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HomeMy WebLinkAboutStudy Session #1 - Supplemental Communication - Water System City of Huntington Beach WATER SYSTEM INFRASTRUCTURE AND RATES STUDY I INVESTING IN OUR FUTURE Im ortance of Water System SUPPLEMENTAL ems► , .; � - `��� � , '-� Wells Reservoir Pump a Pipes Hydrants -x Meters Stations, � � A � r Food � Health � Economy�r,'.Recreation Aes r Fire F�f Vital Services Drinking Protection COMMUNICATION D. ,. / Priorities and Goals Maintaining public health and safety ❑ Provide safe drinking water ❑ Fight fires and protect property - � • .".�`• r ❑ Maintain a reliable and dependable water system for now and future generations Cost To Replace Our Water Infrastructure? 4 Reservoirs/Tank 11 ' ' ' Wells (8 Active) 3Zone 1 Boosters f' '[I I'! 1 1, $50 M Zone 2 Boosters }' ,y 110M Miles of Large & Import Connections •Distribution Mains $5 M }r— i— Miles of Shared Large Mains — $80 M Cost To Replace Our Water Infrastructure? (Con't) 53 �91 Yard, Trucks, Meter Connections � Equipment, etc r •�= - �� 17.749 Public Hydrants Over � � .4 Billion Large Valves $29 M $20 M INFRASTRUCTURE PLANNING • Sustainable Approach — What does "sustainability in public works' mean? sustainability in public works means seeking a balanced "` approach for a vibrant community I . today and tomorrow, and it is �• c accomplished by the efficient delivery /`�c of infrastructure in an environmentally and socially responsible way that ensures the best economic choice in Satisfies the triple bottom line (3 P's) the long term. PeoplelSocially responsible • Planet/Environmentally responsible • Prosperity/Economically/Fiscally responsible INFRASTRUCTURE PLANNING Out • Planning is really risk management • Third The Cost of Pipe Breaks:New Knowledge party damage costsfor Improved Risk Management 57j• Traffic disruption �� • Hospitals, schools and food Y oriented operations impacted "'!t most a Water Master Plan New Reservoirs & New � Main Replacements Booster Stations Wells and Extensions Treatment and Corrosion Control Transmission Main Improvements (Multi-Phases) Replacement and New Maintain a Reliable Financially Sustainable Water Infrastructure �� ""'�' into the Future WMP PROJECTS & COSTS Production Main Distribution Replacement L1Y'� Corrosion Control Security ° Studies 3 Projects/Programs at a value of `$ 1128.2 M Over 20 Years INVESTING 11I OUIR FUTURE NEAR TERM PROJECTS (5 YEARS) ❑ Well 1 Well Head $3M ❑ OC-44 Slip Lining $1 M ❑ Well 9 Odor Treatment $2M ❑ OC-35 Relocation (1-405) $1.6M ❑ New Well 14 $5M ❑ New Well 15 $5M ❑ New Well 16 $5M ❑ Sunset Beach Main Replacement $2M ❑ Well 8 Odor $2M ❑ Aging Water Main Replacements $15M INVESTING IN OUR FUTURE WATER RATES STUDY Water Rates Background o Current Rates • Uniform commodity rate • Daily meter fee based on meter size or number of dwelling units o Resolution 99-50 — established annual adjustment formulas for commodity and meter fees • Commodity adjusted based on basin pumping percentage (BPP), replenishment assessment (RA) and import water rate • Meter fee adjusted based on percentage change in CPI o The adjustment formula worked well for over 13 years o Water Fund reserve policy was adopted by Council in FY 2014-15 Water Rates Background Beginning in 2012, increases in other water related costs outpaced the CPI and the fund balance began to dip and currently does not meet the reserve policy • CPI cumulative change since 2012 = 9.7% • Total Operating and Equipment Expenditures FY 12-13 thru FY 15-16 up 13% • Water Sales Revenue FY 12-13 thru FY 15-16 down 5% • Increases in MWD readiness-to-serve charges and capacity charges - up 56% • Increase in MWDOC connection fees — up 62 Water Master Plan The previous $5.50 capital surcharge sunset 10 years ago in 2007. The fee was originally adopted in 1995 at $2.50 and increased up $0.50 per year. Currently has only minimal funding from connection fees ($340K in FY 16-17) Rate Study Recommendations c- "Cost-of-service" study — determines equitable method of recovering the cost of providing water ?' Commodity rate adjusted based on actual city water costs using current methodology effective at the beginning of each fiscal year c? Fixed meter fee adjustment of $0.88/month to meet costs on 10/1/18 and adjusted annually thereafter by Consumer Price Index + 1.5% • Multi-family charged per dwelling unit • Single-family and other accounts charged by meter size Rates Recommendation • New Capital surcharge per equivalent meter unit (EMU) set at $3.00 to address ongoing capital needs (wells, pipelines, etc.), adjusted by $.50 every two years through FY 22-23 — effective October 1 , 2018. -- /2 I1'22M o•rd Pi up Proposed Capital lm-charge 530U 11 $I1,50 o.. annual azijustmc'nts I per P:MIq IiReetivo duto — — 0024110 01t2019 Oct 2020 Capital Surcharge Est.Rev $3,700,004, all, a Transfer capital component of reserve requirement to the Water Master Plan Current Recommended Financial Policy Water Water Master Plan Notes (Fund 506) (Fund 507) Operations 33% 25% %of Oper.Budget Capital 150% 150% 5•Year Average CIP Emergency $5,400,000 $5,400,000 Well Replacement Beginning Reserve Balance Water And Water Master Plan (using recommended reserve policy) All 3 ,P Proposed 2018-19 Water Rates Water Commodity Rate per ccf"` $2.0839 $2.1490 $0.0651 Basic Meter Fee (3/4") $11.8199 $12.7000 $0.8801 Capital5urcharge $0.00 $3.00 *ccf= S00 cubic feet or 748 gallons—proposed rate is estimated Average Residential DII Water Commodity Rate per ccf $25.01 $25.79• $0.78 Basic Meter Fee (3/4") $11.82 $12.70 $0.88 Capital5urcharge $0.00 $3.00 $3.00 Total $36.83 $41.49 $4.66 'proposed water commodity total uses the estimated rate from the previous slide Comparison of Regional Agencies' SFR Water Rates 70.00 — 1 60.00 — 50.01) 40.0D woo 20.00 10.00 0.00 die tp 4p oo ell OA 8, se 011'jo ir ee ON e Commodit eCommodity at 12 Units •Meter aC Next Steps November/December 2017 - prepare Prop 218 notice, City Attorney review January 2018 — Notice mailed to all water customers and property owners March 2018 — Public Hearing October 1 , 2018 — New rates go into effect Questions?