Hemet City Council
February 10, 2026

MAYOR AND CITY COUNCIL:

Linda Krupa
Mayor (District 5)
Joe Males
Mayor Pro Tem (District 4)
Connie Howard-Clark
Council Member (District 1)
Jaculin "Jackie" Peterson
Council Member (District 2)
Tom Lodge
Council Member (District 3)

CITY STAFF:

Mark Prestwich
City Manager
Steven Graham
City Attorney
John P. Maier
City Clerk

CITY COUNCIL AGENDA

CITY OF HEMET, CALIFORNIA
Regular Meeting of the City Council, Acting as the Successor Agency to the Redevelopment Agency
Tuesday, February 10, 2026
Hemet Public Library, Second Floor
300 E. Latham Ave., Hemet, California 92543
WORK STUDY SESSION AT 4:00 P.M.

CLOSED SESSION AT 5:00 P.M.

REGULAR MEETING AT 6:00 P.M.

Council Chamber: In-person participation is limited in the Council Chamber in order to maintain social distancing room capacity.

Live Stream: This meeting will be live-streamed on the City's website at hemetca.gov/agenda.

Public Comments: Members of the Public who wish to comment on matters before the Council, in lieu of attending in person, may submit comments on or before 2:00 p.m. the day of the meeting by using the following link: Online Comment Form. Comments will be recorded in the official meeting record.

Teleconference: POTENTIAL USE OF AB 2449’S JUST CAUSE OR EMERGENCY CIRCUMSTANCES PROVISIONS - In the event a City Councilmember joins the meeting virtually under AB 2449, then members of the public can utilize the number below to participate via teleconference. If all participating Councilmembers are physically present, then the call-in feature will be unavailable, but the meeting can still be viewed at the link:
https://us02web.zoom.us/j/87658850613
Webinar ID: 876 5885 0613
Passcode: 745765
Telephone: Dial (for higher quality, dial a number based on your current location):

US: +1 669 900 6833 or +1 253 215 8782

Notice Regarding Americans with Disabilities Act

In compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting or if you need agenda documents provided in an alternate format, please contact the City Clerk’s Office at (951) 765- 2395 at least 48 hours prior to the meeting to ensure that reasonable arrangements can be made (28CFR 35.102-

35.104 ADA Title II)

Page

1. WORK STUDY SESSION – 4:00 P.M.

2. CALL TO ORDER

3. ROLL CALL

4. PUBLIC COMMENT PERIOD - RULES OF DECORUM, RESOLUTION NO. 4545

At this time, members of the public may only comment on an item appearing on the Work Study Session agenda.

Please adhere to the following when addressing the Council:
 Comments will be limited to 3 minutes or less.
 Comments should be directed to the Council as a whole and not directed to individual Council Members.  Please follow the adopted rules of decorum: Resolution No. 4545.

5. WORK STUDY DISCUSSION ITEM

5.A. Fiscal Year 24/25 Action Item #8 Update: Identify Locations, Sequencing, Land Acquisition Strategy, and Funding for Locations of Future Fire Stations
Staff Report #26-050 - Pdf

Recommendation:

It is respectfully recommended that the City Council:

Receive and file the update of Fiscal Year 24/25 Action Item #8: Identify Locations, Sequencing, Land Acquisition Strategy, and Funding for Locations of Future Fire Stations; Consider providing direction to the City Manager to analyze and present funding alternatives and recommendations at a future meeting.
11 - 48

6. ADJOURNMENT OF WORK STUDY SESSION

7. CLOSED SESSION – 5:00 P.M.

8. CALL TO ORDER

9. ROLL CALL

10. PUBLIC COMMENT PERIOD - RULES OF DECORUM, RESOLUTION NO. 4545

At this time, members of the public may only comment on an item appearing on the Closed Session agenda. Please

adhere to the following when addressing the Council:
 Comments will be limited to 3 minutes or less.
 Comments should be directed to the Council as a whole and not directed to individual Council Members.  Please follow the adopted rules of decorum: Resolution No. 4545.

11. DISCUSSION ITEM

11.A. CONFERENCE WITH LEGAL COUNSEL – ANTICIPATED

LITIGATION
Significant Exposure to Litigation Pursuant to Paragraph (2) of Subdivision (d) of Section 54956.9
Number of Cases (1)

12. ADJOURNMENT OF CLOSED SESSION

13. REGULAR MEETING – 6:00 P.M.

14. CALL TO ORDER

15. ROLL CALL

16. INVOCATION

17. PLEDGE OF ALLEGIANCE

18. CITY ATTORNEY CLOSED SESSION REPORT

18.A. City Attorney’s Report regarding Closed Session
Recommendation: Information Only

19. PRESENTATION

19.A. Proclamation for Black History Month
Proclamation - Black History Month
49 20. COMMUNICATIONS FROM THE PUBLIC
Welcome to a meeting of the Mayor and City Council of the City of Hemet  Anyone who wishes to speak during public comment or on a particular item will be required to fill out a speaker slip and turn it into the City Clerk. Each request will cover one speaker.  There is a 3-minute-per-person time limit for all general public comments on non-public hearing items.  All who wish to speak, including Council members and staff, need to be recognized by the Mayor before speaking.
 Members of the public shall comply with the adopted Rules of Decorum, Resolution No. 4545. A copy of which can be requested through the City Clerk’s Office.
 You may also fill out a form and submit your comments online at www.hemetca.gov. Submittals must be completed before 2:00 p.m. on the day of the meeting.
 Please state your name and the item you are commenting on before speaking.  The Mayor may receive public comments on agenda items during the public comment period designated for each item at his or her discretion.

20.A. Public Comment for Items Not Listed on the Agenda, but within Jurisdictional Matter

20.B. Public Comment for Items Listed on the Agenda: Consent and Discussion Items

21. PUBLIC HEARINGS
The City Council’s Procedures for Public Hearing will be as follows:
 Staff will provide a report and clarification of items presented.  The public hearing will be opened for comments for those IN FAVOR of or IN OPPOSITION to the item, followed by rebuttal to any comments made.
 The Public Hearing will be closed, and the City Manager may respond to any questions raised by the public (the public will not have an opportunity to respond).
 Discussion will be brought back to the City Council for direction or action.

21.A. Public Hearing and Adoption of Water and Sewer Rate Schedule Pursuant to Proposition 218
Staff Report #26-018 - Pdf

Recommendation:

It is respectfully recommended that the City Council:

1. Receive a staff report on the Consolidated Water and Sewer Rate Study and the resulting five-year rate schedule; and

2. Conduct a Proposition 218 Majority Protest Public Hearing and hear testimony; and

3. Direct the City Clerk to tabulate the results of written protests from property owners.

4. Adopt a Resolution of the City Council of the City of Hemet, California, approving the water and sewer rate schedule to be implemented from March 1, 2026, through January 1, 2030. 51 - 144

21.B. ZOA 25-003: An Ordinance of the City of Hemet, California, Repealing and Restating Chapter 90 (Zoning), Article XI, Section 90-321 of the Hemet Municipal Code regulating Accessory Dwelling Units (ADUs) and Junior Accessory Dwelling Units (JADUs) in accordance with State law.

Environmental Review: Under California Public Resources Code section 21080.17, CEQA does not apply to the adoption of an ordinance by a city or county implementing the provisions of Article 2 of Chapter 13 of Division 1 of Title 7 of the Government Code, which is California’s Accessory Dwelling Unit (ADU) law and which also regulates Junior Accessory Dwelling Units (JADUs), as defined by section 66310 to 66342. The proposed ordinance is exempt from the provisions of the California Environmental Quality Act (CEQA), pursuant to Section §15061(b)(3) which provides that CEQA only applies to projects that have the potential for causing a significant effect on the environment.

Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA.

Staff Report #26-041 - Pdf
145 - 182

Recommendation:

It is respectfully recommended that the City Council:

1. Receive a report regarding the proposed Zoning Ordinance Amendment No. 2025-003; and

2. Find that the Project is Categorically Exempt from CEQA in accordance with California Public Resources Code section 21080.17, as defined by section 66314 to 66332 of the Government Code and CEQA Guidelines Section 15061(b)(3) the “common sense exemption” as it can be seen with certainty that there is no possibility that the proposed Ordinance may have a significant effect on the environment.

3. Adopt an Ordinance of the City Council of the City of Hemet, California, adopting Zoning Ordinance Amendment No. 25-003, Repealing and Restating Chapter 90 (Zoning), Article XI, Section 90-321 of the Hemet Municipal Code regulating Accessory Dwelling Units in accordance with State law.

22. RECEIVE AND FILE

22.A. The City of Hemet Warrant Registers for January 15, 2026, and January 22, 2026, and Periodic Payroll Payments
Staff Report #26-037 - Pdf

Recommendation:

It is respectfully recommended that the City Council:

Receive and file the City of Hemet Warrant Registers and Periodic Payroll Payments.
183 - 211

23. CONSENT CALENDAR
All Consent Calendar items will be acted upon by a single action of the City Council unless otherwise requested by an individual Council Member for separate consideration.

23.A. A Resolution of the City Council of the City of Hemet, California, Awarding Onyx Paving Company the 2024/2025 Slurry Seal Project, CIP 2410, in the Amount of $678,000, Finding the Lowest Bidder, Roy Allan Slurry Seal, Inc. Non-Responsive, Waiving any Minor Bid Irregularities, Authorizing the City Manager to Execute all Contract Documents; Approving Additional Construction Expenditures Not to Exceed 10% of the Contract Amount or $67,800; Approving Materials Testing in the Amount of $10,000; and Authorizing the City Clerk to Record the Notice of Completion upon Acceptance of the Work by the City Engineer
Staff Report #26-017 - Pdf

Recommendation:

It is respectfully recommended that the City Council:
213 - 401

Adopt a Resolution of the City Council of the City of Hemet, California, Awarding Onyx Paving Company the 24/25 Slurry Seal Project, CIP 2410, in the Amount of $678,000, Finding the Lowest Bidder, Roy Allan Slurry Seal, Inc. Non-Responsive, Waiving any Minor Bid Irregularities, Authorizing the City Manager to Execute all Contract Documents; Approving Additional Construction Expenditures Not to Exceed 10% of the Contract Amount or $67,800; Approving Materials Testing in the Amount of $10,000; and Authorizing the City Clerk to Record the Notice of Completion upon Acceptance of the Work by the City Engineer.

23.B. Consideration of a Resolution of the City Council of the City of Hemet, California, In Support of Preserving and Conserving the Juan Bautista de Anza National Historic Trail
Staff Report #26-051 - Pdf

Recommendation:

It is respectfully recommended that the City Council:

Adopt a Resolution of the City Council of the City of Hemet, California, In Support of Preserving and Conserving the Juan Bautista de Anza National Historic Trail.
403 - 455

23.C. Approval of the City Council Regular Meeting Minutes of January 27, 2026, December 9, 2025, November 12, 2025, and October 28, 2025 Staff Report #26-028 - Pdf

Recommendation:

It is respectfully recommended that the City Council:

Approve the City Council Regular Meeting Minutes of January 27, 2026, December 9, 2025, November 12, 2025, and October 28, 2025. 457 - 496

24. DISCUSSION - ACTION ITEMS

24.A. Approval of a License Agreement with the Hemet Woman’s Club for Continued Use of the Hemet Public Library
Staff Report #26-053 - Pdf

Recommendation:

It is respectfully recommended that the City Council:

Approve and authorize the City Manager to execute a License Agreement with the Hemet Woman’s Club for the use of meeting and program space at the Hemet Public Library.
497 - 512

24.B. A Resolution of the City Council of the City of Hemet, California, Calling for a Special Municipal Election on June 2, 2026, Regarding the Elective Office of Mayor
Staff Report #26-054 - Pdf
513 - 524

Recommendation:

It is respectfully recommended that the City Council:

Discuss and Adopt a Resolution of the City Council of the City of Hemet, California, calling for a Special Municipal Election to be held on June 2, 2026. This election will submit three questions to the voters regarding the direct election of the Mayor and the determination of the Mayor’s term of office.

24.C. Consideration of 2026 City of Hemet Community Survey Staff Report #26-052 - Pdf

Recommendation:

It is respectfully recommended that the City Council:

Provide direction to the City Manager regarding options presented for the conceptual 2026 City of Hemet Community Survey.
525 - 526

25. CITY COUNCIL AND STAFF REPORTS

MAYOR KRUPA

1. Hemet Housing Authority

2. Hemet Public Library Board of Trustees

3. Cal Trans Liaison Ad Hoc Committee

4. Riverside County Airport Land Use Commission*

5. League of California Cities

6. Riverside County Transportation Commission

7. Riverside Transit Agency*

8. Western Riverside County Conservation Authority (RCA)*

9. Hemet San Jacinto Water Master Board*

10. WRCOG Regional Committees: Riverside County Waste Management Task Force

11. RCTC Committee: Mobile Source Air Pollution Reduction Review Committee

12. Arts and Culture Ad Hoc Committee

13. Downtown Theater Ad Hoc Committee

MAYOR PRO TEM MALES

1. League of California Cities

2. Planning Commission

3. Riverside County Transportation Commission

4. Riverside County Transit Agency *

5. Western Riverside Council of Governments *

6. Business Outreach Ad Hoc Committee

7. CDBG Ad-Hoc Committee

8. Clean Up/Graffiti Ad Hoc Committee

9. Homeless Outreach Ad Hoc Committee

10. Veterans Memorial Ad Hoc Committee

COUNCIL MEMBER HOWARD-CLARK

1. Investment Oversight Committee

2. Planning Commission

3. Riverside County Habitat Conservation Agency (RCHCA)**

4. Western Riverside County Conservation Authority (RCA)*

5. League of California Cities

6. Community Action Partnership

7. Hemet San Jacinto Water Master Board*

8. CDBG Ad-Hoc Committee

9. Western Riverside Council of Governments (WRCOG)*

10. Hemet Youth Council Ad Hoc Committee

11. Downtown Theatre Ad Hoc Committee

COUNCIL MEMBER LODGE

1. Hemet Housing Authority

2. Clean Up/Graffiti Ad Hoc Committee

3. League of California Cities

4. Hemet Youth Council Ad Hoc Committee

5. Hemet Stock Farm Development Ad Hoc Committee

COUNCIL MEMBER PETERSON

1. Investment Oversight Committee

2. Riverside County Habitat Conservation Agency

3. Ramona Bowl Board of Directors

4. League of California Cities

5. Homeless Outreach Ad Hoc Committee

6. Business Outreach Ad Hoc Committee

7. Cal Trans Liaison Ad Hoc Committee

8. Veterans Memorial Ad Hoc Committee

9. Arts and Culture Ad Hoc Committee

10. Hemet Stock Farm Development Ad Hoc Committee

CITY MANAGER MARK PRESTWICH

26. FUTURE AGENDA ITEMS
The following items are tentatively scheduled and are subject to change. The City Council may ask the City Manager to add specific items to a future agenda by a majority vote.

February 24, 2026:

1. Art and Development Ordinance

2. Sales and Purchase Agreement of Stetson and Sanderson

3. Hemet Auto Mall Tax Incentive Agreements

27. ADJOURNMENT

AFFIDAVIT OF POSTING
I, John Paul Maier, MMC, City Clerk for the City of Hemet, declare under penalty of perjury that the foregoing agenda was posted at City Hall located at 445 E. Florida Ave., the Hemet Public Library located at 300 E. Latham Ave., Hemet, CA, and the City Website.

Date & Time: February 5, 2026, at 7:30 p.m.

Meeting Schedule: The City Council of the City of Hemet regularly meets on the second and fourth Tuesdays of each month at 7:00 p.m., unless otherwise noted. Closed and Special Sessions will be duly noticed as needed.

Council Agendas: Agendas for Regular Meetings are available for public review on the City’s website at hemetca.gov and in the City Clerk’s Office, 445 E. Florida Ave., typically by 4:00 p.m. on the Thursday prior to the meeting, but no later than 72 hours prior to the meeting. Agendas for Closed and Special Sessions are made available at least 72 hours prior to the meeting when possible, but no later than 24 hours prior to the meeting.

Livestream: Regular City Council Meetings are available for viewing during the meeting at hemetca.gov.

Use of Equipment: Please contact the City Clerk’s Office if requesting to use the chamber equipment as part of a scheduled presentation 24 hours prior to the meeting at (951) 765-2395.

Disclosure of
Campaign
Contributions (Levine
Act – Government
Code Section 84308):

Pursuant to Government Code section 84308, members of the Hemet City Council are disqualified and not able to participate in any agenda item involving contracts (other than competitively bid contracts, labor contracts, or personal employment contracts with City of Hemet employees), franchises, discretionary land use permits and other entitlements if the Councilmember received more than $500 in campaign contributions from the applicant or contractor, an agent of the applicant or contractor, or any financially interested participant who actively supports or opposes the City’s decision on the agenda item in the previous 12 months. Members of the Hemet City Council who have received, and applicants, contractors, or their agents who have made, campaign contributions totaling more than $500 to a Councilmember in the previous 12 months are required to disclose that fact for the official record of the subject agenda item and shall not make, participate in making, or in any way attempt to use their official position to influence the subject agenda item.

Disclosures must include the amount of the campaign contribution and identify the recipient Board member and may be made either in writing to the City Clerk prior to the subject hearing or by verbal disclosure at the time of the hearing.

City of Hemet
City Council Meeting

STAFF REPORT

Meeting: City Council Meeting - Feb 10 2026
Department: Fire Department
Submitted by: Mark Prestwich, City Manager
Ryan Webb, Deputy Fire Chief;

☐ Receive and File ☐ Consent Calendar ☒ Business Item ☒ Public Hearing

TITLE:

Fiscal Year 24/25 Action Item #8 Update: Identify Locations, Sequencing, Land Acquisition Strategy, and Funding for Locations of Future Fire Stations

RECOMMENDED ACTION:

It is respectfully recommended that the City Council:

Receive and file the update of Fiscal Year 24/25 Action Item #8: Identify Locations, Sequencing, Land Acquisition Strategy, and Funding for Locations of Future Fire Stations; Consider providing direction to the City Manager to analyze and present funding alternatives and recommendations at a future meeting.

BACKGROUND:

On April 3, 2024, the Hemet City Council held a Priority Setting Workshop to establish Fiscal Year 2024-25 Action Items in support of the City's Strategic Plan. Action Items represent Council-directed priority tasks and initiatives over the next 12 months that support Strategic Plan goals.

FY 2024-25 Strategic Plan Action Items were reviewed and approved by the City Council on May 28, 2024 which included evaluation of the current location of fire stations for effectiveness and to determine, based on current and future needs, where fire stations should be located for maximum effectiveness.

On March 20, 2025 Fire Department staff met with a Council appointed ad-hoc committee consisting of then Council Member Krupa and then Mayor Pro Tem Kendrick to review the results of this analysis.

ANALYSIS:

Hemet Fire Department currently operates out of five fire stations. Each of these stations is described below:

5.A.

Station Address Date Built Size in ft2
Fire Station 1 220 N. Juanita St. 1960 7,500
Fire Station 2 895 W. Stetson Ave. 1968 5,000
Fire Station 3 4110 W. Devonshire
Ave. 1963 6,500
Fire Station 4 1035 S. Cawston Ave. 2005 10,000
Fire Station 5 120 N. Hemet St. 2008 2,600

Key factors to consider when determining station locations are response times, call volume, call concentration, concurrent calls, future growth, and “temporary” fire station 5.

Response Time

Comprised of: Dispatch Time + Turnout Time + Travel Time.

National Fire Protection Association (NFPA) 1710 states that the first unit shall be on scene within 6 minutes and 30 seconds to 90% of incidents. In 2023, the 90th percentile time to all incidents for HFD in 2024 was 7 minutes and 23 seconds.

There are two areas with consistently long response times due to their location; Four Seasons (10 minutes 12 seconds) and McSweeny Farms (7 minutes 36 seconds).

Call Volume/Concentration

Call volume was analyzed from 2018-2023 to provide a comprehensive range of call information and demonstrates an approximate 15% increase from 2018-2024.

Department Call Volume by Year
2018 2019 2020 2021 2022 2023 2024
17,017 18,011 17,585 17,959 18,436 18,719 19,957

Call Volume by Unit per Year
2018 2019 2020 2021 2022 2023 2024
Engine 1 4323 2308 4160 3189 2304 2461 2756
Engine 2 3994 4099 3970 3649 3976 4000 4618
Engine 3 4313 4426 4587 4452 4448 4469 4676
Engine 4 2443 2530 2712 2691 2689 2956 3195
Engine 5 1748 1477 401 655 1424 1558 1630
Squad 1 1289 5117 1966 3495 4841 4599 5411
Truck 4 187 215 243 252 187 186 279

Calls for service during this time were analyzed by address to determine which areas have the highest concentration of calls. The areas with highest number of calls indicate the location of future fire stations. The results of this analysis identify an additional resource North/West of Fire Station 1 and North/East of Fire Station 3.

5.A.

Concurrent Call Volume

When there is a second call dispatched in a response district, the subsequent call is termed a “concurrent” incident. When there is a response district that has frequent concurrent calls, and additional resource is indicated. This analysis shows District 3 as needing an additional resource as well as District 1.

Concurrent Calls
District 1 2049
District 2 1788
District 3 2962
District 4 691
District 5 133

Future Growth

Fire stations should be planned for areas where known growth is to occur or where unique hazards are to be located. In the City of Hemet, the most likely areas for growth are along the western and southern portion of the City where there is the most land available to develop.

DISCUSSION:

Based on the overall analysis, Fire leadership is recommending three additional future fire stations and the future relocation of Fire Station 3.

 Recommendation for Fire Station 6 – State St. and Domenigoni Pkwy.

This station is recommended to account for prolonged response times into McSweeny Farms and to account for future development of McSweeny and the surrounding area. This is also an area of higher wildfire risk due to the topography of the hills around the area. This area is designated as a Very High Fire Severity Zone by the State Fire Marshal.

Property for this station has not been identified and will likely need to be procured. A Fire Facilities Fund was created for funding dedicated to Fire Station 6 which has a current balance of $3,743,576.26.

 Recommendation for Fire Station 7 – Devonshire Ave. and Warren Rd.

This station is recommended to account for prolonged response times into Four Seasons and to account for the future development along the western portion of the City. There is also a significant wildland fire threat to the hills behind Four Seasons and Stoney Mountain. This area is designated as a Very High Fire Severity Zone by the State Fire Marshal.

There is a City-owned parcel of 1.6 acres on the North/West Corner of Devonshire Ave. and Warren Rd.

 Recommendation for Fire Station 8 – Warren Rd. and Poplar St.

This station is recommended for future development in the South/West portion of the City. Additionally, this station will augment Fire Station 6’s response to calls on Domenigoni Pkwy by allowing Engine 6 to travel westbound, while Engine 8 travels eastbound.

 Recommendation for relocation of Fire Station 3 – Menlo Ave. and Lyon Ave.

5.A.

This relocation is recommended to account for the substantial call volume in between State St. to the East, Sanderson Ave. to the West, Esplanade Ave. to the North, and Oakland Ave. to the South. This area represents a significant call concentration in the 5-year analysis. Relocating Fire Station 3 to this location would reduce the burden of both District 3 and District 1. This would need to take place in conjunction with the addition of Fire Station 7 as relocation without Station 7 would further delay response times into Four Seasons.

There is a City-owned parcel of 1.65 acres located at 2100 W. Menlo.

 Recommendation for Permanent Fire Station 5 – 120 N. Hemet Ave.

This relocation is recommended to account for the “temporary” structure currently housing fire station 5. The fire station currently operates out of a 2006 mobile home with a detached apparatus bay. This station should be located in a position similar to its current location.

The current cost to construct a fire station is approximately $1,600 per square foot once the land has been procured, so the cost to build a 2-bay station is approximately $20,000,000. The current personnel cost to staff a station with a Captain, Engineer, and Firefighter Paramedic is approximately $2,500,000 per year.

Given the current construction (and operational) cost of future fire stations, and the limited funds presently set aside for Fire Station 6, it will be necessary to consider various funding strategies to advance construction for future fire stations. While residential development has potential to assist with station construction, the scale and pace of residential development presents challenges for the City's near-term ability to finance construction of Fire Station 6 and multiple buildings concurrently. Therefore, the City Council may desire to consider alternative funding strategies to support fire station construction, including bonding for improvements. If the City Council desires near-term options for construction of Fire Station 6, and relocations/construction of new Fire Stations 3 and 5, City staff can analyze and present funding alternatives and recommendations at a future meeting.

PREVIOUS COUNCIL ACTION:

None

STRATEGIC PLAN INTEGRATION:

GOAL ONE: QUALITY OF LIFE:

To ensure that Hemet is safe, clean, attractive and comfortable for all who live, work, and visit.

Objective 3: Increase Public Safety visibility and response.

GOAL THREE: COMMUNITY ENGAGEMENT
To connect and participate in a constant dialogue between members of the community, City staff, and elected officials to promote togetherness and positivity.

Objective 3: Increase the community's pride within the City.

GOAL FIVE: ORGANIZATIONAL EFFECTIVENESS
To identify the work needed inside the City organization to effectively provide services to the community and ensure financial stability.

Objective 1: Operate in a financially sustainable manner.

Objective 2: Evaluate existing practices to ensure continuity with industry best practices.

ATTACHMENT(S):

Attachment 1: Proposed Fire Station Locations

5.A.

Attachment 2: Station Location Presentation Council Ad hoc 2025

5.A.

Strategic Plan Action Item #8
Identify locations, sequencing, land acquisition strategy, and funding for locations of future fire stations
Interim Chief Cameron Phillips

5.A.

FY 24/25 Strategic Plan Items
• On April 3, 2024 City Council priority setting workshop • Action Items represent Council-directed priorities
• On May 28, 2024 Council approved Strategic Plan Action Items • Item #8: To evaluate current locations of fire stations and identify locations for future fire stations
• On March 20, 2025 fire department staff met with a Council appointed ad-hoc to discuss preliminary findings

5.A.

Fire Station Response Districts
Station Address
Date
Built
Size in
ft2
Fire Station 1 220 N. Juanita St. 1960 7,500
Fire Station 2 895 W. Stetson Ave. 1968 5,000
Fire Station 3 4110 W. Devonshire Ave. 1963 6,500
Fire Station 4 1035 S. Cawston Ave. 2005 10,000
Fire Station 5 120 N. Hemet St. 2006 2,600

5.A.

Factors for Analysis
• Key factors considered:
• Response times
• Call volume
• Call concentration
• Concurrent calls
• Proposed future growth
• Current “temporary” fire station 5

5.A.

Factors for Analysis – Response Times
• Response time
• Dispatch Time + Turnout Time + Travel Time = Response Time • Goal is 6:30 in 90% of calls
• HFD Average in 2024 was 7:23 (McSweeny = 7:36, Four Seasons = 10:12) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
EMS 6:00 8:44 9:20 9:39 6:44 6:51 7:26 7:08 8:45 7:27 7:07 FIRE 9:21 9:15 9:05 9:57 6:52 6:48 7:14 7:25 8:06 11:21 7:13 Other 9:42 16:26 15:23 14:45 8:05 8:24 8:31 9:05 10:15 08:12 07:49 Overall
Average 8:30 8:46 9:20 9:40 7:08 7:21 7:27 7:42 8:28 8:27 7:23 NFPA 1710 6:30 6:30 6:30 6:30 6:30 6:30 6:30 6:30 6:30 6:30 6:30 Difference +2:00 +2:16 +2:50 +3:10 +0:38 +0:51 +0:57 +1:12 +1:58 +1:57 +0:53

5.A.

Factors for Analysis – Call Volume
• Call Volume
• Increase approximately 15% from 2018-2024
• 17,017-19,957
• Target is *2,500 responses per unit
17017
18011
17585
17959
18436 18719
19957
15500
16000
16500
17000
17500
18000
18500
19000
19500
20000
20500
2018 2019 2020 2021 2022 2023 2024
Call Volume Per Year 2018-2024
*Responses Per Unit Per Year
2018 2019 2020 2021 2022 2023 2024
Engine 1 4,323 2,308 4,160 3,189 2,304 2,461 2,756
Engine 2 3,994 4,099 3,970 3,649 3,976 4,000 4,618
Engine 3 4,313 4,426 4,587 4,452 4,448 4,469 4,676
Engine 4 2,443 2,530 2,712 2,691 2,689 2,956 3,195
Engine 5 1,748 1,477 401 655 1,424 1,558 1,630
Squad 1 1,289 5,117 1,966 3,495 4,841 4,599 5,411
Truck 4 187 215 243 252 187 186 279

5.A.

Factors for Analysis – Call Concentration
• Call Concentration
• Analyzed by address to determine highest concentration of calls
• North/East of Station 3 and North/West of Station 1

5.A.

Factors for Analysis – Call Concentration

5.A.

Factors for Analysis – Call Concurrency
• Call Concurrency
• Also known as simultaneous calls - refers to the total number of active responses happening at the same time.
• High concurrency indicates the need for an additional unit.

Concurrent Calls
District 1 2,049
District 2 1,788
District 3 2,962
District 4 691
District 5 133

5.A.

Factors for Analysis – Future Growth
• Future Growth
• Prospective residential expansion estimated at 54%
by 2040

5.A.

Factors for Analysis – Future Growth
• Future Growth
• Prospective commercial expansion

5.A.

General Plan Safety Element 2030

5.A.

Recommendation – Station 6
• Proposal for Fire Station 6
• State St. and Domenigoni Pkwy.
• Response times to McSweeny
• Fire Hazard Severity
• Development – South/East
• No property identified
• Fire Facilities Fund balance - $3.7 Million

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Recommendation – Station 7
• Proposal for Fire Station 7
• Devonshire Ave. and Warren Rd.
• Response times to Four Seasons
• Call volume distribution
• Concurrency
• Fire Hazard
• Development - West
• City-owned property

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Recommendation – Station 8
• Proposal for Fire Station 8
• Warren Rd. / Poplar St.
• Response times to Domenigoni Pkwy.
• Development South/West
• No property identified

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Recommendation – Station 3
• Proposal for relocation of Fire Station 3
• Menlo Ave. / Lyon Ave.
• Call concentration
• Call volume distribution
• Development North
• City-owned property

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Recommendation – Station 5
• Proposal for Construction of Fire Station 5
• Currently in a “temporary” station
• Construct permanent station

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Recommendations

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Cost Considerations
• Cost to construct a fire station = $1,600 per square foot • Two-bay fire station cost approximately $20,000,000
• Cost to staff a station with a Captain, Engineer, and Firefighter Paramedic = $2,500,000 per year
• Fire Engine cost = $900,000

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Discussion & Questions

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1 | P a g e

City of Hemet Strategic Plan Action Items – FY 24-25

Action Item # 8: Identify Locations, Sequencing, Land Acquisition Strategy, and Funding for Locations of Future Fire Stations

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2 | P a g e

2023 Hemet Fire Department Call Volume Frequency Map

Concentration of Response Demand
This map shows the concentration of incident responses made from January 1, 2018 to December 31, 2023. Additional resources should be positioned at fire stations that are located near a high concentration of incidents to ensure a timely, safe, and effective response.

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3 | P a g e

Anticipated Areas of Highest Population Growth

This map identifies the concentrations of population growth based on U.S. Census block estimates in Hemet, California from 2020 through 2023. The highest growth rates represent areas where incident demand will likely increase. Northern and southwest areas should plan to add additional emergency resources and personnel to provide effective response.

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4 | P a g e

Apparatus Response Totals

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Apparatus Travel Time to All Incidents

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6 | P a g e

Cover/Concurrent Incidents

The highest volume of cover incidents were located in First-Due District 3. First-due districts that experience a high number of cover incidents indicates that the fire stations responsible for covering these areas experience high demand and may need additional resources to supplement the primary response apparatus. Engine 4 responded to the highest volume of cover incidents over this time period. When responding to cover incidents, units are dispatched from farther away, creating response delays. Engine 4 covered the most responses in District 3.

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7 | P a g e

IAFF Proposed Staffing Increase

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IAFF Proposed Station Location

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9 | P a g e

HFD Recommended Station Locations

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6 9

3 8

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10 | P a g e

Available City Owned Parcels

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Potential Site of Fire Station 8

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Potential Site of Fire Station 6

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13 | P a g e

Potential Site of Fire Station 3

Parcel: 444-340-004
Acreage: 1.65
Address: 2100 W. Menlo
City Owned: Yes

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PRESENTED FEBRUARY 10, 2026
WHEREAS, during Black History Month, we celebrate the many achievements and contributions made by African Americans to our economic, cultural, spiritual, and political development; and
WHEREAS, Black History Month grew out of the establishment, in 1926, of Negro History Week by Carter G. Woodson and the Association for the Study of African American Life and History; and
WHEREAS, the observance of Black History Month allows us an opportunity to recognize the heroes of African American History, such as Martin Luther King, Rosa Parks, Harriett Tubman, and many more; and
WHEREAS, Black History Month provides a time for all Americans to remember the struggles of African Americans for freedom and equal opportunity; and WHEREAS, the City of Hemet Council celebrates the accomplishments of African Americans past, present, and future.

NOW, THEREFORE, I, Linda Krupa, Mayor of the City of Hemet, along with the Hemet City Council, do hereby proclaim the month of February 2026 as:

National Black History Month
and encourage all residents to join in celebrating the diversity and character of our community and to continue to work toward the ideals of equality, freedom, and opportunity that our country represents.

C i t y o f H e m e t
California
ProclamationNational Black History Month
T o m L o d g e , C o u n c i l M e m b e r
J o e M a l e s , M a y o r P r o T e m
L i n d a K r u p a , M a y o r
C o n n i e C l a r k , C o u n c i l M e m b e r
J a c k i e P e t e r s o n , C o u n c i l M e m b e r

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City of Hemet
City Council Meeting

STAFF REPORT

Meeting: City Council Meeting - Feb 10 2026
Department: Public Works
Submitted by: Mark Prestwich, City Manager
Noah Rau, Public Works Director/City Engineer, Travis Holyoak, Water/Waste Water Superintendent;

☐ Receive and File ☐ Consent Calendar ☐ Business Item ☒ Public Hearing

TITLE:

Public Hearing and Adoption of Water and Sewer Rate Schedule Pursuant to Proposition 218

RECOMMENDED ACTION:

It is respectfully recommended that the City Council:

1. Receive a staff report on the Consolidated Water and Sewer Rate Study and the resulting five- year rate schedule; and

2. Conduct a Proposition 218 Majority Protest Public Hearing and hear testimony; and

3. Direct the City Clerk to tabulate the results of written protests from property owners.

4. Adopt a Resolution of the City Council of the City of Hemet, California, approving the water and sewer rate schedule to be implemented from March 1, 2026, through January 1, 2030.

BACKGROUND:

The City owns and operates a Water and Sewer system that provides water service to over 9,600 connections and sewer collection to over 11,000 connections.

The City of Hemet Water Division of the Public Works Department is directly responsible for water production, treatment, and distribution systems covering approximately 5.25 square miles. The area served generally runs from Oakland Avenue in the North to Stetson Avenue in the South, and from Sanderson Avenue on the West to San Jacinto Street on the East, with several variations to these general boundaries. Two other water districts, Eastern Municipal Water District (EMWD) and Lake Hemet Municipal Water District (LHMWD), serve the remaining 22.45 square miles of the incorporated City area.

The City relies almost entirely on local groundwater as its main domestic water supply. Groundwater is pumped from the Hemet-San Jacinto Groundwater Management Area. Water production facilities currently include three operating wells and four storage reservoirs with a maximum capacity of 5.0 million gallons. Of the four storage reservoirs, the oldest one in service was built in 1954, and the last one was built in 1979. The City maintains exchange agreements with both EMWD and LHMWD to

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provide two-way sharing of water supplies during emergencies. Water is distributed through a network of 132.3 miles of water mains, ranging in diameter from 4 to 24 inches. Pipeline materials include steel, asbestos-cement, and polyvinyl chloride (PVC).

The City owns, operates, and maintains the gravity portion of the wastewater collection and conveyance system that currently serves over 11,000 sewer connections and covers approximately

6.75 square miles. The City’s sewer collection system consists of 140 miles of sewer mains and over 1,800 sewer manholes. However, the City does not own or operate any wastewater treatment facilities. Wastewater treatment and disposal services are provided by and through an agreement with EMWD. The wastewater from the City’s collection system flows directly into the EMWD sewer system through a series of interconnections between the two systems and is conveyed to EMWD's San Jacinto Regional Wastewater Reclamation Facility.

The cost of operation and maintenance of the Water and Sewer systems is supported through separate rate charges billed to City of Hemet Water and Sewer customers for the services provided.

The Water and Sewer rates were last reviewed and adopted in 2015, with the last adjustment made in 2020.

Periodic rate studies are necessary to review and evaluate the current rate structure to ensure that billing is recouping the ongoing cost of providing service. Multiple factors affect water and sewer rates, including increases in labor, electricity, equipment and materials, and construction and engineering costs for Capital Improvement Projects. Conducting rate studies periodically ensures that necessary increases are made gradually to cover the costs of providing consistent services and acceptable levels of maintenance to infrastructure.

Funding to conduct this rate study was included in the fiscal year 24/25 operating budget for the Water and Sewer Division. In June of 2024, the City solicited proposals from firms to conduct a Water and Sewer rate analysis, and five proposals were received and reviewed. The City selected Willdan Financial Services to conduct the Water and Sewer Rate Study and evaluate the financial stability of the Water and Sewer Enterprise.

On December 9th, 2025, the City Council approved the 2025 Comprehensive Water and Sewer Rate Study Report, authorized mailing of the required Proposition 218 Notices, and set a Public Hearing for February 10, 2026.

ANALYSIS:

As part of its ongoing strategic planning efforts, the City commissioned Willdan Financial Services to conduct a comprehensive Water and Sewer Rate Study. The purpose of the study was to evaluate the current financial condition of the City’s Water and Sewer utilities, develop a five-year financial plan analyzing revenues and expenditures, and provide recommendations for rate and/or rate structure adjustments necessary to meet the City’s financial and administrative goals.

The study includes the development and presentation of a pro forma Water and Sewer financial plan covering a five-year planning horizon, as well as the preparation of cost-based utility rates through cost-of-service and rate design analyses. Utility rates must be established at levels sufficient to fully fund operating and maintenance costs, debt service, and capital improvement needs. In addition, revenues generated by each utility must be used exclusively for its intended purposes, and Water and Sewer system revenues must remain financially separate. Failure to achieve adequate revenue levels

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can lead to reduced service quality, deferred maintenance, deterioration of system infrastructure, and increased risk of system failures.

Rate studies generally consist of three interrelated analytical components:

 Financial Planning and Revenue Requirement Analysis, which compares projected revenues to operating, maintenance, debt, and capital expenses;
 Cost of Service Analysis, which allocates costs among customer classes and rate components based on fixed and variable cost characteristics; and
 Rate Design, which evaluates alternative rate structures to equitably and effectively recover required revenues.

The methodology applied in this study included a review of historical operating results, adopted budgets, and other relevant financial data for the Water and Sewer utility systems. Policy objectives were also considered in order to identify the net revenue requirements to be recovered through user rates. The analysis involved allocating costs by functional category and rate component, identifying appropriate rate determinants based on customer usage characteristics, and revising rates to reflect the revenue allocated The customers. utility from recovered be to expenditures and costs requirements were then combined with the identified rate determinants and selected rate structures to develop the proposed Water and Sewer rates.

The study also includes the establishment of drought water rates. A drought rate schedule is a critical tool for achieving compliance with State-mandated water conservation requirements during periods of declared drought. When conservation targets are imposed, agencies must achieve measurable reductions in water use to avoid potential penalties, enforcement actions, or loss of funding. Drought rates are designed to send a clear price signal reflecting water supply scarcity and the increased costs By activities. enforcement outreach, and programs, public conservation with associated temporarily adjusting the rate structure, the City can encourage reduced discretionary water use while recovering water reduced despite operations sales. maintain to revenue sufficient essential Implementation of drought rates, therefore, supports statewide conservation objectives, promotes long-term resource sustainability, and helps preserve the financial stability of the Water utility during periods of constrained supply.

DISCUSSION:

The findings and conclusions of the rate analysis, together with the resulting rate recommendations, were used to develop projected operating results for a five-year planning period spanning Fiscal Year (FY) 2026 (beginning July 1, 2025) through FY 2030 (ending June 30, 2030), herein referred to as the Projection Period. The purpose of the five-year projections is to demonstrate the ability of Water and Sewer policy achieve maintenance, and operations adequately support to revenues ongoing objectives, and fund planned capital improvement programs. The analyses, findings, and related recommendations are presented in the subsequent sections of this Report.

Pursuant to the requirements of Proposition 218, new or increased water and sewer service fees and charges may only be adopted following a public notice, hearing, and protest process. If written protests are submitted by a majority of affected property owners (50 percent plus one), the City Council is prohibited from adopting the proposed rate schedule.

If adopted, the first rate adjustment would become effective on March 1, 2026, and subsequent adjustments would be on January 1st, 2027 through 2030.

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PREVIOUS COUNCIL ACTION:

On December 9th, 2025, the City Council approved the 2025 Comprehensive Water and Sewer Rate Study Report, Authorized mailing of the required Proposition 218 Notices, and set a Public Hearing for February 10th, 2026.

STRATEGIC PLAN INTEGRATION:

GOAL FIVE: ORGANIZATIONAL EFFECTIVENESS
To identify the work needed inside the City organization to effectively provide services to the community and ensure financial stability.

Objective 1: Operate in a financially sustainable manner.

Objective 2: Evaluate existing practices to ensure continuity with industry best practices.

Objective 3: Provide Council with policies that are consistent while lessening liabilities.

Objective 4: Increase employee retention by training and creating a positive workplace.

Objective 5: Streamline fire prevention coordination efforts.

FISCAL IMPACT:

The cost of the 2025 Water and Sewer Rate Study was funded entirely through the Water and Sewer Enterprise Funds in the approved Operating Budget for Fiscal Year 2024-2025. As the Water and Sewer systems are self-supporting, the cost will be covered by the revenue generated through user fees from water and sewer services, and not from the City’s General Fund.

ALTERNATIVE(S):

1. Do not conduct a Proposition 218 Majority Protest Public Hearing for the proposed water and sewer rate schedule.

2. Provide alternative direction to the City Manager.

REVIEWED BY LEGAL:

☐ Staff report ☐ Resolution
☐ Ordinance ☐ Agreement

ATTACHMENT(S):

Attachment 1: Resolution for Water and Sewer Rate Adoption 2026_2030 Attachment 2: Hemet Water & Sewer Rate Study - Final Report Attachment 3: Hemet 2025 Prop 218 Water-Sewer Rate Notice

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CITY OF HEMET RESOLUTION NO. 2026-XXX 1
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CITY OF HEMET

HEMET, CALIFORNIA
RESOLUTION NO. 2026-xxx

A RESOLUTION OF THE CITY COUNCIL OF THE CITY

OF HEMET, CALIFORNIA, APPROVING THE PROPOSED

FIVE-YEAR RATE SCHEDULE, AS PROPOSED BY THE
2025 COMPREHENSIVE WATER AND SEWER RATE
STUDY REPORT, EFFECTIVE MARCH 1, 2026,
THROUGH JANUARY 1, 2030
The City Council of the City of Hemet, California (hereafter referred to as the “City Council”) does resolve as follows:

WHEREAS, the City has undertaken a comprehensive analysis of the City’s cost to provide Water and Sewer collection services and fund both near-term and long-term capital facilities and improvement needs (2025 Comprehensive Water and Sewer Rate Study Report), a copy of which is on file with the City, and has developed a proposed water and sewer collection rate structure; and
WHEREAS, on December 9, 2025, the City Council approved the 2025 Comprehensive Water and Sewer Rate Study Report, authorized mailing of the required Proposition 218 Notices, and set a Public Hearing for February 10th, 2026; and
WHEREAS, on February 10, 2026, the City Council conducted a duly noticed Public Hearing, reviewing the 2025 Comprehensive Water and Sewer Rate Study Report regarding the need for the proposed water and sewer rate adjustments as set forth in the Table below, considered evidence and testimony submitted at such Public Hearing, and accepted protests filed prior to the close of the Public Hearing

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CITY OF HEMET RESOLUTION NO. 2026-XXX 2
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; and
WHEREAS, pursuant to Proposition 218 (Article XIII D of the California Constitution), water and sewer service rates may be adopted only after a noticed public hearing and protest process; and
WHEREAS, the City Clerk, following the close of the majority protest public hearing, tabulated all written protests submitted in opposition to the proposed increases to determine whether or not the number of real property parcels for which a protest was submitted exceeds 50% of the total number of real property parcels affected by the contemplated increases; and
WHEREAS, the City Council has found that the total number of written protests required to defeat any proposed increase in water charges shall be a sum equal to 50% plus 1 of 12,585, the total number of affected real property parcels or 6,293 protests total; and

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CITY OF HEMET RESOLUTION NO. 2026-XXX 3
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WHEREAS, if written protests are submitted by a majority of the affected property owners (50% plus one), the City Council is prohibited from adopting the proposed rate schedule; and
WHEREAS, a total of [insert number] written protests were timely submitted; and
WHEREAS, the proposed increases to the City’s schedule of water and sewer service rates may be implemented because written protests were submitted for less than 50% of the total number of real property parcels affected by the proposed increases.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF HEMET FINDS, DETERMINES, ORDERS, AND RESOLVES AS FOLLOWS:

SECTION 1.RECITALS – The recitals set forth above are hereby adopted as findings in support of this resolution.

SECTION 2. TABULATION – At the conclusion of the February 10, 2026 majority protest public hearing, the City Clerk tabulated the total number of written protests submitted on behalf of affected real property parcels in the City opposing the adoption and implementation of an updated schedule of increased sewer service fees and charges and determined that number to be _________ protests total, a sum representing less than 50% of the total number affected real property parcels.

Accordingly, the City Council may adopt the schedule of rate increases for water and sewer services.

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CITY OF HEMET RESOLUTION NO. 2026-XXX 4
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SECTION 3. ADOPTION – Reaffirms approval of the 2025 City of Hemet Water and Sewer Comprehensive Rate Study report and adopts the proposed rate schedule as shown in the table below:

SECTION 4.EFFECTIVE DATE – This resolution shall become effective upon adoption.

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CITY OF HEMET RESOLUTION NO. 2026-XXX 5
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PASSED, APPROVED, AND ADOPTED this 10th day of February 2026. ____________________________
Linda Krupa, Mayor
ATTEST:
_____________________________
Elodie Klug, Deputy City Clerk

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CITY OF HEMET RESOLUTION NO. 2026-XXX 6
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State of California )
County of Riverside )
City of Hemet )
I, Elodie Klug, Deputy City Clerk of the City of Hemet, do hereby certify that the foregoing resolution was adopted by the Hemet City Council on the 10th day of February, 2026, and was passed by the following vote:

AYES: Council Members:

NOES: Council Members:

ABSTAIN: Council Members:

ABSENT: Council Members:
_____________________________
Elodie Klug, Deputy City Clerk

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City of Hemet, CA

Comprehensive Water & Sewer
Utility Rate Study
Report

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i Water & Sewer Rate Study
January 8, 2026

TABLE OF CONTENT S
TABLE OF CONTENTS ................................ ................................ ................................ ............................... i Section 1 – Executive Summary................................ ................................ ................................ ...........1

1.1 Introduction ......................................................................................................................................... 1

1.1.1 Water System Background ..................................................................................................... 1

1.1.2 Sewer System Background ..................................................................................................... 1

1.1.3 Rate Study Background .......................................................................................................... 2

1.2 Overview of the Rate Study Process ............................................................................................ 2

1.3 Summary of Proposed Rates .......................................................................................................... 4 Section 2 – Revenue Sufficiency Analysis ................................ ................................ .......................... 7

2.1 Financial Planning Principles .......................................................................................................... 7

2.2 Existing Rates ....................................................................................................................................... 7

2.3 Revenue Sufficiency Process ......................................................................................................... 9

2.3.1 Budget ........................................................................................................................................ 10

2.3.2 Capital Improvement Plan (CIP) ........................................................................................ 10

2.3.3 Debt Service ............................................................................................................................. 11

2.3.4 Gross and Net Revenue Requirement .............................................................................. 11

2.4 Customers & Billable Flows ............................................................................................................ 12

2.4.1 Customer Billing Analysis........................................................................................................ 13

2.5 Financial Projections Under Existing Rates ................................................................................ 13 Section 3 – Cost-of-Service (COS) Analysis ................................ ................................ ..................... 16

3.1 General .............................................................................................................................................. 16

3.2 Water Cost-of-Service .................................................................................................................... 16

3.2.1 Peaking Factors ....................................................................................................................... 16

3.2.2 Functional Unbundling of Revenue Requirements ........................................................ 18

3.2.3 Classification of Water System Costs ................................................................................. 19

3.2.4 Allocation to Customer Classes and Unit Cost Development.................................... 21

3.2.5 Rate Design by Unit Cost ....................................................................................................... 23

3.2.6 Cost-of-Service and Revenue Check ............................................................................... 27

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ii Water & Sewer Rate Study
January 8, 2026

3.3 Sewer Cost-of-Service .................................................................................................................... 28

3.3.1 Functional Unbundling of Revenue Requirements ........................................................ 28

3.3.2 Classification of Revenue Requirements .......................................................................... 29

3.3.3 Allocation to Customer Classes and Unit Cost Development.................................... 30

3.3.4 Cost-of-Service and Revenue Check ............................................................................... 31 Section 4 – Proposed Test Year Rates ................................ ................................ ............................... 33

4.1 General .............................................................................................................................................. 33

4.2 Typical Monthly Bill Comparison .................................................................................................. 36

4.3 Rate Comparison with Other Utilities ......................................................................................... 38 Section 5 – Projected Operating Results ................................ ................................ .......................... 40

5.1 General .............................................................................................................................................. 40

5.2 Projected User Rate Revenues .................................................................................................... 40

5.3 Debt Service Coverage ................................................................................................................ 43

5.4 Summary of Projected Operating Results ................................................................................ 44 Section 6 – Drought Surcharge ................................ ................................ ................................ ........... 46

6.1 General .................................................................................................................................................... 46

6.2 Purpose of a Drought Surcharge ...................................................................................................... 46

6.2.1 The City’s Water Shortage Contingency Plan ................................................................ 47

6.3 Proposed Drought Surcharge Rates ................................................................................................ 48 Section 7 – Conclusions and Recommendations ................................ ................................ ............ 50

7.1 Disclaimers............................................................................................................................................... 50

7.1.1 General Disclaimer ................................................................................................................. 50

7.1.2 Municipal Advisory Disclaimer ............................................................................................. 50

7.2 Conclusions ....................................................................................................................................... 51

7.3 Recommendations ......................................................................................................................... 52

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1 | P a g e

Section 1 – Executive Summary

1.1 Introduction
Willdan Financial Services (Willdan) is pleased to submit to the City of Hemet (City) this Water and Sewer Rate Study Report (Report) for your consideration. Willdan has completed the study of the City’s water and sewer rates and summarized the results of the investigations, analyses, conclusions, and recommendations in this Report.

1.1.1 Water System Background
The City of Hemet water production and distribution system covers an area of approximately

5.25 square miles. The area served runs generally from Menlo Avenue on the North to Stetson Avenue on the South, and from Sanderson Avenue on the West to San Jacinto Street on the East. Two other water districts, Eastern Municipal Water District (EMWD) and Lake Hemet Municipal Water District (LHMWD), serve the remaining 22.45 square miles of incorporated City area.

The City relies almost entirely on groundwater production as their main water supply source.

Groundwater is pumped from the Hemet -San Jacinto Groundwater Management Area.

Water production facilities currently include three operating wells, and four storage reservoirs with a maximum capacity of 5.0 million gallons, with the first storage reservoir being built in 1954 and the last one built in 1979. The City also has exchange agreements with both EMWD and LHMWD to provide two -way sharing of water supplies during emer gencies. Water is distributed through a network of 132.3 miles of water mains ranging in size from four inches to 24 inches in diameter. Pipeline materials include steel, asbestos-cement, and PVC.

1.1.2 Sewer System Background
The City of Hemet owns and operates a wastewater collection system that currently serves over 9,600 sewer connections. However, the City does not own or operate any wastewater treatment facilities. The City has an agreement with the Eastern Municipal Water District for treatment and disposal of all sewage generated within the City of Hemet and conveyed to EMWD.

The City owns, operates , and maintains the gravity portion of the wastewater collection system covering 6.75 square miles within the 17.33 square miles of the developed portion of the City boundaries. The City’s sewer collection system consists of 140 miles of sewer mains and over 1,800 sewer manholes. Both EMWD and LHMWD also own and operate wastewater collection systems within the City boundaries for customers that they serve.

Wastewater treatment and disposal services are provided by and through an agreement with EMWD. The wastewater from the City ’s collection system flows directly into the EMWD sewer system through a series of inter -connections between the two systems. The City’s wastewater is treated at the EMWD San Jacinto Regional Water Reclamation Facility.

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1.1.3 Rate Study Background
The City has focused a significant amount of attention and effort on strategic planning measures in all areas of utility operations to ensure that it is able to maintain the critical utility infrastructure necessary to provide a stable and well-functioning utility system that delivers uninterrupted service to its customers and ensures that system remains prepared for the future. As part of its ongoing strategic planning efforts, the City commissioned Willdan to perform a water and sewer rate study to assess the current financial condition of the utilities, develop a financial plan to analyze revenue sources and expenditures of the water and sewer utility systems over a five-year projection period, and provide recommendations for proposed rate and/or rate structure adjustments to meet the financial and administrative goals and objectives of the City. The primary objectives of the rate study include:
• Full recovery of costs related to utility operations (i.e., operating and maintenance costs, capital projects, debt repayment and coverage requirements , and other expenditures);
• Development of cost-based rate structures;
• Consistency with American Water Works Association (AWWA) and Water Environment Federation (WEF) guidelines;
• Equity among customer classes;
• Meeting substantive and procedural Proposition 218 requirements; • Administrative efficiency (i.e., easy to understand and implement); and • 5-Year capital funding plan.

1.2 Overview of the Rate Study Process
This study includes the development and presentation of a pro -forma water and sewer financial plan for a 5-year planning period, as well as the development of cost-based rates through cost-of-service and rate design analyses. Utility rates must be set at a level such that operating, maintenance, debt , and capital expenses are funded with the revenues received from customers. In addition, the revenues generated from utility rates must only be used for this purpose and for each system separately. This is a significant point, as failure to achieve the revenues needed can lead to unacceptable service levels , inadequately maintained facilities, degradation of system components and potential failures. Therefore, a rate study typically consists of the following three interrelated analyses:

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1. Financial Planning/Revenue Requirement Analysis : Creates a five-year financial plan to support an orderly, efficient program of funding for on-going maintenance and operating costs, capital improvement and routine system component replacement activities, debt financing, and retirement of outstanding debt. In addition, the plan should fund and maintain appropriate reserve balances based on industry standards, as well as the City’s fiscal policies and specific needs.

2. Cost -of-Service Analysis : Identifies and apportions annual revenue requirements (i.e., expenditures) to operational and functional cost components based on the demand s placed on the utility system by various groups or classes of customers. The purpose of this analysis is to develop a foundation for customer rates that will generate revenues that are proportionate to their share of each utility’s costs.

This objective is consistent with industry standards as well as the requirements of Proposition 218 (Prop 218).

3. Rate Design: Develops an equitable and proportionate fixed/variable schedule of rates for the City’s customer base that ultimately generates the revenue needed to satisfy the revenue requirement. The policy objectives are coordinated with Prop 218 requirements and cost-of-service objectives to achieve a balance between customer equity and financial stability goals. The balance of fixed and variable charges considers the need for a stable revenue source (the fixed charge) and accounts for customers placing higher costs on the system (through higher water and sewer use) by incurring a higher bill reflective of their impact on the system (the variable component).

Rate Design Analysis
Considers both the level and structure of the rate design to collect the appropiate and targeted level of revenues.

Cost-of-Service Analysis
Allocates the revenue requirements to the fixed/variable cost components based on cost of service.

Revenue Requirement Analysis
Compares the revenues to the expenses of the utility
to determine the overall rate adjustment required.

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4 | P a g e

This rate study utilizes generally accepted rate-making principles and standards established by industry experts such as the AWWA in its “M1 - Principles of Water Rates Fees and Charges” manual and WEF in its “Financing and Charges for Sewer Systems, Manual of Practice No. 27”. The principles established by these entities are used as guidelines in the development of the proposed water and sewer rates. A discussion of some of the key principles of ratemaking is presented in the following subsection of this Report.

1.3 Summary of Proposed Rates
The rate study methodology applied in the development of updated water and sewer rates, and outlined in this Report, consisted of reviewing the historical operating results of the water and sewer utility systems, analyzing budgets and other financial data and policy objectives to identify the net revenue requirements to be recovered from user rate revenues, performing general cost-of-service allocations based on the rate components and functional cost categories , and revising the rates based on the applicable costs and expenditures to be recovered from user rates. In addition, an analysis of the system customers and usage characteristics was performed to identify the rate determinants since they drive the recommended rates, which are the primary source for generating revenues.

The allocated revenue requirements were utilized in conjunction with the rate determinants and rate structure to develop the proposed water and sewer rates.

The findings and conclusions of the rate analysis, as well as the resulting rate recommendations, were utilized to develop a projection of future operating results for a 5 - year planning period from Fiscal Year (FY) 2026 (beginning July 1, 202 5) through FY 2030 (ending June 30, 20 30), herein referred to as the “Projection Period”. The purpose for developing the 5-year projections is to demonstrate the financial capability of the water and sewer revenues to support system operations , maintenance and policy go als, and fund planned capital improvements. The analyses, findings , and accompanying recommendations are presented in the subsequent sections of the Report.

The water and sewer rate analyses described in the Report are performed based on the general guidelines of the defined objectives, as well as common industry standards for setting utility rates. In addition to focusing on these major objectives, the rate analyses performed herein will consider other factors in designing rates. As will be discussed in detail later in the Report, such other rate considerations generally include sensitivity to the impact on existing customers, the relative comparability with n eighboring utilities, and the City’s existing rate structure. The proposed water and sewer rates for assumed implementation effective March 1, 2026 (or other such date as determined by the City) for FY 2025/26 (FY 2026, herein referred to as the “Test Year”) are provided in Tables 1 and 2, respectively. The existing rates are provided in Tables 3 and 4, respectively.

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Table 1 – Proposed Monthly Water Rates

Monthly Fixed Charge:
5/8 Inch 29.93$
3/4 Inch 44.53$

1.0 Inch 73.73$

1.5 Inch 146.73$

2.0 Inch 234.33$

3.0 Inch 438.74$

4.0 Inch 730.74$

6.0 Inch 1,460.76$

8.0 Inch 2,336.78$
Flow Meter 146.73$
Volumetric Rates Per 100 Cubic Feet:

All Flows 4.79$
Description Proposed Rate

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Table 2 – Proposed Monthly Sewer Rates

Description Proposed
Rate
Monthly Fixed Charge:

All Customers - per Sewage Unit 9.37$
All Customers - per Stormwater Unit 4.30$
EMWD Related Charge [1]:

Capital Sewer Charge 4.68$
Sewer (per Sewage Unit) 36.60$
Notes:
[1] Eastern Municipal Water District (EMWD)
provides sewer treatment services to the City of
Hemet. These charges are independent of the City's
sewer collection rates and will be charged in
addition to the City's rates. The City of Hemet has no
control over EMWD's rates. The EMWD rates
provided in this table are subject to change. No
analysis of EMWD's rates was conducted, they are
provided for informational purposes only.

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Section 2 – Revenue Sufficiency Analysis

2.1 Financial Planning Principles
While the individual rates for each of the utilit y systems vary based on a variety of factors, rates should be consistent with common rate-making principles within the utility industry. The guiding principle is that rates designed for any utility should provide a reasonable balance between several key factors. In general, the utility rates should:
• Generate a stable revenue stream that, when combined with other sources of funds, is sufficient to meet the expenditure requirements and goals of the system; • Be based upon the proportionate cost of providing the service and not exceed the cost of providing the service – in compliance with California Proposition 218; • Be equitable – that is, they should generate revenue from customer classes in a manner which is reasonably in proportion to the cost to provide service to that customer class;
• Be easy to understand by customers; and
• Be easy to administer by the utility.

2.2 Existing Rates
The City has established user rates for water and sewer service that are applied to retail customers of the system. The rates charged for water and sewer services are approved by the City Council and are not subject to administrative review or approval by any other local or state agency. The City has historically adjusted rates, as necessary, to provide for recovery of financial obligations including operating expenses, debt service, capital expenditures , and any other expenses and transfers.

The existing water rates consist of 1) a monthly fixed charge that designates the minimum amount a customer will pay regardless of their water usage, and 2) a uniform volumetric rate per 100 cubic feet. The monthly fixed charge varies based on the meter size for all customers.

The volumetric rates are uniform such that the rate per 100 cubic feet remains the same for each respective customer type regardless of the amount of water usage. The existing rates for water service are provided in Table 3.

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Table 3 – Existing Monthly Water Rates

The existing sewer collection rates consist of 1) a monthly fixed charge per sewage unit, and 2) a monthly fixed charge per stormwater unit. Since the City only provides sewer collection services, the City’s sewer rates only reflect the costs of providing sewer collection services.

Sewer t reatment services are provided by Eastern Municipal Water District (EMWD) . In addition to the City’s collection rates, City customers also pay sewer treatment rates set and established by EMWD. The existing rates for sewer service are provided in Table 4.

Monthly Fixed Charge:
5/8 Inch 30.15$
3/4 Inch 33.81$

1.0 Inch 41.16$

1.5 Inch 74.42$

2.0 Inch 97.91$

3.0 Inch 261.43$

4.0 Inch 359.54$

6.0 Inch 563.88$

8.0 Inch 711.85$
Flow Meter 152.98$
Volumetric Rates Per 100 Cubic Feet:

All Flows 4.79$
Description Existing Rate

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Table 4 – Existing Monthly Sewer Rates

2.3 Revenue Sufficiency Process
In evaluating whether the existing rates will generate sufficient revenue to meet the expenditure requirements of the water and sewer systems, the annual expenditures required for each utility (herein referred to as the “Revenue Requirement s”) were developed. The Revenue Sufficiency Analysis compares the forecasted revenues for each utility system under existing rates (including customer growth) to the projected Revenue Requirements.

Description Existing Rate
Monthly Fixed Charge:

All Customers - per Sewage Unit 8.00$
All Customers - per Stormwater Unit 3.30$
EMWD Related Charge [1]:

Capital Sewer Charge 4.53$
Sewer (per Sewage Unit) 33.31$
Notes:
[1] Eastern Municipal Water District (EMWD)
provides sewer treatment services to the City of
Hemet. These charges are independent of the City's
sewer collection rates and will be charged in
addition to the City's rates. The City of Hemet has no
control over EMWD's rates. The EMWD rates
provided in this table are subject to change. No
analysis of EMWD's rates was conducted, they are
provided for informational purposes only.

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2.3. 1 Budget
The Revenue Sufficiency Analysis performed as part of this study and summarized in this Report utilizes the City’s Adopted Budget for FY 24/25 (the “Budget” for FY ending June 30, 2025) as one variable to determine the gross Revenue Requirement to be recovered from user rates over the Projection Period. The Budget, as prepared by the City, is provided on a line-item basis, and is used for projecting the budgeted financial needs for the Test Year and the remainder of the Projection Period. In developing the rate analysis, certain adjustments are made such that expenditures are categorized into either Operating and Maintenance (O&M) expenses or non-operating expenses. In addition, only recurring costs included in the current Budget were included as part of the Revenue Sufficiency Analysis for the entirety of the Projection Period. One-time costs were identified and evaluated in discussions with City Staff and removed from future projections if appropriate . Recurring annual costs were escalated using suitable indexes or escalation factors, again in discussion with City Staff. The O&M expenses are primarily those ongoing costs for labor, materials, chemicals, purchased water, electricity, supplies, services, etc., required to manage and operate the utility systems on a day -to-day basis while maintaining a dependable level of service. The O&M requirements are generally a function of a budgetary process and are directly related to the level of service provided to customers of the utility system. The non -operating expenses include such items as capital outlay and any other expenses and transfers.

The Budget also identifies estimated revenues to be derived from sources other than the retail water and sewer user rates. Such other revenue sources include interest earnings on investments, set-up fees, late charges, permits, and various other miscellaneous service charges. The revenues generated from the other sources are applied to the gross Revenue Requirements to reduce the amount of revenue required from user rates. The result is the net Revenue Requirement.

2.3. 2 Capital Improvement Plan (CIP)
The City provided a list of anticipated capital projects to be funded over the Projection Period which are also included in the development of the gross Revenue Requirements. The capital projects provided by and identified by the City in the CIP are required to modernize and upgrade the system to maintain uninterrupted service to customers by investing in improvements, undertaking repairs, or replacing aging system components as they wear and degrade over time. The CIP also includes projects necessary to maintain compliance with State mandated standards for water quality. The City provided cost estimates for the identified capital projects by the fiscal year in which they are estimated to be undertaken for each system. The planned funding for these capital projects was then used in the analysis, along with O&M and non -operating expenses , to determine the gross Revenue Requirements for both the water and sewer systems. The capital projects included in the CIP, along with the assumed funding sources by fiscal year, for the Projection Period are provided in Tables 5 and 6.

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Table 5 – Water CIP

Table 6 – Sewer CIP

2.3. 3 Debt Service
The City currently has no outstanding debt associated with either the water or sewer utility systems. Based on discussions with the City, there are also no anticipated future debt issuances expected to occur over the Projection Period. Therefore, no annual debt service payments or debt service ratio calculations are included in the analysis and Projection Period.

2.3. 4 Gross and Net Revenue Requirement
The proposed water and sewer rates developed in the Report are designed for assumed implementation in FY 2025/26 (the Test Year as previously defined). The projected Test Year gross and net Revenue Requirements are estimated by utilizing the Budget, capital project cost estimates and assumed funding sources for capital projects as provided by the City, along with anticipated transfers to reserves for funding capital projects . The Test Year Revenue Requirements that are used for developing the user rates proposed herein are detailed in Appendix A at the end of this Report and summarized in Table 7.

2026 2027 2028 2029 2030
Water projects
Echo Hills Tank Site And Waterline Improvements Cash -$ 1,653,750$ -$ -$ -$ 4" To 8" Water Main Upgrade - Taylor, Apricot And Harvard Cash 630,000 716,625 - - - Stetson Ave And Lyon Ave Water M Cash 682,500 - - - -
Backup Generators For Well Sites Cash 367,500 330,750 - - - Well 10A Rehab Cash - - 578,813 - -
2026/27 Citywide Water Main Replacements, Locations Tbd Cash - 1,653,750 - - - 2027/28 Citywide Water Main Replacements, Locations Tbd Cash - - 1,736,438 - - 2028/29 Citywide Water Main Replacements, Locations Tbd Cash - - - 1,823,259 - Well 2A Rehab Cash - - - - 638,141
2029/30 Citywide Water Main Replacements, Locations Tbd Cash - - - - 1,914,422 Total Water projects 1,680,000$ 4,354,875$ 2,315,251$ 1,823,259$ 2,552,563$ Description Funding
Source
Fiscal Year Ending June 30
2026 2027 2028 2029 2030
Sewer projects
2023/24 Citywide Sewer Main Replacments, Locations Tbd Cash 1,575,000$ -$ -$ -$ -$ Well 3 & Lift Station Abandonment Cash 105,000 - - - -
2026/27 Citywide Sewer Main Replacments, Locations Tbd Cash - 1,764,000 - - - 2027/28 Citywide Sewer Main Replacments, Locations Tbd Cash - - 1,967,963 - - 2028/29 Citywide Sewer Main Replacments, Locations Tbd Cash - - - 2,187,911 - 2029/30 Citywide Sewer Main Replacments, Locations Tbd Cash - - - - 2,424,935 Total Sewer projects 1,680,000$ 1,764,000$ 1,967,963$ 2,187,911$ 2,424,935$ Description Funding
Source
Fiscal Year Ending June 30

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Table 7 – Test Year Revenue Requirements – FY 2026

The projected Revenue Requirement s for the water and sewer systems over the entire Projection Period are provided in Tables 8 and 9.

Table 8 – Water Revenue Requirements for the Projection Period

Table 9 – Sewer Revenue Requirements for the Projection Period

2.4 Customers & Billable Flows
The rate study is heavily reliant upon a detailed historical analysis of system customers and their accompanying usage and demand characteristics. Data reflecting the existing utility customer base and metered/billable flows provide the determinants utilized in the cost-of- service analysis, and ultimately in calculating the monthly user rates and charges, which become the foundation for projecting future revenues generated by the water and sewer systems.

Description Water Wastewater Total
Total O&M 12,708,078$ 3,582,281$ 16,290,359$
Debt Service - - -
Other Expenditures & Transfers 3,124,065 1,289,595 4,413,660 Gross Revenue Requirement 15,832,143$ 4,871,876$ 20,704,019$ Less Other Revenues (3,051,128) (95,000) (3,146,128) Net Revenue Requirement 12,781,015$ 4,776,876$ 17,557,891$ 2026 2027 2028 2029 2030
Total O&M 12,708,078$ 13,389,511$ 14,111,148$ 14,875,662$ 15,685,925$ Existing Debt Service - - - - -
Future Debt Service - - - - -
Other Expenditures & Transfers 3,124,065 3,252,015 4,063,353 2,279,570 3,224,123 Gross Revenue Requirement 15,832,143$ 16,641,526$ 18,174,501$ 17,155,232$ 18,910,048$ Less Other Revenues (3,051,128) (3,145,838) (3,244,040) (638,000) (638,000) Net Revenue Requirement 12,781,015$ 13,495,688$ 14,930,461$ 16,517,232$ 18,272,048$ Description Fiscal Year Ending June 30
2026 2027 2028 2029 2030
Total O&M 3,582,281$ 3,761,405$ 3,949,477$ 4,146,953$ 4,354,303$ Existing Debt Service - - - - -
Future Debt Service - - - - -
Other Expenditures & Transfers 1,289,595 1,258,985 1,357,477 1,463,153 1,576,694 Gross Revenue Requirement 4,871,876$ 5,020,390$ 5,306,954$ 5,610,106$ 5,930,997$ Less Other Revenues (95,000) (95,000) (95,000) (95,000) (95,000) Net Revenue Requirement 4,776,876$ 4,925,390$ 5,211,954$ 5,515,106$ 5,835,997$ Description Fiscal Year Ending June 30

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It is important to note that the customer and flow analysis focuses primarily on the customer classifications that will be subject to and impacted by the user rates and charges to be developed in the Report. This consists of the general service (retail) customers who currently pay for utility services pursuant to the existing user rates and charges as previously detailed.

For the purpose s of the rate study, it is these customers and their accompanying usage characteristics that will generate revenues based upon the proposed user rates and charges.

2.4.1 Customer Billing Analysis
For the rate study, detailed historical monthly billing information was provided for each customer. This data offered a breakdown of water and sewer customers by class, usage characteristics, and billed charges. The historical billing data was queried from the City’s electronic billing records. An analysis of the billing data was conducted to obtain an understanding of existing customers, customer classes, demand and usage characteristics, and metered usage per customer class. In accordance with the data, as well as discussions with City staff, the utility system provides service to various identifiable retail customer classes consisting of:
• Single-Family Residential
• Multi-Family Residential
• Commercial/Non-Residential
• Irrigation
• Institutional
Each of these customer classes embodies certain common characteristics in their utility use and service demand profiles that provide the basis for establishing an equitable allocation of system costs. The billing data was utilized to identify the number of customer accounts and dwelling units within each class, the applicable equivalent residential units (ERUs), and the metered/billable usage profiles.

The historical customer data was also utilized, along with other City planning data and discussions with City staff, to establish growth trends for each customer classification. The growth trends were then used to project the average number of customers within each class for the Test Year plus the remaining years of the Projection Period.

2.5 Financial Projections Under Existing Rates
The projected customers and accompanying billable flows were applied to the existing rates to develop a projection of user revenues that would be generated under existing rates. The revenues are then compared to the projected Revenue Requirements/expenditures to determine if revenue adjustments would be needed to meet the calculated Revenue Requirements shown in Tables 8 and 9.

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Based on this comparison, it is projected that under the existing rates, neither the water nor the sewer system will meet its collective projected O&M financial obligations, cost of capital projects, and transfers to maintain cash reserves.

Therefore, revenue increases are required and recommended to generate additional cash to fund projected costs of operations, capital projects, and maintain adequate cash reserves. In addition, the City has an established policy objective of maintaining at least 180 days of cash reserves to help fund ongoing operations in the event of periodic fluctuations in cash flow, and to address unexpected needs that may require immediate cash funding.

The cash-flow statements outlining the projected operating results under existing rates are summarized in Tables 10 and 11 for the water and sewer systems, respectively. The proposed rates and projected financial results are addressed in the subsequent sections of this Report.

Table 10 – Water System Projected Operating Results Under Existing Rates ($1,000s)

Existing
2026 2027 2028 2029 2030
Revenues:

Water Sales 11,618$ 11,684$ 11,751$ 11,818$ 11,885$ Other Revenues [1] 3,051 3,146 3,244 638 638 Total Revenues 14,670$ 14,830$ 14,995$ 12,456$ 12,523$
Less O&M Expenses (12,708) (13,390) (14,111) (14,876) (15,686) Net Income For Debt 1,962$ 1,440$ 884$ (2,420)$ (3,163)$ Debt Service:

Existing -$ -$ -$ -$ -$ Future - - - - - Total Debt Service -$ -$ -$ -$ -$ Net Results 1,962$ 1,440$ 884$ (2,420)$ (3,163)$ Fund Balance Activity:

Cash Reserves
Beginning Balance 4,839$ 5,120$ 2,206$ 774$ (3,469)$ Deposit/(Withdrawal) from Operations 1,962 1,440 884 (2,420) (3,163) Capital Projects From Capital Improvement Plan (1,680) (4,355) (2,315) (1,823) (2,553) Total Cash Reserves 5,120$ 2,206$ 774$ (3,469)$ (9,184)$ Days Cash on Hand 147 60 20 (85) (214) Debt Coverage N/A N/A N/A N/A N/A
Notes:

Description
Projected for Fiscal Year Ending June 30 ($1,000s)
[1] Other Revenues decrease starting in FY 2029 due to the expiration of an interagency agreement between EMWD and the City for the purchase of groundwater carry-over credits.

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Table 11 – Sewer System Projected Operating Results Under Existing Rates ($1,000s)

Existing
2026 2027 2028 2029 2030
Revenues:

Wastewater Sales 3,924$ 3,940$ 3,956$ 3,971$ 3,987$ Other Revenues 95 95 95 95 95 Total Revenues 4,019$ 4,035$ 4,051$ 4,066$ 4,082$ Less O&M Expenses (3,582) (3,761) (3,949) (4,147) (4,354) Net Income For Debt 437$ 274$ 101$ (81)$ (272)$ Debt Service:

Existing -$ -$ -$ -$ -$ Future - - - - - Total Debt Service -$ -$ -$ -$ -$ Net Results 437$ 274$ 101$ (81)$ (272)$ Fund Balance Activity:

Cash Reserves
Beginning Balance 10,113$ 8,870$ 7,380$ 5,513$ 3,245$ Deposit/(Withdrawal) from Operations 437 274 101 (81) (272) Capital Projects From Capital Improvement Plan (1,680) (1,764) (1,968) (2,188) (2,425) Total Cash Reserves 8,870$ 7,380$ 5,513$ 3,245$ 548$ Days Cash on Hand 904 716 510 286 46 Debt Coverage N/A N/A N/A N/A N/A
Projected for Fiscal Year Ending June 30 ($1,000s)
Description

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Section 3 – Cost -of-Service (COS) Analysis

3.1 General
The costs incurred by a utility system are generally driven by specific service requirements imposed on the system by its customers. For water systems, the primary service requirements that drive costs include annual flow volumes, peak flow volumes (i.e., peak day, and peak hour), the number of customers, and the types of customers served. For sewer systems, the primary service requirements that drive costs typically include annual sewer volumes, sewer treatment strength, such as Biochemical Oxygen Demand (BOD) and Total Suspended Solids (TSS), and the number and type s of customers served. Treatment related costs are not considered in this analysis since wastewater from City customers is conveyed to EMWD for treatment.

There are several different options that can be used to perform a COS analysis, and the allocation methodology depends upon the operating profile of the utility and the basis applied. The water COS analysis performed for this rate study utilizes a common industry approach known as the base -extra capacity method. The sewer COS analysis involves an examination of the types of customers being served in accordance with the California State Water Resources Control Board (SWRCB) Revenue Program Guidelines for Wastewater Agencies.

3.2 Water Cost -of-Service
The COS utilizes the Revenue Requirements for the Test Year as a cost basis. The Test Year Revenue Requirements, as identified in the previous section of the Report , are functionally unbundled, classified and allocated to customer class es to determine the proportionate COS by class. More detail relating to the water COS approach can be found in Appendix B.

3.2.1 Peaking Factors
System-wide peaking factors are used to derive the cost component allocation basis for Base Delivery and Max Day costs. Base Delivery represents average daily demand during the year, which has been normalized to a factor of 1.00. Based on data provided by City staff, the average water demand was 3.3 million gallons per day (MGD) and the Max Day water demand was 5.3 MGD in the most recent full year. The Max Day peaking factor shows that the system -wide Max Day demand is 1.61 (5.3 Max Day MGD divided by 3.3 Base Delivery) times greater than the average daily demand. The system-wide peaking factors are shown in Table 12.

The Max Day allocations are calculated as follows:

Base Delivery: 3.3 / 5.3 x 100% = 62.26%
Max Day: (5.3-3.3) / 5.3 x 100% = 37.74%

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Table 12 – Peaking Factors System-Wide

Max Day customer-specific peaking factors are then developed based on the maximum monthly usage divided by average monthly usage for each customer class . Since daily peaking statistics are not available for individual customer classes , t he maximum month peaking factor from the customer/billing data is used as a proxy for the Max Day peaking factors. Using the customer billing data, peaking factors by customer class were calculated as shown in Table 13.

Table 13 – Peaking Factors by Customer Class

Once peaking factors are determined, the Max Day demand of each customer class is calculated and shown in Table 14. Total annual us age is derived from the customer data and then converted to an average daily us age by dividing the total annual us age by 365 days in a year. Total Max Day capacity is developed by multiplying the customer-specific peaking factor (from Table 13) by the average daily us age to arrive at the total capacity required to meet each class’s Max Day demand. The extra capacity required to meet Max Day demand is calculated by subtracting the average daily us age from the total required Description Demand
(MGD) Factor Base Max Day Max Hour Total
Avg Day 3.30 1.00 100.00% 0.00% 0.00% 100.00%
Max Day 5.30 1.61 62.26% 37.74% 0.00% 100.00%
Description Max Day
Peaking Factor
Single-Family
All Flow 1.40
Multi-Family
All Flow 1.28
Commercial
All Flow 1.38
Institutional
All Flow 1.61
Irrigation
All Flow 1.79
City
All Flow 2.17

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capacity for Max Day. The calculation of additional capacity to meet the Max Day demand for each customer class is shown is shown in Table 14.

Table 14 – Usage and Extra Capacity

3.2.2 Functional Unbundling of Revenue Requirement s
The water system costs are unbundled into operating components consisting of Supply/Treatment, Transmission, Distribution, Customer, and Administration functions . These are the primary services provided by most water utility systems to their customers. A brief description of each component is as follows:
• Supply/Treatment – The costs associated with obtaining and converting raw water to potable water;
• Transmission – The costs associated with major pumping and large diameter line facilities that transmit potable water throughout the system at-large; • Distribution – The costs associated with smaller diameter lines that carry water to individual customer properties;
• Customer – The costs associated with metering, billing, and providing other services to customers (e.g., printing, delivering and collecting utility bills, recordkeeping, etc.); and
• Administration – Various overhead and other non-operating costs.

Total Annual
Flow (CCF)
Average
Daily Flow
(CCF)
Peaking
Factor
Total
Capacity
(CCF/Day)
Additional
Capacity
(CCF/Day)
Single-Family
All Flow 649,939 1,781 1.40 2,498 718 Multi-Family
All Flow 473,459 1,297 1.28 1,661 363 Commercial
All Flow 266,726 731 1.38 1,010 279 Institutional
All Flow 41,473 114 1.61 183 70 Irrigation
All Flow 81,582 224 1.79 401 177 City
All Flow 76,686 210 2.17 457 247 Total 1,589,866 4,356 6,210 1,854
Description
Flow Max Day

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The allocation of the functionally unbundled Revenue Requirements for the Test Year are summarized in Table 15.

Table 15 – Functionally Unbundled Cost Allocations

3.2.3 Classification of Water System Costs
As previously addressed, t he functionally unbundled water system Revenue Requirements are then classified using the base -extra capacity cost allocation method. Applying this methodology, costs are classified into the following categories:
• Base Costs – Capital costs and O&M expenses associated with service to customers under average demand conditions. This category does not include any costs attributable to variations in water use resulting from peaks in demand. Base costs tend to vary directly with the total quantity of water used.

Description Test Year
2026
Total O&M 12,708,078$
Existing Debt Service -
Future Debt Service -
Other Expenditures & Transfers 3,124,065
Gross Revenue Requirement 15,832,143$
Less Other Revenues (3,051,128)
Net Revenue Requirement 12,781,015$
Functional Unbundled Revenue Requirement
Treatment -$
Transmission & Distribution 2,620,084
Customer Service 92,505
Admin 7,712,884
Source of Supply 2,014,005
Soboba Settlement Agreement [1] 268,600
CIP 1,680,000
Non-Rate Revenue (3,051,128)
Fund Balance [2] 1,444,065
Total 12,781,015$
[2] Represents a transfer to/(from) reserves to provide funding for capital outlay and CIP costs.

Notes:
[1] Represents a groundwater management plan
agreement between the City, other public agencies, and
the Soboba Band of Luiseño Indians.

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• Maximum Day/Extra Capacity Costs – Costs attributable to facilities that are designed to meet peaking requirements. These costs include capital and operating costs for additional plant and system capacity beyond that required for average usage.
• Meter Costs - Costs associated with meter maintenance, meter service, and other meter maintenance and operation-related costs.
• Customer Costs – Costs associated with any aspect of customer service , such as billing, collection, accounting, and recordkeeping. These costs are independent of the amount of water used and the size of the customer’s meter and are not subject to peak demand factors.

As the name would indicate, using the base-extra capacity method, the costs are separated between those attributed to base capacity (and demand) and those attributed to extra capacity (and demand). Components, such as treatment, transmission, and distribution are allocated based on flows and peaking factors. Administrative and customer-related costs are allocated based on ERUs.

Based on discussions with City staff, the general makeup of the customer base is not expected to change, so it is anticipated that the allocation percentages and factors will not change materially during the Projection Period. However, it is important to note that COS analyses are based on the data at a specific point in time (i.e., the most recent fiscal year).

To the extent that weather conditions, economic conditions , and customer usage characteristics change during the Projection Period, the cost allocators can be impacted.

The system-wide costs by service characteristics are shown in Table 16.

Table 16 - Classification of Unbundled Revenue Requirements

Component Billing &
Collection
Meters &
Services Base
Extra
Capacity
Max Day
Total
Treatment -$ -$ -$ -$ -$ Transmission & Distribution - - 1,631,373 988,711 2,620,084 Customer Service 92,505 - - - 92,505
Admin - 5,446,839 1,410,934 855,111 7,712,884
Source of Supply - - 1,254,003 760,002 2,014,005
Soboba Settlement Agreement [1] - 268,600 - - 268,600 CIP - - 1,046,038 633,962 1,680,000
Non-Rate Rev & Fund Balance (10,331) (638,381) (596,709) (361,642) (1,607,063) Total 82,174$ 5,077,058$ 4,745,639$ 2,876,144$ 12,781,015$ [1] Represents a groundwater management plan agreement between the City, other public agencies, and the Soboba Band of Luiseño Indians.

Notes:

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3.2.4 Allocation to Customer Classes and Unit Cost
Development
The functionalized and classified Revenue Requirements are allocated to customer classes utilizing a unit cost approach as follows:
• Base Costs – Based on relative percentage of Base Annual Usage. • Maximum Day/Extra Capacity System Costs – Based on relative percentage of Extra Capacity for the entire system.
• Maximum Day/Extra Capacity Distribution Costs – Based on relative percentage of Extra Capacity for the distribution system. • System Operating /Demand Costs and Meter Maintenance – Based on the relative percentage of ERUs the system serves through the varying capacity of different water meter sizes. These are costs representing the potential demand that a respective customer class can place on the water system due to the capacity of their assigned water meters, relative to other sized meters.
• Customer Costs – Based on the relative percentage of customers being served.

The units of service for each component of cost by customer class (if applicable) are provided in Table 17. The units of service consist of the number of accounts, ERUs (the total customer accounts being served and the calculation of system ERUs based on a factor of meter-size is provided in Table 21), annual flows in 100 cubic feet (CCF), and Max Day extra capacity in CCF/Day. Accounts are based on the number of customer s as provided in the customer data. E RUs are based on the number of meter equivalencies being served in accordance with AWWA standards . For reference, Table 20, showing meter equivalency factors, follows in the next section (3.2.5) of this Report. Base Delivery is the total annual usage projected for the test year based on historical customer data. Max Day is the extra capacity demand result as previously developed in Table 14.

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Table 17 – Units of Service

The Revenue Requirement for each cost component is divided by its respective unit of service to calculate a unit cost. The unit cost for each cost component is demonstrated in Table 18.

Table 18 – Cost Per Unit

The allocation of the Revenue Requirement to each customer class is determined by multiplying the units of service for each customer class (from Table 17) by the cost per unit for each cost component (from Table 18). The resulting total cost to be recovered from each customer class by cost component is shown in Table 19. To calculate the account and ERU COS by customer class, the monthly units of service from Table 17 are multiplied by twelve (12), representing the number of billing periods, to determine the total annual accounts and Description Accounts ERUs Base (CCF) Max Day
(CCF/Day)
Single-Family 7,925 8,349 649,939 718 All Flow 649,939 718
Multi-Family 618 2,166 473,459 363 All Flow 473,459 363
Commercial 565 2,211 266,726 279 All Flow 266,726 279
Institutional 49 418 41,473 70 All Flow 41,473 70
Irrigation 142 805 81,582 177 All Flow 81,582 177
City 112 541 76,686 247
All Flow 76,686 247
Total 9,411 14,489 1,589,866 1,854
Description Billing &
Collection
Meters &
Services Base
Extra
Capacity
Max Day
Total
Total Revenue Requirement 82,174$ 5,077,058$ 4,745,639$ 2,876,144$ 12,781,015$ Units of Service 9,411 14,489 1,589,866 1,854
Bills/Monthly ERU/Monthly CCF CCF/Day
Cost Per Unit 0.73$ 29.20$ 2.98$ 1,550.96$

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ERUs being served, then that result is multiplied by the cost per unit shown in Table 18. For the Base Delivery and Max Day Costs, the units of service from Table 17 are multiplied by the costs per unit from Table 18.

Table 19 – Cost of Service by Customer Class and Cost Component

3.2.5 Rate Design by Unit Cost
The unit costs developed in the previous section are used to develop the proposed rates for the Test Year. The fixed rate components are based on accounts, ERUs and the allocated customer-related costs. The volumetric rate component is based on the annual usage and extra capacity requirements (Max Day).

The first component of the fixed meter charge is calculated on an ERU basis. It is common practice in the utility rate-making industry to establish a rate structure that includes an incremental service availability charge ( i.e., meter charge, sometimes also called a fixed charge) such that customers placing a greater potential demand requirement on the system (those with larger meters) will pay proportionately more for the service availability component.

The methodology for increasing the service availability charge is based upon standardized meter/capacity criteria established by the AWWA relative to the size and capacity of water meters. The AWWA equivalent meter capacity criteria are commonly used to establish a standard unit of measure for customers , referred to as an ERU. Based upon established Description Accounts ERUs Base (CCF) Max Day
(CCF/Day) Total Costs
Single-Family 69,199$ 2,925,379$ 1,940,023$ 1,113,156$ 6,047,757$ All Flow 1,940,023$ 1,113,156$
Multi-Family 5,396$ 758,808$ 1,413,243$ 563,677$ 2,741,124$ All Flow 1,413,243$ 563,677$
Commercial 4,933$ 774,752$ 796,159$ 433,096$ 2,008,941$ All Flow 796,159$ 433,096$
Institutional 428$ 146,470$ 123,793$ 108,066$ 378,757$ All Flow 123,793$ 108,066$
Irrigation 1,240$ 282,078$ 243,517$ 275,293$ 802,128$ All Flow 243,517$ 275,293$
City 978$ 189,571$ 228,904$ 382,857$ 802,309$ All Flow 228,904$ 382,857$
Total 82,174$ 5,077,058$ 4,745,639$ 2,876,144$ 12,781,015$

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standards, an ERU is equivalent to one single-family residential connection with a 5/8-inch water meter (the typical standard meter size for a single -family residential customer in the City of Hemet). The applicable ERU factors for larger water meters are based upon the incremental increase in potential hydraulic capacity of those meters as compared to the standard meter size. These factors are derived from actual flow testing results as performed and defined by the AWWA and commonly utilized by the water and sewer utility industry.

The AWWA equivalency factors can be applied to the meter charge for a 5/8-inch meter to calculate the applicable meter charges for each meter size. A full summary of the AWWA meter-size equivalency factors, and how they are determined, is provided in Table 20.

Table 20 - AWWA Meter Equivalency Factors

Table 21 provides an illustration of how the AWWA meter -size equivalency factors are applied to the total customer accounts by meter -size to determine the total ERUs that the water system serves.

Description AWWA
Factors [1]
Meter Size
5/8 Inch 1.00
3/4 Inch 1.50

1.0 Inch 2.50

1.5 Inch 5.00

2.0 Inch 8.00

3.0 Inch 15.00

4.0 Inch 25.00

6.0 Inch 50.00

8.0 Inch 80.00
Flow Meter [2] 5.00
Notes:
[1] Meter-size equivalency factors established by
the AWWA and identified in AWWA Standards C700,
M1 and M22.
[2] Based on discussions with City staff, it was
determined that "Flow Meter" customer's potential
demand is equivalent to a 1.5-inch meter.

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Table 21 – Total Monthly Accounts & ERUs

The second component of the fixed charge is the customer charge. Unlike meter -related costs, customer costs do not vary based on meter size. Therefore, the customer unit cost of $0.73 is applied equally to each customer account. The two fixed charge components are added together to develop the total proposed fixed charge for each respective meter size.

The proposed fixed charges for the Test Year are shown in Table 22.

AWWA
Factor
Total
Accounts
by Meter
Size
Total
Equivalent
Residential
Units
[A] [B] [C]=[A]*[B]
Meter Size
5/8 Inch 1.00 7,925 7,925
3/4 Inch 1.50 576 864

1.0 Inch 2.50 426 1,065

1.5 Inch 5.00 24 120

2.0 Inch 8.00 420 3,360

3.0 Inch 15.00 8 120

4.0 Inch 25.00 16 400

6.0 Inch 50.00 4 200

8.0 Inch 80.00 5 400
All Customer Total 9,404 14,454
Plus:

Flow Meter 5.00 7 35
Total 9,411 14,489
Description

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Table 22 – Monthly Fixed Charge Calculation

The water volumetric rates are made up of two different rate components. The first component is for base usage and related costs . The second component represents peak usage and peaking costs, the Max Day cost component. The total system Max Day peak demand costs (from Table 19) are divided by the total system annual usage to calculate the peaking unit costs shown in Table 23.

Table 23 – Peaking Unit Cost Calculation

The total system peaking unit cost of $1.81 is then added to the base unit cost of $2.98 per 100 cubic feet (as previously identified in Table 18) to calculate the proposed volumetric rate per 100 cubic feet as shown in Table 24.

Table 24 – Volumetric Rate Calculation

Meter Size Capacity
Ratio
Meter
Charge
Customer
Charge
Proposed
Fixed
Charge
5/8 Inch 1.00 29.20$ 0.73$ 29.93$ 3/4 Inch 1.50 43.80$ 0.73$ 44.53$

1.0 Inch 2.50 73.00$ 0.73$ 73.73$

1.5 Inch 5.00 146.00$ 0.73$ 146.73$

2.0 Inch 8.00 233.61$ 0.73$ 234.33$

3.0 Inch 15.00 438.01$ 0.73$ 438.74$

4.0 Inch 25.00 730.02$ 0.73$ 730.74$

6.0 Inch 50.00 1,460.03$ 0.73$ 1,460.76$

8.0 Inch 80.00 2,336.05$ 0.73$ 2,336.78$ Flow Meter 5.00 146.00$ 0.73$ 146.73$ Peaking
Costs
Annual Use
(CCF)
Peaking Unit
Cost
[A] [B] [C]=[A]/[B]
Total Water System 2,876,144$ 1,589,866 1.81$
Description
Base Peaking Proposed
Rate ($/CCF)
[A] [B] [C]=[A]+[B]
All Customers
All Flow 2.98$ 1.81$ 4.79$
Description

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3.2.6 Cost -of-Service and Revenue Check
Once the rates are developed from the unit cost analysis , as shown in Sections 3.2.4 and

3.2.5, they are then applied to the customer service units identified in Table 17. The unit cost rates are applied to the customer service units to ensure that the rates calculated under the base-extra capacity method generate revenues from each customer class ification proportionately and equitably, and in a manner that reflects the costs associated with serving them. The revenues generated by customer classification and the cost allocated to each customer classification are provided in Table 25.

Table 25 – Proposed Rate Revenues vs. COS

Monthly
Accounts Monthly ERUs
Monthly
Customer
Charge/
Account
Monthly
Meter
Charge/ERU
Total Fixed
Charge
Revenues
[A1] [B1] [C1] [D1]

[E1]={[A1]*[C1]
+[B1]*[D1]}*12
Single-Family
All Flow 7,925 8,349 0.73$ 29.20$ 2,994,578$ Multi-Family
All Flow 618 2,166 0.73$ 29.20$ 764,204$ Commercial
All Flow 565 2,211 0.73$ 29.20$ 779,685$ Institutional
All Flow 49 418 0.73$ 29.20$ 146,898$ Irrigation
All Flow 142 805 0.73$ 29.20$ 283,318$ City
All Flow 112 541 0.73$ 29.20$ 190,549$ Total Water System 9,411 14,489 5,159,232$ Annual Use
(CCF)
Proposed
Rate ($/CCF)
Total
Volumetric
Revenues
Total
Revenues
Allocated
Costs
[A2] [B2] [C2]=[A2]*[B2] [D2]=[E1]+[C2] [E2]
Single-Family
All Flow 649,939 4.79$ 3,115,795$ 6,110,373$ 6,047,757$ Multi-Family
All Flow 473,459 4.79$ 2,269,753$ 3,033,958$ 2,741,124$ Commercial
All Flow 266,726 4.79$ 1,278,680$ 2,058,365$ 2,008,941$ Institutional
All Flow 41,473 4.79$ 198,819$ 345,718$ 378,757$ Irrigation
All Flow 81,582 4.79$ 391,102$ 674,420$ 802,128$ City
All Flow 76,686 4.79$ 367,633$ 558,182$ 802,309$ Total Water System 1,589,866 7,621,783$ 12,781,015$ 12,781,015$ Description
Description

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3.3 Sewer Cost -of-Service
As with the water system, the COS analysis for the sewer utility utilizes the Revenue Requirements for the Test Year as the cost basis. The Test Year Revenue Requirements are functionally unbundled, classified, and allocated to customer classes to determine the COS by class. As stated in Section 3.1, the sewer COS analysis involves an examination of the number and type of customers served in accordance with the California State Water Resources Control Board (SWRCB) Revenue Program Guidelines for Wastewater Agencies .

More detail relating to the sewer COS approach can be found in Appendix C.

3.3.1 Functional Unbundling of Revenue Requirements
The sewer system costs are unbundled into Collection, Customer , and Administration functions. A brief description of each component is as follows:
• Collection – Costs associated with lines and facilities that transport wastewater from customer properties to treatment facilities;
• Customer – Costs associated with billing, and providing other services to customers (e.g., printing, delivering and collecting utility bills, recordkeeping, etc.); and • Administration – Various overhead and other non-operating costs.

The allocation of the functionally unbundled Revenue Requirements for the Test Year are summarized in Table 26.

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Table 26 - Functional Unbundled Cost Allocations

3.3.2 Classification of Revenue Requirement s
The functionally unbundled Revenue Requirements for the sewer system are classified into sewer and stormwater customer components. As discussed for the water COS analysis, it is anticipated that the allocation percentages will not change materially during the Projection Period. However, it is important to note that COS analyses are based on the data at a specific point in time (i.e., the most recent fiscal year). To the extent that weather conditions, economic conditions, and customer usage characteristics change during the Projection Period, the cost allocators can be impacted. The system-wide costs by service characteristic are shown in Table 27.

Description Test Year 2026
Total O&M 3,582,281$
Existing Debt Service -
Future Debt Service -
Other Expenditures & Transfers 1,289,595
Gross Revenue Requirement 4,871,876$
Less Other Revenues (95,000)
Net Revenue Requirement 4,776,876$
Functional Unbundled Revenue Requirement
Treatment [1] -$
Collection 416,120
Administration 3,119,961
Customer Service 46,200
CIP 1,680,000
Non-Rate Revenue (95,000)
Fund Balance [2] (390,405)
Non-Rate Rev & Fund Balance 4,776,876$
Notes:
[2] Represents a transfer to/(from) reserves to provide funding for capital outlay and CIP costs.
[1] Treatment services are not provided by the City.

Treatment services are provided by and through an
agreement with EMWD.

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Table 27 - Classification of Unbundled Revenue Requirements

3.3.3 Allocation to Customer Classes and Unit Cost
Development
The functionalized and classified Revenue Requirements are allocated to customer classes utilizing a unit cost approach as follows:
• Sewer – Based on relative percentage of annual sewer related costs; and • Stormwater – Based on relative percentage of annual stormwater related costs.

The units of service for each component of cost by customer class (if applicable) are provided in Table 28. The units of service consist of the number of customer accounts and associated customer units as provided by the City in their billing data.

Table 28 – Units of Service

Component Sewer Stormwater Total
Treatment [1] -$ -$ -$
Collection 233,310 182,810 416,120
Administration 1,352,774 1,767,187 3,119,961
Customer Service 23,100 23,100 46,200
CIP 1,680,000 - 1,680,000
Non-Rate Rev & Fund Balance (303,402) (182,003) (485,405) Total 2,985,782$ 1,791,094$ 4,776,876$
Notes:
[1] Treatment services are not provided by the City. Treatment services are provided by and through an agreement with EMWD.

Total Total
Accounts Units
Sewer
City & LHMWD - Sewer Units 10,344 18,495
EMWD - Sewer Units 3,048 8,070
Sub-Total Sewer 13,392 26,565
Stormwater
City & LHMWD - Stormwater Units 10,344 18,495 EMWD - Stormwater Units 10,352 16,208
Sub-Total Stormwater 20,696 34,703
Sewer System Total 34,088 61,268
Description

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The Revenue Requirement for each cost component is divided by its respective unit of service to calculate the cost per unit. The unit cost for each cost component is demonstrated in Table 29.

Table 29 – Cost Per Unit

The allocation of the Revenue Requirement to each customer class is based on the cost per unit for each component multiplied by the units of service for each customer class. The total costs to be recovered from each customer class by rate component are shown in Table 30.

Table 30 – Cost-of-Service by Customer Class and Cost Component

3.3.4 Cost -of-Service and Revenue Check
Once the unit costs are developed and the costs associated with each customer class based on the units of service are determined in Section 3.3.3, rates can be developed to ensure that each customer class generates sufficient revenues to cover their allocated cost- of-service. The proposed rate structure for the sewer rates are as follows:
• Sewer Customer s – For sewer customers, the proposed rates will consist of only a flat fixed charge per customer unit, regardless of usage.
• Stormwater Customers – For stormwater customers, the proposed rates will consist of only a flat fixed charge per customer unit, regardless of usage.

The revenues generated by customer class versus the cost allocated to each customer class are provided in Table 31.

Description Sewer Stormwater Total
Total Revenue Requirement 2,985,782$ 1,791,094$ 4,776,876$ Units of Service 26,565 34,703
Units/Monthly Units/Monthly
Cost Per Unit 9.37$ 4.30$
Rate Class Sewer Stormwater Total
City & LHMWD - Sewer Units 2,078,752$ -$ 2,078,752$ EMWD - Sewer Units 907,030 - 907,030 City & LHMWD - Stormwater Units - 954,565 954,565 EMWD - Stormwater Units - 836,529 836,529 Total 2,985,782$ 1,791,094$ 4,776,876$

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Table 31 – Proposed Rate Revenues vs. COS

Monthly Units
Proposed
Monthly Fixed
Fee
Total Fixed
Fee Revenue
Total COS
Revenues
[A] [B] [C]=[A]*[B]*12 [D]
City & LHMWD - Sewer Units 18,495 9.37$ 2,078,752$ 2,078,752$ EMWD - Sewer Units 8,070 9.37$ 907,030$ 907,030$ City & LHMWD - Stormwater Units 18,495 4.30$ 954,565$ 954,565$ EMWD - Stormwater Units 16,208 4.30$ 836,529$ 836,529$ Total 61,268 4,776,876$ 4,776,876$
Description

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Section 4 – Proposed Test Year Rates

4.1 General
The methodology used to calculate the recommended water and sewer rates proposed herein involves applying the projected customer units of service to the user rates developed in the preceding COS and rate design analyses to calculate the estimated revenues (separately for water and sewer) that would be generated. Then, these projected revenues are compared to the estimated Test Year Revenue Requirements, and the water and/or sewer rates are adjusted on a percentage basis as necessary until the revenues generated are sufficient to meet the revenue needs of each utility system, respectively.

When reviewing potential rate structure options in conjunction with the need for additional revenues, it was determined that revenue adjustments are needed, and the existing rate structure needs to be adjusted based on the COS analysis. The proposed water and sewer rates for the Test Year are provided again in Tables 32 and 33, respectively.

[The rest of this page is intentionally left blank]

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Table 32 – Proposed Monthly Water Rates

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Table 33 – Proposed Monthly Sewer Rates

Description Proposed
Rate
Monthly Fixed Charge:

All Customers - per Sewage Unit 9.37$
All Customers - per Stormwater Unit 4.30$
EMWD Related Charge [1]:

Capital Sewer Charge 4.68$
Sewer (per Sewage Unit) 36.60$
Notes:
[1] Eastern Municipal Water District (EMWD)
provides sewer treatment services to the City of
Hemet. These charges are independent of the City's
sewer collection rates and will be charged in
addition to the City's rates. The City of Hemet has no
control over EMWD's rates. The EMWD rates
provided in this table are subject to change. No
analysis of EMWD's rates was conducted, they are
provided for informational purposes only.

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4.2 Typical Monthly Bill Comparison
In addition to reviewing
the effect that a change
in the rates will have on
the system revenues, it is
also important for City
utility management to
understand the impact
that a change will have
on the existing customers.

Tables 34, 35, and 36
provide a comparison of
several monthly bills at
various flow levels for
water and sewer, as well as the combined utility bills under the existing and proposed rates.

All sewer bills reflect the City’s collection rates as well as EMWD’s treatment rates. A graphical illustration of a bill comparison at various units of flow is provided in Figure 1 for a single-family residential customer with both water and sewer service. It was determined after conducting a historical billing analysis that an average single-family residential customer uses approximately 800 cubic feet monthly. Based on the proposed rates, a typical single-family residential customer will experience an increase of $2.18 ($121.05 current bill vs . $123.23 proposed bill) in their combined monthly water and sewer bill.

Table 34 – Single-Family Residential Water Bill Impact

Existing Proposed
Residential
5/8 Inch 0 30.15$ 29.93$ (0.22)$
5/8 Inch 100 34.94$ 34.72$ (0.22)$
5/8 Inch 200 39.73$ 39.52$ (0.21)$
5/8 Inch 300 44.52$ 44.31$ (0.21)$
5/8 Inch 400 49.31$ 49.10$ (0.21)$
5/8 Inch 500 54.10$ 53.90$ (0.20)$
5/8 Inch 600 58.89$ 58.69$ (0.20)$
5/8 Inch 700 63.68$ 63.49$ (0.19)$
5/8 Inch 800 68.47$ 68.28$ (0.19)$
5/8 Inch 1,000 78.05$ 77.87$ (0.18)$
5/8 Inch 1,200 87.63$ 87.46$ (0.17)$
5/8 Inch 1,400 97.21$ 97.04$ (0.17)$
5/8 Inch 1,600 106.79$ 106.63$ (0.16)$
5/8 Inch 2,000 125.95$ 125.81$ (0.14)$
5/8 Inch 2,400 145.11$ 144.98$ (0.13)$
Description Monthly
Flow
Monthly Charges $ Amount
Difference

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Table 35 – Single-Family Residential Sewer Bill Impact

Table 36 – Single-Family Residential Combined Bill Impact

Existing Proposed
Residential
5/8 Inch 0 52.58$ 54.95$ 2.37$
5/8 Inch 100 52.58$ 54.95$ 2.37$
5/8 Inch 200 52.58$ 54.95$ 2.37$
5/8 Inch 300 52.58$ 54.95$ 2.37$
5/8 Inch 400 52.58$ 54.95$ 2.37$
5/8 Inch 500 52.58$ 54.95$ 2.37$
5/8 Inch 600 52.58$ 54.95$ 2.37$
5/8 Inch 700 52.58$ 54.95$ 2.37$
5/8 Inch 800 52.58$ 54.95$ 2.37$
5/8 Inch 1,000 52.58$ 54.95$ 2.37$
5/8 Inch 1,200 52.58$ 54.95$ 2.37$
5/8 Inch 1,400 52.58$ 54.95$ 2.37$
5/8 Inch 1,600 52.58$ 54.95$ 2.37$
5/8 Inch 2,000 52.58$ 54.95$ 2.37$
5/8 Inch 2,400 52.58$ 54.95$ 2.37$
Monthly Charges $ Amount
DifferenceDescription Monthly
Flow
Existing Proposed
Residential
5/8 Inch 0 82.73$ 84.88$ 2.15$
5/8 Inch 100 87.52$ 89.67$ 2.15$
5/8 Inch 200 92.31$ 94.46$ 2.15$
5/8 Inch 300 97.10$ 99.26$ 2.16$
5/8 Inch 400 101.89$ 104.05$ 2.16$
5/8 Inch 500 106.68$ 108.85$ 2.17$
5/8 Inch 600 111.47$ 113.64$ 2.17$
5/8 Inch 700 116.26$ 118.43$ 2.17$
5/8 Inch 800 121.05$ 123.23$ 2.18$
5/8 Inch 1,000 130.63$ 132.82$ 2.19$
5/8 Inch 1,200 140.21$ 142.40$ 2.19$
5/8 Inch 1,400 149.79$ 151.99$ 2.20$
5/8 Inch 1,600 159.37$ 161.58$ 2.21$
5/8 Inch 2,000 178.53$ 180.76$ 2.23$
5/8 Inch 2,400 197.69$ 199.93$ 2.24$
Monthly Charges $ Amount
DifferenceDescription Monthly
Flow

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4.3 Rate Comparison with Other Utilities
To provide the City with additional insight and context regarding the proposed rate levels, the analysis includes a comparison of both the existing and proposed user rates relative to the user rates imposed by other water and sewer utility systems located in the same region.

A summary analysis is provided comparing the cost of monthly water and sewer service for a typical single-family residential customer calculated under the existing and proposed rates of the City with those of the other utilities. The rates utilized for the other neighboring utilities shown in Figure 2 were in effect as of October 2025 and are exclusive of local taxes, outside surcharges, franchise fees, regulatory fees, or other rate adjustments. A summary comparison with other utilities for a single-family residential customer receiving 800 cubic feet of service per monthly billing is illustrated in Figure 2.

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It should be noted that when making comparisons of water and sewer service with other providers, several factors affect the level of rates and charges. Such factors may include:

1. Terms of wholesale service agreements;

2. Time since last rate update for comparison providers;

3. Level of treatment required before the distribution of water to the ultimate customers;

4. Level of treatment and effluent disposal or discharge methods of sewer service;

5. Anticipated capital improvement programs and capital financing methods;

6. Plant capacity utilization, age of facilities, and assistance in construction by federal or state grants, connection fees, developer contributions, etc.;

7. General Fund and/or administrative fee transfers made by other systems which may account for differences in the level of rates charged; and

8. Bond covenants and funding requirements of the rates.

For the utilities included in the rate comparisons, no analysis has been carried out with consideration of the above-mentioned factors as they relate to the reported water and sewer rates currently being charged.

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Section 5 – Projected Operating Results

5.1 General
As a conclusion to the study, individual pro -forma operating statements are developed for both the water and sewer systems. The statements summarize the projected financial results based on the system revenues, expenses , and other Revenue Requirements anticipated in future years.

The individual operating statements cover the 5 -fiscal year Projection Period through June 30, 20 30, and are prepared on a cash -flow basis. In addition, the individual statements include the applicable annual percentage rate adjustments necessary to meet the projected Revenue Requirements. The annual rate adjustments are considered separately for both water and sewer and are further separated by the fixed charge and volumetric rate components. The following discussions describe the development of the major components of the projected operating results.

5.2 Projected User Rate Revenues
The user rate and charge revenues are estimated by applying the existing and proposed rates to the projected customer units of service. The revenues for the Projection Period are estimated separately for both water and sewer. The resulting revenues are then compared to the projected Revenue Requirements (i.e., O&M expenses, debt service, capital outlay, CIP, transfers, etc.) in each fiscal year to determine if the revenues are sufficient to satisfy the expenditure needs of the system. To the extent that there are revenue shortfalls in any given year of the Projection Period, the water and/or sewer rates developed by the COS and rate design analyses outlined previously in Section 3 of this Report are adjusted on a percentage basis, as necessary, to generate the required level of revenues. The projected water, sewer, and combined user rate revenues are provided in Table 37.

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Table 37 – Projected User Rate Revenues

The projected revenues include the annual water and sewer rate adjustments anticipated for the remaining years of Projection Period beyond the Test Year. The proposed user rates for which the projected operating results are developed for the entire 5-fiscal year Projection Period are provided in Tables 38 and 39. The rates identified in the proceeding tables reflect the cost of providing service to individual customer classes based on the number and types of customers being served, peak demand factors, and volume of flow.

Table 38 – Proposed Monthly Water Rates

Existing Proposed
2026 2026 2027 2028 2029 2030
Water
Single-Family 6,018,106$ 6,047,757$ 6,390,294$ 7,073,888$ 7,830,297$ 8,667,248$ Multi-Family 2,669,283 2,741,124 2,892,493 3,197,747 3,535,128 3,908,002 Commercial 1,683,559 2,008,941 2,121,285 2,347,682 2,598,145 2,875,223 Institutional 269,539 378,757 398,956 440,269 485,851 536,152 Irrigation 519,933 802,128 845,983 934,772 1,032,861 1,141,218 City 458,062 802,309 846,679 936,106 1,034,951 1,144,206 Total Water Revenue 11,618,482$ 12,781,015$ 13,495,690$ 14,930,464$ 16,517,233$ 18,272,049$ Sewer
City & LHMWD - Sewer Units 1,775,520$ 2,078,752$ 2,148,268$ 2,278,387$ 2,416,295$ 2,562,589$ City & LHMWD - Stormwater Units 732,402 954,565 986,487 1,046,238 1,109,566 1,176,744 EMWD - Sewer Units 774,720 907,030 931,520 981,822 1,034,841 1,090,722 EMWD - Stormwater Units 641,837 836,529 859,115 905,507 954,404 1,005,942 Total Sewer Revenue 3,924,479$ 4,776,876$ 4,925,390$ 5,211,954$ 5,515,106$ 5,835,997$ Total Combined Revenue 15,542,961$ 17,557,891$ 18,421,080$ 20,142,418$ 22,032,339$ 24,108,046$ Projected Fiscal Year Ending June 30System
2026 2027 2028 2029 2030
Monthly Fixed Charge:
5/8 Inch 30.15$ 29.93$ 32.92$ 36.21$ 39.83$ 43.82$ 3/4 Inch 33.81$ 44.53$ 48.98$ 53.88$ 59.27$ 65.19$

1.0 Inch 41.16$ 73.73$ 81.10$ 89.21$ 98.13$ 107.95$

1.5 Inch 74.42$ 146.73$ 161.40$ 177.54$ 195.30$ 214.83$

2.0 Inch 97.91$ 234.33$ 257.77$ 283.54$ 311.90$ 343.09$

3.0 Inch 261.43$ 438.74$ 482.61$ 530.87$ 583.96$ 642.36$

4.0 Inch 359.54$ 730.74$ 803.82$ 884.20$ 972.62$ 1,069.88$

6.0 Inch 563.88$ 1,460.76$ 1,606.84$ 1,767.52$ 1,944.27$ 2,138.70$

8.0 Inch 711.85$ 2,336.78$ 2,570.46$ 2,827.50$ 3,110.25$ 3,421.28$ Flow Meter 152.98$ 146.73$ 161.40$ 177.54$ 195.30$ 214.83$ Volumetric Rates Per 100 Cubic Feet:

All Flows 4.79$ 4.79$ 5.27$ 5.80$ 6.38$ 7.02$ Description Existing
Rates
Projected For Fiscal Year Ending June 30

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Table 39 – Proposed Monthly Sewer Rates

The projected user rates provided herein for the periods beyond the Test Year are intended for strategic planning purposes, and to provide the City with the estimated future rates that may be needed to satisfy the projected cash flow requirements. The rates are developed in accordance with the assumed customer, flow, expenditure, and revenue estimates projected in this rate study. It is important to note that, since it is necessary to utilize numerous assumptions to develop the projected operating results, to the extent that actual customers, flows, and/or system expenditures differ from those assumed herein, additional rate adjustments may be required. For informative purposes, a calculation of the typical monthly bill for a representative single-family residential customer based on the projected rates, for each year of the Projection Period, is included herein. An illustration of the projected bill path is provided in Figure 3.

2026 2027 2028 2029 2030
Monthly Fixed Charge:

All Customers - per Sewage Unit 8.00$ 9.37$ 9.87$ 10.41$ 10.97$ 11.56$ All Customers - per Stormwater Unit 3.30$ 4.30$ 4.53$ 4.78$ 5.04$ 5.31$ EMWD Related Charge [1]:

Capital Sewer Charge 4.53$ 4.68$ 4.92$ 4.92$ 4.92$ 4.92$ Sewer (per Sewage Unit) 33.31$ 36.60$ 39.00$ 39.00$ 39.00$ 39.00$ Notes:
[1] Eastern Municipal Water District (EMWD) provides sewer treatment services to the City of Hemet. These charges are independent of the City's sewer collection rates and will be charged in addition to the City's rates.

The City of Hemet has no control over EMWD's rates. The EMWD rates provided in this table are subject to change. No analysis of EMWD's rates was conducted, they are provided for informational purposes only.

Description Existing
Rates
Projected For Fiscal Year Ending June 30

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5.3 Debt Service Coverage
As stated previously in Section 2.3.3, the City currently has no outstanding debt associated with either the water or sewer utility system, and based on discussions with the City, there are no anticipated debt issuances expected to occur over the Projection Period. Therefore, no annual debt service payments or debt service ratio calculations are included in the analysis and Projection Period.

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5.4 Summary of Projected Operating Results
The cash-flow statements outlining the projected operating results are summarized in Tables 40 and 41 for the water and sewer systems, respectively. The results demonstrate that the proposed rates and charges along with the other respective system revenues are anticipated to be sufficient to satisfy the projected Revenue Requirements and capital needs for each respective utility system. To see the full cash -flow statement for each respective utility system over the Projection Period, please refer to Appendix D.

Table 40 – Water System Projected Operating Results

Proposed
2026 2027 2028 2029 2030
Revenues:

Water Sales 12,781$ 13,496$ 14,930$ 16,517$ 18,272$ Other Revenues [1] 3,051 3,146 3,244 638 638 Total Revenues 15,832$ 16,642$ 18,175$ 17,155$ 18,910$ Less O&M Expenses (12,708) (13,390) (14,111) (14,876) (15,686) Net Income For Debt 3,124$ 3,252$ 4,063$ 2,280$ 3,224$ Debt Service:

Existing -$ -$ -$ -$ -$ Future - - - - - Total Debt Service -$ -$ -$ -$ -$ Net Results 3,124$ 3,252$ 4,063$ 2,280$ 3,224$ Fund Balance Activity:

Cash Reserves
Beginning Balance 4,839$ 6,283$ 5,180$ 6,928$ 7,384$ Deposit/(Withdrawal) from Operations 3,124 3,252 4,063 2,280 3,224 Capital Projects From Capital Improvement Plan (1,680) (4,355) (2,315) (1,823) (2,553) Total Cash Reserves 6,283$ 5,180$ 6,928$ 7,384$ 8,056$ Days Cash on Hand 180 141 179 181 187 Debt Coverage N/A N/A N/A N/A N/A
Notes:
[1] Other Revenues decrease starting in FY 2029 due to the expiration of an interagency agreement between EMWD and the City for the purchase of groundwater carry-over credits.

Description
Projected for Fiscal Year Ending June 30 ($1,000s)

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Table 41 – Sewer System Projected Operating Results

Proposed
2026 2027 2028 2029 2030
Revenues:

Wastewater Sales 4,777$ 4,925$ 5,212$ 5,515$ 5,836$ Other Revenues 95 95 95 95 95 Total Revenues 4,872$ 5,020$ 5,307$ 5,610$ 5,931$ Less O&M Expenses (3,582) (3,761) (3,949) (4,147) (4,354) Net Income For Debt 1,290$ 1,259$ 1,357$ 1,463$ 1,577$ Debt Service:

Existing -$ -$ -$ -$ -$ Future - - - - - Total Debt Service -$ -$ -$ -$ -$ Net Results 1,290$ 1,259$ 1,357$ 1,463$ 1,577$ Fund Balance Activity:

Cash Reserves
Beginning Balance 10,113$ 9,723$ 9,218$ 8,607$ 7,882$ Deposit/(Withdrawal) from Operations 1,290 1,259 1,357 1,463 1,577 Capital Projects From Capital Improvement Plan (1,680) (1,764) (1,968) (2,188) (2,425) Total Cash Reserves 9,723$ 9,218$ 8,607$ 7,882$ 7,034$ Days Cash on Hand 991 894 795 694 590 Debt Coverage N/A N/A N/A N/A N/A
Description
Projected for Fiscal Year Ending June 30 ($1,000s)

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Section 6 – Drought Surcharge

6.1 General
In accordance with the American Water Works Association (AWWA) Manual M1, a rate surcharge is a separate charge added to the existing rate structure to collect either:
• A targeted amount of revenue; or
• To assess an appropriate charge for usage characteristics outside of those covered in the standard charge for service.

Surcharges are often separate from the standard rate structure and are labeled for a specific purpose for which the funds will be used, or they are connected directly to an event that causes the need for the surcharge. Drought rates are a specific form of a surcharge.

6.2 Purpose of a Drought Surcharge
Drought surcharges are a specific form of surcharge used during a period of drought that is intended to ensure that revenue collected during a period when water sales are reduced because of drought will still meet the financial requirements of the utility. Most often this is due to mandated water use restrictions enacted as part of specific administrative action, such as a declaration of drought by a legislative body (i.e. City Council) or public official (i.e.

City Manager). Reduction in water demand is usually achieved by multiple actions, such as:
• Appealing to customers to voluntarily reduce their water usage; and • Placing mandatory restrictions on discretionary water usage often related to outdoor usage (e.g., irrigation, filling pools, pressure washing, car washing, etc.).

When water demand is reduced, there may be a negative impact on utility revenues.

Because less water is sold, there is a corresponding reduction in variable water rate revenue which can result in the water utility not being able to generate sufficient revenue to cover the water system’s Revenue Requirements. This is because the standard variable water rates, such as those described in previous sections of this Report, are developed based on a calculated Revenue Requirement and expected water use/sales during normal conditions.

If the volume of water sold is reduced because of drought, the variable rates will no longer be in balance with the required revenue.

To address this situation, a drought surcharge can be created and enacted to help prevent a revenue shortfall and ensure that the water system’s Revenue Requirements are met. If a revenue shortfall were to occur, this could result in the water utility having to draw down on available cash reserves which are designated for other purposes, reduce maintenance activities, delay capital projects, or otherwise cause the water utility to not generate enough revenue to meet its current financial obligations.

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To calculate drought rates adjustments are made to certain expenses that decline as less water is purchased, pumped, treated , and delivered. However, most expenses do not decrease during drought periods, which leads to an imbalance between rate revenue and the revenue required, so the variable rates are adjusted upward to ensure adequate revenue is generated to meet the Revenue Requirement.

6.2.1 T ’
The City adopted a Water Shortage Contingency Plan (WSCP) that is designed to prepare for and respond to water shortages. This WSCP complies with the California Water Code (CWC) Section 10632, which requires that every urban water supplier shall prepare and adopt a WSCP as part of its Urban Water Management Plan (UWMP).

The WSCP establishes water use restrictions and prohibitions to be implemented during times of declared water shortages or declared water shortage emergencies. It establishes six stages of response actions to be implemented in times of shortage, with incre asing restrictions on water use in response to different severities of drought conditions or decreasing available supplies. During times of a water shortage and based on the severity of the water shortage, the City Council shall direct the City Manager, the Public Works Director, the Water/Wastewater Superintendent , or a designated City representative to implement the provisions of this division. An emergency water shortage response can go into effect:

1. If t he City Manager invoke s emergency water shortage restrictions when a major failure occurs, whether temporary or permanent, in the supply, the water quality, the distribution lines, or the reservoirs of the city's water system; or

2. When the Governor and State Water Board find and declare that an emergency exists due to severe drought conditions and that adoption of proposed emergency regulations is necessary to address the emergency.

To provide a consistent regional and statewide approach for conveying the relative severity of water supply shortage conditions, the 2018 Water Conservation Legislation mandates that water suppliers plan for six standard WSCP Levels that correspond to progressive reductions of up to 10, 20, 30, 40, 50 percent, and greater than 50 percent from the normal reliability condition. Each shortage condition should correspond to additional actions water suppliers would implement to meet the severity of the impending shortages. For each declared water supply shortage level, customers will be required to reduce consumption by the percentage specified in the WSCP Level found in the City’s Ordinance No.1997 Sec 82-141. More details regarding the six water shortage contingency plan levels and the demand reduction actions at each stage can be found in the City’s Ordinance No.1997 Sec 82-144.

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6.3 Proposed Drought Surcharge Rates
As described previously, only the volumetric rates are increased when a certain drought stage and the corresponding drought surcharge goes into effect. As stated previously in Section 3 of the Report, this is because of the functional unbundling of the Revenue Requirements (costs). When the drought surcharge rates go into effect at a certain WSCP level due to a water supply shortage, there is less water demand (customer usage) through which to recover the Revenue Requirements allocated to the volumetric rat e cost components. Therefore, volumetric rates need to increase to recover the portion of the Revenue Requirements needed from the volumetric rates, while the base charge remains unchanged. Table 4 2 shows the standard (no drought) rates and demonstrates the volumetric drought rates that were developed for the Test Year at each WSCP stage .

Drought rates are based on the adjusted volumetric rate Revenue Requirements ( i.e., reductions in water purchases, electricity, and water booster pumping costs) which correspond to the reduction in water usage at each WSCP stage.

Table 42 – Stage 2 Through Stage 5 Drought Surcharge Rate Development

The analysis and proposed drought surcharge water rates herein reflect the drought rates per 100 cubic feet that would need to go into effect for WSCP stages (levels) 2 through 5 over the Projection Period. The proposed drought surcharge rates for stages 2 through 5, and a comparison of the standard water rates to the drought rates for stages 2 through 5 over the Projection Period, can be found in Table 43.

Total
Volumetric
Component
Costs
Total Billable
Water Units
(Billable
Usage)
Rate per CCF
[A] [B] [A]/[B]
Drought Stage
Standard (No Drought) 7,621,783$ 1,589,866 4.79$ Stage 2 Drought (20% Reduction) 7,163,409$ 1,271,893 5.63$ Stage 3 Drought (30% Reduction) 6,935,777$ 1,112,906 6.23$ Stage 4 Drought (40% Reduction) 6,749,455$ 953,920 7.08$ Stage 5 Drought (50% Reduction) 6,709,123$ 794,933 8.44$ Description

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Table 43 – Stage 2 Through Stage 5 Drought Surcharge Rates & Comparison to Standard Water Rates per CCF

Proposed
2026 2027 2028 2029 2030
Drought Stage
Standard (No Drought) Rate per CCF 4.79$ 5.27$ 5.80$ 6.38$ 7.02$ Stage 2 Drought Rate per CCF (20% Reduction) 5.63$ 6.18$ 6.81$ 7.48$ 8.25$ Stage 3 Drought Rate per CCF (30% Reduction) 6.23$ 6.82$ 7.54$ 8.26$ 9.12$ Stage 4 Drought Rate per CCF (40% Reduction) 7.08$ 7.74$ 8.56$ 9.37$ 10.36$ Stage 5 Drought Rate per CCF (50% Reduction) 8.44$ 9.22$ 10.21$ 11.17$ 12.36$ Difference per CCF ($)
Stage 2 vs. Standard 0.84$ 0.90$ 1.01$ 1.10$ 1.23$ Stage 3 vs. Standard 1.44$ 1.55$ 1.74$ 1.88$ 2.11$ Stage 4 vs. Standard 2.28$ 2.47$ 2.76$ 2.99$ 3.34$ Stage 5 vs. Standard 3.65$ 3.95$ 4.41$ 4.79$ 5.34$ Fiscal Year Ending June 30
Description

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Section 7 – Conclusions and Recommendations

7.1 Disclaimers

7.1.1 General Disclaimer
In the development of the proposed user rates and charges, certain historical reviews and analyses have been performed, together with the application of assumptions based on prudent financial, operational, and ratemaking relationships. The cost criteria and customer usage characteristics associated with general ratemaking procedures are representative of averages and are not intended as indicators of any individual customer.

In the preparation of the rate study, certain assumptions have been made with respect to conditions that may occur in the future. While it is believed that these assumptions are reasonable for the purpose of this rate study, they are dependent upon future events and actual conditions may differ from those assumed. In addition, the study has used and relied upon certain information that was provided by other parties not associated with Willdan.

Such information includes, among other things, the City’s audite d financial statements, annual operating budgets, periodic reports, and other information and data provided by the City, its independent auditors, and other sources. While the sources are believed to be reliable, there has been no independent verification of the information, and no assurances are offered with respect thereto. To the extent that future conditions differ from those assumed herein or provided by others, the actual results may vary from those projected.

7.1.2 Municipal Advisory Disclaimer
Unless the City of Hemet, California (the “City”) has a written engagement from Willdan Financial Services (“Willdan”) for municipal advisory services, Willdan is not advising or recommending any action be taken by the recipient of this information with respect to any prospective, new, or existing municipal financial products or issuance of municipal securities (including with respect to the structure, timing, terms , and other similar matters concerning such financial products or issues). The City shall dis cuss any such information and material contained in Willdan’s work product with any and all internal and/or external advisors and experts, including its own municipal advisor, that it deems appropriate before acting on the information and material.

For the avoidance of doubt and without limiting the foregoing, in connection with any revenue projections, cash -flow analyses, feasibility studies and/or other analyses Willdan may provide the City with respect to financial, economic or other matters relat ing to a prospective, new or existing issuance of municipal securities of the City, (A) any such projections, studies and analyses shall be based upon assumptions, opinions or views (including, without limitation, any assumptions related to revenue growth) established by the City, in conjunction with such of its municipal, financial, legal and other advisers as it deems appropriate; and (B) under no circumstances shall Willdan be asked to provide, nor shall it

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provide, any advice or recommendations or subjective assumptions, opinions or views with respect to the actual or proposed structure, terms, timing, pricing or other similar matters with respect to any municipal financial products or municipal securities issuances, including any revisions or amendments thereto.

7.2 Conclusions
As previously addressed, the purpose of this study is to provide a review of the City’s existing utility rates to determine if rate adjustments are necessary to meet the budgeted and/or projected financial needs in future years. This Report is the result of the collaborative efforts of representatives from both the City and Willdan. City staff were diligent and cooperative in their efforts to ensure the availability and quality of source data on financial and operating matters. Based on the reviews, analyse s and assumptions discussed herein, it is concluded that:

1. The proposed user rates and charges are anticipated to generate sufficient revenues to meet the Revenue Requirements of each respective system based upon the projected expenditures , capital project timing and costs , transfers, and billable customer units estimated for the Test Year. The proposed rates are based on an assumed implementation date of March 1, 202 6. To the extent that the actual implementation date varies from the assumed implementation date, additional rate adjustments and/or appropriations from existing reserves may be necessary.

2. The estimated revenues and resulting rate adjustments for the remaining years of the Projection Period beyond the Test Year are developed based on the customer growth assumptions generated from the historical analyses and discussions with City staff.

3. Customer growth for the water and sewer systems is projected based on historical customer data as provided by the City as well as discussions with City staff regarding developer activity and anticipated construction. If it turns out that th e customer growth assumptions are not realized , the resulting revenues could be different than projected.

4. The projection of billable water and sewer units is based on historical trends regarding the average units per user for each customer class. The average water and sewer units per account is developed from historical customer data and is assumed to remain relatively constant for the Projection Period. The historical billing data provided by the City was utilized to identify and calculate the average unit statistics for system customers. For the analysis developed herein, it is assumed that the average statistics for the Projection Period will be consistent with recent historical average levels as realized in recent years, or as otherwise assumed based on discussions with staff.

When a pplying the estimated average statistics, it is assumed that the water and sewer sales will increase with the estimated growth in customers. However, it is important to note that annual variations in rainfall and other climatological factors may influence the level of future billable demands for the City.

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5. Future capital improvement projects are assumed to occur as reported by the City in its CIP. To the extent that the timing of such projects may change from that estimated herein, the cost of such projects and resulting impact on future rates and charges may vary from those indicated.

6. The proposed rates and rate structure are consistent with industry standards for rate- setting practices, comply with Proposition 218, and conform to the City’s financial policies with respect to:
a. Equitably recovering costs;
b. Being based upon the proportionate cost of providing services; and c. Generating sufficient revenue to recover system Revenue Requirements, fund capital needs, and meet reserve requirements.

7.3 Recommendations
Based on the reviews, analyses , and assumptions addressed herein, as well as the resulting conclusions provided above, it is respectfully recommended that the City:

1. Adopt the proposed water and sewer rates.

2. Adopt the proposed drought surcharge rates.

3. Enact the proposed rates to become effective as of March 1, 202 (or other such date as determined by the City). Based on the timing of the project and the required public hearing procedures and noticing requirements , it is expected that the proposed water and sewer rates will become effective on the recommended date.

4. Readdress the COS analysis portion of this study every three to five years to ensure costs are recovered consistently with COS principles and customer characteristics.

We appreciate the opportunity to be of service to the City in this engagement. In addition, we would like to thank City staff for the valuable assistance provided during the completion of the rate study.

Respectfully Yours,

WILLDAN FINANCIAL SERVICES

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City of Hemet, CA

Comprehensive Water & Sewer Utility Rate
Study Update
Appendices
A Revenue Requirement for User Rates
B Water Cost-of-Service Analysis
C Sewer Cost-of-Service Analysis
D 5-Year Financial Projections

21.A.

City of Hemet, CA

Comprehensive Water & Sewer Utility Rate
Study Update
Appendix A Revenue Requirement for
User Rates

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APPENDIX - A

CITY OF HEMET, CA
Development of Rate Revenue Requirements
[A] [B] [C]=[A]*[B] [D] [E]=[A]*[D]
FY 2026 % to Water Water % to Sewer Sewer
1 Total Operating Revenues 20,704,019$ 15,832,143$ 4,871,876$ Less:

Other Operating Revenues
2 Interest Earnings 150,000$ 100% 150,000$ 0% -$ 3 Energy Capacity Payments 12,000 100% 12,000 0% - 4 Water Facilities Fees 60,000 100% 60,000 0% - 5 Um: Backflow Fee 78,000 100% 78,000 0% - 6 Sale Of Water Credits 2,413,128 100% 2,413,128 0% - 7 Other Revenue 30,000 100% 30,000 0% - 8 Prepaid Water Services 250,000 100% 250,000 0% - 9 Um: Other Water Charges 50,000 100% 50,000 0% - 10 Water Waste Fine 5,000 100% 5,000 0% - 11 Collection Agency Receipts 3,000 100% 3,000 0% - 12 Investment Earnings 35,000 0% - 100% 35,000 13 Sewer Connection Fees 60,000 0% - 100% 60,000 14 Total Other Operating Revenues 3,146,128 3,051,128 95,000 15 Total Rate Revenue Requirement 17,557,891$ 73% 12,781,015$ 27% 4,776,876$ Test Year for Rate Revenue RequirementLine No: Description A - 1Page 68 of 94

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City of Hemet, CA

Comprehensive Water & Sewer Utility Rate
Study Update
Appendix B Water Cost-of-Service
Analysis

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APPENDIX - B

CITY OF HEMET, CA
Allocation of Test Year Costs to Water Function
Line Expense Group FY 2026
1 Treatment $0
2 Transmission & Distribution 2,620,084
3 Customer Service 92,505
4 Admin 7,712,884
5 Source of Supply 2,014,005
6 Soboba Settlement Agreement 268,600
7 CIP 1,680,000
8 Total 14,388,078$
Test Year Revenue Requirement
B - 1

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APPENDIX - B

CITY OF HEMET, CA
Water Customer and Equivalent Residential Unit Calculation - Test Year FY 2026 [A - 1] [B - 1] [C - 1] [D - 1] [E - 1] [F - 1]
Class --> Single-Family Multi-Family Commercial Institutional Irrigation City Billing Basis--> Units Units Units Units Units Units
1 0.625 1.00 1.00 1.00 1.00 1.00 1.00 2 0.75 1.50 1.50 1.50 1.50 1.50 1.50 3 1.00 2.50 2.50 2.50 2.50 2.50 2.50 4 1.50 5.00 5.00 5.00 5.00 5.00 5.00 5 2.00 8.00 8.00 8.00 8.00 8.00 8.00 6 3.00 15.00 15.00 15.00 15.00 15.00 15.00 7 4.00 25.00 25.00 25.00 25.00 25.00 25.00 8 6.00 50.00 50.00 50.00 50.00 50.00 50.00 9 8.00 80.00 80.00 80.00 80.00 80.00 80.00 10 Flow Meter 5.00 5.00 5.00 5.00 5.00 5.00 [A - 2] [B - 2] [C - 2] [D - 2] [E - 2] [F - 2]
Class --> Single-Family Multi-Family Commercial Institutional Irrigation City Billing Basis--> Units Units Units Units Units Units
11 0.625 7,296 348 226 10 20 25 7,925 12 0.75 531 28 13 1 2 1 576 13 1.00 96 135 123 5 38 29 426 14 1.50 - 7 8 1 1 7 24 15 2.00 2 86 181 23 79 49 420 16 3.00 - 1 4 2 - 1 8 17 4.00 - 4 3 7 2 - 16 18 6.00 - 4 - - - - 4 19 8.00 - 5 - - - - 5 20 Flow Meter - - 7 - - - 7 21 Total Monthly Customers 7,925 618 565 49 142 112 9,411 [A - 1] * [A - 2] [B - 1] * [B - 2] [C - 1] * [C - 2] [D - 1] * [D - 2] [E - 1] * [E - 2] [F - 1] * [F - 2] Class --> Single-Family Multi-Family Commercial Institutional Irrigation City Billing Basis--> Units Units Units Units Units Units
22 0.625 7,296 348 226 10 20 25 7,925 23 0.75 797 42 20 2 3 2 864 24 1.00 240 338 308 13 95 73 1,065 25 1.50 - 35 40 5 5 35 120 26 2.00 16 688 1,448 184 632 392 3,360 27 3.00 - 15 60 30 - 15 120 28 4.00 - 100 75 175 50 - 400 29 6.00 - 200 - - - - 200 30 8.00 - 400 - - - - 400 31 Flow Meter - - 35 - - - 35 32 Total Monthly Customers 8,349 2,166 2,211 418 805 541 14,489 Meter Size
Customer Accounts
Total Equivalent Residential Units
Line
Line
Line
Total
Total
Meter Equivalencies
Meter Size
Meter Size
B - 2

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APPENDIX - B

CITY OF HEMET, CA
Water Max Day/Hour Allocation Factors - Test Year FY 2026 [A] [B] [C] [D] [E] [F]
Flow Peak Month
(CCF)
Average
Month (CCF)
Max
Day/Avg
Day Factor
Max Day Total
Capacity
(CCF/Day)
Max Day
Extra
Capacity
(CCF/Day)
Operating Statistics: MGD Factor
1 Avg Day Flow (MGD) 3.30 1.00 2 Max Day Flow (MGD) 5.30 1.61 3 Cost Allocation Factors: Base Max Day Max Hour
4 Base/Max Day 62.26% 37.74% 0.00%
Peaking Factors: [B] / [C]
Single-Family
5 All Flow 75,525 53,829 1.40
Multi-Family
6 All Flow 51,251 40,035 1.28
Commercial
7 All Flow 30,940 22,385 1.38
Institutional
8 All Flow 5,598 3,470 1.61
Irrigation
9 All Flow 12,155 6,775 1.79
City
10 All Flow 14,081 6,474 2.17
[D] x [B] [E] - [B]
Estimated Flows:

Total Annual
Flow (CCF)
Average
Daily Flow
(CCF)
Peaking
Factor
Total
Capacity
Extra
Capacity
Single-Family
11 All Flow 649,939 1,781 1.40 2,498 718 Multi-Family
12 All Flow 473,459 1,297 1.28 1,661 363 Commercial
13 All Flow 266,726 731 1.38 1,010 279 Institutional
14 All Flow 41,473 114 1.61 183 70 Irrigation
15 All Flow 81,582 224 1.79 401 177 City
16 All Flow 76,686 210 2.17 457 247 17 Total 1,589,866 4,356 6,210 1,854 Maximum Day
Line Description
B - 3Page 72 of 94

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APPENDIX - B

CITY OF HEMET, CA
Water Units of Service by Cost Component - Test Year FY 2026 [A] [B] [C] [D]
ERUs Accounts Base (CCF)
Max Day
(CCF/Day)
1 Single-Family 8,349 7,925 649,939 718 2 All Flow 649,939 718
3 Multi-Family 2,166 618 473,459 363 4 All Flow 473,459 363
5 Commercial 2,211 565 266,726 279 6 All Flow 266,726 279
7 Institutional 418 49 41,473 70 8 All Flow 41,473 70
9 Irrigation 805 142 81,582 177 10 All Flow 81,582 177
11 City 541 112 76,686 247 12 All Flow 76,686 247
13 Total 14,489 9,411 1,589,866 1,854 Line Description
B - 4

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APPENDIX - B

CITY OF HEMET, CA
Allocation of Water Costs - Test Year FY 2026
Line Description Water Costs Base Extra Capacity
Max Day
Meters &
Services
Billing &
Collection Total (Check)
Allocation Factors:
1 Treatment 62.26% 37.74% 0.00% 0.00% 100.00%
2 Transmission & Distribution 62.26% 37.74% 0.00% 0.00% 100.00% 3 Customer Service 0.00% 0.00% 0.00% 100.00% 100.00%
4 Admin 18.29% 11.09% 70.62% 0.00% 100.00%
5 Source of Supply 62.26% 37.74% 0.00% 0.00% 100.00%
6 Soboba Settlement Agreement 0.00% 0.00% 100.00% 0.00% 100.00% 7 CIP 62.26% 37.74% 0.00% 0.00% 100.00%
Allocation of Costs:
8 Treatment -$ -$ -$ -$ -$ -$ 9 Transmission & Distribution 2,620,084 1,631,373 988,711 - - 2,620,084 10 Customer Service 92,505 - - - 92,505 92,505
11 Admin 7,712,884 1,410,934 855,111 5,446,839 - 7,712,884 12 Source of Supply 2,014,005 1,254,003 760,002 - - 2,014,005 13 Soboba Settlement Agreement 268,600 - - 268,600 - 268,600 14 CIP 1,680,000 1,046,038 633,962 - - 1,680,000
15 Non-Rate Rev & Fund Balance (1,607,063) (596,709) (361,642) (638,381) (10,331) (1,607,063) 16 Total 12,781,015$ 4,745,639$ 2,876,144$ 5,077,058$ 82,174$ 12,781,015$ Total Units of Service 1,589,866.44 1,854.43 14,489.00 9,411.00 Units CCF CCF/Day ERU/Monthly Bills/Monthly
Cost Per Unit 2.9849$ 1,550.9616$ 29.2006$ 0.7276$ Units CCF CCF/Day ERU/Monthly Bills/Monthly
B - 5

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APPENDIX - B

CITY OF HEMET, CA
Water Cost of Service by Cost Component and Customer Class - Test Year FY 2026 [A] [B] [C] [D] [F]
ERUs Accounts Base (CCF) Max Day
(CCF/Day) Total
1 Single-Family 2,925,379$ 69,199$ 1,940,023$ 1,113,156$ 6,047,757$ 2 All Flow 1,940,023$ 1,113,156$
3 Multi-Family 758,808$ 5,396$ 1,413,243$ 563,677$ 2,741,124$ 4 All Flow 1,413,243$ 563,677$
5 Commercial 774,752$ 4,933$ 796,159$ 433,096$ 2,008,941$ 6 All Flow 796,159$ 433,096$
7 Institutional 146,470$ 428$ 123,793$ 108,066$ 378,757$ 8 All Flow 123,793$ 108,066$
9 Irrigation 282,078$ 1,240$ 243,517$ 275,293$ 802,128$ 10 All Flow 243,517$ 275,293$
11 City 189,571$ 978$ 228,904$ 382,857$ 802,309$ 12 All Flow 228,904$ 382,857$
13 Total 5,077,058$ 82,174$ 4,745,639$ 2,876,144$ 12,781,015$ Line Description
B - 6

21.A.

APPENDIX - B

CITY OF HEMET, CA
Water Rate Calculation - Test Year FY 2026
[A] [B] [C] [D] [E] [F]
Capacity
Ratio Meter Charge Customer
Charge
Proposed
Fixed Charge
Existing Fixed
Charge Difference
General Service
1 5/8 Inch 1.00 $ 29.20 $ 0.73 $ 29.93 $ 30.15 $ (0.22) 2 3/4 Inch 1.50 $ 43.80 $ 0.73 $ 44.53 $ 33.81 $ 10.72 3 1.0 Inch 2.50 $ 73.00 $ 0.73 $ 73.73 $ 41.16 $ 32.57 4 1.5 Inch 5.00 $ 146.00 $ 0.73 $ 146.73 $ 74.42 $ 72.31 5 2.0 Inch 8.00 $ 233.61 $ 0.73 $ 234.33 $ 97.91 $ 136.42 6 3.0 Inch 15.00 $ 438.01 $ 0.73 $ 438.74 $ 261.43 $ 177.31 7 4.0 Inch 25.00 $ 730.02 $ 0.73 $ 730.74 $ 359.54 $ 371.20 8 6.0 Inch 50.00 $ 1,460.03 $ 0.73 $ 1,460.76 $ 563.88 $ 896.88 9 8.0 Inch 80.00 $ 2,336.05 $ 0.73 $ 2,336.78 $ 711.85 $ 1,624.93 10 Flow Meter 5.00 $ 146.00 $ 0.73 $ 146.73 $ 152.98 $ (6.25) Line Customer Class Base Rate Peaking Rate Proposed
Rate ($/CCF)
Existing Rate
($/CCF) Difference Tier
Differential
Single-Family
1 All Flow 2.98$ 1.81$ 4.79$ 4.79$ $ 0.00 1.00 Multi-Family
2 All Flow 2.98$ 1.81$ 4.79$ 4.79$ $ 0.00 1.00 Commercial
3 All Flow 2.98$ 1.81$ 4.79$ 4.79$ $ 0.00 1.00 Institutional
4 All Flow 2.98$ 1.81$ 4.79$ 4.79$ $ 0.00 1.00 Irrigation
5 All Flow 2.98$ 1.81$ 4.79$ 4.79$ $ 0.00 1.00 City
6 All Flow 2.98$ 1.81$ 4.79$ 4.79$ $ 0.00 1.00 Line Customer Class Annual Use
(CCF) Peaking Costs Peaking Unit
Cost
1 Total Flows 1,589,866 2,876,144$ 1.81$
Line Description
B - 7Page 76 of 94

21.A.

APPENDIX - B

CITY OF HEMET, CA
Water Revenue vs Cost of Service Check - Test Year FY 2026 Total Rates - Cost of Service Component $12,781,015
Rate Units Revenue

0.625 29.93$ 7,925 $2,846,180

0.750 44.53 576 307,782

1.000 73.73 426 376,904

1.500 146.73 24 42,258

2.000 234.33 420 1,181,037

3.000 438.74 8 42,119

4.000 730.74 16 140,303

6.000 1,460.76 4 70,116

8.000 2,336.78 5 140,207
Flow Meter 146.73 7 12,325
-------------------------
Total Service Charge Revenue $5,159,232
Volume Charge Revenue to be Recovered $7,621,783
% Volume in Billed Cumulative Volume Rate
Block Block Volume Factor Rate Revenue
All Flow HCF 100.0% 1,589,866 1.00 4.79$ $7,621,783 ------------------------- --------------------------------------------- ------------------------- Total 100% 1,589,866 $7,621,783
Annual Surplus/(Deficiency) $0
COS Check Calculated COS
Variance
From COS
Percent
Variance
Total $12,781,015 $12,781,015 $0 0.00%
Service Charge, $ per Bill
B - 8

21.A.

City of Hemet, CA

Comprehensive Water & Sewer Utility Rate
Study Update
Appendix C Sewer Cost-of-Service
Analysis

21.A.

APPENDIX - C

CITY OF HEMET, CA
Allocation of Test Year Costs to Sewer Function
Line Expense Group FY 2026
1 Collection $416,120
2 Treatment 0
3 Administration 3,119,961
4 Pumping 0
5 Customer Service 46,200
6 Transfers 0
7 Existing Bond DS 0
8 New Bond DS 0
9 CIP 1,680,000
10 Capital Outlay 0
11 Total 5,262,281$
Test Year Revenue Requirement
C - 1Page 79 of 94

21.A.

APPENDIX - C

CITY OF HEMET, CA
Sewer Customer Account & Stength Characteristics by Customer Class - Test Year FY 2026 Total Total
Accounts Units
Sewer
1 City & LHMWD - Sewer Units 10,344 18,495 2 EMWD - Sewer Units 3,048 8,070
3 Sub-Total Sewer 13,392 26,565
Stormwater
4 City & LHMWD - Stormwater Units 10,344 18,495 5 EMWD - Stormwater Units 10,352 16,208 6 Sub-Total Stormwater 20,696 34,703
7 Sewer System Total 34,088 61,268
DescriptionLine
C - 2

21.A.

APPENDIX - C

CITY OF HEMET, CA
Allocation of Sewer Costs - Test Year FY 2026
Line Description Sewer Costs Sewer Stormwater Total (Check) Allocation Factors:
1 Treatment 0.00% 0.00% 0.00%
2 Collection 56.07% 43.93% 100.00%
3 Administration 43.36% 56.64% 100.00%
4 Customer Service 50.00% 50.00% 100.00%
5 CIP 100.00% 0.00% 100.00%
Allocation of Costs:
6 Treatment -$ -$ -$ -$ 7 Collection 416,120 233,310 182,810 416,120
8 Administration 3,119,961 1,352,774 1,767,187 3,119,961 9 Customer Service 46,200 23,100 23,100 46,200
10 CIP 1,680,000 1,680,000 - 1,680,000
11 Non-Rate Rev & Fund Balance (485,405) (303,402) (182,003) (485,405) 12 Total 4,776,876$ 2,985,782$ 1,791,094$ 4,776,876$ Total Units of Service 26,565 34,703
Units Units/Monthly Units/Monthly
Cost Per Unit 9.37$ 4.30$
Units Units/Monthly Units/Monthly
C - 3

21.A.

APPENDIX - C

CITY OF HEMET, CA
Sewer Cost of Service by Cost Component and Customer Class - Test Year FY 2026 [A] [B] [C]
Sewer Stormwater Total
1 City & LHMWD - Sewer Units 2,078,752$ -$ 2,078,752$ 2 EMWD - Sewer Units 907,030 - 907,030 3 City & LHMWD - Stormwater Units - 954,565 954,565 4 EMWD - Stormwater Units - 836,529 836,529 5 Total 2,985,782$ 1,791,094$ 4,776,876$
Line Description
C - 4

21.A.

APPENDIX - C

CITY OF HEMET, CA
Sewer Rate Calculation - Test Year FY 2026
[A] [B] [C] [D] [E]=[C]-[D]
Fixed Fee
Costs Monthly Units
Proposed
Monthly Fixed
Fee
Existing
Monthly Fixed
Fee
Monthly Fixed
Fee
Difference
1 City & LHMWD - Sewer Units $ 2,078,752 18,495 $ 9.37 $ 8.00 $ 1.37 2 EMWD - Sewer Units $ 907,030 8,070 $ 9.37 $ 8.00 $ 1.37 3 City & LHMWD - Stormwater Units $ 954,565 18,495 $ 4.30 $ 3.30 $ 1.00 4 EMWD - Stormwater Units $ 836,529 16,208 $ 4.30 $ 3.30 $ 1.00 Line Customer Class
C - 5

21.A.

APPENDIX - C

CITY OF HEMET, CA
Sewer Revenue vs Cost of Service by Customer Class Check - Test Year FY 2026 [A] [B] [C]=[A]*[B]*12 [D] [E]=[D]-[C]
Monthly Units
Proposed
Monthly Fixed
Fee
Total Fixed
Fee Revenue
Total COS
Revenues
Difference
Calc vs COS
1 City & LHMWD - Sewer Units 18,495 9.37$ 2,078,752$ 2,078,752$ -$ 2 EMWD - Sewer Units 8,070 9.37$ 907,030$ 907,030$ -$ 3 City & LHMWD - Stormwater Units 18,495 4.30$ 954,565$ 954,565$ -$ 4 EMWD - Stormwater Units 16,208 4.30$ 836,529$ 836,529$ -$ 5 Total 61,268 4,776,876$ 4,776,876$ -$ Line Customer Class
C - 6

21.A.

City of Hemet, CA

Comprehensive Water & Sewer Utility Rate
Study Update
Appendix D 5-Year Financial Projections

21.A.

CITY OF HEMET, CA APPENDIX D

WATER & WASTEWATER SYSTEM

PROJECTED OPERATING RESULTS - WATER
Existing Proposed
2026 2026 2027 2028 2029 2030

REVENUES
Operating Revenues
1 Water Service Charges 11,618,482$ 12,781,015$ 13,495,690$ 14,930,464$ 16,517,233$ 18,272,049$ Other Operating Revenues
2 Miscellaneous Revenues 2,901,128$ 2,901,128$ 2,995,838$ 3,094,040$ 488,000$ 488,000$ Other Non-Operating Revenues
3 Interest 150,000 150,000 150,000 150,000 150,000 150,000 4 Total Revenues 14,669,610$ 15,832,143$ 16,641,528$ 18,174,504$ 17,155,233$ 18,910,049$ Current Expenses
5 Water Administration 12,708,078$ 12,708,078$ 13,389,511$ 14,111,148$ 14,875,662$ 15,685,925$ 6 Sewer Maintenance - - - - - - 7 Storm Drain Maintenance - - - - - - 8 Total Current Expenses 12,708,078$ 12,708,078$ 13,389,511$ 14,111,148$ 14,875,662$ 15,685,925$ 9 Income Available for Debt Service 1,961,532$ 3,124,065$ 3,252,017$ 4,063,356$ 2,279,571$ 3,224,124$

DEBT SERVICE
New Debt
10 Water System Improvements - SRF Loan - - - - - - 11 Water System Improvements - Installment Debt - - - - - - 12 Water System Improvements - Revenue Bond - - - - - - 13 Total New Debt -$ -$ -$ -$ -$ -$ 14 Total Indebtedness -$ -$ -$ -$ -$ -$ 15 Net Results of Operations 1,961,532$ 3,124,065$ 3,252,017$ 4,063,356$ 2,279,571$ 3,224,124$ Line Description Fiscal Year Ending June 30
D - 1

21.A.

CITY OF HEMET, CA APPENDIX D

WATER & WASTEWATER SYSTEM

PROJECTED OPERATING RESULTS - WATER
Existing Proposed
2026 2026 2027 2028 2029 2030Line Description Fiscal Year Ending June 30

RESERVE FUND BALANCE ACTIVITY
Operating Fund - Water
16 Beginning Fund Balance 4,838,720$ 4,838,720$ 6,282,785$ 5,179,927$ 6,928,033$ 7,384,345$ 17 Deposit/(Withdrawal) from Operations 1,961,532 3,124,065 3,252,017 4,063,356 2,279,571 3,224,124 18 Cash Funded Capital Projects From CIP (1,680,000) (1,680,000) (4,354,875) (2,315,251) (1,823,259) (2,552,563) 19 Ending Fund Balance 5,120,252$ 6,282,785$ 5,179,927$ 6,928,033$ 7,384,345$ 8,055,906$ 20 Targeted Fund Balance 6,266,997$ 6,266,997$ 6,603,047$ 6,958,922$ 7,335,943$ 7,735,525$ 21 Variance (1,146,745)$ 15,788$ (1,423,119)$ (30,890)$ 48,402$ 320,381$ 22 Days Cash on Hand 147 180 141 179 181 187 23 Targeted Days Cash on Hand 180 180 180 180 180 180 D - 2

21.A.

CITY OF HEMET, CA APPENDIX D

WATER & WASTEWATER SYSTEM

PROJECTED OPERATING RESULTS - WASTEWATER
Existing Proposed
2026 2026 2027 2028 2029 2030

REVENUES
Operating Revenues
1 Wastewater Service Charges 3,924,479$ 4,776,876$ 4,925,390$ 5,211,954$ 5,515,106$ 5,835,997$ Other Operating Revenues
2 Wastewater Connection Fees 60,000$ 60,000$ 60,000$ 60,000$ 60,000$ 60,000$ 3 Miscellaneous Revenues - - - - - - Other Non-Operating Revenues
4 Interest 35,000 35,000 35,000 35,000 35,000 35,000 5 Total Revenues 4,019,479$ 4,871,876$ 5,020,390$ 5,306,954$ 5,610,106$ 5,930,997$ Current Expenses
6 Water Administration -$ -$ -$ -$ -$ -$ 7 Sewer Maintenance 1,599,001 1,599,001 1,678,956 1,762,905 1,851,052 1,943,605 8 Storm Drain Maintenance 1,983,280 1,983,280 2,082,449 2,186,572 2,295,901 2,410,698 9 Total Current Expenses 3,582,281$ 3,582,281$ 3,761,405$ 3,949,477$ 4,146,953$ 4,354,303$ 10 Income Available for Debt Service 437,198$ 1,289,595$ 1,258,985$ 1,357,477$ 1,463,153$ 1,576,694$

DEBT SERVICE
New Debt
11 Wastewater System Improvements - SRF Loan - - - - - - 12 Wastewater System Improvements - Installment Debt - - - - - - 13 Wastewater System Improvements - Revenue Bond - - - - - - 14 Total New Debt -$ -$ -$ -$ -$ -$ 15 Total Indebtedness -$ -$ -$ -$ -$ -$ 16 Net Results of Operations 437,198$ 1,289,595$ 1,258,985$ 1,357,477$ 1,463,153$ 1,576,694$ Line Description Fiscal Year Ending June 30
D - 3

21.A.

CITY OF HEMET, CA APPENDIX D

WATER & WASTEWATER SYSTEM

PROJECTED OPERATING RESULTS - WASTEWATER
Existing Proposed
2026 2026 2027 2028 2029 2030Line Description Fiscal Year Ending June 30

RESERVE FUND BALANCE ACTIVITY
Operating Fund - Wastewater
17 Beginning Fund Balance 10,112,979$ 10,112,979$ 9,722,574$ 9,217,559$ 8,607,073$ 7,882,315$ 18 Deposit/(Withdrawal) from Operations 437,198 1,289,595 1,258,985 1,357,477 1,463,153 1,576,694 19 Cash Funded Capital Projects From CIP (1,680,000) (1,680,000) (1,764,000) (1,967,963) (2,187,911) (2,424,935) 20 Ending Fund Balance 8,870,177$ 9,722,574$ 9,217,559$ 8,607,073$ 7,882,315$ 7,034,074$ 21 Targeted Fund Balance 1,766,604$ 1,766,604$ 1,854,939$ 1,947,687$ 2,045,073$ 2,147,328$ 22 Variance 7,103,572$ 7,955,969$ 7,362,619$ 6,659,385$ 5,837,242$ 4,886,746$ 23 Days Cash on Hand 904 991 894 795 694 590 24 Targeted Days Cash on Hand 180 180 180 180 180 180 D - 4

21.A.

27368 Via Industria, Suite 200
Temecula, CA 92590
800.755.6864 | Fax: 888.326.6864
www.willdan.com

21.A.

NOTICE OF PUBLIC HEARING REGARDING

PROPOSED CHANGES TO WATER AND SEWER RATES
Hearing Date & Time: February 10, 2026, 6:00 PM
Hearing Location: Hemet City Council Chambers
450 East Latham Avenue, Hemet, California 92543
Why are you receiving this notice?
The City of Hemet (City) is mailing this notice to you because you are a water and/or sewer (wastewater) customer, or record owner of property that receives one or both services. This notice is being provided pursuant to California Constitution Article XIIID (also known as “Proposition 218”) , which requires the City to notify property owners and system users (customers) of proposed changes to property-related fees such as those for water or sewer service. This notice describes proposed changes to the rates for these services and provides information about a public hearing to be held on February 10, 2026, at the Hemet City Council Chambers , 450 East Latham Avenue , Hemet, California 92543. Please Note: The City Council Chambers are currently undergoing renovations which are anticipated to be completed prior to the hearing. In the event construction delays prevent the use of the Chambers, the Public Hearing will be held at the Hemet Public Library, Second Floor, 300 E. Latham Ave., Hemet, California 92543. Final confirmation of the location will be posted on the agenda for this meeting at the following website: https://hemetca.civicweb.net/portal/ and at City Hall at least 72 hours prior to the hearing. If adopted, the proposed rates for water and sewer service will be in effect for the first full billing cycle following March 1, 2026.

What do water and sewer rates fund?
The City operates stable, well-functioning systems that provide water and wastewater service to residents and customers, and it maintains critical infrastructure that ensures service and safeguard s health and safety of the community. The water production and distribution system covers an area of approximately 5.25 square miles that serves an area from Menlo Avenue on the north to Stetson Avenue on the south, and from Sanderson Avenue to the west to San Jacinto Street to the east. The City relies on groundwater from the Hemet-San Jacinto Groundwater Management Area, supplemented as needed by treated water from the State Water Project. Water production facilities include three operating wells, and four reservoirs. The City also has agreements with EMWD and LHMWD to provide sharing of water supplies during emergencies.

Groundwater is treated at one of two City treatment facilities and distributed via 132.3 miles of transmission and distribution pipelines ranging in size from 2 to 14 inches in diameter. Significant portions of the system were built nearly 100 years ago.

Many pipelines are past their planned service life and require rehabilitation and/or replacement to maintain system reliability.

Newer parts of the system are also approaching an age where rehabilitation or extensive maintenance is required. The City’s Capital Improvement Plan (CIP) identifies several rehabilitation projects needed to maintain a high level of service, however adequate funding is lacking for some critical projects. In addition, wells have been decommissioned due to water quality degradation, lease expiration, and reliability issues, and the CIP includes projects to restore some of those to service.

The City owns, operates and maintains the wastewater collection system within the developed portion of the City. The sewer system consists of 140 miles of mains, over 1,800 manholes, and over 9,600 connections. Wastewater treatment and disposal is provided through agreement with the Eastern Municipal Water District (EMWD). The wastewater from City -owned collection facilities flows directly into the EMWD system through a series of inter-connections between the two systems and is treated at the EMWD San Jacinto Regional Water Reclamation Facility.

The purpose of a Water and Sewer Rate Study is to evaluate the current financial condition of both utilities, examine the costs necessary to provide service and determine the funding required over the next five years . The result is a recommended financial plan that ensures each utility can meet projected financial obligations , assure continued safe and efficient operations, and maintain sufficient reserves for cash flow management and emergencies. Updating rates to keep up with the costs of providing reliable, high-quality water and wastewater service is a key component of maintaining financial stability of the utilities. Rates for each utility were designed so that revenues from proposed rates do not exceed the amount required to provide the services, nor will rate revenue be used for purposes other than those for which they are imposed.

Why are water and sewer rate changes needed?
The financial plan determined that the City’s current rates will not meet increasing costs, including operations, maintenance, infrastructure projects needed to ensure uninterrupted service and compliance with regulatory mandates , repair and replacement of aging or worn system components, maintenance of cash reserves and administrative support for operations.

21.A.

The City has not increased water or sewer rates since January 2020, while costs have continued to escalate over that same time period. The City has carefully managed revenues and expenses to mitigate the impacts of inflation. However, budget impacts make it necessary to seek increases to the rates. The proposed rates are based on a comprehensive utility rate study and financial plan completed by an independent consultant. This report is available for review with the City Clerk.

The amount of the proposed rates imposed on any parcel or person as an inciden ce of their property ownership will not exceed the proportional cost of the service(s) attributable to such parcel, and no rate will be imposed for service unless that service is actually used by, or immediately available to, the property owner or customer in question.

How the water and sewer rates are determined and how they work To develop rates that generate sufficient revenue to meet the fiscal and policy objectives of the City for each utility , a determination of the annual revenue requir ements from water and sewer rates was completed. As previously mentioned, revenue requirements include expenditures for operations, maintenance, repair and replacement of aging system components, equipment and capital projects and funding of designated reserves. Maintaining appropriate reserves is critical to the ability of the City to serve its customers, manage cash flow fluctuations, and respond to unforeseen and unpredictable costs. The reserves may only be used to fund costs associated with those systems.

Revenue requirements were compared to sources of available funds under existing rates during each year of the forecast period, to determine whether projected revenues would be sufficient to meet requirements. Where a shortage o f revenue was found, revenue adjustments were calculated, which if implemented, will provide sufficient revenue to meet those needs.

The City is proposing to implement new water and sewer rates as a series of annual adjustments starting on March 1, 2026, and then each January 1 thereafter until January 2030. The following sections summarize the proposed rates , which will go into effect and remain in effect unless superseded by Council action.

Proposed Monthly Water Rates - March 1, 2026 through January 1, 2030 Proposed water rates consist of 1) a monthly fixed charge for all customers that varies based on meter size and is the minimum amount a customer will pay regardless of the amount of water used; and 2) a uniform volumetric rate per 100 cubic feet (100 cubic feet = 1 unit of water = 748 gallons) for customers based upon monthly metered use. The fixed charge recovers fixed costs of maintaining and operating utility infrastructure and facilities, while the volumetric rate recovers variable costs o f pumping, treating, and distributing water. The rate structure was designed so that each customer will be charged an amount that represents their proportional share of the City’s cost of serving them, based on their demand and usage characteristics.

Please note: The rates shown above for the Calendar Year beginning January 1, 2026 will be implemented beginning March 1, 2026.

Drought Surcharge for Water
The City adopted a Water Shortage Contingency Plan (WSCP) in compliance with California Water Code Section 10632, to prepare for and respond to water shortages due to drought. All California urban water suppliers are required to prepare and adopt a WSCP as part of their Urban Water Management Plan.

The provisions of the WSCP take effect upon a declaration of a water shortage made by resolution of the City Council .

Recommendations for the implementation of the WSCP shall be brought to the City Council when the City Manager, upon engineering analysis of water supplies, or due to regulatory requirements, notices, or orders, finds and determines that a water shortage emergency exists or is imminent within the City water service area. The WSCP shall remain in effect for the duration of the water shortage or until rescinded by the Council.

The analysis and proposed drought surcharge water rates shown here reflect drought rates per 100 cubic feet that would only go into effect for WSCP stages 2 through 5. These Drought Surcharge rates are intended to ensure adequate revenue is recovered through the rates under reduced water demand periods at each drought stage. The surcharges are calculated using the same cost -of-service approach employed for basic water rates and reflect percentage reductions in water use at each drought stage and the proportional cost of providing water to customers at varying stages of reduced demand. Regardless of the drought stage, only the volumetric rate per 100 cubic feet will be affected. Monthly fixed charges will remain unchanged from the Proposed Monthly Water Rates table on the previous page of this notice. As with basic water rates, revenues generated through the Drought Surcharge will only be used to fund costs associated with the provision of water service.

Proposed Monthly Drought Rates - March 1, 2026 through January 1, 2030

Proposed Monthly Sewer Rates - March 1, 2026 through January 1, 2030 Proposed sewer rates consist of 1) monthly fixed charges for all customers per sewage and stormwater unit, regardless of usage, that recover fixed costs for operation and maintenance of sewer collection and conveyance facilities. Rates w ere designed so that each customer will be charged an amount proportional to the cost of serving them, based on their demand and usage characteristics. In addition, as shown in the following table, customers receive charges from EMWD for treatment and disposal of wastewater. The EMWD charges were not reviewed or analyzed as part of this study for the City, are not being changed pursuant to this notice and scheduled public hearing and are shown here for informational purposes only.

Please note: The rates shown above for the Calendar Year beginning January 1, 2026 will be implemented beginning March 1, 2026.

21.A.

Drought Surcharge for Water
The City adopted a Water Shortage Contingency Plan (WSCP) in compliance with California Water Code Section 10632, to prepare for and respond to water shortages due to drought. All California urban water suppliers are required to prepare and adopt a WSCP as part of their Urban Water Management Plan.

The provisions of the WSCP take effect upon a declaration of a water shortage made by resolution of the City Council .

Recommendations for the implementation of the WSCP shall be brought to the City Council when the City Manager, upon engineering analysis of water supplies, or due to regulatory requirements, notices, or orders, finds and determines that a water shortage emergency exists or is imminent within the City water service area. The WSCP shall remain in effect for the duration of the water shortage or until rescinded by the Council.

The analysis and proposed drought surcharge water rates shown here reflect drought rates per 100 cubic feet that would only go into effect for WSCP stages 2 through 5. These Drought Surcharge rates are intended to ensure adequate revenue is recovered through the rates under reduced water demand periods at each drought stage. The surcharges are calculated using the same cost -of-service approach employed for basic water rates and reflect percentage reductions in water use at each drought stage and the proportional cost of providing water to customers at varying stages of reduced demand. Regardless of the drought stage, only the volumetric rate per 100 cubic feet will be affected. Monthly fixed charges will remain unchanged from the Proposed Monthly Water Rates table on the previous page of this notice. As with basic water rates, revenues generated through the Drought Surcharge will only be used to fund costs associated with the provision of water service.

Proposed Monthly Drought Rates - March 1, 2026 through January 1, 2030

Proposed Monthly Sewer Rates - March 1, 2026 through January 1, 2030 Proposed sewer rates consist of 1) monthly fixed charges for all customers per sewage and stormwater unit, regardless of usage, that recover fixed costs for operation and maintenance of sewer collection and conveyance facilities. Rates w ere designed so that each customer will be charged an amount proportional to the cost of serving them, based on their demand and usage characteristics. In addition, as shown in the following table, customers receive charges from EMWD for treatment and disposal of wastewater. The EMWD charges were not reviewed or analyzed as part of this study for the City, are not being changed pursuant to this notice and scheduled public hearing and are shown here for informational purposes only.

Please note: The rates shown above for the Calendar Year beginning January 1, 2026 will be implemented beginning March 1, 2026.

21.A.

Impact on your water and sewer bill
Per the proposed rates effective March 1, 2026, the combined water and sewer bill for a typical single-family home using 800 cubic feet of water per monthly billing period would increase from $121.05 currently, to $123.24 per monthly billing period.

The accompanying graph provides a summary of existing and proposed rates under various usage scenarios.

How do you file a protest or participate in the public hearing? The City will consider the new water and sewer rates at a Public Hearing on Tuesday, February 10, 2026, at 6:00 p.m. at the Hemet Council Chambers, 450 East Latham Avenue, Hemet, California 92543. As noted previously, the City Council Chambers are undergoing renovations that are expected to be complete prior to the Hearing. If delays occur, the Hearing will be held at the Hemet Public Library, Second Floor, 300 E. Latham Ave., Hemet, California 92543. Confirmation of the location will be posted on the agenda for this meeting at: https://hemetca.civicweb.net/portal/ and at City Hall at least 72 hours prior to the Hearing. You are invited to present oral or written testimony at the Public Hearing. Any owner, or customer of record, of a parcel subject to the proposed rates may submit a written protest against the proposed rate revisions. If written protests are filed for a majority of the affected parcels, the proposed rates will not be adopted. If you do not object to the proposed rate revisions to fund the operation, maintenance, and capital improvements for City water and wastewater services, you do not need to take any action.

In order for a written protest to be counted, it must include the following: a statement indicating that the identified property owner or customer of record is in opposition to the proposed water or sewer rate changes; the street address or Assessor's Parcel Number (APN) for the parcel(s) with respect to which the protest is made; and the name and signature of the owner or customer. Protests may be mailed to: City Clerk, City of Hemet City Hall, 445 East Florida Avenue , Hemet CA 92543, or hand delivered to the City Clerk at the same address, prior to 2:00 p.m. on February 10, 2026, or hand delivered to the City Clerk at the Public Hearing on February 10, 2026.

To be counted, a signed written protest must be received by the City Clerk before the conclusion of the Public Hearing.

Protests submitted via e -mail or other electronic means will not be accepted. For any written protest, whether mailed or submitted in person to the City Clerk, please identify on the front of the envelope that the enclosed protest is for the Public Hearing on the Proposed Rate Changes – Water and Sewer Rates.

The City Council will consider all written and oral protests related to the proposed rate changes at the Public Hearing. Oral comments at the Public Hearing will not qualify as formal protests unless accompanied by a written protest. Upon the conclusion of the Public Hearing, there will be no more written protests accepted and no more testimony taken, and the City Council will consider adoption of the proposed rates described in this notice. If written protests , as outlined above, are not presented by a majority of property owners or customers of record, the City Council will be authorized to adopt the proposed rates. While both property owners and customers of record may submit written protests, only one protest will be counted for each parcel. If adopted, the rates for water and sewer service will be in effect beginning March 1, 2026.

In accordance with Government Code section 53759, t here is a 120 -day statute of limitations for challenging any new, increased, or extended fee or charge, commencing from the later of the effective date of the new rates or of the date of the final passage, adoption, or approval of the resolution adopting the new rates.

21.A.

City of Hemet
City Council Meeting

STAFF REPORT

Meeting: City Council Meeting - Feb 10 2026
Department: Community Development
Submitted by: Mark Prestwich, City Manager
Layla Sarwari, Assistant City Attorney, Monique Alaniz-Flejter, Community Development Director;

☐ Receive and File ☐ Consent Calendar ☐ Business Item ☒ Public Hearing

TITLE:

ZOA 25-003: An Ordinance of the City of Hemet, California, Repealing and Restating Chapter 90 (Zoning), Article XI, Section 90-321 of the Hemet Municipal Code regulating Accessory Dwelling Units (ADUs) and Junior Accessory Dwelling Units (JADUs) in accordance with State law.

Environmental Review: Under California Public Resources Code section 21080.17, CEQA does not apply to the adoption of an ordinance by a city or county implementing the provisions of Article 2 of Chapter 13 of Division 1 of Title 7 of the Government Code, which is California’s Accessory Dwelling Unit (ADU) law and which also regulates Junior Accessory Dwelling Units (JADUs), as defined by section 66310 to 66342. The proposed ordinance is exempt from the provisions of the California Environmental Quality Act (CEQA), pursuant to Section §15061(b)(3) which provides that CEQA only applies to projects that have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA.

RECOMMENDED ACTION:

It is respectfully recommended that the City Council:

1. Receive a report regarding the proposed Zoning Ordinance Amendment No. 2025-003; and

2. Find that the Project is Categorically Exempt from CEQA in accordance with California Public Resources Code section 21080.17, as defined by section 66314 to 66332 of the Government Code and CEQA Guidelines Section 15061(b)(3) the “common sense exemption” as it can be seen with certainty that there is no possibility that the proposed Ordinance may have a significant effect on the environment.

3. Adopt an Ordinance of the City Council of the City of Hemet, California, adopting Zoning Ordinance Amendment No. 25-003, Repealing and Restating Chapter 90 (Zoning), Article XI, Section 90-321 of the Hemet Municipal Code regulating Accessory Dwelling Units in accordance with State law.

21.B.

BACKGROUND:

In recent years, the California Legislature has approved, and the Governor has signed into law, a number of bills that impose limits on local authority to regulate ADUs and JADUs.

On October 8, 2025, a letter was received from the Department of Housing and Community Development (HCD) regarding the status of the City's adopted ADU Ordinance, which was last updated in 2021. The letter from HCD indicated that if an existing ADU ordinance fails to meet the requirements of State ADU law, the ordinance is "null and void" and the local jurisdiction must apply the standards set forth in State ADU Law until it adopts an ordinance that complies with state law (Gov. Code, § 66316). As such, HCD has recommended that the city either repeal or amend the current ordinance to provide clarity for ADU applicants who may otherwise rely on an outdated ordinance.

Due to the significant number of amendments to state law, a repeal and restatement of Chapter 90 (Zoning), Article XI, Section 90-321 is proposed, including the provision of newly adopted state housing laws that go into effect on January 1, 2026.

On January 6, 2026, following a state mandated 20-day advance public hearing notice, the Planning Commission voted unanimously (3-0, 2 absent) to adopt a Resolution recommending approval of the Zoning Ordinance Amendment to the City Council, subject to findings outlined in Hemet Municipal Code Section 90-41.5(a) as adopted by PC Resolution No. 2026-002.

On January 30, 2026, the City provided a 10-day public notice by advertising in the Press Enterprise prior to the holding of a public hearing at which the project would be considered by the City Council.

To date, one letter has been received from the Riverside County Airport Land Use Commission (ALUC), finding that the project is consistent with the 2017 Hemet-Ryan Airport Land Use Compatibility Plan. No other comments were received either in favor of or in opposition to the request.

ANALYSIS:

Since 2016, State ADU Laws have continued to evolve to further lower barriers to the development of more affordable housing as the Legislature works to address the housing crisis across the state. As these laws change, HCD’s goal is to ensure consistency and clarity in the application of these laws through education, technical assistance, and enforcement. As provided by HCD, the benefits of ADUs are as follows:

 ADUs are an affordable type of home to construct in California because they do not require paying for land, major new infrastructure, structured parking, or elevators.  ADUs can provide a source of income for homeowners.
 ADUs are built with cost-effective wood frame construction, which is significantly less costly than homes in new multifamily infill buildings.
 ADUs allow extended families to be near one another while maintaining privacy.  apartments newly-built many as space much and as provide can ADUs living condominiums, and they're suited well for couples, small families, friends, young people, and seniors.
 ADUs give homeowners the flexibility to share independent living areas with family members and others, allowing seniors to age in place as they require more care.

21.B.

The following summarizes changes to ADU and JADU Law since 2019, which have been incorporated into Chapter 90 (Zoning), Article XI, Section 90-321 as follows.

Changes to ADU Law in 2025:

 To ensure compliance with recent California legislation effective January 1, 2026, including SB 543, AB 1154, SB 9, and AB 462, the following amendments have also been made.  New Procedural Requirements (SB 543)
 City that requirement mandatory the Determination: Completeness 15-Day Added determines application completeness within 15 business days and provides a written list of deficiencies.
 Resubmittal Review: Limited review of resubmittals to only items identified in the incompleteness determination.
 Size Measurement Clarifications (SB 543)
 "Interior Livable Space" Terminology: Updated all size references throughout the ordinance to specify "interior livable space" rather than "size" or "floor area".  Definition Added: Added comprehensive definition clarifying this means net square footage excluding exterior walls, garages, and uninhabitable spaces.  Fee Requirements (SB 543)
 School Fee Exemption: Added new exemption for ADUs/JADUs ≤500 square feet from school fees.
 Impact Fee Clarification: Updated language to specify "interior livable space" for the 750 sq ft threshold.
 JADU Requirements (AB 1154)
 Owner-Occupancy Exception: Added exemption from owner-occupancy requirement when JADU has separate sanitation facilities.
 Fire Sprinkler Clarification: Explicitly state that sprinklers are not required for JADUs if not required for the primary dwelling.
 Objective Standards Compliance
 Removed Subjective Requirement: Eliminated architectural compatibility standards based on "style, construction materials, and primary color".
 These subjective standards are prohibited under state law.

Changes to ADU Law in 2024:

 SB 477 (Chapter 7, Statutes of 2024) made changes to the numbering of the sections of the Government Code for State ADU and JADU Laws.
 Prohibits a local agency from denying a permit for an unpermitted ADU or JADU that was constructed before January 1, 2020, for building code violations, unless the local agency makes a finding that correcting the violation is necessary to comply with conditions that would otherwise deem a building substandard (Gov. Code, § 66332, subds. (a)-(c)).  Defines “livable space” as a space in a dwelling intended for human habitation, as the term appears (e), subdivision 66323, and subdivision in sections Code Government 66313, (a)(3)(A).
 Provides that uncovered, off-street parking spaces demolished in conjunction with the construction of an ADU do not need to be replaced (Gov. Code, § 66314, subd. (d)(11)).  Changes the allowable number of detached ADUs on a lot with an existing multifamily dwelling to eight detached ADUs, provided that the number of ADUs does not exceed the number of existing units on the lot (Gov. Code, § 66323, subd. (a)(4)(A)(ii)).

21.B.

 Prohibits a local agency from imposing any objective development standards on 66323 Units that are not authorized by the provisions of Government Code section 66323, subdivision (a) (Gov. Code, § 66323, subd. (b)).

Changes to ADU Law in 2023:

 Sunsets a former prohibition on a local agency imposing an owner occupancy requirement on any ADU and instead prohibits a local agency from requiring owner occupancy for an ADU (Gov. Code, § 66315).
 Allows a local agency to adopt a local ordinance to allow the separate conveyance of the primary dwelling unit and ADU(s) as condominiums, subject to certain conditions (Gov. Code, §§ 66340-66342).

Changes to ADU Law in 2021:

 Allows local agencies to permit the separate conveyance of ADUs from the primary dwelling under Government Code section 66341 in certain circumstances.

Changes to ADU Law in 2020:

 Requires that an application for the creation of an ADU or JADU is deemed approved (not just subject to ministerial approval) if the local agency has not approved or denied the completed application within 60 days (Gov. Code, § 66317, subd. (a)).  Requires ministerial approval of an application for a building permit within a residential or mixed-use zone to create one ADU and one JADU per lot (not one or the other), within the proposed or existing single-family dwelling, if certain conditions are met (Gov. Code, § 66323, subd. (a)(1)(A)).
 Allows for rental or leasing of a separate interest ADU or JADU in a common interest development, notwithstanding governing documents that otherwise appear to prohibit renting or leasing of a unit, and without regard to the date of the governing documents (Civ. Code, §§ 4740, subd. (a); 4741, subd. (a)).
 Allows a homeowner to create “any of the following”: one converted or attached ADU; one detached, new construction ADU; and one JADU (Gov. Code, § 66323, subds. (a)(1)-(2)).

More information can be found in HCD’s 2025 ADU Handbook (Attachment No. 4).

Changes to ADU Law in 2019:

 Prohibits local agencies from including requirements on minimum lot size in development standards for ADUs (Gov. Code, § 66314, subd. (b)(1)).
 Allows local agencies to designate areas where ADUs may be located based on the adequacy of water and sewer services, as well as on impacts on traffic flow and public safety (Gov.

Code, § 66314, subd. (a)).
 Eliminates all owner occupancy requirements by local agencies for ADUs approved between January 1, 2020, and January 1, 2025 (Gov. Code, § 66315).  Prohibits a local agency from establishing a maximum size of an ADU of less than 850 square feet, or 1,000 square feet if the ADU contains more than one bedroom and requires approval of a permit to build an ADU of up to 800 square feet (Gov. Code, § 66321, subds. (b)(2), (b)(3)).

21.B.

 Prohibits a local agency from requiring replacement of off-street parking spaces for ADUs created through the conversion of a garage, carport, or covered parking structure (Gov. Code, § 66314, subd. (d)(11)).
 Reduces the maximum ADU and JADU application review time from 120 days to 60 days (Gov. Code, §§ 66317, subd. (a); 66335, subd. (2)).
 Clarifies that “public transit” includes various means of transportation that charge set fees, run on fixed routes, and are available to the public (Gov. Code, § 66313, subd. (m)).  Adds impact fee exemptions and limitations based on the size of the ADU. ADUs up to 750 square feet are exempt from impact fees, and ADUs that are 750 square feet or larger may be charged impact fees, but those fees must be proportional in size (by square foot) to fees charged for the primary dwelling unit (Gov. Code, § 66324, subd. (c)(1)).  Defines of an “accessory structure” to mean a structure that is accessory and incidental to a dwelling on the same lot (Gov. Code, § 66313, subd. (b)).  Permits JADUs even where a local agency has not adopted an ordinance expressly authorizing them (Gov. Code, § 66320).
 Allows for a permitted JADU to be constructed within the walls of the proposed or existing single-family residence and eliminates the required inclusion of an existing bedroom and an interior entry into the single-family residence (Gov. Code, § 66333, subd. (d)).  Requires, upon application and approval, a local agency to delay enforcement against a qualifying substandard ADU for five years to allow the owner to correct the violation, so long as the violation is not a health and safety issue, as determined by the enforcement agency (Gov.

Code, § 66331; HSC, § 17980.12).
 Makes covenants, conditions, and restrictions that either effectively prohibit or unreasonably restrict the construction or use of an ADU or JADU on a lot zoned for single-family residential use void and unenforceable (Civ. Code, § 4751)).

STRATEGIC PLAN INTEGRATION:

GOAL THREE: COMMUNITY ENGAGEMENT
To connect and participate in a constant dialogue between members of the community, City staff, and elected officials to promote togetherness and positivity.

Objective 2: Increase transparency for the public.

GOAL FIVE: ORGANIZATIONAL EFFECTIVENESS
To identify the work needed inside the City organization to effectively provide services to the community and ensure financial stability.

Objective 2: Evaluate existing practices to ensure continuity with industry best practices.

FISCAL IMPACT:

Not applicable.

REVIEWED BY LEGAL:

☒ Staff report ☐ Resolution
☒ Ordinance ☐ Agreement

21.B.

ATTACHMENT(S):

Attachment No. 1 CC Ordinance. 02.10.2026 CC_Final Clean Attachment No. 2 PC Resolution
Attachment No. 3 ALUC ZAP1086HR25 Approval Letter
Attachment No. 4 Proof of Publication Press Enterprise

21.B.

CITY OF HEMET ORDINANCE NO. 2026-XXX 1
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CITY OF HEMET

HEMET, CALIFORNIA
ORDINANCE NO. 2026-XXX

AN ORDINANCE OF THE CITY OF HEMET, CALIFORNIA, TO REPEAL AND RESTATE CHAPTER 90 (ZONING), ARTICLE XI, SECTION 90-321

OF THE HEMET MUNICIPAL CODE REGULATING ACCESSORY

DWELLING UNITS (ADUS) AND JUNIOR ACCESSORY DWELLING

UNITS (JADUS) IN ACCORDANCE WITH STATE LAW
WHEREAS, from 2019 to 2025, the California Legislature signed into law multiple Senate and Assembly Bills and other legislation (collectively, the “Bills”) into law, amending Government Code Sections and the Health and Safety Code, thereby establishing statewide requirements for ADUs and JADUs; and WHEREAS, the City Council of the City of Hemet (“City Council”) finds that to further comply with State law, it is necessary for the City to repeal and restate its Municipal Code so that its provisions conform to and align with the requirements of Government Code Sections 66310 through 66342, as may be amended from time to time; and
WHEREAS, the City Council therefore determines that this Ordinance is a reasonable and necessary means to protect and promote the health, safety, and general welfare of the residents of the City.

NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF HEMET DOES HEREBY ORDAIN AS FOLLOWS:

SECTION 1. The above recitals are all true and correct and are incorporated

21.B.

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SECTION 2: REPEAL AND RESTATE CHAPTER 90 (ZONING), ARTICLE XI, SECTION 90-321 as follows:

Sec. 90-321. Accessory dwelling units.
(a) General provisions.
(1) An application for an accessory dwelling unit (“ADU”) or junior accessory dwelling unit (“JADU”) shall be submitted to the building department for building plan check approval and shall be permitted ministerially without discretionary review or public hearing if it meets the definitions. The purpose of this chapter is to allow and regulate accessory dwelling units ("ADUs") and junior accessory dwelling units ("JADUs") in compliance with state law governing accessory dwelling units, including Chapter 13 of Division 1 of Title 7 of the California Government Code, as may be amended from time to time. To the extent state law is more permissive than this chapter, state law shall control.
(2) An application for an ADU or JADU shall be submitted to the building department for building plan check approval and shall be permitted ministerially without discretionary review or public hearing if it meets the definitions and criteria listed in this section and all other applicable zoning, building, and health and safety codes.

A. If the City has not acted upon a completed application for an ADU or JADU within 60 days from submission of a complete application, and the applicant has not requested a delay, the application shall be deemed approved, unless the permit application is to create a new single family or multifamily dwelling on the lot, in which case the City shall not act on the permit application for the ADU or JADU until the City

21.B.

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acts on the permit application for the new dwelling unit. The City shall determine whether an ADU or JADU application is complete within 15 business days of submission. If the application is incomplete, the City shall provide the applicant with a written list of items needed to make the application complete and shall review resubmittals only for the items identified in the incompleteness determination, consistent with state law.

B. If the City denies an application for an ADU or JADU, the City shall provide in writing a full set of comments within 60 days to the applicant from the date of receipt of a completed application, with a list of items that are defective or deficient, and a description of how the application can be remedied, in accordance with applicable state law.

C. An ADU or JADU may not be used for short-term rentals. If rented shall be for a term longer than 30 days.

D. Occupancy of an ADU or JADU shall not be allowed until the City approves occupancy of the primary dwelling unit.
(3) For the purposes of meeting the city's applicable regional housing needs allocation as contained in the adopted housing element, ADUs may be reported as progress towards meeting these goals.
(4) Authority to Designate Areas - The City may designate areas within the jurisdiction where ADUs may be permitted based on the adequacy of water and sewer services and the impact of accessory dwelling units on traffic flow and public safety.

However, where the City has not designated such areas, ADUs shall be permitted in all

21.B.

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areas zoned for residential or mixed use pursuant to this section and applicable state law, as may be amended from time to time.
(5) An ADU shall only be allowed on a residentially zoned lot under this article that contains an existing or proposed single-family or existing multiple-family residence.
(6) For purposes of calculating allowable density, an ADU is not counted as an additional unit.
(b) Definitions.
(1) Accessory dwelling unit (“ADU”) means an attached or detached residential dwelling unit which provides complete independent living facilities for one or more persons and is located on a lot with a proposed or existing primary residence. It shall include permanent provisions for living, sleeping, eating, cooking, and sanitation on the same parcel as the single-family or multifamily dwelling. An ADU also includes the following:
(A) An efficiency unit, as defined in Health and Safety Code § 17958.1. (B) A manufactured home, as defined in Health and Safety Code § 18007.
(2) Accessory structure means a structure that is accessory and incidental to a dwelling located on the same lot.
(3) Junior accessory dwelling (“JADU”) unit means an accessory dwelling unit that is no more than 500 square feet in size and is contained entirely within a

21.B.

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single-family residence. It includes its own separate sanitation facilities, kitchen, or shares sanitation facilities with the existing or proposed single-family structure. (4) Efficiency unit has the same meaning as defined in Section 17958.1 of the Health and Safety Code.
(5) Impact Fee has the same meaning as the term “fee,” as defined in subdivision (b) of Government Code Section 66000, except that it also includes fees specified in Section 66477. “Impact Fee” does not include any connection fee or capacity charge by a local agency, special district, or water corporation. (6) Livable space or interior livable space has the same meaning as defined in applicable state law and means the interior habitable area of a dwelling unit intended for human habitation, including living, sleeping, eating, cooking, or sanitation. This measurement is based on net square footage and does not include exterior walls, garages, or uninhabitable spaces.
(7) Living area means the interior habitable area of a dwelling unit, including basements and attics, but does not include a garage or any accessory structure. (8) Local agency means a City, County, or City and County, whether general law or chartered.
(9) Multifamily dwelling means two or more attached primary dwelling units. (10) Nonconforming zoning condition means a physical improvement on a property that does not conform with current zoning standards.

21.B.

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(11) Objective standards means standards that involve no personal or subjective judgment by a public official and are uniformly verifiable by reference to an external and uniform benchmark or criterion available and knowable by both the development applicant or proponent and the public official prior to submittal. (12) Permitting agency means any entity that is involved in the review of a permit for an accessory dwelling unit or junior accessory dwelling unit and for which there is no substitute, including, but not limited to, applicable planning departments, building departments, utilities, and special districts. (13) Primary dwelling unit means the single-family dwelling or each multifamily dwelling unit, but does not include an ADU or JADU. An attached garage is considered part of the primary dwelling unit.
(14) Proposed dwelling means a dwelling that is the subject of a permit application and that meets the requirements for permitting. (15) Public transit means a location, including, but not limited to, a bus stop or train station, where the public may access buses, trains, subways, and other forms of transportation that charge set fares, run on fixed routes, and are available to the public. (16) Passageway means a pathway that is unobstructed clear to the sky and extends from a street to one entrance of the accessory dwelling unit. (17) Tandem parking means that two or more automobiles are parked on a driveway or in any other location on a lot, lined up behind one another, provided that the vehicles do not extend over the public sidewalk or right-of-way.

21.B.

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(c) General criteria. An ADU shall meet the following criteria. (1) The ADU may be rented separate from the primary residence and may be sold or conveyed separately from the primary residence only if the requirements in applicable state law for separate conveyance are met.
(2) The ADU may be either attached to, or located within, the proposed or existing primary dwelling, including attached garages, storage areas, or similar uses, or detached from the primary dwelling.
(3) The number of ADUs that may be established on a lot shall be as follows, consistent with state law:
(A) On lots with a proposed or existing single-family dwelling:
(i) Up to two detached ADUs are permitted;
(ii) Up to one attached ADU is permitted; and
(iii) Up to one JADU is permitted.
(iv) The detached and attached ADUs and JADUs may be established concurrently or separately, provided the total number of primary dwellings and ADUs/JADUs does not exceed four on any lot zoned for single family residential uses. (B) On lots with existing multifamily dwellings:
(i) No more than two detached ADUs on a lot with proposed multifamily dwelling, or up to four detached ADUs on a lot with an existing multifamily dwelling if each detached ADU satisfies all of the following:

21.B.

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a. The side- and rear-yard setbacks are at least four feet. If the existing multifamily dwelling has a rear or side yard setback of less than four feet, the city will not require any modification to the multifamily dwelling as a condition of approving the ADU.
b. The peak height above grade does not exceed the height limit provided in Section 90-321(c)(15)(A).
c. Provided the number of detached ADUs does not exceed the number of primary dwelling units on the lot.
(ii) Up to 25 percent of the number of existing multifamily units may be attached ADUs, with a minimum of one ADU allowed; and
(iii) Up to 25 percent of the existing multifamily dwelling units may be created within portions of existing multifamily dwelling structures that are not used as livable space, with a minimum of one ADU allowed.
(C) On parcels created through an SB 9 lot split: No more than two units (including ADUs and JADUs) on a parcel created through a Senate Bill 9 (Chapter 162, Statutes of 2021) lot split shall be allowed, and in no case shall the total number of primary dwellings and ADUs/JADUs exceed four on the two parcels collectively. (4) A lot having an ADU shall not be subdivided in a manner that would allow for the principal dwelling unit and the ADU to be located on separate lots that do not meet the development standards required by the underlying zone, unless otherwise permitted by state law.

21.B.

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(5) The maximum interior livable space of an attached ADU is 850 square feet for a studio or one-bedroom unit and 1,000 square feet for a unit with two or more bedrooms, consistent with state law. An attached ADU that expands the existing primary dwelling by more than 150 square feet shall not exceed 50 percent of the existing primary dwelling’s floor area.
(6) The maximum interior livable space of a detached ADU is 850 square feet for a studio or one-bedroom unit and 1,000 square feet for a unit with two or more bedrooms, except that a detached ADU meeting the simplified approval standards may not exceed 800 square feet of interior livable space, consistent with state law. (7) Unless otherwise provided in this subsection, an ADU shall comply with the required standards and setbacks of the zone in which it is located. (A) No setback shall be required for an ADU that is constructed in the same location and to the same dimensions as an existing structure that is converted to an ADU.
(B) A setback of no more than four feet from the side and rear lot lines shall be required for an ADU that is not converted from an existing structure or a new structure constructed in the same location and to the same dimensions as an existing structure.
(C) The minimum side, street-side, and rear yard setback shall be 4 feet, except when converting or replacing an existing accessory structure that is less than 4 feet from those lot lines.
(8) Parking Requirements:

21.B.

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(A) When a garage, carport, uncovered parking space, or covered parking structure is demolished in conjunction with the construction of an ADU or is converted to an ADU, no replacement off-street parking spaces are required. (B) Generally, no parking is required for ADUs or JADUs. However, one parking space per ADU or per bedroom, whichever is less, may be required for detached ADUs only, except as provided in subsection (C). The required parking space may be provided as tandem parking on a driveway or in setback areas. (C) Notwithstanding any other provision in this section, no parking standards shall be imposed for an ADU in the following instances:
a. The ADU is located within one-half mile walking distance of public transit. b. The ADU is located within an architecturally and historically significant and designated historic district.
c. The ADU is part of the proposed or existing primary residence or an existing accessory structure.
d. When on-street parking permits are required but not offered to the occupant of the ADU.
e. When there is a car share vehicle located within one block of the ADU. f. When the ADU permit application is submitted concurrently with a permit application to create a new single-family or new multifamily dwelling on the same lot. (9) No passageway shall be required in conjunction with the construction of the ADU.

21.B.

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(10) An accessory dwelling unit shall be architecturally compatible with the principal dwelling unit. Compatibility shall be based on the architectural style, construction materials, and primary color of the principal dwelling unit. (11) An ADU shall not be considered a new residential use for the purpose of calculating connection fees or capacity charges for utilities, including water and sewer services, unless the ADU is constructed with a new single-family dwelling, consistent with applicable state law, as may be amended from time to time. The City may require a new or separate utility connection directly between the ADU and the utility service. (12) Impact Fees:
(A) No impact fee is required for an ADU or JADU that is less than 750 square feet of interior livable space. Additionally, ADUs and JADUs that are 500 square feet or less of interior livable space are exempt from school fees, consistent with applicable state law, as may be amended from time to time. (B) Any impact fee required for an ADU that is 750 square feet or more in size shall be charged proportionately in relation to the square footage of the primary dwelling unit (e.g., the floor area of the ADU divided by the floor area of the primary dwelling, times the typical fee charged for a new dwelling), consistent with applicable state law.
(13) Prior to issuance of a certificate of occupancy for a JADU, a deed restriction shall be recorded that runs with the land and specifies that the JADU may not be sold separately from the primary single-family dwelling, that the JADU is restricted to the maximum square footage, and includes other requirements of state law

21.B.

CITY OF HEMET ORDINANCE NO. 2026-XXX 12
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for JADUs, as may be amended from time to time. For ADUs, a deed restriction is required only if the ADU is to be sold separately, in which case it must comply with applicable state law regarding separate conveyance.
(14) The City will not deny an application for an ADU or JADU due to a nonconforming zoning condition, building code violation, or unpermitted structure that does not threaten public health and safety and is unaffected by the construction of the ADU or JADU, consistent with applicable state law. For ADUs constructed before January 1, 2020, the City may not deny a permit to legalize the ADU based on violations of building standards or noncompliance with ADU law, except where correcting the violation is necessary to protect health and safety as defined in applicable state law, as may be amended from time to time. (15) Height Standards:
(A) For one-story detached ADUs, the maximum height shall be 16 feet.

Where the detached ADUs is located within one-half mile walking distance of a major transit stop or a high-quality transit corridor, as defined in Public Resources Code § 21155, or is adjacent to or abuts a multi-story multifamily dwelling, then the minimum height limit for a one-story detached ADUs is 18 feet.
(B) For two-story detached ADUs, the maximum height shall be 25 feet. (C) An additional two feet in height shall be allowed to accommodate a roof pitch on an ADU that is aligned with the roof pitch of the primary dwelling unit. (D) When an existing accessory structure is converted to a detached ADU, the maximum height may equal the height of the existing accessory structure.

21.B.

CITY OF HEMET ORDINANCE NO. 2026-XXX 13
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(E) An attached ADU may not exceed 25 feet in height and two stories, or the maximum height allowed in the base zone for the primary dwelling, whichever is lower. (16) Development Standards:

ADUs shall comply with all applicable base zone district objective development standards (e.g., lot coverage, floor area ratio, open space, front setbacks, minimum lot size) unless the application of those standards would physically preclude the construction of at least an 800-square-foot ADU with 4-foot side and rear setbacks.

The City may require that the property be used for rentals of terms 30 days or longer. (17) Utilities and Safety:

All ADUs shall be connected to public utilities or their equivalent, including water, electric and sewer, unless the ADU was constructed with a new single- family dwelling. The City may require separate address identification for an ADU to facilitate emergency responses. Fire sprinklers shall only be required in an ADU or JADU if sprinklers are required in the primary residence, consistent with applicable state law.
(d) Special criteria for junior accessory dwelling units. JADUs shall be subject to the following requirements, in addition to or, where conflicting, in lieu of the general requirements in subsection (c) of this section. To the extent that any of the requirements of the subsection (d) conflict with the requirements of subsection (c), the provisions of this subsection (d) shall control.

21.B.

CITY OF HEMET ORDINANCE NO. 2026-XXX 14
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(1) If necessary, an expansion of no more than 150 square feet to the physical dimensions of the existing structure may be added to accommodate ingress and egress to the JADU.
(2) The JADU must include a cooking facility with appliances and a food preparation counter and storage cabinets that are of reasonable size in relation to the size of the junior accessory unit.
(3) The JADU may include separate bathroom facilities or may share sanitation facilities with the existing structure.
(4) No more than one JADU is permitted on a single lot. (5) The owner of the single-family residential home in which the JADU is located must reside in either the remaining portion of the home or in the newly created JADU unit, unless the JADU includes separate sanitation facilities, in which case owner-occupancy is not required. Owner-occupancy is also not required if the owner is another governmental agency, land trust, or housing organization, consistent with applicable state law, as may be amended from time to time. (6) A JADU shall not be metered separately from the principal dwelling unit for gas, electricity, and water/sewer services, and shall not be considered a separate residential use for purposes of connection fees or capacity charges, or for the purposes of fire or life protection ordinances or regulations.
(7) Size. A JADU shall be no more than 500 square feet of interior livable space and contained entirely within a single-family residence. The minimum interior

21.B.

CITY OF HEMET ORDINANCE NO. 2026-XXX 15
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livable space of a JADU unit shall be 150 square feet, consistent with applicable state law.
(e) Conflicting Standards and Compliance with State Law. To the extent that any provision of this section conflicts with or is less permissive than state law governing ADUs and JADUs, state law shall prevail. This ordinance is intended to comply with all applicable state laws governing accessory dwelling units and junior accessory dwelling units, as may be amended from time to time, and shall be interpreted consistent with such laws. Where this section is silent, state law standards apply.

SECTION 3. CEQA ENVIRONMENTAL FINDINGS. The City Council has analyzed the proposed project and has determined that it is exempt from the California Environmental Quality Act (CEQA) Under California Public Resources Code section 21080.17, CEQA does not apply to the adoption of an ordinance by a city or county implementing the provisions of Article 2 of Chapter 13 of Division 1 of Title 7 of the Government Code, which is California’s Accessory Dwelling Unit (ADU) law and which also regulates Junior Accessory Dwelling Units (JADUs), as defined by section 66310 to 66342. The proposed ordinance is exempt from the provisions of the California Environmental Quality Act (CEQA), pursuant to Section §15061(b)(3), which provides that CEQA only applies to projects that have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA.

21.B.

CITY OF HEMET ORDINANCE NO. 2026-XXX 16
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SECTION 4. SEVERABILITY. If any section, subsection, subdivision, sentence, clause, phrase, or portion of this Ordinance is, for any reason, held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such determination shall not affect the validity of the remaining portions of this Ordinance.

The City Council hereby declares that it would have adopted this Ordinance, and each section, subsection, subdivision, sentence, clause, phrase, or portion thereof, irrespective of the fact that any one or more sections, subsections, subdivisions, sentences, clauses, phrases, or portions thereof be declared invalid or unconstitutional.

SECTION 5. EFFECTIVE DATE. This Ordinance shall take effect thirty (30) days from its passage by the City Council of the City of Hemet.

SECTION 6. PUBLICATION. The City Clerk shall publish this Ordinance in the manner required by law.

21.B.

CITY OF HEMET ORDINANCE NO. 2026-XXX 17
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INTRODUCED at the regular meeting of Hemet City Council on the 10 th day of February 2026.

APPROVED AND ADOPTED this 24th day of February 2026.
____________________________
Linda Krupa, Mayor
ATTEST:
_____________________________
Elodie Klug, Deputy City Clerk

21.B.

CITY OF HEMET ORDINANCE NO. 2026-XXX 18
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State of California )
County of Riverside )
City of Hemet )
I, Elodie Klug, Deputy City Clerk of the City of Hemet, do hereby certify that the foregoing Ordinance was adopted by the Hemet City Council on the 24th day of February, 2026, and was passed by the following vote:

AYES: Council Members:

NOES: Council Members:

ABSTAIN: Council Members:

ABSENT: Council Members:
_____________________________
Elodie Klug, Deputy City Clerk

21.B.

mKIODU'l-PODNA
1112131415161718192o212223242526272829303132333435363738394041424344 CITYOFHEMETHemet,CaliforniaPLANNINGCOMMISSIONRESOLUTIONNO.PC2026-002ARESOLUTIONOFTHEPLANNINGCOMMISSIONOFTHECITYOFHEMET,CALIFORNIA,RECOMMENDINGTHATTHECITYCOUNCILADOPTANORDINANCETOREPEALANDRESTATECHAPTER90(ZONING),ARTICLEXI,SECTION90-321OFTHEHEMETMUNICIPALCODEREGULATINGACCESSORYDWELLINGUNITS(ADUS)ANDJUNIORACCESSORYDWELLINGUNITS(JADUS)INACCORDANCEWITHSTATELAW.WHEREAS,pursuanttoGovernmentCodesections65854and65855,thePlanningCommissionhastheauthoritytoreviewandmakerecommendationstotheCityCouncilregardingamendmentstotheCity’szoningordinance;andWHEREAS,from2019to2025,theCaliforniaLegislaturesignedintolawmultipleSenateandAssemblyBillsandotherlegislation(collectively,the“Bi||s”)intolaw,amendingGovernmentCodeSectionsandtheHealthandSafetyCode,therebyestablishingstatewiderequirementsforADUsandJADUs;andWHEREAS,tofurthercomplywithStatelaw,itisnecessaryfortheCitytorepealandrestateitsMunicipalCodesothatitsprovisionsconformtoandalignwiththerequirementsofGovernmentCodeSections66310through66342,asmaybeamendedfromtimetotime;andWHEREAS,onDecember16,2025,theCitygavea20-daypublicnoticebypublishingnoticeinthePressEnterprisenewspaperoftheholdingofapublichearingregardingconsiderationofZoningOrdinanceAmendment25-003,torepealandrestatetheCity’szoningordinance;andWHEREAS,onJanuary6,2026thePlanningCommissionheldthenoticedpublichearingatwhichinterestedpersonshadanopportunitytotestifyinsupportof,oroppositionto,theproposedamendmenttotheCity’szoningordinanceandwhichthePlanningCommissionconsideredtheproposedrepealandrestatementtotheCity’szoningordinanceandvotedtorecommendthattheCityCouncilapproveOrdinance;and PlanningCommissionResolutionNo.PC2026-002RepealandReplacementofADUOrdinance(ZOA25-003)Page1of4Page 25 of 38

21.B.

WHEREAS,theCityhasanalyzedthisproposedprojectandhasdeterminedthatitisexemptfromtheCaliforniaEnvironmentalQualityAct(“CEQA”)underCaliforniaPublicResourcesCodesection21080.17andCEQAGuidelinesSection§15061(b)(3)becauseitcanbeseenwithcertaintythatthereisnopossibilitythattheactivityinquestionmayhaveasignificanteffectoftheenvironment;andWHEREAS,attachedasExhibit“A”istheproposedOrdinancerevisedperrecommendationsmadebythePlanningCommissiononJanuary6,2026;and NOW,THEREFORE,thePlanningCommissionoftheCityofHemetdoesResolve,Determine,FindandOrderasfollows:SECTION1:ENVIRONMENTALFINDINGSThePlanningCommission,inlightofthewholerecordbeforeit,includingbutnotlimitedto,theCity’sLocalCEQAGuidelinesandThresholdsofSignificance,thedirectionofthePlanningCommissionatitsmeetingonJanuary6,2026anddocumentsincorporatedthereinbyreference,andanyotherevidence(withinthemeaningofPublicResourcesCodeSections21080(e)and21082.2)withintherecordorprovidedatthepublichearingofthismatter,herebyfindsanddeterminesasfollows:CEQA:TheCityhasanalyzedthisproposedprojectandhasdeterminedthatitisexemptfromtheCaliforniaEnvironmentalQualityAct(CEQA)UnderCaliforniaPublicResourcesCodesection21080.17,CEQAdoesnotapplytotheadoptionofanordinancebyacityorcountyimplementingtheprovisionsofArticle2ofChapter13ofDivision1ofTitle7oftheGovernmentCode,whichisCalifornia’sAccessoryDwellingUnit(ADU)lawandwhichalsoregulatesJuniorAccessoryDwellingUnits(JADUs),asdefinedbysection66310to66342.TheproposedordinanceisexemptfromtheprovisionsoftheCaliforniaEnvironmentalQualityAct(CEQA),pursuanttoSection§15061(b)(3)whichprovidesthatCEQAonlyappliestoprojectsthathavethepotentialforcausingasigni?canteffectontheenvironment.Whereitcanbeseenwithcertaintythatthereisnopossibilitythattheactivityinquestionmayhaveasignificanteffectontheenvironment,theactivityisnotsubjecttoCEQA.SECTION2:ZONINGORDINANCEAMENDMENTFINDINGSPursuanttoHemetMunicipalCodeSection90-415(a),thePlanningCommissionmakesthefollowingfindingswithrespecttothiszoningordinanceamendment:1.ThezoningordinanceamendmentisinconformancewiththelatestadoptedgeneralplanfortheCity.Finding:TheproposedtextamendmentisconsistentwiththefollowingGeneralPlanpolicyandfurthersupporttheHousingElement’sHousingProgram:PlanningCommissionResolutionNo.PC2026-002RepealandReplacementofADUOrdinance(ZOA25-003)Page2of4Page 26 of 38

21.B.

OOWVQUIAN—kCO
HousingElementProgramH-2i(MissingMiddleHousing)TheCityiscommittedtofacilitatingandencouraginganincreaseinthesupplyandvarietyofhousingtypes.Specifically,smallerhousingtypesthatareaffordablebydesignanddonotrequiresubsidiesorfundingsources.TheZoningCodecurrentlyallowsavarietyofsmallhousingandunittypessuchasADU/JADUs.HousingElementProgramH-3c(AccessoryDwellingUnits)TheCitywillaccommodateupdatingrelevantcodestoreflectstatelawandpromotetheconstructionofaffordableADUsbyincreasingthepublicawarenessoftheADUandJuniorADUpermitrequirementsandnewprovisionsinStatelawexpandingopportunitiesforADUdevelopment.TheCitywilldevelopoutreachmaterialforpublicdissemination,includingupdatestotheCity’swebsite,informationatCityHallandviaotherappropriateprintanddigitalmedia.HousingElementProgramH-1a(ImplementFairHousingLaws)Ongoing:ContinuetoimproveandstreamlineADUproceduresandreducecosts.Ongoing:Legalize132ADUswithinthePlanningPeriod(2021-2029)Ongoing:Permit88ADUswithinthePlanningPeriod(2021-2029)EnvironmentJusticeElementGoalEJ-5(Addressroot-causeissuesofinequitablehousingaccess)EJ—5.1HomeownershipSupportprogramstoproviderentalandhomeownershipassistancetolower-incomepersons.EJ-5.2ResponsiblePropertyOwnershipExploreincentivesandregulationsthatencourageactiveengagementinpropertymaintenanceandcommunityimprovement.

Thezoningordinanceamendmentwillprotectthepublichealth,safetyandwelfare.Finding:TheCityiscommittedtofacilitatingandencouraginganincreaseinthesupplyandvarietyofhousingtypes.Specifically,smallerhousingtypesthatareaffordablebydesignanddonotrequiresubsidiesorfundingsources.Since2016,StateADUlawshavecontinuedtoevolvetofurtherlowerbarrierstothedevelopmentofmoreaffordablehousingastheLegislatureworkstoaddressthehousingcrisisacrossthestate.ThepurposeofthezoningordinanceamendmentistobringtheHemetMunicipalCodeintocompliancewithstatePlanningCommissionResolutionNo.PC2026-002RepealandReplacementofADUOrdinance(ZOA25-003)Page3of4Page 27 of 38

21.B.

”$63?
(OCDNODU‘l-hOONA
housinglawandtheHealthandSafetyCode,EducationCode,UniformPlumbingCode,andBuildingStandards.Therefore,thezoningordinanceamendmentwillprotectthepublichealth,safetyandwelfare.SECTION3:PLANNINGCOMMISSIONACTIONSThePlanningCommissionherebytakesthefollowingaction:ThePlanningCommissionrecommendsthattheCityCounciladopttheproposedOrdinancewhichhasbeenrepealedandrestatedbasedonrecommendationmadebythePlanningCommissionduringthepublichearing,andisattachedheretoandincorporatedhereinbyreferenceasExhibitA’PASSED,APPROVEDANDADOPTEDthis6thdayofJanuary,2026bythefollowingvote:AYES:ChairBeamesderfer,Vice-ChairWuerth,CommissionerViramontesNOES:ABSTAIN:ABSENT:CommissionerHill,Commissioner JacobmesdChairHem ission
AJordanWalton,RecordsSecretaryHemetPlanningCommission
PlanningCommissionResolutionNo.P02026-002RepealandReplacementofADUOrdinance(ZOA25-003)Page4of4Page 28 of 38

21.B.

CHAIR
Steve Manos
Lake Elsinore

VICE CHAIR
Steven Sanchez
La Quinta

COMMISSIONERS

John Lyon
Riverside

Michael Lewis
Palm Springs

Richard Stewart
Moreno Valley

Vernon Poole
Murrieta

Michael Geller
Riverside

STAFF

Director
Paul Rull

Simon Housman
Jackie Vega
Yesenia Casas

County Administrative Center
4080 Lemon St.,14th Floor.

Riverside, CA 92501
(951) 955-5132

www.rcaluc.org

RIVERSIDE COUNTY

AIRPORT LAND USE COMMISSION

January 15, 2026

Monique Alaniz-Flejter, Community Development Director
City of Hemet, Community Development
445 E Florida Avenue
Hemet, CA 92543

RE: AIRPORT LAND USE COMMISSION (ALUC) DEVELOPMENT REVIEW – DIRECTOR’S

DETERMINATION

File No.: Z AP1086HR25
Related File No.: ZOA25-003(Zoning Ordinance Amendment) APN: Citywide

Dear Ms. Alaniz-Flejter,

As authorized by the Riverside County Airport Land Use Commission (ALUC) pursuant to its Resolution No. 2011-02, as ALUC Director, I have reviewed City of Hemet Zoning Ordinance Amendment (ZOA25-002), a proposal to amend various Sections of Chapter 90 of the City of Hemet Municipal Code for all zones applicable to regulate the Accessory Dwelling Units and Junior Accessory Dwelling Units in accordance with State Law.

The proposed amendments do not involve changes in development standards or allowable land uses that would increase residential density or non- residential intensity. Therefore, these amendments have no possibility for having an impact on the safety of air navigation within airport influence areas located within the City of Hemet.

As ALUC Director, I hereby find the above- referenced project CONSISTENT with the 2 017 Hemet-Ryan Airport Land Use Compatibility plan.

This determination of consistency relates to airport compatibility issues and does not necessarily constitute an endorsement of the proposed amendment.

If you have any questions, please contact me at (951) 955- 6893.

Sincerely,

RIVERSIDE COUNTY AIRPORT LAND USE COMMISSION

____________________________________
Paul Rull, ALUC Director

cc: ALUC Case File

\\tlma-22fsp02\ALUC\AIRPORT CASE FILES\Hemet-Ryan\ZAP1086HR25\ZAP1086HR25.LTR.doc

21.B.

Created: 2025-12-16 05:49:51 [EST]
(Supp. No. 68)

Sec. 90-321. Accessory dwelling units.
(a) General provisions.
(1) An application for an accessory dwelling unit (“ADU”) or junior accessory dwelling unit (“JADU”) shall be submitted to the building department for building plan check approval and shall be permitted ministerially without discretionary review or public hearing if it meets the definitions . The purpose of this chapter is to allow and regulate accessory dwelling units ("ADUs") and junior accessory dwelling units ("JADUs") in compliance with state law governing accessory dwelling units, including Chapter 13 of Division 1 of Title 7 of the California Government Code, as may be amended from time to time. To the extent state law is more permissive than this chapter, state law shall control. (2) An application for an ADU or JADU shall be submitted to the building department for building plan check approval and shall be permitted ministerially without discretionary review or public hearing if it meets the definitions and criteria listed in this section and all other applicable zoning, building and health and safety codes.

A. If the City has not acted upon a completed application for an ADU or JADU within 60 days from submission of a complete application, and the applicant has not requested a delay, the application shall be deemed approved, unless the permit application is to create a new single family or multifamily dwelling on the lot, in which case the City shall not act on the permit application for the ADU or JADU until the City acts on the permit application for the new dwelling unit. The City shall determine whether an ADU or JADU application is complete within 15 business days of submission. If the application is incomplete, the City shall provide the applicant with a written list of items needed to make the application complete and shall review resubmittals only for t he items identified in the incompleteness determination, consistent with state law.

B. If the City denies an application for an ADU or JADU, the City shall provide in writing a full set of comments within 60 days to the applicant from the date of receipt of a completed application, with a list of items that are defective or deficient, and a description of how the application can be remedied, in accordance with applicable state law.

C. An ADU or JADU may not be used for short-term rentals. If rented shall be for a term longer than 30 days.

D. Occupancy of an ADU or JADU shall not be allowed until the City approves occupancy of the primary dwelling unit.
(3) For the purposes of meeting the city's applicable regional housing needs allocation as contained in the adopted housing element, ADUs may be reported as progress towards meeting these goals. (4) Authority to Designate Areas - The City may designate areas within the jurisdiction where ADUs may be permitted based on the adequacy of water and sewer services and the impact of accessory dwelling units on traffic flow and public safety. However, where the City has not designated such areas, ADUs shall be permitted in all areas zoned for residential or mixed use pursuant to this section and applicable state law, as may be amended from time to time.
(5) An ADU shall only be allowed on a residentially zoned lot under this article that contains an existing or proposed single-family or existing multiple-family residence. (6) For purposes of calculating allowable density, an ADU is not counted as an additional unit. (b) Definitions.

21.B.

Created: 2025-12-16 05:49:51 [EST]
(Supp. No. 68)

(1) Accessory dwelling unit (“ADU”) means an attached or detached residential dwelling unit which provides complete independent living facilities for one or more persons and is located on a lot with a proposed or existing primary residence. It shall include permanent provisions for living, sleeping, eating, cooking, and sanitation on the same parcel as the single-family or multifamily dwelling. An ADU also includes the following:
(A) An efficiency unit, as defined in Health and Safety Code § 17958.1. (B) A manufactured home, as defined in Health and Safety Code § 18007. (2) Accessory structure means a structure that is accessory and incidental to a dwelling located on the same lot.
(3) Junior accessory dwelling (“JADU”) unit means an accessory dwelling unit that is no more than 500 square feet in size and is contained entirely within a single -family residence. . It includes its own separate sanitation facilities, kitchen, or shares sanitation facilities with the existing or p roposed single -family structure.
(4) Efficiency unit has the same meaning as defined in Section 17958.1 of the Health and Safety Code. (5) Impact Fee has the same meaning as the term “fee,” as defined in subdivision (b) of Government Code Section 66000, except that it also includes fees specified in Section 66477. “Impact Fee” does not include any connection fee or capacity charge by a local agency, special district, or water corporation. (6) Livable space or interior livable space has the same meaning as defined in applicable state law and means the interior habitable area of a dwelling unit intended for human habitation, including living, sleeping, eating, cooking, or sanitation. This measurement is based on net square footage and does not include exterior walls, garages, or uninhabitable spaces. (7) Living area means the interior habitable area of a dwelling unit, including basements and attics, but does not include a garage or any accessory structure.
(8) Local agency means a City, County, or City and County, whether general law or chartered. (9) Multifamily dwelling means two or more attached primary dwelling units. (10) Nonconforming zoning condition means a physical improvement on a property that does not conform with current zoning standards.
(11) Objective standards means standards that involve no personal or subjective judgment by a public official and are uniformly verifiable by reference to an external and uniform benchmark or criterion available and knowable by both the development applicant or proponent and the public official prior to submittal.
(12) Permitting agency means any entity that is involved in the review of a permit for an accessory dwelling unit or junior accessory dwelling unit and for which there is no substitute, including, but not limited to, applicable planning departments, building departments, utilities, and special districts. (13) Primary dwelling unit means the single-family dwelling or each multifamily dwelling unit but does not include an ADU or JADU. An attached garage is considered part of the primary dwelling unit. (14) Proposed dwelling means a dwelling that is the subject of a permit application and that meets the requirements for permitting.
(15) Public transit means a location, including, but not limited to, a bus stop or train station, where the public may access buses, trains, subways, and other forms of transportation that charge set fares, run on fixed routes, and are available to the public.

21.B.

Created: 2025-12-16 05:49:51 [EST]
(Supp. No. 68)

(16) Passageway means a pathway that is unobstructed clear to the sky and extends from a street to one entrance of the accessory dwelling unit.
(17) Tandem parking means that two or more automobiles are parked on a driveway or in any other location on a lot, lined up behind one another, provided that the vehicles do not extend over the public sidewalk or right-of-way.
(c) General criteria. An ADU shall meet the following criteria. (1) The ADU may be rented separate from the primary residence and may be sold or conveyed separately from the primary residence only if the requirements in applicable state law for separate conveyance are met.
(2) The ADU may be either attached to, or located within, the proposed or existing primary dwelling, including attached garages, storage areas or similar uses, or detached from the primary dwelling. (3) The number of ADUs that may be established on a lot shall be as follows, consistent with state law:
(A) On lots with a proposed or existing single-family dwelling:
(i) Up to two detached ADUs are permitted;
(ii) Up to one attached ADU is permitted; and
(iii) Up to one JADU is permitted.
(iv) The detached and attached ADUs and JADUs may be established concurrently or separately, provided the total number of primary dwellings and ADUs/JADUs does not exceed four on any lot zoned for single family residential uses. (B) On lots with existing multifamily dwellings:
(i) No more than two detached ADUs on a lot with proposed multifamily dwelling, or up to four detached ADUs on a lot with an existing multifamily dwelling if each detached ADU satisfies all of the following:
a. The side - and rear -yard setbacks are at least four feet. If the existing multifamily dwelling has a rear or side yard setback of less than four feet, the city will not require any modification to the multifamily dwelling as a condition of approving the ADU.
b. The peak height above grade does not exceed the height limit provided in Section 90-321(c)(15)(A).
c. Provided the number of detached ADUs does not exceed the number of primary dwelling units on the lot.
(ii) Up to 25 percent of the number of existing multifamily units may be attached ADUs, with a minimum of one ADU allowed; and
(iii) Up to 25 percent of the existing multifamily dwelling units may be created within portions of existing multifamily dwelling structures that are not used as livable space, with a minimum of one ADU allowed.
(C) On parcels created through an SB 9 lot split: No more than two units (including ADUs and JADUs) on a parcel created through a Senate Bill 9 (Chapter 162, Statutes of 2021) lot split shall be allowed, and in no case shall the total number of primary dwellings and ADUs/JADUs exceed four on the two parcels collectively.

21.B.

Created: 2025-12-16 05:49:51 [EST]
(Supp. No. 68)

(4) A lot having an ADU shall not be subdivided in a manner that would allow for the principal dwelling unit and the ADU to be located on separate lots that do not meet the development standards required by the underlying zone, unless otherwise permitted by st ate law. (5) The maximum interior livable space of an attached ADU is 850 square feet for a studio or one- bedroom unit and 1,000 square feet for a unit with two or more bedrooms, consistent with state law. An attached ADU that expands the existing primary dwelling by more than 150 square feet shall not exceed 50 percent of the existing primary dwelling’s floor area. (6) The maximum interior livable space of a detached ADU is 850 square feet for a studio or one- bedroom unit and 1,000 square feet for a unit with two or more bedrooms, except that a detached ADU meeting the simplified approval standards may not exceed 800 square feet of interior livable space, consistent with state law.
(7) Unless otherwise provided in this subsection, an ADU shall comply with the required standards and setbacks of the zone in which it is located.
(A) No setback shall be required for an ADU that is constructed in the same location and to the same dimensions as an existing structure that is converted to an ADU. (B) A setback of no more than four feet from the side and rear lot lines shall be required for an ADU that is not converted from an existing structure or a new structure constructed in the same location and to the same dimensions as an existing structure. (C) The minimum side, street-side, and rear yard setback shall be 4 feet, except when converting or replacing an existing accessory structure that is less than 4 feet from those lot lines. (8) Parking Requirements:
(A) When a garage, carport, uncovered parking space, or covered parking structure is demolished in conjunction with the construction of an ADU or is converted to an ADU, no replacement off- street parking spaces are required.
(B) Generally, no parking is required for ADUs or JADUs. However, one parking space per ADU or per bedroom, whichever is less, may be required for detached ADUs only, except as provided in subsection (C). The required parking space may be provided as tandem parking on a driveway or in setback areas.
(C) Notwithstanding any other provision in this section, no parking standards shall be imposed for an ADU in the following instances:
a. The ADU is located within one-half mile walking distance of public transit. b. The ADU is located within an architecturally and historically significant and designated historic district.
c. The ADU is part of the proposed or existing primary residence or an existing accessory structure.
d. When on-street parking permits are required but not offered to the occupant of the ADU. e. When there is a car share vehicle located within one block of the ADU. f. When the ADU permit application is submitted concurrently with a permit application to create a new single-family or new multifamily dwelling on the same lot. (9) No passageway shall be required in conjunction with the construction of the ADU.

21.B.

Created: 2025-12-16 05:49:51 [EST]
(Supp. No. 68)

(10) An accessory dwelling unit shall be architecturally compatible with the principal dwelling unit.

Compatibility shall be based on the architectural style, construction materials, and primary color, of the principal dwelling unit.
(11) An ADU shall not be considered a new residential use for the purpose of calculating connection fees or capacity charges for utilities, including water and sewer services, unless the ADU is constructed with a new single-family dwelling, consistent with applicable state law, as may be amended from time to time. The City may require a new or separate utility connection directly between the ADU and the utility service.
(12) Impact Fees:
(A) No impact fee is required for an ADU or JADU that is less than 750 square feet of interior livable space. Additionally, ADUs and JADUs that are 500 square feet or less of interior livable space are exempt from school fees, consistent with applicable state law, as may be amended from time to time.
(B) Any impact fee required for an ADU that is 750 square feet or more in size shall be charged proportionately in relation to the square footage of the primary dwelling unit (e.g., the floor area of the ADU divided by the floor area of the primary dwelling, times the typical fee charged for a new dwelling), consistent with applicable state law.
(13) Prior to issuance of a certificate of occupancy for a JADU, a deed restriction shall be recorded that runs with the land and specifies that the JADU may not be sold separately from the primary single -family dwelling, that the JADU is restricted to the maximum square footage, and includes other requirements of state law for JADUs, as may be amended from time to time. For ADUs, a deed restriction is required only if the ADU is to be sold separately, in which case it must comply with applicable state law regarding separate conveyance.
(14) The City will not deny an application for an ADU or JADU due to a nonconforming zoning condition, building code violation, or unpermitted structure that does not threaten public health and safety and is unaffected by the construction of the ADU or JADU, consistent with applicable state law. For ADUs constructed before January 1, 2020, the City may not deny a permit to legalize the ADU based on violations of building standards or noncompliance with ADU law, except where correcting the violation is necessary to protect health and safety as defined in applicable state law, as may be amended from time to time.
(15) Height Standards:
(A) For one-story detached ADUs, the maximum height shall be 16 feet. Where the detached ADUs is located within one -half mile walking distance of a major transit stop or a high -quality transit corridor, as defined in Public Resources Code § 21155, or is adjacent to or abuts a multi -story multifamily dwelling, then the minimum height limit for a one-story detached ADUs is 18 feet. (B) For two-story detached ADUs, the maximum height shall be 25 feet. (C) An additional two feet in height shall be allowed to accommodate a roof pitch on an ADU that is aligned with the roof pitch of the primary dwelling unit. (D) When an existing accessory structure is converted to a detached ADU , the maximum height may equal the height of the existing accessory structure.
(E) An attached ADU may not exceed 25 feet in height and two stories, or the maximum height allowed in the base zone for the primary dwelling, whichever is lower. (16) Development Standards:

21.B.

Created: 2025-12-16 05:49:51 [EST]
(Supp. No. 68)

ADUs shall comply with all applicable base zone district objective development standards (e.g., lot coverage, floor area ratio, open space, front setbacks, minimum lot size) unless the application of those standards would physically preclude the construction of at least an 800 square-foot ADU with 4-foot side and rear setbacks. The City may require that the property be used for rentals of terms 30 days or longer. (17) Utilities and Safety:

All ADUs shall be connected to public utilities or their equivalent, including water, electric and sewer, unless the ADU was constructed with a new single -family dwelling. The City may require separate address identification for an ADU to facilitate emergency responses. Fire sprinklers shall only be required in an ADU or JADU if sprinklers are required in the primary residence, consistent with applicable state law.
(d) Special criteria for junior accessory dwelling units. JADUs shall be subject to the following requirements, in addition to or, where conflicting, in lieu of the general requirements in subsection (c) of this section. To the extent that any of the requirements of the subsection (d) conflict with the requireme nts of subsection (c), the provisions of this subsection (d) shall control.
(1) If necessary, an expansion of no more than 150 square feet to the physical dimensions of the existing structure may be added to accommodate ingress and egress to the JADU. (2) The JADU must include a cooking facility with appliances and a food preparation counter and storage cabinets that are of reasonable size in relation to the size of the junior accessory unit. (3) The JADU may include separate bathroom facilities or may share sanitation facilities with the existing structure.
(4) No more than one JADU is permitted on a single lot. (5) The owner of the single-family residential home in which the JADU is located must reside in either the remaining portion of the home or in the newly created JADU unit, unless the JADU includes separate sanitation facilities, in which case owner-occupancy is not required. Owner-occupancy is also not required if the owner is another governmental agency, land trust, or housing organization, consistent with applicable state law, as may be amended from time to time. (6) A JADU shall not be metered separately from the principal dwelling unit for gas, electricity, and water/sewer services, and shall not be considered a separate residential use for purposes of connection fees or capacity charges, or for the purposes of fire or life protection ordinances or regulations.
(7) Size. A JADU shall be no more than 500 square feet of interior livable space and contained entirely within a single-family residence. The minimum interior livable space of a JADU unit shall be 150 square feet, consistent with applicable state law.
(e) Conflicting Standards and Compliance with State Law. To the extent that any provision of this section conflicts with or is less permissive than state law governing ADUs and JADUs, state law shall prevail. This ordinance is intended to comply with all applicable state laws governing accessory dwelling units and junior accessory dwelling units, as may be amended from time to time, and shall be interpreted consistent with such laws. Where this section is silent, state law standards apply. (Ord. No. 1919, § 1(Exh. 1), 9-27-16; Ord. No. 1940, § 1(Exh. A), 12-12-17; Ord. No. 1964(2020-003), § 1, 2-25-20; Ord. No. 1972, § 2, 2-9-21)