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THE CITY OF <br /> - 11�_ ge.1; " III <br /> pLEASANTON® <br /> September 16, 2015 <br /> Ms. Sarah Palmer,President, Board of Directors <br /> Zone 7 Agency <br /> 100 N.Canyon Parkway <br /> Livermore,CA 94551 <br /> Ms. Jill Duerig, General Manager <br /> Zone 7 Water Agency <br /> 100 N. Canyon Parkway <br /> Livermore,CA 94551 <br /> Dear President Palmer,General Manager Duerig, Members of the Board: <br /> On behalf of the City of Pleasanton, I offer comments on the proposed rate increases <br /> under consideration by Zone 7. Pleasanton is sensitive to the economic impact on your <br /> agency of decreased demand due to the region's aggressive water conservation efforts <br /> under the leadership of Zone 7. We do,though, find the justifications offered to date <br /> inadequate to justify the impact the proposed rate increases will have on every Pleasanton <br /> resident. We are particularly sensitive to a public perception that by conserving water— <br /> with the resulting brown lawns,extraordinary efforts to use recycled water, constant <br /> changes in patterns of past water use and other substantial sacrifices—residents are <br /> "rewarded"with a substantial rate increase that is not fully understood. <br /> The primary reason offered to date for the change in Zone 7's rate structure focuses on <br /> the need for predictable revenues and to build Capital Improvement Program(CIP) <br /> reserves for future capital projects. Pleasanton generally supports a rate structure that ties <br /> capital costs to predictable revenues associated with long-term financing and links <br /> operating costs to demand. It is on this basis that Pleasanton is implementing its own rate <br /> increase as a result of an exhaustive analysis of costs, subsidies,demand and long-term <br /> maintenance. <br /> As a result, it would be unreasonable for Pleasanton to object to Zone 7's proposed rates <br /> simply to oppose an increase. However, at this time,we are only comfortable with Zone 7 <br /> implementing a one-year drought surcharge to replenish operating reserves to an amount <br /> equal to between 20%and 30%of operating expenses. That drought surcharge should be <br /> evaluated annually after Zone 7 closes its books to determine whether to continue with it, <br /> decrease it, or increase to maintain operating reserves. <br /> P. O. Box 520, Pleasanton, CA 94566-0802 123 Main Street <br /> City Manager City Attorney Economic Development City Clerk <br /> (925)931.5002 (925)931-5015 200 Old Bernal Avenue (925) 931-5027 <br /> Fax: 931-5482 Fax: 931-5482 (925)931-5038 Fax: 931-5492 <br /> Fax: 931-5476 <br />