1997 AGN APR 01 I27 - Laserfiche WebLink

Browse Search

CITY OF COLTON AGENDA REPORT FOR COUNCIL MEETING OF APRIL 1, 1997 TO: HONORABLE MAYOR AND CITY COUNCIL APPROVAL: MALIK D. FREEMAN, CITY MANAGER/ FROM: THOMAS K. CLARKE, UTILITY DIRECTOR--T'OO ' SUBJECT: GENERAL WATER RATE INCREASE DATE: MARCH 24, 1997 BACKGROUND 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. DISCUSSION 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 last of these became effective on July 1, 1993, the last time the rates changed. In the report supporting adoption of the ordinance were projections for rate adjustments for FY94-95 and FY95-96. These were not ratified at that time due to concerns of the uncertainty of the projections and therefore staff was instructed to submit specific rate requests as those dates drew nearer. No formal requests were presented to Council during the past two fiscal periods even though system needs have 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 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, will be further defined in the 1997 MasterPlan, and also in a more recent system inspection by the California Department of Health Services. ANALYSIS Water utility personnel have identified approximately $10 million of capital improvements that require immediate attention to reinforce and/or enhance the reliability and deliverability of water on the domestic water system. Their analysis indicates that the funds could be expended over a three year period.' These -projects include well additions and refurbishment, construction of transmission mains, new and rehabbed storage facilities, and certain main replacements and upgrades. Much of the work would be done under contract, but some would be completed by City personnel. Page 1 of 3 Item No. 27