Agenda - 12/11/2008 - 6e Late - Laserfiche WebLink

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2 initial rate increase in January 2009 is designed to bridge the gap between the System's requested operating budget and the approved budget. This initial increase assumes rates will be raised in time for the January billing cycle, giving five to six months to generate the additional revenue necessary to balance the System this year. The subsequent rate increases over the next two fiscal years are designed to generate the revenue necessary not only to fund operation and maintenance of the System, but also to develop a Capital Reserve Fund and a System Fund Balance and eliminate the need for General Fund subsidy of the System. To change the rate schedule for the System, the BOCC will need to amend the ordinance that established the System (Attachment 3). The existing ordinance provides the rates for the current System (Attachment A). Attachment 2 is the replacement page for "Attachment A" of the current ordinance. The proposed amendment would replace the existing "Attachment A" with the new "Attachment A." Several members of the public have requested the rate increases be more gradual. For comparison purposes an alternate 5 year plan to implement the necessary rate changes is included as Attachment 4. A description of the difference between the two schedules was sent to all Commissioners in an email on December 3, 2008. The initial rate increase needs to be the same as the 3 year plan to balance the operating budget this fiscal year and the cost to the General Fund is three times that of the 3 year plan. The 5 year plan is designed to achieve the same goals as the 3 year plan; sufficient revenue for operations, maintenance, capital needs and system fund balance. None of the discussion above takes into account the hardship increased rates will have on low- income customers in the Efland area. A memo was submitted to the BOCC at the December 1, 2008 regular board meeting outlining options for assisting low-income customers. There are currently no programs in existence designed to assist customers on an ongoing, month-to- month basis. Orange County's Department of Social Services (DSS) has an Emergency Assistance program available to help citizens with bills in an emergency situation. Orange Congregations in Mission (OCIM) also has a program that performs essentially the same function. These programs are functioning and available to qualifying Efland customers. However, both programs have an assistance limit of $100-$150 per six months. Customers who may have already used the service may not have enough remaining funds through these programs to assist with their sewer bills. If the BOCC is interested in providing regular monthly assistance to low-income customers with their Efland Sewer bills, a program of that type would need to be developed. FINANCIAL IMPACT: Raising the rates as shown in Attachment 1 by the January 2009 billing cycle provides a means of balancing the FY 2008-09 operating budget for the Efland Sewer System. The net effect of this 3 year rate increase will establish the rate schedule at a level to fully fund operations, provide for a capital needs reserve fund, gradually build a fund balance and eliminate General Fund subsidy of the System. RECOMMENDATION(S): The Manager recommends the Board approve the proposed rate schedule submitted by staff as Attachment 1 by amending the Efland Sewer System Ordinance.