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ð}t -/' Water Enterprise Finances & Rates Redwood City's water enterprise is in excellent operational and financial condition. The City adjusts its rates and service charges annually, to keep revenues in line with expenses, and budgets approximately $2 million per year for ongoing capital repairs and replacements to keep the water system in good working condition. As of June 30, 2005, the water enterprise had accumulated approximately $11.6 million of combined operating and rate stabilization fund reserves, equal to roughly 77% of 2005/06 budgeted operating expenses and 58% of the total enterprise budget including debt service and capital. The City's water rates are low compared to other regional agencies. An average single family residence using about 22 hundred cubic feet (cd) of water per bi-monthly billing period pays a little under $62 for water service, equivalent to almost $31 per month and less than four-tenths of one cent per gallon. The City is currently in the process of updating its Water Facilities Fees - one-time fees paid by new customers connecting to the water system - to ensure new development funds its share of capacity in City infrastructure, including the recycled water system. The City is currently overdrafting its SFPUC water supply assurance and is relying on the recycled water system to provide 100% of new supply for growth. As existing customers are transitioned to the recycled water system, potable water demand will decrease, thereby freeing up potable supply to meet the needs of new development. The City's Water Facilities Fees have not been adjusted since July 1, 1994. Recycled Water Project The City is in the process of constructing Kennedy/Jenks recommended recycled water project Alternative TF. Total construction costs are estimated at about $84 million accounting for contingencies and cost inflation to the construction midpoint for each project. The project includes about $79 million for recycled water system projects plus $5 million for artificial turf fields recommended by the Task Force as another vehicle for offsetting potable demand. Project costs are front-loaded with almost $50 million in expenditures anticipated in first two years. The recommended Alternative TF project will have the capacity to supply approximately 1,960 acre-feet of recycled water per year. Alternative TF Recycled Water Project Cost Year 2004/05 2005/06 2006/07 2007/08 2008/09 Total Cost (future $) $32,621,500 $16,477,000 $15,331,500 $6,858,500 $12,774,500 $84,063,000 % of Total 39% 20% 18% 8% 15% 100% 3