OUR EXPERIENCE
22 ADVANCE/LONG-RANGE PLANNING
REFERENCES
CITY OF EL SEGUNDO, COMMUNITY DEVELOPMENT DEPARTMENT
Description of Services Provided: Providing technical support for long-range planning assignments, including a Zoning Code Amendment to implement various Housing Element programs and developing an implementation and economic development strategy related to the Smoky Hollow Specific Plan.
Completed: June 2024
Contact Information: Michael Allen, AICP, Community Development Director Phone: (310) 524-2345 | Email: [email protected]
Address: 350 Main Street, El Segundo, California 90245-3895 Description of Services Provided: Project Manager for long-range planning initiatives, including (1) adoption of multifamily and mixed-use residential objective development and design standards; and (2) batch Zoning Code Amendment to implement the Housing Element and codify multiple State housing legislations. Prepared Planning Commission and City Council reports, resolutions, ordinances, public hearing notices, and presentations.
Completed: (1) November 2023; and (2) May 2024
Contact Information: Erica Roess, Senior Planner
Phone: 949-362-4067 | Email: [email protected]
CITY OF LAGUNA NIGUEL, PLANNING DIVISION
CITY OF LA MESA, COMMUNITY DEVELOPMENT DEPARTMENT
Description of Services Provided: Project Manager overseeing text amendments to bring the Zoning Ordinance into compliance with the last three cycles of State updates to its ADU and JADU Statutes. Involved drafting staff reports for two public hearings, drafting two ordinances, drafting a resolution and attachments, and serving as the staff presentation lead at all public hearings.
Completed: February 2023
Contact Information: Lyn Dedmon, Assistant to the City Manager Phone: (619) 667-1339 | Email: [email protected]
CITY OF WESTMINSTER, PLANNING DIVISION
Description of Services Provided: Project Manager for various Zoning Text Amendments, including modifying regulations for electronic freeway billboard signs and updating the mixed-use zoning districts chapter.
Contact Information: Adolfo Ozaeta, Assistant City Manager Email: [email protected] | Phone: (714) 548-3462
RESUMES
APPENDIX:
23
Education
Experience
Stephanie Tomaino, AICP
Cal Poly Pomona
University of California, Irvine
MA, Urban and Regional
Planning
BA, Anthropology
City of Costa Mesa
City of Irvine
City of Lake Forest
City of Mission Viejo
City of San Clemente
Affiliations
BA, International Studies
Public Sector:
Amazon: Public Policy,
Entitlements, and Real
Estate Business Unit
Private Sector:
Prior Employment
American Institute of Certified
Planners (AICP)
American Planning Association
Urban Land Institute
Cal Poly Pomona Alumni Association
UCI Planning Alumni
Contact
[email protected]
As a proponent of practical, solutions-focused planning, Stephanie incorporates her experiences as a city planner and customer service supervisor into her Zoning Code projects. She adopts a user-centric approach, foreseeing potential challenges that could emerge when the Code is being implemented by future staff. Stephanie is active in the planning profession, having served in various executive roles on both State and local APA boards. With a background in academia as an Adjunct Professor at UC Irvine, she is uniquely positioned to educate and inform community members on the intricacies of zoning, land use, and development.
M a n a g i n g P r i n c i p a l
Project Manager overseeing text amendments to bring the Zoning Ordinance into compliance with the last three cycles of State updates to its ADU and JADU Statutes.
Involved drafting staff reports for two public hearings, drafting two ordinances, drafting a resolution and attachments, and serving as the staff presentation lead at all public hearings.
City of La Mesa – ADU and JADU Ordinance Updates
S e l e c t e d P r o j e c t E x p e r i e n c e
Project Manager overseeing a batch Zoning Code Amendment to implement the Housing Element and codify multiple State-mandated legislation, including electric vehicle (EV) charging stations, emergency shelters, transitional and supportive housing, group homes, density bonuses, housing sites inventory, and low barrier navigation centers.
City of Laguna Niguel – State-Mandated Zoning Code Amendments Project Manager for two-year work program involving numerous amendments and streamlining updates to all Chapters of the Zoning Ordinance. Involves Zoning Ordinance text amendments to implement the Housing Element Action Plan, increase residential zoning densities consistent with the City’s General Plan Update, incorporate the City’s economic development policies into the Zoning Code to support business retention and attraction, and other improvements for user readability and implementation efficiency.
City of Eastvale – Comprehensive Zoning Code Update
City of El Segundo – Housing Element Implementation
Contract Planner drafting Code amendments to implement housing strategies within the certified Housing Element including residential care facilities, emergency shelters, low barrier navigation centers, employee housing, reasonable accommodations, senior housing, transitional/supportive housing, and new objective findings for site development approvals.
Provide technical support to the team working to adopt multifamily and mixed-use residential objective development and design standards. Specifically assisted with writing the first drafts of the Planning Commission staff report, resolution, ordinance, Zoning Code text amendments, and public hearing notice.
City of Laguna Niguel - Objective Design and Development Standards Subconsultant to De Novo Planning providing technical lead support in drafting Zoning Text Amendments to implement new land use classifications in the General Plan Update, rezone commercial districts to meet the City’s RHNA requirement, and implement other programs as required by the Housing Element and State laws.
City of Lomita – Comprehensive Zoning Code Update
17 Years
Stephanie is a certified planner with over 17 years of experience working in the public and private sectors. Having spent the majority of her career as an in-house planner at multiple cities in Southern California, she possesses diverse and extensive project management experience in all facets of planning and community development. Stephanie is well-versed in implementing and interpreting Zoning Ordinances, Municipal Codes, General Plans, Specific Plans, Design Guidelines, and other regulatory planning documents. With a proven track record in presenting projects before Planning Commissions and City Councils, she is a seasoned expert in entitlement management and ordinance development.
Joshua excels in implementing and executing successful work plans for community engagement, notably in housing discussions and downtown business walks, and pioneers innovative digital marketing strategies for expanded outreach and enhanced decisionmaking. An active service leader, he currently sits on the City of Sacramento’s Historic Preservation Commission, where he contributes to the preservation and enhancement of the City's historical heritage. Furthermore, he assumes the role of President within his local Homeowners Association, demonstrating his commitment to fostering a harmonious and engaged residential community. Joshua's multifaceted experience underscores his dedication and resourcefulness in the Planning profession.
Experience
City of Costa Mesa
City of Pacifica
City of Sausalito
City of Vacaville
Education
San Francisco State University
University of California, Irvine
MA, Public Administration
BA, Urban Studies
Public Sector:
Lilley Planning Group,
consultant to Cities of Lomita
and Bellflower
Private Sector:
Employers
Affiliations
American Planning Association
Municipal Managers of Northern
California (MMANC)
Pi Alpha Alpha (Public
Administration Honors Society)
S e l e c t e d P r o j e c t E x p e r i e n c e
Assisted in overseeing the functions of the Current Planning Team, including reviewing public notices, completeness letters, approval letters, staff reports, and presentations for a team of six planners. Attended all Planning Commission meetings and provided monthly updates on Planning Division activities. Worked directly with businesses, stakeholders, elected officials, city management and directors, and the development community.
With only a team of two full-time Planners, provided 90% of front-counter support for more than six months during a staffing shortage. Compiled referral comments, drafted staff reports, and presented to the Planning Commission, City Council, and legislative bodies, on matters related to Design Review entitlements for residential construction, Conditional Use Permits of commercial businesses, cell towers, historical properties, and ordinance updates.
City of Sausalito - In-House Planner and Business Manager City of Vacaville - Assistant Director
City of Pacifica - In-House Planner and Management Analyst Developed and implemented a parklet program in a pandemic-responsive effort to issue over 20 permits to local businesses to continue their operations during COVID-19. Drafted an ordinance update to successfully implement Reach Codes which surpassed state minimum energy standards for building design and construction. Managed the Climate Action Plan update; coordinated Let’s Talk Housing community engagement listening sessions; oversaw the Pacifica new libraries project to construct a new library facility and rehabilitate an existing facility; and prepared and presented reports for Planning Commission and City Council.
City of Sacramento
City of Folsom
Volunteer:
City of Ukiah - Contract Planner
Serve as the Project Manager for assigned discretionary planning applications, monitor developer deposits, coordinate City reviews with other departments and technical consultants, review projects for completeness and conformance to the Zoning Ordinance and General Plan, draft staff reports and resolutions, present projects at noticed Planning Commission public hearings.
[email protected]
Contact
Town of Tiburon - Contract Planner
Joshua Montemayor, MPA
Senior Planner
12 Years
Provide contract planning staff augmentation managing and coordinating comprehensive design review processes to ensure preservation of the town’s unique visual character; planning reviews included evaluating projects for compliance with zoning regulations and neighborhood aesthetic consistency, presenting projects to the Design Review Board, and facilitating community notifications.
Joshua is a skilled project manager with diverse experiences supporting municipalities across Northern and Southern California. Joshua leverages his unique background having worked directly in the City Manager's Office to integrate Community Development knowledge into city-wide administration, effectively executing City Council goals and initiatives relative to Planning.
PHONE
WEBSITE
EMAIL
+949 485 1960
www.city-advisors.com
[email protected]
CONTACT
INFO
Agenda Item No. 13 November 4, 2025 | 1
City of La Palma
Agenda Item No. 13
MEETING DATE: November 4, 2025
TO: City Council
FROM: City Manager
SUBMITTED BY: Joseph Cisneros, Deputy City Manager
AGENDA TITLE: Adopt a Resolution Approving the Proposed Water, Fire Flow, and Sewer Rates
RECOMMENDED ACTION:
It is recommended that the City Council take the following actions:
1. Open Public Hearing;
2. Receive Staff Report;
3. Council Comments and Questions;
4. Receive Public Input;
5. Close Public Hearing;
6. Adopt a Resolution approving the Proposed Water, Fire Flow, and Sewer Rates.
BACKGROUND:
In September 2024, staff issued a Request for Proposals (RFP) for the preparation of a Water and Sewer Rate Study. On January 14, 2025, the City Council awarded a contract to Willdan Financial Services to complete the study.
A Water and Sewer Rate Study is generally conducted every five years, in alignment with the City Council’s Goals & Objectives to create and maintain City assets, infrastructure, and neighborhoods that reflect municipal pride of ownership. The study ensures the utility system’s operational costs, capital improvements, and system maintenance remain financially sustainable. The City of La Palma last adopted utility rates in April 2022, which became effective July 1, 2022, with annual adjustments thereafter.
Due to the economic impacts of the pandemic, several cost factors were not fully accounted for in the 2021 study. As a result, adjustments were limited to water rates only, while sewer rates have remained unchanged for several years. Additionally, in the 2021 study, the City and the consultant took a cautious approach when evaluating capital projects, as many companies and businesses were in flux during this period, and reliable cost estimates were unavailable. As a result, only minor adjustments were made to the capital cost portion of the 2021 study, leaving rates significantly lower than what is necessary to adequately maintain and finance the system’s infrastructure.
Agenda Item No. 13 November 4, 2025 | 2
On September 2, 2025, the City Council held a study session to discuss the draft fee study and proposed rates. City Council directed staff to schedule a Public Hearing with formal notification (Attachment 2) to all property owners and renters, as is required by Proposition 218, for November 4. 2025.
SUMMARY:
The purpose of this Public Hearing is to review the proposed Water and Sewer Rate Study prepared by Willdan Financial Services and to set/adopt the rates recommended in the study’s findings.
Water System
Since 2022, the costs of producing and purchasing water have continued to rise. Pandemic-related economic impacts, statewide drought regulations, and other financial pressures have affected revenues, while operational and importation expenses have continued to rise.
Several key factors are driving the need for water rate increases, including the replacement of the Walker Well, major utility capital projects such as water treatment design and engineering, and primary service demands such as peak flow requirements and the number and types of customers served.
Sewer System
Similar to the water system, the proposed sewer rate increase is primarily driven by capital costs and the need to strengthen reserve balances to fund future projects. It is important to note that the 2021 study concluded existing sewer rates were adequate to cover operating expenses and maintain required reserves for the subsequent years, however, it was noted an increase would be necessary in the next rate study. As a result, no rate increases were implemented in 2022, leaving the reserve balance insufficient in the FY 25 and FY 26 to support upcoming sewer projects, operational needs, and other maintenance costs increases.
Walker Well
The last two Water Master Plans identified the need to drill a new well at the Walker Street site based on current conditions and the existing well’s useful life. In consultation with professional water contractors, staff has undertaken rehabilitation efforts, including a full well rehabilitation planned for FY 2028, to extend the current well’s life until a replacement can be constructed.
The new well is targeted for 2035, with an estimated cost of $10 million. Based on current projections, capital reserve balances will not be sufficient to fund this project. The proposed rate adjustments include building the Water Capital Reserve Fund to fully finance the new well. This approach provides flexibility to revisit and adjust the funding strategy in the next rate study while simultaneously preparing a suitable reserve balance to make a significant contribution toward the replacement cost and ensure adequate reserves for the Walker Well project.
The Walker Well funding scenarios do not differ significantly. Staff recommends a fully funded approach for this five-year rate adjustment, utilizing cash and capital reserves (Scenario 1). This strategy provides the City with flexibility to revisit and adjust funding in the next rate study. Alternative scenarios include funding the project with 50% cash and reserves and 50% debt (Scenario 2), or with 25% cash and reserves and 75% debt (Scenario 3). Below is a depiction of the scenarios for an average usage bill.
Proposed Rates
The charts below identifies the proposed water, fire flow, and sewer rates, which are billed bi-monthly, along with a projected average bill comparison and neighboring rate comparisons.
Table 1: Water & Fire Flow Rates
Agenda Item No. 13 November 4, 2025 | 3
Table 2: Sewer Rates
Table 3: Projected Average Bill Impact Using 1,600 Cubic Feet of Water PROPOSITION 218 PROCESS:
In November 1996, California voters approved Proposition 218, which requires compliance when setting utility rates. One provision requires that a noticed public hearing on utility rates be held not prior to 45 days of noticing; and that rates not be increased if a majority of affected property owners protest the increased rates in writing. Additionally, there is a 120-day statute of limitations for challenging any new, increased, or extended fee or charges, commencing from the later of the effective date or the date of final passage, adoption, or approval of the Resolution. If adopted, rates would go into effect with a new billing cycle after January 1, 2026.
Proposition 218 requires that any rate increase satisfy five substantive requirements. The Study conducted on the proposed water and fire flow charges addressed these as follows:
Agenda Item No. 13 November 4, 2025 | 4
1. The revenues derived from the proposed rate adjustments do not exceed the funds required to provide City water and fire flow services to the lands, residents, and water users within the City’s service area; and
2. The revenues derived from the proposed rate adjustments and rate structure modifications are not used for any purpose other than to provide City water and fire flow services to the lands, residents, and water users within the City’s service area; and
3. The amount of the proposed rates to be imposed upon any parcel or person does not exceed the proportional cost of water and fire flow services attributable to such parcel or person; and
4. The entirety of the proposed rates will be imposed only for water and fire flow services used by, or immediately available to the property owner, resident, or water user; and the proposed rates do not contain any fees or charges based on potential or future use of service; and
5. No part of the proposed rates will be imposed for general government services, where the service is available to the public at large in substantially the same manner as it is to the property owners, residents, and water users of the City.
As of printing the City Council Agenda on October 30, 2025, the City has received two (2) written protests.
ENVIRONMENTAL IMPACT:
This action is exempt from the California Environmental Quality Act (CEQA) because it is not a project which has a potential for resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment, pursuant to CEQA Guideline Section 15378.
FISCAL IMPACT:
The water and sewer utilities are operated as enterprise funds. As a result, both utilities are neutral to the City’s General Fund as rate revenues are not transferred as either surplus or profit. The proposed rates and charges include increases for water and fire flow service, which includes planning for replacement of the Walker Well. If adopted by City Council, rates would go into effect with a new billing cycle after January 1, 2026.
ATTACHMENTS:
1. Resolution
2. Prop 218 Notice
3. Utility Rate Study
Resolution No. 2025-__
RESOLUTION NO. 2025-__
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
LA PALMA ADOPTING WATER, FIRE FLOW, AND SEWER
SERVICE RATES
WHEREAS, the City has undertaken a comprehensive analysis of the City’s cost to provide Water, Fire Flow, and Sewer Service rates and fund near-term and long-term capital facilities and improvement needs (the “Study”), a copy of which is on file with the City, and has developed proposed water, fire flow and sewer rate structure based upon the Study; and
WHEREAS, on September 19, 2025, a notice was mailed to all property owners and water customers within the City’s service area, informing the recipients of the City’s consideration of the proposed water, fire flow, and sewer collection service rate adjustments, the basis and reason for the amounts of such proposed rate adjustments and modifications, and the recipients’ opportunity to attend and provide testimony on the proposed rate adjustment at a Public Hearing on the proposed rate schedule on November 4, 2025, at City Hall; and
WHEREAS, on November 4, 2025, the City Council conducted a duly noticed Public Hearing, reviewed the Study regarding the need for the proposed water, fire flow, and sewer collection service rate adjustments as set forth in Exhibit “A” hereto, considered evidence and testimony submitted at such Public Hearing, and accepted protests filed prior to the close of the Public Hearing.
NOW, THEREFORE, The City Council of the City of La Palma does hereby resolve as follows:
SECTION 1. The City find and determines that [Insert #] protests against the proposed water, fire flow, and sewer service rate adjustments were filed and not withdrawn before the close of the Public Hearing. The City Council therefore finds and determines that a majority of the property owners, residents, and water users within the City’s service area have not filed with or presented to the City written protests against the proposed water, fire flow, and sewer service rate adjustments, and that there is no successful property owner protest to the proposed rate adjustments.
SECTION 2. Based upon the evidence presented at the public hearing, the Study, and the analysis which is summarized in the staff report regarding the proposed water, fire flow, and sewer service rate adjustments, the City Council finds and determines as follows:
Resolution No. 2025-__
a) The revenues derived from the proposed rate adjustments do not exceed the funds required provide City water, fire flow, and sewer collection service to the lands, residents, and water users within the City’s service area; and b) The revenues derived from the proposed rate adjustments are not used for any purpose other than to provide City water, fire flow, and sewer collection services to the lands, residents, and water users within the City’s service area; and
c) The amount of the proposed rates to be imposed upon any parcel or person does not exceed the proportional cost of water, fire flow, and sewer collection services attributable to such parcel or person; and d) The entirety of the proposed rates will be imposed for water, fire flow, and sewer collection services actually used by, or immediately available to the property owner, resident, or water user, and the proposed rates do not contain any fees or charges based on potential or future use of service; and e) No part of the proposed rates will imposed for general government services, where the service is available to the public at large in substantially the same manner as it is to the property owners, residents, and water users of the City.
SECTION 3. The water, fire flow, and sewer service rate adjustments as proposed and described in the September 19, 2025, Proposition 218 Notice for the November 4, 2025, Public Hearing and the attached hereto as Exhibit “A,” are hereby approved.
SECTION 4. As an alternative to discontinuing the provision of water services for delinquent payment, the delinquent payment amount shall constitute an assessment against the respective lot or parcel of land to which it relates, and upon recordation in the office of the County recorder of a notice of lien, as so made and confirmed, shall constitute a lien on said property for the amount of such assessment. After such confirmation and recordation, a copy may be turned over to the Tax Collector for the City, whereupon it shall be the duty of said Tax Collector to add the amounts of the respective assessments to the next regular tax bills levied against said respective lots and parcels of land for municipal purposes, and thereafter said amounts shall be collected at the same time and in the same manner as ordinary municipal taxes are collected, and shall be subject to the same penalties and the same procedure under foreclosure and sale in case of delinquency as provided for ordinary municipal taxes; or after such recordation, such lien may be foreclosed by judicial or other sale in the manner and means provided by law.
The City Clerk shall, by certified mail, to the property owner, if the property owner’s identity can be determined from the County assessor's or County recorder's records, provide the property owner with a copy of the assessment and a written notice specifying the amount
Resolution No. 2025-__
of the assessment and that the property may be sold after three years by the Tax Collector for unpaid delinquent assessments.
SECTION 5. Based upon the staff report and presentation, the Study, and the testimony and evidence presented at the public hearing, the City Council finds and declares that the increase in rates for water and fire flow service as set forth in Exhibit “A” hereto do not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) and are exempt from CEQA under Public Resources Code Section 21080(b)(8) and State CEQA Guidelines §§ 15376(b)(4) and 15273, because the increased water delivery rates’ (a) involve the creation of government funding mechanisms or other government fiscal activities which do not involve any commitment to any project which may result in a potentially significant physical impact on the environment; and (b) are for the purposes of meeting operating expenses (including employee wage rates and fringe benefits), purchasing or leasing supplies, equipment or materials, meeting financial reserve needs and requirements, and obtaining funds for capital projects necessary to maintain the level of service within the City’s existing service area.
APPROVED AND ADOPTED by the City Council of the City of La Palma at a regular meeting held on the 4th day of November 2025.
__________________________
Mark Waldman
Mayor
ATTEST:
_____________________________
Norma I. Alley, MMC
City Clerk
Resolution No. 2025-__
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) SS.
CITY OF LA PALMA )
I, NORMA I. ALLEY, City Clerk of the City of La Palma, California, DO HEREBY CERTIFY that the foregoing Resolution was adopted by the City Council of said City at a regular meeting of said City Council held on the 4th day of November 2025, and that it was so adopted by called vote as follows:
AYES:
NOES:
__________________________
Norma I. Alley, MMC
City Clerk
NOTICE OF PUBLIC HEARING REGARDING
PROPOSED CHANGES TO WATER AND SEWER RATES
Hearing Date & Time: November 4, 2025, 6:30 PM
Hearing Location: La Palma City Hall Council Chambers
7822 Walker Street, La Palma, CA 90623
Why are you receiving this notice?
The City of La Palma (City) is mailing this notice to you because you are a water and/or sewer (wastewater) customer, or the owner of record of a 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 November 4, 2025, at the La Palma City Council Chambers, located at 7822 Walker Street, La Palma, CA 90623. If adopted, the proposed rates for water and sewer service will be in effect for the first full billing cycle following January 1, 2026.
What do water and sewer rates fund?
The City provides water and sewer service to approximately 4,379 residential, commercial, and fire protection customers and maintains critical infrastructure that ensures quality service and safeguards the health and safety of the community. The bimonthly water and sewer rates the City charges its customers are the primary source of revenue to operate and maintain the water and sewer systems and are used solely for this purpose. Water and sewer rate revenue provides funding for system operations, maintenance, capital projects, administration, as well as costs related to prudent long-term operational or financial management of the utilities, such as maintaining adequate reserve funds and planning for contingencies.
The City provides safe, potable water that is sourced primarily from the local groundwater basin managed by the Orange County Water District (OCWD) and supplemented as needed by imported water purchased from the Metropolitan Water District of Southern California (MET) through the Municipal Water District of Orange County (MWDOC), via two wells and two reservoirs. The City also provides sewer collection services through approximately 30 miles of sewer gravity pipelines, while sewer treatment and disposal services are provided by and billed separately by Orange County Sanitation District (OCSD).
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 to customers and determine the level of funding required from rates over the next five years.
The result is a recommended plan that ensures each utility fund meets projected financial obligations for operations and maintenance and capital infrastructure improvements, to ensure continued safe and efficient operations, while maintaining sufficient reserves for cash flow management and emergencies. To maintain the financial viability of the utilities, the City is updating the water and sewer rates before the end of the last rate study period ending FY 2025/26 due to increased costs it has experienced for operations and maintenance as well as the need to fund future capital improvement projects. The rate structures for each utility were designed so that revenues from proposed rates do not exceed the amount of revenue required to provide the services, nor will rate revenue be used for any purposes other than those for which they are imposed.
Why are water and sewer rate changes needed?
The utility rate study and financial plan determined that the City’s current water rates are not sufficient to meet the increasing costs of system operations, maintenance and capital projects, administrative support for operations, repair and replacement of aging system components, maintenance of designated reserves, and capital projects necessary to ensure uninterrupted service and compliance with regulatory mandates. In addition, future needs for water capital improvements will require additional funding from rates. These capital projects will be funded primarily with rate revenues of the system. As a result, revenue increases are required to generate additional cash to fund the projected costs of operations and capital projects, as well as maintain adequate cash reserves.
During the last rate study, the City chose not to increase sewer rates, but costs have continued to escalate over that same period. Though the current sewer rates continue to generate sufficient revenues to meet the revenue requirements, they will not be able to do so after the projection period ending June 30, 2030. Therefore, nominal rate increases are recommended to, at a minimum, mitigate the impacts of inflation and ensure the ability of the sewer utility to meet financial obligations in the future and maintain sufficient cash reserves to fund capital projects beyond the projection period.
The proposed rates are based on a comprehensive utility rate study and financial plan completed by an independent consultant. Based on a comprehensive cost-of-service analysis, the amount of the proposed rates imposed on any parcel or person as an incidence 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. The rate study report is available for review with the City Clerk.
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 requirements from water and sewer rates was completed. As previously mentioned, revenue requirements include projected expenditures for operations, maintenance, repair and replacement of aging system components, equipment and capital projects. The revenue requirement for each utility also includes designated reserves.
Maintaining appropriate reserves is critical to the ability of the City to serve its customers and respond to unforeseen and unpredictable costs. The reserves may only be used to fund costs associated with those systems.
Revenue requirements were then compared to sources of available funds under existing rates during each year of the forecast period to determine whether projected revenues are sufficient to meet those requirements. Where a shortage of revenue was found, revenue adjustments were calculated which, if implemented, will provide revenue to meet those needs.
The City is proposing to implement new water and sewer rates as a series of annual adjustments starting on January 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 until superseded by Council action.
Proposed Bi-Monthly Water Rates - January 1, 2026 through January 1, 2030 Proposed water rates consist of 1) a bi-monthly fixed charge for all customers, except fire protection accounts who have specific charges, 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 of metered water usage (100 cubic feet = 1 unit of water = 748 gallons). The fixed charge recovers fixed costs of maintaining and operating utility infrastructure and facilities, while the volumetric rate recovers variable costs of 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 characteristic.
Proposed Bi-Monthly Sewer Rates – January 1, 2026 through January 1, 2030 Proposed sewer rates consist of volumetric rates per 100 cubic feet (100 cubic feet = 1 unit of water = 748 gallons) for all customers based on the amount of metered water usage. The volumetric rates only recover the costs of collecting and conveying wastewater to the treatment and reclamation facility owned and operated by OCSD. Sewer treatment and disposal services are provided by and billed separately by OCSD. The rate structure was designed so each customer will be charged an amount proportional to the cost of serving them based on their usage characteristics.
Tables showing the full rate structures for both the water and sewer utilities are presented on the next page.
Proposed Bi-Monthly Water Rates - January 1, 2026 through January 1, 2030 Proposed Bi-Monthly Sewer Rates – January 1, 2026 through January 1, 2030 2026 2027 2028 2029 2030
Bi-Monthly Fixed Service Charge:
5/8 Inch $ 54.52 $ 62.10 $ 77.62 $ 85.38 $ 93.92 $ 99.32 3/4 Inch $ 54.52 $ 62.10 $ 77.62 $ 85.38 $ 93.92 $ 99.32
1.0 Inch $ 54.52 $ 62.10 $ 77.62 $ 85.38 $ 93.92 $ 99.32
1.5 Inch $ 224.40 $ 257.99 $ 322.48 $ 354.73 $ 390.20 $ 412.64
2.0 Inch $ 351.82 $ 404.90 $ 506.13 $ 556.74 $ 612.42 $ 647.63
3.0 Inch $ 649.10 $ 747.71 $ 934.64 $ 1,028.10 $ 1,130.91 $ 1,195.94
4.0 Inch $ 1,073.80 $ 1,237.43 $ 1,546.79 $ 1,701.47 $ 1,871.61 $ 1,979.23
6.0 Inch $ 2,135.58 $ 2,461.74 $ 3,077.17 $ 3,384.89 $ 3,723.38 $ 3,937.48
8.0 Inch $ 3,409.68 $ 3,930.91 $ 4,913.64 $ 5,405.01 $ 5,945.51 $ 6,287.37
10.0 Inch $ 4,896.14 $ 5,644.94 $ 7,056.17 $ 7,761.79 $ 8,537.97 $ 9,028.90 Bi-Monthly Fire Flow Fixed Service Charge:
5/8 Inch $ 13.94 $ 16.15 $ 20.19 $ 22.21 $ 24.43 $ 25.83 3/4 Inch $ 13.94 $ 16.15 $ 20.19 $ 22.21 $ 24.43 $ 25.83
1.0 Inch $ 13.94 $ 16.15 $ 20.19 $ 22.21 $ 24.43 $ 25.83
1.5 Inch $ 21.46 $ 28.25 $ 35.32 $ 38.85 $ 42.73 $ 45.19
2.0 Inch $ 27.08 $ 37.33 $ 46.66 $ 51.33 $ 56.46 $ 59.71
3.0 Inch $ 40.24 $ 58.51 $ 73.13 $ 80.45 $ 88.49 $ 93.58
4.0 Inch $ 59.02 $ 88.76 $ 110.95 $ 122.05 $ 134.25 $ 141.97
6.0 Inch $ 105.98 $ 164.39 $ 205.49 $ 226.04 $ 248.65 $ 262.95
8.0 Inch $ 162.32 $ 255.16 $ 318.95 $ 350.84 $ 385.92 $ 408.11
10.0 Inch $ 228.06 $ 361.05 $ 451.31 $ 496.44 $ 546.08 $ 577.48
12.0 Inch $ 415.90 $ 663.58 $ 829.48 $ 912.43 $ 1,003.67 $ 1,061.38 Volumetric Rates Per 100 Cubic Feet:
All Flow $ 3.47 $ 3.99 $ 4.98 $ 5.48 $ 6.03 $ 6.38
Description Existing
Rates
Projected For Calendar Year Beginning January 1:
2026 2027 2028 2029 2030
Volumetric Rates Per 100 Cubic Feet [1]:
All Flow $ 0.85 $ 0.88 $ 0.94 $ 1.01 $ 1.08 $ 1.15
Notes:
Projected For Calendar Year Beginning January 1:
[1] The City provides collection only services, all customers pay the same rate per 100 cubic feet of billed water Description Existing
Rates
Impact on your water and sewer bill
Per the proposed rates effective January 1, 2026, the combined water and sewer bill for a typical single-family home using 1,600 cubic feet of water per bi-monthly billing period would increase from $123.64 currently to $139.96 per bi-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 new water and sewer rates at a Public Hearing on Tuesday, November 4, 2025, at 6:30 p.m. at the La Palma City Council Chambers, located at 7822 Walker Street, La Palma, CA 90623. 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 rate revisions 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 sewer services, you do not need to take any action.
For a written protest to be counted, it must include the following: 1) a statement indicating that the identified property owner or customer of record is in opposition to the proposed water or sewer rate changes; 2) the street address or Assessor's Parcel Number (APN) for the parcel(s) with respect to which the protest is made; and 3) the name and signature of the owner or customer. Protests may be mailed to the City Clerk at 7822 Walker Street, La Palma, CA 90623, or hand delivered to the City Clerk at the Public Hearing on November 4, 2025. 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 January 1, 2026.
In accordance with Government Code section 53759, there 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.
City of La Palma, CA
Comprehensive Water & Sewer
Utility Rate Study Update
Report
i Water & Sewer Rate Study
August 26, 2025
TABLE OF CONTENTS
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 ..........................................................................................................1
1.2 Overview of the Rate Study Process............................................................................................2
1.3 Summary of Proposed Rates..........................................................................................................3 Section 2 – Revenue Sufficiency Analysis ..........................................................................................6
2.1 Financial Planning Principles..........................................................................................................6
2.2 Existing Rates.......................................................................................................................................6
2.3 Revenue Sufficiency Process .........................................................................................................8
2.3.1 Budget..........................................................................................................................................8
2.3.2 Capital Improvement Plan (CIP) ..........................................................................................9
2.3.3 Debt Service .............................................................................................................................10
2.3.4 Gross and Net Revenue Requirement ..............................................................................11
2.4 Customers & Billable Flows............................................................................................................12
2.4.1 Customer Billing Analysis........................................................................................................12
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 ...............................................................................28
ii Water & Sewer Rate Study
August 26, 2025
3.3 Sewer Cost-of-Service....................................................................................................................29
3.3.1 Functional Unbundling of Revenue Requirements........................................................29
3.3.2 Classification of Revenue Requirements..........................................................................30
3.3.3 Allocation to Customer Classes and Unit Cost Development....................................30
3.3.4 Cost-of-Service and Revenue Check ...............................................................................32 Section 4 – Proposed Test Year Rates ...............................................................................................33
4.1 General ..............................................................................................................................................33
4.2 Typical Bi-Monthly Bill Comparison .............................................................................................35
4.3 Rate Comparison with Other Utilities .........................................................................................37 Section 5 – Projected Operating Results ..........................................................................................39
5.1 General ..............................................................................................................................................39
5.2 Projected User Rate Revenues....................................................................................................39
5.3 Debt Service Coverage ................................................................................................................42
5.4 Summary of Projected Operating Results ................................................................................43 Section 6 – Conclusions and Recommendations ............................................................................45
6.1 Disclaimers...............................................................................................................................................45
6.1.1 General Disclaimer .................................................................................................................45
6.1.2 Municipal Advisory Disclaimer.............................................................................................45
6.2 Conclusions.......................................................................................................................................46
6.3 Recommendations.........................................................................................................................47
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Section 1 – Executive Summary
1.1 Introduction
Willdan Financial Services (Willdan) is pleased to submit to the City of La Palma (City) the 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, and conclusions in this Report.
1.1.1 Water System Background
The City is responsible for providing potable water to approximately 4,379 residential and business service connections, with safe, high-quality drinking water that meets or exceeds quality standards set forth by both the state and federal government. The water utilized by the City is primarily pumped directly from the local groundwater basin that is managed by the Orange County Water District (OCWD) and supplemented by imported water purchased from the Metropolitan Water District of Southern California (MET) through the Municipal Water District of Orange County (MWDOC). The City operates two wells and two reservoirs with a total capacity of 4.5 million gallons (MGs), and also manages 39.7 miles of water mains.
1.1.2 Sewer System Background
The City only provides sewer collection services through approximately 30 miles of sewer gravity pipelines, which are virtually all constructed of vitrified-clay, and over 700 manholes.
Sewer treatment and disposal services are provided by and billed separately by Orange County Sanitation District (OCSD).
Three separate OCSD trunk sewer systems collect the City’s wastewater within Denni Street (OCSD Los Alamitos Sub-Trunk), Moody Street (OCSD West-side Relief Interceptor), and Valley View Street (OCSD Miller-Holder Trunk). The collected wastewater is then sent to the OCSD’s treatment and reclamation facility located in Fountain Valley.
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 critical utility infrastructure, provide a stable and well-functioning water system that delivers uninterrupted service to its customers, and so that it 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 analyze the revenue sources and expenditures of the water and sewer utility systems 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:
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• Full recovery of costs related to utility operations (i.e., operating and maintenance costs, debt, and other expenditure requirements);
• Cost-based rate structures;
• Consistency with American Water Works (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 a cost-of-service and rate design analysis. 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 and inadequately maintained facilities. Therefore, a rate study typically consists of the following three interrelated analyses:
I. Financial Planning/Revenue Requirement Analysis: Creates a five-year plan to support an orderly, efficient program of on-going maintenance and operating costs, capital improvement and routine system component replacement activities. 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.
II. Cost-of-Service Analysis: Identifies and apportions annual revenue requirements (i.e., expenditures) to operational and functional cost components based on the demand placed on the utility system. The purpose of this analysis is to develop rates that generate revenues relatively proportionate to the share of each utility’s costs. This objective is consistent with industry standards as well as the requirements of Proposition 218 (Prop 218).
III. Rate Design: Develops an equitable and proportionate fixed/variable schedule of rates for the City’s customer base. 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
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sewer use) by incurring a higher bill reflective of their impact on the system (the variable component).
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 rates for water and sewer. 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, outlined in this Report, consisted of reviewing the historical operating results of the water and sewer utility systems, analyzing the budget 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 adjusting the user rates based on the applicable costs and expenditures to be recovered. In addition, an analysis of the system customers and their usage and demand characteristics was performed to identify the cost-of-service rate determinants since they form the basis for 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.
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.I
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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, 2025) through FY 2030 (ending June 30, 2030), 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, policy goals such as accumulation and maintenance of designated reserves, and fund planned capital improvement projects. 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 neighboring utilities and the City’s existing rate structure. The proposed water and sewer rates for assumed implementation effective January 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 Bi-Monthly Water Rates
Table 2 – Proposed Bi-Monthly Sewer Rates
Bi-Monthly Fixed Service Charge:
5/8 Inch $ 62.10
3/4 Inch $ 62.10
1.0 Inch $ 62.10
1.5 Inch $ 257.99
2.0 Inch $ 404.90
3.0 Inch $ 747.71
4.0 Inch $ 1,237.43
6.0 Inch $ 2,461.74
8.0 Inch $ 3,930.91
10.0 Inch $ 5,644.94
Bi-Monthly Fire Flow Fixed Service Charge:
5/8 Inch $ 16.15
3/4 Inch $ 16.15
1.0 Inch $ 16.15
1.5 Inch $ 28.25
2.0 Inch $ 37.33
3.0 Inch $ 58.51
4.0 Inch $ 88.76
6.0 Inch $ 164.39
8.0 Inch $ 255.16
10.0 Inch $ 361.05
12.0 Inch $ 663.58
Volumetric Rates Per 100 Cubic Feet:
All Flow $ 3.99
Description Rate
Description Rate
Volumetric Rates Per 100 Cubic Feet [1]:
All Flow $ 0.88
Notes:
[1] The City provides collection only services, all customers pay the same rate per 100 cubic feet of billed water flow. Page 293 of 354 6 | P a g e
Section 2 – Revenue Sufficiency Analysis
2.1 Financial Planning Principles
While the individual rates for each of the utility 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 of providing service to that customer class;
• Be easy to understand by customers; and
• Be easy to administer by the utility.
Striking the appropriate balance between the principles of ratemaking is the result of a detailed process of evaluation of revenue requirements and cost-of-service, and how those translate into the rate design alternatives which meet legal requirements and the specific objectives of the utility under the circumstances in which it operates.
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 bi-monthly service 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 bi-monthly fixed charge varies based on the size of the metered connection. The volumetric rates are uniform such that the rate per 100 cubic feet remains the same for all levels of metered usage. The existing rates for water service are provided in Table 3.
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Table 3 – Existing Bi-Monthly Water Rates
The existing sewer rates consist of a uniform volumetric rate component per 100 cubic feet that recovers the costs of collecting and conveying wastewater. The volumetric rate per 100 cubic feet applies to all customers based upon the amount of metered water usage. The existing rates for sewer service are provided in Table 4.
Bi-Monthly Fixed Service Charge:
5/8 Inch $ 54.52
3/4 Inch $ 54.52
1.0 Inch $ 54.52
1.5 Inch $ 224.40
2.0 Inch $ 351.82
3.0 Inch $ 649.10
4.0 Inch $ 1,073.80
6.0 Inch $ 2,135.58
8.0 Inch $ 3,409.68
10.0 Inch $ 4,896.14
Bi-Monthly Fire Flow Fixed Service Charge:
5/8 Inch $ 13.94
3/4 Inch $ 13.94
1.0 Inch $ 13.94
1.5 Inch $ 21.46
2.0 Inch $ 27.08
3.0 Inch $ 40.24
4.0 Inch $ 59.02
6.0 Inch $ 105.98
8.0 Inch $ 162.32
10.0 Inch $ 228.06
12.0 Inch $ 415.90
Volumetric Rates Per 100 Cubic Feet:
All Flow $ 3.47
Description Rate
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Table 4 – Existing Bi-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 Requirements”) 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.
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 25/26 (the “Budget” for FY ending June 30, 2026) 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 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, electricity, supplies, services, etc., required to manage and operate the utility system 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 nonoperating expenses include such items as capital outlay and any other expenses & transfers.
Description Rate
Volumetric Rates Per 100 Cubic Feet [1]:
All Flow $ 0.85
Notes:
[1] The City provides collection only services, all customers pay the same rate per 100 cubic feet of billed water flow. Page 296 of 354 9 | P a g e
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, meter sales, the fats, oils and grease (FOG) program, 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. These 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, repairs, or replacements of aging system components as they wear 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 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.
While the Projection Period provided herein is 5 years, City staff requested the extension of the financial plan out to ten (10) years. This was done to provide additional long-term insight, since the City is anticipating the addition of a new $10,000,000 well (The Walker Well Project) to the water system in FY 2035, and that project is anticipated to be paid for with capital cash reserves. To properly prepare for funding the new well in FY 2035, the rate adjustments proposed herein factor in the accumulation and maintenance of sufficient reserve funds to fund the Walker Well project.
Taking this proactive approach will help to better prepare the City to mitigate future rate increases and reduce the likelihood and magnitude of potential rate shock to customers beyond the initial five-year Projection Period, while ensuring the water system remains in a strong financial position. The capital projects included in the 10-year CIP (represented in $1,000s), along with the assumed funding sources by fiscal year are provided in Tables 5 and 6.
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Table 5 – Water CIP ($1,000s)
Table 6 – Sewer CIP ($1,000s)
2.3.3 Debt Service
The City currently has no outstanding debt associated with either the water or sewer utility system. 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.
2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Water projects
ONGOING SCADA IMPROVEMENTS Cash $ 28 $ 29 $ 31 $ 32 $ 34 $ 35 $ 37 $ 39 $ 41 $ 43 CITY YARD RESERVOIR REHAB Cash - - 386 - - - - - - -
CITY YARD WELL PUMP & MOTOR REPLACEMENT Cash - - - - 486 - - - - 621 CITY YARD & WALKER WELL RESERVOIR COATING Cash - - 187 - - - - - - - CITY YARD WELL PUMP SUCTION PROJECT Cash - 315 - - - - - - - - CITY YARD WELL SAND REMOVAL DEVICE Cash 100 - - - - - - - - - CITY YARD BOOSTER STATION METER VAULT REPAIR Cash 100 - - - - - - - - - CITY YARD BOOSTER STATION VFD UPGRADES Cash 75 - - - - - - - - - WALKER WELL PUMP & MOTOR REPLACEMENT Cash - - 331 - - - - 422 - - WALKER RESRVOIR COATING Cash - 89 - - - - - - - -
WALKER WELL RESERVOIR REHABILITATION Cash - 263 - - - - - - - - WALKER WELL BOOSTER STATION VFD UPGRADES Cash - - 110 - - - - - - - WALKER WELL REPLACEMENT Cash - - - - - - - - - 10,000
CITY YARD PAVEMENT Cash - 236 - - - - - - - -
CITY YARD STORAGE BUNKER W/ROOF Cash 27 - - - - - - - - - CITY YARD STORM DRAINS Cash - 105 - - - - - - - -
CITY YARD BUILDING PAINTING Cash - - 94 - - - - - - -
CITY YARD STALL Cash 70 - - - - - - - - -
CITY YARD ROOF REPAIRS Cash 75 - - - - - - - - -
WATER VALVES & SEWER MANHOLES Cash 20 21 22 23 24 26 27 28 30 31 RESERVOIR MIXERS Cash - - - 150 - - - - - -
WATER MASTER PLAN Cash 125 - - - - 160 - - - -
URBAN WATER MASTER PLAN Cash 55 - - - - 77 - - - -
WATER RATE STUDY Cash 50 - - - - 128 - - - -
WATER BILLING FEASIBILITY Cash - - - - - - - - 103 -
WATER SYSTEM INVENTORY & VALUATION Cash - 42 - - - 57 - - - - WATER LOSS AUDIT Cash 35 37 39 41 43 45 47 49 52 54
WATER TREATMENT PRELIM DESIGN & ENGINEERING Cash - - - 695 608 - - - - - OC 54 CONNECTION REHABILITATION Cash - - - 35 - - - - - - EMERGENCY WATER INTERCONNECT Cash - 158 - - - - - - - - LARGE METER REPLACEMENT Cash - - - 58 - - - - - -
SECURITY CAMERAS & ACCESS CONTROL Cash - - 138 - - - - - - - WATER METER AMR/AMI Cash 120 105 110 - - - - - - -
Total Water projects $ 880 $1,399 $1,447 $1,033 $1,194 $ 527 $ 111 $ 538 $ 226 $10,749 Description Funding
Source
Fiscal Year Ending June 30
2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Sewer projects
SEWER DEFICIENCY REPAIRS Cash $ 180 $ 191 $ 202 $ 214 $ 227 $ 241 $ 255 $ 271 $ 287 $ 304 WATER VALVES & SEWER MANHOLES Cash 80 85 90 95 101 107 113 120 128 135 GREASE & ENCRUSTATION REMOVAL Cash 124 131 139 147 156 166 176 186 198 209 SEWER SYSTEM EVALUATION, CCTV, & ANALYSIS Cash 60 63 66 69 73 77 80 84 89 93 CITY YARD STORM DRAINS Cash 40 - - - - - - - - -
SEWER SYSTEM INVENTORY & VALUATION Cash 30 - - - - 38 - - - - Total Sewer projects $ 513 $ 470 $ 497 $ 526 $ 557 $ 629 $ 625 $ 662 $ 701 $ 742 Description Funding
Source
Fiscal Year Ending June 30
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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 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.
Table 7 – Test Year Revenue Requirements – FY 2026
The projected Revenue Requirements 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 Description Water Wastewater Total
Total O&M $ 4,022,956 $ 398,128 $ 4,421,084
Debt Service - - -
Other Expenditures & Transfers 599,889 222,431 822,320
Gross Revenue Requirement $4,622,845 $ 620,559 $5,243,404 Less Other Revenues (41,100) (51,600) (92,700)
Net Revenue Requirement $4,581,745 $ 568,959 $5,150,704 2026 2027 2028 2029 2030
Total O&M $ 4,022,956 $ 4,269,395 $ 4,534,779 $ 4,820,770 $ 5,129,197 Existing Debt Service - - - - -
Future Debt Service - - - - -
Other Expenditures & Transfers 599,889 926,164 1,519,860 1,835,223 2,041,024 Gross Revenue Requirement $4,622,845 $5,195,559 $6,054,639 $6,655,993 $7,170,221 Less Other Revenues (41,100) (41,100) (41,100) (41,100) (41,100) Net Revenue Requirement $4,581,745 $5,154,459 $6,013,539 $6,614,893 $7,129,121 Fiscal Year Ending June 30 Description 2026 2027 2028 2029 2030 Total O&M $ 398,128 $ 412,365 $ 427,145 $ 442,491 $ 458,423 Existing Debt Service - - - - -
Future Debt Service - - - - -
Other Expenditures & Transfers 222,431 228,108 254,549 283,309 314,571 Gross Revenue Requirement $ 620,559 $ 640,473 $ 681,694 $ 725,800 $ 772,994 Less Other Revenues (51,600) (51,600) (51,600) (51,600) (51,600) Net Revenue Requirement $ 568,959 $ 588,873 $ 630,094 $ 674,200 $ 721,394 Description Fiscal Year Ending June 30
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2.4 Customers & Billable Flows
The rate study is heavily reliant upon a detailed analysis of system customers and accompanying usage and demand characteristics. The existing utility customer base and metered/billable flows provide the determinants utilized in the cost-of-service analysis, and ultimately in calculating the bi-monthly user rates and charges, which become the foundation for projecting future revenues generated by the water and sewer systems.
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 that currently pay for utility services pursuant to the existing user rates and charges as previously detailed.
For the purposes 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 bi-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 the City staff, the utility system provides service to various identifiable retail customer classes consisting of:
• Residential
• Irrigation
• Fire Service, and
• Non-Residential
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 within each class, the applicable equivalent residential units (ERUs), and the metered/billable water and sewer 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.
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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 were 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 7, 8 and 9.
Based on this comparison, it is projected that under the existing rates, only the water system would not meet its collective projected O&M financial obligations and cost of capital projects that are anticipated to be funded with cash reserves. While the sewer system is projected to be able to meet its collective O&M financial obligations over the Projection Period under existing rates, it is anticipated that without revenue increases, the system would not have sufficient cash reserves to fund capital projects beyond the Projection Period.
Therefore, revenue increases are required 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 90 days of operating cash reserves to help fund ongoing operations in the event of periodic fluctuations in cash flow, and to address unexpected needs that may require 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.
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Table 10 – Water System Projected Operating Results Under Existing Rates ($1,000s) Existing
2026 2027 2028 2029 2030
Revenues:
Water Sales $ 3,984 $ 3,984 $ 3,984 $ 3,984 $ 3,984
Other Revenues 41 41 41 41 41
Total Revenues $ 4,025 $ 4,025 $ 4,025 $ 4,025 $ 4,025
O&M Expenses (4,023) (4,269) (4,535) (4,821) (5,129)
Net Income For Debt $ 2 $ (244) $ (510) $ (796) $ (1,104) Debt Service:
Existing $ - $ - $ - $ - $ -
Future - - - - -
Total Debt Service $ - $ - $ - $ - $ -
Net Results $ 2 $ (244) $ (510) $ (796) $ (1,104)
Fund Balance Activity:
Operating Fund
Beginning Balance $ 112 $ 115 $ (130) $ (639) $ (1,435) Deposit/(Withdrawal) from Operations 2 (244) (510) (796) (1,104) Deposit/(Withdrawal) from/(to) Capital Fund - - - - -
Total Operating Fund Balance $ 115 $ (130) $ (639) $ (1,435) $ (2,539) Operating Days Cash on Hand 10 (11) (51) (109) (181)
Capital Fund
Beginning Balance $ 2,809 $ 1,929 $ 530 $ (917) $ (1,951) Net Transfers In/(Out) From Operating Fund - - - - -
Cash Funded Capital Projects (880) (1,399) (1,447) (1,033) (1,194) Total Capital Fund Balance $ 1,929 $ 530 $ (917) $ (1,951) $ (3,145) Ending Fund Balance $ 2,044 $ 400 $ (1,556) $ (3,385) $ (5,684) 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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Table 11 – Sewer System Projected Operating Results Under Existing Rates ($1,000s) Existing
2026 2027 2028 2029 2030
Revenues:
Wastewater Sales $ 550 $ 550 $ 550 $ 550 $ 550
Other Revenues 52 52 52 52 52
Total Revenues $ 601 $ 601 $ 601 $ 601 $ 601
O&M Expenses (398) (412) (427) (442) (458)
Net Income For Debt $ 203 $ 189 $ 174 $ 159 $ 143
Debt Service:
Existing $ - $ - $ - $ - $ -
Future - - - - -
Total Debt Service $ - $ - $ - $ - $ -
Net Results $ 203 $ 189 $ 174 $ 159 $ 143
Fund Balance Activity:
Operating Fund
Beginning Balance $ 2,243 $ 98 $ 102 $ 105 $ 109
Deposit/(Withdrawal) from Operations 203 189 174 159 143 Deposit/(Withdrawal) from/(to) Capital Fund (2,348) (185) (171) (155) (139) Total Operating Fund Balance $ 98 $ 102 $ 105 $ 109 $ 113 Operating Days Cash on Hand 90 90 90 90 90
Capital Fund
Beginning Balance $ 2,366 $ 4,201 $ 3,917 $ 3,590 $ 3,219 Net Transfers In/(Out) From Operating Fund 2,348 185 171 155 139 Cash Funded Capital Projects (513) (470) (497) (526) (557) Total Capital Fund Balance $ 4,201 $ 3,917 $ 3,590 $ 3,219 $ 2,801 Ending Fund Balance $ 4,299 $ 4,019 $ 3,696 $ 3,328 $ 2,914 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 3 – Cost-of-Service (COS) Analysis
3.1 General
The costs incurred by a utility system are generally driven by specific service requirements placed on the system by its customers. For water systems, the primary service requirements that drive costs include annual flow volumes, peak period flow volumes (i.e., peak day, and peak hour), the number and the types of customers served.
For sewer systems, the primary service requirements that drive costs include annual sewer volumes, sewer strength factors such as Biochemical Oxygen Demand (BOD) and Total Suspended Solids (TSS), and the number and types of customers served.
There are several different options that can be used to perform a COS analysis, and the allocation methodology depends upon 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 annual sewer volumes since the City only provides wastewater collection services. Wastewater collected through City-owned facilities is conveyed to OCSD’s treatment and reclamation facility for treatment and disposal. OCSD charges the City’s customers separately for the wastewater treatment services they provide.
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 classes 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 bases 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 2.30 million gallons per day (MGD) and the Max Day water demand was 3.91 MGD in the most recent full year. The calculated Max Day peaking factor shows that the system-wide Max Day demand is 1.70 (3.91 Max Day MGD divided by
2.30 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: 2.30/ 3.91 x 100% = 58.82%
Max Day: (3.91-2.30) / 3.91 x 100% = 41.18%
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Table 12 – Peaking Factors System-Wide
Max Day customer-specific peaking factors were then developed, based on the maximum bi-monthly usage divided by average bi-monthly usage for each customer class. Since daily peaking statistics are not available for individual customer classes, the maximum bi-monthly 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 were determined, the Max Day demand of each customer class was calculated and is shown in Table 14. Total annual usage is derived from the customer data and then converted to an average daily usage by dividing the total annual usage 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 usage 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 usage from the total required 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.
Description Demand
(MGD) Factor Base Max Day Total
Avg Day 2.30 1.00 100.00% 0.00% 100.00%
Max Day 3.91 1.70 58.82% 41.18% 100.00%
Description
Max Day
Peaking
Factor
All Customers Excluding Fire Service
All Flow 1.13
Fire Service
All Flow 0.00 Page 305 of 354
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Table 14 – Usage and Extra Capacity
3.2.2 Functional Unbundling of Revenue Requirements
The water system costs are unbundled into functional operating components consisting of Supply/Treatment, Transmission, Distribution, Customer, and Administration functions. These are the primary functions undertaken by most water utility systems to provide end-user service 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.); • Administration – various overhead and other non-operating costs.
The allocation of the functionally unbundled revenue requirements for the Test Year are summarized in Table 15.
Total
Annual
Flow (CCF)
Average
Daily Flow
(CCF)
Peaking
Factor
Total
Capacity
(CCF/Day)
Additional
Capacity
(CCF/Day)
All Customers Excluding Fire Service
All Flow 657,528 1,801.45 1.13 2,041.89 240.45
Fire Service
All Flow - - - - -
Total 657,528 1,801.45 2,041.89 240.45
Description
Flow Max Day
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Table 15 – Functionally Unbundled Cost Allocations
3.2.3 Classification of Water System Costs
As previously addressed, the 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. • 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.
Description Test Year
2026
Total O&M $ 4,022,956
Existing Debt Service -
Future Debt Service -
Other Expenditures & Transfers 599,889
Gross Revenue Requirement $ 4,622,845
Less Other Revenues (41,100)
Net Revenue Requirement $ 4,581,745
Functional Unbundled Revenue Requirement
Treatment $ 302,150
Transmission & Distribution 415,700
Pumping 1,440,800
Customer Service 2,000
Administration 1,742,306
Source of Supply 120,000
Existing Bond DS -
New Bond DS -
CIP 879,600
Non-Rate Revenue (41,100)
Fund Balance [1] (279,711)
Total $ 4,581,745
Notes:
[1] Represents a transfer from reserves to provide
funding for capital outlay and CIP costs. Page 307 of 354 20 | P a g e
• 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 providing 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 customerrelated 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
Fire
Protection Total
Treatment $ - $ - $ 177,735 $ 124,415 $ - $ 302,150
Transmission & Distribution - - 244,529 171,171 - 415,700 Pumping - - 847,529 593,271 - 1,440,800
Customer Service 423 1,500 - - 77 2,000
Administration 368,585 1,306,730 - - 66,991 1,742,306
Source of Supply - - 120,000 - - 120,000
Existing Bond DS - - - - - -
New Bond DS - - - - - -
CIP - 353,731 525,869 - - 879,600
Non-Rate Rev & Fund Balance (24,147) (108,755) (125,356) (58,165) (4,388) (320,811) Total $ 344,861 $ 1,553,206 $ 1,790,306 $ 830,692 $ 62,680 $ 4,581,745 Page 308 of 354 21 | P a g e
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 customers as provided in the customer data. ERUs 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 an analysis of historical customer data. Max Day is the extra capacity demand result as previously developed in Table 14.
Table 17 – Units of Service
Description Accounts ERUs Base (CCF) Max Day
(CCF/Day)
All Customers Excluding Fire Service 4,320 5,286 657,528 240 All Flow 657,528 240
Fire Service 59 3,453 - -
All Flow - -
Total 4,379 8,739 657,528 240 Page 309 of 354
22 | P a g e
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 bi-monthly Units of Service from Table 17 are multiplied by six (6), representing the number of billing periods, to determine the total annual 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 Description Billing &
Collection
Meters &
Services Base
Extra
Capacity
Max Day
Fire
Protection Total
Total Revenue Requirement $ 344,861 $ 1,553,206 $ 1,790,306 $ 830,692 $ 62,680 $ 4,581,745 Units of Service 4,379 5,286 657,528 240 3,453
Bills/BiMonthly ERU/BiMonthly CCF CCF/Day ERUs/BiMonthly Cost Per Unit $ 13.13 $ 48.9723 $ 2.72 $ 3,454.7935 $ 3.03 Bills/BiMonthly ERU/BiMonthly CCF CCF/Day ERU
Description Accounts ERUs Base (CCF) Max Day
(CCF/Day) Total Costs
All Customers Excluding Fire Service $ 340,215 $1,553,206 $1,790,306 $ 830,692 $4,514,419 All Flow $ 1,790,306 $ 830,692
Fire Service $ 4,646 $ 62,680 $ - $ - $ 67,326
All Flow $ - $ -
Total $ 344,861 $ 1,615,886 $ 1,790,306 $ 830,692 $ 4,581,745 Page 310 of 354 23 | P a g e
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 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 La Palma). 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.
While the service availability charge (fixed charge) may be incremented based upon standardized meter/capacity criteria established by the AWWA relative to the size and capacity of the water meter, this methodology was modified for customers whose meter size is 1-inch or smaller. Due to California Code section R313.2, automatic fire sprinkler systems that can produce a minimum of 30 gallons per minute (gpm) are required for new construction. Based on meter tests, 5/8-inch and 5/8x3/4-inch meters are only rated for approximately 20-25 gpm. Also, several manufacturers who produce 3/4-inch meters have indicated that those meters cannot meet the 30-gpm requirement. Therefore, 1-inch meters are now the new standard meter being installed since these meters can meet the 30-gpm requirement under California Code section R313.2. Since a 1-inch meter is required to meet the state requirement of 30 gpm for instantaneous fire suppression purposes, and not because a 1-inch customer is necessarily placing more regular or recurring demand on the water system, relative to a 5/8-inch or 3/4-inch meter customer, these 1-inch customers are assumed to place the same demand on the water system as a 5/8-inch or 3/4-inch customer.
As such, both the 3/4-inch and 1-inch meters are normalized with a factor of 1.00 as shown in Table 20. A full summary of the AWWA and City meter-size equivalency factors, and how they are determined, is provided in Table 20.
24 | P a g e
Table 20 - AWWA Meter Equivalency Factors
Table 21 provides an illustration of how the 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]
City Factors
[2]
Meter Size
5/8 Inch 1.00 1.00
3/4 Inch 1.50 1.00
1.0 Inch 2.50 1.00
1.5 Inch 5.00 5.00
2.0 Inch 8.00 8.00
3.0 Inch 15.00 15.00
4.0 Inch 25.00 25.00
6.0 Inch 50.00 50.00
8.0 Inch 80.00 80.00
10.0 Inch 115.00 115.00
12.0 Inch 215.00 215.00
Notes:
[1] Meter-size equivalency factors established by the AWWA and identified in AWWA Standards C700, M1 and M22.
[2] Due to the fire suppression requirements under California Code section R313.2, it is assumed that 3/4-inch and 1-inch customers place the same demand on the system as a 5/8-inch meter. Page 312 of 354 25 | P a g e
Table 21 – Total Bi-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 $13.13 is applied equally to each customer account. The two bi-monthly fixed charge components are added together to develop the proposed total bi-monthly fixed charge for each respective meter size. The proposed bi-monthly fixed charges for the Test Year are shown in Table 22.
Meter
Factor
Total
Accounts
Total
Equivalent
Residential
Units
[A] [B] [C]=[A]*[B]
All Customers Excluding Fire Service
5/8 Inch 1.00 4,137 4,137
3/4 Inch 1.00 8 8
1.0 Inch 1.00 42 42
1.5 Inch 5.00 35 175
2.0 Inch 8.00 83 664
3.0 Inch 15.00 14 210
4.0 Inch 25.00 - -
6.0 Inch 50.00 1 50
8.0 Inch 80.00 - -
10.0 Inch 115.00 - -
12.0 Inch 215.00 - -
All Customers Excluding Fire Service Total 4,320 5,286
Fire Service
5/8 Inch 1.00 - -
3/4 Inch 1.00 - -
1.0 Inch 1.00 1 1
1.5 Inch 5.00 - -
2.0 Inch 8.00 9 72
3.0 Inch 15.00 8 120
4.0 Inch 25.00 - -
6.0 Inch 50.00 19 950
8.0 Inch 80.00 12 960
10.0 Inch 115.00 8 920
12.0 Inch 215.00 2 430
Fire Service Total 59 3,453
Water System Customer Total 4,379 8,739
Meter Size
26 | P a g e
Table 22 – Bi-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.
Meter Size [1] Capacity
Ratio
Meter
Charge
Customer
Charge
Proposed
Fixed Charge
All Customers Excluding Fire Service
5/8 Inch 1.00 $ 48.97 $ 13.13 $ 62.10
3/4 Inch 1.00 $ 48.97 $ 13.13 $ 62.10
1.0 Inch 1.00 $ 48.97 $ 13.13 $ 62.10
1.5 Inch 5.00 $ 244.86 $ 13.13 $ 257.99
2.0 Inch 8.00 $ 391.78 $ 13.13 $ 404.90
3.0 Inch 15.00 $ 734.58 $ 13.13 $ 747.71
4.0 Inch 25.00 $ 1,224.31 $ 13.13 $ 1,237.43
6.0 Inch 50.00 $ 2,448.62 $ 13.13 $ 2,461.74
8.0 Inch 80.00 $ 3,917.79 $ 13.13 $ 3,930.91
10.0 Inch 115.00 $ 5,631.82 $ 13.13 $ 5,644.94
Fire Service
5/8 Inch 1.00 $ 3.03 $ 13.13 $ 16.15
3/4 Inch 1.00 $ 3.03 $ 13.13 $ 16.15
1.0 Inch 1.00 $ 3.03 $ 13.13 $ 16.15
1.5 Inch 5.00 $ 15.13 $ 13.13 $ 28.25
2.0 Inch 8.00 $ 24.20 $ 13.13 $ 37.33
3.0 Inch 15.00 $ 45.38 $ 13.13 $ 58.51
4.0 Inch 25.00 $ 75.63 $ 13.13 $ 88.76
6.0 Inch 50.00 $ 151.27 $ 13.13 $ 164.39
8.0 Inch 80.00 $ 242.03 $ 13.13 $ 255.16
10.0 Inch 115.00 $ 347.92 $ 13.13 $ 361.05
12.0 Inch 215.00 $ 650.46 $ 13.13 $ 663.58 Page 314 of 354 27 | P a g e
Table 23 – Peaking Unit Cost Calculation
The total system peaking unit cost of $1.26 is then added to the base unit cost of $2.72 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
Peaking
Costs
Annual Use
(CCF)
Peaking Unit
Cost
[A] [B] [C]=[A]/[B]
All Customers Excluding Fire Service
All Flow $ 830,692 657,528 $ 1.26
Fire Service
All Flow $ - - $ -
Total $ 830,692 657,528
Rate Class
Base Peaking Proposed
Rate ($/CCF)
[A] [B] [C]=[A]+[B]
All Customers Excluding Fire Service
All Flow $ 2.72 $ 1.26 $ 3.99
Fire Service [1]
All Flow $ 2.72 $ 1.26 $ 3.99
[1] Since there is no usage or peaking affiliated with "Fire Service" customers, these customers will be billed at the same rate per CCF as all other customers if usage does occur. Fire Service is used on an as needed basis for fire suppression purposes only. Therefore, no usage has been included in this analysis.
Notes:
Rate Class
28 | P a g e
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 proportionately and equitably, and in a manner that reflects the relative costs associated with serving them.
The revenues generated by customer class and the cost allocated to each customer class are provided in Table 25.
Table 25 – Proposed Rate Revenues vs COS
Bi-Monthly
Accounts
Bi-Monthly
ERUs
Bi-Monthly
Customer
Charge/
Account
Bi-Monthly
Meter
Charge/ERU
Total Fixed
Charge
Revenues
[A1] [B1] [C1] [D1] [E1]={[A1]*[C1]
+[B1]*[D1]}*6
All Customers Excluding Fire Service
All Flow 4,320 5,286 $ 13.13 $ 48.97 $ 1,893,421
Fire Service
All Flow 59 3,453 $ 13.13 $ 3.03 $ 67,326
Total 4,379 8,739 $ 1,960,747
Annual Use
(CCF)
Proposed
Rate ($/CCF)
Total
Volumetric
Revenues
Total
Revenues
Allocated
Costs
[A2] [B2] [C2]=[A2]*[B2] [D2]=[E1]+[C2] [E2]
All Customers Excluding Fire Service
All Flow 657,528 $ 3.99 $ 2,620,998 $ 4,514,419 $ 4,514,419 Fire Service
All Flow - $ 3.99 $ - $ 67,326 $ 67,326
Total 657,528 $ 2,620,998 $ 4,581,745 $ 4,581,745
Description
Description
29 | P a g e
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 only the sewer volumes since the City only provides wastewater collection services. All the City’s wastewater is conveyed to OCSD, who is the City’s wastewater treatment provider. 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.). • 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.
Table 26 - Functional Unbundled Cost Allocations
Description Test Year
2026
Total O&M $ 398,128
Existing Debt Service -
Future Debt Service -
Other Expenditures & Transfers 222,431
Gross Revenue Requirement $ 620,559
Less Other Revenues (51,600)
Net Revenue Requirement $ 568,959
Functional Unbundled Revenue Requirement
Collection $ 161,500
Administration 236,628
CIP 513,400
Existing Bond DS -
New Bond DS -
Non-Rate Revenue (51,600)
Fund Balance [1] (290,969)
Non-Rate Rev & Fund Balance $ 568,959
Notes:
[1] Represents a transfer from reserves to provide
funding for capital outlay and CIP costs. Page 317 of 354 30 | P a g e
3.3.2 Classification of Revenue Requirements
The functionally unbundled Revenue Requirements for the sewer system are classified into a volumetric customer cost component since the City only provides wastewater collection services. As similarly discussed for the water COS analysis, it is anticipated that the allocation percentages for the functional cost categories 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.
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:
• Collection – Based on relative percentage of annual sewer usage. • Customer – Based on relative percentage of accounts by customer class.
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 annual flows in CCF. Customer accounts are based on the number of customers as provided in the customer data. Collection is the total annual sewer flows projected for the Test Year.
Component Volume Total
Collection $ 161,500 $ 161,500
Administration 236,628 236,628
CIP 513,400 513,400
Existing Bond DS - -
New Bond DS - -
Non-Rate Rev & Fund Balance (342,569) (342,569)
Total $ 568,959 $ 568,959 Page 318 of 354
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Table 28 – Units of Service
The Revenue Requirement for the collection cost component is divided by the total units of service to calculate a unit cost per CCF. The unit cost per CCF is demonstrated in Table 29.
Table 29 – Cost Per Unit
The allocation of the Revenue Requirement to each customer class is based on the unit cost multiplied by the units of service for each customer class. The total cost to be recovered from each customer class is shown in Table 30.
Table 30 – Cost of Service by Customer Class
Total CCF
Customers Flow
Residential 4,232 569,256
Non-Residential 73 77,472
Sewer System Total 4,305 646,728
Description Description Volume Total
Total Revenue Requirement $ 568,959 $ 568,959
Units of Service 646,728
CCF
Cost Per Unit $ 0.88
CCF
Rate Class Volume Total
Residential $ 500,803 $ 500,803
Non-Residential 68,156 68,156
Total $ 568,959 $ 568,959 Page 319 of 354
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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 is generating sufficient revenues to cover their allocated cost of service. The proposed rate structure for the sewer rates are as follows:
• Residential Customers – For residential customers, the proposed rates will consist of a uniform volumetric rate per CCF. The volumetric rate per CCF remains the same regardless of the amount of sewer volume produced.
• Non-Residential Customers – For non-residential customers, the proposed rates will consist of a uniform volumetric rate per CCF. The volumetric rate per CCF remains the same regardless of the amount of sewer volume produced.
The revenues generated by customer class vs the cost allocated to each customer class are provided in Table 31.
Table 31 – Proposed Rate Revenues vs COS
Bi-Monthly
Customers
Proposed
Bi-Monthly
Fixed Fee
Total Fixed
Fee
Revenue
Billable
Annual
Volume
(CCF)
Proposed
Volumetric
Rate
Total
Volumetric
Rate
Revenues
Total
Calculated
Revenues
Total COS
Revenues
[A] [B] [C]=[A]*[B]*6 [D] [E] [F]=[D]*[E] [G]=[C]+[F] [H] Residential 4,232 N/A N/A 569,256 $ 0.88 $ 500,803 $ 500,803 $ 500,803 Non-Residential 73 N/A N/A 77,472 $ 0.88 $ 68,156 $ 68,156 $ 68,156 Total 4,305 $ - 646,728 $ 568,959 $ 568,959 $ 568,959
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 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. 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 Bi-Monthly Water Rates
Table 33 – Proposed Bi-Monthly Sewer Rates
Bi-Monthly Fixed Service Charge:
5/8 Inch $ 62.10
3/4 Inch $ 62.10
1.0 Inch $ 62.10
1.5 Inch $ 257.99
2.0 Inch $ 404.90
3.0 Inch $ 747.71
4.0 Inch $ 1,237.43
6.0 Inch $ 2,461.74
8.0 Inch $ 3,930.91
10.0 Inch $ 5,644.94
Bi-Monthly Fire Flow Fixed Service Charge:
5/8 Inch $ 16.15
3/4 Inch $ 16.15
1.0 Inch $ 16.15
1.5 Inch $ 28.25
2.0 Inch $ 37.33
3.0 Inch $ 58.51
4.0 Inch $ 88.76
6.0 Inch $ 164.39
8.0 Inch $ 255.16
10.0 Inch $ 361.05
12.0 Inch $ 663.58
Volumetric Rates Per 100 Cubic Feet:
All Flow $ 3.99
Description Rate
Description Rate
Volumetric Rates Per 100 Cubic Feet [1]:
All Flow $ 0.88
Notes:
[1] The City provides collection only services, all customers pay the same rate per 100 cubic feet of billed water flow. Page 322 of 354 35 | P a g e
4.2 Typical Bi-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 bi-monthly bills at
various flow levels for
water and sewer, as well as the combined utility bills under the existing and proposed rates.
A graphical illustration of a bill comparison at various units of flow is provided in Figure 1 for an average 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 1,600 cubic feet per bi-monthly billing. Based on the proposed rates, a typical City single-family residential customer will experience an increase of $16.32 ($123.64 current bi-monthly bill vs $139.96 proposed bi-monthly bill) in their combined bi-monthly water and sewer bill, or an increase of $8.16 per month.
Table 34 – Single-Family Residential Water Bi-Monthly Bill Impact Existing Proposed
Residential
5/8 Inch, 3/4 Inch & 1.0 Inch 0 $ 54.52 $ 62.10 $ 7.58
5/8 Inch, 3/4 Inch & 1.0 Inch 100 $ 57.99 $ 66.08 $ 8.09 5/8 Inch, 3/4 Inch & 1.0 Inch 200 $ 61.46 $ 70.07 $ 8.61 5/8 Inch, 3/4 Inch & 1.0 Inch 300 $ 64.93 $ 74.06 $ 9.13 5/8 Inch, 3/4 Inch & 1.0 Inch 400 $ 68.40 $ 78.04 $ 9.64 5/8 Inch, 3/4 Inch & 1.0 Inch 500 $ 71.87 $ 82.03 $ 10.16 5/8 Inch, 3/4 Inch & 1.0 Inch 600 $ 75.34 $ 86.01 $ 10.67 5/8 Inch, 3/4 Inch & 1.0 Inch 700 $ 78.81 $ 90.00 $ 11.19 5/8 Inch, 3/4 Inch & 1.0 Inch 800 $ 82.28 $ 93.99 $ 11.71 5/8 Inch, 3/4 Inch & 1.0 Inch 1,000 $ 89.22 $ 101.96 $ 12.74 5/8 Inch, 3/4 Inch & 1.0 Inch 1,200 $ 96.16 $ 109.93 $ 13.77 5/8 Inch, 3/4 Inch & 1.0 Inch 1,400 $ 103.10 $ 117.90 $ 14.80 5/8 Inch, 3/4 Inch & 1.0 Inch 1,600 $ 110.04 $ 125.88 $ 15.84 5/8 Inch, 3/4 Inch & 1.0 Inch 2,000 $ 123.92 $ 141.82 $ 17.90 5/8 Inch, 3/4 Inch & 1.0 Inch 2,400 $ 137.80 $ 157.77 $ 19.97 Description Bi-Monthly
Flow
Bi-Monthly Charges $ Amount
Difference
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Table 35 – Single-Family Residential Sewer Bi-Monthly Bill Impact Table 36 – Single-Family Residential Combined Bi-Monthly Bill Impact Existing Proposed
Residential
5/8 Inch, 3/4 Inch & 1.0 Inch 0 $ 0.00 $ 0.00 $ 0.00
5/8 Inch, 3/4 Inch & 1.0 Inch 100 $ 0.85 $ 0.88 $ 0.03
5/8 Inch, 3/4 Inch & 1.0 Inch 200 $ 1.70 $ 1.76 $ 0.06
5/8 Inch, 3/4 Inch & 1.0 Inch 300 $ 2.55 $ 2.64 $ 0.09
5/8 Inch, 3/4 Inch & 1.0 Inch 400 $ 3.40 $ 3.52 $ 0.12
5/8 Inch, 3/4 Inch & 1.0 Inch 500 $ 4.25 $ 4.40 $ 0.15
5/8 Inch, 3/4 Inch & 1.0 Inch 600 $ 5.10 $ 5.28 $ 0.18
5/8 Inch, 3/4 Inch & 1.0 Inch 700 $ 5.95 $ 6.16 $ 0.21
5/8 Inch, 3/4 Inch & 1.0 Inch 800 $ 6.80 $ 7.04 $ 0.24
5/8 Inch, 3/4 Inch & 1.0 Inch 1,000 $ 8.50 $ 8.80 $ 0.30 5/8 Inch, 3/4 Inch & 1.0 Inch 1,200 $ 10.20 $ 10.56 $ 0.36 5/8 Inch, 3/4 Inch & 1.0 Inch 1,400 $ 11.90 $ 12.32 $ 0.42 5/8 Inch, 3/4 Inch & 1.0 Inch 1,600 $ 13.60 $ 14.08 $ 0.48 5/8 Inch, 3/4 Inch & 1.0 Inch 2,000 $ 17.00 $ 17.60 $ 0.60 5/8 Inch, 3/4 Inch & 1.0 Inch 2,400 $ 20.40 $ 21.11 $ 0.71 Bi-Monthly
Flow
Bi-Monthly Charges $ Amount
Difference Description Existing Proposed
Residential
5/8 Inch, 3/4 Inch & 1.0 Inch 0 $ 54.52 $ 62.10 $ 7.58
5/8 Inch, 3/4 Inch & 1.0 Inch 100 $ 58.84 $ 66.96 $ 8.12 5/8 Inch, 3/4 Inch & 1.0 Inch 200 $ 63.16 $ 71.83 $ 8.67 5/8 Inch, 3/4 Inch & 1.0 Inch 300 $ 67.48 $ 76.70 $ 9.22 5/8 Inch, 3/4 Inch & 1.0 Inch 400 $ 71.80 $ 81.56 $ 9.76 5/8 Inch, 3/4 Inch & 1.0 Inch 500 $ 76.12 $ 86.43 $ 10.31 5/8 Inch, 3/4 Inch & 1.0 Inch 600 $ 80.44 $ 91.29 $ 10.85 5/8 Inch, 3/4 Inch & 1.0 Inch 700 $ 84.76 $ 96.16 $ 11.40 5/8 Inch, 3/4 Inch & 1.0 Inch 800 $ 89.08 $ 101.03 $ 11.95 5/8 Inch, 3/4 Inch & 1.0 Inch 1,000 $ 97.72 $ 110.76 $ 13.04 5/8 Inch, 3/4 Inch & 1.0 Inch 1,200 $ 106.36 $ 120.49 $ 14.13 5/8 Inch, 3/4 Inch & 1.0 Inch 1,400 $ 115.00 $ 130.22 $ 15.22 5/8 Inch, 3/4 Inch & 1.0 Inch 1,600 $ 123.64 $ 139.96 $ 16.32 5/8 Inch, 3/4 Inch & 1.0 Inch 2,000 $ 140.92 $ 159.42 $ 18.50 5/8 Inch, 3/4 Inch & 1.0 Inch 2,400 $ 158.20 $ 178.88 $ 20.68 Description Bi-Monthly
Flow
Bi-Monthly Charges $ Amount
Difference
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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 bi-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. Since the City currently bills customers bimonthly, for purposes of a meaningful comparison, any comparison utility that does not bill their customers bi-monthly was converted into a bi-monthly bill. The rates utilized for the other neighboring utilities shown in Figure 2 were in effect as of July 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 1,600 cubic feet of service per bi-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, 2030, 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 Project Period, the water and/or sewer rates developed from the COS and Rate 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.
Table 37 – Projected User Rate Revenues
Existing Proposed
2026 2026 2027 2028 2029 2030
Water System
Residential $ 3,477,674 $ 3,982,791 $ 4,479,712 $ 5,226,332 $ 5,748,966 $ 6,195,878 Non-Residential 406,868 466,918 526,106 613,791 675,170 727,656 Irrigation 56,398 64,710 72,899 85,050 93,555 100,829
Fire Flow 43,185 67,326 75,742 88,366 97,202 104,758
Total Water Revenue $ 3,984,125 $ 4,581,745 $ 5,154,459 $ 6,013,539 $ 6,614,893 $ 7,129,121 Sewer System
Residential $ 483,868 $ 500,803 $ 518,331 $ 554,614 $ 593,437 $ 634,978 Non-Residential 65,851 68,156 70,542 75,480 80,763 86,416 Total Sewer Revenue $ 549,719 $ 568,959 $ 588,873 $ 630,094 $ 674,200 $ 721,394 Total Combined Revenue $ 4,533,844 $ 5,150,704 $ 5,743,332 $ 6,643,633 $ 7,289,093 $ 7,850,515 Projected Fiscal Year Ending June 30 System
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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 from 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 following tables reflect the cost of providing service to individual customer classes based on the types of customers being served, peak demand factors, and volume of metered/billable flow.
Table 38 – Proposed Bi-Monthly Water Rates
Table 39 – Proposed Bi-Monthly Sewer Rates
2026 2027 2028 2029 2030
Bi-Monthly Fixed Service Charge:
5/8 Inch $ 54.52 $ 62.10 $ 77.62 $ 85.38 $ 93.92 $ 99.32 3/4 Inch $ 54.52 $ 62.10 $ 77.62 $ 85.38 $ 93.92 $ 99.32
1.0 Inch $ 54.52 $ 62.10 $ 77.62 $ 85.38 $ 93.92 $ 99.32
1.5 Inch $ 224.40 $ 257.99 $ 322.48 $ 354.73 $ 390.20 $ 412.64
2.0 Inch $ 351.82 $ 404.90 $ 506.13 $ 556.74 $ 612.42 $ 647.63
3.0 Inch $ 649.10 $ 747.71 $ 934.64 $ 1,028.10 $ 1,130.91 $ 1,195.94
4.0 Inch $ 1,073.80 $ 1,237.43 $ 1,546.79 $ 1,701.47 $ 1,871.61 $ 1,979.23
6.0 Inch $ 2,135.58 $ 2,461.74 $ 3,077.17 $ 3,384.89 $ 3,723.38 $ 3,937.48
8.0 Inch $ 3,409.68 $ 3,930.91 $ 4,913.64 $ 5,405.01 $ 5,945.51 $ 6,287.37
10.0 Inch $ 4,896.14 $ 5,644.94 $ 7,056.17 $ 7,761.79 $ 8,537.97 $ 9,028.90 Bi-Monthly Fire Flow Fixed Service Charge:
5/8 Inch $ 13.94 $ 16.15 $ 20.19 $ 22.21 $ 24.43 $ 25.83 3/4 Inch $ 13.94 $ 16.15 $ 20.19 $ 22.21 $ 24.43 $ 25.83
1.0 Inch $ 13.94 $ 16.15 $ 20.19 $ 22.21 $ 24.43 $ 25.83
1.5 Inch $ 21.46 $ 28.25 $ 35.32 $ 38.85 $ 42.73 $ 45.19
2.0 Inch $ 27.08 $ 37.33 $ 46.66 $ 51.33 $ 56.46 $ 59.71
3.0 Inch $ 40.24 $ 58.51 $ 73.13 $ 80.45 $ 88.49 $ 93.58
4.0 Inch $ 59.02 $ 88.76 $ 110.95 $ 122.05 $ 134.25 $ 141.97
6.0 Inch $ 105.98 $ 164.39 $ 205.49 $ 226.04 $ 248.65 $ 262.95
8.0 Inch $ 162.32 $ 255.16 $ 318.95 $ 350.84 $ 385.92 $ 408.11
10.0 Inch $ 228.06 $ 361.05 $ 451.31 $ 496.44 $ 546.08 $ 577.48
12.0 Inch $ 415.90 $ 663.58 $ 829.48 $ 912.43 $ 1,003.67 $ 1,061.38 Volumetric Rates Per 100 Cubic Feet:
All Flow $ 3.47 $ 3.99 $ 4.98 $ 5.48 $ 6.03 $ 6.38
Description Existing
Rates
Projected For Fiscal Year Ending June 30
2026 2027 2028 2029 2030
Volumetric Rates Per 100 Cubic Feet [1]:
All Flow $ 0.85 $ 0.88 $ 0.94 $ 1.01 $ 1.08 $ 1.15
Notes:
Description Existing
Rates
Projected For Fiscal Year Ending June 30:
[1] The City provides collection only services, all customers pay the same rate per 100 cubic feet of billed water flow. Page 328 of 354 41 | P a g e
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 bimonthly bill for a representative City single-family residential customer using 1,600 cubic feet 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.
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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 future debt issuances expected to occur over the Projection Period for either utility. Therefore, no annual debt service payments or debt service ratio calculations are included in the analysis and Projection Period.
[The rest of this page is intentionally left blank]
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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.
Table 40 – Water System Projected Operating Results
Existing
2026
Proposed
2026 2027 2028 2029 2030
Revenues:
Water Sales $ 3,984 $ 4,582 $ 5,154 $ 6,014 $ 6,615 $ 7,129 Other Revenues 41 41 41 41 41 41
Total Revenues $ 4,025 $ 4,623 $ 5,196 $ 6,055 $ 6,656 $ 7,170 O&M Expenses (4,023) (4,023) (4,269) (4,535) (4,821) (5,129) Net Income For Debt $ 2 $ 600 $ 926 $ 1,520 $ 1,835 $ 2,041 Debt Service:
Existing $ - $ - $ - $ - $ - $ -
Future - - - - - -
Total Debt Service $ - $ - $ - $ - $ - $ -
Net Results $ 2 $ 600 $ 926 $ 1,520 $ 1,835 $ 2,041
Fund Balance Activity:
Operating Fund
Beginning Balance $ 112 $ 112 $ 712 $ 1,053 $ 1,118 $ 1,189 Deposit/(Withdrawal) from Operations 2 600 926 1,520 1,835 2,041 Deposit/(Withdrawal) from/(to) Capital Fund - - (586) (1,454) (1,765) (1,965) Total Operating Fund Balance $ 115 $ 712 $ 1,053 $ 1,118 $ 1,189 $ 1,265 Operating Days Cash on Hand 10 65 90 90 90 90
Capital Fund
Beginning Balance $ 2,809 $ 2,809 $ 1,929 $ 1,116 $ 1,123 $ 1,854 Net Transfers In/(Out) From Operating Fund - - 586 1,454 1,765 1,965 Cash Funded Capital Projects (880) (880) (1,399) (1,447) (1,033) (1,194) Total Capital Fund Balance $ 1,929 $ 1,929 $ 1,116 $ 1,123 $ 1,854 $ 2,625 Ending Fund Balance $ 2,044 $ 2,642 $ 2,168 $ 2,241 $ 3,043 $ 3,889 Debt Coverage N/A N/A N/A N/A N/A N/A
Description
Projected for Fiscal Year Ending June 30 ($1,000s)
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Table 41 – Sewer System Projected Operating Results
Existing
2026
Proposed
2026 2027 2028 2029 2030
Revenues:
Wastewater Sales $ 550 $ 569 $ 589 $ 630 $ 674 $ 721
Other Revenues 52 52 52 52 52 52
Total Revenues $ 601 $ 621 $ 640 $ 682 $ 726 $ 773
O&M Expenses (398) (398) (412) (427) (442) (458)
Net Income For Debt $ 203 $ 222 $ 228 $ 255 $ 283 $ 315 Debt Service:
Existing $ - $ - $ - $ - $ - $ -
Future - - - - - -
Total Debt Service $ - $ - $ - $ - $ - $ -
Net Results $ 203 $ 222 $ 228 $ 255 $ 283 $ 315
Fund Balance Activity:
Operating Fund
Beginning Balance $ 2,243 $ 2,243 $ 98 $ 102 $ 105 $ 109 Deposit/(Withdrawal) from Operations 203 222 228 255 283 315 Deposit/(Withdrawal) from/(to) Capital Fund (2,348) (2,368) (225) (251) (280) (311) Total Operating Fund Balance $ 98 $ 98 $ 102 $ 105 $ 109 $ 113 Operating Days Cash on Hand 90 90 90 90 90 90
Capital Fund
Beginning Balance $ 2,366 $ 2,366 $ 4,220 $ 3,975 $ 3,729 $ 3,482 Net Transfers In/(Out) From Operating Fund 2,348 2,368 225 251 280 311 Cash Funded Capital Projects (513) (513) (470) (497) (526) (557) Total Capital Fund Balance $ 4,201 $ 4,220 $ 3,975 $ 3,729 $ 3,482 $ 3,235 Ending Fund Balance $ 4,299 $ 4,318 $ 4,077 $ 3,834 $ 3,591 $ 3,348 Debt Coverage N/A 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 – Conclusions and Recommendations
6.1 Disclaimers
6.1.1 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 update, 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 audited 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.
6.1.2 Municipal Advisory Disclaimer
Unless the City of La Palma, 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 discuss 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 relating 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.
6.2 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, analyses 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 January 1, 2026. 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 the City staff regarding developer activity and anticipated construction. If it turns out that the customer growth assumptions are not realized, the resulting revenues could be different than projected.
4. The projection of billable water and sewer flows is based on historical trends regarding the average flow per user for each customer class. The average water and sewer flow 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 the average flow statistics for system customers. For the analyses developed herein, it is assumed that the average usage statistics for the Projection Period will be consistent with recent historical average usage levels as realized in recent years, or as otherwise assumed based on discussions with staff.
When applying the estimated average usage 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
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may influence the level of future water demands and the accompanying billable sewer flows for the City.
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 ratesetting 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.
6.3 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. Enact the proposed rates to become effective as of January 1, 2026 (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.
3. 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
City of La Palma, 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
City of La Palma, CA
Comprehensive Water & Sewer Utility Rate
Study Update
Appendix A
Revenue Requirement for
User Rates
APPENDIX - A
CITY OF LA PALMA, 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 $ 5,243,404 $ 4,622,845 $ 620,559 Less:
Other Operating Revenues
2 Water Meter Sales $ 100 100% $ 100 0% $ -
3 Interest - Investments 5,000 100% 5,000 0% -
4 Fats, Oils, And Grease Program 9,600 0% - 100% 9,600
5 Interest - Investments 16,000 0% - 100% 16,000
6 Interest - Investments 36,000 100% 36,000 0% -
7 Interest - Investments 26,000 0% - 100% 26,000
8 Total Other Operating Revenues 92,700 41,100 51,600
9 Total Rate Revenue Requirement $ 5,150,704 89% $ 4,581,745 11% $ 568,959 Test Year for Rate Revenue Requirement Line No: Description A - 1
City of La Palma, CA
Comprehensive Water & Sewer Utility Rate
Study Update
Appendix B
Water Cost-of-Service
Analysis
APPENDIX - B
CITY OF LA PALMA, CA
Allocation of Test Year Costs to Water Function
Line No: Expense Group FY 2026
1 Treatment $ 302,150
2 Transmission & Distribution 415,700
3 Pumping 1,440,800
4 Customer Service 2,000
5 Administration 1,742,306
6 Source of Supply 120,000
7 Existing Bond DS -
8 New Bond DS -
9 CIP 879,600
10 Total $ 4,902,556
Test Year Revenue Requirement
B - 1
APPENDIX - B
CITY OF LA PALMA, 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 --> Commercial Roll Offs Residential FS Residential W&S Fire Service Irrigation 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 1.00 1.00 1.00 1.00 1.00 1.00
3 1.00 1.00 1.00 1.00 1.00 1.00 1.00
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 10.00 115.00 115.00 115.00 115.00 115.00 115.00
11 12.00 215.00 215.00 215.00 215.00 215.00 215.00
[A - 2] [B - 2] [C - 2] [D - 2] [E - 2] [F - 2]
Class --> Commercial Roll Offs Residential FS Residential W&S Fire Service Irrigation Billing Basis--> Units Units Units Units Units Units
12 0.625 3 0 3,655 476 0 3 4,137
13 0.75 3 0 2 2 0 1 8
14 1.00 10 0 25 6 1 1 43
15 1.50 14 0 0 16 0 5 35
16 2.00 34 1 0 43 9 5 92
17 3.00 6 1 0 7 8 0 22
18 4.00 0 0 0 0 0 0 0
19 6.00 0 1 0 0 19 0 20
20 8.00 0 0 0 0 12 0 12
21 10.00 0 0 0 0 8 0 8
22 12.00 0 0 0 0 2 0 2
22 Total Bi-Monthly Customers 70 3 3,682 550 59 15 4,379 [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 --> Commercial Roll Offs Residential FS Residential W&S Fire Service Irrigation Billing Basis--> Units Units Units Units Units Units
23 0.625 3 0 3,655 476 0 3 4,137
24 0.75 3 0 2 2 0 1 8
25 1.00 10 0 25 6 1 1 43
26 1.50 70 0 0 80 0 25 175
27 2.00 272 8 0 344 72 40 736
28 3.00 90 15 0 105 120 0 330
29 4.00 0 0 0 0 0 0 0
30 6.00 0 50 0 0 950 0 1,000
31 8.00 0 0 0 0 960 0 960
32 10.00 0 0 0 0 920 0 920
33 12.00 0 0 0 0 430 0 430
33 Total Bi-Monthly Customers 448 73 3,682 1,013 3,453 70 8,739 Meter Equivalencies
Meter Size
Meter Size
Meter Size
Customer Accounts
Total Equivalent Residential Units
Line
No:
Line
No:
Line
No:
Total
Total
B - 2
APPENDIX - B
CITY OF LA PALMA, CA
Water Max Day/Hour Allocation Factors - Test Year FY 2026 [A] [B] [C] [D] [E] [F]
Flow
Peak BiMonthly Flow
(CCF)
Average BiMonthly Flow
(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) 2.30 1.00
2 Max Day Flow (MGD) 3.91 1.70
Cost Allocation Factors: Base Max Day Max Hour
3 Base/Max Day 58.82% 41.18% 0.00%
Peaking Factors: [B] / [C]
All Customers Excluding Fire Service
4 All Flow 120,902 106,665 1.13
Fire Service
5 All Flow 0 0 0.00
[D] x [B] [E] - [B]
Estimated Max Day Flows:
Total Annual
Flow (CCF)
Average
Daily Flow
(CCF)
Peaking
Factor
Total
Capacity
Extra
Capacity
All Customers Excluding Fire Service
6 All Flow 657,528 1,801 1.13 2,042 240
Fire Service
7 All Flow 0 0 0.00 0 0
8 Total 657,528 1,801 2,042 240
Maximum Day
Line No: Description
B - 3
APPENDIX - B
CITY OF LA PALMA, CA
Water Units of Service by Cost Component - Test Year FY 2026 [A] [B] [C] [D]
ERUs Accounts Base (CCF)
Max Day
(CCF/Day)
All Customers Excluding Fire Service
1 All Flow 5,286 4,320 657,528 240
Fire Service
2 All Flow 3,453 59 0 0
3 Total 8,739 4,379 657,528 240
Line No: Description
B - 4
APPENDIX - B
CITY OF LA PALMA, CA
Allocation of Water Costs - Test Year FY 2026
Line No: Description Water Costs Base Extra Capacity
Max Day Meters & Services Billing & Collection Fire Protection Total (Check) Allocation Factors:
1 Treatment 58.82% 41.18% 0.00% 0.00% 0.00% 100.00%
2 Transmission & Distribution 58.82% 41.18% 0.00% 0.00% 0.00% 100.00% 3 Pumping 58.82% 41.18% 0.00% 0.00% 0.00% 100.00%
4 Customer Service 0.00% 0.00% 75.00% 21.16% 3.85% 100.00% 5 Administration 0.00% 0.00% 75.00% 21.16% 3.85% 100.00% 6 Source of Supply 100.00% 0.00% 0.00% 0.00% 0.00% 100.00% 7 Existing Bond DS 0.00% 0.00% 100.00% 0.00% 0.00% 100.00% 8 New Bond DS 0.00% 0.00% 100.00% 0.00% 0.00% 100.00%
9 CIP 59.79% 0.00% 40.22% 0.00% 0.00% 100.00%
Allocation of Costs:
10 Treatment $ 302,150 $ 177,735 $ 124,415 $ - $ - $ - $ 302,150 11 Transmission & Distribution 415,700 244,529 171,171 - - - 415,700 12 Pumping 1,440,800 847,529 593,271 - - - 1,440,800
13 Customer Service 2,000 - - 1,500 423 77 2,000
14 Administration 1,742,306 - - 1,306,730 368,585 66,991 1,742,306 15 Source of Supply 120,000 120,000 - - - - 120,000
16 Existing Bond DS - - - - - - -
17 New Bond DS - - - - - - -
18 CIP 879,600 525,869 - 353,731 - - 879,600
19 Non-Rate Rev & Fund Balance (320,811) (125,356) (58,165) (108,755) (24,147) (4,388) (320,811) 20 Total $ 4,581,745 $ 1,790,306 $ 830,692 $ 1,553,206 $ 344,861 $ 62,680 $ 4,581,745 Total Units of Service 657,528.00 240.45 5,286.00 4,379.00 3,453.00 Units CCF CCF/Day ERU/Bi-Monthly Bills/Bi-Monthly ERUs/Bi-Monthly Cost Per Unit $ 2.7228 $ 3,454.7935 $ 48.9723 $ 13.1256 $ 3.0254 Units CCF CCF/Day ERU/Bi-Monthly Bills/Bi-Monthly ERU
B - 5
APPENDIX - B
CITY OF LA PALMA, CA
Water Cost of Service by Cost Component and Customer Class - Test Year FY 2026 [A] [B] [C] [D] [E]
ERUs Accounts Base (CCF) Max Day
(CCF/Day) Total
All Customers Excluding Fire Service
1 All Flow $ 1,553,206 $ 340,215 $ 1,790,306 $ 830,692 $ 4,514,419 Fire Service
2 All Flow $ 62,680 $ 4,646 $ - $ - $ 67,326
3 Total $ 1,615,886 $ 344,861 $ 1,790,306 $ 830,692 $ 4,581,745 Line
No: Description
B - 6
APPENDIX - B
CITY OF LA PALMA, 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
All Customers Excluding Fire Service
1 5/8 Inch 1.00 $ 48.97 $ 13.13 $ 62.10 $ 54.52 $ 7.58
2 3/4 Inch 1.00 $ 48.97 $ 13.13 $ 62.10 $ 54.52 $ 7.58
3 1.0 Inch 1.00 $ 48.97 $ 13.13 $ 62.10 $ 54.52 $ 7.58
4 1.5 Inch 5.00 $ 244.86 $ 13.13 $ 257.99 $ 224.40 $ 33.59 5 2.0 Inch 8.00 $ 391.78 $ 13.13 $ 404.90 $ 351.82 $ 53.08 6 3.0 Inch 15.00 $ 734.58 $ 13.13 $ 747.71 $ 649.10 $ 98.61 7 4.0 Inch 25.00 $ 1,224.31 $ 13.13 $ 1,237.43 $ 1,073.80 $ 163.63 8 6.0 Inch 50.00 $ 2,448.62 $ 13.13 $ 2,461.74 $ 2,135.58 $ 326.16 9 8.0 Inch 80.00 $ 3,917.79 $ 13.13 $ 3,930.91 $ 3,409.68 $ 521.23 10 10.0 Inch 115.00 $ 5,631.82 $ 13.13 $ 5,644.94 $ 4,896.14 $ 748.80 Fire Service
11 5/8 Inch 1.00 $ 3.03 $ 13.13 $ 16.15 $ 13.94 $ 2.21
12 3/4 Inch 1.00 $ 3.03 $ 13.13 $ 16.15 $ 13.94 $ 2.21
13 1.0 Inch 1.00 $ 3.03 $ 13.13 $ 16.15 $ 13.94 $ 2.21
14 1.5 Inch 5.00 $ 15.13 $ 13.13 $ 28.25 $ 21.46 $ 6.79 15 2.0 Inch 8.00 $ 24.20 $ 13.13 $ 37.33 $ 27.08 $ 10.25 16 3.0 Inch 15.00 $ 45.38 $ 13.13 $ 58.51 $ 40.24 $ 18.27 17 4.0 Inch 25.00 $ 75.63 $ 13.13 $ 88.76 $ 59.02 $ 29.74 18 6.0 Inch 50.00 $ 151.27 $ 13.13 $ 164.39 $ 105.98 $ 58.41 19 8.0 Inch 80.00 $ 242.03 $ 13.13 $ 255.16 $ 162.32 $ 92.84 20 10.0 Inch 115.00 $ 347.92 $ 13.13 $ 361.05 $ 228.06 $ 132.99 21 12.0 Inch 215.00 $ 650.46 $ 13.13 $ 663.58 $ 415.90 $ 247.68 Line
No: Customer Class Base Rate Peaking Rate
Proposed
Rate
($/CCF)
Existing Rate
($/CCF) Difference Tier Differential
All Customers Excluding Fire Service
1 All Flow $ 2.72 $ 1.26 $ 3.99 $ 3.47 $ 0.52 1.00
Line
No: Customer Class Peaking Costs
Annual Use
(CCF)
Peaking Unit
Cost
All Customers Excluding Fire Service
1 All Flow $ 830,692 657,528 $ 1.26
2 Total $ 830,692 657,528
Line
No: Description
B - 7
City of La Palma, CA
Comprehensive Water & Sewer Utility Rate
Study Update
Appendix C
Sewer Cost-of-Service
Analysis
APPENDIX - C
CITY OF LA PALMA, CA
Allocation of Test Year Costs to Sewer Function
Line No: Expense Group FY 2026
1 Collection $ 161,500
2 Treatment -
3 Administration 236,628
4 Existing Bond DS -
5 New Bond DS -
6 CIP 513,400
7 Total $ 911,528
Test Year Revenue Requirement
C - 1
APPENDIX - C
CITY OF LA PALMA, CA
Sewer Customer Account & Stength Characteristics by Customer Class - Test Year FY 2026 Total Total CCF
Customers Bills Flow
1 Residential 4,232 25,392 569,256
2 Non-Residential 73 438 77,472
3 Sewer System Total 4,305 25,830 646,728
Line No: Description
C - 2
APPENDIX - C
CITY OF LA PALMA, CA
Allocation of Sewer Costs - Test Year FY 2026
Line No: Description Sewer Costs Volume Total (Check)
Allocation Factors:
1 Treatment 100.00% 100.00%
2 Collection 100.00% 100.00%
3 Administration 100.00% 100.00%
4 CIP 100.00% 100.00%
5 Existing Bond DS 100.00% 100.00%
6 New Bond DS 100.00% 100.00%
Allocation of Costs:
7 Treatment $ - $ - $ -
8 Collection 161,500 161,500 161,500
9 Administration 236,628 236,628 236,628
10 CIP 513,400 513,400 513,400
11 Existing Bond DS - - -
12 New Bond DS - - -
13 Non-Rate Rev & Fund Balance (342,569) (342,569) (342,569) 14 Total $ 568,959 $ 568,959 $ 568,959
Total Units of Service 646,728
Units CCF
Cost Per Unit $ 0.88
Units CCF
C - 3
APPENDIX - C
CITY OF LA PALMA, CA
Sewer Cost of Service by Cost Component and Customer Class - Test Year FY 2026 [A] [B]
Volume Total
1 Residential $ 500,803 $ 500,803
2 Non-Residential 68,156 68,156
3 Total $ 568,959 $ 568,959
Line No: Description
C - 4
APPENDIX - C
CITY OF LA PALMA, CA
Sewer Rate Calculation - Test Year FY 2026
[A] [B] [C] [D] [E] [F] [G] [H] [I] [J]
Fixed Rate
Costs
Bi-Monthly
Customers
Proposed BiMonthly
Fixed Fee
Existing BiMonthly
Fixed Fee
Bi-Monthly
Fixed Fee
Difference
Volumetric
Rate Costs
Billable
Annual
Volume
(CCF)
Proposed
Volumetric
Rate
Existing
Volumetric
Rate
Volumetric
Rate
Difference
1 Residential N/A 4,232 N/A N/A N/A $ 500,803 569,256 $ 0.88 $ 0.85 $ - 2 Non-Residential N/A 73 N/A N/A N/A $ 68,156 77,472 $ 0.88 $ 0.85 $ - Line
No: Customer Class
C - 5
APPENDIX - C
CITY OF LA PALMA, CA
Sewer Revenue vs Cost of Service by Customer Class Check - Test Year FY 2026 [A] [B] [C]=[A]*[B]*6 [D] [E] [F]=[D]*[E] [G]=[C]+[F] [H] [I]=[H]-[G] Bi-Monthly
Customers
Proposed BiMonthly
Fixed Fee
Total Fixed
Fee Revenue
Billable
Annual
Volume
(CCF)
Proposed
Volumetric
Rate
Total
Volumetric
Rate
Revenues
Total
Calculated
Revenues
Total COS
Revenues
Difference
Calc vs COS
1 Residential 4,232 N/A N/A 569,256 $ 0.88 $ 500,803 $ 500,803 $ 500,803 $ - Non-Residential 73 N/A N/A 77,472 $ 0.88 $ 68,156 $ 68,156 $ 68,156 $ - 2 Total 4,232 N/A 646,728 $ 568,959 $ 568,959 $ 568,959 $ - Line
No: Customer Class
C - 6
27368 Via Industria, Suite 200
Temecula, CA 92590
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