Water and Sewer Water and Sewer

City Council MeetingCity Council Meeting

July 18, 2011July 18, 2011

2011/2012 Budget with increase2011/2012 Budget with increase

City of BrisbaneCity of BrisbaneCity Council MeetingCity Council Meeting

July 2011July 2011

Today’s Goals:Today’s Goals:

Protest Meeting regarding Protest Meeting regarding Increase for Water and SewerIncrease for Water and Sewer

Water and Sewer Program

1) Provide a safe and secure water system for personal use and fire protection and an environmentally-friendly wastewater disposal system at a fair rate.

2) Ensure coverage of bond rate covenants.

2011/2012 Water & Sewer Budget

3,800,000

3,900,000

4,000,000

4,100,000

4,200,000

4,300,000

4,400,000

4,500,000

4,600,000

Expenditures Revenues

3,800,000

3,900,000

4,000,000

4,100,000

4,200,000

4,300,000

4,400,000

4,500,000

4,600,000

Expenditures Revenues

HistoryHistory

2000 – City Engaged Consultant to 2000 – City Engaged Consultant to Review Rate Structure and Infrastructure, Review Rate Structure and Infrastructure, Consultant began public review processConsultant began public review process

2001- Consultant continued public review 2001- Consultant continued public review process, Council had 5 meetings for public process, Council had 5 meetings for public hearings, reviewed and adopted ordinancehearings, reviewed and adopted ordinance

FCS Group’s Rate RecommendationFCS Group’s Rate Recommendation 200% - 300% to cover on-going maintenance 200% - 300% to cover on-going maintenance

and capitaland capital

History (cont.)History (cont.)

2002 – Council reviews the rate ordinance, 2002 – Council reviews the rate ordinance, holds meetings concerning criteria for holds meetings concerning criteria for master plans and awards contractsmaster plans and awards contracts

2003 – Council reviews water and Sewer 2003 – Council reviews water and Sewer Master plans as well as set date for Master plans as well as set date for workshop in 2004workshop in 2004

2004 – Council reviewed master plans. 2004 – Council reviewed master plans.

History (cont’d)History (cont’d)

FY 09-10 projected only a cost of living FY 09-10 projected only a cost of living increase in water and sewer rates. Given increase in water and sewer rates. Given that the prior year was a 17% increase, it that the prior year was a 17% increase, it was decided to leave the rates alone.was decided to leave the rates alone.

FY 10-11 staff recommended a 3% FY 10-11 staff recommended a 3% increase which the sub-committee sent to increase which the sub-committee sent to the council. Because of the economic the council. Because of the economic climate, the full council declined to raise climate, the full council declined to raise rates.rates.

Rate increase since 2001/02Rate increase since 2001/02Water Sewer

FY 01-02 18% 18%FY 02-03 20% 20%FY 03-04 6% 6%FY 04-05 45% 45%FY 05-06 3% 0%FY 06-07 3% 6%FY 07-08 6% 1%FY 08-09 17% 17%FY 09-10 0% 0%FY 10-11 0% 0%Cumulative Total 186% 173%

Proposed FY 11/12 24.9% 4%

Enterprise FundsEnterprise Funds

Definition: A fund that provides goods or Definition: A fund that provides goods or services to the public for a fee that makes services to the public for a fee that makes the entity self-supporting. It basically follows the entity self-supporting. It basically follows Generally Accepted Accounting Principles Generally Accepted Accounting Principles (GAAP), as does a commercial enterprise. (GAAP), as does a commercial enterprise. An example is a government-owned utility.An example is a government-owned utility.

What’s behind the Cost?What’s behind the Cost?

SFPUCSFPUC InfrastructureInfrastructure DepreciationDepreciation Indirect CostsIndirect Costs Community demands/expectationsCommunity demands/expectations

The water journeyThe water journey

Water InfrastructureWater Infrastructure

PipesPipes Check ValvesCheck Valves Pressure Reducing ValvesPressure Reducing Valves Water MainsWater Mains Water TanksWater Tanks Pump StationsPump Stations MetersMeters Cost of Water Capital Assets $15,500,000Cost of Water Capital Assets $15,500,000

SFPUC RatesSFPUC Rates

January 13, 2011 January 13, 2011 expect a 31.0% expect a 31.0% increaseincrease

April 13, 2011 expect a April 13, 2011 expect a 47.4% increase47.4% increase

May 10, 2011 authority May 10, 2011 authority to raise rates by 38.4% to raise rates by 38.4% effective July 1, 2011effective July 1, 2011

Every water agency Every water agency served by SFPUC served by SFPUC has the same has the same increase.increase.

Cost of retrofitting Cost of retrofitting Hetch Hetchy pipelineHetch Hetchy pipeline

Conservation led to Conservation led to the increase!the increase!

Sewer InfrastructureSewer Infrastructure PipesPipes Lift StationsLift Stations Sewer MainsSewer Mains Force MainsForce Mains Manhole coversManhole covers Cost of Sewer Capital Assets $5,400,000Cost of Sewer Capital Assets $5,400,000

Other Capital AssetsOther Capital Assets

VehiclesVehicles Sewer Monitoring cameraSewer Monitoring camera Fire HydrantsFire Hydrants

DepreciationDepreciation

The historic cost of the asset The historic cost of the asset (infrastructure) divided by the life (infrastructure) divided by the life expectancy of the asset.expectancy of the asset.

Our water and sewer system has a life Our water and sewer system has a life expectancy of 65 years.expectancy of 65 years.

Current annual depreciation: $632,416.Current annual depreciation: $632,416. Unfunded accumulated depreciation Unfunded accumulated depreciation

through June 2010: $11,681,421.through June 2010: $11,681,421.

Capital Improvements SummaryCapital Improvements SummaryWater Sewer

CIP Expenditures 2002 - present $4,151,395 $4,421,695

Unfunded CIPs 12,773,000 8,516,200

CIPs to be Developer Funded 4,206,720 392,000

Total 21,131,115 13,329,895

Completed Water Capital ProjectsCompleted Water Capital ProjectsCIP Name Year

ClosedTotal Expensed Funding Source

Chloraminated Water Mixing System

2003/4 $390,306 Connection fees

Water System Circulation 112,772 Connection fees

Glen Parkway Fire Main & PRV

2006/7 399,524 Connection fees

Lake Street Booster Pump Station Replacement

2005/6 896,294 Bond issue

Glen Park Tank Construction & Upgrade

2007/8 1,747,422 Bond Issue458,000 Grant

Seismic Upgrades to Pump Stations & Tanks

2004/5 9,161 Connection fees

Crystal Springs Aqueduct Flow Control Vault Stns

In progress Federal grantRates

Seismic Upgrades to Water Storage Tanks

2009/10 595,916 Connection FeesRates

Unfunded Water CIPUnfunded Water CIPCIP Name 2003 Master Plan

Priority Ranking2003 Cost Estimate

Fire Main Improvements & Annis PRV 2 $1,710,240

Glen Park Pump Station Upgrade 2 1,758,400

Seismic Upgrades – Studies/plans 2 78,400

SCADA System Replacement 2 336,800

2013 Water Master Plan 2 145,000

North Hill Pump Station Upgrade 3 616,000

Water Main Replacement – Headloss Reduction

3 776,160

Crocker Tank Replacement 3 1,792,000

Pipeline Replacement – Beyond Design Life 3 5,000,000

Golden Aster Pump Station Addition 3 560,000

Potential Developer Funded Water CIPPotential Developer Funded Water CIP

CIP Name 2003 Water Master Plan Priority

Ranking

2003 Cost Estimate

Water Main Installation – Aqueduct Zone

4 $1,462,720

Storage Tank Installation – Aqueduct Zone

4 2,744,000

Completed Sewer Capital ProjectsCompleted Sewer Capital Projects

CIP Name Year Closed Total Expensed Funding Source

Valley Drive Lift Station

2004/5 $2,792,300 Bond IssueRedevelopment

Standby Generator

2003/4 39,200 Connection fees

Sewer Replacement

2004/5 1,152,804 Connection feesFederal Grant

Glen Parkway pipes

2007/8 264,931 Connection feesFederal Grant

Addition to Public Sewer (Kings Rd)

2005/6 111,109 Rates

Bayshore South Sewer (DESIGN ONLY)

61,351 Connection fees

Unfunded Sewer CIPUnfunded Sewer CIPCIP Name 2003 Master Plan

Priority Ranking2003 Cost Estimate

2013 Sewer Master Plan 2 $262,000

Bayshore South Sewer – CONSTRUCTION ONLY

3 257,600

Television Inspection & Evaluation 3 472,000

North Hill Pump Station Upgrade 3 616,000

Pipeline Replacement – Beyond Design Life 3 5,000,000

Bayshore Blvd North 4 1,713,600

Terminal Sewer Replacement 45,000

Trinity Sewer Replacement 150,000

Potential Developer Funded Sewer Potential Developer Funded Sewer CIPCIP

CIP Transferred to Private CIP Transferred to Private Property OwnersProperty Owners

CIP Name 2003 Sewer Master Plan Priority Ranking

2003 Cost Estimate

Sierra Point Lift Station Improvement (LS#4)

3 $392,000

CIP Name 2003 Sewer Master Plan Priority Ranking

2003 Cost Estimate

Hitachi Lift Station Abandonment (LS #3)

3 $112,000

Indirect CostsIndirect Costs

Services from:Services from: City CouncilCity Council City ManagerCity Manager City ClerkCity Clerk FinanceFinance Human ResourcesHuman Resources City AttorneyCity Attorney Building and Grounds Building and Grounds

Based on ratio of budgetBased on ratio of budget

Community ExpectationsCommunity Expectations

Assistance with high water bills & tracking Assistance with high water bills & tracking the source of any leaksthe source of any leaks

Due date notification on sign boardsDue date notification on sign boards Hand delivered late noticesHand delivered late notices Special envelopes for late noticesSpecial envelopes for late notices Low income assistance (LIRA)Low income assistance (LIRA)

Components of the Utility BillComponents of the Utility Bill

Service Readiness charge for waterService Readiness charge for water Water usageWater usage Service Readiness charge for sewerService Readiness charge for sewer Sewer processing charge Sewer processing charge

based on water usage based on water usage winter average for residentswinter average for residents

Water Readiness Costs ChargeWater Readiness Costs Charge

Certain costs are constant. The fewer the Certain costs are constant. The fewer the number of customers, the higher that number of customers, the higher that price.price.

Each customer class must pay for itself.Each customer class must pay for itself. Often referred to as Pipelines and People.Often referred to as Pipelines and People.

I cut back on my water!I cut back on my water!

Conservation efforts mean less revenueConservation efforts mean less revenue

Less revenue means higher rates needed Less revenue means higher rates needed to cover fixed costs.to cover fixed costs.

Other considerationsOther considerations

Have Cal-Water take overHave Cal-Water take over Rates set by California Public Utilities Rates set by California Public Utilities

CommissionCommission Earns a modest return on the funds it invests in Earns a modest return on the funds it invests in

infrastructureinfrastructure Major costs to operate a water system include Major costs to operate a water system include

purchased electric power, purchased water, purchased electric power, purchased water, treatment costs, groundwater pumping fees, treatment costs, groundwater pumping fees, labor and chemicalslabor and chemicals

Shared service with neighboring citiesShared service with neighboring cities

Reduced Rate ContractsReduced Rate Contracts

GVMID $0.125 per unit up to 12,000 units GVMID $0.125 per unit up to 12,000 units a month (Turnout #2). Maxed out in a month (Turnout #2). Maxed out in summer, managed in winter for best summer, managed in winter for best possible results.possible results.

Turnout #3 also a reduced rate and always Turnout #3 also a reduced rate and always maxed out. Same reduce rate, variable maxed out. Same reduce rate, variable cap depending on month.cap depending on month.

Reduced rates are included in our Reduced rates are included in our projected water costs.projected water costs.

Bond CovenantsBond Covenants

2002 Bond for $4,450,000 used for 2002 Bond for $4,450,000 used for financing capital improvement projectsfinancing capital improvement projects

Debt service paid by water and sewer Debt service paid by water and sewer ratesrates

Rate covenant – produce sufficient Gross Rate covenant – produce sufficient Gross Revenues that net revenue is at least 1.25 Revenues that net revenue is at least 1.25 times the installment payment coming due.times the installment payment coming due.

Bond Covenants (cont’d)Bond Covenants (cont’d)

If insufficient, must notify the Trustee and If insufficient, must notify the Trustee and employ an independent consultant to employ an independent consultant to make recommendations to produce the make recommendations to produce the required revenuesrequired revenues

Required to implement recommendationsRequired to implement recommendations

Our neighbors’ ratesOur neighbors’ rates

Agency Water Readiness

Usage Rate Water Sewer Readiness

Usage Rate Sewer

Westborough Water District

12.70 3.32 5.73 min. of 12 units yr on tax bill

CWS-SSF 20.32 3.1679 - 7 units3.5457 -124.3853 – over 12

88.67 532.00 annual on tax bill

CWS-Mid Peninsula 20.32 3.1679-7 units3.5457-12 units4.3853-over 12

93.64 561.84 annual on tax bill

Brisbane 21.59 4.94-3units6.67-8 units8.28-16 units10.52-over 16

64.36 2.63-8 units7.16 over 8Based on winter average

Daly City 23.28 0-6 free4.39 7-104.49 11-144.60 15-204.69 21-504.80 51-704.91 71-100

4.82 per unit based on water on tax bill

Millbrae 24.80 4.53 83.40 4.91 based on winter average

San Bruno 25.44 4.29 0-186.50 over 18

33.32 5.72 based on winter usage

Burlingame 62.20 5.08 8.06 based on winter average; converted from gallons

Agency Water Readiness

Usage Rate Water Sewer Readiness

Usage Rate Sewer

San Francisco 14.00 3.50 0-64.60 over 6

? 7.16 per unit

5/8 inch meters 2002-2003

2003-2004

2004-2005-1

2004-2005-2

2004-2005-3

2005-2006

2007-2008

2008-2009

Proposed 2011-2012

Residential Base

10.26

10.88

12.51

14.39

15.83

16.27

17.25

20.18 21.59 Residential 10

units

31.81

33.74

38.80

44.63

49.09

50.47

53.50

62.59 78.13 Residential Max

(over 16 ccf)

3.98

4.21

4.84

5.56

6.11

6.28

6.66

7.79 10.52

Commercial Base

15.88

16.83

19.35

22.26

24.48

25.17

26.68

31.21 33.40 Commercial Max

(over 16 ccf)

3.98

4.21

4.84

5.56

6.11

6.28

6.66

7.79 10.52

Irrigation Base

15.88

16.83

19.35

22.26

24.48

25.17

26.68

31.21 33.40 Irrigation Max

(over 16 ccf)

4.75

5.03

5.78

6.64

7.30

7.50

7.95

9.30 12.56

Water Rates HistoryWater Rates History

Sewer Rate HistorySewer Rate History

Sewer 2002-2003

2003-2004

2004-2005-1

2004-2005-2

2004-2005-3

2005-2006

2007-2008

2008-2009

Proposed 2011-2012

Residential Base

32.10

34.02 39.12

44.99

49.49

52.36

52.88

61.88 64.36

Residential Max (over 20 ccf)

3.56

3.78

4.35

5.00

5.50

5.82

5.88

6.88 7.16

Commercial Base Standard

32.10

34.02

39.12

44.99

49.49

52.36

52.88

61.88 64.36

Commercial Max (over 20 ccf)

3.56

3.78

4.35

5.00

5.50

5.82

5.88

6.88 7.16

Increase from S.F. PUCIncrease from S.F. PUC

Increase in water purchase will be 41.2% Increase in water purchase will be 41.2% from S.F. PUC.from S.F. PUC.

Increase in waste water processing will be Increase in waste water processing will be 5%5%

SFPUC’S Wholesale Water Rate SFPUC’S Wholesale Water Rate Proposal Changed Over TimeProposal Changed Over Time

1.1. February—the SFPUC proposed changing the rate February—the SFPUC proposed changing the rate structurestructure – – That proposal was droppedThat proposal was dropped

2. February—SFPUC states historical rate structure would require wholesale rate increase between 42 to 60%

3. April—SFPUC proposed a 47.4% rate increase to $2.80 per Ccf, increased mid-year if sales drop below 130 mgd

4. May—SFPUC proposed a 38.4% rate increase to $2.63 per Ccf, increase mid-year if sales drop below 135 mgd-- This proposal was adopted

BAWSCABAWSCA

Raising rates this yearRaising rates this year

Increase from SFPUC is for water usageIncrease from SFPUC is for water usage Need to capture the 15.2% from prior yearNeed to capture the 15.2% from prior year

Sewer increase of 5% for next yearSewer increase of 5% for next year Need to capture 6% from prior yearNeed to capture 6% from prior year

Raising rates this year (cont’d)Raising rates this year (cont’d)

Increase water readiness charge 7%Increase water readiness charge 7%

Increase water usage rates by 35%Increase water usage rates by 35%

Increase sewer by 4%Increase sewer by 4%

How the Costs Stack UpHow the Costs Stack Up

WaterProposed Current Proposed Current

Bimonthly 5/8" 5/8" 3/4" 3/4"Usage (ccf) Meter Meter Meter Meter

0 21.59 20.18 21.59 20.181 21.59 20.18 26.53 23.842 22.86 21.70 31.47 27.483 28.22 25.67 36.41 31.144 34.89 30.61 43.08 36.085 41.56 35.53 49.75 41.016 48.23 40.47 56.42 45.947 54.90 45.40 63.09 50.878 61.57 50.34 69.76 55.819 69.85 56.47 78.04 61.94

10 78.13 62.59 86.32 68.0611 86.41 68.72 94.60 74.1912 94.69 74.85 102.88 80.3213 102.97 80.97 111.16 86.4414 111.25 87.10 119.44 92.5815 119.53 93.23 127.72 98.7116 127.81 99.36 136.00 104.83

17 or more  127.81  99.36  136.00 104.83   plus 10.52 7.79 10.52 7.79  

per unit over 16                

Residential Sewer

Bimonthly Proposed CurrentFlow (ccf)

0 64.36 61.881 66.99 64.412 69.62 66.933 72.25 69.464 74.88 71.995 77.51 74.526 80.14 77.057 82.77 79.578 85.40 82.109 92.56 88.98

10 99.72 95.8611 106.88 102.7312 114.04 109.6113 121.20 116.4814 128.36 123.3615 135.52 130.2316 142.68 137.1117 149.84 143.9818 157.00 150.8619 164.16 157.7320 171.32 164.61

21 or more  171.32  164.61 plus 7.16 6.88

per unit over 20         

FY 2011/2012 FY 2011/2012

3,800,000

3,900,000

4,000,000

4,100,000

4,200,000

4,300,000

4,400,000

4,500,000

4,600,000

Expenditures Revenues

$410,112

FY 2011/2012 w/ increaseFY 2011/2012 w/ increase

3,800,000

3,900,000

4,000,000

4,100,000

4,200,000

4,300,000

4,400,000

4,500,000

4,600,000

Expenditures Revenues

$111,870