Agenda - 11-24-2008 - c1 - Laserfiche WebLink

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reduction, the rates would need to be increased an average of 150% this year. This percentage increase is derived from the assumption that the rates would be raised in time for the January billing cycle, giving only six months to generate the revenue necessary. The 150% increase would serve only to bridge the gap between the system's requested operating budget and the approved budget. Capital needs funding and establishment of a fund balance for the system are not included in calculation of the 150% increase. At the November 6, 2008, BOCC meeting, an attachment was included in the agenda packet for the Efland sewer rate study which showed the effect on typical monthly bills of staffs suggested 3-year cycle of rate increases. This 3-year plan is designed to recover the funds that were cut from the System's budget this year and eliminate the General Fund's direct subsidy of the System by Fiscal Year (FY) 2011-12. A simplified version of this chart is included as Attachment 1. The timeline required for implementation by the January billing cycle is included as Attachment 2. None of the discussion so far takes into account the impacts to low-income residents who may have difficulty paying the increased rates. Staff is currently investigating existing programs that are already being administered by the County's Department of Social Services (DSS) and community groups such as Orange Congregations in Missions (OCIM), as well. as grant programs that have been successfully implemented by the County's Housing and Community Development department (e.g. Rogers Road water tap grants). The proposed rate schedule in Attachment 1 does not take the costs of such a program into account. Additionally, there is no reliable way to calculate the effect that much higher sewer rates will have on consumption (and therefore, revenue). The increased rates may tend to function as a "conservation rate" due to the financial impact of the higher rates. Finally, please find attached a draft letter to customers notifying them of this public hearing of the proposed new rate schedule (Attachment 3). The letter also gives a brief explanation of the need for increased rates. FINANCIAL IMPACT: Potentially tens of thousands of General Fund dollars could be saved by rescinding the County's subsidy of sewer rates for the Efland sewer system. Additionally, raising the rates as specified in Attachment 2 by the January 2009 billing cycle provides a means of balancing the FY 2008-09 operating budget for the Efland sewer system. RECOMMENDATION(S): The Manager recommends the Board receive public comment on the. proposed rate schedule submitted by staff as Attachment 1.