HomeMy WebLinkAbout2010-11-23; City Council; 20403; PROPOSED RATE INCREASE WATER SEWER TRASHs
CITY OF CARLSBAD AND CARLSBAD MUNICIPAL WATER
DISTRICT - AGENDA BILL
AB#
MTG.
DEPT.
20,403
11/23/10
FIN
PUBLIC HEARING FOR PROPOSED
RATE INCREASES FOR WATER,
SEWER, AND TRASH RATES
DEPT. HEAD QfcK
CITYATTY. £3^2.
CITY MGR. ( V*~^
RECOMMENDED ACTION:
Conduct a public hearing to receive public comment, select water rate option, and adopt
Resolutions No. 1406 and No. 2010-257 approving increases for water, sewer
and trash rates for properties within the Carlsbad Municipal Water District (CMWD) and the City
of Carlsbad (City), so long as there is not a majority protest regarding the proposed rate
increases.
ITEM EXPLANATION:
As part of the ongoing financial management program, the City annually prepares five-year
operating and maintenance forecasts for the water, sewer and trash funds.
The most recent forecasts for the water and sewer funds show that rate increases are needed
for the following reasons:
• Increased costs from the San Diego County Water Authority (SDCWA),
Metropolitan Water District (MWD), and Encina Wastewater Authority.
• Increased maintenance and operating expenditures.
• Maintenance of adequate operating and replacement reserves.
The proposed trash increase is equal to the amount of the increased cost for trash services; no
additional increase is proposed at this time.
PROPOSED WATER RATES:
In September 2009, the San Diego County Water Authority increased the cost of wholesale
water by 17 percent (from $695 to $814 per acre foot). In January 2011, the rate is expected to
increase an additional 9 percent for variable costs (from $814 to $877 per acre foot). In
addition to this variable cost, the fixed charges for water purchases are expected to increase by
more than 22 percent in January 2010 (from $3.5 million to $4.3 million).
DEPARTMENT CONTACT: Heiga Stover, 760-602-2429, Helga.Stover@carlsbadca.gov
FOR CITY CLERKS USE ONLY.
COUNCIL ACTION:APPROVED
DENIED
CONTINUED
WITHDRAWN
AMENDED
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CONTINUED TO DATE SPECIFIC
CONTINUED TO DATE UNKNOWN
RETURNED TO STAFF
OTHER - SEE MINUTES
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Page 2
In September 2010,CMWD sent a Notice to its customers that contained rates which represent
a maximum rate increase of 18% for water purchases and operational charges. Of the
maximum 18% increase in the water rates, a primary component is an expected pass through
directly attributed to the increase in the cost of purchased water, as well as increases to fund
on-going operating, maintenance, and replacement of the infrastructure, and to ensure that
operating reserves are adequate. As long as the rate adopted is equal to or less than the
maximum rate noticed, there is no requirement for subsequent notice mailing and public hearing
(see section titled "Public Noticing Requirements" below).
The proposed maximum rate increase is established to cover the increasing costs associated
with providing potable and recycled water to CMWD customers and to increase reserves to a
level which will allow the CMWD to maintain rates at more consistent levels in future years.
With no additional increase in water rates, the Water Utilities operating fund will reach a deficit
of approximately $2.1 million by the end of the current fiscal year Adopting the maximum rate
increase of 18% would be the first step to correcting the structural deficit and T providing Water
Utilities with a means to stabilize future rate increases and meet unforeseen cash demands.
Since the September Notice was sent to our customers, additional one-time funds of
approximately $3.2 million were received as settlement in a lawsuit brought by the city. As a
result of the positive effect of the one-time settlement monies, staff revisited the previous rate
proposal and recommends a second rate option for consideration, which has a lower rate
increase of 16 percent. The rate model used to develop this proposal assumes that rate
increases will stabilize at 8.5 percent annually after FY 2010-11, based on projections of fixed
and variable water costs provided by the San Diego County Water Authority (CWA). This
increase will cover the operating and capital expenses incurred in providing potable and
recycled water to our customers^
A third option, developed by staff, involves different increases in the fixed and variable rates that
customers pay for water delivery. This option increases the fixed rate for water delivery by 7.2
percent, while increasing the rate paid per unit, or variable rate, by 18 percent. Like the other
options, this increase covers the costs to the CMWD of providing water. This option would be
more beneficial to those customers who consume less water.
PROPOSED WASTEWATER RATES:
The proposed wastewater rates will increase by a maximum of 10% in order to pay for on-going
operating, maintenance, and replacement of the infrastructure, and to ensure that operating
reserves are adequate. The Wastewater fund continues to operate at a deficit; however, the
proposed rate increase will allow the fund to reach a positive balance and begin to rebuild an
operating reserve.
PROTEST LETTERS RECEIVED:
As of November 8th, three protests have been received. The protests are attached as Exhibit 2.
Most comments related to one or more of the following:
Page 3
• Frequency of trash pick up
• Encouraging citizens to reduce trash output
• There is an inequity to those already conserving
• Customers are being penalized
• Lower water usage should result in a lower sewer bill
• Rates were excessive in a recession
If there is no majority protest, staff is recommending that the Board of Directors and City
Council, after hearing public comment, ratify an option for rate increases..
PUBLIC NOTICING REQUIREMENT:
The California Constitution, Article XIIID, Section 6, states that local governments must hold a
public majority-protest hearing, and notify customers forty-five (45) days in advance of
increases in water rates. Customers must be notified forty-five (45) days in advance of the
hearing of the proposed rate changes.
The public hearing is to be held forty-five (45) days after noticing the ratepayers. Any person
interested in objecting to the increases may file a signed written protest with the City Clerk. The
written protest must contain the address of service, the rate change being protested, the
grounds of protest, and be received prior to the close of the public hearing. The protestor may
appear at the hearing and be heard on the matter.
Staff has taken the following actions at least 45 days prior to this public hearing:
• Affected utility customers and property owners were notified by mail of the public
hearing.
• The notice (see Exhibit 1) outlined the proposed rate changes.
• The notice outlined the protest process.
• The notice provided information relating to the public hearing.
FISCAL IMPACT:
The proposed rate increases, if approved, will be effective January 1, 2011, and will provide
adequate funding to properly operate and maintain Carlsbad's water and sewer systems, and to
pay for the cost increase to the provider of trash pick-up services. The proposed rates
increases for water and wastewater are the first step in correcting the structural deficits in the
operating funds and achieving adequate fund balances over a five year period, allowing the
CMWD to mitigate severe rate increases passes along from the CWA.
Page 4
ENVIRONMENTAL IMPACT:
The California Environmental Quality Act (CEQA) does not apply to the establishment or
modification of rate for the purpose of meeting operating expenses (CEQA Guidelines
Regulation 15273).
EXHIBITS:
1. Notice of Public Hearing.
2. Protest letters received.
3. Rate Schedule(s)
4. Resolution No. 1406 of the Board of Directors of the Carlsbad Municipal Water
District approving water rate increases.
5. Resolution No. 2010-257 of the City Council of the City of Carlsbad approving sewer
and trash rate increases.
Sewer
, VVJ
Proposed rates effective Jan. 1, 201 1
Current
Croup
1 - Residential (flat monthly charge)
1 - Multi-family (per unit of water usage)
II - Commercial (per unit of water usage)
III - Commercial (per unit of water usage)
IV - Commercial (per unit of water usage)
V - Other institutional (per unit of
water usage)
V - Elementary school (per student)
V - junior high school (per student)
V - High school (per student)
V - Boarding school (per stgdent)
VI - Bio-Hydration Research Lab Inc.
(per unit of water usage)
20.93
2.41
1.96
2.98
5.53
1.87
0.43
0.64
0.8S
4.45
1.70
1/1/2011
Proposed
23.03
2.65
2.16
3.28
6.08
2.06
0.47
0.70
0.94
4.90
1.87
Sewer and trash rates
Residential customers pay a flat monthly charge
for sewer services while most non-residential
customers pay a rate per volume of water usage.
The proposed sewer rate increase is 10 percent
for all sewer customers. The proposed rate
increase is set to generate revenues for
recovering costs associated with operations,
maintenance, and replacement funding of the
city's wastewater system, as well as establishing
adequate operating reserves.
The proposed trash collection rate increase
for residential and commercial customers is
2,65 percent. The proposed rate increase will
raise the rate for a single-family customer
from $18.87 to $19.37 a month. Commercial
customer fees will vary depending on the size of
the container(s) and the frequency of pick-ups.
Sample of proposed 2011
rate increase*
Water
Sewer
Trash
Total
Current
$44.26
$20.93
$18.87
$84.06
Maximum
$52.20
$23.03
$19.37
$94.60
*Rated based on a single family home using a
5/8 inch meter, using 12 units of water.
More information
For more information about the proposed rate
changes, contact the City of Carlsbad's utility
billing department at 760-602-2403 or visit
www.carisbadca.gov/flnance.
CITY OF
CARLSBAD
1635 Faraday Ave.
Carlsbad, CA 92008
760-602-2403
Notice of public hearing on
Proposed rate increases
Tuesday, Nov. 23
6 p.m.
City of Carlsbad
City Council Chambers
1200 Carlsbad Village Drive
Carlsbad, CA 92008
The rates for water, sewer and trash are
proposed to increase. This notice has
information on the proposed rate increases.
For more information about the
public hearing process or the proposed
water, sewer and trash rate increases, call
760-602-2403, or visit the city's website,
www.carlsbadca.gov/finance.
CITY OF
CARLSBAD
n recyded fapft
' ?hotogfjphi & iStockphotarom
2011 proposed water, sewer
and trash rate increases
The City of Carlsbad and the Carlsbad
Municipal Water District are preparing
for an increase in water, sewer and trash
rates. If the City Council and the Carlsbad
Municipal Water District Board of Directors
approve these changes on 11/23/2010,
the new rates will be effective 1/1/2011
and will be reflected on customers'
February 2011 bills.
Water rates
There are two components to the water rates
charged by the city: the delivery charge and the
usage charge. The delivery charge is a monthly
fixed charge based on the size of the meter.
The usage charge is based on the amount of water
used by water system customers. The proposed
rate increase for the residential and non-residential
delivery charges and usage charges is 18 percent.
The City of Carlsbad relies on imported water
for 100 percent of its potable water supply.
The primary reason for the proposed water rate
increase is the increasing cost of purchasing
imported water.
In addition, the proposed rates will cover the costs
of operations, maintenance and replacement
funding of the city's water system, as well as
establishing adequate operating reserves.
Residential water rates
The usage charges for residential customers are
tiered to help promote water conservation.
Water
» The first tier is for the first 12 units (1 unit:
gallons) per month.
748
CITY Of
CARLSBAD
• The second tier rate applies to all water usage
of more than 12 units and up to 20 units
per month.
« The third tier applies to all water usage of more
than 20 units per month.
The proposed water rate increases will raise the
water rate for a typical single family household,
with a 5/8 inch meter and using 12 units, by
$7.94 per month (from $44.26 to $52.20).
The exact amount of the increase will vary among
customers depending on actual water usage.
Multi-family tiers and rates are found on the table
to the right.
Commercial, agriculture, recycled and
irrigation rates
Non-residential customers have different water
usage needs than residential customers; therefore,
the usage rate is a flat per unit rate rather than a
tiered rate. The delivery charge is also a flat rate
based on meter size.
The per unit cost increase for non-residential
customers is a proposed increase of 18 percent:
• Non-residential and agriculture rates would go
from $2.64 to $3.12 per unit.
» Irrigation rate would go from $2.97 to $3.50
per unit.
• Recycled water rate would go from $2.52 to
$2.97 per unit.
Proposed rates effective (an.
Delivery charge - monthly
Meter size
5/8"
w
1"
1.5"
V£
2.5*
3"
4"
o"
8"
1C"
Single-family rates
Tier 1 (0-1 2 units)
Tier 2 (13-20 uniliU
Tier 3 (21-t- units)
Multi-family rates
Tier 1 (0-5 units)
Tier 2 (6-10 units)
Tier 3 (11 t units)
Comniercfai/non residential
Agricultural rates
Irrigation rate
Recycled rates
i unit -
1,2011
Current
16.78
21.18
30.25
53.08
80.30
116.05
152.90
234.58
461.73
733.98
1,051.88
2.29
2.95
4.02
1.93
2,18
2.59
2.64
2.64
2.97
2.52
748 gallotK
1/1/2011
Proposed
19.80
24.99
35.70
62.63
94.75
1 36.94
180.42
276.80
$44,84
866.10
1.241,22
270
3.48
4.74
2.28
2.57
3.06
312
3.12
3.50
2.97
The City of Carlsbad relies on
imported water for 100 percent
of its potable water supply.
The primary reason for the
proposed water rate increase
is the increasing cost of
purchasing imported water.
www.carlsbadca.gov
Original Message
From: dmorgan [mailto:dorganl@roadrunner.com]
Sent: Sunday, September 12, 2010 9:57 AM
To: Finance
Subject: Rate Increases
An 18% increase in water rates and 10% increase in sewer rates in the
middle of a severe recession, this is ridiculous. What is the
increase of the imported water to the city? If it is more than say
4%, the city should be protesting this on behalf of it's citizens.
Helga Stover
From:
Sent:
To:
Cc;
Subject:
Michael O'Brien
Wednesday, September 15, 2010 5:28 PM
Helga Stover, Colette Wengenroth
Christine Ruess
FW: Proposed rate increases
To all,
The email below was from a concerned citizen. Is there any logic to his request?
Michael
Original Message
From: Heather Locke On Behalf Of Finance
Sent: Monday, September 13, 2010 10:13 AM
To: Michael O'Brien
Subject: FW: Proposed rate increases
Original Message
From: Dave & Cyndee Batzler [mailto:batzsurf@gmail.coir!]
Sent: Saturday, September 11, 2010 10:24 AM
To: Finance
Subject: Proposed rate increases
If trash was only picked up every two weeks, the cost savings would offset the overall rate
increases by approximately $18 per household, which would almost eliminate the overall
proposed rate increases for all services.
Coupled with this, citizens should be encouraged to reduce their overall trash output which
could reduce the overall trash collection fees and also reduce the amount of materials going
into our landfills.
Thank you for reviewing and considering my suggestion.
Best regards,
Dave Batzler
768 602 9609
7110 Tanager Dr
Carlsbad, CA
92011
36 Jfan'is Way
•tebad.CA 92008
_ October 2010
Sub): Proposed Water and Sewer Rate Enfcfrjgj
Dear Mayor and City Council Members.
In accordance with Article 13D Section 6 of the California Constitution the following written protest, is
submitted. The proposed 18% increases in water deliver}' and water usage charges are absurd as well
as the 10% proposed increase in sewer rate. These proposed increases will result in a> 36 % increase
in water delivery, a> 27% increase in water rate, a> 30% increase in sewer charge in aboui 1 year for a
single family home using a 5/8 inch meter and 12 units, of water. (Since December 2008 - a> 63%
increase in delivery,, a > 31% increase in usage rate, and a-> 42% in sewer charge) Even the optimistic
economical present and future as outlined' in the City budget for 2010 - 2011 does not support such
increases, In fact without further explanation the City budget indicates double digit (percentage)
increasesJrtpersonnel expense while significant decreases in maintenance & operations expenses,
Water l-sagt The "Notice of public hearing art Proposed rate increases Nov. 23, 2010" states the
largest contributor to the proposed ! 8% increase is the Increasing COM of purchasing imported water
At the same time the City Budget states there u-as a 15% decrease in water sales (usage) from the
previous year. Although Metropolitan Water District has admitted to increasing rates to compensate for
lost revenue in water sales, hopefully the City has not adopted the same practice - but indications are
that the City has adopted this practice. It is obtuse to penalize ctistonsers tor conservation at the samfc
time promoting consafvaitioa. and penalizing customers for too mucfe. usage ~ a double ecfge, sword. In
keeping with: responsible government, the Wafer Enterprise should operate within its budget The
"T-nterpiise" should act as a true enterprise with goals of reducing cost and-increasing service. While
adjustments for inflation are authorized, I have never, seen a decrease for recession..
Water Delivery The proposed 18% increase for this fixed charge is out of line with the current
economic state and the reasons previously stated. I have not seen an increase in service. In fact the
water pressure available to my home sometimes falls below 40; psi. It is unfair for me to pay the same
rale as those neighbors that have up to 150 psi available to them. 1 also wish that it be made clear what
the .Delivery Charge entails- in justification of the proposed increase.
Sewer The proposed 10% increase for this fixed charge is out of line with the current economic state
and the reasons previously stated. Also as stated in previous correspondence, it is unclear why there is
a fixed cost for sewage Certainly it costs more to process 12 units than 3 units of sewage. 1 fee! *hat -it
my !o\v water/sewage usage that 1 am subsidizing those who have higher sewage output. ! fee) that rnv
cost should not exceed the proportional cent of the .service.
Sincerely,
//
Dale Rubacki
Current Rate
Fixed Increase
Variable Increase
Delivery Charge
5/8"
3/4"
1"
1.5"
2"
2.5"
3"
4"
6"
8"
Single-Family Rates
Tied (0-12ccfs)
Tier2{13-20ccfs)
Tier 3 (21+ ccfs)
Multi-Family Rates
Tier 1 (0-5ccfs)
Tier 2 (6-10ccfs)
Tier3(11+ccfs)
Commercial/Non-Reskfentiai
Agricultural Rates
Irrigation Rate
Recycled Water
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
16.78
21.18
30.25
53.08
80.30
116.05
152.90
234.58
461.73
733.98
1,051.88
2.29
2.95
4.02
1,93
2,18
2,59
2.64
2.64
2.97
2.52
Option 1
18.0%
18.0%
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
19.80
24,99
3S.70
62.63
94.75
136.94
180.42
276,80
544.84
86S.1C
1,241.22
2.70
3.48
4.74
2.28
2.07
3.06
3.12
3.12
3.50
2.S7
Option 2
16.0%
16.0%
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
19.46
24,57
35.09
61.57
93.15
134.62
177.36
272.11
535.61
851.42
1,220.18
2.86
3.42
4.66
2.24
2.53
3.00
3.G6
3.06
3,45
2.92
Option 3
7.2%
18.0%
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
18.00
22.70
32.43
56.90
88.08
124.41
163,91
251.47
494.97
786.83
1,127.62
2.70
3.48
4.74
2.28
2.57
3.06
3.12
3.12
3.50
2.97
m
ui
Exhibit 4
1 RESOLUTION NO. 1406
2 A RESOLUTION OF THE BOARD OF DIRECTORS OF
CARLSBAD MUNICIPAL WATER DISTRICT (CMWD) TO
3 APPROVE INCREASES IN WATER RATES.
4
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WHEREAS, the California Constitution, Article XIIID, Section 6, provides that
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local governments must hold a public majority-protest hearing, and notify customers
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forty-five (45) days in advance of increases in water rates; and
WHEREAS, the Carlsbad Municipal Water District is proposing a schedule of
10 maximum water rates that will apply when the Board has declared a certain percentage
11 cutback in usage which will be implemented according to "Exhibit 1;" and
12 WHEREAS, in September 2010, Carlsbad residents and property owners were
13 notified by mail of the proposed rate increases, thereby complying with the advance
14 notice requirement of forty-five days; and
NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the
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Carlsbad Municipal Water District, as follows:
17
1. That the above recitations are true and correct.
19 2. The Board of Directors of the Carlsbad Municipal Water District imposes
20 the rates that appear in "Exhibit 3, as Option No. 3."
21 3. These rates shall be effective as of January 1, 2011.
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PASSED, APPROVED AND ADOPTED at a Joint Special Meeting of the
Carlsbad Municipal Water District Board of Directors and the Carlsbad City Council,
held on the 23rd day of November, 2010, by the following vote to wit:
AYES: Board Members Lewis, Hall, Packard and Blackburn.
NOES: None.
ABSENT: Board Member Kulchin.
ATTEST:
|» = TORRAINE M. WOOD, Secretary
(SEAL)
Exhibit 4
1 RESOLUTION NO.
2 A RESOLUTION OF THE BOARD OF DIRECTORS OF
CARLSBAD MUNICIPAL WATER DISTRICT (CMWD) TO
3 APPROVE INCREASES IN WATER RATES.
4
5
WHEREAS, the California Constitution, Article XIIID, Section 6, provides that
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local governments must hold a public majority-protest hearing, and notify customers
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forty-five (45) days in advance of increases in water rates; and8
WHEREAS, the Carlsbad Municipal Water District is proposing a schedule of
maximum water rates that will apply when the Board has declared a certain percentage
11 cutback in usage which will be implemented according to "Exhibit 1;" and
12 WHEREAS, in September 2010, Carlsbad residents and property owners were
13 notified by mail of the proposed rate increases, thereby complying with the advance
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notice requirement of forty-five days; and
15 NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the
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Carlsbad Municipal Water District, as follows:
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1. That the above recitations are true and correct.18
19 2. The Board of Directors of the Carlsbad Municipal Water District has
20 adopted Option No. 3 imposes the rates that appear in "Exhibit 3-", as Option No.
21 3.
22 3. These rates shall be effective as of January 1, 2011.
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Exhibit 4
1 PASSED, APPROVED AND ADOPTED at a Special Meeting of the Carlsbad
2 Municipal Water District of the City of Carlsbad on the day of.
3 2010, by the following vote:
4
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AYES:
6
NOES:
7
ABSENT:8
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CLAUDE A LEWIS, PRESIDENT
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ATTEST:13
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15 LORRAINE M. WOOD, SECRETARY
16 (SEAL)
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RESOLUTION NO. 2010-257
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CARLSBAD, CALIFORNIA, TO APPROVE INCREASES IN
SEWER AND TRASH RATES.
WHEREAS, the California Constitution, Article XIIID, Section 6, states
governments must hold a public majority-protest hearing, and notify customers
(45) days in advance of increases in sewer and trash rates; and
Exhibits
that local
forty-five
WHEREAS, the City of Carlsbad is proposing an increase in sewer and trash
rates; and
WHEREAS, in September 2010, Carlsbad residents and property owners were
notified by mail of the proposed rate increases, thereby complying with the
notice requirement of forty-five days; and
advance
WHEREAS, the City Council of the City of Carlsbad approves the sewer rate
increases as set forth in "Exhibit 1 ."
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of
Carlsbad, California, as follows:
1 . That the above recitations are true and correct.
2. That the City Council of the City of Carlsbad approves the increases in
sewer rates, effective January 1 , 201 1 , as set forth in "Exhibit 1 ."
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PASSED, APPROVED AND ADOPTED at a Joint Special Meeting of the
Carlsbad City Council and Carlsbad Municipal Water District Board of Directors, held on
the 23rd day of November, 2010, by the following vote to wit:
AYES: Council Members Lewis, Hall, Packard and Blackburn.
NOES: None.
ABSENT: Council Member Kulchin.
ATTEST:
LORRAINE M. WOOD, City Clerk
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RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CARLSBAD, CALIFORNIA, TO APPROVE INCREASES IN
SEWER AND TRASH RATES.
WHEREAS, the California Constitution, Article XIIID, Section 6, states
governments must hold a public majority-protest hearing, and notify customers
(45) days in advance of increases in sewer and trash rates; and
Exhibit 5
that local
forty-five
WHEREAS, the City of Carlsbad is proposing an increase in sewer and trash
rates; and
WHEREAS, in September 2010, Carlsbad residents and property owners were
notified by mail of the proposed rate increases, thereby complying with the
notice requirement of forty-five days; and
advance
WHEREAS, the City Council of the City of Carlsbad approves the sewer a&4
trash rate increases as set forth in "Exhibit 1."
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of
Carlsbad, California, as follows:
1 . That the above recitations are true and correct.
2. That the City Council of the City of Carlsbad approves the increases in
sewer and trash rates, effective January 1 , 201 1 , as set forth in "Exhibit 1 ."
\\
\\
\\
\\
\\
Exhibit 5
1 PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council
2 of the City of Carlsbad on the day of , 2010, by
-i the following vote:
4
5
AYES:
6
NOES:
7
ABSENT:8
9
10
11
CLAUDE A LEWIS, Mayor
12
ATTEST:
13
14
LORRAINE M. WOOD, City Clerk
16 (SEAL)
17
18
19
20
21
22
23
24
25
26
27
28
t-'Uy of C«rl«hn4
Wn«lcwnliT Fiiiunrinl Mod. 1
.Sainninrv
Reve-Hies
Clwgos for Services
Fines and Forte tores
Income from Property S Investments
Eng Labor Reimbursed - CIP
Other Revenues
Connection Fees
Total Revenues
ExDendilyre.s
Ongoing Oporating Expanses
Personnel
Maintenance & Equipment
Capital Outlay
Other Financing Uses
Other Operating Expenses
Debt Service
Rate Funded Capital
Policy Expenditures
Keplacemen! Funding
Transfers to Capita. Fund
Total Expenditures
Cash Flows
Coverage
Wnir-um 1.25x
FY 2008/09
$ 8,456.050
75,283
167.989
44.148
$ 8,743,470
$ 1,532,465
5,632,785
478,121
55,977
$
$ 3.154,725
740,000
$ 11,494,073
( (Z, 750,603)
2.40 X
• ;' FY2WW10
sffc^lblMlffe:
FY 2009/10
$ 9,515.049
70,618
61.005
7D.730
$ 9,717,400
$ 1,6-7.430
5,214.833
77.072
50,977
S
$ 3.043.635
$ 10,003,747
$ (286,347)
4.02 x
PY 2OT8H1
«feni«ij«fc
FY 201 0/11
S 9.956,874
60,000
51,000
284.113
25,000
$ 10,376,987
$ 2.190.929
4,886.294
51,000
$
$ 3.400.000
* 10,508,223
$ (131,236)
4.42 x
FTZtlim
sgifeiMiifc
FY 2011/12
S 10.875,236
60.300
20.907
290.648
25.576
$ 11.272,665
$ 2.289.848
5.002.022
51,000
$
S 3,468.000
$ 10.810,870
$ 461,796
5.04 x
• FY'jtotjtm •••
iSiifeayBiS^^
FY 201 2/1 3
S 11,599.991 $
80.602
19.714
297.042
26,138
$ 12,003,486 $
$ 2,324,671 S
5,137.039
51,000
$ - $
$ 3.572.040 S
$ 11,084,750 $
$ 918,736 S
5.48 x
FY 3013/14 .
^•* 44«Si(«
FY 2013/14
12.190,928
60,905
47,276
304,171
26.765
12.630,045
2.380,494
5.285,507
51,000
3,714.922
11,431,922
1,198,122
5.71 x
"W281.4ttS '1
FY 2014/15
S 12.689,737
61,209
32,220
312,688
27,514
$ 13,123,368
$ 2,466,168
5,458,177
51.000
$
$ 3.863.518
$ 11,838,863
$ 1,284,504
569x
pS^E^^t^Tii^^
Operating Reserve
Beginning Balance
Cash Flows/Transfers
bndmg Balance
Days worth of Operating Expenditures
FY 2008/09
$ 1,663.533
(2.760.604)
S (1,087.071)
52 Days
FY 2009/10
S (1,087,071)
(288.347)
$ (1,373,418)
-72 Days
FY 2010/11
S (1.373.418)
(131.236)
S (1 ,504.654)
-77 Days
FY 2011/12
I (1.504.654)
461.796
$ (1.042,859)
-52 Days
FY 2012/13
$ (1.042,859) S
918.736
$ (124.122) $
-6 Days
FY 2013/1 4
(124.122)
1.198.122
1.074,000
51 Days
14%
FY 2014/1 5
$ 1.074,000
1.284,504
S 2.358.504
108 Days
30%
10/26/2010
; !36 Janis Way
flarlsbad, CA 92008
October 2010
Subj: Proposed Water and Sewer Rate Initj
Dear Mayor and City Council Members,
In accordance with Article 13D Section 6 of the California Constitution the following written protest is
submitted. The proposed 18% increases in water delivery and water usage charges are absurd as well
as the 10% proposed increase in sewer rate. These proposed increases will result in a > 36 % increase
in water delivery, a > 27% increase in water rate, a > 30% increase in sewer charge in about 1 year for a
single family home using a 5/8 inch meter and 12 units of water. (Since December 2008 - a > 63%
increase in delivery, a > 53% increase in usage rate, and a > 42% in sewer charge) Even the optimistic
economical present and future as outlined in the City budget for 2010 - 2011 does not support such
increases. In fact without further explanation the City budget indicates double digit (percentage)
increases in personnel expense while significant decreases in maintenance & operations expenses.
Water Usage. The "Notice of public hearing on Proposed rate increases Nov. 23, 2010" states the
largest contributor to the proposed 18% increase is the increasing cost of purchasing imported water.
At the same time the City Budget states there was a 15% decrease in water sales (usage) from the
previous year. Although Metropolitan Water District has admitted to increasing rates to compensate for
lost revenue in water sales, hopefully the City has not adopted the same practice - but indications are
that the City has adopted this practice. It is obtuse to penalize customers for conservation at the same
time promoting conservation and penalizing customers for too much usage - a double edge sword. In
keeping with responsible government, the Water Enterprise should operate within its budget. The
"Enterprise" should act as a true enterprise with goals of reducing cost and increasing service. While
adjustments for inflation are authorized, I have never seen a decrease for recession.
Water Delivery. The proposed 18% increase for this fixed charge is out of line with the current
economic state and the reasons previously stated. I have not seen an increase in service. In fact the
water pressure available to my home sometimes falls below 40 psi. It is unfair for me to pay the same
rate as those neighbors that have up to 150 psi available to them. I also wish that it be made clear what
the Delivery Charge entails in justification of the proposed increase.
Sewer. The proposed 10% increase for this fixed charge is out of line with the current economic state
and the reasons previously stated. Also as stated in previous correspondence, it is unclear why there is
a fixed cost for sewage. Certainly it costs more to process 12 units than 3 units of sewage. I feel that at
my low water/sewage usage that I am subsidizing those who have higher sewage output. I feel that my
cost should not exceed the proportional cost of the service.
Sincerely,
Dale RCibacki
Y OF
CARLSBAD
Memorandum
June 8, 2010
To: Mayor and City Council
From: City Manager j i .^
Re: Solid Waste Rate Analysis Information
www.carlsbadca.gov
Date:
fcFwww* ^•^wWW^wWi
City Clerk
Asst. City CMc
Deputy CMc
Book
Per your request, please find attached the information relating to the Solid Waste Rate Analysis
that was previously distributed to the City Council. Please let me know if you would like
additional information.
Thank you.
Attachments
LH/src
City Hall
1200 Carlsbad Village Drive 1 Carlsbad, CA 92008 I 760-434-2820 I 760-720-9461 fax
ACM DCM CA_CX: www.car|sbadca.gov
AH Receive
,^ c i T Y o F For the Information of the:
V CARLSBAD
DateTlfa? City Manager
Memorandum
April 13, 2010
To: Lisa Hildabrand, City Manager
From: Sheree Kay Hildebrandt, Associate Analyst
Via: Glenn Pruim, Utilities Director
Re: Solid Waste Rate Comparisons/Storm Water Fee (Trash Surcharge Fee)
Calculation Update
The following information is in response to the City Council's request at the Council Workshop on March 16,
2010 for additional information regarding the solid waste rate study, Oceanside's benchmark analysis, and
storm water fee calculations and the commercial rate impact.
Carlsbad's Rate Study
In 2009, a rate study was completed by R3 Consulting Group, Inc. for the City of Carlsbad. The study inr iuded
an analysis using the solid waste industry standard for profit and operating ratios for determining 'he
appropriate level of a potential rate increase.
R3 Consulting Group, Inc. recommendation and focus was to determine what if any rate adjustment is
appropriate since the last rate adjustment in 2005 on the cumulative profit. The "standard" was pre$c;r f:.'d
for what constitutes a reasonable profit with the cumulative profit the basis for comparison to the standard.
The consultant does not recommend considering 5-year rolling average or data prior to 2005 for the purpose
of the current rate adjustment consideration since the City has already addressed that time period.
The study concluded a 3.3% to 5.8% solid waste rate increase would ensure rates would keep the hauler's
profit level within the solid waste industry standard profit level of 9.9% to 13.6% at least through 2011 oased
on annual profit levels.
Profit Level Comparison
The city's waste hauler's annual profit levels are based on their annual financial performance, while the
average profit levels are based on a base year, averaging forward through to a rate adjustment year or to a
current year of interest. Since 2002, the waste hauler has been at or above the solid waste industry standard
profit ratio of 9.9% to 13.6% with the exception of the annual profit level in 2004 and in 2009.
Rolling Averages
The main use of a rolling average indicator is its smoothing out function. In this way, the rolling or moving
average removes short-term fluctuations and follows the prevailing trend. The oldest data is removed from
the rolling average when a new year is added to the computation. Rolling averages are frequently used to
understand underlying trends and helps in forecasting. The solid waste hauler's rolling averages indicate a
downward trend over a period of years, and a forecast of the rolling average falling below the industry
standard in 2011.
Utilities Department
5950 El Camino Real I Carlsbad, CA 92008 760-438-2722 I 760-431-1601 fax
Solid waste rate comparisons
April 1, 2010
Page 2
The table below includes annual profit levels, average profit levels based on 2002 forward, 5-year profit level
rolling averages and the impacts of a 3.3% increase.
Calendar
Year
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Annual
Profit
Level*
213%
17.9%
9.4%
19.6%
143%
13.7%
9.9%
9.7%
9.7%
5.0%
0.5%
Annual Profit
Level with a
3.3%
Increase
9.9%
5.2%
Average '02
forward Profit
Level**
21.3%
19.6%
16.2%
17.1%
16.5%
16.0%
15.2%
14.5%
12.9%
12.1%
11.0%
Avg. Profit
Level with
3.3%
Increase
2005 forward
12.2%
11.3%
5-Yr Rolling
Average
16.3%
14.9%
13.3%
13.2%
11.5%
9.7%
6.9%
5-Yr Rolling
Avg. with a
3. 3% Increase
10.6%
"7 #9%
* Waste Management's annual profit data for 2002 through 2004 does not include pass-through costs. The rate study
included pass-through costs in the profit level calculations for 2005 through 2012. For the purpose of showing history,
the annual profit for 2002 through 2004 assumes the same percentage of pass-through costs as 2005.
**The average profit level is based on averaging annual profit levels forward.
Annual and Average Profit Levels
High Profit Level
Annual Profit Levels
Avg Profit Levels 2002 forward
•—•Low Profit Level
-sir'With 3/3% Increase
• *-< With 3/3% Increase
20.0% -j._.fil*«*jN- -
15.0% ••: \.
10.0% ;--:• —————
5.0% •[
0.0% 4 - - -
^
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
5-Year Profit Level Rolling Averages
' 20.0% :
—&1*5 Year Rolling Average
—A—With 3.3% increase
——High Profit Level
Low Profit Level
2006 2007 2008 2009 2010 2011 2012
Solid waste rate comparisons
April 1, 2010
Page 3
Oceanside's Benchmark Study
In 2009, a benchmark study was completed by H F & H Consulting, LLC for the City of Oceanside (attached).
The benchmarking process consists of two stages.
Phase I involved adjusting the published rates of the various cities to reflect actual effective compensation to
service providers for provision of comparable service and the relative number of customer accounts. There
was an effort to adjust for comparability of service between seventeen cities, excluding the City of San Diego
and the County of San Diego, that provide manual can service and automated cart service. Adjustments
were made for franchise fees, AB 939 fees, storm water management funding, household hazardous waste
funding, rate stabilization funding, billing costs and street sweeping funding. The rates were also adjusted to
assume the same number of residential and commercial customers with various service levels. The purpose
of Phase I was to identify the cities with the five lowest adjusted rates for Phase II.
Phase II involved comparing adjusted rates for the five jurisdictions ranked lowest in San Diego County.
Phase II adjustments address areas in which services are not provided or services provide an unusual high
level of a service. Additional services requested for adjustment for Phase II for 2009 were bulky item
collections, clean-up events, beach and litter can collection, roll-off service, and the provision of yard and
recycling carts and crates.
The purpose of Phase II adjustments were to account for real differences in the level of service provided to
Oceanside and the identified cities in Phase I. The goal of Phase II was to determine what percentage
adjustment to the service provider's rates would ultimately be required to match the adjusted rates of the
third lowest city.
The results of this study indicated that the City of Carlsbad has the lowest service revenue in the county and
is 5.7% lower than the next lowest city, Santee.
The service revenue represents the adjusted revenue to the waste hauler.
Summary of Final Comparison - Final Adjusted Benchmarked Service Revenue
Highest to Lowest
CITY
San Marcos
Oceanside
Escondido
National City
Santee
Carlsbad
SERVICE
REVENUE
$1,015,760
$ 989,953
$ 947,316
$ 936,799
$ 931,589
$ 878,552
NOTES
Oceanside's revenue is 5.4% higher than the 3rd lowest city in the county, National City
Carlsbad's revenue is 5.7% lower than the 2nd lowest city in the county, Santee
Solid waste rate comparisons
April 1, 2010
Page 4
Storm Water Fee (Trash Surcharge Fee) Calculation
The City of Carlsbad Storm Water Protection Program completed a Regulatory Fee Study Report in 2003 in
compliance with the City's National Pollutant Discharge Elimination System (NPDES). Prevention, reduction,
removal, transport and disposal of the pollutants found in storm water and other drainage flows are
considered part of the City's solid waste handling services. The storm water fees, known as trash surcharge
fees, are recoverable through the collection of fees assessed to solid waste service users throughout the city.
Storm water/trash surcharge fees are calculated first by determining the revenue required to fund activities
relating to storrn water protection such as street sweeping, litter removal, storm drainage light maintenance
and storm water pollution prevention plans. The costs are allocated to residential and commercial customers
based on an equitable apportionment of all the activities related to storm water.
Commercial service rates ar.e determined by first calculating the percentage revenue required to generate
the fair share amount allocable to commercial service users and are then spread uniformly across the
commercial service rates, providing approximately 53% of the storm water/trash surcharge fee funding. In
this manner, those businesses requiring the greatest amount of service will pay a proportionately higher rate
commensurate with the amount of waste generated.
Residential service rates are calculated by dividing the total fair share allocation of costs to residential users
by the yearly average number of residential users, providing approximately 47% of the storm water/trash
surcharge funding.
Residential customers will continue to pay $3.46 per month. If the proposed solid waste rate increase of
3.3% is approved, the percentage for the commercial sector will change from 23.09% to 22.35%, keeping
the total amount of commercial storm water/trash surcharge fees collected will be the same. For example, a
3 yard bin picked up once weekly comparison is:
Commercial - Monthly
Base Rate to Hauler
Storm Water Fee
AB 939 Fee 2%
Franchise Fee 7.5%
Paid by Business
Current Solid Waste Rate Allocation
s$
$
$
s
Increase to
Increase to
72.68
18.54 (23.09%)
1.61
6.02
98.85
Business (2.6%)
Base Rate to Hauler
Proposed
$
$
S
$
$
$
$
increase 3.3%
75.08
18.54
1.66
6.22
101.50
2.65
2.40
Allocation
(22.35%)
For more information, please contact Sheree Kay Hildebrandt at 760-602-2776 or via e-mail at
sheree.hildebrandttgcarlsbadca.gov
Majority Protest Public Hearing
Water, Sewer and Solid Waste
Rate Increases
November 23, 2010
Calendar
June 2010:Budget Adoption
September 2010:Public Notice mailed
November 23:Hold Public Hearing
Set rates
January 1: Effective Date
Public Noticing
•Mailed to all property owners
•Copy mailed with September utility bill
•Posted on city website
•Q&A posted on city website
•Information sent to e-news list
•Announcements sent to city’s Twitter followers
•Information sent to the media
Agenda
Water Supply Update
MWD/CWA Rates and Charges
Rate Options & Impacts
Water
Sewer
Trash
Open Public Hearing
CMWD Board Action
City Council Action
4
Water Supply Update
5
Carlsbad’s Water Supplies
•CMWD provides both potable and recycled
water to its’ customers
•Recycled Water
–Leucadia Wastewater District
–Vallecitos Water District
–Carlsbad Water Recycling Facility
•Potable Water
–San Diego County Water Authority
Potable Water Supplies
•County Water Authority Supplies
–Metropolitan Water District
–Imperial Irrigation District
–Transfers from other water agencies
–Canal Lining
–Local Storage
•Northern California
•Colorado River
Reactions to Water Supply Limitations
•MWD Unable to Meet Demands
•CWA Establishes Water Reduction Targets
•CWA Develops Model Drought Ordinance
•CMWD Adopts Drought Ordinance
•CMWD Prepares Rate Study and Adopts
Tiered Water Rate Structure
•SBX7-7: Water Conservation Act of 2009
Potable Water Purchased (Acre Feet)
4%
-5%-5%
-14%0%
0
5000
10000
15000
20000
25000
FY06 FY07 FY08 FY09 FY10 Est. FY11
Total Rate Per AF
(Including Fixed Costs)
$616 $657 $691
$754
$869
$993 $1,039
$1,157
$-
$200
$400
$600
$800
$1,000
$1,200
$1,400
Jan. 2005 Jan. 2006 Jan. 2007 Jan. 2008 Jan. 2009 Sept. 2009 Jan. 2010 Jan. 2011
TOTAL RATE PER AF
May/June 2010
•Update on effect of conservation on revenues
•Discussed rate increases needed to support
operating budgets
•Objective of 30% operating reserve by 2015
Public Notice
Mailed in September 2010
–Requirement of Proposition 218
–Maximum Rate Increase per Notice
–Water –18% maximum increase
–Sewer –10% maximum increase
–Trash –2.65% maximum increase
–Average single family utility bill 12.5% increase
12
The cost of water continues to go
up…..
CWA/MWD Cost Increase
1/1/09 13.2% increase (commodity)
11.7 % increase (fixed charges)
9/1/09 17.1% increase (commodity)
1/1/10 21.2% increase (fixed charges)
1/1/11 9 .0% increase (commodity)
22.0% increase (fixed charges)
13
Water Fund
•Maximum noticed 18% increase:
–Pay for increased cost of wholesale water
–Pay for ongoing operations at current levels of
service
•Reserve Objective –by 2015:
–30% (110 days) of annual operating expense
14
Proposed Water Rate Increase
(continued)
Delivery Charge -Residential
•Current Rate $16.78 per month
•Noticed Rate $19.80 per month
Commodity Charge -Residential
•Current Rate $2.29 per unit
•Noticed Rate $2.70 per unit (Tier 1)
•12 units per month
Proposed Water Rate Increase
(continued)
Non-residential -$2.64 to $3.12 per unit
Agricultural -$2.64 to $3.12 per unit
Irrigation -$2.97 to $3.50 per unit
Recycled -$2.52 to $2.97 per unit
Water Rate Options
Option 1 Option 2 Option 3
Maximum
Current 16% Fixed 18% Fixed 7.2% Fixed
Rate 16% Variable 18% Variable 18% Variable
Fixed 16.78$ 19.46$ 19.80$ 18.00$
Variable 27.48$ 31.88$ 32.40$ 32.40$
Total 44.26$ 51.34$ 52.20$ 50.40$
Water Rate Options
18
Other Agencies
$0
$10
$20
$30
$40
$50
$60
$70
Water Rate Comparison -As of September 19, 2010
Sewer Fund
Fund Balance and Operating Reserve
•Proposed 10% increase:
–Pay for ongoing operations at current levels of
service
•Reserve Objective –by 2015:
–30% (110 days) of annual operating expense
20
Residential Sewer Rates
10% increase
Current Rate -$20.93 per month
Proposed Rate -$23.03 per month
Non-Residential Sewer Rates
Minimum monthly rate
Based on flow and wastewater strength characteristics
Other Agencies
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
Sewer Rate Comparison -As of September 19, 2010
Trash Rate
•Proposed 2.65% increase:
–To pay for increase in cost of service provider
–Single family rate will increase $0.50 per month
•$18.87 to $19.37 per month
–All categories will increase 2.65%
24
Monthly Utility Rate Increases
Options are for Water Rates Only
Option 1 Option 2 Option 3
Maximum
16% Fixed 18% Fixed 7.2% Fixed
Current 16% Variable 18% Variable 18% Variable
Rate (water only)(water only)(water only)
Water 44.26$ 51.34$ 52.20$ 50.40$
Sewer 20.93$ 23.03$ 23.03$ 23.03$
Trash 18.87$ 19.37$ 19.37$ 19.37$
Total 84.06$ 93.74$ 94.60$ 92.80$
11.5%12.5%10.4%% increase
Protest Letters (3)
•Frequency of trash pick-up
•City should encourage reduced trash output
•Not fair to those already conserving
•Customers are being penalized
•Lower water usage should result in a lower
water bill
•Rates are excessive in a recession
26
PUBLIC HEARING
Monthly Utility Bill –Options
Options are for Water Rates Only
Option 1 Option 2 Option 3
Maximum
16% Fixed 18% Fixed 7.2% Fixed
Current 16% Variable 18% Variable 18% Variable
Rate (water only)(water only)(water only)
Water 44.26$ 51.34$ 52.20$ 50.40$
Sewer 20.93$ 23.03$ 23.03$ 23.03$
Trash 18.87$ 19.37$ 19.37$ 19.37$
Total 84.06$ 93.74$ 94.60$ 92.80$
11.5%12.5%10.4%% increase
CMWD Board of Directors
Adopt Resolution No. 1406
Option 1: 16% rate increase
Option 2: 18% rate increase (maximum)
Option 3: 7.2% increase to the Fixed Rate
18% increase to the Variable Rate
Action Items –Effective 1/1/2011
City of Carlsbad City Council
Adopt Resolution No. 2010-257
Increase Sewer Rate 10%
Increase Trash Rate 2.65%
Action Items –Effective 1/1/2011