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2625 Alcatraz Ave, #602
Berkeley, CA 94705
Tel 510 653 3399
www.bartlewells.com
DATE: March 19th, 2025
TO: City of Foster City/Estero Municipal Improvement District
FROM: Bartle Wells Associates
SUBJECT: Water Rate Study Update Results DRAFT
SUMMARY OF FINDINGS AND RECOMMENDATIONS
Introduction and Background
The Estero Municipal Improvement District (District ) engaged Bartle Wells Associates (BWA) to develop 10-year financial projections for the District’s Water Enterprise and to project water rate adjustments for the next five-year period. BWA last conducted formal rate studies in 20 24, which resulted in a one -year rate approval for water rates for FY 2025.
Current and projected water service rates are in the low range compared to other agencies on the Peninsula, however, the District water enterprise s face unique infrastructure funding challenges.
Water Enterprise Summary
The primary driver for the proposed rate increases is to smooth District rate increases due to projected increases in the San Francisco Public Utilities Commission (SFPUC) wholesale water rate. The rate increase is due to a variety of factors including debt service on existing and newly issued bonds, continued low water usage, and repayment of the balancing account. Additionally, the District has increased the annual amount of projected capital expenditure transfers from the operating reserve fund to the capital reserve fund from $1 million to $2.4 million on average.
SFPUC, the sole source of water supply for the District, released updated projections for their wholesale rate for the next 5 years (FY 2026 to FY 2030) . SFPUC is projecting the current rate of $5.67 in FY 2025 per hundred cubic feet (ccf) will increase 2.1% to $5.79 in FY 2026, 1% to $5.85 in FY 2027, 1% to $5.91 in FY 2028, 5.2% to $6.22 in FY 2029, and 8% to $6.72 in FY 2030. Any increases implemented by SFPUC above these values are
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recommended to be passed through to District customers via Government Code section 53756, as explained on page 11.
BWA projects the SFPUC rate will increase 3.5% annually beyond FY 2030 based on the average increase projected by SFPUC. 3.5% also corresponds well to BWA’s estimate of future cost inflation in the economy.
SFPUC rates were historically held level at $4.10/ccf for six years (FY 2017 to FY 2022) despite escalating SFPUC debt service and operating costs through use of a balancing account. The balancing account was built up from SFPUC wholesale water sales exceeding projections used in rate setting . In FY 2023, the wholesale rate increased 15.9% to $4.75/ccf, 9.7% to $5.21 in FY 2024, and 8.8% to $5.67 in FY 2025.
During the time that SFPUC wholesale rates were held flat by the balancing account, the District has been gradually increasing its volumetric rates in anticipation of projected wholesale rate increases by SFPUC. While the wholesale rate increases have come to fruition, the District’s rates have been phased to ensure sufficient revenues and avoid sharp increases based on a rate smoothing model.
The District will also continue to make annual payments, projected to be $ 675,000 annually, to the Bay Area Water Supply and Conservation Agency (BAWSCA) for the Water System Improvement Project (WSIP) that was funded through the issuance of bonds. The water enterprise’s single largest cost is water purchases from SFPUC.
WSIP is a multi- year capital initiative with a budget of $4.8 billion. Its goal is to enhance both the regional and local water systems managed by the SFPUC. The program focuses on repairing, replacing, and seismically upgrading critical parts of the Hetch Hetchy Regional Water System. WSIP encompasses 87 projects, including 35 local projects within San Francisco and 52 regional projects across seven counties, extending from the Sierra foothills to San Francisco. By October 2020, the San Francisco portion of the program had been fully completed. In March 2022, the SFPUC Commission approved updates to the program, including a schedule extension to February 2027.
BWA proposed water rates are designed to maintain the operating fund above target levels (90 days operating expenses in reserves) and cover District operating and capital costs. The District is projected to set aside approximately $12 million for capital improvements over the next 5 years. The capital improvement set aside amount is based on funding the District’s water master plan. Major projects include valve replacements,
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water tank lining and structural retrofitting, and an emergency bypass transmission main, among others. BWA projects the District will need to obtain $ 4 million of debt financing to fund the capital improvements in FY 2028. The source of the funds is unknown currently and is estimated to be a 30-year loan at 6% interest with 1.5% transaction costs for planning purposes.
Proposed water rates are based on 1 0% water loss. That is, 90 % of the water EMID purchases are sold to retail customers. The losses have decreased over time due to the District’s efforts to replace aging meters. Water loss refers to the difference between the amount of water put into the distribution system and the amount of water billed to customers. This loss can be categorized into two main types:
• Real Losses: These are physical losses of water from the system due to leaks, overflows, or breaks in the water mains, service lines, and other infrastructure.
Real losses can be caused by aging infrastructure, corrosion, damage, or faulty installation.
• Apparent Losses: These are losses caused by non-infrastructure related incidents such as inaccuracies in metering, data handling errors, or unauthorized consumption (water theft).
The District separates its costs into variable costs (captured by a volumetric rate) and fixed costs (captured by a meter charge rate). (see page 1 8 and Table 6.) To maintain the operating reserve s, fund the capital set aside, and phase in volumetric rates , BWA recommends the District implement a 3% volumetric rate increase and a 8.5% meter charge increase in FY 2026 . The average bill for a single family home would increase by 5% or $4.05 per month.
Detailed water rate calculations are shown in APPENDIX C.
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Rate Survey
A survey of communities along the San Francisco Peninsula was conducted to compare the District’s typical residential monthly water bills with neighboring communities. The results of the water survey are summarized in APPENDIX B.
The water survey compares a monthly water bill for 8 units (1 unit = 1 ccf) of water which would be a common residential consumption. Including the recommended increase, the District’s average monthly water bill proposed for FY 2026 is $85.70. Since it is unknown what the comparator agencies are proposing for FY 2026, the District compares its FY 2025 monthly residential water bills to the FY 2025 monthly residential water bills for the neighboring agencies. The survey indicates that the District’s water rates are among the lowest on the Peninsula. The average monthly water bill for the region based on 8 ccf is $116.09 per month and the District’s average monthly residential water bill is $81.65 per month, or about 30% less. Since the proposed increase is also less than the FY 2025 average, it is likely that EMID customers will continue to pay lower than average water bills.
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Water Enterprise Fund
The District currently provides water service to a population of approximately 3 6,500.
Most of the District’s customers are residential. Table 1 shows approximately 8,295 accounts/meters that allow for water service and fire protection service.
Meter ratios reflect the proportionate volume of water that may flow through the various meter sizes. The total 3/4” meter equivalents in the District amounts to 20,229 based on industry standard meter ratios established by the American Water Works Association (AWWA).
Private fire meter ratios are set at 35% of regular meter ratios due to lower usage frequency, as they are primarily for emergency use. Fire meters are often on standby and only used during fire emergencies, resulting in less operational time and reduced maintenance and inspection requirements compared to regular water meters. Fire service lines of 1-1/2" and smaller diameters often have similar flow rates and pressure requirements, making it practical to treat them as a single category for cost and rate purposes.
The water enterprise service area includes Foster City and the Mariner’s Island area shown in APPENDIX D.
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Table 2 illustrates the current reserves that the District can draw down in case of emergency or to smooth any “rate shocks” to its customers.
The District is meeting its 90-day operating fund reserv e target (estimated to be $ 4.4 million.) The target is based on the District’s long standing reserve policy and is an industry Table 1
City of Foster City / Estero Municipal Improvement District Water Meters By Size
Data as of: 01/22/25
Water Service
3/4" 6,832 1.00 6,832
1" 466 1.67 777
1-1/2" 182 4.00 728
2" 379 5.33 2,021
3" 89 11.67 1,038
4" 61 21.00 1,281
6" 39 46.67 1,820
8" or greater 19 80.00 1,520
Subtotal 8,067 16,017
Private Fire Protection Service
1-1/2" & below 11 1.40 15
2" 0 1.87 0
3" 2 4.08 8
4" 35 7.35 257
6" 95 16.33 1,551
8" or greater 85 28.00 2,380 Subtotal 228 4,212
Total 8,295 20,229
Source: Foster City/Estero Municipal Improvement District water use records [2] Private fire protection service ratio based on the fire service line; Resolution No. 2715 [3] Equals the number of accounts multiplied by the meter ratio for each meter size.
Meter Size Accounts Meter Ratio1,2 Est. Meter Equivalents3 [1] The meter ratios shall be based on meter size in compliance with ratios established by the American Water Works Association (AWWA) Sizing Water Service Lines and Meters M22, Second Edition, 2004 (M22 Manual)
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standard minimum target to maintain adequate short term liquidity in case of emergencies.
The wholesale water purchase rates that SFPUC and BWA are projecting through FY 2030 are shown graphically in CHART A. The SFPUC rates are projected to increase from $5.67/ccf in FY 2025 to $6.72/ccf in FY 2030.
Table 2
City of Foster City / Estero Municipal Improvement District W
ater Enterprise Operating Reserves
July 1, 2024
Fund Reserve Component Reserve Balance
Reserved for Maintenance & Operation (401) $11,194,614
Total $11,194,614
operating expenditures.
Note: Rate model only includes fund reserve components available to fund ongoing Source: City of Foster City/Estero Municipal Improvement District Staff
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CHART A
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Table 3 summarizes the District’s projected operating costs which are anticipated to increase over the next five years between 2.1% and 6.6% annually.
Table 3
City of Foster City / Estero Municipal Improvement District Water Enterprise O&M Projection
Revised
Budget
FY2025 FY2026 FY2027 FY2028 FY2029 FY2030
Employee Services 2,956,001 3,387,751 3,523,261 3,664,191 3,810,759 3,963,190 4.0% Additional Cost [2] - 31,339 303,873 313,542 324,103 335,045 varies Internal Services - Others 1,244,701 1,449,956 1,486,205 1,523,360 1,561,444 1,600,480 2.5% Internal Services - Equipment
Replacement Fund 456,767 396,971 406,895 417,068 427,494 438,182 2.5% Services & Supplies 817,062 979,062 1,003,539 1,028,627 1,054,343 1,080,701 2.5% SFPUC Water Purchases 10,467,000 10,814,000 10,966,000 11,119,000 11,742,000 12,727,000 varies BAWSCA Bond Repayment 601,416 670,356 675,000 675,000 675,000 675,000 Reallocation [3] 1,362,521 1,373,045 1,407,371 1,442,555 1,478,619 1,515,585 2.5% Water Sustainability 250,000 250,000 200,000 200,000 200,000 200,000 TOTAL O&M Expenditures 18,155,468 19,352,480 19,972,144 20,383,343 21,273,763 22,535,182
6.6% 3.2% 2.1% 4.4% 5.9%
[1] Based on City/District Staff direction
[2] A placeholder for potential additional positions to support the water enterprise Five Year Projection Annual %
Increase [1]Expenditures
[3] Costs allocated to the water enterprise for the cost of services provided to the enterprise by City departments, as documented in the City’s cost allocation study.
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Table 4 summarizes the current water rates. The District has variable expenditures which are expenditures that are impacted by the amount of water its customers consume. These costs must be recouped via its volumetric water charge, $6.60 per ccf in FY 2025. Likewise, the District’s meter charges recover fixed expenditures, expenditures that are fixed regardless of amount of water that is consumed, $28.85 for a ¾” meter in FY 2025.
District Tiered Rates Cost Basis
The District has a two-tiered model for its residential customers where higher levels of water consumption are subject to higher water rates based on a proportionate share of conservation program costs. Commercial customers are charged a uniform rate, which includes commercial customers’ proportionate share of conservation program costs.
Water conservation programs for District customers aim to reduce water use in the District service area and help water users save water and money. Conservation efforts include rebates, such as conversion of living grass lawn to more water-wise options, rain barrels to collect rainwater, smart irrigation controllers to minimize excess water use; education, including free landscaping and gardening classes and educational programs for students in local schools and the Foster City Library; self-audit kits for indoor water use and landscape audits for outdoor water use, and more.
Conservation program costs of $200,000 per year are allocated to each customer class based on the proportionate impact of each customer class on the need for the program and its costs.
Residential and irrigation customers pay conservation costs on Tier 2 usage only, while commercial customers pay their share of conservation costs on each unit of water usage.
For its irrigation customers, the District has worked with John Whitcomb of Waterfluence to assign each irrigation customer a water budget. Any water consumed above the irrigation customers allotted amount is subject to a higher Tier 2 rate based on each customer’s share of conservation program costs.
APPENDIX A shows the District’s historical water use trends from the prior year . BWA’s proposed rates are designed to match volumetric expenses (such as water purchases) with volumetric revenue. The rate structure mitigates over or under collecting revenue due to fluctuations in water use.
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District Residential Tier Allotments
The tiered rate allotments are designed to align with the state’s gallon per capita per day (GPCD) mandate. Low-tier users are already consuming water within the prescribed limits, meaning their consumption does not drive the need for the conservation program. The District is required to incur the costs of the conservation program to offset water overuse by those categories of water users (Tier 2 users) that exceed the state’s GPCD threshold. Thus, those Tier 2 users are required to pay their proportionate share of the costs of the conservation program.
While Tier 1 users participate in the program, their conservation efforts are aimed at offsetting the overuse of Tier 2 users. The necessity for Tier 1 conservation arises because of the high consumption in Tier 2.
SFPUC Wholesale Rate Passthrough
SFPUC establishes the wholesale water rate and for each unit of water the District purchases, which accounts for 100% of the District’s water supply. If SFPUC increases the wholesale water rate, the District is authorized to pass through the increase to customers in accordance with Government Code section 53756.
The formula for calculating the pass through amount will be: (Additional SFPUC $ Amount Per CCF Above Study Projections / 0.9) additional charge for each unit of water usage, where 0.9 accounts for 10% water loss. The District will provide 30 days’ notice before passing through an increase in water rates. The District will not convene another public hearing before passing through any increase in the District’s water rates.
For example, if the SFPUC rate in FY 2027 is $5.94, the pass through would be calculated as the following: ($5.94-$5.85)/0.9 = $0.10 per ccf. $0.10 per ccf would be added to all District volumetric rates. The 0.9 factor is designed to adjust for the fact that the District sells 90% of its water purchases.
To elucidate the pass -through calculation with a simple example: Suppose an individual purchases 10 apples for $1 and is only able to sell 5 of them. To fully recover the cost, the selling price per apple would need to be $2. This scenario represents a loss percentage of 50%.
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Now, if the purchase price per apple doubles to $2 and the price increase is only raised by the difference (i.e., $1), then the total expenditure would be $20 (10 apples x $2 per apple).
However, only $15 would be generated in revenue (5 apples x $3 per apple). Therefore, the price increase must be passed on by dividing the increase by (1 - loss percentage).
The necessary price increase should be calculated as: ($1/0.5) = $2
With this adjustment, the expenditure remains $20 (10 apples x $2 per apple) and the revenue generated is $20 (5 apples x $4 per apple).
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Table 4
City of Foster City / Estero Municipal Improvement District Current Rates
Current Rates 2025
Fixed Meter Charge
Monthly Meter Charge
Meter Size
3/4" $28.85
1" $48.08
1-1/2" $115.40
2" $153.87
3" $336.58
4" $605.85
6" $1,346.33
8" or greater $2,308.00
Bi-Monthly Water Consumption Tiers and Rates
Single Family Residential
Tier 1 0-20 per ccf $6.60
Tier 2 Over 20 ccf $7.33
Multi-Family Residential
Tier 1 0-10 ccf per living unit $6.60
Tier 2 Over 10 ccf per living unit $7.36
Irrigation Customers
Tier 1 <=100% of annual budget $6.60
Tier 2 >100% of annual budget $7.80
Commercial and Fire Line
All usage $6.72
Monthly Private Fire Protection Charge
Meter Size
1-1/2" & below $40.39
2" $53.95
3" $117.71
4" $212.05
6" $471.12
8" or greater $807.80
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Low Income Discount
Currently the District has approximately 34 customers enrolled in the Water/Wastewater Rate Assistance Program (WWRAP), which was implemented in 2020. Customers meeting the eligibility and qualification requirements below are granted a discount of up to $15 per month each on their qualifying Water accounts, not to exceed a $30 per month discount per customer. To be eligible for the WWRAP, customers must show that they qualify for the PG&E CARE Program or other public assistance program or submit proof of income eligibility.
The estimated maximum potential cost of a $15/month discount for 34 customers amounts to $6,120 per year. Since the low income discount revenue sources cannot be funded with rates, rates are unaffected by the decision on the terms of the program and hence are not required to be included in the Proposition 218 notification.
The District funds the current low income discount through non-rate sources of revenue such as fines and penalties, cell tower lease and general fund revenue to maintain compliance with California Proposition 218. The discount is recommended to be provided as funds are available. Late penalties collected year to date for water in FY 2025 amounted to $27,000, exceeding the cost of the program.
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APPENDIX A
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APPENDIX B
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APPENDIX C
Table 5
City of Foster City / Estero Municipal Improvement District Water Enterprise Cash Flow Projection - Residential Two Tier Rate Structure Hybrid Model Fiscal Year Ending June 30 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Assumptions:
Interest Earnings Rate 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Revenue Increase from Growth [1] 0.37% 0.37% 0.37% 0.37% 0.37% 0.37% 0.37% 0.37% 0.37% 0.37% Fixed Charge $28.85 $31.30 $33.80 $36.15 $38.70 $41.40 $43.05 $44.75 $46.55 $48.40 $50.35 Fixed Rate Adjustment 8.5% 8.0% 7.0% 7.1% 7.0% 4.0% 3.9% 4.0% 4.0% 4.0% SFR Variable Charge $6.60 $6.80 $7.02 $7.29 $7.56 $7.84 $8.17 $8.44 $8.72 $9.01 $9.31 Variable Rate Adjustment 3.0% 3.2% 3.8% 3.7% 3.7% 4.2% 3.3% 3.3% 3.3% 3.3% Monthly Service Charge Single Family (8 ccf) $81.65 $85.70 $89.96 $94.47 $99.18 $104.12 $108.41 $112.27 $116.31 $120.48 $124.83 Rate Adjustment 5.0% 5.0% 5.0% 5.0% 5.0% 4.1% 3.6% 3.6% 3.6% 3.6% Beginning Fund Balance $11,194,614 $10,550,000 $8,088,500 $5,985,400 $8,468,600 $7,154,900 $6,505,800 $6,364,800 $6,383,800 $6,592,800 $6,998,800 Revenues
Water Sales & Service Charges
Meter Charge Revenue Estimate 7,004,000 7,626,000 8,265,000 8,872,000 9,533,000 10,235,000 10,682,000 11,144,000 11,635,000 12,142,000 12,677,000 Volumetric Revenue Estimate 11,171,000 11,548,000 11,961,000 12,462,000 12,968,000 13,481,000 14,090,000 14,600,000 15,135,000 15,687,000 16,258,000 Debt Issuance / Interfund Loan 0 0 0 4,000,000 0 0 0 0 0 0 0 Connection Fees [1] 0 0 0 0 0 0 0 0 0 0 0
Interest Earnings - Operating Reserve [2] 336,000 317,000 243,000 180,000 254,000 215,000 195,000 191,000 192,000 198,000 210,000 Other 0 0 0 0 0 0 0 0 0 0 0
Operating Revenues 18,511,000 19,491,000 20,469,000 25,514,000 22,755,000 23,931,000 24,967,000 25,935,000 26,962,000 28,027,000 29,145,000 Expens es
Employee Services 2,956,001 3,387,751 3,523,261 3,664,191 3,810,759 3,963,190 4,122,000 4,287,000 4,458,000 4,636,000 4,821,000 Additional Cost 0 31,339 303,873 313,542 324,103 335,045 348,000 362,000 376,000 391,000 407,000 Internal Services - Others 1,244,701 1,449,956 1,486,205 1,523,360 1,561,444 1,600,480 1,640,000 1,681,000 1,723,000 1,766,000 1,810,000 Internal Services - ERF 456,767 396,971 406,895 417,068 427,494 438,182 449,000 460,000 472,000 484,000 496,000 Services & Supplies 817,062 979,062 1,003,539 1,028,627 1,054,343 1,080,701 1,108,000 1,136,000 1,164,000 1,193,000 1,223,000 SFPUC Water Purchases 10,467,000 10,814,000 10,966,000 11,119,000 11,742,000 12,727,000 13,218,000 13,728,000 14,258,000 14,808,000 15,380,000 BAWSCA Bond Repayment 601,416 670,356 675,000 675,000 675,000 675,000 675,000 675,000 675,000 675,000 675,000 Reallocation 1,362,521 1,373,045 1,407,371 1,442,555 1,478,619 1,515,585 1,553,000 1,592,000 1,632,000 1,673,000 1,715,000 Capital Outlay / Vehicles 0 0 0 0 0 0 0 0 0 0 0
Operating Expenses 17,905,468 19,102,480 19,772,144 20,183,343 21,073,763 22,335,182 23,113,000 23,921,000 24,758,000 25,626,000 26,527,000 Operating Net Revenues 605,532 388,520 696,856 5,330,657 1,681,237 1,595,818 1,854,000 2,014,000 2,204,000 2,401,000 2,618,000 Water Sustainability Fund Transfer 250,000 250, 000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 Capital Improvement Transfer [3] 1,000,000 2, 600,000 2,600,000 2,500,000 2,500,000 1,750,000 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 Proj. Debt Service (6%, 1.5% issuance, 30yr) 0 0 0 147,477 294,955 294,955 294,955 294,955 294,955 294,955 294,955 Total Expenses 19,155,468 21,952,480 22,572,144 23,030,820 24,068,718 24,580,137 25,107,955 25,915,955 26,752,955 27,620,955 28,521,955 Revenues Les s O&M Expens es 605,532 388,520 696,856 5,330,657 1,681,237 1,595,818 1,854,000 2,014,000 2,204,000 2,401,000 2,618,000 Revenues Les s Total Expens es (644,468) (2,461,480) (2,103,144) 2,483,180 (1,313,718) (649,137) (140,955) 19,045 209,045 406,045 623,045 Ending Fund Balance 10,550,146 8,088,520 5,985,356 8,468,580 7,154,882 6,505,763 6,364,845 6,383,845 6,592,845 6,998,845 7,621,845 Revenue Tes t: Annual Revenues > O&M Expenses
Annual Revenues Less O&M Expenses 605,532 388,520 696,856 5,330,657 1,681,237 1,595,818 1,854,000 2,014,000 2,204,000 2,401,000 2,618,000 Pass/fail PASS PASS PASS PASS PASS PASS PASS PASS PASS PASS PASS Fund Reserve Test: Minimum Fund Balance > 25% O&M Expenses Year-end fund balance 10,550,146 8, 088,520 5,985,356 8,468,580 7,154,882 6,505,763 6,364,845 6,383,845 6,592,845 6,998,845 7,621,845 25% operating expenses 4,420,000 4,710,000 4,880,000 4,980,000 5,200,000 5,510,000 5,700,000 5,900,000 6,100,000 6,320,000 6,540,000 # of Days O&M in Reserves 215 155 110 153 124 106 101 97 97 100 105 Pass/fail PASS PASS PASS PASS PASS PASS PASS PASS PASS PASS PASS Debt Service Coverage 9.02 5.70 5.41 6.29 6.83 7.47 8.14 8.88 [1] Connection fees not included in this analysis
[2] Calculated as 3% of the Beginning Fund Balance of the Water Revenue Fund [3] Capital Improvements are funded through the Long-Term Capital Improvement Project Fund Five Year Projection Extended Year Projection
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Table 6
City of Foster City / Estero Municipal Improvement District Water Rate Calculation - Two Tier Hybrid Model
F
iscal Year Ending June 30 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Fixed Meter Charge Increas e 8.50% 8.00% 7.00% 7.00% 7.00% 4.00% 4.00% 4.00% 4.00% 4.00% Fixed Revenues +/- 6% of Fixed Costs? YES YES YES YES YES YES YES YES YES YES Res erves % Above (Below) Res erve Target 171.7% 122.7% 170.1% 137.6% 118.1% 111.7% 108.2% 108.1% 110.7% 116.5% Res erve Target Met? YES YES YES YES YES YES YES YES YES YES Revenue Es timates
Meter Charge Revenue 7,004,000$ 7,626,000$ 8,265,000$ 8,872,000$ 9,533,000$ 10,235,000$ 10,682,000$ 11,144,000$ 11,635,000$ 12,142,000$ 12,677,000$ Other Fixed Revenue 336,000$ 317,000$ 243,000$ 180,000$ 254,000$ 215,000$ 195,000$ 191,000$ 192,000$ 198,000$ 210,000$ Volumetric Revenue 11,171,000$ 11,549,000$ 11,960,000$ 12,456,000$ 12,964,000$ 13,484,000$ 14,093,000$ 14,603,000$ 15,126,000$ 15,677,000$ 16,250,000$ Total Projected 18,511,000$ 19,492,000$ 20,468,000$ 21,508,000$ 22,751,000$ 23,934,000$ 24,970,000$ 25,938,000$ 26,953,000$ 28,017,000$ 29,137,000$ Total Projected Revenue (Rounded '000's) 18,511,000$ 19,492,000$ 20,468,000$ 21,508,000$ 22,751,000$ 23,934,000$ 24,970,000$ 25,938,000$ 26,953,000$ 28,017,000$ 29,137,000$ Revenue Allocation
Fixed 39.7% 40.8% 41.6% 42.1% 43.0% 43.7% 43.6% 43.7% 43.9% 44.0% 44.2% Variable 60.3% 59.2% 58.4% 57.9% 57.0% 56.3% 56.4% 56.3% 56.1% 56.0% 55.8% Costs Estima te s
Fixed Costs [1] $7,837,052 $10,218,124 $10,731,144 $11,036,820 $11,451,718 $10,978,137 $11,014,955 $11,312,955 $11,619,955 $11,937,955 $12,266,955 Variable Costs [2] $11,318,416
$11,734,356 $11,841,000 $11,994,000 $12,617,000 $13,602,000 $14,093,000 $14,603,000 $15,133,000 $15,683,000 $16,255,000 Total Projected Costs $19,155,468 $21,952,480 $22,572,144 $23,030,820 $24,068,718 $24,580,137 $25,107,955 $25,915,955 $26,752,955 $27,620,955 $28,521,955 Net Revenue
Fixed Charges -$497,052 -$2,275,124 -$2,223,144 -$1,984,820 -$1,664,718 -$528,137 -$137,955 $22,045 $207,045 $402,045 $620,045 Volumetric Charges -$147,416 -$185,356 $119,000 $462,000 $347,000 -$118,000 $0 $0 -$7,000 -$6,000 -$5,000 Total -$644,468 -$2,460,480 -$2,104,144 -$1,522,820 -$1,317,718 -$646,137 -$137,955 $22,045 $200,045 $396,045 $615,045 Cost Ana lysis
Fixed 40.9% 46.5% 47.5% 47.9% 47.6% 44.7% 43.9% 43.7% 43.4% 43.2% 43.0% Variable 59.1% 53.5% 52.5% 52.1% 52.4% 55.3% 56.1% 56.3% 56.6% 56.8% 57.0% Meter Charge Calculation
Monthly charge per meter equivalent 28.85$ 31.30$ 33.80$ 36.15$ 38.70$ 41.40$ 43.05$ 44.75$ 46.55$ 48.40$ 50.35$ (Rounded to nearest $0.05)
Annual charge per meter equivalent 346.20$ 375.60$ 405.60$ 433.80$ 464.40$ 496.80$ 516.60$ 537.00$ 558.60$ 580.80$ 604.20$ Meter equivalents [3] 20,229 20,303 20,377 20,452 20,527 20,602 20,677 20,753 20,829 20,905 20,982 Meter Charge Revenue Estimate 7,004,000$ 7,626,000$ 8,265,000$ 8,872,000$ 9,533,000$ 10,235,000$ 10,682,000$ 11,144,000$ 11,635,000$ 12,142,000$ 12,677,000$ Volumetric Rate Calculation
EMID Proposed Uniform Rate $6.72 6.92$ 7.14$ 7.41$ 7.68$ 7.96$ 8.29$ 8.56$ 8.83$ 9.12$ 9.42$ Projected annual water sales (ccf) [4] 1,662,412 1,669,000 1,675,000 1,681,000 1,688,000 1,694,000 1,700,000 1,706,000 1,713,000 1,719,000 1,725,000 Variable revenue estimate $11,171,000 $11,549,000 $11,960,000 $12,456,000 $12,964,000 $13,484,000 $14,093,000 $14,603,000 $15,126,000 $15,677,000 $16,250,000 % Spread between EMID and SFPUC
Surcharge 18.5% 19.5% 22.1% 25. 4% 23.5% 18.5% 19.2% 18.9% 18.5% 18.3% 18.0% SFPUC PROJECTED RATES $5.67 $5.79 $5.85 $5.91 $6.22 $6.72 $6.96 $7.20 $7.45 $7.71 $7.98 Increas e (Decreas e) % 2.1% 1.0% 1.0% 5.2% 8.0% 3.5% 3.5% 3.5% 3.5% 3.5% BAWSCA Surcharge $0.36 $0.36 $0.36 $0.36 $0.36 $0.36 $0.36 $0.36 $0.36 $0.36 $0.36 SFPUC Rate + BAWSCA Surcharge $6.03 $6.15 $6.21 $6.27 $6.58 $7.08 $7.32 $7.56 $7.81 $8.07 $8.34 EMID Fixed Meter Charge Increas e (Decreas e) 8.5% 8.0% 7.0% 7.1% 7.0% 4.0% 3.9% 4.0% 4.0% 4.0% EMID Volumetric Rate Increas e (Decreas e) 3.0% 3.2% 3.8% 3.6% 3.6% 4.1% 3.3% 3.2% 3.3% 3.3% Note:
[1] Includes: Employee Services, Internal Services - Other, Internal Services - ERF, Services & Supplies, Reallocation, Capital Outlay, Capital Improvement Fund Transfers, Debt Service, and net revenues for the operating fund. [2] Includes: SFPUC Water Purchases, BAWSCA Bond Repayment, and Water Sustainability Fund Transfers. [3] 0.37% growth estimated for planning purposes
[4] Includes 10% water loss factor
Five Year Projection Extended Year Projection
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Table 7
City of Foster City / Estero Municipal Improvement District Proposed Water Rates - Two Tier Hybrid Model
Current
Rates FY2026 FY2027 FY2028 FY2029 FY2030 FY2031 FY2032 FY2033 FY2034 FY2035 Monthly Meter Charge
3/4" $28.85 $31.30 $33.80 $36.15 $38.70 $41.40 $43.05 $44.75 $46.55 $48.40 $50.35 1" 48.08 52.17 56.33 60.25 64.50 69.00 71.75 74.58 77.58 80.67 83.92 1-1/2" 115.40 125.20 135.20 144.60 154.80 165.60 172.20 179.00 186.20 193.60 201.40 2" 153.87 166.93 180.27 192.80 206.40 220.80 229.60 238.67 248.27 258.13 268.53 3" 336.58 365.17 394.33 421.75 451.50 483.00 502.25 522.08 543.08 564.67 587.42 4" 605.85 657.30 709.80 759.15 812.70 869.40 904.05 939.75 977.55 1,016.40 1,057.35 6" 1,346.33 1,460.67 1,577.33 1,687.00 1,806.00 1,932.00 2,009.00 2,088.33 2,172.33 2,258.67 2,349.67 8" or greater 2,308.00 2,504.00 2,704.00 2,892.00 3,096.00 3,312.00 3,444.00 3,580.00 3,724.00 3,872.00 4,028.00 Conservation-Based Water Rate Model (based on bi-monthly allotments)* Single Family Residential
Tier 1 0-20 per ccf 6.60 6.80 7.02 7.29 7.56 7.84 8.17 8.44 8.72 9.01 9.31 Tier 2 Over 20 ccf 7.33 7.56 7.79 8.08 8.34 8.59 8.92 9.19 9.46 9.75 10.05 Multi-Family Residential (per living unit)
Tier 1 0-10 ccf per living unit 6.60 6.80 7.02 7.29 7.56 7.84 8.17 8.44 8.72 9.01 9.31 Tier 2 Over 10 ccf per living unit 7.36 7.54 7.77 8.06 8.32 8.57 8.90 9.17 9.44 9.73 10.03 Irrigation Customers
Tier 1 <=100% of annual budget 6.60 6.80 7.02 7.29 7.56 7.84 8.17 8.44 8.72 9.01 9.31 Tier 2 >100% of annual budget 7.80 7.76 8.00 8.29 8.55 8.79 9.12 9.39 9.66 9.95 10.24 Commercial and Fire Line Customers
Base Consumption Rate 6.72 6.92 7.14 7.41 7.68 7.96 8.29 8.56 8.83 9.12 9.42 Monthly Fire Meter Charge
1-1/2" & below 40.39 43.82 47.32 50.61 54.18 57.96 60.27 62.65 65.17 67.76 70.49 2" 53.95 58.53 63.21 67.60 72.37 77.42 80.50 83.68 87.05 90.51 94.15 3" 117.71 127.70 137.90 147.49 157.90 168.91 175.64 182.58 189.92 197.47 205.43 4" 212.05 230.06 248.43 265.70 284.45 304.29 316.42 328.91 342.14 355.74 370.07 6" 471.12 511.13 551.95 590.33 631.97 676.06 703.01 730.77 760.16 790.37 822.22 8" or greater 807.80 876.40 946.40 1,012.20 1,083.60 1,159.20 1,205.40 1,253.00 1,303.40 1,355.20 1,409.80 (Minimum charge is equivalent to 1-1/2" meter charge)
TWO TIER HYBRID MODEL
Recommended Rates
*Recommended SFPUC wholesale rate pass through formula: (Additional SFPUC $ Amount Per HCF Above Study) / (0.9) added to each volumetric rate.
0.9 Accounts for 10% Water loss
20 | Page
Table 8
Foster City / Estero Municipal Improvement District
Projected Water Rate Impacts
Current FY2026
Rates Two Tier Hybrid Model
Monthly meter charge $28.85 $31.30
% Change 8.5%
Single Family Residential
Bi-Monthly Tiers
Tier 1: 0 to 20 ccf $6.60 $6.80
Tier 2: over 20 ccf $7.33 $7.56
Water Monthly
Use Level Use (ccf) Monthly Bill
Low User 5 $61.85 $65.30
$ Increase 3.45
% Increase 5.6%
Median Us er 6 $68.45 $72.10
$ Increase 3.65
% Increase 5.3%
Average Us er 8 $81.65 $85.70
$ Increase 4.05
% Increase 5.0%
High User 10 $94.85 $99.30
$ Increase 4.45
% Increase 4.7%
Very High User 20 $160.85 $174.90
$ Increase 14.05
% Increase 8.7%
Exces s ive Us er 50 $380.75 $401.70
$ Increase 20.95
% Increase 5.5%
21 | Page
Table 9
Foster City / Estero Municipal Improvement District
P
rojected Water Rate Impacts
Current
2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Two Tier Hybrid Model
Single Family Residential Monthly Rate $81.65 $85.70 $89.96 $94.47 $99.18 $104.12 $108.41 $112.27 $116.31 $120.48 $124.83 $ Increase 4.05 4.26 4.51 4.71 4.94 4.29 3.86 4.04 4.17 4.35 % Increase 5.0% 5.0% 5.0% 5.0% 5.0% 4.1% 3.6% 3.6% 3.6% 3.6% Based on Single Family Residential Use of 8 ccf
Fiscal Year Ending June 30 Extended Year ProjectionProjected Water Bills
22 | Page
APPENDIX D