Report Prepared by: Venus Rodriguez, Finance Officer
Title
SUBJECT: City of Merced Financial Forecast, CalPERS, Fiscal Year 2020-21 Quarterly and Sewer Rate Update
REPORT IN BRIEF
Presentation of the Financial Forecast, CalPERS, Fiscal Year 2020-21 Quarterly and Sewer Rate Update.
RECOMMENDATION
City Council - Adopt a motion adopting Resolution 2021-121, A Resolution of the City Council of the City of Merced, California continuing the base sewer service rates and charges unchanged for the next calendar year.
Body
CITY COUNCIL PRIORITIES
The City Council has set a policy to be financially sustainable.
DISCUSSION
Presentation to the City Council and the public of the City’s Financial Five Year Forecast as well as a CalPERS and Fiscal Year 2020-21 final quarterly update. The City Council has made a policy to become and remain financially sustainable. This presentation is to provide financial information that could assist in guiding future City Council decisions.
Sewer Rate Update
The last Sewer Rate and Connection Fee study was completed and adopted by the City Council on April 5, 2010. The sewer rate study indicated a reduction to rates and fees at that time. Fiscal Year 2010-2015 included no increases to those base rates. As of 2015-16 the adopted ordinance allows the City to increase its fees per a consumer price index (CPI) annually until the next Sewer Rate Study is completed and adopted. The current sewer rate for a single-family home is $43.93, which includes a cumulative increase of $3.64 over the last 6 years. The CPI increases have averaged from 1%-3% annually. If the city increases the Sewer Rate based on the ordinance it is scheduled to increase $2.20 (5%) and would be effective 1/1/2022. Attached you will find the last 3 years of increases and what the increases would be if we implemented per the ordinance.
The City has held off on completing a new Sewer Rate Study until the City’s Sewer Master Plan has been finalized. Until the Sewer Master Plan is complete, it would be difficult to determine and include what long term maintenance and replacement projects will need to be included in the rate study. Currently, work on the Sewer Master Plan is still actively progressing and is anticipated to be complete by the summer of 2022, with a new sewer rate study to kick-off by the end of 2022.
The Wastewater operating fund is financially stable and healthy. It is recommended that it have a six-month reserve and it is currently carrying over a year of reserve. 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 sewer rates at this time.
In order to not increase the sewer rates the City Council needs to adopt a resolution stating the sewer rates will not increase in January 2022.
ATTACHMENTS
1. Resolution 2021-121
2. Sewer Rates