City of Ukiah

The City of Ukiah retained The Reed Group, Inc. to build up a ten-year drinking water system financial strategy and to update drinking water rates for the City’s water power. The purpose of the study was going to ensure that water prices are sufficient to fulfill the utility’s monetary and service responsibilities for ongoing procedure and maintenance, financial debt service, and capital improvements while maintaining wise reserves. The last adjusting to the water prices occurred in July 2014. The scope of services for water rate study covered the following: • Assessment financial goals and policy objectives • Review the current spending budget, debt obligations, and capital improvement programs • Prepare a ten-year financial plan and determine annual drinking water rate revenue requirements for the water power • Review the present water rate framework and recommend adjustments consistent with rate environment objectives • Develop water rate suggestions that meet the statutory requirements for cost of support • Present initial recommendations to the City Authorities to review the presumptions and conclusions from your financial plan and rate analyses • Prepare a water price study report (this report) to record the analyses performed during the study • Present study suggestions to the City Council throughout a regular meeting, and assist the City in preparing a see of public ability to hear regarding the proposed drinking water rates • Present final water price recommendations during a general public hearing. The purpose of this kind of report is to explain the analyses performed, present the monetary plan for the water power, and summarize results and recommendations about the water rates. MONETARY PLAN AND INCOME NEEDS The City’s water rates had been last increased found in July 2014 within the last of a series of total annual rate adjustments comprising five years. Generally, financial objectives have already been met. However, currently the City and the Condition are in the midst of a multi-year drought, that has reduced water product sales and related income. While the financial condition from the water utility is usually not critical, financial improvement needs are certainly not being fully or perhaps adequately funded. As the City’s water power continues to provide dependable water service to the customers, the current finances limit its capability to implement needed capital CITY OF UKIAH DRINKING WATER RATE STUDY THE REED GROUP, INCORPORATION. PAGE 2 alternative, rehabilitation, and update projects. The capital improvement plan for the water power totals about $22. 9 million (in current dollars) in new projects within the planning period (through FY 23-24). Nevertheless, about $15. two million of this quantity is scheduled for five years. Recent revenues do not completely support this degree of capital program activity, and currently available supplies will be significantly exhausted as these projects will be completed. It is recommended that the town continue its practice with a modest total annual water rate raises. Beginning in June 2016, it is recommended that the City boost water rate income by 3 percent followed by four years with a 3 percent annual water price increase each January. These increases can help ensure the financial balance during the current drought and subsequent restoration, maintain adequate income for operating and maintenance costs, and also debt service, and supply additional funding intended for the capital improvement system. The financial strategy model reflects presumptions and estimates which can be believed reasonable currently. However, conditions switch. It is recommended that the City evaluate the financial condition from the water utility yearly as part of the budget procedure, and perform an even more comprehensive financial strategy and rate upgrade study every 3-5 years, unless or else needed sooner. The financial analysis offered in this report shows that the revenues produced by the water prices would not exceed the price of providing service, which includes maintaining prudent supplies for specified reasons. Details of financial strategy analyses and the suggestion to annually change the water rates to hold pace with enhancements made on costs are offered in Section 2 of this report. SUGGESTED WATER RATE ROUTINE Exhibit I-1 gives the proposed drinking water rate schedules for five years, depending on a public ability to hear in March 20161. The water rates offered in this report consist of minor rate framework changes to better line up the water rates with all the cost of providing support. The water rate framework includes: • Keeping a uniform drinking water usage rate framework for all customer classes • Adjustments towards the monthly service costs to better align the allocation of client costs across almost all customer accounts, along with reflecting the allowance of capacity costs with the capacity offered across meter sizes. The rate restructuring is usually proposed to occur with all the 3 percent general water rate income increase, to be effective on June 2016. As a result of rate restructuring water bills will increase a lot more than 3 percent while others less than three percent. Typical single-family members' water bills might increase about four. 5 percent as a result of the price of service analysis. Information on the cost of service evaluation and water price recommendations are offered in Section 3 of this report..

.. ...