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City of San Leandro City Council Meeting Date: March 3, 2025 Agenda Number: 10.a. Agenda Section: ACTION ITEMS File Number: 25-067 File Type: Staff Report Adopt a Resolution to Receive Wastewater Utility Rate Study and Provide Direction to Proceed with the Necessary Procedural Requirements Pursuant to Proposition 218 for Proposed Sewer Rate Increases COUNCIL PRIORITY ·Infrastructure SUMMARY The Water Pollution Control Division (WPC) initiated a sewer rate study to determine the fiscal requirements to maintain high quality service, repair aging infrastructure, and meet regulatory requirements. The Wastewater Rate Study report includes proposed updated sewer rates to support these expenses and is necessary to initiate the Proposition 218 noticing process. RECOMMENDATIONS Staff recommends that the City Council receive the attached Wastewater Utility Rate Study final report and to authorize staff to move forward with the Proposition 218 balloting process which will conclude with a public hearing on May 5, 2025. BACKGROUND The City’s wastewater infrastructure serves about 60,000 residents and businesses in the northern two-thirds of the City. The system includes 125 miles of collection system pipelines, 12 lift stations, and a Water Pollution Control Plant (WPCP) that processes an average of about 5 million gallons per day of wastewater. Because of the preponderance of business and industrial users, the WPCP receives some of the strongest wastewater in the Bay Area and processes this water to exceed stringent requirements set by state and federal regulating agencies. Proposition 218 requires that sewer rates be justified by expenses incurred in the collection and processing of wastewater, including capital expenses and reserve requirements. The City worked with Bartle Wells Associates, a public finance consulting firm with expertise in the areas of utility rates and finance, to analyze all financial data from the wastewater enterprise fund including operating expenses and Capital Improvement Program (CIP) costs to develop cost-of-service based rates. The Wastewater Rate Study report, included as Attachment B, contains financial projections for the next five years and evaluates revenue requirements to cover the cost of services and ensure financial stability. In accordance with Proposition 218, it analyzes the revenue required and proposes rates that are proportionate, equitable and fair to all customers. Analysis Page 1 City of San Leandro Printed on 9/4/2025