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REQUEST FOR <br />COUNCIL ACTION <br />CITY COUNCIL MEETING DATE: <br />FEBRUARY 17, 2015 <br />TITLE: <br />PUBLIC HEARING — RESOLUTION <br />ADJUSTING CITY WATER AND SEWER <br />RATES (NON- GENERAL FUND) <br />{STRATEGIC PLAN NO. 6, 1, H} <br />4��:a ) 4' <br />CITY MAN GER <br />RECOMMENDED ACTION <br />CLERK OF COUNCIL USE ONLY: <br />. * R <br />❑ As Recommended <br />❑ As Amended <br />❑ Ordinance on 18' Reading <br />❑ Ordinance on 2n' Reading <br />❑ Implementing Resolution <br />❑ Set Public Hearing For <br />CONTINUED TO <br />FILE NUMBER <br />Hold a public hearing and adopt a resolution adjusting the City water and sewer rates effective <br />March 1, 2015; July 1, 2015; July 1, 2016; July 1, 2017; and July 1, 2018. <br />DISCUSSION <br />Background <br />The City owns and operates a water system and a sewer collection system that provides services <br />to a population of over 330,000. The City water system consists of 500 miles of mains, 10 <br />reservoirs, 7 pumping stations, and 19 active wells. The City sewer system consists of 390 miles of <br />main, 8,000 manholes, and 2 lift stations. <br />In June 2011, the City Council directed staff to perform a comprehensive examination of City <br />assets, capital needs, and the financial condition of both the water and sanitary sewer enterprises. <br />The last comprehensive examination and rate study had been performed in 1995. The results of <br />the new 2014 rate studies identified that comprehensive water and sewer rate adjustments were <br />needed to continue to provide reliable water and sewer service to customers. <br />According to the report findings, the main reasons for the adjustments include rising costs to <br />purchase imported water, rising costs of producing groundwater, and the need to replace aging <br />infrastructure. Over the last three years, purchased water costs have increased 25% and account <br />for almost 43% of the Santa Ana Water Enterprise annual budget. Additionally, to maintain the <br />level of service provided to rate payers, the City is proposing to invest heavily in replacing the <br />existing aging water and sewer infrastructure. Currently the City replaces about 0.5% of water <br />system pipelines per year and 0.1 % of sewer system pipeline per year. The City proposes to <br />increase the rate of replacement for both water and sewer pipelines to the minimum industry <br />standard of 1.0% of system pipelines per year. This equates to constructing a minimum of 5 miles <br />of new water main and 4 miles of new sewer main each year. <br />75A -1 <br />