AgdaPkt 2019-06-24 Joint SA PFA - Laserfiche WebLink

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6.U. - Page 2 of 47 ANALYSIS The Sewer Financial Plan and Rate Update, developed by BWA, identifies future sewer revenue obligations and forecasts necessary rates to meet funding needs. Currently, the City's sewer utility is financially stable due to proactive rate setting in prior fiscal years. However, the enterprise faces substantial capital costs on the horizon. A significant portion of future costs is financing crucial capital improvements to the City's sewer collection system and SVCW's wastewater treatment facilities. SVCW is in the process of completing an $850 million capital improvement program to rehabilitate the regional wastewater treatment plant and conveyance pipelines. As a member of the JPA, Redwood City is contractually responsible for approximately 48.57% of total project costs, or roughly $410 million. In preparation, the City's share of debt service for SVCW's capital program is expected to increase from $11.1 million in the current fiscal year to $21.6 million over the next 8 fiscal years. Separately, the City must also secure funding for improvements to the City's maturing system of pipelines and pump stations. To continue to support infrastructure improvements and keep pace with inflation, an increase of 4.5% across all rate classes is proposed each year for the next three fiscal years, spanning FY 2019-20 to 2021-22. Table 1 displays the current sewer rates and proposed rates for the next three years. ProposedTable 1: Current Sewer Rates Proposed Rates Effective On or After August 1, 2019 July 1, 2020 July 1, 2021 Sewer Rate Increase 4.5% 4.5% 4.5% Residential Sewer Rates Fixed Monthly Sewer Service Charges per Residential Dwelling Unit Residential (with 1-9 Dwelling Units) $78.24 $81.76 $85.44 $89.28 Multi -Family (with 10+ Dwelling Units) $70.42 $73.59 $76.90 $80.36 Commercial/Non-Residential Sewer Rates Volumetric Sewer Rates per Hundred Cubic Feet of Water Use, Subject to a Minimum Monthly Charge Class A $5.99 $6.26 $6.54 $6.83 Class B $6.97 $7.28 $7.61 $7.95 Class C $7.37 $7.70 $8.05 $8.41 Class D $11.74 $12.27 $12.82 $13.40 Class E $17.66 $18.45 $19.28 $20.15 Minimum Monthly Charge $70.42 $73.59 $76.90 $80.36 This gradual rate increase is recommended to equitably recover service costs while maintaining a balanced enterprise budget. Even with the proposed rate increases, Redwood City's sewer charges and combined utility bills are projected to remain in the middle range compared to other regional agencies, as shown in Figures 1 and 2. City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.org 681