Title
Recommendation to Approve the Sewer Rate Study Report; and Adoption of Resolution Declaring the City's Intention to Revise the Sewer Service Charge and Establish Procedures for Accepting Protests Pursuant to Article XIIID, Section 6(a) of the California Constitution Regarding Property-Related Fees and Charges. (Public Works 501)
Body
To: Honorable Mayor and Members of the City Council
From: Jennifer Ott, City Manager
EXECUTIVE SUMMARY
The City of Alameda (City) collects sewage generated by Alameda residents and businesses and conveys it via a network of sewer pipes and pump stations to the East Bay Municipal Utility District (EBMUD) for treatment. The City contracted with NBS, a specialized fiscal consultant, to conduct a comprehensive review of the City's sewer fund. The City last conducted a sewer rate review in 2020, which recommended 3% annual rate revenue increases through Fiscal Year (FY) 2024-2025. Although Proposition 218 sets the legal rate horizon to 5 years, it is best practice to prepare a ten-year cash flow projection to assess annual revenue requirements to accomplish the following objectives:
* Fund sewer pipeline replacements and other capital improvements
* Maintain adequate operating and capital reserves
* Meet or exceed debt coverage requirements
* Mitigate impacts on the ratepayers
The City operates its sewer collection system under a Federal Consent Decree, which also includes EBMUD and other East Bay agencies. Alameda is mandated to replace approximately 2.6 miles of sewer pipeline annually for the remaining term of the Consent Decree, or through 2035. This significant on-going capital cost is a main driver in determining the necessary revenue adjustments.
Staff recommends an annual 3% rate revenue increase for FY2025-2026 through FY 2029-2030. As shown in the bill comparison in the Rate Study, Exhibit 1, even with the proposed 3% annual rate revenue increase in FY 2025/2026, the monthly sewer service charge for Alame...
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