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6.F. - Page 2 of 7 However, at the same time, the utility billing system has seen an increased number of unauthorized water users, also known as "ghost accounts". Ghost accounts have active water service, but the existing customer closed the account, and no new customer has opened a new account for the service. The most challenging issue is that new tenants have moved in and have not requested to open a new utility account with the City, despite receiving water service. To address these ghost accounts, staff is actively contacting residents and currently shutting off water if a tenant moves out and a new tenant has not opened an account for service. Ghost accounts are not a widespread issue, and the billing system has approximately 40 ghost accounts since March 15, 2020. Acknowledging the pervasive financial difficulties caused by COVID-19, on April 27, 2020, the City Council waived penalties for late payments from residential and commercial utility customers for billing assessed between March 1, 2020 and August 31, 2020. Since this resolution was approved, late payment and shut- off penalties were waived on 1,689 accounts with potential fees valued at approximately $20,500. While considering this recommendation, the City Council requested that staff review future utility rate increases. This staff report evaluates the City's options to reduce any financial hardship caused by utility fees that provide essential and basic services amidst challenging circumstances. ANALYSIS Utility Rate Schedules and Fund Balances The City assesses rates for three utility services: solid waste, sewer, and water. The rate schedules and fund balances, if any, are described below for each utility. • Solid Waste o Although the City Council has not yet acted, solid waste rates are expected to increase next year to fund contractually obligated costs for the City's solid waste service provider, Recology San Mateo County. o There is not a sufficient balance in solid waste related accounts that can offset Recology's increased costs. • Sewer o The City Council approved a 4.5% annual rate increase for three years with rates increasing August 1, 2019, July 1, 2020, and July 1, 2021. o Rate increases are to offset costs for capital improvement projects and treatment and disposal services provided by Silicon Valley Clean Water. o Currently, the Sewer Fund has a projected year-end fund balance of $32.3M for Fiscal Year (FY) 2019/20; the fund balance is typically used for the City's sewer related capital improvement projects. • Water o The City Council approved a rate increase which was effective July 1, 2018. Page 2 of 5 City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.ore 151