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8 DATE: April 20, 2026
TO: President and Members of the Estero Municipal Improvement District (EMID) Board of Directors
VIA: Stefan Chatwin, District Manager
Marlene Subhashini, Assistant District Manager
FROM: Andrew Brozyna, Public Works Director
Nate Cruz, Finance Director
DEPARTMENT: Public Works
SUBJECT: CONFIRMING PREVIOUSLY ADOPTED WATER RATES
EFFECTIVE JULY 1, 2025, WITH ANNUAL ADJUSTMENTS
EACH JULY 1 THROUGH JULY 1, 2029
RECOMMENDATION
It is recommended that the Board of Directors of the Estero Municipal Improvement District (EMID) review the attached study on water rates, which confirms the previously adopted water rates effective July 1, 2025, with annual adjustments each July 1 through 2029 and the implementation of the pass through increase of $0.42 cents per hundred cubic feet (ccf) for Fiscal Year 2027. This is an informational item only; no action is needed.
EXECUTIVE SUMMARY
On March 24, 2025, the EMID Board held a Budget Study Session to consider an analysis of proposed water rates for a five-year period from FY 2025-2026 to FY 2029- 2030 conducted by EMID's rate consultant, Bartle Wells Associates (BWA). Pursuant to direction received from the EMID Board at that meeting, staff prepared a public hearing notice of the proposed adoption of maximum new water rates.
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8 In conformance with Proposition 218 and AB 2257, a public hearing notice with the proposed rates was mailed to all record property owners and customers of record on March 31, 2025. The notice also included information regarding Government Code section 53756, which allows EMID to “pass through” changes to the wholesale cost to its customers. Under this provision, EMID implemented a pass-through mechanism per the formula in the study allowing adjustments to its retail water rates during the five-year period to reflect changes in rates imposed by the San Francisco Public Utilities Commission (SFPUC) that exceed the originally projected increases. A public hearing was held, and the rates were adopted on June 2, 2025.
For FY 2026-2027 the approved rate adjustment includes a 3.2% volumetric rate increase and an 8% meter charge increase, which results in an average monthly bill of about $89.96 a month for a single family home. The implementation of the pass-through amount of $0.42 cents per ccf will result in an average monthly bill of about $93.32.
According to a survey of communities conducted along the San Francisco Peninsula by BWA, EMID’s average water bill remains among the lowest in the region.
BACKGROUND/ANALYSIS
EMID provides water service to approximately 8,296 water service and fire protection service accounts/meters. Most of the District’s customers are residential.
Water bills are composed of two components: a fixed monthly charge based on meter size, plus a water consumption charge based on each customer’s metered water use.
The fixed monthly charge corresponds to the District’s fixed costs to provide water delivery to customers, based upon the size of the meter.
EMID's strategy for funding long-term capital water improvements calls for an annual transfer from water operating revenues to the City's Capital Improvement Fund to fund projects over the next 15 years. The proposed rate projections include allocations to the Capital Improvement Account to support critical infrastructure projects, including water tank lining, structural retrofitting, and an emergency bypass transmission main. In addition to annual transfers, BWA anticipates the need to secure $4 million in short term debt financing in FY 2027- 2028 to provide the necessary cash to fund these improvements. By securing financing instead of immediately raising rates, EMID can ensure that cash flow needs are met while allowing funds to be replenished over time.
Should staff determine that debt financing is recommended in FY 2027-2028, the recommendation will be presented to the EMID Board for approval.
On March 24, 2025, the EMID Board held a Budget Study Session regarding updated water rates to be effective July 1, 2025, with annual increases through July 1, 2029. At the Budget Study Session, the EMID Board considered information developed by EMID's rate consultant, BWA, and approved the Rate Setting Procedures which incorporate and implement the requirements contained in Proposition 218 and the procedures by which property owners/rate payers are required to exhaust 6 0
8 administrative remedies as set forth in Government Code section 53759.1 and 53759.2 (AB 2257). Pursuant to that direction and in conformance with Proposition 218, staff prepared and mailed the public hearing notice with the proposed rates by March 31, 2025.
A public hearing was held on June 2, 2025, there was no majority protest to the rates, and the rates adopted were effective July 1, 2025, with annual adjustments each July 1 through 2029. Consistent with Resolution No. 3804 Section 6(c), EMID is authorized to passthrough actual wholesale water costs from SFPUC that exceed the estimated costs incorporated in the water rate calculation. As identified in the Rate Study, the approved water rates estimated wholesale water costs of $5.85 per ccf for FY 2027; however, the actual costs provided by SFPUC for FY 2027 are $6.23 per ccf. Therefore, consistent with the formula in the Rate Study, the passthrough rate for FY 2027 is ($6.23-$5.85)/0.9 = $0.42 per ccf.
The proposed rates provide adequate revenue for operations, capital expenditures and transfers, and maintain the operating fund balance at or above target levels. The rates include consideration of the operational and maintenance costs related to water system operations and capital improvement projects.
Fiscal Year 2026-2027 through 2029-2030 are included in Table B-3 from the updated BWA Rate Study. Each year of the adopted rates, EMID will calculate the passthrough rate by comparing the updated costs from SFPUC to the costs that were estimated at the time the Water Rates were approved.
The EMID Board has implemented a long-term rate smoothing model that considers long-range projections for wholesale water rates and significant capital improvements Table B-3
Foster City / Estero Municipal Improvement District
Projected Water Rate Impacts
Current
2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Monthly Rate Impacts (Including Projected Passthrough)
Single Family Residential Monthly Rate $85.70 $89.96 $94.47 $99.18 $104.12 $108.41 $112.27 $116.31 $120.48 $124.83 Pass Through Amount 3.36 4.80 4.00 1.68 1.76 1.76 1.84 1.92 2.00 Total 93.32 99.27 103.18 105.80 110.17 114.03 118.15 122.40 126.83 $ Increase 7.62 5.95 3.91 2.62 4.37 3.86 4.12 4.25 4.43 % Increase 8.9% 6.4% 3.9% 2.5% 4.1% 3.5% 3.6% 3.6% 3.6% Based on Single Family Residential Use of 8 ccf
Projected Water Bills Fiscal Year Ending June 30 Extended Year Projection 6 0
8 and maintains rate increases at no greater than 10% per year. The proposed rates were prepared using a 15-year model, which has proven to be successful in dampening rate spikes. EMID customers will be notified of the previously approved rate change and the pass-through adjustments at least 30 days prior to the change in rates.
CALIFORNIA ENVIRONMENTAL QUALITY ACT
This action is not subject to the California Environmental Quality Act ("CEQA") pursuant to Public Resources Code Section 21080(b)(8), and California Code of Regulations Section 15273 (of the "CEQA Regulations") because it establishes, modifies, structures, or restructures, and approves rates and charges for the purposes of: (1) meeting operating expenses; (2) purchasing supplies, equipment and materials; (3) meeting financial requirements; and (4) obtaining funds for capital projects necessary to maintain service within existing service areas. Additionally, it is exempt per CEQA General Rule, Section 15061 (b) (3)
FISCAL IMPACT
The adopted water rates will cover the projected system expenditures while adhering to budget policy objectives established by the EMID Board related to enterprise funds.
All fiscal impacts for the water system are borne by water system customers. There is no General Fund impact.
VISION, MISSION, AND VALUE/PRIORITY AREA
Facilities and Infrastructure
Innovation and Sustainability
Smart Planning, Development, and the Local Economy
ATTACHMENTS:
Attachment 1 – Bartle Wells Associates Water Rate Study Analysis Attachment 2 – EMID Resolution No. 3804 Adopting Water Rates effective July 1, 2025, with annual adjustments each July 1 through 2029