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AGENDA ITEM REVIEW FORM |
2.D.
Work Session
- Meeting Date:
- 03/03/2021
- Department Head:
- Jorge Perez
- Submitted By:
- Jorge Perez, Billing & Collections Manager, Finance Department, Billing & Collections
Action Requested:
Discussion Item - No Action to be Taken
ITEM:
Discussion and possible directions to staff on any and all matters regarding an update on the status of current utility rates, infrastructure needs, and possible professional analysis to forecast utility rates to fund capital improvement projects. (Jorge Perez, Billing & Collections Manager and Eulogio Vera, Director of Public Works)
SUMMARY:
It is customary for cities and towns to review their utility rates every five (5) years and make any rate adjustments necessary to maintain and improve infrastructure and operations for the residents of the city. Cities contract expert economists as guides to study this complex area of predicting future needs of the city as well as analyzing for any shortfalls in funding from the past.
Back in 2013, the city adopted a five-year utility rate increase plan that was intended to help the water, wastewater, and solid waste enterprise funds become self-sustainable. At that time, the revenues were not sufficient to cover the maintenance and needed improvement expenses. Rate adjustments were necessary to promote the continued growth of the community. The adoption of the rate increases has helped the enterprise funds to invest in new infrastructure to improve the quality of the services that the city provides to its residents. The last increase from the previously mentioned plan was done back on July 1st, 2017.
The city is currently experiencing tremendous growth in residential population but is also experiencing some commercial and industrial growth in east San Luis. The Public Works Department is foreseeing a need for new infrastructure in the near future to be able to provide the services that are being requested in this growing part of the city. Needs will be largely required in water and wastewater systems.
Staff is contemplating the option of a new utility rate and service analysis to be conducted by a professional economist firm. We are looking for guidance on how to properly handle the growth and pay for the future capital investments that are needed in San Luis. Studies that were done in the past, like the one adopted in 2013, did not include the option of an industrial service fee/rate. This is also an answer that we are hoping to obtain from the study.
Capital improvements being forecasted by public works include the possible expansion of both (west and east) wastewater treatment plants as well as increasing the water capacity/production by adding well sites to east San Luis.
Staff roughly estimates the west wastewater plant expansion cost at around 14 million dollars. The east wastewater plant expansion cost will depend on the approach of the utility rate study (what type and volume of growth are expected/needed). In terms of water production and capacity, staff is seeking to invest in a new water well site for east San Luis with cost estimates ranging between 3 and 4 million dollars, again depending on the scope of the utility rate study. Staff is also seeking to invest in an additional water well site at the Public Works yard, where half of the infrastructure is already there; this cost is estimated at about 1.5 million dollars.
Public Works, Finance, and Billing and Collections staff would like guidance on how to proceed with this task.
Back in 2013, the city adopted a five-year utility rate increase plan that was intended to help the water, wastewater, and solid waste enterprise funds become self-sustainable. At that time, the revenues were not sufficient to cover the maintenance and needed improvement expenses. Rate adjustments were necessary to promote the continued growth of the community. The adoption of the rate increases has helped the enterprise funds to invest in new infrastructure to improve the quality of the services that the city provides to its residents. The last increase from the previously mentioned plan was done back on July 1st, 2017.
The city is currently experiencing tremendous growth in residential population but is also experiencing some commercial and industrial growth in east San Luis. The Public Works Department is foreseeing a need for new infrastructure in the near future to be able to provide the services that are being requested in this growing part of the city. Needs will be largely required in water and wastewater systems.
Staff is contemplating the option of a new utility rate and service analysis to be conducted by a professional economist firm. We are looking for guidance on how to properly handle the growth and pay for the future capital investments that are needed in San Luis. Studies that were done in the past, like the one adopted in 2013, did not include the option of an industrial service fee/rate. This is also an answer that we are hoping to obtain from the study.
Capital improvements being forecasted by public works include the possible expansion of both (west and east) wastewater treatment plants as well as increasing the water capacity/production by adding well sites to east San Luis.
Staff roughly estimates the west wastewater plant expansion cost at around 14 million dollars. The east wastewater plant expansion cost will depend on the approach of the utility rate study (what type and volume of growth are expected/needed). In terms of water production and capacity, staff is seeking to invest in a new water well site for east San Luis with cost estimates ranging between 3 and 4 million dollars, again depending on the scope of the utility rate study. Staff is also seeking to invest in an additional water well site at the Public Works yard, where half of the infrastructure is already there; this cost is estimated at about 1.5 million dollars.
Public Works, Finance, and Billing and Collections staff would like guidance on how to proceed with this task.
RECOMMENDATION / SUGGESTED MOTION:
Discussion and possible directions to staff only, no action.
Fiscal Impact
- IS THERE FISCAL IMPACT ASSOCIATED WITH THIS ITEM:
- N/A
- CITY/STATE/FEDERAL FUNDS:
- CITY
- TOTAL:
- N/A
- BUDGETED AMOUNT:
- N/A
- AVAILABLE AMOUNT TO TRANSFER:
- N/A
- ACCT NAME & GL#/REMAINING BALANCE BEFORE PURCHASE:
- N/A
FISCAL IMPACT STATEMENT (IF THIS IS A BUDGET TRANSFER, YOU MUST ATTACH THE BUDGET ADJUSTMENT FORM):
Discussion item only for direction.