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HomeMy WebLinkAbout2015-12-01; City Council; 22157; Public Hearing New Wastewater Rate Structure; Proposing Increases Wastewater Rates, Water RatesPublic Hearing-Rates December 1, 2015 Page 2 of 7 Proposed Wastewater Rate Structure and Rates A Wastewater Cost of Service Study was completed in September 2015 by Carollo Engineers (Carollo). Staff recommends the adoption of a new wastewater rate structure and a one year rate increase beginning Jan. 1, 2016. The proposed wastewater rate structure will be calculated as follows: • Single-family residential-Flat monthly charge o Second dwelling units-50 percent of single-family residential flat monthly charge • Multi-family residential-Based on 90 percent of water usage • Commercial-Based on 95 percent of water usage • Schools-Based on number of students • Large Volume-Based on 95 percent of water usage • Industrial Pretreatment Class Ill-Based on 95 percent of water usage The allocation of costs by user category has changed based on the recent cost of service study. The wastewater rate structure is fundamentally sound and creates an equitable basis for recovering costs from system customers. For Fiscal Year 2015-16, the proposed rate structure does not create an increase in revenues. Rather, it rebalances the rates based on the current reduction in water and wastewater discharges associated with the state mandated water reductions. It also accounts for minor shifts between customer classes due to changes in usage patterns and the resultant impact on the wastewater system. In future fiscal years, the cost of service study anticipates approximately three percent rate increases to fund operational needs and capital re-investments. These anticipated increases in future years are driven primarily by inflationary estimates. See the "Fiscal Impact" section of this report for more information. California law declared via AB 1866 that second dwelling units are a valuable form of housing in California because the units provide housing for family members, students, elderly, and others at below-market rates within existing neighborhoods. As such, there has been an increase in the construction of second dwelling units. To comply with legislative guidance on rate setting, it is appropriate to review, among other things, the current usage patterns and development matrices and incorporate any changing patterns into the cost of service. This helps ensure the enterprise's rates reflect the true cost of providing the service. As of Dec. 31, 2014, there are 349 second dwelling units within the City of Carlsbad. Based on the Wastewater Cost of Service Study, Carollo determined that, on average, single-family residences with second dwelling units discharged approximately 50 percent more than the average single-family residences without a second dwelling unit. This information was based on the estimated incremental wastewater demand placed on the system by studying the water usage data and wastewater return factors for residential properties with second dwelling units. As such, Carollo recommends setting the rate for second dwelling units at 50 percent of the flat monthly single-family residential rate; a 50 percent decrease from the current rate which is set at 100 percent of the flat monthly single-family residential rate. For example, a property which has a primary residence and a second dwelling unit would receive one bill totaling $41.72. This includes the flat residential charge of $27.81 and the second dwelling unit charge of $13.91. The $13.91 is 50 percent of the flat residential charge. Therefore, Carollo recommends setting the flat rate for second dwelling units at $13.91. 2 Public Hearing-Rates December 1, 2015 Page 3 of7 An Industrial Discharge Blending Study was conducted by Encina Wastewater Authority (EWA) in March 2015 to determine the anticipated impact to the EWA plant influent and effluent resulting from the desalination plant industrial discharges to the wastewater system. This EWA study classified Poseidon Resources' desalination plant as an Industrial Pre-treatment Class Ill customer. They are the only customer currently in this customer class. According to the Carlsbad Municipal Code an Industrial Pre-treatment Class Ill customer means "any user discharging waste other than domestic waste, having a reasonable potential to adversely affect the Encina Water Pollution Control Facility and requires annual inspections and permits every three years." Carollo incorporated the information contained in the EWA Blending Study into the Wastewater Cost of Service Study and concluded that an Industrial Pre-treatment Class Ill rate of $4.53 per unit of water usage would appropriately recover the costs associated with this class of customer. As such, Carollo recommends setting the rate for Industrial Pre-treatment Class Ill customers at $4.53. Should other customers enter this customer class, the rate will be revisited for efficacy and adjusted as appropriate. During the cost of service study it was determined that the Group VI-Large Volume rate category wasn't currently needed. The only customer in this rate category was Bio-Hydration Research Lab, Inc. dba Penta Water Company, Inc. Penta Water Company is currently located in Colton and no longer has a business presence within Carlsbad. Including this rate category within the Cost of Service Study when there are no associated customers would result in a Group VI rate based solely on estimates, not data. Therefore, Carollo recommends removing the rate category as it is not currently needed. Should this rate category be needed in the future, a rate will be developed based on the underlying usage data. The Wastewater Cost of Service Study is attached as Exhibit 8. A summary of the recommended changes per customer class is shown in Exhibit 3. Existing Potable Water and Recycled Water Rate Structure On Nov. 5, 2013, CMWD adopted a new rate structure for its potable and recycled water services. The cost of service allocations in the study are based on the Base-Extra Capacity Method endorsed by the American Water Works Association. Under the Base-Extra Capacity Method, revenue requirements are allocated to the different user classes proportionate to their use of the potable water system. The structure also includes a three-tier rate structure for Single-family Residential (SFR) and Multi-Family Residential (MFR). Non-residential customer classes are based on the uniform volumetric rate structure, with adjustments to the rates based on customer peaking demand activity. The rate structure consists of a base monthly delivery charge and a volumetric usage charge. The base monthly delivery charge is paid regardless of water consumption and is imposed proportionate to water meter size. This fixed delivery charge helps recovers costs such as utility billing, maintenance, operations, and replacement funding. The usage charge is imposed based on actual water consumption. Proposed Potable and Recycled Water Rates No changes are recommended to the potable and recycled water rate structure for 2016. While the Cost of Service Study will be updated to determine what impacts, if any, second dwelling units also have on water cost of service, staff chose to delay a Cost of Service Study for potable and recycled water until 3 Public Hearing-Rates December 1, 2015 Page4 of7 calendar year 2016 for two reasons. First, the impacts of the desalination plant on desalinated water and potable water rates should be solidified by the end of the calendar year 2015. Second, Phase Ill of the recycled water program is now underway. Some changes to the previously proposed program may be recommended based on new usage needs information. Both of these changes should be studied in conjunction with the second dwelling units and incorporated into the cost of service as necessary for each enterprise. Studying these changes together instead of separately helps use rate payer funds efficiently. Council should expect to see this information presented during the Fall of 2016 rate setting process. See the "Fiscal Impact" section for more information. While no changes are currently recommended to the rate structure or cost of service, staff recommends a one year increase to water fixed charge rates and potable water volumetric rates of approximately 5.25 percent, effective Jan. 1, 2016. This increase is driven by increases in the purchased water cost from SDCWA and the estimated desalination rate pursuant to the Uniform Member Agency Purchase Contract {UMAPC}. A portion of the operating reserve is being used to help temper these increases. See the "Fiscal Impact" section for more information. Staff recommends no cost increases for recycled water volumetric rates. A summary of the recommended changes per customer class is shown in Exhibit 3. FISCAL IMPACT: The proposed rate structure and rate increases, if approved, will be effective Jan. 1, 2016 for one year, and will provide adequate funding to properly operate and maintain Carlsbad's wastewater and water systems and provide adequate funding reserves. Recommended Wastewater Rate Increase Staff recommends increasing wastewater rates effective for one year beginning Jan. 1, 2016. The recommended rate increases do not generate revenue beyond what is needed to fund the estimated operational expenditures for Fiscal Year 2015-16. Rather, the recommended increases rebalance the rates based on the current reduction in water and wastewater discharges associated with the state mandated water reductions. It also accounts for minor shifts between customer classes due to current operational expenditures. Carollo recommends increasing the single-family rate by 6.84 percent to $27.81; an increase of $1.78. The recommended increase to multi-family is 9.67 percent or $0.29. The recommended commercial rate increases average just under 11 percent or about $0.50. The proposed increases to schools are approximately four percent or about $0.08. As discussed in the "Item Explanation" section, Carollo is recommending several rate category changes. First, Carollo recommends the Group VI -Large Volume rate category be removed as it is not currently needed. Second, Carollo recommends adding an Industrial Pre-treatment Class Ill category to account for the desalination plant discharge into the wastewater system. The Industrial Pre-treatment Class Ill rate is recommended at $4.53 to recover costs associated with the impacts of desalination plant on the wastewater system. And lastly, Carollo recommends adding a second dwelling unit rate set at 50 percent of the single-family rate, or $13.91. As such, single-family properties with a second dwelling unit would receive a bill1.5 times higher, or $41.72 in total, than single-family properties without a second dwelling 4 Public Hearing-Rates December 1, 2015 PageS of7 unit. This proposed rate is a 50 percent decrease from the current rate which is set at 100 percent of the flat monthly single-family residential rate. The proposed revenue increase and corresponding rates shown in Exhibit 3 reflect the utility's cost of providing wastewater services and account for the current estimated decrease in water demand based on recent consumption patterns. Recommended Potable Water Rate Increase Staff recommends increasing potable water rates by approximately 5.25 percent effective for one year beginning Jan. 1, 2016. This increase is driven in part by a 5.4 percent increase in the San Diego County Water Authority's (SDCWA) all-in rate for treated water. The SDCWA added a new fixed charge for calendar year 2016, the Supply Reliability Charge. This charge recovers a portion of the costs associated with the Carlsbad desalination plant and the Imperial Irrigation District (liD) transfer to recognize the supply reliability provided to the agencies who use those benefits while also recognizing that the agencies who develop their own local supply and roll off of Carlsbad desalination and liD shouldn't pay for those costs. For example, the City of San Diego's Pure Water Program is being developed independently of the SDCWA. The more water the City of San Diego uses from their Pure Water Program, the less they will be using from Carlsbad desalination and liD sources. As such, they will slowly roll off the SDCWA Supply Reliability Charge. The new supply reliability charge, increases passed through from the Metropolitan Water District, and an estimate for depressed water sales due to water conservation are the primary drivers in the SDCWA's all-in rate. To temper the all-in rate increase, SDCWA used one time funds from debt service optimization and its Rate Stabilization Fund. The recommended increase in the potable water rates is also driven in part by the current estimates for the desalination rate associated with purchasing 2,500 acre-feet of water under the UMAPC. The current estimate ofthe UMAPC desalination rate is approximately $2,494 per acre-foot. Staff estimates the impact of the UMAPC desalination rate is approximately 5.25 percent to the average single-family resident. The recommended potable water rate increase for CMWD includes the increased SDCWA rates, the estimated UMAPC desalination rate, and an estimate for depressed water sales (sales assumptions are modeled after 2013 sales figures). However, a target operating reserve of 40 percent of operations and maintenance, better than anticipated financial results, incorporating the estimated impacts of the UMAPC desalination rate into the potable water rate model in 2013, and rate smoothing have helped temper the recommended potable water rate increase by creating sufficient operating reserves. A portion of these operating reserves are being used to soften, or stabilize, the recommended potable water rate increase. Additionally, a separate Agenda Bill on entering into the UMAPC will be presented for the Board's consideration in the near future. If the Board chooses not to adopt the UMAPC, the potable water rates will more than likely be reduced. The timing and mechanism of any rate adjustment will be dependent upon the timing of a UMAPC decision. 5 Public Hearing-Rates December 1, 2015 Page 6 af7 Recommended Recycled Water Rate Staff recommends the usage charge for recycled water rates be held flat, effective for one year beginning Jan. 1, 2016. The monthly fixed charges, which apply to both potable water and recycled water, do increase based on the size of the meter. As of calendar year 2015, the recycled water rate is less than the blended potable water commodity rate for the average single-family resident who uses 13 units of water. Example Monthly Bill If the increases discussed are adopted, the following table provides an estimate of the impacts to a monthly bill for each enterprise: Current Bill Proposed Bill (1/1/2016) Potable Water1 $67.93 $71.532 Wastewater1 $26.03 $27.81 Total Single-family Residential $93.96 $99.34 Recycled Water3 $1,358.81 $1,365.28 1. Assumes an average single-family house: a. Potable Water: 5/8" meter using 13 units per month. b. Wastewater: Pays a flat monthly charge. A property with a second dwelling unit pays 50 percent more, or $41.72 in total. 2. Price per gallon for average single-family home is approximately $0.007. 3. Recycled Water: Industrial Park site with 2" meter using 350 units in July. Multi-Year Rates While the Cost of Service Study was updated this year for wastewater, it was not updated for potable water and recycled water for the reasons stated previously. Once the Cost of Service Studies have been updated for potable water and recycled water during calendar year 2016, staff will begin recommending multi-year rates again. Staff recommends keeping the enterprises on the same rate setting schedules to use Rate Payer Funds efficiently. Having to notice the enterprises separately is costly; combining the noticing spreads the costs amongst all three enterprises increasing economies of scale. The City Council can expect to see multi-year rates again beginning Fall 2016 during the rate setting process for calendar year 2017. ENVIRONMENTAL IMPACT: This project is exempt from the California Environmental Quality Act {CEQA) per State CEQA Guidelines Section 15273(a) -modification, structuring, restructuring, or approval of rates, tolls, fares, or other charges by public agencies. PUBLIC NOTIFICATION: The California Constitution, Article XIIID, Section 6, states that local governments must hold a Majority Protest Public Hearing, and notify property owners and customers 45 days in advance of Public Hearings related to proposed water, recycled water, and wastewater rates. The Public Hearing is to be held 45 days 6 Public Hearing-Rates December 1, 2015 Page 7of7 after noticing the rate payers. At the Public Hearing, if it is determined that a majority of property owners have 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 45 days prior to the Dec. 1, 2015 Public Hearing: • Notified affected utility customers and property owners by mail of the Public Hearing. • The Notice (Exhibit 3) provided information relating to the Public Hearing. • The Notice provided information regarding the proposed rates. • In addition, information about the Majority Protest Public Hearing and proposed rates was posted on the city's website at www.carlsbadca.gov. Information regarding public notifications of this item such as mailings, Public Hearing notices posted in the newspaper, and on the city website will be available in the office of the City Clerk. Protest Letters Received As of Nov. 18, 2015 there were 70 protest letters received. The protest letters are on file with the City Clerk. Any protest letters received prior to the close of the Majority Protest Public Hearing will be forwarded to the City Council and Board of Directors. If there is no majority protest, staff is recommending that the City Council and Board of Directors, after hearing public comment, adopt the proposed rate increases. EXHIBITS: 1. Resolution No. 2015-302 of the City Council of the City of Carlsbad, California, conducting a Majority Protest Public Hearing to approve a new wastewater rate structure and proposed increases in wastewater rates. 2. Resolution No. 1539 of the Board of Directors of the Carlsbad Municipal Water District, California, conducting a Majority Protest Public Hearing to approve increases in water rates. 3. Notice of Public Hearing. 4. 2016 Water Rates. 5. 2016 Wastewater Rates. 6. Carlsbad Municipal Water District Boundary Map. 7. City of Carlsbad Wastewater Boundary Map. 8. 2015 City of Carlsbad Wastewater Cost of Service Study. 9. Protest letters received on file with the City Clerk. 7 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 RESOLUTION NO. 2015-302 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, APPROVING A NEW RATE STRUCTURE AND PROPOSED INCREASES IN WASTEWATER RATES EXHIBIT 1 WHEREAS, the California Constitution Article XIII D §6(A)(2) states that local governments must hold a Public Majority Protest Hearing, and notify customers not less than 45 days in advance of increases in wastewater rates; and WHEREAS, the City of Carlsbad is proposing a new wastewater rate structure and wastewater rate increases, effective Jan. 1, 2016; and WHEREAS, on October 13, 2015, Carlsbad residents and property owners were notified by mail of the proposed new wastewater rate structure and increases in wastewater rates, thereby complying with the advance notice requirement of forty-five days; and WHEREAS, on Dec. 1, 2015, the City Council of the City of Carlsbad held a Public Hearing and approved a new wastewater rate structure and increases in wastewater rates. 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, California, approves a new wastewater rate structure and wastewater rate increases, effective Jan. 1, 2016. II II II 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 RESOLUTION NO. 1539 A RESOLUTION OF THE BOARD OF DIRECTORS OF CARLSBAD MUNICIPAL WATER DISTRICT (CMWD), CALIFORNIA, APPROVING INCREASES IN WATER RATES EXHIBIT 2 WHEREAS, the California Constitution Article XIII D §6(A)(2) states that local governments must hold a Public Majority Protest Hearing, and notify customers not less than 45 days in advance of increases in water rates; and WHEREAS, the Carlsbad Municipal Water District is proposing increases in water rates, effective Jan. 1, 2016; and WHEREAS, on October 13, 2015, Carlsbad residents and property owners were notified by mail of the increases in water rates, thereby complying with the advance notice requirement of forty-five days; and WHEREAS, on Dec. 1, 2015, Carlsbad Municipal Water District, held a Public Hearing and approved increases in water rates. NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Carlsbad Municipal Water District, as follows: 1. That the above recitations are true and correct. 2. That the Board of Directors of the Carlsbad Municipal Water District approves increases in water rates, effective Jan. 1, 2016. II II II II EXHIBIT 5 2016 WASTEWATER RATES TABLE City of Carlsbad Customers are assessed one fee monthly, either a flat fee, a fee based on water usage, or a per student based fee. Customer Class by Groups 1 through 5 RESIDENTIAL/ COMMERCIAL Flat Monthly Fee 1. Single Family Residential 2. Single Family w/Second Dwelling Unit Per Unit of Water Used 1. Multi-Family Residential 2. Mobile Home 3. Commercial -Group 2 4. Commercial -Group 3 5. Commercial-Group 4 6. Other-Group 5 7. large Volume-Group 6 8. Industrial Pretreatment Class Ill SCHOOLS Per Student 5. Elementary 5. Junior High 5. High School 5. Boarding School City of Carlsbad/Carlsbad Municipal Water District Monthly Base Rate $ $ $ $ $ $ $ $ $ $ $ $ $ $ 27.81 41.72 3.29 3.29 2.70 4.10 7.65 2.61 4.53 0.55 0.82 1.10 5.75 5950 El Camino Real I Carlsbad, CA 92008 I 760-438-2722 I 760-431-1601 fax I www.cartsbadca.gov TABLE OF CONTENTS CONTENTS l. Introduction 4 Purpose 4 Project opproach 4 Background 5 Project Recommendations and Findings 6 2. Assumptions and Data 8 Growth and Wastewater Usage 8 User Rate Categories 8 Capital Improvement Plan 9 Operations and Maintenance Expenditures 9 Approach to Rate Analysis 10 3. Revenue Requirements Analysis 1 1 Fiscal Policies 1 1 Debt 13 Revenue Requirement 1 3 4. Cost of Service Analysis 15 Functional Allocation 15 5. Rate Design Analysis 17 Customer Allocation 17 Wastewater Rate Development 23 6. Rate Comparison 26 City of Carlsbad Wastewater Cost of Service Rate Study \~ TABLE OF CONTENTS FIGURES Figure 1: Wastewater Functional Allocation .......................................................................................................... 16 Figure 2: Cost Allocation by Customer Closs ......................................................................................................... 23 Figure 3-Single-Family-Residence Rate Comparison ......................................................................................... 26 City of Carlsbad ii Wastewater Cost of Service Rate Study TABLE OF CONTENTS TABLES Table 1: Wastewater Rates by Customer Class ...................................................................................................... 7 Table 2: Wastewater Revenue Requirements by Fiscal Year .............................................................................. 14 Table 3: Functional Components for Allocating Wastewater System Costs ..................................................... 15 Table 4: Development of Unit Costs for the Functional Components of the Wastewater System ............... 16 Table 5: Assumed Wastewater Loadings by Customer Class ............................................................................. 20 Table 6: Functional Demands by Customer Class .................................................................................................. 21 Table 7: Allocation of Wastewater System Costs by Customer Class and Functional Categories .............. 22 Table 8: Wastewater System Charges by Customer Class ................................................................................. 24 Table 9: Five-Year Rate Schedule ............................................................................................................................ 25 City of Carlsbad iii Wastewater Cost of Service Rate Study ASSUMPTIONS AND DATA 2. ASSUMPTIONS AND DATA This cost-of-service analysis accounted for fund balances, interest earnings, use of capacity fees, deposits and withdrawals to the capital fund, and tracked the operating fund as a method of assessing the impacts of adjustments to wastewater rates. Data was provided by the City to be the basis for the analyses for the rate study. The data included fiscal policies and practices, historical and projected operational and maintenance expenditures, operating transfers, non-operating revenues, debt service requirements, replacement funding, capital improvement needs and customer data. Based on the review of the data, a number of assumptions were developed and used as the basis for performing the cost-of-service and preparation of the rate design. This section outlines these assumptions as well as the limitations of the study. GROWTH AND WASTEWATER USAGE Based on staff projections, Carlsbad's population is expected to grow to 1 14,484 persons by FY 2020/21. This population is considered the build-out population for the purposes of this analysis. This represents an increase of approximately 3.2% over the current population of 110,983. It is expected that wastewater discharges will grow at a commensurate level over the same time period. USER RATE CATEGORIES Carlsbad classifies its wastewater customers as one of ten active customer classes: Single Family Residential (SFR), Multi-Family Residential, Commercial Group I, Commercial Group II, Commercial Group Ill, Other Institutions, Elementary Schools, Junior High Schools, High Schools and Boarding Schools. Single family residential customers are charged a fixed monthly fee for sewer service. If an SFR customer also has a second-dwelling unit (SDU) included on the property, the customer will have an additional fixed monthly fee that is discussed later in this report. Schools are charged for wastewater service based on the number of students. All other customers are subject to a volumetric charge for sewer service based on water usage. This volumetric charge varies between customer classes based on assumed loadings within each customer class. Wastewater customers' effluent discharges are not individually metered; instead, each user's discharges are estimated using wastewater billing records and/or metered water consumption records and assumed strength characteristics. Carlsbad's billing system has a detailed listing of historic water consumption by customer, property use classification, and month. Based on the assumed flow and loadings of each customer class, wastewater rates were developed. The City will also be adding a new customer class to their system, the Industrial Pre-treatment Class Ill, in order to classify their newest customer, Poseidon Resources (Channelside) LP (Poseidon). Poseidon owns and operates a 50 million gallon per day (MGD) reverse osmosis seawater desalination plant. The plant ---------- City of Carlsbad 8 Wastewater Cost of Service Rate Study ASSUMPTIONS AND DATA will be discharging an average of approximately 9,000 gallons per day (GPD) into the City's collection system, per an Industrial Discharge Blending Study completed by Kiewit Shea Desalination on March 2015. The discharge will then be treated at the Encino Water Authority's (EWA) wastewater treatment plant. Poseidon was permitted as a Class Ill facility regulated under EWA's local discharge standards. According to the Study, the industrial discharges will be coming from the plant's woshdown, flushing, analyzer, lab, emergency showers, and neutralization tank discharge. Using the assumed flows and concentrations from the Study, it was determined that this new customer class will also be subject to a volumetric charge based on water usage. It was determined during this study that the Group VI -large Volume rote category is currently not in use. The City's only customer is now located outside the service area and no longer has a business presence within Carlsbad. Carollo recommends removing this customer class from the cost-of-service study as it would result in a rate based solely on estimates and not data. A rote will be developed in the future if there are new customers that fall within this category. CAPITAL IMPROVEMENT PLAN Carlsbad developed the current wastewater Capital Improvement Plan (CIP) to meet the ongoing major repair, replacement, and expansion requirements of the wastewater utility system. Carlsbad categorizes its CIP projects as 'sewer connection' or 'sewer replacement' projects. The sewer connection projects for the next four years are budgeted at approximately $772,000 to $4.1 million annually, in real terms. Fourteen sewer replacement projects ore listed in Carlsbad's CIP. Carlsbad has budgeted $3.1 million to $6.1 million annually for these projects, in real terms. In addition to the fourteen projects are projects associated with the Encino Wastewater Authority's general improvement projects and planned asset replacements. These projects range from $2.6 million to $3.5 million annually. The CIP budget totals $34.9 million, in real terms, through FY 2020/21. Carlsbad frequently adjusts this CIP based on engineering and planning needs for the wastewater system. For the purposes of this rote analysis, only annual depreciation funding will be recovered each year through rates. As of the writing of this report, the City believes that the current annual depreciation funding and existing capital reserves are sufficient to fund the near-term CIP. When significant changes ore made, Carlsbad will need to evaluate funding mechanisms (i.e., reserve balances, capacity fee revenues, etc.) and the timing of projects within its CIP to develop an optimized funding strategy while mitigating any unnecessary rate impacts. OPERATIONS AND MAINTENANCE EXPENDITURES The cost-of-service analysis utilizes Carlsbad's FY 2015/16 budgets as the basis for forecasting future revenue needs. O&M expenditures are projected to total $8.3 million for the fiscal year, not including capitol outlays/transfers and depreciation. In FY 2020/21, $9.7 million has been budgeted for O&M. This increase is due primarily to inflation. City of Carlsbad 9 Wastewater Cost of Service Rate Study REVENUE REQUIREMENTS ANAlYSIS 3. REVENUE REQUIREMENTS ANALYSIS FISCAL POLICIES In developing the cost-of-service analysis, the utility's fiscal policies were reviewed and evaluated in relation to capital funding and appropriate funding levels for the operating, capital and bond reserves. Based on the results of this review, these policies were incorporated within the financial model by tracking fund balances, interest earnings, use of capacity fees, deposits and withdrawals to funds, and tracking the operating fund as a way to assess the impacts of adjustments to wastewater rates. Fund Polides and Benchmark s Utility fund policies are intended to be implemented as a measure of safety and security against future events that may negatively impact the utility's financial health. Fund balances can address variability and timing of expenditures and receipts, as well as occasional disruptions in activities, costs, or revenues. The general objectives of these policies are to facilitate stable and predictable rates and funding sources, along with equitable recovery of costs from customers as they are being incurred (or accrued). Overall, a utility's fund policies are a collection of rules and guidelines. The collective use of individual funds will allow the utility to minimize its exposure to revenue shortfalls and coverage defaults. A review of Carlsbad's financial information indicates that it currently maintains operating and capital reserve funds. Carlsbad currently has a minimum target balance for its operating reserve set at 1 0 percent of annual operating expenditures. By implementing the proposed rates for FY 15/16 and including a 3.0 percent overall rate increase each year, the City's operating reserve will remain at approximately 40 percent of annual operating expenditures. Unforeseen circumstances, such as natural disasters or drastic reductions in usage, might negatively impact fund balance levels. Operating Fund Carlsbad policy states that the utility should maintain a minimum balance for this fund equivalent to 1 0 percent of annual operating expenditures. As of the beginning of FY 2014/15, fund balance is equivalent to 40 percent of annual operating expenditures. The operating fund provides a minimum year-end unrestricted fund balance needed to accommodate the cyclical nature of revenues and expenses. It provides a "cushion" which can be used to cover cash balance fluctuations. This fund is intended to address both anticipated and unanticipated changes in revenues and expenses. Anticipated changes may include billing and receipt cycles, payroll cycles, and other payables. The operating fund can be used to meet cash deficiencies due to unanticipated changes in usage, unforeseen expenditures, or drops in revenues. The fund's target balance is characterized as a percentage of annual expenditures set at a level commensurate to the potential shortfall in revenues, based on the relative volatility of revenues of the utility's volume based rate structure. In general, utilities that recover a significant portion of their costs City of Carlsbad 1 1 Wastewater Cost of Service Rate Study REVENUE REQUIREMENTS ANALYSIS through volume charges will experience greater fluctuations in revenues due to seasonal usage patterns and will face a greater degree of revenue risk than a utility with a flat rate structure. As noted, under Carlsbad's current rate structure, single family residential customers and schools are charged a flat monthly charge for sewer services and all other customers are charged on a volumetric basis. Carlsbad should prepare itself for potential revenue volatility by maintaining an operating fund balance that meets or exceeds the minimum target fund balance, as set by utility policy. A utility may use its operating fund to cover deficits in the winter months (when lower demand results in lower commercial rate revenues) until surpluses can be accumulated in the summer months (when higher demand results in higher revenues). At 40 percent of annual operating expenditures, it is expected that this reserve can ease the impact that multi-year periods of reduced revenues due to lower consumption might have. The operating balance can be funded through rate revenues over time to prevent significant rate spikes. Based on the recommended rates, it is expected that the operating fund balance will be approximately 40 percent of operating expenditures by the end of FY 201 5/1 6. Capital Fund In addition to resources designed to protect against variations in operating costs and revenues, a capital fund can help meet the cost of capital projects, repairs, replacements, and unexpected emergency capital outlays. While it would be impractical to reserve against major system-wide failures such as a catastrophic earthquake (utilities often hold insurance policies for such catastrophic events), it is reasonable and prudent to identify and quantify possible failures of individual system components. Carlsbad uses system reinvestment as the mechanism to determine capital funding levels. This provides a relatively stable and predictable source of funding for capital projects. Depreciation is a commonly used benchmark for system reinvestment. Carlsbad funds depreciation by making annual contributions into the capital fund which may then be used to fund repair and replacement projects within Carlsbad's CIP. Based on the wastewater asset data provided, annual depreciation amounts to $4.2 million in FY 201 5/16. By using funds from the Capital fund, the City has been able to fully fund their Capital Improvement Plan and maintain stable impacts on rates by collecting annual depreciation rather than setting rates to meet fluctuations in annual capital spending. For the purposes of this study, Carlsbad is expected to maintain a capital fund based on system depreciation and the expected useful life of the system's assets. It is projected that Carlsbad will have a beginning balance of $$22.6 in FY 2015/16. Carlsbad's annual capital project expenditure needs range from $3.7 million to $1 0.6 million over the next ten years. There are four major sources of funding for this capital balance: contributions from other agencies (specifically, the City of Vista), capacity fee revenues, interest, and depreciation funding (as outlined in the previous paragraph). Based on staff projections, it is estimated that $200,000 to $465,000 of capacity fee revenues will be deposited into the capital fund on an annual basis over the next ten years. City of Carlsbad 1 2 Wastewater Cost of Service Rate Study REVENUE REQUIREMENTS ANALYSIS The capital fund will assist Carlsbad in meeting unexpected capital needs and in cash funding a larger portion of its projected capital repair and replacement program. This will ultimately save the wastewater utility ratepayers money. It is expected that capital projects that cannot be fully funded through the use of this capital fund will need to be funded through debt or user rates. However, projections show that Carlsbad will be able to fund its CIP budget in the near term using this capital fund. Bond Reserve Since Carlsbad currently has no debt, there is no need to hold funds in this reserve. DEBT Carlsbad currently has no debt in the wastewater enterprise fund and has no plans to issue debt for this rate update. REVENUE REQUIREMENT At the foundation of any utility rate study is a revenue requirement, which uses projected cash flows and debt service requirements to project revenue shortfalls. Using historical records, future operating and maintenance expenditures were projected. Ongoing expenditures were escalated annually on a line-item basis using a range of escalation factors. For example, variable costs like power were increased not only by general cost inflation but also with increases in utility demands (see the section on operating and maintenance expenditures for more information}. Non-operating revenues and expenditures were also evaluated. Carlsbad's CIP was incorporated as described in detail in the capital improvement section of this report. Using these projections, a financial model was developed that incorporates the preceding tasks and assesses the forecasted revenues through a cash flow sufficiency test. A projection of revenue required to service total service operations was therefore established. The model consists of a functional set of methods and data that align with the objectives of the utility. A financial analysis was performed to evaluate utility revenue requirements that accounts for costs associated with operating and maintaining the wastewater utility. This analysis relied on historic expenditures; projected operating, non-operating, and capital expenditures; fluctuating demands; and, projected non-rate revenues. The revenue requirement analysis determines the amount of rate revenue needed in a given year to meet a utility's expected financial obligations. Two separate tests must be met in order for Carlsbad's wastewater rates to be sufficient: • Cash Flow Test - A utility must generate annual utility revenues adequate to meet general cash needs. • Bond Coverage Test-Annual rate revenues must satisfy debt coverage obligations on outstanding debt. However, since Carlsbad has no debt and does not plan to issue debt for the wastewater enterprise fund, this test is not necessary. City of Carlsbad 1 3 Wastewater Cost of Service Rate Study REVENUE REQUIREMENTS ANALYSIS The cosh flow test identifies projected cash requirements in a given year. Cash requirements include operations and maintenance expenses, policy-driven additions to the operating and capital funds, miscellaneous capital outlays, replacement funding and rate funded capitol expenditures. Generally, debt service expenditures are also included in the cash flow test; however, because Carlsbad has no debt, and does not plan to issue new debt it is not part of the cash flow test. Eligible expenditures are then compared to total annual projected revenues. Shortfalls are then used to estimate the necessary rote increases. The bond coverage test measures the ability of a utility to meet both legal and policy-driven revenue obligations. When a municipality issu.es a bond, the official statement dictates the financial obligations that must be met in order to remain in legal compliance. This official statement lists off bond covenants, including a coverage factor. Coverage factors are usually set at a level between 1.0x to 2.0x of annual debt service. The official statement also lists eligible revenues and expenditures to be included in the coverage test. The coverage test does not include policy expenditures (i.e., additions to meet minimum fund balances and depreciation funding), capital expenditures, or capacity fee revenues. Revenues must be sufficient to satisfy both the cash flow and coverage tests. If revenues are found to be deficient through one or both of the tests, then the greater deficiency (shortfall) drives the rote increase. Because Carlsbad has no debt, the cash flow test will drive Carlsbad's revenue requirements over the next 5 years. The results of this revenue requirement analysis are summarized in Table 2: Table 2: Wastewater Revenue Requirements by Fi scal Year City of Carlsbad Wastewater Cost of Service Rate Study FY 2015/16 FY 2016/17 FY 2017/18 FY 2018/19 FY 2019/20 (in millions) (in millions) (in millions) (in millions) (in millions) O&M Expenditures $ 8.3 $ 8.5 $ 8.8 $ 9.1 $ 9.5 Fixed Asset Replacement $ 4.2 $ 4.3 $4.5 $ 4.6 $4.7 Funding (Depreciation) Transfer to Capital Fund ---($ 0.10) ($ 0.18) Net Cash Flow ( 1 ) $0.29 $0.15 $0.20 $0.28 $0.35 Additions to Meet - ---- Coverage Less: Non-Rate Revenues ($0.35) ($0.36) ($0.38) ($0.41) ($0.45} Revenue Requirement $12.4 $12.6 $13.1 $13.5 $13.9 Notes: ( 1 } Includes revenues from rate increases. Between FY 2015/16 and FY 2019/20, the annual revenue requirement varies from $12.4 million to $13.9 million as outlined above. The recommended rates are projected to recover enough revenues to meet the cash f low and cove.rage tests. As noted, the rate increases outlined above generate enough cash flows to maintain the target operating fund balance. C.ity of Carlsbad 14 Wastewater Cost of Service Rote Study RATE DESIGN ANAlYSIS 5. RATE DESIGN ANALYSIS CUSTOMER ALLOCATION Carlsbad does not individually meter wastewater usage by its customers. Metering wastewater is an expensive and generally inefficient process. Single family residential customers, including duplex and 'M 1 ' customers, incur a flat monthly charge for service. Schools are charged on a per student basis, and all other customer classes are charged based on a percentage of water consumption, which is outlined in this report. Carlsbad staff provided wastewater billing records for the purposes of this study. These billing records included data from three fiscal years: FY 2012/13 to FY 2014/15. FY 2013/14 data was utilized to develop usage information by customer class and by month. Wastewater billing records list monthly charges by customer as well as the amount of water used by each customer. Water consumption was not provided for those customers who receive a flat monthly bill (i.e., single family residences and schools). For these customers, data from the water utility billing system was used to estimate discharges to the sewer system. In order to test the validity of the customer data, two tests were performed: an accuracy test and a reliability test. The accuracy test verifies that the correct data is being used by performing a price out on the provided data set in order to calculate revenues and compare the result to the actual revenues listed in financial statements. An acceptable margin of error for this test is +/-3 percent (actual revenues compared to revenues calculated from the billing records). Actual water rate revenues collected by Carlsbad in FY 2013/14 amounted to $44,696,142. Using the customer data set provided, the calculated amount came to $46,700,354, or a difference of $2,004,21 2. This represents a variance of 4 percent. This difference was deemed too large to validate the accuracy of the customer data provided. In order to compensate for this discrepancy within the billing history, a factor of .99 was applied to the consumption data. All consumption data entered in the model was therefore scaled down at the same rate in order to create a more accurate representation of the actual consumption data. Performing a reliability test is also necessary in order to confirm that the correct data is being used. From a statistical standpoint, the definition of reliability is the consistency of a set of measurements. In other words, "Can the provided data be considered a 'normal' year?" It is important to verify that a normalized year of data is being used as the foundation for developing rates; otherwise, revenues may be over or under collected. For example, during a wet year, consumption may be reduced. If a test for reliability is not performed under these circumstances, then the customer base may be understated. Rates would then be set at a level higher than needed and revenues would be over collected. While there is no guarantee that a 'normal' year will occur in the years addressed by this study, for the sake of projections, it is prudent to assume that this will be the case. In performing the reliability test, historical data was reviewed and compared. When comparing historical data, it is important to account for any growth within the customer data and also to take into City of Carlsbad 17 Wastewater Cost of Service Rate Study RATE DESIGN ANAlYSIS consideration any external forces (such as weather, conservation, etc.). Based on the relative consistency of consumption in 2012/13 compared to historical years, it is prudent to assume that FY 2012/13 water consumption represents a normalized non-drought year and is valid for the purposes of this study and that FY 2013/14 has been identified as a drought year. The City of Carlsbad provided historical winter water consumption totals for FY 201 2/1 3 to FY 2014/15. It was found that, on average, consumption in FY 2014/15 was lower than FY 2012/13 and FY 201 3/14. There are two main factors that serve as the basis for these findings. The first is the general long-term trend towards conservatism. As customers replace their appliances or install new irrigation systems, many of them are replacing old, water wasting items, with newer water conserving products. Secondly, the California State Governor declared a statewide drought. This led to a call for mandatory water reductions throughout the State beginning June 1, 2015. Reports show that this has led to decreased water consumption in the area. As noted, a number of Carlsbad's wastewater customers are charged for wastewater service based on water consumption. Therefore, any drops in water consumption will result in reduced sewer flow assumptions and consequently reduced revenues. Absent significant increases in precipitation, drought conditions will most likely persist. Due to the volumetric structure of Carlsbad's wastewater rates, a drop in consumption from FY 2013/14 levels will result in lower than projected revenues which will lead to revenue deficiencies absent rate increases. As such, reduced water demands and wastewater discharges have been accounted for in this analysis for both residential and commercial customers. Using the City's water usage data, it was found that residential customers used approximately 6.6 percent less water in the winter months of FY 2014/15 than in the non-drought year FY 2012/1 3. Commercial customers reduced their consumption approximately 3.0 percent in FY 2014/15 than in FY 201 2/1 3. By applying these percentages to the annual usage presented in the Study, the data that is allocated will equitably shift the costs to represent more realistic projections. As noted, the wastewater rates presented in this section of the report are based on a normalized, non- drought year. It is assumed that FY 201 2/1 3 customer data represents a normal year and is valid for the purposes of this study. After the provided customer data sets were validated, the number of accounts and the amount of flow, BOD, and TSS for each customer class were determined. This allowed for the allocation of costs from the various functional categories (as described in the previous section) to each customer class. The customer classes ore defined as follows: • Single Family Residential includes single family residences, duplexes and M 1 (multiple PDUs) accounts. These users are charged a flat monthly wastewater bill. • Multi-Family Residential includes multi-family residences and mobile homes. These users are charged based on 90% of their water usage. • Group II Commercial includes soft water services, car washes, office buildings, professional buildings, laundromats, department and retail stores, warehouses, hospital convalescent homes and indoor theaters. These users ore charged based on 95% of their water usage. • Group Ill Commercial includes hotels and motels without restaurants, repair and service stations, shopping centers, amusement parks, nightclubs, nurseries and greenhouses, City of Carlsbad 18 Wastewater Cost of Service Rate Study RATE DESIGN ANALYSIS commercial laundries, manufacturing and lumber yards. These users are charged based on 95% of their water usage. • Group IV Commercial includes hotels and motels with restaurants, wholesale bakeries, supermarkets, mortuaries, and restaurants. These users are charged based on 95% of their water usage. • Group V Institutional includes membership organizations and social services. These users are charged based on 95% of their water usage. • Elementary Schools are billed on a per student basis. • Middle Schools are billed on a per student basis. • High Schools are billed on a per student basis. • Boarding Schools are billed on a per student basis. • Industrial Pretreatment Class Ill includes any user discharging waste other than domestic waste, having a reasonable potential to adversely affect the Encino Water Pollution Control Facility and requires annual inspection and permits every three years. These users are charged based on 95% of their water usage. Second Dwelling Units The City of Carlsbad has seen an increase in second-dwelling units (SDUs) in recent years. As of December 31, 2014, there are approximately 349 second-dwelling units within the City of Carlsbad. To comply with legislative guidance on rate setting, it is appropriate to review, among other things, the current usage patterns and development matrices and incorporate any changing patterns into the cost of service. Carollo evaluated the total winter water demands across the single family rate class and the winter water demands by customers with secondary units. The objective in this evaluation was to estimate the incremental sewer discharges that a secondary unit contributes to the wastewater system. Carollo found that, on average, duplex accounts usage is approximately 50 percent higher than SFR accounts. • Single Family Residential Discharges -During the winter months with the lowest water demands, the average SFR property uses 9.3 ccf. This demand information is from FY 201 3 j 14 to FY 2014/15. Even during the winter, Carlsbad residences continue some outdoor irrigation. Consistent with the overall analysis, a 75 percent return to sewer factor was used, which assumes that 75 percent of the water purchases are discharged back into the sewer system. Based on this adjustment, it is estimated that the average SFR discharges approximately 6.9 ccf to the sewer system. • Secondary Unit Discharges -During the same winter period, accounts with secondary units used roughly 4.1 ccf more than the average SFR accounts. Similar to the base SFR account, it is assumed that not all water purchased will be discharged back into the wastewater system. However, most irrigation usage is already accounted for with the SFR return to sewer factor. Consequently, for secondary unit water usage, a 90 percent return to sewer factor is applied yielding an incremental discharge of 3.67 ccf, or approximately 50 percent of the average SFR user. City of Carlsbad 19 Wastewater Cost of Service Rate Study o1 RATE DESIGN ANALYSIS Carollo recommends setting the rate for second-dwelling units at 50 percent of the flat monthly single family residential rate. For example, a property which has a primary residence and a second-dwelling unit would receive one bill that would total 1 50 percent of the base SFR monthly rate. Finally, implementing a rate for secondary units is intended to provide consistency, ease of understanding and administration, and equitably recover costs from system users. It is important for the City to revisit this rate and the water demand to confirm that the secondary unit discharge factor reasonably accounts for incremental water demands. This rate structure is intended to serve single- family residential customers with secondary, in-law units rather than vacation rentals that tend to have higher peak season discharges. Because Carlsbad is a vacation destination, it will be important to confirm the discharges over time and potentially apply a multi-family rate to all vacation rentals. This will also prevent the City's wastewater department from having to police dwelling unit changes in the future. Customer Class Loading and Allocation Carlsbad provided a table that outlines the assumed loading concentrations by user class. It is assumed that these concentrations are accurate. No changes have been made to the assumed loading concentrations that are shown in Table 5. Table 5: Assumed Wastew ater Loadings by Customer Class City of Carlsbad Wastewater Cost of Service Rate Study Customer Class BOD(mg/L) TSS(mg/L) Residential Single Family 200 200 Multi-Family 200 200 Non-Residentia I Commercial II 130 121 Commercial Ill 328 279 CommerciallY 820 680 lnstitutiona I 2,000 600 Assumed Flow per dayi_student* Elementary Schools 130 100 10 gpd Middle Schools 130 100 15 gpd High Schools 130 100 20 gpd Boarding Schools 130 100 75 gpd Industrial Pretreatment Class Ill 298 477 Using these assumptions, water consumption data and the wastewater billing records, assumed usage by each customer class was calculated and is summarized in Table 6: City of Carlsbad 20 Wastewater Cost of Service Rate Study RATE DESIGN ANALYSIS Table 6: Functional Demands by Cu stomer Class City of Carl sbad Wastewater Cost of Service Rate Study Customer Class Monthly Flow BOD TSS Accounts (units, in 1,000's) (lbs, in 1,000's) (lbs, in 1,000's} Single Family 20,788 1,940 2,422 2,422 Residential Multi Family 678 5 14 642 642 Commercial II 1,066 393 320 296 Commercial Ill 281 398 815 692 Commercial IV 91 119 610 506 Institutional 36 11 9 6 Elementary Schools 18 17 13 10 Middle Schools 4 10 8 6 High Schools 4 18 15 11 Boarding Schools 1 8 6 5 Industrial 1 4.6 8.2 13 Pretreatment Class Ill Total 22,968 3,432 4,869 4,609 Due to rounding, totals moy not add up Using these assumptions and the units costs developed in the functional allocation section of this wastewater report, costs were allocated to each customer class as outlined in Table 7. ------------ City of Carlsbad 21 Wastewater Cost of Service Rate Study RATE DESIGN ANALYSIS Charges are developed for all other customer classes by dividing total costs allocable to that customer class by the total assumed flow of that customer class. These customers are subject to a monthly minimum charge for wastewater service. This minimum monthly charge is set at half of the monthly rate that is incurred by single family residential users. This minimum charge was accounted for when developing rates. Table 8 outlines the resulting FY 2015/16 wastewater rates by customer class: Table 8: Wa stewater System Charges by Customer Class City of Carlsbad Wastewater Cost of Service Rate Study Cu stomer Class Rate SFR $27.81 per account MFR $3.29 per unit Commercial II $2.70 per unit Commercial Ill $4.10 per unit Commercial IV $7.65 per unit lnstitutiona I $2.61 per unit Elementary Schools $0.55 per student Junior High Schools $0.83 per student High Schools $1.10 per student Boarding Schools $5.75 per student Industrial Pretreatment Class Ill $4.53 per unit Sic-Hydration Research Lab N/A When the results of the revenue requirement are integrated with the rate design, the 5-year rate schedule that is shown in Table 9 is developed: City of Carlsbad 24 Wastewater Cost of Service Rate Study EXHIBIT 9 • Protest letters received are on file with the City Clerk. Protest Letters Follow j j j j j j j j j j j j j j j j j j j j j j j j j j j j Donna Heraty From: City Clerk Sent: To: Tuesday, December 01, 2015 4:26 PM Donna Heraty Subject: FW: To Council re:water rate increase From: Help Sent: Tuesday, December 01, 2015 1:02 PM To: City Clerk Subject: FW: To Council re:water rate increase From: tempfurn@aof.com [mailto:tempfurn@aol.com] Sent: Tuesday, December 01, 2015 12:54 PM To: Help <Help@CarlsbadCA.gov> Subject: To Council re:water rate increase I am unable to attend tonight's (Dec 1) council meeting. I oppose any water rate increase. I would like the water district proposal to thoroughly document and explain how every cost cutting avenue was utilized. And I expect the council members to investigate the financials and cut costs first. It is easy for you to spend your citizen's money and until the water district has cut costs, programs, personnel (there are some unproductive ones), advertising, pensions, etc., no increase should be approved. Thank you, Carlsbad citizen 1 Office of the City Clerk City of Carlsbad Stephen Blaine 2755 Wilson Street Carlsbad, CA 92008 760.729.8118 se-cablaine@mindspring.com November 30, 2015 1200 Carlsbad Village Drive Carlsbad, CA 92008 Re: Notice and Protest Against Proposed Water Rate Increase Customer Name: Stephen Blaine Service Address: 2755 Wilson Street Carlsbad, CA 92008 ·Hearing Date:.December 1, 2015 Dear Madame Clerk: My customer name and service address are listed above. A copy of my recent bill is attached for identification and reference purposes. I protest the proposed increases in the Monthly Water Delivery Charge, the Single Family Water Usage Charge (all tiers) and the Single Family Residential rate increase. This letter serves as my formal written protest. Please contact me at your earliest convenience if you have any questions or if you need further information to process this protest. Thank you. Very truly yours, I, Heather Silverberg, am opposed to the proposed increase to the wastewaterrate structure and rate '~ l ---------...., increases for water and wastewater services. il 'D ----~ ,, t:::c ------! ''-·£1Vt:: ----__, Property Address: 3733 Glen Avenue, Carlsbad CA 92010 We just underwrote the desalination project!! ( I -D I I ¥ I ! LCrr'/ OF -' I (;1 C',-~~cf:,L(V·s 0EJ;:u; ~OFF;,;~_ e were told to expect our water rates to fcillff~ Fill out and mail in a stamped envelope to: Office of the City Clerk, City of Carlsbad, 1200 Carlsbad Village Drive, Carlsbad CA 92008 Office of the City Clerk City of Carlsbad 1200 Carlsbad Village Drive Carlsbad, CA 92008 Dear Office of the City Clerk: Albert J. Vidano Marie Wood Vidano 6706 Barberry Place Carlsbad, CA 9201:1;::3418_ i ---------November 25, 201p -~- 1 I I ,l I I I I ·" ·r !' L~~_,f Y"' r·,i r--, ------~c:f-?/--:..-'s 0 r-/ ----.. Fr-leE I ~-.:,-::~:.,.,o_,j We are opposed to any increase in the water rates for Carlsbad, California. Sincerely, Marie Wood Vidano I Nov. 27,2015 Riaz Zaboori 3712 strata dr. carlsbad, ca. 92010 760-877-8719 1200 Carlsbad Village Drive Cf\ 92.008 I_Riaz Zaboori am opposed to the proposed increase to the wastewater rate structure and rate increases for water and wastewater services. Property Address: ?/7 { 2--s 7/lATA /)( CA/LLS&,AlJ:_~CA-Of.J-ofu Nov.30, 2015 Jerome J. Schuck 2721 Athens Ave. Carlsbad, CA 92010 Office of the City Clerk City of Carlsbad 1200 Carlsbad Village Dr. Carlsbad, CA 92008 WATER RATE INCREASE PROTEST. This letter. is my formal protest to the proposed changes to Water rates and wastewater rates as set forth by the City of Carlsbad in its recent notice. I am specifically protesting: 1. Monthly Water Delivery Fee increase 2. Residential Water rate increases: a. Single Family (Tier 1, Tier 2 Tier 3) b. Multi Family (All tiers) 3. Monthly Wastewater Fee increases, Residential Single Family These rate increases are unnecessary and overboard. With the reduced water usage in compliance with the Carlsbad restrictions, there is a logical reduction in wastewater treatment requirements and therefor the costs involved. Carlsbad citizens have met water usage mandates and MUST NOT BE PUNISHED for doing so. Do not punish the citizens for following your mandates. q:::_ 7AJJJI 2721 Athens Ave. Carlsbad,CA 92010 USE THiS fORM TO PROTEST THE PROPOSED WATER RATE tNCREASES f II am opposed to this proposed increase to water, wastewater, and recycled water rates. Property Address or Assessors Parcel Number: Signature: ~ Li ,t-----------= lt )\1 tl ( 11/17/15 Office of the City Clerk City of Carlsbad 1200 Carlsbad Village Drive Carlsbad, CA 92008 I, Deanna Neely, am opposed to the proposed increase to the wastewater rate structure and rate increases for water and wastewater services. My property address is: 1316 Corvidae Street, Carlsbad CA 92011 :arlsbad Municipal Water District l am protesting the water rate increase for two important reasons. 1) When we voted approval to install a desalination plant here; we were promised our water rates would remain the same-not increase, 2) Since the citizens have conserved water as requested/required1 the totar cost of water from the county must go down not up1 because we're buying less water. Any change to our city's expense should be less not more. Concerned Carlsbad Registered Voter, Theodore E. Van de Kamp 1708 Evergreen Circle Carlsbad, CA 92008 --(lA-.Ct.; \tv\c: ~) v·"L '-J D { c:.._V\ e -s-+e \f'-e ~ ~ LLCc-c 0LQ_, c;-}e..Lk-i--u--g ~ 4 'f ~ ·-ro-R..J2-el:8 a fl\ V\ €i c r f2. c./ e LcUL l~ }]c-cc~ j 'C/A CJ/L..D I I November 6, 2015 Office of the City Clerk, City of Carlsbad 1200 Carlsbad Village Drive Carlsbad CA 92008 Kenneth J. Koroncey 676 Shrewsbury Drive Clarkston, MI 48348-3674 248-693-2345 ~-----------~enkoroncey@aol.com I r:;;~ / I cC:C£iVEo I I v I CiTy c?!: CARL so 'ID I -cF\l('S 0 ,...,.: r·r·fC£: 1 ~ As directed under your brochure we are protesting the Increase in Carlsbad Water and Wastewater Rates. We are protesting the Monthly Water Delivery charge and the Residential Water Rates for Single Families, Tier 1, 2 and 3. We are protesting the Single Family Monthly Wastewater Rates. This is for our single family home at: 1 7 36 Blackbird Circle Carlsbad 92011 Sincerely yours, Kenneth]. Koroncey, trustee November 6, 2015 Office of the City Clerk, City of Carlsbad 1200 Carlsbad Village Drive Carlsbad CA 92008 Kenneth J. Koroncey 676 Shrewsbury Drive Clarkston, lVII 48348-3674 248-693-2345 kenkoroncey@aol.com J~c -I JEIVED ------,1 I , I v 10 I I As directed under your brochure we are protesting the Increase in Carlsbad Water and Wastewater Rates. We are protesting the Monthly Water Delivery charge and the Residential Water Rates for Single Families, Tier 1, 2 and 3. We are protesting the Single Family Monthly Wastewater Rates. This is for our single family home at: 2720 Olympia Drive Carlsbad 92010 Sincerely yours, Kenneth]. Koroncey, trustee Sincerely, Maria Bucci I November 3, 2015 We D i no ~' )uJ i e, La~, II C\_ are opposed to the proposed increase to the waste ater rate structure and rate increases for water and wastewater services. Address: 2375 Terraza Ribera, Carlsbad, CA 92009 Signature: ~ Jof?aot·v...- ~ovember 2, 2015 Office of the City Clerk City of Carlsbad 1200 Carlsbad Village Drive Carlsbad CA 92008 TO WHOM IT MAY CONCERN: I, Wendysue Wiegand, am opposed to the proposed increase to the wastewater rate structure and rate increases for water and wastewater services. Property Address: 6333 Greenhaven Dr, Carlsbad CA 92009 Thank you for your consideration. Sincerely, Wendysue Wiegand 71;() ~s 11-11 7 r ./' October 28, 2015 Office of the City Clerk City of Carlsbad 1200 Carlsbad Village Drive Carlsbad, California To whom it may concern: I against the proposed water rate increase for a single family account. I am against and protest the increase for uwater delivery chargen, 11Water usage charge" and 11monthly waterwaster ratesn for Single Family and 5/8" as well as 3/4" meter sizes. Larry Slagal 3750 Longview Drive Carlsbad 92010 To: City Clerk, City of Carlsbad I, Gene Edick, am opposed to the proposed increase to the wastewater rate Property address: 1385 Buena Vista Way 92008 October 27, 2015 City Clerk, City of Carlsbad 1200 Carlsbad Village Drive Carlsbad, CA 92008 ATIN; City Clerk We have been home owners in Carlsbad for over thirty years, and we are protesting the proposed increase in our monthly water rates. 7103 Mimosa Drive Carlsbad, CA 92011, A single famify home. /) . () ~:~~~~1~~ Mary shacke"ord )~ ~ f~FU1r~ aJ ./:J~/ /~v::: d~c:C//~.·~~ / Jj)R_aY ~ ~I ~ d-\"~~~~~~I ~ Ovvv0 • +R;_ ~ p-o~ G-t~ ~ Wcri:uu ~, ~ ~ 1 • ~ -f{sV-·7, ~t~ ~I Q ;;r;J45 ~ ~ .._ -""'""'=' ...L/1 ...._ "' I CA q :t 0 0 <() ~b~ -J No T'11Gr~ r~c~ ··, ~~· ·~ /bD-57fo~lfY~Y October 22, 2015 Office of the City Clerk City of Carlsbad 1200 Carlsbad Village Drive Carlsbad, CA 92008 I am formally protesting the 5.25% rate increase. I receive service at 1644 Cormorant Drive, Carlsbad, CA David Perlmutter Office of the City Clerk · City of Carlsbad 1200 Carlsbad Village Drive Carlsbad, CA 92008 I, Dr. Lorie A. Sousa, am opposed to the proposed increase to the wastewater rate structure and rate increases for water and wastewater services. Property Address: 2278 Aventurine Place Carlsbad, CA 92009 / October 24, 2015 Elizabeth Hoffman 6847 Alderwood Drive Carlsbad, Ca 92011 Re: Water/Sewage Rate Increase To Whom It May Concern: I am opposing the water/sewage rate increase. I am a single parent and caring for my disabled son, as well as supporting my college aged daughter. Recently, my property taxes and HOA fees increased. My current employer cut my hourly rate by 13%. I am unable to afford this water/sewage rate increase. I currently practice water conservation, as you will note by my water usage. I contribute to my community through these efforts. I am hopeful you will take this into consideration and keep my water/sewage rates unchanged. Please feel free to contact me if you have any questions. Respectfully, Elizabeth Hoffman 858-342-7526 Office of the City Clerk City of Carlsbad 1200 Carlsbad Village Dr Carlsbad Ca 92008 To: The City of Carlsbad, This letter is to protest the water and wastewater proposed rate increase for residential customers. Thank you, ~p_; Sarah Louie 6809 Maple Leaf Dr Carlsbad Ca 92011 October 23, 2015 City Clerk City of Calrsbad 1200 Carlsbad Village Drive Carlsbad, CA 92008 Dear City Clerk: Carole S. Bloom 7067 Rockrose Terrace Carlsbad, CA 920 11 760-207-6006 This letter is to strongly Protest the proposed increase in Single Family Residental Water Delivery Charge and Monthly Wastewater Rates. Sincerely, (}(UJ-{v~ Carole Bloom, homeowner 7067 Rockrose Terrace Carlsbad, CA 92011 / / i< Bruce Bandemer PO Box 668 Carlsbad CA 92018 October 21, 2015 Office of the City Clerk City of Carlsbad 1200 Carlsbad Village Drive Carlsbad CA 92008 RE: Own property at 6341 Allston St, Carlsbad CA. Dear City Clerk; I am opposed to the proposed increase to the wastewater rate structure, as well as the increases for water and wastewater services. Thank you Bruce H Bandemer October 21, 2015 Office of the City Clerk City of Carlsbad 1200 Carlsbad Village Drive Carlsbad CA 92008 Bruce Bandemer PO Box 668 Carlsbad CA 92018 RE: Own property at 2720 Jefferson St, Carlsbad CA. Dear City Clerk; ~- / R~CEJV~Q---7 i I am opposed to the proposed increase to the wastewater rate structure, as well as the increases for water and wastewater services. Thank you Bruce H Bandemer / Office of the City Clerk City of Carlsbad 1200 Carlsbad Village Drive Carlsbad, CA 92008 RE: 08815700-04 Dear Office of the City Clerk: Rodrigo Sada Natali a Sada 2874 Rancho Rio Chico Carlsbad, CA 92009 I am writing this letter to communicate you that we are protesting your new proposed rates to take effect in 2016. Thank you for your time and attention to this matter. Sincerely, ~~#~···, Rodrigo ··a a Natalia Sada Enclosures City of Carlsbad 1200 Carlsbad Village Drive Carlsbad, CA 92008 October 20, 2015 To whom it may concern: I am writing to protest the proposed water rate increase. I am adamantly opposed to the rate increase the Carlsbad Municipal Water District is proposing to the water usage and delivery charge. I do not think it is fair that now that we are all doing our part to save water, we should be penalized for it. It is bad enough that our lawns and plants have dried out trying to follow the water restrictions you have implemented, but it is outrageous that now we would be expected to pay more because we are spending less on water. I strongly object to these water rate increases and hope you will reject this proposal. Sincerely, ~~ Susana Cuellar 6347 Paseo Cerro Carlsbad,CA 92009 Emilie K. Cuthbert 3207 La Costa Ave. Carlsbad, CA 92009 Office of the City Clerk City of Carlsbad 1200 Carlsbad Village Drive Carlsbad CA 92008 Regarding Raising Water Rates: I, Emilie K. Cuthbert, am opposed to the proposed increase to the wastewater rate structure and rate increases for water and wastewater services. Property Address: 3207 La Costa Avenue, Carlsbad, CA 92009 Signature: October 20, 2015 Karen and Roupen Keusseyan 2541 El Gavilan Court Carlsbad, CA 92009 To Whom it May Concern; All members of the Carlsbad City Council: We do hereby protest the residential water and sewer rate increase. We protest the water delivery charge increase, the tiered water usage increased charges and the wastewater rate increases. It is UNCONSCIONABLE that the City of Carlsbad is punishing its citizens for conserving water by raising the cost. We are two of many, and are confident that the proposed rate increase will be withdrawn, per our rights as a majority. • Why is it not possible for private citizens to tap into the purple pipe system for irrigation? • Why is Carlsbad, as a municipality, mandated to conserve at a higher percentage than others, when we have infrastructure in place to mitigate our usage? • Why is the airport expansion being thrust upon us without a vote, as required by law? • Why has the Caruso 85/15 project not been put on the ballot? The extreme hubris of the Carlsbad City Council is astounding. Sincerely, Roupen Leo~ Keusseyan, regi~ £+<. ~· ( . ~ Office of the City Clerk City of Carlsbad 1200 Carlsbad Village Drive Carlsbad, CA 92008 RE: Proposed Water Rate Increase Sir: I am against the proposed waster rate increase from the current $3.35/unit to the proposed $3.53/unit effective January 1, 2016. We are in the middl~ of a prolonged drought with mandatory water usage restrictions having been imposed and yet the City is permitting the construction of new homes which will further exacerbate the problem. I use the absolute minimum amount of water that I can and yet I find myself in Tier 3 every month. It is not right that often times the bill is exaggerated because of the number of days in a billing cycle can be as high as 32-33 days. With the smart meters of today, there is no reason why the billing cycle cannot be maintained at constant 30 days, so that the consumer is not punished some months with an exorbitant number of units in Tier 3 merely because the City decides to prolong the billing cycle. The proposed 5.4% increase in the cost of water per unit is much more than the cost ofliving index and I believe is difficult to justify in these economic times. Including all of the ancillary costs, the price increase amounts to an increase of more than 6. 8% which is more than 3 times the maximum cost of living adjustment that I am eligible to receive. Stop the new construction and limit the infrastructure operations and maintaince requirements. Don't saddle homeowners with the added expense because the City cannot adequately manage its budgetary responsibilities. Sincerely, ~~- Theodore Labahn 3800 Stoneridge Road Carlsbad, CA 92010 .·\; .2184 Okkinson Drive t.Car~sbad. CA 92008-4667 Q#lce of the Citv Clerk Citv ot Carlsbad 1200 Carisbad Viiiage Drive Carlsbad~ CA 92008 .· ... ' .. ~ '· . Jkan ownertn:rtep:a;yer ofthe above property iocated in Carlsbad, CA, I formally protest tne 1/01/16 Month Wastewater Rate proposaf and want it rejected. Water rates are costing taxpayers more as water usage continues to declme, Office of the City Clerk City of Carlsbad 1200 Carlsbad Village Dr. Carlsbad, CA 92008 Re; Protest Against Water Rate Hike Dear Sir: This is to notify you that my wife & I are protesting the water rate increase in our residence in Carlsbad as noted below: Address: 7342 Grebe Dr., Carlsbad CA 92011 Names: George Chow Edna Chow ULeL/ ~ To whom it may concern, I, Sheila H. Jan, am opposed to the proposed increase to the wastewater rate structure and rate increases for water and wastewater services. Property Address: 7207 Plaza De La Costa Carlsbad, CA 92009 AI H. Zanganeh 2202 Azurite Place, Carlsbad, CA 92009 Office of the City Clerk City of Carlsbad ·1200 Carlsbad Village Drive Carlsbad CA 92008 Ref: Water rate increases Date: October 19, 2015 We are opposed to the proposed increase to the wastewater rate structure and rate increases for water and wastewater services. Respectfully, KEVIN B VALLES {760) 434-3222 I~ ocr 1 1£"; IJ C OF CARL,., C' r::R , uBAD . ~SOFFJCE 3390 CELINDA DR CARLSBAD CA 92008 October 17, 2015 Office of the City Clerk City Of Carlsbad 1200 Carlsbad Village Drive Carlsbad, CA 92008 Dear City Clerk, I protest the raising of water rates. I specifically protest any and all proposed increases to the monthly wastewater rates per the notice recently received in the mail and in connection with the public hearing on Tuesday December 1, 2015. Thank You ;J~----- Kevin B. Valles Untitled 18/18/2815 Office of the City Clerk Carlsbad, CA 92888 RE: Proposed Rate Increases RECEIVED I am adamantly OPPOSED to your proposed residential single family rate hikes on water delivery charges, water usage and monthly wastewater. 7ax-~ Robert Evans 2817 Rancho Rio Chico Carlsbad, CA 92889 Page 1 I October 16, 2015 Office of the City Clerk City of Carlsbad 1200 Carlsbad Village Drive Carlsbad, CA 92008 Elizabeth Goldey 7323 Grebe Drive Carlsbad, CA 92011 I would like to protest the proposed fee increase for: • Monthly water delivery charge • Water usage charge • Monthly wastewater rates. I am protesting these fee increases for the property address listed above, of which I am the owner and rate payer. , Thank you for your consideration. Elizabeth Goldey I, Barbara J. Levi, am opposed to the proposed increase to the wastewater rate ~tructure and rate increases for water and wastewater services. Property Address: 3462 Ravine Drive, 92010 (\ Jk\ ...... (; 1\ 1 l rJt!L~ ' I u ·, .. ,....-' .. l ~- A~; Renteria , 2691 Coventry Road Carlsbad, Ca 92010 ,k~ v-e_~~~~~ ~_Q,.__1~) &C)/I~ / ~\S\ t:_ ~ VY\~'4-e. '-" ~ JLL0o..srf~~. i . ' v j l&-~"-~; ·~' ~ j / j ~ ~_,J)~~~·~ otf.p ~ i -~ cJ ' ~ ' I I ~sO-~ ~-~ L4 CJd ~ .i &i~ l.' i ~~-"c...-:t-~ ~ L--(1. i j j j j j j j j j j j j j j j j j j j j j j j j 26 October 2015 Office of the City Clerk City of Carlsbad 1200 Carlsbad Village Drive Carlsbad, CA 92008 RE: Protest of Water Price Increase Dear Sirs: I am opposed to the proposed water price increase. I have cut my water usage 59% percent. Carlsbad, CA 92009 Please show me that the City of Carlsbad had cut staff, reduced salaries, furloughed employees, and delayed capital expenses before I am going to agree to a water price increase. a;ress,(_.is--ow_n_a_b_o-ve-. Alec E. Alessandra Majority Protest Public Hearing: Water and Wastewater Rate Increases City of Carlsbad/Carlsbad Municipal Water District December 1, 2015 Cost of Service Study: Wastewater •Consultant: Carollo Engineers, Inc. •Objectives: –Update data on current customer usage demands •Look at second dwelling units •Incorporate desalination plant –Ensure sufficient funding for operations –Comply with Proposition 218 Cost of Service Study: Wastewater Findings •Rebalanced rates to account for water reductions •Rate structure revisions to mirror usage patterns: –Reduced second dwelling unit rate –Added Industrial Pretreatment Class III rate –Eliminated Group VI –Large Volume rate •Reserve policy: maximum of 40% of operating budget 3 Cost of Service Study: Wastewater Bill Comparison 4 $90.91 $70.99 $63.92 $57.99 $56.31 $55.28 $54.25 $51.20 $44.00 $42.32 $39.32 $38.99 $36.91 $34.34 $31.54 $27.81 $26.05 $26.04 $- $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 Del Mar, City of Fallbrook Olivenhain (Rancho Cielo Service Area) Oceanside Ramona Padre Dam Vista, City of Valley Center MWD Pauma Valley CSD San Diego, City of La Mesa, City of Vallecitos Escondido Otay Poway Carlsbad (Proposed) Rainbow Leucadia Potable Water Rates •Rate increase of approximately 5.25% for calendar year 2016 •Rate increase primarily driven by: –San Diego County Water Authority all-in rate increase of 5.4% –Desalination rate impact of approximately 5.25% to average single family resident •Reserve policy: maximum of 40% of operating budget 5 Potable Water Bill Comparison 6 110.62 108.41 106.99 102.84 101.57 99.52 95.99 91.79 88.16 86.78 84.01 82.63 81.90 81.87 79.23 79.21 76.33 75.73 74.06 72.49 72.01 71.30 63.02 $- $20 $40 $60 $80 $100 $120 Padre Dam E Padre Dam W Rainbow Ramona Valley Center Del Mar Fallbrook Escondido Vista Rincon San Diego Yuima Oceanside Otay Helix Carlsbad Santa Fe Olivenhain Sweetwater Vallecitos San Dieguito Poway Lakeside Recycled Water Rates •Annual volumetric rate increase of 0% for calendar year 2016 •Reserve policy: maximum of 40% of operating reserves 7 Example of Monthly Bill Changes Current Proposed (1/1/2016) Potable Water1 $67.93 $71.532 Wastewater1 $26.03 $27.81 Total $93.96 $99.34 Recycled Water3 $1,358.81 $1,365.28 8 1.Average single-family house: •Potable Water: 5/8” meter using 13 units •Wastewater: Pays a flat monthly charge 2.Price per gallon for average single family home is approximately $0.007 3.Industrial Park site with 2” meter using 350 units in July Action Items •Protest letters •Open public hearing •Carlsbad City Council action •CMWD Board action 9 Water and Wastewater Rates Questions? 10 Water Agency Contact Information San Diego County Water Authority http://www.sdcwa.org 4677 Overland Avenue San Diego, CA 92123 858-522-6600 Metropolitan Water District http://www.mwdh2o.com Mailing address: P.O. Box 54153 Los Angeles, CA 90054-0153 Street address: 700 North Alameda Street Los Angeles, CA 90012-2944 213-217-6000 11 Water: Monthly Fixed “Delivery Charges” Meter Size Existing Service Charge Proposed Service Charge (1/1/2016) 5/8”$21.08 $22.19 3/4"$28.68 $29.87 1”$42.98 $45.24 1-1/2”$79.49 $83.66 2”$123.31 $129.78 2-1/2”$174.41 $183.57 3”$225.52 $237.36 4”$371.56 $391.07 6”$736.64 $775.31 8”$1,174.74 $1,236.41 10”$1,685.86 $1,774.37 12 Water: Monthly Variable “Usage Charges” Existing Variable Charge (per HCF) Proposed Variable Charge (1/1/2016) Single Family: Tier 1 (10 units)$3.35 $3.53 Tier 2 (11-18 units)$4.45 $4.68 Tier 3 (19+ units)$6.42 $6.76 Multi-family: Tier 1 (5 units)$3.35 $3.53 Tier 2 (6-10 units)$4.45 $4.68 Tier 3 (11+ units)$6.42 $6.76 Non-residential $4.05 $4.26 Agricultural $4.15 $4.37 Irrigation $4.44 $4.67 Recycled $3.53 $3.53 13 Wastewater Charges Monthly Wastewater Rates Current Proposed (1/1/2016) Residential Single family $26.03 $27.81 Single Family w/ SDU $52.06 $41.72 Multi-family $3.00 $3.29 Mobile home $3.00 $3.29 Commercial Group II $2.44 $2.70 Group II $3.70 $4.10 Group IV $6.87 $7.65 Group V –Schools Elementary school $0.53 $0.55 Junior high school $0.78 $0.82 High school $1.06 $1.10 Boarding school $5.53 $5.75 Group V –Other Other $2.44 $2.61 Group VI –Other Bio Hydration $2.11 $0.00 Industrial Pretreatment Class III Desalination Plant $0.00 $4.5314 Wastewater Where does the money go? 15 Potable Water Where does the money go? 16 Recycled Water Where does the money go? 17 Calendar •October 6, 2015: Set majority-protest public hearing for December 1, 2015 •October 17, 2015: Mail written public notice on or before this date to comply with Proposition 218 (45 day) noticing requirement •December 1, 2015:Hold majority-protest public hearing, set rates, and approve new rate design •January 1, 2016: Implement new rates 19