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HomeMy WebLinkAbout2011-12-06; City Council; 20750; PUBLIC HEARING PROPOSE INCREASES WATER SEWER RATES10 CITY OF CARLSBAD AND CARLSBAD MUNICIPAL WATER DISTRICT - AGENDA BILL rffdA AB# 20.750 MTG. 12/06/11 DEPT. FIN PUBLIC HEARING FOR PROPOSED INCREASES FOR WATER AND SEWER RATES DEPT. HEAD^t^s CITY ATTY. £/C CITYMGR. (U^^ RECOMMENDED ACTION: Conduct a public hearing to receive public comment and adopt Resolutions No. 1430 and No. 2011-275 approving increases for water and sewer 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 and sewer funds. The most recent forecasts for the water and sewer funds show that rate increases are needed for the following reasons: • Increased cost of wholesale potable and recycled water • Increased maintenance and operating expenditures • Maintenance of adequate operating and replacement reserves PROPOSED WATER RATES: The proposed maximum increase to water rates paid by Carlsbad residents located within the Carlsbad Municipal Water District is 10 percent, effective January 1, 2012, and an additional 10 percent, effective January 1, 2013. As long as the rates adopted are equal to or less than the maximum rates noticed, there is no requirement for a subsequent notice and public hearing (see section titled "Public Noticing Requirements" below). The increase for January 2013 will be reviewed during the budget adoption process for FY2012-13. A primary component of these increases, 65 to 70 percent, is directly attributed to the increases in the cost of purchased water. The City of Carlsbad purchases 100 percent of its potable water from the San Diego County Water Authority (CWA). The purchase price includes two components - fixed and variable charges. The variable charges are paid for the actual DEPARTMENT CONTACT: Helga Stover, 760-602-2429, Helga.Stover@carlsbadca.gov FOR CITY CLERKS USE ONLY. „ / COUNCIL ACTION:APPROVED DENIED CONTINUED WITHDRAWN AMENDED Kn'aan CONTINUED TO DATE SPECIFIC CONTINUED TO DATE UNKNOWN RETURNED TO STAFF OTHER -SEE MINUTES D D D D Page 2 water, or commodity, purchased and the transportation cost and is charged on a per acre foot basis. In January 2012, the CWA is expected to increase the cost of wholesale water by 8 percent, from $887 to $957 per acre foot. The fixed charge component incudes charges for customer service, emergency storage, infrastructure access, ready-to-serve charges, and capacity reservation charges. These are allocated to member agencies of the CWA on an annual basis and billed over a 12 month period. These fixed charges pay for everything except the water and transportation of the water. Fixed charges for water purchases are expected to increase by about 18 percent in January 2012. Projected increases to fixed and variable charges for water purchased from CWA are expected to be about 10 percent or more in January 2013. The remaining 30 to 35 percent of the increase are to fund on-going operating, maintenance, and replacement of the infrastructure for the Carlsbad Municipal Water District (CMWD). The CMWD is also setting aside a portion of the rates to build an adequate reserve. The maximum rate increases are consistent with CMWD's plan to increase the fund balance (reserve) to 30 percent of operating expenses by the end of Fiscal Year 2014-15. The 30 percent fund balance is an amount reserved for unanticipated emergencies (such as a water main break) and unexpected fluctuations in revenues or expenditures (such as decreases in water purchase quantities or rising water costs) which could affect the district's ability to fund ongoing operating and maintenance costs. In preparing the five-year financial forecast for the water utility, CMWD uses a rate model to develop proposed rate increases. The rate model includes expenditures for the cost of purchased water from the CWA, with assumptions about expected increases based on information provided by the CWA. In addition, the model takes all other expenditures, such as personnel, maintenance and operations, and replacement of infrastructure, and calculates the funds remaining at the end of each year. The district's objective is to have the balance of funds equal to 30 percent of the annual operating expense, by 2014-15. In order to meet this objective, the rate model calculates the estimated increase needed for each year. Current estimates indicate that rate increases will stabilize at 5 to 9 percent, annually, after FY 2013-14, based on projections of fixed and variable water costs provided by the CWA. PROPOSED SEWER RATES: The proposed maximum wastewater/sewer rates are 6.5 percent, effective January 1, 2012 and 6 percent, effective January 1, 2013. These proposed rate increases are needed for ongoing operating, maintenance, and replacement of the infrastructure, and to ensure that operating reserves are replenished and adequate. Revenues from sewer service charges decreased when customers began using significantly less amounts of water due to the drought and ensuing conservation efforts. At the same time, expenditures for maintenance activities increased in order to comply with the state mandated Wastewater Discharge Requirements. The decrease in revenue, coupled with the increase in costs, rapidly depleted the cash balance of the utility. The proposed rate increases will allow the fund to reach a positive balance and to establish a 30 percent reserve by fiscal year 2014-15. Like the increases for water rates, there is no requirement for a subsequent notice and public hearing as long as rates are equal to or less than those adopted in this public hearing (see section titled "Public Noticing Requirements" below). The increase for January 2013 will be reviewed during the budget adoption process for FY2012-13. PageS PUBLIC NOTICING REQUIREMENT: The California Constitution, Article XIIID, Section 6, states that local governments must hold a public majority protest hearing, and notify property owners and customers forty-five (45) days in advance of public hearings related to proposed water and wastewater rates. The public hearing is to be held forty-five (45) days after noticing the ratepayers. At the public hearing, if it is determined that a majority of property owners has submitted a formal protest, the proposed fee change must be rejected. This is a requirement of Proposition 218, which was passed by California voters in 1996 to limit methods by which local governments can create or increase taxes, fees and charges without taxpayer consent. 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 and be received prior to the close of the public hearing. While protestors may appear at the hearing and be heard on the matter, only written protests are considered as part of the majority protest. Staff took the following actions at least forty-five (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 provided information relating to the public hearing. • In addition, information about the majority protest hearing and proposed rates was posted on the City's website at www.carlsbadca.gov. PROTEST LETTERS RECEIVED: As of November 7, two protest letters were received. The protest letters are attached as Exhibit 2. Any protest letters received after the public hearing will be forwarded to the City Council. If there is no majority protest, staff is recommending that the Board of Directors and City Council, after hearing public comment, adopt the proposed rate increases. FISCAL IMPACT: The proposed rate increases, if approved, will be effective January 1, 2012 and January 1, 2013, and will provide adequate funding to properly operate and maintain Carlsbad's water and sewer systems and provide adequate operational reserves. 3 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 4. Resolution No. 1430 of the Board of Directors of the Carlsbad Municipal Water District approving water rate increases 5. Resolution No. 2011-275 of the City Council of the City of Carlsbad approving sewer rate increases Exhibit 1 Proposed Sewer Increases 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 increases are 6.5% and 6.0% beginning January 1, 2012 and January 1, 2013, respectively. The proposed rate increases are needed to generate sufficient revenue for recovering costs associated with operations, maintenance and replacement of aging or failing infrastructure, as well as establishing and maintaining an adequate operating reserve. Two Year Maximum Rate Increases 1/1/2012 1/1/2013 Current Proposed Proposed Groups (I through VI) 6.5% 6.0% Flat monthly charge: 1 - Residential $23.03 $24.53 $26.00 Per unit of water used: 1 - Multi-family II - Commercial III - Commercial IV - Commercial V - Other institutional $2.65 $2.16 $3.28 $6.08 $2.06 $2.82 $2.30 $3.49 $6.47 $2.19 $2.99 $2.44 $3.70 $6.86 $2.32 VI - Bio-Hydration Research Lab Inc.$1.87 $1.99 $2.11 Per student: V - Elementary school V - Junior high school V - High school V - Boarding school $0.47 $0.70 $0.94 $4.90 $0.50 $0.74 $1.00 $5.22 $0.53 $0.78 $1.06 $5.53 The proposed rates, if adopted, will become effective January 1, 2012 and January 1, 2013. Sample of Maximum Rate Increases Current 1/1/2012 1/1/2013 Water (*) $ 50.40 $ 55.44 $ 61.02 Sewer $ 23.03 $ 24.53 $ 26.00 Trash (**) $ 18.87 $ 18.87 $ 18.87 Total $ 92.30 $ 98.84 $ 105.89 Total monthly increase $ 6.54 $ 7.05 Increase percent 7.1% 7.1% (*) The sample rate calculation is based on a single family home with a 5/8 inch meter using 12 units of water per month. (**) Trash rate increases are not being considered as part of this action. The trash rates shown in the table above are based on the existing rates and are subject to changes in future years based on subse- quent actions by the city council. For more information about the public hearing process or the proposed water and sewer rate increases, call 760-602-2403, or visit the city's website at www.carlsbadca.gov/finance. Notice of Public Hearing on proposed maximum sewer and water rate increases Tuesday December 6th, 2011 at 6pm City of Carlsbad City Council Chambers 1200 Carlsbad Village Drive Carlsbad, CA 92008 The rates for water and sewer service are proposed to increase. This notice has information about the proposed rate increases. CITY OF CARLSBAD Proposed Water and Sewer Rate Increases The City of Carlsbad and the Carlsbad Municipal Water District are proposing increases in water and sewer rates over the next 2 years. If the City Council and the Carlsbad Municipal Water District Board of Directors adopt the rate increases at the public hearing on December 6th, 2011, the new rates will be effective January 1, 2012, and January 1, 2013, About 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 meter. The usage charge is the charge for the volume of water used. The proposed rate increases for the residential and non-residential delivery charges and usage charges are 10% (maximum) on January 1, 2012 and 10% (maximum) on January 1, 2013. The City of Carlsbad purchases 100% of its potable water from the San Diego County Water Authority (SDCWA). The cost of potable water purchased from the SDCWA continues to increase. The cost of purchased recycled water has also risen. The proposed rates will cover the increasing cost of purchased water and pay for ongoing operations, maintenance and replacement of the city's water system, as well as establish an adequate operating reserve. CITY Of CARLSBAD Residential water rates Single-family and multi-family residential rates are grouped into tiers, with the first tiers having the lowest per unit rate and the second and third tiers having incrementally higher rates. The proposed water rate increase for January 1, 2012, will raise the monthly water charge for a typical single family household with a 5/8 inch meter and using 12 units of water, by $5.04 (from $50.40 to $55.44). The exact amount of the increase will vary among customers depending on actual water usage. The proposed increase for January 1, 2013 will raise the monthly water charge from $55.44 to $61.02 ($5.58). Proposed water rates are shown on the table to the right. Commercial, agriculture, recycled and irrigation water rates Non-residential customers have different water usage needs than residential customers; therefore, the usage charge is a flat per unit rate rather than a tiered rate. The delivery charge is also a flat rate based on meter size. Proposed non-residential rates are also shown on the table to the right. Two Year Maximum Rate Increases Current Monthly Delivery Charge: 1/1/2012 Proposed 10% 1/1/2013 Proposed 10% Meter Size: 5/8" 3/4" 1" 1.5" 2" 2.5" 3" 4" 6" 8" 10" $ Usage Charges (i unit = $ 18.00 $ 22.70 $ 32.43 $ 56.90 $ 86.08 $ 124.41 $ 163.91 $ 251.47 $ 494.97 $ 786.83 1,127.62 748 gallons): $ 19.80 $ 24.97 $ 35.67 $ 62.59 $ 94.69 $ 136.85 $ 180.30 $ 276.62 $ 544.47 $ 865.51 $ 1,240.38 10% $ 21.78 $ 27.47 $ 39.24 $ 68.85 $ 104.16 $ 150.54 $ 198.33 $ 304.28 $ 598.92 $ 952.06 $ 1,364.42 10% Single-Family Rates Tier 1 (0-12 units) Tier 2 (13-20 units) Tier 3 (21+ units) $ 2.70 $ 3.48 $ 4.74 $ 2.97 $ 3.83 $ 5.21 $3.27 $ 4.21 $ 5.73 [Multi-Family Rates | Tier 1 (0-5 units) Tier 2 (6-10 units) Tier 3 (11+ units) $ 2.28 $ 2.57 $ 3.06 $ 2.51 $ 2.83 $ 3.37 $ 2.76 $ 3.11 $ 3.71 (Commercial, Agriculture and Irrigation Rates Non-residential Agricultural Rates Irrigation Rate Recycled Water $3.12 $3.12 $ 3.50 $ 2.97 $ 3.43 $ 3.43 $ 3.85 $ 3.27 $ 3.77 $ 3.77 $ 4.24 $ 3.60 Exhibit 2 From: Bill Blank [mailto:brblank@roadrunner.com] Sent: Monday, October 24, 2011 4:12 PM To: WasteWater; Water Subject: Proposed rate increases on sewer and water fees Carlsbad Municipal Water District Board of Directors: This message is in opposition to the proposed increases on water and sewage fees. I a a retired senior citizen on a fixed income and these fee increases will be a burden on the senior citizen community with Carlsbad. The only opportunity that I have to increase my income is through the Cost of Living Adjustments for Social Security, which this year is estimated to be about 3%. In my opinion the Water and Sewer Board need to look for ways to reduce cost and keep any increases in the range of the COLA adjustment for the Senior Citizen community. I am amazed at all the Water Boards in San Diego County and the duplicate facilities that they have built and the fees paid to Water Board Directors. To me, water board consolidation and having directors serve without pay, it a prime way to reduce overhead cost. I can't understand the City of Carlsbad spending millions of dollars on a "water park" and at the same time trying to raise rates for water and sewer fees. In these difficult times, it seems more appropriate to reduce discretionary spending to offset any extra cost charged by SDCWA. BiH Blank 2917 Rancho Rio Chico Carlsbad, CA 92009 Exhibit 2 2236 Janis Way Carlsbad, CA 92008 16 November 2011 Subj: CMWD Water and Sewer Rate Increases Dear Mayor and City Council Members, I protest the water rate increase (up to 10% each year) and sewer rate increases (6.5% and 6.0%) proposed for January 2012 and January 2013 respectively. While some rate increase may be considered I believe the proposed rate increases are unwarranted, not justified and excessive. The reasons for my opposition are as follows: 1. The current economic state does not support the excessive rate proposal. Even today's Union Tribune's Business section cites high unemployment and low pay increases. Employees have seen negative pay increases. Although it appears the economy is SLOWLY improving, we are not out of the woods yet. 2. The Notice of Public Hearing on proposed Rate Increases is confusing and does not provide (nor identify by reference) information that clearly justifies rate increases nor where the revenue or the additional generated revenue will be spend. Even contact with the Water Department only provides general information, for example: our costs are increasing, lack of revenue due to conservation (finally admitted to), passing down cost increases from SDCWA (but the amount is never stated), etc. I have asked specifically how my monthly delivery charge ($22.70) is spent, but no one has provided an answer. The issue of spending transparency regarding the CMWD was raised at September 9th 2008 City Council meeting; however, only general and department level information has been provided, 3. To my knowledge CMWD has never challenged or opposed the rate increases of SDCWA or MWD. These appear to be accepted as just "pass down". I have heard rumors of unnecessary facilities expansion, pension increases, huge high level salary increases, etc. 4. Although customer charges seem to continually increase, service does not seem to be increasing. I urge City Council to reject CMWD's proposal rate increases. Sincerely, Dale Kubacki PROPOSED MAXIMUM RATE INCREASES EXHIBITS Delivery Charge 5/8" 3/4" 1" 1.5" 2" 2.5" 3" 4" 6" 8" 10" Single-Family Rates Tier 1 (0-12ccfs) Tier 2 (13-20ccfs) Tier 3 (21+ ccfs) Multi-Family Rates Tier 1 (0-5ccfs) Tier 2 (6-10ccfs) Tier 3 (11+ ccfs) Commercial/Non-Residential Agricultural Rates Irrigation Rate Recycled Water WATER Current 18.00 22.70 32.43 56.90 86.08 124.41 163.91 251.47 494.97 786.83 1,127.62 2.70 3.48 4.74 2.28 2.57 3.06 3.12 3.12 3.50 2.97 1/1/2012 PROPOSED 10% 19.80 24.97 35.67 62.59 94.69 136.85 180.30 276.62 544.47 865.51 1,240.38 2.97 3.83 5.21 2.51 2.83 3.37 3.43 3.43 3.85 3.27 1/1/2013 PROPOSED 10% 21.78 27.47 39.24 68.85 104.16 150.54 198.33 304.28 598.92 952.06 1,364.42 3.27 4.21 5.73 2.76 3.11 3.71 3.77 3.77 4.24 3.60 SEWER Group 1 - Residential (Flat Monthly Charge) Group 1 - Multi-Family (per ccf of water usage) Group II - Commercial (per ccf of water usage) Group III - Commercial (per ccf of water usage) Group IV - Commercial (per ccf of water usage) Group V - Other Institutional (per ccf of water usage) Group V - Elementary School (per student) Group V - Junior High School (per student) Group V - High School (per student) Group V - Boarding School (per student) Group VI - Bio-Hydration Research Lab Inc. (per ccf) Current 23.03 2.65 2.16 3.28 6.08 2.06 0.47 0.70 0.94 4.90 1.87 1/1/2012 PROPOSED 6.5% 24.53 2.82 2.30 3.49 6.47 2.19 0.50 0.74 1.00 5.22 1.99 1/1/2013 PROPOSED 6.0% 26.00 2.99 2.44 3.70 6.86 2.32 0.53 0.78 1.06 5.53 2.11 Table showing single family monthly utility bill for a household using 12 units of water. Average Single Family Bill WATER SEWER TRASH TOTAL CURRENT $ 50.40 $ 23.03 $ 18.87 $ 92.30 Increase $ Increase % 1/1/2012 $ $ $ $ $ 55.44 24.53 18.87 98.84 6.54 7.1% 1/1/2012 S $ $ $ $ 61.02 26.00 18.87 105.89 7.05 7.1% 1 2 3 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RESOLUTION NO. 1430 A RESOLUTION OF THE BOARD OF DIRECTORS CARLSBAD MUNICIPAL WATER DISTRICT (CMWD) APPROVE INCREASES IN WATER RATES. WHEREAS, the California Constitution, Article XIIID, Section local governments must hold a public majority-protest hearing, and forty-five (45) days in advance of increases in water rates; and Exhibit 4 OF TO 6, provides that notify customers WHEREAS, the Carlsbad Municipal Water District is proposing a schedule of maximum water rates as shown in "Exhibit 3;" and WHEREAS, in October 2011, Carlsbad residents and property owners were notified by mail of the proposed rate increases (Exhibit 1), thereby complying with the advance notice requirement of forty-five days; and NOW, THEREFORE, BE IT RESOLVED by the Board of Carlsbad Municipal Water District, as follows: 1 . That the above recitations are true and correct. 2. The Board of Directors of the Carlsbad Municipal Water Directors of the District imposes the rates that appear in "Exhibit 3." These rates shall be effective as of January 1 , 2012 and January 1, 2013. \\ \\ \\ \\ \\ \\ 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 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 6th day of December 2011, by the following vote: AYES: Board Members Hall, Kulchin, Blackburn, Douglas, Packard. NOES: None. ABSENT: None. MATKHALL, President (SEAL) M. WOOD, Secretary Exhibit 5 1 RESOLUTION NO. 2011-275 2 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, TO APPROVE INCREASES IN 3 SEWER RATES. 4 5 WHEREAS, the California Constitution, Article XIIID, Section 6, states that local 6 governments must hold a public majority-protest hearing, and notify customers forty-five 7 (45) days in advance of increases in sewer and trash rates; and 8 WHEREAS, the City of Carlsbad is proposing an increase in sewer rates; and 9 WHEREAS, in October 2011, Carlsbad residents and property owners were 10 notified by mail of the proposed rate increases (Exhibit 1), thereby complying with the 11 advance notice requirement of forty-five (45) days; and 12 WHEREAS, the City Council of the City of Carlsbad approves the sewer rate increases as set forth in "Exhibit 3." 15 NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of 16 Carlsbad, California, as follows: 17 1. That the above recitations are true and correct. 18 2. That the City Council of the City of Carlsbad approves the increases in 19 sewer rates, effective January 1, 2012, and January 1, 2013, as set forth in "Exhibit 3." 20 \\ 21 \\22 23 * 24 \\ 25 \\ 26 \\ 27 28 1 PASSED, APPROVED AND ADOPTED at a Joint Special Meeting of the 2 Carlsbad City Council and Carlsbad Municipal Water District Board of Directors, held on the 6th day of December 2011, by the following vote: 4 5 AYES: Council Members Hall, Kulchin, Blackburn, Douglas, Packard. 6 NOES: None. 7 ABSENT: None.8 9 10 11 MATT HALL, Mayor 12 ATTEST:13 14 ' ' ~ ~'-' INE M. WOOD, City Clerk" 16 (SEAL) 17 18 19 20 21 22 23 24 25 26 27 28 Partial List of Items Reviewed Regarding Proposed Water and Sewer Fees Increases • Carlsbad Public Hearing Notices from 2007 through 2011. • The Agenda Bills and Protest Letters from 2008 and 2009. • CAFR-June 30, 2010. • Cash Flow Sheet from Finance Department - briefly viewed. • Monthly Financial Status Reports June and October 2011. • Council and CMWD Meeting Videos including the SDCWA, CMWD, and Finance Department power point presentations from earlier this year. • CMWD Ordinances 44 and 45. • CMWD Urban Water Management Plan June 2011 - briefly viewed. • U.S. Census Demographics for the Carlsbad 2000 and 2010. • Cost of Services Study prepared by the FCS Group for Carlsbad. • City of Carlsbad Legislative Platform. • City Council Goals for FY 2011-2012. • Brown Act regarding Open Meetings. • Proposition 218 and a number of overviews, court cases and legal interpretations of various parts of Proposition 218, in particular regarding notices for public hearings and the majority protest process. These include a paper by Attorney Steve Kabot, of McCormick, Kabot, Jenner & Lew, and recommendations by San Diego City Attorney Tom Zelaney. • Public Hearing Notices, all of which include majority protest announcements and instructions from the cities of Davis, Port Hueneme, Vacaville, Los Angeles, Escondido, Oceanside and more. • The San Diego Grand Jury Report Regarding Water dated May 31, 2011. • The California Local Government Financial Almanac - briefly reviewed. • League of California Cities, Proposition 218 Implementation Guide. • State of California Legislative Analyst Office: Understanding Proposition 218 with analysis. • Howard Jarvis Taxpayers Association, drafters of Proposition 218 and "Intent". • Article 13d of the California Constitution, the legislative interpretation of the law and the corresponding code 53750-53760. • Association of California Water Agencies website, ordered their publication titled "Open and Accessible: A Public Water Agency Guide to Communication and Transparency, and reviewed the ACWA Proposition 218: Local Agency Guidelines for Compliance 2007 particularly pages 19 and 20. ...and more. Gretchen M. Ashton (760) 271-6069 Main Points for Majority Protest Public Hearing • In 2007, 2008 and 2009, the agenda bills and public hearing notices regarding utility service fee increases included wording informing property owners/customers of their right to protest fee increases and the basic procedures for a majority protest hearing. In 2010 and 2011 the majority protest information was dropped from the notices. Majority protest wording should be included in the public hearing notices. In the course of preparing for this hearing, I was initially provided two different sets of procedures for filing a protest. According to the Carlsbad City Attorney's office, Carlsbad does not have a legal opinion paper to reference regarding these procedures. It appears Carlsbad has not established written policy and procedures directed by council for the majority protest hearing process. The public hearing notices for water and sewer are not reviewed by the attorney's office for compliance with Proposition 218 or any other legal concern before they are mailed to customers. Instead staff references the Proposition 218 Implementation Guidelines from the Association of California Water Agencies, which states, Article 13d does not specifically require a notice of a proposed property-related fee or charge to contain a statement that a majority protest will prevent the increase of the fee. ACWA also states "This does not mean that an agency may not include an explanation". The spirit and intent of Proposition 218 is clear, "The provisions of this Act shall be liberally construed to effectuate its purposes of limiting local government revenue and enhancing taxpayer consent." According to the Howard Jarvis Taxpayers Association, the drafters of Proposition 218, the purpose of this section is to ensure that, in the event of any ambiguity, the rights of the taxpayers will be the paramount consideration." It is common practice among virtually all other cities in California to have either a written procedural recommendation or include majority protest wording in the public hearing notice, or both. The City of San Diego goes so far as to include a protest form in the public hearing mailer. In a conversation with San Diego City Attorney Tom Zelaney, I asked how he connected the dots between his recommendations and what some would call ambiguity in Proposition 218. His response was simply it is the "most conservative" approach. He also believed it "high risk" to not have a legal review of the notice. • Since staff currently relies on the ACWA implementation procedure of Proposition 218,1 reviewed it and numerous other documents. In addition to other information, the public hearing notice must state the basis upon which the amount of the proposed fee or charge is to be imposed on each parcel. The basis would include some explanation of the costs which the proposed fee or charge will cover and how the costs are allocated among property owners/customers under the proposed rate and fee schedule. According to ACWA, the explanation may necessarily by presented in a general description, "but the agency must nevertheless have detailed data to support the amount of the increase, including actual cost data and water sales projections, prior to the hearing on the increase." The City's Comprehensive Annual Financial Report (CAFR) is not yet complete. While some data may be available to the governing body, the public also requires this audited financial information in advance to prepare for the public hearing. Finance staff shared a cash flow sheet with me while at the city offices, but would not provide a copy, stating "it is a working document. The year-to-date report through October 2011 reflects water and sewer revenues are up a net 9%, yet maximum increases are still being proposed. Further maximum increases as outlined in the Cost of Services Study have been implemented "across-the-board". And there still needs to be action taken regarding the disproportionate way the San Diego County Water Authority passes through their MWD costs. I also understand that at least one water reserve fund was quote "decimated" by the Marbella settlement. Legal and insurance documents, and some news articles refer to the cause of the landslide as a rupture/leak of a fire hydrant and water line attached to a fire hydrant after city employees changed out an o- ring. However, the July 2007 Agenda Bill outlining the details of city actions regarding the Marbella settlement describes it as a storm drain settlement, which in reality was ancillary as a practical consequence of the repairs. Regardless of the opinions or what the settlement is labeled, it seems that repairs obviously included some fire protection related expenses and it could be determined that the entire settlement was the result of providing fire protection services. Proposition 218, regarding property-related fees specifically excludes fire protection services where the service is available to the public at large in substantially the same manner as it is to property owners. An article in CityVision Magazine indicates courts have already ruled that providing public fire protection through fire hydrants is a governmental function that must be paid out of general fund revenue and not through water-use rates including the entire infrastructure required to deliver water to the hydrants. • Another compliance question, relating to the proportionality requirements of Proposition 218 is raised by assumptions that were made in the establishment of the tiered pricing break points in the Cost of Services Study that deviate from encouraging water conservation and reasonable costs to ultimately penalizing families. U.S. Census data for Carlsbad shed some light on this. According to Proposition 218, the burden of proof is on the City of Carlsbad and CMWD. I request that the proposed fee increases not be approved, that compliance with Proposition 218 be ensured in all areas including fire protection and current financial data and how costs are allocated and fees are established, that procedures and policies be established for the majority protest public hearing process and that these procedures be included in the notification of the public hearing mailed to property owners/customers before any further consideration of additional fee increases including the upcoming proposed trash collection. I invite your questions. A &$> CITY OF CARLSBAD Memorandum Decembers, 2011 To: Lisa Hildabrand, City Manager From: Helga Stover, Senior Accountant Via: Chuck McBride, Finance Directorc Re: Protest Letters and correspondence - Majority Protest Public Hearing Attached are copies of protest letters received as of December 6th, 2011, for distribution 1. Bill Blank a. Email dated 10/24/2011 b. Reply to Email, dated 11/7/2011 c. Reply to reply to Email, dated 11/29/2011 2. Todd Anderson a. Email dated 11/6/2011 3. Dale Kubacki a. Letter dated 11/16/2011 4. Gretchen Ashton a. Email dated 10/25/2011 b. Email dated 11/16/2011 c. Email from Ron Kemp dated 11/18/2011 d. Response to Email dated 11/18/2011 e. Email dated 11/28/2011 f. Letter dated 12/1/2011 HS Finance Department 1635 Faraday Ave. I Carlsbad, CA 92008 I 760-602-2430 I 760-602-8553 fax I www.carlsbadca.gov From: Bill Blank [mailto:brblank@roadrunner.com] Sent: Monday, October 24, 2011 4:12 PM To: WasteWater; Water Subject: Proposed rate increases on sewer and water fees Carlsbad Municipal Water District Board of Directors: This message is in opposition to the proposed increases on water and sewage fees. I a a retired senior citizen on a fixed income and these fee increases will be a burden on the senior citizen community with Carlsbad. The only opportunity that I have to increase my income is through the Cost of Living Adjustments for Social Security, which this year is estimated to be about 3%. In my opinion the Water and Sewer Board need to look for ways to reduce cost and keep any increases in the range of the COLA adjustment for the Senior Citizen community. I am amazed at all the Water Boards in San Diego County and the duplicate facilities that they have built and the fees paid to Water Board Directors. To me, water board consolidation and having directors serve without pay, it a prime way to reduce overhead cost. I can't understand the City of Carlsbad spending millions of dollars on a "water park" and at the same time trying to raise rates for water and sewer fees. In these difficult times, it seems more appropriate to reduce discretionary spending to offset any extra cost charged by SDCWA. Bill Blank 2917 Rancho Rio Chico Carlsbad, CA 92009 CITY OF CARLSBAD Finance Department www.carlsbadca.gov November 7,2011 Bill Blank 2917 Rancho Rio Chico Carlsbad, CA 92009 Re: Proposed rate increases on sewer and water fees Dear Mr. Blank, The City of Carlsbad has received your opposition to the proposed increases in water and sewer charges, and appreciates your comments. The city works hard to keep rates as affordable as possible for our utility customers and understands that the economy has made this a difficult time for people financially. Unfortunately, many of the costs associated with these rate increases, such as the actual cost of purchasing water, are passed through to the city from other regional water agencies. By law, revenues collected from our utility customers may only be used for the business needs of those specific utilities. For example, funds collected for water charges can only be used to fund water purchases, water system operations and improvements and cannot be used to fund other governmental services, such as libraries, parks or public safety. Compensation for the members of the Board is provided from these funds, but the amount paid is nominal and not a contributing factor in how new water rates are established. The water park you mentioned in your letter is actually a component of a new community park called Alga Norte. Because this is a park facility and not related in any way to our water utilities, it is precluded from receiving any funding from water, wastewater, or solid waste funds. Instead, Alga Norte Park will be funded from fees paid by developers and revenues collected from general taxes, such as property and sales tax. Again, thank you for your comments about the proposed rate increases. I hope this letter has clarified how funds from our water and sewer funds are established and how they may be used. The city will continue its commitment to keep rates as affordable as possible for our customers. Your comments will be shared with the City Council/ board members of Carlsbad Municipal Water District (CMWD), to be considered at the public hearing scheduled for December 6, 2011. Regards, Helga Stover, Senior Accountant City of Carlsbad 1635 Faraday Avenue. Carlsbad CA 92008-7314 Tel 760-602-2430 Fax 760-602-8553 Business License 760-602-2495, Utility Billing 760-602-2420, Purchasing Tel 760-602-2460 - Fax 760-602-8556 ® William R. Blank 2917 Rancho Rio Chico Carlsbad, CA 92009 November 29, 2011 Helga Stover Senor Accountant City of Carlsbad 1635 Faraday Ave. Carlsbad, CA 92008 Ms. Stover: First, thank you for your response to my e-mail concerning the proposed increases in water and sewer charges. I continue to object to the large (10%) increases to the water and sewer rates. If the law requires that the "revenues collected from our utility customers may only be used for the business needs of those specific utilities", then the Carlsbad Water & Sewer District (CMWD) needs to find savings within their own organization The Water and Sewer District need to reduce cost to compensate for the increased cost from the MWP. This must include staff reduction and compensation reductions. This is the model that is being enforced at school district across the county. The District should not be forcing any increase on their customers without first taking this action. The concept of building a surplus for future expenses is not appropriate in today's current financial environment. The CMWD must live within its revenue income and reduce cost through expense reduction. This may be painful for the CMWD employees and its customers, BUT it MUST be done. I feel that Carlsbad residents are totally opposed to this concept of double digit increases. Also, any compensation for the members of the board should be totally eliminated, in my opinion. In addition, expenses for attendance at conferences and out of town events should be NOT allowed, EXCEPT for senior executive on legitimate fact find trips to reduce cost and improve efficiency. Further, I continue to believe that real cost savings will come from merging the numerous Water Boards in the North County. There are significant savings to be realized by combining all the Water/Sewer Boards through reduction of employees, sharing of equipment, elimination of administrative staff, sharing of maintenance equipment and reducing the number of "Palaces" built by the various Boards. I know this will take time to negotiate and implement, but we need to get started NOW. Please enter my comments into the record for the December 6, hearing. Sincerely WilliafrlR. Blank CC: Matt Hall, Mayor, City of Carlsbad Helga Stover From: Todd Anderson <todd@switchfootcreative.com> Sent: Tuesday, November 08, 2011 7:18 AM To: Council Internet Email Subject: Proposed Water and Sewer rate increases for 2012-13 Honorable Mayor and City Council - As a current resident, business owner, and taxpayer in the City of Carlsbad, I am disappointed to learn that our water and sewer rates are again slated for an increase. If this proposed increase is approved by the Council, it will be three years in a row of rate increases at a time when our economy is still struggling, business is still down and families are having a tough time making ends meet from month to month. Carlsbad residents and businesses just witnessed an increase this year of 7.2 percent for the fixed monthly charge, and 18 percent for the per unit or "commodity" charge. The new proposal requests an additional 20 percent increase in both over the next two years. That's an unbelievable 27.2 percent increase for the fixed monthly charge, and 38 percent increase per unit per month over a three year period. Think about the burden that will place on city residents and small businesses struggling to keep a roof over their heads and their doors open. If the growth of the economy was trucking along at such voluminous numbers each year, I probably wouldn't have a problem with the proposed rate hike. But this is unprecedented, and I urge you to look for cuts in services and other City programs to mitigate the need for these increases. Thank you for your time and consideration - Todd Anderson, Owner/Creative Director switchfoot creative t 760.720.4255 f 760.720.4295 >» Put Your Best Foot Forward >» 3«~ 2236 Janis Way Carlsbad, CA 92008 16 November 2011 Dear Mayor and City Council Members, It appears that since 1988 that I have only approximately 40 psi (standing water pressure) which falls to less than 40 psi under demand (substandard). Yet other residential customers (estimated over 90%) have up to 150 psi. The question I have asked various water/utility personnel this: question "Why — when I receive low standard to substandard service, do I continue to pay the same amount for service (delivery charge) as those residential customers who receive better service? To date have not received a clear/acquit able answer. I believe one should only pay for the level of service provided. Sincerely, Dale Kubacki •u. Helga Stover To: Kira Linberg Subject: RE: Water Fees and CAFR - Providing Information to Carlsbad Residents —Original Message— From: dngbythec@roadrunner.com [mailto:dngbythec@roadrunner.com] Sent: Tuesday, October 25, 2011 4:54 AM To: Council Internet Email Cc: Finance Subject: Water Fees and CAFR - Providing Information to Carlsbad Residents Dear Mayor, Council Members and Finance Department, I received the water rate increase brochure in the mail and read it over. As a result of the way information was presented in the brochure and having seen staff presentations at council meetings, I wanted more information. After review and research on the city website, I would like to pass along quick discoveries that the following items are not current information regarding the proposed water rate increase: The .pdf water rate increase brochure is from the fee increase that went into effect as of January 1,2011. The CAFR is dated fiscal year ending June 2010. Please post the current information as soon as possible, so it can be reviewed by anyone interested before the public hearing on the fee increase. Further reading and navigating revealed that the council is also the board for other legal agencies including CMWD. This clarification really should be noted on the water fee brochure. Makes me wonder if any public comment matters because of this arrangement. Seems as if the increase is a board recommendation to get this far in the process, and that the council will be approving something it has already approved or decided on. Perhaps you can clarify for me. The council as board(s) for CMWD and other agencies is not easy to discover on the website, especially through the water information area. The board members are not listed on the CMWD page. Further, these five agencies/boards are not listed in the boards, commissions and committees list through the city clerk pages. These would be obvious locations for this information. The information does appear in the council area of the website at the bottom of the meeting and agendas page in the "other" section, in the council meeting brochure, and a reference in human resources where it discusses compensation for participating in board meetings. Regarding the CAFR; I am interested to know how the revenue generated by CMWD is spent. Once it is transferred how do we track the funds in a way that correlates to the reasons for the increase indicated in the water fees brochure? In other words, how much is actually spent on operating expenses, reserve, maintenance, etc., Or is it just thrown into a lump sum with other departments in its category and used in a general fashion to offset deficits in waste water, the golf course, etc., as a lump sum. Does all of the revenue fall into discretionary spending accounts in the budget? With this in mind? Does our fee increase become an "automatic response" to any increase in the cost of water or are other analyses performed to evaluate the possibility of avoiding an increase or at least a portion of it? Will you please direct me to or provide a summary of how much the city spends on the cost of water only - per tier, the cost of maintenance only, how reserve funds are spent in detail, etc. It would also be important to see this same level of detail for any funds that are offset by CMWD revenue to fully understand what our fees are paying for. It seems that a lot of the reporting available and presented emphasizes trends and speculations of our region and the economy and could be more inclusive of actual costs. It would be very good to put a breakdown of costs in the water fees brochure. Maybe show where the average single family home water bill actually gets spent - on what and how much. A lot of folks don't have the time or are not willing to do this much research. It would be great if meaningful information was available with little effort, so it is easier for those who are engaged in city government and to encourage those who would be more involved if it wasn't so difficult. Thank you for your assistance, Gretchen M. Ashton (760) 271-6069 Mayor/ Board Member City Council of Carlsbad Carlsbad Municipal Water District (CMWD) RE: Proposed Water and Sewer Rate Increases - Public Notice Process This is an IMPORTANT and TIME SENSITIVE communication. Dear Mayor Hall, On October 25, 2011,1 sent an email communication to city council and the finance department via council(5)carlsbadca.gov. I expressed concerns that the information in the public notice for water and sewer increases did not provide all the information that might be presented to water users, i.e. that the city council is also the board for CMWD. I also shared my discovery that information regarding the rate change was not provided on the city website. In fact, the water fee increase brochure for the previous year was posted and the Comprehensive Annual Financial Report (CAFR) was through fiscal year-ending June 2010. Since then I have observed a few changes of updated information on the website. Current water and sewer fee increase brochure is now available. The CAFR is not. In the website update regarding the public process for the water and sewer fee increase, there is a reference to Proposition 218 and an announcement that it is a "majority protest" public hearing. Upon further research about what is involved in this type of hearing, I discovered that there are requirements for the information and language of the public notice sent out 45 days prior, and a required additional public meeting. It appears city of Carlsbad has not met these requirements. I have attached a brochure from the city of San Diego that includes required wording, a "Revised Notice of Public Hearing" from the city of Vacaville, and the city of Carlsbad brochure for your quick reference. See Brown Act Section 54954.6 The legislative body shall provide at least 45 days' public notice of the public hearing at which the legislative body proposed to enact or increase the general tax or assessment. The legislative body shall provide notice for public meeting at the same time and in the same document as the notice for public hearing, but the meeting shall occur prior to the hearing. The joint notice of both the public meeting and the public hearing required by subdivision (a) with respect to a proposal for a new or increased assessment on real property shall be accomplished through a mailing, postage prepaid, in the United States mail and shall be deemed given when so deposited. The public meeting .. .shall take place no earlier than 10 days after the joint mailing pursuant to this subdivision. The public hearing shall take place no earlier than seven days after the public meeting....A statement that a majority protest will cause the assessment to be abandoned if the assessment act used to the levy the assessment so provides (see Proposition 218). The joint notice required shall include, but not be limited to .... The estimated amount of the assessment... A general description of the purpose or improvements... The phone number and address for more information... A statement that a majority protest will cause the assessment to be abandoned if the assessment act used to the levy the assessment so provides...The dates, times, and location of the public meeting and hearing... AND MORE See Proposition 218 The drafters of Proposition 218 indicate that is was their intent to include most fees commonly collected on monthly bills to property owners, such as those for water delivery, garbage service, sewer service, and storm water management fees. Sincerely, Gretchen M. Ashton 1204 Abelia Avenue Carlsbad, California 92011 tc. •1 *''" V Helga Stover : I crom: Ronald Kemp jent: Friday, November 18, 2011 4:03 PM To: dngbythec@roadrunner.com Cc: Helga Stover Subject: IMPORTANT INFORMATION REGARDING PUBLIC HEARING - WATER AND SEWER FEES INCREASE Good Afternoon Ms. Ashton, I understand that you met with Helga Stover of the city's finance department to discuss the concerns that are outlined in your e-mail below. I wanted to address your concern over the noticing aspect of the public hearing. It is important to note that water and sewer rates are considered to be property related charges under California Constitution Article XIIID (introduced by Proposition 218). This is different from a tax or assessment. As such, the city and the water district must follow the procedures outlined in Article XIIID, Section 6. Government Code Section 54954.6 does not apply. The City and CMWD are required to give customers 45 days' notice of a public hearing in which the Council and Board Members will consider the rate increase. If a majority of the rate payers submit a written protest prior to the close of the hearing, the rate increase cannot take effect. If the Council and Board adopt the rate increase it becomes effective. Voter approval is not required for the increase as Section makes an exception for fees and charges for sewer, water and refuse collection. Dlease do not hesitate to contact me if you have further questions. Ronald Kemp Assistant City Attorney CITY OF CARLSBAD '$& Office of the Gty Attorney "id Helga Stover To: Kira Linberg Subject: RE: Re: IMPORTANT INFORMATION REGARDING PUBLIC HEARING - WATER AND SEWER FEES INCREASE From: "gretchen ashton" <scubafit(o)gmail.com> Date: Nov 18,2011 5:50 PM Subject: Re: IMPORTANT INFORMATION REGARDING PUBLIC HEARING - WATER AND SEWER FEES INCREASE To: "Ronald Kemp" <Ronald.Kemp(S),carlsbadca.gov> Dear Mr. Kemp, I know you are pressed on the power plant preparation and appreciate your looking into this matter for me. Although the Brown Act and Proposition 218 do not specifically state the same semantics for fee, assessment or rate, The Brown Act is the only reference we have for how a majority protest hearing is to be conducted and Proposition 218 is clearly drafted as a supplement to, not a replacement for other laws . Proposition 218 is clear that water fees require a majority protest hearing. How can the city legally or in good conscience conduct a majority protest hearing without informing property owners of the type and process of the hearing. The city has set a standard of adhering to the Brown Act for other hearings and processes why not this one. Other cities have demonstrated the proper announcement of a majority protest hearing as I provided in the brochure from San Diego. I will discuss this with council directly. It was explained to me that the city always leans toward openness and transparency with the public, but this is not the appearance in this matter. Thank you for your time and I hope you will review Proposition 218 and the Brown Act again from this practical perspective. Best Regards, Gretchen M. Ashton te. Helga Stover To: Kira Linberg Subject: RE: Majority Protest Process for the City of Carlsbad Proposed Water Rate Increase Original Message From: dngbythec@roadrunner.com [mailto:dngbythec@roadrunner.cbm] Sent: Monday, November 28, 201112:18 PM To: Council Internet Email Cc: Attorney Subject: Majority Protest Process for the City of Carlsbad Proposed Water Rate Increase Dear Mayor, Council Members / Board CMWD, To keep you informed, I have contacted the City Clerk's office to confirm information found on the city website and inquire about the specific instructions for the majority protest process. Whether you decide to inform,or NOT inform, residents that the public hearing for the proposed water and sewer rate increase is a majority protest hearing, we still need to know how, when and in what form (email?) to file a protest. Interestingly, when the website was updated, after the fact, staff felt it necessary to identify the hearing as "majority protest" according to Proposition 218. However, they did not include this information in the mailer to residents. As recent as 2009, the City of Carlsbad did include the majority protest information and instructions in the notice to residents. It is my opinion, that the RIGHT thing to do is to reschedule this hearing and give proper notice to residents. The City Clerk's office is checking the procedure with the City Attorney and will let me know by the end of the day. Gretchen M. Ashton (760) 271-6069 Gretchen M. Ashton 1204 Abelia Avenue Carlsbad, California 92011 December 1,2011 City of Carlsbad and Carlsbad Municipal Water District (CMWD) 1635 Faraday Avenue Carlsbad, CA 92011 Subject: Protest of Proposed Water and Sewer Fee Increases Reference: Notice of Public Hearing of December 6,2011 Dear Mayor Hall, Council Members and CMWD Board Members, This written letter of protest is submitted according to my rights under Article 13d of the California Constitution and Proposition 218. I am protesting the proposed maximum water and sewer fee increases that, if approved, would become effective January 1,2012 and January 1, 2013. This protest includes, but is not limited to the following concerns: 1) The majority protest proceedings have not been properly announced or followed for this public hearing. I am requesting that the hearing be rescheduled with proper notice and procedure. I will also note that the same lack of procedure occurred for the 2010 public hearing approving utility fee increases. As recent as 2009, the majority protest procedure was properly performed as evidenced in both the agenda bill and mailing to residents for that year. 2) Current, complete and audited financial information regarding water and sewer fees is not yet available for public review; i.e., the Comprehensive Annual Financial Report (CAFR) for fiscal year-end June 30,2011. The finance department allowed me to view a cash flow sheet, but I was not able to receive a copy of it and I was informed "it is a working document". 3) The monthly update reports done in June 2011 and October 2011, which include year-to-date revenue reporting for enterprise funds, indicates water revenue is up by a net 9%, yet maximum increases in water fees are still being proposed. The report attributes this to a combination of the fee increase effective January 1,2011 and an increase in water usage. 4) The October 2011 year-to-date report reveals that more than half of the water budget is for items other than purchasing water. While some of these additional costs are clearly associated with provided the actual service, it appears it is prudent to evaluate compliance with Proposition 218 and Article 13d regarding the "reasonable and actual costs of providing the service", including expenses relating to the Marbella lawsuit and reserve accounts. This is especially important when a comparison of the five-year rate projections provided in the Cost of Services Study by the FCS Group reveals that fee increases have been implemented every year at the maximum and are proposed again at the maximum. 5) The Cost of Services Study in determining the current and proposed city water rates recommended a tiered fee system. In the study, it appears that certain assumptions were made regarding single-family discretionary water use that deviates from encouraging water conservation and actually penalizes households with more family members. This is then reinforced by the arbitrary decision that the Tier One "break point" of 12 units should be based on the one-half (51%) of single family homes with the lowest water usage, which represents only 21% of the total water used by single family homes. The entire report and basis for all utility fees needs to be further evaluated. Especially since census demographics data that was available at the time the study was conducted provides at least some data that supersedes such an assumption and usage information from the positive draught response is now available to assist in analysis. The COSS cost us over $106,000.00. 6) The San Diego County Water Authority (SDCWA) acquires considerably less than 50% of its total water purchases from the Metropolitan Water District (MWD), but "passes through" 55% of its fees as MWD costs to CMWD. Communication and information provided to residents, is further complicated when increases from these agencies are cited as if nothing can be done to prevent water fee increases. I appreciate your consideration of this protest as allowed by law. Sincerely, Gretchen M. Ashton (760) 271-6069 Majority Protest Public Hearing Water and Sewer Rate IncreasesDecember 6, 2011 CalendarJune 2011: Budget AdoptionSeptember 2011: Update Financial ForecastOctober 2011: Public Notice mailedDecember 6: Hold Public HearingSet rates –2 yearsJanuary 1: Effective  Dates(2012 & 2013) June 20115 Year ForecastWater Rates:January 1, 2012 – increase 12.5%January 1, 2103 – increase 12.0%Sewer Rates:January 1, 2102 – increase 6.5%January 1, 2013 – increase 6.3% September 20115 Year ForecastWater Rates:January 1, 2012 – increase 10.0%January 1, 2103 – increase 10.0.%Sewer Rates:January 1, 2102 – increase 6.5%January 1, 2013 – increase 6.0% Public Noticing•Mailed to all property owners and customers affected by the proposed increase•Notice posted on city website•Prop. 218 process posted on city website•Q&A posted on city website Agenda•Water Purchases and Sales•San Diego County Water Authority Rates and Charges•Carlsbad/CMWD Proposed Rates•Water•Sewer•Protest Letters•Open Public Hearing •CMWD Board Action•Carlsbad City Council Action6 Water Enterprise Potable Water Purchased (Acre Feet)10,00012,00014,00016,00018,00020,00022,00024,0002007 2008 2009 2010 2011 2012 (est)Purchases •Water sales have decreased by 38% since 2007San Diego County Water AuthorityDecreasing Water Sales - 100,000 200,000 300,000 400,000 500,000 600,000 700,0002007 2008 2009 2010 2011Acre FeetHistorical Water Sales VolumesAGM&I491,9249661,618619,407556,592410,320(est.) Potable Water –Cost per Acre FootPaid to San Diego County Water Authority(Fixed + Commodity) •Decreasing sales volumes•Planned debt service payments•Increasing cost of water supplies•Increasing water supply transportation costsKey Rate Drivers11 San Diego County Water Authorityhttp://www.sdcwa.org4677 Overland AvenueSan Diego, CA 921231‐858‐522‐6600Metropolitan Water Districthttp://www.mwdh2o.comMailing address:P.O. Box 54153Los Angeles, CA 90054‐0153Street address:700 North Alameda StreetLos Angeles, CA 90012‐29441‐213‐217‐6000 Potable Water Supply•Carlsbad currently purchases 100% of its potable water supply from the San Diego County Water Authority.•61% of annual operating expense Where does the money go?$ 3,449,268 , 11%$4,826,845 , 15%$ 4,193,000 , 13%$ 19,870,511 , 61%PersonnelM&OReplacementWater Purchases 5 Year Forecast ‐Revised•Updated with actual revenues and expenditures through 6/30/2011•Revenue from water sales was higher than anticipated•Future sales increased based on revised actual sales for FY2011•Reduction in proposed rate increase Water Fund•Public Notice mailed in October 2011–Maximum Increase•January 1, 2012 = 10.0% (down from 12.5%)•January 1, 2013 = 10.0% (down from 12.0%)•Pay for Maintenance and Operations•Pay for replacement of infrastructure•Fund Emergency reserve ‐30% (110 days) of annual operating expense by 201517 Potable Water Operating FundProjected Reserve BalanceAt 6/30/2012 $2.7 Million =8% (estimated)At 6/30/2015 $12.0 Million = 30% (estimated) Proposed Water Rate IncreaseDelivery Charge ‐Residential•Current Rate  ‐$18.00 per month•1/1/2012 rate ‐$19.80 per month•1/1/2013 rate ‐$21.78 per monthCommodity Charge – Residential (*)•Current Rate  ‐$2.70 per unit•1/1/2012 rate ‐$2.97 per unit•1/1/2013 rate ‐$3.27 per unit(*) First 12 units per month Proposed Water Rate IncreaseCurrentJan. 1 2012Jan 1. 2013Non‐residential3.12$       3.43$       3.77$       Agricultural Rates3.12$       3.43$       3.77$       Irrigation Rate3.50$       3.85$       4.24$       Recycled Water2.97$       3.27$       3.60$       Proposed Rate Increases 21 Comparison with other agencies(monthly charge using 12 units of water)