CITY of COTATI
1963
2025 Water & Sewer Rate Study
City of Cotati
Draft Report
February 20, 2025
HILDEBRAND
CONSULTING
Mr. Craig Scott
Public Works Director / City Engineer
H
City of Cotati
201 West Sierra Ave.
Cotati, CA94931
Re: 2025 Water and Sewer Rate Study
Dear Mr. Scott,
Hildebrand Consulting is pleased to present this 2025 Water and Sewer Rate Study (Study) for the water and Sewer Enterprises that were performed for the City of Cotati.
We appreciate the fine assistance provided by you and all of the members of the City staff who participated in the Study.
If you or others at the City have any questions, please do not hesitate to contact me at:
[email protected]
(510) 316-0621
We appreciate the opportunity to be of service to the City and look forward to the possibility of doing so again in the near future.
Sincerely,
Mark Hildebrand
Hildebrand Consulting, LLC
Enclosure
City of Cotati
2025 Water and Sewer Financial Plans Table of Contents
TABLE OF CONTENTS
SECTION 1. INTRODUCTION AND SUMMARY.. ..2
1.1 WATER AND SEWER UTILITY BACKGROUND... 2
1.2 STUDY BACKGROUND.....
1.3 STUDY OBJECTIVES..... 3
1.4 STUDY METHODOLOGY..............
1.5 SUMMARYOF FINDINGS AND RECOMMENDATIONS ...
SECTION. WATER ENTERPRISE FINANCIAL PLAN 5
2.1 WATER FUND STRUCTURE AND CASH FLOWS.. 5
2.2 WATER ENTERPRISE BEGINNING FUND BALANCES.. 7
2.3 CUSTOMER GROWTH... 8
2.4 WATER ENTERPRISE RATE REVENUE.. 8
2.5 WATER ENTERPRISE NON-RATE REVENUES 9
2.6 FUTURE WATER USAGE ....... 10
2.7 WATER ENTERPRISE OPERATING AND DEBT EXPENSES 10
2.8 WATER UTILITY COST ESCALATION.. 11
2.9 WATER CAPITAL IMPROVEMENT PROGRAM. 12
2.10 WATER ENTERPRISE DEBT STRATEGY. 13
2.11 PROPOSED WATER RATE REVENUE INCREASES .. 14
SECTION 3. SEWER ENTERPRISE FINANCIAL PLAN 17
3.1 SEWER FUND STRUCTURE AND CASH FLOWS. 17
3.2 SEWER ENTERPRISE BEGINNING FUND BALANCES.. 19
3.3 CUSTOMER GROWTH..... 19
3.4 SEWER ENTERPRISE RATE REVENUE ..... 19
3.5 SEWER ENTERPRISE NON-RATE REVENUES... 20
3.6 SEWER ENTERPRISE OPERATING AND DEBT EXPENSES.. 21
3.7 SEWER UTILITY COST ESCALATION.. 22
3.8 SEWER CAPITAL IMPROVEMENT PROGRAM... 23
3.9 PROPOSED SEWER RATE REVENUE INCREASES 24
LIST OF TABLES
Table 1: Water Enterprise FY2024/25 Beginning Cash Balance.. ... 8 1 City of Cotati
2025 Water and Sewer Financial Plans Table of Contents
Table 2: Sewer Enterprise FY2024/25 Beginning Cash Balance 19
LIST OF FIGURES
Figure 1: Water Enterprise Revenue Categories (FY2024/25 budget). 9 Figure 2: Water Enterprise Operating &Debt Expenses (FY2024/25) Figure 3: Water Enterprise Capital Spending 13
Figure 4: Water Enterprise Cash Flow Projection with Recommended Rate Increases and Debt Issuances..... 15
Figure 5: Sewer Enterprise Revenue Categories (FY2024/25 budget). 21 Figure 6: Sewer Enterprise Operating & Debt Expenses (FY2024/25). 22 Figure 7: Sewer Enterprise Capital Spending. 24
Figure 8: Sewer Enterprise Cash Flow Projection with Recommended Rate Increases. .. 25
LIST OF SCHEDULES
Schedule W-1 - Water Enterprise Capital Spending Request Schedule W-2 - Water Enterprise Cash Flow Pro Formas
Schedule W-3 - Water Enterprise 5-Year Schedule of Proposed Rates Schedule S-1 - Sewer Enterprise Capital Spending Request Schedule S-2 - Sewer Enterprise Cash Flow Pro Formas
Schedule S-3 - Sewer Enterprise 5-Year Schedule of Proposed Rates City of Cotati
2025 Water and Sewer Financial Plans Table of Contents
List of Acronyms
ADU accessory dwelling unit
AWWA American Water Works Association
CIP capital improvement program
COSA cost ofservice analysis
DCR debt service coverage ratio
DU dwelling unit
FY fiscal year (which ends on June 30 for the City)
O&M operations and maintenance
PayGo "pay as you go" (i.e., cash financing for capital projects) TGAL thousand gallons
City of Cotati
2025 Water and Sewer Financial Plans Introduction and Summary Section 1. ', 20- "3!2'-, , " 13++ 07
Hildebrand Consulting has been retained by the City of Cotati (City) to conduct an update to the financial plans and utility rates for the City's Water and Sewer Enterprises.
This report describes in detail the assumptions, procedures, and results of the Study, including conclusions and recommendations.
1.1 WATER AND SEWER UTILITYBACKGROUND
The City of Cotati is located in the County of Sonoma (County), approximately 8 miles south of the City of Santa Rosa. Cotati is within the nine-county San Francisco Bay Region. The City owns and operates a public drinking water system consisting of pipelines, wells, pumps, and tanks and is regulated by the State Water Resources Control Board Division of Drinking Water. In addition, the City owns and operates a public sewer collection system and sends wastewater to the City of Santa Rosa's Regional Wastewater Treatment Plant for treatment and reuse (referred to as the "Subregional" system).
1.2 STUDYBACKGROUND
In 2022, the City of Cotati retained Hildebrand Consulting, LLC to prepare ten-year Water and Sewer Enterprise financial plans for the City's water and sewer utilities (2022 Rate Study'). Following that study, the City adopted new water and sewer rate schedules for a 5-year planning period with the last rate increase scheduled for May 15, 2026.
' City of Cotati, 2022 Water and Sewer Rate Study- Final Report, May 4, 2022 2 City of Cotati
2025 Water and Sewer Financial Plans Introduction and Summary
1.3 STUDYOBJECTIVES
The purpose ofthis Study is to develop new 10-year projections ofoperating and capital expenses in order to create financial plans, including new 5-year rate schedules, which will generate sufficient revenue to meet each Enterprise's financial and service obligations for ongoing operation and maintenance, debt service, and capital improvements while maintaining prudent reserves.
1.4 STUDYMETHODOLOGY
This Study applied methodologies that are aligned with industry standard practices for rate setting as laid out in the AWWAMI Manual, and applicable law, including California Constitution Article XIII D, Section 6(b), commonly known as Proposition 218.
The Study began with a review of both utility enterprises current financial dynamics and latest available data for the utilities' operations. Multi-year financial management plans were then developed to determine the level of annual rate revenue required to cover projected annual operating expenses, debt service (including coverage targets), and capital cost requirements while maintaining adequate reserves. This portion ofthe Study was conducted using MS Excel®-based financial planning models which were customized to reflect financial dynamics and latest available data for the City's operations in order to develop a long-term financial management plan, inclusive of projected annual revenue requirements and corresponding annual rate adjustments.
While this Study did not include an update to the cost-of-service analysis (COSA), a comprehensive COSAwas completed within the past 10 years as part ofa 2017 study.
We understand that the 2017 COSAwas conducted based upon principles outlined by the AWWA, legal requirements (i.e., Proposition 218) and other generally accepted industry practices to develop rates that reflect the cost of providing service. " City of Cotati, Water and Sewer Rate Study-Final Report, June 20, 2017, prepared by The Reed Group 3 City of Cotati
2025 Water and Sewer Financial Plans Introduction and Summary
1.5 SUMMARYOF FINDINGS AND RECOMMENDATIONS
This Study is recommending that a new schedule of water and sewer rates replace the schedules that were proposed by the 2022 Rate Study. The revisions to the rate schedules are necessary due to significant financial changes for both enterprises. The Water Enterprise is planning for higher capital spending than was anticipated bythe 2022 Rate Study. The Sewer Enterprise is also planning for higher capital spending and has received lower rate revenue than had been anticipated by the 2022 Rate Study.
City of Cotati
2025 Water and Sewer Financial Plans Introduction and Summary Section 2. 5 2#0 #, 2#0. O'1#$', ,!' * •*,
This section presents the financial plan for the City's Water Enterprise, including a description of the source data, assumptions, and City's financial policies. The City has provided recent actual spending data and budgeted financial information associated with operation of the Water Enterprise, including recent actual operating costs for FY 2023/24, budgeted operating costs for FY2024/25, a multi-year capital improvement program (CIP), and outstanding debt service obligations. City staff also assisted in providing other assumptions and policies, such as reserve targets and escalation rates for operating costs (all of which are described in the following subsections).
The Water Enterprise's rate revenue requirement is the amount ofrevenue needed from water rates to cover planned operating, maintenance, debt service, and capital program costs with consideration of other revenues and financial reserves.
The Water Enterprise 10-year Financial Plan was developed through several interactive work sessions with City staff. As a result ofthis process, the Study has produced a robust Financial Plan that will enable the City to meet its future revenue requirements and achieve financial performance objectives throughout the projection period while striving to limit rate increases.
2.1 WATER FUND STRUCTURE AND CASH FLOWS
The financial plan is an annual cash flow model. As a cash flow model, it differs from standard accounting income statements, and balance sheets. The financial plan models sources and uses of funds into, out of, and between the various funds and reserves ofthe Water Enterprise.
The financial plan model is based on the fund structures currently used by the City and incorporates reserve policies for specified purposes. The reserve structure includes an 5 City of Cotati
2025 Water and Sewer Financial Plans Introduction and Summary Operating Reserve within the Water Operating Funds (Fund 401) and the Water Capital Fund (Fund 402) for the purpose of meeting water system capital improvement needs.
Exhibit 1 includes a schematic diagram of the funds/reserves and major cash flows associated with the Water Enterprise financial plan model.
An understanding ofthe fund/reserve structure is helpful in understanding the financial plan worksheets that model estimated annual cash flows through the Water Enterprise from one year to the next. The fund/reserve structure is comprised of:
2.1.1 Water Operating Fund (Fund 401)
The Water Operating Fund (Fund 401) is the primary fund within the Enterprise. Most of the Water Enterprise's revenues, including user rate revenues, flow into the Operating Fund and all operating and maintenance costs, including debt service payments, are paid out ofthis fund. Funds are also transferred from the Water Operating Fund to the Water Capital Fund to help pay for capital projects ofthe capital improvement program.
Operating Reserve Target - The 2017 Study recommended that the City establish and maintain a minimum Water Operating reserve target equal to 33 percent of annual operating and maintenance costs, including debt service. The purpose ofthe Operating Reserve target is to have sufficient funds for unplanned operating and maintenance expenditures. The Operating Reserve target in fiscal year (FY) 2024/25 is $728 thousand.
The balance in the Water Operating Fund at the beginning of FY 2024/25 was about $2,423,000, or about $1,695,000 above the Operating Reserve target.
The balance in the Operating Fund in excess of the target amount for the Operating Reserve is shown in the financial plan as "Available Balance". After all other obligations are met, the Available Balance is used to offset rate increases. The financial plan models generally seek to reduce any Available Balance over time. 6 City of Cotati
2025 Water and Sewer Financial Plans Introduction and Summary Exhibit 1 - Water Enterprise - Schematic Diagram of Cash Flows Operations & Maintenance
Water Rate Revenue
Operating Fund (401)
Operating Reserve Debt Service
Interest Earnings
Other Revenue
Debt Proceeds
Water Capital Fund (402)
Impact Fees Capital Reserve Capital Projects
Impact Fee Reserve
Interest Earnings
2.1.2 Water Capital Fund (Fund 402)
The Water Capital Fund is used to account for revenues and funds available for capital project expenditures. The capital fund is primarily funded through transfers from the Operating Fund for projects that rehabilitate aging infrastructure. Impact Fees, paid by new development (if and when new development occurs), are available to improve system capacity and help meet the capacity needs of new development. The financial plan models generally seek to maintain a positive balance in the capital funds while also covering the costs of planned capital improvement projects. This is achieved through annual transfers of funds from the operating fund to the capital fund of each utility.
This financial plan aims to maintain a target cash reserve level in the capital fund equal to average annual capital spending (currently about $1.25 million).
2.2 WATER ENTERPRISE BEGINNING FUND BALANCES
The ending cash balance for FY2023/24 was used to establish the FY2024/25 beginning balance, as outlined in Table 1. It should be noted that the amount of cash that the Water Enterprise keeps in reserves is a product of its reserve policies (see Section 1.1). 7 City of Cotati
2025 Water and Sewer Financial Plans Introduction and Summary Table 1: Water Enterprise FY 2024/25 Beginning Cash Balance Water Operating Reserve $2,422,600
• Water Capital Reserve $1,064,100
Total Water Reserves: $3,486,700
2.3 CUSTOMER GROWTH
Growth in the customer base affects both water demand as well as Impact Fee revenue.
Estimated annual Impact Fee revenues are based on the applicable fees and the amount of new development activity. Impact Fee revenue accrues to the respective capital fund and is used to help fund planned capital improvement projects.
In recent years, developer impact fee revenues indicate that the City has had essentially no growth. Future growth will depend on many factors, including the economy. Based on recent Impact Fee revenues (minimal) and direction from City staff, this Study assumes that there will be no material growth over the next 10 years.
2.4 WATER ENTERPRISE RATE REVENUE
Rate revenue is the revenue generated from customers for water service. The City collects rate revenue from water customers based on a fixed monthly "Service Charge" (assessed based on meter size) and a water "Usage Rate" (applied to each thousand gallons ("TGAL") of water use). Customers receive a monthly bill.
The Water Enterprise Financial Plan starts with FY 2024/25 budgeted rate revenues.
Budgeted and projected rate revenues (including proposed rate adjustments) are listed in the first table in Schedule W-2. Water demands are assumed to remain constant over the planning period.
3 Development Impact Fees are one-time charges to new development to pay for capacity in the utility systems.
8 City of Cotati
2025 Water and Sewer Financial Plans Introduction and Summary
2.5 WATER ENTERPRISE NON-RATE REVENUES
In addition to rate revenue, the City receives additional "non-rate revenue" from sources such as miscellaneous service fees, developer Impact Fees, occasional grants, and interest revenue on investments. Projections of miscellaneous fee revenues were based on FY2024/25 budgeted revenues. Future interest income was estimated based upon projected fund balances and assumed interest rate of 1.5 percent, which is consistent with the City's recent historical interest earnings relative to its total reserve levels. Interest accrues to each of the funds. No Impact Fee revenue is assumed for the planning period.
Budgeted water rate and non-rate revenues are depicted in Figure 1 below and listed in detail in the first table in Schedule W-2.
Interest Earnings
2.5%
Miscellaneous
Fees
2.0%
Rate Revenue
95.5%
Figure 1: Water Enterprise Revenue Categories (FY 2024/25 budget) 9 City of Cotati
2025 Water and Sewer Financial Plans Introduction and Summary
2.6 FUTURE WATER USAGE
Water usage is integral to Water Enterprise finances since more than 50 percent of rate revenue is derived from the variable Usage Rate. While a reduction in water usage may have significant impacts on the Water Enterprise's rate revenue, this Study does not attempt to predict future water usage trends (given the fact that it is impossible to accurately predict whether a new drought will emerge). Rather, this Water Enterprise financial plan uses FY2023/24 actual rate revenue as the basis for future rate revenue (and accounts for the 6 percent increase that was applied to those rates for FY2024/25).
In 2017 the City adopted Water Shortage Surcharges as a means to protect the Water Enterprise from the revenue volatility associated with droughts. While the current study does not propose to renew that policy, the City may wish to consider re-establishing Water Shortage Surcharges during the next rate study.
2.7 WATER ENTERPRISE OPERATING AND DEBT EXPENSES
The Water Enterprise's expenses include operating and maintenance expenses, debt service, and capital spending. Capital spending is addressed separately in Section 2.9.
Future operating and maintenance expenses were projected based upon the budgeted expenditures from FY2024/25 and adjusted for inflation (see Section 2.8).
Major budgeted expense categories for FY2024/25 are depicted in Figure 2. The Water Enterprise does not have any existing debt aside for a CalPERS repayment plan.
Budgeted and projected operating and maintenance costs well as debt service expenses are listed in Schedule W-2.
10 City of Cotati
2025 Water and Sewer Financial Plans Introduction and Summary CaPERS Payment Plan
3.5%
Salaries and
Benefits
SCWA Water
32.7%
Purchases
30.5%
Professional
Adminstration Services
7.5% 8.1%
Taxes, Insurance Maintenance
and Other Conservation Utilities 5.3%
5.3% 1.3% 5.8%
Figure 2: Water Enterprise Operating & Debt Expenses (FY 2024/25)
2.8 WATER UTILITY COST ESCALATION
Annual cost escalation factors for the various types of expenses were developed based upon a review of historical inflation trends, published inflation forecasts, industry experience, and discussions with City staff. During the projection period, the following escalation assumptions were made:
• Sonoma Water rates - 12.0 percent in FY2025/26 and FY2026/27 and 6.0 percent thereafter.
• Benefits - 4.0 percent per year
• Utilities and Fuel- 18 percent in FY2025/26, then 8.0 percent for two years, then
5.0 percent thereafter
11 City of Cotati
2025 Water and Sewer Financial Plans Introduction and Summary • Insurance - 15 percent in FY2025/26, then 6 percent for three years, then 3 percent thereafter
• All other expenses - 3.0 percent per year
These inflation assumptions were discussed with City staff and are consistent with the assumptions used by other regional utilities and are reasonable for financial planning purposes.
2.9 WATER CAPITAL IMPROVEMENT PROGRAM
Figure 3 shows that from FY2022/23 to FY2023/24 the City has spent very little in capital projects to rehabilitate or improve the water system (an average of $460 thousand per year). Starting in FY 2024/25, the City plans to increase its annual capital spending significantly in order to proactively address the water system's rehabilitation needs associated with treatment facilities, pipes, water tanks, and other system facilities.
Most significantly, the City plans to replace and upgrade the existing Cypress Storage Tank in FY2027/28 (at a cost of approximately $2.8 million in 2025 dollars). This will increase annual capital spending to an average of nearly $1.3 million per year over the next 10 years. A detailed list of the requested capital projects and associated costs is provided in Schedule W-1.
12 City of Cotati
2025 Water and Sewer Financial Plans Introduction and Summary $4.5
$4.0
$3.5 • Projected Spending
$3.0 • Historical Spending
$2.5
$2.0
$1.5
$1.0
$0.5
$0.0
FY2023 FY2024 FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 FY2031 FY2032 FY2033 FY2034 FY2035 Figure 3: Water Enterprise Capital Spending
2.10 WATER ENTERPRISE DEBT STRATEGY
In order to meet the cash flow requirements associated with the near-term "spike" in capital spending, this Studyrecommends that the Water Enterprise borrow $7.4 million in two separate loans ($5.0 million immediately and $2.4 million in FY 2028/29. This financial plan assumes that the debt will carry an interest rate of 5.0 percent and a repayment period of 20 years. The form ofdebt (bond, bank note, subsidized loan, etc.) has not yet been identified.
One of the requirements associated with debt financing is to maintain rates and other water system revenues at levels sufficient to meet debt service coverage requirements (DCR). Water system net revenues (i.e., revenues after paying all operating costs) must be maintained at a DCR level that is at least 1.20 times annual debt service. Based on published guidance from Fitch Ratings, utility systems with midrange financial profiles should maintain a DCR greater than 1.50 times annual debt service. Schedule W-2 shows that the proposed financial plan maintains a DCR of at least 1.32 (and usually higher).
13 City of Cotati
2025 Water and Sewer Financial Plans Introduction and Summary
2.11 PROPOSED WATER RATE REVENUE INCREASES
All of the above information was entered into a financial planning model to produce a 10-year projection ofthe sufficiency of current rate revenues to meet projected financial requirements and determine the level ofrate revenue increases necessary in each year ofthe projection period.
Based upon the previously discussed financial data, assumptions, policies, and debt strategy, this Study proposes a 5-year schedule ofannual rate adjustments as shown in Figure 4. The rate schedules associated with these rate adjustments have been provided as Schedule W-3.
The numbers provided in the first table in Schedule W-2 (cash flow proforma for the Water Operating Fund) are summarized graphically in Figure 4, which shows the Operating Fund target reserves being met throughout the planning period. Schedule W- 2 shows the cash flow with each of the Water Enterprise's funds and the projected transfers between the Water Operating Fund and the Water Capital Fund.
After the final recommended increase in FY 2029/30, it is anticipated (barring unforeseen emergencies or changes in infrastructure/operational needs) that the rate revenue increases will need to continue as shown in Schedule W-2. These levelized rate increases will ultimately allow the Water Enterprise to cash-finance its capital program rather than seek internal and external loans.
14 City of Cotati
2025 Water and Sewer Financial Plans Introduction and Summary r. Non-Rate Revenue = Existing Rate Revenue • Additional Rate Revenue $6 • Operaling Expenses • Debt • Cash Capital
$4
Total Revenue / Expenses ($M) $3
$2
$1
$0
FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 FY2031 FY2032 FY2033 FY2034 FY2035 —Combined Ending Fund Balance - - •Target Reserve Level — Minimum Reserve Levels ----
FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 FY2031 FY2032 FY2033 FY2034 FY2035 Proposed Forecasted
Rate Revenue Increase: 11.0% 11.0% 11.0% 8.0% 8.0% 8.0% 7.0% 6.0% 6.0% 6.0% (previously adopted) 6.0% 6.0% 6.0%
Debt Coverage Ratio: na 2.18 1.32 1.57 1.68 1.61 1.86 2.03 2.26 2.41 Debt Proceeds: $5.0M $2.4M
Figure 4: Water Enterprise Cash Flow Projection with Recommended Rate Increases and Debt Issuances
In addition to typical cost inflation which results in higher costs every year, the following summarizes the changes in costs facing the Water Enterprise that are driving the need for the proposed rate increases:
• The cost of purchasing imported water from Sonoma Water has increase significantly over the past three years and is forecasted to continue increasing significantly. These costs represent approximately 1/4 of the water utility operating budget.
Utility and insurance costs have also increased significantly and are expected to continue rising.
• The City has identified more capital spending needs that were not identified in previous financial plans.
15 City of Cotati
2025 Water and Sewer Financial Plans Introduction and Summary It is recommended that the City continue to closely monitor the financial condition of the water utility on an annual basis. In particular, the City should track changes in rate revenue due to drought, in water purchase costs from Sonoma Water, and revenue from development activity.
16 City of Cotati
2025 Water and Sewer Financial Plans Sewer Financial Plan Section 3. 1#5 #0 #, 2#0. O'1#$ ",,!' * . *
3.1 SEWER FUND STRUCTURE AND CASH FLOWS
The financial plan is an annual cash flow model. As a cash flow model, it differs from standard accounting income statements, and balance sheets. The financial plan models sources and uses of funds into, out of, and between the various funds and reserves of the sewer utility.
The financial plan model is based on the fund structures currently used by the City and incorporates reserve policies for specified purposes. The reserve structure includes an Operating Reserve within the Sewer Operating Funds (Fund 404), as well as the Sewer Capital Funds (Fund 405) for the purpose of meeting sewer system capital improvement needs ofthe capital program. Exhibit 2 includes a schematic diagram ofthe funds/reserves and major cash flows associated with the Sewer Enterprise financial plan model.
An understanding of the fund/reserve structure is helpful in understanding the financial plan worksheets that model estimated annual cash flows through the sewer utility from one year to the next. The fund/reserve structure is comprised of:
3.1.1 Sewer Operating Fund (Fund 404)
The Sewer Operating Fund (Fund 404) is the primary fund within the utility. Most of the Sewer Enterprise's revenues, including user rate revenues, flow into the Operating Fund and all operating and maintenance costs, including debt service payments, are paid out ofthis fund.
Funds are also transferred from the Sewer Operating Fund to the Sewer Capital Fund to help pay for capital projects ofthe capital improvement program.
Sewer Operating Reserves - The 2017 Study recommended that the City establish and maintain Sewer Operating Reserves equalto 33 percent ofannual operating and maintenance costs, including debt service (a target ofabout $1.2 million for FY2024/25). The purpose ofthe Operating Reserve is to provide working capital and funds for unplanned operating and maintenance expenditures. The balance in the Sewer Operating Fund at the beginning of the 17 City of Cotati
2025 Water and Sewer Financial Plans Sewer Financial Plan current fiscal year (FY 2024/25) was about $2.75 million, or about $1.55 million above the target Operating Reserve.
As explained in Section 2.1.1, the balance in the Operating Fund in excess ofthe target amount for the Operating Reserve is shown in the financial plan as "Available Balance." Operations & Maintenance
Sewer Rate Revenue
ewer Operating Fund (404
perating Reserv, Debt Service
Interest Earnings
Other Revenue
Debt Proceeds Sewer Capital Fund (405)
Impact Fees Capital Reserve Capital Projects
Impact Fee Reserve
Interest Earnings
Exhibit 2 - Sewer Enterprise - Schematic Diagram of Cash Flows
3.1.2 Sewer Capital Fund (Fund 405)
The Sewer Capital Fund is used to account for revenues and funds available for capital project expenditures. The capital fund is primarily funded through transfers from the Operating Fund for projects that rehabilitate aging infrastructure. Impact fees, paid by new development if and when development occurs), are available to improve system capacity and help meets the capacity needs of new development. The financial plan models generally seek to maintain a positive balance in the capital funds while also covering the costs of planned capital improvement projects. This is achieved through annual transfers of funds from the operating fund to the capital fund ofeach utility. Aportion ofSewer Impact Fee revenue (when available) is transferred from the Sewer Capital Fund to the Sewer Operating Fund to help pay Subregional debt service.
18 City of Cotati
2025 Water and Sewer Financial Plans Sewer Financial Plan This financial plan aims to maintain a target cash reserve level in the capital fund equal to average annual capital spending (currently about $400 thousand).
3.2 SEWER ENTERPRISE BEGINNING FUND BALANCES
The ending cash balance for FY 2023/24 was used to establish the FY 2024/25 beginning balance, as shown in Table 2. It should be noted that the amount of cash that the Sewer Enterprise keeps in reserves is a product of its reserve policies (see Section 3.1).
Table 2: Sewer Enterprise FY 2024/25 Beginning Cash Balance Sewer Operating Reserve $2,750,000
Sewer Capital Reserve $127,000
Total Sewer Reserves: $2,877,000
3.3 CUSTOMER GROWTH
As explained in more detail in Section 2.3, this Study assumes that no material growth with occur during the planning period.
3.4 SEWER ENTERPRISE RATE REVENUE
Rate revenue is the revenue generated from customers for sewer service. The City collects rate revenue from sewer customers based on a fixed monthly "Service Charge" (assessed based on meter size) and a sewer "Usage Rate" (applied to each TGAL) of water use). Residential customers without separate irrigation meters will be charged based on the lesser of the estimated actual use and the actual water usage. All other customers will have sewer service charges based on the metered water consumption from all sources except those sources that are not discharged to the city sewer as determined by the City Engineer. Customers receive a monthly bill.
19 City of Cotati
2025 Water and Sewer Financial Plans Sewer Financial Plan The Sewer Enterprise Financial Plan starts with FY2024/25 budgeted rate revenues. Budgeted and projected rate revenues (including proposed rate adjustments) are listed in the first table in Schedule S-2. Sewer production is assumed to remain constant over the planning period.
3.5 SEWER ENTERPRISE NON-RATE REVENUES
In addition to rate revenue, the City receives additional "non-rate revenue" from sources such as miscellaneous service fees, developer Impact Fees, occasional grants, and interest revenue on investments. Projections of miscellaneous fee revenues were based on FY 2024/25 budgeted revenues. Future interest income was estimated based upon projected fund balances and assumed interest rate of 1.5 percent, which is consistent with the City's recent historical interest earnings relative to its total reserve levels. Interest accrues to each of the funds. No Impact Fee revenue is assumed for the planning period.
Budgeted sewer rate and non-rate revenues are depicted in Figure 5 below and listed in detail in the first table in Schedule S-2.
20 City of Cotati
2025 Water and Sewer Financial Plans Sewer Financial Plan Miscellaneous
Interest Earnings Revenue
2.0% 0.4%
Rate Revenue
97.6%
Figure 5: Sewer Enterprise Revenue Categories (FY 2024/25 budget)
3.6 SEWER ENTERPRISE OPERATING AND DEBT EXPENSES
The Sewer Enterprise's expenses include operating and maintenance expenses, debt service, and capital spending. Capital spending is addressed separately in Section 3.8. Future operating and maintenance expenses were projected based upon the budgeted expenditures from FY 2024/25 and adjusted for inflation (see Section 3.7). A significant portion of the operating costs are driven by Subregional costs, which have been increasing significantly and are expected to continue to increase (see Section 3.7).
The Sewer fund's current debt obligations consist ofan internal loan from the In-Lieu Housing Fund ($1 million over 20 years at 3 percent for the P-1 project) and the Sewer fund's responsible to pay a portion of Santa Rosa Subregional system debt. At present, Cotati's share of annual Subregional debt service is about $776,000. For purposes of calculating debt coverage ratio, all ofthe above debt obligations are treated as operating costs.
Major budgeted expense categories for FY 2024/25 are depicted in Figure 6. Budgeted and projected operating and maintenance costs as well as debt service expenses are listed in Schedule S-2.
21 City of Cotati
2025 Water and Sewer Financial Plans Sewer Financial Plan Administration Salaries and
2.0% Benefits
18.2%
Taxes, Insurance and Supplies
Other 0.2%
4.5%
Professional
Services
2.8%
Maintenance
4.8%
Subregional 0&M & Debt
Service Utilities
64.9% 0.9%
Figure 6: Sewer Enterprise Operating & Debt Expenses (FY 2024/25)
3.7 SEWER UTILITY COST ESCALATION
Annual cost escalation factors for the various types of expenses were developed based upon a review of historical inflation trends, published inflation forecasts, industry experience, and discussions with City staff. During the projection period, the following escalation assumptions were made:
• Subregional Wastewater Treatment - 6.0 percent in FY2025/26 and predominantly 3.0 percent thereafter.
• Benefits - 4.0 percent per year
• Utilities and Fuel - 18 percent in FY2025/26, then 8.0 percent for two years, then 5.0 percent thereafter
22 City of Cotati
2025 Water and Sewer Financial Plans Sewer Financial Plan • Insurance - 15 percent in FY2025/26, then 6 percent for three years, then 3 percent thereafter
• All other expenses - 3.0 percent per year
These inflation assumptions were provided by City staff, are consistent with the assumptions used by other regional utilities and are reasonable for financial planning purposes.
3.8 SEWER CAPITAL IMPROVEMENT PROGRAM
Figure 7 shows that in FY2022/23 and FY2023/24 the City has spent an average ofabout $740 thousand per year for capital projects to rehabilitate or improve the sewer system. The forecasted average from FY2024/25 through FY2034/35 is $606 thousand per year. Adetailed list ofthe requested capital projects and associated costs is provided in Schedule S-1.
The forecasted capital spending is materially different from the capital spending that was forecasted by the 2022 Rate Study. The spending that is currently forecasted to occur between FY2024/25 through FY2031/32 is $4.2 million whereas the 2022 Rate Study forecasted that the spending would only be $2.1 million during the same period (a 100 percent increase). This increase in annual capital spending is the primary driver for the proposed increase in sewer rates. These capital projects are proposed to be paid with cash (not debt) since there is no spike in spending, rather the increase in capital spending represent a "new normal" which is more appropriate to fund with cash.
23 City of Cotati
2025 Water and Sewer Financial Plans Sewer Financial Plan $1.2
• Projected Spending
$1.0 • Historical Spending
$0.8
$0.6
$0.4
$0.2
$0.0
FY2023 FY2024 FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 FY2031 FY2032 FY2033 FY2034 FY2035 Figure 7: Sewer Enterprise Capital Spending
3.9 PROPOSED SEWER RATE REVENUE INCREASES
All ofthe above information was entered into a financial planning modelto produce a 10-year projection ofthe sufficiency of current rate revenues to meet projected financial requirements and determine the level of rate revenue increases necessary in each year of the projection period.
Based on the previously discussed financial data, assumptions, policies, and PayGo strategy, this Study proposes a 5-year schedule ofannual rate adjustments as shown in Schedule S-3.
The numbers provided in the first table in Schedule S-2 (cash flow proforma for the Sewer Operating Fund) are summarized graphically in Figure 8, which shows that the beginning cash balance in the Sewer Operating Fund and Sewer Capital Fund for FY2024/25 was about twice the target levels, but those reserves are drawn down quickly over the next couple years as a result of increases in operating costs and capital spending. This results in Operating Fund temporarily not meeting it minimum reserve target until FY2030/31. In the event that sewer expenses exceed the forecasts, the Sewer Enterprise may need to borrow cash from the Water 24 City of Cotati
2025 Water and Sewer Financial Plans Sewer Financial Plan Enterprise in the interim. Schedule S-2 shows the cash flow for both ofthe Sewer Enterprise's funds.
r. Non-Rate Revenue = Existing Rate Revenue • Additional Rate Revenue $7 • Operating Expenses I Debt • Cash Capital
$6
$5
$4
Total Revenue / Expenses ($M)
$3
$2
Expenses
$1
$O
FY2025 FY2026 FY2027 FY2028 FY2032 FY2034 FY2035
$3 - Combined Ending Fund Balance - - •Target Reserve Level $2
MILLIONS $1
$0
FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 FY2031 FY2032 FY2033 FY2034 FY2035 Proposed Forecasted
Rate Revenue Increase: 10.0% 10.0% 10.0% 10.0% 5.0% 4.0% 4.0% 3.0% 3.0% 3.0% Previously Adopted 9.0% 9.0% 5.0%
Figure 8: Sewer Enterprise Cash Flow Projection with Recommended Rate Increases
It is important to note that the 2022 Rate Study had already anticipated that rate increases over the next two years would need to be 9 percent. The following describes some of the changes in costs facing the Sewer Enterprise that weren't fully accounted for during the 2022 Rate Study:
• As previously discussed, annual capital spending is forecasted to be twice as high as was forecasted bythe 2022 Rate Study
• Current usage revenue is 12 percent lower than previously anticipated due to a decrease in water usage
25 City of Cotati
2025 Water and Sewer Financial Plans Sewer Financial Plan Schedule S-2 shows the cash flow with each ofthe Sewer Enterprise's fund and the projected transfers between the Sewer Operating Fund and the Sewer Capital Fund.
It is recommended that the City continue to closely monitor the financial condition of the sewer utility on an annual basis.
26 City of Cotati
2025 Water and Sewer Financial Plans Schedules
SCHEDULES
Schedule W-1: Water Utility Capital Spending Request
Schedule W-2: Water Utility Cash Flow Pro Formas
Schedule W-3: 5-Year Schedule of Proposed Water Rates
Schedule S-1: Sewer Enterprise Capital Spending Request Schedule S-2: Sewer Enterprise Cash Flow Pro Formas
Schedule S-3: 5-Year Schedule of Proposed Sewer Rates
City of Cotati
2025 Water and Sewer Financial Plans Schedules
Schedule W-1 - Water Enterprise 5-Year Capital Spending Projections FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 Total
1 Well 1A Well 3 Treatment Renewal and Replacement $150,000 $150,000 2 Well 2 Renewal/Remediation $60,000 $175,000 $235,000
3 Water and Sewer Renewal and Replacement $150,000 $150,000 4 Distribution System Monitoring
5 Well No. 4 $0
West Sierra Tank Recoating $838,000 $838,000
7 BP-1: Cypress Tank Booster Pumps $226,000 $600,000 $826,000 8 T-1: New Cypress Storage Tank $226,000 $2,600,000 $2,826,000 9 P-5: Sycamore Lane Water Main Replacement $650,000 $650,000 10 P-3, 4: Cypress Tank New Water Main $80,000 $180,000 $950,000 $1,210,000 11 P-1: Portal Street, Mercantile, Aaron Main Replacement $100,000 $1,490,000 $1,590,000 12 SCADA Water $53,000 $53,000
13 Well 3 Emergency Repairs 80000 80000
14 Total Capital Spending (FY 2025 dollars) $193,000 $555,000 $632,000 $4,150,000 $1,588,000 $1,490,000 $8,608,000 W
City of Cotati
2025 Water and Sewer Financial Plans Schedules
Schedule W-2 - Water Enterprise Cash Flow Pro Formas (1 of 2) WATER OPERATING FUND (Fund 401)
Budget Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast FY2025 FY2026 FY2028 FY2029 FY2030 FY2031 FY2032 FY2033 FY2034 FY2035 1 Rate Revenue Increase: 11.00% 11.00% 11.00% 8.00% 8.00% 8.00% 7.00% 6.00% 6.00% 6.00% Rate Revenue
• Water Rate Revenue $2,319,000 $2,319,000 $2,574,000 $2,857,000 $3,171,000 $3,425,000 $3,699,000 $3,995.000 $4,275,000 $4,532,000 $4,804,000 $0 $0 $o SO $0 $0
3 Casase de to at a dustments $255,000 $283,000 $314,000 $254,000 $274,000 $296,000 $280,00 $257,000 $272,000 $288,000 Non-Rate Revenues,
Miscellaneous Fees $41,500 $41,900 $42,300 $42,800 $43,200 $43,600 $44,100 $44,500 $44,900 $44,900 $44,900 $60,000 $35,000 $38,000 $26,000 $13,000 $15,000 $19,000 $9,000 $15,000 $8,000 $3,000 7 Total Revenue $2,420,500 $2,650,900 $2,937,300 $3,239,800 $3,481,200 $3,757,600 $4,058,100 $4,328,500 $4,591,900 $4,856,900 $5,139,900 O&M Costs
& Salaries and Benefits $747,000 $772,400 $798,700 $825,900 $854,000 $883,100 $913,300 $944,500 $976,700 $1.010,200 S1.044,700 1 Mansional Sences $184,500 $280,200 $212,500 $187,900 $211,100 $199,400 $225,400 $211,500 $240,400 $224,400 $266,200 $121,500 $87,900 $90,500 $93,200 $96,000 $98,900 $101,800 $104,900 $108,000 $111,300 $114,600 $133,600 $157,700 $170,300 $183,900 $193,100 $202,800 $212,900 $223,600 $234,800 $246,500 $258,800 $28,800 $29,700 $30,600 $31,500 $32,400 $33,400 $34,400 $35,400 $36,500 $37,600 $38,700 $121,800 5137,501 $145,000 $153,000 $161,500 $166,300 $171,300 $176,500 $181,800 $187,200 $192,800 $171,100 5176,301 $181,600 $187,000 $192,600 $198,400 $204,400 $210,500 $216,800 $223,300 $230,000 15 SCWA Water Purchases $697,300 5781,000 $874,700 $927,200 $982,800 $1,041,800 $1,104,300 51,170,600 $1,240,800 $1,315,200 $1,394,200 16 Total Operating Expenses $2,205,600 52,422,700 $2,503,900 $2,589,600 S2,723,500 $2,824,100 $2,967,800 S3,077,500 S3,235,800 $3,355,700 $3,540,000 Debt and Transfers
17 CaPERS Payment Plan $80,000 380,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 18 New Debt Service $165,000 $436,000 $436,000 $511,000 $633,000 $633,000 $633,000 $633,000 $633,000 Transfer to Sewer Fund
20 Total Debt and Traitors 5100000 $1,000.000 $0 so 5199,00 $0 31703000 $1,000,000 1,000,000 $80,000 $1,245,000 $516,000 $516,000 $713,000 $1,713,000 $713,000 1,713,000 21 Total Revenue Requirement $2,285,600 $3,502,700 $3,748,900 S3,105,600 $3,239,500 $4,415,100 $3,680,800 $4,790,500 $4,948,800 $4,068,700 $5,253,000 22 Beginning Year Balance $2,423,000 $2,557,900 $1,706,100 $894,500 $1,028,700 $1,270,400 $612,900 $990,200 $528,200 $171,300 55050,500 23 Surplus/(Shortfall) $134,900 ($851,800) ($811,600) $134,200 $241,700 ($657,500) $377,300 ($462,000) (5356,900) $788,200 ($113,100) 24 End of Year Balance $2,557,900 $1,706,100 $894,500 S1.028,700 $1,270,400 $612,900 $990,200 $528,200 $171,300 $959,500 $846,400 25 Operating Reserve Minimum Level 5728,000 $799,000 $826,000 $855,000 $899,000 $932,000 $979,000 $1,016,000 51,068,000 $1,107,000 51,168,000 26 Available Balance $1,829,900 $907,100 $68,500 $173,700 $371,400 (S319,100) $11,200 ($487,800) 5896,700) ($147,500) ($321,600) W2-1
City of Cotati
2025 Water and Sewer Financial Plans Schedules
Schedule W-2 - Water Enterprise Cash Flow Pro Formas (2 of 2) WATER CAPITALFUND (Fund 402)
Budget Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 FY2031 FY2032 FY2033 FY2034 FY2035 1 Beginning Balance $1,064,000 $878,100 $1,409,900 $2,416,700 $2,423,600 $1,541,400 $2,548,400 $1,839,700 $2,109,600 $2,357,500 $1,582,600 Revenues
2 Transfer in from Operating Fund $0 $1,000,000 $1,000,000 SO $1,000,000 $0 $1,000,000 $1.000.000 $0 $1,000,000 3 Impact Fee Revenue $0 $0 SO So SO $O $0 $O $O
5 Theres Earis fees $6,700 $6,800 $6,800 $6,900 $7,000 57,000 $7,100 $7,200 $7,300 $7,300 57.300 $0 $0 SO So SO $0 $0 $0 $0
6 Total Revenues 6,700 1,006,800 1,006,800 6,900 7,000 1,007,000 7,100 1,007,200 1,007,300 7,300 1,007,300 $192,600 $555,000 $631,000 $4,274,500 $1,684,900 $1,628,200 $715,800 $737,300 $759,400 $782,200 $805,700 $0 $80,000 $631,000 $4,274,500 $795,700 $1,628,200 $O $0 $0 $0 $192,600 $475,000 $0 $O $889,200 SO $715,800 S737,300 $759,400 S782,200 $805,700 192,600 475,000 889,200 715,800 737,300 759,400 782,200 805,700 11 Surplus/(Shortfall) (185,900) 531,800 1,006,800 6,900 (882,200) 1,007,000 (708,700) 269,900 247,900 (774,900) 201,600 12 Capital Reserve Ending Balance $878,100 $1,409,900 $2,416,700 $2,423,600 $1,541,400 $2,548,400 $1,839,700 $2,109,600 $2,357,500 $1,582,600 51,784,200 3 Capital Reserve Target Leve $1,257,000 $1,257,000 $1,257,000 $1,257,000 $1,257,000 $1,257,000 $1,257,000 $1,257,000 $1,257,000 $1,257,000 $1,257,000 4 Available Balanc ($378,900) $152,900 $1,159,700 51,166,600 $284,400 $1,291,400 $582,700 $852,600 $1,100,500 $325,600 $527,200 W2-2
City of Cotati
2025 Water and Sewer Financial Plans Schedules
Schedule W-3 - Five-Year Schedule of Proposed Water Rates? Current June 2025 June 2026 June 2027 June 2028 June 2029 Monthly Service Charge
3/4" meter $28.37 $31.49 $34.95 $38.79 $41.89 $45.24
1" meter $46.37 $51.47 $57.13 $63.41 $68.48 $73.96
11/2" meter $90.98 $100.99 $112.10 $124.43 $134.38 $145.13 2" meter $144.72 $160.64 $178.31 $197.92 $213.75 $230.85 3" meter $270.19 $299.91 $332.90 $369.52 $399.08 $431.01 4" meter $449.41 $498.85 $553.72 $614.63 $663.80 $716.90( Water Usage Rates ($/TGAL)
Residential
Tier 1 (0 to 5 TGAL)- $2.42 $2.69 $2.99 $3.32 $3.59 $3.88 Tier 2 (5 to 10 TGAL) $3.10 $3.44 $3.82 $4.24 $4.58 $4.95 Tier 3 (over 10 TGAL) $3.87 $4.30 $4.77 $5.29 $5.71 $6.17 Multi-Family, Non-Resid., & Irrigation
All Water Usage $2.67 $2.96 $3.29 $3.65 $3.94 $4.26
1 "GAL" means thousand gallons
' New rates implemented on the June 15th of the indicated year WB
City of Cotati
2025 Water and Sewer Financial Plans Schedules
Schedule S-1 - Sewer Enterprise 5-Year Capital Spending Projections FY2025 FY2026 FY2027 FY 2028 FY 2029 FY2030 Total
1 Sewer Renewal and Replacement (R&R) Master Plan $70,000 $70,000 2 Sewer Collection System R&R $90,000 $175,000 $500,000 $500,000 $500,000 51,765,000 3 Sewer Lift Stations R&R $110,000 $150,000 $150,000 $410,000 4 SCADA Sewer $53,000 $53,000
5 Sewer Lift Station Emergency Generator Project $185,000 $185,000 Total Capital Spending (FY 2025 dollars) $53,000 $455,000 $360,000 $500,000 $650,000 $650,000 $2,668,000 S1
City of Cotati
2025 Water and Sewer Financial Plans Schedules
Schedule S-2 - Sewer Enterprise Cash Flow Pro Formas (1 of 2) SEWER OPERATING FUND (404)
Budget Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast FX2025 FY2026 FX2027 FY2028 FX2029 FY2030 FX2031 FY2032 FY2033 FX2034 FX2035 1 Rate Revenue Increase: 10.00% 10.00% 10.00% 10.00% 5.00% 4.00% 4.00% 3.00% 3.00% 3.00% Rate Revenue
2 Sewer Rate Revenue $3,385,300 $3.385,300 $3,724,000 $4,096,000 $4,506,000 $4,957,000 $5,205,000 $5,413,000 $5,630,000 $5,799,000 $5,973,000 * Corease due to rate justments $0 $0 $O $0 $0 $0 $0 $0 $0 $O $339,000 $372,000 $410,000 $451,000 $248,000 $208,000 $217,000 $169,000 $174,000 $179,000 Non-Rate Revenues
$60,000 $34,000 $16,000 $1,000 $6,000 $15,000 $12,000 $9,000 $7,000 $21,000 $21,000 : operate evenuefees $0 $0 $o $0 $0 $0 $0
7 Total Revenue $3,445,300 $3,758,300 $4,112,000 $4,507,000 $4,963,000 $5,220,000 $5,425,000 $5,639,000 $5,806,000 $5,994,000 $6,173,000 0&M Costs
8 Salaries and Benefits $701,000 $722,000 $744,000 $766,000 $789,000 $813,000 $837,000 $862,000 $888,000 $915,000 $942,000 9 Supplies $7,000 $8,000 $8,000 $8,000 $8,000 $8,000 $9,000 $9,000 $9,000 $10,000 $10,000 10 Professional Services $110,000 $101,000 $134,000 $107,000 $128,000 $113,000 $137,000 $120,000 $146,000 $128,000 $166,000 11 Maintenance $184,000 $133,000 $137,000 $141,000 $145,000 $150,000 $154,000 $159,000 $164,000 $169,000 $174,000 12 Utilities $33,000 $39,000 $42,000 $46,000 $48,000 $50,000 $53,000 $56,000 $58,000 $61,000 $64,000 13 Subregional O&M & Debt Service $2,507,000 $2,634,000 $2.713,000 $2,794,000 $2,878,000 $2,965,000 $3,074,000 $3,166,000 $3,261,000 $3,359,000 $3,671,000 14 Taxes, Insurance and Other $99,000 $102,000 $105,000 $108,000 $111,000 $115,000 $118,000 $122,000 $125,000 $129,000 $133,000 15 Administration $76,000 $79,000 $81,000 $84,000 $86,000 $89,000 $91,000 $94,000 $97,000 $100,000 $103,000 16 Total Operating Expenses $3,717,000 53,818,000 53,964,000 54,054,000 $4,193,000 $4,303,000 $4,473,000 $4,588,000 $4,748,000 54,871,000 $5,263,000 Debt and Transfers
7 In-Lieu Housing Debt Service $67,000 $67,000 $67,000 $67,000 $67,000 $67,000 $67,000 $67,000 $67,000 $67,000 $67,000 $76,200 $76,200 $76,200 $76,200 $76,200 $76,200 $76,200 $76,200 $76,200 $76,200 $76,200 $80,000 $1,000,000 $1,000,000 $0 $O $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $223,200 $1,143,200 $1,143,200 $143,200 $143,200 $1,143,200 $1,143,200 $1,143,200 $143,200 51,143,200 $1,143,200 21 Total Revenue Requirement $3,940,200 S4,961,200 $5,107,200 $4,197,200 $4,336,200 $5,446,200 $5,616,200 $5,731,200 S4,891,200 S6,014,200 $6,406,200 22 Beginning Year Balance $2,750,000 $2,255,100 $1,052,200 $57,000 $366,800 $993,600 $767,400 $576,200 $484,000 $1,398,800 $1,378,600 23 Surplus/(Shortfall) ($494,900) ($1,202,900) ($995,200) $309,800 $626,800 (S226,200) ($191,200) ($92,200) $914,800 (S20,200) ($233,200) 24 End of Year Balance $2,255,100 S1,052,200 $57,000 $366,800 $993,600 $767,400 $576,200 $484,000 $1,398,800 51,378,600 $1,145,400 25 Operating Fund Reserve Target $1,227,000 $1,260,000 $1,308,000 $1,338,000 $1,384,000 $1,420,000 $1,476,000 $1,514,000 $1,567,000 $1,607,000 $1,737,000 26 Available Balance $1,028,100 ($207,800) ($1,251,000) (S971,200) (S390,400) ($652,600) ($899,800) (51,030,000) ($168,200) ($228,400) ($591,600) H S2-1
City of Cotati
2025 Water and Sewer Financial Plans Schedules
Schedule S-2 - Sewer Enterprise Cash Flow Pro Formas (2 of 2) SEWER CAPITAL FUND (405)
Budget Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 FY2031 FY2032 FY2033 FY2034 FY2035 1 Beginning Balance $127,000 $177,000 $740,000 $1,406,000 $928,000 $268,000 $578,000 $871,000 $1,146,000 $403,000 $627,000 $80,000 $1.000,000 $1,000,000 $0 $0 $1,000,000 $1.000,000 $1,000,000 $0 $1,000,000 $1,000,000 $0 $0 $0 $0 $O $0 $0 $0 $0
$15,000 $15,000 $15,000 $16,000 $16,000 $16,000 $16,000 $16,000 $16.000 $17,000 $17,000 5 Interest Earnings $8,000 $3,000 $11,000 $21,000 $14,000 $4,000 $9,000 $13,000 $17,000 $6,000 $9,000 Transfer in from Operating Fund
$103,000 $1,018,000 $1,026,000 $37,000 $30,000 $1,020,000 $1,025,000 $1,029,000 $33,000 $1,023,000 $1,026,000 Capital Spending
7 TOTAL CAPITAL SPENDING $53,000 $455,000 $360,000 $515,000 $690,000 $710,000 $732,000 $754,000 $776,000 $799,000 $823,000 8 Debt Funded Capital $0 $0 $0 $0 $0 $0 $0 $0
9 Cash Funded Capital Projects $53,000 $455.000 $360.000 $515,000 $690,000 $710,000 $732,000 $754,000 S776,000 $799,000 $823,000 10 Capital Spending $53,000 $455,000 $360,000 $515,000 $690,000 $710,000 $732,000 $754,000 $776,000 $799,000 $823,000 11 Surplus/Shortfall) 50,000 563,000 666,000 (478,000) (660,000) 310,000 293,000 275,000 (743,000) 224,000 203,000 12 Capital Reserve Ending Balance $177,000 $740,000 $1,406,000 $928,000 $268,000 $578,000 $871,000 $1,146,000 $403,000 $627,000 $830,000 Capital Reserve Target $404,000 $404,000 $404,000 $404,000 $404,000 $404,000 $404,000 $404,000 $404,000 $404,000 $404,000 Available Balance ($227,000) $336,000 $1.002,000 $524,000 ($136,000) $174,000 $467,000 $742,000 ($1,000) $223,000 $426,000 52-2
City of Cotati
2025 Water and Sewer Financial Plans Schedules
Schedule S-3 - Five-Year Schedule of Proposed Sewer Rates? Current June 2025 June 2026 June 2027 June 2028 June 2029 Monthly Service Charge
3/4" meter $53.25 $58.58 $64.44 $70.88 $77.97 $81.87
1" meter $87.71 $96.48 $106.13 $116.74 $128.41 $134.83
11/2" meter $173.12 $190.43 $209.47 $230.42 $253.46 $266.13 2" meter $276.01 $303.61 $333.97 $367.37 $404.11 $424.32 3" meter $516.28 $567.91 $624.70 $687.17 $755.89 $793.68 4" meter $859.42 $945.36 $1,039.90 $1,143.89 $1,258.28 $1,321.19 Sewer Usage Rates ($/TGAL) *
All Customers $6.22 $6.84 $7.52 $8.27 $9.10 $9.56
" Residential customers without separate irrigation meters will be charged based on the lesser of the estimated actual use and the actual water usage. All other customers will have sewer service charges based on the metered water consumption from all sources except those sources that are not discharged to the city sewer as determined by the City Engineer. ^ New rates implemented on the June 15th of the indicated year