10-12-10, Peter Kavounas Answers Al Hofmann’s Water Rate Increase Questions

10-12-10, Peter Kavounas Answers Al Hofmann’s Water Rate Increase Questions

Good morning Mr. Weber,

The following email was sent as a response to an email sent by Mr. Hofman on Sunday 10/10/10. In light of your expressed interest in the pending rate increase I am forwarding this email to you as well.

Best regards,

Peter Kavounas

Assistant General Manager-Water

Glendale Water and Power

(818) 548-2137

Our mission is to effectively and efficiently provide high quality, reliable water to Glendale

From: Kavounas, Peter
Sent: Monday, October 11, 2010 4:35 PM
To: 'ahofmann8@hotmail.com'
Cc: Friedman, Laura; Starbird, Jim; Steiger, Glenn O.
Subject: Responses to questions raised in 10/10/10 email from Mr. Hofman to GHCC members and Associates

Good afternoon Mr. Hoffman,

Below are responses to the questions raised in the above referenced email. You are kindly requested to circulate these to the same group that received your original email.

Public Outreach

The method of public outreach for this City Council discussion is the same as followed in any other instance: staff arrange to appear in existing community events as possible (in this case the GHCC and Rotary organizations), and also organize other “drop-in” community events. Some of these events draw more attendance than others; clearly the water conservation series of discussions in 2009 drew a larger crowd at events that were organized and advertised in the exact same way as the recent community gatherings for the proposed rate increase.

Fitch Report

The Fitch report was clearly discussed at the Joint Commission/City Council meeting. The notable conclusion of that report is that without the proposed rate increase the GWP credit rating will be lowered. This correctly reflects that financial markets perception of utilities’ stability is based on the level of support received from elected officials. In the case of the proposed rate increase there is no reason to add the Fitch report observation on a City Council report.

Borrowing/Reserves questions:

What is the current gross amount of the Water Bond debt? $50 million was borrowed in February 2008

What is the current amount paid annually to service the debt on this borrowed money? $2.3 million per year

What were these figures in 1990, 1995, 2000, and 2005? For years 1995, 2000, and 2005 the debt service was $0. We are researching the answer for the year 1990; there was a bond issued in the 1980’s that may or not have been paid off by 1990.

What are other long term bonds by specific title and was is it costing to service those debts annually? There are no other long term water bonds.

What are the yearly increases in Water Department Operating Budget over the past ten years?

What are the annual gross compensation packages, including pension costs for Water Department employees over the past 10 years?

Salaries and benefits are approximately 20% of the annual operating budgets.

How much revenue has been transferred yearly to the general fund in the last ten years?

Year 2000-01 $3,101,892

Year 2001-02 $2,818,283

Year 2002-03 $3,082,210

Year 2003-04 $3,231,833

Year 2004-05 $3,719,121

Year 2005-06 $3,873,819

Year 2006-07 $4,109,184

Year 2007-08 $4,000,000

Year 2008-09 $4,160,000

Year 2009-10 $4,160,000

Are the transfers in violation of Proposition 218? The City Attorney is investigating this claim and expects to have a written opinion sometime in November 2010.