AgdaPkt 2003-08-11 - Laserfiche WebLink

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S.A -2o • Establish a prudent level of minimum fund reserves • Survey recycled water pricing strategies of other regional agencies with recycled water programs • Develop new facilities fees to recover an appropriate share of costs for water system infrastructure, including the recycled water project, needed to serve new development The findings and recommendations presented in this report were developed with a substantial amount of input from City staff, Kennedy /Jenks Consultants, and the City Council's Utilities Committee. Financing Plan Revisions Since the original report was issued in December 2002, there have been substantial revisions to a number of key assumptions underlying the original recommendations. Key revisions include the following: • No mandatory use ordinance for existing residential customers — On February 3, 2003, the City Council adopted the following policy: Redwood City will not make the use of recycled water mandatory to existing residences or homeowners' associations. • Change in recycled water project alternative — Without a mandatory use ordinance for existing residential landscape meters, the City will need to construct a larger recycled water project in order to meet potable consumption targets. This report assumes that the City will construct Kennedy /Jenks recommended Alternative E, a $43.6 million recycling project, with a single -phase construction schedule. • Change in recycled water use projections — Kennedy /Jenks developed new recycled water use projections corresponding with the new project alternative. The new projections assume that recycled water deliveries will not begin until 2005/06. • Introductory rate structure for recycled water — The City's long -term policy objective is to price recycled water and potable water at the same rates. However, the City anticipates offering a 5 -year rate reduction for recycled water purchases to encourage conversion from potable to recycled water use. The temporary rate reduction will also help offset customer costs for recycled water infrastructure. Recycled water rates will not be subject to drought rate increases. • Substantial wholesale water rate increases — Wholesale water rates from the San Francisco Public Utilities Commission (SFPUC) are projected to increase by about 41% over the next two years, and to almost triple over the next 10 years. These increases are substantially higher than previous wholesale rate projections. Wholesale water purchases currently account for about 40% of annual water enterprise costs. • Potential for grant funding will likely decrease over time — The City anticipates pursuing grant funding for the recycled water project to the maximum extent possible. However, the City's potential for securing grant funding may decrease substantially over time as possible funding sources are drawn down by other agencies. Water Financing Plan ES -2 02/24/03