*NOT YET APPROVED* Attachment A
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Resolution No.
Resolution of the Council of the City of Palo Alto Approving the FY 2026 Wastewater Collection Utility Financial Forecast and Reserve Management Practices, Amending Rate Schedules S-1 (Residential Wastewater Collection and Disposal), S-2 (Commercial Wastewater Collection and Disposal), S-6 (Restaurant Wastewater Collection and Disposal) and S-7 (Commercial Wastewater Collection and Disposal – Industrial Discharger), and Repealing Rate Schedules S-3 (Industrial Waste Laboratory and Analysis Charges) and S-4 (Hauled Liquid Waste Charges)
R E C I T A L S
A. Each year the City of Palo Alto (“City”) assesses the financial position of its utilities with the goal of ensuring adequate revenue to fund operations. This includes making long-term projections of market conditions, the physical condition of the system, and other factors that could affect utility costs, and setting rates adequate to recover these costs. The City does this with the goal of providing safe, reliable, and sustainable utility services at competitive rates. The City adopts Financial Forecasts or Plans to summarize these projections.
B. The City uses reserves to protect against contingencies and to manage other aspects of its operations, and regularly assesses the adequacy of these reserves and the management practices governing their operation. The status of utility reserves and their management practices are included in Reserves Management Practices and Financial Forecast (Exhibit 4 and Exhibit 1) attached to this resolution and made a part of the staff report presented to the City Council.
C. Pursuant to Chapter 12.20.010 of the Palo Alto Municipal Code, the Council of the City of Palo Alto may by resolution adopt rules and regulations governing utility services, fees and charges.
D. On June 16, 2025, the City Council held a full and fair public hearing regarding the proposed rate increase and considered all protests against the proposals.
E. As required by Article XIII D, Section 6 of the California Constitution and applicable law, notice of the June 16, 2025 public hearing was mailed to all City of Palo Alto Utilities wastewater customers by May 2, 2025.
F. The City Clerk has tabulated the total number of written protests presented by the close of the public hearing, and determined that it was less than fifty percent (50%) of the total number of customers and property owners subject to the proposed wastewater rate amendments, therefore a majority protest does not exist against the proposal.
The Council of the City of Palo Alto does hereby RESOLVE as follows:
SECTION 1. The Council hereby approves the Reserves Management Practices (Exhibit *NOT YET APPROVED* Attachment A
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41) and FY 2026 Financial Forecast presented to the Finance Committee on April 1, 20252 and updated by the June 16, 2025 Council report, (Exhibit 13), which is attached to this resolution and made a part of the staff report presented to the City Council.
SECTION 2. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule S-1 (Residential Wastewater Collection and Disposal) is hereby amended to read as shown in Exhibit 2. Utility Rate Schedule S-1, as amended, shall become effective July 1, 2025.
SECTION 3. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule S-2 (Commercial Wastewater Collection and Disposal) is hereby amended to read as shown in Exhibit 24. Utility Rate Schedule S-2, as amended, shall become effective July 1, 2025.
SECTION 4. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule S-6 (Restaurant Wastewater Collection and Disposal) is hereby amended to read as shown in Exhibit 2. Utility Rate Schedule S-6, as amended, shall become effective July 1, 2025.
SECTION 5. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule S -7 (Commercial Wastewater Collection and Disposal – Industrial Discharger) is hereby amended to read as shown in Exhibit 2 . Utility Rate Schedule S-7, as amended, shall become effective July 1, 2025.
SECTION 6. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule S-3 (Industrial Waste Laboratory and Analysis Charges) is hereby repealed, effective July 1, 2025 (Exhibit 35).
SECTION 7. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule S-4 (Hauled Liquid Waste Charges) is hereby repealed, effective July 1, 2025 (Exhibit 3).
SECTION 8. The Council finds that the revenue derived from the wastewater rates approved by this resolution do not exceed the funds required to provide wastewater service, and the revenue derived from the adoption of this resolution shall be used only for the purposes set forth in Article VII, Section 2, of the Charter of the City of Palo Alto.
1 Exhibit 4 https://www.paloalto.gov/files/assets/public/v/1/agendas -minutes-reports/agendas-minutes/city-council- agendas-minutes/2025/june-16/rates-attachments/attachment-a-exhibit-4-fy26-wastewater-reserve-management- practices.pdf
2 Meeting Agenda Item 2: https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=16017) 3 Exhibit 1 https://www.paloalto.gov/files/assets/public/v/3/agendas-minutes-reports/agendas-minutes/city-council- agendas-minutes/2025/june-16/rates-attachments/finalized-attachment-a-exhibit-1-fy26-wastewater-collection-utility- financial-forecast-and-cip-detail.pdf
4 Exhibit 2 https://www.paloalto.gov/files/assets/public/v/1/agendas -minutes-reports/agendas-minutes/city-council- agendas-minutes/2025/june-16/rates-attachments/attachment-a-exhibit-2-fy26-wastewater-rate-schedules.pdf 5 Exhibit 3 https://www.paloalto.gov/files/assets/public/v/2/agendas -minutes-reports/agendas-minutes/city-council- agendas-minutes/2025/june-16/rates-attachments/attachment-a-exhibit-3-wastewater-rate-schedules-repealed.pdf *NOT YET APPROVED* Attachment A
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SECTION 9. The Council finds that the fees and charges adopted by this resolution are charges imposed for a specific government service or product provided directly to the payor that are not provided to those not charged, and do not exceed the reasonable costs to the City of providing the service or product.
SECTION 10. The Council finds that the adoption of this resolution approving the FY 2026 Wastewater Collection Utility Financial Forecast and Reserve Management Practices does not meet the California Environmental Quality Act’s definition of a project under Public Resources Code Section 21065 and CEQA Guidelines Section 15378(b)(5), because it is an administrative governmental activity which will not cause a direct or indirect physical change in the environment, and therefore, no environmental review is required. The Council finds that the adoption of this resolution changing Wastewater collection rates to meet operating expenses, purchase supplies and materials, meet financial reserve needs and obtain funds for capital improvements necessary to maintain service is not subject to the California Environmental Quality Act (CEQA), pursuant to California Public Resources Code Sec. 21080(b)(8) and Title 14 of the California Code of Regulations Sec. 15273(a). After reviewing the staff report and all attachments presented to Council, the Council incorporates these documents herein and finds that sufficient evidence has been presented setting forth with specificity the basis for this claim of CEQA exemption.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS
ATTEST:
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
Assistant City Attorney City Manager
Director of Utilities
Director of Administrative Services