DATE: December 18, 2024
TO: Honorable Mayor and City Councilmembers
FROM: Water Utilities Department
TITLE: ADOPTION OF A RESOLUTION FOR THE ADJUSTMENT OF FEES FOR WATER UTILITY SERVICES, AND THE ESTABLISHMENT OF NEW ADMINISTRATIVE, RECYCLED WATER INSPECTION, AND PLAN CHECK FEES
RECOMMENDATION
title
Staff recommends that the City Council adopt a resolution to adjust and establish new Water Utilities Department fees in order to ensure cost recovery associated with the services provided by the Department.
body
BACKGROUND AND ANALYSIS
Staff recently performed an analysis addressing “cost of service” requirements in compliance with Proposition 218 and the California State Constitution. Through this process, it was determined that costs associated with personnel, resources, and equipment involved with several of the Water Utilities Department fees have changed, requiring an update of existing fees to accurately recover costs. The existing fees originate from various prior resolutions and many have been updated through subsequent resolutions.
Additionally, to account for new services offered by the Water Utilities Department and to recover costs associated with development that historically have not been charged, staff recommends establishing the following new fees:
• Customer Requested Offsite Meter Exam Fee - To recover costs when a customer requests that their water meter be removed, tested offsite using the City’s Testbench exam tool, and reinstalled or replaced.
• Sand-Oil Separator Permit Fee - To recover the compliance costs associated with monitoring and reporting customers with sand-oil separators.
• Recycled Water (RW) Inspection Fee - To recover inspection costs when customer RW systems are being constructed. Fees are tiered by project square footage.
• Water Utilities Building Inspection Fee - To recover inspection costs associated with new building sites where water or sewer inspection is needed.
• Shut-Off Fee - To recover costs when a Department representative shuts-off a customer’s water meter due to non-payment or non-compliance.
• Pass-through Department of Environmental Health and Quality (DEHQ) RW Plan Check Fee - This pass-through fee is part of the existing RW plan check, but is not applicable to every RW project. This cost is set and adjusted by the San Diego County DEHQ. County increases to this fee shall be adopted by the City.
• Grading & Improvement Plan Check Fees - Establish additional cost tiers to more equitably recover costs.
Based on the findings of the internal cost of service calculations, Tables 1 through 6 show the proposed fee adjustments along with proposed new fees. As noted, some fees are set to increase while others will be decreased. Fees not shown in these tables shall remain unadjusted from their current amount and CPI increase status. No fees are to be removed from the City fee schedule as part of this proposed resolution.
The proposed fees identified in Tables 1 through 6 shall be effective January 1, 2025, and will be adjusted annually starting July 1, 2026, in an amount equal to the increase in CPI-Urban Index for San Diego (CPI-U, San Diego) based on December of the prior year.
Upon completion of staff’s analysis, a handful of existing fees were found to be currently set much lower than necessary to recover costs, including the:
• Automated Delinquent Notification fee which was set to historically lower mailing costs and had not been adjusted since 2017
• Delinquent Meter Removal & Reinstallation fee which accounted only for meter removal and not for reinstallation, though the process included both
• Industrial Waste Permit which was not accurately allocating the staffing costs of running the program to the small quantity of industrial waste customers
• Backflow Prevention Non-Compliant Recurring Monthly fee which was not accurately allocating the staffing costs of monitoring and notifying non-compliant customers on a recurring basis
In summary, this resolution will adjust 32 existing fees, including the establishment of higher tiers for two existing plan check fees, and it will establish seven new fees.
FISCAL IMPACT
These proposed fee adjustments and new fees for the Water Utilities Department will more accurately reflect the updated costs of providing these services. Staff estimates that adopting these changes will result in a net increase in overall revenue, as outlined below:
|
Account |
Net Effect on Revenues |
|
Water Operating Fund (711) |
$268,364 |
|
Sewer Operating Fund (721) |
$186,617 |
|
Water Connection Fees Fund (715) |
$29,000 |
|
Solid Waste Operating (731) |
($1,650) |
|
Overall |
$482,331 |
COMMISSION OR COMMITTEE REPORT
The Utilities Commission approved staff’s recommendation at its regularly scheduled meeting on November 12, 2024.
CITY ATTORNEY’S ANALYSIS
The referenced documents have been reviewed by the City Attorney and approved as to form.
end
Prepared by: Carlos Cortes, Management Analyst
Approved by: Lindsay Leahy, Water Utilities Director
Submitted by: Jonathan Borrego, City Manager
ATTACHMENTS:
1. Staff Report
2. Resolution
3. Fee & Revenue Calculations