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HomeMy WebLinkAbout2015-1116 Study Session PACKET CITY OF ASHLAND CITY COUNCIL STUDY SESSION AGENDA Monday, November 16, 2015 Council Chambers, 1175 E. Main Street 5: 30 p.m. Study Session 1. Public Input (15 minutes maximum) 2. Look Ahead review 3. Water rate cost of services study 4. Continued discussion of downtown behavior issues and additional approaches (request of Councilor Seffinger) In compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting, please contact the City Administrator's office at (541) 488-6002 (TTY phone number 1-800-735- 2900). Notification 72 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility to the meeting (28 CFR 35.102-35.104 ADA Title 1). COUNCIL MEETINGS ARE BROADCAST LIVE ON CHANNEL 9. STARTING APRIL 15, 2014, CHARTER CABLE WILL BROADCAST MEETINGS ON CHANNEL 180 OR 181. VISIT THE CITY OF ASHLAND'S WEB SITE AT WWW.ASHLAND.OR.US City of Ashland Council Meeting Look Ahead *****THIS IS A DRAFT AND SUBJECT TO CHANGE***** Departments Responsible 1/19 211 2/2 2/16 2116 1/5 Regular Council Meeting 24 Approval of Council Liaison to commissions for 2016 (Mayor) Council CONS 25 Recommendations of AFN Gov. ad hoc Committee Dave Admin NEW Second reading of an ordinance regulating outdoor growing, CD 26 production, processing, wholesaling and sales of medical and ORD-2 recreational mari'uana Bill 1/11 State of the City 5:30 p.m. Community Center 1/11 1118 Stud Session Canceled due to MLK, Jr. Da 1/18 1/19 Regular Council Meeting 1/19 Public hearing and first reading of an ordinance expanding the CD 27 Wildfire Lands overlay and adoption of development standards (Bill) ORD-1 ORD-2 28 Plastic Ba Ban one-year review (Adam) Admin NEW 211 Study Session (in Siskiyou Roorn ~ 1 29 Discussion of the future of the Electric Utility (request of Mayor Admin SS Stromber 2/2 Regular Council Meeting 2/2 30 Ordinance expanding the Wildfire Lands overlay and adoption of CD ORD-2 _ development standards (Bill) 2/15 Stud Session Canceled due to President's Da 2115 2/16 Regular Council Meeting 2116 31 Annual presentation b the Transportation Commission Mike PW PRES Commission Presentation Dates - 2015 February 17 - Transportation Commission March 17 - Tree Commission April 21 - Historic Commission May 19 - Wildfire Mitigation Commission June 2 - Band Board Jul 21 - Forest Lands Commission August 18 - Conservation Commission September 15 - Airport Commission October 20 - Public Arts Commission November 17 - Housing and Human Services Commission December 15 - Planning Commission Discussion of Class & Compensation stud (request of Councilor Voisin February 2 Council meeting - 6 month review of calls for service to the Vinyl Club and Granite Ta house (Tighe/John) Discussion of raising the temperature threshold for declaration of extreme weather emergency shelter (request of Councilor Voisin Water Master Plan update Mike Fau ht Hostler Dam rniect update Mike Fau ht Page 2 of 2 11/12/2015 City of Ashland Counr" Meeting Look Ahead *****THIS IS A DRAFT AND -oBJECT TO CHANGE***** Departments Responsible 11119 Budget Committee Meeting (6:00 .m. 11/19 11/30 Study Session (in Siskiyou Room) 30 1 Discussion of Gateway Island art project process Ann Admin SS 2 Re ulation of marijuana rows - production and sales Bill CD SS 12/1 Regular Council Meeting 12/1 3 Report on Ashland Community Resource Center Dave Admin PRES 4 Sprint Franchise renewal Ann/ David L. Admin Legal CONS 5 Supplemental budget for software purchases (Lee) Finance PH RES Public hearing of an ordinance regulating outdoor growing, CD 6 production, processing, wholesaling and sales of medical and PH ORD-1 ORD-2 recreational marijuana Bill 7 Annual A ointment of Citizen Budget Committee Barbara Recorder NEW 8 Annual Appointment of Audit Commission and Council Liaison Recorder NEW Barbara 9 First reading of an ordinance regarding parking rules Dave L. Le al ORD-1 ORD-2 10 First reading of an ordinance updating animals allowable in city parks Parks Legal ORD-1 ORD-2 Michael/ David L.) 12/14 Study Session (in Siski ou Room 12114 11 Street utility fee and transportation funding Mike PW SS 12 AF&R staffing options John Fire SS 12/15 Regular Council Meeting 12/15 13 Annual presentation b the Planning Commission Bill CD PRES 14 Presentation by Ashland Police Department on drug amnesty and Police PRES treatment program (Tighe) 15 Acceptance of the 2015 Comprehensive Annual Financial Report Finance NEW CAFR Lee 16 Consideration of Gateway Island art project Ann Admin NEW 17 First reading of an ordinance regarding parking rules Dave L. Legal ORD-2 18 First reading of an ordinance updating animals allowable in city parks Parks Legal ORD-2 Michael/ David L. First reading of an ordinance regulating outdoor growing, production, CD 19 processing, wholesaling and sales of medical and recreational ORD-1 ORD-2 marijuana (Bill) 1/4 Stud Session (in Siski+L Room 1/4 20 Update on the seismic stud of city hall Mike PW SS 21 Discussion of downtown beautification project funding for the Admin SS remainder of this biennium (request of Councilor Marsh 22 Discussion regarding AMC 2.27 - Citizen involvement in planning Admin SS request of Councilor Voisin 114 Executive Session (following the Stud Session 1/4 23 For legal counsel pursuant to ORS 190.660(2)(h) Le al EXEC Page 1 oft 11/12/2015 CITY OF -ASHLAND Council Communication November 16, 2015, Study Session Water Rate Cost of Services Study FROM: Michael R. Faught, Director, Public Works Department, faughtm@ashland.or.us SUMMARY Staff is seeking Council direction on the proposed modifications as outlined in the Hansford Economic Consulting (HEC) draft water cost of service study. While the study recommends rate increases consistent with the adopted 2012 Water Master Plan, the study also proposes rate structure modifications to customer classes, based on the American Water Works Association M1 rate setting manual, that will increase costs for Talent Irrigation District (TID) and municipal irrigation users while reducing costs for commercial, residential and industrial customers. BACKGROUND AND POLICY IMPLICATIONS: The purpose of a cost of service study is to ensure that the water utility is accurately allocating the functionalized costs, expenses, assets and discounts offered for conservation measures of the water system to various customer classes (single-family residential, multi-family residential, commercial and irrigation) equitably. To that end, the City contracted with Hanford Economic Consulting to conduct a cost of service study (http://www.ashland.or.us/Page.asp?NavlD=16271). The study found that commercial, residential and institutional customers are currently paying more than their proportional share while the TID, municipal irrigation and to a small degree fire guards are paying less than their share of the water system costs (see figure I below). Page I of 4 ~r, CITY OF -ASHLAND Figure 1 Cost of Service Redistribution of Fiscal Year 2015-16 Revenue Requirement F _ TID Irrigation, $68,372 4.: Municipal Irrigation, Fire Guards, $93,837 $5,834 Insitutional, ($9,793) Commercial.- ($126,988) Residential, ($31,262) ($150,000) ($100,000) ($50,000) $0 $50,000 $100,000 $150,000 A summary of the recommended rate structure modifications are as follows: • The flat charges to all customers will include costs associated with administration of the water system and customer service. This charge essentially insures the water utility generates sufficient funds to cover the day to day costs of operations. • Commercial customers will be separated into commercial and institutional customers. The institutional customer class includes government, municipal and 15 Port customers. TIER 1 TIER 2 Cubic Feet CURRENT for ALL NON-RESIDENTIAL < 50,000 >50,000 NEW INSTITUTIONAL No tier - uniform rate IRRIGATION No tier -seasonal rates COMMERCIAL 2" or less < 2,500 >2,500 COMMERCIAL >2" < 15,000 >15,000 • Residential customers use tiers would not change; however residential customers with irrigation meters would pay a service charge for each meter year round. In the short term, residential irrigation customer bills will be begin at the second tier and then when the City purchases and converts to a new utility billing software system, residential municipal irrigation water use will be added to the domestic water for billing calculations. • Municipal irrigation customers (not TID) would be billed the flat monthly charges year-round rather that just when they are using water for irrigation. A summary of the proposed rate impacts are as follows: • Residential customers would see a 5% rate increase in 2016 rather that the full 8% rate increase proposed in the adopted water master plan. Page 2 of 4 CITY OF ASHLAND • Most commercial customers would see a decrease in their water bills in 2016; in addition, a larger portion of bills will be in the flat monthly charges for customers with two-inch and larger meters. • Institutional customers would see a decrease in their water bills. • Irrigation customers would see an increase in their irrigation bills during the peak summer months. They would also see an increase in bills during non-peak periods with the new year- round flat monthly charge if they have zero usage. • TID irrigation charges would increase from $170 per acre to $638.34 per acre to reflect the actual cost for the TID water system. Due to the proposed substantial increased charges to this customer class, increases are proposed to be phased in over a six-year period (see table below). While the goal of the study specifically looks to allocate all costs equitably, staff is concerned that full implementation of cost of service may result in a reduction of TID users. 2015-16 2016-17 2017-18 1' 2019-20 2020-21 2021-2022 $ 170.01 $ 250.00 $ 343.95 $436.95 $ 530.43 $ 623.91 $ 717.39 The study recommends water rate increases consistent with the adopted 2012 Water Mater Plan. However, it's important to note that this estimate assumes that the City will successfully secure State funding at 1% for both the new water plant and Crowson 11 projects. If the City is unable to secure the 1% loan then these projected rate impacts would have to be adjusted. 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 8% 4% 3% 3% 3% 3% The following is the impact to the water bill for a typical single family home with a 3/4 meter: Figure 2 Typical Monthly Bill for a Single Family Home with a meter: $64 $62.03 $ 62 $60.46 $60 $58.84 $57.31 $55.85 4hi $56 n $54.07 $54..r: $51.72 $52 $50 - 2016 2017 2018 2019 2020 2021 2022 Page 3 of 4 Ir, CITY OF -ASHLAND It's important to note that the recommended adjustments are consistent with the consultant's assignment to look at equitable cost allocations throughout the water fund. However, both staff and the consultant realize some of the recommendations have a large impact to some customers, therefore the consultant will be prepared to offer alternative solutions based on the Council's input at the study session. COUNCIL GOALS SUPPORTED: • Complete a detailed water cost of service study at an estimated cost of $50,000. • Monitor and adjust the 2012 water master plan planning, management and financial plan assumptions. FISCAL IMPLICATIONS: There are no fiscal implications to report as this study recommends rate increases consistent with the adopted water master plan. STAFF RECOMMENDATION AND REQUESTED ACTION: N/A SUGGESTED MOTION: N/A ATTACHMENTS: 1. HEC Draft Water Rates Cost of Service Study 2. HEC Draft Appendix Page 4 of 4 Fr, e Water Rate Cost of Services Study Draft CITY OF ,.S H LA D November 10, 2015 HEC Project #140136 TABLE OF CONTENTS SECTION PAGE 1. Introduction 1.1 Purpose of the Study 1 1.2 Methodology 2 1.3 Organization of the Report 2 2. Summary of Findings 4 2.1 Major Findings 4 2.2 Key Assumptions 6 2.3 Calculated Rates 7 2.3 Rate Impacts 10 3. Current Conditions I.J. 3.1 City Water System 11 3.2 Customer Base 14 3.3 The Water Fund 15 4. Financial Projections 21 4.1 Revenue Requirement 21 4.2 Talent Irrigation District Untreated Irrigation Service 25 4.3 Meter Replacement Program 26 5. Cost of Service Analysis 28 5.1 Functional Cost Allocation 28 5.2 Rate Design 29 5.3 Water Demand Projection 36 5.4 Calculated Rates 37 5.5 Projected Cash Flow and Fund Balance 41 6. Impacts of New Rate Structure 43 6.1 Bill Impacts 43 6.2 Affordability Test 43 6.3 Comparison of Water Rates 44 City of Ashland Water Rates Cost of Service Study November 10. 2015 DRAFT Page i LIST OF TABLES TABLE PAGE 1 Calculated Water Rates through 2022 8 2 Calculated Typical Home Bill for 1,ooo Cubic Feet 9 3 Historical Water Production 11 4 Historical Water Consumption 13 S City Population Growth 14 6 Current Water Rates 17 7 Water System Development Charges 18 8 Forest Resiliency Program Fee Schedule 19 9 Historical Water Fund Balance 20 10 Summary of CIP for Existing Customers 22 11 Estimated Water System Assets Depreciation 23 12 Projected Revenue Requirement 24 13 Calculated TID Use Rates 25 14 TID Revenue Offset 26 15 Estimated Meter Replacement Fee Program Costs 27 16 Calculated Meter Replacement Fees 27 17 Allocation of Revenue Requirement to Cost Functions 29 18 Calculation of Customer Service Costs per Account 30 19 Calculation of Monthly Service Charge by Meter Size 31 20 Estimated Meter Equivalent Units 31 21 Customer Usage Characteristics 33 22 Projected Water Demand 36 23 Calculated Use Charges per Cubic Foot 38 24 Summary of Calculated Water Rates 39 25 Cost Allocation by Customer Type 40 26 Projected Operating Fund Cash Flow 43- 27 Projected Water Fund Balance 42 28 Affordability Test 44 29 Calculated Typical Home Bill for 1,ooo Cubic Feet 45 City of Ashland Water Rates Cost of Service Study November io. 2015 DRAFT Page ii LIST OF FIGURES FIGURE PAGE 1 Cost of Service Redistribution of FY 2015-16 Revenue Requirement 4 z Typical Bi-Monthly Bill for 3/4" Single Family Home g 3 Annual Water Consumption by Month 12 4 Water Use by Customer Type 15 5 Typical Annual Sources of Water Funds Revenue 16 6 Water Sales by Customer Type 16 7 Typical Annual Water Fund Expenses 19 8 Monthly Water Use by Customer Type 32 g Residential Water Use by Tier 34 10 Non-Residential Water Use by Tier 35 11 Commercial Water Use by Tier 35 12 Redistribution of Costs to Customer Types 40 13 Water Fund Balance 42 14 Comparison of Single Family Monthly Water Bill 45 City of Ash land Water Rates Cost of Service Study November io. 2015 DRAFT Page iii Section 1: INTRODUCTION 1.1 PURPOSE OF THE STUDY The City of Ashland (City) contracted with Hansford Economic Consulting (HEC) to perform a Water Rates Cost of Service Study (Study). The purpose of this Study is two-fold: (1) to ensure that different customer types pay their fair share of water system costs by performing a cost of service analysis and (2) to collect sufficient revenues to adequately fund the water system in a safe manner; providing the residents and businesses of the City with a clean, safe and reliable potable water system that meets State and Federal requirements, by projecting revenue needs and determining a supporting rate schedule. This report provides an explanation and justification of redistribution of water system costs to customer types and the calculated water rates through fiscal year ending 2022. This report has been prepared with the following principles in mind: (1) Revenues derived from water fees should not exceed the funds required to provide the water service. (2) Revenues derived from water fees should not be used for any purpose other than that for which the fees were imposed. (3) Customer water bills should reflect the customer's fair share (proportional) cost of service to provide water to the customer. (4) Water fees should only be charged to customers using the service or with the ability to use the service at any time. Water fees should not be charged based on potential or future use of water. The City conducted a Water Master Plan that was completed in 2012. The Water Master Plan called for several large capital improvement projects and the need to raise water rates to plan for those project costs. The City has raised water rates July 2013, 2014, and 2015 by 10% each year as a result of the findings of the Water Master Plan. Since the 2012 completion of the Water Master Plan the region has experienced a drought. Projected water demands have not been realized, which have resulted in (a) less revenue than anticipated, and (b) greater expenditure in earlier years to complete the Talent-Ashland- Phoenix (TAP) project to augment water supplies. The recent water rate increases were based on percentage increases needed from water sales and not based on cost of service. The City wanted to assess whether customers are paying their proportional share of costs of the water system (not subsidizing among customer types). The City also wanted to ensure that sufficient revenues would be available to pay for projects identified in the Master Plan, as well as other projects identified since completion of the 2012 Master Plan. City of Ashland Water Rates Cost of Service Study November 10. 2015 DRAFT Page i Given the decrease in water demand in 2013, 2014, and projected continued decreased demand in 2015 due to the drought, the City also anticipated that water rates would have to increase through fiscal year 2022, or necessary capital projects (most particularly a new water treatment plant), would have to be postponed. 1.2 METHODOLOGY This report was prepared using the principles established by the American Water Works Association (AWWA). The AWWA "Principles of Water Rates, Fees, and Charges: Manual of Water Supply Practices M1" (the "M1 Manual") establishes commonly accepted professional standards for cost of service studies. The M1 Manual general principles of rate structure design and the objectives of the Study are described below. According to the M1 Manual, the first step in the ratemaking analysis is to determine the adequate and appropriate funding of a utility. This is referred to as the "revenue requirements" analysis. This analysis considers the short-term and long-term service objectives of the utility over a given planning horizon, including capital facilities and system operations and maintenance, to determine the adequacy of a utility's existing rates to recover its costs. A number of factors may affect these projections, including the number of customers served, water-use trends, nonrecurring sales, weather, conservation, use restrictions, inflation, interest rates, wholesale contracts, water rights agreements, and other changes in operating and economic conditions. After determining a utility's revenue requirements, a utility's next step is determining the cost of service. Utilizing a public agency's approved budget, financial reports, operating data, and capital improvement plans, a rate study categorizes (functionalizes) the costs, expenses, and assets of the water system among major operating functions to determine the cost of service. After the assets and the costs of operating those assets are properly categorized by function, the rate study allocates those "functionalized costs" to the various customer classes (e.g., single-family residential, multi-family residential and commercial) by determining the characteristics of those classes and the contribution of each to incurred costs such as peaking factors or different delivery costs, service characteristics and demand patterns. Rate design is the final part of the M1 Manual's ratemaking procedure. The revenue requirement and cost of service analyses are used to determine appropriate rates for each customer class. 1.3 ORGANIZATION OF THE REPORT The Study is presented in six sections. Following this introduction, Section 2 provides a summary of major assumptions and findings of the study. Section 3 provides information on the City's water system including historical water production and consumption, customer base, historical City growth and health of the water enterprise fund. Section 4 projects revenue needs "the revenue requirement" through fiscal year 2021-22, calculates costs associated with City Talent Irrigation District (TID) untreated irrigation water service, and determines a meter replacement program and its associated costs. City of Ashland Water Rates Cost of Service Study November 10. 2015 DRAFT Page 2 Section 5 presents the cost of service analysis, water demand projections and details of the calculated water rates. The impacts of the new water rate structure are presented in Section 6, including a comparison of bills with other Oregon water providers. Appendix A includes support tables for the water rates analysis. City of Ashland Water Rates Cost of Service Study November io. 2015 DRAFT Page 3 Section 2: SUMMARY OF FINDINGS 2.1 MAJOR FINDINGS Cost of Service. The cost of service analysis finds that commercial, residential, and institutional customers are currently paying more than their proportional share of water system costs. Municipal irrigation and TID irrigation customers are paying less than their proportional share of water system costs. This is illustrated in Figure 1 below. Customer types with negative revenue requirement in the illustration should be paying less as a customer group than they are currently paying. As a result of the cost of service analysis (see Section 5) the rates from fiscal year 2016-17 onwards shift costs between customer types. Figure 1 Cost of Service Redistribution of Fiscal Year 2015-16 Revenue Requirement TO Irrigation, $68,372 Municipal - Irrigation, Fire Guards, $93,837 I°`= $5,834 Insitutional, ($9,793) Commercial ($126,988) Residential, ($31,262) ($150,000) ($100,000) ($50,000) $0 $50,000 $100,000 $150,000 Costs are attributed to municipal customers based on their potential to use system capacity and their water usage characteristics. TID customer costs are calculated based on their share of maintenance costs of the City-owned canal, water rights and associated payments to TID, and City staffing and materials costs. Rate Structure Modifications. The current rate structure is proposed to be modified to better reflect customer usage patterns and cost of service, ensure accuracy for account billing, and encourage water use efficiency. • Flat Charges (All Customers). Currently bills comprise one flat charge -the monthly service charge. Under the new rate structure bills would continue to have a service charge, but also have a customer charge for costs associated with administration of the water system and City of Ashland Water Rates Cost of Service Study November 10. 2015 DRAFT Page 4 provision of customer service. The customer charge would be the same every month, and the same for every account (accounts with more than one meter only charged once). The service charge would continue to cover the costs of services and meters and a portion of system capacity costs; generally, the costs to be able to provide water service regardless of the amount of water used during a given period. The service charge would continue to apply to each meter at the property. Service Charge Meter Ratios Change. The service charge meter ratios were adjusted to AWWA meter ratios established using safe maximum operating capacities for meters in the M1 Manual. These meter ratios more accurately capture the capacity of the water service to each customer than the current meter ratios. As a result of this change the larger meter sizes would pay more per month than under the current meter ratios. For 1" meter services the meter ratio was set equal to a 3/" meter to ensure households upsized for fire code requirements are not penalized (this methodology was also used to establish the Forest Resiliency Program Fee in May, 2015 and is being used with greater frequency in cities in other Western U.S. states)'. • Commercial Customers. Commercial customers are separated into commercial, institutional, and irrigation customers. Institutional customers include the current government, municipal and 15 Port customers. This change is made to better reflect the different customer water demand patterns associated with non-residential activity. The tiers for the new customer categories are also different from the current tiers. The rate structure is intended to fit typical customer usage patterns and promote water use efficiency as well as proportionately allocate the cost of service to those who place the greatest demands on the system. The table below shows proposed modifications to the non-residential customer tiers. Note that non-residential irrigation water would be charged at on peak and off peak rates. The purpose of seasonal rates for irrigation is to reduce the cost of irrigation water during the shoulder and winter months when water supply is not a concern and increase the cost of irrigation water when supplies may be impacted by drought. TIER 1 TIER 2 Cubic Feet CURRENT for ALL NON-RESIDENTIAL < 50,000 >50,000 NEW INSTITUTIONAL No tier -uniform rate IRRIGATION Notier -seasonal rates COMMERCIAL 2" or less < 2,500 >2,500 COMMERCIAL >2" < 15,000 >15,000 ' Source: HEC experience working with cities in California. City of Ashland Water Rates Cost of Service Study November lo. 20l5 DRAFT Page 5 • Residential Customers. There is no change proposed for residential tiers. Residential customers with separate irrigation meters (about 5% of all irrigation customers) would pay a service charge each month for each meter but only one customer charge for the account each month. Metered irrigation water would be added to the domestic water for calculation of use charges. As the City is converting to new water billing software in 2016 there may be a transition period during which time residential irrigation water is billed starting at the Tier 2 rate for residential water. Billing would begin at Tier 2 because average water use is 460 cubic feet per month for indoor use (see Table 21) indicating that a typical home would be using some irrigation water in Tier 2. Once the new billing software is in place the irrigation metered use would be added to domestic metered use. • Irrigation Customers. All irrigation customers (commercial and residential) would be billed the flat monthly charges (service charge and customer charge) year-round rather than only in the months that water is taken as is current practice. Irrigation customers would be treated the same as all other municipal water customers in this regard, reflecting the ability for the customer to take water at any time of year. This shift from current billing practice may cause some irrigation customers to want to discontinue having a separate irrigation meter. This is an option for residential irrigation customers.Z 2.2 KEY ASSUMPTIONS Implementation. The new rate structure is assumed to be in effect beginning July 1, 2016 and to be increased each July 1 thereafter. The rate increases would coincide with the fiscal year as is current practice. TID Irrigation Rates Phased In. It is recommended that the City moves to cost of service rates as soon as practical for all customers. In the Study all customer rates except TID unmetered customer rates are at full cost of service in 2016. The calculated rate per acre for untreated unmetered TID irrigation customers in fiscal year 2016-17 is $638.34. Currently these customers pay $170.01 per acre. While it is desirable to move immediately to cost of service rates, this represents a large rate shock to the affected customers. To mitigate such a large rate shock the rate schedule has been phased in to the rate model so that TID irrigation customers are not paying full cost of service until fiscal year 2021-22. Water CIP Projects are funded through rates, connection fees, and City borrowing. Rates and City borrowing will be used to finance capital improvements that benefit existing customers. Connection fees will only be used for projects that are related to new growth in the City. Developer contributions may be required for certain facilities. It is assumed that the City will obtain Safe Drinking Water State Revolving Fund (DWSRF) money to finance construction of the new water treatment plant and Crowson II reservoir. If DWSRF money is not obtained the revenue requirement would increase (assuming all other costs do not change) and water rates would have to increase beyond those calculated in this report. z This is not an option for non-residential customers because of sewer billing methodology. City of Ashland Water Rates Cost of Service Study November io. 2015 DRAFT Page 6 System rehabilitation costs are included in rates. Rates should include depreciation of existing assets so that funds are accumulated and available for replacement of assets on a timely basis, preferably paid for with cash. This Study uses estimated depreciation costs to collect for system rehabilitation. Rate money collected for system rehabilitation is used to fund capital improvement projects for existing customers. In some years system rehabilitation revenue may exceed capital improvement costs. In these years the excess revenue is added to reserves for future rehabilitation projects. TAP Water Costs. The TAP emergency water pipeline was recently completed. This treated water source will be utilized by the City in late summer or early fall, as needed, to augment supplies. For purposes of the Study it is assumed that water is taken for 31 days each year. The current contract rate is 68 cents per 1,000 gallons of water. In the model it is assumed the cost increases to 75 cents per 1,000 gallons in 2016 and at 3.5% per year each year thereafter. 2.3 CALCULATED RATES The Study provides a basis for adoption of new rates beginning July 1, 2016. By modifying the rate structure the City will generate sufficient revenue to continue to meet its bond covenants, to build a healthy reserve, to fund necessary capital improvements and to fully fund water operations. The revenue requirement, which is the amount of money to be raised by rates, is calculated to increase by the following percentages: 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 8% 4% 3% 3% 3% 3%.77 The revenue requirement percentage increases for the next 3 years match those calculated in the 2012 Water Master Plan; however, with the shift in costs between customer categories not all customer categories will experience the same percentage increases. Table 1 on the following page shows calculated water rates through 2022 for all customer categories and compares the calculated rates with the current rate structure. Table 2 on page 9 shows the calculated bill for a single family home using 1,000 cubic feet of water in a billing cycle. A typical residential bill would increase from $51.72 in 2015 to $54.07 in 2016 under the proposed water rates. City of Ashland Water Rates Cost of Service Study November io. 2015 DRAFT Page 7 Table 1 Calculated Water Rates through 2022 Rate Component Rates Implementation 7/1/2015 7/1/2016 7/1/2017 7/1/2018 7/1/2019 7/1/2020 7/1/2021 Monthly Customer Charge per Bill n.a. $11.70 $12.08 $12.39 $12.72 $13.06 $13.40 Monthly Service Charge per Meter [1] 3/4" and Fire Guards $23.50 $13.71 $14.15 $14.52 $14.91 $15.32 $15.72 1" $46.99 $14.30 $14.76 $15.15 $15.56 $15.99 $16.41 1.5" $66.99 $65.41 $67.54 $69.29 $71.13 $73.06 $74.96 2" $88.24 $103.95 $107.33 $110.11 $113.03 $116.10 $119.11 3" $184.50 $208.44 $215.21 $220.80 $226.64 $232.81 $238.84 4" $282.07 $330.61 $341.34 $350.23 $359.52 $369.33 $378.93 5" $528.92 $650.47 $671.60 $689.04 $707.27 $726.50 $745.33 8" $881.49 $1,031.18 $1,064.70 $1,092.28 $1,121.14 $1,151.59 $1,181.36 USE CHARGES Residential [1], [2] per month, per unit 0 to 300 cf $0.0243 $0.0244 $0.0252 $0.0259 $0.0266 $0.0273 $0.0280 301 to 1,000 cf $0.0299 $0.0305 $0.0315 $0.0323 $0.0332 $0.0341 $0.0350 1001 to 2,500 cf $0.0400 $0.0412 $0.0425 $0.0437 $0.0448 $0.0461 $0.0473 > 2,500 cf (2,501 - 3,600 cf June to Sept) $0.0517 $0.0534 $0.0552 $0.0566 $0.0581 $0.0597 $0.0613 > 3,600 cf (June to Sept only) $0.0673 $0.0686 $0.0709 $0.0728 $0.0747 $0.0768 $0.0788 Non-Residential per month, per meter 0-50,000 cf $0.0343 n.a. n.a. n.a. n.a. n.a. n.a. > 50,000 cf $0.0353 n.a. n.a. n.a. n.a. n.a. n.a. Commercial <2" meter 0-2,500 cf n.a. $0.0305 $0.0315 $0.0323 $0.0332 $0.0341 $0.0350 > 2,500 cf n.a. $0.0412 $0.0425 $0.0437 $0.0448 $0.0461 $0.0473 Commercial 2"+ meter 0-15,000 cf n. a. $0.0305 $0.0315 $0.0323 $0.0332 $0,0341 $0.0350 > 15,000 cf n. a. $0.0412 $0.0425 $0.0437 $0.0448 $0.0461 $0.0473 Insitutional n.a. $0.0292 $0.0301 $0.0309 $0.0317 $0.0326 $0.0335 Commercial and Institutional Irrigation [2] October to May n.a. $0.0321 $0.0333 $0.0342 $0.0352 $0.0362 $0.0372 June to September n.a. $0.0436 $0.0452 $0.0464 $0.0478 $0.0492 $0.0505 Bulk Water Rate [3] same as non-res. $0.0335 $0.0346 $0.0355 $0.0365 $0.0375 $0.0385 Fire Protection Service [4] Meter Replacement Charge n. a. $1.18 $1.22 $1.26 $1.30 $1.34 $1.38 Service Charge $23.50 $13.71 $14.15 $14.52 $14.91 $15.32 $15.72 Usage Charges same as non-res. $0.0335 $0.0346 $0.0355 $0.0365 $0.0375 $0.0385 TID Irrigation Rates per irrigation season, per acre or portion of Unmetered Service $170.01 $250.00 $343.48 $436.95 $530.43 $623.91 $717.39 Metered Service: Service Charge per meter as above n.a. n.a. n.a. n.a. n.a. n.a. Meter Replacement Fee [5] none per meter as above Water Consumption per c.f. $0.0055 $0.0050 $0.0051 $0.0053 $0.0054 $0.0055 $0.0056 Outside City Limits All rates and charges for water service provided outside the city limits will be 1.5 times the inside city rates and charges. Source: City of Ashland. sum rotes [1] For residential customers with separate irrigation meters the metered irrigation water is added to the domestic water use. [2] Irrigation customers currently only billed charges when the service takes water. Effective July 1, 2016 these customers will be charged the flat monthly fees every month regardless of whether water is taken. [3] For temporary water provided through a bulk meter on a fire hydrant. [4] This rate shall apply to all water taken through fire protection services or fire guards. [5] Due once per year on first TID irrigation water bill. City of Ashland Water Rates Cost of Service Study November io. 20 15 DRAFT Page 8 Table 2 Calculated Typical Home Bill for 1,000 Cubic Feet Fiscal Year Ending Residential Charges 2016 2017 2018 2019 2020 2021 2022 current 1 2 3 4 5 6 Flat Charges Customer Charge $11.70 $12.08 $12.39 $12.72 $13.06 $13.40 Service Charge $23.50 $13.71 $14.15 $14.52 $14.91 $15.32 $15.72 Total Flat Charges $23.50 $25.40 $26.23 $26.91 $27.62 $28.38 $29.11 Use Charges Tier 1 per cu. ft. $0.0243 $0.0244 $0.0252 $0.0259 $0.0266 $0.0273 $0.0280 Tier 2 per cu. ft. $0.0299 $0.0305 $0.0315 $0.0323 $0.0332 $0.0341 $0.0350 Tier 1 Charges (300 cu ft) $7.29 $7.32 $7.56 $7.76 $7.97 $8.19 $8.41 Tier 2 Charges (700 cu ft) $20.93 $21.35 $22.06 $22.64 $23.25 $23.89 $24.52 Total Use Charges $28.22 $28.67 $29.62 $30.40 $31.22 $32.08 $32.92 Bill for 3/4" using 1,000 cu. ft. $51.72 $54.07 $55.85 $57.31 $58.84 $60.46 $62.03 Percentage Increase 5% 3% 3% 3% 3% 3% Source: HEC. sf bill The calculated bill for a single family home with a 3/" meter using 1,000 cubic feet is shown in Figure 2 through 2022. Bills will be lower or higher than shown depending on actual quantity of water used. Figure 2 Typical Monthly Bill for Single Family Home $64 $62.03 $60.46 $60 $58.84 $58 $57.31 $56 $55.85 $54.07 $54 $52 $51.72 $50 I_ 2016 2017 2018 2019 2020 2021 2022 City of Ashland Water Rates Cost of Service Study November 10. 2015 DRAFT Page 9 2.4 RATE IMPACTS Residential. In 2016 residential water bills would experience increases of about 5% rather than the full 8% increase in revenue requirement because of the cost redistribution between customers. The bills for residential customers will remain affordable per the Oregon Drinking Water State Revolving Fund program definition (see Section 6). Commercial. Most commercial water bills would decrease under the new rate structure in 2016. The reduction in bills is also due to the reallocation of costs under the cost of service analysis. Note that commercial customers with 2" and larger meters would pay a larger portion of their bill as a flat monthly charge due to the change in service charge meter ratios to AWWA safe maximum operating capacities for meters. Larger water meter commercial customers would have higher bills in 2016. Institutional. Institutional customers would experience a slight increase in bills in the winter months and a decrease in bills in the summer months. Institutional customers have a relatively flat demand throughout the year, with a slight peak in the spring months before the irrigation season begins, so the change to a uniform use charge (the same rate per 1,000 gallons is charged regardless of total water use) is appropriate. Irrigation. During the peak summer months irrigation bills would increase in 2016 due to cost redistribution. The new rate design is intended to curb irrigation water use during the peak use months by having a higher rate per 1,000 gallons June through September "the on-peak rate". During off-peak months (October through April) water bills would increase if no water was taken. This reflects billing the flat monthly charges regardless of whether water is used or not. For accounts using water during the off-peak, irrigation bills would decrease. The off-peak irrigation water rate encourages planting in summer and fall months when water supply is not a concern. TID Irrigation. At full cost of service, the TID unmetered rate would increase from $170.01 per acre to $638.34 per acre. In the Study, the rate is increased to $250.00 per acre in 2016 and the full cost of service gradually phased in so that these customers pay full cost of service in fiscal year 2021-22. The TID metered customer rate will decrease from $0.0055 per cubic foot to $0.0050 per cubic foot in 2016. In addition, TID metered customers would no longer pay the base meter charge but would pay a smaller meter replacement fee. City of Ashland Water Rates Cost of Service Study Novemberio. 20 i5 DRAFT Page io Section 3: CURRENT CONDITIONS 3.1 CITY WATER SYSTEM The City operates a surface water supply system. The main water supply is from Ashland Creek and reservoir. This water is treated at a City owned and operated water treatment plant. Treated water enters the distribution system from this point and either flows directly to customers or to one of 4 reservoirs (water tanks) located in the City. In 2014 the TAP water supply was completed to Ashland. The City can take up to 2.13 million gallons per day (mgd) in emergency water supplies from the Medford Water Commission. This water source will be used in late summer or early fall as needed to augment supplies. In addition to these two sources of treated water the City also obtains water from the Talent Irrigation District (TID). Untreated TID water is supplied to irrigation customers located along the TID canal. Under terms of the contracts with TID the City may also use the water for municipal purposes. When used for municipal purposes water from the canal is diverted to the Ashland Creek water treatment plant where it is treated and enters the City's municipal water distribution system. Water production averages 46 million gallons per month during the winter months (December through March). Peak month production is July or August when production averages 152 million gallons per month. The highest month production in the past 6 years was 180 million gallons in July 2009. Table 3 shows historical water production. Table 3 Historical Water Production Month Calendar Year Avg. Annual Percent Year 2009 2010 2011 2012 2013 2014 Water Delivery of Delivery (MG) by Month Figures in Millions of Gallons January 51.06 48.16 48.88 48.07 42.97 42.38 46.92 5% February 44.48 41.77 44.11 44.96 36.98 37.36 41.61 4% March 48.71 47.54 47.18 47.65 42.45 41.71 45.87 5% April 64.90 48.40 48.70 53.24 54.76 56.41 54.40 5% May 105.77 59.31 60.78 90.64 90.46 97.70 84.11 8% June 124.39 88.51 88.77 109.75 117.26 119.26 107.99 11% July 180.38 157.48 135.27 133.40 170.48 137.17 152.36 15% August 167.64 158.29 152.00 149.87 155.29 131.38 152.41 15% September 116.02 114.52 131.36 124.35 114.30 104.15 117.45 12% October 69.73 86.43 82.60 81.33 99.24 83.61 83.83 8% November 48.97 51.89 54.13 45.01 81.63 55.40 56.17 6% December 51.26 47.26 49.63 40.50 52.97 51.01 48.77 5% Total 1,073.32 949.57 943.42 968.78 1,058.79 957.53 A 991.90 100% Base Monthly Flow (Dec - Mar) 8 45.79 Average Annual Base Flow C= 8*12 549.53 55% Average Annual Additional Flow D = A-C 442.37 45% Source: City of Ashland. prodn City of Ashland Water Rates Cost of Service Study November 10. 2015 DRAFT Page 11 Water production includes Ashland Creek and TAP water supplies. Annual base water production is the winter monthly average production multiplied by 12. Base water production comprises 55% of annual production. Additional flow to meet demands that pick up during the spring, summer, and fall months comprises 45% of annual production. Historical water consumption is shown in Table 4. Due to billing cycles, consumption by month in the table reflects the amount of water billed each month which is not exactly the same as total water used in each month; however, the pattern of use is very similar with peak month usage typically in July or August. Figure 3 shows the seasonal pattern of water consumption. Figure 3 Annual Water Consumption by Month 20,000,000 18,000,000 16,000,000 14,000,000 12,000,000 L v 10,000,000 U 8,000,000 6,000,000 4,000,000 2,000,000 0 ~ Fe P Q~ O o~ 5e ~ O Table 4 also compares consumption and production. The figures show that about 4.5% of water produced is unbilled or unaccounted for. This figure is considered healthy for a water system'. The total annual water usage billed increased 10% between 2010 and 2011 then fell back to the same level as 2010 in 2014. The decrease in water use between 2013 and 2014 is probably largely due to the drought. Oftentimes a decrease such as this can be sustained for many years, particularly if followed by another drought year, as has been the case in 2015. Referred to as 'demand hardening,' customers become accustomed to using less water. During the drought years they have retrofitted fixtures and reset irrigation clocks or changed out landscaping to reduce their water use. 3 "Most states have regulatory policies that set acceptable losses from public water system distribution systems at a maximum of between 10 and 15 percent of the water produced by the public water system.", page vii of 'Control and Mitigation of Drinking Water Losses in Distribution Systems', EPA November 2010 publication. City of Ashland Water Rates Cost of Service Study November io. 2015 DRAFT Page 12 Table 4 Historical Water Consumption Calendar Year Month 2010 2011 2012 2013 2014 Consumption Figures in Cubic Feet January 5,688,024 6,377,053 5,822,654 6,398,479 5,698,647 February 5,099,644 5,088,576 5,264,148 5,106,362 5,903,155 March 5,997,480 5,766,127 6,218,217 6,620,823 5,395,848 April 6,277,962 5,688,600 5,835,945 6,921,512 6,737,313 May 6,175,787 6,517,915 9,374,536 11,570,159 9,004,008 June 10,337,043 10,144,694 13,728,687 15,752,849 13,984,004 July 16,158,844 15,031,208 18,171,761 20,422,663 16,487,000 August 21,397,458 19,009,537 20,835,815 21,394,834 17,197,539 September 18,241,371 20,055,884 17,842,766 17,004,658 15,052,946 October 11,996,052 13,614,063 16,505,230 9,332,010 12,255,392 November 7,824,931 7,349,883 7,001,274 7,667,451 7,481,389 December 5,685,693 6,519,096 6,151,573 6,465,232 7,819,658 Total Consumption (Cu. Ft.) 120,880,289 121,162,636 132,752,606 134,657,031 123,016,899 Total Consumption (Gallons) 904,184,561 906,296,515 992,989,490 1,007,234,594 920,166,406 Millions of Gallons Billed 904 906 993 1,007 920 Millions of Gallons Produced [1] 950 943 969 1,059 958 Production less Consumption 45 37 -24 52 37 Production as % of Billing 4.8% 3.9% -2.5% 4.9% 3.9% Source: City of Ashland. billed [1] Includes TAP water of 6.3 MG in 2014. Production figures for 2012 unreliable due to calibration difficulties at the plant. In selecting a base year as a platform for water use from which to project water demand over the Study time period it would be best to either use the average of the last five years or the most recent year of water use. This Study projects water use based on the most recent year of water use (2014). Unlike the Water Master Plan, in which the core objective is to ensure sufficient capacity is available for a 'worst case' growth in demand scenario (maximum likely use), this Study needs to ensure sufficient revenue is available in a 'best case' growth in demand scenario under which there are minimum increases in water use. The average annual water use of the last 5 years was 946 million gallons. The Study uses the 2014 use of 920 million gallons as the base for projecting water demand. Over the same five-year period (2010-2014) the population of Ashland increased very slightly from an estimate of 20,100 to 20,300. Gallons of water produced per capita per day has remained flat at 129. Ashland's population growth and gallons per capita per day is shown in Table S. City of Ashland Water Rates Cost of Service Study November 10. 2015 DRAFT Page 13 Table 5 City Population Growth Water Certified Production Population Annual Annual % Gallons per Year Estimate Change Change Capita per Day 1-Jul 2000 19,610 2001 19,770 160 0.8% 2002 20,130 360 1.8% 2003 20,430 300 1.5% 2004 20,590 160 0.8% 2005 20,880 290 1.4% 160 2006 21,430 550 2.6% 161 2007 21,630 200 0.9% 154 2008 21,485 -145 -0.7% 153 2009 21,505 20 0.1% 137 2010 20,095 -1,410 -6.6% 129 2011 20,255 160 0.8% 128 2012 20,325 70 0.3% 131 2013 20,295 -30 -0.1% 143 2014 20,340 45 0.2% 129 Change 730 52 Average Annual Population Increase 0.26% Source: Portland State University Population Research Center - stats www.pdx.edu/prc and Carollo 2012 City of Ashland Comprehensive Water Master Plan. 3.2 CUSTOMER BASE As shown in Table 5, the City services a population of approximately 20,300 and it has sustained an annual average population increase of 0.26% since 2000. City water customers include residential (single family and multi-family), commercial, institutional (government and municipal), irrigation and raw water (irrigation) customers. Figure 4 shows water use by customer type. The figure excludes water use by the TID raw water irrigation customers. As the pie chart shows, the majority of City water use (68%) is by residential customers. City of Ashland Water Rates Cost of Service Study November 10. 2015 DRAFT Page 14 Figure 4 Water Use by Customer Type 5% 14% 16% Single Family Residential Multi-Family Residential Commercial Government & Municipal Irrigation (excl. TID customer) 3.3 THE WATER FUND The water enterprise fund accounts for the revenues and expenses associated with operating the water system.4 Revenues. Historically, 61% of the water enterprise fund's operating revenue has been derived from water sales. Other operating revenue includes bond proceeds, system development charges (SDCs), new service installation fees, and inter-government, interest and other miscellaneous revenues. Table A-1 shows historical and budgeted water fund revenues. Figure 5 shows the typical annual share of revenues by source. Rate revenue is generated according to the current water rate schedule shown in Table 6 on page 17. Customers are billed fixed service charges according to their water meter size plus use charges. Water sales by customer type is shown in Figure 6. 4 An enterprise fund is a fund that is intended to recover its costs through user fees and charges. Enterprise funds also provide the repayment capacity for, and make debt service payments on, any debt incurred for capital projects associated with the utility; therefore, any water enterprise fund bond-funded projects do not diminish the City's general fund debt capacity. City of Ashland Water Rates Cost of Service Study November 10. 2015 DRAFT Page i5 Figure 5 Typical Annual Sources of Water Fund Revenue r Water Sales SDC Revenue New Service Installation Intergovernmental, Interest & Miscellaneous Bond Proceeds r a a.... 61% 1% ' 1% Figure 6 Water Sales by Customer Type 11% 14% 1% »lr _ 4% r 12% = Commercial . Fire Guard Government & Municipal Multifamily Residential Single Family Residential Irrigation (incl. TO customers) City of Ashland Water Rates Cost of Service Study November io. 2015 DRAFT Page 16 Table 6 Current Water Rates Rate Component Rate Schedule 7/1/2015 Monthly Service Charge Within City Limits Meter Size 3/4" $23.50 1" $46.99 1.5" $66.99 2" $88.24 3" $184.50 4" $282.07 6" $528.92 8" $881.49 Usage Charges Residential [1] October - May 0 to 300 cf per month per unit $0.0243 301 to 1,000 cf per month per unit $0.0299 1001 to 2,500 cf per month per unit $0.0400 > 2,500 cf per month per unit $0.0517 June - September 0 to 300 cf per month per unit $0.0243 301 to 1,000 cf per month per unit $0.0299 1001 to 2,500 cf per month per unit $0.0400 2,501 to 3,600 cf per month per unit $0.0517 > 3,600 cf per month per unit $0.0673 Non-Residential [1] 0-50,000 cf per month $0.0343 > 50,000 cf per month $0.0353 TID Irrigation Rates Unmetered Service per acre or portion of $170.01 Metered Service Base Service Charge per meter as above Water Consumption per cf $0.0055 Bulk Water Rate For water provided on a temporary basis through a bulk meter on a fire hydrant Deposit $1,859.28 Basic Fee $234.77 Cost of Water same as non-residential Fire Protection Service This rate shall apply to all fire protection services or fire guards. The basic service charge will be equal to the minimum basic service charge. Water will be billed at non-residential rates. Outside City Limits All rates and charges for water service provided outside the city limits will be 1.5 times the rates for water service provided within the city limits. Source: City of Ashland. rates [1] Irrigation customers only billed when the service takes water. City of Ashland Water Rates Cost of Service Study November 10. 2015 DRAFT Page i7 New development pays System Development Charges (SDC) fees to pay for new facilities necessary to accommodate the increased demand associated with new customers. The current SDC fee schedule is shown in Table 7. SDC charges are not updated as part of this Study. Table 7 Water System Development Charges Applicant SDC Charges Reimbursement Improvement Total Residential All, per Sq. Ft. Habitable Area $0.9318 $1.6751 $2.6069 Commercial & Industrial Meter Size 3/4" $1,792.89 $3,084.22 $4,877.11 1" $2,988.75 $5,140.43 $8,129.18 1.5" $5,975.70 $10,280.87 $16,256.57 2" $9,561.48 $16,448.58 $26,010.06 3" $20,917.65 $35,983.04 $56,900.69 4" $35,857.80 $61,685.21 $97,543.01 6" $74,704.35 $128,508.83 $203,213.18 8" $107,573.40 $185,053.61 $292,627.01 Source: Economic & Financial Analysis, June 5, 2014. sdc Water customers are also charged a fixed monthly fee by water meter size for the Ashland Forest Resiliency Program. This new fee was adopted by City Council in May 2015 and is also not part of the Study. The Forest Resiliency Program was included in the Water Fund prior to fiscal year 2015-16. It is now part of public safety. The Forest Resiliency Program fee schedule is shown in Table 8 on the following page. Expenses. The water fund incurs annual expenses for supply, distribution, treatment plant, and conservation functions. Costs for these functions are further grouped into ten categories in the Study: Personnel (includes benefits) Supplies Repair & Maintenance Communications Contractual Services Central Service Miscellaneous Charges Other Purchased Services Conservation Programs Franchise Tax City of Ashland Water Rates Cost of Service Study November lo. 2015 DRAFT Page 18 Table 8 Forest Resiliency Program Fee Schedule Meter Size Monthly Charge 3/4" $1.39 1" $1.39 1.5" $6.95 2" $11.12 3" $22.24 4" $34.75 6" $69.50 8" $111.20 Source: Resolution 2015-14 adding a surcharge to water meters for the surcharge purpose of generating and dedicating general fund resources for additional work in the forest interface as part of the Ashland Forest Resiliency Program, May 2015. Over the past six years personnel costs (including salaries and benefits), central service costs (support from other departments allocated to water), and miscellaneous costs have been the largest expenditure items. Personnel costs have comprised approximately 35 percent of annual costs of the water utility. The percentage share of fiscal year 2015-16 budgeted expenses by expense category is shown in Figure 7. Figure 7 Typical Annual Water Fund Expenses 2% 35 11% f~ 7ri 7% 8% t,s Personnel Supplies & Communications Repair & Maintenance Contractual Services in Central Service Miscellaneous Charges ■ Other Purchased Services ■ Franchise Tax ■ Conservation Programs City of Ashland Water Rates Cost of Service Study November 10. 2015 DRAFT Page 1g An addition to the fiscal year 2015-16 budget is the cost of TAP water. This new water source first came online in the fall of 2014. The City anticipates using this water source one month every year in typical water years. Table A-2 shows historical and budgeted expenditures by water system function. Operations expenditures are summarized in Table A-3. Water Fund Balance. In 2010 and 2011 the water fund was unable to sustain itself. Inter-fund loans from other City funds were used to pay for operations of the water system. Following an increase in revenue in 2013 as a result of the completion of the Water Master Plan and implementation of increased rates, the water fund was able to sustain itself. The water fund balance increased from $2.7 million to $6.4 million. The inter-fund loans were repaid. The water fund balance decreased in fiscal years ending 2014 and 2015 (the last 2 fiscal years) to $5.2 million as revenues decreased due to the drought (despite rate increases over the same time period). Bond proceeds have been utilized increasingly from 2013 to fund major capital improvements. The historical water fund balance is shown in Table 9 below. Table 9 Historical Water Fund Balance Fiscal Year Ending Water Fund 2010 2011 2012 2013 2014 2015 Revenues $4,455,768 $4,806,604 $5,745,624 $8,280,514 $6,322,141 $6,604,338 Expenses $5,007,651 $4,996,091 $5,049,115 $6,899,636 $7,315,933 $8,414,077 Excess (Deficiency) ($551,883) ($189,487) $696,509 $1,380,878 ($993,792) ($1,809,739) Other Financing Sources $80,000 $550,000 ($200,000) $2,347,791 $829,630 $744,916 repayment of repayment of repayment of interfund loan & interfund loan & Interfund loan Interfund loan interfund loan bond proceeds bond proceeds bond proceeds Net Change in Fund Balance ($471,883) $360,513 $496,509 $3,728,669 ($164,162) ($1,064,823) Fund Balance July 1 $2,323,768 $1,851,885 $2,212,398 $2,708,907 $6,437,576 $6,273,414 Fund Balance June 30 $1,851,885 $2,212,398 $2,708,907 $6,437,576 $6,273,414 $5,208,591 Source: City of Ashland CAFRS. cafr City of Ashland Water Rates Cost of Service Study November 10. 2015 DRAFT Page 20 Section 4: FINANCIAL PROJECTIONS 4.1 REVENUE REQUIREMENT The revenue requirement refers to the amount of money that must be raised annually through rates. The projection of revenue requirement is therefore the cornerstone for calculation of rates. This section explains the derivation of revenue requirement for this Study. Components of revenue requirement include: • Capital Improvements • Debt Service • System Rehabilitation • Operations Expenses and Reserves City TID water sales revenue as well as other non-water sales revenue projections are credited against projected operations costs. Non-water sales include intergovernmental revenue, interest on investments, new service installation revenue, and other miscellaneous revenues. 4.1.1. Capital Improvements The City's water system capital improvements plan (CIP) is shown in Table A-4. The table shows costs in inflated dollars to account for the increased cost of infrastructure over time. Project costs are increased 3.12% per year for inflation per the historical 1995-2015 20-year Engineering News-Record Construction Cost Index (ENR CCI) average annual increase. The table only shows costs to be borne by existing customers. Improvements that benefit future customers will be paid for with system development charges. Total CIP costs benefiting existing customers is summarized in Table 10. Of the total identified $30.0 million (inflated costs) in improvements, $20.4 million is assumed to be funded with an SRF loan, $2.1 million is assumed to be funded with bond proceeds, $4.7 million with cash raised by rates specifically for system rehabilitation, $0.4 million with other water fund cash, and $2.4 million with use of restricted reserves for capital improvements. 4.1.2. Debt Service Existing debt service of the water fund is shown in Table A-5. Existing debt comprises City general obligation bonds as well as Medford Water Commission debt and State of Oregon revolving fund loan debt for the TAP project. State of Oregon revolving fund loan debt payments are estimated to begin in fiscal year 2017-18. New debt service estimates for projects bond-funded by the City are shown in Table A-6. Table A-7 shows the assumptions and debt service for financing the new water treatment plant and Crowson II reservoir with the Oregon DWSRF program. City of Ashland Water Rates Cost of Service Study November 10. 2015 DRAFT Page 21 Table 10 Summary of 10-Year CIP for Existing Customers p o 0 0 0 o p ° N O O V} V} VT i/> O = N O C O a c N M M rn p O M M M N to V} to a CD 0 CD CD CD 0 ri O O V} V1 V} VT O N C)1 Ol al O Ln 00 Co 00 O ul In In N in V} to O n r- VT V} V} V) n N M M M Ol N N N c ri n n n w O lD lD l0 E N V) Vl iA w O O 0 0 0 0 0 0 Q Cil O O V} V} V? V} O E lD tD tD M. 00 M ui ui Ln r-I a 'T a - p O o O Q N ° rj 1 ri u _O o h O M O 0 0 00 ri M Vr (.D -1 to r-I a l!1 M iD Ln ul Ii a 0 0 1 r•1 N Ol cM-I d' V (Z) Ln Dl a~ N O ri V). O ai e-7 V1 Vr r-I - ih 3 `n 00 ( ^ o o " N O V} lD u1 V} N v lD c-I Ol lfl lD 'c lD ~--I n r, in M n E O rn Ili c-i O N N -i Ql N ri V} V} ri U ih w O O O O O O O N N lD r 1i y ~n M N c-I m M r~ M N O N Ol N w p CO M 00 O M N V -i N -:T v V} V} V>• co O ~--I 0 0 0 0 -4 C vl N ~t M Ln ri M O _ N M N lD t` M N u u CO m N oo 4 al a, w M lO O lD to M M - O 0 m r- ~ M M O al OU o_ 0 N O N rn t N V} V} N V} N c in V) V} ~ w C N O > Vf O L ~ 1Q ~ - d O N E 'p L v, ra - ro N N U L Q f~6 Cu E u O N Y v Y w V U L V U t w L "6 w aY U : L v U CC C w Oj d C LL U > v w w 7 w O 1 a` w v Z5 F- Ln N City of Ashland Water Rates Cost of Service Study November lo. 2015 DRAFT Page 22 4.1.3. System Rehabilitation Depreciation is used as the basis for which to collect rates to cover system rehabilitation costs. It is recommended that the City collect water service fees to fund system rehabilitation costs. Table 11 shows the estimated cost of depreciation of the water system. The estimated cost includes replacement of existing assets and assets that are estimated to be constructed during the Study time period (see Table A-8). Table 11 Estimated Water System Assets Depreciation Assets Annual Depreciation 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 Base 1 2 3 4 5 6 Existing Assets Water Rights $0 $0 $0 $0 $0 $0 $0 Buildings $0 $0 $0 $0 $0 $0 $0 Equipment $11,832 $8,189 $1,390 $1,390 $1,390 $1,390 $1,390 Improvements $676,083 $673,081 $663,935 $663,935 $663,735 $661,981 $657,684 Total Existing $687,915 $681,270 $665,325 $665,325 $665,126 $663,371 $659,074 New Assets Improvements $98,600 $300,179 $472,352 $496,075 $513,991 $530,655 $536,239 Total New $98,600 $300,179 $472,352 $496,075 $513,991 $530,655 $536,239 Combined Existing & New $786,515 $981,448 $1,137,677 $1,161,400 $1,179,117 $1,194,026 $1,195,313 % Included in Rates 0% 100% 100% 100% 100% 100% 100% Amount In Rates $0 $981,448 $1,137,677 $1,161,400 $1,179,117 $1,194,026 $1,195,313 Source: City of Ashland and HEC. depr 4.1.4. Operations Expenses and Reserves Table A-9 shows that operations costs of the water fund have increased at an average annual rate of 3.4% since 2010. This average annual increase is compared with a 2.7% Engineering News Record (ENR) Construction Cost Index (CCI) increase and 1.8%-2.2% Consumer Price Index (CPI) indexes. It is typical for utilities costs to increase at a faster rate than the price indexes shown. This Study recommends using average annual increases of 4.0% for personnel costs, 3.5% for TAP water costs, and 3.0% for all other operating costs. 4.1.5. Calculated Revenue Requirement Table 12 on the next page estimates the revenue requirement of the water fund for the next 10 years. In fiscal year 2015-16 the revenue requirement is calculated at $5.79 million. The City projects revenues of $6.52 million. Any realized additional revenue will be reserved for capital improvements identified in the Water Master Plan. City of Ashland Water Rates Cost of Service Study November 1.0. 201.5 DRAFT Page 23 Table 12 Projected Revenue Requirement Revenuesand 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 Expenses Base 1 2 3 4 5 6 Operating Expenses Personnel 4.0% $1,737,310 $1,806,802 $1,879,074 $1,954,237 $2,032,407 $2,113,703 $2,198,251 Supplies 3.0% $305,825 $315,000 $324,450 $334,183 $344,209 $354,535 $365,171 Repair & Maintenance [1] 3.0% $410,512 $359,827 $370,622 $381,741 $393,193 $404,989 $417,139 Communications 3.0% $22,380 $23,051 $23,743 $24,455 $25,189 $25,945 $26,723 Contractual Services 3.0% $353,600 $364,208 $375,134 $386,388 $397,980 $409,919 $422,217 Central Service 3.0% $887,650 $914,280 $941,708 $969,959 $999,058 $1,029,030 $1,059,901 Miscellaneous Charges 3.0% $517,020 $532,531 $548,507 5564,962 $581,911 $599,368 $617,349 Other Purchased Services 3.0% $207,320 $213,540 $219,946 $226,544 $233,340 $240,341 $247,551 Franchise Tax 3.0% $402,653 $414,733 $427,175 $439,990 $453,189 $466,785 $480,789 Conservation Programs 3.0% $114,500 $117,935 $121,473 $125,117 $128,871 $132,737 $136,719 TAP Water [2) 3.5% $44,000 $48,000 $50,000 $52,000 $54,000 $56,000 $58,000 Subtotal Operating Expenses $5,002,770 $5,109,906 $5,281,831 $5,459,577 $5,643,347 $5,833,351 $6,029,809 Debt Service Existing Debt (City bonds) $453,291 $451,941 $450,491 $453,891 $457,091 $450,191 $448,241 Existing Debt Medford Water Commission $163,768 $163,768 $163,768 $163,768 $163,768 $163,768 $163,768 Existing Debt (IFA note) $0 $0 $157,000 $103,000 $103,000 $103,000 $103,000 New City Debt [3] Table A-6 $180,000 $180,000 $180,000 $180,000 $180,000 $180,000 New SRF Debt (New Treatment Plan Table A-7 $20,867 $139,079 $260,836 $1,000,200 $1,000,200 $1,000,200 Subtotal Debt Service $617,059 $816,576 $1,090,338 $1,161,495 $1,904,059 $1,897,159 $1,895,209 Capital Outlay Cash Funded $402,240 $0 $0 $0 $0 $0 $0 System Rehabilitation $0 $981,448 $1,137,677 $1,161,400 $1,179,117 $1,194,026 $1,195,313 Operating Reserves $0 $380,000 $70,000 $50,000 ($630,000) ($550,000) ($470,000) Subtotal Annual Cost $6,022,069 $7,287,931 $7,579,846 $7,832,472 $8,096,523 $8,374,537 $8,650,331 Credits New Service Installation 2.0% $114,800 $117,096 $119,438 $121,827 $124,263 $126,748 $129,283 Intergovernmental Revenue constant $14,000 $14,000 $14,000 $14,000 $14,000 $14,000 $14,000 Interest on Investments constant $20,400 $20,400 $20,400 $20,400 $20,400 $20,400 $20,400 Miscellaneous 2.0% $12,000 $12,240 $12,485 $12,734 $12,989 $13,249 $13,514 TID Charges Table 14 $74,988 $79,405 $96,511 $113,641 $130,797 $147,980 $165,190 Subtotal Credits $236,188 $243,141 $262,833 $282,602 $302,449 $322,377 $342,387 REVENUE REQUIREMENT $5,785,881 $7,044,790 $7,317,013 $7,549,870 $7,794,073 $8,052,160 $8,307,944 base Change from Base Year Water Sales $6,521,112 $523,678 $795,901 $1,028,758 $1,272,961 $1,531,048 $1,786,832 Annual Change $523,678 $272,223 $232,857 $244,204 $258,086 $255,784 Percentage Change 8% 4% 3% 3% 3% 3% Source: HEC. rev req [1] Maintenance costs reduced in year 1 by $63,000 which is the average amount spent on meter replacement in the City each year currently. Meter replacement costs will be recouped in the new meter replacement monthly charges. [2] Assumes 2.13 mgd for 31 days/year. In 2015 the cost is 68 cents per 1,000 gallons. The cost is assumed to increase to 75 cents per 1,000 gallons. in 2016 and thereafter 3.5% per year in the model. [3] Assumes payments start the following year. The revenue requirement is projected to increase to $7.04 million in fiscal year 2016-17, and increases each year thereafter. The revenue requirement is projected to continue to increase to account for inflation, to fund capital expenditures, and to account for new debt. Note that the revenue requirement is the amount that must be collected from municipal water customers; it excludes revenues from water sales to City TO customers. The percentage increases in revenue requirement match the 2012 Water Master Plan for the first three fiscal years. City of Ashland Water Rates Cost of Service Study November 3.o. 203.5 DRAFT Page 24 4.2 TALENT IRRIGATION DISTRICT UNTREATED IRRIGATION SERVICE Total annual costs of the water system to municipal users is reduced by credits, including credit for water sales to TID untreated water customers. In fiscal year 2015-16 TID charges are budgeted at $75,000. This Study calculates the costs of the TID system at $143,360 for fiscal year 2015-16. Table A-10 shows annual costs comprise contracted water costs, city canal maintenance and depreciation costs, as well as staffing and materials costs. Table A-11 provides a supporting cost estimate for annual maintenance costs. TID irrigation water is supplied under a 1924, 1926 and 1935 contract between the City and TID. This contract allows for use of 769 acre-feet for both untreated irrigation and treated domestic water supplies. Use of TID deliveries by year since 2004 is shown in Table A-12. During drought years the contract may be reduced as it was in 2013 and 2014. The City also has a contract with TID for 600 acre-feet per year. The 600-acre feet contract is for municipal customers only. The City diverts TID water to the Ashland Creek water treatment plant where it is treated and then enters the municipal water distribution system. In drought years the City may also divert a portion or all the 769 acre-feet contract water to the treatment plant. Under this circumstance only the `front side' canal users, located before the diversion to the treatment plant may receive water. On average TID customers use 87% of the 769 acre-feet of water rights. This percentage is applied to the TID cost calculations. Table 13 shows allocation of TID system costs of $145,360 between City TID customers (Southern Oregon University or SOU which pays a metered rate and other irrigators who pay an unmetered rate per acre of land or portion of an acre of land). Table 13 Calculated TID Use Rates Calculation of TID Item Current Rates User Cost Total TID Annual Cost a $143,360 COST PER CUBIC FOOT b $0.0049 SOU Costs [1] c = 7,101,690*b $34,807 All Other Irrigators Costs d = a-c $108,553 All Other Irrigators Acres e 174 All Other Irrigators Cost per Acre f = We $623.87 Source: City of Ashland and HEC. tid rates [1] Excludes meter replacement fee. Cost share based on TID water use of: Total Cubic Feet 29,249,837 SOU Cubic Feet 7,101,690 All Other Irrigators Cubic Feet 22,148,147 City of Ashland Water Rates Cost of Service Study November io. 2015 DRAFT Page 25 City of Ashland Ordinance 1288 provides for metered and unmetered TID irrigation water rates. The ordinance requires that rates shall be self-supporting so far as is practicable, so that domestic water users do not subsidize the cost of the TID irrigation water system; however, the ordinance also states that the primary use of the City's TID water is for domestic purposes in water-short years. In addition, TID water will be available for irrigation purposes at rates less than those in effect for domestic water. TID revenues are an offset in the revenue requirement estimate. Table 14 shows the calculated offset to the revenue requirement over the Study period. Although it would be best to move TID unmetered customers to full cost of service in 2016, this would be a large rate increase; this Study phases in the increase so that full cost of service is not paid by the TID unmetered customers until fiscal year 2021-22. The calculated rate for metered customers is less than the current rate. Table 14 TID Revenue Offset 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 Costs Assumption Base 1 2 3 4 5 6 Contracted Water 2.0% $51,480 $52,510 $53,560 $54,631 $55,724 $56,838 $57,975 City Maintenance Costs 3.0% $46,100 $47,483 $48,907 $50,375 $51,886 $53,443 $55,046 Canal Depreciation constant $22,980 $22,980 $22,980 $22,980 $22,980 $22,980 $22,980 TID Billing Costs (personnel) 4.0% $22,800 $23,712 $24,660 $25,647 $26,673 $27,740 $28,849 Total Annual Cost (rounded) $143,360 $146,685 $150,108 $153,633 $157,262 $161,000 $164,850 Annual Percentage Increase 2.3% 2.3% 2.3% 2.4% 2.4% 2.4% TID Annual Cost Paid by SOU Base Meter Charge [1] $6,347 $0 $0 $0 $0 $0 $0 Meter Replacement Fee [2] $0 $291 $300 $310 $319 $329 $340 Metered Water Use [3] $39,059 $35,614 $36,445 $37,301 $38,182 $39,090 $40,025 Total SOU TID Costs $45,406 $35,905 $36,746 $37,611 $38,502 $39,419 $40,364 All Other TID Users Costs Flat Fee for Use per Acre [4] $29,582 $43,500 $59,765 $76,030 $92,295 $108,560 $124,825 TID Annual Cost Paid by Irrigators $29,582 $43,500 $59,765 $76,030 $92,295 $108,560 $124,825 Total Estimated TID Customer Payments Meter Fees $6,347 $291 $300 $310 $319 $329 $340 Use Fees $68,641 $79,114 $96,210 $113,331 $130,478 $147,650 $164,850 Total Fees $74,988 $79,405 $96,511 $113,641 $130,797 $147,980 $165,190 Source: City of Ashland and HEC. nd offset [1] Base Meter Charges (current year) $6,347.04 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 [2] SOU Meter Replacement Cost - 6" $0.00 $291.31 $300.39 $309.76 $319.42 $329.38 $339.65 [3], [4] Calculated Rates from Table 12 Calculated Rate per Metered Connection $0.0055 $0.0050 $0.0051 $0.0053 $0.0054 $0.0055 $0.0056 Calculated Rate per Acre $170.01 $63834 $653.23 $668.57 $684.37 $700.63 $717.39 Implemented Rate per Acre $170.01 $250.00 $343.48 $436.95 $530.43 $623.91 $717.39 4.3 METER REPLACEMENT PROGRAM City crews replace older water meters that are near the end of their useful life, or which are inaccurately measuring water flow. The City has not been collecting funds to routinely replace meters. The cost to replace meters by size of meter was used to determine the annual cost of a City of Ashland Water Rates Cost of Service Study November ao. 2o15 DRAFT Page 26 meter replacement program (it is estimated that meters will have to be replaced every 20 years). Meter replacement program costs will increase as the number of City water meters increases and as the cost of installation increases. It is estimated that the meter replacement program will increase annually from approximately $138,000 in 2015 as shown in Table 15. Table 15 Estimated Meter Replacement Fee Program Costs Fiscal Year Ending _ 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 Item Assumption Base 1 2 3 4 5 6 Projected Growth in Water Meters 0.59% 0.59% 0.59% 0.59% 0.591o 0.59% Projected City Water Meters 8,819 8,871 8,923 8,976 9,029 9,082 9,136 Estimated Replacement Cost per Meter [1] 3.1% $312 $322 $332 $342 $353 $364 $376 Percentage of Meters Replaced 20-yr cycle 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% Estimated Meter Replacement Program Cost $137,719 $142,851 $148,169 $153,697 $159,426 $165,363 $171,533 Source: City of Ashland and HEC. meter cost [1] Weighted average cost of meters. Assumptions for meter costs in 2015 are shown in Table A-13. Meter costs and fees are increased 3.12% per year per the historical 20-year average annual ENR CCI increase previously described. Table 16 shows the calculated meter replacement fees. Since the revenues and costs of the meter replacement program are assumed to be equal each year, the program is not included in the revenue requirement calculation. Table 16 Calculated Meter Replacement Fees Effective July 1 Meter 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 Size Base 1 2 3 4 5 6 Annual escalator 3.1% 3/4" $1.15 $1.18 $1.22 $1.26 $1.30 $1.34 $1.38 1" $1.72 $1.77 $1.83 $1.88 $1.94 $2.00 $2.07 1-1/2" $2.71 $2.79 $2.88 $2.97 $3.06 $3.16 $3.26 2" $3.65 $3.76 $3.88 $4.00 $4.12 $4.25 $4.38 3" $7.81 $8.06 $8.31 $8.57 $8.83 $9.11 $9.39 4" $16.98 $17.51 $18.05 $18.62 $19.20 $19.80 $20.41 6" $23.54 $24.28 $25.03 $25.81 $26.62 $27.45 $28.30 8" $28.39 $29.27 $30.18 $31.12 $32.10 $33.10 $34.13 Source: HEC. meterfee City of Ashland Water Rates Cost of Service Study November 10. 2015 DRAFT Page 27 Section 5: COST OF SERVICE ANALYSIS 5.1 FUNCTIONAL COST ALLOCATION City water system costs were classified into different functions: customer costs, meter and services costs, capacity costs, and commodity costs. Customer costs, meter and services costs, and a portion of capacity costs are fixed costs. Fixed costs generally consist of costs that a utility incurs to serve customers irrespective of the amount or rate of water they use.' A portion of capacity costs and all commodity costs are variable costs. Variable costs are those that change in total as the volume of activity changes, as measured in a specific time period. These commonly include the costs of chemicals used in the treatment process, energy related to pumping for transmission and distribution, and purchased water. Table A-14 shows how the expenses in the City's budget were allocated to the different functions of water service. Expense functions were allocated based on one of five different methodologies. These methodologies include: 1. Plant In Service. Plant in service allocation is shown in Table A-15. Plant in service costs include the original cost of current water system assets. Total cost is allocated to customers, meters and services, capacity, and commodity. 2. Ratio of Average to Peak Month. The calculation of peak to average month flows is shown in Table 3. Expenses are allocated 55% to customers and 45% to use functions using this methodology. 3. Utilities. All utilities costs (electricity) are allocated 100% to commodity because they are directly affected by the amount of water delivered. TAP water is also allocated 100% to commodity. 4. Customers. Central service costs and costs such as office supplies, telephones, computers, postage and insurance are allocated 100% to customer costs. These costs are not affected by the amount of water delivered. 5. Average of Classified Costs. Many expenses are allocated to multiple functions of water service because they do not directly relate to capacity of the water system, or quantity of water deliveries. These expenses are allocated among the customer, meters and services, capacity, and commodity functions based on the combined percentage allocation of all other classified costs. Examples of expenses allocated using this methodology include salaries and other personnel costs, professional services, and training costs. Customer, meters and services and a portion of capacity costs are captured in flat monthly fees. Commodity costs and a portion of capacity costs are captured through variable water service fees (use fees). Capacity costs were split between flat monthly fees and use fees to reflect that some capacity or infrastructure costs must be recovered regardless of the amount of water used.' 'M1 Manual, pp. 137-138. e M1 Manual page 139, fixed charges. City of Ashland Water Rates Cost of Service Study November to. 2015 DRAFT Page 28 The portion of capacity costs allocated to the flat monthly fees is referred to as a readiness to serve charge. The allocation of revenue requirement using the functional allocation is shown in Table 17. Table 17 Allocation of Revenue Requirement to Cost Functions Functional Costs Allocation 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 Table A-14 Total Revenue Requirement $6,452,740 $7,044,790 $7,317,013 $7,549,870 $7,794,073 $8,052,160 $8,307,944 Customer 18% $1,161,493 $1,268,062 $1,317,062 $1,358,977 $1,402,933 $1,449,389 $1,495,430 Meters & Services 5% $322,637 $352,239 $365,851 $377,493 $389,704 $402,608 $415,397 Capacity (in flat charge) [1] 19% $1,226,021 $1,338,510 $1,390,232 $1,434,475 $1,480,874 $1,529,910 $1,578,509 Capacity (in use charge) 31% $2,000,349 $2,183,885 $2,268,274 $2,340,460 $2,416,163 $2,496,169 $2,575,463 Commodity 27% $1,742,240 $1,902,093 $1,975,593 $2,038,465 $2,104,400 $2,174,083 $2,243,145 Total 100% $6,452,740 $7,044,790 $7,317,013 $7,549,870 $7,794,073 $8,052,160 $8,307,944 Flat Charges [2] 42% $2,710,151 $2,958,812 $3,073,145 $3,170,945 $3,273,511 53,381,907 $3,489,336 Source: HEC. -t @110C [1] The readiness to serve charge. [2] Currently the City collects 45% of water charges in flat monthly charges. 5.2 RATE DESIGN Allocation of costs to customer categories is based on the Commodity-Demand method described in the M1 Manual Chapter 111.2. Once the revenue requirement has been projected and the functional allocation analysis performed the City has to arrive at a rate design (how the revenue requirement will be collected) with knowledge of how the City's water system costs are structured. In determining an appropriate rate design for Ashland, this Study considered the following key objectives: • Rates must be capable of generating sufficient revenues to meet all annual financial obligations of the water enterprise fund; • The rate structure should encourage water efficiency; • Change to the rate structure must be administratively feasible (compatible with the existing billing system and straightforward to explain to customers); • The rate structure should be as representative of local customer water use patterns as possible; and • Revised rates must be supportive of City goals, keeping within affordability guidelines. With these objectives in mind, the differential in costs by pumping zone was analyzed. The analysis did not show any significant differences in costs by pumping zone; this potential change to the rate design was discarded. City of Ashland Water Rates Cost of Service Study November 10. 2015 DRAFT Page 29 Flat Monthly Costs. The customer, meters and services and readiness to serve costs should all be collected in flat monthly fees. Options for collection include combining all costs into one service charge based on meter size (as is currently done) or separating customer costs from capacity costs and collecting customer costs based on the number of accounts, rather than meter size. While both approaches are common, this Study recommends a customer charge and a service charge because the City has high central service costs associated with the water system. Central services costs are a direct function of the number of water accounts served, not capacity of the system. This Study recommends implementation of monthly customer charges as shown in Table 18. If a water account has multiple meters associated with it, the account would only pay the customer charge once. In contrast, capacity costs are collected for each meter with the potential to use the capacity of the system. Table 18 Calculation of Customer Service Costs per Account Allocated To 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 Projected Annual Growth Rate 0.59% 0.59% 0.59% 0.59% 0.59% 0.59% Revenue Requirement Allocated $1,161,493 $1,268,062 $1,317,062 $1,358,977 $1,402,933 $1,449,389 $1,495,430 Total City Water Accounts 8,980 9,033 9,087 9,140 9,194 9,249 9,303 Customer Cost per Bill per Year $129.34 $140.38 $144.95 $148.68 $152.59 $156.71 $160.74 Cost per Month $10.78 $11.70 $12.08 $12.39 $12.72 $13.06 $13.40 Source: City of Ashland and HEC. custbill Table 19 on the next page shows allocation of meters and services and the readiness to serve costs. The calculation is based on total number of billable meter equivalents and the meter ratios of meter sizes to a 3/4" meter. Meter ratios reflect the difference in water volume that can be taken through the meter. Calculation of equivalent meter ratios is shown in Tables 20 and A-16. In addition to the customer and service charges calculated from the revenue requirement projection and allocation, the new rate structure adds the meter replacement fee (see Section 4) to the service charge. Variable (Use) Costs. Remaining capacity costs and commodity costs are recovered from customers through use charges applied to actual water consumption as measured through water meters. The City currently collects 55% of costs through use charges. This Study calculates rates with 58% of costs collected in use charges so that use charges continue to send a water conservation signal to customers. There are many ways that the City could collect use charges. This Study selected a rate structure based on City goals and customer water use patterns. City of Ashland Water Rates Cost of Service Study November 10. 2015 DRAFT Page 30 Table 19 Calculation of Monthly Service Charge by Meter Size 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 Base 1 2 3 4 5 6 Allocated Costs [1] $1,548,658 $1,690,749 $1,756,083 $1,811,969 $1,870,578 $1,932,518 $1,993,906 Est. Billable Meter Equivalents 11,184 11,250 11,317 11,384 11,451 11,519 11,587 Meter Meter Size Ratio Monthly Service Charge per Meter 3/4" 1.00 $11.54 $12.52 $12.93 $13.26 $13.61 $13.98 $14.34 1" 1.00 $11.54 $12.52 $12.93 $13.26 $13.61 $13.98 $14.34 1.5" 5.00 $57.70 $62.62 $64.66 $66.32 $68.07 $69.91 $71.70 2" 8.00 $92.31 $100.19 $103.45 $106.12 $108.90 $111.85 $114.72 3" 16.00 $184.63 $200.38 $206.90 $212.23 $217.81 $223.70 $229.45 4" 25.00 $288.48 $313.10 $323.28 $331.61 $340.33 $349.53 $358.51 6" 50.00 $576.96 $626.20 $646.57 $663.22 $680.65 $699.06 $717.02 8" 80.00 $923.14 $1,001.91 $1,034.51 $1,061.16 $1,089.04 $1,118.49 $1,147.24 Source: City of Ashland and HEC. base charge [1] Includes meter and services costs and portion of capacity costs that represent the readiness to serve. Table 20 Estimated Meter Equivalent Units Number of Ratio to 3/4" Equivalent Meter Size Meters Service Meter Units 3/4" 7,814 1.0 7,814 1" 509 1.0 509 1.5" 167 5.0 835 2" 145 8.0 1,160 3" 21 16.0 336 4" 14 25.0 350 6" 2 50.0 100 8" 1 80.0 80 Total 8,673 11,184 Source: City of Ashland, and HEC. m equiv This Study proposes to keep the City's current increasing block rate structure for most customers for use charges. Properly designed increasing block rates recover class-specific costs of service while sending a more conservation-oriented price signal to that class.' The M1 7 M1 Manual page 111. City of Ashland Water Rates Cost of Service Study November io.2oi5 DRAFT Page 31 Manual page 116 also summarizes that "increasing block rate structure have found growing use in areas experiencing growth in water demand that is reaching the safe yield or capacity of the system, where there has been an impetus for improved efficiency in water use." Setting appropriate increasing blocks is determined by examining customer characteristics. 5.2.1. Customer Characteristics Table 21 on the following page shows the customer characteristics of residential, non- residential, and irrigation customers. Average monthly use, monthly winter average and monthly summer average use as well as average annual use by customer type are calculated using 2014 meter reads. In the summer months all residential customers and commercial customers with meters 2" or less use approximately twice the amount of water that they do during the winter months. Larger commercial customers and institutional customers use about 1.5 times the amount of water during the summer months. The summer to average month ratio is close to one for institutional customers and maximum month usage is in May, before the peak use for the water system as a whole. Institutional characteristics suggest one rate for all water use would be appropriate. Irrigation customers display very different usage to the other customer types. Only about 10% of irrigation customers take water throughout the year. Figure 8 shows customer usage patterns by customer type throughout the year. The peaking patterns of residential and irrigation customers is pronounced compared with the other customer types. These customers also comprise 81% of total water use (see Figure 4) therefore a rate structure that encourages efficient use of water during the summer months is very important. Figure 8 Monthly Water Use by Customer Type 12,000,000 10,000,000 8,000,000 v 6,000,000 U U 4,000,000 - 2,000,000 t cA cr aJ ~z Ja 5~ e~ et e~ e~ Ja Ja a~ QQ ~J ~ JgoJ , ono ,~o a 'ao Qe~ P Q~e OG ore eoa~ Commercial --Institutional Residential Irrigation City of Ash land Water Rates Cost of Service Study November 10. 2015 DRAFT Page 32 Table 21 Customer Usage Characteristics +o-~ ~ ~ in ct m ti v v o o E oc M > un Q 0 v o N n m y ~ N N N ti ti M £ r6 1-I p 3 ~ N i L Ln rl O CO O co Y L N O ro M O E O C ry Ln M M m M N 00 co E j r1 N Cf r~ o0 :3 1H C VI Q w Ln O O 1:3" Lo r, r6 N O O oo Uo O N ri ° Lry Qr 'U h Ln l-r ~D -i r0 A oo QD UD rn UD O C N N O to M M Q N m oo n Ol Qi Y N N ~ V1 N ~ N a o O O O Y D n m E C y Q Q a Q Q y EC y N Q G C ° N N j r° 0e I a a` a m o oQ1o It LNn Ln N to °l Ln to v j C c-I N Ln M O Q ~ j a-i c-I U (U T Cr N ru N't O N J- n n r, N oo d' C tail M r, U) N h N O ci H Lo I'D C T uD Ln co O n r0 L N M O oo .1 M Ln N Ln Ln n m lD r o 5 Ln .--i ti 00 o m m o m m ° co D m lD O O v Lo ro r, Ln LD o 3 0 0) E LD M O rn n m LLn o Lr) 41 W E Z D EE o c w o c a o y oA = ~ ~ c r6 c ~ o G E U -O O s v ra 61 _ N uo p_ N o m CU V N :E o co 76 Y bA ~ u N F ~ d U L p 3 y a+ a, v c y x E o v v v E E o f o 0 01p s E E I v a 3 a in o U° U ~ o a U G' Z F i° City of Ashland Water Rates Cost of Service Study November io. 2015 DRAFT Page 33 Use by customer type by month is further examined by water meter size in Table A-17. The table shows that use is driven by customer category and by meter size. Based on use characteristics by customer type the proposed rate structure includes five customer categories, designed to capture customer use patterns. The customer categories include residential, commercial 2" or smaller, commercial greater than 2", institutional, and irrigation. Bill Tabulation. Bill tabulation is a tool used to analyze customer use data to determine appropriate rate blocks. Bill tabulations and analysis for residential customers are shown in Tables A-18 through A-20. On an annual basis, residential customers take 36% of water in tier 1, 37% in tier 2, 19% in tier 3, 4% in tier 4 and 3% in tier 5 (summer months only). Residential use by tier is illustrated in Figure 9. This Study recommends keeping the current tiers for residential customers. As is desired, the current rate structure is capturing the majority of water use in tiers 1, 2, and 3. Only excessive water users (the top 7% of water) are billed in tiers 4 and 5. Tier 5 only applies during the summer (June through Septembers. Figure 9 Residential Water Use by Tier 60% [5 Tier 1 Tier 2 Tier 3 s0% 49% Tier 4 Tier 5 40% 08% 37% 36%37% 30% 25% 28% 19% 20% 10% 10% 6% 5% 4% ° 3% 3 I'-- y 0% Residential - Winter Residential - Summer Residential - Annual Non-residential bill tabulation under the current rate structure is shown in Table A-21. The table shows large discrepancies in water billed under tiers 1 and 2 among the different non- residential customer types (irrigation, commercial and institutional) as illustrated in Figure 10. This Study recommends only charging commercial customers tier 1 and tier 2 water 8 Tier 1 is intended to capture typical customer monthly indoor water usage. Tier 2 is intended to capture typical customer monthly indoor usage and some outdoor water usage. Tier 3 is intended to apply to customers using more than the typical customer does in an average water use month. City of Ash I and Water Rates Cost of Service Study November io.2oi5 DRAFT Page34 rates. The proposed tiers result in the bill tabulation shown in Table A-22. As a result of changing the commercial tiers according to meter size (less than 2" and 2" and larger), 60- 65% of water is billed in tier 1, providing consistency among different commercial users. This is shown in Figure 11. The current rate structure and proposed rate structure are compared in Tables A-23 and A-24. Figure 10 Non-Residential Water Use by Tier (current rate structure) 120% Tier 1 99% 100% FAJier 2 85% 80% 60% 60% 40% 40% 20% 15% 1% 0% Commercial Institutional Irrigation Figure 11 Commercial Water Use by Tier (proposed rate structure) 70% 65% 60% 61% Tier 1 Tier 2 j 50% 39% 40% 35% 30% i 20% 10% 0% Commercial <2" Commercial 2+" City of Ashland Water Rates Cost of Service Study November 10. 2015 DRAFT Page35 S.3 WATER DEMAND PROJECTION Historical water use by customer type is shown in Table A-25. Projected water demand is shown in Table 22. Total number of water users by customer category is projected using an average annual growth rate of 0.59%. The growth rate is based on the average of the State certified population estimates historical growth rate and the City's Comprehensive Plan estimated growth rate. Projected water demand is based on average annual use by customer category for calendar year 2014. Table 22 Projected Water Demand Customer 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 Base 1 2 3 4 5 6 Residential Figures in Cubic Feet Single Family 62,048,584 62,478,043 62,795,100 63,136,013 63,477,067 63,817,430 64,164,087 Multi-Family 20,299,186 20,447,873 20,553,934 20,666,854 20,779,908 20,892,863 21,007,699 Subtotal Residential 82,347,770 82,925,916 83,349,034 83,802,867 84,256,975 84,710,293 85,171,786 Non-Residential Commercial <2" meter 10,276,017 10,480,389 10,530,487 10,585,865 10,641,147 10,696,144 10,752,437 Commercial 2"+ meter 7,446,478 7,594,576 7,630,879 7,671,009 7,711,068 7,750,922 7,791,714 Institutional 6,197,355 6,283,193 6,316,663 6,351,876 6,387,165 6,422,472 6,458,288 Irrigation 15,495, 243 14,807, 244 14, 840,710 14, 897,152 14, 952,051 1S,004,554 15,061, 816 Subtotal Non-Residential 39,415,093 39,165,402 39,318,739 39,505,902 39,691,431 39,874,092 40,064,256 Total Billable 121,762,863 122,091,318 122,667,773 123,308,769 123,948,406 124,584,385 125,236,042 Tracking Water 1,254,006 1,261,422 1,268,881 1,276,385 1,283,932 1,291,525 1,299,162 Unaccounted Water 5,535,759 5,550,873 5,577,149 5,606,332 5,635,455 5,664,416 5,694,084 Estimated Water Produced 128,552,628 128,903,613 129,513,804 130,191,485 130,867,794 131,540,326 132,229,288 Source: City of Ashland and HEC. demand Tables A-26 and A-27 show the water demand calculations. Projected water demand accounts for decreased use of water due to reaction to increased water prices. This effect is called 'price elasticity.' Price elasticity measures the change in water use resulting from a price increase, all other things held equal. Price elasticity factors vary by location, pricing structure of both water and sewer rates, time of year, and customer type. Price elasticity is only applied to real prices increases; that is the price increase adjusted for inflation, to keep the effect of the price of water independent of total cost increases. For example, if the price increase necessary to meet the revenue requirement is 10.0% and inflation is 2.0%, any change in water demand as a result of a price increase is calculated on an 8.0% increase. With a negative price elasticity of 0.1, a single family residential customer is expected to decrease water use by 1.0% when price increases 10.0%. Irrigation customers are anticipated to react the most to water price increases. City of Ashland Water Rates Cost of Service Study November 10. 2015 DRAFT Page 36 Table A-28 compares the water demand projection in the Study to water demand projections in the 2012 Water Master Plan. It also shows derivation of the average annual growth rate used in the Study. This cost of service water rate study projects lower demands than the 2012 Water Master Plan; however, this is considered reasonable for purposes of the Study. As described in Section 1 of the Study the purpose of the Water Master Plan is to plan for maximum future use whereas the purpose of the Study is to plan for minimum future use. 5.4 CALCULATED RATES The flat monthly charges were calculated in section 5.2. Use charges are calculated based on the proposed new customer categories, rate structure (tiers), estimated water use by tier, and total projected water demand (section 5.3). Total costs allocated to use charges equals capacity costs allocated to use charges and commodity costs. The allocation of these costs by customer type is shown in Table A-29. A support table to the allocation of commodity costs is shown in Table A-30. Table 23 on the next page shows the calculation of usage charges. The cost ratios between residential tier 1 and tier 2 is 0.80. Between tier 2 and tier 3 the ratio is 1.35, between tier 3 and tier 4 it is 1.75 and between tier 4 and tier 5 it is 2.25. As an example, tier 3 water is 35% more expensive than tier 2 water. Commercial customers are charged the tier 2 and tier 3 rates. On-peak and off-peak (seasonal) rates were calculated for commercial and institutional irrigation customers based on historical usage as shown in Table A-31. On-peak rates would be charged June through September. Institutional customers would be charged one rate for all consumption. Calculated water rates through the Study period are shown in Table 24 on page 39. City of Ashland Water Rates Cost of Service Study November 10. 2015 DRAFT Page 37 Table 23 Calculated Use Charges per Cubic Foot Item 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 1 2 3 4 5 6 Allocated Cost $4,085,978 $4,243,867 $4,378,924 $4,520,562 $4,670,253 $4,818,607 Total Consumption 122,091,318 122,667,773 123,308,769 123,948,406 124,584,385 125,236,042 Cost per Cubic Foot [1] $0.0335 $0.0346 $0.0355 $0.0365 $0.0375 $0.0385 Institutional Costs Insitutional Cost $183,295 $190,377 $196,436 $202,790 $209,505 $216,160 Insitutional Use 6,283,193 6,316,663 6,351,876 6,387,165 6,422,472 6,458,288 Institutional Cost per Cu. Ft. $0.0292 $0.0301 $0.0309 $0.0317 $0.0326 $0.0335 Residential & Commercial Costs Residential Cost $2,803,572 $2,911,907 $3,004,576 $3,101,760 $3,204,469 $3,306,262 Commercial Cost $500,308 $519,641 $536,178 $553,521 $571,849 $590,015 Total Resid. & Comm'I Costs $3,303,880 $3,431,548 $3,540,754 $3,655,281 $3,776,319 $3,896,277 Estimated Usage by Customer Group by Tier Tier 1 (Residential) 30,189,882 30,343,922 30,509,144 30,674,465 30,839,500 31,007,510 Tier 2 (Residential & Comm'I) 42,264,756 42,476,761 42,705,930 42,935,098 43,163,663 43,396,679 Tier 3 (Residential & Comm'I) 22,729,963 22,843,761 22,966,879 23,089,989 23,212,763 23,337,947 Tier 4 (Residential) 3,701,390 3,720,276 3,740,533 3,760,802 3,781,036 3,801,635 Tier 5 (Residential June - Sept only) 2,114,890 2,125,681 2,137,255 2,148,836 2,160,397 2,172,167 Total Use Residential & Comm'I 101,000,881 101,510,400 102,059,741 102,609,191 103,157,359 103,715,937 Resid. & Comm'I Cost per Cu. Ft. Ratio Tier 1 (Residential) 0.80 $0.0244 $0.0252 $0.0259 $0.0266 $0.0273 $0.0280 Tier 2 (Residential & Comm'I) 1.00 $0.0305 $0.0315 $0.0323 $0.0332 $0.0341 $0.0350 Tier 3 (Residential & Comm'I) 1.35 $0.0412 $0.0425 $0.0437 $0.0448 $0.0461 $0.0473 Tier 4 (Residential) 1.75 $0.0534 $0.0552 $0.0566 $0.0581 $0.0597 $0.0613 Tier 5 (Residential June - Sept only) 2.25 $0.0686 $0.0709 $0.0728 $0.0747 $0.0768 $0.0788 Irrigation Costs [2] Irrigation Cost $598,803 $621,942 $641,735 $662,492 $684,429 $706,170 Irrigation Off-Peak Use 27% 4,054,754 4,063,918 4,079,374 4,094,407 4,108,785 4,124,465 Irrigation Summer (Peak) Use 73% 10,752,490 10,776,792 10,817,778 10,857,644 10,895,769 10,937,351 Off-Peak Cost per Cu. Ft. $0.0321 $0.0333 $0.0342 $0.0352 $0.0362 $0.0372 On-Peak Cost per Cu. Ft. $0.0436 $0.0452 $0.0464 $0.0478 $0.0492 $0.0505 Source: HEC. use charge [1] Bulk water rate is the average cost of water collected in use charge for all customer types. [2] Commercial and Institutional Irrigation services. City of Ashland Water Rates Cost of Service Study November 10. 2015 DRAFT Page 38 Table 24 Summary of Calculated Water Rates Rates Effective on July 1 Bills Charges Current 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 Monthly Charges per Bill) Customer Charge $0.00 $11.70 $12.08 $12.39 $12.72 $13.06 $13.40 Service Charge Monthly Charges per Meter Size) 3/4" and Fire Guards $23.50 $13.71 $14.15 $14.52 $14.91 $15.32 $15.72 1" $46.99 $14.30 $14.76 $15.15 $15.56 $15.99 $16.41 1.5" $66.99 $65.41 $67.54 $69.29 $71.13 $73.06 $74.96 2" $88.24 $103.95 $107.33 $110.11 $113.03 $116.10 $119.11. 3" $184.50 $208.44 $215.21 $220.80 $226.64 $232.81 $238.84 4" $282.07 $330.61 $341.34 $350.23 $359.52 $369.33 $378.93 6" $528.92 $650.47 $671.60 $689.04 $707.27 $726.50 $745.33 8" $881.49 $1,031.18 $1,064.70 $1,092.28 $1,121.14 $1,151.59 $1,181.36 Use Charge $ per cubic foot Bulk Water [11 $0.0335 $0.0346 $0.0355 $0.0365 $0.0375 $0.0385 Institutional Water [1] $0.0292 $0.0301 $0.0309 $0.0317 $0.0326 $0.0335 Residential [2] Tier 1 $0.0243 $0.0244 $0.0252 $0.0259 $0.0266 $0.0273 $0.0280 Tier 2 $0.0299 $0.0305 $0.0315 $0.0323 $0.0332 $0.0341 $0.0350 Tier 3 $0.0400 $0.0412 $0.0425 $0.0437 $0.0448 $0.0461 $0.0473 Tier 4 $0.0517 $0.0534 $0.0552 $0.0566 $0.0581 $0.0597 $0.0613 Tier 5 (Jun-Sep only) $0.0673 $0.0686 $0.0709 $0.0728 $0.0747 $0.0768 $0.0788 Commercial [3] Tier 1 $0.0343 $0.0305 $0.0315 $0.0323 $0.0332 $0.0341 $0.0350 Tier 2 $0.0353 $0.0412 $0.0425 $0.0437 $0.0448 $0.0461 $0.0473 Irrigation [4] Off-Peak (Oct - May) [1] $0.0321 $0.0333 $0.0342 $0.0352 $0.0362 $0.0372 On-Peak (Jun - Sep) [1] $0.0436 $0.0452 $0.0464 $0.0478 $0.0492 $0.0505 Source: HEC. proj rates [1] Currently charged the same as commercial customers. [2] Tiers do not change under new rate structure. They are: Tier 1- up to 300 cf, Tier 2 - 301-1,000 cf, Tier 3 - 1,001-2,500 cf, Tier 4 - 2,501-3,600 cf, Tier 5 - greater than 3,600 cf. Residential irrigation services currently charged the same as residential domestic services. Under the new rate structure irrigation use would be combined with domestic use. [3] Commercial current tiers are <50,000 cf and >50,000 cf. New tiers are <2,500 cf and >2,500 cf for commercial customers with meters <2" and <15,000 and >15,000 for larger meters. [4] Seasonal rates for commercial and institutional irrigation meters. City of Ashland Water Rates Cost of Service Study November 10. 2015 DRAFT Page 39 S.4-1. Cost of Service Redistribution of Costs The cost of service analysis shows that currently there is subsidization of rates among customer classes. Table 25 shows the reallocation of costs as a result of the cost of service analysis. Cost reallocation is also illustrated in Figure 12. Detailed calculations of revenues under the new rate structure are provided in Table A-32. Table 25 Cost Allocation by Customer Type Customer Current (per Budget) New (see Table A-32) Rates Model Type Total Share of Total Share of Cost Redistribution Total Total Residential $4,621,000 70% $4,589,738 70% ($31,262) Non-Residential Commercial $938,800 14% $811,812 12% ($126,988) Institutional $278,900 4% $269,107 4% ($9,793) Fire Guards $25,500 0% $31,334 0% $5,834 Irrigation $656,912 10% $750,749 11% $93,837 Subtotal $6,521,112 99% $6,452,740 98% ($68,372) TID Water $74,988 1% $143,360 2% $68,372 Total FY 2015-16 $6,596,100 100% $6,596,100 100% $0 Source: City of Ashland and HEC. cos Figure 12 Redistribution of Costs to Customer Types Fire Guards TID Water Institutional Irrigation Commercial Residential 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% Residential Commercial Irrigation Institutional TID Water Fire Guards New 69.6% 12.3% 11.4% 4.1% 2.2% 0.5% Current 70.1% 14.2% 10.0% 4.2% 1.1% 0.4% City of Ashland Water Rates Cost of Service Study November 10. 2015 DRAFT Page 40 5.5 PROJECTED CASH FLOW AND FUND BALANCE Table 26 projects cash flow through fiscal year 2021-22 for the operating fund. With adoption of the calculated rates it is anticipated that the City will be able to meet all water enterprise fund obligations, including existing and potential debt service coverage requirements, and achieve a targeted reserve of 20% of annual revenues in every year. Table 26 Projected Operating Fund Cash Flow Revenuesand 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 Expenses Base 1 2 3 4 5 6 New Rates Effective 71112016 71112017 71112018 71112019 71112020 71112021 Revenue Municipal Water Sales $6,521,112 $7,044,790 $7,317,013 $7,549,870 $7,794,073 $8,052,160 $8,307,944 TID Water Sales $74,988 $79,405 $96,511 $113,641 $130,797 $147,980 $165,190 Other Revenue Sources $161,200 $163,736 $166,323 $168,961 $171,652 $174,397 $177,197 Total Revenues $6,757,300 $7,287,931 $7,579,846 $7,832,472 $8,096,523 $8,374,537 $8,650,331 Operating Expenses $5,002,770 $5,109,906 $5,281,831 $5,459,577 $5,643,347 $5,833,351 $6,029,809 Net Revenue before Debt Service and System Rehabilitation $1,754,530 $2,178,025 $2,298,015 $2,372,895 $2,453,176 $2,541,185 $2,620,522 Debt Service $617,059 $816,576 $1,090,338 $1,161,495 $1,904,059 $1,897,159 $1,895,209 Debt Service Coverage [1] 2.84 2.61 2.11 2.04 1.29 1.34 1.38 System Rehabilitation $0 $981,448 $1,137,677 $1,161,400 $1,179,117 $1,194,026 $1,195,313 Additional Cash for CIP Projects $402,240 $1,959,967 $408,663 $0 $0 $0 $0 Net Revenue $735,231 ($1,579,967) ($338,663) $50,000 ($630,000) ($550,000) ($470,000) Beginning Balance [2] $3,264,915 $4,000,146 $2,420,179 $2,081,516 $2,247,316 $2,124,058 $2,169,184 Net Revenue $735,231 ($1,579,967) ($338,663) $50,000 ($630,000) ($550,000) ($470,000) Transfer In (Out) $0 $0 $0 $0 $0 $0 $0 Add Back Rehabilitation Net of CIP $0 $0 $0 $115,800 $506,742 $595,126 $860,313 Ending Balance $4,000,146 $2,420,179 $2,081,516 $2,247,316 $2,124,058 $2,169,184 $2,559,497 Target Balance [3] $1,351,460 $1,457,586 $1,515,969 $1,566,494 $1,619,305 $1,674,907 $1,730,066 Source: City of Ashland and HEC. flow [1] Minimum requirement of 1.25 assumed. [2] Beginning balance as of July 1, 2015. [3120% of operating revenues. Projected water fund balances are shown in Table 27. This table includes the capital fund which is funded with SDC revenues. Figure 13 illustrates the historical and projected water fund balance. The water fund balance is projected to decrease from $4.99 million to $3.61 million in fiscal year 2021-22. City of Ashland Water Rates Cost of Service Study November 10. 2015 DRAFT Page 41 Figure 13 Water Fund Balance $7,000,000 a 4, Water Fund Balance Historical $6,000,000 Operating Target Balance Projected $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Table 27 Projected Water Fund Balance 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 Projected Cash Balances Base 1 2 3 4 5 6 Operating Beginning Balance $775,215 $1,510,446 $1,890,446 $1,960,446 $2,010,446 $1,380,446 $830,446 Revenues $6,757,300 $7,287,931 $7,579,846 $7,832,472 $8,096,523 $8,374,537 $8,650,331 Expenses ($6,022,069) ($8,867,898) ($7,918,509) ($7,782,472) ($8,726,523) ($8,924,537) ($9,120,331) TAP Contingency $0 $0 $0 $0 $0 $0 $0 Transfer In (Out) $0 $1,959,967 $408,663 $0 $0 $0 $0 Ending Operating Balance $1,510,446 $1,890,446 $1,960,446 $2,010,446 $1,380,446 $830,446 $360,446 System Rehabilitation Beginning Balance $2,489,700 $2,489,700 $529,733 $121,070 $236,870 $743,611 $1,338,738 System Rehabilitation Revenue $0 $981,448 $1,137,677 $1,161,400 $1,179,117 $1,194,026 $1,195,313 Revenue used for CIP Projects $0 ($981,448) ($1,137,677) ($1,045,600) ($672,375) ($598,900) ($335,000) Transfer In (Out) $0 ($1,959,967) ($408,663) $0 $0 $0 $0 Ending Rehabilitation Balance $2,489,700 $529,733 $121,070 $236,870 $743,611 $1,338,738 $2,199,051 Total Operating Balance $4,000,146 $2,420,179 $2,081,516 $2,247,316 $2,124,058 $2,169,184 $2,559,497 Capital Beginning Balance $1,943,676 $991,716 $1,070,716 $1,061,716 $1,052,716 $1,048,716 $1,044,716 Add SDC Revenue [1] $100,000 $250,000 $260,000 $260,000 $270,000 $270,000 $280,000 Future Customers CIP PAYG ($1,051,960) $0 $0 $0 $0 $0 $0 Debt Service $0 ($171,000) ($269,000) ($269,000) ($274,000) ($274,000) ($274,000) Transfer In (Out) $0 $0 $0 $0 $0 $0 $0 Ending Capital Balance $991,716 $1,070,716 $1,061,716 $1,052,716 $1,048,716 $1,044,716 $1,050,716 Water Fund Balance $4,991,862 $3,490,895 $3,143,232 $3,300,032 $3,172,774 $3,213,900 $3,610,213 Source: HEC. Wl [1] Assumes addition of 50 EDUs per year and annual increase of SDCs of 2%. City of Ashland Water Rates Cost of Service Study November 30. 2035 DRAFT Page 42 Section 6: IMPACTS OF NEW RATE STRUCTURE 6.1 BILL IMPACTS Bill impact analysis to demonstrate the new rate structure and the redistribution of costs among customer types is illustrated in Tables A-33 through A-41 for the first year of rate increase, fiscal year 2016-17. The tables demonstrate that the new rate structure has the desired outcome on each customer group. Residential. Residential water bills would experience a small increase under the new rate structure because of the reallocation of costs under the cost of service analysis (see Table A- 33). Commercial. Most commercial water bills would decrease under the new rate structure. The reduction in bills is also due to the reallocation of costs under the cost of service analysis. Larger meter sizes would be billed a greater portion of their total bill in flat monthly charges and would experience a total bill increase. Bill impacts are shown in Tables A-34 through A-37. Institutional. Institutional water bills would experience a slight increase in the winter months and a decrease in the summer months. Since institutional customers have a relatively flat demand throughout the year, with a slight peak in the spring months before the irrigation season begins, this is appropriate. Institutional bills for 2" and 4" customers are shown in Tables A-38 and A-39. Irrigation. During peak summer months irrigation bills would increase. The rate design is intended to curb irrigation water use during the peak use months. During off-peak months water bills would increase if no water was taken. This reflects billing the flat monthly charges regardless of whether water is used or not. For accounts using water, irrigation bills would decrease. The off-peak irrigation water rate encourages planting in summer and fall months when water supply is not a concern. Irrigation bill impacts are shown in Tables A-40 and A-41. 6.2 AFFORDABILITY TEST The Drinking Water State Revolving Fund (DWSRF) program bases its evaluation of affordability of water rates on two criteria: 1. Median Household Income (MHI) of the community compared to the State MHI; and 2. Percentage of MHI spent on water bills. Generally water rates are considered to be burdensome if they are greater than 2.5% of MHI. If a community's MHI is less than 80% of the State MHI, the community is considered "Disadvantaged," in which case a rate greater than 2.0% of MHI may be considered burdensome. City of Ashland Water Rates Cost of Service Study November 10. 2015 DRAFT Page 43 The City of Ashland meets the definition of Disadvantaged since MHI is 66% of the State MHI. Under the calculated water rates for July 1, 2016, a meter single family home using 1,000 cubic feet in a month would pay $54.07, which is 1.61% of the estimated median household income for Ashland. The proposed water rates are, per the DWSRF definition, affordable. These calculations are shown in Table 28. Table 28 Affordability Test Annual Item Annual Increase Monthly Ashland Median Household Income [1] $40,308 State of Oregon MHI [2] $61,094 Ashland as a Percentage of Oregon MHI 66% 2015-16 Water Rates 3/4" using 1,000 cu. ft./mo $621 $51.72 Current Water Rates as % of Ashland MHI 1.54% 2016-17 Water Rates 3/4" using 1,000 cu. ft./mo $649 $54.07 Proposed Water Rates % of Ashland MHI 1.61% Water Rates @ 1.5% of MHI [2] $605 ($16) $50.39 Water Rates @ 2.0% of MHI $806 $806 $67.18 Water Rates @ 2.5% of MHI $1,008 $1,007 $83.98 Source: US Census. afford [1] American Community Survey estimates for 2013. [2] Per EPA guidelines a water rate between 1-2% MHI is mid-range, between 2-2.5% is high-range, and anything higher than 2.5% is burdensome. 6.3 COMPARISON OF WATER RATES A typical single family household in Ashland has a meter. The Oregon DWSRF program calculates affordability for a home using 7,500 gallons (rounded to 1,000 cubic feet) in a month. Figure 14 illustrates what a household using 1,000 cubic feet in a month would pay for water in several comparison communities as of August 1, 2015. Ashland's water rates are currently at the high end of the range and will remain at the high end of the range with the proposed rate increases. City of Ashland Water Rates Cost of Service Study November lo. 2015 DRAFT Page 44 Figure 14 Comparison of Single Family Monthly Water Bill Monthly Water Bill for 1,000 cubic feet $so oConsumption Charge $70 Service Charge $bo $so $40 $30 $20 510 ~i - 6F Q~ d e v fi'n` 011 a Jam ~ sac 01 3° 01 Vt Le 5Q 0 _ Ps PSG. Table 29 compares fiscal year 2015-16 water bills for a typical single family home using 1,000 cubic feet under the current and new rate structures, and projects the calculated water bill through fiscal year ending 2022. Per EPA guidelines', water rates would be considered mid- range through fiscal year 2021-22. Table 29 Calculated Typical Home Bill for 1,000 Cubic Feet Fiscal Year Ending Residential Charges 2016 2017 2018 2019 2020 2021 2022 current 1 2 3 4 5 6 Flat Charges Customer Charge $11.70 $12.08 $12.39 $12.72 $13.06 $13.40 Service Charge $23.50 $13.71 $14.15 $14.52 $14.91 $15.32 $15.72 Total Flat Charges $23.50 $25.40 $26.23 $26.91 $27.62 $28.38 $29.11 Use Charges Tier 1 per cu. ft. $0.0243 $0.0244 $0.0252 $0.0259 $0.0266 $0.0273 $0.0280 Tier 2 per cu. ft. $0.0299 $0.0305 $0.0315 $0.0323 $0.0332 $0.0341 $0.0350 Tier 1 Charges (300 cu ft) $7.29 $7.32 $7.56 $7.76 $7.97 $8.19 $8.41 Tier 2 Charges (700 cu ft) $20.93 $21.35 $22.06 $22.64 $23.25 $23.89 $24.52 Total Use Charges $28.22 $28.67 $29.62 $30.40 $31.22 $32.08 $32.92 Bill for 3/4" using 1,000 cu. ft. $51.72 $54.07 $55.85 $57.31 $58.84 $60.46 $62.03 Percentage Increase 5% 3% 3% 3% 3% 3% Source: HFC. sf bill 9 "Affordability Assessment Tool for Federal Water Mandates", prepared for the United States Conference of Mayors, The American Water Works Association, and the water Environment Federation by Stratus Consulting, Boulder, Colorado, 2013. City of Ash land Water Rates Cost of Service Study November 10. 2015 DRAFT Page 45 ATTACHMENT A RATE STUDY SUPPORT TABLES Table A-1 City of Ashland Water Rate Study Historical and Budgeted Water Fund Revenues DRAFT REVENUES Fiscal Year 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 actual actual actual actual actual actual budget Charges for Service Water Sales Commercial $580,812 $603,874 $679,370 $762,567 $816,152 $892,585 $938,800 Fire Guard $14,880 $17,342 $18,434 $24,025 $29,845 $31,423 $25,500 Government & Municipal $174,795 $185,897 $201,809 $242,995 $266,409 $272,797 $278,900 Multifamily Residential $479,996 $500,079 $562,916 $643,854 $671,343 $715,405 $777,900 Single Family Residential $2,439,336 $2,504,647 $2,781,220 $3,208,071 $3,473,458 $3,537,845 $3,843,100 Irrigation (incl. TID customers) $444,284 $419,039 $528,824 $609,199 $581,370 $624,453 $731,900 Subtotal Water Sales $4,134,103 $4,230,879 $4,772,573 $5,490,711 $5,838,578 $6,074,507 $6,596,100 System Development Charges $151,864 $180,604 $491,612 $266,196 $269,029 $328,414 $100,000 Connection Fees $0 $0 $0 $0 $0 $0 $0 Temporary Service $0 $0 $0 $0 $0 $0 $0 New Service Installation $12,627 $18,086 $83,058 $29,262 $35,746 $50,837 $114,800 Miscellaneous $0 $1,290 $35,601 $27,587 $39,308 $38,580 $12,000 Subtotal Charges for Service $164,491 $199,980 $610,272 $323,046 $344,084 $417,831 $226,800 Other Revenues 1982 Water Bonds $46 $21 $24 $18 $24 $14 $0 1992 Water Bonds $54 $24 $28 $21 $28 $15 $0 Intergovernmental Revenue $99,928 $344,396 $336,811 $1,969,979 $89,747 $70,473 $14,000 Interest on Investments $22,991 $10,006 $16,598 $19,542 $32,527 $24,080 $20,400 Miscellaneous Income $34,154 $21,297 $9,318 $477,199 $17,154 $17,420 $0 Bond Proceeds $80,000 $550,000 $0 $2,547,791 $979,630 $744,916 $3,921,000 Subtotal Other Revenues $237,174 $925,744 $362,780 $5,014,551 $1,119,110 $856,917 $3,955,400 Total Revenues $4,535,767 $5,356,603 $5,745,625 $10,828,307 $7,301,772 $7,349,255 $10,778,300 Fund Balance $6,273,414 $5,208,591 Total Revenues $13,575,186 $12,557,846 Source: City of Ashland. revs Prepared by HEC 140136 Model NOV 2015 11/11/2015 Table A-2 City of Ashland Water Rate Study Historical and Budgeted Expenditures by Water System Function DRAFT EXPENDITURES Fiscal Year 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 SUPPLY Actual Actual Actual Actual Actual Actual Adopted Salaries & Wages $2,932 $11,664 $0 Benefits $235 $2,150 $0 Subtotal Personal Services $3,168 $13,815 $0 Infrastructure $0 $0 $800 $0 $135 $28,011 $0 Professional Services $7,442 $19,997 $23,211 $34,853 $54,508 $54,303 $229,600 Miscellaneous $109,916 $109,457 $113,392 $112,533 $140,783 $145,109 $151,050 Other $58,791 $61,459 $60,408 $63,664 $143,393 $104,638 $149,900 Subtotal Materials & Services $176,148 $190,913 $197,810 $211,050 $338,820 $332,061 $530,550 Capital Outlay $75,469 $108,186 $193,531 $59,501 $1,640,806 $2,491,193 $1,209,150 Debt Service $22,860 $23,147 $23,122 $21,416 $22,613 $22,174 $9,568 TOTAL SUPPLY $274,477 $322,246 $414,463 $291,968 $2,005,408 $2,859,242 $1,749,268 DISTRIBUTION Salaries & Wages $580,171 $562,250 $494,924 $537,596 $583,438 $654,405 $635,000 Benefits $278,819 $275,600 $265,372 $301,271 $365,844 $378,422 $394,750 Subtotal Personal Services $858,990 $837,850 $760,296 $838,867 $949,282 $1,032,827 $1,029,750 Office $2,195 $1,480 $1,605 $4,120 $1,322 $1,252 $2,650 Small Tools $1,873 $2,961 $5,473 $3,503 $3,081 $5,545 $4,000 Uniforms - Clothing $1,928 $828 $810 $1,676 $3,961 $1,589 $1500 Uniforms - Other $175 $1,769 $2,678 $404 $0 $1,339 $3,000 Technical $3,075 $2,788 $6,113 $859 $5,174 $5,433 $15,000 Chemicals $706 $307 $1,253 $2,516 $3,563 $111 $5,500 County Services $3,200 $4,000 $3,600 $2,800 $0 $3,200 $4,950 Other $0 $0 $0 $0 $0 $0 $15,000 Books & Periodicals $48 $82 $51 $89 $252 $111 $200 Subtotal Supplies $13,200 $14,215 $21,582 $15,967 $17,352 $18,582 $51,800 Fleet Maintenance $73,500 $73,500 $66,340 $66,340 $66,340 $66,340 $66,340 Fuel $24,692 $29,117 $27,218 $25,849 $19,338 $14,342 $28,000 Replacement $51,300 $51,300 $51,300 $51,300 $51,300 $51,300 $61,560 Electricity $28,771 $21,488 $22,101 $22,931 $31,322 $51,618 $60,000 Water $881 $460 $385 $0 $0 $0 $0 Wastewater & Other $0 $130 $0 $0 $0 $0 $300 Custodial $0 $9 $16 $0 $0 $0 $0 Disposal $0 $0 $0 $0 $0 $214 $500 Infrastructure $42,570 $43,741 $67,480 $91,824 $91,296 $73,007 $115,000 Subtotal Rental, Repair, Maintenance $221,714 $219,745 $234,838 $258,243 $259,596 $256,820 $331,700 Local $1,207 $1,178 $1,167 $1,222 $1,347 $1,353 $1,200 Long Distance $12 $15 $17 $16 $16 $18 $20 Cellular $1,577 $1,523 $1,961 $2,036 $2,428 $2,667 $3,700 Computers $0 $0 $0 $2,749 $3,085 $1,144 $2,500 Postage $188 $264 $628 $432 $1,459 $1,539 $2,000 Radios $0 $0 $0 $0 $0 $0 $1,000 Subtotal Communications $2,985 $2,981 $3,773 $6,456 $8,334 $6,721 $10,420 Professional Services $5,626 $1,113 $4,159 $20,679 $22,745 $33,767 $60,000 Physician/Health $0 $183 $0 $187 $0 $0 $0 Other $0 $0 $184 $244 $90 $39 $50,000 Subtotal Contractual Services $5,626 $1,296 $4,343 $21,110 $22,835 $33,806 $110,000 Prepared by HEC Page 1 of 4 140136 Model NOV 2015 11/11/2015 Table A-2 City of Ashland Water Rate Study Historical and Budgeted Expenditures by Water System Function DRAFT EXPENDITURES Fiscal Year 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 Central Service $549,753 $549,753 $570,000 $632,000 $646,640 $659,530 $692,510 Insurance Service $35,760 $35,760 $34,900 $34,900 $34,900 $34,900 $35,600 Technology Debt $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 Use of Facilities $125,883 $125,883 $80,000 $80,000 $80,000 $80,000 $80,000 Bad Debt Expense $6,204 $10,089 $7,894 $3,620 $22,504 $13,224 $12,000 Other $0 $0 $3,000 $2,111 $583 $0 $0 Licensing $5,546 $8,623 $8,423 $6,321 $10,965 $5,104 $37,700 Subtotal Miscellaneous Charges & Fees $773,147 $780,109 $754,217 $808,951 $845,592 $842,758 $907,810 Advertising $0 $0 $0 $0 $0 $1,875 $0 Air $0 $0 $0 $0 $0 $1,533 $3,000 Personal Vehicle Mileage $0 $0 $0 $284 $0 $0 $350 Lodging $0 $517 $0 $510 $0 $939 $2,000 Meals $0 $1,006 $0 $113 $0 $334 $350 Training $2,602 $423 $2,470 $1,655 $0 $89 $4,000 Dues $268 $1,082 $0 $0 $0 $0 $0 Medical & Laboratory $9,595 $10,710 $10,545 $11,563 $11,526 $12,567 $15,000 Subtotal Other Purchased Services $12,466 $13,737 $13,015 $14,125 $11,526 $17,338 $24,700 Franchise Tax $419,978 $342,525 $294,695 $356,283 $357,799 $372,200 $402,653 Capital Outlay $53,865 $72,088 $109,315 $84,197 $206,990 $104,317 $1,105,200 Debt Service $325,990 $330,336 $327,051 $137,064 $333,461 $329,340 $250,649 TOTAL DISTRIBUTION $2,687,960 $2,614,882 $2,523,125 $2,541,263 $3,012,767 $3,014,709 $4,224,682 TREATMENT PLANT Salaries & Wages $275,564 $298,719 $294,268 $312,259 $308,548 $332,754 $340,050 Benefits $112,364 $140,315 $134,534 $154,592 $158,437 $177,449 $197,320 Subtotal Personal Services $387,929 $439,034 $428,801 $466,851 $466,985 $510,203 $537,370 Office $2,330 $5,154 $5,196 $2,214 $1,544 $1,180 $2,000 Small Tools $798 $324 $463 $739 $559 $1,142 $800 Uniforms - Clothing $1,197 $454 $1,131 $805 $686 $2,084 $2,500 Uniforms- Other $245 $443 $774 $567 $60 $383 $500 Technical $12,154 $10,438 $9,766 $15,213 $20,128 $10,446 $22,000 Chemicals $147,418 $131,893 $111,049 $128,767 $157,280 $171,617 $220,000 Emergency Work ($12) $0 $0 $30 $0 $0 $0 Books & Periodicals $0 $140 $126 $186 $0 $170 $150 Subtotal Supplies $164,131 $148,846 $128,505 $148,521 $180,257 $187,021 $247,950 Fleet Maintenance $10,200 $10,200 $9,200 $9,200 $9,200 $9,200 $9,397 Fuel $3,211 $4,568 $6,255 $5,618 $9,846 $7,334 $6,500 Replacement $900 $900 $900 $900 $900 $900 $1,080 Maintenance ($750) $0 $622 $0 $0 $0 $0 Electricity $37,102 $38,965 $46,948 $33,378 $34,855 $38,552 $38,000 Custodial $170 $476 $26 $98 $86 $116 $1,000 Grounds Care $2,873 $988 $1,064 $79 $308 $266 $1,500 Infrastructure $9,023 $7,077 $11,042 $10,176 $4,871 $21,531 $15,000 Subtotal Rental, Repair, Maintenance $62,729 $63,174 $76,057 $59,450 $60,067 $77,898 $72,477 Prepared by HEC Page 2 of 4 140136 Model NOV 2015 11/11/2015 Table A-2 City of Ashland Water Rate Study Historical and Budgeted Expenditures by Water System Function DRAFT EXPENDITURES Fiscal Year 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 Local $5,566 $5,485 $5,532 $5,651 $5,665 $5,661 $5,600 Long Distance $1 $0 $0 $0 $0 $0 $10 Cellular $477 $444 $262 $263 $252 $493 $500 Computers $0 $0 $0 $2,037 $960 $9,611 $2,500 Postage $5,408 $1,933 $221 $40 $217 $22 $3,000 Radios $0 $0 $0 $0 $0 $300 $100 Subtotal Communications $11,452 $7,862 $6,015 $7,990 $7,094 $16,087 $11,710 Professional Services $11,880 $580 $24,389 $7,701 $5,579 $1,080 $12,000 Other $72 $0 $0 $0 $0 ($1,600) $0 Subtotal Contractual Services $11,952 $580 $24,389 $7,701 $5,579 ($520) $12,000 Central Service $143,119 $143,119 $155,000 $155,000 $158,100 $161,200 $169,260 Insurance Service $8,030 $8,030 $4,000 $4,000 $4,000 $4,000 $4,080 Technology Debt $28,200 $28,200 $28,200 $28,200 $28,200 $28,200 $28,200 Use of Facilities $137,235 $137,235 $100,000 $100,000 $100,000 $100,000 $100,000 Other $0 $0 $3,000 $2,111 $583 $0 $0 Licensing $1,155 $1,709 $7,850 $3,222 $1,194 $3,714 $4,700 Subtotal Miscellaneous Charges & Fees $317,739 $318,293 $298,050 $292,533 $292,077 $297,114 $306,240 Personal Vehicle Mileage $180 $0 $198 $261 $0 $142 $200 Advertising $0 $0 $0 $0 $0 $78 $0 Lodging $773 $813 $1,000 $1,117 $1,357 $2,064 $2,000 Meals $289 $180 $389 $380 $362 $188 $600 Training $4,253 $1,581 $1,280 $1,044 $1,015 $2,749 $2,000 Dues $70 $268 $81 $81 $166 $255 $270 Medical & Laboratory $17,425 $11,200 $11,886 $13,700 $11,261 $10,918 $19,400 Subtotal Other Purchased Services $22,990 $14,042 $14,834 $16,583 $14,161 $16,394 $24,470 Capital Outlay $79,183 $1,872 $4,145 $98,033 $50,388 $108,397 $2,226,690 Debt Service $231,260 $233,322 $233,146 $220,863 $235,320 $232,114 $436,211 TOTAL TREATMENT PLANT $1,289,365 $1,227,024 $1,213,943 $1,318,525 $1,311,928 $1,444,707 $3,875,118 FORESTINTERFACE Salaries & Wages $66,540 $130,770 $151,035 $146,031 $97,935 $92,753 $0 Benefits $32,822 $54,554 $65,010 $68,379 $52,657 $48,424 $0 Subtotal Personal Services $99,361 $185,324 $216,045 $214,410 $150,592 $141,177 $0 Other $120,486 $181,646 $268,098 $2,243,767 $423,446 $165,908 $0 Advertising $0 $465 $302 $900 $1,670 $1,280 $0 Personal Vehicle Mileage $0 $165 $94 $286 $48 $339 $0 Meals $0 $0 $0 $0 $48 $0 $0 Training $594 $658 $930 $463 $2,146 $2,605 $0 Forest Commissions $575 $858 $258 $258 $87 $130 $0 TOTAL FOREST INTERFACE $221,016 $369,116 $485,728 $2,460,085 $578,038 $311,440 $0 SDC REIMBURSEMENT Capital Outlay $38,321 $113,549 $96,007 $0 $0 $0 $0 Debt Service $82,297 $83,328 $83,240 $77,098 $81,408 $79,825 $34,443 Unappropriated - Other Financing $0 $0 $0 $0 $0 $0 $0 TOTAL SDC REIMBURSEMENT $120,618 $196,877 $179,246 $77,098 $81,408 $79,825 $34,443 SDC IMPROVEMENTS Contractual $0 $413 $0 $1,600 $947 $27,093 $0 Capital Outlay $198,014 $48,370 $45,273 $30,537 $101,554 $34,419 $1,298,360 Debt Service $41,147 $41,664 $41,620 $38,549 $40,704 $383,799 $180,977 Unappropriated - Other Financing $0 $0 $0 $0 $0 $0 $0 TOTAL SDC REIMBURSEMENT $239,162 $90,447 $86,893 $70,686 $143,205 $445,311 $1,479,337 Prepared by HEC Page 3 of 4 140136 Model NOV 2015 11/11/2015 Table A-2 City of Ashland Water Rate Study Historical and Budgeted Expenditures by Water System Function DRAFT EXPENDITURES Fiscal Year 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 CONSERVATION Salaries & Wages $73,475 $69,630 $49,841 $51,505 $77,643 $87,799 $105,240 Benefits $34,263 $34,852 $23,111 $22,385 $42,088 $44,734 $64,950 Subtotal Personal Services $107,737 $104,482 $72,952 $73,889 $119,731 $132,532 $170,190 Office $651 $511 $1,914 $231 $S81 $536 $4,550 Small Tools $24 $27 $918 $13 $35 $78 $200 Uniforms - Clothing $47 $0 $148 $118 $0 $0 $200 Uniforms - Other $0 $0 $0 $29 $0 $0 $125 Technical $0 $0 $0 $40 $0 $740 $800 Meetings $0 $SO $0 $29 $0 $156 $100 Books & Periodicals $16 $0 $224 $41 $0 $0 $100 Subtotal Supplies $739 $588 $3,204 $500 $616 $1,510 $6,075 Fleet Maintenance $300 $300 $270 $270 $270 $270 $270 Fuel $0 $126 $0 $57 $227 $58 $150 Replacement $5,790 $5,790 $5,790 $5,790 $5,790 $5,790 $5,790 Rental Charges $0 $42 $124 $122 $121 $121 $125 Subtotal Rental, Repair, Maintenance $6,090 $6,258 $6,184 $6,240 $6,408 $6,239 $6,335 Local $82 $0 $0 $38 $159 $160 $100 Long Distance $0 $0 $0 $0 $0 $0 $50 Cellular $112 $95 $94 $95 $214 $525 $0 Computers $0 $0 $756 $317 $0 $0 $0 Postage $0 $0 $36 $0 $0 $28 $100 Subtotal Communications $193 $95 $886 $450 $372 $713 $250 Professional Services $0 $0 $56 $0 $0 $8,271 $2,000 Central Service $23,625 $23,625 $23,700 $23,700 $24,170 $24,650 $25,880 Insurance Service $2,245 $2,245 $3,370 $3,370 $3,370 $3,370 $3,440 Use of Facilities $15,085 $15,085 $7,500 $7,500 $7,500 $7,500 $8,250 Subtotal Miscellaneous Charges & Fees $40,955 $40,955 $34,626 $34,570 $35,040 $43,791 $39,570 Advertising $333 $0 $2,113 $1,068 $290 $132 $1,600 Printing & Binding $36 $0 $0 $10 $16 $0 $200 Air $407 $241 $337 $610 $302 $1,538 $1,500 Personal Vehicle Mileage $22 $215 $0 $0 $106 $407 $500 Lodging $66 $1,050 $73 $715 $686 $1,363 $2,000 Meals $175 $488 $142 $222 $166 $295 $750 Training $811 $0 $1,220 $169 $779 $730 $1,000 Dues $508 $125 $440 $381 $783 $785 $700 Subtotal Other Purchased Services $2,358 $2,118 $4,324 $3,175 $3,128 $5,250 $8,250 Conservation Programs $16,982 $20,999 $23,539 $21,191 $17,884 $68,805 $114,500 TOTAL CONSERVATION $175,054 $175,495 $145,716 $140,014 $183,179 $258,842 $345,170 MISCELLANEOUS Interfund Loans $0 $0 $200,000 $200,000 $150,000 $0 $250,000 Contingency $0 $0 $0 $0 $0 $0 $170,000 Unappropriated $0 $0 $0 $0 $0 $0 $0 TOTAL WATER FUND $5,007,651 $4,996,087 $5,249,115 $7,099,639 $7,465,934 $8,414,076 $12,128,018 Source: City of Ashland. exps Prepared by HEC Page 4 of 4 140136 Model NOV 2015 11/11/2015 Table A-3 City of Ashland Water Rate Study DRAFT Historical and Budgeted Water Fund Operation Expenditures Adopted Expenses 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 Water Fund Operating Expenses Personnel $1,454,017 $1,566,691 $1,478,094 $1,594,018 $1,689,757 $1,830,555 $1,737,310 Supplies $178,069 $163,649 $153,291 $164,988 $198,225 $207,113 $305,825 Repair & Maintenance $290,532 $289,177 $317,079 $323,933 $326,070 $340,958 $410,512 Communications $14,630 $10,938 $10,675 $14,896 $15,801 $23,521 $22,380 Contractual Services $25,020 $21,873 $51,999 $63,664 $82,921 $95,860 $353,600 Central Service $716,497 $716,497 $748,700 $810,700 $828,910 $845,380 $887,650 Miscellaneous Charges $525,259 $532,316 $451,585 $437,887 $484,583 $483,392 $517,020 Other Purchased Services $96,604 $91,357 $92,581 $97,546 $172,208 $143,619 $207,320 Franchise Tax $419,978 $342,525 $294,695 $356,283 $357,799 $372,200 $402,653 Conservation Programs $16,982 $20,999 $23,539 $21,191 $17,884 $68,805 $114,500 Other Forest Interface $221,016 $369,116 $485,728 $2,460,085 $578,038 $311,440 $0 Other Supply Costs $0 $0 $800 $0 $135 $28,011 $0 Subtotal Operating Expenses $3,958,605 $4,125,137 $4,108,767 $6,345,190 $4,752,332 $4,750,855 $4,958,770 Capital Outlay $208,517 $182,146 $306,991 $241,732 $1,898,185 $2,703,906 $4,541,040 Total $4,167,122 $4,307,283 $4,415,758 $6,586,922 $6,650,517 $7,454,761 $9,499,810 Source: City of Ashland. op exp Prepared by HEC 140136 Model NOV 2015 11/11/2015 O N N O O O O O O O O O O O O O O O O O O O O O O V} V} th VT V} V} V} V} V} Vf V} V} V} V} iA Vl t/} U1 V} Vf O O O N O O N V1 N 0 ,-I O M M z N M M z O Vl to v LL N o a O O O O O O O O O O O O O O O O O O O O O O m Vl ON V)0 C o N a) m 00 O 00 O ~(7 N In co N al N N V r V Jn O VT t/1 to to N O O Vl 0 0 0 0 0 0 to 0 0 0 0 0 0 0 0 0 0 O Ln O V} V} f~ V} Vl O V} V} V} r, V} U} V? 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V} V} V} V} V} in in +n i N 41 v E E N O O O O O O O O O iA V} V} V) V} to Vl- in ~ N ~O Q U p cu v N E v O O O O O O O O - D M Ql m ai O N O O ri rv ai ri rl C o Ln Lr o = 3 Q1 to N 00 O M 00 O O O th V} V} ri lqr ri v - N N N N iA v 0 ih V} -tn aJ QJ c t j O 3 O i Ln _ O -Q z N Q O nl O F- -0 w ~ lO O c Q a, n > o O ai o u H o v o aN b0 (D ~ C N u i a1 U LU C 41 > O (A 3 L a aj y - a a ~ w N o ~ C CO 4- L 41 f6 `Q i CC a) C a) 41 41 a--O -0 N -0 O {Ln ra 41 a) E U LA E Q) O LL _0 j 3 v c a o :a o v -0 0 0 co u > m z L be -0 u LO -0 Q C_ N N 'L' Q) y N_ U m a1 LA 41 41 m Q C C v X a1 aT+ 'n > m U co W co W u w V W LL 2 v C CL al CL Table A-7 City of Ashland Water Rate Study DRAFT Estimated Debt for SRF-Funded Facilities Item 2015-16 2016-17 2017-18 Total 2.5 MGD Water Treatment Plant $1,043,370 $5,910,570 $6,087,870 $13,041,810 Crowson II $778,320 $3,223,980 $3,320,640 $7,322,940 Contingency (10%) $182,169 $913,455 $940,851 $2,036,475 Total Estimated Bond Proceeds (rounded) $2,003,859 $10,048,005 $10,349,361 $22,401,225 Estimated Interest $20,867 $139,079 $260,836 $420,782 Annual Debt Service [1] $1,000,200 Total Payments $30,006,000 Principal $22,401,225 Interest $7,604,775 Source: City of Ashland. srf [1] Terms assumed: Interest 2.0% Years 30 Assumes project completed by October 2017 and first debt payment is due Dec 1, 2018. 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O ai (1) a) -6 -6 w 41 ~1 4, M _0 m L C ar r0 U m Ln OA U m c C C U i6 f0 C t O C - - - -o c C U n i N i C U i y O (n Q) QJ c + 'a ro Q trl u (a x C 01 u O •L s v _ O m > O -C m o Z n L d o_ d Q O (Z U LL c: J Q1 N QJ O in L O f0 O L, C 7 N C w a) 0 Q v- b0 L O COL m aL-~ U Iv U )n O/ U O v) ul Ln a Ol O L cu 4, u OJ i COL C S_ S_ N-c c C Y C C C C L X > a) m N 7 N O O W c } O O Z i O O O w Q U Q W Vl CC U U U c 0 W U W W m U U U N Table A-10 City of Ashland Water Rate Study Cost of TID Deliveries Front and Back Sides DRAFT Estimated Cost per Cost per Cu. TID Total Annual Cost Cost Ac. Ft. Ft. Costs 671 Acre Feet Contracted Water [1] $51,480 $66.94 $0.0018 City Maintenance Costs [2] $46,100 $59.95 $0.0016 Canal Depreciation [3] $22,980 $29.88 $0.0008 TID Staffing and Materials Costs [4] $22,800 $29.65 $0.0008 Total Annual Cost $143,360 $186.42 $0.0049 Typical Delivery [5] Cost per Cubic Feet Acre Feet Acre Total Use a 29,249,837 671 SOU Use in Cubic Feet [6] b 7,101,690 163 Irrigator/Other Use c = a-b 22,148,147 508 $623.87 Front Side Irrigators [7] d 11,455,938 263 Back Side Irrigators e 10,692,209 245 FRONT SIDE f = d+b 18,557,628 Percent Share of Total g = f/a 63% FRONT SIDE EXCL. SOU d 11,455,938 Percent Share of Total h = d/c 52% Source: City of Ashland and HEC. tid calc [1] Includes the following costs at 87% - see Table A-12: 769 Ac Ft Acre Feet of Water $37,412 City Properties (Imperatrice) $9,042 Wheeling Charge / Admin $12,500 [2] See Table A-10. Costs shown are 87% of the total costs - see Table A-12. [3] Cost basis $2,820,000 (2015$) with useful life of 60 years. T.I.D. Customer share is 56% (769/1369 ac ft) multiplied by 87%. [4] Estimated finance and public works departments time and materials costs to manage T.I.D. agreements, billing and customer service. [5] Under the 1924, 1926, and 1935 contract the City can take up to 769 acre feet in a typical year for any purpose. The City also has an agreement with TID for an additional 600 acre feet for municipal purposes. On average, City TID customers use 87% of the 769 acre feet contract and the City municipal customers use the 600 acre feet contract. See Table A-12. [6] Greatest delivery amount was in 2012 (of past 5 years). [7] Non-SOU TO Customers acres: acres % of acres Front-Side Customers 90 52% Back-Side 84 48% All Customers 174 Prepared by HEC 140136 Model NOV 2015 11/11/2015 Table A-11 City of Ashland Water Rate Study TID Canal Maintenance Costs DRAFT Cost 2013 2014 Man Hours 1,205 1,411 Labor Cost $33,076 $30,753 Equipment Cost $8,098 $33,671 Total Cost $41,174 $64,425 Source: City of Ashland. tid maint Prepared by HEC 140136 Model NOV 2015 11/11/2015 Table A-12 City of Ashland Water Rate Study Actual TID Deliveries (Past 10 Years) DRAFT Total Municipal Irrigation 1924, 1926 & Irrigation Use as Year Acre-Feet Use Use 1935 Contract % of Contract [1] [2] [3] All Figures in Acre Feet 2004 751.71 0.00 751.71 769.00 98% 2005 478.57 0.00 478.57 769.00 62% 2006 659.93 0.00 659.93 769.00 86% 2007 560.14 0.00 560.14 769.00 73% 2008 726.56 0.00 726.56 769.00 94% 2009 742.90 224.24 518.66 769.00 67% 2010 818.73 0.00 818.73 769.00 106% 2011 755.37 0.00 755.37 769.00 98% 2012 731.81 0.00 731.81 769.00 95% 2013 981.49 205.15 776.34 654.00 119% 2014 1,173.94 565.44 608.50 654.00 93% Average 90.44 671.48 769.00 87% Source: Talent Irrigation District. tid deliv [1] TID measurements. [2] City measurements. [3] In 2013 and 2014 TID curtailed the amount allowed to 654 acre feet. Prepared by HEC 140136 Model NOV 2015 11/11/2015 Ln CD 0 N O~ Q1 I- rMi O M co CY O 00 N tm o0 oo 00 Ln r i LD N N ; o t/) 'V} Vl- in v N E o Z O 't LD O m qr TT N O N LM O 00 In (n Lf) Ql N lD N N [YI W1 o l0 ~t in -Ln LM N N i/} i/I- In tD ti 0 O N m Ln lzT 00 LD lfl LI) W N O O m N N w -1 O N N LL tn Q O O Ln Ln lzt e-I :T O O I- I\ O m 00 Ol LIl M i/} 00 N I M i r I i/f iA 07 i n N Ln 0) Q Q Ln Ln Izi- Ln r-I O ct m r~ O d' LD N C0J rl r-I t/} 00 N V-~- M M c fV -La L! -L1 -Ln Vv O ~ (.0 O m vi Ln N O N Ln CD m n I~ N Lr) -i i/} LD (Ij V)- 4Ar in r-I O w Il M -1 N Ln m LD rl e-I O N I\ n m i!? V} [7 N e I r I O Vl- 4A 41 E O d In O -1 e-I r1 O N ~ rl N N 'Ln a, UA M O 6 N E u Y Y C C i1 c a O O o N ON r T 41 4 a ~ N O M vL \ ~ a N v v C Q O N O Z _ 3 L0 O O 4, 3 i c (A U a) 76 i Lu > ] N V c ra _ VI Y O Q1 L L u _0 Y O i LL O_ 41 L U O E W O L ro W OJ cu O E C O 41 41 41 0 f0 C N L L 00) s O o\° cu 0 Q) L a~-U O_ (u C t -O N m Y Ln O C L CL to aO O u 0 4' r_ L •Y CL O - O Q' C: C c co v ~ ~ CL W O L ~ U CO _ ~n c6 O Q N Y N O L L U U Y 0u u Q 4- L C U U Q L Q (ii u u W O y CC - CC ro u a Q Q = - 4- 41 41 m G •1.~ C 41 Q V1 O Ln 4 C 0! W Ln -0 C U C z Q P U C U N N M a N a v d Table A-14 City of Ashland Water Rate Study Calculation of Functional Allocation Revenue Requirement DRAFT BUDGET Meters & Operating Expenditures 2015-16 Allocation Basis Customer Services Capacity Commodity Unclassified wrtn add~non of Ill SUPPLY lnr wmer Salaries & Wages $0 Avg. of Classified M/ 01/. 01 0% 100% Benefits $0 Avg. of Classified 0% 0% 0% 00/1 100% Infrastructure $0 Plant In Service 9116 2% 74% 15% 0% Professional Services $229,600 Avg. of Classified 0% 0% 0% 0% 100% Miscellaneous $151,050 Avg. of Classified 0% 01/. 0% 01/. 100'% Other $149,900 Avg of Classified 0% 0% 0% 0% 100% Capital Outlay $1,209,150 Plant In Service 901/1 2% 74% 15% 0% Debt Service $9,568 Peaking Month Use 0% 0% 55% 45% 0% TAP Water $44,000 Utilities 0% 0% 0% 100% 0% TOTAL SUPPLY $1,793,268 DISTRIBUTION Salaries&Wages $635,000 Avg. of Classified 0% 0% 0% 0% 1001/6 Benefits $394,750 Avg. of Classified C% 0% 0% 0% 100% Office $2,650 Customers 100% 0'/0 01/. 0% 0% Small Tools $4,000 Peaking Month Use 0% 55% 0% 45% 0% Uniforms - Clothing $1,500 Plant In Service 9% 2% 74% 15% 0% Uniforms - Other $3,000 Plant In Service 9% 2% 74% 15% 01/1 Technical $15,000 Peaking Month Use 0% 55% 0% 45% 0% Chemicals $5,500 Peaking Month Use 01/s 55% 0% 45% 0% County Services $4,950 Customers 100% 0% 0% O% 0% Other $15,000 Avg.1 Classified 0% 0% 0% 0% 100% Books & Periodicals $200 Customers 100% 0% 0% 0% 0% Fleet Maintenance $66,340 Peaking Month Use 55% 0% 45°% 0% Fuel $28,000 Peaking Month Use 0% 55% on, 45% 01/1 Replacement S61,S60 Peaking Month Use 0% 55% 0% 45% 0% Electricity $60,000 Utilities 0% 0% 0% 100% 0% Water $0 Utilities 0% 01A 0% 100% 0% Wastewater&Other $300 Utilities O% 00/ 0% 100% 0% Custodial $0 Avg. of Classified 0% 00/1 0% 0% 100% Disposal $500 Plant In Service 9% 2% 74% 15% 0% Infrastructure $115,000 Plant In Service 9% 2% 74% 15% 0% Local $1,200 Customers 100% 0% 0% 0% 0% Long Distance $20 Customers 100% 0% 0% 0% 0% Cellular $3,700 Customers 100% 01/ 0% 0% 0% Computers $2,500 Customers 100% 0% 0% O% Postage $2,000 Customers 100% 0% 0% 0% 0% Radios $1,000 Customers 100% 0% O% 00/. 0% Professional Services $60,000 Avg, of Classified 0% O% 0% 01/ l0U% Physician/Health $0 Avg, of Classified 0% 0% 0% 00/ 100% Other $50,000 Avg. of Classified 0% 0% 01/ 0% 1001/1 Central Service $692,510 Customers 100% 0% 0111 01/ 00/ Insurance Service $35,600 Customers 1001/ 0% 0% D% 0% Technology Debt $50,000 Peaking Month Use a% 55% 0% 45% 0% Use of Facilities $80,000 Peaking Month Use C% 55% 0% 45% 0% Bad Debt Expense $12,000 Piant In Service 9% 20/ 74% 15% 0% Other $0 Customers 100% 0% 0% 0% 0% Licensing $37,700 Plant In Service 9% 2/ 745. 15% 0% Air, $3,000 Customers 100% 0% 0% 0% 0% Personal Vehicle Mileage $350 Avg. of Classified 0% 0% 0% 0% 100% Lodging 52,000 Avg. of Classified 0% 01/ 0°ro 0% l00% Meals $350 Avg. of Classified 0% 0% 0% 0% 100% Training $4,000 Avg. of Classified 0% 0% 0% 01% 100% Dues $0 Avg. of Classified 0% 0110 0% 01;/. 100% Medical & Laboratory $15,000 Avg. of Classified 01/ 0% 0% 0% 100% Franchise Tax $402,653 Utilities C% 0% o% 100% 0% Capital Outlay $1,105,200 Plant In Service 9% 2% 74% 15% 0% Debt Service $250,649 Peaking Month Use 0% 0% 55% 45% 0% TOTAL DISTRIBUTION $4,224,682 TREATMENT PLANT Salaries & Wages $340,050 Avg. of Classified 0% 0% 0% 0% 100% Benefits $197,320 Avg. of Classified 0% 0% 0% 0111 100% Office $2,000 Customers 1000/. 0% 01/ 0% 0% Small Tools $800 Peaking Month Use 00/. 5S% 01/ 4S% 01/ Uniforms - Clothing $2,500 Plant In Service 91/ 2% 74% 15% D% Uniforms - Other $500 Plant In Service 9% 2% 74% 15% 01A Technical $22,000 Peaking Month Use 0% 55% 0% 4S% 0% Chemicals $220,000 Utilities 0% 0% 100% 0% Prepared by HEC Page 1 ce 2 140136 Model NOV 2015 11/11/2015 Table A-14 City of Ashland Water Rate Study Calculation of Functional Allocation Revenue Requirement DRAFT BUDGET Meters & Operating Expenditures 2015-16 Allocation Basis Customer Services Capacity Commodity Unclassified "ith addition of [11 Emergency Work $0 Peaking Month Use 0% 55% 0% 45% 0% Books & Periodicals $150 Customers 100% 00/ 0% 01/ 0% Fleet Maintenance $9,397 Peaking Month Use 0% 55% 0% 45% 0% Fuel $6,500 Peaking Month Use 0% 55% 0% 45% 0% Replacement $1,080 Peaking Month Use 0% 55% o% 459% 0% Maintenance $0 Peaking Month Use 0% 55% 0% 45% 0% Electricity $38,000 Utilities 0% 0% 0% 100% 0% Custodial $1,000 Avg, of Classified 01/ 0% 0% 100% Grounds Care $1,500 Avg. of Classified 0Fh 0% 0% 1001/6 Infrastructure $15,000 Plant In Service 91A 2% 74% 15% 0% Local $5,600 Customers 100% 0% 00/ 0% 0% Long Distance $10 Customers 1001/ 056 0% 0% 0% Cellular $500 Customers 1001A 01/ 0% 0% 0% Computers $2,500 Customers 100% 0% 01/ 01/ 01% Postage $3,000 Customers 100% 0% o% 01/ 0% Radios $100 Customers 100% 0% 0% 01/ 0% Professional Services $12,000 Avg. of Classified 01/ 0% 0% 01A 100% Other $0 Avg_of Classified 0% 0% 0% 0% 100% Central Service $169,260 Customers 100% o% 01/. 0% 0% Insurance Service $4,080 Customers 100% 0% 0% 0% C% Technology Debt $28,200 Peaking Month Use 0% 55% 0% 45% 0% Use of Facilities $100,000 Peaking Month Use 0% 55% 0% 45% 0% Other $0 Customers 100% 0% 0% 0% 0% Licensing $4,700 Utilities 0% 01/ 0% 100% 0% Personal Vehicle Mileage $200 Avg. of Classified 01/ 0% 0% 0% 100% Lodging $2,000 Avg. of Classified 00/1 0% 0% 01/ 100% Meals $600 Avg. of Classified 0% 0% 0% 01/8 100% Training $2,000 Avg. of Classified 0% C% 00/ 0% 100% Dues $270 Avg, of Classified 0% 0% 0% 0% 100% Medical & Laboratory $19,400 Avg. of Classified 01/ 0'% 0% 0% 100'% Capital Outlay $2,226,690 Plant In Service 9% 2% 74% 15% 0% Debt Service $436,211 Peaking Month Use 0% C% 551/ 45% 0% TOTAL TREATMENT PLANT $3,875,118 CONSERVATION Salaries & Wages $105,240 Avg, of Classified 0% 0% 01/ 01/ 100% Benefits $64,950 Avg. of Classified 0% 0% 01% 0% 100% Office $4,550 Customers 100% 0% 0% 0% 0% Small Tools $200 Peaking Month Use 0% 55% 0% 45% 0% Uniforms - Clothing $200 Plant In Service 9% 2% 74% 15% 0% Uniforms - Other $125 Plant In Service 91% 2% 74% 15% 0% Technical $800 Peaking Month Use 01% 55% 01/ 45% 01/. Meetings $100 Customers 100% 0% 0% 0% 0% Books&Periodlcals $100 Customers 1000% 0% 0% 0% 0% Fleet Maintenance $270 Peaking Month Use 0% 55% 0% 45% 0% Fuel $150 Peaking Month Use 0% SS% 0% 45% 0% Replacement $5,790 Peaking Month Use 0% 55% 0% 45% 0% Rental Charges $125 Peaking Month Use 0% 55% 01/8 45% 0% Local $100 Customers 100% o% 0% 0% 0% Long Distance $50 Customers 1001/ 1 01/8 0% 01/. Cellular $0 Customers 100% o% 0% 01/. 0% Computers $0 Customers 100% C% 0% 0% 0% Postage $100 Customers 100% 0% 0% 01/ 0% Professional Services $2,000 Avg. of Classified 0% 0% 0% 0% 100% Central Service $25,880 Customers 100% o% 01/ O% 0% Insurance Service $3,440 Customers 100% 0% 0% 0% 0% Use of Facilities $8,250 Peaking Month Use O% S S % O% 45% 0% Advertising $1,600 Customers 100% 0% 0% 01% 0% Printing & Finding $200 Customers 100% 0% 0% 0% 0% Air $1,500 Customers 100% 0% o% 0% Personal Vehicle Mileage $Soo Avg. of Classified 0% 0% 0% 0% 100% Lodging $2,000 Avg. of Classified 0% 0% 01/8 0% 100% Meals $750 Avg, of C I a ssified 0% 0% 0% 0% 100% Training $1,000 Avg. of Classified 0% 0% 0% 01/ 100% Dues $700 Avg. of Classified 0% O% 0% 01/ 100% Conservation Programs $114,500 Utilities 0% 0% 0% 100% 0% TOTAL CONSERVATION $345,170 TOTAL OPERATING EXPENDITURES $10,238,238 $1,382,804 $391,007 $3,901,763 $2,102,184 $2,460,480 Unclassified Expenditures Reallocation $437,448 $123,694 $1,234,316 $665,022 Total with Reallocation $10,238,238 $1,820,252 $514,702 $5,136,079 $2,767,206 Revenue Requirement Allocation Percentages 18% 5% 50% 27% Source: HEC. June [1] For allocation of plant in service see Table A-14. For allocation of peaking month use see Table 4. Prepared by HEC Page 2 of 2 140136 Model NOV 201511/11/2015 N 0 N N N ti Ql o o M Ln M M O LD 0 Lo o0 0 1, Ln oo m r- m m V c o m o 00 -1 M 00 LT rn a o n It a rH r1 1-1 00 m M ^ o ❑ N N M r 1i cl Ii ocW ~ cz LD N N 3' L' W LD D1 V CD Q > m O It Ln Ln -i oo Ln O m oo LL) ui Ln 00 N L.D LT r, O N to O m M N -I Vn Ln r1 m Ln 00 La m N 00 M O O Ln 00 'T 00 O z m V} V1 V> V} V)- try V1 N N Ln oo N -i ~-i r, am V> 00 a-1 v in -Lr' O Ol O N t/} N LIl N M 0 (J V} rl V} V1 V} M M V} in r ~ o\° m LL r VO O O M O m O Ln M O O O n Ln 00 m O O M 00 } O M C VT - VT It 00 t CD LD VT V} V} ~ rl 00 00 VT VT lD 00 Ln o Q "O ~ M Ol r t\ O lD N 1:31 00 CO M CO O r 1i Lrl M Ln r% n 00 N O1 (T O O li E -1 -1 -Ln -La N L.D rl m O I, Ln 00 -1 Q E U} V} (n to 11 N H In h W 00 0 V). N ci tf~ ~i .1 V> V1 v> ih 0 ZI O O O O Ln LD O O O ri O N O O O O O r, m N M V} O V? VT m 00 Ln V} V} N Vl co ct' V} V} V} V} 00 M V LD u0 cr Q1 rl ri m n lD cY N n U N ci Ln n O u1 r, O a' M Q m c-i Ln A LO N M 00 Izi- M r-I 01. V} V} V1 in LD LXl M V} Lr1 LD U rl o' Ln :T V 0 V} -1 N N N L} in 0rj yL O O O O O O M O N C7 Ln 0 0 0 0 M O O O V m 0 an d V} V} V} V} V} V} Ql V} LD In O V} V} V} VT N t/} V} Ln M 00 N U W r 1i LD lD N C lD M a--I N 7 Ln N 00 L.0 m N Ln m N lD N N n V} V} VL• N Ln rl 00 cO G V} V} t/} i/E Ol O 0 0 0 0 0 Ln O to O LD 0 0 0 0 0 0 0 LD O y N V} V/V). V} V} to IT V} zr t/} O V} V} V} V} La to V} O ~ Ql 0 O Ln Ln Ln Ln O m N N O O W am V} V} Cl a1 00 O 'Ln -1 ri N U V1 in• in E o 0 0 0 0 0 0 0 0 0 0 0 0\° O O O O O O O CD O O O O O O O O O O O O O O O O O O O O O O Cl o O O O O O F- ci rl ci .-i c-I c-I ci rl ri .-I ci rl r-1 ci a-I r-I ci c-I T a O O O O O Lr1 O O Ln O o m O O N Ln r- O O r, Cl E -1 ci ri c-I c-I O O ,=L U ra u T Q u O O O O O O O m Ln O 00 00 O O O O. c-I c-I c-I c-I G r0 d u i Ol ~ co u O L'1 o n a-, i O N O N c~ d c-I a-i G Ln E o O O 0 O O O Y O Ln N T 7 O u 7 En Ln 01 U 0! u 0 w ° m > c t0 _ 6 N a N E c c C c `v v L i Qr N VI L 67 v C r6 6 L Q/ U f6 C ^I C dJ w a Y M O v O > L f0 a r6 N f0 H a) N C n 7 E Q 2 2 Q c ~ c a c H o a c c c o 0 0 c N E- E Ln t o o Q 02 06 c w at co o c c v c o Q c v f6 v a 2 M E cu o n a o F- a c o m v 0:: bn c E.~ u v o >.U'- Qa, 61 m o tf0, v n v N i t a n E v o a o v v Cl 7 a v > 3 O m a U H Ln > Ln n n cr a > LZ Ln 0 o w F U Q LL co w - F- Ln x v a v a Table A-16 City of Ashland Water Rate Study DRAFT Number of Billing Meters Customer Category % of Residential Commercial Irrigation Government Fire Meter Size Total TOTAL SF MF 3/4" 90.1% 7,814 6,723 444 332 179 19 117 1" 5.9% 509 256 68 108 61 16 0 1.5" 1.9% 167 11 51 64 35 6 0 2" 1.7% 145 3 35 45 40 22 0 3" 0.2% 21 0 4 4 7 6 0 4" 0.2% 14 0 4 2 2 6 0 6" 0.0% 2 0 0 0 1 1 0 8" 0.0% 1 0 0 0 0 1 0 Total 100.0% 8,673 6,993 606 555 325 77 117 % of Total 100% 81% 7% 6% 4% 1% 1% Source: City of Ashland. meters Prepared by HEC 140136 Model NOV 2015 11/11/2015 Table A-17 City of Ashland Water Rate Study DRAFT Typical Water Consumption by Meter Size by Customer Type Meter Size/ Consumption (2014 Data) Customer Type Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total 3/4" Figures in Cubic Feet Residential SF 486 460 428 448 550 795 1,073 1,178 1,136 955 678 483 8,187 Residential MF 839 826 813 896 1,057 1,572 1,715 1,733 1,548 1,260 943 851 14,054 Commercial 892 850 767 940 1,077 1,472 1,703 1,773 1,518 1,309 993 856 14,148 Institutional 300 318 352 400 480 791 1,326 1,086 896 1,143 711 378 8,180 Irrigation 297 347 163 533 1,467 2,913 3,503 3,581 3,010 2,099 914 238 19,064 1" Residential SF 478 469 474 774 877 1,479 1,948 1,779 1,553 1,318 638 506 12,293 Residential MF 1,242 1,326 1,073 1,223 1,316 1,923 2,171 2,004 1,754 1,534 1,208 1,033 17,809 Commercial 1,258 1,213 1,006 1,322 1,638 2,420 2,513 3,081 2,828 2,141 1,449 1,258 22,127 Institutional 1,010 805 591 856 961 1,176 1,029 983 1,017 1,118 977 634 11,157 Irrigation 234 704 970 718 2,547 3,314 4,647 5,037 3,775 3,014 858 500 26,317 1.5" Residential SF 636 594 522 848 1,142 1,699 2,308 2,314 2,265 1,525 1,145 1,156 16,154 Residential MF 2,697 3,479 2,856 3,052 3,511 4,579 4,859 5,116 4,968 4,307 3,773 3,142 46,339 Commercial 2,401 2,227 2,316 3,080 3,757 5,231 6,141 6,234 5,329 4,922 3,518 2,646 47,804 Institutional 1,976 1,818 2,222 1,338 7,820 2,048 1,665 847 797 692 2,650 870 24,743 Irrigation 414 322 308 1,922 4,713 8,614 12,982 13,984 11,558 8,031 1,719 840 65,407 2" Residential SF 963 260 680 550 613 1,210 1,703 2,533 3,210 2,450 1,687 630 16,490 Residential MF 10,187 10,694 9,899 11,196 12,200 20,561 22,593 20,322 19,732 15,615 12,704 12,281 177,984 Commercial 5,734 7,046 6,603 7,748 8,205 10,157 12,221 12,657 11,344 9,747 8,280 6,964 106,707 Institutional 6,145 10,434 9,260 8,995 19,053 15,680 16,262 14,952 9,444 10,082 10,929 8,452 139,689 Irrigation 640 377 506 8,343 11,538 20,023 22,624 23,745 19,845 15,143 7,106 2,996 132,884 3" Residential MF 14,005 15,605 13,263 11,863 15,288 23,425 21,040 19,945 21,543 22,723 21,983 19,908 220,588 Commercial 17,618 15,500 16,216 17,592 22,458 36,710 35,242 34,500 31,320 28,940 23,784 20,630 300,510 Institutional 3,518 8,547 7,499 7,241 8,906 12,434 10,264 9,852 9,912 8,154 6,711 5,177 98,214 Irrigation 6,910 1,200 1,400 2,735 41,146 36,502 62,480 85,750 49,291 62,530 7,330 580 357,854 4" and greater Residential MF 30,753 38,173 36,985 42,868 48,143 66,950 60,238 56,803 53,973 46,845 56,272 38,135 576,134 Commercial 13,250 10,500 9,750 19,000 38,000 35,250 57,750 53,000 55,500 41,500 30,250 23,250 387,000 Institutional 19,699 25,883 22,005 16,579 20,048 24,384 16,585 13,043 16,731 23,835 23,206 17,993 239,989 Irrigation 0 467 667 14,000 55,500 70,327 66,111 123,030 122,227 86,404 1,576 0 540,309 Source: City of Ashland and HEC use by size Prepared by HEC 140136 Model NOV 2015 11/11/2015 Table A-18 City of Ashland Water Rate Study Bill Tabulation for Rate Design - Residential - Winter DRAFT Total Use to Cumulative This Block of Cumulative Total Use of Use of Bills Bills Passing Percent Block Billing Bills through Bills Stopping Stopping in Through Cumulative Cumulative Customer Limit Units Block in Block Block Block Billed Usage Billed Usage Master Metered Zero Use 164 4,920 0 0 0 0 0% Tier 1 300 2,072 4,756 407,866 407,866 805,200 1,213,066 65% Tier 2 1,000 2,525 2,684 1,221,745 1,629,611 159,000 1,788,611 97% Tier 3 2,500 152 159 200,941 1,830,552 17,500 1,848,052 100% Tier 4 > 2,500 7 7 22,156 1,852,708 0 1,852,708 100% Total 4,920 1,852,708 Single Family Zero Use 1,660 56,630 0 0 0 0 0% Tier 1 300 18,399 54,970 3,204,856 3,204,856 10,971,300 14,176,156 47% Tier 2 1,000 30,748 36,571 16,592,584 19,797,440 5,823,000 25,620,440 86% Tier 3 2,500 5,148 5,823 7,328,780 27,126,220 1,687,500 28,813,720 96% Tier 4 > 2,500 675 675 2,740,988 29,867,208 0 29,867,208 100% Total 56,630 29,867, 208 Source: City of Ashland and HEC. smaller bill tab Table A-19 City of Ashland Water Rate Study Bill Tabulation for Rate Design - Residential - Summer DRAFT Total Use to Cumulative This Block of Cumulative Total Use of Use of Bills Bills Passing Percent Block Billing Bills through Bills Stopping Stopping in Through Cumulative Cumulative Customer Limit Units Block in Block Block Block Billed Usage Billed Usage Master Metered Zero Use 65 2,460 0 0 0 0 0% Tier 1 300 481 2,395 97,968 97,968 574,200 672,168 41% Tier 2 1,000 1,454 1,914 832,998 930,966 460,000 1,390,966 85% Tier 3 2,500 428 460 584,380 1,515,346 80,000 1,595,346 98% Tier4 3,600 23 32 67,452 1,582,798 32,400 1,615,198 99% Tier 5 > 3,600 9 9 47,668 1,630,466 0 1,630,466 100% Total 2,460 1,630,466 Single Family Zero Use 543 28,315 0 0 0 0 0% Tier 1 300 4,704 27,772 794,582 794,582 6,920,400 7,714,982 24% Tier 2 1,000 11,461 23,068 6,951,500 7,746,082 11,607,000 19,353,082 61% Tier 3 2,500 8,941 11,607 14,060,337 21,806,419 6,665,000 28,471,419 89% Tier 4 3,600 1,684 2,666 4,966,874 26,773,293 3,535,200 30,308,493 95% Tier 5 > 3,600 982 982 5,185,537 31,958,830 0 31,958,830 100% Total 28,315 31,958,830 Source: City of Ashland and HEC. res tab Prepared by HEC Bill Tab Analysis 11/2/2015 ~ 0 0\ 0 0 0 - y ti vi m o m m H \ ~ 0 0 0 0° 0 \ 0 0 0 y o a m ti~ v a T - a m m 0 0 0 0 0 0 0 0 m ti 0 m m O m O m rl N N N N N N c ~ u d N o 0 0 a o a o o e LL d M M M 7 m M M M M NQ ~ I.L ~ o 0 0 0 0 0 0 0 0 N R V N N I~il m M F N o 0 0 0 0 0\° ~ O O O O O O O O O O O O O F N N rl N N a 0 0 0 0 0 0 0 0 0 v a °o °0 0o m m ol 0o m m m > M o 0 0 0 0 ~ 0 0 0 fa ~ O m m m W m m m m ~ H rl ~ N U o c o 0 0 \ o o a C ~ I~ lfl tD ut .ti N .-i m V O m W CO W Ip tD m h f~ u ~ v a ~ 0 0 0 0 0 0 0 0 0 N P V C C N N u1 m M F tD O IO ~ W N V 1 ocN r O N O W m m N W N O F m m .0 c co m .ti c-i M m r-i vi m m ~ la m m O co m v ° ll cl Ift tD N H 0 N r V v 't- clcl n o m m c .ti m H o N m O M y N M m m D 0 7 al LL U N O N iD m V1 W m I~ 41 vl N n C c-I t0 m M M O 1~ n m V 1~ M m m U W M N l11 c-I l0 M W d > i- m IlI Imrl a c av m o co O m o N m N m n n 3 E LL .-I O N l0 N oo I~ N m O N C Ill w m v h N m U N lD O clc O vt In O W ON O m - V I~ to 0 v m m n m .-i .-i Iri ri ai o m ct o6 N N ri N a V l0 l0 N W N O V CO N ~ l0 ✓1 N l~ 07 Vl M m h O W N N m N N .--I M y m ID m N ~ 1~ ul cy l0 H N rl M i0 n M clcc1lM r-i Vf I~ DO c-i I N ci r-1 N O1 F V O O m y O m m ~ m c m o o O o d y O O O O O N N N N !Y c m z z v' T a u a o 00 0 °o .3. dal O ri r-1 ti c-i In m a co 0 0 0 0 y o O O O m O 3 m 3 ~ v v v a u m `m a v c y a w v d w Q Q m ~ v m v m- m~ v x H U lu u of Q ° a Table A-21 City of Ashland Water Rate Study Bill Tabulation for Rate Design - Nonresidential Current DRAFT Cumulative Total Use of Cumulative Total Use to Bills Bills Use of Bills This Block of Percent Block Billing through Stopping in Stopping in Bills Passing Cumulative Cumulative Customer Limit Units Block Block Block Through Block Billed Usage Billed Usage Irrigation 0 0 0 0 0 0 0 0% Zero Use 0 1,700 4,092 0 0 0 0 0% Tier 1 50,000 2,335 2,392 10,344,253 10,344,253 2,850,000 13,194,253 85% Tier 2 > 50,000 57 57 5,094,536 15,438,789 0 15,438,789 100% Total 4,092 15,438,789 Commercial Zero Use 0 519 7,306 0 0 0 0 0% Tier 1 50,000 6,774 6,787 16,932,837 16,932,837 650,000 17,582,837 99% Tier 2 > 50,000 13 13 781,010 17,713,847 0 17,713,847 100% Total 7,306 17,713,847 Institutional Zero Use 0 121 1,032 0 0 0 0 0% Tier 1 50,000 887 911 13,388 13,388 1,200,000 1,213,388 40% Tier 2 > 50,000 24 24 3,012,632 3,026,020 0 3,026,020 100% Total 1,032 3,026,020 Source: City of Ashland and HEC. nonres bill tab Prepared by HEC Bill Tab Analysis 11/2/2015 Table A-22 City of Ashland Water Rate Study DRAFT Bill Tabulation for Rate Design - Commercial Proposed Cumulative Total Use of Cumulative Total Use to Bills Bills Use of Bills This Block of Percent Block Billing through Stopping in Stopping in Bills Passing Cumulative Cumulative Customer Limit Units Block Block Block Through Block Billed Usage Billed Usage Commercial <2" Zero Use 460 6,586 0 0 0 0 0% Tier 1 2,500 4,851 6,126 3,074,096 3,074,096 3,187,500 6,261,596 61% Tier 2 > 2,500 1,275 1,275 7,209,273 10,283,369 0 10,283,369 100% 6,586 10,283,369 Commercial 2+" Zero Use 59 720 0 0 0 0 0% Tier 1 15,000 472 661 1,989,468 1,989,468 2,835,000 4,824,468 65% Tier 2 > 15,000 189 189 5,441,010 7,430,478 0 7,430,478 100% 720 7,430,478 Source: City of Ashland and HEC. 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Ln C a QJ ',F, O U 'O vi C QJ Q1 O U Ln C Q) y ar O m v1 E E on ;a E_ n E E tin E E tia +m a = T O Lail fl. a) O O L O E a) O O L O 41 a) O O L O m :t - O m O cc u U - F- 0 p cc u U F- D U U H o n H U Q U U f- U H H a v m a v L1 Table A-30 City of Ashland Water Rate Study Calculation of Share of Maximum Day Water Use by Customer Category DRAFT Non- Coincident Average Maximum MM/AM MD Peak Max Daily %ofAvg. %ofPeak %ofMax. Customer Type Month Use Month Use Ratio Ratio Use Month Month Day (AM) (MM) a b c= b/a d (below) e= d*(b/31) f= a/total a g= b/total b h= e/total e Residential cu. ft. cu. ft. cu. ft. Master Metered 1,233,889 1,807,603 1.46 2.22 129,200 12% 10% 10% Single Unit 5,399,033 9,066,113 1.68 2.54 742,780 51% 53% 59% Non-Residential Commercial < 2" 842,679 1,311,138 1.56 2.00 84,453 8% 8% 7% Commercial 2" or larger 572,439 815,422 1.42 1.83 48,085 5% 5% 4% Institutional 522,097 734,827 1.41 2.17 51,378 5% 4% 4% Irrigation 2,093,565 3,461,986 1.65 1.82 203,140 20% 20% 16% Total 10,689,965 17,248,262 1.61 1,259,036 100% 100% 101% Master Comm'I. Comm'I. Calculation of MD Peak Factor Metered Single Unit < 2" 2"+ Institutional Irrigation MM/AD Factor 1.46 1.68 1.56 1.42 1.41 1.65 System MD/MM Production Ratio [1] 1.10 1.10 1.10 1.10 1.10 1.10 Weekly Usage Adjustment 1.38 1.38 1.17 1.17 1.40 1.00 Calculated MD Peak Factor 2.22 2.54 2.00 1.83 2.17 1.82 Source: City of Ashland, AWWA M1 Manual, and HEC. peaks [1] Calculation: 2010 2011 2012 2013 2014 Average Maximum Day (MG) 5.88 5.36 5.14 5.95 4.80 Maximum Month (MG) 158.29 152.00 149.87 170.48 137.17 Average MGD in the Max. Month (max, day / 31) 5.11 4.90 4.83 5.50 4.42 Ratio of Max. Day to Avg. in Max. Month 1.15 1.09 1.06 1.08 1.08 1.10 Prepared by HEC 140136 Model NOV 2015 11/11/2015 Table A-31 DRAFT City of Ashland Water Rate Study Irrigation Peak Cost Allocation Calculation Excl. TID Month All Water Irrigation cubic feet January 5,698,647 25,023 February 5,903,155 19,250 March 5,395,848 34,123 April 6,737,313 352,456 May 9,004,008 1,158,194 June 13,984,004 2,148,917 July 16,487,000 2,862,767 August 17,197,539 3,451,333 September 15,052,946 2,740,545 October 12,255,392 2,146,283 November 7,481,389 458,953 December 7,819,658 43,004 Total 123, 016,899 15,440,848 On Peak 62,721,489 11,203,562 Peak as % of Total 51% 73% Source: City of Ashland. irr peak Prepared by HEC 140136 Model NOV 2015 11/11/2015 3 N f r rv Q v. yr .n ~n 0 us .n ~n N ~ E F 3 ~ .z E - o ~ _ 0 T O O N m ri m Ln m N Ln m N m m n O a N L 0) 0) m a--1 N M Ln 00 O N Ln rl m N W m o ti O m u N N N N N N N N M M M M r+1 C E in. in in in V>- iA in V* in Vf in iA V). V1- iA VA f0 O v N d = O w rl r., rl r. o v r, ri c* rl ri LO M ri 0 O V' m N t\ 00 m q M 111 n q N a t\ eti OR Li Z Ln O Ln .-1 r\ a N O 00 r\ Ln M .-i a-i ri N v a, N M M 't Ln LO rl n 00 01 O i-i N M a a \ V> V1 Vl V? 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V} V)- V} V} i/? tJ? to V} V). r1 VT V~ V D L O N N F O O O O O O O O O O O O O O O O ~ '6 U LL O Ln ul m Ln Ln Ln Ln Ln Ln Ln Ln Ln ul Ln ul Cl m m m m m m m m m m m m m m m N N N N N N N N N N N N (14 N N •L N U Vt• Vl- V} in in V} V} V} V} V> V} V} V} V} V? -73 L 41 1A m L v 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 w Q Q Q .1 L LL r v 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 = O O 0 Ol U N lD w o N~ w w o N~ w 00 O E N N m v N r-I ri r-1 ri ri N N N 0 - C c"D H U m m V° U Lu 2 v Lo sZ a a CITY OF ASHLAND Council Communication November 16, 2015, Study Session Continued discussion of downtown behavior issues and additional approaches FROM: Dave Kanner, city administrator, dave.kanner@ashland.or.us SUMMARY: Councilor Seffinger has requested a continuation of the discussion of downtown behavior issues begun at the November 2 study session, in order to establish strategic application of resources and clarify direction to staff. BACKGROUND AND POLICY IMPLICATIONS: At its November 2°` study session, the Council discussed various approached to the downtown behavior issues that plagued the City for much of this past summer, and the Council developed to following list of strategies and tactics for staff to pursue: - Having an outreach worker (for youth or social services generally) in the downtown- Mental health services - Resource allocation on how police officers are allocated - Increased public education and enforcement (including signage) regarding the prohibition on public consumption of marijuana and open containers - Strict enforcement of alcohol and smoking laws, downtown and elsewhere - Providing police or other uniformed presence for 2016 - Safety net services - Proposal on education that included a roll out, options for funding and partnering with businesses or community groups (e.g., the Peace Commission and the Chamber of Commerce) - Draft a panhandling ordinance targeting aggressive panhandling that would pass Oregon Court review - Information on the Ambassador Program or similar programs - Create a strict enforcement list that included existing laws and regulations where strict enforcement might help. - Seasonal downtown staffing options and associated costs - Research jail space options and include operational mechanics and costs - Look into using a Downtown Streets or a Code of Behavior approach to get people out of homelessness. Research the program the City of Palo Alto used and include work programs like street and creeks cleaning Following a conversation between myself, Councilor Seffinger and the Mayor in which I offered that, given everything else we are currently working on, in addition to the press of managing the day-to-day affairs of the City, staff could not develop all of these proposals in a timely manner, Councilor Seffinger requested a study session discussion of which two or three of these items are the highest priority for staff time and resources. It was also suggested that to the extent some of these tactics and Page 1 of 2 lorrWahmall CITY OF ASHLAND strategies may require additional monetary resources, the Council have a discussion of where such resources might be found in the budget or whether to consider new revenue sources. COUNCIL GOALS SUPPORTED N/A FISCAL IMPLICATIONS: N/A STAFF RECOMMENDATION AND REQUESTED ACTION: N/A SUGGESTED MOTIONS: N/A. ATTACHMENTS: None. Page 2 of 2 Fr,