HomeMy WebLinkAboutResolution 2007-022 N.C.S. 01/22/2007 Resolution No. 2007-022 N.C.S.
of the City of Petaluma, California
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PETALUMA
ADOPTING A NEW RATE SCHEDULE FOR WATER SERVICE AND RESCINDING
RESOLUTION NO. 2002-191
WHEREAS, the Petaluma Municipal Code Title 15 provides for the establishment and
operation of a water system and the charging of certain fees and charges; and,
WHEREAS, Chapter 15.16 provides the setting of certain fees and charges by
resolution; and,
WHEREAS, water services provided by the City include, but are not limited to,
pumping, storage, and distribution of water purchased from the Sonoma County Water Agency
and pumping, storage and distribution of groundwater; and,
WHEREAS, the City retained Bartle Wells Associates to develop a Wastewater and
Water Rate Study and Financial Plan ("Study"); and,
WHEREAS, the Petaluma City Council conducted a public meeting on the proposed
rates pursuant to the Study on October 16, 2006; and,
WHEREAS, notices of proposed rate increases and the public hearing were sent to
record owners of properties that would be impacted by the proposed increases on October 19,
2006; and,
WHEREAS, a notice on the proposed rate increases and the public hearing was
published in the Petaluma Argus Courier on November 1, 2006; and,
WHEREAS, the Petaluma City Council conducted public hearings on the proposed rate
increases on December 4, 2006, December 18, 2006, and January 22, 2007, and received
testimony and considered all evidence presented regarding the proposed rate increases; and,
WHEREAS, a majority of the record owners of properties that would be impacted by the
rate increases did not protest the increases; and,
WHEREAS, after due consideration, the Petaluma City Council finds based on the Study
that:
(l) The proposed rates as presented herein are necessary to achieve full recovery of the
costs of providing water services to residents and businesses in Petaluma;
(2) The proposed rates as presented herein will not generate revenue in excess of the cost
of providing water services;
(3) The proposed rates as presented herein will not be used for purposes other than
-providing water services;
Resolution 2007-022 N.C.S. Page 1
(4) The rates or charges imposed on any parcel or person as an incident of property
ownership shall not exceed the proportional cost of the service attributable to the
parcel;
(5) Proper notice of the proposed rate increases were given to record owners of properties
that would be impacted by the proposed increases, as prescribed by law; and
(6) A majority of record owners of properties that would be impacted by the proposed
increases did not protest the proposed rate increases; and
WHEREAS, adoption of revised rates and charges pursuant to this resolution involves the
establishment, modification, restructuring or approval of rates and charges, as identified and
analyzed in the Study, including rates and charges to obtain funds for meeting operating
expenses, purchasing or leasing supplies, equipment or materials, meeting financial reserve
needs and requirements and/or obtaining funds for capital projects necessary to maintain service
within existing service areas. Therefore, adoption of this resolution setting rates and charges is
not a project under the California Environmental Quality Act pursuant to California Public
Resources Code Section 21080(b)(8)(D) and 14 Cal. Code Regs. Section 15273.
NOW, THEREFORE, BE IT RESOLVED, that the Petaluma City Council. hereby rescinds
Resolution 2002-191 and adopts this resolution in its stead, effective February 1, 2007.
ARTICLE I
GENERAL
SECTION 1.1 PURPOSE. (A) Findings. The above recitals are hereby declared to be
true and correct and to be findings of the City Council of the City of Petaluma and are made a
part of this resolution.
(B) Revenue. The purpose of the water service charge is to raise revenue for the cost of
operation and maintenance of the City of Petaluma's water utility used for the distribution,
pumping and storage of water and for payment of principal and interest on bonds and capital
recovery costs.
(C) Resolution. The purpose of this resolution is to establish a method of sharing the
cost of the operation and maintenance of the City's water utility among the users of water
service.
(D) Study• This resolution and the water charges established in this resolution are
based on the Wastewater and Water Rate Study and Financial Plan prepared by Bartle Wells
Associates ("Study"). The Study is attached to and made a part of this resolution as Exhibit A.
ARTICLE II
RATES
SECTION 2.1 WATER SERVICE CHARGE. (A) Potable and Recycled Water.
The monthly service charge for potable and recycled water shall be as set forth in Table 1.
~ This charge does not apply if superseded by a recycled water user agreement.
Resolution 2007-022 N.C.S. Page 2
Table 1. Monthly Water Service Charges
Meter Size Monthly Service Charge on Billings Rendered On or After the Dates
Indicated Below
Feb. 1, 2007 January 1, January 1, January 1, January 1,
2008 2009 2010 2011.
5/8" $4.47 $4.92 $5.17 $5.42 $5.69
$4.47 $4.92 $5.17 $5.42 $5.69
1" (residential) $5.37 $5.91 $6.20 $6.51 $6.84
1" $5.55 $6.11 $6.41 $6.73 $7.07
1.5" $9.24 $10.72 $11.25 $11.81 $12.40
2" $13.84 $16.05 $17.65 $18.54 $19.46
3" $26.73 $33.14 $36.45 $38.27 $40.19
4" $36.00 $44.64 $49.10 $51.55 $54.13
6" $52.00 $64.48 $70.92 $74.47 $78.19
(B) Monthly Service Charge Annual Increases. Beginning January 1, 2012 and each
January 1 thereafter, fixed monthly service charges shall increase by three and one-half percent
(3.5%).
Section 2.2 POTABLE WATER COMMODITY CHARGES. (A) Potable water
w commodity charges shall be as set forth in Table 2.
Table 2. Potable Water Commodity Charges
Commodity Charge on Billings Rendered On or After the Dates Indicated
Tier or Customer Below er hct
Class Feb. 1, January 1, January 1, January 1, January 1,
2007 2008 2009 2010 201.1
Single Family
Residential (monthly)
Tier 1 (0-9 hc~ $2.31 $2.50 $2.70 $2.83 $2.94
Tier 2 (10-18 hcfl $2.61 $2.87 $3.10 $3.25 $3.41
Tier 3 (19-24 hc~ $3.00 $3.39 $3.73 $4.07 $4.35
Tier 4 (25+ hc~ $3.24 $3.75 $4.13 $4.50 $4.82
Multi-Unit
Residential, Business, $2.44 $2.64 $2.80 $2.96 $3.14
Industrial, Public
(B) Potable Water Commodity Charges Annual Increases. Beginning January 1, 2012
and each January 1 thereafter, commodity charges shall increase by three and one-half percent
(3.5%).
SECTION 2.3 RECYCLED WATER COMMODITY CHARGES. The commodity
charge for recycled water use shall be as shown in Table 3.
Resolution 2007-022 N.C.S. Page 3
Table 3. Recycled Water Commodity Charge
Commodity Charge on Billings Rendered On or After the Dates Indicated
Below er he
Feb. 1, January 1, January 1, January 1, January 1,
2007 2008 2009 2010 2011
$1.46 $1.58 $1.68 $1.77 $1.88
SECTION 2.4 PRIVATE FIRE PROTECTION. (A) Private Fire Protection Services.
For services used exclusively for fire protection, including sprinklers, private hydrants and other
fire lines, the service charge shall be as follows:
Connection Size (inches) Monthly Service Charge
1 '/2 $3.90
2 $5.64
3 $8.40
4 $11.22
6 $16.80
8 $22.44
(B) Water Consumed for Fire Protection. In addition, all water consumed for private fire
hydrant testing or fire suppression or other uses shall be charged to the property owner at the
"business" commodity rate in Table 2.
ARTICLE III
OTHER CHARGES
SECTION 3.1 DELINQUENCY AND SERVICE RESTORATION CHARGES. (A)
Delinquenc~ges. If payment is not made within thirty (30) days after mailing, it is
delinquent, and a late charge of $10 will be levied.
(B) Restoration Charms When service is discontinued because of delinquency in
payment of water bill, the service shall not be restored until all charges, including a restoration
charge, have been paid.
(1) Restoration Chafe During Norn~al Working Hours (8:00 AM - 4:30 PM, Monday
through Frida~cepting City holidays). The restoration charge applicable for work requested
to be performed during normal working hours of the Department of Water Resources and
Conservation will be $40.
(2) Restoration Charge After Normal Workins; Hours. The restoration charge
applicable for work requested to be performed after normal working hours will be $60.
Resolution 2007-022 N.C.S. Page 4
SECTION 3.2 CHARGE FOR RETURNED CHECKS. A fee of $25 shall be charged
for each check tendered as a payment to the City that is returned from the bank for non-sufficient
funds.
SECTION 3.3 TURN-ON CHARGE FOR NEW ACCOUNTS. A charge of $1.5.00
shall be paid for turning on a service for new accounts during normal working hours. A charge
of $60 shall be paid for turning on a service for new accounts after normal working hours.
SECTION 3.4 TEMPORARY WATER SERVICE CONNECTION. Wherever feasible,
recycled water shall be used for temporary construction uses. (A) Meter Deposit. Deposits are
required at the time of application. Lost meters will result in forfeiture of deposit. The deposit
may be applied to the closing bill and any remaining amount refunded to the customer.
(1) 1" or Smaller Service Meter. A deposit of $100 shall be required fora 1-inch or
smaller service meter set at curb stop.
(2) Bride Meter. Bridge meters are used to "bridge" from the City's water system to a
project's water system for the purpose of testing buried water infrastructure and for providing
site water. A deposit of $600 shall be required for a bridge meter.
(3) Fire Hydrant Meter. A deposit of $1,000 shall be required for a fire hydrant meter.
(B) Service Charges.
(1) 1" or Smaller Service Meter. A $1.00 per day service charge shall be applied for
water service, irrespective of the quantity used.
(2)Brid~e Meter or Hydrant Meter. A $2.00 per day service charge shall be applied for
water service, irrespective of the quantity used.
(C) Commodity Charge. The potable water commodity charge shall be the same as the
"business" class in Table 2. The recycled water commodity charge shall be as shown in Table 3.
(D) Fees. Fees associated with temporary city meters are shown below.
Descri tion Fee
First time meter set $45
Unable to set/test meter $30
Relocate meter $45
Rush meter set/relocate (if set/relocate request is within $80
24 hours of ermit issuance or relocation re uest)
ARTICLE IV
CITY PROVIDE SERVICES
SECTION 4.1 CITY PROVIDED SERVICES. (A) Hot Taps. Hot tap fees shall be
paid prior to service. Hot taps will be charged as follows:
Size of Hot Ta (inches) Hot Ta Fee
3/4 - 2 $200
4 - 6 $400
8 $500
10 - 12 $750
Resolution 2007-022 N.C.S. Page 5
(B) Other Services. The City may install domestic or fire services, or provide other
related services, upon request. The cost for each service will be based on an estimate prepared
by the City. The requestor will provide a written request accompanied by a drawing to show the
location of the proposed service. The City will provide an estimate to the requestor. When the
check for the service is received from the requestor the work order will be forwarded to City
crews for installation and coordination. Final costs will be based on actual time and materials
costs plus a 20% administrative charge.
ARTICLE V
PENALTY CHARGES
SECTION 5.1 TAMPERING WITH CITY METERS. The charge for tampering with
City meters or operating a meter valve is $50 for each occurrence.
SECTION 5.2 ILLEGAL OR UNAUTHORIZED USE OF FIRE HYDRANT. The fee
for any illegal or unauthorized use of a City hydrant shall be $500 for each occurrence plus $50
for each additional day that such use occurs.
ARTICLE VI
SECURITY DEPOSITS
SECTION 6.1 AMOUNT. The City may impose a security deposit of $100 to open an
account or for instances of delinquent payments.
SECTION 6.2 APPLICATION OF DEPOSIT. The City may apply the security deposit
to an account owing to the City, which is delinquent for more than thirty days.
SECTION 6.3 REFUND. Any amounts remaining in the security deposit will be
returned to the customer without interest, upon termination of the service and payment of all
charges, fees and indebtedness owed to the City by the customer.
ARTICLE VII
ADJUSTMENT OF BILLS
SECTION 7.1 GENERAL. The City may, upon written request of a customer, supported
by repair bills or other appropriate documentation, adjust such customer's bill in the case of loss
of water due to circumstances beyond the reasonable control of such customer, such as
mechanical malfunction, blind leak, theft of water, vandalism, unexplained water loss or other
unusual or emergency conditions. (A) Determination. A determination of whether an
adjustment is granted shall be made at the sole discretion of the City. In making the
determination, the City may take into account the cause of water loss, the customer's
opportunity, if any, to detect it, any negligence or fault of the customer in connection therewith,
and the promptness with which the water loss was discovered, stopped and repairs made.
SECTION 7.2 WATER BILL ADJUSTMENT. The customer's adjusted bill shall be
calculated as follows. (A) Average. The "average usage" shall equal the average used
during the same period in the previous one or two years, whichever is available. If the applicant
Resolution 2007-022 N.C.S. Page 6
has not been a customer for a sufficient length of time to make such determination, then the
amount of water used shall be at the discretion of the City.
(B) Excess Usage. From the total water consumption shown on the bill submitted for
correction, the "average usage" will be deducted. The resulting amount is the "excess
usage."
(C) Applicable Rates.
(1) Sin>;le Family Residential Customers. The regular rates will apply to the "average
usage" and 50% of the Tier 1 rate will apply to the "excess usage." The customer's
bill shall then be the total of the bill for the "average usage" amount plus the bill for
the "excess usage" amount. The total of these two amounts will be the amount the
customer must pay for water usage during the period covered by the adjusted bill.
(2) Multi-Family Residential and Non-Residential Customers. The regular rates will
apply to the "average usage" and 50% of the regular rate will apply to the "excess
usage." The customer's bill shall then be the total of the bill for the "average usage"
amount plus the bill for the "excess usage" amount. The total of these two amounts
will be the amount the customer must pay for water usage during the period covered
by the adjusted bill.
(D)Limitations. Water loss adjustments will be limited to two billing periods, and will also
be limited to one adjustment every thirty-six months. The thirty-six month period begins
the first month of the billing period following the last billing period for which the loss
water adjustment was prepared. No adjustments will be made for water delivered after
sixty days after the City issues the water bill with excessive use.
(E) Adjustments Under $10. No adjustments shall be made for an amount less than ten
dollars ($10).
SECTION 7.3 WASTEWATER BILL ADJUSTMENT. This section addresses
adjustments to wastewater bills due to water loss. (A) Single Family Residential Customers.
Because wastewater charges for single family residential customers are based on average winter
time water usage, water losses will not affect the wastewater charge unless they occur during the
winter averaging period. If the adjustment to the water bill occurs during the wastewater winter
average period, the wastewater winter average will be adjusted to the prior year's winter average.
If the customer has not established a wastewater winter average for the previous year, the winter
average amount shall be as determined by the City.
(B) Multi-Family Residential and Non-Residential Customers.
(1) For Water Leaks That Occur Outdoors. If an adjustment is deemed appropriate for a
water leak that occurs outdoors, the wastewater portion of the bill will be adjusted as follows:
(i) First, the City will calculate "average usage." The "average usage" shall equal the
average used during the same period in the previous one or two years, whichever is
available. If the applicant has not been a customer for a sufficient length of time to
make such deternination, then the amount of water used shall be at the discretion of
the City.
(ii) Then the "excess usage" portion of the wastewater bill will be calculated based on the
customer's water usage during leak period less "average usage." The wastewater bill will then
be reduced by the "excess usage" amount.
(2) For Water Leaks That Occur Indoors. If an adjustment is deemed appropriate for a
water leak that occurs indoors, the wastewater portion of the bill will be adjusted as follows:
(i) First, the City will calculate "average usage." The "average usage" shall equal the
average used during the same period in the previous one or two years, whichever is
available. If the applicant has not been a customer for a sufficient length of time to
Resolution 2007-022 N.C.S. Page 7
make such determination, then the amount of water used shall be at the discretion of
the City.
(ii) Then the "excess usage" portion of the wastewater bill will be calculated based on the
customer's water usage during leak period less "average usage." The wastewater bill
will then be reduced by 50% of the "excess usage" amot.tnt. For example, if the
wastewater bill with excess usage is $150, and the wastewater bill based on prior use
is $100, the difference is $50. 50% of the difference is $25. This example
customer's wastewater bill would then be reduced by $25.
Under the power and authority conferred upon this Council by the Charter of said City.
RG(; ERGNCE: I hereby certify the foregoing Resolution was introduced and adopted by the ppro to
Council of the City of Petaluma at a Regular meeting on the 22"~ day of January, f nr
2007, by the following vote:
City Atto ney
AYES: Barrett, Harris, O'Brien, Rabbitt, Mayor Torliatt
NOES: Vice Mayor Nau
t
ABSENT: None
ABSTAIN: None /
r.
ATTEST:
City Clerk Mayor
Resolution 2007-022 N.C.S. Page 8
EXHIBIT A TO RESOLUTION ADOPTING
WATER REVENUE PROGRAM
WATER & WASTEWATER RATE STUDY AND
FINANCIAL PLAN
Resolution 2007-022 N.C.S. Page 9
The City's water resources rate structures were previously analyzed in 2001. The information
from the 2001 analysis resulted in the following key changes to the rate structure:
• To encourage water conservation, water rates were converted from a flat per unit rate stricture
to increasing block or tiered rates.
• To encourage water conservation and provide better equity, residential wastewater charges
were converted from a fixed. monthly flat fee to a consumption charge, based on average winter-
time water usage.
The Department of Water Resources and Conservation engaged the services of Bartle Wells
Associates (Berkeley, CA)Z to develop a wastewater and water rate study and financial plan. The
rate study analyzed the approved budgets for FY 06-07, prior year revenue and expenditures,
projected future revenue, and the projected future costs of operations and maintenance. The
water and wastewater models are attached.
Water Analysis
Our goal was to build a comprehensive financial model along with water rate recommendations
that allow the City to:
a Meet current and future operating expenses of the utility;
® Support the replacement and rehabilitation of existing infrastructure;
® Support the construction of new capital facilities required for growth and expansion of the
system; and
® Where possible, minmize the impact of required rate adjustments on the City's utility
customers.
Existing Rates and Charges
The water enterprise bills customers bi-monthly. There are two components to water service
charges. The City. assesses a fixed, bi-monthly charge based on the size of the meter in service.
For a typical single family dwelling with a 5/8" meter, this charge is currently $7.58 for two
months of service.
The City also assesses a variable, consumption-based charge for all water consumed by the
customer. Customers are billed a quantity rate for each hundred cubic feet (hcf) consumed. For
residential customers, these rates are "tiered" such that the cost of the first twenty units of water
in a two month period are currently $2.16 per hcf, while the unit cost of the next thirty two units
of water (up to 52 total hcf in two months) are billed at a quantity rate of $2.37 per hcf. All
consumption. above 52 hcf in a two month period is billed at a rate of $2.61 per hcf.
Commercial customers pay one flat rate for all water consumed ($2.07).
The City also assesses aone-time capacity charge (also known as a connnection fee) to new
customers connecting to the water system. This fee is variable and is calculated seperately for
each new connection. They vary based on whether or not the water infrastructure was City- or
developer-provided.
BWA is a public finance consulting firm with over 40 years' experience providing independent, objective financial advice to public
agencies throughout California.
Resolution 2007-022 N.C.S. Page 10
Water Enterprise Finances
Revenues The City's water enterprise generates the vast majority of its revenues from service
charges and water sales. For the year ending June 30, 2006, the City collected approximately
$S.5 million in water sales revenue and $900,000 in fixed monthly service charges. During the
same time period, the City also collected approximately $1.1 million in water connection fees.
This is significantly above the five-year average annual connection fee revenue collected, which
is approximately $620,000.
The balance of the water enterprise's revenue comes from interest earnings and other
miscellenous revenues.
Expenses Operating expenses for the water enterprise include salaries and benefits for City staff,
the cost of purchasing water, maintenance on water lines and connnections, and utilities for
pumping and delivery of the water. The water enterprise also transfers a portion of its revenue to
the City of Petaluma's General Fund to cover its share of administrative and billing costs
incurred by other city staff (such as in the utility billing office). Total operating expenses (before
debt service) for the year ending June 30, 2006 were $7.4 million, with another $1.7 million in
intragovernmental transfers to the General Fund.
Debt The water enterprise issued bonds in 20013. Annual debt service on this issue is
approximately $650,000, and there is approximately $9 million in principal outstanding. Debt
covenants require that the City generate operating revenues in excess of expenses at least 1.25
this amount. The City is permitted to maintain a rate stabilization and debt service reserve fund
for the purposes of meeting this coverage requirement.
Notably, the City has been very close to missing its debt coverage requirements over the past two
fiscal years. Net operating revenues have been insufficient to meet debt service, with coverage
being met by the existence of sufficient operating reserves. Should the City wish to issue more
debt in early 2007, rates would certainly have to be increased to meet this shortfall.
Fund Reserves As of July 1, 2006, the water enterprise had approximately $2.6 million in its
operating fund. This amount includes a 60-day operating and maintenance reserve of
approximately $1.6 million and an emergency capital replacement and improvement reserve of
approximately $600,000. The City does not, as of Oct 1, 2006, maintain a rate stabilization or
debt service reserve, but there are plans to form one.
Capital Program
The water enterprise will incur capital costs associated with the construction of the Paula Lane
Reservoir No. 2 in late 2006/07. Total design and construction costs are estimated at $2 million.
The City is also planning to install automatic read meters for all customers over the next 5 to 7
years. It is estimated that this project will cost approximately $500,000 per year during that
time.
Additional capital costs include the annual repair and replacement of aging water mains. The
City currently invests about $500,000 per year in its water main and service replacement
3 Proceeds from the 2001 bonds were used for payment of prior bonds ($4.6 million), which had an uncompetitive interest rate,
acquisition of property for the Paula Lane Reservoir No. 2 ($424,000), .water main replacement projects ($2.2 million), and
construction of the Water Field Office ($2.6 million).
Resolution 2007-0'22 N.C.S. Page 1 l
program. In order to adequately maintain the City's water infrastructure, this investment will
increase to $1,000,000 per year.
Future Debt
The City anticipates selling water revenue bonds in early calendar year 2007 to fund constriction
of the reservoir, increase water main and service replacement investments, and the installation
automatic read meters. The size of the issue would be approximately $6.5 million. The sale of
these bonds is contingent. on passing new rates effective January 1, 2007.
Cash Flow Pro'ecl tion
Bartle Wells developed aten-year cash flow projection for the water enterprise. The projection
allows us to determine if rate increases are needed to meet future operating expenses as well as
the capital program, and if so, what the size of these rate increases would be. Our projections are
built on a number of assumptions. Among them:
® Operating expenses are projected to increase 3.5% per year;
® The City is expected to grow at an annual rate of .5%. This would add approximately 100
new water customers to the enterprise annually;
® Annual connection fee revenue was estimated using the 5-year annual average;
® The City is interested in increasing the number of water tiers from three to four in order to
increase the conservation incentive of the rate structure. We have proposed that the City set
these tiers at 0 - 18 hcf, 19 - 36 hcf, 37 - 48 hcf, and all use above 48 hcf for bi-monthly use,
or 0 - 9 .hcf, 10 - 18 hcf, 19 - 24 hcf, and all use above 24 hcf for monthly use. This
effectively lowers the first tier by a small amount (from 20 hcf to 18 hcf) and ensures that
more customers will be billed for water consumption in the third tier (for water use above 36
hcf). Additionally, the City is interested in "steepening" the tiers, that is, making the
differences between each new tier larger. This would make the top tier water more expensive
(relative to the lowest tier) than it is now. Taken together, both of these changes to the tier
structures should serve to increase the incentive to conserve water.
® Analysis of the fixed meter charge indicates that they are not currently in proportion with
AWWA recommended meter ratios and demand factors. New meter charges should be
phased in over three years to reduce or, if possible, eliminate these improper ratios.
® With such a large portion (about 90%) of the water enterprises revenues coming from
variable consumption water sales, it is particualrly important to verify estimates of the
amount of water sold. Our revenue projections are based on total water use of 3.8 million
hcf. This number is below the three-year average annual water sales and is chosen so as not
to overestimate water sales revenue.
o Our cash flow projection does not take into account a projected increase in the water
connection fee that could take place in the next six to twelve months. The increase in this
capacity fee is predicated on approval of the general plan and the projects included in it.
While this plan would also require significant capital improvements above and beyond those
currently included in this plan, the increased connection fee revenues would offset these
additonal projects.
Resolution 2007-022 N.C.S. Page 12
Rate Recommendations
Residential Our analysis demonstrates that the City will require a series of moderate,
incremental rate increases for its residential customers over the next five years. These increases
are needed to meet rising costs of operation, increased capital spending on the replacement of
aging water mains (which will be funded by rates), and new debt service projected at $485,000
annually, starting in fiscaL2007/2008.
Taken as a whole, the City needs to increase overall operating revenues somewhere between
14%. and 16°fo between now and July 1, 2008. BWA has developed a rate schedule that allows
the City to meet these revenue requirements while minimizing the impact of the increases on
residents. It is recommended that the City pass two rate increases, one on January 1, 2007, and
the second one year later, and that these rate increases be followed by a series of three smaller
annual rate increases designed to allow the utility to keep up with cost inflation. The proposed
water rate changes are illustrated in Table 1.
Because the City uses a tiered water rate structure for its residential customers, the proposed rate
increases will not affect all users uniformly. In fact, there is no way to put an exact- percentage
increase on each users bill. It will, by definition, vary according to how much water a consumer
uses. However, because we have "steepened" the tiers, in general the highest residential water
users will see the highest percentage increases. Low water users will see comparatively small
increases.
In order to better understand how these recommended rate increases will impact water bills, we
have developed "composite" rate increase numbers to show how "average" single family
residential bills will change from one year to the next. We developed three hypothetical
customers: a "low" user who uses 8 hcf per monthly; an "average" user who uses 12 hcf per
month; and a "high" user who uses 18 hcf per month. As illustrated in Table 2, in no year will
an "average" customer of water experience more than a 10% rate increase. For the "average"
customer, the annual water rate increases for the next 5 years would be 10%, 9%, 8%, 5%, and
4%. The impact of adding the fourth tier is evident in the "very high" customer's bill, which will
increase by 20% in 2007, as compared to the "low" customer's anticipated increase of 9%.
Commercial Commercial and mult-family residential customers are not billed in tiered rates; in
addition to their bi-monthly meter charge, they pay one flat rate for all water consumed. This
rate is currently $2.07, an amount below the first tier water price .for residential customers
($2.16). City Management recommends that this quantity rate be increased to eliminate this
"discounted" water; the proposed rate schedule includes an 18% increase for the quantity rate on
January 1, 2007 for commercial customers. This puts commercial water between the first and
second tier for single family residential users. City Management recommends that the
commerical quantity rate stay between the first and second tier rate for residential users from this
point forward. Sample commercial and multi-family water bills are illustrated in Table 2.
Residential Char eg Comparison
How do Petaluma's current and proposed water service charges compare to other communities?
This comparison is provided in Table 3. As shown in Table 3, Petaluma's proposed rate for
2007 will remain less than average for the agencies included in the comparison.
Resolution 2007-022 N.C.S. Page 13
Wastewater Analysis
The City engaged Bartle Wells Associates (BWA) to also develop a wastewater rate study and
financing plan. The goal was to build a comprehensive financial model with rate
recommendations that allow the City to:
® Meet current and future operating expenses of the wastewater utility;
® Support the replacement and rehabilitation of existing infrastructure;
® Support the construction of new capital facilities, including the Ellis Creek Water Recycling
Facility; and
o Where possible, minimize the impact of required rate adjustments on rate payers.
Existing Rates and Charges
The wastewater enterprise bills customers bi-monthly. There are two components to each bill.
The City assesses a fixed, monthly charge based on customer class (residential, commerical,
industrial). This fixed charge is currently the same for all classes at $9.11 per month.
The City also assesses aconsumption-based charge for wastewater discharged to the collection
and treatment system. Because wastewater connections themselves are not metered, this charge
is based on water consumption. Customers are billed one fixed consumption amount for the
entire year. The amount is set each July to equal the average winter usage of a customer during
the past year. In this way, the utility is adjusting for water used for irrigation and other outdoor
purposes that is not discharged to the sewer system.
All residential users are billed a flat quantity rate for their wastewater discharge. These rates are
not tiered. The current quantity rate is $4.32 per hundred cubic feet (hcf).
Under the current rate structure; a single family residence that discharges 15 hcf per bi-monthly
billing cycle to the sewer system would be billed $83.01 (2 x $9.11 + 15 x $4.32).
Commercial customers are grouped into three classes, based on the strength of the wastewater
discharged to the sewer system. Low strength users are billed at a quantity rate of $4.30 per hcf;
medium strength users at a quantity rate of $5.11 per hcf; and high strength users are billed at a
rate of $6.62 per hcf.
Industrial users are billed according to their specific discharges to the sewer system. Their flows
are .sampled by the City, and they are charged according to their flow, biochemical oxygen
demand (BOD), and total suspended solids (TSS).
The City also assesses cone-time capacity charge (also known as a connnection fee) to new
customers connecting to the wastewater system. This charge is set to recover the costs of
providing existing infrastructure to new users, as well as future capital improvements and
expansions to meet new growth. In 2005/06, a new single family dwelling paid $3,506 to
connect to the system
Wastewater Enterprise Finances
Revenues The City's wastewater enterprise generates the vast majority of its revenues from user
charges. For the year ending June 30, 2006, the City generated approximately $12.1 million in
Resolution 2007-022 N.C.S. Page 14
user charges. During the same time period, the City collected $1.4 million in connection fee
revenues.
Smaller amounts of income were generated by investment earnings and miscellaneous fees and
charges.
Expenses Operating expenses for the wastewater enterprise include salaries and benefits for City
staff, the cost of treatment, maintenance on collection lines and connections, and utilities for
pumping and delivery of the wastewater flows to the treatment plant. Expenses for operation and
maintenance of the surface water system are also included in the wastewater enterprise. The
wastewater enterprise also transfers a portion of its revenue to the City of Petaluma's General
Fund to cover its share of administrative and billing costs incurred by other city staff (such as in
the utility billing office). Total operating expenses (before debt service) for the year ending June
30, 2006, were $7.1 million, and intragovernmental transfers to the General Fund totaled $1.2
million.
Debt The wastewater enterprise issued revenue bonds in 20004. Annual debt service on this
issue is approximately $720,000, and there is approximately $7.4 million in principal
outstanding. Debt covenants require that the City generate operating revenues in excess of
expenses at least 1.25 this amount. The City is permitted to maintain a rate .stabilization and debt
service reserve fund for the purposes of meeting this coverage requirement. The City currently
exceeds its debt coverage requirements for its wastewater revenue bonds by a significant margin.
Fund Reserves As of July 1, 2006, the wastewater enterprise had approximately $6.0 million in
fund reserves. BWA recommends that the City always maintain at least a 60-day O&M reserve
(or approximately $1.5 million) for emergency repairs or expenses.
Capital Program
The wastewater enterprise is currently in the midst of an extensive capital improvement program.
Construction of the Ellis Creek Water Recycling Facility began in October 2005 and is scheduled
to be completed in 2009. Total project costs are expected to approach $150 million during that
time. The addition of SCADA for the Ellis Creek WRF, further recycled water improvements
(Phase II) and demolition of the Hopper WWTF in 2009/10 will add another $20 million in
project costs. All told, the city plans to invest upwards of $170 million in non-replacement
capital projects between 2005/2006 and 2010/2011.
Through FY OS-06, the City levied a 5% administrative charge for its role in managing capital
projects for the utility. For the purposes of this study, it was assumed this fee would not be
applied for FY 06-07 through FY 13-14.
Future Debt
With only $6 million in available reserves, the City is expecting to finance almost 100% of the
planned capital improvements. The City has SRF funding available for approximately $125
million of the Ellis Creek project costs. This funding can be drawn on at a rate of $25 million
a The proceeds from this debt service were used for construction. of the Pond Influent Pump Station Upgrade Project ($4.6 million),
Lindberg Lane Sewer Main Replacement Project ($1.7 million), Disinfection Facility Upgrade Project ($300,000), and early planning
and environmental documentation for the Ellis Creek Water Recycling Facility Project ($2 million).
Resolution 2007-022 N.C.S. Page IS
per year. The balance of capital project costs above this amount will be paid (at least in the
interim) by a variable rate line of credit secured in 2005.
The City expects to issue two different series of revenue bonds over the next five years. The
first, in late fiscal 2006/07, will be used to fund the Phase II Recycled Water Improvements. The
second, in 2010/11, will be used to refund the remaining balance on the line of credit. These two
issues are currently sized at $12.5 and $26.2 million respectively.
By 2010/11, when SRF payments are first due, the total combined debt service for these three
new issues will total approximately $11.3 million. Additionally, as a condition of its SRF loan,
the City must also form a replacement and rehabilitation reserve for the Ellis Creek facility, and
fiend that with approximately $690,000 per year. All told, the City can expect to meet no less
than $12.0 million in new debt service by 2010/11. Put in perspective, the wastewater enterprise
will be required to almost double its total revenues by that time.
Cash Flow Projection
Bartle Wells developed aten-year cash flow projection for the wastewater enterprise. The
projection allows us to determine ifrate increases are needed to meet future revenue
requirements, and if so, what the size of these rate increases would be. Our projections are built
on a number of assumptions. Among them:
• Operating expenses are projected to increase 3.S% per year;
® The City is expected to grow at an annual rate of .S%. This would add approximately 100
new wastewater customers to the enterprise annually;
® Annual connection fee revenue was estimated by multiplying the estimated l Oft new
connections by the existing capacity fee;
• Any proposed rate increases are applied uniformly to both fixed monthly charges and
quantity charges. All customer classes are increased uniformly as well; and
• The line of credit is used to fund the General Fund capital administrative transfer of $3.9
million in 2007/08.
Rate Recommendations
As stated above, future capital expenditures and the resulting debt service will effectively double
the revenue requirement of the utility by 2010/1 1. BWA investigated a number of rate increase
scenarios that would allow the City to meet this target. It was determined that steady, level
increases are an important policy consideration.
As such, our analysis has concluded that a series of five 13% annual rate increases, applied
uniformly to both fixed monthly charges and variable consumption rates, would allow the
wastewater enterprise to meet ongoing operating expenses and future debt service .requirements.
City Management recommends that these rates be put in place by January 1, 2007. The
recommended wastewater rates are illustrated in Table 4.
In order to better understand how these recommended rate increases will impact wastewater
.customers, we have developed "composite" rate increase numbers to show how "average" single
family residential bills will change from one year to the next. We developed three hypothetical
customers: a "low" user who discharges S hcf to the sewer every month: an "average" user who
discharges 8 hcf per month; and a "high" user who discharges 12 hcf per month. Table S
Resolution 2007-022 N.C.S. Page 16
outlines how these three sample residential users would see their total wastewater bill change
from one year to the next as a result of these recommend rate changes. Similar calculations are
provided for non-residential customers.
Residential Char eg Comparison
How do Petaluma's current and proposed wastewater service charges compare to other
communities? Table 6 presents a comparison of Petaluma's monthly residential wastewater
service charges with other communities. It should be noted that charges are dependent on a
number of factors, including age of facilities, level of wastewater treatment provided, regulatory
conditions, and type of services provided. Many communities listed in Table 6 have made or are
in-the process of making significant improvements to their facilities. As shown in Table 6,
Petaluma's wastewater rate for 2007 will remain less than the average for the agencies included
in the comparison.
Resolution 2007-022 N.C.S. Page 17
Resolution 2007-022 N.C.S. Page ] 8
Table 1
Recommended Water Rates
Type of Charge Current Recommended Water Rates
Rates
1-Jan- 1-Jan- 1-Jan- 1-Jan- 1-Jan-10 1-Jan-
06 07 08 09 11
Monthly Service
Charges ($/mo)
S/8" $3.79 $4.47 $4.92 $5.17 $5.42 $5.69
'/4" $3.79 $4.47 $4.92 $5.17 $5.42 $5.69
1" (residential) $4.SS $5.37 $5.91 $6.20 $6.51 $6.84
1" $4.SS $S.SS $6.11 $6.41 $6.73 $7.07
1.S" $7.57 $9.24 $10.72 $11.25 $11.81 $12.40
2" $10.98 $13.84 $16.05 $17.65 $18.54 $19.46
3" $21.21 $26.73 $33.14 $36.45 $38.27 $40.19
4" $2727 $36.00 $44.64 $49.10 $51.55 $54.13
6" $39.39 $52.00 $64.48 $70.92 $74.47 $78.19
Consumption
Charges ($/hcf)
Single Family
Residential (monthly)
Tier 1 (0-10 hcf) 2.16
Tier 2 (11-26 hcf) 2.37
Tier 3 (27+ hcf) 2.61
Tier I (0-9 hcf) $2.31 $2.50 $2.70 $2.83 $2.94
Tier 2 (10-18 hcf) $2.61 $2.87 $3.10 $3.25 $3.41
Tier 3 (19-24 hcf) $3.00 $3.39 $3.73 $4.07 $4.35
Tier 4 (2S+ hcf) $3.24 $3.75 $4.13 $4.50 $4.82
Multi-Unit Residential,
Business, Industrial, $2.07 $2.44 $2.64 $2.80 $2.96 $3.14
Public
Resolution 2007-022 N.C.S. Page l9
Table 2
Changes of Proposed Water Rates
For Sample Customers
Estimated Monthl Bill Amount
Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
Average
Annual Current
Monthly Monthly
Water Use Water
Type of Customer (hcf) Bill Amount Increase Amount Increase Amount Increase Amount Increase Amount Increase
Low 8 $21.07 $22.96 9% $24.89 8% $26.73 7% $28.07 5% $29.25 4%
Sin le Family Residential
Average 12 $30.13 $33.09 10% $35.99 9% $38.72 8% $40.65 S% $42.43 4%
Sin le Fainil Residential
High 18 $44.35 $48.73 10% $53.19 9% $57.30 8% $60.17 5°,~0 $62.92 5%
Sin le. Famil Residential
Very High 50 $125.95 $150.89 20% $171.15 13% $ 187.06 9% $201.60 8% $214.25 6%
Sin le Famil Residential
20-unit Apartment Building 65 $145.53 $172.61 19% $187.52 9% $199.41 6% $211.20 6% .$223.69 6%
2" meter
Office Building 58 $131.04 $155.51 19% $169.05 9% $179.84 6% $190.45 6% $201.69 6%
2" meter
Restaurant 55 $124.83 $148.18 19% $161.14 9% $171.45 6% $181.56 6% $192.27 6%
1" meter
Resolution 2007-022 N.C.S. Page 20
Table 3
Comparison of Monthly Water Charges for Average Single
Family Residential Customer
Average Monthly
Water Bill
A enc (12 hcf/month)
Windsor $1991
North Marin $27.20
Petaluma (current) $30.13
Petaluma (proposed for
2007) $33.09
Santa Rosa (2007) $34.70
Avera e o all a encies $35.57
Cotati $37.76
Rohnert Park $38.75
Sonoma $38.95
Marin Munici al $42.37
Healdsbur $47.39
Resolution 2007-022 N.C.S. Page 21
't'able 4
Recommended Wastewater Rates
Type of Charge Current Recommended Wastewater Rates
Rates
1-Jan- 1-Jan- 1-Jan- 1-Jan- 1-Jan- 1-Jan-
06 07 08 09 10 11
Fixed month) char a $/mo
Single-Fami~l Residential $9.11 $10.29 $11.63 $13.14 $14.85 $16.78
Multi-Unit Residential, per dwelling
unit $9.11 $10.29 $11.63 $13.14 $14.85 $16.78
Ilnmetered Residential, per dwelling
unit $44.21 $49.96 $56.45 $63.79 $72.08 $81.45
Commercial
Low-Strength $9..11 $10.29 $11.63 $13.14 $14.85 $16.78
Medium-Strength $9.11 $10.29 $ l 1.63 $13.14 $14.85 $16.78
_ Hi h-Stren th $9.11 $10.29 $11.63 $13.14 $14.85 $16.78
Metered Industrial Users $9.11 $10.29 $11.63 $13.14 $14.85 $16.78
Variable char e ($/hc
Sin le-Family Residential $4.32 $4.88 $5.51 $6.23 $7.04 $7.96
Multi-Unit Residential $4.32 $4.88 $5.51 $6.23 $7.04 $7.96
Commercial
Low-Strength $4.30 $4.86 $5.49 $6:20 $7.01 $7.92
Medium-Strength $5.11 $5.78 $6.53 $7.38 $8.34 $9.42
High-Strength $6.62 $7:48 $8.45 $9.55 $10.79 $12.19
Metered Industrial Users
Flow ($/hcfl $3.20 $3.62 $4.09 $4.62 $5.22 $5.90
BOD ($/lb) $0.31 $0.35 $0.40 $0.45 $0.51 $0.57
TSS ($/]b) $0.34 $0.38 $0.43 $0.49 $0.55 $0.63
Resolution 2007-022 N.C.S. Page 22
Table 5
Changes of Proposed Wastewater Rates
For Sample Wastewater Customers
Estimated Monthl Bill Amount
Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
Average Current
Monthly Monthly
Wastewater Wastewater
Type of Customer Use (hcf) Bill Amount Increase Amount Increase Amount Increase Amount . Increase Amount Increase
Low 5 $30.71 $34.70 13% $39.21 13% $44.30 13% $50.06 13% $56.57 13%
Sin le Famil Residential
Average 8 $43.66 $49.34 13% $55.75 13% $63.00 13% $71.19 13% $80.44 13%
Sin le Famil Residential
High 13 $65.26 $73.74 13% $83.33 13% $94.16 13% $106.40 13% $120.23 13%
Sin le Famil Residential
20-unit Apartment
Building 65 $462.94 $523,12 13% $591.12 13% $667.97 13% $754.80 13% $852.93 13%
2" meter
Office Building 58 $258.39 $291.99 13% $329.94 13% $372.84 13% $421.30 13% $476.07 13%
2" meter
Restaurant 55 $372.99 $421.48 13% $476.27 13% $538.19 13% $608.15 13% $687.21 13%
1" meter
Resolution 2007-022 N.C.S. Page 23
7Cable 6
Comparison of Monthly Wastewater Charges for Average Single
.Family Residential Customer
Average Monthly
Single Family
Residential
Wastewater Bill
A enc (8 hcf/month)
Novato Sanita District $28.50
Windsor $43.06
Petaluma (current) $43.66
Sonoma $45.75
Petaluma (proposed for
2007) $49.34
Avera e o all a encies $53.33
Rohnert Park $56.10
Santa Rosa (2007) $65.19
Healdsbur $67.88
Cotati $70.81
Resolution 2007-022 N.C.S. Page 24
l~®I)EL RUl®TS
Resolution 2007-022 N.C.S. Page 25
Table 1
City of Petaluma -Water Utility Fund
Cash Flow Projections
Actual Estimate Budget Projected
2004/05 2005106 2006/07 2007/08 2008/09 2009/10 2010/11 2011112 2012/13 2013/74
Beginning Fund Balance $10,729,443 $4,541,726 $2,441,000 $5,552,000 $4,629,000 $4,293,000 $4450,000 $5,025,000 $5,983,000 $6,737,000
Rate Slabilizalion Fund $0 $0 $150,000 $165,000 $180,000 $195,000 $210,000 $225,000 $240,000 $255,000
Revenues
Ooeratino
Charges for sales' 9,174,000 8,551,000 8,655,000 9,727,000 10,591,000 17,364,000 12,063,000 12,717,000 13,283,000 13,795,000
Charges for services° 0 909,000 1,088,000 1,213,000 7,286,000 7,358,000 1,432,000 7,512,000 1,595,000 1,683,000
Investment earnings' 105,000 100,000 61,000 139,000 776,000 707,000 111,000 726,000 750,000 168,000
Other - 881,_200 0 200
000 207,_000 214
000 221
000 229
000 237
000 245
000 254y00
Subtotal Operating 10,760,200 9,560,000 10,004,000 11286,000 72,207,000 73,050,000 13,835,000 14,592,000 15,273,000 75,900,000
Caoital
Connection fees 447,603 1,063,319 619,000 638,000 657,000 677,000 697,000 718,000 740,000 762,000
Debt proceetls 0 0 6.364,000 0 0 0 0 0 0 0
Subtotal Capital 447,603 1,063,319 6,903,000 638,000 657,000 677,000 697,000 718,000 740,000 762,000
Transfers 8 Adjustments
Transfer In/(Out) 49000 0 0 0 0 0 0 0 0 0
Subtotal Transfers 8 Adjustments 49,000 0 0 0 0 0 0 0 D 0
Total Revenue, Transfers, and Adjustments $10,656,803 $70,623,319 $16,987,000 $71,924,000 $12,864,000 $13,727,000 $14,532,000 $15,310,000 $16,013,000 $16,662,000
Expenditures
ODefatinq
Cost of sales° . 4,800,000 4,332,370 4,484,000 4,641,000 4,603,000 4,971,000 5,145,000 5,325,000 5,571,000 5,704,000
Cost of services° 3,397,350 3,023,575 3,800,000 3,933,000 4,071,000 4,213,000 4,360,000 4,513,000 4,671,000 4,834,000
lntragovernmental Transfers (General Fund) 1 311 300 t 706 000 1.561:000 1.616 000 1.673.000 1,732.000 1,793 000 1 856.000 1.921,000 1 988 000
Subtotal Operating 9,502,650 9,061,885 9,845,000 10,190,000 10,547,000 10,916,000 11,298,000 11,694,000 12,103,000 12;526;000
Caoital
Non-replacement capitafimprovement projects 3,919,048 836,000 2,000,000 0 0 0 0 0 0 0
Replacement capital improvement projects 1,205,000 528,000 1,000,000 1,500,000 1,500,000 1,500,000 1,500,000 7,500,000 2,000,000 2,000,000
Capital outlays 212,750 0 0 0 0 0 0 0 0 0
Existing Oebt Service 657,753 659,503 656,000 657,000 653,000 654,000 659,000 658,000 656,000 659,000
Projected Debt Service I 0 0 0 485
000 485
000 485
000 485
000 485
000 485
000 485
000
Subtotal Capital 5,994,550 2,023,503 3,656,000 2,642,000 2,638,000 2,639,000 2,644,000 2;643,000 3,741,000 3,144,000
Trans/ers 8 Adjustments
Projects-City Departments-Transfers 1,139,214 1,448,587 360,000 0 0 0 0 0 0 0
Capital admin/other/5% GF overhead 206,706 40,000 0 0 0 0 0 0 0 0
Subtotal Transfers & Adjustments 1,347,320 1,488,587 360,000 0 0 0 0 0 0 0
Total Expentlltures, Transfers, and Adjustments $16,844,520 $12,573,975 $73,861,000 $12,832,000 $13,185,000 $73,555,000, $13,942,000 $14,337,000 $15,244,000 $15,670,000
Net operating revenue (before debt service) 657,550 498,115 159,000 1,096,000 1,660,000 2,134,000 2,537,000 2,898,000 3,170,000 3,374,000
Net total revenue (6,187,717) (1,950,656) 3,126,000 (908,000) (321,000) 172,000 590,000 973,OOG 769,000 992,000
Ending FundBalance 4,541,726 2,591,070 5,567,000 4,644,000 4,308,000 4,465,000 5,040,000 5,99d,000 6;752,000 7,729,000
Transfer to rate stabilization ~ 0 0 (15,000) (15,000) (15,000) (15,000) (75,000) (15,000) (75,000) (15,000)
Reserve Fund Targets
O8M (60 days) Reserve 1,584,000 1,570,000 1,641,000 1,698,000 7,758,000 1,819,000 1,883,000 1,949,000 2,017,000 2,088,000
Capital Replacement 8 ImprovemeN Reserve 580
000 597
000 61_ 5,_000 633
000 652
000 672i~_00 692
000 713
000 734
000 756
OOG
Total Minimum Reserve Fund Targets 2,164,000 2,107,000 2,256,000 2,331,000 2,410;000 2 491,000 2,575,000 2,662,000 2,751,000 2,844,000
Total Minimum Reserve Fund Targets Met rsYES'._vr6, Y,E >'E~ YES -~f,E _ _ i ;AYES; YES,. YES_ YES.;,,.
Debt Service Coverage (Min 1.25 x)x 1 68 2.37 1.41 1.66 2.19 2.64 3.01 3.36 3.64 3.84
Resolution 2007-022 N.C.S. Page 26
Table 2
City of Petaluma -Water Utility Fund
Capital Improvement Program
2005/06 2006107 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 Total
Non-Replacement Capital
C501100 New Wells $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
C501200 Property Site Improvements 800,000 - - - - - 800,000
C500105 Reservoir Seismic Upgrades 15,000 - - - - - 15,000
C500101 Paula Lane Reservoir#2 21;000 2000,000 - - - - 2;021,000
C501D04 E. Wash. SL Water Main - - - - - - 0
Phase 2 Recycled Water ~ - 0
Phase 3 Recycled Water - - - - - 0
Phase 4 Recycled Water _ 0
Phase 5 Recycled Water D
Wellhead Treatment 0
Total 836,000 2,000,000 0 0 0 0 0 0 0 2,836,000
5% GF transfer 40,000 95,000 b 0 0 0 0 0 0 135.000
Enhanced Water Conservation
Water Conservation
Total - - - - - - - _
Replacement Capital
CSO1D00 Water Main Improvements 528.000 1 000,000 1,500,000 1,500.000 1,500.000 1.500.000 1:500 000 2.000,000 2 000 000
Total 528,000 1,000,000 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 2,000,000 2,000,000
Total 1,364,000 3,000,000 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 2,000,000 2.000,000
Pay-as-you-go Contribution 1,000,000 500,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,500,000 1,500,000
Amount to be Financed 364.000 2 500.000 500.000 500,000 500 000 500.000 ~ 500.000 500,000 500,000
200612007 Bond' 6,364,000
1 -Bond to finance Pau{a Lane Reservoir and $500,000 per year for automatic read meters
Resolution 2007-022 N.C.S. Page 27
Table 3
City of Petaluma -Water Utility Fund
Petaluma Water Revenue 2001 Bonds Annual Debt Service
November 1 Principal Interest Total
2004 $220,000 $437,753 $657,753
2005 230,000 429,503 659,503
2006 235,000 420,878 655,878
2007 245,000 412,065 657,065
2008 250,000 402,878 652,878
2009 260,000 393,503 653,503
2010 275,000 383,623 658,623
2011 285,000 372,623 657,623
2012 295,000 361,223 656,223
2013 310,000 349,054 659,054
2014 320,000 335,414 655,414
2015 335,000 321,014 656,014
2016 355,000 305,604 660,604
2017 270,000 289,185 559,185
2018 280,000 276,360 556,360
2019 295,000 262,920 557,920
2020 310,000 248,613 558,613
2021 325,000 233,500 558,500
2022 340,000 217,250 557,250
2023 360,000 200,250 560,250
2024 380,000 182,250 562,250
2025 400,000 163,250 563,250
2026 420,000 143,250 563,250
2027 440,000 122,250 562,250
2028 465,000 100,250 565,250
2029 485,000 77,000 562,000
2030 515,000 52,750 567.,750
2031 540,000 27,000 567,000
Total 9,440,000 7,521,208 16,961,208
Resolution 2007-022 N.C.S. Page 28
Table 4
City of Petaluma -Water Utility Fund
Estimated Future Annual Debt Service I and II
Debt Issue I - 2006/07 25 years
Projects $6,364,000
Issuance costs 200,000
Reserve (1 year Debt Service) 485,000
U/W discount and bond insurance at 1.5% 107,848
Contingency/Rounding 33,000
Total Issue Size 7,189,848
Assumed Average Interest Rate* 4.50%
Estimated Annual Payment for Reserve Sizing $485,000
Debt Issue II - TBD 25 years
Projects $0
Issuance costs 0
Reserve (1 year Debt Service) 0
U/W discount and bond insurance at 1.5% 0
Contingency/Rounding 0
Total Issue Size 0
Assumed Average Interest Rate* .5.00%
Estimated Annual Payment for Reserve Sizing $0
*Based on current rates -subject to change
Resolution 2007-022 N.GS. Page 29
Table 1
City of Petaluma -Wastewater Utility Fund
Wastewater Cash Flow Projections -Ellis Creek Water RecyUir Actual Actual Butlgel Projected
2004!05 2005/06 200610] 2007108 2008109 2009/10 2010/11 2011112 2012/13 2013/14
Beginning All Fund Balance 54,808,070 55,120,000 56,010,000 54,400,000 57,910,000 510,600,000 510,520,000 514,220,000 Si 5,280,000 §16,270,000
Avera0e Sinela Family Residential Rale lncreaset 13.0% 17.0% t].0% 13.0% 13.0% 2.0% 0.0% O.OY.
Capacity Fees _ 3,329 3.409 3,SOfi 3.629 3,75fi 3.88] 6,023 4,164 4,310 4,661
No. of New Connections 210 414 100 100 100 100 100 100 100 100
Revenues
Operating
Charges for services-Fixetl Service Gharges° 5,016,800 3,110,613 2;684,000 3,04],000 3,958,000 3,925,000 4,457,000 4,798.000 4,868,000 5,026,000
Charges for services-Wastewater COnsumplion Charges 7,525.200 B.u/d.]15 11,950.000 13,550,000 15,365,0011 11.425,000 19,765,000 21,260.000 21,550,000
22,238,000
Connecioon fees 747,309 1413.000 350,000 360,000 300,000 390,000 600,000 420,000 630.000 450.000
Intergovemmentallgmnts and other funds 842,302 - - 2,233.000 - - - - - -
Inveslment earnings' 79,018 14,500 150,000 110.000 200,000 - 2]0.000 260.000 360,000 380.000 410.000
Other ~ 143.000 _
Subtotal Operating 14,157,629 13,516,829 15,134,000 19,100,000 19,403,000 22.010,000 24,882,000 26,838,000 27,218,000 28,124,000
capital
SRF Treatment Plant Proceeds - - 50,000,000 25,000,000 25.000.000 25,000,000 964,254 - - -
Inlerim Financing Procee0sl(Atljuslment) - 2],191.]39 31,331,950 2,404,000 - - - - - -
Projected Debt Proceeds 9,06],000 24,417,000
Subtotal Debt - 27,192,]39 81,331,950 36,671,000 25,000,000 25.000,000 25;381,254 - -
Total Revenues 14,353,629 40,709,568 96p65,950 55,771,0110 44,403,000 47.010,0110 50.263,254 26,838,000 2],228,000 28,124,000
Eltpendi[ures
Operating
Cost of services 6,050,442 7,095,239 ],516,120 7,780,000 8.050.000 6,330,000 0,620,000 8,920,000 9,230.000 9.550,000
Cost Allocation tmnsters (Intergovernmental Tr4nsfers) 946.950 1.218,750 1,359.050 1 410,000 1 460.000 1 510,000 1,560,000 1,610,000 1 6]0,000
1,]30.000
Other 250,000 200,000
Subtotal Operating 6,997,392 8,567,989 9,075,1]0 9,190,000 9,510,000 9,840,1100 10,180,000 10,530,(100 10,900,000 11,280,000
Capital°
Ellis Creek Pmjecl Costs 3,310,000 27,192,]39 81,331,950 27 404 X00 13,158,000 330,000 242,000 - -
Non-replacement rapital improvemenrpmjects 394,000 286,839 2,481,350 9,266.000 368,000 5,625,000 - - - -
Replacement capital improvement projects - ~ 1,250,000 1,288,000 1,32],000 1.367,000 1,408,000 1,45];000 1,508,000 1 561 000
Minor capital outlays 11fi.750 - - - - - - - -
Bank Line o(Credit -Principal payment - - - - 11,842,000 24,610,000 26,417,000 -
Debl Service 10
Series 2000-Existing Oebl Service 714,300 ]15,059 ]14,929 718,954 ]16,]04 718,374 723,694 ]22,488 ]24,730 ]25,738
SRF Wastewater Capital Replacement FuM - - - - - 689,141 689,141 689,141 689.141
Projected SRF Debt Service. 2.4%, 20 years - - - - - - 4,319,000 8,758.000 8,)58,000 8.]58,000
Bank Lines of Credit -Interest - 388.000 2,057,000 2,867,000 2.925.000 2,fi4O.000 1,]64,000 - - -
Sedes 2007 Debt Service - - - 312,13] 624,000 fi24,000 624,1100 628',000 624,000 626,000
Series 2011 Debt Service ~ 829,000 1,658,000 1.658.000 1,658.000
Suhmtal Gapltal 4,535,000 28,581,000 87,815,000 41,854,000 70,961,000 35,9]4,000 75,0]6,000 17,909,000 13,962,000 14,016,000
Transler and Atljuslmenl5 -
Projects-City Depadmenls-Translers1O 1,584,0170 696,700 334.000 350,000 350.000 350,000 350,000 350.000 350,000 350.000
Capital admiNOlher 177,000 1,341.000 - - - - -
Sbdacewater OBM 746,000 691,4]8 835,050 864.000 894,000 925,000 957,000 990,000 .1,025,000 '1,061,000
Subtotal Transfers 8 AdjusUnen6 2,507,000 2,678,178 1,169,050 1,214,000 1,244,000 1,2]5,000 1,707,000 1,340,000 1,375,000 1,411,000
Total Ex pentll[ures 14,079,392 79;826;167 98,079,220 52,258,000 41,]15,000 67,089,000 06,563;000 25,7]9,000 26,237,000 26,707,000
Total Revenue less Total ExpeMitures 314,23] 885,401 (1,613.270) 3,513,000 2,688.000 (79,000) 3,]00,254 1p59,000 991,000 1 417,000
Ending Funtl Balance §5,122,30] 56,005,401 54,396,]30 57.917,000 $10;598,000 510,521,000 §14,220,254 515,279,000 §16,2]1,000 §17,687,000
Reserve Funtl Targets
OSM (60 days) Reserve 1,166,232 1,42] 332 1,512,528 1,531.667 1,585,000 1,640,000 1,696,667 1,755,000 1,816,667 1,880,000
Capital Replacement 8lmpmvement Reserve ~NOte) 934.000 962.000 991 000 1.021 1100 1.052.000 1 084 900 1.117 C00 1.151.000 1.186 000 1.222.000
Total.Minimum Reserve Fund Targets 2,100,232 2,389,332 2,503,528 2,552,667 2,637,000 2,]24000 2,813,667 2.906,000 3;002,6fi] 3.102,000
Total Minimum Reserve Fund Targets Met Yes Ves Yes Yes Yes Yes Ves Yes Yes Ves
Debt Service Coverage ~Mln 1.25 x) 7.39 3.50 7.85 2.35 2.09 2.80 164 1.29 1.29 1.33
Resolution 2007-022 N.C.S. Page 30
Table 2
City of Petaluma -Wastewater Utility Fund
Wastewater Capital Improvement Program (1)
2004/05 2005/06 2006/07 2007/08 2008109 2009110 2010/11 Total
Non-Replacement Capital
C500402 Water Recycling Facility-Treatment Plant $3,310,000 $26,616,751 $80,334,450 $26,555,000 $12,738,000 $330,000 $242,000 $150,126,201
CSOOAAA SCADA forEllis Creek W RF 575,988 997,500 849,000 420 000 - - 2,842,488
C500EEE Pump Station SCADA - - - - - -
C501400 Wilmington Pump Station - - - 197,000 - - - 197,000
C500205 C Street Pump Station Upgrade 394,000 27,910 773.000 1,327,000 - - - 2,521,910
C500302 Recycled Water Pipeline - - - - - - - -
C500505 Phase II Recycled Water Improvements - - 1,708,350 7,740,000 - - - 9,448,350
C500BBB Lakeville Highway Improvements - - - - - 0
C500405 Oxidation Pond Dike Repair - 256,929 - - - - - 256,929
C500305 Demolition of Hopper. W WTF - - - - 368,000 5,625,000 - 5,993,000
C501104 Biosolids Mgmt Program - - - - - - - -
C500403 River Access Improvements - - - - - - - -
C500605 Petaluma Marsh Soil Remediation - - - -
Total $3,704,000 $27,478,000 $83,813.000 $36,668,000 $13,526,000 $5,955,000 $242,000 $171.386,000
Admin and other 177,000 1,308,000 3,991,000 1,747,000 645,000 284,000 12,000 8,164,000
Total non-replacement CIP less admin/other 3,527,000 26,170,000 79,822,000 34,921,000 12,881,000 5.671,000 230,000 163,222,000
Replacement Capital
8221-54151 Sewer Main Repairs - - 1,000,000 1,030,000 1;061,000 1,093,000 1,126,000 5,310,000
CSOODDD '2nd St. Trunk Sewer Replace - - - - - - -
8221-54110 Integrated Collection System - 250,000 258,000 266,000 274,000 282,000 1,330,000
Total - - 1,250,000 1,288,000 1,327,000 1,367,000 1,408,000 6,640,000
Total Ellis Creek Project Costs 3,310,000 27,192,739 81,331,950 27;404,000 13,158.000 330,000 242,000 152,968,689
Total Non-Ellis Creek Project Costs 394,000 284,839 2,481,350 9,264,000 368,000 5,625,000 0 18,417,189 -
Totalreplacementcapital 0 0 1,250,000 1,268,000 1,327,000 1,367,000 1,408,000 6,640,000
Total CIP 3,704,000 27,478,000 85,063,000 37,956,000 14,853,000 7,322,000 1,650,000 178,026,000
(1) Certain projects receive grant funding which is shown on Table 2 as intergovernmental revenues.
(2) Line of credit borrowing will be used based on an approval for retroactive funding from the SRF
Resolution 2007-022 N.C.S. Page 31
Table 3
City of Petaluma -Wastewater Utility Fund
Petaluma Wastewater Revenue 2000 Bonds Annual Debt Service
May 1 Principal Interest Total
2004 $310,000 $402,608 $712,608
2005 325,000 389,278 714,278
2006 340,000 375,059 26,616;751 715,059
2007 355,000 359,929 575,988 714,929
2008 375,000 343,954 718,954
2009 390,000 326,704 716,704
2010 410,000 308,374 27,910 71.8,374
2011 435,000 288,694 723,694
2012 455,000 267,488 722.,488
2013 480,000 244,738 3,110,613 724,738
2014 505,000 220,738 8,978,716 725,738
2015 530,000 194,983 1,413,000 724,983
2016 560,000 167,423 727,423
2017 595,000 138,023 14,500 733,023
2018 625,000 106,488 731,488
2019 650,000 73,050 723,050
2020 690,000 37,950 727,950
Total 8,030,000 4,245,475 12,275,475
Resolution 2007-022 N.C.S. Page 32
Table 4
City of Petaluma -Wastewater Utility Fund
Estimated Future Annual Debt Service for SRF and Interim Financing for Ellis Creek Water Recycling Facility
2004/05 2005/06 2006/07 2007!08 2008/09 2009/10 2010/11
Ellis Creek Water Recycling Project Cost $3,310,000 $27,192,739 $81,331,950 $27,404,000 $13,158,000 $330,000 $242,000
SRF Borrowing 0 0 .50,000,000 25,000,000 25,000,000 25,000,000 964,254
SRF Accumulated Borrowing
(Prev Yr +Intereston Prev Yrs + Current Yr) 0 0 50,000;000 76,200,000 .103,029,000 130,502,000 134,598,254
Estimated Annual Accrued Interest - on
Outstanding Balance 0 0 1,200,000 1,829,000 2,473,000 3,132,000 3,230,000
Assumed Average Interest Rate 2.40 % 2.40 % 2.40 % 2.40 % 2.40°/ 2.40 % 2.4U
Term (years)
Estimated Annual Debt Service- SRF borrowings 2004/05 - 2010!11 with payments beginning 2009/10
WCRF Payments $3,110,613
$8,978,716 _
Assumed Line of Credit Interest Pa ment E: 2004/05 2005/06 1413000 2007/08 2008/09 2009/10 ~ 2010(11
Line Used During Year $0 $27,192,739 $31,331,950 $2,404,000 $0 $0 $0
Outstanding. Line (Current + Prior) 27,192,739 58,524,689 60,928,689 60,928,689 49,066,689 24,416,689
Repayment of Line - - - - !11 842 000) (24 670 000) (24 416.689)
Outstanding Balance 0 27,192,739 58,524,689 60,928,689 49,086,689 24,416,689 0
Estimated Annual Interest Payment (4.8 0 388,000 2,057,000 2,867,000 .2,925,000 2,640,000 1,764,000
Resolution 2007-022 N.C.S. Page 33