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2625 Alcatraz Ave, #602
Berkeley, CA 94705
Tel 510 653 3399
www.bartlewells.com
DATE: March 23rd, 2026
TO: City of Foster City/Estero Municipal Improvement District
FROM: Bartle Wells Associates
SUBJECT: Wastewater Rate Study Update Results
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 Wastewater Enterprise and to project wastewater rate adjustments for the next five -year period. BWA last conducted a rate study update in 2025, and the District adopted a five -year schedule of wastewater rates.
Current and projected wastewater service rates are in the mid dle range compared to other agencies on the Peninsula, and because water rates are comparatively low, combined water and wastewater service rates are in the middle -low range compared to other agencies on the Peninsula.
Wastewater Enterprise Summary
The District has entered into a Joint Powers Agreement with the City of San Mateo under which the District’s wastewater is treated via the San Mateo Wastewater Treatment Plant (WWTP). Under this agreement, the District is responsible for its proportionate share of the operating and maintenance costs incurred by the City of San Mateo, which acts as the lead agency and contracting entity for treatment services. In addition to ongoing operating costs, the District contributes approximately 24% of the WWTP improvement costs and 12% of program management costs incurred as part of the Clean Water Program (CWP), a 10-year comprehensive capital improvement project initiated in 2014.
The Clean Water Program represents a comprehensive effort to rehabilitate and modernize aging wastewater infrastructure serving San Mateo, Foster City, and surrounding communities. A major component of the program was the expansion and upgrade of the jointly owned wastewater treatment plant (WWTP).
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The project replaced significant portions of infrastructure that were more than 75 years old and incorporated advanced treatment technologies, including biological nutrient removal systems, to improve effluent quality, increase wet -weather treatment capacity, and reduce nutrient discharges to the San Francisco Bay.
Construction of the upgraded facility was substantially completed in 2025, with final improvements and commissioning activities continuing into 2026. The improvements include new headworks and primary clarifiers, advanced treatment processes, enhanced odor control systems, and expanded hydraulic capacity to better manage peak storm events.
During this transition period, the District is experiencing elevated operating costs associated with bringing the upgraded facilities online and optimizing performance. This includes a period in which both existing and new treatment facilities are operated concurrently to ensure system reliability and maintain regulatory compliance. In addition, the upgraded facility is expected to be more energy - and chemical-intensive, which will contribute to higher ongoing operating costs in future years. These upgrades reduce the risk of sanitary sewer overflows, enhance protection of the San Francisco Bay, and support compliance with current and evolving regulatory requirements.
The overall Clean Water Program cost exceeds $1 billion across all program components, with the WWTP upgrade representing the largest element of the program. The District’s total share of the WWTP improvements is estimated at approximately $17 2.8 million. In addition to the regional treatment plant improvements, the District continues to invest in capital improvements to its own wastewater collection system to maintain reliability and support long-term service needs.
The wastewater enterprise revenue model is designed to fund collection system capital expenditures through annual transfers from the operating fund to the capital improvement fund. This approach allows the District to maintain adequate funding for ongoing infrastructure rehabilitation while minimizing reliance on additional debt financing.
In June 2020, to fund the anticipated costs of the Clean Water Program improvements, the District Board approved a multi -year wastewater rate adjustment schedule. The original schedule included three annual increases of 14.25% from FY 2021 through FY 2023, followed by a planned 10% increase in FY 2024 and a 2% increase in FY 2025.
Subsequent financial analysis conducted in 2023 determined that the District had
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sufficient financing capacity to spread the remaining rate adjustments over a longer period. As a result, the City Council reduced the FY 2024 increase from 10% to 3% and maintained the previously adopted 2% increase in FY 2025. In FY 2026, the District Board approved a five-year rate schedule with no increase in FY 2026 and 2% increases from FY 2027 to FY 2030.
The San Mateo and Foster City partnership was able to secure historically low -interest financing for portions of the Clean Water Program, including federal and state loans with interest rates as low as approximately 1.14% for 30 -year financing. This favora ble financing structure helped reduce overall borrowing costs and allowed the District to implement smaller rate increases than originally anticipated.
Although major construction for the WWTP upgrade has been completed, uncertainty remains regarding future operating costs associated with the expanded facility, evolving regulatory requirements, and ongoing capital needs within the District’s collection system. To maintain financial stability while limiting impacts to ratepayers, BWA recommends implementing the adopted annual increases of approximately 2 % from FY 2027 through FY 2030. These increases are intended to support ongoing operating costs, capital reinvestment, and financial reserve targets, while allowing flexibility to re-evaluate future rate adjustments as additional operational and financial data becomes available.
Rate Surveys
A survey of communities along the San Francisco Peninsula was conducted to compare the District’s typical wastewater bills with neighboring communities. The results of the wastewater survey are summarized in A ppendix A. Detailed adopted wastewater rates are shown in Appendix B.
The District’s proposed monthly residential wastewater bill for FY 2027 is $136.16. Since it is unknown what the comparator agencies are proposing for FY 2027, the District compared its FY 2026 monthly residential wastewater bills to the FY 2026 monthly residential wastewater bills for the neighboring agencies. The survey indicates that the District’s current wastewater rates are slightly above the average among its comparator agencies. The average monthly bill for the region is $130.90 and the District’s current FY 2026 rate is $133.49 per month, or about 2% more.
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Wastewater Enterprise Fund
There are approximately 13,987 wastewater accounts serviced by the District. Most accounts are residential with the remainder consisting of commercial and institutional accounts as shown in Table 1. The wastewater service area includes Foster City only and is shown in Appendix C.
The District’s minimum operating reserve target is 25% of operating expenses (approximately $2.8 million in FY 2026), equivalent to about 90 days of operating expenditures. The minimum target ensures adequate liquidity in case of unexpected expenditures. Wastewater utilities typically carry a median of 90 days to two years of cash on hand, with higher levels viewed more favorably by credit rating agencies.
Tabl e 1
Foster City / Estero Municipal Improvement District
Wastewater Servi ce Accounts
Data as of: 03/09/26
Number of Accounts
Residential
Single Fam ily 4,536
Townhouse/Duplex 2,296
Apartment/Condominium (Pools w/ Restrooms) 6,906
Re side ntial Total 13,738
Commercial
Restaurants 42
Commercial/Hotels/Offices/Industrial/Laundromats 171
Commerci al Total 213
Institutional
Institutional/Schools 36
Institutional Total 36
Total 13,987
Source: Cognos Sewer Customer Count Report
Customer Class
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As shown in Appendix B, for FY 2026, the District maintained an O&M reserve balance of $17,684,963 (approximately 575 days). This balance is projected to be drawn down to $11,899,050 (approximately 348 days) in the following year, which remains well above the minimum target of $3,116,936.
Table 2 summarizes the current and adopted wastewater service rates. From FY 2026 through FY 2030, rates are scheduled to increase by 2% annually for residential flat monthly charges and for volumetric charges (per ccf) applied to commercial and institutional customers.
Tabl e 2
Foster City / Estero Municipal Improvement District
Adopted Wastewater Rates
Current
Fiscal Year Ending June 30 FY 2026
FY 2027 FY 2028 FY 2029 FY 2030
Residential (flat monthly rate)
Single Fam ily $133.49 $136.16 $138.88 $141.66 $144.49 Townhouse/Duplex 112.13 114.37 116.66 118.99 121.37
Apartment/Condominium (Pools w/ Restrooms) 112.13 114.37 116.66 118.99 121.37 Commercial (rate per ccf of water use)
Restaurants 24.26 24.75 25.25 25.76 26.28
Commercial/Hotels/Offices/Industrial/Laundromats 8.53 8.70 8.87 9.05 9.23 Institutional (rate per ccf of water use)
Institutional/Schools 5.61 5.72 5.83 5.95 6.07
Adopted Rates
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Table 3 summarizes the operating expenses of the wastewater enterprise. Total O&M expenditures are projected to increase from approximately $11.2 million in FY 2026 to $12.5 million in FY 2027, representing an 11% increase. This increase is primarily driven by a significant rise in the District’s share of WWTP O&M costs associated with bringing the upgraded facilities online and optimizing performance. Following FY 2027, O&M expenditures are projected to continue increasing at a more moderate rate, ranging from approximately 2.7% to 6.1% annually through FY 2031. Projections of the District’s share of WWTP operating and maintenance costs assume the District contributes approximately 21% of total flows to the WWTP.
Table 3
City of Foster City / Estero Municipal Improvement District Wastewater Enterprise O&M Projection
Revised
Budget
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031
Employee Services $3,215,450 $3,243,502 $3,373,242 $3,508,172 $3,648,499 $3,794,439 4.0% Additional Staffing Expense [2] 0 0 118,767 122,661 126,689 $131,756 Vari es Internal Services (from City) 1,631,334 1,842,089 1,888,141 1,935,345 1,983,729 2,033,322 2.5% Internal Services- Equipment Replacement Fund 401,864 401,864 411,911 422,209 432,764 443,583 2.5% Services & Supplies 851,450 922,800 945,870 969,517 993,755 1,018,599 2.5% EMID Share WWTP O&M 4,040,000 4,800,000 5,200,000 5,300,000 5,500,000 5,600,000 N/A Reallocation [3] 1,087,381 1,257,490 1,288,927 1,321,150 1,354,179 1,388,033 2.5% TOTAL O&M Expenditures $11,227,479 $12,467,745 $13,226,858 $13,579,054 $14,039,615 $14,409,732
11.0% 6.1% 2.7% 3.4% 2.6%
[1] Based on historical results
[2] A placeholder for potential additional positions to support the wastewater enterprise. [3] Costs allocated to the wastewater enterprise for the cost of services provided to the enterprise by City departments, as documented in the City’s cost allocation study.
Expenditures Annual %
Increase [1]
Five Year Projection
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Wastewater Financial Projections
Wastewater projections are shown in Appendix B.
Table 4 shows debt service for the District’s share of WWTP costs. Annual debt service for WWTP financing amounts to approximately $6 million. The City of San Mateo and the District used the proceeds to invest in the rehabilitation of their aging WWTP. This project aims to increase the plant's capacity to handle wet weather flows, produce higher-quality effluent, enhance system reliability, and support sustainability goals. The upgrade is designed to meet both current and future regulatory requirements and provide opportunities for future water reuse. Additionally, new treatment facilities comply with National Pollutant Discharge Elimination System (NPDES) permit limits. This upgrade will also boost the system’s ability to manage wastewater during storms up to 78 million gallons per day (mgd) and help prevent sanitary sewer overflows into the San Francisco Bay.
Key Benefits of the Project:
• Rehabilitation of the aging WWTP
• Reduction of ammonia and nitrogen effluent concentrations in compliance with the NPDES permit
• Decreased sewer overflows and unauthorized discharges into the San Francisco Bay
Table 4
City of Foster City / Estero Municipal Improvement District D
ebt Service
Debt Service FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 WIFIA Loan $2,652,882 $2,652,882 $2,652,882 $2,652,882 $2,652,882 $2,652,882 $2,652,882 $2,652,882 $2,652,882 $2,652,882 2019 Bonds 2,086,875 2,087,750 2,086,875 2,084,250 2,084,750 2,088,125 2,084,375 2,083,500 2,085,250 2,084,500 2023 SRF Loan/Bonds 1,259,604 1,259,573 1,259,540 1,259,508 1,259,475 1,259,443 1,259,410 1,259,376 1,259,342 1,259,309 Total Debt Service 5,999,361 6,000,205 5,999,297 5,996,640 5,997,107 6,000,450 5,996,666 5,995,758 5,997,475 5,996,690
APPENDIX A
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10.42 10.71
67.11 69.92
16.25 94.58
104.58
112.00
120.00
$37.61
123.88
49.66 60.94
86.36 133.49
$136.16
65.71 159.92
160.42
98.07 182.08
133.72
359.25
30.00 53.55
56.68 85.68
74.58 67.32
43.18 77.34
67.92 66.86
40.42 64.26
67.11 69.92
72.93 94.58
104.58
112.00
120.00
123.29
123.88
124.24
128.26
129.54
133.49
136.16
143.05
159.92
160.42
165.99
182.08
200.58
359.25
$0
$25
$50
$75
$100
$125
$150
$175
$200
$225
$250
$275
$300
$325
$350
Sewer Usage Charges
Fixed or Minimum Charges
Source
Typical Single Family Residential Monthly Sewer Charges Based on flat rate or 6 hcf of monthly winter water use Average: $130.90
APPENDIX B
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Table B-1
City of Foster City / Estero Municipal Improvement District Wastewater Enterprise Cash Flow Projection
Current Extended Year Projection
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 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% Revenue Increase from Growth 0.37% 0.37% 0.37% 0.37% 0.37% 0.37% 0.37% 0.37% 0.37% 0.37% Rate Adjustment 0.00% 2.00% 2.00% 2.00% 2.00% 1.00% 1.00% 1.00% 1.00% 1.00% Monthly Service Charge for Single Family $133.49 $136.16 $138.88 $141.66 $144.49 $145.93 $147.39 $148.86 $150.35 $151.85 Beginning O&M Fund Balance $28,611,436 $17,685,000 $11,899,100 $11,901,900 $12,088,200 $12,365,500 $12,600,300 $12,693,800 $13,733,700 $14,840,800 Operating Revenues
Service Charges 21,441,367 21,950,000 22,471,000 23,004,000 23,550,000 23,873,000 24,200,000 24,531,000 24,867,000 25,208,000 Connection Fees [1] 0 0 0 0 0 0 0 0 0 0
Interest Earnings [2] 858,000 531,000 357,000 357,000 363,000 371,000 378,000 381,000 412,000 445,000 Other Revenue 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 Operating Revenue 22,300,367 22,482,000 22,829,000 23,362,000 23,914,000 24,245,000 24,579,000 24,913,000 25,280,000 25,654,000 Total Revenue 22,300,367 22,482,000 22,829,000 23,362,000 23,914,000 24,245,000 24,579,000 24,913,000 25,280,000 25,654,000 Operating Expenses
Employee Services 3,215,450 3,243,502 3,373,242 3,508,172 3,648,499 3,794,439 3,946,217 4,104,066 4,268,229 4,438,958 Additional Staffing Expense 0 0 118,767 122,661 126,689 131,756 137,026 142,507 148,208 154,136 Internal Services (from City) 1,631,334 1,842,089 1,888,141 1,935,345 1,983,729 2,033,322 2,084,155 2,136,259 2,189,665 2,244,407 Internal Services -ERF 401,864 401,864 411,911 422,209 432,764 443,583 454,673 466,040 477,691 489,633 Services & Supplies 851,450 922,800 945,870 969,517 993,755 1,018,599 1,044,064 1,070,166 1,096,920 1,124,343 EMID Share WWTP O&M 4,040,000 4,800,000 5,200,000 5,300,000 5,500,000 5,600,000 5,800,000 6,000,000 6,000,000 6,000,000 Reallocation 1,087,381 1,257,490 1,288,927 1,321,150 1,354,179 1,388,033 1,422,734 1,458,302 1,494,760 1,532,129 Operating Expenses 11,227,479 12,467,745 13,226,858 13,579,054 14,039,615 14,409,732 14,888,869 15,377,340 15,675,473 15,983,606 Operating Net Revenue 11,072,888 10,014,255 9,602,142 9,782,946 9,874,385 9,835,268 9,690,131 9,535,660 9,604,527 9,670,394 Capital Expens es
Transfer Out - Collection CIP 16,000,000 9,800,000 3,600,000 3,600,000 3,600,000 3,600,000 3,600,000 2,500,000 2,500,000 2,500,000 Capital Expenses 16,000,000 9,800,000 3,600,000 3,600,000 3,600,000 3,600,000 3,600,000 2,500,000 2,500,000 2,500,000 Annual Debt Service 5,999,361 6,000,205 5,999,297 5,996,640 5,997,107 6,000,450 5,996,666 5,995,758 5,997,475 5,996,690 Debt Service 5,999,361 6,000,205 5,999,297 5,996,640 5,997,107 6,000,450 5,996,666 5,995,758 5,997,475 5,996,690 Debt Coverage [3] 1.85 1.67 1.60 1.63 1.65 1.64 1.62 1.59 1.60 1.61 Total Expenditures 33,226,840 28,267,950 22,826,156 23,175,693 23,636,722 24,010,182 24,485,535 23,873,098 24,172,947 24,480,296 Revenues Less Total Expenditures (10,926,473) (5,785,950) 2,844 186,307 277,278 234,818 93,465 1,039,902 1,107,053 1,173,704 Ending O&M Fund 17,684,963 11,899,050 11,901,944 12,088,207 12,365,478 12,600,318 12,693,765 13,733,702 14,840,753 16,014,504 Cash Fund Reserve Test: Minimum Fund
Balance > 25% O&M Expenses
Year-end O&M Fund 17,684,963 11,899,050 11,901,944 12,088,207 12,365,478 12,600,318 12,693,765 13,733,702 14,840,753 16,014,504 25% Operating Expenses 2,806,870 3,116,936 3,306,715 3,394,763 3,509,904 3,602,433 3,722,217 3,844,335 3,918,868 3,995,901 # of Days O&M in Reserves 575 348 328 325 321 319 311 326 346 366 Pass/fail PASS PASS PASS PASS PASS PASS PASS PASS PASS PASS [1] Connection fees excluded from analysis.
[2] Projected interest calculated as 3% of the Beginning Fund Balance of the Wastewater O&M Fund. [3] Minimum requirement debt service coverage requirement = 1.25x Five Year Projection
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Table B-2
City of Foster City / Estero Municipal Improvement District Wastewater Rate Impacts
Current
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
% Rate Increas e 2.00% 2.00% 2.00% 2.00%
Residential (flat monthly rate)
Single Family $133.49 $136.16 $138.88 $141.66 $144.49
Increase (Decrease) 2.67 2.72 2.78 2.83
Townhouse/Duplex $112.13 $114.37 $116.66 $118.99 $121.37 Increase (Decrease) 2.24 2.29 2.33 2.38
Apartment/Condominium (Pools w/ Restrooms) $112.13 $114.37 $116.66 $118.99 $121.37 Increase (Decrease) 2.24 2.29 2.33 2.38
Commercial (rate per ccf of water us e)
High Strength $24.26 $24.75 $25.25 $25.76 $26.28
Increase (Decrease) per ccf 0.49 0.50 0.51 0.52
Medium/Domestic Strength $8.53 $8.70 $8.87 $9.05 $9.23
Increase (Decrease) per ccf 0.17 0.17 0.18 0.18
Low Strength $5.61 $5.72 $5.83 $5.95 $6.07
Increase (Decrease) per ccf 0.11 0.11 0.12 0.12
Adopted Rates Adopted - Fiscal Year Ending June 30
Table B-3
City of Foster City / Estero Municipal Improvement District A
dopted Wastewater Rate Impacts
Current
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
% Rate Increas e
Single Family Residential Flat Monthly Flat $133.49 $136.16 $138.88 $141.66 $144.49 $ Increase (Decrease) 2.67 2.72 2.78 2.83
% Increase (Decrease) 2.00% 2.00% 2.00% 2.00%
Adopted Rate Changes Adopted - Fiscal Year Ending June 30
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Figure B-1
$133.49 $136.16 $138.88 $141.66 $144.49
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
$110
$120
$130
$140
$150
$160
FY2026 FY2027 FY2028 FY2029 FY2030
Foster City/Estero Municipal Improvement District
Monthly Single Family Residential Wastewater Bill
Adopted SFR Monthly Bills
APPENDIX C
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