AGENDA TITLE:
title
Set a Public Hearing for July 16, 2025, to Consider Adopting a Resolution Setting Pre-Approved Engineering News Record Adjustment Index for Wastewater Rates for Residential, Commercial, and Industrial Customers (PW)
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MEETING DATE:
June 18, 2025
PREPARED BY:
Public Works Director
recommendation
RECOMMENDED ACTION:
Set public hearing for July 16, 2025, to consider adopting a resolution setting pre-approved Engineering News Record adjustment index for wastewater rates for residential, commercial, and industrial customers.
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BACKGROUND INFORMATION:
On January 17, 2024, City Council approved a five-year rate plan in accordance with the Proposition 218 rate setting process. The proposed rate adjustments are needed to generate sufficient revenue to meet projected operation and maintenance costs and debt service obligations, as well as necessary current and future capital maintenance improvements. The approved five-year rate plan allows annual rate adjustments in accordance with the change in Engineering News Record Index (ENR) but capped at a maximum increase of 5 percent. The ENR annual change in 2025 was 2.4%.
A summary of the past years’ wastewater rate adjustments relative to the ENR index change is provided in the table below. The purpose of this table is to demonstrate that, due to sound financial management, past actual rate increases have at times been below the approved maximum or deferred to coordinate with the programming of capital improvement projects.
|
|
Cap |
ENR Index |
Approved/ Recommended |
|
July 2020 |
3.0% |
1.5% |
0% |
|
July 2021 |
3.0% |
3.1% |
0% |
|
July 2022 |
3.0% |
8.9% |
3% |
|
July 2023 |
3.0% |
3% |
3% |
|
July 2024 |
n/a* |
n/a* |
4% |
|
July 2025 |
5.0% |
2.4% |
2.4% |
*increase based on 2023 Prop 218 rate study, ENR was not applicable
At present, the wastewater operating fund balance exceeds target operating reserves. This surplus will be needed to fund wastewater capital expenditures amounting to over $27 million over the next five years without borrowing.
The recommended rate adjustment for this next year (Exhibit A) reflects a recommended increase of 2.4% percent effective August 1, 2025.
Staff recommends setting public hearing for July 16, 2025, to consider adopting a resolution setting pre-approved Engineering News Record adjustment index for usage-based and flat wastewater rates for residential, commercial, and industrial customers.
STRATEGIC VISION:
3A. Fiscal Health: Promote City's transparency & fiscal fluency.
FISCAL IMPACT:
Increased revenues are required to properly fund capital maintenance, and to keep up with cost of service increases, and State mandated costs.
FUNDING AVAILABLE:
Not applicable.