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Home My WebLink AboutPPT_65B_WATER SEWER RATE STUDIES City of Santa Ana Water and Sewer Rate Studies CITY COUNCIL MEETING DAVID CAVAZOS, CITY MANAGER FRED MOUSAVIPOUR, EXECUTIVE DIRECTOR OF PUBLIC WORKS AGENCY ANN BUI, BLACK & VEATCH DECEMBER 2, 2014 OVERALL GOALS Provide sustainable and reliable water and • sewer service meeting or exceeding federal and state standards. Deliver clean and safe drinking water to all • residents. Protect and care for the City’s infrastructure. • Bring value to the City through new • technology and automation. Take action now to bring financial stability to • maintain a high sustainable Level of Service. Begin and make bi-annual rate studies • 2 KEY TAKE-AWAY POINTS Meet all these goals for just an additional • $1.58 per month (5¢/day). More than 20 years since last comprehensive • rate study. Acting now saves money: • Avoid additional costs of road closures, • impacted businesses, sinkholes, etc. Avoid regulatory fines and mandated • activities 3 PURPOSE OF THE WATER AND SEWER RATE STUDIES •Develop a long-term financial plan that projects operating revenue, expense and capital financing costs to meet the City’s future needs. •Propose a capital program that incorporates a risk evaluation of the City’s assets •Increase revenue stability for the utilities to support capital system investments 4 WATER & SEWER UTILITIES BACKGROUND Large capital Significant Provide Heavily intensive fixed costs services to regulated by programs the 11Federal & th largest CA State Purchased More than cityagencies water costs $86M planned Operate capital USEPA, Increasing complex water projects State WRB, MWD & and sewer over next 5 CA DPH OCWD costs systems years 5 QUICK FACTS -WATER •500 miles of mains •Average age: 50 years •Life expectancy: 40 to 60 years •Main replacement cost: $943M •Age pipes breaking: 35 to 45 years •10 reservoirs, 7 pumping stations, and 19 active wells •Current replacement rate is 0.5% of system per year •Industry standard is minimum of 1% of system per year •Imported water costs have increased more than 25% since last rate adjustment in 2011 6 QUICK FACTS -SEWER •390 miles of mains •20 miles of OCSD mains maintained by City •Average age: 50 years •Life expectancy: 40 to 60 years •Main replacement cost: $405M •Current replacement rate is 0.1% of system per year •Industry standard is minimum of 1% of system per year •8,000 manholes •2 lift stations 7 COST BREAKDOWN –FY 15 BUDGET Approximately 80% of costs are fixed Sewer Budget Water Budget 17% 36% 38% 46% 45% 18% O&M O&M Laterals & FOG Programs Purchased Water Capital Capital 8 WATER SYSTEM –DISTRIBUTION BY INSTALL DECADE 70% Over 70% of the system installed pre-1980s 9 SEWER SYSTEM –DISTRIBUTION BY INSTALL DECADE 85% Over 85% of the system installed pre-1980s 10 WATER SYSTEM PRIORITIZATION Colored Zones Total of $119.2 million  13 miles (5% of system) –significant probability of  failure in 5 years 11 PRIORITY WATER MAINS Older Part Of City 12 SEWER SYSTEM PRIORITIZATION Colored Zones Total of $88 million  44 miles (12% of system totaling $46M) –high likelihood of failure in  5 years 13 PRIORITY SEWER MAINS Older Part Of City 14 PROPOSED WATER CIP 2.8% annual increases provides: • CIP of $67.8M over 5 years – Elimination of main replacement backlog – 3 miles per year replacement – Rehab of Well 32 (currently offline) will increase local supply – Requires debt financing of $24M and cash financing of • $35M (from revenue adjustments ) In $000’s ProjectFY 14/15FY 15/16FY 16/17FY 17/18FY 18/19 AMI3,278.23,376.53,477.83,582.2 Well 32 Rehab 5,177.3 R&R -Annual 5,352.55,057.25,208.8 Inspections 314.81,300.6 R&R -Critical 10,462.23,299.44,505.54,640.78,738.8 Total $10,462.2$12,244.9$13,059.3$14,476.3$17,529.8 AMI = Advanced Metering Infrastructure R&R = Rehabilitation and Replacement 15 PROPOSED SEWER CIP 8.8% annual revenue provides: • CIP of $18.4M over 5 years – Elimination of main replacement backlog – Target 5 miles replacement/year after FY 18/19 – Requires debt financing of $13.5M and cash financing of • $4.3M Reserves at 90 days of O&M and $1M emergency fund • In $000’s ProjectFY 14/15FY 15/16FY 16/17FY 17/18FY 18/19 CriticalR&R 1,230.8 2,674.8 3,393.2 1,154.0 2,805.9 Master Plan 300.0 0.0 0.0 0.0 0.0 Inspections 0.0 0.0 0.0 1,241.4 663.0 Non-Collection System Projects 0.0 0.0 84.7 327.3 399.3 Total $1,530.8 $2,674.8 $3,477.9 $2,722.7 $3,868.2 R&R = Rehabilitation and Replacement 16 BENEFITS OF ACTING NOW Maintain level Take advantage of service of low interest provided to rates to finance ratepayersactivities Avoid increased costs of Establish long- deferring term financial activities and and service opportunity viability costs 17 COST OF DEFERRING CIP • American Society of Civil Engineers Reports “Failure to Act” series examines economic impacts if capital • investment is delayed Road closures, sinkholes • Loss of jobs, health & safety issues • Costs are in addition to asset replacement and regulatory • fines • Mandated projects via consent decrees Annual Water Impacts Annual Sewer Impacts HouseholdsBusinessesLocal EconomyHouseholdsBusinessesLocal Economy $366K $917K$4.46M $129K $324K$1.58M toToTotoToTo $1.31M$3.29M$16.00M$1.08M$2.70M$13.12M 18 WATER CASH FLOW NO ADJUSTMENTS • FY 14/15 revenues include refinancing proceeds 19 WATER CASH FLOW PROPOSED 2.8% 2.8%2.8%2.8%2.8% •FY 14/15 revenues include refinancing proceeds 20 SEWER CASH FLOW NO ADJUSTMENTS 21 SEWER CASH FLOW PROPOSED 8.8% 8.8% 8.8% 8.8% 8.8% 22 TYPICAL MONTHLY BILLS –MARCH 2015 Combined Single Family Residential Bill Increase = $1.58/month (3.1%) Water ProposedRates % Total Meter Usage Current Bill Customer AccountsSize(HCF)($/month) $/monthIncrease ($) SingleFamily76.7%5/8”15$44.41$45.40$0.99 Commercial9.6%2”50$171.51$199.94$28.43 Industrial0.18%6”500$1,707.61$1,899.11$191.50 Sewer ProposedRates % Total Usage Current Bill Customer Accounts(HCF)($/month) $/monthIncrease ($) SingleFamily80.9%15$5.18$5.760.59 Commercial7.6%50$17.25$16.41($0.84) Food Services2.5%50$17.25$33.81$16.56 Industrial0.19%500$172.50$153.30($19.20) 23 TYPICAL SINGLE FAMILY RESIDENTIAL COMBINED MONTHLY BILLS 24 WHAT ELSE CAN YOU GET FOR 5¢ A DAY? ½ a gallon of regular unleaded gasoline 1/3 of a Less than ½ a 3/4 of a Coke Grand Latte gallon of milk 25 COMPARISON TO OTHER CITIES –WATER 26 COMPARISON TO OTHER CITIES –SEWER 27 COMPARISON TO OTHER CITIES – COMBINED 28 NEXT STEPS  Present to Council and direct staff to proceed with report recommendations (December 2, 2014)  Written (Prop 218) Notice of rate adjustments to be mailed to parcel owners  Citywide town hall meeting on proposed rate adjustments  City Council to hold a public hearing to consider all written protests against the proposed charge. (February 17, 2015)  If a majority of parcel owners do not object, the new rate adjustment will become effective. (March 1, 2015) 29 City of Santa Ana THANK YOU PROP 218 NOTICES • Must include: The amount of the charge  The basis of the charge  The basis upon which the amount of the  proposed charge was calculated The reason for the charge  The date, time, and location of a public  hearing, which is to be held not less than 45 days after the notice is mailed 31 PLANNED OUTREACH  Written (Prop 218) Notice of rate adjustments to be mailed to parcel owners  Upload presentation and reports to City website  Presentation to Com-Link on proposed rate adjustments  Issue a Press Release  Informational inserts to be included along with bills  Presentations at neighborhood association meetings 32