HomeMy WebLinkAbout1973-02-14; City Council; 1006-1; Report of Water Rate Study•THE CITY O F CARLSBAD
c2? //-<fc
CAL-IF'ORNIA
Agenda Bill No,
Referred To: City Council
Date: Feb 14, 1973
subject: Report of Water Rate Study Submitted By:
Jerome N. Pieti
Administrative Assistant
Statement of the Matter
At the regular meeting of the City Council on January 16, 1973, the
City Manager was directed to initiate further study of water rates
as they apply to multiple dwellings and agricultural users of the
City Water System. The study has been completed and is attached
as an exhibit to this Agenda Bill. Staff recommendations are in-
cluded in the attached study.
Exhibit
City of Carlsbad Study 2-73.
Staff Recommendations
Included in the attached study
c
CITY OF CARLSBAD
1200 Elm Avenue
Carlsbad, Ca 92008
February 16, 1973
To: Honorable Mayor and Members of the City Council
From: City Manager
Subject: Water Rates
Attached is a memorandum from Mr. Pieti which reflects the
Staff position on water rate adjustments. I am well aware
that multiple units in many cases received a rather substan-
tial rate increase. However, I agree with the Water Committee
that multiple units now bear their proportionate share of
system costs where before the homeowner was carrying an un-
fair proportion of the costs. The only practical way to meet
our bond obligation and reduce costs to multiple units is to
adjust our water rate, which as mentioned heretofore would
place a greater burden on the homeowner.
Mr. Pieti has additional information available for the City
Council if you wish it during discussion of the matter at
the February 20, 1973 meeting.
JA'CK B. ARNOLD
c o
CITY OF CARLSBAD
1200 Elm Avenue
Carlsbad, Ca 92008
To: City Manager
From: Administrative Assistant
Subject: Studyto determine feasibility of changing Ready-to-
Service Rates for Multiple Dwellings and Agricultural
Water Rates
Reference: (a) City Council Policy No. 14 of November 21, 1972
(b) City Manager's Memorandum of January 23, 1973
1. In accordance with references (a) and (b) the enclosed report
is submitted.
•&
EROME N. PIETI
February 16, 1973
STAFF REPORT ON RE-EXAMINATION OF EXISTING WATER RATES
1. At the regular January 16, 1973 meeting of the City Council a
study was requested which would re-examine specific water consumer
rates. A comprehensive study of water rates has been recently com-
pleted and was presented in a formal study format. Accordingly,
the information contained herein is presented in an abbreviated
form to preclude duplication of the completed study and to provide
Council information in as concise a form as possible.
2. The first charge by the Council was to re-examine current Ready-
to-Service rates for multiple dwellings to determine if these rates
a re equitable.
a. Using the definition established in the previous water rate
study of "A Ready-to-Service Charge being that monthly cost to a
consumer required by the City to enable the City to maintain a water
system ready to deliver water to a consumer" as the basis for con-
sideration, then the assessment of Ready-to-Service charge for
multiple dwellings is equitable. Whether the residents of a dwelling
place a demand upon the water system or not is not relevant. That
the City must provide, at a cost to the City, a capability to deliver
water is relevant. If the City is required to provide the service
to all dwellings, is it not equitable for all residents to share in
the support of the expense of that capability?
b. If all potential users of water should share in the support of
maintaining a delivery capability, how should they share? The
current effective ordinance provides for this sharing by first
defining an equivalent dwelling unit and establishing minimums for
all dwelling units based upon the lowest assessment existing which
is a monthly charge equivalent to service by a 5/8" meter.
c. If equitability is to be determined by comparison to other
systems, then value judgments are required. In this case value
judgments are not offered but similarities and differences as to
what exists in other systems are presented as information which the
Council may use for value judgments.
Comparable Multiple Dwelling Assessments
City of Oceanside
City of Burbank
City of Fullerton
City of Anaheim
City of Escondido
4 units of$3.75/month, includes
water per dwel1 ing
No special multiple dwelling
assessment
No special multiple dwelling
assessment
Ready-to-serve charge for main
meter multiplied by the number
of multiple dwellings
$.75/month
c o
STAFF REPORT ON RE-EXAMINATION OF EXISTING WATER RATES 2
3. The second charge by the Council was to re-examine current
agricultural water rates to consider possible changes.
a. Current agricultural water rates are the same as for
domestic consumers with the exception that Agricultural Credits
received by the City are passed on at a pro rata share usage"
basis to Agricultural Accounts. Presently there are 'approximately
111 Agricultural Accounts. The definitions and criteria used to
determine an agricultural user are the same as those used by the
Metropolitan Water District of Southern California.
b. An integral part of the agricultural rate equitability
arises from a comparison with industrial users who are granted a
reduced rate on any water used in excess of 200 units per month.
The equitability of this comparison is also a value judgment. A
vital consideration to this judgment is the sewerage rate for
industrial consumers. Industrial sewerage rates are based upon
water consumption. Currently the industrial sewerage rate is
$.12/unit, an increase of 100% over last year. Industrial water
consumers are in one respect charged twice for water consumption,
whereas agricultural users are not.
c. Comparison with actions of other water enterprises are
presented to aid Council in determining equitability.
City of Oceanside Agricultural rate same as domestic
with agricultural rebate
City of Burbank All consumer rates are equal
City of Fullerton Domestic, Commercial & Industrial
rates equal. Combination Domestic/
Irrigation rate 3-4<£ per gallon less
City of Anheim Commercial rate .13/unit less than
domestic rate. Agricultural rate
.13/unit less than domestic.
City of Escondido All consumer rates are equal.
4. The following information as to the current financial status of
the City's water enterprise is offered for consideration as it is
relevant to the question before the Council.
a. City Council Resolutions 397, 711 and 1779 require the City
water enterprise to produce net revenues equal to 1.35 the amount
of annual Water Revenue Bond Principal and Interest. This amount
is to remain after operation and maintenance costs have been paid.
We may deduct from this depreciation costs.
Water Revenue Bond Principal & Interest, FY 72-73 $185,006
1 .35
Total Net Revenues Required 249,758
Water Revenue Bond Principal & Interest, FY 72-73 185.006
Net Revenue remaining if 1.35 function achieved 64,752
Budgeted Operation and Maintenance, FY 72-73 595,977
Water Revenue Bond Principal & Interest, FY 72-73 185.006
Total Required 780,983
^EXAMINATION OF EXISTING WMESTAFF REPORT ON ^EXAMINATION OF EXISTING WffTER RATES 3
Total Revenues, First Half FY 72-73 $334,851
x 2
Projected Revenues, FY 72-73 669,702
Total Required for Operation, Maintenance 780,983
and Bonds, FY 72-73
Projected Revenues, FY 72-73 669,702
Deficit (111,281)
Depreciation Projection, FY 72-73 54.578
Deficit (57,703)
Reduced Water Purchases, FY 72-73 38.000
Deficit Water Enterprise, FY 72-73 ($19,703)
5. As shown above not only does the water enterprise not meet the
minimum requirements of producing a net revenue minus bond principal
and interest of $64,752, the enterprise can be projected to have a
deficit of approximately $19,703 for FY 72-73. The only viable
alternative which can be offered to the Council if reduction to
Multiple Dwelling Ready-to-Service Charge or Agricultural Water Rates
are considered is to increase these same rates and charges to single
dwelling domestic users.
6. It is recommended that Council not consider any rate or charge
reducations to-water- consumers at this time.
EROME N. PIETI