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Home My WebLink About09. Conduct a public hearing to consider the previously approved rate increase to the FY 2022-2023 Sewer Service Charge (SSC) Page 1 of 7 Item 9. CENTRAL SAN BOARD OF DIRECTORS POSITION PAPER MEETING DATE: APRIL 21, 2022 SUBJECT: CONDUCTA PUBLIC HEARING INACCORDANCE WITH ORDINANCE NO. 304 TO CONSIDER THE FINANCIAL CONDITION OF CENTRAL SAN WITH RESPECT TO THE CURRENT NEED FOR THE PREVIOUSLYADOPTED FISCAL YEAR (FY) 2022-23 SEWER SERVICE CHARGE (SSC) RATE OF $690 FOR A SINGLE-FAMILY RESIDENCE AND FY 2022-23 RATES FOR ALL OTHER USER GROUPS SUBMITTED BY: INITIATING DEPARTMENT: THOMAS BRIGHTBILL, SENIOR ENGINEER ENGINEERING AND TECHNICAL SERVICES- PDS-RATES AND FEES REVIEWED BY: DANEA GEMMELL, PLANNING AND DEVELOPMENT SERVICES DIVISION MANAGER JEAN-MARC PETIT, DIRECTOR OF ENGINEERING AND TECHNICAL SERVICES PHILIP R. LEIBER, DIRECTOR OF FINANCE AND ADMINISTRATION Roger S. Bailey General Manager ISSUE Ordinance No. 304 requires that the Board of Directors hold a public hearing to consider Central San's current financial condition prior to imposing the previously approved rate increase for FY 2022-23. BACKGROUND On April 18, 2019, the Board of Directors adopted Ordinance No. 304 which approved rate increases to the annual SSC effective July 1, 2019; July 1, 2020; July 1, 2021; and July 1, 2022. The approved SSC rate increase for July 1, 2022 increases the SSC by an average of 4.5%. The rate for single-family homes is increased by$30 to $690 per year (residential rates are rounded to the nearest whole dollar.) April 21, 2022 Regular Board Meeting Agenda Packet- Page 43 of 135 Page 2 of 7 Ordinance No. 304 requires that prior to imposing the rate increase: "The Board of Directors shall consider, at a noticed public hearing each year prior to June 30, Central San's proposed budget, its financial condition, projected capital and operations and maintenance costs, as well as other factors which bear on Central San's revenue requirements to determine whether the increased amounts set forth herein for each fiscal year are still necessary. If the Board concludes by a majority vote that sewer service charges for less than the amount set forth in this ordinance for that fiscal year will produce adequate revenues for the fiscal year, the Board may, by resolution, fix the sewer service charges for that fiscal year to be imposed at appropriate amounts up to the maximum of the rates set forth herein without an amendment of this ordinance. In such case, the resolution shall clearly set forth such lesser charges that are to be imposed and those charges shall remain in place until further action of the Board. If the Board determines the rates set forth in the table are appropriate for imposition in that fiscal year, no further action of the Board shall be required." On March 10, 2022, a Financial Planning Workshop was held with staff and the Board of Directors which reviewed Central San's current financial position, the updated 10-year Capital Improvement Plan (Cl P), options for financing the increased spending associated with the Cl P, as well as options and strategies for debt financing. The financial numbers presented at this workshop included the previously approved 4.5% SSC rate increase for FY 2022-23. ALTERNATIVES/CONSIDERATIONS After reviewing Central San's current financial condition and receiving any public input, the Board of Directors could: • take no action, thereby imposing the previously approved 4.5% rate increase to the annual SSC; • impose a rate increase in an amount less than 4.5%; or • take some other action. FINANCIAL IMPACTS Unless other action is taken by the Board of Directors, the previously approved rate increase will provide an estimated $4.98 million in additional revenue for FY 2022-23. This would allow for increasing the investment in infrastructure replacement, compliance with financial reserve policy requirements, moderate and stable rate increases in future years, and recognition of continuing inflationary impacts to overall costs. COMMITTEE RECOMMENDATION The matter was not reviewed by a Board Committee. The entire Board of Directors provided comments at the March 24, 2022 Financial Planning Workshop. RECOMMENDED BOARD ACTION Review Central San's current financial condition. Hold the public hearing. Receive any public input. Take no additional action and thereby impose the previously approved rate increase to $690 per year per single- family residence and FY 2022-23 rates for all other user groups. April 21, 2022 Regular Board Meeting Agenda Packet- Page 44 of 135 Page 3 of 7 Strategic Plan Tie-In GOAL THREE: Fiscal Responsibility Strategy 1—Maintain financial stability and sustainability, Strategy 2—Ensure integrity and transparency in financial management ATTACHMENTS: 1. Presentation April 21, 2022 Regular Board Meeting Agenda Packet- Page 45 of 135 Page 4 of 7 FISCAL YEAR 2022-23 SEWER SERVICE CHARGE Public Hearing April 21, 2022 Board Meeting 1 SUMMARY OF ADOPTED SEWER SERVICE CHARGE (SSC) RATES • Board of Directors approved a 4-year schedule of SSC rates in April 2019. • Rate ordinance requirements include annual reviews to determine if adjustments are needed followed by an annual public hearing. W 2 CENTRALSAN 2 April 21, 2022 Regular Board Meeting Agenda Packet- Page 46 of 135 1 Page 5 of 7 APPROVED 4-YEAR SSC RATES (FISCAL YEAR (FY) 2019-20 To FY 2022-23) $1,000 $31 not $900 collected $776 $807 $800 approved $718 $746 (+4.02%)X3.99%J $629 $690 (+4.06%) (+3.90%) I ) I 1 $700 $660 r——�� I_ -1 I� $598 effective I I I $600 $598 I I I I I I I I I I $500 $400 $300 $200 �� F_ I I I I I I I I $100 I $0 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 2026- ■Approved Single-Family Rate E Not Collected F3 Planned 3 CENTRALSAN 3 OUR RATES CONTINUE TO BE BELOW THE AVERAGE San Francisco(SFPUC) Berkeley(EBMUD for treatment) Santa Rosa Petaluma Benicia Rodeo Sanitary District Richmond San Leandro(EBMUD for treatment) Crockett Sanitary Department Oakland(EBMUD for treatment) Average Average of Agencies Surveyed Vallejo Sanitation and Flood Control Livermore Mt View Sanitary District Napa Sanitation District Central San PROPOSED FY 2022-23 Central San FY 2022-23(approved April 2019) Stege SD(EBMUD for treatment) Median Median of Agencies Surveyed Brentwood West County Wastewater District Concord(CCCSD for treatment) Sunnyvale Central San Central San FY 2021-22 Novato Sanitary District Pittsburg(Delta Diablo for treatment) Antioch(Delta Diablo for treatment) Bay Point(Delta Diablo for treatment) Fairfield-Suisun Sewer District Pleasanton(DSRSD for treatment) San Jas Union Sanitary District Dublin San Ramon Services District Castro Valley Sanitary District Hayward Oro Loma Sanitary District $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 FY 2021-22 Sewer Service Charge per Single-Family Home a 4 April 21, 2022 Regular Board Meeting Agenda Packet- Page 47 of 135 2 Page 6 of 7 RATE COMPARISON INCLUDING PROPERTY TAX San Francisco(SFPUC) Berkeley(EBMUD for treatment) Santa Rosa Petaluma Rodeo Sanitary District Benicia Crockett Sanitary Department Richmond San Leandro(EBMUD for treatment) Oakland(EBMUD for treatment) Average Average of Agencies Surveyed Central San PROPOSED Fy 2022-23 Central San FY 2022-23(approved April 2019) Mt View Sanitary District Vallejo Sanitation and Flood Control Central San Central San FY 2021-22 Novato Sanitary District Livermore Median i Median of Agencies Surveyed Napa Sanitation District Stege SD(EBMUD far treatment) West County Wastewater District Brentwood Concord(CCCSD for treatment) Pittsburg(Delta Diablo for treatment) Sunnyvale11 ■FY 2021-22 Sewer Service Charge Antioch(Delta Diablo for treatment) 6L! Diablo for treatmentlestlmated IaoIRrIY tazalley Sanitary District-Suisun Sewer District DSRSD for treatment) SanJose nion Sanitary District mon Services District Hayward Loma Sanitary District $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 FY 2021-22 Sewer Service Charge per Single-Family Home 5 5 STAFF RECOMMENDATION: ADOPTION OF PREVIOUSLY APPROVED SEWER SERVICE CHARGE RATES Conduct a public hearing in accordance with Ordinance No. 304 to consider the financial condition of Central San with respect to the current need for the previously adopted 4.5% Sewer Service Charge rate increase for FY 2022-23. Staff Recommendation (Motion Required): Leave unchanged the published rate of$690 per Single- Family residence for FY 2022-23. ` 6 CENTRAL SAN 6 April 21, 2022 Regular Board Meeting Agenda Packet- Page 48 of 135 3 Page 7 of 7 QUESTIONS ) , -� CENTRAL SAN April 21, 2022 Regular Board Meeting Agenda Packet- Page 49 of 135 4