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<br /> 7A
<br />calculated using the escalation formula defined by the U.S. Bureau of Labor Statistics and Page 2
<br />is based on the annual adjustment in the Consumer Price Index-Urban (San Francisco-
<br />Oakland - San Jose) from January 1 to December 31,2005.
<br />Table of Additional Charges: Commercial User Categories
<br />User Cateaories Current Rate New Rate
<br />Retail Commercial $2.20 $2.25
<br />Restaurants $3.68 $3.75
<br />Suoermarkets $3.66 $3.73
<br />Institutional and Public $2.12 $2.16
<br />Hosoitals $2.27 $2.32
<br />Industrial $1.88 $1.92
<br />In consideration of the proposed rate increase, on May 8, 2006, staff initiated the
<br />Proposition 218 notification process by mailing written notices of the proposed sewer rate
<br />increase to all owners of property receiving sewer services from the City. The notice
<br />included information on the date, time, and location of the June 26, 2006 public hearing.
<br />During the 45-day notice period, from May 8,2006 to June 22,2006, six written protests
<br />were received and acknowledged by staff (attached). Staff also responded to several
<br />email and telephone inquiries. Additional notification to residents about the public hearing
<br />was published in the Redwood City Daily News on June 9, 2006 and June 22, 2006, as
<br />well as announced through a June 13 City-issued press release.
<br />This fiscal year, the increase to the sanitary sewer basic service charge is driven primarily
<br />by the need for replacement and refurbishment of SBSA wastewater treatment facilities.
<br />Over the past two years, SBSA replacement and capital reserves were depleted to
<br />complete the $3.6 million emergency repair of approximately 260 feet of the plant's large
<br />outfall discharge pipe into San Francisco Bay. The SaSA Commission has adopted a 10-
<br />year financial plan that calls for increasing the amount held for replacement reserve and
<br />development of a capital reserve for unanticipated projects in order to finance the
<br />refurbishing of the aging facilities and infrastructure without debt financing.
<br />At its April 26, 2006 meeting, the City Council Utilities Committee directed staff to reassess
<br />the future revenue demand on sewer rates based on the 10- Year Plan issued by the SBSA
<br />Commissioners in December 2005, along with the anticipated future needs for the City's
<br />operation and maintenance of the collection system based on new regulatory
<br />requirements. Further, the Utilities Committee directed staff to build in a rate stabilization
<br />component, as a measure to help offset increases in costs due to emergencies and
<br />unforeseen needs during the year. An initial amount of $250,000 is contained in the
<br />proposal budget as the rate stabilization contribution to the enterprise fund.
<br />The SBSA revenue demand projections contained in the initial budget proposal for Fiscal
<br />Year 2006-07 were based on the SBSA10-Year Financial Plan issued in December 2005.
<br />At the time of the April 26, 2006 Utilities Commission meeting, it was apparent that the
<br />SBSA Commission would take further action on the plan. However, it was uncertain what
<br />the outcome of the Commission's discussions would be, and when they would conclude
<br />their work. Staff recommended that the City proceed with the Proposition 218 notification
<br />and set the publiC hearing date using the Commission's earlier amounts, as contained in
<br />the plan. A further delay in addressing the rate increase, pending Commission action,
<br />could have greater adverse financial implications for Redwood City.
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