Agenda Item 8AAGENDA ITEM:
SUBMITTED BY:
DATE:
CITY COMMISSION MEETING
STAFF REPORT
AGENDA ITEM# 8A
JANUARY 13, 2014
Report on future capital cost replacement for reuse system
compared with proposed rates
December 5, 2013
STRATEGIC PLAN LINK: Strategic Plan Priority #2: Golf Course
BACKGROUND: A recommendation for the adoption of rates for sale of reuse water to
both residential and golf course customers was presented to the City
Commission on October 14, 2013. A question was raised during that
presentation about the cost to replace capital components of the reuse
system in future years and whether or not the proposed residential reuse
rate would be sufficient to cover those costs. This report is to answer
that question.
Reuse system capital equipment to be replaced in the future will include
not only equipment being installed under contract with the City of
Atlantic Beach as previously authorized by the City Commission, but
also reuse lines (purple pipe) being installed by the developer which will
be deeded to the City upon completion. Getting all that information
together has delayed the completion of this response.
Some of the equipment that will require replacement in the future has
life spans as little as five years while other components of the system are
expected to last at least 35 years. Replacement of various small pumps
and motors and repainting of equipment are examples of the shorter time
frames. Piping is one example ofthe 35+ year lifespan.
Most of the reuse lines and equipment will be utilized both for the
residential customers as well as the golf course while other components
will only be related to the residential subdivision.
The annual cost of the future requirements for capital equipment
replacement allocated to the residential customers, based upon the
percentage of reuse water that will be used, equals $20,100 per year. An
allocation of the estimated annual operating cost for the residential
customers is $8,976. Total estimated costs for residential customers
equal $29,076 per year.
BUDGET:
RECOMMENDATION:
ATTACHMENTS:
AGENDA ITEM# SA
JANUARY 13, 2014
The total estimated revenues from the sales of reuse water to residential
customers, as estimated in the September 7, 2013 staff report, is
$58,000. The only other costs which are not included in this calculation
are for meter reading and associated billing. However, those costs are
expected to be minimal, especially considering that the meter readers
will already be on site reading the regular water meters and utility bills
will be sent out to each of those customers for water, sewer and garbage
services.
Consequently, the answer to the question raised by the City Commission
as to whether or not sufficient revenues will be received from the
proposed residential rate to cover the City's costs, including future
capital replacement, is yes.
The cost to construct the reuse system is already included in the City's
FY-14 budget, along with annual operating costs. No capital equipment
replacement is budgeted because the system has not yet been built and
the earliest replacement costs are estimated to be five years in the future.
There are no revenues for reuse included in the City's FY -14 budget
because the first residential units will not be constructed until late in
2014 and the City's agreement with the country club for providing golf
course irrigation does not charge for irrigation during the first year of
construction and grow-in.
This is intended to provide an answer to the Commission's questions.
No action is necessary at this time. However, the City Commission
should adopt rates for sale of reuse water by the summer of2014.
1) Reuse System Replacement Cost Estimate dated 12/5/2013
2) Staff Report of September 7, 2013
AGENDA ITEM# 8A
JANUARY 13,2014
Reuse System Replacement Cost Estimate 12/5/2013
Item/ Replacement Schedule 5 years 6 years 12 years 35 years Total/ Year
A. Shared Equipment
1. Reuse Pumps (3) $6,000 $60,000
2. Chemical Metering Pump Unit
(2 pumps) $1,500 $20,000
3. CL2 Monitoring Equip. $4,000
4. Turbidity Monitoring Equip. $2,500
5. Chemical Storage/ Concrete
Structures $95,000
6. Pipe/ Fittings $337,400
7. Building Canopy $20,000
8. Electrical Equipment $188,100
10. Msc. Yearly replacement $20,000
9. Instrumentation $121,000
Subtotal $27,500 $6,500 $80,000 $761,500
Present Value per year $5,500 $1,083 $6,667 $21,757 $35,007
B. Equipment For Residential Reuse
System Only
1. Hydrotank Repainting/
Replacement $4,000 $45,000
2. Residential Meter Replacement $18,000
3. Pipe Installed by Developer $308,439
Subtotal $4,000 $18,000 $353,439
Present Value Per Year $800 $1,500 $10,098 $12,398
Operating Cost Estimate/ year $40,800
Usage of Reuse
* Golf course GPD 250,000 78%
* Residential units; GPD 180 71,013 22%
Total 321,013 100%
Operating Shared Residential
Allocation of Annual Costs Cost Equipment Only Equip. Total
* Golf Course $31,824 $27,306 $0 $59,130
* Residential Units $8,976 $7,702 $12,398 $29,076
Total $40,800 $35,007 $12,398 $88,205
AGENDA ITEM:
SUBMITTED BY:
DATE:
STRATEGIC PLAN LINK:
BACKGROUND:
CITY COMMISSION MEETING
STAFF REPORT
Proposed Rates for Sale of Reuse Water to Customers
Jim Hanson, City Manager
September 7, 2013
Strategic Plan Priority Number Two; Golf Course
AGENDA ITEM# 8A
JANUARY 13, 2014
Attached for your consideration is a proposed set of rates for reuse water.
These should be adopted by the City Commission by ordinance just like other
water and sewer rates. However, it is not necessary to adopt them immediately
due to the schedule for construction of new homes in the golf course
subdivision and the proposed provision in the Master Agreement with the
Country Club whereby there would be no charge for reuse during the first 18
months of grow-in and operation.
These proposed rates are similar to the cunent Atlantic Beach water rates in
several ways. They have both a base charge and a volume charge based on
metered consumption. There are also separate rates for residential and
commercial customers. This reuse rate adds a third category; bulk customers.
This is similar to the rates for reuse water established by the JEA and Clay
County. A summary of the rates from both of these utilities is attached.
For the proposed reuse rates for residential and commercial customers, the base
charge per month is based on the meter size and is proposed to be the same
amount that the City currently charges for regular water sales. The City's
charges for regular water volume include an increasing block rate whereby the
more a customer uses, the higher amount they pay per thousand gallons. This
rate structure has been required as part of our water consumption permit issued
by the SJRWMD to encourage conservation. While reuse water is also a
valuable resource that should not be wasted, it does not seem necessary to have
as complex a rate structure. Consequently, a single volume charge of$1.49 per
thousand gallons is proposed. This is calculated to be two-thirds of the cost of
regular water for an average 12,000 gallon per month inigation customer. The
12,000 gallon per month figure was obtained by averaging the consumption of
a number of inigation meters in the Selva Links ide Subdivision which are most
similar in size and nature to the lots proposed for the new country club
development. Once the 180 homes are built in the new subdivision, and
estimating an average monthly usage of 12,000 gallons, the revenue to the City
per year for residential customers under this rate structure would be $58,000.
The bulk rate is based upon a pro-rated portion of the estimated operating costs
of the reuse facility. These are cunently estimated to be $40,800 per year.
Based upon this proposed bulk rate, and the provisions in the master agreement
BUDGET:
ATTACHMENTS:
AGENDA ITEM# 8A
JANUARY 13, 2014
for charging the country club for reuse water, the estimate of revenues from the
country club per year will be $16,000.
This brings the estimate of total revenues from the country club golf course and
the new 180 unit subdivision to be $74,000 per year.
The estimated operating costs for the reuse system of $40,800 are already
included in the FY -14 budget. There are no revenues for reuse budgeted in
FY -14 because of the timing of construction and provisions in the proposed
Master Agreement. Total revenues are estimated to equal $74,000 per year
after subdivision construction is complete.
1) Proposed Atlantic Beach Reuse Rates
2) Summary of JEA and Clay County Reclaimed Water Rates as of October
2012
Proposed Atlantic Beach Reuse Rates
Residential
Service Availability Charge:
Meter Size Amount
3/4" $8.97
1" $8.97
1.5" $8.97
2" $8.97
3" $8.97
Volume Charges per 1,000 gallons
Volume Cost/1000 gals.
All kgal $1.49 kgal
Commercial
Meter Size
3/4"
1"
1.5"
2"
3"
4"
Volume
All kgal
Bulk Rate
Volume
All kgal
9/4/2013
Amount
$8.97
$11.22
$22.43
$35.85
$71.73
$112.08
Cost/1000 gals.
$1.49 kgal
Cost/1000 gals.
$0.35 kgal
AGENDA ITEM# 8A
JANUARY 13, 2014
JEA Reclaimed Water Rates as of 11/22/12
Residential Commercial
Service Availability Charge:
Meter Size Amount Meter Size Amount
3/4" $18.90 3/4"
1" $31.50 1" $31.50
1.5" $63.00 1.5" $63.00
2" $100.80 2" $100.80
3" $201.60 3" $201.60
4" $315.00
6" $630.00
8" $1,008.00
Volume Charges per 1,000 gallons
Volume Cost/1000 gals. Volume Cost/1000 gals.
1-14 kgal $2.60 1-14 kgal $3.44
> 14 kgal $5.60 > 14 kgal $3.96
Bulk Rate
Volume Cost/1000 gals.
All kgal* $0.14
All kgal** $0.28
*Customers who are forgoing groundwater withdrawal from SJRWMD
**All other bulk customers
Clay County Utility Authority Reclaimed Water Rates as of October 2012:
Residential Commercial
Base Charge:
Meter Size Amount Meter Size Amount
3/4" $14.69 3/4" $14.69
1" $36.72 1" $36.72
1.5" $73.45 1.5" $73.45
2" $117.51 2" $117.51
3" $235.03 3" $235.03
4" $367.23
6" $734.46
8" $1,175.14
Volume Charges per 1,000 gallons
Volume Cost/1000 gals. Volume Cost/1000 gals.
AGENDA ITEM# SA
JANUARY 13, 2014
1-15 kgal $0.57
16-20 kgal $1.13
> 20 kgal $1.70
1-15 kgal
16-20 kgal
> 20 kgal
Wholesale Rate
Volume
All kgal
$0.57
$1.13
$1.70
Cost/1000 gals.
$0.32
AGENDA ITEM# SA
JANUARY 13, 2014