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HomeMy WebLinkAbout2010-02-17 e-packet~zxs ~ SPECIAL MEETING o ~. J O CITY COUNCIL c'~LIFOR~l~ OF THE CITY OF SOUTH SAN FRANCISCO P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, California 94083 CITY HALL LARGE CONFERENCE ROOM 400 GRAND AVENUE WEDNESDAY, FEBRUARY 17, 2010 6:30 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 17t" day of February, 2010, at 6:30 p.m., in the Large Conference Room, at City Hall, 400 Grand Avenue, South San Francisco, California. Purpose of the meeting: 1. Call to Order. 2. Roll Call. 3. Agenda Review 4. Public Comments -comments are limited to items on the Special Meeting Agenda. 5. Capacity fee revision analysis. 6. Review of alternate sewer rate structure "dynamic pricing." 7. Recommendation to replace Quint 65 with a fire engine. 8. Adjournment. ~~ City Clerk, City of South San Francisco DATE: February 17, 2010 TO: Honorable Mayor and City Council FROM: Terry White, Director of Public Works SUBJECT: CAPACITY FEE REVISION ANALYSIS RECOMMENDATION It is recommended that the City Council review and advise, through discussion, City staff on the Capacity Fee Revision Analysis. BACKGROUND/DISCUSSION Staff is seeking consultation and discussion with Council members to revisit the cost for new or significantly changed in demand sewer connection "Capacity Fees" for construction projects. The fee applies to development and new constructJreconstruction only and has not been examined since 2000 when it was set at $1,360 per Equivalent Dwelling Unit (EDU). This fee has been tied to a construction index so it has been moved from $1,360 per EDU to $1,729 over these past ten years as dictated by the rise in the index. Given that much has changed within the scope and nature of our Treatment Plant and collection system over those ten years! staff felt it was prudent to examine this fee and hired Bartle Well Associates to perform this analysis. We will review those results as attached to this report. FUNDING No impact on funding is anticipated as part of this discussion, however, at a later date if the fee is increased the sewer enterprise fund would see higher revenues. CONCLUSION Council discussion and direction to staff will help them prepare for any future actions. ,. I By ~ Terry Whit Director of Public Works ~~ Approved: Barry M. Nagel City Manager Attachment: Bartle Wells Study Dated August 2009 City of South San Francisco Sewer Capacity Fee Analysis FINAL August 2009 BARTLE WELLS ASSOCIATES Independent Public Finance Advisors 1889 Alcatraz Avenue Berkeley CA 94703-2714 Tel. 510/653-3399 Fax 510/653-3769 www.bartlewells.com Background Bartle Wells Associates (BWA) was retained by the City of South San Francisco to assist in updating the sewer capacity charge (currently called a sewer connection fee). This report summarizes the methodology, analysis, and draft findings of this work. This report and its findings should be considered draft until final review and revision from staff and City Council. This fee, which is collected both on new connections to the sanitary sewer system, as well as on redevelopment projects where there is change to the impact on the sewer system, was last updated through a study in 2000, when it was set at $1,360 per single family dwelling unit (or EDU). Since that time, the fee, which can be increased based on the percent changed in the ENR- Construction Cost Index, has been increased to $1,729 per single family dwelling unit. The primary goal of this study is to provide the City with updated analysis demonstrating a clear nexus between the sewer capacity fee and the new development paying the fee. Purpose of Fee and Statutory Authority Capacity fees (also commonly known as connection fees or occasionally impact fees) are levied by local governments to recover the costs associated with providing water or sewer capacity to new development. According to Government Code Section 66013, a capacity charge is: "...a charge for public facilities in existence at the time a charge is imposed or charges for new public facilities to be acquired or constructed in the future that are of proportional benefit to the person or property being charged, including supply or capacity contracts for rights or entitlements, real property interests, and entitlements and other rights of the local agency involving capital expense relating to its use of existing or new public facilities. A "capacity charge" does not include a commodity charge." (California Government Code Section 66013) In this case, the City's sewer capacity charge is a one-time charge on new development (residential and non-residential) intended to allow the City to recover costs associated with providing wastewater collection and treatment capacity to that development, both through the existing infrastructure provided, and through future capital projects. GC 66013 also states that "...when a local agency imposes fees for water connections or sewer connections, or imposes capacity charges, those fees or charges shall not exceed the estimated reasonable cost of providing the service for which the fee or charge is imposed." This means that the fees levied must be based on the actual costs of providing the capacity, and that each new connection's fee must be proportional to their expected demand on the system (that is, that each fee must be proportional to capacity used). In short, the preceding statutes empower cities and other local agencies to impose fees as a condition of development that defray the costs of both existing and future facilities provided by the agency for the benefit of new development. This fee may not exceed that portion of the cost of those facilities attributable to new development. Fee revenues can only be used to fund construction of the identified improvements. Methodology The City of South San Francisco operates a sewer collection system that serves most land within the city limits. It also jointly owns and operates a water quality control plant that treats sanitary sewer flows from the City, San Bruno, Colma, and a portion of Daly City. In April 2009, average daily flows from South San Francisco to the treatment plant were approximately 5.46 million gallons per day. The total capacity of the plant is 13.0 million gallons per day, of which the City of South San Francisco owns 73.08% (9.5 mgd). The balance of the capacity is owned by the City of San Bruno. Much of the land within the sewer service area (both within the City and in other areas served by the treatment plant) is built-out. In-fill development and continued industrial development in the East of 101 area is expected to continue increasing flows to the treatment plant in the near term. The City completed a large upgrade at the treatment facility in 2002 and 2003. BWA proposes to use an "average cost" methodology for calculating the sewer capacity fee. In this methodology, each new connection to the sewer system pays the same "average cost" for capacity as current users for the existing and future capital facilities. The proposed sewer capacity fee would include both a "buy-in" to the existing collection and treatment capacity, as well as an "expansion and upgrade" component, which represents a new connection's proportional share of future capital improvements which benefit all users. Because of limitations in the ability to project future sewer EDUs based on existing land uses, BWA recommends that the City use a "capacity-based" approach to calculating the capacity fee. This means that the study will first demonstrate the "cost of capacity" (both in terms of existing capital assets and future improvements and upgrades), and then come up with a unit cost of capacity by dividing those costs by the amount of capacity provided. The sewer capacity fee can then be calculated based on the amount of capacity desired by the new connection. Table 1 includes an analysis of the existing users and total capacity of the sewer system (South San Francisco share only). 2 Table 1 City of South San Francisco System Capacity Analysis (Ibs/day) Flow (mgd) BOD TSS Percent Existing user flows and loadings (1) 5.46 14,663 15,346 57.5% Capacity available for growth (SSF share) 4.04 10,958 9.526 42.5% Total plant capacity (2) 9.50 25,621 24,872 (1) From April 2009 flows and loadings to the Water Quality Control Plant (2) Estimated by Carollo Engineers and City staff Capacity Fee Analysis Valuation of existing facilities For the purposes of calculating the "buy-in" portion of the capacity fee, BWA first developed a valuation of the existing sewer system, including both collection and treatment facilities. The primary data source for determining the value of existing sewer facilities is the fixed asset listing. This details all fixed assets in service in the sewer utility. (It is also included as an Appendix to this report). To determine a fair value of the assets included on the listing, BWA uses the Replacement Cost New Less Depreciation (RCNLD) method. This method allows for the adjustment of the original cost of an asset based on its age and condition to arrive at an approximate true value of that asset. The original cost of the asset (book value) is inflated to 2008$ using the Engineering News Record - Construction Cost Index. This develops an estimate of the replacement cost of the asset. From this amount, the accumulated depreciation of the asset is subtracted, to account for wear and tear and age. BWA calculated the RCNLD from the fixed asset detail for buildings, infrastructure, and treatment facilities only. BWA did not include equipment or vehicles with lifespans shorter than 10 years. The RCNLD for all assets included in the fixed asset detail is $81.914 million. Collection lines are not included in the fixed asset detail. In order to develop a fair valuation of the collection lines in place, BWA calculated a replacement cost new for the system based on estimates of the full replacement cost today (per linear foot) of those lines, multiplied by the length of lines in place. From this replacement cost new for the inventory, BWA subtracted an estimate of the total depreciation based on the weighted average depreciation of those assets on the fixed asset detail. In total, the estimated RCNLD of the collection system (including manholes) is $72.131 million. Taken together, BWA estimates that the fair value of existing capital assets is $161.223 million. Table 2 details this calculation. Table 2 City of South San Francisco Fixed Asset Valuation Summary (1) Replacement Original Cost Cost New (2) Depreciation RCNLD Buildings $22,685,871 $35,194,237 $3,546,287 $31,647,950 Less estimated share San Bruno/Colma (6,107,036) (9,474,289) (954,660) (8,519,628) Treatment facilities 75,256,573 88,144,492 14,197,752 73,946,740 Less estimated share San Bruno/Colma (20,259,069) (23,728,497) (3,822,035) (19,906,462) Infrastructure and other improvements 4.115.038 5.290.189 544.332 4.745.857 Subtotal buildings, treatment facilities, infrastructure $75,691,376 $95,426,132 $13,511,676 $81,914,456 Collection system Linear feet Re~lc. Cost (3) Reolc. Cost New Depreciation RCNLD 6^ 360,573 $140 50,480,220 7,147,648 43,332,572 g^ 91,433 $158 14,446,414 2,045,512 12,400,902 10" 23,070 $174 4,014,180 568,380 3,445,800 12^ 14,035 $186 2,610,510 369,630 2,240,880 14" 2,863 $200 572,600 81,076 491,524 15" 17,523 $216 3,784,968 535,925 3,249,043 18" 16,777 $224 3,758,048 532,113 3,225,935 20^ 980 $228 223,440 31,638 191,802 21 ^ 3,256 $234 761,904 107,880 654,024 24^ 6,423 $240 1,541,520 218,268 1,323,252 27^ 7,030 $245 1,722,350 243,873 1,478,477 30" 449 $250 112.250 15.894 96.356 Subtotal collection system $84,028,404 $11,897,837 $72,130,567 Manholes 2,389 $3,500 $8,361,500 $1,183,930 $7,177,570 (1) Building, treatment facilities, and infrastructure from 2007/08 fixed asset detail, including all p ump stations (2) Replacement cost new estimated by inflating original cost of asset to 2 008$ using ENR-CCI (3) Replacement cost new for collection system estimated by multiplying linear feet in service by engineering cost estimates Future capital improvements The City has an approved five-year capital improvement program for the sewer utility. Projects are divided into two categories; non-routine (or major one-time improvements) and routine (mostly replacement and rehabilitation). All of the projects in the "Non-Routine" category are required upgrades and improvements to the existing treatment and collection system that are required in order to provide service for both existing and future users at the current plant capacity. They benefit all users of the system in proportion to the amount of capacity demanded. The total value of these projects is therefore included in the total system valuation for the existing capacity. For projects in the routine category, City staff developed project-by-project benefit allocations between existing and future users. Only that portion of each project which benefits new development is included in the capacity fee calculation. In total, $60,000 of $2.670 million of the routine projects cost is allocated to new development. The balance is considered replacement or rehabilitation only. Of note, those projects in the sewer CIP which are recovered in the East of 101 Impact Fee calculation are not included in the sewer capacity fee. Capital projects of note include: Reliability Upgrades: This project includes a number of improvements at the treatment plant, including upgrades to the grit removal system and digesters. These upgrades can be considered as benefiting the full build-out capacity of the system; as such, they are included in the overall capacity fee calculation. Recycled Water Project: This project will treat secondary effluent at the treatment plant to Title 22 tertiary standards. This project will provide benefits to both existing and future development in the City by reducing potable water demands and increasing available groundwater supplies. Solar/Wind/Cogeneration Projects: These projects will involved installation of solar, wind, and cogeneration assets at the treatment plant. This will increase the supply of renewable energy at the facility and reduce future operating costs for all users. Table 3 details the capital improvement program. ~ N w N 7 N O C xN W ..+ I Fo- d' r M O N O O O O N r m 0 n. c m o c a 7 fl- ~„~ c~ U N O ~ HUB 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O to x 0 0 0 0~ r(p1~MrOO N~MNMMOtf> CO N r to N ff3 00 O O O 00 O O O M O M ~ N O O O O O O O O O M 0 0 ~ N ~ 0 0 M r O r r O ~ r N N O O O O O O O O O O O O O O O ` ~ O O r 0 ON0~ r C'7NM0 ~ p tt N N ~ N 000000 0 0 0 0 0 0 0 0 0 0 0 0 r ~~ N O MM d' ~ N ~ O O O O O O O O O O O O O O O O O O ~ r~i~Od' r M M M O N NEl~ ~ r r b9 .-~ .-. IC ~ d t O N ~ ~ ~ ~~~ ~ ~ E ~a~ a~ ~av~ ~'~...a o.>~c~a>oV ~ > O N ~ ~ w cco ~ ~ u- _ ~ c a~ >cn~a:r a~~ o~~ ~ o .M~~~.c~ c~ c V -_ O ~ N (0 c O ~ O U " ~ ~ o ~ U ~ m rn ~ v ~ _~ ~~ N 0 0 0 0 Z~cn~Ucn~cn 0 0 0 0 0 0 0 0 0 0 0 o o ~~~ o o ~ ~ o O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ~y M~ 0 O V ~ d r 0 0 0 0 0 0 0 0 o O o o O O O O O O O O O O r 0 0 0 0 0 0 0 0 0 0 0 0 O I~ 0 0 r r r r r r r r~ r M 0i W NEi~ 0 0 0 0 0 0 0 0 0 0 0 0 0 O O O O O O O O O O O O C 0 0 0 0 0 0 0 0 0 0 0 0 ~NNm~c~~cD~OiOOp~ O O O OI O O O O O ~ ~ r N b9 O O O O OI O O O O O O O O O ~ ~ ~ to r O N H3 0 0 O O OI O O O O O O Oct -O O O N 0 0 0 0 0 0 0 OI O 0 0 0 0 0 0 0 O M ~ ~ ~ ~ c00 ~ 000 ~ '- r ~ O O O O 0 0 0 0 0 0 0 O O O O 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 000 O l!')OOOOOM MEf3 er Ln r O O H 0~ 0 N £fl M_ N N N ~ N ~ ~ c~v vi ~ Q a ~~v a m a~ ~~c ~0~a~ia~i~~ 0 o a°'j m m~~ c E ~ ~ ~ ~ amsU ~ m~ °? ~ ~ aci m~a~~ ~ m ~° a~U ~ ~~ ~°~ m ~ `m~~~~ c _ ~ a m ~ ~ cp ~ a3i ai ~ coA Z > o ~,v~~ ~ aoc~c~~vvQ V L Z' cn ~ m w Z' Z` a> a ~ c:~ da;9 amp o _°. ~ o~.~ 0 0 U 3~ N 7 O~ N N (0 c0 ~~ ~ 7 ~(7(/)~LL~~(/)(n2 JJQfn O .a CO C N c0 N O O O 0 r EA D1 C ~C .~ N 0) L C O O _~ U ~ L N 'C w U cU0 a. 0) O '~ G U '~ d) N U "O C O ~ U O •~ C_ O N C .a y O -0 O c ~ f0 O N ~ ~ O N ~ ~3 U O ~. o .6 - O N r L O += r Orr.., ~ U p r ~ y O L ~ ll1 O '0 L M O d '`~ d9 t w ~ O .roo-o o ~w~ co ~ m o'cv, ~ °~g8~' o ~ c ~. ~ j ~ U U c o v ?' cn .~ 'o U~? o. a~i o o O ~ M ~ a ?' m a~ d c L L Q O I- F- ~~M d' ~O Calculation of Fee Under the chosen methodology, BWA first developed a total estimated valuation for the existing system (Table 2). To this amount, the estimated total investment required in upgrading the existing system to meet build-out conditions was added (Table 3, Capital Improvement Program). In total, BWA estimates that the total system investment-existing and future projects included-is $188.791 million. BWA allocates this investment among the three treatment parameters of the system. Treatment assets are allocated 50% to flow, 25% to BOD, and 25% to TSS. Collection lines are allocated 95% to flow and 5% to TSS (as collection systems can impact the amount of solids introduced into the system by I/I). Finally, buildings and other infrastructure are assigned allocations of 34% flow, and 33% BOD and TSS respectively. The weighted average allocation of capital assets to treatment parameters is approximately 69% to flow, 14% to BOD, and 17% to TSS. (This weighting is used in the calculation of the non-residential EDUs discussed later in the report). This investment provides the City with 9.5 mgd of total dry weather average day capacity. At design strengths for BOD and TSS, the treatment plant capacity is 25,621 lbs/day and 24,8721bs/day respectively. Dividing the cost of capacity in its functional groups (Flow, BOD, and TSS) by the amount of capacity provided gives unit cost of capacity for each treatment parameter. The cost of flow capacity is $13.79 per gallon per day, while BOD capacity is $1,037.88 per lbs/day. TSS capacity is $1,255.83 per lbs/day. Multiplying these unit costs by the design flows of one single family equivalent (200 gallons per day, 234 mg/1 BOD and 168 mg/1 TSS) gives the capacity fee for one EDU; $3,514. Table 4 details these calculations. Levying the Capacity Fee The City would levy the capacity fee calculated in this report on new development requesting connection to the sewer system, or on redevelopment projects of existing connections where the use of the sewer system changes. For all single family residential properties, the $3,514 fee would apply. The city charges multi- family properties the same fee for each residential unit of a project. For commercial and industrial connections, a fee should be levied based on the estimated average daily flow and strength of wastewater to be discharged to the sanitary sewer, using the unit cost of capacity for the three discharge parameters calculated in Table 4. BWA will include in its final report recommended fee calculations for a sample of commercial and industrial connections. Table 4 City of South San Francisco System Capacity Analysis Allocation of capital assets Totat Flow BOD TSS Treatment plant $54,040,000 50% 25% 25% Collection lines and manholes 79,308,000 95% 0% 5% Buildinas and infrastructure 27.874.000 34% 33% 33% Total $161,222,000 $111,840,000 $22,708,000 $26,674,000 Capital improvement program (non-routine) Capital improvement program (routine) $27,509,000 $60,000 $19,083,000 $41,622 $3,875,000 $8,451 $4,551,000 $9,927 Total system investment $188,791,000 $130,964,622 $26,591,451 $31,234,927 Calculation of unit cost of capacity Flow (gpd) (Ibs/day) (Ibs/day) Plant capacity 9,500,000 25,621 24,872 Unit cost of capacity $13.79 $1,037.88 $1,255.83 One EDU design parameters (1) 200 0.39 0.28 One EDU capacity fee $2,757.15 $405.10 $351.91 (1) Per EDU design parameters from 2000 connection fee study Non-Residential Capacity Fees For the purposes of levying capacity fees on non- residential connections, BWA recommends that the City first calculate the number of "EDUs" of capacity the new connection will demand. That is, the City should determine how many single family equivalents the new connection represents. BWA has developed the following updated formula for the purposes of calculating the number of EDUs for a new connection. Flow is measured in gallons per day, BOD is the amount of Biochemical Oxygen Demand in lbs/day, and TSS is the amount of Total Suspended Solids in lbs/day. The formula is based on one EDU being 200 gpd, and 0.39 lbs/day BOD and 0.28 lbs/day TSS, and the weighted allocation of capital assets discussed previously. EDUs = (0.00347 x Flow) + (0.362 x BOD) + (0.589 x TSS) Once the number of EDUs is determined, the City can levy the per EDU capacity fee multiplied by the number of EDUs in service to amve at the total sewer capacity fee for the project. 8 Sewer Capacity/Capacity Fee Comparison Table 5 summarizes a survey of neighboring providers of sewer service. Currently, the City charges the smallest sewer capacity fee of those providers surveyed. After adoption of the proposed fee, the City would be slightly below the median. Table 5 City of South San Francisco Sewer Connection/Capacity Fee Survey Total City of Foster City $2,000 City of San Mateo 2,282 City of Brisbane 2,523 Redwood City 3,096 City of Millbrae 3,309 City of San Bruno 3,495 East Palo Alto Sanitary District 3,625 West Bay Sanitary District (1) 4,289 City of San Carlos 4,500 City of Belmont 5,174 Town of Hillsborough 10,757 City of Palo Alto 10,876 City of Half Moon Bay 15,839 Montara Water and Sanitary District (2) 19,296 (1) Menlo Park, Atherton, Woodside, Portola Valley (2) Montara and unincorporated parts of San Mateo County Next Steps The first step in adopting an update to the capacity fee would be to present this nexus study at a City Council meeting for feedback. After acceptance of the nexus report, BWA will present the findings of this study at a public hearing to consider changes to the sewer capacity fee, if necessary. As with the fee adopted in 2000, BWA recommends that the sewer capacity fee ordinance or resolution include an indexing mechanism. With this indexing, the City can update the fee annually to keep pace with changing capital costs. BWA recommends that the City update the sewer capacity fee in January of each year. This change could happen administratively by staff, and would be based on the percent change in the Engineering News Record -Construction Cost Index for the San Francisco Bay Area for the 12-months ending the preceding October. Estimated SKS Fee Increase from Proposed Sewer Connection Fees Estimate @ Current Rate Estimate @ Proposed Rate Estimated connection fee $1,729.00/EDU Office $1,104,416.00 638.76 EDU Lab $1,888,413.80 1092.20 EDU Total $2,992,829.80 1730.96 EDU Estimated Connection fee $3,514.00/EDU Office $2,211,114.20 629.23 EDU Lab $3,882,970.00 1105 EDU Total $6,094,084.20 1734.23 EDU Estimated Increase to this Project Increase to SKS Project Total $3,101,254.40 Flows were based on 50% occupancy for lab and 50% occupancy for office. Flows for office use were based on 175gpd/1000 sq ft Flows for lab use were based on 250 gpd/1000 sq ft TSS and BOD estimates used were averages of all Genentech Buildings that are currently permitted by the WQCP. 8/24/2009 C. Prudhel ~~ bae IVlemorandum To Kate Rosenlieb, City of San Francisco Fr+~m: Janet Smith-Heimer, Managing Principal, BAE Jessica Kondrick, Analyst R~ South. San Francisco Fee Study ~~fe: December 8, 2009 This memorandum summarizes an analysis of development fees for South San Francisco, conducted during November and early December 2009. The City of South San Francisco corrimissioned this fee study in order to evaluate how its fees compare with other Bay Area cities, particularly those cities in San Francisco, San Mateo, and Santa Clara Counties which occasionally compete with South San Francisco as locations for R & D development projects or major tenants. Methodology The City of South San Francisco provided BAE with most key assumptions for this study, including comparison cities, four prototype projects, and estimates of South San Francisco fees for the four projects. The comparison cities selected by South San Francisco for analysis were (in alphabetical order): • Foster City • Mountain View • Palo Alto • Redwood City • San Francisco • San Mateo • Sunnyvale For each city above, BAE was requested to analyze the fees for four prototype projects, including: • Mixed-Use project, with 100 housing units and 5,000 square feet of ground floor retail • R & D building totaling 150,000 square feet • Hotel with 200 rooms • Grocery store totaling 40,000 square feet Bay Area Economics San Francisco gay Area Sacramento New York Washington, D.C. Headquarters 510.547.9380 1285 66th Street fax 510.547.9388 Emeryville, CA 94608 [email protected] bayareaeconomics.corn ~~ Specific assumptions regarding each prototype were also provided by City staff, and are summarized below: •.. .• .• Mixed-Use Residential + R 8 D Assumptions Restaurant Building Hotet Grocery Store Site Size (Acres) 2.00 5.00 2.00 2.16 Gross Building Size (sq. ft.) 120,000 150,000 110,000 40,000 Number of Floors 5 3 8 1 Number of Residential Units 100 NA 200 NA average Unit Size (sq. ft.) 900 NA 350 NA Restaurant Space (sq. ft.) 5,000 NA 5,500 NA Jabs/1,0000 sq. ft. 2.00 2.22 2.38 2.00 Total Jobs 10.0 333.0 261.8 80.00 Trips Generated/1,000 sq. ft. 48.00 5.30 10.50 48.00 Total Trips Generated 240.00 795.00 1,155.00 1,920.00 pairk/Open Space None None None None Building Valuation (per city) $ 16,133,050 $ 18,583,500 $ 12,887,600 $ 2,213,200 Fees analyzed included all building permits, other permits and application processing fees, and development impact fees. For each comparison city, BAE obtained the published fee chart, calculated all fees (see Tables 4 through 10), and reviewed key assumptions and calculations with staff members of each city. BAE determined that several fee categories should be excluded from the analysis, as profiled belt~w: • School Impact Fees. Although the cities varied in their published rates, these fees are capped by state regulation, and school districts routinely increase these fees on a regular cycle; thus, these fees are excluded from the analysis as all cities can theoretically maximize these fees at any point in time • Building Standards Administration Special Revolving Fund. In accordance with SB 1473, the State of California now charges a fee for every building permit, in the amount of $4.00 per $100,000 of building valuation. Since these fees are consistently charged by all cities, these fees are not included in the estimates shown in this memorandum. • BMR In-Lieu Fee. In addition, it should be noted that the in-lieu fee for affordable housing is not calculated for this memorandum. This approach was taken because South /2 Table 3: South San Francisco Fees Mixed-Use Residential + Restaurant R $ D Building Hotel Grocery Store With Proposed With Proposed With Proposed Park Fee $ Park Fee 8 Park Fee d, Sewer With Proposed Park Fee Notes Current Sewer Ca Fee Current Sewer Ca Fee Current Ca Fee Current 8 Sewer Ca Fee Building Permit and 1'lar Check Fees 1 Bulldin PermR $67,591.00 $67,591.00 $77,391.00 $77,391.00 $54,607.00 $54,607.00 $11,911.00 $11,911.00 1 Buildi Plan Check $43,934.15 $43,934.15 $50,304.15 $50,304.15 $35,494.55 $35,494.55 $7,742.15 $7,742.15 2 Plumbin PermR $5,908.75 $5,908.75 $7,682.50 $7,682.50 $5,902.50 $5,902.50 $2,288.75 $2,288.75 2 Mechank;al PermR $9,894.06 $9,894.06 $9,497.81 $9,497.81 $8,074.06 $8,074.06 $1,557.50 $1,557.50 2 Electrical PermR $4,900.00 $4,900.00 $5,360.00 $5,360.00 $4,292.50 $4,292.50 $3,799.06 $3,799.06 1 Ener Fees General Plan Mafntena.[jce Fee $24,199.58 $24,199.58 $27,875.25 $27,875.25 $19,331.40 $19,331.40 $3,319.80 $3,319.80 1 Green Buiidi Fee Waste Ma ement Plan Review Fees $439.34 $439.34 $503.04 $503.04 $354.95 $354.95 $77.42 $77.42 3 Tech-related Fees $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 1 _.;: Seismic! Stron Motion Fees SMIP $3,387.94 $3,387.94 $3,902.54 $3,902.54 $2,706:40 $2,706.40 $464.77 5464.77 0 1 Fire Review! PermR Fees $27,036.40 $27,036.40 $30,956.40 $30,956.40 $21,842.80 $21,842.80 $4,764.40 $4,764.4 1 .. Plan Review $4,055.46 $4,055.46 $3,869.55 $3,889.55 $0.00 $0.00 $0.00 $0.00 4 Desl n Review Board.:.,..._..; $5,600.00 $5,600.00 $700.00 $700.00 $700.00 $700.00 $700.00 $700.00 Public Works Fees Other PermRs/Processir Fees Noise Insulation Fee _,....._.._ Park and Rec Tax Park and Rec Plan Check and Ins coon Fee Solar Permit 5 Construction Tax L al $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,000.00 5 ,. Fish and Game Review $2,043.00 $2,043.00 $2,043.00 $2,043.00 $2,043.00 $2,043.00 $2,043.00 $2,043.00 6 . .. TDM Review Fee $200.00 $200.00 Develo ment Im act,Feesl Other Fees 500 00 $188 500.00 $188 $85,500.00 $85,500.00 $19,800.00 $19,800.00 $27,200.00 $27,200.00 7 8 Child Care Fee O ter Point Ove ass . , NA , NA $181,695.73 $181,695.73 $263,973.05 $263,973.05 NA NA 9 _ Traffic Im act Fee $735,000.00 $735,000.00 $228,394.00 $228,394.00 Fire/Police Art in Public Places 10 Libra Park $2,196,000.00 $3,394,440.00 $717,150.00 $563,860.00 $172,320.00 Public) Communi Facilities NA NA 400.00 $239 $239,400.00 $119,700.00 $119,700.00 NA NA 12 13 Sewer Im act Fee Sewer Ca aci Fee $254,491.51 $517,225.00 , $280,945.21 $570,989.86 $363,176.45 $738,115.70 $105,330.68 $214,072.88 Fees Communi Stabilizatfott . Jobs-Housi Linka O..Fee Sense of Place Fee Shadow Im act Fee Tree In Lieu Fee ............. Total 52,840,008.19 54,301,179.68 $1,744,851.18 $2.752,045.83 $1.152,417.66 $2.091,216.91 $173,223.53 5454,28 Per Unit or Per S.:.,Ft. 528,400.06 $43,011.60 $11.63 $16.35 110.48 $19.01 ;4.33 511.38 1 Fees provided by City of South San Francisco 2 Plumbing, Electrical, aril Mechanical Fees calculated by South San Francisco building permit software. 3 Tech related fees include the Permit Program Maintenance Fee, based on 2009 Planning fees. 4 The Design Review Board includes a $600 base fee, plus $50 per dwelling unit for residential, and $700 for commercial uses. 5 Legal Fees, Fish and Garde according to 2009 Planning fees. 6 The Transportation Demand Management Review fee ($200) applied to R&D development only. 7 Childcare Impact Fees ere as follows: Residential (per unit) $1,851.00 Retail (ps.f) $0•~ R&D (p.s.f) $0.57 Hotel (p.s.f.) $0.18 8 Oyster Point Overpass fee is applied to R8D and hotel development scenarios only. 9 Citywide Traffic Impact Fees are as follows: Retail (ps.f) $20.33 Office/ R&D (p.s.f) $4•~ Hotel (per room) ~r~741•yr 10 Current SSF Park fee applies to residential only. Estimated by city staff at $2,196,000 total for mixed-use project. 11 The Proposed Park Fr;tl Niould apply to all land uses. Proposed fees currently being reviewed internally by staff. 12 The Sewer Impact Fees were calculated by the City. Retail and office uses assume 400 gallons per 1,000 square feet. Gross area is multiplied by (gallons produced /square feet) then multiplied by $3.99. Hotel uses assume 150 gallons of waste water produced per roc led by $3.99. 13 The Proposed Sewer Capacity Fee assumes 13.3 focture uni ($3,514) er residential unit. Additional fees calculated by the City. Sources: South San F~aricisco Master Fee Schedule, 2009; Planning Department, 2009; Building Department, 2009; BAE, 2009. /~ DATE: February 17, 2010 TO: Honorable Mayor and City Council FROM: Terry White, Director of Public Works SUBJECT: REVIEW OF ALTERNATE SEWER RATE STRUCTURE "DYNAMIC PRICING" RECOMMENDATION It is recommended that the City Council review and advise, through discussion, City staff on the review of alternate sewer rate structure "dynamic pricing". BACKGROUND/DISCUSSION Attached is a review of staff's research into various means of charging existing sewer system users in a way that would be perceived as "more fair" to those who live in large complexes or small houses. The term used last spring when current sewer rates were established was "Dynamic Pricing". Rather than maintain the status quo of flat rates for all residential users, a means of users paying a rate representative of their actual usage would be created. We will review various scenarios to accomplish that feat for Council's discussion. FUNDING No impact on funding is required as part of this discussion. CONCLUSION Through discussion, staff will be able to refine possible rate changes in preparation of future meetings. y. ~/\./ L Terry White / Director of Pu lic Works Approve ` arry M. Na City Manager Attachment: Staff Rate Analysis dated 2/10/2010 Sewer Rate Analysis February 10, 2010 Various Tiered or Dynamic Rate Scenarios EXHIBIT "A" PARCEL USE CLASSIFICATION AND ANNUAL RATE/UNIT RATE A. Residential Class: Sin le-famil dwellin $461.00 er dwellin - earl Multi-family dwelling (duplexes, flats, apartments, and similar $461.00 per dwelling per unit -yearly class of users Trailer Court and similar class of $413.00 per dwelling per unit -yearly uses B. Institutional Class: Schools, colleges, rest homes, hospitals, clubs, lodges, and similar class of uses. Minimum charge, or $461.00 yearly Volume charge based on water $4.924 per 100 cubic feet of water consumed metered inflow , or consumed Volume charge based on water $5.470 per 100 cubic feet of water consumed metered effluent consumed C. Commercial and Non-monitored Industrial Classes 1. Light Strength Uses: Bars (without dining facilities), car washes, department and retail stores, hotels, motels (without dining facilities), Laundromats, professional and business offices, banks, savings and loan associations, warehouses, auto rentals (without repair shops), newspapers, commercial printing shops, freight and drayage services, barber shops, shoe repair shops, camera shops, plating shops, wood and furniture fabricators, heating and appliance stores, drug stores, auto supply stores, general contractors' offices, public administration offices, health services, legal services, dry cleaners, metal fabricators, lumber companies, laundry services, sheet metal shops, and similar classes of uses with wastewater strengths less than or approximated equivalent to residential strength. Minimum charge, or $461.00 per facility -yearly Volume charge based on water $6.102 per 100 cubic feet of water consumed metered inflow , or consumed Volume charge based on water $6.782 per 100 cubic feet of water consumed metered effluent consumed 2. Moderate Strength Uses: Auto/gas service stations, auto steam cleaners, auto rentals (with repair shops), bakeries, beauty and hair salons, commercial laundries, mortuaries, lodges (with dining facilities), radiator repair shops, markets (with garbage disposals), ice cream parlors, candy manufacturers, food preparation and caterers, sandwich shops, drive-in theaters, creameries, roofers, chemical preparations, machine shops, photo/film processors, rug, carpet, upholstery cleaners, foundries, ceramics studios, oil services, transmission services, sanitation services, furriers, drum and barrel cleaners, and similar classes of uses with wastewater strengths significantly greater than residential strength. The user will be reclassified to the light strength use classification if it adequately demonstrates to the City Engineer it is discharging only segregated or wastewater equivalent in strength to residential wastewater. Minimum char e, or $461.00 - earl Volume charge based on water $9.552 per 100 cubic feet of water consumed metered inflow , or consumed Volume charge based on water $10.614 per 100 cubic feet of water consumed metered effluent consumed 3. Restaurants, Cafes and Other Eating Places: Minimum char e, or $461.00 - earl Volume charge based on water $13.957 per 100 cubic feet of water consumed metered inflow , or consumed Volume charge based on water $15.507 per 100 cubic feet of water consumed metered effluent consumed z Monitored and Industrial Class: 1. Monitored and Industrial Users: Manufacturers, processors, producers, laundries, photo finishers, painting services, packagers and similar classes of uses whose wastewater are monitored by the City. Minimum charge, or combination $461.00 -yearly of the followin ; Volume charge based on water $3.656 per 100 cubic feet of water consumed metered inflow , or consumed Volume charge based on water $4.063 per 100 cubic feet of water consumed metered effluent consumed Surcharge for suspended solids $1.227 per pound of suspended solids SS dischar ed Surcharge for chemical oxygen $0.379 per pound of COD discharged demand COD 2. Septage Waste Haulers: Commercial businesses which haul to and dispose of Septage waste at the Water Quality Control Plant. Minimum char a $461.00- earl Volume charge based on waste water dischar a $0.260 er allon dischar ed Proposed Schedule of rates for 2010-11 - Up to a 10% increase in all use Classifications Proposed Schedule of rates for 2011-12 - Up to a 5% increase in all use Classifications Proposed Schedule of rates for 2012-13 - 0% increase in all use Classifications Proposed Schedule of rates for 2013-14 - 0% increase in all use Classifications REVENUE SUMMARY FOR FISCAL YEAR 2009-2010 11,633 RESIDENTIALS $5,351,749.00 884 RESIDENTIAL-MULTI $2,054,677.00 3 TRAILERS $169,743.00 12,517 SUB TOTAL $7,576,169.00 Flow (HCF) 32 INSTITUTIONS $62,289.04 11,990 1020 LIGHT COMM. $2,662,650.80 416,984 36 LIGHT COMM. (M) $168,813.12 24,711 183 MODERATE $651,694.92 67,344 5 MODERATE (M) $50,336.18 4,699 83 RESTAURANTS $650,044.58 47,023 6 RESTAURANTS (M) $221,495.06 14,283 67 INDUSTRIES $4,324,635.82 555,449 132 MANUAL $471,963.40 56,786 18 DWELLINGS $24,433.00 3,829 1564 SUB TOTAL $9,288,355.92 1,203,098 13 SCHOOLS $110,202.32 80 HOUSING UNITS $36,880.00 24 DIRECT BILLINGS $132,055.96 9 DIRECT RESIDENTIALS $4,149.00 1 SEPTAGE HAULER $34,497.57 0 DEPT. OF TRANSPORTATION 0.00 127 SUB TOTAL $317,784.85 1 TOWN OF COLMA $506,665.00 1 DALY CITY $226,500.00 SUB TOTAL $733,165.00 TOTAL REVENUE 2009-2010 $17,915,474.77 Total SSF Users 14,229 Breakdown of Water Consumption Total water consumed 3,562,911 hcf/yr Residential 2,313,934 hcf/yr 65% all others 1,248,977 hcf/yr 35% Current Budget Information 2009-2010 Sewer Fund Budget (maint./operations & debt service) $13,126,445 2009-2010 Sewer Fund CIP budget $3,542,034 $16,668,479 "T SSF Breakdown of Multi Dwelling Units 2/10/2010 # of units # of complexes Total units Subtotals 2 402 804 3 127 381 4 115 460 5 30 150 6 67 402 7 70 490 8 18 144 9 7 63 10 9 90 11 8 88 12 17 204 3276 12 units or less 13 2 26 14 6 84 15 1 15 16 1 16 18 3 54 21 1 21 22 1 22 24 1 24 262 13-24 units 27 1 27 30 1 30 33 1 33 35 1 35 36 1 36 38 1 38 40 1 40 43 1 43 282 25-43 units 52 1 52 60 1 60 65 1 65 74 1 74 75 1 75 102 1 102 125 1 125 172 1 172 180 1 180 188 1 188 1093 >43 units 4913 5 ,_ __ _ . Number of Complexes '. 0 0 0 0 °o o °o o °o o j N W A Ul 01 V l0 f-+ O I-~ F-' N N I--~ W F--' A F-' Ul F-~ Q1 I-~ W N N N N N N V W O Zug C W ~N fD l!7 ~ ~N A Ol s D o °' oWo ~~ ~ o x K ~w K ~~ ~N rn 0 rn V A V F-' O N I--' N N V N I--~ 00 I ~ L-~ li W Z "'11 D 1"f C f'F N V Dynamic or Tiered Sewer Rate Options Listed below are four scenarios of dynamic or possible tiered rates for SSF sewer system users. These are staff ideas based upon previous Council and citizen discussion but are certainly not limited to these choices. The amount of ideas and hybrids of each are nearly endless, however, rates based on water consumption are by far the most popular with other City's and Districts. These will begin our discussion; 1. Convert all users to water consumption based rates. Set a cost of $5.50/hcf ($3.34 for tlrs) plus a minimum base rate/admin fee. We would recommend this be conducted through an agency or private biller. All commercial users would remain the same as they are based on water plus loading fee multipliers.~i> Impact: The income potential would be unknown. It would be close and more likely higher in the first year than what we currently collect. We would start the Prop 218 process over again because the potential for a rate payer to exceed the current maximum charge is very real. Residential use accounts for approximately 65% of all water consumed within the city. A fee to cover the cost of billing, collection, and addressing customer concerns would need to be set and be part of a minimum base rate.($250) The County Assessor collects all fees now so income is guaranteed to us under the Teeter Plan. Delinquency issues, penalties, and liens are held with the County. Although considered the most equitable of all ideas several years of adjustment would need to be experienced before we could depend on known income amounts. Current water consumption varies widely. 2. Provide a Multi unit building price break. Multiple unit buildings would receive a price break of 10% per unit reduction up to 12 units. A 15% per unit break up to 24 units. A 20% per unit break for 48 units and above. Impact: The cost for single units would need to be higher to offset the reduction in income for the loss through multiple units regardless of consumption. All commercial users would remain at the same rate; however, single family homes would be bumped up (from $461 to $493) to make up the lost income or roughly 7%. We would start the Prop 218 process over because again the potential for a rate payer to exceed the current maximum charge would occur in the second year. 3. Rates based 'on Consumption with incentives for Conservation. Base residential rates would remain the same, however, based on flow data, a reduction in cost or credit is applied to the following year's rate if the amount consumed is less than 7,500 cubic feet (75hcf) of 10% of rate and a 20% reduction if less than SOhcf. Conversely, if more than 100hcf is consumed there is a 10% penalty and if more than 150hcf is consumed it would be a 20% penalty. Impact: The average residential consumption rate is 139 hcf/yr. Again the income level would be unknown in the first year, although based upon usage data provided to us, income would likely be lower in the first year. This would encourage conservation techniques which maybe mandated on the City in the future. Business would need to bare the brunt of this increase~2~ or a formula to distribute the cost to all users would need to be developed. We would start the .Prop 218 process over because again the potential for a rate payer to exceed the current maximum charge would likely occur for many in the second year. 4. Remove multiple unit dwellings from residential rates. Reclassify residential multiple units into the commercial category above institutions. A base rate fee would be set for multiple units and an increase from the current rate for all others would offset this decrease. Impact: With 884 multiple dwelling units within the City the financial impact is large. A new group would be called multiple housing units. That rate would be set at $372 which would necessitate an increase in single family homes by 7.11 % or $494. These numbers can be massaged to something more or less depending on Council desire but represent an average water use. A financial breakdown of each scenario is attached. 1. Commercial users would not be reduced from the current plan. Presumably the decrease on some homes would be offset by increases in others. A choice would need to be made to change residential rates up or down based upon experience as the total income to the plant must remain the same. 2. Commercial rates would need to be increased to make up the shortfall in the reduced collection of fees from the multi unit reduction. Scenario #1 approximate water use for residential 2,217,659 HCF $5.50 rate/HCF $12,197,124.50 $169,743.00 trailer income $12,366,867.50 I#2 excluding trailers 2,217,659 HCF $3.34 rate/HCF $7,406,981.06 $169,743.00 trailer income $7,576,724.06 Based on water use for all residential/commercial users - no minimum charge ave annual water use = 207 HCF ave sewer bill = $691.38 range from $3.34 - $2,702. (excludes industrial users and City property) current income from multi tenant users $2,264,893.00 least amount 10% discount $223,489.30 less income from multi tenant users assume all multi 12 units or less 3276 receive 10% discount $1,359,212.40 Based on actual apartment numbers 262 receive 15% discount $102,664.70 282 receive 20% discount $104,001.60 1093 receive 25% discount $377,904.75 $1,943,783.45 $321,109.55 less income from multi tenant users I#3 Based on 2009 water use 1415 units would receive a 10% discount (all figures are estimates) Based on 2009 water use 4201 units would receive a 20% discount # of residences rate income 10,016 $461.00 $4,617,376.00 no discount 1415 $415.00 $587,225.00 10 % discount 4201 $369.00 $1,550,169.00 20 % discount $6,754,770.00 $ 7,406,426.00 total income w/o discount $ 651,656.00 difference in income with discount program for residences only #3 cont. If all rate payers were given a 20 % discount (including commercial) for use <60 HCF per year # of users <60 HCF rate income 4617 $369.00 $1,703,673.00 20% discount If all rate payers were given a 10% discount (including commercial) for use <75 HCF per year # of users <75 HCF rate income 1555 $415.00 $645,325.00 10% discount $2,348,998.00 income with discount 6172 $461.00 $2,845,292.00 income w/o discount $496,294.00 difference in income with all users receiving a discount #4 current residential income w/o trailers $ 7,406,426.00 $ 372.00 per unit for multi unit 4457 # of units $ 1,658,004.00 income from multi unit $ 5,748,422.00 income from single family 11,633 # of single family $ 494.15 new rate for single family 7.11% increase /~ Sewer service charge summaries for San Mateo County Cities 1. Foster City $43.85/month or $526.20/year Collected on the property tax bill. 2. Belmont Annual base rate - $254.83/base rate times the number of dwelling units/parcel plus Low strength flow rate =$3.34 per hundred cubic feet (HCF) times the estimated wastewater discharge (average monthly flow is annualized using winter flow of December -March) Collected on the property tax bill. 3. San Mateo Rate effective July 2010 Base rate $5.36/HCF Based on 5-month period of November to March then annualized 100% flow based Collected on the property tax bill. 4. Millbrae Water and sewer is billed bimonthly by the City of Millbrae Meters are read by Public Works As of 7-1-09 $37.90/month base rate, $4.46/HCF added to the base rate Finance department handles the billing S. San Bruno Bimonthly/60 day cycle on the utility bill Proposed monthly rate as of 7-1-10 - $16.66 base rate plus$5.72/HCF based on average water use from December -April 6. Burlingame $9.43/1000 gallons (3-3-10), based on winter water consumption January-April Billed and collected every 60 days by the City 7. Redwood City Billed bi-monthly, flat fee of $584.66 for 10/11 8. San Carlos $525.00 annual flat fee, collected on the property tax bill /~ 9. Half Moon Bay Winter months usage used to calculate -December-March. $16.90/HCF water use. Minimum charge $270.40 or $22.53/month. Collected on the property tax bill. 10. Brisbane Use charge of $1.07/HCF up to 8 HCF Then $2.91/HCF anything over 8 HCF Based on average water use for November -February Billed bi-monthly 11. Pacifica $7.33/HCF Collected on the property tax bill 12. South San Francisco Flat rate of $461.00/residence/year Collected on the property tax bill. /z Legal opinion on Prop 218 noticing requirements In a number of situations, once a maximum fee, tax, or assessment has been set, Prop. 218 won't require a new hearing and approval process to set the fee, tax, or assessment at an amount less than the maximum. In this case, however, the safer approach would be to go through the fee increase process again as part of approving the switch to metered rates. The existing rate structure requires residential customers pay a flat amount. If the fee structure were switched to metered rates based on water consumption, there wouldn't necessarily be any guarantee that the amount a customer was charged would be less than the maximum amount that's in the schedule for that year. If we can't guarantee that people would pay less than the already approved maximum, then it would be risky to rely on those maximums as the basis for not needing to go through the Prop 218 approval process when switching to metered rates. It may be advisable to adopt a cap on the amount that residential customers would pay under the metered rate system, equal to the maximum amount already approved as part of the 5-year plan, but that would result in either the general fund or other ratepayers subsidizing customers who would otherwise exceed the cap. The former wouldn't be a problem under Prop 218, but it's probably not a desirable outcome. Prop. 218 would prohibit the latter. Additionally, the procedure that Prop. 218 requires the City to follow when approving sewer fees includes (1) calculating the amount of the fee and (2) providing each property owner notice of both the amount and the basis on which it was calculated (Cal. Const. art. XIIID, sec. 6(a) (1)). It would be difficult to rely successfully on the amounts and manner of calculating the current 5-year fee schedule as satisfying those procedural requirements for metered rates. l3 Timeline for Actions Needed for 2010-11 Rate Changes for Compliance with Proposition 218: Option 1 Option 2 Less Flexibility for or Uncertainty Final Decision on Rates. Needed From Council (Approval of Resolution Authorizing a new Rate program, with final Not to .Exceed Ratesper.. year 5-Apr 19-Apr Final Draft of Notices, including explanation, program details, rates, protest procedures, and date of public hearing Notices Mailed along with Proposed Rates for 5 Years to All Sewer Ratepayers 23-Apr 7-May 27-Apr 11-May 45 day noticing requirement Public Hearing, Formal Protest Vote Tabulation at Council Meeting: 9-Jun 23-Jun Update. property/parcel database records for property tax bills, due to :County on 7-Jul 7-Jul /~ Next Steps if Council wants staff to proceed with dynamic billing of sewer rates: I. 160 days Obtain water data downloaded from CalWater and Westbourgh Water District into format usable by City: 15 days • Work with engineering firm to calculate new rate structure that is consistent with Proposition 218 90 days • Prepare new rate mailings to all residential customers, send out, and hold information meeting -per Proposition 218 requirements 45 days • Hold public hearing II. Concurrently with getting the data, staff would have to set up a billing operation. We currently have no utility billings, so we do not have the hardware, software, or staffing in place to undertake this. This would involve either in house or contracting out services. Assuming in-house 1. Purchase a utility billing software system at an estimated price of $25,000 2. Hire 1 permanent FTE plus 1 part time FTE to send out monthly bills and respond to billing and usage questions from residents (Annual cost of $135,000). We'd need at least 1 FTE, and would request the part time to make sure we are adequately prepared. We would re-evaluate staffing needs after 6 months. 3. Send out information letters and flyers. It would take approximately 6 months to complete these 3 steps. Assuming Contracting out: Alternatively to pursuing this in house, staff could pursue contracting the service out, probably for a lowered cost. Billing/usage questions would go the contractor, not to City staff. Possibilities include the water districts (that already have the usage data and the billing systems), a neighboring city (most of our neighbors have some type of utility billing already), or private billing companies. /~ DATE: February 17, 2010 TO: Honorable Mayor and City Council FROM: Philip D. White, Fire Chief SUBJECT: RECOMMENDATION TO REPLACE QUINT 65 WITH A FIRE ENGINE RECOMMENDATION It is recommended that Council consider replacing Quint 65 with a fire engine. BACKGROUND/DISCUSSION In May of 1993, the Fire Department embarked upon a three year plan to: 1. To provide an increased level of service to the citizens of South San Francisco. 2. To ensure cost effective and efficient administration of the Department. 3. To reduce Departmental operating costs. These goals were in part achieved by eliminating the Department's truck company and placing into service another rescue ambulance. At the time the Department had only one rescue ambulance available to respond to care for the sick and injured. As a result, it was unavailable to respond to approximately 360 medical calls per year. By placing into service an additional rescue ambulance an increased level of service to the community would be realized with a corresponding increase in cost recovery for the Department's paramedic program. Reduced operating costs would also be achieved by reclassifying the truck company's three (3) fire captain and three (3) fire apparatus/engineer positions to paramedic/firefighter positions that would help staff the second rescue ambulance. To ensure that the Department would still retain the capability to rescue occupants from building heights exceeding the reach of ground ladders and/or place elevated water streams into operation, a quint was purchased in place of a fire engine that was scheduled for replacement. For the purposes of clarification: 1. Truck Company: is a fire apparatus that is staffed with 3-4 firefighters and is equipped with rescue equipment, a full complement of ground ladders and a 75 to 110 foot aerial ladder. 2. Fire Engine: is a fire apparatus that is staffed with 3-4 firefighters and is equipped with limited rescue equipment (hand tools), a fire pump, water, fire hose, a 14 foot roof ladder and 24 foot extension ladder. 3. Quint: is a fire apparatus that is staffed with 3-4 firefighters and is equipped with limited rescue equipment (hand tools, and some powered tools), a fire pump, water, limited fire hose, limited number of ground ladders and a 75 to 110 foot aerial ladder. Staff Report To: Honorable Mayor and City Council Re: Resolution Recommending Replacement of Quint 65 with a Fire Engine Date: February 17, 2010 Pale: 2 of 3 Currently, the Department operates the following fire/rescue apparatus: 1. three (3) fire engines, 2. two (2) quints and 3. two (2) rescue ambulances While the decision to replace the truck company with a quint helped the Department achieve some of its 1993 planning goals and retain certain important operational capabilities of a truck company, it has shown over time to have been a costly decision and should be reviewed before deciding to replace Quint 65 with another quint. Table 1. Comparison of Quint 65 and Fire Engine Annual Operating Costs Make/Year Parts Labor Total Cost Yearly Avg. (1996) Q65- 508 $100,462.89 $123,448.00 $223,910.89 $16,023.56 (2000) E66 - 503 $ 56,870.26 $ 65,205.76 $122,075.02 $12,207.50 As you can see in the table above the annual cost of maintaining a quint is significantly greater than a fire engine . Table 2. Comparison of Replacement Costs Quint, Fire Engine and Truck Fire Apparatus Type Apparatus Cost Tools and Equipment Quint $945,000 $190,000 Fire Engine $628,000 $145,000 Fire Truck $1.3 million $200,000 The typical service life of fire apparatus is fifteen years (15) front line and five (5) years reserve. Quint 65 was purchased in 1995 and is scheduled for replacement in FY 2010-2011. Based on the information in Table 2, the cost of replacing Quint 65 with another quint is significant compared with a fire engine. The annual operating costs of a quint are also significantly greater than a fire engine. Furthermore, the operational benefits of having two (2) quints has also shown to be limited, particularly since the development of the San Mateo County Automatic Aid Agreement in 1996. Staff Report To: Honorable Mayor and City Council Re: Resolution Recommending Replacement of Quint 65 with a Fire Engine Date: February 17, 2010 Page: 3 of 3 This Agreement facilitates the sharing of fire apparatus between jurisdictions with minimal delay or additional cost to the requesting agency using a centralized dispatching system. In the event the Department needed an additional quint to perform in the role of a truck company at the scene of an emergency the Automatic Aid Agreement would provide one. FT TNnTNfi If the recommendation is approved, the purchase of a fire engine would be funded by the City's vehicle replacement fund. Because the cost of an engine is lower than a quint, significant saving would be realized. CONCLUSION Replacing Quint 65 with a fire engine will still allow the Department to realize its 1993 goals of providing an increased level of service to the citizens of South San Francisco and reduce operating costs. In addition, it will greatly reduce the impact on the City's vehicle replacement fund. Finally, it will have no negative impact on Department emergency operations. ~~C. B Y~ Philip D. W ' e Fire Chief '~ ~ , Approve : '~~~ '~-'~~, :Barry M. Nagel City Manager t PW/jd