Alameda City Council
June 3, 2025

nbsgov.com
Sewer Rate Study
Final Report
February 2025
EXHIBIT 1

TABLE OF CONTENTS

1. Executive Summary .......................................................................................................... 1

2. Introduction ..................................................................................................................... 2

2.1 Purpose ................................................................................................................... 2

2.2 Overview of the Study ............................................................................................ 2

3. Sewer Rate Study ............................................................................................................. 7

3.1 Key Sewer Rate Study Issues ................................................................................... 7

3.2 Financial Plan .......................................................................................................... 7

3.3 Cost-of-Service Analysis ........................................................................................ 10

3.4 Rate Design Analysis ............................................................................................. 12

3.5 Proposed Sewer Rates .......................................................................................... 13

3.6 Comparison of Current and Proposed Sewer Bills ................................................ 13

4. Recommendations and Next Steps ................................................................................. 14

4.1 Consultant Recommendations .............................................................................. 14

4.2 Next steps ............................................................................................................. 14

4.3 NBS’ Principal Assumptions and Considerations ................................................... 14 Technical Appendices ............................................................................................................ 15 Appendix. Sewer Rate Study Tables and Figures .................................................................... 16

TABLE OF FIGURES

Figure 1. Primary Components of a Rate Study .................................................................................................. 3 Figure 2. Summary of Sewer Revenue Requirements ........................................................................................ 9 Figure 3. Summary of Sewer Reserve Funds ...................................................................................................... 9 Figure 4. Development of the Flow Allocation Factor ...................................................................................... 11 Figure 5. Development of the Fixed Capacity and Customer Allocation Factors ............................................. 11 Figure 6. Allocation of Revenue Requirements by Customer Class based on COSA ........................................ 12 Figure 7. Current vs. Proposed Sewer Rates .................................................................................................... 13 Figure 8. Regional Monthly Sewer Bill Comparison – Single Family Customers .............................................. 13

Sewer Rate Study – City of Alameda
Prepared by NBS – February 2025 1

1. Executive Summary
The City of Alameda (City) retained NBS to conduct a comprehensive utility rate study for its sewer enterprise fund. The City had several objectives and goals for this study including meeting revenue requirements, reviewing the rising costs of providing services, funding capital improvements, and complying with certain legal requirements (e.g., California Constitution Article XIII D, Section 6, which is commonly referred to as Proposition 218 [Prop 218]). The City’s last rate study was performed in 2019 which means it is appropriate an in-depth review of its current rates and rate design structure to ensure that new rates collect sufficient revenues to meet all financial obligations during the upcoming five-year rate period.

The City’s broader objectives in this study include ensuring adequate funding for operating and capital costs, maintaining reasonable reserves, and ensuring revenue stability in utility rates. The City operates its sewer collection system under a Federal Consent Decree, which also includes EBMUD and other East Bay agencies. The City of 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 rate revenue adjustments.

The rates resulting from this study were developed in a manner that is consistent with industry standard cost-of-service principles. As part of this study, NBS projected revenues and expenditures, developed net revenue requirements, performed cost-of-service analyses, and developed the proposed sewer rates for the City. In addition to documenting the rate study methodology, this report is provided with the intent to assist the City in its continuing effort to maintain transparent communications with the residents and community it serves.

In developing new rates for the City’s enterprise funds, NBS worked cooperatively with City staff in selecting the appropriate rate alternatives that address the City’s goals and objectives. Based on input provided by City staff, this report proposes an annual 3% rate revenue adjustment for Fiscal Year 2025/26 through Fiscal Year 2029/30, as shown in the table below. The City Council (Council) has the final decision regarding the adoption of the proposed rates and whether to proceed with the Prop 218 approval process.

Current vs. Proposed Sewer Rates

Year 1 Year 2 Year 3 Year 4 Year 5
FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30
Projected Increase in Rate Revenue: 3.00% 3.00% 3.00% 3.00% 3.00% Customer Class
Single Family ($/month) $31.22 $31.95 $32.91 $33.90 $34.92 $35.97 Multi-Family ($/month) $28.13 $27.77 $28.61 $29.47 $30.35 $31.26 Commercial
Fixed Charge ($/month) (includes first 730 cubic feet) $28.13 $29.50 $30.39 $31.30 $32.24 $33.21 Flow-Based Rate ($ per HCF) $3.86 $4.01 $4.13 $4.25 $4.38 $4.51 Sewer Rate Schedule Current
Rates
($/EDU)
Proposed Monthly Sewer Rates

Sewer Rate Study – City of Alameda
Prepared by NBS – February 2025 2

2. Introduction

2.1 Purpose
The City of Alameda (City) retained NBS to conduct a comprehensive utility rate study for its sewer enterprise fund. The City had several objectives and goals for this study including meeting revenue requirements, reviewing the rising costs of providing services, funding capital improvements, and complying with certain legal requirements (e.g., California Constitution Article XIII D, Section 6, which is commonly referred to as Proposition 218 [Prop 218]).

The City’s broader objectives in this study include ensuring adequate funding for operating and capital costs, maintaining reasonable reserves, and ensuring revenue stability in utility rates. The rates resulting from this study were developed in a manner that is consistent with industry standard cost-of-service principles. In addition to documenting the rate study methodology, this report is provided with the intent to assist the City in its continuing effort to maintain transparent communications with the residents and community it serves.

In developing new rates for the City’s enterprise funds, NBS worked cooperatively with City staff in selecting the appropriate rate alternatives that address the City’s goals and objectives. Based on input provided by City staff, NBS proposes the rates summarized in this report. The City Council (Council) has the final decision regarding the adoption of the proposed rates and whether to proceed with the Prop 218 approval process.

2.2 Overview of the Study
Comprehensive rate studies, such as this one, typically include three components: (1) preparation of a financial plan that identifies the net revenue requirements for the utility; (2) analysis of the cost to serve each customer class, and (3) the rate structure design. These steps are shown in Figure 1 and are intended to follow industry standards and reflect the fundamental principles of cost-of-service rate making embodied in the Water Environment Federation’s Financing and Charges for Wastewater Systems (Manual of Practice No. 27).
1 Rate studies also address requirements under Prop 218 that rates do not exceed the cost of providing the service and be proportionate to the cost of providing service for all customers. In terms of the chronology of the study, the three steps shown in Figure 1 represent the order in which they were performed in this study.

1 Financing and Charges for Wastewater Systems, Manual of Practice No. 27, Water Environment Federation, Fourth Edition, 2018.

Sewer Rate Study – City of Alameda
Prepared by NBS – February 2025 3

Figure 1. Primary Components of a Rate Study

1 FINANCIAL
PLAN

2 COST-OF-

SERVICE

ANALYSIS

3 RATE DESIGN

ANALYSIS
Compares current sources and
uses of funds and determines the
revenue needed from rates and
projects rate adjustments.

Proportionally allocates revenue
requirements to the customer
classes in compliance with industry
standards and State Law.

Considers the rate structure that
best meets the City’s need to collect
rate revenue from various types of
customers.

NBS projected revenues and expenditures, developed net revenue requirements, performed cost-of-service analyses, and developed the proposed sewer rates for the City using this approach. The following sections in this report present an overview of the methodologies, assumptions, and data used along with the financial plans and rates developed. Detailed tables and figures documenting the development of the proposed rates are provided in the Appendix.

The City provided NBS with the data necessary to conduct the study, including historical, current, and projected revenues and expenditures, number of customer accounts, and water consumption data along with other operational and capital cost information.

FINANCIAL PLAN
As a part of the rate study, NBS projected revenues and expenditures on a cash-flow basis. The amount of required rate revenue that will allow reserves to be maintained at the recommended levels is known as the net revenue requirement. As the current rate revenue falls short of the net revenue requirement, rate adjustments – or more accurately, adjustments in the total revenue collected from rates – are recommended. This report presents an overview of the methodologies, assumptions, and data used along with the financial plan and proposed rates developed in this study. 2 This financial plan lays the groundwork for the cost-of-service and rate design analyses addressed in the subsequent sections. The following subtasks were completed as part of the financial plan:

1. Projected Revenues and Expenditures – NBS prepared a 10-year rate model that projects revenues, expenses, and the increases in rate revenue needed to meet all obligations. The analysis utilized a cash-based approach when addressing the City’s system of accounts. The work provides the City with a financial tool that can easily model rate adjustments, varying operating and maintenance costs, infrastructure improvements, debt issuance, and appropriate reserve fund

2 The complete financial plans are available in the Appendices.

Sewer Rate Study – City of Alameda
Prepared by NBS – February 2025 4
levels. The City’s projected customer growth rates from master plan documents and planned cost inflation factors are also incorporated into the analysis.

2. Evaluate Reserve Fund Sufficiency – NBS evaluated the sufficiency of existing reserve funds, target reserve fund levels, reserve fund policies, and other related issues. In this evaluation, NBS considered costs for operations, maintenance, capital, and debt while balancing the need for rate stabilization. NBS has provided recommendations for reserve fund targets that are tailored to the City’s specific needs.

3. Review Capital Improvement Program Funding – NBS has incorporated the City’s plans for new facilities and infrastructure improvements into the financial plan. NBS has evaluated the timing, costs, and available reserves needed to fund the identified capital projects. NBS has worked closely with City staff to develop a well-conceived approach to funding these priority capital improvement needs. The proposed solution includes an appropriate balance between rate funded projects and the use of the City’s capital rehabilitation and replacement reserve funds.

COST-OF-SERVICE ANALYSIS
The basic purpose of the cost-of-service analysis (COSA) is to fairly and equitably allocate costs to customer classes. The cost-of-service analysis consists of two major components: (1) the classification of expenses, and (2) the allocation of costs to customer classes.

Using the net revenue requirements developed in the financial plan, NBS then worked to equitably allocate costs to each customer class based on cost-of-service principles that comply with Prop 218. NBS reviewed the City’s existing customer classes for the sewer utility and analyzed the historical usage and billing characteristics to determine if any changes should be made in order to provide more equity among user classes or comply with industry standards.

For the City of Alameda, this exercise required NBS to compare estimated flows for customers based on their wintertime water consumption (the typical proxy for sewer flows). Additionally, NBS evaluated how costs should be allocated to various cost components and types of customers. With the City’s customer billing data, NBS developed the customer usage statistics, or allocation factors, that were used to assign costs to each customer class. The main components of the cost-of-service analysis are as follows:

1. Functionalization/Classification of Expenses – Functionalizing the expenses means arranging costs into basic categories, such as fixed collection costs, costs based on the amount of effluent volume, as well as administrative and overhead costs. Once the costs have been functionalized, they are then classified into their various cost components (i.e., volume, fixed capacity, or customer-related costs).

2. Development of Customer Usage Statistics – NBS developed the customer usage statistics, or allocation factors, that are used to assign costs to each customer class. The allocation considered the City’s collection system and industry standard customer classification data. The factors that were developed include:
• Volume Allocation Factor – Develop estimates of the total annual volume of sewer collected for each customer class.

Sewer Rate Study – City of Alameda
Prepared by NBS – February 2025 5
• Capacity Allocation Factor – Fixed expenses that do not necessarily flucatate based on flow or strength concentrations.
• Customer Allocation Factor – Based on the number of customers by customer class in the City’s service area.

3. Allocation of Costs to Customer Classes – NBS then apportioned these costs to individual customer classes based on allocation factors specific to each cost classification, producing fixed and variable revenue requirements for each customer class. These allocations are used for the actual rate calculations.

Further details are discussed below and documented in the Appendix.

RATE DESIGN ANALYSIS
During the rate design phase of the study, NBS and City staff worked together to develop rate alternatives that will meet the City’s objectives. It is important for the City to send proper price signals to its customers about the actual cost of providing service. This objective is typically addressed through both the magnitude of the rate adjustments and the rate structure design. In other words, both the amount of revenue collected and the way in which the revenue is collected from customers are important.

Several criteria are typically considered in setting rates and developing sound rate structures. The fundamentals of this process have been well documented in several rate-setting manuals, such as AWWA’s Manual M1. The foundation for evaluating rate structures is generally credited to James C. Bonbright in Principles of Public Utility Rates,
3 which outlines pricing policies, theories, and economic concepts along with various rate designs. The following is a simplified list of the attributes of a sound rate structure:
• Rates should be easy to understand from the customer’s perspective. • Rates should be easy to administer from the utility’s perspective. • Rates should be equitable and non-discriminating (i.e., cost-based). • Rates should promote the efficient allocation of the resource. • There should be continuity in the rate making philosophy over time. • Rates should address other utility policies (e.g., conservation and economic development). • Rates should provide month-to-month and year-to-year revenue stability.

KEY FINANCIAL ASSUMPTIONS
The following is a summary of the key financial assumptions used in the analysis. The following capital and operational fund targets reflect input from City staff to meet specific utility objectives.

Funding of Capital Projects – The capital improvement costs will be funded with a combination of cash in reserves and the additional revenue generated from the proposed rate increases. The capital projects listed

3 James C. Bonbright, Albert L. Danielsen, and David R. Kamerschen, Principles of Public Utility Rates, Arlington, VA: Public Utilities Report, Inc., Second Edition, 1988, pp. 383-384.

Sewer Rate Study – City of Alameda
Prepared by NBS – February 2025 6
in the financial plan are from the City’s Capital Improvement Program. Further details of the sewer capital projects included in the rate study are included in Appendix Tables 7-11. The analysis assumes:
• Only capital costs attributable to existing customers are funded using rate revenue. • Only capital costs attributable to growth are funded by revenue from the impact fee reserves.

Reserve Targets – For the sewer utility, the City maintains reserves for operations, capital, and other specific needs. The details of the utility’s reserve targets are covered in their respective sections of this report.

Inflation and Growth Projections – Assumptions were made in the analysis regarding cost inflation to project future revenues and expenses for the study period. The following inflation factors were used in the analysis:
• Customer growth is estimated at 2.20% annually.4
• General cost inflation is estimated at 3.56% annually.5 • Labor cost inflation is estimated at 4.50% annually.6 • Construction cost inflation is estimated at 3.45% annually.7 These inflation factors are based on long-term trends; therefore, the City should re-examine these factors in another year to assess the impacts on utility costs and whether projected rate increases will be sufficient for the remainder of the rate adoption period.

4 Customer growth is estimated based on the City of Alameda 2023-2031 Housing Element. 5 General cost inflation is based on the 5-year average annual change in the Consumer Price Index for all Urban Consumers in the San Francisco-Oakland-Hayward, CA area.
6 Labor cost inflation is estimated based on maximum salary adjustment in Memorandum of Understanding between City of Alameda and Alameda City Employees Association for July 1, 2022 through June 30, 2025. 7 Construction cost Inflation is the 5-year average change in the Construction Cost Index for 2020-2024. Source: Engineering News Record website (http://enr.construction.com).

Sewer Rate Study – City of Alameda
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3. Sewer Rate Study

3.1 Key Sewer Rate Study Issues
The City owns and operates approximately 135 miles of sewer main and 46 pump stations and conveys its wastewater to the treatment plant owned and operated by East Bay Municipal Utility District (EBMUD) treatment plant. The City’s last rate study was performed in 2019 which means it is appropriate an in-depth review of its current rates and rate design structure to ensure that new rates collect sufficient revenues to meet all financial obligations during the upcoming five-year rate period. NBS has worked closely with City staff to determine the rate design that best meets the City’s financial objectives while minimizing the fiscal impact on customers.

Other City objectives that were incorporated in this sewer study analysis and rate design include:
• Ensuring equity among customer classes by collecting rate revenue through the cost-of-service process based on both fixed monthly
charges and volumetric rates.
• Maintain adequate reserve levels to ensure continuity in operations. • Ensure adequate funding for the utility’s capital projects, due to the level of capital investment planned over both the upcoming five-year period as well as the upcoming ten-year horizon. • Comply with Prop 218 requirements to ensure costs are properly allocated between user classifications.
• Creating a rate model that City staff can modify in response to changing conditions and assumptions and accommodate updates of customer data and consumption patterns.

3.2 Financial Plan
It is important for the sewer utility to ensure rates provide sufficient funding to cover operating and maintenance costs, planned capital expenditures, and maintain reasonable reserves. The City operates its sewer collection system under a Federal Consent Decree, which also includes EBMUD and other East Bay agencies. The City of 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 rate revenue adjustments. The sewer utility’s rate revenue adjustments are governed by these needs, and the current state of the City’s sewer utility is as follows:

Meeting Net Revenue Requirements: For FY 2025/26 through FY 2029/30, the projected net revenue requirements (that is, total operating expenses plus rate-funded capital costs less non-rate revenues) for the City increases from approximately $11.0 million to $16.1 million annually. Annual rate revenue adjustments are recommended for the utility to keep pace with the projected increases in operating and maintenance expenses so that projected expenses do not outpace projected revenues.

Maintaining Reserve Funds: Reserve funds provide a basis for a utility to cope with fiscal emergencies such as revenue shortfalls, asset failure, and natural disasters, among other events. Reserve policies provide guidelines for sound financial management, with an overall long-range perspective to maintain financial solvency and mitigate financial risks associated with revenue instability, volatile capital costs, and

Sewer Rate Study – City of Alameda
Prepared by NBS – February 2025 8
emergencies. The reserve funds for the sewer utility are considered unrestricted reserves and consist of the following:
• Operating Reserve: The target ending fund balance for the operating reserve is equal to 60% of annual operating expenses, or approximately $2.4 million in FY 2024/25. An operating reserve is intended to promote financial viability in the event of any short-term fluctuation in revenues and/or expenditures. Fluctuations in revenue can be caused by weather patterns, the natural inflow and outflow of cash during billing cycles, natural variability in demand-based revenue streams (such as volumetric charges), and – particularly in periods of economic distress – changes or trends in age of receivables.
• Capital Rehabilitation & Replacement Reserve equal to one year of the annual expenses of the pipeline replacement program, which is approximately $9.8 million in FY 2024/25. This reserve is set aside to address long-term capital system replacement and rehabilitation needs. •
Maintaining Adequate Bond Coverage: The City is required by the rate covenants to maintain a minimum debt service coverage ratio of 1.25. The benefit of maintaining a coverage ratio higher than 1.25 is that it strengthens the City’s credit rating which helps lower interest rates for debt-funded capital projects and can reduce annual debt service payments.

The recommended rate revenue increases are 3% annual rate revenue increases in FY 2025/26 through FY 2029/30. Based on the current ten-year cash flow projection, a 4% annual rate revenue increase over the next 5 years ensures adequate revenue to comply with the Consent Decree, meet debt coverage and reserve requirements and avoid a rate spike in the future. However, a 3% annual rate revenue increase nearly accomplishes these objectives and is less impactful to ratepayers. A 2% annual rate revenue increase does not keep pace with inflation and by FY 2029/30, projected expenses will outpace revenue and the fund balance begins to dip below minimum reserve target. Based on the above alternatives analysis, staff recommend an annual 3% rate revenue increase for FY 2025/26 through FY 2029/30.

Figure 2 summarizes the sources and uses of funds, net revenue requirements, and the recommended annual increases in sewer rate revenue proposed for the next five years. Figure 3 summarizes the projected reserve fund balances and reserve targets for the sewer utility’s unrestricted funds.

Sewer Rate Study – City of Alameda
Prepared by NBS – February 2025 9

Figure 2. Summary of Sewer Revenue Requirements

Figure 3. Summary of Sewer Reserve Funds

Budget
FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 Sources of Sewer Funds 1
Operating Assessments 12,298,382$ 12,568,946$ 12,845,463$ 13,128,063$ 13,416,881$ 13,712,052$ Sewer Service Fee 500,000 511,000 522,242 533,731 545,473 557,474 Total Sources of Funds: 12,798,382$ 13,079,946$ 13,367,705$ 13,661,795$ 13,962,354$ 14,269,526$ Uses of Sewer Funds 1
Operating Expenses :

Salaries and Benefits 1,312,598$ 1,371,665$ 1,433,390$ 1,497,892$ 1,565,298$ 1,635,736$ General Operating 628,400 650,771 673,938 697,931 722,777 748,508 Fees and PILOT 1,023,000 1,045,506 1,068,507 1,092,014 1,116,039 1,140,591 Water and Electricity 100,400 102,609 104,866 107,173 109,531 111,941 Cost Allocation 667,787 691,474 716,057 741,571 768,053 795,542 Equipment Replacement 218,217 225,745 233,534 241,591 249,925 258,548 Subtotal: Operating Expenses 3,950,402$ 4,087,771$ 4,230,293$ 4,378,173$ 4,531,623$ 4,690,866$ Other Expenditures:

Existing Debt Service 766,919$ 765,219$ 766,494$ 767,319$ 763,381$ 764,700$ Future Debt Service - - - - - - Rate-Funded Capital Expenses 10,654,453 6,664,288 7,608,699 9,080,661 10,341,641 11,217,657 Subtotal: Other Expenditures 11,421,372$ 7,429,507$ 8,375,193$ 9,847,980$ 11,105,022$ 11,982,357$ Total Uses of Sewer Funds: 15,371,774$ 11,517,277$ 12,605,485$ 14,226,152$ 15,636,645$ 16,673,223$ plus: Revenue from Rate Increases 3 - 392,398 814,093 1,266,817 1,752,398 2,272,766 Annual Surplus/(Deficit) (2,573,392)$ 1,955,068$ 1,576,313$ 702,460$ 78,107$ (130,932)$ 14,871,774$ 11,006,277$ 12,083,243$ 13,692,421$ 15,091,172$ 16,115,749$ Total Rate Revenue After Rate Increases 12,798,382$ 13,472,345$ 14,181,798$ 14,928,612$ 15,714,753$ 16,542,292$ Projected Annual Rate Revenue Increase 0.00% 3.00% 3.00% 3.00% 3.00% 3.00% Cumulative Increase from Annual Revenue Increases 0.00% 3.00% 3.00% 6.09% 9.27% 12.55% Debt Coverage After Rate Increase N/A N/A N/A 13.75 14.65 15.50

1. Revenue and expenses for FY 2024/25 provided by the City. Revenues and expenses for all other years are escalated based on the forecasting assumptions in Table 5.

Source files: 1a. YTD_Budget_Report_FY2425

2. Interest earnings are calculated based on historical LAIF returns. Source file: Inflation Factors_03-18-24.xlsx .

3. Revenue from rate increases assumes an implementation date of July 1, 2025 for new rates.

For each year thereafter, the assumption is that new rates will be implemented on July 1st of each year.

RATE REVENUE REQUIREMENTS SUMMARY1
Net Revenue Req't. (Total Uses less Non-Rate Revenue)
5-Year Projected Rate Period
Budget
FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 Total Beginning Cash1 18,094,386$
Unrestricted Reserves:

Operating Reserve
Beginning Reserve Balance 18,094,386$ 2,692,080$ 2,500,919$ 2,582,516$ 2,672,969$ 2,766,579$ Plus: Net Cash Flow (After Rate Increases) (2,573,392) 1,955,068 1,576,313 702,460 78,107 (130,932) Plus: Transfer of Debt Reserve Surplus - - - - - - Plus: Interest Earnings 322,080 47,919 44,516 45,969 47,579 49,245 Less: Transfer Out to Capital Replacement Reserve (13,150,994) (2,194,148) (1,539,232) (657,976) (32,076) - Ending Operating Reserve Balance 2,692,080$ 2,500,919$ 2,582,516$ 2,672,969$ 2,766,579$ 2,684,892$ Target Ending Balance (60% of O&M) 2 2,370,000$ 2,453,000$ 2,538,000$ 2,627,000$ 2,719,000$ 2,815,000$ Capital Reserve
Beginning Reserve Balance -$ 13,150,994$ 12,555,990$ 12,239,891$ 11,714,471$ 11,453,151$ Plus: Grant Proceeds - - - - - - Plus: Transfer of Operating Reserve Surplus 13,150,994 2,194,148 1,539,232 657,976 32,076 - Plus: Interest Earnings - 234,088 223,497 217,870 208,518 203,866 Less: Use of Reserves for Capital Projects - (3,023,239) (2,078,828) (1,401,267) (501,914) - Ending Capital Reserve Balance 13,150,994$ 12,555,990$ 12,239,891$ 11,714,471$ 11,453,151$ 11,657,017$ Target Ending Balance (1 Year Pipe Replacement) 3 9,790,000$ 10,127,755$ 10,477,163$ 10,838,625$ 11,212,557$ 11,599,390$ Ending Balance - Excl. Restricted Reserves 15,843,074$ 15,056,909$ 14,822,408$ 14,387,440$ 14,219,730$ 14,341,909$ Min. Target Ending Balance -Excl. Restricted Reserves 12,160,000$ 12,580,755$ 13,015,163$ 13,465,625$ 13,931,557$ 14,414,390$ Ending Surplus/(Deficit) Compared to Reserve Targets 3,683,074$ 2,476,154$ 1,807,245$ 921,815$ 288,172$ (72,481)$ Annual Interest Earnings Rate 4 1.78% 1.78% 1.78% 1.78% 1.78% 1.78%

1. Beginning cash balances provided by City staff for Fund 501. Source files: Item 1 - Fund 501 Cash Balanace - Trial Balance.

2. The target ending balance is set equal to 60% of O&M expenses.

3. The target ending balance is set equal to 1 year of pipe replacement projects. See Exhibit 2 (CIP) for details.

4. Historical interest earning rates are per the average annual yields for funds invested in LAIF (2020-2024).

The source is the California State Treasurer's website: https://www.treasurer.ca.gov/pmia-laif/historical/annual.asp. 5-Year Projected Rate PeriodSUMMARY OF CASH ACTIVITY

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A more detailed version of the utility’s proposed five-year financial plan is included in Appendix A. The appendix tables include detailed information on revenue requirements and proposed rate increases (Table 1), reserve funds (Tables 2 and 3), revenue sources and expenses (Tables 4-6) and the City’s capital improvement program (Tables 7-11).

3.3 Cost-of-Service Analysis
Once the net revenue requirements are determined, the cost-of-service analysis (COSA) proportionately distributes the revenue requirements to each of the customer classes. The COSA consists of the classification of expenses and then the allocation of those expenses to customer classes based on allocation factors, such as water consumption and number of equivalent dwelling units (EDUs), or accounts.

Ultimately, the COSA is intended to result in rates that are proportional to the cost of providing service to each customer class.

Budgeted costs that were developed in the financial plan were classified into the following categories to develop the basis for allocating costs to various customer classes in this analysis:
• Flow Costs (“Volume”) – Flow based costs are primarily related to the collection and distribution systems, which gather effluent from customers and transports it to the EBMUD treatment facilities. • Fixed Capacity Costs (“Account Services”) – Fixed expenses that do not necessarily flucatate based on flow or strength concentrations.
• Customer Related Costs (“Customer”) – Customer based costs are related to the billing of customers (such as mailing and staff time committed to customer service).

CUSTOMER CLASSES AND ALLOCATION FACTORS
Customer classes are determined by combining customers with similar demand characteristics and types of use into categories that reflect the cost differentials to serve each type of customer. The most recent water consumption data was the basis for estimating the amount of flow that each customer class sends to the EBMUD treatment plant.

Figure 4 shows the development of the flow/volume allocation factors by customer class. Winter water usage was utilized as the basis for determining the estimated wastewater flow to the treatment plant. In developing the flow/volume allocations, a mass balance was conducted to determine the relative contributions of each customer class to the City’s effluent flows received at the wastewater treatment plant. Further details on the mass balance are contained in Appendix Table 22.

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Figure 4. Development of the Flow Allocation Factor

Figure 5 summarizes the development of the fixed capacity and customer services allocation factors by customer class. The fixed capacity percentages were used to allocate fixed capacity-related costs based on the number of equivalent dwelling units (EDU’s) in each customer class. The customer services percentages are allocated based on the number of accounts in each customer class. Further details on the development of the fixed capacity and customers services allocation factors are found in Appendix Table 23.

Figure 5. Development of the Fixed Capacity and Customer Allocation Factors

Figure 6 summarizes the development of the account services allocation factor.

CLASSIFICATION AND ALLOCATION OF COSTS
As previously noted, costs are classified into the following three categories: (1) flow-related costs, (2) fixed capacity related costs and (3) customer services-related costs. The City’s budgeted costs were allocated to these three categories which serve as the basis for calculating the fixed and variable charges. Tables 18-21 in the Appendix show how the City’s expenses were classified and allocated to these cost-causation components.

Figure 6 summarizes the allocation of the net revenue requirements to each cost causation component for the proposed rates based on the cost-of-service analysis. Additional details on allocation of revenue requirements by customer class are found in Appendix Table 25.

Development of the FLOW ESTIMATES TO TREATMENT PLANT 1
Customer Class Number
of Accounts
Number
of Units
Estimated
Annual
Volume (HCF)2
Percentage
of Estimated
Annual
Volume
Single Family 14,166 14,166 1,240,942 37.3% Multi-Family 5,396 18,839 1,650,296 49.6% Commercial 2,808 4,998 437,862 13.2% Total: 22,370 38,003 3,329,100 100.0%

1. Customer data provided by City Staff.

2. Estimated sewer flow based on average winter consumption for residential customers.

Commercial customers are based on annual consumption.

Development of the Allocation Factors
Number of
Accounts

CUSTOMER
Allocation Factors
% of Total
Ac
counts
Number of EDU
Billing Units

CAPACITY
Allocation
Factors (% of
To
tal EDUs)
Estimated
Annual Flow
(HCF)
VOLUME
Allocation
Factor (% of
Es
timated Flow)
Single Family 14,166 63.3% 14,166 37.3% 1, 240,942 37.3% Multi-Family 5,396 24.1% 18,839 49.6% 1, 650,296 49.6% Commercial 2,808 12.6% 4,998 13.2% 437, 862 13.2% Total: 22,370 100.0% 38, 003 100.0% 3,329,100 100.0%

1. Customer data provided by City Staff. Source file: 2023-24 Sewer Charge Levy Data

Sewer Rate Study – City of Alameda
Prepared by NBS – February 2025 12
Figure 6. Allocation of Revenue Requirements by Customer Class based on COSA

The existing rates for each customer class will be adjusted in accordance with the proportional share of each customer class to the total net revenue requirements of the sewer utility in order to meet the legal requirements set forth in Prop 218 under California law. The proposed rates will need to be designed to capture the cost-of-service from each customer class in order to accurately reflect the cost-of-service net revenue requirements as calculated in Figure 6 above.

3.4 Rate Design Analysis
During this rate study, NBS discussed with City staff various rate alternatives that collected revenue differently from fixed vs. variable charges. Ultimately, the rate alternative selected by City staff is one similar to the existing rate design. The reasons for selecting this alternative are (1) it generally maintains the existing customer classes while simplifying the billing structure (2) it provides continuity for sewer customers, and (3) it is easy to understand from a customer’s perspective and easy to administrate from City staff’s perspective.

FIXED CHARGES AND VARIABLE CHARGES
The fixed charge recognizes that the sewer utility incurs fixed costs regardless of whether customers send any sewer into the City’s collection system. There are three factors used to develop the fixed charge: 1) the number of dwelling units for residential customers, 2) the number of accounts for non-residential customers, and 3) the annual revenue requirement.

The monthly fixed charge is calculated by taking 100% of total revenue requirements for residential customer classes and dividing by the number of accounts (for single-family) and by the number of dwelling units (for multi-family).

Non-residential monthly fixed charges are based on the directly allocated program costs divided by the number of accounts in the seven non-residential categorical customer classes. The monthly fixed charge for non-residential customers includes the first 730 cubic feet of effluent. The variable charges are calculated by dividing 100% of the annual net revenue requirements by the annual consumption (per CCF) for the customer class
Net Revenue Requirements 1 5,164,019$ 6,736,172$ 1,572, 154$ 13,472,345$ --

38.3% 50.0% 11.7% 100.0%
Single Family 1,924,918$ 2,510, 948$ 995,580$ 5,431,446$ 40.3% Multi-Family 2,559,900$ 3,339,245$ 379,228$ 6,278,373$ 46.6% Commercial 679,201$ 885,979$ 197,345$ 1,762,525$ 13.1%
Total: 5,164,019$ 6,736,172$ 1,572,154$ 13,472,345$ 100%

1. The revenue requirement for each customer class is determined by multiplying the revenue requirement from each cost classification by the allocation factors for each customer class.

Customer Class
Volume Customer Related
Cost-of-Service
Net Revenue
Req'ts.
% of COS Net
Revenue Req'ts. Capacity
Cost Classification Components

Sewer Rate Study – City of Alameda
Prepared by NBS – February 2025 13

3.5 Proposed Sewer Rates
Figure 7 compares the current and proposed rates for FY 2025/26 through FY 2029/30 by customer class.

While proposed rates in the first year (FY 2025/26) reflect the cost-of-service realignment that often occurs when rates have not been updated for several years, the projected rates for future years are strictly tied to annual rate increase in an “across-the-board” adjustment. As mentioned throughout the Study report, more detailed tables on the development of the proposed rates are documented in the Appendix.

Figure 7. Current vs. Proposed Sewer Rates

3.6 Comparison of Current and Proposed Sewer Bills
Figure 8 presents a comparison of residential sewer rates for EBMUD satellite sanitation agencies. These bill comparisons are calculated at typical levels of consumption.

Figure 8. Regional Monthly Sewer Bill Comparison – Single Family Customers

Year 1 Year 2 Year 3 Year 4 Year 5
FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30
Projected Increase in Rate Revenue: 3.00% 3.00% 3.00% 3.00% 3.00% Customer Class
Single Family ($/month) $31.22 $31.95 $32.91 $33.90 $34.92 $35.97 Multi-Family ($/month) $28.13 $27.77 $28.61 $29.47 $30.35 $31.26 Commercial
Fixed Charge ($/month) (includes first 730 cubic feet) $28.13 $29.50 $30.39 $31.30 $32.24 $33.21 Flow-Based Rate ($ per HCF) $3.86 $4.01 $4.13 $4.25 $4.38 $4.51 Sewer Rate Schedule Current
Rates
($/EDU)
Proposed Monthly Sewer Rates

Sewer Rate Study – City of Alameda
Prepared by NBS – February 2025 14

4. Recommendations and Next Steps

4.1 Consultant Recommendations
NBS recommends the City take the following actions:
• Receive this Study: NBS recommends the City Council formally receive this Study and its recommendations and proceed with the next steps outlined below to implement the proposed rates in accordance with Prop 218 procedural requirements. This will provide documentation of the rate study analyses and the basis for analyzing potential changes to future rates. • Implement Recommended Levels of Rate Increases and Proposed Rates: Based on successfully meeting the Prop 218 procedural requirements, the City should proceed with implementing the 5-year schedule of proposed rates and rate increases previously shown in Figure 7. This will help ensure the continued financial health of City’s utilities. • Adopt Reserve Fund Targets: NBS recommends the City Council adopt the consultant-proposed reserve fund targets described in this study. The City should periodically evaluate reserve fund levels and attempt to maintain the recommended levels for the Operating and Capital Rehabilitation and Replacement reserve funds.

4.2 Next steps
Annually Review Rates and Revenue – Any time an agency adopts new utility rates or rate structures, those new rates should be closely monitored over the next several years to ensure the revenue generated is sufficient to meet the annual revenue requirements. Changing economic and water consumption patterns underscore the need for this review, as well as potential and unseen changing revenue requirements — particularly those related to environmental regulations that can significantly affect capital improvements and repair and replacement costs.

Note: The attached Technical Appendices provide more detailed information on the analysis of the financial plan, revenue requirements, cost-of-service, and the rate design analyses that have been summarized in this report.

4.3 NBS’ Principal Assumptions and Considerations
In preparing this report and the opinions and recommendations included herein, NBS has relied on several principal assumptions and considerations regarding financial matters, conditions, and events that may occur in the future. This information and these assumptions, including the City’s budgets, capital improvement costs, customer accounts and consumption, and information from City staff were provided by sources we believe to be reliable, although NBS has not independently verified this data.

While we believe NBS’ use of such information and assumptions is reasonable for the purpose of this report and its recommendations, some assumptions will invariably not materialize as stated herein and may vary significantly due to unanticipated events and circumstances. Therefore, the actual results can be expected to vary from those projected to the extent that actual future conditions differ from those assumed by us or provided to us by others.

Sewer Rate Study – City of Alameda
Prepared by NBS – February 2025 15
Technical Appendices
These Appendices contain:
• Appendix: Sewer Rate Study Tables and Figures

Sewer Rate Study – City of Alameda
Prepared by NBS – February 2025 16
Appendix. Sewer Rate Study Tables and Figures

Sewer Rate Study – City of Alameda
Prepared by NBS – February 2025 17

Financial Plan & Reserve SummaryCITY OF ALAMEDA

SEWER RATE STUDY
Financial Plan and Reserve Projections
TABLE 1: FINANCIAL PLAN AND SUMMARY OF REVENUE REQUIREMENTS Budget
FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 FY 2030/31 FY 2031/32 FY 2032/33 FY 2033/34 FY 2034/35 Sources of Sewer Funds 1
Operating Assessments 12,298,382$ 12,568,946$ 12,845, 463$ 13,128, 063$ 13,416, 881$ 13,712, 052$ 14,013, 717$ 14,322, 019$ 14,637, 104$ 14,959, 120$ 15,288, 220$ Sewer Service Fee 500,000 511,000 522,242 533,731 545,473 557,474 569,738 582,272 595,082 608,174 621,554 Total Sources of Funds: 12,798,382$ 13,079,946$ 13,367, 705$ 13,661, 795$ 13,962, 354$ 14,269, 526$ 14,583, 456$ 14,904, 292$ 15,232, 186$ 15,567, 294$ 15,909, 775$ Uses of Sewer Funds 1
Operating Expenses :

Salaries and Benefits 1,312,598$ 1,371,665$ 1,433, 390$ 1,497, 892$ 1,565, 298$ 1,635, 736$ 1,709, 344$ 1,786, 265$ 1,866, 646$ 1,950, 646$ 2,038, 425$ General Operating 628,400 650,771 673,938 697,931 722,777 748,508 775,155 802,750 831,328 860,923 891,572 Fees and PILOT 1,023,000 1,045,506 1,068, 507 1,092, 014 1,116, 039 1,140, 591 1,165, 684 1,191, 330 1,217, 539 1,244, 325 1,271, 700 Water and Electricity 100,400 102,609 104,866 107,173 109,531 111,941 114,403 116,920 119,493 122,121 124,808 Cost Allocation 667,787 691,474 716,057 741,571 768,053 795,542 824,078 853,701 884,457 916,390 949,546 Equipment Replacement 218,217 225,745 233,534 241,591 249,925 258,548 267,468 276,695 286,241 296,117 306,333 Subtotal: Operating Expenses 3,950,402$ 4,087,771$ 4,230, 293$ 4,378, 173$ 4,531, 623$ 4,690, 866$ 4,856, 132$ 5,027, 662$ 5,205, 704$ 5,390, 522$ 5,582, 384$ Other Expenditures:

Existing Debt Service 766,919$ 765,219$ 766,494$ 767,319$ 763,381$ 764,700$ 764,956$ 764,131$ 762,856$ 766,056$ 763,731$ Future Debt Service - - - - - - - - - - -
Rate-Funded Capital Expenses 10,654,453 6,664,288 7,608,699 9,080,661 10,341,641 11,217,657 11,604,666 12,005,027 12,419,201 12,543,289 11,951,798 Subtotal: Other Expenditures 11,421,372$ 7,429,507$ 8,375, 193$ 9,847, 980$ 11,105, 022$ 11,982, 357$ 12,369, 622$ 12,769, 158$ 13,182, 057$ 13,309, 345$ 12,715, 529$ Total Uses of Sewer Funds: 15,371,774$ 11,517,277$ 12,605, 485$ 14,226, 152$ 15,636, 645$ 16,673, 223$ 17,225, 754$ 17,796, 820$ 18,387, 762$ 18,699, 867$ 18,297, 913$ plus: Revenue from Rate Increases3 - 392,398 814,093 1,266, 817 1,752, 398 2,272, 766 2,829, 953 3,426, 107 4,063, 492 4,744, 494 5,471, 632 Annual Surplus/(Deficit) (2,573,392)$ 1,955,068$ 1,576, 313$ 702,460$ 78,107$ (130, 932)$ 187,654$ 533,579$ 907,916$ 1,611, 921$ 3,083, 493$ 14,871,774$ 11,006,277$ 12,083,243$ 13,692, 421$ 15,091, 172$ 16,115, 749$ 16,656, 016$ 17,214, 547$ 17,792, 679$ 18,091, 692$ 17,676, 359$ Total Rate Revenue After Rate Increases 12,798,382$ 13,472,345$ 14,181, 798$ 14,928, 612$ 15,714, 753$ 16,542, 292$ 17,413, 409$ 18,330, 399$ 19,295, 678$ 20,311, 788$ 21,381, 407$ Projected Annual Rate Revenue Increase 0.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Cumulative Increase from Annual Revenue Increases 0.00% 3.00% 3.00% 6.09% 9.27% 12.55% 15.93% 19.41% 22.99% 26.68% 30.48% Debt Coverage After Rate Increase N/A N/A N/A 13.75 14.65 15.50 16.42 17.41 18.47 19.48 20.69

1. Revenue and expenses for FY 2024/25 provided by the City. Revenues and expenses for all other years are escalated based on the forecasting assumptions in Table 5.

Source files: 1a. YTD_Budget_Report_FY2425

2. Interest earnings are calculated based on historical LAIF returns. Source file: Inflation Factors_03-18-24.xlsx .

3. Revenue from rate increases assumes an implementation date of July 1, 2025 for new rates.

For each year thereafter, the assumption is that new rates will be implemented on July 1st of each year. 2 <-- Select Financial Plan Scenario Here
Financial Plan Alternatives FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 FY 2030/31 FY 2031/32 FY 2032/33 FY 2033/34 FY 2034/35 1 Alternative 1 - 2% Annual Rate Increases 0.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2 Alternative 2 - 3% Annual Rate Increases 0.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3 Alternative 3 - 4% Annual Rate Increases 0.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4 Alternative 4 - No Rate Increases 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% RATE REVENUE REQUIREMENTS SUMMARY1
Net Revenue Req't. (Total Uses less Non-Rate Revenue)
5-Year Projected Rate Period Projected
Prepared by NBS
www.nbsgov.com | Toll-Free: 800.676.7516 Financial Plan, 1 of 19 Financial Plan & Reserve SummaryCITY OF ALAMEDA

SEWER RATE STUDY
Financial Plan and Reserve Projections
TABLE 2: RESERVE FUND SUMMARY
Budget
FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 FY 2030/31 FY 2031/32 FY 2032/33 FY 2033/34 FY 2034/35 Total Beginning Cash1 18,094,386$
Unrestricted Reserves:

Operating Reserve
Beginning Reserve Balance 18,094,386$ 2,692,080$ 2,500, 919$ 2,582, 516$ 2,672, 969$ 2,766, 579$ 2,684, 892$ 2,920, 338$ 3,068, 982$ 3,177, 628$ 3,290, 562$ Plus: Net Cash Flow (After Rate Increases) (2,573,392) 1,955,068 1,576, 313 702,460 78,107 (130, 932) 187,654 533,579 907,916 1,611, 921 3,083, 493 Plus: Transfer of Debt Reserve Surplus - - - - - - - - - - - Plus: Interest Earnings 322,080 47,919 44,516 45,969 47,579 49,245 47,791 51,982 54,628 56,562 58,572 Less: Transfer Out to Capital Replacement Reserve (13,150,994) (2,194,148) (1, 539,232) (657, 976) (32, 076) - - (436,916) (853, 898) (1, 555,549) (3, 025,055) Ending Operating Reserve Balance 2,692,080$ 2,500,919$ 2,582, 516$ 2,672, 969$ 2,766, 579$ 2,684, 892$ 2,920, 338$ 3,068, 982$ 3,177, 628$ 3,290, 562$ 3,407, 572$ Target Ending Balance (60% of O&M)2 2,370,000$ 2,453,000$ 2,538, 000$ 2,627, 000$ 2,719, 000$ 2,815, 000$ 2,914, 000$ 3,017, 000$ 3,123, 000$ 3,234, 000$ 3,349, 000$ Capital Reserve
Beginning Reserve Balance -$ 13,150,994$ 12,555, 990$ 12,239, 891$ 11,714, 471$ 11,453, 151$ 11,657, 017$ 11,864, 512$ 12,512, 617$ 13,589, 239$ 15,082, 303$ Plus: Grant Proceeds - - - - - - - - - - - Plus: Transfer of Operating Reserve Surplus 13,150,994 2,194,148 1,539, 232 657,976 32,076 - - 436,916 853,898 1,555, 549 3,025, 055 Plus: Interest Earnings - 234,088 223,497 217,870 208,518 203,866 207,495 211,188 222,725 241,888 268,465 Less: Use of Reserves for Capital Projects - (3,023,239) (2, 078,828) (1, 401,267) (501, 914) - - - - (304,374) (1, 339,110) Ending Capital Reserve Balance 13,150,994$ 12,555,990$ 12,239, 891$ 11,714, 471$ 11,453, 151$ 11,657, 017$ 11,864, 512$ 12,512, 617$ 13,589, 239$ 15,082, 303$ 17,036, 713$ Target Ending Balance (1 Year Pipe Replacement)3 9,790,000$ 10,127,755$ 10,477, 163$ 10,838, 625$ 11,212, 557$ 11,599, 390$ 11,999, 569$ 12,413, 555$ 12,841, 822$ 13,284, 865$ 13,743, 193$ Ending Balance - Excl. Restricted Reserves 15,843,074$ 15,056,909$ 14,822, 408$ 14,387, 440$ 14,219, 730$ 14,341, 909$ 14,784, 849$ 15,581, 599$ 16,766, 867$ 18,372, 864$ 20,444, 285$ Min. Target Ending Balance -Excl. Restricted Reserves 12,160,000$ 12,580,755$ 13,015, 163$ 13,465, 625$ 13,931, 557$ 14,414, 390$ 14,913, 569$ 15,430, 555$ 15,964, 822$ 16,518, 865$ 17,092, 193$ Ending Surplus/(Deficit) Compared to Reserve Targets 3,683,074$ 2,476,154$ 1,807, 245$ 921,815$ 288,172$ (72, 481)$ (128, 720)$ 151,044$ 802,045$ 1,853, 999$ 3,352, 092$ Annual Interest Earnings Rate 4 1.78% 1.78% 1.78% 1.78% 1.78% 1.78% 1.78% 1.78% 1.78% 1.78% 1.78%

1. Beginning cash balances provided by City staff for Fund 501. Source files: Item 1 - Fund 501 Cash Balanace - Trial Balance.

2. The target ending balance is set equal to 60% of O&M expenses.

3. The target ending balance is set equal to 1 year of pipe replacement projects. See Exhibit 2 (CIP) for details.

4. Historical interest earning rates are per the average annual yields for funds invested in LAIF (2020-2024).

The source is the California State Treasurer's website: https://www.treasurer.ca.gov/pmia-laif/historical/annual.asp.

TABLE 3: RESERVE FUND SUMMARY, cont.

Budget
FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 FY 2030/31 FY 2031/32 FY 2032/33 FY 2033/34 FY 2034/35 Restricted Reserves:

Debt Reserve Fund
Beginning Reserve Balance1 771,869$ 785,608$ 799,592$ 813,825$ 828,311$ 843,055$ 858,061$ 873,334$ 888,880$ 904,702$ 920,806$ Plus: Reserve Funding from Future Debt Obligations - - - - - - - - - - - Plus: Interest Earnings 13,739 13,984 14,233 14,486 14,744 15,006 15,273 15,545 15,822 16,104 16,390 Less: Transfer of Surplus to Operating Reserve - - - - - - - - - - - Ending Debt Reserve Balance 785,608$ 799,592$ 813,825$ 828,311$ 843,055$ 858,061$ 873,334$ 888,880$ 904,702$ 920,806$ 937,196$ Annual Interest Earnings Rate 2 1.78% 1.78% 1.78% 1.78% 1.78% 1.78% 1.78% 1.78% 1.78% 1.78% 1.78%

1. Beginning cash balances provided by City staff for Fund 501. Source files: Item 1 - Fund 501 Cash Balanace - Trial Balance.

2. Historical interest earning rates are per the average annual yields for funds invested in LAIF (2020-2024). The source is the California State Treasurer's website: https://www.treasurer.ca.gov/pmia-laif/historical/annual.asp . 5-Year Projected Rate Period ProjectedSUMMARY OF CASH ACTIVITY 5-Year Projected Rate Period ProjectedSUMMARY OF CASH ACTIVITY Prepared by NBS
www.nbsgov.com | Toll-Free: 800.676.7516 Financial Plan, 2 of 19 Charts & TablesCITY OF ALAMEDA

SEWER RATE STUDY
Financial Plan Charts
CHART 1
$.0 Mil.
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2025 2026 2027 2028 2029 2030
Annual Obligations
Fiscal Year Ending June 30
Revenue Requirements vs.

Revenue Under Existing and Increased Rates
Rate-Funded Capital Expenses Debt Service
O&M Expenses Revenues under Existing Rates
Revenues under Increased Rates
5-Year Project Rate Period
Prepared by NBS
www.nbsgov.com | Toll-Free: 800.676.7516 Charts and Tables, 3 of 19 Charts & TablesCITY OF ALAMEDA

SEWER RATE STUDY
Financial Plan Charts
CHART 2
$.0 Mil.
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2025 2026 2027 2028 2029 2030
Fiscal Year Ending June 30
Ending Cash Balances vs. Recommended Reserve Targets
Ending Cash Balance Minimum Target Reserve Balance
5-Year Project Rate Period
Prepared by NBS
www.nbsgov.com | Toll-Free: 800.676.7516 Charts and Tables, 4 of 19 Charts & TablesCITY OF ALAMEDA

SEWER RATE STUDY
Financial Plan Charts
CHART 3

3.0% 3.0% 3.0% 3.0% 3.0%
0%
1%
1%
2%
2%
3%
3%
4%
2026 2027 2028 2029 2030
Fiscal Year Ending June 30
Projected Increases to Rate Revenue
Prepared by NBS
www.nbsgov.com | Toll-Free: 800.676.7516 Charts and Tables, 5 of 19 Charts & TablesCITY OF ALAMEDA

SEWER RATE STUDY
Financial Plan Charts
CHART 4
$9.8 Mil
$8.8 Mil
$8.8 Mil
$9.6 Mil
$9.9 Mil
$10.2 Mil
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$18.0 Mil.
$19.0 Mil.
$20.0 Mil.
2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
City of Alameda
Capital Improvement Projects
5-Year Project Rate Period
Prepared by NBS
www.nbsgov.com | Toll-Free: 800.676.7516 Charts and Tables, 6 of 19 Exhibit 1 - O&MCITY OF ALAMEDA

SEWER RATE STUDY
Operating Revenue and Expenses
TABLE 4: REVENUE FORECAST1
Budget
Basis FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 FY 2030/31 FY 2031/32 FY 2032/33 FY 2033/34 FY 2034/35 Operating Revenue
501-40-41-600 -31210 - Operating Assessments 1 12,298,382$ 12,568,946$ 12,845,463$ 13,128,063$ 13,416,881$ 13,712,052$ 14,013,717$ 14,322,019$ 14,637,104$ 14,959,120$ 15,288,220$ 501-40-41-600 -34360 - Sewer Service Fee 1 500,000$ 511,000$ 522,242$ 533,731$ 545,473$ 557,474$ 569,738$ 582,272$ 595,082$ 608,174$ 621,554$ 501-40-41-600 -36120 - Mrket Val Adj - GASB 31 Non-GF 1 -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 501-40-41-600 -36150 - Interest Income See FP -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ TOTAL: REVENUE 12,798,382$ 13,079,946$ 13,367,705$ 13,661,795$ 13,962,354$ 14,269,526$ 14,583,456$ 14,904,292$ 15,232,186$ 15,567,294$ 15,909,775$ TABLE 5: OPERATING EXPENSE FORECAST1
FUND CATEGORY Basis FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 FY 2030/31 FY 2031/32 FY 2032/33 FY 2033/34 FY 2034/35 501 Sewer Services
501-40-41-600 -41010 - Regular Pay - Full Time 3 779,732 814,820$ 851,487$ 889,804$ 929,845$ 971,688$ 1,015, 414$ 1,061, 108$ 1,108, 857$ 1,158, 756$ 1,210, 900$ 501-40-41-600 -41030 - Part Time Pay - Temp 3 15,500 16,198$ 16,926$ 17,688$ 18,484$ 19,316$ 20,185$ 21,093$ 22,043$ 23,034$ 24,071$ 501-40-41-600 -41300 - Overtime 3 60,000 62,700$ 65,522$ 68,470$ 71,551$ 74,771$ 78,136$ 81,652$ 85,326$ 89,166$ 93,178$ 501-40-41-600 -41350 - Special Pay - PERSable 3 8,730 9,123$ 9,533$ 9,962$ 10,411$ 10,879$ 11,369$ 11,880$ 12,415$ 12,974$ 13,557$ 501-40-41-600 -41360 - Special Pay - Non-PERSable 3 0 -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 501-40-41-600 -41415 - Acting/Add Duties (NONPERS) 3 0 -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 501-40-41-600 -41440 - Health in Lieu (NONPERS) 3 0 -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 501-40-41-600 -41455 - Standby/Call back (NONPERS) 3 0 -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 501-40-41-600 -41470 - Misc Other Special Pays (PERS) 3 0 -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 501-40-41-600 -41610 - Leave Payout (NONPERS) 3 0 -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 501-40-41-600 -41620 - Payout at Separation (NONPERS) 3 0 -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 501-40-41-600 -42000 - Benefits 3 0 -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 501-40-41-600 -42010 - Medical 3 218,804 228,650$ 238,939$ 249,692$ 260,928$ 272,670$ 284,940$ 297,762$ 311,161$ 325,164$ 339,796$ 501-40-41-600 -42020 - Dental 3 13,091 13,680$ 14,296$ 14,939$ 15,611$ 16,314$ 17,048$ 17,815$ 18,617$ 19,454$ 20,330$ 501-40-41-600 -42040 - Long Term Disability 3 852 890$ 930$ 972$ 1,016$ 1,062$ 1,110$ 1,159$ 1,212$ 1,266$ 1,323$ 501-40-41-600 -42050 - Medicare 3 11,433 11,947$ 12,485$ 13,047$ 13,634$ 14,248$ 14,889$ 15,559$ 16,259$ 16,991$ 17,755$ 501-40-41-600 -42060 - Deferred Comp Plan 3 832 869$ 909$ 949$ 992$ 1,037$ 1,083$ 1,132$ 1,183$ 1,236$ 1,292$ 501-40-41-600 -42100 - Other Benefits 3 2,174 2,272$ 2,374$ 2,481$ 2,593$ 2,709$ 2,831$ 2,959$ 3,092$ 3,231$ 3,376$ 501-40-41-600 -43010 - PERS Normal Cost - Misc 3 64,469 67,370$ 70,402$ 73,570$ 76,880$ 80,340$ 83,955$ 87,733$ 91,681$ 95,807$ 100,118$ 501-40-41-600 -43020 - PERS Unfunded - Misc 3 128,666 134,456$ 140,506$ 146,829$ 153,437$ 160,341$ 167,557$ 175,097$ 182,976$ 191,210$ 199,814$ 501-40-41-600 -43050 - PARS - Part-Time 3 0 -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 501-40-41-600 -43060 - OPEB ISF Charges 3 8,315 8,689$ 9,080$ 9,489$ 9,916$ 10,362$ 10,828$ 11,316$ 11,825$ 12,357$ 12,913$ 501-40-41-600 -51030 - Office Supplies 2 1,500 1,553$ 1,609$ 1,666$ 1,725$ 1,787$ 1,850$ 1,916$ 1,984$ 2,055$ 2,128$ 501-40-41-600 -51040 - Computer Software and Hardware 2 11,000 11,392$ 11,797$ 12,217$ 12,652$ 13,102$ 13,569$ 14,052$ 14,552$ 15,070$ 15,607$ 501-40-41-600 -51110 - Other Repair/Mtce Supplies 2 0 -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 501-40-41-600 -51120 - Machinery/Equipment Supplies 2 90,000 93,204$ 96,522$ 99,958$ 103,517$ 107,202$ 111,018$ 114,971$ 119,064$ 123,302$ 127,692$ 501-40-41-600 -51130 - Small Tools 2 12,000 12,427$ 12,870$ 13,328$ 13,802$ 14,294$ 14,802$ 15,329$ 15,875$ 16,440$ 17,026$ 501-40-41-600 -51140 - Meeting Refreshments 2 500 518$ 536$ 555$ 575$ 596$ 617$ 639$ 661$ 685$ 709$ 501-40-41-600 -51150 - Uniforms and Clothing 2 8,000 8,285$ 8,580$ 8,885$ 9,201$ 9,529$ 9,868$ 10,220$ 10,583$ 10,960$ 11,350$ 501-40-41-600 -51200 - Books/Manual/Periodicals/etc 2 2,000 2,071$ 2,145$ 2,221$ 2,300$ 2,382$ 2,467$ 2,555$ 2,646$ 2,740$ 2,838$ 501-40-41-600 -51210 - Postage and Mailing 2 200 207$ 214$ 222$ 230$ 238$ 247$ 255$ 265$ 274$ 284$ 501-40-41-600 -51270 - Forms Printing 2 2,000 2,071$ 2,145$ 2,221$ 2,300$ 2,382$ 2,467$ 2,555$ 2,646$ 2,740$ 2,838$ 501-40-41-600 -51390 - Other Operating Supplies 2 2,000 2,071$ 2,145$ 2,221$ 2,300$ 2,382$ 2,467$ 2,555$ 2,646$ 2,740$ 2,838$ 501-40-41-600 -52010 - Professional Services 2 45,000 46,602$ 48,261$ 49,979$ 51,758$ 53,601$ 55,509$ 57,485$ 59,532$ 61,651$ 63,846$ 501-40-41-600 -52020 - Consulting Services 2 20,000 20,712$ 21,449$ 22,213$ 23,004$ 23,823$ 24,671$ 25,549$ 26,459$ 27,400$ 28,376$ ProjectedOperations and Maintenance Forecast

DESCRIPTION
5-Year Projected Rate Period
Prepared by NBS
www.nbsgov.com | Toll-Free: 800.676.7516 Exhibit 1 (O&M), 7 of 19 Exhibit 1 - O&MCITY OF ALAMEDA

SEWER RATE STUDY
Operating Revenue and Expenses
501-40-41-600 -52140 - Maintenance Contracts 2 387,000 400,777$ 415,045$ 429,820$ 445,122$ 460,968$ 477,379$ 494,374$ 511,973$ 530,200$ 549,075$ 501-40-41-600 -52180 - Cellular Phone 2 17,000 17,605$ 18,232$ 18,881$ 19,553$ 20,249$ 20,970$ 21,717$ 22,490$ 23,290$ 24,120$ 501-40-41-600 -53000 - Recruitment Expense 2 600 621$ 643$ 666$ 690$ 715$ 740$ 766$ 794$ 822$ 851$ 501-40-41-600 -53030 - Medical Examinations 2 2,400 2,485$ 2,574$ 2,666$ 2,760$ 2,859$ 2,960$ 3,066$ 3,175$ 3,288$ 3,405$ 501-40-41-600 -54000 - Travel and Education 2 1,000 1,036$ 1,072$ 1,111$ 1,150$ 1,191$ 1,234$ 1,277$ 1,323$ 1,370$ 1,419$ 501-40-41-600 -54010 - Professional Development 2 10,000 10,356$ 10,725$ 11,106$ 11,502$ 11,911$ 12,335$ 12,775$ 13,229$ 13,700$ 14,188$ 501-40-41-600 -54030 - Training and Conferences 2 5,500 5,696$ 5,899$ 6,109$ 6,326$ 6,551$ 6,784$ 7,026$ 7,276$ 7,535$ 7,803$ 501-40-41-600 -54040 - Mileage Reimbursement 2 1,200 1,243$ 1,287$ 1,333$ 1,380$ 1,429$ 1,480$ 1,533$ 1,588$ 1,644$ 1,703$ 501-40-41-600 -54060 - Long Distance Travel 2 2,500 2,589$ 2,681$ 2,777$ 2,875$ 2,978$ 3,084$ 3,194$ 3,307$ 3,425$ 3,547$ 501-40-41-600 -54070 - Meals and Lodging 2 1,000 1,036$ 1,072$ 1,111$ 1,150$ 1,191$ 1,234$ 1,277$ 1,323$ 1,370$ 1,419$ 501-40-41-600 -54090 - Memberships and Dues 2 6,000 6,214$ 6,435$ 6,664$ 6,901$ 7,147$ 7,401$ 7,665$ 7,938$ 8,220$ 8,513$ 501-40-41-600 -56050 - County Admin Fees 1 191,000 195,202$ 199,496$ 203,885$ 208,371$ 212,955$ 217,640$ 222,428$ 227,322$ 232,323$ 237,434$ 501-40-41-600 -56060 - Permit Fees 1 0 -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 501-40-41-600 -56110 - Pmt In Lieu of Taxes (PILOT) 1 832,000 850,304$ 869,011$ 888,129$ 907,668$ 927,636$ 948,044$ 968,901$ 990,217$ 1,012, 002$ 1,034, 266$ 501-40-41-600 -58010 - Water 1 32,000 32,704$ 33,423$ 34,159$ 34,910$ 35,678$ 36,463$ 37,265$ 38,085$ 38,923$ 39,779$ 501-40-41-600 -58020 - Electricity 1 68,400 69,905$ 71,443$ 73,014$ 74,621$ 76,262$ 77,940$ 79,655$ 81,407$ 83,198$ 85,029$ 501-40-41-600 -70000 - Cost Allocation 1 171,230 174,997$ 178,847$ 182,782$ 186,803$ 190,912$ 195,113$ 199,405$ 203,792$ 208,275$ 212,857$ 501-40-41-600 -70700 - Cost Allocation - Facil Mtce 4 46,881 48,498$ 50,172$ 51,903$ 53,693$ 55,546$ 57,462$ 59,444$ 61,495$ 63,617$ 65,812$ 501-40-41-600 -70800 - Cost Allocation - Facil Replac 4 39,775 41,147$ 42,567$ 44,035$ 45,555$ 47,126$ 48,752$ 50,434$ 52,174$ 53,974$ 55,836$ 501-40-41-600 -71000 - Cost Allocation - Fleet Mtce 4 144,280 149,258$ 154,407$ 159,734$ 165,245$ 170,946$ 176,844$ 182,945$ 189,256$ 195,786$ 202,540$ 501-40-41-600 -71200 - Cost Allocation - Gen Liabil 3 19,482 20,359$ 21,275$ 22,232$ 23,233$ 24,278$ 25,371$ 26,512$ 27,705$ 28,952$ 30,255$ 501-40-41-600 -71400 - Cost Allocation - IT Ops 3 58,568 61,204$ 63,958$ 66,836$ 69,843$ 72,986$ 76,271$ 79,703$ 83,290$ 87,038$ 90,954$ 501-40-41-600 -71500 - Cost Allocation - IT Replace 3 6,853 7,161$ 7,484$ 7,820$ 8,172$ 8,540$ 8,924$ 9,326$ 9,746$ 10,184$ 10,642$ 501-40-41-600 -72000 - Cost Allocation - PW Admin 3 161,675 168,950$ 176,553$ 184,498$ 192,800$ 201,476$ 210,543$ 220,017$ 229,918$ 240,264$ 251,076$ 501-40-41-600 -72400 - Cost Allocation - Workers Comp 3 14,572 15,228$ 15,913$ 16,629$ 17,377$ 18,159$ 18,977$ 19,830$ 20,723$ 21,655$ 22,630$ 501-40-41-600 -72500 - Cost Allocation - EOC 3 4,471 4,672$ 4,882$ 5,102$ 5,332$ 5,572$ 5,822$ 6,084$ 6,358$ 6,644$ 6,943$ 501-40-41-600 -81050 - Equipment Replacement > $10K 4 218,217 225,745$ 233,534$ 241,591$ 249,925$ 258,548$ 267,468$ 276,695$ 286,241$ 296,117$ 306,333$ 501-40-41-600 -90310 - Transfer Out - Cap Improv Proj See Exh 2 -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Subtotal: 501 Sewer Services 3,950,402$ 4,087,771$ 4,230, 293$ 4,378, 173$ 4,531, 623$ 4,690, 866$ 4,856, 132$ 5,027, 662$ 5,205, 704$ 5,390, 522$ 5,582, 384$

SEWER CAPITAL PROJECTS
Capital Expenditures See Exh 2 -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Subtotal: Sewer Capital Projects -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

DEBT SERVICE
Debt Service - Principal Payment See Exh 3 -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Debt Service - Interest Payment See Exh 3 - - - - - - - - - - - Debt Service - Fiscal Agent Fees See Exh 3 - - - - - - - - - - - Subtotal: Debt Service -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ TOTAL: SEWER SYSTEM 3,950,402$ 4,087,771$ 4,230, 293$ 4,378, 173$ 4,531, 623$ 4,690, 866$ 4,856, 132$ 5,027, 662$ 5,205, 704$ 5,390, 522$ 5,582, 384$ Plus Debt Service
Check
Prepared by NBS
www.nbsgov.com | Toll-Free: 800.676.7516 Exhibit 1 (O&M), 8 of 19 Exhibit 1 - O&MCITY OF ALAMEDA

SEWER RATE STUDY
Operating Revenue and Expenses
TABLE 6: FORECASTING ASSUMPTIONS2
Basis 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Customer Growth3 1 -- 2.20% 2.20% 2.20% 2.20% 2.20% 2.20% 2.20% 2.20% 2.20% 2.20% General Cost Inflation4 2 -- 3.56% 3.56% 3.56% 3.56% 3.56% 3.56% 3.56% 3.56% 3.56% 3.56% Labor Cost Inflation5 3 -- 4.50% 4.50% 4.50% 4.50% 4.50% 4.50% 4.50% 4.50% 4.50% 4.50% Construction Cost Inflation6 4 -- 3.45% 3.45% 3.45% 3.45% 3.45% 3.45% 3.45% 3.45% 3.45% 3.45% No Escalation 5 -- 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

2. Expenses are inflated each year by the following annual inflation factor categories.

3. Customer growth is estimated based on the City of Alameda 2023-2031 Housing Element.

4. General cost inflation is based on the 5-year average annual change in the Consumer Price Index for all Urban Consumers in the San Francisco-Oakland-Hayward, CA area.

5. Labor cost inflation is estimated based on maximum salary adjustment in Memorandum of Understanding between City of Alameda and Alameda City Employees Association for July 1, 2022 through June 30, 2025.

6. Construction cost Inflation is the 5-year average change in the Construction Cost Index for 2020-2024. Source: Engineering News Record website ( http://enr.construction.com ).

INFLATION FACTORS
Prepared by NBS
www.nbsgov.com | Toll-Free: 800.676.7516 Exhibit 1 (O&M), 9 of 19 Exhibit 2 - CIPCITY OF ALAMEDA

SEWER RATE STUDY
Capital Improvement Plan Expenditures
TABLE 7: CAPITAL FUNDING SUMMARY
CAPITAL FUNDING FORECAST Budget
FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 FY 2030/31 FY 2031/32 FY 2032/33 FY 2033/34 FY 2034/35 Grant Funds -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Use of Capacity Fee Reserves - - - - - - - - - - - SRF Loan Funding - - - - - - - - - - -
Use of New Revenue Bond Proceeds - - - - - - - - - - - Use of Capital Rehabilitation and Replacement Reserve - 3,023,239 2,078, 828 1,401, 267 501,914 - - - - 304,374 1,339, 110 Rate Revenue 10,654,453 6,664,288 7,608, 699 9,080, 661 10,341, 641 11,217, 657 11,604, 666 12,005, 027 12,419, 201 12,543, 289 11,951, 798 Total Sources of Capital Funds 10,654,453$ 9,687,527$ 9,687, 527$ 10,481, 928$ 10,843,555$ 11,217,657$ 11,604,666$ 12,005,027$ 12,419,201$ 12,847,663$ 13,290,908$ Uses of Capital Funds:

Total Project Costs 10,654,453$ 9,687,527$ 9,687, 527$ 10,481, 928$ 10,843,555$ 11,217,657$ 11,604,666$ 12,005,027$ 12,419,201$ 12,847,663$ 13,290,908$ Capital Funding Surplus (Deficiency) -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ SRF Loan Funding -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ New Revenue Bond Proceeds -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Use of Loan Proceeds don't exceed proceeds check
TABLE 8: CAPITAL IMPROVEMENT PROGRAM FUNDING OPTIONS
Policy Choice FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 FY 2030/31 FY 2031/32 FY 2032/33 FY 2033/34 FY 2034/35 1 Alternative 1 - Full Funding of CIP 10,654,453$ 9,687, 527$ 9,687, 527$ 10,481, 928$ 10,843,555$ 11,217,657$ 11,604,666$ 12,005,027$ 12,419,201$ 12,847,663$ 13,290,908$ 2 Alternative 2 - 75% Funding of CIP 7,990,840$ 7,265, 645$ 7,265, 645$ 7,861, 446$ 8,132, 666$ 8,413, 243$ 8,703, 500$ 9,003, 771$ 9,314, 401$ 9,635, 747$ 9,968, 181$ 3 Alternative 3 - 50% Funding of CIP 5,327,227$ 4,843, 763$ 4,843, 763$ 5,240, 964$ 5,421, 777$ 5,608, 829$ 5,802, 333$ 6,002, 514$ 6,209, 600$ 6,423, 832$ 6,645, 454$ 1 Capital Improvement Program Funding Choice FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 FY 2030/31 FY 2031/32 FY 2032/33 FY 2033/34 FY 2034/35 Effective Annual Funding Amount 10,654,453$ 9,687,527$ 9,687, 527$ 10,481, 928$ 10,843,555$ 11,217,657$ 11,604,666$ 12,005,027$ 12,419,201$ 12,847,663$ 13,290,908$ Funding Sources:

Insert policy choice in box to right, based on options listed above:
5-Year Projected Rate Period Projected
Prepared by NBS
www.nbsgov.com | Toll-Free: 800.676.7516 Exhibit 2 (CIP), 10 of 19 Exhibit 2 - CIPCITY OF ALAMEDA

SEWER RATE STUDY
Capital Improvement Plan Expenditures

CAPITAL IMPROVEMENT PROGRAM
TABLE 9: CAPITAL IMPROVEMENT PROGRAM COSTS (in Current-Year Dollars )1 Project # Description2 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 FY 2030/31 FY 2031/32 FY 2032/33 FY 2033/34 FY 2034/35 Capital Improvement Plan
C21000 Sewer Rehabilitation 9,790,000$ 8,500,000$ 8,500,000$ -$ -$ -$ -$ -$ -$ -$ -$ C22000 Sewer Pump Stations 562,000$ 562,000$ 562,000$ 562,000$ 562,000$ 562,000$ 562,000$ 562,000$ 562,000$ 562,000$ 562,000$ Vehicle/Eqipment Replacement 302,453$ 302,453$ 302,453$ 302,453$ 302,453$ 302,453$ 302,453$ 302,453$ 302,453$ 302,453$ 302,453$ Estimated Future Projects
Future Projects3 - 8,930,000 8,930, 000 8,930, 000 8,930, 000 8,930, 000 8,930, 000 8,930, 000 8,930, 000 Total: CIP Program Costs (Current-Year Dollars) 10,654,453$ 9,364,453$ 9,364, 453$ 9,794, 453$ 9,794, 453$ 9,794, 453$ 9,794, 453$ 9,794, 453$ 9,794, 453$ 9,794, 453$ 9,794, 453$ TABLE 10: CAPITAL IMPROVEMENT PROGRAM COSTS (in Future-Year Dollars) 4 Project # Description2 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 FY 2030/31 FY 2031/32 FY 2032/33 FY 2033/34 FY 2034/35 Capital Improvement Plan
C21000 Sewer Rehabilitation 9,790,000$ 8,793, 250$ 8,793, 250$ -$ -$ -$ -$ -$ -$ -$ -$ C22000 Sewer Pump Stations 562,000$ 581,389$ 581,389$ 601,447$ 622,197$ 643,663$ 665,869$ 688,841$ 712,607$ 737,191$ 762,625$ Vehicle/Eqipment Replacement 302,453$ 312,888$ 312,888$ 323,682$ 334,849$ 346,402$ 358,352$ 370,716$ 383,505$ 396,736$ 410,424$ Estimated Future Projects
Future Projects3 - - - 9,556,799 9,886, 508 10,227, 593 10,580, 445 10,945, 470 11,323, 089 11,713, 736 12,117, 860 Total: CIP Program Costs (Future-Year Dollars) 10,654,453$ 9,687,527$ 9,687, 527$ 10,481, 928$ 10,843,555$ 11,217,657$ 11,604,666$ 12,005,027$ 12,419,201$ 12,847,663$ 13,290,908$ TABLE 11: FORECASTING ASSUMPTIONS
Economic Variables FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 FY 2030/31 FY 2031/32 FY 2032/33 FY 2033/34 FY 2034/35 Annual Construction Cost Inflation, Per Engineering News Record5 0.00% 3.45% 3.45% 3.45% 3.45% 3.45% 3.45% 3.45% 3.45% 3.45% 3.45% Cumulative Construction Cost Multiplier from FY 2026/27 1.00 1.03 1.03 1.07 1.11 1.15 1.18 1.23 1.27 1.31 1.36

1. Capital project costs were provided by City Staff. Source file: 8C21000 - Sewer and 9-C2200 - Sewer Pump Stations.

2. The City's Annual Sewer Rehabilitation Program includes the design and construction of priority sewer projects due to critical needs of the sewer facilities.

These projects include the replacement and rehabilitaiton due to pipe size and condition as well as sewer pump stations.

3. F ut
ure project costs are based on the average of the City's capital improvement plan.

4. Capital improvement projects are inflated to future year estimated costs with ENR CCI for the region. Source: Engineering News Record website ( http://enr.construction.com ).

5. For reference purposes, the annual Construction Cost Inflation percentage is the 10-year average change in the Construction Cost Index from 2013 to 2023 (3.45%).

Source: Engineering News Record website (http://enr.construction.com).

Prepared by NBS
www.nbsgov.com | Toll-Free: 800.676.7516 Exhibit 2 (CIP), 11 of 19 Exhibit 3 - Debt
28500000

CITY OF ALAMEDA

SEWER RATE STUDY
Debt Service
TABLE 12: EXISTING DEBT OBLIGATIONS
EXISTING DEBT OBLIGATIONS Budget
Annual Repayment Schedules: FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 FY 2030/31 FY 2031/32 FY 2032/33 FY 2033/34 FY 2034/35 2012 Sewer Revenue Bond
Principal Payment 440,000$ 450,000$ 465,000$ 480,000$ 490,000$ 505,000$ 520,000$ 535,000$ 550,000$ 570,000$ 585,000$ Interest Payment 326,919 315,219 301,494 287,319 273,381 259,700 244,956 229,131 212,856 196,056 178,731 Subtotal: Annual Debt Service 766,919$ 765,219$ 766,494$ 767,319$ 763,381$ 764,700$ 764,956$ 764,131$ 762,856$ 766,056$ 763,731$ Coverage Requirement ($-Amnt above annual payment) -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Reserve Requirement (total fund balance) -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Total: Existing Annual Debt Service 766,919$ 765,219$ 766,494$ 767,319$ 763,381$ 764,700$ 764,956$ 764,131$ 762,856$ 766,056$ 763,731$ Total: Existing Annual Coverage Requirement -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Total: Existing Debt Reserve Target -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

1. Revenue bonds issued to refund the 2004 Bonds with an original principal balance of $8.675M. Source file: 8a. Sewer Refund Refinancing Bond 01 16.pdf .

TABLE 13: EXISTING ANNUAL DEBT OBLIGATIONS TO BE SATISFIED BY WATER RATES Annual Obligations FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 FY 2030/31 FY 2031/32 FY 2032/33 FY 2033/34 FY 2034/35 Existing Annual Debt Service 766,919$ 765,219$ 766,494$ 767,319$ 763,381$ 764,700$ 764,956$ 764,131$ 762,856$ 766,056$ 763,731$ Existing Annual Coverage Requirement - - - - - - - - - - - Existing Debt Reserve Target - - - - - - - - - - - 5-Year Projected Rate Period Projected
Prepared by NBS
www.nbsgov.com | Toll-Free: 800.676.7516 Exhibit 3 (Debt), 12 of 19 Exhibit 4 - Current RatesCITY OF ALAMEDA

SEWER RATE STUDY
Projected Sewer Rates Under Existing Rate Schedule
TABLE 17: CURRENT SEWER RATES
Sewer Rate Schedule FY 2025
Customer Class
Single Family ($/month) $31.22
Multi-Family ($/month) $28.13
Commercial
Fixed Charge ($/month) (includes first 730 cubic feet) $28.13 Flow-Based Rate ($ per HCF) $3.86
Prepared by NBS
www.nbsgov.com | Toll-Free: 800.676.7516 Exhibit 4 (Current Rates), 13 of 19 Functionalization & ClassificationCITY OF ALAMEDA

SEWER RATE STUDY
Cost of Service Analysis
TABLE 18: CLASSIFICATION OF EXPENSES FOR COST OF SERVICE ANALYSIS Classification of Expenses
Total Revenue
Requirements Flow Fixed (EDUs) Customer
FY 2025/26 (VOL) (CAP) (CA) (VOL) (CAP) (CA)
501 Sewer Services
Regular Pay - Full Time 814,820$ 305,557$ 40 7,410$ 10 1,852$ 37 .5% 50.0% 12.5% Part Time Pay - Temp 16,198$ 6,074$ 8, 099$ 2, 025$ 37.5% 5 0.0% 12.5% Overtime 62,700$ 23,513$ 31 ,350$ 7, 838$ 37.5% 5 0.0% 12.5% Special Pay - Persable 9,123$ 3,421$ 4, 561$ 1, 140$ 37.5% 5 0.0% 12.5% Special Pay - Non-Persable -$ -$ -$ -$ 3 7.5% 50.0% 12.5% Acting/Add Duties (Nonpers) -$ -$ -$ -$ 3 7.5% 50.0% 12.5% Health In Lieu (Nonpers) -$ -$ -$ -$ 3 7.5% 50.0% 12.5% Standby/Call Back (Nonpers) -$ -$ -$ -$ 3 7.5% 50.0% 12.5% Misc Other Special Pays (Pers) -$ -$ -$ -$ 3 7.5% 50.0% 12.5% Leave Payout (Nonpers) -$ -$ -$ -$ 3 7.5% 50.0% 12.5% Payout At Separation (Nonpers) -$ -$ -$ -$ 3 7.5% 50.0% 12.5% Benefits -$ -$ -$ -$ 3 7.5% 50.0% 12.5%
Medical 228,650$ 85,744$ 11 4,325$ 28 ,581$ 37 .5% 50.0% 12.5% Dental 13,680$ 5,130$ 6, 840$ 1, 710$ 37.5% 5 0.0% 12.5% Long Term Disability 890$ 334$ 44 5$ 11 1$ 37.5% 5 0.0% 12.5% Medicare 11,947$ 4,480$ 5, 974$ 1, 493$ 37.5% 5 0.0% 12.5% Deferred Comp Plan 869$ 326$ 43 5$ 10 9$ 37.5% 5 0.0% 12.5% Other Benefits 2,272$ 852$ 1, 136$ 28 4$ 37.5% 5 0.0% 12.5% Pers Normal Cost - Misc 67,370$ 25,264$ 33 ,685$ 8, 421$ 37.5% 5 0.0% 12.5% Pers Unfunded - Misc 134,456$ 50,421$ 67 ,228$ 16 ,807$ 37 .5% 50.0% 12.5% Pars - Part-Time -$ -$ -$ -$ 3 7.5% 50.0% 12.5% Opeb Isf Charges 8,689$ 3,258$ 4, 345$ 1, 086$ 37.5% 5 0.0% 12.5% Office Supplies 1,553$ 583$ 77 7$ 19 4$ 37.5% 5 0.0% 12.5% Computer Software And Hardware 11,392$ 4,272$ 5, 696$ 1, 424$ 37.5% 5 0.0% 12.5% Other Repair/Mtce Supplies -$ -$ -$ -$ 3 7.5% 50.0% 12.5% Machinery/Equipment Supplies 93,204$ 34,952$ 46 ,602$ 11 ,651$ 37 .5% 50.0% 12.5% Small Tools 12,427$ 4,660$ 6, 214$ 1, 553$ 37.5% 5 0.0% 12.5% Meeting Refreshments 518$ 194$ 25 9$ 65$ 37.5% 5 0.0% 12.5% Uniforms And Clothing 8,285$ 3,107$ 4, 142$ 1, 036$ 37.5% 5 0.0% 12.5% Books/Manual/Periodicals/Etc 2,071$ 777$ 1, 036$ 25 9$ 37.5% 5 0.0% 12.5% Postage And Mailing 207$ 78$ 10 4$ 26$ 37.5% 5 0.0% 12.5% Forms Printing 2,071$ 777$ 1, 036$ 25 9$ 37.5% 5 0.0% 12.5% Other Operating Supplies 2,071$ 777$ 1, 036$ 25 9$ 37.5% 5 0.0% 12.5% Professional Services 46,602$ 17,476$ 23 ,301$ 5, 825$ 37.5% 5 0.0% 12.5% Consulting Services 20,712$ 7,767$ 10 ,356$ 2, 589$ 37.5% 5 0.0% 12.5% Maintenance Contracts 400,777$ 150,291$ 20 0,389$ 50 ,097$ 37 .5% 50.0% 12.5% Cellular Phone 17,605$ 6,602$ 8, 803$ 2, 201$ 37.5% 5 0.0% 12.5% Recruitment Expense 621$ 233$ 31 1$ 78$ 37.5% 5 0.0% 12.5% Medical Examinations 2,485$ 932$ 1, 243$ 31 1$ 37.5% 5 0.0% 12.5% Travel And Education 1,036$ 388$ 51 8$ 12 9$ 37.5% 5 0.0% 12.5% Professional Development 10,356$ 3,884$ 5, 178$ 1, 295$ 37.5% 5 0.0% 12.5% Training And Conferences 5,696$ 2,136$ 2, 848$ 71 2$ 37.5% 5 0.0% 12.5% Mileage Reimbursement 1,243$ 466$ 62 1$ 15 5$ 37.5% 5 0.0% 12.5% Basis of ClassificationBudget Categories
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SEWER RATE STUDY
Cost of Service Analysis
Long Distance Travel 2,589$ 971$ 1, 295$ 32 4$ 37.5% 5 0.0% 12.5% Meals And Lodging 1,036$ 388$ 51 8$ 12 9$ 37.5% 5 0.0% 12.5% Memberships And Dues 6,214$ 2,330$ 3, 107$ 77 7$ 37.5% 5 0.0% 12.5% County Admin Fees 195,202$ 73,201$ 97 ,601$ 24 ,400$ 37 .5% 50.0% 12.5% Permit Fees -$ -$ -$ -$ 3 7.5% 50.0% 12.5%
Pmt In Lieu Of Taxes (Pilot) 850,304$ 318,864$ 42 5,152$ 10 6,288$ 37 .5% 50.0% 12.5% Water 32,704$ 12,264$ 16 ,352$ 4, 088$ 37.5% 5 0.0% 12.5% Electricity 69,905$ 26,214$ 34 ,952$ 8, 738$ 37.5% 5 0.0% 12.5% Cost Allocation 174,997$ 65,624$ 87 ,499$ 21 ,875$ 37 .5% 50.0% 12.5% Cost Allocation - Facil Mtce 48,498$ 18,187$ 24 ,249$ 6, 062$ 37.5% 5 0.0% 12.5% Cost Allocation - Facil Replac 41,147$ 15,430$ 20 ,574$ 5, 143$ 37.5% 5 0.0% 12.5% Cost Allocation - Fleet Mtce 149,258$ 55,972$ 74 ,629$ 18 ,657$ 37 .5% 50.0% 12.5% Cost Allocation - Gen Liabil 20,359$ 7,635$ 10 ,179$ 2, 545$ 37.5% 5 0.0% 12.5% Cost Allocation - It Ops 61,204$ 22,951$ 30 ,602$ 7, 650$ 37.5% 5 0.0% 12.5% Cost Allocation - It Replace 7,161$ 2,686$ 3, 581$ 89 5$ 37.5% 5 0.0% 12.5% Cost Allocation - Pw Admin 168,950$ 63,356$ 84 ,475$ 21 ,119$ 37 .5% 50.0% 12.5% Cost Allocation - Workers Comp 15,228$ 5,710$ 7, 614$ 1, 903$ 37.5% 5 0.0% 12.5% Cost Allocation - Eoc 4,672$ 1,752$ 2, 336$ 58 4$ 37.5% 5 0.0% 12.5% Equipment Replacement > $10K 225,745$ 84,655$ 11 2,873$ 28 ,218$ 37 .5% 50.0% 12.5% Transfer Out - Cap Improv Proj -$ -$ -$ -$ 3 7.5% 50.0% 12.5% Subtotal: 501 Sewer Services 4,087,771$ 1,532,914$ 2, 043,885$ 51 0,971$ 37 .5% 50.0% 12.5% TOTAL: SEWER SYSTEM 4,087,771$ 1,532,914$ 2, 043,885$ 51 0,971$ 37 .5% 50.0% 12.5% TABLE 19: CLASSIFICATION OF EXPENSES FOR COST OF SERVICE ANALYSIS, cont.

Classification of Expenses, cont.

Total Revenue
Requirements Flow Fixed (EDUs) Customer
FY 2025/26 (VOL) (CAP) (CA) (VOL) (CAP) (CA)
Debt Service Payments
Outstanding Debt 765,219$ 382,609$ 38 2,609$ -$ 5 0.0% 50.0% 0.0% New Debt Issue - SRF Loan - - - - 50.0% 5 0.0% 0.0% New Debt Issue - Revenue Bond - - - - 50.0% 5 0.0% 0.0% Total Debt Service Payments 765,219$ 382,609$ 38 2,609$ -$ 5 0.0% 50.0% 0.0% Capital Expenditures
Rate Funded Capital Expenses 6,664,288$ 2,499,108 3, 332,144 83 3,036 37 .5% 50.0% 12.5% TOTAL REVENUE REQUIREMENTS 11,517,277$ 4,414,631$ 5, 758,639$ 1, 344,007$ 38 .3% 50.0% 11.7% Less: Non-Rate Revenues
NET REVENUE REQUIREMENTS 11,517,277$ 4,414,631$ 5, 758,639$ 1, 344,007$ Allocation of Revenue Requirements 100.0% 38.3% 50.0% 11.7% Net Revenue Req't. Check from Financial Plan -$
Budget Categories Basis of Classification
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SEWER RATE STUDY
Cost of Service Analysis
TABLE 20: ADJUSTMENT TO CLASSIFICATION OF EXPENSES FOR COST OF SERVICE ANALYSIS Adjustments to Classification of Expenses Flow Fixed (EDUs) Customer Adjustment to Current Rate Level: Total (VOL) (CAP) (CA) Test Year (FY 2025/26) Target Rate Rev. After Rate Increases 13,472,345$ Projected Rate Revenue at Current Rates 13,079,946
Test Year (FY 2025/26) Projected Rate Adjustment 3.0%
Adjusted Net Revenue Requirements 13,472,345$ 5,164,019$ 6, 736,172$ 1, 572,154$ Percent of Revenue 100.0% 38.3% 50.0% 11.7%
TABLE 21: RATE ALTERNATIVES BASED ON COST-OF-SERVICE ANALYSIS Flow Fixed (EDUs) Customer
(VOL) (CAP) (CA)
Rate-Design Adjustments to Fixed/Variable % 100.0% 38.3% 50.0% 11.7% Rate-Design Adjustments to Fixed/Variable ($) 13,472,345$ $5,164,019 $6,736,172 $1,572,154 Variable (Volumetric Rates) 38.3%
Fixed Charges 61.7%
COST-OF-SERVICE NET REVENUE REQUIREMENTS Total
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SEWER RATE STUDY
Sewer Cost of Service Analysis
TABLE 22: DEVELOPMENT OF THE FLOW ESTIMATES TO TREATMENT PLANT Development of the FLOW ESTIMATES TO TREATMENT PLANT1
Customer Class Number
of Accounts
Number
of Units
Estimated
Annual
Volu
me (HCF)2
Percentage
of Estimated
Annual
Volume
Single Family 14,166 14,166 1,240,942 37.3%
Multi-Family 5,396 18,839 1,650,296 49.6%
Commercial 2,808 4,998 437,862 13.2%
Total: 22,370 38,003 3,329, 100 100.0%

1. Customer data provided by City Staff.

2. Estimated sewer flow based on average winter consumption for residential customers.

Com
mercial customers are based on annual consumption.

TABLE 23: DEVELOPMENT OF THE SEWER ALLOCATION FACTORS
Development of the Allocation Factors
Number of
Accounts

CUSTOMER
Allocation Factors
% of
Total
Accounts
Number of EDU
Billing Units

CAPACITY
Allocation
Fac
tors (% of
Total EDUs)
Estimated
Annual Flow
(HCF
)
VOLUME
Allocation Factor
(% of Estimated
Flow)
Single Family 14,166 63.3% 14,166 37.3% 1, 240,942 37.3% Multi-Family 5,396 24.1% 18,839 49.6% 1, 650,296 49.6% Commercial 2,808 12.6% 4,998 13.2% 437, 862 13.2%
Total: 22,370 100.0% 38,003 100.0% 3, 329,100 100.0%

1. Customer data provided by City Staff. Source file: 2023-24 Sewer Charge Levy Data TABLE 24 : TOTAL REVENUE BY CUSTOMER CLASS
Customer Class
FY 2024/25
Rate
Revenue1
Percentage
of Accounts
Single Family 5,307,150$ 40.4%
Multi-Family 6,145,816$ 46.7%
Commercial 1,697,126$ 12.9%
Total: 13,150,092$ 100.0%

1. Source file: 2024-25 Sewer Charge Levy Data
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SEWER RATE STUDY
Sewer Cost of Service Analysis
TABLE 25: ALLOCATION OF NET REVENUE REQUIREMENTS COST-OF-SERVICE NET REVENUE REQUIREMENTS Net Revenue Requirements 1 5,164,019$ 6,736,172$ 1,572,154$ 13,472,345$ --

38.3% 50.0% 11.7% 100.0%
Single Family 1,924,918$ 2,510,948$ 995,580$ 5,431,446$ 40.3% Multi-Family 2,559,900$ 3,339,245$ 379,228$ 6,278,373$ 46.6% Commercial 679,201$ 885,979$ 197,345$ 1,762,525$ 13.1%
Total: 5,164,019$ 6,736,172$ 1,572,154$ 13,472,345$ 100%

1. The revenue requirement for each customer class is determined by multiplying the revenue requirement from each cost classification by the allocation factors for each customer class.

TABLE 26 : RATE DESIGN - SUMMARY OF REVENUE REQUIREMENTS Single Family 5,431,446$ 40.3% 100% 0% -$ 4,435,866$ 995,580$ 5,431,446$ -$ 5,431,446$ Multi-Family 6,278,373$ 46.6% 100% 0% - 5,899,145 379,228 6,278,373 -$ 6,278,373 Commercial 1,762,525$ 13.1% 56% 44% 768,493 796,687 197,345 994,032 768,493$ 1,762,525 Total 13,472,345$ 100.0% 768,493$ 11,131,698$ 1,572,154$ 12,703,852$ 768,493$ 13,472,345$ Percent of Total Revenue Collected 94% 6% -$ Check
TABLE 27 : PROPOSED SEWER RATES

NET REVENUE REQUIREMENTS
Customer Class Number of
Units
Net Revenue
Requirement
Estimated Fixed
Revenue
Estimated
Variable
Revenue
Monthly Fixed
Charge Per Unit
Annual Charge
Per Unit
Volumetric
Rate ($/HCF) Fixed Revenue
Variable
Revenue Total Revenue
Total
Revenue
check
Single Family 14,166 5,431,446$ 5,431, 446$ -$ $31.95 ` N /A 5,431,446$ -$ 5,431,446$ -$ Multi-Family 18,839 6,278,373$ 6,278, 373$ -$ $27.77 ` N /A 6,278,373$ -$ 6,278,373$ -$ Commercial 2,808 1,762,525$ 994,032$ 768,493$ $29.50 ` $4. 01 994,032$ 768,493$ 1,762, 525$ 0$ Total 35,813 13,472,345$ 12,703, 852$ 768,493$ 12,703,852$ 768,493$ 13,472, 345$ 0$ Customer
Related
Estimated
Fixed Revenue
Estimated
Variable
Revenue
Customer Class
Cost-of-Service Net Revenue
Requirements
FY 2024/25
COS
Rev. Req't
% of COS
Rev. Req't.
% Fixed
Revenue
% Variable
Revenue Volume
NET

REVENUE REQUIREMENTS
Capacity
Customer Class
Volume Customer Related
Cost-of-Service
Net Revenue
Req'ts.
% of COS Net
Revenue Req'ts. Capacity
Cos
t Classification Components
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SEWER RATE STUDY
Sewer Cost of Service Analysis/Rate Design
TABLE 28: CURRENT VS. PROPOSED SEWER RATES
Year 1 Year 2 Year 3 Year 4 Year 5
FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 Projected Increase in Rate Revenue: 3.00% 3.00% 3.00% 3.00% 3.00% Customer Class
Single Family ($/month) $31.22 $31.95 $32.91 $33.90 $34.92 $35.97 Multi-Family ($/month) $28.13 $27.77 $28.61 $29.47 $30.35 $31.26 Commercial
Fixed Charge ($/month) (includes first 730 cubic feet) $28.13 $29.50 $30.39 $31.30 $32.24 $33.21 Flow-Based Rate ($ per HCF) $3.86 $4.01 $4.13 $4.25 $4.38 $4.51 Sewer Rate Schedule Current
Rates
($/E
DU)
Proposed Monthly Sewer Rates
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