PUBLIC HEARING & INTRODUCTION OF AN ORDINANCE
ESTABLISHING SEWER SERVICE CHARGES FOR
FY 2025-2026,2026-2027, 2027-2028, 2028-2029, 2029-2030 MAY 6, 2025
Item 10.1
• MARCH 4, COUNCIL ACCEPTED THE SEWER RATE STUDY AND SCHEDULED THE PUBLIC HEARING FOR MAY 6, 2025
• PURSUANT TO STATE PROP 218 – ANY INCREASE TO SEWER RATES REQUIRE
NOTIFICATION OF ALL PROPERTY OWNERS
• MAILERS WERE SENT OUT MORE THEN 45 DAYS PRIOR TO A PUBLIC HEARING • March 12, 2025
• FIRST READING AND PUBLIC HEARING AT MAY 6TH CITY COUNCIL MEETING • Protest votes to be Counted tonight & heard in public • SECOND READING AND ADOPTION ON MAY 20TH –
• If approved to proceed at the First Reading
• 30 DAYS AFTER SECOND READING THE ORDINANCE WILL BE IN EFFECT • IF APPROVED, NEW RATES WILL BE INCLUDED ON THE 2025-2026 TAX ROLL • June 17, 2025 Council Meeting
Public Noticing & Rate-setting Process
• CITY OF NATIONAL CITY MUNICIPAL SEWER SYSTEM
• Collection system only
– Miles of Pipe – approximately 100
– Customers ~17,000
Residential – 14,627
Commercial – 2,851
• Metropolitan Joint Powers Authority (Metro JPA) member • Treatment by the City of San Diego (Metro)
• LAST NATIONAL CITY RATE STUDY: 2017
• Adopted Rates for FY 2018 through FY 2023
• FY 2023 Extended rates with no increase for 2 years
• FY 2026 – FY 2030 rates proposed to increase by 3% per year for Single Family and Multifamily Properties
Background
• CITY HAS SIGNIFICANT CAPITAL NEEDS FOR THEIR SYSTEM
• Aging System
• Increased Densification
• INCREASED OPERATION & MAINTENANCE TO MEET REGULATORY
REQUIREMENTS (State and Federal laws)
• PERSONNEL COSTS INCREASED
• GENERAL INFLATIONARY IMPACTS
• TREATMENT COST INCREASES FROM METRO & THE CITY OF SAN DIEGO
PURE WATER PROGRAM
What Has Changed?
• EVALUATE THE ADEQUACY OF PROJECTED REVENUES UNDER EXISTING
CHARGES
• DEVELOP A WASTEWATER COST OF SERVICE AND RATE MODEL FOR BOTH OPERATIONS AND CAPITAL OVER A 5-YEAR TIMEFRAME (FY2026 TO FY2030) • EVALUATE AND ALLOCATE REVENUE REQUIREMENTS ACROSS THE
VARIOUS CUSTOMER CLASSES PROPORTIONATELY
• DEVELOP A 5-YEAR SEWER SERVICE CHARGE THAT IS ANTICIPATED TO
PRODUCE SUFFICIENT REVENUE TO MEET THE OPERATION &
MAINTENANCE AS WELL CAPITAL NEEDS
• QUANTIFY APPROPRIATE RESERVE LEVELS
Goals of the Rate Study
Revenue Requirement Analysis
Compares the sources of funds (revenue) to
the expenses of the utility to determine the
overall rate adjustment required
Cost of Service Analysis
Allocates the revenue requirements to the
various customer classes of service in a "fair
and equitable manner
Rate Design Analysis
Considers both the level and structure of the
rate design to collect the target level of
service
Rate Study Process
Major Cost Components of the City of National
City’s FY 2026 Revenue Requirements
47% is Treatment
Remainder is O&M,
CIP, Staff & Admin
National City Annual Sources and Uses of
Funds vs. Cash Reserves and Reserves Targets
Components of FY 2026 Single Family
Monthly Rate
Recommended Annual Revenue
Adjustment
FY 2026 National City Single Family
Rate vs. FY 2025 Metro Agencies
Average Metro FY
2025 Monthly Rate:
$62.21/month
National City 15%
lower than Average
Metro FY 2025 Rate
SEWER RATES ARE NOT A TAX – THEY ARE PROPERTY RELATED FEES FOR
SERVICES PROVIDED
REFERENCE CORRECTIONS AND TYPOS IN THE SEWER RATE STUDY • Best Management Practices reference in the Study should have instead referenced Waste Discharge requirements (WDR’s) - no impact on proposed rates • Water usage calculations – no impact on proposed rates BASIS FOR MINIMUM CHARGES - COMMERCIAL VS. MOBILE HOME
• General Operation & Maintenance (O&M) & CIP of the System is required from all connections due to state WDR’s, Minimal/No Water Use still requires a minimum charge to cover cost of O&M & CIP, Mobile home Rate is very close to the calculated rate of fees if there were no treatment costs Other Items to Clarify
May 6, 2025
Recommendation
THE FOLLOWING ARE ACTIONS RECOMMENDED
• Hold Public Hearing
• Consider and Count the number of Protest Votes Received • Introduce Ordinance titled, “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”