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8.A. - Page 10 of 47 Redwood C Ry I Cahfarnia FmuidW 1867 Notice of a Public Hearing on Proposed Sewer Rate Increases City Council Chambers 1017 Middlefield Road Redwood City, California Monday, June 10, 2019 at 7:00 p.m. The City of Redwood City will hold a public hearing on proposed increases to the City's sewer rates at the date, time and location shown above. The City is proposing to phase in a series of 4.5% annual sewer rate increases each year over the next three years. The proposed rates were calculated to recover the City's costs of providing wastewater service, including the costs to rehabilitate and replace aging wastewater facilities and cover the City's increased operational costs. The proposed rates are designed to equitably and proportionally recover costs from all customer classes. The Sewer Financial Plan and Rate Update, which is available on the City's website and at the Public Works Services Department, provides a comprehensive analysis of the City's revenue requirements and the basis upon which the proposed rates were calculated. With the proposed rate increases, the City's sewer rates are projected to remain in the middle range compared to other regional agencies. WASTEWATER SYSTEM OVERVIEW Redwood City owns and operates a wastewater collection system consisting of over 200 miles of sewer pipelines and 31 pump stations. The City's wastewater is conveyed to a regional wastewater treatment plant operated by Silicon Valley Clean Water (SVCW) for treatment. After being treated to stringent environmental standards, wastewater effluent is either discharged into the San Francisco Bay or subject to additional purification and distributed as recycled water. Redwood City has been a regional pioneer in the use of recycled water to help meet the City's water demands. WHY ARE SEWER RATE INCREASES NEEDED? The City's sewer utility is a self-supporting enterprise funded primarily from sewer service charges. As such, sewer rates need be set at adequate levels to fund operating and maintenance expenses for the City's sewer system and expenses related to the regional wastewater treatment plant, sewer system pipeline replacement costs, and the City's share of costs to rebuild SVCW's regional wastewater treatment facilities. Sewer rates are used only to pay for wastewater system expenses and cannot be used for any other purpose. Specifically, sewer rate increases are needed to provide funding for the following capital improvements: ➢ Rehabilitation & Reconstruction of Regional Wastewater Treatment Facilities — SVCW is in the process of completing an $850 million capital improvement program to rebuild and rehabilitate its aging and outdated wastewater treatment plant and the 9 -mile pipeline that conveys sewage from Redwood City and other regional agencies to the treatment plant. Redwood City is contractually responsible for approximately 48.6% of total project costs equating to over $410 million. The improvements will enable SVCW to replace and upgrade its outdated facilities to meet regulatory requirements and provide reliable service in future years. ➢ Replacement of Aging Sewer Collection System Pipelines — Redwood City owns and operates a wastewater collection system with roughly 200 miles of sewer pipelines and 31 pump stations. Many of the City's sewer pipelines are over 50 years old and are approaching the end of their useful lives. Some pipelines are undersized and need to be replaced with larger pipelines. The proposed rate increases will enable the City to continue 595