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File Number: 25-176 including operating expenses and Capital Improvement Program (CIP) costs to develop cost-of-service based rates and produce a Wastewater Rate Study. At the March 3, 2025 City Council meeting, the City Council accepted the Wastewater Utility Rate Study (“Study”), and authorized City staff to move forward with sending notices to property owners, to open the legally required 45 day protest period, and to hold a public hearing to receive and count protest votes to ascertain whether a majority protest against the proposed sewer rates was achieved, all as required by and in compliance with Proposition 218. Notices were mailed to all property owners in the City of San Leandro sewer service area on March 17, 2025, which allowed for more than the required 45-day protest period before the Public Hearing on May 5, 2025. The City Clerk kept a record of all protest notices received and will report on the total number of protest votes, including those made in person at the Public Hearing. City staff mailed 14,589 notices, so if fewer than 7,294 protests are received, the City Council is authorized under Proposition 218 to approve the proposed rates described in the notice. Attachment A Exhibit A shows rates for Fiscal Year 2025 currently in effect, and the proposed rates for the next five years. The proposed rates would be effective July 1, 2025, and July 1 in subsequent years. Analysis The Study included three key elements: 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 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. 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 Page 2 City of San Leandro Printed on 9/4/2025