Item 3.1 - Reso Establishing Sched. of Water Rates & Charges effective 1/1/17G`�•(O POlCi43
�1ry•1Y THE CSV
City of Poway
COUNCIL AGENDA REPORT
APPROVED
APPROVED AS AMENDED ❑
(SEE MINUTES)
DENIED ❑
REMOVED ❑
CONTINUED
RESOLUTION NO. 1-QO
DATE: January 10, 2017
TO: Honorable Mayor and Members of the City Council
FROM: Wendy Kaserman, Assistant City Manager t
CONTACT: Peter Moote, Assistant Director of Administrative Servicer
858-668-4414 or pmoote@poway.org
SUBJECT: Resolution to establish the Schedule of Water Rates
and Charges effective January 1, 2017
Summary:
Proposition 218 requires that ratepayers be given the right to protest increases in water
and sewer rate charges prior to approval. Notice of tonight's hearing for proposed water
rate increases was mailed to 13,722 ratepayers on November 23, 2016. Under the
provisions of Proposition 218, if the City receives written protests from a majority of
affected ratepayers (in other words, written protests from more than 6,861 ratepayers),
the City Council cannot approve the proposed rate increases. As of December 21,
2016, the City has received nine written protests.
The proposed water rates would recover increases to the raw water rate and fixed
charges adopted by the San Diego County Water Authority in effect January 2017, as
well as cover a portion of the City's increased commitment to water capital improvement
projects. The proposed water rates also address the unprecedented decrease in water
sales due to compliance with State mandated reductions in water consumption.
No changes to the City's sewer rates, in effect since January 2016, are proposed with
this public hearing.
The proposed water rates would increase the bill for a single-family residential customer
with FY 2017-18 projected median water use (22 units; 748 gallons/unit), the most
common residential meter size (3/4 -inch), and most common sewer tier (2), by $5.46
per month. Also, with the expiration of the temporary surcharge credit (applied to the
first 22 units of water on a residential bill), a customer using 22 units of water will
experience an additional increase of $16.50 to the bimonthly bill.
Recommended Action:
Staff recommends that the City Council:
• Open the public hearing, hear testimony and accept all written protests against water
rate increases from affected ratepayers;
• Close the public hearing;
• Adopt the attached resolution (Attachment 1) to establish the Schedule of Water
Service Rates and Charges effective January 1, 2017.
1 of 26 January 10, 2017 Item #3.1
Public Hearing on Proposed Water and Sewer Rates
January 10, 2017
Page 2
Discussion:
On November 15, 2016, the City Council held a workshop to consider recommended
water and sewer rates for 2017. The rates presented at the workshop were
recommended to provide recovery of pass-through costs, continue proper maintenance
of the water and sewer systems, meet regulatory requirements, and fund necessary
capital projects.
The workshop resulted in Council directing staff to proceed with noticing a Proposition
218 public hearing, as required by California Constitution, Article XIIID, Section 6
(commonly known as "Proposition 218"), to consider increases to water rates. Notices
were mailed to 13,722 ratepayers on November 23, 2016, describing the following
proposed increases to water commodity charges and fixed service (meter) charges, and
no change to sewer commodity or fixed service charges:
• An increase to the water commodity rate by 7.75%;
• An increase to the fixed meter charge by 8.75%
• Expiration of the temporary Drought Recovery Surcharge credit, applied to the first 22
units of water on a residential bill, at $0.75 per unit of water (748 gallons);
A copy of the Proposition 218 notice is attached to this report (Attachment 2).
Water Rates - Background:
Due to limited local resources, the City buys virtually all of its water supply from the San
Diego County Water Authority (CWA). The City's allocation of fixed charges and the
cost of water from CWA for 2017 will be almost 50% higher than costs five years prior.
CWA increases reflect the higher cost of water supply from Metropolitan Water, and
recovery of costs for the Carlsbad desalination plant.
The City's FY 2016-17 adopted budget for water utilities operations and system
rehabilitation is $26.21 million. After accounting for reductions in consumption, the
updated budget requirement for water utilities is approximately $23.79 million. Roughly
62% of operating costs (excluding system rehabilitation) is made up of water supply
purchases and other pass-through charges from the CWA. The remaining 38%
represents the City's cost for water treatment, operations, maintenance, and
administration. Cost reduction measures implemented by the City between 2007 and
2012, primarily in response to the economic downturn, resulted in reduced costs across
all operations, including water and sewer utilities. The most significant of these
measures included reduction of the City workforce and the early adoption of pension
reform. Revenue collected by the City from water fees and charges is used exclusively
to operate, administer, maintain, and rehabilitate the water system.
2 of 26 January 10, 2017 Item #3.1
Public Hearing on Proposed Water and Sewer Rates
January 10, 2017
Page 3
The City's current adopted water rates reflect a multi-year outlook that demonstrated the
need for rate increases ranging from 7% to 9% over the next five years. Significant
factors driving the rate increases include the City's partial absorption of prior years'
increases in the cost of the raw water, the region's investment in alternative but more
costly water supply sources, including desalination, and the City's increased annual
commitment to funding priority water system rehabilitation projects. Based on the water
system maintenance needs assessment, water rates will need to support an ongoing
commitment of approximately $1.8 million from the water fund each year in order to
ensure continuation of safe and reliable water service for the City's residents.
Adopted water rates include the temporary drought recovery surcharge of $0.75 per unit
(748 gallons), anticipated to remain in place through December 2018. The surcharge
addresses the temporary loss of the City's ability to recover the cost of operation and
maintenance of the City's water system, due largely to single family residential
customers' compliance with the state mandated emergency water use restrictions. In
order to lessen the disproportionate burden of the surcharge on customers whose
conservation efforts are already largely responsible for the City's compliance with
mandated reduction levels, Council adopted resolution 16-001 to suspend the
surcharge on the first 22 units of consumption on single family residential bills. This
residential customer surcharge credit was made effective January 2016 through
December 2016, with the full surcharge going into effect January 2017. Council
authorized a $401,250 loan from the general fund to temporarily cover the revenue loss
due to the residential customer surcharge credits. An additional similar general fund
loan for the surcharge credits issued between July 2016 through December 2016 may
be necessary prior to FY 2016-17 year end in order to retain a positive balance in the
water fund.
Facts and recent trends for water consumption are as follows:
• The City's water customer base is comprised of 14,137 service
connections; single-family residential customers represent approximately
89% of the customer base.
• Median household bimonthly use declined from 36 units in 2007-08 to 25
units in 2014-15, and was further reduced to just over 20 units for 2015-16.
• In 2015-16, 562 bills were issued to customers who reached the second
rate block (200 units or more), representing approximately 2% of all
residential water use billed.
Water Rates - Commodity Charges:
While the state's mandated reduction in Poway's water consumption was essential to
addressing the drought crisis, reduced consumption has resulted in a substantial
decline in the revenue necessary to sustain the City's water system. Also, effective
January 2017, the City's water supply purchases will reflect a CWA commodity rate
increase of just over 9%.
3 of 26 January 10, 2017 Item #3.1
Public Hearing on Proposed Water and Sewer Rates
January 10, 2017
Page 4
In order to recover increased CWA commodity charges and support the City's water
utilities operations, the City's water commodity charge is recommended to increase by
7.75%. Without a commodity rate increase, a deficit balance in the water fund is
projected by FY 2016-17 year end. This projection reflects the $401,250 general fund
loan with the closing of FY 2015-16 for the residential surcharge credits.
An important factor in determining revenue necessary to recover operating costs is
projected water consumption over the course of the year. As of the close of FY 2015-
16, a 32% reduction in consumption across all customer types since FY 2013-14 has
resulted. Early indications for FY 2016-17 indicate an increase of up to 17%, reflecting
the recent changes to allow watering three days per week. This increase in volume was
taken into account in determining projected revenue, using the recommended rate
increases.
It should be noted that the California Department of Water Resources and the State
Water Resources Control Board are still working on permanent state water use
regulations to be adopted before January. These regulations will potentially address
indoor water use, outdoor irrigation, commercial -industrial use, and water loss. San
Diego water agencies, including Poway, have urged the state not to take a one -size -fits -
all approach.
Service (Meter) Charms:
The City's rate structure continues to support water conservation by limiting revenue
from fixed (i.e., service charges) to variable (i.e., commodity charges) revenue. The
City currently receives approximately 18% of its water revenue through fixed charges.
In order to reduce rate volatility caused by unpredictable year-to-year consumption
while moving the City closer to full recovery of the fixed costs assessed by the CWA,
the City's multi-year rate outlook calls for incrementally increasing revenue from fixed
charges. This target is increased from 20% to 25% of total revenue to align with
restructured CWA rates, which shifted a portion of their revenue from variable charges
to a fixed Supply Reliability Charge. To meet the City's target for recovery of fixed
costs, annual increases in service charges that exceed both annual cost indexes and
annual CWA fixed charge increases are necessary.
While the City's plan is to increase the percentage of revenue received from fixed
charges to 25% over time, revenue from variable charges will be adjusted to achieve
overall revenue that is projected to meet, not exceed, the amount necessary to recover
operating and system maintenance costs. With fixed charges at 25% of total water
revenue, the City's ratio would still remain below the 30% industry -recommended
standard for water conservation purposes.
In order for the City to continue moving toward greater recovery of CWA fixed charges
while supporting priority water system rehabilitation projects, the City's water meter
charge is recommended to increase by 8.75%.
4 of 26 January 10, 2017 Item #3.1
Public Hearing on Proposed Water and Sewer Rates
January 10, 2017
Page 5
Water Fund Balance:
Due to the City's increased funding level for rehabilitation of its aging water system,
partial absorption of increased pass-through costs, and significantly lower water sales
due to conservation mandates, the water fund reserve balance has been used to
moderate necessary rate increases. Consistent with projections at the time current
rates were set in January 2016, virtually the entire water fund reserve has been utilized.
After a general fund loan to temporarily make up for the $401,250 residential surcharge
credits to date, the water fund balance at the start of FY 2016-17 was just under
$100,000, as shown in the following chart.
H $5.0
C
° $4.5
2 $4.0
$3.5
$3.0
$2.5
$2.0
$1.5
$1.0
$0.5
$0.0
FY 12-13 FY 13-14 FY 14-15 FY 15-16 FY 16-17
The City's multiyear rate outlook assumes future annual rate increases that exceed
pass-through and normal annual City cost increases in order to rebuild the water fund
balance to policy minimum. Based on 20% of the current annual water operating
budget, the target fund balance for FY 2016-17 is approximately $4.4 million. Although
it is anticipated to require over five years to rebuild the water operating fund balance to
this target, a $5.4 million loan from the sewer fund was previously authorized by
Council, which remains available to ensure sufficient funds are available as needed for
water system operations and system maintenance requirements. Assuming moderate
annual increases in Metropolitan Water and CWA pass-through costs, and annual City
rate increases similar to those proposed for 2017, the water fund reserve would reach
20% of annual operating costs as called for in the reserve policy by 2021.
In the event a portion or the entire sewer fund loan is utilized, the existing long term rate
plan for sewer services will not be affected. The sewer fund is maintaining a fund
balance capable of moderating future sewer rate increases that will be needed to
recover increased sewer system costs. Most notable is Metro's Pure Water/sewer
outflow reduction project, discussed further in the sewer rates background section of
this report.
5 of 26 January 10, 2017 Item #3.1
Public Hearing on Proposed Water and Sewer Rates
January 10, 2017
Page 6
If adopted, the rate increases, as shown in the following tables, would be in effect
January 2017, and would be reflected on customer bills beginning March 2017 for all
water used after January 1, 2017,
Current and Proposed Fixed Water Meter Charges
(All Customer Classes)
Meter Size
5/8", 3/4", 1" Fire
Current Charge
(bimonthly)•
$34.28
Proposed Charge
•
$37.28
1"
$57.13
$62.13
1-1/2"
$114.25
$124.24
2"
$182.79
$198.78
3"
$342.74
$372.73
4"
$571.23
$621.20
6"
$1,142.45
$1,242.41
8"
$1,827.91
$1,987.84
Current and Proposed Water Commodity Rates
(1 unit= 748 gallons)
Single -Family
Residential
Multi -Family &
Non -Residential
All C
Block 1 1-199 units $4.60
Block 2 200+ units $6.56
Uniform $4.69
Drought Recovery Surcharge
(1 unit= 748 gallons
Sewer Rates - Backoround:
Potable Water
75
$7.07
$5.05
Wastewater generated in Poway is collected by the City's sewer system and conveyed
to the City of San Diego Metropolitan Wastewater System (Metro), where it is treated
and ultimately discharged to the Pacific Ocean. The City's updated FY 2016-17 budget
for sewer treatment, operations, maintenance, and administration is $8.67 million. In
addition, $5.73 million is programmed over the next five years for sewer system
improvement and rehabilitation projects.
6 of 26 January 10, 2017 Item #3.1
Public Hearing on Proposed Water and Sewer Rates
January 10, 2017
Page 7
Approximately 56% of the City's costs for providing sewer services (excluding
rehabilitation projects) are pass-through costs from Metro and other component
systems relied on for sewage transport, treatment, and discharge. As cited in the water
rates background section of this report, cost reduction measures implemented by the
City between 2007 and 2012 resulted in reduced costs across all operations, including
sewer utilities. The most significant of these measures includes reduction of the City
workforce and the early application of pension reform. Revenue collected by the City
from sewer fees and charges is used exclusively to operate, administer, maintain, and
rehabilitate the sewer system.
Between 2011 and 2012, the City Council reduced sewer commodity charges by 20%,
followed by no rate changes in 2013. Combined, these actions have resulted in a
reduction in the sewer fund balance over time, as reserves have supported operations
and allowed absorption of increased Metro pass-through charges. Increases to the
sewer fixed service charges and commodity charges beginning in 2014 represented the
first steps toward once again achieving full recovery of sewer operating costs.
The City's current sewer rates went into effect in January 2016, when service (fixed
meter) charges were increased by 8.75%, and commodity (volumetric) charges were
increased by 7.50%. Similar to water, the adopted rates reflected a multi-year outlook
that demonstrated the need for similar rate increases through 2020, until which use of
sewer fund balance would be necessary to cover a portion of operating costs. During
this period, the sewer fund balance is projected to remain sufficient, after absorbing the
City's share of increased capital and operating costs associated with Metro's Pure
Water project. The project will reduce the region's sewer outflow by processing
recycled water, and initially produce 30 MGD of high quality potable water for the region
by 2021. Metro member agencies, including Poway, will share project costs that will
ramp up substantially by 2020, resulting in necessary overall treatment cost increases
of over 50%. The project avoids the substantial long term costs of upgrading the
system from primary only to secondary treatment and provides a new potable water
supply for the region.
Sewer Rates - Findinas:
The recommended objective of the rate plan for the sewer fund is to reach full recovery
of costs for day-to-day operations and ongoing rehabilitation of the aging system,
particularly by the time substantial San Diego Pure Water program costs begin getting
passed through to the City in 2020-21. In order to reach this objective, the sewer fund
rate plan determined that the sewer use (commodity) rates and sewer service (fixed)
charges increase by 5% to 7% annually for a minimum of three years. Due to refunds
issued by Metro based on final system operating costs in FY 2013-14, and an estimated
refund for FY 2014-15, the anticipated increases for the City's sewer rates, to have
been in effect January 2017, may be deferred for one year at this time. Assuming a
return to the long-term rate plan in 2018, the result is a projected ongoing draw -down on
sewer fund balance through 2021, at which time full cost recovery may be achieved.
7 of 26 January 10, 2017 Item #3.1
Public Hearing on Proposed Water and Sewer Rates
January 10, 2017
Page 8
Combined Water and Sewer Rates:
The combined proposed water and existing sewer rates for a single-family residential
customer with FY 2016-17 projected median water use (22 units), the most common
residential meter size (3/4 -inch), and most common sewer tier (2), would be $10.92
bimonthly ($5.46 month). Also, a residential customer with 22 units of consumption, and
therefore currently receiving the temporary surcharge credit for all units consumed
(applied to the first 22 units), will pay an additional $16.50 on their bimonthly bill once
the credit expires effective December 31, 2016.
Single -Family Residential Customer
Combined Bimonthly Water and Sewer Bill
(22 Units, Most Common 3/4 -inch Meter, Tier 2)
Water Service Meter
ProposedCurrent
$34.28
$37.28
$3.00
Water Commodity
$101.20
$109.12
$7.92
Temporary Drought
Recovery Surcharge
$16.50*
$16.50
$.00**
Sewer
$68.04
$68.04
$ -
Total Combined Bill
$220.02
$230.94
Bimonthly $10.92
Monthly $5.46
* Suspended on first 22 units, January 2016 — December 2016
** Although no increase is proposed to the Temporary Drought Recovery Surcharge, the
credit from a general fund loan will expire effective December 31, 2016
Environmental Review:
This item is not subject to CEQA review.
Fiscal Impact:
If the proposed rates, are adopted, an estimated $172,844 will be added to the water
fund reserve in FY 2016-17, bringing the balance to 3% of annual operating costs and
closer to the annual operating policy level of 20%. Sewer revenues are expected to be
supported by $1.45 million from the sewer fund reserve balance to meet operational and
system rehabilitation needs in FY 2016-17.
Public Notification:
A Notice of Public Hearing was published in the Poway News Chieftain on December
29, 2016, and January 5, 2017. Additionally, a Proposition 218 hearing notice was
mailed to every customer on November 23, 2016.
8 of 26 January 10, 2017 Item #3.1
Public Hearing on Proposed Water and Sewer Rates
January 10, 2017
Page 9
Attachments:
1. Resolution Establishing Water Service Charges and Rates
2. Proposition 218 Notice
3. Written Protests Received Through December 21, 2016
Reviewed/Approved By: Reviewed By: Approved ByV-
Wendy KaOrman Morgan Foley Tina M. White
Assistant City Manager City Attorney City Manager
9 of 26 January 10, 2017 Item #3.1
RESOLUTION NO. 17-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF POWAY, CALIFORNIA,
ESTABLISHING THE SCHEDULE OF WATER SERVICE CHARGES AND RATES
PER SECTION 13.11.120 OF THE POWAY MUNICIPAL CODE
WHEREAS, the City of Poway provides water services to residents of Poway;
and
WHEREAS, the City has a fixed bimonthly water service charge based upon the
hydraulic capacity of the meter size; and
WHEREAS, the fixed bimonthly water service charge adopted herein shall be
imposed as a condition of service by the City to the customer. Any customer may avoid
payment of the fee or charge by disconnecting from the facilities of the City; and
WHEREAS, the City also has a water commodity charge, which is imposed on
the basis of the amount of water used or consumed by the customer, and
WHEREAS, the City has a Raw Water Rate and other charges; and
WHEREAS, the City has a delinquency fee and other noted fees related to water
services, as established from time to time by City Council resolution; and
WHEREAS, the City Council of the City of Poway held a duly noticed public
hearing on January 10, 2017, pursuant to the provisions of Article XIIID of the California
Constitution and the Proposition 218 Omnibus Implementation Act; and
WHEREAS, the City Council received a final tabulation of all written protests
received by the City Clerk at the January 10, 2017 Proposition 218 hearing; and
WHEREAS, the City Council heard and considered all written and oral protests to
the proposed changes to the rates at the public hearings.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Poway
as follows:
Section 1. The City Council hereby finds that no majority protest for the Schedule
of Water Charges and Rates were received.
Section 2. The City Council hereby establishes the following Schedule of Water
Service Charges and Rates, to replace the water service charges and rates, if any, set
forth in section 13.11.120 of Chapter 13.11 of the Poway Municipal Code, for all water
services billed beginning the first full billing cycle after January 1, 2017 for all water
used on or after January 1, 2017, as follows:
10 of 26 Attachment 1 January 10, 2017 Item #3.1
Resolution No. 17- _
Page 2
A. Water Capacity. Every water customer pays a bimonthly water service
charge regardless of customer class. The fee is based upon meter size.
Most residential water customers pay the 5/8 -inch, 3/4 -inch charge.
Fixed Meter Charges
Meter Size
Current
Charge
Charge Effective
01/01/16
5/8 -inch, 3/4 -inch, 1 -inch Fire
$34.28
$37.28
1 -inch
$57.13
$62.13
1 1/2 -inch
$114.24
$124.24
2 -inch
$182.79
$198.78
3 -inch
$342.74
$372.73
4 -inch
$571.22
$621.20
6 -inch
$1,142.45
$1,242.41
8 -inch
$1,827.90
$1,987.84
B. Water Commodity Rate. In addition to a water capacity fee, every customer
pays for each unit of potable water registered through his or her meter
(commodity). Each unit is approximately 748 gallons.
Water Rates
Current
Rate per Unit
Customer Type
Rate
Effective
per Unit
01/01/16
Single -Family
Block 1: 1-199 Units
$4.60
$4.96
Residential; Two -Block
Rate Structure
Block 2: 200+ Units
$6.56
$7.07
Multi -family; Uniform Rate Structure
$4.69
$5.05
Landscape Irrigation; Uniform Rate Structure
$4.69
$5.05
Nonresidential (Including Commercial/
$4.69
$5.05
Industrial); Uniform Rate Structure
C. Drought Recovery Charge (Temporary). In addition to the water capacity fee
and water commodity fees, a temporary $0.75 per unit charge will be applied
to each unit of potable water registered through his or her meter (temporary
drought recovery charge). Each unit is approximately 748 gallons.
11 of 26 January 10, 2017 Item #3.1
Resolution No. 17- _
Page 3
D. Special Water Rates.
1. Raw Water. The basic raw water rate will be the raw water cost from the
San Diego County Water Authority (CWA), associated fixed charges, and
a City surcharge as established by separate agreement.
2. Reclaimed Water. At this time, reclaimed water is only available in the
City's business park. The reclaimed water rate is 90 percent of the
nonresidential water commodity rate per unit then in effect.
3. Agricultural Credit. The CWA may offer interruptible water to agricultural
customers at discounted rates through special programs. The City may
pass through the discounted rate to retail customers who meet program
requirements and choose to participate in the program, subject to CWA
program availability, terms, and conditions.
Section 3. That the setting of such charges and rates is statutorily and
categorically exempt from the requirements of CEQA, pursuant to Section 21080(b)(8)
of the Public Resources Code, and Title 14 of the California Code of Regulations,
Sections 15273(a) and 15307.
Section 4. This Resolution shall take effect immediately.
PASSED, ADOPTED AND APPROVED by the City Council of the City of Poway
at a regular meeting this 10th day of January 2017.
Steve Vaus, Mayor
ATTEST:
Nancy Neufeld, CMC, City Clerk --
12 of 26 January 10, 2017 Item #3.1
Resolution No. 17- _
Page 4
STATE OF CALIFORNIA )
) SS
COUNTY OF SAN DIEGO )
I, Nancy Neufeld, City Clerk of the City of Poway, do hereby certify under penalty of
perjury that the foregoing Resolution No. 17- was duly adopted by the City Council
at a meeting of said City Council held on the 10th day of January 2017, and that it was
so adopted by the following vote:
AYES:
NOES:
ABSENT:
DISQUALIFIED:
Nancy Neufeld, CMC, City Clerk
City of Poway
13 of 26 January 10, 2017 Item #3.1
Notice of Public Hearing on Proposed Water Rates
The City is committed to providing the highest quality
water and sewer services at the lowest possible rates.
To ensure this commitment, each year the City
evaluates its infrastructure needs, operations and
maintenance costs for the next year. Based on this
evaluation, rate increases are proposed for 2017.
Why are you receiving this notice?
The City of Poway is mailing this notice to you because
you are a water and/or sewer customer responsible for
payment of water and/or sewer fees, or you are the owner of
record for a property that receives water and/or sewer
service. This notice describes proposed increases to water
rates ranging from approximately 7.75% to 8.75%, and
provides notice of the upcoming public hearing at which
these proposed changes will be considered by the Poway City
Council.
If the proposed rates are approved, the bimonthly water
and sewer bill for a typical single-family residential customer,
who uses 22 units of water bimonthly, and is assigned to
sewer tier 2, will increase by $10.92. The City Council
previously approved a temporary partial credit toward the
Drought Recovery Surcharge for single family residential
customers. This credit will expire in December 2016,
resulting in higher water charges for these customers.
What are the reasons for rate increases?
The primary reason for the rate increases is reduced
water sales coupled with the increased price of wholesale
water purchased from the San Diego County Water Authority.
Additionally, the City has scheduled capital improvement
projects that are essential to maintain safe, reliable, and cost-
effective water and sewer services for the Poway community.
State mandated regulations that required Poway to
reduce its water consumption resulted in a significant impact
Protests
The City Council will hear and consider all written
and oral protests to the proposed rate adjustments
at the public hearing. Oral comments at the
hearing will not qualify as formal protests unless
accompanied by a written protest. Only one
written protest will be counted per identified
parcel. While email is not an official rate protest
mechanism under Proposition 218, the City
Council values resident input and will read all
email correspondence regarding rates. Written
protests must include:
• A description of the property, such as the
address or assessor's parcel number; and
• The name and signature of the customer
submitting the protest.
The City Council will receive a final tabulation of
all written protests received by the City Clerk.
Written protests must be received by the City
Clerk's office no later than 4:30 p.m. January 10,
2017, or can be submitted in writing in the Council
Chambers before the public hearing is closed. The
Council will then consider and may adopt the rate
changes described in this notice. If a majority of
the affected customers file written protests, the
proposed rate structure and rate adjustments will
be reconsidered.
on the City's water revenues and proposed rates. Fixed costs
Please send written protests to:
to operate and maintain the water system remain the same City Clerk of the City of Poway, P.O. Box 789
regardless of water sales. The rate increases explained in this Poway, CA 92074-0789
notice are proposed to go into effect in January 2017.
14 of 26 Attachment 2 January 10, 2017 Item #3.1
Supply Cost
The Metropolitan Water District
(MWD) is the primary water supplier
for the San Diego County Water Au-
thority (CWA), which is the whole-
sale supplier for the City.
MWD and CWA increased rates for
2017. CWA rates now include cost
recovery charges for adding desali-
nated water to the region's water
supply.
Proposed Water Rates
Pass -Through Costs
Pass-through costs, including the
purchase of raw water, are about 62
percent of the City's cost for provid-
ing water service to its customers.
The City's ongoing efforts to control
and reduce its own costs has helped
to mitigate MWD/ CWA's price in-
creases.
Cost Recovery
The City is increasing its capital rein-
vestment in the water system to en-
sure the continued reliability of the
City's aging system.
The proposed rates are necessary for
recovering the costs of providing a
safe and reliable drinking water sup-
ply to our customers.
FIXED CHARGES
Based on Meter Size
CURRENT
EFFECTIVE 1/01/17
5/8 -inch, 3/4 -inch, and 1 -inch Fire
$34.28
$37.28
1 -inch
$57.13
$62.13
1 -1/2 -inch
$114.24
$124.24
2 -inch
$182.79
$198.78
3 -inch
$342.74
$372.73
4 -inch
$571.22
$621.20
6 -inch
$1,142.45
$1,242.41
8 -inch
$1,827.90
$1,987.84
COMMODITY RATE Per Unit (1 Unit = 748 Gal.)
CURRENT
EFFECTIVE 1/01/17
Based on Customer Type
Single -Family Residential; Two Blocks
Block 1: 1-199 Units
$4.60
$4.96
Block 2: 200+ Units
$6.56
$7.07
Multi -Family
$4.69
$5.05
Landscape Irrigation
$4.69
$5.05
Nonresidential
$4.69
$5.05
Drought Recovery Surcharge (temporary)
$0.75
$0.75
Reclaimed Water The reclaimed water rate will be 90 percent of the nonresidential commodity rate in effect.
Raw Water The basic raw water rate will be the raw water cost from CWA, associated fixed charges and a
City surcharge as established by separate agreement.
Other Rates Any water rates or fees associated with water service, including raw water, not addressed within
and Fees this notice shall remain in full force and effect as previously adopted by the Poway City Council.
1115 of 26 january 10, 2017 item #3.1
Raw Water
About 99.5% of Poway's raw water needs are met
through importing water from the San Diego County
Water Authority. The Water Authority's two main
sources of raw water are from the Northern California
Aqueduct, and the Colorado River Systems.
Treatment
About four billion gallons of water are treated annually
at the Lester J. Berglund Water Treatment Plant
(adjacent to Lake Poway).
Delivery
Water is delivered to the community through the water
distribution system pumps and 289 miles of pipe.
All revenue from customer charges is used exclusively to
operate, maintain, and rehabilitate the water system.
Did
1 1
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Tap water is a
r TRUE bargain
Temporary Drought Recovery Surcharge
Due to record-setting drought conditions, the State of California adopted mandatory reductions in Poway's
water consumption. While this was essential to help address the state's water shortage, reduced consumption
caused a substantial decline in the revenue necessary to sustain the City's water system. This condition is largely
responsible for the near complete depletion of the City's Water Fund reserve.
As the fixed costs to operate and maintain Poway's water system remain the same regardless of water sales, the
City implemented a temporary Drought Recovery Surcharge of $0.75 per unit effective January 2016. This
surcharge provides necessary cost recovery while drought conditions remain in effect.
Between January 2016 and December 2016, a partial suspension of the Drought Recovery Surcharge was in
effect for single-family residential customers, by application of a credit equal to the Surcharge on the first 22 units
of bimonthly water consumption. Beginning January 2017, the credit expires and this will result in increased water
charges for single-family residential customers of up to $16.50 bimonthly (22 units x $0.75).
Elimination of the Surcharge is anticipated by December 2018, when it is expected that the City's water
revenue losses will be recovered.
16 of 26 January 10, 2017 Item #3.1
PO Box 789
Poway, California 92074-0789
www.poway.org
DATED MATERIAL—DO NOT DELAY DELIVERY
Close to The percentage of water Poway
imports through the San Diego
100% County Water Authority.
The cost to provide water service
in Poway per year. Sewer service
$22 million costs (contracted with the City of
San Diego) are approximately
$8.8 million per year.
The amount of pass-through costs
More than (raw water, sewer treatment) in
half the City's water and sewer
expenditures.
Annual City expenditures for
water and sewer system
improvement projects for each of
$2.8 million the next five years (based on
maintenance needs
17 of 26 assessments).
Indicia here
NOTICE OF PUBLIC HEARING
ON
PROPOSED WATER RATES
Date:
Tuesday, January 10, 2017 at 7 p.m.
Location:
City Council Chambers
13325 Civic Center Drive, Poway, California
On Tuesday, January 10, 2017 at 7 p.m. the Poway City Council will
consider adopting proposed changes to water charges. The rate
adjustments under consideration will become effective January I,
2017 for all bills mailed on or after March I, 2017. The City bills for
water and sewer service bimonthly (every two months) based on
consumption during the two months prior to the billing date.
If you have questions regarding this notice,
please contact Customer Services at (858) 668-4401
January 10, 2017 Item #3.1
Robert and Colleen Pescatore
14265 Hacienda Lane
Poway, CA 92064
December 6, 2016
Received
City Clerk's Office
DEC 09 2016
CITY OF POWAY
We are writing to protest the increase in the water rates. We feel we already pay an exuberant amount
on water and believe homeowners should not be required to pay more because sales have gone down.
We are being penalized for doing a good job conserving water!
Sincerely,
Robert Pescatore
Colleen Pescatore
18 of 26 Attachment 3 January 10, 2017 Item #3.1
Received
City Clerk's Office
DEC 0 6 2016
5 December 2016
City Council Members CITY OF POWAY
I protest the water rate increase you are considering. Instead of taking the easy route and
raising rates you need to cut expenses in the water department. In the real world, when
revenues drop there is a corresponding drop in expenses. It should be no different for the
City of Poway.
Have any reductions been made in labor costs? Have pay decreases been considered?
Has there been a moratorium placed on hiring? Have vacancies in the department been
left unfilled? These are all steps that could cut expenses and eliminate the need for a rate
increase.
Some time ago millions of gallons of water needed to be dumped due to poor planning by
the water department. Was the person responsible for the cause of this blunder fired?
Why not?
Since the beginning of the most recent drought period the City has already raised rates
using this same logic....... rates must increase because revenues are down due to
rationing. It is time for the council to find another way. Why not use budget surplus in
another department? Why not make expense cuts in other departments? Why not forego
raises to the City Council members or cut their pay????
Robert Tilburg
15040 Espola Rd
Poway, Ca 92064
19 of 26 January 10, 2017 Item #3.1
Received
City Clerk's Office
DEC 0 5 2016
CITY OF POWAY
December 1, 2016
City Clerk of the City of Poway
P.O. Box 789
Poway, CA 92074-0789
Subject: Protest Against Proposed Water Rate Increase
Samir Soliman
13726 Paseo De Las Cumbres
Poway, CA 92064-2153
Dear City Council Members:
I write to you today to protest against the proposed water rate increase that I was
informed of through a letter of "Notice of Public Hearing on Proposed Water Rates." I
understand that there will be a Public Hearing on January 10, 2017 at 7:00 pm at the
Poway City Council Chambers. I also understand that if written protests against the
proposed water rate increase are presented by a majority of owners or ratepayers subject
to the increase, the City Council shall not impose the increase.
Consider this letter my formal written protest against the proposed water rate
increase.
Sincerely,
Samir Soliman
13726 Paseo De Las Cumbres
Poway, CA 92064-2153
20 of 26 January 10, 2017 Item #3.1
Manouchehr (Mike) Hadjiaghai
14266 Tierra Bonita Road
Poway, CA 92064
December 1, 2016
Dear City Council members,
Received
City Clerk's Office
DEC 0 5 2016
CITY OF POWAy
As a longtime Poway resident of 23 years, I am appalled by the recent announcement of plans for a
7.75% - 8.75% water rate increase. It is unconscionable that the main reason cited for this rate increase
is "reduced water sales". Although other reasons have been mentioned, it appears that the collective
efforts of Poway residents to reduce water use to meet the state's challenge of cutting back on water
use during the state's severe drought situation, is the primary reason for this proposed rate hike.
How can anyone in good conscience ask a group of people to comply with the adopted water restriction,
and when they do, slap them with what essentially amounts to a fine (and not just a one-time but
ongoing one) for following through on exactly what was asked of them? This is exactly what is being
done here and I hope that as our City Council, you will take a stand against this egregious and unfair
proposed action.
What is even more outrageous, is that this 8.75% rate increase would be occurring at a time that many
working full-time have experienced zero or very small pay increases from their employers over the past
several years. And don't forget that since 2004, our city's water rates have gone from $1.93 per unit to
now $5.58 per unit, on average. That is an almost astounding 200% increase in just a little over a
decade, while the general inflation rate has been around 30% during this same period.
Please do the residents of Poway right by not allowing this increase to go into effect in 2017!
Thank you,
Mike Hadjiaghai
21 of 26 January 10, 2017 Item #3.1
Camille and Yune Kim
12837 Stone Canyon Road
Poway, California 92064
November 30, 2016
City Clerk of the City of Poway
P.O. Box 789
Poway, California 92064
Regarding: Written protest to the proposed water rate adjustments
Dear Poway City Clerk,
Received
City Clerk's Office
DEC 0 5 2016
CITY OF pOWAY
On November 29, 2016, we received the Notice of Public Hearing on Water Rates. We have
thoroughly read the information, and want to voice a written protest.
Over one year ago, the City of Poway asked homeowners to reduce our monthly water
consumption and become more drought conscious. We complied by reducing our landscape
watering to twice a week, replaced plants and flowers with drought tolerant varieties, and
accepted living with dead, ugly grass. We also reduced filling our pool to only when necessary.
Inside the home, we reduced our shower time and started combining laundry to make larger
loads.
After we met the city's water reduction quota, and made BIG changes to our everyday use of
water, the city wants to penalize us by increasing our water bill. The city needs to revisit other
options. This is a complete slap in the face and hardly promotes homeowners wanting to
comply with other city campaigns.
The city has done a good job managing and maintaining a budgetary profit. One suggestion
instead of taxing homeowners is to use the current profits as an investment in a safe and
reliable water system. Another idea is to reduce or eliminate extraneous expenses like creating
an ice rink at Christmas time, and use the funds allocated for frivolous expenditures towards
capital reinvestment in water.
There must be other avenues of recouping the cost. Otherwise, what is the point in a
homeowner making daily sacrifices when the reward is an INCREASE cost for decreased usage?
Sincerely,
Camille and Yune Kim
22 of 26 January 10, 2017 Item #3.1
Dec.4, 2016
City of Poway
Received
City Clerk's Office
DEI; 13 2016
CITY OF POWAY
This letter is in response to the information i received from you about the proposed water
rate increases. We as consumers cannot win. We cut our water consumption by more than
what we needed to and you still want an increase because we are not using enough water to pay
the cost of water provided to us... This is a no win situation for us, the consumers.
Most of the homeowners do not even water our grass anymore due to the high bills we receive.
Our lawns look like something out of a science fiction movie.
Why don't you use some of the excess money you have to help pay for the cost of the water.
Poway dumped a large amount of water a few years ago..So it looks to me that you are not
managing the resources we have in a responsible manner. Surely you can find the money
in an account to pay for the increased water without making it harder on the rate payers.
You need to realize what each rate increase will mean to us seniors, especially when electricity
bills keep going up....
I am against any rate increase. I have given up on gardening due to water increases,
hope the people of Poway who receive water bills flood the City with letters
against any increase....
Get rid of some of the deadbeats on the city payroll, and you will save money there instead
of punishing us who pay your salary. I see city workers standing around all the time just talking
to each other while one or two guys are doing the work. Is that really necessary to have that many
guys standing around? Someone should be checking on the abuses and decreasing the number
of employees on any given job.
Ann Chadwick
12937 Papago Dr.
Poway, CA. 92064
23 of 26 January 10, 2017 Item #3.1
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24 of 26 January 10, 2017 Item #3.1
Received
City Cierk's Office
To City Clerk of Poway OFA 2, II 20% Dec. 15, 2016
Cr1Y OF POWAY
The recent editorial in the Poway Chieftain, entitled " Water hike unconscionable" by Mike Hadjiaghai,
was 100 % correct on the proposed water rate increase!! As a 30 year resident of Poway, I have spent
considerable time and money re -doing my landscape, including taking out grass and going to drip
irrigation. Many of my neighbors have also done the same thing.
We were asked to conserve water and I think all of us tried to meet the goals. What is the reward year
after year, higher water and sewer prices. Something does not seem right about this outcome. How
about holding this increase for at least a year and help restore some faith for the consumers!
Thanks,
Steve Swanson
14054 Valley Springs Road
Poway Ca. 92064
25 of 26 January 10, 2017 Item #3.1
Eve Pearce
December 16, 2016
To Whom It May Concern,
Received
City Cierk's Office
OEC 2 o Z01fs
CITY OF POWAY
14625 FAIRBURN ST., POWAY, CA 92o64
This letter is being written in protest to the proposed water rate increase.
While we appreciate that the City of Poway gave us a partial credit on the Drought
Recovery Surcharge which expires this month, we think it is absolutely ludicrous that we
will be penalized with a rate increase solely because we, and the residents of this city,
reduced out water usage per City of Poway directives.
Why are we being punished for conserving water? Charge those residents that made no
effort to conserve water—and believe me there are numerous households in this city
that did nothing to restrict their water use!
Do not vote this rate increase in. We already pay a premium to live here. Don't
penalize us even more.
Sincerely,
Cy_OCL�
oger and Evangeline Pearce
14625 Fairburn St, Poway, CA
26 of 26 January 10, 2017 Item #3.1