HomeMy WebLinkAbout12 Water Rates and Public HearingAgenda Item # 12
ACTION
To: Board of Directors
From: Robert Mescher
Date: June 03, 2015
Subject: Approve the Notice of Proposed Water Rates for 2016 through 2020
and Set a Public Hearing Date Regarding Establishment of New
Water Rates
1. WHY THIS MATTER IS BEFORE THE BOARD
Only the Board of Directors can approve the water rate target and set the date for a
public hearing.
2. HISTORY
In 2013, the District contracted with Shawn Koorn, of HDR Engineering, Inc., to review
the Districts cost of service to provide water and its water rates. The revenue
requirement calculated by HDR indicated that the District should increase its rates 3%
annually from 2014 through 2017, and 2.5% annually thereafter for at least the next
six years.
The Board adopted an ordinance to raise rates an average of 3% annually for 2014
and 2015 in compliance with California's Proposon 2183 also known as the "Right to
Vote on Taxes Act." The main requirements of Prop 218 are:
• Rates must be based on actual cost of service;
• District must mail a notice to all rate payers and may mail a notice to property
owners of the proposed change in rates;
• District must hold a public hearing at least 45 days after the mailing of the
notices;
• Proposed change in rates is considered rejected if written protests are
received from a majority of the affected property owners; and if not rejected
• Rates can become effective 30 days after the public hearing and adoption of
an ordinance.
Since 2013, there has been upward pressure on the District's revenue requirements
due to needed accelerated pipeline replacement and California's continuing severe
drought.
The District has benefited from recent pipeline replacements which reduce water
losses and the cost of pumping water. Staff is recommending that the District
accelerate its efforts in replacing impaired pipelines to continue the reduction of water
losses and pumping costs, which will benefit customers in the long run. The estimated
additional cost is approximately $600,000 per year.
Additionally, the State is mandating that the District reduce its water production by
28% as compared to 2013. Staff is anticipating additional administrative costs in
educating the District customers and enforcing the regulations, all while the District's
revenue is reduced by lower consumption.
With these two new circumstances, the District will need to annually raise its rates by
approximately 6.0% in 2016 and 5.0% in 2017, then back to about 3% thereafter, in
order to maintain a minimum of $5 million in cash and reserves. The Water Utility's
reserve goal is $8 million.
The District contracted HDR to perform a review of the cost of service and rates. At
the May 20, 2015 Board Meeting, Shawn Koorn of HDR summarized the water rate
study and proposed rates to accomplish the District's goals. The Board directed staff
to present the Scenario 1 water rates, which increased rates an average of 6% in
20161 5% in 2017, 3% in 2018, 3% in 2019, and 3% in 2020.
3. NEW INFORMATION
If the Board adopts these new rates for 2016 through, the following schedule would be
implemented in compliance with Proposition 218:
• Approve the water rate increase subject to a public hearing -June 3, 2015
(tonight);
• Mail notices to customers and parcel owners of proposed rates and of public
hearing - June 30, 2015 or before;
• Advertise in local newspaper of proposed rates and of public hearing - July and
August 2015;
• Hold a public hearing regarding proposed water rates - August 19, 2015;
• Adopt an ordinance for the new water rates - August 19, 2015; and
• New rates would be effective the first bill printed after January 1st of each year.
Staff will annually review the adopted water rates and the financial position of the
Water Utility with the Board as part of the mid -year budget cycle review in the summer
of the subsequent years.
4. FISCAL IMPACT
Raising rates as proposed will increase the District's water revenue by approximately
$640,000, $580,000, $370,000, $390,000, and $410,000 in the years 2016, 2017,
2018, 2019, and 2020 respectively.
5. RECOMMENDATION
1) Approve the proposed new water rates for the next five years.
2) Set the public hearing for August 19, 2015 to receive input related to the proposed
water rates.
Robert Mescher Michael D. Holley
Administrative Services Manager General Manager
Notice of a Public Hearing Regarding 2016 through 2020 Water Rates
Notice of Proposed Water Rate Increases
Pursuant to the requirements of California Proposition 218 and the California Constitution Article XIII, this notice provides information
regarding consideration by the Board of Directors of the Truckee Donner Public Utility District ("District") to change water rates in
Fiscal Years 2016 through 2020. The District Board will hold a public hearing on the rates and receive public comment at the date, time
and location specified below in the NOTICE OF PUBLIC HEARING.
The District continues to provide high quality water and a reliable distribution system to meet current and future needs. A rate increase
is now needed due to accelerated replacement of impaired pipeline to reduce pumping costs, inflationary pressure on overall
expenses, and additional costs related to the unfunded State mandate to reduce water consumption. The District has successfully
improved efficiencies in many areas so that the average annual rate increase will be about 4% for the next five years.
Earlier this year, the District engaged HDR Engineering, Inc., the same consulting firm which performed an independent rate and cost
of service study in 2013. HDR completed an update of the rate study, incorporating current District data and the projected effects of
the unfunded State mandate to conserve water. The HDR updated study supports the proposed rate increases and the District's Board
accepted the study results. The Board is considering the proposed rate changes as shown below:
Summary of the Districts Proposed Rate Adjustments
FY 2015
FY 2016
FY 2017
FY 2018
FY 2019
FY 2020
Proposed Rate Adjustment
Existing
6.0
5.0%
3.0%
3.0%
3.0%
Metered Residential
3/4" and 5/8" x 3/4"
$57.28
$60.72
$63.75
$65.67
$67.64
$69.66
1"
Greater than 1" charged as
Commercial
68.32
72.42
76.04
78.32
80.67
83.09
Consumption (1,000 gal)
0 - 8000 gal (block 1)
$0.64
$0.68
$0.71
$0.73
$0.76
$0.78
8000 + gal (block 2)
Un-metered Residential
Zone 1
Zone 2
Zone 3
0.80
0.85
0.89
0.92
0.94
0.97
$65.00
$68.90
$72.35
$74.52
$76.75
$79.05
67.50
71.55
75.13
77.38
79.70
82.09
71.00
75.26
79.02
81.39
83.84
86.35
Zone 4
74.50
78.97
82.92
85.41
87.97
90.61
Zone 5
78.00
82.68
86.81
89.42
92.10
94.86
Zone 6
81.30
86.18
90.49
93.20
96.00
98.88
Zone 7
85.00
90.10
94.61
97.44
100.37
103.38
Commercial Fixed Charges
3/4" and 5/8" x 3/4"
$57.28
$60.72
$63.75
$65.67
$67.64
$69.66
1"
68.32
72.42
76.04
78.32
80.67
83.09
1.5"
96.04
101.80
106.89
110.10
113.40
116.80
2"
132.03
139.95
146.95
151.36
155.90
160.58
3"
221.02
234.28
246.00
253.38
260.98
268.81
4"
316.25
335.23
351.99
362.55
373.42
384.62
6"
474.37
502.83
527.97
543.81
560.13
576.93
8"
592.96
628.54
659.96
679.76
700.16
721.16
Commercial Consumption
$/1,000 gal
$1.57
$1.66
$1.75
$1.80
$1.85
$1.91
Elevation (Zone) Charges
Zone 1
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
Zone 2
0.35
0.40
0.45
0.50
0.55
0.60
Zone 3 0.70
Zone 4 1.05
Zone 5 1.40
Zone 6 1.75
Zone 7 2.10
0.80
0.90
1.00
1.10
1.20
1.20
1.35
1.50
1.65
1.80
1.60
1.80
2.00
2.20
2.40
2.00
2.25 2.50
2.70 3.00
2.75
3.00
3.60
2.40
3.30
The above proposed rates will be effective the first bills printed after January 1st of each calendar year of 2016 through 2020.
You May File a Protest
Under California Proposition 218, if you are the owner of record for a parcel or parcels or a tenant directly liable for payment of the
water fees subject to the proposed rate changes, you may submit a written protest. If a tenant pays the water fees, then it is the
responsibility of the property owner to provide tenants with this water rate change notice.
Protests must be filed in writing with the Deputy Clerk of the District any time before the close of the public hearing. Written protests
may be mailed or hand delivered to Deputy Clerk at 11570 Donner Pass Road, Truckee, CA 96161. Any written protest must be signed
by the property owner or the customer responsible for payment of the water fees and it must include the service address or assessor's
parcel number (APN). Only one protest may be filed per parcel or service address.
NOTICE OF PUBLIC HEARING
REGARDING PROPOSED WATER RATE INCREASES FOR 2016 THROUGH 2O20
Notice is hereby given that the Truckee Donner Public Utility District is considering water rate changes for
2016 through 2020. The District Board of Directors will hold a public hearing and receive public comment:
Date: Wednesday, August 19, 2015
Time: 6:00 p.m.
Place: District Board Room at 11570 Donner Pass Road, Truckee, California
Notice is further given that the District's Board may continue the public hearing to another time.
This notice has been sent to all District customers and property owners receiving water services. All
customers and interested parties are invited to express their views during the public hearing in written or
oral form or to submit written views prior to the time of the public hearing at the District office or by mail to
11570 Donner Pass Road, Truckee, CA 96161.
The other side of this notice describes the water rate increase amounts, background information, and how
to file a protest against the rate increases.
For more information or questions about the water rate increases, you may contact the District Office at
11570 Donner Pass Road, Truckee, CA 96161, or visit the District's web site at tdpud.org.