Belmont City Council
June 14, 2022

CITY OF BELMONT

CITY COUNCIL AND BELMONT FIRE

PROTECTION DISTRICT BOARD OF

DIRECTORS
www.belmont.gov

1. ROLL CALL

2. PLEDGE OF ALLEGIANCE

3. REPORT FROM CLOSED SESSION

CITY COUNCIL REGULAR MEETING AGENDA
Tuesday, June 14, 2022
7:00 PM
City Council Chambers
City Hall, One Twin Pines Lane, Belmont, California

TELECONFERENCE PARTICIPANTS
Some Members may Participate Virtually
Being held under Gov. Code 54953(e) and
Belmont City Council Resolution 2022-048
The meeting will be broadcast live to Belmont residents on Comcast Cable Channel 27, streamed live via the City’s website at www.Belmont.gov. The public may also attend the meeting in the City Council Chambers and address the council from the chambers. Social distancing must be practiced, and seating will be limited.

PUBLIC COMMENT:

To maximize time for live public comment, we encourage members of the public to provide comments by joining the City Council meeting via Zoom : For web, visit https://belmont-gov.zoom.us/ select “Join” and enter Meeting ID: 95745673035. Use the Raise Hand feature to request to speak. You may rename your profile if you wish to remain anonymous.

For dial- in comments, call *67 1-(669) 900-6833 (your phone number will appear on the live broadcast if *67 is not dialed prior to the phone number), enter Meeting ID: 95745673035, and press *9 to request to speak. All public comments are subject to a 3-minute time limit unless otherwise determined by the Mayor.

If you wish to submit written public comment, you may send an email to [email protected] before the council considers the item. Please indicate the agenda item topic or agenda item number you wish to comment on in your email’s subject line. Any public comment regarding agenda items that are received from the publication of the agenda through the meeting date will be made part of the meeting record, but will not be read during the Council meeting.
1 4. SPECIAL PRESENTATIONS
A. Proclamation Recognizing Mosquito Vector Month and Annual Presentation from the San Mateo County Mosquito and Vector Control District

5. PUBLIC COMMENTS ON ITEMS NOT ON THE AGENDA
This portion of the meeting is reserved for persons wishing to address the Body on any City matter not on the agenda. The period for public comment at this point in the agenda is limited to 15 minutes, with a maximum of 3 minutes per speaker. Speakers who requested but did not receive an opportunity to speak during this comment period will be given an opportunity to address the Body later in the meeting. State law prohibits the Body from acting on non-agenda items.

6. COUNCILMEMBER ANNOUNCEMENTS

7. CONSENT BUSINESS
Consent business items are considered to be routine in nature and will be enacted by one motion. There will be no separate discussion on these items unless a member or staf request specific items to be removed for separate action. The City Attorney will read the title of ordinances to be adopted.

A. Virtual Meetings in May and June
Recommendation: Adopt a resolution finding that the COVID-19 statewide emergency remains in effect and that state and local officials continue to recommend measures to promote social distancing and directing the Council’s Citizen Advisory Bodies to make consistent findings
Attachment(s):

Staff Report
Resolution
B. Approval of Minutes
Recommendation: Approve Minutes as Presented
Attachment(s):

February 17, 2022 Special Meeting
February 16, 2022 Special Meeting
January 25, 2022 Special and Regular Meeting
February 8, 2022 Special and Regular Meeting
February 22, 2022 Special and Regular Meeting
C. Belmont-San Carlos Fire Department Budgets for FY 2023 and FY 2024 Recommendation:

Adopt a resolution ratifying the proposed budgets for the Belmont-San Carlos Fire Department for Fiscal Year (FY) 2023 and FY 2024, which cover the period July 1, 2022 through June 30, 2024
Attachment(s):

Staff Report
Resolution
Proposed FY 2023 and FY 2024 Budget
Fire Commission Approved Resolution
D. Outreach Communications Services
Recommendation: Adopt a resolution authorizing the City Manager to execute an 2 Amendment to the Service Agreement with The Lew Edwards Group to provide communications services in an amount of $100,000 plus a 10% contingency for a total notto-exceed amount of $210,000.

Attachment(s):

Staff Report
Resolution
E. Amended Services Agreement for Open Space Management Plan Development Services from WRA, Inc.

Recommendation: Adopt a resolution (1) authorizing an amendment to the contract with WRA, Inc. for consultant services for development of an Open Space Management Plan for an additional amount of $19,000 plus a 10% contingency, for a total not-to-exceed of $148,720, and (2) authorizing a budget appropriation of $20,900 from Planned Park Fund 341 for this purpose
Attachment(s):

Staff Report
Resolution

8. PUBLIC HEARINGS
A. Resolution making certain findings under Public Health and Safety Code Section 33433 for disposition of public property located at 30 Oxford Place, and 300-400 Davey Glen Road (APN’s 040-500-170, 106-190-070, 106-270-060)
Recommendation: Adopt a Resolution making certain findings under Public Health and Safety Code Section 33433 for disposition of public property.

Attachment(s):

Staff Report
Resolution
Section 33433 Report
B. Public Hearing Under Proposition 218 to Consider Protests to Proposed Increases to Sewer Service Charges Effective Fiscal Years 2022/2023 and 2023/2024 Recommendation:

Hold a Public Hearing

1. If protest is not made by the owners of a majority of separate parcels of property, adopt a resolution increasing the City’s sewer charges effective fiscal years 2022/2023 and 2023/2024;

2. If protest is made by the owners of a majority of separate parcels of property, the City should stop further proceedings of the rate proposal and direct staff to prepare an annual report of city sewer service charges based on current sewer service rates.

Attachment(s):

Staff Report
Resolution
2022 Comprehensive Sewer Rate Study
Prop 218 Notice to Property Owners
C. Adopt Budget and Related Items for Fiscal Year 2023
3 Recommendation: Adopt resolutions approving the Fiscal Year 2023 Budget, approving the Appropriations Limit, authorizing the Special Library Tax, approving revisions to the Master Revenue Schedule, and directing the City Manager to explore possible fiscal stability strategies
Attachment(s):

Staff Report
Presentation
FY 2023 Budget Resolutions
Proposed FY2023 Master Revenue Schedule
D. Annual Report For Collection of Storm Drainage Fees
Recommendation: Adopt a resolution approving the annual report for collection on the tax roll of storm drainage fees charged to parcel owners to fund the City of Belmont’s National Pollutant Discharge Elimination System (NPDES) Storm Water Compliance Program for FY 2022-2023
Attachment(s):

Staff Report
Resolution.pdf
NPDES Report FY 2022-2023
E. Annual Report For Collection of Sewer Treatment Facility Charges Recommendation:

Adopt a resolution approving the annual report for collection on the tax roll of the sewer treatment facility fees charged to parcel owners to fund the City of Belmont’s share of the Silicon Valley Clean Water (SVCW) sewer treatment plant and conveyance system Attachment(s):

Staff Report
Resolution.pdf
Sewer Treatment Facility Charges FY 2022-2023
F. Annual Report For Collection of Sewer Service Fees
Recommendation:

Adopt a resolution approving the annual report for collection on the tax roll of sewer services fees
charged to parcel owners to fund the operation and maintenance of the City’s sewer collection system
Attachment(s):

Staff Report
Resolution
Report FY 2022-2023
G. Military Equipment Policy Adoption
Recommendation:

Introduce an ordinance Adopting Belmont Police Department Military Equipment Policy 710 and requiring annual review of the policy in accordance with Government Code Section 7071 4 Attachment(s):

Staff Report
Policy
Ordinance
Presentation
H. Energy Reach/EV Infrastructure Code Amendments
Recommendation: 1. Conduct Public Hearing and 2. Consider and adopt Energy Reach & EV Infrastructure Code Amendments Ordinance (2nd Reading)
Attachment(s):

Staff Report
Reach-EV Code Findings Resolution
2019 CBSC CalGreen Reach Codes Ordinance

9. GENERAL BUSINESS
General Business items are considered separately, typically in the order listed. The chair will call for public comment on each item when the body considers the item.

A. Appointment of Retired Annuitant
Recommendation: Adopt a resolution making findings and approving the appointment of retired annuitant Stacey Stevenson sooner than 180 days after her retirement Attachment(s):

Staff Report
Resolution

10. BRIEF VERBAL REPORTS FROM MEMBERS AND STAFF
Verbal report from Councilmembers on Intergovernmental (IGR) and Subcommittee Assignments Verbal report from City Manager

11. MATTERS OF INTEREST/CLARIFICATION
Items in this category are for discussion and direction to staf only. However, Council/Board may take final action on an item if there is no need for additional staf analysis.

12. ADJOURNMENT
If you need assistance to participate in this meeting, please contact the City Clerk at (650) 595-7413. The speech and hearing-impaired may call (650) 637-2999 for TDD services. Notification in advance of the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting.

Meeting information can also be accessed via the internet at:www.belmont.gov. All staff reports will be posted to the web in advance of the meeting, and any writings or documents provided to a majority of the City Council/District Board or Commission regarding any item on this agenda will be made available for public inspection in the City Clerk's Office, One Twin Pines Lane, during normal business hours and at the Council Chambers at City Hall, Second Floor, during the meeting. 5

Virtual Meetings June - Staff Report

STAFF REPORT
Meeting Date: June 14, 2022
Agency: City of Belmont
Staff Contact: Scott Rennie, City Attorney
Agenda Title: Virtual Meetings in May and June
Agenda Action: Resolution
Recommendation
Adopt a resolution finding that the COVID-19 statewide emergency remains in effect and that state and local officials continue to recommend measures to promote social distancing and directing the Council’s Citizen Advisory Bodies to make consistent findings.

Strategic Focus Area
Fiscal and Organizational Sustainability
Background
Governor Newsom proclaimed a state of emergency on March 4, 2020, in response to the COVID-19 pandemic and subsequently issued a series of Executive Orders (N-25-20, N-29-20, and N-08-21) that effectively suspended certain provisions of the Brown Act governing the use of teleconferencing by local legislative bodies and allowed them to hold fully virtual meetings. The Brown Act was subsequently amendment by enactment of AB 361 in 2021 to include new requirements for holding fully virtual meetings during a state of emergency proclaimed by the Governor.

The Brown Act, in Government Code Section 54953(b)(3), typical requires a city legislative body that this uses teleconferencing to: (1) post agendas at all teleconference locations from which members will participate, (2) identify each location in the notice and agenda of the meeting or proceeding, (3) make teleconference location accessible to the public and (4) maintain at least a quorum of the members of the legislative body in locations within the boundaries of the city. Under Government Code Section 54953(e) as amended by AB 361, fully virtual meetings are allowed without complying with these requirements during a proclaimed state of emergency if either:

1. State or local officials have imposed or recommended measures to promote social distancing; or,

2. The legislative body determines by majority vote that as a result of the emergency meeting in person would present imminent risks to the health or safety of attendees.

After the initial teleconferenced meeting the legislative body must reconsider the state of emergency and determine whether either of the above circumstances continue every 30 days in order to continue to teleconference without complying with the requirements in section 54953(b)(3) listed above.

The City Council found both circumstances listed both existed and began holding fully virtual public 6

Virtual Meetings June - Staff Report
meetings on September 28, 2021. The Council reconsidered findings at least every 30 days between September 28, 2021 and March 8, 2022 and affirmed both findings. On April 26, 2022, the Council found that state and local officials have imposed or recommended measures to promote social distancing.

The current San Mateo County Health Officer order related to COVID-19 issued on February 16, 2022, remains in effect and advises that individuals should continue to follow guidance released by the United States Department of Health & Human Services (“HHS”) including their sub-agency United States Centers for Disease Control and Prevention (“CDC”), the United States Environmental Protection Agency (“EPA”), California Department of Public Health (“CDPH”), and California Department of Social Services (“CDSS”).

On February 25, 2022, Governor Newsom lifted many of his previous emergency order’s related to COVID-19 and left in place critical measures that support the state’s ongoing response and recovery efforts. By mid-March 2022, transmission and hospitalize rates were low and stable and the circumstances appeared appropriate to transition back to in-person meetings. However, since then transmission and case rates have been steadily rising.

On April 13, 2022, California Public Health Officer Dr. Tomás J. Aragón issued a statement noting that the rising transmissions “underscores the need for Californians to remain vigilant and protect themselves and their communities by getting vaccinated and boosted.” At this time, a vaccine has not been approved for children under 5 years.

On May 6, 2022, the chief of San Mateo County Health, Louise Rogers issued a statement encouraging the public “to take the important actions we can to protect ourselves and our loved ones” in response to increasing COVID-19 transmission in the community and rising COVID-19 hospitalizations. On May 23, 2022, the chief issued a statement noting that community transmission was high and raising and urging people to take protective safety projections against the continued increase in COVID-19 case transmission test positivity and hospitalization.

As of June 3, 2022, the CDC assessed the COVID-19 community level in San Mateo County as “medium”.

The CDC continues to recommend that individuals who are not up to date on COVID-19 vaccinations stay six feet apart from other people in indoor public places. The CDC also continues to advise that physical distancing along with other risk-reduction measures help reduce the chances of spreading COVID-19. https://www.cdc.gov/coronavirus.

The current emergency COVID-19 regulations of the California Department of Industrial Relations Division Occupational Safety and Health (Cal/OSHA) require employers to inform employees that strategies to decease the spread of COVID-19 are most effective when used in combination including physical distancing. (California Code of Regulations Title 8, Section 3205). COVID-19 Prevention Emergency Temporary Standards
Analysis
Transmission rates of COVID-19 have increased, and the risk of COVID-19 variants are still unknown.

COVID-19 remains a significant public health hazard, particularly for unvaccinated individuals and continues to spread and impact nearly all parts of city operations. 7

Virtual Meetings June - Staff Report
Reducing the circumstances under which people come into close contact remains an important component of Belmont’s COVID-19 response strategy. However, the open nature of public meetings makes it is difficult to enforce compliance with vaccination, physical distancing, masking, cough and sneeze etiquette, or other safety measures. Meetings of the city’s legislative bodies incur indoors for sustained periods of time which increases the risk to members of the legislative bodies and attending members of the public to Delta variant transmission and infection. In addition, the non-emergency teleconferencing requirements of the Brown Act do not provide a safe alternative for legislative body members who may be at high risk of infection or are susceptible to more severe illness as a result of infection because those rules require that the public be allowed to attend at the teleconference location.

Staff concludes that the Council may reasonably find, based on the available public health information pertaining to COVID-19, that meeting in person by the city’s legislative bodies at this time would present imminent risks to the health or safety of attendees. Staff also concludes that the Council may also reasonably find, as an independent basis for continuing virtual meetings, that the County Health Officer recommends individuals follow CDC guidance which continues to encourage physical distancing as risk reduction strategy, and that CalOSHA continues to promote physical distancing as a prevention strategy in the workplace. Council may therefore find that state and local officials continue to recommend measures to promote social distancing in settings such as legislative body meetings.

Alternatives

1. Take no action (in which case in-person meetings will resume)

2. Consider other findings
Attachments
A. Draft resolution
Fiscal Impact
☒ No Fiscal Impact
☐ Funding Source Confirmed:

Source: Purpose: Public Outreach:

Staff Discretionary Action Posting of Agenda
8

RESOLUTION NO. 2022 –

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BELMONT RECONSIDERING THE COVID-19 STATEWIDE EMERGENCY, FINDING THAT

STATE AND LOCAL OFFICIALS CONTINUE TO RECOMMEND MEASURES TO PROMOTE SOCIAL DISTANCING, AND DIRECTING THE COUNCIL’S CITIZEN ADVISORY BODIES TO MAKE CONSISTENT FINDINGS.

WHEREAS, in response to the COVID-19 pandemic, Governor Newsom proclaimed a state of emergency on March 4, 2020, and the state of emergency remains in effect; and, WHEREAS, the City Council made findings under Government Code Section 54953(e) and began holding fully virtual public meetings on September 28, 2021, and reconsidered those findings at least every 30 days between September 28, 2021 and March 8, 2022; and, WHEREAS, the current San Mateo County Health Officer order related to COVID-19 issued on February 16, 2022, remains in effect and advises that individuals should continue to follow guidance released by the United States Department of Health & Human Services (“HHS”) including their sub-agency United States Centers for Disease Control and Prevention (“CDC”), the United States Environmental Protection Agency (“EPA”), California Department of Public Health (“CDPH”), and California Department of Social Services (“CDSS”); and, WHEREAS, on February 25, 2022, Governor Newsom lifted many of his previous emergency order’s related to COVID-19 and left in place critical measures that support the state’s ongoing response and recovery efforts; and,
WHEREAS, by mid-March 2022, transmission and hospitalize rates were low and stable and the circumstances appeared appropriate to transition back to in-person meetings, however, since then transmission and case rates have risen; and, WHEREAS, on April 13, 2022, California Public Health Officer Dr. Tomás J. Aragón issued a statement noting that the rising transmissions “underscores the need for Californians to remain vigilant and protect themselves and their communities by getting vaccinated and boosted”; and,
WHEREAS, On May 23, 2022, the chief of San Mateo County Health, Louise Rogers issued a statement noting that community transmission was high and raising and urging people to take protective safety projections against the continued increase in COVID-19 case transmission test positivity and hospitalization; and,
WHEREAS, as of June 3, 2022, the CDC assessed the COVID-19 community level in San Mateo County as “medium”, and the CDC continues to recommend that individuals who are not up to date on COVID-19 vaccinations stay six feet apart from other people in indoor public places, and continues to advise that physical distancing along with other risk-reduction measures help reduce the chances of spreading COVID-19; and, WHEREAS, the current emergency COVID-19 regulations of the California 9

Department of Industrial Relations Division Occupational Safety and Health (Cal/OSHA) require employers to inform employees that strategies to decease the spread of COVID-19 are most effective when used in combination including physical distancing. (California Code of Regulations Title 8, Section 3205).

NOW, THEREFORE, the City Council of the City of Belmont resolves as follows:

SECTION 1. The Council has reconsidered the circumstances of the state of emergency and finds that state and local officials continue to recommend measures to promote social distancing.

SECTION 2. The subordinately legislative bodies of the city, including the commissions and other citizen advisory bodies, are directed to make findings consistent with the findings herein unless the body finds new information which was not known and could not have been known with the exercise of reasonable diligence as of June 14, 2022 that would prevent a reasonable decisionmaker from making either of the findings in Section 1 or the Council directs otherwise. Any finding inconsistent with the findings in Section 1 is subject to review and vacation by the Council.

SECTION 3. The resolution is effective immediately.
* * *
ADOPTED June 14, 2022 by the City of Belmont City Council by the following vote:

Ayes:

Noes:

Absent:

Abstain:

ATTEST:

City Clerk Mayor
APPROVED AS TO FORM:

City Attorney
10 Minutes of Special Meeting of
February 17, 2022 (Commission Interviews)

CITY OF BELMONT CITY COUNCIL AND BELMONT FIRE PROTECTION

DISTRICT BOARD OF DIRECTORS
Minutes of Special Meeting of February 17, 2022 (Commission Interviews)

ITEMS OF BUSINESS
CALL TO ORDER 6:30 pm
ATTENDED BY COUNCILMEMBERS: Lieberman, Stone, Hurt, Mates ABSENT: McCune
Recess: 7:30 pm
Reconvene: 7:40 pm
Interview Candidates for Parks and Recreation and Planning Commissions City Council discussed the interview process.

Parks and Recreation Commission Candidates Interviewed: Chuck Cotton, Austin Lee, Karl Mittelstadt, James Simmons, Tatiana Elliston, Pat Cuviello Planning Commission Candidate interviewed: Brian Kulich ADJOURNMENT at this time being 8:30 pm
Jozi Plut
City Clerk
11 Minutes of Special Meeting
February 16, 2022 (Commission Interviews)

CITY OF BELMONT CITY COUNCIL AND BELMONT FIRE PROTECTION

DISTRICT BOARD OF DIRECTORS
Minutes of Special Meeting of February 16, 2022 (Commission Interviews)

ITEMS OF BUSINESS
CALL TO ORDER 6:50 p.m.

Meeting delayed due to withdrawal of candidate
ATTENDED BY COUNCILMEMBERS: Lieberman, Stone, Hurt, Mates ABSENT: McCune
Interview Candidates for Parks and Recreation and Planning Commissions The Council discussed the interview process and interviewed the following individuals:

Parks and Recreation Commission Candidates: James Farrimond Recess 7:35 pm
Reconvene 7:40 pm
Planning Commission Candidates: Rocsana Enriquez, Surya Singh, Mark Gurevich ADJOURNMENT at this time being 8:40 pm
Jozi Plut
City Clerk
12 Combined Agency Meeting Minutes
January 25, 2022

Meeting Minutes of Special and Regular Meetings of January 25, 2022 City Hall, One Twin Pines Lane, Belmont, California

ITEMS OF BUSINESS
CLOSED SESSION 5:30 P.M.

COUNCILMEMBERS PRESENT: Lieberman, Hurt, Mates, Stone (all via ZOOM) COUNCILMEMBERS ABSENT: McCune
Conference with Conference with Labor Negotiators (Govt Code Section 54957.6) (1) Agency designated representatives: Afshin Oskoui, City Manager; Employee organization: Mid-Management Confidential Employees Association (MMCEA) ATTENDED BY: Councilmembers Lieberman, Stone, Hurt, Mates ADJOURNMENT at this time being 6:01 pm
STUDY SESSION (6:03 P.M)
COUNCILMEMBERS Present: McCune, Lieberman, Hurt, Mates, Stone (all via ZOOM) Economic Development Task Force Presentation
Housing and Economic Development Manager Rose stated that in September 2019, City Council adopted a resolution approving an Economic Development Implementation Strategy which identifies City policies and program activities aimed at furthering the Citywide priority of promoting economic growth. She explained that the resolution also adopted a Fiscal Year 2020 (FY2020) Action Plan that included a recommended set of City activities to establish a local economic development program, to connect the City with community stakeholders, support local businesses, and encourage economic growth. She noted that an Economic Development Task Force (EDFT) was established; comprised of nine members of the public; Patrick Colabucci, Ed.D., Notre Dame de Namur University, Mark Gurevich, Private Investor, Karen Haas-Foletta, Footsteps Childcare, Mary Morrissey Parden, Belmont Chamber of Commerce/The Parden Agency, Kenneth M. Pizzi, Thai Tamarind Restaurant, Joe Polyak, Realtor, Homes by RISE, Walt Shjeflo, Fox, Shjeflo & Babu, LLP, Surya Singh, Intutive Surgical and Belmont Resident, and Sirinee Tippakorn, Financial Advisor, Edward Jones.

Christine Butterfield, Management Partners, provided an overview of the Task Force work plan completed to date. She stated that the EDTF was charged with (1) identifying current challenges and opportunities facing the local business community and (2) to review best practices and resources available to support Belmont businesses, assess collaboration with business and identify communication needed improvements, and advise the City Council on methods to grow the City’s efforts to support current and future businesses.

Ms. Rose provided a summary of the effects on reginal economic trends due to the COVID 19 Pandemic. She noted that research and development activity pipeline is strong with 3.4 million square feet currently under construction and all slated for life science space. 13 Combined Agency Meeting Minutes
January 25, 2022

Ms. Butterfield summarized the task force’s findings of the effects of the Pandemic. She noted that casual dining and quick service restaurants are trending up but below pre-pandemic levels. She noted that in person shopping is in strong demand, she added that hotels are rebounding slowly and companies are adapting to new ways of doing work. She noted that auto sales soared and multifamily residential construction remains strong, but nonresidential construction is largely dormant.

Ms. Butterfield explained the EDTF communication recommendations, including implementing a social media strategy, sending targeted information to various types of business, develop an information portal for business, and improve website search functions for quicker public inquiry turnaround.

Ms. Rose summarized the Task Force Action Plan challenges and opportunities. She described a potential for a community benefit program in Belmont defined as a method for local government to derive benefits from new development and offering developers incentives. She noted that developers contribute or construct community benefits including monetary contributions for public purpose and or improvements such as street construction, sidewalks, and bridges.

Committee members described their top ranked community benefits and concluded that the civic center needs improvements, there is a need to build gathering spaces in the City and provide more transportation and downtown parking. They noted that economic development growth adds pressure on schools and childcare facilities.

Ms. Rose concluded the presentation and discussed the next steps, she noted that the Council will receive an updated Action Plan and EDTF recommendations in the 2022-20223 budget process.

She explained that the EDTF will reconvene in the coming months to gather economic development progress. She stated that development activity updates will be distributed in the Belmont Weekly Updates.

Council concurred on the relevance of the EDTF report and its recommendations. The Mayor concluded the discussion.

ADJOURNMENT at this time being 7:02 pm
14 Combined Agency Meeting Minutes
January 25, 2022

REGULAR MEETING
CALL TO ORDER: 7:08 P.M.

ROLL CALL
COUNCILMEMBERS PRESENT: Lieberman, Stone, Hurt, Mates
COUNCILMEMEBRS ABSENT: McCune

PLEDGE OF ALLEGIANCE
Led By Mary Morrisey Parden

REPORT FROM CLOSED SESSION
City Attorney Rennie state that there is no reportable action from an earlier held closed session.

SPECIAL PRESENTATIONS

Proclamation Designating February 2022 as Black History Month Mayor Mates read the proclamation.

Individuals present to receive the Proclamation:

Carolyn Hoskins
Members of the Carlmont Students Black Student Union and the African American Community Initiative
Pamela Ward Pious - Cochair of The African American Community Initiative Maria Lorente Foresti, Behavioral Health and Recovery Services Lee Harrison San Mateo County Office of Diversity and Equity Proclamation Designating January 2022 as National Slavery and Human Trafficking Prevention Month
Mayor Mates read the proclamation and presented it to Beverly May, Belmont Resident and Director of Governmental Affairs, Human Trafficking and IT California Massage Therapy Council Ms. May thanked the Council for recognizing the January 2022 as National Slavery and Human Trafficking Prevention Month.

Belmont Police Chief Stenquist acknowledged the efforts of the San Mateo County Human Trafficking program and their partnership with Belmont.

San Mateo County Public Library Annual Report
Item deferred to later agenized meeting.

PUBLIC COMMENTS ON ITEMS NOT ON THE AGENDA
Victor Garza spoke in regard to lot merger issues in Belmont.

Amar Desai spoke in regard to lot merger issues in Belmont. 15 Combined Agency Meeting Minutes
January 25, 2022

Max Reinhardt spoke in regard to property in the Sugar Loaf area of Belmont Canyon related to certificates of compliance related to lot legality.

Email correspondence received regarding placement of Measure I placards from Tim Strinden.

ITEM TAKEN OUT OF ORDER
Second Public Hearing for Transition from At-Large Elections to By District Elections to By District Elections for Council Seats and At-Large Mayor- (Presentation and Public Hearing) Bryn Hammarberg, Redistricting Partners, summarized the election districting and sequencing process. He noted that districting is the initial process of creating election district boundaries that determine eligibility to run for an elected office and stated that only voters within that district vote for their representative. He explained that sequencing is the process of selecting which district will hold an election in a certain election year. He noted that the staggered council election cycle will hold two district elections in 2022 and 2 in 2024, this model does not include election of Mayor.

Mr. Hammarberg explained the districting criteria and noted that districts should be relatively equal in size, contiguous, maintain communities of interest, follow city, county and local government lines and keep districts compact.

He provided the process of defining a community of interest noting that they are the building block of the districts which include ethnic and language minorities and other groups. He further explained that communities covered by the Coting Rights Act are Latinos, Asians, and African Americans. He noted that race cannot be the predominate factor in drawing district boundaries.

He outlined public participation opportunities including identifying communities of interest, using the map drawing tools found on the dedicated Belmont election districting website and provided the upcoming public hearing schedule.

Mayor Mates opened the Public Hearing
Joanne Adamkewicz, Belmont resident commented on the process of district election if a candidate is not identified.

City Attorney Rennie stated that in the case of no candidate for a certain district the Council may make appointment. He noted that the process and timeline to appoint a councilmember is governed by state law, he further noted that the Council would have some procedural control.

Mayor Mates closed the public hearing.

Council discussion ensued regarding distribution of information encouraging community engagement in the districting process.

COUNCILMEMBER ANNOUNCEMENTS
Councilmember Hurt announced the Domini Hoskins Black History Month exhibition at the San Mateo County Events Center.
16 Combined Agency Meeting Minutes
January 25, 2022

Mayor Mates, stated that the Youth Park and Recreation Commission recruitment is extended.

Councilmember Lieberman announced a new pizza restaurant Slice House in Belmont.

Mayor Mates, commented on the Coleville, Texas Synagogue hostage incident on January 15, 2022. She commented on the efforts of local law enforcement response and encouraged welcoming and safe communities.

City Manager Oskoui introduced newly appointed Assistant City Manager Eric Engelbart.

CONSENT BUSINESS
Received Annual Investment Policy
Approved Fiscal Year 2023 Budget Calendar
Resolution 2022-04 authorizing the City Manager to submit an application for up to $325,000 to the California’s Department of Forestry and Fire Protection (CAL FIRE) California Climate Investment Fire Prevention Grant Program to fund fuel reduction in Waterdog Lake Open Space and San Juan Canyon
Resolution 2022-05 accepting work and authorizing the issuance of a Notice of Completion for the 2020 Street Reconstruction Project, City Contract Number 2020-588, for a final contract cost of $1,989,209
Resolution 2022-06 approving application submittal for payment programs and related authorizations on behalf of the City of Belmont to the California Department of Resource Recycling and Recovery (CalRecycle).

At this time being 8:00 p.m. Councilmember McCune joined the meeting In response to Councilmember Stone on the Annual Investment Policy, Finance Director Castaneda stated that government agency investments are governed under the CA Code Section 53600 and city policy and noted that the low rate of return is due to the objective to invest city funds with safety first, liquidity second and yield last. She further explained that yield being last is the rate of return is lower.

ACTION: On a motion made by Councilmember Hurt and seconded by Councilmember Stone the consent business items were unanimously approved by a roll call vote. (5-0)

GENERAL BUSINESS
None

BRIEF VERBAL REPORTS FROM MEMBERS AND STAFF
Verbal report from Councilmembers on Intergovernmental (IGR) and Subcommittee Assignments
Councilmembers reported on their IGR assignments.
17 Combined Agency Meeting Minutes
January 25, 2022

Councilmember Lieberman announced the San Mate County Consolidated Fire 3-year anniversary. He announced the recent appointment of Ken Thrasher as Fire Chief for the SMC Consolidated Fire Department.

Mayor Mates announced the appointment of Councilmember Stone as Caltrain Board Vice-Chair.

Verbal report from City Manager
City Manager Oskoui explained that that the late service experiences from Recology is due to COVID impacts on staffing. He announced upcoming Parks and Recreation events.

MATTERS OF INTEREST/CLARIFICATION
None
Council Intergovernmental Assignments
Council updated their Intergovernmental Assignments for Calendar Year 2022

ADJOURNMENT at this time being 8:25 p.m.
18 Combined Agency Meeting Minutes
February 8, 2022

Meeting Minutes of Special and Regular Meetings of February 8, 2022 City Hall, One Twin Pines Lane, Belmont, California

ITEMS OF BUSINESS
CLOSED SESSION 5:45 PM

1. Conference with Legal Counsel - Significant Exposure to Litigation (Gov’t Code Section 54956.9(d)(2)), one matter
Letter from David Blackwell, Esq. dated August 13, 2021, on behalf of CP VII 815 Belmont LLC protesting the imposition of the City's traffic impact fee on the project located at 815 Old County Road.

2. Conference with Conference With Labor Negotiators (Govt Code Section 54957.6 ) Agency designated representatives: Afshin Oskoui, City Manager; Employee organization:

Mid-Management Confidential Employees Association (MMCEA) ATTENDED BY: Councilmembers Lieberman, Stone, Hurt, McCune, Mates ADJOURNMENT at this time being 6:10 pm
STUDY SESSION 6:15 PM
Review of Fiscal Impact Study and Options for Development of a City Services Community Facilities District
Finance Director Castaneda stated that the City is exploring a Community Facilities District (CFD) formation to help fund essential City services for new development projects. She explained that the proposed structure is to be paid by new construction with no impact on existing property owners. She noted that with increasing development in the City and new housing unit requirements the City updated its development impact faces, park and park in-lieu fee and adopted a new traffic impact fees. She explained that the fees are restricted to fund only capital project. She further explained that the CFD would compliment funding essential operating and maintenance needs for new development projects.

Chris Lynch, Jones Hall provided a background on CFD funding of Public Services, he noted that that the districts are not benefit based, must go through a defined approval mechanism and must fund defined services. Mr. Lynch provided an overview of CFD and future annexation area formation process.

Sara Mares, NBS, provided a fiscal impact and CFD funding of public services analysis, she noted that the analysis projected to future development through 2050. She noted that CFD special tax rates would apply only to future development in the City. She further noted that CFD special taxes would not apply to affordable housing, commercial and industrial development. She outlined CFD formation next steps.

In response to Councilmember McCune City Manager Oskoui stated that new accessory dwelling unites affected by the CFD is a future Council policy discussion. City Attorney Rennie clarified 19 Combined Agency Meeting Minutes
February 8, 2022

that CA State ADU legislation would treat an ADU as an extension of an existing unit and not considered as a new unit for this purpose.

In response to Councilmember Lieberman, City Attorney Rennie stated that a single family home rebuild project does not change the demand for services on a dwelling unit basis.

In response to Councilmember Stone, City Attorney confirmed that the proposed CFD would be imposed on new development that intensifies.

Email comments received from, Tim Strinden, Kristen Mercer, Judi Allen ATTENDED BY: Councilmembers Lieberman, Stone, Hurt, McCune, Mates

ADJOURNMENT at this time being 6:45 pm.

Jozi Plut
City Clerk

REGULAR MEETING
CALL TO ORDER 7:00 P.M.

ROLL CALL
COUNCILMEMBERS PRESENT: Lieberman, Stone, Hurt, McCune, Mates COUNCILMEMBERS ABSENT: NONE

PLEDGE OF ALLEGIANCE
Led by Councilmember Hurt

REPORT FROM CLOSED SESSION
City Attorney Rennie stated that there are no reportable actions from an earlier held closed session.

SPECIAL PRESENTATIONS
None

PUBLIC COMMENTS ON ITEMS NOT ON THE AGENDA
Max Reinhardt, commented on undeveloped land and improvement map in the San Juan area.

COUNCILMEMBER ANNOUNCEMENTS
Councilmember Stone announced that the Save the Music festival will take place in April.

Councilmember McCune stated that the West Bay Community Band of which he is a member will perform at the Save the Music festival.
20 Combined Agency Meeting Minutes
February 8, 2022

Council Member Hurt announced that the Domini Hoskins Museum of Black History is on display in Redwood City.

Mayor Mates announced that the Youth Commission application recruitment is ongoing, she announced the upcoming districting map workshop, and informational pop-up locations, and the upcoming Lunar New Year celebration at City Hall.

CONSENT BUSINESS
Resolution 2022-007 Making Findings for Continued Use of Fully Virtual Meetings and Directing Citizen Advisory Bodies to Make Consistent Findings
Resolution 2022-008 Authorizing the City Manager to Negotiate and Execute Task Orders with HdL Companies for Revenue, Audit and Recovery Services for Sales, Use and Transaction Tax and Business License Tax
Resolution 2022-009 Authorizing an Amendment to The Rates in The City’s Agreement with Burke, Williams & Sorensen LLP to Procure Legal Services Resolution 2022-010 Approving A Memorandum of Understanding Between the City of Belmont and The American Federation of State, County and Municipal Employees (AFSCME) Recommendation: Adopt A Resolution Approving the Memorandum of Understanding Between the City of Belmont and AFSCME. The Memorandum of Understanding Is a Three-and One-HalfYear Agreement for The Term of January 1, 2022, Through June 30, 2025.

ACTION: On a motion made by Councilmember McCune and Seconded by Councilmember Hurt the Consent Business was unanimously approved. (5-0)

ITEMS TAKEN OUT OF ORDER

MATTERS OF INTEREST/CLARIFICATION
Resolution Proclaiming January 6 “Eugene Goodman Day” in Belmont (Councilmembers Davina Hurt and Charles Stone)
Councilmember Stone explained that he and Councilmember Hurt request the Council consider a proclamation at a subsequent meeting declaring January 6th Eugene Goodman Day in Belmont. He also noted that Officer Goodman is a veteran of the US Army and served in the Belmont adopted 101st Airborne. He noted that stated that United States Capital Office Eugene Goodman demonstrated the values of democracy during the events of January 2, 2022, at the State Capital and saved lives.

Councilmember Hurt noted that February is Black History Month and often the celebrated individuals are those that have passed. She explained that Mr. Goodman embodies what it is to be an American and is fitting to honor him.

Council concurred to support Councilmember Hurt and Stone’s request.

Creation of an Honorary City Historian Position (Mayor Julia Mates) Mayor Mates requested including on an upcoming Council agenda a discussion to create a position of City Historian. She explained that Belmont has a Historical Society, with information on the city’s long and diverse history. She also noted that there are interested residents and individuals 21 Combined Agency Meeting Minutes
February 8, 2022

who collect and preserve Belmont’s past and that it would be beneficial to formalize that history with an individual who can convey through events, presentations, and creative mechanisms.

Councilmember Lieberman suggested the appointment of Deny Lawhern as honorary Historian.

Councilmember Stone commented on the records digitizing work Sam Hosmer provided to the Belmont Historical Society.

Karl Mittelstadt, Belmont Historical Society, commented in support of the creation of an Honorary Belmont Historian.

Mayor Mates closed the discussion, Council concurred to add the item for consideration at a future meeting.

PUBLIC HEARINGS
Third Public Hearing for Transition from At-Large Elections to By District Elections for Council Seats and At Large Mayor – Draft Map Presentation Chris Chaffee, Redistricting Partners, provided a presentation on the districting principles for election districts. He explained that there are a number of criteria that are used nationally and upheld by the courts to draw new City Council lines for fair representation. He noted that with the information from the census, districts should be relatively equal size of people not citizens. He added that districts should be contiguous and maintain communities of interest. He noted that communities of interest are the guiding principle of the districting. He further explained that the district lines should follow neighborhood/local governance lines and should be compact in appearance and function.

He demonstrated the DistrictR tool for drawing district maps, He provided an overview of maps received from the community stating that to date seventeen maps were submitted. He provided an overview of three draft maps for consideration. He concluded the presentation with an overview of next steps, including additional public hearings schedule.

In response to Council questions Mr. Chafee stated that communities of interest are subjective and can be defined with geographic or economic interest and may be as small as a shopping center of school area or as large as an entire city neighborhood.

Council discussion ensued on community outreach and engagement; council concurred that outreach is key to successfully drawn districts.

City Manager Oskoui explained the City’s community outreach efforts to date and stated that more pop-up booths and a community workshop are planned.

Mayor Mats opened the public hearing.

The following came forward to speak
Margo, commented on the City’s outreach effects she commented in opposition of districting. 22 Combined Agency Meeting Minutes
February 8, 2022

Joanne Adamkewicz, commented on communities of interest in the Sterling and Homeview neighborhoods.

Terri Cook, commented on communities of interest, she noted that there are distinct neighborhoods in the City of Belmont that should stay intact.

Karen, Belmont resident commented in regard to communities of interest in the Sterling Downs neighborhood.

Mark Gurevich commented on the mapping tool, communities of interest and selection of districts process.

Mayor Mates closed the Public Hearing.

City Attorney provided an overview of the at large election’s lawsuit brought against the City. He explained that the City is being sued for violation of the California a Voting Rights Act of 2001(CVRA). He further noted that the legislation is written in a way that provides ease for a plaintiff to win the suit and imposing the plaintiff’s attorney fees on the City. He explained that no City’s has been successful to defend the allegations.

In response to Council questions, Mr. Chafee stated that districts may not be drawn primarily on race unless able to meet the compact minority group that makes up fifty percent of a district, must historically vote in the same way and for the same candidates, and the majority surrounding the group must vote for a different candidate blocking their candidate of choice. He noted that if the three “Jingles Tests” are met than a section 2 seat must be created predominately drawn based on race. He further explained that in Belmont there is not a compact area Latino, Asian or African American by citizen voting age population, thus not being able to meet the first prong of the “Jingles Test”. He noted that race may be used as a secondary or tertiary or a cultural standpoint as the binding element to create a traditional community of interest while using other elements to draw district lines to be in compliance with the CVRA.

Council discussion ensued regarding identifying communities of interest in Belmont, Council concurred that Sterling Downs and Homeview neighborhoods can be considered as communities of interest. The Council further agreed that East Belmont should stay intact with in a district.

Council discussion ensued regarding the DistrictR map drawing tool and provided input to City Consultant Redistricting Partners on drawing district lines. Council concurred that Ralston Avenue should not be used as a delineation of districts lines.

Council concurred to further enhance public outreach on the districting process and suggested engaging community partners to assist.

Council discussion concluded.
23 Combined Agency Meeting Minutes
February 8, 2022

GENERAL BUSINESS

ITEMS TAKEN OUT OF ORDER
Energy Reach/EV Infrastructure Code Update
Community Development Director de Melo explained that REACH Codes are local enhancements and amendments to state building codes as part of the State’s 3-year building code cycle. He noted that Peninsula Clean Energy initiatives are aimed at improved economic and energy performance for new construction. He further explained that REACH codes are targeted to address building electrification for reduced use of natural gas and electric vehicle (EV) charging for increased EV readiness. He explained building code options including a natural gas ban, all-electric required with limited gas use or choice of all electric or high efficiency mixed fuel. He noted that the 2022 model California energy code is anticipated to be electric preferred.

He outlined the preferred EV code options, he noted that the focus is on speed levels, readinessEV capable, EV Ready and EV charging stations and number of spaces required to be outfitted.

Mr. de Melo stated that 50 California cities adopted reach codes in 2019, he briefly outlined Reach Code exemptions in both residential and non-residential uses and outlined new building construction reach code recommendations. He noted that they include requiring new multifamily and commercial building be all electric with exemptions, require all exempted appliances have electrical pre-wiring to accommodate a future electric appliance, consider extending the Reach Code requirement to all new single-family dwellings and consider potential exemptions. He noted that potential exemptions for pharmaceuticals/medical labs that use flame and restaurant and hotel banquet kitchens.

Mr. de Melo provided an overview of EV infrastructure recommendations for residential and nonresidential projects. He concluded with an overview of the potential Reach Code development timeline noting that the building code be implemented in January of 2023.

Council discussion ensued.

In response to Council questions Farhad Farahmand, TRC representing PCE, stated that the PCE 2022 model recommendations go above the California State recommendation preferring electric appliance to meet greenhouse gas emission targets.

Public speakers
Margo provided comments on her single-family energy bill.

March Gurevich commented on EV charger levels at multifamily dwellings.

Councilmember McCune and Lieberman noted that cost, liability and pace of renewables cause hesitation on single fuel requirements.

Council concurred to move on an ordinance change in advance of 2022 Code Cycle with staff recommendations and exceptions. Council also concurred to add more level 2 EV charging. 24 Combined Agency Meeting Minutes
February 8, 2022

ACTION: Motion to extend the meeting 30 minutes was approved by roll call vote. (5-0) Report on Mid-Year Financial Results as of December 31, 2021 ACTION: On a motion made by Councilmember Lieberman and Seconded by Councilmember McCune the Report on Mid-Year Financial Results as of December 31, 2021, was deferred to the February 22, 2022 meeting.

BRIEF VERBAL REPORTS FROM MEMBERS AND STAFF
Report from Councilmembers on Intergovernmental (IGR) and Subcommittee Assignments Councilmembers reported on their IGR Assignments.

Report from City Manager
City Manager Oskoui stated that many events are planned by Park & Recreation for the coming months and invited the public to visit the City’s website for more details.

Adjournment at this time being 10:45 pm
Jozi Plut
City Clerk

25 COMBINED AGENCY MEETING MINUTES
February 22, 2022

Regular Meeting of The City of Belmont City Council and Belmont Fire Protection District Board of Director
February 22, 2022

STUDY SESSION
CALL TO ORDER 6:35 PM
ATTENDED BY: Councilmembers Lieberman, Stone, Hurt, McCune, Mates State Legislative Advocacy for the City of Belmont
Dane Hutchings, Renne Public Policy Group (RPPG), provided a brief overview of the Governor’s Budget noting that the budget outlines $25 billion in discretionary surplus. He noted that more investment in infrastructure is proposed, he further stated that RPPG will position the City compete for the funds. He stated that funding is also slated for COVID response, climate action and green infrastructure, homelessness and housing and coating crime.

Mr. Hutchings stated that as of February 2022 781 new legislative bills were introduced and expectations are that over 1400 more will come. He noted that RPPG is creating a priority bill customized for the City. He also noted that early indicators show a legislative turnover due to 2022 ratified district maps and retirements.

He outlined legislation that may impact the function of the City including COVID-19 vaccine requirements, Housing, ADU’s and parking restrictions, transportation funding - including CEQA streamlining for projects, Brown Act reforms, and fire, flood and climate change. He explained deadlines for proposed legislation and noted that the FY 2023-2024 CA Budget must be signed by the Governor.

Mr. Hutchings provided a review of the Belmont State legislative Platform, he recommended that Belmont support funding opportunities provided to local jurisdiction through statewide bond efforts. He recommended the City review and evaluate legislation that directly ties production mandates to the reginal housing needs assessment process. He further recommended that Belmont support utilities legislation that provides fair and equitable rate structures for CCA customers including access to revenues through Power Charge Indifference Adjustment (PCIA) program.

In response to Councilmember Hurt, Mr. Hutchings stated that no new funding is allocated for broad band funding. He noted that site maps are being processed by the PUC for eligible areas to receive funding from last fiscal allocations. He noted that support for legislative funding to address gaps and digital equity and programs for digital inclusion can be added to the City’s Platform.

In response to Councilmember Lieberman, Mr. Husting stated that more local control for housing can be considered as a top legislative platform priority.

Council concluded the discussion.

ADJOURNMENT at this time being 6:58 PM
26 COMBINED AGENCY MEETING MINUTES
February 22, 2022

REGULAR MEETING
CALL TO ORDER: 7:00 PM

ROLL CALL
COUNCILMEMBERS PRESENT: Lieberman, Stone, Hurt, McCune, Mates COUNCILMEMBERS ABSENT: None

PLEDGE OF ALLEGIANCE
Led by Vice Mayor McCune

REPORT FROM CLOSED SESSION
City Attorney Rennie Stated that no closed session was agenized.

SPECIAL PRESENTATIONS
Proclamation Designating January 6th Eugene Goodman Day in the City of Belmont Mayor Mates read the proclamation.

San Mateo County Library System Annual Report
Anna Koch, Belmont Library Manager, provided an Annual San Mateo County Library Report.

She noted that 284 thousand are served by the library system. She discussed pivots the library system made to continue providing service during the COVID-19 Pandemic. She explained the services offered by the library system and its efforts to be an equitable service.

Council thanked Anna for her report and the services the Library system provides residents.

Natasha Flaherty, spoke in support of the SMC Library System.

San Mateo County "Choose Local SMC" Small Business Support Shopping App Don Cecil, San Mateo County Chamber of Commerce, provided a presentation the San Mateo County Choose Local SMC, he noted that the smart phone application is now available in all Sam Mateo County Cities. He noted that small businesses are often owned and employed by minorities.

He explained that the goal of the app is to divert some percentage of shopping away from a large chain or known online platform to a local option. He noted that there is no cost to the app on the business or user. He provided an overview of how the app works and invite the public to download the app.

ITEM TAKEN OUT OF ORDER AT THIS TIME BEING 7:36 PM

PUBLIC HEARINGS
Public Hearing for Transition from At-Large Elections to by District Elections for Council Seats and At-Larger Mayor
City Attorney Rennie provided an overview of the Districting Process stating that the City received a demand letter from the law firm of Shenkman and Hughes, representing Southwest Voter Registration Education Project and their members in Belmont alleging that Belmont’s At- Large System of electing Councilmembers is in violation of the California Voting Rights Act (CVRA). 27 COMBINED AGENCY MEETING MINUTES
February 22, 2022

He explained that the City has 45 days to announce its intention to transition out of an at-large to district election method. He further explained that it is easy for a plaintiff to establish a violation and are essentially guaranteed a payment of their attorney fees. He noted that the fees are in the millions of dollars and to date no City has successfully defended a lawsuit of this nature.

Attorney Rennie stated that at a November 2, 2021 the Council held a study session to discuss the option of transitioning to district based elections and at the November 9, 2021 announced its decision to transition district elections with a directly elected mayor. He noted that the short 135- day timeline would place Belmont to make the transition by December 19, 2021. He further explained that the City negotiated an extension of time with Mr. Shenkman on taking action. He noted that the process must be complete no later than April.

City Demographer Chafee, Redistricting Partners, provided a presentation on the districting principles. He explained that the nationally used criteria for drawing district maps and noted that the districts must be relatively equal in size, contiguous, maintain communities of interest, follow city, county and local government lines and districts must be kept compact in appearance and function.

He demonstrated the map drawing toll DistrictR. He noted that the tools used with DistrictR stem from the most recent censes information. He noted the public submissions for communities of interest and public maps received from the community and noted that over fifty community drawn maps were submitted.

Mayor Mates opened the public hearing.

The following provided Public Comments:

Natasha Flaherty, commented on candidate focus in election districts and ranked choice voting.

Jennifer, commented in opposition to district election in Belmont and At-Large Mayor.

Juan Phem, commented in support of district elections and Mayor At-Large.

Michelle LaPedis, commented in opposition to district elections and At-Large Mayor.

Deniz Bobol, commented in opposition to district elections and At-Large Mayor.

In response to Mayor Mates, City Attorney Rennie stated that incumbency may not be used as the basis when drawing district maps.

City Demographer further clarified stating that specific language in the Fair Maps Act states that incumbency or candidate location may not be a community of interest as part of the line drawing process.

Councilmember Hurt clarified her comments in a letter read at the November meeting, she stated that her letter stated her support for a five-district option. She further explained that she is open to the option of four districts and an elected mayor and can find that model to be more sensible. 28 COMBINED AGENCY MEETING MINUTES
February 22, 2022

City Demographer Chafee outlined the community maps and communities of interest submissions.

He noted that distinct themes emerged from community input in council meetings, the mapping workshop and online submissions; including uniting the Sterling Downs and Homeview neighborhoods, keeping Belmont Heights and Plateau Skymont areas whole, areas around parks and schools should be considered comminutes of interest and major throughfares in the city are not appropriate district boundaries. He outlined three draft maps for Council discussion. He concluded the presentation with next steps providing and upcoming public hearing schedule.

Council discussion ensued regarding the three draft maps. Council concurred on an east, west central model keeping with school district lines, keeping geographically diverse areas together.

Council concurred to hold an upcoming study session to further discuss the map selection.

City Attorney Rennie clarified that Council should make a its decision on district lines and term of the mayor at the next Council meeting and Public Hearing on March 8th to avoid running against the timeline.

Public Comments
Joanne Adamkewicz commented in regard to population growth in the Sterling Downs neighborhood and keeping the area as a community of interest.

PUBLIC COMMENTS ON ITEMS NOT ON THE AGENDA
None

COUNCILMEMBER ANNOUNCEMENTS
Mayor Mates thanked the community for attending the Lunar Year celebration. She announced the continued recruitment for Youth Park and Recreation Commission. She announced the virtual State of the City Address in partnership with the San Mateo County and Belmont Chamber of Commerce to be held on March 9th at noon. She announced an upcoming Stanford a virtual informational meeting.

CONSENT BUSINESS
Resolution 2022- 011 Approving Plans and Specifications, Authorizing Advertisement for Sealed Bids, Authorizing the City Manager to Execute a Contract with The Lowest Responsible Bidder for An Amount Not to Exceed $275,000, Approving A FIFTEEN Percent Construction Contingency for The San Juan SEWER Pump Station Slope Repair Project, CCN 579 Resolutions 2022-012 Authorizing the City Manager to Execute Grant Contracts in The Total Amount Of $36,000 From CaLeVIP for the Construction Of Electronic Vehicle (EV) Charging At Belmont’s City Hall
Resolution 2022-013 Approving Plans and Technical Specifications, Authorizing the City To Advertise For Sealed Bids For The City Hall And Twin Pines Park Electric Vehicle (EV) Charging Project (CCN2022-610), And Authorizing The City Manager To Negotiate And Execute An Agreement For This Project With The Lowest Responsible Bidder For A Total Amount Not To Exceed $175,680 Plus A Ten Percent (10%) Contingency
29 COMBINED AGENCY MEETING MINUTES
February 22, 2022

In response to Councilmember Hurt, Parks and Recreation Director Shearer explained that EV charging stations are in line with the Parks and Recreation Master Plan and that the stations longevity may be affected by the placement of the underground catch basins proposed for Twin Pines Park.

ACTION: on a motion made by Councilmember McCune and seconded by Council Liberman the Consent Business items were unanimously approved by roll count vote (5-0)

GENERAL BUSINESS
Report on Mid-Year Financial Results as of December 31, 2021 (Continued from 2/8/2022) Finance Director Castaneda stated that the City received the first half a onetime American Rescue Plan (ARPA) funding allocated to municipalities. She noted that the second half will be received in the next fiscal year. She also noted that the funds helped recover some revenue loss during the COVID shutdowns. She explained that impacts to key revenues continue. She stated that property tax mitigation strategies are in place and the City is on target to meet them. She noted that continued action to maintain City service levels is needed.

Ms. Castaneda provided an overview of financial results and stated that the general fund balance is up over last year and clarified that it is due to the $3.2 million ARPA funds received. She noted that expenditures are 87% of the year-to-date budget indicating containment of expenditures. She noted that property tax is the top revenue source for the general fund. She also noted that in 2021 the property tax revenue dropped by 20% due to property tax in lieu of VLF and residual RDA property tax. She noted that sales tax and measure I salestax are preforming to trend. She explained that hotel room tax experienced a 70% drop due to the pandemic and a slow recovery is anticipated.

Ms. Castaneda stated that the general fund expenditures for the first six months of the year are at or below the 50% mid-year mark indicating containment of expenditures. She explained that the general fund supports transfers to the recreation, development services, street maintenance and storm drainage funds. She briefly outlined the capital improvement plan stating that the 2020 and 2021 streets projects were completed. She further explained that significant ongoing contributions are made to Silcom Valley Clean Water (SVCW) for the RESCU program.

Ms. Castaneda provided an overview of the City’s fiscal sustainability she noted that $160 thousand dollars FEMA reimbursement was submitted of which $60 thousand was deemed ineligible by FEMA. She explained that ARPA funding received by the City is based on population and is a onetime $6.4 million allocation of which half was received in FY 2022.

Ms. Castaneda stated that Property Tax In-lieu of Vehicle License Fee (VLF) is higher than budget estimates. She further explained that VLF continues to be underfunded by the State for the third straight year; she added that when a school shifts to non-basic aid, additional funding is made available for VLF. She added that for FY 2022, the County currently estimates a $57 million shortfall of VLF due to one school district shifting to non-basic aid. She explained that the longterm trend continues to assume all school districts will convert to basic aid, which results in increasing VLF shortfall year-over-year.
30 COMBINED AGENCY MEETING MINUTES
February 22, 2022

Ms. Castaneda explained that impacts of the Residual RDA property tax, she stated that as a result of the 2020 Court of Appeals decision on the Chula Vista case that modified the mythology in calculating proportionate share of residual property tax that each taxing entity receives. She explained that the impact to the City is a $700 thousand per year general fund deficit and $900 thousand per year fire district deficit. She further explained that the decision is retroactive to fiscal year 2019.

Economic Development and Housing Manager Rose provided an overview of the Successor Agency Bond Defeasance. She noted that the City accelerated the dissolution of the Successor Agency and redirecting the property tax revenue dollars to the general fund. She noted that the dissolution will be finalized in June of 2022 and further explained that in FY 2023 and beyond, both the City and BFPD will see an increase in general property tax revenues.

Finance Director Castaneda summarized the City’s financial forecast stating that fund balances will drop due to revenues not keeping pace with expenditures. She explained that the due to the general fund dependency to few revenue resources and when those sources are impacted the drop consumes time to recover. She concluded stating that the City will continue community engagement to identify community service priorities and explore targeted, locally controlled revenue sources. She noted that the FY 2023 budget directive will reflect ongoing efforts to address financial sustainability efforts and City Council’s Strategic Focus Areas. She added that staff recommends Council adopt resolutions approving adding one full time equivalent staff in the Community Development department stating the need is due to increasing development activity.

Mayor Mates opened the item for discussion no member of the public cam forward.

In response to Councilmember McCune, City Manager Oskoui explained that the City is actively taking steps at the legislative level to address the VLF issues.

ACTION: On a motion made by Councilmember McCune and Seconded by Councilmember Stone Resolution 2022- 014 Amending the Fiscal Year 2022 Budget by Approving Revisions to Revenue and Authorizing Supplemental Appropriations
ACTION: on a motion made by Councilmember Stone and Seconded by Councilmember McCune the meeting was extended for 30 minutes by a roll call vote. (5-0) Disposable Food Service Ware Ordinance Amendment
Community Development Director de Melo provided a brief background ordinance he noted that in February 2020, the County Board of Supervisors adopted its Disposable Food Service Ware Ordinance, codified as San Mateo County Ordinance Code (SMCOC)_Chapter 4.107, regulating the use of disposable food service ware by food facilities. He noted that the county-wide model ordinance was available for cities to adopt and created uniformity and consistency via county-wide implementation. He further explained that in November 2020, the Belmont City Council unanimously adopted SMCOC Chapter 4.107 by reference with city amendments.

He further explained that October 2021, Governor Newsom signed into law AB 1200, which prohibits the sale or distribution of single-use foodware comprised of paper or other plant-based 31 COMBINED AGENCY MEETING MINUTES
February 22, 2022

natural fiber that contains intentionally added PFAS. He noted that AB 1200 goes into effect on January 1, 2023 and does not direct a specific entity to be the enforcement agency. He also noted that the San Mateo County Board of Supervisors repealed and replaced SMCOC Chapter 4.107 to align with the new State requirements on foodware in AB 1276 and AB 1200.

He explained that staff recommends Council adopt by reference the San Mateo County Ordinance Code Chapter 4.107 with city amendments regulating the use of disposable food service ware by food facilities and schedule a public hearing.

ACTION: On a motion made by Councilmember Hurt and Seconded Councilmember McCune a Public Hearing was set for March 22, 2022, the City Attorney read the title of the Ordinance into the record motion unanimously passed by roll call vote. (5-0)

BRIEF VERBAL REPORTS FROM MEMBERS AND STAFF
Verbal report from Councilmembers on Intergovernmental (IGR) and Subcommittee Assignments
Councilmembers reported on their IGR assignments.

Verbal report from City Manager
City Manager Oskoui announced the Parks and Recreation open registration for summer camps.

He stated that the Parks and Recreation Commission will receive a PROS Master Plan status update at the March 2 meeting. He announced other parks and recreation programs and summer employment opportunities.

MATTERS OF INTEREST/CLARIFICATION
None
ADJOURNMENT at this time being 10:40 pm
32

Ratify BSCFD FY 23 & 24 Budgets

STAFF REPORT
Meeting Date: June 14, 2022
Agency: Belmont Fire Protection District
Staff Contact: Grace Castaneda, Finance Director, [email protected] Agenda Title: Belmont-San Carlos Fire Department Budgets for FY 2023 and FY 2024 Agenda Action: Resolution
Recommendation
Adopt a resolution ratifying the proposed budgets for the Belmont-San Carlos Fire Department for Fiscal Year (FY) 2023 and FY 2024, which cover the period July 1, 2022 through June 30, 2024.

Strategic Focus Area
Fiscal and Organizational Sustainability
Background
On October 1, 2011, the Belmont-San Carlos Fire Department, a joint powers authority, or JPA, entered into a post-operations era with the primary function of winding down the legacy obligations incurred during the prior operation of the jointly funded fire department.

The Second Amended and Restated Joint Powers Agreement for the Belmont-San Carlos Fire Department (“Fire Department”) requires a multi-step process to adopt a budget. The first step is a recommendation to adopt a budget by the Belmont-San Carlos Fire Department’s Fire Commission. The second step is for the member agencies, the Belmont Fire Protection District and the City of San Carlos, to take an action consenting to the Fire Commission’s recommendation. The budget is considered adopted once both member agencies have ratified. The Fire Department follows a two-year budget cycle.

Pursuant to Section 4.2 of Article IV of the Joint Powers Agreement, the Fire Commission must obtain the prior consent of the Belmont Fire Protection District and the City of San Carlos on the proposed budget before it is formally adopted. The Belmont-San Carlos Fire Department is to prepare a budget setting forth the expenditures and cost allocation for the upcoming year. The cost allocation formula by member agencies stipulates the Belmont Fire Protection District pay 47.1% and the City of San Carlos 52.9%, with the exception of the administrative support services, which are split equally amongst the agencies.

Consistent with the process outlined above, the Fire Commission considered the Belmont-San Carlos Fire Department FY 2023 and FY 2024 Budgets at their meeting on May 24, 2022. After receiving a staff report and discussing this issue, the proposed budgets for FY 2023 and FY 2024 were recommended for approval by Resolution to the member agencies by the Fire Commission.

Analysis
The proposed budgets generally include non-discretionary expenditures. Important highlights include the following four wind-down activities of the JPA:
33

Ratify BSCFD FY 23 & 24 Budgets

1. Paying for the unfunded liabilities of the safety and miscellaneous retirement plans with CalPERS.

Below is a summary of the outstanding pension obligations based on the CalPERS June 30, 2020 actuarial valuation. The actuarial valuation reports are the basis for the amounts included in the FY 2023 and FY 2024 budget appropriations.

Plan Unfunded Accrued Liability
Safety $32,090,713
Miscellaneous $1,046,543

2. Paying for other post-employment benefits for retirees who have earned lifetime medical coverage.

3. Paying for outstanding workers compensation claims from past employees of the Fire Department.

4. Paying for other obligations of the former Fire Department.

As noted earlier, administrative support service costs are split equally amongst the member agencies. The Belmont-San Carlos Fire Department’s budget for FY 2023 is 3,922,996, and $3,758,295 for FY 2024.

Contributions paid by the member agencies increase modestly in FY 2023, followed by a decrease in FY 2024, as follows: Belmont Fire Protection District ($1,792,093 in FY 2023 and $1,719,818 in FY 2024 -

47.1%) and the City of San Carlos ($2,009,131 in FY 2023 and $1,927,802 in FY 2024 - 52.9%).

The Budget assumes a prudent fiscal reserve of $178,036 in FY 2023, and then lowering the reserve to $150,000 in FY 2024, which is the stated minimum reserve for the entity.

Alternatives

1. With direction, refer to staff for further consideration.

2. Take no action.

Attachments
A. Resolution
B. Proposed FY 2023 and FY 2024 Budget
C. Fire Commission Approved Resolution
Fiscal Impact
☐ No Fiscal Impact
☒ Funding Source Confirmed:

For FY 2023, the Belmont Fire Protection District’s contribution is $1,792,093, which has been incorporated in the Belmont Fire Protection District’s proposed FY 2023 budget.

For FY 2024, the Belmont Fire Protection District’s contribution is $1,719,818, which will be incorporated during FY 2024’s budget development process.

Source: Purpose: Public Outreach:

Staff Statutory/Contractual Requirement Posting of Agenda 34

RESOLUTION NO. 2022 –

A RESOLUTION OF THE BOARD OF DIRECTORS OF THE BELMONT FIRE

PROTECTION DISTRICT RATIFYING THE BELMONT-SAN CARLOS FIRE DEPARTMENT BUDGETS FOR FY 2023 AND FY 2024
WHEREAS, pursuant to Section 4.2 of Article IV of Belmont-San Carlos Fire Department’s Joint Powers Agreement, the Fire Commission must obtain the prior consent of the Belmont Fire Protection District and the City of San Carlos on the proposed budget before it is formally adopted; and,
WHEREAS, on May 24, 2022, the Department’s Fire Commissions recommended the Fiscal Year 2023 and Fiscal Year 2024 Budgets to be ratified by the Belmont Fire Protection District as a member agency.

NOW, THEREFORE, the Board of Directors of the Belmont Fire Protection District resolves as follows:

SECTION 1. The Belmont Fire Protection District ratifies the Belmont-San Carlos Fire Department’s Appropriations Budget in the amount of $3,922,996 for Fiscal Year 2023 and $3,758,295 for Fiscal Year 2024. The budgeted amount for the Belmont Fire Protection District contribution is $1,792,093 in Fiscal Year 2023 and $1,719,818 in Fiscal Year 2024. * * *
ADOPTED June 14, 2022 by the Board of Directors of the Belmont Fire Protection District by the following vote:

Ayes:

Noes:

Absent:

Abstain:

ATTEST:

Board Secretary Board President
APPROVED AS TO FORM:

Board Attorney
35 Belmont-San Carlos Fire Department
FY 2023 & FY 2024 Budget
36 Belmont-San Carlos Fire Department
Fiscal Years 2023 & 2024 Budgets
Table of Contents
Budget Summary ...................................................................................... 1 Summaries and Operating Budget
Fund Recap – Fiscal Years 2022 through 2024 ............................................. 3 Revenues and Other Sources & Expenditures and Other Uses by Fund and Function.................................................................................................... 4 Department Summary by Division and Expenditure Classification .................. 5 Appendix ................................................................................................... 6 37 Belmont-San Carlos Fire Department
Budget Fiscal Years 2023 and 2024
Budget Summary
The proposed Fiscal Years 2023 and 2024 Budget reflects the Department’s obligations in a postoperations era since the September 30, 2011 dissolution. The Budget funds the following winddown activities of the Department:
▪ Below is a summary of the outstanding pension obligations based on CalPERS’s June 30, 2020 actuarial valuation:

Plan Unfunded Accrued Liability
Safety $32,090,713
Miscellaneous $1,046,543
In furtherance of retiring these obligations, the Budget includes payments to CalPERS of $3,632,911 in FY 2023 and $3,470,062 in FY 2024. These amounts factor in a prepayment discount of the contribution in one annual payment at the beginning of each fiscal year, and no additional discretionary payments towards retiring the obligation. The FY 2023 cost reflects CalPERS’s investment returns of 4.7% as of June 30, 2020 and a discount rate of 7% that is phasing in to the rates. The FY 2024 cost is lower primarily because it reflects CalPERS’s investments returns of 21.3% as of June 30, 2021. It also factors in CalPERS’s Funding Risk Mitigation Policy and the results of the Asset Liability Management process from November 2021 that lowered the discount rate to 6.8%. ▪ Based on Bartel’s June 30, 2021 actuarial valuation, the outstanding postretirement health benefit obligation, net of plan assets in the California Employers' Retiree Benefit Trust (CERBT) fund, is $1,051,841. The Budget includes Other Post-Employment Benefits (OPEB) benefit payments made on a pay-go basis for retirees and surviving spouse who have earned lifetime medical coverage, $192,571 in FY 2023 and $181,182 in FY 2024. Based on the actuarial valuation, the actuarially determined contributions (ADC) into CERBT are lower in each fiscal year than the pay-go benefit payments that are paid outside of the trust, which means that the Department can request a reimbursement from CERBT on the difference between the ADC and the pay-go payments. To that end, the Budget includes reimbursements from CERBT, $95,955 in FY 2023 and $84,613 in FY 2024. The reimbursements help to counter increases in member agencies contributions, while still keeping the CERBT plan on track for funding. ▪ The estimated liability for unpaid loss and allocated loss adjustment expenses ranges from $117,000 (70% confidence level) to $212,000 (90% confidence level) estimated as of June 30, 2023 for outstanding workers compensation claims from past employees. The Fire Department estimates claims payments of $17,227 in FY 2023 and $17,950 in FY 2024. 38 ▪ Staff performed a review of the ongoing support required to carry-out the above activities, and with the expectation that administering the legacy activities of the Department is becoming more efficient, the Budget for administrative and professional services have been lowered to $59,195 in FY 2023 and $61,681 in FY 2024.

As a result of the above activity and the need to maintain the reserve requirement discussed below, contributions paid by the member agencies increase modestly in FY 2023, followed by a decrease in FY 2024 as follows: Belmont Fire Protection District ($1,792,093 in FY 2023 and $1,719,818 in FY 2024 - 47.1%) and the City of San Carlos ($2,009,131 in FY 2023 and $1,927,802 in FY 2024 - 52.9%).

The Budget assumes a prudent fiscal reserve of $178,036 in FY 2023, and then lowering the reserve to $150,000 in FY 2024, which is the stated minimum reserve for the entity. 39 Reserved or Reserved or Reserved or Reserved or
Number Description Designated Available Revenues Expenditures Designated Available Revenues Expenditures Designated Available Revenues Expenditures Designated Available

GENERAL FUND
105 General Fund $ 150,000 $ 148,212 $ 3,571,406 $ 3,663,791 $ 150,000 $ 55,827 $ 3,895,205 $ 3,922,996 $ 150,000 $ 28,036 $ 3,730,259 $ 3,758,295 $ 150,000 $ (0) 5/11/2022 10:35
Belmont-San Carlos Fire Department
FY 2023 & FY 2024 Budget
Fund Recap
Fiscal Years 2022 through 2024
Audited Fund Balance Estimated Fund Balance Proposed Fund Balance Fund Estimated Proposed Proposed
Proposed Fund Balance
7/1/2021 FY 2022 6/30/2022 FY 2023 6/30/2023 FY 2024 6/30/2024 40 Account/Division FY2021 FY2022 FY2023 FY2024
Fund Number Description Actual Estimated Proposed Proposed Revenues & Other Sources
105 6628 BELMONT FIRE DISTRICT SERVICES 1,687,055 1,685,001 1,792,093 1,719,818 105 6629 CITY OF SAN CARLOS SERVICES 1,890,787 1,888,379 2,009,131 1,927,802 Service Charges 3,577,842 3,573,380 3,801,224 3,647,620 105 7111 Interest Earnings-Investments (3,971) 694 694 694 105 7112 Other Interest Earnings (2,546) (2,667) (2,667) (2,667) Use of Money/Property (6,517) (1,974) (1,974) (1,974)
105 7252 Refunds and Rebates - - 95,955 84,613
Miscellaneous - - 95,955 84,613
General Fund 3,571,325 3,571,406 3,895,205 3,730,259
TOTAL REVENUES AND OTHER SOURCES 3,571,325 3,571,406 3,895,205 3,730,259 Expenditures & Other Uses
105 Dissolution Costs 3,601,121 3,663,791 3,922,996 3,758,295 Public Safety 3,601,121 3,663,791 3,922,996 3,758,295
General Fund 3,601,121 3,663,791 3,922,996 3,758,295
TOTAL EXPENDITURES AND OTHER USES 3,601,121 3,663,791 3,922,996 3,758,295 5/11/2022 10:35
Belmont-San Carlos Fire Department
FY 2023 & FY 2024 Budget
Revenues and Other Sources & Expenditures and Other Uses 41 Division: 4222 Dissolution Costs Dissolution Costs
Fund: 105 General Fund Fire Department
Actual Estimated Proposed Proposed
Account Account Description FY2021 FY2022 FY2023 FY2024 Personnel
8120 PERS Legacy Costs $ 3,271,512 $ 3,366,361 $ 3,632,911 $ 3,470,062 Personnel Total $ 3,271,512 $ 3,366,361 $ 3,632,911 $ 3,470,062 Supplies & Services
8351 Other Professional/Technical $ 15,863 $ 19,637 $ 15,272 $ 21,355 8363 Bank Service Fees - 5,585 5,820 6,064
8519 OPEB ADC/PayGo Contribution 224,099 188,821 192,571 181,182 8598 Claims-Workers' Compensation 24,422 16,533 17,227 17,950 Supplies & Services Total $ 264,384 $ 230,576 $ 230,890 $ 226,552 Administrative & Other
8310 Administrative Support Service $ 65,225 $ 66,855 $ 59,195 $ 61,681 Administrative & Other Total $ 65,225 $ 66,855 $ 59,195 $ 61,681 Total Expenditures $ 3,601,120 $ 3,663,791 $ 3,922,996 $ 3,758,295 Account Account Description Amount
8120 PERS Legacy Costs $ 3,632,911
$ 3,470,062
8351 Other Professional/Technical $ 15,272
$ 21,355
8363 Bank Service Fees $ 5,820
$ 6,064
8519 OPEB ARC Contribution
$ 192,571
$ 181,182
8598 Claims-Workers' Compensation $ 17,227
$ 17,950
8310 Administrative Support Services $ 59,195
$ 61,681
Notes
FY 23 - Amounts provided by CalPERS. Miscellaneous - $113,980, Safety - $3,492,890 and IRC Section 415(b) Replacement Benefit Plan - $26,041. 47.1%-Belmont/52.9%-San Carlos split.

FY 24 - Amounts provided by CalPERS. Miscellaneous - $106,700, Safety - $3,336,800 and IRC Section 415(b) Replacement Benefit Plan - $26,562. 47.1%-Belmont/52.9%-San Carlos split.

Multi-year agreement with City of Belmont, including financial, treasury, debt, and risk management, subject to CPI increase. 50/50 split amongst agencies.

Multi-year agreement with City of Belmont, including financial, treasury, debt, and risk management, subject to CPI increase. 50/50 split amongst agencies.

Legal, accounting, actuary and workers compensation claim administration services. CPI increase. 47.1%/52.9% split.

Legal, accounting, actuary and workers compensation claim administration services. CPI increase. 47.1%/52.9% split.

Per Bartel actuarial report, April 27, 2022. Using greater of ADC or PayGo (Expected Retiree Benefit Payments). 47.1%/52.9% split.

Per Bartel actuarial report, April 27, 2022. Using greater of ADC or PayGo (Expected Retiree Benefit Payments). 47.1%/52.9% split.

Legacy claims cost based on actuarial Worker's Compensation Program.

47.1%/52.9% split.

Legacy claims cost based on actuarial Worker's Compensation Program.

47.1%/52.9% split.

Service fees for banking services. Bank fees have offset interest income in prior years. CPI increase. 47.1%/52.9% split.

Service fees for banking services. CPI increase. 47.1%/52.9% split. 42 APPENDIX
What is the Basis for the Belmont-San Carlos Fire Department Budget? The Belmont-San Carlos Fire Department prepares its budget using the modified accrual basis of accounting whereby revenues are recognized when they become measurable and available.

Likewise, expenditures are recognized when an event or transaction is expected to draw upon current spendable resources.

What are the Budgetary Policies of the Belmont-San Carlos Fire Department? The Belmont-San Carlos Fire Department operates under a set of budget policies which guide the development of the budget. These policies are presented below. • Where possible, General Fund revenues, operating expenditures and transfers should balance on a "current" basis.
• Supplemental appropriations during the fiscal year require an appropriations adjustment resolution to be passed by the Fire Board.
• In cases where there is an increase in the size of the budget due to an appropriation increase, the resolution requires an offsetting change in fund balance, unless the added cost is accompanied by an unanticipated increase in revenue to the General Fund. If such an offset occurs then there is no change to the fund balance, but the increase in revenue and the source of that revenue is to be shown in the appropriations adjustment resolution.
• Where the increased appropriation is to be funded from a restricted source and no offsetting revenue is identified, the resolution must show a decrease in fund balance from the balance that was expected when the budget was adopted.

What are Funds?
Perhaps the biggest perplexities encountered by someone examining the budget or financial statements of a government agency for the first time is the existence of numerous "funds." Whereas even the largest commercial enterprise generally will report only a single amount for each item in its financial statements (e.g., "cash," "sales"), governments, both large and small, will typically report a number of separate columns or "funds." Each of these funds is considered to function as a separate fiscal and accounting entity. Funds are normally used by governments to segregate resources related to specific activities (e.g., general operations, capital projects). For most governments, the principal operating fund is known as the "General Fund."
43 What Different Kinds of Funds do Governments Use?
Governments may use any number of individual funds in their budgeting and financial reporting (although they are encouraged to use the least number of funds practical in their specific circumstances). Regardless of the number of individual funds used, generally accepted accounting principles (GAAP) require all of these individual funds to be aggregated into no more than seven specified "fund types" on the combined balance sheet.

Four of these fund types are known as the "governmental funds." They are the General Fund, the special revenue funds, the debt service funds, and the capital project funds. These funds are typically used to account for most of a government's operations and capital expenditures.

Two other funds types are known as the "proprietary funds" because they function in a manner similar to private enterprise. These funds are the enterprise (or service) funds and the internal service funds. The last of the seven fund types that may be found on a government’s combined balance sheet or in a budget document is the trust and agency fund. The Belmont-San Carlos Fire Department only uses a General Fund.

General Fund
The General Fund is used to account for the financial resources and expenditures associated with most Department operations where revenue is not required to be recorded in a separate fund. As the name implies, revenues collected in this fund are not restricted as to which division or purpose they may be expended.

The sources of revenue for the General Fund are primarily from service charges and the use of money and property held by the Department.

Is "Unassigned Fund Balance" a Good Measure of Economic Health? "Unassigned” or “available” fund balance is not designated to reflect economic health but simply to provide a measure of the financial resources available for future spending or appropriation. While an absence of spendable resources may well be an indication of actual or potential economic problems, the presence of such resources is no guarantee of sound economic health. For example, just as an individual can increase his or her checkbook balance by taking out a loan, so too can a governmental fund increase its spendable resources (i.e., " unassigned fund balance") by issuing long-term debt.

In neither case would the economic position of the individual or government be improved because the debt must be repaid. Accordingly, a significant level of "unassigned fund balance" should not be taken alone as evidence of sound economic health. Rather, users of government financial statements should also take care to evaluate future claims on governmental fund assets when assessing the economic health of a governmental fund. In particular, users should be careful to consider a governmental fund's obligation to finance long-term debt (reported separately in the general long-term debt account group), as well as the potential future drain on governmental fund resources posed by deficits in other funds (e.g., enterprise funds).
44 How High a Level of "Unassigned” or “Available” Fund Balance Should be Maintained in the General Fund?
There is little argument that a deficit "unassigned” or “available” fund balance is normally to be avoided. Indeed, such deficits are illegal in a number of jurisdictions. The "right amount" of unassigned fund balance, however, is a question open to debate, particularly in the General Fund. Bond raters and others often use "rules of thumb" to measure the adequacy of unreserved fund balance in the General Fund. For example, 5 percent of annual operating expenditures is a commonly used amount. Others argue that unassigned fund balance should equal no less than one month's operating expenditures (i.e., 8.3%). Care must be taken, however, to avoid applying such rules of thumb mechanically. A variety of factors must be taken into account when evaluating the adequacy of fund balance in the General Fund.

One important consideration is the reliability of a governmental agency's revenue sources.

Whereas some governmental revenues are traditionally quite stable, others often can vary significantly depending on conditions in the economy (e.g., interest income). Governments depending upon less reliable revenue sources may need to maintain significantly higher levels of unreserved fund balance than those relying upon more stable sources of revenue.

Another important factor is the timing of cash inflows and outflows. Governments whose cash flows are less predictable or uneven because of the timing of revenue collections may need relatively higher levels of unreserved fund balance to maintain liquidity than those with highly predictable continuous cash inflows and outflows.

A third important consideration involves resources available in other funds. Some governments, for example, establish separate "budget stabilization funds" to meet unexpected contingencies. When such additional resources are available in other funds, a lessor amount of unreserved fund balance may be appropriate in the General Fund.

In short, the specific financial history, prospects and circumstances of each individual government must be carefully weighed when evaluating the adequacy of "unassigned fund balance."
In Belmont-San Carlos Fire Department's case, the revenue stream is stable, predictable and known. Accordingly, the Board has not set an established policy on the balance of unassigned fund balance of the General Fund.

Why Does the Department Prepare a Budget?
Any government entity prepares a budget for more than one reason. The first is that it has a legal obligation to do so. But of equal importance, for Belmont-San Carlos Fire Department, is that the budget sets forth the basic spending policy of the Fire Board. 45 Each year the Board adopts a budget for the upcoming fiscal year. The approved budget for the upcoming year is reviewed and revised as necessary and a budget for the year following is presented, deliberated on and approved as a part of the budget plan. The Department's fiscal year begins on July 1st. The budget, therefore, will remain in effect through June 30th. There are two major sections of the budget. The revenue side describes the sources and amounts of revenue the Department expects to receive over the fiscal year period. The expenditure or appropriations side describes how much money will be spent from either current revenues or from existing fund.

A final important purpose to remember about the budget document is that it is a plan. The projected revenues and the expenditures are estimates. Many incidents can happen throughout a year to change either revenue expectations or expenditure needs. The Department tries to budget as accurately as possible. Should things change, however, there is a process in place to amend the budget document. Supplemental appropriations resolutions are presented to the Board during the budget cycle to add appropriations.. Sometimes these changes will be accompanied by an offsetting additional source of revenue, neutralizing the possible impact on the expected ending fund balance of the relevant fund. Other times these changes will require fund balances be used, reducing the amount of the fund balance from what was projected at the beginning of the year.

How Does the Department Prepare its Budget?
The Belmont-San Carlos Fire Department prepares a budget through a traditional budget process. The Controller prepares a rough draft of the budget with input from the City Managers of Belmont and San Carlos. Once this phase has been completed, a final draft budget document is prepared, reviewed, considered and adopted by the Fire Board at a public hearing. Finally, the Belmont Fire Protection District and City of San Carlos will ratify the budget adopted by the Board.

Major Revenue Sources
Belmont Fire Protection District/City of San Carlos Service Charges - This revenue source is derived from charging each agency for the obligations of the Department.
46 Glossary of Terms
Administrative & other - A budget category that accounts for all administrative support charges, principal and interest payments, and transfers between funds required to support the fund.

Appropriation - Money budgeted for a given division. Appropriations are the means by which legal authority is given to expend public monies. The appropriation is the maximum level of expenditure authorized.

Budget - A plan of financial and division operation which lists appropriations and the means of financing them for a given time period. Belmont-San Carlos Fire Department adopts a one-year plan.

Encumbrance - Financial commitments related to unperformed services or contracts for goods for which part of an appropriation has been reserved.

Expenditure - Appropriated funds which have been spent.

Fiscal year - A twelve-month period used for budgeting, accounting or revenue reporting purposes. California agencies operate on a July 1 to June 30 fiscal basis.

Fund - An independent fiscal and accounting term used to record all financial transactions related to the specific purpose for which the fund was created.

Revenue - Amounts received for intergovernmental sources, service charges, interest and use of property and other income.

Supplies & services - A budget category that accounts for all supplies, goods and services required to support the division.

N:\Common\BUDGET\FY 18-19 Budget\BSCFD\Appendix.docx
47 RESOLUTION NO. 2022-02

RESOLUTION OF THE BELMONT-SAN CARLOS FIRE DEPARTMENT RECOMMENDING THE FY 2023 AND FY 2024 BUDGET TO THE BELMONT FIRE PROTECTION DISTRICT

AND THE CITY OF SAN CARLOS AND ADOPTION OF THE BUDGETS UPON

RATIFICATION BY THE MEMBER AGENCIES
WHEREAS, pursuant to the Joint Powers Agreement, the Fire Department to prepare a budget setting forth the expenditures for supplies and services subsequent to service termination; and, WHEREAS, the Budget has been reviewed by the Member Agencies’ City Managers who recommend adoption; and,
WHEREAS, the cost allocation formula stipulates the Belmont Fire Protection District pay 47.1% and the City of San Carlos 52.9%, with administrative support services shared equally; and, WHEREAS, this decision qualifies as a Major Decision and requires the approval of the Member Agencies before it can be implemented; and,
WHEREAS, the Fire Commission intends to implement the budget immediately upon ratification by the Member Agencies.

NOW, THEREFORE, BE IT RESOLVED that the Fire Commission of the Belmont-San Carlos Fire Department finds the FY 2023 and FY 2024 Budgets to be balanced and establishes an appropriation of $3,922,996 for FY 2023 and $3,758,295 for FY 2024 for the disbursement of expenditures to meet the obligations of the Department for the fiscal years; and, BE IT FURTHER RESOLVED that the Fire Commission of the Belmont-San Carlos Fire Department further authorizes the appropriation of all remaining sums from fund balance and delegates authority to the City Managers to approve amendments to the Budget as may be required for the disbursement of expenditures to meet the obligations of the Department consistent with established policy; and,
BE IT FURTHER RESOLVED that the Fire Commission of the Belmont-San Carlos Fire Department establishes contributions to be paid by the member agencies as follows: Belmont Fire Protection District ($1,792,093 in FY 2023 and $1,719,818 in FY 2024) and the City of San Carlos ($2,009,131 in FY 2023 and $1,927,802 in FY 2024); and, BE IT FURTHER RESOLVED that the Fire Commission of the Belmont-San Carlos Fire Department recommends the proposed FY 2023 and FY 2024 Budgets to the Belmont Fire Protection District and the City of San Carlos and, upon ratification of the proposed FY 2023 and FY 2024 Budgets by the Belmont Fire Protection District Board and San Carlos City Council, the Budgets shall be deemed adopted by the Fire Commission.
* * *
48 I hereby certify that the foregoing Resolution was duly and regularly passed and adopted by the Fire Commission of the Belmont-San Carlos Fire Department at a Special Meeting thereof held on the 24th day of May, 2022 by the following vote:

AYES, COMMISSIONERS: Collins, Dugan, Stone, and Chair Lieberman NOES, COMMISSIONERS: None
ABSTAIN, COMMISSIONERS: None
ABSENT, COMMISSIONERS: None
_______________________________________________
Secretary of the Belmont-San Carlos Fire Department
APPROVED:
_______________________________________________
Chair of the Belmont-San Carlos Fire Department
49

LEG Amendment – Outreach and Communications Services

STAFF REPORT
Meeting Date: June 14, 2022
Agency: City of Belmont
Staff Contact: Grace Castaneda, Finance Director, [email protected] Agenda Title: Outreach Communications Services
Agenda Action: Resolution
Recommendation
Adopt a resolution authorizing the City Manager to execute an Amendment to the Service Agreement with The Lew Edwards Group to provide communications services in an amount of $100,000 plus a 10% contingency for a total not-to-exceed amount of $210,000.

Strategic Focus Area
Fiscal and Organizational Sustainability
Background
In September 2019, as part of City Council’s Strategic Focus Areas, Council directed staff to develop alternatives for long-term capital financing of deferred maintenance needs, maximize existing sources of revenue, and identify new revenue sources to maintain financial stability. Staff issued a Request for Qualifications (RFQ) for Opinion Research and Communication Services. The objective of the RFQ was to obtain assistance in conducting opinion research and communication services to gauge interest, determine feasibility, develop and communicate rationale, conduct outreach, and raise awareness for a variety of projects and endeavors, including a new community center, storm drainage infrastructure improvements, business license modernization and fairness, and business improvement district interest.

In many cases, there is no identified source of funding for these efforts and, as such, the City was interested in gauging the community’s interest and, where it makes sense, advancing the effort further for consideration by the community.

In November 2019, the City engaged The Lew Edwards Group (LEG) to provide the requested outreach communication services in an amount not to exceed $100,000. Since that time, LEG has worked closely with staff on essential communication engagement efforts for infrastructure and services, consistent with the City Council’s Strategic Focus Areas.

Analysis
The Lew Edwards Group’s proposed scope of work for continued services reflect the same activities and efforts that they have been working on with staff, but with an extended project timeline, as these community engagement efforts are protracted to 2022-2023.

Staff requests that the City Council authorize an Amendment to the Service Agreement with LEG for the procurement of communications outreach and consulting services exceeding the original scope, to assist with the City’s ongoing efforts to address community priorities. 50

LEG Amendment – Outreach and Communication Services
As set forth in Exhibit A to the proposed resolution accompanying this report and considering the complexity of the topics to be addressed, an additional 10% contingency of $10,000 is recommended for a total not-to-exceed amount of $210,000 for Amendment No. 1.

Alternatives

1. Deny the requested authority.

2. Solicit services from an alternative firm.

3. Continue the item for future discussion.

Attachments
A. Resolution
Fiscal Impact
☐ No Fiscal Impact
☒ Funding Source Confirmed:

There are sufficient funds available in Account 101-1-501-8351 for this purpose for services anticipated in the remainder of the current fiscal year 2022 and incorporated in the proposed budget for fiscal year 2023.

Source: Purpose: Public Outreach:

Council Council Vision/Priority Posting of Agenda
51

RESOLUTION NO. 2022 –

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BELMONT

AUTHORIZING THE CITY MANAGER TO EXECUTE AN AMENDMENT TO THE

SERVICE AGREEMENT WITH THE LEW EDWARDS GROUP TO PROVIDE COMMUNICATIONS OUTREACH AND CONSULTING SERVICES FOR $100,000 PLUS A 10% CONTINGENCY, FOR A TOTAL NOT TO EXCEED AMOUNT OF $210,000
WHEREAS, as part of City Council’s Strategic Focus Areas, Council has directed staff to develop alternatives for long-term capital financing of deferred maintenance needs, to maximize existing sources of revenue, and identify new revenue sources to maintain financial stability; and,
WHEREAS, from time to time the City has need of consulting services to assist with engaging in community outreach and education for Council’s Strategic Focus Areas, such as infrastructure and services and revenue measures; and,
WHEREAS, these services are highly specialized and require a consultant with particular expertise; and,
WHEREAS, the City does not possess the technical expertise in-house to conduct communications outreach and consulting services.

NOW, THEREFORE, the City Council of the City of Belmont resolves as follows:

SECTION 1. The City Manager is authorized to negotiate and execute an amendment to the Service Agreement purchasing communications outreach and consulting services from The Lew Edwards Group for $100,000, plus a 10% contingency for a total not to exceed amount of $210,000
SECTION 2. The Amendment will be funded by account 101-1-501-8351, subject to annual budget appropriation.
* * *
52

ADOPTED June 14, 2022 by the City of Belmont City Council by the following vote:

Ayes:

Noes:

Absent:

Abstain:

ATTEST:

City Clerk Mayor
APPROVED AS TO FORM:

City Attorney
53

Open Space Management Plan Amended Agreement - Staff Report

STAFF REPORT
Meeting Date: June 14, 2022
Agency: City of Belmont
Staff Contact: Brigitte Shearer, Parks and Recreation Director, (650) 595-7488, [email protected]
Agenda Title: Amended Services Agreement for Open Space Management Plan Development Services from WRA, Inc.

Agenda Action: Resolution
Recommendation
Adopt a resolution (1) authorizing an amendment to the contract with WRA, Inc. for consultant services for development of an Open Space Management Plan for an additional amount of $19,000 plus a 10% contingency, for a total not-to-exceed of $148,720, and (2) authorizing a budget appropriation of $20,900 from Planned Park Fund 341 for this purpose.

Strategic Focus Area
Quality of Life
Background
On September 8, 2020, City Council adopted Resolution 2020-074 authorizing the City Manager to execute an Architecture and Engineering Services Agreement with Gates + Associates to develop a Park, Recreation, and Open Space (PROS) Master Plan to guide decision-making related to parks and recreation planning, programming, and funding for a 15+ year horizon.

While the PROS Master Plan took a broad approach to our vision for the City park system, community outreach conducted on its behalf uncovered the need for a more detailed Open Space Management Plan.

The City currently manages approximately 300 acres of open space including 9.6 miles of multi-use trails surrounded by homes and enjoyed by users of all ages and abilities, both Belmont residents and the greater community. Through PROS Master Plan outreach, staff and consultants received hundreds of comments regarding open space management, demonstrating it is a community priority. Additionally, many comments raised concerns regarding wildfire mitigation and the balance between natural resource conservation and recreational usage, warranting further investigation.

On December 14, 2021, Council adopted Resolution 2021-106 authorizing the City Manager to execute a Services Agreement with WRA, Inc. to develop an Open Space Management Plan for an amount not to exceed $116,200, plus a contingency amount of $11,620 for a total of $127,820.

Developing an Open Space Management Plan as a component of the PROS Master Plan has provided an opportunity to better address specific concerns raised regarding the management of this highly valued community resource. The final Plan will provide a foundation for sustainable wildfire mitigation, vegetation and natural resource management, and trail maintenance and management standards in 54

Open Space Management Plan Amended Agreement - Staff Report accordance with the City’s 2035 General Plan.

Analysis
Open Space Management Plan services have been provided by WRA, Inc. since December 2021. As of June 6, 2022, WRA, Inc. has billed $88,583.44 for services rendered through April 29, 2022. Due to more frequent meetings with City staff and Gates + Associates (Parks, Recreation, and Open Space [PROS] Master Plan consultants), preparation for and execution of one additional PROS Master Plan Advisory Committee meeting, and a more extensive site assessment scope and review of community input, it is anticipated that the remaining encumbered funds ($39,236.56) will be exhausted by services provided through late May/early June. Meanwhile, review of additional community feedback, meetings with City staff and Gates + Associates, and final revisions to the draft Plan document are still expected.

Staff therefore recommends that, to complete the development of the Open Space Management Plan component of the PROS Master Plan, City Council authorize an additional $19,000 plus a 10% contingency.

Alternatives

1. Continue the item

2. Take no action
Attachments
A. Resolution
Fiscal Impact
☐ No Fiscal Impact
☒ Funding Source Confirmed:

A budget appropriation of $20,900 from Planned Park Fund 341 will be necessary in Fiscal Year 2022 to supplement account 343- 4-810-9030 for Open Space Management Plan Capital
Improvement Project #8096.

Source: Purpose: Public Outreach:

Council Council Vision/Priority Posting of Agenda
55

RESOLUTION NO. 2022 –

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BELMONT AUTHORIZING AN AMENDMENT TO THE CONTRACT WITH WRA, INC., FOR

CONSULTING SERVICES FOR DEVELOPMENT OF AN OPEN SPACE
MANAGEMENT PLAN FOR AN ADDITIONAL AMOUNT OF $19,000 PLUS A 10% CONTINGENCY, FOR A TOTAL NOT-TO-EXCEED OF $148,720, AND AUTHORIZING A BUDGET APPROPRIATION OF $20,900 FROM PLANNED PARK FUND 341 FOR THIS PURPOSE
WHEREAS, On December 14, 2021, City Council adopted Resolution 2021-106 authorizing the City Manager to execute a Services Agreement with WRA, Inc. to develop an Open Space Management Plan for an amount not to exceed $116,200, plus a contingency amount of $11,620 for a total of $127,820; and,
WHEREAS, Due to more frequent meetings with City staff and Gates + Associates (Parks, Recreation, and Open Space [PROS] Master Plan consultants), preparation for and execution of one additional PROS Master Plan Advisory Committee meeting, and a more extensive site assessment scope and review of community input, it is anticipated that the remaining encumbered funds ($39,236.56) will be exhausted by services provided through early June; and,
WHEREAS, Review of additional community feedback, meetings with City staff and Gates + Associates, and final revisions to the draft Open Space Master Plan document are necessary to complete the project; and,
WHEREAS, The additional amount to complete the project is $19,000 plus a 10% contingency, for a total additional authorization of $20,900, bringing the total cost for consultant services for the Open Space Management Plan, including contingency, to $148,720 (see Attachment A for amendment proposal).

NOW, THEREFORE, the City Council of the City of Belmont resolves as follows:

SECTION 1. The City Manager is authorized to amend the contract with WRA, Inc, for consulting services for development of an Open Space Management Plan for an additional amount of $19,000 plus a 10% contingency, for a total additional authorization of $20,900 as set forth in Attachment A.

SECTION 2. A budget appropriation of $20,900 from Planned Park Fund 341 is authorized to supplement account 343-4-810-9030 for Open Space Management Plan Capital Improvement Project #8096.
56

* * *
ADOPTED June 14, 2022 by the City of Belmont City Council by the following vote:

Ayes:

Noes:

Absent:

Abstain:

ATTEST:

City Clerk Mayor
APPROVED AS TO FORM:

City Attorney
57

ATTACHMENT A

BELMONT OPEN SPACE MANAGEMENT PLAN
CHANGE ORDER 1
Prepared for
Brigitte Shearer
City of Belmont Parks and Recreation
June 6, 2022
WRA Project # 31315
Purpose
Since February 2022, WRA has been working with the City of Belmont Parks and Recreation Department (City) to prepare an Open Space Management Plan (OSMP) for the City’s two open space areas; Waterdog Lake open space area, and San Juan Canyon open space area. To date, WRA has reviewed and summarized all existing planning documents, prepared existing conditions reports on environmental and recreation resources, participated in multiple public meetings, and has completed a draft Base Plan, and two management alternatives.

As described below, WRA’s role for the OSMP has required more effort than we assumed in our scope of work, which is part the executed contract between WRA and the City. WRA is seeking additional funds for two items.

Additional Internal Meetings. WRA’s original fee assumed 4 internal meetings (meetings with City staff and or Gates and Associates staff). To-date we have participated in 11 meetings on the following dates:

February 24, 2022
March 31, 2022
April 7, 2022
April 14, 2022
April 21, 2022
April 26, 2022
April 28, 2022
April 29, 2022
58

May 11, 2022
May 18, 2022
WRA’s scope states that additional meetings will be billed at $1,000 per meeting. Thus, WRA is requesting $10,000, for a total of 10 anticipated meetings. This estimate assumes one internal meeting per week until completion of the project the second week of July, 2022 (7 weeks) and three additional, contingency meetings which may be needed to prepare for the remaining three public meetings.

Revisions to the OSMP. WRA’s scope of work indicates that two sets of revisions would be made to the Open Space Management Plan (OSMP). The scope refers to preparing an administrative draft OSMP, followed by a first set of revisions, then a draft OSMP, then another set of revisions to produce a final OSMP. To date, WRA has prepared three versions of the administrative draft OSMP, and is currently responding to the latest set of comments. WRA anticipates additional revisions following public review of the OSMP, as well as review from the Park and Recreation Commission, and City Council. Thus, WRA is requesting funds for an additional 50 hours of labor, or $9,000, for completing draft and final versions of the OSMP.

Please let us know if you have questions about this proposed change order. WRA looks forward to continuing to support the City in completing the OSMP that has broad public support.

Summary of Estimated Costs
Out of Scope Work COST
Item 1-Additional Internal Meetings $10,000
Item 2-Additional Revisions to OSMP $9,000
Total $19,000
Terms and Conditions
This amended Scope of Work is subject to WRA’s Standard Terms and Conditions, which were incorporated into the original scope of work, dated November 30, 2021. (Approval/Signature Page Follows)
59

Approval to Proceed
To authorize WRA’s services and to signify their mutual intent to be legally bound by this Scope of Work and Exhibit A, authorized representatives of the parties hereby execute this agreement, effective upon the date when both parties have signed below.

FOR CLIENT
Signature Date
Printed Name and Title
Email Address
Name and Email (if different from above)

FOR WRA
Signature Date
Printed Name and Title
60

33433 Public Hearing

STAFF REPORT
Meeting Date: June 14, 2022
Agency: City of Belmont
Staff Contact: Jennifer Rose, Housing & Economic Development Manager, [email protected] Agenda Title: Resolution making certain findings under Public Health and Safety Code Section 33433 for disposition of public property located at 30 Oxford Place, and 300-400 Davey Glen Road (APN’s 040-500-170, 106-190-070, 106-270-060) Agenda Action: Resolution
Recommendation
Adopt a Resolution making certain findings under Public Health and Safety Code Section 33433 for disposition of public property.

Strategic Focus Area
Economic Development and Housing
Background
In January 2012, the Belmont City Council approved Resolution No. 2012-0013 authorizing the City to serve as the Housing Successor Agency of the now dissolved Belmont Redevelopment Agency (the "Agency"), thereby assuming all rights, powers, assets, liabilities, duties, and obligations previously associated with the housing activities of the Agency in accordance with Health and Safety Code Section 34176.

The California Department of Finance approved the transfer of housing assets from the former Agency to the City of Belmont acting in its capacity as the Belmont Housing Successor Agency. Assets included residential real property assets, land held for redevelopment, and loans receivable. Among the three real property assets were three occupied residential units that the former Agency has been renting for below market rate—one single family residential home, and two condominium units (the “Properties”).

At the direction of Council, the City has been working to leverage these real estate housing assets to help fund development of more affordable housing in Belmont. The General Fund Housing Element Program

2.1 directs sale of real estate assets and reinvestment of assets towards development of new affordable units. In 2019, the City Council approved a Tenant Relocation Plan and Replacement Housing Plan and directed staff to proceed with sale of the three properties.

The City now desires to pursue sale of these three properties to market rate buyers pursuant to Health & Safety Code Section 33433.
61

33433 Public Hearing
Analysis
Because the City acquired the Properties as the Housing Successor Agency to the Former Redevelopment Agency, Section 33433 of the California Health and Safety Code requires City Council approval of the property disposition, after a public hearing, and a determination that the sales prices meet or exceed the standards for fair market value or fair reuse value in Section 33433.

The City has prepared a summary report consistent with the requirements of Health and Safety Code Section 33433, including a summary of the proposed sale transactions, the appraised value of the property interest to be conveyed, estimated fair reuse value, and consistency with blight elimination requirements.

The Properties will be listed at their appraised values, and the sale is anticipated to bring in significant net revenues—all of which will be deposited into the City’s Affordable Housing Fund and used to development new affordable housing units in the City.

The City published a notice of report availability and notice of the time and place of this public hearing a general circulation newspaper as specified in Section 6066 of the Government Code, with notices published on June 1, 2022 and again on June 8, 2022.

Next Steps
Once the City Council adopts a resolution making certain findings under Public Health and Safety Code Section 33433 for disposition of the Properties, the City will proceed with listing the properties for sale (pursuant to a Listing Agreement approved by the Council at the May 10, 2022 meeting) and taking actions to comply with the notification requirements in the Surplus Lands Act. Sale of the Properties is expected to close in July 2022.

Alternatives

1. Provide alternative direction regarding sale of Housing Successor real property assets.

2. Take no action; discontinue sale of Properties.

Attachments
A. Resolution
B. 33433 Summary Report
Fiscal Impact
☐ No Fiscal Impact
☒ Funding Source Confirmed:

Adoption of the attached resolution does not commit the City to any financial obligation to sell the properties, but does facilitate the sale process which is anticipated to generate net revenues.

These funds will be deposited into the Belmont Affordable Housing Fund and must be spent in compliance with the Health and Safety Code which requires that all funds be spent on development of low income housing units.
62

33433 Public Hearing
Source: Purpose: Public Outreach:

Staff Statutory/Contractual Requirement Other*
* The City published a notice of report availability and notice of the time and place of this public hearing a general circulation newspaper as specified in Section 6066 of the Government Code, with notices published on June 1, 2022 and again on June 8, 2022.
63

RESOLUTION NO. 2022 –

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BELMONT

MAKING CERTAIN FINDINGS UNDER PUBLIC HEALTH AND SAFETY CODE SECTION 33433 FOR DISPOSITION OF PUBLIC PROPERTY LOCATED AT 30 OXFORD PLACE AND 300-400 DAVEY GLEN ROAD (APN’S 040-500-170, 106-190- 070, 106-270-060)
WHEREAS, on January 24, 2012, the Belmont City Council approved Resolution No. 2012-0013 authorizing the City to become the Housing Successor Agency of the now dissolved Belmont Redevelopment Agency (the "Agency"), thereby assuming all rights, powers, assets, liabilities, duties, and obligations previously associated with the housing activities of the Agency in accordance with Health and Safety Code Section 34176; and, WHEREAS, on August 30, 2012, the California Department of Finance (DOF) approved the transfer of all housing assets listed on the Belmont Housing Asset Transfer Form from the Agency to the City pf Belmont acting in its capacity as the Belmont Housing Successor Agency; and,
WHEREAS, the properties subject to this resolution are included on the Housing Asset Transfer Form approved by DOF and are now owned by the City. The properties include one single family home (30 Oxford Place) and two condominium units (300 Davey Glen Road #3507 and 400 Davey Glen Road #4606) (the “Properties”); and, WHEREAS, on May 28, 2019, the Belmont City Council approved a Tenant Relocation Plan and Replacement Housing Plan pursuant to California Health and Safety Code Section 33413, and directed staff to proceed with sale of the Properties consistent with the Belmont General Plan Housing Element Program 2.1 which directs sale of real property assets and reinvestment of assets towards development of new affordable housing units; and, WHEREAS, the City now desires to pursue the sale of these properties to market rate buyers pursuant to Health and Safety Code Section 33433, which requires that before any property which was acquired in whole or in part, directly or indirectly, with redevelopment tax increment moneys is sold or leased for development pursuant to the redevelopment plan, the sale must be approved by the legislative body after a public hearing; and, WHEREAS, the City published a notice of report availability and notice of the time and place of this public hearing a general circulation newspaper as specified in Section 6066 of the Government Code, with notices published on June 1, 2022 and again on June 8, 2022.

NOW, THEREFORE, the City Council of the City of Belmont resolves as follows:
64

SECTION 1. The City Council finds that the sale of the real properties located at 30 Oxford Place and 300-400 Davey Glen Road will assist in the elimination of blight and provide housing for low-income households and finds that sale of the property is in the City’s best interests. The City Council further finds that the financial compensation the City will receive per the property listing agreement is not less than the fair reuse value, and that the sale of property has complied with the requirements of Section 33433 of the California Health and Safety Code. * * *
ADOPTED June 14, 2022 by the City of Belmont City Council by the following vote:

Ayes:

Noes:

Absent:

Abstain:

ATTEST:

City Clerk Mayor
APPROVED AS TO FORM:

City Attorney
65 1

SUMMARY REPORT ON THE

DISPOSITION OF REAL PROPERTIES PURSUANT TO
SECTION 33433 OF THE CALIFORNIA HEALTH AND SAFETY CODE
30 OXFORD PLACE, BELMONT, CA 94002 (APN 040-500-170)
300 DAVEY GLEN ROAD, APT 3507, BELMONT, CA 94002 (APN 106-190-070) 400 DAVEY GLEN ROAD, APT 4606 BELMONT, CA 94002 (APN 106-270-060) This Summary Report has been prepared pursuant to Section 33433 of the California Health and Safety Code (“HSC”). HSC 33433 requires that before any property which was acquired in whole or in part, directly or indirectly, with redevelopment tax increment moneys is sold or leased for development pursuant to the redevelopment plan, the sale or lease must be approved by the legislative body after a public hearing. Notice of the time and place of the hearing shall be published in a newspaper of general circulated in the community at least once a week for at least two successive weeks as specified in Government Code Section 6066.

This Summary Report sets forth certain details of the proposed sales terms for three real properties located in the City of Belmont (“City”) and acquired by the former Belmont Redevelopment Agency (“Former Agency”) with tax increment moneys:
30 Oxford Place, Belmont, CA 94002 (APN 040-500-170)
300 Davey Glen Road, Apt 3507, Belmont, CA 94002 (APN 106-190-070) 400 Davey Glen Road, Apt 4606, Belmont, CA 94002 (APN 106-270-060) The three properties listed above (the “Properties”) were transferred from the Former Agency to the City as Housing Successor to the Former Belmont Redevelopment Agency (“Housing Successor”) upon redevelopment dissolution pursuant to HSC 34176. The City plans on selling the Properties at or above appraised value. Net sales proceeds will be deposited into the Housing Successor Low- and ModerateIncome Housing Asset Fund (“Housing Asset Fund”), which is restricted for use on affordable housing development and related purposes pursuant to HSC 34176 and 34176.1.

The proposed sale will effectuate the Community Development Plan for the Los Costanos Community Development Project (“Redevelopment Plan”) by eliminating blight and increasing the City’s supply of affordable housing. In 2014, the City Council gave direction regarding the future disposition of real property assets. The Belmont General Plan Housing Element Program 2.1 further directs sale of real property assets to leverage City Affordable Housing Funds for development of larger multi-family residential affordable projects. The City currently has two 100% affordable multi-family housing rental projects in entitlement review that have requested project funding from the City in order to help secure other sources of public financing available. Development of these two projects would create 163 new affordable housing units, a significant net increase in the number of affordable units. The disposition of 66 2
the Properties is part of a strategy that supports the goals of increasing the overall supply of market-rate and affordable housing opportunities consistent with the City Housing Element. Sales proceeds will be deposited into the Housing Asset Fund to invest in other affordable housing activities as required by HSC 34176 and 34176.1.

This Summary Report is organized into the following sections:

I. Summary of Proposed Sale: This section summarizes the proposed sales terms of the Properties (the “Sale”).

II. Cost of the Sale to the City: This section details the total cost to the City associated with implementing the Sale, including land acquisition cost, clearance costs, relocation costs, the costs of any improvements to prepare the Properties for sale, and other administrative costs.

III. Estimated Value of the Interests to be Conveyed: This section estimates the value of the interests to be conveyed determined at the highest use permitted under the Properties’ existing zoning and the requirements imposed by the Redevelopment Plan.

IV. Estimated Fair Reuse Value: This section summarizes the valuation estimate for the Properties based on the proposed Sale.

V. Blight Elimination: This section describes the proposed Sale satisfies the blight elimination criteria imposed by HSC 33433.

VI. Conformance with the Five-Year Implementation Plan: Prior to dissolution, Section 33433 Summary Reports described how the sale or lease of property achieved goals identified in the Former Agency’s Five-YearImplementation Plan. This determination is no longer application after dissolution.

This report and the Sale are to be made available for public inspection prior to the approval of the Sale.

I. SUMMARY OF PROPOSED SALE
The Properties consist of one single-family home and two condominium units as described in Table 1. The City plans on selling the Properties at fair market value, which is expected to be at or above appraised value unless buyer due diligence proves that an adjustment to the appraisal is necessary. Table 1 lists the Properties’ appraised value as of March 30, 2022.
67 3
Table 1
Property APN Appraised
Value
Description
30 Oxford Place 040-500-170 $1,690,000 Two-story 3,772 s.f. single-family home built in 2000 with 3-bed, 2-bath and 2-car
attached garage
300 Davey Glen Road,
Apt 3507
106-190-070 $615,000 One-story 732 s.f. condominium unit built in 1965 with 1-bed, 1-bath, a deck, and
garage parking
400 Davey Glen Road,
Apt 4606
106-270-060 $555,000 One-story 736 s.f. condominium unit built in 1965 with 1-bed, 1-bath, a deck, and
garage parking
Source: Carolynn Ulrich, Appraisals of Real Property, March 30, 2022 Net sales proceeds will be deposited into the Housing Asset Fund and spent on affordable housing activities as required by HSC 34176 and 34176.1.

II. COST OF THE AGREEMENT TO THE CITY
The cost of the agreement to the City includes the previous acquisition cost of the Properties as summarized under Table 2.

Table 2
Property Acquisition
Date
Acquisition Cost
30 Oxford Place 9/5/2007 $380,921
300 Davey Glen
Road, Apt 3507
2/19/2009 $297,618
400 Davey Glen
Road, Apt 4606
1/30/2009 $295,422
Source: City of Belmont; San Mateo County tax records provided by Carolynn Ulrich, Appraisals of Real Property, March 30, 2022 The Properties were purchased by the Former Agency with Low- and Moderate-Income Housing Set Aside Funds for the purpose of achieving its redevelopment goals of alleviating blight and producing affordable housing. Former Agency housing assets are now managed by the City as the Housing Successor. 68 4
III. ESTIMATED VALUE OF THE INTERESTS TO BE CONVEYED DETERMINED AT THE HIGHEST AND

BEST USES PERMITTED UNDER THE REDEVELOPMENT PLAN
The estimated values of the interests at their highest and best use are the appraised values provided in Table 1. Appraisals dated March 30, 2022, determined the highest and best use of the Properties to be their current use.

IV. ESTIMATED REUSE VALUE OF THE INTERESTS TO BE CONVEYED The estimated reuse value of the Properties is their appraised value. Their actual fair market value and reuse value will be based on the offers received for the Properties, which are being listed for sale and available to the public under the open market.

VI. BLIGHT ELIMINATION
The net sales proceeds from the sale of the Properties will be deposited into the Housing Asset Fund for use on affordable housing development and related efforts. Sale of the subject properties will also return these units—which have been vacant since 2019—to the housing supply, adding new activity and home ownership to the respective neighborhoods. In accordance with California Redevelopment Law, as portrayed in HSC 33433, the conveyance of property that results in the provision of housing for low- and moderate-income persons satisfies the blight elimination criteria imposed by HSC 33433. Thus, the proposed Sale fulfills the blight elimination requirement.

VII. CONFORMANCE WITH THE FIVE-YEAR IMPLEMENTATION PLAN Prior to dissolution, Section 33433 Summary Reports described how the sale or lease of property achieved goals identified in the Former Agency’s Five-Year Implementation Plan. This determination is no longer applicable after redevelopment dissolution.
69

Public Hearing Under Proposition 218 to Consider Protests to Proposed Increases to Sewer Service Charges Effective Fiscal Years 2022- 2023 and 2023-2024 - Staff Report

STAFF REPORT
Meeting Date: June 14, 2022
Agency: City of Belmont
Staff Contact: Peter Brown, Public Works, 650-595-7469, [email protected] Alberto Espinoza, Public Works, 650-595-7465, [email protected] Agenda Title: Public Hearing Under Proposition 218 to Consider Protests to Proposed Increases to Sewer Service Charges Effective Fiscal Years 2022/2023 and 2023/2024 Agenda Action: Resolution
Recommendation
Hold a Public Hearing and, 1) If protest is not made by the owners of a majority of separate parcels of property, adopt a resolution increasing the City’s sewer charges effective fiscal years 2022/2023 and 2023/2024; 2) If protest is made by the owners of a majority of separate parcels of property, the City should stop further proceedings of the rate proposal and direct staff to prepare an annual report of city sewer service charges based on current sewer service rates.

Strategic Focus Area
Fiscal and Organizational Sustainability
Background
The City’s Sewer Rate Revenue is used to wholly fund operations, maintenance, and debt service for the capital improvements associated with of the City of Belmont’s sewer utility systems, and to fund City of Belmont’s sewer treatment costs at the wastewater treatment plant managed by the Silicon Valley Clean Water (SVCW). Rate calculations follow the guidelines developed by the State Water Resources Control Board, to ensure that sufficient revenues are collected to operate and maintain the system, cover all obligations of the Sewer Fund, and that the costs of providing service are equitably distributed among customer classes based on their use of the system.

Analysis
On April 12, 2022, the City Council received the 2022 Comprehensive Rate Analysis Report (Attachment B) prepared by HDR Engineering, Inc. (HDR) that analyzed the revenue requirements for the current year plus a five-year projected period. The analysis indicated that the total deficiency of revenues before any sewer rate adjustments ranges from $724,000 in FY 2022/2023 to $4.2 million by FY 2026/2027. The calculations are based on meeting the following key prudent financial metric criteria:
 Meeting Debt Service Coverage Ratios – During the prior rate study this was a key driver in the results of the proposed rate adjustments. The proposed rate adjustments in this study allow the City to maintain a strong debt service coverage ratio.
 Adequate Renewal and Replacement Funding – The need to maintain the system is key to minimizing future deferred capital needs. This study continued the annual renewal and 70

Public Hearing Under Proposition 218 to Consider Protests to Proposed Increases to Sewer Service Charges Effective Fiscal Years 2022- 2023 and 2023-2024 - Staff Report
replacement funding needs to prudent levels over the 5-year plan.  Maintaining Prudent Reserve Fund Levels – The study has continued funding to increase reserve fund ending balances to typical industry levels. Given that the city receives semi-annual payments for services, it is important to have sufficient reserves (cash on hand) to fund operations between payments.

Rate adjustments needed to meet the deficiency are 5.5% in FYs 2023-2027 and are shown in Table 1.

The table summarizes revenue requirements compared to anticipated expenses for the sewer utility.

Table 1 – Summary of Sewer Utility Revenue Requirements In 2016, the City implemented a Drought Regulation Adjustment (DRA) factor at 14%. For this twoyear rate period, the proposed rates include a 10% DRA factor. The DRA factor increases by 1% from 9% in rate years 2020/2021 and 2021/2022 to 10% in rate years 2022/2023 and 2023/2024. The 10% DRA factor will allow the City to maintain sufficient revenues to support the City’s fixed cost of operating the sewer enterprise given continued changing winter water consumption levels. The DRA factor will be 71

Public Hearing Under Proposition 218 to Consider Protests to Proposed Increases to Sewer Service Charges Effective Fiscal Years 2022- 2023 and 2023-2024 - Staff Report
reviewed again during the next rate study period and adjusted at that time if need be.

For illustrative purposes, at present rates, a typical residential customer with 8 hundred cubic feet (HCF) of water average would have a monthly bill of $120.96 (8 HCF X 1.09 = 8.72 HCF). Under the proposed rates, with the proposed DRA increased to 10%, the same customer would have a monthly bill of $128.31 in FY 2022/23. The proposed rate adjustment for FY 2023 is 5.5%, however with the DRA or flow factor adjustment from 1.09 to 1.10, it results in an overall change to the bill of 6.1%. Table 2 shows an example of the monthly change to the sewer bill assuming an average of 8 HCF. Table 3 shows the present rates, proposed rates, and forecasted rates at the 5.5% level.

Table 2 – Monthly Change to Sewer Bill
Table 3 – Present Rates, Proposed Rates, and Forecasted Rates at the 5.5% level Note: Present Drought Regulation Adjustment (DRA) is Hundred Cubic Feet (HCF) X 1.09 X $/HCF; Proposed is HCF X 1.10 X $/HCF. 72

Public Hearing Under Proposition 218 to Consider Protests to Proposed Increases to Sewer Service Charges Effective Fiscal Years 2022- 2023 and 2023-2024 - Staff Report
On April 12, 2022, the City Council reviewed and discussed the proposed adjustments and provided staff direction to proceed with setting a Proposition 218 public hearing. In proposing the increased charges, the City has complied with each of the relevant requirements of Section 6 of Article XIIID of the California Constitution (which was adopted by the voters in 1966 as part of Proposition 218).

Consequently, the City mailed notice of the proposed change to each property owner of record as of the last equalized assessment roll.

Property owners have the right to submit written protest against the proposed change and may do so by mail or in person to the City Clerk not later than the conclusion of the Public Hearing. If written protests against the change are presented by the owners of a majority of the affected parcels, the City Council may not impose the change.

Proposition 218 Compliance
Staff implemented notification requirements of Proposition 218 for this rate increase, which mandates that written notice of proposed service rate increases be mailed to all affected property owners. The notice, a copy of which is attached (Attachment C), lists the current and proposed rates, and described the process for protesting the proposed rates. A total of 7,795 notices were mailed out. The language in Proposition 218 specified that the Council may not take action on the proposed rates if a majority of property owners (50% +1), or about 3,898, submit written protests.

The City Clerk will tabulate the final number of protests at the end of the public hearing and certify the results. As of June 1, 2022, 10 (ten) written protests had been received by the City Clerk’s Office.

Alternatives

1. Refer to staff for additional input

2. Take no action

3. Deny or modify the approval
Attachments
A. Resolution
B. 2022 Comprehensive Sewer Rate Study
C. Proposition 218 Notice
Fiscal Impact
☐ No Fiscal Impact
☒ Funding Source Confirmed: Sewer rates are accounted for in the Sewer Collections Fund and incorporated into the proposed FY 2023 budget.

Source: Purpose: Public Outreach:

Staff Statutory/Contractual Requirement Posting of Agenda Other*
* Public hearing notice was mailed to all property owners in the City 73

RESOLUTION NO. 2022 –

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BELMONT INCREASING CERTAIN CITY SEWER SERVICE CHARGES EFFECTIVE JULY 1, 2022 AND JULY 1, 2023
WHEREAS, the City Council has determined to increase sewer service charges; and, WHEREAS, the City Council has determined that the increased sewer service charge should be considered for collection on the assessment roll as provided in Belmont City Code Section (BCC) 21-70; and,
WHEREAS, Health and Safety Code Section 5471 authorizes a city to set sewer service rates by ordinance or resolution in order to collect the charge on the assessment roll.

WHEREAS, on June 9, 2020, the City Council adopted Ordinance No. 2020-1147, amending Belmont City Code Section 21-93 to provide that future rate adjustments may be adopted by ordinance or resolution and the City is choosing to adopt the rates by resolution beginning this FY and moving forward.

NOW, THEREFORE, the City Council of the City of Belmont resolves as follows:

SECTION 1. LEGISLATIVE FINDINGS:

The City Council finds as follows:
(a) The City has complied with each of the requirements of California Constitution Article XIIID, Section 6, including the notice requirement set forth in Section 6(a)(1) for increasing the City’s sewer service charges.
(b) Revenues derived from the Sewer Service Charge will be used only for the purpose set forth in BCC Section 21-86.
(c) The Sewer Service Charge is established at a rate that does not exceed the amount permissible under Article XIIID for such a charge and is not a tax. (d) A majority protest, as defined by Section 6(b) of Article XIIID of the California Constitution does not exist with respect to the increase of the sewer service charge. (e) The rates adopted herein fairly and equitably recover the cost of providing sewer service from all customer classes through fixed fees and a volume charge calculated based on the average monthly non-irrigation water consumption for the prior fiscal year for all customers.

SECTION 2. SEWER SERVICE CHARGE
(a) The City’s schedule of charges for sewer service is amended as provided in this section.

In accordance with BCC Section 21-93, the schedule of charges as amended herein shall remain in effect until amended or repealed by the City Council by resolution. 74

(b) The annual sewer service charge for use of the system by a parcel is the sum of the Base Charge and a Flow Charge. The Flow Charge is calculated by multiplying the Flow Charge Factor in the rate tables in subsection (c) by the estimated annual wastewater discharge of the parcel. The “Drought Regulation Adjustment” (DRA) shown in the rate tables is applied to winter water rate use to normalize water consumption.
(c) The Base Charge and Flow Charge Factor for residential and commercial parcels effective July 1, 2022 is shown in Rate Table (1), and effective July 1, 2023 is shown in Rate Table (2).

Rate Table (1) - effective July 1, 2022
Collection Rate
Residential
Base Charge $408.21
Flow Charge Factor ($/HCF x 1.10 DRA) $5.81
Commercial
Base Charge $408.21
Flow Charge Factor Low Strength ($/HCF x 1.10 DRA) $5.81 Flow Charge Factor High Strength ($/HCF x 1.10 DRA) $11.29 Treatment Rate
Residential
Base Charge $214.54
Flow Charge Factor ($/HCF x 1.10 DRA) $2.87
Commercial
Base Charge $214.54
Flow Charge Factor Low Strength ($/HCF x 1.10 DRA) $2.87 Flow Charge Factor High Strength ($/HCF x 1.10 DRA) $5.59 Note: 1 HCF (hundred cubic feet) = 748 gallons of water Rate Table (2) - effective July 1, 2023
Collection Rate
Residential
Base Charge $430.66
Flow Charge Factor ($/HCF x 1.10 DRA) $6.13
Commercial
Base Charge $430.66
Flow Charge Factor Low Strength ($/HCF x 1.10 DRA) $6.13 Flow Charge Factor High Strength ($/HCF x 1.10 DRA) $11.91 Treatment Rate
Residential
Base Charge $226.34
Flow Charge Factor ($/HCF x 1.10 DRA) $3.03
75

Commercial
Base Charge $226.34
Flow Charge Factor Low Strength ($/HCF x 1.10 DRA) $3.03 Flow Charge Factor High Strength ($/HCF x 1.10 DRA) $5.90 (d) The estimated annual wastewater discharge of a parcel is determined by multiplying a parcel’s estimated monthly winter water use by 12. Winter water use is estimated as the average of meter readings provided by Mid-Peninsula Water District for the period of December through March from two years before the year for which the charges are calculated. If December through March readings are not available for that year but are for the year prior to the year for which the charges are calculated, the later readings are used for the average. (f) The city manager is directed to update the Master Revenue Schedule to reflect the changes to the schedule of charges for sewer service.
* * *
ADOPTED June 14, 2022 by the City of Belmont City Council by the following vote:

Ayes:

Noes:

Absent:

Abstain:

ATTEST:

City Clerk

Mayor
APPROVED AS TO FORM:

City Attorney
76 Draft Report
City of Belmont
Comprehensive Sewer
Rate Study
April 2022
Attachment B
77 900 108th Ave NE, Suite 1300
Bellevue, WA 98004
April 6, 2020
Mr. Peter Brown
Director of Public Works
City of Belmont
One Twin Pines Lane
Belmont, California 94002
Subject: City of Belmont 2022 Comprehensive Sewer Rate Study Draft Report Dear Mr. Brown:

HDR Engineering, Inc. (HDR) is pleased to present the draft report on the comprehensive sewer rate study recently conducted for the City of Belmont (City). The overall objective in conducting the rate study was to establish cost-based rates that provide adequate and sustainable funding for the operational and capital needs of the sewer utility. This report outlines the approach, methodology, findings, and conclusions of the rate study process undertaken for the City’s sewer utility.

This report was developed utilizing the City’s specific accounting, operating, and historical customer billing records. HDR utilized this information to develop our analyses which shaped our findings, conclusions, and recommendations. At the same time, this study was developed utilizing generally accepted rate setting principles as outlined in the Water Environment Federation Manual of Practice No. 27 rate setting manuals to meet the requirements of Proposition 218. The conclusions and recommendations contained within this report are intended to provide the City with cost-based and equitable rates for its customers.

We appreciate the assistance provided by the City staff, management, and the City Council in the development of this study.

Sincerely yours,
HDR Engineering, Inc.

Shawn Koorn
Associate Vice President
78 Table of Contents i
City of Belmont – Comprehensive Sewer Rate Study
Executive Summary
Introduction .................................................................................................................. 1 Overview of the Rate Study Process .............................................................................. 2 Key Study Results .......................................................................................................... 3 Overview of the Sewer Rate Study ................................................................................. 4 Summary of the Revenue Requirement Analysis.................................................. 4 Summary of the Cost of Service Analysis ............................................................. 6 Summary of the Rate Design Analysis .................................................................. 7 Summary ..................................................................................................................... 10 1 Overview of the Rate Setting Process

1.1 Introduction ...................................................................................................... 11

1.2 Generally Accepted Rate Setting Principles .. …………………………………………………….11

1.3 Prudent Financial Planning .......................... …………………………………………………….11

1.4 Overview of the Rate Study Process ..……………………………………………………………….12

1.5 Determining the Revenue Requirement ............................................................ 12

1.6 Analyzing the Sewer Cost of Service .................................................................. 13

1.7 Designing Sewer Rates ....................................................................................... 14

1.8 Summary………………………………… .................. …………………………………………………….14 2 Development of the Sewer Revenue Requirement

2.1 Introduction ....................................................................................................... 15

2.2 Determining the Sewer Utility Revenue Requirement ........................................ 15

2.2.1 Determining the Time Period and Methodology ..................................... 15

2.2.2 Flow Impact on Calculating Revenues ..................................................... 16

2.2.3 Projection of Sewer Revenues ................................................................ 17

2.2.4 Projection of Sewer Operation and Maintenance Expenses .................... 18

2.2.5 Projection of Sewer Capital Improvement Projects and Funding ............. 20

2.2.6 Projection of Debt Service ...................................................................... 21

2.2.7 Reserve Funding ..................................................................................... 22

2.2.8 Summary of the Sewer Revenue Requirement ....................................... 22

2.2.9 Debt Service Coverage Ratios ................................................................. 24

2.2.10 Review of the Sewer Reserve Levels ....................................................... 25

2.2.11 Consultant’s Conclusions ........................................................................ 25

2.3 Summary............................................................................................................ 26 Table of Contents
79 Table of Contents ii
City of Belmont – Comprehensive Sewer Rate Study
3 Development of the Sewer Cost of Service Analysis

3.1 Introduction ..................................................................................................... 27

3.2 Objectives of a Cost of Service Study ................................................................ 27

3.3 Determining the Customer Classes of Service .................................................... 28

3.4 General Cost of Service Procedures ................................................................... 28

3.4.1 Functionalization of Costs ..................................................................... 28

3.4.2 Allocation of Costs ................................................................................ 28

3.4.3 Development of Distribution Factors .................................................... 29

3.4.4 Functionalization and Allocation of Sewer Plant in Service ................... 30

3.4.5 Functionalization and Allocation of Operating Expenses ....................... 30

3.4.6 Major Assumptions of the Cost of Service Study ................................... 31

3.5 Summary of the Cost of Service Analysis ........................................................... 32

3.6 Consultant’s Conclusions and Recommendations .............................................. 32

3.7 Summary ........................................................................................................... 33 4 Development of the Sewer Rate Design

4.1 Introduction ...................................................................................................... 34

4.2 Rate Design Goals and Objectives ...................................................................... 34

4.3 Development of Cost Based Sewer Rates ........................................................... 34

4.4 Present and Proposed Sewer Rates ................................................................... 35

4.5 Average Residential Local Bill Comparison ......................................................... 38

4.6 Summary of the Sewer Rate Study..................................................................... 38 Technical Appendix
Proposition 218 Notice
80 Executive Summary 1
City of Belmont – Comprehensive Sewer Rate Study
Introduction
HDR Engineering, Inc. (HDR) was retained by the City of Belmont (City) to perform a comprehensive sewer rate study as an update to the prior rate study which was performed in 2020. The 2020 study set rates for the two year period of Fiscal Years (FY) 2020/2021 and 2021/2022. The City’s sewer treatment services are provided for the City through its participation in Silicon Valley Clean Water (SVCW), which owns and operates a sub-regional wastewater treatment plant and related conveyance facilities that serve the City of Belmont, the cities of Redwood City and San Carlos and the West Bay Sanitary District. SVCW costs are allocated proportionally among the JPA members based on their capacity rights, average annual flow rates and strength of the sewer generated by each member agency. The collection system component is based on the costs to operate and maintain the City’s sewer system, except for treatment costs. The treatment costs are based on the current treatment costs projections as notified of cost changes by the SVCW.

The City’s sewer rate is comprised of two components, a collection system component and a treatment system component. The collection system component is based on the costs to operate the City’s sewer system, with the exception of treatment costs. The treatment costs are based on the current treatment costs projections and can be adjusted as the City is notified of cost changes by SVCW. Each parcels’ sewer charge is the sum of the base charge and flow charges for both collection and treatment.

The vast majority of the City’s rate revenues are derived from residential customers. Currently, the City has two major classes of service: residential and non-residential customers. Nonresidential customers are further categorized between low-strength and high-strength customers. The City’s sewer rate structure includes a fixed component, as well as a component based on the customers’ winter water average consumption. Annually, the City requests the water consumption data from the Mid-Peninsula Water District to develop the proposed sewer rates, and resulting revenue forecast, for the next fiscal year. In the 2016 rate study, it was recommended that the City make adjustments to the winter water calculation that takes into account the mandated conservation on the City’s sewer customers. This resulted in the City adopting a drought regulation adjustment on each customer’s winter period consumption, or a multiplier, to develop the consumption for rate setting purposes. The consumption data from Mid-Peninsula Water District is reviewed and a determination made as to the level of the drought regulation adjustment. In the 2020 study, adjustment factor was reduced to reflect current consumption patterns. For this study, the adjustment factor was increased from 9% to 10% to reflect the changes in consumption and the planned reduction in consumption due to conservation efforts and the anticipated drought.

This study is based on the previous sewer rate study methodologies and analyses completed by HDR in 2014, 2016, 2018, and 2020. The prior studies, provided recommendations, and rates, to fund an adequate level of renewal and replacement and include funding of capital projects from prior years. This funding/financial plan was updated during the recent issuance of the 2019 JPFA Executive Summary
81 Executive Summary 2
City of Belmont – Comprehensive Sewer Rate Study
Sewer Revenue Bond debt to fund a portion of the City’s major capital improvement projects.

This study reviews the adequacy of the existing sewer rates to meet system improvement needs, and provide the basis for appropriate rate structures for each customer classification. The projected rate adjustments allow the City to meet three key prudent financial criteria, these are:
x Meeting Debt Service Coverage Ratios (DSC) – DSC ratios are the measurement of a utility’s ability to repay outstanding debt. During this study this was a key driver in the results of the proposed rate adjustments to meet a 2.0 debt service coverage ratio target.

The 2.0 debt service coverage target was based on the analysis for the recent 2019 JPFA Sewer Revenue Bond. The proposed rate adjustments in this study allow the City to maintain a strong debt service coverage ratio.
x Adequate Renewal and Replacement Funding – The need to maintain the system is key to minimizing future capital needs. This study has continued with the City’s the annual renewal and replacement funding needs to prudent levels which exceed depreciation over the rate planning period. This reflects the funding needs of past deferred capital improvements and necessary inflow and infiltration (I&I) capital improvement needs. x Maintaining Prudent Reserve Fund Levels – The study has continued to provide ending reserve fund balances to be in line with typical industry levels (i.e. industry best practices).

Given that the City receives semi-annual payments for services, it is important to have sufficient cash reserves on hand to fund operations between payments.

Meeting these three key criteria are critical to the City being able to fund/finance future capital through the issuance of long-term debt. By adjusting rates the City is demonstrating to the outside financial community its willingness and commitment to maintain a strong financial position. This willingness to address this financial issue and adjust rates accordingly will be beneficial when issuing future long-term debt for the sewer systems capital needs.

The development of this study examines the adequacy and proportionality of the current sewer rates for the sewer utility and provides the cost-basis for any recommended sewer rate revenue adjustments. This report describes the overall methodology used to analyze the City’s sewer rates along with the findings, conclusions, and recommendations.

Overview of the Rate Study Process
A comprehensive sewer rate study uses three interrelated analyses to address the adequacy and proportionality of a utility’s rates. These three analyses are a revenue requirement analysis, a cost of service analysis, and a rate design analysis. These three analyses are illustrated below in Figure ES-1.
82 Executive Summary 3
City of Belmont – Comprehensive Sewer Rate Study
Figure ES – 1
Overview of the Comprehensive Rate Analyses
For the City’s sewer rate study, HDR completed each of the three analyses, a revenue requirement, cost of service analysis, and rate design analysis. The results from each task of the rate study were used as the basis for establishing cost-based and proportional rates for the City’s customers.

Key Study Results
The sewer utility was financially evaluated on a stand-alone basis. By reviewing the sewer utility individually, the costs (expenses) required to adequately fund both O&M and capital infrastructure must be balanced against the rate impacts to customers. Likewise, future rate impacts should be considered. For example, the delayed action to fund capital improvements in the current time period could result in future higher costs and in turn increased rate adjustments as well as risk associated with catastrophic failure. It is challenging to balance the desire for least cost rates with the operating and capital needs required to provide a high-level service to customers.

Based on the technical analysis undertaken as part of this study, the following findings, conclusions, and recommendations were noted.
x The revenue requirement analysis for the sewer utility was developed for FY 2021/2022 – 2026/2027.
x The starting point for the revenue requirement analysis was the City’s FY 2021/2022 sewer budget and the current capital improvement plan.
x Wastewater treatment is provided by the Silicon Valley Clean Water (SVCW) and included within the City’s operation and maintenance expenses. SVCW FY 2021/2022 budget was escalated annually at approximately 4% annual inflationary factor for future years based on SVCW cost planning projections.
x The current flow adjustment factor has been increased to 10% from the current 9% to reflect anticipated changes in winter water averages for the two year rate setting period.

Revenue Requirement Analysis
Cost of Service Analysis
Rate Design Analysis
Compares the revenues to the expenses of
the utility to determine the overall
revenue adjustment required
Proportionally distributes the revenue
requirement to the sewer utility customer
classes of service
Considers both the level and structure of
the rate design to collect the
target level of revenues
83 Executive Summary 4
City of Belmont – Comprehensive Sewer Rate Study
x Escalation factors were developed to project future years operating expenses. These factors ranged from 2% to 7% per year depending on the specific expense and reflect the inflationary increases experienced by the City in the past. x The level of repair and replacements were funded at an adequate level as projected in the prior studies, as well as a focus on inflow and infiltration (I&I) capital needs. x A cost of service analysis was developed to review the proportionality of the existing rates. The results of the cost of service analysis indicated minor some cost differences between the various customer classes of service. However, the differences are minimal and reflect a reasonable range of difference. Given this, it is recommended that no adjustments in the cost relationships between the classes of service be made at this time. x Proposed rates were developed for consideration by the City Council for FY 2022/2023 and FY 2023/2024.
x Rate projections were developed for a 5-year period through FY 2026/2027, to provide the City Council with a projection of rates necessary to meet future operating and capital needs.
x The proposed rate adjustments are necessary for the City to adequately fund its financial needs and maintain prudent financial measures and operating metrics 9 Maintain a healthy financial outlook for future long-term borrowing by targeting a 2.0 debt service coverage ratio
9 Adequate funding of capital improvements from rates to prudently maintain the City’s existing infrastructure (i.e., renewal and replacement programs) as well as I&I improvements.
9 Maintain adequate minimum reserve levels for routine operating and capital needs and emergency situations
Provided below is the executive summary of the technical analyses undertaken for the City and the findings, conclusions, and recommendations of this study.

Overview of the Sewer Rate Study
The sewer rate study determined the overall adequacy of the existing sewer rates, on a financial stand-alone basis, at current rate levels. That is, no funding sources other than those generated by the sewer utility were used to fund sewer utility expenses. For the sewer rate study, a concerted effort was made to minimize rate impacts over the five year review period while also maintaining the City’s financial metric’s targets for debt service coverage ratio, capital improvement funding, and operating and capital cash reserve levels.

Summary of the Revenue Requirement Analysis
The development of the revenue requirement analysis is used to determine the overall adequacy of the sewer utility rates. The starting point of the sewer revenue requirement analysis was the FY 2021/2022 budget. HDR and City staff developed a projection of revenues and expenses for future years based on assumed escalation (inflationary) factors. The sewer study developed future rate needs based on operating and capital needs, however, the focus for purposes of rate setting was the next two-year period (FY 2022/2023 – 2023/2024). A rate transition plan was developed for the five-year time period in a way that creates a smooth transition to fully funding 84 Executive Summary 5
City of Belmont – Comprehensive Sewer Rate Study
the utility in the future. The summary of the sewer revenue requirement is shown below in Table ES-1. It indicates the need for rate adjustments in order to properly fund the sewer utility.

Table ES – 1
Summary of Sewer Revenue Requirement ($000s)
Budget Projected
2021/22[1] 2022/23 2023/24 2024/25 2025/26 2026/27
Revenues
Retail Rate Revenues $13,840 $13,160 $13,291 $13,424 $13,559 $13,694 Other Revenues 138 244 225 206 247 228
Total Revenues $13,979 $13,404 $13,516 $13,631 $13,806 $13,922 Expenses
Collection O&M Expenses $4,155 $4,351 $4,488 $4,630 $4,778 $4,931 Treatment O&M Expenses 3,387 3,530 3,670 3,990 4,700 4,690 Repair & Replace. Funding 1,900 2,250 2,600 2,950 3,300 3,650 I/I Capital Funding 627 644 661 679 697 716
Total Debt Service 2,502 2,500 2,500 3,479 3,474 3,477
Change in Working Capital +/- 1,407 853 1,099 242 95 661 Total Expenses $13,979 $14,128 $15,018 $15,970 $17,044 $18,125 Balance/(Deficiency) of Funds $0 ($724) ($1,502) ($2,339) ($3,238) ($4,204) Cumulative as a % of Rates 0.0% 5.5% 11.3% 17.4% 23.9% 30.7% Proposed Rate Adjustments 0.0% 5.5% 5.5% 5.5% 5.5% 5.5% Debt Service Coverage Ratio
Before Rate Adjustment 2.52 2.15 2.09 1.40 1.21 1.20
After Rate Adjustment 2.52 2.44 2.69 2.07 2.14 2.41
[1] Note: FY 2021/22 includes the revenues at the adopted rate levels from the prior rate study. Therefore, no rate adjustment is included in FY 2021/22.

Table ES–1 shows the total deficiency of revenues before any sewer rate adjustments ranges from $724,000 in FY 2022/23 increasing to $4.2 million by FY 2026/27. A 5.5% annual sewer revenue adjustment is proposed for the projected time period of FY 2022/2023 through FY 2026/2027. The projected rate adjustments allow the City to meet three key prudent financial metric criteria, these are:
x Meet Prudent Debt Service Coverage Ratios – DSC target of 2.0. x Adequate Renewal and Replacement Funding – Annual renewal and replacement funding needs exceed depreciation over the 5-year plan as well as I&I capital funding needs.
x Maintain Prudent Reserve Fund Levels – Operating reserve target equal to annual minimum of 180 days of O&M; Capital project reserve target equal to two years of annual depreciation.
85 Executive Summary 6
City of Belmont – Comprehensive Sewer Rate Study
The revenue requirement developed in this sewer rate study will allow the City to develop costbased rates that meet the City’s goals and objectives for maintaining the existing system and funding future capital needs. The rate transition plan developed provides a gradual increase in rates over the 5-year period. While the revenue requirement analysis projected operating and capital needs over a five year period, the focus of the proposed rates, for Proposition 218 purposes is the next two fiscal year period of FY 2022/2023 and FY 2023/2024.

Summary of Cost of Service Analysis
A cost of service analysis determines the proportional distribution of the previously developed revenue requirement to each of the customer classes of service. The objectives of the cost of service analysis are different from determining revenue requirement. A revenue requirement analysis determines the utility's overall financial needs, while the cost of service study determines the proportional manner to collect the revenue requirement. The City has two rate schedules, low strength and high strength. Low strength includes all residential customers, and the nonresidential customers that have domestic strength wastewater. High strength is for those nonresidential customers that have wastewater strengths greater than domestic strength levels.

Table ES-2 provides the summary of the cost of service analysis for the FY 2020/2021 test year.

Table ES – 2
Summary of the FY 2022/23 Sewer Cost of Service Analysis ($000’s) Classes of Service
Present Rate
Revenues
Distributed
Costs
$
Difference
%
Difference
Low Strength
Residential and Non-Residential $12,858 $13,565 ($707) 5.5% High Strength
Non-Residential 302 318 ($17) 5.5%
Total $13,160 $13,883 ($724) 5.5%
The results of the cost of service analysis indicated no cost differences between the customer classes of service. It should be noted that the cost of service analysis developed by HDR is not a simple fixed/variable analysis. Rather, the cost of service analysis distributes costs between the various customer classes of service based on each customer classes proportional share of volume, strength, and customer-related costs. Given that, no adjustments in the cost relationships between the customer classes of service are recommended at this time. 86 Executive Summary 7
City of Belmont – Comprehensive Sewer Rate Study
Summary of the Rate Design Analysis
The final step of the comprehensive sewer rate study process is the design of sewer rates to collect the desired level of revenue, based on the results of the revenue requirement and cost of service analysis. The individual allocated totals were then distributed to the different customer classes. The distributed expenses were then aggregated to determine the overall responsibility of each customer class of service.

Developing proportional rates is of paramount importance in developing the proposed sewer rates. Given this, the City’s proposed sewer rates have been developed with the intent of meeting the legal requirements of California constitution article XIII D, section 6 (Article XIII D), commonly referred to as Proposition 218. A key component of Article XIII D is the development of rates which reflect the cost of providing service and are proportionally allocated among the customer classes of service. HDR would point out that there is no single methodology for equitably assigning costs to the various customer groups. The Water Environment Federation (WEF) Manual of Practice No. 27 clearly delineates various methodologies which may be used to establish cost-based rates. Article XIII D does not prescribe a particular methodology for establishing rates; consequently, HDR developed the City’s proposed sewer rates based on the WEF MOP #27 methodology and the City’s sewer collection system operating and customer characteristics, to meet the requirements of Article XIII D to provide an administrative record of the steps taken to establish the City’s proposed sewer rates.

HDR is of the opinion that the proposed rates comply with legal requirements of Article XIII D.

HDR reaches this conclusion based upon the following:
ƒ The revenue derived from sewer rates does not exceed the funds required to provide the property related service (i.e., sewer service). The proposed rates are designed to collect the overall revenue requirements of the City’s sewer utility. ƒ The revenues derived from sewer rates shall not be used for any purpose other than that for which the fee or charge is imposed. The revenues derived from the City’s sewer rates are used exclusively to operate and maintain the City’s sewer system. ƒ The amount of a fee or charge imposed upon a parcel or person as an incident of property ownership shall not exceed the proportional costs of the service attributable to the parcel.

The cost of service analysis was specifically developed to focus on the issue of proportional assignment of costs.

The City’s sewer rate is comprised of two components, a collection system component and a treatment system component. The collection system component is based on the costs to operate the City’s sewer system, except for treatment costs. The treatment costs are based on the current treatment costs projections and can be adjusted as the City is notified of cost changes by the wholesale provider. Each parcels’ sewer charge is the sum of the base charge and flow charges for both collection and treatment. The proposed sewer rate designs maintain their current rate structure.
87 Executive Summary 8
City of Belmont – Comprehensive Sewer Rate Study
For the five year rate period, the rates include a 10% flow adjustment factor that replaces the current 9% flow adjustment factor which was updated during the 2020 rate study. Mid-Peninsula Water District consumption billing data for the three year periods of FY 2019/2020 2020/2021, and 2021/2022 billing information was reviewed. Based on this data, along with the projected upcoming drought, the recommendation is to increase the flow adjustment factor from 9% to 10% for the two year rate setting period. The flow adjustment factor will allow the City to maintain sufficient revenues during the proposed rate period of FY 2022/2023 and FY 2023/2024.

The flow adjustment factor will be reviewed again during the next rate study and a determination made as to adjust the flow adjustment factor or to eliminate, and restart, the flow adjustment factor.

The same formula for this adjustment will remain as follows: (HCF = 100 cubic feet) Formula: Actual Volume Usage x (1 + (flow adjustment factor)) = adjusted volume usage Example: 8 HCF x (1+ .10) = 8.8 HCF adjusted volume usage Table ES-3 provides the present and proposed rates for the residential and non-residential customers for the next five fiscal years.
88 Executive Summary 9
City of Belmont – Comprehensive Sewer Rate Study
Table ES – 3
Present and Proposed Sewer Rates (Annual)
Present
Rates
Proposed
Rates
FY 2022/23
Proposed
Rates
FY 2023/24
Forecasted
Rates
FY 2024/25
Forecasted
Rates
FY 2025/26
Forecasted
Rates
FY 2026/27

COLLECTION
Residential
Base Charge $386.93 $408.21 $430.66 $454.35 $479.34 $505.70 Flow Charge ($/HCF)[1] $5.51 $5.81 $6.13 $6.47 $6.83 $7.20 Non-Residential
Base Charge $386.93 $408.21 $430.66 $454.35 $479.34 $505.70 Flow Charge Low
Strength ($/HCF)[1]
$5.51 $5.81 $6.13 $6.47 $6.83 $7.20
Flow Charge High
Strength ($/HCF)[1]
$10.70 $11.29 $11.91 $12.56 $13.26 $13.98

TREATMENT
Residential
Base Charge $203.36 $214.54 $226.34 $238.79 $251.93 $265.78 Flow Charge ($/HCF)[1] $2.72 $2.87 $3.03 $3.19 $3.37 $3.55 Non-Residential
Base Charge $203.36 $214.54 $226.34 $238.79 $251.93 $265.78 Flow Charge Low
Strength ($/HCF)[1]
$2.72 $2.87 $3.03 $3.19 $3.37 $3.55
Flow Charge High
Strength ($/HCF)[1]
$5.30 $5.59 $5.90 $6.22 $6.57 $6.93

COMBINED
Residential
Base Charge $590.29 $622.76 $657.01 $693.14 $731.27 $771.49 Flow Charge ($/HCF) $8.23 $8.68 $9.16 $9.66 $10.20 $10.76 Non-Residential
Base Charge $590.29 $622.76 $657.01 $693.14 $731.27 $771.49 Flow Charge Low
Strength ($/HCF)]
$8.23 $8.68 $9.16 $9.66 $10.20 $10.76
Flow Charge High
Strength ($/HCF)
$16.00 $16.88 $17.81 $18.79 $19.82 $20.91
At present rates, a typical residential customer with 8 hundred cubic feet of winter water average would have a monthly bill of $120.96 (8 HCF X 1.09 = 8.72 HCF). Under the proposed rates, with the proposed flow adjustment factor increased to 10%, the same customer would have a monthly bill of $128.31 in FY 2022/23. The proposed rate adjustment for FY 2021 was 5.5%, however with the flow factor adjustment from 1.09 to 1.10, it results in an overall change to the bill of 6.1%.

Table ES-4 shows the average residential bill for FY 2021 through FY 2025. 89 Executive Summary 10
City of Belmont – Comprehensive Sewer Rate Study
Table ES – 4
Present and Proposed Sewer Rates (Monthly)
Proposed
FY 2022/23
Proposed
FY 2023/24
Forecasted
FY 2024/25
Forecasted
FY 2025/26
Forecasted
FY 2026/27
Proposed Revenue Adjustment 5.5% 5.5% 5.5% 5.5% 5.5%
Present Average Monthly Bill [1] $120.96
After Proposed Rate Adj. [2] $128.31 $135.36 $142.80 $150.66 $158.95 Monthly Bill Difference $7.35 $7.05 $7.44 $7.86 $8.28
Cumulative Bill Difference $7.35 $14.40 $21.85 $29.71 $37.99 % Change to Monthly Bill 6.1% 5.5% 5.5% 5.5% 5.5%
[1] – Current average bill assumes 9% flow adjustment factor and 8 HCF monthly consumption [2] –Proposed average bill assumes a 10% flow adjustment factor and 8 HCF monthly consumption This report provides a more detailed discussion of the sewer rate study revenue requirement, cost of service, and rate design analyses undertaken for the City.

Summary
The adequacy of the City’s sewer rates were reviewed by HDR through the development of a comprehensive sewer rate study. Based upon the analyses developed herein, which included the budgeted operating and capital expenses, HDR has proposed a comprehensive set of revenue recommendations for the sewer utility. The following sections of the report provide a more detailed discussion of the technical analyses undertaken, along with the findings, conclusions, and recommendations of the study.
90 Introduction and Overview of the Rate Setting Process 11 City of Belmont – Comprehensive Sewer Rate Study

1.1 Introduction
HDR Engineering, Inc. (HDR) was retained by the City of Belmont (City) to conduct a comprehensive sewer rate study. The objective in conducting a comprehensive sewer rate study is to develop cost-based and proportional rates which adequately fund the City’s operation and maintenance (O&M) needs, along with the necessary capital improvements (i.e., capital infrastructure) for the utility. This study determines the adequacy of the existing sewer rates and provides the analytical framework for any needed future adjustments.

1.2 Generally Accepted Rate Setting Principles
As a practical matter, utilities should consider setting their rates around generally accepted or global principles and guidelines. Utility rates should be:
9 Cost-based, equitable, and set at a level that meets the utility’s full revenue requirement 9 Easy for the customer to understand and easy for the utility to administer 9 Designed to conform with generally accepted rate setting techniques 9 Stable in their ability to provide adequate revenues to meet the utility’s financial, operating, capital infrastructure and regulatory requirements 9 Established at a level that is, from the customer’s perspective, stable from year-to-year These general principles and guidelines have historically been used by the City to establish their current sewer rates. For this study, they were again applied, in the development of the rate analyses developed for the City.

1.3 Prudent Financial Planning
Financial rate-setting policies and guidelines are integral to the process of developing a utility rate study. Financial policies are intended to provide guidance in the financial planning and ratesetting process, and in the day-to-day financial management of the City’s utilities. Adoption of financial policies provides a strong foundation for the long-term financial sustainability of the utility and provides the outside financial community with a better understanding of the City’s commitment to managing the utility in a
financially prudent manner. As a part of the City’s previous utility rate studies, key financial and rate-setting
policies/targets were developed and established. These
key financial policies address issues such as maintaining minimum reserves for cash flow and capital improvement
purposes, minimum debt service coverage (DSC) ratios, and consistent and adequate rate funding of capital projects for the City. Each of the key financial planning and rate setting objectives were carried forward from the City’s prior sewer rate studies.

1.0 Overview of the Rate Setting Process
“Financial policies are
intended to provide guidance
in the financial planning and
rate-setting
process…Adoption of
financial policies provides a
strong foundation for the
long-term financial
sustainability of the utility...”
91 Introduction and Overview of the Rate Setting Process 12 City of Belmont – Comprehensive Sewer Rate Study

1.4 Overview of the Rate Study Process
A comprehensive study generally consists of three interrelated analyses performed for the sewer utility. Figure 1 - 1 provides an overview of these analyses.

Figure 1 – 1
Overview of the Comprehensive Rate Analyses
In a comprehensive rate study, the revenue requirement analysis is concerned with the overall funding sources (revenues) and expenses (both operating and capital) of the utility. From this analysis, a determination can be made as to the overall level of adjustment to rate revenues.

Next, a cost of service analysis is performed to proportionally distribute the revenue requirement to the various types of customers served (e.g., residential, commercial). Finally, given the overall level of revenues to be collected, along with the proportional distribution of those costs, the last step of the rate study process in the design of rates to collect the appropriate level of revenues while considering the other rate design goals and objectives of the utility (e.g. revenue stability, conservation, ease of administration, customer understanding). However, a key component of the study is supporting the requirements of Proposition 218 for the proposed rates while considering rate design goals and objectives.

In the case of the City’s study, all three analyses (revenue requirement, cost of service, rate design) were conducted for the sewer utility. The results from each task of the rate study, were used as the basis for establishing cost-based and proportional rates for the City’s customers.

In developing this study, HDR utilized generally accepted cost of service and rate setting techniques and industry best practices in the development of the City’s sewer rate study.

1.5 Determining the Revenue Requirement
Most public utilities use the “cash basis” methodology for establishing their revenue requirement and setting rates. This revenue requirement methodology conforms to most public utility budgetary requirements and the calculation is easy to understand. Under the cash basis revenue requirement methodology, a public utility:

Revenue Requirement Analysis
Cost of Service Analysis
Rate Design Analysis
Compares the revenues to the expenses of
the utility to determine the overall
revenue adjustment required
Proportionally distributes the revenue
requirement to the sewer utility customer
classes of service
Considers both the level and structure of
the rate design to collect the
target level of revenues
92 Introduction and Overview of the Rate Setting Process 13 City of Belmont – Comprehensive Sewer Rate Study
9 Adds operation and maintenance (O&M) expenses to applicable taxes or transfer payments to determine total operating expenses. Operation and maintenance expenses include the materials, electricity, labor, supplies, etc., needed to keep the utility functioning.
9 Calculates capital costs by adding debt service payments (principal and interest) to capital improvements financed with rate revenues. In lieu of including capital improvements financed with rate revenues, a utility sometimes includes (i.e., substitutes) annual depreciation expense to stabilize the annual revenue requirement from year-to-year.

Note that the two portions of the capital expense component (debt service and capital improvements financed from rates) are necessary under the cash basis methodology because utilities generally cannot finance all their capital facilities with strictly rates or long-term debt.

Under the cash basis revenue requirement methodology the sum of the operating expenses and capital costs equals the utility’s total revenue requirement during any period of time (see Table 1-1).

Table 1 – 1
Overview of the Sewer Utility Cash Basis Revenue Requirements + Sewer Operation and Maintenance Expenses
3 Planning and Project Management
3 Sanitary Sewer Operations
+ Repair and Replacement Funded from Rates
+ Debt Service (P + I) – Existing and Future
± Change in Working Capital .
= Total Sewer Revenue Requirement
о Miscellaneous Revenues .
= Net Revenue Requirement (Balance Required from Rates) The analyses developed within this report utilized the cash basis methodology. This is consistent with past practices of the City’s utility rate-setting.

1.6 Analyzing the Sewer Cost of Service
After the total revenue requirement is determined, it is then distributed to the users (i.e., customers) receiving sewer service. The proportional distribution, as analyzed through a cost of service analysis, reflects the cost relationships for collecting and treating wastewater. The approach for establishing the cost of service analysis is based on the Water Environment Federation Manual of Practice No. 17 (WEF MOP 27). As discussed in the manual, a cost of service analysis requires three analytical steps. A cost of service analysis requires three analytical steps:

1. Costs are functionalized or grouped into the various cost categories related to providing service (e.g., for pumping; treatment, collection, etc.). This step is largely accomplished by the utility’s accounting system.

2. The functionalized costs are then allocated to specific cost components. Allocation refers 93 Introduction and Overview of the Rate Setting Process 14 City of Belmont – Comprehensive Sewer Rate Study
to the arrangement of the functionalized data into cost components. For example, sewer utility’s costs are typically allocated as volume, strength (BOD/TSS), or customer-related.

3. Once the costs are allocated to the cost components, they are proportionally distributed to the customer classes of service (e.g., residential, non-residential, high-strength). The distribution is based on each customer class’ relative contribution to the cost component (i.e., benefits received from and burdens placed on the system and its resources). For example, customer-related costs are distributed to each class of service based on the total number of customers in that class of service. Once costs are distributed, the revenues from each customer class of service required to achieve cost-based rates can be determined.

At the conclusion of the cost of service study, two key pieces of information are provided. First, the cost of service provides an understanding of the total revenues to be collected from each class of service. In other words the revenue requirement is, for example, $10.0 million and the cost of service provides an proportional method to distribute that total cost of $10.0 between the various sewer customer classes of service (e.g., residential, non-residential). The other important piece of information provided by the cost of service analysis is the average unit costs.

Average unit costs are the distributed costs divided by the appropriate consumption (billing) units. This provides an understanding of the cost on a $/customer/month and $/hundred cubic feet (HCF) basis.

1.7 Designing Sewer Rates
The design of the proposed sewer rates for adoption by the City concludes the analytical portion of the rate study process. In designing proposed sewer rates, the results from both the revenue requirement and cost of service analysis is used to develop rates that achieve the overall goals and objectives of the City. These goals and objectives may include consideration of cost-based rates, but may also consider items such as ability to pay, continuity of past rate philosophy, conservation (efficient use), encouragement of economic development, ease of customer understanding and billing administration, legal requirements, etc. It is important to understand that cost of service is only one goal or objective in designing final sewer rates, however, it is an important one, and necessary to meet the proportionality requirements of Proposition 218.

1.8 Summary
This section of the report has provided a brief introduction to the general principles, techniques, and economic theory used to set sewer utility rates. These principles and methodologies have been the basis for the City’s past utility rate studies and continue to be the basis for the City’s current rate study. The next three sections of the report discuss the sewer utility rate study and the technical analyses undertaken.
94 Development of the Sewer Revenue Requirement Analysis 15 City of Belmont – Comprehensive Sewer Rate Study

2.1 Introduction
This section of the City’s rate study report discusses the development of the sewer revenue requirement analyses and proposed sewer rate transition plan. The main objectives of the sewer rate study is to develop cost-based sewer rates while attempting to minimize the impacts to the utility’s customers. Provided below is a detailed discussion of the revenue requirement, along with our findings, conclusions and recommendations.

2.2 Determining the Sewer Utility Revenue Requirement
The starting point of the sewer revenue requirement analysis was the FY 2021/2022 budget. HDR developed a projection of revenues and expenses for future years based on assumed escalation (inflationary) factors. The sewer study developed future rate needs based on operating and capital needs over a five-year period, through FY 2026/2027. However, the focus for purposes of rate setting was the next two-year period (FY 2022/2023 and FY 2023/2024). A rate transition plan was developed to provide a smooth transition to fully funding the sewer utility over the long-term.

The sewer capital funding plan was developed from the City’s CIP plan as the starting point. That plan assumed the issuance of long-term debt to fund a portion of the City’s major capital improvement projects. This study updated the capital improvement funding analysis based on the City’s current capital plan and funding approach. As part of this, the City is anticipating the need to issue additional long-term debt to fund necessary capital improvements. A key consideration in issuing long-term debt is the establishment of rates sufficient to support repayment of the debt, but also sufficient to meet rate covenants associated with the debt (e.g., reserves, minimum debt service coverage). This study includes a transition to continue to strengthen the level of renewal and replacement and capital project funding over the 5-year planning period.

2.2.1 Determining the Time Period and Methodology
The first step in calculating the revenue requirement for the sewer utility was to establish a time frame for the revenue requirement analysis. For this study, the revenue requirement was developed from FY 2021/2022 to 2026/2027, with the focus for rate setting purposes of FY 2022/2023 and FY 2023/2024. Reviewing a multi-year time period is recommended in an attempt to identify any major expenses that may be on the horizon. By anticipating future financial requirements, the City can begin planning for these changes sooner, thereby minimizing shortterm rate impacts and overall long-term rates.

The second step in determining the revenue requirement for the City was to decide on the basis of accumulating costs. For the City’s revenue requirement, a “cash basis” approach was utilized.

The cash basis approach is the most commonly used methodology by municipal utilities to set their revenue requirement, and the method used in previous rate studies developed for the City by HDR. The actual revenue requirement developed for the City was customized to follow the

2.0 Development of the Sewer Revenue
Requirement
95 Development of the Sewer Revenue Requirement Analysis 16 City of Belmont – Comprehensive Sewer Rate Study
City’s system of accounts (budget documents). However, even with these modifications, the City’s sewer revenue requirement still contains the basic cost components of a cash basis methodology. Table 2-1 provides a summary of the cash basis approach used to develop the City’s sewer revenue requirement.

Table 2 – 1
Overview of the Cash Basis Revenue Requirements
+ Collection O&M Expenses
+ Treatment O&M Expenses
+ Repair & Replacement Funded from Rates
+ I/I Capital Funding
+ Debt Service (P + I) – Existing and Future
± Change in Working Capital .
= Total Sewer Revenue Requirement
о Miscellaneous Revenues .
= Net Revenue Requirement (Balance Required from Rates) Given a time period around which to develop the revenue requirement and a method to accumulate the costs; the focus shifts to the development and projection of the revenues and expenses of the sewer utility.

The primary financial inputs in the development of the revenue requirement were the City’s 2021/2022 adopted operating budget, historical winter data customer characteristics (e.g., customer number and average winter consumption), and current adopted rates. Presented below is a detailed discussion of the steps and key assumptions contained in the development of the projections of the City’s sewer revenues and expenses.

2.2.2 Flow Impacts on Calculating Revenues
The City has a sewer rate structure that includes a fixed component as well as a volumetric component based on the customers’ winter water average consumption. Each year, the City requests the water consumption data from the Mid-Peninsula Water District to develop the proposed sewer rates, and resulting revenue forecast, for the next fiscal year. The City adopted a drought regulation factor during the 2016 rate study, which is now called the flow adjustment factor. This adjustment factor has been in place since that time. However, during the comprehensive rate study process the factor is updated to reflect current, and projected, consumption levels.

The flow adjustment factor was reviewed and adjusted based on billing flow data (average winter months) for the last three years. Mid-Peninsula Water District consumption for the winter period of FY 2019/2020 2020/2021, and 2021/2022 billing information (data is one year lag in billing data) was reviewed. Given the recent consumption patterns, current drought conditions and expected continuation of the drought conditions, and Mid-Pen outlining additional conservation 96 Development of the Sewer Revenue Requirement Analysis 17 City of Belmont – Comprehensive Sewer Rate Study
plans, the flow adjustment factor was increased to 10%. Table2-2 shows a summary of the average of the three years of winter flow average and the projected flow for FY 2022/2023.

Table 2 – 2
Summary of the Winter Water Flow Adjustment
Component 2019/20 2020/21 2021/22 Average
Estimated
2022/23
Billed Winter Flow HCF[1] 794,305 722,463 807,524 774,764 722,463 % Adjustment Factor 14% 9% 9% 10%
Total HCF 905,508 787,485 880,202 857,731 794,710
[1] HCF = hundred cubic feet
By making this flow factor adjustment to the sewer billing units, the City will be projected to maintain target revenues during this next two year period as customer winter water is impacted by drought conditions, possible changes in the COVID pandemic, and future conservation efforts by Mid-Pen. Absent an adjustment to consumption levels, the City will need to adjust rates higher to reflect the reduced consumption levels. The flow adjustment factor will allow the City to maintain sufficient revenues during the next two year period given continued changing winter water consumption levels. The flow adjustment factor will be reviewed again during the next rate study and adjusted at that time, or depending on conditions, reset and rates set at adequate levels assuming no flow adjustment factor. The same formula for this adjustment will remain as follows (HCF = 100 cubic feet):

Formula: Actual Volume Usage x (1 + (flow adjustment factor)) = adjusted volume usage Example: 8 HCF x (1+ .10) = 8.80 HCF adjusted volume usage It should also be noted that the majority of the City’s costs are fixed and do not vary depending on the level of sewer flows. The one cost that would vary is the cost of treatment from the Silicon Valley Clean Water (SVCW). The cost of treatment is flow based and would change as a result of decreased sewer flows. Given all of the above, a decline in annual winter water consumption, which is the basis for establishing sewer billing units and subsequent sewer rate revenues, will have an impact on the necessary rate adjustment to prudently fund the City’s operating and capital expenses.

2.2.3 Projection of Sewer Revenues
Once the billing units were developed based on the winter water data, the next step in developing the revenue requirement was to develop a projection of rate revenues, at present rate levels. In general, this process involved developing projected billing units for each customer group. The billing units for each customer group were then multiplied by the applicable current sewer rates. This method of independently calculating revenues assures the projected revenues used within the analysis tie to the projected billing units. 97 Development of the Sewer Revenue Requirement Analysis 18 City of Belmont – Comprehensive Sewer Rate Study
The vast majority of the City’s rate
revenues are derived from residential
customers. Currently, the City has two
major classes of service: residential and
non-residential customers. Non-residential
customers are further categorized between
low-strength and high-strength customers.

In total, and at currently adopted rate
levels, the City is projected to receive
approximately $13.2 million in rate
revenue in FY 2022/2023. This is based on
the projected winter water billing data, plus the flow adjustment factor of 10%. Future years are projected at an additional 1.0% annual customer growth.

In addition to rate revenues, the City also receives a variety of miscellaneous revenues which includes interest on investments, charge back revenues, standby fees, and other miscellaneous revenues. The utility is projected to annually receive approximately $230,000 in miscellaneous revenues over the projected planning horizon.

On a combined basis, taking into account the rate revenues along with miscellaneous revenues, the City’s total projected revenues are expected to be approximately $13.4 million in FY 2022/2023 increasing to approximately $13.9 million in FY 2026/2027.

2.2.4 Projection of Sewer Operation and Maintenance Expenses Operation and maintenance (O&M) expenses are incurred by the City to operate and maintain the existing plant in service. In general, O&M expenses are grouped into a number of different major functional categories (see Table 2-1). For each major functional category, the City maintains a number of subaccounts. To begin the process of projecting O&M expenses over the planning horizon, escalation factors were developed.

Escalation factors were developed for the basic types of expenses the City incurs: labor, benefits, materials and supplies, utilities, insurance, and miscellaneous expenses. The escalation factors used were in the range of two to seven percent per year, depending on the type of cost and recent inflationary trends. A major cost for the sewer utility is the cost of wastewater treatment from Silicon Valley Clean Water (SVCW). SVCW’s costs have been increasing due to their recent major capital projects, but also because of their operating cost associated with regulatory and utility cost increases. SVCW costs are allocated proportionally among the JPA members based on their capacity rights, average annual flow rates and strength of the sewer generated by each member agency. The SVCW budget for FY 2022/2023, for Belmont, of $3.5 million in treatment costs was included in the study. The SVCW treatment costs was based on SVCW planning document and is increasing at approximately 4.7% annually over the five year period.

Provided below in Table 2-3 is a summary of the escalation factors used to develop the projected O&M expenses for FY 2022/2023 through 2026/2027.
98 Development of the Sewer Revenue Requirement Analysis 19 City of Belmont – Comprehensive Sewer Rate Study
Table 2 – 3
Overview of the Sewer Utility Escalation Factors
FY
2022/23[1]
FY
2023/24
FY
2024/25
FY
2025/26
FY
2026/27
Revenues
Rate Revenues (Growth) 0.0% 1.0% 1.0% 1.0% 1.0%
Other Revenues N/A N/A N/A N/A N/A
Expense
Labor 2.0% 2.0% 2.0% 2.0% 2.0%
Professional/Contractual 2.0% 2.0% 2.0% 2.0% 2.0%
Data Processing 3.0% 3.0% 3.0% 3.0% 3.0%
Benefits – Medical 7.0% 7.0% 7.0% 7.0% 7.0%
Benefits – Other 5.3% 5.3% 5.3% 5.3% 5.3%
Materials & Supplies 3.0% 3.0% 3.0% 3.0% 3.0%
Equipment/Vehicles 3.0% 3.0% 3.0% 3.0% 3.0%
Education/Training 2.0% 2.0% 2.0% 2.0% 2.0%
Indirect Expense 3.0% 3.0% 3.0% 3.0% 3.0%
Miscellaneous 3.0% 3.0% 3.0% 3.0% 3.0%
Utilities 5.0% 5.0% 5.0% 5.0% 5.0%
SVCW Treatment 4.2% 4.0% 8.7% 17.8% -0.2%
Inflation Factor 2.7% 2.7% 2.7% 2.7% 2.7%
[1] Rate revenue for FY 2022/2023 was based on the projected billing units and current adopted sewer rates. Other revenues were calculated.

The development of the revenue requirement was based on the City’s FY 2021/2021 adopted budget. Using the escalation factors developed in Table 2 - 3, a forecast of future O&M expenses was developed. As noted, the SVCW treatment costs were based on the projection provided by SVCW. The revenue requirement maintained the overall functional nature of the City’s system of accounts (i.e., salaries and wages, benefits, supplies). It should be noted that no other significant changes or extraordinary increases over the FY 2021/2022 budget levels for operating expenses were assumed.

Total operation and maintenance
expenses for the City are projected to be
approximately $7.9 million in FY
2022/2023. Of this amount,
approximately 45% or $3.5 million is
related to SVCW wastewater treatment
costs. The SVCW wastewater treatment
costs are purchased services and are
thus not a “locally controlled” sewer
99 Development of the Sewer Revenue Requirement Analysis 20 City of Belmont – Comprehensive Sewer Rate Study
cost. Over the planning horizon, the O&M expenses are projected to increase to approximately $9.6 million by FY 2026/2027.

2.2.5 Projection of Sewer Capital Improvement Projects and Funding A key component in the development of the City’s sewer revenue requirement was properly funding capital improvement needs. The sewer capital funding plan was developed from the City’s current capital improvement plan and ongoing master plan. The current plan assumes the issuance of long-term debt to fund a portion of the City’s major capital improvement projects.

To fund the identified necessary capital improvements, long-term debt is issued in FY 2024/2025 and FY 2027/2028 in the amount of $15 million for both issuances. A key consideration in issuing debt is the establishment of rates sufficient to support repayment of the debt, but also sufficient to meet rate covenants associated with the debt (e.g., minimum reserves, minimum debt service coverage ratios).

As noted, the prior rate studies, and this rate study, focused on setting proposed rates at a level that establishes a prudent funding level for renewal and replacement needs above annual depreciation expense. This study includes a transition to continue to strengthen the level of renewal and replacement and capital project funding over the 5-year planning. Renewal and replacement funding is approximately $2.25 million in FY 2022/2023 increasing to $3.65 million in FY 2026/2027.

In addition to the sewer capital plan, additional capital improvements have been outlined to reduce inflow and infiltration (I&I) in the sewer system. I&I rate funded capital is $644,000 in FY 2022/2023 increasing to $716,000 in FY 2026/2027. Shown below in Table 2–4 is a summary of the sewer capital improvement plan and funding.

Table 2 - 4
Summary of the Sewer Capital Improvement Plan ($000s)
FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27
Total Sewer Capital Projects $8,055 $8,260 $7,935 $8,335 $8,535 Less: Funding Sources
Operating Fund Reserves $0 $0 $0 $0 $0
Capital Fund Reserves[1] 5,805 5,660 4,985 5,035 4,885
Grants 0 0 0 0 0
Total Funding Sources $5,805 $5,660 $4,985 $5,035 $4,885 Sewer Capital from Rates $2,250 $2,600 $2,950 $3,300 $3,650 I&I Capital Funding $644 $661 $679 $697 $716
[1] Capital fund reserves are funded through periodic issuances of long-term debt The City, based on the rate transition plan developed as part of this revenue requirement, is projected to have adequate resources to provide funding for these capital projects. Provided 100
Development of the Sewer Revenue Requirement Analysis 21 City of Belmont – Comprehensive Sewer Rate Study
below is an overview of the funding sources the City has used, and will continue to use, to fund the planned improvements over the next five-year period.

Rate Funding - A general financial guideline states that, at a minimum, a utility should annually fund from rates an amount equal to or greater than annual depreciation expense for renewal and replacement funding. In this case, annual depreciation expense reflects the City’s current investment in sewer collection plant being depreciated or “losing” its useful life. Therefore, this portion of plant investment needs to be replaced to maintain the existing level of infrastructure.

More importantly, for a sewer utility, a failure to maintain the collection system infrastructure could lead to infiltration and inflow (I&I) issues. With increased flows, the City’s overall cost of wastewater treatment would, in turn, also increase. That being the case, it becomes very costeffective to properly and adequately maintain the collection system in order to minimize I&I issues on the system. The City has taken a pro-active approach in past studies and in this analysis to maintain capital funding equal to greater than annual depreciation.

Capital Reserve Funding – The capital reserve can serve different purposes but capital reserves are primarily a means to set aside funds for larger capital projects that may require funding greater than the annual rate funding component provides. Maintaining adequate capital reserves help to smooth out the fluctuations in the capital improvement spending, but it also provides the City with greater financial flexibility during the planning and construction of the projects. As part of the current capital funding plan, there will be approximately $41.1 million in capital projects over the five year period, with an annual average ending cash balance of $7.8 million in capital reserves used as a funding source over the five-year rate setting period (2021 – 2025). Over the planning horizon, close attention should be given to the capital reserve balance as to not reduce fund balances below minimum targets. The target minimum capital reserve amount is typically set equal to two-year of capital projects.

Long-Term Debt – Another funding source for capital projects is from the issuance of long-term debt (e.g., low-interest loans, revenue bonds). While there are certain advantages and disadvantages with the issuance of long-term debt, it is important to weigh all of them when deciding whether to issue new debt or fund a project by other means. Long-term debt is often issued for major capital projects which have an immediate impact on rates and long-term debt is a financing mechanism to smoothly finance / fund the major capital project. For this analysis, the City is anticipating issuing additional long-term debt in FY 2024/2025 for $15.0 million to fund necessary capital improvement projects.

2.2.6 Projection of Debt Service
The final component of the City’s revenue requirement is annual debt service payments. The City currently has three outstanding debt obligations; the 2016 Refunding, and the 2016 and 2019 revenue bonds, amounting to a total annual debt service of approximately $2.5 million for 2022/2023. In addition, the City has projected the need to issue additional long term debt during the projected five-year period. The City is expecting to issue approximately a $15 million bond in FY 2024/2025 to fund capital project needs. The level of annual debt service payments resulting from this new issuances would increase the annual debt service by approximately $975,000 and is estimated to start in FY 2024/2025.
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Development of the Sewer Revenue Requirement Analysis 22 City of Belmont – Comprehensive Sewer Rate Study

2.2.7 Reserve Funding
This study has used reserve funding, or transfers to and from sewer reserve funds, to smooth and mitigate the rate adjustments in any particular year. Funds can be drawn down to mitigate the need for a rate adjustment, or increased to replenish reserves if they have been drawn down in prior years. In this analysis, change in working capital is primarily used to balance revenue requirements to the proposed rate adjustments. From year-to-year, the use of these reserves, or change in working capital, is very minimal.

2.2.8 Summary of the Sewer Revenue Requirement
Given the above projections of revenues and expenses, a summary of the revenue requirement for the sewer utility can be developed. In developing the final revenue requirement, consideration was given to the financial planning considerations of the City. In particular, emphasis was placed on attempting to minimize rates, yet still have adequate funds to support the operational and capital expenses, and the City’s target financial metrics throughout the projected time period. Presented below in Table 2-5 is a summary of the sewer revenue requirement. A detailed analysis of the sewer revenue requirement can be found in Technical Appendix.

Table 2 – 5
Summary of Sewer Revenue Requirement ($000s)
Budget Projected
2021/22[1] 2022/23 2023/24 2024/25 2025/26 2026/27
Revenues
Retail Rate Revenues $13,840 $13,160 $13,291 $13,424 $13,559 $13,694 Other Revenues 138 244 225 206 247 228
Total Revenues $13,979 $13,404 $13,516 $13,631 $13,806 $13,922 Expenses
Collection O&M Expenses $4,155 $4,351 $4,488 $4,630 $4,778 $4,931 Treatment O&M Expenses 3,387 3,530 3,670 3,990 4,700 4,690 Repair & Replace. Funding 1,900 2,250 2,600 2,950 3,300 3,650 I/I Capital Funding 627 644 661 679 697 716
Total Debt Service 2,502 2,500 2,500 3,479 3,474 3,477
Change in Working Capital +/- 1,407 853 1,099 242 95 661 Total Expenses $13,979 $14,128 $15,018 $15,970 $17,044 $18,125 Balance/(Deficiency) of Funds $0 ($724) ($1,502) ($2,339) ($3,238) ($4,204) Cumulative as a % of Rates 0.0% 5.5% 11.3% 17.4% 23.9% 30.7% Proposed Rate Adjustments 0.0% 5.5% 5.5% 5.5% 5.5% 5.5% Debt Service Coverage Ratio
Before Rate Adjustment 2.52 2.15 2.09 1.40 1.21 1.20
After Rate Adjustment 2.52 2.44 2.69 2.07 2.14 2.41
[1] Note: FY 2021/22 includes the revenues at the adopted rate levels from the prior rate study. Therefore, no rate adjustment is included in FY 2021/22.
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Development of the Sewer Revenue Requirement Analysis 23 City of Belmont – Comprehensive Sewer Rate Study
It is important to note the “Balance/(Deficiency) of Funds” row in Table 2-5 is cumulative. That is, any adjustments in the initial years will reduce the deficiency in the later years. Rates need to be adjusted approximately 30.7% in order to adequately fund annual O&M expenses, annual repair and replacement funding, and the system’s capital needs over the five-year period. The size and timing of the adjustments is critical as it is proposed that the City set rates for a two year period. This is important as
the rate transition plan, or
proposed rate adjustments,
have been developed for a 5-
year period. Any
adjustments to the
proposed rate adjustments
shown in the early years will
result in the need for to
adjust rates, more or less, in
the future years depending
upon the adjustments made
in the early years. The graph
illustrates the projected
revenues, expenses, and
reserve fund.

Table 2 – 5 shows the total deficiency of revenues before any sewer rate adjustments ranges from $724,000 in FY 2022/2023 to $4.2 million by FY 2026/2027. A 5.5% sewer revenue adjustment is proposed annually for each of the five years of the projected time period. As noted, this study is focused on the proposed rates for FY 2022/2023 and FY 2023/2024. The projected rate adjustments allow the City to meet three key prudent financial metric criteria, these are:
x Debt Service Coverage Ratios – DSC target of 2.0.
x Adequate Renewal and Replacement Funding – Annual renewal and replacement funding needs exceed depreciation over the 5-year plan. x Maintain Prudent Reserve Fund Levels – Operating reserve target equal to annual minimum of 180 days of O&M; Capital project reserve target equal to two years of annual depreciation.

Meeting these three key criteria are critical to the City being able to fund/finance capital projects with long-term debt in the future. By adjusting rates the City is demonstrating to the outside financial community its willingness and commitment to maintain a strong financial position.

The revenue requirement developed in this sewer rate study will allow the City to develop costbased rates that meet the City’s goals and objectives for maintaining the existing system and funding past deferred capital projects. The rate transition plan provides smooth increases in rates over a 5-year period.
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Development of the Sewer Revenue Requirement Analysis 24 City of Belmont – Comprehensive Sewer Rate Study

2.2.9 Debt Service Coverage Ratios
Generally, revenue bonds contain covenants requiring rates to be set at an adequate level to assure repayment of the annual principal and interest debt obligations. The financial measure of rate adequacy is typically determined using a debt service coverage ratio (DSC). The DSC ratio is financial measure of the utility’s ability to repay the debt. Based in the City’s approach, the DSC ratio is set at a level such that revenues less operating expenses will be 2.00 times greater than the maximum annual debt service on the outstanding debt. That is, rates will be sufficient to pay projected O&M and have an additional annual debt service payment.

As noted above, the City
has established a target
of maintaining a 2.00 DSC
ratio. At present rate
levels, the sewer utility is
meeting the policy
minimum. However,
absent any rate
adjustments, the sewer
system DSC ratio is
declining as the capital
plan assumes additional
debt will be issued to pay
for capital projects.

Financially, this means that the City’s debt service payments are projected to increase over time and absent any rate adjustments, the City will not be meeting the policy minimum DSC. However, with the proposed rate adjustments the coverage ratios continue to be strong and above the target of 2.0 DSC ratio.1 This is an important financial target as planning around the absolute minimum level (e.g., 1.25 bond requirement) can result in a technical default on the bonds if unplanned expenditures occur or revenues are lower than anticipated in a given year. Planning a minimum target DSC of 2.0 was recommended by the City’s financial advisors during the most recent bond issues. A higher DSC ratio can result in a higher bond rating and lower interest rates and bond costs.
1 A debt service coverage (DSC) ratio is an indicator of the amount of funds available to pay debt service after O&M expenses and other pre-debt obligations have been met. A DSC ratio of 1.25 means the utility has 25% more funds available to pay debt service than the amount of the debt service payment(s). For example, assuming a utility has a $1.0 million debt service payment, a DSC of 1.25 means that the utility has $1.25 million available to pay debt service (i.e. $1.25 million y $1.0 million = 1.25 DSC).
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Development of the Sewer Revenue Requirement Analysis 25 City of Belmont – Comprehensive Sewer Rate Study

2.2.10 Review of the Sewer Reserve Levels
There can be many different purposes for reserves. They are also a good indicator of the longterm financial health of the utility. The City’s sewer utility current has one reserve fund, however, for rate setting purposes it was split into two reserve funds: an operating reserve fund, and capital reserve fund. The operating fund reserve has a minimum ending fund balance target of 180 days of O&M expenses plus an emergency reserve of $2.0 million, which is approximately $7.3 million for FY 2022/2023. The capital fund reserve has a target minimum of approximately two years of annual depreciation expense or approximately $3 million for FY 2022/2023. Taken together, the City’s minimum reserve is approximately $10 million for FY 2022/2023 increasing to $11.6 million by FY 2026/2027. Over this planning period, the City is projected to maintain adequate operating and
capital reserves and not
fall below these
recommended minimum
reserve levels. The
annual cash flow and
ending reserve balances
should be reviewed each
year to make sure that
the uses of funds does
not place the reserve
below the minimum
level. Additionally, as the
sewer reserves approach
the minimums, the need for rate adjustments should be evaluated so as to avoid future, large rate adjustments for customers. It should also be noted that the funding source for the capital reserve is through current, and future, long-term debt issuances which are placed in the capital reserve fund.

2.2.11 Consultant’s Conclusions
Based on the City’s revenue requirement analysis the proposed overall sewer rate adjustment should be adjusted annually by 5.5% over the projected five year period. These proposed rate adjustments are needed to fully fund the projected operating costs of the sewer utility and the annual capital improvement needs. HDR has reached this conclusion for the following reasons:
x Rate adjustments are necessary to continue to fund the City’s annual renewal and replacement needs.
x Rate adjustments are necessary to move towards more prudent financial metrics for debt service coverage ratio and reserve levels.
x The proposed rate adjustments maintain the City’s sewer system strong financial health, which is important as the City continues to maintain the existing system.

The rate transition plan presented in this study provides the City with the ability to meet the goals and objectives for the sewer system.
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2.3 Summary
This section of the report has provided a discussion of the City’s revenue requirement analysis.

The revenue requirement analysis developed a financial plan to support the City’s operating and capital needs for the sewer utility. The next section will discuss the cost of service analysis developed for the City.
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3.1 Introduction
A cost of service analysis is concerned with the proportional distribution of the total revenue requirement between the various customer classes of service. For the City’s study, the customer classes of service are low strength (residential and commercial low) and high strength commercial. The previously developed revenue requirement for FY 2022/2023 was utilized in the development of the cost of service analysis.

In order to determine the proportional distribution of costs to each customer class of service on the sewer system, a cost of service analysis is conducted. As outlined in the WEF MOP #27, and to meet the requirements of Proposition 218, the cost of service functionalizes, allocates, and distributes the sewer revenue requirement to each of the classes of service in a proportional manner. In recent years, increasing emphasis has been placed on cost of service studies by government agencies, customers, utility regulatory commissions, and other parties. This interest has been generated in part by continued inflationary trends, increased operating and capital expenditures, and concerns of equity in rates among customers. Following the generallyaccepted guidelines and principles of a cost of service analysis will inherently lead to rates which are equitable, cost-based, and not viewed as arbitrary or capricious in nature. Provided below is a detailed discussion of the cost of service analysis for the sewer utility.

3.2 Objectives of a Cost of Service Study
There are two primary objectives in conducting a cost of service study:
x Distribute the allocated the revenue requirement to the customer classes of service x Derive average unit costs for subsequent rate designs The objectives of a cost of service analysis are different from determining the revenue requirement. As noted in the previously, a revenue requirement analysis determines the utility’s overall financial (revenue) needs, while the cost of service study determines the proportional manner to collect the revenue requirement.

The second rationale for conducting a cost of service analysis is to design the rates such that they properly reflect the costs incurred by the City to provide sewer service. For example, the City may incur costs related to flow or total volume, the strength of the wastewater flow, and customer cost components. Each of these types of costs may be collected in a slightly different manner to allow for the development of a rate that collects costs in the same manner as they are incurred.

In order to determine the cost to serve each customer class on a system, three basic analytical tasks are completed: functionalization, allocation, and distribution of the FY 2022/2023 revenue requirement. Each of these steps in the cost of service analysis is discussed in detail below.

3.0 Development of the Sewer Cost of Service
Analysis
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3.3 Determining the Customer Class of
Service
One of the first tasks of a cost of service analysis is determine the classes of service for the analysis. In determining classes of service, the objective is to group customers together into similar or homogeneous groups based upon wastewater flow and strength characteristics and/or sewer facility
requirements. Based on the current rate schedules the
classes of service used within the sewer study are:
„ Low Strength
9 Residential
9 Non-Residential – Low
„ High Strength
9 Non-Residential – High
In determining classes of service for cost of service purposes, the objective is to group customers together into similar or homogeneous groups based upon facility requirement
and/or flow characteristics. In this case, low strength represents domestic level wastewater for the residential customers and those commercial customers with domestic
strength wastewater flow. High strength represents those commercial customers with higher strength wastewater
which is more costly to treat. Furthermore, the City is billed by SVCW based on the strength of the wastewater. In
developing these customer classes of service, the costs of treatment can be distributed proportionately to reflect the impacts placed on the system.

3.4 General Cost of Service Procedures
In order to determine the cost to serve each customer class of service on the City’s system, a cost of service analysis is conducted. A cost of service study utilizes a three-step approach to review costs. These were previously discussed in our general overview in Section 1, and take the form of functionalization, allocation, and distribution. Provided below is a detailed discussion of the sewer cost of service study conducted for the City, and the specific steps taken within the analysis.

3.4.1 Functionalization of Costs
The first analytical step of the sewer cost of service study is called functionalization. Functionalization is the
arrangement of sewer expenses and asset (infrastructure) data by major operating functions. This is generally accomplished through the utility’s system of Terminology of a Cost of
Service Analysis
Functionalization – The
arrangement of the cost data by
functional category (e.g.
treatment, collection etc.).

Allocation – The assignment of
functionalized costs to cost
components (e.g. volume,
strength, and customer related).

Distribution – Distributing the
allocated costs to each customer
class based on the proportional
contribution to that specific cost
component.

Volume Costs – Costs that are
classified as volume related vary
with the total flow of sewer (e.g.
chemical use at the treatment
facility).

Strength Costs – Costs classified
as strength related refer to the
wastewater treatment function.

Typically, strength-related costs
are further defined as
biochemical oxygen demand
(BOD) and suspended solids (SS).

Customers with higher
wastewater strength
characteristics cost more to
treat. Facilities are often
designed and sized around
meeting these costs.

Direct Assignment – Costs that
can be clearly identified as
belonging to a specific customer
class.
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accounts. In this study, the City’s system of accounts was used to functionalize sewer plant assets and operating expenses.

3.4.2 Allocation of Costs
The second analytical task performed is the allocation of the functionalized expenses to cost components. This task reviews each cost and attempts to determine why the sewer cost was incurred and what type of need was being met (e.g. volume, strength, customer etc.). The cost classifiers used for the sewer utility cost of service study are as follows:
x Volume Related Costs. Volume-related costs are those that tend to vary according to the quantity of wastewater collected and treated. An example of a volume related cost is electricity for pumping of wastewater.
x Strength Related Costs. Strength related costs are those costs associated with the additional handling and treatment of high “strength” wastewater. Strength of wastewater is typically measured in biochemical oxygen demand (BOD) and total suspended solids (SS). Increased levels of BOD or SS generally equate to increased treatment costs. Pre-treatment is generally required if the discharge is known to regularly exceed the typical (i.e., domestic level) waste strength. x Customer Related Costs. Customer-related costs vary with the addition or deletion of a customer. Customer related costs typically include the costs of billing, collecting, and accounting. Customer-related costs may also be further categorized as actual or weighted.
x Revenue Related. Some costs associated with the sewer utility may vary with the amount of revenue received by the utility. An example of a revenue related cost would be a utility tax which is based on gross utility revenue.
x Direct Assignment. Certain costs associated with operating the utility may be directly traced to a specific sewer customer or class of service. These costs are then directly assigned to that specific class of service. It should be noted there were not any costs that were directly assigned during the development of the City’s cost of service analysis.

Once the costs have been allocated, the next step is to distribute the costs proportionally between the customer classes of service. Provided in the next section is a summary of the development of the distribution factors.

3.4.3 Development of Distribution Factors
Once the allocation process is complete, and the customer groups have been defined, the various allocated costs are distributed to the customer classes of service. The City’s allocated costs were distributed using the following distribution factors:
„ Volume Distribution Factor: Volume-related costs are distributed on the basis of contribution to wastewater flows. In order to develop this distribution factor, some knowledge of the contribution to flows must be determined. The assumed wastewater contribution by customer class for FY 2022/2023 was the basis for the development of the volume allocation factor. Sewer flows were projected based on historical winter water 109
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billing for residential customers, and average water consumption for commercial customers.
„ Strength Distribution Factor: Strength-related costs are allocated between biochemical oxygen demand (BOD) and suspended solids (SS). Both of these types of costs are distributed to the various classes of service based upon the relative estimated strengths that each class of service contributed to the overall flow at the plant. Strength factors for the low strength, and high strength, customers were based on industry standard data. „ Customer Distribution Factor: Customer costs within the cost of service study are distributed to the various customer classes of service based upon their respective customer counts. Two types of customer distribution factors were developed, actual and weighted.

The actual customer distribution factor was based on the actual number of accounts for each customer class. The weighted customer factor was not used in the development of the cost of service study.
„ Revenue Related Distribution Factor: The revenue related distribution factor was developed from the projected rate revenues for FY 2022/2023 for each customer group.

The development of distribution factors is based on generally accepted principles as developed in the WEF MOP #27 to meet the proportionality requirements of Proposition 218. Given the development of the distribution factors, the final step in the cost of service study is to distribute the allocated costs to the various customer classes of service.

3.4.4 Functionalization and Allocation of Sewer Plant in Service The next step of the cost of service is the functionalization and allocation of sewer plant in service. In performing the functionalization of plant in service, HDR utilized the City’s historical plant records. The allocation process included reviewing each group of assets and determining which cost classifiers the assets were related to. For example, the City’s assets were allocated as: volume-related, strength-related, customer-related, or revenue-related. Provided below is a brief discussion of the allocation process used.

The City’s system assets are collection in nature. In this study, the collection plant was classified as 65% volume and 35% actual customer to reflect a portion of the assets being in place to simply move wastewater away from the customer and to the treatment system as well as a portion being related to providing service based on the number of customers on the system. Table 3-1 shows the detail of the classification for the City’s sewer plant in service. A more detailed exhibit of the City’s functionalization and classification of plant investment can be found in the Sewer Technical Appendix.
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Table 3 - 1
Summary of the Allocation of Sewer Plant in Service
Category
Volume
Related
BOD
Related
SS
Related
Actual
Customer
Direct
Assign
Improvements 65% 0% 0% 35% 0%
Machinery & Equipment 100% 0% 0% 0% 0%

3.4.5 Functionalization and Allocation of Operating Expenses Operating expenses are generally functionalized and allocated in a manner similar to the corresponding plant account. For example, maintenance of collection lines is typically allocated in the same manner (allocation percentages) as the plant account for collection lines. This approach to allocation of operating expenses was used for this analysis.

Table 3 - 2
Summary of the Allocation of Sewer Expenses
Category
Volume
Related
BOD
Related
SS
Related
Actual
Customer
Weighted
Customer
SVCW Treatment 39% 29% 32% 0% 0%
Planning and Project
Management, Sewer
Operations, (Overall) 56% 1% 1% 26% 16%
Computer, Administrative
Charge 0% 0% 0% 0% 100%
For the City’s study, the revenue requirement for FY 2022/2023 were functionalized, allocated, and distributed. As noted earlier, the City utilized a cash basis revenue requirement, which was comprised of operation and maintenance expenses, debt service, and capital additions funded from rates. The SVCW treatment costs were allocated based on the SVCW wholesale contract for billing. A more detailed review of the allocation of revenue requirement can be found in the Technical Appendix.

3.4.6 Major Assumptions of the Cost of Service Study
A number of key assumptions were used within the City’s cost of service study. Below is a brief discussion of the major assumptions used.
„ The methodology used within the sewer cost of service study was based upon and is consistent with the methodology used in the City’s sewer comprehensive rate study conducted in prior years and industry standard approaches. „ The test period used for the sewer cost of service analysis was FY 2022/2023. The revenue and expense data was previously developed within the revenue requirement study. 111
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„ A cash basis approach was utilized which conforms to generally accepted sewer cost of service approaches and methodologies.
„ The allocation of plant in service was developed based upon generally accepted cost allocation techniques. Furthermore, they were developed using the City-specific data. „ Customer volumes used within this study were provided for each class of service by the City through Mid Penn’s average winter billing data.
„ Strength distribution factors were based on overall strength levels at the treatment plant within the City’s records.

3.5 Summary of the Cost of Service Analysis
Given the allocation and distribution of the FY 2022/2023 revenue requirement a summary of the distributed costs as compared to the current revenues can be developed. Provided in Table 3-2 is a summary of the cost of service analysis.

Table 3 – 2
Summary of the FY 2022/23 Sewer Cost of Service Analysis ($000’s) Classes of Service
Present Rate
Revenues
Distributed
Costs
$
Difference
%
Difference
Low Strength
Residential and Non-Residential $12,858 $13,565 ($707) 5.5% High Strength
Non-Residential 302 318 ($17) 5.5%
Total $13,160 $13,883 ($724) 5.5%
The results of the cost of service analysis indicated no cost differences between the customer classes of service. It should be noted that the cost of service analysis developed by HDR is not a simple fixed/variable analysis. Rather, the cost of service analysis distributes costs between the various customer classes of service based on each customer classes proportional share of volume, strength, and customer-related costs. As the City continues to monitor rates and cost of service results through future studies, cost of service adjustments may be made as the results are driven by customer consumption. Given that, no adjustments in the cost relationships between the customer classes of service are recommended at this time.

3.6 Consultant’s Conclusions and Recommendations
The overall allocation of costs between low strength customers (e.g., residential and low strength non-residential) and high strength customers reflects the overall system average increase. In addition, it was noted that customers have been adjusting their water consumption habits and consumptive use has changed over the last several years, which has a direct impact on the rates charged in future years. As the City continues to monitor rates and cost of service results through future studies, cost of service adjustments may be made as the results are driven by customer consumption. Given that, no adjustments in the cost relationships between the customer classes of service are recommended at this time. As a result, the overall proposed revenue/rate adjustments will be applied equally across all customer groups. 112
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3.7 Summary
This section of the study has provided a summary of the cost of service analysis developed for the City. This analysis was prepared using generally accepted cost of service techniques and principles. The next section of the study will review the present and proposed sewer rates for the City.
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4.1 Introduction
The final step of the City’s comprehensive sewer rate study is the design of sewer rates to collect the desired levels of revenues, based on the results of the prior analyses. In reviewing sewer rate designs, consideration is given to the level of the rates and the structure of the rates.

4.2 Rate Design Goals and Objectives
Prudent rate administration dictates that several criteria must be considered when setting utility rates. Some of these rate design criteria are listed below:
9 Rates which are easy to understand from the customer’s perspective. 9 Rates which are easy for the utility to administer.
9 Consideration of the customer’s ability to pay.
9 Continuity, over time, of the rate making philosophy. 9 Policy considerations (encourage efficient use, economic development, etc.). 9 Provide revenue stability from month to month and year to year. 9 Promote efficient allocation of the resource.
9 Equitable and non-discriminatory (cost-based).

Many contemporary rate economists and regulatory agencies recognize the last consideration, equitable and cost-based rates, should be of paramount importance and provide the primary guidance to utilities on rate structure and policy. It is important that the City provide its customers with a proper price signal as to what their consumption or usage is costing. This goal may be approached through rate level and structure. When developing the proposed rate designs, all the above listed criteria were taken into consideration. However, it should be noted that it is difficult, if not impossible, to design a rate that meets all the goals and objectives listed above. For example, it may be difficult to design a rate that takes into consideration the customer’s ability to pay, and one which is cost-based. In designing rates, there are always tradeoffs between these various goals and objectives.

4.3 Development of Cost Based Sewer Rates
As mentioned, developing cost-based and proportional rates is of paramount importance in developing proposed sewer rates. While always a key consideration in developing rates, meeting the legal requirements, and documenting the steps taken to meet the requirements, has been in the forefront with the recent legal challenges in the State of California on utility rates. Given this, the development of the City’s proposed sewer rates have been developed to meet the legal requirements of California Constitution article XIII D, section 6 (Article XIII D). A key component of Article XIII D is the development of rates which reflect the cost of providing service and are proportionally distributed between the various customer classes of service. HDR would point out that there is no single methodology for equitably assigning costs to the various customer groups.

The Water Environment Federation Manual of Practice #27 provides various methodologies which may be used to establish cost-based rates. Unfortunately, Article XII D is not prescriptive and does not provide a specific methodology for establishing rates. Given that, HDR developed

4.0 Development of the Sewer Rate Design
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the City’s proposed sewer rates based on generally accepted rate setting methodologies to meet the requirements of Article XIII D.

HDR is of the opinion that the proposed rates meet the legal requirements of Article XIII D. HDR reaches this conclusion based upon the following:
x The revenue derived from sewer rates does not exceed the funds required to provide the property related service (i.e., sewer service). The proposed rates are designed to collect the overall revenue requirement of the City’s sewer system. x The revenues derived from sewer rates shall not be used for any purpose other than that for which the fee or charge is imposed. The revenues derived from the City’s sewer rates are used exclusively to operate and maintain the City’s sewer system. x The amount of a fee or charge imposed upon a parcel or person as an incident of property ownership shall not exceed the proportional costs of the service attributable to the parcel.

The cost of service analysis focused exclusively on the issue of proportional assignment of costs to customer classes of service. The proposed rates have appropriately grouped customers into customer classes of service (low strength and high strength) that reflect the varying wastewater volumes and system requirements (i.e., the benefits they receive from and burdens they place on the system) of each customer class of service. The grouping of customers and rates into these classes of service creates the proportionality expected under Proposition 218 by having differing rates by customer classes of service which reflect both the level of revenue to be collected by the utility, and the manner in which these costs are incurred and equitably assigned to customer classes of service based upon their proportional impacts.

4.4 Present and Proposed Sewer Rates
The City’s sewer rate is comprised of two components, a collection system component and a treatment system component. The collection system component is based on the costs to operate the City’s sewer system, except for treatment costs. The treatment costs are based on the current treatment costs projections and can be adjusted as the City is notified of cost changes by the wholesale provider. Each parcels’ sewer charge is the sum of the base charge and flow charges for both collection and treatment. The proposed sewer rate designs maintain their current rate structure.

For the five year rate period, the rates include a 10% flow adjustment factor that replaces the current 9% flow adjustment factor which was updated during the 2020 rate study. Mid-Peninsula Water District consumption billing data for the three year periods of FY 2019/2020 2020/2021, and 2021/2022 billing information was reviewed. Based on this data, along with the projected upcoming drought, the recommendation is to increase the flow adjustment factor from 9% to 10% for the two year rate setting period. The flow adjustment factor will allow the City to maintain sufficient revenues during the proposed rate period of FY 2022/2023 and FY 2023/2024.

The flow adjustment factor will be reviewed again during the next rate study and a determination made as to adjust the flow adjustment factor or to eliminate, and restart, the flow adjustment factor.

The same formula for this adjustment will remain as follows: (HCF = 100 cubic feet) 115
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Formula: Actual Volume Usage x (1 + (flow adjustment factor)) = adjusted volume usage Example: 8 HCF x (1+ .10) = 8.8 HCF adjusted volume usage Table 4-1 provides the present and proposed rates for the residential and non-residential customers for the next five fiscal years.

Table 4 – 1
Present and Proposed Sewer Rates (Annual)
Present
Rates
Proposed
Rates
FY 2022/23
Proposed
Rates
FY 2023/24
Forecasted
Rates
FY 2024/25
Forecasted
Rates
FY 2025/26
Forecasted
Rates
FY 2026/27

COLLECTION
Residential
Base Charge $386.93 $408.21 $430.66 $454.35 $479.34 $505.70 Flow Charge ($/HCF)[1] $5.51 $5.81 $6.13 $6.47 $6.83 $7.20 Non-Residential
Base Charge $386.93 $408.21 $430.66 $454.35 $479.34 $505.70 Flow Charge Low
Strength ($/HCF)[1]
$5.51 $5.81 $6.13 $6.47 $6.83 $7.20
Flow Charge High
Strength ($/HCF)[1]
$10.70 $11.29 $11.91 $12.56 $13.26 $13.98

TREATMENT
Residential
Base Charge $203.36 $214.54 $226.34 $238.79 $251.93 $265.78 Flow Charge ($/HCF)[1] $2.72 $2.87 $3.03 $3.19 $3.37 $3.55 Non-Residential
Base Charge $203.36 $214.54 $226.34 $238.79 $251.93 $265.78 Flow Charge Low
Strength ($/HCF)[1]
$2.72 $2.87 $3.03 $3.19 $3.37 $3.55
Flow Charge High
Strength ($/HCF)[1]
$5.30 $5.59 $5.90 $6.22 $6.57 $6.93

COMBINED
Residential
Base Charge $590.29 $622.76 $657.01 $693.14 $731.27 $771.49 Flow Charge ($/HCF) $8.23 $8.68 $9.16 $9.66 $10.20 $10.76 Non-Residential
Base Charge $590.29 $622.76 $657.01 $693.14 $731.27 $771.49 Flow Charge Low
Strength ($/HCF)]
$8.23 $8.68 $9.16 $9.66 $10.20 $10.76
Flow Charge High
Strength ($/HCF)
$16.00 $16.88 $17.81 $18.79 $19.82 $20.91
The above rates are based upon the rate transition plan developed from the revenue requirement and cost of service analyses. As noted above, the rate is split between collection 116
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and treatment to allow the City to pass-through any increases in the wholesale treatment costs.

All components of the rate structure – fixed and variable – are proposed to be increased to meet the target revenue levels based on the rate transition plan.

At present rates, a typical residential customer with 8 hundred cubic feet of winter water average would have a monthly bill of $120.96 (8 HCF X 1.09 = 8.72 HCF). Under the proposed rates, with the proposed flow adjustment factor increased to 10%, the same customer would have a monthly bill of $128.31 in FY 2022/23. The proposed rate adjustment for FY 2021 was 5.5%, however with the flow factor adjustment from 1.09 to 1.10, it results in an overall change to the bill of 6.1%.

Table 4-2 shows the average residential bill for FY 2021 through FY 2025.

Table 4 – 2
Present and Proposed Sewer Rates (Monthly)
Proposed
FY 2022/23
Proposed
FY 2023/24
Forecasted
FY 2024/25
Forecasted
FY 2025/26
Forecasted
FY 2026/27
Proposed Revenue Adjustment 5.5% 5.5% 5.5% 5.5% 5.5%
Present Average Monthly Bill [1] $120.96
After Proposed Rate Adj. [2] $128.31 $135.36 $142.80 $150.66 $158.95 Monthly Bill Difference $7.35 $7.05 $7.44 $7.86 $8.28
Cumulative Bill Difference $7.35 $14.40 $21.85 $29.71 $37.99 % Change to Monthly Bill 6.1% 5.5% 5.5% 5.5% 5.5%
[1] – Current average bill assumes 9% flow adjustment factor and 8 HCF monthly consumption [2] –Proposed average bill assumes a 10% flow adjustment factor and 8 HCF monthly consumption As a point of reference, the proposed rates for FY 2022/2023 and FY 2023/2024 are the focus of this study and the only rates proposed for this study. Forecasted rates are for information only to provide the City with the expected future rates for planning purposes based on the assumptions of this study. Proposed rates for future periods will be developed as part of future comprehensive sewer rate studies.
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4.5 Average Residential Local Bill Comparison
A comparison of the City’s current average residential rate to other local surrounding sewer utilities has been developed. Provided in the chart below is a comparison of the City’s current rate, and the proposed rates.

As can be seen in the above graph, with the potential adjustments, the City’s sewer rates remain very competitive, while funding O&M, increased renewal and replacements, and deferred capital costs.

4.6 Summary of the Sewer Rate Study
This completes the analysis for the City’s sewer rate study. The proposed sewer rates were developed using generally accepted rate making methods and principles. The proposed sewer rate adjustments for FY 2022/2023 through 2026/2027 are needed to adequately support the operating and capital needs of the City’s sewer system. Adoption of the proposed sewer rates for FY 2022/2023 and FY 2023/2024 are projected to provide adequate funding for the sewer utility over the two year period, while financially positioning the utility for anticipated future capital and operation needs. Even with these proposed annual adjustments, it is prudent for the City to annually revisit the sewer rates to confirm their ability to cover expenses and maintain the identified financial metrics (e.g., reserve targets, debt service coverage ratios). 118
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Technical Appendix
119
Actual Estimated Budget
FY 2019/20 FY 2020/21 FY 2021/22 FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 Sources of Funds
Operating Revenues $12,470,775 $12,385,054 $13,840,423 $13,159,760 $13,291,358 $13,424,271 $13,558,514 $13,694,099 $13,831,040 $13,969,351 $14,109,044 Other Revenue 357,950 138,406 138,406 244,382 224,573 206,328 247,355 227,596 210,700 255,966 245,044 ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- Total Sources of Funds $12,828,725 $12,523,459 $13,978,828 $13,404,143 $13,515,931 $13,630,600 $13,805,869 $13,921,696 $14,041,741 $14,225,317 $14,354,089 Applications of Funds
Collection O&M Expense $3,481,970 $4,020,600 $4,155,257 $4,351,460 $4,488,062 $4,630,056 $4,777,695 $4,931,243 $5,090,978 $5,257,196 $5,430,204 Treatment O&M Expenses 3,004,200 3,387,172 3,387,030 3,530,000 3,670,000 3,990,000 4,700,000 4,690,000 4,660,000 4,820,000 4,830,000 Repair and Replacement Funding 1,400,393 1,750,000 1,900,000 2,250,000 2,600,000 2,950,000 3,300,000 3,650,000 4,000,000 4,350,000 4,700,000 I/I Capital Funding 237,942 611,000 627,000 644,000 661,000 679,000 697,000 716,000 735,000 755,000 775,000 Total Debt Service 1,514,186 2,411,596 2,502,346 2,499,671 2,500,446 3,478,843 3,473,968 3,476,843 4,452,614 4,448,389 4,447,989 Change in Working Capital +/- 3,190,034 343,091 1,407,195 852,798 1,098,679 241,764 95,314 661,151 342,938 946,305 1,714,811 Total Revenue Requirements $12,828,725 $12,523,459 $13,978,828 $14,127,929 $15,018,187 $15,969,663 $17,043,977 $18,125,236 $19,281,531 $20,576,890 $21,898,004 Total Balance/(Deficiency) $0 $0 $0 ($723,787) ($1,502,256) ($2,339,064) ($3,238,107) ($4,203,541) ($5,239,790) ($6,351,573) ($7,543,916) Cumulative Balance as a % of Rate Revenues 0.0% 0.0% 0.0% 5.5% 11.3% 17.4% 23.9% 30.7% 37.9% 45.5% 53.5% Proposed Rate Adjustment 0.0% 0.0% 0.0% 5.5% 5.5% 5.5% 5.5% 5.5% 5.5% 5.5% 5.5% Additional Revenue from Adjustment $0 $0 $0 $723,787 $1,502,256 $2,339,064 $3,238,107 $4,203,541 $5,239,790 $6,351,573 $7,543,916 Total Balance/(Deficiency) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Additional Rate Adjustment Required 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Residential Bill Comparison (8 HCF X Adjustment Factor) Monthly
After Proposed Rate Adjustment $120.96 $128.31 $135.36 $142.80 $150.66 $158.95 $167.69 $176.91 $186.64 Monthly Bill Difference $7.35 $7.05 $7.44 $7.86 $8.28 $8.74 $9.22 $9.73 Cumulative Bill Difference $7.35 $14.40 $21.85 $29.71 $37.99 $46.73 $55.95 $65.68 Debt Service Coverage Ratio (Revenue Bonds Only)
Before Proposed Rate Adjustment 3.99 2.06 2.52 2.15 2.09 1.40 1.21 1.20 0.93 0.90 0.89 After Proposed Rate Adjustment 3.99 2.06 2.52 2.44 2.69 2.07 2.14 2.41 2.11 2.33 2.59 Ending Reserve Balances $0 $0 $26,678,149 $21,725,947 $17,164,626 $27,421,390 $22,481,704 $18,257,855 $29,574,126 $26,843,764 $25,231,908 Target Minimum (Operating + Capital) $0 $0 $9,927,000 $10,194,000 $10,432,000 $10,761,000 $11,292,000 $11,474,000 $11,647,000 $11,921,000 $12,137,000 City of Belmont
Sewer Cost of Service Study - Rate Transition Plan
Summary of Revenue Requirement
Exhibit 1
Projected

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Sewer Cost of Service Study
Exhibit 2
Data Assumptions
Actual Estimated Budget
FY 2019/20 FY 2020/21 FY 2021/22 FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 Escalation Factors
Revenues
Rate Revenue Actual Actual Estimated 0.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% Other Revenues Actual Estimated Budget 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% Interest 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% Flat 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Expenses
Labor Actual Estimated Budget 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Profess/Contractual Actual Estimated Budget 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Data Processing Actual Estimated Budget 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% Benefits - Medical Actual Estimated Budget 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% Benefits - Other Actual Estimated Budget 5.3% 5.3% 5.3% 5.3% 5.3% 5.3% 5.3% 5.3% Materials & Supplies Actual Estimated Budget 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% Equipment/Vehicles Actual Estimated Budget 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% Education/Training Actual Estimated Budget 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Indirect Expense Actual Estimated Budget 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% Miscellaneous Actual Estimated Budget 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% Utilities Actual Estimated Budget 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% SVCW Treatment Actual Estimated Budget 4.2% 4.0% 8.7% 17.8% -0.2% -0.6% 3.4% 0.2% Jan 2022, SVCW Long Range Plan, pg 156 As Inflation Inflation 2.7% 2.7% 2.7% 2.7% 2.7% 2.7% 2.7% 2.7% 2.7% Revenue Bond Issue
Term in Years 30 30 30 30 30 30 30 30 30 30 30
Rate 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% Projected

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Sewer Cost of Service Study Page 1 of 3
Exhibit 3
Sources and Applications of Funds
Actual Estimated Budget
FY 2019/20 FY 2020/21 FY 2021/22 FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 Notes

REVENUES
Operating Revenues
6805 Sewer Use Fees - Rate Revenues $12,470,775 $12,385,054 $13,840,423 $13,159,760 $13,291,358 $13,424,271 $13,558,514 $13,694,099 $13,831,040 $13,969,351 $14,109,044 As Rate Revenue ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- Total Rate Revenues $12,470,775 $12,385,054 $13,840,423 $13,159,760 $13,291,358 $13,424,271 $13,558,514 $13,694,099 $13,831,040 $13,969,351 $14,109,044 Miscellaneous Revenues
6705 Public Works Service Charges $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 As Flat 6706 City CIP Chargeback 0 0 0 0 0 0 0 0 0 0 0 As Flat
6850 Sewer Lateral Certificate Fee 0 0 0 0 0 0 0 0 0 0 0 As Flat 7111 Interest Earnings - Investments 58,614 0 0 106,713 86,904 68,659 109,686 89,927 73,031 118,297 107,375 As Interest 7112 Other Interest Earnings 74,047 0 0 0 0 0 0 0 0 0 0 As Flat 7113 Interest Revenue - Change 85,656 0 0 0 0 0 0 0 0 0 0 As Flat 7252 Reimbursements 0 0 0 0 0 0 0 0 0 0 0 As Flat
Standby Charges 139,633 138,406 138,406 137,669 137,669 137,669 137,669 137,669 137,669 137,669 137,669 As Flat ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- Total Miscellaneous Revenues $357,950 $138,406 $138,406 $244,382 $224,573 $206,328 $247,355 $227,596 $210,700 $255,966 $245,044 TOTAL REVENUES $12,828,725 $12,523,459 $13,978,828 $13,404,143 $13,515,931 $13,630,600 $13,805,869 $13,921,696 $14,041,741 $14,225,317 $14,354,089

EXPENSES
Planning and Project Management (701)
Personnel
8101 Regular Salaries $515,746 $485,260 $339,632 $346,292 $353,082 $360,005 $367,064 $374,261 $381,600 $389,082 $396,711 As Labor 8102 Permanent Part-Time $9,450 $16,306 $16,306 16,626 16,952 17,284 17,623 17,968 18,321 18,680 19,046 As Labor 8103 Temporary Part-Time 3,651 3,709 3,709 3,781 3,855 3,931 4,008 4,087 4,167 4,248 4,332 As Labor 8111 Overtime 272 0 0 0 0 0 0 0 0 0 0 As Labor
8119 Termination Pay 16,930 8,732 0 0 0 0 0 0 0 0 0 As Labor 8211 P.E.R.S. Retirement 99,291 96,474 69,390 73,068 76,941 81,018 85,312 89,834 94,595 99,609 104,888 As Benefits - Other 8232 Medicare 8,019 7,448 4,029 4,311 4,613 4,935 5,281 5,651 6,046 6,469 6,922 As Benefits - Medical 8233 Life & Disability Insurance (206) 2,522 1,672 1,789 1,914 2,048 2,191 2,344 2,509 2,684 2,872 As Benefits - Medical 8235 State Unemployment Insurance 3,777 0 0 0 0 0 0 0 0 0 0 As Benefits - Other 8241 Dental Plan 4,290 3,625 2,579 2,759 2,952 3,159 3,380 3,617 3,870 4,141 4,431 As Benefits - Medical 8242 Vision Plan 1,003 910 602 645 690 738 790 845 904 967 1,035 As Benefits - Medical 8253 Allowances (1,270) 840 1,050 1,106 1,164 1,226 1,291 1,359 1,431 1,507 1,587 As Benefits - Other 8259 Deferred Compensation 11,945 13,569 9,170 9,656 10,168 10,707 11,274 11,872 12,501 13,163 13,861 As Benefits - Other 8271 SEC 125 Benefits 75,168 67,495 47,776 51,120 54,698 58,527 62,624 67,008 71,698 76,717 82,087 As Benefits - Medical 8281 Benefit Prefunding 53,337 48,732 35,792 37,688 39,686 41,789 44,004 46,336 48,792 51,378 54,101 As Benefits - Other 8283 GASB 68 Pension Expense 58,705 0 0 0 0 0 0 0 0 0 0 As Benefits - Other 8284 GASB 75 OPEB Expense (356,847) 0 0 0 0 0 0 0 0 0 0 As Benefits - Other 8285 Workers' Compensation 1,818 14,245 9,312 9,806 10,326 10,873 11,449 12,056 12,695 13,368 14,076 As Benefits - Other ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- Total Personnel $505,079 $769,868 $541,018 $558,645 $577,039 $596,240 $616,291 $637,238 $659,128 $682,014 $705,950 Supplies & Services
8351 Other Professional/Technical $27,358 $4,000 $5,000 $5,098 $5,198 $5,300 $5,404 $5,510 $5,618 $5,728 $5,840 As Profess/Contractual 8522 Liability Insurance Charge 11,561 17,376 7,668 7,898 8,135 8,379 8,630 8,889 9,156 9,431 9,714 As Miscellaneous 8531 Postage/Delivery Services 0 50 100 103 106 109 113 116 119 123 127 As Materials & Supplies 8532 Telephone 8,721 0 0 0 0 0 0 0 0 0 0 As Utilities
8550 Printing & Binding 0 0 0 0 0 0 0 0 0 0 0 As Materials & Supplies 8580 Travel & Training 2,193 1,000 3,000 3,060 3,121 3,184 3,247 3,312 3,378 3,446 3,515 As Education/Training 8591 Membership & Dues 3,484 5,000 6,000 6,120 6,242 6,367 6,495 6,624 6,757 6,892 7,030 As Education/Training 8599 Miscellaneous 1,154 2,500 4,000 4,120 4,244 4,371 4,502 4,637 4,776 4,919 5,067 As Miscellaneous 8610 General Supplies 469 1,000 1,000 1,030 1,061 1,093 1,126 1,159 1,194 1,230 1,267 As Materials & Supplies 8612 Small Tools 90 500 500 515 530 546 563 580 597 615 633 As Miscellaneous 8680 Books/Manuals/Subscriptions 0 100 200 206 212 219 225 232 239 246 253 As Miscellaneous ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- Total Supplies & Services $55,030 $31,526 $27,468 $28,150 $28,850 $29,568 $30,304 $31,060 $31,835 $32,630 $33,446 Administrative & Other
8307 Vehicle Usage Charge $13,358 $16,089 $13,471 $13,875 $14,291 $14,720 $15,162 $15,617 $16,085 $16,568 $17,065 As Equipment/Vehicles 8308 Computer Usage Charge 140,177 89,135 144,038 148,359 152,810 157,394 162,116 166,980 171,989 177,149 182,463 As Data Processing 8309 Building Maintenance Charge 38,001 35,036 35,487 36,552 37,648 38,778 39,941 41,139 42,373 43,645 44,954 As Miscellaneous 8310 Administrative Charge 134,099 155,767 156,784 161,488 166,332 171,322 176,462 181,756 187,208 192,825 198,609 As Miscellaneous ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- Total Administrative & Other $325,635 $296,027 $349,780 $360,273 $371,082 $382,214 $393,680 $405,491 $417,656 $430,185 $443,091 Total Planning and Project Management (701) $885,744 $1,097,421 $918,266 $947,069 $976,971 $1,008,022 $1,040,276 $1,073,788 $1,108,619 $1,144,830 $1,182,487 Projected

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Sewer Cost of Service Study Page 2 of 3
Exhibit 3
Sources and Applications of Funds
Actual Estimated Budget
FY 2019/20 FY 2020/21 FY 2021/22 FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 Notes Projected
Sanitary Sewer Operations (710)
Personnel
8101 Regular Salaries $468,546 $477,752 $705,041 $758,383 $773,254 $788,415 $803,875 $819,637 $835,708 $852,095 $868,802 As Labor 8111 Overtime 3,510 6,385 6,385 6,511 6,638 6,769 6,901 7,037 7,175 7,315 7,459 As Labor 8112 Standby/Unscheduled 12,344 10,326 9,077 9,255 9,436 9,621 9,810 10,002 10,198 10,398 10,602 As Labor 8119 Termination Pay 3,722 19,625 0 0 0 0 0 0 0 0 0 As Labor 8211 P.E.R.S. Retirement 88,891 97,990 134,616 145,040 152,727 160,821 169,345 178,320 187,771 197,723 208,202 As Benefits - Other 8221 F.I.C.A. Social Security 4 0 0 0 0 0 0 0 0 0 0 As Benefits - Other 8232 Medicare 7,716 8,062 10,266 11,557 12,366 13,232 14,158 15,149 16,210 17,344 18,558 As Benefits - Medical 8233 Life & Disability Insurance (256) 2,550 3,762 4,275 4,574 4,894 5,236 5,603 5,995 6,415 6,864 As Benefits - Medical 8241 Dental Plan 5,343 4,976 9,254 10,888 11,650 12,465 13,338 14,272 15,271 16,340 17,483 As Benefits - Medical 8242 Vision Plan 1,421 1,195 1,911 2,192 2,346 2,510 2,685 2,873 3,075 3,290 3,520 As Benefits - Medical 8253 Allowances (988) 420 420 442 466 490 516 544 573 603 635 As Benefits - Other 8259 Deferred Compensation 11,128 12,643 23,417 26,299 27,693 29,161 30,706 32,334 34,047 35,852 37,752 As Benefits - Other 8271 SEC 125 Benefits 94,354 86,151 153,497 176,647 189,012 202,243 216,400 231,548 247,756 265,099 283,656 As Benefits - Medical 8281 Benefit Prefunding 50,999 51,873 76,855 83,985 88,436 93,123 98,058 103,255 108,728 114,491 120,559 As Benefits - Other 8282 Compensated Absences (48,853) 0 0 0 0 0 0 0 0 0 0 As Labor 8285 Workers' Compensation 30,303 53,406 79,905 89,878 94,641 99,657 104,939 110,501 116,357 122,524 129,018 As Benefits - Other ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- Total Personnel $728,185 $833,354 $1,214,405 $1,325,351 $1,373,238 $1,423,401 $1,475,968 $1,531,075 $1,588,864 $1,649,488 $1,713,111 Supplies & Services
8305 After Hours Dispatch Service $10,000 $10,000 $10,000 $10,196 $10,396 $10,600 $10,808 $11,020 $11,236 $11,456 $11,681 As Profess/Contractual 8311 Property Tax Admin Fee 44,145 45,469 46,197 46,197 46,659 47,126 47,597 48,073 48,554 49,039 49,529 As Rate Revenue 8351 Other Professional/Tech 110,462 81,000 94,000 95,843 97,722 99,639 101,592 103,584 105,615 107,686 109,798 As Profess/Contractual 8411 Water 9,879 9,000 12,000 12,600 13,230 13,892 14,586 15,315 16,081 16,885 17,729 As Utilities 8417 Other Waste Water Treatment 270,841 150,000 150,000 157,500 165,375 173,644 182,326 191,442 201,014 211,065 221,618 As Utilities 8418 S.V.C.W. Sewer Treatment 3,004,200 3,387,172 3,387,030 3,530,000 3,670,000 3,990,000 4,700,000 4,690,000 4,660,000 4,820,000 4,830,000 As SVCW Treatment 8430 Repair & Maintenance Service 18,558 18,000 20,000 20,600 21,218 21,855 22,510 23,185 23,881 24,597 25,335 As Miscellaneous 8441 Land/Building Rentals 56,000 56,000 56,000 57,680 59,410 61,193 63,028 64,919 66,867 68,873 70,939 As Miscellaneous 8442 Equipment/Vehicle Rental 3,709 3,800 2,000 2,060 2,122 2,185 2,251 2,319 2,388 2,460 2,534 As Equipment/Vehicles 8522 Liability Insurance Charge 263,891 541,217 500,000 515,000 530,450 546,364 562,754 579,637 597,026 614,937 633,385 As Equipment/Vehicles 8530 Communications 1,220 6,649 7,000 7,210 7,426 7,649 7,879 8,115 8,358 8,609 8,867 As Materials & Supplies 8532 Telephone 7,343 0 0 0 0 0 0 0 0 0 0 As Materials & Supplies 8580 Travel And Training 4,054 3,000 7,000 7,140 7,283 7,428 7,577 7,729 7,883 8,041 8,202 As Education/Training 8590 Street Access Fee 204,204 204,204 204,204 204,204 204,204 204,204 204,204 204,204 204,204 204,204 204,204 As Flat 8591 Memberships & Dues 3,891 6,000 8,000 8,160 8,323 8,490 8,659 8,833 9,009 9,189 9,373 As Education/Training 8599 Miscellaneous 2,327 2,500 2,500 2,575 2,652 2,732 2,814 2,898 2,985 3,075 3,167 As Miscellaneous 8610 General Supplies 7,665 7,000 5,000 5,150 5,305 5,464 5,628 5,796 5,970 6,149 6,334 As Materials & Supplies 8612 Small Tools 20,575 5,500 10,000 10,300 10,609 10,927 11,255 11,593 11,941 12,299 12,668 As Materials & Supplies 8613 Safety Equipment 15,136 10,000 15,000 15,450 15,914 16,391 16,883 17,389 17,911 18,448 19,002 As Miscellaneous 8632 Natural Gas & Electricity 50,530 47,023 48,000 50,400 52,920 55,566 58,344 61,262 64,325 67,541 70,918 As Utilities 8639 Gasoline 12,998 16,000 16,000 16,800 17,640 18,522 19,448 20,421 21,442 22,514 23,639 As Utilities 8641 Repair & Maintenance Supplies 51,224 30,000 40,000 41,200 42,436 43,709 45,020 46,371 47,762 49,195 50,671 As Miscellaneous ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- Total Supplies & Services $4,172,852 $4,639,534 $4,639,931 $4,816,265 $4,991,294 $5,347,577 $6,095,164 $6,124,104 $6,134,452 $6,336,262 $6,389,593 Administrative & Other
8307 Vehicle Usage Charge $336,961 $383,743 $314,920 $324,368 $334,099 $344,122 $354,445 $365,079 $376,031 $387,312 $398,931 As Equipment/Vehicles 8308 Computer Usage Charge 99,681 120,865 124,449 128,182 132,028 135,989 140,068 144,270 148,599 153,057 157,648 As Data Processing 8309 Building Maintenance Ch 42,518 48,317 48,939 50,407 51,919 53,477 55,081 56,734 58,436 60,189 61,994 As Miscellaneous 8310 Administrative Support 117,414 147,204 148,093 152,536 157,112 161,825 166,680 171,680 176,831 182,136 187,600 As Miscellaneous ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- Total Administrative & Other $596,575 $700,129 $636,401 $655,493 $675,158 $695,413 $716,275 $737,763 $759,896 $782,693 $806,174 Total Sanitary Sewer Operations (710) $5,497,612 $6,173,018 $6,490,737 $6,797,109 $7,039,690 $7,466,391 $8,287,407 $8,392,942 $8,483,212 $8,768,444 $8,908,877 Sanitary Sewer Capital Operations (730)
8351 Other Professional/Tech $5,074 $4,100 $4,100 $4,223 $4,350 $4,480 $4,615 $4,753 $4,896 $5,042 $5,194 As Miscellaneous 8310 Administrative Charge 97,740 133,233 129,184 133,060 137,051 141,163 145,398 149,760 154,252 158,880 163,646 As Miscellaneous 8599 Miscellaneous 0 0 0 0 0 0 0 0 0 0 0 As Profess/Contractual 9030 Improvement Other Than Building 0 0 0 0 0 0 0 0 0 0 0 As Miscellaneous ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- Total Sanitary Sewer Capital Operations (730) $102,814 $137,333 $133,284 $137,283 $141,401 $145,643 $150,012 $154,513 $159,148 $163,923 $168,840 Total Operating & Maintenance Expense $6,486,170 $7,407,772 $7,542,287 $7,881,460 $8,158,062 $8,620,056 $9,477,695 $9,621,243 $9,750,978 $10,077,196 $10,260,204

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Exhibit 3
Sources and Applications of Funds
Actual Estimated Budget
FY 2019/20 FY 2020/21 FY 2021/22 FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 Notes Projected
Repair and Replacement Funding $1,400,393 $1,750,000 $1,900,000 $2,250,000 $2,600,000 $2,950,000 $3,300,000 $3,650,000 $4,000,000 $4,350,000 $4,700,000 FY 2021 Approx. Depr. $1,400,393 I/I Capital Funding Transfer $237,942 $611,000 $627,000 $644,000 $661,000 $679,000 $697,000 $716,000 $735,000 $755,000 $775,000 Deferred Capital Funding (Debt Service) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Debt Service
2016 Sewer Revenue Refunding $762,105 $770,355 $767,105 $767,705 $767,505 $771,255 $768,505 $764,505 $769,255 $771,455 $773,355 Debt Schedule 2016 Sewer Revenue 630,991 620,741 625,741 621,341 621,941 621,191 620,191 628,941 621,941 619,141 616,341 Debt Schedule 2019 Sewer Revenue 121,090 1,020,500 1,109,500 1,110,625 1,111,000 1,110,625 1,109,500 1,107,625 1,109,875 1,106,250 1,106,750 Debt Schedule New Low Interest Loan 0 0 0 0 0 0 0 0 0 0 0
New Revenue Bond 2024/2025 0 0 0 0 0 975,772 975,772 975,772 975,772 975,772 975,772 New Revenue Bond 2027/2028 0 0 0 0 0 0 0 0 975,772 975,772 975,772 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- Total Debt Service $1,514,186 $2,411,596 $2,502,346 $2,499,671 $2,500,446 $3,478,843 $3,473,968 $3,476,843 $4,452,614 $4,448,389 $4,447,989 Change in Working Capital +/-
Operating (Cash) Reserve Transfer $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Capital Reserve Transfer 3,190,034 343,091 1,407,195 852,798 1,098,679 241,764 95,314 661,151 342,938 946,305 1,714,811 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- Change in Working Capital +/- $3,190,034 $343,091 $1,407,195 $852,798 $1,098,679 $241,764 $95,314 $661,151 $342,938 $946,305 $1,714,811 TOTAL REVENUE REQUIREMENT $12,828,725 $12,523,459 $13,978,828 $14,127,929 $15,018,187 $15,969,663 $17,043,977 $18,125,236 $19,281,531 $20,576,890 $21,898,004 Total Balance/(Deficiency) of Funds $0 $0 $0 ($723,787) ($1,502,256) ($2,339,064) ($3,238,107) ($4,203,541) ($5,239,790) ($6,351,573) ($7,543,916) Total Incr. as a % of Current Rates 5.5% 11.3% 17.4% 23.9% 30.7% 37.9% 45.5% 53.5% Proposed Rate Adjustment 5.5% 5.5% 5.5% 5.5% 5.5% 5.5% 5.5% 5.5% Additional Revenue from Rate Increase $723,787 $1,502,256 $2,339,064 $3,238,107 $4,203,541 $5,239,790 $6,351,573 $7,543,916 Balance/(Deficiency) of Funds $0 $0 $0 $0 $0 $0 $0 $0
Deficiency as a % of Retail Rate Revenues 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Residential Bill Comparison (8 HCF X Adjustment Factor) After Proposed Rate Adjustment $120.96 $128.31 $135.36 $142.80 $150.66 $158.95 $167.69 $176.91 $186.64 Monthly Bill Difference $7.35 $7.05 $7.44 $7.86 $8.28 $8.74 $9.22 $9.73 Cumulative Bill Difference $7.35 $14.40 $21.85 $29.71 $37.99 $46.73 $55.95 $65.68 Percentage overall change to bill 6.1% 11.2% 16.1% 20.8% 25.2% 29.4% 33.4% 37.1% Debt Service Coverage Ratio (Revenue Bonds Only)
Before Proposed Rate Adjustment 3.99 2.06 2.52 2.15 2.09 1.40 1.21 1.20 0.93 0.90 0.89 Minimum 1.0/Min Target 1.25 After Proposed Rate Adjustment 3.99 2.06 2.52 2.44 2.69 2.07 2.14 2.41 2.11 2.33 2.59 Minimum 1.0/Min Target 1.25 Reserve Balances
Operating (Cash) Reserve
Beginning Reserve Balance $13,518,120 $13,518,120 $13,518,120 $13,518,120 $13,518,120 $13,518,120 $13,518,120 $13,518,120 $13,518,120 Plus: To Reserves 0 0 0 0 0 0 0 0 0
Less: Transfers to Capital Reserve 0 0 0 0 0 0 0 0 0 Needs to be (-) Less: Other Uses of Funds 0 0 0 0 0 0 0 0 0
Ending Reserve Balance $13,518,120 $13,518,120 $13,518,120 $13,518,120 $13,518,120 $13,518,120 $13,518,120 $13,518,120 $13,518,120 Target Minimum = 180 Days of O&M $5,070,000 $5,280,000 $5,460,000 $5,730,000 $6,200,000 $6,320,000 $6,430,000 $6,640,000 $6,790,000 Emergency/Litigation Reserve $2,000,000 $2,000,000 $2,000,000 $2,000,000 $2,000,000 $2,000,000 $2,000,000 $2,000,000 $2,000,000 Target Minimum $7,070,000 $7,280,000 $7,460,000 $7,730,000 $8,200,000 $8,320,000 $8,430,000 $8,640,000 $8,790,000 Capital Project Reserve
Beginning Reserve Balance $12,392,834 $13,160,029 $8,207,827 $3,646,506 $13,903,270 $8,963,584 $4,739,735 $16,056,006 $13,325,644 Plus: To Reserves 1,407,195 852,798 1,098,679 241,764 95,314 661,151 342,938 946,305 1,714,811 Plus: Bond Funds Year 1 0 0 0 15,000,000 0 0 0 0 0 Input from City Projections Plus: Bond Funds Year 2 0 0 0 0 0 0 15,000,000 0 0
Plus: Transfers from Operating Reserve 0 0 0 0 0 0 0 0 0 Less: CIP (640,000) (5,805,000) (5,660,000) (4,985,000) (5,035,000) (4,885,000) (4,026,667) (3,676,667) (3,326,667) Less: Other Uses of Funds 0 0 0 0 0 0 0 0 0
Ending Reserve Balance $13,160,029 $8,207,827 $3,646,506 $13,903,270 $8,963,584 $4,739,735 $16,056,006 $13,325,644 $11,713,788 Target Minimum = 2 Yr's of Ann Depr Exp $2,800,786 $2,857,000 $2,914,000 $2,972,000 $3,031,000 $3,092,000 $3,154,000 $3,217,000 $3,281,000 $3,347,000 FY 2021 Depr. $1,400,393 X 2 Connection Fee Reserve (Restricted) $5,704,970 $6,704,970 $7,704,970 $8,704,970 $9,704,970 $10,704,970 $11,704,970 $12,704,970 $13,704,970 Monthly

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City of Belmont
Sewer Cost of Service Study
Exhibit 4
Capital Improvement Projects
Capital Improvement Projects FY 2020/21 FY 2021/22 FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 Total Notes Total Sewer Capital $6,850,000 $2,540,000 $6,805,000 $8,260,000 $6,435,000 $3,585,000 $4,035,000 $5,276,667 $5,276,667 $5,276,667 $54,340,000 Additional Master Plan Identified Capital Needs $0 $0 $1,250,000 $0 $1,500,000 $4,750,000 $4,500,000 $2,750,000 $2,750,000 $2,750,000 $20,250,000 Less: Funding Sources
Grants $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Reserves 5,100,000 640,000 5,805,000 5,660,000 4,985,000 5,035,000 4,885,000 4,026,667 3,676,667 3,326,667 43,140,000 Additional Long-Term Debt 0 0 0 0 0 0 0 0 0 0 0
Total Funding Sources $5,100,000 $640,000 $5,805,000 $5,660,000 $4,985,000 $5,035,000 $4,885,000 $4,026,667 $3,676,667 $3,326,667 $43,140,000 Total Capital Improvement Funded Through Rates $1,750,000 $1,900,000 $2,250,000 $2,600,000 $2,950,000 $3,300,000 $3,650,000 $4,000,000 $4,350,000 $4,700,000 $31,450,000 FY 2021 Approx. Depr. $1,400,393 I/I Capital Funding $611,000 $627,000 $644,000 $661,000 $679,000 $697,000 $716,000 $735,000 $755,000 $775,000 $6,900,000 FY 2021 Approx. Depr. $234,197 $1,750,000 $1,900,000 $2,250,000 $2,600,000 $2,950,000 $3,300,000 $3,650,000 $4,000,000 $4,350,000 $4,700,000

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City of Belmont
Sewer Cost of Service Study
Exhibit 5A
Revenue At Present Rates for 2019-2020
Use Description
Billing
Units 0.14
Rate Per Billing
Unit Total
Standby Charge 564 $245.40 $138,405.60
Residential
Collection
Base Charge $/Unit 10,630 $337.96 $3,592,514.80
Flow Charge $/HCF 665,755 758,961 $4.81 3,650,600.97
Total $7,243,115.77
Treatment
Base Charge $/Unit 10,630 $177.62 $1,888,100.60
Flow Charge $/HCF 665,755 758,961 $2.38 1,806,326.47
Total $3,694,427.07
Total Residential Revenue $10,937,542.83
Commercial
Collection
LS - Base Charge $/Unit 293 $337.96 $99,022.28
HS - Base Charge $/Unit 45 $337.96 15,208.20
Low Strength Flow Charge $/HCF 107,921 123,030 $4.81 591,774.01 High Strength Flow Charge $/HCF 20,629 23,517 $9.35 219,884.51 Total 794,305 905,508 $925,889.00
Treatment
LS - Base Charge $/Unit 293 $177.62 $52,042.66
HS - Base Charge $/Unit 45 $177.62 7,992.90
Low Strength Flow Charge $/HCF 107,921 123,030 $2.38 292,811.26 High Strength Flow Charge $/HCF 20,629 23,517 $4.63 108,883.99 Total $461,730.81
Total Commercial Revenue $1,387,619.81
Summary of Revenues at Present Rates
Total Number of Billing Units
Standby 564
Residential 10,630
LS Commercial 293
HS Commercial 45
Total 11,532
Total Annual Flow
Residential 665,755
LS Commercial 107,921
HS Commercial 20,629
Total 794,305
Total Revenue
Standby Charge Revenue $138,406
Residential Revenue $10,937,543
LS Commercial 1,035,650
HS Commercial 351,970
Total $12,325,163
Total Revenue $12,463,568
Estimated 2020 $11,936,993
$526,575

4.4%

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126
City of Belmont
Sewer Cost of Service Study
Exhibit 5B
Projected Revenue At Present Rates for 2020-2021
Use Description
Billing
Units 0.09
Rate Per
Billing Unit Total
Standby Charge 561 $245.40 $137,669.40
Residential
Collection
Base Charge $/Unit 11,129 $361.62 $4,024,361.16
Flow Charge $/HCF 580,968 633,255 $5.15 3,261,265.57
Total $7,285,626.73
Treatment
Base Charge $/Unit 10,748 $190.05 $2,042,580.75
Flow Charge $/HCF 580,968 633,255 $2.55 1,614,801.40
Total $3,657,382.15
Total Residential Revenue $10,943,008.88
Commercial
Collection
LS - Base Charge $/Unit 200 $361.62 $72,324.00
HS - Base Charge $/Unit 25 $361.62 9,040.50
Low Strength Flow Charge $/HCF 125,000 136,250 $5.15 701,687.50 High Strength Flow Charge $/HCF 16,495 17,980 $10.00 179,795.50 Total 722,463 787,485 $962,847.50
Treatment
LS - Base Charge $/Unit 200 $190.05 $38,010.00
HS - Base Charge $/Unit 25 $190.05 4,751.25
Low Strength Flow Charge $/HCF 125,000 136,250 $2.55 347,437.50 High Strength Flow Charge $/HCF 16,495 17,980 $4.95 88,998.77 Total $479,197.52
Total Commercial Revenue $1,442,045.02
Summary of Revenues at Present Rates
Total Number of Billing Units
Standby 561
Residential 11,129
LS Commercial 200
HS Commercial 25
Total 11,915
Total Annual Flow
Residential 580,968
LS Commercial 125,000
HS Commercial 16,495
Total 722,463
Total Revenue
Standby Charge Revenue $137,669
Residential Revenue $10,943,009
LS Commercial 1,159,459
HS Commercial 282,586
Total $12,385,054
Total Revenue $12,522,723
2017-18 2018-19 2019-20 Average 2020-21
Billed HCF 778,645 754,965 794,305 775,972 722,463
% Adjustment Factor 0.14 0.14 0.14 0.09
Total HCF 887,655 860,660 905,508 884,608 787,485

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127
City of Belmont
Sewer Cost of Service Study
Exhibit 5C
Projected Revenue At Present Rates for 2021-2022
Use Description
Billing
Units 0.09
Rate Per
Billing
Unit Total
Standby Charge 555 $245.40 $136,197.00
Residential
Collection
Base Charge $/Unit 10,748 $386.93 $4,158,650.10
Flow Charge $/HCF 678,490 739,554 $5.51 4,074,941.12
Total $8,233,591.22
Treatment
Base Charge $/Unit 10,748 $203.36 $2,185,674.63
Flow Charge $/HCF 678,490 739,554 $2.72 2,011,586.18
Total 97,521 $4,197,260.81
Total Residential Revenue $12,430,852.03
Commercial
Collection
LS - Base Charge $/Unit 208 $386.93 $80,479.21
HS - Base Charge $/Unit 19 $386.93 7,351.67
Low Strength Flow Charge $/HCF 115,097 125,455 $5.51 691,258.09 High Strength Flow Charge $/HCF 13,938 15,193 $10.70 162,561.03 Total 807,524 880,202 $941,650.00
Treatment
LS - Base Charge $/Unit 208 $203.36 $42,297.71
HS - Base Charge $/Unit 19 $203.36 3,863.84
Low Strength Flow Charge $/HCF 115,097 125,455 $2.72 341,238.11 High Strength Flow Charge $/HCF 13,938 15,193 $5.30 80,520.89 Total $467,920.55
Total Commercial Revenue $1,409,570.55
Summary of Revenues at Present Rates
Total Number of Billing Units
Standby 555
Residential 10,748
LS Commercial 208
HS Commercial 19
Total 11,530
Total Annual Flow
Residential 678,490
LS Commercial 115,097
HS Commercial 13,938
Total 807,524
Total Revenue
Standby Charge Revenue $136,197
Residential Revenue $12,430,852
LS Commercial 1,155,273
HS Commercial 254,297
Total $13,840,423
Total Revenue $13,976,620
2018-19 2019-20 2020-21 Average 2021-22
Billed HCF 754,965 794,305 722,463 757,244 807,524
% Adjustment Factor 0.14 0.14 0.09 0.09
Total HCF 860,660 905,508 787,485 851,218 880,202

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128
City of Belmont
Sewer Cost of Service Study
Exhibit 5D
Projected Revenue At Present Rates for 2022-2023
Use Description
Billing
Units 0.10
Rate Per
Billing
Unit Total
Standby Charge 555 $245.40 $136,197.00
Residential
Collection
Base Charge $/Unit 10,748 $386.93 $4,158,650.10
Flow Charge $/HCF 580,968 639,065 $5.51 3,521,248.88
Total $7,679,898.98
Treatment
Base Charge $/Unit 10,748 $203.36 $2,185,674.63
Flow Charge $/HCF 580,968 639,065 $2.72 1,738,257.16
Total $3,923,931.79
Total Residential Revenue $11,603,830.77
Commercial
Collection
LS - Base Charge $/Unit 208 $386.93 $80,479.21
HS - Base Charge $/Unit 19 $386.93 7,351.67
Low Strength Flow Charge $/HCF 125,000 137,500 $5.51 757,625.00 High Strength Flow Charge $/HCF 16,495 18,145 $10.70 194,146.15 Total 722,463 794,710 $1,039,602.03
Treatment
LS - Base Charge $/Unit 208 $203.36 $42,297.71
HS - Base Charge $/Unit 19 $203.36 3,863.84
Low Strength Flow Charge $/HCF 125,000 137,500 $2.72 374,000.00 High Strength Flow Charge $/HCF 16,495 18,145 $5.30 96,165.85 Total $516,327.40
Total Commercial Revenue $1,555,929.43
Summary of Revenues at Present Rates
Total Number of Billing Units
Standby 555
Residential 10,748
LS Commercial 208
HS Commercial 19
Total 11,530
Total Annual Flow
Residential 580,968
LS Commercial 125,000
HS Commercial 16,495
Total 722,463
Total Revenue
Standby Charge Revenue $136,197
Residential Revenue $11,603,831
LS Commercial 1,254,402
HS Commercial 301,528
Total $13,159,760
Total Revenue $13,295,957
2019-20 2020-21 2021-22 Average 2022-23
Billed HCF 794,305 722,463 807,524 774,764 722,463
% Adjustment Factor 0.14 0.09 0.09 0.100
Total HCF 905,508 787,485 880,202 857,731 794,710

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129
City of Belmont
Sewer Cost of Service Study
Exhibit 6
Development of the Volume Distribution Factor
FY 2022/23 11.0% Total Annual Avg. Daily
Annual Wastewater Inflow and Flow at Plant Flow At % of Flow (CCF) [1] Infiltration [2] [3] (CCF) Plant (MGD) [4] Total Residential 580,968 63,907 644,875 1.32 80.4%
Commercial 125,000 13,750 138,750 0.28 17.3%
Commercial High S. 16,495 1,814 18,309 0.04 2.3%
------------- ------------- ------------- ------------- ------------- Total Consumption 722,463 79,471 801,934 1.64 100.0%
Estimated Plant Flow [4] 1.94
Distribution Factor (VOL)
Note:
[1] Based on 2021/22 customer’s winter period consumption, plus estimated growth for FY 22/23 [2] Calculated based on billing report versus total plant flow. - Inflow represents external groundwater that can enter the sewer at service connections where the pipe is broken, at defective joints, at connections to manholes, etc. - Infiltration is water discharged to sewer from sources such as roof leaders, cellar, yard and drains from springs and other wet areas, storm sewers, catch basins, surface water runoff, etc [3] Total I&I allocated to each class of service based on flow. [4] City provided total flow for FY 2021/22 plus one year growth.

130
City of Belmont
Sewer Cost of Service Study
Exhibit 7
Development of the Customer Distribution Factor
Number of % of Number of Weighting Weighted % of
Units Total Bills [1] Factor Customer Total
Residential 10,748 97.9% 7,780 1.0 7,780 97.2%
Commercial 208 1.9% 208 1.0 208 2.6%
Commercial High S. 19 0.2% 19 1.0 19 0.2%
------------- ------------- ------------- ------------- ------------- Total Customers 10,975 100.0% 8,007 8,007 100.0%
Distribution Factor (AC) (WCA)
Note:
[1] Number of Residential bills from billing records.

Actual Customer Customer Service & Accounting

131
City of Belmont
Sewer Cost of Service Study
Exhibit 8
Development of the Strength Distribution Factor
Annual Flow Avg. Factor Calculated % of Avg. Factor Calculated % of (CCF) (mg/l) [1] Pounds [2] Total (mg/l) [1] Pounds [2] Total Residential 644,875 250 1,006,337 77.2% 220 885,576 77.2% Commercial 138,750 250 216,521 16.6% 220 190,539 16.6%
Commercial High S. 18,309 700 80,002 6.1% 616 70,402 6.1% ------------- ------------- ------------- ------------- ------------- Total Strength 801,934 1,302,860 100.0% 1,146,517 100.0% Distribution Factor (BOD) (SS)
Note:
[1] Average BOD and SS strength factors based on typical residential customer from similar studies. High strength based on 2.8 times residential based on WA State Dept Health, Rule Development Committee Issue Research Report, Wastewater Quality/Strength/Content, page 6 of 18. [2] Calculated pounds equals (annual flow (x) 748 (x) strength factor mg/l (x) 8.34 /1,000,000) Biochemical Oxygen Demand Suspended Solids

132
City of Belmont
Sewer Cost of Service Study
Exhibit 9
Development of the Revenue Related Distribution Factor
Projected Year % of
FY 2022/23 Total
Residential $11,603,831 88.2%
Commercial 1,254,402 9.5%
Commercial High S. 301,528 2.3%
--------------- -------------
Total Rate Revenues $13,159,760 100.0%
Distribution Factor (RR)

133
City of Belmont
Sewer Cost of Service Study
Exhibit 10
Functionalization and Allocation of Plant in Service
Customer Related
Weighted for:

Total Operating Biochemical Suspended Actual Customer
Plant Volume Oxygen Demand Solids Customer Acct/Svcs Revenue Direct FY 2021 (VOL) (BOD) (SS) (AC) (WCA) (RR) (DA)
Sewer Operations (501)
Land $14,793 $9,615 $0 $0 $5,178 $0 $0 $0 65.0% VOL 35% AC Improvements 8,442,998 5,487,949 0 0 2,955,049 0 0 0 65.0% VOL 35% AC Machinery and Equipment 261,761 261,761 0 0 0 0 0 0 100.0% VOL --------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- Total Sewer Operations (501) $8,719,552 $5,759,325 $0 $0 $2,960,227 $0 $0 $0 Sewer Capital (503)
Land $0 $0 $0 $0 $0 $0 $0 $0 65.0% VOL 35% AC
Construction in Progress 5,254,615 3,415,500 0 0 1,839,115 0 0 0 65.0% VOL 35% AC Improvements 33,530,504 21,794,828 0 0 11,735,676 0 0 0 65.0% VOL 35% AC Machinery and Equipment 9,098 9,098 0 0 0 0 0 0 100.0% VOL --------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- Total Sewer Capital (503) $38,794,217 $25,219,425 $0 $0 $13,574,792 $0 $0 $0 TOTAL PLANT IN SERVICE $47,513,769 $30,978,751 $0 $0 $16,535,019 $0 $0 $0 Less: Accumulated Depreciation
Improvements
Sewer Operations (501) ($6,754,397) ($4,390,358) $0 $0 ($2,364,039) $0 $0 $0 As Sewer Operations (501) Sewer Capital (503) (10,343,235) (6,723,103) 0 0 (3,620,132) 0 0 0 As Sewer Capital (503) --------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- Total Accum Depr Imprv. ($17,097,632) ($11,113,461) $0 $0 ($5,984,171) $0 $0 $0 Machinery and Equipment
Sewer Operations (501) ($251,179) ($251,179) $0 $0 $0 $0 $0 $0 As Sewer Operations (501) Sewer Capital (503) (9,098) (5,914) 0 0 (3,184) 0 0 0 As Sewer Capital (503) --------------- --------------- --------------- --------------- --------------- --------------- --------------- --------------- Total Accum Depr Mach & Equip ($260,277) ($257,093) $0 $0 ($3,184) $0 $0 $0 Total Accumulated Depreciation ($17,357,909) ($11,370,554) $0 $0 ($5,987,356) $0 $0 $0 Net Plant in Service $30,155,860 $19,608,197 $0 $0 $10,547,663 $0 $0 $0 Basis of Allocation

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City of Belmont
Sewer Cost of Service Study Page 1 of 3
Exhibit 11
Functionalization and Allocation of
Revenue Requirements
Weighted for:

Biochemical Suspended Actual Customer
Total Volume Oxygen Demand Solids Customer Acct/Svcs Revenue Direct FY 2022/23 (VOL) (BOD) (SS) (AC) (WCA) (RR) (DA)

EXPENSES
Planning and Project Management (701)
Personnel
Regular Salaries $346,292 $225,169 $0 $0 $121,123 $0 $0 $0 As Net Plant In Svc Permanent Part-Time 16,626 10,810 0 0 5,815 0 0 0 As Net Plant In Svc Temporary Part-Time 3,781 2,459 0 0 1,323 0 0 0 As Net Plant In Svc Overtime 0 0 0 0 0 0 0 0 As Net Plant In Svc
Termination Pay 0 0 0 0 0 0 0 0 As Net Plant In Svc
P.E.R.S. Retirement 73,068 47,511 0 0 25,557 0 0 0 As Net Plant In Svc Medicare 4,311 2,803 0 0 1,508 0 0 0 As Net Plant In Svc Life & Disability Insurance 1,789 1,163 0 0 626 0 0 0 As Net Plant In Svc State Unemployment Insurance 0 0 0 0 0 0 0 0 As Net Plant In Svc Dental Plan 2,759 1,794 0 0 965 0 0 0 As Net Plant In Svc Vision Plan 645 419 0 0 225 0 0 0 As Net Plant In Svc
Allowances 1,106 719 0 0 387 0 0 0 As Net Plant In Svc
Deferred Compensation 9,656 6,279 0 0 3,377 0 0 0 As Net Plant In Svc SEC 125 Benefits 51,120 33,240 0 0 17,880 0 0 0 As Net Plant In Svc Benefit Prefunding 37,688 24,506 0 0 13,182 0 0 0 As Net Plant In Svc GASB 68 Pension Expense 0 0 0 0 0 0 0 0 As Net Plant In Svc GASB 75 OPEB Expense 0 0 0 0 0 0 0 0 As Net Plant In Svc Workers' Compensation 9,806 6,376 0 0 3,430 0 0 0 As Net Plant In Svc ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- Total Personnel $558,645 $363,247 $0 $0 $195,398 $0 $0 $0

Supplies & Services
Other Professional/Technical $5,098 $3,315 $0 $0 $1,783 $0 $0 $0 As Net Plant In Svc Liability Insurance Charge 7,898 5,136 0 0 2,763 0 0 0 As Net Plant In Svc Postage/Delivery Services 103 67 0 0 36 0 0 0 As Net Plant In Svc Telephone 0 0 0 0 0 0 0 0 As Net Plant In Svc
Printing & Binding 0 0 0 0 0 0 0 0 As Net Plant In Svc
Travel & Training 3,060 1,990 0 0 1,070 0 0 0 As Net Plant In Svc Membership & Dues 6,120 3,979 0 0 2,141 0 0 0 As Net Plant In Svc Miscellaneous 4,120 2,679 0 0 1,441 0 0 0 As Net Plant In Svc General Supplies 1,030 670 0 0 360 0 0 0 As Net Plant In Svc Small Tools 515 335 0 0 180 0 0 0 As Net Plant In Svc
Books/Manuals/Subscriptions 206 134 0 0 72 0 0 0 As Net Plant In Svc ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- Total Supplies & Services $28,150 $18,304 $0 $0 $9,846 $0 $0 $0 Administrative & Other
Vehicle Usage Charge $13,875 $9,022 $0 $0 $4,853 $0 $0 $0 As Net Plant In Svc Computer Usage Charge 148,359 0 0 0 0 148,359 0 0 100% WCA Building Maintenance Charge 36,552 23,767 0 0 12,785 0 0 0 As Net Plant In Svc Administrative Charge 161,488 0 0 0 0 161,488 0 0 100% WCA ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- Total Administrative & Other $360,273 $32,789 $0 $0 $17,638 $309,847 $0 $0

Total Planning and Project Management (701) $947,069 $414,340 $0 $0 $222,882 $309,847 $0 $0 Strength Related
Basis of Allocation

135
City of Belmont
Sewer Cost of Service Study Page 2 of 3
Exhibit 11
Functionalization and Allocation of
Revenue Requirements
Weighted for:

Biochemical Suspended Actual Customer
Total Volume Oxygen Demand Solids Customer Acct/Svcs Revenue Direct FY 2022/23 (VOL) (BOD) (SS) (AC) (WCA) (RR) (DA)
Strength Related
Basis of Allocation
Sanitary Sewer Operations (710)
Personnel
Regular Salaries $758,383 $493,122 $0 $0 $265,261 $0 $0 $0 As Net Plant In Svc Overtime $6,511 4,233 0 0 2,277 0 0 0 As Net Plant In Svc Standby/Unscheduled $9,255 6,018 0 0 3,237 0 0 0 As Net Plant In Svc Termination Pay $0 0 0 0 0 0 0 0 As Net Plant In Svc
P.E.R.S. Retirement $145,040 94,309 0 0 50,731 0 0 0 As Net Plant In Svc F.I.C.A. Social Security $0 0 0 0 0 0 0 0 As Net Plant In Svc Medicare $11,557 7,515 0 0 4,042 0 0 0 As Net Plant In Svc Life & Disability Insurance $4,275 2,779 0 0 1,495 0 0 0 As Net Plant In Svc Dental Plan $10,888 7,080 0 0 3,808 0 0 0 As Net Plant In Svc Vision Plan $2,192 1,425 0 0 767 0 0 0 As Net Plant In Svc Allowances $442 288 0 0 155 0 0 0 As Net Plant In Svc
Deferred Compensation $26,299 17,100 0 0 9,199 0 0 0 As Net Plant In Svc SEC 125 Benefits $176,647 114,861 0 0 61,786 0 0 0 As Net Plant In Svc Benefit Prefunding $83,985 54,609 0 0 29,375 0 0 0 As Net Plant In Svc Compensated Absences $0 0 0 0 0 0 0 0 As Net Plant In Svc Workers' Compensation $89,878 58,441 0 0 31,437 0 0 0 As Net Plant In Svc ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- Total Personnel $1,325,351 $861,781 $0 $0 $463,570 $0 $0 $0 Supplies & Services
After Hours Dispatch Service $10,196 $6,630 $0 $0 $3,566 $0 $0 $0 As Net Plant In Svc Property Tax Admin Fee 46,197 30,039 0 0 16,158 0 0 0 As Net Plant In Svc Other Professional/Tech 95,843 0 0 0 0 95,843 0 0 100% WCA Water 12,600 8,193 0 0 4,407 0 0 0 As Net Plant In Svc
Other Waste Water Treatment 157,500 60,834 45,457 51,208 0 0 0 0 39% VOL 29% BOD 33% SS S.V.C.W. Sewer Treatment 3,530,000 1,363,460 1,018,823 1,147,717 0 0 0 0 39% VOL 29% BOD 33% SS Repair & Maintenance Service 20,600 13,395 0 0 7,205 0 0 0 As Net Plant In Svc Land/Building Rentals 57,680 37,505 0 0 20,175 0 0 0 As Net Plant In Svc Equipment/Vehicle Rental 2,060 1,339 0 0 721 0 0 0 As Net Plant In Svc Liability Insurance Charge 515,000 334,868 0 0 180,132 0 0 0 As Net Plant In Svc Communications 7,210 4,688 0 0 2,522 0 0 0 As Net Plant In Svc Telephone 0 0 0 0 0 0 0 0 100% WCA
Travel And Training 7,140 4,643 0 0 2,497 0 0 0 As Net Plant In Svc Street Access Fee 204,204 204,204 0 0 0 0 0 0 100.0% VOL Memberships & Dues 8,160 5,306 0 0 2,854 0 0 0 As Net Plant In Svc Miscellaneous 2,575 1,674 0 0 901 0 0 0 As Net Plant In Svc General Supplies 5,150 3,349 0 0 1,801 0 0 0 As Net Plant In Svc Small Tools 10,300 6,697 0 0 3,603 0 0 0 As Net Plant In Svc Safety Equipment 15,450 10,046 0 0 5,404 0 0 0 As Net Plant In Svc Natural Gas & Electricity 50,400 50,400 0 0 0 0 0 0 100.0% VOL Gasoline 16,800 10,924 0 0 5,876 0 0 0 As Net Plant In Svc Repair & Maintenance Supplies 41,200 26,789 0 0 14,411 0 0 0 As Net Plant In Svc ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- Total Supplies & Services $4,816,265 $2,184,983 $1,064,281 $1,198,925 $272,234 $95,843 $0 $0