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7.A. - Page 28 <br /> 1 BACKGROUND, OBJECTIVES, & LEGAL REQUIREMENTS <br /> 1.1 Background <br /> The City of Redwood City is a full service city with a population of approximately 83,000. The City is <br /> located in San Mateo County, California, roughly halfway between the Cities of San Francisco and <br /> San Jose, in northern Silicon Valley. The City was incorporated in 1867 and is governed by a seven- <br /> member City Council, elected to 4-year terms at large from the community. The City provides water <br /> and sewer service to residential, commercial, and institutional customers located within and <br /> adjacent to the City. <br /> Redwood City's water and sewer utilities operate as self-supporting enterprise funds. Revenues are <br /> derived primarily from water and sewer service charges. As such, the City must establish rates and <br /> charges adequate to fund the costs of providing water and sewer service, including costs for <br /> ongoing operations, wholesale water supply, debt service, and capital improvements needed to <br /> keep the City's aging utility infrastructure in safe and reliable operating condition. <br /> 1.2 Rate Study Objectives <br /> In 2015, the City retained Bartle Wells Associates (BWA) to develop long-term financial plans and <br /> rate studies for the City's water and sewer enterprises. BWA had previously worked with the City <br /> on a number of assignments including development and periodic updates of long-term water and <br /> sewer financial and rate projections. While the City has adopted gradual annual water and sewer <br /> rate increases each year in order to keep revenues in line with escalating costs of providing service, <br /> the City's water and sewer rate structures have not been independently reviewed in many years. <br /> Key goals and objectives of this study include developing water and sewer rates that: <br /> • Recover the costs of providing service, including operating, capital, and debt funding needs; <br /> • Are fair and equitable to all customers; <br /> • Are easy to understand and implement; <br /> • Comply with the substantive requirements of the California Constitution, Article 13D, <br /> Section 6 (which was adopted by the voters as Proposition 218 in 1996) and the general <br /> mandate of Article 10, Section 2 that prohibits the wasteful use of water; <br /> • Support the long-term operational and financial stability of the water and sewer utilities. <br /> [ Background, Objectives& Legal Requirements <br /> `'V Water&Sewer Financial Plans&Rate Studies <br />