(1)AR 042109 Water Rates - Laserfiche WebLink

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Thus, if fewer than 6,619 protests are received, the City Council/Authority may enact the rate increase by ordinance. Health & Safety Code, Section 5471 In addition to the majority protest requirements of Proposition 218, the City/Authority is required to adopt water rate increases by ordinance. Specifically, California Health & Safety Code, provides that: "...any entity shall have power, by an ordinance approved by a two-thirds vote of the members of the legislative body thereof, to prescribe, revise and collect, fees, tolls, rates, rentals, or other charges for services and facilities furnished by it, either within or without its territorial limits, in connection with its water ... system...." Thus, the Council/Authority must pass the ordinance with at least 5 affirmative votes. FINANCIAL IMPACT: Staff has reviewed and analyzed the need to adjust water rates based on the following factors: 1. Cost of Operations. 2. Cost of replacing Development Fee revenue, which is projected to decrease over time until the time of "build -out." 3. Cost of funding certain capital projects with operating or reserve cash on a pay-as-you-go (PAYGO) basis. 4. Cost of funding rate stabilization, reserve, and capital improvement funds while retiring existing interfund loan debt. 5. Cost to maintain revenue coverage in accordance with debt covenants. The failure to implement a new rate schedule would result in continued negative cash flow and a failure to meet revenue coverage requirements. Even with the implementation of the proposed rate structure, the CUA cash position will see a reduction of approximately $800,000 through the end of the current FY. Interfund debt retirement would occur in FY 2018, while concurrently building a cash reserve. If the proposed rate structure is not implemented, an immediate reduction of $3,843,117 from the current year budget will be necessary. A combination of layoffs, elimination of capital projects, reductions to the general fund allocations, customer service staff reductions, meter replacement program curtailment, and the elimination or reduction of other major expenditures will be necessary. In the event the staff recommendation fails to pass with the required two-thirds majority vote of the City Council or the City Clerk receives a majority protest opposing the revised rate structure, CUA staff seeks authorization from the Council/Board to make necessary budget reductions to remove $3,843,117 in expenses from the current Fiscal Year budget. ENVIRONMENTAL IMPACT: California Public Resources Code §21080(b)(8) and CEQA Guidelines, Section 15273 provide a statutory exemption from California Environmental Quality Act for rate increases for capital projects in existing service areas. Though this exemption applies to the rate increase action, the capital projects supported by the rate increases (if approved) would require independent CEQA review.