HomeMy WebLinkAboutCC ORD 2023-2521 Amending of Ord 2017-2442 - FY22-23 Wastewater RatesORDINANCE CE NO. 2023 - 2521
ORDINANCE OF THE CITY COUNCIL OF THE CITY OF NATIONAL CITY,
CALIFORNIA, AMENDING ORDINANCE NO. 2017-2442 EXTENDING THE
WASTEWATER TE1 RATES ADOPTED FOR FISCAL YEARS 2022-2023 TO FISCAL
YEARS 2023-2024 and 2024-2025 WITH NO INCREASE.
WHEREAS, ►S, the City of National City("City") provides sewer services to
approximately 9,000 customers; and
WHEREAS, pursuant to Ordinance No. 2017-2442, adopted by the City council
on December 5, 2017, the city adopted a five-year sewer service fee rate adjustment
schedule commensurate with projected Regional Wastewater treatment increases and
elected to have sewer service charges collected on the tax roll, as provided by California
Health and safety Code Section 5473 et seq; and
WHEREAS, S, a study was conducted and determined that the rates approved for
Fiscal Year 2022-2023 could be extended to Fiscal Years 2023-2024 & 2024-2025 with
no increase; and
WHEREAS, ►S, if no increase in wastewater rates are proposed, then Proposition 218
notification is not required and a Public Hearing can be held to extend the rates at the
same level as previously adopted.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF NATIONAL CITY
HEREBY ORDAINS AS FOLLOWS:
Section 1: That the City Council hereby amends Ordinance No. 2017-2442
which established sewer service charges for Fiscal Years 2018-2019, 2019-2020, 2020-
2021, 2021-2022, and 2022-2023 and to maintain the rates established for Fiscal Year
2022-2023 for Fiscal Years 2023-2024 and 2024-2025 as set forth in Exhibit "A" of the
staff report, which is incorporated herein by reference effective July 1, 2023.
Section 2: This Ordinance shall take effect and be in force thirty days 3 from
the date of its passage, and before the expiration of fifteen 1 days after its passage, it
or a summary of it, shall be published once with the names of the members of the City
Council voting for and against the same in the Star News, a newspaper of general
circulation published in the County of San Diego.
Section 3: The City Council declares that the judicial invalidity of any subsection
or portion of this chapter shall not affect the validity of any other remaining section or
portion; that the City council would have adopted each of those remaining portions,
notwithstanding any later declared invalidity. If any provision determined invalid under the
preceding sentence can either be judicially severed or interpreted in a way that could
harmonize it with the remaining provisions, then it may be severed or interpreted and
applied so as to give full purpose, meaning and effect to the remaining provisions of this
Chapter.
Section 4: The proposed action is exempt from the California Environmental
Quality Act ("CEQA") under Section 1 o 1(b)(3) - general rule; the project is not
considered a project under CEQA as there is no possibility that the activity raised by this
Ordinance may have a significant impact on the environment; the city currently charges
sewer services fees and by this ordinance will extend the existing fee schedule for two
years.
Section 5: The City Clerk shall certify to the adoption of this Ordinance and shall
publish in accordance with the law.
INTRODUCED at a regular meeting of the City Council of National City, held on
this 16th day of May, 2023.
ATTEST:
Shelley Chap,
PASSED and ADOPTED this 6th da ► of 'e, 2023.
'\\
MMC, ity Clerk
APPROVED 'ED AS TO FORM:
G�1i2-y.
Barry J.
ltz, City Atto ney
Ron Morrison, Mayor
Passed and adopted by the Council of the City of National City, California, on June 6,
2023 by the following vote, to -wit:
Ayes: Morrison, Molina, Bush, Rodriguez, Yamane
Nays: None.
Absent: None.
Abstain: None,
AUTHENTICATED BY:
By:
Ron Morrison
Mayor of the City of National City, California
Shelley Chapel
City Clerk of the
City of National City, California
City
,AtIQ
k
I HEREBY CERTIFY that the foregoing Ordinance was not finally adopted until seven
calendar days had elapsed between the day of its introduction and the day of its final
passage, to wit, on May 16, 2023 and on June 6, 2023.
1 FURTHER CERTIFY THAT said Ordinance was read in full prior to its final passage or
that the reading of said Ordinance in full was dispensed with by a vote of not less than
a majority of the members elected to the Council and that there was available for the
consideration of each member of the Council and the public prior to the clay of its
passage a written or printed copy of said Ordinance.
I FURTHER CERTIFY that the above and foregoing is a full, true and correct copy of
ORDINANCE NO. 2023-2521 of the City Council of the City of National City, passed
and adopted by the Council of said City on June 6, 2023.
(1))
(1011eitClerk of tr,e
City of onal City, California
By:
ARDURRA
MEMO
Date: April 27, 2023
To: Roberto Yano, Public Works Director, City of National City
From: Carmen Kasner, Ardurra Group, Inc.
Subject: Wastewater Rate Analysis
The City of National City (City) adopted via the Proposition 218 process, a wastewater rate study in Fiscal
Year (FY) 2017 (2016-2017) that set rates for FY2017-2018 through FY2022-2023. This included increases
for 5 years ending in FY2023. These rates included increases for each of those years of 9.8% with the
anticipation that the financial picture of the wastewater system for the City should stabilize during that
time. The actual revenues received from the projected rates matched the model well and costs
experienced during this time was also similar. When those rates were established, there was significant
uncertainty with the actual costs that would be carried by the City for the cost of the treatment and
transportation of wastewater to the City of San Diego. This is due to the Pure Water Program that was
being implemented to provide the double benefit of "secondary equivalency" to San Diego's wastewater
customers including National City as well as a significant new potable water supply for the City of San
Diego.
The City hired Ardurra Group, Inc. as a subconsultant to Anser Advisors to review expected revenue and
expenditures for the next few fiscal years to assess whether a rate increase was needed. We have
completed that assessment and note the following key elements of the system needs:
1. The City's Reserves are much higher than the previous model predicted due to lower costs
from Metro during the rate model. Additionally, the amount of money needed for the Metro
Cash Flow reserve has significantly dropped since the City of San Diego decided to take out
loans for the construction of the Pure Water Program.
2. Inflation will affect the City's CIP costs and City of San Diego Metropolitan Treatment System
(Metro) system costs. Construction costs are currently vastly outpacing inflation, which has
increased significantly.
3. Metro costs during the past 5 years have generally been lower than the previous rate model.
Their costs over the next 5 years will be significantly more than the previous rate model.
4. No significant changes have occurred in the flow characteristics and distribution of flows or
billing classifications in the past 5 years and therefore the current billing structure is
appropriate.
5. The City's CIP budget needs to be increased to address system improvements needed.
$4,000,000 can be budgeted and fit within the current rates.
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April 27, 2023
Page 2
Based upon our review of these key elements and the current reserves, no increase in rates is needed
for the City of National City for FY23-24 or FY24-25 at this time. We will continue to monitor it annually
and make recommendations based upon actual expenditures and construction costs.
The below table details the recommended monthly and unit charges.
TABLE A
Annual Sewer Service Charges for FY 2023-2024 & FY 2024-2025*
User Class
Current
2024
2025
Residential: $ Per Month
Single Family
$ 51.18
$ 51.18
$ 51.18
Multi-family/Condo
$ 39.92
$ 39.92
$ 39.92
Mobile Homes
$ 31.22
$ 31.22
$ 31.22
Non -Residential: $ Per HCF
Commercial - Low
$ 5.25
$ 5.25
$ 5.25
Commercial - Medium Low
$ 5.66
$ 5.66
$ 5.66
Commercial - Medium
$ 6.80
$ 6.80
$ 6.80
Commercial - Medium HigF
$ 7.95
$ 7.95
$ 7.95
Commercial - High
$ 9.88
$ 9.88
$ 9.88
*Commercial properties have an annual minimum charge of $374.61 which is equivalent
to a mobile home annual charge. Duplexes on a property are charged one single family
rate and one multi -family rate.
For the purposes of this memo, references to a specific fiscal year are for the City's fiscal year ending
June 30. To avoid confusion between calendar and fiscal years, the term FY refers to the year beginning
July 1 and ending June 30. The current rates were set through FY 2023 and therefore 2023 is considered
current.
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April 27, 2023
Page 3
The below table details the current beginning balance based on the draft ACFR, budgets and projected
expenses for the next two years and resulting Fund balance over the recommended target reserves:
TABLE B
City of National City
Sewer Utility Long Range Financial Plan
Current
Fiscal Year
2023-2024
Fiscal Year
2024-2025
Beginning Balance
Revenue:
$ 19,357,821
$ 16,154,651
$ -
$ 15,331,767
_
$ -
Non -Operating Revenue
User Fees
$ 10,847,8984
$ 11,910,000
$ 11,910,000
Total Revenue
$ 10,847,898
$ 11,910,000
$ 11,910,000
Operations Expenses:
Collection System Maintenance
$ 2,185,086
$ 2,294,340
$ 7,438,544
$ 9,732,884
$ 2,409,057
$ 7,661,700
$ 10,070,758
Metro and JPA costs -Blended
$ 6,285,4364
Total Operations Expenses
$ 8,470,522
Capital Improvement Program:
Collection System CIP
$ 5,580,546
$ 3,000,000
$ 4,000,000
Total Expenses
$ 14, 051, 068
$ 12, 732, 884
$ 14,070 758
$ 16,154,651
$ 15,331,767
$ 13,171,009
Fund Balance Prior to Reserves
Reserve Targets:
Operations/Cash Flow _ _
Metro Cash Flow
$ 4,235,261
$ 825,000
$ 2,107,660
$ 1,270,578
$ 1,270,578
$ 4,866,442
$ 825,000
$ 1,909,933
$ 1,459,933
$ 1,459,933
$ 5,035,379
$ 825,000
$ 2,110,614
$ 1,510,614
$ 1,510,614
Emergency/Nat Disaster
Capital Expansion Reserve
Capital Replacement Reserve
Total Recommended Reserves
$ 9,709,078
$ 10,521,240
$ 10,992,220
Fund Balance Over/(Under) Reserve Target
$ 4,810,527
$ 6,445,573
$ 2,178,789
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April 27, 2023
Page 4
This analysis maintains the City's current reserve policy #201, Amended May 4, 2021, that applies to the
sewer fund of which there are five elements:
Sewer Service Fund Operations/Cash Flow Reserve: Between 25& 50% of a single year's
budgeted Sewer Service Fund Operating Expenditures.
Sewer Service Fund Metro Cash Flow Reserve: an amount equal to the City's Estimated portion
of the projected cash needs for capital costs of the San Diego Metropolitan Sewerage's
Wastewater Treatment Program.
Sewer Service Fund Emergency/Natural Disaster Reserve: an amount equal to a minimum of
15% of a single year's budgeted Sewer Service Fund Operating Expenditures.
Sewer Service Fund Capital Replacement Reserve: an amount equal to between 10% & 15% of
a single year's budgeted Sewer Service Fund Operating Expenditures.
Sewer Service Fund Capital Expansion Reserve: an amount equal to between 10% & 15% of a
single year's budgeted Sewer Service Fund Operating Expenditures.
Background: City of National City
The City provides wastewater service to approximately 17,000 customers within the incorporated area
of the City of National City. It owns and operates approximately 100 miles of pipeline, 2,000 manholes,
and 2 lift stations. The collection, treatment, and disposal of wastewater in an environmentally safe and
efficient manner promotes healthy communities and increases the quality of life for local residents.
The City is responsible for collecting and conveying wastewater flows originating within the City to the
City of San Diego's Point Loma Treatment Plant for treatment and disposal. The City's primary goals are
operating the sewerage system safely and efficiently while meeting the needs of their customers.
To meet these goals, the City undertakes routine cleaning, inspections, and repairs and rehabilitates its
facilities as needed. The wastewater system operates in an area subject to strict regulatory oversight by
Federal and State agencies such as the U.S. Environmental Protection Agency (US EPA) and the California
State Water Resources Control Board (SWRCB). The City must comply with a multitude of laws including,
but not limited to, State Wastewater Discharge Requirements (WDRs). Complying with these regulations
and resulting mandates contributes to a large share of the cost burden on the City's system.
Background: City of San Diego Metropolitan Sewage Treatment System
The City is one of thirteen participating agencies (PAs) who send their wastewater to the City of San
Diego Metropolitan Sewage Treatment System (Metro) for treatment and disposal. Along with the other
PAs the City entered into the Regional Disposal Agreement with San Diego in 1998.
14271 Danielson Street I Poway, CA 92064 I 858.413.2400 I www.ardurra.com
April 27, 2023
Page 5
In 2015 the City of San Diego initiated a multibillion -dollar public works project entitled the Pure Water
Program which will provide the double benefit of "secondary equivalency" to San Diego's wastewater
customers including National City as well as a significant new potable water supply for the City of San
Diego. When the last rate study was completed, there was a lot of uncertainty as to whether the Pure
Water Program construction would be funded with cash or with loans. The rates and reserves
established by the City in the last rate study included reserves that would have allowed for paying cash
for the City's portion of the cost of the program. Since that time, the City of San Diego has obtained low
interest loans for much of the work and thus the reserves needed for the Metro system have greatly
reduced and now only include regular Capital Improvement Program projects that are anticipated to be
paid for with cash. There for the total dollar of necessary reserves for the City has been reduced.
The construction of the Program is well underway and therefore most of the costs are known, but the
City of San Diego has also indicated that there are other inflationary items and potential change orders
that will affect the City of San Diego's projects. An Amended and Restated Regional Wastewater
Disposal Agreement between the City of San Diego and the Participating Agencies was adopted in 2018
that updated cost share of this program. Another update is being developed and negotiated that will
finalize several elements of that 2018 agreement that were left open. It is anticipated that update will
be ready for finalizing in the next 6-12 months. It is not expected that these updates will significantly
affect the City's costs currently projected.
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