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Home My WebLink About1999-05-02 City CouncilBUDGET ’99 ’- 01 C~ty City of Palo Alto Manager’s Report TO:HONORABLE CITY COUNCIL ATTENTION: FINANCE COMMITTEE FROM: DATE: CITY MANAGER MAY 3, 1999 DEPARTMENT: UTILITIES CMR: 220:99 SUBJECT:PROPOSED WASTEWATER COLLECTION RATE INCREASE REPORT IN BRIEF This report requests Council approval of a wastewater collection rate increase of approximately 8 percent, effective July 1, 1999. This increase is necessary to offset increased treatment costs and to fund a higher level of Capital Improvement Program (CIP) projects in FY 1999-00. This is the first rate increase since 1993. In 1996, wastewater collection rates ’ were reduced 9 percent. CMR:220:99 Page I of 4 RECOMMENDATION Staff recommends that Council direct staff to prepare a resolution, in conjunction with adoption of the 1999-00 Budget, to increase Wastewater Collection revenue approximately 8 percent effective July 1, 1999. BACKGROUND A FY 1999-00 review of the Wastewater Collection Utility’ s financial obligations indicates that the current revenue level is insufficient to meet the Utility’s financial obligations. The Wastewater Collection Fund’s revenue requirement consists of a number of components, including the cost to operate and maintain a reliable system, to finance an appropriate level of capital improvement projects from current operating revenues, to recover the cost of treatment, and to fund a prudent reserve level. Any change in one or more of these components may trigger the need for a rate change. DISCUSSION In 1999-00, wastewater treatment cost is estimated to be 10 percent higher than FY 1998-99. In addition, CIP project expenditures will rise significantly compared to prior years. The current year’s CIP activity is particularly low since it is a design year with minimal construction activity. The largest CIP expenditure in 1999-00 is for Rehabilitation/Augmentation Projects, which total approximately $3.5 million. These two factors account for the need to raise rates. Impact of the Proposed 8 Percent Rate Increase: The proposed increase of approximately $711,000 will be spread between customer classes on an equal percentage basis. Table 1 shows the impact of the proposed rates on customer bills. TABLE 1 Impact on Customer Bills .Customers,--:.-.Current BH! ::, ..Proposed Bin. Residential Commercial/ CCF Restaurants/ CCF $13.00 2.54 $14.00 2.74 " :Difference:= $1.oo .20 5.15 .384.77 8% 8 8 CMR:220:99 Page 2 of 4 Wastewater Collection Rate Comparison: A recent survey of wastewater collection rates in Menlo Park, Redwood City, Mountain View and Los Altos indicates that Palo Alto’s propos.ed wastewater collection rate for residential customers is approximately 12 percent below the composite average of the surveyed cities. Rate comparisons for businesses are difficult because the rate structures vary between jurisdictions. Some cities charge different rates for different kinds of businesses or may charge by the number of toilets. In any event, it is apparent that wastewater rates for businesses in Palo Alto are higher than those charged in surrounding areas. Depending on further studies, including a cost of service analysis, subsequent rate adjustments may be applied primarily to residential customers with a lesser percentage applied to businesses. RESOURCE IMPACT This proposed 8 percent increase will increase the Wastewater Fund’s revenue by approximately $711,000 for FY 1999-00. For FY 1999-00, the Rate Stabilization Reserve will be over its maximum level according to the guidelines approved by Council, but in FY2000-01 it is projected to decline to near the target level. POLICY IMPLICATIONS This recommendation does not represent a change to existing policies. TIMELINE The proposed effective date for this rate change is July 1, 1999 but may be impacted by the conversion of the existing billing system to the Customer Information System (CIS). Staff resources are prioritized for this important conversion. However, a possibility exists that this rate change will be delayed beyond July 1, 1999. ENVIRONMENTAL REVIEW Adoption of the resolution to increase wastewater collection rates does not constitute a project under the California Environmental Quality Act. CMR:220:99 Page 3 of 4 ATTACHMENTS Rate Schedules S-1 and S-2 PREPARED BY:Lucie Hirmina, Manager, Utilities Rates Randy Baldschun, Assistant Director Administrative Services DEPARTMENT HEAD APPROVAL: CITY MANAGER APPROVAL: Director of Utilities FLEMING Manager CMR:220:99 Page 4 of 4 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 ........................$14.00 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. Issued by the City Council Supersedes Sheet No. S-1-1 dated 7-1-96 CITY OF PALO ALTO UTILITIES Effective 7-1-99 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 Palo Alto and on land owned or leased by the City. C. RATES: 1. Restaurants (A) Minimum charge per connection per month ...................$14.00 (B) Quantity Rates: Based on metered water, per 100 cubic feet ...................$5.15 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: $1,679 per million gallons ($1.26 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, lead, nickel, silver and zinc. Issued by the City Council Supersedes Sheet No. S-2-1 dated 7-1-96 CITY OF PALO ALTO UTILITIFS Effective 7-1-99 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 ....................$14.00 (B) Quantity Rates: Based on metered water per 100 cubic feet ....................$ 2.74 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. 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. Issued by the City Council Supersedes Sheet No. S-2-2 dated 7-1-96 CITY OF PALO ALTO UTILITIES Effective 7-1=99 Sheet No S-2-2