Laserfiche WebLink
REPORT <br />To the Honorable Mayor and City Council <br />From the City Manager <br /> <br />June 27, 2016 <br /> <br />SUBJECT <br />Approval of Water Utility Service Rates and Charges <br /> <br />RECOMMENDATION <br />Waive Second Reading and Adopt an Ordinance Amending Redwood City Municipal <br />Code Section 38.5 (Water Service Charge) <br /> <br />BACKGROUND <br />In 2015, the City retained Bartle Wells Associates to develop a long-term financial plan <br />and rate study for the City’s water utility enterprise. While the City has annually <br />reviewed and adjusted water rates, the actual rate structure had not been independently <br />reviewed in many years. The City’s key goals while developing the proposed water <br />rates and structure were to: (1) recover the costs of providing service; (2) ensure <br />charges are fair and equitable to all customers; (3) create rates that are easy to <br />understand and implement; (4) comply with the requirements of the California <br />Constitution, Article 13D, Section 6 (i.e. Proposition 218) and the general mandate of <br />Article 10, Section 2 that prohibits the wasteful use of water; and (5) support the long- <br />term operational and financial stability of the water utility. <br /> <br />Conclusions from the rate study support a proposed average annual water rate increase <br />of approximately 6.8% per year for the next three fiscal years, starting with 2016-17 and <br />continuing to 2018-19. Even with the proposed increases, the City’s water rates are <br />projected to remain in the lower-to-middle range compared to other regional agencies. <br /> <br />ANALYSIS <br />As an “Enterprise” fund, the City’s water utility is legally required to be self-sustaining. <br />All water fund expenditures must be directly related to operations, maintenance, repair, <br />and replacement of the utility. Revenues collected from rates and other water charges <br />are segregated from other municipal funds and uses, and cannot be commingled with <br />other activities. <br /> <br />Water rate increases are being proposed to eliminate annual budget deficits and pay <br />for: <br /> <br />· Wholesale Water Rate Increases – The City purchases 100% of its potable water <br />supply from the San Francisco Public Utilities Commission (SFPUC). The <br />6.4.A. - Page 1