1998 AGN JUL 21 I02 - Laserfiche WebLink

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CITY OF COLTON CIN COUNCIL AGENDA REPORT/ FOR COUNCIL MEETING OF JU1�1998 TO: Honorable Mayor and City Councilmembers APPROVAL: Henry T. Garcia, City Manage FROM: Thomas K. Clarke, Utility Director&____ SUBJECT: Proposed Water Rate Increase DATE: June 25, 1998 For some time, the water utility has been operating on very close margins. Revenues and expenses were closely monitored to assure that the enterprise continued to operate in the black. However, little effort was put forth to prepare a comprehensive financial plan and establish the proper cash flows to allow for needed system improvements and capital additions. These financial requirements for certain components of the water system have now become unavoidable and need to be addressed. On April 3, 1992, Ordinance 0-07-92 was placed in effect setting the water rates for FY91-92, FY92-93, and FY93-94. The third step became effective on July 1, 1993, the last time the rates changed. In the report supporting adoption of the ordinance, were subsequent projections for rate adjustments in FY94-95 and FY95-96. These changes were not ratified at that time due to concerns for the uncertainty of the projections and as a result staff was instructed to submit specific rate requests as those dates drew nearer. However, no formai requests. were presented to Council during the past two fiscal periods even though system needs had been identified. From a simplified approach, the Water Utility has done quite well without any additional rate increases. The revenues have equaled or exceeded the expenditures. Unfortunately, an active capital improvement for system expansion, reliability, and renewal and replacement was absent. This created a situation whereby major components of the water system showed the obvious signs of age and became operationally constrained. Wells, transmission, and storage, along with a coordinated main replacement program, were all put on hold due to the lack of capital improvement funds. Many of these components had already been identified for rehab or replacement in the 1991 Water Master Plan, in a system inspection by the California Department of Health Services, and more recently in the 1998 Water System Master Plan prepared by Krieger and Stewart. The consultant, with considerable input from Staff, has identified approximately $28 million of capital improvements that require attention to enhance or provide for the long-term reliability and deliverability of water on the domestic water system. Their analysis indicates that approximately half of the identified improvements are necessary in the ensuing three-year period. The projects include well additions, construction of transmission mains, new and rehabbed storage facilities, and certain main replacements and upgrades. Much of the work would have to be done under contract, but City personnel would complete some. Item # 2