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    20.    
City Council Regular
Meeting Date: 06/23/2020  

SUBJECT:
FISCAL YEAR 2020/21 WATER RATE INCREASE
RECOMMENDATION:
  1. Adopt a resolution for the Fiscal Year 2020/21 water rate increase and include one of the following options:

    Option 1:  4% increase July 1, 2020 and an additional 4% increase January 1, 2021
    Option 2:  Six month deferral with an 8% increase January 1, 2021
    Option 3:  No deferral. 8% increase July 1, 2020. 
     
  2. Direct the City Clerk to update the resolution with the Fiscal Year 2020/21 water rate increase option selected by the City Council.  
BACKGROUND/ANALYSIS:
On May 8, 2018, the City Council approved a water rate study with a new rate structure and a financial plan to cover ongoing water costs, debt service funding, operating and maintenance funding, and capital replacement and expansion costs for the next five years. These new rates were established in compliance with the results of the ballot protest proceedings. The estimated annual increase is 8%; and was based on actual costs and charges for water, electricity, projects, and operation and maintenance of the water system. Under this approval, water rates are scheduled to increase every July 1 from 2018 to 2022.
 
The COVID-19 pandemic has significantly impacted the economy at the national, state, and local levels. While the full extent of the economic impact is not yet known, this crisis has created uncertainty within our community. In an effort to mitigate the financial impact to the City’s residential and commercial water customers, staff recommends the City Council consider the following FY 2020/21 water rate increase options and provide direction to staff:

Option 1:  4% increase July 1, 2020 and an additional 4% increase January 1, 2021
Option 2:  Six month deferral with an 8% increase January 1, 2021.
Option 3:  No deferral. 8% increase July 1, 2020. 
ENVIRONMENTAL (CEQA) REVIEW:
This action is not a project within the meaning of the California Environmental Quality Act (CEQA) (California Public Resources Code §§ 21000, et seq., “CEQA”) and CEQA Guidelines (Title 14 California Code of Regulations §§ 15000, et seq.) Section 15373 and is therefore exempt from CEQA. CEQA does not apply to the establishment, modification, structuring, restructuring, or approval of rates, tolls, fares, or other charges.
 
FISCAL IMPACT:
The fiscal impact will be based on the selected option as follows:

Option 1: Approximate loss of $600,000. 
Option 2: Approximate loss of $1,200,000.
Option 3. No fiscal impact.

There is no impact to the General Fund with this item.
 
REVIEWED BY OTHERS:
This item has been reviewed by the Finance Director.
Attachments
Resolution

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