2001 AGN NOV 06 I03 - Laserfiche WebLink

Browse Search

Council and Colton a General Rate the proposed rate increase. Staff from Utilities and Finance were able to reach a solution that satisfied the operational needs of both departments and effectively reduced the rate increase from 33 percent to 17.3 percent, based on the then available data and pro -forma calculations. The assumptions that the solution was based upon are still valid, with the following limitations. First, the debt service is based on the final amount used for construction of the first two new ditches and the rehabilitation work at Unit 1. Since that work has not been completed, the exact amount is not known. Second, a condition within the State Revolving Fund requires that the City implement sewer rates based upon the strength of discharge (associated with the costs of treatment) of effluent for major customers and customer classes. A preliminary study was performed in 1999. However, the results of that study did not include the new hospital, the expansion of two of the City's major businesses, and realignment of customer class contributions. Finally, the relationship between the City of Colton and the City of Grand Terrace is contractually in question if Unit 1 is taken out of service completely. Under the existing agreements, Grand Terrace has ownership interest in the plant (Units 1 and 2) for 1.5 million gallons per day of treatment. Using the existing contracts, and by agreement of the Grand Terrace staff, they would experience a rate increase of 16.8 percent as part of this action. The two cities were in discussion targeting changes in the contractual relationship that may have altered that number. All of the above facts were disclosed at the July 18, 2000 meeting of the City Council during the formation of the Colton Utility Authority. Furthermore, bond financing was issued predicated upon enactment of a 17.3 percent rate increase effective July 1, 2001. The bond covenants require a rate increase of at least 17.3 percent for Colton customers and 16.8 percent for Grand Terrace. Even though the rate increase was not enacted on July 1, 2001, the coverage requirements in the bond covenants can still be met if staff can reduce expenses through June 30, 2002. If expenses cannot be reduced, loans or transfers from other city funds may be necessary to cover the shortfall (approximately $308,000) for July 15 -December 20, 2001, resulting from not increasing rates on July 1, 2001. ALTERNATIVES No alternatives to the 17.3 percent increase would be consistent with the actions taken on July 18, 2000. FISCAL IMPACT Approval of the attached ordinance will place in effect a 17.3 percent rate increase for all service in the City of Colton, and a 16.8 percent increase for the accounts affected by contract in the City of Grand Terrace. A typical residential account in Colton will have a monthly increase from $18.50 to $21.70. The accounts in Grand Terrace will change from $14.62 to $17.07 per month. These rates will be effective December 20, 2001. ENVIRONMENTAL IMPACT There is no direct environmental impact from the rate increase. However, the debt incurred is primarily for plant expansion which assures compliance with environmental concerns associated with effective wastewater treatment. RECOMMENDATION Staff respectfully recommends that the Colton Utility Authority adopt and approve the Ordinance amending 13.16.025 of the Colton Municipal Code increasing wastewater sewer service charges. Attachment: Amending Ordinance Page 2 of 2 (w/Attachments)