CITY COUNCIL
SPECIAL MEETING WORKSHOP - REVISED
AGENDA
Tuesday, April 21, 2026
5:00 PM
City Council Chamber
200 Old Bernal Avenue
Pleasanton, CA 94566
Public participation: It is requested that members of the public wishing to address the City Council submit a speaker card. When public comment is opened on an agenda item, individuals may speak once per agenda item.
To submit written public comment regarding an open session item on this meeting agenda visit https://forms.cityofpleasantonca.gov/f/writtenpubliccomment. Comments will be accepted by the City Clerk’s Office until 12:00 p.m. on the day of the Council meeting.
In Person at Council Chamber:
• Submit a physical speaker card to the City Clerk at the meeting. When your name is called, please provide comment at the podium.
CALL TO ORDER
• Roll Call
1. Public Comment - Comments are limited to items listed on the agenda.
WORKSHOP
2. Receive an update on the 2026 Sewer Rate Study
ADJOURNMENT
Accessible Public Meetings
The City of Pleasanton can provide special assistance for persons with disabilities to participate in public meetings. To make a request for a disability-related modification or accommodation (e.g., an assistive listening device), please contact the City Clerk’s Office at 123 Main Street, Pleasanton, CA 94566 or (925) 931-5027 at the earliest possible time. If you need translation or interpretation assistance, please provide at least two working days’ notice prior to the meeting date.
Item #2
CITY COUNCIL AGENDA REPORT
April 21, 2026
Public Works - Utilities Division
TITLE: RECEIVE AN UPDATE ON THE 2026 SEWER RATE STUDY
SUMMARY
The City of Pleasanton owns and operates a sanitary sewer collection system serving approximately 21,000 service connections and conveying wastewater to the Dublin San Ramon Services District (DSRSD) and the City of Livermore (for the Ruby Hill service area) for treatment and disposal.
In 2025, the City completed its Sewer System Management Plan (SSMP) and a supplemental long-term sewer Capital Improvement Program (CIP) to guide sewer program management, support infrastructure sustainability, and reduce the risk of sewer overflows. To maintain financial sustainability as the SSMP is implemented, the City is conducting the 2026 Sewer Rate Study (Rate Study) to evaluate the sewer enterprise’s financial condition and develop cost-based, equitable rates that recover the cost of service across customer classes.
On February 17, 2026, the City Council reviewed three funding scenarios and adopted Scenario 1 – Maintain. Council also directed staff to return for a spring workshop on the Maintain scenario’s rate impacts and key rate structure policy items. This workshop provides an overview of proposed sewer rates, proposed rate structure changes, and policy considerations needed to complete the Rate Study and prepare for the Proposition 218 process.
Following the workshop, staff will incorporate City Council feedback and return with a summary report seeking City Council approval on the rate structure in May 2026.
RECOMMENDATION
Receive an overview of the proposed sewer rates to implement the Rate Study financial plan's Maintain Scenario, and consider staff recommendations to:
1. Update the sewer rates for Condominium and Multi-Family homes to be the same (consistent with DSRSD methodology).
2. Update the sewer rate methodology for commercial and industrial customers to align with DSRSD by providing one collection rate regardless of business classification.
3. Continue differentiating between non-metered and submetered Pleasanton Unified School District (PUSD) customers.
4. Discuss the sewer rate discount for Ruby Hills customers.
BACKGROUND
The City owns and operates a sewer collection system comprising approximately 253 miles of gravity sewers, 4.9 miles of force mains, 8 siphons, 11 active pump stations, and about 21,000
service connections. The average dry-weather flow is approximately 6 million gallons per day (MGD).
The City has agreements with DSRSD and the City of Livermore (for the Ruby Hill service area) for wastewater treatment, and is a member of the Livermore-Amador Valley Water Management Agency (LAVWMA) for the disposal of treated wastewater. The City also has an agreement with Alameda County, which allows sewage flows from the County’s Castlewood Service Area to be conveyed through the City’s collection system for treatment at DSRSD.
Historically, the City has relied on Consumer Price Index (CPI) increases to raise sewer revenue. This approach has not generated the resources needed to adequately maintain and rehabilitate aging infrastructure or keep up with increasing operational and regulatory demands. As a result, operating costs have been withdrawing from the sewer enterprise fund balance every year. With aging infrastructure experiencing higher failure rates and increasing regulatory requirements, it is critical that the City establish a justifiable sewer rate that supports the system's critical infrastructure needs in the coming years and meets State regulatory requirements for managing the sanitary sewer system.
On June 17, 2025, the City Council approved the City’s 2025 Sewer System Management Plan (SSMP), a living document required by the State Water Resources Control Board (SWRCB) that provides the framework for managing the sewer program. The SSMP identified the need for the City to establish a complete and comprehensive sewer management program that supports required operations and maintenance (O&M), repair and replacement (R&R), and capital improvement program (CIP) projects to meet the minimum State requirements for effective sewer system management and to maintain compliance with all sanitary sewer regulatory requirements. As required in the SSMP, the City developed a long-term sewer CIP identifying critical infrastructure needs over the next 20 years, which the City Council approved on November 4, 2025.
To support financial sustainability during SSMP implementation, the City retained a utility rate consulting firm, Water Resources Economics, LLC (WRE), to prepare the 2026 Sewer Rate Study. The Rate Study will develop cost-based, fair, and legally defensible sewer rates and connection fees that adequately fund the sewer program.
Rate Study objectives are:
• Maintain financial sufficiency for O&M and CIP needs to implement the SSMP through a five-year financial plan (fiscal year (FY) 2026 - FY 2030) • Develop a four-year sewer rate schedule (FY 2027 - FY 2030), with rates effective January 1, 2027, and then July 1 at the start of each subsequent fiscal year • Align collection rates with cost-of-service principles through an updated cost-of-service analysis
• Simplify the rate structure to improve transparency and consistency with peer agencies • Develop updated 2027 sewer connection fees, with annual CPI adjustments • Document the rate development process in a formal report.
The City Council reviewed three implementation scenarios on February 17, 2026, and adopted Scenario 1 — Maintain, which provides a balanced approach between near-term improvements and long-term risk. Staff was directed to return for a spring workshop to review
the rate impacts and policy items needed to finalize the rate study process, and to prepare for Proposition 218 noticing.
Staff plans to return to the City Council in May to approve the sewer rate structure, sewer rate, and connection fees, and to seek City Council approval for Proposition 218 notices in July 2026. The new sewer rate is targeted to take effect starting January 1, 2027.
DISCUSSION
On February 17, 2026, the City Council adopted the Rate Study - Maintain financial planning scenario for the sanitary sewer program. The Maintain Scenario is intended to stabilize system conditions over a five-year period (FY 2026 - FY 2030) by providing the funding needed for enhanced operations and maintenance (O&M) and prioritized capital improvements consistent with the SSMP and long-term sewer CIP, while managing rate impacts to the extent feasible.
This scenario provides the minimum effort required to meet the State regulatory requirements for effective sewer system management.
To implement the Maintain scenario, the sewer enterprise requires additional funding from both rate revenue and debt financing to support ongoing operations, deliver planned capital improvements, and maintain key financial performance metrics (including reserve balances and debt coverage requirements). The funding requirements for the Maintain scenario include:
• $27.4 million in additional rate revenue
• $28.0 million in debt financing
Financial Plan Changes
Following City Council direction, staff refined the timing of O&M costs, CIP implementation, and associated debt issuances to better align with financial advisor recommendations that would put the City in a better position for bond issuance. These updates improve financial feasibility while maintaining the planned investment level. While costs and debt issuance were rephased within the five-year planning period, the total funding needs (additional rate revenue and proposed debt financing) and the Maintain Scenario’s goal of stabilizing system conditions by the end of the planning period remain unchanged. A revised Maintain Scenario CIP plan will be submitted for City Council approval in May 2026 as part of the mid-term budget process.
Based on the financial plan, Table 1 summarizes the revenue changes needed to meet the Maintain Scenario adopted by the City Council. For context, the current City portion of the typical residential service sewer bill is $31.70 every other month, or $15.85 per month. The monetary impact for each customer classification is illustrated in Table 2 below.
Table 1. Projected Sewer Revenue Adjustments 2027-2030
Cost of Service Methodology
The cost-of-service analysis allocates the City’s sewer collection costs to customer classes based on each class’s estimated contribution to wastewater flows. This approach is consistent with industry best practices and is intended to ensure rates are proportional to the cost of providing service. This is the first time that Pleasanton sewer rates have been comprehensively evaluated with a cost-of-service study designed to right-size and more equitably distribute costs across customer classifications. • Residential Customers: Wastewater flow is estimated using average household size by unit type (American Community Survey data), combined with a City-specific indoor water-use assumption of 51 gallons per capita per day.
• Non-Residential Customers: Wastewater flow is estimated using FY 2025 water usage data, which provides a representative basis for evaluating customer demand patterns. To better reflect indoor water use (most closely correlated with sewer flows), a return factor is applied based on the ratio of average winter water use to average annual water use.
Winter usage is commonly used as a proxy for indoor demand, as it generally excludes outdoor irrigation, enabling more accurate wastewater flow estimates for Commercial/Industrial and Institutional customers in line with industry best practices.
Cost Allocation Results
Based on this methodology, total system costs are allocated to customer classes in proportion to their estimated wastewater flow contributions. Updated water-use data and refined flow assumptions reflect current usage patterns. Overall, the updated cost allocation better aligns costs with sewer system usage across all customer classes, which is justified by the cost of services.
Proposed Sewer Rate Structure Changes
The proposed sewer rate structure aligns with cost-of-service principles, simplifies the current structure, and improves consistency with peer agencies.
Key changes to the rate structure include:
• Residential: Combine Condo and Multi-Family rates into a single rate category • Commercial/Industrial: Adopt a single uniform collection rate across all business classifications and include a minimum charge
• Institutional (School): Continue differentiating submetered and non-submetered PUSD customer rates
These updates simplify the sewer rate structure while retaining customer class differences where supported by measurable differences in water usage and wastewater flow characteristics.
Ruby Hill Discount Consideration
Ruby Hills customers currently receive a 10 percent reduction in sewer billing from both the Cities of Pleasanton and Livermore. The current reduction was approved by the City Council in 2017. Under current rules, including Proposition 218, continuing to offer this bill reduction would result in an approximate $31 thousand dollar impact on the General Fund. Staff
recommends incorporating the discussion into the City’s upcoming budget process and discussion on the General Fund, separating the discussion from the overall sewer enterprise funding and rate analysis.
Proposed Pleasanton Sewer Rates
Proposed Pleasanton sewer rates are designed to meet the financial plan’s revenue requirements and reflect the updated cost-of-service results and proposed sewer rate changes. Rates have been developed to ensure that the sewer enterprise remains financially sustainable over the study period while meeting the sewer program's needs. Table 2 reflects the proposed sewer rates by customer category effective January 1, 2027. The rates in this table do not include DSRSD and Livermore sanitary charges, which are a direct pass-through cost to Pleasanton customers.
Table 2. Proposed Pleasanton Sewer Rates Effective January 1, 2027 (Excludes DSRSD and Livermore Charges)
Customer Impacts
Impacts were evaluated by comparing current bills to projected bills under the proposed rates for residential and non-residential customers. In the analysis, staff evaluated the impact of customers on the City’s sewer collection costs. A second customer impact analysis was performed using combined bills that included Pleasanton collection charges and treatment costs from DSRSD or Livermore. The result of this analysis is summarized in Table 3 — Analysis of Pleasanton Sewer Bill Changes by Customer Classification.
For Single-Family Homes, the combined bimonthly sewer bill would increase from $93.28 to $122.61, a difference of $29.33 per bimonthly billing cycle. In the Ruby Hill neighborhood, a single-family home would see its bimonthly bill increase from $166.68 to $213.01, a difference of $46.33. Ruby Hill customers pay a higher sewer cost for sewer services compared to other Pleasanton homes because their wastewater is collected by both Pleasanton and Livermore’s collection systems and then treated by Livermore’s wastewater treatment facility. All other customers pay the Pleasanton collection and DSRSD treatment cost. Therefore, Ruby Hill homes pay for the sewer fee for two collection systems and the treatment cost, while regular homes only pay for one collection system and the treatment cost.
For Commercial/Industrial customers, classifications would be updated to align with the DSRSD rate structure, with charges based on actual usage at a single unit rate and a minimum charge equal to the Multi-Family rate. This is a significant change from the current rate model and is based on industry best practices and consideration that wastewater collected from commercial and industrial customers costs the same to move, regardless of source. Some customers who have historically had lower unit rates would see a larger increase than others based on their typical usage patterns. Under the proposed FY 2027 rates, a typical office or retail customer, categorized as “All-Other,” would see its combined sewer bill increase from $469.06 to $740.72, a difference of $271.66. Additionally, a typical full-service restaurant, using 154 units of water, would see its bimonthly sewer bill increase from $1,239 to $1,703, a difference of $463. These two commercial/industrial customer classifications are the first and second most common, respectively.
Schools would continue to be differentiated based on whether they are submetered (separate irrigation and domestic water meters) versus non-submetered (combined water meters).
Under the proposed FY 2027 increase, submetered schools with an average usage of 172 units per bimonthly billing cycle would see their bimonthly sewer bill increase from $849.68 to $1,002.76, a difference of $153.08 per billing cycle. Non-submetered schools with average usage of 1,394 units per billing cycle would see their bimonthly sewer bill increase from $6,175.42 to $6,523.92, a difference of $348.50 per billing cycle.
This update aligns with industry standards and is supported by the financial analysis and cost- of-service study. Total sewer bill costs are shown in Table 3 using current FY 2026 rates and proposed FY 2027 rates to provide a comprehensive view of total sewer service costs.
Table 3. Analysis of Sewer Bill Changes by Customer Classification
Sewer Rate Survey
A sewer rate survey compared Pleasanton’s combined collection and treatment bills with peer agencies in the Tri-Valley area for Single-Family Residences and average Commercial/Industrial customers. The analysis indicates that after implementing the proposed rates, Pleasanton’s combined sewer bills are generally expected to remain within the range of peer agencies, dependent on customer type. Figure 1 reflects the sewer rate survey for Single-Family homes, Figure 2 reflects the sewer rate survey for a typical Full-Service Restaurant, and Figure 3 reflects the sewer rate survey for a typical submetered school customer. Each figure shows combined collection and treatment rates for Pleasanton/DSRSD customers.
Figure 1. Tri-Valley Sewer Rate Survey for Single-Family Customers
Figure 2. Tri-Valley Sewer Rate Survey for Full-Service Restaurant
Figure 3. Tri-Valley Sewer Rate Survey for School – Submetered
Next Steps
Following the workshop, staff will incorporate any City Council feedback and finalize the rate study and associated analyses. The anticipated schedule is:
• May 2026: City Council acceptance and adoption of staff-recommended sewer rate structure, sewer rate, and connection fees.
• July 2026: City Council approval on the final rate study and request to approve initiation of Proposition 218 rate notices.
• November / December 2026: Proposition 218 public hearing to consider adoption of updated sewer rates.
• January 1, 2027: New sewer rates and connection fees take effect
EQUITY AND SUSTAINABILITY
The City provides sewer collection as an essential service. Establishing reasonable and equitable sewer rates supports the long-term fiscal sustainability of the Sewer Enterprise Fund, helps ensure that City can maintain, rehabilitate, and replace critical infrastructure, and aligns customer charges with the cost of providing service across customer classes.
OUTREACH
The City has proactively provided information on sewer-related activities and the sewer rate process through ongoing outreach efforts. Staff plans to continue strengthening communication and information sharing with customers and residents through the following efforts:
• Community events
• New web pages for Sewer Services & Programs and Sewer Rates • Monthly social media posts
• Pleasanton Pipeline e-newsletter articles
• Targeted outreach to key stakeholder groups, including commercial and industrial customers such as Pleasanton Downtown Association, Hacienda, and Pleasanton Unified School District
STRATEGIC PLAN ALIGNMENT
This item supports the ONE Pleasanton Strategic Plan goal of Funding our Future, Strategy 3 - Evaluate and update enterprise revenue sources, including utility rates, connection fees, and user fees, to address growth and meet current needs.
FISCAL IMPACT
The Maintain Scenario financial plan requires approximately $27.4 million in additional rate revenue and $28.0 million in debt financing over the five-year planning period (FY 2026- FY 2030) to fund increased O&M, implement planned capital improvements, and maintain key financial performance metrics. This workshop item is informational and intended to support City Council direction. Financial fiscal impacts will be presented in the final rate study and subsequent Proposition 218 actions.
Prepared by: Submitted by: Approved by:
Nick Ajluni, Assistant
Director of Public Works -
Utilities
Siew-Chin Yeong, Director of Public
Works
Gerry Beaudin, City
Manager
Attachments:
1. WRE Staff Report Preliminary Rates
2. Sewer Rate Presentation
Water Resources Economics
Memo
To: Nick Ajluni, Assistant Director of Public Works – City of Pleasanton From: Nancy Phan, Principal Consultant – Water Resources Economics, LLC Date: April 1, 2026
Re: Sewer Rate Scenarios Technical Memo
INTRODUCTION
Water Resources Economics, LLC (WRE) was engaged by the City of Pleasanton (City) to conduct a sewer rate study to develop an updated multi-year schedule of sewer rates. The purpose of the study is to evaluate the financial condition of the sewer enterprise, ensure long-term financial sustainability, and establish rates that equitably recover the cost of providing service to all customer classes.
City staff is seeking City Council input on the proposed sewer rates, rate structure changes, and policy considerations to complete the sewer rate study process. The results of this analysis are intended to support the development of a sewer rate structure that is financially sufficient, cost-based, and consistent with the City’s policy objectives.
The proposed sewer rates have been developed with the following objectives:
• Maintaining financial sufficiency to support ongoing operations and maintenance (O&M) and capital improvement program (CIP) needs to implement the Sewer System Management Plan (SSMP) • Stabilizing system condition over the five-year planning horizon (FY 2026 to FY 2030) • Aligning City collection rates with cost-of-service principles • Simplifying the rate structure to improve transparency and consistency with peer agencies
SEWER FINANCIAL PLAN
Maintain Scenario and Funding Needs
At the February 17 Council meeting, the City Council selected the Maintain financial planning scenario, which is designed to stabilize the condition of the sewer system over a five-year period from FY 2026 through FY 2030. This scenario reflects a balanced approach that addresses critical near-term infrastructure needs while maintaining a manageable rate impact.
To meet the objectives of the Maintain scenario, the sewer enterprise requires additional funding from both rate revenue and debt financing sources. These funding levels are necessary to support ongoing operations, implement planned capital improvements, and maintain key financial performance metrics, such as reserve balances and debt coverage requirements (for proposed debt issuances).
The funding requirements for the Maintain scenario include:
• $27.4 million in additional rate revenue
• $28.0 million in debt financing
Financial Plan Changes
ATTACHMENT 1
City of Pleasanton
Sewer Rate Technical Memo
Water Resources Economics
Following Council direction, City staff refined the timing of O&M expenses, CIP implementation, and associated debt issuances to better align with bond advisor requirements and anticipated financing constraints. These changes were made to improve the financial feasibility of the plan while maintaining the overall level of investment in the system.
As a result, the timing of costs and debt issuance has been adjusted within the five-year planning period. However, total funding needs (additional rate revenue and proposed debt financing) remain unchanged. The objective of stabilizing system condition within the five-year planning period also remains unchanged. The updated financial plan represents a change in implementation timing, rather than a change in scope or level of service.
COST-OF-SERVICE METHODOLOGY
The cost-of-service analysis allocates the total costs of the City’s sewer collection system to customers based on their estimated contribution to wastewater flows. This approach is consistent with industry best practices and is intended to ensure that rates are proportional to the cost of providing service to each customer class.
Residential Customers
Residential wastewater flow is estimated using a combination of demographic and water usage characteristics.
Specifically, average household size by unit type is derived from American Community Survey (ACS) data and applied to each Residential customer class. This information is combined with a City-specific indoor water usage assumption of 51 gallons per capita per day to estimate total Residential wastewater flow. Indoor water usage patterns are the primary driver of wastewater flows for Residential customers.
Non-Residential Customers
Non-Residential wastewater flow is estimated using actual water usage data for FY 2025, which provides a representative basis for evaluating customer demand patterns. To isolate indoor water use, which most closely corresponds to wastewater flow, a return factor is applied based on the ratio of average winter water usage to average annual usage for Non-Residential customers.
Winter water usage is commonly used as a proxy for indoor demand because it excludes outdoor irrigation. This approach allows for a more accurate estimation of wastewater flows for Commercial/Industrial and Institutional customers.
Cost Allocation Results
Based on this methodology, total system costs are allocated to customer classes in proportion to their estimated wastewater flow contributions. The updated analysis reflects current usage patterns and results in a modest shift in cost responsibility from Residential and Institutional customers to Commercial/Industrial customers. This shift is primarily driven by updated water usage data and refined assumptions regarding estimated wastewater flow generation. The updated cost allocation aligns costs with sewer system usage for all customer classes.
PROPOSED SEWER RATE STRUCTURE CHANGES
The proposed sewer rate structure has been developed to align with cost-of-service principles while also simplifying the existing structure and improving consistency with peer agencies. The intent of these changes is to create a rate structure that is both equitable and easier for customers to understand.
Key changes to the rate structure include:
City of Pleasanton
Sewer Rate Technical Memo
Water Resources Economics
• Residential: alignment of Condo and Multi-Family rates into a single rate category • Commercial/Industrial: implementation of a single uniform collection rate across all Commercial classifications
• Institutional: continued differentiation of School rates based on Submetered and Not Submetered customers
These changes simplify the sewer rate structure while maintaining appropriate distinctions, which were justified by differences in usage/wastewater flow characteristics.
RUBY HILL DISCOUNT CONSIDERATIONS
Currently, customers in the Ruby Hill area receive a 10% discount on both City of Pleasanton collection charges and City of Livermore sewer charges. The discount represents a policy decision rather than a cost-of-service- based adjustment. If the City elects to continue providing this discount, it will result in an ongoing impact to the City’s General Fund of approximately $31,000 annually beginning in FY 2027. As part of the rate adoption process, the City may consider whether to continue, modify, or eliminate this discount.
PROPOSED SEWER RATES
The proposed sewer rates are designed to generate the revenue required under the financial plan while reflecting the updated cost-of-service allocation and proposed modifications to the sewer rate structure. The rates have been developed to ensure that the sewer enterprise remains financially sustainable over the study period.
CUSTOMER IMPACTS
Proposed Sewer Rates Current FY 2027 FY 2028 FY 2029 FY 2030Bi-Monthly Fixed Residential ChargesSingle Family $31.70 $57.03 $62.74 $69.02 $75.93Single Family w/ 2nd Residence $48.28 $96.53 $106.19 $116.81 $128.50Condo $21.77 $39.51 $43.47 $47.82 $52.61Multi-Family $16.58 $39.51 $43.47 $47.82 $52.61 Proposed Sewer Rates Current FY 2027 FY 2028 FY 2029 FY 2030Commercial/Industrial Variable Charges ($/ccf)All Commercial/Industrial Customers $4.08 $4.49 $4.94 $5.44Minimum Charge $16.58 $39.51 $43.47 $47.82 $52.61 Commercial (Current Classifications)Auto Steam Cleaning $1.79 $4.08 $4.49 $4.94 $5.44Bakery $1.78 $4.08 $4.49 $4.94 $5.44Laundry $1.79 $4.08 $4.49 $4.94 $5.44Grocery with Disposal $1.71 $4.08 $4.49 $4.94 $5.44Mortuary $2.09 $4.08 $4.49 $4.94 $5.44Restaurant, Fast Food $1.67 $4.08 $4.49 $4.94 $5.44Restaurant, Full Service $1.67 $4.08 $4.49 $4.94 $5.44All Other $1.51 $4.08 $4.49 $4.94 $5.44 Institutional Variable Charges ($/ccf)Schools, Submetered $1.46 $2.03 $2.24 $2.47 $2.72Schools, Not Submetered $0.95 $0.88 $0.97 $1.07 $1.18
City of Pleasanton
Sewer Rate Technical Memo
Water Resources Economics
Customer impacts were evaluated for both Residential and Non-Residential customers by comparing current bills to projected bills under the proposed rates. Collection charges reflect the City’s sewer collection costs only, while combined bills include both collection charges and treatment costs (from DSRSD or Livermore). Treatment costs are shown using current FY 2026 rates and proposed FY 2027 rates to provide a comprehensive view of total sewer service costs.
SEWER RATE SURVEY
A sewer rate survey was conducted to compare Pleasanton’s rates with those of peer agencies in the Tri-Valley area for Single-Family Residences, Commercial Full-Service Restaurants, and Institutional Schools Submetered customers. These comparisons provide context for evaluating the City’s sewer rates both before and after implementation of the proposed increases. The analysis indicates that, following implementation of the proposed rates, Pleasanton’s combined sewer bills are expected to remain within the range of peer agencies in the Tri-Valley area.
Residential Customers Current Collection Bill Proposed Collection Bill Difference ($) Current Combined Bill Proposed Combined Bill Difference ($) Pleasanton / DSRSDSingle Family $31.70 $57.03 $25.33 $93.28 $122.61 $29.33Single Family w/ 2nd Residence $48.28 $96.53 $48.25 $156.56 $227.70 $71.14Condo $21.77 $39.51 $17.74 $68.46 $90.67 $22.21Multi-Family $16.58 $39.51 $22.93 $63.27 $90.67 $27.40Ruby Hill / LivermoreSingle Family $31.70 $57.03 $25.33 $166.68 $213.01 $46.33 Non-Residential Customers Average Bi-Monthly Use (ccf)
Current Collection Bill Proposed Collection Bill Difference ($) Current Combined Bill Proposed Combined Bill Difference ($) Auto Steam Cleaning 24 $42.96 $97.92 $54.96 $242.16 $315.36 $73.20Bakery 221 $393.38 $901.68 $508.30 $2,227.68 $2,903.94 $676.26Laundry 20 $35.80 $81.60 $45.80 $105.40 $157.60 $52.20Grocery with Disposal 171 $292.41 $697.68 $405.27 $1,515.06 $2,067.39 $552.33Mortuary 15 $31.35 $61.20 $29.85 $138.60 $181.35 $42.75Restaurant, Fast Food 97 $161.99 $395.76 $233.77 $686.76 $970.00 $283.24Restaurant, Full Service 154 $257.18 $628.32 $371.14 $1,239.70 $1,703.24 $463.54All Other 94 $141.94 $383.52 $241.58 $469.06 $740.72 $271.66Schools, Submetered 172 $251.12 $349.16 $98.04 $849.68 $1,002.76 $153.08Schools, Not Submetered 1,394 $1,324.30 $1,226.72 ($97.58) $6,175.42 $6,523.92 $348.50
City of Pleasanton
Sewer Rate Technical Memo
Water Resources Economics
1City of PleasantonCity Council Meeting, Sewer Rates – April 21, 2026ATTACHMENT 2 Agenda•Goal of Today’s Workshop •Background•Rate Study Overview•Financial Plan Review•Cost-of-Service Methodology•Proposed Rate Structure Changes•Ruby Hill Discount•Proposed Sewer Rates•Customer Impacts and Rate Survey•Next Steps and Schedule2 1 2
Goal of Today’s Workshop•Why are we here?•Council requested a workshop at the February 17 meeting•Staff to provide an overview of the comprehensive rate study and recommended sewer rate changes•What are we asking from the City Council?•Consider staff-proposed sewer rate changes and ask any additional questions ahead of rate study adoption in May 3 Background•Approval of the City Sewer System Management Plan in June 2025•Approval of long-term CIP in November 2025•Water Resources Economics (WRE) retained to develop 2026 Rate Study and Financial Analysis•Funding Scenarios were presented to City Council in February 2026 with Council adopting Scenario 1 – Maintain4 3 4
Rate Study Overview5Financial PlanDevelop funding plan for SSMP / CIPDetermine annual rate revenue needs to maintain financial sufficiencyCost-of-ServiceAllocate costs of sewer systemDetermine cost to serve each customer classRate DesignDevelop sewer rate structure most suitable to meet City’s goals and objectivesEvaluate customer and rate classesCompletion by May/June 2026Rate AdoptionDocument rate study in report Adopt sewer rates according to Proposition 218 processCompletion by November/ December 2026We are here Changes to the Sewer Financial Plan•Council previously selected the “Maintain” scenario (February 17 meeting)•Goal: stabilize system condition over FY 2026 - FY 2030•Scenario requirements:•$27.4M in additional rate revenue•$28.0M in debt financing•City staff adjusted timing of O&M and CIP projects to meet bond advisor requirements•No change to total funding needs; timing of costs and debt issuances have shifted•Five-year system stabilization goal remains unchanged6 5 6
Prior Financial Plan – Maintain Scenario7
Prior plan assumed earlier CIP spending and larger initial debt issuancesDebt ProceedsRevenue IncreaseFiscal Year$0.0M$2.9M2027$11.0M$6.9M2028$10.5M$8.1M2029$6.5M$9.5M2030$28.0M$27.4MTotalThis financial plan scenario was presented during the prior Council meeting (February 17) Proposed Financial Plan – Maintain Scenario8Proposed plan adjusted O&M, CIP , and debt issuance timing to align with financing constraintsDebt ProceedsRevenue IncreaseFiscal Year$0.0M$2.9M2027$6.0M$6.9M2028$16.0M$8.1M2029$6.0M$9.5M2030$28.0M$27.4MTotalThis proposed financial plan scenario is updated based on O&M, CIP , and debt timing 7 8
Cost-of-Service Methodology•The total costs for the City’s sewer collection system are allocated based on estimated wastewater flow by customer class•Residential wastewater flow is estimated based on:•Household size (household density analysis from census data, American Community Survey 2024)•City-specific indoor water usage in gallons per capita per day (51 gpcd)•Non-residential wastewater flow is estimated based on:•Actual water usage data (FY 2025 actuals)•Wastewater return factor based on average winter usage relative to average annual usage•Cost-of-service aligns costs with estimated wastewater contribution by class9 Wastewater Flow Allocation by Class10Current Cost AllocationProposed Cost AllocationEst. Wastewater Flow (ccf)Customer Class81.4%76.6%1,953,229Residential17.7%22.9%583,308Commercial/Industrial0.9%0.5%12,087Institutional100.0%100.0%2,548,624TotalCompared to current allocation, costs shift from Residential and Institutional customers to Commercial/Industrial customers9 10
Proposed Rate Structure ChangesGoals of proposed sewer rate structure:•Simplify sewer rate structure / match to peer agencies•Align with cost-of-service principlesProposed changes to sewer rate structure:•Residential – align Condo and Multi-Family rates •Commercial/Industrial – one collection rate, regardless of commercial classification •Institutional – continue differentiated school rates by Submetered and Not Submetered11 Ruby Hill Discount•Currently, Ruby Hill customers receive a 10% sewer bill reduction from the Cities of Pleasanton and Livermore•Bill reduction total value is approximately $31k for the City of Pleasanton•For the first year of proposed rates, the reduction is less than $3 per month per customer•The current 10% reduction was City Council-approved after the last sewer rate study•Under current rules, continuing to offer this bill reduction would result in a $31k cost in the General Fund•Staff will coordinate with the City Council on the recommendation of the Ruby Hill reduction and align with the City’s budget cycle12 11 12
Projected Sewer Revenue Adjustments 2027-2030132030202920282027Fiscal YearJuly 1, 2029July 1, 2028July 1, 2027January 1, 2027Date Effective10%10%10%100%Total Rate Revenue Adjustment10%10%10%88%Residential10%10%10%159%Commercial/Industrial10%10%10%9%InstitutionalTo ensure sufficient revenue to implement the financial plan, a 100% revenue adjustment is required effective January 1, 2027 followed by subsequent 10% annual adjustments through 2030.For context, the City portion of the typical residential service sewer bill is $31.70 every other month, or $15.85 per month.
Proposed Sewer Rates – Residential14Proposed Sewer Rates Current FY 2027 FY 2028 FY 2029 FY 2030Bi-Monthly Fixed Residential ChargesSingle Family $31.70 $57.03 $62.74 $69.02 $75.93Single Family w/ 2nd Residence $48.28 $96.53 $106.19 $116.81 $128.50Condo $21.77 $39.51 $43.47 $47.82 $52.61Multi-Family $16.58 $39.51 $43.47 $47.82 $52.6113 14
Proposed Sewer Rates – Non-Residential15
Sewer Customer Impacts – Residential16Residential CustomersCurrent Collection BillProposed Collection BillDifference ($)Current Combined BillProposed Combined BillDifference ($)Pleasanton / DSRSDSingle Family $31.70 $57.03 $25.33 $93.28 $122.61 $29.33Single Family w/ 2nd Residence $48.28 $96.53 $48.25 $156.56 $227.70 $71.14Condo $21.77 $39.51 $17.74 $68.46 $90.67 $22.21Multi-Family $16.58 $39.51 $22.93 $63.27 $90.67 $27.40Ruby Hill / LivermoreSingle Family $31.70 $57.03 $25.33 $166.68 $213.01 $46.33Collection bill includes City of Pleasanton collection charges onlyCombined bill includes FY 2026 treatment costs (current) and FY 2027 treatment costs (proposed) 15 16
Sewer Customer Impacts – Non-Residential17Non-Residential CustomersAverage Bi-Monthly Use (ccf)Current Collection BillProposed Collection BillDifference ($)Current Combined BillProposed Combined BillDifference ($)Auto Steam Cleaning 24 $42.96 $97.92 $54.96 $242.16 $315.36 $73.20Bakery 221 $393.38 $901.68 $508.30 $2,227.68 $2,903.94 $676.26Laundry 20 $35.80 $81.60 $45.80 $105.40 $157.60 $52.20Grocery with Disposal 171 $292.41 $697.68 $405.27 $1,515.06 $2,067.39 $552.33Mortuary 15 $31.35 $61.20 $29.85 $138.60 $181.35 $42.75Restaurant, Fast Food 97 $161.99 $395.76 $233.77 $686.76 $970.00 $283.24Restaurant, Full Service 154 $257.18 $628.32 $371.14 $1,239.70 $1,703.24 $463.54All Other 94 $141.94 $383.52 $241.58 $469.06 $740.72 $271.66Schools, Submetered 172 $251.12 $349.16 $98.04 $849.68 $1,002.76 $153.08Schools, Not Submetered 1,394 $1,324.30 $1,226.72 ($97.58) $6,175.42 $6,523.92 $348.50Collection bill includes City of Pleasanton collection charges onlyCombined bill includes FY 2026 treatment costs (current) and FY 2027 treatment costs (proposed) Sewer Rate Survey – Single Family18Combined bill includes FY 2026 treatment costs (current) and FY 2027 treatment costs (proposed) 17 18
Sewer Rate Survey – Full Service Restaurant19Combined bill includes FY 2026 treatment costs (current) and FY 2027 treatment costs (proposed) Sewer Rate Survey – Schools Submetered20Combined bill includes FY 2026 treatment costs (current) and FY 2027 treatment costs (proposed) 19 20
Next Steps and Schedule•Council Workshop – April 21 – preliminary sewer rates (today)•Council Meeting – May – sewer rates and connection fees•Council Meeting – July – receive sewer rate study report and Proposition 218 notice•45-day Public review period•Council Meeting – November/December – Public Hearing to adopt sewer rates•New rates to go into effect if approved on January 1, 202721 OutreachPublic outreach communications and events are key•Update of webpages and social media posts•Pleasanton Pipeline E-Newsletter Articles•Targeted outreach to specific user groups such as:•Pleasanton Downtown Association•Hacienda•Pleasanton Unified School District•Other business parks and/or associations22 21 22
Sanjay GaurFounder / [email protected] PhanPrincipal [email protected]