Utility Rates Special City Council Meeting

Transcription

1 Utility Rates Special City Council Meeting December 10,

2 Recommendation 1. Provide direction on: 1. Utility rate policy 2. Utility rate options 2. Adopt Proposition 218 Public Hearing Procedures Resolution. 2

3 Utility Rate Policy First Southwest Mike Kremer Phillip Curls

4 Relevance of Municipal Credit Ratings A municipal credit rating reflects a borrower s ability and willingness to repay its long-term obligations Higher credit ratings result in lower borrowing costs When are credit ratings assigned and/or changed? Prior to selling bonds Reviewed periodically (every two years) The City s credit ratings are assigned by Standard & Poor's (S&P) Three other credit rating agencies are nationally recognized for municipal bonds: Fitch Ratings, Moody's Investors Service, and Kroll Ratings 4

5 City s Approach to its Credit Ratings The City seeks to maintain the highest possible credit ratings without compromising its policy objectives Finance Department staff is responsible for managing the City s relations with S&P This effort includes transmitting the City s annual budget, financial statements and other requested information in a timely manner, and coordinating periodic conference calls or meetings with S&P 5

6 Municipal Credit Ratings are Similar to Consumer Credit Scores Banks and credit card companies use credit scores (like FICO) to evaluate the likelihood that a person will pay his/her debts The higher your credit score, the lower the interest rates offered for mortgages and auto loans Credit scores are intended to measure default risk by taking into account five basic factors in a person's financial history 6

7 Standard & Poor s Credit Rating Definitions for Long-Term Debt S&P Rating Category AAA AA A S&P Rating Definition Highest rating. Obligor's capacity to meet its financial commitment is extremely strong The obligor's capacity to meet its financial commitment is very strong More susceptible to the adverse effects of changes in economic conditions. The obligor's capacity to meet its financial commitment is still strong Approximate FICO Score BBB BB; B; CCC; CC; and C Adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment - adequate Obligations rated 'BB', 'B', 'CCC', 'CC', and 'C' are regarded as having significant speculative characteristics D An obligation rated 'D' is in payment default < 475 7

8 Various Factors Determine a Utility Credit Rating Economic characteristics of service area and rate payers Financial performance and capital expenditures Rate setting philosophy and practices System operations Financial management Bond covenants/legal provisions 8

9 Similarity of Household Budget to Wastewater Utility Budget 9

10 Key Credit Indicators Used to Evaluate Utility Systems Indicator Credit Ratio Calculation Economic Wealth Operating Net Revenues Median Household Income as % of National Average Debt Service Coverage = Median Household Income/ National Average = Annual Net Revenues/ Annual Debt Service on Bonds Liquidity Days Cash on Hand = Unrest. Cash & Investments/ (Annual Operating Costs per day) Debt Leverage Rate Payer Concentration & Reliance Debt to Capital Top-10 Customers as % of Total Revenue = Bonded Debt/ Net Capital Assets = Top-10 Customer Revenue/ Total Revenue 10

11 Key Credit Ratio Ranges Indicator Ratio Range Median Household Income as % of National Average Low Adequate Good Strong Very Strong <65% 65%-90% 90%-110% 110%-130% >130% Debt Service Coverage Insufficient Adequate Good Strong <1.00x 1.00x-1.25x 1.26x-1.50x >1.50x Days Cash on Hand Low Adequate Good Strong <30 days days days >120 days Debt to Capital High Mod. High Moderate Low >80% 60%-80% 40%-60% <40% Top-10 Customers as % of Total Revenue Concentrated Moderately Concentrated Diverse Very Diverse >40% 26%-40% 15%-25% <15% 11

12 S&P Assesses a Utility s Political Willingness to Set Rates S&P s Assessment Strong Good Standard Vulnerable Utility s Rate-Setting Practices 1. Multi-year pre-approved rate increases are common 2. Decisions are financially prudent, not politically expedient 3. Periodic rate studies (internal or external) 1. Year-to-year rate planning 2. Necessary rate increases are timely and apolitical 1. Rate covenant serves as the minimum target for rate adjustments 2. Necessary rate increases are timely 1. Rates increases are reaction to weakened financial position and/or rate covenant violations 2. Evidence of political decisions to defer/downsize needed rate increases 12

13 Distribution of S&P Ratings for 174 Water & Sewer Utilities in CA Oxnard Water, Solid Waste California utilities rated below BBB+ Oxnard Wastewater System (BBB) Fillmore Wastewater System (BBB) Chino Water System (BBB) Atwater Wastewater System (BBB-) Stockton East Water District (BBB-) Oxnard Wastewater 13

14 Oxnard s Water & Wastewater Peer Group (All Full Service Systems) Oxnard Ventura Escondido Oceanside Population 203, , , ,350 Unemployment Rate 8.6% 7.0% 7.9% 5.7% Per Capita Income $19,953 $31,727 $21,851 $47,768 Median Household Income as % of national average 113% (68% per capita) 121.5% 100.0% 114.0% 14

15 Water System Peer Group Rated by S&P Key Credit Indicators Rate Covenant/ Additional Bonds Test Oxnard A+* 1.00x + 25% MADS in $ Ventura AA Escondido AA- Oceanside AA+ 1.20x 1.20x 1.25x Debt Service Coverage 1.00x 2.12x 2.90x 5.70x Debt to Capital Assets 68% 60% 65% 60% Days Cash on Hand year Capital Plans $210M $74M $39.8M $150M (10-yr) Top-10 Customers by $ 11.3% 4.7% 6.6% 4.2% *Negative Outlook: Due to declining coverage levels per S&P November report 15

16 Debt Service Coverage Exactly at Covenant While Days Cash is Strong 16

17 Higher Debt/Capital for Oxnard But Sufficiently Diversified Customer Base 25% Top-10 Customers as a % of Total Revenue 20% 15% 10% 5% 0% 17

18 Average Monthly SFH (10 HCF) Water Bill - Historical and Projected Dashed lines represent proposed rates 18

19 Wastewater System Peer Group Rated by S&P Key Credit Indicators Oxnard BBB Ventura AA Escondido AA- Oceanside AA Rate Covenant / Additional Bonds Test 1.00x + 25% MADS in $ 1.20x 1.15x 1.25x Debt Service Coverage 1.09x 1.30x 1.62x 2.97x Debt to Capital Assets 53% 24% 51% 18% Days Cash on Hand year Capital Plans $121M $20.1M $40.6M $46.6M Top-10 Customers by $ 12.0% 5.8% 11.0% 4.3% 19

20 Wastewater with Thin Debt Service Coverage and Relatively Low Liquidity 20

21 Wastewater Relatively High for Both Debt/Capital & Top Customer Concentration 21

22 Average Monthly SFH (10 HCF) Wastewater Bill - Historical and Projected Dashed lines represent proposed rates 22

23 Rating Impact on Borrowing Cost Water System Assuming 30-year $100 million bond sale with different credit ratings Projected Borrowing Cost Change in Borrowing Cost from A+ Change in Total Debt Payments Present Value of Change Upgrade to AA- Current Rating A+ Downgrade to A 4.02% 4.10% 4.15% -0.08% % -$2.37M - $1.59M -$690,000 - $460,000 Cost of a downgrade from A+ to A projected to cost the 2006 water bond refunding ~$287,000 in present value savings 23

24 Rating Impact on Borrowing Cost Wastewater System Assuming 30-year $100 million bond sale with different credit ratings Projected Borrowing Cost Change in Borrowing Cost from BBB Change in Total Debt Payments Upgrade to BBB+ Current Rating BBB Downgrade to BBB- 4.34% 4.39% 4.50% -0.05% % -$1.64M - $3.41M Present Value of Change -$470,000 - $975,000 Also: Downgrade from BBB to BBB- could trigger swap agreement termination and City payment of $4.2 million to the swap provider 24

25 Comparison of Peer Group Reserve Policies All peer cities carry cash balances well in excess of policy minimums Due to expected expenditures for future capital projects (resulting in less debt funding) City Oceanside Peer Group Annual Reserve Policies Operating: 60 days of operating costs Escondido Ventura Operating: 90 days of operating costs days of debt service Operating: 90 days of operating costs Capital: 180 days of asset replacement cost 25

26 Recommended Utility Debt Service Coverage and Reserve Policies Debt Service Coverage 1.25x Recommended Policies Capital Reserve 1 year of Depreciation Operating Reserve Operating: 90 days of operating costs days of debt service 26

27 Utility Rate Options Daniel Rydberg, P.E. Alex Bugbee Mary Vorissis, P.E. Jeff Miller Thien Ng, P.E. Terry Kirsch Todd Housley

28 Rate Setting Process Master Plan: year strategic plan Capital Improvement Program (CIP) Plan: 5-10 year list of projects Cost of Service Study: Determines required rates Prop 218 Hearing Process Mail information regarding proposed rate increase to every property owner & ratepayer Notice to Ratepayers must include maximum rate increase» Council has ability to set lower rate Protest vote yes/no» Not voting on options Hold a hearing at least 45 days after the mailing Rates cannot be approved if majority property owners/ratepayers (50%+1) protest 28

29 Utility Rates Timeline March 4, 2014 WW Treatment Plant Assessment July 29, 2014 Drought and Desalter Update September 23, 2014 Proposed WW 6% Rate Increase (Postponed) December 9, 2014 Proposition 218 Workshop April 28, 2014 Assessment and Master Plan Contract Approved (not including utility Cost of Service Study) April to September Finance Department Review previous Cost of Service Study November 25, Master Plan and Staffing Plan - Contract amendment for utility Cost of Service Study February 3, 2015 Utilities & Master Plan Update 29

30 Utility Rates Timeline April 16, 2015 U.T.F. Meeting June 9, 2015 Budget Presentation July 16, 2015 U.T.F. Wastewater plant tour Sep 3, 2015 U.T.F. Meeting October 13, 2015 City Council Approves Beginning Rate Process Nov 5, 2015 U.T.F. Meeting December 3, 2015 Notice to Ratepayers is Mailed December 17, 2015 Community Forum January 19, 2016 Public Hearing Introduction of Ordinance February 26, Day Waiting Period and Notice to the Ratepayers of New Rates April to June Develop Options for WWTP considering new technology July 28, 2015 Utility Rates Study Session Aug 26, 2015 to Sep 16, 2015 Initial four Utility Ratepayers Advisory Panel Workshops November 17, 2015 Protest form decision December 10, 2015 Special Council Meeting January 13, 2016 Community Forum January 26, 2016 Adoption of Ordinance March 1, 2016 Rates would become effective 30

31 Community Outreach Website Community Forums December 17, 2015 January 13, 2016 Community Organizations Service clubs Facility Tours Wastewater Plant Material Recovery Facility (MRF) Utility Ratepayers Advisory Panel (URAP) Rushed process but did provide good feedback 31

32 Challenges and Needs 1. Financing Utility Services Operations and maintenance funding Maintenance Staff Bond rating Replace facilities Reserves Operations & Maintenance, Capital Improvement Program 2. Infrastructure Maintenance and replacement of aging and failing facilities year old Wastewater facilities 3. Water Supply and System Reliability Drought Backup systems 4. Environmental regulations 32

33 Utility Regulatory Requirements Existing New LA Regional Water Quality Control Board National Pollutant Discharge Elimination System (NPDES) Permit Wastewater collection system cleaning and inspection Monitoring and control of storm water quality Wastewater operations staff California Water Resources Control Board Water operations staff Desalter corrosion protection California Water Resources Control Board 20% reduction of potable water by 2020 Local Enforcement Agency (LEA) AB Mandatory Commercial Recycling Law % diversion from landfill by 2020 AB 32 - California Global Warming Solutions Act of 2006 Divert Organics 33

34 Regulatory Penalties Water Boards Enforcement Penalties (Civil Liability) can include: Damages to Environment Base Liability, Economic Benefit, Investigation and Enforcement costs Legal Challenges can be made by Others (e.g. Stakeholders, Individuals) City Officials have a legal responsibility to meet requirements 34

35 Rate Guidelines Utility revenue can only be used for the utility for which it is collected Indirect charges for General Fund services Infrastructure use fee for public safety and streets Utility charges must not exceed the estimated reasonable cost of service Based on Cost of Service Study Rates must be charged only to the users benefiting from the service No subsidies from rate revenue Interest on operations and maintenance fund balance may be used for rate assistance 35

36 Rate Cost of Service Study Update April 2015 initial rate model October 2015 updated model based on feedback from UTF New wastewater plant options Average Revenue Increase* Net 5 yr Wastewater 35% 10% 8% 8% 8% 87% Water 15% 12% 8% 8% 8% 62% Solid Waste 6% 4% 4% 4% 3% 23% Combined Weighted Average 19% 9% 7% 7% 7% 60% *Actual rate increases vary by customer class and consumption. Water rate structure was changed to comply with new interpretation of Proposition

37 Refinement of Rates Since October Determined that the infrastructure use fee does not need to be included in the bond coverage calculation Develop options Balance health & safety, cost, reliability, and risk Special rate cases Reduced operations and maintenance cost Postponed filling vacancies Postponed maintenance Postponed capital projects Recycled water Purchase of land for wastewater treatment plant Reviewed Actual revenue Effects of drought significantly impacted water and wastewater revenue 37

38 Evaluating Options Transparency Priority?? 1. Health & Safety 2. Cost/Efficiency 3. Risk 4. Reliability Expectations An effective rate structure balances cost, risk, reliability, and health & safety to meet rate payer expectations Health & Safety= Cost and/or Reliability and/or Risk Cost = Health & Safety and/or Reliability and/or Risk Risk= Cost and/or Health & Safety and/or Reliability Reliability = Cost and/or Health & Safety and/or Risk 38

39 Wastewater Needs Biotower Clarifiers Central Trunk Operators Leaking biotower Concrete deterioration Pipeline damage Leaking clarifier Handrail corrosion 39

40 Wastewater Opportunities & Efficiencies Biosolids disposal Reduce cost $400,000 per year Biotower decommissioning Reduce electrical cost by $200,000 per year Cogeneration 35% of plant electricity Sewer line odor control Reduce odor and manhole deterioration Improve quality of life 40

41 Wastewater Rate Options Option 1 Reliability Rebuild failing infrastructure in years 1-5 Meet all regulatory and financial requirements Risk: Medium short term, Lowest mid-term, Moderate long term Option 2 Reliability and Modernization Stop gap and minimum rehab in years 1-5, Rebuild in years 8-12 with new technologies Risk: Medium short term, Medium to high mid-term, Lowest long term risk if included in future rate increases and implemented on schedule Option 3 Delayed Maintenance Infrastructure use fee not needed in coverage calculation Reduced all costs as low as possible deferred maintenance Risk: High short term, Moderate to high mid-term and long term Recommended reserve = $24.7 million in 2020 Revenue Increase Bond Coverage Reserve ($ million) % 25% 10% 10% 10% % 10% 8% 8% 8% % 18% 8% 8% 8% % 0% 0% 0% 0%

42 Consequences of Not Increasing Wastewater Rates Financial Negative O&M fund balance at the end of this fiscal year if credit swap is called Future deficits Won t meet bond covenants (contract with bondholders) Credit rating reduced to junk status Maintenance Increases cost and difficulty of future debt financing for required plant rehabilitation Urgent need maintenance projects are delayed Potential failure of primary treatment and bio-tower processes Potential failure of Central Trunk manholes Stop repairing tree root damage to sewer pipelines and property owner laterals citywide Postpone odor control system for sewer collection pipelines Staffing levels and maintenance do not meet regulatory requirements National Pollutant Discharge Elimination System (NPDES) violations and potential fines 42

43 Water Needs Corrosion protection Meter replacement Cast Iron Pipe replacement Recycled water SCADA Backup wells Operators & mechanics 43

44 Water Opportunities & Efficiencies Replace variable frequency drives No discharge pipeline flushing system Well rehabilitation Optimized blending ratio Indirect potable reuse grant 44

45 Water Rate Options Option 1 System and Supply Reliability Continue to develop recycled water Construct system reliability projects Improved maintenance, e.g. valve exercising & pipeline flushing Option 2 System Reliability Limited Capital Improvements Complete existing recycled water facilities Reduce budget as much as possible Shut down desalter for remainder of this FY (July 2016) Continue to have reliability issues, e.g. desalter, wells & control systems Option 3 Minimum Maintenance Only Reduce budget as much as possible Shut down desalter for remainder of this FY (July 2016) No new recycled water facility work Continue to have reliability issues, e.g. desalter, wells & control systems Recommended reserve = $26.1 million in 2020 Revenue Increase Bond Coverage Reserve ($ million) % 10% 9% 9% 9% % 12% 8% 8% 8% % 12% 4% 4% 4% % 12% 4% 4% 4% % 0% 0% 0% 0%

46 Consequences of Not Increasing Water Rates Financial Future deficits Won t meet bond covenants (contract with bondholders) Credit rating reduced/financing cost increased Maintenance Water meters are not replaced ($14 million project) reduced revenues Pipeline corrosion protection is not replaced, pipelines not flushed, valves not exercised Postpone street resurfacing or resurface without replacing cast iron and asbestos cement water lines La Colonia, Redwood, Bryce Canyon South, College Estates 46

47 Golf Course Recycled Water Rate Well 18 Owned by Golf Enterprise Approx. 322 acre-ft of pumping allocation per year Same rate method as agriculture recycled water agreement Approx. $500 - $87.50 storage discount=$ per acre-ft Includes exchange of pumping allocation Well 27 Owned by Water Enterprise Approx acre-ft of pumping allocation per year Irrigation in lieu of potable rate 85% of potable rate = approx. $1,577 per acre-ft 47

48 Port Hueneme Water Agency and Proctor & Gamble Delivery Pipeline Oxnard water transmission pipelines for water from Calleguas Municipal Water District (CMWD) State Water Project water lower total dissolved solids (TDS) Not connected to the rest of the system reduced reliability Customers Port Hueneme Water Agency (PHWA) City of Port Hueneme, Naval Base Ventura County, and Channel Islands Community Beach Services District (CIBCSD) Approx. 455 acre-ft per approx. $1,500 per acre-ft in 2014 ($680,000) Proctor & Gamble Approx. 1,700 acre-ft per approx. $1,400 per acre-ft in 2014 ($2.4 million) Contract Rate Existing Pass through of Calleguas fixed and variable cost plus a City fee Option 2 Update 2003 City fee calculation Depends on use, but approx. $1,645 per acre-ft Option 3 City commercial rate Approx. $1,866 per acre-ft 48

49 Ocean View Water Rates Water City assumed responsibility for Ocean View system Connected to United Water Conservation District (UWCD) Delivered on Oxnard Hueneme (OH) pipeline owned by UWCD Residential Rate Same as City residential rate Commercial Rate Same as City commercial rate Agricultural Irrigation Rate Existing United pass through rate with 10% City charge = approx. $439 per acre-ft Option 2 Use current United rate in calculation = approx. $521per acre-ft Option 3 Complete an engineers report to set City fee = estimated >$550 Option 4 Agriculture irrigation rate = approx. $1,730 per acre-ft City irrigation rate reduced by United pumping fee difference between ag and municipal Option 5 Switch to contract and use pass through interruptible rate Same price as option 3 49

50 Non-Metered Construction Water Rate Temporary water use while a building is being constructed Jumper is used to connect service without a meter Options Existing Fixed rate that is lower than the metered fixed rate component. No variable rate. $8.40 for 3/4 inch line, $24.67 for 2 line Option 2 Set fixed fee the same as new residential Charge for approx. half of the average monthly consumption $33.98 for 3/4 inch line, $ for 2 inch line Option 3 Eliminate the rate All connections need to be metered Fixed charge: $16.08 for 3/4 inch line, $68.89 for 2 inch line Usage rate: depends on customer type 50

51 Environmental Resources Needs Vehicles Fueling and maintenance Sorting equipment Organics processing 51

52 Environmental Resources Efficiencies Increased diversion Reduced landfill Increased recyclables volume Mattresses, pallets, and foam New markets International buyers More consistent scheduling Comprehensive health and safety program Rebid contracts to reduce cost Education and outreach Saved approx. $2 million (even though recyclable market was down 35%) Reduced need for rate increase 52

53 Solid Waste Rate Options Option 1 Reliability Cash purchase of CNG collection vehicles Installation of CNG fueling station, sorting equipment and maintenance facility Build reserves Option 2 Limited CIP Debt fund vehicle replacement Postpone sorting equipment and maintenance facility Savings from MRF transition has helped reduce required rate increases Equipment replacement was a City responsibility under the old MRF contract Recommended reserve = $14.3 million in 2020 Revenue Increase Bond Coverage Reserve ($ million) % 4% 4% 4% 3% % 3% 3% 3% 3% % 0% 0% 0% 0%

54 Consequences of Not Increasing Solid Waste Rates Deficits after 2 years O&M fund balance reduced CNG vehicle replacement is delayed and/or debt financed Increased vehicle maintenance cost Sorting equipment replacement is delayed Meeting State requirements for organics and landfill diversion is delayed 54

55 Rates Option Comparison Noticed Rates Net 5 yr Wastewater 35% 10% 8% 8% 8% 87% Water 15% 12% 8% 8% 8% 62% Solid Waste 6% 4% 4% 4% 3% 23% Combined Weighted Average 19% 9% 7% 7% 7% 60% Wastewater stop gap projects in yr 1-5 Complete existing recycled water projects Replace ER collection trucks and sorting equipment Fill maintenance, operator, and engineering vacancies over 2 years Optional financial requirements, Delayed maintenance, replacement, and staffing Net 5 yr Wastewater 25% 18% 8% 8% 8% 86% Water 15% 12% 4% 4% 4% 45% Solid Waste 3% 3% 3% 3% 3% 16% Combined Weighted Average 16% 11% 5% 5% 5% 49% Delay wastewater plant maintenance Delay completion of Recycled water facilities Delay replacement of ER collection vehicles Fill only operator vacancies These are average revenue increases. The actual rate increases vary by customer class and consumption. 55

56 Rate Calculation Single Family Residential - 9 HCF per month water consumption Current Rates Noticed Rates Solid Waste $31.02 Solid Waste $32.89 Water Water Fixed $16.89 Fixed $16.08 Tier 1 6 x $2.84 $17.04 Tier 1 9 x $3.87 $34.83 Tier 2 3 x $3.15 $9.45 Tier 2 0 x $4.57 $0.00 Tier 3 0 x $4.42 $0.00 Tier 3 0 x $6.12 $0.00 TOTAL $43.38 * TOTAL $50.91 Wastewater Wastewater Fixed $21.07 Fixed $28.45 Tier x $1.37 $9.86 Tier x $1.85 $13.32 Tier x $1.52 $0.00 Tier x $2.06 $0.00 Tier x $2.12 $0.00 Tier x $2.87 $0.00 TOTAL $30.93 TOTAL $41.77 TOTAL $ TOTAL $ *Current water cost was listed as $42.45 instead of $43.38 (used new tier levels with current rates) 56

57 5 Year Combined Rate Increase for Single Family Residential $180 $160 $140 $120 $100 $80 $60 $40 $20 $0 $ $31.02 $30.93 $43.38 $ $ $ $ $34.20 $32.92 $32.88 $31.96 $ $ $ $ $36.99 $34.93 $35.57 $33.91 $53.73 $53.41 $49.72 $49.42 $45.99 $45.71 $41.77 $38.72 $ $ $38.10 $35.98 $58.10 $57.76 $50.92 $50.92 $53.65 $53.65 $60.09 $57.88 $65.45 $63.07 $70.57 $68.02 Rec. Min. Rec. Min. Rec. Min. Rec. Min. Rec. Min. Existing FY 2015/16 FY 2015/16 FY 2016/17 FY 2016/17 FY 2017/18 FY 2017/18 FY 2018/19 FY 2018/19 FY 2019/20 FY 2019/20 Water Bill Wastewater Bill ER Bill Single Family Residential With Median Water Use (9 HCF per month) 57

58 Wastewater Single Family Rate History Compared to CPI $45 $40 $35 $30 Approx. $110 million of revenue below CPI $25 $20 Utility CPI $15 $10 $5 $ Actual Oxnard Rates Utilities CPI Increase 58

59 Combined Monthly Average Residential Bill Comparison $160 Comparison With Current Rates $140 $120 $100 $80 Avg = $ $ $ $60 $40 $20 $0 Oxnard Current Camarillo Current Simi Valley Current Thousand Oaks Current Santa Paula Current City of Ventura Current Channel Islands Current Port Hueneme Current Ojai Current Fillmore Current Water Wastewater ER Average Single Family Residential With Median Water Use (9 HCF per month) 59

60 Combined Monthly Average Residential Bill Comparison $160 Comparison With Current, Proposed or Estimated Rates $140 $120 $100 Avg =$ $ $80 $60 $40 $20 $0 Camarillo Current Thousand Oaks Current Santa Paula Current City of Ventura Proposed Oxnard Proposed (Mar 1, 2016) Simi Valley Proposed Channel Islands Estimated Water Wastewater ER Average Port Hueneme Estimated Ojai Current Fillmore Current Single Family Residential With Median Water Use (9 HCF per month) 60

61 Proposition 218 Public Hearing Procedures Stephen Fischer

62 Proposition 218 Public Hearing Procedures Resolution Recommended because Prop 218 provides little detail on counting protests Sets forth: Who may submit a protest How protests must be submitted and withdrawn Handling of submitted protests Criteria for a valid protest How protests will be tabulated Serves as "Rules for the Road" 62

63 Direction

64 Recommendation 1. Provide feedback on: 1. Utility rate policy 2. Utility rate options 2. Approve Proposition 218 Protest Procedure Resolution. 64

65 Recommended Utility Debt Service Coverage and Reserve Policies Debt Service Coverage 1.25x Recommended Policies Capital Reserve 1 year of Depreciation Operating Reserve Operating: 90 days of operating costs days of debt service 65

66 Rate Options Wastewater Water Solid Waste Special Rate Issues Golf Course Proctor & Gamble Port Hueneme Water Agency (PHWA) Ocean View Unmetered water 66

67 Proposition 218 Public Hearing Procedures Resolution Recommended because Prop 218 provides little detail on counting protests Sets forth: Who may submit a protest How protests must be submitted and withdrawn Handling of submitted protests Criteria for a valid protest How protests will be tabulated Serves as "Rules for the Road" 67

68 Next Steps Outreach Refine rate options Complete Cost of Service Study Rates Assistance Program Community Conversations December 17 & January 13 Public hearings January 19 & January 26 68