2024-04-15 City Council - Full Agenda-Special Meeting

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Staff Report to the Mayor and City Council Water and Wastewater Rate Study April 15, 2024 Page 2 or pay for all debt service payments. The City and CUA are committed to replacing aging water infrastructure and securing an adequate water supply to meet current and future demands. The study concluded that the current revenues from the City’s water rates are and will be insufficient to cover (1) Current and projected operations and maintenance costs for the water system - in particular energy, chemical supplies, water treatment costs, and debt service obligations; and (2) The capital infrastructure improvements needed to maintain, repair and update the City’s aging water system. Accordingly, the study determined that rate inc reases are necessary to avoid operational deficits, further depletion of reserves, and an inability to address infrastructure and water quality improvements. Water Rates were last adjusted in Fiscal Year 2015/16 through 2019/20. Wastewater Rates were last adjusted in Fiscal Year 2014/15 through 2017/18. ISSUES/ANALYSIS On April 5, 2022, the City Council and CUA approved the Professional Services Agreement with NBS, Inc. in the amount of $88,160 for the Water and Wastewater Cost of Service Rate Studies. NBS determined an updated Rate structure that would meet the fiscal needs of the City and CUA. Key components of the rate structure to be proposed are: (1) conformity with current state laws, (2) fair and objective rates (3) establish a methodology to retire debt in a reasonable time frame (4) accountable and stable (5) easy to administer and explain to customers (6) meet revenue requirements of existing bond and any future bond sales. At the January 16, 2024 City Council meeting staff and Consultant made a presentation on the Water and Wastewater Rates study. Staff was directed to bring back for a Workshop, and include the full study, including Capital Improvement Projects list. Staff was also requested to provide a timeline of previous rate studies. Following are timelines of the Water and Wastewater rate studies and rate implementation: Water  September 13, 2013, City Council awarded contract to NBS to conduct a Water Rate Study. Study was delayed due to newly implemented State requirements for conservation.  May 15, 2015, City Council awarded amended contract to include water conservation analysis.  Water Rate Study was presented to Utilities Commission on July 13, 2015, at which it was requested that Water Rate Study and Financial Plan be brought back to meeting of August 10, 2015. 1 Packet Pg. 6