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REV: 02-06-26 MI •Capital Improvement Projects: Consultant will generate a 10-year capital improvements schedule based on City staff information to determine the annual cash-funded capital expenditures per fiscal year. •Future Considerations: Consultant shall evaluate and account for changes in accounts and SVCW costs due to growth and usage pattern fluctuations, such as from new development. Deliverables: Consultant shall provide a 10-year sewer financial model that includes revenue requirement, reserves, reserve policies, debt service coverage, and forecasted revenues. Consultant may also consider creating a new reserve target. Task 3 – Cost-of-Service Analysis Consultant shall prepare a cost-of-service analysis so that revenue requirements are distributed among the customer classes (which includes, but is not limited to, single family, multi-family, commercial, and accessory dwelling units (ADUs)) and conform to the rate structures identified for each customer class. Consultant shall identify the unit costs of service and proportionate share of the overall revenue requirement for each class. Consultant shall evaluate the commercial customer classes to recommend any potential restructuring or simplification. Prior to preparing the cost-of-service analyses, Consultant shall present alternative rate structures for the consideration of the Public Works Director or their designee(s). In presenting these alternatives, Consultant shall confirm whether the City’s customer billing system has the ability to charge the rates. Consultant shall clearly indicate: 1) how much the overall revenue requirement changes; 2) how much the cost-of-service changes for each customer class; 3) how much the rates change for each customer class; and 4) how much customer bills change for representative customers. The cost-of-service analyses shall allocate the revenue requirements between the fixed and volumetric charges, as well as among the various customer classes. Consultant shall work closely with City staff to develop allocation factors based on usage and loading data for each class. Consultant shall compare the result with the revenue from current charges to determine the difference. Deliverables: Consultant shall provide cost-of-service analyses that will be integrated into the 10-year sewer financial model developed for Task 2. Task 4 - Rate Design and Bill Impacts Consultant shall present a rate design up to five years so that impacts are easily understood by staff, elected officials, and rate payers. Consultant shall compare rate structure alternatives with the current rate structure and with comparable agencies’ rate structures, which shall include, but is not limited to, agencies serving San Mateo County. Consultant shall also compare the customer bills produced by those rate structures. For ATTY/AGR.2026.032/HF&H Consultants, LLC (Sewer Rate Study 2026-2027) (Page 12 of 16)