Rate Study 2023
The City of Grover Beach is dedicated to providing safe and reliable water and wastewater services in a cost-effective manner. The City provides water and wastewater service to residential, landscape, and commercial customers. Bi-monthly rates charged to system users (customers) are the primary source of revenue to operate the water and wastewater systems and are used solely for this purpose. Rate revenue provides funding for annual operating and maintenance costs, capital projects to improve water and wastewater infrastructure, administration, and maintaining adequate fund reserves and planning for contingencies.
In order to maintain high-quality utility services and ensure adequate water supply, several water and wastewater system capital projects over the next five years are proposed to be supported by rates. These projects include:
- Central Coast Blue Water Sustainability Project (for more information on this project, please go to https://www.grover.org/FAQ.aspx?TID=24 or https://www.centralcoastblue.com/)
- Water reservoir maintenance
- Installation of an automated meter reading system
- Water meter replacements
- Booster station upgrades
- Sewer upgrades for both future and existing flows
- Front Street and South Oak Park Boulevard lift station upgrades
- Citywide sewer lining projects.
2023 Water and Wastewater Rate Study
Current user rates do not provide adequate funding for long-term operation and maintenance expenses and capital projects for the City’s water and wastewater systems. The City engaged a consultant to perform studies of the City’s water and wastewater funds, and to recommend user rates designed to meet the City’s financial obligations, including operating and debt service costs, funds for needed capital projects, and maintenance of cash reserves.
The study recommends the City adopt a rate structure that allows for annual water revenue increases of up to 19.7% for years 1-4 beginning in February 2024 along with a 4% increase in year 5 and annual wastewater revenue increases of up to 19.5% for years 1-4 beginning in February 2024 along with a 4% increase in year 5. If this structure is adopted and rates are set at the maximum level each year, the average bi-monthly bill for residential water customers using 15 units per billing period is projected to increase from $94 to $120 ($26 increase bi-monthly or $13 per month). For wastewater customers, the projected increase is from $26 to $31 ($5 increase bi-monthly or $2.50 per month). The combined total increase is from $120 to $151 ($31 increase bi-monthly or $15.50 per month). This total does not include the bi-monthly South San Luis Obispo County Sanitation District charge of $50.98 where there is no change in rates and were not involved in this study. Of note, should the City receive additional grant funding or other funding to offset costs, the City Council has the ability to set water and/or wastewater rates at a lower amount than the maximum allowed.
The rate structures developed in the studies comply with federal, state, and City laws and guidelines. They are consistent with good industry practices and are equitable among the City’s customer classes. At the City Council Meeting on September 25, 2023, the report on these studies was presented which included recommended utility rates through January of 2028. The full Utility Rate Study may be viewed here.
Process/Public Hearing for the Proposed Water and Wastewater Rate Structure
Pursuant to Section 6 of Article XIII D of the California Constitution, and as approved by the City Council on October 23, 2023, the City has provided written notice by mail of the proposed rate structure to the owner of record of each parcel upon which the rates will be imposed. The notice included the amount of the proposed rates, the basis upon which the rates were calculated, the reason for the proposed rates, as well as the date, time and location of the public hearing before the City Council. These notices were sent in excess of the required 45 days in advance of the December 11, 2023 public hearing. Pursuant to Section 6(a)(2) of Article XIII D, the City will consider all protests against the proposed rate structure. If a majority of the owners of the identified parcels (50%, plus one) submit a written protest, the City cannot implement the proposed rate structure.
For more information, please see:
- Rate Study Report (PDF) - How the consultant arrived at the proposed new rates
- Water Rate Comparison (PDF)
- Public Information Meeting Recording on November 8, 2023
- Public Information Meeting Questions and Answers
- Notice of Public Hearing - Mailed to all customers on September 27, 2023
- Re-Noticing of Public Hearing - Mailed to all customers including property owners on October 24, 2023
- Central Coast Blue Information from City Council Meeting on Monday, October 23, 2023
- Staff Report (PDF) - Utility Rate Study Report and Approval of Proposition 218 Noticing (September 25, 2023)
- Staff Report (PDF) - Approve the Proposition 218 Noticing Process for a Hearing on Proposed Water and Wastewater Rates
- Staff Report (PDF) - Utility Rate Study Workshop (September 5, 2023)
- Staff Report (PDF) - Central Coast Blue Joint Powers Authority Agreement (September 26, 2022)
- Staff Report (PDF) - Central Coast Blue Cost Sharing Agreement (February 15, 2022)
- What is the Central Coast Blue project?
Central Coast Blue is a regional recycled water project that will provide a sustainable water supply and will protect the Santa Maria Groundwater Basin (the City of Grover Beach’s largest water supply source) from seawater intrusion. The project will include construction of a new Advanced Water Purification Facility (AWPF) to treat wastewater from the Pismo Beach wastewater treatment plant with state-of-the-art technology to purify the water before injecting it into the groundwater basin. For more information on the water treatment process, please visit https://www.centralcoastblue.com/about.
- Who is participating in the Central Coast Blue project?
Central Coast Blue is a collaboration between the cities of Grover Beach, Arroyo Grande and Pismo Beach. The City Councils for each city approved a Joint Exercise of Powers Agreement in 2022 to form the Central Coast Blue Regional Recycled Water Authority (CCBRRWA) to provide for the operation of the project. The CCBRRWA is governed by a three-member Board of Directors, consisting of one representative from each city (currently Mayors Karen Bright of Grover Beach, Caren Ray Russom of Arroyo Grande and Ed Waage of Pismo Beach). To find meeting agendas and other CCBRRWA information, please visit https://www.centralcoastblue.com/governance.
- How will the project provide water sustainability?
The Central Coast Blue project will intake treated water from Pismo Beach’s wastewater treatment plant and pipe that water to the new AWPF. That water will then be treated to drinking water standards with advanced treatment technologies to prepare it for groundwater recharge. An estimated 900-1,000 Acre Feet (AF) per year of purified water will be injected into the groundwater basin to replenish the supply of water and prevent seawater intrusion into the existing groundwater supply. This will not only protect the groundwater supply the City of Grover Beach currently relies upon, but will also provide an estimated additional 324-360 AF per year of reliable groundwater for the City of Grover Beach, based on the City’s 36% allocation.
- What is the current scope of the project?
Phase 1 of the project proposes to construct the AWPF facility in the City of Grover Beach, as well as eight (8) wells (3 injection wells and 5 monitoring wells). Phase 1 will also include approximately two (2) miles of pipeline, including 1.1 miles of pipeline in Grover Beach. Please see the attached map showing the location of proposed pipelines in Grover Beach. In coordination with Phase 1, the City of Pismo Beach will also construct one new production well in Pismo Beach to replace an existing failing well, which will be fully funded by Pismo Beach.
Phase 2 of the project would include an expansion to the AWPF to purify water from the South San Luis Obispo County Sanitation District (SSLOCSD) Wastewater Treatment Plant. Up to three (3) additional injection wells and up to six (6) additional monitoring wells would be constructed in Phase 2 along with interconnecting pipelines. The schedule for Phase 2 of the project has not been established. Phase 1 is a stand-alone, independent project and is not contingent upon Phase 2, which may be considered and constructed should additional water supply from SSLOCSD be needed in the future.
- What is the project timeline?
Preliminary Engineering and piloting of this project began in 2016. The project is currently in the permitting process and final design stage. Construction is anticipated to begin in 2024 and be completed in 2026 with the additional water provided by the project available shortly after.
- How much will the project cost? How will it be funded?
The currently estimated cost of the project, including program costs from March 2022 through completion of construction (design, construction, implementation, and project contingency) is $93 million. It is anticipated that State and Federal grants will be used for 50% of that total cost. The remaining cost is anticipated to be funded with low-interest Water Infrastructure Finance and Innovation Act (WIFIA) loans totaling $47 million. The City of Grover Beach is responsible for 36% of the costs under the Cost Sharing Agreement approved by each City Council. If half of the City’s costs are covered by grant funding, as expected, the City’s share of funding will be $16.7 million, which will be funded with the WIFIA loan to be repaid by water rates. The projected cost does not include the cost of the land for the AWPF in Grover Beach which was purchased previously.
- Why has the cost increased since the original project cost estimate?
The estimated cost of the project has increased from $49 million to $93 million. The cost increase is primarily due to additional project features that were identified as the design was progressed past the conceptual phase and as a result of recent volatility in the construction market related to inflation, supply chain interruptions, and labor shortages. Cost increases have affected all sectors of the economy and are not unique to the construction market or public infrastructure projects. Due to continuing inflationary factors, project delays may lead to further project cost increases.
- How much additional water will Grover Beach receive?
As noted above, Phase 1 of the project is estimated to increase the total groundwater basin water supply by approximately 900-1,000 AF per year. Under the Cost Sharing Agreement, the City of Grover Beach will be allocated 36% of that additional water supply, or approximately 324-360 AF per year.
The project will also enhance access to existing groundwater supplies. Grover Beach, Arroyo Grande, Pismo Beach, and Oceano have reduced groundwater pumping to 25% of their entitlements to mitigate the threat of seawater intrusion. The Central Coast Blue injection wells will create a seawater intrusion barrier that will allow current groundwater pumping rates to be increased. The total water supply benefit to Grover Beach from the project is approximately 500 AF per year including new Central Coast Blue water supply and increased access to existing groundwater.
- Will the project require rehabilitation of newly improved residential streets in Grover Beach?
Although there will be some need to replace previously improved residential streets in order to install pipelines, the pipeline routes have been optimized to avoid existing utilities and minimize repairs in streets recently repaved. In total, only two blocks, including intersection crossings, of newly repaved streets will be affected. These streets will be fully restored by the project once pipelines are installed. The Phase 1 pipeline routes are shown on the attached map.
- Why isn’t the City considering using the SSLOCSD plant as an alternative to this project?
This option was considered in previous studies, however, it was determined that this is not a viable option, as the SSLOCSD facility is in a floodplain and subject to risks associated with climate change and sea level rise. The Coastal Development Permit issued by the Coastal Commission for the facility’s redundancy project is only valid through 2047, and the entire facility will likely be required to relocate when the permit expires. Construction of a recycled water facility at the SSLOCSD would be difficult to permit and locate given site constraints, and subject to the same limited term. Consequently, it is not financially responsible to invest significant funds in a facility that will require relocation in a relatively short period of time.
- Where can I learn more about the project?
For more information regarding the CCB project, please visit https://www.centralcoastblue.com/.
- How is Measure K-14 funding separate from the proposed rate study?
On November 4, 2014, voters approved Measure K-14, the Grover Beach Street Rehabilitation Safety Improvement Bond Measure. In approving the measure, the City was authorized to issue up to $48 million in general obligation bonds to fund local street rehabilitation and repair. The Measure K-14 bond payments are semi-annual property tax assessments paid by property owners based on assessed valuation. The Measure K-14 assessment amount is $95 per $100,000 assessed value, which amounts to 0.095% (less than 0.1%) of the assessed value of a property.
The water and wastewater rates are different from the Measure K-14 street repair bond payments. The water and wastewater rates are bi-monthly charges for service that can vary each billing cycle based on usage and can be paid either by a property owner or a tenant who has a utility account. The water rates are also based on a tiered system where higher water users pay a higher unit cost. The City is committed to finding ways to minimize future rate increases through working with partner agencies to secure additional grant funding.
- Why was the site for Central Coast Blue Advanced Water Purification Facility selected in Grover Beach?
Over 30 possible sites in Arroyo Grande, Grover Beach and Oceano were identified as possibilities for a treatment facility. The site in Grover Beach was selected for several reasons. Firstly, the treated wastewater effluent from Pismo Beach runs in a pipe along the Highway, so locating the facility nearby minimizes costs for piping and pumping. Secondly, this vacant industrial property in Grover Beach was available for purchase at a relatively low price compared to other properties. Thirdly, this property is close to the proposed injection wells in Grover Beach and Oceano, which are located in this area to create a seawater intrusion barrier to protect the groundwater basin. This proximity minimized costs by requiring less piping than locations further out. Lastly, if Phase 2 of the project is constructed involving wastewater from the South San Luis Obispo County Sanitation District, this location is more suitable for these potential future flows.
- Who owns the land for Central Coast Blue facility properties?
Land purchased for this project will be owned by the Central Coast Blue Joint Powers Authority. Ownership of the Huber Street property originally purchased by the City of Pismo Beach has been transferred to the Joint Powers Authority (JPA), which will operate the Advanced Water Purification Facility and will be owned by the JPA in perpetuity. The City of Grover Beach is a partner in the JPA. The Calvin Court parcel purchased by the City of Grover Beach will also be owned by the JPA in perpetuity.
- Were there specific requirements regarding the economic status of the community in which the Central Coast Blue facility had to be situated to qualify for grant funding?
None of the grants obtained for the Central Coast Blue project imposed conditions necessitating the placement of the Advanced Water Purification Facility (AWPF) within a particular economic condition of a community.
- When does the City expect to have Coastal Development Permit approval for all development within the Coastal zone areas in Grover Beach, Pismo Beach and Oceano?
The project team has been coordinating with Coastal Commission staff since October 2022 and a request for a consolidated Coastal Development Permit (CDP) was approved by the City and County in early 2023. It is anticipated that the CDP will be issued by the Coastal Commission by late spring of 2024. The CDP is anticipated to cover both Phase I and Phase II of the project though only Phase I will be constructed at this time.
- Are other alternative water supplies feasible in creating the same level of benefits for Grover Beach residents?
Central Coast Blue offers multiple benefits that alternative water supplies can’t provide, including drought resiliency, local control, and protection of the existing groundwater basin, as illustrated in the figure below.
- How does the Oceano Community Services District factor into the Central Coast Blue Project?
Phase 1 of the project has been planned to meet the immediate water supply and groundwater protection needs of Grover Beach, Pismo Beach, and Arroyo Grande. The Oceano Community Services District chose not to participate in Phase I of the Central Coast Blue project. Phase 2 of the project could be constructed if the partner agencies, or other regional stakeholders identify the need for additional water supply and contribute to the capital and operating cost of a larger facility.
- What would Phase 2 of Central Coast Blue cost?
Phase II of the project would include an expansion to the Advanced Water Purification Facility (AWPF) to purify water from the SSLOCSD Wastewater Treatment Plant. Up to three additional injection wells and up to six additional monitoring wells would be constructed in Phase 2, along with interconnecting pipelines. The planning level construction cost estimate for Phase II is approximately $53 million. This estimate does not include implementation costs such as design, construction management, program management, environmental compliance, legal services, property acquisition, or contingency.
- What is the cost per acre-foot of water created?
Central Coast Blue provides a water supply benefit in excess of the volume of purified water injected into the groundwater basin each year. Updated modeling has shown that if 900 acre-feet per year (AFY) of purified water is injected into the groundwater basin as part of Phase I, 1,420 AFY of groundwater can be extracted over and above current pumping rates. The injection wells create a seawater intrusion barrier that will allow the partner agencies to increase pumping rates without inducing seawater intrusion. The cost of the water would be approximately $7,200/acre-foot assuming 900 AFY, or approximately $4,600/acre-foot assuming 1,420 AFY based on the estimated construction cost of Phase I of the project.
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