HomeMy WebLinkAboutSS6 - Sewer Rate Proposal - PowerPointJuly 25, 2017
Item No. SS6
City of Newport Beach
Sewer Rate Study Update
City Council Study Session I July 25, 2017
Why is the City looking at Rates?
• Insufficient revenue to support operations and
maintenance
• Need to increase capital replacement
— Protecting Bay and Ocean Water Quality
• Sewer rates have not changed in 11 years
• Existing rate structure requires review
— Proportionality in compliance with Prop 2A
zo Year Rate History
• 1996
— Variable rate increase from $0.15 to $o.2o (0.05)
• 2005
— Variable rate increase from$0.20 to X0.30 ($0.1-0)
— Fixed fee increase $3.6o to $4.50 ($0.90)
• 2006
— Variable rate increase from $0.30 to X0.35 ($0.05)
• 2006 to present (i.1 years)
— Unchanged
Recent Actions
• City retained the services of HF&H Consultants to
update the Sewer Rate Study
• Finance Committee review on June2q,201.7
— Committee moved the item to City Council for discussion
• Draft rate study complete
• Finalizing Proposition218 notice
Sneak Peek
• Rate Study Findings &
Recommendations:
— Average Single Family Home (Average water use of 12
HCF* per month with a 5/8 to 1 -inch meter)
• Will see a $2.35 increase in their monthly bill starting in
January 2o18
— 5 year incremental increase
— Change to fixed fee structure
— Elimination of surcharge and dwelling unit charges
— Change in how we charge "Sewer Only" customers
*(1 HCF = loo cubic feet or 748 gallons)
How did we get there?
• Three main components to expenditures
— Operations
• Salaries, benefits, contracts, equipment, materials, and
day to day maintenance and repairs
— Capital Improvement Projects (CIP)
• Projects identified in the 2010 Sewer Master Plan
— Reserves
• Council Policy F-2 requires a minimum reserve target
equal to 50% of the operations budget
Revenue and Expenditures
$6.0
c
$4.0
C:
a)
E
(D $3.0
a)
ry
ar
$2.0
a)
ay
ry
$1.0
$0.0
Revenue
Expenditures
ZZ �
FY 2016-17 FY 2017-18
Salaries
Operations & Maintenance
Capital Expense
FY 2018-19 FY 2019-20 FY 2020-21
� Benefits
� Internal Services Allocation
-Revenue from Current Rates
FY 2021-22
FY 2016-17
FY 2017-18
FY 2018-19
FY 2019-20
FY 2020-21
FY 2021-22
Salaries
$1,020,322
$939,130
$962,609
$986,674
$1,011,341
$1,036,624
Benefits
675,743
708,107
725,810
743,955
762,554
781,618
Operations & Maintenance
1,418,080
1,457,443
1,482,657
1,508,307
1,534,401
1,560,946
Internal Services Allocation
486,500
475,296
483,519
491,883
500,393
509,050
Capital Expense
750,000
1,000,000
1,030,000
1,060,900
1,092,727
1,125,509
Total Revenue Requriement
$4,350,646
$4,579,977
$4,684,594
$4,791,719
$4,901,415
$5,013,746
Revenue from Current Rates
3,558,806
3,558,806
3,558,806
3,558,806
3,558,806
3,558,806,
Fund Balance
Reserves without Rate Increase
Reserves with Rate Increase
Target Balance
Rate Increase
FY 2015-16
FY 2016-17
Year End Fund Balances
$3,675,000
$4.0
$3,675,000
$1,800,323
$1,800,323
($1,057,812)
($2,526,897)
$2,830,589
$3.5
$1,890,428
$1,839,036
$1,920,666
$1,800,323
$1,789,988
$1,827,297
$1,865,410
$1,904,344
9.4%
9.4%
9.4%
8.4%
2.0%
$3.0
`.
�
1■
$2.5
'. Reserves With
U
` Rate Increases
♦
°
t�
$2.0
°
=
c
Target Reserve Balance °%
LL
$1.5
`%
$1.0
O
`
Reserves Without `�♦
Rate Increases `♦
`.
$0.5
ti
$0.0
`
FY 2015-16
FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22
Reserves without Rate Increase
Reserves with Rate Increase
Target Balance
Rate Increase
FY 2015-16
FY 2016-17
$1,638,296
$3,675,000
$1,638,296
$3,675,000
$1,800,323
$1,800,323
FY 2017-18
FY 2018-19
FY 2019-20
FY 2020-21
FY 2021-22
$2,663,365
$1,539,133
$298,942
($1,057,812)
($2,526,897)
$2,830,589
$2,225,001
$1,890,428
$1,839,036
$1,920,666
$1,800,323
$1,789,988
$1,827,297
$1,865,410
$1,904,344
9.4%
9.4%
9.4%
8.4%
2.0%
Current Rate Structure
0
0
0
0
Fixed monthly service charge
$4.50 for all customers
Monthly use charge
— Based on water use per HCF (748 gallons)
Surcharge
— s so.00 charge for meters i inches or greater
— $2.00per dwelling unit charge
Sewer only customers
— Flat fee of s6.25 for all customers
Proposed Rate Structure
• Fixed monthly service charge
— Graduated based on water meter size
— Surcharge and dwelling unit charge eliminated
• Monthly use charge
— Based on water use per HCF
• Sewer only customers
— Fixed monthly service charge based on meter size and
average water use
Proposed Rates
Water and Sewer Customers
Sewer Service Charge
Current
FY 2016-17
Proposed
FY 2017-18 FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22
(Eff. 1/1/18) (Eff. 1/1/19) (Eff. 1/1/20) (Eff. 1/1/21) (Eff. 1/1/22
Water Meter Size
5/8"
$4.50
$6.46
$7.07
$7.74
$8.39
$8.55
3/4"
$4.50
$6.46
$7.07
$7.74
$8.39
$8.55
1"
$4.50
$6.46
$7.07
$7.74
$8.39
$8.55
1.5"
$4.50
$7.11
$7.78
$8.51
$9.23
$9.41
2"
$14.50
$9.70
$10.61
$11.61
$12.58
$12.83
3"
$14.50
$10.99
$12.02
$13.15
$14.26
$14.54
4"
$14.50
$12.93
$14.14
$15.47
$16.77
$17.11
6"
$14.50
$14.55
$15.91
$17.41
$18.87
$19.25
8"
$14.50
$16.16
$17.68
$19.34
$20.97
$21.39
10"
$14.50
$20.69
$22.63
$24.76
$26.84
$27.37
12"
$14.50
$25.86
$28.29
$30.95
$33.55
$34.22
Sewer Use Charge(per HCF
$0.35
$0.38
$0.42
$0.46
$0.50
$0.51
Per Dwelling Unit Charge
$2.00
$0.00
$0.00
$0.00
$0.00
$0.00
Surcharge - 2" and larger meter
$10.00
$0.00
$0.00
$0.00
$0.00
$0.00
Proposed Rates
Sewer Only Customers
Sewer Service Charge
Current
FY 2016-17
Proposed
FY 2017-18 FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22
(Eff. 1/1/18) (Eff. 1/1/19) (Eff. 1/1/20) (Eff. 1/1/21) (Eff. 1/1/22
Water Meter Size
5/8"
$6.25
$9.90
$10.83
$11.85
$12.84
$13.10
3/4"
$6.25
$9.90
$10.83
$11.85
$12.84
$13.10
1"
$6.25
$11.59
$12.68
$13.87
$15.04
$15.34
1.5"
$6.25
$34.87
$38.15
$41.73
$45.24
$46.14
2"
$6.25
$35.92
$39.30
$42.99
$46.60
$47.54
3"
$6.25
$92.27
$100.94
$110.43
$119.70
$122.10
4"
$6.25
$163.41
$178.78
$195.58
$212.01
$216.25
6"
$6.25
$287.97
$315.04
$344.65
$373.60
$381.07
8"
$6.25
$289.58
$316.80
$346.58
$375.70
$383.21
10"
$6.25
$294.11
$321.75
$352.00
$381.57
$389.20
Per Dwelling Unit Charge
1 $2.00
1 $0.00
$0.00
1 $0.00
1 $0.00
1 $0.00
Typical Bill Impacts
Bill Imvacts
Customer Type Meter Size Water Use
Current
Service
Charge Use Charge Monthly Bill
Proposed
Service
Charge Use Charge Monthly Bill
Change
Single Family Residential low flow
5/8" - 1"
3.0
$4.50
$1.03
$5.53
$6.46
$1.13
$7.60
$2.06
Single Family Residential (avg flow
5/8" - 1"
11.8
$4.50
$4.13
$8.63
$6.46
$4.52
$10.99
$2.35
Single Family Residential (high flow
5/8" - 1"
23.6
$4.50
$8.27
$12.77
$6.46
$9.05
$15.51
$2.74
Sewer -only no additional DUs
3/4"
9.0
$6.25
$0.00
$6.25
$6.46
$3.44
$9.90
$3.65
Commercial
1.5"
29.7
$4.50
$10.40
$14.90
$7.11
$11.38
$18.49
$3.59
Commercial
2"
118.9
$14.50
$41.61
$56.11
$9.70
$45.52
$55.21
-$0.89
Commercial
3"
237.7
$14.50
$83.21
$97.71
$10.99
$91.03
$102.02
$4.31
• Approximately 8o percent of Single Family homes have s/8to1-inch water
meters with an average monthly flow of 11.8 HCF
- These customers will see a $2.35 monthly increase in January 2018
- Rates will continue to increase annually for five years ending in 2022.
- The final increase will be $5.94 higher than their current monthly bill
Next Steps
• If Council approves
— 45 -day Public Notice period commences
— Public Hearing Septemberl2, 2017
Tabulation o f P rot e st s
Proposed Sewer Rate Increase
Notice of Pub Hearing and Protest
Procedure
— First Reading of Ordinance amending
NOTICE IS HEREBY
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Questions?
• For more information please contact the Municipal Operations Department:
— Phone (949) 644-3011
— Email UtilitiesHelp(a)newportbeachca.gov
• Or visit our website at www.newportbeachca.gov/sewerrates