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6.U. - Page 22 of 47 <br />1.1 Background <br />The City of Redwood City is a full service city with a population of approximately 86,500. The City is located <br />in San Mateo County, California, roughly halfway between the Cities of San Francisco and San Jose, in <br />northern Silicon Valley. The City was incorporated in 1867 and is governed by a seven -member City <br />Council, elected to 4 -year terms at large from the community. The City provides sewer service to <br />residential, commercial, and institutional customers located within and adjacent to the City. <br />Redwood City's sewer utility operates as self-supporting enterprise fund. Revenues are derived primarily <br />from sewer service charges. As such, the City must establish rates and charges adequate to a) fund the <br />costs of operating and maintaining the City's sewer system, b) fund capital improvements to repair and <br />replace the City's aging sewer system infrastructure, and c) pay for the City's share of costs for the regional <br />wastewater treatment plant operated by Silicon Valley Clean Water (SVCW), including the City's share of <br />costs for rebuilding and upgrading SVCW's aging and outdated wastewater treatment plant and 9 -mile <br />pipeline that conveys sewage from Redwood City and other regional agencies to SVCW. <br />1.2 Rate Study Update Process <br />The general process used in this study is summarized on the following diagram. Two key elements of the <br />study included: <br />a) 10 -Year Financial Plan Update - Development of updated financial projections to evaluate future <br />annual funding needs and project sewer rate increases needed to fund the costs of providing service <br />and to support long-term financial stability of the City's sewer utility, and <br />b) Rate Structure Review—Analysis of a) projected expenses and b) wastewater flows and loadings from <br />the City's sewer customer classes from recent years, to determine if the City's sewer rate structure <br />continues to reflect the cost of providing service to each customer class. <br />Rate Study Update Process <br />LProject Financial Rate Structure Outreach & <br />Initiation Plan Update Review Adoption <br />Clarify Objectives 10 -Year Financial Projections Analyze Usage & Billing Data Build Consensus <br />Establish Process & Schedule CIP Financing Alternatives Review Cost Allocations Public Education <br />Review Data & Assumptions Evaluate Financial Scenarios Assess Existing Rate Structure Proposition 218 Process <br />BARTLE WELLS ASSOCIATES 5 <br />Sewer Financial Plan & Rate Update <br />701 <br />