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9/16/2009 <br />Wastewater Rate Study <br />o Rate study to be finalized in 2010 once project cost <br />estimates are firmed up <br />o Rate study uses a new, simplified rate methodology <br />o Old methodology was based on San Leandro's <br />agricultural past with seasonal variations in production <br />o The new methodology will result in uneven <br />adjustments to various rate classes and industries <br />during the first year rates go into effect <br />o In years 2 through 5, wastewater rate increases are <br />expected to increase uniformly from 6 % to 12 % for all <br />customers based on project cost <br />a After five years, rate increases projected to drop below <br />5% <br />Wastewater Rate Study (con's.) <br />d Proposal is to adopt a five year rate schedule <br />o Wastewater rates are subject to Prop 218 and will <br />require a formal public notice process <br />o Under Prop 218, City only needs to define a <br />maximum rate <br />o Rates could be lower if bids come in low, new <br />businesses move in, inflation stays low, and/or <br />borrowing costs come in lower than projected <br />o Primary rate driver will be total annual revenue to <br />meet lender covenants, operating cash flow and to <br />maintain minimum reserve levels <br />6 <br />