The City did receive comments and protest votes as part of the noticing process. One comment received did note that the rate study report referenced Best Management Practices (BMP’s) established by the State of California on page 3-6. That reference instead should be to the State of California’s Waste Discharge Requirements (WDR’s) that require that the City have a source of revenue to allow for the appropriate maintenance of the City’s wastewater syste m. This administrative, non-substantive clarification does not result in any changes to the rates developed and does not require a revised report.
In summary, staff recommends that Council hold a public hearing, receive public comment and count any protests received and if a majority of protests are not received, approve the Ordinance.
If authorized to continue, a second public hearing and recommendation to adopt the Ordi nance will be held on May 20, 2025.
FINANCIAL STATEMENT:
Increasing the exi sting sewer fees for Fiscal Years 2025 -2026 to 2029 -2030 will maintain the reserve levels set by the City Council and allow for the on -going maintenance, operation, and repair/replacement of the sewer system.
RELATED CITY COUNCIL 2020-2025 STRATEGIC PLAN GOAL:
Transportation Choices and Infrastructure
ENVIRONMENTAL REVIEW:
This is not a project under CEQA , and is therefore , not subject to environmental review.
CCR15378; PRC 21065.
PUBLIC NOTIFICATION:
The Agenda Report was posted at least 72 hours before the Regular Meeting date and time, and 24 hours before a Special Meeting in accordance with the Ralph M. Brown Act
ORDINANCE:
First Reading
EXHIBITS:
Exhibit A – Notice of Public Hearing
Exhibit B – Sewer Rate Study
Exhibit C – Ordinance
Engineering & Public Works Department
1243 National City Boulevard, National City, CA 91950
619/336-4380 www.nationalcityca.gov
NOTICE OF PUBLIC HEARING
To Consider Proposed adjustments to Sewer Service Charges Tuesday, May 6, 2025, 6:00 p.m.
Proposition 218
Pursuant to Article XIIID of the California Constitution and the Proposition 218 Omnibus Implementation, the City of National City (“City”) hereby gives notice that a public hearing will be held on May 6, 2025 at 6:00 PM, or as soon as possible thereafter as the matter can be heard, at the regularly scheduled City Council meeting. The public hearing will be held in the Council Chamber of City Hall, located at 1243 National City Boulevard, National City, California, 91950.
Upon conclusion of the public hearing, the City Council will consider a proposed increase to the rates the City charges for sewer service for Fiscal Years 2025/26 through 2029/30. If approved, the rate adjustment will become effective on customers’ 2025/26 property tax bills. For more detailed information on how the sewer rates were calculated, copies of the Ardurra rate study analysis (see below) are available at http://www.nationaIcitvca.gov/engneerinpublic- works/engineering-division/sewer-service or at the Engineering/Public Works Department, located at 1243 National City Boulevard, National City, California, 91950, Telephone No. (619)- 336-4380.
Reason for Proposed Rate Increase
The City is provided wastewater treatment and disposal services by the City of San Diego’s Metropolitan Wastewater System (“Metro”). The proposed rate adjustments will allow the City to collect sufficient revenue so the City may continue providing sewer service to customers in the face of sharply increasing operating costs from Metro. The proposed rate adjustments will also enable the City to pay for capital improvements that are essential for operating the sewer system in a safe and financially prudent manner. The City’s system is aging and requires more extensive maintenance. Revenues derived from the City’s sewer service charges, and any adopted adjustments described in this notice, will be used solely for the actual and necessary expenses of providing sewer service to customers. The City is prohibited by law from making a profit on sewer service.
The City elected to conduct a comprehensive review of its sewer rates for all users to ensure the long-term stability of its sewer services. The new proposed rate increases are based on a January 28, 2025 rate study titled "City of National City Sewer Rate Study” (the “Study”) conducted by Ardurra, a well-respected engineering and consulting firm. Ardurra considered all sewer-related factors described in this notice, in addition to other, more specific information described in the Study, in conducting their sewer rate analysis. The Study’s underlying rate methodology will be discussed in more detail at the public hearing.
Protest Procedure
The property owner of record or tenant of the property may file a written protest to the proposed rate adjustment. Property owners or tenants do not have to attend the public hearing in order to file a protest. Protests may be mailed to: City Clerk, 1243 National City Boulevard, National City,
Engineering & Public Works Department
1243 National City Boulevard, National City, CA 91950
619/336-4380 www.nationalcityca.gov
California 91950. If protesting by mail, please write on the front of the envelope that the enclosed letter of protest is for the proposed sewer rate adjustments. AII protests must be received before the close of the public comment portion of the public hearing on May 6, 2025.
Any protests received after that date and time, even if postmarked on or prior to that date, will not be counted.
The protest must be signed by the property owner(s) or tenant(s). Because an original signature is required, any protest received via e-mail, fax, or other electronic means will not be accepted.
Similarly, protests with copies of signatures will not be counted. Oral comments do not qualify as a protest, unless accompanied by a written protest. While both property owners and tenants of a property may attend the public hearing, only one valid protest per parcel will be counted.
In order to be counted, each protest must contain the following:
1. State that the property owner of record is opposed to the proposed rate increase.
2. Identify the location of the parcel by street address, assessor’s parcel number (APN) listed on the address label of your envelope, or City account number.
3. Provide the printed name and original signature of the property owner or tenant submitting the protest.
4. If you wish to protest and you own multiple properties, you may file one valid protest for each parcel that you own. Only one protest will be counted per parcel. For example, if you own five parcels and you wish to file protests for each of your properties, you must file five separate protests.
5. If you wish to protest and your parcel is owned by more than one person, or by a corporation or other legal entity, you may only file one protest for that parcel. Proper documentation must be provided showing that the person who signs the protest has the authority to sign on behalf of the other owners, corporation, or legal entity.
6. If the name of the property owner was not shown on San Diego County's last equalized assessment roll as the owner of record, you must provide the City with a certified copy of a recorded deed.
Individuals with disabilities who require reasonable accommodation under the Americans with Disabilities Act in order to participate in the public hearing should contact the City Clerk’s Office as far in advance of the public hearing as possible.
Proposed Increases
The City last adjusted sewer service charges in FY 2017 for a five year period ending in FY 2023. The Study showed that, over the next five years, current sewer service revenues will not meet the increasing cost of City operating and capital expenses. The City’s system of sewer service charges meets regulatory and industry standards, and the current rate schedule reflects the proper elements of a cost-of-service-based rate structure. No structural changes to the current system of charges will be made, but rate increases are different for different customer classes to maintain the correct balance of the cost-of-service.
Based upon the Study, rate increases will be considered for each of the City’s four distinct sewer customer groups: (1) single-family residential; (2) multi-family; (3) mobile home parks; and (4) commercial/industrial. The City maintains a specific sewer charge formula for each of
Engineering & Public Works Department
1243 National City Boulevard, National City, CA 91950
619/336-4380 www.nationalcityca.gov
these four customer groups. Single family, multi-family, and mobile home customers are billed flat rates based on a system of equivalent dwelling units established for each of these three customer groups. Commercial/industrial users are placed into one of five rate categories based on (1) their respective sewage strengths, and (2) 90% of the users’ total water usage from the prior year.
The following rate table contains the recommended sewer service charges that the City Council will consider for adoption at the public hearing:
*Commercial properties have an annual minimum charge which is equivalent to the mobile home annual charge. Duplexes or a single ADU with a single family on a property are charged one single family rate and one multi-family rate.
Pass-Through Costs
The above-proposed rate table is based, in part, on projections provided by Metro, which provides treatment for all of the City’s sewage. State law allows the City to pass through to customers any increases to wholesale treatment costs that exceed the budgeted amounts for those services in the rate study. In the event of any adopted increase of such wholesale costs, the City may automatically adjust the rate table above and will provide customers at least 30 days’ notice before the effective date of any adjustment.
If you have any questions about this process, or this notice in general, please contact the Engineering / Public Works Department at (619)-336-4380.
EXISTING
2024-
2025
2025-
2026 2026-2027
2027-
2028
2028-
2029
2029-
2030
Residential: $ Per Month
Single Family 51.18$ 52.72 $ 54.30 $ 55.93 $ 57.60 $ 59.33 $ Multi-family/Condo 39.92$ 41.12 $ 42.35 $ 43.62 $ 44.93 $ 46.28 $ Mobile Homes 31.22$ 31.53 $ 31.85 $ 32.17 $ 32.49 $ 32.81 $ Non-Residential: $ Per HCF
Commercial - Low 5.25$ 5.67 $ 6.12 $ 6.61 $ 7.14 $ 7.71 $ Commercial - Medium Low 5.66$ 6.06 $ 6.48 $ 6.93 $ 7.42 $ 7.94 $ Commercial - Medium 6.80$ 7.28 $ 7.79 $ 8.33 $ 8.91 $ 9.54 $ Commercial - Medium High 7.95$ 8.43 $ 8.93 $ 9.47 $ 10.04$ 10.64 $ Commercial - High 9.88$ 10.42$ 11.00 $ 11.60 $ 12.24 $ 12.91 $
CITY OF NATIONAL CITY
NOTICE AND SUMMARY OF INTENT TO ADOPT PROPOSED ORDINANCE
NOTICE IS HEREBY GIVEN that the City Clerk of the City of National City is in receipt of a written rate study analyzing residential and non-residential annual sewer service charges for the next five years, 2025-2030, with 3% increases each year. The report may be viewed at the City Clerk’s Office, 1243 National City Blvd., during normal business hours.
NOTICE IS FURTHER GIVEN that the City Council of the City of National City will hold a Public Hearing after the hour of 6 :00 p.m., Tuesday, May 6, 2025, in the City Council Chambers, Civic Center, 1243 National City Boulevard, National City, California:
TO CONSIDER PUBLIC HEARING AND ADOPTION OF AN ORDINANCE
OF THE CITY COUNCIL OF THE CITY OF NATIONAL CITY TO INCREASE THE WASTEWATER RATES BEGINNING IN FISCAL YEAR 202 5-2026 THROUGH FISCAL YEAR 2029-2030. AFTER SUCH HEARING, THE CITY
COUNCIL MAY ADOPT, REVISE, CHANGE, REDUCE OR MODIFY ANY
CHARGE OR OVERRULE ANY AND ALL OBJECTIONS AND MAKE A
FINAL DETERMINATION UPON EACH CHARGE DESCRIBED IN THE
REPORT AND CONSIDER FINAL ADOPTION OF SAID REPORT.
The City Council will have the S econd reading of this ordinance wherein they will consider its adoption at its Regular Meeting to be held on Tuesday, May 20, 2025 at 6:00 p.m. via LIVE WEBCAST in the City Council Chamber, 1243 National City Boulevard, National City, California. Written comments or testimony from the public must be submitted via e- mail to [email protected] by 2:00 P.M. on the day of the City Council Meeting.
A full text copy of the proposed ordinance, and Regular Online Meeting of the City Council, will be webcast and archived on the City’s website at: www.nationalcityca.gov .
Shelley Chapel, MMC, City Clerk
Published in the Star News March 21 and April 25, 2025
City of National City
Sewer Rate Study
January 2025
Submitted to:
City of National City
1243 National City Boulevard
National City, CA 91950-4301
Submitted By:
Ardurra
9665 Chesapeake Drive, Suite 230
San Diego, CA 92123
858.842.6978 Page 213 of 252
Table of Contents
i
Table of Contents
Table of Contents .......................................................................................................................... i Appendicies ................................................................................................................................. ii List of Abbreviations .................................................................................................................... iii Section 1 EXECUTIVE SUMMARY ......................................................................................... 1-1
1.1 FINDINGS ....................................................................................................... 1-1
1.2 RECOMMENDATIONS .................................................................................. 1-3 Section 2 INTRODUCTION ................................................................................. 2-1
2.1 BACKGROUND: CITY OF NATIONAL CITY .................................................. 2-1
2.2 BACKGROUND: CITY OF SAN DIEGO METROPOLITAN SEWAGE
TREATMENT SYSTEM ...................................................................................... 2-2
2.3 RATE STUDY SUMMARY ................................................................................ 2-3 Section 3 WASTEWATER RATE STUDY................................................................. 3-1
3.1 OVERVIEW OF THE SEWER SERVICE CHARGE UPDATE PROCESS ............ 3-1 List of Figures
Figure 1-1 National City Annual Sources and Uses of Funds vs Cash Reserve and Reserve Targets ......................................................................................................................... 1-3 Figure 1-2 Metro Member Agencies Sewer Rates Comparison ................................................ 1-5 Figure 2-1 Sewer Rate Comparison for Participating Agencies in San Diego Metro System. 2-3 Figure 3-1 Overview of the Comprehensive Rate Study Analysis .............................................. 3-1 Figure 3-2 Major Cost Components of City of National City's FY 2026 Revenue Requirements ...................................................................................................................................... 3-3 Figure 3-3 National City Annual Sources and Uses of Funds vs Cash Reserve and Reserve Targets ......................................................................................................................... 3-5 Figure 3-4 Components of FY 2026 Single Family Monthly Rate ................................................ 3-8 Figure 3-5 Metro Member Agencies Sewer Rate Comparison .................................................. 3-9 List of Tables
Table 1-1 Sewer Service Fund Long Range Plan without Revenue Adjustments (Status Quo) ...................................................................................................................................... 1-2 Table 1-2 Recommended Annual Revenue Adjustment .......................................................... 1-3 Table 1-3 Sewer Service Fund Long Range Plan with Recommended Revenue Adjustment ..................................................................................................................................... .1-4 Table 1-4 Recommended Annual Sewer Service Charges ...................................................... 1-4 Table 3-1 City of National City Revenue Requirements ............................................................ 3-2 Table 3-2 City of National City Long Range Financial Plan ...................................................... 3-4 Table 3-3 Summary of Current Users and Estimated Sewer Flow .............................................. 3-5 Table 3-4 Proposed Percentage Increase in rates…………………………………………………3-7
Table of Contents
ii
Table 3-5 Comparison of Current Versus Proposed Sewer User Rates ..................................... 3-8
Appendices
Appendix A Rate Model
iii
List of Abbreviations
AWWA American Water Works Association
BMP Best Management Practices as Prescribed by the State of California BOD Biochemical Oxygen Demand – A Measure of Sewage Strength CCTV Closed-Circuit Television
CIP Capital Improvement Program or Plan
EDU Equivalent Dwelling Unit
ENR-CCI Engineering News Record Construction Cost Index FY Fiscal Year Ending June 30
FYE Fiscal Year Ending June 30
GPD Gallons per Day
HCF Hundred Cubic Feet
Metro City of San Diego Metropolitan Wastewater System mg/l Milligrams per Liter
O&M Operations and Maintenance
PA Participating Agency in the San Diego Metro System
TSS Total Suspended Solids – A Measure of Sewage Strength US EPA U.S. Environmental Protection Agency
Section 1 – Executive Summary
1-1
Section 1
EXECUTIVE SUMMARY
This report was prepared for the City of National City (City) to document the development of a wastewater multi-year financial plan, cost of service analysis, and rate design for the City (rate case). The specific goals of the study were to:
Evaluate the adequacy of projected revenues under existing sewer service charges to meet projected revenue requirements;
Develop a wastewater cost of service and rate model for the City covering a five- year study (Fiscal Year 2025-2026 (FY 2026) through Fiscal Year 2029-2030 (FY2030)) period for both ongoing operations and planned capital improvements; Allocate the projected fiscal years revenue requirements to the various customer classes in accordance with the proportionate share of their wastewater contributions;
Develop a five-year sewer service charge program that produces revenues adequate to meet financial needs of the City for both their required funding of the transportation & treatment of wastewater by the City of San Diego’s Metropolitan Wastewater System (Metro) including the city’ share of the Pure Water Program and the City’s operations and capital needs, while recognizing customer costs of service, and local and state legal and policy considerations such as California Constitution Articles XIII C and D (Proposition 218), and Proposition 26; and Recommend appropriate reserve levels for operations and capital needs
1.1 FINDINGS
During the course of our analysis in relation to the specific goals of the study we made the following findings:
1. The City of National City last adjusted the sewer service charges in FY 2017.
2. Wastewater service charge revenues at current levels will not be sufficient over the next five years to meet the increasing cost of City operating and capital expenses without negatively affecting fund balance levels1. Table 1-1 on the next page illustrates the projected financial picture without recommended sewer service charge adjustments. While the fund has reserves, the costs of services are rising and _________________________
1 The term “fund balance” refers to the remaining amounts available after short-term liabilities (monies owed) are paid off with the agency’s available cash and other financial resources (such as receivables). The fund balance includes reserved and unreserved components. For the purposes of this Study, this term refers to “available cash excluding reserved monies” and the term “fund” refers to the account in which monies reside for operating or capital expenditures, specifically known as the Sewer Service Fund.
Section 1 – Executive Summary
1-2
large increases to rates would be necessary in the future if incremental increases are not enacted now. Furthermore, with the capital projects anticipated to be constructed in the coming years, the reserve balance would fall below the target level by FY 2030.
Table 1-1 – Sewer Service Fund Long Range Plan without Revenue Adjustments (Status Quo)
3. The City’s formal reserve policy for their operations or capital funds should be updated.
4. The City currently does not have a mechanism to pass through wholesale treatment costs from the City of San Diego to customers should those costs rise beyond projections in the cost of service model, or beyond future year projections.
5. The City has an adequate system of sewer service charges to meet regulatory and industry standards, and their current rate schedule reflect the proper elements of a cost of service based rate structure. Thus, we are not recommending any structural changes to the current system of charges, but the increases are not equivalent across customer classes.
6. The City’s capacity charge for new development has not been updated in many years. The City will be evaluating and determining how those charges should change as a separate process in the near future.
Section 1 – Executive Summary
1-3
1.2 RECOMMENDATIONS
The following lists Ardurra’s recommendations to address the findings listed above:
1. Per the cost-of-service analysis contained within this report, Ardurra recommends City wastewater service charges be adjusted to reflect current costs of providing sewer service to customers within the City. This recommendation includes adjusting total revenue from rates in FY 2026 and ending in FY 2030 as shown in Table 1-2. Based on the cost-of-service analysis, revenue adjustments per customer class do vary.
Table 1-2 – Recommended Annual Revenue Adjustment
Should the City approve these rate adjustments, the projected financial picture of the City will draw down reserves, while increasing user fees at a nominal rate. While FY 2030 is nominally under target for the fund balance, a 10 year look forward has the fund only dipping below the balance for just the one year and the City should monitor both revenue and expenditures over the study period to assure it stays on track. This is presented in graphic format with Figure 1-1 and all of the detailed numbers in 1-3. Figure 1-1 includes projections to 2035 showing the projections stabilize with these increases. However, any projection beyond 5 years includes many assumptions that may or may not be accurate.
Figure 1-1 National City Annual Sources and Uses of Funds vs. Cash Reserves and Reserves Targets
Section 1 – Executive Summary
1-4
Table 1-3 - Sewer Service Fund Long Range Plan with Recommended Revenue Adjustments
2. Based on cost of service and projected revenue requirements the City should adopt the following sewer service charges. Table 1-4 shows the proposed sewer charges for FY 2026 through FY 2030 and compares them to existing charges.
Table 1-4: Recommended Annual Sewer Service Charges
Section 1 – Executive Summary
1-5
Figure 1-2 summarizes all San Diego Metro Member Agencies comparative sewer user rates based on 7 HCF of water usage/sewer flow and a residential monthly base fee. It should be noted that the rates shown are those effective January 1, 2025, based upon readily available information. The figure also includes the City’s current monthly rate as well as the proposed FY 2026 rate of $52.72 per EDU per month. The City’s first proposed rate adjustment will not begin until July 1, 2025. Many agencies are in the process of updating their current rate cases. Even with the proposed 5-year rate adjustments National City will still enjoy some of the lowest rates among the users of the San Diego Metro System. The proposed FY 2026 single family rate will be as low as $52.72 which is 15% lower than the existing (FY 2025) average Metro member agency rate of $62.21.
Figure 1-2 Metro Member Agencies Sewer Rates Comparison
3. The City’s reserve policy generally protects the financial integrity of their sewer service fund. The following minor changes are recommended (shown below as strike-through for deletion and underlined for additions):
Sewer Service Fund Operations/Cash Flow Reserve: Between 25& At least 50% of a single year’s budgeted Sewer Service Fund Operating Expenditures.
Sewer Service Fund Metro Cash Flow Reserve: an amount equal to the City’s estimated portion of the projected cash needs for capital costs of the San Diego Metropolitan Sewerage’s Wastewater Treatment Program. This amount is assumed to be $850,000 for fiscal year 2025-26 through fiscal year 2029-30
Section 1 – Executive Summary
1-6
Sewer Service Fund Emergency/Natural Disaster Reserve: an amount equal to a minimum of 15% of a single year’s budgeted Sewer Service Fund Operating expenditures, including both operational and capital improvement program costs.
Sewer Service Fund Capital Replacement Reserve: an amount equal to between 10% & 15% of a single year’s budgeted Sewer Service Fund operating expenditures user fees.
Sewer Service Fund Capital Expansion Reserve: an amount equal to between 10% & 15% of a single year’s budgeted Sewer Service Fund operating expenditures user fees.
4. Ardurra recommends that the City provide a provision to give the City the ability to pass through City of San Diego wholesale transportation, treatment, and disposal costs to customers should those costs rise beyond projections in the cost-of-service model or beyond what the City notices to customers at time of rate implementation.
This action would obviate the need for the City to conduct another Proposition 218 mailed 45-day notice and public hearing requirement. The authority to provide this provision is located in California Government Code Section 53756. Specifically, the Government Code reads as follows:
An agency providing water, wastewater, sewer, or refuse collection service may adopt a schedule of fees or charges authorizing automatic adjustments that pass-through increases in wholesale charges for water, sewage treatment, or wastewater treatment or adjustments for inflation, if it complies with all of the following:
(a) It adopts the schedule of fees or charges for a property-related service for a period not to exceed five years pursuant to Section 53755.
(b) The schedule of fees or charges may include a schedule of adjustments, including a clearly defined formula for adjusting for inflation. Any inflation adjustment to a fee or charge for a property-related service shall not exceed the cost of providing that service. (c) The schedule of fees or charges for an agency that purchases wholesale water, sewage treatment, or wastewater treatment from a public agency may provide for automatic adjustments that pass through the adopted increases or decreases in the wholesale charges for water, sewage treatment, or wastewater treatment established by the other agency
Section 2 – Introduction
2-1
Section 2
INTRODUCTION
This study (Study) takes a long-range planning approach to establishing wastewater service charges and fees. A discussion of the long-range plan and recommended sewer charge and fee adjustments are included in the following section of this report. The analyses contained herein include operation and maintenance (O&M) costs, City of San Diego Metropolitan Wastewater Department (Metro) transportation, treatment and disposal costs, reserve levels, and identified capital improvement projects (CIP). To that end, the Study examines the revenues generated by the City and makes recommendations for revenue adjustments, as needed. The City retained NV5 in 2017 to update a wastewater cost of service study previously developed by PBS&J in FY 2003. Ms.
Carmen Kasner supported this effort and in FY2023 she completed a minor update to the study to confirm that holding the rates flat for two years through FY2025 was appropriate.
For purposes of this report, the study period is the fiscal years beginning July 1, 2025, and ending June 30, 2030. Unless otherwise noted, references in this report to a specific year are for the City’s fiscal year ending June 30. To avoid confusion between calendar and fiscal years, the term FY refers to the year beginning July 1 and ending June 30. Presented herein are the results of a Study of the City’s projected revenues, revenue requirements, cost of service, and rates for service.
2.1 BACKGROUND: CITY OF NATIONAL CITY
The City provides wastewater service to approximately 17,000 customers within the incorporated area of the City of National City. It owns and operates approximately 100 miles of pipeline, 2,000 manholes, and 2 lift stations. The collection, treatment, and disposal of wastewater in an environmentally safe and efficient manner promote healthy communities and increase the quality of life for local residents.
The City is responsible for collecting wastewater flows originating within the City and conveying the collected flows to the City of San Diego’s Point Loma Treatment Plant for treatment and disposal. The City’s primary goals are operating the sewerage system safely and efficiently while meeting the needs of their customers.
To meet these goals, the City undertakes routine cleaning, inspections, and repairs and rehabilitates its facilities as needed. The wastewater system operates in an area subject to strict regulatory oversight by Federal and State agencies such as the U.S. Environmental Protection Agency (US EPA) and the California State Water Resources Control Board (SWRCB). The City must comply with a multitude of laws including, but not limited to, State Wastewater Discharge Requirements (WDRs). Complying with these regulations and resulting mandates contributes to a large share of the cost burden on the City’s system.
Section 2 – Introduction
2-2
The City completed a Wastewater Master Plan in 2017 which will be updated in the near future, this plan identified numerous projects to upgrade the system. Recently the City has begun a more aggressive CCTV program to identify improvements. Based upon early results of about 10% of the system, numerous improvements are necessary. Due to these identified issues and significant increases in construction costs an average of $6 million per year for the next 3 years and then $5 million and $4 million for the following years are proposed for required rehabilitation and expansion projects. These annual projected capital improvement costs (CIP) are incorporated into this Study and form the basis for the City’s annual capital requirements.
2.2 BACKGROUND: CITY OF SAN DIEGO METROPOLITAN SEWAGE
TREATMENT SYSTEM
The City of National City is one of thirteen participating agencies (PAs) who send their wastewater to the City of San Diego Metropolitan Sewage Treatment System (Metro) for treatment and disposal. Along with the other PAs the City entered into the Regional Disposal Agreement with San Diego in 1998. Due to positive financial negotiations with San Diego since that time and especially the establishment of the “Administrative Protocol on Allocation of Operating Reserves and Debt Service Coverage” during FY 2010 the City has enjoyed stable annual billings for the last 8 years from the City of San Diego. However, in 2015 the City of San Diego initiated a multi-billion-dollar public works project entitled the Pure Water Program which will provide the double benefit of “secondary equivalency” to San Diego’s wastewater customers including National City as well as a significant new potable water supply for the City of San Diego.
This resulted in a Major amendment to the Regional Disposal agreement approved in 2018 but that amendment left many elements to further discussion and negotiations. Since that time, the City is well underway with construction of their Pure Water Program and the East County Joint Powers Authority has begun construction on their Advanced Purified Water Project. For the past 6 years, discussions and negotiations on those open-ended items has progressed and the City of San Diego and Metro members appear to be coming close to a final Draft of a Second Amended and Restated Agreement.
A five-year projection of Metro costs for the City were received from the City of San Diego in December of 2024 but do not include some uncertainties because there are still many unknown final costs. The projections received do not include costs for the spills in the system during rain events in the past two winters, the final costs for upgrades to the large Metro Pumpstations 1&2 that were conditions of a spill from four years ago, the final rate methodology for the Second Amended and Restated Metro Agreement (SARA) that is still being negotiated, Costs for Pure Water Phase II, nor do they include final audited costs for the past three Fiscal Years. The City of San Diego recommends that each agency have a pass-through provision in their rates due to these uncertainties at the moment.
Section 2 – Introduction
2-3
2.3 RATE STUDY SUMMARY
The City of National City customers enjoy some of the lowest sewer service charges in the Metro System as shown in Figure 2-1 and have for many years. The City last adjusted sewer service charges in FY 2023 and held them flat for the past two years. the FY 2025 charge is 15% lower than the average Metro PA rate of $62.21 per month. However, the City’s increased internal CIP requirements and the costs associated with Metro require that the City adjust their sewer rates for the next five years.
The rate study assumed 3% inflation for all expenses except Metro for the rate study period.
Figure 2-1 Sewer Rate Comparison for Participating Agencies in San Diego Metro System
Section 3 – Wastewater Rate Study
3-1
Section 3
WASTEWATER RATE STUDY
3.1 OVERVIEW OF THE SEWER SERVICE CHARGE UPDATE PROCESS A comprehensive rate study typically utilizes three interrelated analyses to address the adequacy and equity of the utility’s rates. These three analyses are a revenue requirement analysis, a cost-of-service analysis, and a rate design analysis. The process is illustrated in Figure 3 -1.
Figure 3-1 Overview of the Comprehensive Rate Study Analysis
The City’s sewer utility was evaluated on a “stand-alone” basis. That is, no subsidies between the utility or other City funds occur. By viewing the utility on a stand-alone basis, the need to adequately fund both operations and maintenance (O&M) and capital infrastructure (CIP) must be balanced against the rate impacts on utility customers.
A detailed and comprehensive process was used to review the City’s rates. As a part of the rate study process a number of on-site project meeting and conference calls were used to review the results with City staff. From this process, final proposed rates were developed and their development is reviewed in this section of the report. Following is a summary of each step in the process.
Revenue Requirement AnalysisCompares the sources of funds (revenue) to the expenses of the utility to determine the overall rate adjustment requiredCost of Service AnalysisAllocates the revenue requirements to the various customer classes of service in a "fair and equitable mannerRate Design AnalysisConsiders both the level and structure of the rate design to collect the target level of service
Section 3 – Wastewater Rate Study
3-2
Revenue Requirement Analysis: The revenue requirement analysis revealed that several significant financial changes have occurred since the City’s 2023 update holding rates flat. The significant changes are:
The current CIP needs of the City have increased due to construction cost increases, additional CCTV and inspection. The age of the city’s system and some densification requiring some upsizing. The Rate study has updated CIP costs to an average of $6 million per year for the next 3 years and then $5 million and $4 million for the following years. This will allow the City to draw down some of the fund reserves and make significant progress on required rehabilitation and expansion projects that are causing a higher risk of spills and more operational costs. These annual projected capital improvement costs (CIP) are incorporated into this Study and form the basis for the City’s annual capital requirements. These costs were not included in the City’s FY 2025 adopted budget.
The construction phase of the City of San Diego’s Pure Water Program is nearly done and during FY 2025 to FY 2030 additional Metro costs are anticipated for Phase 1 of this program due to Audit true ups and the previously discussed SARA that is being negotiated and other Metro system issues. The City’s portion of the Metro budget is currently 7.4% and while the SARA draft methodology does not increase the City’s percentage, there is still uncertainties with flows and impacts from the East county JPA project.
The largest component of the City of National City’s revenue requirement is the costs associated with transportation, treatment, and disposal of the City’s wastewater by the Metro facilities, an aggressive CIP is a close second. A summary of the projected City collection system O&M and CIP, plus San Diego Metro expenses to be included in the City’s rate case, are included on Table 3-1.
Table 3-1: City of National City Revenue Requirements
Section 3 – Wastewater Rate Study
3-3
Figure 3-2 shows the percentage of each of the major cost centers in the City’s rate case.
As noted, the largest component of National City’s revenue requirements (47%) will be paid directly to the City of San Diego.
Figure 3-2 Major Cost Components of City of National City’s FY 2026 Revenue Requirements
As a part of establishing the revenue requirement for the City’s rate case City staff requested Ardurra consultant’s guidance in reviewing their reserve policy to financially protect the City’s sewer service fund. At the end of FY 2024 (June 30, 2024) the City’s sewer service fund showed a reserve cash fund balance of $26.3 million. Ardurra consultants reviewed with City staff industry standard guidelines in establishing formal reserve policies as well as the City’s needs for financial stability and potential exposures to external forces which could require unplanned O&M or capital expenditures. The City’s reserve policy is solid as it was updated in a prior rate study, but the following minor updates are suggested (shown below as strike-through for deletion and underlined for additions).
Sewer Service Fund Operations/Cash Flow Reserve: Between 25& At least 50% of a single year’s budgeted Sewer Service Fund Operating Expenditures.
Sewer Service Fund Metro Cash Flow Reserve: an amount equal to the City’s estimated portion of the projected cash needs for capital costs of the San Diego Metropolitan Sewerage’s Wastewater Treatment Program. This amount is assumed to be $850,000 for fiscal year 2025-26 through fiscal year 2029-30
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Sewer Service Fund Emergency/Natural Disaster Reserve: an amount equal to a minimum of 15% of a single year’s budgeted Sewer Service Fund Operating expenditures, including both operational and capital improvement program costs.
Sewer Service Fund Capital Replacement Reserve: an amount equal to between 10% & 15% of a single year’s budgeted Sewer Service Fund operating expenditures user fees.
Sewer Service Fund Capital Expansion Reserve: an amount equal to between 10% & 15% of a single year’s budgeted Sewer Service Fund operating expenditures user fees.
The final step in determining the revenue requirement for the City’s rate case was to overlay the projected expenditures for the next five years as summarized in Table 3-1 and the recommended reserve policy. Table 3-2 creates a long-range plan showing the use of reserves to minimize the annual rate adjustment to per year stating in FY 2026 through FY 2030. The use/replacement of the City’s reserves is shown on Line 22. While the FYE2030 shows the fund balance slightly under the target, that target is with the maximum percentages from the reserve policy and thus are still well within the appropriate reserve amount. During the next 5 years there will be more clarity available from Metro and from the City’s CCTV and planning efforts.
A detailed copy of the five-year revenue requirement is included in Appendix A to this report.
Table 3-2: City of National City Long Range Financial Plan
Section 3 – Wastewater Rate Study
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Ardurra did look at a 10 year projection of rates and increases and assumed a similar increase of a nominal 3% with expenses increasing at a similar rates and it shows that the rate increase shown here will stabilize the expenditures into the future unless significant additional Capital projects are identified or inflation and other cost factors change as well. Any projection past 5 years includes many assumptions that may or may not be accurate.
Figure 3-3 National City Annual Sources and Uses of Funds vs. Cash Reserves and Reserves Targets
Cost of Service Analysis: The cost-of-service analysis revealed that several major changes have occurred in users and use since the City’s 2017 rate study and subsequently adopted sewer user rates. The significant changes are:
As with other communities in San Diego County and Southern California the City’s citizens and businesses have decreased their water usage significantly since FY 2017.
This was especially the case during COVID when many businesses were closed. This has decreased revenues from the commercial and industrial users of the City who are billed on their annual water usage.
The City uses an equivalent dwelling unit (EDU) system of rates for their residential users. Historically the City has used 240 gallons per day (gpd) for a single-family residential user for billing purposes. Multi-family/condo units are considered to be 0.8 EDU and mobile home units 0.6 EDUs. These EDUs are consistent with industry standards for EDU based user systems. However, due to the decreased water use by residential as well as commercial/industrial users the gallons per EDU have decreased to an estimated 220 gpd. 220 gpd is consistent with the other Participating Agencies wastewater generation rate (in gpd) for EDUs The City’s rate model was updated with the number of residential and commercial/ industrial users used for billing purposes on the FY 2025 tax roll. As noted above the gallons
Section 3 – Wastewater Rate Study
3-6
for residential EDUs were revised to 220 gpd per EDU and the most recent water usage for commercial/industrial users was included.
Table 3-3 summarizes the current number of City users and their projected sewer flows based on the current tax roll water use data for FY 2025.
Table 3-3: Summary of Current Users and Estimated Sewer Flow
Rate Design Analysis: As part of the rate setting process a routine review of an agency’s sewer service charge rate structure is performed. This is done to assure that the agency’s rate structure meets industry standards as well as complies with local, State, and Federal guidelines and regulations.
The City of National City first established their current rate structure in the mid-1990’s and it was submitted to the State Water Resources Control Board of the State of California (SWRCB) and the US EPA. The rate structure and the cost allocations upon which it is based were approved by both the SWRCB and the US EPA. These principles still meet industry standards today and follows Best Management Practices (BMP’s) established by the State of California, and thus there are no recommended changes to the existing rate structure.
The City uses a combination of EDU’s for residential users and water based rates for commercial/industrial users. Single family residential users are considered to be 1 EDU, and multi-family/condo users 0.8 EDU, and mobile home users 0.6 EDU. Commercial/industrial users are grouped based on their estimated sewage strengths into five classes of users.
Each year 90% of the prior year’s water usage per commercial/industrial customer is used to determine the upcoming year’s sewer service charge (Return to Sewer percentage).
There are a few customers with different Return to Sewer percentages based upon a case by case situation which includes a field inspection and engineering review of the situation.
Units of Service and Loadings FLOW: COD:(A) (B) (C) (D) (E) (F) (G)User GroupNo. of Active CustomersBilling Flow Billing Flow Annual Flow (MG/Year) COD UserAnnual COD LoadSS per User Annual Load(MGD) (HCF) (MG/L) (LBS/YR) (MG/L) (LBS/YR)Single Family5,969 0.9546 541,160.1 348.43 200581,170200581,170Multi-family/Condo8,293 2.2238 1,085,130.9 811.68 2001,353,8342001,353,834Mobile Homes365 0.0382 18,651.0 13.95 20023,26920023,269Subtotal- Residential14,6273.2166 1,644,942 1,174.06 1,958,274 1,958,274Commercial - Low1,7930.5038245,846.5183.89 200306,724200306,724Commercial - Medium Low9250.142769,657.352.10 20086,906300130,359Commercial - Medium40.029014,139.010.58 40035,28040035,280Commercial - Medium High190.01768,602.26.43 60032,19750026,831Commercial - High1100.159277,676.058.10 680329,495900436,097Subtotal Non-Residential2,851 0.8524 415,921 311.11 790,602 935,291TOTAL 17,478 4.0690 2,060,863 1,485.17 2,748,876 2,893,564SS:
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The model is using reserves to fund a large part of the CIP and thus the strength based analysis does not completely reflect the actual costs year over year by customer class.
However, based upon treatment costs in FY2030, having all customer classes having the same percentage increase would place an unfair burden on SFR customers. The cost for treatment for commercial customers must be increased a higher percentage to keep the proportions correct.
All classes of users will continue to be billed their annual sewer service charge on the County of San Diego tax roll based on either their EDU classification or their annual water usage and sewage strength category. Table 3-4 compares the current FYE 2025 sewer rates with the proposed FYE 2026 through FYE 2030 of the proposed rate case. The entire output from the rate model showing all steps in the rate case is contained in Appendix A to this Study. Individual years are not revised and reduced or increased exactly because of the use of reserves and rates are never reduced. The goal was to keep increasing the commercial rates with the proportionality correct in FY2030. The final FY2030 rates were within 4% of the calculated proportionality for all commercial classes.
Table 3-4: Proposed Percentage Increases in Rates
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Table 3-5: Comparison of Current Versus Proposed Sewer User Rates
As discussed earlier in this report, the majority of the revenue requirement recovered by the City’s sewer service charges go to pay for cost associated with charge from San Diego Metro. Figure 3-4 summarizes the major components of the proposed FY 2026 monthly single-family sewer service charge of $52.72 per EDU. This figure also shows the use of City reserves to cover City CIP costs:
Figure 3-4 Components of FY 2026 Single Family Monthly Rate
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Figure 3-5 summarizes all San Diego Metro Member Agencies comparative sewer user rates based on 7 HCF of water usage/sewer flow and a residential monthly base fee. It should be noted that the rates shown are those effective January 1, 2025 based upon readily available information. The figure also includes the City’s current monthly rate as well as the proposed FY 2026 rate of $52.72 per EDU per month. The City’s first proposed rate adjustment will not begin until July 1, 2025. Many agencies are in the process of updating their current rate cases. Even with the proposed 5-year rate adjustments National City will still enjoy some of the lowest rates among the users of the San Diego Metro System. The proposed FY 2026 single family rate will be as low as $52.72 which is 15% lower than the existing (FY 2025) average Metro member agency rate of $62.21.
Figure 3-5 Metro Member Agencies Sewer Rate Comparison
APPENDIX A – RATE MODEL
Wastewater Operations & Maintenance Budget
Budget Summary
Step 1 – Customer Summary and Estimated Flows
Step 2 – Determination of Unit Costs
Step 3 – Sewer User Rate Calculations by Fund and Cost
City of National City
Wastewater Rate Study
Draft Report - January 2025
City of National City
Wastewater Operations & Maintenance Budget
FY24 FY25 FY26 FY27 FY28 FY29 FY30
ACCOUNT - MUNIS Unaudited Actual Proposed 5 6 7 7 7 8 9 125-416-029 ENGINEERING
125-416-029-100 SALARIES
125-85-31-31100-6005- Hourly Wages - - - - - - - 125-85-31-31100-6001- FULL-TIME SALARIES 313,803.94 431,795.00 444,748.85 458,091.32 471,834.05 485,989.08 500,568.75 125-85-31-31100-6102- OVERTIME 4,909.46 - - - - - - 125-85-31-31100-6110- ALLOWANCES & STIPENDS 1,328.40 1,440.00 1,483.20 1,527.70 1,573.53 1,620.73 1,669.35 125-85-31-31100-6120- DIFFERENTIAL PAY 2,993.73 3,415.00 3,517.45 3,622.97 3,731.66 3,843.61 3,958.92 125-85-31-31100-6140- WORKERS' COMPENSATION 11,880.22 44,596.00 45,933.88 47,311.90 48,731.25 50,193.19 51,698.99 125-85-31-31100-6150- HEALTH INSURANCE 34,747.51 48,300.00 49,749.00 51,241.47 52,778.71 54,362.08 55,992.94 125-85-31-31100-6151- LTD INSURANCE 486.81 878.00 904.34 931.47 959.41 988.20 1,017.84 125-85-31-31100-6160- RETIREMENT PLAN CHARGES 71,451.09 106,001.00 109,181.03 112,456.46 115,830.15 119,305.06 122,884.21 125-85-31-31100-6161- MEDICARE 4,838.55 6,261.00 6,448.83 6,642.29 6,841.56 7,046.81 7,258.21 125-85-31-31100-6199- PERSONNEL COMPENSATION 12,090.95 2,000.00 2,060.00 2,121.80 2,185.45 2,251.02 2,318.55 125-416-029-200 MAINTENANCE & OPERATIONS
125-85-31-31100-7226- TRAINING, TRAVEL & SUBSISTENCE - - - - - - - 125-85-31-31100-7299- CONTRACT SERVICES 36,126.34 85,000.00 87,550.00 90,176.50 92,881.80 95,668.25 98,538.30 125-416-052 PUBLIC WORKS - OPERATIONS
125-416-052-200 MAINTENANCE & OPERATIONS
125-416-052-268-0000 RENTALS &LEASES - - - - - - - 125-416-052-400-0000 FIXED CHARGES & DEBT SERVICE - - - - - - - 125-416-052-484-0000 OTHER INTEREST - - - - - - - 125-416-221 STREETS
125-416-221-100 Personnel Services
125-85-31-31300-6005- Hourly Wages 24,673.18 - - - - - - 125-85-31-31300-6001- FULL-TIME SALARIES 289,133.75 176,507.00 181,802.21 187,256.28 192,873.96 198,660.18 204,619.99 125-85-31-31300-6102- OVERTIME 69,243.89 32,000.00 32,960.00 33,948.80 34,967.26 36,016.28 37,096.77 125-85-31-31300-6105- LONGEVITY - 985.00 1,014.55 1,044.99 1,076.34 1,108.63 1,141.88 125-85-31-31300-6120- DIFFERENTIAL PAY 2,009.59 - - - - - - 125-85-31-31300-6140- WORKERS' COMPENSATION 27,278.41 31,887.00 32,843.61 33,828.92 34,843.79 35,889.10 36,965.77 125-85-31-31300-6150- HEALTH INSURANCE 40,198.89 29,303.00 30,182.09 31,087.55 32,020.18 32,980.78 33,970.21 125-85-31-31300-6151- LTD INSURANCE 231.13 366.00 395.28 426.90 461.05 497.94 537.77 125-85-31-31300-6160- RETIREMENT PLAN CHARGES 78,569.01 43,331.00 44,630.93 45,969.86 47,348.95 48,769.42 50,232.50 125-85-31-31300-6161- MEDICARE 5,576.02 2,559.00 2,635.77 2,714.84 2,796.29 2,880.18 2,966.58 125-85-31-31300-6199- PERSONNEL COMPENSATION - 3,000.00 3,090.00 3,182.70 3,278.18 3,376.53 3,477.82 125-416-221-000 Other Financing Uses
125-10-19-19100-8999- TRANSFERS TO OTHER FUNDS - 1,136,300.00 - - - - 125-416-222 SEWER SERVICE
125-416-222-000 Other Financing Uses
125-85-31-31400-8999- TRANSFERS TO OTHER FUNDS - - - - - - - 125-416-222-100 Personnel Services
Wastewater Operations and Maintenance Budget - 1 of 3 Page 236 of 252 City of National City
Wastewater Rate Study
Draft Report - January 2025
City of National City
Wastewater Operations & Maintenance Budget
FY24 FY25 FY26 FY27 FY28 FY29 FY30
125-85-31-31400-6001- FULL-TIME SALARIES 93,523.11 508,334.00 523,584.02 539,291.54 555,470.29 572,134.40 589,298.43 125-85-31-31400-6102- OVERTIME 37,989.83 - - - - - - 125-85-31-31400-6105- LONGEVITY - - - - - - - 125-416-222-110-0000 ALLOWANCES & STIPENDS - - - - - - - 125-85-31-31400-6120- DIFFERENTIAL PAY 4,819.35 - - - - - - 125-85-31-31400-6140- WORKERS' COMPENSATION 10,920.15 44,833.00 46,177.99 47,563.33 48,990.23 50,459.94 51,973.73 125-85-31-31400-6150- HEALTH INSURANCE 14,193.18 87,358.00 89,978.74 92,678.10 95,458.45 98,322.20 101,271.86 125-85-31-31400-6151- LTD INSURANCE - - - - - - - 125-416-222-159-0000 DEFERRED COMPENSATION - - - - - - - 125-85-31-31400-6160- RETIREMENT PLAN CHARGES 24,451.14 124,791.00 128,534.73 132,390.77 136,362.50 140,453.37 144,666.97 125-85-31-31400-6161- MEDICARE 1,923.50 7,371.00 7,592.13 7,819.89 8,054.49 8,296.13 8,545.01 125-85-31-31400-6199- PERSONNEL COMPENSATION - 8,600.00 8,858.00 9,123.74 9,397.45 9,679.38 9,969.76 125-416-222-200 Maintenance & Operations
125-416-222-200-0000 Maintenance & Operations -
125-85-31-31400-7211- LAUNDRY & CLEANING SERVICES - - - - - - - 125-416-222-213-0000 PROFESSIONAL SERVICES 54,546.35 100,000.00 103,000.00 106,090.00 109,272.70 112,550.88 115,927.41 125-85-31-31400-7222- MEMBERSHIPS AND SUBSCRIPTIONS 1,264.80 76,127.00 78,410.81 80,763.13 83,186.03 85,681.61 88,252.06 125-85-31-31400-7226- TRAINING, TRAVEL & SUBSISTENCE 1,809.00 7,000.00 7,210.00 7,426.30 7,649.09 7,878.56 8,114.92 125-85-31-31400-7234- ELECTRICITY & GAS 7,309.50 6,000.00 6,180.00 6,365.40 6,556.36 6,753.05 6,955.64 125-85-31-31400-7236- WATER 3,207.19 3,000.00 3,090.00 3,182.70 3,278.18 3,376.53 3,477.82 125-85-31-31400-7268- RENTALS & LEASES - 500.00 515.00 530.45 546.36 562.75 579.64 125-85-31-31400-7272- SEWAGE TRANS. & TREATMENT (Utilities Inflation)6,928,614.20 7,651,673.36 7,948,280.00 8,200,628.40 8,203,047.25 8,205,538.67 8,378,104.83 125-85-31-31400-7291- R & M - AUDIO VISUAL EQUIPT. 2,297.99 5,000.00 5,150.00 5,304.50 5,463.64 5,627.54 5,796.37 125-85-31-31400-7299- CONTRACT SERVICES 32,698.97 30,000.00 30,900.00 31,827.00 32,781.81 33,765.26 34,778.22 125-85-31-31400-7318- WEARING APPAREL 8,688.61 7,000.00 7,210.00 7,426.30 7,649.09 7,878.56 8,114.92 125-416-222-329-0000 PAINTING SUPPLIES - - - - - - - 125-85-31-31400-7337- SMALL TOOLS 873.63 30,000.00 30,900.00 31,827.00 32,781.81 33,765.26 34,778.22 125-416-222-340-0000 SHOP SUPPLIES - - - - - - - 125-85-31-31400-7346- TRAFFIC CONTROL SUPPLY 528.82 800.00 824.00 848.72 874.18 900.41 927.42 125-85-31-31400-7352- SEWER PIPE & MATERIALS 2,961.02 4,000.00 4,120.00 4,243.60 4,370.91 4,502.04 4,637.10 125-85-31-31400-7354- CHEMICAL PRODUCTS 2,264.27 2,200.00 2,266.00 2,333.98 2,404.00 2,476.12 2,550.40 125-416-222-360-0000 SIDEWALK CURB & GUTTER MATER. - - - - - - - 125-85-31-31400-7399- MATERIALS & SUPPLIES 4,393.43 4,600.00 4,738.00 4,880.14 5,026.54 5,177.34 5,332.66 125-416-222-500 Capital Outlay
125-416-222-511-0000 AUTOMOTIVE EQUIPMENT - - - - - - - 125-416-222-512-0000 AUTOMOTIVE LEASES - - - - - - 125-10-18-18500-7598- CAPITAL IMPROVEMENT PROGRAM 1,597,662.59 3,000,000.00 6,000,000.00 6,000,000.00 6,000,000.00 5,000,000.00 4,000,000.00 125-416-222-600 Refunds, Contributions & Special Paymnts 125-85-31-31400-7698- INDIRECT/OVERHEAD COSTS 239, 533.00 239,533.00 246,718.99 254,120.56 261,744.18 269,596.50 277,684.40 125-85-31-31100-3563- Internal Service Charges and Reserves 125-85-31-31400-7740- BUILDING SERVICES CHARGES 20,496.96 23,422.00 24,124.66 24,848.40 25,593.85 26,361.67 27,152.52 125-85-31-31400-7750- VEHICLE SERVICES CHARGES 74,864.04 79,589.00 81,976.67 84,435.97 86,969.05 89,578.12 92,265.46 125-85-31-31400-7752- VEHICLE LEASE CHARGES 21,300.00 33,000.00 35,640.00 38,491.20 41,570.50 44,896.14 48,487.83 125-85-31-31400-7755- INFO. SYSTEMS MAINT. CHARGE 17,550.96 18,022.00 18,562.66 19,119.54 19,693.13 20,283.92 20,892.44 125-416-222-760-0000 OPERATIONS CHARGES - - - - - - - 125-416-222-770-0000 PERSONNEL COMPENSATION CHARGES - - - - - - - Wastewater Operations and Maintenance Budget - 2 of 3 Page 237 of 252 City of National City
Wastewater Rate Study
Draft Report - January 2025
City of National City
Wastewater Operations & Maintenance Budget
FY24 FY25 FY26 FY27 FY28 FY29 FY30
125-85-31-31400-7790- INSURANCE CHARGES 312,263.04 466,139.00 480,123.17 494,526.87 509,362.67 524,643.55 540,382.86 TOTAL SERWER SERVICE FUND - BUDGET 10,554,519.50 14,754,816.36 17,005,796.59 17,351,672.25 17,450,568.32 16,552,586.95 15,827,834.26 - -
- -
- -
Wastewater Operations and Maintenance Budget - 3 of 3 Page 238 of 252 City of National City
Wastewater Rate Study
Draft Report - January 2025
City of National City
Budget Summary
Scenario 1: $2-6 Million CIP Per Year
Expense Description FY24 FY25 FY26 FY27 FY28 FY29 FY30
125-416-029 ENGINEERING
125-416-029-100 Salaries 458,531 $ 644,686 $ 664,027 $ 683,947 $ 704,466 $ 725,600 $ 747,368 $ 125-416-029-200 Maintenance & Operations 36 ,126 $ 85,000 $ 87,550 $ 90,177 $ 92,882 $ 95,668 $ 98,538 $ 125-416-052 PUBLIC WORKS - OPERATIONS
125-416-052-200 Maintenance & Operations -$ -$ -$ -$ -$ -$ -$ 125-416-221 STREETS
125-416-221-000 Other Financing uses - $ 1,136,300 $ - $ - $ - $ - $ - $ 125-416-221-100 Personnel Services 536,914 $ 319,938 $ 329,554 $ 339,461 $ 349,666 $ 360,179 $ 371,009 $ 125-416-222 SEWER SERVICE
125-416-222-000 Other Financing Uses - $ - $ - $ - $ - $ - $ - $ 125-416-222-100 Personnel Services 187,820 $ 781,287 $ 804,726 $ 828,867 $ 853,733 $ 879,345 $ 905,726 $ 125-416-222-200 Maintenance & Operations 12 2,844 $ 276,227 $ 284,514 $ 293,049 $ 301,841 $ 310,896 $ 320,223 $ 125-416-222-272-0000 Sewage Trans. & Treatment 6,928,614 $ 7,651,673 $ 7,948,280 $ 8,200,628 $ 8,203,047 $ 8,205,539 $ 8,378,105 $ -$ - $ - $ - $ - $ - $ - $ -$ - $ - $ - $ - $ - $ - $ -$ - $ - $ - $ - $ - $ - $ -$ - $ - $ - $ - $ - $ - $ 125-416-222-500 Capital Outlay
Other Capital Outlay - $ - $ - $ - $ - $ - $ - $ Collection System CIP 1,597,663 $ 3,000,000 $ 6,000,000 $ 6,000,000 $ 6,000,000 $ 5,000,000 $ 4,000,000 $ 125-416-222-600 Refunds, Contributions & Special Payments 239,533 $ 239,533 $ 246,719 $ 254,121 $ 261,744 $ 269,597 $ 277,684 $ 125-416-222-700 Internal Service Charges and Reserves 446,475 $ 620,172 $ 640,427 $ 661,422 $ 683,189 $ 705,763 $ 729,181 $ Plus/Minus Reserves Collection
Plus/Minus Reserves Metro
Subtotal Expenditures 10,554,520 $ 14,754,816 $ 17,005,797 $ 17,351,672 $ 17,450,568 $ 16,552,587 $ 15,827,834 $ W/Current Budget and Straight Inflation 10,554,520 $ 14,754,816 $ 17,005,797 $ 17,351,672 $ 17,450,568 $ 16,552,587 $ 15,827,834 $ Budget Summary - 1 of 1 Page 239 of 252
City of National City
Wastewater Rate Study
Draft Report - January 2025
City of National City
FY 2025 Base Year
Step 1 -- Customer Summary and Estimated Flows
Units of Service and Loadings FLOW: COD:
(A) (B) (C) (D) (E) (F) (G)
User Group No. of Active
Customers Billing Flow Billing Flow Annual Flow
(MG/Year) COD User Annual COD
Load SS per User Annual Load
(MGD) (HCF) (MG/L) (LBS/YR) (MG/L) (LBS/YR)
Single Family 5,969 0.9546 541,160.1 348.43 200 581,170 200 581,170 Multi-family/Condo 8,293 2.2238 1,085,130.9 811.68 200 1,353,834 200 1,353,834 Mobile Homes 365 0.0382 18,651.0 13.95 200 23,269 200 23,269 Subtotal- Residential 14,627 3.2166 1,644,942 1,174.06 1,958,274 1,958,274 Commercial - Low 1,793 0.5038 245,846.5 183.89 200 306,724 200 306,724 Commercial - Medium Low 925 0.1427 69,657.3 52.10 200 86,906 300 130,359 Commercial - Medium 4 0.0290 14,139.0 10.58 400 35,280 400 35,280 Commercial - Medium High 19 0.0176 8,602.2 6.43 600 32,197 500 26,831 Commercial - High 110 0.1592 77,676.0 58.10 680 329,495 900 436,097 Subtotal Non-Residential 2,851 0.8524 415,921 311.11 790,602 935,291 TOTAL 17,478 4.0690 2,060,863 1,485.17 2,748,876 2,893,564 SS:
Step 1 - 1 of 1Page 240 of 252
City of National City
Wastewater Rate Study
Draft Report - January 2025
City of National City
FY 2025 Base Year
Step 2 -- Determination of Unit Costs
Metro Cost Projections
FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30
Cost Category
Parameter
Allocation
Percentages
Unit Cost Unit Cost Unit Cost Unit Cost Unit Cost Unit Cost Unit Cost Unit Cost Unit Cost
1. Collection System Volume Related Costs 1,563,062 $ 1,795,128 $ 3,625,905 $ 7,103,143 $ 9,057,517 $ 9,151,044 $ 9,247,521 $ 8,347,048 $ 7,449,729 $ Annual Flow (MG) 1,485.17 1,485.17 1,485.17 1,485.17 1,485.17 1,485.17 1,485.17 1,485.17 1,485.17 Unit Cost ($ /MG) 1,052.44 $ 1,208.70 $ 2,441.40 $ 4,782.71 $ 6,098.63 $ 6,161.60 $ 6,226.56 $ 5,620.25 $ 5,016.07 $
2. Sewage Treatment & Transportation Costs: Metro Blend Projections 6,109,203 $ 7,198,480 $ 6,928,614 $ 7,651,673 $ 7,948,280 $ 8,200,628 $ 8,203,047 $ 8,205,539 $ 8,378,105 $ Parameter
Cost Per Parameter Allocation %'s*
Flow (MG)
50.8% 3,103,475 3,656,828 3,519,736 3,887,050 4,037,726 4,165,919 4,167,148 4,168,414 4,256,077 COD (LBS.) 23.1% 1,411,226 1,662,849 1,600,510 1,767,537 1,836,053 1,894,345 1,894,904 1,895,479 1,935,342 SS (LBS.) 26.1% 1,594,502 1,878,803 1,808,368 1,997,087 2,074,501 2,140,364 2,140,995 2,141,646 2,186,685 100.0%
Annual Flow (MG) 1,485.17 1,485.17 1,485.17 1,485.17 1,485.17 1,485.17 1,485.17 1,485.17 1,485.17 Pounds of COD (lbs) 2,748,876 2,748,876 2,748,876 2,748,876 2,748,876 2,748,876 2,748,876 2,748,876 2,748,876 Pounds of SS (lbs) 2,893,564 2,893,564 2,893,564 2,893,564 2,893,564 2,893,564 2,893,564 2,893,564 2,893,564 Unit Cost ($ / HCF) 2,089.64 $ 2,462.22 $ 2,369.92 $ 2,617.24 $ 2,718.69 $ 2,805.01 $ 2,805.83 $ 2,806.69 $ 2,865.71 $ Unit Cost ($ / COD lb) 0.51 $ 0.60 $ 0.58 $ 0.64 $ 0.67 $ 0.69 $ 0.69 $ 0.69 $ 0.70 $ Unit Cost ($ / SS lb) 0.55$ 0.65$ 0.62$ 0.69$ 0.72$ 0.74$ 0.74$ 0.74$ 0.76$ Total Revenue Requirement For Rates 7,672,265 $ 8,993,608 $ 10,554,520 $ 14,754,816 $ 17,005,797 $ 17,351,672 $ 17,450,568 $ 16,552,587 $ 15,827,834 $ Check - - - - - - - - - Step 2 - 1 of 1
City of National City
Wastewater Rate Study
Draft Report - January 2025
FY26 Volume (Flow)
Flow COD SS
Unit Cost Unit Cost Unit Cost Unit Cost
No. of EDUs Annual Flow
COD
Annual Load
SS
Annual Load ($/MG) ($/MG) ($/lb.) ($/lb.)
User Group
(MG) (lbs) (lbs) $ 6,098.63 $ 2,718.69 $ 0.67 $ 0.72 Total Annual
Revenue
Required
Monthly
Flat Rate
with no
reserves
Rate
Per HCF
Single Family 5,969 348.43 581,170 581,170 2,124,975 $ 947,287 $ 388,180 $ 416,662 $ 3,877,104 $ 54.13 $ Multi-family/Condo 8,293 811.68 1,353,834 1,353,834 4,950,122 $ 2,206,702 $ 904,264 $ 970,613 $ 9,031,701 $ 90.76 $ Mobile Homes 365 13.95 23,269 23,269 85,082 $ 37,928 $ 15,542 $ 16,683 $ 155,235 $ 35.44 $ Subtotal- Residential 14,627 1,174.06 1,958,274 1,958,274 7,160,179 $ 3,191,917 $ 1,307,987 $ 1,403,957 $ 13,064,040 $ Commercial - Low 1,793 183.89 306,724 306,724 1,121,496 $ 499,949 $ 204,870 $ 219,901 $ 2,046,216 $ 8.32 $ Commercial - Medium Low 925 52.10 86,906 130,359 317,761 $ 141,654 $ 58,047 $ 93,459 $ 610,921 $ 8.77 $ Commercial - Medium 4 10.58 35,280 35,280 64,499 $ 28,753 $ 23,565 $ 25,294 $ 142,110 $ 10.05 $ Commercial - Medium High 19 6.43 32,197 26,831 39,241 $ 17,493 $ 21,505 $ 19,236 $ 97,476 $ 11.33 $ Commercial - High 110 58.10 329,495 436,097 354,340 $ 157,960 $ 220,079 $ 312,653 $ 1,045,034 $ 13.45 $ Subtotal Non-Residential 2,851 311.11 790,602 935,291 1,897,338 $ 845,809 $ 528,066 $ 670,544 $ 3,941,756 $ Total 17,478 1,485.17 2,748,876 2,893,564 9,057,517$ 4,037,726$ 1,836,053$ 2,074,501$ 17,005,797$ Check (Should = 0) - - - - $ FY27 Volume (Flow)
Flow COD SS
Unit Cost Unit Cost Unit Cost Unit Cost
No. of EDUs Annual Flow
COD
Annual Load
SS
Annual Load ($/MG) ($/MG) ($/lb.) ($/lb.)
User Group
(MG) (lbs) (lbs) $ 6,161.60 $ 2,805.01 $ 0.69 $ 0.74 Total Annual
Revenue
Required
Monthly
Flat Rate
with no
reserves
Rate
Per HCF
Single Family 5,969 348.43 581,170 581,170 2,146,917 $ 977,362 $ 400,504 $ 429,891 $ 3,954,674 $ 55.21 $ Multi-family/Condo 8,293 811.68 1,353,834 1,353,834 5,001,237 $ 2,276,762 $ 932,974 $ 1,001,429 $ 9,212,401 $ 92.57 $ Mobile Homes 365 13.95 23,269 23,269 85,960 $ 39,133 $ 16,036 $ 17,212 $ 158,341 $ 36.15 $ Subtotal- Residential 14,627 1,174.06 1,958,274 1,958,274 7,234,114 $ 3,293,257 $ 1,349,514 $ 1,448,531 $ 13,325,416 $ Commercial - Low 1,793 183.89 306,724 306,724 1,133,077 $ 515,822 $ 211,374 $ 226,883 $ 2,087,155 $ 8.49 $ Commercial - Medium Low 925 52.10 86,906 130,359 321,042 $ 146,151 $ 59,890 $ 96,426 $ 623,509 $ 8.95 $ Commercial - Medium 4 10.58 35,280 35,280 65,165 $ 29,666 $ 24,313 $ 26,097 $ 145,240 $ 10.27 $ Commercial - Medium High 19 6.43 32,197 26,831 39,646 $ 18,049 $ 22,188 $ 19,847 $ 99,730 $ 11.59 $ Commercial - High 110 58.10 329,495 436,097 357,999 $ 162,976 $ 227,067 $ 322,580 $ 1,070,621 $ 13.78 $ Subtotal Non-Residential 2,851 311.11 790,602 935,291 1,916,930 $ 872,663 $ 544,831 $ 691,833 $ 4,026,256 $ Total 17,478 1,485.17 2,748,876 2,893,564 9,151,044$ 4,165,919$ 1,894,345$ 2,140,364$ 17,351,672$ Check (Should = 0) - - $
Strength (Treatment) Rates
Strength (Treatment) Rates
Step 3 - 1 of 3Page 242 of 252
City of National City
Wastewater Rate Study
Draft Report - January 2025
FY28 Volume (Flow)
Flow COD SS
Unit Cost Unit Cost Unit Cost Unit Cost
No. of EDUs Annual Flow
COD
Annual Load
SS
Annual Load ($/MG) ($/MG) ($/lb.) ($/lb.)
User Group
(MG) (lbs) (lbs) $ 6,226.56 $ 2,805.83 $ 0.69 $ 0.74 Total Annual
Revenue
Required
Monthly
Flat Rate
with no
reserves
Rate
Per HCF
Single Family 5,969 348.43 581,170 581,170 2,169,552 $ 977,650 $ 400,623 $ 430,017 $ 3,977,842 $ 55.53 $ Multi-family/Condo 8,293 811.68 1,353,834 1,353,834 5,053,964 $ 2,277,434 $ 933,249 $ 1,001,724 $ 9,266,370 $ 93.11 $ Mobile Homes 365 13.95 23,269 23,269 86,866 $ 39,144 $ 16,040 $ 17,217 $ 159,268 $ 36.36 $ Subtotal- Residential 14,627 1,174.06 1,958,274 1,958,274 7,310,382 $ 3,294,228 $ 1,349,912 $ 1,448,959 $ 13,403,481 $ Commercial - Low 1,793 183.89 306,724 306,724 1,145,023 $ 515,974 $ 211,436 $ 226,950 $ 2,099,382 $ 8.54 $ Commercial - Medium Low 925 52.10 86,906 130,359 324,427 $ 146,194 $ 59,908 $ 96,455 $ 626,983 $ 9.00 $ Commercial - Medium 4 10.58 35,280 35,280 65,852 $ 29,674 $ 24,320 $ 26,104 $ 145,951 $ 10.32 $ Commercial - Medium High 19 6.43 32,197 26,831 40,064 $ 18,054 $ 22,195 $ 19,853 $ 100,166 $ 11.64 $ Commercial - High 110 58.10 329,495 436,097 361,774 $ 163,024 $ 227,133 $ 322,675 $ 1,074,606 $ 13.83 $ Subtotal Non-Residential 2,851 311.11 790,602 935,291 1,937,139 $ 872,920 $ 544,992 $ 692,037 $ 4,047,088 $ Total 17,478 1,485.17 2,748,876 2,893,564 9,247,521$ 4,167,148$ 1,894,904$ 2,140,995$ 17,450,568$ Check (Should = 0) - - $
FY29 Volume (Flow)
Flow COD SS
Unit Cost Unit Cost Unit Cost Unit Cost
No. of EDUs Annual Flow
COD
Annual Load
SS
Annual Load ($/MG) ($/MG) ($/lb.) ($/lb.)
User Group
(MG) (lbs) (lbs) $ 5,620.25 $ 2,806.69 $ 0.69 $ 0.74 Total Annual
Revenue
Required
Monthly
Flat Rate
with no
reserves
Rate
Per HCF
Single Family 5,969 348.43 581,170 581,170 1,958,293 $ 977,947 $ 400,744 $ 430,148 $ 3,767,132 $ 52.59 $ Multi-family/Condo 8,293 811.68 1,353,834 1,353,834 4,561,837 $ 2,278,125 $ 933,532 $ 1,002,028 $ 8,775,522 $ 88.18 $ Mobile Homes 365 13.95 23,269 23,269 78,408 $ 39,156 $ 16,045 $ 17,223 $ 150,832 $ 34.44 $ Subtotal- Residential 14,627 1,174.06 1,958,274 1,958,274 6,598,537 $ 3,295,229 $ 1,350,322 $ 1,449,399 $ 12,693,486 $ Commercial - Low 1,793 183.89 306,724 306,724 1,033,527 $ 516,130 $ 211,500 $ 227,019 $ 1,988,176 $ 8.09 $ Commercial - Medium Low 925 52.10 86,906 130,359 292,836 $ 146,239 $ 59,926 $ 96,484 $ 595,484 $ 8.55 $ Commercial - Medium 4 10.58 35,280 35,280 59,440 $ 29,683 $ 24,327 $ 26,112 $ 139,563 $ 9.87 $ Commercial - Medium High 19 6.43 32,197 26,831 36,163 $ 18,059 $ 22,201 $ 19,859 $ 96,283 $ 11.19 $ Commercial - High 110 58.10 329,495 436,097 326,546 $ 163,073 $ 227,202 $ 322,773 $ 1,039,595 $ 13.38 $ Subtotal Non-Residential 2,851 311.11 790,602 935,291 1,748,511 $ 873,185 $ 545,157 $ 692,247 $ 3,859,101 $ Total 17,478 1,485.17 2,748,876 2,893,564 8,347,048$ 4,168,414$ 1,895,479$ 2,141,646$ 16,552,587$ Check (Should = 0) - - $
Strength (Treatment) Rates
Strength (Treatment) Rates
Step 3 - 2 of 3Page 243 of 252
City of National City
Wastewater Rate Study
Draft Report - January 2025
FY30 Volume (Flow)
Flow COD SS
Unit Cost Unit Cost Unit Cost Unit Cost
No. of EDUs Annual Flow
COD
Annual Load
SS
Annual Load ($/MG) ($/MG) ($/lb.) ($/lb.)
User Group
(MG) (lbs) (lbs) $ 5,016.07 $ 2,865.71 $ 0.70 $ 0.76 Total Annual
Revenue
Required
Monthly
Flat Rate
with no
reserves
Rate
Per HCF
Single Family 5,969 348.43 581,170 581,170 1,747,774 $ 998,514 $ 409,172 $ 439,194 $ 3,594,654 $ 50.19 $ Multi-family/Condo 8,293 811.68 1,353,834 1,353,834 4,071,433 $ 2,326,035 $ 953,165 $ 1,023,101 $ 8,373,735 $ 84.14 $ mobile homes 365 13.95 23,269 23,269 69,979 $ 39,979 $ 16,383 $ 17,585 $ 143,926 $ 32.86 $ Subtotal- Residential 14,627 1,174.06 1,958,274 1,958,274 5,889,185 $ 3,364,529 $ 1,378,720 $ 1,479,880 $ 12,112,314 $ Commercial - Low 1,793 183.89 306,724 306,724 922,421 $ 526,985 $ 215,948 $ 231,793 $ 1,897,147 $ 7.72 $ Commercial - Medium Low 925 52.10 86,906 130,359 261,356 $ 149,314 $ 61,186 $ 98,513 $ 570,369 $ 8.19 $ Commercial - Medium 4 10.58 35,280 35,280 53,050 $ 30,308 $ 24,839 $ 26,662 $ 134,858 $ 9.54 $ Commercial - Medium High 19 6.43 32,197 26,831 32,276 $ 18,439 $ 22,668 $ 20,276 $ 93,659 $ 10.89 $ Commercial - High 110 58.10 329,495 436,097 291,442 $ 166,503 $ 231,981 $ 329,561 $ 1,019,486 $ 13.12 $ Subtotal Non-Residential 2,851 311.11 790,602 935,291 1,560,544 $ 891,549 $ 556,622 $ 706,805 $ 3,715,520 $ Total 17,478 1,485.17 2,748,876 2,893,564 7,449,729$ 4,256,077$ 1,935,342$ 2,186,685$ 15,827,834$ Check (Should = 0) - - $
Strength (Treatment) Rates
Step 3 - 3 of 3Page 244 of 252
ORDINANCE NO. 2025 -
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF NATIONAL CITY, CALIFORNIA, REPEALING ORDINANCE NO. 2017-2442, AS AMENDED BY ORDINANCE NO. 2023-2521,
AND ADOPTING AN ORDINANCE ESTABLISHING SEWER SERVICE CHARGES FOR FISCAL YEARS 2025-2026, 2026-2027, 2027-2028, 2028-2029, AND 2029-2030.
WHEREAS, the City of National City (“City”) provides wastewater service to more than 17,000 customers within the incorporated area of the City, and owns and operates approximately 100 miles of sewer pipeline, 2,000 manholes, and two lift stations; and
WHEREAS, in the fall of 2024, the City retained an outside consultant , Ardurra Group, Inc., to perform a sewer rate study in order to develop a wastewater multi-year financial plan, cost of service analysis, and rate design for the City (the “Study”); and
WHEREAS, on March 4, 2025, the City Council accepted the Study, which recommended increasing sewer service charges to reflect current costs of providing sewer service to customers within the City; and
WHEREAS, on March 12, 2025, the City mailed the “Notice of Public Hearing to Consider Proposed Adjustments to Sewer Service Charges” to all City property owners to satisfy the notice requirements of Proposition 218; and
WHEREAS, on May 6, 2025, no majority protest of such property owners was presented upon conclusion of the noticed Proposition 218 public hearing to consider the proposed adjustments to sewer service charges.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF NATIONAL CITY, CALIFORNIA, HEREBY ORDAINS AS FOLLOWS:
Section 1: That the City Council hereby repeals Ordinance No. 2017-2442, as amended by Ordinance No. 2023-2521, which established sewer service charges for Fiscal Years 2018-2019, 2019-2020, 2020-2021, 2021-2022, and 2022-2023 and extended said charges for Fiscal Years 2023-2024 and 2024-2025.
Section 2: That, in or der to meet the current costs of providing sewer service to customers within the City of National City, as established by the sewer rate study accepted by the City Council on March 4, 2025, the City Council of the City of National City hereby approves, adopts, and authorizes the sewer service charges for Fiscal Years 2025-2026, 2026-2027, 2027- 2028, 2028 -2029, and 2029 -2030, including adjustments in conformance with California Government Code section 53756, as set forth in the attached Exhibit “A”, which is incorporated herein by reference, effective July 1, 2025.
Section 3: This Ordinance shall take effect and be in force thirty days (30) from the date of its passage, and before the expiration of fifteen (15) days after its passage, it or a summary of it, shall be published once , with the names of the members of the City Council voting for and against the same in the Star News, a newspaper of general circulation published in the County of San Diego, California.
Section 4: The City Council declares that the judicial invalidity of any subsection or portion of this chapter shall not affect the validity of any other remaining section or portion; that the City Council would have adopted each of those remaining portions, notwithstanding any later declared invalidity. If any provision determined invalid under the preceding sentence can either be judicially severed or interpreted in a way that could harmonize it with the remaining provisions, then it may be severed or interpreted and applied so as to give full purpose, meaning and effect to the remaining provisions of this chapter.
Section 5: The proposed action is exempt from the California Environmental Quality Act (“CEQA”) under Section 15061(b)(3) – general rule; the project is not considered a project under CEQA as there is no possibility that the activity raised by this Ordinance may have a significant impact on the environment; the City currently charges sewer services fees and by this ordinance will substitute the existing fee schedule with an updated schedule.
Section 6: The City Clerk shall certify to the adoption of this Ordinance an d shall publish in accordance with the law.
INTRODUCED at a regular meeting of the City C ouncil of the City of National City, California, held on the 6th day of May, 2025.
PASSED and ADOPTED this _____ day of _______, 2025.
Ron Morrison, Mayor
ATTEST:
Shelley Chapel, MMC, City Clerk
APPROVED AS TO FORM:
Barry J. Schultz, City Attorney
Exhibit A
Annual Sewer Service Charges for FY 2025-2026 to FY 2029-2030 * Duplexes or a single family with a single ADU on one property are charged one single family rate and one multi-family rate.
AGENDA REPORT
Department: Community Development
Prepared by: Martin Reeder, AICP – Asst. Director of Community Development Meeting Date: Tuesday, May 6, 2025
Approved by: Scott W. Huth, Interim City Manager
SUBJECT:
Update on the Development of Accessory Dwelling Units
RECOMMENDATION:
File the report
BOARD/COMMISSION/COMMITTEE PRIOR ACTION:
Not Applicable.
EXPLANATION:
The City adopted an Ordinance regulating Accessory Dwelling Unit (ADU) and Junior Accessory Dwelling Unit (JADU) development in 2021. The purpose of the Ordinance was to provide for the construction of ADUs in areas zoned to allow residential uses pursuant to Government Code Section 65852.2 related to addressing the state’s housing crisis. In addition to being compliant with state code, ADUs help advance the goals and policies of the city's housing element related to affordability, neighborhood preservation , housing choice, and income preservation.
ADU production
In the years 2022, 2023, and 2024, 10, 23, and 22 ADUs (including JADUs) were produced , although 108 permits were issued. 108 issued permits would be an average of 36 ADUs per year.
Planning Division records show over 200 projects related to ADU deed restrictions. However, the discrepancy is likely due to projects that are still in review. The 108 units were reported in the City’s Annual Progress Reports (APR), which inform the state of the City’s p rogress in meeting its Regional Housing Needs Allocation (RHNA) commitments.
In 2023, the City received a SANDAG technical assistant grant for the production of an ADU Handbook, which was published in March 2024. The handbook has been a useful tool for bo th the public and for staff to understand and implement the City’s ADU program. The Handbook is published on the City’s website1 and includes all information needed by prospective homeowners and developers, including utilities, fire protection, parking, design, and permit processing.
State Bills
There were many new bills introduced in 2024, as noted below, all of which are mandatory. The City may be more permissive than the State on ADUs. All new laws from 2024 are addressed in the updated ADU Handbook from January 2025.
1 https://www.nationalcityca.gov/home/showpublisheddocument/33455/638603728477570000
SB 1211: Increases the number of detached ADUs that can be approved ministerially in multifamily residential projects.
o Allows up to eight detached ADUs on a lot with an existing multifamily dwelling. o Allows up to two detached ADUs on a lot with a proposed multifamily dwelling.
AB 2533: Addresses unpermitted ADUs built before January 1, 2020, allowing them to be legalized.
o Prohibits local agencies from penalizing applicants for having unpermitted ADUs. o Requires local agencies to app rove necessary permits to correct noncompliance with health and safety standards.
SB 1077:
o Streamlines the permitting process for ADUs in coastal zones.
AB 1332:
o Imposes additional obligations on local agencies to accelerate ADU approvals and reduce bureaucratic barriers.
o Requires local agencies to establish a preapproval program for ADU plans. o Requires agencies to publish pre -approved ADU plans online. o Requires agencies to recognize and post plans pre -approved by other local or state agencies.
AB 434: Requires all California cities and municipalities to have a pre -approved ADU plan scheme in place by January 1, 2025.
AB 976: Removes the requirement that homeowners looking to rent out their ADU or their single-family home must live on the proper ty.
SB 684: Makes it easier to divide up large parcels of land for modest clusters of townhomes and cottages, but only in areas already zoned for multifamily housing.
SB 1037: Cracks down on local governments that block or delay approved housing, imposing penalties up to $50,000 per month, with funds going towards affordable housing.
AB 2221: Streamlines California ADU law, facilitating easier construction, especially in unused commercial spaces.
o Allows builders to seamlessly propose and constru ct ADUs in new multifamily housing plans.
o Reduces arbitrary decisions blocking ADU construction.
SB 1123: Requires local agencies to ministerially approve the subdivision of vacant, single - family lots to allow for up to ten units, as specified.
There are also pending bills for 2025, not yet approved. Because the state’s legislative session has not yet ended, some of these pending bills may change or be deleted. A final list of adopted bills is usually published in the Spring.
SB 79: Allows multi-family homes near transit.
o Not ADU-specific, but multi-family properties can yield more ADUs than single-family properties.
AB 253: Allows for third party permit review for residential projects, which could include ADUs.
AB 1308: Allows for third party inspections for residential projects, which could include ADUs.
AB 1154: Clarifies existing language related to JADUs and small ADUs.
Challenges
ADU production has proven to be of great benefit to the region in the realm of housing production, especially by providing housing without the cost of acquiring new land, dedicated parking, and costly infrastructure. However, it has not been without its do wnside. Other cities in San Diego County have received significant pushback on their regulations, the City of San Diego in particular.
San Diego’s ADU Bonus Program (2021) allows a property owner to build a second “bonus” unit if they agree to construct a n ADU and restrict the rent to an affordable level. The program also allows for a maximum of five units on one property in areas not served by public transit. In transit priority areas, the number can be even higher.
The City of Chula Vista voted late last year to not increase the number of allowable ADUs in the City. A consideration to allow up to two detached ADUs with a cap of four total units was rejected by both their Planning Commission and City Council. 2
In researching other issues in the state related to ADUs, there are some references to concerns over parking, but most of the news articles on ADUs in California have a positive tone. Outliers are the coastal communities due to the views (Laguna Beach) and outright disdain (Huntington Beach). There were also concerns raised about areas with wildfire risk a few years ago, but not recently.
FINANCIAL STATEMENT:
Not Applicable
RELATED CITY COUNCIL 2020-2025 STRATEGIC PLAN GOAL:
Not Applicable
ENVIRONMENTAL REVIEW:
This is not a project under CEQA , and is therefore , not subject to environmental review.
CCR15378; PRC 21065.
PUBLIC NOTIFICATION:
The Agenda Report was posted at least 72 hours before the Regular Meeting date and time, and 24 hours before a Special Meeting in accordance with the Ralph M. Brown Act
ORDINANCE:
Not Applicable
EXHIBITS:
Not Applicable
2 https://www.kpbs.org/news/economy/2024/10/14/chula-vista-granny-flat-adu-rules
AGENDA REPORT
Department: Human Resources
Prepared by: Lydia Flores-Hernandez, Human Resources Director Meeting Date: Tuesday, May 6, 2025
Approved by: Scott W. Huth, Interim City Manager
SUBJECT:
City Manager Executive Recruitment
RECOMMENDATION:
Retain an Executive Recruitment Firm for City Manager Recruitment
BOARD/COMMISSION/COMMITTEE PRIOR ACTION:
Not Applicable.
EXPLANATION:
On April 18, 2025, the City Council and City Manager Ben Martinez mutually agreed that Mr.
Martinez would step down from his role, effective immediately, thereby creating a vacancy in the position of City Manager. Subsequently, on April 22, 2025, the City Council approved the appointment of Scott Huth as Interim City Manager.
The position of Ci ty Manager plays a critical role in leading the city's administrative operations, executing the vision of the City Council, and serving as the primary liaison between city staff and the community. Given the significance of this role, it is essential that t he recruitment process is thorough, timely, and attracts individuals with the requisite experience, leadership qualities, and values aligned with our community's goals.
City staff now seeks direction regarding the process to permanently fill the City Manager position.
Engaging an executive recruitment firm is a common practice, with typical costs ranging from $25,000 to $60,000. The average timeline to complete a City Manager recruitment is approximately three to six months.
The first option is for the Human Resources Department to manage the recruitment process internally.
The second option is to engage an external executive search firm to conduct a nationwide search for the next City Manager.
Executive recruitment services typically include the deve lopment of a comprehensive position profile—informed by input from City Councilmembers —followed by targeted advertising, outreach, and screening of candidates. The process also involves coordinating structured interviews and conducting thorough reference c hecks for top finalists before presenting candidates for Council consideration.
FINANCIAL STATEMENT:
The estimated fiscal impact of engaging an executive recruitment firm is expected to range between $25,000 and $60,000. A specific budget appropriation will be identified upon the selection of a service provider.
RELATED CITY COUNCIL 2020-2025 STRATEGIC PLAN GOAL:
Balanced Budget and Economic Development
ENVIRONMENTAL REVIEW:
This is not a project under CEQA , and is therefore , not subject to environmental review.
CCR15378; PRC 21065.
PUBLIC NOTIFICATION:
The Agenda Report was posted at least 72 hours before the Regular Meeting date and time, and 24 hours before a Special Meeting in accordance with the Ralph M. Brown Act
ORDINANCE:
Not Applicable
EXHIBITS:
None