HomeMy WebLinkAboutCC_2020_04_14_SpecialMeetingAgendaPacket CITY OF ATASCADERO CITY COUNCIL AGENDA
* COVID-19 NOTICE *
Consistent with Executive Orders N-25-20 and No. N-29-20 from the
Executive Department of the State of California and the San Luis Obispo
County Health Official’s March 18, 2020 Shelter at Home Order, the City
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HOW TO OBSERVE THE MEETING :
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Members of the public are highly encouraged to call 805-538-2888 to listen and
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Page 1 of 38
CITY OF ATASCADERO
CITY COUNCIL
SPECIAL MEETING AGENDA
Tuesday, April 14, 2020
City Hall Council Chambers, 4th floor
6500 Palma Avenue, Atascadero, California
SPECIAL MEETING – CALL TO ORDER: 6:00 P.M.
COMMUNITY FORUM: This portion of the meeting is reserved for persons wanting to
address the Council on this Special Meeting Agenda.
MANAGEMENT REPORTS:
1. Proposed Sewer Service Rate Increases
Fiscal Impact: Approving staff recommendations will generate an estimated
$400,000 in additional revenue from sewer service charges collected in
FY20/21 over FY19/20 amounts.
Recommendations: Council:
1. Direct staff to administer the Proposition 218 majority protest process and
send out notice of the proposed increases to all property owners connected
to the municipal sanitary sewer system.
2. Cancel the Public Hearing on May 26, 2020 for the City Cou ncil’s
consideration of the proposed wastewater rate increases.
3. Set a new Public Hearing on June 9, 2020 for the City Council’s
consideration of the proposed wastewater rate increases. [Public Works]
B. ADJOURN
Please note: Should anyone challenge any proposed development entitlement listed on this Agenda in court, that person
may be limited to raising those issues addressed at the public hearing described in this notice, or in written correspondence
delivered to the City Council at or prior to this public hearing. Correspondence submitted at this public hearing will be
distributed to the Council and available for review in the City Clerk's office.
City Council Special Meeting: 6:00 P.M.
Page 2 of 38
ITEM NUMBER: 1
DATE: 04/14/20
Atascadero City Council
Staff Report - Public Works Department
Proposed Sewer Service Rate Increases
RECOMMENDATIONS:
Council:
1. Direct staff to administer the Proposition 218 majority protest process and send
out notice of the proposed increases to all property owners connected to the
municipal sanitary sewer system.
2. Cancel the Public Hearing on May 26, 2020 for the City Council’s consideration of
the proposed wastewater rate increases.
3. Set a new Public Hearing on June 9, 2020 for the City Council’s consideration of
the proposed wastewater rate increases.
REPORT IN BRIEF:
This report was presented to City Council on March 24, 2020 at which time the
Council directed staff to administer the Proposition 218 majority protest process ,
set a public hearing for May 26, 2020, and send out notice of the proposed sewer
service rate increases and public hearing. Staff drafted a notice, which was sent
to the City’s printing and mailing vendor, MailStream.net, for distribution. However,
the vendor mistakenly printed and distributed the notice they had on file for last
year’s sewer service rate increase, whereby requiring the City to send a new notice
and set a new public hearing date, in order to meet the 45-day minimum written
notice requirements of Proposition 218.
The City is proposing to increase wastewater rates in order to accommodate the costs of
providing wastewater services due to a number of key factors including but not limited to
rising treatment and energy costs; impacts of regul ation and legislation; and past and
continued critical upgrades and/or replacement of wastewater facilities and infrastructure.
Sanitary sewer rates for Atascadero customers have been increased only three times in
nearly 40 years. Increasing wastewater rates must comply with Proposition 218, which
requires certain procedures to be followed with regard to “property-related” fee increases
imposed by governmental agencies. This report provides the analysis for the rate
increases and identifies the procedures to implement the new rates.
Page 3 of 38
ITEM NUMBER: 1
DATE: 04/14/20
DISCUSSION:
Background
The City of Atascadero provides wastewater collection and treatment service for most
non-residential properties and a portion of the City’s residential population serving a
combined area consisting of approximately 2,000 acres of the roughly 15,000 acres within
the City boundary. Customers of the wastewater collection and treatment system are
comprised of approximately 5,000 parcels that include residential, commercial, and light
industrial customers. The remainder of the City’s population is served by on -site
wastewater treatment systems (septic systems).
The City of Atascadero assumed ownership and operation of the wastewater collection
and treatment system from the Atascadero County Sanitation District in 1982 shortly after
incorporation (1979). While there have been upgrades, modifications, and additions to
wastewater treatment facilities, the overall process has not changed significantly since
1982 and is considered a stabilization pond treatment system.
The wastewater collection system (also referred to as the sanitary sewer system) is
currently comprised of approximately 63 miles of four to 21-inch diameter gravity sewer
pipe, 1,460 manholes, 12 lift stations, 7 miles of four to 16-inch diameter forcemain, and
5,000 sewer service connections. This system has expanded since 1982 but still has
original pipes in service from the 19 30’s.
Utilities that have customer water consumption data customarily use consumption during
winter months as a basis for the year -round sewer service charges at a volumetric rate.
Customers connected to the City’s sanitary sewer system are billed a fixed charge for the
City’s service to collect and treat the wastewater, which is called a sewer service charge
or wastewater service charge. This fixed rate methodology is used since the City is not
the water supplier and does not have access to individual customer water consumption
data without the customer’s consent. The fixed charge used by the City is based upon
Equivalent Dwelling Units (EDUs), where one EDU is the basis for a single family
residence (SFR) service charge, based upon an estimated average daily flow of 240
gallons of wastewater and wastewater strength provided by the residence. Other
connection users are assigned a multiple or fraction of an EDU based upon expected
average daily flow and strength of wastewater compared to that of SFR. For example ,
an apartment or condo is 0.75 EDUs and charged 0.75 times that of a SFR service
charge, and a restaurant with less than 40 seats is four EDUs and charged 4 times that
of a SFR service charge. The City currently has about 8,400 EDUs in the system.
Sewer service charges are collected by placing a levy each year on the property taxes of
individual customers through San Luis Obispo County. The City provi des data to the
County including the Assessor’s Parcel Number (APN) and the associated sewer service
charge being levied on the property . The charge is included as a line item on the
customer’s property tax statements. Revenue from sewer service charges are paid to the
City twice each year.
The sewer service charges have been adjusted only three times since 1982. Council
adopted the current monthly rate of $24.01 per EDU last year. Prior to that, the current
rates had remained unchanged since 1994.
Page 4 of 38
ITEM NUMBER: 1
DATE: 04/14/20
Wastewater Rate Analysis
The City is dedicated to keeping rates low by maintaining lean staffing levels, absorbing
increasing operational and maintenance costs, and using reserves when necessary.
However, much like other utilities and services delivered to homes and businesses, the
costs involved to collect and treat wastewater have risen and continue to rise.
As part of the Wastewater Master Plan process, an independent engineering consultant,
MKN, assessed and analyzed the capital needs of the wastewat er collection and
treatment systems. A Capital Improvement Program (CIP) was developed that identified
numerous capital facility replacements and upgrades to provide a safe and reliable
wastewater system. In addition to other projects, the most significa nt capital projects
identified consist of the Water Reclamation Facility treatment process improvements
totaling in excess of $23 million, and Lift Station No. 13 and Force Main project totaling
about $5.5 million. Both projects are expected to be completed within the next five years.
The CIP cost estimates exceed $52 million over the next ten years.
Tuckfield & Associates, an independent financial consultant, completed a comprehensive
wastewater rate study for the City’s wastewater enterprise in May 2019 (see attached).
This study analyzed the City’s wastewater services, wastewater enterprise revenue and
revenue requirements, and current rate structure. The study also analyzed and
determined the cost of providing wastewater services and their corresponding impacts to
customer’s bills. This analysis identified a number of key factors that result in the
proposed rates. These key factors include, but are not limited to:
Rising treatment and energy costs
Impacts of regulation and legislation
Past and continued critical upgrades and/or replacement of wastewater facilities
and infrastructure
The wastewater rate study recommends increasing the current monthly sewer service
charge of $24.01 per SFR (or EDU) by $4.56 for a total monthly rate of $28.57. The report
further recommends similar percentile incr eases for each of the following years through
FY23/24. The table below shows the current and proposed FY20/21 sewer service
charges for the various connection user categories.
Page 5 of 38
ITEM NUMBER: 1
DATE: 04/14/20
Staff analyzed what the current SFR monthly sewer service charge would be if Consumer
Price Index (CPI) values were applied each year since the last rate adjustment in 1993.
Using the Los Angeles-Long Beach-Anaheim area CPI values, the CPI-adjusted monthly
SFR sewer service rate would be $36.86 on July 1, 2019, an increase of $12.85 or 54%
Current Proposed1
Residential Fixed Charges
Single Family 1.00 Dwelling Unit 24.01$ 28.57$
Apartment, Condo 0.75 Dwelling Unit 18.00$ 21.43$
Mobile Home 0.60 Spaces 14.41$ 17.14$
Senior Apartment Unit 0.35 Dwelling Unit 8.40$ 10.00$
Non-Residential Fixed Charges
Financial Institutions 2.00 Unit 48.03$ 57.14$
Bars 1.50 Unit 36.02$ 42.86$
Carwash 7.50 Unit 180.11$ 214.28$
Churches/Meeting Halls
< 150 seats 1.33 Seats 31.93$ 38.00$
150 to 250 seats 2.66 Seats 63.87$ 76.00$
> 250 seats 3.00 Seats 72.15$ 85.71$
Commercial Unit 1.00 Unit 24.01$ 28.57$
Funeral Home 9.00 Unit 216.13$ 257.13$
Gas Station 2.00 Unit 48.02$ 57.14$
Grocery Store > 10,000 sq. ft.8.00 1,000 sq. ft.192.08$ 228.56$
Gymnasium 10.00 Unit 240.11$ 285.70$
Laundry 9.00 Unit 216.13$ 257.13$
Motel (per room)0.33 Room 7.93$ 9.43$
Office Unit 1.00 Unit 24.01$ 28.57$
Rest Home (per bed)0.35 Bed 8.40$ 10.00$
Restaurants
< 40 seats 4.00 Seats 96.04$ 114.28$
40 to 60 seats 6.00 Seats 144.06$ 171.42$
61 to 100 seats 8.00 Seats 192.08$ 228.56$
> 100 seats 10.00 Seats 240.11$ 285.70$
Schools (per student on Mar. 1)0.05 Student 1.20$ 1.43$
Theater 4.00 Unit 96.04$ 114.28$
Veterinarians 3.00 Unit 72.04$ 85.71$
Unlisted Uses2 1.00 Unit 24.01$ 28.57$
1 Proposed Rates effective July 1, 2020
2 Unlisted uses are determined by use of fixture units from the California Plumbing Code or as by
means deemed appropriate by the City Engineer.
3 EDU = Equivalent Dwelling Unit is the average daily flow of wastewater discharge from a
single family residence (240 gallons per day).
CURRENT AND PROPOSED MONTHLY SEWER SERVICE CHARGES
Classification Description
EDU3
Multiple
Unit of
Measure
Monthly Rate
Page 6 of 38
ITEM NUMBER: 1
DATE: 04/14/20
higher than the current $24.01 rate. The following graph compares the actual and CPI-
adjusted rates.
Tuckfield & Associates conducted a wastewater rate survey for neighboring communities
to the City of Atascadero. The rate survey includes rate schedules in effect in April 2019.
The following chart compares the City’s monthly sewer service charge for a SFR to those
neighboring communities at the same use for rates in effect February 2020. As the chart
depicts, the current and proposed FY20/21 monthly sewer service bill is among the lowest
in San Luis Obispo County.
$-
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
$40.00
1993199419951996199719981999200020012002200320042005200620072008200920102011201220132014201520162017201820192020Monthly SFR Sewer Service Charge Comparison
(1993 to 2020)
Actual CPI Adjusted Proposed Linear (CPI Adjusted)
Page 7 of 38
ITEM NUMBER: 1
DATE: 04/14/20
The study also analyzed capacity charges, or connection fees, that are one-time charges
paid by new customers as a capital contribution for capacity in the wastewater system.
These charges are similar to development impact fees and can be assessed to existing
wastewater customers requiring increased capacity to serve changes in their
development or use occupancy. The proceeds from capacity charges are a financing
source for future facilities. The study recommends a capacity charge of $5,584 per SFR
(or EDU) with an annual adjustme nt based upon the Engineering News Record
Construction Cost Index. The City Council adopted new capacity charges on
September 24, 2019, which went into effect on November 23, 2019.
The City has updated the customer database and performed a full audit and inventory of
all wastewater connection user classifications. The City and its consultants are
coordinating with Atascadero Mutual Water Company (AMWC) and utilizing water records
to complete a volumetric analysis of the water use pattern s of the various groups of
connection user classifications. After this process, wastewater rates are recommended
to be re-evaluated and established for a four or five-year period, ideally FY21/22 through
FY25/26, with built-in CPI adjustments.
Proposition 218 Process
Sanitary sewer rate increases must follow the Proposition 218 majority protest process
that requires certain procedures be followed with regard to “property -related” fee
increases imposed by governmental agencies. Those rate increases are subject to a
“majority protest” process that provides if a majority of the parcels subject to the City fee
protest the proposed rate increase, the City cannot impose the increase.
Proposition 218 requires that the City provide all properties receiving the sewer service
for which the fee is charged with a minimum of 45 days written notice prior to the City
Council holding a Public Hearing on a proposed rate increase. The property owners (and
record owners) have the ability to "protest" the proposed rate increase until the close of
the Public Hearing. If a majority of the parcels file written protests with the City prior to
the close of the Public Hearing, the Proposition states that the City cannot implement the
proposed increase. If a majority of the parcels do not protest the proposed increase, the
City Council has the authority to implement the proposed rate increase.
The majority protest process is part of the California Constitution (Article XIIID) and it is
mandatory that the City adhere to this v oter-enacted process. As reference, the specific
relevant text from Proposition 218 is included below:
ARTICLE 13D (ASSESSMENT AND PROPERTY-RELATED FEE REFORM)
SEC. 6. Property Related Fees and Charges. (a) Procedures for New or Increased
Fees and Charges. An agency shall follow the procedures pursuant to this section
in imposing or increasing any fee or charge as defined pursuant to this article,
including, but not limited to, the following:
(1) The parcels upon which a fee or charge is proposed for imposition shall
be identified. The amount of the fee or charge proposed to be imposed upon
each parcel shall be calculated. The agency shall provide written notice by
mail of the proposed fee or charge to the record owner of each identified
parcel upon which the fee or charge is proposed for imposition, the amount
Page 8 of 38
ITEM NUMBER: 1
DATE: 04/14/20
of the fee or charge proposed to be imposed upon each, the basis upon
which the amount of the proposed fee or charge was calculated, the reason
for the fee or charge, together with the date, time, and location of a public
hearing on the proposed fee or charge.
(2) The agency shall conduct a public hearing upon the proposed fee or
charge not less than 45 days after mailing the notice of the proposed fee or
charge to the record owners of each identified parcel upon which the fee or
charge is proposed for imposition. At the public hearing, the agency shall
consider all protests against the proposed fee or charge. If written protests
against the proposed fee or charge are pr esented by a majority of owners
of the identified parcels, the agency shall not impose the fee or charge.
The Council created a majority protest process on May 14, 2019 (Resolution 2019 -033)
that establishes procedures for the submission and tabulation of protests in connection
with rate hearings conducted pursuant to the requirements of Proposition 218 . This
provides clarity and transparency in the City’s compliance with this process, and could
avoid invalidating proposed rate increases from minor technic alities or other challenges.
The City levies the sewer service charges to property taxes and the parcel owner is billed
by the County twice annually. Every party listed on the parcel ownership will be mailed a
notice. However, the City is only required to count one protest per parcel. Accordingly,
even if all parties listed on an individual parcel file a protest, only one protest shall be
counted for purposes of determining whether there is a majority protest .
Listed in the table below is the proposed schedule to implement the proposed rates :
April 14, 2020 Direct staff to administer the Proposition 218 pr ocess
April 14 - 24, 2020 Obtain current parcel owner data from County, prepare and print
Notices, and ready Notices for mailing
April 24 or before Mail Notices to wastewater parcel (and record) owners
April 25 – June 8, 2020
45 day requirement prior to election
June 9, 2020 Public Hearing and Protest Results; Council adopts New Rates
June 9 or 23, 2020 Council adopts Resolution to levy sewer service charges
July 9, 2020 New rates become effective (30+ days after adoption of new rates)
July 15, 2020 County deadline to levy sewer service charges to property tax rolls
In accordance with Title 7, Chapter 10 of the Municipal Code, the wastewater rates are
adopted by resolution. To avoid confusion, the City Attorney’s office recommends that
the new rates are not effective for 30 days following adoption.
Conclusion
The City has operated the wastewater collection and treatment systems in a very
economical manner for nearly 40 years with only three increases to sewer service rates
during that time. The sewer service rates have not kept up with the increasing costs of
maintaining, operating and replacing the wastewater collection and treatment systems.
The 2019 rate study shows that the City will have to continue to incrementally increase
the sewer service rates in order to continue operating, and replacing the existin g system.
As discussed at this time last year, this proposed rate increase is the second of five
proposed rate increases intended to phase-in the necessary higher sewer service rates
Page 9 of 38
ITEM NUMBER: 1
DATE: 04/14/20
needed to align revenues and expenses in the wastewater system. Even with this
increase, the proposed FY20/21 wastewater rates are much less than that of CPI -
adjusted values, and will still be among the lowest in San Luis Obispo County.
FISCAL IMPACT:
Approving staff recommendations will generate an estimated $400,000 in additional
revenue from sewer service charges collected in FY20/21 over FY19/20 amounts. Costs
related to printing and postage for the new notice will be covered by
MailStream.net.
ALTERNATIVES:
1. If the Proposition 218 majority protest process results in a non-majority protest, the
Council may reduce the proposed sewer service charge rate increase for FY20/21,
but cannot increase the rate over that proposed.
2. Council may direct staff to include proposed rate increase s through FY23/24 as
described in the study. However, staff recommends waiting until the City has
completed the volumetric analysis of the water use patterns of the various groups of
connection user classifications (estimated January 2021).
3. Council could take no action.
ATTACHMENT:
Report on Wastewater Rate Study (May 2019)
Page 10 of 38
May 2019
Prepared For:
City of Atascadero
6500 Palma Avenue
Atascadero, CA 93422
(805) 470-3456
Submitted By:
Tuckfield & Associates
2549 Eastbluff Dr, #450B
Newport Beach, CA 92660
(949) 760-9454
www.tuckfieldassociates.com
Report on
Wastewater Rate Study
ITEM NUMBER: 1
DATE: 04/14/20
ATTACHMENT: 1
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Tuckfield & Associates
2549 Eastbluff Drive, Suite 450B, Newport Beach, CA 92660
Phone (949) 760-9454 Fax (949) 760-2725
Email ctuckfield@tuckfieldassociates.com
May 10, 2019
Mr. Nick DeBar
Public Works Director/City Engineer
City of Atascadero
6500 Palma Avenue
Atascadero, CA 93422
Dear Mr. DeBar:
I am pleased to submit this report on the Wastewater Rate Study (Study) for the City of Atascadero
(City). The wastewater service charges presented in this report have been developed based on industry
methods that result in fair and equitable rates for the users of the wastewater utility in accordance with
Proposition 218.
The Study included a review and analysis of the wastewater enterprise revenue and revenue
requirements, number of equivalent dwelling units, and current rate structure. This report presents the
findings and recommendations for the City’s wastewater service charges to meet the on-going
operational needs of the wastewater enterprise and the funding of the capital infrastructure
requirements. Tables and figures throughout the report are provided to demonstrate the calculations.
It has been a pleasure working with the City on this project. If there are any questions regarding this
report, please contact me at (949) 760-9454.
Very Truly Yours,
TUCKFIELD & ASSOCIATES
G. Clayton Tuckfield
President/Project Consultant
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Page 14 of 38
Table of Contents
Page
Executive Summary ...................................................................................................................... 1
Wastewater Financial Plan ............................................................................................................. 1
Current Wastewater Service Charges ............................................................................................ 1
Proposed Wastewater Service Charges ........................................................................................ 2
Wastewater Residential Bill Impacts .............................................................................................. 2
Wastewater Rate Survey ................................................................................................................ 3
Capacity Charges ........................................................................................................................... 4
Introduction ................................................................................................................................... 5
Background ..................................................................................................................................... 5
Objectives ....................................................................................................................................... 5
Scope of Study ................................................................................................................................ 5
Assumptions ................................................................................................................................. 6
Planning Factors ............................................................................................................................. 6
City Reserve Policy ......................................................................................................................... 6
City Beginning Balances ................................................................................................................. 7
Wastewater Financial Planning ................................................................................................... 8
Existing Wastewater Service Charges ........................................................................................... 8
Wastewater User Classifications .................................................................................................... 8
Number of Customers .............................................................................................................. 8
Equivalent Dwelling Units ........................................................................................................ 8
Revenues ........................................................................................................................................ 9
Revenue Requirements ................................................................................................................ 10
Operation and Maintenance Expense ................................................................................... 10
Annual Replacement .............................................................................................................. 10
Debt Service ........................................................................................................................... 11
Wastewater Capital Improvement Program .......................................................................... 11
Wastewater Financial Plan ........................................................................................................... 12
Proposed Revenue Adjustments ........................................................................................... 12
Wastewater Rate Design ............................................................................................................ 13
EDU Wastewater Flow .................................................................................................................. 13
Strength Factor and Equivalent Dwelling Unit .............................................................................. 14
Proposed Wastewater Service ..................................................................................................... 14
Service Charge Variances ............................................................................................................ 15
Wastewater Bill Impact Analysis .............................................................................................. 15
Wastewater Rate Survey ............................................................................................................ 15
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Table of Contents (cont.)
Page
Capacity Charges ........................................................................................................................ 16
Capacity Charge Variances .......................................................................................................... 18
List of Tables
Table ES-1 Proposed Wastewater Service Charges ......................................................................... 3
Table ES-2 Comparison of Current Residential Monthly Bill with Proposed Monthly Bill
Using August 2019 Wastewater Charges ...................................................................... 3
Table 1 Planning Factors .............................................................................................................. 7
Table 2 Wastewater Enterprise Reserves .................................................................................... 7
Table 3 Current Monthly Wastewater Service Charges ............................................................... 9
Table 4 Projected Wastewater Service Charge Revenue Using Existing Charges .................. 10
Table 5 Projected Miscellaneous Revenue ................................................................................ 10
Table 6 Summary of Projected Operation and Maintenance Expense ..................................... 11
Table 7 Summary of Capital Improvement Program Expenditures
And Sources of Funding ................................................................................................ 11
Table 8 Wastewater Financial Plan ............................................................................................ 13
Table 9 Proposed Wastewater Service Charges ....................................................................... 14
Table 10 Comparison of Current Residential Monthly Wastewater Bill with
Proposed Monthly Bill Using August 2019 Wastewater Service Charges ................... 16
Table 11 Development of Capacity Charges ............................................................................... 17
Table 12 Schedule of Capacity Charges ...................................................................................... 18
List of Charts
Chart ES-1 Single-family Residential Monthly Wastewater Bills ....................................................... 3
Chart 1 Single-family Residential Monthly Wastewater Bills ..................................................... 16
List of Appendices
Appendix A Wastewater Technical Appendix ............................................................................. 19
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Wastewater Rate Study City of Atascadero
Tuckfield & Associates Page: 1
Executive Summary
The City of Atascadero (City) engaged Tuckfield & Associates to conduct a comprehensive Wastewater Rate
Study (Study) for its wastewater system (System). This Study includes development of a pro forma statement
of revenues and revenue requirements for the wastewater enterprise and design of wastewater service
charges for implementation.
The last time that wastewater service charges were increased was in 1994, or about 25 years ago. It is
recommended that the City conduct an update to this Study at least every three to five years for prudent rate
planning
Wastewater Financial Plan
Current wastewater charges consist of monthly fixed charges which are collected through the county of San Luis
Obispo tax rolls. Fixed charges for all customers are established as a multiple of the single-family residential (SFR)
dwelling unit fixed charge. The City currently serves about 8,400 Equivalent Dwelling Units (EDUs) and the
number of EDUs is expected to increase by 115 annually.
The City has prepared a five-year capital improvement program (CIP) spending plan for the wastewater utility.
The capital expenditures consist of various repair, replacement, and rehabilitation projects in addition to two
large projects consisting of Water Reclamation Facility (WRF) Process Improvements and the Lift Station #13
and Force Main Project estimated to cost about $23.15 million and $5.8 million respectively. The WRF Process
Improvements are planned to be financed with proposed debt issues in FY 2021-22 and in FY 2023-24. The Lift
Station #13 and Force Main Project is partially financed with the FY 2021-22 debt issue. Debt service related
to the projects is estimated to be $919,000 beginning in FY 2021-22 and an additional $707,100 in FY 2023-24.
A forward looking financial plan was created that identifies the revenue and revenue requirements of the
wastewater enterprise. Annual revenue includes wastewater service charge revenue and miscellaneous
revenue. Annual revenue requirements include operation and maintenance (O&M) expense, annual capital
replacement, and new debt service. Future O&M expenses were projected recognizing escalation in expenses
as well as changes in operations staffing.
From the analysis of the financial plan, revenue increases are recommended to adequately meet future
obligations and cash reserve targets. These proposed revenue adjustments include 19 percent annual increases
beginning August 8, 2019 and then on each July 1 for the next four years July 2020 and continuing through July
2023. The wastewater financial plan is presented in Table 7.
Current Wastewater Service Charges
The City’s current wastewater service charges consist of monthly fixed charges to residential and non-residential
customers. All customers are charged a fixed charge as a multiple of the single-family residential (SFR) charge.
The fixed charge EDU methodology is used since the City is not the public water supplier for Atascadero and does
not have access to individual customer’s water consumption data.
The wastewater service charge for an SFR dwelling unit is defined as one EDU. One EDU is the sewer flow and
strength of a single-family residence stated in terms of maximum discharge flow in gallons per day (gpd) and
ITEM NUMBER: 1
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Wastewater Rate Study City of Atascadero
Tuckfield & Associates Page: 2
strength consisting of bio-chemical oxygen demand (BOD) and suspended solids (SS). Service charges for other
customers are based on their proportion of flow and strength relative to the single-family residence. The current
wastewater charges are presented in Table 3.
Proposed Wastewater Service Charges
Table ES-1 presents the wastewater service charges to be implemented by the City to meet future operations and
capital spending needs of the System. The current charges are also shown for comparison purposes. The
wastewater service charges reflect the forecast of the cost of providing wastewater service presented in this
Study.
Where a new wastewater customer does not fit the wastewater classifications identified in Table ES-1, it is
recommended that the City reserve the right to calculate the monthly service charge through the use of fixture
units using the California Uniform Plumbing Code, or by means deemed appropriate by the City Engineer.
Wastewater Residential Bill Impacts
Table ES-2 presents the impacts to SFR bills from the implementation of the proposed August 8, 2019 wastewater
service charges. The table shows that the wastewater bill of an SFR customer will increase from $20.18 to $24.01,
an increase of $3.83, or 19 percent.
Table ES-1
Current and Proposed Wastewater Service Charges
Date of Increase
Unit of Aug 8, July 1, July 1, July 1, July 1,
Description Measure Current 2019 2020 2021 2022 2023
Residential Fixed Charges
Single Family Dwelling Unit $20.18 $24.01 $28.58 $34.01 $40.47 $48.16
Apartment, Condo Dwelling Unit $15.13 $18.00 $21.43 $25.50 $30.34 $36.11
Mobile Home Spaces $15.13 $18.00 $21.43 $25.50 $30.34 $36.11
Senior Apt Unit Dwelling Unit $7.06 $8.40 $10.00 $11.90 $14.16 $16.85
Non-Residential Fixed Charges
Financial Institutions Unit $40.36 $48.03 $57.15 $68.01 $80.94 $96.31
Bars Unit $30.27 $36.02 $42.87 $51.01 $60.70 $72.23
Carwash Unit $151.35 $180.11 $214.33 $255.05 $303.51 $361.17
Churches/Meeting Halls
< 150 seats Seats $26.83 $31.93 $37.99 $45.21 $53.80 $64.03
150 to 250 seats Seats $53.67 $63.87 $76.00 $90.44 $107.63 $128.08
> 250 seats Seats $60.63 $72.15 $85.86 $102.17 $121.58 $144.68
Commercial Unit Unit $20.18 $24.01 $28.58 $34.01 $40.47 $48.16
Funeral Home Unit $181.62 $216.13 $257.19 $306.06 $364.21 $433.41
Gas Station Unit $40.35 $48.02 $57.14 $68.00 $80.92 $96.29
Grocery Store > 10,000 sf 1,000 sf $161.41 $192.08 $228.57 $272.00 $323.68 $385.18
Gymnasium Unit $201.77 $240.11 $285.73 $340.01 $404.62 $481.49
Laundry Unit $181.62 $216.13 $257.19 $306.06 $364.21 $433.41
Motel (per room) Room $6.66 $7.93 $9.43 $11.22 $13.36 $15.89
Office Unit Unit $20.18 $24.01 $28.58 $34.01 $40.47 $48.16
Rest Home (per bed) Bed $7.06 $8.40 $10.00 $11.90 $14.16 $16.85
Restaurants
< 40 seats Seats $80.71 $96.04 $114.29 $136.01 $161.85 $192.60
41 to 60 seats Seats $121.06 $144.06 $171.43 $204.01 $242.77 $288.89
61 to 100 seats Seats $161.41 $192.08 $228.57 $272.00 $323.68 $385.18
> 100 seats Seats $201.77 $240.11 $285.73 $340.01 $404.62 $481.49
School (per student on 3/1) Student $1.01 $1.20 $1.43 $1.70 $2.03 $2.41
Theater Unit $80.71 $96.04 $114.29 $136.01 $161.85 $192.60
Veterinarians Unit $60.54 $72.04 $85.73 $102.02 $121.40 $144.47
Unlisted Uses [1] Unit $20.18 $24.01 $28.58 $34.01 $40.47 $48.16
[1] Determined by use of fixture units from the California Plumbing Code or as by means deemed appropriate by the City Engineer.
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Wastewater Rate Survey
Chart ES-1 has been prepared to compare the City’s SFR wastewater bill with those of other communities at the
same consumption where appropriate. The chart indicates that with the implementation of the August 2019
wastewater service charges, an SFR customer will experience a bill that is among the lowest in San Luis Obispo
County.
Table ES-2
Comparison of Current Residential Monthly Bill with
Proposed Monthly Bill Using August 2019 Proposed Wastewater Charges
Aug 2019
Residential Current Proposed Dollar Percent
Classification Bill Bill Change Change
Single Family $20.18 $24.01 $3.83 19.0%
Apartment, Condo $15.13 $18.00 $2.87 19.0%
Mobile Home $15.13 $18.00 $2.87 19.0%
Senior Apt Unit $7.06 $8.40 $1.34 19.0%
Chart ES-1 Comparison of Single-family Residential Monthly Wastewater Bills
For Rates in Effect April 2019
Note: Above table uses wastewater rates in effect April 2019. City’s August 2019 bill is based
on the wastewater service charges in Table 8. San Luis Obispo, Cambria, Paso Robles, Arroyo
Grande, and Los Osos have a variable wastewater rate component and an average water
consumption of 15 HCF and an average winter water use of 7 HCF have been assumed.
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Capacity Charges
Capacity charges, sometimes referred to as connection fees, are one-time charges paid by a new customer
connecting to the wastewater system for capacity in the System. Capacity charges are also charged to existing
customers that require increased capacity from changes in their development.
The capacity charges determined in this report follow industry standard methods and are based the current value
of the City’s existing facilities and include the cost of future replacement facilities and future facilities that that
serve new development. Capacity charges for implementation by the City are provided in Table 12 of this report
and include capacity charges for other residential and non-residential development types.
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Introduction
The City of Atascadero (City) engaged Tuckfield & Associates to conduct a comprehensive Wastewater Rate Study
(Study) for its wastewater system (System). This Study includes development of a pro forma statement of
revenues and revenue requirements of the wastewater enterprise and design of new wastewater service charges
for implementation.
Background
The City of Atascadero was incorporated in 1979 and is located approximately 15 miles north of the City of San
Luis Obispo. The City provides wastewater collection and treatment service to a portion of the City’s population
serving an area consisting of about 1,900 acres out of the total 5,000 acres within the City limits. Customers of
the System include residential, commercial, and light industrial customers.
The wastewater collection system consists of about 63 miles of sewer pipe, 7 miles of sewer force main, and
twelve lift stations that conveys wastewater to the City owned wastewater treatment plant. The treatment plant
facilities consist of flow metering, headworks, lagoons, ponds, aeration facilities, percolation basins, and sludge
drying beds. Facilities also include public works buildings, RV waste receiving station, and an irrigation well to
serve a mixture of treated effluent and groundwater to Chalk Mountain Golf Course.
Current wastewater charges consist of monthly fixed charges collected through the county of San Luis Obispo tax
rolls. Fixed charges for all customers are established as a multiple of the single-family residential (SFR) dwelling
unit fixed charge. For example, a multifamily dwelling unit is charge 0.75 times that of the SFR charge whereas a
restaurant with less than 40 seats is charged 4 times the SFR charge.
Objectives
The objectives of this Study are to (1) review the current and future financial status of the wastewater enterprise,
(2) make any adjustments to the revenue being received to ensure that financial obligations are being met now
and in the future, including adequate reserves and debt service coverage, and (3) design rates and charges that
generate the required revenue while being fair and equitable for its customers. Additionally, the Study also
sought to provide the following.
Revenue sufficiency to fund operating and capital needs
Appropriate levels of operating and capital reserves
Rates and charges that are consistent with industry practice
Stable revenue stream similar to the existing rate structure
Ease of understanding and administration
Scope of the Study
This Study includes the findings and recommendations of analyzing the wastewater enterprise financial status
and related capital improvement program (CIP) financing of the System. Historical trends were analyzed from
data supplied by the City including current year’s budget showing revenue and revenue requirements, financial
audits, System master plans, and capital improvement plans.
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Revenue requirements include operation and maintenance expense, annual replacement, and additions to
reserves. Changing conditions such as additional facilities, utility growth, employee additions/reductions, and
non-recurring maintenance expenditures are recognized. Inflation for ongoing expenditures is included to reflect
cost escalation.
The financial plans and rates developed herein are based on funding of the capital improvement plan as stated
as well as estimates of operation and maintenance expenses developed from information provided by the City.
Deviation from the planning assumptions, financial plans, construction cost estimates and funding requirements,
major operational changes, or other financial policy changes that were not foreseen, may result in the need for
lower or higher revenue than anticipated. It is recommended that the City conduct an update to the rate study
at least every three to five years for prudent rate planning.
Assumptions
Planning Factors
Several assumptions and planning factors were used to conduct the Study for the period FY 2019-20 to FY 2023-
24. The assumptions include customer growth rates, expense inflation factors, debt terms, and other
assumptions. Assumptions and financial planning factors are provided in Table 1.
Table 1
Assumption and Planning Factors
Description Value
Account Growth
Annual Account & Demand growth (EDUs) [1] 115
Interest Earnings Rate
Interest earnings on fund reserves (annual) 1.5%
Escalation Factors
Salaries and Wages [2] 5.0%
Benefits, Insurance, Taxes 10.0%
Electrical Power 3.0%
Chemicals 3.0%
All Other Operations and Maintenance 3.0%
Capital 3.0%
New Revenue Bond Debt
Interest Rate 5.0%
Repayment Period (Term) - years 30
Bond Proceeds as a % of Issue Amount 92.0%
Bond Reserve (1 year's payment) 7.1%
Cost of Issuance 1.5%
[1] Growth in number of Equivalent Dwelling Units (EDUs) is based on
October 2014 Wastewater Treatment Plant Master Plan Update.
[2] Escalation in a City personnel position is 5% percent annually.
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City Reserve Policy
A reserve policy provides a basis to deal with unanticipated reductions in revenues, changes in the costs of
providing services, fixed asset repair and replacement, natural disaster, and other issues. It also provides
guidelines to maintain the financial health and stability of the enterprise fund. The City’s goal is to maintain
appropriate reserves related to wastewater operations and capital spending developed in this Study. These
reserve types and their targets are described below.
Operating Reserve – The purpose of the Operating Reserve is to provide working capital to meet cash flow needs
during normal operations and support the operation, maintenance and administration of the utility. This reserve
ensures that operations can continue should there be significant events that impact cash flows. The target
balance to be maintained is 180 days of annual O&M expense. Since O&M expense increases each year, the
reserve to be maintained will increase annually also.
Capital Replacement Reserve – The Capital Replacement Reserve is used to fund future replacement of assets
and capital projects. The City currently provides reserves related to capital spending by earmarking 26 percent
of the revenue received from wastewater service charges as capital related, which is available for annual capital
spending or accumulation as a capital reserve. This policy is utilized in this Study and the minimum reserve level
used is average annual replacement expenditures, excluding the WRF Process Improvements and Lift Station #5
and #13 projects, is estimated at $1,600,000.
Capital Emergency Reserve – The purpose of the emergency capital reserve is to provide protection against
catastrophic loss and to provide a cushion for inaccuracy in long range replacement program. The Target reserve
is established at 5 percent of the value of current capital fixed asset value. The amount is currently estimated at
$800,000 and will increase as CIP is booked into fixed assets.
City Beginning Balances
From the City’s 2017 – 2019 Budget, the estimated beginning cash balances as of June 30, 2019 is $10,112,000
shown in Table 2. This amount has been separated into beginning balances by reserve type as stated below. The
City has accumulated capital replacement reserves for the specific purpose of their use towards the capital
improvements identified in this Study. The operating and capital cash balances are used in the development of
the financial plans for the System with the intent to meet the Target Reserves. Target Reserves are also shown
below for the first year of the financial plan.
Table 2
Wastewater Enterprise Reserves
Est. Reserve
Balance Target
Reserve Type June 30, 2019 Reserve
Operating $826,000 $826,000
Capital Replacement $8,486,000 $1,600,000
Capital Emergency $800,000 $800,000
Total [1] $10,112,000 $3,226,000
[1] Estimated Reserve Balance from FY 17-19 Budget, page C-10.
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Wastewater Financial Planning
This section discusses the current wastewater service charges, user classifications, revenues and revenue
requirements, planned capital improvement expenditures and associated financing sources, used in developing
the wastewater utility financial plan. Revenue adjustments are discussed and proposed to sustain the wastewater
enterprise.
Existing Wastewater Service Charges
The City’s current wastewater service charges consist of monthly fixed charges to residential and non-residential
customers. All customers are charged a fixed charge as a multiple of the SFR charge. The fixed charges can be
adjusted annually and are billed through the San Luis Obispo County tax rolls.
The charge for an SFR dwelling unit is defined as one Equivalent Dwelling Unit (EDU). One EDU is the sewer flow
and strength of a single-family residence stated in terms of maximum discharge flow in gallons per day (gpd) and
strength consisting of bio-chemical oxygen demand (BOD) and suspended solids (SS). Service charges for other
customers are based on their proportion of flow and strength relative to the single-family residence. The current
wastewater charges are presented in Table 3.
Wastewater User Classifications
Number of Customers
Wastewater customers are currently classified as Residential and Non-Residential. The Residential classification
is further separated into single-family residential, multifamily residential (apartment and condo), mobile home,
and senior apartment. Non-Residential classifications consist of 18 separate classifications shown in Table 3.
Number of Equivalent Dwelling Units
The total number of EDUs are deduced from City information. Since each customer classification is charged a
multiple of the SFR dwelling unit charge as listed in Table 3, the total number of EDUs can be determined from
the revenue received from wastewater service charges and the current SFR dwelling unit charge.
From the City’s FY 2017-19 Budget, the City expects to generate wastewater service charge revenue of $2,038,500
in FY 2019-20. Dividing this revenue by the SFR monthly charge of $20.18, or $242.16 annually, the total number
of EDUs is about 8,418 EDUs. The number of EDUs are planned to increase by 115 annually following the planning
factors shown in Table 1.
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Revenues
The City receives revenue from wastewater service charges and miscellaneous revenues. Table 4 presents the
projected revenue from current wastewater service charges of the wastewater utility. The revenue is projected
by applying the current wastewater charges from Table 3 to the projected number of EDUs.
Table 3
Current Monthly Wastewater Service Charges
Current EDU Unit of
Description Charge Multiple Measure
Residential Fixed Charges
Single Family $20.18 1.00 Dwelling Unit
Apartment, Condo $15.13 0.75 Dwelling Unit
Mobile Home $15.13 0.75 Spaces
Senior Apt Unit $7.06 0.35 Dwelling Unit
Non-Residential Fixed Charges
Financial Institutions $40.36 2.00 Unit
Bars $30.27 1.50 Unit
Carwash $151.35 7.50 Unit
Churches/Meeting Halls
< 150 seats $26.83 1.33 Seats
150 to 250 seats $53.67 2.66 Seats
> 250 seats $60.63 3.00 Seats
Commercial Unit $20.18 1.00 Unit
Funeral Home $181.62 9.00 Unit
Gas Station $40.35 2.00 Unit
Grocery Store > 10,000 sf $161.41 8.00 1,000 sf
Gymnasium $201.77 10.00 Unit
Laundry $181.62 9.00 Unit
Motel (per room) $6.66 0.33 Room
Office Unit $20.18 1.00 Unit
Rest Home (per bed) $7.06 0.35 Bed
Restaurants
< 40 seats $80.71 4.00 Seats
41 to 60 seats $121.06 6.00 Seats
61 to 100 seats $161.41 8.00 Seats
> 100 seats $201.77 10.00 Seats
School (per student on 3/1) $1.01 0.05 Student
Theater $80.71 4.00 Unit
Veterinarians $60.54 3.00 Unit
Unlisted Uses [1] $20.18 1.00 Unit
[1] Determined by use of fixture units from the California Plumbing Code or as by means
deemed appropriate by the City Engineer.
Table 4
Projected Wastewater Service Charge Revenues Using Existing Charges
Estimated Projected
Description FY 2019-20 FY 2020-21 FY 2021-22 FY 2022-23 FY 2023-24
Service Charge Revenues
Number of EDUs 8,418 8,533 8,648 8,763 8,878
Charge per EDU $20.18 $20.18 $20.18 $20.18 $20.18
Total Service Charge Revenues $2,038,500 $2,066,400 $2,094,200 $2,122,000 $2,149,900
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In addition to revenue from wastewater service charges, the City receives miscellaneous revenue from several
sources including sewer connection fees, sewer extension fees, tap-in fees, permit and inspection fees, and other
miscellaneous revenue. Table 5 provides the estimated and projected revenue from miscellaneous sources.
Revenue Requirements
Revenue requirements of the wastewater utility include operation and maintenance expense and annual
replacement capital spending. Additionally, new debt is proposed to meet the capital improvement spending that
is planned by the City. Each of these items are discussed below.
Operation and Maintenance Expense
Operation and maintenance (O&M) expenses are an on-going obligation of the wastewater utility and such costs
are normally met from wastewater service revenue. O&M expenses include the cost to operate and maintain the
wastewater collection system, lift stations, and wastewater treatment facilities. Costs also include technical
services and other general and administrative expenses.
O&M expense for FY 2019-20 is provided from the City’s Budget. Future O&M expense has been projected
recognizing the major expense categories of personnel services, electricity, chemicals, and all other expenses.
Personnel costs consist of salaries and benefits expense of those personnel directly involved with providing
wastewater service. Cost inflation for personnel services costs are projected to increase by 5 percent annually
beginning in FY 2020-21.
Annual escalation in electricity, chemicals, and all other expense is projected to increase by 3 percent based on
expectations of future expense inflation. Table 6 below summarizes projected O&M expense for the wastewater
utility. Table A-1 in Appendix A provides the detailed projections of historical and projected wastewater O&M
expense.
Annual Replacement
The City provides for annual capital replacement by allocating 26 percent of wastewater service charge revenue
for this purpose. This amount is spent annually towards replacement, identified in the capital improvement
plan discussed below, or is accumulated in the capital reserve for future replacement spending.
Table 5
Projected Miscellaneous Revenues
Budget Projected
Description FY 2019-20 FY 2020-21 FY 2021-22 FY 2022-23 FY 2023-24
Miscellaneous Revenues [1]
Permits and Inspections $5,200 $5,400 $5,600 $5,800 $6,000
Sewer Extension Fees [2] 138,000 144,900 152,100 159,700 167,700
Sewer Connection Fees [2] 642,000 642,000 642,000 642,000 642,000
Well Water 40,000 40,000 40,000 40,000 40,000
Tap-in Fees 5,500 5,500 5,500 5,500 5,500
Total Miscellaneous Revenues $830,700 $837,800 $845,200 $853,000 $861,200
[1] Interest income is included in Table 8.
[2] FY 2019-20 includes revised Sewer Connection Fees from Table 11.
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Debt Service
The City does not currently have any outstanding debt. However, new debt is proposed to partially finance
certain capital improvements as discussed below. The debt service payments associated with the proposed
debt is paid from revenues and is a revenue requirement of the utility. Future debt service payments are
expected to include $919,000 beginning in FY 2021-22 and an additional $707,100 in FY 2023-24. The debt
issue in FY 2021-22 is planned to provide $13 million in proceeds while the debt issue in FY 2023-24 is expected
to provide $10 million in proceeds. The debt payments assume an interest rate of 5 percent, term of 30 years,
2 percent issuance costs, and a debt service reserve. While the City may be able to secure less expensive financing
from other sources, traditional loan financing is assumed for this debt issue to ensure sufficient funds are provided
at the appropriate time.
Wastewater Capital Improvement Program
The City has developed a CIP plan that lists capital expenditures for FY 2019-20 through FY 2028-29. The first five
years of the CIP plan is summarized in Table 7 however the complete listing of projects is provided in Appendix
A-2. Both tables include 3 percent annual inflation in the project costs to the year of expenditure. The CIP plan
consists of various repair, replacement and rehabilitation projects with the largest project consisting of the Water
Reclamation Facility (WRF) Process Improvements totaling $23.15 million in inflated dollars.
Table 6
Summary of Projected Operation and Maintenance Expense
Budget Projected
Description FY 2019-20 FY 2020-21 FY 2021-22 FY 2022-23 FY 2023-24
Operation and Maintenance Expense
Collection $270,400 $281,300 $292,600 $304,400 $316,600
Treatment 288,100 301,500 315,600 330,200 345,400
General Operations [1] 1,182,600 1,270,500 1,476,700 1,571,100 1,910,300
Total Projected O&M Expense $1,741,100 $1,853,300 $2,084,900 $2,205,700 $2,572,300
[1] Salaries & wages are included in General Operations costs. Includes new Wastewater Operator positions in FY 2021-22 and
and new Operator and Maintenance worker (1 and 1/2 positions) in FY 2023-24.
Table 7
Summary of Capital Improvement Program Expeditures and Sources of Funding
Projected
Description FY 2019-20 FY 2020-21 FY 2021-22 FY 2022-23 FY 2023-24
Total Capital Improvement Spending [1] $3,079,000 $4,044,100 $8,321,600 $10,065,600 $10,622,000
Sources and Uses of Capital Funds
Beginning Year Balance [2] $9,286,000 $7,479,700 $4,838,400 $11,076,400 $2,759,200
Transfer In Annual Capital Replacement 630,700 760,800 917,600 1,106,400 1,334,000
Transfer In Sewer Connection Fees 642,000 642,000 642,000 642,000 642,000
New Bond Proceeds (net of issuance costs) - - 13,000,000 - 10,000,000
CIP Project Expenditures (3,079,000) (4,044,100) (8,321,600) (10,065,600) (10,622,000)
Sources Less Uses $7,479,700 $4,838,400 $11,076,400 $2,759,200 $4,113,200
Target Capital and Emergency Reserve [3] 2,400,000 2,500,000 2,900,000 3,400,000 3,800,000
[1] Entire list of CIP projects is provided in Apendix A-2.
[2] FY 2019-20 beginning balance includes all sources of available cash except operating reserve of 6 months of annual O&M expense.
[3] Includes Capital Reserve Target equal to average annual replacement and Emergency Capital Reserve equal to 5% of fixed asset value.
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Funding provided for the CIP includes capital reserves, annual replacement revenue from wastewater service
charges, sewer connection fee revenue, and new debt proceeds. Construction of the WRF Process Improvements
is planned to be partially financed with a proposed debt issue providing proceeds as stated above. The capital
financing plan in Appendix A-2 shows the funding of future CIP that includes the debt proceeds as well as ending
cash balances for a 10-year period.
Wastewater Financial Plan
The financial plan provides the means of analyzing the impacts of projected revenue and revenue requirements
on funding on-going O&M expense and annual capital infrastructure requirements, as well as the impact on
reserves. The financial plan includes the revenues, O&M expense, annual replacement, and debt service that
were identified above. The plan also incorporates specific financial planning goals to provide guidance to
maintain the health of the wastewater utility on an on-going basis. The goals included the following.
Generate positive levels of income in each year of the Study period
Maintain operating and capital reserves at or greater than target levels
Maintain debt service coverage ratios at or greater than the minimum required, estimated at 125%
Meet annual capital replacement spending from the annual provision from wastewater service
revenue
Proposed Revenue Adjustments
Table 8 shows the pro forma statement of revenue and revenue requirements for the wastewater utility. The
table also includes proposed annual revenue increases recommended to meet the financial planning goals for
the Study period. The proposed revenue adjustments include annual increases of 19 percent beginning August
8, 2019 and then on each July 1 for the next four years July 2020 and continuing through July 2023. The proposed
adjustments are planned to increase revenue over the next five years to fund O&M expense, annual
replacement, debt service, and reserves for the Study period.
The combined operating and capital reserve balance initially increases, then decreases with the beginning of
the debt service payments from the proposed debt. The combined operating and capital reserve balance
remains above the Target Reserve level in all years of the study period. Additionally, Table 8 also shows that
the calculated debt service coverage ratio is met in all years.
This Study also proposes increases in sewer connection fees discussed in a later section of this report. Table 8
shows that revenue received from new connection fees is increased from the update to the charges. The
revenue received from connection fees can only be spent on capital projects for which the fees were collected.
Therefore, the connection fee revenue received is shown as a transfer out in Table 8 to be spent on capital
projects where it is shown as a source of funds in Table 7.
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Wastewater Rate Design
This section describes how wastewater service charges are designed and also provides the proposed schedule of
wastewater rates for implementation.
EDU Wastewater Flow
The City’s Wastewater Treatment Plant (WWTP) Master Plan provides a residential wastewater flow of 70 gallons
per capita per day (gpcd) with a peaking factor of 1.3. Using this information and a persons-per-household (PPH)
value of 2.65 from the City’s General Plan, a flow estimate for an SFR customer can be calculated. Multiplying 70
gpcd by 2.65 PPH and by the peaking factor of 1.3, results in a flow estimate of 240 gallon per day (gpd)
representing maximum month flow. This is the same flow used by the existing wastewater service charge
schedule. Therefore, the EDU multiples for each customer classification shown in Table 2 are assumed to be
reasonable and will be used to establish the future wastewater service charges for existing customers.
Table 8
Wastewater Financial Plan
Projected
Description FY 2019-20 FY 2020-21 FY 2021-22 FY 2022-23 FY 2023-24
Proposed Rate Increase (Aug 8) 19.0%
Proposed Rate Increase (July 1) 19.0% 19.0% 19.0% 19.0%
Operating Revenues
Service Charge Revenues, Existing Rates [1] $2,038,500 $2,066,400 $2,094,200 $2,122,000 $2,149,900
Additional Revenue from Rate Adjustments [2] 355,000 859,800 1,434,900 2,133,400 2,980,700
Miscellaneous Revenues [3] 830,700 837,800 845,200 853,000 861,200
Interest Earnings [4] 140,700 114,800 145,300 132,800 82,000
Total Operating Revenues $3,364,900 $3,878,800 $4,519,600 $5,241,200 $6,073,800
Operating Expenses
Operation and Maintenance Expense $1,740,500 $1,853,300 $2,084,900 $2,205,700 $2,572,300
New Bond Debt Service [5] 0 0 919,300 919,300 1,626,400
Annual Replacement [6] 622,300 760,800 917,600 1,106,400 1,334,000
Transfer Sewer Connection Fees to Capital 642,000 642,000 642,000 642,000 642,000
Total Operating Expenses $3,004,800 $3,256,100 $4,563,800 $4,873,400 $6,174,700
Net Balance From Operations $360,100 $622,700 ($44,200) $367,800 ($100,900)
Annual Debt Service Coverage
Net Revenues [7] $1,624,400 $2,025,500 $2,434,700 $3,035,500 $3,501,500
Total Annual Debt Service $0 $0 $919,300 $919,300 $1,626,400
Coverage n/a n/a 265% 330% 215%
Combned Operating and Capital Reserves
Beginning Available Reserves $10,112,000 $8,657,400 $6,638,800 $12,832,600 $4,883,200
Increase (Decrease) Reserve (1,454,600) (2,018,600) 6,193,800 (7,949,400) 1,253,100
Ending Available Reserves $8,657,400 $6,638,800 $12,832,600 $4,883,200 $6,136,300
Target Operating and Capital Reserves $3,270,000 $3,427,000 $3,942,000 $4,503,000 $5,086,000
Above (below) Target $5,387,400 $3,211,800 $8,890,600 $380,200 $1,050,300
[1] Projected using the existing wastewater rates. Changes in rate based revenues are due to customer and demand growth.
[2] FY 2019-20 increase effective Aug 8. All other increases are effective July 1.
[3] Miscellaneous revenue includes Permits and Inspections, Sewer Extension Fees, Sew er Connection Fees, Well Water, and Tap-in Fees.
[4] Interest earnings on the average fund balance calculated at 1.50%.
[5] Debt service related to new bond proceeds listed in Table 7. Assumes interest rate of 5.0%, 30 year term, and issuance expenses.
[6] Equal to 26% of sewer service charge revenue and additional revenue from rate adjustments .
[7] Includes revenue from rates, interest earnings, and miscellaneous revenues less operation and maintenance expense.
ITEM NUMBER: 1
DATE: 04/14/20
ATTACHMENT: 1
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Strength Factor and EDU Multiple
As discussed in the Existing Wastewater Service Charges section, one EDU is the sewer flow and strength of a
single-family residence, stated in terms of maximum discharge flow in gallons per day (gpd) and strength
consisting of bio-chemical oxygen demand (BOD) and suspended solids (SS). A Strength Factor can be developed
whereby a customer’s proportion of BOD and SS strength relative to the SFR dwelling unit can be calculated and
stated separately. The Equivalent Dwelling Unit is the product of the customer’s flow in relation to the SFR flow,
multiplied by the Strength Factor. Service charges for wastewater customers are calculated as follows.
Wastewater Service Charge = (Customer Flow/SFR Flow) x Strength Factor x SFR Service Charge
= EDU Multiple x SFR Service Charge
Therefore, wastewater service charges for various user groups can be calculated from their estimated flow and
Strength Factor which are proportional to the SFR wastewater service charge.
Proposed Wastewater Service Charges
The revenue increases outlined in Table 8 are applied to the SFR dwelling unit fixed charge to determine the
proposed charges in future years. Applying the EDU multiples from the current wastewater service charge
schedule shown in Table 3, to the SFR charge provides the wastewater service charges for other residential and
non-residential customers. The proposed wastewater service charges are shown in Table 9.
Table 9
Current and Proposed Wastewater Service Charges
Date of Increase
EDU Unit of Aug 8, July 1, July 1, July 1, July 1,
Description Multiple Measure Current 2019 2020 2021 2022 2023
Residential Fixed Charges
Single Family 1.00 Dwelling Unit $20.18 $24.01 $28.58 $34.01 $40.47 $48.16
Apartment, Condo 0.75 Dwelling Unit $15.13 $18.00 $21.43 $25.50 $30.34 $36.11
Mobile Home 0.75 Spaces $15.13 $18.00 $21.43 $25.50 $30.34 $36.11
Senior Apt Unit 0.35 Dwelling Unit $7.06 $8.40 $10.00 $11.90 $14.16 $16.85
Non-Residential Fixed Charges
Financial Institutions 2.00 Unit $40.36 $48.03 $57.15 $68.01 $80.94 $96.31
Bars 1.50 Unit $30.27 $36.02 $42.87 $51.01 $60.70 $72.23
Carwash 7.50 Unit $151.35 $180.11 $214.33 $255.05 $303.51 $361.17
Churches/Meeting Halls
< 150 seats 1.33 Seats $26.83 $31.93 $37.99 $45.21 $53.80 $64.03
150 to 250 seats 2.66 Seats $53.67 $63.87 $76.00 $90.44 $107.63 $128.08
> 250 seats 3.00 Seats $60.63 $72.15 $85.86 $102.17 $121.58 $144.68
Commercial Unit 1.00 Unit $20.18 $24.01 $28.58 $34.01 $40.47 $48.16
Funeral Home 9.00 Unit $181.62 $216.13 $257.19 $306.06 $364.21 $433.41
Gas Station 2.00 Unit $40.35 $48.02 $57.14 $68.00 $80.92 $96.29
Grocery Store > 10,000 sf 8.00 1,000 sf $161.41 $192.08 $228.57 $272.00 $323.68 $385.18
Gymnasium 10.00 Unit $201.77 $240.11 $285.73 $340.01 $404.62 $481.49
Laundry 9.00 Unit $181.62 $216.13 $257.19 $306.06 $364.21 $433.41
Motel (per room) 0.33 Room $6.66 $7.93 $9.43 $11.22 $13.36 $15.89
Office Unit 1.00 Unit $20.18 $24.01 $28.58 $34.01 $40.47 $48.16
Rest Home (per bed) 0.35 Bed $7.06 $8.40 $10.00 $11.90 $14.16 $16.85
Restaurants
< 40 seats 4.00 Seats $80.71 $96.04 $114.29 $136.01 $161.85 $192.60
41 to 60 seats 6.00 Seats $121.06 $144.06 $171.43 $204.01 $242.77 $288.89
61 to 100 seats 8.00 Seats $161.41 $192.08 $228.57 $272.00 $323.68 $385.18
> 100 seats 10.00 Seats $201.77 $240.11 $285.73 $340.01 $404.62 $481.49
School (per student on 3/1) 0.05 Student $1.01 $1.20 $1.43 $1.70 $2.03 $2.41
Theater 4.00 Unit $80.71 $96.04 $114.29 $136.01 $161.85 $192.60
Veterinarians 3.00 Unit $60.54 $72.04 $85.73 $102.02 $121.40 $144.47
Unlisted Uses [1] 1.00 Unit $20.18 $24.01 $28.58 $34.01 $40.47 $48.16
[1] Determined by use of fixture units from the California Plumbing Code or as by means deemed appropriate by the City Engineer.
ITEM NUMBER: 1
DATE: 04/14/20
ATTACHMENT: 1
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Service Charge Variances
It is suggested that the City reserve the right to determine a new wastewater customer’s monthly charge by
estimating the wastewater flow through the use of fixture units according to the California Plumbing Code or
other methods deemed appropriate by the City Engineer. The resulting wastewater flow would be applied to the
formula provided in a previous section. A new wastewater customer classification may be created that is not
listed in Table 9.
Wastewater Bill Impact Analysis
The impact to the single-family customer bill that would occur from the implementation of the proposed
wastewater service charges for the August 2019 increase is provided in Table 10 below. The table shows that the
wastewater bill of an SFR customer will increase from $20.18 to $24.01, an increase of $3.83, or 19 percent.
Wastewater Rate Survey
A wastewater rate survey was conducted for neighboring communities to the City of Atascadero. Chart 1
compares the City’s SFR monthly wastewater bill with those of neighboring communities at the same use.
Wastewater bills were calculated assuming a 5/8” meter or 3/4” meter where that is the smallest size available,
and a monthly use of 15 hundred cubic feet (HCF) and an average winter water use of 7 HCF where applicable.
The rate survey includes rate schedules in effect April 2019 and provides wastewater bills for the City using the
current service charges and for the proposed service charges from Table 9 for implementation August 8, 2019.
From reviewing Chart 1, the City’s proposed August 8, 2019 SFR monthly wastewater bill is among the lowest in
San Luis Obispo County.
Table 10
Comparison of Current Residential Monthly Wastewater Bill with
Proposed Monthly Bill Using August 2019 Wastewater Service Charges
Aug 2019
Residential Current Proposed Dollar Percent
Classification Bill Bill Change Change
Single Family $20.18 $24.01 $3.83 19.0%
Apartment, Condo $15.13 $18.00 $2.87 19.0%
Mobile Home $15.13 $18.00 $2.87 19.0%
Senior Apt Unit $7.06 $8.40 $1.34 19.0%
ITEM NUMBER: 1
DATE: 04/14/20
ATTACHMENT: 1
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Capacity Charges
Capacity charges, sometimes referred to as connection fees, are one-time charges paid by new customers as a
capital contribution for capacity in the wastewater system. These charges can also be assessed to customers
requiring increased capacity requirements to serve changes in their development. Proceeds from capacity
charges are to be placed into an account separate from all other accounts and are to be used to finance the
development of growth related infrastructure. The proceeds are a financing source for future facilities.
Capacity charges are calculated recognizing EDU multiples of the different customer classifications stated in the
wastewater service charge schedule in Tables 9. The calculation of the capacity charge is proposed as follows.
Capacity Charge= (Customer Flow/SFR Flow) x Strength Factor x SFR Capacity Charge
= EDU Multiple x SFR Capacity Charge
The SFR capacity charge is calculated following standard methods by identifying the existing fixed asset value, in
terms of replacement cost less depreciation, and the CIP value that is related to replacement and to serving future
growth. Table 11 provides a summary of the calculations used to determine the capacity charge for an SFR
dwelling unit. The capacity charges have been developed using the combination methodology, a combination of
the buy-in and incremental cost methodology whereby the charges are based on the value of existing capacity
and value of CIP replacement and growth-related projects.
Chart 1 Comparison of Single-family Residential Monthly Wastewater Bills
For Rates in Effect April 2019
Note: Above table uses wastewater rates in effect April 2019. City’s August 2019 bill is based
on the wastewater service charges in Table 9. San Luis Obispo, Cambria, Paso Robles, Arroyo
Grande, and Los Osos have a variable wastewater rate component and an average water
consumption of 15 HCF and an average winter water use of 7 HCF have been assumed.
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Using the capacity charge for the SFR dwelling unit and the formula described above, a capacity charge schedule
is developed as shown in Table 12 for existing development types. The capacity charges provided in Table 12
should be adjusted annually by the percentage increase in the Engineering News Record Construction Cost Index
(ENR-CCI).
Table 11
Development of Single-family Residential Capacity Charge
Line RCLD Contributions/ Asset Capacity
No. Description Value Debt Principal Value Capacity Charge
gpd $/gpd
Existing Plant Investment
1 Collection $15,743,199 ($12,226,755) $3,516,444
2 Pumping and Lift Stations 2,429,453 - 2,429,453
3 Treatment 7,123,338 - 7,123,338
4 General Plant 3,068,790 - 3,068,790
5 Total Existing Plant Investment $28,364,780 ($12,226,755) $16,138,025 2,280,000 $7.08
6 Capital Improvements (CIP)
7 Replacement Related $39,300,150 ($22,900,000) $16,400,150 2,280,000 $7.19
8 Growth Related Improvements $7,611,850 (5,100,000) 2,511,850 510,000 $4.93
9 Total CIP $46,912,000 ($28,000,000) $18,912,000
Adjustments
10 Capital Cash Balance $9,286,000 $9,286,000 2,280,000 $4.07
11 Total Value $84,562,780 $44,336,025
12 Unit Valuation of Existing Wastewater System ($/gpd) $23.269
13 Single-family Residential Demand (gpd) 240
14 Connection Fee (Replacement) ((line 5 + line 7 + line 10) * line 13) $4,403
15 Connection Fee (Growth-Related) (line 8 * line 13) $1,182
16 Single-family Residential Capacity Charge $5,584
ITEM NUMBER: 1
DATE: 04/14/20
ATTACHMENT: 1
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Capacity Charge Variances
For any new wastewater customer, the City may reserve the right to charge the customer using estimated flow
based on fixture units according to the California Plumbing Code, or other method deemed appropriate by the
City’s engineer. The capacity charge may be calculated using the formula provided above.
Table 12
Schedule of Capacity Charges
EDU Unit of Capacity
Development Type Multiple Measure Charge
Residential
Single Family 1.00 Dwelling Unit $5,584
Apartment, Condo 0.75 Dwelling Unit $4,186
Mobile Home 0.75 Spaces $4,186
Senior Apt Unit 0.35 Dwelling Unit $1,953
Non-Residential
Financial Institutions 2.00 Unit $11,168
Bars 1.50 Unit $8,376
Carwash 7.50 Unit $41,880
Churches/Meeting Halls
< 150 seats 1.33 Seats $7,426
150 to 250 seats 2.66 Seats $14,853
> 250 seats 3.00 Seats $16,752
Commercial Unit 1.00 Unit $5,584
Funeral Home 9.00 Unit $50,256
Gas Station 2.00 Unit $11,168
Grocery Store > 10,000 sf 8.00 1,000 sf $44,672
Gymnasium 10.00 Unit $55,840
Laundry 9.00 Unit $50,256
Motel (per room) 0.33 Room $1,842
Office Unit 1.00 Unit $5,584
Rest Home (per bed) 0.35 Bed $1,954
Restaurants
< 40 seats 4.00 Seats $22,336
41 to 60 seats 6.00 Seats $33,504
61 to 100 seats 8.00 Seats $44,672
> 100 seats 10.00 Seats $55,840
School (per student on 3/1) 0.05 Student $279
Theater 4.00 Unit $22,336
Veterinarians 3.00 Unit $16,752
Unlisted Uses 1.00 Unit $5,584
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DATE: 04/14/20
ATTACHMENT: 1
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Appendix A
Wastewater Technical Appendices
Wastewater Historical and Projected Operation and Maintenance Expense, Capital Improvement
Program with Sources and Uses Funding, and the Wastewater Financial Plan are detailed in Appendix A.
ITEM NUMBER: 1
DATE: 04/14/20
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Appendix A-1
Historical and Projected Operation and Maintenance Expense
Inflationary Historical Budget Projected [1]
Description Escalation FY 2014-15 FY 2015-16 FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 FY 2022-23 FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29
COLLECTION
Electricity 3% [1] $64,418 $67,310 $76,842 $78,762 $68,000 $71,921 $76,016 $80,292 $84,757 $89,417 $94,280 $99,355 $104,649 $110,172 $115,932
Chemicals 3% [1] 19,777 21,035 33,644 28,427 30,000 31,730 33,537 35,424 37,394 39,450 41,596 43,835 46,171 48,608 51,149
Operating Supplies 3% 16,400 9,291 4,130 7,008 10,000 10,300 10,609 10,927 11,255 11,593 11,941 12,299 12,668 13,048 13,439
Vehicle & Equip Supp & Repair 3% 9,092 49,270 38,232 27,197 75,000 77,250 79,568 81,955 84,413 86,946 89,554 92,241 95,008 97,858 100,794
Contract Services 3% 104,065 101,009 45,777 39,100 70,350 72,461 74,634 76,873 79,180 81,555 84,002 86,522 89,117 91,791 94,545
Other 3% 5,209 5,255 5,989 6,315 6,500 6,709 6,924 7,147 7,376 7,612 7,856 8,108 8,369 8,638 8,915
Total Collection Expense $218,962 $253,170 $204,614 $186,809 $259,850 $270,371 $281,288 $292,618 $304,375 $316,573 $329,229 $342,360 $355,982 $370,115 $384,774
TREATMENT
Electricity 3% [1] $162,906 $162,468 $172,653 $174,898 $170,000 $179,803 $190,042 $200,733 $211,895 $223,546 $235,705 $248,392 $261,628 $275,435 $289,835
Operating Supplies 3% 26,899 26,777 22,426 32,206 37,000 38,110 39,253 40,431 41,644 42,893 44,180 45,505 46,870 48,277 49,725
Vehicle & Equip Supp & Repair 3% 7,303 7,542 16,693 8,321 13,000 13,390 13,792 14,205 14,632 15,071 15,523 15,988 16,468 16,962 17,471
Contract Services 3% 42,444 44,845 46,309 52,325 50,000 51,500 53,045 54,636 56,275 57,964 59,703 61,494 63,339 65,239 67,196
Other 3% 4,518 5,078 5,271 4,962 5,100 5,253 5,411 5,574 5,740 5,912 6,089 6,273 6,461 6,654 6,854
Total Treatment Expense $244,070 $246,709 $263,352 $272,712 $275,100 $288,056 $301,543 $315,579 $330,186 $345,386 $361,200 $377,652 $394,766 $412,567 $431,081
GENERAL OPERATIONS
Salaries and Wages 5% [2] $335,262 $344,379 $358,567 $378,829 $374,145 $396,905 $433,473 $527,672 $554,059 $717,394 $753,262 $790,924 $830,472 $872,002 $915,602
Benefits 10% 175,224 195,165 209,180 231,496 242,231 274,703 302,172 387,786 426,566 569,772 626,748 689,427 758,370 834,207 917,626
Insurance 3% (5,503) 15,806 16,451 21,956 16,050 16,532 17,027 17,538 18,064 18,606 19,165 19,739 20,332 20,942 21,570
Operating Supplies 3% 23,482 22,661 42,224 27,381 26,000 26,780 27,583 28,411 29,263 30,141 31,045 31,977 32,936 33,924 34,942
Vehicle & Equipment Repairs 3% 23,688 24,943 22,605 38,333 36,000 37,080 38,192 39,338 40,518 41,734 42,986 44,275 45,604 46,972 48,381
Contract Services 3% 10,702 1,495 4,515 680 11,500 11,845 12,200 12,566 12,943 13,332 13,732 14,144 14,568 15,005 15,455
Franchise Fees 35,865 37,121 38,251 38,636 51,850 48,516 58,524 70,582 85,108 102,612 109,132 116,058 123,396 131,182 139,436
Departmental Service Allocation 3% 79,510 67,240 74,160 72,410 72,320 74,490 76,724 79,026 81,397 83,839 86,354 88,944 91,613 94,361 97,192
Administrative Services 3% 118,340 199,130 202,650 217,520 221,960 228,619 235,477 242,542 249,818 257,312 265,032 272,983 281,172 289,607 298,296
Contingency Reserve 3% 0 0 0 0 10,000 10,300 10,609 10,927 11,255 11,593 11,941 12,299 12,668 13,048 13,439
Other 3% 45,038 44,305 59,583 33,535 55,180 56,834 58,543 60,297 62,107 63,968 65,886 67,864 69,899 71,997 74,156
Total G&A Expenses $841,608 $952,245 $1,028,186 $1,060,776 $1,117,236 $1,182,604 $1,270,524 $1,476,685 $1,571,098 $1,910,303 $2,025,283 $2,148,634 $2,281,030 $2,423,247 $2,576,095
Total O&M Expenses $1,304,640 $1,452,124 $1,496,152 $1,520,297 $1,652,186 $1,741,031 $1,853,355 $2,084,882 $2,205,659 $2,572,262 $2,715,712 $2,868,646 $3,031,778 $3,205,929 $3,391,950
[1] Expense increases from additional wastewater flow due to growth as well as cost escalation.
[2] Includes a new Wastewater Operator position occuring in year FY 2021-22 and FY 2023-24, and an allocation of a 0.5 FTE in FY 2023-24.
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Table A-2
Capital Improvement Program With Sources and Uses of Funds
Estimated Projected
Description FY 2019-20 FY 2020-21 FY 2021-22 FY 2022-23 FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29
Current Capital Improvement Projects (CIP) [1]
Wastewater Treatment Plant $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
WRF Process Improvements and Upgrades - 309,000 3,026,700 9,759,700 10,052,500 - - - - -
Percolation Basin Capacity Evaluation - 36,100 - - - - - - - -
Dredge Pipe Replacement - - - 38,200 - - - - - -
Aerator Replacement Program 19,000 19,600 20,200 - - - - - - -
Lift Stations - - - - - - - - - -
Lift Station No. 2 Replacement 1,332,000 - - - - - - - - -
Lift Station No. 5 and Force Main Replacement - - - - - 1,233,500 7,193,000 - - -
Lift Station No. 6 and Force Main Upgrades - - - - 164,300 955,200 - - - -
Lift Station 4, 7, 9 11, 14, 15 Rehabilitation Projects 473,000 - - - - - - - - -
Lift Station No. 13 and Force Main Replacement - 848,700 4,951,200 - - - - - - -
Collection - - - - - - - - - -
Highway 41 and El Camino Real Sewer Improvements - - - - - - - - 281,200 1,641,400
Traffic Way Sewer Improvements 389,000 2,269,100 - - - - - - - -
Various Locations Sewer Condition Improvements 456,000 - - - - 1,496,600 - 1,587,800 - -
4x4 Loader - - 159,100 - - - - - - -
Asset Management Program and Work Order System - 103,000 - - - - - - - -
CCTV Truck 200,000 - - - - - - - - -
Combo Truck Storage Structure 15,000 - - - - - - - - -
Inflow and Infiltration Study - 30,900 - - 33,800 - - 36,900 - -
Portable Bypass Pump - 77,300 - - - - 119,400 - - -
Portable Generator (Total of 2) - 97,900 - - - - - 123,000 - -
Service Vehicle Replacement (Total of 6) 35,000 36,100 - 38,200 - 40,600 - 43,000 - 45,700
Skip and Drag - 97,900 - - - - - - - -
Annual GIS Maintenance & Modeling Support 15,000 15,500 15,900 16,400 16,900 17,400 17,900 18,400 19,000 19,600
Manhole Rehabilitation & Sewer Line Repairs 100,000 103,000 132,600 136,600 168,800 173,900 209,000 215,200 253,400 261,000
Sewer System Management Plan Audit 15,000 - 15,900 - 16,900 - 17,900 - 19,000 -
Wastewater Fee Study - - - 54,600 - - - 61,500 - -
Wastewater Customer Database Review - - - 21,900 - - - 24,600 - -
Sewer System Management Plan Update 30,000 - - - - 34,800 - - - -
Wastewater Master Plan Update - - - - 168,800 - - - - -
Total $3,079,000 $4,044,100 $8,321,600 $10,065,600 $10,622,000 $3,952,000 $7,557,200 $2,110,400 $572,600 $1,967,700
Sources and Uses of Capital Funds
Beginning Year Balance [2] $9,286,000 $7,479,700 $4,838,400 $11,076,400 $2,759,200 $4,113,200 $2,221,900 $1,815,500 $1,951,200 $3,726,000
Transfer In Annual Capital Replacement 630,700 760,800 917,600 1,106,400 1,334,000 1,418,700 1,508,800 1,604,100 1,705,400 1,812,700
Transfer In Sewer Connection Fees 642,000 642,000 642,000 642,000 642,000 642,000 642,000 642,000 642,000 642,000
Additional Funding from Net Operating Revenues - - - - - - - - - -
New Bond Proceeds (net of issuance costs)- - 13,000,000 - 10,000,000 - 5,000,000 - - -
CIP Project Expenditures ($3,079,000) ($4,044,100) ($8,321,600) ($10,065,600) ($10,622,000) ($3,952,000) ($7,557,200) ($2,110,400) ($572,600) ($1,967,700)
Sources Less Uses $7,479,700 $4,838,400 $11,076,400 $2,759,200 $4,113,200 $2,221,900 $1,815,500 $1,951,200 $3,726,000 $4,213,000
Target Capital and Emergency Reserve $2,400,000 $2,500,000 $2,900,000 $3,400,000 $3,800,000 $4,000,000 $4,300,000 $4,300,000 $4,200,000 $4,200,000
[1] CIP Source: CIP Project list provided by the City.
[2] The available cash balance reflects the City's FY 2019-20 Budget less Operating Reserve.
ITEM NUMBER: 1
DATE: 04/14/20
ATTACHMENT: 1
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Appendix A-3
Wastewater Financial Plan
Projected
Description FY 2019-20 FY 2020-21 FY 2021-22 FY 2022-23 FY 2023-24 FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29
Proposed Rate Increase (Aug 8) 19.0%
Proposed Rate Increase (July 1) 19.0% 19.0% 19.0% 19.0% 5.0% 5.0% 5.0% 5.0% 5.0%
Operating Revenues
Service Charge Revenues, Existing Rates [1] $2,038,500 $2,066,400 $2,094,200 $2,122,000 $2,149,900 $2,177,700 $2,205,600 $2,233,400 $2,261,300 $2,289,100
Additional Revenue from Rate Adjustments [2] 355,000 859,800 1,434,900 2,133,400 2,980,700 3,278,900 3,597,300 3,936,400 4,297,800 4,682,700
Miscellaneous Revenues [3] 830,700 837,800 845,200 853,000 861,200 869,800 878,800 888,200 898,100 908,500
Interest Earnings [4] 140,700 114,800 145,300 132,800 82,000 77,800 58,400 53,600 66,800 84,800
Total Operating Revenues $3,364,900 $3,878,800 $4,519,600 $5,241,200 $6,073,800 $6,404,200 $6,740,100 $7,111,600 $7,524,000 $7,965,100
Operating Expenses
Operation and Maintenance Expense $1,740,500 $1,853,300 $2,084,900 $2,205,700 $2,572,300 $2,715,700 $2,868,700 $3,031,800 $3,205,900 $3,392,000
New Bond Debt Service [5] 0 0 919,300 919,300 1,626,400 1,626,400 1,980,000 1,980,000 1,980,000 1,980,000
Annual Replacement [6] 622,300 760,800 917,600 1,106,400 1,334,000 1,418,700 1,508,800 1,604,100 1,705,400 1,812,700
Transfer Sewer Connection Fees to Capital 642,000 642,000 642,000 642,000 642,000 642,000 642,000 642,000 642,000 642,000
Total Operating Expenses $3,004,800 $3,256,100 $4,563,800 $4,873,400 $6,174,700 $6,402,800 $6,999,500 $7,257,900 $7,533,300 $7,826,700
Net Balance From Operations $360,100 $622,700 ($44,200) $367,800 ($100,900) $1,400 ($259,400) ($146,300) ($9,300) $138,400
Annual Debt Service Coverage
Net Revenues [7] $1,624,400 $2,025,500 $2,434,700 $3,035,500 $3,501,500 $3,688,500 $3,871,400 $4,079,800 $4,318,100 $4,573,100
Total Annual Debt Service $0 $0 $919,300 $919,300 $1,626,400 $1,626,400 $1,980,000 $1,980,000 $1,980,000 $1,980,000
Coverage n/a n/a 265% 330% 215% 227% 196% 206% 218% 231%
Combned Operating and Capital Reserves
Beginning Available Reserves $10,112,000 $8,657,400 $6,638,800 $12,832,600 $4,883,200 $6,136,300 $4,246,400 $3,580,600 $3,570,000 $5,335,500
Increase (Decrease) Reserve (1,454,600) (2,018,600) 6,193,800 (7,949,400) 1,253,100 (1,889,900) (665,800) (10,600) 1,765,500 625,400
Ending Available Reserves $8,657,400 $6,638,800 $12,832,600 $4,883,200 $6,136,300 $4,246,400 $3,580,600 $3,570,000 $5,335,500 $5,960,900
Target Operating and Capital Reserves $3,270,000 $3,427,000 $3,942,000 $4,503,000 $5,086,000 $5,358,000 $5,734,000 $5,816,000 $5,803,000 $5,896,000
Above (below) Target $5,387,400 $3,211,800 $8,890,600 $380,200 $1,050,300 ($1,111,600) ($2,153,400) ($2,246,000) ($467,500) $64,900
[1] Projected using the existing wastewater rates. Changes in rate based revenues are due to customer and demand growth.
[2] FY 2019-20 increase effective Aug 8. All other increases are effective July 1.
[3] Miscellaneous revenue includes Permits and Inspections, Sewer Extension Fees, Sewer Connection Fees, Well Water, and Tap-in Fees.
[4] Interest earnings on the average fund balance calculated at 1.50%.
[5] Debt service related to new bond proceeds listed in Table 7. Assumes interest rate of 5.0%, 30 year term, and issuance expenses.
[6] Equal to 26% of sewer service charge revenue and additional revenue from rate adjustments .
[7] Includes revenue from rates, interest earnings, and miscellaneous revenues less operation and maintenance expense.
ITEM NUMBER: 1
DATE: 04/14/20
ATTACHMENT: 1
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