Resolution No. 2019-051RESOLUTION NO. 2019
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON ADOPTING A REVISED SCHEDULE OF WATER RATES
AND REPEALING ALL RESOLUTIONS IN CONFLICT THEREWITH
WHEREAS, pursuant to Article 1 of Chapter 25 of the Vernon
City Code, the City charges rates to its water customers to fund the
City's water enterprise; and
WHEREAS, the City's existing water rates are insufficient to
fully fund anticipated enterprise costs; and
WHEREAS, Section 25.1 of the Vernon City Code authorizes the
City Council to set water rates by resolution; and
WHEREAS, on October 1, 2019, staff presented to the City
Council of the City of Vernon the results of the "Water Rate Study for
City of Vernon" dated September 26, 2019, prepared by IGService, and
staff began the California Proposition 218 (Proposition 218) process in
order to receive testimony regarding the adoption of the Amended Water
Rate Schedule; and
WHEREAS, the Amended Water Rate Schedule does not include the
rates for reclaimed water (the "Reclaimed Water Rates"), because those
rates are a complete pass -through from the Central Basin Municipal
Water District to, currently, one industrial customer, the Malburg
Generating Station; and
WHEREAS, the proposed water rates to be amended include
automatic pass through and inflation adjustments as set forth in the
Resolution of Intention; and
WHEREAS, on November 19, 2019, the City Council held a full
and fair public hearing regarding the proposed water rates (the "Public
Hearing"); and
WHEREAS, as required by law, notice of the Public Hearing was
mailed to all affected water customers not less than 45 days prior to
the hearing; and
WHEREAS, pursuant to the City's adopted "Policy Governing
for the Acceptance and Tabulation of Protests" (the "Protest Policy")
the City Clerk has accepted written protests against the proposed
water rates; and
WHEREAS, the City Clerk has determined and the City Council
hereby confirms that a majority protest against the proposed water
rates does not exist; and
WHEREAS, the City Council of the City of Vernon desires to
revise the City's water rates.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF VERNON AS FOLLOWS:
SECTION 1: The City Council of the City of Vernon hereby
finds and determines that the above recitals are true and correct.
SECTION 2: The City Council of the City of Vernon finds
that this action is exempt from California Environmental Quality Act
(CEQA) review pursuant to CEQA Guidelines § 15273(a)(4), which states
that CEQA does not apply to the establishment, modification,
structuring, restructuring, or approval of rates, tolls, fares, or
other charges by public agencies which the public agency finds are for
the purpose of obtaining funds for capital projects, necessary to
maintain service within existing service areas. Furthermore, even if
the proposed changes in water rates were subject to CEQA review, the
approval requested is exempt in accordance with CEQA Guidelines §
15061(b)(3), the general rule that CEQA only applies to projects that
- 2 -
may have a significant effect on the environment, for the reason that
any construction that may occur in the future by a private party
relying on this approval would be subject to CEQA review at that time.
SECTION 3: The City Council of the City of Vernon hereby
adopts the Schedule of Water Rates set forth in Attachment "A" to this
Resolution subject to the automatic pass through and inflation
adjustments set forth in Attachment "B" to this Resolution. Staff is
authorized to implement the automatic adjustments and cause such
adjustments to take effect without further action by the City Council.
Such automatic adjustments shall not constitute "increases" in the
water rates for purposes of Article XIII D, Section 6 of the
California Constitution.
SECTION 4: The rates approved by this Resolution shall be
effective as of January 1, 2020.
SECTION 5: The Reclaimed Water Rates shall remain
unadjusted and carry forward unaffected by the Amended Water Rate
Schedule; and
SECTION 6: The City Council of the City of Vernon finds and
determines that:
(a) Revenues derived from the rates imposed by this
Resolution will not exceed the funds required to provide water
service.
(b) Water rates are used solely to fund costs associated
with providing water service, and, therefore, revenues derived from
the rates imposed by this Resolution will not be used for any purpose
other than providing water service.
(c) The amount of water rates imposed upon any parcel or
person as an incident of property ownership will not exceed the
- 3 -
proportional cost of the service attributable to the parcel.
(d) Water rates are imposed only for services actually used
by, or immediately available to, the water customer.
(e) The water rates are not imposed for general governmental
services where the service is available to the public at large in
substantially the same manner as it is to property owners.
SECTION 7: All resolutions or parts of resolutions,
specifically Resolution No. 2016-48, not consistent with or in conflict
with this resolution are hereby repealed.
SECTION 8: The City Clerk of the City of Vernon shall
certify to the passage, approval and adoption of this resolution, and
the City Clerk of the City of Vernon shall cause this resolution and
the City Clerk's certification to be entered in the File of Resolutions
of the Council of this City.
APPROVED AND ADOPTED this 19th day of November, 2019.
l Melissa' r�arra
Name:
ATTEST:
yI Ss+- u-
L s� a Pope, City Jerk
APPROVED AS TO FORM:
D
Brian Byun,
Senior Deputy ity Attorney
Title: Mayor /
- 4 -
STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )
I, Lisa Pope, City Clerk of the City of Vernon, do hereby certify
that the foregoing Resolution, being Resolution No. 2019-51, was duly
passed, approved and adopted by the City Council of the City of Vernon
at a regular meeting of the City Council duly held on Tuesday, November
19, 2019, and thereafter was duly signed by the Mayor or Mayor Pro-Tem
of the City of Vernon.
Executed this Z;� day of November, 2019, at Vernon, California.
(SEAL)
- 5 -
(LisaPope, City Clerk
Attachment A
Schedule of Water Rates
City of Vernon Water Rate Schedule
Rreaent
year 1
Y. P
ysr r
Y. C
Y. r
Cab9ory 0 Service
Rataa
Chess s: Various
3.0%
3.0%
3.016
10$$
»naval Water Seryica
Role too, HCF for A' use
S22o6
R2116
00%
$2270
52.340
U410
52.480
Monthly Meter Clagn
Ng' Whir
$823
$1646
100%
$16.0
S17.46
$11.%
$18.52
14'
$12.14
$24.68
100%
V5.42
$26,18
M97
U7M
1'
S20.57
511.14
100%
S42.37
S43.64
W,ffi
S...
1-10
$41.15
$82.30
10036
Sea'"
S92.31
WIM
$92.0
2'
S85.Sit
S131.68
100%
$M63
$in."
$14369
S14321
3'
$123.45
5246.90
100%'
S25431
5261.94
$MM
32yr.89
4"
$20,76
5411.50
1o0%
5423.86
S136.57
$44967
5463.16
6'
S411.50
582100
100%
$847.69
$873.12
$899.31
$928.29
8'
5658.41
$1,31682
10066
51.356.32
$1,39191
51,438.92
S1,43209
nre senses Charges
Cost per Square Foot of Flrcprotecled
5000319
$0.00364
14%
XX375
$0.00386
$0.wm
W.1)U410
Buddha Space per Month
Cost per each FrERetated Meter per
S2.o0
Fee Rmrnned to be CoreiM by Square Footage Cost
Month
Cost per Sprinkler Head per Month
$025
Fee RemwM to be Covered by Square
Footage Cost
(Mmmum Rate)
Cerroduold. Hydrant Uspe
Refuni New Deposit
E00o.W
5600.00
056
59N_UU
"Dow
Slaw
$800.00
Installation aM removal
$26IWI
$loom
0%
S .00
UNM
5200.00
$2o0A0
Rate par HCF for all use
52.208
V.206
00%
U270
52340
$2.410
52A80
Rate changes dung Was 2Ifni 5 may vary depas iiq on me impaot of th emilesale water cost adjustment mechanism.
The rates and charges are established pursuant to Chapter 25, Article I of the Vernon Municipal
Code. An example of the wholesale water cost adjustment mechanism for rate changes during
years two through five is included in Attachment B.
Attachment B
Automatic Adjustments
p,n—�z
account for forecast costs of water from revenue/expense model in rate study.
Account for actual costs of water at the end of each fiscal year.
Calculate the added charge per unit of water sold based on volume sales forecast.
Consider the impact of charges in other exial
Determine the pass -through amount to be used, documenting national le for public review when requested
Forecast Costs from 2019 Bate Study,
Year
Fiscal Year
Water
Replenishment
Central Basin Total
Forecast
District
Cost
1
20/21
$2,568,312
$496,314
$3,0 ,626
2
21122
$2,645.000
$516,000
$3,161,000
3
22/23
52,224."
$539,000
$3,261A00
4
23/24
$2,806,000
$558A0o
$3.364Aoo
5
24125
$2,890,000
$5S0,000
$3,470,000
Forecast Saks Oven-rmover Added Charge
Volume(CCFJ$/CCF
) (Under -recover) or )
$/[CF)
21/22
22/23
23/24
24/25
Actual Costs during Fool Year
Water Over -recover
Replenishment Central Basin Total Actual (Under-rmoverl
Distinct Cost
Each January 1, beginning January 1, 2021 and ending January 1, 2025, the volumetric charge
will automatically adjust for pass through costs received originating from water purveyors.
STAFF REPORT
AGENDA APPROVED 11/19/19 DJ
City Council Agenda Item Report
Agenda Item No. COV-493-2019
Submitted by: Joanna Moreno
Submitting Department: Public Utilities
Meeting Date: November 19, 2019
SUBJECT
Public Hearing Regarding Proposed Changes in Water Rates and Resolution Approving and Adopting a Revised Water
Rate Schedule
Recommendation:
A. Find that approval of the proposed action is exempt from Cardomia Environmental Quality Act (CEQA) review
pursuant to CEQA Guidelines § 15273(ax4), which states that CEQA does not apply to the establishment,
modification. structuring, restructuring, or approval of rates, tolls, fares, or other charges by public agencies which the
public agency fads are for the purpose of obtaining finds for capital projects, necessary to maintain service within
existing service areas. Furthermore, even d'the proposed changes in water rates were subject to CEQA review, the
approval requested is exempt in accordance with CEQA Guidelines § 15061(b)(3), the general rule that CEQA only
applies to projects that may have a significant effect on the environment, for the reason that any construction
that may occur in the future by a private party relying on this approval would be subject to CEQA review at that
time; and
B. Provided that a majority ofowners/tenants ofthe affected properties have not submitted written protests as
of the end ofthe Public Hearing, adopt a resolution adopting a revised schedule of water rates and repealing all
resolutions in conflict.
Background:
Vernon Public Utilities (VPU) owns and operates a potable water system that annually provides approximately 6,900
acre-feet of water to its customer base. VPU currently serves is customer base with groundwater and, on an as -needed
bass, costly imported surface water purchased from Central Basin Municipal Water District. The major components of
the water system consist of eight active groundwater production wells, one standby well, three booster plants with
fourteen active booster pumps, eight storage reservoirs, and approximately forty-nine miles of distribution pipelne. Due
to the overall age of facilities and deferred maintenance, many of the water facilities have fallen into disrepair.
Mechanical breakdowns occur frequently and most of the facilities require repair or rehabilitation. The Water Division
Capital Improvement Plan (CIP) will address the die state of the water facilities, add reliability and capacity, facilitate
more efficient water system operations, and ultimately eliminate dependence on costly imported water. In order to find
the Water Division CIP, City of Vernon ("City) staffs seeking to obtain bond financing. To secure bond financing, the
water utility mist secure a proper credit rating and meet the required debt service coverage.
On May 9, 2019, City staff presented to the Business and Industry Commission (BIC) regarding a then -proposed
water rate study as well as the Water Division CIP that would address aging infrastructure. The presentation was
well -received by the BIC.
On June 4, 2019, City Council ('Councir) approved a Services Agreement with Interstate Gas Services, Inc. dba
IGService (`7GService') to update the April 2018 Water Rate Study. As the Council is aware, C'ty staff is currently
AGENDA APPROVED 11/19/19 DJ
going through the process to issue water revente bonds in an amount not to exceed fifteen mlgon dollars ($15,000,000)
to finance the water utility's CIP. The updated rate study (2019 Rate Study) and corresponding proposed rate
increases are a critical factor in securing tax-exempt bond financing as the increased revenue wig enable the water utility
to secure a proper credit rating, meet the required debt service coverages, and ensure repayment of the bonds.
Due to the state of the Water Division facilities, many CIP projects were urgent in nature and, as such, critical projects
com minced prior to the receipt of bond proceeds after Council approved Restitution No. 2019-18 on June 18, 2019,
declaring the City's official intent to refinbuse expenditures from the proceeds ofobligationis to be issued by the City of
Vernon, a related party or other affiliate, and approving certain related actions. Resolution No. 2019-18 authoniwd the
Water Division to utilize bond fiad'ng, once available, to replace City reserves used to fiord urgently -needed CIP
projects.
The 2019 Rate Study was completed on September 26, 2019. On October 1, 2019, City staff and IGServices
presented to Council the results of the 2019 Rate Study, including the recommended changes to water rates.
Additionally, City staff and IGServices reported to Council the process for adopting new rates. Subsequently, as part of
the aforememioned process and pursuant to California Constitution Article XIII D, § 6 C?mposiion 218' ), a Notice of
Public Hearing Regarding Proposed Changes in Water Rates was mailed to custoners along with an invitation to attend
an informations] meeting scheduled for October 22, 2019. The informational meeting was held on the abovementioned
date. VPU Staff and IGServices presented to attendees and proceeded to answer questions posed by the audience. A
total oftwo companies attended the informational meeting.
Consistent with the 2019 Rate Study, staff proposes that the Water Rate Schedule and the City's billing poky be
simultaneously modified to remove the Utility User Tax (UUT) Credit and increase rates, as fiatber described in the
proposed resolution.
The proposed rates cannot be nposed/ncreased l'a majoriy of ownersherants of the affected properties submit
written protests. All allowable protests received will be tabulated prior to- and at the conclusion of- the Public Hearing.
If protests ane received from fifty percent or less of the affected properties, the proposed rates may be adopted.
Focal Impact:
If approved and adopted, the proposed water rates will go into effect on January 1, 2020. As such, the water utl'ay will
receive the corresponding additional revenue for the second half of the current fecal year.
ATTACHMENTS
• I. Notice of Public Hearing Regarding Proposed Changes in Water Rates
• 2. Water Rate Study for City of Veman September 26. 2019
• 3. Water Division TTree-Year Capital Improvements Plan
• 4. Resolution Adopting a Revised Schedule of Water Rates
AGENDA APPROVED 11/19/19 DJ
CITY OF VERNON
NOTICE OF PUBLIC HEARING REGARDING PROPOSED CHANGES IN WATER RATES
I to comply with P'psnioo 219. Califamia Constimtuw Ankle MID. Section 61
The Vernon City Council Hill hold a public hcadng to considerproposed moditicat oc and increases to warer,harks for
,a m mesd to ha the Cin. anhear and consider.abe ce, and pvoreari to the proposed mdifcalions and the raze ewda
'non described beio..
IIF.:\RIti D\fE: feeds. ]member 19.3019 a: ar aher90p am
FIE ARISG I.GCATIO\: Ca of\'croon Cin Council ('hamhers. 4305 S. Santa Fe Amnue. Vtmon. CA W59
RATE SIFF DI REPORT: A repo,, ha IGSco. . dtd September 26. 2019. deseribing detaik .1the We
modifications and increases and the method cud to calculate the me modifeatiom s,d increases Ithe "Report') ha baen prepare.
and the contents of the report submitted to the ('ounci:. The Repo is on fac with the Cin Clerk m th<ddress ebu, a anJ ea e!so
be tound an the Cin wcb,oc,
A\IOI SI' OF PRO".SED \\AIER RAI E \IODIFI('.\l'IO\S: I he vnuunt, ofwatcr rams Iprcsem and p'pscdl
arc on the ameba ram mble. The mem1l rtmntm inaeax in the tint yam is I1 Nrcrnt IDlimwd h) (rem eons<cuti,e three pals.
"t ion, The three percent increases cos' San baud on ,.Sagas in the re of wr hlemk wsa sup.. The increased a laa er
irn..,s c. San d nor on umcr char ci ion pan<ms. Smaller pummels auth loam, water conao ,in hu sett! sec larger
(I ICF) s M1 be tul hart mm:the mna ararges will hse inereawd a. permit. where. the o.i born
mic rate pr hundred avbi, tea
II IC'P) rrci he unchanged in the first )rn. The that
;.reads arc kfi.0 e. upn remoaal 1'mm ion to the
bills of the Pmum
fine proem t'tilin )rout las credit. meaninf that cuxmmers will pay the lull six percent cos. in addition m tht 13 percent ncemll
increase
RE.\SO] FOR "I IIE PROPOSED MODIFICATION OF WATER RATES: [be proposd mudificotions of
Ve.... wsar rates are "orient) to pro,ide funding for apmaimatdy S21 million in capital improaement projects oaer the next
Osc the c projects are rwc,, a to proaldc s,mcm mliahllm- aswm good owur quality. ad to a oid prcltax, of
nNmaiae imprmd Scoter. Rcaenuc from find rate aampnrnrz IMnnthh Mncr('h.,e and )'ire"im Chargel will be iouri
o,erctl .bat 30 No i,nr to 38 percent in mnrc drub match reacnsw receia d with tied.,,1s m opener the Scoter entapri..
R \91S FOR PROPOSED \IODIFK ATIO\S OF q'ATER R\TES: A deungion ofho" the modifical4m, were
calcula;,J ens nee in the Report . Jr. general. the has:, is to dmrge msm.en m pmpnion lone- bund. puns to -r,c them.
tinin the nunlitied rams and charges will not he ,none then the funds taqutrd in the City to comic ade,..Ic Darer
,cop. mdadlog capital impmarnwms w usure Mlabilit5 and kmga, io nr uniee.
PRO( 'F.DI'RE FOR IIF..\RING \ND DEI'F.R\IINI\(: MUCIR11'\ PRO'I'F_ST: At the time sorted aho,c. the
Co,oun will hear Sad consider all objections and protusu. if an,. In :hc p.q„d want rate moditicariom and other mute.
dovcnbd in ;hc Report . the Com,i! mac contin. the hcadng from :ire to titre. At the dox of:he been. , if written Pratnn
.fain. the pmposad modified ..,or rate are pnxcolvd or .acre promoted prior to the public hcadng and or eithdnun h, a
,nalorh) o1'the recoN nx re,nfthe pawls that could he,uhjep In the ni ditid „a:cr.te, the ('its may not imp. the nadified
.late* cotes: insamd. later rams would ,nntinuc at their existing. pre. ouch-uppnucd amounts. It: a: the ,low• of the p'mst
Searing there is m maioita pmttvr as dexn!wd ahsn c. th. Cuunail mac apro,e the rate mtditia..ma as prop+s,d ar as changed
b, the (roans., 1. m d: all'eethe commencing daaoan 1 2020.
PRESER\ I\G 711E RIC.IIT TO ('11 %LLEMA.: An) prwn whw .,, m prune lheoppnunil) m file a lowso!t
'hiiKecging the propose netcrac mod!`ca:dn. if imps,' or.her rraccn described to the Repn roux file a prince p,,.t
h the Council, ..vo, the sNuitic ground, of the protest. Any ground, not smtd in ,rk. prot<x 13kd with the Council
ine the 61'1e n!!he "'test hearing un \merb,r 19 2019. will be deemed ocincd.,A it., not Sc, raid in area sLhl,lel!
.n.lin
IIO\\ TO PROTF.Sf THE PROPOSED R,\TE 6CRF.ASES: All owners and temntS 9f propn) namn ing City
eater ur, ice,. and interested .as ax inn iced to attend the Public Hearing noticed iboac. P'tinen protests must b, mwiaed
Icon porrmndrth b5 the Cin Clerk before or during the public hearing. An) protest submitted Its c-mail orothar ekctvnic means
oil. nn: be acceged. The ustax roux bo sig.d ba In, proprt) nen,) or mac n,I an teas: include the assessor's "reel
..umbensl or street addrewc') .1' ell proue,mm') w,r,!c,d. (h 1, are written protest per identified panel or Fortson, will be
anunmd for no aus.1'decor ni., uherb,, thereis. majorft5 pmm,t.
ADDITIONAI. INFORMATION: For ddn—i inquire .boa the prop, d „Star rare proceeding. roman Atrnasn)
Serrano. Cuslomer Services Manager. at (3231583-9811 1'. xt. 202. or ha email. x,erren. u ei., e
AGENDA APPROVED 11/19/19 DJ
City of Vemon Water Rate SGhadule
r... r
1G. 3'
rGr <•
Y.n r
4h30ry W 3.rvi<.
NM
cfts'.. WII...
310%
30%
Im
30%
G.nna Wa.. Smlu
R.l per r.CFtr Y�x
V.
3220I OC%
UM
ww
32.10
WIN
MpnRJY Meu' Cn.ges
S9-Mex
N23
S:6b 10yt
3:095
3:246
S11"
$Is S2
5:2.
52.. iW
MW
MIS
SM92
II2m
1'
$2051
5<11< 1(PA6
34237
U364
MISS
m30
I-"T
V.-5
WIN 1y
SG.n
56231
us 93
59263
i
MS.
$13166 Ip
313563
3139n
S1069
S1021
r
s:nas
3246 e0 'ao%
uv 3:
sa-.G
sa90.O
anse
a
3211S 15
5.""5C 'C'_'*-
S<n65
3<Y 52
Su961
546I 1.
6'
ull SO
umm 'CC%
Y4289
"':, 12
U9931
"an
6-
5556 a1
Si I1662 t¢4
S1 3X 32
$139201
3H3692
111 IN
Flp B.rvIC. Ca.gG
Cwr xr $02an cx; a.xe-arO:.d<O
SO cn"
50003N 1<1
fO.11
ww,,S6
Nmw
NOO<10
all,
CGr GrGT IllRnem.1 se
WX
FNRw WGCOm.OSYSpun Fm OCO<:
Wnp
ex-SW.tN'nGC x'VR,p
W25
'G 9<rr �:S pe^xee aY SO.art iwlp.
Gpe
IV .I, R.)
ic..Vpolpn HY6r.R Ilu9e
Re„ .e Mille, xpp.-
s50C c9
sw9. 3%
mwx
SIX
Sea 90
SNOW
<..a.p era mp.a
a9c SC
52WW a%
um co
u0C 0C
sm.
umm
'.. a.rc pe••1CF q, a...x
$7.
$22C9 0a%
$221.
323<0
"n
$2460
'.aae m.,6Gc.^9mere 2puq-5m.r xaGxen0
cn pemo.cp•m..,,oe..e.ne.cmr.c;-.m.,1
p.<n.,a+
� p
Ile: ah llartinpnn. m<nm ('i• .en. (late /
AGENDA APPROVED 11/19/19 DJ
CALIFORNIA NEWSPAPER SERVICE BUREAU
DA I LY JOU RNA L CORPORAT ION
Mailing Address: 015 E FIRST ST. LOS ANGELES, CA 90012
Telephone (800) 789-78401 Fax (800) 484-2839
Visit us ®www.Legs Adstam.com
Lisa Pope
CITY OF VERNON CITY CLERK
4305 SANTA FE AVE
VERNON, CA 90058 PRE# 3309303
COPY OF NOTICE
Notice Type: GPN GOUT PUBLIC NOTICE
Ad Dexnption
Notice of Public Hearing - Proposed Charges in Water Rates
To tl1e right is a cep, of the ratice you sent to us for publication in the
HUNTINGTON PARK BULLETIN. Please read his notice cerefully and call us
wth any corrections. The Proof of Publication will be filed with the County
Clerk, it required. and mailed to you after he last date below. Publication
dam(s) for this notice is (are):
10/312019. 1110T/2019
An kwdce Will be sere after the last data of pubicatcn. If you prepaid his
order in full, you will not receive an invoice.
IIII IIII IIIII IIIII IIIII IIIII IIIII IIIII IIIII IIIII IIIII IIIII IIIII IIII IIII
+ A 0 0 0 0 0 5 2 6 1 2 9 3+
CITY OF VERNON
NQT=KH
a AMU IN .WATERRATES
XII10Serear6The Mal l Coy Com^J elf IeM A condo bade', a coms4er PW-'waw m atiW and
mrsases to water cheri for savxa hrmishm W Me Cry ere to neeand crosed, o0)ederis
and protests to Me gq'ated amincalms and ate she U0y re vi desmbe0 over
HEARING DATE: TuxErv_ November 19. M19 as Or after 9:DO am
HEARINGLOCATION: Cma Vemon CllyCWndl Cbamttrf,a305S. San1aPo
Avenue. Vernon, CA 9005E
RATE STUDY REPORT A repot by ICSereiu, dated Seplemeer 26, 201R desWining
dekiM of ate vale mo0iM.S and high f and Ire maMW used w wkulae The race
modifications and brasses (Me wepaY) had boom pepaed, and Na commis a Ire
regof ..We. to IM1a Ccunal. The Repo is on file war Me City Ckrf At tlne address
above and can also be found on the City whomme.
AMOUNT OF PROPOSED WATER RATE MO IFICATIONS: The Amomys of ware w
(pesa9m veil pro .) ae om me offecr ed. udB. The vernal havmue rem —
mat par A 13 paean. Idbvnd by kur crosecumv. Minx paeadnl baeesee '
percent inwases may vary bexd An charges or me msl of wirokmk wale, s
increased eggs to customers MII very based on welet cowmptio patlems. is
-a. worm . ward, wnwmplgn will Sx target infl . because 1—
mela drapes WA Move -,Mooed IN perrml, wVmwS me vdurrretre ralad pre
Wtic leg M CF) cod be undragent n The find 5'xr. The proposed ageamea a,...
upon re,Mvalhdn wflmmer bills W me present fix parnnl Urpty Usa Tu cral "
Malnatationwillpayme NIIgzpereentae.lnaddbimtoma13Pe Moveral
REASON FOR THE PROPOSED MODIFICATION OF WATER RATES: The —
mWilcalems a Vemos wgtt vales Are P anenty to pmvbe funding fee ap'.'7'
#1 millm er capiall institutional projMs over Me time five year. These pm,e::; ..
naeaafary to power, System relubils, assure good water duals, and A avoid purchases
of expensive Imported water Revenue from fixed rate components (Monody Meter Charge
and Fire Server, Charge) will be increased overall from W portent to W percent to more
camer,,Melt revenue thermal wed fired W91s to apv the water mlerp.
BASIS FOR PROPOSED MODIFICATIONS OF WATER RATES: Adeangm W how the
mCOifiulbnswerecalculatedCan"foun0mine Report ngene2l, thex1biatocharge
customers in proportion to Me burden cogs to Serve Main. The revenue from the modified
rates and charges vnll not he mo2lhan Me funds requoed M Me Cry to provide a0el
walo earvarts indudTg capral i,nprovements to aawre relubilry and M9evey dxrve.¢
G MAJORITY PROTEST.
Me time
Paled above EMeCouncilnRw� must andconsidera0 Objections end pMests t atnyy W the
proposed wed modifications hin eReport The Councilmay, continue thehfor1. to tells Al Mad ebx a theml wrltMn
a9rig Me "Formed mN?red wNa hales are permanent or was pexne0 prior A the
pubfe hearing, and nq whim. by a thermal of the recoil comers of the pareab mat
wwId be subject to the minor water raters the City may not mpose the mMmed water
rates', instead, water rates would continue at Mew easing, pnamuslAapproved amunts
N, of me Wu of the prowl xnngthereis no mapry"am as des revere. the
CWrrul may approve Pe ralemWifiwtms. es gopoead roes cTangx bytM Council. to
be effes ve commencing Aanua a 1. 2020
PRESERVING THE RIGHT TO CHALLENGE'. Any person who wants to preserve the
Oppddumty to file a 4wwr challenging me popOfed water rate modifications, dShift.
odlwtmilersdexn mthe ReponmMfibaw enVpegwind Me CWndl, slatng
the epe ri e, grounds ill Me "am Any gmundf her Staled in a wnm patent filed All
me CWndl Ca1dR Me case d lh! pMeg hea,in0 Cn Nmwemen 19 1019, vnll Ce dxmed
dived and may nod of raised In any subsequent Iaweet
NOW TO PROTEST THE PROPOSED RATE INCREASES: All or. ae 1manB e
properly hmervhg CM valor xrvxez, and mNhmdW panme ae heard to and Irv¢
Public Heamg native shore. V. prmegf mug be recMVM(not posbnarhed) by the
CBy Caere before or during Me public hearing. Any Protest submitted by e-mail w Other
elwmnc means will Dglee accepted. The protest must be all by the property owne,ts)
elements) and must include Me asmsso'a petal numbers) or street eddresamer) Of al
prWmyStes) serve,. Only one wrillm groteg per identified ps'cel or property will Ce
com18d for pmyxa W determining ..e mero R A negoily poeed
ADDITIONAL INFORMATION'. For additional inquiry eWN the proposed water rate
precaeding, coon ad Anthony Serrano, Customer Services Manager, at (323) 583-mil l
Er,. 202, or by bmar, 9xhnnOmcl ve
fJgwy MSFNtt
NnM cool
wear
YW7
war
stop
Rate
chn9a: vndva
us
am:
ITS
3.
fienww.as.ww
1uepFllffmaa
11203 u2W
ages
u219
s23ae
ue10
ueW
Ibgy
ST.
M.23 and
IW%
$16%
$114
$11.M
SAID
by
$12L $21M
IOU%
S2542
s2611
S691
322.28
r
SK51 $4114
103%
H231
1364
Mr95
Us
1-17
off 15 fifif
Ip>4
Me.11
M131
W93
f9261
2
Ulm SUfTo
100%
SUID
Slaro
swo
Sl
S
fine, LAW
1W%
S2N.31
Carat
M Ad
$21.Ti
r
Layers pit
IOUe,
M2385
ME51
All
MSS.Ifi
T
pit I123.W
m4C%
UsT69
M2312
MY.31
39M.29
C
M " SI"S'
IOU%
SUM $I As It
SIA992
P.Mi
_
Cafes SpaeFaftlReRa 19.W319bWEe
le%
WWR5
0.
10003M
WDOMb
$?W Fx Rewsfbl¢fine,bbysgae
or a
025 NbhfbvMdl8aa0
F ��
precool
SSWW mm m, agent U0000
sIX .
mm
=of Vol 01 Ni SNJ.W
$210.0)
12W.W
UM 122% 00% u270 S23w
u410
uea0
- Ra[ages ties yen 2 ervoryh 5 my ear, M9 AS dad'nen of the wnWAlla9a-
ImdmrtNrvn.
Mailed: Oderer2 2019
Published: October 31 and November 7, 2019
IOIGService AGENDA APPROVED 11/19/19 DJ
Water Rate Study for City of Vernon
September 26, 2019
Purpose
The water rate study updates the study done by IGService dated April 2018. The key element updated is
an expanded capital improvement project list requiring the need for bond funding and increased rates. This
updated study stands alone without reference to the previous study. As before, customer classes are
considered to assure revenue is in proportion to cost to serve them. Overall operating costs, debt, assets,
and revenue are analyzed to evaluate reasonableness of costs, and the need to increase overall revenue.
These steps are conducted to he consistent with the requirements of California's Proposition 218.
Summary
The City of Vemon's water rates are amongst the lowest compared to many water suppliers in the Los
Angeles basin. The city's customer base is almost exclusively industrial and commercial, with a very small
residential demand. Consequently, essentially all customers have Flat water demand profiles throughout
the year. The result is that the City's common volumetric rate for all customers is reasonable. The City's
fixed monthly rate is based on meter sin and is exactly proportional to the American Water Works
Association (A W WA) standard. Finally, the fire protection charges are proportional to square footage of
buildings, which is also equitable across customers.
In the previous April 2018 study, the capital improvement plan (CIP) was $15 million over ten years. In
this updated study, it is $21 million over five years. The water system needs extensive capital
improvements, accelerated since 2018 because of added water well failures. This study includes provision
for $15 million in bond finance, plus the benefit to water of repayment from intra-fund loans.
This study includes the need to increase overall revenue 13 percent in the first year, followed by consecutive
three percent increases to keep up with inflation. The 13 percent increase assumes the existing five percent
Utility User Tax (UUT) credit is suspended such that customers pay the full six percent UUT. Rates are
modified to shift revenue from volumetric charges to the fixed monthly charges, thereby increasing revenue
certainty. The greatest increases of 100 percent (doubling rate) are to the fixed monthly meter charge. The
fire service charge based on square footage of buildings is increased 14 percent. The volumetric rate is not
increased in the first year. The result is the overall contribution from fixed revenue is increased from 30
percent to 38 percent.
Proposition 218
Proposition 218 specifies certain requirements regarding user fees, as follows.'
• Revenues derived from a fee or charge shall not exceed the funds required to provide
the property -related service.
• Revenue derived from the fee or charge shall not be used for any purpose other than
that for which the fee or charge was imposed.
' California Constitution, Article XI I I D, Section 6(2)(b).
15 Shasm Lane, Walnut Creek CA 94597 Office: 925-946-9090 Cell: 925-899-2578 Email: dan@igsemice.com
® AGENDA APPROVED 11/19/19 DJ
• The amount of a fee or charge imposed upon any parcel or person as an incident of
property ownership shall not exceed the proportional cost of the service attributable to
the parcel.
• No fee or charge may be imposed for a service unless that service is actually used by,
or immediately available to, the owner of the property in question.
The consequence of these requirements is that customers should pay for water service in proportion to the
cost to serve them. For Vernon, this evaluation is straight forward because all customers look essentially
the same to the water system. They are essentially all commercial and industrial customers operating
constantly through the year. Consequently, all customers have been charged the same volumetric rate of
$2.206 per hundred cubic feet. In addition, a monthly meter rate is applied based on meter sin. The
existing meter rate for increasing sins is exactly proportional to the A W WA meter factor table (518" scale),
which is consistent with cost of service rate making. Vernon's "monthly square foot rate" is for emergency
water supply to private fire protection services. This is in place of the typical fee -based on pipe service sin
for fire protection. The cost of fire protection is exactly proportional to square footage, again meeting the
cost of service criteria. In comparison to other water service providers, the monthly cost for fire protection
is also consistent.
Existing Rates and Cost of Service
Vernon's existing rate structure was most recently approved by the Vernon City Council on August 16,
2016, in Resolution 201648. The reason for the rate increase, as written in the staff report, was to cover
increases in replenishment costs for pumped water and increasing costs of purchased water, plus needed
capital improvements. The commodity and meter charge rates were increased, whereas the square footage
rate was decreased. The resultant increase to revenue was approximately nine percent.
Resolution 2016-49 also includes an automatic "Pass -Through Adjustment" in Attachment B of the
Resolution. This is effective for each January 1"beginning January 2017 and ending 2021. The intent of
the formula is to increase the volumetric component of the water rate in proportion to an increase in cost
by either the Water Replenishment District of Southern California (pumped water) or the Central Basin
Municipal Water District (purchased water).°
Vernon's existing utility billing policy is to provide water (and other utility) customers a five percent Utility
User Tax (UUT) credit to offset the full cost to customers of the increase from one percent to six percent
of the UUT passed in Measure R and implemented July 1, 2018.' Presently, the cost burden of the five
present credit is covered by revenue from rates.
Finally, Vernon's existing water rates yield a relatively low component of revenue from fixed monthly
charges, compared to variable revenue from metered usage. An AW W A survey4 reveals that the Southern
California average for fixed revenue is 39 percent. Vernon's revenue from meter charges is I 1 percent of
the total, and revenue from the fire service square footage charge is 19 percent of the total. The combined
30 percent is still less than the Southern California average of 39 percent. The allocation of Vernon revenue
is shown in the chart below.
t Consistent with the Pau -Through Adjustment language, the commodity rate was increased from $2.097 to $2.206
per HCF effective January 1, 2018. This is a 5.2 percent increase. The rate was not increased January 1, 2019.
Resolution 2016-48 will be superseded by the new rate structure proposed in this rate study.
3 Resolution 2017-65, dated April 10, 2018.
4 A W W A Joumal, September 2017, Gaur & Diagne.
® AGENDA APPROVED 11/19/19 DJ
0, of Vernon.,U, f m..... ePer.... Nl—,W IirUl
._4ese.au_
Comparison to Other Water Suppliers
Overall, Vernon's rates are amongst the lowest compared to several water suppliers in the region, including
all members of the Southeast Water Coalition. The comparisons are shown separately in the charts below
for a large customer and small customer. (These comparison charts also show proposed rates, covered later
in this report.) Vernon is the lowest cost for a large customer with a 4-inch meter in a 50,000 square foot
building consuming 5,500 AF per month.
%.cenca.w,m. -. Xc.e r
rb.M.Va .-mae, s.W acF w,.-.)
1
1'
do q
• AGENDA APPROVED 11/19/19 DJ
For a smaller water customer with a two-inch meter in a 50,000 square foot building consuming only 200
HCF per month, Vernon is on the lower end of the scale.
wm[ coil comw[� . small c-I—,
I SO OOO xQX $'moist ]OO NCF yI monM)
KM
S1,aW
I St,20D
5
St 000
S
} 5000
tT SgOa
t �
Sloo
So
"Op gwaQ
J
W— Historical Treated Wale, Produttlan lnduding Imported PurcXdus
M
VM
Total al Pur[IufetdM
/ npCuction 25%W.I.an
109 Pim,hi, 14' uniPdo.
u.rza,00a 4reaP. aal
rM. alX, pye H—"
f da
S
z
PMxn p Gamdrd Ma[ was impallfl ps W f e3 at mu[ h
M61`er mil. 041ttWelit to mimmVe,Ipm+'[IhateOw
ses;Rx�en49s o=-===-c t 4 3
J
• AGENDA APPROVED 11/19/19 DJ
Water Sales History
City of Vernon treated water sales have been on a very slight decline for the past ten years, this following
a major 25 percent drop in 2008 caused by the stock market crash and subsequent economic recession. (See
the chart above.) A benefit of the 2008 drop has been less dependency on more expensive purchased water.
For example, during FY08, purchased water was 19 percent of the total, whereas during FYI 7, purchased
water was only nine percent of the total. However, beginning in 2019, problems with the city's wells have
caused an increase in purchased water as shown in the lower right comer of the chart.
Capital Improvement Projects (CIP)
In the previous study, Vemon's ten-year CIP was projected at $15 million. The near -tern planning was to
drill two new wells and refurbish one well over a three-year period. Doing so would have alleviated the
need for expensive purchase water from Central Basin. a However, unanticipated well failures in the
meantime have accelerated the timeline. Consequently, Vernon staff has revised the CIP to attack
improvements more aggressively. The plan now is to invest more money over a shorter time period,
approximately $21 million over five years. Increasing system reliability is critically important to benefit
from city -source water wells, and thereby avoid the expensive cost of purchased water. The expanded CIP
includes many other projects to increase operating efficiency and reliability. See the full detail of planned
CIP in Attachment A.
An important consideration is that the (old) water system in its current state is oversized because water sales
have declined over the past decade. Thus, the entire system will not need to be updated, but only the
portions of the system needed to serve current load. Improved operating technologies will be included in
system improvements resulting in better operating efficiency. For example, expanded use of variable speed
drive pumping, combined with updated Supervisory Control and Data Acquisition (SCADA) will be used
to better utilize both storage and delivery capacity.
Revenue and Expense Projections
Detailed revenue and expense information, including consideration for ongoing fund balances, capital
expenditures and debt service, are shown in Attachment B. Audited results are shown for FYI6/17 and
FY17/18. Preliminary values are shown for FYI8/19, and budgeted values for FYI9/20.
The model shows the percentage increases needed to generate enough revenue for adequate debt service
coverage. The goal is to accomplish a debt service coverage ratio of at least 1.30, meaning that revenue
available for debt service is 30 percent higher than debt service needed. The percentage revenue increase
is 13 percent in the first year, followed by consecutive three percent increases. The resultant debt service
coverage ratios are above 2.00 over most of the 10-year planning period. The amount of debt planned is
$15 million at 3.6 percent annual interest over a 30-year term. Debt service for principal and interest is
$826,000 per year.
'During FY17/I8, the average cost of city -source water was approximately $300 paid to the water Replenishment
District, whereas the average cost of purchased Cennal Basin water was approximately 51,200. Central Basin water
is approximately four times as expensive.
• AGENDA APPROVED 11/19/19 DJ
Water volumes sold are assumed to be flat over the planning period. Though there has been a very slight
decline over the past 10 years, Vernon's largest customer, the Farmer John pork processing facility, is
presently expanding operating capacity, which should increase demand slightly.
The revenue section of the model shows an expense for the Vernon Utility User Tax (UUT) beginning July
2018, but then ending December 2019. This is to account for the five percent portion of the six percent
UUT that is being credited back to customers. After December 2019, the model does not increase revenue
to cover the full amount of the UUT credit to customers because out recommendation is that customers pay
the full six percent UUT without showing a UUT credit on the bill. Doing so provides in bettertransparency
to customers of the purposes for utility revenues paid. If the UUT credit were continued, the overall revenue
increase from rates would be 18 percent by simply adding the five percent credit amount to the 13 percent
increase recommended.
The baseline year for planning is FYI8119 with projections following for each year thereafter. The 13
percent increase is allocated between FY19/20 and 20/21 because it is planned to take place midway through
FY19120 such that not all the revenue benefit will be achieved in FY19/20. In the expense categories,
purchases from Central Basin are projected to peak in FY19/20 at $1,506,785, then drop significantly in
FY20/21 to $496,314. This is the result of anticipated water well repair to restore water supply from within
Vernon. All expense categories are escalated over the planning period to account for inflation. Personnel
costs are escalated at the highest amount of six percent. Central Basin purchased water costs are escalated
at four percent, and electricity is at four percent.
Fund Balance Projections
The lower section of Attachment B shows the projected impact on the fund balance from the combination
of.,
• Surplus revenue after debt service,
• Loan from the Water Replenishment District (WRD),
• Repayment to water of the interfund loan, and
• Bond proceeds made available.
Surplus revenue after debt service is relatively high, ranging from just over $1 million in FY20/21, down
to $700,000 in in FY28/29. This is the result of planning a healthy debt service coverage ratio and needing
access to funds for CIP investments beyond the $15 million in bond proceeds.
The loan from W RD is for specific water well work. This is $1.5 million at tiro interest amortized over
ten years.
The FY 17/18 audit also shows the current balance owed to water from other funds, which is relatively large
at $11,311,300.6 The city's plan is for this amount to be paid back to water, beginning with $5,061,803 in
FY19/20, then followed by annual amounts that are six percent of revenue, based on the collected amount
of UUT from water customers.
Bond proceeds of $15 million are projected to be available within FY 19/20, then spent over the next three
years. When bond funds are expended, "Pay -Go" funding will be used, which is utilization of accumulated
and ongoing net revenue. Pay -Go amounts assigned to the fourth and fifth years total $6.4 million. Adding
" Vemon Public Utilities Annual Financial Report for the fiscal year ended June 30, 2018, page 46.
• AGENDA APPROVED 11/19/19 DJ
this to $15 million debt service funding approximates the five-year plan for capital expenditures of
$21,432,999 in Attachment A.
Beginning with the FY17/I8 audited financial statement, a value is assigned to "cash and investments" for
the water fund. The amount is $1,259,233'. Previously, cash in the water fund was accounted elsewhere.
Tracking the ongoing cash balance within water operations is necessary, considering the planned strategy
to use debt funding to support projects.
The fund balance is projected to be $10 million at the end of the 10-year period. This is approximately ten
months revenue from rates and can be used as pay -go funding for projects moving forward potentially
alleviating the need for additional debt service funding.
Proposed Rates
The present rate structure must be modified to achieve an immediate 13 percent increase in revenue
combined with eliminating the five percent UUT credit. Together, these achieve an IS percent overall
revenue increase. The rate categories to be modified are shown under Service Category in the table below.
These are divided between variable charges (dependent on the volume of metered water) and fixed charges
(constant each month). The comparisons in the but charts above include the full 18 percent increase.
A second rate -setting option is to retain the five percent UUT credit but increase revenue from rates a full
18 percent. This option is not recommended because the water enterprise fund is paying the six percent
UUT to the general fond anyway. Continuing the credit could confuse customers regarding funds used for
the water enterprise vs funds collected through the UUT for transfer to the general fund. Nonetheless, a
revenue and expense model, allocation model, and rate table are shown for this option in Attachment E.
The existing allocation yields 70 percent of revenue from variable charges and 30 percent from fixed
charges. A primary rate setting objective is to increase the portion of revenue from fixed charges. Doing
so provides better revenue stability and assigns costs incurred more accurately to customers.' The right
side of the table shows the proposed new balance of variable vs fixed revenue. The fixed contribution is
increased to 38 percent, and the variable contribution reduced to 62 percent.
The "% Change" values in the table for individual service categories were set to achieve the reallocated
values on the right side of the table. Fixed monthly charges were increased first, increasing the monthly
meter charge amounts by 100 percent to double them from the present levels. To simplify billing statements
for fire service charges, the monthly charges for fire meters ($2 per customer per month) is eliminated. The
sprinkler count charge is also eliminated. Both these charges are residual from historical rates, and both
are relatively small revenue components. The lost revenue from eliminating these rate components is
absorbed in the increased fire square footage charge.
The fire square footage component increase was limited to 14 percent, and the volumetric charge is not
increased in the first year. The increase in the fire square footage charge was limited to prevent large
monthly increases for customer with large buildings and low water consumption.
[bid.
' Primary variable costs are water and utilities (pumping), projected at $4.5 million in FY2021. This is 56 percent
of total operating expenses of $8 million. The balance of up to 44 percent can be assigned to rates to cover fixed
costs. If annual capital investment is included, the fixed component would increase.
• AGENDA APPROVED 11/19/19 DJ
City of Verona Water Rate Study
Existing Revenue Allocation and Proposed Reallocation with Increases
Service Category
Existing
%Change
Reallocated alth Increases
Vactahle
Metered Water
f5.8g0,000
$5.900,000
70%
0.0%
E5,880.000
E5,900,000
G2%
Charges
Fre: Metered water
f30,000
0.0%
$20,000
Month). %Ieter Charge
f923,000
100.0%
f1,846,000
R.,d
Fire: Meter Charge
$20,000
-100.0%
EO
Monthly
52,560,OD0
30%
E3.rd6,580
38%
Charge
Fre: Sprinkler Count
E20,000
-t00.0%
f0
Fier: Square Footage
51,597,0M
14.0%
f1,820,580
Total,
$8,460,000 $8,460,000 100%
59,5M,580 $9,566,580 100%
I.e.. Met Ynr.
E1,099,800 13% Ahuve(Below) Revenue Goal: S6,M
Revenue Goal:
59,559,800
The proposed water rate increase will have more impact on smaller water -consuming customers. These are
about 500 customers, approximately half of all customers, and most have two-inch meters. These are small
commercial customers where the proportion of monthly meter charge is greater than the proportion of water
volume cost Even so, the proposed rates assign costs in proportion to the cusxmer's meter sin and
building sin to be more consistent with the portion of fixed cost to operate Vernon's water system. This
is reasonable because the water system is available to the customer to deliver water even though the
customers usage may be low. The rate comparison bar charts show more of an increase for a typical smaller
customer than for a typical larger customer. Smaller customers using less than 200 HCF per month will
we larger monthly increases, up to 46 percent for a customer that uses no water in a month.9
The proposed rate table is given in Attachment C. It shows the present and proposed rates for each category
of service. The increases applied in the first year are consistent with the table above. The increases for
subsequent years are three percent applied evenly to all categories, except for the impact of the water cost
adjustment mechanism.
A wholesale water cost adjustment mechanism is proposed to mitigate the impact of unanticipated increases
From the combined costs of the Water Replenishment District and Central Basin. This mechanism is
important because wholesale water costs are significant at approximately 40 percent of total operating cost,
and the city cannot control the cost of wholesale water. Accordingly, to the extent wholesale water costs
increase more than the forecast numbers in the expense section of Attachment B, the city will have the
opportunityto pass through the added costs to customers through a rate adjustment beyond the three percent
increases. To the extent wholesale water costs decrease below the forecast numbers, the city will have the
opportunity to lower the planned three percent increases; however, such a decrease would also need to
consider the balance of the overall expenses incurred during the review period. The intent will be to review
the forecast vs actual costs annually; however, adjustments could be more frequent based on need.
Language detailing the cost adjustment language will be written into the proposed resolution for the rate
changes. An example tracking table is shown in Attachment D.
9 Using the comparison of 50,000 sq. ft. and a two-inch meter, a customer using no water pays $228 now (with UUT
Credit) and would pay S333 under the proposed rates (without UUT Credit). ($333-$228)1$228 x 100%= 46%
• AGENDA APPROVED 11/19/19 DJ
Conclusion
Projected revenues from rates need to increase 13 percent followed by consecutive three percent increases
to cover increased operating costs, combined with debt service for $15 million. The 13 percent increase is
dependent on removing the five percent UUT credit, such that customer pay the full six percent UUT.
Repayment of intro -fund loans alleviates the need for added revenue increases. The overall revenue
increase to the water enterprise will be approximately 18 percent. Rates are reset to shift revenue from
volumetric to fixed monthly charges to provide greater revenue stability and more closely match the balance
of fixed and variable expenses. A wholesale water cost adjustment clause is also included to cover
unanticipated water cost increases beyond those forecasted in the study.
AGENDA APPROVED 11/fi/ achment A
City of Vernon Water Division Projected 5-Year Capital Improvements (At of 5/30/19)
Yew
Yew
Yew
Yea4
Yews
Capital outl
FY 20-22
FY 21.22
FY 22-23
FY23.24
Wee
21 ftm OW WNI11Pu aM Mma
IMM
Genemtorin wNl ll
00WN130
WeeE.Ie
Rekb
00E
Generator on Wee 20
WWell
12 RehaNhWion
00WN12206111
aM Casl
000Wen
22 Wellhead uimon
000NewWNhWeeheadE
1a &CM
$ 225A00
5 155000
0 RdmF Anal is and MasteNlan
300
Resemdr carlddm asseunems 61MG
$ 13
EIMmd Ta*U des aMmmeml
350,000
U mdesfor lOMG Refemia eNaimem
$ 2500M
E e Genemtmm WN122
$ 300A00
Well 15 Re b
$ M=
Eme envy Gemmtm m Wee 15
$ 300,OW
Reserwir Demo N WN120
$ 100.M
BPS, BP; BP3 E imed Deal n
$ 3 ,=
BPS NW am WW Reva 'MWN RICK -Sid
$ MAW
Eme Generaux m BPosmr Nam I
$ =AM
SP3 Pum and Motor R.m WWI RI Mlid
MAW
8P2 R<SendrS RedoM
$ 100
Re im Reservoirs SP3 We. & C.Vucew
$ 1A04000
BP2 Pump aM Motor Re mp ImIWIM RI kolzl
5 ,=
Re Im Reservoirs BP2 Desip &
Is 1 =
Oak Demo at OE ON*
s 35l,Oro
Well 23 Ddlll aM C.11M
S 2214W0
Well 23 welhead
s 1900,903
Eme Geremmrm WN123
$�
Me PM..
1 000
IOO WO
10&000
IM.M
S I00 M
Ele al Umiles
000
25MM
S 250,000
S DA
MM
Mi. Win R.pl.emem
s LMM
Packem/Exche eaM Damey Rd Pi Iine Estemlm
is 1000W
ltwae 2 RefurtlsMrem
is 41XM
FeMe Replacemem PP2&Wee 19
s X=
Suetot.1Q ital Owla
$ 7.6M1000
S U00,000
uokm
Juceee
$ 1570,000
Ca ital E ul M arld Vehides
UM Utlllty Vehicle Meter Rma
$ XA00
Cmstmction Tmck
s 120.000MI
$
Blain Tmck
26&000Paa
Mber for 10 MG Resemdr
ID000Aum
Chbdmtim 1061G Reeemdr
$ MM
W Tmck
M'M
FoM F250IIIIII TmckSUMatel
Caeal a mint aM VehW
$ M9M,000
$
$ 12DAM
Annual Total $8,252,000 $ 3,560,000 $ 3,250,000 $ 4,676,999 $ 1,6M,000
Cumulative Total $8,252,000 $11,812,000 $15,066,000 $19,742,999 $21,432,999
in
AGENDA APPROVED 11/19/19 DJ
Attachment B
asas6sats�ss€a.
:pp^Q»ppp,$:: 8
^S
�y '"JR-,
i
1111 QaQtl IM
$
Y
€ems
a�
F
X `
b$p^,X
3y€yR »
f7f7
�&�N Xq YtS98';'ti $
9ws
»."y
`x
a
e
�sS� $"
g
7�8. �e^e8S"Y
g
„,"•.
„=3 �
�
8
`-i
E� Sdbd QSFEdik
REA
'nL$n
.ten
TE'^Ldc
„
7
r
x
E3
W R
�
RRAA
Is
gS"^n
3
�
i
3
haaa
s`
a g
ai`s1
9
s
$a s
3 xR
i
g
W
°gp �°Ri
x�i8t
8gp�6�
^`' f
E
aF�
3 .B�Eifj�j
egg �S6 :BFi
ssad
da
�
yyid;�
6,
E$lsiT'as3Pea�a€
i Fsc's3==
9.
AGENDA APPROVED 11/1 1 chment C
City of Vernon Water Rate Schedule
Proposed without cost coverage to pay for 5% UUT Credit
Present year 1 Year 2' Year 3- Year 4' Year 5'
Category of Service Rotas
Changes: Various 3.0% 3.0% 3.0% 3.0%
Rneral Water $e rYim
Rate per FICF for all use 52.206 52.206 0 0% $2 270 $2.340 52.410
Monthly Meter Charges
5r8"Meter
58.23
$16.46
100%
$16.95
$17.46
$17,98
314'
$12.34
$24.68
100%
$25.42
$26.18
$26.97
1"
$20,57
$41.14
100%
$42.37
$43.64
$44.95
1- Wr
$41.15
$82.30
100%
$84.T
$87,31
$89.93
T
$65.84
$131.68
100%
$13563
$139.70
$143.89
3•
$123.46
$246.90
100%
$25431
$261.94
$269,80
4"
$205.75
$411.50
100%
5423.85
5436.57
$449.67
6"
$411.50
$823.00
100%
$847.69
$873.12
$899.31
W
$658.41
$1.316.82
100%
$1,356.32
$1.397.01
$1,438,92
ire Service Charges
Cost per Square Foot of Fire -Protected
$000319
W00364 14% $0.00375 $c00386
50.00398
SOA0410
Builsg Space per Month
Cast par each Fire -Related Meter per
$2 00
Fee Remved to W Covered by Square Footage Cost
Month
Cost per Sprinkler Head per Month
$0.25
Fee Removed to be Covered by Square Footage Cost
(Mr umn Rate)
:onslruction Hydrant usage
Refunable Meter Deposit
5800.00
$800.00 0% $800.00 5800.00
5300.00
$000.00
Installation and retrieval
$200.00
$200.00 0% $200.00 $200,00
$200.00
$200.00
Rate per HCF for at use
$2.206
$2-206 0.0% 52.270 52.340
$2.410
$2.480
1:
Rate changes during years 2 through 5 may vary dependig on the trig l of the w holesab W War cost adjustmnt rrechanism
12
AGENDA APPROVED v,m,=
Attachment D
�§
f3
\
&
!
|
)
!
}/%
ETO
!`#(##
|#
-
)
;.-
|
-
§|
!
! •
---®-
!!
)�(
k
�ttt;
-:
!�
�\}}�\�\|\\\
V.
13
Attachmen[ �'�(ionliinua #on o� 94%ti6redit)
ceggsegsasc��a
iRt
z '
R —
R
I Will
� � a
F � t 6 ggs ai zc�g"qq$$ggg•�5 : R s A �g 8
a •R ^'R$ZpR :RRxx^:eR xx• 9 ... x R
6
p x
a ; 98 �Baa.<i�nga��� tig
It
al
14
Attachment ions nua5lonoiA4WlHY6redit)
City of Vernon Water Rate Study Update
Existing Revenue Allocation and Proposed Reallocation with Irrcreases
Service
Category
Existing
%CMnge
ReallocatedeflM1lorreses
Variable
Metered Water
S5M000
%900.000
70-4
5.3%
%203,4(q
%X24500
62%
Charges
Fire: Metered Water
S20,000
5.5%
E21,IlM)
idealhly Mehr Cbarge
SM'000
IOD.O%
51,816,000
Fixed
MomMy
Fire: Meter Chnge
S20,000
S2560.000
30%
-10i
%3,762,4g1
38%
Chngea
Has: Sprinkler Count
$20,6DD
-100.0%
Fire: Sq. Footage
$1,597,ODO
20.0%
SI,916,d00
Truth
Wead)00
X460,000
IOU%
$91986,9M 59,9%,900 100%
Increase First Year.
51522,1100
IW.
AM1ove (Below) Revenue Goal: S4,100
Revens GOY:
S9,9112-800
City of Vemon Water Rate Schedule
Present Year 1 Year 2• Year F Year 4• Year V
Category of Service Rates
Changes: Various 3.0% 3.0% 3.0% 3.0%
General Water Service
Rate per HCF for at use
$2,206
$2,327
5.5%
$2.400
$2.470
$2.540
$2.620
Monthy Meter Charges
58"Meter
$8.23
$16.46
100%
$1695
$17.46
$17,98
$18.52
314"
$12.34
$24.68
100%
S2542
$26.18
$2697
$27.78
1-
$20,57
$41.14
10D%
$42.37
$43,64
$4495
$46.30
1-10
$41,15
$82.30
100%
$84.77
$87,31
$89.93
S92,63
2"
$6584
$131.68
100%
S135.63
$13970
$143.89
S148.21
3"
$123.45
$246.90
100%
$254.31
$261.94
$269.80
$27189
e
$205.75
$411.50
100%
S423.85
$436,57
S44il
$463.16
6"
$411,50
$823.00
10D%
$847.69
$873,12
$899.31
$926.29
B"
$658.41
$1,316.82
100%
$1.356,32
$1,397.01
$1,438.92
S1482.09
Fire Service Charges
Cost per Square Foot of Fre-Rotected
E0,00319
$0.00383
20%
$0,00394
$0 00406
$0.00418
$0.00431
Building Space par Month
Cost par each Fife Related Meter per
$2 00
Fee Removed to be Covered by Square Footage Cast
Month
Cost par Sprinkler Head par
$0.25
Fee fiermad, to be Covered by Square Footage Cost
Month (Minimum Rate)
Construction Hydrant Usage
Refundable Wer Deposit
5800.00
5800.00
0%
$800.00
$800.00
$800.00
$800.00
retaliation and reimval
$2W.00
$200.00
0%
S20000
$201
$200,00
$200.00
Rate per HCF for all use
$2,206
$2.327
5.5%
$2,400
$2,470
$2,540
$2.620
Notes:
• Rate changes during years 2 through 5 my vary depending on the react of the w holiness, water cost adjustment mechanism
15
Water Division Projected
3-Year CapdMimproveM
MD 11/19/19 DJ
Year 1
Year 2
Year 3
Capital Outlay
FY 19-20
FY 20-21
FY 21-22
Well 5 Destruction
$
125,000
Well 11 Pump and Motor
S
150,000
Emergency Generator on Well 11
$
300,000
Well 20 Rehab
S
550,000
Emergency Generator on Well 20
$
300,000
Well 17 Rehabilitation
$
600,000
Well 22 Drilling and Casing
$
2,050,000
Well 22 Wellhead equipment
$
1,800,000
New Wells Wellhead Engineering & CM
$
215,000
New Wells Drilling & Casing Constriction Management
$
155,000
_
Operations Analysis and MasterPlan
$
300,000
Reservoir condition assessments (6-1 MG)
$
12,000
Elevated Tank Upqrades (automation)
$
250,0D0
Upgrades for 1 OMG Reservior (automation)
$
234,000
Emergency Generator on Well 22
$
300,E
Well 15 Rehab
$
500,000
Emergency Generator on Well 15
$
300,000
Reservoir Demo at Well 20
$
100,000
BP1, BP2, BP3 Engineering Design
$
300,000
BPI Pump and Motor Revamp including Right -sizing
$
500,000
Emergency Generator on Booster Plant 1
$
300,0D0
BP3 Pump and Motor Revamp including Right -sizing
$
500,000
BP2 Reservoir Supply Redundancy
$
100,000
Repairs Reservoirs BP3 Design & Construction
BP2 Pump and Motor Revamp including Right -sizing
Repairs Reservoirs BP2 Design & Constrrction
_
$ 1,OOO,O00
$ 500,000
$ 1,000,000
Dods Demo at OE Clark
$ 254,000
Well 23 Drilling and Casing
Well 23 Wellhead equipment
Emorqency Generator on Well 23
AMI Program
$
100,000
$
100,000
$ 100,000
Electrical Upgrades
$
500,000
$
225,000
$ 225,000
SCADA
$
250,000
Pilot Main Replacement Program
Packers/Exchange and Downey Rd Pipeline Extension
Pump House 2 Refurbishment
Fence Replacement PP2 & Well 19
Subtotal Capital Outlay
$
7,657,000
$
3,459,000
$ 3,079,000
Capital Equipment and Vehicles
Light Utility Vehicle Meter Readers
$
30,000
$ 30,000
Construction Truck
$
120,000
$ 120,000
Boom Truck
$
260,000
Pax Mixer for 10 MG Reservoir
S
70,000
Auto Chlorination 10 MG Reservoir
$
35,000
Dump Truck
$
80,000
Ford F-250 Utility Truck
1 $
60,000
Subtotal Capital Equipment and Vehicles
$
595,000
1 $
60,000
$ 150,000
Annual Total
$
8,252,000
$
3,519,000
$ 3,229,000
(Cumulative Total $ 8,J,Cj{S,Q¢J A4WP k:bXVW"/1!'19 0.000.000 1