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City of Santa Ana, CA I WATER RATE STUDY <br />In addition, there are two one -time increases in FY 15/16 — one under routine capital outlay to cover <br />vehicle and heavy equipment needs and one under contract services. The latter adjustment reflects the <br />City's move to comply with the Prevailing Wage laws in order to qualify for grants and low- interest loans <br />administered by the State. The projected impact to contract services to address the Prevailing Wage <br />laws is 10 percent. <br />Total 0 &M is projected to increase from $45,104,400 in FY 14/15 to $48,516,400 in FY 18/19. <br />Capital Improvement Program <br />While 0 &M expenses cover day -to -day operations, the Water Enterprise incurs additional capital <br />expenditures to replace existing water facilities or installed new facilities for planned future growth. As a <br />result, the Water Enterprise requested Black & Veatch to assist with developing a long -term R &R <br />Program that identifies future water system needs and upgrades. <br />Black & Veatch conducted a high -level asset condition review using City - provided Geographic <br />Information System (GIS) data and available condition reports for the water system. Black & Veatch <br />evaluated the available data and held two workshops with engineering and maintenance staff to <br />develop weighting factors for the asset assessment. <br />Overview of Asset Information <br />Figure 1 illustrates the distribution of the City's water mains by installation decade and pipe material. <br />The mains included in the analysis are for "potable" use and do not include the MWD lines that served <br />the City and are within the City's boundaries. Of the approximately 508 miles of mains in the system, <br />over 70 percent was installed pre 1980 and the average age of the pipes in the system is 50 years. From <br />Figure 1 it is clear that the City will soon face a major reinvestment period as water mains reach the end <br />of their useful life. In the absence of any condition assessments, the industry standard for main <br />replacement is 1 percent of the system per year. If we apply this approach to the City's system, the <br />result is an annual replacement rate of 5 miles of mains. The City is currently replacing mains at a rate of <br />0.5 percent per year. <br />BLACK & VEATCH I Water Rate Study <br />[INTENTIONALLY LEFT BLANK] <br />65B -35 <br />