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File Number: 25-067 The three key elements of the Wastewater Rate Study include: 1.Financial projections using historical and estimated future operational and CIP expenditures; 2.Flow and wastewater strength projections using historical usage data and anticipated changes; 3.An evaluation of customer class and fee structure Financial Projections There is a projected increase in costs due to increased staffing costs and projects as part of the 10-year CIP to address aging infrastructure and stricter requirements from the State Water Board for nutrient reduction. In addition, the proposed sewer rates support maintaining at least one year of operating funds in reserve, as is standard practice for utilities. This level allows the Water Pollution Control Plant Enterprise Fund to absorb unexpected changes or disasters without reliance on the General Fund. The City analyzed the upcoming capital improvement needs for the wastewater enterprise over the next 10 years. The CIP plan was presented to City Council on October 21, 2024. The plan aims to address the aging infrastructure with upgrades to the Water Pollution Control Plant, sewer pipelines, and lift stations. While some of these costs are offset by grants, the remainder comes from sewer fees. In July 2024, the San Francisco Bay Regional Water Quality Control Board (“Water Board”) imposed limits for the first time on the quantity of nitrogen that can be discharged to San Francisco Bay. Complying with this requirement will require changes to the WPCP. The CIP Plan sets forth a strategy for identifying cost-effective changes while maintaining flexibility to meet lower limits if necessary. However, because the costs for compliance with this requirement are not yet determined, additional debt financing is not recommended over the next five years to reserve future debt capacity if necessary. Flow and Strength Projections Residential estimates are based on average home size in San Leandro and median water usage. Commercial usage is based on historical flow data and standard loading by type of business. Industrial usage is based on measured historical flow and load strength. There is currently no anticipated significant increase in new customers. Customer Classes Sewer service fees are assessed within three customer classes: 1.Residential: Flat fee for single family homes and multifamily units 2.Commercial: Fees based on water flow by category of business 3.Industrial: Fees based on flow and loading charges A new fee structure is proposed for commercial users. The current structure specifies rates for certain types of industries, with most businesses falling into an “all other” category. Customers will now be categorized as low, medium, or high based on industry standards for flow strength. The proposed fees increase the sewer rates by 8% for fiscal year 2025-2026 and by 9% for fiscal years 2026-2027 through 2029-2030. Because the rate study also includes a recalculation of rates relative to one another, this may vary slightly by customer class in the first year. Page 2 City of San Leandro Printed on 9/4/2025