3A Public Hearing 2010 0621 - Laserfiche WebLink

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Sewer and wastewater treatment fee increase 2 June 21, 2010 last requirement of the City's application for an SRF funding commitment from the State Board is governing body action on a comprehensive rate study showing adequate reserves and debt service coverage. The Water Pollution Control Enterprise Fund has along-standing policy of developing user charges that ensure equity among ratepayers. In December of 2007, the City entered into an agreement with Municipal Financial Services for the development and evaluation of wastewater rates. The rate setting objectives are to adequately fund sewer utility operations, maintenance, capital replacement expenditures and debt service obligations, while keeping rates as competitive as possible and maintaining a prudent level of reserves. In addition, the City sought to modify the somewhat complex methodology of the past rate consultant (Lawson Management Consultants) making it easier to understand for rate payers and to ensure equitable allocation among customer classifications. The Wastewater Rate Study was completed in April of 2010 and includes $46 million in capital costs to complete the plant upgrades and rehabilitation work. The rate model anticipates this project will be paid through a combination of cash and debt. The Rate Study is for 5 years and recommends a maximum 5% rate increase for each year through Fiscal Year 2014-15. The change to a simplified methodology, which eliminates the demand charge currently billed to Industrial Users, will result in uneven adjustments in the first year. In years two through five, wastewater rates will be applied uniformly for all customer classes. The increase could be less than the 5% maximum in subsequent years if bids come in low, new businesses start up, or costs of operation are lower than projected. Wastewater fees will be presented to the City Council annually for review and approval. On March 9, 2010, the City Council Facilities and Transportation Committee forwarded its recommendation for the Plant Rehabilitation Project and associated rate increase to the full Council. On April 19, 2010 City Council authorized mailing notice of proposed sewer and wastewater treatment rate increases, setting a 45 day protest period and public hearing in accordance with Proposition 218 requirements. In accordance with the procedures of Proposition 218, the City Council properly noticed a proposed wastewater rate increase to affected property owners, opened the prescribed protest period, and declared that a public hearing to hear testimony and receive written protests to the rate increase would be held at 7 p.m., June 21, 2010 at San Leandro City Hall. Upon the conclusion of the public hearing, the City Clerk must count the number of valid protests received to determine whether a majority protest exists. If a written protest against the proposed rate increases is presented by a majority of the affected property owners, then the City may not impose the rate increase, and the City has complied with Prop. 218. This requires a majority of all affected property owners to protest the fee under the traditional "silence equals consent" rule. Only one protest per parcel may be counted in determining whether a majority protest exists. However, if the City Clerk determines that a majority protest does not exist, the City has complied with Prop. 218, and may raise the wastewater rates in a subsequent action. For Fiscal Year 2010-11, the published rate must be adopted due to the change in rate calculation methodologies.