CITY COUNCIL AGENDA ITEM
Memo Date: July 17, 2024
Agenda Date: August 13, 2024
Prepared By: Jessica Dovale, Utility Support Service Manager
Through: Rebecca Bowman, Finance Director
Requested Action:
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Approve a Resolution to accept Stantec’s FY2024 Water/Sewer Utility Revenue Sufficiency Report, validating the reduction of the automatic four percent (4%) increase in FY2025, to a two percent (2%) increase to the Water, Sewer, Fire Lines, Hydrant, and Reclaimed Water fixed monthly charges and usage rates effective October 1, 2024 by amending Schedule A (1001A.FY25): Utility Rates, Fees and Charges for FY25 and further adjusting Schedule A (1001A.FY26): Utility Rates, Fees, and Charges for FY26 with the automatic four percent (4%) increase.
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BACKGROUND:
On March 9, 2021, Council approved a 5-year comprehensive rate study prepared by Stantec for FY2021 through FY2026. The rate study recommends the automatic annual implementation of an annual four percent (4%) increase to the water, fire lines, hydrant, wastewater and reclaimed water fixed monthly charges and usage rates each October 1st, 2021 and ending with the last adjustment October 1, 2025. The automatic annual increase is subject to an annual review and validation by City Council prior to the rate increase being implemented per Resolution No. 2021-016.
On July 10, 2024, at the FY 2025 Budget Kickoff Workshop Council voted to reduce the automatic annual four percent (4%) rate increase to a two percent (2%) rate increase to the water, fire lines, hydrant, wastewater and reclaimed water fixed monthly charges and usage rates for FY2025 only. Schedule A (1001A.FY25): Utility Rates, Fees and Charges for FY25 contains calculated rates with the two percent (2%) increase to be effective October 1, 2024.
Further included is the recalculated Schedule A (1001A.FY26)): Utility Rates, Fees and Charges for FY26, reinstating the automatic annual four percent (4%) increase to be effective October 1, 2025 (FY26).
The annual rate increase is intended to fund the capital improvements necessary to repair and maintain the aging utilities infrastructure, as analyzed by the City’s utility engineering consultant, Jacobs, and the City’s rate consultant, Stantec. Utility capital improvement projects are large, long-term projects that require dedicated funding sources for debt service for a definite period of time.
STRATEGIC PLAN CONNECTION:
BUDGETARY IMPACT:
PREVIOUS ACTION:
In Fiscal Year 2020 a full rate study began and concluded March of 2021. Through Resolution 2021-016 the Utility Handbook and rate schedules were updated.
In Fiscal Year 2021 through Resolution 2021-086 the Utility Handbook and rate schedules were updated.
In Fiscal Year 2022 through Resolution 2021-120 the Utility Handbook and rate schedules were updated.
In Fiscal Year 2023 through Resolution 2022-074 the Utility Handbook and rate schedules were updated.
RECOMMENDED MOTION:
Recommendation
Approve a Resolution to accept Stantec’s FY2024 Water/Sewer Utility Revenue Sufficiency Report, validating the reduction of the automatic four percent (4%) increase in FY2025, to a two percent (2%) increase to the Water, Sewer, Fire Lines, Hydrant, and Reclaimed Water fixed monthly charges and usage rates effective October 1, 2024 by amending Schedule A (1001A.FY25): Utility Rates, Fees and Charges for FY25 and further adjusting Schedule A (1001A.FY26): Utility Rates, Fees, and Charges for FY26 with the automatic four percent (4%) increase.