Utilities Rate Advisory Commission Meeting, May 26, 2021

The Utilities Rate Advisory Commission (URAC) met on Wednesday, May 26, 2021, at 5:30 p.m. via teleconference. The meeting included a consent calendar, two major discussion items (a financial overview of the Recycling and Solid Waste Division and a storm drainage system workshop), and no public comments. Key topics included the insolvency risk of the Solid Waste Fund by fiscal year 2026, the urgent need for a storm drainage rate increase (the first since 1996), and the initiation of a Proposition 218 process for storm drainage fee adjustments.

Consent Calendar

• Approved the minutes from the December 9, 2020 meeting. Commissioner Gutowski abstained as she was not present at that meeting. The motion passed with the remaining commissioners voting yes.

Discussion Items

1. Recycling and Solid Waste Division Financial Overview

• Janice Conerly-Coleman, Support Services Manager, presented the financial outlook for the Solid Waste Fund. User fees make up 98.5% of revenue. Expenditures exceeded revenue by $3.5 million in the current year, with fund balance used to bridge the gap—an unsustainable practice. Labor costs account for 44% of operating expenses and have increased 35% in five years. Collection vehicle costs (side loaders) have risen 44% over a decade, to $140,000 each. The five-year forecast without a rate adjustment shows the fund becoming insolvent in fiscal year 2026. Yard waste costs have increased more than 100% due to Senate Bill 1383 compliance. Recycling faces ongoing litigation with Waste Management over processing costs, which regionally range from $80 to $140 per ton. Street sweeping remains healthy. Commissioners asked about overtime reduction from rerouting and the timing of future rate adjustments; staff indicated a series of increases may be needed starting in 2022.

2. Department of Utilities Storm Drainage Workshop: System Overview

• Tony Bertrand, Engineering Division Manager, provided an overview of the city’s storm drainage system. The city sits in a levee-protected bowl requiring pumped drainage. The system includes 105 pumping stations, 842 miles of pipeline, 82 basins, 68 miles of levees, and a combined sewer system. The system was built to a 10-year/100-year level of service adopted in 1993. A backlog of $236 million in capital projects exists to meet that standard, with $164 million needed for the 100-year storm level. The drainage fund has not had a rate increase since 1996. A 2020 city audit found that expenditures will exceed revenues and reserves by FY2026 and recommended $34 million annual investment for best practices. Three funding scenarios were shown: minimal CIP (negative fund balance by FY2027), critical CIP (negative by FY2024), and best practice CIP (negative by FY2023). New costs include illegal encampment cleanups (budgeted $400,000 in FY2022, up from $0 in 1996) and rodent abatement. A consultant (TBWBH with subcontractors FM3 and NBS) has been hired for under $250,000 to guide a Proposition 218 process, including a customer survey of 1,200 customers conducted in April 2021. The goal is a mail ballot election in early 2022. Commissioners inquired about permit violations, potential FEMA floodplain remapping, and the URAC’s role in the 218 process. Staff clarified that URAC will be involved in the protest hearing and rate proposal before council and ballot authorizations.

Public Comments & Testimony

• No public comments were received.

Key Outcomes

• The commission received and filed the Solid Waste Division Financial Overview and the Storm Drainage Workshop presentation.
• Staff will return with the customer survey results (expected June 2021) and a deeper dive on the Proposition 218 process at a future meeting, likely in August 2021.
• No formal votes were taken on policy or rate changes; the presentations were informational.