Norco City Council
June 4, 2025

6 or proceeds of or to any of the Collateral which may now or hereafter exist, and any and all rent or income derived from any or all of the Collateral, subject to the rights of Borrower to collect and retain the same so long as no Event of Default shall have occurred and is continuing.

Capitalized terms not otherwise defined herein shall have the meaning ascribed to such terms in the Property Acquisition Loan Agreement made and entered into as of September 1, 2023 by Five Keys Schools and Programs, a California nonprofit public benefit corporation, as Borrower, and City of Norco, a California municipal corporation and chartered city, as Lender.

City Council

STAFF REPORT
Date: June 4, 2024 Agenda Item:

3.D.

To: Honorable Mayor and City Council Members
From: William Otterman, Fire Chief
Prepared By: Sarah Muro, Emergency Services Assistant
Department: Fire
SUBJECT:

Increasing Revenue, Appropriation and Expenditure from the FY 2024 Emergency Management Performance Grant (EMPG) Program in the Amount of $11,322 for Emergency Operations Center (EOC) Upgrades And Establishing the Fire Chief as the Authorized Agent in Any Actions Necessary for the Purpose of Obtaining Federal Financial Assistance Provided by the Federal Department of Homeland Security through the Federal Emergency Management Agency and Sub-Granted through the State of California Office of Emergency Services
RECOMMENDATION:

Adopt Resolution No. 2025-28, accepting EMPG funds in amount of $5,661 and agreeing to match with a contribution of $5,661 for upgrades and enhancements to the EOC, and identifying the Fire Chief as the Authorized Agent to act on behalf of the City of Norco in any actions necessary for the purpose of obtaining Federal financial assistance provided by the Federal Department of Homeland Security through the Federal Emergency Management Agency and sub-granted through the California Office of Emergency Services.

SUMMARY:

The major focus of the Emergency Management Performance Grant (EMPG) Program is to improve and enhance the ability of local cities and governing bodies to respond to disasters. The Emergency Operations Center (EOC) allows the City to properly respond to emergency incidents within the City. This grant will allow the City to continue to make purchases to update and make the EOC easily accessible during disasters. A requirement of the Emergency Management Performance Grant Program is the identification of the Fire Chief by City Council as the Authorized Agent to act on behalf of the City pertaining to any actions necessary for the purpose of obtaining Federal Emergency Management Agency Funds.

BACKGROUND:

The purpose of the Emergency Management Performance Grant (EMPG) Program is to provide federal funds to States to assist State, local, and tribal governments in preparing for all hazards. Funds provided under the EMPG must be used to support activities that contribute to the Operational Area’s capability to prevent, prepare for, mitigate against, respond to, and recover from emergencies and disasters, whether natural or man-made.

Previous grants have been received by the City of Norco that provided the ability to update and maintain the Emergency Operations Center (EOC). The EOC allows the City to organize emergency events or incidents and properly assign resources and/or ask for assistance from the County’s Operational Area. This grant will allow the City to continue to make upgrades to the functionality of the EOC, including the purchase of desks, chairs, and other essential equipment.

All applicants of the Homeland Security Grant Program and the Emergency Management Performance Grant Program are required to provide this resolution.

FISCAL IMPACT:

Acceptance of the grant requires a dollar-for-dollar matching fund requirement. The total amount granted to the City was $5,661. The matching amount will be funded from the City’s General Fund Fire Division under general ledger account number:
121.761A.30430 - Small Office Equipment. The grant and match funding has been appropriated in the FY 25-26 Operating Budget.

RELATIONSHIP TO STRATEGIC PLAN:

Appropriation of matching funds for the Emergency Management Performance Grant is consistent with Strategic Direction #5 “Improve the quality of life by enhancing public safety services; Action Plan #5 “Complete all actions necessary to update City Emergency Operations Plan including training, development of checklist, communication protocols with residents and staff.”
REVIEWED AND APPROVED BY:

Certified as to Availability of Funds: Joshua Calhoun, Finance Director Approved by: Lisette Free, City Manager
Approved as to Form: Harper and Burns, LLP, City Attorney ATTACHMENT(S):

Norco_FY24 EMPG Award Letter
FY24 Standard Assurances
Resolution 2025-28 FY2024 EMPG

Bruce Barton
Director
450 EAST ALESSANDRO
RIVERSIDE, CALIFORNIA 92508
T: 951.358.7100 ♦ TDD: 711
WWW.RIVCOEMD.ORG
April 23, 2025
City of Norco
William Otterman, Division Chief
SUBJECT: FY 2024 Emergency Management Performance Grant (EMPG) Award Notice Period of Performance: Personnel 7/1/2024 – 12/31/2025
Other 4/23/2025 – 12/31/2025
Grant #: 2024-0050 CFDA #: 97.067
This letter is being provided to notify you that your FY 2024 EMPG subaward has been approved in the amount of $5,661.

This subaward is subject to requirements in 2 CFR, Part 200, including the Notice of Funding Opportunity (NOFO), Preparedness Grants Manual, California Supplement to the NOFO, Riverside County Supplement to the NOFO, Grant Assurances, and all applicable federal, state, and local requirements. All activities funded with this subaward must be completed within the period of performance.

The Riverside County Operational Area (OA) may suspend or terminate grant funding, in whole or in part, or other measures may be imposed for any of the following reasons:
• Failure to submit required performance reports.
• Failure to expend a minimum of 90% of awarded funding. • Failure to expend funds in a timely manner consistent with the grant milestones, guidance, and assurances.
• Failure to comply with the requirements or statutory progress toward the goals or objectives of federal or state law.
• Failure to make satisfactory progress toward the goals or objectives set forth in the Subrecipient application.
• Failure to follow Grant Subaward requirements or special conditions. • Proposing or implementing substantial plan changes to the extent that, if originally submitted, the application would not have been selected for funding. • False certification in the application or document.
• Failure to adequately manage, monitor, or direct the grant funding activities of the organization.

Subrecipients must obtain additional written approval prior to incurring costs for activities such as aviation, watercraft, noncompetitive procurement, and projects requiring Environmental Planning and Historic Preservation (EHP) review. Any changes to the Financial Management Forms Workbook (FMFW) requires approval from the OA prior to conducting activities and incurring costs.

Bruce Barton
Director
450 EAST ALESSANDRO
RIVERSIDE, CALIFORNIA 92508
T: 951.358.7100 ♦ TDD: 711
WWW.RIVCOEMD.ORG
The following documents must be submitted with signatures to finalize the acceptance of this subaward. The documents should be submitted in a single PDF to [email protected] by July 23, 2025:
• Financial Management Forms Workbook
o Grant Subaward Face Sheet
o Authorized Agent and Contact Tab
o Project Ledger Tab
o Planning Tab
o Organization Tab
o Equipment Tab
o Training Tab
o Exercise Tab
o Consultant-Contractor Tab
o Personnel Tab
o Match Tab
o Authorized Agent Sheet
• Governing Body Resolution
• Standard Assurances
• EHP Screening Form
Reimbursement requests will not be processed without the acceptance documents on file.

This subaward is subject to all provisions of 2 CFR Part 200, Subpart F – Audit Requirements. Any funds received in excess of current needs, approved amounts, or those found owed as a result of a final review or audit, must be refunded to the OA within 30 days upon receipt of an invoice from the County of Riverside Emergency Management Department.

For further assistance, please contact [email protected]. We look forward to working with you and appreciate your cooperation and support.

Sincerely,
Louis Le
Emergency Management Program Supervisor
County of Riverside Emergency Management Department

FY 2024 Standard Assurances
Federal Grant Programs

As the duly authorized representative of the Applicant, I hereby certify that the Applicant has the legal authority to apply for federal assistance and the institutional, managerial, and financial capability (including funds sufficient to pay any non-federal share of project cost) to ensure proper planning, management, and completion of the project described in this application, within prescribed timelines.

I further acknowledge that the Applicant is responsible for reviewing and adhering to all requirements within the:
(a) Applicable Federal Regulations (see below);
(b) Federal Program Notice of Funding Opportunity (NOFO); (c) Federal Preparedness Grants Manual;
(d) California Supplement to the NOFO;
(e) Federal and State Grant Program Guidelines; and
(f) Riverside County Supplement to the NOFO.

Federal Regulations
Government cost principles, uniform administrative requirements, and audit requirements for federal grant programs are set forth in Title 2, Part 200 of the Code of Federal Regulations (C.F.R.). Updates are issued by the Office of Management and Budget (OMB) and can be found at http://www.whitehouse.gov/omb/.

Significant state and federal grant award requirements (some of which appear in the documents listed above) are set forth below. The Applicant hereby agrees tocomply with the following:

1. Proof of Authority
The Applicant will obtain written authorization from the city council, governing board, or authorized body in support of this subaward. This written authorization must specify that the Applicant and the city council, governing board, or authorized body agree:
(a) To provide all matching funds required for the grant project and that any cash match will be appropriated as required;
(b) Any liability arising out of the performance of this agreement shall be the responsibility of the Applicant and the city council, governing board, or authorized body;
(c) Grant funds shall not be used to supplant expenditures controlled by the city council, governing board, or authorized body; and
(d) The official executing this agreement is authorized by the Applicant.

FY 2024 Standard Assurances
Federal Grant Programs

This Proof of Authority must be maintained on file and readily available upon request.

2. Period of Performance
The Applicant will initiate work after approval of the award and complete all work within the period of performance specified in the grant.

3. Lobbying and PoliticalActivities
As required by Section 1352, Title 31 of the United States Code (U.S.C.), for persons entering into a contract, grant, loan, or cooperative agreement from an agency or requests or receives from an agency a commitment providing for the United States to insure or guarantee a loan, the Applicant certifies that:
(a) No federal appropriated funds have been paid or will be paid, by or on behalf of the undersigned, to any person for influencing or attempting to influence an officer or employee of an agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any Federal contract, the making of any federal grant, the making of any federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any federal contract, grant, loan, or cooperativeagreement.
(b) If any funds other than federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with this federal contract, grant, loan, or cooperative agreement, the undersigned shall complete and submit Standard Form-LLL, “Disclosure Form to Report Lobbying”, in accordance with itsinstructions.
(c) The undersigned shall require that the language of this certification be included in the award documents for all subawards at all tiers (including subcontracts, subgrants, and contracts under grants, loans, and cooperative agreements) and that all subrecipients shall certify and disclose accordingly.

The Applicant will also comply with provisions of the Hatch Act (5 U.S.C. §§ 1501- 1508 and §§ 7324-7328) which limit the political activities of employees whose principal employment activities are funded in whole or in part with federal funds.

FY 2024 Standard Assurances
Federal Grant Programs

Finally, the Applicant agrees that federal funds will not be used, directly or indirectly, to support the enactment, repeal, modification or adoption of any law, regulation or policy without the express written approval from the awarding agency.

4. Debarment andSuspension
As required by Executive Orders 12549 and 12689, and 2 C.F.R. § 200.213 and codified in 2 C.F.R. Part 180, Debarment and Suspension, the Applicant will provide protection against waste, fraud, and abuse by debarring or suspending those persons deemed irresponsible in their dealings with the federal government.

The Applicant certifies that it and its principals, recipients, or subrecipients:
(a) Are not presently debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded from covered transactions by any federal department oragency;
(b) Have not within a three-year period preceding this application been convicted of or had a civil judgment rendered against them for commission of fraud or a criminal offense in connection with obtaining, attempting to obtain, or performing a public (federal, state, or local) transaction or contract under a public transaction; violation of federal or state antitrust statutes or commission of embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, or receiving stolen property;
(c) Are not presently indicted for or otherwise criminally or civilly charged by a governmental entity (federal, state, or local) with commission of any of the offenses enumerated in paragraph (2)(b) of this certification; and (d) Have not within a three-year period preceding this application had one or more public transaction (federal, state, or local) terminated for cause or default.

Where the Applicant is unable to certify to any of the statements in this certification, he or she shall attach an explanation to this application.

5. Non-Discrimination and Equal Employment Opportunity
The Applicant will comply with all federal statutes relating to non-discrimination.

These include, but are not limited to, the following:

FY 2024 Standard Assurances
Federal Grant Programs

(a) Title VI of the Civil Rights Act of 1964 (Public Law (P.L.) 88-352 and 42 U.S.C. § 2000d et. seq.) which prohibits discrimination on the basis of race, color, or national origin and requires that recipients of federal financial assistance take reasonable steps to provide meaningful access to persons with limited English proficiency (LEP) to their programs and services;
(b) Title IX of the Education Amendments of 1972, (20 U.S.C. §§ 1681-1683, and 1685-1686), which prohibits discrimination on the basis of sex in any federally funded educational program oractivity;
(c) Section 504 of the Rehabilitation Act of 1973, (29 U.S.C. § 794), which prohibits discrimination against those with disabilities or access and functional needs;
(d) Americans with Disabilities Act (ADA) of 1990, which prohibits discriminationon the basis of disability and requires buildings and structures be accessible to those with disabilities and access and functional needs (42 U.S.C. §§ 12101- 12213);
(e) Age Discrimination Act of 1975, (42 U.S.C. §§ 6101-6107), which prohibits discrimination on the basis ofage;
(f) Public Health Service Act of 1912 (42 U.S.C. §§ 290 dd—2), relating to confidentiality of patient records regarding substance abuse treatment; (g) Title VIII of the Civil Rights Act of 1968 (42 U.S.C. § 3601 et seq.), relating to nondiscrimination in the sale, rental or financing of housing as implemented by the Department of Housing and Urban Development at 24 C.F.R. Part 100. The prohibition on disability discrimination includes the requirement that new multifamily housing with four or more dwelling units—i.e., the public and common use areas and individual apartment units (all units in buildings with elevators and ground-floor units in buildings without elevators)— be designed and constructed with certain accessible features (See 24 C.F.R. § 100.201); (h) Executive Order 11246, which prohibits federal contractors and federally assisted construction contractors and subcontractors, who do over $10,000 in Government business in one year from discriminating in employmentdecisions on the basis of race, color, religion, sex, sexual orientation, gender identification or national origin;
(i) Executive Order 11375, which bans discrimination on the basis of race, color, religion, sex, sexual orientation, gender identification, or national origin in hiring and employment in both the United States federal workforce and on the part of governmentcontractors;
(j) California Public Contract Code § 10295.3, which prohibits discrimination based on domestic partnerships and those in same sex marriages;

FY 2024 Standard Assurances
Federal Grant Programs

(k) Department of Homeland Security (DHS) policy to ensure the equal treatment of faith-based organizations, under which all applicants and recipients must comply with equal treatment policies and requirements contained in 6 C.F.R.

Part 19;
(l) The Applicant will comply with California’s Fair Employment and Housing Act (FEHA) (California Government Code §§12940-12957), as applicable. FEHA prohibits harassment and discrimination in employment because of ancestry, familial status, race, color, religious creed (including religious dress and grooming practices), sex (which includes pregnancy, childbirth, breastfeeding and medical conditions related to pregnancy, childbirth or breastfeeding), gender, gender identity, gender expression, sexual orientation, marital status, national origin, ancestry, mental and physical disability, genetic information, medical condition, age, pregnancy, denial of medical and family care leave, or pregnancy disability leave, military and veteran status, and/or retaliation for protesting illegal discrimination related to one of these categories, or for reporting patient abuse in tax supported institutions; (m) Any other nondiscrimination provisions in the specific statute(s) under which application for federal assistance is being made;and (n) The requirements of any other nondiscrimination statute(s) which may apply to the application.

6. Drug-FreeWorkplace
As required by the Drug-Free Workplace Act of 1988 (41 U.S.C. § 701 et seq.), the Applicant certifies that it will maintain a drug-free workplace and a drug-free awareness program as outlined in the Act.

7. Environmental Standards
The Applicant will comply with state and federal environmental standards, including:
(a) California Environmental Quality Act (CEQA) (California Public Resources Code §§ 21000- 21177), to include coordination with the city or county planning agency;
(b) CEQA Guidelines (California Code of Regulations, Title 14, Division 6, Chapter 3, §§ 15000- 15387);
(c) Federal Clean Water Act (CWA) (33 U.S.C. § 1251 et seq.), which establishes the basic structure for regulating discharges of pollutants into the waters of the United States and regulating quality standards for surfacewaters;

FY 2024 Standard Assurances
Federal Grant Programs

(d) Federal Clean Air Act of 1955 (42 U.S.C. § 7401) which regulates air emissions from stationary and mobile sources;
(e) Institution of environmental quality control measures under the National Environmental Policy Act (NEPA) of 1969 (P.L. 91-190); the Council on Environmental Quality Regulations for Implementing the Procedural Provisions of NEPA; and Executive Order 12898 which focuses on the environmentaland human health effects of federal actions on minority and low-income populations with the goal of achieving environmental protection for all communities;
(f) Evaluation of flood hazards in floodplains in accordance with Executive Order 11988;
(g) Executive Order 11514 which sets forth national environmental standards; (h) Executive Order 11738 instituted to assure that each federal agency empowered to enter into contracts for the procurement of goods, materials, or services and each federal agency empowered to extend federal assistance by way of grant, loan, or contract shall undertake such procurement and assistance activities in a manner that will result in effective enforcement of the Clean Air Act and the Federal Water Pollution Control Act Executive Order 11990 which requires preservation of wetlands; (i) The Safe Drinking Water Act of 1974, (P.L. 93-523); (j) The Endangered Species Act of 1973, (P.L. 93-205);
(k) Assurance of project consistency with the approved state management program developed under the Coastal Zone Management Act of 1972 (16 U.S.C. §§1451 et seq.);
(l) Conformity of Federal Actions to State (Clear Air) Implementation Plans under Section 176(c) of the Clean Air Act of 1955, as amended (42 U.S.C. §§7401 et seq.);
(m) Wild and Scenic Rivers Act of 1968 (16 U.S.C. § 1271 et seq.) related to protecting components or potential components of the national wildand scenic riverssystem.

The Applicant shall not be: 1) in violation of any order or resolution promulgated by the State Air Resources Board or an air pollution district; 2) subject to a cease and desist order pursuant to § 13301 of the California Water Code for violation of waste discharge requirements or discharge prohibitions; or 3) determined to be in violation of federal law relating to air or water pollution.

FY 2024 Standard Assurances
Federal Grant Programs

8. Audits
For subrecipients expending $750,000 or more in combined federal grant funds annually, the Applicant will be required to submit financial and compliance audits in accordance with the Single Audit Act Amendments of 1996 and Title 2 of the Code of Federal Regulations, Part 200, Subpart F Audit Requirements.

9. Cooperation and Access to Records
The Applicant must cooperate with any compliance reviews or investigations conducted by DHS. In accordance with 2 C.F.R. § 200.337, the Applicant will give the awarding agency, the Comptroller General of the United States and, if appropriate, the state, through any authorized representative, access to and the right to examine all records, books, papers, or documents related to the award. The Applicant will require any subrecipients, contractors, successors, transferees and assignees to acknowledge and agree to comply with this provision.

10. Conflict of Interest
The Applicant will establish safeguards to prohibit employees from using their positions for a purpose that constitutes or presents the appearance of personal or organizational conflict of interest, or personal gain.

11. Financial Management
False Claims for Payment - The Applicant will comply with 31 U.S.C §§ 3729-3733 which sets forth that no subrecipient, recipient, or subrecipient shall submit a false claim for payment, reimbursement or advance.

12. Reporting - Accountability
The Applicant agrees to comply with applicable provisions of the Federal Funding Accountability and Transparency Act (FFATA) (P.L. 109-282), specifically (a) the reporting of subawards obligating $25,000 or more in federal funds and (b) executive compensation data for first-tier subawards. The Applicant also agrees to comply with the requirements set forth in the government-wide financial assistance award term regarding the System for Award Management and Universal Identifier Requirements located at 2 C.F.R. Part 25, Appendix A.

13. Whistleblower Protections
The Applicant also must comply with statutory requirements for whistleblower protections at 10 U.S.C. § 2409, 41 U.S.C. § 4712, and 10 U.S.C. § 2324, 41 U.S.C. § 4304 and § 4310.

FY 2024 Standard Assurances
Federal Grant Programs

14. Human Trafficking
The Applicant will comply with the requirements of Section 106(g) of the Trafficking Victims Protection Act of 2000, as amended (22 U.S.C. § 7104) which prohibits grant award recipients or a subrecipient from: (1) engaging in trafficking in persons during the period of time that the award is in effect; (2) procuring a commercial sex act during the period of time that the award is in effect; or (3) using forced labor in the performance of the award or subawards under the award.

15. Labor Standards
The Applicant will comply with the following federal labor standards:
(a) The Davis-Bacon Act (40 U.S.C. §§ 276a to 276a-7), as applicable, and the Copeland Act (40 U.S.C. § 3145 and 18 U.S.C. § 874) and the Contract Work Hours and Safety Standards Act (40 U.S.C. §§ 327-333), regarding labor standards for federally assisted construction contracts or subcontracts, and (b) The Federal Fair Labor Standards Act (29 U.S.C. § 201 et al.) as they apply to employees of institutes of higher learning (IHE), hospitals and othernon-profit organizations.

16. Worker’s Compensation
The Applicant must comply with provisions which require every employer to be insured to protect workers who may be injured on the job at all times during the performance of the work of this Agreement, as per the workers compensation laws set forth in California Labor Code §§ 3700 et seq.

17. Property-Related
If applicable to the type of project funded by this federal award, the Applicant will:
(a) Comply with the requirements of Titles II and III of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (P.L. 91-646) which provide for fair and equitable treatment of persons displaced or whose property is acquired as a result of federal or federally-assisted programs. These requirements apply to all interests in real property acquired for project purposes regardless of federal participation in purchase; (b) Comply with flood insurance purchase requirements of Section 102(a) of the Flood Disaster Protection Act of 1973 (P.L. 93-234) which requires subrecipients in a special flood hazard area to participate in the program and to purchase flood insurance if the total cost of insurable construction and acquisition is $10,000 ormore;

FY 2024 Standard Assurances
Federal Grant Programs

(c) Assist the awarding agency in assuring compliance with Section 106 of the National Historic Preservation Act of 1966, as amended (16 U.S.C. § 470), Executive Order 11593 (identification and protection of historic properties), and the Archaeological and Historic Preservation Act of 1974 (16 U.S.C. §469a-1 et seq.); and
(d) Comply with the Lead-Based Paint Poisoning Prevention Act (42 U.S.C. § 4831 and 24 CFR Part 35) which prohibits the use of lead-based paint in construction or rehabilitation of residence structures.

18. Certifications Applicable Only to Federally-Funded Construction Projects For all construction projects, the Applicant will:
(a) Not dispose of, modify the use of, or change the terms of the real property title or other interest in the site and facilities without permission and instructions from the awarding agency. Will record the federal awarding agency directives and will include a covenant in the title of real property acquired in whole or in part with federal assistance funds to assure nondiscrimination during the useful life of the project;
(b) Comply with the requirements of the awarding agency with regard to the drafting, review and approval of construction plans and specifications;and (c) Provide and maintain competent and adequate engineering supervision at the construction site to ensure that the complete work conforms with the approved plans and specifications and will furnish progressive reports and such other information as may be required by the assistance awarding agency or State.

19. Use of Cellular Device While Driving is Prohibited
Applicants are required to comply with California Vehicle Code sections 23123 and 23123.5. These laws prohibit driving motor vehicle while using an electronic wireless communications device to write, send, or read a text-based communication. Drivers are also prohibited from the use of a wireless telephone without hands-free listening and talking, unless to make an emergency call to 911, law enforcement, or similar services.

FY 2024 Standard Assurances
Federal Grant Programs

20. California Public Records Act and Freedom of Information Act The Applicant acknowledges that all information submitted in the course of applying for funding under this program, or provided in the course of an entity’s grant management activities that are under Federal control, is subject to the Freedom of Information Act (FOIA), 5 U.S.C. § 552, and the California Public Records Act, California Government Code section 6250 et seq. The Applicant should consider these laws and consult its own State and local laws and regulations regarding the release of information when reporting sensitive matters in the grant application, needs assessment, and strategic planning process.

EMERGENCY MANAGEMENT PERFORMANCE GRANT PROGRAM (EMPG) –

PROGRAM SPECIFIC ASSURANCES / CERTIFICATIONS

21. Acknowledgment of Federal Funding from DHS
All recipients must acknowledge their use of federal funding when issuing statements, press releases, requests for proposals, bid invitations, and other documents describing projects or programs funded in whole or in part with federal funds.

22. Activities Conducted Abroad
All recipients must ensure that project activities carried on outside the United States are coordinated as necessary with appropriate government authorities and that appropriate licenses, permits, or approvals are obtained.

23. Best Practices for Collection and Use of Personally Identifiable Information (PII) DHS defines personally identifiable information (PII) as any information that permits the identity of an individual to be directly or indirectly inferred, including any information that is linked or linkable to that individual. All recipients who collect PII are required to have a publicly-available privacy policy that describes standards on the usage and maintenance of PII they collect. Recipients may also find the DHS Privacy Impact Assessments: Privacy Guidance and Privacy template a useful resource respectively.

24. Copyright
All recipients must affix the applicable copyright notices of 17 U.S.C. §§ 401 or 402 and an acknowledgement of U.S. Government sponsorship (including the award number) to any work first produced under federal financial assistanceawards.

25. Duplication of Benefits
Any cost allocable to a particular federal financial assistance award provided for in 2 C.F.R. Part 200, Subpart E may not be charged to other federal financial assistance

FY 2024 Standard Assurances
Federal Grant Programs

awards to overcome fund deficiencies, to avoid restrictions imposed by federal statutes, regulations, or federal financial assistance award terms and conditions, or for other reasons. However, these prohibitions would not preclude recipients from shifting costs that are allowable under two or more awards in accordance with existing federal statutes, regulations, or the federal financial assistance award terms and conditions.

26. Energy Policy and ConservationAct
All recipients must comply with the requirements of 42 U.S.C. § 6201 which contain policies relating to energy efficiency that are defined in the state energy conservation plan issued in compliance with this Act.

27. Federal Debt Status
All recipients are required to be non-delinquent in their repayment of any federal debt. Examples of relevant debt include delinquent payroll and other taxes, audit disallowances, and benefit overpayments. See OMB Circular A-129.

28. Fly America Act of 1974
The Applicant must comply with Preference for United States Flag Air Carriers: (air carriers holding certificates under 49 U.S.C. § 41102) for international air transportation of people and property to the extent that such service is available, in accordance with the International Air Transportation Fair Competitive Practices Act of 1974 (49 U.S.C. § 40118) and the interpretative guidelines issued by the Comptroller General of the United States in the March 31, 1981, amendment to Comptroller General Decision B-138942.

29. Hotel and Motel Fire Safety Act of 1990
In accordance with Section 6 of the Hotel and Motel Fire Safety Act of 1990, all Applicants must ensure that all conference, meeting, convention, or training space funded in whole or in part with federal funds complies with the fire prevention and control guidelines of the Federal Fire Prevention and Control Act of 1974, as amended, 15 U.S.C. § 2225a.

30. Non-supplanting Requirement
All recipients who receive federal financial assistance awards made under programs that prohibit supplanting by law must ensure that federal funds do not replace (supplant) funds that have been budgeted for the same purpose through nonfederal sources.

31. Patents and Intellectual Property Rights
Unless otherwise provided by law, recipients are subject to the Bayh-Dole Act, Pub. L.

No. 96-517, as amended, and codified in 35 U.S.C. § 200 et seq. All recipients are

FY 2024 Standard Assurances
Federal Grant Programs

subject to the specific requirements governing the development, reporting, and disposition of rights to inventions and patents resulting from financial assistance awards located at 37 C.F.R. Part 401 and the standard patent rights clause located at 37 C.F.R. § 401.14.

32. SAFECOM
All recipients who receive federal financial assistance awards made under programs that provide emergency communication equipment and its related activities must comply with the SAFECOM Guidance for Emergency Communication Grants, including provisions on technical standards that ensure and enhance interoperable communications.

33. Terrorist Financing
The Applicant must comply with Executive Order 13224 and United States law that prohibit transactions with, and the provisions of resources and support to, individuals and organizations associated with terrorism. The Applicant is legally responsible for ensuring compliance with the Order and laws.

34. Reporting of Matters Related to Recipient Integrity and Performance If the total value of the recipient’s currently active grants, cooperative agreements, and procurement contracts from all federal assistance offices exceeds $10,000,000 for any period of time during the period of performance of this federal financial assistance award, you must comply with the requirements set forth in the government-wide Award Term and Condition for Recipient Integrity and Performance Matters located at 2 C.F.R. Part 200, Appendix XII, the full text of which is incorporated here by reference in the award terms and conditions.

35. USA Patriot Act of 2001
The Applicant must comply with requirements of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (USA PATRIOT Act), which amends 18 U.S.C. §§ 175-175c.

36. Use of DHS Seal, Logo, andFlags
The Applicant must obtain permission from their DHS Financial Assistance Office, prior to using the DHS seal(s), logos, crests or reproductions of flags or likenesses of DHS agency officials, including use of the United States Coast Guard seal, logo, crests or reproductions of flags or likenesses of Coast Guard officials.

37. Required Use of American Iron, Steel, Manufactured Products, and Construction Materials
The Applicant must comply with the “Build America, Buy America” Act (BABAA),

FY 2024 Standard Assurances
Federal Grant Programs

enacted as part of the Infrastructure Investment and Jobs Act and Executive Order 14005. Applicants receiving a federal award subject to BABAA requirements may not use federal financial assistance funds for infrastructure projects unless:
(a) All iron and steel used in the project are produced in the United States – this means all manufacturing processes, from the initial melting stage through the application of coatings, occurred in the United States; (b) All manufactured products used in the project are produced in the United States – this means the manufactured product was manufactured in the United States; and the cost of the components of the manufactured product that are mined, produced, or manufactured in the United States is greater than 55 percent of the total cost of all components of the manufactured product, unless another standard for determining the minimum amount of domestic content of the manufactured product has been established under applicable law or regulation; and
(c) All construction materials are manufactured in the United States – this means that all manufacturing processes for the construction material occurred in the United States.

The “Buy America” preference only applies to articles, materials, and supplies that are consumed in, incorporated into, or affixed to an infrastructure project. It does not apply to tools, equipment, and supplies, such as temporary scaffolding, brought to the construction site and removed at or before the completion of the infrastructure project.

Nor does a “Buy America” preference apply to equipment and furnishings, such as movable chairs, desks, and portable computer equipment, that are used at or within the finished infrastructure project but are not an integral part of the structure or permanently affixed to the infrastructure project.

Per section 70914(c) of BABAA, FEMA may waive the application of a “Buy America” preference under an infrastructure program in certain cases.

38. Monitoring and Suspension/Termination
Failure to comply with these requirements may result in suspension of payments under the grant or termination of the grant or both and the subrecipient may be ineligible for award of any future grants if Riverside County OA or the Cal OES determines that any of the following has occurred: (1) the recipient has made false certification, or (2) violates the certification by failing to carry out the requirements as notedabove. Subawards that are found to be out of compliance will be provided notice to informally resolve the problem prior to issuing a notice of intent to impose corrective measures. Riverside County OA may reduce, suspend, or terminate current and/or future grant funding, in whole or in part, or other measures

FY 2024 Standard Assurances
Federal Grant Programs

may be imposed for any of the following reasons:
• Failure to submit required reports.
• Failure to expend at least 90% or $5,000 (whichever is greater) of the award could affect future funding.
• Failure to expend funds in a timely manner consistent with the grant milestones, guidance, and assurances.
• Failure to comply with the requirements or statutory progress toward the goals or objectives of federal or state law.
• Failure to make satisfactory progress toward the goals or objectives set forth in the Subrecipient application.
• Failure to follow grant agreement requirements or special conditions. • False certification in the application or document.
• Failure to adequately manage, monitor or direct the grant funding activities of the subaward.

FY 2024 Standard Assurances
Federal Grant Programs

IMPORTANT
The purpose of these assurances is to obtain federal and state financial assistance, including any and all federal and state grants, loans, reimbursement, contracts, etc.

Applicant recognizes and agrees that state financial assistance will be extended based on the representations made in these assurances. These assurances are binding on Applicant, its successors, transferees, assignees, etc. as well as any of its subrecipients.

All appropriate documentation, as outlined above, must be maintained on file by the Applicant and available for Cal OES and Riverside County OA or public scrutiny upon request. Failure to comply with these requirements may result in suspension of payments under the grant or termination of the grant or both and the Applicant may be ineligible for award of any future grants if Cal OES determines that the Applicant:
(1) has made false certification, or (2) violates the certification by failing to carry out the requirements as noted above.

All of the language contained within this document must be included in the award documents for all subawards at all tiers. Applicants are bound by DHS Security Standard Terms and Conditions 2023, Version 2, hereby incorporated by reference, which can be found at: https://www.dhs.gov/publication/fy15-dhs- standard-termsand-conditions.

The undersigned represents that he/she is authorized to enter into this agreement for and on behalf of the Applicant.

Subrecipient:

Signature of Authorized Agent:

Printed Name of Authorized Agent:

Title: Date:

RESOLUTION NO. 2025-28

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NORCO,
CALIFORNIA INCREASING REVENUE IN THE AMOUNT $5,661 FROM THE EMERGENCY MANAGEMENT PERFORMANCE GRANT; AND
INCREASING APPROPRIATION IN THE AMOUNT OF $5,661 AND

IDENTIFYING THE FIRE CHIEF AS THE AUTHORIZED AGENT TO ACT

ON BEHALF OF THE CITY OF NORCO IN ANY ACTIONS NECESSARY

FOR THE PURPOSE OF OBTAINING FEDERAL FINANCIAL

ASSISTANCE PROVIDED BY THE FEDERAL DEPARTEMENT OF

HOMELAND SECURITY THROUGH THE FEDERAL EMERGENCY

MANAGEMENT AGENCY (FEMA) AND SUBGRANTED THROUGH THE

STATE OF CALIFORNIA OFFICE OF EMERGENCY SERVICES
WHEREAS, the City of Norco desires to participate with State and local governmental agencies in improving responses to natural or man-made disasters through the EOC; and
WHEREAS, the City of Norco will receive, and accepts, an Emergency Management Performance Grant (EMPG) from the Governor’s Office of Homeland Security for Fiscal Year 2024 in the amount of $5,661 and agrees to match with a contribution of $5,661, funded from the City’s General, Fire Division, as a Small Office Equipment line item, for upgrades and to enhance the functionality of the City of Norco Emergency Operation Center (EOC).

WHEREAS, the City of Norco is a California public entity and warrants and represents that it is eligible to receive federal financial assistance provided by the Federal Department of Homeland Security through the Federal Emergency Management Agency (FEMA) and sub-granted through the State of California Office of Emergency Services; and
WHEREAS, the Norco City Council identifies the Fire Chief as the Authorized Agent to execute for and on behalf of the City of Norco any actions necessary for the purpose of obtaining federal financial assistance from the Homeland Security Grant Program and Emergency Management Grant Program; and
NOW, THEREFORE, be it resolved that the City Council of the City of Norco, California, does hereby increase revenue in the amount of $5,661 from the emergency management performance grant; and increasing appropriation in the amount of $11,322 in the City’s General, Fire Division, Small Office Equipment line item, and hereby resolves as follows:

SECTION 1: The Fire Chief is hereby designated as the Authorized Agent to execute for and on behalf of the City of Norco, a public entity established under the laws of the State of California, any actions necessary for the purpose of obtaining federal

Resolution No. 2025-28

June 4, 2025
financial assistance provided by the Federal Department of Homeland Security through the Federal Emergency Management Agency (FEMA) and sub-awarded through the State of California Department of Emergency Services.

PASSED AND ADOPTED by the City Council of the City of Norco at a regular meeting held on June 4, 2025.
_________________________
Greg Newton, Mayor
City of Norco, California
ATTEST:
_________________________
Dana Roa, CMC, City Clerk
City of Norco, California
I, Dana Roa, CMC, City Clerk of the City of Norco, California, do hereby certify that the foregoing Resolution was adopted by the City Council of the City of Norco, California, at a regular meeting held on June 4, 2025, by the following vote of the City Council:

AYES:

NOES:

ABSENT:

ABSTAIN:

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of Norco, California, on June 4, 2025. _________________________
Dana Roa, CMC, City Clerk
City of Norco, California

City Council

STAFF REPORT
Date: June 4, 2025 Agenda Item:

5.A.

To: Honorable Mayor and City Council Members
From: Lisette Free, City Manager
Prepared By: Cindy Balderas, Human Resources Manager
Department: Human Resources
SUBJECT:

Presentation on City Vacancies and Recruitment/Retention Efforts RECOMMENDATION:

Receive and file.

SUMMARY:

This item is presented to the City Council for information only in compliance with Assembly Bill 2561 and Government Code §3502.3.

BACKGROUND:

On September 22, 2024, Governor Newsom signed Assembly Bill (AB) 2561 into law, adding Government Code (GC) §3502.3 to the Meyers-Milias-Brown Act (MMBA), imposing new obligations on public agencies related to tracking and presenting information on job vacancies. The new law and the legal obligations thereunder took effect January 1, 2025.

AB 2561 declares that job vacancies in local government are a widespread and significant problem for the public sector, and that job vacancies may undermine labor relations between public agencies and their employees. AB 2561 requires that, on an annual basis, public agencies assess and address vacancy rates to help avoid the negative effects of understaffing on the delivery of public services as well as on public employees.

Under GC § 3502.3, public agencies must now do the following:

1. Track job vacancies at the agency;

2. Present information on the status of the vacancies (such as information on the number of posted job openings, candidates interviewed, eligibility lists created, conditional offers made, etc.) and the agency’s recruitment and retention efforts.

An agency must present this information at a public hearing before the agency’s governing body at least once per fiscal year. If an agency will adopt an annual or multiyear budget in a given year, the public hearing must occur prior to the governing body adopting the agency’s budget; and

3. Identify, during the public hearing, any policies, procedures, and recruitment activities that may present obstacles in the agency’s hiring process and potential changes that may alleviate such obstacles.

These affirmative obligations apply to all public agencies subject to the MMBA, even if the agency does not have any represented employees. However, if the agency has a represented workforce, the new law entitles recognized employee organizations to make a presentation at the public hearing when the agency makes its presentation; however, it is not required.

In addition to the requirements described above, if the vacancy rate in a bargaining unit is at least 20% of the total number of authorized full-time positions, the employee organization that represents the bargaining unit may request that the agency present additional information at the public hearing.

City Vacancies
As of May 9, 2025, the City has thirteen (13) vacancies among the 90 full-time positions authorized by the City Council in the Fiscal Year 2024-25 Annual Operating Budget.

This reflects a vacancy rate of 14 percent across the City. In compliance with GC §3502.3, Norco General Employees' Association (NGEA) currently has a 10 percent vacancy rate (three (3) vacancies), the Utility Workers Union of America, Local 606 (UWUA, Local 606) has an 18 percent vacancy rate (four (4) vacancies), MidManagement, Professional, Confidential Personnel has an 20 percent vacancy rate (six (6) vacancies) and the Management currently has a 0 percent vacancy rate.

Vacancy Bargaining Group Current Status
Account Clerk NGEA Applications being reviewed
Animal Control
Superintendent
Mid-Mgmt Recruitment pending
Building Inspector Mid-Mgmt Recruitment
pending/currently filled by
contractor
Building Official Mid-Mgmt Recruitment
pending/currently filled by
contractor
Deputy Director of Public
Works/Deputy City
Engineer
Mid-Mgmt Reclassification request
Human Resources Analyst Mid-Mgmt Authorized Position;
Unfunded
IT Technician NGEA Authorized Position;
Unfunded
Parks Maintenance
Worker
UWUA Authorized Position;
Unfunded

Senior Planner Mid-Mgmt Recruitment Open Until
Filled
Utility Compliance
Coordinator
NGEA Authorized Position;
Unfunded
Utility Maintenance Worker
(3 positions)
UWUA Interviews held: May 28 &
29 To mitigate the operational impacts of vacancies on service delivery and staff workload, the City has continued its efforts to streamline the hiring process. The Human Resources Division tracks recruitment timelines from the initial recruitment opening date through the candidate’s acceptance of the position. The average number of days to fill vacancies is as follows:
 FY 2021-22 = 91 days
 FY 2022-23 = 85 days
 FY 2023-24 = 90 days
 FY 2024-25 = 74 days (through May 9, 2025)
Additionally, the Human Resources Division closely monitors employee separations and turnover trends within the City. Employees who leave the City generally fall into one of three separation categories: voluntary, involuntary, or retirement. The table below provides an overview of the City's turnover trends over the past three fiscal years.

Separation Reason FY 21-22 FY 22-23 FY 23-24
Voluntary 10 6 5
Involuntary 2 4 4
Retirement 2 2 4
Total 14 12 13
Avg. Number of
Employees 69 85 85
Turnover Rate 20% 14% 15%
Recruitment and Retention Efforts
To efficiently fill vacancies and retain top talent, the Human Resources Division employs a proactive strategy, continuously refining its recruitment and retention efforts as needed. Recent enhancements to the hiring process include the implementation of NEOGOV Insight, which provides applicants with a seamless and user-friendly application experience; the use of targeted advertising channels to attract highly qualified candidates.

The City is committed to employee retention through a comprehensive approach that prioritizes competitive total compensation, work-life balance and a positive workplace culture. We invest in continuous learning opportunities to support long-term employee development. Competitive compensation and comprehensive benefits ensure our team members feel valued and supported. Additionally, Human Resources is continually working on improving the onboarding process through NEOGOV Onboard, comprehensively introducing new employees to the City of Norco's culture, clearly outlining their role and responsibilities, and providing necessary training.

FISCAL IMPACT:

Not applicable for this item.

RELATIONSHIP TO STRATEGIC PLAN:

This item is consistent with Strategic Plan Direction No. 2 - Human Capital: Build a sustainable workforce to meet the needs of all stakeholders.

REVIEWED AND APPROVED BY:

Certified as to Availability of Funds: Joshua Calhoun, Finance Director Approved by: Lisette Free, City Manager
Approved as to Form: Harper and Burns, LLP, City Attorney

City Council

STAFF REPORT
Date: June 4, 2025 Agenda Item:

5.B.

To: Honorable Mayor and City Council Members
From: Sam Nelson, Interim Public Works Director
Prepared By: Sam Nelson, Interim Public Works Director
Department: Public Works
SUBJECT:

Proposition 218 Public Protest Hearing - Approval of 5-Year Potable Water, Recycled Water and Sewer Rate Increases
RECOMMENDATION:

Conduct a Public Protest Hearing. If the majority protest fails, adopt Resolution 2025- 34 approving 5-year rate adjustment to Potable Water, Recycled Water and Sewer rates.

SUMMARY:

In compliance with Article XIIID of the State of California Constitution and the Proposition 218 Omnibus Implementation Act, and AB 3030 Section 53756 of the Government Code regarding increases in water and sewer rate charges, the City mailed public notices to all affected property owners and rate payers of the proposed 5-Year Potable Water, Recycled Water and Sewer Rate increases. Staff is recommending that the City Council conduct a Public Protest Hearing, accept written and verbal protests and comments on the proposed rates and, If there is no majority protests, to approve the proposed rates.

BACKGROUND:

In February 2024, the City retained Stantec Consulting Services to perform potable water, recycled water and sewer rate study. The study includes a cost-of-service analysis that uses a planning period of five (5) years and a Capital Improvement Program (CIP) implementation period of ten (10) years. This study was presented to Council on April 2, 2025, with Council directing staff to implement the Proposition 218 noticing process for a public hearing on June 4, 2025.

The study provides recommended rates that should provide sufficient potable water, recycled water and sewer revenues necessary to support operations and maintenance,

the capital improvement program, and establish a minimum operating reserve to ensure future financial stability (see 2025 Water, Sewer & Recycled Water Rate Study).

Potable Water, Recycled Water and Sewer Rate Study Report The report examined the financial data for the Water, Sewer and Recycled Water Funds for the past five (5) years and reviewed the projected financial obligations and planned capital improvement projects over the next five (5) years using a detailed water, sewer and recycled water financial modeling software. The rate study was developed based on three primary goals:
 Maintain positive cash balance in the operating fund to include a minimum of three months operating reserve.
 Establish a rate stabilization fund.
 Provide funding for all the projects outlined in the current Council approved FiveYear Capital Improvement Program (CIP) budget.

Key Financial Issues
Water
Over the past several years the City has experienced a decline in water sales (approximately 18% since Fiscal Year 2020-21). Given that metered water sales make up roughly 50% of the revenues within the water fund, these reductions in use are having a sizable impact on the water fund. At the same time, operating and maintenance costs have increased substantially due to inflationary increases. As a result, should the City maintain a “status quo” approach and not increase water rates going forward, the water fund will not be able to meet its’ financial obligations.

Specifically, the financial modeling demonstrates that if the City only funds the operating and maintenance costs, excluding any future capital improvements, the annual shortfalls in revenues compared to expenses will result in the operating fund balance dropping below the three-month minimum target by Fiscal Year 2028-29 and will result in all cash in the revenue fund being depleted by Fiscal Year 2029-30.

Sewer
The financial pressures on the sewer system are not as pronounced as the water system. While sewer rates have not been increased for over a decade, the existing rates are forecasted to be sufficient to be able to fund the operating and maintenance cost of the sewer system over the project period. However, the sewer rates are not sufficient to fund the necessary capital investments. Under the “status quo” scenario with no adjustments to sewer rates and the planned capital projects, the cash balance within the sewer operating fund would fall below the minimum target in Fiscal Year 2026-27 and would be completed exhausted by Fiscal Year 2027-28. Therefore, funds are currently not available for the completion of the capital improvement projects.

Rate Scenarios
The rate study provided three scenarios that were reviewed at the workshop on February 5, 2025 by a combined working group made up of the City Council, Streets,

Trails, and Utilities Commission, and City staff. The primary variable considered in the development of the scenarios included the funding of the City’s adopted CIP, specifically the execution level of the CIP and the funding sources. The specific scenarios that were evaluated included the following:

Water
 Scenario 1: Full execution of the City’s adopted CIP without the issuance of debt  Scenario 2: Full execution of the City’s five-year CIP with the issuance of debt in Fiscal Year 2025-26 and 2027-28 to fund a portion of the water CIP  Scenario 3: Extension of the five-year CIP beyond the next five years to reduce the annual investment required with the issuance of debt in Fiscal Year 2025-26, Fiscal Year 2027-28, Fiscal Year 2029-30 and Fiscal Year 2032-33.

Sewer
 Scenario 1: Full execution of the City’s adopted CIP
 Scenario 2: Extension of the City's five-year CIP beyond the next five years to reduce the annual investment in the sewer by completing projects over a tenyear period.

Each of the scenarios was evaluated to determine the required adjustments to water and sewer rates to meet the funding requirements for each Fund. A summary of the results of the financial planning scenarios for the Water and Sewer Fund are outlined in the attached Water and Sewer Rate Study Report.

The results of the financial planning scenarios for the water and sewer funds were reviewed with the City staff during an interactive work session. Based on the review, it was determined that the most appropriate approach for the City would be to move forward with Scenario 3 for the water fund and Scenario 2 for the sewer fund. This approach is recommended because it will allow the City to more gradually increase water and sewer rates. It should be noted that the level of capital investment the City will be undertaking with the extension of the CIP still represents a significant amount of investment in the water and sewer systems, keeping the water system investments at a similar level as recent years and ramping of the investment in the sewer system. The funding level will allow the City to move forward with addressing critical water and sewer system capital needs associated with repair and replacement of system assets. The following table summarizes the recommended water and sewer rate increases identified over the next five years per the revenue sufficiency analysis.

Recommended Water and Sewer Rate Revenue Increase
FY 2025-
26 FY 2026-
27 FY 2027-
28 FY 2028-
29 FY 2029-
30 Effective Date: 7/1/2025 7/1/2026 7/1/2027 7/1/2028 7/1/2029 Water Rate
Revenue
Increases

9.0% 9.0% 8.0% 6.0% 6.0%
Sewer Rate
Revenue
Increases

5.0% 5.0% 4.0% 4.0% 4.0%

Customer Impact Analysis
As part of the Study, a bill impact analysis was conducted to better understand the changes that the recommended rate modifications would have on the monthly bills of various types of customers (See Customer Impact Analysis). The average residential customer in the City uses approximately 20 HCF per month. It should be noted that 3/4" and 1” metered customers account for 96% of the total number of accounts served by the City.

Recycled Water
Based on the identified expenditures and the anticipated demands for recycled water within the City it was possible to develop an estimate of the recycled water rates that would be required to cover the full cost of providing the service (See Recycled Water Rates). This table demonstrates what the usage rate per HCF would need to be in order to cover the full cost of recycled water with a breakout for the operating and capital components. The table also includes a monthly fixed charge for customer receiving recycled water. Given the limited number of recycled water customers, a monthly fixed charge would not generate a substantial amount of revenue but it would provide some revenue stability and result in a rate structure that is consistent with the City’s water rate structure. This table presents the recycled water rates with a monthly fixed charge which would recover 5% of the capital costs.

The Potable Water, Recycled Water and Sewer Funds must recover all costs from user charges as it is a business-type operation not supported by any taxes. The City is required to set rates that are sufficient to cover operating costs, capital improvements and debt service obligations. Funds derived from potable water, recycled water and sewer rates may not be used for any other purpose. If the proposed rates are adopted the first increase would become effective July 1, 2025 and every July 1st through 2030.

FISCAL IMPACT:

The 5-year schedule of rate increases is anticipated to generate sufficient revenue to meet the projected financial obligations for operations and maintenance, capital improvement projects, reserve targets, and debt obligations.

RELATIONSHIP TO STRATEGIC PLAN:

This item is consistent and supports Strategic Direction #5 - "Ensure timely preservation, replacement, improvement and acquisition of infrastructure and capital assets.

REVIEWED AND APPROVED BY:

Certified as to Availability of Funds: Joshua Calhoun, Finance Director Approved by: Lisette Free, City Manager
Approved as to Form: Harper and Burns, LLP, City Attorney

ATTACHMENT(S):
2025 Water, Sewer & Recylcle Water Rate Study
Customer Impact Analysis
Recycled Water Rates
Reso. 2025-34, Prop 218 Hearing, Adopting 5-Year Potable Water, Recycled Water _ Sewer Rate Increases

City of Norco
Water, Sewer, and Recycled Water Rate
Study - Final Report
March 26, 2025

March 26, 2025
Mr. Chad Blais
Director of Public Works
City of Norco
2870 Clark Avenue
Norco, CA 92860
Re: Water, Sewer, Recycled
Water Rate Study - Final Report
Dear Mr. Blais,
Stantec is pleased to present this Final Report on the Water, Sewer, and Recycled Water Rate Study (Study) that was
conducted for the City’s Water, Sewer, and Recycled Water Enterprise Funds. We appreciate the professional assistance provided by you and all of the members of City staff who participated in the analysis and study.

If you or others at City have any questions, please do not hesitate to call us at (202) 585-6391 or email me at
[email protected]. We appreciate the opportunity to be of service to the City, and we look forward to the possibility of doing so again in the near future.

Sincerely,
David A. Hyder
Senior Principal
1299 Pennsylvania Ave NW
Washington DC 20004
(202) 585-6391
[email protected]

Enclosure

TABLE OF CONTENTS
Executive Summary ..........................................................................................................1 E.1 Objectives...................................................................................................................................1 E.2 Scope of Work ............................................................................................................................1 E.3 Background.................................................................................................................................2 E.4 Revenue Sufficiency Analysis and Financial Plan........................................................................2 E.5 Cost of Service Allocation............................................................................................................3 E.6 Rate Structure Analysis...............................................................................................................4 E.7 Recycled Water Rates.................................................................................................................6

1. Introduction....................................................................................................................7

1.1 Background.................................................................................................................................7

1.1.1 Water System.....................................................................................................................7

1.1.2 Wastewater System............................................................................................................7

1.1.3 Recycled Water System .....................................................................................................8

1.1.4 Rate History .......................................................................................................................8

1.2 Objectives ...................................................................................................................................9

1.3 General Methodology ................................................................................................................10

1.4 Acroynms..................................................................................................................................10

2. Revenue Sufficiency Analysis...................................................................................12

2.1 Data & Assumptions..................................................................................................................12

2.1.1 Beginning Fund Balances..............................................................................................12

2.1.2 Growth..........................................................................................................................13

2.1.3 Revenues......................................................................................................................13

2.1.4 Operating Expenses & Existing Debt .............................................................................13

2.1.5 Cost Escalation .............................................................................................................14

2.1.6 Capital Improvement Program.......................................................................................14

2.1.7 Interest Earnings on Invested Funds..............................................................................15

2.1.8 Minimum Operating Reserve Balance............................................................................15

2.1.9 Rate Stabilization Reserve ............................................................................................15

2.1.10 Future Borrowing Assumptions...................................................................................16

2.1.11 Debt Service and Coverage........................................................................................16

2.1.12 Summary of Assumptions...........................................................................................16

2.2 Financial Planning Analysis ......................................................................................................17

2.3 Financial Planning Scenarios....................................................................................................17

2.3.1 Water Fund ...................................................................................................................17

2.3.2 Sewer Fund...................................................................................................................18

2.3.3 Recommended Rate Increases .....................................................................................19

3. Cost-Of-Service Allocation ........................................................................................21

3.1 Process....................................................................................................................................21

3.2 Components of the Analysis .....................................................................................................22

3.2.1 Functional Cost Allocations ...........................................................................................22

3.2.2 Distribute Function Costs to System Parameters ...........................................................23

3.2.5 Allocation of System Parameter Costs to Rate Components.......................................... 24

3.2.6 Calculation of Private Fire Cost Allocation .....................................................................25

4. Rate Structure Analysis .............................................................................................26

4.1 Water Rates .............................................................................................................................26

4.1.1 Current Water Rates .....................................................................................................26

4.1.2 Evaluation of the Water Rate Structure..........................................................................27

4.1.2.1 Fixed Charges............................................................................................................27

4.1.2.2 Volumetric Charges....................................................................................................27

4.2 Recommmended Water Rates..................................................................................................27

4.2.1 Fixed Monthly Charge Methodology...............................................................................27

4.2.2 Uniform Usage Rate Methodology.................................................................................28

4.2.3 Recommended Water Rates..........................................................................................28

4.2.4 Private Fire Protection Charges.....................................................................................28

4.3 Sewer Rates.............................................................................................................................29

5. Recycled Water Rates.................................................................................................31

5.1 Recycled Water Costs ...............................................................................................................31

5.2 Recycled Water Customers and Demand Forecast....................................................................33

5.3 Sales of Recycled Water to Outside Agencies ...........................................................................34

5.4 Recycled Water Rates...............................................................................................................34

6. Customer Impacts and Utility Comparisons ...........................................................36

6.1 Water and Sewer User Rate Bill Impacts ...................................................................................36

6.2 Water and Sewer Bill Comparison Survey..................................................................................37 APPENDIX: Revenue Sufficiency Analysis Schedules..............................................40

Executive Summary
City of Norco | Water and Sewer Rate Study Final Report Stantec | 1

EXECUTIVE SUMMARY
This Executive Summary presents an overview of the results of the Comprehensive Water, Sewer, and Recycled Water Rate Study (Study) that was conducted for the water, sewer and recycled water systems (collectively the “Utility”) of the City of Norco (City) by Stantec Consulting Services (Stantec). While the Executive Summary presents the primary conclusions and recommendations developed during the study, the full report outlines all of the key assumptions and detailed analysis completed to arrive at the results of the Study and should be consulted to gain a full understanding of the analysis.

E.1 OBJECTIVES
The primary objectives of this Study are to:
i. Develop a multi-year financial management plan for each fund that identifies future rate adjustments to water and sewer rates that will provide adequate revenues to meet the ongoing financial requirements of each fund;
ii. Integrate the capital funding needs per the City’s adopted Capital Improvements Plan for the Utility including evaluation of appropriate funding levels and sources of funds; iii. Identify appropriate reserve levels for each fund to provide financial stability and resiliency within the Utility; and
iv. Recommend specific water, sewer, and recycled water rate structures that equitably recover the cost of service, enhance revenue stability and conforms with industry practices and legal requirements.

E.2 SCOPE OF WORK
The following phases were used to conduct this Study:

Perform a Revenue Sufficiency Analysis (RSA) – Develop and populate a multi-year forecasting model for each of the City’s water, sewer, and recycled water funds that was used to determine the level of annual revenue required to satisfy projected annual operating costs, debt service expenses, and capital cost requirements as well as maintain and develop adequate reserves.

Cost-of-Service Allocation (COSA) Analysis – Using the revenue requirements from the revenue sufficiency analysis for Fiscal Year (FY) ending 2025, we performed a detailed COSA analysis based upon principles outlined by the American Water Works Association (AWWA) and other generally accepted industry practices in order to allocate the cost of providing service to the components of the rate structure.

Rate Structure Analysis – The rate structure analysis phase developed specific rates that would recover the identified level of required revenue for each service. The recommended rate schedules were designed to conform with accepted industry practices and reflect the appropriate distribution of system costs, while achieving the City’s policy objectives.

Executive Summary
City of Norco | Water and Sewer Rate Study Final Report Stantec | 2 Recycled Water Rate Analysis – Evaluation of the cost of providing recycled water service to determine an appropriate recycled water rate necessary to fund the operations and capital needs of the City’s recycled water system.

Benchmarking and Customer Impacts – Benchmark the City’s water and sewer rates with comparable and local utilities. Demonstrate the impacts of any recommended changes to rates on customers of the systems in the form of customer bill impact comparisons.

E.3 BACKGROUND
The City’s last rate study was completed in 2016 and provided recommendations for adjustments to both water and sewer rates over a five-year period (FY 2017 to FY 2021). The rate plan was adopted by the City Council. While the water rates were increased as adopted, the City elected to not implement the approved increases for sewer rates given the performance of the sewer fund. As a result, sewer rates have not been increased for over a decade and water rates have remained constant over the past four years (last adjustment was for FY 2021). The primary driver for the previously approved water rate adjustments was to begin funding a long list of essential capital improvement projects related to the City’s aging water system. Since the last rate study, the City has been able to invest over $12 million in water mainlines replacing over six and a half (6.5) miles of mainlines. Additionally, investments were made in groundwater treatment, reservoirs and booster stations totaling approximately $14.5 million. While the previous water rate adjustments have allowed the City to address about $26.5 million in critical capital investments in the water system, the City has nearly $36 million in additional projects still lacking sufficient funding. The investments in the sewer system have been more measured by comparison with total investment since the last rate study of approximately $4 million in projects to replace aging sewer lift stations. However, the City does have an additional $4 million in construction projects occurring now to replace 4 additional sewer lift stations with $11 million in projects yet to be funded.

While the City has made significant progress with reinvesting in the utility systems, particularly the water system, significant increases in operational costs have placed significant pressure on the utility systems.

The majority of the input costs associated with managing, operating and maintaining the utility systems have increased substantially due to inflationary increases and supply chain issues related to Covid-19.

Given the cost pressures, the lack of rate adjustments and the need to continue to address critical capital investments, the City engaged Stantec Consulting to complete this comprehensive rate study.

E.4 REVENUE SUFFICIENCY ANALYSIS AND FINANCIAL PLAN
Given this backdrop, the Revenue Sufficiency Analysis (RSA)evaluated the sufficiency of the Utility’s revenues to meet all of its current and projected financial requirements over a ten-year projection period, and determined the level of any rate revenue increases necessary in each year of the projection period to provide sufficient revenues to fund all of its cost requirements. The ten-year forecast provides a long-term outlook for the water and sewer systems, however, the study focused on the next five years (FY 2026 thru FY 2030) in order to allow for the development of a five-year financial management plan inclusive of a

Executive Summary
City of Norco | Water and Sewer Rate Study Final Report Stantec | 3 recommended five-year plan of rate adjustments. Working with City staff, we thoroughly discussed the base data and assumptions of the analysis, and reviewed several alternative funding scenarios for the water and sewer funds. Through this process, we identified the recommended financial management plan presented herein to address the current and projected cost requirements of the Utility.

Water Fund Summary
Over the past several years the City has experienced a decline in water sales (approximately 18% since FY21). Given that metered water sales make up roughly 50% of the revenues within the water fund, these reductions in use are having a sizable impact on the water fund. At the same time, operating and maintenance costs have increased substantially due to inflationary increases. As a result, should the City maintain a “status quo” approach and not increase water rates going forward, the water fund will not be able to meet its’ financial obligations. Specifically, the financial modeling demonstrates that if the City only funds the operating and maintenance costs of the system (not addressing any capital needs), the water fund would exhaust all cash balances over the next four years, essentially resulting in a negative cash balance. If additional revenues are not generated within the water system, the City will be at risk of defaulting on debt covenants, jeopardize its ability to purchase water and execute critical infrastructure repair projects.

Sewer Fund Summary
The sewer system is currently generating revenues sufficient to fund the operations of the system.

However, current revenues are not sufficient to address capital infrastructure needs. Over the next five years additional revenue will be required to address the increasing cost of providing sewer service, including purchased wastewater treatment services and to provide funds for repair and replacement of the sewer system.

The recommended financial management plan and five-year corresponding plan of water and sewer rate revenue adjustments are based upon the revenue and expense information, beginning balances, and assumptions as described in the full report. The specific five-year rate revenue adjustment plan recommended herein is presented in the following table.

Table E-1: Recommended Plan of Water & Sewer Rate Revenue Increases FY2026 FY2027 FY2028 FY2029 FY2030
Effective Date: 7/1/2025 7/1/2026 7/1/2027 7/1/2028 7/1/2029 Water Rate Revenue Increases 9.0% 9.0% 8.0% 6.0% 6.0%
Sewer Rate Revenue Increases 5.0% 5.0% 4.0% 4.0% 4.0%
E.5 COST OF SERVICE ALLOCATION
A COSA analysis was completed for the study to identify the cost of providing water service including fixed, variable and system peaking costs. The Study employed the “base-extra capacity” cost-of-service method promulgated in AWWA’s Manual M1: Principles of Water Rates, Fees, and Charges (M1) for the water

Executive Summary
City of Norco | Water and Sewer Rate Study Final Report Stantec | 4 system, whereby costs are first allocated to individual functions or activities then the costs of each function are distributed to appropriate system parameters to allow for allocation to specific components of the rate structure. The COSA analysis was completed only for the water system since the City’s current sewer rate structure has been assumed to be functioning appropriately given the solid level of fixed cost recovery and the lack of desire to modify the existing sewer rate structure.

E.6 RATE STRUCTURE ANALYSIS
Upon completion of the COSA analysis, a rate structure analysis was performed to identify potential rate structure modifications and specific rate schedules for implementation in FY 2026 that would:
i. Fairly and equitably recover each fund’s current cost of providing service and meet revenue requirements;
ii. Conform to accepted industry practice and legal requirements; iii. Provide fiscal stability and recovery of fixed costs of the system; and iv. Maintain affordability to low volume and average users to the extent possible.

Water Rates
The City’s current water rate structure consists of a fixed monthly charge and a variable usage charge based on metered water usage. The fixed monthly charge portion of the water rate structure currently generates 48.8% of the water system rate revenues and the remaining 51.2% is generated from the usage charge. The percentage of the revenue generated from the fixed charge is generally consistent with the COSA analysis completed as part of the Study and therefore the current water rate structure is appropriate.

However, it is recommended that the fixed charges revenues be aligned with the cost of service which would bring the revenue generated from the fixed charges up to 49.6% of revenues.

In addition to the standard water rates, the Study reviewed the current private fire protection charges assessed by the City. The cost of providing this service was determined as part of the COSA analysis and recommended private fire protection charges have been calculated.

The recommended water rates summarized in the following tables are intended for implementation on July 1, 2025 and each subsequent fiscal years. The water annual rate revenue adjustments recommended by the RSA portion of this study and presented in Table E-1 along with results from the cost of service analysis are reflected in the recommended rates shown in Tables E-2 and E-3. It should be noted that the first year of the rates (FY2026) reflect the modifications resulting from the cost of service and therefore all rates and charges do not increase at the same percentage increase in the first year (fixed charges increase slightly more than usage rates to reflect the cost of service).

Executive Summary
City of Norco | Water and Sewer Rate Study Final Report Stantec | 5 Table E-2: Recommended Water Rates
Current FY2026 FY2027 FY2028 FY2029 FY2030
Fixed Charge
3/4" $47.85 $52.60 $57.34 $61.93 $65.65 $69.59
1" $71.01 $77.48 $84.45 $91.21 $96.68 $102.48
1 1/2" $165.95 $179.25 $195.38 $211.01 $223.67 $237.09
2" $213.47 $230.18 $250.90 $270.97 $287.23 $304.46
3" $559.23 $600.79 $654.86 $707.25 $749.69 $794.67
4" $996.81 $1,069.82 $1,166.10 $1,259.39 $1,334.95 $1,415.05 6" $2,371.04 $2,542.82 $2,771.67 $2,993.40 $3,173.00 $3,363.38 8” $3,804.31 $4,079.10 $4,446.22 $4,801.92 $5,090.04 $5,395.44 10” $6,018.68 $6,452.62 $7,033.36 $7,596.03 $8,051.79 $8,534.90 12” $9,893.75 $10,606.21 $11,560.77 $12,485.63 $13,234.77 $14,028.86 Usage Charge
Rate (per HCF) $2.70 $2.92 $3.18 $3.43 $3.64 $3.86
Table E-3: Recommended Fire Protection Charges
Current FY2026 FY2027 FY2028 FY2029 FY2030
Fixed Charge
2" $50.88 $53.80 $58.65 $63.34 $67.14 $71.17
3" $52.83 $56.10 $61.14 $66.04 $70.00 $74.20
4" $56.20 $60.05 $65.45 $70.69 $74.93 $79.43
6" $68.30 $74.23 $80.91 $87.39 $92.63 $98.19
8” $89.16 $98.70 $107.58 $116.19 $123.16 $130.55
10” $120.54 $135.50 $147.70 $159.51 $169.08 $179.23
12” $164.03 $186.51 $203.29 $219.55 $232.73 $246.69
Usage Charge
Rate (per HCF) $5.40 $5.71 $6.23 $6.72 $7.13 $7.55
Sewer Rates
The current sewer rate structure was reviewed and deemed appropriate given the services provided by the City. The current sewer fixed monthly charge generates approximately 60% of the sewer system revenues providing revenue stability and a relatively high level of fixed cost recovery. The recommended sewer rates summarized in Table E-4 are intended for implementation on July 1, 2025 and each subsequent fiscal year.

The adjustment reflect the recommended plan of sewer rate revenue increases outlined in Table E-1.

Executive Summary
City of Norco | Water and Sewer Rate Study Final Report Stantec | 6 Table E-4: Recommended Sewer Rates
Current FY2026 FY2027 FY2028 FY2029 FY2030
Monthly Fixed Charge $51.00 $53.55 $56.23 $58.48 $60.82 $63.25 Sewer Usage Charge
Rate (per HCF) $8.00 $8.40 $8.82 $9.17 $9.54 $9.92
Monthly Non-Connect Fee(1) $19.00 $19.00 $19.00 $19.00 $19.00 $19.00 (1) The monthly non-connect fee is not being adjusted at this time.

E.7 RECYCLED WATER RATES
The City does not currently provide recycled water within the City. A cost-of-service analysis was completed for the City’s existing and future recycled water infrastructure and operations to determine the appropriate pricing for recycled water service once the City is able to provide the service.

The preliminary rates identified herein are set to cover the estimated annual cost of providing recycled water service. Table E-5 presents the recycled water rates assuming the City has an initial demand of 350 acrefeet per year. The table demonstrates the usage charge required to fund operating costs and capital costs and incorporates a fixed monthly charge that would cover 5% of the annual capital costs.

Table E-5: Recommended Recycled Water Rates
Year 1 Year 2 Year 3 Year 4 Year 5
Fixed Charge
3/4" $23.82 $49.40 $50.38 $51.34 $51.79
1" $37.79 $78.40 $79.96 $81.47 $82.18
1 1/2" $94.97 $197.03 $200.93 $204.73 $206.53
2" $123.59 $256.40 $261.47 $266.42 $268.76
3" $331.84 $688.39 $702.03 $715.32 $721.60
4" $595.38 $1,235.11 $1,259.57 $1,283.42 $1,294.69
6" $1,423.04 $2,952.09 $3,010.55 $3,067.56 $3,094.49
8” $2,286.25 $4,742.84 $4,836.76 $4,928.35 $4,971.62
10” $3,619.91 $7,509.51 $7,658.21 $7,803.23 $7,871.74
12” $5,953.76 $12,351.08 $12,595.66 $12,834.18 $12,946.87 Recycled Water Usage Charge
Total Rate (per HCF) $2.21 $3.22 $3.22 $3.23 $3.23

1. Introduction
City of Norco | Water and Sewer Rate Study Final Report Stantec | 7

1. INTRODUCTION
Stantec has conducted a Comprehensive Water, Sewer, and Recycled Water Rate Study (Study) for the water, sewer and recycled water systems operated and maintained by the City of Norco. This report presents the objectives, approach, methodologies, source data, assumptions, as well as the findings, conclusions and recommendations of the Study.

1.1 BACKGROUND
The City’s Public Works Department is responsible for constructing, improving, and otherwise maintaining the water and sewer systems within the City of Norco. The cost of operating and maintaining the water and sewer systems is fully funded by the rates, fees and charges collected by the City from users of the systems.

The City accounts for the cost of operating the water and sewer systems in separate Water and Sewer Enterprise Funds. The City recently established a Recycled Water Fund to account for the future operations of the recycled water system. A description of the recycled water system is discussed below.

1.1.1 Water System
The City’s water system currently serves a population of approximately 27,000 through 7,500 service connections covering a 14 square mile area. In calendar year 2024, the water system produced about 5,600,000 gallons a day or 6,246 acre-feet of water overall for the year. The City obtains its water supply from a combination of multiple sources, including three (3) groundwater wells: Wells 12, 13, and 15 and seven (7) interties with adjacent water systems (City of Riverside, City of Corona, Chino Basin Desalter Authority’s Chino II Desalter system, Jurupa Community Services District, and Western Municipal Water District’s Arlington Desalter system). The City’s water distribution system consists of five pressure zones served by 100 miles of water mainlines, nine (9) water storage reservoirs and four (4) booster stations. The City also operates the Bluff St. Groundwater Treatment Plant that removes iron, manganese, and arsenic from two wells (Wells 13 and 15).

1.1.2 Wastewater System
The City’s sewer system currently serves a population of approximately 27,000 through 6,800 service connections covering a 14 square mile area. The City’s sewer collection system consists of about 110 miles of mainlines and twelve (12) sewer lift stations. The City is also a member of a joint powers authority with four other agencies (City of Corona, Home Gardens Sanitation District, Jurupa Community Services District, and Western Municipal Water District) that owns a 14 million gallon per day wastewater treatment facility that is operated and maintained by the Western Riverside County Regional Wastewater Authority (WRCRWA). The City has maximum treatment allowance of 2,700,000 gallons a day but discharges about 1,800,000 gallons a day to the WRCRWA treatment plant.

1. Introduction
City of Norco | Water and Sewer Rate Study Final Report Stantec | 8

1.1.3 Recycled Water System
The City does not currently deliver recycled water to properties located within the City. However, the City does maintain infrastructure that will allow for the delivery of recycled water in the future. The existing recycled water infrastructure includes approximately six (6) miles of recycled water distribution lines. The City anticipates being able to provide recycled water over the coming years following the completion of joint projects including a joint booster pump station and pipeline that will deliver recycled water from the WRCRWA wastewater treatment facility to the City.

1.1.4 Rate History
The City has historically engaged outside consultants to complete rate studies for the water and sewer enterprise funds. The City’s last rate study was completed in 2016 and provided recommendations for adjustments to both water and sewer rates over a five-year period (FY 2017 to FY 2021). The rate plan was adopted by the City Council. While the water rates were increased as adopted, the City elected to not increase sewer rates annually as originally approved given the performance of the sewer fund. As a result, sewer rates have not been increased for over a decade and water rates have remained constant over the past four years. The primary driver for the water rate adjustments was to facilitate the completion of essential capital improvement projects within the City’s aging water system. Since the last rate study, the City has been able to invest over $12 million in water lines replacing over six and a half (6.5) miles of lines.

Additionally, investments were made in groundwater treatment, reservoirs and booster stations totaling approximately $14.5 million. In total the water rate adjustments have allowed the City to address about $26.5 million in necessary capital investments in the water system, but the City has nearly $36 million in additional projects still lacking sufficient funding. The investments in the sewer system have been lessor by comparison with total investment since the last rate study of approximately $4 million in projects to replace aging sewer lift stations. However, the City does have an additional $4 million in construction projects occurring now to replace 4 additional sewer lift stations with $11 million in projects yet to be funded.

While the City has made significant progress with reinvesting in the utility systems, particularly the water system, increases in operational costs have placed significant pressure on the utility systems. The majority of the input costs associated with managing, operating and maintaining the utility systems have increased substantially due to inflationary increases and supply chain issues related to Covid-19. While the City has held water and sewer flat over the past four years, most consumer goods have increased due to these inflationary pressures. To provide some perspective on the cost of typical consumer goods over the past four years, data was pulled from the U.S. Census Bureau and the St. Louis Federal Reserve. Figure 1-1 presents the cost per gallon of typical consumer goods in 2021 and current cost for 2025 along with level of inflation.

1. Introduction
City of Norco | Water and Sewer Rate Study Final Report Stantec | 9 Figure 1-1 Price Comparison (Cost per Gallon) 2025 vs. 2021 Figure 1-1 demonstrates the significant increases in most consumer goods on a per gallon basis over the past four years. It also shows the fact that the City’s water on a per gallon basis is substantially less than most consumer goods and has remained constant over this period.

Given the financial pressures on the City’s utilities and the need to continue to reinvest in the system assets to ensure long-term sustainable operations, the City has engaged Stantec Consulting Services to complete a comprehensive rate study which outlined within this Report.

1.2 OBJECTIVES
The primary objectives of this Study is to:
i. Develop a multi-year financial management plan for each fund that identifies future rate adjustments to water and sewer rates that will ensure adequate revenues to meet the ongoing financial requirements of each fund;
ii. Integrate the capital funding needs per the City’s adopted Capital Improvements Plan for the Utility including evaluation of appropriate funding levels and sources of funds; iii. Identify appropriate cash reserve levels for each fund to provide financial stability and resiliency within the Utility; and

1. Introduction
City of Norco | Water and Sewer Rate Study Final Report Stantec | 10 iv. Recommend specific water and sewer rate structures that equitably recover the cost of service, increase revenue stability and conforms with industry practices and legal requirements.

1.3 GENERAL METHODOLOGY
This section presents our methodology used to conduct the Study. To begin the Study, we first evaluated multiple financial management planning scenarios for each fund that determined the level of annual revenue required to satisfy projected annual operating, debt service (including coverage), and capital cost requirements as well as maintain adequate reserves. This portion of the Study was conducted using the revenue sufficiency and financial planning module of our Financial Analysis and Management System (FAMS) modeling system. We customized two separate versions of our module to reflect the financial dynamics and most current data available for the water and sewer funds, respectively, in order to develop the long-term financial management plan scenarios, inclusive of projected annual revenue requirements and corresponding annual rate adjustments, for each respective fund. The financial management plans were reviewed with City staff and a recommended multi-year financial management plan was developed for each fund.

Using the cost of providing service and net revenue requirements from the revenue sufficiency analysis for Fiscal Year (FY) ending 2025, we then performed a detailed cost-of-service allocation (COSA) analysis based upon principles as outlined by the American Water Works Association (AWWA) and other generally accepted industry practices in order to determine the various components of providing water service including billing, customer service, average day (base capacity) and system peaking costs.

Once all FY 2025 costs and revenue requirements were allocated to the system cost components, we then developed specific rates that would recover the identified costs. The recommended rate schedules presented herein are designed to conform with accepted industry practice and reflect the appropriate distribution of system costs, while achieving the City’s policy objectives, such as fiscal stability and resiliency, to the greatest extent possible. Using this approach, we were able to clearly identify and review the impacts of the results of the rate structure presented herein for the City’s customer base.

As part of the Study, we also examined the anticipated cost of providing recycled water within the City. This analysis was completed by examining the estimated operational and capital costs associated with the City beginning to convey recycled water to select customers within the City. A set of preliminary recycled water rates were developed based on these costs and estimated demands for recycled water within the City.

1.4 ACROYNMS
AWWA American Water Works Association
CIP capital improvement plan
COSA cost-of-service allocation
FAMS Financial Analysis and Management System model
FTE full time equivalent (employee)
FY fiscal year ending June 30

1. Introduction
City of Norco | Water and Sewer Rate Study Final Report Stantec | 11 GPCD gallons per capita per day
HCF hundred cubic feet
TGAL thousands of gallons
TGPD thousands of gallons per day
MGD millions of gallons per day
O&M operation and maintenance
RSA revenue sufficiency analysis

2. Revenue Sufficiency Analysis
City of Norco | Water and Sewer Rate Study Final Report Stantec | 12

2. REVENUE SUFFICIENCY ANALYSIS
This section presents the financial management plan scenarios and corresponding plan of water and sewer rate adjustments developed in the revenue sufficiency analysis (RSA) that was conducted as part of the Study. This section also presents a description of the source data, assumptions, and policies reflected in the RSA, as well as the results of the RSA. The Appendix to this Report includes detailed schedules supporting the financial management plan identified herein for each respective fund.

During the RSA we reviewed alternative multi-year financial management planning scenarios and corresponding water, sewer, and recycled water rate revenue adjustment plans through several interactive work sessions with City staff. As an outcome to this process, the Study has produced a recommended financial management plan and corresponding plan of annual rate revenue adjustments that will allow each fund to meet its respective revenue requirements and financial performance objectives throughout the projection period.

2.1 DATA & ASSUMPTIONS
The City provided historical and budgeted financial information regarding the operation of the water and sewer utilities, including each fund’s adopted multi-year capital improvement programs (CIP) and current debt service obligations and covenants. City staff also assisted in providing other assumptions and policies, such as demands and customer growth, debt coverage levels, levels of operating reserves, earnings on invested funds, and escalation rates for operating costs. The following presents the key source data relied upon in conducting the RSA.

2.1.1 Beginning Fund Balances
The ending balances for FY 2024 was used to establish the beginning FY 2025 balances for both the Water Fund and the Sewer Fund1
. The basis of the FY 2025 beginning balances used in the RSA are provided in Schedule 1-W (for water) and Schedule 1-S (for sewer) of the Appendix. The City maintains a separate revenue fund and a capital fund within both the water and sewer funds and a rate stabilization fund within the water fund. As of the end of FY 2024, the revenue fund for the water system has a balance of $4.5 million, a balance of nearly $4.8 million in the capital fund which is designated for capital projects and approximately $1.6 million in the rate stabilization fund. As of the end of FY 24, the sewer fund maintained approximately $1 million in its revenue fund and $12.2 million in the sewer capital fund. It should be noted that during FY 2024, the City transferred $3.2 million from the sewer revenue fund, to a newly created recycled water fund to provide necessary funding for establishment of the recycled water system. The City also adopted a resolution which requires that the recycled water fund begin making payments back to the 1 File source: TrialBalanceListing_24.xlsx

2. Revenue Sufficiency Analysis
City of Norco | Water and Sewer Rate Study Final Report Stantec | 13 sewer fund within two years of operation of the recycled water system. These payments will extend over a 25-year period at a 2% interest rate.

2.1.2 Growth
Based on a review of recent historical trends and discussions with City staff, the RSA assumes a customer growth rate of 0.25% (approximately 25 new connections per year) over the projection period for the water system. The projected growth in the sewer system is slightly lower at 0.20%. The City has experienced a reduction in metered water usage over the past three years, due to conservation efforts and potentially resulting from aging water meters within the City showing signs of reduced accuracy in measuring water usage. Water usage has decreased 18 percent since FY 2021. Based on our experience, it is unlikely that the City will experience a return to historical usage levels. Once customers make adjustments to water usage patterns, the usage levels typically become ingrained within the community. Given these trends and continued conservation efforts, the RSA assumes a reduction in usage per account of 0.25% for existing customers in the future years of the projection period. The only growth in usage in future years would be a result of additional customers within the systems.

2.1.3 Revenues
The water and sewer revenues utilized in the RSA reflect an evaluation of multiple years of historical results from FY 2020 through FY 2024, FY 2025 Budget amounts, and historical billing information. Water and sewer revenues consist of rate revenue, interest income and other small miscellaneous charges. Rate revenue for each fund is based upon FY 2024 billing statistics and the recommended rate structure presented herein, adjusted to reflect changes in revenue based upon assumed customer growth.

Projections of all other revenues were based upon the FY 2025 Budget, excluding interest income (which was calculated annually based upon projected average fund balances and assumed interest rates). The FY 2025 estimated rate revenue, as well as forecasts for all other non-rate revenues are provided in Schedule 2-W (for water) and Schedule 2-S (for sewer) in the Appendix.

2.1.4 Operating Expenses & Existing Debt
The water and sewer utilities’ operating expenses include all operating and maintenance expenses, water purchases, wastewater treatment services, transfers, debt service requirements, and minor capital outlay.

Over the past several years, the City has experienced substantial increases in the costs associated with operating and maintaining the water and sewer systems. These increases have resulted from inflation in many of the input costs associated with the City’s utilities, including chemicals, energy and materials. These increases are placing significant pressure on the City’s water and sewer funds and are heightened by the lack of rate increases over the past several years during this inflationary period.

The increased costs are reflected in the City’s FY 2025 Budget and while likely not to continue to grow at the levels experience over the past few years, costs are not likely to return to pre-inflationary levels. As a result, future operating expenses were projected based upon the individual expense categories and expense amounts in the FY 2025 Budget, adjusted per discussions with City staff to reflect known and

2. Revenue Sufficiency Analysis
City of Norco | Water and Sewer Rate Study Final Report Stantec | 14 measurable changes, as well as expected inflation (see Section 2.1.5). The Water Fund and Sewer Fund both have existing bonds (the 2019 Bonds) that are payable during the projection period. The remaining annual debt service expenses for outstanding bonds were included in the RSA and are identified in Schedule 3-W (for water) and Schedule 3-S (for sewer) of the Appendix.

2.1.5 Cost Escalation
Annual cost escalation factors for the various types of operating and maintenance expenses were developed based upon a review of historical trends, our industry experience, and detailed discussions with City staff. As mentioned above, costs are not anticipated to increase at the same level as the past several years but will continue to escalate. The specific escalation factors assumed for the various categories of expenses are provided in Schedule 4-W (for water) and Schedule 4-S (for sewer) of the Appendix.

2.1.6 Capital Improvement Program
City staff provided the adopted five-year Capital Improvement Program for the water and sewer system for FY 2025 through FY 2029, reflecting the capital improvement needs identified for each respective fund.

While the City has made significant investments in the water system since the last rate study, a substantial amount of work remains to address aging infrastructure and to provide long-term sustainability within the water system. The majority of the water projects included in the CIP address eight (8) water mainline replacements. These projects will assist with replacing portions of the aging water distribution system and will help to reduce the amount of water lost in the system. Over the past eight years, these 8 planned water mainline replacement projects have a combined 188 incidents of repairs due to main breaks (38), mainline leaks (69) and service leaks (81).

In addition to continued investments in the water system, the City will need to ramp up capital spending for the sewer system given the requirements to address aging infrastructure. In total, the CIP from FY 2025 – FY 2029 is approximately $36.4 million for the water fund and is $21.4 million for the sewer fund. A detailed list of projects and costs by year per the City’s adopted CIP are provided in Schedule 5-W (for water) and Schedule 5-S (for sewer) in the Appendix. A summary by project type is shown in the following tables.

Note that the tables include estimates for FY 2030 to provide a five-year projection period beyond the current fiscal year.

Table 2-1: Water Capital Improvement Program ($ Millions) Project Category FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 Mainline Replacement $4.33 $6.08 $5.73 $5.90 $4.40 -
Hydrant and Valve Replacement $0.10 $0.10 $0.10 $0.10 $0.10 $0.10 Meter Replacement - - $1.60 $1.60 $1.60 -
PFAs Treatment $0.90 $2.20 $1.30 $0.00 - -
Additional Capital $0.30 - - - - $4.00
Total $5.63 $8.38 $8.73 $7.60 $6.10 $4.10

2. Revenue Sufficiency Analysis
City of Norco | Water and Sewer Rate Study Final Report Stantec | 15 Table 2-2: Sewer Capital Improvement Program ($ Millions) Project Category FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 Lift Station Replacement $4.80 $3.90 $1.70 $0.20 $1.70 - Mainline Replacement $1.50 - - - - -
WRCRWA Capital Improvements $1.55 $1.50 $1.50 $1.50 $1.50 $1.50 Total $7.85 $5.40 $3.20 $1.70 $3.20 $1.50
Based on the planned CIP, the City will be investing an average of approximately $7.3 million per year in the water system and $4.3 million per year in the sewer system. The average level of investment completed in the water system is relatively consistent with the past several years, but the average sewer capital investments are substantially higher than prior years, since FY2016 the total capital investment completed in the sewer system has been approximately $4 million. For the current fiscal year, the City has an additional $4 million in sewer projects currently in design or construction.

2.1.7 Interest Earnings on Invested Funds
The RSA reflects interest earnings on invested funds at a rate of 4.5% per year in FY 2025, 4.0% in FY 2026, 3.5% in FY 2027 and 3.0% each year thereafter.

2.1.8 Minimum Operating Reserve Balance
Reserve balances for utility systems are funds set aside for a specific cash flow requirement, financial need, project, task, or legal covenant. The rationale related to the maintenance of minimum reserves is two-fold.

First, it helps to assure that the utility will have adequate funds available to meet its financial obligations during the year, serving as a working capital reserve. Second, it provides funds that can be used for minor emergency repairs or replacements to the system that can occur as a result unanticipated system failures.

The City of Norco’ policy requires that that its’ utility funds maintain a minimum operating fund balance of three (3) months of annual O&M expenses within each fund. The City maintains these funds within the water and the sewer revenue funds. The financial management plans included herein were developed to ensure that the water and sewer fund operating reserves do not fall below the 3 months of annual O&M policy.

2.1.9 Rate Stabilization Reserve
In addition to operating reserves, it is fairly common for utilities to maintain rate stabilization reserves that provide funds for unexpected reductions in revenues or unplanned expenditures. The City established a rate stabilization reserve for the water system to help address issues like unforeseen reductions in revenues or unexpected expenditures. The City has been working to build up the rate stabilization reserve to a target of $2 million by FY 2026. The City should be able to hit this target within the planned timeframe. The target balance was developed based on analysis of the potential reductions in revenues from future conservation

2. Revenue Sufficiency Analysis
City of Norco | Water and Sewer Rate Study Final Report Stantec | 16 efforts. A rate stabilization reserve has not been established for the sewer fund due to the stability within the fund as result of the current sewer rate structure.

2.1.10 Future Borrowing Assumptions
As part of the development of the financial management plan scenarios, various approaches to funding the CIP were examined. One of the funding scenarios assumed the issuance of new debt to fund a portion of the City’s adopted CIP.

Based upon discussions with City staff, any new debt anticipated to be issued during the projection period would be secured through the California Drinking Water State Revolving Fund (SRF). Based on the typical loan terms for the SRF, it was assumed that the terms of the loan would be consistent with the following:
 30-year term, level debt service
 2.0% cost of issuance
 Interest rate on debt: 2.0%

2.1.11 Debt Service and Coverage
The Utility must maintain the following minimum debt service coverage requirements:
 Net revenue (gross revenue minus operating expenses) that is at least 1.10 times greater than the annual debt service requirement (i.e. the annual principal and interest payments) on its outstanding senior-lien debt.

This coverage requirement is a minimum requirement. To the extent the Utility is unable to meet this requirement, it could be found in technical default resulting in the Utility having its credit rating downgraded, which would affect the interest rate and terms of future financing initiatives. As a policy decision, utilities often measure revenue sufficiency and set rates based upon a higher coverage level so as to ensure compliance with these covenants in the event future projections of revenue and expenses do not occur as predicted. To ensure the Utility maintains its current rating, the financial management plans presented in this report were designed to achieve minimum target debt service coverage of at least 1.25 times net revenue with a target of 1.50. Per published guidance from Fitch Ratings, the municipal utility ratings agency, utility systems with Midrange financial profiles maintain debt service coverage greater than 1.50 times net revenue and those with Stronger financial profiles maintain debt coverage greater than 2.00 times net revenue.

2.1.12 Summary of Assumptions
A summary of annual assumptions regarding growth rates, interest earnings, operating budget execution percentages and reserve targets are provided in Schedule 6-W (for water) and Schedule 6-S (for sewer) in the Appendix.

2. Revenue Sufficiency Analysis
City of Norco | Water and Sewer Rate Study Final Report Stantec | 17

2.2 FINANCIAL PLANNING ANALYSIS
All of the above information was entered into two separate versions (one for each fund) of the financial module of our (FAMS) interactive modeling system. This module of FAMS produced a ten-year projection of the sufficiency of each fund’s revenues to meet all current and projected financial requirements, and determined the level of rate revenue increases necessary in each year of the projection period to provide sufficient revenues for each fund’s cost requirements.

The revenue sufficiency and financial planning module of FAMS utilizes all projected available funds in each year of the projection period to pay for capital projects. The model is set up to reflect the rules of cash application as defined and applied by City staff, and it produces a detailed summary of the funding sources to be used for each project in the CIP.

2.3 FINANCIAL PLANNING SCENARIOS
Based upon the data, assumptions, and policies presented herein, the City’s current water and sewer rates will not provide sufficient revenue to meet each fund’s respective revenue requirements over the five and ten-year projection period. The results for each fund and the planning scenarios are discussed below.

2.3.1 Water Fund
Over the past several years the City has experienced a decline in water sales (approximately 18% since FY21). Given that metered water sales make up roughly 50% of the revenues within the water fund, these reductions in use are having a sizable impact on the water fund. At the same time, operating and maintenance costs have increased substantially due to inflationary increases. As a result, should the City maintain a “status quo” approach and not increase water rates going forward, the water fund will not be able to meet its’ financial obligations. Specifically, the financial modeling demonstrates that if the City only funds the operating and maintenance costs, excluding any future capital improvements, the annual shortfalls in revenues compared to expenses will result in the operating fund balance dropping below the three-month minimum target by FY 2029 and will result in all cash in the revenue fund being depleted by FY 2030. Should the City use the cash within the rate stabilization reserve, the cash balance would only last another year (balances going negative by FY 2031). The financial modeling demonstrates that current water revenue will not be sufficient to meet the basic operations of the water system let alone address the capital improvements that have been identified for the system.

To address the revenue shortfalls in the water fund, multiple financial planning scenarios were developed and reviewed with City staff. All of the scenarios evaluated assumed that the City would increase revenues necessary to meet the annual operating and maintenance, debt service and reserve requirements to ensure that the water fund remains financially viable. The primary variable considered in the development of the scenarios included the funding of the City’s adopted CIP, specifically the execution level of the CIP and the funding source. The specific scenarios that were evaluated include the following:
• Scenario 1: Full execution of the City’s adopted CIP without the issuance of debt

2. Revenue Sufficiency Analysis
City of Norco | Water and Sewer Rate Study Final Report Stantec | 18 • Scenario 2: Full execution of the City’s five-year CIP with the issuance of debt in FY 2026 and 2028 to fund a portion of the water CIP
• Scenario 3: Extension of the five-year CIP beyond the next five years to reduce the annual investment required with the issuance of debt in FY2026, FY2028, FY2030 and FY2033 Each of the scenarios was evaluated to determine the required adjustments to water rates to meet the funding requirements of the fund (maintaining a minimum cash balance within the operating fund and a debt service coverage of 1.25). A summary of the results of the financial planning scenarios for the water fund are shown in Table 2-3.

Table 2-3: Water Fund Financial Planning Scenarios
FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 Total
Annual Capital Funded (millions)
Scenario 1 $5.63 $8.38 $8.73 $7.60 $6.10 $4.10 $40.53
Scenario 2(1) $5.63 $8.38 $8.73 $7.60 $6.10 $4.10 $40.53 Scenario 3(2) $3.43 $6.38 $5.18 $5.85 $4.95 $5.60 $31.38 Rate Increases
Scenario 1 - 65.0% 3.0% 3.0% 0.0% 0.0% 71.0%
Scenario 2 - 17.0% 10.0% 6.0% 6.0% 4.0% 43.0%
Scenario 3 - 9.0% 9.0% 8.0% 6.0% 6.0% 38.0%
Customer Bill (Average Residential Customer)(3)(4)
Scenario 1 $101.85 $168.05 $173.09 $178.29 $178.29 $178.29 Scenario 2 $101.85 $119.16 $131.08 $138.95 $147.28 $153.17 Scenario 3 $101.85 $111.02 $121.01 $130.69 $138.53 $146.84 (1) Assumes loan totaling $21.3 million over five-year period (2) Assumes loans totaling $21.3 million over ten-year period (3) Average residential customer using 20 HCF per month with ¾” meter (4) Bills reflect increases applied to the City’s current water rate structure As demonstrated in the table, Scenario 1 (the full execution of the water system CIP without the issuance of debt) would require significant increases in water rates in FY2026. The level of the rate increases in Scenario 1 would likely cause rate shock within the City. Scenarios 2 and 3 provide lesser increases resulting from the use of long-term financing to fund a portion of the projects. Given that the investments in the water system will have long useful lives it would be appropriate to fund the projects using debt as it matches the life of the asset with the funding of the asset. Scenario 3 results in the lowest water rate increases but forces the City to push approximately $9.15M of the City’s to current five-year CIP, beyond the next five years.

2.3.2 Sewer Fund
The financial pressures on the sewer system are not as pronounced as the water system. While sewer rates have not been increased for over a decade, the existing rates are forecasted to be sufficient to be

2. Revenue Sufficiency Analysis
City of Norco | Water and Sewer Rate Study Final Report Stantec | 19 able to fund the operating and maintenance cost of the sewer system over the project period. However, the sewer rates are not sufficient to fund the necessary capital investments. Under the “status quo” scenario with no adjustments to sewer rates and the planned capital projects, the cash balance within the sewer operating fund would fall below the minimum target in FY 2027 and would be completed exhausted by FY 2028. Therefore, funds are currently not available for the completion of the capital improvement projects.

To address the revenue shortfalls in the sewer fund, multiple financial planning scenarios were developed and reviewed with City staff. All of the scenarios evaluated assumed that the City would increase revenues necessary to meet the annual operating and maintenance, debt service and reserve requirements to ensure that the sewer fund remains financially viable. The primary variable considered in the development of the scenarios included the funding of the City’s adopted CIP, specifically the execution level of the CIP. The specific scenarios that were evaluated include the following:
• Scenario 1: Full execution of the City’s adopted CIP
• Scenario 2: Extension of the City’s five-year CIP beyond the next five years to reduce the annual investment in the sewer by complete projects over a ten-year period.

The financial planning scenarios are summarized below.

Table 2-4: Sewer Fund Financial Planning Scenarios
FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 Total
Annual Capital Funded (millions)
Scenario 1 $7.85 $5.40 $3.20 $1.70 $3.20 $2.50 $23.85
Scenario 2 $6.35 $3.00 $3.35 $3.55 $3.40 $3.20 $22.85
Rate Increases
Scenario 1 - 6.0% 6.0% 5.0% 3.0% 3.0% 23.0%
Scenario 2 - 5.0% 5.0% 4.0% 4.0% 4.0% 22.0%
Customer Bill (Average Residential Customer)(1)
Scenario 1 $51.00 $54.06 $57.30 $60.17 $61.98 $63.84
Scenario 2 $51.00 $53.55 $56.23 $58.48 $60.82 $63.25
(1) Single family customers pay a fixed monthly usage charge regardless of metered water use Table 2-4 demonstrates the necessary level of rate increases for each scenario. The differences between the scenarios are limited given the fact that the sewer capital projects are less flexible in terms of extending them into the future. The revenue increases in the sewer fund are less substantial than the water fund because of the current health of the sewer fund and the magnitude of the sewer CIP.

2.3.3 Recommended Rate Increases
The results of the financial planning scenarios for the water and sewer funds were reviewed with the City staff during an interactive work session. Based on the review, it was determined that the most appropriate approach for the City would be to move forward with Scenario 3 for the water fund and Scenario 2 for the

2. Revenue Sufficiency Analysis
City of Norco | Water and Sewer Rate Study Final Report Stantec | 20 sewer fund. This approach is recommended because it will allow the City to more gradually increase water and sewer rates. It should be noted that the level of capital investment the City will be undertaking with the extension of the CIP still represents a significant amount of investment in the water and sewer systems, keeping the water system investments at a similar level as recent years and ramping of the investment in the sewer system. The funding level will allow the City to move forward with addressing critical water and sewer system capital needs associated with repair and replacement of system assets. Table 2-5 summarizes the recommended water and sewer rate increases identified over the next five years per the RSA that was conducted as described herein.

Table 2-5: Recommended Water and Sewer Rate Revenue Increase FY2026 FY2027 FY2028 FY2029 FY2030
Effective Date: 7/1/2025 7/1/2026 7/1/2027 7/1/2028 7/1/2029 Water Rate Revenue Increases 9.0% 9.0% 8.0% 6.0% 6.0%
Sewer Rate Revenue Increases 5.0% 5.0% 4.0% 4.0% 4.0%
The Appendix of this report includes the following detailed schedules presenting components of the recommended financial management plan developed for the Utility. • Cash flow Pro Forma - Schedule 7-W (for water) and Schedule 7-S (for sewer) o Revenues
o Expenses
o Cash balances
• Debt Service Coverage – Schedule 8-W (for water) and Schedule 8-S (for sewer) • FAMS model Control Panel - Schedule 9-W (water) and Schedule 9-S (sewer) o Summary of rate increases, debt coverage, and graphs of financial results over ten-year projection period.
• Capital Funding Summary - Schedule 10-W (water) and Schedule 10-S (sewer) • Future Loan Summary - Schedule 11-W (water) and Schedule 11-S (sewer) • Funding Summary by Fund - Schedule 12-W (water) and Schedule 12-S (sewer)

3. Cost of Service Allocation
City of Norco | Water and Sewer Rate Study Final Report Stantec | 21

3. COST-OF-SERVICE ALLOCATION
The previous section described the total rate revenue requirements of the water and sewer utilities. This section describes the cost-of-service allocation (COSA) analysis which identifies the specific cost drivers of providing service, which then forms the design of utility rates. The following section of this Report presents an overview of the COSA methodology utilized in the Study and corresponding results.

The COSA was completed only for the water system based on the fact that the City’s current sewer rate structure is functioning appropriately as discussed in Section 4 of this report.

The purpose of a COSA analysis for this study was to determine the cost of providing water service by system function and component so that the costs could be allocated to the various aspects of the water rate structure. This Study employed well-established industry practices for these types of studies as recognized by the American Water Works Association (AWWA) and other accepted industry practices.

Namely, this Study employed the “base-extra capacity” cost-of-service method promulgated in AWWA’s Manual M1: Principles of Water Rates, Fees, and Charges (M1) for the water system, whereby costs are first allocated to individual functions or activities (such as supply, treatment, distribution, meters/services, etc.) then the cost of each function are distributed to appropriate system parameters (such as average day demands, max day demands, customers, etc.). System parameter costs were then used as a basis for the development of alternative water rate structures. It is important to note that we found limited difference in the cost to serve different customer types (such as single-family homes, multifamily homes, commercial accounts, etc.). As such, this report espouses the City’s current (and historic) practice of a single rate schedule for all customer classes. For this reason, a customer class specific COSA analysis was not completed as part of the rate study analysis.

3.1 PROCESS
The COSA analysis was based upon the water fund FY 2025 estimated expenditures and revenue requirements per the RSA, and included the following:
 Allocation of water system costs to the appropriate activities/functions (i.e. supply, distribution)  Allocation of the costs of each function to specific system parameters (i.e. base capacity, customer)  Allocation of the system parameter costs to the components of the rate structure (fixed and variable)
 Calculation of private fire protection service cost allocation The following sub-sections present the COSA analysis results.

3. Cost of Service Allocation
City of Norco | Water and Sewer Rate Study Final Report Stantec | 22

3.2 COMPONENTS OF THE ANALYSIS
As the City maintains separate enterprise funds for the water and sewer systems, no initial separation of expenses or revenue between systems was necessary for this Study. Therefore, the following presents the key components or steps that were performed to distribute the expenses and revenue requirements of the water system to the system parameters and rate components.

3.2.1 Functional Cost Allocations
The operating expenses, debt service, and cash-funded capital requirements within the water system were distributed to specific activities or functional components of service. The functional components of the water system were identified as:
 Source of Supply
 Treatment
 Distribution
 Meters/Customer Services
 Fire Protection (public and private services)
A detailed process was followed for assigning expenses to the respective functional components that was reviewed with City staff. Tables 3-1 and 3-2 outline how the water system budgetary category costs were allocated to the functional components of the water system. Table 3-1 presents the major budgetary categories within the water fund budget and how the expenses were allocated. Table 3-2 presents a more granular view of the allocations and the various criteria that were used to allocate the costs to the system functional components.

Table 3-1: Basis of budget category allocations to water functional components Human Resources Based on estimate of FTEs serving each respective function Finance Based on estimate of FTEs serving each respective function Public Works Inspection Based on estimate of FTEs serving each respective function Engineering Based on 5-Year spending by function
Water Division Based on estimate of FTEs serving each respective function (excluding water purchases directly allocated to supply)
Transfers Out Indirect (Less Water Purchase)
Debt Service Directly allocated to functions based on nature of projects funded by existing debt
Indirect Allocated to each function in proportion to the total operation and maintenance costs allocated to each function.

3. Cost of Service Allocation
City of Norco | Water and Sewer Rate Study Final Report Stantec | 23 Table 3-2: Budget category allocations to water functional components Supply Treatment Transmission
/ Distribution
Meters /
Services Fire Protection
Basis / Factor Allocation %
Supply 100.00% 0.00% 0.00% 0.00% 0.00%
Treatment 0.00% 100.00% 0.00% 0.00% 0.00%
Transmission / Distribution 0.00% 0.00% 95.00% 0.00% 5.00% Meters/Services 0.00% 0.00% 0.00% 100.00% 0.00%
Fire Protection 0.00% 0.00% 0.00% 0.00% 100.00%
Supply/Treatment 50.00% 50.00% 0.00% 0.00% 0.00%
5 Year CIP 0.00% 13.49% 64.61% 18.50% 3.40%
2025 CIP 0.00% 31.37% 39.86% 25.10% 3.67%
FTE 10.00% 10.00% 50.00% 20.00% 10.00%
Indirect 8.90% 47.00% 33.52% 6.95% 3.64%

3.2.2 Distribute Function Costs to System Parameters
Next the costs of each functional component were distributed to system parameters. As shown in Table 3- 3, the water system’s Supply costs are allocated entirely to the system’s Base Capacity (as measured by the Average Day), Meter/Services costs are assigned to the Customer parameter (as measured by the number of accounts), and Fire Protection is assigned to the Fire Protection parameter (as measured by hydraulic capacity).

Treatment costs are split between the Base Capacity and Extra Capacity – Max Day. This split is calculated based on the relative volume of an Average Day as compared to a Maximum Day (see Table 3-4). The logic is that the treatment system has been sized to be able to meet the demands associated with the average flows during a maximum day event.

Distribution costs are split between the system’s Base Capacity and Extra Capacity – Max Day and Peak Hour as the distribution system has been sized to meet all system demands (i.e. average day, maximum day and peak hour). The allocation percentages shown in Table 3-3 are calculated based on the relationship of the system demand values shown in Table 3-4 based on system demands over the past three years.

Table 3-3: Water System: Mapping Functional Components to System Parameters Function
Base
Capacity -
Avg Day
Extra
Capacity -
Max Day
Extra
Capacity -
Peak Hour
Fire
Protection Customers
Supply 100% 0% 0% 0% 0%
Treatment 57% 43% 0% 0% 0%
Transmission/Distribution 35% 27% 38% 0% 0%
Meters/Services 0% 0% 0% 0% 100%
Fire Protection 0% 0% 0% 100% 0%

3. Cost of Service Allocation
City of Norco | Water and Sewer Rate Study Final Report Stantec | 24 Table 3-4: Water System Peaking Profile
Average Day (MGD) Max Month (MGD) May Day (MGD)
Water System Demands 5.27 8.95 10.33
Next the water system’s functionalized costs for operating, existing debt service and cash-funded capital spending were allocated to system parameters based on the values shown in Table 3-5. The following table presents the resulting water system costs allocated to the system parameters for FY 2025.

Table 3-5: Water System Costs Allocated to System Parameters Water System Costs
Base Capacity $6,056,508
Extra Capacity - Max Day $4,626,940
Fire Protection $461,940
Customer Service / Metering $881,975
Total $12,027,364
Once the water system costs were allocated to the system parameters the cost components could be utilized to determine an appropriate rate structure as discussed in the next section.

3.2.5 Allocation of System Parameter Costs to Rate Components The water system parameter costs were reviewed to determine the appropriate allocation of each parameter to the components of the water rate structure. The costs associated with customer service and metering are typically recovered in the fixed monthly charge because the City will incur the costs regardless of metered water use. Similarly, the costs associated with providing public fire service can be recovered in the fixed charge because fire protection is a standby service and not related to actual metered water use.

It should be noted that the portion of fire protection related to private fire service is determined in the next section of this report. The base capacity (or average day use in the water system) should be recovered in the variable “usage” portion of the water rate because it correlates directly to use. The final component, extra capacity, can be recovered in the fixed charge because the City must be prepared to meet the peak demands regardless of actual customer use. Table 3-6 summarizes the allocation of the system parameter costs to the fixed and variable components of the water rate structure.

3. Cost of Service Allocation
City of Norco | Water and Sewer Rate Study Final Report Stantec | 25 Table 3-6: Allocation of System Parameter Costs to Rate Components Allocation
Water System Costs Fixed Variable
Base Capacity $6,056,508 0% 100%
Extra Capacity – Max Day $4,626,940 100% 0%
Fire Protection $461,940 100% 0%
Customer Service / Metering $881,975 100% 0%
Total $12,027,364 $5,970,855 $6,056,508

49.6% 50.4%
The application of the system parameter costs to the rate components is discussed further in the rate structure portion of this report.

3.2.6 Calculation of Private Fire Cost Allocation
As shown in Table 3-5, the COSA analysis identified the cost of providing public and private fire protection within the City at $461,940 in FY 2025. The majority of these costs are related to providing public fire service throughout the City. However, a portion of these costs are associated with properties that have private fire service providing fire service to their respective properties. The vast majority of these properties are commercial in nature. Fire protection costs are allocated based on the hydraulic capacity of the respective service sizes for each service. Table 3-7, shows the calculation of the allocation between private and public fire service. The private fire system accounts for 23% of the total fire system capacity, while the public fire system accounts for the remaining 77% (based upon the hydraulic capacity of the respective connection sizes for each service). This yields a cost allocation of $106,840 to the private fire system, which needs to be collected through private fire protection fees to those customers with such service.

Table 3-7: Private vs. Public Fire Capacity Usage
Number in
Service
Demand
Factor
Equivalent
Connections
Percent of
Total Fire
Protection
Total
Public Fire Service
Hydrant in Service 1,368 111.31 152,272
Total Public Hydrants 1,368 152,272 77% $355,100
Private Fire Service
Fire Lines in Service
4” 38 38.32 1,456
6” 168 111.31 18,700
8” 74 237.21 17,553
10” 19 426.58 8,105
Total Private Fire Lines 299 45,815 23% $106,840

4. Rate Structure Analysis
City of Norco | Water and Sewer Rate Study Final Report Stantec | 26

4. RATE STRUCTURE ANALYSIS
A rate structure analysis then used COSA analysis results as a basis for recommending a rate structure and schedule that would:
i. Fairly and equitably recover each fund’s current cost of providing service; ii. Conform to accepted industry practice and legal requirements; iii. Provide fiscal stability and recovery of fixed costs of the system; and iv. Maintain affordability to low volume and average users to the extent possible.

While all of the key goals for the rate structures were considered while evaluating rate structures, particular emphasis was placed on developing rate structures that maintain revenue stability within the Utility. The following sub-sections present a description of the basis of the recommended rate structure, specific rate schedules based upon the rate structure recommendations for implementation in FY 2026.

4.1 WATER RATES
The following explains how the recommended water rates were designed in a manner such that they comply with the cost-of-service results and address the aforementioned rate structure objectives.

4.1.1 Current Water Rates
Common industry practice for water utilities is a two-part rate structure comprised of both fixed and variable charges. Generally accepted practice recovers a portion of the costs of the system in a fixed monthly readiness-to-serve charge, recognizing that utilities have substantial investments in capacity-related costs and other fixed costs that are incurred year-round to maintain a state of readiness to meet peak demands when they occur. The amount of cost recovery in fixed versus variable charges is unique to each community’s balance of fiscal stability, philosophy regarding cost recovery, and level of fixed costs.

Consistent with standard industry practice, the City currently applies a water rate structure which is made up of two parts:

1. Fixed Monthly Charge; and

2. Uniform Usage Rates
The City’s Fixed Monthly Charge is a charge that is the same for all customer classes and is assessed based on meter size. The Fixed Monthly Charge currently recovers 48.8% of the fund’s rate revenue, which is slightly below the City’s fixed costs of providing water service as identified by the COSA and presented in Table 3-6 While the difference is minimal, it would be appropriate for the portion of revenue generated from fixed charge to be increased to generate 49.6%.

4. Rate Structure Analysis
City of Norco | Water and Sewer Rate Study Final Report Stantec | 27 The Uniform Usage Rates are designed to recover the remaining (50.4%) of the water fund’s total costs of providing water service, as identified by the COSA and presented in Table 3-6 .

4.1.2 Evaluation of the Water Rate Structure
The following presents a review of the evaluation of the City’s current rate structure and our findings and recommendations regarding any appropriate modifications.

4.1.2.1 Fixed Charges
Fixed costs are costs that the utility will incur, regardless of whether water is actually delivered to an account. In a sense, these are akin to “readiness-to-serve” costs. This Study considers two general categories of fixed costs: (1) the fixed costs associated with managing each water account (customer service, billing, administration) and (2) the fixed costs associated with the infrastructure needed to serve the account (distribution pipe, pumps, treatment facilities, etc.). During the City’s last rate study (completed in 2016), the City’s water fixed charges were designed to recover customer service costs on a per account basis and the fixed costs of providing infrastructure were designed to be assessed by meter and in proportion to the meter size (since the meter size reflects the amount of capacity that is prepared to serve the account). This fixed charge rate structure is logical and consistent with industry standards. Based on our evaluation of the structure of the fixed charges no modifications are recommended.

4.1.2.2 Volumetric Charges
Based on the level of cost recovery from the Fixed Monthly Charge, the remaining revenues will be collected with the Uniform Usage Rate.

4.2 RECOMMMENDED WATER RATES
The following explains how the cost-of-service results were used to calculate the proposed rates for each respective customer class.

4.2.1 Fixed Monthly Charge Methodology
As described in Section 3, this Study proposes to recover customer service costs and fixed infrastructure related costs associated with meeting the system peak demands within a Fixed Monthly Charge. In FY 2025 the customer service-related costs within the water fund total $881,975. The remaining costs allocated to the fixed monthly charge include those associated with providing system infrastructure to meet system peaking demands, including public fire protection. As shown on Table 3-6, in Section 3 of this report, the combination of the customer service costs and the fixed infrastructure costs total approximately $6.0 million in FY 2025 which represents 49.6% of the total system revenue requirements. Based on the results, the current level of the fixed charge recovery (48.8%) should be increased slightly to align with the cost of service.

4. Rate Structure Analysis
City of Norco | Water and Sewer Rate Study Final Report Stantec | 28

4.2.2 Uniform Usage Rate Methodology
After the fixed charges have been calculated, the remaining cost to provide service is collected through the volumetric rates (“Uniform Usage Rate”). The uniform usage rates would recover the remaining 50.4% of the water fund revenues on an annual basis.

4.2.3 Recommended Water Rates
Based upon the results of the COSA analysis, the current rate structure described herein, as well as the recommended financial management plan outlined as Scenario 3, we have prepared the following schedule of water rates. The recommended rates are summarized in Table 4-1 with the first rate adjustment in FY 2026 effective July 1, 2025 and in each subsequent year on July 1, through 2029. It should be noted that during the first year of the rate adjustment (FY2026), the percentage increase in fixed charges is slightly higher than usage charges to account for the cost of service adjustment discussed in this section. In subsequent years, the fixed charges and usage charges increase at the same percentage.

Table 4-1: Recommended Water Rates
Current FY2026 FY2027 FY2028 FY2029 FY2030
Fixed Charge
3/4" $47.85 $52.60 $57.34 $61.93 $65.65 $69.59
1" $71.01 $77.48 $84.45 $91.21 $96.68 $102.48
1 1/2" $165.95 $179.25 $195.38 $211.01 $223.67 $237.09
2" $213.47 $230.18 $250.90 $270.97 $287.23 $304.46
3" $559.23 $600.79 $654.86 $707.25 $749.69 $794.67
4" $996.81 $1,069.82 $1,166.10 $1,259.39 $1,334.95 $1,415.05 6" $2,371.04 $2,542.82 $2,771.67 $2,993.40 $3,173.00 $3,363.38 8” $3,804.31 $4,079.10 $4,446.22 $4,801.92 $5,090.04 $5,395.44 10” $6,018.68 $6,452.62 $7,033.36 $7,596.03 $8,051.79 $8,534.90 12” $9,893.75 $10,606.21 $11,560.77 $12,485.63 $13,234.77 $14,028.86 Usage Charge
Rate (per HCF) $2.70 $2.92 $3.18 $3.43 $3.64 $3.86

4.2.4 Private Fire Protection Charges
Based on the results of the COSA analysis, private fire protection charges were also analyzed. The City currently assess private fire protection charges as a fixed monthly charge equivalent to the fixed monthly charge for a water customer based on the size of the fire line, currently $50.88 for a 2” fire line. Based on the COSA analysis and the financial plan a set of proposed private fire projection charges are presented in Table 4-2 with the first rate adjustment in FY 2026 effective July 1, 2025 and each in subsequent year on July 1, through 2029.

4. Rate Structure Analysis
City of Norco | Water and Sewer Rate Study Final Report Stantec | 29 Table 4-2: Recommended Private Fire Protection Charges
Current FY2026 FY2027 FY2028 FY2029 FY2030
Fixed Charge
2" $50.88 $53.80 $58.65 $63.34 $67.14 $71.17
3" $52.83 $56.10 $61.14 $66.04 $70.00 $74.20
4" $56.20 $60.05 $65.45 $70.69 $74.93 $79.43
6" $68.30 $74.23 $80.91 $87.39 $92.63 $98.19
8” $89.16 $98.70 $107.58 $116.19 $123.16 $130.55
10” $120.54 $135.50 $147.70 $159.51 $169.08 $179.23
12” $164.03 $186.51 $203.29 $219.55 $232.73 $246.69
Usage Charge
Rate (per HCF) $5.40 $5.71 $6.23 $6.72 $7.13 $7.55

4.3 SEWER RATES
The City currently charges all sewer accounts a fixed monthly charge of $51.00. In addition, non-residential accounts including schools, governmental, industrial, commercial and multi-family residential (4 individual living units or more) are charged a sewer rate per HCF for all metered water usage over 10 HCF. The current monthly fixed charge generates approximately 60% of the total sewer fund revenues. While the fixed costs of operating the sewer system exceed this value the current structure provides a strong level of revenue stability and fixed cost recovery. Based on our review of the current rate structure we recommend that the current structure remain in place with rate adjustments as outlined in our recommended financial management plan for the sewer fund. In addition to the active sewer accounts the City has installed laterals to parcels throughout the City that have not yet connected to the sewer system. These parcel owners are assessed a non-connect fee intended to recover the investment in and maintenance of treatment capacity at WRCRWA and infrastructure required to provide the available sewer service when these properties eventually connect to the City sewer system. The non-connect fees should be adjusted consistent with the financial management plan to ensure that the fee continues to recover the cost of making sewer service available. However, because the non-connect fee is considered to be a standby fee and not a service fee, the rate for the non-connect cannot be revised as part the Proposition 218 process and will require a separate engineers report and approval process. Therefore, the non-connect fee is not being adjusted at this time.

The recommended sewer rates are summarized in Table 4-3 and are intended to generate the revenues identified in the financial management plan for the sewer fund. As demonstrated in the table, sewer rates and fees will be increased beginning in FY2026 (effective July 1, 2025 with adjustments on July 1 of each subsequent year through 2029).

4. Rate Structure Analysis
City of Norco | Water and Sewer Rate Study Final Report Stantec | 30 Table 4-3: Recommended Sewer Rates
Current FY2026 FY2027 FY2028 FY2029 FY2030
Monthly Fixed Charge $51.00 $53.55 $56.23 $58.48 $60.82 $63.25 Sewer Usage Charge
Rate (per HCF) $8.00 $8.40 $8.82 $9.17 $9.54 $9.92
Monthly Non-Connect Fee $19.00 $19.00 $19.00 $19.00 $19.00 $19.00 * Monthly Fixed Charge applies to all customer classes
** Sewer Usage Charge excludes single family and irrigation customer classes *** Monthly Non-Connect Fee is for single family residential on septic and is not being adjusted at this time

5. Recycled Water Rates
City of Norco | Water and Sewer Rate Study Final Report Stantec | 31

5. RECYCLED WATER RATES
This section of the report outlines an evaluation of the estimated cost of providing recycled water within the City. The City currently maintains approximately six (6) miles of recycled water distribution pipe lines which are currently dry (installed years ago but do not currently convey recycled water). The City has been working in partnership with WRCRWA and other member agencies (City of Corona, Western Municipal Water District, Home Gardens Sanitation District, and the Jurupa Community Services District) to facilitate the development of a regional recycled water system. This includes the construction of a booster pump station and pipeline that would convey recycled water to partner communities and the City of Norco. It should be noted that at this time all capital projects will be completed in early calendar year 2026, and the City will be able to deliver recycled water to properties in the City. As a result, the analysis assumes a “Year 1” cost analysis and recycled water rate which reflects the first year of recycled water operations in the City.

5.1 RECYCLED WATER COSTS
The cost of providing recycled water consists of operational costs, repayment of loans and other debt obligations and any cash funded capital required within the system. The operational costs consist of costs that will be incurred internal to the City (staff time and materials) and the City’s portion of the shared operational costs for the regional booster pump station and pipeline. The internal operational costs were determined based on discussions with City staff and consist of estimates of labor and materials associated with managing the recycled water system. The external operational costs have been provided to the City based on initial cost sharing agreements. The estimated initial operational costs are presented in Table 5-

1. Table 5-1 Recycled Water O&M
Expenditure Type Year 1
Internal O&M $96,902
Pipeline O&M $27,638
Pump Station O&M $70,948
Total $195,489
To develop a forecast of recycled water O&M costs, the internal O&M costs were assumed to increase at 3% per year, the pipeline O&M costs were set at 1% per year and the booster pump station O&M costs were set at 3% per year. The pipeline and booster pump station escalation factors are based on the cost sharing agreement signed by the WRCRWA member agencies.

Similar to the recycled water operating costs, the City will need to fund internal and external capital costs to facilitate the delivery of recycled water. The internal capital includes upgrades to the existing recycled

5. Recycled Water Rates
City of Norco | Water and Sewer Rate Study Final Report Stantec | 32 water system within the City. The City estimates that these capital projects will cost $1.12 million. The external capital includes the City’s share in the pump station and the pipeline. Table 5-2 summarizes the total estimated capital.

Table 5-2 Recycled Water Capital
Capital Project
Internal Capital $1,120,000
Pipeline Cost Share $2,736,456
Booster Pump Station Cost Share $2,925,284
Total $6,781,739
The City has identified several funding sources for the recycled water capital projects. These funding sources include the $3.2 million loan provided from the sewer fund and various grant proceeds. The grant proceeds include a US EPA Community Grant that can provide up to $3 million towards the construction of the booster pump station with the City required to provide 25% in matching funds and a $0.56 million grant for the internal capital projects provided by Riverside County Flood Control. Based on these funding sources, it was assumed that the loan from the sewer fund would be used to pay for the balance of the internal capital projects and the balance of booster pump station. The City has the option to pay for the pipeline over time as part of the cost sharing agreement with the Jurupa Community Service District. The terms are favorable with a 20-year payback period and 0.80% interest. After funding all identified capital, this approach would leave the recycled water fund with approximately $1.9 million in operating reserve, equivalent to the $3.2 million sewer loan less the $1.3 million used to pay for Internal Capital and Booster Pump Station. Table 5-3 summarizes the sources and uses of funds for capital projects.

It should be noted the City has a second US EPA Community Grant in the amount of $3 million that is awaiting approval as a project in the Federal Budget. If this grant is approved the City will be able to fund 75% of the capital cost for the recycled water pipeline project rather than using a loan from JCSD. This would help reduce the cost for providing recycled water.

Table 5-3 Recycled Water Capital Funding
Capital Project Project Cost Grants Sewer Fund
Loan
JCSD Loan
Internal Capital $1,120,000 $560,000 $560,000 -
Pipeline Cost Share $2,736,456 - - $2,736,456
Booster Pump Station Cost Share $2,925,284 $2,193,963 $731,321 - Total $6,781,739 $2,753,963 $1,291,321 $2,736,456
Based on the capital funding assumptions, the recycled water fund will be obligated to meet loan payments originating from the loan from the sewer fund and the pipeline loan from JCSD. The repayment of the JCSD

5. Recycled Water Rates
City of Norco | Water and Sewer Rate Study Final Report Stantec | 33 loan is projected to start in Year 1 of operations and the loan to the sewer fund has been outlined to begin in the second year of operations. Table 5-4 presents the annual payments over the first five years of operations.

Table 5-4 Recycled Water Loan Payments
Year 1 Year 2 Year 3 Year 4 Year 5
Sewer Fund Loan - $162,760 $162,760 $162,760 $162,760
JCSD Pipeline Loan $148,606 $148,606 $148,606 $148,606 $148,606 Total $148,606 $311,336 $311,336 $311,336 $311,336
The total estimated annual expenditures for the recycled water system are summarized in Table 5-5.

Table 5-5 Recycled Water Total Annual Expenditures
Expenditure Type Year 1 Year 2 Year 3 Year 4 Year 5
O&M Costs $195,489 $200,801 $206,266 $211,890 $217,678
Capital Costs $148,606 $311,366 $311,366 $311,366 $311,366 Total Expenditures $344,094 $512,166 $517,632 $523,256 $529,043 Table 5-5 shows that the cost of providing recycled water will be in the range of approximately $0.5 million during the initial years of the systems operations. This level of expenditure is largely contingent on the capital costs. Additional grants or identification of additional capital improvements would have a substantial impact on the annual costs.

5.2 RECYCLED WATER CUSTOMERS AND DEMAND FORECAST
The City has identified several properties within the City that desire recycled water. These properties include Wayne Makin Shearer Sports Complex, Neal Snipes Park, Pikes Peak Park, and the Navy’s Lake Norconian. Caltrans has also expressed some interest in using recycled water along the I-15 freeway, but no firm commitment has been provided. Based on the identified properties, the initial estimated demand for the service is 350 acre-feet per year. For modeling purposes this initial recycled water demand is forecasted to increase at 1% per year as additional demands are placed on the system. Table 5-6 presents the assumed annual demand over the first five years of operations Table 5-6 Recycled Water Demand Forecast
Demand (HCF) Year 1 Year 2 Year 3 Year 4 Year 5
Baseline 152,470 152,470 152,470 152,470 152,470
Growth - 1,525 3,065 4,620 6,191
Total 152,470 153,995 155,535 157,090 158,661

5. Recycled Water Rates
City of Norco | Water and Sewer Rate Study Final Report Stantec | 34

5.3 SALES OF RECYCLED WATER TO OUTSIDE AGENCIES
WRCRWA members, including Norco, do not have enough users of recycled water to utilize all the recycled water that will be available on a daily basis. This unused recycled water will be discharged down the Santa Ana River. However, the member agencies elected to cost share in the construction of the JCSD pipeline that is intended to facilitate the sale and delivery of recycled water to other agencies in the Chino Basin that have demands for recycled water. WRCRWA is currently engaging multiple agencies that have expressed interest in obtaining long-term agreements for recycled water. If WRCRWA is able to sell recycled water to outside agencies then Norco will be provided a proportional share of the sales as revenue. However, this potential revenue is not considered as part of the COSA analysis in the development of the proposed recycled water rates.

5.4 RECYCLED WATER RATES
Based on the identified expenditures and the anticipated demands for recycled water within the City it was possible to develop an estimate of the recycled water rates that would be required to cover the full cost of providing the service. Table 5-7 demonstrates what the usage rate per HCF would need to be in order to cover the full cost of recycled water with a breakout for the operating and capital components. The table also includes a monthly fixed charge for customer receiving recycled water. Given the limited number of recycled water customers, a monthly fixed charge would not generate a substantial amount of revenue but it would provide some revenue stability and result in a rate structure that is consistent with the City’s water rate structure. Table 5-7 presents the recycled water rates with a monthly fixed charge which would recover 5% of the capital costs.

Table 5-7: Recommended Recycled Water Rates - Baseline
Year 1 Year 2 Year 3 Year 4 Year 5
Fixed Charge
3/4" $23.82 $49.40 $50.38 $51.34 $51.79
1" $37.79 $78.40 $79.96 $81.47 $82.18
1 1/2" $94.97 $197.03 $200.93 $204.73 $206.53
2" $123.59 $256.40 $261.47 $266.42 $268.76
3" $331.84 $688.39 $702.03 $715.32 $721.60
4" $595.38 $1,235.11 $1,259.57 $1,283.42 $1,294.69
6" $1,423.04 $2,952.09 $3,010.55 $3,067.56 $3,094.49
8” $2,286.25 $4,742.84 $4,836.76 $4,928.35 $4,971.62
10” $3,619.91 $7,509.51 $7,658.21 $7,803.23 $7,871.74
12” $5,953.76 $12,351.08 $12,595.66 $12,834.18 $12,946.87 Usage Rate (per HCF)
Operating Costs $1.28 $1.30 $1.33 $1.35 $1.37
Capital Costs $0.93 $1.92 $1.90 $1.88 $1.86
Total Unit Rate $2.21 $3.22 $3.23 $3.23 $3.23

5. Recycled Water Rates
City of Norco | Water and Sewer Rate Study Final Report Stantec | 35 Based on discussions with City staff, it is possible that the City may awarded a second US EPA Community Grant that would be used to fund the City’s portion of the JCSD pipeline. This would eliminate the need for the City to participate in a loan with JCSD for the pipeline. If the City were to receive a grant for $3 million and fund the 25% match with cash from the sewer loan (which would leave approximately $0.7 million), the recycled water rates would be reduced. Table 5-8 presents the recycled water rates assuming the additional grant funding. Under this scenario the only capital costs that would need to be funded would include the repayment of the loan to the sewer fund. For the purposes of this study the recommended rates for recycled water are those shown in Table 5-7 but if the second grant is awarded the City would be able to assess the rates in Table 5-8 without having to conduct a new Prop 218 Notice and Hearing.

Table 5-8: Potential Recycled Water Rates – Additional Grants Year 1 Year 2 Year 3 Year 4 Year 5
Fixed Charge
3/4" - $25.83 $26.34 $26.84 $27.07
1" - $40.98 $41.80 $42.59 $42.96
1 1/2" - $102.99 $105.03 $107.02 $107.96
2" - $134.03 $136.68 $139.27 $140.49
3" - $359.84 $366.97 $373.92 $377.20
4" - $645.63 $658.41 $670.88 $676.77
6" - $1,543.15 $1,573.70 $1,603.50 $1,617.58
8” - $2,479.22 $2,528.31 $2,576.19 $2,598.81
10” - $3,925.44 $4,003.17 $4,078.98 $4,114.79
12” - $6,456.27 $6,584.12 $6,708.80 $6,767.71
Usage Rate (per HCF)
Operating Costs $1.28 $1.30 $1.33 $1.35 $1.37
Capital Costs $0.00 $1.00 $0.99 $0.98 $0.97
Total Unit Rate $1.28 $2.31 $2.32 $2.33 $2.34
Based on the assumptions and estimated costs outlined within this section of the report, there are potential wide variations in the level of recycled water rates given the level of demands and funding of capital.

6. Customer Impacts and Utility Comparisons
City of Norco | Water and Sewer Rate Study Final Report Stantec | 36

6. CUSTOMER IMPACTS AND UTILITY COMPARISONS
As part of this Study, a bill impact analysis was conducted to better understand the changes that the recommended rate adjustments would have on the monthly bills of various types of customers. Additionally, a comparison of water and sewer bills for the City and surrounding utilities was completed to provide perspective on the level of water and sewer bills.

6.1 WATER AND SEWER USER RATE BILL IMPACTS
Table 6-1 demonstrates the bill impact analysis over the next three years for Single Family Residential customers with a 3/4” water meter and varying amounts of water usage. As highlighted in the table the average residential customer in the City uses approximately 20 HCF per month. Table 6-2 shows the bill impact analysis for Commercial customers with a 1” water meter and varying amounts of water usage over the next three years. It should be noted that 3/4" and 1” metered customers account for 96% of the total number of accounts served by the City.

Table 6-1: Water Bill Impact Analysis, Single Family Residential with 3/4” Meter Monthly
Use (HCF) Current Bill Proposed FY 2026 Bill Change Proposed FY 2027 Bill Change Proposed FY 2028 Bill Change 5 $61.35 $67.20 $5.85 $73.24 $6.04 $79.08 $5.84
10 $74.85 $81.80 $6.95 $89.14 $7.34 $96.23 $7.09
15 $88.35 $96.40 $8.05 $105.04 $8.64 $113.38 $8.34
20 $101.85 $111.00 $9.15 $120.94 $9.94 $130.53 $9.59
25 $115.35 $125.60 $10.25 $136.84 $11.24 $147.68 $10.84 30 $128.85 $140.20 $11.35 $152.74 $12.54 $164.83 $12.09 35 $142.35 $154.80 $12.45 $168.64 $13.84 $181.98 $13.34 40 $155.85 $169.40 $13.55 $184.54 $15.14 $199.13 $14.59 Table 6-2: Water Bill Impact Analysis, Commercial Customer with 1” Meter Monthly
Use (HCF) Current Bill Proposed FY 2026 Bill Change Proposed FY 2027 Bill Change Proposed FY 2028 Bill Change 5 $84.51 $92.08 $7.57 $100.35 $8.27 $108.36 $8.01
10 $98.01 $106.68 $8.67 $116.25 $9.57 $125.51 $9.26
15 $111.51 $121.28 $9.77 $132.15 $10.87 $142.66 $10.51
20 $125.01 $135.88 $10.87 $148.05 $12.17 $159.81 $11.76 25 $138.51 $150.48 $11.97 $163.95 $13.47 $176.96 $13.01 30 $152.01 $165.08 $13.07 $179.85 $14.77 $194.11 $14.26 35 $165.51 $179.68 $14.17 $195.75 $16.07 $211.26 $15.51 40 $179.01 $194.28 $15.27 $211.65 $17.37 $228.41 $16.76 45 $192.51 $208.88 $16.37 $227.55 $18.67 $245.56 $18.01 50 $206.01 $223.48 $17.47 $243.45 $19.97 $262.71 $19.26 55 $219.51 $238.08 $18.57 $259.35 $21.27 $279.86 $20.51

6. Customer Impacts and Utility Comparisons
City of Norco | Water and Sewer Rate Study Final Report Stantec | 37 Table 6-3 demonstrates the sewer bill impact analysis over the next three years for Single Family Residential customers. Table 6-4 shows the sewer bill impact analysis for Commercial customers with varying amounts of water usage over the next three years. It should be noted that all single-family customers pay a flat fixed charge for sewer service and commercial customers pay a fixed charge plus a sewer usage rate for all usage above 10 HCF.

Table 6-3: Sewer Bill Impact Analysis, Residential Customers Current Bill Proposed FY
2026 Bill Change Proposed FY 2027 Bill Change Proposed FY 2028 Bill Change $51.00 $53.55 $2.55 $56.23 $2.68 $58.48 $2.25
Table 6-4: Sewer Bill Impact Analysis, Commercial Customer Monthly
Use (HCF) Current Bill Proposed FY 2026 Bill Change Proposed FY 2027 Bill Change Proposed FY 2028 Bill Change 5 $51.00 $53.55 $2.55 $56.23 $2.68 $58.48 $2.25
10 $51.00 $53.55 $2.55 $56.23 $2.68 $58.48 $2.25
15 $91.00 $95.55 $4.55 $100.33 $4.78 $104.33 $4.00
20 $131.00 $137.55 $6.55 $144.43 $6.88 $150.18 $5.75
25 $171.00 $179.55 $8.55 $188.53 $8.98 $196.03 $7.50
30 $211.00 $221.55 $10.55 $232.63 $11.08 $241.88 $9.25
35 $251.00 $263.55 $12.55 $276.73 $13.18 $287.73 $11.00 40 $291.00 $305.55 $14.55 $320.83 $15.28 $333.58 $12.75 45 $331.00 $347.55 $16.55 $364.93 $17.38 $379.43 $14.50 50 $371.00 $389.55 $18.55 $409.03 $19.48 $425.28 $16.25 55 $411.00 $431.55 $20.55 $453.13 $21.58 $471.13 $18.00

6.2 WATER AND SEWER BILL COMPARISON SURVEY
To provide a comparison of the relative charges for water and sewer service in the City of Norco compared with surrounding communities, a bill survey was completed. While the comparison provides insight to local charges between communities it is important to note that there are a host of factors that make it difficult to provide a true “apples to apples” comparison. Each community has differing economies of scale, purchase water costs, age of infrastructure, outside funding sources and many other factors. Figure 6-1 presents the comparison. It is important to note that each monthly bill in the survey was calculated based upon current FY 2025 water and sewer rates. It is very likely that the majority of entities surveyed will be implementing rate increases in the coming years.

6. Customer Impacts and Utility Comparisons
City of Norco | Water and Sewer Rate Study Final Report Stantec | 38 Figure 6-1: Residential Monthly Bill Comparison (20 HCF per Month with 3/4” Meter) .

City of Norco | Water and Sewer Rate Study Final Report Stantec | 39 Disclaimer
This document was produced by Stantec Consulting Services, Inc. (“Stantec”) for the City of Norco and is based on a specific scope agreed upon by both parties. In preparing this report, Stantec utilized information and data obtained from the City or public and/or industry sources. Stantec has relied on the information and data without independent verification, except only to the extent such verification is expressly described in this document. Any projections of future conditions presented in the document are not intended as predictions, as there may be differences between forecasted and actual results, and those differences may be material.

Additionally, the purpose of this document is to summarize Stantec’s analysis and findings related to this project, and it is not intended to address all aspects that may surround the subject area. Therefore, this document may have limitations, assumptions, or reliances on data that are not readily apparent on the face of it. Moreover, the reader should understand that Stantec was called on to provide judgments on a variety of critical factors which are incapable of precise measurement. As such, the use of this document and its findings by the City should only occur after consultation with Stantec, and any use of this document and findings by any other person is done so entirely at their own risk.

Appendix: Revenue Sufficiency Analysis Schedules
City of Norco | Water and Sewer Rate Study Final Report Stantec | 40 APPENDIX:REVENUE SUFFICIENCY ANALYSIS

SCHEDULES

Appendix: Revenue Sufficiency Analysis Schedules
City of Norco | Water and Sewer Rate Study Final Report Stantec | 41 Water Fund Working Capital as of 7/1/2024 Schedule 1-W
Fund Balance Detail Revenue Fund Rate Stabilization Capital Fund Current Unrestricted Assets
Cash and Cash Equivalents $ 3,706,734 $ - $ 4,805,770
Rate Stabilization - 1,555,554 -
Receivables: 2,334,791 - -
Interest 17,982 - 16,727
Due from Other Funds 47,864 - -
Prepaid Items 12,604 - -
Total Assets $ 6,119,975 $ 1,555,554 $ 4,822,497
Current Liabilities
Accounts and Contracts Payable $ (1,353,382) $ - $ (37,727) Deposits Payable (257,498) - -
Calculated Fund Balance (Assets - Liabilities) $ 4,509,096 $ 1,555,554 $ 4,784,770 Available Fund Balance $ 4,509,096 $ 1,555,554 $ 4,784,770 Fund Summary
Total Available Funds $ 10,849,420

Appendix: Revenue Sufficiency Analysis Schedules
City of Norco | Water and Sewer Rate Study Final Report Stantec | 42 Sewer Fund Working Capital as of 7/1/2024 Schedule 1-S
Stantec Grouping of Funds in Model Revenue Fund Sewer Facilities Improvement
Current Unrestricted Assets
Cash and Cash Equivalents $ 254,611 $ 12,303,479
Receivables: 1,344,976 -
Interest 53,988 46,492
Prepaid Items 12,604 -
Total Assets $ 1,666,180 $ 12,349,971
Current Liabilities
Accounts and Contracts Payable $ (387,028) $ (136,757)
Deposits Payable (205,630) -
Calculated Fund Balance (Assets - Liabilities) $ 1,073,522 $ 12,213,214 Available Fund Balance $ 1,073,522 $ 12,213,214
Total Available Funds $ 13,286,736

Appendix: Revenue Sufficiency Analysis Schedules
City of Norco | Water and Sewer Rate Study Final Report Stantec | 43 Schedule 2-W
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 Water Rate Revenue
1 Water Sales - Fixed Monthly Charges $ 6,016,700 $ 6,574,599 $ 7,184,229 $ 7,778,364 $ 8,265,679 $ 8,783,524 $ 9,157,702 $ 9,547,820 $ 9,954,557 $ 10,378,621 $ 10,820,750 2 Water Sales - Usage Charges 6,000,000 6,523,568 7,092,824 7,641,003 8,079,114 8,542,344 8,861,716 9,193,029 9,536,729 9,893,279 10,263,159 3 Total Water Rate Revenue $ 12,016,700 $ 13,098,167 $ 14,277,052 $ 15,419,368 $ 16,344,792 $ 17,325,867 $ 18,019,418 $ 18,740,849 $ 19,491,286 $ 20,271,900 $ 21,083,909 Other Operating Revenue
4 Energy Pass Thru $ 58,200 $ 58,200 $ 58,200 $ 58,200 $ 58,200 $ 58,200 $ 58,200 $ 58,200 $ 58,200 $ 58,200 $ 58,200 5 Bulk Water 140,700 140,700 140,700 140,700 140,700 140,700 140,700 140,700 140,700 140,700 140,700 6 Reconnection & Coll. Fees 39,600 39,600 39,600 39,600 39,600 39,600 39,600 39,600 39,600 39,600 39,600 7 Other Service Fees 35,300 35,300 35,300 35,300 35,300 35,300 35,300 35,300 35,300 35,300 35,300 8 Miscellaneous Revenue 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 9 Total Other Operating Revenue $ 277,800 $ 277,800 $ 277,800 $ 277,800 $ 277,800 $ 277,800 $ 277,800 $ 277,800 $ 277,800 $ 277,800 $ 277,800 Interest Income
10 Interest Income $ 283,316 $ 280,495 $ 241,580 $ 183,685 $ 197,093 $ 203,450 $ 175,597 $ 177,373 $ 238,563 $ 275,423 $ 258,922 11 Total Interest Income $ 283,316 $ 280,495 $ 241,580 $ 183,685 $ 197,093 $ 203,450 $ 175,597 $ 177,373 $ 238,563 $ 275,423 $ 258,922 Capital Project Funding Sources
12 Loan Interest $ 80,734 $ 76,177 $ 71,499 $ 66,697 $ 61,767 $ 56,705 $ 51,509 $ 46,174 $ 40,698 $ 35,075 $ 29,303 13 Silverlakes Loan Payment 171,177 175,734 180,412 185,214 190,144 195,206 200,402 205,737 211,213 216,836 222,608 14 Water Capital Fees 120,403 120,704 121,005 121,308 121,611 121,915 122,220 122,525 122,832 123,139 123,447 15 Total Capital Project Funding Sources $ 372,314 $ 372,615 $ 372,916 $ 373,219 $ 373,522 $ 373,826 $ 374,131 $ 374,437 $ 374,743 $ 375,050 $ 375,358 16 Total Cash Inflows $ 12,950,130 $ 14,029,077 $ 15,169,349 $ 16,254,072 $ 17,193,207 $ 18,180,944 $ 18,846,946 $ 19,570,458 $ 20,382,392 $ 21,200,173 $ 21,995,989 Projection of Cash Inflows

Appendix: Revenue Sufficiency Analysis Schedules
City of Norco | Water and Sewer Rate Study Final Report Stantec | 44 Schedule 2-S
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 Sewer Rate Revenue
1 Base Rate Revenue $ 4,008,384 $ 4,219,325 $ 4,441,367 $ 4,630,569 $ 4,827,832 $ 5,033,497 $ 5,147,003 $ 5,263,068 $ 5,381,750 $ 5,503,108 $ 5,627,203 2 Usage Rate Revenue 3,125,631 3,273,667 3,428,714 3,556,903 3,689,885 3,827,839 3,894,586 3,962,497 4,031,592 4,101,892 4,173,417 3 Total Sewer Rate Revenue $ 7,134,015 $ 7,492,992 $ 7,870,081 $ 8,187,472 $ 8,517,717 $ 8,861,336 $ 9,041,588 $ 9,225,564 $ 9,413,341 $ 9,605,000 $ 9,800,621 Other Operating Revenue
4 Loan Interest 96,200 100,643 92,754 84,629 76,259 67,639 58,760 49,614 40,195 30,492 20,499 5 Corona Loan Payments 263,000 262,964 270,853 278,978 287,348 295,968 304,847 313,993 323,412 333,115 343,108 6 Miscellaneous Revenue 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 7 Total Other Operating Revenue $ 361,200 $ 365,607 $ 365,607 $ 365,607 $ 365,607 $ 365,607 $ 365,607 $ 365,607 $ 365,607 $ 365,607 $ 365,607 Transfers In
8 Transfer In (Loan payment from Recycled Water) $ - $ - $ - $ 163,905 $ 163,905 $ 163,905 $ 163,905 $ 163,905 $ 163,905 $ 163,905 $ 163,905 9 Total Transfers In $ - $ - $ - $ 163,905 $ 163,905 $ 163,905 $ 163,905 $ 163,905 $ 163,905 $ 163,905 $ 163,905 Interest Income
10 Unrestricted $ 327,107 $ 236,223 $ 194,850 $ 152,031 $ 114,451 $ 85,272 $ 70,707 $ 66,381 $ 61,857 $ 57,007 $ 51,703 11 Total Interest Income $ 327,107 $ 236,223 $ 194,850 $ 152,031 $ 114,451 $ 85,272 $ 70,707 $ 66,381 $ 61,857 $ 57,007 $ 51,703 Capital Project Funding Sources
12 Loan Interest $ 82,330 $ 77,683 $ 72,913 $ 68,015 $ 62,988 $ 57,826 $ 52,527 $ 47,087 $ 41,502 $ 35,769 $ 29,883 13 Corona Loan Payments 25,443 25,443 25,443 25,443 25,443 25,443 25,443 25,443 25,443 25,443 20,709 14 Silverlakes Loan Payment 171,177 175,734 180,412 185,214 190,144 195,206 200,402 205,737 211,213 216,836 222,608 15 Sewer Connection Fees 108,515 108,786 109,058 109,331 109,604 109,878 110,153 110,428 110,704 110,981 111,259 16 Total Capital Project Funding Sources $ 387,465 $ 387,646 $ 387,826 $ 388,003 $ 388,179 $ 388,353 $ 388,525 $ 388,695 $ 388,863 $ 389,029 $ 384,458 17 Total Cash Inflows $ 8,209,787 $ 8,482,468 $ 8,818,364 $ 9,257,019 $ 9,549,860 $ 9,864,474 $ 10,030,333 $ 10,210,152 $ 10,393,574 $ 10,580,547 $ 10,766,294 Projection of Cash Inflows

Appendix: Revenue Sufficiency Analysis Schedules
City of Norco | Water and Sewer Rate Study Final Report Stantec | 45 Projection of Cash Outflows Schedule 3-W 1 of 3
Expense Line Item FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 Human Resources
1 Full Time Salaries $ 20,900 $ 21,527 $ 22,173 $ 22,838 $ 23,523 $ 24,229 $ 24,956 $ 25,704 $ 26,475 $ 27,270 $ 28,088 2 Overtime 100 103 106 109 113 116 119 123 127 130 134
3 Administrative Leave Cash Out 200 206 212 219 225 232 239 246 253 261 269 4 Sick Leave Buy Back 400 412 424 437 450 464 478 492 507 522 538 5 Annual Vacation Cash Out 500 515 530 546 563 580 597 615 633 652 672 6 PERS Retirement 2,800 2,940 3,087 3,241 3,403 3,574 3,752 3,940 4,137 4,344 4,561 7 PERS Monthly Employer UAL Payment 7,400 7,770 8,159 8,566 8,995 9,444 9,917 10,413 10,933 11,480 12,054 8 Employee Group Insurance 3,800 3,990 4,190 4,399 4,619 4,850 5,092 5,347 5,614 5,895 6,190 9 Medical Savings Account 100 103 106 109 113 116 119 123 127 130 134 10 Medicare Insurance 400 420 441 463 486 511 536 563 591 621 652 11 Total Human Resources $ 36,600 $ 37,986 $ 39,428 $ 40,928 $ 42,490 $ 44,114 $ 45,805 $ 47,565 $ 49,398 $ 51,305 $ 53,291 Finance
12 Full Time Salaries $ 284,200 $ 292,726 $ 301,508 $ 310,553 $ 319,870 $ 329,466 $ 339,350 $ 349,530 $ 360,016 $ 370,817 $ 381,941 13 Part-Time Salaries 11,600 11,948 12,306 12,676 13,056 13,448 13,851 14,267 14,695 15,135 15,589 14 Administrative Leave Cash Out 3,000 3,090 3,183 3,278 3,377 3,478 3,582 3,690 3,800 3,914 4,032 15 Sick Leave Buy Back 3,000 3,090 3,183 3,278 3,377 3,478 3,582 3,690 3,800 3,914 4,032 16 Annual Vacation Cash Out 2,300 2,369 2,440 2,513 2,589 2,666 2,746 2,829 2,914 3,001 3,091 17 PERS Retirement 25,800 27,090 28,445 29,867 31,360 32,928 34,574 36,303 38,118 40,024 42,025 18 PERS Monthly Employer UAL Payment 22,100 23,205 24,365 25,584 26,863 28,206 29,616 31,097 32,652 34,284 35,999 19 Employee Group Insurance 55,500 58,275 61,189 64,248 67,461 70,834 74,375 78,094 81,999 86,099 90,404 20 Vehicle Allowance 1,200 1,236 1,273 1,311 1,351 1,391 1,433 1,476 1,520 1,566 1,613 21 Cell Phone Stipend 200 206 212 219 225 232 239 246 253 261 269 22 Medical Savings Account 500 525 551 579 608 638 670 704 739 776 814 23 Medicare Insurance 4,300 4,515 4,741 4,978 5,227 5,488 5,762 6,051 6,353 6,671 7,004 24 Deferred Compensation 300 309 318 328 338 348 358 369 380 391 403 25 Tuition Reimbursement 800 824 849 874 900 927 955 984 1,013 1,044 1,075 26 Conferences & Meetings 6,000 6,180 6,365 6,556 6,753 6,956 7,164 7,379 7,601 7,829 8,063 27 Office Supplies 3,000 3,090 3,183 3,278 3,377 3,478 3,582 3,690 3,800 3,914 4,032 28 Printing & Copies 10,000 10,300 10,609 10,927 11,255 11,593 11,941 12,299 12,668 13,048 13,439 29 Postage 35,500 36,565 37,662 38,792 39,956 41,154 42,389 43,661 44,970 46,319 47,709 30 Special Departmental 700 721 743 765 788 811 836 861 887 913 941 31 Equipment Rental 2,000 2,060 2,122 2,185 2,251 2,319 2,388 2,460 2,534 2,610 2,688 32 Contractual Services 64,000 65,920 67,898 69,935 72,033 74,194 76,419 78,712 81,073 83,505 86,011 33 Accounting & Auditing Svc 11,700 12,051 12,413 12,785 13,168 13,564 13,970 14,390 14,821 15,266 15,724 34 Financial Services 22,000 22,660 23,340 24,040 24,761 25,504 26,269 27,057 27,869 28,705 29,566 35 Computer Replacement Chrg 3,800 3,914 4,031 4,152 4,277 4,405 4,537 4,674 4,814 4,958 5,107 36 Computing Operations 61,100 62,933 64,821 66,766 68,769 70,832 72,957 75,145 77,400 79,722 82,113 37 Total Finance $ 634,600 $ 655,802 $ 677,748 $ 700,467 $ 723,986 $ 748,336 $ 773,547 $ 799,654 $ 826,688 $ 854,686 $ 883,684 Engineering
38 Full Time Salaries $ 271,600 $ 279,748 $ 288,140 $ 296,785 $ 305,688 $ 314,859 $ 324,305 $ 334,034 $ 344,055 $ 354,376 $ 365,008 39 Overtime 400 412 424 437 450 464 478 492 507 522 538 40 Administrative Leave Cash Out 3,100 3,193 3,289 3,387 3,489 3,594 3,702 3,813 3,927 4,045 4,166 41 Sick Leave Buy Back 4,200 4,326 4,456 4,589 4,727 4,869 5,015 5,165 5,320 5,480 5,644 42 Annual Vacation Cash Out 2,700 2,781 2,864 2,950 3,039 3,130 3,224 3,321 3,420 3,523 3,629 43 PERS Retirement 25,900 27,195 28,555 29,982 31,482 33,056 34,708 36,444 38,266 40,179 42,188 44 PERS Monthly Employer UAL Payment 29,100 30,555 32,083 33,687 35,371 37,140 38,997 40,947 42,994 45,144 47,401 45 Employee Group Insurance 35,700 37,485 39,359 41,327 43,394 45,563 47,841 50,233 52,745 55,382 58,152 46 Vehicle Allowance 1,500 1,545 1,591 1,639 1,688 1,739 1,791 1,845 1,900 1,957 2,016 47 Cell Phone Stipend 200 206 212 219 225 232 239 246 253 261 269 48 Medical Savings Account 300 315 331 347 365 383 402 422 443 465 489 49 Medicare Insurance 4,000 4,200 4,410 4,631 4,862 5,105 5,360 5,628 5,910 6,205 6,516 50 Deferred Compensation 100 103 106 109 113 116 119 123 127 130 134 51 Total Engineering $ 378,800 $ 392,064 $ 405,821 $ 420,090 $ 434,892 $ 450,249 $ 466,181 $ 482,713 $ 499,868 $ 517,671 $ 536,148

Appendix: Revenue Sufficiency Analysis Schedules
City of Norco | Water and Sewer Rate Study Final Report Stantec | 46 Projection of Cash Outflows Schedule 3-W 2 of 3
Water
52 Full Time Salaries $ 742,000 $ 764,260 $ 787,188 $ 810,803 $ 835,128 $ 860,181 $ 885,987 $ 912,566 $ 939,943 $ 968,142 $ 997,186 53 Overtime 140,000 144,200 148,526 152,982 157,571 162,298 167,167 172,182 177,348 182,668 188,148 54 Administrative Leave Cash Out 3,100 3,193 3,289 3,387 3,489 3,594 3,702 3,813 3,927 4,045 4,166 55 Sick Leave Buy Back 6,400 6,592 6,790 6,993 7,203 7,419 7,642 7,871 8,107 8,351 8,601 56 Annual Vacation Cash Out 5,500 5,665 5,835 6,010 6,190 6,376 6,567 6,764 6,967 7,176 7,392 57 PERS Retirement 77,900 81,795 85,885 90,179 94,688 99,422 104,393 109,613 115,094 120,848 126,891 58 PERS Monthly Employer UAL Payment 125,000 131,250 137,813 144,703 151,938 159,535 167,512 175,888 184,682 193,916 203,612 59 Employee Group Insurance 156,600 161,298 166,137 171,121 176,255 181,542 186,989 192,598 198,376 204,327 210,457 60 Cell Phone Stipend 200 206 212 219 225 232 239 246 253 261 269 61 Medical Savings Account 400 420 441 463 486 511 536 563 591 621 652 62 Medicare Insurance 12,800 13,440 14,112 14,818 15,558 16,336 17,153 18,011 18,911 19,857 20,850 63 Workers Compensation 1,000 1,050 1,103 1,158 1,216 1,276 1,340 1,407 1,477 1,551 1,629 64 Conferences & Meetings 15,000 15,450 15,914 16,391 16,883 17,389 17,911 18,448 19,002 19,572 20,159 65 Auto Mileage 200 206 212 219 225 232 239 246 253 261 269 66 Uniforms & Safety Gear 10,500 10,815 11,139 11,474 11,818 12,172 12,538 12,914 13,301 13,700 14,111 67 Dues,Membrshps & Subscrpt 5,000 5,150 5,305 5,464 5,628 5,796 5,970 6,149 6,334 6,524 6,720 68 Office Supplies 2,500 2,575 2,652 2,732 2,814 2,898 2,985 3,075 3,167 3,262 3,360 69 Special Departmental 375,000 386,250 397,838 409,773 422,066 434,728 447,770 461,203 475,039 489,290 503,969 70 Small Tools 8,000 8,240 8,487 8,742 9,004 9,274 9,552 9,839 10,134 10,438 10,751 71 Equipment Rental 3,000 3,090 3,183 3,278 3,377 3,478 3,582 3,690 3,800 3,914 4,032 72 Buildings & Grounds Mtce 8,000 8,240 8,487 8,742 9,004 9,274 9,552 9,839 10,134 10,438 10,751 73 Well & Pump Maintenance 75,000 77,250 79,568 81,955 84,413 86,946 89,554 92,241 95,008 97,858 100,794 74 Water Charges 8,500 8,925 9,371 9,840 10,332 10,848 11,391 11,960 12,558 13,186 13,846 75 Electricity Charges 500,000 525,000 551,250 578,813 607,753 638,141 670,048 703,550 738,728 775,664 814,447 76 Natural Gas 500 525 551 579 608 638 670 704 739 776 814 77 Telephone Charges 1,900 1,995 2,095 2,199 2,309 2,425 2,546 2,673 2,807 2,948 3,095 78 Wireless 11,500 12,075 12,679 13,313 13,978 14,677 15,411 16,182 16,991 17,840 18,732 79 Contractual Services 925,000 952,750 981,333 1,010,772 1,041,096 1,072,329 1,104,498 1,137,633 1,171,762 1,206,915 1,243,123 80 Financial Services 1,200 1,236 1,273 1,311 1,351 1,391 1,433 1,476 1,520 1,566 1,613 81 Administrative Overhead 556,360 573,051 590,242 607,950 626,188 644,974 664,323 684,253 704,780 725,924 747,701 82 Property Taxes 1,000 1,030 1,061 1,093 1,126 1,159 1,194 1,230 1,267 1,305 1,344 83 Vehicle Operations & Mtce 94,300 97,129 100,043 103,044 106,135 109,320 112,599 115,977 119,456 123,040 126,731 84 Vehicle Replacement Chrgs 125,400 129,162 133,037 137,028 141,139 145,373 149,734 154,226 158,853 163,619 168,527 85 Computer Replacement Chrg 3,200 3,296 3,395 3,497 3,602 3,710 3,821 3,936 4,054 4,175 4,301 86 Computing Operations 73,300 75,499 77,764 80,097 82,500 84,975 87,524 90,150 92,854 95,640 98,509 87 Self-Ins Expenses 323,644 333,353 343,354 353,655 364,264 375,192 386,448 398,041 409,983 422,282 434,950 88 Self-Ins Settlements 30,000 30,900 31,827 32,782 33,765 34,778 35,822 36,896 38,003 39,143 40,317 89 Equipment 50,000 51,500 53,045 54,636 56,275 57,964 59,703 61,494 63,339 65,239 67,196 90 Automotive Equipment 80,500 82,915 85,402 87,965 90,603 93,322 96,121 99,005 101,975 105,034 108,185 91 Building/Improvements-Construction 30,000 30,900 31,827 32,782 33,765 34,778 35,822 36,896 38,003 39,143 40,317 92 Total Water $ 4,589,404 $ 4,741,876 $ 4,899,662 $ 5,062,958 $ 5,231,968 $ 5,406,904 $ 5,587,987 $ 5,775,447 $ 5,969,522 $ 6,170,459 $ 6,378,517 Variable Operating Expenses
93 Water Purchases $ 5,500,000 $ 5,775,000 $ 6,063,750 $ 6,366,938 $ 6,685,284 $ 7,019,549 $ 7,370,526 $ 7,739,052 $ 8,126,005 $ 8,532,305 $ 8,958,920 94 Total Operating Expenses $ 11,139,404 $ 11,602,728 $ 12,086,409 $ 12,591,380 $ 13,118,620 $ 13,669,151 $ 14,244,047 $ 14,844,431 $ 15,471,480 $ 16,126,426 $ 16,810,561

Appendix: Revenue Sufficiency Analysis Schedules
City of Norco | Water and Sewer Rate Study Final Report Stantec | 47 Projection of Cash Outflows Schedule 3-W 3 of 3
Transfers Out
95 Transfer Out to Fund 121 $ 129,100 $ 129,100 $ 129,100 $ 129,100 $ 129,100 $ 129,100 $ 129,100 $ 129,100 $ 129,100 $ 129,100 $ 129,100 96 Transfers to Rate Stabilization 222,222 222,222 - - - - - - - - - 97 Total Transfers Out $ 351,322 $ 351,322 $ 129,100 $ 129,100 $ 129,100 $ 129,100 $ 129,100 $ 129,100 $ 129,100 $ 129,100 $ 129,100 Debt Service
98 2019 Bonds 1,402,244 1,401,369 1,398,236 1,399,292 1,395,588 1,395,257 1,394,949 1,392,800 1,390,583 1,397,496 1,398,306 Total Debt Service $ 1,402,244 $ 1,401,369 $ 1,398,236 $ 1,399,292 $ 1,395,588 $ 1,395,257 $ 1,394,949 $ 1,392,800 $ 1,390,583 $ 1,397,496 $ 1,398,306 99 Total Personal Services $ 2,017,800 $ 2,087,028 $ 2,158,768 $ 2,233,116 $ 2,310,174 $ 2,390,046 $ 2,472,844 $ 2,558,680 $ 2,647,674 $ 2,739,949 $ 2,835,635 100 Personal Services Execution Percentage 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 101 Total: Personal Servies Funding Level $ 1,916,910 $ 1,982,677 $ 2,050,829 $ 2,121,460 $ 2,194,665 $ 2,270,544 $ 2,349,202 $ 2,430,746 $ 2,515,290 $ 2,602,951 $ 2,693,853 102 Total: Fixed Operating Expenses $ 3,069,204 $ 3,161,280 $ 3,256,119 $ 3,353,802 $ 3,454,416 $ 3,558,049 $ 3,664,790 $ 3,774,734 $ 3,887,976 $ 4,004,615 $ 4,124,754 103 Fixed Operating Expenses Execution Percentage 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 104 Total: Fixed Operating Expenses Funding Level $ 2,915,744 $ 3,003,216 $ 3,093,313 $ 3,186,112 $ 3,281,695 $ 3,380,146 $ 3,481,551 $ 3,585,997 $ 3,693,577 $ 3,804,384 $ 3,918,516 105 Total: Variable Operating Expenses - All Depts $ 6,022,400 $ 6,323,520 $ 6,639,696 $ 6,971,681 $ 7,320,265 $ 7,686,278 $ 8,070,592 $ 8,474,122 $ 8,897,828 $ 9,342,719 $ 9,809,855 106 Variable Operating Expenses Execution Percentage 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 107 Total: Variable Operating Expenses Funding Level $ 5,721,280 $ 6,007,344 $ 6,307,711 $ 6,623,097 $ 6,954,252 $ 7,301,964 $ 7,667,062 $ 8,050,416 $ 8,452,936 $ 8,875,583 $ 9,319,362 108 Total: Capital Outlay Expenses - All Depts $ 30,000 $ 30,900 $ 31,827 $ 32,782 $ 33,765 $ 34,778 $ 35,822 $ 36,896 $ 38,003 $ 39,143 $ 40,317 109 Capital Outlay Expenses Execution Percentage 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 110 Total: Capital Outlay Expenses Funding Level $ 30,000 $ 30,900 $ 31,827 $ 32,782 $ 33,765 $ 34,778 $ 35,822 $ 36,896 $ 38,003 $ 39,143 $ 40,317 111 Total O&M Cash Outflow $ 12,337,499 $ 12,776,828 $ 13,011,016 $ 13,491,842 $ 13,989,065 $ 14,511,789 $ 15,057,686 $ 15,625,954 $ 16,219,489 $ 16,848,658 $ 17,499,454

Appendix: Revenue Sufficiency Analysis Schedules
City of Norco | Water and Sewer Rate Study Final Report Stantec | 48 Projection of Cash Outflows Schedule 3-S 1 of 3
Expense Line Item FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 Human Resources
1 Full Time Salaries $ 20,900 $ 21,527 $ 22,173 $ 22,838 $ 23,523 $ 24,229 $ 24,956 $ 25,704 $ 26,475 $ 27,270 $ 28,088 2 Overtime 100 103 106 109 113 116 119 123 127 130 134
3 Administrative Leave Cash Out 200 206 212 219 225 232 239 246 253 261 269 4 Sick Leave Buy Back 400 412 424 437 450 464 478 492 507 522 538 5 Annual Vacation Cash Out 500 515 530 546 563 580 597 615 633 652 672 6 PERS Retirement 2,800 2,940 3,087 3,241 3,403 3,574 3,752 3,940 4,137 4,344 4,561 7 PERS Monthly Employer UAL Payment 7,400 7,770 8,159 8,566 8,995 9,444 9,917 10,413 10,933 11,480 12,054 8 Employee Group Insurance 3,800 3,990 4,190 4,399 4,619 4,850 5,092 5,347 5,614 5,895 6,190 9 Medical Savings Account 100 105 110 116 122 128 134 141 148 155 163 10 Medicare Insurance 400 420 441 463 486 511 536 563 591 621 652 11 Total Human Resources $ 36,600 $ 37,988 $ 39,432 $ 40,935 $ 42,499 $ 44,126 $ 45,820 $ 47,583 $ 49,419 $ 51,330 $ 53,320 Finance
12 Full Time Salaries $ 245,700 $ 253,071 $ 260,663 $ 268,483 $ 276,538 $ 284,834 $ 293,379 $ 302,180 $ 311,245 $ 320,583 $ 330,200 13 Part-Time Salaries 11,600 11,948 12,306 12,676 13,056 13,448 13,851 14,267 14,695 15,135 15,589 14 Overtime 3,000 3,090 3,183 3,278 3,377 3,478 3,582 3,690 3,800 3,914 4,032 15 Administrative Leave Cash Out 2,000 2,060 2,122 2,185 2,251 2,319 2,388 2,460 2,534 2,610 2,688 16 Sick Leave Buy Back 1,400 1,442 1,485 1,530 1,576 1,623 1,672 1,722 1,773 1,827 1,881 17 Annual Vacation Cash Out 1,800 1,854 1,910 1,967 2,026 2,087 2,149 2,214 2,280 2,349 2,419 18 PERS Retirement 21,400 22,470 23,594 24,773 26,012 27,312 28,678 30,112 31,618 33,198 34,858 19 PERS Monthly Employer UAL Payment 13,500 14,175 14,884 15,628 16,409 17,230 18,091 18,996 19,946 20,943 21,990 20 Employee Group Insurance 50,800 53,340 56,007 58,807 61,748 64,835 68,077 71,481 75,055 78,807 82,748 21 Vehicle Allowance 800 824 849 874 900 927 955 984 1,013 1,044 1,075 22 Cell Phone Stipend 200 206 212 219 225 232 239 246 253 261 269 23 Medical Savings Account 400 420 441 463 486 511 536 563 591 621 652 24 Medicare Insurance 3,800 3,990 4,190 4,399 4,619 4,850 5,092 5,347 5,614 5,895 6,190 25 Deferred Compensation 500 515 530 546 563 580 597 615 633 652 672 26 Tuition Reimbursement 800 824 849 874 900 927 955 984 1,013 1,044 1,075 27 Conferences & Meetings 6,000 6,180 6,365 6,556 6,753 6,956 7,164 7,379 7,601 7,829 8,063 28 Office Supplies 3,000 3,090 3,183 3,278 3,377 3,478 3,582 3,690 3,800 3,914 4,032 29 Printing & Copies 10,000 10,300 10,609 10,927 11,255 11,593 11,941 12,299 12,668 13,048 13,439 30 Postage 35,500 36,565 37,662 38,792 39,956 41,154 42,389 43,661 44,970 46,319 47,709 31 Special Departmental 700 721 743 765 788 811 836 861 887 913 941 32 Equipment Rental 2,000 2,060 2,122 2,185 2,251 2,319 2,388 2,460 2,534 2,610 2,688 33 Contractual Services 64,000 65,920 67,898 69,935 72,033 74,194 76,419 78,712 81,073 83,505 86,011 34 Accounting & Auditing Svc 11,700 12,051 12,413 12,785 13,168 13,564 13,970 14,390 14,821 15,266 15,724 35 Financial Services 22,000 22,660 23,340 24,040 24,761 25,504 26,269 27,057 27,869 28,705 29,566 36 Computer Replacement Chrg 3,200 3,296 3,395 3,497 3,602 3,710 3,821 3,936 4,054 4,175 4,301 37 Computing Operations 61,100 62,933 64,821 66,766 68,769 70,832 72,957 75,145 77,400 79,722 82,113 38 Total Finance $ 576,900 $ 596,005 $ 615,773 $ 636,229 $ 657,397 $ 679,304 $ 701,978 $ 725,447 $ 749,740 $ 774,889 $ 800,925 Engineering
39 Full Time Salaries $ 193,900 $ 199,717 $ 205,709 $ 211,880 $ 218,236 $ 224,783 $ 231,527 $ 238,473 $ 245,627 $ 252,996 $ 260,585 40 Overtime 400 412 424 437 450 464 478 492 507 522 538 41 Administrative Leave Cash Out 3,100 3,193 3,289 3,387 3,489 3,594 3,702 3,813 3,927 4,045 4,166 42 Sick Leave Buy Back 4,200 4,326 4,456 4,589 4,727 4,869 5,015 5,165 5,320 5,480 5,644 43 Annual Vacation Cash Out 2,700 2,781 2,864 2,950 3,039 3,130 3,224 3,321 3,420 3,523 3,629 44 PERS Retirement 19,800 20,790 21,830 22,921 24,067 25,270 26,534 27,861 29,254 30,716 32,252 45 PERS Monthly Employer UAL Payment 29,000 30,450 31,973 33,571 35,250 37,012 38,863 40,806 42,846 44,989 47,238 46 Employee Group Insurance 25,300 26,565 27,893 29,288 30,752 32,290 33,904 35,600 37,380 39,249 41,211 47 Vehicle Allowance 1,500 1,545 1,591 1,639 1,688 1,739 1,791 1,845 1,900 1,957 2,016 48 Cell Phone Stipend 200 206 212 219 225 232 239 246 253 261 269 49 Medical Savings Account 200 210 221 232 243 255 268 281 295 310 326 50 Medicare Insurance 2,900 3,045 3,197 3,357 3,525 3,701 3,886 4,081 4,285 4,499 4,724 51 Total Engineering $ 283,200 $ 293,240 $ 303,658 $ 314,470 $ 325,692 $ 337,339 $ 349,430 $ 361,982 $ 375,014 $ 388,546 $ 402,597

Appendix: Revenue Sufficiency Analysis Schedules
City of Norco | Water and Sewer Rate Study Final Report Stantec | 49 Projection of Cash Outflows Schedule 3-S 2 of 3
Sewer
52 Full Time Salaries $ 143,300 $ 147,599 $ 152,027 $ 156,588 $ 161,285 $ 166,124 $ 171,108 $ 176,241 $ 181,528 $ 186,974 $ 192,583 53 Overtime 5,900 6,077 6,259 6,447 6,641 6,840 7,045 7,256 7,474 7,698 7,929 54 Administrative Leave Cash Out 3,100 3,193 3,289 3,387 3,489 3,594 3,702 3,813 3,927 4,045 4,166 55 Sick Leave Buy Back 5,500 5,665 5,835 6,010 6,190 6,376 6,567 6,764 6,967 7,176 7,392 56 Annual Vacation Cash Out 2,900 2,987 3,077 3,169 3,264 3,362 3,463 3,567 3,674 3,784 3,897 57 PERS Retirement 16,600 17,430 18,302 19,217 20,177 21,186 22,246 23,358 24,526 25,752 27,040 58 PERS Monthly Employer UAL Payment 33,700 35,385 37,154 39,012 40,963 43,011 45,161 47,419 49,790 52,280 54,894 59 Employee Group Insurance 32,300 33,915 35,611 37,391 39,261 41,224 43,285 45,449 47,722 50,108 52,613 60 Cell Phone Stipend 500 515 530 546 563 580 597 615 633 652 672 61 Medical Savings Account 100 105 110 116 122 128 134 141 148 155 163 62 Medicare Insurance 2,200 2,310 2,426 2,547 2,674 2,808 2,948 3,096 3,250 3,413 3,584 63 Workers Compensation 1,000 1,050 1,103 1,158 1,216 1,276 1,340 1,407 1,477 1,551 1,629 64 Tuition Reimbursement 500 515 530 546 563 580 597 615 633 652 672 65 Conferences & Meetings 15,000 15,450 15,914 16,391 16,883 17,389 17,911 18,448 19,002 19,572 20,159 66 Auto Mileage 100 103 106 109 113 116 119 123 127 130 134 67 Uniforms & Safety Gear 10,500 10,815 11,139 11,474 11,818 12,172 12,538 12,914 13,301 13,700 14,111 68 Dues,Membrshps & Subscrpt 3,000 3,090 3,183 3,278 3,377 3,478 3,582 3,690 3,800 3,914 4,032 69 Office Supplies 1,000 1,030 1,061 1,093 1,126 1,159 1,194 1,230 1,267 1,305 1,344 70 Special Departmental 15,000 15,450 15,914 16,391 16,883 17,389 17,911 18,448 19,002 19,572 20,159 71 Small Tools 5,000 5,150 5,305 5,464 5,628 5,796 5,970 6,149 6,334 6,524 6,720 72 Pension Trust Contribution 50,000 52,500 55,125 57,881 60,775 63,814 67,005 70,355 73,873 77,566 81,445 73 Equipment Rental 2,000 2,060 2,122 2,185 2,251 2,319 2,388 2,460 2,534 2,610 2,688 74 Buildings & Grounds Mtce 8,000 8,240 8,487 8,742 9,004 9,274 9,552 9,839 10,134 10,438 10,751 75 Well & Pump Maintenance 30,000 30,900 31,827 32,782 33,765 34,778 35,822 36,896 38,003 39,143 40,317 76 Electricity Charges 100,000 105,000 110,250 115,763 121,551 127,628 134,010 140,710 147,746 155,133 162,889 77 Natural Gas 500 525 551 579 608 638 670 704 739 776 814 78 Telephone Charges 1,200 1,260 1,323 1,389 1,459 1,532 1,608 1,689 1,773 1,862 1,955 79 Wireless 11,500 12,075 12,679 13,313 13,978 14,677 15,411 16,182 16,991 17,840 18,732 80 Contractual Services 2,990,000 3,079,700 3,172,091 3,267,254 3,365,271 3,466,229 3,570,216 3,677,323 3,787,643 3,901,272 4,018,310 81 Financial Services 2,000 2,060 2,122 2,185 2,251 2,319 2,388 2,460 2,534 2,610 2,688 82 Administrative Overhead 350,200 360,706 371,527 382,673 394,153 405,978 418,157 430,702 443,623 456,932 470,640 83 Vehicle Operations & Mtce 48,700 50,161 51,666 53,216 54,812 56,457 58,150 59,895 61,692 63,542 65,449 84 Vehicle Replacement Chrgs 125,400 129,162 133,037 137,028 141,139 145,373 149,734 154,226 158,853 163,619 168,527 85 Computer Replacement Chrg 4,100 4,223 4,350 4,480 4,615 4,753 4,896 5,042 5,194 5,350 5,510 86 Computing Operations 61,100 62,933 64,821 66,766 68,769 70,832 72,957 75,145 77,400 79,722 82,113 87 Automotive Equipment 80,500 82,915 85,402 87,965 90,603 93,322 96,121 99,005 101,975 105,034 108,185 88 Building/Improvements-Construction 50,000 51,500 53,045 54,636 56,275 57,964 59,703 61,494 63,339 65,239 67,196 89 Total Sewer $ 4,212,400 $ 4,343,754 $ 4,479,298 $ 4,619,169 $ 4,763,512 $ 4,912,473 $ 5,066,205 $ 5,224,868 $ 5,388,624 $ 5,557,643 $ 5,732,101 90 Total Operating Expenses $ 5,109,100 $ 5,270,987 $ 5,438,161 $ 5,610,803 $ 5,789,099 $ 5,973,242 $ 6,163,433 $ 6,359,880 $ 6,562,797 $ 6,772,408 $ 6,988,943

Appendix: Revenue Sufficiency Analysis Schedules
City of Norco | Water and Sewer Rate Study Final Report Stantec | 50 Projection of Cash Outflows Schedule 3-S 3 of 3
Transfers Out
91 Transfer Out to Fund 121 $ 129,100 $ 129,100 $ 129,100 $ 129,100 $ 129,100 $ 129,100 $ 129,100 $ 129,100 $ 129,100 $ 129,100 $ 129,100 92 Total Transfers Out $ 129,100 $ 129,100 $ 129,100 $ 129,100 $ 129,100 $ 129,100 $ 129,100 $ 129,100 $ 129,100 $ 129,100 $ 129,100 Debt Service
93 2019 Loan $ 1,643,407 $ 1,638,480 $ 1,638,644 $ 1,636,659 $ 1,637,390 $ 1,689,813 $ 1,687,961 $ 1,685,586 $ 1,684,977 $ 1,685,852 $ 1,683,070 94 Total Debt Service $ 1,643,407 $ 1,638,480 $ 1,638,644 $ 1,636,659 $ 1,637,390 $ 1,689,813 $ 1,687,961 $ 1,685,586 $ 1,684,977 $ 1,685,852 $ 1,683,070 Total Personal Services
95 Total Personal Services All Departments $ 971,900 $ 1,007,407 $ 1,044,297 $ 1,082,626 $ 1,122,456 $ 1,163,848 $ 1,206,868 $ 1,251,584 $ 1,298,066 $ 1,346,390 $ 1,396,633 96 Personal Services Execution Percentage 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 97 Total: Personal Servies Funding Level $ 923,305 $ 957,037 $ 992,082 $ 1,028,495 $ 1,066,333 $ 1,105,656 $ 1,146,525 $ 1,189,005 $ 1,233,163 $ 1,279,071 $ 1,326,801 Total: Fixed Operating Expenses
98 Total Fixed Operating All Departments $ 4,024,000 $ 4,144,720 $ 4,269,062 $ 4,397,133 $ 4,529,047 $ 4,664,919 $ 4,804,866 $ 4,949,012 $ 5,097,483 $ 5,250,407 $ 5,407,920 99 Fixed Operating Expenses Execution Percentage 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 100 Total: Fixed Operating Expenses Funding Level $ 3,822,800 $ 3,937,484 $ 4,055,609 $ 4,177,277 $ 4,302,595 $ 4,431,673 $ 4,564,623 $ 4,701,562 $ 4,842,609 $ 4,987,887 $ 5,137,524 Total: Variable Operating Expenses - All Depts
101 Total Variable Operating All Departments $ 113,200 $ 118,860 $ 124,803 $ 131,043 $ 137,595 $ 144,475 $ 151,699 $ 159,284 $ 167,248 $ 175,610 $ 184,391 102 Variable Operating Expenses Execution Percentage 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 103 Total: Variable Operating Expenses Funding Level $ 107,540 $ 112,917 $ 118,563 $ 124,491 $ 130,716 $ 137,251 $ 144,114 $ 151,320 $ 158,886 $ 166,830 $ 175,171 104 Total O&M Cash Outflow $ 6,626,152 $ 6,775,018 $ 6,933,997 $ 7,096,022 $ 7,266,134 $ 7,493,493 $ 7,672,323 $ 7,856,572 $ 8,048,734 $ 8,248,739 $ 8,451,666

Appendix: Revenue Sufficiency Analysis Schedules
City of Norco | Water and Sewer Rate Study Final Report Stantec | 51 Cost Escalation Factors Schedule 4-W
Operating Expense Category Code Inflation Factor FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 Full Time Salaries 30100 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Part-Time Salaries 30105 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Part Time Salaries - 32 Hour 30106 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Part Time Salaries - 20 Hour 30107 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Covid-19 Related Salaries 30108 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Overtime 30110 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% PERS Retirement 30200 Retirement 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% PERS Monthly Employer UAL Payment 30201 Retirement 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% PERS Retirement & Contra Account 30203 Retirement 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% Employee Group Insurance 30205 Health Insurance 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% Vehicle Allowance 30210 Admin Services 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Cell Phone Stipend 30212 Admin Services 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Medical Savings Account 30215 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Medicare Insurance 30220 Health Insurance 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% Administrative Leave Cash Out 30221 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Sick Leave Taken - Part-Time 30224 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Sick Leave Buy Back 30225 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Sick Leave Taken 30226 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Sick Leave Payoff 30227 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Comp Taken 30228 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Comp Payoff 30229 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Annual Vacation Cash Out 30230 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Vacation Taken 30231 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Vacation Payoff 30232 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Other Personnel Services 30234 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Deferred Compensation 30235 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Workers Compensation 30245 Health Insurance 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% Tuition Reimbursement 30255 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Conferences & Meetings 30300 Admin Services 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Auto Mileage 30305 Admin Services 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Uniforms & Safety Gear 30310 Admin Services 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Dues,Membrshps & Subscrpt 30320 Admin Services 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Office Supplies 30400 Admin Services 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Printing & Copies 30405 Admin Services 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Postage 30410 Admin Services 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Special Departmental 30415 Admin Services 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Small Tools 30425 Repair & Maintenance 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Small Office Equipment 30430 Admin Services 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Retiree Medical Insurance Contribution 30470 Retirement 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% Pension Trust Contribution 30471 Retirement 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% Office Equipment Maintnce 32100 Admin Services 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Equipment Rental 32105 Admin Services 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Buildings & Grounds Mtce 32200 Repair & Maintenance 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Well & Pump Maintenance 32450 Repair & Maintenance 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Utilities 33100 Fuel, Utilities, Chemicals 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% Chino Pump Tax 33115 Fuel, Utilities, Chemicals 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% Contractual Services 34100 Contract Services 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Accounting & Auditing Svc 34125 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Financial Services 34130 Contract Services 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Administrative Overhead 35150 Admin Services 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Property Taxes 35205 Admin Services 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Water Purchase 33105 Water Purchase 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% Vehicle Operations & Mtce 42100 Repair & Maintenance 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Vehicle Replacement Chrgs 42105 Repair & Maintenance 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Computer Replacement Chrg 42110 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Computing Operations 42115 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Self-Ins Expenses 42220 Repair & Maintenance 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Self-Ins Settlements 42225 Repair & Maintenance 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Equipment 43100 Repair & Maintenance 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Automotive Equipment 43110 Repair & Maintenance 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Building/Improvements-Construction 43115 Repair & Maintenance 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Weighted Average Increase in O&M Expenses ¹ 3.17% 3.17% 3.17% 3.18% 3.18% 3.18% 3.19% 3.19% 3.19% 3.20% ¹ The Weighted Average Increase in O&M Expenses is reflective of the cost escalation factors presented on this schedule and the cost execution factors on Schedule 1.

Appendix: Revenue Sufficiency Analysis Schedules
City of Norco | Water and Sewer Rate Study Final Report Stantec | 52 Cost Escalation Factors Schedule 4-S
Operating Expense Category Code Inflation Factor FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 Full Time Salaries 30100 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Overtime 30200 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Administrative Leave Cash Out 30201 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Sick Leave Buy Back 30203 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Sick Leave Taken 30205 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Annual Vacation Cash Out 30212 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Vacation Taken 30215 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% PERS Retirement 30220 Retirement 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% PERS Monthly Employer UAL Payment 30255 Retirement 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% Employee Group Insurance 30105 Health Insurance 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% Cell Phone Stipend 30107 Admin Services 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Medical Savings Account 30106 Health Insurance 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% Medicare Insurance 30108 Health Insurance 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% Tuition Reimbursement 30110 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Full Time Salaries 30221 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Part-Time Salaries 30224 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Part Time Salaries - 20 Hour 30225 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Part Time Salaries - 32 Hour 30226 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Covid-19 Related Salaries 30227 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Overtime 30228 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Administrative Leave Cash Out 30229 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Sick Leave Taken - Part-Time 30230 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Sick Leave Buy Back 30231 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Sick Leave Taken 30232 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Sick Leave Payoff 30234 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Vacation Payoff 30210 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% PERS Retirement & Contra Account 30235 Retirement 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% Vehicle Allowance 30300 Admin Services 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Cell Phone Stipend 30400 Admin Services 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Medical Savings Account 30405 Health Insurance 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% Medicare Insurance 30410 Health Insurance 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% Deferred Compensation 30415 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Tuition Reimbursement 30430 Salaries & Wages 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Conferences & Meetings 32100 Admin Services 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Office Supplies 32105 Admin Services 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Printing & Copies 34100 Admin Services 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Postage 34125 Admin Services 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Special Departmental 34130 Admin Services 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Small Office Equipment 35100 Admin Services 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Office Equipment Maintnce 35515 Admin Services 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Contractual Services 42110 Contract Services 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Accounting & Auditing Svc 42115 Contract Services 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% PERS Monthly Employer UAL Payment 30245 Retirement 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% Cell Phone Stipend 30305 Admin Services 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Medical Savings Account 30310 Health Insurance 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% Telephone Charges 35110 Fuel, Utilities, Chemicals 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% Vehicle Replacement Chrgs 43110 Repair & Maintenance 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Computer Replacement Chrg 43115 Repair & Maintenance 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Weighted Average Increase in O&M Expenses ¹ 4.16% 4.17% 4.18% 4.19% 4.20% 4.21% 4.22% 4.23% 4.24% 4.25% ¹ The Weighted Average Increase in O&M Expenses is reflective of the cost escalation factors presented on this schedule and the cost execution factors on Schedule 1.

Appendix: Revenue Sufficiency Analysis Schedules
City of Norco | Water and Sewer Rate Study Final Report Stantec | 53 Capital Improvement Program (CIP) Schedule 5-W
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 Total Cost 1 Bluff 8" Water Mainline Replacement $ 125,000 $ - $ - $ - $ 1,600,000 $ - $ - $ - $ - $ - $ - $ 1,725,000 2 Caballeros & Indian Horse Mainline - - - 1,000,000 - - - - - - - $ 1,000,000 3 Corona Ave Watermain Replacement - - 75,000 875,000 - - - - - - - $ 950,000 4 Corydon 12" Water Mainline Replacement 100,000 1,125,000 - - 1,125,000 - - - - - - $ 2,350,000 5 Crestview Drive Mainline Replacement - - - - 100,000 750,000 - - - - - $ 850,000 6 East Street Mainline Replacement - - - 50,000 400,000 - - - - - - $ 450,000 7 Fifth Street Transmission Mainline - 1,350,000 - - - - - - - - - $ 1,350,000 8 Hamner Ave Mainline Replacement - - - - 150,000 1,750,000 - - - - - $ 1,900,000 9 Hydrant & Valve Installation & Replacement 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 $ 1,100,000 10 Meter Replacement Program Project - 1,600,000 1,600,000 1,600,000 - - - - - - - $ 4,800,000 11 North Dr Transmission Mainline Project - - 100,000 750,000 - - - - - - - $ 850,000 12 North Norco Channel Water Relocations 300,000 - - - - - - - - - - $ 300,000 13 PFAS Treatment System 900,000 2,000,000 1,500,000 - - - - - - - - $ 4,400,000 14 Reservoir No. 2 Replacement Project - - - - - - - 400,000 4,600,000 - - $ 5,000,000 15 Riding Ring Rd Mainline Replacement - - - - - 1,000,000 - - - - - $ 1,000,000 16 Roundup Rd & Corral St Mainline - 200,000 1,800,000 - - - - - - - - $ 2,000,000 17 Sixth St 12" Water Mainline Replacement 100,000 - - 1,475,000 1,475,000 - - - - - - $ 3,050,000 18 Temescal Ave Mainline Replacement 1,800,000 - - - - - - - - - - $ 1,800,000 19 Trail Street Watermain Replacement - - - - - - 150,000 1,450,000 - - - $ 1,600,000 20 Unspecified Future Capital - - - - - 2,000,000 4,000,000 2,000,000 - 4,000,000 4,000,000 $ 16,000,000 21 Total CIP Budget (in current dollars) $ 3,425,000 $ 6,375,000 $ 5,175,000 $ 5,850,000 $ 4,950,000 $ 5,600,000 $ 4,250,000 $ 3,950,000 $ 4,700,000 $ 4,100,000 $ 4,100,000 $ 52,475,000 22 Annual CIP Execution Percentage 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 23 Final CIP Funding Level $ 3,425,000 $ 6,375,000 $ 5,175,000 $ 5,850,000 $ 4,950,000 $ 5,600,000 $ 4,250,000 $ 3,950,000 $ 4,700,000 $ 4,100,000 $ 4,100,000 $ 52,475,000

Appendix: Revenue Sufficiency Analysis Schedules
City of Norco | Water and Sewer Rate Study Final Report Stantec | 54 Capital Improvement Program (CIP) Schedule 5-S
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 Total Cost 1 Corral Sewer Lift Station Replacement $ - $ - $ - $ - $ 200,000 $ 1,700,000 $ - $ - $ - $ - $ - $ 1,900,000 2 Grulla Sewer Lift Station Replacement 1,900,000 - - - - - - - - - - $ 1,900,000 3 Old Hamner Road Sewer Lift Station Replacem 150,000 - 1,850,000 - - - - - - - - $ 2,000,000 4 Oldenburg Sewer Lift Station Replacement 825,000 - - - - - - - - - - $ 825,000 5 Pacific Sewer Lift Station Replacement - - - 200,000 1,700,000 - - - - - - $ 1,900,000 6 Parkridge-Mountain Mainline Replacement - 1,500,000 - - - - - - - - - $ 1,500,000 7 Sewer Lift Station No. 10 Replacement 825,000 - - - - - - - - - - $ 825,000 8 Sewer Lift Station No. 9 Replacement 150,000 - - 1,850,000 - - - - - - - $ 2,000,000 9 Shawnee Sewer Lift Station Replacement 950,000 - - - - - - - - - - $ 950,000 10 Unspecified Manhole Rehabilitation 50,000 - - - - - - - - - - $ 50,000 11 WRCRWA Capital Improvements 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 $ 16,500,000 12 Unspecified Capital - - - - - - 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 $ 5,000,000 13 Total CIP Budget (in current dollars) $ 6,350,000 $ 3,000,000 $ 3,350,000 $ 3,550,000 $ 3,400,000 $ 3,200,000 $ 2,500,000 $ 2,500,000 $ 2,500,000 $ 2,500,000 $ 2,500,000 $ 35,350,000 14 Annual CIP Execution Percentage 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 15 Final CIP Funding Level $ 6,350,000 $ 3,000,000 $ 3,350,000 $ 3,550,000 $ 3,400,000 $ 3,200,000 $ 2,500,000 $ 2,500,000 $ 2,500,000 $ 2,500,000 $ 2,500,000 $ 35,350,000

Appendix: Revenue Sufficiency Analysis Schedules
City of Norco | Water and Sewer Rate Study Final Report Stantec | 55 Water Fund - Assumptions Schedule 6-W
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 Rate Increase Adoption Date 7/1/2024 7/1/2025 7/1/2026 7/1/2027 7/1/2028 7/1/2029 7/1/2030 7/1/2031 7/1/2032 7/1/2033 7/1/2034 Annual Growth
Water
Ending # of ERCs 10,356 10,382 10,408 10,434 10,460 10,486 10,513 10,539 10,565 10,592 10,618 ERC Growth N/A 26 26 26 26 26 26 26 26 26 26
% Change in ERCs N/A 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% % Change in Usage N/A -0.25% -0.25% -0.25% -0.25% -0.25% -0.25% -0.25% -0.25% -0.25% -0.25% Capital Fees
Water Capital Fees $4,662.00 $4,662.00 $4,662.00 $4,662.00 $4,662.00 $4,662.00 $4,662.00 $4,662.00 $4,662.00 $4,662.00 $4,662.00 Average Annual Interest Earnings Rate
On Fund Balances 4.50% 4.00% 3.50% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Operating Budget Reserve
Target (Number of Months of Reserve) 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 Operating Budget Execution Percentage
Personal Services 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% Variable Operations and Maintenance 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% Fixed Operations and Maintenance 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% Capital Outlay 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Rate Stabilization Reserve Amount $ 1,777,776 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998

Appendix: Revenue Sufficiency Analysis Schedules
City of Norco | Water and Sewer Rate Study Final Report Stantec | 56 Sewer Fund - Assumptions Schedule 6-S
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 Rate Increase Adoption Date 7/1/2024 7/1/2025 7/1/2026 7/1/2027 7/1/2028 7/1/2029 7/1/2030 7/1/2031 7/1/2032 7/1/2033 7/1/2034 Annual Growth
Sewer
Ending # of ERCs 7,094 7,112 7,129 7,147 7,165 7,183 7,201 7,219 7,237 7,255 7,273 % Change in ERCs N/A 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% % Change in Usage N/A -0.25% -0.25% -0.25% -0.25% -0.25% -0.25% -0.25% -0.25% -0.25% -0.25% Connection Fees
Sewer Connection Fees $6,134.00 $6,134.00 $6,134.00 $6,134.00 $6,134.00 $6,134.00 $6,134.00 $6,134.00 $6,134.00 $6,134.00 $6,134.00 Average Annual Interest Earnings Rate
On Fund Balances 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Operating Budget Reserve
Target (Number of Months of Reserve) 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 Operating Budget Execution Percentage
Personal Services 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% Variable Operations and Maintenance 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% Fixed Operations and Maintenance 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% Capital Outlay 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

Appendix: Revenue Sufficiency Analysis Schedules
City of Norco | Water and Sewer Rate Study Final Report Stantec | 57 Pro Forma Schedule 7-W
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 1 Operating Revenue
2 Water, Rate Revenue $ 12,016,700 $ 12,016,700 $ 13,098,167 $ 14,277,052 $ 15,419,368 $ 16,344,792 $ 17,325,867 $ 18,019,418 $ 18,740,849 $ 19,491,286 $ 20,271,900 3 Change in Revenue From Growth - (33) 46 140 248 365 496 629 772 925 1,090 4 Subtotal $ 12,016,700 $ 12,016,667 $ 13,098,213 $ 14,277,192 $ 15,419,616 $ 16,345,158 $ 17,326,364 $ 18,020,047 $ 18,741,621 $ 19,492,211 $ 20,272,990 5 Weighted Average Rate Increase 0.00% 9.00% 9.00% 8.00% 6.00% 6.00% 4.00% 4.00% 4.00% 4.00% 4.00% 6 Additional Rate Revenue From Rate Increase - 1,081,500 1,178,839 1,142,175 925,177 980,709 693,055 720,802 749,665 779,688 810,920 7 Total Rate Revenue $ 12,016,700 $ 13,098,167 $ 14,277,052 $ 15,419,368 $ 16,344,792 $ 17,325,867 $ 18,019,418 $ 18,740,849 $ 19,491,286 $ 20,271,900 $ 21,083,909 8 Plus: Other Operating Revenue 277,800 277,800 277,800 277,800 277,800 277,800 277,800 277,800 277,800 277,800 277,800 9 Equals: Total Operating Revenue $ 277,800 $ 277,800 $ 277,800 $ 277,800 $ 277,800 $ 277,800 $ 277,800 $ 277,800 $ 277,800 $ 277,800 $ 277,800 10 Less: Operating Expenses
11 Personal Services $ (1,916,910) $ (1,982,677) $ (2,050,829) $ (2,121,460) $ (2,194,665) $ (2,270,544) $ (2,349,202) $ (2,430,746) $ (2,515,290) $ (2,602,951) $ (2,693,853) 12 Variable Operations & Maintenance Costs (5,721,280) (6,007,344) (6,307,711) (6,623,097) (6,954,252) (7,301,964) (7,667,062) (8,050,416) (8,452,936) (8,875,583) (9,319,362) 13 Operations & Maintenance Costs (2,915,744) (3,003,216) (3,093,313) (3,186,112) (3,281,695) (3,380,146) (3,481,551) (3,585,997) (3,693,577) (3,804,384) (3,918,516) 14 Equals: Net Operating Income $ 1,740,567 $ 2,382,730 $ 3,102,999 $ 3,766,499 $ 4,191,981 $ 4,651,013 $ 4,799,404 $ 4,951,491 $ 5,107,283 $ 5,266,781 $ 5,429,978 15 Plus: Non-Operating Income/(Expense)
16 Interest Income $ 283,316 $ 280,495 $ 241,580 $ 183,685 $ 197,093 $ 203,450 $ 175,597 $ 177,373 $ 238,563 $ 275,423 $ 258,922 17 Capital Fees 120,403 120,704 121,005 121,308 121,611 121,915 122,220 122,525 122,832 123,139 123,447 18 Equals: Net Income $ 2,144,286 $ 2,783,929 $ 3,465,585 $ 4,071,492 $ 4,510,685 $ 4,976,378 $ 5,097,220 $ 5,251,389 $ 5,468,678 $ 5,665,343 $ 5,812,347 19 Less: Revenues Excluded From Coverage Test
20 Capital Fees $ (120,403) $ (120,704) $ (121,005) $ (121,308) $ (121,611) $ (121,915) $ (122,220) $ (122,525) $ (122,832) $ (123,139) $ (123,447) 21 Equals: Net Income Available For Cash Flow Test $ 2,023,883 $ 2,663,225 $ 3,344,580 $ 3,950,184 $ 4,389,073 $ 4,854,463 $ 4,975,000 $ 5,128,863 $ 5,345,846 $ 5,542,205 $ 5,688,901 22 Cash Flow Test
23 Net Income Available For Debt Service $ 2,023,883 $ 2,663,225 $ 3,344,580 $ 3,950,184 $ 4,389,073 $ 4,854,463 $ 4,975,000 $ 5,128,863 $ 5,345,846 $ 5,542,205 $ 5,688,901 24 Less: Non-Operating Expenditures
25 Net Interfund Transfers (In - Out) (351,322) (351,322) (129,100) (129,100) (129,100) (129,100) (129,100) (129,100) (129,100) (129,100) (129,100) 26 Net Debt Service Payment (1,402,244) (1,532,870) (1,691,813) (1,837,734) (2,012,576) (2,052,872) (2,102,636) (2,100,487) (2,236,186) (2,413,081) (2,413,890) 27 Capital Outlay (30,000) (30,900) (31,827) (32,782) (33,765) (34,778) (35,822) (36,896) (38,003) (39,143) (40,317) 28 Net Cash Flow $ 240,317 $ 748,133 $ 1,491,840 $ 1,950,568 $ 2,213,632 $ 2,637,713 $ 2,707,442 $ 2,862,380 $ 2,942,557 $ 2,960,881 $ 3,105,593 29 Unrestricted Reserve Fund Test
30 Balance At Beginning Of Fiscal Year $ 4,509,096 $ 4,749,413 $ 5,497,546 $ 4,307,056 $ 3,938,626 $ 5,200,897 $ 4,362,438 $ 3,344,011 $ 4,480,828 $ 7,423,385 $ 6,938,180 31 Cash Flow Surplus/(Deficit) 240,317 748,133 1,491,840 1,950,568 2,213,632 2,637,713 2,707,442 2,862,380 2,942,557 2,960,881 3,105,593 32 Projects Designated To Be Paid With Cash - - - - - - (3,725,869) - - - - 33 Projects Paid With Non Specified Funds - - (2,682,330) (2,318,998) (951,361) (3,476,172) - (1,725,563) - (3,446,086) (3,720,459) 34 Balance At End Of Fiscal Year $ 4,749,413 $ 5,497,546 $ 4,307,056 $ 3,938,626 $ 5,200,897 $ 4,362,438 $ 3,344,011 $ 4,480,828 $ 7,423,385 $ 6,938,180 $ 6,323,313 35 Minimum Working Capital Reserve Target 2,638,483 2,748,309 2,862,963 2,982,667 3,107,653 3,238,164 3,374,454 3,516,790 3,665,451 3,820,730 3,982,933 36 Excess/(Deficiency) Of Working Capital To Target $ 2,110,930 $ 2,749,237 $ 1,444,093 $ 955,959 $ 2,093,244 $ 1,124,275 $ (30,442) $ 964,039 $ 3,757,934 $ 3,117,450 $ 2,340,381

Appendix: Revenue Sufficiency Analysis Schedules
City of Norco | Water and Sewer Rate Study Final Report Stantec | 58 Pro Forma Schedule 7-S
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 1 Operating Revenue
2 Sewer, Rate Revenue $ 7,134,015 $ 7,134,015 $ 7,492,992 $ 7,870,081 $ 8,187,472 $ 8,517,717 $ 8,861,336 $ 9,041,588 $ 9,225,564 $ 9,413,341 $ 9,605,000 3 Change in Revenue From Growth - 2,168 2,323 2,489 2,640 2,799 2,966 3,082 3,202 3,325 3,452 4 Subtotal $ 7,134,015 $ 7,136,183 $ 7,495,315 $ 7,872,570 $ 8,190,112 $ 8,520,515 $ 8,864,302 $ 9,044,671 $ 9,228,766 $ 9,416,666 $ 9,608,451 5 Weighted Average Rate Increase 0.00% 5.00% 5.00% 4.00% 4.00% 4.00% 2.00% 2.00% 2.00% 2.00% 2.00% 6 Additional Rate Revenue From Rate Increase - 356,809 374,766 314,903 327,604 340,821 177,286 180,893 184,575 188,333 192,169 7 Total Rate Revenue $ 7,134,015 $ 7,492,992 $ 7,870,081 $ 8,187,472 $ 8,517,717 $ 8,861,336 $ 9,041,588 $ 9,225,564 $ 9,413,341 $ 9,605,000 $ 9,800,621 8 Plus: Other Operating Revenue 361,200 365,607 365,607 365,607 365,607 365,607 365,607 365,607 365,607 365,607 365,607 9 Equals: Total Operating Revenue $ 7,495,215 $ 7,858,599 $ 8,235,688 $ 8,553,079 $ 8,883,324 $ 9,226,943 $ 9,407,195 $ 9,591,171 $ 9,778,948 $ 9,970,607 $ 10,166,228 10 Less: Operating Expenses
11 Personal Services $ (923,305) $ (957,037) $ (992,082) $ (1,028,495) $ (1,066,333) $ (1,105,656) $ (1,146,525) $ (1,189,005) $ (1,233,163) $ (1,279,071) $ (1,326,801) 12 Variable Operations & Maintenance Costs (107,540) (112,917) (118,563) (124,491) (130,716) (137,251) (144,114) (151,320) (158,886) (166,830) (175,171) 13 Operations & Maintenance Costs (3,822,800) (3,937,484) (4,055,609) (4,177,277) (4,302,595) (4,431,673) (4,564,623) (4,701,562) (4,842,609) (4,987,887) (5,137,524) 14 Equals: Net Operating Income $ 2,641,570 $ 2,851,161 $ 3,069,435 $ 3,222,817 $ 3,383,680 $ 3,552,363 $ 3,551,934 $ 3,549,285 $ 3,544,291 $ 3,536,819 $ 3,526,731 15 Plus: Non-Operating Income/(Expense)
16 Interest Income 327,107 236,223 194,850 152,031 114,451 85,272 70,707 66,381 61,857 57,007 51,703 17 Connection Fees 108,515 108,786 109,058 109,331 109,604 109,878 110,153 110,428 110,704 110,981 111,259 18 Transfers In - - - 163,905 163,905 163,905 163,905 163,905 163,905 163,905 163,905 19 Equals: Net Income $ 3,077,192 $ 3,196,170 $ 3,373,343 $ 3,648,083 $ 3,771,641 $ 3,911,419 $ 3,896,699 $ 3,890,000 $ 3,880,758 $ 3,868,712 $ 3,853,599 20 Less: Revenues Excluded From Coverage Test
21 Connection Fees $ (108,515) $ (108,786) $ (109,058) $ (109,331) $ (109,604) $ (109,878) $ (110,153) $ (110,428) $ (110,704) $ (110,981) $ (111,259) 22 Transfers In - - - (163,905) (163,905) (163,905) (163,905) (163,905) (163,905) (163,905) (163,905) 23 Equals: Net Income Available For Debt Service $ 2,968,677 $ 3,087,384 $ 3,264,285 $ 3,374,847 $ 3,498,131 $ 3,637,635 $ 3,622,641 $ 3,615,666 $ 3,606,148 $ 3,593,826 $ 3,578,435 24 Cash Flow Test
25 Net Income Available For Debt Service $ 2,968,677 $ 3,087,384 $ 3,264,285 $ 3,374,847 $ 3,498,131 $ 3,637,635 $ 3,622,641 $ 3,615,666 $ 3,606,148 $ 3,593,826 $ 3,578,435 26 Less: Non-Operating Expenditures
27 Net Interfund Transfers (In - Out) (129,100) (129,100) (129,100) 34,805 34,805 34,805 34,805 34,805 34,805 34,805 34,805 28 Net Debt Service Payment (1,643,407) (1,638,480) (1,638,644) (1,636,659) (1,637,390) (1,689,813) (1,687,961) (1,685,586) (1,684,977) (1,685,852) (1,683,070) 29 Net Cash Flow $ 1,196,169 $ 1,319,804 $ 1,496,541 $ 1,772,994 $ 1,895,547 $ 1,982,628 $ 1,969,485 $ 1,964,885 $ 1,955,977 $ 1,942,780 $ 1,930,170 30 Unrestricted Reserve Fund Test
31 Balance At Beginning Of Fiscal Year $ 1,073,522 $ 2,269,691 $ 3,589,495 $ 5,086,036 $ 4,373,184 $ 3,256,910 $ 2,427,892 $ 2,285,902 $ 2,139,482 $ 1,984,322 $ 1,816,130 32 Cash Flow Surplus/(Deficit) 1,196,169 1,319,804 1,496,541 1,772,994 1,895,547 1,982,628 1,969,485 1,964,885 1,955,977 1,942,780 1,930,170 33 Projects Designated To Be Paid With Cash - - - - - - - - - - (2,115,542) 34 Projects Paid With Non Specified Funds - - - (2,485,845) (3,011,821) (2,811,647) (2,111,475) (2,111,305) (2,111,137) (2,110,971) - 35 Balance At End Of Fiscal Year $ 2,269,691 $ 3,589,495 $ 5,086,036 $ 4,373,184 $ 3,256,910 $ 2,427,892 $ 2,285,902 $ 2,139,482 $ 1,984,322 $ 1,816,130 $ 1,630,758 36 Minimum Working Capital Reserve Target 1,213,411 1,251,859 1,291,563 1,332,566 1,374,911 1,418,645 1,463,815 1,510,472 1,558,664 1,608,447 1,659,874 37 Excess/(Deficiency) Of Working Capital To Target $ 1,056,280 $ 2,337,636 $ 3,794,472 $ 3,040,618 $ 1,881,999 $ 1,009,246 $ 822,086 $ 629,011 $ 425,658 $ 207,684 $ (29,116)

Appendix: Revenue Sufficiency Analysis Schedules
City of Norco | Water and Sewer Rate Study Final Report Stantec | 59 Water Fund - Debt Service Coverage
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 Revenues
Water Rate Revenue $ 12,016,700 $ 13,098,167 $ 14,277,052 $ 15,419,368 $ 16,344,792 $ 17,325,867 $ 18,019,418 $ 18,740,849 $ 19,491,286 $ 20,271,900 $ 21,083,909 Other Operating Revenue 277,800 277,800 277,800 277,800 277,800 277,800 277,800 277,800 277,800 277,800 277,800 Interest Income 283,316 280,495 241,580 183,685 197,093 203,450 175,597 177,373 238,563 275,423 258,922 Total Operating Revenues $ 12,577,817 $ 13,656,462 $ 14,796,433 $ 15,880,853 $ 16,819,685 $ 17,807,117 $ 18,472,815 $ 19,196,022 $ 20,007,649 $ 20,825,123 $ 21,620,631 Operating Expenses
Personal Services $ (1,916,910) $ (1,982,677) $ (2,050,829) $ (2,121,460) $ (2,194,665) $ (2,270,544) $ (2,349,202) $ (2,430,746) $ (2,515,290) $ (2,602,951) $ (2,693,853) Variable O&M $ (5,721,280) $ (6,007,344) $ (6,307,711) $ (6,623,097) $ (6,954,252) $ (7,301,964) $ (7,667,062) $ (8,050,416) $ (8,452,936) $ (8,875,583) $ (9,319,362) Fixed O&M $ (2,915,744) $ (3,003,216) $ (3,093,313) $ (3,186,112) $ (3,281,695) $ (3,380,146) $ (3,481,551) $ (3,585,997) $ (3,693,577) $ (3,804,384) $ (3,918,516) Operating Expenses $ (10,553,934) (10,993,237) (11,451,853) (11,930,669) (12,430,612) $ (12,952,654) $ (13,497,815) $ (14,067,158) $ (14,661,803) $ (15,282,919) $ (15,931,731) Net Revenues Available for Debt Service $ 2,023,883 2,663,225 3,344,580 3,950,184 $ 4,389,073 $ 4,854,463 $ 4,975,000 $ 5,128,863 $ 5,345,846 $ 5,542,205 $ 5,688,901 Senior Lien Debt Service $ 1,402,244 $ 1,532,870 $ 1,691,813 $ 1,837,734 $ 2,012,576 $ 2,052,872 $ 2,102,636 $ 2,100,487 $ 2,236,186 $ 2,413,081 $ 2,413,890 Senior Lien Debt Coverage 1.44 1.74 1.98 2.15 2.18 2.36 2.37 2.44 2.39 2.30 2.36 Minimum Debt Service Coverage 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 Net Revenues Available for Subordinate Debt Servic $ 621,639 1,130,355 1,652,767 2,112,450 2,376,497 2,801,591 2,872,364 3,028,376 3,109,660 3,129,124 3,275,010 Subordinate Debt Service $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Subordinate Debt Service Coverage - - - - - - - - - - - Minimum Debt Service Coverage 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 All In Debt Service Coverage 1.44 1.74 1.98 2.15 2.18 2.36 2.37 2.44 2.39 2.30 2.36 Schedule 8-W

Appendix: Revenue Sufficiency Analysis Schedules
City of Norco | Water and Sewer Rate Study Final Report Stantec | 60 Sewer Fund - Debt Service Coverage
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 Revenues
Sewer Rate Revenue $ 7,134,015 $ 7,492,992 $ 7,870,081 $ 8,187,472 $ 8,517,717 $ 8,861,336 $ 9,041,588 $ 9,225,564 $ 9,413,341 $ 9,605,000 $ 9,800,621 Other Operating Revenue 361,200 365,607 365,607 365,607 365,607 365,607 365,607 365,607 365,607 365,607 365,607 Interest Income 327,107 236,223 194,850 152,031 114,451 85,272 70,707 66,381 61,857 57,007 51,703 Total Operating Revenues $ 7,822,322 $ 8,094,822 $ 8,430,538 $ 8,705,110 $ 8,997,775 $ 9,312,215 $ 9,477,902 $ 9,657,552 $ 9,840,805 $ 10,027,614 $ 10,217,931 Operating Expenses
Personal Services $ (923,305) $ (957,037) $ (992,082) $ (1,028,495) $ (1,066,333) $ (1,105,656) $ (1,146,525) $ (1,189,005) $ (1,233,163) $ (1,279,071) $ (1,326,801) Variable O&M $ (107,540) $ (112,917) $ (118,563) $ (124,491) $ (130,716) $ (137,251) $ (144,114) $ (151,320) $ (158,886) $ (166,830) $ (175,171) Fixed O&M $ (3,822,800) $ (3,937,484) $ (4,055,609) $ (4,177,277) $ (4,302,595) $ (4,431,673) $ (4,564,623) $ (4,701,562) $ (4,842,609) $ (4,987,887) $ (5,137,524) Operating Expenses $ (4,853,645) (5,007,438) (5,166,253) (5,330,263) (5,499,644) $ (5,674,580) $ (5,855,262) $ (6,041,886) $ (6,234,657) $ (6,433,788) $ (6,639,496) Net Revenues Available for Debt Service $ 2,968,677 3,087,384 3,264,285 3,374,847 $ 3,498,131 $ 3,637,635 $ 3,622,641 $ 3,615,666 $ 3,606,148 $ 3,593,826 $ 3,578,435 Senior Lien Debt Service $ 1,643,407 $ 1,638,480 $ 1,638,644 $ 1,636,659 $ 1,637,390 $ 1,689,813 $ 1,687,961 $ 1,685,586 $ 1,684,977 $ 1,685,852 $ 1,683,070 Senior Lien Debt Coverage 1.81 1.88 1.99 2.06 2.14 2.15 2.15 2.15 2.14 2.13 2.13 Minimum Debt Service Coverage 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 Net Revenues Available for Subordinate Debt Servic $ 1,325,269 1,448,904 1,625,641 1,738,188 1,860,742 1,947,822 1,934,680 1,930,080 1,921,172 1,907,974 1,895,364 Subordinate Debt Service $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Subordinate Debt Service Coverage - - - - - - - - - - - Minimum Debt Service Coverage 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 All In Debt Service Coverage 1.81 1.88 1.99 2.06 2.14 2.15 2.15 2.15 2.14 2.13 2.13 Schedule 8-S

Appendix: Revenue Sufficiency Analysis Schedules
City of Norco | Water and Sewer Rate Study Final Report Stantec | 61 FAMS - Control Panel Schedule 9-W

NORCO, CA - WATER FUND
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 Water Fixed Charge 0.00% 9.00% 9.00% 8.00% 6.00% 6.00% 4.00% 3.00% 3.00% 3.00% 2.00% Water Usage Rate 0.00% 9.00% 9.00% 8.00% 6.00% 6.00% 4.00% 3.00% 3.00% 3.00% 2.00% All-In Debt Service Coverage 1.44 1.74 1.98 2.15 2.18 2.36 2.37 2.35 2.22 2.05 1.92 CIP Timing Extended Timing Fixed Charge (3/4" Meter) $47.85 $52.16 $56.85 $61.40 $65.08 $68.98 $71.74 $73.89 $76.11 $78.39 $79.96 Bond Funding Yes Usage Rate (per CCF) $2.70 $2.94 $3.20 $3.46 $3.67 $3.89 $4.05 $4.17 $4.30 $4.43 $4.52 Total Bonded $21.28M Single Family Bill (20 units) $101.85 $110.96 $120.85 $130.60 $138.48 $146.78 $152.74 $157.29 $162.11 $166.99 $170.36 $0.0M
$2.0M
$4.0M
$6.0M
$8.0M
25 26 27 28 29 30 31 32 33 34 35
Capital Fund Operating/Cash Debt
$0.0M
$1.0M
$2.0M
$3.0M
$4.0M
$5.0M
$6.0M
$7.0M
$8.0M
24 25 26 27 28 29 30 31 32 33 34 35
Cash Balance Minimum Balance
$0.0M
$1.0M
$2.0M
$3.0M
$4.0M
$5.0M
$6.0M
$7.0M
25 26 27 28 29 30 31 32 33 34 35
$0.0M
$5.0M
$10.0M
$15.0M
$20.0M
$25.0M
25 26 27 28 29 30 31 32 33 34 35
Revenues Total Expenditures
$0.0M
$1.0M
$2.0M
$3.0M
$4.0M
$5.0M
$6.0M
$7.0M
$8.0M
25 26 27 28 29 30 31 32 33 34 35
$0.0M
$5.0M
$10.0M
$15.0M
$20.0M
$25.0M
25 26 27 28 29 30 31 32 33 34 35

O&M CIP DEBT TO
Operating Fund
CIP Spending
Revenues vs. Expenses
CIP Funding Borrowing
Expenses by Type

CALC SAVE CTRL LAST OVR
$0.0M
$1.0M
$2.0M
$3.0M
$4.0M
25 26 27 28 29 30 31 32 33 34 35
Current Plan
Capital Fund
$0.0M
$1.0M
$2.0M
$3.0M
$4.0M
$5.0M
25 26 27 28 29 30 31 32 33 34 35
Current Plan
Rate Stabilization Fund

Appendix: Revenue Sufficiency Analysis Schedules
City of Norco | Water and Sewer Rate Study Final Report Stantec | 62 FAMS - Control Panel Schedule 9-S

NORCO, CA - SEWER FUND
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 Sewer Fixed Charge 0.00% 5.00% 5.00% 4.00% 4.00% 4.00% 2.00% 2.00% 2.00% 2.00% 2.00% Sewer Usage Rate 0.00% 5.00% 5.00% 4.00% 4.00% 4.00% 2.00% 2.00% 2.00% 2.00% 2.00% All-in Debt Service Coverage 1.81 1.88 1.99 2.06 2.14 2.15 2.15 2.15 2.14 2.13 2.13 CIP Timing Extended Timing Fixed Charge (3/4" Meter) $51.00 $53.55 $56.23 $58.48 $60.82 $63.25 $64.52 $65.81 $67.13 $68.47 $69.84 Commerical Usage Rate (per CCF) $8.00 $8.40 $8.82 $9.17 $9.54 $9.92 $10.12 $10.32 $10.53 $10.74 $10.95 Single Family Bill $51.00 $53.55 $56.23 $58.48 $60.82 $63.25 $64.52 $65.81 $67.13 $68.47 $69.84

$0.0M
$1.0M
$2.0M
$3.0M
$4.0M
$5.0M
$6.0M
$7.0M
25 26 27 28 29 30 31 32 33 34 35
Debt Operating/Cash Sewer Facilities Improvement
$0.0M
$1.0M
$2.0M
$3.0M
$4.0M
$5.0M
$6.0M
24 25 26 27 28 29 30 31 32 33 34 35
Cash Balance Minimum Balance
$0.0M
$1.0M
$2.0M
$3.0M
$4.0M
$5.0M
$6.0M
$7.0M
25 26 27 28 29 30 31 32 33 34 35
$0.0M
$2.0M
$4.0M
$6.0M
$8.0M
$10.0M
$12.0M
25 26 27 28 29 30 31 32 33 34 35
Revenues Total Expenditures
$0.0M
$0.0M
$0.0M
$0.0M
$0.0M
$0.0M
25 26 27 28 29 30 31 32 33 34 35
$0.0M
$5.0M
$10.0M
$15.0M
25 26 27 28 29 30 31 32 33 34 35

O&M CIP DEBT TO
Operating Fund
CIP Spending
Revenues vs. Expenses
CIP Funding Borrowing
Expenses by Type

CALC SAVE CTRL LAST OVR
$0.0M
$2.0M
$4.0M
$6.0M
$8.0M
$10.0M
$12.0M
$14.0M
24 25 26 27 28 29 30 31 32 33 34
Current Plan
Sewer Facilities Improvement Fund

Appendix: Revenue Sufficiency Analysis Schedules
City of Norco | Water and Sewer Rate Study Final Report Stantec | 63 Capital Project Funding Summary Schedule 10-W
Final Capital Projects Funding Sources FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 Capital Fund $ 2,300,000 $ 3,025,000 $ 817,670 $ 381,002 $ 373,639 $ 373,828 $ 374,131 $ 374,437 $ 100,000 $ 653,914 $ 379,541 Revenue Fund - - 2,682,330 2,318,998 951,361 3,476,172 - 1,725,563 - 3,446,086 3,720,459 Senior-Lien Debt Proceeds 1,125,000 3,350,000 1,675,000 3,150,000 3,625,000 1,750,000 150,000 1,850,000 4,600,000 - - Projects Designated To Be Paid With Cash - - - - - - 3,725,869 - - - - Total Projects Paid $ 3,425,000 $ 6,375,000 $ 5,175,000 $ 5,850,000 $ 4,950,000 $ 5,600,000 $ 4,250,000 $ 3,950,000 $ 4,700,000 $ 4,100,000 $ 4,100,000

Appendix: Revenue Sufficiency Analysis Schedules
City of Norco | Water and Sewer Rate Study Final Report Stantec | 64 Capital Project Funding Summary Schedule 10-S
Final Capital Projects Funding Sources FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 Sewer Facilities Improvement $ 6,350,000 $ 3,000,000 $ 3,350,000 $ 1,064,155 $ 388,179 $ 388,353 $ 388,525 $ 388,695 $ 388,863 $ 389,029 $ 384,458 Revenue Fund - - - 2,485,845 3,011,821 2,811,647 2,111,475 2,111,305 2,111,137 2,110,971 - Projects Designated To Be Paid With Cash - - - - - - - - - - 2,115,542 Total Projects Paid $ 6,350,000 $ 3,000,000 $ 3,350,000 $ 3,550,000 $ 3,400,000 $ 3,200,000 $ 2,500,000 $ 2,500,000 $ 2,500,000 $ 2,500,000 $ 2,500,000

Appendix: Revenue Sufficiency Analysis Schedules
City of Norco | Water and Sewer Rate Study Final Report Stantec | 65 Schedule 11-W
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 Term (Years) 30 30 30 30 30 30 30 30 30 30 30
Interest Rate 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% Sources of Funds
Par Amount $ - $ 6,575,078 $ - $ 7,243,277 $ - $ 2,031,325 $ - $ - $ 6,895,814 $ - $ - Uses of Funds
Proceeds $ - $ 6,150,000 $ - $ 6,775,000 $ - $ 1,900,000 $ - $ - $ 6,450,000 $ - $ - Cost of Issuance 2.00% of Par - 131,502 - 144,866 - 40,627 - - 137,916 - - Debt Service Reserve 1 Year(s) of Debt Service - 293,577 - 323,412 - 90,699 - - 307,898 - - Total Uses $ - $ 6,575,078 $ - $ 7,243,277 $ - $ 2,031,325 $ - $ - $ 6,895,814 $ - $ - 1 Year Interest - 131,502 - 144,866 - 40,627 - - 137,916 - - Annual Debt Service $ - $ 293,577 $ - $ 323,412 $ - $ 90,699 $ - $ - $ 307,898 $ - $ - Total Debt Service - 8,807,302 - 9,702,353 - 2,720,955 - - 9,236,927 - - Cumulative New Annual Senior Lien Debt Service1 $ - $ 131,502 $ 293,577 $ 438,442 $ 616,988 $ 657,615 $ 707,687 $ 707,687 $ 845,603 $ 1,015,585 $ 1,015,585 1 Reflects interest-only payment due in year of issuance.

Future Loan Projections

Appendix: Revenue Sufficiency Analysis Schedules
City of Norco | Water and Sewer Rate Study Final Report Stantec | 66 Schedule 11-S
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 Term (Years) 30 30 30 30 30 30 30 30 30 30 30
Interest Rate 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% Sources of Funds
Par Amount $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
Uses of Funds
Proceeds $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
Cost of Issuance 2.00% of Par - - - - - - - - - - -
Debt Service Reserve 1 Year(s) of Debt Service - - - - - - - - - - - Total Uses $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
1 Year Interest - - - - - - - - - - -
Annual Debt Service $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Total Debt Service - - - - - - - - - - -
Cumulative New Annual Senior Lien Debt Service1 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - 1 Reflects interest-only payment due in year of issuance.

Future Loan Projections

Appendix: Revenue Sufficiency Analysis Schedules
City of Norco | Water and Sewer Rate Study Final Report Stantec | 67 Funding Summary by Fund Schedule 12-W
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 Rate Stabilization
Balance At Beginning Of Fiscal Year $ 1,555,554 $ 1,777,776 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 Annual Revenues 222,222 222,222 - - - - - - - - -
Less: Annual Expenses - - - - - - - - - - -
Less: Payment Of Debt Service - - - - - - - - - - -
Subtotal $ 1,777,776 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 Less: Restricted Funds - - - - - - - - - - -
Total Amount Available For Projects $ 1,777,776 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 Amount Paid For Projects - - - - - - - - - - -
Subtotal $ 1,777,776 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 Add Back: Restricted Funds - - - - - - - - - - -
Plus: Interest Earnings 75,000 75,555 70,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 Less: Interest Allocated To Cash Flow (75,000) (75,555) (70,000) (60,000) (60,000) (60,000) (60,000) (60,000) (60,000) (60,000) (60,000) Balance At End Of Fiscal Year $ 1,777,776 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 $ 1,999,998 Capital Fund
Balance At Beginning Of Fiscal Year $ 4,784,770 $ 3,029,026 $ 444,754 $ 7,783 $ 117 $ 2 $ 0 $ 0 $ 0 $ 278,864 $ 4,183 Annual Revenues 372,314 372,615 372,916 373,219 373,522 373,826 374,131 374,437 374,743 375,050 375,358 Less: Annual Expenses - - - - - - - - - - -
Less: Payment Of Debt Service - - - - - - - - - - -
Subtotal $ 5,157,084 $ 3,401,640 $ 817,670 $ 381,002 $ 373,639 $ 373,828 $ 374,131 $ 374,437 $ 374,743 $ 653,914 $ 379,541 Less: Restricted Funds - - - - - - - - - - -
Total Amount Available For Projects $ 5,157,084 $ 3,401,640 $ 817,670 $ 381,002 $ 373,639 $ 373,828 $ 374,131 $ 374,437 $ 374,743 $ 653,914 $ 379,541 Amount Paid For Projects (2,300,000) (3,025,000) (817,670) (381,002) (373,639) (373,828) (374,131) (374,437) (100,000) (653,914) (379,541) Subtotal $ 2,857,084 $ 376,640 $ - $ - $ - $ - $ - $ - $ 274,743 $ - $ - Add Back: Restricted Funds - - - - - - - - - - -
Plus: Interest Earnings 171,942 68,113 7,783 117 2 0 0 0 4,121 4,183 63 Less: Interest Allocated To Cash Flow - - - - - - - - - - - Balance At End Of Fiscal Year $ 3,029,026 $ 444,754 $ 7,783 $ 117 $ 2 $ 0 $ 0 $ 0 $ 278,864 $ 4,183 $ 63 Revenue Fund
Balance At Beginning Of Fiscal Year $ 4,509,096 $ 4,749,413 $ 5,497,546 $ 4,307,056 $ 3,938,626 $ 5,200,897 $ 4,362,438 $ 3,344,011 $ 4,480,828 $ 7,423,385 $ 6,938,180 Net Cash Flow 240,317 748,133 1,491,840 1,950,568 2,213,632 2,637,713 2,707,442 2,862,380 2,942,557 2,960,881 3,105,593 Less: Cash-Funded Capital Projects - - - - - - (3,725,869) - - - - Less: Payment Of Debt Service - - - - - - - - - - -
Subtotal $ 4,749,413 $ 5,497,546 $ 6,989,386 $ 6,257,624 $ 6,152,258 $ 7,838,610 $ 3,344,011 $ 6,206,392 $ 7,423,385 $ 10,384,266 $ 10,043,772 Less: Restricted Funds (2,638,483) (2,748,309) (2,862,963) (2,982,667) (3,107,653) (3,238,164) (3,344,011) (3,516,790) (3,665,451) (3,820,730) (3,982,933) Total Amount Available For Projects $ 2,110,930 $ 2,749,237 $ 4,126,423 $ 3,274,957 $ 3,044,605 $ 4,600,447 $ - $ 2,689,602 $ 3,757,934 $ 6,563,536 $ 6,060,840 Amount Paid For Projects - - (2,682,330) (2,318,998) (951,361) (3,476,172) - (1,725,563) - (3,446,086) (3,720,459) Subtotal $ 2,110,930 $ 2,749,237 $ 1,444,093 $ 955,959 $ 2,093,244 $ 1,124,275 $ - $ 964,039 $ 3,757,934 $ 3,117,450 $ 2,340,381 Add Back: Restricted Funds 2,638,483 2,748,309 2,862,963 2,982,667 3,107,653 3,238,164 3,344,011 3,516,790 3,665,451 3,820,730 3,982,933 Plus: Interest Earnings 208,316 204,939 171,581 123,685 137,093 143,450 115,597 117,373 178,563 215,423 198,922 Less: Interest Allocated To Cash Flow (208,316) (204,939) (171,581) (123,685) (137,093) (143,450) (115,597) (117,373) (178,563) (215,423) (198,922) Balance At End Of Fiscal Year $ 4,749,413 $ 5,497,546 $ 4,307,056 $ 3,938,626 $ 5,200,897 $ 4,362,438 $ 3,344,011 $ 4,480,828 $ 7,423,385 $ 6,938,180 $ 6,323,313

Appendix: Revenue Sufficiency Analysis Schedules
City of Norco | Water and Sewer Rate Study Final Report Stantec | 68 Funding Summary by Fund Schedule 12-S
FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 Sewer Facilities Improvement
Balance At Beginning Of Fiscal Year $ 12,213,214 $ 6,250,679 $ 3,638,326 $ 676,151 $ - $ - $ - $ - $ - $ - $ - Annual Revenues 387,465 387,646 387,826 388,003 388,179 388,353 388,525 388,695 388,863 389,029 384,458 Less: Annual Expenses - - - - - - - - - - -
Less: Payment Of Debt Service - - - - - - - - - - -
Subtotal $ 12,600,679 $ 6,638,326 $ 4,026,151 $ 1,064,155 $ 388,179 $ 388,353 $ 388,525 $ 388,695 $ 388,863 $ 389,029 $ 384,458 Less: Restricted Funds - - - - - - - - - - -
Total Amount Available For Projects $ 12,600,679 $ 6,638,326 $ 4,026,151 $ 1,064,155 $ 388,179 $ 388,353 $ 388,525 $ 388,695 $ 388,863 $ 389,029 $ 384,458 Amount Paid For Projects (6,350,000) (3,000,000) (3,350,000) (1,064,155) (388,179) (388,353) (388,525) (388,695) (388,863) (389,029) (384,458) Subtotal $ 6,250,679 $ 3,638,326 $ 676,151 $ - $ - $ - $ - $ - $ - $ - $ - Add Back: Restricted Funds - - - - - - - - - - -
Plus: Interest Earnings 276,958 148,335 64,717 10,142 - - - - - - - Less: Interest Allocated To Cash Flow (276,958) (148,335) (64,717) (10,142) - - - - - - - Balance At End Of Fiscal Year $ 6,250,679 $ 3,638,326 $ 676,151 $ - $ - $ - $ - $ - $ - $ - $ - Revenue Fund
Balance At Beginning Of Fiscal Year $ 1,073,522 $ 2,269,691 $ 3,589,495 $ 5,086,036 $ 4,373,184 $ 3,256,910 $ 2,427,892 $ 2,285,902 $ 2,139,482 $ 1,984,322 $ 1,816,130 Net Cash Flow 1,196,169 1,319,804 1,496,541 1,772,994 1,895,547 1,982,628 1,969,485 1,964,885 1,955,977 1,942,780 1,930,170 Less: Cash-Funded Capital Projects - - - - - - - - - - (2,115,542) Less: Payment Of Debt Service - - - - - - - - - - -
Subtotal $ 2,269,691 $ 3,589,495 $ 5,086,036 $ 6,859,029 $ 6,268,731 $ 5,239,538 $ 4,397,376 $ 4,250,787 $ 4,095,459 $ 3,927,102 $ 1,630,758 Less: Restricted Funds (1,213,411) (1,251,859) (1,291,563) (1,332,566) (1,374,911) (1,418,645) (1,463,815) (1,510,472) (1,558,664) (1,608,447) (1,630,758) Total Amount Available For Projects $ 1,056,280 $ 2,337,636 $ 3,794,472 $ 5,526,464 $ 4,893,820 $ 3,820,893 $ 2,933,561 $ 2,740,316 $ 2,536,795 $ 2,318,655 $ - Amount Paid For Projects - - - (2,485,845) (3,011,821) (2,811,647) (2,111,475) (2,111,305) (2,111,137) (2,110,971) - Subtotal $ 1,056,280 $ 2,337,636 $ 3,794,472 $ 3,040,618 $ 1,881,999 $ 1,009,246 $ 822,086 $ 629,011 $ 425,658 $ 207,684 $ - Add Back: Restricted Funds 1,213,411 1,251,859 1,291,563 1,332,566 1,374,911 1,418,645 1,463,815 1,510,472 1,558,664 1,608,447 1,630,758 Plus: Interest Earnings 50,148 87,888 130,133 141,888 114,451 85,272 70,707 66,381 61,857 57,007 51,703 Less: Interest Allocated To Cash Flow (50,148) (87,888) (130,133) (141,888) (114,451) (85,272) (70,707) (66,381) (61,857) (57,007) (51,703) Balance At End Of Fiscal Year $ 2,269,691 $ 3,589,495 $ 5,086,036 $ 4,373,184 $ 3,256,910 $ 2,427,892 $ 2,285,902 $ 2,139,482 $ 1,984,322 $ 1,816,130 $ 1,630,758

Monthly Use
(HCF) Current Bill
Proposed FY 2026 Bill Change
Proposed FY
2027 Bill Change
Proposed FY 2028 Bill Change
5 $61.35 $67.20 $5.85 $73.24 $6.04 $79.08 $5.84
10 $74.85 $81.80 $6.95 $89.14 $7.34 $96.23 $7.0915 $88.35 $96.40 $8.05 $105.04 $8.64 $113.38 $8.3420 $101.85 $111.00 $9.15 $120.94 $9.94 $130.53 $9.5925 $115.35 $125.60 $10.25 $136.84 $11.24 $147.68 $10.8430 $128.85 $140.20 $11.35 $152.74 $12.54 $164.83 $12.0935 $142.35 $154.80 $12.45 $168.64 $13.84 $181.98 $13.3440 $155.85 $169.40 $13.55 $184.54 $15.14 $199.13 $14.59 Monthly Use (HCF) Current Bill
Proposed FY 2026 Bill Change
Proposed FY
2027 Bill Change
Proposed FY 2028 Bill Change
5 $84.51 $92.08 $7.57 $100.35 $8.27 $108.36 $8.01
10 $98.01 $106.68 $8.67 $116.25 $9.57 $125.51 $9.2615 $111.51 $121.28 $9.77 $132.15 $10.87 $142.66 $10.5120 $125.01 $135.88 $10.87 $148.05 $12.17 $159.81 $11.7625 $138.51 $150.48 $11.97 $163.95 $13.47 $176.96 $13.0130 $152.01 $165.08 $13.07 $179.85 $14.77 $194.11 $14.2635 $165.51 $179.68 $14.17 $195.75 $16.07 $211.26 $15.5140 $179.01 $194.28 $15.27 $211.65 $17.37 $228.41 $16.7645 $192.51 $208.88 $16.37 $227.55 $18.67 $245.56 $18.0150 $206.01 $223.48 $17.47 $243.45 $19.97 $262.71 $19.2655 $219.51 $238.08 $18.57 $259.35 $21.27 $279.86 $20.51 Water Bill Impact Analysis, Single Family Residential with 3/4” MeterWater Bill Impact Analysis, Commercial Customer with 1” Meter

Current Bill Change
Proposed FY
2028 Bill Change
$51.00 $2.68 $58.48 $2.25
Monthly Use (HCF) Current Bill
Proposed FY
2027 Bill Change
Proposed FY 2028 Bill Change
5 $51.00 $56.23 $2.68 $58.48 $2.25
10 $51.00 $56.23 $2.68 $58.48 $2.2515 $91.00 $100.33 $4.78 $104.33 $4.0020 $131.00 $144.43 $6.88 $150.18 $5.7525 $171.00 $188.53 $8.98 $196.03 $7.5030 $211.00 $232.63 $11.08 $241.88 $9.2535 $251.00 $276.73 $13.18 $287.73 $11.0040 $291.00 $320.83 $15.28 $333.58 $12.7545 $331.00 $364.93 $17.38 $379.43 $14.5050 $371.00 $409.03 $19.48 $425.28 $16.2555 $411.00 $453.13 $21.58 $471.13 $18.00 $431.55 $20.55 Sewer Bill Impact Analysis, Residential Customers
Sewer Bill Impact Analysis, Commercial Customer
$305.55 $14.55$347.55 $16.55$389.55 $18.55$179.55 $8.55$221.55 $10.55$263.55 $12.55 $53.55 $2.55$95.55 $4.55
$137.55 $6.55
Proposed FY 2026 Bill Change
$53.55 $2.55
Proposed FY
2026 Bill Change
Proposed FY
2027 Bill
$53.55 $2.55 $56.23

Year 1 Year 2 Year 3 Year 4 Year 5
Fixed Charge
3/4" $23.82 $49.40 $50.38 $51.34 $51.79
1" $37.79 $78.40 $79.96 $81.47 $82.18
1 1/2" $94.97 $197.03 $200.93 $204.73 $206.53
2" $123.59 $256.40 $261.47 $266.42 $268.76
3" $331.84 $688.39 $702.03 $715.32 $721.60
4" $595.38 $1,235.11 $1,259.57 $1,283.42 $1,294.69
6" $1,423.04 $2,952.09 $3,010.55 $3,067.56 $3,094.49
8” $2,286.25 $4,742.84 $4,836.76 $4,928.35 $4,971.62
10” $3,619.91 $7,509.51 $7,658.21 $7,803.23 $7,871.74
12” $5,953.76 $12,351.08 $12,595.66 $12,834.18 $12,946.87 Usage Rate (per HCF)
Operating Costs $1.28 $1.30 $1.33 $1.35 $1.37
Capital Costs $0.93 $1.92 $1.90 $1.88 $1.86
Total Unit Rate $2.21 $3.22 $3.23 $3.23 $3.23
Table 5-7: Recommended Recycled Water Rates - Baseline

RESOLUTION NO. 2025-34

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NORCO
ADOPTING 5-YEAR SCHEDULE OF POTABLE WATER, RECYCLED WATER

AND SEWER RATES
WHEREAS, on July 2006, the California Supreme Court ruled that metered rates for consumption of water services are “property-related fees” subject to Proposition 218 majority protest hearing; and
WHEREAS, in compliance with the State of California Constitution and the Proposition 218 Omnibus Implementation Act and AB 3030 Section 53756 of the Government Code, the City on April 9, 2025 mailed public hearing notices to property owners and ratepayers in the City as required by the Supreme Court Ruling; and
WHEREAS, staff presented to City Council and the public on April 2, 2025 to consider the establishment of a 5-Year schedule of Potable Water, Recycled Water and Sewer Rate Increases; and
WHEREAS, staff reported the Potable Water, Recycled Water and Sewer Fund must recover all costs from user charges as it is a business-type operation not supported by any taxes, and
WHERAS, the City is required to set rates that are sufficient to cover operating cost, capital improvements and debt service obligations; and
WHEREAS, all revenues derived from water, recycled water and sewer charges are required to be deposited into the Water, Recycled Water and Sewer Funds; and NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Norco hereby resolves a 5-Year Schedule of Potable Water, Recycled Water and Sewer Rate Increases as shown below are adopted, provided that a majority of property owners in the City do not protest against these rates.

Resolution No. 2025-34
Adopting 5-Year Potable Water, Recycled Water and Sewer Rate Increase

June 4, 2025
Adopted Potable Water Rates
(Single Family, Multi-Family, Commercial, Industrial, Irrigation, and Municipal Customers) Current FY2026 FY2027 FY2028 FY2029 FY2030
Fixed Charge
3/4" $47.85 $52.60 $57.34 $61.93 $65.65 $69.59
1" $71.01 $77.48 $84.45 $91.21 $96.68 $102.48
1 1/2" $165.95 $179.25 $195.38 $211.01 $223.67 $237.09
2" $213.47 $230.18 $250.90 $270.97 $287.23 $304.46
3" $559.23 $600.79 $654.86 $707.25 $749.69 $794.67
4" $996.81 $1,069.82 $1,166.10 $1,259.39 $1,334.95 $1,415.05 6" $2,371.04 $2,542.82 $2,771.67 $2,993.40 $3,173.00 $3,363.38 8” $3,804.31 $4,079.10 $4,446.22 $4,801.92 $5,090.04 $5,395.44 10” $6,018.68 $6,452.62 $7,033.36 $7,596.03 $8,051.79 $8,534.90 12” $9,893.75 $10,606.21 $11,560.77 $12,485.63 $13,234.77 $14,028.86 Usage Charge
Rate (per HCF) $2.70 $2.92 $3.18 $3.43 $3.64 $3.86
Adopted Fireline Water Rates
(Single Family, Multi-Family, Commercial, Industrial, Irrigation, and Municipal Customers) Current FY2026 FY2027 FY2028 FY2029 FY2030
Fixed Charge
2" $50.88 $53.80 $58.65 $63.34 $67.14 $71.17
3" $52.83 $56.10 $61.14 $66.04 $70.00 $74.20
4" $56.20 $60.05 $65.45 $70.69 $74.93 $79.43
6" $68.30 $74.23 $80.91 $87.39 $92.63 $98.19
8” $89.16 $98.70 $107.58 $116.19 $123.16 $130.55
10” $120.54 $135.50 $147.70 $159.51 $169.08 $179.23
12” $164.03 $186.51 $203.29 $219.55 $232.73 $246.69
Usage Charge
Rate (per HCF) $5.40 $5.71 $6.23 $6.72 $7.13 $7.55
Adopted Sewer Rates
(Single Family, Multi-Family, Commercial, Industrial, Irrigation, and Municipal Customers) Current FY2026 FY2027 FY2028 FY2029 FY2030
Monthly Fixed Charge $51.00 $53.55 $56.23 $58.48 $60.82 $63.25 Sewer Usage Charge
Rate (per HCF) $8.00 $8.40 $8.82 $9.17 $9.54 $9.92
Monthly Non-Connect Fee(1) $19.00 $19.00 $19.00 $19.00 $19.00 $19.00 (1) The monthly non-connect fee is not being adjusted at this time.

Resolution No. 2025-34
Adopting 5-Year Potable Water, Recycled Water and Sewer Rate Increase

June 4, 2025
Adopted Recycled Water Rates
Year 1 Year 2 Year 3 Year 4 Year 5
Fixed Charge
3/4" $23.82 $49.40 $50.38 $51.34 $51.79
1" $37.79 $78.40 $79.96 $81.47 $82.18
1 1/2" $94.97 $197.03 $200.93 $204.73 $206.53
2" $123.59 $256.40 $261.47 $266.42 $268.76
3" $331.84 $688.39 $702.03 $715.32 $721.60
4" $595.38 $1,235.11 $1,259.57 $1,283.42 $1,294.69
6" $1,423.04 $2,952.09 $3,010.55 $3,067.56 $3,094.49
8” $2,286.25 $4,742.84 $4,836.76 $4,928.35 $4,971.62
10” $3,619.91 $7,509.51 $7,658.21 $7,803.23 $7,871.74
12” $5,953.76 $12,351.08 $12,595.66 $12,834.18 $12,946.87 Recycled Water Usage Charge
Total Rate (per HCF) $2.21 $3.22 $3.22 $3.23 $3.23
PASSED AND ADOPTED by the City Council of the City of Norco at a regular meeting held on June 4, 2025.
_____________________________
Greg Newton, Mayor
City of Norco, California
ATTEST:
_______________________________________
Dana Roa, CMC, City Clerk
City of Norco, California
I, Dana Roa, CMC, City Clerk of the City of Norco, California, do hereby certify that the foregoing Resolution was adopted by the City Council of the City of Norco, California at a regular meeting thereof held on June 4, 2025, by the following vote of the City Council.

AYES:

NOES:

ABSENT:

ABSTAIN:

Resolution No. 2025-34
Adopting 5-Year Potable Water, Recycled Water and Sewer Rate Increase

June 4, 2025
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of Norco, California, on June 4, 2025.
______________________________
Dana Roa, CMC, City Clerk
City of Norco, California

City Council

STAFF REPORT
Date: June 4, 2025 Agenda Item:

5.C.

To: Honorable Mayor and City Council Members
From: Amanda Hamilton, Facilities and Maintenance
Director
Prepared By: Amanda Hamilton, Facilities and Maintenance Director
Department: Facilities and Maintenance
SUBJECT:

Ordering the Continuation of Landscape Maintenance Districts, Confirming a Diagram, Assessment, and Annual Assessment Levy for Districts No. 1 – Beazer, Tract 28765; No. 2 – Western Pacific, Tract 25779; No. 3 – Centex, Tract 28626; No. 4 – Norco Ridge Ranch, Tracts 29588 and 29589; and No. 5 – Hawk’s Crest, Tract 30230 RECOMMENDATION:

Open the Public Hearing, hear public testimony, and adopt Resolution No. 2025-29, LMD No.1 (Beazer); Resolution No. 2025-30, LMD No. 2 (Western Pacific); Resolution No. 2025-31, LMD No. 3 (Centex); Resolution 2025-32, LMD No. 4 (Norco Ridge Ranch); Resolution No. 2025-33, LMD No. 5 (Hawks Crest), providing for an Annual Assessment Levy necessary to maintain the Landscape Maintenance Districts.

SUMMARY:

The “Landscaping and Lighting Act" of 1972 requires that an Engineer’s Report for existing Landscape Maintenance Districts (LMDs) must be reviewed and approved annually to continue assessments for the Districts. The Engineer’s Report includes the estimated fund balance for the fiscal year ending June 30, 2025, and the cash flow funding needs. At no time, will any district be assessed an amount greater than the Maximum Assessment Rate.

BACKGROUND:

The "Landscaping and Lighting Act" of 1972 mandates that an Engineer’s Report for existing landscape maintenance districts (LMDs) must be reviewed and approved annually to continue assessments for the districts. The formation of LMD No. 1 allows the Maximum Assessment Rate to increase by 5% annually. For the remaining four districts, the maximum annual maintenance assessment rates may be increased each year by the annual change in the Consumer Price Index (CPI), during the preceding

year ending in March, for the Riverside, San Bernardino, and Ontario areas. The annual CPI ending March 31, 2025, was 2.53%.

Each district will only assess the amount necessary to cover the costs in that district, so levying at the Maximum Assessment Rate may or may not be required during any fiscal year. The tables below show both the current year and the prior year Maximum Assessment Rate, as well as the rate that will be applied for the current fiscal year. At no time, will any district be assessed an amount greater than the Maximum Assessment Rate.

The following information applies to each Landscape Maintenance District as designated:

LMD No. 1 - On February 3, 1999, City Council adopted Landscape Maintenance District No. 1 for Tract 28765 (Beazer Homes) comprised of 67 lots. The District was formed to maintain landscaping along the River Road frontage of the tract. The maximum assessment rate will be applied to this district due to the lack of reserves, Capital Improvement Projects (CIP) will not be scheduled for this district at this time.

LMD No. 2 - On January 27, 2000, the City Council established Landscape Maintenance District No. 2 for Tract No. 25799 (Western Pacific), which includes 219 assessable lots. This district is responsible for maintaining the landscaping along Norco Hills Road and Hidden Valley Parkway, as well as selected interior slopes, wetlands, equestrian trails, and Norco Hills Park. In 2023, the Proposition 218 Ballot Measure to increase funding for this district did not pass. As a result, the City had to remove the old playground equipment at Norco Hills Park, as it had exceeded its useful life.

Additionally, the temporary restroom at Norco Hills Park was removed to help manage the district's cash flow and incidental costs. The maximum assessment rate will be applied to this district due to the lack of sufficient Operating and Capital reserves, Capital Improvement Projects (CIP) will not be scheduled for this district at this time.

LMD No. 3 - On June 6, 2001, the City Council adopted Landscape Maintenance District No. 3 for Tract 28626 (Centex), which comprises 82 lots. This district was established to maintain landscaping along Norco Hills Road, certain designated slopes within the district, and all equestrian trails in the development. In 2023, the Proposition 218 Ballot Measure to increase funding for this district did not pass. Consequently,

proposed cuts to the non-functional turf are being considered as a cost-saving measure and to comply with water conservation efforts. The maximum assessment rate will be applied to this district due to the lack of sufficient Operating and Capital reserves, Capital Improvement Projects (CIP) will not be scheduled for this district at this time.

LMD No. 4 - On October 2, 2002, the City Council adopted Landscape Maintenance District No. 4 for Tracts 29588 and 29589 (Norco Ridge Ranch), comprising 557 singlefamily developed lots, of which 25 lots receive only trail maintenance benefits, and five other undeveloped lots, totaling 562 assessable lots. This District was established to maintain landscaping within designated slopes, both irrigated and non-irrigated, fuel modification areas, parkway landscaping, equestrian trails, natural open spaces, wetlands areas, and Ridge Ranch Park. The Operating and Capital Improvement Funds for this District are fully funded; therefore, there is no need to assess the maximum assessment rates for this District.

LMD No. 5 – On January 7, 2004 City Council adopted Landscape District No. 5 for Tract 30230 (Hawks Crest) comprised of 50 lots. The District was formed to maintain certain exterior slopes, parkway landscaping, equestrian trails, two park lots, and Hawks Crest Park. The Operating and Capital Improvement Funds for this District are fully funded; therefore, there is no need to assess the maximum assessment rate for this District.

Below is a summary of the Operating and CIP Reserve fund information for all five Districts:

The Engineer’s Report includes the estimated fund balance for Fiscal Year ending June 30, 2025, and the cash flow funding needs. Each district requires a six-month cash flow reserve to sustain the District from the beginning of the fiscal year (July 1) until the City receives from the County of Riverside, its first assessment payment, six months later. If the City does not have this reserve, the general fund reserves must “carry” the District.

The “estimated unfunded needs” is the difference between the “fund balance” and the “needs.”
Below is a summary of the services provided in each maintenance district:

The observation line item for each District funds the salary of the LMD Inspector. The observation line item is broken into percentages based on the size and demand of the District. The breakdown is as follows:

Staff recommends that the members of the City Council approve the Engineer’s Report for the continuation of the Landscape Maintenance Districts to guarantee that landscaping within each district will be maintained to the best level permitted by the revenues received by each district.

FISCAL IMPACT:

Not applicable for this item.

RELATIONSHIP TO STRATEGIC PLAN:

This item is consistent with Strategic Plan No. 5 - Infrastructure and Asset Management:

Ensure timely preservation, replacement, improvement and acquisition of infrastructure and capital assets.

REVIEWED AND APPROVED BY:

Certified as to Availability of Funds: Joshua Calhoun, Finance Director Approved by: Lisette Free, City Manager
Approved as to Form: Harper and Burns, LLP, City Attorney ATTACHMENT(S):

FY 25-26 Norco LMD No. 1_Engineer Report - Final
FY 25-26 Norco LMD No. 2_Engineer Report - Final
FY 25-26 Norco LMD No. 3_Engineer Report - Final
FY 25-26 Norco LMD No. 4_Engineer Report - Final
FY 25-26 Norco LMD No. 5_Engineer Report - Final
1_Resolution 2025-29_Ordering Continuation of LMD 1
2_Resolution 2025-30_Ordering Continuation of LMD 2
3_Resolution 2025-31_Ordering Continuation of LMD 3
4_Resolution 2025-32_Ordering Continuation of LMD 4
5_Resolution 2025-33_Ordering Continuation of LMD 5

Engineer’s Report
Fiscal Year 2025-2026
City of Norco
Landscape Maintenance District No. 1 (Beazer)
Prepared For
June 2025

Table of Contents
Sections
Section i. Engineer’s Statement _______________________________________________________i Section 1. Plans and Specifications ____________________________________________________ 1 Section 2. Cost Estimate ____________________________________________________________ 2 Section 3. Method of Apportionment__________________________________________________ 4 Section 4. Assessment______________________________________________________________ 7 Section 5. Assessment Diagram ______________________________________________________ 8 Tables
Table 2-1. Budget Details____________________________________________________________ 3 Appendices
Appendix A. Assessment Roll ________________________________________________________ A-1 Appendix B. Assessment Diagram ____________________________________________________ B-1

i. Engineer’s Statement
City of Norco Landscape Maintenance District No. 1
Engineer’s Report for Fiscal Year 2025-2026 i
AGENCY: CITY OF NORCO
PROJECT: LANDSCAPE MAINTENANCE DISTRICT NO. 1
TO: CITY COUNCIL

CITY OF NORCO

STATE OF CALIFORNIA
Report Pursuant to "Landscaping and Lighting Act of 1972" Pursuant to direction from the City Council (the “City Council”) of the City of Norco (the “City”), State of California, submitted herewith is the Engineer’s Report for Landscape Maintenance District No. 1 (the "Report"), consisting of the following parts, pursuant to the provisions of Division 15, Part 2 of the Streets and Highways Code of the State of California, being the "Landscaping and Lighting Act of 1972" (the “1972 Act”), as amended, commencing with Section 22500, and which is in accordance with Resolution No. 2025-07 adopted by the City Council, Riverside County, California ordering the preparation of the Report for Landscape Maintenance District No. 1 (the “District” or “LMD No. 1”). This Report is applicable for the ensuing 12-month period, being the Fiscal Year commencing July 1, 2025, to June 30, 2026.

SECTION 1 PLANS AND SPECIFICATIONS of the improvements to be maintained and/or improved for Fiscal Year 2025-2026. The plans and specifications show and describe the existing improvements and are sufficient in showing and describing the general nature, location, and extent of the improvements.

SECTION 2 A COST ESTIMATE of the improvements to be maintained and-or improved for the mentioned Fiscal Year.

SECTION 3 The METHOD OF APPORTIONMENT showing the proportionate amount of the assessment to be charged in proportion to the benefits to be received by each lot or parcel within the exterior boundaries as shown in Appendix B.

SECTION 4 An ASSESSMENT showing the proportionate amount of the assessment to be charged in proportion to the benefits to be received by each lot or parcel within the boundaries of the District, as shown in Appendix B.

SECTION 5 An ASSESSMENT DIAGRAM of the District. Said Diagrams shall show the boundaries of the District.

Reference is made to the Riverside County (the “County”) Assessor's Maps for a detailed description of the lines and dimensions of any lots or parcels. The lines and dimensions of each lot shall conform to those shown on the County Assessor's Maps for the Fiscal Year to which the Report applies.

i. Engineer’s Statement
City of Norco Landscape Maintenance District No. 1
Engineer’s Report for Fiscal Year 2025-2026 ii
I, Matthew E. Webb, a Professional Civil Engineer (employed at Albert A. Webb Associates and retained through an agreement between Webb Municipal Finance, LLC and my employer), acting on behalf of the City of Norco, pursuant to the Act do hereby assess and apportion the total amount of the costs and expenses upon the parcels of land within Landscape Maintenance District No. 1 liable therefore and benefited thereby, in proportion to the estimated benefits that each parcel receives, respectively, from said maintenance, works of improvement, and appurtenances.

Executed this day of 2025.

ALBERT A. WEBB ASSOCIATES
MATTHEW E. WEBB
PROFESSIONAL CIVIL ENGINEER NO. 37385

ENGINEER OF WORK

ON BEHALF OF THE CITY OF NORCO

STATE OF CALIFORNIA
Final approval, confirmation and levy of the annual assessment and all matters in the Engineer's Report were made on the day of 2025, by adoption of Resolution No. by City Council.

CITY CLERK

CITY OF NORCO

STATE OF CALIFORNIA
A copy of the Assessment Roll and Engineer's Report were filed in the City Clerk’s Office on the day of 2025.

CITY CLERK

CITY OF NORCO

STATE OF CALIFORNIA

i. Engineer’s Statement
City of Norco Landscape Maintenance District No. 1
Engineer’s Report for Fiscal Year 2025-2026 iii
WHEREAS, on March 19, 2025, the City Council, under the Act, adopted its Resolution Initiating Proceedings for the Levy and Collection of Assessments and the Preparation of an Engineer’s Report for LMD No. 1; Whereas, the Resolution of Intention directed Webb Municipal Finance, LLC, to prepare and file a report presenting plans and specifications describing the general nature, location and extent of the improvements to be maintained, an estimate of the costs of the maintenance, operation and servicing of the improvements for LMD No. 1 for the referenced Fiscal Year, a diagram for LMD No. 1 showing the area and properties to be assessed, and an assessment of the estimated costs of the maintenance, operation and servicing of the improvements, assessing the net amount upon all assessable lots and/or parcels within LMD No. 1 in proportion to the special benefit received;

1. Plans and Specifications
City of Norco Landscape Maintenance District No. 1
Engineer’s Report for Fiscal Year 2025-2026 1
Overview
On February 3, 1999, the City Council of the City of Norco, California, pursuant to the provisions of the Landscaping and Lighting Act of 1972, Part 2 (commencing with Section 22500) of Division 15 of the California Streets and Highways Code (the “Act”) adopted its Resolution of the City Council of the City of Norco Initiating Proceedings for the Formation for a Maintenance Assessment District and thereafter formed Landscape Maintenance District No. 1 (Beazer).

This Report describes the District, the improvements, and the proposed assessments to be levied against properties in connection with the benefits the properties will receive from the maintenance and servicing of the District improvements for Fiscal Year 2025-2026. The annual assessments to be levied on properties within the District provide a funding source for the continued operation and maintenance of local landscaping improvements installed in connection with the development of properties within the District. Each fiscal year, the City establishes the District’s assessments based on an estimate of the costs to maintain, operate and service the landscaping improvements and based upon available revenues including fund balances and assessment limits. The costs of the improvements and the proposed annual assessments budgeted and assessed against properties within the District may include: the estimated expenditures for regular annual maintenance and repairs; incidental expenditures related to the operation and administration of the District and the collection of adequate funds for operational reserves or periodic expenditures including installments collected for long-term improvement projects. Each parcel is assessed proportionately for only those improvements, services, and expenses for which the parcel will receive special benefit.

The word “parcel,” for the purposes of this Report, refers to an individual property assigned its own Assessor’s Parcel Number (“APN”) by the Riverside County Assessor’s Office. The County Auditor/Controller uses Assessor’s Parcel Numbers and specific Fund Numbers to identify properties to be assessed on the tax roll for the special benefit assessments.

Description of Improvements and Services
The improvements are the operation, maintenance, and servicing of landscaping, wetlands, horse trails, hardscape masonry, and appurtenant facilities including but not limited to personnel, electrical energy, utilities such as water, materials, contracting services, and other items necessary for the satisfactory operation of these services, described as follows:

Landscaping, planting, shrubbery, trees, irrigation, hardscapes, masonry wall surfaces, fixtures, and appurtenant facilities in the River Road public right-of-way (parkway area), along the frontage and adjacent to the boundary of the Landscape Maintenance District. A reduced scale plan depicting the improvements is attached hereto. • Landscape maintenance includes all pruning, weed and pest control, fertilization, turf care, trash and debris cleanup, irrigation to include maintenance and repair, water cost, electrical cost for controllers, tree trimming up to 15 feet, tree staking, backflow testing, rodent control and plant replacements. • Hardscape Masonry includes graffiti removal, repair cracks, heaving and breakage.

2. Cost Estimate
City of Norco Landscape Maintenance District No. 1
Engineer’s Report for Fiscal Year 2025-2026 2
The estimated costsfor the operation, maintenance and servicing of the facilities,shown below, are the estimated costs of maintenance if the facilities were fully maintained for Fiscal Year 2025‐2026. The 1972 Act provides that the total cost of the maintenance and services, together with incidental expenses, may be financed from the assessment proceeds. The incidental expenses may include engineering fees, legal fees, printing, mailing, postage, publishing, and all other related costs identified with district proceedings.

The 1972 Act requires that a special fund be set up for the revenues and expenditures of the District.  Funds raised by assessments shall be used only for the purposes as stated herein.  A contribution to the District by the City may be made to reduce assessments, as the City Council deems appropriate.  Any balance remaining on July 1 must be carried over to the next fiscal year.  The estimated fund deficit for Fiscal Year ending June 30, 2026, is $6,320.66.

The cost of servicing, maintaining, repairing, and replacing the actual improvements as described in the Plans and Specifications are summarized below.

2. Cost Estimate
City of Norco Landscape Maintenance District No. 1
Engineer’s Report for Fiscal Year 2025-2026 3
Table 2‐1
Budget Details
Direct Costs FY 2024‐25 FY 2025‐26
Landscape Maintenance $2,700   $2,850
Hardscape Masonry $0   $0
Tree and Plant Replacement $0   $0
Utility ‐ Water $3,000   $3,500
Utility ‐ Electrical $50   $220
Utility ‐ Phone $300   $500
Capital Replacement Reserve Collection $0   $0
Total Direct Costs $6,050   $7,070
Indirect Costs
City Staff to Manage District $4,554   $4,122
Professional Services $2,000   $1,560
City Overhead/Administration $540   $540
County Administration Fees $111   $111
Fuel $30   $30
Incidentals $400   $300
Operating Reserve Collection $0   $0
Total Indirect Costs   $7,635   $6,663
Total Direct & Indirect Costs $13,685   $13,733
Adjustments
Operating Reserve Contribution ($872) ($278)
Capital Replacement Contribution $0   $0
Total Adjustments ($872) ($278)
Total Assessment (1) $12,814   $13,455
Individual Assessment
Total Parcel 67   67
Maximum Allowable Levy per Parcel $191.25   $200.82
Proposed Levy per Parcel $191.24   $200.82
Reserve Fund Balances
Beginning Operating Reserve ($4,752) ($6,042)
Operating Reserve Collection/Contribution ($872) ($278) Est. Ending Operating Reserve (2) ($5,624) ($6,321)
Beginning Capital Replacement Reserve $0.00   $0
Capital Reserve Collection/Contribution $0.00   $0
Est. Ending Capital Replacement Reserve (3) $0.00   $0
(1) Slight variance due to rounding. (2) The Operating Reserve Fund may equal up to 50% of the estimated annual cost of providing services funded by the District and shall be used to pay the cost of services until the District receives funds from the assessment levy. (3) The Capital Replacement Reserve fund will be used for capital improvement projects including the cost to replace and/or renovate larger, more expensive improvements within the benefit zone. These improvements have finite life expectancies and will need to be replaced at some point in the future. On an annual basis, any non‐expended assessment monies, in excess of the Operating Reserve Contribution, will be transferred to the Capital Replacement Reserve fund until such time as there are sufficient monies to pay for these and/or other unforeseen improvement costs.

3. Method of Apportionment
City of Norco Landscape Maintenance District No. 1
Engineer’s Report for Fiscal Year 2025-2026 4
Proposition 218 Compliance
On November 5, 1996, California voters approved Proposition 218, entitled “Right to Vote on Taxes Act,” which added Article XIII D to the California Constitution. While its title refers only to taxes, Proposition 218 establishes new procedural requirements for the formation and administration of assessment districts. Proposition 218 also requires that with certain specified exceptions, which are described below, all existing assessment districts must be ratified by the property owners within the District using the new procedures.

Some of these exceptions include:

1. Any assessments imposed exclusively to finance the capital cost or maintenance and operation expenses for streets.

2. Any assessments levied pursuant to a petition signed by the persons owning all of the parcels subject to the assessment at the time the assessment was initially imposed.

However, even if assessments are initially exempt from Proposition 218, if the assessments are increased in the future, the City will need to comply with the provisions of Proposition 218 for that portion of the increased assessment formula (e.g., CPI increase).

Proposition 218 does not define the term “streets,” however, based on the opinions of the public agency officials, attorneys, assessment engineers and Senate Bill 919, it has been determined that streets include all public improvements located within the street rights-of-way. This would include median and parkway landscaping, traffic signals, safety lighting, and street lighting.

Proposition 218 defines “assessment” as “any levy or charge upon real property by an agency for a special benefit conferred upon the real property.” Cal. Const., art. XIII D, §2(b). A special assessment, sometimes called a “benefit assessment,” is a charge generally levied upon parcels of real property to pay for benefits the parcels receive from local improvements. Special assessments are levied according to statutory authority granted by the Legislature or, in some instances, local charters. Distinguishing among taxes, fees, and assessments can be difficult and often depends on the context in which the distinction is made. For example, taxes, assessments, and property-related fees all may be imposed on property. The key feature that distinguishes an assessment from a tax, fee, or charge is the existence of a special benefit to real property. Without identifying a special benefit, there can be no assessment.

Distinguishing General and Special Benefit
Proposition 218 added a set of procedures and requirements, which a local government must follow to levy an assessment. In addition to notice, hearing, and assessment ballot proceedings, Proposition 218 provides that “only special benefits are assessable” and requires a local government to “separate the general benefits from the special benefits conferred on a parcel.”
By its nature, most public improvements financed through an assessment district contain an element of public benefit. The test is: does there exist, with relation to the improvement, a special benefit to the property assessed? The law requires that the portion of the cost of the improvement which benefits the public generally to be separated from that portion of the cost of the improvement which specially benefits assessed properties.

Proposition 218 provides the following definition of “special benefit”:
“Special benefit” means a particular and distinct benefit over and above general benefits conferred on real property located in the district or to the public at large. General enhancement of property value does not constitute “special benefit”.

Below is the description of the Method of Apportionment and Special Benefit and the Assessment Roll summary for the Assessment District.

3. Method of Apportionment
City of Norco Landscape Maintenance District No. 1
Engineer’s Report for Fiscal Year 2025-2026 5
Improvements Authorized by the 1972 Act
As applicable or may be applicable to this proposed District, the 1972 Act defines improvements to mean one or any combination of the following:
• The installation or planting of landscaping.
• The installation or construction of statuary, fountains, and other ornamental structures and facilities. • The installation or construction of public lighting facilities. • The installation or construction of any facilities which are appurtenant to any of the foregoing or which are necessary or convenient for the maintenance or servicing thereof, including, but not limited to, grading, clearing, removal of debris, the installation or construction of curbs, gutters, walls, sidewalks, or paving, or water, irrigation, drainage, or electrical facilities. • The maintenance or servicing, or both, of any of the foregoing. • The acquisition of any existing improvement otherwise authorized pursuant to this section.

Incidental expenses associated with the improvements including, but not limited to:
• The cost of preparation of the report, including plans, specifications, estimates, diagram, and assessment; • The costs of printing, advertising, and the publishing, posting, and mailing of notices; • Compensation payable to the County for collection of assessments; • Compensation of any engineer or attorney employed to render services; • Any other expenses incidental to the construction, installation, or maintenance and servicing of the improvements;
• Any expenses incidental to the issuance of bonds or notes pursuant to Section 22662.5. • Costs associated with any elections held for the approval of a new or increased assessment.

The 1972 Act defines "Maintain" or "maintenance" to mean the furnishing of services and materials for the ordinary and usual maintenance, operation, and servicing of any improvement, including:
• Repair, removal, or replacement of all or any part of any improvement. • Providing for the life, growth, health, and beauty of landscaping, including cultivation, irrigation, trimming, spraying, fertilizing, or treating for disease or injury. • The removal of trimmings, rubbish, debris, and other solid waste. • The cleaning, sandblasting, and painting of walls and other improvements to remove or cover graffiti.

Method of Apportionment
The law requires and the statutes provide that assessments, as levied pursuant to the provisions of the “Landscaping and Lighting Act of 1972,” must be based on the benefit that the properties receive from the works of improvement. The statute does not specify the method or formula that should be used in any special assessment district proceedings. The Assessment Engineer is appointed for the purpose of making an analysis of the facts and determining the correct apportionment of the assessment obligation. For these proceedings, the City has based its determination on standard assessment practices utilized by consulting civil engineers with a background of experience in the design of such works of improvement and experience in the completion of assessment district formation projects.

IDENTIFYING THE BENEFIT
It is necessary to identify the benefit that the public improvement will render to the properties within the District.

The landscaping, irrigation, and equestrian trails have been designed and will be constructed for the benefit of enhanced aesthetics and neighborhood identity for all properties within the District.

3. Method of Apportionment
City of Norco Landscape Maintenance District No. 1
Engineer’s Report for Fiscal Year 2025-2026 6

APPORTIONMENT OF COSTS
In further making the analysis, it is necessary that the property owners receive a special and direct benefit distinguished from that of the general public. In this case, several factors are being used in the final method and spread and assessment.

The individual parcels of land within the Assessment District are currently developed or have the potential for development to single-family residential units. The proposed improvements are designed to enhance the appearance and appeal of the District and all of the parcels within. The improvements will provide a sense of neighborhood identity for the District. As such, each parcel will benefit equally from the proposed improvements.

ASSESSMENT ADJUSTMENT
In 1999 the property owners approved, via ballot, the formation of the District and the levy of the annual assessments, including an annual increase of 5.00%. In no case may the increase exceed the actual cost of providing the services rendered within and pursuant to the District. The application of the 5.00% adjustment for Fiscal Year 2025-2026 will increase the maximum per parcel assessment from $191.25 to $200.82. The maximum assessment of $200.82 per parcel will be levied.

4. Assessment
City of Norco Landscape Maintenance District No. 1
Engineer’s Report for Fiscal Year 2025-2026 7
Parcel identification for each lot or parcel within the District shall be the parcel as shown on the County Secured Roll for the year in which this Report is prepared and reflective of the Assessor’s Parcel Maps. A listing of the proposed lots and parcels to be assessed within this District along with the assessment amounts are presented in Appendix A.

5. Assessment Diagram
City of Norco Landscape Maintenance District No. 1
Engineer’s Report for Fiscal Year 2025-2026 8
An Assessment Diagram for the District is on file in the office of the City Clerk. The lines and dimensions of each lot or parcel within the District are those lines and dimensions shown on the maps of the Assessor of the County of Riverside, for the year when this Report was prepared, and are incorporated by reference herein and made a part of this Report. A reduced scale map depicting the assessment diagram is attached hereto.

Legal Description of Landscape Maintenance District No. 1 (Beazer) That certain real property situated in the City of Norco, County of Riverside, State of California, more particularly described as follows:

Lots 1 through 12 inclusive, and Lots 14 through 68, inclusive, of Tract No. 28765 in the City of Norco, County of Riverside, State of California, as per map recorded in Book 274, Pages 95 through 98, inclusive, of Maps in the Office of the County Recorder of Said County.

APPENDIX A
Assessment Roll

Total 67 $13,454.94
APN Levy
121541001 $200.82
121541005 $200.82
121542001 $200.82
121542005 $200.82
121542009 $200.82
121543003 $200.82
121543007 $200.82
121543011 $200.82
121543015 $200.82
121551003 $200.82
121551010 $200.82
121551014 $200.82
121551018 $200.82
121552001 $200.82
121552005 $200.82
121552009 $200.82
121553001 $200.82
APN Levy
121541002 $200.82
121541006 $200.82
121542002 $200.82
121542006 $200.82
121542010 $200.82
121543004 $200.82
121543008 $200.82
121543012 $200.82
121543016 $200.82
121551004 $200.82
121551011 $200.82
121551015 $200.82
121551019 $200.82
121552002 $200.82
121552006 $200.82
121552010 $200.82
121553002 $200.82
APN Levy
121541003 $200.82
121541007 $200.82
121542003 $200.82
121542007 $200.82
121543001 $200.82
121543005 $200.82
121543009 $200.82
121543013 $200.82
121551001 $200.82
121551008 $200.82
121551012 $200.82
121551016 $200.82
121551021 $200.82
121552003 $200.82
121552007 $200.82
121552011 $200.82
121553003 $200.82
APN Levy
121541004 $200.82
121541008 $200.82
121542004 $200.82
121542008 $200.82
121543002 $200.82
121543006 $200.82
121543010 $200.82
121543014 $200.82
121551002 $200.82
121551009 $200.82
121551013 $200.82
121551017 $200.82
121551022 $200.82
121552004 $200.82
121552008 $200.82
121552012 $200.82
Albert A. Webb Associates Page 1 of 1 Execution Time: 5/5/2025 10:27:28 AM Fiscal Year 2025-26 Assessment Roll
City of Norco 682517 - LMD No. 1