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Home My WebLink AboutSS3 - Wastewater Rate Study - PowerPoint (Consultant)Council Work Session May 26, 2015 City of Newport Beach Sewer Rate Update Council Work Session Presentation Outline • Background • Revenue Requirements • Sewer Rate Design • Customer Bill Comparison • Next steps Note: This Sewer Rate Update was initially presented to the City's Finance Committee on April 29, 2014. HF &H Consultants, LLC 1 May 26, 2015 City of Newport Beach Sewer Rate Update Council Work Session Background • Sewer rates have not been updated since 2006 • Costs are increasing City's Sewer Master Plan identified $30 million in planned expenditures over 30 years • Revenue is decreasing — Customer flows have gradually declined • Existing sewer rate structure is in need of review • Recycled water rates were revised first — Adopted in 2014 Note: Customers are billed annually on the tax rolls for wastewater treatment by Orange County Sanitation District. HF &H Consultants, LLC 2 May 26, 2015 City of Newport Beach Sewer Rate Update Council Work Session N 0 E 0 Revenue Requirements $6.0 $5.0 Capital Reserve Expense ■ Internal Services Allocation Operations & Maintenance ■ Benefits ■ Salaries $4.0 $3.0 $2.0 $1.0 $0.0 FY 2015 -16 FY 2016 -17 FY 2017 -18 FY 2018 -19 FY 2019 -20 HF &H Consultants, LLC 3 Projected reserve expenses are higher — Additional revenue is needed to fund $1,300,000 per year in capital projects identified in the Master Plan — Additional revenue is needed to maintain adequate reserves All other expenses are gradually increasing May 26, 2015 City of Newport Beach Sewer Rate Update Council Work Session Sewer Fund Balance HF &H Consultants, LLC 4 -%, May 26, 2015 $3.50 Target Balance (Operations + Capital) $3.00 N C $2.50 eserves with a e Increase $2.00 m m m $1.50 ' LL `� Minimum Balance �� (Operations) U d $1.00 ` `. m 0 $0.50 Reserves without Rate Increase ` $0.00 FY 2014 -15 FY 2015 -16 FY 2016 -17%% FY 2017 -18 FY 2018 -19 FY 2019 -20 HF &H Consultants, LLC 4 -%, May 26, 2015 City of Newport Beach Sewer Rate Update Council Work Session Current Sewer Rate Structure Monthly Use Charge • Same fixed charge per water service connection size Consumption charge • Same uniform rate per HCF* for all customers (residential and non - residential) • Based on monthly year round customer water consumption Surcharges • Additional fixed charge for meters 2 inches or greater • Multi unit charge per dwelling unit for more than one dwelling unit on the same connection Flat rate customers • Sewer customers who do not also receive water service from the City pay flat monthly rate HCF = hundred cubic feet (748 gallons) HF &H Consultants, LLC 5 May 26, 2015 City of Newport Beach Sewer Rate Update Council Work Session Proposed Rate Structure Modifications Monthly Use Charge • Currently recovers equal fixed costs (i.e., capacity costs) • Should recover proportionate shares of capacity Consumption cha 0 • Recovers approximately 45% of revenue • Same charge for all customers because charge covers costs of collection system, not treatment (OCSD handles treatment) • No change in structure recommended Surcharges • Added to monthly use charges • Combines fixed charges in proportion to capacity Flat rate customers • No change in structure HF &H Consultants, LLC 6 May 26, 2015 City of Newport Beach Sewer Rate Update Council Work Session Current and Proposed Sewer Rates Current FY 2015 -16 FY 2016 -17 FY 2017 -18 FY 2018 -19 FY 2019 -20 Monthly Sewer Use Charge 5/8" or 3/4" $4.50 $7.34 $8.22 $8.79 $9.41 $9.88 1" $4.50 $7.34 $8.22 $8.79 $9.41 $9.88 1 '/2" $4.50 $8.07 $9.04 $9.67 $10.35 $10.87 2" $4.50 $11.01 $12.33 $13.19 $14.11 $14.82 2'/2" $4.50 $11.74 $13.15 $14.07 $15.05 $15.81 3" $4.50 $12.47 $13.97 $14.95 $16.00 $16.79 4" $4.50 $14.68 $16.44 $17.57 $18.82 $19.76 6" $4.50 $16.51 $18.49 $19.78 $21.17 $22.23 8" $4.50 $18.34 $20.55 $21.98 $23.52 $24.70 10" $4.50 $23.48 $26.30 $28.14 $30.11 $31.61 -- HF &H Consultants, LLC 7 May 26, 2015 City of Newport Beach Sewer Rate Update Council Work Session Current and Proposed Sewer Rates Current FY 2015 -16 FY 2016 -17 FY 2017 -18 FY 2018 -19 FY 2019 -20 Consumption Charge Per HCF $0.35 $0.43 $0.48 $0.52 $0.55 $0.58 Surcharges Multi Unit $2.00 N/A N/A N/A N/A N/A Large Meter $10.00 N/A N/A N/A N/A N/A HF &H Consultants, LLC 8 May 26, 2015 City of Newport Beach Sewer Rate Update Council Work Session Residential Monthly Bill Comparison Current 2015 -16 2016 -17 2017 -18 2018 -19 2019 -20 Monthly Use Charge $4.50 $7.34 $8.22 $8.79 $9.41 $9.88 Commodity Charge $4.02 $4.94 $5.52 $5.98 $6.32 $6.66 Total Bill $8.52 $12.28 $13.74 $14.77 $15.73 $16.54 • Single Family Residential Bills — 5/8" meter size — Average monthly flow of 11.49 HCF* — Bills increase an average of $2.00 per month per year over five years * FY 2011 -12 HF &H Consultants, LLC 9 May 26, 2015 City of Newport Beach Sewer Rate Update Council Work Session Non Residential Monthly Bill Comaarison Current 2015 -16 2016 -17 2017 -18 2018 -19 2019 -20 Monthly Use Charge $14.50 $11.01 $12.33 $13.19 $14.11 $14.82 Commodity Charge $22.40 $27.52 $30.72 $33.28 $35.20 $37.12 Total Bill $36.90 $38.53 $43.05 $46.47 $49.31 $51.94 • Non Residential Bills — 2" meter size — Average monthly flow of 64 HCF — Current structure monthly use charge includes surcharge for meters 2" or greater — Bills increase an average of $3.00 per month per year over five years HF &H Consultants, LLC 10 May 26, 2015 City of Newport Beach Sewer Rate Update Council Work Session $20 $15 m i $10 Y c 0 2 $5 $0 Comparison with Neiqhborin Buena Park Seal Beach ♦ Newport Beach- I Garden Grove SD 7777�P untington Beach Irvine Ranch WD Newport Beach - Current La Habra Costa Mesa SD Fullerton 0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 Population of Service Area HF &H Consultants, LLC 11 4aencies • Charge for collection system costs only (OCSD treatment). • La Habra and Huntington Beach charge a fixed rate; all others have a flow -based component • City also maintains laterals from street to property line in addition to sewer collection services May 26, 2015 City of Newport Beach Sewer Rate Update Council Work Session Next Steps Council directs staff to issue Proposition 218 notice* to subject rate payers 45 -day Public Notice period commences* Written protests received and tabulated ** Protest Hearing If less than majority protest, Council can adopt rates* * In compliance with California Constitution Article XIII D, Section 6 ** In compliance with Resolution 2009 -58 Procedures for the submission and tabulation of protests. First and second reading of ordinance Rates effective in 30 days HF &H Consultants, LLC 12 May 26, 2015 City of Newport Beach Sewer Rate Update Council Work Session QUESTIONS & DISCUSSION HF &H Consultants, LLC 201 N. Civic Drive, Suite 230, Walnut Creek, CA 94596 John Farnkopf Sima Mostafaei Senior Vice President Senior Associate HF &H Consultants, LLC 13 May 26, 2015