26-1280 Water Utility Financial Plan and Rates Study FY 2027-FY 3031

PAVLETIC CONSULTING LLC
2014 Mann Pkwy, Celina, TX 75009
Water Utility Financial Plan and Rates Study
Prepared for
City of Fresno, California
September 2026
S i g n a t u r e a t f i n a l O w n e r
T h o m a s P a v l e t i c
D a t e
This Page Intentionally Blank.

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Table of Contents
List of Figures.....................................................................................................................................................iii List of Tables ......................................................................................................................................................iii List of Abbreviations ..........................................................................................................................................iv Executive Summary ......................................................................................................................................ES-1 2015 Water Rate Plan ...........................................................................................................................ES-1 Operating Expenditures..........................................................................................................................ES-2 Capital Improvement Program Expenditures and Funding..................................................................ES-3 Revenue Required from Rates and Cash Flow.....................................................................................ES-4 Recommended Water Rates and Charges............................................................................................ES-7

1. Introduction...............................................................................................................................................1-1

1.1 Organization of the Report ............................................................................................................1-1

1.2 Rate-Making Objectives.................................................................................................................1-1

1.3 Overview of Utility Rate Setting Process.......................................................................................1-2

1.4 Fresno Water Utility........................................................................................................................1-3

1.5 Water Rates and Charges Effective July 1, 2018 ........................................................................1-3

2. User Characteristics .................................................................................................................................2-1

2.1 Projected Water Use ......................................................................................................................2-1

2.2 Water Meters..................................................................................................................................2-3

2.3 Water Meter Equivalency Factors and Fire Service Demand Factors ........................................2-4

2.4 Equivalent 1-inch Water Meters....................................................................................................2-5

2.5 Private Fire Protection Connections and Equivalent Connections..............................................2-6

3. Financial Plan and Revenue Requirements ...........................................................................................3-1

3.1 Cost and Growth Projection Assumptions ....................................................................................3-1

3.2 Operation and Maintenance and Other Expenditures.................................................................3-2

3.3 Capital Improvement Program Expenditures ...............................................................................3-5

3.4 Long-Term Debt..............................................................................................................................3-5

3.5 Revenue Required from Rates and Cash Flow ............................................................................3-6

3.6 Operating Fund and Other Reserve Fund Balances ....................................................................3-9

4. Cost of Service Analysis ...........................................................................................................................4-1

4.1 Cost Allocation Factors ..................................................................................................................4-1

4.2 Cost Allocation Factors for Benchmark Year................................................................................4-4

4.3 Unit Costs .......................................................................................................................................4-6

4.4 Cost of Water Service for Highest Users.......................................................................................4-7

5. Water Quantity, Meter, Private Fire Protection Charges, and Proposition 218 Notice ........................5-1

5.1 Water Quantity Charges.................................................................................................................5-1

5.1.1 Uniform Water Quantity Charges ....................................................................................5-1

5.1.2 Private Wells Water Quantity Charges ............................................................................5-1 Table of Contents Water Utility Financial Plan and Rates Study ii Pavletic consulting llc
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5.2 Meter Charges................................................................................................................................5-1

5.3 Private Fire Protection Charges.....................................................................................................5-2

5.4 Recycled Water Rates and Charges..............................................................................................5-2

5.5 Proposition 218 Notice..................................................................................................................5-3

6. Impact of Rate Plan on Customer Bills ...................................................................................................6-1

6.1 Projected Revenue from Water Charges ......................................................................................6-1

6.2 Impact on Monthly Bills .................................................................................................................6-2

7. Limitations ................................................................................................................................................7-1 Appendix A: Master Fee Schedule #590...........................................................................................................A Appendix B: User Characteristics...................................................................................................................... B Appendix C: Cash Flow....................................................................................................................................... C Appendix D: Capital Improvement Program (CIP) ............................................................................................D Appendix E: Rate Development..........................................................................................................................E Water Utility Financial Plan and Rates Study Table of Contents Pavletic consulting llc iii
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List of Figures
Figure 1-1. Overview of Rate Setting Steps...................................................................................................1-2 Figure 2-1. Metered Water Use by Customer Class......................................................................................2-2 Figure 6-1. Projected Monthly Bills @ 17 HCF/month..................................................................................6-2 Figure 6-2. Projected Monthly Bills @ 50 HCF/month..................................................................................6-2 List of Tables
Table ES-1. Current Water Rates ................................................................................................................ES-1 Table ES-2. Operating Expenditures FY27 – FY31 ....................................................................................ES-2 Table ES-3. Capital Expenditures FY27 – FY31.........................................................................................ES-3 Table ES-4. Cash Flow FY27 – FY31...........................................................................................................ES-6 Table ES-5. Current and Recommended Water Rates and Charges FY27– FY31 ..................................ES-7 Table 1-1. Current Water Rates and Charges Effective July 1, 2018.........................................................1-3 Table 2-1. Metered Water Use by Customer Class ......................................................................................2-2 Table 2-2. Water Meters by Customer Class and Size ................................................................................2-3 Table 2-3. Water Meter Equivalency and Fire Service Connection Demand Factors ................................2-4 Table 2-4. Equivalent 1-inch Water Meters by Customer Class and Size ..................................................2-5 Table 2-5. Public Fire Hydrants and Private Fire Protection Connections..................................................2-6 Table 3-1. Cost and Growth Assumptions FY27 – FY31 .............................................................................3-1 Table 3-2. Operating Expenditures FY27 – FY31 ........................................................................................3-2 Table 3-3. Capital Expenditures FY27 – FY31 .............................................................................................3-5 Table 3-4. Cash Flow FY27 – FY31...............................................................................................................3-8 Table 3-5. Evaluation of Reserve Fund Targets FY27 – FY31 ..................................................................3-10 Table 3-6. Operating and Reserves Fund Balances FY27 – FY31............................................................3-10 Table 4-1. Plant in Service Allocation Factors..............................................................................................4-2 Table 4-2. FY27-FY31 Average Annual Cash Capital Expenditures and Debt Service ..............................4-3 Table 4-3. Cost Allocation Percentages for Benchmark Year .....................................................................4-4 Table 4-4. Allocation of FY27-FY31 Annual Revenue Requirements .........................................................4-5 Table 4-5. Allocation of FY27-FY31 Annual Revenue Requirements for Fire Protection ..........................4-5 Table 4-6. Unit Costs of Service....................................................................................................................4-6 Table 4-7. Water Use Analysis – Top 10% of Users.....................................................................................4-7 Table 5-1. Rates and Charges for Proposition 218 Notice .........................................................................5-3 Table 6-1. Revenue from Rates and Charges ..............................................................................................6-1 Table of Contents Water Utility Financial Plan and Rates Study iv Pavletic consulting llc
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List of Abbreviations
ACDR Annual Comprehensive Debt Report
ACFR Annual Comprehensive Financial Report
AF acre feet (equal to 325,851 gallons)
AWWA American Water Works Association
BAB Build America Better
BOR Bureau of Reclamation
CIP Capital Improvement Program
City City of Fresno
DPU Department of Public Utilities
DSC Debt Service Coverage
DWR Department of Water Resources
FID Fresno Irrigation District
FWA Friant Water Authority
FY Fiscal year (July 1 to June 30)
FY27 July 1, 2026, to June 30, 2027
gpd gallons per day
HCF Hundred Cubic Feet (equal to ~ 748.1 gallons)
mgd million gallons per day
MFS Master Fee Schedule
O&M Operation and maintenance
RW Recycled Water
SCADA Supervisory Control and Data Acquisition
SE Southeast
SRF State Revolving Fund
TCP Trichlorophosphate
UB&C Utility Billing and Collection
UP&E Utility Planning and Engineering
UGM Urban Growth Management
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Executive Summary
The City of Fresno, in conjunction with Pavletic Consulting LLC, have developed rates that generate sufficient revenues to cover operating and maintenance costs as well as capital costs while supporting debt service obligations and meeting financial planning goals. Rates and charges were developed for the five-year period Fiscal Year 2026 – 2027 (FY27) through FY31. 2015 Water Rate Plan
The City implemented a five-year rate plan for FY15 – FY19 (2015 Rate Plan) that was adopted in February 2015. Rate increases in the 2015 Rate Plan were developed as shown in the Water Utility Financial Management Plan and Rates Study dated February 2015. The first set of rate changes in the 2015 Rate Plan were implemented on March 30, 2015. The final set of rate increases implemented as part of the 2015 Rate Plan were effective July 1, 2018 (for FY19) and no adjustments have been implemented since that date. Current rates remain at 2018 (FY 19) levels.

Pages from the Master Fee Schedule (MFS) that list current water rates are included in Appendix A.

Rates shown in the MFS are listed in Table ES-1.

Table ES-1. Current Water Rates
Quantity Rate, $/HCF $1.74
Monthly Charges, $/month
Domestic Meters Irrigation Meters Private Fire Protection Connections Meter Size FY26 Count Rate Meter Size FY26 Count Rate Meter Size FY26 Count Rate ¾-inch 17,869 $13.50 ¾-inch 97 $10.70 Fire Hydrants see 6-inch $45.60

1.0-inch 108,025 $17.90 1.0-inch 1,196 $13.40 1.0-inch 1 $15.70

1.5-inch 8,616 $20.80 1.5-inch 814 $15.20 1.5-inch 5 $15.70

2.0-inch 3,948 $35.30 2.0-inch 1,909 $24.10 2.0-inch 219 $15.70

3.0-inch 146 $52.80 3.0-inch 28 $34.90 3.0-inch 3 $15.70

4.0-inch 760 $79.00 4.0-inch 161 $51.00 4.0-inch 695 $15.70

6.0-inch 226 $152.00 6.0-inch 35 $96.00 6.0-inch 1,187 $45.60

8.0-inch 219 $705.00 8.0-inch 6 $436.00 8.0-inch 1,022 $98.00

10.0-inch 9 $1,113.00 10.0-inch 0 $687.00 10.0-inch 93 $175.00

12.0-inch 0 $1,462.00 12.0-inch 0 $901.00 12.0-inch 27 $283.00 Executive Summary Water Utility Financial Plan and Rates Study ES-2 Pavletic consulting llc
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Operating Expenditures
Between FY27 and FY31 (five fiscal years), total operating expenditures are approximately $522.1 million.
1 Planned expenditures, by expense category, are summarized in Table ES-2. FY27 operating expenditures are from the City of Fresno Adopted Budget for the Fiscal Year July 1, 2026 – June 30,2027 (FY27 Adopted Budget) as amended during preparation of the 2026 Water Rate Plan.

Operating expenditures for FY27-FY31 are shown listed in Appendix C, Table C-1, and discussed in more detail in Section 3.

Table ES-2. Operating Expenditures FY27 – FY31
*Fixed Reimbursement UB&C are for billing and revenue services provided by the Revenue Division to other City departments. Cost Allocation Plan Charges are fixed charges for services and materials furnished by General Fund activities. Fixed Reimbursement Public Utilities are charges for services provided by the Administration Division of the Department of Public Utilities and the Capital Projects Department. 1 In this table and other tables in this report, dollar values may be rounded so line-item totals are approximate.

Adopted Projected
Cash Flow, $ millions FY27 FY28 FY29 FY30 FY31 Total $
Operating
Employee Services $23.1 $25.1 $27.0 $28.1 $28.9 $132.2
Pumping Power/Utilities 15.0 15.8 16.5 17.4 18.2 82.9
Water Supply-FWA 2.8 2.8 2.9 3.0 3.1 14.7
Water Supply-FID 7.6 8.2 8.5 8.7 9.0 41.9
Water Supply-CVP Water (BOR) 3.9 4.1 4.2 4.3 4.4 20.9
Specialty Chemicals (Water Treatment) 9.7 10.0 10.3 10.6 11.0 51.7 Other Objects 1.6 1.5 1.6 1.6 1.7 8.1
Supplies 7.0 7.2 7.4 7.6 7.9 37.1
Purchased Professional/Tech 5.0 5.2 5.4 5.5 5.7 26.8
Purchased Property Services 4.8 5.0 5.1 5.3 5.4 25.6
Other Purchased Services 0.4 0.4 0.4 0.4 0.4 1.9
Property 0.0 0.0 0.0 0.0 0.0 0.0
Interdepartmental Charges 2.8 2.9 2.9 3.0 3.1 14.7
Fixed Reimbursement UB&C * 2.7 2.8 2.9 2.9 3.0 14.2
Cost Allocation Plan Charges * 2.1 2.2 2.2 2.3 2.4 11.2 Fixed Reimbursement Public Utilities * 3.2 3.7 3.8 3.9 4.1 18.7 Fixed Reimbursement Fire Hydrants 1.5 1.6 1.6 1.7 1.7 8.1 Fleet Services Charges 1.3 1.5 1.7 2.0 2.0 8.5
Fleet Fuel Charges 0.5 0.5 0.5 0.6 0.6 2.7
Trustee Services 0.005 0.005 0.005 0.005 0.005 0.02
Total Operating Expenditures $95.0 $100.3 $105.1 $109.0 $112.6 $522.1 Water Utility Financial Plan and Rates Study Executive Summary Pavletic consulting llc ES-3
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Capital Improvement Program Expenditures and Funding
Between FY27 and FY31, adopted and projected CIP expenditures are approximately $497.2 million.

Planned expenditures, by project category related to infrastructure scope, are summarized in Table ES-3.

Expenditures for water main pipe renewal and extension, and water well and pump rehabilitation and construction, are approximately $419.6 million (84.4%) of total expenditures.

A list of the 49 capital projects categories and expenditures for each are shown in Appendix D, Table D-1, and discussed in Section 3.

Table ES-3. Capital Expenditures FY27 – FY31
Water capital improvement program expenditures for FY27-FY31 are funded through a combination of sources including operating fund cash, cash transfers from capital funds, projected revenue bond proceeds, grants, special funds. CIP funding sources are listed below:
• Operating Fund 4001 - $184,268,200
• Revenue Bonds - $50,000,000
• Capital Reserve Fund 4017 - $11,300,000
• Capacity Fee Fund 4011 - $38,701,200
• Connection Charge Fund 4002 - $13,508,500
• SE Fresno Fund 4006 - $3,748,000 2
• UGM (Urban Growth Management) Wellhead Fund 4063 - $206,500 • TCP (1,2,3-Trichloropropane) Remediation Settlement Fund 4010 - $190,231,800 • Federal and State Grants - $5,262,9003
2 The SE Fresno Fund was created to support capital improvement projects in Southeast Fresno. Once all funds are spent, the fund will be closed.
3 The grants include capital projects for the Leaky Acres Recharge Facility, Polyethylene Pipe Replacements, GO-BIZ (Downtown Sewer and Water Grant), and Granular Activated Carbon at Well 345-1.

Adopted Projected FY27 - 31
Capital Costs, $ millions FY27 FY28 FY29 FY30 FY31 Total $ % of Total Water Mains Renewal & Extension $9.7 $25.5 $42.4 $35.6 $44.1 $157.3 31.64% Water Well & Pump Rehabilitation $23.8 $35.5 $95.2 $68.3 $39.6 $262.3 52.76% Surface Water Treatment Plant $2.6 $7.8 $4.7 $10.3 $17.0 $42.4 8.53% Public Utilities Administration $6.2 $11.3 $5.9 $6.8 $5.0 $35.2 7.08% Total $42.3 $80.0 $148.2 $121.0 $105.7 $497.2 100%
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Revenue Required from Rates and Cash Flow
Rates must generate revenues sufficient to cover operating and maintenance costs as well as needed capital costs while supporting debt service obligations and meeting financial management guiding principles. Elements of Operating Fund cash flow for FY27 – FY31 are explained in the following paragraphs. Detailed data is included in Appendix C, Table C-1 and in Section 3. Operating Fund cash flow is summarized in the adjacent table.

BEGINNING BALANCE. The operating fund
beginning balance is projected to be
approximately $107.0 million at the start of
FY27 (July 1, 2026). This amount is
projected to decline to approximately $9.8
million at the end of FY31 (June 30, 2031)
due primarily to the use of cash funding for
capital improvement program expenditures
and gradual increases in operating costs.

Use of the operating fund balance reduces
future rate increases.

Note that the Water enterprise has an
Operating Reserve Fund – separate from the
Operating Fund – that helps maintain
liquidity and manage short-term obligations.

REVENUES. The approximate amount of
revenues required from rates and charges
for the five-year period, FY27 through FY31,
is approximately $699.3 million. Another $49.7 million in revenue is from other sources including approximately $5.8 million from the Rate Stabilization Fund. Total revenues are approximately $749.0 million. Detailed data is included in Appendix C, Table C-1.

Other sources of revenue include:
• Other Charges for Services reimbursements for repair and replacement of damaged property • Interest Income
• Federal Loan Reimbursements
• Other revenue such as land leases and rentals; and
• Transfers from the Rate Stabilization Fund
EXPENDITURES. Expenditures for FY27 through FY31 are approximately $1,149.4 million. Expenditures are for Operations and Maintenance ($522.1 million), Debt Service ($138.7 million), and Capital Projects ($497.2 million). Debt Service expenditures are reduced by BAB (Build America Better) subsidies of $8.7 million. Detailed data is included in Appendix C, Table C-1.

BONDS. Projected bond disbursements are $50 million. Debt service for new debt issues is shown in Appendix C, Table C-1.

CAPITAL TRANSFERS. Projected capital transfers are from the Capital Reserve Fund 4017, Capacity Fee Fund 4011, Water Connection Charge Fund 4002, SE Fresno Project Fund 4006, Urban Growth Management (UGM) Fund 4063, and TCP (1,2,3-Trichloropropane) Settlement Fund 4010. The amount of transfer and the capital projects funded are shown in Appendix C, Table C-1, and total approximately $257.7 million.

Operating Fund 4001 FY27 - FY31
Cash Flow, $ millions detail Total
Beginning Balance, July 1, 2026 $107.0
Revenue/Expenditures/Net Revenue
Total Revenues $749.0
O&M Expenditures/Credits ($522.1)
Net Operating Revenues $226.9 $226.9
Capital Expenditures ($497.2)
Capital Fund Sources:

Bonds/Grants/Capital Reserves/Special Funds $313.0
Use of Operating Fund Balance and Revenue
from Rates * see below for detail
($184.3) ($184.3)
* Drawdown of Operating Fund Balance $97.2
* Use of Revenue from Rates $87.0
Other Transfers, Net ($9.8)
Debt Service ($130.1)
Ending Balance, June 30, 2031 $9.8
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GRANTS. The City expects grants for capital projects related to the Leaky Acres Recharge Facility, Polyethylene Pipe Replacement, and Granular Activated Carbon treatment at Well 345-1. Grant funding totals approximately $5.3 million.

OTHER TRANSERS (NET). Other transfer result in a net outflow from the Operating Fund of approximately $9.8 million. Other transfers are described below.

Transfers (To)/From Operating Reserve. The Operating Reserve is maintained at a level equivalent to 90 days of operating and maintenance (O&M) expenses.

Transfers (To)/From SRF Reserve: The State Water Board requires the City of Fresno to maintain a separate reserve account funded at a level equal to one year of debt service on the obligation (the “Reserve Amount”). The City anticipates fully funding all SRF reserve accounts by FY 2030. The restricted reserve fund must be maintained for the entire term of the Finance Agreement and will remain subject to lien and pledge as security for the Obligation.

Transfers (To)/From Capital Reserve: Transfers from the Operating Fund are used to maintain the Capital Reserve at its target level, equal to 2% of the five-year capital improvement program budget.

Transfers (To)/From Vehicle Replacement Reserve: Transfers to and from the Vehicle Replacement Reserve support the planned replacement of Water Division fleet vehicles and equipment.

Transfer to DPU O&M Facility Fund – Operating & Maintenance Costs: Transfers the cost‑sharing contribution from the Water Operating Fund to the DPU O&M Facility Fund 5253 to support Operating and Maintenance (O&M) expenses.

Transfer to DPU O&M Facility Fund – Capital Costs: Transfer the cost‑sharing contribution from the Water Operating Fund to the DPU O&M Facility Fund 5253 to support Capital expenditures. This transfer will fund the building demolition scheduled for FY 2027, with an estimated cost of $4.9 million for the Water Utility’s contribution.

ENDING BALANCES. The Operating Fund balance is projected to decline from approximately $107.0 to $9.8 million during FY27 – FY31. The Operating Fund balance decreases because expenditures of approximately $1,159.1 million (O&M, Debt Service, and Capital plus the outflow of Other Transfers, Net) exceed Total Revenues plus Bond/Grants/Capital Funds ($1,061.9 million) by approximately $97.2 million. As such, the FY27 Operating Fund beginning balance of $107.0 million is being used to reduce the amount of revenue that DPU must recover from water rates over the five-year rate plan, thereby reducing the rate increases that would otherwise be required to fund water service costs.

The Operating Reserve Fund ending balance is projected to decrease from approximately $32.6 to $27.8 million during the five-year period to meet target fund levels. Beginning in FY27, the Operating Reserve Fund target is 90 days of operating costs. The projected FY27 Operating Reserve Fund is approximately 125 days of operating costs .The Operating Reserve Fund target is fixed to operating costs, so the impact on the reserve target increases as operating costs increase. The net effect of the impact of decreasing the fund target from 125 days of operating costs to 90 days of operating costs and the impact of increasing the target as operating costs increase is a reduction in the Operating Reserve Fund ending balance.

DEBT SERVICE COVERAGE (DSC) RATIO. Debt service coverage meets or exceeds the contractual minimum required by loan documents (1.25x) and the City’s target level (1.50x) in all years. 4 See page
19 of the City of Fresno Fiscal Year 2024-2025 Annual Comprehensive Debt Report for a table showing Water Enterprise debt service coverage for FY16 – FY25. 4 The debt service coverage ratio represents the margin of safety associated with bonded indebtedness reflecting the ratio of the actual or projected net revenue available for debt service to annual debt-service payments. Net revenue is defined as total recurring operating revenue less recurring operation and maintenance expense and is a requirement included in bond indentures associated with revenue bonds.

Executive Summary Water Utility Financial Plan and Rates Study ES-6 Pavletic consulting llc
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Cash flow and debt service coverage is summarized in Table ES-4. All dollar values are rounded to the nearest $0.1 million and may appear not to add correctly.

Table ES-4 summarizes the revenue required from rates and cash flows described above.

Table ES-4. Cash Flow FY27 – FY31
* Days O&M Expenditures = Total Ending Balances ÷ Operation & Maintenance Expenditures * 365 days ** DSC Ratio = Total Revenues less O&M less BAB subsidy divided by Debt Service less BAB subsidy; where in FY26, the BAB (Build America Better) subsidy is approximately $2 million decreasing to $1.5 million in FY31 Operating Fund 4001 Adopted Projected FY27 -
Cash Flow, $ millions (all values are rounded) FY27 FY28 FY29 FY30 FY31 FY31 Beginning Balance, July 1 $107.0 $105.9 $89.0 $46.4 $51.5

REVENUES
Water Charges $123.3 $133.3 $140.3 $147.5 $154.8 $699.3 All Other $11.6 $11.7 $10.1 $8.4 $7.8 $49.7
Total Revenues $134.9 $145.0 $150.4 $156.0 $162.6 $749.0

EXPENDITURES
Operations & Maintenance $95.0 $100.3 $105.1 $109.0 $112.6 $522.1 Debt Service $27.3 $27.2 $27.1 $26.9 $30.3 $138.7
BAB Subsidy ($1.9) ($1.8) ($1.7) ($1.6) ($1.5) ($8.7)
Capital Projects - All Funds $42.3 $80.0 $148.2 $121.0 $105.7 $497.2 Total Expenditures $162.6 $205.7 $278.7 $255.3 $247.1 $1,149.4

BONDS/GRANTS/CAPITAL TRANSFERS
Bond Disbursements $0.0 $0.0 $0.0 $50.0 $0.0 $50.0
Grants $5.1 $0.2 $0.0 $0.0 $0.0 $5.3
Transfers for Capital Projects $23.7 $44.9 $87.0 $56.3 $45.8 $257.7 Total Bonds/Grants/Capital Transfers $28.8 $45.0 $87.0 $106.3 $45.8 $313.0 OTHER TRANSFERS - NET ($2.3) ($1.2) ($1.4) ($1.9) ($3.0) ($9.8) ENDING BALANCE, JUNE 30
Operating Fund 4001 $105.9 $89.0 $46.4 $51.5 $9.8
Operating Reserve 4016 $32.6 $31.4 $30.1 $28.7 $27.8
Total Operating and Operating Reserve $138.6 $120.4 $76.5 $80.2 $37.6 Target Fund Balances
Operating Fund 4001 $7.8 $8.3 $8.6 $9.0 $9.3
Operating Reserve Fund 4016 $23.4 $24.7 $25.9 $26.9 $27.8 Total Operating and Operating Reserves $31.2 $33.0 $34.6 $35.8 $37.0 Calculated Target Days O&M Expenditures
Operating Fund 4001 407 324 161 172 32
Operating Reserve 4016 125 114 104 96 90

DEBT SERVICE COVERAGE RATIO
BAB (Build America Better) Subsidy
BAB Subsidy Adjustment to Net Revenues
and Interest Expense
$1.944 $1.843 $1.738 $1.628 $1.514
Other Operating Revenues and Interest Income
Adjustment to Net Revenues $10.891 $10.012 $8.847 $6.195 $4.537 Calculated DSC Ratio 1.93x 2.09x 2.07x 2.04x 1.84x
Minimum DSC Ratio 1.50x 1.50x 1.50x 1.50x 1.50x
Technical Default DSC Ratio 1.25x 1.25x 1.25x 1.25x 1.25x Water Utility Financial Plan and Rates Study Executive Summary Pavletic consulting llc ES-7
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Recommended Water Rates and Charges
Recommended rates and charges for FY27 – FY31 are shown in Table ES-5. The effective date for FY27 is January 1, 2027. For FY28 – FY31, the effective dates are July 1 – the beginning of each fiscal year.

The current water rates and charges have been in effect since July 1, 2018.

Table ES-5. Current and Recommended Water Rates and Charges FY27– FY31 Current Recommended
Item FY26 FY27 FY28 FY29 FY30 FY31
effective date > 1-Jan-27 1-Jul-27 1-Jul-28 1-Jul-29 1-Jul-30 Water Quantity Charges, $/HCF
Potable Water Meters $1.74 $1.85 $1.96 $2.06 $2.16 $2.26 Private Wells $0.218 $0.33 $0.34 $0.35 $0.36 $0.37
Meter Charges, $/month
Domestic
¾-inch $13.50 $13.60 $14.25 $14.95 $15.65 $16.35

1.0-inch $17.90 $17.80 $18.65 $19.50 $20.40 $21.35

1.5-inch $20.80 $28.90 $30.30 $31.70 $33.20 $34.75

2.0-inch $35.30 $34.45 $36.10 $37.80 $39.60 $41.40

3.0-inch $52.80 $55.30 $57.95 $60.65 $63.50 $66.50

4.0-inch $79.00 $104.00 $109.00 $115.00 $120.00 $125.00

6.0-inch $152.00 $174.00 $182.00 $191.00 $200.00 $209.00

8.0-inch $705.00 $680.00 $710.00 $740.00 $780.00 $810.00

10.0-inch $1,113.00 $1,540.00 $1,610.00 $1,690.00 $1,770.00 $1,850.00 Irrigation
¾-inch $10.70 $10.85 $11.40 $11.90 $12.45 $13.05

1.0-inch $13.40 $13.35 $14.00 $14.65 $15.35 $16.05

1.5-inch $15.20 $20.10 $21.05 $22.00 $23.05 $24.10

2.0-inch $24.10 $23.45 $24.55 $25.70 $26.90 $28.15

3.0-inch $34.90 $36.00 $37.70 $39.45 $41.35 $43.25

4.0-inch $51.00 $65.30 $68.40 $71.65 $75.00 $78.50

6.0-inch $96.00 $108.00 $113.00 $118.00 $124.00 $129.00

8.0-inch $436.00 $410.00 $430.00 $450.00 $470.00 $500.00

10.0-inch $687.00 $930.00 $980.00 $1,020.00 $1,070.00 $1,120.00 Private Fire Protection Charges, $/month
Fire Service Connections

1.0-inch $15.70 $8.25 $8.65 $9.10 $9.55 $10.00

1.5-inch $15.70 $8.25 $8.65 $9.10 $9.55 $10.00

2.0-inch $15.70 $8.25 $8.65 $9.10 $9.55 $10.00

3.0-inch $15.70 $8.25 $8.65 $9.10 $9.55 $10.00

4.0-inch $15.70 $8.25 $8.65 $9.10 $9.55 $10.00

6.0-inch $45.60 $23.95 $25.15 $26.40 $27.70 $29.05

8.0-inch $98.00 $51.10 $53.60 $56.25 $59.00 $61.85

10.0-inch $175.00 $91.85 $96.40 $101.15 $106.10 $111.25

12.0-inch $283.00 $148.40 $155.75 $163.35 $171.35 $179.70 This Page Intentionally Blank.

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Section 1
Introduction
This section describes the organization of the report, rate-making objectives, the rate-setting process, and a general description of the water system.

1.1 Organization of the Report
This report is divided into seven sections. This introduction provides an overview of the study objectives and description of the City’s water system.

Section 2 describes the water use characteristics of customers. The number, type and size of connections and water consumption projected for FY26 – FY31 is developed in this section.

Section 3 describes the development of revenue required from water rates.

Section 4 describes the allocation of revenue requirements to defined functional cost categories.

Section 5 describes the development of the water rate structure and water rates and charges.

Section 6 describes the impact of recommended water rates and charges upon customer bills.

Section 7 describes the limitations of the study document.

1.2 Rate-Making Objectives
There are numerous rate-making objectives that must be considered when developing rates and rate structures.

Revenue sufficiency. Generate sufficient revenue to fund operating costs, capital costs, bonded debt, and adequate reserves.

Revenue stability. Recover revenue from rates that will cover costs that are fixed and costs that are variable.

Meet Fiscal Management Principles. Meet Department of Public Utilities financial management guiding principles.

Proportionality. Provide that each customer class pays its proportionate share of the required revenue in compliance with legal rate-making requirements found in Proposition 218. 5 5 Proposition 218 is a provision of the California Constitution that requires a cost basis for certain fees and rates. Proposition 218, officially titled the “Right to Vote on Taxes Act,” was approved by California voters on November 5, 1996. It amended the California Constitution by adding articles XIII C and XIII D, which established additional substantive and procedural requirements and limitations on new and increased taxes, assessments and property-related fees and charges.

Section 1 Introduction
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1.3 Overview of Utility Rate Setting Process
Rate studies classically have three categories of technical analysis – the development of revenue required from rates, the allocation of costs among functional cost categories (cost-of-service analysis) and the design of a rate structure. An overview of the rate-setting analytical steps is shown in Figure 1-1.

The revenue required from rates is net of non-rate
revenues (for example interest earned on fund
balances, loan disbursements, revenue from new
connections to the water system, lease and rental
income, various reimbursements, other charges for
services). The allocation of costs is structured so
that the revenue required from charges is
distributed proportionally for every level of service
in a manner that allows the development of unit
costs. The rate structure uses the unit costs as a
basis for aggregating costs into rates that are
applicable to the various customer classes.

Figure 1-1. Overview of Rate Setting Steps
Information and data for the development of water rates and preparation of this report comes from many documents provided by the City. The list of documents, and the key information and data from each used in this study, are summarized below.

City of Fresno Fiscal Year 2026 - 2027 - Adopted Budget (FY27 Budget). The City of Fresno Annual Budget is the most important document the City produces. It outlines the City’s spending plan and priorities for the coming fiscal year, which runs from July 1st to June 30th. Each year, the city’s budget is developed in conjunction with the Mayor, City Manager and all city departments. The budget is then reviewed and approved by the City Council. The result is a budget that closely matches the community's highest priorities each fiscal year.

All revenue, expenditure, fund balance, customer, and financial data used in the development of water rates and charges in this study were provided by the City.

City of Fresno Fiscal Year 2024-2025 Annual Comprehensive Financial Report (FY25 ACFR). The City of Fresno Annual Comprehensive Financial Report shows the financial position and results of the City’s operations as represented by the financial activity of its various funds.

City of Fresno Fiscal Year 2024-2025 Annual Comprehensive Debt Report (FY25 ACDR). The City of Fresno Annual Comprehensive Debt Report provides an overview of the Debt Management Program, Debt Management Policies, Rating Agency Relations and Credit Maintenance, Composition of the Debt Financing Team, and Trustee activity during the year.

City of Fresno Master Fee Schedule Utilities Department. The City of Fresno Master Fee Schedule Utilities Department MFS Amendment #590, pp. 160 – 161, details rates and fees effective July 1, 2026 (unless otherwise noted in the schedule) for water services that are provided to the City’s customers.

Utility Billing System data. The City provided billing data from its Utility Billing system for all metered connections and all private fire service connections.

Municipal Code of The City of Fresno Chapter 6 Municipal Services and Utilities. This chapter of the Fresno Municipal Code contains sections governing billing and collection procedures for municipal utility services, sewage and water disposal, wells, water regulation, and other operations and administrative activities.

Revenue Requirement Analysis
Cost-of-Service Analysis
Rate-Design Analysis
Compares revenues of the utility to its
operating and capital costs to
determine the adequacy of the existing
rates to recover costs
Allocates the revenue requirements to
the various customer classes of service
in a fair and proportionate manner
Considers both the level and structure
of the rate design to collect the
distributed revenue requirements from
each class of service
Introduction Section 1
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1.4 Fresno Water Utility
The original Fresno water system began in 1876 as a nonprofit organization established by a group of public-minded citizens. Initially, the water system consisted of one pumping station, composed of small pumps and two storage tanks located above the second floor of an early building, located on Fresno Street between "J" and "K" Streets, presently known as Broadway and Fulton.

By the late 1880’s, the town had grown into a small city in need of an improved water distribution system, so in 1888, the first pumping station and water tower of a permanent nature were constructed at Fresno and "O" Streets. These facilities were designed to be an integral part of a larger and continually expanding water system. This first station was in continuous use until 1959, when it was retired, having served its purpose. Today, this building, which has since been declared a historical structure, is widely known throughout Fresno as the "Water Tower".

In 1926, the distribution system was purchased by the California Water Service Company. In 1931, the company sold the water system to the City of Fresno, which operated as a municipal utility. The water system was first managed under an appointed water board and is currently a Division of the Department of Public Utilities. The Water Division manages and operates the City of Fresno’s water system. The City serves a population of approximately 556,000 and delivers drinking water to about 143,000 urban residential, commercial, and industrial customers across 117 square miles of the City, and many County Islands, within the City’s Sphere of Influence.

Fresno's primary source of water has historically been groundwater, coming from a natural underground basin, called an aquifer. Using approximately 260 wells, the Water Division pumps approximately 91 million gallons of water per day (mgd) during peak demand. In addition to groundwater, the Fresno water supply is supplemented with surface water delivered directly from the Sierra Nevada mountain range to the Northeast Surface Water Treatment Facility, which supplies about 30 million gallons of water per day during peak demand, Tank-3 facility, which supplies approximately 3 million gallons a day during peak demand, and the Southeast Surface Water Treatment Facility, which supplies approximately 54 million gallons of water per day during peak demand.

1.5 Water Rates and Charges Effective July 1, 2018
Water rates and charges effective July 1, 2018 (the start of FY19) have not been changed and are the current (FY26) rates listed below in Table 1-1. Each water account has one or more meters or private fire protection connections. Each meter is billed for metered water use at the rates shown (except private fire protection connections which have no water meter and are not billed for water use for fighting fires and fire department inspections or tests). Pages from the Master Fee Schedule (MFS) that list current water rates are included in Appendix A.

Table 1-1. Current Water Rates and Charges Effective July 1, 2018 Quantity Rate, $/HCF $1.74
Monthly Charges, $/month
Domestic Meters Irrigation Meters Private Fire Protection Connections Meter Size FY26 Count Rate Meter Size FY26 Count Rate Meter Size FY26 Count Rate ¾-inch 17,869 $13.50 ¾-inch 97 $10.70 Fire Hydrants see 6-inch $45.60

1.0-inch 108,025 $17.90 1.0-inch 1,196 $13.40 1.0-inch 1 $15.70

1.5-inch 8,616 $20.80 1.5-inch 814 $15.20 1.5-inch 5 $15.70

2.0-inch 3,948 $35.30 2.0-inch 1,909 $24.10 2.0-inch 219 $15.70

3.0-inch 146 $52.80 3.0-inch 28 $34.90 3.0-inch 3 $15.70

4.0-inch 760 $79.00 4.0-inch 161 $51.00 4.0-inch 695 $15.70

6.0-inch 226 $152.00 6.0-inch 35 $96.00 6.0-inch 1,187 $45.60

8.0-inch 219 $705.00 8.0-inch 6 $436.00 8.0-inch 1,022 $98.00

10.0-inch 9 $1,113.00 10.0-inch 0 $687.00 10.0-inch 93 $175.00

12.0-inch 0 $1,462.00 12.0-inch 0 $901.00 12.0-inch 27 $283.00 This Page Intentionally Blank.

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Section 2
User Characteristics
The purpose of this section is to summarize use of the water system by all customers connected to the system. The data used in this section comes from the City’s Utility Billing system. Customer data is used for the allocation of costs, development of rates and charges, and analysis of the impact on customer bills.

2.1 Projected Water Use
After a State of Emergency due to drought conditions was declared in January 2014, and the State of California issued restrictions to achieve a statewide reduction of 25% in potable urban water usage in April 2015, water use for Single Family accounts in the City decreased to approximately 16.4 HCF (hundred cubic feet) per month, approximately 400 gallons per day (gpd).

On May 31, 2018, Governor Brown signed two bills into law (SB 606 and AB 1668) which support making “Water Conservation a California Way of Life” as outlined in the California Water Action Plan. As stated by Governor Brown “In preparation for the next drought and our changing environment, we must use our precious resources wisely. We have efficiency goals for energy and cars- and now we have them for water.” In addition, the State Water Resources Control Board is in the process of strengthening their Conservation and the Prevention of Waste and Unreasonable Use laws by adopting the prohibited water uses during the drought into the California Code of Regulations, Title 23.

From FY16 to FY21, water use for Single Family accounts increased approximately 15% from 16.4 HCF to approximately 18.7 HCF per month (461 gpd).

Water use data for the 48 months ending June 2025 (FY22, FY23, FY24 and FY25) was evaluated to determine recent water use trends; identify annual and seasonal water use patterns for residential and commercial customer classes; and project water consumption for FY26 and the following five fiscal years of the rate study.

Single Family water use for FY22 was approximately 17.4 HCF per month (428 gpd). Single Family water use for FY23 and FY24 decreased to 16.6 HCF per month (408 gpd) in FY23 and 16.7 HCF per month (411 gpd) in FY24 – a two-year reduction of approximately 4%. Single Family water use for FY25 rebounded approximately 4.7% to 17.5 HCF per month (430 gpd).

Average water use per account for FY26 for all customer classes is projected to remain the same as FY25. Total water use is projected to increase approximately 0.3 percent due to new meter connections.

In FY27 and FY28, as water and wastewater bills increase, the quantity of water used is expected to decrease. Growth in the number of new meter connections is expected to offset some of the decrease in water use due to conservation.

Water use per account for the Single Family customer class for FY27 and FY28 is projected to decrease by approximately 1.5% per year. Average use per account is projected to be 17.2 HCF per month (424 gpd) in FY27 and 17.0 HCF per month (417 gpd) in FY28. Average water use per account for FY29 – FY31 is projected to remain at the FY28 level.

Average water use for all other customer classes for FY26 and onward are expected to remain constant because of the offsetting effects of reduced use due to water conservation and increased use due to new accounts.

Section 2 User Characteristics
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All city departments pay for their water use.

Water use projections for FY26 – FY31 do not incorporate possible state-mandated outdoor potable water reductions or indoor per-capita water use limitations such as were mandated in 2014 and 2015.

In the event of such mandates, it is recommended that drought rates be developed in accordance with the methodology deemed appropriate to those circumstances.

Actual water use for FY22, FY23, FY24 and FY25, estimated water use for FY26, and projected water use for FY27 – FY31, for each customer class, are summarized in Table 2-1. Detailed data is shown in Table B-1 in Appendix B.

Table 2-1. Metered Water Use by Customer Class
Actual water use for FY22, FY23, FY24 and FY25, estimated water use for FY26, and projected water use for FY27 – FY31 for each customer class, are shown in Figure 2-1. Projected water use for FY27 – FY31 is used in the development of recommended rates.

Figure 2-1. Metered Water Use by Customer Class
Actual Actual Actual Actual Estimate Projected
(All Use in HCF x 1,000) FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 Annual Water Use
Single Family 25,390 24,301 24,623 25,968 26,042 25,779 25,519 25,645 25,771 25,898 Nonresidential 18,735 18,146 17,592 17,845 17,845 17,845 17,845 17,845 17,845 17,845 Irrigation 4,694 4,421 4,442 4,983 4,983 4,983 4,983 4,983 4,983 4,983 Total 48,819 46,869 46,656 48,796 48,870 48,607 48,347 48,473 48,600 48,726 Annual Change in Water Use
Single Family (1,089) 322 1,345 74 (262) (260) 126 126 126 Nonresidential (588) (555) 254 0 0 0 0 0 0
Irrigation (273) 21 541 0 0 0 0 0 0
Total (1,950) (212) 2,140 74 (262) (260) 126 126 126
Percent Change in Water Use
Single Family -4.3% 1.3% 5.5% 0.3% -1.0% -1.0% 0.5% 0.5% 0.5% Nonresidential -3.1% -3.1% 1.4% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Irrigation -5.8% 0.5% 12.2% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Total -4.0% -0.5% 4.6% 0.2% -0.5% -0.5% 0.3% 0.3% 0.3%
25,390 24,301 24,623 25,968 26,042 25,779 25,519 25,645 25,771 25,898 18,735 18,146 17,592 17,845 17,845 17,845 17,845 17,845 17,845 17,845 4,694 4,421 4,442 4,983 4,983 4,983 4,983 4,983 4,983 4,983 48,819 46,869 46,656 48,796 48,870 48,607 48,347 48,473 48,600 48,726 -4.0% -0.5% 4.6% 0.2% -0.54% -0.54% 0.26% 0.26% 0.26%
0 10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
FY22 Act FY23 Act FY24 Act FY25 Act FY26 Est FY27 FY28 FY29 FY30 FY31 Water Use (HCF x 1,000)
Actual, Estimated and Projected Water Use, HCFx1000
Single Family Residential Nonresidential Irrigation Annual Percent Change User Characteristics Section 2
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2.2 Water Meters
The projected number of water meters, by size, was based on actual data from the City’s utility billing system as of June 2025 and projected growth in the number of meter connections. Values from the utility billing system and projections for FY26 through FY31 are shown below in Table 2-2.

Footnote 2 in Table 2-2 shows projected growth for 1.0, 1.5 and 4-inch domestic meters and 2-inch irrigation meters. Those meters sizes and categories best approximate growth in new connections because they represent the most common categories for new connections.

The projected annual growth in accounts of approximately 0.47 percent per year was provided by the City and is based on recent historical patterns for new connections to the water system. The projected number of ¾-inch meters remains the same as the current number because the City no longer installs ¾-inch meters for new connections.

Table 2-2. Water Meters by Customer Class and Size
Actual
June Projected [2]
Meter Size 2025 FY26 FY27 FY28 FY29 FY30 FY31
Domestic Use Meters
¾-inch [1] 17,869 17,869 17,869 17,869 17,869 17,869 17,869

1.0-inch 107,405 108,025 108,645 109,265 109,885 110,505 111,125

1.5-inch 8,576 8,616 8,656 8,696 8,736 8,776 8,816

2.0-inch 3,948 3,948 3,948 3,948 3,948 3,948 3,948

3.0-inch 146 146 146 146 146 146 146

4.0-inch 755 760 765 770 775 780 785

6.0-inch 226 226 226 226 226 226 226

8.0-inch 219 219 219 219 219 219 219

10.0-inch 9 9 9 9 9 9 9
Totals 139,153 139,818 140,483 141,148 141,813 142,478 143,143 Irrigation Use Meters
¾-inch 93 93 93 93 93 93 93

1.0-inch 1,226 1,226 1,226 1,226 1,226 1,226 1,226

1.5-inch 839 839 839 839 839 839 839

2.0-inch 1,959 1,969 1,979 1,989 1,999 2,009 2,019

3.0-inch 29 29 29 29 29 29 29

4.0-inch 152 152 152 152 152 152 152

6.0-inch 35 35 35 35 35 35 35

8.0-inch 8 8 8 8 8 8 8

10.0-inch 0 0 0 0 0 0 0
Totals 4,341 4,351 4,361 4,371 4,381 4,391 4,401
Total All Meters 143,494 144,169 144,844 145,519 146,194 146,869 147,544 # Increase in Meters 675 675 675 675 675 675
% Increase in Meters 0.47% 0.47% 0.47% 0.46% 0.46% 0.46% Notes:

1. The number of ¾-inch meters includes all ⅝-inch meters.

2. The number of new meter connections per year are listed below. All new connections are assigned the meter size shown.

Use Category Meter FY26 FY27 FY28 FY29 FY30 FY31
Domestic 1.0-inch 620 620 620 620 620 620
Domestic 1.5-inch 40 40 40 40 40 40
Domestic 4.0-inch 5 5 5 5 5 5
Irrigation 2.0-inch 10 10 10 10 10 10
Total 675 675 675 675 675 675
Section 2 User Characteristics
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2.3 Water Meter Equivalency Factors and Fire Service Demand Factors Meter charges for each meter size are based, in part, on an "equivalency factor" that relates the maximum continuous operation flow of a meter (in gallons per minute, gpm) to that of a standard 1-inch meter. The City’s standard 1-inch meter is a “Recordall” Disc Model 55 manufactured by Badger Meter.

For example, the equivalency factor for a 2-inch is calculated by dividing the 2-inch maximum continuous flow rate (100 gpm) by the standard 1-inch meter maximum continuous flow rate (40 gpm). The result is an equivalency factor of 2.5
Meter Types are the same for domestic and irrigation connections.

The equivalency factors and maximum continuous operation flows used in this study are shown in Table 2-3 and are based on values from the meter manufacturers’ product data sheets.

Most fire connections have no meter (other than a small-size flow detection meter) between the fire water lateral and the City’s water supply main. The water supply through those connections is strictly for fire flows. A different factor is used to equate the different sizes of fire service connections for purpose of developing rates.

Fire Protection charges for connections greater than 1-inch are based, in part, on a "demand" factor that relates the nominal size of the cross-sectional area of the connection to that of a 1-inch connection. 6 The
demand factors used in this study are shown in Table 2-3 and are based on values published by the AWWA.

While the AWWA demand factors were determined to be the most accurate for fire protection meters, equivalency factors based on actual meter specifications were determined to be more accurate for domestic water meters.

Table 2-3. Water Meter Equivalency and Fire Service Connection Demand Factors 6 The demand factor or relative potential of the size of service or connection is derived based on the nominal size of the crosssectional area of the connection. The relative flow potential for various size pipes is dependent on the diameter raised to the

2.63 power. See American Water Works Association (AWWA), Manual of Water Supply Practices, M1 Principles of Water Rates, Fees, and Charges, 2012 Fifth Edition, page 146.

Mfg Spec Sheets 1-inch Fire
Max Continuous Meter Connection Demand
Meter Size Meter Type Flow Rate Eq. Factor Size Factor
¾-inch Badger Disc Model 35 25 gpm 0.625 Fire Hydrants 111.3

1.0-inch Badger Disc Model 55 40 gpm 1.0 1.0-inch 1.0

1.5-inch Badger Disc Model 120 80 gpm 2.0 1.5-inch 2.9

2.0-inch Badger Disc Model 170 100 gpm 2.5 2.0-inch 6.2

3.0-inch Metron Single Jet 175D 175 gpm 4.375 3.0-inch 18.0

4.0-inch Metron Single Jet 500D 350 gpm 8.750 4.0-inch 38.3

6.0-inch Metron Single Jet 1000D 600 gpm 15.0 6.0-inch 111.3

8.0-inch Metron Single Jet 2800D 2,400 gpm 60.0 8.0-inch 237.2

10.0-inch Badger Recordall Turbo 5500 5,500 gpm 137.5 10.0-inch 426.6 User Characteristics Section 2
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2.4 Equivalent 1-inch Water Meters
The projected number of equivalent water meters, by size, was based on data from the City’s utility billing system as of August 2024 and June 2025 and projected growth in the number of meter connections. The number of meters in each size category, shown in Table 2-2, are multiplied by the Meter Equivalency Factors shown in Table 2-3, to obtain the number of equivalent 1-inch meters.

The projected numbers of equivalent water meters for FY26 through FY31 are shown in Table 2-4. The projected number of equivalent water meters for FY27 – FY31 is used in the development of recommended rates.

Table 2-4. Equivalent 1-inch Water Meters by Customer Class and Size Actual
Equiv. June Projected
Meter Size Factor 2025 FY26 FY27 FY28 FY29 FY30 FY31
Domestic Use Meters 1-inch
Eq Mtr
¾-inch 0.625 11,168 11,168 11,168 11,168 11,168 11,168 11,168

1.0-inch 1.0 107,405 108,025 108,645 109,265 109,885 110,505 111,125

1.5-inch 2.0 17,152 17,232 17,312 17,392 17,472 17,552 17,632

2.0-inch 2.5 9,870 9,870 9,870 9,870 9,870 9,870 9,870

3.0-inch 4.4 639 639 639 639 639 639 639

4.0-inch 8.8 6,606 6,650 6,694 6,738 6,781 6,825 6,869

6.0-inch 15.0 3,390 3,390 3,390 3,390 3,390 3,390 3,390

8.0-inch 60.0 13,140 13,140 13,140 13,140 13,140 13,140 13,140

10.0-inch 137.5 1,238 1,238 1,238 1,238 1,238 1,238 1,238 Totals 170,608 171,351 172,095 172,839 173,583 174,326 175,070 Irrigation Use Meters 1-inch
Eq Mtr
¾-inch 0.625 58 58 58 58 58 58 58

1.0-inch 1.0 1,226 1,226 1,226 1,226 1,226 1,226 1,226

1.5-inch 2.0 1,678 1,678 1,678 1,678 1,678 1,678 1,678

2.0-inch 2.5 4,898 4,923 4,948 4,973 4,998 5,023 5,048

3.0-inch 4.4 127 127 127 127 127 127 127

4.0-inch 8.8 1,330 1,330 1,330 1,330 1,330 1,330 1,330

6.0-inch 15.0 525 525 525 525 525 525 525

8.0-inch 60.0 480 480 480 480 480 480 480

10.0-inch 137.5 0 0 0 0 0 0 0
Totals 10,322 10,347 10,372 10,397 10,422 10,447 10,472 Total All Meters 180,929 181,698 182,467 183,235 184,004 184,773 185,542 Section 2 User Characteristics
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2.5 Private Fire Protection Connections and Equivalent Connections The projected number of public and private fire protection connections, by size, was based on actual data from the City’s utility billing system as of March 2025 and projected growth in the number of connections. The projected number of public fire hydrants and private fire protection connections and equivalent connections, by size, are shown in Table 2-5. The number of equivalent connections is calculated by multiplying the Demand Factors, shown in Table 2-3, times the number of connections, to obtain the number of equivalent connections. Projections for FY25 through FY31 are shown in Table 2-5.

The projected number of equivalent connections for FY27 – FY31 is used in the development of recommended rates.

The City has discontinued charging for private fire hydrants which were previously charged as a 6-inch private fire connections because those hydrants are installed and maintained by the customer.

Table 2-5. Public Fire Hydrants and Private Fire Protection Connections Demand Actual Projected
Connection Type Factor Mar-25 FY25 FY26 FY27 FY28 FY29 FY30 FY31 Public Fire Protection 1
Fire Hydrants (6.0-inch) 111.3 14,004 14,007 14,047 14,087 14,127 14,167 14,207 14,247 Equivalent Connections 1,558,798 1,559,132 1,563,585 1,568,037 1,572,489 1,576,942 1,581,394 1,585,847 Private Fire Protection Service 1
Fire Service Connections Size

1.0-inch 1 1 1 1 1 1 1 1

1.5-inch 5 5 5 5 5 5 5 5

2.0-inch 216 216 219 222 225 228 231 234

2.5-inch 3 3 3 3 3 3 3 3

4.0-inch 693 693 695 697 699 701 703 705

6.0-inch 1,185 1,185 1,187 1,189 1,191 1,193 1,195 1,197

8.0-inch 1,022 1,022 1,022 1,022 1,022 1,022 1,022 1,022

10.0-inch 93 93 93 93 93 93 93 93

12.0-inch 27 27 27 27 27 27 27 27
Totals 3,245 3,245 3,252 3,259 3,266 3,273 3,280 3,287
Equivalent Connections
Fire Service Connections Size

1.0-inch 38.3 38 38 38 38 38 38 38 38

1.5-inch 38.3 192 192 192 192 192 192 192 192

2.0-inch 38.3 8,277 8,277 8,392 8,507 8,622 8,737 8,852 8,967

2.5-inch 38.3 115 115 115 115 115 115 115 115

4.0-inch 38.3 26,555 26,555 26,632 26,709 26,785 26,862 26,938 27,015

6.0-inch 111.3 131,903 131,903 132,126 132,349 132,571 132,794 133,017 133,239

8.0-inch 237.2 242,425 242,425 242,425 242,425 242,425 242,425 242,425 242,425

10.0-inch 426.6 39,672 39,672 39,672 39,672 39,672 39,672 39,672 39,672

12.0-inch 689.0 18,604 18,604 18,604 18,604 18,604 18,604 18,604 18,604 Totals 467,782 467,782 468,196 468,610 469,024 469,439 469,853 470,267 Summary
Public Equivalent Connections 1,559,132 1,563,585 1,568,037 1,572,489 1,576,942 1,581,394 1,585,847 Private Equivalent Connections 467,782 468,196 468,610 469,024 469,439 469,853 470,267 Total 2,026,914 2,031,781 2,036,647 2,041,514 2,046,380 2,051,247 2,056,114

1. The number of new connections per year are listed below. All values provided by the City.

FY25 FY26 FY27 FY28 FY29 FY30 FY31
Public Fire Hydrants 3 40 40 40 40 40 40
Private

2.0-inch 0 3 3 3 3 3 3

4.0-inch 0 2 2 2 2 2 2

6.0-inch 0 2 2 2 2 2 2

8.0-inch 0 0 0 0 0 0 0

10.0-inch 0 0 0 0 0 0 0

12.0-inch 0 0 0 0 0 0 0
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Section 3
Financial Plan and Revenue
Requirements
Rates are developed to generate sufficient revenues to cover operating and maintenance costs as well as capital costs while supporting debt service obligations and meeting financial planning goals. Rates and charges were developed for the five-year period Fiscal year 2026 – 2027 (FY27) through FY31.

3.1 Cost and Growth Projection Assumptions
Cost and growth assumptions used in the model to develop cash flow projections for FY27-FY31 are summarized in Table 3-1. A table with dollar values for operating expenditures for FY27-FY31 is in Appendix C, Table C-1. Projected operating expenditures are discussed in detail in the next subsection.

Table 3-1. Cost and Growth Assumptions FY27 – FY31
Adopted Projected
Item FY27 FY28 FY29 FY30 FY31
Inflation and Cost Increases
Water Supply-FWA, Water Supply-CVP Water (BOR), Specialty Chemicals (Water Treatment), Supplies, Purchased Property Services, Other Purchased Services, Property, Interdepartmental Charges, Cost Allocation Plan Charges, Fixed Reimbursement Public Utilities, Fixed Reimbursement Fire (Hydrants), Fleet Fuel Charges

3.0% 3.0% 3.0% 3.0% 3.0%
Employee Services (Labor and Benefits) 7.9% 8.8% 7.7% 4.0% 3.0% Pumping Power/Utilities 5.0% 5.0% 5.0% 5.0% 5.0%
Water Supply-FID 11.0% 8.0% 3.0% 3.0% 3.0%
Other Objects -59.5% -3.4% 3.0% 3.0% 3.0%
Purchased Professional/Tech 0.4% 3.0% 3.0% 3.0% 3.0%
Fixed Reimbursement UB&C -6.0% 4.2% 3.0% 3.0% 3.0%
Fixed Reimbursement Public Utilities 2.7% 18.0% 3.0% 3.0% 3.0% Fleet Services Charges -16.1% 10.1% 20.3% 12.1% 3.4%
Transfer to DPU O&M Facility Fund for O&M costs 3.0% 3.0% 3.0% 3.0% 3.0% Interest Earnings on Reserve Balances 3.5% 3.5% 3.5% 3.5% 3.5% Connection Fee and Capacity Fee Revenues 3.0% 3.0% 3.0% 3.0% 3.0% Annual Growth in New Connections
Domestic: 1 inch 620 620 620 620 620
Domestic: 1.5 inch 40 40 40 40 40
Domestic: 4 inch 5 5 5 5 5
Irrigation: 2 inch 10 10 10 10 10
Overall Rate of Growth in Connections 0.47% 0.47% 0.46% 0.46% 0.46% Water Use Reduction per Single Family Acct 1.5% 1.5% 0.0% 0.0% 0.0% Avg. Single Family Water Use, gallons per day 424 417 417 417 417 Water Use Reduction, Other Customer Classes 0.0% 0.0% 0.0% 0.0% 0.0% New Debt Issuance
Number of Annual Payments 2
Interest Rate 5.00%
Issuance plus debt service reserve costs 8.0%
Term of Loan 30
Debt Service Payments Debt Service payments begin in the FY following the disbusement of funds. no
new
debt
no
new
debt
no
new
debt
no
new
debt
Section 3 Financial Plan and Revenue Requirements
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3.2 Operation and Maintenance and Other Expenditures
Between FY27 and FY31 (five fiscal years), total adopted and projected operating expenditures are approximately $522.1 million. Planned expenditures, by expense category, are summarized in Table 3-2.

FY27 operating expenditures are from the FY27 Adopted Budget. Operating expenditures for FY27-FY31 are listed in Appendix C, Table C-1 and discussed in Section 3.

Table 3-2. Operating Expenditures FY27 – FY31
*Fixed Reimbursement UB&C are for billing and revenue services provided by the Revenue Division to other City departments. Cost Allocation Plan Charges are fixed charges for services and materials furnished by General Fund activities. Fixed Reimbursement Public Utilities are charges for services provided by the Administration Division of the Department of Public Utilities and the Capital Projects Department.

Table 3-2 lists 20 operating expenditure categories for FY27-FY31. Most categories have the same annual cost increase assumption for each year (3.0 percent). Categories in Table 3-2 with annual cost increases different from the benchmark cost increase assumption are explained in the following paragraphs.

Adopted Projected
Cash Flow, $ millions FY27 FY28 FY29 FY30 FY31 Total $
Operating
Employee Services $23.1 $25.1 $27.0 $28.1 $28.9 $132.2
Pumping Power/Utilities 15.0 15.8 16.5 17.4 18.2 82.9
Water Supply-FWA 2.8 2.8 2.9 3.0 3.1 14.7
Water Supply-FID 7.6 8.2 8.5 8.7 9.0 41.9
Water Supply-CVP Water (BOR) 3.9 4.1 4.2 4.3 4.4 20.9
Specialty Chemicals (Water Treatment) 9.7 10.0 10.3 10.6 11.0 51.7 Other Objects 1.6 1.5 1.6 1.6 1.7 8.1
Supplies 7.0 7.2 7.4 7.6 7.9 37.1
Purchased Professional/Tech 5.0 5.2 5.4 5.5 5.7 26.8
Purchased Property Services 4.8 5.0 5.1 5.3 5.4 25.6
Other Purchased Services 0.4 0.4 0.4 0.4 0.4 1.9
Property 0.0 0.0 0.0 0.0 0.0 0.0
Interdepartmental Charges 2.8 2.9 2.9 3.0 3.1 14.7
Fixed Reimbursement UB&C * 2.7 2.8 2.9 2.9 3.0 14.2
Cost Allocation Plan Charges * 2.1 2.2 2.2 2.3 2.4 11.2 Fixed Reimbursement Public Utilities * 3.2 3.7 3.8 3.9 4.1 18.7 Fixed Reimbursement Fire Hydrants 1.5 1.6 1.6 1.7 1.7 8.1 Fleet Services Charges 1.3 1.5 1.7 2.0 2.0 8.5
Fleet Fuel Charges 0.5 0.5 0.5 0.6 0.6 2.7
Trustee Services 0.005 0.005 0.005 0.005 0.005 0.02
Total Operating Expenditures $95.0 $100.3 $105.1 $109.0 $112.6 $522.1 Financial Plan and Revenue Requirements Section 3
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Employee Services (Labor and Benefits). Labor and benefit cost increases in FY27–FY31 are driven by negotiated Memorandum of Understanding (MOU) wage adjustments and planned staffing additions.

The forecast includes a total of 23 new positions in the water division: 11 in FY28 and 12 in FY29.

The water positions are aimed at reducing repair backlogs, strengthening preventive maintenance and service reliability, supporting regulatory compliance and sampling, and enhancing network security across our highly complex SCADA and telemetry systems. The staffing costs associated with existing personnel to maintain current staffing levels total $124.0 million and $8.2 million is to fund twenty-three new positions, which are summarized below.
• In FY28, the water division proposes adding eleven new positions. These include: one Water Production Specialist and one Water Production Technician focused on meter maintenance and repair; one Water Distribution/Production Specialist; and two Water Distribution/Production Technicians supporting maintenance, testing, repair, replacement, and installation of large water meters. One Water System Supervisor would oversee half of all well‑site testing and monitoring for emerging contaminants. One Senior Control Specialist would support security networks across all four SCADA facilities. One Cross‑Connection Control Specialist would manage the backflow prevention device network. One Senior Management Analyst would provide fiscal, analytical, and operational support, while one Management Analyst would handle recordkeeping for personnel requirements and compliance with state regulatory reporting. Finally, one Certified Water Manager would oversee all water conservation and meter shop teams. Total estimated salary and benefit costs for these positions are $4.8 million over FY28–FY31, including assumed annual increases per negotiated labor bargaining unit agreements. • In FY29, the water division proposed adding twelve new positions. These include: one Water Production Specialist and one Water Production Technician who will form a dedicated crew for valve maintenance, testing, and repair; one Water Distribution/Production Specialist; two Water Distribution/Production Technicians; and one Warehouse Laborer responsible for organizing and maintaining essential materials and equipment. One Cross‑Connection Control Specialist will support oversight of the backflow prevention device network. Additional positions include one Instrumentation Technician to support implementation of preventative maintenance program and perform instrumentation duties at the three surface water treatment facilities, one Industrial Electrician to manage all lockout tagout (LOTO) permits on all electrical work that is performed at the treatment facilities, one Management Analyst to support contract management at the treatment facilities, and two Water Conservation Representatives to assess commercial, industrial and institutional customer performance and provide water conservation education. The estimated cost for salaries and benefits for these positions is $3.3 million over FY29–FY31 and reflects assumed annual increases under negotiated labor bargaining unit MOUs.

Pumping Power/Utilities. The increase in utility costs is primarily driven by PG&E rate increases associated with pumping and treatment operations, including pump stations, treatment facilities, booster pumps, and storage facilities.

Water Supply-FID. The increases in FY27 and FY28 for Water Supply costs with the Fresno Irrigation District (FID) reflect FID’s adopted rate adjustments.

Other Objects. The decrease in FY27 is primarily due to the removal of one‑time grant funding associated with the Expanded Lawn‑to‑Garden rebate program. This grant was previously budgeted within the operating enterprise fund but has since been reassigned to its own dedicated grant fund.

Fixed Reimbursement Public Utilities. The increase in FY27 – FY 28 is due to the Water division’s shared staffing costs for four new positions to support DPU Administration and Utilities Planning and Engineering (UP&E) division. The DPU Administration and UP&E positions are intended to strengthen Section 3 Financial Plan and Revenue Requirements
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The four new positions requested include: one Senior Management Analyst managing water resource regulations and negotiations between the City and outside agencies; one Management Analyst II to support the Land Development team with general administrative tasks, record‑keeping, and compliance reporting; one Engineer II to review water and sewer service requirements and extensions and maintain standard specifications and checklists; and one Licensed Professional Engineer to support the Land Development team by conducting environmental reviews, water supply studies, and evaluating water and sewer service requests.

Fleet Services Charges/Lease. Fleet costs decrease in FY27 because no new vehicle leases or equipment purchases are planned for that year. Beginning in FY28, fleet costs increase due to the addition of fourteen leased vehicles associated with the new positions included in the forecast. Of these, six vehicles will be leased in FY28 and eight more in FY29.

Financial Plan and Revenue Requirements Section 3
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3.3 Capital Improvement Program Expenditures
Between FY27 and FY31 (five fiscal years), adopted and projected CIP expenditures are approximately $497.2 million. These planned expenditures, by project category related to infrastructure scope, are summarized in Table 3-3. Expenditures for water main pipe renewal and extension, and water well and pump rehabilitation and construction, are approximately $419.6 million (84.4%) of total expenditures.

A list of the 49 capital project categories and expenditures for each project are shown in Appendix D, Table D-1, and discussed in Section 3. Also included in Appendix D is a Memorandum titled, FY 2027- 2031 Capital Improvement Program for Water, that provides details for all the capital expenditures.

Table 3-3. Capital Expenditures FY27 – FY31
Water capital improvement program expenditures for FY27-FY31 are funded through a combination of sources including operating fund cash, cash transfers from capital funds, projected revenue bond proceeds, grants, special funds. CIP funding sources are listed below:
• Operating Fund 4001 - $184,268,200
• Revenue Bonds - $50,000,000
• Capital Reserve Fund 4017 - $11,300,000
• Capacity Fee Fund 4011 - $38,701,200
• Connection Charge Fund 4002 - $13,508,500
• SE Fresno Fund 4006 - $3,748,000 7
• UGM (Urban Growth Management) Wellhead Fund 4063 - $206,500 • TCP (1,2,3-Trichloropropane) Remediation Settlement Fund 4010 - $190,231,800 • Federal and State Grants - $5,262,900 8

3.4 Long-Term Debt
Current Water Enterprise debt is summarized in the City of Fresno Fiscal Year 2024-2025 Annual Comprehensive Debt Report (FY25 ACDR). City of Fresno Annual Comprehensive Debt Reports provide an overview of the Debt Management Program, Debt Management Policies, Rating Agency Relations and Credit Maintenance, Composition of the Debt Financing Team, and Trustee activity during the year. 7 The SE Fresno Fund was created to support capital improvement projects in Southeast Fresno. Once all funds are spent, the fund will be closed.
8 The grants include capital projects for the Leaky Acres Recharge Facility, Polyethylene Pipe Replacements, GO-BIZ (Downtown Sewer and Water Grant), and Granular Activated Carbon at Well 345-1.

Adopted Projected FY27 - 31
Capital Costs, $ millions FY27 FY28 FY29 FY30 FY31 Total $ % of Total Water Main Renewal $8.1 $24.3 $40.5 $33.8 $30.9 $137.7 27.69% Water Main Extension $1.6 $1.1 $1.9 $1.8 $13.2 $19.6 3.95% Water Well & Pump Rehabilitation $2.1 $5.0 $7.0 $7.6 $7.3 $28.9 5.81% Water Well Construction $21.7 $30.5 $88.2 $60.7 $32.3 $233.5 46.95% Water Telemetry System $0.3 $3.4 $4.5 $5.9 $4.5 $18.6 3.75% Surface Water Treatment Plant $2.6 $7.8 $4.7 $10.3 $17.0 $42.4 8.53% Recharge Basins & Leaky Acres $1.0 $5.5 $0.8 $0.4 $0.1 $7.7 1.56% Planning & Project Management $0.4 $1.9 $0.3 $0.1 $0.1 $2.9 0.58% Public Utilities Administration $4.5 $0.5 $0.3 $0.3 $0.3 $5.9 1.20% Total $42.3 $80.0 $148.2 $121.0 $105.7 $497.2 100.00%
Section 3 Financial Plan and Revenue Requirements
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The City of Fresno Annual Comprehensive Debt Reports also have Debt Detail Reports and Debt Coverage Calculations for the Water Enterprise. Water Enterprise debt service for FY27-FY31 is summarized in Appendix C, Table C-1.

Water Enterprise debt issuance projected for FY27-FY31 is $50 million. Debt service for new debt issues is summarized in Appendix C, Table C-1.

3.5 Revenue Required from Rates and Cash Flow
Rates must generate revenues sufficient to cover operating and maintenance costs as well as needed capital costs while supporting debt service obligations and meeting financial management guiding principles. Elements of Operating Fund cash flow for FY27 – FY31 are explained in the following paragraphs. Detailed data is included in Appendix C, Table C-1. Table 3-4 summarizes the various elements of cash flow.

BEGINNING BALANCE. The operating fund beginning balance is projected to be approximately $107.0 million at the start of FY27 (July 1, 2026). This amount is projected to decline to approximately $9.8 million at the end of FY31 (June 30, 2031) due primarily to the use of cash funding for capital improvement program expenditures and gradual increases in operating costs. Use of the operating fund balance reduces future rate increases.

Note that the Water enterprise has an Operating Reserve Fund – separate from the Operating Fund – that helps maintain liquidity and manage short-term obligations.

REVENUES. The approximate amount of revenues required from rates and charges for the five-year period, FY27 through FY31, is approximately $699.3 million. Another $49.7 million in revenue is from other sources including approximately $5.8 million from the Rate Stabilization Fund. Total revenues are approximately $749.0 million. Detailed data is included in Appendix C, Table C-1.

BONDS. Projected bond disbursements are $50 million. Debt service for new debt issues is shown in Appendix C, Table C-1.

OTHER TRANSERS (NET). Other transfer result in a net outflow from the Operating Fund of approximately $9.8 million. Other transfers are described below.

Financial Plan and Revenue Requirements Section 3
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Transfers (To)/From Operating Reserve. The Operating Reserve is maintained at a level equivalent to 90 days of operating and maintenance (O&M) expenses.

Transfers (To)/From Capital Reserve: Transfers from the Operating Fund are used to maintain the Capital Reserve at its target level, equal to 2% of the five-year capital improvement program budget.

Transfers (To)/From Vehicle Replacement Reserve: Transfers to and from the Vehicle Replacement Reserve support the planned replacement of Water Division fleet vehicles and equipment.

DEBT SERVICE COVERAGE (DSC) RATIO. Debt service coverage meets or exceeds the contractual minimum required by loan documents (1.25x) and the City’s target level (1.50x) in all years. 9 See page
19 of the City of Fresno Fiscal Year 2024-2025 Annual Comprehensive Debt Report for a table showing Water Enterprise debt service coverage for FY16 – FY25. 9 The debt service coverage ratio represents the margin of safety associated with bonded indebtedness reflecting the ratio of the actual or projected net revenue available for debt service to annual debt-service payments. Net revenue is defined as total recurring operating revenue less recurring operation and maintenance expense and is a requirement included in bond indentures associated with revenue bonds.

Section 3 Financial Plan and Revenue Requirements
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Cash flow and debt service coverage is summarized in Table 3-4. All dollar values are rounded to the nearest $0.1 million and may appear not to add correctly.

Table 3-4. Cash Flow FY27 – FY31
* Days O&M Expenditures = Total Ending Balances ÷ Operation & Maintenance Expenditures * 365 days ** DSC Ratio = Total Revenues less O&M less BAB subsidy divided by Debt Service less BAB subsidy; where in FY26, the BAB (Build America Better) subsidy is approximately $2 million decreasing to $1.5 million in FY31 Operating Fund 4001 Adopted Projected FY27 -
Cash Flow, $ millions (all values are rounded) FY27 FY28 FY29 FY30 FY31 FY31 Beginning Balance, July 1 $107.0 $105.9 $89.0 $46.4 $51.5

REVENUES
Water Charges $123.3 $133.3 $140.3 $147.5 $154.8 $699.3 All Other $11.6 $11.7 $10.1 $8.4 $7.8 $49.7
Total Revenues $134.9 $145.0 $150.4 $156.0 $162.6 $749.0

DEBT SERVICE COVERAGE RATIO
BAB (Build America Better) Subsidy
BAB Subsidy Adjustment to Net Revenues
and Interest Expense
$1.944 $1.843 $1.738 $1.628 $1.514
Other Operating Revenues and Interest Income
Adjustment to Net Revenues $10.891 $10.012 $8.847 $6.195 $4.537 Calculated DSC Ratio 1.93x 2.09x 2.07x 2.04x 1.84x
Minimum DSC Ratio 1.50x 1.50x 1.50x 1.50x 1.50x
Technical Default DSC Ratio 1.25x 1.25x 1.25x 1.25x 1.25x Financial Plan and Revenue Requirements Section 3
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3.6 Operating Fund and Other Reserve Fund Balances
The Water Enterprise has an operating fund and three reserve funds that supplement the operating fund. The three reserve funds are:
4000-4016 - Operating Reserve Fund. The revenue source is transfers from Water Operating Fund (4000-4001) as needed to meet the reserve target. The funds will be used to cover revenue shortfall or disruption conditions or unanticipated operations expenses. 4000-4004 - Rate Stabilization Reserve Fund. The revenue source is transfers from the Water Operating Fund (4000-4001) as needed to meet the reserve target. The funds will be used to maintain a stable balance in the reserve to mitigate future rate increases and be consistent with bond covenants when required.
4000-4017 - Capital Improvement Reserve Fund. The revenue source is transfers from Water Operating Fund (4000-4001). Funds are used for unanticipated capital projects or emergency capital needs.

Operating and Reserve Funds Target Balances
The Department of Public Utilities financial management guiding principles recommend each reserve fund have an annual target balance:

The annual target minimum fund balance for the Operating Fund and each reserve fund is summarized as follows:
• Operating Fund and Operating Reserve Fund – Together, these funds are recommended to maintain a minimum annual fund balance carryover and maintenance of a minimum balance of 120 days of operating expenses. The Operating Fund will maintain a minimum of 30 days unassigned cash as annual fund balance carryover and the Operating Reserve Fund will maintain a minimum of 90 days unassigned cash.
• Rate Stabilization Reserve Fund – This reserve fund is recommended to maintain a reserve fund balance equivalent to 2% of annual budgeted rate revenue. • Capital Improvement Reserve Fund – This reserve is recommended to maintain a reserve fund balance equivalent equal to 2% of the 5-year capital improvements budget, with large capital projects or major capital programs being omitted from the overall capital reserve calculation. The City will establish contingencies for those projects or programs that are not included in the Capital Reserve Fund calculation.

Section 3 Financial Plan and Revenue Requirements
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Ending balances and the target minimum fund balances for FY27 – FY31 for the Operating Fund the reserve funds are summarized in Table 3-5.

Table 3-5. Evaluation of Reserve Fund Targets FY27 – FY31 Fund balances for the operating fund and three reserve funds are summarized in Table 3-6.

Table 3-6. Operating and Reserves Fund Balances FY27 – FY31 All Values in $thousands
Operating Fund 4001 FY27 FY28 FY29 FY30 FY31
O&M Expenditures 95,000 100,300 105,100 109,000 112,600 Target Days of O&M Expenditures Minimum 30 30 30 30 30
Target Minimum Balance 7,808 8,244 8,638 8,959 9,255
Projected Ending Balances and Targets
Operating Fund 4001 105,900 89,000 46,400 51,500 9,800
Days of O&M Expenditures 407 324 161 172 32
Operating Reserve Fund 4016 FY27 FY28 FY29 FY30 FY31
O&M Expenditures 95,000 100,300 105,100 109,000 112,600 Target Days of O&M Expenditures Minimum 90 90 90 90 90
Target Minimum Balance 23,425 24,732 25,915 26,877 27,764 Projected Ending Balances
Operating Reserve Fund 4016 32,600 31,400 30,100 28,700 27,800 Days of O&M Expenditures 125 114 105 96 90
Rate Stabilization Reserve Fund 4004 FY27 FY28 FY29 FY30 FY31 Operating Revenues 123,300 133,300 140,300 147,500 154,800 Target Percent of Operating Revenues Minimum =>2.0% =>2.0% =>2.0% =>2.0% =>2.0% Target Reserve 2,500 2,700 2,800 3,000 3,100
Projected Ending Balance 6,400 4,600 3,800 3,100 3,200
Capital Improvements Reserve Fund 4017 FY27 FY28 FY29 FY30 FY31 FY27-FY31 CIP Budget (excluding TCP) 306,995 306,995 306,995 306,995 306,995 2% of the 5-year CIP budget Minimum =>2.0% =>2.0% =>2.0% =>2.0% =>2.0% Target Minimum Balance 6,100 6,100 6,100 6,100 6,100
Projected Balance 16,000 8,100 7,400 6,600 6,100
All Values in $thousands
ENDING BALANCES FY27 FY28 FY29 FY30 FY31
Operating Fund 4001 105,900 89,000 46,400 51,500 9,800
Operating Reserve Fund 4016 32,600 31,400 30,100 28,700 27,800 Rate Stabilization Reserve Fund 4004 6,400 4,600 3,800 3,100 3,200 Capital Improvements Reserve Fund 4017 16,000 8,100 7,400 6,600 6,100 Total Ending Fund Balances 160,900 133,100 87,700 89,900 46,900 Pavletic consulting llc 4-1
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Section 4
Cost of Service Analysis
Water systems are comprised of several facilities (unit processes or functions) that are designed and operated to collect, treat, store, and distribute water to customers. The basic premise of the cost-ofservice allocation process is to assign each cost to the utility function it accomplishes to provide a means of distributing these costs to customer classes in proportion to their respective demands on the system.

The total amount of revenue required from water rates and charges (costs) is allocated between amounts to be recovered from meter service charges, fire protection charges, and quantity charges.

Allocation is accomplished by the development of factors that allocate costs among functional cost categories.

The functional cost categories and allocations are based on principles and methodology found in the American Water Works Association Manual of Water Supply Practices, M1 Principles of Water Rates, Fees, and Charges (M1 Manual). The use of these industry standard principles and methods ensures that revenue requirements are equitably recovered from classes of customers in proportion to the cost of serving those customers.

The general cost of service process includes the following steps:

1. Develop allocation factors (percentages) for allocation of capital costs (including debt service) and operation and maintenance costs;

2. Allocate capital and operating costs for a benchmark year to rate component categories;

3. Develop unit costs of service for each rate component by dividing the total costs for each category by the respective total system units of service; and

4. Distribution of costs to customer classes based on the unit costs of service.

4.1 Cost Allocation Factors
Water systems are comprised of several facilities (unit processes or functions) that are designed and operated to collect, treat, store, and distribute water to customers. The basic premise of the functionalization process is to assign each cost to the utility function it accomplishes to provide a means of distributing these costs to customer classes based on their respective demands on the system.

Allocation factors (percentages) for capital, debt service, and operations and maintenance costs used in this study are:
• Plant in Service – allocate capital and debt service costs (not operating costs); • Source of Supply – allocate operating costs that apply solely to water supply purchase, treatment and production;
• Water costs for fire service – allocate operating costs that apply solely to the fire protection function;
• General and Administration– allocate operating costs that are independent of the amount of water use, meter size or meter type (potable or irrigation); and • Operations – allocate operating costs not included in the other operating cost categories.

Development and use of the allocation factors are explained in the following sections.

Section 4 Cost of Service Analysis
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Plant in Service Factors. The Plant in Service factors are used to allocate capital and debt service costs (not operating costs) among the functional cost components. The City provided a list of assets (pipes, wells, tanks, transmission mains, distribution lines, etc.) and their value. The value of water system assets provides a reasonable basis for allocating capital and debt service costs because the plant in service assets are used to provide water utility services. As such, the breakdown of water system assets into the various Plant in Service factors is the best way to allocate costs among each of the various functions to ensure that capital and debt service costs that are recovered from rates are proportionate to costs of service.

The asset values are converted to annual current dollars using a four percent per year amortization rate over the useful life of each asset and then allocated to various functional categories.

Calculation of Plant in Service factors are shown in Table 4-1.

Table 4-1. Plant in Service Allocation Factors
Assets that are utilized to supply water regardless of time of day or intended use (domestic, irrigation or fire suppression such as well sites/generators, Leaky Acres recharge, water suppliers’ pipe, and water treatment plants) are allocated 99 percent to Annual Water Usage and 1 percent for Fire Protection (fire system testing, hydrant flushing, and actual fire suppression).

For SCADA (Supervisory Control and Data Acquisition), Fleet and Generator assets allocations to Annual Water Usage are split with Meter & Service Lateral Capacity (49.5 percent each).

Allocations for tanks, raw water mains, transmission lines and distribution lines recognize that a portion of asset costs are related to the provision of peak hour water demand (25.6 percent) and Fire Protection (1 percent).

Annual Allocation, Dollars
Capital Annual Meter & Account
2025 Useful Recovery Water Fire Service Lateral and
Valuation, Life, Expense Usage Protection Capacity Customer Basis of Allocation Plant Assets Dollars Years Dollars (QTY) (FP) (MTR) (CUS) (QTY) (FP) (MTR) (CUS) Water Rights 16,200,000 na 648,000 648,000 0 0 0 100 0 0 0 Well Sites/Generators 464,809,321 50 21,636,967 21,420,597 216,370 0 0 99 1.0 0 0 Leaky Acres Recharge 8,291,194 50 385,957 382,097 3,860 0 0 99 1.0 0 0 Friant Kern/Kings Pipe 169,787,182 55 7,679,685 7,602,888 76,797 0 0 99 1.0 0 0 NESWTF 86,102,834 55 3,894,538 3,855,593 38,945 0 0 99 1.0 0 0 SESWTF 259,188,499 55 11,723,418 11,606,184 117,234 0 0 99 1.0 0 0 Tank 3 53,850,774 50 2,506,764 1,839,757 25,068 641,940 0 73.4 1.0 25.6 0 Tank 4 30,350,498 50 1,412,822 1,036,894 14,128 361,800 0 73.4 1.0 25.6 0 Service Meters 101,561,407 25 6,501,145 4,771,301 892,391 837,453 0 73.4 13.7 12.9 0 Service Laterals 1,460,222,752 55 66,047,689 48,473,523 9,066,151 8,508,015 0 73.4 13.7 12.9 0 Warehouse Physical Inventory 2,684,681 50 124,972 91,719 17,155 16,098 0 73.4 13.7 12.9 0 Hydrants 44,241,355 50 2,059,444 0 2,059,444 0 0 0 100.0 0 0 Valves 50,771,480 50 2,363,423 0 2,363,423 0 0 0 100.0 0 0 Raw Water - Mains 112,275,173 55 5,078,346 3,727,084 50,783 1,300,478 0 73.4 1.0 25.6 0 Recycle Water - Mains 153,768,055 55 6,955,120 6,955,120 0 0 0 100 0.0 0 0 Transmission Lines 1,036,723,369 55 46,892,286 34,415,047 468,923 12,008,316 0 73.4 1.0 25.6 0 Distribution Lines 8" 3,556,661,757 55 160,872,231 118,066,868 22,082,408 20,722,955 0 73.4 13.7 12.9 0 Blowoffs 3,132,948 50 145,839 107,034 20,019 18,786 0 73.4 13.7 12.9 0 SCADA 10,280,805 10 1,267,530 627,427 12,675 627,427 0 49.50 1.00 49.50 0 Furniture 15,206 15 1,368 0 0 0 1,368 0 0.0 0 100
Fleet 12,734,813 7 2,121,742 1,050,262 21,217 1,050,262 0 49.50 1.00 49.50 0 Generators 1,421,310 7 236,804 117,218 2,368 117,218 0 49.50 1.00 49.50 0 Tools & Equipment 1,511,168 10 186,313 0 0 0 186,313 0 0.0 0 100 Total 7,636,586,581 350,742,404 266,794,615 37,549,358 46,210,749 187,681 Percent of Total 76.1% 10.7% 13.2% 0.1%
Cost of Service Analysis Section 4
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Allocations for Service Meters, Service Laterals, Warehouse Physical Inventory (mostly water meters), Distribution Lines 8” and Blowoffs recognize that these assets handle base water use (73.4 percent) but are sized to accommodate instantaneous fire flows (13.7 percent) and peak hour water demand (12.9 percent).

Five asset classes are 100 percent allocations to a single factor – Water Rights and Recycle Water – Mains (Annual Water Usage); Hydrants and Valves (Fire Protection); and Furniture and Tools & Equipment (Customer).

The Plant in Service factors are used to allocate capital and debt service costs (not operating costs) among the functional cost components. Calculation of FY27 - FY31 average annual expenditures for cash capital funds and for debt service (allocated using plant in service factors) are shown in Table 4-2.

Table 4-2. FY27-FY31 Average Annual Cash Capital Expenditures and Debt Service Source of Supply Factor. This factor allocates costs 100 percent to water use and is used to allocate operating costs that apply solely to water supply acquisition and water production. Those costs include water supply expenses for Friant Water Authority (FWA), Fresno Irrigation District (FID), and the Bureau of Reclamation (BOR) for its Central Valley Project (CVP); pumping power and utilities costs; and specialty chemicals costs for water treatment.

Water Costs for Fire Service Factor. This factor allocates costs 100 percent to fire protection and is used to allocate operating costs that apply solely to the fire protection function. These costs include those directly related to public fire hydrants and related branches and mains; and private fire protection costs.10 The capital (cash funded) and debt service portion of annual revenue required from rates is the only portion of costs that are allocated to both public and private fire service connections. All other water costs for fire service, including operations costs, are for public fire service only.

General and Administration Factor. This factor allocates costs 100 percent to accounts and is used to allocate operating costs that are independent of the amount of water use, meter size or meter type (potable or irrigation). These operating costs include Interdepartmental Charges, Fixed Reimbursement UB&C, Cost Allocation Plan Charges, and Fixed Reimbursement Public Utilities.

Operations Factor. This factor is used to allocate operating costs not included in the other operating cost categories. The percent allocation of operations expenditure category costs is based on correlation of the job categories of DPU staff in the Water Division with functional cost components. The correlation was established using FY26 Water Division staff that include 203 non-management, non-supervisory, supervisory management, and grant-supported (limited) positions. 10 Water costs for fire service are properly included in water rates because these services primarily benefit ratepayers as described and determined by Government Code section 53750.5.

Item (values in $ thousands)
Capital (Cash Funded) and Debt Service
Capital, Total FY27-FY31 from Table 3-4 497,227
less
Capital, Grant Funded FY27-FY31 from Table 3-4 (5,263)
Capital, Bond Funded FY27-FY31 from Table 3-4 (50,000)
Capital, Enterprise Funds and Special Funds FY27-FY31 from Table 3-4 (246,396) Capital, Cash Funded, FY27-FY31 195,568
Capital, Cash Funded, FY27-FY31 Annual Average 39,114
Debt Service, Total FY27-FY31 from Table 3-4 138,721
Debt Service, Total FY27-FY31, Annual Average 27,744
Capital (Cash Funded) and Debt Service, Annual Average used in Table 4-3 66,858 Section 4 Cost of Service Analysis
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4.2 Cost Allocation Factors for Benchmark Year
Cost allocation to rate development categories involves allocation of capital (using the Plant in Service factors) and operating expenditures (using the other factors) on a percentage basis among the rate component categories of water usage, water costs for fire service, meter, and account. The allocation of dollars into the four rate development categories results in a final set of percentages used to allocate revenue required from rates and charges for the development of unit costs of service for each year in FY27 – FY31.

Some operating expenditures are allocated exclusively to one rate development category based on the direct association between the expenditure and its categorical function. For example, the expenditure for “Pumping Power/Utilities”, the three “Water Supply” categories, and “Specialty Chemicals (Water Treatment)” are allocated solely to the “Water Use” rate development component because these costs may be equitably allocated among all customers based on the amount of water use rather their meter size or account.

The percent cost allocation to functional categories for the Benchmark Year is based on allocation of FY29 operating expenditures (shown in Table C-1) and FY27 - FY31 average annual cash expenditures for capital and debt service (shown in Table 4-2).

Calculation of percentages for the Benchmark Year are shown in Table 4-3.

Table 4-3. Cost Allocation Percentages for Benchmark Year Quantity
Charges
Meter Charges and
Fire Protection Charges
FY29 Water Use Fire Protection Meter Capacity Account
Item (values in $ thousands) Benchmark (QTY) (FP) (MTR) (ACCT) Basis of Allocation [1] Operating & Maintenance from Table C-1
Employee Services 27,021 16,106 2,662 6,123 2,130 Operations Pumping Power/Utilities 16,544 16,379 165 0 0 Source of Supply Water Supply-FWA 2,933 2,904 29 0 0 Source of Supply
Water Supply-FID 8,453 8,368 85 0 0 Source of Supply
Water Supply-CVP Water (BOR) 4,176 4,135 42 0 0 Source of Supply Specialty Chemicals (Water Treatment) 10,327 10,224 103 0 0 Source of Supply Other Objects 1,596 951 157 362 126 Operations
Supplies 7,422 4,424 731 1,682 585 Operations
Purchased Professional/Tech 5,352 3,190 527 1,213 422 Operations Purchased Property Services 5,124 3,054 505 1,161 404 Operations Other Purchased Services 388 231 38 88 31 Operations
Interdepartmental Charges 2,946 0 0 0 2,946 General & Admin Fixed Reimbursement UB&C 2,850 0 0 0 2,850 General & Admin Cost Allocation Plan Charges 2,236 0 0 0 2,236 General & Admin Fixed Reimbursement Public Utilities 3,829 0 0 0 3,829 General & Admin Fixed Reimbursement Fire (Hydrants) 1,618 0 1,618 0 0 Fire Hydrant Insp & Mtc Fleet Services Charge 1,750 1,043 172 396 138 Operations Fleet Fuel Charges 535 319 53 121 42 Operations
Capital (Cash Funded) & Debt Service from Table 4-2 66,858 50,856 7,158 8,809 36 Plant In Service Total Expenditures 171,958 122,184 14,046 19,955 15,773 Percent by Category 71.1% 8.2% 11.6% 9.2%
Percent by Charge Type 71.1% 28.9%
Notes:
1 The basis for allocation used for each expense category are: (QTY) (FP) (MTR) (CUS) Plant In Service 76.1% 10.7% 13.2% 0.1% < % from Table 4-1 Source of Supply 99% 1% 0% 0% < water use category
Water Costs for Fire Service 0% 100% 0% 0% < fire protection category General and Administration 0% 0% 0% 100% < account category Operations 60% 10% 23% 8% < all other categories
Cost of Service Analysis Section 4
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The percent cost allocation to functional categories for the Benchmark Year is used to allocate annual revenue required from rates and charges for FY27 – FY31 and is summarized in Table 4-4. Note that projected revenue from rates and charges for FY27 will be less than annual revenue requirements shown for calculation of percentages for allocation of costs due to delay in implementation of rate increases until January 1, 2027, six months into the fiscal year.

Table 4-4. Allocation of FY27-FY31 Annual Revenue Requirements Annual revenue requirements for the Fire Protection category are split into two subcategories – Public Fire Protection and Private Fire Protection. Note that cost allocation to Private Fire Protection charges includes only the portion of capital (funded by cash and debt service) for capacity in the water system for fire flow allocable to Private Fire Protection. Allocations between Public Fire Protection and Private Fire Protection are summarized in Table 4-5.

Table 4-5. Allocation of FY27-FY31 Annual Revenue Requirements for Fire Protection All Revenue Values in $thousands FY26 FY27 FY28 FY29 FY30 FY31 Revenue Required From Rates and Charges
Projected Change in Rate Revenue BASED ON FULL YEAR OF RATE INCREASES 4.00% 5.20% 5.15% 5.15% 5.10% Projected FY27 - FY31 Annual Revenue Requirement FY26 value from Table C-1 121,584 126,448 133,023 139,874 147,077 154,578 Allocation of Revenue Required From Rates Charges
Quantity Rate Benchmark Year %
Water Use from Table 4-3 71.1% 89,847 94,519 99,387 104,505 109,835 Meter Charges and Fire Protection Charges Benchmark Year % Fire Protection from Table 4-3 8.2% 10,329 10,866 11,426 12,014 12,627 Meters & Service Laterals from Table 4-3 11.6% 14,673 15,436 16,231 17,067 17,938 Account and Customers from Table 4-3 9.2% 11,598 12,202 12,830 13,491 14,179 Total Revenue Required From Rates and Charges 100% 126,448 133,023 139,874 147,077 154,578 All Values in $ thousands FY27 FY28 FY29 FY30 FY31
Revenue Requirement Allocation from Table 4-4 $10,329 $10,866 $11,426 $12,014 $12,627 Public and Private Fire Protection Portion
% Allocation of Costs Applicable to Both Public and Private Connections Cost Allocated to Fire Protection in Benchmark Year FY29 from Table 4-3 Capital (Cash Funded) & Debt Service Portion $7,158
Total Portion in Benchmark Year FY29 $14,046
% Allocation of Costs for Capital (Cash Funded)
& Debt Service Portion
$ Allocation to Public and Private Fire Protection $5,263 $5,537 $5,822 $6,122 $6,434 $ Allocation to Public Fire Protection Only $5,066 $5,329 $5,603 $5,892 $6,192 Public Fire Protection Portion
% Allocation of Costs Between Public and Private Connections Equivalent Connections
Public Fire Protection from Table 2-5 1,568,037 1,572,489 1,576,942 1,581,394 1,585,847 Private Fire Protection from Table 2-5 468,610 469,024 469,439 469,853 470,267 Total 2,036,647 2,041,514 2,046,380 2,051,247 2,056,114 Percent of Total Equivalent Connections
Public Fire Protection 77% 77% 77% 77% 77%
Private Fire Protection 23% 23% 23% 23% 23%
Public and Private Connections Portion
$ Allocation to Public and Private Fire Protection from above $5,263 $5,537 $5,822 $6,122 $6,434 % Public Fire Protection from above 77% 77% 77% 77% 77% $ Public Fire Protection $4,052 $4,265 $4,487 $4,720 $4,963 $ Allocation to Public Fire Protection Only from above $5,066 $5,329 $5,603 $5,892 $6,192 $ Total Public Fire Protection Only $9,118 $9,594 $10,090 $10,612 $11,155 % Public Protection Portion of Total Fire Protection Revenue Requirement 88.3% 88.3% 88.3% 88.3% 88.3% Private Fire Protection Portion
$ Allocation to Public and Private Fire Protection from above $5,263 $5,537 $5,822 $6,122 $6,434 % Private Fire Protection from above 23% 23% 23% 23% 23% $ Private Fire Protection $1,211 $1,272 $1,336 $1,402 $1,472 % Private Fire Protection Portion of Total Fire Protection Revenue Requirement 11.7% 11.7% 11.7% 11.7% 11.7% 51% 51% 51% 51% 51% 51%
Section 4 Cost of Service Analysis
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4.3 Unit Costs
Revenue required from rates is allocated to functional cost categories as shown in Table 4-4 and Table 4-5 and are merged with units of service shown in tables in Section 2 to calculate unit costs of service.

Unit cost calculations are summarized in Table 4-6. Unit costs are used to develop all recommended rates and charges.

Tables showing detailed calculations are included in Appendix E: Uniform Water Quantity rates (Table E1), Private Well Water Quantity rates (Table E-2), unit costs for Meter charges (E-3), Meter charges (Table E-4), and Private Fire Protection charges (Table E-5).

Table 4-6. Unit Costs of Service
FY27 FY28 FY29 FY30 FY31
Uniform Quantity Rates
Revenue Allocation, $x1000 from Table 4-4 $89,847 $94,519 $99,387 $104,505 $109,835 Annual Water Use, HCFx1,000 from Table 2-1 48,607 48,347 48,473 48,600 48,726 Unit Cost, $/HCF (rounded up to nearest $0.01) $1.85 $1.96 $2.06 $2.16 $2.26 Meter Charges
Fire Protection (Public)
Revenue Allocation, $x1000 from Table 4-5 $9,118 $9,594 $10,090 $10,612 $11,155 Equivalent 1-inch meters from Table 2-4 172,095 172,839 173,583 174,326 175,070 Unit Cost, $/eq-mtr/mo $4.42 $4.63 $4.84 $5.07 $5.31
Meters/Services
Revenue Allocation, $x1000 from Table 4-4 $14,673 $15,436 $16,231 $17,067 $17,938 Equivalent 1-inch meters from Table 2-4 182,467 183,235 184,004 184,773 185,542 Unit Cost, $/eq-mtr/mo $6.70 $7.02 $7.35 $7.70 $8.06
Customers/Accts
Revenue Allocation, $x1000 from Table 4-4 $11,598 $12,202 $12,830 $13,491 $14,179 Accounts from Table 2-2 144,844 145,519 146,194 146,869 147,544 Unit Cost, $/acct/mo $6.67 $6.99 $7.31 $7.65 $8.01
Private Fire Protection Charges
Revenue Allocation, $x1000 from Table 4-5 $1,211 $1,272 $1,336 $1,402 $1,472 Equivalent Connections from Table 2-5 468,610 469,024 469,439 469,853 470,267 Unit Cost, $/eq.-conn/mo $0.22 $0.23 $0.24 $0.25 $0.26
Total Revenue Allocation, $x1000 from Table 4-4 $126,448 $133,023 $139,874 $147,077 $154,578 Cost of Service Analysis Section 4
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4.4 Cost of Water Service for Highest Users
In 2023, the State of California passed a law that requires the costs of water service for the highest users and the average annual volume of water delivered to high water users to be made publicly available by posting the information in the City’s cost-of-service analysis.11 The high water users that account for the top 10 percent of water use, in terms of volume of water consumed, were identified using FY24 billing data provided by the City. The number of accounts, average annual volume of water (in HCF), and the total cost of service for each customer (water quantity charges plus meter charges) are listed in Table 4-7. Customers are sorted by customer class.

Table 4-7. Water Use Analysis – Top 10% of Users
The FY24 cost of service shown for the top 10% water users is based on the same unit costs, rates and meter charges applicable to all water users. Charging the same uniform quantity rates to the highest users is the appropriate cost of service because the source of potable water supply is the same for all potable water users and the City’s costs of service do not change, per unit, as the volume of water used increases.
11 Assembly Bill No. 755 passed in the 2023-2024 Legislative Session added Chapter 3.8 (commencing with Section 390) to Division 1 of the Water Code, relating to water.

Number of Average Annual Cost of
Customer Class Accounts Volume (HCF) Water Service
Schools 290 1,388,249 $2,699,348
Municipal 1,666 1,146,883 $2,411,152
Industrial 6 1,255,213 $2,210,548
Commercial 49 658,770 $1,171,392
Multi-Residential 132 237,832 $482,653
Total 2,143 4,686,948 $8,975,092
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Section 5
Water Quantity, Meter, Private Fire
Protection Charges, and Proposition
218 Notice
Distribution of costs to functional categories described in the preceding section is followed by the calculation of water quantity charges, meter charges and fire protection charges. Tables showing detailed calculations are included in Appendix E: Uniform Water Quantity rates (Table E-1), Private Well Water Quantity rates (Table E-2), unit costs for Meter charges (E-3), Meter charges (Table E-4), and Private Fire Protection charges (Table E-5).

5.1 Water Quantity Charges
Approximately 71 percent of annual revenue requirements are to be recovered from water quantity (use) charges based on allocations to the “Water Use” function. The method of calculating each of the charges in the rate structure is explained below.

5.1.1 Uniform Water Quantity Charges
The calculation involves dividing the Water Use cost allocations by the projected annual amount of water use. The rate structure for current rates and in the recommended five-year rate plan is a uniform rate structure.

5.1.2 Private Wells Water Quantity Charges
Private wells, which draw water from the groundwater aquifer, with water meters that are used for irrigation or commercial purposes are required to pay a Water Quantity Charge. The Private Wells Water Quantity Charge recovers the City’s costs associated with recharging the groundwater aquifer used for the City’s water supply. Development of the Private Wells Water Quantity Charge involves calculating the costs associated with recharging the groundwater aquifer as a percentage of total costs allocated to water quantity charges. Estimated revenue from the Private Wells Water Quantity Charge is approximately $50,000 per year.

5.2 Meter Charges
Approximately 28 percent of annual revenue requirements are to be recovered from meter charges based on allocations to the “Fire Protection”, “Meters/Services” and “Customer/Account” functions.

Note that the Fire Protection functional cost category allocation to meter charges includes only the portion for public fire protection; the portion for private fire protection is recovered from a separate charge (described in the next subsection).

Section 5 Water Charges and Proposition 218 Notice
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Unit costs are used to develop meter charges for each customer class. There are some important assumptions made in the calculation of meter service charges that change the meter service charge structure for each customer category and class. Those assumptions are listed below:
• Single Family Residential and Nonresidential meter service charges include the “Fire Protection”, Meters/Services” and “Customer/Account” functional cost categories; • Irrigation meter service charges include the “Meters/Services” and “Customer/Account” functional cost categories and exclude the “Fire Protection” functional cost category; • Travel meter charges are assigned the 3-inch meter rated capacity and pay the Single Family Residential and Nonresidential meter service charges for a 3-inch meter. 12 5.3 Private Fire Protection Charges
Approximately 1 percent of annual revenue requirements are to be recovered from private fire protection connections based on allocations to the “Fire Protection” function. Note that the Fire Protection functional cost category allocation to private fire protection charges includes only the portion for private fire protection; the portion for public fire protection is recovered from a separate meter charge (described in the previous subsection).

The City has discontinued charging for private fire hydrants – which were previously charged as a 6-inch private fire connection – because those hydrants are installed and maintained by the customer.

5.4 Recycled Water Rates and Charges
Recycled water customers are charged a uniform volume charge and one-time charges for installation of a meter and service lateral connection to the recycled water distribution system. A separate cost-ofservice analysis has been prepared to calculate appropriate rates for recovery of costs to produce and distribute recycled water and to recover administrative expenses associated with the recycled water program.

Recycled water revenues are used for operating and maintenance costs of the recycled water distribution system, which are incurred by the Water Division and a portion of the treatment costs, which are incurred by the Wastewater Division. The recycled water revenues are deposited in the Wastewater Division recycled water fund and revenue is transferred to the Water Division fund to reimburse for operating and maintenance costs of the recycled water distribution system. When revenues are sufficient, funds are also reimbursed to the Wastewater operating fund for treatment expenses incurred.

The Recycled Water Fee is not a property-related fee under Article XIII-D, Section 6 of the California Constitution because it is not a fee required for use of property and the costs to provide recycled water are not being passed on to ratepayers. Rather, the Recycled Water Fee is a fee governed by Article XIII-C, Section 1 of the California Constitution.
12 Travel meters are portable meters and are sometimes referred to as “hydrant” meters (because they are connected to fire hydrants) or “construction” meters (because they are frequently used at construction sites). Users of travel meters also pay a usage charge for water registered by the meter.

Water Charges and Proposition 218 Notice Section 5
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5.5 Proposition 218 Notice
Recommended rates and charges for FY27 – FY31 are shown in Table 5-1. The effective date for FY27 is January 1, 2027. For FY28 – FY31, the effective dates are July 1 – the beginning of each fiscal year. The current water rates and charges have been in effect since July 1, 2018.

Table 5-1. Rates and Charges for Proposition 218 Notice Current Recommended
Item FY26 FY27 FY28 FY29 FY30 FY31
effective date > 1-Jan-27 1-Jul-27 1-Jul-28 1-Jul-29 1-Jul-30 Water Quantity Charges, $/HCF
Potable Water Meters $1.74 $1.85 $1.96 $2.06 $2.16 $2.26 Private Wells $0.218 $0.33 $0.34 $0.35 $0.36 $0.37
Meter Charges, $/month
Domestic
¾-inch $13.50 $13.60 $14.25 $14.95 $15.65 $16.35

1.0-inch $17.90 $17.80 $18.65 $19.50 $20.40 $21.35

1.5-inch $20.80 $28.90 $30.30 $31.70 $33.20 $34.75

2.0-inch $35.30 $34.45 $36.10 $37.80 $39.60 $41.40

3.0-inch $52.80 $55.30 $57.95 $60.65 $63.50 $66.50

4.0-inch $79.00 $104.00 $109.00 $115.00 $120.00 $125.00

6.0-inch $152.00 $174.00 $182.00 $191.00 $200.00 $209.00

8.0-inch $705.00 $680.00 $710.00 $740.00 $780.00 $810.00

10.0-inch $1,113.00 $1,540.00 $1,610.00 $1,690.00 $1,770.00 $1,850.00 Irrigation
¾-inch $10.70 $10.85 $11.40 $11.90 $12.45 $13.05

1.0-inch $13.40 $13.35 $14.00 $14.65 $15.35 $16.05

1.5-inch $15.20 $20.10 $21.05 $22.00 $23.05 $24.10

2.0-inch $24.10 $23.45 $24.55 $25.70 $26.90 $28.15

3.0-inch $34.90 $36.00 $37.70 $39.45 $41.35 $43.25

4.0-inch $51.00 $65.30 $68.40 $71.65 $75.00 $78.50

6.0-inch $96.00 $108.00 $113.00 $118.00 $124.00 $129.00

8.0-inch $436.00 $410.00 $430.00 $450.00 $470.00 $500.00

10.0-inch $687.00 $930.00 $980.00 $1,020.00 $1,070.00 $1,120.00 Private Fire Protection Charges, $/month
Fire Service Connections

1.0-inch $15.70 $8.25 $8.65 $9.10 $9.55 $10.00

1.5-inch $15.70 $8.25 $8.65 $9.10 $9.55 $10.00

2.0-inch $15.70 $8.25 $8.65 $9.10 $9.55 $10.00

3.0-inch $15.70 $8.25 $8.65 $9.10 $9.55 $10.00

4.0-inch $15.70 $8.25 $8.65 $9.10 $9.55 $10.00

6.0-inch $45.60 $23.95 $25.15 $26.40 $27.70 $29.05

8.0-inch $98.00 $51.10 $53.60 $56.25 $59.00 $61.85

10.0-inch $175.00 $91.85 $96.40 $101.15 $106.10 $111.25

12.0-inch $283.00 $148.40 $155.75 $163.35 $171.35 $179.70 Section 5 Water Charges and Proposition 218 Notice
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Rates and charges in FY27 reflect the cost-of-service alignment which creates rates and charges that are proportionate to use. Major changes that are occurring due to changes in the rate structure or realignment of costs are:
• Private well quantity charge: Increases in this charge reflect the use of a new calculation methodology and lack of increases in the charge over previous years. • Discontinued private fire hydrant charges: The City has discontinued charging for private fire hydrants which were previously charged as a 6-inch private fire connection because those fire hydrants are installed and maintained by the customer.
• Variability in domestic and irrigation meter charge increases: 1) Meter charges for each meter size are based, in part, on an "equivalency factor" that relates the maximum continuous operation flow of a meter (in gallons per minute, gpm) to that of a standard 1-inch meter. The City’s standard 1-inch meter is a “Recordall” Disc Model 55 manufactured by Badger Meter.

Current meter charges were based on a standard 3/4-inch meter. 2) Proposed meter charges are based on maximum continuous operation flow published in the meter manufacturers’ specification sheets. Current meter charges were based on maximum continuous operation flow published by the American Water Works Association.
• Decrease in private fire protection charges: Revenue from private fire protection charges is reduced due to discontinued private fire hydrant charges. Proposed fire protection charges are based on recovery of approximately 1.0 percent of total rate revenues. Current fire protection connection charges were based on recovery of approximately 1.92 percent of total rate revenues. The reduction in revenue from fire protection connection charges is approximately 65 percent.

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Section 6
Impact of Rate Plan on Customer
Bills
The impact on customers is summarized in terms of annual changes in revenue required from each rate or charge and annual changes in monthly bills.

6.1 Projected Revenue from Water Charges
Projected revenues from current rates and charges for FY26 and from recommended rates and charges for FY27 – FY31 are shown in Table 6-1. Note that the revenues shown for FY26 are developed using current rates which were the final set of rate increases, effective July 1, 2018, and implemented as part of the 2015 Rate Plan. Annual percentage changes in projected water use and projected number of meters are shown for reference.

Note that revenue from rates and charges for FY27 will be less than the amount of revenue required from rates and charges used to develop allocation of costs and unit costs as shown in Table 4-4. The difference is due to delay in implementation of rate increases until January 1, 2027, six months into the fiscal year. Revenue required from rates and charges used to develop allocation of costs and unit costs as shown in Table 4-4 is approximately $126,448,000. Projected revenue from rates and charges with rate increases on January 1, 2027, six months into the fiscal year, is approximately $123,300,000 as shown in Table 6-1.

Table 6-1. Revenue from Rates and Charges
Total revenue from rates and charges for FY27 – FY31 is projected to be approximately $699.3 million with the first rate increase on January 1, 2027. Total revenue from rates and charges for FY27 – FY31 without any rate increases during the five-year period would be approximately $607.9 million (the FY26 value of $121.6 million times 5). The recommended rate increases are projected to increase revenue by approximately $91.4 million over the five-year period.

Estimate Projected FY27 - 31
FY26 FY27 FY28 FY29 FY30 FY31 Total $ Total %
effective date > 1-Jan-27 1-Jul-27 1-Jul-28 1-Jul-29 1-Jul-30 revenue increase > 1.4% 8.1% 5.3% 5.1% 4.9%
SF mo bill % increase > 3.7% 5.5% 4.9% 4.8% 4.6%
Summary, % of Total
Water Use Charges 69.9% 70.3% 71.1% 71.1% 71.1% 71.1% 71.0% Potable & Irrigation Meter Charges 28.2% 28.3% 28.0% 27.9% 27.9% 27.9% 28.0% Private Fire Connection Charges 1.9% 1.4% 1.0% 1.0% 1.0% 1.0% 1.0% Summary, $millions
Water Use 85.0 86.6 94.8 99.9 105.0 110.1 496.3
Meter Charges 34.2 34.9 37.3 39.2 41.2 43.2 195.7
Private Fire Protection Conn. 2.3 1.8 1.3 1.3 1.4 1.5 7.2 Total All 121.6 123.3 133.3 140.3 147.5 154.8 699.3
$ Annual Change 1.7 10.0 7.1 7.2 7.3
% Annual Change 1.4% 8.1% 5.3% 5.1% 4.9%
Section 6 Impact of Rate Plan on Customer Bills
6-2 Pavletic consulting llc
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6.2 Impact on Monthly Bills
Projected monthly bills for single family accounts (or any customer) with a 1-inch domestic meter connection using 17 HCF per month (approximately 418 gallons per day) are shown in Figure 6-1 for FY26 – FY31. Most single family accounts have a 1-inch meter connection and the average monthly water use for the single family customer class is projected to be approximately 17 HCF for FY27.

Figure 6-1. Projected Monthly Bills @ 17 HCF/month
The impact on monthly bills for commercial accounts (or any customer) with a 1-inch domestic meter connection and higher water use of 50 HCF (approximately 1,230 gallons per day) is nearly the same (except for FY27) – on a percentage basis – as for the average single family customer. As shown in Figure 6-2, for monthly bills based on 50 HCF per month water use, the absolute bill is higher but the percentage increase in bills is approximately the same as for water use of 17 HCF per month.

Figure 6-2. Projected Monthly Bills @ 50 HCF/month
$47.48 $49.25 $51.97 $54.52 $57.12 $59.77
4%
6% 5% 5% 5%
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
FY26 FY27 FY28 FY29 FY30 FY31
Monthly Bill @17 HCF/month % Increase
$104.90 $110.30 $116.65 $122.50 $128.40 $134.35
5% 6% 5% 5% 5%
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
FY26 FY27 FY28 FY29 FY30 FY31
Monthly Bill @50 HCF/month % Increase
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Section 7
Limitations
This document was prepared solely for City of Fresno in accordance with professional standards at the time the services were performed and in accordance with the contract, and contract amendments, between City of Fresno and Pavletic Consulting LLC (and its predecessor entity, Municipal Financial Services) dated February 1, 2022. This document is governed by the specific scope of work authorized by the City of Fresno; it is not intended to be relied upon by any other party.

Pavletic Consulting LLC relied on budgetary projections, cost estimates, and account balances provided by the City of Fresno and, unless otherwise expressly indicated, made no independent investigation as to the validity, completeness, or accuracy of such information. Pavletic Consulting LLC also relied on cost allocation data provided by the City as needed to complete the cost-of-service analysis. The cost allocation data was reviewed by Pavletic Consulting LLC and were determined to be reasonable.

Actual future data may differ from projected data. Some of the assumptions used in this report may not be realized, and unanticipated events and circumstances may occur. Therefore, there may be differences between the data or results projected in this report and future, actual revenues and expenditures and those differences may be material. Pavletic Consulting LLC is not responsible for differences between projected data and actual data caused by unforeseen events or for updating this report to account for events occurring after the date of this report.

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Water Utility Financial Plan and Rates Study
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Appendix A: Master Fee Schedule #590
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CITY OF FRESNO

MASTER FEE SCHEDULE
WATER RATES**
Amend # Fee Description & Unit/Time * Current
522 Water, Metered Service Rate total charge shall be monthly meter service charge plus quantity charge based on usage.

Water Meter Service Charge, (meter size per month):

Domestic
3/4-inch or smaller 13.50
1-inch 17.90
1-1/2-inch 20.80
2-inch 35.30
3-inch 52.80
4-inch 79.00
6-inch 152.00
8-inch 705.00
10-inch 1,113.00
12-inch 1,462.00
Irrigation***
3/4-inch or smaller 10.70
1-inch 13.40
1-1/2-inch 15.20
2-inch 24.10
3-inch 34.90
4-inch 51.00
6-inch 96.00
8-inch 436.00
10-inch 687.00
12-inch 901.00
Water Quantity Charge:

All Customer Classes
Each 100 Cubic Feet (HCF) 1.74
1,000 gallons 2.33
522 Water Affordability Credit for Income - Qualified
Single Family Residential Accounts Only, $/Month Up to $5.00 Water Quantity Charge (continued):

Wells, private (used for irrigation or commercial purposes when required to be metered)
Each HCF 0.218
1,000 gallons 0.290
Water drawn from a fire hydrant / Minimum per month 29.97 * Rates effective 7/1/16
*** These charges were previously charged at the Domestic service rate. ** Rates shall be adjusted annually by staff to reflect the rates in effect as per Res. No. 2015-36.

PUBLIC UTILITIES DEPARTMENT
All fees effective 07/01/2026 unless otherwise noted
MFS Amendment #590 (January 2026) 7/1/2026 12:07 PM Page 160

CITY OF FRESNO

MASTER FEE SCHEDULE
WATER RATES**
Amend # Fee Description & Unit/Time *** Current
540 Backflow Prevention, Program Fee
Per assembly/per month 2.00
Private Fire Protection Charges, $/Month
522 Private Hydrants 45.60
Fire Service Connections****
1-inch 15.70
1-1/2-inch 15.70
2-inch 15.70
2-1/2 and 3-inch 15.70
4-inch 15.70
6-inch 45.60
8-inch 98.00
10-inch 175.00
12-inch 283.00
464 Penalties
Fire hydrant, unauthorized use / first violation 500.00 Each violation after first violation 1,000.00
Fire hydrant damage repair fee
580 Excavation not required 767.00
500 Excavation required 100%
Delinquent notice
Returning travel meter after permit expiration date per day 10.00 Conditions of service work (related to Water Conservation, FMC 6-520(e)*
549 First Month with Incident Notice of Water Waste Issued Second Month with Incident 25.00
Third Month with Incident 50.00
Fourth Month with Incident 100.00
Fifth through Twelfth Month with Incident 100.00
*** Rates effective 7/1/16

2.00 +
accumulated
interest &
principal
installment
Sewer connection, deferred payment plan,
60 days delinquent
* Fines shall not be imposed upon incidents of water waste recorded by the City's water meter reading system until the passage of a Council resolution authorizing such fines. ** Rates shall be adjusted annually by staff to reflect the rates in effect as per Res.

No. 2015-36 .
**** These charges were previously a part of the Fire Protection Automatic Sprinkler Service charges.

PUBLIC UTILITIES DEPARTMENT
All fees effective 07/01/2026 unless otherwise noted
MFS Amendment #590 (January 2026) 7/1/2026 12:07 PM Page 161 Water Utility Financial Plan and Rates Study
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Appendix B: User Characteristics
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Table B-1
Actual and Projected Water Use, HCFx1000
Actual Actual Actual Actual Estimated Projected
Customer Class FY22 Act FY23 Act FY24 Act FY25 Act FY26 Est FY27 FY28 FY29 FY30 FY31 Potable Water [1,2]
Single Family Residential 25,390 24,301 24,623 25,968 26,042 25,779 25,519 25,645 25,771 25,898 Multi-Residential 8,410 8,073 7,883 8,082 8,082 8,082 8,082 8,082 8,082 8,082 Commercial 6,220 5,964 5,836 6,075 6,075 6,075 6,075 6,075 6,075 6,075 Industrial 2,558 2,620 2,339 2,108 2,108 2,108 2,108 2,108 2,108 2,108 Municipal 760 709 727 668 668 668 668 668 668 668
Schools 787 781 806 913 913 913 913 913 913 913
Total 44,125 42,448 42,214 43,813 43,887 43,625 43,364 43,490 43,617 43,743 Irrigation Water [3]
Single Family Residential 13 12 12 14 14 14 14 14 14 14 Multi-Residential 331 319 308 351 351 351 351 351 351 351 Commercial 2,002 1,866 1,913 2,112 2,112 2,112 2,112 2,112 2,112 2,112 Industrial 24 21 27 28 28 28 28 28 28 28
Municipal 1,217 1,154 1,178 1,273 1,273 1,273 1,273 1,273 1,273 1,273 Schools 1,107 1,049 1,004 1,205 1,205 1,205 1,205 1,205 1,205 1,205 Total 4,694 4,421 4,442 4,983 4,983 4,983 4,983 4,983 4,983 4,983 Total Water Use 48,819 46,869 46,656 48,796 48,870 48,607 48,347 48,473 48,600 48,726 Total Water Use, Average mgd 100 96 95 100 100 99 99 99 99 100 Summary, HCFx1000
Single Family Residential 25,390 24,301 24,623 25,968 26,042 25,779 25,519 25,645 25,771 25,898 Nonresidential 18,735 18,146 17,592 17,845 17,845 17,845 17,845 17,845 17,845 17,845 Irrigation 4,694 4,421 4,442 4,983 4,983 4,983 4,983 4,983 4,983 4,983 Total 48,819 46,869 46,656 48,796 48,870 48,607 48,347 48,473 48,600 48,726 Annual Change -1,950 -212 2,140 74 -262 -260 126 126 126 Annual Percent Change -4.0% -0.5% 4.6% 0.2% -0.54% -0.54% 0.26% 0.26% 0.26% Notes:
1 Single Family Residential potable water use for FY26 onward is based on the following assumptions:

Water conservation projections do not incorporate possible state-mandated outdoor water reductions and indoor per-capita water use limitations.

Actual Actual Actual Actual Estimated Projected
FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31
HCFx1000> 25,390 24,301 24,623 25,968
number of meters > 121,533 122,153 122,773 123,434 124,054 124,674 125,294 125,914 126,534 127,154 average monthly HCF/meter > 17.4 16.6 16.7 17.5
average monthly gpd/meter > 428 408 411 431
estimated percent conservation/meter > 5.0% -0.8% -4.7% 0.0% 1.5% 1.5% 0.0% 0.0% 0.0% projected avg. monthly HCF/meter > 17.5 17.5 17.2 17.0 17.0 17.0 17.0 projected avg. monthly gpd/meter > 430 430 424 417 417 417 417 2 Nonresidential water use for FY26 onward is based on the following estimates applied to the prior year water use.

For FY26 and onward, reduced use due to water conservation and increased use due to new accounts are expected to result in no increase in water use.

Estimated Projected
FY26 FY27 FY28 FY29 FY30 FY31
Multi-Residential 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Commercial 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Industrial 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Municipal 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Schools 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
3 Irrigation water use for FY26 onward is based on the following estimates applied to the prior year water use.

For FY26 and onward, reduced use due to water conservation and increased use due to new accounts are expected to result in no increase in water use.

Estimated Projected
FY26 FY27 FY28 FY29 FY30 FY31
Irrigation 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
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Water Utility Financial Plan and Rates Study
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Appendix C: Cash Flow
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Table C-1
Water Enterprise Cash Flow Tables
Operating Fund 4001 Adopted Projected
Revenues FY27 FY28 FY29 FY30 FY31
Operating Revenues
1 Customer User Charges 123,284,918 133,298,290 140,348,728 147,544,233 154,831,139 3 Other Charges for Services 4,009,500 4,126,700 4,247,400 4,371,700 4,499,900 4 Interest Income--Enterprise Fund 3,690,300 3,707,200 3,115,900 1,625,300 1,801,800 5 Federal Reimbursement (Build America Bonds - BABs) 1,944,100 1,843,100 1,737,700 1,628,000 1,513,500 6 Transfers From Rate Stabilization Fund 4004 2,000,000 2,000,000 1,000,000 800,000 0 Total Operating Revenues 134,928,818 144,975,290 150,449,728 155,969,233 162,646,339 Operating Fund 4001 Adopted Projected
Expenditures FY27 FY28 FY29 FY30 FY31
Operating Expenses
Employee Services 23,063,900 25,083,100 27,020,800 28,094,900 28,937,800 Pumping Power/Utilities 15,006,300 15,756,600 16,544,400 17,371,600 18,240,200 Water Supply-FWA 2,764,900 2,847,800 2,933,200 3,021,200 3,111,800 Water Supply-FID 7,600,400 8,206,600 8,452,800 8,706,400 8,967,600 Water Supply-CVP Water (BOR) 3,936,600 4,054,700 4,176,300 4,301,600 4,430,600 Specialty Chemicals (Water Treatment) 9,734,100 10,026,100 10,326,900 10,636,700 10,955,800 Other Objects 1,604,600 1,549,700 1,596,200 1,644,100 1,693,400 Supplies 6,996,100 7,206,000 7,422,200 7,644,900 7,874,200 Purchased Professional/Tech 5,044,800 5,196,100 5,352,000 5,512,600 5,678,000 Purchased Property Services 4,830,000 4,974,900 5,124,100 5,277,800 5,436,100 Other Purchased Services 365,600 376,600 387,900 399,500 411,500 Interdepartmental Charges 2,776,400 2,859,700 2,945,500 3,033,900 3,124,900 Fixed Reimbursement UB&C 2,657,000 2,767,300 2,850,300 2,935,800 3,023,900 Cost Allocation Plan Charges 2,107,600 2,170,800 2,235,900 2,303,000 2,372,100 Fixed Reimbursement Public Utilities 3,150,400 3,717,000 3,828,600 3,943,400 4,061,700 Fixed Reimbursement Fire Hydrants 1,525,400 1,571,200 1,618,300 1,666,800 1,716,800 Fleet Services Charges HIDDEN ROW 1,320,500 1,360,100 1,400,900 1,442,900 1,486,200 Fleet Services Charges 1,320,500 1,453,800 1,749,600 1,960,800 2,026,600 Fleet Fuel Charges 504,500 519,600 535,200 551,300 567,800 All Other Operating and Maintenance
Total Operating Expenses (Ongoing) 94,989,100 100,337,600 105,100,200 109,006,300 112,630,800 Trustee Fees 4,500 4,500 4,500 4,500 4,500
Total Ongoing Expenditures 94,993,600 100,342,100 105,104,700 109,010,800 112,635,300 Table C-1
Water Enterprise Cash Flow Tables
Adopted Projected
Parity Debt Service Coverage FY27 FY28 FY29 FY30 FY31
Net Revenue 39,935,218 44,633,190 45,345,028 46,958,433 50,011,039 Net Revenue Available for Prior Debt Service 39,935,218 44,633,190 45,345,028 46,958,433 50,011,039 Less: BABs (also applied as Debt Service reduction) (1,944,100) (1,843,100) (1,737,700) (1,628,000) (1,513,500) Subtotal 37,991,118 42,790,090 43,607,328 45,330,433 48,497,539 Parity Debt Service:

Parity State Loans 3,035,000 3,035,000 3,035,000 3,035,000 3,035,000 2010 Series A Bonds 9,994,513 9,895,913 9,789,963 9,681,338 9,564,388 SDWSRF Loan (SE SWTF) 7,444,000 7,444,000 7,444,000 7,444,000 7,444,000 SRF FK/SESWTF Pipeline Loan 901,100 901,100 901,100 901,100 901,100 SRF Kings River Pipeline Loan 2,434,100 2,434,100 2,434,100 2,434,100 2,434,100 SRF Regional Transmission Mains 2,839,700 2,839,700 2,839,700 2,839,700 2,839,700 SRF NESWTF Tank 606,200 606,200 606,200 606,200 606,200 Future Bond Debt
Debt Issue FY28 0 0 0
Debt Issue FY29 0 0 0
Debt Issue FY30 0 3,494,167
Debt Issue FY31 0
Subtotal Future Bond Debt 0 0 0 0 3,494,167
Total Parity Debt Service 27,254,613 27,156,013 27,050,063 26,941,438 30,318,655 Less: BABs Subsidy (also not included in Net Revenue for Coverage Calculations)(1,944,100) (1,843,100) (1,737,700) (1,628,000) (1,513,500) Total Parity Debt Service less BAB subsidy 25,310,513 25,312,913 25,312,363 25,313,438 28,805,155 Parity Debt Service Coverage by Net Revenues
Available for Parity Debt Service

1.50x 1.69x 1.72x 1.79x 1.68x
Adopted Projected
Projected Operating Fund Balance FY27 FY28 FY29 FY30 FY31 Beginning Fund Balance 106,997,952 105,919,457 89,026,434 46,436,299 51,480,494 Operating Revenues 134,928,818 144,975,290 150,449,728 155,969,233 162,646,339 Non-Operating Revenues and Transfers
Transfers (To)/From Operating Reserve Fund 4016 0 2,300,000 2,300,000 2,300,000 1,800,000 Transfers (To)/From SRF Reserve (1,379,300) (1,379,300) (1,379,300) (1,379,300) (1,379,300) Transfers (To)/From Vehicle Replacement Reserve Fund 4014 (732,700) (1,721,200) (1,917,100) (2,392,100) (2,974,700) Transfers (To)/From Recycled Water Distrib Sys O&M Fund 4007 (25,000) (25,000) (30,000) (30,000) Transfers (To)/From Capital Reserve Fund 4017 0 8,500,000 1,000,000 1,000,000 800,000 Transfers (To)/From Capacity Fee Fund 4011 7,034,600 6,962,700 2,103,400 2,492,800 20,107,700 Transfers (To)/From Connection Chg Fund 4002 2,544,400 2,620,700 2,699,400 2,780,300 2,863,700 Transfers (To)/From SE Fresno Pjct Fund 4060 1,829,800 1,018,200 900,000 0 0 Transfers (To)/From UGM Wellhead Fund 4063 144,800 61,700 0 0 0 Transfers (To)/From TCP Settlement Fund 4010 12,177,100 25,732,400 80,322,300 50,000,000 22,000,000 Capital Transfers (To)/From DPU O&M Facility Fund 5253 for Capital Expenditures Cost Share Balance Transfer - Project Cost Incld in Total CIP Expense
(4,374,900) (321,300) 0 0 0
Capital Transfers (To)/From DPU O&M Facility Fund 5253 for Capital Expenditures Cost Share Balance Transfer - Project Cost Incld in Total CIP Expense
4,565,500 294,600 0 0 0
Proceeds from Sale of Water Yard 0 0 0 0 0
Transfer out to Solid Waste Mgt for Fresno Bee Property Acq/CIP 0 0 0 0 0 Solid Waste Loan Reimbursement for Fresno Bee Bldg 0 0 0 0 0 Transfer out--PFAS Litigation 0 0 0 0 0
Transfer to DPU O&M Facility Fund for O&M costs (359,000) (369,800) (380,900) (392,300) (404,100) State Grant Leaky Acres 504,900 0 0 0 0
Federal Grant EPA Proactive Polyethylene Pipe Replacement 3,791,100 0 0 0 0 GO-BIZ 25,600 0 0 0 0
Federal Grant Wellhead Treatment For 345-1 787,900 152,400 1,000 0 0 Bond Disbursements 0 0 0 50,000,000 0
Total Nonoperating Revenues and Transfers 26,559,800 43,826,100 85,623,800 104,379,400 42,783,300 Expenditures
Operating 94,993,600 100,342,100 105,104,700 109,010,800 112,635,300 Debt Service and Other Misc. Expenditures (CVP M&I Deficit Payment) 27,254,613 27,156,013 27,050,063 26,941,438 30,318,655 BABs Subsidy 1,944,100 1,843,100 1,737,700 1,628,000 1,513,500 Capital 42,263,000 80,039,400 148,246,600 120,980,200 105,697,900 Total Expenditures 162,567,113 205,694,413 278,663,663 255,304,438 247,138,355 Ending Fund Balance 105,919,457 89,026,434 46,436,299 51,480,494 9,771,778 Table C-1
Water Enterprise Cash Flow Tables
Adopted Projected
4000-4016 - Water O&M Reserve Fund FY27 FY28 FY29 FY30 FY31 Beginning Balance 31,578,600 32,646,900 31,389,500 30,088,100 28,741,200 Transfers (To)/From Operating 4001 0 (2,300,000) (2,300,000) (2,300,000) (1,800,000) Transfers (To) Rate Stabilization 0 0 0 0 0
Interest of Fund Balance 1,168,300 1,142,600 1,098,600 1,053,100 1,005,900 Total Revenue 1,168,300 (1,157,400) (1,201,400) (1,246,900) (794,100) Expenditures
Purchased Property Services 100,000 100,000 100,000 100,000 100,000 Total Expenditures 100,000 100,000 100,000 100,000 100,000 Ending Balance 32,646,900 31,389,500 30,088,100 28,741,200 27,847,100 Target Balance (120 days of Operating Expenses) 31,230,800 32,989,200 34,555,000 35,839,200 37,030,800 Evaluation of Days of Cash
Operating Expenditures 94,993,600 100,342,100 105,104,700 109,010,800 112,635,300 Evaluation of Fund Balances
Operating Fund 4001 105,919,457 89,026,434 46,436,299 51,480,494 9,771,778 Target Balance 30 days of Operating Expenses 7,810,000 8,250,000 8,640,000 8,960,000 9,260,000 Calculated Days of Operating Expenditures 407 324 161 172 32 Operating Reserve Fund 4016 32,646,900 31,389,500 30,088,100 28,741,200 27,847,100 Target Balance 90 days of Operating Expenses 23,420,000 24,740,000 25,920,000 26,880,000 27,770,000 Calculated Days of Operating Expenditures 125 114 104 96 90 Total Operating Reserves 138,566,357 120,415,934 76,524,399 80,221,694 37,618,878 Calculated Days of Operating Expenditures 532 438 266 269 122 Target Days of Operating Expenditures 120 120 120 120 120 Adopted Projected
4000-4004 - Water Rate Stabilization Reserve Fund FY27 FY28 FY29 FY30 FY31 Beginning Balance 8,100,200 6,399,900 4,623,900 3,785,700 3,118,200 Transfers (To)/From Operating 4001 (2,000,000) (2,000,000) (1,000,000) (800,000) 0 Interest of Fund Balance 299,700 224,000 161,800 132,500 109,100 Ending Balance 6,399,900 4,623,900 3,785,700 3,118,200 3,227,300 Target 2% of Rate Revenue 2,466,000 2,666,000 2,807,000 2,951,000 3,097,000 Adopted Projected
4000-4017 - Water Capital Reserve Fund FY27 FY28 FY29 FY30 FY31 Beginning Balance 15,488,700 16,024,700 8,085,600 7,368,600 6,626,500 Transfers (To)/From Operating 4001 0 (8,500,000) (1,000,000) (1,000,000) (800,000) Interest of Fund Balance 536,000 560,900 283,000 257,900 231,900 Interdepartmental Charges
Ending Balance 16,024,700 8,085,600 7,368,600 6,626,500 6,058,400 Target Balance 2% of the 5-year CIP budget 6,139,906 6,139,906 6,139,906 6,139,906 6,139,906 Adopted Projected
4000-4014 - Water Fleet Replacement Fund FY27 FY28 FY29 FY30 FY31 Beginning Balance 5,190,400 5,620,000 6,816,700 8,055,300 9,337,200 Transfers (To)/From Operating 4001 732,700 1,721,200 1,917,100 2,392,100 2,974,700 Interest of Fund Balance 192,000 196,700 238,600 281,900 326,800 Interdepartmental Charges (495,100) (721,200) (917,100) (1,392,100) (1,974,700) Ending Balance 5,620,000 6,816,700 8,055,300 9,337,200 10,664,000 Adopted Projected
4000-4007 - Recycled Water Distrib Sys O&M FY27 FY28 FY29 FY30 FY31 Beginning Balance 323,800 200 9,160 11,791 12,804
Revenue
Other Revenue 12,000 12,360 12,731 13,113 13,506
Misc. Revenue 0 0 300 400 500
Transfers In from Wastewater 0 200,000 200,000 200,000 200,000 Transfers In from Water 0 25,000 25,000 30,000 30,000
Total Revenue 12,000 237,360 238,031 243,513 244,006
Expenditures
Employee Services 139,200 158,400 163,200 168,100 173,100 Purchased Prof and Tech 16,700 0 0 0 0
Purchased Property Services 84,300 33,000 34,000 35,000 36,100 Supplies 93,400 35,000 36,100 37,200 38,300
Other Objects 2,000 0 0 0
Interdepartmental Charges 0 2,000 2,100 2,200 2,300
Total Expenditures 335,600 228,400 235,400 242,500 249,800 Ending Balance 200 9,160 11,791 12,804 7,010
Table C-1
Water Enterprise Cash Flow Tables
Adopted Projected
4000-4011 - Water Capacity Fee Fund FY27 FY28 FY29 FY30 FY31 Beginning Balance 24,661,800 24,385,500 20,830,000 22,086,000 23,075,400 Revenue
Charges 5,715,900 2,553,700 2,630,300 2,709,200 2,790,500 Interest of Fund Balance 1,042,400 853,500 729,100 773,000 807,600 Total Revenue 6,758,300 3,407,200 3,359,400 3,482,200 3,598,100 Expenditures
Next Five Years Forecast CIP
Water Well Evaluation and Development 515,600 400 0 0 0 Water Well Construction 6,199,800 2,185,700 1,132,900 0 0 Surface Water Treatment Plant 0 0 0 2,027,500 8,110,100 City Recharge Basins 314,100 4,776,600 401,700 0 0
SE/SWTP Transmission Pipelines 0 0 568,800 465,300 11,997,600 Transmission Grid Mains 5,100 0 0 0 0
Total Expenditures 7,034,600 6,962,700 2,103,400 2,492,800 20,107,700 Ending Balance 24,385,500 20,830,000 22,086,000 23,075,400 6,565,800 Adopted Projected
4000-4002 - Water Connection Charge Fund FY27 FY28 FY29 FY30 FY31 Beginning Balance 4,884,800 4,566,000 4,211,300 3,828,700 3,416,900 Revenue
Charges 2,044,900 2,106,200 2,169,400 2,234,500 2,301,500 Interest of Fund Balance 180,700 159,800 147,400 134,000 119,600 Total Revenue 2,225,600 2,266,000 2,316,800 2,368,500 2,421,100 Expenditures
Next Five Years Forecast CIP
Serv/Meter Install 2" or Less 1,244,000 1,281,400 1,319,800 1,359,400 1,400,100 Serv/Meter Install Above 2" 551,400 567,800 584,900 602,400 620,500 Combined/multiple installation 749,000 771,500 794,700 818,500 843,100 Total Expenditures 2,544,400 2,620,700 2,699,400 2,780,300 2,863,700 Ending Balance 4,566,000 4,211,300 3,828,700 3,416,900 2,974,300

WATER FUND DESCRIPTIONS
4000‑4001 – The Water Operating Fund is primarily supported by customer user fees collected through water rates, along with other miscellaneous revenues. This fund is used to cover operating and maintenance (O&M) expenses for water supply, treatment, storage, recharge, and distribution facilities, as well as to administer the water conservation program. The fund also supports debt service, pay‑as‑you‑go capital projects, and the maintenance of required reserve funds. 4000-4016 - Water Operating Reserve Fund revenue source is a transfer from Water Operating Fund (4000-4001) as needed. The appropriate use of funds will be in response to revenue shortfall or disruption conditions or unanticipated operations expenses. 4000-4004 - Rate Stabilization Reserve Fund revenue source is a transfer from Water Operating Fund (4000-4001) as needed to meet reserve target. The fund will be used to maintain a stable balance in the reserve to mitigate future rate increases and be consistent with bond covenants when required.
4000-4017 - Water Capital Improvement Reserve Fund revenue source is a transfer from Water Operating Fund (4000-4001), Funds are used for unanticipated capital projects or emergency capital needs.
4000-4014 - Water Fleet Replacement Fund restricted revenue source is annual transfer from Water Operating Fund (4000-4001). The appropriate use of funds is to supplement Fleet Division replacement/depreciation collected for vehicle shortfall where cost exceeds the amount collected from Fleet through their accumulated amortization.
4000-4002 - Water Connection Fee Fund restricted revenue from frontage charges and service connection charges as required under FMC Section 6-507. The appropriate use of funds is to be expended for acquisition, construction, and reconstruction of the city water system including payment of interest and principal on bonds issued for that purpose. 4000-4007 – Recycle Water Distribution System Fund restricted revenue source is a transfer from Wastewater Operating Fund (4500-4515). The appropriate use of funds is for the maintenance and operation of the City of Fresno recycled water distribution system. Recycle water users charges are a separate fee that is collected under Wastewater fund 4500-4515. 4500-4515 - Recycled Water Fund restricted revenue source is recycled water user charges. The revenues are used for operating and maintenance costs of the recycled water distribution system, which is the responsibility of the Water Division. Recycled water revenue is deposited in this fund, and annual transfers are made as needed to Water Division Fund 4000-4007.

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Water Utility Financial Plan and Rates Study
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Use of contents on this sheet is subject to the limitations specified at the end of this document.

Appendix D: Capital Improvement Program (CIP)
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Table D-1
Capital Improvement Projects
Projected FY27 - FY31
Project_ID Fund Subprogram_Description FY27 FY28 FY29 FY30 FY31 Total WC00001 ENT Fire Hydrant Installations 555,500 2,810,900 4,247,600 4,206,000 3,214,800 15,034,800 WC00004 ENT Water Main Extensions 652,100 376,100 515,300 510,300 390,000 2,443,800 WC00005 ENT Water Main Renewal 1,160,700 17,669,800 31,359,400 24,702,000 22,690,600 97,582,500 WC00015 ENT Water Well Evaluation and Development 181,500 713,200 1,376,800 1,389,000 1,380,100 5,040,600 WC00016 ENT Water Well Construction 756,500 1,150,300 5,005,200 9,113,700 8,804,100 24,829,800 WC00017 ENT Well Rehabilitation 544,100 2,077,900 3,677,600 4,502,600 4,473,800 15,276,000 WC00018 ENT Pump Rehabilitation 759,700 1,076,600 1,669,800 1,697,100 1,584,100 6,787,300 WC00020 ENT Granular Activated Carbon 157,000 0 0 0 0 157,000 WC00021 ENT Surface Water Treatment Plant 750,700 6,786,500 3,429,300 5,732,800 5,642,700 22,342,000 WC00022 ENT Leaky Acres 0 66,900 101,100 100,100 76,500 344,600 WC00023 ENT Water Telemetry System 266,600 3,242,400 4,504,400 5,634,700 4,485,400 18,133,500 WC00024 ENT Water Yard-Expansion/Improvements 52,300 66,200 100,100 99,100 98,500 416,200 WC00027 ENT Inventory - Materials 104,700 132,400 200,100 198,200 196,900 832,300 WC00032 ENT Booster Pump 184,300 0 0 0 0 184,300
WC00033 ENT Recharge Facilities-Basins 0 609,700 296,300 292,800 33,800 1,232,600 WC00050 ENT City Recharge Basins 163,100 0 0 0 0 163,100 WC00051 ENT Metro Resources Plan Update 297,300 1,771,600 192,800 0 0 2,261,700 WC00053 ENT EMERGENCY GENERATOR SETS 198,700 0 0 0 0 198,700 WC00057 ENT SE FRSNO SURFACE WTR TREATMNT 0 0 408,200 2,554,600 3,201,900 6,164,700 WC00074 ENT Water Facilities Security Impr 749,100 1,811,100 1,620,800 1,379,200 1,259,800 6,820,000 WC00075 ENT System-wide Leak Detection 0 194,400 0 308,600 0 503,000 WC00083 ENT Program Management 71,600 90,600 136,900 135,500 103,600 538,200 WC00089 ENT L-T Hydraulic & WQ Modeling 66,500 0 0 0 0 66,500 WC00095 ENT Polyethylene Replacement 785,200 1,986,500 3,001,900 2,972,500 2,953,600 11,699,700 WC00096 ENT Well Site Improvements 590,700 536,900 376,900 178,300 136,300 1,819,100 UC00003 ENT DPU O&M Building Fleet Paving 0 0 0 0 0 0
UC00005 ENT DPU O&M Building MASTER PLAN 0 0 0 0 0 0
UC00006 ENT DPU O&M Building SITE IMPRVMNT 0 0 0 0 0 0
UC00007 ENT DPU OM FACILITY UST REMOVAL 0 0 0 0 0 0
UC00008 ENT DPU O&M Building DEMOLITION 4,374,900 0 0 0 0 4,374,900 UC00009 ENT DPU PMIS 0 126,200 0 0 0 126,200
UC00010 ENT DPU FACILITIES STUDY 0 195,100 0 0 0 195,100 WC00095 GRT Polyethylene Replacement 3,791,100 0 0 0 0 3,791,100 WM00009 GRT GO-BIZ 25,600 0 0 0 0 25,600
WC00005 SE_F Water Main Renewal 0
WC00021 SE_F Surface Water Treatment Plant 474,500 17,200 0 0 0 491,700 WC00057 SE_F SE Surface Water Treatment Plant 1,355,300 1,001,000 900,000 0 0 3,256,300 WC00020 TCP Treatment/Construction CIP Projects 12,177,100 25,732,400 80,322,300 50,000,000 22,000,000 190,231,800 WC00022 GRT Leaky Acres 504,900 0 0 0 0 504,900
WC00016 UGM Water Well Construction 0
WC00020 UGM Granular Activated Carbon 144,800 61,700 0 0 0 206,500 WC00015 CAP Water Well Evaluation and Development 515,600 400 0 0 0 516,000 WC00016 CAP Water Well Construction 6,199,800 2,185,700 1,132,900 0 0 9,518,400 WC00021 CAP Surface Water Treatment Plant 0 0 0 2,027,500 8,110,100 10,137,600 WC00050 CAP City Recharge Basins 314,100 4,776,600 401,700 0 5,492,400 WC00065 CAP SE/SWTP Transmission Pipelines 0 0 568,800 465,300 11,997,600 13,031,700 WC00085 CAP Transmission Grid Mains 5,100 0 0 0 5,100
WC00002 CON Serv/Meter Install 2" or Less 1,244,000 1,281,400 1,319,800 1,359,400 1,400,100 6,604,700 WC00006 CON Serv/Meter Install Above 2" 551,400 567,800 584,900 602,400 620,500 2,927,000 WC00014 CON Combined/multiple installation 749,000 771,500 794,700 818,500 843,100 3,976,800 WC00020 GRT Granular Activated Carbon 787,900 152,400 1,000 0 0 941,300 49 Totals 42,263,000 80,039,400 148,246,600 120,980,200 105,697,900 497,227,100 Legend:

ENT: Enterprise Operating Fund 4001; DPU - Department of Public Utilities; GRT - Grant; SE_F: Southeast Fresno; TCP: Trichlorophosphate UGM: Urban Growth Management; CAP - Capacity
Table D-1
Capital Improvement Projects
Source of Funds
FY27 - FY31
Grants FY27 FY28 FY29 FY30 FY31 Total
Grants GRT Leaky Acres 504,900 0 0 0 0 504,900
Grants GRT Polyethylene Replacement 3,791,100 0 0 0 0 3,791,100 Grants GRT GO-BIZ 25,600 0 0 0 0 25,600
Grants GRT Granular Activated Carbon 787,900 152,400 1,000 0 0 941,300 Total 5,109,500 152,400 1,000 0 0 5,262,900
Capital Enterprise Funds Projected FY27 - FY31
Capacity Fee FY27 FY28 FY29 FY30 FY31 Total
WC00015 CAP Water Well Evaluation and Development 515,600 400 0 0 0 516,000 WC00016 CAP Water Well Construction 6,199,800 2,185,700 1,132,900 0 0 9,518,400 WC00021 CAP Surface Water Treatment Plant 0 0 0 2,027,500 8,110,100 10,137,600 WC00050 CAP City Recharge Basins 314,100 4,776,600 401,700 0 0 5,492,400 WC00065 CAP SE/SWTP Transmission Pipelines 0 0 568,800 465,300 11,997,600 13,031,700 WC00085 CAP Transmission Grid Mains 5,100 0 0 0 0 5,100 Total 7,034,600 6,962,700 2,103,400 2,492,800 20,107,700 38,701,200 Conn Charge
WC00002 CON Serv/Meter Install 2" or Less 1,244,000 1,281,400 1,319,800 1,359,400 1,400,100 6,604,700 WC00006 CON Serv/Meter Install Above 2" 551,400 567,800 584,900 602,400 620,500 2,927,000 WC00014 CON Combined/multiple installation 749,000 771,500 794,700 818,500 843,100 3,976,800 Total 2,544,400 2,620,700 2,699,400 2,780,300 2,863,700 13,508,500 SE Fresno
WC00021 SE_F Surface Water Treatment Plant 474,500 17,200 0 0 0 491,700 WC00057 SE_F SE Surface Water Treatment Plant 1,355,300 1,001,000 900,000 0 0 3,256,300 Total 1,829,800 1,018,200 900,000 0 0 3,748,000
UGM Wellhead
WC00020 UGM Granular Activated Carbon 144,800 61,700 0 0 0 206,500 Total 144,800 61,700 0 0 0 206,500
TCP
WC00020 TCP Treatment/Construction CIP Projects 12,177,100 25,732,400 80,322,300 50,000,000 22,000,000 190,231,800 DPU
WC00091 DPU DPU O&M Facility-Water 4,374,900 321,300 0 0 0 4,696,200 Total Capital Enterprise Funds 23,730,700 36,395,700 86,025,100 55,273,100 44,971,400 246,396,000 Bond Disbursements 0 0 0 50,000,000 0 50,000,000
Grants 5,109,500 152,400 1,000 0 0 5,262,900
Capital Reserve Fund 4017 0 8,500,000 1,000,000 1,000,000 800,000 11,300,000 Use of Fund Balance or Revenue from Rates 13,422,800 34,991,300 61,220,500 14,707,100 59,926,500 184,268,200 FUNDING SUMMARY FY27 FY28 FY29 FY30 FY31 FY27 - FY31 %
Operating 13,422,800 34,991,300 61,220,500 14,707,100 59,926,500 184,268,200 37.1% Bond Disbursements 0 0 0 50,000,000 0 50,000,000 10.1%
Capital Reserve Fund 0 8,500,000 1,000,000 1,000,000 800,000 11,300,000 2.3% Capacity Fee 7,034,600 6,962,700 2,103,400 2,492,800 20,107,700 38,701,200 7.8% Connection Charge 2,544,400 2,620,700 2,699,400 2,780,300 2,863,700 13,508,500 2.7% SE Fresno 1,829,800 1,018,200 900,000 0 0 3,748,000 0.8% UGM (Urban Growth Management) Wellhead 144,800 61,700 0 0 0 206,500 0.0% TCP (Trichlorophosphate) Remediation Settlement 12,177,100 25,732,400 80,322,300 50,000,000 22,000,000 190,231,800 38.3% Federal and State Grants 5,109,500 152,400 1,000 0 0 5,262,900 1.1% Total 42,263,000 80,039,400 148,246,600 120,980,200 105,697,900 497,227,100 100%

MEMORANDUM
DATE: September 22, 2026
TO: PAUL AMICO, PE, Director
Department of Public Utilities
FROM: AHMED ALY, PE, Assistant Director
Department of Public Utilities – Utilities Planning & Engineering SUBJECT: FY 2027-2031 CAPITAL IMPROVEMENT PROGRAM FOR WATER

EXECUTIVE SUMMARY
The Department of Public Utilities (DPU) operates and maintains the City’s water production and distribution system which includes approximately 260 groundwater wells, 3 surface water treatment facilities, dedicated storage and booster infrastructure, and over 1,900 miles of transmission and distribution pipelines.

In August of 2019, the City completed a Renewal and Replacement (R&R) study for the water infrastructure. The study identified major needs in the renewal and replacement of water distribution mains and the rehabilitation, construction and treatment of water production wells.

The five-year Water Capital Budget for FY2027-2031 (five fiscal years) incorporates the findings of the 2019 report as well as other operational needs identified since the report was completed such as the replacement of older cast iron pipes within higher pressure areas of the system.

September 22, 2026 Page 2 of 10
Table 1 – Five-Year All Funds
The projected capital expenditures for FY2027-FY2031 are approximately $497.2 million across all funding sources. Expenditures for water main pipe renewal and extension, and water well and pump rehabilitation and construction are approximately $419.7 million (85%) of total expenditures.

Table 2 – Five-Year Rate Funded
Capital expenditures funded exclusively by water rate revenues are approximately $245.6 million. Expenditures for water main pipe renewal and extension and water well projects are approximately $187.9 million (77%) of total rate funded capital expenditures. Table 2 highlights the major categories that contribute to the capital program. The ‘All Other’ category is expanded in Table 3 below. A list of the rate funded capital projects is shown in Appendix A.

CAPITAL BUDGETING ASSUMPTIONS
Capital project budgets are based on construction costs estimated using various sources, including past construction projects, consultant estimates during the pre-design phases, or original asset construction costs escalated to present-day value. A 20% estimating contingency is then applied to the base construction costs to account for project details that are undefined at the time of programming but are included in the scope and will be more specifically defined during the design phase. The base construction cost and the estimating contingency together establish the project construction budget.

September 22, 2026 Page 3 of 10
Soft costs for project management, engineering design, and construction management are calculated as a percentage of the project construction budget for the different work activities performed to complete the project. The percentages currently used to calculate the soft cost budgets were established using generally accepted industry practice for capital program management. Engineering and project administrative costs account for an additional 39% to the budget to cover Professional Consultant Services, Project Management, Construction Management, Surveying, Permitting fees, and Legal services.

A final 7% is added to the budget for Construction Material purchases and City Force Construction services. The total project budget is the sum of the construction and soft costs budgets. The following table describes the different soft costs and percentage of construction used to calculate the budgets.

Finally, a 5% construction contingency is added to the budget of the subsequent construction year to account for field changes during construction due to modifications to the project scope, unforeseen site conditions, or regulatory changes that may result in construction change orders.

Estimating Contingency – 20% Budget for costs defined during design to account for project details that are undefined
at the time of programming
Engineering and Administrative
Costs – 39%
• Professional Consultant Services – 14%
• Project Management – 12%
• Construction Management – 8%
• Surveying – 2%
• Legal services – 2%
• Permitting fees – 1%
Construction related expenses –
7%
• City Force Construction services – 5%
• Construction Material purchases – 2%
Construction Contingency – 5% Budget allocated to projects in subsequent construction year for change orders
Note: Capital project budgets assume that consultant services, engineering services during construction (ESDC), and construction management are contracted professional services.

September 22, 2026 Page 4 of 10

RATE FUNDED CAPITAL PROGRAM
Table 3 – Five-Year Rate Funded by Category
Water capital projects are grouped into nine categories of infrastructure scope (Table 3) and 28 sub-categories referred to as project identification numbers (Table 4). Two categories are for pipeline projects including renewal and replacement of existing water mains and the extension of existing mains. Two categories are for water well projects for well and pump rehabilitation and new well construction. There are separate categories for surface water treatment plant projects, groundwater recharge basins, water telemetry, and water utility planning projects. The final category named “All Other” is a general category for miscellaneous projects such as water yard improvements, material purchases for inventory, and the Water Divisions share of Admin projects.

The 2019 R&R study prioritized approximately 17% (299.3 miles) of the water distribution system into 5 project groups for capital budgeting. The most critical scope focused on the replacement of DR-25 PVC pipe within the system which has become associated with high rates of catastrophic failures. Of the approximately 15-miles of DR25 identified in the 2019 R&R study, 10-miles are programmed for renewal in the 5-year capital program. R&R projects represent 51% of the rate funded capital expenditures to address this need.

Well and pump rehabilitation and well construction together comprise 25% of the rate funded capital program. The R&R study developed a prioritization approach that ranked the most valuable wells for the reliability of the water system and identified the most pressing needs in well rehabilitation, well construction, well treatment and other site improvements such as emergency generators and security improvements.

September 22, 2026 Page 5 of 10
Table 4 – Five-Year Rate Funded by Project ID
September 22, 2026 Page 6 of 10

DESCRIPTION OF CAPITAL PROJECTS
Water Main Renewal (WC00005): There are 1,900 miles of water mains throughout the City’s water service area, 180 miles are past the useful life, and another 50 miles are within 10 years of the end of useful life. The FY 2027 budget for this project category includes funding for the construction phases of four previously encumbered pipeline projects, as well as for the design of six additional pipeline projects. The total FY 2027 budget for water main replacement is $1.2 million and the total budget between FY 2027 and FY 2031 is $97.6 million.

Water Well Construction (WC00015 and WC00016): New municipal water wells are needed in existing service areas to replace wells that have reached the end of useful life and may also be required for new developments. The capital program separates these new wells by funding sources with wells for new developments being funded by capacity fees and replacement wells being funded by enterprise funds. Well drilling and site improvement design and construction are ongoing at 5 well sites throughout the water service area for a total FY 2027 budget of $938,000 and a total five-year budget of $29.9 million from FY 2027 through FY 2031.

Water Well & Pump Rehabilitation (WC00017 and WC00018): There are 265 municipal water production wells throughout the City’s water service area that need periodic rehabilitation. Rehabilitation of water wells is required when production output is diminished due to mineral build-up on the well casing and in the gravel pack.

Rehabilitation also includes redevelopment to reduce sand production, (i.e. installation of well screens to prevent sand intrusion in older open bottom wells), repairs to failed casings and chemical treatments to reestablish production, and replacement of aging pumps, motors, and column assemblies to improve overall pump efficiencies. The total FY 2027 budget is $1.3 million, and the total five-year budget is $22.1 million from FY 2027 through FY 2031.

Water Telemetry System (WC00023 and WC00075): The water telemetry system (also referred to as a Supervisory Control and Data Acquisition (SCADA) System) is a wireless communication system that allows staff to remotely monitor and control the water production system and measure consumption. Replacement and upgrade of SCADA system control components and software will increase operational efficiencies and reduce power and maintenance costs. The FY 2027 capital budget includes a master plan that will identify priorities and phasing of system upgrades over the next five-years. The total FY 2027 budget for water telemetry projects is $267,000 and the total budgeted amount between FY 2027 and FY 2031 is $18.6 million.

Polyethylene (PE) Replacement (WC00095): City water services made of polyethylene (PE) material have experienced higher than normal rates of failures and leaks. The demand for repairing or replacing these premature failures has put a strain on existing Water Division O&M resources and frequently requires overtime to get customers back in service. This project uses contractors to replace failing PE water services and allows Water Division staff to resume preventative maintenance and repair activities. All replacement components will be made of copper, which is more durable. Over the past 5 years, the City has averaged 620 service replacements per year. Historically, the PE September 22, 2026 Page 7 of 10
water service replacements have been ‘reactive replacements’, where services have been replaced on an as-needed basis when the service fails. The City also recognized that there was a benefit to proactively replacing PE services before they leak. To this end, the City received a $3.8 million grant to proactively target specific areas for PE water service replacements, which is not included in the rate funded capital program. In FY 2027, a total of $785,000 is budgeted for rate funded PE replacements. The five-year capital plan includes a total of $11.7 million in rate funded PE replacements from FY 2027 through FY 2031.

Fire Hydrant Replacement (WC00001): Fire hydrants are critical components of water infrastructure. Public Utilities will proactively replace 285 hydrants (on average) per year to comply with current City Standards with a total target of 1,425 hydrants over the 5-year program. Replacements will be complete assembly swaps, including hydrant, base valve, and lateral gate valve to meet current City standards. The FY 2027 capital program budget is $555,000, with a total program budget of $15.0 million from FY 2027 to FY 2031.

Granular Activated Carbon (GAC) Treatment (WC00020): GAC is used to treat groundwater for naturally occurring and manmade contaminants that may be found in drinking water supplies. The capital program budget includes the design and construction of 2 GAC wellhead treatment systems at municipal water well sites throughout the City.

The improvements range from full GAC system construction to re-piping and treatment modifications. This will assist the City in ensuring customers receive adequate levels of service and that water quality meets all state and federal requirements. These projects are funded through a variety of funding sources. The rate funded program is approximately $157,000. The total budgeted amount between FY 2027 through FY 2031 is $157,000.

Recharge Basins (WC00022, WC00033, and WC00050): Groundwater recharge basins utilize surface water to replenish the underground aquifer. The Leaky Acres Groundwater Recharge Facility was commissioned in the early 1970s. In FY 2026, $4.6 million in infrastructure improvements will be constructed using grant funding to restore groundwater recharge rates. The FY 2027 capital program includes a feasibility study for a future recharge facility, and continued investment in developing the Northwest Fresno Recharge Basin. The majority of these capital expenditures come from grant funding.

Rate funded capital expenditures are $163,000 for FY 2027 and $1.7 million for the period between FY2027 and FY 2031.

Northeast Surface Water Treatment Facility (NESWTF) Improvements (WC00021):

The NESWTF is the City’s first surface water treatment facility, and it has been in operation since 2004. Several operational improvements projects are needed to enhance the water treatment processes, meet regulatory requirements, and repair aging infrastructure. Projects include filter valve replacements, chemical feed system upgrades, refurbishing treated water pumps, upgrading pretreatment processes, and completing other site improvements projects. The FY 2027 capital budget is $750,700 and the total budget between FY 2027 and FY 2031 is $22.3 million.

September 22, 2026 Page 8 of 10
Facilities Security Improvements (WC00074): The security and safety at Public Utilities facilities is a priority for the Department. To enhance security and safety at Public Utilities facilities, the FY 2027 capital budget includes studies for standardizing security access equipment and perimeter security improvements. The FY 2027 budget is $749,100 and the total budget between FY 2027 and FY 2031 is $6.8 million.

Public Utilities Administration and Master Planning Capital Projects The FY 2027 capital program for Public Utilities Administration includes the following capital projects:

Former Fresno Bee Building Demolition (UC00008): In April 2021, Public Utilities purchased the property formerly occupied by the local daily newspaper, the Fresno Bee.

The Administration, Water, and Solid Waste Management Divisions were intended to be housed at this facility, with the Wastewater Management Division utilizing it for fleet management only. Since then, the facility has experienced a series of significant system failures, including HVAC outages, persistent water leaks, and other issues severe enough to require a relocation of staff from the facility. The FY 2027 capital budget includes $8.1 million to demolish the existing building onsite, funded by the three operating utilities with a cost share split of 54.1%, 30.7%, and 15.2% between Water, Solid Waste, and Wastewater, respectively. The water rate funded capital expense for FY 2027 is $4.4 million.

Utility Planning (WC00051 and WC00083): Utility planning is a foundational engineering function that utilizes the City’s asset management programs and hydraulic modeling software to analyze and prioritize the City’s infrastructure improvements needed for renewal and replacement and for increased water capacity. Planning documents provide the technical basis and the roadmap for the implementation of the capital program. The major utility planning projects for FY 2027 include the Water Renewal and Replacement Plan ($186,400) and the SCADA Master Plan ($52,300). The FY 2027 budget for utility planning projects totals $368,900 and $2.8 million between FY 2027 and FY 2031.

September 22, 2026 Page 9 of 10
APPENDIX “A” – DETAILED PROJECT LIST
September 22, 2026 Page 10 of 10
Water Utility Financial Plan and Rates Study
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Use of contents on this sheet is subject to the limitations specified at the end of this document.

Appendix E: Rate Development
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Table E-1
Uniform Water Quantity Charge
All Revenue Values in $thousands FY27 FY28 FY29 FY30 FY31 Revenue Allocation
(in $ thousands) from Table 4-4 $89,847 $94,519 $99,387 $104,505 $109,835 Annual Water Use
(in HCF x 1,000)
Single Family from Table 2-1 25,779 25,519 25,645 25,771 25,898 Nonresidential from Table 2-1 17,845 17,845 17,845 17,845 17,845 Irrigation from Table 2-1 4,983 4,983 4,983 4,983 4,983 Total 48,607 48,347 48,473 48,600 48,726
Rate, $/HCF
Revenue Allocation from above $89,847 $94,519 $99,387 $104,505 $109,835 Annual Water Use from above $48,607 $48,347 $48,473 $48,600 $48,726 (rounded up to nearest $0.01) current > $1.74 $1.85 $1.96 $2.06 $2.16 $2.26 Table E-2
Private Wells Water Quantity Charge
Costs and Revenues (in $ thousands) FY27 FY28 FY29 FY30 FY31 Source of Supply Costs
Source of Supply-FWA, FID, CVP from Table C-1 14,302 15,109 15,562 16,029 16,510 Recharge Basins O&M Projections based on FY26
Estimate escalated at 3% 1,246 1,284 1,322 1,362 1,403
Total Source of Supply Costs 15,548 16,393 16,884 17,391 17,913 Revenue Required from Water Quantity Charges
Revenue Requirement Allocation from Table E-1 89,847 94,519 99,387 104,505 109,835 Source of Supply Costs as a Percent
of Water Quantity Charges Revenue
Total Source of Supply Costs from above 15,548 16,393 16,884 17,391 17,913 Revenue Requirement Allocation from above 89,847 94,519 99,387 104,505 109,835 Percent of Water Quantity Charges Revenue 17.3% 17.3% 17.0% 16.6% 16.3% Private Wells Water Quantity Charge as a
Percent of Water Quantity Charges
Water Quantity Charges, $/HCF from Table E-1 $1.85 $1.96 $2.06 $2.16 $2.26 Percent of Water Quantity Charges Allocated
to Private Wells Water Quantity Charges
from above 17.3% 17.3% 17.0% 16.6% 16.3%
Private Wells Water Quantity Charges, $/HCF current
(roundup to next $0.01) $0.218 $0.33 $0.34 $0.35 $0.36 $0.37 Table E-3
Unit Costs for Development of Meter Charges
Item FY27 FY28 FY29 FY30 FY31
Revenue Allocation
(in $ thousands)
Public Fire Protection from Table 4-5 $9,118 $9,594 $10,090 $10,612 $11,155 Meters/Services from Table 4-4 $14,673 $15,436 $16,231 $17,067 $17,938 Customer/Accts from Table 4-4 $11,598 $12,202 $12,830 $13,491 $14,179 Total $35,390 $37,232 $39,151 $41,170 $43,272
Unit Costs
Public Fire Protection from above $9,118 $9,594 $10,090 $10,612 $11,155 Equivalent 1-inch meters from Table 2-4 172,095 172,839 173,583 174,326 175,070 Unit Cost, $/eq-mtr/mo $4.42 $4.63 $4.84 $5.07 $5.31
Meters/Services from above $14,673 $15,436 $16,231 $17,067 $17,938 Equivalent 1-inch meters from Table 2-4 182,467 183,235 184,004 184,773 185,542 Unit Cost, $/eq-mtr/mo $6.70 $7.02 $7.35 $7.70 $8.06
Customers/Accts from above $11,598 $12,202 $12,830 $13,491 $14,179 Accounts from Table 2-2 144,844 145,519 146,194 146,869 147,544 Unit Cost, $/acct/mo $6.67 $6.99 $7.31 $7.65 $8.01
Table E-4
Meter Charges
Item FY27 FY28 FY29 FY30 FY31
Unit Costs
Public Fire Protection from Table E-3 $4.42 $4.63 $4.84 $5.07 $5.31 Meters/Services from Table E-3 $6.70 $7.02 $7.35 $7.70 $8.06 Customer/Accts from Table E-3 $6.67 $6.99 $7.31 $7.65 $8.01 Meter Charges, $/month
Domestic 1-inch Eq. Mtr.
¾-inch 0.625 $13.60 $14.25 $14.95 $15.65 $16.35

1.0-inch 1.000 $17.80 $18.65 $19.50 $20.40 $21.35

1.5-inch 2.000 $28.90 $30.30 $31.70 $33.20 $34.75

2.0-inch 2.500 $34.45 $36.10 $37.80 $39.60 $41.40

3.0-inch 4.375 $55.30 $57.95 $60.65 $63.50 $66.50

4.0-inch 8.750 $104.00 $109.00 $115.00 $120.00 $125.00

6.0-inch 15.00 $174.00 $182.00 $191.00 $200.00 $209.00

8.0-inch 60.00 $680.00 $710.00 $740.00 $780.00 $810.00

10.0-inch 137.50 $1,540.00 $1,610.00 $1,690.00 $1,770.00 $1,850.00

12.0-inch 125.00 $1,400.00 $1,470.00 $1,540.00 $1,610.00 $1,680.00 Irrigation
¾-inch 0.625 $10.85 $11.40 $11.90 $12.45 $13.05

1.0-inch 1.000 $13.35 $14.00 $14.65 $15.35 $16.05

1.5-inch 2.000 $20.10 $21.05 $22.00 $23.05 $24.10

2.0-inch 2.500 $23.45 $24.55 $25.70 $26.90 $28.15

3.0-inch 4.375 $36.00 $37.70 $39.45 $41.35 $43.25

4.0-inch 8.750 $65.30 $68.40 $71.65 $75.00 $78.50

6.0-inch 15.00 $108.00 $113.00 $118.00 $124.00 $129.00

8.0-inch 60.00 $410.00 $430.00 $450.00 $470.00 $500.00

10.0-inch 137.50 $930.00 $980.00 $1,020.00 $1,070.00 $1,120.00

12.0-inch 125.00 $850.00 $890.00 $930.00 $970.00 $1,020.00 Table E-5
Private Fire Protection Charges
Item FY27 FY28 FY29 FY30 FY31
Revenue Requirement Allocation
(in $ thousands) from Table 4-5 $1,211 $1,272 $1,336 $1,402 $1,472 Equivalent Connections (Eq. Conn.) from Table 2-5 468,610 469,024 469,439 469,853 470,267 Unit Cost per Eq. Conn., $/month $0.22 $0.23 $0.24 $0.25 $0.26 Rate per Connection, $/month
Fire Service Connections Demand Factor

1.0-inch 38.3 $8.25 $8.65 $9.10 $9.55 $10.00

1.5-inch 38.3 $8.25 $8.65 $9.10 $9.55 $10.00

2.0-inch 38.3 $8.25 $8.65 $9.10 $9.55 $10.00

3.0-inch 38.3 $8.25 $8.65 $9.10 $9.55 $10.00

4.0-inch 38.3 $8.25 $8.65 $9.10 $9.55 $10.00

6.0-inch 111.3 $23.95 $25.15 $26.40 $27.70 $29.05

8.0-inch 237.2 $51.10 $53.60 $56.25 $59.00 $61.85

10.0-inch 426.6 $91.85 $96.40 $101.15 $106.10 $111.25

12.0-inch 689.0 $148.40 $155.75 $163.35 $171.35 $179.70 This Page Intentionally Blank.

Fresno City CouncilOctober 8, 2026

Fresno City Council
October 8, 2026