Report Prepared by: Venus Rodriguez, Finance Officer
Title
SUBJECT: Adoption of Resolution to Approve No Increase to Water Rates per City Council Direction
REPORT IN BRIEF
Resolution to Approve No Increase to Water Rates per City Council Direction.
RECOMMENDATION
City Council - Adopt a motion adopting Resolution 2022-33, A Resolution of the City Council of the City of Merced, California continuing the base water service rates and charges unchanged for the next fiscal year.
Body
CITY COUNCIL PRIORITIES
The City Council has set a policy to be financially sustainable.
DISCUSSION
The last Water Rate and Connection Fee study was completed and adopted by the City Council on November 5, 2018. The water rate study indicated 2% increase annually to rates and fees over 3 years. As of 2022-23 the adopted ordinance requires the City to increase its fees per a consumer price index (CPI) annually until the next Water Rate Study is completed and adopted. The current water rate for a single-family home is $32.25, which includes a cumulative increase of $1.86 over the last 3 years. If the city increases the Water Rate based on the ordinance it is scheduled to increase $2.41 (7%) and would be effective 7/1/2022. Attached you will find the last 3 years of increases and what the increases would be if we implemented per the ordinance.
The City will be working on completing a new Water Rate Study after the City’s Sewer Master Plan and a Sewer Rate Study has been finalized.
The Water operating fund is financially stable and healthy. It is recommended that it should have a six-month reserve and it is currently carrying two years of reserves. Due to the healthy reserve, the large increase the CPI would create, and to be consistent with Council direction on other fees in light of the ongoing COVID-19 pandemic, staff is recommending no increases to water rates at this time.
In order to not increase the water rates the City Council would need to adopt a resolution stating the water rates will not increase in July 2022. On May 16, 2022 the City Council directed staff to bring back a resolution to not increase water rates for adoption.
ATTACHMENTS
1. Resolution 2022-33
2. Water Rates