COUNCIL COMMUNICATION
TO: Honorable Mayor and Council
FROM: Anthony Kozlowski, Assistant to the City Manager
Jill Olsen, Administrative Services Director
SUBJECT:Title
Adopt Resolution No. 23-3707 Amending and Adopting a Five-Year Water and Wastewater Rate and Fee Schedule to Increase Water and Sewer Rates and Charges Effective November 1, 2023 (Anthony Kozlowski)
Body
FUNDING SOURCE:
N/A
PURPOSE:
To adopt Resolution No. 23-3707 adopting an increase in water and sewer rates effective November 1, 2023. Since the City bills in arrears, the December utility bills will reflect the new rates as applied to November’s usage.
BACKGROUND:
The City retained Willdan Financial Services (“Willdan”) to prepare a long-term financial plan and rate and fee study for each utility fund (water and sewer) to ensure the Utilities Division has sufficient revenue to meet its operational, capital and debt service obligations and that rates are set proportionate to the costs of providing utility service to each customer class. As a part of this rate study, Willdan facilitated dialog with City staff at several meetings over the past year. During these meetings, recommendations were incorporated into the study where appropriate. The final draft report documents the findings, analyses and recommendations of the comprehensive rate and fee study effort. The results of the rate and fee study were then posted on the city website. The rate recommendations have been available online since August 25, 2023.
There was extensive public outreach conducted prior to the adoption of the Notice of Intent on July 25, 2023.
Lake Havasu City owns and operates water and wastewater utilities serving the residents and businesses of Lake Havasu City and surrounding areas outside the former Irrigation and Drainage District (IDD). The Water Division maintains and operates a water treatment plant, approximately 500 miles of water lines, fifteen booster stations, twenty-six storage tanks and is also responsible for reading and servicing 32,441 water meters. The Wastewater Division is responsible for maintaining 27,885 sewer users and 353 miles of gravity sewer line and twenty-five miles of force main. There are a total of forty-nine sewer pump stations and three wastewater treatment plants within the city.
The IDD, formed in 1963, funded approximately $5.7 million per year for operations and debt service related to water services, based on a property tax rate of $268 per acre. The IDD expired in 2022, resulting in a significant financial loss to the City’s water fund.
The one-year timeline has expired and based on direction from City Council at the October 2021 meeting, City staff is in the process of conducting a second study to provide a comprehensive review of rates, rate structures, capital replacement and expansion to establish appropriate future rate levels for the next five years. It is also necessary for the city to determine the appropriate level of future revenues to cover the costs associated with future maintenance needs of the system.
Based on the discussions to date, staff recognizes that the consensus of the Council is to select Option A (Cost of Service Model) for water and Option A (Cost of Service Model) for sewer.
COMMUNITY IMPACT:
Regular rate reviews and modifications are necessary to maintain a stable financial position for the water and sewer utility funds. The goal of the proposed rate increase is to provide for a financially sustainable utility system.
FISCAL IMPACT:
Adoption of these new rates will allow each of the utility functions to generate the revenue necessary to cover all costs required to operate these utilities. User fees are the appropriate revenue source for enterprise funds in local government.
ATTACHMENTS:
Resolution No. 23-3707
PowerPoint Presentation
SUGGESTED MOTION:Recommended Action
I move to adopt Resolution No. 23-3707 amending and adopting a Five-Year Water and Wastewater Rate and Fee Schedule effective November 1, 2023.