Loading...
HomeMy WebLinkAbout7 Water Standby Charges Agenda Item # 7 ACTION To: Board of Directors From: Mary Chapman Date: June 03, 2009 Subject: Discussion of Water and Electric Standby Charges and Consideration of Amending the HDR Rate Study Contract to Prepare an Updated Analysis of Water Standby Charges 1. WHY THIS MATTER IS BEFORE THE BOARD In order to continue Electric and Water Standby Charges, the Board needs to hold a Public Hearing and adopt resolutions to continue the charges. Only the Board can hold public hearings and pass resolutions. 2. HISTORY In 1975, the District began imposing annual Electric and Water Standby Charges pursuant to California Public Utilities Code Sections 16475 and 16485 and California Government Code Section 54984 Uniform Standby Charge Procedures Act. The purpose of the standby charge is to collect revenues to help pay operating and maintenance expenses. The concept is that vacant lots benefit by being in close proximity to electric and water lines, and should, therefore, contribute to maintenance of those lines. We have not changed the standby rates in many years, and we do not propose changing them at this time. The original charges were as follows: Electric Standby: $10 per unimproved parcel less than 1 acre $20 per unimproved parcel greater than 1 acre Water Standby: $ 5 per unimproved parcel less than 1 acre $10 per unimproved parcel greater than 1 acre In 1991, the District increased the Water Standby Charge for unimproved parcels. The law required that the District follow a protest hearing process in order to increase a Water Standby Charge. This process is required by California Proposition 218. In order to increase the rate, the District was required to provide an engineer's report, documentation on the basis of the charge and the methodology and rationale of benefits conferred by the service. After a protest hearing was held, the Board adopted Ordinance No. 9105 increasing the Water Standby Charge to $80 per parcel regardless of the parcel's size. This charge has not been increased since 1991. In 2001, the District acquired the Donner Lake Water System. In 2002, the District acquired the Glenshire Water System. In 2004, the District began imposing Water Standby Charges to unimproved parcels in these developments. In 2006, it was determined that the District did not follow the proper procedure to add Water Standby Charges to the unimproved parcels within these two developments. As a result, the Water Standby Charges were reversed and the monies collected were refunded to the parcel owners. In order to continue either charge, the District must hold a Public Hearing. At the April 15, 2009 Board meeting, the Board scheduled a Public Hearing to be held on June 17, 2009. The Board also expressed an interest in continuing with the Electric Standby Charge and amending the HDR Rate Study Contract to prepare an updated analysis of the Water Standby Charge to be implemented with the FY10-11 billing cycle. 3. NEW INFORMATION HDR provided the District with a proposal to analyze the existing Water Standby Charge along with the water rate study work they are already under contract to perform. The attached proposal includes the Scope of Services to be performed including Initial Project Meeting/Data Collection, Review and Update of the Standby Fee Analysis and issuing a Letter Report. The estimated labor and expenses are $5,850. 4. FISCAL IMPACT The estimated revenue associated with standby funds is: Electric Standby Charges $ 21,100 Water Standby Charges 162,800 Total $183,900 The estimated cost associated with HDR's update to the Water Standby Charges is $5,850. Funding for this project will come from the Administrative Services FY09 operating budget. 5. RECOMMENDATION Approve HDR's cost proposal to update the Water Standby Charges in an amount not to exceed $5,850. M�(/V - -- -- --- Mary Cha a Michael D. Holley Administrative Services Manager General Manager May 14, 2009 Mr.Neil Kaufman Water System Engineer Truckee Donner Public Utility District PO Box 309 Truckee, California 96160 Subject: Standby Fee Analysis Scope and Proposal Dear Mr. Kaufman: HDR Engineering, Inc. (HDR)was retained by the Truckee Donner Public Utility District (District)to provide a comprehensive water rate study. In March of 2009, HDR provided a proposal to the District outlining a proposed scope of services. In discussion with District staff it was requested that HDR also provide a review of the current standby fee. Given the standby fee analysis was not included in the original scope of services provided to the District this letter proposal will detail the scope and fee for providing the requested services to the District. Overview of Standby Fees A standby fee is intended to recover costs from property owners in which service has been extended to the property but property owners have not yet connected to the water system. To calculate the standby fee the utility must identify the related capital expenditures for those services. Once the capital expenditure costs are determined the utility must define the unit basis for applying the charge. The unit basis can be applied to benefiting properties can be by area, frontage, or parcel basis. Scope of Services In order to complete the review of the District's existing standby fee the following proposed scope of services has been developed. Provided below is a detailed summary of the proposed scope of service based on HDR's understanding of the requested services. Task 1—Initial Project Meeting/Data Collection Task Objective: Determine the appropriate data needs and discuss the key assumptions, goals and objectives with District staff to assure that all parties have a mutual understanding of the goals, objectives, issues and concerns related to the analysis. HDR Engineering,Inc. 500IleIO:tA= �W)NT. 4,5)1 i a6,'(0 fax jiK,,f b3-;lit I o-.i z ti w,`'A 9 fir 554 The initial project meeting will allow for a discussion of the process used by the District to develop the current standby fee, and the applicable expenses HDR proposes to include to review and update the standby fee. In addition, the data requirements for the analysis can be discussed during this meeting. It is proposed that the project meeting take place when HDR staff are at the District's offices for other project related work. Expected District Staff Support for Task 1: ■ Have key staff participate in a kick-off meeting. Deliverables as a Result of Task 1: ■ Identification of data needs to complete the analysis. ■ Meet with District staff to review the current standby fee analysis. Task 2— Review and Update of the Standby Fee Analysis Task Objective: Review and update, as needed, the current standby fee based on generally accepted methodologies and current California legal requirements. In establishing standby fee, an important requirement is that they be developed and implemented in conformance with any legal requirements. The standby fee will be reviewed and updated based on the legal requirements as outlined by the California Code and the uniform standby fee act for those vacant parcels within the service area of the District's water service area. The first step will be to work with District staff to determine the applicable costs that will be included in the review and update of the current fee. The next step will be to determine the method of which the fee will be imposed. As noted previously,this can be based on front footage,parcel, etc. As part of this analysis, HDR will work with District staff to determine the most equitable method of charging the updated fee. Expected District Staff Support for Task 2: ■ Assist HDR, as needed, during the review and update of the standby fee. Deliverables as a Result of Task 2: ■ A review and update of the current standby fee. Task 3—Letter Report Task Objective: Provide a letter report detailing the analysis and results. Upon completion of the analysis, HDR will develop a draft letter report. The letter report is intended to be comprehensive in nature and document all of the activities undertaken as a part of the analysis, along with our findings, conclusions, and recommendations. HDR will provide an electronic copy of the draft letter report to the District for its review and comment. Any comments, suggestions, or corrections from the District concerning the draft letter report will be incorporated into the final letter report. Two (2) copies of the final letter report will be provided to the District, as well as an electronic version. HDR Engineering,Inc. Expected District Staff Support for Task 3: ■ Review the draft letter and provide comments as needed. Deliverables as a Result of Task 3: ■ One(1)electronic copy of the draft letter report. ■ Two(2)copies of the final report along with a final electronic copy. This completes the proposed scope of services. Should the District request additional services in addition to those presented above they can be provided at current billing rates and on a time and material basis. Proposed Time Schedule In discussion with District staff it has been determined that the analysis will be completed in tandem with the current water rate analysis being conducted for the District. Estimated Project Fees Based on current hourly billing rates, the following labor and expense estimates are provided for the District's model update. Summary of the Estimated Labor and Expenses Labor Fees: Task 1 —Initial Project Meeting/Data Collection $700 Task 2—Review and Update of the Standby Fee 3,900 Task 3 —Letter Report 1,300 Total Labor Fees $5,850 Plus: Expenses $0 Total Labor and Expenses HDR is willing to enter into a lump sum not to exceed contract for the proposed services. Should the District request any additional services, the services will be provided at the applicable hourly billing rates. All portions of this letter proposal can be expanded or reduced as mutually agreed upon in writing by the District and HDR. HDR Engineering,Inc. Summary The information provided above has detailed HDR's scope and fee for the review and update of the District's standby fee. Should you have any questions or require additional information or detail regarding this request, please do not hesitate to me. Sincerely, HDR ENGINEERING, INC. ov Shawn Koorn Project Manager HOR Engineering,Inc.