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Home My WebLink About09- Development Department D ., JELOPMENT DEPARTMEN f OF THE CITY OF SAN BERNARDINO REQUEST FOR COMMISSION/COUNCIL ACTION FROM: KENNETH J. HENDERSON SUBJECT: DELMANN HEIGHTS Executive Director WATER SYSTEM DATE: June 3, 1993 --------------------------------------------------------------------------------------------------------------------------------------------- Synoasis of Previous Commission/Council/Committee Action (s): On May 24, 1993, the Community Development Commission requested a report from the General Manager of the Water Department regarding water service differential rates relative to the purchase of the Delmann Heights water system. --------------------------------------------------------------------------------------------------------------------------------------------- Recommended Motion(s): (Mayor and Common Council MOTION: That the Mayor and Common Council receive and file the attached report from the General Manager of the Water Department regarding the Delmann Heights water services area. Atftn-i—nistrator KENNETH J. HE ERSON Executive Director ----------------------------------------------------------------------------------------------------------------------------- Contact Person(s): Kenneth J. Henderson/Bernie Kersey Phone: 5081 Project Area(s): North West (NW) Ward(s): Six (6) Supporting Data Attached: Report from General Manager Water Department FUNDING REQUIREMENTS: Amount: $ N/A Source: N/A Budget Authority: N/A ------------------------------------------------------------------------------------------------------------------------- Commission/Council Notes: --------------------------------------------------------------------------------------------------------- KJH:Iag:DLMN.AGD COMMISSION MEETING AGENDA MEETING DATE: 06/07/1993 Agenda Item Number: q _ JUN-03-'93 09:57 ID: 4821 P02 0 CITY OF SAN BERNARDINO MUNICIPAL WATER DEPARTMENY' EV I'ER.OFFICE MEMORANDUM To: Honorable Mayor and Common Council FROM: Bernard C. Kersey, General Managerlwater Department SUBJECT: DIFFERENTIAL WATER RAT88 DELMANN $EIGHTS WATER SERVICE AREA DATE: June 3, 1993 COPIES: j Ij In 1984 the City and East Valley water District, through the High land-De lmann Heights Quality Water Supply Authority, began the process of acquiring Southern California water Company through eminent domain. The City and East Valley Water District took prejudgment possession Of the Southern California Water Company's two (2) service areas on January 1, 1987 by depositing with the courts a fair market value for the water systems. The two agencies, after taking possession, left the rates established by Southern California Water Company in place. On October 5, 1989, a negotiated settlement was reached by all parties with the total acquisition cost of the water systems established at $5,465,000.00. The City of San Bernardino's share of this cost, plus expenses of the Authority was $732,680.98. When the Water Department took the Delmann System, it received very little value in the way of assets. All of the Wells owned by the water company were contaminated and did not meet drinking water standards. The system had no reservoir capacity for fire flows, most of the mains were undersized or worn out, and were located in the backyards of the residences. The existing system was evaluated in 1986 and it was estimated that over $1.5 million in improvements were necessary to bring the system up to standards. In addition, when we took possession of the service area, the residents were served off of the Water Department's water system. Of the total original cost to acquire the system of $732,680.98, the Water Department paid from the Water Fund $352,813.18 from 1986 to 1989. The balance of the acquisition cost was financed through Certificates of Participation issued by East Valley Water District. Our share of that cost was $399,168.00 plus interest over five (5) JUN-03-'93 09:57 ID: 4821 P03 Honorable Mayor and common Council RE: Delman Heights June 3, 1993 Page -2- years. In 1990, the Mayor and Common Council voted to use community Development Block Grant Funding for the principal payments on the financed portion of the acquisition. Since the water Department took possession of the Delmann Heights water service area, the net revenue derived from water sales is $1,279,249.00. The offset to the revenues recdived is as follows: Revenue $1,279,249.00 Expenses: Maintenance & Improvements $119,351.00 Operating Costs for Water Deliveries 712,193.00 original Deposit 352,813.00 Interest on Promissory Note and Principal Not Covered by CDBG 75,686.00 $1,260,043.00 Net Revenue $ 19,206.00 Exhibit 1, attached hereto, shows a comparison of the two water rate schedules; Delmann-Heights service area and city Water Department general rates, and the costs for a typical residential user from 1987 to the present. I believe you will see that the rates in the Delmann system were higher but the rates have been increased four times for the City Water Department bringing the average monthly costs closer together. Exhibit 2 is a summary, somewhat hypothetical, of what the difference in the rate structures would produce in overall revenue from January 1987 to present. The Delmann rate produces an estimated revenue of $430,582.00 in excess of what the revenue would have been under standard city rates. This additional revenue offsets the original deposit of the Water Department and interest and unpaid principal on the notes payable to East Valley Water District. The differential rate currently produces about $36,000.00 per fiscal year in additional revenue, hardly enough to fund the total improvements needed in the system. When the Water Department raises rates, the differential will continue to diminish so that those in the Delmann system will pay only a portion of the total cost to improve the water system. The majority of the costs �l _ JUN-03-'93 09:58 ID: 4821 PO4 Honorable Mayor and Common Council RE! Delmann Heights June 3, 1993 Page -3» will be borne by the entire rate base, or if possible funded through grants and other sources of revenue. If there are any questions, please advise. Respectfully submitted, Bernard C. Kersey " General Manager ECK:mka Attachments - --" JUN-03-193 09:58 ID: X #821 P05 it TOTAL WATER CONSUMPTION 1187 - 4193 1.281.370 HCF AVERAGE NUMBER OF ACCOUNTS 748 AVERAGE CONSUMPTION PER ACCOUNT 22 HCF -------------------------------------------------------------------------------------- 1 r COMPARISON OF RATES - 5/8" RESIDENTIAL METER - 20 HCF AVERAGE USE i D.H. C.W.D. r. RATE EFFECTIVE: JAN. 87 21.05 8.55 APR. 88 21.05 11.55 NOV. 89 21.05 14.50 APR. 91 21.05 17.40 ! BASIC RATES - 518" RESIDENTIAL METER: DELMANN HEIGHTS USERS - EFFECTIVE JAN. 87 MIN. MONTHLY CHARGE 64.60 FIRST 300 C.F. 5.70 PER 100 C.F. OVER 300 C.F. 6.844 PER 100 C.F. C.W.D. USERS - EFFECTIVE JUL. 82 MIN. MONTHLY CHARGE (500 C.F.) $3.00 OVER 500 C.F. 6.37 PER 100 C.F. C-W.D. USERS - EFFECTIVE APR. 88 MIN. MONTHLY CHARGE (500 C.F.) 64.50 OVER $00 C.F. $.47 PER 100 C.F. C-N.D. USERS - EFFECTIVE NOV. 89 MIN. MONTHLY CHARGE (500 C.F.) 63.30 OVER 500 C.F. 6.60 PER 100 C.F. C.W-D. USERS - EFFECTIVE APR. 91 MIN. MONTHLY CHARGE (500 C.F.) $6.60 OVER 500 C.F. $.72 PER 100 C.F. r EXHIBIT "1' JUN-03-'93 09:59 ID: ii 4821 P06 0 COMPARISON OF REVENUE - D.H. RATES vs. C.W.D. RATES ACTUAL SALES SALES D.H. RATES C.W.D. RATES DIFFERENCE ------------- ------------- -------------- 84/87 (6 MOS.) 56,777 26,282 30,496 87/88 199,513 89,424 110,089 88189 212,319 121,844 90,474 89/90 230.640 148.006 82.634 9or91 208.506 158,798 49,708 91/92 208,877 172,601 36,276 92193 (10 MOS.) 170.132 139,227 30.905 NET DIFFERENCE IF CONSUMPTION WAS $430.582 CHARGED AT STANDARD C.W.D. RATES EXHIBIT "2" C