REQUEST FOR COUNCIL ACTION

RESOLUTION: 2005-74

SUBJECT: Update water utility rates.

RECOMMENDATION: Approval

SUMMARY AND BACKGROUND OF SUBJECT MATTER:

The City purchases water from the Denver Water Department and distributes it to approximately 700 customers in an area generally east of Pierce Street and north of 12th Avenue. Sixteen other entities serve the remainder of the City.

The rates charged the City's water customers have been changed from time to time to address increases in costs of purchasing water, maintenance, etc. The water utility is an enterprise fund for which rates must be sufficient to cover all costs of service attributable to the City's water customers. No general fund revenue is used by the water utility and water utility revenue is not available for purposes other than providing water service to the utility's customers.

Public Works recommends rates be modified effective January 2006 to those shown in the attached resolution. The bill for a typical single-family home in Lakewood would increase from $50.24 to $58.72 per two-month billing cycle under the proposed rates.

Lakewood's utility rates are currently inadequate to cover costs due to Denver Water rate increases. Also, the utility is anticipating the need for a major capital expenditure within the next five years to replace a water line in Colfax Avenue. The utility does not currently have an adequate capital fund for the replacement.

City Council has not increased water rates since fall 2003. Since the 2003 rate increase, Denver Water has increased the cost to purchase water three times. At this time, it is estimated that future Denver Water rate increases will be approximately 8 percent annually. Staff anticipates recommending that future Denver Water rate increases be passed on to Lakewood customers.

During December, a mailing will be sent to the City's water customers notifying them of the 2006 rate change. The first bills using the new rate will be due approximately April 28, 2006.

RESOLUTION ADOPTION DATE: November 28, 2005

ORIGINATED BY: Department of Public Works

STAFF PERSON RESPONSIBLE: Jay N. Hutchison, City Engineer, 303-987-7916

DOCUMENTS ATTACHED: Resolution 2005-74

SUBMITTED BY:
Richard J. Plastino, Director of Public Works

REVIEWED BY:
Joni Inman, Director Mayor and City Manager's Office
Michael J. Rock, City Manager