AgdaPkt 2006-06-26 - Laserfiche WebLink

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7A The Commission's final action occurred on May 11> 2006 and resulted in revisions to their Page 3 1 o-year Plan and revenue needs. Attachment 1 of the Staff Report illustrates the changes to the fevenue demand from the initial proposed budget to the fevised proposed budget that shows the changes to the SBSA figures. Staff is recommending that City Council proceed with the recommended sewer rate increase to $33.00 with the understanding that an additional increase will be required later in the fiscal year, to meet the now higher SBSA costs. The City's payment of $1,984,162 to the SBSA reserve is due on August 15,2006. The Sewer Enterprise Fund does not have sufficient cash available for this payment without significantly disrupting planned capital projects which may cause operational or health problems. PWS staff and the Finance Director recommend that funds from the Water Enterprise Fund (rate stabilization account) be lent to the Sewer Enterprise Fund to provide sufficient cash to make this payment to SBSA. The terms of such loan would be structured so as not to disadvantage one fund at the expense of the other. Should Council concur with this method of financing the Sewer Enterprise Fund's cash needs, staff will return to Council with the necessary documentation to affect this inter-fund loan. The Sewer Fund is an "enterprise" fund, which by law is self-sustaining. All expenditures must be directly related to operations, maintenance, repairs and system replacement. Revenues must be segregated from other municipal funds and uses, and cannot be co- mingled with other activities. As this matter now goes before the full City Council for public hearing fOf consideration and final decision, the recommended increase in sewer bills changes the City's position in the benchmarking study (attached) of other neighboring agencies: Redwood City is in the top eight most cost efficient sewer service providers among the 17 surveyed agencies (one year ago, Redwood City was 5th of 14 agencies surveyed). If approved, the new residential sewer service charge would place Redwood City bills 6.1 % below the median and 27% below the average cost of sewer services among the bench marked agencies. Alternatives There is not a viable, financially sound alternative to provide for the increased cost of sewer services to the community. The City Council could decline to raise the service charge, which would result in lost revenues and a fund deficit. Alternatively, the City Council could consider reducing the level of service to the collection system; however, operation and maintenance to the collection system must be maintained at a level that protects public health and safety. A reduction in service could result in greater risk to the environment and the public. Fiscal Impact If the Council approves the Utilities Committee's recommended changes to the Sewer Service Charge, then a Redwood City residential customer's bimonthlv sewer utility bill will increase by $13.46 or 26%, from $52.54 to $66.00. Increases would take effect on August 25,2006, a full 60 days (residential billing period) following the Council's d . ion. f/ Peter Ingram Everett Public Wor1<s Se IceS DIrector City Manager 30f4 ._,_. ,...__~".. ._'>m..___"...."~...."."..,~.~~,...."...,__~..~_'..-.____......._"_,.,_'^_""-.u_..___,~._,_,...-~,_.