two residential properties in the
City; 1107 Balboa Ave, 92662, and 1222 E. Balboa Blvd, 92661 (this, formerly billed to Alice
Ouzounian, recently deceased).
The current recession demands more prudent approaches to all city services and
especially relief of water rates to homeowners, not more burden. There appears to be a
mounting practice to place city wide increases on the backs and wallets of property
owners, especially homeowners, which is unfair and not reasonable. Visitors to our city
are great in numbers and should be shouldering the burden via other means of levy.
Additionally, the rate of increase is large and accelerated as the schedule of years to come
indicate. We residents continually conserve and attempt to maintain our homes for a
"water tight" condition and low use, year after year. We are asked to keep cutting back
and conserving yet years past we have done so without rate relief consideration when the
State is flush with water. Consider the year recently of 38" of rain for a season; nowhere
was a return of lower fees considered.
Considering the great financial position that our city is in due to prudent financial
operations, it is highly recommended that this proposed rate increase be rescinded,
especially for residential property owners.
r
Sinc f�
� Brian H. Our ounian
10/06/2009
City of Newport Beach City Clerk
3300 Newport Boulevard
Newport Beach, CA 92663
RECEIVED
2M9 OCT -8 AM 9� 06
OFFICE OF
THE Ci T Y CLERK
CITY OF N! 11PORT BEX H
We, Kurt Kawohl and Inge Kawohl, residents of 2111 Yacht Wanderer,
Newport Beach, CA 92660, hereby state our opposition to the
proposed water rate increase.
- .fc_____--- 4 _ - - - - - --
Kurt Kawohl
•'J UIGZ- -- ---X
Inge Kawohl
Acct. #4503360 -04
2111 Yacht Wanderer
Newport beach, CA 92660
i,
City of Newport Beach, City Clerk
3300 Newport Blvd.
Newport Beach, CA 92663
Opposed to the proposed water rate increase
Parcel #047-032-12
Owner: Matt Smith
RECEIVED
2m9 OCT -7 AN I: 49
OFrICE OF
THE GR CLEW
CITY (),= t ''', ?0AT GM
The proposed plan is too aggressive with increases in pricing ... In 5 years, under the proposed plan the
pricing for both the water service charge and water usage fee double. If they continue to double every 5
years we are headed down a slippery slope.
October 5, 2009
City of Newport Beach
Attn: City Clerk
3300 Newport Blvd.
Newport Beach, Ca 92663
Re: 615 Bay Hill Drive
Dear City Clerk,
RECEIVED
20 OCT -7 AM 8- 49
OFFICE OF
THE OTY CLERK
CITY OF BEACH
I understand that The City of Newport Beach is considering raising the water
rates and I am writing to protest this decision. As a homeowner in Newport
Beach, in these economic times it is hard enough to pay my mortgage, let alone
an increase in my water rates. And, the increase you are proposing would
almost double my rate in 2010 and then continue for the next 5 years.
How do you know what your expenses are going to be in 3, 4 or 5 years? This is
not the way to run a business or government, you need to reconsider your
decision.
Sincerely,
Marcia Rosenberg
615 Bay Hill Drive
Newport Beach, Ca. 92660
City of Newport Beach
3300 Newport Blvd.
Newport Beach, CA 92663
Attention: City Clerk
RECEIVED
2109 OCT -7 AM 8� 49
C; FILE OF
Fir
�
Re: Protest To Proposed Water 8 _ i, _ i . N218).
October 3, 2009
This letter is being submitted in opposition to the proposed water rate increase, which
indicates nearly a 50% increase over the next five years. Please notify me if you require
any additional information in regards to this protest.
Sincerely Wd E.
312 Lugonia St.
Newport Beach, CA 92663
949 645 5356
a
ar
�L�
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C�
�1tW°�Rr City of Newport Beach
P.O. Box 1768
c „o, •� Newport Beach, CA 92658 -8915
W P- I v -c�
NPZ0922A AUTO 5 -DIGIT 92662
7000018680 01.0054.0144 18680/1
ilunull�rdinggnlhnlu�drluru�lll�l�l�ll
JON J VISEL
204 APOLENA AVE
BALBOA ISLAND CA 92662 -1216
RECEI�/ED
pko� " f , 3* 21
t 'CE OF
THE CITY CLERK
CITY F';'DNPCRT BEACH
City of Newport Beach Information and Notice of Public Hearing
Protest Procedure of Proposed Water Rate Charges
lo�q /o 9
�'
RECEIVED
7L09 OCT 15 APB IO- 16
�. cc uyf7 C RCE OF
CITY,C� ' . -" ,"ORT BEACH �3
TA4�
1
-v
RECEIVED
Zm9 OCT 15 M D 16
C =RCE OF
TI; M CLERK
CITY CF P:EVORT EEK, H
Dear City of Newport Beach,
700 Malabar
Corona Del Mar, CA
;2625 1042/2009
I am opposed to the proposed wEter rate increase.
/,
Sincerely,
0
Jocelyn Dougherty
(Gjj
w
Parcel # 934 - 610 -40 2704 Hillside Drive, Newport Beach,
92660
Before doubling our water rates, try and be more creative with
the citizens of Newport Beach. Water rationing would be a good
way to begin. Tax the ones that are abusing the water shortage.
Let the ones that are making a conscious effort at saving water be
rewarded by keeping their rates at the normal level. In these
times, it's simply unethical to be asking the citizens to cough up
more money when money is so scarce. And many households are
out of work. Let's be more user - friendly and think of ways that
won't increase our rates. I, for one, am only flushing the toilet
every 3rd time as long as it's yellow! I turn off the water when
brushing the teeth. I sweep the driveway and patio and only
rinse occasionally with the hose. I water the garden only 2x's a
week. So, I should be rewarded for my effort in this situation.
Patricia Knapp
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KLEIN & WILSON
BUSINESS TRIAL LAWYERS
A Partnership of Professional Corporations
326 Old Newport Boulevard
Newport Beach, California 92663
Telephone (949) 631 -3300
Facsimile (949) 631 -3703
November 2, 2009
City Clerk
City of Newport Beach
3300 Newport Boulevard
Newport Beach, CA 92663
Re: Proposed Water Rate Increase
Dear Sir or Madam:
RECEIVED
zo NOV -A All 9: 03
OFHCc OF
VAi& iIson.com
GAY Cr BEAD Fi
This letter is in response to the proposed water rate increase and notice of public hearing.
My office is located at 326 Old Newport Boulevard, Newport Beach, California, opposes proposition
218 and the related proposed water rate increase. Klein & Wilson encourages the City Council to
reject the water rate increase.
Sincerely,
*bf
Mark B. Wilson
COR09/028•
October 27. 2009
City of Newport Beach
City Clerk
3300 Newport Boulevard
Newport Beach, CA 92663
Subject: Proposed Water Rate Increase
Dear City of Newport Beach City Clerk,
I protest the City's proposed water rate increase.
RECEIVED
2109 OCT 29 AM 9= 13
C`FICE OF
TINC CITY CLEFX
CITY 0= " :" PORT REACH
Based on your Sample of Rates attached to your Notice of Public Hearing and Protest Procedure, my
Monthly Water Service Charge will increase by over 524% from 2009 to 2014.
To say that a 524% increase is ludicrous is an understatement by anyone's statement.
The City's Notice states that the City's chemical and electrical costs increased by 6% and its imported
water increased by 20 %. Neither of these costs added to capital expenditures could approach a 524%
rate increase.
Part of the City's responsibilities is to contain all costs associated with its water delivery and not raise
rates. The City cannot expect its customers to bear a 524% rate increase while every other business is
reducing costs and prices to remain in business. Additionally, every other business in the City continues
to be adversely affected by the recession causing them to reduce employment, renegotiate contracts to
lower their expenses and incur financial losses. How can the City propose a rate increase in a recession,
with over 12% unemployment and no end in sight?
For all of these reasons, I protest the City's plan to increase water rates.
Sincerely,
Charles T Polce, Jr.
514 Y2 Narcissus
Corona Del Mar, CA 92625
�.7
/4" -Z i _
ez
I ,q L1,64
FROM
HUGUETTE WILSON
4809 RIVER AVE., UNIT "A"
NEWPORT BEACH CA., 92663
949 - 645 -9466
TO: CITY OF NEWPORT BEACH CITY CLERK
3300 NEWPORT BLVD.
NEWPORT BEACH CA 92663
RE PROPOSITION 218
THIS IS A WRITTEN PROTEST TO THE PROPOSED WATER RATE INCREASE
I OPPOSE THE INCREASE IN WATER RATE FOR THE ABOVE PROPERTY.
I OWN THE ABOVE PROPERTY AND LIVE AT THE ABOVE ADDRESS AND I ALSO PAY THE
WATER BILL FOR THIS PROPERTY.
SIGNED:
SINCERELY
HUGUETTE WILSON
HUGUETTE WILSON
10/19/2009
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10/19/2009
Page I of 1
From: "Huguette Wilson" <huguettewil @yahoo.com>
To: "MGMT MGMT' < angie@ diversifiedrealpropertymgmt.com>
Sent: Friday, October 16, 2009 6:59 PM
Subject: REMATER RIVER
ANGIE:
THIS IS ANOTHER LETTER I WOULD LIKE TYOU TO PRINT FOR ME.
THANK YOU SO VERY MUCH FOR YOUR HELP
FROM
HUGUETTE WILSON
4809 RIVER AVE., UNIT "A"
NEWPORT BEACH CA., 92663
949 - 645 -9466
a
TO: CITY OF NEWPORT BEACH CITY CLERK
��o
o
rn
3300 NEWPORT BLVD.
°y -
NEWPORT BEACH CA 926563
_
�C)
RE PROPOSITION 218"
o
=
o
THIS IS A WRITTEN PROTEST TO THE PROPOSED WATER RATE INCREASE
�J
I OPPOSE THE INCREASE IN WATER RATE FOR THE ABOVE PROPERTY.
I OWN THE ABOVE PROPERTY AND LIVE AT THE ABOVE ADDRESS AND I ALSO PAY THE
WATER BILL FOR THIS PROPERTY.
SIGNED:
SINCERELY
HUGUETTE WILSON
HUGUETTE WILSON
10/19/2009
wv
City Clerk
City of Newport Beach
3300 Newport Blvd. Newport Beach, CA. 92663
October 20, 2009
To: City Clerk:
Re: Opposition to water rate increase
RECEIVED
M OCT 22 AMD08
Grr-wE OF
1� Garr CLEF
CITY 0 ' _ ", BOAT F= ,;H
We object to the proposed water rate increase. We are retired and this price
increase will be a financial problem for us.
Parcel Number: 936 - 460 -24
41 Monaco
Richard Ting
V-"'vv z'
`�v
RECEIVED
CITY OF NEWPORT BEACH
ATTN: CITY CLERK M NOV -G AM IO
3300 NEWPORT BLVD
NEWPORT BEACH. CA 92663
C'hvt Vi
THE CITY CERK
AS A LONG TIME RESIDENT OF NEWPORT BMI,OPFgp , ;I WATER RATE
INCREASE. OUR STATE IS BEING HIT WITH LL OO MANY W TAXES AND THIS WILL
BE ONE MORE THAT THE CITIZENS DO NOT NEED. THE WATER DEPT. NEEDS TO
TIGHTEN ITS BELT LIKE THE REST OF US ARE DOING.
MY HOME ADDRESS IS
53 HARBOR RIDGE DRIVE IN NEWPORT BEACH 92660
JOHN J. GATES - /0 / d
Y,4,
CITY OF NEWPORT BEACH
ATTN: CITY CLERK
3300 NEWPORT BLVD
NEWPORT BEACH. CA 92663
AS A LONG TIME RESIDENT OF NEWPORT BEACH I OPPOSE THE WATER RATE
INCREASE. OUR STATE IS BEING HIT WITH ALL TOO MANY NEW TAXES AND THIS WILL
BE ONE MORE THAT THE CITIZENS DO NOT NEED. THE WATER DEPT. NEEDS TO
TIGHTEN ITS BELT LIKE THE REST OF US ARE DOING.
MY HOME ADDRESS IS
53 HARBOR RIDGE DRIVE IN NEWPORT BEACH 92660
C.S. GATES
DANIEL C. LORTI RECEIVED
50 Ridgeline Drive
Newport Beach, California 92660 Zm9 0 T o l 1 J 9 O$
Tel: (949) 640 -4298 Fax: (949) 706 -9890 e-mail: dilorti om
Thy CiiY CLERK
CITY OF Al TORT EEA(,H
October 16, 2009
City of Newport Beach City Clerk
3300 Newport Blvd.
Newport Beach, CA 92663
Re: Water Bill Rate Increase; Parcel Number 936-460-60
I wish to file a protest that I am strongly against the proposed water rate increase. We are retired
and have seen our retirement funds shrink over the past 18 months while utility rates continue to
increase reducing my quality of life. We are already considering selling our home to use the
equity for our remaining years. We can only hope that you will consider our opposition at the
November Council meeting. We know we're not alone in this city with a financial problem.
Sincerely,
pz-40--It�
Daniel Lorti
November 3, 2009
The Newport Beach City Clerk
3300 Newport Boulevard
Newport Beach, CA 92663
RECEIVED
20 NOV -5 AN 9: 38
THE CITY CLERK
CITY CF ""'"PORT BEACH
Re: Protest against proposed water rate increases
As a resident of Newport Beach, CA, I hereby submit this written protest against the
proposed water rate increases for which a public hearing is scheduled for November 1o,
2009.
My protest is primarily against the proposed exorbitant and unprecedented 384%
increase in the Monthly Water Service Charge over the next few years. The information
in my possession supports the fact that these increases are based primarily on increased
rates proposed by MET /MWDOC, and that those increases are due to proposed
increases in expenses which are not directly related to water acquisition and delivery.
M yYZ
Michael G. Jacobs
647 Vista Bonita
Newport Beach, CA 9266o
Parcel # 440- 124 -05
To: City Clerk: City of Newport Beach
3300 Newport Boulevard
Newport Beach, CA 92663
From: Donald J. Shergalis
1608 Dover Dr.
Newport Beach, CA 92660
RECEIVED
Date: Oct. 26, 2009
2019 OCT 28 AM 9. 03
OFACE OF
THE CITY CLERK
CRY OF ; !EEVPORT BEACH
Subject: Protest of Proposed Water Rate Increase
Sirs:
I am a property owner and resident of the City of Newport Beach, California.
I am opposed to the planned Water Rate Increase as stated in the City of Newport Beach
Public Hearing Notice for November 10, 2009.
I am the Property Owner and water service customer of parcel number
117- 491 -08 located at the above listed street address.
Signed: >r,�t� �� G J c
Donald J. Shergailis, Property O er
LW
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n
ME
Mark B. Wilson
427 El Modena Avenue
Newport Beach, CA 92663
November 2, 2009
City Clerk
City of Newport Beach
3300 Newport Boulevard
Newport Beach, CA 92663
Re: Proposed Water Rate Increase
Dear Sir or Madam:
RECEIVED
949 - 631 -33
O�FICE CF
THE CITY CLE-X
CITY 0' 1'0,"OORT ffkH
This letter is in response to the proposed water rate increase and notice of public hearing.
I reside at 427 El Modena Avenue, Newport Beach, California, and I oppose proposition 218 and
the related proposed water rate increase. I encourage the City Council to reject the water rate
increase.
Sincerely,
Mark B. Wilson
WMACox091012-
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RECENED
2�q CCT -6 AM 9.05
1845 Port Barmouth P
Newport Beach, CA(
1 October 2009 Cl� CF CkiT BF
City of Newport Beach City Clerk
Newport Beach City Hall
3300 Newport Boulevard
Newport Beach, CA 92663
To Whom It May Concern:
This letter is to register our written protest against the proposed water rate increase described on
the enclosed notice. While the costs of water are undoubtedly going up and some increase is
probably justified, this proposal would nearly quadruple monthly water service charges by 2014
for 5/8" or 3/4" (residential) customers, while increasing the cost per hundred cubic feet by 50%
over the same period. This huge increase, in our opinion, is far more than is absolutely necessary
to cover actual cost increases, and should not be adopted, especially at this time of economic
hardship when members of our community are facing layoffs and having difficulty holding onto
their homes and businesses. The Water Department should be asked to re-work their proposal
and come up with something more reasonable.
Thank you for the opportunity to express our opposition to this proposal.
Sincerely,
� ilvJCU- c,T�J��C1
Howard D. Mirowitz
Property Owner
1845 Port Barmouth Place
Newport Beach, CA 92660
n e
Xf
Ellen C. Mirowiitz
Property Owner
1845 Port Barmouth Place
Newport Beach, CA 92660
J �b
SAMPLE
MUNICIPAL SERVICES STATEMENT
Route: 010
SERVICE PERIOD: 06/18/09 to 08/13/09
Current Reading: 796
WATER CHARGES: QTY: RA TOTAL:
WATER USE HCF 18.00 52.08 $37.44
?ndATER SERVIC .75" 0 59.00 $9.00
This is where
to find vour
meter size. Current and Proposed Water Rates
Monthly Water Usage Fee (cost per HCF)
This is how
much water
you used.
Current 1 2 3 4 5
FY2009 FY2010 FY2011 FY2012 FY2013 FY2014
Commodity Charge $2.08 $2.20 $2.46 $2.73 $2.96 $3.08
Monthly Water Service Charge
Current 1 2 3 4 5
Combined Fixed Charges
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
518" or 3/4"
$4.50
$8.27
$13.09
$15.11
$16.63
$17.27
1"
----------------------------------------------'-------------------------------------
$5.50
$13.78
$21.82
$25.19
$27.72
---------------------
$28.79
--- - - - -- -'
11/2"
$7.00
$27.55
$43.64
$50.38
$55.43
$57.58
2"
$49.50
$44.08
$69.82
$80.61
$88.69
$92.12
3"
$18.00
$82.65
$130.91
$151.14
$166.30
$172.73
4"
$25.50
$137.75
$218.18
$251.90
$277.16
$287.88
6"
$38.50
$275.50
$436.37
$503.81
$554.32
$575.76
8"
$45.00
$440.80
$698.19
$806.09
$886.91
$921.22
*10"
545.00
$792.34
51,254,99
$1,448.95
$1,594.22
$1,655.90
1.12"
$45.00
S'1,274.47
S2,018,64
$2;330.61
52,564.27
52,663.48
* Currently, all water meters sized 10 inch and above are owned and used by the City of Newport Beach.
However, Proposition 218 requires the City to list these charges should a customer obtain this size of meter in the
future.
For more detailed information regarding the proposed rates or Utility Financial Plan, please visit our
web site at: wv vw.newportbeachca.00v /WaterRates
Need More Information? If you have questions, please call George Murdoch, Utilities Director at
(949) 644 -3011 or e -mail at utilitieshelp (a)newportbeachca.gov .
RECEIVED
610 Poinsettia Ave
Corona Del Mar, CA92625 70 OCT —6 M 9, 06
October 1, 2009 OFFICE OF
THE CITY CLERK
Newport Beach City Clerk CITY OF 1,- 3vPORT BEO
3300 Newport Boulevard, Newport Beach CA 92663
Subject: Proposed Water Rate increasing the cost of Water and the Service.
As I calculate the propose increase you propose increasing the service charge, 250% FY2010, 150% FY
2011, 115% FY 2012, 110% FY 2013, and 103% 2014. Additionally the cost of water would increase by
approximately 150% in the five year period.
Your suggested increases are way too much and completely unacceptable. Ordinary people, young
families and senior citizens cannot afford Increases like this.
Let me suggest some changes that would reduce or even avoid increases.
(1) We are in the worst recession since the great depression. I suggest the first thing to do is re-
examine your budgets and reduce your expenditures by at least 10%
(2) Instead of reading water meters bi- monthly, read them quarterly.
(3) Gradually change out existing water meters to electronic that can be read and billed off a
computer.
(4) Recycle used water.
(5) Increase your efforts to encourage conservation. Think smaller. Work with less.
Thank you.
Sincerely,
Derek M. Torley '
k6 z
10/2/09
RECEIVED
29 OCT -6 dN g 06
1, Joel Nelson, a resident living at 2116 E. Balboa Blvd., Newport Beach Ca. 92661,
FORMALLY PROTEST, AND OPPOSE the propos&[FQilVr
increase as referenced by the Notice of Public Hearing on this JF LQTYCLERK
BEACH
Joel Nesson
Niall Saunders and Lavinia Chong RECEIVED
1720 Port Stirling Place, 2l9 OCT -5 Ate 10: 02
Newport Beach, California 92660
Tel: (949) 640 1390
September 28, 2009
City Clerk
3300 Newport Blvd.,
Newport Beach, CA, 92663
Re: Proposed water rate increase
Dear Sirs,
F;CE THE ;TY CLERK
CITY OF r;- "FORT BEACH
We wish to file a protest against the proposed water rate increases.
Firstly, we feel the increases in the monthly water usage or commodity fees are
excessive at 6% (first year) and over 10% for the following years. This results it
a 50% increase over the 5 years and no guarantee of a price halt at that point.
Secondly, the proposed monthly service charge increases are astronomical, with
potential increases of 2,000% over five years. Please explore other means of
encouraging water conservation and funding pipe repairs.
Sincerely,
Niall Saunders & Lavinia Chong
RECEIVED
2M9 OCT -5 AM la 03
OFFICE OF
THE CITY CLERK
CITY 0- Asmw KO
Ms. Leilani Brown
City Clerk
City of Newport Beach
3300 Newport Blvd.
Newport Beach, CA. 92663
Dear Ms. Brown,
Sean Salomon
102 Columbia St.
Newport Beach, CA. 92663
seansalomon @gmail.com
I am writing to express my opposition to the proposed water rate increase in our city. I
believe that the increases are extreme. The water expense increases cited in the notice your
department sent out add up to about a 48% increase from 2005 to January of 2011. Yet, the
sample services statement sent out with the notice showing the proposed rate increases
shows a 400% increase in the amount that the average Newport Beach resident will be
paying for water over the next six years. Why is a 400% increase in rates needed to cover a
roughly 48% increase in expenses? It just doesn't add up.
Rate increases may be a bit easier to stomach once I've been assured that water, and not
salaries and pension for unionized water division employees, are what I am paying for.
In addition, I find it offensive that the notice sent to my house was so obvious in its support
of the increases. I can only hope that it was not a representation of the opinion of every
voting member of the City Council. Please share this letter with them and consider it my
official protest to the proposed rate increases.
Thank You,
c,
Sean Salomon
J [,rt�
ID, � -
4 (REC �E(I�VED
"SQ&kL'+- C�4m Qp -5 m004
I UCC OFFICE OF
PA o� Cr �� N` L S Q E cm CLERK
O Y OF VVPORT BEACH
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7 ✓4
DENNIS A. REPP
3419 Via Lido #262
The City of Newport Beach receives its water from two primary water sources. Newport Beach, CA
1. Groundwater from the four City owned wells in Fountain Valley 92663 -3908
2. Import water supplied by the Metropolitan Water District (MET), purchased through the Municipal
Water District of Orange County (MWDOC)
Currently 62% of the City's water supply is from our groundwater sources while the remaining 38% is
purchased from MWDOC. The percentage of water from our groundwater source is based on water
available in the underground water basin managed by the Orange County Water District (OCWD). Facing a
third year of below average rainfall, the basin levels continue to drop. The amount of water we pump from
the basin has been reduced this year by 7 %, following a reduction of 5% from the previous year.
MET has experienced water supply issues not only from the lack of rainfall but by a court ordered pumping
restriction from the Sacramento -San Joaquin Delta in an effort to protect endangered species. Prior to the
cutbacks from the Delta, MET received nearly half of its water from Northern California through the
California Aqueduct and the remainder from the Colorado River through the Colorado River Aqueduct. As a
result of these cutbacks and lack of rainfall, MET has imposed water allocations (set at 15% reduction) for
the first time to all agencies it serves in Southern California. These allocations took effect July 1, 2009.
Should the City not meet these reductions, MET will charge approximately three times the standard rate for
water.
Q. How is my water bill calculated?
A. A customer's water bill is a component of the municipal services statement sent to City water customers.
Each bill will have two components:
1. Water Service Charge (Fixed): This charge is based on the customer's water meter size. Most
single - family residential properties have a 3/4, or 1 inch meter. This charge is designed to recover
the costs of reading, maintaining, and replacing the water meters. Additionally, this charge includes
a capital component. The capital component is to be used for repairs and improvements to the
water system identified in the Water Master Plan.
2. Water Usage Fee (Variable): This charge is based on the amount of water used and is calculated
by multiplying the number of hundred cubic feet units (HCF) of water used by the unit rate per HCF.
One HCF is equal to 748 gallons. This charge is geared primarily towards recovering the costs
associated with City water purchases, treatment, and distribution costs.
In an effort to promote water conservation, the California Urban Water Conservation Council defines a
water conservation rate structure as a structure that collects a minimum of 70% of the total revenue from
water usage fees. The idea behind the structure is that as a customer's usage increases, so does the cost;
thus incentivizing and encouraging conservation. Approximately 70% of the proposed total revenue
collected from the water bill comes from the Water Usage Fee and 30% of total revenue comes from the
Water Service Charge. The following table displays the rates for each component until the year 2014.
Q. How can I find out how the rate change affects my bill?
A. Start by looking at your Municipal Services Statement (a sample has been provided). You'll see a notation
like "WATER SERVICE .75 ". This means that the water meter at your home or business is a '/" meter.
Next, look at the "Current and Proposed Water Rates" chart on this notice. If you have a' /4°
meter, the rate will go from $9.00 for each two -month perio to $16.54 for ea h two -month period.
Using the same sample provided, if you used th e HC o water, your total charge for water use
( "WATER USE HCF "), would go from $37.4 to $39.60 r the two -month period. As you can see, the
monthly meter charge will go up more than th odity" charge under the proposed rates.
If you still have questions about how your bill might be impacted, call or e-mail the City using the number or
address at the end of this notice.
/� � 0,� /
f. 54
�4 — c+3 4 4 55.4 4 ,
September 29, 2009
City of Newport Beach
3300 Newport Blvd.
Newport Beach, CA 92663
To: City Clerk
From: Hannah and Harold Meany
601 Carnation Avenue
Corona del Mar, CA 92625
We are opposed to the proposed water rate increase.
The proposed combined Fixed Charges appear excessive.
RECEIVED
M9 OCT ®2 AN 8: 46
OFFICE OF
THE CffY CLERIC
CITY OF NEWPORT BEACH
In the Q and A Section, the question, "why do the rates need to be raised ?" The answer
Section does not include activities the water department should do rather than "sit back
and raise the rates"
Has the Department considered:
Freezing employee salaries.
I see no reference to the option of using new technologies to desalinate sea water or clean
surface water. Please investigate DXV Water Technologies, 1451 Edinger Avenue,
Tustin, CA, (714) 258 -8559. See the article in The Orange County Register, September,
6, 2009, Page 10 in the "Local" Section.
Sincerely,
Harold MMeeany�
Hannah Meany
J Lb
V. 949.675.8835
City Clerk,
City of Newport Beach, Ca.
Bob McCaffrey
PO Box 26
Balboa Island, CA 92662
C. 949.500.5851
I am in opposition to the proposed water rate increase.
I own a property at 1410 S. Bay Front, Balboa Island. Ca.
Thank you, L
Robert McCaffrey
RECEIVED
F. 949.675.5342
2619 OCT -2 M 8+ 47
September 29, 2009
OFFICE OF
CBY OF KWK KkH
4 ��
September 27, 2009
City of Newport Beach City Clerk
3300 Newport Blvd.
Newport Beach, CA 92663
I am opposed to the proposed water rate increase.
RECEIVED
2W9 OCT - I Am & 53
OFFICE OF
CITy THE E4UPORTCLEWBEq H
It is apparent that many of the water agencies, water districts and water divisions, within Orange
County and the State of California, are politically empowered. It is not apparent that they have
the best interests of the residents or water users as a priority. The water bureaucrats seem to be
primarily motivated by individual political power and influence, along with individual personal
greed and perpetual personal benefits.
The City of Newport Beach should not acquiesce to the demands, the mismanagement expenses
and the increased charges by the water bureaucracies. The City should represent the best
interests of the residents by beginning a campaign for ethical water management, throughout the
State, and to protect and remove the State's water resources from political graft and corruption.
W 7�
Richard Connella
2113 Miramar Dr.
Balboa, CA 92661
V i -Y,
Marsha & Frank Easterbrook
RECEIVE pccort B s Point Lane
rt Beach, CA 92660
949.718.0010
2N9 OCT e I AN O+ 55
OFFICE OF
THE CI1Y CLERK
CITY OF NEWPORT BEACH
CITY OF NEWPORT BEACH CITY CLERK
3300 Newport Blvd.
Newport Beach, CA 92663
We are residents of Newport Beach and own 2 homes in the area.
3 Cypress Point Lane, 92660 & 1505 Miramar Drive, 92661
September 29, 2009
We are very opposed to the proposed Water Bate Increase. The Municipal Services
Statement sample indicates a 284% increase within the next five (5) years.
This is extreme!
There are other cities in Orange County who have implemented water rationing. Why has this
not been done in Newport Beach? Those home/business owners who use an abundance of water
should pay higher fees — not implement across the board increases for everyone. Let's be fair!!!!
Also, in these difficult economic times, perhaps the city employees should have salaries reduced
or work weeks curtailed to help with increased costs in water usage and service.
Simply passing on water rate increases is not managing the situation; effective management of a
city or a business should develop and implement plans to mitigate out of control expenses such
as these.
Thank you,
7 �
Marsha and Frank Easterbrook
3 Cypress Point Lane
Newport Beach, 92660
Dr. Alan C. Bleier
500 and 500 %2 Poinsettia
Corona del Mar, Ca 92625
Dear Sirs:
RECEIVED
2019 OCT -I AM 8$ 57
September 28, 2009
OFFICE OF
CITY OOFF NEWEW ORT BEA(,'H
As the owner of the above property and the person who pays all the bills so related, I
would like to lodge my protest to the proposed water rate increases along with the
majority of all the other home owners effected. In the 30 years I've owned this property
I've seen the water rates steadily climbing. These increases place a financial hardship on
the elderly, retired people who are effected, such as myself. If the proposed, new
increases go into effect it will create a financial hardship which cannot be tolerated.
In your Notice of Public Hearing you note that IF the majority of property owners protest
the increased rates in writing then the rates will NOT be increased. I am placing such a
protest related to my property. I'm sure the vast majority of home owners will also
protest which will preclude the rate increase.
Sincerely,
Alan C. Bleier, Owner
Proposed Water Rate Increase
ra
Notice of Public Hearing and Protest Procedure
NOTICE IS HEREBY GIVEN that on Tuesday, November 10, 2009, at 7:00 p.m., a public hearing will be
conducted in the City Council Chambers (Building A) at 3300 Newport Boulevard, Newport Beach, CA
92663.
This will be a public hearing before the Newport Beach City Council to allow public testimony and discussion of
the proposed water rate increases described within this notice. The City Council will take written and oral
comments that evening. They will also consider all written protests against the proposed charges, determine if
a majority protest exists, and consider resolutions to adopt the water rate charges.
How to File a Written Protest
Written protests must be filed with the City of Newport Beach City Clerk. Written protests may be hand
delivered or mailed to the City Clerk at 3300 Newport Boulevard, Newport Beach, California 92663. To be
valid, written protests must state opposition to the proposed water rate increase, identify the parcel (by
assessor's parcel number or street address), and include the original signature of the water service customer
or property owner. Written protests may be submitted up to the conclusion of the public testimony at the public
hearing on November 10, 2009.
About Proposition 218
In November 1996, California voters approved Proposition 218. As a result, California agencies must comply
with its requirements when setting utility rates. One provision requires that a noticed public hearing on utility
rates be held and that rates not be increased if a majority of affected property owners protest the increased
rates in writing.
Frequently Asked Questions
Q. What does my water bill pay for?
A. Your Newport Beach water bill covers the following categories costs and services:
• The annual operation and maintenance of the water system, including well and pump station
operations, water treatment and testing, and water division employee salaries.
• The cost the City incurs to purchase imported and groundwater. The City purchases imported water
from the Municipal Water District of Orange County and groundwater from the Orange County
Water District.
• The repair and replacement of pipes, pump stations, facilities and equipment to improve the water
system safety, efficiency and reliability. No debt for this purpose is proposed and all improvements
will be "paid as we go" with rate revenue.
Q. Why do the rates need to be raised?
A. Newport Beach is not immune to the increases in delivery costs and the scarcity of water seen throughout
California over the past several years. Operating expenses, particularly chemical and electrical costs, have
increased by an average of 6 % over the last four years. This year the cost of imported water increased by
20% on September 1, 2009 and will increase by another 22% on January 1, 2011. In addition, capital
expenditures are required to maintain the water delivery system. The City has not raised its water rates
since 2005. The existing rates do not provide enough revenue to meet the expenses necessary to operate
the water system to provide a safe and reliable water supply to City customers for the next five years.
The need to balance the revenues with the purchase water costs, operations, maintenance, and capital
improvement expenditures is a necessity. In addition, reserve levels have fallen below Council policy
levels. It is the goal to establish full reserve levels by the year 2014.
Clif ford Q. Jordan.1I.D. Uk. RECEIVED
2M MT -I AN 8: s7
—� .. eOFFICE OF
CITY CLERK
CCTV lL v�� T • i CITY OF NEWPORT BEp(,'N
.��'z'�".• fi'�.y i.%C��'�1o1.1S / /tI�K!t<�s'�S /n-�'
11775 Ss' -'�1»S /
-r
n 7 �S CTU GCr� I �t t
22
/Q (jlt9,,t5,a1Sg1"i stfi7�91� Ru�6 /Yl>)N/
;771 1? ce 2yI1L
CLfford R Jordan MD Inc. 0**
i . 1212 Swbago Dr.
Newport Beach. CA 92660 ( J
V
RECEIVED
2m9 SEP 30 AM 9. 50
.0
2306 Port Aberdeen Place
Newport Beach, CA 92660
September 28, 2009
City of Newport Beach City Clerk
3300 Newport Blvd.
Newport Beach, CA 92663
ONCE OF
THE CITY CLERK
CITY OF NE' MRT BEACH
1 am writing to state my opposition to the proposed water rate
increases. I am a retiree on a fixed income, and the proposed
increases would create a financial hardship for me.
Sincerely,
tanne Burns
.e�,
MAREA QWzEI\/ED
1 CAMBRIA DRIVE
CORONA DEL W°AKJOA 062504
OFFICE OF
THE CITY CLERK
�1BEACH
City Clerk
City of Newport Beach
3300 Newport Boulevard
Newport Beach, CA 92663
Re: Written Protest to Proposed Water Rate Increase
Public Hearing on November 10, 2007
Dear Sir:
I am the property owner and reside at 1 Cambria Drive in Corona Del Mar,
assessor's parcel no. 461- 031 -15. I am writing to oppose the proposed water rate
increase discussed in the "Proposed Water Rate Increase Notice of Public Hearing
and Protest Procedure."
The proposed water rate increase would result in an increase of monthly fixed
charges by more than 500% by 2014. At the same time, the Notice states that
"[ o]perating expenses, particularly chemical and electrical costs, have increased by an
average of 6% over the last four years." Given the extremely modest increase in
operating expenses during the past four years, there clearly is inadequate justification
for the enormity of the fixed charge increase that the City Council proposes to impose
on City residents.
Moreover, the fixed charge increase when combined with the proposed
commodity charge increase will place a substantial and undue burden on City
residents. The resources of City residents are not unlimited. In coming years,
homeowners will be faced with constantly increasing charges for all utilities and
services as well as increasing homeowner's association charges due to those
increases. The City Council should vote against this unnecessary and excessive
proposed rate increase.
Very truly yours,
&A,t ._ A.
Marea M. Suozzif I
M
Ed Van den Bossche RECEIVED
121 40th Street
Newport Beach, Ca 92MNOV -2 AND 07
0 fCEOF
1N= MY CLERK
CIPf Cr - 7:707 PE CH
October 28, 2009
City Clerk
City of Newport Beach
3300 Newport Blvd.
Newport Beach, Ca 92663
This is to state my opposition to the proposed water rate increase.
I am the owner of the property at 121 40th Street, Newport Beach,
California 92663 and the water service customer at the same address.
Sincerely,
Ed Van den Bossche
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>Ia31O A!!0 341
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LO :6 Wb 9— 130 6MI
03AI303
October 28, 2009
City of Newport Beach City Clerk
3300 Newport BI
Newport Beach CA 92663
Dear City Clerk
RECEIVED
M9 Nov —2 AM 10. 06
C nCE OF
THE CITY CLERK
CITY OF ' ,''PORT BEACH
I object to the increase in water service charge and the water usage fee. 148%
increase in 5 years for the water usage fee is excessive and 383% increase in 5
years for water service charge is also excessive.
Regards,
John B. Patterson
1106 White Sails Way
Corona del Mar CA 92625 -1543
N TR 2202 BLK LOT 35 LIN
Lq�
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01
Tony and India g6w, ,
7 Trafalgar
NeHyor: Beach, Canfomla 92660
dW:ahynes@hotrna1.con
1949 706 9000 C 3� 0 920 63M
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Tony and India g6w, ,
7 Trafalgar
NeHyor: Beach, Canfomla 92660
dW:ahynes@hotrna1.con
1949 706 9000 C 3� 0 920 63M
0 (lC b tixf JZZ U9
"RECEI D AFTER AGENDA
Pliil-<TED:" 6
RECEIVED
Pamela L. Whitesides
3322 Via Lido 2199 NOV -4 PM 12: 06
Newport Beach, CA 92663
(949) 673 -4507 OFFICE OF
THE CITY CLERK
November 3, 2009 CITY OF N'E''PORT 1 E.A 9
City Council
C/o City Clerk
City of Newport Beach
3300 Newport Boulevard
Newport Beach, California
92663
Re: Opposition to Proposed Water Rate Increases
Property Address 3312 -3318 Via Lido, Newport Beach
Dear City Council Members
We are the involuntary owners of a 3 -inch water meter and are very much opposed to the
huge increase in the fixed "Water Service Charge ". (We are also charged for a 1 -inch water
meter and something called a "Multi/Bl" water service on the same property.) As we understand
the public notice, the City proposes to increase the charge for 3 -inch meters 458% the first year,
and within five years, it proposes a 1000% increase to over $2000 per year. These exorbitant
increases would make us continue to pay dearly for a 3 -inch meter and fire suppression device
the City required us to install, ostensibly as fire protection for only two boat slips in front of our
4 -unit apartment building.
Our small apartment building has a combined total of 4270 square feet, equivalent to the
square footage in a medium -sized single family home. When we needed to rebuild the
dilapidated docks in front of the building, we obtained the necessary building permits to replace
the existing five small boat slips with two larger slips. We were told we would need to install a
new water line for the new docks, with a "backflow" device to be located in the 3 -foot setback
along the side of the building, leaving enough room to walk around it on the path. The old docks
were demolished and construction on the new docks was well under way when we were
suddenly told the City's Fire Department was requiring us to install, at our own expense, a 3 -inch
water line and some kind of larger backflow unit. We did not know until the device was
delivered that the required fire suppression device was a huge, 5' x 7' piece of red machinery
with pipes almost 4 inches in diameter (see attached photos).
Since we had no choice, we spent over $16,500 to trench the street, lay and connect the
new 3 -inch line and meter, and purchase the fire suppression device. The size of the device
would have blocked the 3 -foot walkway on the side of the building, so it had to be located in
front of a tenant's master bedroom window on the only small plot of dirt where landscaping used
to be. In addition to the $16,500 fire suppression system, we still had to pay $12,000 -plus to
install an ordinary fire hose on the docks, which is just like the fire box and hose that we took out
when we demolished the docks. The existing water to the docks and boats (for wash downs and
filling water tanks) continues to be from our old water delivery system and backflow device. We
do not use the water from the 3 -inch line and fire suppression system; in fact, we cannot turn it
on without breaking a chain or unlocking it with a key we never received.
We have not been able to find another similar device on local streets, even for multiple
boat slips far larger than ours. In fact, we have never seen a fire suppression device as large as
ours, even at local commercial and Lido Isle marinas with 20 -30 boats each (see attached photos
of Lido Isle marina water device and a "fire hydrant" close by). We are convinced the fire
suppression "overkill" imposed on our relatively small property was actually intended to also
serve the surrounding properties, especially the sailing club on one side of the our property and
the multiple -slip marina on the other side, neither of which has a similar device.
If our assumption is wrong and the only reason the City required the huge system was
because of the unique fire issues with our two slips, the current water service charge of $216 per
year and the several hundred dollars yearly to test the new device's backflows might be a fair
bargain. If, however, the system was imposed on us in part for the safety of our neighbors, the
proposed water service increases would be grossly unfair to us, especially since we have already
given our land and thousands of dollars to the common good. In either case, the proposed
increases of 458% the first year to over 1000% in five years is oppressive and unfair to small
property owners.
In evaluating the proposed increase in water service charges, please consider that the City
has imposed fire requirements on some property owners for reasons other than for the fire safety
or water needs of their own property. Perhaps it would be more appropriate and fair to charge
for meters based on their use, or the purpose for which they were installed (e.g., fire suppression
versus supplying continuous water to the property), rather than imposing a charge based only on
the property's meter size. The City's proposed 1000% increase over the next five years without
regard to any circumstance other than the meter's size is unduly harsh and will pose a hardship
on owners like us, as well as on our tenants.
Thank you for your consideration.
Very truly yours,
"6� A2_J
Pamela L. Whitesides
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V. 949.675.8835
City Clerk,
City of Newport Beach, Ca.
Bob McCaffrey
PO Box 26
Balboa Island, CA 92662
C. 949.500.5851
I am in opposition to the proposed water rate increase.
RECEIVED
F. 949.675.5342
29)9 OCT -2 AM 9 47
September 29, 2009
OFFICE OF
THE CITY CLERK
CITY OF N WRT BEO
I own a property at 205 and 205 '/2 Coral Ave Balboa Island. Ca.
Thank you,
Robert McCaffrey
�Z Ja7 /o 9
N--P- C -4 6& a di.
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o klo��
YI:30
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CDA13038
J 1 {9l
1 October 2009
City of Newport Beach
City Clerk
3300 Newport Blvd.
Newport Beach CA 92663
Dear Council Members,
RECEIVED
M OCT -6 AN 9: 06
OFFICE OF
THE CITY CLERK
CITY OF N:vVPORT BEACH
I write in opposition to the new proposed water rate increases. Particularly in these down
economic times and with the grandeur opulent plans for a new Taj Mahal like city hall,
that is totally out of line for today's market and totally unnecessary. Those same dollars
could be spent on a more modest and sufficient City Hall complex with the savings spent
on a total sewer /water overhaul and maintenance program for years to come with no
additional rate increases necessary. Quit trying to waste all the taxpayers' money on
glitzy and show and start using it for the items for which it is intended.
I have lived in this area most of my life and have been a city resident for most of 40 years
and I have never seen the opulent waste of money by our council members, city planners
and spenders as in the last ten years or so. Balboa improvements and especially the tree
removals and replacements are among the top of the list along with the new city hall.
Now, today October 1, in our local Daily Pilot, it says because of revenue loss you are
looking at employee early retirement, service reductions plus other cuts to residents but
nothing about stopping the opulent spending. Everyone would love to live an opulent
personal life but they can't afford it. Neither can most of the taxpayers of Newport
Beach.
For your consideration.
Sincerely,
Yaer-rjoP rty Owner
2294 Channel Road
Balboa CA 92661
RECEIVED
M OCT 16 AM 9-- 55 Dorothy Margulies
1380 Galaxy Drive
C -ICE OF Newport Beach, CA 92660
THE CITY CLEFiKPh. Or FAX (949) 642 1101
CITY OF 'it` -VC,RT B5'1J'Hdotsala@sbcslobal.net
Protest Against The Proposed Water Rate Increase
Dear City of Newport Beach Clerk:
Please treat this letter as a formal written protest against the proposed water rate increase. I
object to this increase particularly at a time of severe economic pressures.
1. There has been considerable self monitoring of water usage by citizens on Newport
Beach. Self restrictions on watering lawns, eliminating lawns in favor of plants and
shrubs that require less water, reducing water use in cleaning driveways. This must
reduce the need to import water and hence the costs must be decreasing.
2. The University of California has reduced faculty and staff salaries by 8 %. Salaries and
other expenses need to be maintained and not increased in these times. If the rate
increase is to cover increased costs there needs to be some way avoid increasing costs
and passing it on to consumers.
3. It's about time the City of Newport Beach, and other government related agencies
take a hard look at covering costs and providing services without increasing rates and
taxes.
4. Every issue is resolved by increasing taxes, including real estate taxes in Orange
County. I think the increase is unnecessary and easy method for increasing revenue
without consideration of the impact on citizens.
Please treat this as a formal written protest against the water rate increase to be discussed
on November 10, 2009.
Sincerely.
Dorothy Margulies
October 16, 2009
City Clerk
City of Newport Beach
3300 Newport Blvd.
Newport Beach, CA 92663
RE: Water Rate Hearing of 11/10109
Honorable Council Members:
RECEIVED
2(09 OCT 21 Ali 9: 07
OFFICE OF
THE Cl T Y GaK
CITY Cdr K!E'JV-PORT BEACH
As a property owner in Newport Beach since 1972, 1 appreciate the water services I am
able to purchase. I protest the proposed rate increase and urge the council to
understand the current economy and financial pressures we are all subject to.
My wife and I drive an '86 and an '89 vehicle for daily trips. I was on a bike ride the
other day and met two nice water district employees working on a weekend morning,
doing checking on a green belt area. They were not doing repair and had no equipment
with them or in the truck they had parked. As I rode on, I came upon their new, or recent
model Ford pickup truck belonging to the Water District/City. Why are employees
working, perhaps only part time, on a weekend when we probably have to pay a
premium for their time? Why is the District using new vehicles rather than maintaining
vehicles for a longer life as I have to do? Please don't tell me that the lease is up and
we need new vehicles. Why are we paying a lease premium rather than owning?
In answer to your question "Why do the rates need to be raised ?" Rates do not need to
be raised. Operating Expenses can be restrained to not exceed the CPI, and cuts
probably could be made all over the District. Overtime doesn't have to be incurred,
hiring can be abated, raises can be shelved, the reserve levels set by Council can
lowered, etc. Yes, that would be uncomfortable, not business as usual. My wife and I
have to do that with our personal finances, why shouldn't the District/City? I urge you to
vote no and not to enact a rate increase. Please review your proposal and act in accord
with my request to abandon your proposal.
Thank you considering this letter,
effrey Simonds
440 Aliso
Newport Beach, CA
City of Newport Beach City Clerk
RECEIVED
10 QCT ?7 AN 9: 07
Re: Prop 218 - Proposed water rate increase Notice of public hearing and Protes
Parcel numer:424- 434 -03 CFPCE OF
THE CITY GUW
Address: 206 Orange street, Newport beach, CA 92661 CITY OF N�1:, j yy
lot 11 block 7 of Seashore Colony Tract in the city of Newport Beach, County of Orangg,%e of
California as per map recorded in Book 7 Page(s) 25 of Miscellaneous Maps in the Office of the county
Recorder of Orange County.
To whom it may concern,
My property address is 206 Orange street, Newport beach, CA 92661. I am strongly against the
proposed water rate increase in the city of Newport Beach. I am a widow and have been for
nearly 15 years and I raised my children by myself since they are 1 and 2. 1 have worked very
hard all my life trying to make a decent living for them and myself and the proposed water rate
increase will greatly jeopardize my financial situation. I therefore kindly urge that you do NOT
go forth with the drastic water rate increase.
Thank you for your attention in this matter.
Sincerely, g
Sandy Wong
2'l3 - 892 -3° 1 Z
0APIQ
C 3 2-3 - 9*-'
RECENED
IM9 SEP 30 119 9' 50
0 --i CE U
OENgl�PORR
CM �H
September 27, 2009
Re Proposed water rate increase
Dear Sirs:
1 wish to formally oppose the proposed water rate increase for my property at 115
port Sheffield place, Newport Beach, CA. The rate increase would cause an undue
hardship on my income.
I respectfully request that the water rate increase be denied.
�Sinnc�erely,
Myriam Shapiro
0
tiL.
City Clerk
City of Newport Beach
3300 Newport Boulevard
Newport Beach, CA 92663
Dear City Clerk:
RECEIVED
Robert L. Muench
1801 Alta Woo
��rl _3 A� 9 48
Altadena, CA 91 �jj jj 33
OFFICE OF
THE C=.TY CLERK
Cfv CF 11 :, -CRT BE (�K
REGARDING PROPOSED WATER RATE INCREASES
HEARING OF NOVEMBER 10, 2009
As an owner of property located on Balboa Island (APN 050- 063 -10), I am writing to protest the
proposed water rate increases. I understand the need to maintain infrastructure and to cover
increased costs of purchased water; however, the proposed rate increases are heavily weighted
toward meter charges (up 400 percent) while water use rates are only increased 50 percent. How
can this encourage conservation.
I look forward to a revised proposal with more information about the actual amount of money
needed, its proposed uses and how water conservation can be encouraged through a revised rate
structure. I cannot support the water rate increases as they are now proposed.
Respectfully submitted,
`Gr � —1 —
Robert L. Muench
Parcel Number 050- 063 -10
Robert A. LaFont, O.D.
6747 E Waterton Ave.
Orange, CA 92867
City of Newport Beach City Clerk
3300 Newport Blvd.
Newport Beach, CA 92663
October 9, 2009
Re: 412 Westminster Ave., Newport Beach, CA 92663
To whom it may concern,
I am sending this letter in protest of the recent proposed Water Rate charges. I feel that the increase for
the monthly water service is excessive and the cost per HCF was already high in relationship to other
cities in the area. I live in the city of Orange and the cost per HCF is half of Newport Beach's current
cost.
Your notice referenced reserve levels but failed to indicate what those levels are and how much the City
of Newport Beach has in reserve at this time and what the reserve is held for or approved to be spent on.
I feel this increase would be difficult for seniors or lower income families to afford.
Sincerely,
Robert A. LaFont
V_
Robert A. LaFont, O.D.
6747 E Waterton Ave.
Orange, CA 92867
U�
City of Newport Beach City Clerk
3300 Newport Blvd.
Newport Beach, CA 92663
October 9, 2009
Re: 400 Westminster Ave., Newport Beach, CA 92663
To whom it may concern,
I am sending this letter in protest of the recent proposed Water Rate charges. I feel that the increase for
the monthly water service is excessive and the cost per HCF was already high in relationship to other
cities in the area. I live in the city of Orange and the cost per HCF is half of Newport Beach's current
cost.
Your notice referenced reserve levels but failed to indicate what those levels are and how much the City
of Newport Beach has in reserve at this time and what the reserve is held for or approved to be spent on.
I feel this increase would be difficult for seniors or lower income families to afford.
Sincerely,
Robert A. LaFont
October 16, 2009
City Clerk
City of Newport Beach
3300 Newport Blvd.
Newport Beach, CA 92663
RE: Water Rate Hearing of 11/10/09
Honorable Council Members:
RECEIVED
2119 OCT 20 PH D 01
OFFICE OF
THE CITY CLERK
CITY OF BEACH
As a property owner in Newport Beach since 1972, 1 appreciate the water services I am
able to purchase. I protest the proposed rate increase and urge the council to
understand the current economy and financial pressures we are all subject to.
My wife and I drive an '86 and an '89 vehicle for daily trips. I was on a bike ride the
other day and met two nice water district employees working on a weekend morning,
doing checking on a green belt area. They were not doing repair and had no equipment
with them or in the truck they had parked. As I rode on, I came upon their new, or recent
model Ford pickup truck belonging to the Water District/City. Why are employees
working, perhaps only part time, on a weekend when we probably have to pay a
premium for their time? Why is the District using new vehicles rather than maintaining
vehicles for a longer life as I have to do? Please don't tell me that the lease is up and
we need new vehicles. Why are we paying a lease premium rather than owning?
In answer to your question "Why do the rates need to be raised ?" Rates do not need to
be raised. Operating Expenses can be restrained to not exceed the CPI, and cuts
probably could be made all over the District. Overtime doesn't have to be incurred,
hiring can be abated, raises can be shelved, the reserve levels set by Council can
lowered, etc. Yes, that would be uncomfortable, not business as usual. My wife and I
have to do that with our personal finances, why shouldn't the District/City? I urge you to
vote no and not to enact a rate increase. Please review your proposal and act in accord
with my request to abandon your proposal.
Thank you considering this letter,
J ey Simonds
231 Opal
Balboa Island, CA
RECFIVED
2Gl9 OCT 21 P14 I: 0
OMMiCE OF
THE Q I CLERK
CITY OF NSMRT BEAT H
10 13 09
City of Newport Beach
3300 Newport Blvd...
Newport Beach, California 92663
Re; 1015 E. Balboa Blvd. Unit B
Municipal Services Dept.
The residents are tired of the parking tickets, restriction of parking and Jet noise over our
roof tops loud garbage trucks disturbing our sleep. Rough treatment from NPB
departments. And other infringements on our safety
This letter is to express my voice against any water rate increase. Decrease the size of the
New Port Beach office staff and others to reduce the cost of water.
�i4e��
RECEI\/ED
2M9 NOV 10 PM 4: 30
C TICE OF
THE UY CLERK
CtN 0c ` „'^JRT -E"
November 10, 2009
Leilani I. Brown
City Clerk
City of Newport Beach
3300 Newport Boulevard
Newport Beach, CA. 92663
RE: Proposed Water rate increases
Dear Ms. Brows
This is to protest the amount of water rate increase the City of Newport Beach is proposing. This
rate increase is the subject of a public hearing on November 10, 2009 at 7:00 PM.
I understand the need for water rate increase in order to pay for increasingly expensive imported
water and other operating and capital costs. However, I believe the increases should be met by a
combination of a reduction in water usage coupled with a lesser rate increase, not solely a rate increase.
It is my opinion that the voluntary water conservation program needs to have a higher profile and
more urgent community education, and if voluntary measures do not result in the reduction of water usage
needed, then mandatory water conservation measures should be implemented.
Thanl5you. My property address is 131 Corsica Drive, Newport Beach, Ca.
Susan E. Rhodes
Mailing address:
1401 Avocado Avenue, Suite 901
Newport Beach, CA. 92660
CEIVED
rdRECEIVED
� v _2 AND 02
2M9 OCT -5 AM 10: 05
P.R t Of
'J lei d ,�- C3 c �n- �c c. '� �- .� � f(I Of : GTY CLERK
THE ERK ` FORT BEACH
J". T /BFXH
!Z•<� ,tr �- en.� -r, c� err- ��.c�t�,n� - �� -�e..�
proposed water
P P
y s monthly water
Proper 1' -j )..in r s ,l 121a P o Ave- ^ �
iitciwa.0 ........... .... ....�__i7 t� I_o Mlkr C-A C12 2.5 licate whether or
not a commercial user such as this property has enhanced objection power, but it should.
Bayside Village has 270 home sites and a large manna,
Feel free to contact me to discuss the details.
Sincerely,
/,�I �6-tLn .�
Richard Newman
Assistant Vice President
De Anza Corporation,
Manager of Gelfand Properties, LLC,
Manager of Bayside Village, LLC
2211 Pacific Beach Drive, San Diego, California 92109
Direct Line (858) 581 -4351
ITP(! AT ts
October 27, 2009
City Clerk
City of Newport Beach
r ^
o
3300 Newport Boulevard
t
Newport Beach, California 92663
C����
°`
Re: Objection to Proposed Water Rate Increase
�r-
a
3
o
\
f T l
APNs: 988- 132 -42, 988 - 132 -43, 988 - 132-44
_
Q
To Whom It May Concern:
On behalf of Newport Dunes Resort and Marina, I object to the proposed water rate
increases. I calculate that the proposal would increase the property's monthly water bill
by 146% between now and 2014.
The recent Notice of Public Hearing and Protest Procedure did not indicate whether or
not a commercial user such as this property has enhanced objection power, but it should.
Newport Dunes has 400+ RV sites, a restaurant, market and a 400+ slip marina,
Feel free to contact me to discuss the details.
Waterfr6nt Resort Propehq
A California Limited PartrA
By: De Anza Corporation
Its: General Partner
By: Herbert M. Gelfand
Chairman
"Newport Dunes Marina, LLC
A California Limited Liability Company
By: WLB Group GP, LLC
A Manager
By: Warren L. Breslow
Manager
1 13 1 Back Bad Drive , Newport Beach. California 92660 • 949.729.3863 • Fax 949.759.5685
Jerrilynn Kline
1957 Port Chelsea Place
Newport Beach, CA 92660
(949)720 -0789
September 28, 2009
Ciy Clerk
3300 Newport Blvd.
Newport Beach, CA 92663
Re: Property address: 1954 Port Albans Place, NB 92660
Dear City Clerk,
RECEIVED
21119 OCT - I AM 1: 56
OFFICE OF
H CITY CLERK
CITY OF WEVORT BEACH
I am writing to oppose the proposed water rate increase. I am the property owner of the
above named property.
Thank you,
1'
J� Ak Yb),q
JemJ. Kline
City of Newport Beach City Clerk,
RECEIVED
October 1, 2009
2M9 OCT -6 AM 9: O6
I hereby wish to place my protest against the water rate increases.
I represent commercial parcels:
048 - 112 -21
048 - 112 -221'�
048 - 112 -23
residential parc�el/:
V
117- 443 -02 �,J}
Thank you for your consideration.
Sincceerely,�
(/John Vallely
2042 Commodore Road
Newport Beach, Cailf. 92660
949 645 -9790
OFFICE Of
THE CITY CLERK
MY OF' °:'rJAT EEACH
y RECEIVED
33 `"t M9 0CT 26 Affil: is
THE MY E CLERK
CITY OF ', _ "?ORT 6EW,;H
ueeZt4, AO-,Zz, ti -7&�e-,Le «�,
-G/L'
C°. fLdi7L�jC:. ,dLC� -fit. � /��l.L yGL� -S ctL�sC
Axle c:
l�'t -� ; �= c.��i��.� L� G �-,�1� :,. �.`.%�.�ti�� l,. .i:•�4. /��cda �-a n... � �
'VA/
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zo
/ ZG'GG�'� � Q i. �i. Lt" �y1 c� o u�i.L1%c_L4��/G+�t"� -• o +.G-� LJ' 64� .LQ� G�1L(/
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jxlsfi4,17 a._6�'c'
f g�Grc h L >'Z
.,;z 06
DIVERSIFIED REAL PROPERTY MANAGEMENT
AND BUSINESS SERVICES INC.
180 East Main Street Suite 101, Tustin, CA 92780 Ph: 714- 544 -7755 Fax 714 -544 -7771
10 -19 -09
c�
City of Newport Beach City Clerk
o—+
3300 Newport Blvd.
c jn�j
Newport Beach, CA 92663
dE�e,
N
N
CZ)
RE: Proposition 218'�
rfl
S
To Whom It May Concern:
..
�
0
We are Diversified Real Property Management writing to you on behalf of
Huguette Wilson, owner of the property located at #7 Ima Loa Court, Newport
Beach, CA 92663.
This is a written protest to the proposed water rate increase. Ms. Wilson highly
opposes this possible increase.
We appreciate your time and effort in making her opinion known to all necessary
parties.
incerely,
Angie Nelson,
Agent for Huguette Wilson,
Newport Homeowner
OCT -16 -20179 09:9@ =RON:THE HOME OFFICE 7328739185 7 0:2550735 P.1
J.M. (Moore
RAB A35. 9101 W. Sahare Ave:, Suite 105 • Las Vegas, NV 89117 -5772
October 14, 2009
City Clerk
City of Newport Beach, California
3300 Newport Blvd
Newport Beach CA 92563
RE: 317 Coronado, Newport Beach
Par #048- 102.15
Dear Sir or Madame,
RECEIVED
Tel/Fax (702) 255 -8735 • Call (702) 52a•9403
2[09 OCT 21 AN 9: 07
OFFICE OF
THE CP CLERK
CITY 0= F ;?,;� ^T BEACH
As property owner of the above designated property I and we object to the proposed water
rate increase.
I comment as follows:
1, Freeze all salaries retroactive as of 111/08 or as soon as possible in the Water or
Utility Department
2. Reduoe all other expenses in the department by 20% across the board.
3. Cancel all purchases as much as possible, trucks, equipment, furniture, etc,
4. Operating expenses are out of control if they have increased 24% in the last 4 years.
S. Its incredible that the deparbrrent has succumbed to "imported" water costs of 20%
on 911109 and another increase of 22% on 1/1111, 42% total in slightly more than 1
year.
6. Everything for everybody is "a qty^ until the money well from citizens and
taxpayers runs dryl Well its dryl
Thank you for allowing us to express an opinion and vote "NO" on any increase for this cost.
Moore
RECEIVED
Ed Van den Bossche Y919 NOV -2 AM 10-- 07
121 40th Street
Newport Beach, Ca 92663 OFFCE OF
F'- ;,1Y CLERK
Cry "CRT EEAGH
October 28, 2009
City Clerk
City of Newport Beach
3300 Newport Blvd.
Newport Beach, Ca 92663
This is to state my opposition to the proposed water rate increase.
I am the owner of the property at 206 34th Street, Newport Beach,
California 92663 and the water service customer at the same address.
Sincerely,
oar
iX �
Ed Van den Bossche
TERRA VISTA MANAGEMENT
October 27, 2009
City Clerk
City of Newport Beach
3300 Newport Boulevard
Newport.Beach, California 92663
Re: Objection to Proposed Water Rate Increase
APNs: 440 - 132 -60, 440 - 132 -61, 440 - 132 -62
To Whom It May Concern:
RECEIVED
2M9 NDV -2 AN 0 02
OFFICE OF
CITY Or t J CLERK
IPO^RT BEACH
On behalf of De Anza Corporation and Bayside Village, I object to the proposed water
rate increases. I calculate that the proposal would increase the property's monthly water
bill by 60% between now and 2014.
The recent Notice of Public Hearing and Protest Procedure did not indicate whether or
not a commercial user such as this property has enhanced objection power, but it should.
Bayside Village has 270 home sites and a large manna,
Feel free to contact me to discuss the details.
Sincerely,
Richard Newman
Assistant Vice President
De Anza Corporation,
Manager of Gelfand Properties, LLC,
Manager of Bayside Village, LLC
2211 Pacific Beach Drive, San Diego, California 92109
Direct Line (858) 581 -4351
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