Service Rates for Fiscal Year 2016 Approved
13, 2015, USD's Board of Directors held a public hearing regarding
the collection of sewer service charges on the property tax roll.
The Board considered and approved sewer service rates for Fiscal
Year 2016 (July 1, 2015 - June 30, 2016.) Links to Agenda items
pertaining to sewer service rates are below:
of Public Hearing - Fiscal Year 2016 Sewer Service Charges
HEREBY GIVEN that pursuant to Sections 5471 and 5473, et seq. of
the Health and Safety Code of the State of California and Union
Sanitary District Ordinance No. 31, the Board of Directors of Union
Sanitary District will consider adoption of Ordinance No. 31.38
which establishes Sewer Service Charges for the Fiscal Year ending
June 30, 2016. The District has elected to collect its charges for
sewer services on the tax roll, in the same manner as general taxes.
has filed a written report with the Secretary of the Board of Directors
describing each parcel of real property subject to the charges and
amount of the charges against that parcel for fiscal year 2016.
The report is on file and available for inspection at the District's
offices at 5072 Benson Road, Union City, California.
FURTHER GIVEN that on Monday, the 13th day of July 2015, at the
hour of 7:00 p.m., or as soon thereafter as the matter may be heard,
at the Union Sanitary District Boardroom, 5072 Benson Road, Union
City, California, in said District, the Board will hold a hearing
on the collection of sewer service charges on the property tax roll.
At the hearing, the Board of Directors will hear and consider all
objections or protests, if any, to the District's report. Any questions
regarding the charges may be directed to the Business Services Manager
at (510) 477-7500.
By order of
the Board of Directors of Union Sanitary District
to notice with Board signature
Increase FY 2016
this article as a pdf
District (USD) is an award winning public agency providing wastewater
service to the Tri-Cities (Fremont, Newark and Union City). USD
held a public hearing in July 2015 to consider the third and final
rate increase recommended by a 2013 rate study. In 2013, USD sent
a Proposition 218 notice to all property owners in Fremont, Newark,
and Union City regarding rates for Fiscal Years 2014, 2015, and
2016. Before the July 2015 hearing, USD published notices in two
newspapers and on its website containing information regarding time,
place, and format for public comment.
recognizes that no one enjoys a rate increase and continuously looks
for ways to reduce costs while maintaining a high level of service.
Only four agencies of 26 surveyed in the Bay Area have rates lower
than USD. To meet increased expenses, and to allow for necessary
and required maintenance and upgrades to the Districtís infrastructure,
USD staff recommended the Board adopt a modest increase in sewer
service charges for all customers. For single-family homeowners
(the majority of USDís customers) the increase equates to $1.67
per month, bringing the annual total to $377 for Fiscal Year 2016.
to keep rates low and stable
in 2004, USD implemented a rate increase program for the purpose
of funding capital improvements and keeping pace with increasing
operation costs facing the agency. Prior to 2004, USD had not increased
rates since 1997, and in fact decreased them in 1999, 2000, and
2002. During that time, the District used reserves to finance the
majority of its capital projects, which significantly decreased
this account. A modest rate increase program was therefore implemented
to carry out the Boardís philosophy of keeping rates relatively
stable over time and protecting ratepayers from large fluctuations
or price spikes that can occur in a service delivery business. Under
this program, USDís sewer service charges have increased an average
of 5.5 percent each year since 2004. A graph illustrating the recent
history of rates and capital expenditures is shown below.
District plans 10 years in advance for capital projects and needs,
these capital expenditures are evaluated on an annual basis. Capital
expenditures for FY 2015 are anticipated to total $15.3 million.
Currently, capital expenditure projected totals for Fiscal Years
2016, 2017, and 2018 are $16.75, $23.25, and $26.2 million respectively.
rates in perspective
an annual rate comparison survey of 26 Bay Area wastewater agencies.
The Districtís goal is to remain in the lower 1/3 of agencies surveyed,
meaning USDís rates would be lower than 2/3 of neighboring agencies.
Today, only four districts have lower rates.
rate comparison history
below shows USDís rate percentiles since the District began surveying
26 Bay Area wastewater agencies annually in 2002. USD's rates are
currently in the 15th percentile.
to other utilities and services, USDís rates are the lowest
household in USDís service area pays considerably more for services
like those below:
Rate shown is USD's FY 2015 single-family residential rate (July
1, 2014 - June 30, 2015)
monthly utility rates are based on a typical residential household
and were obtained from service providers in August 2014. Cell phone
monthly bill is based on a typical calling plan for a family of
Capital Improvement Program Is A Large Driver For Increased Rates
a large number of facilities and equipment, including more than
811 miles of sewer lines, seven pump stations, the treatment plant
and other infrastructure Ė much of it built in the late 1970s. Responsible,
timely upkeep of these facilities has allowed the District to avoid
catastrophic failures, interruptions to service, major spills, and
sinkholes that often plague other utilities and agencies.
the primary focus of the Districtís Capital Improvement Program
has been on rehabilitation, replacement and repair of its pump stations
and treatment plant equipment. For Fiscal Years 2004 - 2014, USD
spent more than $151 million on capital projects. The plant operates
24/7/365 to process an average of 23 million gallons of untreated
sewage every day, and operates and maintains more than 50 major
treatment process units and buildings. A large portion of District
facilities are now over 35 years old.
Rate Increase Compared To Inflation
Price Index, typically referred to as inflation, for the San Francisco
Bay Area has averaged approximately 3% annually (between 1996 and
2014). The proposed rate increase does exceed inflation as it takes
operational and capital increases into consideration, which are
not the types of expenses included in CPI computations. Capital
expenses, or the cost of projects required to maintain the integrity
of the Districtís infrastructure, are based upon a prioritized need
and life cycle of the infrastructure. Limiting rate increases to
accommodate inflation only would result in a short-fall in funds
necessary to safely and responsibly operate the District and maintain/rehabilitate
infrastructure. The difference in revenues between 5.7% and 3% over
the next four years would equate to approximately 14.5 million dollars
in lost revenue.
revenue, District staff would have to be significantly reduced and/or
capital projects would be postponed or not completed. All of the
projects proposed in the Districtís CIP program are necessary; thus,
delaying projects raises the likelihood of failure, increases project
costs, and leads to possibly even larger future rate increases.
Approximately 15 critical projects in the current CIP budget would
need to be deferred to a later date if revenues were decreased.
and deleting planned CIP projects increases the risk of failure.
Repair and replacement costs increase when infrastructure fails
due to the emergency nature of this work. These additional costs
include but are not limited to uncompetitive bids, clean-up, claims
for damage, traffic delays, material and labor premiums and environmental
impacts that can lead to permit violations and fines. A planned
repair and replacement program is significantly more cost effective
and efficient. The deferment of projects does not secure a reduced
rate as these projects will need to be completed at some point.
If the rate
increase were reduced to 3%, utilizing the CIP budget currently
recommended by staff, the Structural Renewal & Replacement Fund
balances would be negative. Under this scenario negative fund balances
would begin in FY 2018 and extend five consecutive years, with the
largest negative balance of $16.2 million in FY 2020. This would
not only violate the Districtís adopted Reserve Fund Policy, but
also significantly weaken its financial stability. In accordance
with generally accepted government accounting standards, the District's
policy states that, at a minimum, the fund should remain positive
throughout a ten year planning period.
below shows the Districtís fund balances under a 3% increase scenario:
to funding USDís capital improvement program, rate increases have
been implemented in part to address other rising costs. Approximately
42% of the Districtís total budget is dedicated to personnel expenses,
which is within range of other service providers in this industry.
Every business has faced steeply rising employee costs; USD is no
different. To help offset these rising costs, all USD employees
pay a portion of their health care and pension benefits. By March
of 2016, employees of USD will be paying approximately 30% of the
overall pension costs. In addition, USD is subject to pension reforms
enacted by the State. These reforms reduce the retirement benefit
and raise the retirement age for new USD employees that have not
participated in the previous retirement program. Currently, approximately
10% of USDís workforce participate in the new program.
electricity, and fuel also account for a significant portion of
the Districtís budget - those costs have similarly increased substantially
over the last 10 years. Chemical costs alone were over $1.8 million
in FY 2014. USDís electricity bill in FY 2014 was over $2.1 million.
While USD uses renewable energy wherever possible and works toward
energy-independence, the District must still purchase power from
outside sources, generally at rising costs every year. Moreover,
the cost of complying with state and local regulations, including
annual permit fees, also continues to rise.
One of the
many factors keeping USDís rates low is efficient service and use
of technology. By implementing technology to streamline permitting,
plant operations, maintenance management and engineering services,
the District has been able to maintain conservative staffing levels,
helping to control costs. USD also teams with neighboring agencies
to purchase chemicals and equipment at discounted prices. Careful
financial planning allows USD to finance capital improvements at
very low, below-market rates.
USD is proud
of its award winning service. Since 2004, nearly every team or workgroup
at USD has received awards. A partial list of those awards includes:
Performance Platinum Award from the National Association
of Clean Water Agencies for five years of 100% compliance
at the Districtís Treatment Plant. USD's Plant has been
recognized for 21 consecutive years by NACWA (and its predecessor,
AMSA) for outstanding performance
Achievement Award for 2014 from the California Water Environment
CWEA Collection System Worker of the Year Ė 2013
Al Ditman Professional Development Award - 2013
Safety Program of the Year Ė Statewide Award 2010
Treatment Plant of the Year for the State of California
Collection System Maintenance Program of the Year - 2005,
2009, 2010, 2012
EPA Pretreatment Program of the Year (National Award) 2008
Project Award, 2007 - American Public Works Association
Magazine International Top 125 Training Programs (private
and public sector businesses) Ė 2011 (USD was one of only
3 public sector agencies of the 125 companies)
information, please take a look at USDís newsletters, which can
be found here.
Budget and Expenses Overview
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USD is proud
to provide award-winning, cost-effective service that protects human
health and San Francisco Bay. The District operates on an annual
budget of approximately $56.7 million, and raises revenue from two
primary sources: sewer service charges paid by residential customers,
businesses, and other users of the system; and capacity fees paid
by developers and others who connect to USDís system. A small portion
of annual revenue comes from interest income and other administrative
goal is to keep its sewer service charge rates in the lowest third
of 27 Bay Area agencies that provide sanitary sewer service. These
agencies are surveyed on an annual basis. Currently, USDís rates
are in the lowest 15% of surveyed agencies.
and Capital budgets are projected to increase in Fiscal Year 2016.
Like other agencies or businesses, the District has expenses, such
as labor, energy, chemicals and parts required for preventative
maintenance, which commonly increase annually and have direct influence
on sewer service charges. These include but are not limited to:
- Infrastructure Ė USD is responsible for
operating, maintaining and replacing assets worth more than
$643.7 million. The District must ensure it has adequate
resources for projects such as seismic retrofitting of aging
facilities, rehabilitation of the collection system, and
repair and replacement of mechanical equipment. On average,
the District spends $18.45 million each year on Capital
projects to refurbish, replace and rehabilitate aging infrastructure.
Costs for these projects are subject to increases.
- Salary and benefits Ė Through a negotiated
multi-year labor contract, the District pays increases in
health care costs and annual salary increases for employees.
The District and employees share in retirement costs. For
FY 2016, our total salary and benefits expenses are expected
to increase by 1.2 percent.
- Biosolids removal Ė The District is entering
a new five-year contract that increases costs for hauling
of biosolids discharged into the collection system and treated
at USDís plant.
- Chemicals Ė The drought has increased the
degree of root intrusion into pipes in the Districtís collection
system, and more chemicals are needed to control this. The
cost of these chemicals, as well as chemicals needed for
treatment processes, has increased. USD participates with
other agencies in a chemical consortium to increase buying
power and keep costs at a minimum.
- Power Ė Wastewater treatment is an energy-intensive
process. While USD uses renewable energy wherever possible
and works toward energy-independence, the District must
still purchase power from outside sources, and those costs
generally rise every year.
projects that over the next 10 years, these and other factors will
result in an average annual increase of 4 percent in operating expenses.
For the purposes of long-term planning for increases in operating
expenses and capital expenditures, the District projects an average
annual increase of 5 percent in the sewer service charge.
projections are estimates, based upon a variety of assumptions that
are subject to changes over time. However, the District must plan
for the long term to anticipate normal increases in its recurring
costs, the costs of maintaining and replacing an aging infrastructure,
and the costs of complying with changing regulatory requirements.
This planning helps the District fulfill its fiduciary responsibility
to ensure it has revenues needed to remain financially sound and
keep rates as stable and predictable as possible.
evaluates rates every year and makes adjustments according to near
term and long term needs. Rate changes are subject to a prescribed
Service Charges and Ordinances
Revenues to operate the District are collected yearly from residents
and businesses that are connected to the sanitary sewer system.
The following information will explain how yearly Sewer Service
Charges are calculated and what steps businesses can take to minimize
Annual Sewer Service Charges are placed on your Alameda County property
tax statement. The charges appear on the tax statement as a line
item next to our phone number 477-7500 and are listed as "Union
Sewer Svc." Sewer Service Charges are not a property tax and
are not related to the assessed value of a property. They represent
a charge for a service provided, similar to your phone and P.G.
& E. bills. We simply include the yearly charges on the property
tax statement to save the administrative cost of generating and
mailing our own invoices. More details on how the charges are calculated
are provided below.
Customers are charged at a flat rate.
Charges for residential customers are based on a flat rate per dwelling
unit. The current rate (2015-2016) per dwelling unit is $377.00
per year. This is the charge for a single family home. A property
with multiple housing units such as an apartment complex is charged
$326.00 for each dwelling unit on the property. For example, a ten
unit apartment complex would be charged $326.00 x 10 or $3,260.00
per year. This rate is effective July 28, 2015.
How water use is determined for Commercial & Industrial Charges
Charges for commercial and industrial customers are based on the
volume and pollutant strength of the wastewater being treated. The
volume of wastewater is determined from water meter records obtained
from the Alameda County Water District. Credit is given for water
used that is not discharged to the sanitary sewer, such as landscape
irrigation. Due to the lead time involved to get yearly charges
placed on the County property tax statements, the Sewer Service
Charges on the current year's tax statement reflect services already
provided. Water use for purposes of computing the service charge
is measured from March through February of the previous year. The
Sewer Service Charge for this period is then placed on the property
tax statement that is mailed out in October, with the first installment
due December 10th. The Sewer Service Charge Timing Chart below,
illustrates when charges are collected.
for Commercial & Industrial Users
How pollutant strength is determined
for Commercial and Industrial Charges
Pollutant strength is
measured in samples of wastewater for two components: chemical oxygen
demand (COD), and suspended solids (SS). Wastewater with high strength
costs the District more to treat. For example, wastewater with high
levels of suspended solids produces more sludge (a by-product of
treatment). Sludge is treated and then disposed of at an agricultural
site. If more sludge is produced, our hauling and disposal costs
are higher. Therefore, rates are structured so that customers are
charged based on the volume of solids they contribute to the system.
Wastewater strength for
commercial and industrial customers is determined by one of three
primary methods: General Assignment, Specific Assignment, and
General Assignment: Most commercial and industrial customers,
or properties that include several different types of businesses,
are calculated by the General Assignment method. With this method,
customers are assigned a general strength of strong, moderate or
weak. The three rate components, VOLUME, COD, and SS are combined
into one rate per 1,000 gallons of wastewater discharged. The current
rates for Fiscal Year 2016 (as of July 28, 2015) are shown below:
Strong $7.90 per 1,000
gallons per year
Moderate $4.26 per
1,000 gallons per year
Weak $3.73 per 1,000
gallons per year
Specific Assignment: Strength values are based on studies
of wastewater from similar types of businesses and represent an
"average" for that group. The total charges under this
method are the sum of three components - volume, COD, and SS. USD's
current rates for restaurants are listed below:
Fast Food Restaurants
$7.55 per 1,000 gallons per year
Full Service Restaurants
$9.65 per 1,000 gallons per year
Direct Sampling: This method applies only to industrial customers
with industrial discharge permits. Under this method, samples of
wastewater are collected and sent to a laboratory for analysis.
Both COD and SS are measured and then averaged with other samples
taken that year to determine an average strength for use in calculating
Sewer Service Charges. The sum of three components determines the
total charge. The current rates for each component are:
Volume (Flow) = $2.37
per 1,000 gallons per year
COD = $240.51 per 1,000
pounds per year
SS = $440.95 per 1,000
pounds per year
For more details on how
annual charges are calculated, see the sample rate calculations
for all three methods.
How Sewer Service Rates Are Established
Union Sanitary District is governed by a five-member Board of Directors
which is elected by the residents of the service area. Rates are
reviewed each year based on financial plans for the District and
are subject to approval by the Board. Before rates are set, a notice
is published in the Argus newspaper. If a rate increase is proposed,
the District also complies with Proposition 218 "Right to vote
on Taxes" notification requirements. The annual public hearing
is normally scheduled in June of each year with rates becoming effective
in July. Customers are encouraged to participate in the public hearings
and can send written comments on items before the Board to the attention
of the General Manager.
How Sewer Service Charges Can Be Minimized
For commercial and industrial customers that are under the Specific
or General Assignment methods, the most effective way of minimizing
charges is water conservation. Charges are directly tied to the
volume of water used; therefore, saving-water will reduce the Sewer
Service Charge as well as charges for water. There is a wide variety
of water-saving fixtures on the market. Low-flow toilets, shower
heads and faucet aerators are among the most cost effective. For
industrial customers under the Direct Sampling method, water conservation
and any reductions in pollutant loadings will minimize service charges.
One of the most effective ways to reduce loadings is to minimize
the amount of waste being discharged to the sanitary sewer system.
The District sponsors a Pollution Prevention Program to assist customers
in reducing their waste streams. Call in the District's Commercial/Residential
Customer Team at (510) 477-7500 for more information. More specific
information on water conservation can be obtained from the Alameda
County Water District at (510) 659-1970.
Due to the lag in billing, commercial or industrial customers who
rent or lease their property should carefully consider how Sewer
Service Charges are addressed in the lease or rental agreement.
Changes in tenants with different demands for water or that have
different wastewater strengths will affect the yearly service charge.
A landlord may not become aware of potential changes in service
charges until well after tenant changes have occurred. All
Sewer Service Charges are billed to the property owner. Property
owners are responsible for paying the charges whether or not they
are able to collect from their tenants.
Service Charge Ordinance Ordinance 31.37 An ordinance
providing for the establishment of sewer service charges for fiscal
years 2014, 2015 and 2016. Effective through July 28, 2015.
Service Charge Ordinance Ordinance 31.38 An
ordinance providing for the establishment of sewer service charges
for fiscal years 2014, 2015 and 2016. Effective date July