HomeMy WebLinkAboutSupplemental PowerPoint Water and Sewer Utility Rate Study11/12/2019
Water and Sewer Utility Rate Study
UTILITY RATE PROFESSIONAL SERVICES AGREEMENT
WITH RAFTELIS FINANCIAL CONSULTANTS, INC.
CITY COUNCIL MEETING — NOVEMBER 12, 2019
Presentation Overview
------------ _. -
• Street Sweeping & Tree Trimming Fees
• Street Light Assessment District Fee
• Water, Sewer, Tree Maintenance, and Street Sweeping Utility Rate
Study RFP
• Proposition 218 Process and Milestone Schedule
• Staff Recommendations
1
11/12/2019
The City of Seal Beach's Strategic Plan includes a goal of
ensuring that water and sewer rates, as well as street sweeping
and tree trimming fees, are properly set to provide the
appropriate level of revenue and meet cost -of -service
requirements.
2
11/12/2019
Street Sweeping and Tree Trimming Fee History
0 -
June
June 6, 1988 — Resolution 3788 approved both Street Sweeping and Tree Trimming fees following
a Public Hearing.
Fees established by simple majority vote of the City Council
Leisure World charged the street sweeping fee and was exempted from the Tree Trimming fee
Surfside Colony was exempted from both fees
• September 24, 2001 — Ordinance 1478 calling for a special landowner election to consider
increasing fees for street sweeping and tree trimming to be held on November 27, 2001
c In accordance with Proposition 218 (enacted in 1995) a simple majority property owner vote was conducted
November 27, 2001 — Special Election Measures A and B relating to Street Sweeping and Tree
Trimming Fees disapproved by the voters
Both fee increases were voted down by City property owners:
Final Street Sweeping Fee increase tally = 1564 "no" votes (61.5%) and 977 "yes" votes (38.4°/x)
Final Tree Trimming Fee increase tally = 1607 "no" votes (63.5%) and 924 "yes" votes (36.5%)
Street Sweeping and Tree Trimming Fee Considerations
• Current citywide street sweeping costs is approximately $174,000 per year (starting in FY2020-21)
Golden Rain Foundation reimburses the City for services rendered.
Surfside Colony does not utilize the City street sweeping services (thus exempt from fee)
Total revenue collected from Street Sweeping Fee is approximately $53,000 annually (approximately 31 % of total annual costs)
• Current citywide tree trimming costs is approximately $145,000 per year
Surfside and Leisure World does not utilize City tree trimming services (thus exempt from fee)
Total revenue collected from Tree Trimming Fee is approximately $39,000 annually (appro)imately 27% of total annual costs)
¢ Any increase in street sweeping and tree trimming fees requires a Proposition 218 approval process
Option 1 - Conduct City Landowner special election (requires two-thirds vote)
Option 2 - Setup a Special Assessment Districts and conduct a majority protest vote (approximate consulting costs is $52,466)
• Special Assessment District law related to property owner vs. community benefit of a particular
service will result in a maximum fee that is less than full cost recovery
3
Street Lighting Special Assessment District
0
The Street Lighting Special Assessment District was established after Proposition 218
Assessments for each parcel of property are based on benefit derived from street lights vs. the
overall community benefit as established by the District Engineer's Report.
Total estimated District costs for providing street lighting throughout the City for FY 2019-20 is
$189,600:
o Based on the Engineer's Report a total of $141,600 is required from property parcel assessments
o The City general fund contribution is $48,000 or 25% of the overall District annual costs
o Reducing the City's contribution requires:
• The Engineer's Report to reevaluate the parcel property benefit vs the community benefit ratio
A majority protest vote in accordance with Proposition 218 requirements
Staff recommends not increasing the Street Lighting Assessment to property owners beyond its
cost current ratio of 75% property owner vs. 25% City contribution.
Last Water Rate Adjustment
The last Water Rate adjustment was approved April 12, 2010
• 2010 Rate Adjustment consisted of:
o An Initial residential rate decrease in FY 2010-11
o A total of three 5% annual rate increases starting in FY 2011-12
• Rates currently remain at FY 2013-14 levels (among the lowest water
rates in Orange County)
11/12/2019
4
11/12/2019
Last Sewer Rate Adjustment
n
Last sewer rate adjustment approved October 24, 2005
2005 Sewer Rate Adjustment included:
o Retained variable fee of 22% of total bi-monthly water bill
o Established the fixed fee component of the sewer rate with the new fixed fee being increased annually
each year over a 12 -year period starting in FY 2004-05
• Last sewer rate adjustment in July 2016
• Sewer rate remains unchanged since 2016
5
Utility Rate Study Progression
A Water and Sewer Utility Rate Study was awarded in 2015 and extended in 2017
In 2018 it was determined that a revised "scope of work" was needed to meet the City's
goals and objectives, including:
o REGULATORY
• Opportunity to adjust water rate design to prepare for mandatory water use restrictions legislation (2018)
• Opportunity to restructure sewer rate design to include the new law (SB231) allowing for limited storm water utility
maintenance related expenses
o RATE DESIGN
• Complete restructuring of the sewer rate design to provide a more equitable cost of service to customers
• Update funding needs and service costs
• Opportunity to reduce sewer rates since 2005 capital funding targets have been achieved
o SCOPE
Development and delivery of dynamic water and sewer rate computer models
Incorporate studies to increase assessment fees for street sweeping, tree trimming, and street lights
2019 Utility Rate Study Proposal
In addition, 2015 Utility Rate Study analysis would require substantial reworking to include the
current fiscal year's end data
Staff determined the most cost effective path forward would be to suspend the 2015 Utility Rate
Study analysis
A new Request for Proposal (RFP) for the Water, Sewer, Tree Maintenance, and Street
Sweeping Utility Rate Study (2019 Utility Rate Study) with an updated "scope of work" was
developed to more closely align with City's current goals and objectives
The 2019 Utility Rate Study RFP was released in June 2019 to five consulting firms specializing
in utility rate design and analysis.
11/12/2019
6
2019 Utility Rate Proposal Evaluation
A total of three proposals were received from utility rate consulting firms by the August due date:
NBS Government Financial Services, Temecula, California
NewGen Strategies and Solutions, Annapolis Maryland
Raftelis Financial Consulting, Los Angeles, California
• A Selection Panel consisting of 3 staff members was formed to interview each consultant team
and evaluate their proposals.
Based on this qualification -based evaluation, each consulting firm was ranked based on a set
criteria listed in the RFP.
The Selection Panel ranked Raftelis Team as the most qualified primarily for following reasons:
o Project Team's demonstrated expertise in the field of utility rate setting and design.
Project Team has extensive experience preparing utility rate studies for cities and agencies through -out Los Angeles
and Orange Counties.
o Project understanding and approach
o Quality of their dynamic rate modeling software
Proposition 218 Rate & Fee Adjustment Process
0
• Award 2019 Utility Rate Study
• City Council workshop to review proposed utility rate adjustments and set a Public Hearing
• Staff distributes Public Notice of Proposed Rate Adjustments
• Staff conducts public workshops introducing proposed utility rate adjustments
• City Council holds Public Hearing and considers approval of utility rate adjustments based on
results of the proposition 218 majority protest vote
• If approved, new rate adjustments become effective 30 to 60 days later
11/12/2019
7
Utility Rate & Assessment Fee Adjustment Schedule
11/12/19 — City Council approves Utility Rate Study PSA.
01 /20/20 — Data collection complete.
01 /27/20 — Management Workshop and Scenario development.
• 03/09/20 — CC approves Report(s) and sets hearing date.
• 03/25/20 — Begin community workshops.
• 05/11/20— Hold public hearing on new rates.
07/01/20 — New rates become effective.
Staff Recommendations
City Council Adopt Resolution 6978 approving and authorizing the City Manager
to execute a professional services agreement with Raftelis Financial
Consultants, Inc. to prepare the Water and Sewer Rate Study for a for a total
not -to -exceed amount of $95,133
Staff does not recommend increasing the street sweeping and tree maintenance
fees that were established prior to Proposition 218 requirements.
Cost to form a Tree Maintenance Assessment District: $21,344
c Cost to form a Street Sweeping Assessment District: $31,122
11/12/2019
8
11/12/2019