HomeMy WebLinkAbout1996-05-23 City CouncilTO:
BUDGET 1996-98
City of Palo Alto
City Manager’s Report
HONORABLE CITY COUNCIL
ATTENTION:FINANCE COMMITTEE
FROM:CITY MANAGER DEPARTMENT:UTILITIES
AGENDA DATE:
SI~JECT:
May 23, 1996
Wastewater Rate Decrease
CMR:234:96
REQUEST:
This report requests Council approval of a proposal to reduce Wastewater Collection Fund
revenue approximately 9 percent effective July 1, 1996. This decrease is necessary to reduce
the Rate Stabilization Reserve (RSR) which has risen above its maximum guideline level due
to increased groundwater discharge revenue, higher interest income, and unanticipated cost
savings in the operating and capital budgets.
RECOMMENDATIONS:
Staff recommends that Council adopt the attached resolution to decrease Wastewater Collection
Fund revenue approximately $870,000, or 9 percent, effective July 1, 1996.
POLICY IMPLICATIONS:
Approval of this rate proposal does not represent a change in existing policies.
DISCUSSION:
Reason for a Rate Decrease
Wastewater collection rates are established to pay operating and capital costs, Treatment Plant
charges, debt service, and to fund reserves. The revenue requirement for the Wastewater
Collection Fund is met through a combination of rates, reserves, and other revenue sources
such as groundwater discharge revenue, connection fees, and interest earnings on its reserve
balances. Changes in these financial obligations or reserve or revenue sources can require a
rate adjustment.
Rates are set at a level based on the adopted budget for the upcoming year. To the extent
CMR:234:96 Page 1 of 4
actual expenditures are less than the amount budgeted, the difference is transferred into the
RSR. If cost savings are substantial, the RSR balance may exceed its maximum guideline
level. That is what has occurred in the Wastewater Collection Fund at the close of FY 1994-95
and additional budget savings and higher revenue are projected to continue in FY 1995-96.
To lower the balance in the RSR, staff recommends an $870,000 or 9 percent rate decrease
effective July 1, 1996. Although it was anticipated that the RSR would exceed its maximum
guideline level in FY 1995-96, staff did not recommend a decrease at that time because electric
and water rates were also scheduled to decrease in FY 1995-96; and the plan was to defer the
rate decrease to FY 1996-97 to help offset possible future rate increases in other utilities.
Accordingly, this wastewater collection rate decrease will help offset FY 1996-97 proposed rate
increases in refuse and water.
Factors that Created a RSR Surplus
A number of factors have favorably impacted the RSR during FY 1994-95 and the current
fiscal year. During FY 1994-95, the bidding contractor’s fees for the CIP infrastructure project
were $466,000 less than the total amount budgeted. During FY 1994-95, there was a $568,000
savings in Treatment Plant expenditures compared to the budget and a similar amount of
savings is projected for the current fiscal year. During FY 1994-95 there were expenditure
savings below the operating budget of approximately $150,000 and savings of $57,000 on the
carry-over of a Roto-rooter contract.
On the revenue side, a $320,000 increase in groundwater discharge revenue is projected which
reflects increased activity in this area, and the billing of the Santa Clara Transportation Agency
for approximately $300,000 this year. Another factor is that cash is presently not being
expended on the CIP infrastructure project because the project has been delayed. Retaining
this cash in reserves has boosted interest earnings on the Fund’s portfolio approximately
$170,000 this year.
The result of these factors and others is that the RSR may exceed its maximum guideline level
for FY 1995-96 by $2.5 million. To effectively reduce this surplus in the RSR will require a
two to three year timeframe, a 9 percent rate decrease is proposed in FY 1996-97. The need
to reduce rates further in the following years will be affected by an anticipated debt service
obligation associated with the Treatment Plant’s replacement of the incinerator. Staff will
monitor these events, as well as the RSR balance, and advise Council accordingly.
Application of the Proposed 9 percent Revenue Decrease
A recent survey of nearby cities wastewater rates (attached), indicates that Palo Alto residential
wastewater rates are approximately 10 percent below corresponding rates in surrounding
communities. On the other hand, Palo Alto non-residential rates are almost a third higher than
corresponding rates in surrounding cities. In order to improve the rate
CMR:234:96 Page 2 of 4
competitiveness of Palo Alto non-residential rates, a larger percentage decrease is proposed for
the non-residential class compared to the residential class. The proposal applies approximately
a 9 percent decrease to non-residential customers, a 12 percent decrease to restaurants, and a
6 percent decrease to residential bills.
IMPACT ON CUSTOMER BILLS
The following table shows the impact of the proposed wastewater rate decrease on typical
monthly customer bills.
Table 1
Impact of the Proposed Wastewater Rate Decrease on Customer Bills
Current Proposed Dollar Percent
Customers Bill Bill Difference Difference
Residential $13.89 $13.00 $(0.89)(6.4)
Non-residential 2.80 2.54 (0.26)(9.0)
Restaurants 5.44 4.77 (0.67)(12.3)
FISCAL IMPACT
The fiscal impact of a 9 percent rate decrease will reduce the Wastewater Collection Fund
revenue by about $870,000. The RSR is projected above the maximum guideline level during
FY 1996-98 but is expected to gradually decline and fall within the Council approved
guidelines in FY 1998-99.
ENVIRONMENTAL ASSESSMENT
The adoption of the resolution does not constitute a project under the California Environmental
Quality Act, therefore, no environmental assessment is required.
CMR:234:96 Page 3 of 4
ATTACHMENTS
Rate Comparison
Resolution
Rate Schedules S-1, S-2
PREPARED BY:Lucie Hirmina, Manager of Utilities Rates
Randy Baldschun, Assistant Director of Utilities
DEPARTMENT HEAD REVIEW:
Jo
of Utilities
CITY MANAGER APPROVAL:
CC:Utilities Advisory Commission
CMR:234:96 Page 4 of 4
RESIDENTIAL WASTEWATER BILL COMPARISON
$ Monthly Bill
20
15
10
0
7.67 /1 1 6.92
~~/::::::::: ~ 14.29
~q’~<< 10.45
mPalo Alto E~Menlo Park E~Redwood City I~-"]Sunnyvale [~lMountain View
NON-RESIDENTIAL WASTEWATER BILL COMPARISON
(Based on 30 Ccfs Water Consumption)
$ Monthly Bill
100
80
60
40
20
0
76.20
65.10
58.72
..........47.10
~Palo Alto r’]Menlo Park E]Redwood City }’q3Sunnyvale E]Mountain View
RESTAURANT WASTEWATER BILL COMPARISON
(Based on 100 Ccfs Water Consumption)
500
400
300
20O
1 O0
$ Monthly Bill
477
433
330
257
192
Alto r-~Menlo Park r~Redwood City r’qSunnyvale []Mountain View
RESOLUTION NO.
RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO
AMENDING UTILITY RATE SCHEDULES S-I AND S-2 OF THE
CITY OF PALO ALTO UTILITIES RATES AND CHARGES
PERTAINING TO DOMESTIC AND COMMERCIAL WASTEWATER
COLLECTION
WHEREAS, the Council has considered the need for an
adjustment to wastewater collection rates;
NOW, THEREFORE, the Council of the City of Palo Alto does
hereby RESOLVE as follows:
SECTION i. Pursuant to Section 12.20.010 of the Palo Alto
Municipal Code, Utility Rate Schedule S-I (Domestic Wastewater
Collection and Disposa!), and Utility Rate Schedule S-2 (Commercial
Wastewater Collection and Disposal) of the Palo Alto Utilities
Rates and Charges are hereby amended to read in accordance with the
sheets captioned "Utility Rate Schedule S-l-l," "Utility Rate
Schedule S-2-I," and "Utility~Rate Schedule S-2-2," attached hereto
and incorporated herein by this reference. The foregoing Utility
Rate Schedules shall become effective on July i, 1996.
SECTION 2. The Council finds that the revenue derived from
the authorized adjustments of wastewater collection and disposal
rates by the City Manager shall be used only for the purposes set
forth in the Article VII, Section 2, of the Charter of the City of
Palo Alto.
SECTION 3. The Council finds that the adoption of this
resolution is exempted under the CEQA Guidelines under Section
15273 of Title 14 of the California Code of Regulations.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:APPROVED:
City Clerk Mayor
APPROVED AS TO FORM:City Manager
Senior Asst. City Attorney Deputy City Manager,
Administrative Services
Director of Utilities
960417 syn 0070951
DOMESTIC WASTEWATER COLLECTION
AND DISPOSAL
UTILITY RATE SCHEDULE S-1
A. APPLICABILITY:
This schedule applies to each occupied domestic dwelling unit.
B. TERRITORY:
Within the incorporated limits of the City of Palo Alto and on land owned or leased by the
city.
C. RATES:
Per Month
Each domestic dwelling unit ......................$13.00
D. SPECIAL NOTES:
1.An occupied domestic dwelling is designated as any house, cottage, flat, duplex unit,
or apartment unit having kitchen, bath, and sleeping facilities and to which utilities
services are being rendered.
2.Any dwelling unit being individually served by a water, gas, or electric meter will be
considered as continuously occupied.
3.For two or more occupied dwelling units served by one water meter, the monthly
wastewater charge will be calculated by multiplying the current wastewater rate by the
number of dwelling units.
4.Each developed separate lot shall have a separate service lateral to a sanitary main or
manhole.
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No. S-1-1 dated 7-1-93
Effective 7-1-96
Original Sheet No. S-1-1
COMMERCIAL WASTEWATER COLLECTION
AND DISPOSAL
UTILITY RATE SCHEDULE S-2
A.APPLICABILITY:
This schedule applies to all establishments other than domestic dwelling units.
B.TERRITORY:
Within the incorporated limits of the City of Pato Alto and on land owned or leased by the
city.
C. RATES:
1. Restaurants
(A) Minimum charge perconnection per month .................$13.00
(B) Quantity Rates:
Based on metered water, per 100 cubic feet ................$ 4.77
2.Any establishment discharging sewage in excess of 25,000 gallons or quality equivalent
of sewage per day as determined by metered water usage and sampling.
(A)Collection System Operation, Maintenance, and Infiltration Inflow:
$1,046.00 per million gallons ($0.78 per 100 cubic feet of metered water).
(B)Advanced Waste Treatment Operations and Maintenance Charge:
$789.00 per million gallons ($0.59 per 100 cubic feet of metered water).
(C)$ 174.00 per 1000 pounds of COD
(D)$ 372.00 per 1000 pounds of SS
(E)$ 2,321.00 per 1000 pounds of NH3
(F)$10,955.00 per 1000 pounds of toxics*
*Toxics include sum of chromium, copper, cyanide, Dead, nickel, silver and zinc.
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No. S-2-1 dated 7-1-93
Effective 7-1-96
Sheet No S-2-1
COMMERCIAL WASTEWATER COLLECTION
AND DISPOSAL
UTILITY RATE SCHEDULE S-2
(Continued)
3.All Other Establishments
(A) Minimum Charge per connection per month .................$13.00
(B) Quantity Rates:
Based on metered water per 100 cubic feet ..................$ 2.54
D. SPECIAL NOTES:
Upon application from establishments maintaining extensive irrigated landscaping, the
monthly charge will be based upon the average water usage for the months of January,
February and March. If a water meter is identified as exclusively serving irrigation
landscaping, such meter will be exempted from sewer charge calculations.
2.Sewage metering facilities may be required, in which case service will be governed by terms
of a special agreement.
Charges for large discharges (25,000 gallons per day or greater) will be determined on the
basis of sampling as outlined in Utilities Rule and Regulation 23C. However, for purposes
of arriving at an accurate flow estimate, discharge meters, if installed, can be utilized to
measure outflow for billing purposes. Annual charges will be determined and allocated
monthly for billing purposes.
4.Dischargers of Unmetered Contaminated Groundwater
Quantity rates for collection and treatment of the contaminated groundwater will be based
on the same rates applicable to metered usage for customers discharging less than 25,000
gallons of sewage per day. Discharge permits are issued by the Environmental Compliance
Manager at the Water Quality Control Plant, 2501 Embarcadero Way, Palo Alto.
5.Industrial Waste Discharge Fee
A fee of $500 will be required for the issuance of an Industrial Discharge Permit, including
any Exceptional Waste Permits. This fee may be reduced to $100 for a one-time batch
discharge permit.
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No. S-2-2 dated 7-1-93
~*"-~,.#~’~,~*~]Effective 7-1-96
~~"Sheet No S-2-2