HomeMy WebLinkAboutResolution 2023-098 N.C.S. 06/19/2023 DocuSign Envelope ID: 1 E71 D8130-C1 E5-4920-AC1 C-OE84A202FF13
Resolution No. 2023-098 N.C.S.
of the City of Petaluma, California
RESOLUTION COMMENCING THE PROPOSITION 218 PROCESS FOR ADJUSTMENTS TO THE
CITY OF PETALUMA'S WATER AND WASTEWATER RATES
WHEREAS, the City of Petaluma's utility system provides essential services to residents and businesses,
including water,wastewater, and recycled water. The Department of Public Works and Utilities is responsible for
maintaining and upgrading critical infrastructure to ensure the delivery of safe and reliable services to the
community; and
WHEREAS, since the last rate study in 2017, there have been significant changes in the operating
environment, including increased regulatory requirements, aging infrastructure, and fluctuations in the cost of
supplies and labor. Additionally, the City has been developing updated Water and Wastewater Master Plans to
identify future capital improvement needs for the City's aging water and wastewater infrastructure; and
WHEREAS, operation, maintenance, and renewal of the City's water and wastewater system is entirely
funded by the City's water and wastewater enterprise Funds. Financially, the water and wastewater utility is
operated as a self-supporting enterprise relying primarily on revenues from water and wastewater rates to fund
the cost of providing service and maintaining the systems,with grant funding pursued when available. Water and
wastewater rates were last adopted in 2017,with the last increase occurring in July of 2022; and
WHEREAS, the City is obligated by State regulations to maintain the integrity of its water production,
treatment, and distribution systems, and its wastewater treatment system. The City of Petaluma is currently
working on an Integrated Water Master Plan and Sewer Master Plan. In addition to numerous Capital
Improvement Program (CIP) projects, the Master Plan will recommend that the City complete numerous
rehabilitation,replacement, and improvement projects over the next ten years. Near-term costs over the next five
years with estimated 3% annual construction cost escalation include approximately $54 million of water system
improvements, $70 million of wastewater system improvements, and $41 million of recycled water system
improvements. The City has been successful seeking grant funding and anticipates receiving up to $40 million in
grants over the next five years; and
WHEREAS, in October of 2022, the City authorized Bartle Wells & Associates, a public finance consulting
firm with expertise in the areas of utility rates and finance, to prepare a new Utility Rate Study ("Study") that
develops long-term financial projections for the water and wastewater funds, analyzes the City's current water
and wastewater rates, and recommends adjustments to the rates for the next five years. The Study was completed
in June 2023 and complies with all requirements of the California Constitution regarding municipal utility rates;
and
WHEREAS, the Study recommends base increases in water and wastewater rates to achieve an annual
increase of 2.0 percent and 2.5 percent in revenue, respectively, to fund water and wastewater system operation,
maintenance, and needed capital improvements. The Study also recommends the City continue its historical
practice of passing through additional rate adjustments each year to account for wholesale water rate increases
implemented by Sonoma County Water Agency and inflation; and
WHEREAS,proposed changes to water rates have been documented in a draft Proposition 218 Notice,which
is included as Exhibit A; and
Resolution No. 2023-098 N.C.S. Page 1
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WHEREAS, the proposed action is exempt from the requirements of the California Environmental Quality
Act (CEQA) in accordance with CEQA Guidelines Section 15378(b)(5), in that, approving this action does not
meet CEQA's definition of a"project,"because the action is just an introductory presentation with no action item
and therefore does not have the potential for resulting either a direct physical change in the environment or a
reasonably foreseeable indirect physical change in the environment.
NOW, THEREFORE,BE IT RESOLVED,by the City Council of the City of Petaluma as follows:
1. All of the above recitals are true and correct and incorporated herein by reference.
2. The City receives the 2023 Water&Wastewater Utility Rate Study by Bartle Wells &Associates and directs
staff to commence the Proposition 218 notification,public hearing,and protest process for water rate increases
not to exceed the amounts shown in the draft Proposition 218 Notice included as Exhibit A.
3. The City Council hereby declares that a public hearing shall be held tentatively on August 7, 2023, at the
regular City Council meeting, provided that staff may set the public hearing at a different date that is at least
45 days after the mailing of the Proposition 218 Notice in the event that August 7, 2023 is not available for
any reason, to consider the rate request, and to receive and count any protests received by that time in
accordance with the procedures required by Proposition 218 (Cal. Const., article XIII D, section 6).
4. The proposed action is exempt from the requirements of the California Environmental Quality Act (CEQA)
in accordance with CEQA Guidelines Section 15378(b)(5), in that, approving this action does not meet
CEQA's definition of a "project,"because the action is just an introductory presentation with no action item
and therefore does not have the potential for resulting either a direct physical change in the environment or a
reasonably foreseeable indirect physical change in the environment.
Under the power and authority conferred upon this Council by the Charter of said City.
REFERENCE: I hereby certify the foregoing Resolution was introduced and adopted by the Approved as to
Council of the City of Petaluma at a Regular meeting on the 191 day of June F77
ned :
2023,by the following vote:
5EF85AE1�3%F6,`ney
AYES: Mayor McDonnell,Vice Mayor Cader Thompson,Councilmembers 11 A
Barnacle,Healy,Nau,Pocekay,Shribbs
NOES: None
ABSENT: None
ABSTAIN: None
DocuSigned by: L��-tJlb449AW24fb
DocuSigned by:
ATTEST: 4 10L f.G0bin,ln,t,�,�,
City er Mayo
Resolution No. 2023-098 N.C.S. Page 2
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Exhibit A to Resolution
PETALUMA DRAFT
SONoMA COu►vrV
1.o..I.-.
Notice of Public Hearing on Proposed Water & Wastewater Rate Increases
Dear Property Owner or Customer,
The City of Petaluma is proposing to gradually increase its water and wastewater rates over the next five years to
provide adequate funding for operating and maintenance expenses and high-priority capital improvements including
rehabilitation and replacement of aging infrastructure. Petaluma's water and wastewater utilities are financially self-
supporting enterprises that rely primarily on revenues from service charges to fund the costs of providing service.As
such, water and wastewater rates must be set at levels adequate to fund the costs of operations, maintenance, debt
service, wholesale water supply from Sonoma Water,and capital improvements needed to support safe and reliable
service.The City is also proposing to adopt Water Shortage Contingency Plan Rate Adjustments that could be phased
in to support financial stability of the City's utilities during a drought or water shortage emergency.The City will hold
a public hearing on the proposed rates as follows:
Date: August 7, 2023
Time: 6:30 p.m.
Place: Petaluma City Hall
11 English Street
Petaluma, CA 94952
Petaluma's combined water and wastewater charges for a typical single-family home are in the middle range compared
to other regional agencies and are projected to remain in the middle range with the proposed rate increases.
Proposed Water Rates
Proposed water rate increases are needed to support adequate funding for water system operations and high-priority
capital improvements to the City's aging water system. Capital improvement needs include rehabilitation and
replacement of older water pipelines and water storage tanks, construction of groundwater wells and treatment
facilities,and other infrastructure improvements needed to support safe and reliable water service.The City has been
successful in obtaining grant funding for some of its capital improvement projects and will continue seeking additional
grant funding.
The City is proposing to phase in a series of gradual annual water rate increases over the next five years as shown on
the table on the following page. Water rates include two components:
• Fixed Monthly Service Charges: Residential customers pay a fixed service charge per type of dwelling unit.
Commercial and other non-residential accounts pay fixed charges based on water meter size, with higher
charges for larger meters that place more demand on the water system.
• Water Consumption Charges: These charges are billed based on metered water consumption. Water
Consumption Charges for single family residential customers are billed according to a 4-tiered rate structure
with water first billed in Tier 1 and subsequently billed in higher tiers as water use increases. All other
customers pay a uniform rate for all water use. Water Consumption Charges are billed per hundred cubic
feet (hcf), with 1 hcf equal to approximately 748 gallons of water. Hence, the proposed Single Family
Residential tiered rates of$4.78 to $7.01 per hcf effective September 1, 2023, equal approximately$0.64 to
$0.94 per hundred gallons, less than 1 cent per gallon.
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The proposed water rates include base 2.5% annual rate increases for each of the next 5 years to gradually increase
funding for water system operations and capital improvement needs. In addition, the City plans to continue its
historical practice of implementing additional annual pass-through rate adjustments to account for inflation and
wholesale water rate increases levied by Sonoma Water. The proposed rates effective September 1, 2023, include a
base 2.5% rate increase and also account for an additional 3.0% inflation adjustment and a $0.23 per hcf increase in
Sonoma Water's wholesale water rates passed through to the City's Water Consumption Charges.The proposed rates
shown for subsequent years starting July 1, 2024, will be adjusted annually to account for pass-through rate
adjustments for inflation and wholesale water rate increases as described later in this notice.
Proposed
Current Proposed Rates Effective On or After
Water Sept 1 July 1 July 1 July 1 July 1
Rates 2023 2024 2025 2026 2027
FIXED MONTHLY CHARGES
Fixed monthly charges billed per residential dwelling unit or based on non-residential meter size.
Residential
Single Family: Up to 1-inch meter $18.98 $20.03 $20.54 $21.05 $21.58 $22.11
Multi-Family: Per Dwelling Unit 11.39 12.02 12.32 12.63 12.95 13.27
All Other Customers
5/8&3/4-i nch meter $18.98 $20.03 $20.54 $21.05 $21.58 $22.11
1-inch meter 30.13 31.81 32.60 33.41 34.25 35.10
1-1/2-inch meter 58.02 61.25 62.79 64.35 65.96 67.61
2-inch meter 91.47 96.57 98.98 101.46 103.99 106.58
3-inch meter 169.56 179.01 183.49 188.08 192.79 197.61
4-inch meter 281.10 296.77 304.19 311.79 319.59 327.58
6-inch meter 559.96 591.18 605.96 621.11 636.64 652.56
WATER CONSUMPTION CHARGES
Volumetric charges billed per hundred cubic feet(hcf)of metered water use.
Single Family Residential
Tier 1 0-4 hcf $4.31 $4.78 $4.90 $5.01 $5.13 $5.26
Tier 2 4.01-8 hcf 4.79 5.29 5.41 5.54 5.68 5.81
Tier 3 8.01- 16 h cf 5.48 6.02 6.16 6.31 6.46 6.62
Tier4 >16hcf 6.42 7.01 7.17 7.35 7.52 7.71
All Other Customers 4.79 5.29 5.41 5.54 5.68 5.81
Temporary Service &Water Haulers 7.18 7.81 8.00 8.19 8.39 8.59
The rates shown above shall be adjusted annually starting July 1, 2024, to account for pass-through rate
adjustments for inflation and future increases in Sonoma Water's wholesale water rates as described later in this
notice.
Sample Water Bill Calculation for a Typical Single-Family Home
Effective September 1, 2023, the monthly water bill for a typical single-family home using 7 hcf of water per month
would be calculated as follows:
Fixed Monthly Charge Water Consumption Charge Total
First 4 hcf x$4.78 Next 3 hcf x$5.29 Subtotal
$20.03 $19.12 $15.87 $34.99 $55.02
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Proposed Wastewater Rates
Proposed wastewater rate increases are needed to fund projected operating and maintenance expenses, meet debt
service funding requirements, and provide adequate funding for high-priority capital improvements to the sewer
collection system, Ellis Creek Water Recycling Facility, and recycled water system. Planned capital improvements
include replacement of the influent force main and pumps that convey wastewater to the treatment plant, tertiary
treatment and chemical system upgrades at the Ellis Creek Water Recycling Facility, rehabilitation and replacement
of aging sewer lift stations and pipelines, and expansion of the City's recycled water distribution system.The City has
been successful in obtaining grant funding for some of its capital improvement projects and will continue seeking
additional grant funding.
The City is proposing to phase in a series of wastewater rate increases over the next five years as shown in the table
on the following page. Wastewater rates include two components:
• Fixed Monthly Service Charges: Residential customers pay a fixed service charge per dwelling unit.
Commercial and other non-residential accounts pay fixed charges based on water meter size, with higher
charges for accounts with larger meters that place more demand on the wastewater system.
• Wastewater Commodity Charges: These charges are billed based on metered water consumption.
Residential Commodity Charges are billed based on the lowest of either a) the average of the two lowest of
four low-use months of winter water use, or b) billed monthly water use, whichever is lower. Commercial
Commodity Charges are applied based on metered water use with higher rates for customers with higher-
strength wastewater that costs more to treat. Metered Industrial customers are billed based on metered use
and wastewater strength loadings estimated for each customer.The City's Wastewater Commodity Charges
are billed in units of one hundred cubic feet (hcf), with 1 hcf equal to approximately 748 gallons. Hence, the
City's proposed Residential Commodity Charge of $9.45 per hcf effective September 1, 2023, equals
approximately$1.26 per hundred gallons or 1.26 cents per gallon.
The proposed wastewater rates include base 2.0% annual rate increases for each of the next 5 years to gradually
increase funding for wastewater system operations and capital improvement needs. In addition, the City plans to
continue its historical practice of implementing additional annual pass-through rate adjustments to account for
inflation. The proposed rates effective September 1, 2023, include a base 2.0% rate increase and also account for an
additional 3.0% inflation adjustment. The proposed rates shown for subsequent years starting July 1, 2024, will be
adjusted annually to account for future pass-through rate adjustments for inflation as described later in this notice.
Sample Wastewater Bill Calculation for a Typical Single-Family Home
Effective September 1, 2023,the monthly wastewater bill for a typical single-family home with billed sewer usage of
5 hcf per month would be calculated as follows:
Fixed Monthly Charge Wastewater Commodity Charge Total
$39.85 5 hcf x$9.45=$47.25 $87.10
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Proposed
Current Proposed Rates Effective on or After
Wastewater Sept 1 July 1 July 1 July 1 July 1
Rates 2023 2024 2025 2026 2027
FIXED MONTHLY CHARGES
Fixed monthly charges billed per residential dwelling unit or based on non-residential metersize.
RESIDENTIAL
Fixed monthly charge per dwelling unit
Single Family Residential $37.93 $39.85 $40.64 $41.46 $42.29 $43.14
Multi-Unit Residential 32.24 33.88 34.55 35.24 35.95 36.67
Unmetered Residential 100.88 105.99 108.11 110.27 112.48 114.72
NON-RESIDENTIAL
Fixed monthly charge based on metersize
Up to 3/4-inch meter $37.93 $39.85 $40.64 $41.46 $42.29 $43.14
1-inch meter 62.43 65.59 66.90 68.24 69.61 71.00
1-1/2 inch meter 123.66 129.91 132.51 135.16 137.86 140.62
2-inch meter 197.15 207.12 211.26 215.49 219.79 224.19
3-inch meter 368.63 387.28 395.03 402.93 410.98 419.20
4-inch meter 613.30 644.34 657.22 670.37 683.78 697.45
6-inch meter 1,226.00 1,288.04 1,313.80 1,340.07 1,366.87 1,394.21
METERED INDUSTRIAL
Fixed monthly charge based on metersize
2-inch ultrasonic meter $552.36 $580.31 $591.92 $603.76 $615.83 $628.15
10-inch ultrasonic meter 1,226.00 1,288.04 1,313.80 1,340.07 1,366.87 1,394.21
2-inch magnetic meter 368.63 387.28 395.03 402.93 410.98 419.20
3-inch magnetic meter 809.57 850.53 867.55 884.90 902.60 920.66
4-inch magnetic meter 1,287.24 1,352.37 1,379.42 1,407.00 1,435.14 1,463.85
6-inch magnetic meter 2,573.31 2,703.52 2,757.60 2,812.75 2,869.01 2,926.39
WASTEWATER COMMODITY CHARGES
Volumetric charges billed per hundred cubic feet(hcf)of estimated sewer discharge.
RESIDENTIAL
Based on a)average of two lowest of four low use months of metered winter water use or b)actual water use
Single Family Residential $8.99 $9.45 $9.63 $9.83 $10.02 $10.22
Multi-Unit Residential 8.99 9.45 9.63 9.83 10.02 10.22
COMMERCIAL
Billed based on metered water use
Low Strength $8.66 $9.09 $9.28 $9.47 $9.65 $9.85
Medium Strength 11.78 12.38 12.63 12.89 13.14 13.41
High Strength 16.01 16.82 17.16 17.50 17.85 18.21
METERED INDUSTRIAL
Based on metered use&estimated wastewater loadings
Flow($/hcf) $7.44 $7.82 $7.97 $8.13 $8.29 $8.46
BOD($/Ib) 1.26 1.33 1.36 1.39 1.42 1.45
SS($/Ib) 1.43 1.50 1.53 1.57 1.60 1.63
The rates shown above shall be adjusted annually starting July 1, 2024, to account for pass-through rate adjustments
for inflation as described later in this notice.
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Pass-Through Rate Adjustments for Inflation & Wholesale Water Rate Increases
Pursuant to California Government Code 53756, the City plans to adjust its water and wastewater rates each year
starting July 1, 2024, to account for a) cost inflation and b) future wholesale water rate increases. Prior to initiating
these pass-through rate adjustments, the City will send notification to all customers at least 30 days prior to
implementation informing them of the rate adjustments.
• Future inflation pass-through rate adjustments will be implemented by adjusting the City's Proposed Water
and Wastewater Rates by the percentage change in the Consumer Price Index (CPI) for the San Francisco Bay
Area from the base reference index of 331.222 for December 2022 to the index for December of the year
preceding each annual rate adjustment. For example, if the CPI increases by 3.2% from December 2022 to
December 2023, the City would by authorized to adjust its adopted water and wastewater rates by an amount
not to exceed 3.2%starting July 1, 2024.
• Wholesale water rate pass-through adjustments will be implemented by adjusting the City's Water
Consumption Charges by the increase in Sonoma Water's wholesale water rate (in cents per hcf)from the base
year rate of$2.67 per hcf effective July 1, 2023. For example, if Sonoma Water increases its wholesale water
rate to $2.87 per hcf effective July 1, 2024, the City would be authorized to increase its Water Consumption
Charges by an additional $0.20 per hcf starting July 1, 2024.
Proposed Water Shortage Contingency Plan Rate Adjustments
The City is also proposing to authorize a series of Water Shortage Plan Rate Adjustments that could be implemented
to support the financial stability of the City's water and wastewater enterprises during periods of drought and water
shortage emergencies. The proposed surcharges would apply to billable use and would be levied in addition to the
City's regular Water Consumption Charges and Wastewater Commodity Charges. The surcharges correspond with
the Water Shortage Contingency Plan Levels identified in the City's 2020 Urban Water Management Plan. No
surcharges are proposed for a Level 1 Water Shortage. However, the City would have authority to phase in rate
adjustments in response to more significant droughts and water shortages up to the maximum proposed levels.
Proposed • Contingency
Water Shortage Contingency Plan Level
Level Level Level Level Level
Water Shortage or Mandated Reduction Up to 20% Up to 30% Up to 40% Up to 50% >50%
Maximum Rate Adjustment% 8% 16% 27% 41% 62%
Maximum Rate Adjustment* $0.42 $0.85 $1.43 $2.17 $3.28
Effective Sept-1,2023($/hcf)
* Each year, the Maximum Water Shortage Contingency Plan Rate Adjustments will be adjusted on July 1 based
on a)the Maximum Rate Surcharge %corresponding with each Water Shortage Level multiplied by b)the Water
Consumption Charge implemented for All Other Customers.
Projected Maximum Wastewater Rate Adjustments forShortages
Water Shortage Contingency Plan Level
Leve12 Leve13 Leve14 Level5 Leve16
Water Shortage or Mandated Reduction Up to 20% Up to 30% Up to 40% Up to 50% >50%
Maximum Rate Adjustment% 5% 7% 10% 14% 20%
Maximum Rate Adjustment*
Effective Sept-1,2023($/hcf) $0.47 $0.66 $0.94 $1.32 $1.89
* Each year,the Maximum Wastewater Rate Adjustments for Water Shortages will be adjusted on July 1 based on
a)the Maximum Rate Surcharge%corresponding with each Water Shortage Level multiplied by b)the Residential
Wastewater Commodity Charge.
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Water Conservation Programs & Rebates
The City of Petaluma offers a variety of water conservation programs and rebates to help our water customers save
water and money.These include:
• Free consultations for saving water at home and at work through the Water-Wise HouseCall Program
• Mulch Madness Program - a free turf conversion program for residents and businesses who want to transform
their high-water use turf to a drought tolerant mulched landscape.
• Rebates for:
o High-efficiency toilets and clothes washers
o Pool or spa covers
o Laundry-to-landscape greywater systems
• How-to guides and resources including how to read your water meter and check for leaks.
• Free water saving devices and supplies: low-flow faucet aerators, hose-end nozzles,and shower heads,toilet leak
detection tablets, and more.
For more information, please visit the City's website at cityofpetaluma.org/conserve,call the Water Conservation line
at(707) 778-4507, or email conservation@cityofpetaluma.org
Community Input & Written Protest Procedures
Members of the public are invited to attend the Public Hearing and provide input on the proposed rates. Property
owners and customers may also submit written protests against the proposed rates. Written protests must:
a) identify the affected property or properties, such as by address, Assessor's Parcel Number, or customer account
number, b) include the name and original signature of the customer or property owner submitting the protest and
c) indicate opposition to the proposed water rates, wastewater rates, water shortage contingency plan rate
adjustments, and/or pass-through rate adjustments for inflation and wholesale water rate increases.
Written protests can be mailed or delivered to: Attn: City Clerk, City of Petaluma, 11 English Street, Petaluma, CA
94952. Pursuant to California law, one written protest will be counted per parcel. Protests submitted by e-mail,
facsimile, or other electronic means are not counted.The proposed rates cannot be adopted if written protests are
received from a majority of affected parcels. Written protests must be submitted prior to the close of the Public
Hearing.
Customer Assistance Program
Petaluma participates in the Low Income Household Water Assistance Program(LIHWAP)administered by California's
Department of Community Services and Development. This is a federally funded program designed to help low-
income households pay past due bills and utility bills in order to maintain or restore service and avoid disconnection
due to bill payment delinquencies. Information on LIHWAP is available at csd.ca.gov/lihwap or on the City's website
at-citvofpetaluma.org/billing-water-sewer or by searching for "Water & Sewer Billing". Customers can also contact
the City's Finance Department at 707-778-4350 to learn more about the program.
Additional Information
Pursuant to California Government Code 53759, there is a 120-day statute of limitations for challenging any new,
increased, or extended fees. This statute of limitations applies to the proposed and future water rates, wastewater
rates, and water shortage contingency plan rate adjustments.
The City is committed to operating as cost-effectively as possible while providing safe and reliable utility service. For
questions or more information about the proposed rates, please contact the Department of Public Works & Utilities
at 707-778-4546 or by email at publicworks@cityofpetaluma.org.
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