CC MIN 03152022 - Laserfiche WebLink

annual budget. She clarified that due to the City's bi-monthly billing cycles a May 1 rate increase would not impact revenues until fiscal year (FY) 2023. In response to Councilmember Testa, Director Yurchak clarified the 30-unit threshold in the 2015 drought was based upon excess use penalties. She advised the excess use penalties did not impact residents with very low bimonthly usage but the drought rate is applied uniformly. In response to Councilmember Balch, Director Yurchak clarified whether it has to be uniform is a policy decision. She advised this will be the first time the City has activated drought rates. She explained it would be a policy decision if the City Council wanted to remove the lowest tier users from paying drought rates and that a majority of customers are in the lower usage tiers. She noted there is already a revenue loss of$3.2 million in FY 2021/22. In response to Councilmember Testa, Councilmember Balch agreed each low usage customer would not cost the City much individually, but noted low usage customers are such a substantial percentage of the customers the combined total would amount to a lot of money. Councilmember Balch called for an analysis of how much money the City would lose by exempting low usage customers from the Stage 2 drought rates. In response to Councilmember Balch, Deputy Director Baptista advised the City Council can postpone the decision, but advised staff recommends making the rate increase effective May 1. Director Yurchak advised waiting six weeks to make the switch allows time to communicate the rate change to customers. In response to Councilmember Balch, Director Yurchak advised the reserve policy calls for the Water Fund to be at 34% and noted it would dip to 33% if item 23 is approved later tonight. In response to Councilmember Testa, Deputy Director Baptista advised Zone 7 is about to begin its multi-year rate study. She confirmed if Zone 7 raises its rates it would be passed along to Pleasanton's customers. In response to Councilmember Testa, Deputy Director Baptista clarified the Water Enterprise Fund comes from separate funding sources than the General Fund. In response to Councilmember Arkin, Deputy Director Baptista confirmed both fixed costs for things such as equipment and variable costs for things like the water factor into the rates customers pay. In response to Councilmember Arkin, Director Yurchak advised she has not seen any programs from the State to offset the costs of water sales. Deputy Director of Business Services Baptista revised her previous answer that fixed costs are about 50% of revenues while variable costs stand at about 80% of revenues. In response to Councilmember Arkin, Deputy Director Baptista clarified excess use penalties would punish those who use more water but advised those revenues have restrictions on how it can be used which is why staff is recommending the drought rates. She advised if drought rates are unsuccessful in achieving the desired conservation, staff would return with a request to enact excess use penalties. She reported staff evaluate the situation monthly based on water usage. In response to Councilmember Narum, Deputy Director Baptista clarified there is a blended rate for the City's water, including what Zone 7 charges. She confirmed the deficiency is in the fixed rate the City must pay Zone 7. City Council Minutes Page 17 of 22 March 15, 2022