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6.3.A. - Page 1 <br /> RE PO RT <br /> To the Honorable Mayor and City Council <br /> From the Cit Mana er <br /> October 22, 2012 <br /> SUBJECT <br /> Loan Agreement between the Equipment Services Fund and the Water Enterprise Fund <br /> to finance the Automated Meter Infrastructure Project (Smart Meter Financing) <br /> RECOMMENDATION <br /> Approve, by resolution, an Interfund loan agreement between the Equipment Services <br /> Fund and the Water Enterprise Fund in the amount of $3,000,000 for the <br /> implementation of the Automated Meter Infrastructure (AMI) Project and an <br /> appropriation amendment for the acquisition of these meters. <br /> BACKGROUND <br /> Redwood City has a total of 23,217 water connections. This includes all commercial, <br /> industrial, municipal, residential and irrigation accounts. Of the total accounts, 18,688 of <br /> the accounts are for single family residential meters. The City's Residential Water Meter <br /> Replacement Program Phase I will replace 7,850 single family residence water meters <br /> throughout the City with Automated Meter Infrastructure (AMI). The new water meters <br /> use radio waves to send hourly meter readings directly to an antenna and then transmit <br /> the data to the City via an internet connection. Automated email notifications can be <br /> sent to customers to notify them of water use in excess of more than 5% of their <br /> allotment and in near real-time in the event of a water leak. <br /> The City has received a grant toward this project from the United States Department of <br /> Interior, Bureau of Reclamation in the amount of $300,000. The cost of the total <br /> replacement program is $3,000,000. <br /> This project will assist the water conservation program, and staff calculates a possible <br /> annual water savings of 540 acre-feet. Further, this project provides automatic remote <br /> reading and recording for water meters, eliminating the need for manual reading of the <br /> water meters, as is the current practice. The City also benefits with a decrease in <br /> operation and maintenance costs related to water meter readings. The overall program <br /> savings is estimated at $100,000 per year. <br /> ANALYSIS <br /> Since the Water Enterprise Fund (WEF) does not have sufficient funds to finance this <br /> project and maintain an appropriate level of emergency reserves it is recommended that <br /> the acquisition of these meters be financed through a $3 million loan from the <br /> Equipment Services Fund (EFS). As of August 31, 2012 the ESF had about $8.7 million <br />