2010 Water Supply Plan, Water Rate and Connection Charge Study City Council Study Session September 8, 2010.

2010 Water Supply Plan,Water Rate and Connection Charge Study

City CouncilStudy Session

2010 Water Supply Plan,Water Rate and Connection Charge Study

City CouncilStudy Session

September 8, 2010September 8, 2010

2

AgendaAgenda

1. Purpose of Meeting

2. Water Supply Situation

3. Impact on City

4. Demand Forecast

5. Conservation Plan for New Development

6. Off-site Conservation Funded by New Conservation Offset

Charge

7. Other Strategies to Satisfy Demand

8. Comparison of Strategies

9. Meeting Demand at Buildout

3

Agenda (cont.)Agenda (cont.)

10. Needed Capital Improvements

11. Allocation of Costs to New Development

12. Water Connection Charges and Comparisons

13. Billing System and Rate Structure

14. Financial Models and Key Assumptions

15. Financing Alternatives and Comparison

16. Recommended Financing Alternative (Alt. 4)

17. Impact on SF Customer and Comparisons

18. Water Shortage (Drought) Surcharge

19. Recommendations

4

Purpose of MeetingPurpose of Meeting

Provide update on water supply situation and water supply projects

Provide brief update on water demands, demand projections and water conservation

Presentation of 2010 Water Supply Plan and Water Rate and Connection Charge Study prepared by John Olaf Nelson

Obtain input from the Council and the general public

5

Water Supply: Importance of Local Groundwater SupplyWater Supply: Importance of Local Groundwater Supply

Constitutes 5 to 15% of City’s water supply picture

Conjunctive use strategyDrought contingency supplyEmergency supply

6

Local Groundwater PlanningLocal Groundwater Planning

· Tested Well #7 for Detailed Design.

· Well #7 was not brought into service due to low yield & treatment required.

· Evaluated KT Carter Park site.

Determine Need for New Well Location

Screening Potential Well Site

· Evaluated entire City well system.

· Completed City-wide well siting evaluation.

2 YEARS 6 MONTHS 1 YEAR 6 MONTHS 1 YEAR

“Desktop”Yield, Quality and

Interference Analysis

CEQA

Bid Process Well Installation

Pilot Hole

Well Installation & Testing

Well Head Treatment & Facilities

Preliminary Design

Full Design

Bid Phase

ConstructionPhase

5 YEARS0

· Next Step – site-specific evaluation prior to drilling.

WE

LL

DE

VE

LO

PM

EN

T

PR

OC

ES

SS

TE

PS

P

ER

FO

RM

ED

7

Fault & 2008-2009 GroundwaterContour Reference MapFault & 2008-2009 GroundwaterContour Reference Map

8

Geologic MapGeologic Map

9

Cross SectionCross Section

10

Well Study AreaWell Study Area

11

Potential New Well Siting Map Potential New Well Siting Map

Other Sonoma Valley Groundwater ProjectsOther Sonoma Valley Groundwater Projects

Active in the Groundwater Management Plan Meetings

SC Water Agency Groundwater Banking Feasibility Study

SC Water Agency Stormwater Capture and Recharge Project

City of Sonoma Well #7 monitoring for groundwater depression

12

13

Water Supply SituationWater Supply Situation

Biological Opinion (BO) Impacts Limits access to Warm Springs storage (Lake Sonoma) Increases cost of Russian River (RR) water

Lake Mendocino Storage Issues Increased demands Reduced diversions from Eel River Inadequate storage for Fall fish runs in some years

14

Water Supply Situation (cont.)Water Supply Situation (cont.)

SCWA’s response: Abandon The Water Project Calls for reduction of RR diversions from June -

September in some years Fix BO limitations with In-stream improvements Build Dry Creek Bypass, if needed Focus on conservation, recycled reuse and groundwater

alternatives Action Plan based on limiting RR diversions to 75,000 afa

and renegotiation of Restructured AgreementCity’s response:

Demand management through water conservation Increased reliance on local groundwater 2008 Water Supply Action Plan

15

Impact on CityImpact on City

Peak month delivery capacity limited to 3.46 mgd vs. 6.3 mgd Entitlement1

Annual delivery limit of 2,617 af vs. 3,000 af Entitlement1

Potential BO and Lake Mendocino storage issues resulting in reductions in Aqueduct deliveries of up to 25% during June - September in some years

Increased cost of water purchased from SCWA2

City must look to its own resources to meet increased demands of growth envisioned in General Plan

Notes: 1. Cal. Year 2009 Demand (a depressed demand year):

Pk Mo 2.73 mgdAnnual - 2065 af

2. 11% per yr average for past 4 years

Caution: 3.46 mgd capacity could be reduced.

16

Demand ForecastDemand ForecastRemaining New Development1

Type Dwelling Units ESD’s % of Demand

SF 386 346 31%

MF 1,006 557 50%

COM na 203 19%

Total2 1,392 1,106 100%

Notes:1. Based on City’s 2020 General Plan.2. Buildout estimated to occur in year 2031.

17

Demand Forecast (cont.)Demand Forecast (cont.)

Projected Demand Including Remaining New Development

Demand Annual (afa)

Peak Month (mgd)

Existing (Normal Year)1 2,583 3.41

New Development2 492 0.53

Projected New Gross 3,075 (19%) 3.94

Notes:1. Determined by regression model of historic data.2. Includes 8% for Unaccounted-for Water (UFW). Deducting UFW leaves balance of 456 af.

18

Conservation Plan for New DevelopmentConservation Plan for New Development

Conservation Programs Savings (afa)

% of New Demand

Cost

On-site Savings at Buildout:

Plumbing Code 51 11%

NDS - General 45.3

NDS - Submetering MF 13.8

NDS - Commercial 14.9

Subtotal NDS 74 16%

Subtotal, on-site savings 125 27% $1.6 M

Off-site savings1 103 23% $2.1 M

Total, on and off-site savings 228 50%2

Notes:1. Paid for by new Conservation Offset Charge.2. Predicted increase in demand of 456 af is cut in half.

19

Conservation Plan (cont.)Conservation Plan (cont.)

Program Savings

(afa)Benefit/Cost

RatioOff-site Programs for Consideration (Savings achieved by Buildout):

Smart controller program 29.7 4.0

Double clothes washer rebate 7.5 1.5

Sub-metering MF 4.3 1.2

Cash-for-grass 14.4 1.1

Hot water on-demand 4.9 0.9

Cost

Total, off-site programs listed 61 $1.5 M

Added Tier 1 and Tier 2 42 $0.6 M

Total savings, off-site programs1 103 $2.1 M

1. Funded by proposed Conservation Offset Charge

20

Conservation Plan (cont.)Conservation Plan (cont.)

Other Strategies Considered to Satisfy Demand

Program Savings Cost

Sonoma Development Center and VOM - CU Proj.

0.57 mgd;165 afa

$655,000

Groundwater Banking - CU Proj. ? ?

New/increased Local Wells 0.61 mgd;180 afa

$3.4 M

Recycled Water 106 afa $3.3 M ?1

Graywater, clothes washer only gravity system2

11,545 g/yr/SF $649/ SF site

Rainwater harvesting (barrels)2 3,362 g/yr/SF $488/ SF site

Notes:1. Cost incomplete. Does not include rehab/modification of storage or pump

station. Does not include connection from ST Plant to Watmaugh Rd.2. Participation and persistence of use unknown. Pilot programs recommended.

21

Comparison of Strategies - Unit Cost Comparison of Strategies - Unit Cost

Figure 25 - PV Comparison of Various Strategies

1,206

7351,037 985

771

479

579104 98

212

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

Recycled Water(106 af)

Conjunctive UseProject (165 af)

NDS (74 af) Off-siteConservation

Offsets (103 af)

New Wells (180 af)

$ pe

r ac

re-f

t

Capital O&M

22

Comparison of Strategies - Capital Cost Comparison of Strategies - Capital Cost

Figure 26 - Total PV Capital Cost per afa of Available Yield

30,734

3,970

21,772 20,68018,889

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

Recycled Water(106 af)

Conjunctive UseProject (165 af)

NDS (74 af) Off-siteConservation

Offsets (103 af)

New Wells (180af)

$/af

of P

oten

tial

Ava

ilab

le Y

ield

or

23

Comparison of StrategiesComparison of Strategies

Comparison of Various Strategies - Unit Cost over 30 years

Strategy Amount(af)

Capital($)

O&M($)

Total($/af)

Recycled Water 106 1,206 479 1,685

Conjunctive Use Project 165 735 579 1,314

NDS 74 1,037 104 1,141

Off-site Conservation Offsets 103 985 98 1,083

New Wells 180 771 212 983

Discount Rate = 3.0%

24

Comparison of Mixes of StrategiesComparison of Mixes of Strategies

Comparison of Mixes1

Program Mix Capital Cost($, PV)

Cost/af($/af)

New wells+NDS+Cons Offsets+CU 8,856,336 1,080

New wells+NDS+Cons Offsets+CU+RW 12,126,446 1,223

The Water Project2 33,455,427 1,525

NDS = New Development StandardsCU = SDC and VOM Conjunctive Use Proj.RW = Recycled Water Proj.

Notes:1. All three alternatives include cost of watershed restoration (in-stream

improvement projects) and Dry Creek Bypass.2. Updated cost of project is $518.9 M (including instream improvement

projects and Bypass. $33,4 M is Sonoma’s estimated share.

<==

25

Meeting Demand at Buildout – Normal YearMeeting Demand at Buildout – Normal Year

Annual

afa %Peak Month

mgd %

Existing Demand 2,583 3.41

Remaining New Gross Demand 492 0.53

Total Gross Demand at BO 3,075 3.94

Reductions (Cons. and RW) Conservation in New Development Conservation off-site offsets Remaining Tier 1 savings – future RW offsetsTotal Cons. savings & RW offsets

125103

54106389

32%27%14%

__27%100%

0.110.090.05

_0.090.35

32%27%14%

__27%100%

Net Potable Demand w RW 2,687 3.59

Net Potable Demand w/o RW 2,793 3.69

26

Meeting Demand at Buildout – Normal Year (cont.)Meeting Demand at Buildout – Normal Year (cont.)

Annual afa %

Peak Month mgd %

Supply Available (excl. RW) SCWA aqueduct Existing wells Planned new wells Total Available Cushion in a Normal YearAdditional Supply on Standby/reserve Conjunctive Use Project

2,617250

__1803,047

254

165

94%9%

__6%109%

9%

3.460.85

_0.614.921.23

0.57

94%23%

-17%133%

33%

Surplus Available to Meet Drought and Weather Variations

419 15% 1.80 49%

27

Meeting Demand at Buildout – Dry YearsMeeting Demand at Buildout – Dry YearsComparison of Various Water Year Conditions

Water Supply Condition

Surplus (+) or Deficit (-)in af and as

Percent of demand

Existing (2009) Buildout (2031)

Normal Year – excl. BO impact1

Normal Year – incl. BO impact+284 / +11%

-37 / -1%+419 / +15%+99 / +4%

Single Dry Year – excl. BO impactSingle Dry Year – incl. BO impact

+284 / +11%-37 / -1%

+245 / +9%-54 / -2%

Multiple Dry Years – excl. BO impactMultiple Dry Years – incl. BO impact

+284 / +11%-37 / -1%

+419 / +15%+99 / 4%

Extreme case2 – excl. BO impactExtreme case – incl. BO impact

-81 / -3%-401 / -14%

-149 / -5%-448 / -14%

Notes: 1. BO impact could be addressed as early as 2016 or as late as 2030. 2. Extreme case assumes hot dry year coincides with worst supply limitation.

28

Meeting Demand at Buildout - ConclusionsMeeting Demand at Buildout - Conclusions

Without BO limitations, strategy mix provides surplus in Normal, Single Dry and Multiple Dry Years

With BO limitations, minor deficits of 1 to 2%, except for Extreme Case condition where deficit of 3 to 14% result

With resolution of Dry Creek flow problem, deficits drop to 3 to 5%

During Extreme Case conditions, well production will be increased to maximum capacity. Also an

additional 85 af might be available from the SDC

CU Project.

29

Annual Water Demand ForecastAnnual Water Demand Forecast

Figure 28 Historic and Projected Annual Demand, af

y = 37.042x + 1574.1

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

2025

2027

2029

2031

2033

2035

afa

Historic Production Forecast w ConservationForecast w/o Future Conservation Avail. from Aq + Eist. Wells + New WellsAvail. from Aq. and Exist Wells Water SalesLinear (Historic Production)

Estimated Buildout under the Growth Management Ord. (65 DUs/yr) will occur by 2031.

Note: 1. Linear trend line represents normal weather years w/o calls for conservation/rationing. Based on historic record, annual demand can deviate 14% above trend line.2. Forecast includes UFW of 8%.3. Rebound from rationed and managed demand years (2997 - 2009) to 2014 is estimated and shown.

30

Capital Improvement Plan - SummaryCapital Improvement Plan - Summary

Project Type Cost

Water mains $ 1.2 M

Service line replacements $ 3.2 M

Tanks, pumps, wells $12.9 M

Post 2019 projects $ 3.4 M

Total $20.7 M

31

Calculation of New Capacity Charge and Conservation Offset ChargeCalculation of New Capacity Charge and Conservation Offset Charge

Charge Cost, PV %

Capacity Charge:

Future Water System Improvements SCWA Watershed Restore/Dry Creek Bypass Total Remaining ESDs to Buildout

$8,354,147$1,050,789$9,404,936

994

89% 11%100%

Unit Capacity Charge ($/ESD) $9,460

Conservation Offset Charge:

Off-site offsets funded by New Development $2,138,989

Unit Conservation Offset Charge ($/ESD) $2,200

32

Recommended Connection ChargesRecommended Connection Charges

Item Existing Proposed % Increase Meter Charge – Standard 1-inch Service, $ (1) $511 $423 -17% Capacity Charge, $/ESD (2) $8,000 $9,460 +18% New Conservation Offset Charge, $/ESD (3) $0 $2,200 New Charge Front-Ft Charge, $/ft (4) $49 $56 +14% Authorize adjustment of all charges annually as function of ENR SF Bay Area Construction Cost Index (average of past three years recommended) (5) Notes: 1. Charges for other size services per Table 59. Decrease due to Staff experience with AMR meters and pricing. 2. 75% of the increase is explained by increased cost of construction. Had The Water Project gone forward, the proposed charge would be $12,289 (up 54%). 3. Note that the sum of the proposed Capacity Charge and New Conservation Offset Charge is $11,660 or a combined increase of 46% (8 percentage points less than the Capacity Charge had The Water Project gone forward). 4. Increase due to application of ENR Index. No change recommended in 100 ft minimum. 5. Financial model assumes charges will be adjusted annually. Six of eight Water Contractors now adjust connection charge annually.

33

SF Rate Structure DesignSF Rate Structure Design

Block Limits, tgal *

Accounts Impacted

Rate Multiplier Water Volume

Revenue

1 0 – 12 47% 1.00 49% 35% 2 12 – 36 40% 1.70 x Block 1 35% 42% 3 > 36 14% 1.25 x Block 2 16% 23%

* tgal = thousands of gallons

Table S6

34

Financial ModelsFinancial Models

Two Interactive Models: · Water Rate Model · Capital Spending Model Allow trial of different rate increases and borrowing to determine the best mix that will meet revenue requirements while avoiding subsidy of new development. Key parameters and criteria: · Adequate reserve balances · Avoid subsidy of new customers by existing customers · Ratio of net operating revenue to dept service > 1.25 · Avoidance of rate-shock · Sensible bundling of debt if needed

35

Financial Models - Key AssumptionsFinancial Models - Key Assumptions

· Annual well use – 100 afa · Capital cost escalator (ENR CCI performance) – 3.41% · Inflation of O&M expense (CPI performance) – 2.52% · Increase in salaries and benefits – 2.5% (City Finance Director) · Annual account growth – 1% · Increase in SCWA water rates – 10%/yr through FYE 2012 and 9%/yr · Portion of SCWA water rates allocable to future customers – 9.1% · Earnings on reserve funds – 3% (City Finance Director) · Term of new debt – 20 years · Average annual interest cost of new COPs – 4.75% (market) · Cost of COP issuance – 3% (market) · Minimum Operating Fund Reserve – 4 months O&M expense · Minimum debt service coverage ration – 1.25

36

Alternative Financing PlansAlternative Financing Plans

Five basic alternatives analyzed: All assume the existing; already approved increases of 5% each for February 1, 2011 and 2012 go into effect as planned. 1. No New Rate Increases and No New Debt 2. Minimum Rate Increases with No New Debt 3. Minimum Rate Increases and New Debt 4. Reasonable Rate Increases and Debt (Recommended) 5. Limit New Rate Increases to four plus Reasonable Debt

37

Comparison of Financing PlansComparison of Financing Plans

Item Alt. 1 Alt. 2 Alt. 3 Alt. 4 (Rec.) Alt. 5 2013 – 2017 Rate Increases, % (1) 0 6+6+7+8+7.1 4+5+5+5+5 5+5+5+5+5 6.1+6.1+6.1+6.5 New Debt Issue – 2011, $ 0 0 1,976,698 2.008,628 2.008,628 New Debt Issue or Loan – 2015, $ 0 0 1,550,907 1,935,443 1,935,443 Total New Debt, $ 0 0 3,527,605 3,944,071 3,944,071 New Annual Debt Service, $ (2) 0 0 263,980 295,145 295,145 Capacity Fund Balance, $ (3) -1,451,647 -1,451,647 299,846 577,834 577,834 Surplus Oper. Reserve, $ (3, 4) -5,224,788 2,618,331 172,820 544,212 1,209,360 Debt Service Coverage > 1.25 (5) No Yes Yes Yes Yes Cumulative Increase, % (6) 8 / -14 50 / 28 37 / 15 38 / 16 37 / 15 Notes: (1) Does not include already approved 5% increases for Feb. 1, 2011 and 2012. (2) Assumes terms of 20 years and interest of 4.75% (3) At close of FYE 2019 (4) Amount in excess of Minimum Target Operating Reserve of 4 months of operating expense. (5) Water Enterprise’s existing debt service also requires the 1.25 coverage factor. (6) Values are percentages calculated on FY basis (FYE 2012 => FYE 2019. First value is not corrected for inflation. Second is corrected for inflation of 2.5% per year. includes the impact of the two already authorized increases.

Table S7

38

Recommended Financing Plan (Alt. 4)Recommended Financing Plan (Alt. 4)

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

$8,000,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Purchase Water Cost Labor and Benefits Other Operating Expense Inter City Transfers

Debt Service Direct Capital Outlay Billed Revenue (bar) Non-rate Revenue (bar)

Interest Earned (bar) Capacity Charge Income (bar) Total Annual Reserves

Note on how to read this chart: Vertical bars show breakdown of Revenues. Cummlative area plots show a breakdown of Expenses. Solid black line is resulting total reserves (operating + capital).

39

Recommended RatesRecommended Rates

A. Customers Inside City Limits: Increases >> 5% 5% 5% 5% 5% 5% 5% Feb. 1st of: 2010 2011 2012 2013 2014 2015 2016 2017 $ /meter per bimonthly billing period Current Already Approved Propose d Additional Increases

Fixed Bimonthly Service Charge Applicable to All Customer Categories Located Inside City Limits: 5/8" me ter 27.84 29.23 30.69 32.22 33.83 35.53 37.30 39.17 1" meter 33.42 35.09 36.84 38.69 40.62 42.65 44.78 47.02 1.5" meter 44.58 46.81 49.15 51.61 54.19 56.90 59.75 62.73 2" meter 55.72 58.51 61.43 64.51 67.73 71.12 74.67 78.41 3" meter 83.57 87.75 92.14 96.74 101.58 106.66 111.99 117.59 4" meter 139.28 146.25 153.56 161.24 169.30 177.76 186.65 195.98 5" meter 102.61 107.74 113.13 118.79 124.72 130.96 137.51 144.38 6" meter 223.05 234.20 245.91 258.20 271.11 284.67 298.90 313.85 Hydrant 27.86 29.25 30.72 32.25 33.87 35.56 37.34 39.20

Variable 3-Block (tier) Commodity Rates Applicable to SF Customers Located Inside City Limits: Block $ /tgal per Block designated per bimonthly bil ling period

Block 1 3.26 3.42 3.59 3.77 3.96 4.16 4.37 4.58 Block 2 5.54 5.82 6.11 6.42 6.74 7.07 7.43 7.80 Block 3 6.92 7.27 7.63 8.02 8.42 8.84 9.28 9.74

Variable Commodity Rates Ap plicable to Other Customer Categories Locat ed Inside City Limits: MF 4.16 4.37 4.59 4.82 5.06 5.31 5.57 5.85 COM 4.63 4.86 5.10 5.36 5.63 5.91 6.20 6.51 IRR 6.11 6.41 6.73 7.07 7.42 7.79 8.18 8.59 MUN 4.45 4.68 4.91 5.16 5.41 5.68 5.97 6.27 Hydrant 6.11 6.41 6.73 7.07 7.42 7.79 8.18 8.59

Table S8

40

Impact of Rates on SF CustomerImpact of Rates on SF Customer

Commodity

Rate Bimonthly Chg

(1) Rate Increase

Status Effective Feb.1st

% Incr. Annual, $

Unit Chg.,

$ Annual

(x 6)

Total Annual

Bill

Annual Bill

Inflation Adjusted

(2) Current Rates 2010 7% 419.71 27.84 167.02 586.73 Already Approved 2011 5% 440.70 29.23 175.37 616.06 616.06 Already Approved 2012 5% 462.73 30.69 184.13 646.87 630.70 Proposed Increase 2013 5% 485.87 32.22 193.34 679.21 644.12 Proposed Increase 2014 5% 510.16 33.83 203.01 713.17 655.89 Proposed Increase 2015 5% 535.67 35.53 213.16 748.83 665.68 Proposed Increase 2016 5% 562.46 37.30 223.82 786.27 673.06 Proposed Increase 2017 5% 590.58 39.17 235.01 825.59 677.58 Proposed Increase 2018 0% 590.58 39.17 235.01 825.59 669.46 Proposed Increase 2019 0% 590.58 39.17 235.01 825.59 694.22 Notes: Typical Customer = Median Customer. Annual use = 103,216 gallons. 1. Based on 5/8-inch meter service 2. Based on 2.5% inflation factor applied to operating expense items in financial model studies and calculated on a fiscal year basis. FYE 2011 taken as the base year.

Table S9

41

Comparison of Current RatesComparison of Current Rates

0

100

200

300

400

500

600

700

MarinMunicipal WD

City ofRohnert Park

City ofSonoma

City of SantaRosa

Valley of theMoon WD

North MarinWD

City ofPetaluma

City of Cotati Town ofWindsor

Ann

ual B

ill fo

r M

edia

n U

se S

F C

usto

mer

, $

Variable Commodity Charge

Fixed Bimonthly Charge

Fig S4

42

Drought SurchargeDrought Surcharge

Assumptions and Recommended Criteria: · Surcharge based on conditions at the time. · Surcharge would only be used in case of formal declaration of a water shortage. · Customers would be notified when the surcharge would take effect and the date it.

would be removed or the criteria by which removal would be determined. · The Conjunctive Use Project with SDC and VOM is in place and ready to implement. · Extraordinary costs: Increased Expense: · Increased Cost of Enhanced and Extra Conservation Programs · Increased Staff Labor to Manage Shortage and Implement Programs · Cost of Operating SDC/VOM Conjunctive Use Project Appropriate Surcharge (based on 2010 costs): $0.58/tgal Revenue: $397,000 if in place 12 months. Increase in SF customer bill: $78/yr

43

Recommendations - Water Supply PlanRecommendations - Water Supply Plan

Implement ”New Wells + Conservation + Conjunctive Use” mix of strategies. Specifically, it is recommended: 1. The City adopt and implement the NDS set forth in Table 29. 2. In addition to its existing water conservation programs, implement the

new/modified off-site conservation programs described in Part I, Section 4.4.2.

3. Pursue implementation of the Conjunctive Use Project with VOM, SDC and SCWA as described in Section 4.5.1.

4. Continue planned new groundwater development and rehabilitation of wells.

5. Continue to participate in studies of recycled water use, but hold participation in project construction in abeyance until assurances on water costs and subsidies sufficient to make the project competitive with other alternatives are available (refer to Part I, Section 4.7.3 for specific description of subsidies needed).

6. Implement pilot conservation programs recommended for graywater reuse and rainwater harvesting as set forth in Part I, Sections 4.8.6 and 4.9.7.

7. Make changes to the City’s Water Action Plan as shown in Table F-1 of Appendix F.

44

Recommendations - Connection ChargesRecommendations - Connection Charges

1. Approve revised Capacity Charge of $9,460/ESD as soon so as possible.

2. Approve new Conservation Offset Charge of $2,200/ESD as soon as possible with receipts to be spent on conservation programs whose goal is to reduce the footprint of new development demand to 50%.

3. Approve reducing Meter Charges as shown in Table 59. 4. Approve increasing Front Foot Charge to $56/ft. 5. Approve adjusting all connection charges annually using

average change in ENR SF Bay Area CCI for the past 3-years.

45

Recommendations - RatesRecommendations - Rates

1. Pursue Alternative 4 – Reasonable Rate Increases and Debt.

2. Approve five added new annual rate increases of 5% effective February 1 of 2013 through and including 2017 and the schedule shown in Table S8.

3. Approve steps necessary for the City to issue debt for water system improvements and related expenses in the amount of $2,000,000 as soon as practicable (2011).

4. Commence investigation of acquiring loans, grants or issuing additional debt of $1,940,000 in 2015.

5. Consider adopting Water Shortage Surcharge methodology described in Table 68.

46

Future Items for Discussion & ConsiderationFuture Items for Discussion & Consideration

1. Request Sonoma Valley County Sanitation District to calculate residential charge as a function of inside water use and bill directly or provide an appropriate credit or refund to SF customers who install conservation appliances or systems that reduce sewage.

2. Mandate retrofit of water conserving plumbing fixtures upon resale. 3. Consider adding water conservation point threshold to Green Building

Ordinance (see Part I, Section 4.1.2.1). 4. Implement “Pay as You Save” type program (City pays the full cost of

purchasing and installing devices, which are paid back by the occupant over time via bill adjustments as the savings occur.) If the property changes hands, the water devices remain with the property and the new occupant pays the charge on the water bill.

5. Mandate submetering of apartment buildings upon sale and remodel. 6. Provide free leak survey and free flapper replacement. 7. Upgrade Water Department billing and data software. 8. Increase block rates to place a greater premium on summertime water

use.

47

QuestionsQuestions