Item 38 - Water Revenue Bonds - Laserfiche WebLink

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rain during 2022 and 2023, snowfall has greatly improved with indications of record high snow water equivalent levels for this time of year. Due to the improved drought conditions, on March 24, 2023, the California Governor issued Executive Order N-5-23 (the "2023 Executive Order"), easing drought emergency provisions that are no longer necessary while maintaining certain requirements that are still needed in parts of the State. The 2023 Executive Order included termination of the voluntary reduction of water usage, while retaining the state of emergency in all State counties to allow for drought response and recovery efforts to continue. hi response to the State's drought proclamations and regulations, the City has adopted a water shortage contingency plan ("WSCP") in compliance with State guidelines for such plans. The WSCP calls for the City to respond to water shortages in stages or "shortage levels" as described in the WSCP. The City Council has the authority to declare a water shortage and establish the mandatory measures to be taken pursuant to the WSCP. In the event of water shortages and mandatory reduction measures, the City will experience a reduction in revenue due to reduced water sales. Throughout this period of time, expenditures may increase or decrease with varying circumstances. Expenditures may increase in the event of significant damage to the Water System, resulting in emergency repairs. Expenditures may also decrease as less water is pumped through the system, resulting in lower power costs. Water shortage mitigation actions will also impact revenues and require additional costs for drought response activities such as increased staff costs for tracking, reporting, and communications. The City receives water revenue from a service charge and a commodity charge. The service charge recovers costs associated with providing water to the serviced property. The service charge does not vary with consumption and the commodity charge is based on water usage. Rates have been designed to recover the full cost of water service in the charges. Therefore, the total cost of purchasing water would decrease as the usage or sale of water decreases. In the event of a drought emergency, the City will impose excessive water use penalties on its customers, which may include additional costs associated with reduced water revenue, staff time taken for penalty enforcement, and advertising the excessive use penalties. The excessive water use penalties are further described in the City's Municipal Code, Chapter 39, Article VI — Water Shortage Contingency Plan. Reference to the City's Municipal Code is provided here for convenience and no information contained in such Municipal Code is incorporated herein by such reference. There are significant fixed costs associated with maintaining a minimal level of service. The City will monitor projected revenues and expenditures should the WSCP be implemented impacting water sales for an extended period of time. To overcome potential revenue losses and/or expenditure impacts, the City may use its reserve funds to offset the lost revenue from water sales. If necessary, the City may reduce expenditures by delaying implementation of its capital improvement program and equipment purchases to reallocate funds to cover the cost of operations and critical maintenance, adjust the work force, implement a drought surcharge, and/or make adjustments to its water rate structure. Climate Change Numerous scientific studies on global climate change show that, among other effects on the global ecosystem, sea levels will rise, extreme temperatures will become more common and extreme weather events will become more frequent and more intense as a result of increasing global temperatures attributable to atmospheric pollution. The Fifth National Climate Assessment, published by the U.S. Global Change Research Program in November 2023 (NCA5), finds that rising temperatures, sea level rise, and more frequent and intense extreme weather and climate -related events, as well as changes in average climate conditions, are expected to continue to increasingly disrupt and damage infrastructure, ecosystems, social systems, property, and regional economies and industries that depend on natural resources and favorable climate conditions. Beyond the direct adverse material effect of global climate change itself, present, pending and possible regulations aimed at curbing the effects of climate change may directly or indirectly materially adversely affect 34