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REPORT <br />To the Honorable Mayor and City Council <br />From the City Manager <br /> <br />June 27, 2016 <br /> <br />SUBJECT <br />Approval of Sewer Service Rate and Charges <br /> <br />RECOMMENDATION <br />Waive Second Reading and Adopt an Ordinance Amending Redwood City Municipal <br />Code Section 27.100 (Sewer Service Charges) <br /> <br />BACKGROUND <br />In 2015, the City retained Bartle Wells Associates to develop a long-term financial plan <br />and rate study for the City’s sewer utility enterprise. While the City has annually <br />reviewed and adjusted sewer rates, the actual rate structure has not been <br />independently reviewed in many years. The City’s key goals while developing the <br />proposed sewer rates and structure are to: (1) recover the costs of providing service; (2) <br />ensure charges are fair and equitable to all customers; (3) create rates that are easy to <br />understand and implement; (4) comply with the requirements of the California <br />Constitution, Article 13D, Section 6 (i.e. Proposition 218); and (5) support the long-term <br />operational and financial stability of the sewer utility. <br /> <br />Conclusions from the rate study support a proposed average annual sewer rate <br />increase of approximately 3.0% per year for the next three fiscal years, starting with <br />2016-17 and continuing to 2018-19. Even with the proposed increases, the City’s sewer <br />rates are projected to remain in the middle range compared to other regional agencies <br />and remain the lowest of the four Silicon Valley Clean Water (SVCW) member <br />agencies. <br /> <br />ANALYSIS <br />As an “Enterprise” fund, the City’s sewer utility is legally required to be self-sustaining. <br />All sewer fund expenditures must be directly related to operations, maintenance, repair, <br />and replacement of the utility. Revenues collected from rates and other sewer charges <br />are segregated from other municipal funds and uses, and cannot be commingled with <br />other activities. <br /> <br />Sewer rate increases are being proposed to pay for increased costs including: <br /> <br />· Rehabilitation and Reconstruction of Regional Wastewater Treatment Facilities – <br />Redwood City’s wastewater is conveyed to a regional wastewater treatment plant <br />6.4.B. - Page 1