HomeMy WebLinkAbout2009-03-25 e-packet (2)~~H Ste; .
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!o ~ - ~, CITY COUNCIL
~H ~ t
OF THE
J ~ CITY OF SOUTH SAN FRANCISCO
`'~LIFO~~~~~ P.O. LoY 711 (City Hall, 400 Grand Avenue)
South Sail Francisco, California 94083
1`/Ieeting to be held at:
MUNICIPAL SERVICES BUILDING
BETTY WEBER. ROOM
33 ARROYO DRIVE
SOUTH SAN FRANCISCO, CA
WEDNESDAY, MARCH 25, 2009
8:00 P.M.
NOTICE IS HEREBY GIVEN, pursuant to Section 54956 of the Government Code of
the State of California, the City Council of the City of South San Francisco will hold a Special
Meeting on Wednesday, the 25th day of March, 2009, at 8:00 p.m., in the Betty Weber Room at
the Municipal Services Building, 33 Arroyo Drive, South San Francisco, California 94080.
Purpose of the meeting:
1. Call to Order.
2. Roll Call.
~ Y
3. Public Comments -Comments are limited to items on the Special Meeting
Agenda.
4. Discussion of five (5) year Sewer Rate Increase Plan.
5 . Adjournment.
•
ity erk, City of outh San Francisco
DATE: March 25, 2009
TO: Honorable Mayor and City Council
FROM: Terry White, Director of Public Works
Jim Steele, Finance Director
SUBJECT: PROPOSED FIVF. YEAR SEWER RATE INCREASE PLAN
RECOMMENDATION
It is recommended that the City Council review and discuss the proposed sewer service rates
for Fiscal Years (FY} 2009-10 through 2013-14, and provide direction so staff can prepare
the necessary noticing for a public hearing in June, in compliance with Proposition 218.
BACKGROUND/DIS CU S S ION
In Apri12004, in accordance with the requirements of Proposition 218, the City notified, by mail,
the owners of property in South San Francisco of a rate increase of 25% for sewer service for the
2004-2005 fiscal year, and then annual increases of up to 9% each year for FY 2005/06 through
FY 2008/09. It was explained in the notice that the rate increases were needed to finance capital
improvements for the City's Water Quality Control Plant (WQCP}and sanitary sewer system. It is
now time to plan for the next five year rate increase, beginning in 2009-10.
Since the last rate increase plan was approved, City staffhas focused the capital improvement plan
to fund:
- Completion of plant upgrades to increase the wet weather flow capacity of the facilities,
construction of additional primary clarifiers, anal other new buildings
- Completion of Wet Weather Phase I which built new pump stations and increased farce
main size
- Completion of upsizing of sewer collection lines throughout the City (VVet Weather
Program Phase II West and Central)
- Feasibility and Facility Master Plans for the use of recycled water production
- Wind and Solar Power Feasibility Plans
- Outfall Line Repair plan preparations
- General sanitary sewer rehabilitation to reduce storm water inflow and infiltration
These prof ects were needed to comply with the requirements of the State Regional Water Quality
Control Board per its Cease and Desist Order issued to the City in 1997. The City has now been
issued a new NPDES permit by the Water Board which establishes new criteria for the operations
Staff Report
Subject: PROPOSED SEWER RATE INCREASE
Page 2 of 3
of the plant for the next five years. Those requirements and routine operations of the plant require
new funding. Rebuilding of digesters, the Outfall line repair, and miscellaneous projects are part
of normal maintenance activities. Upgrading of the cogeneration facility, installation of Solar
systems, and construction of a recycled water generating facility are optional plans. Staff also
anticipates large capital projects required by the Board under the next permit, to deal with
potential environmental requirements during the next rate cycle. These requirements are not
factored into these rates.
Rate Options:
Staff has prepared two rate increase options for the Council, to show the relative impact of the
two scenarios. They are:
I. Base Case:
A. Required improvements will total $25.9 million over the five years:
- Outfall repair costs totaling $400,000;
Reliability improvements to the aging Plant totaling $25 million. These
improvements are needed for components of the Plant which are quite old, and
which were not upgraded during the plant upgrades over the past decade. These
include such items as replacement of three (3) digesters, retrofitting grit basins,
and replacing a generator;
Seismic upgrades to the Plant, totaling $500,000; and
B. Green technology improvements would include installing new solar and wind energy, and
expanding the cogeneration capabilities of the plant to save additional energy. This portion of the
upgrades is not required, but at a net cost of $5 million over the five years (after rebates), these
improvements would result in energy savings over time, and would help reduce the City's carbon
footprint.
This scenario results in rate increases as follows:
Option I 2009-10 2010-11 2011-12 2012-13 2013-14
Rate Increase
Needed 17% 10% 5% 0% 0%
Staff evaluated the impact on rates without the cost for green technology improvements, since
they are not required; but doing that only reduced the rates by 1 % in the second year. The increase
associated with debt service on the bonds needed to fund these green projects is almost offset by
the prof ected energy savings realized by installing them, so staff believes the green improvements
make economic sense.
Staff Report
Subject: PROPOSED SEWER RATE INCREASE
Page 3 of 3
II. Base Case plus Recycled Water
This assumes all the elements in the Base Case, above, plus a $5 million dollar estimate of the
City's cost for installing a Recycled Water Treatment and Transmission Facility in partnership
with the San Francisco PUC, and potentially Cal Water and the City of San Bruno. No cost
sharing agreements have been reached yet, and staff will continue discussions with the other
parties to explore the mutual willingness to fund these improvements. Because the largest costs
should be borne by other entities, if Council approves this rate option, it would only be triggered
once cost sharing agreements were reached with at least the PUC. Adding this scenario results in
rate increases totaling:
Option II 2009-10 2010-11 2011-12 2012-13 2013-14
Rate Increase
20% 10% 5% 0% 0%
Needed
Due to the size of the capital improvements, once again staff is recommending that they be funded
primarily through bonds, or if available, State Revolving Fund Loans. If these projects were to be
funded more by cash, then there would be higher rate increases initially, then negative rate
increases in later years.
CONCLUSION
City staff has updated the financial forecast for the Sewer Fund, taking into consideration ongoing
operational costs and new CIP projects that should be undertaken. Based on this evaluation, staff
recommends that a new five year plan of rate increases be authorized by the Council for the 2009-
l Othrough 2013-14 fiscal years. Council direction on the rates is needed so that work can begin
on the documents needed to notify to all ratepayers in advance of a public hearing in June, in
compliance with Proposition 218.
~.
By~~--~-~ r ..
Terry White•.~
Director of Public Works
Approve
M. Nagel
City Manager
Attachments: Rate Scenarios
Timeline for Proposition 218 noticing
Projected Residential Survey
PowerPoint presentation
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Timeline for Actions Needed for 2009-10 Rate Increase
for Compliance with Proposition 218:
Final Decision on Rates Needed
From Council (Approval of
Resolution Authorizing a 5 year
Rate program, with final Not to
Exceed Rates per year)
Final Draft of Notices, including
explanation, program details, rates,
protest procedures, and date of
public hearing
Option 1 Option 2
Less Flexibility for
or Uncertainty
8-Apr 22-Apr
20-Apr 4-May
Notices Mailed along with
Proposed Rates for 5 Years to All
Sewer Ratepayers
24-Apr 8-May
45 day noticing requirement
Public Hearing, Formal Protest
Vote Tabulation at Council
Meeting:
10-Jun 24-Jun
Update property/parcel database
records for property tax bills, due to
County on 8-Jul 8-Jul
First Bond Sale Needed: December 2009 -February 2010
Est. $4.5 million for Required Plant
Reliability Improvements
PROJECTED RESIDENTIAL SURVEY
SEWER SERVICE CHARGE
SAN MATED COUNTY
(AS OF MARCH 2009)
TREATING 65 UNITS OF WATER A YEAR
AGENCY PROJECTED COSTS IN FY 09/10
MONTARA SANITARY DIST. $1905
HILLSBOROUGH $1563 *
HALF MOON BAY $939
PACIFICA $618
BURLINGAME $538
BRISBANE $535
SAN CARLOS $525*
SAN BRUNO $518
FOSTER CITY $492*
REDWOOD CITY $492*
SOUTH SAN FRANCISCO $461*
(with proposed 20% increase)
MILLBRAE $455
SOUTH SAN FRANCISCO $449*
(with proposed 17% increase)
BELMONT $441
MENLO PARK $400*
SOUTH SAN FRANCISCO $384
(Current Charge)
DALY CITY $315
EL GRANADA SANITARY $314*
SAN MATED $293
AVG $625
*Flat charge per year not tied to individual water consumption.
Other listed rates are annual estimates based on homeowners "average" monthly domestic
water consumption charges that can vary from year to year, household to household. (1 unit
equals 748 gallons.)
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