Santa Barbara, City of
The City of Santa Barbara (City) was incorporated in 1850 and provides water and wastewater services to a population of approximately 91,000. The City receives water from a diverse mix of sources, with the majority coming from the Santa Ynez River; other sources of supply include the State Water Project, recycled water, and groundwater. The City’s water system includes 3 treatment plants, a desalination plant that is in long-term storage, 9 wells, 12 pump stations, 13 reservoirs, and over 300 miles of pipelines. In addition, the City’s wastewater enterprise collects, treats, and disposes of wastewater from residents and businesses within the City’s service area. Wastewater is treated at the El Estero Wastewater Treatment Plant, with 11 million gallons per day (MGD) secondary treatment capacity and 4.3 MGD tertiary treatment capacity.
The City engaged RFC to conduct a financial plan study for its wastewater enterprises. The City had expressed some concerns about financial stability and anticipated significant capital expenses associated with sewer line replacement in the upcoming years. As part of the financial plan development process, RFC evaluated the City’s existing accounts and consumption patterns as well as its existing rate structure to evaluate and project revenues. These revenues were compared to existing and projected revenue requirements, including operating and capital expenses as well as existing debt service obligations. The results of the study included a financial plan dashboard which allowed the City to evaluate various financial plan scenarios, including the necessary levels of revenue adjustments required and capital funding options available in order to meet its required coverage ratios and target reserve balances.
RFC is working with the City to review the sewer rate structure, as well as conducting a water rate study. The City has not conducted a water rate study since 1995, and while it is not dissatisfied with its existing rate structure, the City would like to develop a financial plan to ensure financial stability and evaluate its existing rate structure for possible improvements to ensure greater compliance with proposition 218 and other regulatory requirements.