La Verne City Council
November 3, 2025

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6 7.4 177.6
7 7.86 188.8
8 8.33 200.0
9 8.8 211.2
10 9.26 222.4
11 9.78 233.6
12 10.2 244.8
13 10.66 256.0
14 or more 11.13 267.2

For non-shift employees:

Consecutive Years
of Service Vacation Days Per Year
1-5 12
6 13
7 14
8 15
9 16
10 17
11 18
12 19
13 20
14 21
15 22
16 or more 23

Cap on Accrual. New employees hired after June 30, 2020, and employees who were not previously LVFA members prior to June 30, 2020, will have their vacation hours capped at 400 hours and will not be able to accrue past that amount.

Employees subject to the cap of 400 hours with at least 350 hours of accrued vacation hours will be eligible to cash out up to 40 hours of vacation if they meet the following: (i) Have been denied the use of vacation by the department after submitting a vacation request of no less than thirty-six (36) hours and no more than the equivalent of two (2) weeks; (ii)The request for vacation (that has been denied) must have been submitted at least thirty (30) days in advance of the first day of the desired vacation date; (iii) Have not previously cashed out vacation hours pursuant to this cash out procedure for the same requested vacation leave (an employee may only cash out vacation hours pursuant to this cash out procedure once per denied vacation request).

B. Scheduling of employee vacation leave shall be at the discretion of the City with due regard to the wishes of the employees and work requirements of the City.

Vacations will normally be scheduled on a seniority basis (full-time as a member of the L.V.F.D.). To exercise seniority rights, vacation requests must be submitted to the City by March 1st of each year. The taking of one (1) shift for shift employees, or five (5) days for forty (40) hour employees, exercises the particular employee's seniority right for that year. For this purpose, year shall be defined as April 1

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through March 31.

All requests for vacation of one (1) or less shifts should be submitted at least 96 hours prior to the requested day off, and include the name of a qualified replacement.

No vacation shall be granted between December 16 and January 2 unless the employee finds a qualified replacement.

All requests for vacation of one (1) or more shifts should be submitted to the Battalion Chief for approval at least fourteen (14) days prior to the first desired day off. If the request is within seven (7) days, the request must include the name of a qualified replacement for each shift desired off.

When looking for a qualified replacement, the employee will refer to the “Priority Chart” which lists employees’ names by rank, from lowest hours to highest, and will make a reasonable attempt to contact members of their own rank in order from low to high until they are able to identify a qualified replacement. The Priority Chart will be updated monthly according to hours provided to the Fire Department by the Finance Department and will be posted at all three fire stations.

C.

During Probation. Vacation leave shall not be granted or accrued to any employee during the first six (6) months of the employee's original probationary period. However, on the successful completion of the probationary period, the employee will be credited with vacation leave that would otherwise have been accrued.

D. Deduction. Vacation leave granted by the City and used by an employee shall be deducted from the employee's accrued vacation leave. Vacation leave shall not be granted to any employee after separation from City service, or during a City authorized leave of absence without pay or any other leave of absence not authorized by the City.

E. Carry Over. In the event that any carry over of accrued vacation leave exceeding the amount received in a twenty-four (24) month period is desired, the employee may request and the City may grant approval for such carryover.

F. Accrual During Holiday. In the event that a holiday recognized in this Memorandum of Understanding occurs during an employee's scheduled vacation leave, then such holiday shall not be considered as vacation leave.

G. Payment Upon Separation. An employee separated from City service shall receive full compensation for accrued vacation leave on the books at the employee's then current salary rate.

H. Annual Cash Out. Association represented employees with a minimum of 675 hours of accumulated sick leave may "cash out" up to 56 hours (40 hours for non- shift employees) of accumulated vacation on an annual basis provided that subsequent to the cash out, the employee shall retain a minimum vacation accrual balance of 168 hours (3 weeks). Said vacation cash out shall be approved by the Personnel Officer on the condition that it is paid to the employee in conjunction with a vacation leave of at least one week in duration that has been scheduled and approved by the department head at least thirty (30) days in advance.

I. Deferred Compensation Plan Cash Out. Employees who have reached the age of 47 are eligible for the "Catch up Provision" under the 457 deferred compensation plan. Employees who have reached the age of 47 during the first

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full pay period in January may "cash out" the dollar equivalent of up to $15,000 of vacation hours each year for a period of three consecutive years and have the funds deposited directly into deferred compensation. The employee must complete the Participation Agreement with the Deferred Compensation Plan no later than that last day of the first full pay period in January, and evenly distribute the $15,000 over the remaining pay periods. However, the employee’s total deposit must be equivalent to the maximum deposit amount allowed by laws relating to Section 457 plans (without the added amount). The employees shall retain an accumulated vacation balance of at least two weeks (112 hours) at all times.

Article 15 – Uniform Allowance

Each employee shall receive uniform allowance in the amount of $600 per year for the purchase and maintenance of uniforms, payable in the first pay period ending in December. An employee who begins employment or who severs employment prior to the uniform allowance being paid shall, within the first three months of employment, receive up to $500 in cost reimbursement toward the purchase of new uniforms subject to submission of receipt and purchase documentation and approval by the Fire Chief or designee. Prior to the beginning of calendar years 2011, and 2012, the Association may initiate discussions with the City relative to adjustments in uniform allowance based upon labor market comparisons of the comparison agencies listed in Article 8 (B).

Article 16 – Retirement

The plan is administered by the CalPERS Board. The City and the employees shall be subject to the rules and regulations governing retirement, premium cost, etc., as endorsed and accepted by the CalPERS Board, except as otherwise noted herein.

A. Employer Premium. Premium cost is fixed by the governing board of CalPERS and is divided between the City and employee. The City shall pay the premium designated as employer charges.

B. Employee Premium for “New Members,” as Defined by AB 340, Hired After January 1, 2013; Public Safety PERS 2.7% @ 57 under AB 340.

1. Employee contribution rate for “new members” as defined by AB 340 is at least 50% of the normal cost rate for that defined benefit plan, rounded to the nearest quarter percent or the current contribution rate of similarly situated employees, whichever is greater.

2. Compensation cap for “new members” as defined by AB 340 (120% of Contribution and Benefit Base).

3. Calculation of benefits based on base pay for “new members” as defined by AB 340.

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4. 3 year average final compensation for “new members” as defined by AB 340.

5. Benefits will be determined in accordance with all of the applicable requirements of AB 340.

6. If AB 340 is partly or wholly overturned or modified by subsequent legislative or judicial actions, employees covered by Article 16 – Section A. will be provided with benefits under Article 16 – Section C. to the greatest extent permitted by law.

C.

Employee Premiums for Individuals hired after February 1, 2010 who are not “New Members,” as defined by AB 340; Public Safety PERS 3% @ 50 full formula and Section 20024.7(one year final compensation.) Individuals hired after February 1, 2010, will be responsible for paying the full amount of their employee contribution (9% of reported compensation) Employee Premiums for Individuals hired by the City on or prior to February 1, 2010 who are not “New Members,” as defined by AB 340; Public Safety PERS 3% @ 50 full formula and Section 20024.7 (one year final compensation).

1. Effective with the first full pay period in September 2014, employees will be responsible for paying 7% of their 9% member contribution to PERS.

The remaining 2% will be paid by the City.

2. Effective with the first full pay period in July 2015, employees will be responsible for paying 8% of their 9% member contribution to PERS. The remaining 1% will be paid by the City.

3. Effective with the first full pay period in January 2016, employees will be responsible for paying 9% of their member contribution to PERS.

4. Credit for Unused Sick Leave. The City will bear the cost for the Credit for Unused Sick Leave benefit.

D. 4th Level 1959 Survivor Benefit. City shall take all action necessary to amend its contract with CalPERS on or before May 1, 2004 to implement the benefits of Cal. Government Code, Section 21574. Any changes in the City’s CalPERS rate caused by this contract amendment will be borne by the Association members.

E. Pre-retirement Optional Settlement 2 Death Benefit. The City shall obtain an actuarial valuation for the costs of implementing the benefits of California Government Code, Section 21548. Thereafter, the City agrees to meet with the Association and to discuss implementing the benefits of that Section, with the Association members bearing the cost for such benefits.

Article 17 – Medical and Dental Plans

A. Active Employees: The City shall provide at least two health maintenance organization (HMO) medical plans that have been approved by the Association through the Employee Health and Safety Committee for all employees and their dependents.

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1. At the time of hire, an employee shall choose a plan that best meets the needs of the employee.

2. An open enrollment period will occur in May-June of each year (effective July 1). Only during this time may the employee change to another plan.

Current Employees and those who are on the current eligibility list as of the date of ratification of the MOU: The City will pay 100% of the cost of insurance premium for employees and their eligible dependents, not to exceed the cost of the HMOs offered by the City.

Employees Hired After Ratification of the MOU: For employees hired after the date of ratification of the MOU who are not on the current eligibility list as of the date of ratification of the MOU, the City will pay the following medical insurance contribution amounts only, and employees shall be responsible to cover any medical insurance premium amounts over what the City provides:

EE only: $600/month
EE plus spouse: $1,000/month
EE plus child: $800/month
EE plus family: $1,300/month
B.

Retired Employees: The City shall not provide any retiree medical insurance contributions for employees hired after the date of the ratification of the MOU who are not on the current eligibility list as of the date of the ratification of the MOU. The City shall provide monthly medical insurance contributions to current retired employees and those hired who are on the current eligibility list as of the date of the ratification of the MOU up to the following amounts:

1. Those who retired between 10-1-84 and 9-1-90:
- Single $88.32
- Couple $181.06
- Family $247.30

2. Those who retired between 9-2-90 and 6-30-99:
- Single $110.00
- Couple $225.00
- Family $247.30

3. Those who retire between 7-1-99 and 12-31-2003 will be provided with monthly medical insurance contributions in an amount that does not exceed eighty-five percent (85%) of the monthly premium of the least expensive HMO plan (for the retiree and covered dependents) that was in effect at the time of the retirement. The amount of this City-paid monthly contribution toward medical insurance shall be permanently fixed and will not be increased in conjunction with changes in monthly premium rates.

4. Those who retire January 1, 2004 or later, will be entitled to 80% of the monthly medical insurance premiums of the least expensive HMO (for the retiree and covered dependents). That amount shall not be fixed and will increase with changes in the rates that are available through the City provided plans. Employees must have at least 20 years of full-time service with the City to be eligible for this benefit (an employee who was hired prior to January 31, 1994, shall be eligible to apply up to two years

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of La Verne reserve firefighter experience towards the 20 year eligibility requirement).

The City shall provide the above retirement benefits only to those retired employees and their dependents who:

1. if eligible for Medicare, have enrolled in, and maintain, Medicare coinsurance benefits, in which case, the City shall provide a supplemental medical insurance plan not to exceed the aforementioned contribution rates.

2. are not receiving disability retirement benefits through the PERS nor have filed for industrial disability retirement benefits through the PERS with the following exceptions as determined by the City Manager:
a. the employee suffered a permanently disabling injury (not illness) as a result of a single, on-duty incident directly related to their actual performance of official duties; and
b. the employee has not declined an offer of a modified duty assignment; and
c. the employee’s disabling injury that necessitates retirement specifically excludes back injuries, psychological problems, heart disease, hypertension, and stress trauma.

3. obtain their medical insurance through the City. However, a retiree who chooses to purchase medical insurance from an independent source may receive direct payments from the City in the amounts specified above. In order to receive such direct payments, the retiree shall provide the City with an annual signed statement certifying that he has medical insurance coverage to cover the cost of catastrophic illness or injury for the retiree and dependents. Said medical insurance payments shall be made on a quarterly basis.

4. Upon death of the retired employee, dependents will not be eligible for medical insurance through the City.

5. Beginning on July 1, 2013, there shall be a cap of $300 on post Medicare monthly medical insurance contributions by the City to retired employees who were hired prior to January 1, 2013. The City shall not contribute any amount toward the post Medicare monthly medical insurance contributions for employees hired on or after January 1, 2013.

C.

Dental Plan. The City shall contribute to a group dental plan for the employee and eligible dependents in the form of an allocation of up to $33 per month.

Article 18 – Training

A. School Fee. Where as a condition for continued employment, the City requires attendance at a school or training establishment and where a fee is charged, the City shall pay such fees. An employee attending such school shall suffer no loss of wages or benefits if attendance during working hours is required. Books and materials purchased by the City will remain City property.

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B. Reimbursement. Non-probationary members will be reimbursed a maximum of $500 per calendar year for completion of job related classes. To be eligible for reimbursement, employee must have submitted class for pre-approval to the Personnel Officer, received a “C” or better grade, and not use the classes for any other compensable program that the City offers. Member will be responsible to repay any amount received within twelve (12) months of separating from employment.

Article 19 – Time Off to Employee Representatives

A. The City will allow a maximum of two (2) City employee representatives time off without loss of compensation or benefits when formally meeting and conferring with representatives of the City on matters within the scope of representation.

Said representatives may be given time not to exceed forty-eight (48) hours at the sole discretion of the City Manager to attend an annual seminar.

B. The City shall allow the Association the opportunity to hold general meetings; however, in order to ensure meetings do not conflict with training or department objectives, prior approval must be granted from the Fire Chief or Battalion Chief whose shift the meeting falls on.

Article 20 – Education Incentive and Tuition Reimbursement

A. Education Incentive Pay. The City will pay employees an education incentive in the amount of two and one-half percent (2.5%) of base monthly salary for an A.A./A.S. degree in a job related discipline; or five percent (5%) of base monthly salary for a B.A./B.S. degree in a job related discipline.

B. Tuition Reimbursement. Non- probationary employees who have attained an Associates of Arts or Science degree from a community college or provide written documentation from an accredited college or university of enrollment with junior class standing or higher shall be eligible for tuition reimbursement for courses leading toward completion of a Bachelor's degree in a related field, e.g., public administration, organizational management, etc. An employee pursuing a Master's degree in the aforementioned fields may petition for consideration for tuition reimbursement under this section. The City's Personnel Officer shall determine employee eligibility and eligibility of courses for tuition reimbursement, subject to review by the City Manager whose decision shall be final. Upon confirmation of eligibility and completion of courses with a grade of B or higher, the employee will be reimbursed for the cost of tuition and books up to $ 1,500 per calendar year. For purposes of determining what year an expense is charged to, the date the last class session was held will be used.

Article 21 – Unemployment Insurance

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The City will participate in and contribute to the State of California Unemployment Insurance program at the rate established by Local Entity Employees Fund of the State.

Article 22 – Workers' Compensation Insurance

The State workers' compensation laws and these terms and conditions of employment shall govern all aspects of duty related injuries, illnesses, and accidents.

A.

Industrial Injuries and Accidents.

1. Employees shall report any duty related injury or illness which requires medical treatment to the appropriate department supervisor as soon as physically possible.

2. Employees shall report any duty related injury or illness which does not require medical treatment to the appropriate department supervisor by the end of the workday on which the injury or illness occurred.

B.

Accident Reporting. Employees shall report any accident that results in any injury or property damage to the appropriate department supervisor as soon as physically possible.

C. Medical Treatment. Any employee suffering from any duty related injury or illness which requires medical treatment shall immediately seek such treatment from a City designated physician or medical facility.

D. Leave of Absence for Industrial Disability Qualification. An employee suffering a duty related injury or illness that disables that employee from the performance of regular job duties may request a leave of absence for industrial disability. Such request may be submitted in the form or a workers' compensation claim. Any dispute regarding such claim shall be resolved through the State Workers' Compensation Appeals Board process.

E. Compensation. For any employee on leave of absence under the workers' compensation sections of the California Labor Code, accumulated paid leave may be prorated to supplement such temporary disability compensation payments, provided that the total amount shall not exceed the regular gross salary of the employee.

F. Workers’ Compensation. While receiving 4850 leave, employees may come and go freely from their residences. However, employees must obtain prior approval from the Fire Chief if they wish to travel:

1. outside the state; or

2. to a location that is more than four hours driving time from the City limits.

Article 23 – Life Insurance

For Association represented employees in the classifications of Firefighter, Fire Engineer, and Fire Captain, the City shall provide a term life insurance policy with a fifty thousand dollar ($50,000) benefit and a fifty thousand dollar ($50,000)

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accidental death and dismemberment benefit. The monthly premium for said insurance policy shall be paid jointly by the City and the employee with the City paying one-half (1/2) of the premium amount and the employee paying one-half of the premium amount through payroll deduction.

Article 24 – Leave of Absence

A. Request for Leave. Any employee who has successfully completed the original probationary period may request a leave of absence for a period of time not to exceed one (1) year.

B. Automatic Resignation. Employee use of leave of absence for a purpose other than that requested shall be considered as an employee's automatic resignation from City service.

C. Approval. The City shall have sole discretion in approving or disapproving any employee request for leave of absence or in granting any pay or benefits.

Any paid leave of absence exceeding thirty (30) days must be approved by the City Council.

Article 25 – Discipline

A. Authority. Full authority for administering discipline, up to and including discharge for just cause, is retained by the City.

B. Principles of Corrective Discipline. The City shall generally follow the principles of corrective discipline as established in case law; that is, a written reprimand for the first offense; disciplinary action including, but not limited to, reduction in pay, delay in step increases, demotion or suspension for the second offense; and discharge for the third. However, the City reserves the right to administer disciplinary actions commensurate with the severity and/or frequency of the offense.

Article 26 – Grievance Procedures

A. Right of Appeal. A grievance is an alleged violation of a specific clause of these terms and conditions of employment and other rules, regulations, or procedures of the City. An employee's exclusive recognized labor organization or the City may grieve an action or inaction pursuant to the procedures herein specified.

B. Informal Grievance Procedure. The first attempt to settle a grievance will be through discussion with the immediate supervisor. If, after this discussion, the matter has not been resolved, the employee shall have the right to discuss it with the supervisor's immediate superior. Every effort should be made to find a solution by informal means at the lowest level of supervision. If the matter is not settled, the employee shall then have the right to file a formal appeal in

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writing to the department head within fifteen (15) days after receiving the decision of the supervisor.

C. Formal Grievance Procedure. An employee filing a formal appeal shall do so in accordance with the following:

1. First Level of Review. The appeal shall be presented in writing to the employee's department head that shall render a decision in writing to the employee within fifteen (15) calendar days after receiving the appeal. If the employee does not agree with the decision or if no answer has been received within the time, the employee may present a written appeal to the City Manager. Should the employee fail to take action within fifteen (15) calendar days after receiving the decision of his department head, or within the same time period from the time the appeal was filed if no department head decision is rendered, the appeal shall be deemed to have been abandoned and terminated.

2. City Manager Review. The City Manager or a designated representative shall discuss the grievance with the employee or a representative, if any, and with other appropriate persons. The City Manager may designate a fact-finding committee for advice concerning the appeal. The City Manager shall render a decision in writing to the employee within fifteen (15) calendar days. If the employee does not agree with the decision, the employee shall then have the right to file a formal appeal in writing to the City Council within fifteen (15) calendar days after receiving the decision of the City Manager.

D. Appeal to the City Council. On receipt of an appeal, the City Council may make such investigations as it deems necessary. The City Council may make such investigations as it deems necessary. The City Council will decide whether or not to hear the appeal or to appoint a hearing officer or body. The employee may request that the appeal be considered at a public meeting or at a closed session. The City shall notify the employee requesting the hearing of the date, time and place of the hearing. Unless incapacitated, the employee making the appeal shall appear personally before the City Council or hearing officer at the hearing.

Upon conclusion of any investigation or hearing, the City Council shall cause its findings and recommendations to be prepared in writing and shall certify the same. Such findings shall be countersigned and filed as a permanent record by the City Manager. Any member of the City Council may submit a minority or supplemental report, which shall be part of the permanent record.

If, due to the absence from the City, or illness or disability of a majority of the City Council, an employee would be deprived of a right of a hearing, and in the event the employee were laid off, demoted, reduced or dismissed, the City Manager may defer action until the Council is able to function, unless the case be an emergency, in which event, the City Manager may suspend the employee until the Council is able to function.

E. Conduct of Grievance Procedure.

1. The time limits specified above may be extended to a definite date by mutual agreement of the employee and the appellate person or body.

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2. The employee may be represented in preparing and presenting the appeal at any level of review.

Article 27 – Jury Duty

Employees called for jury duty shall notify the City of the call. If, in the opinion of the City, the absence of the employee for jury duty would result in undue disruption of work programs, the City may refuse to grant the employee a paid leave of absence to serve on jury duty for the purpose of obtaining an exemption from jury duty. Where serious disruption would not occur, and the employee has no objection to serving, the City may permit the employee to serve. The time spent off the job by the employee while actually serving on jury duty under the supervision of the court shall be compensated for on a straight time basis, limited to the employee's normal workday schedule. All per diem reimbursement paid the employee by the court shall be signed over to the City.

Article 28 – Inspection Privileges/Posting of Notices

A. With City approval, authorized agents of the Association shall have access to City premises during working hours for the purpose of adjusting disputes, investigating working conditions and such other matters. Such access shall be restricted so as not to interfere with the normal conduct of City services, or with City safety or security standards.

B. City bulletin boards may be used for transmitting notices of Association meetings, elections, results of elections, and other matters pertaining to Association business. In all cases where such items are to be put on City bulletin boards, the City shall have the right to review and approve such material.

C. Notwithstanding the provisions outlined above, the City reserves its right to inspect any and all equipment that is either issued or provided to a member for the purpose of completing their assignments. This includes but is not limited to workstations, lockers and computer storage devices.

Article 29 – Employee Retention Agreement

In order to promote retention, team building, employee safety and productivity, Association has agreed that the City may require employees hired after January 1, 2004, to enter into an employment agreement, the purpose of which is to discourage employees from unilaterally terminating employment prematurely. The terms of that employment agreement shall be as set forth in Attachment A of these terms and conditions of employment.

Article 30 – Safety and Health/Drug Testing

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The City will make reasonable provisions for the safety and health of City employees during the hours of their employment. Protective devises, safety wearing apparel, equipment, and facilities shall be provided by the City and shall comply with requirements under applicable regulations and laws. Employees shall utilize such safety and health devices, apparel, equipment and facilities when needed.

A.

Safety Committee. A safety committee shall be established under the direction of the Fire Chief for the purpose of reviewing and recommending safety equipment, facilities, and procedures.

B. Drug Testing. The City's Administrative Regulation No. 316 on Drug and Alcohol Testing which provides for pre-employment drug testing, reasonable suspicion testing, post-accident testing and random drug testing will be amended to be applicable to all employees covered by these terms and conditions of employment.

Article 31 – Work by Management Personnel

Management personnel will not perform work that is normally performed by employees covered in these terms and conditions of employment. Management and/or supervisory personnel may perform any work required or directed in the event of an emergency.

Article 32 – Non-discrimination

Neither the employer nor the Association shall discriminate against any employee or applicant for employment because of race, color, creed, age, sex, national origin, or union or nonunion activities.

Article 33 – Fair Labor Standards Act (FLSA) Requirements

A. Exemption. The City of La Verne has exercised its ability to take a statutory "7K" exemption for Fire personnel. The Work period for such employees shall be determined by these terms and conditions of employment.

B. Fair Labor Standards Act Exempt Employees. Although all classifications listed in these terms and conditions of employment are part of the LVFA bargaining unit; for purposes of the FLSA, the City may designate specific positions exempt per Department of Labor guidelines. The City will not treat Association exempt employees any differently than non-exempt employees.

The City shall so inform said employees in writing and place a copy of said notice in the employee's personnel file.

C. Clothes Changing. Each employee is provided with a locker for his/her own personal convenience. An employee may or may not utilize the locker for

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storage and changing purposes prior to the start of a shift at his/her own discretion. Time spent changing clothes before or after a shift is not considered hours worked and is not compensable in any manner whatsoever.

D.

Early Relief Policy. The practice of early shift relief shall be voluntary on behalf of each employee involved in the relief. The employee providing relief shall not have his/her compensable hours increased as a result of the early relief. "Paybacks" of early relief hours are the sole obligation of the two employees involved in the early relief. Any dispute is to be resolved by the involved employees, and under no circumstances will the department be obligated for any further compensation whatsoever to any of the involved employees. The department is not responsible in any manner for hours owed to employees by other employees that leave the employment of the City or are assigned to other duties.

E. City Vehicle Use. Employees who are provided with a City vehicle to travel to and from work shall not be compensated in any manner whatsoever for such travel time in the City vehicle.

F. Gym Facility. The City provides gym equipment for the voluntary use of employees during their off duty hours. Time spent by employees working out during off duty hours is not considered hours worked and will not be compensated in any manner.

G. Training Time.

1. Mandatory Training. Mandatory attendance at training school/facilities required by the Department shall be considered as compensable hours worked. Time spent in studying and other personal pursuits is not compensable hours of work even though the employee may be confined to campus or barracks. Travel time will be compensated per Department of Labor guidelines.

2. Non-mandatory Training. Non-mandatory attendance at training schools/facilities that improves the performance of regular tasks and/or prepares for job advancement are not compensable hours. Time spent in studying and other personal pursuits is not compensable hours of work, even though the employee may be confined to campus twenty-four (24) hours a day.

However, if an employee is authorized to attend department sanctioned non-mandatory training during the normal work shift without utilizing paid leave time for the normal work shift, such training time during the normal work shift shall be counted as hours worked for purposes of eligibility for overtime under the FLSA.

H. Overtime.

1. Authorization. All overtime requests must have the prior written authorization of a supervisor prior to the commencement of such overtime work. Where prior written authorization is not feasible, explicit verbal authorization must be obtained as soon as thereafter practicable.

Dispatched calls beyond the end of duty time are considered as authorized.

An employee's failure to obtain prior written approval, or explicit verbal

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authorization followed by written authorization, will result in the denial of the overtime request.

Employees are cautioned not to spend excessive amounts of time at their workstation before or after their normal work period. This incidental time will not be compensated in any manner whatsoever unless prior authorization of a supervisor is obtained.

2. Work Period. For purposes of calculating overtime under the FLSA, the work period for all safety members of the Fire Department assigned to the 48/96 schedule shall be a 24 day period generally consisting of four (4) 48-hour shifts for a total of 192 hours.

3. Calculation of Overtime. All hours actually worked in excess of 182 in a 24-day work period shall be compensated at one and one-half times the regular rate of pay. "Actual Hours Worked" for purposes of calculating overtime hours shall not include paid leave time such as sick leave, workers' compensation temporary disability, and jury duty; the only exception being vacation The regular rate of pay shall include education incentive pay.

Time off for workers' compensation temporary disability, which resulted directly from an on the job injury incurred at an emergency incident which required the employee to be relieved immediately of active duty to receive medical attention, may be deemed as hours worked. Notwithstanding the foregoing language, time off for workers' compensation temporary disability due to back strains or back or neck injuries without clear objective findings as determined by a City physician or emergency room physician shall not be deemed as hours worked for overtime purposes.

Since the ten (10) hours from 183 to 192 (inclusive) constitute regular assigned work hours, it is understood that the straight hourly rate for these hours is included in the employee's salary. Actual hours worked from 183 to 192 (inclusive) shall be paid at the additional half time of the hourly rate of pay.
"Actual Hours Worked" along with vacation hours used that total more than 192 in a 24-day work period shall be paid at one and one-half times the regular rate of pay. However, hours previously paid at the overtime rate during the 24-day work period will be excluded from this calculation.

Because "actual hours worked" cannot be determined in total until the end of the 24-day work period, payment of FLSA overtime will be paid as soon as practicable following the end of each 24-day work period.

4. Compensatory Time. In lieu of overtime pay, employees may elect to receive compensatory time off. Compensatory time will be recorded on employee time cards and credited as time earned at straight time. At the end of the 24-day work period, payment of FLSA overtime will be paid as soon as practicable following the end of each 24-day work period.

Compensatory time may be accumulated to a maximum of two hundred forty (240) hours as the discretion of the employee.

Unused compensatory time on the books as of the last pay period in October, shall be paid to an employee with the first full pay period of

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November of each calendar year. Said payoff shall be by separate check barring any change in tax or retirement law.

Compensatory time earned in November and December may be carried over into the next calendar year.

5. Non-shift Employees. For purposes of calculating overtime under the FLSA, all non-shift employees required to work in excess of the standard work period of forty (40) hours in a seven (7) day cycle shall receive compensation at the rate of time and one-half his/her regular rate of pay.

The regular rate of pay shall include education incentive.

I. New Fair Labor Standards Act Regulations. In the event the Department of Labor issues new or revised interpretive regulations defining what are and what are not compensable hours of work, the City shall amend any affected provisions of these terms and conditions of employment to comply with such regulations. The Association recognizes that there will be no retroactive application of such regulations under this Agreement unless so provided by the regulations or court mandates.

J. Reversion to Previous Practice. The City of La Verne and the La Verne Firefighters' Association acknowledge the following:

1. On February 19, 1985, the United States Supreme Court decided the case of Garcia v San Antonio Metropolitan Transit Authority. The decision reversed National League of Cities v Usery (1976) 426 U.S. 833, and holds that the FLSA applies to local public agencies.

2. The effective date of the coverage of the FLSA was mandated to be April 15, 1986. If affected employees are held exempt from the FLSA as a result of administrative, legislative, or judicial decision, should any subsequent changes to the implementation of FLSA occur thorough litigation or new Department of Labor regulations during the effective period of these terms and conditions of employment, the parties will reopen the meet and confer process to discuss implementation of said subsequent changes to the FLSA.

Article 34 – Bilingual Pay

The City will provide a monthly stipend of $75 for each represented employee that demonstrates his/her ability to fluently speak and understand Spanish or another language. The City and the Association will develop an appropriate proficiency exam in conjunction with the local university or high school to certify an individual’s abilities.

With the exception of Spanish, the City reserves the right based on operational needs to determine which languages will be eligible for bilingual pay as well as certify the number of employees it deems necessary.

In the event a member who is receiving a stipend for the above proficiency pay is off work for a period of longer than 30 consecutive days or is on modified duty that prohibits him/her from completing their normal duties, the above proficiency pay shall be withheld until the date of return to their regular assignment.

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10298467.1 LA080-037 -11/28/22

Article 35 – Eligibility List

The City shall maintain an active eligibility list for the positions of Engineer, Captain and Battalion Chief. Should there not be a valid eligibility list for a position(s), the City will initiate a recruitment for the relevant position(s) within four months.

Article 36 – Savings Provision

If any provision(s) of these terms and conditions of employment are held contrary to law, such provision(s) will not be deemed valid and subsisting except to the extent permitted by law, but all other provisions will continue in full force and effect.

Article 37 – Term of Memorandum of Understanding

This Memorandum of Understanding shall remain in full force and effect from the date of ratification through and including the next 48 months.

Article 38 – Conclusiveness of Memorandum of Understanding

This MOU contains all the covenants, stipulations, and provisions agreed upon by the parties. This MOU is intended to supersede prior agreements, memoranda of understanding, contrary provisions of City Code sections, personnel rules and regulations, and department policies, whether expressed, implied, written or oral.

Therefore, for the term of this MOU, neither party shall be compelled to negotiate or bargain concerning any bargaining issues within the scope of representation whether or not such issues were specifically discussed prior to the execution of this MOU, or whether or not such issues were omitted from any discussion. The parties may mutually agree to discuss or meet and confer regarding any issue arising during the term of this MOU.

DATED___________________________ DATED____________________________

LA VERNE FIREFIGHTERS ASSOC. CITY OF LA VERNE

By______________________________ By________________________________ Association Representative City Manager

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10298467.1 LA080-037 -11/28/22
By______________________________ By________________________________ Association Representative Assistant City Manager

City of La Verne,City Council
Agenda Report

DATE: November 3, 2025
TO: Honorable Mayor and City Council
FROM: Joe Vieyra, Deputy Public Works Director
SUBJECT: VEHICLE REPLACEMENT, POLICE CHIEF ASSIGNED VEHICLE.

SUMMARY
Public Work's Fleet Division is requesting an amendment to the Fiscal Year 2025-26 Budget and advancement of the vehicle replacement schedule for vehicle FM 3115 to purchase a new 2026 Dodge Durango. The new vehicle will provide a reliable vehicle for the Chief of Police and the former vehicle will become a utility vehicle within the Police Deparment.

RECOMMENDATION
That the City Council adopt a resolution titled, "A RESOLUTION OF THE CITY COUNCIL, CITY OF LA VERNE, CALIFORNIA, AMENDING FISCAL YEAR 2025-26 ADOPTED BUDGET IN THE AMOUNT OF $49,996.18 AND AUTHORIZE THE ADVANCEMENT OF VEHICLE REPLACEMENT FM 3115 FOR THE PURCHASE OF ONE (1) 2026 DODGE DURANGO."

DISCUSSION
In 2023, the City purchased a 2023 Chevrolet Traverse for the Chief of Police using AB 2766 Mobile Source Air Pollution Reduction funds (Fund 246) to support the City’s clean fleet initiatives. Since April 2025, the vehicle has experienced significant mechanical issues, including two complete engine replacements within a six-month period, making it unreliable for daily operations and emergency response.

The Chevrolet Traverse currently has 23,000 miles and will remain in the Police Department’s fleet for secondary administrative use until its scheduled replacement year in 2031.

Replacement funds for that vehicle will continue to be allocated annually through the Vehicle Replacement Fund (624).

To address the ongoing vehicle reliability concerns, Staff recommends advancing the replacement of Vehicle FM3115 (2018 Honda Odyssey), originally scheduled for FY 2026-27 by approximately nine months. The pre-allocated replacement funds for FM3115 will be used to purchase a new vehicle suitable for the Chief of Police's operational needs. The 2026 Dodge Durango is proposed as the replacement vehicle. It provides improved reliability, performance, and safety, aligning with other administrative units within the Police Department.

Advancing the replacement of FM3115 allows the City to use funds already reserved within the Vehicle Replacement Program without impacting the General Fund. Once the Dodge Durango is acquired and outfitted, the 2023 Chevrolet Traverse will remain in use for lower-demand administrative duties, ensuring continued utilization of the vehicle’s remaining service life.

Vehicle Replacement, Police Chief Assigned Vehicle., Page 2

This recommendation supports fleet continuity and operational readiness for the Police Department while maintaining fiscal discipline within the City’s established vehicle replacement schedule.

FISCAL ANALYSIS
The total estimated cost of the replacement vehicle is $49,996.18. This includes the purchase of one (1) 2026 Dodge Durango at a cost of $44,996.18 and an additional $5,000.00 for outfitting, which covers installation of a radio, lightbar, and other required equipment.

Funding for this purchase will come from two existing sources. The amount of $42,760.00 is available and pre-allocated in the Vehicle Replacement Fund (624) for Vehicle FM3115 (2018 Honda Odyssey). The remaining balance of $7,236.18 will be funded through the Asset Forfeiture Fund (231). The transaction will not impact the General Fund, as all funding is already available within the City’s internal service and special revenue accounts.

ENVIRONMENTAL ANALYSIS
The proposed action is not a project under the California Environmental Quality Act (CEQA) pursuant to Section 15378(b)(4) of the CEQA Guidelines, as it involves government fiscal activities that do not result in a direct or reasonably foreseeable indirect physical change in the environment. Therefore, no environmental review is required.

LEGAL REVIEW
Not Applicable.

ATTACHMENTS

1. Resolution Durango

Prepared By: Coordinated with:

Joe Vieyra, Deputy Public Works Director Sam Gonzales, Chief of Police

RESOLUTION NO. 25-XXX

A RESOLUTION OF THE CITY COUNCIL, CITY OF LA VERNE, CALIFORNIA, AMENDING FISCAL YEAR 2025-26 ADOPTED BUDGET IN THE AMOUNT OF $49,996.18 AND AUTHORIZE THE ADVANCEMENT OF VEHICLE REPLACEMENT FM 3115 FOR THE PURCHASE OF ONE (1) 2026 DODGE DURANGO

WHEREAS, the City of La Verne maintains a Vehicle Replacement Program (Fund 624) to ensure timely replacement of essential fleet assets; and

WHEREAS, Vehicle FM3115 (2018 Honda Odyssey) is currently scheduled for replacement in FY 2026-27, with replacement funds pre-allocated in Fund 624; and

WHEREAS, the 2023 Chevrolet Traverse assigned to the Police Department, and specifically the Chief of Police, has experienced repeated mechanical failures since April 2025, including two engine replacements and multiple service-related issues, resulting in prolonged downtime and limited availability; and

WHEREAS, the Chevrolet Traverse currently has 23,000 miles and, while being reassigned to secondary administrative use within the Police Department, will remain in service until its scheduled replacement year of 2031, with funds allocated annually for its eventual replacement; and

WHEREAS, staff recommends advancing the replacement of Vehicle FM3115 by approximately nine months to purchase a reliable replacement vehicle for the Police Chief; and

WHEREAS, the proposed replacement vehicle is a 2026 Dodge Durango at a cost of $44,996.18, with an estimated $5,000.00 in outfitting costs for a total of $49,996.18; and

WHEREAS, the budget for the City of La Verne for Fiscal Year 2025-26 was approved by the City Council on June 16, 2025; and

WHEREAS, the approved budget is in accordance with all applicable ordinances of the City and all applicable statutes of the State; and

WHEREAS, amendments to the budget shall be by approval and resolution of the City Council; and

WHEREAS, sufficient funds are available from Fund 624 (Vehicle Replacement – FM3115) in the amount of $42,760.00 and Fund 231 (Asset Forfeiture) in the amount of $7,236.18 to complete this purchase with no impact to the General Fund.

NOW THEREFORE, BE IT RESOLVED by the City Council of the City of La Verne as follows:

Section 1. The City Council authorizes advancing the scheduled replacement of Vehicle FM3115 (2018 Honda Odyssey) from FY 2026-27 to FY 2025-26 and the purchase of one (1) 2026 Dodge Durango.

Section 2. That the City Council amends the Fiscal Year 2025-26 Adopted Budget in the amount of $42,760.00 from Fund 624 (Vehicle Replacement Fund) and $7,236.18 from Fund 231 (Asset Forfeiture) for the purchase of the vehicle.

Section 3. The Mayor shall sign and the Deputy City Clerk shall certify to the passage and adoption of this Resolution and thereupon the same shall take effect and be in force.

PASSED, APPROVED AND ADOPTED this 3rd day of November, 2025.

______________________________________
Mayor Tim Hepburn
_______________________________
Debra Fritz, Assistant City Clerk

CERTIFICATION
I hereby certify that the foregoing [Resolution No. XX-XX] was duly and regularly adopted by the City Council of the City of La Verne at a meeting thereof held on the 3rd day of November, 2025, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

____________________________________
Debra Fritz, Assistant City Clerk

City of La Verne,City Council
Agenda Report

DATE: November 3, 2025
TO: Honorable Mayor and City Council
FROM: Danny Wu, Director of Public Works
SUBJECT: CONDUCT A PUBLIC HEARING AND CONSIDER RESOLUTION ADOPTING WATER AND SEWER RATE ADJUSTMENTS FOR FISCAL YEARS 2025-26 THROUGH 2029-30 AND FINDING THAT ADOPTION OF THE RATES IS

EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT
(CEQA).

SUMMARY
The City of La Verne currently operates water and sewer utility systems through enterprise funds supported entirely by ratepayer revenue. Raftelis Financial Consultants, Inc., completed a comprehensive rate study to update the cost-of-service mode and financial plan. The City Council's Proposition 218 Public Hearing allows for residents to protest the proposed rates and, if sufficient protest is not received, for Council to set rates for the next five years in a manner no greater than advertised in the Public Notice, effective January 1, 2026.

RECOMMENDATION
That the City Council, after conducting a Public Hearing in compliance with Proposition 218 to accept comments on the proposed water and sewer rates:

1. Direct the Deputy City Clerk to tabulate the results of the protests received from property owners and announce the findings; and

2. Adopt a Resolution titled, "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

LA VERNE, CALIFORNIA, ESTABLISHING WATER AND SEWER RATES AND CHARGES FOR A FOUR-YEAR PERIOD (FY 2025-26 THROUGH FY 2029-30)"; and

3. Authorize the City Manager, Finance Director, and Public Works Director to implement the rates, update the Master Schedule of Fees and Charges, make non-substantive corrections to the exhibits, and complete all billing system updates; and

4. Find that adoption of the water and sewer rates is exempt from the California Environmental Quality Act (CEQA) pursuant to Public Resources Code Section 21080(b)(8) and CEQA Guidelines Sections 15061(b)(3) and 15378(b)(2).

DISCUSSION
The City’s Water and Sewer utilities operate as self-sustaining enterprises. All expenses related to operations, maintenance, capital improvements, and reserve funding are supported entirely through user rates, independent of the City’s General Fund. The City last performed a cost allocation study in 2018 and made a single rate adjustment effective January 1, 2019. Since that time, inflationary pressures, increased wholesale water costs, aging infrastructure, and new regulatory requirements have exceeded current rate revenues.

Conduct a Public Hearing and Consider Resolution Adopting Water and Sewer Rate Adjustments for Fiscal Years 2025-26 through 2029-30 and Finding that Adoption of the Rates is Exempt from the California Environmental Quality Act (CEQA)., Page 2

To address these challenges, the City retained Raftelis Financial Consultants, Inc. to prepare a comprehensive Water and Sewer Rate Study and long-term financial plan. The study analyzed current operating and maintenance costs, capital project needs, and reserve targets to establish a sustainable funding strategy consistent with City policy. On July 1, 2024, the City Council approved the Raftelis contract and established the Water and Sewer Ad Hoc Committee to review rate scenarios and provide community input. The five-member Committee, appointed by individual Council Members, met approximately ten times between October 2024 and July 2025.

Throughout this process, Committee members received comprehensive briefings on utility operations, maintenance programs, and capital priorities. To better understand system conditions, members toured critical facilities, including City wells, booster stations, reservoirs, and the Three Valleys Municipal Water District treatment and supply facilities. After evaluating several rate scenarios, the Committee recommended a balanced structure designed to maintain financial sustainability while minimizing customer impacts.

In conjunction with the Committee’s recommendation, staff developed a financial strategy to support ongoing operations during implementation of the new rate schedule. This includes a low-interest interfund loan from the Sewer Fund to the Water Fund in the amount of $4 million.

The loan is anticipated to be repaid between FY 2028 and FY 2030, with total repayment (including interest) of $4.57 million. Revenues generated under the adopted rate schedule will be deposited into their respective enterprise accounts, the Water Enterprise Fund and the Sewer Enterprise Fund, and used solely for the operation, maintenance, and capital improvement of those utilities. Five-year revenue projections and rate adjustments are summarized in the attached City of La Verne Water and Wastewater Rate Study, prepared by Raftelis.

Beyond ensuring financial stability, the City continues to prioritize water conservation and efficient resource management. Current programs include the distribution of water-saving devices and participation in regional rebate and incentive programs offered through the Three Valleys Municipal Water District and the Metropolitan Water District of Southern California.

These efforts reinforce the City’s commitment to long-term water sustainability and help customers manage water use responsibly.

The proposed water and sewer rate adjustments are based on the principles of fairness, proportionality, and cost recovery under Proposition 218 and were developed using the American Water Works Association (AWWA) Manual M1 and Water Environment Federation (WEF) Manual 27 cost-of-service methodologies to ensure compliance with California Constitution Article XIII D, Section 6(b)(1–3). These manuals provide the foundational guidance and best practices for establishing equitable and financially sustainable utility rates that align customer charges with the true cost of providing water and wastewater services. The rates are designed to achieve full cost recovery without generating surplus revenue.

Water Utility System:

The City owns and maintains a water system and is responsible for ensuring safe and reliable

Conduct a Public Hearing and Consider Resolution Adopting Water and Sewer Rate Adjustments for Fiscal Years 2025-26 through 2029-30 and Finding that Adoption of the Rates is Exempt from the California Environmental Quality Act (CEQA)., Page 3

water for potable and fire protection use. These essential services are accomplished through a strategic combination of highly qualified operators and administrative support staff, which includes City departments such as the Public Works Department, City Manager’s Office, City Clerk’s Office, and the Finance Department. Together, the water system’s ten (10) reservoirs, eleven (11) booster stations, nine (9) production wells, 132 miles of pipelines, and over 8,300 service connections are properly maintained.

Based on Raftelis’ detailed financial plan analysis, the 2018 rate adjustments are no longer sufficient to balance the annual operating and maintenance costs due to:

1. Increased wholesale import and groundwater costs

2. Aging infrastructure and deferred maintenance

3. Overall inflationary impacts; and

4. More stringent federal and state water quality standards Water Enterprise Fund Reserve Policy:

The Water Rates have been constructed with a financial plan that corrects the structural deficit and sufficiently fund operations, capital and reserves. A reserve policy was set based on the types of risk the utility faces.

Operating Reserves– to cover day-to-day expenses and maintain sufficient funds to cover operating cash flows, periods of reduced water sales, or unforeseen costs. • Target: 90 Days of Operating & Maintenance expenditures Capital Reserves – to cover a portion of upcoming annual capital expenditures and mitigate unexpected capital needs.
• Target: 50% of average 5 - year CIP
Debt Reserve – to cover debt repayments when cash flow to a debt service is insufficient and prevents default.
• Target: 1.25 times total operating expenses
Proposed Water Debt
To maintain effective operations, it is necessary to secure Water utility revenue through a low- interest interdepartmental loan from the Sewer Fund. This approach ensures ongoing expenditures can be sustained until the anticipated rate-generated revenues come into effect.

FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Sewer Fund Loan $ - $4.0M $ - $ - $ -

The Water Fund is scheduled to repay the $4 million loan to the sewer fund as follows:
• FY 2028 $1,092,025
• FY 2029 $2,282,332

Conduct a Public Hearing and Consider Resolution Adopting Water and Sewer Rate Adjustments for Fiscal Years 2025-26 through 2029-30 and Finding that Adoption of the Rates is Exempt from the California Environmental Quality Act (CEQA)., Page 4

• FY 2030 $1,192,519
The total repayment for the loan with interest is estimated at $4,566,876.00, assuming an industry average interest rate of 4.5%.

Water Bill Components:

Water Rates have two (2) components – 1) fixed charges; and 2) variable volumetric charges.

Fixed charges are a function of meter size and are charges without respect to use. Volumetric charges are calculated based on the amount of water used multiplied by the rate per unit. The unit is measured by a thousand gallons (Kgal).

Proposed Water Rates:

Current Water Rate structures will remain the same. That is, a fixed charge by meter size, plus a volumetric rate that is generally broken down into the following:
• A single-tiered rate for Single-Family Residential, Multi-Family Residential, Commercial, Irrigation, Institutional, and Agricultural customer class based on consumption.

The tables in Appendix A illustrate the proposed rate and charge increases recommended by the Committee for the next five (5) years. These adjustments were calculated by forecasting revenue, operations & maintenance expenses, and reserves needed to establish an adequate cost-to-debt ratio.

Sewer Utility System:

The City also owns and maintains a Wastewater (also known as Sewer) collections system.

This system consists of 99 miles of city-owned pipelines, approximately 2,294 manholes, and two (2) sewer lift stations. Similar to the Water Utility System, the Sewer Utility System is supported by technical and administrative staff through a rate-supported Sewer Enterprise fund.

Sewer Enterprise Fund Reserve Policy:

The Sewer Rates have been constructed with a financial plan that corrects the structural deficit and sufficiently funds operations, capital and reserves. A reserve policy was set based on the types of risk the utility faces.

Operating Reserves – to cover day-to-day expenses and maintain sufficient funds to cover operating cash flows, periods of reduced revenue, or unforeseen costs. • Target: 60 days of Operating & Maintenance expenditures Capital Reserves – to cover a portion of upcoming annual capital expenditures and mitigate unexpected capital needs.
• Target: 50% of average 5 - year CIP

Conduct a Public Hearing and Consider Resolution Adopting Water and Sewer Rate Adjustments for Fiscal Years 2025-26 through 2029-30 and Finding that Adoption of the Rates is Exempt from the California Environmental Quality Act (CEQA)., Page 5

Debt Reserve – to cover debt repayments when cash flow to a debt service is insufficient and prevents default.
• Target: 1.25 times of total operating expenses
Sewer Bill Components:

Sewer Rates have two (2) components – 1) fixed charges; and 2) variable volumetric charges.

Fixed charges are a function of customer classification and are charges without respect to use.

The City does not measure wastewater flow, but instead estimates flows based on water use by applying a return-to-sewer factor (RTS) to non-residential water use. Volumetric charges, therefore, are calculated based on the amount of water used multiplied by the rate per unit.

Proposed Sewer Rates:

The current Sewer Rates structure will remain the same. • Single Family Residential: fixed charge;
• Other Customer Classes: fixed charge plus volumetric rate based on water consumption.

The table in Appendix A illustrates the proposed rate and charge increases recommended by the Ad Hoc Water and Sewer Rate Study Committee for the next five (5) years. These adjustments were calculated by forecasting revenue, expenses and reserves to establish adequate cost-to-debt ratio.

Timeline/Past Actions

• On July 1, 2024, City Council approved the development of the Ad Hoc Water and Sewer Rate Study Committee and appointed five (5) members through direct appointments by each Council Member.

• Between October 8, 2024, and July 30, 2025, the Ad Hoc Committee met regularly with City staff and Raftelis Financial Consultants to review water and sewer operations, capital project needs, rate model development, and to tour key facilities including wells, booster stations, and reservoirs.

• On April 21, 2025, a Joint Special Meeting and Study Session was held with the Ad Hoc Committee and City Council to provide an update on the rate study progress.

• On July 30, 2025, the Ad Hoc Committee met to evaluate and recommend to the City Council a rate adjustment scenario. By a 3-2 vote, the Committee selected the phased water rate adjustment, which included a 50 percent rate increase effective January 1, 2026, followed by a 25 percent increase in FY 2026-27, a 15 percent increase in FY 2027-28, a 10 percent increase in FY 2028-29, and a 10 percent increase in FY 2029-30, effective July 1st of each fiscal year.

The scenario also assumed a $4 million loan from the Sewer Fund to the Water Fund, which would be repaid over Fiscal Years 2027-28 thru 2029-30. For the sewer rates, the Committee voted unanimously, 5-0, in favor of a 15 percent increase beginning January 1, 2026, with subsequent 15 percent increases each Fiscal Year through Fiscal Year 2029-30.

Conduct a Public Hearing and Consider Resolution Adopting Water and Sewer Rate Adjustments for Fiscal Years 2025-26 through 2029-30 and Finding that Adoption of the Rates is Exempt from the California Environmental Quality Act (CEQA)., Page 6

• On August 4, 2025, the City Council authorized initiation of the Proposition 218 process for proposed water and sewer rate adjustments, which passed by a 4–1 vote.

• On September 12, 2025, Proposition 218 Notices were mailed to all property owners and customers. The notices outlined the proposed rate structures, public hearing date, and instructions for filing written protests. The Proposition 218 process also included clear instructions for the public protest and objection procedures in accordance with Government Code Sections 53759 and 53759.1. The City also posted the information on its website, including a Water Rate Calculator allowing customers to estimate bill impacts.

Following the mailing of notices, staff conducted four (4) community information sessions to enhance the public outreach and awareness process:
• September 25, 2025: Virtual Workshop #1
• October 7, 2025: Virtual Workshop #2
• October 13, 2025: Virtual Workshop #3
• October 18, 2025: In-person Workshop #4 held in the City Council Chambers Attendance at these information sessions comprised approximately 3 to 5 residents at each of the virtual workshops and approximately 21 residents attended the in-person workshop. At the four public sessions, staff heard residents express concern about the sudden magnitude of the initial rate increase and that the second adjustment is scheduled six months later. Participants also requested clear comparisons with neighboring cities’ rates to understand how this increase aligns with local peers, and asked for assurances that water and sewer Capital Improvement Program (CIP) projects will be implemented as planned.

Annual Capital Improvement Program Reporting
Staff will provide regular updates to the Active Transportation & Infrastructure Commission and publish an annual report on CIP project status - highlighting progress, funding, and any key changes, to enhance transparency and accountability. These steps are designed to increase transparency and accountability, giving the community confidence that the investments funded through the rate adjustment are being advanced as promised.

FISCAL ANALYSIS
As currently budgeted, the Water Fund is operating at a structural deficit, drawing down on net working capital reserves. The anticipated increase in water and sewer revenue required to sustain proper utility operations is summarized below. These projected revenues correspond to the five-year rate schedule outlined in the Raftelis Financial Plan and are necessary to maintain daily targets.

Projected revenues are deposited and administered through the respective Water and Sewer Enterprise Funds, ensuring all utility costs are funded by rate revenue and not the General Fund.

Conduct a Public Hearing and Consider Resolution Adopting Water and Sewer Rate Adjustments for Fiscal Years 2025-26 through 2029-30 and Finding that Adoption of the Rates is Exempt from the California Environmental Quality Act (CEQA)., Page 7

Projected Water Utility Revenue Adjustment

Thru 6/26 FY 2027 FY 2028 FY 2029 FY 2030
Projected Revenue
Increase
$2.49M $8.72M $11.5M $13.7M $16.1M

Projected Sewer Utility Revenue Adjustment

Thru 6/26 FY 2027 FY 2028 FY 2029 FY 2030
Projected Revenue Increase $138K $598K $969K $1.3M $1.8M

ENVIRONMENTAL ANALYSIS
This item is not subject to the California Environmental Quality Act (CEQA) because CEQA does not apply to the establishment, modification, structuring, restructuring, or approval of water and sewer rates under Public Resources Code Section 21080(b)(8). The proposed rates are proposed to meet operating expenses, purchase necessary supplies and equipment, meet financial reserve needs, and fund capital projects necessary to maintain service within the existing service area. Furthermore, it is not a “project” as defined under Section 15378(b) of the state CEQA Guidelines. This item is also exempt from CEQA pursuant to Section 15061(b)(3) of the Guidelines because it can be seen with certainty that the approval of Water and Sewer Utility Rates will not have a significant effect on the environment.

LEGAL REVIEW
The City Attorney has reviewed this report and has also approved the Resolution as to form.

ATTACHMENTS

1. Resolution Water Rates

2. Appendix A - Proposed Water and Sewer Rate Tables

3. La Verne Water and Wastewater Rate Study Report

4. Prop 218 Notice/Mailer

Report Prepared By: Coordinated with:

Joe Vieyra, Deputy Public Works Director Christy Lopez, Finance Director Kristie Sanchez, Senior Management Analyst

RESOLUTION NO. 25-XX

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LA VERNE,

CALIFORNIA, ESTABLISHING WATER AND SEWER RATES AND CHARGES FOR A FOUR-YEAR PERIOD (FY 2025-26 THROUGH FY 2029-30)

WHEREAS, the City of La Verne owns and operates water and sewer utility systems as enterprise funds supported by ratepayer revenues; and

WHEREAS, the last water and sewer rate study was completed in October 2018, and existing rates are no longer sufficient to fund the costs of operation, maintenance, capital reinvestment, and reserves; and

WHEREAS, the City retained Raftelis Financial Consultants, Inc. on July 1, 2025 to prepare a comprehensive water and sewer rate study, updating the cost of service and developing a multi-year financial plan; and

WHEREAS, on August 4, 2025, the City Council initiated the Proposition 218 process, adopted updated procedures consistent with Government Code Sections 53759 and 53759.1, and scheduled a public hearing for November 3, 2025; and

WHEREAS, the City Clerk mailed notices of the proposed water and sewer rate adjustments on September 11, 2025, and staff conducted virtual public outreach presentations on September 25, 2025, October 7, 2025, and October 13, 2025, as well as an in-person outreach presentation on October 18, 2025; and

WHEREAS, on November 3, 2025, the City Council held the duly noticed public hearing and considered all written protests, oral comments, and staff presentations regarding the proposed rates; and

WHEREAS, the City Clerk certified the tabulation of protests and confirmed that a majority protest did not occur for either the water or sewer utility; and

WHEREAS, the City Council finds that adoption of the proposed water and sewer rates is necessary to recover the cost of service, maintain reliable utility operations, fund required capital improvements, and rebuild reserves consistent with adopted policies.

NOW THEREFORE, BE IT RESOLVED by the City Council of the City of La Verne as follows:

Section 1. Adoption of Rates. The City Council hereby adopts the water and sewer rates and charges set forth in Appendix A – Water and Sewer Rates attached hereto and incorporated herein by reference.

Section 2. Effective Dates. The rates shall be effective on January 1, 2026, and adjusted annually thereafter on July 1 of each fiscal year through FY 2029-30, as specified in Exhibit A.

Section 3. Implementation. The City Manager, Finance Director, and Public Works Director are authorized and directed to:
• Amend the City Master Schedule of Fees and Charges to reflect the adopted water and sewer rates effective January 1, 2026. • Implement the new rates in the City’s billing system and customer accounts. • Make non-substantive corrections or formatting adjustments to the rate tables if necessary for administration.

Section 4. Findings. The City Council finds that adoption of the water and sewer rates is exempt from the California Environmental Quality Act (CEQA) pursuant to Public Resources Code Section 21080(b)(8) and CEQA Guidelines Sections 15061(b)(3) and 15378(b)(2).

PASSED, APPROVED AND ADOPTED this 3rd day of November, 2025.

______________________________________
Mayor Tim Hepburn
_______________________________
Debra Fritz, Deputy City Clerk

CERTIFICATION
I hereby certify that the foregoing [Resolution No. XX-XX] was duly and regularly adopted by the City Council of the City of La Verne at a meeting thereof held on the XX day of [Month], [year], by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

____________________________________
Debra Fritz, Deputy City Clerk

Appendix A
Proposed Water Rates

B i-Monthly S ervice Charge
Meter S ize Current 1/1/2026 7/1/2026 7/1/2027 7/1/2028 7/1/2029 5/8" 36.40 $ 48.53 $ 60.66 $ 69.76 $ 76.73 $ 84.41 $ 3/4" 40.00 $ 48.53 $ 60.66 $ 69.76 $ 76.73 $ 84.41 $ 1" 51.00 $ 72.95 $ 91.19 $ 104.86 $ 115.35 $ 126.88 $ 1 1/2" 65.60 $ 134.00 $ 167.50 $ 192.62 $ 211.89 $ 233.08 $ 2" 106.00 $ 207.26 $ 259.08 $ 297.94 $ 327.73 $ 360.50 $ 3" 400.00 $ 402.62 $ 503.28 $ 578.77 $ 636.65 $ 700.32 $ 4" 509.60 $ 622.41 $ 778.01 $ 894.71 $ 984.18 $ 1,082.60 $ 6" 764.40 $ 1,232.92 $ 1,541.15 $ 1,772.32 $ 1,949.56 $ 2,144.51 $ 8" 1,055.60 $ 1,965.54 $ 2,456.92 $ 2,825.46 $ 3,108.00 $ 3,418.80 $ 10" 1,456.00 $ 2,942.35 $ 3,677.94 $ 4,229.63 $ 4,652.60 $ 5,117.86 $ B i-
Monthly A dded Unit Charge
Meter S ize Current 1/1/ 2026 7/1/2026 7/1/2027 7/1/2028 7/1/2029 5/8" 11.20 $ 17.86 $ 22.33 $ 25.67 $ 28.24 $ 31.07 $ 3/4" 11.20 $ 17.86 $ 22.33 $ 25.67 $ 28.24 $ 31.07 $ 1" 11.20 $ 17.86 $ 22.33 $ 25.67 $ 28.24 $ 31.07 $ 1 1/2" 11.20 $ 17.86 $ 22.33 $ 25.67 $ 28.24 $ 31.07 $ 2" 11.20 $ 17.86 $ 22.33 $ 25.67 $ 28.24 $ 31.07 $ 3" 11.20 $ 17.86 $ 22.33 $ 25.67 $ 28.24 $ 31.07 $ 4" 11.20 $ 17.86 $ 22.33 $ 25.67 $ 28.24 $ 31.07 $ 6" 11.20 $ 17.86 $ 22.33 $ 25.67 $ 28.24 $ 31.07 $ 8" 11.20 $ 17.86 $ 22.33 $ 25.67 $ 28.24 $ 31.07 $ 10" 11.20 $ 17.86 $ 22.33 $ 25.67 $ 28.24 $ 31.07 $ B i-
Monthly F ire Line Char ge
Line S ize Current 1/1/2026 7/1/2026 7/1/2027 7/1/2028 7/1/2029 5/8" - $ 12.19 $ 15.24 $ 17.53 $ 19.28 $ 21.21 $ 3/4" - $ 12.38 $ 15.47 $ 17.79 $ 19.57 $ 21.53 $ 1" - $ 12.92 $ 16.15 $ 18.57 $ 20.43 $ 22.47 $ 1 1/2" - $ 14.86 $ 18.58 $ 21.36 $ 23.50 $ 25.85 $ 2" 46.60 $ 18.21 $ 22.77 $ 26.18 $ 28.80 $ 31.68 $ 3" 65.30 $ 30.25 $ 37.81 $ 43.48 $ 47.83 $ 52.61 $ 4" 102.60 $ 51.00 $ 63.75 $ 73.32 $ 80.65 $ 88.71 $ 6" 130.66 $ 125.49 $ 156.87 $ 180.40 $ 198.44 $ 218.28 $ 8" 167.70 $ 253.98 $ 317.47 $ 365.09 $ 401.60 $ 441.76 $ 10" 205.10 $ 447.24 $ 559.05 $ 642.91 $ 707.20 $ 777.92 $ $/K gal V olumetr
ic Rate (A ll Classes)
Customer Class Current 1/1/2026 7/1/2026 7/1/2027 7/1/2028 7/1/2029 A ll Classes
Z 1 3.92 $ 5.67 $ 7.09 $ 8.16 $ 8.97 $ 9.87 $ Z 2 4.02 $ 5.96 $ 7.45 $ 8.57 $ 9.43 $ 10.37 $ Z 3 4.21 $ 6.32 $ 7.90 $ 9.09 $ 10.00 $ 11.00 $ Z 4 4.42 $ 6.33 $ 7.92 $ 9.10 $ 10.01 $ 11.02 $ Z 5 4.53 $ 7.44 $ 9.30 $ 10.69 $ 11.76 $ 12.94 $ Z 6 4.77 $ 7.44 $ 9.30 $ 10.69 $ 11.76 $ 12.94 $ Z P 5.37 $ 7.44 $ 9.30 $ 10.69 $ 11.76 $ 12.94 $ Z L 2.74 $ 7.44 $ 9.30 $ 10.69 $ 11.76 $ 12.94 $

Proposed Sewer Rates

*($/Kgal Volumetric Rate is for nonresidential classes)

Current 1/1/2026 7/1/2026 7/1/2027 7/1/2028 7/1/2029

23.43 $ 26.61 $ 30.61 $ 35.21 $ 40.50 $ 46.58 $ $/K gal V olumetric Rate *
Current 1/1/2026 7/1/2026 7/1/2027 7/1/2028 7/1/2029

0.20 $ 0.29 $ 0.34 $ 0.40 $ 0.46 $ 0.53 $

Water and Wastewater Rate Study

Final Report / September 10, 2025

CITY OF

LA VERNE

~ RAFTELIS

445 S Figueroa Street, Suite 2270
Los Angeles, CA 90017

www.raftelis.com

September 10, 2025

Ms. Kristie Sanchez
Senior Management Analyst
City of La Verne Public Works Department
3660 D Street
La Verne, CA 91750

Subject: Cost of Service and Rate Design Study Report

Dear Ms. Sanchez,

Raftelis is pleased to present this water and wastewater cost of service and rate design study report. The primary objective of this study was to develop a fiscally sound, and equitable rate structure that ensures the long-term financial sustainability of your critical water and wastewater services.

The study concludes that the recommended rate revenue adjustments are necessary for both utilities to adequately fund ongoing operations and essential capital improvement projects. These recommended rates are designed to:

• Maintain Financial Stability: Provide sufficient revenue for current and future needs, supporting bond ratings and financial health through FY 2029/30.
• Adhere to Cost-of-Service: Ensure that rates for each customer class reasonably reflect the specific costs they impose on the utility system.
• Support Infrastructure Investment: Provide the necessary funding for vital projects that ensures reliable service, maintains system integrity, and meets evolving regulatory standards.

The report includes a brief Executive Summary summarizing the key results of the study followed by a detailed discussion regarding study assumptions and an in-depth rate discussion of the study.

It was a pleasure working with you and we wish to express our thanks for the support from you and your staff. If you have any questions, please call me at 626.583.1894.

Sincerely,

Sudhir Pardiwala, PE Jeremy Tamargo
Senior Principal Manager

~ RAFTELIS

Table of Contents

1. EXECUTIVE SUMMARY ............................................................................................1

1.1 BACKGROUND ................................ ................................ ................................ .................... 1

1.2 METHODOLOGY ................................ ................................ ................................ .................. 1

1.3 KEY RESULTS AND RECOMMENDATIONS ................................ ................................ ...... 2

1.3.1 Factors Affecting Revenue Adjustments ............................................................................................ 2

1.4 WATER ................................ ................................ ................................ ................................ . 2

1.4.1 Proposed Water Rates .......................................................................................................................... 2

1.4.2 Proposed Fixed Charge ........................................................................................................................ 3

1.4.3 Potable Commodity Rate ...................................................................................................................... 4

1.5 WASTEWATER ................................ ................................ ................................ .................... 4

1.5.1 Proposed Wastewater Rates ................................................................................................................ 4

2. WATER ENTERPRISE ...............................................................................................5

2.1 WATER SYSTEM BACKGROUND ................................ ................................ ...................... 5

2.2 FINANCIAL PLAN ASSUMPTIONS ................................ ................................ ..................... 5

2.2.1 Number of Accounts ............................................................................................................................. 5

2.2.2 Account and Water Use Growth Assumptions ................................................................................... 7

2.2.3 Water Use ............................................................................................................................................... 7

2.2.4 Inflationary and Water Purchase Cost Assumptions ......................................................................... 8

2.2.5 Water System Expenses ....................................................................................................................... 8

2.2.6 O&M Expenses ....................................................................................................................................... 9

2.2.7 Capital Improvement Plan (CIP) ........................................................................................................... 9

2.2.8 Existing Debt Service ............................................................................................................................ 9

2.2.9 Revenue Adjustments ......................................................................................................................... 10

2.2.10 Cash Flow Analysis (Financial Plan) ................................................................................................. 10

2.2.11 Graphical Financial Plan ..................................................................................................................... 11

2.2.12 Fund Balances and Reserve Targets ................................................................................................. 12

3. LEGAL FRAMEWORK AND RATE SETTING METHODOLOGY ............................ 13

3.1 LEGAL FRAMEWORK ................................ ................................ ................................ ....... 13

3.3.1 California Constitution - Article XIII D, Section 6 (Proposition 218) ............................................... 13

3.2 COST-BASED RATE-SETTING METHODOLOGY ................................ ............................ 14

4. COST-OF-SERVICE ANALYSIS .............................................................................. 16

4.1 ALLOCATION OF EXPENSES TO COST COMPONENTS ................................ ................ 16

4.2 REVENUE REQUIREMENT DETERMINATION ................................ ................................ . 21

4.3 ALLOCATION OF COSTS TO COST COMPONENTS ................................ ....................... 22

4.4 EQUIVALENT METERS ................................ ................................ ................................ ..... 24

4.5 FIRE PROTECTION CAPACITY ................................ ................................ ........................ 25

5. RATE DERIVATION ................................................................................................. 27

5.1 EXISTING RATE STRUCTURE AND RATES ................................ ................................ .... 27

5.2 PROPOSED RATE STRUCTURE ................................ ................................ ...................... 28

5.3 UNITS OF SERVICE ................................ ................................ ................................ ........... 29

5.4 PROPOSED BI-MONTHLY SERVICE CHARGE ................................ ................................ 31

5.4.1 Bi-monthly Service charge Components .......................................................................................... 31

5.4.2 Capacity Component ........................................................................................................................... 31

5.4.3 Billing Component ............................................................................................................................... 31

5.4.4 Total Bi-monthly Service Charge for All Meters ............................................................................... 32

5.5 PROPOSED FIRE LINE CHARGES ................................ ................................ ................... 33

5.6 VOLUMETRIC RATES ................................ ................................ ................................ ....... 34

5.6.1 Total Volumetric Revenue ................................................................................................................... 34

5.6.2 Customer Classes ............................................................................................................................... 34

5.6.3 Pressure Zones .................................................................................................................................... 34

5.6.4 Volumetric Rate Derivation ................................................................................................................. 35

5.6.5 Cost Component Definitions .............................................................................................................. 35

5.6.6 Derivation of the Unit Cost by Cost Component .............................................................................. 35

5.6.7 5-Year Volumetric Rates ..................................................................................................................... 37

5.6.8 Largest 10% of Users ......................................................................................................................... 37

6. BILL IMPACTS ......................................................................................................... 38

6.1 BI-MONTHLY SINGLE FAMILY RESIDENTIAL BILL IMPACTS ................................ ....... 38

6.2 MULTI-FAMILY BILL IMPACTS ................................ ................................ ......................... 38

6.3 INSTITUTIONAL ................................ ................................ ................................ ................. 39

6.4 COMMERCIAL ................................ ................................ ................................ ................... 39

6.5 INDUSTRIAL ................................ ................................ ................................ ...................... 40

7. WASTEWATER ........................................................................................................ 41

7.1 CURRENT WASTEWATER RATES ................................ ................................ ................... 41

7.2 WASTEWATER O&M EXPENSES ................................ ................................ ..................... 42

7.3 PROJECTED CAPITAL IMPROVEMENT PROGRAM ................................ ....................... 43

7.4 PROPOSED FINANCIAL PLAN ................................ ................................ ......................... 43

8. WASTEWATER ENTERPRISE COST OF SERVICE AND RATE DERIVATION .... 47

8.1 WASTEWATER COST OF SERVICE ANALYSIS ................................ .............................. 47

8.1.1 Cost Allocation to Cost Components ................................................................................................ 47

8.1.2 Revenue Requirement Determination ............................................................................................... 48

8.1.3 Allocating the Revenue Requirement to Cost Causation Components and Rate Calculation .... 49

8.1.4 Five Year Proposed Wastewater Service Rates ............................................................................... 50

8.1.5 Single Family Residential Wastewater Bill Impacts ......................................................................... 50

List of Tables
Table 1-1: Recommended Yearly Revenue Adjustments ............................................................................... 2 Table 1-2: Current and Proposed Bi-Monthly Fixed Water Charge .............................................................. 3 Table 1-3: Current and Proposed Bi-Monthly Fixed AU Charge ................................................................... 3 Table 1-4: Current and Proposed Bi-Monthly Fixed Fire Line Charge ......................................................... 3 Table 1-5: Current and Proposed Water Commodity Rates for All Customer Classes ($/KGAL) ............. 4 Table 1-6: Current and Proposed Bi-Monthly Fixed Wastewater Charge .................................................... 4 Table 1-7: Current and Proposed Bi-Monthly Volumetric Wastewater Charge ($/KGAL) .......................... 4 Table 2-1: Projected Accounts by Meter Size (FY 2026) ................................................................................ 6 Table 2-2: Account Growth and Water Use Assumptions ............................................................................. 7 Table 2-3: Actual (2024) Water Use in by Pressure Zone ............................................................................... 7 Table 2-4: Inflationary Assumptions ................................................................................................................ 8 Table 2-5: Projected O&M Expenses ................................................................................................................ 9 Table 2-6: Detailed Capital Improvement Plan ................................................................................................ 9 Table 2-7: Existing Water Debt Service.......................................................................................................... 10 Table 2-8: Proposed Water Rate Adjustments .............................................................................................. 10 Table 2-9: Five-Year Water Operating Cash Flow ......................................................................................... 11 Table 4-1: System-Wide Peaking Factors and Allocation to Cost Components ....................................... 17 Table 4-2: Allocation of O&M Expenses to Cost Causation Components ................................................. 18 Table 4-3: Allocation of Assets to Cost Causation Components ............................................................... 20 Table 4-4: Revenue Requirement Determination .......................................................................................... 21 Table 4-5: Expense Allocation to Cost Components.................................................................................... 23 Table 4-6- Derivation of Equivalent Meter Units – Water Meters ................................................................ 24 Table 4-7: Number of Added Units (AU) ......................................................................................................... 24 Table 4-8 : Equivalent Fire Connections ........................................................................................................ 25 Table 4-9: Fire Service Share of Peaking Requirements ............................................................................. 26 Table 5-1: Existing Service Charge Rate Structure and Rates (Bi-monthly) – Water Meters .................. 27 Table 5-2: Existing Service Charge Rate Structure and Rates (Bi-monthly) – AU’s ................................. 27 Table 5-3: Existing Service Charge Rate Structure and Rates (Bi-monthly) – Private Fire Lines ........... 28 Table 5-4: Existing Volumetric Rates (All Classes) ...................................................................................... 28 Table 5-5: Rate Revenue Recovery Structure ............................................................................................... 29 Table 5-6: Derivation of Units of Service ....................................................................................................... 30 Table 5-7: Derivation of Units Cost by Cost Causation Component .......................................................... 30 Table 5-8: Bi-monthly Meter and Customer Charge Derivation – Water Meters ....................................... 32 Table 5-9: Bi-monthly Meter and Customer Charge Derivation – AUs ....................................................... 32 Table 5-10: Five Year Service Charges – By Meter Size .............................................................................. 32 Table 5-11: Five Year Service Charges – Per AU .......................................................................................... 33 Table 5-12: Derivation of Private Fire Line Equivalent Units ....................................................................... 33 Table 5-13: Calculation of Private Fire Charges ........................................................................................... 34 Table 5-14: Bi-Monthly Fixed Fire Line Charges ........................................................................................... 34 Table 5-15: Volumetric Cost of Service by Customer Class and Pressure Zone ...................................... 36 Table 5-16: Water Demand (KGALs) by Zone and Class ............................................................................. 36 Table 5-17: Derivation of Volumetric Rates by Zone and Class .................................................................. 36 Table 5-18: Five-Year Volumetric Rates ......................................................................................................... 37 Table 6-1: Single Family Residential Bi-monthly Bill Impacts..................................................................... 38 Table 6-2: Multi-family Residential Bi-monthly Bill Impacts ........................................................................ 38 Table 6-3: Institutional Bi-monthly Bill Impacts ............................................................................................ 39 Table 6-4: Commercial Bi-monthly Bill Impacts ............................................................................................ 39

Table 6-5: Industrial Bi-monthly Bill Impacts ................................................................................................ 40 Table 7-1: Current Wastewater Service Charges .......................................................................................... 41 Table 7-2: Wastewater Accounts and Wastewater Use in Thousand Gallons (kgals) .............................. 42 Table 7-3: Projected Wastewater Revenue .................................................................................................... 42 Table 7-4: Projected Escalation Factors and Wastewater O&M Expenses ................................................ 43 Table 7-5: Wastewater Capital Improvement Projects ................................................................................. 43 Table 7-6: Proposed Wastewater Revenue Adjustments ............................................................................. 44 Table 7-7: Wastewater Enterprise Proposed Financial Plan Pro-Forma .................................................... 44 Table 8-1: Allocating O&M and Capital Costs to Cost Causation Components ........................................ 47 Table 8-2: Allocating to Cost Components ................................................................................................... 48 Table 8-3: Wastewater Enterprise Revenue Requirement for FY 2026 ...................................................... 49 Table 8-4: Allocation of Fixed and Variable Cost-of-Service Requirements by Customer Class ........... 49 Table 8-5: Revenue Requirement Allocation to Cost Components and Rate Calculation ....................... 50 Table 8-6: Proposed Five-Year Fixed and Variable Wastewater Rates ...................................................... 50 Table 8-7: Single Family Residential and Commercial Wastewater Bill Impacts ...................................... 51

List of Figures
Figure 2-1: Proposed Water Operating Financial Plan ................................................................................. 11 Figure 2-2: Water Utility Fund Balances and Reserve Targets ................................................................... 12 Figure 7-1: Proposed Wastewater Operating Financial Plan....................................................................... 45 Figure 7-2: Wastewater Projected Fund Balances vs. Overall Target Reserve Balances ........................ 46

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CITY OF LA VERNE / WATER AND SEW ER FINANCIAL PLAN STUDY REPORT 1

1. Executive Summary

1.1 Background
In July 2024, the City of La Verne (City) engaged Raftelis to conduct a Water and Wastewater Rate Study (Study) including a financial plan, cost-of-service study, and rate calculation for both utilities. This report presents the financial plan and the resulting rates for implementation on January 1, 2026.

This Executive Summary summarizes the proposed water and wastewater rates and contains a description of the assumptions, methodologies, and recommendations associated with the Study. The City’s last rate adjustment, which consisted of an inflationary increase, was effective on January 1, 2019.

The central goals of this study and rates update include helping the City to establish fair and equitable rates that:

1. Meet the City’s fiscal needs in terms of operational expenses, reserve goals, and capital investment to maintain the system

2. Are fair and equitable and therefore proportionately allocate the costs of providing service in accordance with California Constitution Article XIII D, Section 6 (commonly referred to as Proposition 218)

3. Help the City fund needed critical capital improvement projects (CIP)

1.2 Methodology
The water rates presented in this report were developed using cost of service principles set forth by the American Water Works Association (AWWA) publication Manual of Water Supply Practices M1, Principles of Water Rates, Fees and Charges (AWWA M1 Manual). Cost of service principles endeavor to distribute costs to customer classes in accordance with the way each class uses the water system. This methodology is described in detail in Sections 4 and 5. The Base-Extra Capacity Method of the AWWA M1 Manual was used to distribute costs to customer classes and tiers. This method separates costs into four main1 components: (1) base costs, (2) extra capacity costs, (3) customer costs, and (4) fire protection costs. Base costs are costs associated with meeting average daily demand needs and include operations and maintenance costs and capital costs designed to meet average load conditions. Extra capacity costs are costs (both operating and capital) associated with meeting peak demand. Customer costs are associated with serving customers, such as meter reading, billing and customer service, etc. Fire protection costs are related solely to the fire protection function of a water system and include expenses such as fire hydrants and related mains and valves.

Wastewater rates were derived in accordance with the Water Environment Federation (WEF) publication Manual of Practice No. 27, Financing and Charges for Wastewater Systems (WEF Manual 27). The City’s sewer system collects and conveys wastewater to the Los Angeles County Sanitation District’s (LACSD) system for treatment. LACSD charges customers directly for sewer treatment service. The City of La Verne charges customers directly for costs associated the City’s wastewater collection system.

1 There can be other cost components such as conservation and supply; however, the four mentioned are almost always used in rate studies.

CITY OF LA VERNE / WATER AND SEW ER FINANCIAL PLAN STUDY REPORT 2

1.3 Key Results and Recommendations

Table 1-1 shows the revenue adjustments for the water and wastewater enterprise funds as part of the selected Financial Plan. The revenue adjustment is the additional amount of revenue collected for each enterprise compared to the amount collected by rates during the previous fiscal year2.

Table 1-1: Recommended Yearly Revenue Adjustments

1.3.1 FACTORS AFFECTING REVENUE ADJUSTMENTS
The following factors impact the City’s revenue requirement (i.e., costs) and thus its rates for each enterprise. The City’s expenses include Operation and Maintenance (O&M) expenses, capital expenses, debt service (for water and wastewater) and reserve funding. » O&M Expenses: The City’s O&M expenses increase each year, in line with general inflation, purchase water cost increases, and the increasing cost of employee pay and benefits. » Capital Investment: The City plans to invest millions in each system as discussed in the capital improvement plan (CIP) section for each enterprise fund. Water and wastewater system improvements total $ 16.9 million and $10.5 million over the next five years (FY 2026 through FY 2030) for each system respectively.

The City has not increased its rates since 2019 and that amounts to a 28% increase in CPI inflation.

Typically, water and sewer rates rise about 2% more than the general inflation rate measured by CPI, which would add an additional 15%. The cost of treated water purchased from the Metropolitan Water District of Southern California (MWD) has increased by over 50% in the same time frame and is expected to see significant estimated increases for the next two years. The utilities have been depleting their reserves while not adjusting their rates. The increases are therefore necessary to supplement the depleted reserves as well. The City will be intentional in using fund balances, as shown herein, to minimize customer rate impacts.

1.4 Water

1.4.1 PROPOSED WATER RATES
In this report, the terms “fee” and “charge” are often used interchangeably. The City’s base water rate structure includes the following components: (1) a fixed bi-monthly Service Charge that is based on meter size, and (2) a variable Commodity Rate that is charged per 1,000 gallons of water used (kgal).

Additionally, if applicable, the City also charges a bi-monthly fixed service charge for those customers with private fire meters and, if applicable, for those customers with additional units (AU’s). Each of these charges is described below. No major changes are proposed to the existing rate structure for the City’s water utility.

2 This assumes that the rates are implemented for the full fiscal year.

A B C D E F
Line Revenue Adjustments 1/1/2026 7/1/2026 7/1/2027 7/1/2028 7/1/2029 1 Water 50% 25% 15% 10% 10%
2 Wastewater 15% 15% 15% 15% 15%

CITY OF LA VERNE / WATER AND SEW ER FINANCIAL PLAN STUDY REPORT 3

1.4.2 PROPOSED FIXED CHARGE
The City’s proposed bi-monthly fixed charge is the Meter Service Charge, and it is based on the size of the meter serving a property. The Service Charge is calculated to recover the cost to maintain and replace meters as well as a portion of extra-capacity related costs (i.e., costs associated with meeting system capacity beyond that required for average daily demand). This cost is proportional to the size of the meter and goes up with meter size according to standards set forth by the AWWA. The second component is the customer service component. This component recovers costs associated with metering, answering customer calls and billing customers. These costs are not related to the size of the meter and are the same for all meters. Additionally, if applicable, the City also charges a bi-monthly fixed service charge for those customers with private fire meters and, if applicable, for customers with AU’s. The full derivation of the total charge is described in Section 5, and the Fixed Service Charges, Fixed AU Charges and Fixed Fire Line Charges are shown in Table 1-2, Table 1-3, and Table 1-4, respectively.

Table 1-2: Current and Proposed Bi-Monthly Fixed Water Charge

Table 1-3: Current and Proposed Bi-Monthly Fixed AU Charge

Table 1-4: Current and Proposed Bi-Monthly Fixed Fire Line Charge

A B C D E F G
Line Meter Size Current 1/1/2026 7/1/2026 7/1/2027 7/1/2028 7/1/2029 1 5/8" 36.40$ 48.53$ 60.66$ 69.76$ 76.73$ 84.41$ 2 3/4" 40.00$ 48.53$ 60.66$ 69.76$ 76.73$ 84.41$ 3 1" 51.00$ 72.95$ 91.19$ 104.86$ 115.35$ 126.88$ 4 1 1/2" 65.60$ 134.00$ 167.50$ 192.62$ 211.89$ 233.08$ 5 2" 106.00$ 207.26$ 259.08$ 297.94$ 327.73$ 360.50$ 6 3" 400.00$ 402.62$ 503.28$ 578.77$ 636.65$ 700.32$ 7 4" 509.60$ 622.41$ 778.01$ 894.71$ 984.18$ 1,082.60$ 8 6" 764.40$ 1,232.92$ 1,541.15$ 1,772.32$ 1,949.56$ 2,144.51$ 9 8" 1,055.60$ 1,965.54$ 2,456.92$ 2,825.46$ 3,108.00$ 3,418.80$ 10 10" 1,456.00$ 2,942.35$ 3,677.94$ 4,229.63$ 4,652.60$ 5,117.86$

A B C D E F G
Line All Customers Current 1/1/2026 7/1/2026 7/1/2027 7/1/2028 7/1/2029 1 Per AU 11.20$ 17.86$ 22.33$ 25.67$ 28.24$ 31.07$

A B C D E F G
Line Meter Size Current 1/1/2026 7/1/2026 7/1/2027 7/1/2028 7/1/2029 1 5/8" - $ 12.19$ 15.24$ 17.53$ 19.28$ 21.21$ 2 3/4" - $ 12.38$ 15.47$ 17.79$ 19.57$ 21.53$ 3 1" - $ 12.92$ 16.15$ 18.57$ 20.43$ 22.47$ 4 1 1/2" - $ 14.86$ 18.58$ 21.36$ 23.50$ 25.85$ 5 2" 46.60$ 18.21$ 22.77$ 26.18$ 28.80$ 31.68$ 6 3" 65.30$ 30.25$ 37.81$ 43.48$ 47.83$ 52.61$ 7 4" 102.60$ 51.00$ 63.75$ 73.32$ 80.65$ 88.71$ 8 6" 130.66$ 125.49$ 156.87$ 180.40$ 198.44$ 218.28$ 9 8" 167.70$ 253.98$ 317.47$ 365.09$ 401.60$ 441.76$ 10 10" 205.10$ 447.24$ 559.05$ 642.91$ 707.20$ 777.92$

CITY OF LA VERNE / WATER AND SEW ER FINANCIAL PLAN STUDY REPORT 4

1.4.3 POTABLE COMMODITY RATE
Table 1-5 shows the current and proposed uniform commodity rates (also known as volumetric rates) by elevation zones. The rates are designed to recover the costs associated with serving each zone as discussed in Sections 4 and 5 of this report. The City’s current rate structure consists of eight zones, or pricing groups, where each group represents a different pumping zone in the City. Detail of the derivation of the volumetric rates by pumping zones is found in Section 5.6 of this report.

Table 1-5: Current and Proposed Water Commodity Rates for All Customer Classes ($/KGAL)

1.5 Wastewater

1.5.1 PROPOSED WASTEWATER RATES
The City’s current wastewater rates include a fixed charge (for all customers) and a volumetric rate (for non-residential customers). The volumetric rate is based on water consumed through the water meter connection. After discussing the wastewater rate structure with City Staff, Raftelis proposes no major changes to the rate structure—rates were increased based on the cost-of-service analysis to meet the utility’s operational and capital revenue requirements. Tables 1-6 and 1-7 show the current and proposed five-year wastewater rates.

Table 1-6: Current and Proposed Bi-Monthly Fixed Wastewater Charge

Table 1-7: Current and Proposed Bi-Monthly Volumetric Wastewater Charge ($/KGAL)

Raftelis developed a ten-year financial plan to ensure that rates do not experience spikes after the five year adjustments. The main body of this report contains the City’s detailed five-year financial plan, rate derivation and customer bill impacts for the water and wastewater utilities.

A B C D E F G
Line Customer Class Current 1/1/2026 7/1/2026 7/1/2027 7/1/2028 7/1/2029 1 Z1 3.92$ 5.67$ 7.09$ 8.16$ 8.97 $ 9.87$ 2 Z2 4.02$ 5.96$ 7.45$ 8.57$ 9.43 $ 10.37$ 3 Z3 4.21$ 6.32$ 7.90$ 9.09$ 10.00 $ 11.00$ 4 Z4 4.42$ 6.33$ 7.92$ 9.10$ 10.01 $ 11.02$ 5 Z5 4.53$ 7.44$ 9.30$ 10.69$ 11.76 $ 12.94$ 6 Z6 4.77$ 7.44$ 9.30$ 10.69$ 11.76 $ 12.94$ 7 ZP 5.37$ 7.44$ 9.30$ 10.69$ 11.76 $ 12.94$ 8 ZL 2.74$ 7.44$ 9.30$ 10.69$ 11.76 $ 12.94$

A B C D E F G
Line Rate Current 1/1/2026 7/1/2026 7/1/2027 7/1/2028 7/1/2029 1 Fixed Bi-Monthly 23.43$ 26.61$ 30.61$ 35.21$ 40.50$ 46.58$

A B C D E F G
Line Rate Current 1/1/2026 7/1/2026 7/1/2027 7/1/2028 7/1/2029 1 Volumetric ($/kgals) 0.20 $ 0.29 $ 0.34 $ 0.40 $ 0.46 $ 0.53 $

CITY OF LA VERNE / WATER AND SEW ER FINANCIAL PLAN STUDY REPORT 5

2. Water Enterprise

This section describes the water enterprise rate study, starting with the water financial plan, followed by the cost-of-service study, rate design, and customer bill impacts.

2.1 Water System Background
The City of La Verne, situated in the eastern San Gabriel Valley region of Los Angeles County, relies on a robust and diverse water supply system to meet the demands of its approximately 31,000 residents and various commercial and industrial customers. Understanding the provenance and management of this vital resource is fundamental to assessing its sustainability, reliability, and future planning.

Geographic Context and Water Demand: La Verne is characterized by its semi-arid climate, typical of Southern California, which necessitates a significant reliance on imported water sources to supplement limited local supplies. The community's water demand fluctuates with seasonal changes, with higher usage generally observed during warmer months for irrigation and outdoor activities.

Water Sources: The City of La Verne's water supply is characterized by a blended approach, drawing from both local groundwater sources and imported surface water. • Local Groundwater: A significant portion of La Verne's water supply (~24%) is extracted from wells tapping into the Pomona and Live Oak Basins, a vast and critical regional aquifer.

Groundwater production helps to enhance local water independence and provides a measure of supply reliability, particularly during periods of drought affecting imported supplies. The management and pumping rights within the Six Basins are carefully overseen by a court- appointed Watermaster.
• Imported Surface Water: Complementing the local groundwater, a substantial and often primary portion of La Verne's water is imported (~76%). This imported water originates from two major sources: the State Water Project (SWP), bringing water from Northern California, and the Colorado River Aqueduct (CRA). This water is conveyed by the Metropolitan Water District of Southern California (MWD), the region's largest water wholesaler. From MWD, water is typically delivered to La Verne via the Three Valleys Municipal Water District (TVMWD), which serves as a sub-regional wholesale supplier.

Historical Development: Like many Southern California communities, La Verne's water system has evolved from an initial reliance on local wells and springs to a sophisticated system incorporating vast imported water infrastructure. This evolution reflects the region's growth, increasing population density, and the necessity of securing diverse and resilient water sources in an arid environment. The integration of local and imported supplies has been critical in supporting the community's development and ensuring a consistent and safe water supply for its residents and businesses.

2.2 Financial Plan Assumptions

2.2.1 NUMBER OF ACCOUNTS
Raftelis created a five-year financial plan that models anticipated revenue and expenses. This report shows the financial plan and assumptions for the next 5 years (FY 2026 to FY 2030) to correspond with the rate development for these years. Estimated rate revenue (without adjustments) was calculated by

CITY OF LA VERNE / WATER AND SEW ER FINANCIAL PLAN STUDY REPORT 6 multiplying the number of accounts by the bi-monthly (fixed) charge and multiplying the total water use in each zone by the corresponding commodity rate. Table 2-1 shows the projected number of water accounts, including AU accounts by meter size and class for FY 2026. This year is shown because this is the “test year”, or the year used to develop rates. Raftelis projected the number of meters using City- provided FY 2024 meter data. The number of accounts is used to forecast the amount of fixed revenue the City will receive from fixed bi-monthly service charges.

Table 2-1: Projected Accounts by Meter Size (FY 2026)

A B C D E F G H I
Line
Standard
Accounts by
Meter Size
Residential Institutional Commercial Industrial Lifeline Multi-Family Agriculture TOTAL 1 5/8" 1,979 30 44 3 0 6 0 2,061
2 3/4" 776 8 24 0 0 2 0 810
3 1" 4,622 30 107 28 0 134 1 4,922
4 1 1/2" 14 31 35 26 0 92 0 198
5 2" 8 70 93 42 0 106 1 321
6 3" 0 7 2 1 0 2 0 12
7 4" 0 7 3 0 0 5 0 14
8 6" 0 1 1 0 0 1 0 3
9 8" 0 2 0 0 0 1 0 3
10 10" 0 1 0 0 0 0 0 1
11 12" 0 0 0 0 0 0 0 0
12 Total 7,399 187 309 100 0 349 2 8,345

A B C D E F G H I
Line AU Accounts
by Meter Size Residential Institutional Commercial Industrial Lifeline Multi-Family Agriculture TOTAL 1 5/8" 60 3 19 3 0 14 0 99
2 3/4" 24 1 7 0 0 0 0 32
3 1" 35 87 66 8 0 319 0 515
4 1 1/2" 4 10 85 0 0 228 0 327
5 2" 1 153 121 64 0 1,734 0 2,073
6 3" 0 137 0 0 0 374 0 511
7 4" 0 160 8 0 0 617 0 785
8 6" 0 0 0 0 0 102 0 102
9 8" 0 4 0 0 0 0 0 4
10 10" 0 0 0 0 0 0 0 0
11 12" 0 0 0 0 0 0 0 0
12 Total 124 555 305 75 0 3,387 0 4,446
A B C
Line Meter Size Standard
Accounts
Added Unit
Accounts
1 5/8" 2,061 99
2 3/4" 810 32
3 1" 4,922 515
4 1 1/2" 198 327
5 2" 321 2,073
6 3" 12 511
7 4" 14 785
8 6" 3 102
9 8" 3 4
10 10" 1 0
11 12" 0 0
12 Total 8,345 4,446

CITY OF LA VERNE / WATER AND SEW ER FINANCIAL PLAN STUDY REPORT 7

2.2.2 ACCOUNT AND WATER USE GROWTH ASSUMPTIONS
The revenue calculated for each fiscal year in the Financial Plan is a function of the number of accounts, account growth, water use trends, and existing rates. Table 2-2 shows the assumed account growth rates and the water demand assumptions. The City of La Verne provided actual growth numbers for FY 2025 and showed at 0.34% increase. Raftelis used this number to predict future use in the residential and multi- family classes, as shown in Table 2-2. Zero to minimal growth is predicted in other classes, as is also shown in Table 2-2. Per direction from City staff, demand from all customer classes is projected to decrease with increasing rates and in alignment with “Making Conservation a California Way of Life Regulations” being implemented over the study period.

Table 2-2: Account Growth and Water Use Assumptions

2.2.3 WATER USE
Table 2-3 shows the water use by pressure zone for FY 2024 (actual). Water use shown below was then multiplied by the demand forecast in Table 2-2 above to estimate projected water use by zone during five- year study period.

Table 2-3: Actual (2024) Water Use in by Pressure Zone

A B C D E F
Line Account
Growth FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
1 Residential 0.34% 0.34% 0.34% 0.34% 0.34%
2 Institutional 0.00% 0.00% 0.00% 0.00% 0.00%
3 Commercial 0.00% 0.00% 0.00% 0.00% 0.00%
4 Industrial 0.00% 0.00% 0.00% 0.00% 0.00%
5 Lifeline 0.00% 0.00% 0.00% 0.00% 0.00%
6 Multi-Family 0.34% 0.34% 0.34% 0.34% 0.34%
7 Agriculture 0.00% 0.00% 0.00% 0.00% 0.00%

A B C D E F
Line Demand
Forecast FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
1 All Classes -3.00% -3.00% -3.00% -3.00% -3.00%
A B
Line Water Usage (kgals) 2024
1 Total Zone Consumption
2 Z1 726,252
3 Z2 454,909
4 Z3 120,221
5 Z4 233,430
6 Z5 57,372
7 Z6 0
8 ZP 123,580
9 ZL 249
10 Total - Water Usage (kgal) 1,716,013

CITY OF LA VERNE / WATER AND SEW ER FINANCIAL PLAN STUDY REPORT 8

2.2.4 INFLATIONARY AND WATER PURCHASE COST ASSUMPTIONS
To ensure future O&M costs are reasonably projected, Raftelis has made informed assumptions about inflationary factors, water costs and water use. Table 2-4 shows the inflationary categories that were used to escalate the City’s FY 2026 O&M expense budget, which is part of the Financial Plan. The inflationary factors shown in Table 2-4 reflect long-term averages for general and capital (construction) inflation, as well as energy prices. The City provided the salary (includes 3% payroll annual increase plus 2% annual increase to retirement) and benefit inflationary factors which reflect employee salaries and benefit obligations. The City also provided the water purchase inflationary cost increases based on known increases in FY 2026 and FY 2027, as well as projected cost increases for purchased water in FY 2028 through FY 2030.

Table 2-4: Inflationary Assumptions

Raftelis used the assumptions shown in Table 2-4 to develop the City’s Water Financial Plan. The plan uses projected annual operating expenses and revenues at current rates, capital expenditures, reserve fund balances, and annual debt service coverage ratios to estimate the amount of additional rate revenue needed per year. This section of the report provides a discussion of O&M expenses, the Capital Improvement Plan (CIP), reserve funding, projected revenue under existing rates, and the revenue adjustments needed to ensure the fiscal sustainability and solvency of the Water Enterprise.

2.2.5 WATER SYSTEM EXPENSES
The City’s expenses include O&M expenses, capital expenses, and debt service payments. Each of these expense categories is described below.

A B C D E F
Line Escalation Factors FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Expense Inflation
2 General 3.0% 3.0% 3.0% 3.0% 3.0%
3 Salary 5.0% 5.0% 5.0% 5.0% 5.0%
4 Benefits 7.0% 7.0% 7.0% 7.0% 7.0%
5 Utilities 7.5% 7.5% 7.5% 7.5% 7.5%
6 Capital 4.5% 4.5% 4.5% 4.5% 4.5%
7 Water Purchase 12.0% 12.0% 10.5% 10.5% 10.5%

CITY OF LA VERNE / WATER AND SEW ER FINANCIAL PLAN STUDY REPORT 9

2.2.6 O&M EXPENSES
The City’s O&M budget is shown by fiscal year in Table 2-5. The O&M budget incorporates the inflationary factors discussed in Section 2.2.4 – Inflationary and Water Purchase Cost Assumptions, and are summarized in Table 2-4. Approximately 71% of the O&M budget in FY 2026 is water production costs, over which the City has no control. Significant water production costs include wholesale water purchases, utility costs and materials costs.

Table 2-5: Projected O&M Expenses

2.2.7 CAPITAL IMPROVEMENT PLAN (CIP)
Table 2-6 shows the City’s CIP summary. The City is funding capital investment through a mixture of rate revenue and reserve funds (also known as PAY-GO funding), as well as taking on debt by borrowing $4 million from the sewer fund and paying off that loan with interest (interest rate of 4.5%) in FY 2028 ($1,092,025), FY 2029 ($2,282,332) and FY 2030 ($1,192,519). Note that Projects on Lines 2-4 have already been funded in FY 2025.

Table 2-6: Detailed Capital Improvement Plan

2.2.8 EXISTING DEBT SERVICE
Table 2-7 shows the City’s existing debt service payments during the five-year study period.

A B C D E F G
Line Operating Expenses FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Water Administration $955,340 $994,529 $1,035,516 $1,078,395 $1,123,262 $1,170,220 2 Water Production $8,960,299 $9,820,363 $10,774,232 $11,721,660 $12,760,716 $13,900,625 3 Transmission & Distribution $959,015 $1,002,316 $1,047,785 $1,095,541 $1,145,710 $1,198,425 4 Customer Service $874,312 $903,753 $945,178 $988,697 $1,034,424 $1,082,481 5 Pension Obligation Fund $0 $0 $0 $0 $0 $0
6 Transfers $1,151,037 $1,185,568 $1,221,135 $1,257,769 $1,295,502 $1,334,367 7 Total - O&M Expenses $12,900,003 $13,906,528 $15,023,846 $16,142,062 $17,359,615 $18,686,117

A B C D E F G
Line Capital Projects FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Capital Improvement Plan - Inflated
2 Plateau Summit Transmission Line $4,000,000 $0 $0 $0 $0 $0 3 Ramona Avenue Pressure Reducing Valve $225,000 $0 $0 $0 $0 $0 4 Booster Pump III to IV $400,000 $0 $0 $0 $0 $0
5 Pipeline Rehabilitation: Wheeler Avenue (First Street to Second Street) $0 $0 $0 $0 $0 $207,207 6 AMI Meter Conversion - AMI Water Loss Project $0 $913,952 $760,408 $988,530 $0 $0 7 SCADA System Upgrade (Phased over 4 years) $0 $0 $0 $676,000 $703,040 $731,162 8 Pipeline Rehabilitation: Bonita Avenue (Wheeler Avenue to A Street) $0 $0 $0 $390,838 $0 $0 9 Plateau #1 Reservoir Ladder Replacement $0 $0 $44,995 $0 $0 $0 10 Well: Repair and Rehabilitation (Mills, LVH3, Lincoln, Beech; $400k/Well) (Phased over 4 years) $0 $0 $0 $449,946 $467,943 $486,661 11 Conduct AU study $0 $0 $0 $68,833 $0 $0
12 Amherst Reservoir - Roof Replacement $0 $0 $0 $0 $0 $0 13 Pipeline Rehabilitation: 7th Street (E Street to G Street) & (C Street to D Street) and a Segment West of Live Oak $0 $0 $0 $834,414 $0 $0 14 Pipeline Rehabilitation: Construct 1,280 feet of 16-inch pipe and 1,585 feet of 8-inch pipe on E Street $0 $0 $0 $0 $1,431,721 $0 15 Pipeline Rehabilitation: Daybreak Drive (Park Crest Drive to Canyon Crest Drive) $0 $0 $0 $0 $575,576 $0 16 6th and White Treatment Plant Upgrade: VOC Removal $0 $0 $0 $0 $1,896,647 $0 17 Pipeline Rehabilitation: Construction additional 1,500 gpm Pumping Capacity for Pressure Zone I $0 $0 $0 $0 $0 $0 18 Pipeline Rehabilitation: Construct 615 linear feet of 8-inch near Los Flores Park $0 $0 $0 $0 $0 $604,530 19 Pipeline Rehabilitation: Upsize 1,335 linear fee of 8-inch to 12-inch pipe along Foothill Boulevard $0 $0 $0 $0 $0 $0 20 Pipeline Rehabilitation: Upsize 760 linear feet of 10-inch to 12-inch pipe along Foothill Boulevard $0 $0 $0 $0 $0 $0 21 6th & White Treatment Plant: Nitrate Removal $0 $929,130 $1,858,259 $1,858,259 $0 $0 22 Amherst Treatment Plant Upgrade $0 $0 $0 $0 $0 $0
23 Construct a new well in the Pomona Basin to Replace the Cartwright Well $0 $0 $0 $0 $0 $0 24 Construct a New Well in the Live Oak Basin to Replace La Verne Heights No.1 Well $0 $0 $0 $0 $0 $0 25 Amherst Reservoir: Replace 3.5 MG Reservoir $0 $0 $0 $0 $0 $0 26 Construct 3,900 linear feet of 12- inch pipe from the Old Baldy Plant to the White Avenue Forebay $0 $0 $0 $0 $0 $0 27 Total Project Costs $4,625,000 $1,843,082 $2,663,662 $5,266,821 $5,074,927 $2,029,560

CITY OF LA VERNE / WATER AND SEW ER FINANCIAL PLAN STUDY REPORT 10 Table 2-7: Existing Water Debt Service

2.2.9 REVENUE ADJUSTMENTS
Using the assumed number of accounts and water use shown above in Table 2.3, Raftelis developed a financial plan using projected operating and capital expenses, revenue, and resulting yearly cash balances for the financial plan study period - from FY 2026 to FY 2030. The financial plan determines the overall revenue adjustments required to ensure water enterprise financial stability. Revenue adjustments represent the average increase in rates as a whole; rate changes for individual classes will depend on the cost of service – since a cost-of-service analysis allocates costs to each zone. Therefore, the revenue adjustment may not be the same as the average bill impact for each zone. This study establishes rates from FY 2026 to FY 2030.

The proposed revenue adjustments help ensure adequate revenue to fund operating expenses, capital expenditures, and compliance with bond covenants. Financial Plan modelling assumes the FY 2026 revenue adjustment will occur in January of 2026, with subsequent annual adjustments occurring in July.

The proposed revenue adjustments would enable the City to cover operating expenses and execute the CIP shown in Table 2-6 and meet its debt service coverage requirement of 125% in each year beyond FY 2027. Table 2-8 shows the proposed revenue adjustments selected by the City. The rates presented in Section 5 are based on these revenue adjustments.

Table 2-8: Proposed Water Rate Adjustments

2.2.10 CASH FLOW ANALYSIS (FINANCIAL PLAN)
Table 2-9 shows the City’s cash flow projection over the study period assuming the revenue adjustments shown in Table 2-8.

A B C D E F G
Line Existing Debt Service FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Pension Obligation Bonds
2 Principal $103,323 $107,074 $111,166 $115,258 $119,691 $124,465 3 Interest $130,398 $126,680 $122,730 $118,551 $114,173 $109,506 4 Total $233,721 $233,754 $233,896 $233,809 $233,864 $233,971

A B C D E F
Line Revenue Adjustments FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Effective Year 2026 2026 2027 2028 2029
2 Effective Month January July July July July
3 % Adjustment 50% 25% 15% 10% 10%

CITY OF LA VERNE / WATER AND SEW ER FINANCIAL PLAN STUDY REPORT 11 Table 2-9: Five-Year Water Operating Cash Flow

2.2.11 GRAPHICAL FINANCIAL PLAN
Figure 2-1 displays the Financial Plan from Table 2-9 in graphical format.

Figure 2-1: Proposed Water Operating Financial Plan

A B C D E F G
Line Financial Plan FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Revenues
2 Water Rate Revenue $9,974,575 $9,983,004 $9,991,463 $9,999,951 $10,008,468 $10,017,014 3 Revenue Adjustments $0 $2,495,751 $8,742,530 $11,562,443 $13,730,367 $16,118,002 4 Total Non-Rate Revenue $279,100 $388,444 $391,368 $419,741 $440,720 $463,413 5 Total - Revenues $10,253,675 $12,867,199 $19,125,361 $21,982,135 $24,179,554 $26,598,429 6 7 O&M Expenses
8 Customer Service $874,312 $903,753 $945,178 $988,697 $1,034,424 $1,082,481 9 Other O&M Expenses $10,874,654 $11,817,207 $12,857,533 $13,895,596 $15,029,689 $16,269,269 10 Total - O&M Expenses $12,900,003 $13,906,528 $15,023,846 $16,142,062 $17,359,615 $18,686,117 11 12 Net Revenue ($2,646,328) ($1,039,329) $4,101,515 $5,840,073 $6,819,939 $7,912,312 13 14 Existing Debt Service $233,721 $233,754 $233,896 $233,809 $233,864 $233,971 15 16 Cash Funded CIP $4,625,000 $1,843,082 $2,663,662 $5,266,821 $5,074,927 $2,029,560 17 18 Net Cash Flow ($2,880,049) ($1,273,083) $3,867,619 $5,606,263 $6,586,076 $7,678,341 19 20 Debt Service Coverage
21 Calculated Debt Service Coverage (11.32) (4.45) 17.54 24.98 29.16 33.82 22 Required Debt Service Coverage 1.25 1.25 1.25 1.25 1.25 1.25 23 24 Beginning Balance $6,562,018 $6,134,062 $7,094,995 $8,423,588 $7,797,977 $7,136,164 25 Total Ending $6,134,062 $7,094,995 $8,423,588 $7,797,977 $7,136,164 $11,735,436 26 27 Combined Target $4,868,628 $5,801,269 $5,810,406 $6,517,891 $6,310,617 $6,434,743 28 Variance from Target $1,265,434 $1,293,726 $2,613,182 $1,280,086 $825,547 $5,300,693 ($10)
($5)
$0
$5
$10
$15
$20
$25
$30
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Millions
Financial Plan
Water Purchases O&M Expenses Debt Service PAYGO CIP
Reserve Funding Current Revenues Proposed Revenues

- - - --

CITY OF LA VERNE / WATER AND SEW ER FINANCIAL PLAN STUDY REPORT 12

2.2.12 FUND BALANCES AND RESERVE TARGETS
Water utilities maintain reserve targets for both Operations and Capital needs to ensure financial stability, service reliability, and long-term system integrity.

Operational reserves are critical for working capital needs, managing unforeseen daily challenges such as emergency repairs (e.g., pipe bursts, pump failures), unexpected spikes in material or energy costs, or fluctuations in revenue due to weather patterns or economic downturns, preventing service disruptions and avoiding immediate, reactive rate increases.

Capital reserves, on the other hand, are vital for addressing capital needs, unpredictable, infrastructure failures, accelerating scheduled replacements due to premature obsolescence, or responding to unforeseen regulatory mandates requiring significant system upgrades, ensuring the utility can maintain its long-term asset health and capacity without excessive borrowing or sudden, large rate surcharges.

The City has the following reserve targets for the water utility:
• Operations: 90 days (or 3 months) of Operations and Maintenance expenses, which is in alignment with most municipal water agencies. Maintaining financial resilience is the core function of an operating reserve. This target minimum reserve addresses short-term volatility in revenue streams and operational costs, and furthermore, provides a safeguard against adverse trends in receivables, particularly when facing economic challenges. • Capital: 50% of annual capital expenditures. As the City has significant planned capital investments over the study horizon, this target minimum reserve is intended to be a cash resource set aside to address capital system replacement and rehabilitation needs of the system.

Figure 2-2 displays the City’s Fund Balances compared to the Overall Target Reserve Balances for the water utility in a graphical format over the five-year rate implementation period.

Figure 2-2: Water Utility Fund Balances and Reserve Targets

$6
$7
$8 $8 $7
$12
$0
$2
$4
$6
$8
$10
$12
$14
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Millions
Fund Balances
Ending Balance Target Balance

------------------- ~ - 1--------= ===------------- ---l -
-

CITY OF LA VERNE / WATER AND SEW ER FINANCIAL PLAN STUDY REPORT 13

3. Legal Framework and
Rate Setting Methodology

3.1 Legal Framework
This section of the report describes the legal framework surrounding rate setting and calculating cost-of- service rates that provide a fair and equitable cost allocation to customer classes.

3.3.1 CALIFORNIA CONSTITUTION - ARTICLE XIII D, SECTION 6 (PROPOSITION 218)
Proposition 218 was enacted in 1996. It amended the California Constitution by adding Article XIII C and XIII D. Article XIII D, Section 6, established procedural requirements for the imposition of property- related fees and charges and substantive provisions governing the amount that may be imposed and the use of such fees charged by local agencies. The substantive requirements for such fees and charges are as follows:

1. A property-related charge (such as water and wastewater service fees and charges) imposed by a public agency on a parcel shall not exceed the costs required to provide property-related service.

2. Revenues derived by the charge shall not be used for any other purpose other than that for which the charge was imposed.

3. The amount of the charge imposed upon any parcel shall not exceed the proportional cost of service attributable to the parcel.

4. No charge may be imposed for a service unless that service is actually used or immediately available to the owner of the property.

5. No fee or charge may be imposed for general governmental services including, but not limited to, police, fire, ambulance or library services, where the service is available to the public at large in substantially the same manner as it is to property owners.

To preclude costly legal challenges, the legislature has enacted legislation that can be included in the Proposition 218 notices which provides a limited time to challenge rates.

1. Limitation to Rate Challenges
Pursuant to California Government Cost Section 53759, there is a 120 day statute of limitations for judicially challenging rates from the date the Council adopts the resolution approving rates.

2. Exhaustion of Administrative Remedies
Pursuant to California Government Code Sections 53759.1 and 53759.2, a person or entity will be prohibited from bringing a judicial action or proceeding alleging that the proposed rates do not comply with Proposition 218 unless that person or entity has submitted a written Objection to the proposed rates in response to the notice. This is known as an Exhaustion of Administrative Remedies requirement and is separate from the Proposition 218 majority Protest process.

CITY OF LA VERNE / WATER AND SEW ER FINANCIAL PLAN STUDY REPORT 14

3.2 Cost-Based Rate-Setting Methodology
The AWWA M1 Manual states, “the costs of water rates and charges should be recovered from classes of customers in proportion to the cost of serving those customers.” To develop utility rates that comply with Proposition 218 and industry standards, while meeting other emerging goals and objectives of the utility, there are four major steps discussed below.

1.) Calculate Revenue Requirement
The rate-making process starts by determining the test year revenue requirement - which for this study is FY 2026. The revenue requirement is the amount a utility needs to sufficiently fund the utility’s O&M, debt service, and capital expenses, and reserve funding.

2.) Cost-of-Service Analysis (COS)
The annual cost of providing water service is distributed among customer classes commensurate with their service requirements. A COS analysis involves the following:

1. Functionalizing costs. This process takes each cost item in the City’s budget and organizes them collectively based on their function. Examples of cost functions are supply, treatment, transmission, distribution, storage, meter servicing, and customer billing and collection.

2. Allocating functionalized costs to cost components. This process allocates the functionalized costs to cost components. Cost components include base, maximum day, maximum hour3, meter service, customer service and conservation costs.

3. Distributing the cost components. This analysis distributes the cost components, using unit costs, to customer classes in proportion to their demands on the water system. This is described in the M1 Manual published by AWWA.

A COS analysis considers both the average quantity of water consumed (base costs) and the peak rate at which it is consumed (peaking or capacity costs as identified by maximum day and maximum hour demands).4 Peaking costs are costs that are incurred during peak times of consumption. There are additional costs associated with designing, constructing, and operating and maintaining facilities to meet peak demands. These peak demand costs need to be allocated so that those costs are appropriately passed on to customers.

3 Collectively maximum day and maximum hour costs are known as peaking costs or capacity costs. 4 System capacity is the system’s ability to supply water to all delivery points at the time when demanded.

Coincident peaking factors are calculated for each customer class at the time of greatest system demand. The time of greatest demand is known as peak demand. Both the operating costs and capital asset related costs incurred to accommodate the peak flows are generally allocated to each customer class based upon the class’s contribution to the peak month, day and hour event. Max Day (Maximum Day Demand): This is the highest total volume of water (e.g., in gallons or cubic feet) that the utility expects to deliver over a continuous 24 -hour period. It typically occurs during periods of high demand, like hot summer days when irri gation is prevalent.

For a rate study, Max Day is crucial because it dictates the required capacity of the major infrastructure components such as water treatment plants, primary pumping stations, and large transmission mains. The fixed costs associated with building and maintaining this capacity are a significant driver of rates. Max Hour (Maximum Hour Demand): This represents the highest instantaneous flow rate of water (e.g., in gallons per minute) that the system must deliver during any 60-minute period on the Max Day, but focuses on the brief, intense peaks. Max Hour is vital for sizing the localized distribution network, including smaller diameter mains, booster pumps, and elevated storage tanks, to ensure adequate pressure and flow are available to all customers, even during the most extreme short-term demand. The capital costs for these distribution assets, necessary to meet Max Hour, also contribute to the overall rate structure.

CITY OF LA VERNE / WATER AND SEW ER FINANCIAL PLAN STUDY REPORT 15

3.) Rate Design and Calculations
Rates do more than simply recover costs. Within the legal framework and industry standards, properly designed rates should support and optimize a blend of various utility objectives, such as conservation, affordability for essential needs, and revenue stability, among other objectives. Rates may also act as a public information tool in communicating these objectives to customers.

4.) Rate Adoption
Rate adoption is the last step of the rate-making process to comply with Proposition 218. Raftelis documented the rate study results in this Study Report to help educate the public about the proposed changes, the rationale and justifications behind the changes, and their anticipated financial impacts in lay terms.

CITY OF LA VERNE / WATER AND WASTEWATER FINANCIAL PLAN STUDY REPORT 16

4. Cost-of-Service
Analysis

A Cost-of-Service (COS) analysis distributes a utility’s revenue requirement (yearly revenue needed) to each customer class or zone. This is done by allocating the City’s revenue requirement to the cost causation components. The cost causation components include:

1. Base (average) costs5

2. Peaking costs (maximum day and maximum hour)

3. Meter Maintenance

4. Additional Dwelling Unit (AU)

5. Direct Fire Protection

6. Private Fire Protection

7. Customer Service & Meter Reading

8. Administrative and General Costs

Additional cost components include pumping zone costs and supply costs. Peaking costs are further divided into maximum day and maximum hour demand. The maximum day demand is the maximum amount of water used in a single day in a year. The maximum hour demand is the maximum hour usage on the maximum usage day. Both maximum day and maximum hour peaking demand calculations are used to calculate capacity related costs and peaking unit rates to distribute costs to customer classes.

Generally, peaking costs are allocated in proportion to how the different customer classes use water during peak day and hour demands. Different facilities, such as distribution and storage facilities, are designed to meet the peak demands of customers. Therefore, extra capacity6 costs include the O&M and capital costs associated with meeting peak customer demand. This method is consistent with the AWWA M1 Manual and is widely used in the water industry to perform cost-of-service analyses.

4.1 Allocation of Expenses to Cost Components
In a Cost-of-Service analysis, the City’s expenses are allocated to the cost causation components. To do so it is necessary to identify system-wide peaking factors, which are shown in column B of Table 4-1 and labeled “Peaking Factor.” The system-wide peaking factors are used to derive the cost component allocation bases (i.e., percentages) shown in columns C through E of Table 4-1. Functionalized7 expenses are then allocated to the cost components using the allocation bases shown in column A. To understand the interpretation of the percentages shown in columns B through F we must first establish the base use as the average daily demand during the year – which is assigned an allocation basis of 1. If the base allocation basis is used to allocate an expense, it means that the costs associated with that expense are to meet average daily demand (base) related costs.

5 The base component can be further divided into supply and base/delivery cost components as discussed in Section 6.3.
6 The terms extra capacity, peaking and capacity costs are used interchangeably. 7 Functions of a water utility are: supply, treatment, transmission and distribution, storage, meter service, customer service, general & administration and fire protection.

CITY OF LA VERNE / WATER AND WASTEWATER FINANCIAL PLAN STUDY REPORT 17 Expenses that are allocated to the cost causation components using the maximum day base percentages (line 2) attribute 65.4% (1/1.53) the demand (and therefore costs) to base (average daily demand) use and the remaining 34.6% to maximum day (peaking) use. Expenses allocated using the maximum hour basis assume 31.7% (1/3.15) of costs are due to base demands, 16.8% ((1.53-1)/3.15) due to max day and

51.5%) are due to max hour costs. Collectively the maximum day and hour cost components are known as peaking costs. These allocation bases are used to assign City O&M functions, shown in column A of Table 4-2, to the cost causation components also shown across the top of Table 4-2.

Table 4-1: System-Wide Peaking Factors and Allocation to Cost Components

A B C D E F
Line System-Wide Peaking Factors Peaking Factor Base Max Day Max Hour Total 1 Base 1.00 100.0% 100.0%
2 Max Day 1.53 65.4% 34.6% 100.0%
3 Max Hour 3.15 31.7% 16.8% 51.5% 100.0%
4 Average Max Day/Max Hour 48.6% 25.7% 25.7% 100.0%

CITY OF LA VERNE / WATER AND WASTEWATER FINANCIAL PLAN STUDY REPORT 18

Table 4-2: Allocation of O&M Expenses to Cost Causation Components

A B C D E F G H I J K L
Line System Demand Ratios Base Max Day Max Hour Supply
Meter
Maintenanc
e
Additional
Dwelling
Unit
Direct Fire
Protection
Private Fire
Protection
Customer
Service &
Meter
Reading
Admin &
General
Functional
Allocation
1 Supply (Wells, Purchased Water) 0.00% 0.00% 0.00% 100.00% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 6,608,000$ 2 Raw & Treated Water Pumping 65.39% 34.61% 0.00% 0.00% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 105,525$ 3 Treatment 65.39% 34.61% 0.00% 0.00% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 2,167,863$ 4 Distribution Storage 31.75% 16.80% 51.45% 0.00% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% -$ 5 Trans. & Dist. (Pipelines) 48.57% 25.71% 25.73% 0.00% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 601,389$ 6 Direct Fire Protection 0.00% 0.00% 0.00% 0.00% 0.0% 0.0% 100.0% 0.0% 0.0% 0.0% -$ 7 Meter Maintenance 0.00% 0.00% 0.00% 0.00% 100.0% 0.0% 0.0% 0.0% 0.0% 0.0% 625,307$ 8 Additional Dwelling Unit 0.00% 0.00% 0.00% 0.00% 0.0% 100.0% 0.0% 0.0% 0.0% 0.0% 145,030$ 9 Customer Service & Meter Reading 0.00% 0.00% 0.00% 0.00% 0.0% 0.0% 0.0% 0.0% 100.0% 0.0% 832,311$ 10 Private Fire Protection 0.00% 0.00% 0.00% 0.00% 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% 99,842$ 11 Admin & General 0.00% 0.00% 0.00% 0.00% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 1,782,285$ 12 13 Supply (Wells, Purchased Water) -$ -$ -$ 6,608,000$ -$ -$ -$ -$ -$ -$ 6,608,000$ 14 Raw & Treated Water Pumping 69,004$ 36,521$ -$ -$ -$ -$ -$ -$ -$ -$ 105,525$ 15 Treatment 1,417,591$ 750,272$ -$ -$ -$ -$ -$ -$ -$ -$ 2,167,863$ 16 Distribution Storage -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 17 Trans. & Dist. (Pipelines) 292,086$ 154,589$ 154,714$ -$ -$ -$ -$ -$ -$ -$ 601,389$ 18 Direct Fire Protection -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 19 Meter Maintenance -$ -$ -$ -$ 625,307$ -$ -$ -$ -$ -$ 625,307$ 20 Additional Dwelling Unit -$ -$ -$ -$ -$ 145,030$ -$ -$ -$ -$ 145,030$ 21 Customer Service & Meter Reading -$ - $ - $ -$ - $ - $ - $ - $ 832,311 $ -$ 832,311$ 22 Private Fire Protection -$ - $ - $ -$ - $ - $ - $ 99,842 $ - $ -$ 99,842$ 23 Admin & General -$ - $ - $ -$ - $ - $ - $ - $ - $ 1,782,285$ 1,782,285$

CITY OF LA VERNE / WATER AND WASTEWATER FINANCIAL PLAN STUDY REPORT 19

The allocation bases and percentages shown in the top half of Table 4-2 in lines 1 through 11 are used to allocate the functionalized costs (shown in column L) to each cost causation component (Lines 13-23).

For example, the total expense for water treatment (Line 15, column L) is multiplied by the percentages in Line 3 to yield the amounts shown in Line 15, columns C through K.

The allocation bases, in column A, are chosen based on the type of cost for each line item and the proportion of those costs associated with each cost causation component (max day, max hour, general, supply, etc.). For example, distribution storage, line 12, is allocated using the max hour basis since distribution costs are associated with serving average day demands and peak day demands in proportion to max hour allocations identified in Table 4-1. This is because the distribution and storage system must be sized and operated to meet max hour demands. Certain cost bases are identical to the cost causation components – such as supply – and therefore are easily allocated to the cost component with the same name. This resulting allocation is used to allocate the City’s operating revenue requirements (discussed in Section 4.2) to the various cost components.

The City’s capital assets are also allocated to the cost causation components as shown in Table 4-3. The resulting total asset allocation is derived in a similar manner as the O&M allocation in Table 4-2. Raftelis functionalized the City’s assets and then allocated them to the cost causation components in the same manner as O&M expenses. Part of the City’s revenue requirement includes rate funded capital – which is discussed in Section 4.2. The capital portion of the revenue requirement (discussed in Section 4.2) is allocated to the cost causation components using the asset allocation shown in line 21 of Table 4-3.

Costs for pumping are identified separately.

CITY OF LA VERNE / WATER AND WASTEWATER FINANCIAL PLAN STUDY REPORT 20

Table 4-3: Allocation of Assets to Cost Causation Components

A B C D E F G H I J K L
Line Allocated Capital Base Max Day Max Hour Supply Meter Maintenance
Additional
Dwelling Unit
Direct Fire
Protection
Private Fire
Protection
Customer
Service &
Meter
Reading
Admin &
General
Functional
Allocation
1 Supply (Wells, Purchased Water) $0 $0 $0 $2,905,330 $0 $0 $0 $0 $0 $0 $2,905,330 2 Raw & Treated Water Pumping $544,816 $288,349 $0 $0 $0 $0 $0 $0 $0 $0 $833,165 3 Zone 1 Pumping $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
4 Zone 2 Pumping $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
5 Zone 3 Pumping $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
6 Zone 4 Pumping $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
7 Zone 5 Pumping $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
8 Zone 6 Pumping $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
9 Zone P Pumping $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
10 Zone L Pumping $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
11 Treatment $2,373,441 $1,256,164 $0 $0 $0 $0 $0 $0 $0 $0 $3,629,605 12 Distribution Storage $2,716,159 $1,437,551 $4,402,191 $0 $0 $0 $0 $0 $0 $0 $8,555,900 13 Trans. & Dist. (Pipelines) $11,104,781 $5,877,303 $5,882,035 $0 $0 $0 $0 $0 $0 $0 $22,864,118 14 Direct Fire Protection $0 $0 $0 $0 $0 $0 $576,598 $0 $0 $0 $576,598 15 Meter Maintenance $0 $0 $0 $0 $2,044,769 $0 $0 $0 $0 $0 $2,044,769 16 Additional Dwelling Unit $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 17 Customer Service & Meter Reading $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 18 Private Fire Protection $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 19 Admin & General $0 $0 $0 $0 $0 $0 $0 $0 $0 $2,193,422 $2,193,422 20 Total $16,739,197 $8,859,367 $10,284,225 $2,905,330 $2,044,769 $0 $576,598 $0 $0 $2,193,422 $43,602,909 21 Capital Allocation 38.4% 20.3% 23.6% 6.7% 4.7% 0.0% 1.3% 0.0% 0.0% 5.0% 100.0%

CITY OF LA VERNE / WATER AND WASTEWATER FINANCIAL PLAN STUDY REPORT 21

4.2 Revenue Requirement Determination
Table 4-4 shows the revenue requirement derivation. The total revenue required from water rates is shown on Line 18. The total in Line 18, Column B, is the O&M revenue requirement that is allocated to the cost components using the percentages derived in Table 4-2. The capital revenue requirement in Line 18, Column C, is allocated to the cost components using the percentages derived in Table 4-3.

Raftelis calculated the revenue requirement using budgeted FY 2026 expenses, which include water purchases, O&M expenses, capital expenses and existing debt service as shown in lines 2 – 4.

To arrive at the rate revenue requirement in Line 18, Column D, non-rate revenue offsets are subtracted and adjusted for annual cash balance (lines 6-9). The adjustments, shown as negative values, are subtracted (therefore added as a result of subtracting a negative number) to arrive at the total revenue required from City rates in line 18 column D. To account for the fact that the impending rate adjustment will take place six months into the fiscal year, the revenue increase must be annualized so that the correct rates are calculated. This is the total amount the City’s fixed service charges and volumetric rates are designed to collect in FY 2026 if rates were applied for a full Fiscal Year.

Table 4-4: Revenue Requirement Determination

A B C D
Line Revenue Requirement - FY 2026 Operating Capital Total 1 Revenue Requirements
2 O&M $13,906,528 $0 $13,906,528
3 Debt Service $0 $233,754 $233,754
4 Gross Revenue Requirement $13,906,528 $233,754 $14,140,282 5 6 Revenue Offsets
7 Other Revenue $279,582 $0 $279,582
8 Interest Revenue $0 $108,862 $108,862
9 Total Revenue Offsets $279,582 $108,862 $388,444
10 11 Net Revenue Requirement Before Adjustments $13,626,946 $124,892 $13,751,838 12 13 Adjustments
14 Adjustment for Cash Balance $0 ($1,273,083) ($1,273,083) 15 Net Revenue Requirement Before Mid-Year Increase $13,626,946 ($1,148,190) $12,478,755 16 17 Revenue needed to annualize rates $2,495,751 $0 $2,495,751 18 Net Revenue Req After Adj. for Mid-Year Increase $16,122,697 ($1,148,190) $14,974,506

CITY OF LA VERNE / WATER AND WASTEWATER FINANCIAL PLAN STUDY REPORT 22

4.3 Allocation of Costs to Cost Components
The next step is to allocate the total revenue requirement in Table 4-4 to the cost components as shown in Table 4-5.

Lines 1-4 provide requirements before any adjustments, based on the O&M revenue requirement (Line 1), Capital Revenue Requirement (Line 2) and the Revenue Offsets (Line 3). Line 8 provides the net revenue requirements after adjustments for allocation of change in cash (Line 6) and the revenue needed to annualize the rates (Line 7).

Line 11 shows the revenue requirements after allocation of general costs to the various cost causation components. This line reallocates general costs to the other cost components in proportion to each component’s share of total costs. This reflects the fact that general costs support the other functions in proportion to their share of costs. Line 15 shows the net revenue requirement after allocation of the fire components for public fire (Line 13) and private fire (Line 14).

The final adjustment in Line 17 shows the adjustment of base and peaking costs onto the fixed meter charge component. This reallocation to the meter component is so that the City can collect these costs through a fixed charge – since meter and customer costs are collected through the fixed bi-monthly charge. The final net revenue requirement is shown in Line 18.

CITY OF LA VERNE / WATER AND WASTEWATER FINANCIAL PLAN STUDY REPORT 23 Table 4-5: Expense Allocation to Cost Components

The next step is to derive the rates for each customer class using the cost components in Table 4-5 to collect the total amount shown in column T.

This is discussed in detail in Section 5.

Having identified the costs associated with each cost causation parameter, the next step is to identify the bases for those costs or service demands over which they should be spread to calculate the unit costs of each parameter.

A B C D E F G H I J K N O P Q R S T
Line Revenue Requirement Base Max Day Max Hour Supply Zone 1 Pumping
Zone 2
Pumping
Zone 3
Pumping
Zone 4
Pumping
Zone 5
Pumping
Zone 6,
Zone P,
Zone L
Pumping
Meter
Maintenance Added Unit Direct Fire
Protection
Private Fire
Protection
Customer
Service &
Meter
Reading
Admin &
General Total
1 O&M Revenue Requirement 1,778,681$ 941,382$ 154,714$ 6,608,000$ 315,461$ 261,691$ 174,705$ 4,366$ 182,752$ -$ 625,307$ 145,030$ -$ 99,842$ 832,311$ 1,782,285$ 13,906,528$ 2 Capital Revenue Requirement 47,946$ 25,376$ 29,457$ 8,322$ -$ -$ -$ -$ -$ -$ 5,857$ -$ 1,652$ -$ -$ 6,283$ 124,892$ 3 Revenue Offsets (63,607)$ (33,664)$ (5,533)$ (236,306)$ (11,281)$ (9,358)$ (6,248)$ (156)$ (6,535)$ -$ (22,361)$ (5,186)$ -$ (3,570)$ (29,764)$ (63,736)$ (497,306)$ 4 Revenue Requirement Before
Adjustment 1,763,020$ 933,094$ 178,638$ 6,380,016$ 304,180$ 252,333$ 168,457$ 4,210$ 176,217$ -$ 608,802$ 139,843$ 1,652$ 96,272$ 802,547$ 1,724,832$ 13,534,114$ 5 6 Allocation of Change in Cash (488,738)$ (258,669)$ (300,271)$ (84,827)$ -$ -$ -$ -$ -$ -$ (59,702)$ -$ (16,835)$ -$ -$ (64,042)$ (1,273,083)$ 7 Revenue needed to annualize rates 958,121$ 507,094$ 588,650$ 166,296$ -$ -$ -$ -$ -$ -$ 117,039$ -$ 33,003$ -$ -$ 125,547$ 2,495,751$ 8 Net Revenue Requirement After
Adjustment 2,232,404$ 1,181,519$ 467,018$ 6,461,484$ 304,180$ 252,333$ 168,457$ 4,210$ 176,217$ -$ 666,140$ 139,843$ 17,820$ 96,272$ 802,547$ 1,786,338$ 14,756,783$ 9 10 Allocation of General Costs 307,455$ 162,723$ 64,319$ 889,900$ 41,893$ 34,752$ 23,201$ 580$ 24,269$ -$ 91,743$ 19,260$ 2,454$ 13,259$ 110,530$ (1,786,338)$ -$ 11 Revenue Requirement After Allocation
of General Costs 2,539,859$ 1,344,243$ 531,338$ 7,351,384$ 346,073$ 287,085$ 191,658$ 4,790$ 200,486$ -$ 757,883$ 159,103$ 20,274$ 109,531$ 913,077$ -$ 14,756,783$ 12 13 Allocation of Capacity for Public Fire -$ (273,597)$ (20,269)$ -$ -$ -$ -$ -$ -$ -$ 314,140$ -$ (20,274)$ -$ -$ -$ -$ 14 Allocation of Capacity for Private Fire -$ (42,201)$ (3,126)$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ 45,327$ -$ -$ -$ 15 Net Revenue Requirement After Fire
Allocation 2,539,859$ 1,028,445$ 507,942$ 7,351,384$ 346,073$ 287,085$ 191,658$ 4,790$ 200,486$ - $ 1,072,023$ 159,103 $ -$ 154,858$ 913,077$ -$ 14,756,783$ 16 17 Peak to Meter Adjustment (1,269,929)$ (514,222)$ (253,971)$ -$ -$ -$ -$ -$ -$ -$ 2,038,123$ - $ -$ -$ -$ -$ -$ 18 Final Net Revenue Requirement 1,269,929$ 514,222$ 253,971$ 7,351,384$ 346,073$ 287,085$ 191,658$ 4,790$ 200,486$ - $ 3,110,146$ 159,103 $ -$ 154,858$ 913,077$ -$ 14,756,783$

CITY OF LA VERNE / WATER AND WASTEWATER FINANCIAL PLAN STUDY REPORT 24

4.4 Equivalent Meters
To allocate meter-related costs appropriately, the concept of equivalent meters needs to be understood. By using equivalent meters instead of a straight meter count, the analysis accounts for the fact that larger meters impose larger demands and are more expensive to install, maintain, and replace than smaller meters. Equivalent meters are used in calculating meter service costs.

The City’s number of meter equivalent units is shown in Table 4-6, which is used to derive the bi-monthly service charge. Equivalent meter units account for the potential flow through larger meters and equate this flow to the total flow through the ¾” meter, which is the standard size for a single family residence. Equivalent meter units are calculated by multiplying the number of meters (column B) by the American Water Works Association (AWWA) capacity ratios in column D to yield equivalent meters in column E. As shown in the table below, the City has a total of 14,151 ¾” meter equivalents in the system.

Table 4-6- Derivation of Equivalent Meter Units – Water Meters

AUs are part of single family residential, multi-family residential, institutional, commercial, and industrial customers. The total number of AU’s is shown below in Table 4-7.

Table 4-7: Number of Added Units (AU)

A B C D E
Line Meter Size No of Meters Max GPM Flow Equiv
Ratio
Equivalent
Meters
1 5/8" 2,160 20 1.00 2,061
2 3/4" 842 30 1.00 810
3 1" 5,437 50 1.67 8,203
4 1 1/2" 524 100 3.33 659
5 2" 2,394 160 5.33 1,711
6 3" 522 320 10.67 126
7 4" 799 500 16.67 239
8 6" 105 1,000 33.33 100
9 8" 7 1,600 53.33 160
10 10" 1 2,400 80.00 80
11 Total 12,791 14,151
A B
Line Number of AUs
1 4,446

CITY OF LA VERNE / WATER AND WASTEWATER FINANCIAL PLAN STUDY REPORT 25

4.5 Fire Protection Capacity

Water systems provide two types of fire protection: public fire protection for firefighting (i.e., fire hydrants) and private fire protection (i.e., fire lines for private structures with sprinkler systems for fire suppression and private fire hydrants). Raftelis performed a fire demand analysis to determine the share of fire protection costs allocated to public versus private fire protection. The City provided Raftelis with a count of fire hydrants. The number of private fire connections is shown in Table 4-8.

Table 4-8 shows the calculation of equivalent fire demand associated with public hydrants and private fire lines.

Each connection size has a fire flow demand factor similar to the hydraulic capacity factor of a water meter. The equivalent capacity ratio (Column C) takes the relative flow capacity factor at each fire line size divided by the 6- inch flow capacity to establish each connection on an equivalent basis. The equivalent capacity ratio is multiplied by the number of hydrants (Column E) or connections (Column B) at each size and summed to calculate the equivalent number of hydrants (Column E, Line 13) and connections (Column D, Line 13). Line 14 shows the proportional share of equivalent fire connections between public (Column E) and private (Column D).

Table 4-8 : Equivalent Fire Connections

Table 4-9 shows the max day and max hour extra capacity requirements based on fire flow information provided by the City’s engineer. The information in Table 4-8 and Table 4-9 is used to determine the amount of max day and max hour demand due to fire flow. The flow rates (Column A) and durations (Column B) are converted to hcf per day to determine max day and max hour requirements by pressure zone.

A B C D E
Line Fire Line
Size
Private Fire
Connections
Relative Flow
Capacity
Private Fire
Capacity
Public Fire
Hydrants
1 5/8" 1 0.00 0.00 0
2 3/4" 0 0.00 0.00 0
3 1" 1 0.01 0.01 0
4 1 1/2" 0 0.03 0.00 0
5 2" 2 0.06 0.11 0
6 3" 0 0.16 0.00 0
7 4" 29 0.34 9.98 0
8 6" 82 1.00 82.00 1,473
9 8" 58 2.13 123.60 0
10 10" 3 3.83 11.50 0
11 12" 0 6.19 0.00 0
12 Total 176 227.20 1,473
13 Total All 6" Equiv. 227.20 1473
14 Proportional Share 13% 87%

CITY OF LA VERNE / WATER AND WASTEWATER FINANCIAL PLAN STUDY REPORT 26 Table 4-9: Fire Service Share of Peaking Requirements

A B C D
Line Pressure Zone Max Fire
Flow (gpm)
Duration
(hours)
Max Day Fire
Flow (hcf)
Max Hour Fire
Flow (hcf)
1 Zone 1 5,000 4 1,200 6,000
2 Zone II 3,000 3 540 3,780
3 Zone III 1,500 2 180 1,980
4 Zone IV 1,500 2 180 1,980
5 Zone V 1,500 2 180 1,980

CITY OF LA VERNE / WATER AND WASTEWATER FINANCIAL PLAN STUDY REPORT 27

5. Rate Derivation

5.1 Existing Rate Structure and Rates
The City’s existing rate structure consists of a fixed bi-monthly service charge by meter size, and a set of volumetric rates depending on customer location/zone and amount of usage. The City’s volumetric rate is based on the zone elevation of the customer, as determined by address. There are a total of eight zones in the City – zones one through six, zone P, and zone L. Table 5-1, Table 5-2, Table 5-3, and Table 5-4 show the existing rate structure and rates.

Table 5-1: Existing Service Charge Rate Structure and Rates (Bi-monthly) – Water Meters

Table 5-2: Existing Service Charge Rate Structure and Rates (Bi-monthly) – AU’s

A B
Line Meter Size Bi-Monthly
Service Charge
1 5/8" $36.40
2 5/8" $36.40
3 3/4" $40.00
4 1" $51.00
5 1 1/2" $65.60
6 2" $106.00
7 3" $400.00
8 4" $509.60
9 6" $764.40
10 8" $1,055.60
11 10" $1,456.00
A B
Line All Customers Bi-Monthly AU Charge
1 Per AU $11.20

CITY OF LA VERNE / WATER AND WASTEWATER FINANCIAL PLAN STUDY REPORT 28 Table 5-3: Existing Service Charge Rate Structure and Rates (Bi-monthly) – Private Fire Lines

Table 5-4: Existing Volumetric Rates (All Classes)

5.2 Proposed Rate Structure
In Table 4-5, the City’s revenue requirement was allocated to each cost causation component. Table 5-5 shows how the City will collect revenue for each cost component – through a fixed service charge, a fixed private fire charge, a fixed AU charge and a volumetric charge. Table 5-5 shows that the City will collect approximately 29.4% through the Bi-monthly fixed charges and 70.6% through volumetric rates.

A B
Line Fire Line
Diameter
Bi-Monthly Fire
Line Charge
1 5/8" $0.00
2 3/4" $0.00
3 1" $0.00
4 1 1/2" $0.00
5 2" $46.60
6 3" $65.30
7 4" $102.60
8 6" $130.66
9 8" $167.70
10 10" $205.10
11 12" $242.20
A B
Line Customer Class Volumetric
Rate ($/kgal)
1 All Classes
2 Z1 $3.92
3 Z2 $4.02
4 Z3 $4.21
5 Z4 $4.42
6 Z5 $4.53
7 Z6 $4.77
8 ZP $5.37
9 ZL $2.74

CITY OF LA VERNE / WATER AND WASTEWATER FINANCIAL PLAN STUDY REPORT 29 Table 5-5: Rate Revenue Recovery Structure

5.3 Units of Service
Table 5-6 shows the projected FY 2026 customer class units of service for each cost causation component (Lines 1-9) and the total system units of service for each cost causation component (Line 10). The cost of service by cost causation component was previously calc ulated in Table 4-5 and the units of service calculated in Table 5-6, t his information is used to determine the $/unit cost of service for each cost causation component as shown in Table 5-7. The calculated unit costs are utilized to determine the customer rates discussed below in Sections 5.4 through Section 5.6.

A B C D E F
Line Customer Class Commodity Meter AU Private Fire Total 1 Residential $5,718,218 $2,846,365 $13,308 $0 $8,577,891 2 Institutional $1,656,990 $227,151 $59,494 $0 $1,943,636 3 Commercial $989,812 $233,307 $32,685 $0 $1,255,804
4 Industrial $192,181 $89,118 $8,037 $0 $289,336
5 Lifeline $42,892 $73 $0 $0 $42,964
6 Multi-Family $1,788,229 $308,133 $362,973 $0 $2,459,335 7 Agriculture $31,277 $1,681 $0 $0 $32,958
8 Private Fire $0 $0 $0 $154,858 $154,858
9 Total $10,419,598 $3,705,828 $476,498 $154,858 $14,756,783 10 70.6% 100.0%
11 Variable Total

29.4%
Fixed

CITY OF LA VERNE / WATER AND WASTEWATER FINANCIAL PLAN STUDY REPORT 30 Table 5-6: Derivation of Units of Service

Table 5-7: Derivation of Units Cost by Cost Causation Component

A B C D E F G H I J K L M O P R S T U
Customer Class Annual Use
(ccf)
Average
Daily Use
(ccf/day)
Peaking
Factor
Total
Capacity
(kgal/day)
Extra
Capacity
(kgal/day)
Peaking
Factor
Total
Capacity
(kgal/day)
Extra
Capacity
(kgal/day)
Meter Count Equivalent
Meters Bills AU Bills
Total
Meters+
AU
Total
Bills
Fire Line
Count
Equivalent
Fire Lines
Fire Line
Bills
Residential 938,990 2,573 1.89 4,874 2,301 3.90 10,039 5,165 7,399 10,548 44,392 124 745 7,523 45,137 0 0 0 Institutional 263,912 723 1.59 1,148 425 3.27 2,365 1,217 187 973 1,119 555 3,331 742 4,450 0 0 0 Commercial 168,001 460 2.12 976 516 4.37 2,011 1,035 309 961 1,852 305 1,830 614 3,682 0 0 0 Industrial 30,801 84 3.11 262 178 6.41 541 278 100 373 600 75 450 175 1,050 0 0 0 Lifeline 7,539 21 1.44 30 9 2.97 61 32 0 0 1 0 0 0 1 0 0 0 Multi-Family 301,897 827 1.54 1,273 446 3.17 2,622 1,349 349 1,289 2,093 3,387 20,322 3,736 22,416 0 0 0 Agriculture 4,873 13 3.44 46 33 7.09 95 49 2 7 12 0 0 2 12 0 0 0 Private Fire 0 0 0.00 0 0 0.00 0 0 0 0 0 0 0 0 0 0 0 0
Public Hydrants 0 0 0.00 0 0 0.00 0 0 0 0 0 0 0 0 0 176 227 1,056 Total 1,716,013 4,701 8,609 3,908 17,734 9,124 8,345 14,151 50,070 4,446 26,678 12,791 76,748 176 227 1,056

A B C D E F G H I J K L M N O Q R S
Line Unit Cost of
Service Base Max Day Max Hour Supply Zone 1
Pumping
Zone 2
Pumping
Zone 3
Pumping
Zone 4
Pumping
Zone 5
Pumping
Zone 6
Pumping
Zone P
Pumping
Zone L
Pumping
Meter
Maintenance Added Unit Private Fire
Protection
Customer
Service &
Meter
Reading
Total
1 Cost of Service $1,269,929 $514,222 $253,971 $7,351,384 $346,073 $287,085 $191,658 $4,790 $200,486 $0 $0 $0 $3,110,146 $159,103 $154,858 $913,077 $14,756,783 2 Units of Service 1,716,013 3,908 9,124 1,716,013 1,716,013 989,761 534,852 414,631 181,201 123,829 123,829 249 14,151 4,446 227 76,748 3 Unit Cost $0.74 $131.58 $27.83 $4.28 $0.20 $0.29 $0.36 $0.01 $1.11 $0.00 $0.00 $0.00 $36.63 $5.96 $113.60 $11.90 4 The unit cost for Zones 6, P, and L will be the same as Zone 5.

CITY OF LA VERNE / WATER AND WASTEWATER FINANCIAL PLAN STUDY REPORT 31

5.4 Proposed Bi-Monthly Service Charge

5.4.1 BI-MONTHLY SERVICE CHARGE COMPONENTS
The bi-monthly service charge comprises two cost components: capacity and billing, which are described below. This charge recognizes that the City incurs fixed costs related to reading and maintaining meters as well as billing customers. It also collects a portion of capacity costs through the service charge to attain revenue stability.

5.4.2 CAPACITY COMPONENT
The meter service component recovers two types of costs: 1) costs associated with maintaining and servicing meters as well as billing customers, and 2) capacity (also known as peaking) costs. Capacity costs increase as the meter size increases and are proportional to the AWWA hydraulic capacity ratios shown in column D of Table 4-6. The capacity ratios, which are a function of a meter’s safe maximum flow rate, are used to increase the capacity component for larger capacity meters – as shown in column D of Table 4-6. The ratios shown in column D are the ratio of potential flow through each meter size compared to the flow through a 3/4-inch meter. The 3/4 -inch meter is the standard size used for single families and is used as the base. Larger meters have the potential to demand more peak capacity. For example, column D of Table 4-6 shows that the hydraulic capacity of a 2-inch meter is 5.33 times that of a 3/4-inch meter and therefore the meter service component is 5.33 times that of the 3/4-inch meter.

Peaking costs are shown as max day and max hour costs in Table 4-5. A portion of capacity (peaking) related costs was allocated to the meter service component so that it can be collected through the fixed bi- monthly charge and allows the City to reach its fixed revenue goals. Allocating a portion of the extra capacity costs by meter size is a common way to pass a portion of the fixed capacity costs of the system on to meters and provides greater revenue stability, especially in light of decreasing revenues during a drought or other reasons for sales declines. Stated in another way – it is quite common to reallocate peaking or capacity costs (max day and max hour) to be collected through the service charge – this is the basis for the reallocation in line 17 of Table 4-5.

5.4.3 BILLING COMPONENT
The billing (customer component) derivation, shown in the bottom portion of Table 5-8, column C, recovers costs associated with meter reading, customer billing and collection, as well as providing customer service. These costs are the same for all meter sizes as it costs the same to bill a small meter as it does a larger meter.

Table 5-8 shows the derivation of these components for the meter sizes included in the rate table by water meter size.

CITY OF LA VERNE / WATER AND WASTEWATER FINANCIAL PLAN STUDY REPORT 32 Table 5-8: Bi-monthly Meter and Customer Charge Derivation – Water Meters

Table 5-9 shows the fixed charge derived per AU including the capacity cost from column O, Table 5-7.

Table 5-9: Bi-monthly Meter and Customer Charge Derivation – AUs

5.4.4 TOTAL BI-MONTHLY SERVICE CHARGE FOR ALL METERS
Table 5-10 and Table 5-11 shows the bi-monthly fixed service charge by meter size and by AU, respectively, for the next five fiscal years. Rates for future years are derived by applying the revenue adjustments shown in Table 2-8 to the service charges for FY 2026 shown in Table 5-8.

Table 5-10: Five Year Service Charges – By Meter Size

A B C D
Line Meter Size Capacity
UCOS Billing UCOS Proposed
Meter Charge
1 5/8" $36.63 $11.90 $48.53
2 3/4" $36.63 $11.90 $48.53
3 1" $61.05 $11.90 $72.95
4 1 1/2" $122.10 $11.90 $134.00
5 2" $195.36 $11.90 $207.26
6 3" $390.73 $11.90 $402.62
7 4" $610.51 $11.90 $622.41
8 6" $1,221.02 $11.90 $1,232.92
9 8" $1,953.64 $11.90 $1,965.54
10 10" $2,930.46 $11.90 $2,942.35

A B C D
Line Meter Size Capacity UCOS Billing UCOS Proposed AU Charge 1 Per AU $5.96 $11.90 $17.86

A B C D E F G
Line Meter Size Current FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 l 5/8" $ 36.40 $ 48.53 $ 60.66 $ 69.76 $ 76.73 $ 84.41
2 3 / 4" $ 40.00 $ 48.53 $ 60.66 $ 69.76 $ 76.73 $ 84.41 3 l" $ 51.00 $ 72.95 $ 91.19 $ 104.86 $ 115.35 $ 126.88 4 1 1/2" $ 65.60 $ 134.00 $ 167.50 $ 192.62 $ 211.89 $ 233.08 5 2" $ 106.00 $ 207.26 $ 259.08 $ 297.94 $ 327.73 $ 360.50 6 3" $ 400.00 $ 402.62 $ 503.28 $ 578.77 $ 636.65 $ 700.32 7 4" $ 509.60 $ 622.41 $ 778.01 $ 894.71 $ 984.18 $ 1,082.60 8 6" $ 764.40 $ 1,232.92 $ 1,541.15 $ 1,772.32 $ 1,949.56 $ 2,144.51 9 8" $ 1,055 60 $ 1,965 54 $ 2,456.92 $ 2,825.46 $ 3,108.00 $ 3,4 18.80 10 10" $ 1,456.00 $ 2,942.35 $ 3,677.94 $ 4,229.63 $ 4,652.60 $ 5,117.86

CITY OF LA VERNE / WATER AND WASTEWATER FINANCIAL PLAN STUDY REPORT 33 Table 5-11: Five Year Service Charges – Per AU

5.5 Proposed Fire Line Charges

The calculation of private fire line equivalent units is a critical method employed by water utilities to quantify the capacity reservation and infrastructure burden imposed by dedicated fire suppression connections on private properties. Unlike standard metered services that primarily incur charges based on volumetric consumption, fire lines require significant main capacity and pressure availability regardless of actual water usage. Therefore, equivalent units are typically derived from the nominal diameter of the fire line, often comparing its theoretical flow capacity or cross-sectional area to that of a standard 6-inch line, which is usually assigned one equivalent unit. Larger fire lines, capable of delivering exponentially greater volumes of water during an emergency, are assigned proportionally higher equivalent unit values, reflecting their demand on the utility's transmission and distribution system. This methodology ensures equitable cost recovery for the fixed infrastructure, maintenance, and readiness costs associated with providing robust fire protection services, even for systems that rarely draw water, and is typically governed by local utility ordinances and established engineering standards. Table 5-12 shows the first step in the derivation of private fire charges, which is the derivation of private fire line equivalent units.

Table 5-12: Derivation of Private Fire Line Equivalent Units

Table 5-13 shows the next step in the derivation of private fire charges. The total amount associated with private fire charges is the addition of the capacity cost-of-service plus the administrative (billing) component of the cost-of-service. The capacity ratios, which are a function of a line’s flow capacity, are used to increase the capacity component for different line sizes as shown in the table below using the 6- inch line as the base.

A B C D E F
Line Private Fire Line Size Demand
Factor Count Eq. Demand Fire Ratio Eq. Units
1 5/8" 0.29 1 0.29 0.00 0.00
2 3/4" 0.47 0 0.00 0.00 0.00
3 1" 1.00 1 1.00 0.01 0.01
4 1 1/2" 2.90 0 0.00 0.03 0.00
5 2" 6.19 2 12.38 0.06 0.11
6 3" 17.98 0 0.00 0.16 0.00
7 4" 38.32 29 1111.26 0.34 9.98
8 6" 111.31 82 9127.50 1.00 82.00
9 8" 237.21 58 13757.98 2.13 123.60
10 10" 426.58 3 1279.74 3.83 11.50
11 12" 689.04 0 0.00 6.19 0.00
12 Total All 6" Equiv. 176 227.20

A B C D E F G
Line All Customers Current FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Per AU $ 11.20 $ 17.86 $ 22.33 $ 25.67 $ 28.24 $ 31.07

CITY OF LA VERNE / WATER AND WASTEWATER FINANCIAL PLAN STUDY REPORT 34 Table 5-13: Calculation of Private Fire Charges

Rates will increase in subsequent years by the adjustments shown in Table 2-8 in the same manner as the meter charges. Table 5-14 provides a summary of the bi-monthly fixed fire line charges over the five-year study implementation period.

Table 5-14: Bi-Monthly Fixed Fire Line Charges

5.6 Volumetric Rates

5.6.1 TOTAL VOLUMETRIC REVENUE
Table 5-5, Column B, shows the total amount of revenue the volumetric rates are designed to collect. The next step is to derive each component of the volumetric rate for each class.

5.6.2 CUSTOMER CLASSES
The City decided to keep the existing customer classes unchanged from the existing water rate structure.

5.6.3 PRESSURE ZONES
The City proposes to keep the same pressure zone classifications unchanged from the existing rate structure.

A B C D E F
Line Fire Line
Diameter Count Fire Ratio
(Flow)
Capacity
UCOS Billing UCOS Proposed
Charge
1 5/8" 1 0.00 $0.30 $11.90 $12.19
2 3/4" 0 0.00 $0.48 $11.90 $12.38
3 1" 1 0.01 $1.02 $11.90 $12.92
4 1 1/2" 0 0.03 $2.96 $11.90 $14.86
5 2" 2 0.06 $6.32 $11.90 $18.21
6 3" 0 0.16 $18.35 $11.90 $30.25
7 4" 29 0.34 $39.11 $11.90 $51.00
8 6" 82 1.00 $113.60 $11.90 $125.49
9 8" 58 2.13 $242.08 $11.90 $253.98
10 10" 3 3.83 $435.34 $11.90 $447.24
11 12" 0 6.19 $703.20 $11.90 $715.10

A B C D E F G
Line Meter Size Current FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 5/ 8" $ $ 12.19 $ 15.24 $ 17.53 $ 19.28 $ 21.21
2 3 / 4" $ $ 12.38 $ 15.47 $ 17.79 $ 19.57 $ 21.53
3 1" $ $ 12.92 $ 16.15 $ 18.57 $ 20.43 $ 22.47
4 11/2 " $ $ 14.86 $ 18.58 $ 21.36 $ 23.50 $ 25.85
5 2" $ 46.60 $ 18.21 $ 22.77 $ 26.18 $ 28.80 $ 31.68
6 3 " $ 65.30 $ 30.25 $ 37.81 $ 43.48 $ 47.83 $ 52.61
7 4 " $ 102.60 $ 51.00 $ 63.75 $ 73.32 $ 80.65 $ 88.71
8 6 " $ 130.66 $ 125.49 $ 156.87 $ 180.40 $ 198.44 $ 218.28 9 8 " $ 167.70 $ 253.98 $ 317.47 $ 365.09 $ 401.60 $ 441.76 10 10" $ 205.10 $ 447.24 $ 559.05 $ 642.91 $ 707.20 $ 777.92

CITY OF LA VERNE / WATER AND WASTEWATER FINANCIAL PLAN STUDY REPORT 35

5.6.4 VOLUMETRIC RATE DERIVATION
The total volumetric rate is the summation of unit rates for each cost component: Supply, Delivery, Peaking (Max day and hour) and Pumping. Each unit rate will be derived and added together to get the total volumetric rate for each zone. Each cost component is defined below.

5.6.5 COST COMPONENT DEFINITIONS
The commodity rates for each class and tier are derived by summing the unit rates ($/KGALs) for:

1. Water Supply

2. Delivery

3. Peaking

4. Pumping

Water Supply costs are costs associated with obtaining and treating water to make it ready for delivery from each City source:

1. Local water

2. Imported water from Metropolitan Water District through Three Valley Municipal Water District.

Delivery costs are the operating and capital costs associated with delivering water to all customers through the distribution system (pipelines and storage reservoirs) at a constant average rate of use – also known as serving customers under average daily demand conditions. Therefore, delivery costs are spread over all units of water which results in an equal delivery unit cost for all classes and tiers.

Peaking costs, or extra-capacity costs, represent costs incurred to meet customer peak demands in- excess of base use (or in excess of average daily demand). Peaking costs are the sum of the maximum day and maximum hour costs. Some of the peaking costs are collected through the service charge and the remainder through the volumetric rate. The amounts collected through each charge are shown in Table 4-5 shows the max day and max hour amounts that are reallocated to the meter component – so that they can be collected through the service charge. For the portion of peaking costs collected through the volumetric rate, peaking costs are distributed to each tier and class using peaking factors derived from customer use data – discussed later in this section. For the portion of peaking costs collected through the fixed charge, AWWA hydraulic capacity factors are used to distribute peaking costs to the various meter sizes.

Pumping costs represent a significant operational expense for water utility systems, primarily driven by the electricity required to operate pumps that move water from its source, through treatment, into storage tanks, and finally through distribution mains to customer taps, often against gravity or over long distances to maintain adequate pressure and flow. Beyond electricity, these costs also include maintenance, repair, and eventual replacement of pumping equipment. To recover these essential expenditures, pumping costs are integrated into the overall cost structure that determines customer water rates.

5.6.6 DERIVATION OF THE UNIT COST BY COST COMPONENT
Table 5-15 shows volumetric cost of service as calculated by customer class and pressure zone.

CITY OF LA VERNE / WATER AND WASTEWATER FINANCIAL PLAN STUDY REPORT 36 Table 5-15: Volumetric Cost of Service by Customer Class and Pressure Zone

Table 5-16 shows the projected water demand (kgals) by customer class and pressure zone.

Table 5-16: Water Demand (KGALs) by Zone and Class

Table 5-17 shows the derivation of the volumetric rates by zone and customer class. Volumetric rates for each pressure zone were calculated by dividing the cost of service for each pressure zone by the projected water demand in each pressure zone. The calculated differentials for each zone add to the next lower zone with Zone 1 being the base zone and Zone 5 and beyond being the highest zones. The final volumetric rate for each zone is calculated by added the average rate for Zone 1 ($5.67 in Column B, Line 9) to the cost average cost differential calculated for each zone (Line 10), as shown in the table below.

Table 5-17: Derivation of Volumetric Rates by Zone and Class

The City has decided to use the average rates for all classes so that they all pay the same average rate.

A B C D E F G H I J
Line Customner Class Zone 1 Zone 2 Zone 3 Zone 4 Zone 5 Zone 6 Zone P Zone L Total 1 Residential $5,353,455 $183,727 $125,187 $2,737 $53,112 $0 $0 $0 $5,718,218 2 Institutional $1,468,934 $38,184 $40,706 $1,283 $107,885 $0 $0 $0 $1,656,990 3 Commercial $974,647 $13,627 $1,538 $0 $0 $0 $0 $0 $989,812 4 Industrial $192,125 $56 $0 $0 $0 $0 $0 $0 $192,181
5 Lifeline $41,482 $1,063 $343 $4 $0 $0 $0 $0 $42,892
6 Multi-Family $1,673,826 $50,354 $23,793 $767 $39,490 $0 $0 $0 $1,788,229 7 Agriculture $31,112 $74 $91 $0 $0 $0 $0 $0 $31,277
8 Private Fire $0 $0 $0 $0 $0 $0 $0 $0 $0
9 Total COS $9,735,580 $287,085 $191,658 $4,790 $200,486 $0 $0 $0 $10,419,598

A B C D E F G H I
Line Customner Class Zone 1 Zone 2 Zone 3 Zone 4 Zone 5 Zone 6 Zone P Zone L 1 Residential 938,990 633,423 349,355 236,887 48,003 1,271 1,271 249 2 Institutional 263,912 131,643 113,596 111,020 97,507 97,205 97,205 0 3 Commercial 168,001 46,980 4,293 0 0 0 0 0
4 Industrial 30,801 194 0 0 0 0 0 0
5 Lifeline 7,539 3,665 956 327 0 0 0 0
6 Multi-Family 301,897 173,601 66,397 66,397 35,691 25,353 25,353 0 7 Agriculture 4,873 255 255 0 0 0 0 0
8 Private Fire 0 0 0 0 0 0 0 0
9 Total Demand 1,716,013 989,761 534,852 414,631 181,201 123,829 123,829 249

A B C D E F G H I
Line Customer Class Zone 1 Zone 2 Zone 3 Zone 4 Zone 5 Zone 6 Zone P Zone L 1 Residential $5.70 $0.29 $0.36 $0.01 $1.11 $0.00 $0.00 $0.00 2 Institutional $5.57 $0.29 $0.36 $0.01 $1.11 $0.00 $0.00 $0.00 3 Commercial $5.80 $0.29 $0.36 $0.00 $0.00 $0.00 $0.00 $0.00 4 Industrial $6.24 $0.29 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 5 Lifeline $5.50 $0.29 $0.36 $0.01 $0.00 $0.00 $0.00 $0.00 6 Multi-Family $5.54 $0.29 $0.36 $0.01 $1.11 $0.00 $0.00 $0.00 7 Agriculture $6.38 $0.29 $0.36 $0.00 $0.00 $0.00 $0.00 $0.00 8 Private Fire $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 9 Average $/kgal $5.67 $0.29 $0.36 $0.01 $1.11 $0.00 $0.00 $0.00 10 $5.96 $6.32 $6.33 $7.44 $7.44 $7.44 $7.44

CITY OF LA VERNE / WATER AND WASTEWATER FINANCIAL PLAN STUDY REPORT 37

5.6.7 5-YEAR VOLUMETRIC RATES
Table 5-18 shows the proposed five-year volumetric rates by escalating the volumetric rates derived in Table 5-15 by the proposed revenue adjustments shown in Table 2-8. Customer bill impacts are discussed in Section 6.

Table 5-18: Five-Year Volumetric Rates

5.6.8 LARGEST 10% OF USERS
Recent regulatory changes detailed in AB 755 passed in 2023 and codified in Water Code, §§ 390 & 390.1 require us to identify the costs to serve the largest 10 percent of the users in the City. Proposition 218 requires rates that allocate costs of service proportionately, not special rates for the top 10% of consumers regardless of other factors.

In FY 2024, the City had 8,292 accounts; the top 10% of users represent 829 accounts and approximately

50.0% of total annual water use. These large users are primarily non-residential accounts. As detailed previously in the report, the City sells water from both local sources and purchased water. All users within the City pay a uniform volumetric rate for water consumption based on their respective pressure zone. Based on the uniform rate structure, it is our professional judgement that the existing rate structure is an efficient and fair way to allocate the City’s costs among those who create those costs. All water customers in the City’s system pay rates that allocate costs of service proportionately to the amount of water usage by the customer.

A B C D E F G
Line Customer Class Current FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Zl $ 3.92 $ 5.67 $ 7.09 $ 8.16 $ 8.97 $ 9.87
2 Z2 $ 4.02 $ 5.96 $ 7.45 $ 8.57 $ 9.43 $ 10.37
3 Z3 $ 4.2 1 $ 6.32 $ 7.90 $ 9.09 $ 10.00 $ 11.00
4 Z4 $ 4.42 $ 6.33 $ 7.92 $ 9.10 $ 10.01 $ 11.02
5 ZS $ 4.53 $ 7.44 $ 9.30 $ 10.69 $ 11.76 $ 12.94
6 Z6 $ 4.77 $ 7.44 $ 9.30 $ 10.69 $ 11.76 $ 12.94
7 ZP $ 5.37 $ 7.44 $ 9.30 $ 10.69 $ 11.76 $ 12.94
8 ZL $ 2.74 $ 7.44 $ 9.30 $ 10.69 $ 11.76 $ 12.94

CITY OF LA VERNE / WATER AND WASTEWATER FINANCIAL PLAN STUDY REPORT 38

6. Bill Impacts

6.1 Bi-monthly Single Family Residential Bill Impacts
Table 6-1 shows the single family residential (SFR) customer bill impacts for various consumption levels assuming a 1-inch meter, which is the most common meter size for SFR customers.

Table 6-1: Single Family Residential Bi-monthly Bill Impacts

`

6.2 Multi-family Bill Impacts
Table 6-2 shows multi-family residential (MFR) customer (with two dwelling units) bill impacts for various consumption levels, assuming a 1-inch meter, which is the most common meter size for this class.

Table 6-2: Multi-family Residential Bi-monthly Bill Impacts

$300
$250
$200
$150
$100
$50
$0
■ Current
■ Propo sed
Impa ct ($)
Impact( %)
$300
$250
$200
$150
$100
$50
$0
■ Current
■ Proposed
Impact ($)
Impact(% )
SFR Bi-Monthly Bill Impacts at Various Usage Levels- 1"' Meter $243 .15
$186.42
$152.38
$168 .60
$129.40
$101.32 $112.66
$70.60 $78.44
I I
$105 .88
Very low Use (5 kgal) low Use (7 kgal) An nua I Avg. (14 kga I) Medium High Use (20 High Use (30 kgal) kgal) $70.60 $78.44 $105.88 $129.40 $168.60
$101.32 $112.66 $152.38 $186.42 $243.15
$30.72 $34.22 $46.50 $57.02 $74.55
44% 44% 44% 44% 44%
MFR with ADU Bi-Monthly Bill Impacts at Various Usage Levels - 1'" Meter, 2 Dwelling Units $261.01
$232.64
$204.28
$179.80
$160.20
$140.60
Low Use (20 kgal) Medium Use (25 kgal) High Use (30 kgal) $140.60 $160.20 $179.80
$204.28 $232.64 $261.01
$63.68 $72.44 $81.21
45% 45% 45%

CITY OF LA VERNE / WATER AND WASTEWATER FINANCIAL PLAN STUDY REPORT 39

6.3 Institutional
Table 6-3 shows the institutional customer bill impacts for various use points and assuming a 1-inch meter, which is the most common meter size for this class.

Table 6-3: Institutional Bi-monthly Bill Impacts

6.4 Commercial
Table 6-4 shows the commercial customer bill impacts assuming a 1.5-inch meter, which is the most common meter size for this class.

Table 6-4: Commercial Bi-monthly Bill Impacts

$400
$350
$300
$250
$200
$150
$100
$50
$0
■ Current
■ Propo sed
Impact($)
Impact(%)
$1,200
$1,000
$800
$600
$400
$200
$0
■ Current
■ Proposed
Impact($)
Impact( %)
Institutional Bi-Monthly Bill Impacts at Various Usage Levels - 1"' Meter $356.62
$299.88
$243 .15 $247 .00
$207.80
$168 .60
Low Use (30 kgal) Med ium Use (40 kgal) High Use (50 kgal) $168.60 $207.80 $247.00
$243 .15 $299.88 $356 .62
$74.55 $92.08 $109.62
44% 44% 44%
Commercial Bi-Monthly Bill Impacts at Various Usage Levels - 1.5'" Meter $995 .48
$758.00 $802.96
$660.84
$496.75 $527.82
Low Use (30 kgal) Medium Use (40 kgal) High Use (50 kgal) $496.75 $527.82 $660.84
$758.00 $802.96 $995.48
$261.25 $275.14 $334.64
53% 52% 51%

CITY OF LA VERNE / WATER AND WASTEWATER FINANCIAL PLAN STUDY REPORT 40

6.5 Industrial
Table 6-5 shows the industrial customer bill impacts assuming a 2-inch meter, which is the most common meter size for this class.

Table 6-5: Industrial Bi-monthly Bill Impacts

$1,800
$1,600
$1,400
$1,200
$1,000
$800
$600
$400
$200
$0
■ Current
■ Proposed
Impact($)
Impact(%)
Industrial Bi-Monthly Bill Impacts at Various Usage Levels - 2"' Meter Low Use (30 kgal)
$653 .60
$985.01
$331.41
51%
Medium Use (40 kgal)
$849.60
$1,268.67
$419.07
49%
High Use (50 kgal)
$1,045.60
$1,552.34
$506.74
48%

CITY OF LA VERNE / WATER AND WASTEWATER FINANCIAL PLAN STUDY REPORT 41

7. Wastewater

The City of La Verne is responsible for both the operation and maintenance of an extensive wastewater collection and conveyance system. The City of La Verne’s wastewater collection system, managed by its Wastewater Division, consists of approximately 97 miles of gravity wastewater lines, four lift stations, and 2,000 manholes. Wastewater collected by this system from residential, commercial, and industrial properties within La Verne is conveyed to the Los Angeles County Sanitation District (LACSD) treatment plants for treatment and disposal, with the City operating under the jurisdiction of the LACSD for these processes. LACSD bills customers directly for treatment costs.

Raftelis analyzed existing operating wastewater revenues, O&M and capital expenses, and reserve requirements for the wastewater enterprise. This section discusses projected revenues, O&M expenses, reserve funding and the revenue adjustments needed to ensure the fiscal sustainability of the Wastewater Enterprise.

7.1 Current Wastewater Rates
Table 7-1 shows current wastewater rates, which have remained unchanged since 2019. The City’s current wastewater rates include a fixed charge (for all customers) and a volumetric rate (for non- residential customers). The volumetric rate is based on water consumed through the water meter connection. Raftelis proposes no major changes to the wastewater rate structure.

Table 7-1: Current Wastewater Service Charges

Table 7-2 shows the projected number of wastewater accounts for each customer class and the wastewater flow in thousand gallons (kgals) for each non-residential customer class over the study period.

A B
Customer
Class
Bi-Monthly
Fixed Charge
All Customers $23.43
A B
Customer Class
Volumetric
Charge
($/kgal)
Institutional $0.20
Commercial $0.20
Manufacturing $0.20

CITY OF LA VERNE / WATER AND WASTEWATER FINANCIAL PLAN STUDY REPORT 42 Table 7-2: Wastewater Accounts and Wastewater Use in Thousand Gallons (kgals)

Raftelis estimated current wastewater rate revenue by multiplying the current rates by the number of accounts and customer effluent flow (water consumed through the meter was utilized as a proxy for effluent flow) for each fiscal year. The result is shown in Table 7-3. This is the projected amount of revenue if the City does not adjust wastewater rates. Small increases in revenue result from growth.

Table 7-3: Projected Wastewater Revenue

7.2 Wastewater O&M Expenses
Raftelis projected wastewater O&M expenses by applying the inflation factors shown in Table 2-4 to the FY 2025 O&M budget. Table 7-4 summarizes the budgeted and projected O&M expenses during the Study period.

A B C D E F G H
Line Customer Accounts 2024 2025 2026 2027 2028 2029 2030 1 Residential 7,186 7,211 7,236 7,261 7,286 7,311 7,336 2 Institutional 113 113 113 113 113 113 113
3 Commercial 253 253 253 253 253 253 253
4 Industrial 88 88 88 88 88 88 88
5 Lifeline 0 0 0 0 0 0 0
6 Multi-Family 269 269 270 271 272 273 274
7 Agricultural 0 0 0 0 0 0 0
8 Total - Accounts 7,908 7,934 7,959 7,985 8,011 8,037 8,063

A B C D E F G H
Line Customer Effluent Flow (kgals) 2024 2025 2026 2027 2028 2029 2030 1 Institutional 263,912 263,912 263,912 263,912 263,912 263,912 263,912 2 Commercial 168,001 168,001 168,001 168,001 168,001 168,001 168,001 3 Industrial 30,801 30,801 30,801 30,801 30,801 30,801 30,801 4 Total - Customer Effluent Flow (kgals) 462,714 462,714 462,714 462,714 462,714 462,714 462,714

A B C D E F
Line Calculated Revenues FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Fixed Charge Revenue
2 Residential $1,036,006 $1,039,575 $1,043,156 $1,046,749 $1,050,355 3 Institutional $98,547 $98,547 $98,547 $98,547 $98,547 4 Commercial $79,006 $79,006 $79,006 $79,006 $79,006
5 Industrial $22,774 $22,774 $22,774 $22,774 $22,774
6 Lifeline $0 $0 $0 $0 $0
7 Multi-Family $521,188 $522,983 $524,785 $526,592 $528,406 8 Agricultural $0 $0 $0 $0 $0
9 Subtotal - Fixed Charge Revenue $1,757,520 $1,762,884 $1,768,267 $1,773,668 $1,779,087 10 11 Variable Rate Revenue
12 Institutional $52,782 $52,782 $52,782 $52,782 $52,782 13 Commercial $33,600 $33,600 $33,600 $33,600 $33,600
14 Industrial $6,160 $6,160 $6,160 $6,160 $6,160
15 Subtotal - Variable Rate Revenue $92,543 $92,543 $92,543 $92,543 $92,543 16 17 Total - Rate Revenue $1,850,063 $1,855,427 $1,860,809 $1,866,211 $1,871,630

CITY OF LA VERNE / WATER AND WASTEWATER FINANCIAL PLAN STUDY REPORT 43

Table 7-4: Projected Escalation Factors and Wastewater O&M Expenses

7.3 Projected Capital Improvement Program
The City’s capital improvement program (CIP) through the end of the Study period, as adjusted for inflation, is shown in Table 7-5. The proposed capital improvement program will be funded through rates (PayGo) and is the primary driver for the proposed revenue adjustments. The current plan is to avoid taking on any additional debt to fund the City’s capital improvement program.

Table 7-5: Wastewater Capital Improvement Projects

7.4 Proposed Financial Plan
To ensure that the Wastewater Enterprise has adequate revenues to fund operating and capital expenditures, as well as funds for sufficient reserves, Raftelis and City Staff recommend the revenue adjustments shown in Table 7-6. The City has been postponing many much-needed capital improvement projects and funding these projects is a primary driver of the rate revenue adjustments. The first revenue

A B C D E F
Line Escalation Factors FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Expense Inflation
2 General 3.0% 3.0% 3.0% 3.0% 3.0%
3 Salary 5.0% 5.0% 5.0% 5.0% 5.0%
4 Benefits 7.0% 7.0% 7.0% 7.0% 7.0%
5 Utilities 7.5% 7.5% 7.5% 7.5% 7.5%
6 Capital 4.5% 4.5% 4.5% 4.5% 4.5%

A B C D E F G
Line Operating Expenses FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Sewer Administration $737,761 $767,099 $797,754 $829,793 $863,287 $898,309 2 Sewer System Maintenance $922,488 $967,031 $1,013,947 $1,063,372 $1,115,451 $1,170,339 3 Transfers $156,763 $161,466 $166,310 $171,299 $176,438 $181,731 4 Total - O&M Expenses $1,817,012 $1,895,596 $1,978,011 $2,064,464 $2,155,176 $2,250,379

A B C D E F G
Line Capital Projects FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Sewer Capital Improvement - Fund 531
2 Purchase: Colina De Oro Lift Station - portable backup generators $0 $93,600 $0 $0 $0 $0 3 Pipeline Rehabilitation: Bunnelle Avenue $0 $134,446 $145,417 $0 $0 $0 4 Pipeline Rehabilitation: Golden Hills Road $0 $168,780 $182,552 $0 $0 $0 5 Pipeline Rehabilitation: Wheeler Avenue $0 $159,166 $172,154 $0 $0 $0 6 Sewerline Rehabilitation $0 $234,000 $0 $0 $0 $0
7 Manhole/Cleanout Rehabilitation (10% Over 15 years - 16.86/year @$28,641each)$0 $0 $522,291 $543,182 $564,910 $587,506 8 Sewer Relining (2.25 miles/year) $0 $0 $0 $2,157,100 $2,283,384 $2,414,719 9 Purchase: Franklin - portable backup generator $0 $0 $0 $0 $105,287 $0 10 CONSTRUCTION CONTRACTS $150,000 $0 $0 $0 $0 $0
11 SURVEILLANCE EQUIPMENT $75,000 $0 $0 $0 $0 $0
12 Subtotal - Sewer Capital Improvement - Fund 531 $225,000 $789,992 $1,022,414 $2,700,282 $2,953,581 $3,002,225 13 14 Total - Capital Projects $225,000 $789,992 $1,022,414 $2,700,282 $2,953,581 $3,002,225

CITY OF LA VERNE / WATER AND WASTEWATER FINANCIAL PLAN STUDY REPORT 44 adjustments are assumed to take effect in January of FY 2026, with subsequent revenue adjustments occurring in July of each year.

Table 7-6: Proposed Wastewater Revenue Adjustments

Table 7-7 shows the cash flow projection with the proposed revenue adjustments from Table 7-6. The proposed financial plan meets the City’s financial needs by meeting long-term reserve goals. As indicated by the negative net cash flow, the City plans to use fund balances to minimize customer impacts.

Table 7-7: Wastewater Enterprise Proposed Financial Plan Pro-Forma

Figure 7-1 shows the financial plan in a graphical format. Status Quo revenue is shown by the teal line.

Projected revenue is shown by the dashed line. Annual expenditures are shown by the columns. Red bars above the X-axis show the net cash to build up the reserves and red bars below the X-axis show withdrawals from reserves to fund costs.

A B C D E F
Line Revenue Adjustments FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Effective Year 2026 2026 2027 2028 2029
2 Effective Month January July July July July
3 % Adjustment 15% 15% 15% 15% 15%

A B C D E F G
Line Financial Plan FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Revenues
2 Service Charges Subtotal $1,844,717 $1,850,063 $1,855,427 $1,860,809 $1,866,211 $1,871,630 3 Revenue Adjustments $0 $138,755 $598,375 $969,249 $1,397,803 $1,892,887 4 Total Non-Rate Revenue $322,978 $241,874 $193,147 $182,002 $180,493 $184,440 5 Total Non-Rate Revenue $2,167,695 $2,230,691 $2,646,949 $3,012,061 $3,444,507 $3,948,957 6 7 O&M Expenses
8 Sewer Administration $737,761 $767,099 $797,754 $829,793 $863,287 $898,309 9 Sewer System Maintenance $922,488 $967,031 $1,013,947 $1,063,372 $1,115,451 $1,170,339 10 Transfers $156,763 $161,466 $166,310 $171,299 $176,438 $181,731 11 Total - O&M Expenses $1,817,012 $1,895,596 $1,978,011 $2,064,464 $2,155,176 $2,250,379 12 13 Net Revenue $350,683 $335,095 $668,938 $947,597 $1,289,331 $1,698,578 14 15 Existing Debt Service $95,613 $95,627 $95,685 $95,649 $95,671 $95,715 16 17 Cash Funded CIP $225,000 $789,992 $1,022,414 $2,700,282 $2,953,581 $3,002,225 18 19 Net Cash Flow $255,070 $239,469 $573,254 $851,948 $1,193,659 $1,602,863 20 21 Total Beginning Balance $14,998,463 $8,140,111 $3,589,587 $3,140,427 $2,384,118 $2,906,528 22 Total Ending Balance 8,140,111.00 3,589,587.32 3,140,427.07 2,384,117.65 2,906,528.13 3,892,203.89 23 24 Combined Target $1,345,536 $1,595,686 $1,804,509 $1,858,109 $1,646,393 $1,361,820 25 Variance from Target $6,794,575 $1,993,901 $1,335,918 $526,008 $1,260,135 $2,530,384

CITY OF LA VERNE / WATER AND WASTEWATER FINANCIAL PLAN STUDY REPORT 45 Figure 7-1: Proposed Wastewater Operating Financial Plan

Additionally, wastewater utilities maintain reserve targets for both Operations and Capital to ensure financial resilience, continuous service, and environmental compliance.

Operational reserves are vital for meeting working capital requirements, addressing unforeseen daily challenges such as emergency repairs to collection systems (e.g., blockages, force main breaks, pump station failures), unexpected increases in chemical or energy costs, or revenue fluctuations. These reserves enable prompt responses preventing service interruptions while avoiding sudden, reactive rate increases.

Capital reserves, on the other hand, are essential for funding CIP, funding major, often unpredictable, infrastructure failures like collection component failures, accelerating scheduled replacements due to premature wear, or responding to new, more stringent regulatory mandates. This ensures the utility can maintain long-term asset integrity and meet its environmental obligations without incurring excessive debt or imposing large, abrupt rate surcharges on customers.

The City has the following reserve targets for the wastewater utility:
• Operations: 90 days (or 3 months) of Operations and Maintenance expenses, which is in alignment with most municipal sewer agencies. Maintaining financial resilience is the core function of an operating reserve. This target minimum reserve addresses short-term volatility in revenue streams and operational costs, and furthermore, provides a safeguard against adverse trends in receivables, particularly when facing economic challenges. • Capital: 50% of annual capital expenditures. As the City has significant planned capital investments over the study horizon, this target minimum reserve is intended to be a cash resource set aside to address capital system replacement and rehabilitation needs of the system.

Figure 7-2 displays the City’s Fund Balances compared to the Overall Target Reserve Balances for the wastewater utility in a graphical format over the five-year rate implementation period.

Financial Plan
V)
$6
C
$5 .Q
~ $4
$3 -----
$2
$1
$0
($1) FY 2025 FY 2026 FY 2027
($2)
($3}
- O&M Expenses - Debt Service PAYGO CIP
- Reserve Funding - Current Revenues - - - Proposed Revenues

CITY OF LA VERNE / WATER AND WASTEWATER FINANCIAL PLAN STUDY REPORT 46 Figure 7-2: Wastewater Projected Fund Balances vs. Overall Target Reserve Balances

V, $9
.Q $8
i $7
$6
$5
$4
$3
$2
$1
$0
-
-
-
FY 2025
Fund Balances
- -
- - -
FY 2026 FY 2027 FY 2028 FY 2029
- Ending Balance - Target Reserve

CITY OF LA VERNE / WATER AND WASTEWATER FINANCIAL PLAN STUDY REPORT 47

8. Wastewater Enterprise
Cost of Service and Rate
Derivation

8.1 Wastewater Cost of Service Analysis
This section discusses the allocation of O&M expenses and capital costs to the wastewater cost components, which is simplified for the City since it operates as a wastewater collection agency and does not operate a wastewater treatment plant. The City collects sewage and sends it to the LACSD treatment plant. LACSD bills customers separately for treatment. Therefore, the City’s cost components consist of Flow, Customer and General components. As discussed in Section 8.1, the City’s rate structure consists of a bi-monthly wastewater service charge and a volumetric rate based on wastewater use for non-residential customers. The City requested to maintain the existing rate structure for sewer service charges.

8.1.1 COST ALLOCATION TO COST COMPONENTS
Table 8-1 shows the percentage allocation of the City’s O&M, capital, and non-rate revenue budgets to the cost components. The total allocation to each cost component is highlighted in bold in the table. The final percentage allocation is used to allocate the wastewater revenue requirement to the cost components. Since the City provides a collection-only system, there are no treatment costs (BOD, TSS) or conveyance to LACSD costs allocated to these categories.

Table 8-1: Allocating O&M and Capital Costs to Cost Causation Components

Table 8-2 shows the allocation of wastewater O&M, capital and non-rate revenues to the cost components. This allocation is used to allocate the City’s budgets to each cost component. The resulting cost component allocations

A B C D E F G H I
Line Budget Category FY 2026 Treatment Collection Conveyance Lift Stations Customer
Service &
Meter
Reading
Admin &
General Total
1 Total - Sewer Administration $767,099 0% 0% 0% 0% 5% 95% 100% 2 Total - Sewer System Maintenance $967,031 0% 71% 0% 19% 0% 10% 100% 3 Total - Transfers $161,466 0% 0% 0% 0% 0% 100% 100%
4 Total Operating Expenses $1,895,596 0% 36% 0% 10% 2% 52% 100% 5 6 Total Capital Revenue Requirement $95,627 0% 75% 0% 24% 0% 0% 100% 7 8 Total Non-Rate Revenues $241,874 0% 55% 0% 17% 1% 27% 100%

A B C D E F G
Line Cost Causation Components Flow BOD TSS
Customer
Service &
Meter
Reading
Admin &
General Total
1 Treatment 0% 50% 50% 0% 0% 100%
2 Collection 100% 0% 0% 0% 0% 100%
3 Conveyance 100% 0% 0% 0% 0% 100%
4 Lift Stations 100% 0% 0% 0% 0% 100%
5 Customer Service & Meter Reading 0% 0% 0% 100% 0% 100% 6 Admin & General 0% 0% 0% 0% 100% 100%

CITY OF LA VERNE / WATER AND WASTEWATER FINANCIAL PLAN STUDY REPORT 48 totals for each category are shown in the table. Since the City provides a collection-only system, there are no treatment costs (BOD, TSS) or conveyance costs allocated to these categories.

Table 8-2: Allocating to Cost Components

8.1.2 REVENUE REQUIREMENT DETERMINATION
The revenue required from rates is the amount of revenue required to fund all wastewater expenses in the test year (FY 2026). The utility must generate annual revenues adequate to meet its estimated annual O&M expenses, reserve targets, debt service and capital investment. Table 8-3 shows the derivation of the revenue requirement for FY 2026.

The total wastewater revenue requirement includes O&M, debt service and capital expenses shown in the upper portion of the table. Revenue from other sources is subtracted from this total and several other adjustments are made to ensure the adequate revenue collection. A revenue adjustment is made to account for the fact that the proposed rate increase takes place midway through the fiscal year. The final revenue requirements by cost causation component are then utilized to calculate the unit rate ($/kgal) for volumetric costs (Line 17) as well as the unit rate ($/account bill) for fixed costs (Line 18) for the wastewater utility.

A B C D E F G
Line Allocation Flow BOD TSS Customer Service
& Meter Reading
Admin &
General Total
1 O&M Allocation
2 Treatment $0 $0 $0 $0 $0 $0
3 Collection $682,094 $0 $0 $0 $0 $682,094
4 Conveyance $0 $0 $0 $0 $0 $0
5 Lift Stations $188,233 $0 $0 $0 $0 $188,233
6 Customer Service & Meter Reading $0 $0 $0 $38,355 $0 $38,355 7 Admin & General $0 $0 $0 $0 $986,913 $986,913
8 Total - O&M Allocation $870,328 $0 $0 $38,355 $986,913 $1,895,596 9 10 Capital Allocation
11 Treatment $0 $0 $0 $0 $0 $0
12 Collection $72,136 $0 $0 $0 $0 $72,136
13 Conveyance $0 $0 $0 $0 $0 $0
14 Lift Stations $23,395 $0 $0 $0 $0 $23,395
15 Customer Service & Meter Reading $0 $0 $0 $0 $0 $0
16 Admin & General $0 $0 $0 $0 $96 $96
17 Total - Capital Allocation $95,531 $0 $0 $0 $96 $95,627 18 19 Non-Rate Revenue Allocation
20 Treatment $0 $0 $0 $0 $0 $0
21 Collection $132,851 $0 $0 $0 $0 $132,851
22 Conveyance $0 $0 $0 $0 $0 $0
23 Lift Stations $40,899 $0 $0 $0 $0 $40,899
24 Customer Service & Meter Reading $0 $0 $0 $2,544 $0 $2,544 25 Admin & General $0 $0 $0 $0 $65,580 $65,580
26 Total - Non-Rate Revenue Allocation $173,750 $0 $0 $2,544 $65,580 $241,874

CITY OF LA VERNE / WATER AND WASTEWATER FINANCIAL PLAN STUDY REPORT 49 Table 8-3: Wastewater Enterprise Revenue Requirement for FY 2026

8.1.3 ALLOCATING THE REVENUE REQUIREMENT TO COST CAUSATION

COMPONENTS AND RATE CALCULATION
The revenue requirement in Table 8-3 is then allocated to the cost components to calculate the wastewater bi- monthly service charge and volumetric rate. Table 8-4 shows the allocation of the variable and fixed cost-of-service requirements by customer class. To estimate the wastewater flow by the different classes, we have used winter use for residential customers and annual water use for non-residential customers, assuming that both classes use about 10 percent of the use shown for irrigation. Column B shows the customer usage (per 1,000 gallons of water consumed through the meter) by customer class. Column C provides the calculated unit cost per thousand gallons of usage. The variable cost-of-service requirement is calculated by multiplying the customer class usage in Column B times the unit cost in Column C. Fixed costs by customer class are calculated by multiplying the number of account bills in each customer class (Column E) times the unit fixed costs per account bill of the wastewater utility (Column F) in order to calculate the fixed cost-of-service requirements by customer class in Column G. Column H provides the total cost-of-service requirements by customer class.

Table 8-4: Allocation of Fixed and Variable Cost-of-Service Requirements by Customer Class

A B C D E
Line Revenue Requirement Flow
Customer
Service &
Meter Reading
Admin &
General Total
1 O&M Revenue Requirement $870,328 $38,355 $986,913 $1,895,596 2 Capital Revenue Requirement $95,531 $0 $96 $95,627
3 Revenue Offsets ($173,750) ($2,544) ($65,580) ($241,874) 4 Revenue Requirement Before Adjustment $792,109 $35,811 $921,429 $1,749,349 5 6 Allocation of Change in Cash $239,229 $0 $240 $239,469 7 Adjustment for Mid-Year Increase $63,707 $2,808 $72,241 $138,755 8 Net Revenue Requirement After Adjustment $1,095,045 $38,618 $993,909 $2,127,572 9 10 Allocation of General Costs $0 $993,909 ($993,909) $2,127,572 11 Revenue Requirement After Allocation of General Costs $1,095,045 $1,032,527 $0 $2,127,572 12 13 Variable to Fixed Adjustment ($602,275) $602,275 $0 $0 14 Final Revenue Requirement After Variable/Fixed Adj. $492,770 $1,634,802 $0 $2,127,572 15 16 Units of Service 1,317,420 75,012
17 Unit Rate ($/kgal) $0.37
18 Unit Rate ($/account bill) $21.79

A B C D E F G H
Line Customer Class Customer
Usage (kgals)
Unit Cost
($/kgal
Usage)
Variable
COS Req.

Account
Bills
Unit Cost
($/account bill)
Fixed COS
Req.

Total COS
Req.
1 Residential 639,750 $0.37 $239,293 44,217 $21.79 $963,667 $1,202,960 2 Institutional 263,912 $0.37 $98,714 4,206 $21.79 $91,666 $190,380 3 Commercial 168,001 $0.37 $62,839 3,372 $21.79 $73,489 $136,329 4 Industrial 30,801 $0.37 $11,521 972 $21.79 $21,184 $32,705 5 Lifeline 0 $0.37 $0 0 $21.79 $0 $0
6 Multi-Family 214,956 $0.37 $80,403 22,244 $21.79 $484,796 $565,199 7 Agricultural 0 $0.37 $0 0 $21.79 $0 $0
8 Total 1,317,420 $492,770 75,012 $1,634,802 $2,127,572

CITY OF LA VERNE / WATER AND WASTEWATER FINANCIAL PLAN STUDY REPORT 50

Table 8-5 shows the revenue requirement allocation and the rate calculation. For residential, lifeline, muti-family and agricultural customers, the cost-of-service requirement in Column B is completely recovered by the bi-monthly fixed charge in Column J. For institutional, commercial and industrial customers, the cost-of-service requirement in Column B is collected through a combination of the bi-monthly fixed charge in Column B and the volumetric rate in Column K in order to satisfy the cost-of-service revenue requirements for each customer class.

Table 8-5: Revenue Requirement Allocation to Cost Components and Rate Calculation

8.1.4 FIVE YEAR PROPOSED WASTEWATER SERVICE RATES
Table 8-6 shows the proposed 5-year rates for all customer classes. The out-year rates are derived by escalating the rates from Table 8-5 by the revenue adjustments from Table 7-6.

Table 8-6: Proposed Five-Year Fixed and Variable Wastewater Rates

8.1.5 SINGLE FAMILY RESIDENTIAL WASTEWATER BILL IMPACTS Table 8-7 shows the estimated wastewater bill impacts for each single-family residential and non-residential customers for FY 2026.

A B C D E F G H I J K
Line Customer Class COS Rev.

Req.
% of COS
Rev. Req.
% Fixed
Revenue
% Variable
Revenue
Estimated
Fixed
Revenue
Estimated
Variable
Revenue
Billing Units Flow (kgal) Bi-Monthly
Fixed Charge
Vol. Rate
($/kgal)
1 Residential $1,202,960 56.5% 100% 0% $1,176,362 $0 44,217 NA 26.60$ NA 2 Institutional $190,380 8.9% 59% 41% $111,897 $78,482 4,206 263,912 26.60$ $0.29 3 Commercial $136,329 6.4% 66% 34% $89,710 $46,619 3,372 168,001 26.60$ $0.29 4 Industrial $32,705 1.5% 79% 21% $25,859 $6,845 972 30,801 26.60$ $0.29 5 Lifeline $0 0.0% 100% 0% $0 $0 0 NA 26.60$ NA 6 Multi-Family $565,199 26.6% 100% 0% $591,797 $0 22,244 NA 26.60$ NA 7 Agricultural $0 0.0% 100% 0% $0 $0 0 NA 26.60$ NA 8 Total $2,127,572 $1,995,625 $131,947 75,012 462,714

A B C D E F G
Line Rate Current FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 I Fixed Bi-Monthly $ 23.43 $ 26.61 $ 30.61 $ 35.21 $ 40.50 $ 46.58

A B C D E F G
Line Rate Current FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Volumetric ($/kga ls) $ 0.20 $ 0.29 $ 0.34 $ 0.40 $ 0.46 $ 0.53

CITY OF LA VERNE / WATER AND WASTEWATER FINANCIAL PLAN STUDY REPORT 51 Table 8-7: Single Family Residential and Commercial Wastewater Bill Impacts

$30
$25
$20
$15
$10
$5
$0
■ Current
■ Proposed
Impact($)
Impact{%)
$40
$35
$30
$25
$20
$15
$10
$5
$0
■ Current
■ Proposed
Impact($)
Impact {%)
SFR Bi-Monthly Bill Impacts - 100% Fixed Charge
$23.43
SRF (100% Fixed Charge)
$23.43
$26.61
$3.18
14%
$26.61
Commercial Bi-Monthly Bill Impacts at Various Effluent Flow Levels $35.16
$32.31
$29.46
$25.43
$27 .43
$29.43
Low Effluent Flow (10 kgal) Medium Effluent Flow (20 kgal) High Use (30 kgal) $25.43 $27.43 $29.43
$29.46 $32.31 $35.16
$4.03 $4.88 $5.73
16% 18% 19%
(909) 596-8744 www.laverneca.gov/[email protected]

NOTICE OF PUBLIC HEARING
Proposition 218 Notification:

Proposed Adjustments to Water and Sewer Rates
City of La Verne
Office of the City Clerk

3660 D Street
La Verne, CA 91750
Monday, November 3, 2025
Hearing Date:

Time:

Place:
6:30 p.m.

City of La Verne
Council Chambers
3660 D Street
La Verne, CA 91750
This Notice is provided by the City of La Verne in accordance with Article XIII D, Section 6 of the California Constitution (Proposition 218), which requires the City to notify property owners of record with City water and/or sewer connections of proposed water and sewer rate adjustments and their right to protest.

Presorted
First Class Mail
US Postage
PAID
San Dimas, CA
Permit No. 175
(909) 596-8744 www.laverneca.gov/[email protected]

NOTICE OF PUBLIC HEARING
Proposition 218 Notification:

Proposed Adjustments to Water and Sewer Rates
City of La Verne
Office of the City Clerk
3660 D Street
La Verne, CA 91750
Monday, November 3, 2025
Hearing Date:

Time:

Place:
6:30 p.m.

City of La Verne
Council Chambers
3660 D Street
La Verne, CA 91750
This Notice is provided by the City of La Verne in accordance with Article XIII D, Section 6 of the California Constitution (Proposition 218), which requires the City to notify property owners of record with City water and/or sewer connections of proposed water and sewer rate adjustments and their right to protest.
(909) 596-8744 www.laverneca.gov/[email protected]

NOTICE OF PUBLIC HEARING
Proposition 218 Notification:

Proposed Adjustments to Water and Sewer Rates
City of La Verne
Office of the City Clerk
3660 D Street
La Verne, CA 91750
Monday, November 3, 2025
Hearing Date:

Time:

Place:
6:30 p.m.

City of La Verne
Council Chambers
3660 D Street
La Verne, CA 91750
This Notice is provided by the City of La Verne in accordance with Article XIII D, Section 6 of the California Constitution (Proposition 218), which requires the City to notify property owners of record with City water and/or sewer connections of proposed water and sewer rate adjustments and their right to protest.

□
The La Verne City Council will conduct a Public Hearing on Monday, November 3, 2025, to consider adopting proposed rate adjustments to the City’s current water and sewer
service charges. All interested persons are invited to attend the Public Hearing. The City Council will hear and consider all oral testimony and written materials submitted regarding the proposed rate adjustments at the Public Hearing. In the absence of a
majority protest, the City Council has the
authority to adjust the proposed water and/or sewer rates in response to oral testimony and written materials submitted for consideration, provided adjustments do not increase rates beyond those proposed in this Notice. If adopted by the City Council, the proposed rate adjustments will become effective on January 1, 2026, with annual rate adjustments on
July 1 of each year from 2026 through 2029.

Questions About
Proposed Rates? VIRTUAL SESSIONS

NOTICE TO PROPERTY OWNERS AND WATER/SEWER CUSTOMERS
1 REASONS FOR PROPOSED RATE ADJUSTMENTS
Address rising costs of wholesale water supply, utilities, chemicals, and supplies. About 75% of the water used in the City’s service area is imported from the Colorado
River and Northern California. Imported water costs have risen dramatically.

Replace and modernize our aging infrastructure to
prevent breaks and service disruptions and improve
system resiliency. Close to $16 million in water and
sewer capital projects are recommended.

Meet minimum debt service requirements and fund
emergency and unplanned expenses.

Maintain financial sustainability while addressing
reduced revenues from mandated and responsible
conservation. When customers use less water, which
happens in drought years and during periods of
abundant rainfall, it leads to lower revenues. Lower
revenues are a challenge because a majority of the costs associated with operating and maintaining our water and sewer systems do not decrease proportionately with
lower water use.

The City is hosting several
community information sessions
to address questions about
proposed rates, how they were
determined, what’s driving the need
to increase rates, and how your
bills may be impacted beginning in
2026. The same content will be
covered in each session.

The City is committed to providing safe and reliable water and sewer services, now and into the future. Effective
financial management of our water and sewer systems is
ess
ential for long-term resilience and maintaining the high quality of life we have come to expect in La Verne. However, aging infrastructure, rising costs for water supplies, evolving regulations, and inflation pose financial and operational challenges. Costs incurred by the City to operate, maintain, repair/rehabilitate, and replace water and sewer
infrastructure such as wells, pipes, pumps, and other
ess
ential facilities continue to increase.

The majority of funds required to operate and invest in our water and sewer systems come directly from the rates
customers pay for service. Revenues from current rates are no longer adequate to support operations and fund the
much-needed system improvements and maintenance
planned over the next five to 10 years. Per state law,
revenues generated from rate increases can only be used to fund
the costs to provide the service including operations
and maintenance, capital improvements, the cost of debt to finance capital equipment and maintaining cash and
emergency reserves.

With costs continually outpacing revenues in recent years, the City retained an independent (third-party) utility financial consultant to examine our costs of service to operate each system.

The study looked at operating and capital costs and
revenue needed to ensure the financial stability of water and sewer services in the years to come, including funding
reserves to manage financial risks. Reserves help address challenges such as drought conditions, emergency repairs, natural disasters, increased costs for purchasing water, and aging infrastructure that is at or near the end of its useful life,
all while continuing to provide high-quality service.

The rate study revealed a significant revenue shortfall and the need for continued annual rate increases. The last rate increase occurred in 2018. This Notice summarizes the rate study findings and proposed rate adjustments that the La Verne City Council will consider to the City’s water and sewer service charges over the next five years. The proposed
changes
to water and sewer rates and charges are
necessary to:

IN PERSON SESSION
Thurs., Sept. 25, 6 p.m.

Tues., Oct. 7, 4 p.m.

Mon., Oct. 13, 5 p.m.

Sat., Oct. 18, 10 a.m.

La Verne City Hall Council
Chambers, 3660 D Street
NOTE: Virtual Session Zoom links will be posted at the rate study website linked in this Notice.

•
•
•
•
The City’s rate structure includes a fixed charge and a volumetric rate shown in Tables 1 and 2 below. Table 1 shows current and proposed bi-monthly water fixed charges that all customers pay based on meter size. Private fire charges are only applicable to those commercial accounts with private fire protection (does not include single family homes).

Meter Size
Rates are shown
bi-monthly
Current
Effective
1/1/2026
Effective
7/1/2026
Effective
7/1/2027
Effective
7/1/2028
Effective
7/1/2029
5/8'' AND 3/4'’
$36.40
$48.53
$60.66
$69.76
$76.73
$84.41
1"
$51.00
$72.95
$91.19
$104.86
$115.35
$126.88
1 1/2"
$65.60
$134.00
$167.50
$192.62
$211.89
$233.08
2"
$106.00
$207.26
$259.08
$297.94
$327.73
$360.50
3"
$400.00
$402.62
$503.28
$578.77
$636.65
$700.32
4"
$509.60
$622.41
$778.01
$894.71
$984.18
$1,082.60
6"
$764.40
$1,232.92
$1,541.15
$1,772.32
$1,949.56
$2,144.51
8"
$1,055.60
$1,965.54
$2,456.92
$2,825.46
$3,108.00
$3,418.80
10"
$1,456.00
$2,942.35
$3,677.94
$4,229.63
$4,652.60
$5,117.86
Private Fire Charges
5/8"
$0.00
$12.19
$15.24
$17.53
$19.28
$21.21
3/4"
$0.00
$12.38
$15.47
$17.79
$19.57
$21.53
1"
$0.00
$12.92
$16.15
$18.57
$20.43
$22.47
1 1/2"
$0.00
$14.86
$18.58
$21.36
$23.50
$25.85
2"
$46.60
$18.21
$22.77
$26.18
$28.80
$31.68
3"
$65.30
$30.25
$37.81
$43.48
$47.83
$52.61
4“
$102.60
$51.00
$63.75
$73.32
$80.65
$88.71
6"
$130.66
$125.49
$156.87
$180.40
$198.44
$218.28
8"
$167.70
$253.98
$317.47
$365.09
$401.60
$441.76
10"
$205.10
$447.24
$559.05
$642.91
$707.20
$777.92
The reasons for proposed rate adjustments, the basis upon which they were calculated, and the amount of the proposed rates are described in more detail in the Rate Study Report posted at www.laverneca.gov/ratestudy and available for review at the City Clerk’s office,
3660 D Street, La Verne, CA 91750.
2 What Happens if the City Does not Raise Rates?
Current rates are not sufficient to sustain the utility enterprise funds. Investment in critical infrastructure is currently being deferred, which could place the City’s aging systems in a vulnerable status. Deferring maintenance and improvements could result in higher costs and possible increased regulatory oversight and fines by permitting agencies, as well as creating increased
risk of operational interruptions.

How were Proposed Rates and Charges Determined?
The proposed rates will ensure the City collects sufficient revenue to cover operating and capital expenses to maintain high-quality, reliable water and sewer services that customers rely on. The proposed rates were determined based on the projected revenue needed to fund:

Operations and Maintenance, such as purchased water,
supplies, chemicals, electricity, etc.

Capital Improvements, such as large projects to
repair/replace pipes, wells, pump stations and equipment, and develop alternative water sources to minimize future water shortage impacts on our customers.

Debt Service to pay back loans.

Reserves to meet minimum debt service requirements
and fund emergency or unplanned expenses.

The proposed rate changes were also reviewed both by the Water and Sewer Ad Hoc Committee and City Council.

PROPOSED WATER RATES
TABLE 1: Proposed 5-Year Schedule of Bi-Monthly Water Fixed Charges (Every Other Month) Table 1 shows the proposed bi-monthly water service charge by meter size over the next five years. Most City water customers have
a 5/8-inch to 1-inch metered connection. An additional bi-monthly charge is applied to all meters that also serve an ADU.

Scan the code to be taken directly
to the rate study website.

Bi-Monthly Added Unit Charges (ADU)
All Meters
$11.20
$17.86
$22.33
$25.67
$28.24
$31.07

•
•
•
•

I I I I I I

I I I I

VOLUMETRIC RATES
(per 1,000 gallons)
Current
Effective
1/1/2026
Effective
7/1/2026
Effective
7/1/2027
Effective
7/1/2028
Effective
7/1/2029
Zone 1
$3.92
$5.67
$7.09
$8.16
$8.97
$9.87
Zone 2
$4.02
$5.96
$7.45
$8.57
$9.43
$10.37
Zone 3
$4.21
$6.32
$7.90
$9.09
$10.00
$11.00
Zone 4
$4.42
$6.33
$7.92
$9.10
$10.01
$11.02
Zone 5
$4.53
$7.44
$9.30
$10.69
$11.76
$12.94
Zone 6
$4.77
$7.44
$9.30
$10.69
$11.76
$12.94
Zone P
$5.37
$7.44
$9.30
$10.69
$11.76
$12.94
Zone L
$2.74
$7.44
$9.30
$10.69
$11.76
$12.94
3 TABLE 2: Proposed 5-Year Schedule of Bi-Monthly Water Volumetric Rates Table 2 shows the bi-monthly water volumetric (consumption) rate, which is the amount each customer pays per 1,000 gallons of water used. The varying rates relate to pressure zones based on elevation. Each zone north of Zone 1 incurs additional pumping charges for the cost of pumping the water up to the various elevations. The basic water consumption
rate in Zone 1 includes the cost of imported water and accounts for 79% of the water rate.

The City purchases water from Three Valleys Municipal Water District (TVMWD), which is sourced from the Colorado River and the State Water Project, and has no control over the charges from the wholesale agencies. Should the cost of imported water increase at any time during 2026-2030 the water rate will be adjusted to reflect a direct pass-through of the
increase. Notice of any adjustment to pass through costs will be provided 30 days or more before the effective date of the adjustment.

TABLE 3: Proposed 5-Year Schedule of Bi-Monthly Sewer Charges and Rates Table 3 shows the current and proposed bi-monthly sewer charges and rates. Single-Family Residential customers only pay a fixed charge. All other customers (Commercial, Industrial, Institutional) pay a fixed charge and a volumetric rate.

The
volumetric sewer rate is in dollars per 1,000 gallons of water consumed through the water meter connection.

PROPOSED SEWER RATES
SEWER
Current
Effective
1/1/2026
Effective
7/1/2026
Effective
7/1/2027
Effective
7/1/2028
Effective
7/1/2029
Bi-Monthly Fixed /g26harge - /g24ll /g26ustomer /g26lasses $23.43
$26.61
$30.61
$35.21
$40.50
$46.58
Volumetric Rate /g49or Residential /g26ustomers
N/A
N/A
N/A
N/A
N/A
N/A
Volumetric Rate /gBper /g)4,000 gallons) for
Institutional, Commercial, and /g30anufacturing
Customer Classes
$0.20
$0.29
$0.34
$0.40
$0.46
$0.53
Pass Through Rates
Bill Calculator
A water bill calculator is available at www.laverneca.gov/calculator. Input your monthly water usage, and the calculator will show you how the proposed adjustments will affect your monthly bill.

Drought Surcharges Remain In Effect
Drought surcharges work to offset reduced revenues when the City is in a declared water shortage emergency. In 2019, the City Council adopted drought surcharges that may be charged to customers in addition to water use rates during
drought stages. Drought surcharges may only be implemented at the discretion of the City Council during periods of mandatory conservation, declared shortages, or other water emergencies to ensure the water utility is financially whole. The 2019 drought surcharges are not changing as part of the proposed 2025 updated water rates described in this Notice.

I
The proposed water and sewer rate adjustments are subject to a majority protest process under Proposition 218. Any record owner of a property that receives water and/or sewer service from the City or occupant who is directly liable for payment of the City’s water and/or sewer service charges (Customer of Record) may submit a written Protest against the proposed rate adjustments for water and/or sewer service. Owners of multiple parcels may file one
Protest for each parcel owned within the City’s service area.

Only one written Protest against the proposed rate adjustments for the water or sewer service charges per parcel will be counted in determining whether a majority protest exists.
4 HOW TO PROTEST PROPOSED RATE ADJUSTMENTS
A written Protest must include all of the following to be counted in determining whether there is a majority protest (50% + 1):

1. Clearly stated opposition to the proposed rate adjustments for the water service charges, sewer service charges, or both, as applicable;

2. Name of the record property owner or account holder who is submitting the Protest;

3. Identification by street address or other clear identification of the
property for which the protest is made; and

4. Original signature and legibly printed name of the record property owner or customer who is submitting the Protest - an electronic signature CANNOT be counted.

Written Protests may be delivered to the City Clerk during the Public Hearing. In advance of the Public Hearing, written Protests may be mailed or personally delivered to the City Clerk at the Submittal Location
shown below by 4 p.m. on Monday, November 3, 2025. No
e-mailed or faxed protests will be accepted, nor late postmarked Protests.

At the Public Hearing, the City Council will accept and consider all written Protests and hear all oral comments on the proposed rate adjustments. However, oral comments will not be counted in determining the existence of a majority protest.

W
hat is a Majority Protest?
The existence of a majority protest will be determined separately for proposed water rate adjustments and proposed sewer rate adjustments. A majority protest against the proposed water or sewer rate adjustments will exist if at the end of the Public Hearing there are written protests submitted and not withdrawn that represent a majority of the parcels (50% +1) that receive water or s
ewer service, as applicable. The City Council cannot adopt the proposed rate adjustments if a majority protest exists.

SUBMITTAL LOCATIONS:

Mail:

City Clerk, ATTN: Utility Rates Protest or Objection
City of La Verne
3660 D Street, La Verne, CA 91750
In Person:

La Verne City Hall, City Clerk’s Office
3660 D Street, La Verne, CA 91750
Exhaustion of Administrative Remedies
How do I preserve my ability to judicially challenge the Proposed Rate
s?
Pursuant to California Government Code Sections 53759.1 and 53759.2, a person or entity will be prohibited from bringing a judicial action or proceeding alleging that the proposed rates do not comply with Proposition 218 unless that person or entity has submitted a written Objection to the proposed rates. This is known as an Exhaustion of Administrative Remedies requirement and is separate from the
Proposition 218 majority Protest process described (left).

To exhaust your administrative remedies, your written Objection must include the specific grounds for alleging noncompliance of the proposed rates with Proposition 218.

Written Objections may be emailed, mailed or personally delivered to the City Clerk at the Submittal Location listed below, and must be re
ceived by the City Clerk by 4 p.m., Monday, October 27, 2025.

Note that this deadline for submitting a written Objection is one week before the Public Hearing, whereas written Protests may be submitted until the Hearing is closed (as described in the left column). The City will review each written Objection and respond in writing to all timely written submittals.

A failure to timely Object to the proposed rate adjustments in writing bars any righ
t to challenge the rate adjustments through a
legal proceeding.

Please note that pursuant to California Government Code section 53759, there is a 120-day statute of limitations for judicially challenging all rates set forth in this Notice that runs from the date the La Verne City Council adopts a Resolution approving the proposed rates.

STATUTE OF LIMITATIONS FOR CHALLENGING

PROPOSED RAT
ES:

Written Protest Procedures Written Objection Procedures

151 Miles of Water Mains
2,331
Manholes
2 Sewer Lift
Stations
99 Miles of City Owned
Sewer Mains
10 Booster Stations9 Groundwater Wells 10 Reservoirs
(22 Million Gallon Capacity)
5 About the City’s Water Division
The City’s Water Division is responsible for the operation and maintenance of the City’s water production and distribution facilities, and for the maintenance and reading of the City’s water meters. La Verne receives its water from two main sources: local groundwater (24%) and imported water (76%). The City owns and operates eight active groundwater wells that pump groundwater from the
Pomona and Live Oak basins. The imported water is purchased from Three Valleys Municipal Water District (TVMWD), which is sourced from the Colorado River and the State Water Project, then blended and treated at the Miramar Treatment Plant. The imported water and groundwater are blended and distributed to residential and commercial customers throughout La Verne. For questions or concerns about water services, water meters, or billing, contact Customer Service at
(909) 596-8744.

The City Water System Components:

The City Sewer System Components:
1,473 Fire Hydrants
The City’s Sewer Division is responsible for general maintenance and cleaning of the sewer system that consists of about 112 miles of sewer mainlines and two sewer lift stations. The City’s sewer system collects waste and conveys it to the Los
Angeles County Sanitation District for treatment and discharge. To report a sewer overflow, contact the Public Works Department at (909) 596-8741.

About the City’s Sewer Division
The City of La Verne owns and operates water and sewer systems that serve a population of approximately 30,000 people.

~
Frequently Asked /g34uestions
Rate studies are conducted as an
industry best practice to ensure that a
utility’s financial health is maintained,
and that the City is setting a course
toward meeting future financial
obligations. The industry standard is to
perform comprehensive rate studies
every three to five years.

The City’s most recent multi-year water
and sewer rate adjustments were
approved by the City Council in 2018.

We must keep up with rising costs and
be able to implement critical capital
projects that are mandated or necessary
for the health and safety of our
community. Due to inflation-related cost
increases to operate and maintain the
systems, repairs and replacement, and
meeting state and federal regulations,
the utilities’ fund revenues have been
impacted. The rate study is being
conducted to adjust rates to address
the deficit and balance operating
budgets, while also planning for future
capital improvement projects.

Performed regularly, utility rate studies
provide transparency into what the City
can expect in the years ahead and
ensure we have the financial resources
to meet our budget, maintain our
infrastructure, implement new
technologies, address existing and new
state and federal regulations, and
implement our Capital Improvement
Program (CIP).

Other elements of the rate study include
a reserve policy that considers the
different types of risks we face to
ensure revenue stability while
maintaining affordability. Potential risks
include future drought conditions,
emergency repairs, and increased costs
for purchasing water and conveying
sewage to the Los Angeles County
Sanitation District.

Why did the City conduct a water and
sewer rate study?
How are the City’s water and
wastewater utilities funded?
The City’s water and sewer Enterprise
Funds are primarily funded by the rates
customers pay, and not from taxes or
the City’s General Fund. Customer
payments ensure the City’s ability to
deliver high-quality, reliable water and
sewer services in a manner that values
our environment and community, and
sustains the resources entrusted to our
care. The City of La Verne is committed
to good governance, fiscal
accountability, and transparency, with
systems and policies in place to earn
the trust of our customers.
6 The City is committed to using industry
best practices to ensure we plan
thoughtfully for the future. Revenues
collected through water and sewer rates
are invested in our infrastructure to
secure system reliability now and well
into the future. Revenues derived from
utility rates ensure the continuity of
operations and reliable service delivery.

As an example, rates pay for:

Purchase and pumping of local
groundwater and imported water.

Replacing and repairing aging
infrastructure.

Maintenance and repair of critical
infrastructure, such as water
reservoirs, booster stations, and
groundwater wells, including 623
catch basins and 10 reservoirs with
a storage capacity of 22 million
gallons of water.

Maintaining more than 150 miles of
water pipelines and 99 miles of
sewer pipelines to ensure water
delivery to homes and businesses,
and sewer collection to be treated
and recycled by Los Angeles County.

Maintaining, repairing, and replacing
more than 1,400 fire hydrants.

Hiring and retaining highly skilled,
qualified, and licensed staff to
operate the water and sewer
systems and conduct water quality
monitoring.

What do water and sewer rates pay
for?
How are rates determined?
In 1996, California voters approved the
Right to Vote on Taxes Act, also known
as Proposition 218, which established
requirements for setting local
government utility rates, fees, and
charges. This legal framework guides
how rates and charges for utility
services are determined and
established a process that allows
customers to protest proposed rates.

Proposed rates are determined through
evaluation and analysis of cost
escalations related to operations and
maintenance, water treatment and
distribution, wastewater collection,
capital project costs, general inflation,
and cost increases for materials and
power.

Under Proposition 218, property owners
and customers will receive a mailed
public notice detailing proposed rate
adjustments, the protest process, and a
City Council Public Hearing date.

Property owners must have 45 days to
protest the proposed rate adjustments
through a simple written process. In the
Public Hearing, the City Council will
review customer protests and consider
approving or denying rate adjustments.

Should the City receive a majority
protest from customers, rate
adjustments will not be implemented.

7 FAQs Continued
City of La Verne
3660 D Street
La Verne, CA 91750
(909) 596-8744
www.laverneca.gov/ratestudy
[email protected]
Questions
About this
Notice:

W:

E:

P:

Enterprise Funds must pay for
themselves and meet minimum debt
service coverage and reserves to
maintain a healthy utility. The purpose
of a five-year rate study is to reconcile
these differences in projected expenses
and revenues and factor actual
expenses and surpluses or deficits into
the projected revenue needs for the
next five years. Rate revenues must
also fund operating and capital reserves
to address unforeseen conditions such
as emergency repairs, or droughts, and
to meet debt service requirements.

Utility reserves are not used to fund
other City expenditures and must only
be utilized for the respective utility
enterprise fund. The rate study included
projected expenses and forecasted cost
increases over the next five to 10 years.

If there is additional revenue or
expenses, the funds will either be
slightly in the positive or slightly in the
negative, with the objective of a healthy
utility fund to balance revenues with
expenses over multiple years.

Does the City inflate forecasted
expenses when setting rates?
No. Water funds can only be used on
water projects and sewer funds can only
be used on sewer projects. For example,
water or sewer system revenues cannot
be used to fund other City services,
such as parks or public safety.

Is revenue from water and sewer rates
used on other City projects?
Water and sanitation are core services
necessary for a healthy community. The
City routinely evaluates the condition of
its facilities and infrastructure to identify
needs and limit risks. If rates are not
raised, the City would need to review
the pressing needs of its aging utility
systems and prioritize those that are
most critical to ensure public and
environmental health. We would be
forced to defer major infrastructure
projects, which would leave our existing
systems vulnerable.

Deferring until later will only guarantee
higher costs and potentially increased
regulatory oversight by permitting
agencies.

Continued investment allows for gradual
rate adjustments, as opposed to
sudden hikes. Proactive investment
keeps water and wastewater services
affordable and reliable now and into the
future.

What are the consequences if we do
not invest in our water and sewer
systems?
If approved, water and sewer rates in La
Verne will remain among the most
competitive in the area. More details
are available on the City website.

If approved, how will water and sewer
rates in La Verne compare to
neighboring communities?

City of La Verne
Investing in Our Critical Water and
Sewer Systems
Proposition 218 Public Hearing
City Council Meeting
November 3, 2025
1 Ad Hoc Rates
Committee #1
Sept 2024
Ad Hoc Rates
Committee #3
Dec
2024 2025 2026
Ad Hoc Rates
Committee
Facility Tours
Oct-Nov
Financial Plan
Review
Ad Hoc Rates
Committee #4
Feb 2025
City Council and Ad Hoc
Committee Workshop
Apr
City Council
Meeting #2
Aug 4
Public Hearing
Nov 3 @
6:30 p.m.

Proposition 218
Notice Mailed
Sept 11
Timeline
Community
Info Sessions
(4)
Sept-Oct
We
are
here
2 NEW RATES

EFFECTIVE
Jan 1, 2026
Ad Hoc Rates
Committee #6
May

History of Increases
1” Meter Rate & Zone 1 Commodity Rate
3 2004 – 1” Meter
Rate $22.40 /
Commodity Rate
$2.08 per 1,000
gallons
2006 – Commodity
Rate Increase $0.30
to $2.38
2009 – 1” Meter Rate
increase of $14.00 to
$36.40 / Commodity Rate
increase of $0.31 to $2.69
2012 – Commodity Rate increase
of $0.31 to $3.00
2015 – Commodity Rate
increase of $0.28 to $3.28
2017 – 1” Meter Rate increase
of $14.60 to $51.00 /
Commodity Rate increase of
$0.27
2019 – Commodity Rate
increase of $0.37 to $3.92
No Service charge increase from 2009 until 2017
Proposed Rate Adjustments
4 Proposed Rate Adjustments
5 • Community concerns over the magnitude and timing of rate adjustments. • Water Fund reserves have been depleted, and are in a deficit, jeopardizing critical infrastructure investments.
• Noticed rates are maximums; City Council may adopt lower rates. • To balance system needs with community feedback, Council may consider a lower initial adjustment and deferring the second rate adjustment to Oct. 1, 2026.

Proposed Rate Adjustment Options
6 Revenue Adjustments 1/1/2026 7/1/2026 7/1/2027 7/1/2028 7/1/2029 Water 50% 25% 15% 10% 10%
Wastewater 15% 15% 15% 15% 15%
Option 1: Maximum Rate Adjustments in Prop 218 Notice
Revenue Adjustments 1/1/2026 10/1/2026 7/1/2027 7/1/2028 7/1/2029 Water 45% 25% 15% 10% 10%
Wastewater 15% 15% 15% 15% 15%
Option 2: Alternative Based on Feedback from Community Sessions Financial Plan and Reserve Fund Impacts
7 Option 1: Maximum Rate Adjustments in
Prop 218 Notice
(50%/25%/15%/10%/10%)
Option 2: Alternative Based on Feedback
from Community Sessions (45%/25%
(Oct. 1)/15%/10%/10%)

Example Bill Impacts for SFR Customers – Option 2
8 Assumes SFR Customer with 1” meter in Zone 1 at 14 kgals bimonthly use.

Option 2 – Bi-Monthly Service Charge
9 Meter Size Current 1/1/2026 10/1/2026 7/1/2027 7/1/2028 7/1/2029 5/8" 36.40$ 45.37$ 56.72$ 65.22$ 71.75$ 78.92$ 3/4" 40.00$ 45.37$ 56.72$ 65.22$ 71.75$ 78.92$ 1" 51.00$ 67.67$ 84.58$ 97.27$ 107.00$ 117.70$ Option 2 – Commodity Charge
10 Current 1/1/2026 10/1/2026 7/1/2027 7/1/2028 7/1/2029 Z1 3.92$ 5.54$ 6.93$ 7.97$ 8.76$ 9.64$ Z2 4.02$ 5.83$ 7.29$ 8.39$ 9.22$ 10.15$ Z3 4.21$ 6.19$ 7.74$ 8.90$ 9.79$ 10.77$ Z4 4.42$ 6.20$ 7.76$ 8.92$ 9.81$ 10.79$ Z5 4.53$ 7.31$ 9.14$ 10.51$ 11.57$ 12.72$ Z6 4.77$ 7.31$ 9.14$ 10.51$ 11.57$ 12.72$ ZP 5.37$ 7.31$ 9.14$ 10.51$ 11.57$ 12.72$ ZL 2.74$ 7.31$ 9.14$ 10.51$ 11.57$ 12.72$ Commodity Rate Per 1,000 Gallons of water

Option 2 – Comparison Chart 1” Meter Charge
11 Entity
Bi-monthly
1 Inch Meter
Charge
Monthly
1 Inch Meter
Charge
City of San Dimas (Golden State Water District $168.24 $84.12 City of La Verne (Golden State Water District) $168.24 $84.12 City of Pomona $148.55 $74.28
City of Glendora $134.23 $67.12
Walnut Valley Water District $116.60 $58.30
City of Upland $113.00 $56.50
Rowland Water District $98.46 $49.23
Cucamonga Valley Water District $89.56 $44.78
Monte Vista Water District $84.34 $42.17
City of La Verne $67.67 $33.84
City of Azusa $61.20 $31.80
45% Increase January 1, 2026
Entity
Bi-monthly
1 Inch Meter
Charge
Monthly
1 Inch Meter
Charge
City of San Dimas (Golden State Water District $168.24 $84.12 City of La Verne (Golden State Water District) $168.24 $84.12 City of Pomona $148.55 $74.28
City of Glendora $134.23 $67.12
Walnut Valley Water District $116.60 $58.30
City of Upland $113.00 $56.50
Rowland Water District $98.46 $49.23
Cucamonga Valley Water District $89.56 $44.78
City of La Verne $84.58 $42.29
Monte Vista Water District $84.34 $42.17
City of Azusa $61.20 $31.80
25% Increase October 1, 2026

Option 2 – Comparison Commodity Rate
12 Council Action
13 Direct the Deputy City Clerk to tabulate and announce the results of the Prop 218 protest submissions from property owners.

Adopt a Resolution establishing new water and sewer rates for FY 2025-26 through FY 2029-30, including fixed and volumetric rate tables and effective implementation dates.

Authorize the City Manager, Finance Director, and Public Works Director to implement the approved rates, update the Master Schedule of Fees and Charges, make minor technical corrections, and complete all necessary billing system updates.

Provide direction to staff on whether to proceed with the originally proposed rate scenario or the revised alternative.
14 14
Council
Discussion