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THE CITY OF 17 j�L£�ASANTONe CITY COUNCIL AGENDA REPORT April 6, 2010 City Manager TITLE: OVERVIEW OF WATER AND SEWER RATES AND AUTHORIZATION TO MAIL THE PROPOSITION 218 NOTICE OF PUBLIC HEARING ON JUNE 1, 2010 SUMMARY Completion of a comprehensive analysis of water and sewer rates is a City Council priority and consistent with the City's water and sewer policies. The policies require the City of Pleasanton to operate these utilities on an enterprise basis, whereby the costs of services are borne entirely by the users of the system. Local water and sewer rates have not been adjusted since 2001. However, since that time, the cost of purchased water from Zone 7 (the wholesaler) has increased 55.25 While the City has been able to absorb these increases over the years, not adjusting local water rates to reflect the increases in the cost of purchased water as well as annual inflation is now placing a significant strain on the City's water enterprise, which over the years has not been, nor should be, reliant on the General Fund to operate. To ensure that both the water and sewer enterprises remain fiscally solvent and that appropriate reserves are in place to fund system maintenance and replacement obligations, staff is recommending for the average residential customer an average increase of $10.40 per bi- monthly period for water and sewer rates effective August 1, 2010. The following table demonstrates this recommendation for a residential customer who uses 40 100 cubic feet (Ccf) of water per bi- monthly billing period (29,920 gallons of water over a 60 day billing period): AVERAGE RESIDENTIAL ACCOUNT BI- MONTHLY BILLING PERIOD (Based on (40Ccf)) Bi- monthly Monthly Current Bill Recommended Rates Difference Difference Sewer Local 21.70 21.70 Regional 38.91 38.91 Total 60.61 60.61 Water 82,70 93.10 Total $143.31 $153.71 $10.40 $5.20 RECOMMENDATION Staff recommends the City Council authorize staff to mail the Proposition 218 notice to the ratepayers regarding the proposed changes to the water and sewer rates and set the public hearing date for consideration of this matter by the City Council on June 1, 2010. FINANCIAL STATEMENT The water and sewer funds are enterprise funds. The operations of these funds are 100% fee based and as such, the proposed rate increases if ultimately approved by the City Council will be borne by the water and sewer customers. The City is a customer of the utilities also and as such, will incur rate increases for the water and sewer services at City parks, government buildings including the police station, City Library and Fire Stations.