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07/21/2017
AT/CH OFFICE OF THE CITY MANAGER July 21, 2017 TO: Honorable Mayor and City Council FROM: Alan Tandy, City Manager SUBJECT: General Information Notable Items On Wednesday, July 19th, City staff held a Council workshop discussing the proposed water rate increases to fund the initial capital requirements of the 1,2,3- Trichloropropane (TCP) treatment project. The proposed rate increases of 16 percent, 13 percent, and 7.6 percent were generated from a Water Rate Study conducted by Stantec Consultants, who specialize in conducting water rate studies. The Rate Study Report is attached for your review and information. Also, this report will be made available for public review in the City Clerk’s Office and website (www.bakersfieldcity.us/waterratereport2017). On Thursday, July 20th, City staff began repairing a sinkhole located within Truxtun Avenue at the BNSF railroad overcrossing. The westbound outside lane of Truxtun Avenue is closed for the duration of the repair work. In addition, the westbound middle lane is closed during active work operations (8:00 a.m. to 3:30 p.m. daily). City staff anticipates the work to be completed later next week. On Saturday, July 22nd (8:00 a.m. to 1:00 p.m.), a citywide swim meet will be held at McMurtrey Aquatic Center. All pools will be closed to the public due to all aquatic staff being assigned to the swim meet. However, spray parks will remain open. I will be on vacation Wednesday through Monday (July 26-31). As always, the City Manager’s Office has my contact information, and I will have periodic access to email. In addition, Chris Huot will be in charge during my absence. Reports o Quarterly Status Report on Revenues and Expenses of the 18th and Eye Street Parking Garage General Information July 21, 2017 Page 2 Event Notifications Event calendar for the Rabobank Arena Theater and Convention Center Public Participation Hearing for Pacific Gas and Electric (PG&E) Rate Case Recreation and Parks July Event Calendar On Friday, June 21st (6:00 p.m. to 9:00 p.m.), bring the entire family for Family Fun Night at McMurtrey Aquatic Center. Activities for this special evening event include: open swim, diving boards, water slides, themed games, water safety booths with prizes, and more. For more information, please see the attached flyer. On Tuesday, August 1st (6:00 p.m. to 9:00 p.m.), the Bakersfield Police Department will hold National Night Out at The Park at River Walk. National Night Out is a free event that encourages the community to support local anti-crime programs. For more information, please see the attached flyer. AT:cg cc: Department Heads Christopher Gerry, Acting City Clerk 2121 N. California Blvd., Suite 600 • Walnut Creek, California 94596 Mr. Nelson Smith Finance Director City of Bakersfield 1600 Truxtun Avenue. Bakersfield, CA 93301 July 19, 2017 Subject: Water Rate Study Report Dear Mr. Smith, Stantec Consulting is pleased to present this Water Rate Study Report that we performed for the City of Bakersfield (City). We appreciate the fine assistance provided by you, the members of the City staff, and the consultants from the firm of Fieldman, Rolapp & Associates, Inc. who participated in the development of the Report. This Report primarily addresses financial planning for the domestic water fund in response to capital investments and operational changes needed for 1,2,3-trichloropropane treatment from the City’s groundwater supply. Our efforts were completed using standard rate setting principles established by the American Water Works Association. If you or others at the City have any questions, please do not hesitate to call me at (510) 316-0621 or email me at mark.hildebrand@stantec.com. We appreciate the opportunity to be of service to the City, and look forward to the possibility of doing so again in the near future. Sincerely, Mark Hildebrand Principal Consultant Enclosure City of Bakersfield Draft Report Water Rate Study Report Executive Summary ES-1 Executive Summary The City of Bakersfield (City) engaged Stantec Consulting to study the finances of the City’s Domestic Water Fund and develop recommendations for updating the Domestic Water Rates. The complete Water Rate Study Report (Report) is primarily a long-range financial plan with recommended rate revenue adjustments, and also includes recommendations regarding cost of service, rate design, and financial policies for the Domestic Water Fund. The rates recommended in this Report reflect the City’s cost of providing water services to its customers. In early March 2017, the State Water Resources Control Board Division of Drinking Water (DDW) issued a Notice of Proposed Rulemaking for a new maximum contaminant level for the synthetic organic chemical 1,2,3-trichloropropane (TCP). The anticipated implementation schedule for the new regulation requires utilities to begin sampling for TCP in drinking water as early as the first quarter of 2018. It is expected that the City will begin treatment at 41 wells for a capital cost of approximately $55 million (the majority of which will be financed with two Water Revenue Bonds) and an estimated additional $5 million in annual operating costs. Purpose - The purpose of this Report is to assess the Domestic Water Fund’s finances and recommend Domestic Water service rate adjustments that will generate the rate revenue needed to meet the current and projected costs of providing water service. Financial Plan - In order to evaluate the long-term financial sustainability of the Domestic Water Fund, the project team evaluated the revenues and expenses in a five-year financial plan. In addition to accounting for operating costs, capital spending, and projected debt service, the financial plan also accounts for non- rate revenue, reserve targets, and financial performance metrics (specifically, the debt service coverage ratio). This report recommends that the City adopt the following Water Service rate increases: City of Bakersfield Draft Report Water Rate Study Report Executive Summary ES-2 October 2017 16% increase July 2018 13% Increase July 2019 7.6% increase The following table provides the schedule of Domestic Water Service rates for inside-city customers for the planning period. October 1, 2017 July 1, 2018 July 1, 2019 16% increase 13% increase 7.6% increase Quantity Rate (per 100 cubic ft.) $0.94 $1.09 $1.23 $1.32 Readiness-To-Serve Charge (per month): 5/8" x 3/4" Services $9.88 $11.46 $12.95 $13.93 1" Services $15.06 $17.47 $19.74 $21.24 1-1/2" Services $22.98 $26.66 $30.13 $32.42 2" Service $31.28 $36.28 $41.00 $44.12 3" Services $57.80 $67.05 $75.77 $81.53 4" Service $84.02 $97.46 $110.13 $118.50 6" Service $151.00 $175.16 $197.93 $212.97 8" Service $232.12 $269.26 $304.26 $327.38 10" Service $319.95 $371.14 $419.39 $451.26 Private Fire Protection Service Charge (per month): 1-1/2" Connection $9.33 $10.82 $12.23 $13.16 2" Connection $12.44 $14.43 $16.31 $17.55 3" Connection $18.66 $21.65 $24.46 $26.32 4" Connection $24.87 $28.85 $32.60 $35.08 6" Connection $37.30 $43.27 $48.90 $52.62 8" Connection $49.74 $57.70 $65.20 $70.16 10" Connection $62.17 $72.12 $81.50 $87.69 12" Connection $74.61 $86.55 $97.80 $105.23 Proposed RatesGeneral Metered Service Within City Limits City of Bakersfield Draft Report Water Rate Study Report Table of Contents 1 TABLE OF CONTENTS SECTION 1. INTRODUCTION ............................................................................................ 2 1.1 SYSTEM OVERVIEW .....................................................................................................2 1.2 PROJECT BACKGROUND .............................................................................................2 1.3 PURPOSE OF THE REPORT .............................................................................................3 1.4 PROJECT METHODOLOGY ...........................................................................................4 1.5 ACRONYMS AND ABBREVIATIONS ..................................................................................4 SECTION 2. FINANCIAL PLAN .......................................................................................... 5 2.1 CAPITAL FINANCING POLICIES ......................................................................................5 2.2 RESERVE POLICIES ......................................................................................................5 2.3 MODELING ASSUMPTIONS............................................................................................6 2.4 RATE REVENUE REQUIREMENTS ......................................................................................8 2.5 FORECAST WITH NO RATE ADJUSTMENTS ....................................................................... 12 2.6 RECOMMENDED RATE ADJUSTMENTS............................................................................ 12 SECTION 3. CONCLUSION............................................................................................. 14 City of Bakersfield Draft Report Water Rate Study Report Introduction 2 INTRODUCTION The City of Bakersfield (City) engaged Stantec Consulting to study the finances of the City ’s Domestic Water Fund and develop recommendations for updating the Domestic Water Rates. This Water Rate Study Report (Report) is primarily a long- range financial plan with recommended rate revenue adjustments, and also includes recommendations regarding cost of service, rate design, and financial policies for the Domestic Water Fund. The rates recommended in this Report reflect the City’s cost of providing water services to customers. 1.1 SYSTEM OVERVIEW The City is the county seat and the principal metropolitan city of Kern County. The City operates under a council-manager form of government, with the City’s Water Board recommending, administering and implementing domestic water and Kern River water policies set by the City Council. The City’s Domestic Water system provides drinking water to over 143,000 residents and local businesses in Bakersfield. The City operates the Domestic Water Fund as an enterprise fund. The City’s Domestic Water System is a local water purveyor that serves retail customers within its service area. California Water Service (Cal Water) is under contract to operate and maintain the City’s Domestic Water System. Outside of the Domestic Water System, the City wholesales a portion of its Kern River water to various water entities. A portion of the urban water demand within the City limits is satisfied through the City’s Kern River deliveries to water treatment plants owned and operated by Cal Water and the Kern County Water Agency. 1.2 PROJECT BACKGROUND In early March 2017, the State Water Resources Control Board Division of Drinking Water (DDW) issued a Notice of Proposed Rulemaking for a new maximum contaminant level (MCL) for the synthetic organic chemical 1,2,3-trichloropropane (TCP). The anticipated implementation schedule for the new regulation requires utilities to begin sampling for TCP in drinking water as early City of Bakersfield Draft Report Water Rate Study Report Introduction 3 as the first quarter of 2018. DDW will require that the City comply with the new regulation within the City's Domestic Water System service area. Of the City’s 64 groundwater wells, 41 currently exceed the proposed standard for TCP. The City has divided the TCP treatment project between 27 wells with the most immediate need and 14 remaining wells. The treatment of those wells (the “TCP Treatment” project) is estimated to result in a cost of approximately $55 million ($35 million in the first year (FY 2017-181) and $20 million in the second year. The City anticipates that it will apply approximately $12.6 million of cash on hand to the initial costs of treatment. The remainder of the costs ($42.4 million) will be financed with two Water Revenue Bond issuances, the first anticipated in October 2017 and the second in FY 2018-19. 1.3 PURPOSE OF THE REPORT The purpose of this Report is to assess the Domestic Water Fund’s finances and recommend Domestic Water service rate adjustments that will generate the rate revenue needed to meet the current and projected costs of provided water service. While this report also makes recommendations regarding best practices for cost of service, rate design and utility financial policies, the focus of the report are the water rates that will enable the City to immediately address the health and regulatory priorities of the City. The City is committed to serving its customers with reliable, economical, and high- quality water service. The financial planning associated with this Report furthers these goals by developing rates that support the City’s financial goals and policies. 1 Fiscal years begin on July 1 and end on June 30. For example, FY 2017-18 runs from July 1, 2017 to June 30, 2018. City of Bakersfield Draft Report Water Rate Study Report Introduction 4 1.4 PROJECT METHODOLOGY The financial plan presented herein compares the overall revenues of the Domestic Water Fund to its operating, capital, and debt costs in order to determine the rate adjustments that will result in strong fiscal health over the planning period. This study follows industry-accepted financial planning principles, including those promulgated by the American Water Works Association’s M1 Manual. This study incorporates the best available projections for operating costs, capital expenditures, debt service, and customer base growth. 1.5 ACRONYMS AND ABBREVIATIONS AWWA American Water Works Association CIP Capital Improvement Program City City of Bakersfield DSCR debt service coverage ratio DDW State Water Resources Control Board Division of Drinking Water FY fiscal year (which begins on July 1) HCF hundred cubic feet MCL maximum contaminant level R&R repair and rehabilitation Report Water Rate Study Report TCP 1,2,3-trichloropropane City of Bakersfield Draft Report Water Rate Study Report Financial Plan 5 FINANCIAL PLAN In order to evaluate the long-term financial sustainability of the Domestic Water Fund, the project team evaluated the revenues and expenses in a five-year financial plan. In addition to accounting for operating costs, capital spending, and debt service, the financial plan also accounts for non-rate revenue, reserve targets and financial performance metrics (specifically, the debt service coverage ratio). 2.1 CAPITAL FINANCING POLICIES City’s Domestic Water Fund has not historically issued external debt to finance its capital expenses, and as such does not have a credit rating, nor a formal policy for debt service coverage ratio (DSCR), which is the ratio of revenues net of all operating and maintenance expenses relative to the annual debt service2. The City’s Sewer Fund has recently issued debt, achieving an “AA” credit rating. Based on the guidance of the City’s Financial Advisor (Fieldman, Rolapp & Associates, Inc. - Fieldman), the City’s Domestic Water Fund is targeting the same “AA” credit rating for the two Water Revenue Bonds it anticipates issuing for financing of the capital costs of the TCP treatment project. A DSCR target of 1.60 was used in these projections, based on the DSCR target used by the City’s Sewer utility. 2.2 RESERVE POLICIES Similar to maintaining a strong DSCR, adhering to robust reserve policies will strengthen the Domestic Water Fund’s credit rating. Target reserve policies are 2 DSCR is calculated as net revenue (excluding connection fee revenues) divided by projected debt service. The City’s existing debt obligation, the Kern County Water Lease, is included in this calculation as an operating expense rather than as existing debt, per the terms of that debt agreement. City of Bakersfield Draft Report Water Rate Study Report Financial Plan 6 designed to establish sound formal fiscal guidelines to ensure strong fiscal management that guide future City decisions. For purposes of this Study, we have assumed a 6-month Operating Reserve policy, which means that 180 days of operating costs are kept available in cash reserves. This reserve ensures continuity of service regardless of short-term changes in cash flow or sudden increases in operating costs. Since this reserve target is set relative to the Domestic Water Fund‘s operating budget, the target will change as the budget changes (see Section 2.4.2). As detailed in Schedule 3 and Schedule 4, the Operating Reserve target will range from approximately $11.1 million in FY 2017-18 to $15.2 million in FY 2021-22. Going forward, the City may wish to consider adopting more comprehensive reserve policies that may include components such as: A “Rate Stabilization” reserve designed to smooth rate volatility during short to mid-term rate revenue loss. A “Capital Improvement Program” reserve designated for funding capital assets and designed to stabilize funding for capital by accumulating “pay as you go” reserves. 2.3 MODELING ASSUMPTIONS This financial plan was developed using Stantec’s proprietary financial planning model (FAMS XL©), which was loaded with the Domestic Water Fund’s most recent audited financial information and adopted budgets for the study period. City staff and Fieldman were consulted during the process of developing the following financial assumptions. 2.3.1 GROWTH ASSUMPTIONS Customer growth was assumed to be 1.8% per year based on the City’s 2015 Urban Water Management Plan (dated June 2017). Per-capita water usage was projected to remain at the level of water usage in FY 2016-17. As represented in Figure 1, starting point for water usage is 12% higher than the (recent) historical low of FY 2015-16, and 5.9% lower than the five-year average. Total water usage City of Bakersfield Draft Report Water Rate Study Report Financial Plan 7 is assumed to increase at the rate of customer growth over the five-year projection period. Figure 1 – Domestic Customers Historical Water Usage 2.3.2 ESCALATION ASSUMPTIONS A general escalation assumption of 2.3 percent3 per year was assumed for projecting future operating costs. Future capital project costs were inflated at a rate of 3.0 percent4 per year. For variable costs that change in proportion to water usage (e.g. pumping costs & purchased water), the escalation factor was based on the system growth assumption of 1.8% compounded with the general escalation assumption above, for a combined 4.1%. 3 Source: Second Quarter 2017 Survey of Professional Forecasters, Federal Reserve Bank of Philadelphia, 10-year inflation forecast. 4 Source: Staff estimate, based on historical construction escalation. City of Bakersfield Draft Report Water Rate Study Report Financial Plan 8 2.4 RATE REVENUE REQUIREMENTS The Domestic Water Fund’s rate revenue requirements are calculated by measuring all revenue sources (rate and non-rate revenue) against all expenses (operating costs and capital costs, both cash and debt service) while accounting for cash reserve and debt service coverage targets (as described in Section 2.1 and Section 2.2). The Domestic Water Fund’s revenues and expenses are described in detail below. Note that all budget values in this report were provided by City staff, as documented in detail in the financial model developed by Stantec (“Bakersfield FY 18 FAMS_Final”). 2.4.1 BEGINNING FUND BALANCES The Domestic Water Fund is comprised of a single fund, which had an unencumbered cash balance of approximately $31,800,000 at the beginning of FY 2017-185,6. 2.4.2 REVENUE REQUIREMENTS Revenue requirements are organized into Operating Costs, Capital Spending, and Debt Service, as detailed below. Operating Costs - The financial plan model was populated with Domestic Water’s adopted operating budget for FY 2017-18. Operating budgets were forecasted using the escalation assumptions described in Section 2.3.2. 5 Source: City Finance Director during July 5, 2017 workshop. 6 Refer to Section 2.4.4 regarding a separate Connection Fee fund that the City will utilize going forward. City of Bakersfield Draft Report Water Rate Study Report Financial Plan 9 In addition to the escalation of existing operating costs, the TCP treatment will add new operating costs of an estimated $5 million per year7 for activities such as water sampling, additional reporting, and filter media replacement. The operating budget projections for the next five years are summarized in Table 1. A more detailed list is provided as Schedule 1. Table 1 – Forecasted Operating Expenses Capital Costs - The capital spending projections in the financial plan model are based on Domestic Water System’s Capital Improvement Program (CIP). Detailed capital spending has been projected through FY 2021-22. Capital projects are separated into two categories: repair and rehabilitation (R&R) projects which are always funded through the operating fund, and growth projects which are generally paid for with revenue from Connection Fees, when such funds are available. A detailed summary of the projected capital spending has been provided in Schedule 2. Figure 2 provides a summary of the projected capital spending. Amounts shown are in nominal dollars (after escalation). 7 Approximately $3 million for Phase I operation starting in FY 2018-19 and additional $2 million for Phase II operation starting in FY 2019-20. Operating Expense1 FY 2017-18 FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 Salaries and Benefits 1,510,000$ 1,552,000 1,596,000 1,641,000 1,689,000 Other Outside Services2 7,445,000 7,754,000 8,075,000 8,409,000 8,757,000 Phase 1 TCP Treatment - 3,000,000 3,124,000 3,254,000 3,388,000 Phase 2 TCP Treatment - - 2,083,000 2,169,000 2,259,000 Water 4,158,000 4,254,000 4,352,000 4,452,000 4,554,000 Electricity 3,932,000 4,022,000 4,115,000 4,210,000 4,306,000 Taxes 620,000 634,000 649,000 664,000 679,000 Repair & Maintenance 1,560,000 1,460,000 1,494,000 1,528,000 1,563,000 KCWA Water Rights Lease 1,385,000 1,348,000 1,350,000 1,349,000 1,348,000 Other 1,722,000 1,760,000 1,801,000 1,840,000 1,881,000 Total 22,332,000$ 25,784,000 28,639,000 29,516,000 30,424,000 Percent change:15.5%11.1%3.1%3.1% 1 Values have been rounded 2 Predominantly the Cal Water operating contract City of Bakersfield Draft Report Water Rate Study Report Financial Plan 10 Figure 2 – Capital Spending Summary 2.4.3 DEBT SERVICE The TCP project will cost $55 million, of which $12.6 million will be paid from existing cash reserves, and the remainder ($42.4 million) will be financed with Water Revenue Bonds. The anticipated debt service payments for the Water Revenue Bonds, based on the schedules provided by the Fieldman, Rolapp & Associates, are included in Schedule 4 and Schedule 5. 2.4.4 EXISTING REVENUE As shown in Figure 3, the unrestricted revenues received by the Domestic System Fund are predominately from rates (98.5%) but it also receives some non-rate revenue that financially supports its operations. Schedule 4 shows a summary of the projected revenues through FY 2021-22 assuming no rate adjustments. The City also collects Connection Fees, however the use of Connection Fee revenue is restricted to growth-related projects. City of Bakersfield Draft Report Water Rate Study Report Financial Plan 11 Figure 3 – Revenue Sources in FY 2017-18 The Report assumed interest earnings on the cash balance at a rate of 1.1%8 for the duration of the study period. 2.4.5 RESTRICTED FUNDS As previously mentioned, the Domestic Water Fund assesses a Connection Fee9 on new connections and upgrades to existing connections to the water system. These funds are restricted for the construction of facilities that provide additional capacity to the Domestic Water System. Going forward, to more easily track the use of these funds, the City will deposit this revenue in a restricted fund. 8 Per the City Treasurer via Randy McKeegan email on June 26, 2017. 9 Connection Fees in this case are synonymous with developer impact fees or capacity charges (as used in California law). City of Bakersfield Draft Report Water Rate Study Report Financial Plan 12 2.5 FORECAST WITH NO RATE ADJUSTMENTS Figure 4 below shows a five-year cash flow projection based on a scenario in which the City proceeds with issuing the Water Revenue Bonds to finance the TCP Treatment project, but makes no adjustment to water rates. The figure illustrates that the fund balance (blue line) will drop below zero within four years as a result of expenses (orange line) consistently exceeding revenues (bars). This is considered a non-viable scenario presented for informational purposes only. Figure 4 – Domestic Fund Cash Flow Analysis – No Rate Increases The pro forma provided in Schedule 4 shows the detailed numerical results of the same scenario. The details in Schedule 4 also shows that the Domestic Water Fund’s projected DSCR would have a negative value, which would result in the City not qualifying for Water Revenue Bonds. 2.6 RECOMMENDED RATE ADJUSTMENTS This report recommends that the City adopt the following Water Service rate increases: City of Bakersfield Draft Report Water Rate Study Report Financial Plan 13 October 2017 16% increase July 2018 13% Increase July 2019 7.6% increase Figure 5 below shows the five-year cash flow projection given these rate increases. The figure illustrates that the fund balance (blue line) stays above the reserve target (dashed black line). The fact that the reserve levels do not drop to the reserve target is a result of the fact that the DSCR remains at, or above, 1.6 (see pro forma in Schedule 5) and the Domestic Water System has very little capital spending needs after FY 2019-20 (which means that the extra rate revenue generated in meeting debt service coverage is not spent on capital projects). Figure 5 – Domestic Fund Cash Flow Analysis – Recommended Rate Increases The pro forma in Schedule 5 shows the detailed numerical results of this scenario. Schedule 6 provides the proposed schedule of rates for Inside-City customers for the planning period. City of Bakersfield Draft Report Water Rate Study Report Conclusion 14 CONCLUSION This Report uses methodologies that are aligned with industry standard practices for rate setting as promulgated by AWWA and all applicable law, including Proposition 218. The proposed adjustments to the rates will provide revenue stability and continue to equitably and proportionately recover costs from the appropriate customers. In general the structure of the Domestic Water rates are consistent with common industry practices. Stantec recommends that the City conduct regular cost-of- service analyses as a standard practice in order to ensure compliance with all applicable regulations. It is worth noting that the rates that are adopted by City Council do not necessarily need to be fully implemented if the financial condition of the Domestic Water Fund improves in the coming years (whether by higher than forecasted revenue or lower than forecasted expenses). City of Bakersfield Draft Report Water Rate Study Report Conclusion 15 DISCLAIMER This document was produced by Stantec Consulting Services, Inc. (“Stantec”) for the City of Bakersfield (City) and is based on a specific scope agreed upon by both parties. In preparing this report, Stantec utilized information and data obtained from the City or public and/or industry sources. Stantec has relied on the information and data without independent verification, except only to the extent such verification is expressly described in this document. Any projections of future conditions presented in the document are not intended as predictions, as there may be differences between forecasted and actual results, and those differences may be material. Additionally, the purpose of this document is to summarize Stantec’s analysis and findings related to this project, and it is not intended to address all aspects that may surround the subject area. Therefore, this document may have limitations, assumptions, or reliances on data that are not readily apparent on the face of it. Moreover, the reader should understand that Stantec was called on to provide judgments on a variety of critical factors which are incapable of precise measurement. As such, the use of this document and its findings by the City should only occur after consultation with Stantec, and any use of this document and findings by any other person is done so entirely at their own risk. City of Bakersfield Draft Report Water Rate Study Report Schedule 1 16 Schedule 1 – Detailed Operating Budget and Forecast10 10 Actual budget amounts have been rounded FY 2017-18 FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 1 Personal Services: 2 Regular Pay 914,000$ 935,000 957,000 979,000 1,001,000 3 Temporary Pay 34,000 35,000 35,000 36,000 37,000 4 Overtime Pay 5,000 5,000 5,000 5,000 5,000 5 Accrued Leaves Payoff 40,000 41,000 42,000 43,000 44,000 6 Longevity Pay 1,000 1,000 2,000 2,000 2,000 8 Speciality Pay 1,000 1,000 1,000 1,000 1,000 9 Auto Allowance 6,000 6,000 6,000 6,000 7,000 12 Sick Leave Conversion Pay 6,000 6,000 6,000 6,000 6,000 13 Life Insurance 1,000 1,000 1,000 1,000 1,000 14 Medicare Insurance 13,000 13,000 13,000 13,000 14,000 15 Medical Insurance-Active 127,000 130,000 133,000 136,000 139,000 16 Medical Insurance-Retiree 44,000 45,000 46,000 47,000 48,000 17 Workers Comp Ins Alloc 19,000 19,000 20,000 20,000 21,000 18 Pers - Miscellaneous 297,000 312,000 327,000 344,000 361,000 19 City 1% Match - Rhs Plan 2,000 2,000 2,000 2,000 2,000 20 Water Operations 21 Administrative Allocation 375,000$ 384,000 392,000 401,000 411,000 22 Direct Allocation 11,000 11,000 11,000 11,000 11,000 23 Legal 400,000 409,000 419,000 428,000 438,000 24 Other Professional 400,000 409,000 419,000 428,000 438,000 25 Internal Vehicles 69,000 70,000 72,000 73,000 75,000 26 Internal Comm Equip 1,000 1,000 1,000 1,000 1,000 27 Internal Telephone Equip 3,000 3,000 3,000 4,000 4,000 28 Repair & Maintenance 1,560,000 1,460,000 1,494,000 1,528,000 1,563,000 29 Liability Ins Allocation 4,000 4,000 4,000 4,000 4,000 30 Property Ins Allocation - - - - - 31 Telephone-Cell Phone Chg 6,000 6,000 7,000 7,000 7,000 32 Advertising 1,000 1,000 1,000 1,000 1,000 33 Printing And Binding 7,000 7,000 7,000 7,000 7,000 34 Internal Duplication 1,000 1,000 1,000 1,000 1,000 35 Internal Garbage 3,000 3,000 3,000 3,000 3,000 36 Internal Sewer 3,000 3,000 3,000 3,000 3,000 37 Reimbursable Expense 7,000 7,000 7,000 7,000 7,000 38 Other Outside Services 7,445,000 7,754,000 8,075,000 8,409,000 8,757,000 39 Water 4,158,000 4,254,000 4,352,000 4,452,000 4,554,000 40 Natural Gas 2,000 2,000 2,000 2,000 2,000 41 Electricity 3,932,000 4,022,000 4,115,000 4,210,000 4,306,000 42 Office Supplies 4,000 4,000 4,000 4,000 4,000 43 Maintenance 140,000 143,000 147,000 150,000 153,000 44 Uniforms & Accessories 1,000 1,000 1,000 1,000 1,000 45 Computer Supplies 3,000 3,000 3,000 3,000 3,000 46 Equipment Parts 3,000 3,000 3,000 3,000 3,000 47 Other Materials/Supplies 207,000 212,000 217,000 222,000 227,000 48 Furniture & Equip (Minor)4,000 4,000 4,000 4,000 4,000 49 Taxes 620,000 634,000 649,000 664,000 679,000 50 Other Equipment 67,000 69,000 70,000 72,000 73,000 51 Administrative Allocation - - - - - 52 Direct Allocation - - - - - 53 Land & Improvements - - - - - 54 Other Equipment - - - - - - - - - - 55 Kcwa Water Rights Lease 1,385,000 1,348,000 1,350,000 1,349,000 1,348,000 56 TCP Remediation Expense 57 Phase I Cost - 3,000,000 3,124,000 3,254,000 3,388,000 58 Phase II Cost - - 2,083,000 2,169,000 2,259,000 59 Total Operating Expense 22,332,000$ 25,784,000$ 28,639,000$ 29,516,000$ 30,424,000$ City of Bakersfield Draft Report Water Rate Study Report Schedule 2 17 Schedule 2 – Capital Improvement Program11 11 Actual budget amounts have been rounded Project FY 2017-18 FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 Wellhead Facility Upgrades 400,000$ 400,000 412,000 424,000 437,000 Service Connection Replacement Program 600,000 800,000 824,000 849,000 874,000 Build Exp 1000 Buena Vista (DWF)350,000 - - - - Pump Station Upgrades - 400,000 412,000 424,000 437,000 Water Main Extensions - 450,000 464,000 477,000 492,000 TCP Treatment Project 35,000,000 20,000,000 - - - Total Projects Paid 36,350,000$ 22,050,000$ 2,112,000$ 2,174,000$ 2,240,000$ City of Bakersfield Draft Report Water Rate Study Report Schedule 3 18 Schedule 3 – Sources of Revenue (No Rate Adjustment)12 12 Actual budget amounts have been rounded FY 2017-18 FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 1 Rate Revenue Growth Assumptions: 2 Growth in Water Accounts 1.80%1.80%1.80%1.80%1.80%3 Growth in Total Billed Water Use 1.80%1.80%1.80%1.80%1.80% 4 Assumed Water Rate Increase 0.00%0.00%0.00%0.00%0.00% 5 Rate Revenue:6 Water Rate Revenue 22,431,000$ 22,835,000 23,246,000 23,664,000 24,090,000 7 Other Operating Revenue: 8 Plan Checking Fees 18,000$ 18,000 19,000 19,000 19,000 9 Safety Review/Inspection 10,000 10,000 10,000 11,000 11,000 10 Fire Hydrants Sales 60,000 61,000 62,000 63,000 64,000 11 Fire Hydrant Testing 7,000 7,000 7,000 7,000 7,000 12 Rents and Royalties 1,000 1,000 1,000 1,000 1,000 13 Total Other Operating Revenue 96,000$ 97,000 99,000 101,000 102,000 14 Non-Operating Revenue: 15 Pr. Yr. Reimbursements 50,000$ 51,000 52,000$ 53,000$ 54,000$ 16 Wtr/Swr Line Ext Refunds 5,000 5,000 5,000 5,000 5,000 17 Insurance Commissions 5,000 5,000 5,000 5,000 5,000 18 Sale-Scrap & Supply 7,000 7,000 7,000 7,000 8,000 19 Other Revenue 5,000 5,000 5,000 5,000 5,000 20 Interest Income 200,000 151,000 59,000 (50,000) (167,000) 21 Total Non-Operating Revenue 272,000$ 224,000 133,000 25,000 (90,000) 22 Total Revenue 22,799,000$ 23,156,000 23,478,000 23,790,000 24,102,000 City of Bakersfield Draft Report Water Rate Study Report Schedule 4 19 Schedule 4 –Forecast with No Recommended Rate Adjustment (Non-Viable Scenario)13 13 Actual budget amounts have been rounded FY 2017-18 FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 1 Rate Revenue Increase 0.00%0.00%0.00%0.00%0.00% 2 Revenues 3 Rate Revenue Before Adjustments 22,431,000$ 22,431,000 22,835,000 23,246,000 23,664,000 4 Additional Rate Revenue From Growth - 404,000 411,000 418,000 426,000 5 Additional Rate Revenue From Rate Adjustment - - - - - 6 Other Operating Revenues 96,000 97,000 99,000 101,000 103,000 7 Interest Income 200,000 151,000 59,000 (50,000) (167,000) 8 Connection Fees 1,300,000 1,330,000 1,360,000 1,392,000 1,424,000 9 Other Non-Operating Revenue 72,000 73,000 75,000 76,000 77,000 10 Total Revenues 24,099,000$ 24,486,000 24,839,000 25,183,000 25,527,000 11 Operating Expenses12Salaries and Benefits 1,510,000$ 1,552,000 1,596,000 1,641,000 1,689,000 13 Other Outside Services1 7,445,000 7,754,000 8,075,000 8,409,000 8,757,000 14 Phase 1 TCP Treatment - 3,000,000 3,124,000 3,254,000 3,388,000 15 Phase 2 TCP Treatment - - 2,083,000 2,169,000 2,259,000 16 Water 4,158,000 4,254,000 4,352,000 4,452,000 4,554,000 17 Electricity 3,932,000 4,022,000 4,115,000 4,210,000 4,306,000 18 Taxes 620,000 634,000 649,000 664,000 679,000 19 Repair & Maintenance 1,560,000 1,460,000 1,494,000 1,528,000 1,563,000 20 KCWA Water Rights Lease 1,385,000 1,348,000 1,350,000 1,349,000 1,348,000 21 Other 1,722,000 1,760,000 1,801,000 1,840,000 1,881,000 22 Total Operating Expenses 22,332,000$ 25,784,000 28,639,000 29,516,000 30,424,000 23 Net Revenues 1,767,000$ (1,298,000) (3,800,000) (4,333,000) (4,897,000) 24 Cumulative New Debt Service 1,414,825$ 2,821,625 2,814,625 2,816,625 2,816,625 25 Projects Paid with Connection Fees 350,000 450,000 463,500 477,405 491,727 26 Transfer to Connection Fee Fund 950,000 880,000 896,500 914,595 932,273 27 Projects Paid with Cash 13,640,000 1,600,000 1,648,000 1,698,000 1,748,000 28 Total Revenue Requirement 38,687,000$ 31,536,000 34,462,000 35,423,000 36,413,000 29 Revenues Over (Under) Expenses (14,588,000)$ (7,050,000) (9,623,000) (10,240,000) (10,886,000) 30 Operating Fund - Beginning Balance 31,800,000$ 17,214,000 10,164,000 543,000 (9,698,000) 31 Operating Fund - Ending Balance 17,212,000 10,164,000 541,000 (9,697,000) (20,584,000) 32 Operating Fund - Target Reserves 11,165,000$ 10,164,000 543,000 (9,698,000) (20,587,000) 33 Debt Service Coverage (1.6 Req.)0.33 (neg.)(neg.)(neg.)(neg.) (1) The majority of this line item is the current Cal Water contract. City of Bakersfield Draft Report Water Rate Study Report Schedule 5 20 Schedule 5 – Financial Forecast with Recommended Rate Adjustment14 14 Actual budget amounts have been rounded FY 2017-18 FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 1 Rate Revenue Increase 16.00%13.00%7.60%0.75%0.88% 2 Revenues 3 Rate Revenue Before Adjustments 22,431,000$ 24,978,000 29,932,000 32,786,000 33,627,000 4 Additional Rate Revenue From Growth - 468,000 539,000 590,000 605,000 5 Additional Rate Revenue From Rate Adjustment 2,547,000 4,485,000 2,316,000 251,000 303,000 6 Other Operating Revenues 96,000 97,000 99,000 101,000 103,000 7 Interest Income 200,000 218,000 219,000 219,000 219,000 8 Connection Fees 1,300,000 1,330,000 1,360,000 1,392,000 1,424,000 9 Other Non-Operating Revenue 72,000 73,000 75,000 76,000 77,000 10 Total Revenues 26,646,000$ 31,649,000 34,540,000 35,415,000 36,358,000 11 Operating Expenses12Salaries and Benefits 1,510,000$ 1,552,000 1,596,000 1,641,000 1,689,000 13 Other Outside Services1 7,445,000 7,754,000 8,075,000 8,409,000 8,757,000 14 Phase 1 TCP Treatment - 3,000,000 3,124,000 3,254,000 3,388,000 15 Phase 2 TCP Treatment - - 2,083,000 2,169,000 2,259,000 16 Water 4,158,000 4,254,000 4,352,000 4,452,000 4,554,000 17 Electricity 3,932,000 4,022,000 4,115,000 4,210,000 4,306,000 18 Taxes 620,000 634,000 649,000 664,000 679,000 19 Repair & Maintenance 1,560,000 1,460,000 1,494,000 1,528,000 1,563,000 20 KCWA Water Rights Lease 1,385,000 1,348,000 1,350,000 1,349,000 1,348,000 21 Other 1,722,000 1,760,000 1,801,000 1,840,000 1,881,000 22 Total Operating Expenses 22,332,000$ 25,784,000 28,639,000 29,516,000 30,424,000 23 Net Revenues 4,314,000$ 5,865,000 5,901,000 5,899,000 5,934,000 24 Cumulative New Debt Service 1,414,825$ 2,821,625 2,814,625 2,816,625 2,816,625 25 Projects Paid with Connection Fees 350,000 450,000 463,500 477,405 491,727 26 Transfer to Connection Fee Fund 950,000 880,000 896,500 914,595 932,273 27 Projects Paid with Cash 13,640,000 1,600,000 1,648,000 1,697,000 1,748,000 28 Total Revenue Requirement 38,687,000$ 31,536,000 34,462,000 35,422,000 36,413,000 29 Revenues Over (Under) Expenses (12,041,000)$ 113,000 78,000 (7,000) (55,000) 30 Operating Fund - Beginning Balance 31,800,000$ 19,760,000 19,875,000 19,954,000 19,947,000 31 Operating Fund - Ending Balance 19,759,000 19,873,000 19,953,000 19,947,000 19,892,000 32 Operating Fund - Target Reserves 11,165,000$ 12,892,000 14,319,000 14,759,000 15,214,000 33 Debt Service Coverage (1.6 Req.)2.13 1.61 1.61 1.60 1.60 (1) The majority of this line item is the current Cal Water contract. City of Bakersfield Draft Report Water Rate Study Report Schedule 6 21 Schedule 6 – Proposed Rate Schedule October 1, 2017 July 1, 2018 July 1, 2019 16% increase 13% increase 7.6% increase Quantity Rate (per 100 cubic ft.) $0.94 $1.09 $1.23 $1.32 Readiness-To-Serve Charge (per month): 5/8" x 3/4" Services $9.88 $11.46 $12.95 $13.93 1" Services $15.06 $17.47 $19.74 $21.24 1-1/2" Services $22.98 $26.66 $30.13 $32.42 2" Service $31.28 $36.28 $41.00 $44.12 3" Services $57.80 $67.05 $75.77 $81.53 4" Service $84.02 $97.46 $110.13 $118.50 6" Service $151.00 $175.16 $197.93 $212.97 8" Service $232.12 $269.26 $304.26 $327.38 10" Service $319.95 $371.14 $419.39 $451.26 Private Fire Protection Service Charge (per month): 1-1/2" Connection $9.33 $10.82 $12.23 $13.16 2" Connection $12.44 $14.43 $16.31 $17.55 3" Connection $18.66 $21.65 $24.46 $26.32 4" Connection $24.87 $28.85 $32.60 $35.08 6" Connection $37.30 $43.27 $48.90 $52.62 8" Connection $49.74 $57.70 $65.20 $70.16 10" Connection $62.17 $72.12 $81.50 $87.69 12" Connection $74.61 $86.55 $97.80 $105.23 Proposed RatesGeneral Metered Service Within City Limits Finance Department ● 1600 Truxtun Avenue ● Bakersfield ● California ● 93301 (661) 326-3742 ● Fax (661) 852-2040 FINANCE DEPARTMENT July 21, 2017 TO: ALAN TANDY, CITY MANAGER FROM: NELSON K. SMITH, FINANCE DIRECTOR SUBJECT: REFERRAL RESPONSE QUARTERLY STATUS REPORT ON REVENUES AND EXPENSES OF THE 18TH AND EYE STREET PARKING GARAGE Councilmember Gonzales requested that City staff provide a quarterly status report on revenues and expenses of the 18th and Eye Street parking garage. Attached is a spreadsheet summarizing the quarterly information for the past fiscal year. We will update this report on a quarterly basis going forward. CITY PARKING GARAGE QUARTERLY FINANCIAL REPORT 2016/17 2016/17 2016/17 2016/17 2016/17 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Fiscal Year Totals Daily Parking Revenue 10,615 15,161 14,514 17,574 57,864 Monthly Parking Revenue 23,950 23,270 21,450 19,300 87,970 Other Income 860 1,101 994 1,066 4,021 Total Revenues 35,425 39,532 36,958 37,940 149,855 Operating Expenses 29,455 20,650 36,699 41,340 128,144 NET OPERATING INCOME/(LOSS)5,970 18,882 259 (3,400) 21,711 Capital Outlay Expenses 32,750 32,750 (Project costs of new exterior signs on south and east sides of facility) BOX OFFICE HOURS Mon-Fri 10 AM - 5 PM (Excluding Event Days) CHARGE-BY-PHONE 1-888-929-7849 GROUP SALES INFORMATION 661-852-7309 SEASON TICKET INFORMATION Bakersfield Condors 661-324-PUCK (7825) www.bakersfieldcondors.com Bakersfield Symphony 661-323-7928 www.BSOnow.org Broadway In Bakersfield 661-852-7308 Week of July 17th UPCOMING EVENTS July 19 - Nine Inch Nails w/Tobacco 8:00 PM $35 On Sale Now Sept 23 – Gloria Trevi/Alejandra Guzman 8:00 PM $145, $115, $90, $60, $50 On Sale Now September 30 – Tim McGraw/Faith Hill 7:30 PM $129.50, $99.50, $69.50 On Sale Now November 3 – Skillet, Britt Nicole, etc.7:00 PM $49.75, $36.75, $26.75, $19.75 On Sale Now November 9 - Disney On Ice 7:00 PM $60, $36, $12 On Sale 8/1 November 10 – Disney On Ice 7:00 PM $60, $36, $25, $23, $18, $15, $12 On Sale 8/1 November 11 – Disney On Ice 3PM/7PM November 12 – Disney On Ice 1PM/5PM November 18 – PBR Velocity Tour 7:00 PM $150, $65, $45, $25, $15 On Sale Now $60, $36, $25, $23, $18, $15, $12 On Sale 8/1 $60, $36, $25, $23, $18, $15, $12 On Sale 8/1 July 22 - Pepe Aguilar 8:00 PM $199, $125, $95, $75, $60, $50 On Sale Now July 30 – Premier Boxing Champions 2:15 PM $80, $45, $30 On Sale Now August 10 – WWE NXT Live 7:30 PM $75, $40, $20, $15 On Sale Now September 29 – Bakersfield Symphony 7:00 PM $45, $35 On Sale Now November 30 – Mannheim Steamroller 7:30 PM $67.50, $52.50, $35 On Sale 7/21 Season subscriptions on sale now! October 8 -- Dirty Dancing January 19 -- Rent February 27 -- Buddy - The Buddy Holly Story March 30 -- Jay Owenhouse - The Authentic Illusionist www.rabobankarena.com - www.spectrumamphitheatre.com August 26 – Fake-a-palooza 3 6:00 PM $20 GA, $30 VIP On Sale Now The California Public Utilities Commission Wants To Hear From You About Phase II of PG&E’s Rate Case The California Public Utilities Commission (CPUC) is holding a Public Participation Hearing in Bakersfield to obtain comment from the public on PhaseAIIAofAPG&E’sArateAcase to determine the cost and rate schedules for each customer class. Please bring your comments--and your neighbors--to express your views. What do you think of PG&E’s service? What are your thoughts on PG&E’s rate case? The CPUC wants to hear from you! For more information about Phase II of PG&E’s rate case, please visit: www.cpuc.ca.gov/PPH. At each Public Participation Hearing, customer service representatives from PG&E will be available to assist individual customers with their accounts. If you are unable to attend this hearing in person, written comments may be submitted to: CPUC Public Advisor, 505 Van Ness Ave., San Francisco, CA 94102, or via email to public.advisor@cpuc.ca.gov. Please reference proceeding number A.16-01-013 on any written or email correspondence. If specialized accommodations are needed to attend, such as non-English language interpreters, please contactAtheACPUC’sAPublicA dvisor’sAOfficeAatApublic.advisor@cpuc.ca.gov, or toll free at 866-849-8390, at least five business days in advance of the hearing. www.cpuc.ca.gov ● twitter.com/CaliforniaPUC ● facebook.com/CaliforniaPUC instagram.com/CaliforniaPUC ● youtube.com/CaliforniaPUC Monday, August 14, 2017 2 p.m. AND 6 p.m. Bakersfield City Council Chamber 1600 Truxtun Ave., Bakersfield Su n Su n Su n Su n Mo n Mo n Mo n Mo n Tu e Tu e Tu e Tu e We d We d We d We d Th u Th u Th u Th u Fr i Fr i F r i Fr i SatSatSatSat 1 WALK • BIKE • EXPLORE Kern River Parkway 32 Mile Trail 2 FRE E B e a l e P a r k Ba n d C o n c e r t @ 8 p m 3 Si g n y o u r c h i l d u p fo r P e e W e e o r Ju n i o r S p o r t s Ca m p 4 FRE E “ T H E F O U R T H A T R I V E R W A L K ” FI R E W O R K S , MU S I C , C H I L D R E N ’ S AC T I V I T I E S & F O O D 5 Do l l a r D i s c o u n t Op e n S w i m Al l C i t y P o o l s 6 Ta k e y o u r d o g t o on e o f t h e C i t y ’ s 7 O f f - L e a s h Do g P a r k s 7 FRE E M o v i e @ C e n t r a l P a r k “T r o l l s ” Wa c k y F r i d a y @ M L K Po o l 8 FREE Fun Runs @ Yokuts Full Moon Ride Beach @ 8 pm 9 PIC N I C IN A CIT Y PAR K PA R K H O U R S 5 a m - 1 0 p m 10 ST A Y H Y D R A T E D 11 12 13 14 F R E E M o v i e @ S i l v e r C r e e k P a r k “M o a n a ” Wa c k y F r i d a y @ Je f f e r s o n P o o l 15 Play Basketball or Horseshoes 16 FR E E P i c k l e b a l l @ J a s t r o 4 p m S u n d a y s 17 18 19 20 21 FRE E M o v i e @ W i l s o n P a r k “F i n d i n g D o r y ” Fa m i l y F u n N i g h t @ M c M u r t r e y 22 City Swim Meet @ McMurtrey 23 CHE C K OUT T H E SKA T E P A R K S @ BEA C H & P L A N Z 24 Sw i m L a p s a t Mc M u r t r e y Mo r n i n g s , N o o n an d E v e n i n g s 25 59 C i t y P a r k s Go O u t & Di s c o v e r a N e w On e 26 FR E E P i c k l e b a l l @ J a s t r o 5 p m W e d n e s d a y s 27 RE S E R V E A P A R K FA C I L I T Y 28 FRE E M o v i e @ R W S p e c t r u m A m p “T h e L e g o B a t m a n ” Wa c k y F r i d a y @ Si l v e r C r e e k P o o l 29 Ask a friend to take a walk, play tennis or swim 30 31 Si g n u p f o r D e e p Wa t e r I n t e r v a l s @ Mc M u r t r e y Cr e a t e a h e a l t h y h a b i t b y g e t t i n g o u t t o a p a r k , t r ai l , p l a y g r o u n d , sw i m m i n g p o o l , n a t u r a l a r e a , o r o t h e r p u b l i c s p a c e ev e r y w e e k . F e e l th e e n e r g y o f t h e c r o w d s a n d h a v e a g r e a t t i m e ! M a ke y o u r pe r s o n a l c o m m i t m e n t t o g e t o u t d o o r s i n J u l y ! 66 1 . 3 2 6 . F U N N ( 3 8 6 6 ) 66 1 . 3 2 6 . F U N N ( 3 8 6 6 ) 66 1 . 3 2 6 . F U N N ( 3 8 6 6 ) 66 1 . 3 2 6 . F U N N ( 3 8 6 6 ) VI S I T O N E O R A L L O F T H E 9 S P R A Y P A R K S : Be a l e • G r e y s t o n e • J a s t r o • J e f f e r s o n ML K • P l a n z • S a u n d e r s • S i e m o n • W a y s i d e S E V E N D A Y S A W E E K • 1 - 6 P . M . SIG N UP: Bo n s a i , C l o g g i n g , D o g O b e d i e n c e , K a r a t e , L i n e D a n c i ng , T a i C h i , Sp o r t s L e a g u e s (S o f t b a l l , R o l l e r H o c k e y , S o c c e r ) & M o r e Ci t y o f B a k e r s f i e l d R e c r e a t i o n & P a r k s ww w . B a k e r s f i e l d P a r k s . u s For more information visit www.bakersfieldparks.us or call 661.852.7430 Bring the whole family to enjoy the following: Swimming for all ages Waterslides Special activities Diving boards Water safety and healthy beverage booths @ McMurtrey Aquatic Center $4 per person/$13 for groups of 4 Passes not accepted Friday, July 21st 6 - 9 PM Upcoming Events: