Redlands City Council
May 7, 2024

These plans serve as a guide for the efficient and timely replacement, rehabilitation, and/or maintenance of water and wastewater infrastructure.

PROPOSED BI-MONTHLY SEWER SERVICE CHARGES

CUSTOMER CLASS CURRENT

RATE PROPOSED RATE
August 5, 2024 July 1, 2025
Residential
Single Family Dwelling Unit $62.43 $66.04 $72.65
Multi-Family Dwelling Unit $48.08 $52.40 $57.64

NON-RESIDENTIAL BASED ON WATER USE IN CCF
Low Strength I $2.42 $2.82 $3.11
Low Strength II $2.87 $3.41 $3.76
Low Strength III $3.32 $3.99 $4.39
Medium Strength I $3.77 $4.58 $5.04
Medium Strength II $4.22 $5.16 $5.68
Medium Strength III $4.67 $5.75 $6.33
High Strength I $5.12 $6.34 $6.98
High Strength II $5.56 $6.92 $7.62
Large Volume User $3.32 $3.99 $4.39
Schools ($/100 students)
Elementary School $134.38 $143.11 $157.43
Secondary & High School $215.02 $238.52 $262.38
Septage $0.11 $0.10 $0.11
The table shows the current
and the proposed wastewater
rates which, if approved, will
become effective in 2024 and
2025. While modest rate
increases are proposed to
reflect the increased costs to
the City of providing service
and meeting financial
obligations, the basic
wastewater rate structure for
all customer classes remains
unchanged.

Redlands Regular Meeting of 5-7-2024 793 of 1013

CITY OF REDLANDS

NOTICE OF PUBLIC HEARING REGARDING PROPOSED ADOPTION OF SEWER SERVICE MAY 2024

PROPOSED BI-MONTHLY WATER SERVICE CHARGES

WATER SERVICE CURRENT

RATE PROPOSED RATE
August 5, 2024 July 1, 2025
5/8” $32.10 $32.94 $33.60
3/4” $43.17 $44.01 $44.90
1” $64.67 $65.50 $66.81
1 1/2” $116.79 $117.60 $119.96
2” $172.83 $173.62 $177.10
3” $299.23 $299.97 $305.97
4” $462.10 $462.79 $472.05
6” $853.02 $853.56 $870.64
8” $1,256.97 $1,257.36 $1,282.51
10” $2,977.00 $2,976.76 $3,036.30
12” $3,915.20 $3,914.61 $3,992.91

FIRE PROTECTION SERVICE
2” $10.19 $11.81 $12.05
3” $18.10 $21.20 $21.63
4” $31.75 $37.39 $38.14
6” $80.73 $95.48 $97.39
8” $165.22 $195.69 $199.61
10” $292.32 $346.42 $353.35
12” $468.46 $555.33 $566.44
FIRE HYDRANT SERVICE $73.60 $299.97 $305.97
The table shows the current
and the proposed water
service rate which, if approved,
will become effective in 2024
and 2025. The Water Service
rate is a fixed charge that does
not fluctuate with increasing
and/or decreasing water
usage. While modest rate
increases are proposed to
reflect the increased costs to
the City of providing service
and meeting financial
obligations, the basic water
service rate structures for all
customer classes remains
unchanged.

The table shows the current
and the proposed water usage
rate which, if approved, will
become effective in 2024 and
2025. The Water Usage rate
varies with increasing and/or
decreasing water usage. While
modest rate increases are
proposed to reflect the
increased costs to the City of
providing service and meeting
financial obligations, the basic
water usage rate structures for
all customer classes remains
unchanged. Water use is
measured in one hundred
cubic feet increments (CCF).

One (1) CCF equals 748
gallons.

PROPOSED BI-MONTHLY WATER USAGE CHARGES

BUILDING WATER USAGE CURRENT

RATE PROPOSED RATE
August 5, 2024 July 1, 2025
TIER I (≤ 16 ccf) $1.46 $1.57 $1.61
TIER II (17 ccf - 27 ccf) $1.78 $1.86 $1.90
TIER III (> 27 ccf) $2.69 $2.79 $2.85

NON-BUILDING WATER USAGE
TIER I (≤ 27 ccf) $1.78 $1.77 $1.81
TIER II (> 27 ccf) $2.69 $2.49 $2.54

FIRE PROTECTION WATER
ALL UNITS $2.69 $2.79 $2.85
Redlands Regular Meeting of 5-7-2024 794 of 1013

UTILITIES ADVISORY COMMITTEE
In accordance with Chapter 2.70 of the Redlands Municipal Code, every two years the City Council appoints seven utility customers of the City to be members of its Utilities Advisory Committee (UAC). Members of the UAC provide oversight and guidance for the process to assist the City’s financial consultant and staff in establishing water, wastewater and non-potable water rates, charges and revenue requirements. The UAC provides recommendations to the City Council to ensure that water, wastewater, and non-potable water rates and charges (1) recover costs reasonably borne in providing water, wastewater and non-potable water services; (2) are equitable to all customer classes; (3) are in compliance with all state and federal law; and (4) are easily explained to customers. The UAC was formed by the City Council on January 16, 2024, and the UAC provided its recommendations for City Council consideration on May 7, 2024.

HOW DO I PROTEST THE RATE CHANGES?
If you wish to oppose the proposed water and wastewater rate increases, you must submit a written protest pursuant to the Resolution No. 7128 which establishes a policy for the submission and tabulation of protests with respect to the public hearings for utility rate adjustments. The written protest must contain the printed name and original wet signature of the property owner or customer, and must include the street address, or the county of San Bernardino Assessor’s parcel number of the property served. During the public hearing, the City Council will consider all public testimony and all written protests. At the conclusion of the public hearing, the City Council will decide whether to adopt the proposed rate increases. Only one written protest per identified parcel or property will be counted for determining whether a majority protest exists. If valid written protests are received from a majority of the affected property owners, the City Council will not approve the proposed rate increases. Your written protest must be received (not postmarked) by the City Clerk prior to the close of the public hearing on July 2, 2024. Protests should be addressed and mailed to: City Clerk, Redlands City Hall, 35 Cajon Street, Suite 4, Redlands, CA 92373. Written protests may also be presented in-person to the City Clerk prior to the July 2, 2024 meeting. Written protests may also be submitted during the public hearing. Protests may not be submitted via email or by other electronic means.

Additional information regarding the proposed water and wastewater rate increases is presented in the City of Redlands 2024 Water, Wastewater, and Non-Potable Water Financial Plan & Rate Study which is available for review during business hours at the City Clerk’s Office or you may review the report on the City’s website at www.cityofredlands.org. For questions or additional information regarding the proposed rate increases, you may also contact the City’s Municipal Utilities and Engineering Department at (909) 798-7698.

PRESORT STD
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SAN BERNARDINO, CA
PERMIT 1123
City of Redlands
Municipal Utilities & Engineering Department
P.O. Box 3005
Redlands, CA 92373

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Redlands Regular Meeting of 5-7-2024 795 of 1013
ptage

CITY OF REDLANDS
Water, Wastewater, and
Non-Potable Water
Financial Plan and Rate Study
FINAL REPORT / MARCH 27, 2024
Redlands Regular Meeting of 5-7-2024 796 of 1013
Redlands Regular Meeting of 5-7-2024 797 of 1013
March 27, 2024
John R. Harris
Municipal Utilities & Engineering Director
City of Redlands
Municipal Utilities and Engineering
35 Cajon Street
Redlands, CA 92373
Subject: Water, Wastewater, and Non-Potable Water Financial Plan and Rate Study Report Dear Mr. Harris:

Raftelis is pleased to provide this Water, Wastewater, and Non-Potable Water Financial Plan Study Report (Report) for the City of Redlands (City). This report presents the analyses, rationales, and methodologies utilized in the study to determine utility rates that align with the requirements of Proposition 218. The study was developed with feedback and input from City staff.

The study involved a comprehensive review of the City’s current water, wastewater, and non-potable water cost requirements to determine rates that meet the City’s objectives. The main objectives that informed the study include:
• Adequately recovering all costs to ensure the financial sufficiency of the City’s utilities • Determining feasible capital financing plans for all three utilities • Developing long-term financial plans for all three utilities • Calculating cost of service-based rates for all three utilities • Minimizing customer impacts from rate adjustments
We are confident that the proposed rates developed during this study are fair and equitable for the City’s customers and are in alignment with the requirements of Proposition 218. We appreciate the input provided by City staff which helped guide the final recommendations of the financial plan and resulting rates. It was a pleasure working with you and your team, and we wish to express our gratitude for the support you and other City staff provided during the study.

Sincerely,

Sudhir Pardiwala Lindsay Roth
Executive Vice President Consultant
Redlands Regular Meeting of 5-7-2024 798 of 1013
Redlands Regular Meeting of 5-7-2024 799 of 1013
Contents

1. Executive Summary ..................................................................... 1

1.1. Study Background ........................................................................................................1

1.2. Current Rates ................................................................................................................1

1.3. Process and Approach .................................................................................................4

1.4. Legal Framework...........................................................................................................5

1.5. Results and Recommendations...................................................................................5

1.5.1. Water Utility..................................................................................................................... 5

1.5.2. Wastewater Utility ........................................................................................................... 6

1.5.3. Non-Potable Water Utility ................................................................................................ 6

1.6. Proposed Rates.............................................................................................................6

1.7. Combined Customer Impacts ......................................................................................9

1.8. Regional Rate Survey .................................................................................................10

2. Key Assumptions ....................................................................... 12

2.1. Customer Account Growth.........................................................................................12

2.2. Revenue Inflation Factors ..........................................................................................12

2.3. Expense Inflation Factors...........................................................................................13

3. Water – Financial Plan................................................................ 14

3.1. Projected Revenues....................................................................................................14

3.2. Projected O&M Expenses...........................................................................................15

3.3. Debt Service ................................................................................................................16

3.4. Capital Projects...........................................................................................................17

3.5. Current Financial Plan – Status Quo .........................................................................20

3.6. Proposed Financial Plan.............................................................................................23

4. Water – Cost-of-Service Analysis and Rates.............................. 28

4.1. Process and Approach ...............................................................................................28

4.2. Revenue Requirement ................................................................................................28

4.3. Peaking Factors ..........................................................................................................29

4.4. Operating and Capital Cost Allocation......................................................................30

4.5. Allocation of Fire Protection Costs – Public vs. Private..........................................35

4.6. Final Cost Allocation of Revenue Requirement .......................................................35 Redlands Regular Meeting of 5-7-2024 800 of 1013

4.7. Unit Cost Components ...............................................................................................37

4.8. Distribution of Cost Components to Customer Classes .........................................42

4.9. Rate Calculation..........................................................................................................44

4.9.1. Proposed Bi-Monthly Fixed Charges ............................................................................. 44

4.9.2. Proposed Bi-Monthly Fire Service Charges................................................................... 44

4.9.3. Proposed Water Usage Rates....................................................................................... 45

5. Wastewater – Financial Plan...................................................... 50

5.1. Customer Accounts and Usage .................................................................................50

5.2. Current Rates ..............................................................................................................51

5.3. Calculated Rate Revenues at Current Rates.............................................................52

5.4. Projected Revenues at Current Rates .......................................................................53

5.5. Projected O&M Expenses...........................................................................................54

5.6. Debt Service ................................................................................................................55

5.7. Capital Projects...........................................................................................................56

5.8. Current Financial Plan – Status Quo .........................................................................58

5.9. Proposed Financial Plan.............................................................................................61

6. Wastewater – Cost of Service Analysis and Rates.................... 65

6.1. Process and Approach ...............................................................................................65

6.2. Revenue Requirement ................................................................................................65

6.3. Plant Mass Balance.....................................................................................................66

6.4. Operating and Capital Cost Allocation......................................................................70

6.5. Unit Cost Components ...............................................................................................72

6.6. Revenue Requirement Allocation..............................................................................74

6.7. Rate Calculation..........................................................................................................75

6.8. Proposed Rates...........................................................................................................77

7. Non-Potable Water – Financial Plan........................................... 79

7.1. Projected Revenues....................................................................................................79

7.2. Projected O&M Expenses...........................................................................................80

7.3. Debt Service ................................................................................................................80

7.4. Capital Projects...........................................................................................................80

7.5. Current Financial Plan – Status Quo .........................................................................81

7.6. Proposed Financial Plan.............................................................................................84

7.7. Proposed Rates...........................................................................................................84 Redlands Regular Meeting of 5-7-2024 801 of 1013

8. Appendix A – Alternative Wastewater Rate Scenario............... 86 Redlands Regular Meeting of 5-7-2024 802 of 1013
Tables
Table 1-1: Current Bi-Monthly Water Service Charges ($/meter size) ...................................................... 1 Table 1-2: Current Water Usage rates ($/ccf of water)............................................................................. 2 Table 1-3: Current Bi-Monthly Residential Wastewater Service Chargers ($/dwelling unit) ...................... 2 Table 1-4: Current Non-Residential Wastewater Usage Rates ($/ccf of water) ........................................ 3 Table 1-5: Current Bi-Monthly Schools Wastewater Service Charge ($/100 students) ............................. 3 Table 1-6: Current Bi-Monthly Non-Potable Water Service Charges ($/meter size).................................. 3 Table 1-7: Current Non-Potable Water Usage Rates ($/ccf of water) ....................................................... 4 Table 1-8: Proposed Bi-Monthly Water Service Charges ($/meter size)................................................... 7 Table 1-9: Proposed Water Usage Rates ($/ccf of water) ........................................................................ 7 Table 1-10: Proposed Bi-Monthly Residential and Schools Wastewater Service Charges ....................... 8 Table 1-11: Proposed Non-Residential Wastewater Usage Rates ($/ccf of water) ................................... 8 Table 1-12: Proposed Bi-Monthly Non-Potable Water Service Charges ($/meter size) ............................ 9 Table 1-13: Proposed Non-Potable Water Usage Rates ($/ccf of water).................................................. 9 Table 1-14: Proposed Single Family Customer Bi-Monthly Impacts (3/4” meter, 40 ccf) ........................ 10 Table 2-1: Customer Account Growth Projections.................................................................................. 12 Table 2-2: Revenue Inflation Factors ..................................................................................................... 12 Table 2-3: Expense Inflation Factors...................................................................................................... 13 Table 3-1: Projected Water Revenues ................................................................................................... 15 Table 3-2: Projected Water O&M Expenses........................................................................................... 16 Table 3-3: Existing Water Debt Service.................................................................................................. 17 Table 3-4: Inflated Water Capital Projects.............................................................................................. 18 Table 3-5: Proposed Water Capital Financing Plan................................................................................ 20 Table 3-6: Projected Water Financial Plan (Status Quo) ........................................................................ 21 Table 3-7: Proposed Water Revenue Adjustments................................................................................. 24 Table 3-8: Projected Water Financial Plan (Proposed Revenue Adjustments) ....................................... 25 Table 4-1: Water Revenue Requirement Calculation ............................................................................. 29 Table 4-2: System Peaking .................................................................................................................... 29 Table 4-3: System-Wide Peaking Factors .............................................................................................. 30 Table 4-4: Water Operating Cost Allocation ........................................................................................... 32 Table 4-5: Water Asset Allocation .......................................................................................................... 34 Table 4-6: Fire Analysis ......................................................................................................................... 35 Table 4-7: Revenue Requirement by Cost Component .......................................................................... 36 Table 4-8: FY 2025 Projected Water Usage by Class ............................................................................ 37 Table 4-9: Derivation of Equivalent Meters............................................................................................. 37 Redlands Regular Meeting of 5-7-2024 803 of 1013
Table 4-10: Derivation of Equivalent Fire Lines...................................................................................... 38 Table 4-11: Calculation of Peak Capacity .............................................................................................. 39 Table 4-12: Cost Causation Component Unit Cost Calculation .............................................................. 41 Table 4-13: Derivation of Costs to Serve Each Class............................................................................. 43 Table 4-14: Proposed Bi-Monthly Service Charge (FY 2025)................................................................. 44 Table 4-15: Proposed Bi-Monthly Fire Service Charge (FY 2025).......................................................... 45 Table 4-16: Peaking Unit Cost Calculation............................................................................................. 45 Table 4-17: Potable Water Supply Cost ................................................................................................. 46 Table 4-18: Supply Component Calculation ........................................................................................... 47 Table 4-19: Proposed Water Usage Rates (FY 2025)............................................................................ 48 Table 4-20: Proposed Bi-Monthly Service Charges................................................................................ 49 Table 4-21: Proposed Water Usage Rates............................................................................................. 49 Table 5-1: Projected Wastewater Customer Accounts and Usage ......................................................... 51 Table 5-2: Current Bi-Monthly Wastewater Service Charges and Usage Rates ..................................... 52 Table 5-3: Calculated Wastewater Rate Revenues at Current Rates ..................................................... 53 Table 5-4: Projected Wastewater Revenues at Current Rates ............................................................... 54 Table 5-5: Projected Wastewater O&M Expenses.................................................................................. 55 Table 5-6: Existing Wastewater Debt Service ........................................................................................ 55 Table 5-7: Proposed Wastewater Debt Service...................................................................................... 56 Table 5-8: Inflated Wastewater Capital Projects..................................................................................... 57 Table 5-9: Proposed Wastewater Capital Financing Plan....................................................................... 58 Table 5-10: Projected Wastewater Financial Plan (Status Quo)............................................................. 59 Table 5-11: Proposed Wastewater Revenue Adjustments ..................................................................... 61 Table 5-12: Projected Wastewater Financial Plan (Proposed Revenue Adjustments)............................ 62 Table 6-1: Wastewater Revenue Requirement Calculation .................................................................... 66 Table 6-2: Schools Wastewater Flow Estimate ...................................................................................... 67 Table 6-3: Wastewater Plan Balance Calculation................................................................................... 68 Table 6-4: Residential Proportion of Wastewater Flow........................................................................... 69 Table 6-5: Estimated Residential Wastewater Loadings......................................................................... 69 Table 6-6: Wastewater Operating Cost Allocation.................................................................................. 71 Table 6-7: Wastewater Capital Allocation............................................................................................... 72 Table 6-8: Wastewater Service Units by Cost Components ................................................................... 73 Table 6-9: Wastewater Cost of Service and Unit Costs.......................................................................... 74 Table 6-10: Allocation of Wastewater Revenue Requirement to Customer Classes............................... 75 Table 6-11: Wastewater Bi-Monthly Rate Calculation ............................................................................ 76 Table 6-12: Wastewater Bi-Monthly Rate Comparison........................................................................... 77 Redlands Regular Meeting of 5-7-2024 804 of 1013
Table 6-13: Proposed Bi-Monthly Wastewater Service Charges ............................................................ 77 Table 6-14: Proposed Non-Residential Wastewater Rates..................................................................... 78 Table 7-1: Projected Non-Potable Water Revenues............................................................................... 79 Table 7-2: Projected Non-Potable Water O&M Expenses ...................................................................... 80 Table 7-3: Inflated Non-Potable Water Capital Projects ......................................................................... 81 Table 7-4: Projected Non-Potable Water Financial Plan (Status Quo).................................................... 82 Table 7-5: Proposed Non-Potable Water Revenue Adjustments ............................................................ 84 Table 7-6: Proposed Bi-Monthly Non-Potable Water Service Charges ($/meter size) ............................ 85 Table 7-7: Proposed Non-Potable Water Usage Rates ($/ccf of water).................................................. 85 Table 8-1: Proposed Bi-Monthly Residential and Schools Wastewater Service Charges ....................... 86 Table 8-2: Proposed Non-Residential Wastewater Usage Rates ($/ccf of water) ................................... 86 Figures
Figure 1-1: Regional Single Family Customer Bi-Monthly Sewer Bill Comparison.................................. 11 Figure 3-1: Proposed Water Capital Financing Plan (Status Quo).......................................................... 22 Figure 3-2: Projected Water Financial Plan (Status Quo)....................................................................... 23 Figure 3-3: Projected Water Fund balances (Status Quo)...................................................................... 23 Figure 3-4: Proposed Water Capital Financing Plan............................................................................... 26 Figure 3-5: Projected Water Financial Plan (Proposed Revenue Adjustments)...................................... 26 Figure 3-6: Projected Water Fund Balances (Proposed Revenue Adjustments)..................................... 27 Figure 5-1: Proposed Wastewater Capital Financing Plan ..................................................................... 60 Figure 5-2: Projected Wastewater Financial Plan (Status Quo).............................................................. 60 Figure 5-3: Projected Wastewater Fund Balances (Status Quo) ............................................................ 61 Figure 5-4: Proposed Wastewater Capital Financing Plan ..................................................................... 63 Figure 5-5: Projected Wastewater Financial Plan (Proposed Revenue Adjustments)............................. 63 Figure 5-6: Projected Wastewater Fund Balances (Proposed Revenue Adjustments) ........................... 64 Figure 7-1: Proposed Water Capital Financing Plan (Status Quo).......................................................... 83 Figure 7-2: Projected Non-Potable Water Financial Plan (Status Quo) .................................................. 83 Figure 7-3: Projected Non-Potable Water Fund Balances (Status Quo)................................................. 84 Appendices
Appendix A: Alternative Wastewater Rate Scenario
Redlands Regular Meeting of 5-7-2024 805 of 1013

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Redlands Regular Meeting of 5-7-2024 806 of 1013

1. Executive Summary

1.1. Study Background
In 2022, the City of Redlands (City) contracted Raftelis to conduct a Water, Wastewater, and Non-Potable Water Rate Study, which included developing long-term financial plans and cost of service rates.

This report presents the three financial plans and resulting rates for the water, wastewater, and non-potable water utilities for a five-year period to ensure fairness and equity for its customers and the financial stability of the three enterprises.

This Executive Summary outlines the proposed financial plans and resulting rates and contains a description of the rate study process, methodology, and recommendations for the City’s rates. The main objectives that informed the Study include:
• Adequately recovering all costs to ensure the financial sufficiency of the City’s utilities • Determining feasible capital financing plans for all three utilities • Developing long-term financial plans for all three utilities • Calculating cost of service-based rates for the three utilities • Minimizing customer impacts from changes to the rate structures

1.2. Current Rates
The City’s current water rates were adopted on July 1, 2018 and include a bi-monthly service charge based on meter size for water service, fire protection service, fire hydrant service, and tiered water usage rates per hundred cubic feet (ccf) of water by customer class. Table 1-1 shows current bi-monthly service charges and fire protection and hydrant service charges, and Table 1-2 shows the water usage rates by customer class.

Table 1-1: Current Bi-Monthly Water Service Charges ($/meter size)

A B C D
Line Meter Size Water Service
Charge
Fire Protection
Water Service
Charge
Fire Hydrant
Service Charge
1 5/8" $32.10
2 3/4" $43.17
3 1" $64.67
4 1 1/2" $116.79
5 2" $172.83 $10.19 $73.60
6 3" $299.23 $18.10 $73.60
7 4" $462.10 $31.75 $73.60
8 6" $853.02 $80.73 $73.60
9 8" $1,256.97 $165.22 $73.60
10 10" $2,977.00 $292.32 $73.60
11 12" $3,915.20 $468.46 $73.60
Redlands Regular Meeting of 5-7-2024 807 of 1013
Table 1-2: Current Water Usage rates ($/ccf of water)
A B
Line Customer Class
Water
Usage
Rate
1 Building Water Usage
2 Tier 1 $1.46
3 Tier 2 $1.78
4 Tier 3 $2.69
5 6 Non-Building Water Usage
7 Tier 1 $1.78
8 Tier 2 $2.69
9 10 Other Water Usage
11 B Contract $100.46
12 Recycled $110.00
13 14 Fire Protection Water Usage
15 All Units $2.69
The current wastewater rates were implemented on July 1, 2018, and include a bi-monthly service charge for residential customers and schools and non-residential wastewater usage rates per ccf of water usage. Table 1-3 shows the current bi-monthly residential service charges, Table 1-4 shows the non-residential wastewater usage rates for all non-residential customer classes, and Table 1-5 shows the bi-monthly schools service charge by school type.

Table 1-3: Current Bi-Monthly Residential Wastewater Service Chargers ($/dwelling unit) A B
Line Residential Customer Class Wastewater
Service Rate
1 Single Family $62.43
2 Multiple Family $48.08
Redlands Regular Meeting of 5-7-2024 808 of 1013
Table 1-4: Current Non-Residential Wastewater Usage Rates ($/ccf of water) A B
Line Non-Residential Customer Class Wastewater
Usage Rate
1 Low Strength I $2.42
2 Low Strength II $2.87
3 Low Strength III $3.32
4 Medium Strength I $3.77
5 Medium Strength II $4.22
6 Medium Strength III $4.67
7 High Strength I $5.12
8 High Strength II $5.56
9 Large Volume User $3.32
10 Minimum Charge ($) $48.08
11 12 Septage Charge ($/gal) $0.11
Table 1-5: Current Bi-Monthly Schools Wastewater Service Charge ($/100 students) A B
Line Schools Customer Class Wastewater
Service Rate
1 Elementary $134.38
2 Secondary & High $215.02
The current non-potable water rates include a bi-monthly service charge and a usage rate per ccf of nonpotable water usage. Table 1-6 and Table 1-7 show the bi-monthly non-potable water service charges and non-potable water usage rates, respectively.

Table 1-6: Current Bi-Monthly Non-Potable Water Service Charges ($/meter size) A B
Line Meter Size
Non-Potable
Water Service
Charge
1 3/4" $13.81
2 1" $20.65
3 1 1/2" $37.29
4 2" $55.16
5 3" $95.50
6 4" $147.45
7 6" $272.16
8 8" $401.04
Redlands Regular Meeting of 5-7-2024 809 of 1013
Table 1-7: Current Non-Potable Water Usage Rates ($/ccf of water) A B
Line Non-Potable Customer Class Non-Potable
Water Usage Rate
1 Non-Potable Water $0.99
2 Conversion Customer $0.64

1.3. Process and Approach
The City’s rate-setting process involves participation and feedback from City staff. During the study, Raftelis met with City staff to discuss and understand the challenges the City’s three utilities face and to provide guidance to finalize the rate recommendations, which are detailed in this report.

During these meetings, Raftelis presented the various assumptions, inputs, and scenario analyses that were utilized to determine the water, wastewater, and non-potable water financial plans. City staff discussed the upcoming capital project requirements, which are some of the main drivers for the revenue adjustments in the final recommendations presented in this report. Raftelis designed and presented the financial plan and rate models to analyze various scenarios, such as those related to debt issuances, revenue adjustments, and capital funding.

The proposed financial plans detailed in this report followed industry standard practices for long-term financial planning and utilized commonly accepted assumptions in the absence of specified assumptions from the City, such as general inflation based on the Consumer Price Index (CPI). Raftelis worked closely with City staff to determine the most accurate methodology to project future revenues and expenses to reinforce sound fiscal management practices.

The City opted for no revenue adjustments for non-potable water. The cost of service analysis utilized to develop the water rates followed the guidelines for allocating costs outlined in the American Water Works Association’s (AWWA) “Principles of Water Rates, Fees, and Charges: Manual of Water Supply Practices M1, 6th edition” (M1 Manual). Wastewater rates followed the guidelines for allocating costs outlined in the Water Environment Federation (WEF) Manual of Practice No. 27, Financing and Charges for Wastewater (2018).

The cost of service analysis and rate design process consists of seven major steps, as outlined below:

1. Determine the revenue requirement, equal to the revenue to be recovered from rates.

2. Functionalize operations and maintenance (O&M) expenses and capital assets into functional categories such as supply, distribution, treatment, laboratory, collection, engineering, etc.

3. Allocate each functional category into cost components such as supply, base delivery, peaking, meter and customer service for water, and wastewater flow and strength, which includes biochemical oxygen demand (BOD) and total suspended solids (TSS) for wastewater.

4. Develop customer class characteristics and units of service by cost component.

5. Calculate the unit cost component rates by dividing the total cost in each component by the total units of service for that component. For example, wastewater service units include flow which is measured in ccf and BOD and TSS which are measured in pounds (lbs) per year.

6. Calculate the cost for each customer class by multiplying the unit cost by the units of service for each customer class.

Redlands Regular Meeting of 5-7-2024 810 of 1013

7. Design rates to meet the City’s objectives.

The financial plans for the three utilities include the five-year Study period from fiscal year (FY) 2025 1 to FY
2029. The proposed rates were developed for implementation on July 1, 2024 (beginning of FY 2025) and in July of every year thereafter until 2029.

1.4. Legal Framework
California Constitution Article XIII D, Section 6, commonly referred to as Proposition 218, was enacted in 1996 to ensure that rates and fees are reasonable and proportionate to the cost of providing service. The principal requirements for the fairness of the fees, as they relate to public wastewater service are as follows:

1. A property-related charge (such as water and wastewater rates) imposed by a public agency on a parcel shall not exceed the costs required to provide the property-related service.

2. Revenues derived by the charge shall not be used for any other purpose other than that for which the charge was imposed.

3. The amount of the charge imposed upon any parcel shall not exceed the proportional cost of service attributable to the parcel.

4. No charge may be imposed for a service unless that service is actually used or immediately available to the owner of the property.

5. A written notice of the proposed charge shall be mailed to the record owner of each parcel at least 45 days prior to the public hearing, when the agency considers all written protests against the charge.

Proposition 218 requires that rates cannot be “arbitrary and capricious,” meaning that the rate-setting methodology must be sound and there must be a nexus between the costs and the rates charged. Raftelis follows industry standard rate setting methodologies to perform the cost of service analysis for the water utility based on the M1 Manual and for the wastewater utility based on WEF’s Manual No. 27.

1.5. Results and Recommendations
Raftelis worked closely with City staff to define the final results and recommendations of the water, wastewater, and non-potable water rate Study. The recommendations presented in this report will ensure the financial sufficiency and stability of the City’s three utilities to fund all necessary operating costs, capital costs, and to maintain sufficient cash balances. To minimize customer impacts due to changes in rate structure, which is a key objective that informed the Study approach, Raftelis recommends that the City maintain the same rate structure for the water, wastewater, and non-potable water systems.

1.5.1. Water Utility
• The water O&M expenses are expected to increase, on average, by 3.6 percent each year of the Study based on the City’s FY 2024 budget and inflationary assumptions. • The City plans to spend approximately $52.8 million on capital projects from FY 2025 to FY 2029. • Raftelis recommends 2..0 percent revenue adjustments per year in FY 2025 through FY 2029 to fund its capital project spending and to maintain a sufficient cash balance. 1 FY 2025 is the period from July 1, 2024 to June 30, 2025.

Redlands Regular Meeting of 5-7-2024 811 of 1013

1.5.2. Wastewater Utility
• The wastewater O&M expenses are expected to increase, on average, by 3.7 percent each year of the Study based on the City’s FY 2024 budget and inflationary assumptions. • The City plans to spend $66.3 million in capital projects from FY 2025 to FY 2029, the majority of which is to refurbish and modify the City’s current wastewater treatment plant. • The City plans to obtain an SRF loan of $45 million in FY 2026 to fund most of the wastewater treatment plant project costs.
• Raftelis recommends 10 percent revenue adjustments per year in FY 2025 through FY 2028 and 8 percent revenue adjustment in FY 2029 to fund capital projects and debt service and to meet debt coverage requirements. The wastewater financial plan will be reviewed again in the next rate cycle.

1.5.3. Non-Potable Water Utility
• The non-potable O&M expenses are expected to increase, on average, by 3 percent each year of the Study based on the City’s FY 2024 budget and inflationary assumptions. • The City plans to spend $1.5 million in capital projects for the non-potable water utility from FY 2025 to FY 2029.
• Raftelis recommends no revenue adjustments for FY 2025 through FY 2029 as the utility has sufficient cash balance to fund capital project costs and operating expenses.

1.6. Proposed Rates
Table 1-8 and Table 1-9 show the proposed bi-monthly water service charges and water usage rates for the City’s water utility, respectively, based on the above recommendations. The proposed water rates for FY 2025 are determined by the cost of service analysis, and rates for the following years are increased from those rates based on the proposed revenue adjustments.

Redlands Regular Meeting of 5-7-2024 812 of 1013
Table 1-8: Proposed Bi-Monthly Water Service Charges ($/meter size)

A B C D E F G
Line Bi-Monthly Water Service
Charges
Current
Rates July 2024 July 2025 July 2026 July 2027 July 2028 1 Water Service
2 5/8" $32.10 $32.94 $33.60 $34.28 $34.97 $35.67
3 3/4" $43.17 $44.01 $44.90 $45.80 $46.72 $47.66
4 1" $64.67 $65.50 $66.81 $68.15 $69.52 $70.92
5 1 1/2" $116.79 $117.60 $119.96 $122.36 $124.81 $127.31 6 2" $172.83 $173.62 $177.10 $180.65 $184.27 $187.96
7 3" $299.23 $299.97 $305.97 $312.09 $318.34 $324.71
8 4" $462.10 $462.79 $472.05 $481.50 $491.13 $500.96
9 6" $853.02 $853.56 $870.64 $888.06 $905.83 $923.95
10 8" $1,256.97 $1,257.36 $1,282.51 $1,308.17 $1,334.34 $1,361.03 11 10" $2,977.00 $2,976.76 $3,036.30 $3,097.03 $3,158.98 $3,222.16 12 12" $3,915.20 $3,914.61 $3,992.91 $4,072.77 $4,154.23 $4,237.32 13 14 Fire Protection Service
15 2" $10.19 $11.81 $12.05 $12.30 $12.55 $12.81
16 3" $18.10 $21.20 $21.63 $22.07 $22.52 $22.98
17 4" $31.75 $37.39 $38.14 $38.91 $39.69 $40.49
18 6" $80.73 $95.48 $97.39 $99.34 $101.33 $103.36
19 8" $165.22 $195.69 $199.61 $203.61 $207.69 $211.85
20 10" $292.32 $346.42 $353.35 $360.42 $367.63 $374.99
21 12" $468.46 $555.33 $566.44 $577.77 $589.33 $601.12
22 23 Fire Hydrant Service
24 All Meters $73.60 $299.97 $305.97 $312.09 $318.34 $324.71 Table 1-9: Proposed Water Usage Rates ($/ccf of water)

A B C D E F G H
Line Water Usage Rates
BiMonthly
Tiers
Current
Rates July 2024 July 2025 July 2026 July 2027 July 2028 1 Building Water Usage
2 Tier 1 16 $1.46 $1.57 $1.61 $1.65 $1.69 $1.73
3 Tier 2 27 $1.78 $1.86 $1.90 $1.94 $1.98 $2.02
4 Tier 3 Over 27 $2.69 $2.79 $2.85 $2.91 $2.97 $3.03
5 6 Non-Building Water Usage
7 Tier 1 27 $1.78 $1.77 $1.81 $1.85 $1.89 $1.93
8 Tier 2 Over 27 $2.69 $2.49 $2.54 $2.60 $2.66 $2.72
9 10 Fire Protection Water Usage
11 All Units $2.69 $2.79 $2.85 $2.91 $2.97 $3.03
Redlands Regular Meeting of 5-7-2024 813 of 1013
Table 1-10 and Table 1-11 show the proposed bi-monthly residential and schools wastewater service charges and non-residential water usage rates for the wastewater utility, respectively. The proposed wastewater rates are based on the cost of service analysis.

Table 1-10: Proposed Bi-Monthly Residential and Schools Wastewater Service Charges

A B C D E F G
Line Bi-Monthly Wastewater
Service Charges
Current
Rates July 2024 July 2025 July 2026 July 2027 July 2028 1 Residential ($/dwelling unit)
2 Single Family $62.43 $66.04 $72.65 $79.92 $87.92 $94.96 3 Multiple Family $48.08 $52.40 $57.64 $63.41 $69.76 $75.35 4 5 Schools ($/100 students)
6 Elementary $134.38 $143.11 $157.43 $173.18 $190.50 $205.74 7 Secondary & High $215.02 $238.52 $262.38 $288.62 $317.49 $342.89 Table 1-11: Proposed Non-Residential Wastewater Usage Rates ($/ccf of water)

A B C D E F G
Line Wastewater Usage Rates Current
Rates
July 2024 July 2025 July 2026 July 2027 July 2028
1 Non-Residential Usage ($/ccf)
2 Low Strength I $2.42 $2.82 $3.11 $3.43 $3.78 $4.09
3 Low Strength II $2.87 $3.41 $3.76 $4.14 $4.56 $4.93
4 Low Strength III $3.32 $3.99 $4.39 $4.83 $5.32 $5.75
5 Medium Strength I $3.77 $4.58 $5.04 $5.55 $6.11 $6.60 6 Medium Strength II $4.22 $5.16 $5.68 $6.25 $6.88 $7.44 7 Medium Strength III $4.67 $5.75 $6.33 $6.97 $7.67 $8.29 8 High Strength I $5.12 $6.34 $6.98 $7.68 $8.45 $9.13
9 High Strength II $5.56 $6.92 $7.62 $8.39 $9.23 $9.97
10 Large Volume User $3.32 $3.99 $4.39 $4.83 $5.32 $5.75 11 Minimum Charge ($) $48.08 $52.40 $57.64 $63.41 $69.76 $75.35 12 13 Septage Charge ($/gal) * $0.11 $0.10 $0.11 $0.13 $0.15 $0.17 14 Minimum Septage Charge $15.00 $16.50 $18.15 $19.97 $21.57 Table 1-12 and Table 1-13 show the bi-monthly non-potable water service charges and non-potable water usage rates, respectively. Raftelis recommends no revenue adjustments for the study period. The proposed rates for FY 2025 are based on the cost of service analysis and remain the same through FY 2029.

Redlands Regular Meeting of 5-7-2024 814 of 1013
Table 1-12: Proposed Bi-Monthly Non-Potable Water Service Charges ($/meter size)

A B C D E F G
Line Bi-Monthly Non-Potable
Water Service Charges
Current
Rates July 2024 July 2025 July 2026 July 2027 July 2028 1 Non-Potable Water Service
2 3/4" $13.81 $13.81 $13.81 $13.81 $13.81 $13.81
3 1" $20.65 $20.65 $20.65 $20.65 $20.65 $20.65
4 1 1/2" $37.29 $37.29 $37.29 $37.29 $37.29 $37.29
5 2" $55.16 $55.16 $55.16 $55.16 $55.16 $55.16
6 3" $95.50 $95.50 $95.50 $95.50 $95.50 $95.50
7 4" $147.45 $147.45 $147.45 $147.45 $147.45 $147.45
8 6" $272.16 $272.16 $272.16 $272.16 $272.16 $272.16
9 8" $401.04 $401.04 $401.04 $401.04 $401.04 $401.04
Table 1-13: Proposed Non-Potable Water Usage Rates ($/ccf of water)

A B C D E F G
Line Non-Potable Water Usage
Rates
Current
Rates July 2024 July 2025 July 2026 July 2027 July 2028 1 Non-Potable Water Usage
2 Non-Potable Water $0.99 $0.99 $0.99 $0.99 $0.99 $0.99 3 Conversion Customer $0.64 $0.64 $0.64 $0.64 $0.64 $0.64

1.7. Combined Customer Impacts
Table 1-14 outlines the proposed customer bi-monthly impacts for a Single Family customer with a ¾” meter using 40 ccf of water each billing period. The customer impacts show the water, wastewater, non-potable water, and combined bill impacts. A typical Single Family customer will have water and wastewater service, and the total impact for this typical customer does not exceed $8 per bi-monthly billing period in the first year (Column B, Line 15).

Redlands Regular Meeting of 5-7-2024 815 of 1013
Table 1-14: Proposed Single Family Customer Bi-Monthly Impacts (3/4” meter, 40 ccf)

A B C D E F
Line Bi-Monthly Impacts Proposed
July 2024
Proposed
July 2025
Proposed
July 2026
Proposed
July 2027
Proposed
July 2028
1 Current Water Bill $121.08 $121.08 $121.08 $121.08 $121.08 2 Proposed Water Bill $125.86 $128.61 $131.37 $134.15 $136.95 3 Difference ($) $4.78 $7.53 $10.29 $13.07 $15.87
4 5 Current Wastewater Bill $62.43 $62.43 $62.43 $62.43 $62.43 6 Proposed Wastewater Bill $66.04 $72.65 $79.92 $87.92 $94.96 7 Difference ($) $3.61 $10.22 $17.49 $25.49 $32.53
8 9 Current Non-Potable Water Bill $53.41 $53.41 $53.41 $53.41 $53.41 10 Proposed Non-Potable Water Bill $53.41 $53.41 $53.41 $53.41 $53.41 11 Difference ($) $0.00 $0.00 $0.00 $0.00 $0.00
12 13 Current Water and Wastewater Bill $183.51 $183.51 $183.51 $183.51 $183.51 14 Proposed Water and Wastewater Bill $191.90 $201.26 $211.29 $222.07 $231.91 15 Difference ($) $8.39 $17.75 $27.78 $38.56 $48.40
16 17 Current Combined Bill $236.92 $236.92 $236.92 $236.92 $236.92 18 Proposed Combined Bill $245.31 $254.67 $264.70 $275.48 $285.32 19 Difference ($) $8.39 $17.75 $27.78 $38.56 $48.40

1.8. Regional Rate Survey
Figure 1-1 shows the bi-monthly sewer bill comparison for a Single Family Dwelling Unit customer. The graph shows the City’s proposed wastewater charge to be implemented in July of 2024.

Figure 1-2 shows the bi-monthly water bill comparison for a Single Family Dwelling Unit customer using a 3/4” meter and 40 ccf of water use per bi-monthly billing period. The graph shows the City’s proposed water rates to be implemented in July of 2024.

Redlands Regular Meeting of 5-7-2024 816 of 1013
Figure 1-1: Regional Single Family Customer Bi-Monthly Sewer Bill Comparison Figure 1-2: Regional Single Family Customer Bi-Monthly Water Bill Comparison Redlands Regular Meeting of 5-7-2024 817 of 1013

2. Key Assumptions
The key assumptions outlined in this section of the report represent the global assumptions utilized in the Study to project the number of customer accounts, revenues, and expenses for future years. City staff provided data on customer accounts, usage, and actual revenues and expenses for FY 2022 and budgeted revenues and expenses for FY 2023 and FY 2024. The remaining years of the Study, from FY 2025 to FY 2029, were projected based on this information and the key assumptions shown in this section.

2.1. Customer Account Growth
Table 2-1 shows the customer account growth projections for each customer class based on recommendations from City staff. The values from the 2015 Urban Water Management Plan (UWMP) were maintained for this rate study cycle. This conservative value was used as a prudent fiscal practice to ensure that adequate revenues are collected to fund the City’s utilities in the event that large growth does not occur.

Table 2-1: Customer Account Growth Projections

A B C D E F G
Line Customer Account
Growth FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
1 Single Family 0.5% 0.5% 0.5% 0.5% 0.5% 0.5%
2 Multiple Family 0.5% 0.5% 0.5% 0.5% 0.5% 0.5%
3 Commercial 0.5% 0.5% 0.5% 0.5% 0.5% 0.5%
4 Municipal 0.5% 0.5% 0.5% 0.5% 0.5% 0.5%
5 Non-Building 0.6% 0.6% 0.5% 0.5% 0.5% 0.5%
6 Fire Service 0.5% 0.5% 0.5% 0.5% 0.5% 0.5%
7 School 0.5% 0.5% 0.5% 0.5% 0.5% 0.5%
8 Non-Potable 0.5% 0.5% 0.5% 0.5% 0.5% 0.5%

2.2. Revenue Inflation Factors
Table 2-2 shows the revenue inflation factors utilized to project future revenues and calculate investment income. Projections assume no increase in miscellaneous, non-rate revenues throughout the study period. The reserve interest rate is used to calculate the investment income based on projected fund balances and is based on conservative estimates.

Table 2-2: Revenue Inflation Factors

A B C D E F G
Line Revenue Inflation
Factors FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Non-Rate Revenues 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
2 Reserve Interest Rate 1.0% 1.0% 1.0% 1.0% 1.0% 1.0%
Redlands Regular Meeting of 5-7-2024 818 of 1013

2.3. Expense Inflation Factors
Table 2-3 shows the expense inflation factors, which are used to project future operating and capital project expenses for the study period. These factors were determined with input from City staff and reference industry standard escalations and commonly used price indices. The general inflation factor is based on the long-term change in the CPI. Water supply, utilities, power, and chemical costs are based on industry averages. The capital inflation factor is based on the Engineering News Record Construction Cost Index (CCI).

Table 2-3: Expense Inflation Factors

A B C D E F G
Line Expense Inflation
Factors FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 General 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
2 Salary/Benefits 4.0% 4.0% 4.0% 4.0% 4.0% 4.0%
3 Water Supply 5.0% 5.0% 5.0% 5.0% 5.0% 5.0%
4 Utilities/Power 5.0% 5.0% 5.0% 5.0% 5.0% 5.0%
5 Chemicals 5.0% 5.0% 5.0% 5.0% 5.0% 5.0%
6 Supplies/Materials 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
7 Capital 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
Redlands Regular Meeting of 5-7-2024 819 of 1013

3. Water – Financial Plan
This section of the report details the water enterprise’s long-term financial plan, based on the projected revenues, expenses, debt service, and capital project costs. Raftelis modeled the financial plan without revenue (status quo) and with proposed revenue adjustments to ensure the financial sustainability and solvency of the water utility. The results of the water financial plan are the proposed rates for five years based on the proposed revenue adjustments.

3.1. Projected Revenues
City staff provided the actual FY 2022 revenues and budgeted FY 2023 and FY 2024 revenues for the water utility, which were used to project revenues for the remainder of the study period. Table 3-1 shows the projected water revenues for each of the water funds.

The water rate revenues (Lines 4, 6, 8-10) are calculated for future years based on the weighted customer account growth assumptions for each customer class (Table 2-1). The City expects modest increases in water rate revenues for all years of the study. The investment income (Lines 13, 27) is calculated using the reserve interest rate (Table 2-2 , Line 2). The remaining revenues are inflated using the non-rate revenue inflation factor (Table 2-2, Line 1).

Redlands Regular Meeting of 5-7-2024 820 of 1013
Table 3-1: Projected Water Revenues

A B C D E F G
Line Projected Revenues FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Water Service (501)
2 Cost Recover/Reimb
Expenditure $25 $25 $25 $25 $25 $25
3 Plan Check $21,000 $21,000 $21,000 $21,000 $21,000 $21,000 4 Water Usage $26,337,835 $26,482,428 $26,624,274 $26,766,879 $26,910,248 $27,054,385 5 Fire Flow Testing $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 6 "B" Contract Water Usage $105,000 $82,423 $82,860 $83,299 $83,741 $84,185 7 Water Meter Install $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 8 Irrigation Water Usage $3,100,000 $3,146,152 $3,162,826 $3,179,589 $3,196,441 $3,213,382 9 Fire Hydrant Water Usage $155,000 $140,931 $141,689 $142,451 $143,218 $143,988 10 Fire Protection Water Usage $420,000 $541,627 $544,541 $547,470 $550,415 $553,376 11 Conservation Violation
Penalty $525 $525 $525 $525 $525 $525
12 Frontage Charge $45,000 $45,000 $45,000 $45,000 $45,000 $45,000 13 Investment Income $510,297 $286,933 $227,614 $215,110 $202,470 $201,514 14 Returned Check Charge $50 $50 $50 $50 $50 $50
15 Rental Income $130,000 $130,000 $130,000 $130,000 $130,000 $130,000 16 Miscellaneous Receipts $105,000 $105,000 $105,000 $105,000 $105,000 $105,000 17 Total - Water Service (501) $32,917,731 $32,970,095 $33,073,404 $33,224,399 $33,376,133 $33,540,430 18 19 Source Acquisition (508)
20 Water Source Acq Residential $437,000 $437,000 $437,000 $437,000 $437,000 $437,000 21 Water Source Acquisition
Non-Resident $46,000 $46,000 $46,000 $46,000 $46,000 $46,000 22 Total - Source Acquisition
(508) $500,297 $505,300 $510,353 $515,457 $520,611 $525,818 23 24 Water CIP (509)
25 Capital Improv Chrg Non-Res $345,000 $345,000 $345,000 $345,000 $345,000 $345,000 26 Capital Improv Chrg Resident $1,610,000 $1,610,000 $1,610,000 $1,610,000 $1,610,000 $1,610,000 27 Investment Income $0 $0 $0 $0 $0 $0
28 Total - Water CIP (509) $1,955,000 $1,955,000 $1,955,000 $1,955,000 $1,955,000 $1,955,000 29 30 Total - Revenues $35,373,029 $35,430,395 $35,538,757 $35,694,856 $35,851,745 $36,021,248

3.2. Projected O&M Expenses
City staff provided the actual FY 2022 and budgeted FY 2023 and FY 2024 O&M expenses for the water utility based on expense function. Table 3-2 shows the projected O&M expenses for the study period, inflated for FY 2025 and beyond using the expense inflation factors (Table 2-3).

Redlands Regular Meeting of 5-7-2024 821 of 1013
Table 3-2: Projected Water O&M Expenses

A B C D E F G
Line Projected O&M Expenses FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Water Service (501)
2 Salaries and Benefits $7,678,736 $7,985,885 $8,305,321 $8,637,534 $8,983,035 $9,342,356 3 Services - Power $2,330,125 $2,459,708 $2,596,497 $2,740,467 $2,892,419 $3,052,796 4 Services $11,441,234 $11,784,471 $12,138,005 $12,502,145 $12,877,210 $13,263,526 5 Supplies - Purchased Water $0 $0 $0 $0 $0 $0
6 Supplies - Treatment $475,500 $501,944 $529,858 $559,237 $590,245 $622,973 7 Supplies $3,179,750 $3,275,143 $3,373,397 $3,474,599 $3,578,837 $3,686,202 8 Debt Service $0 $0 $0 $0 $0 $0
9 Total - Water Service (501) $25,105,345 $26,007,150 $26,943,078 $27,913,981 $28,921,745 $29,967,853 10 11 Water Project (503)
12 Salaries and Benefits $7,035 $7,316 $7,609 $7,913 $8,230 $8,559 13 Services - Power $0 $0 $0 $0 $0 $0
14 Services $500,000 $515,000 $530,450 $546,364 $562,754 $579,637 15 Supplies - Purchased Water $0 $0 $0 $0 $0 $0
16 Supplies - Treatment $0 $0 $0 $0 $0 $0
17 Supplies $0 $0 $0 $0 $0 $0
18 Fixed Assets $0 $0 $0 $0 $0 $0
19 Debt Service $0 $0 $0 $0 $0 $0
20 Total - Water Project (503) $507,035 $522,316 $538,059 $554,277 $570,984 $588,196 21 22 Source Acquisition (508)
23 Fixed Assets $0 $0 $0 $0 $0 $0
24 Total - Water Project (503) $0 $0 $0 $0 $0 $0
25 26 Total - O&M Expenses $25,612,380 $26,529,467 $27,481,137 $28,468,258 $29,492,730 $30,556,049

3.3. Debt Service
The City currently has two existing debt issues for the water utility. Table 3-3 shows the annual principal and interest payments for the existing debts.

Redlands Regular Meeting of 5-7-2024 822 of 1013
Table 3-3: Existing Water Debt Service

A B C D E F G
Line Existing Debt Service FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Safe Drinking Water (Tate)
2 Principal $355,782 $364,156 $926,522 $0 $0 $0
3 Interest $27,937 $19,563 $32,773 $0 $0 $0
4 Total - Safe Drinking Water
(Tate) $383,719 $383,719 $959,295 $0 $0 $0
5 6 Hinkley SRF Loan
7 Principal $499,951 $512,536 $525,439 $538,666 $552,226 $566,127 8 Interest $153,165 $146,912 $134,169 $121,105 $107,713 $93,983 9 Total - Hinkley SRF Loan $653,116 $659,448 $659,607 $659,771 $659,938 $660,110 10 11 Total - Existing Debt Service $1,036,834 $1,043,167 $1,618,902 $659,771 $659,938 $660,110

3.4. Capital Projects
City staff provided the capital improvement plan (CIP) for the water utility for the study period.

Redlands Regular Meeting of 5-7-2024 823 of 1013
Table 3-4 shows the CIP costs for the study period, escalated by the capital expense inflation factor (Table 2-3, Line 7) to determine CIP costs in future years’ dollars. Replacement projects are funded through a combination of water rate revenues, cash reserves, and bond proceeds, and expansion projects are funded entirely through Development Impact Fee (DIF) revenues.

Redlands Regular Meeting of 5-7-2024 824 of 1013
Table 3-4: Inflated Water Capital Projects

A B C D E F G
Line Capital Projects (Inflated) FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Replacement
2 Annual Citywide Water Pipeline Replacement $4,635,000 $4,774,050 $4,917,272 $5,064,790 $5,216,733 $5,373,235 3 Highline Replacement Project - Final Phase $206,000 $3,182,700 $0 $0 $0 $0 4 Citywide Pavement Repair for Water $309,000 $318,270 $327,818 $0 $0 $0 5 Water System SCADA Design & Integration (14 sites) $0 $0 $0 $0 $0 $0 6 Water System SCADA Design & Integration (18 sites fy 21/22; 13 sites fy 22/23) $0 $0 $0 $0 $0 $0
7 Annual Citywide Potable Water Meter Replacements $0 $0 $0 $0 $0 $0 8 Water Infrastructure Seismic Assessment $0 $0 $0 $0 $0 $0 9 HAWC Booster Pump Rehab $515,000 $0 $0 $0 $0 $0
10 1750 Blend Manifold Replacement $0 $0 $0 $0 $0 $0
11 Booster #2310 Replacement $0 $0 $0 $0 $0 $0
12 Booster #2311 Replacement $0 $0 $0 $0 $0 $0
13 Booster Stations & MCC Upgrade Master Plan - Tesco $0 $318,270 $546,364 $844,132 $869,456 $895,539 14 Booster Pump Replacement (Booster Pump Repl Order TBD) $0 $530,450 $546,364 $337,653 $347,782 $358,216 15 Sunset Reservoir Rehab / Repl to meet current seismic standards $0 $6,365,400 $0 $0 $0 $0 16 Margarita, Sand Cyn., Smiley, 5th Ave. Tank Mixers Installation $0 $0 $0 $0 $0 $0 17 Texas Grove Reservoir stair installation & mixer $0 $0 $0 $0 $0 $0 18 AWIA Reservoir Risk Mitigation (R3 Thru R7) $0 $0 $0 $1,042,221 $0 $0 19 AWIA Reservoir Risk Mitigation (R8 Thru R13) $0 $0 $0 $0 $585,433 $0 20 Agate Reservoir curtin anchor replacement $0 $0 $0 $0 $98,538 $298,513 21 Hinckley WTP Transmission Line Repl (Cost shared with B.V.) $2,060,000 $0 $0 $0 $0 $0 22 Hinckley/Tate Roof Repair $0 $0 $0 $0 $0 $0
23 Hinckley WTP Safety Fencing $0 $0 $0 $0 $0 $0
24 Hinckley Sludge Press $0 $0 $0 $0 $0 $0
25 Hinckley Generator Replacement $0 $0 $0 $0 $0 $0
26 Hinckley WTP Paving $0 $0 $0 $0 $0 $0
27 AWIA HWTP Resilience Improvements (R1) $0 $0 $0 $272,373 $0 $0 28 Tate WTP Transmission Line Assessment $4,120,000 $0 $0 $0 $0 $0 29 Tate ACH Tank Replacement $0 $0 $0 $0 $0 $0
30 Tate WTP Clarifier Recoating & Cover Installation $0 $0 $0 $0 $0 $0 31 Tate Influent Static Mixer $0 $0 $163,909 $0 $0 $0
32 Tate PLC Replacement (End of Life Hardware) $0 $0 $0 $0 $0 $0 Redlands Regular Meeting of 5-7-2024 825 of 1013

A B C D E F G
Line Capital Projects (Inflated) FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 33 PRV Station Replacement (Redlands Blvd. & New Jersey) $257,500 $0 $0 $0 $0 $0 34 AWIA TWTP Resilience Improvements (R2) $257,500 $0 $0 $160,948 $0 $0 35 Tate Disinfection System Upgrade Cl2 Gas to NaOCl $257,500 $0 $163,909 $1,688,263 $0 $0 36 Maint. - Airport 1 $0 $0 $0 $168,826 $0 $0
37 Maint. - S.B. MUNI $0 $0 $0 $258,867 $0 $0
38 Maint. - E.L. 3 $0 $0 $0 $47,271 $0 $0
39 Maint. - E.L. 6 $0 $0 $0 $92,292 $0 $0
40 Maint. - N. Orange 1 $0 $0 $0 $174,454 $0 $0
41 Maint. - Madeira $0 $0 $0 $0 $165,776 $0
42 Maint. - Mentone 2 $0 $0 $0 $0 $192,439 $0
43 Maint. - Well 38 $0 $0 $0 $0 $173,891 $0
44 Maint. - Well 39 $0 $0 $0 $0 $185,484 $0
45 Maint. - Airport 2 $137,773 $0 $0 $0 $0 $191,048
46 Maint. - Mill Creek 2A $69,216 $0 $0 $0 $0 $95,524
47 Maint. - Rees $116,019 $0 $0 $0 $0 $161,197
48 Maint. - Church St. $143,483 $0 $0 $0 $0 $202,989
49 Maint. - Crafton $0 $196,267 $0 $0 $0 $0
50 Maint. - Orange ST $0 $201,571 $0 $0 $0 $0
51 Maint. - N. Orange 2 $0 $212,180 $0 $0 $0 $0
52 Maint. - Well 10 $0 $0 $218,545 $0 $0 $0
53 Maint. - Well 13 $0 $0 $218,545 $0 $0 $0
54 Maint. - Mill Creek 2 $0 $0 $147,518 $0 $0 $0
55 Agate 2 Liner $0 $249,312 $0 $0 $0 $0
56 E.L. 6 Liner $0 $201,571 $0 $196,964 $0 $0
57 E.L.3 Drill New Well $103,000 $2,652,250 $0 $0 $0 $0 58 AWIA Resilience Improvements (R18) $0 $58,350 $0 $0 $0 $0 59 Wellhead Perchlorate Treatment Evaluation - Church
Street/Orange/Well #38/Well #39 $0 $0 $0 $0 $0 $0
60 Wellhead Perchlorate Treatment Evaluation - Well #10/Well #13/Agate #1/Agate #2/Crafton $0 $0 $0 $0 $0 $0
61 Entrained Air Treatment System Assessment $0 $530,450 $0 $0 $0 $0 62 Total - Replacement $13,186,991 $19,791,090 $7,250,244 $10,349,054 $7,835,533 $7,576,262 Redlands Regular Meeting of 5-7-2024 826 of 1013
Table 3-5 shows the proposed capital financing plan for the water utility. The City plans to fully fund its water CIP for all years of the study (Line 1). The inflated project costs (Line 3) are the total project costs ( Redlands Regular Meeting of 5-7-2024 827 of 1013
Table 3-4, Line 13). The CIP expenditures will be funded through rate revenue and reserves.

Table 3-5: Proposed Water Capital Financing Plan

A B C D E F G
Line Capital Financing Plan FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 CIP to Spend 100% 100% 100% 100% 100% 100%
2 3 Inflated Project Costs $13,186,991 $19,791,090 $7,250,244 $10,349,054 $7,835,533 $7,576,262 4 5 Bond Proceeds $0 $0 $0 $0 $0 $0
6 Balance $0 $0 $0 $0 $0 $0
7 8 Capital Financing
9 Rate Funded $13,186,991 $19,791,090 $7,250,244 $10,349,054 $7,835,533 $7,576,262 10 Bond Funded $0 $0 $0 $0 $0 $0
11 Loan Funded $0 $0 $0 $0 $0 $0
12 13 Total - Capital Financing $13,186,991 $19,791,090 $7,250,244 $10,349,054 $7,835,533 $7,576,262

3.5. Current Financial Plan – Status Quo
Table 3-6 shows the projected water financial plan without revenue adjustments (also referred to as status quo). Rate revenues and other revenues are derived from projected revenues (Table 3-1). O&M expenses are derived from projected O&M expenses (Table 3-2); existing debt service is from the annual debt service payments for outstanding debt (Table 3-3); rate funded capital projects (Line 22) are from the capital financing plan (Table 3-5, Line 9).

The net cash flow (Line 26) is calculated by subtracting O&M expenses (Line 17) and debt and capital costs (Line 24) from the total revenues (Line 6). Net operating revenue (Line 27) is equal to total revenues (Line 6) less O&M expenses (Line 17). Debt coverage (Line 29) is calculated by dividing the net operating revenue (Line 27) by the total debt service (Lines 20 and 21) and is well over the required debt coverage (Line 30).

Net cash flow is negative for all years of the rate study, which means that the water utility does not have enough revenue from rates to fund its operating expenses, debt, and capital costs. If there are no revenue adjustments for the water utility, the fund cash balance (Line 33) will be depleted by FY 2030.

Table 3-6: Projected Water Financial Plan (Status Quo)

A B C D E F G
Redlands Regular Meeting of 5-7-2024 828 of 1013
Line Water Financial Plan FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Revenues
2 Rate Revenues $30,012,835 $30,311,138 $30,473,330 $30,636,390 $30,800,322 $30,965,132 3 Revenue Adjustments $0 $0 $0 $0 $0 $0
4 Investment Income $510,297 $283,902 $215,366 $187,208 $152,218 $121,950 5 Other Revenues $4,702,600 $4,680,023 $4,680,460 $4,680,899 $4,681,341 $4,681,785 6 Total - Revenues $35,225,731 $35,275,063 $35,369,156 $35,504,497 $35,633,881 $35,768,867 7 8 O&M Expenses
9 Salaries and Benefits $7,685,771 $7,993,202 $8,312,930 $8,645,447 $8,991,265 $9,350,916 10 Services - Power $2,330,125 $2,459,708 $2,596,497 $2,740,467 $2,892,419 $3,052,796 11 Services $11,941,234 $12,299,471 $12,668,455 $13,048,509 $13,439,964 $13,843,163 12 Supplies - Purchased Water $0 $0 $0 $0 $0 $0
13 Supplies - Treatment $475,500 $501,944 $529,858 $559,237 $590,245 $622,973 14 Supplies $3,179,750 $3,275,143 $3,373,397 $3,474,599 $3,578,837 $3,686,202 15 Fixed Assets $0 $0 $0 $0 $0 $0
16 Debt Service $0 $0 $0 $0 $0 $0
17 Total - O&M Expenses $25,612,380 $26,529,467 $27,481,137 $28,468,258 $29,492,730 $30,556,049 18 19 Debt and Capital
20 Existing Debt Service $1,036,834 $1,043,167 $1,618,902 $659,771 $659,938 $660,110 21 Proposed Debt Service $0 $0 $0 $0 $0 $0
22 Rate Funded Capital Projects $13,186,991 $19,791,090 $7,250,244 $10,349,054 $7,835,533 $7,576,262 23 DIF Funded Capital Projects $0 $0 $0 $0 $0 $0
24 Total - Debt and Capital $14,223,825 $20,834,256 $8,869,146 $11,008,824 $8,495,472 $8,236,372 25 26 Net Cash Flow ($4,480,474) ($11,958,659) ($851,127) ($3,842,585) ($2,224,320) ($2,893,554) 27 Net Operating Revenue $9,743,351 $8,875,597 $8,018,019 $7,166,239 $6,271,152 $5,342,818 28 29 Calculated Debt Coverage 9.40 8.51 4.95 10.86 9.50 8.09 30 Required Debt Coverage 1.25 1.25 1.25 1.25 1.25 1.25 31 32 Beginning Balances $55,254,771 $36,741,518 $24,805,159 $23,981,386 $20,171,257 $17,984,549 33 Ending Balances $36,741,518 $24,805,159 $23,981,386 $20,171,257 $17,984,549 $15,133,812 Figure 3-1 shows the proposed water capital financing plan in graphical format, based on the capital projects shown in
Redlands Regular Meeting of 5-7-2024 829 of 1013
Table 3-4 and with no debt issuances. The dark teal bars represent the rate funded CIP costs.

Figure 3-1: Proposed Water Capital Financing Plan (Status Quo) Figure 3-2 shows the projected water financial plan under the status quo scenario in graphical format. The stacked bars represent the O&M expenses (light gray), supply, treatment, and power (dark teal), debt service (yellow), and capital projects (dark gray). The green bars show the changes to cash balances: if the green bars are below the stacked bars, then the City will be drawing from cash reserves, and vice versa. The current and proposed revenue lines overlap since there is no revenue adjustment. Since the line, which represents current revenues, is below the stacked bars, this means that the City’s current water revenues are not sufficient to fund its costs.

Figure 3-2: Projected Water Financial Plan (Status Quo) Redlands Regular Meeting of 5-7-2024 830 of 1013
Figure 3-3 shows the projected water fund cash balance under the status quo scenario in graphical format.

Without revenue adjustments, the cash balances (shown as turquoise bars) will be significantly drawn down over the Study period and will be depleted by FY 2030.

Figure 3-3: Projected Water Fund balances (Status Quo)

3.6. Proposed Financial Plan
The projected financial plan under the status quo scenario in Table 3-6 shows that the City’s current water rate revenues are not sufficient to sustain financial sufficiency for the water utility beginning in FY 2027.

Table 3-7 shows the proposed revenue adjustments for the study period, effective in July of each fiscal year, which will allow the City to fund all necessary operating and capital costs.

Table 3-7: Proposed Water Revenue Adjustments
A B C
Line Fiscal Year Revenue
Adjustment Month Effective
1 FY 2025 2.0% July
2 FY 2026 2.0% July
3 FY 2027 2.0% July
4 FY 2028 2.0% July
5 FY 2029 2.0% July
Table 3-8 shows the projected water financial plan with the proposed revenue adjustments from FY 2025 through FY 2029. The net cash flow (Line 26) is negative for all years as the water utility draws down cash reserves to minimize rate impacts. The ending cash balance (Line 33) is positive throughout the study period.

Redlands Regular Meeting of 5-7-2024 831 of 1013
Table 3-8: Projected Water Financial Plan (Proposed Revenue Adjustments)

A B C D E F G
Line Water Financial Plan FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Revenues
2 Rate Revenues $30,012,835 $30,311,138 $30,473,330 $30,636,390 $30,800,322 $30,965,132 3 Revenue Adjustments $0 $606,223 $1,231,123 $1,875,192 $2,538,937 $3,222,876 4 Investment Income $510,297 $286,933 $227,614 $215,110 $202,470 $201,514 5 Other Revenues $4,702,600 $4,680,023 $4,680,460 $4,680,899 $4,681,341 $4,681,785 6 Total - Revenues $35,225,731 $35,884,317 $36,612,527 $37,407,592 $38,223,070 $39,071,306 7 8 O&M Expenses
9 Salaries and Benefits $7,685,771 $7,993,202 $8,312,930 $8,645,447 $8,991,265 $9,350,916 10 Services - Power $2,330,125 $2,459,708 $2,596,497 $2,740,467 $2,892,419 $3,052,796 11 Services $11,941,234 $12,299,471 $12,668,455 $13,048,509 $13,439,964 $13,843,163 12 Supplies - Purchased Water $0 $0 $0 $0 $0 $0
13 Supplies - Treatment $475,500 $501,944 $529,858 $559,237 $590,245 $622,973 14 Supplies $3,179,750 $3,275,143 $3,373,397 $3,474,599 $3,578,837 $3,686,202 15 Fixed Assets $0 $0 $0 $0 $0 $0
16 Debt Service $0 $0 $0 $0 $0 $0
17 Total - O&M Expenses $25,612,380 $26,529,467 $27,481,137 $28,468,258 $29,492,730 $30,556,049 18 19 Debt and Capital
20 Existing Debt Service $1,036,834 $1,043,167 $1,618,902 $659,771 $659,938 $660,110 21 Proposed Debt Service $0 $0 $0 $0 $0 $0
22 Rate Funded Capital Projects $13,186,991 $19,791,090 $7,250,244 $10,349,054 $7,835,533 $7,576,262 23 DIF Funded Capital Projects $0 $0 $0 $0 $0 $0
24 Total - Debt and Capital $14,223,825 $20,834,256 $8,869,146 $11,008,824 $8,495,472 $8,236,372 25 26 Net Cash Flow ($4,480,474) ($11,349,406) $392,244 ($1,939,491) $364,869 $408,885 27 Net Operating Revenue $9,743,351 $9,484,850 $9,261,390 $9,069,333 $8,860,341 $8,645,257 28 29 Calculated Debt Coverage 9.40 9.09 5.72 13.75 13.43 13.10 30 Required Debt Coverage 1.25 1.25 1.25 1.25 1.25 1.25 31 32 Beginning Balances $55,254,771 $36,741,518 $25,414,413 $25,834,010 $23,926,976 $24,329,457 33 Ending Balances $36,741,518 $25,414,413 $25,834,010 $23,926,976 $24,329,457 $24,781,159 Figure 3-4 shows the proposed water capital financing plan in graphical format, based on the capital financial plan shown in Table 3-5. The dark teal bars show that all CIP is funded by rates and reserves.

Redlands Regular Meeting of 5-7-2024 832 of 1013
Figure 3-4: Proposed Water Capital Financing Plan
Figure 3-5 shows the proposed financial plan in graphical format with the revenue adjustments in Table 3-7.

The proposed revenues shown as the dark teal line, along with the draw down of the reserves (green bars), allow the City to fund its operating and capital costs for the study period.

Figure 3-5: Projected Water Financial Plan (Proposed Revenue Adjustments) Figure 3-6 shows the projected water fund balances with the proposed revenue adjustments in Table 3-7. The City’s restricted reserves are for the source acquisition fund and are represented by the gray bars. The unrestricted reserves or cash balance is comprised of operating and capital reserves. The blue bars represent the unrestricted cash balance available to finance operating expenses and capital projects. While the Redlands Regular Meeting of 5-7-2024 833 of 1013
unrestricted reserves are being drawn down through the study period, the ending balance remains at or above target through FY 2029.

Figure 3-6: Projected Water Fund Balances (Proposed Revenue Adjustments) Redlands Regular Meeting of 5-7-2024 834 of 1013

4. Water – Cost-of-Service Analysis
and Rates
This section of the report details the cost-of-service analysis and rate calculation process to determine the proposed water rates. The goal of this process is to determine the cost of providing water service to each of the City’s water customer classes and to ensure equity and fairness among the various classes.

4.1. Process and Approach
The cost-of-service analysis utilized to develop the water rates followed the guidelines for allocating costs outlined in the AWWA M1 manual. The cost of service analysis and rate design process consists of seven major steps, as outlined below:

1. Determine the revenue requirement, equal to the revenue to be recovered from rates

2. Functionalize O&M expenses and capital assets into functional categories such as supply, pumping, transmission & distribution, customer service & billing, etc.

3. Allocate each functional category into cost components such as supply, meters, customer service, conservation, base delivery, etc.

4. Develop customer class characteristics and units of service by cost component

5. Calculate the cost component unit rates by dividing the total cost in each cost component by the total units of service for that component. For example, base delivery costs are divided by the annual water demand and customer billing costs are divided by the annual number of bills.

6. Calculate the cost for each customer class by multiplying the unit cost by the units of service for each customer class.

7. Design rates to meet City’s objectives.

4.2. Revenue Requirement
The first step of the cost-of-service analysis is to determine the revenue requirement for the test year, or ratemaking year. The test year of this study is FY 2025.

Table 4-1 shows the revenue requirement calculations for the water utility.

The revenue requirements (Lines 2-3) are equal to the O&M expense and debt and capital costs for FY 2025 (Table 3-8, Column C, Lines 17 and 24). The revenues from other sources (Lines 7-10), also known as nonrate revenues or revenue offsets, are equal to all non-rate revenues (Table 3-8, Column C, Lines 4-5). The adjustment for cash from/(to) reserves (Line 14) is equal to the negative value of net cash flow (Table 3-8, Column C, Line 26) excluding the source acquisition fund revenue of $437,000.

The revenue to be recovered from rates excluding interest income (Line 19) is divided between operating (Column B) and capital (Column C) based on the function of each line item. For example, debt and capital costs (Line 3) are allocated to capital, while O&M expenses (Line 2) are allocated to operating. Note that the total revenue requirement (Column D, Line 18) is equal to rate revenues increased by a full year of the revenue adjustment for FY 2025. Interest income is excluded in Line 19 to be used as an offset for the Tier 1 building variable rate and therefore is excluded from the total rate revenue requirement for FY 2025.

Redlands Regular Meeting of 5-7-2024 835 of 1013
Table 4-1: Water Revenue Requirement Calculation

A B C D
Line Revenue Requirement Calculation Operating Capital Total 1 Revenue Requirements
2 O&M Expenses $26,529,467 $0 $26,529,467
3 Debt and Capital $0 $20,834,256 $20,834,256
4 Total - Revenue Requirements $26,529,467 $20,834,256 $47,363,723 5 6 Revenue from Other Sources
7 Investment Income $0 $286,933 $286,933
8 Water Service (501) $2,242,023 $0 $2,242,023
9 Water Capital Improvement (509) $0 $1,955,000 $1,955,000 10 B Contract Water Revenue $130,000 $0 $130,000
11 Total - Revenue from Other Sources $2,372,023 $2,241,933 $4,613,957 12 13 Adjustments
14 Cash from Reserves $0 $11,832,406 $11,832,406
15 Midyear Increase $0 $0 $0
16 Subtotal - Adjustments $0 $11,832,406 $11,832,406
17 18 Revenue to be Recovered from Rates $24,157,443 $6,759,917 $30,917,361 19 Revenue to be recovered Excluding
Interest Income $24,157,443 $7,046,850 $31,204,294

4.3. Peaking Factors
One of the major factors in cost allocation is allocation of peaking costs. To do so, we must identify systemwide peaking factors. The maximum day demand is the maximum amount of water used in a single day in a year. The maximum hour demand is the maximum usage in an hour on the maximum usage day. Different facilities, such as distribution and storage facilities and infrastructure, and the capital and O&M costs associated with those facilities, are designed to meet the peak demands placed on the system by customers.

Therefore, extra capacity costs include the O&M and capital costs associated with meeting peak customer demand in excess of average rate of use, or base use, requirements. The system-wide factors for maximum day and maximum hour were provided by the City’s UWMP. Maximum day and maximum hour factors are shown in Table 4-2 relative to the base factor. Base, or average daily demand, is represented by the factor of

1.00. Table 4-2: System Peaking
A B
Line Allocation Factor System Peaking
Factor
1 Base 1.00
2 Max Day 1.70
3 Max Hour 2.75
Calculated water system peaking factors from Table 4-2 are shown in Column B of Table 4-3. The systemwide peaking factors are used to derive the cost causation component allocation base (i.e., percentages) shown Redlands Regular Meeting of 5-7-2024 836 of 1013
in Columns of Table 4-3. The numbers and calculations outlined in the following sections are rounded and may not be equal to the exact amounts shown.

Line 1 “Base” represents the average day demand throughout the year and is, therefore assigned a factor of

1.00. » Base = 1.00 / 1.00 = 100%
Line 2 “Max Day” is the ratio of maximum day demand relative to base demand, or 1.33. The percentage allocated to maximum day is the incremental responsibility above base demand. » Base = 1.00 / 1.70 = 59%
» Max Day = (1.70 – 1.00) / 1.70 = 41%
Similarly, Line 3, “Max Hour” is the ratio of maximum hour demand, on the maximum day, relative to base demand. The max hour factor is 1.65.
» Base = 1.00 / 2.75 = 36%
» Max Day = (1.70 – 1.00) / 2.75 = 26%
» Max Hour = (2.75 – 1.70) / 2.75 = 38%
These factors indicate how much additional capacity is required to meet demand above average daily use. As demand, and therefore capacity, increases, so must the sizing of facilities and pipelines, which incur greater costs to construct, maintain, and replace. To understand the interpretation of the percentages shown in columns C through E, “Base” is established as the average daily demand during the year. These allocation bases are used to assign certain functionalized costs to the cost causation components including reservoir, transmission, treatment, and distribution functions.

Table 4-3: System-Wide Peaking Factors

A B C D E F
Line Allocation Factor System Peaking
Factor Base Max Day Max Hour Total
1 Base 1.00 100% 0% 0% 100%
2 Max Day 1.70 59% 41% 0% 100%
3 Max Hour 2.75 36% 26% 38% 100%
4 Average Max Day/Max Hour 48% 33% 19% 100%

4.4. Operating and Capital Cost Allocation
The next step in the cost-of-service analysis is to determine the operating and capital cost allocations by cost component. The cost components for water include Base, Max Day, Max Hour, Meters, Customer, Fire Protection, Conservation and General.

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Table 4-4 shows the water operating cost allocation. The allocation basis for each function is listed in Column B. For the purpose of allocating operating costs, City staff provided the O&M expense budget estimates by function (Column A, Lines 14-25). This is representative of the distribution of operating costs shown in Table 3-2. Functions include General and Administration, Engineering, Production & Operations, Production Maintenance, Water Treatment, Water Quality, Water Distribution, Water Conservation Program, B Contract (Reimbursable and City), and South Mountain Water. The operating costs are allocated to each cost component based on the percentage allocation (Lines 1-12) for each component. The final O&M expense allocation (Line 27) is determined by taking the weighted proportion of total operating costs by cost component based on the percentage allocations.

Redlands Regular Meeting of 5-7-2024 838 of 1013
Table 4-4: Water Operating Cost Allocation

A B C D E F G H I J K
Line O&M Allocation Allocation Basis Base Max Day Max Hour Meters Customer Fire Protection Conservation General Total 1 Water Admin & General General 0% 0% 0% 0% 11% 0% 0% 89% 100% 2 Water Engineering Max Hour Fire 25% 18% 27% 15% 0% 15% 0% 0% 100% 3 Water Production & Operations - General Max Day 59% 41% 0% 0% 0% 0% 0% 0% 100% 4 Water Production Maintenance Max Day 59% 41% 0% 0% 0% 0% 0% 0% 100% 5 Water Treatment - HTWTP Max Day 59% 41% 0% 0% 0% 0% 0% 0% 100% 6 Water Treatment - HHWTP Max Day 59% 41% 0% 0% 0% 0% 0% 0% 100% 7 Water Quality - General Base 95% 0% 0% 5% 0% 0% 0% 0% 100% 8 Water Distribution - General Max Hour Fire 25% 18% 27% 15% 0% 15% 0% 0% 100% 9 Water Conservation Program Conservation 0% 0% 0% 0% 0% 0% 100% 0% 100% 10 B' Contract (Reimbursable) Base 95% 0% 0% 5% 0% 0% 0% 0% 100% 11 B' Contract (City) Base 95% 0% 0% 5% 0% 0% 0% 0% 100% 12 South Mountain Water (Reimbursable) Base 95% 0% 0% 5% 0% 0% 0% 0% 100% 13 14 Water Admin & General General $0 $0 $0 $0 $925,279 $0 $0 $7,486,349 $8,411,628 15 Water Engineering Max Hour Fire $302,904 $212,852 $317,640 $178,585 $0 $178,585 $0 $0 $1,190,566 16 Water Production & Operations - General Max Day $3,019,621 $2,121,896 $0 $0 $0 $0 $0 $0 $5,141,518 17 Water Production Maintenance Max Day $1,859,120 $1,306,409 $0 $0 $0 $0 $0 $0 $3,165,529 18 Water Treatment - HTWTP Max Day $493,743 $346,954 $0 $0 $0 $0 $0 $0 $840,697 19 Water Treatment - HHWTP Max Day $681,909 $479,179 $0 $0 $0 $0 $0 $0 $1,161,088 20 Water Quality - General Base $458,256 $0 $0 $24,119 $0 $0 $0 $0 $482,375 21 Water Distribution - General Max Hour Fire $1,416,314 $995,248 $1,485,216 $835,024 $0 $835,024 $0 $0 $5,566,826 22 Water Conservation Program Conservation $0 $0 $0 $0 $0 $0 $452,935 $0 $452,935 23 B' Contract (Reimbursable) Base $93,653 $0 $0 $4,929 $0 $0 $0 $0 $98,582 24 B' Contract (City) Base $12,412 $0 $0 $653 $0 $0 $0 $0 $13,066 25 South Mountain Water (Reimbursable) Base $4,425 $0 $0 $233 $0 $0 $0 $0 $4,658 26 Total O&M Expenses $8,342,358 $5,462,538 $1,802,856 $1,043,543 $925,279 $1,013,609 $452,935 $7,486,349 $26,529,467 27 O&M Allocation 31% 21% 7% 4% 3% 4% 2% 28% 100%
Redlands Regular Meeting of 5-7-2024 839 of 1013
Redlands Regular Meeting of 5-7-2024 840 of 1013
Table 4-5 shows the water capital cost allocation. To minimize fluctuations in the capital cost allocation as capital projects change from year to year, capital costs are allocated on the basis of capital assets. For the purpose of allocating capital costs, City staff provided the water capital assets listed by function (Column A, Lines 16-29). This is representative of the distribution of capital costs shown in Table 3-5. Functions include Source of Supply, Wells, Pumping, Treatment, Transmission, Distribution, Storage, Meters, Fire Protection, Customer Billing, Land, Building Improvements, Rolling Stock (Vehicles), and General Plant. The capital asset costs are allocated into each cost component based on the percentage allocation (Lines 1-14) for each component. The final capital expense allocation (Line 31) is determined by taking the weighted proportion of total capital asset costs by cost component.

Redlands Regular Meeting of 5-7-2024 841 of 1013
Table 4-5: Water Asset Allocation

A B C D E F G H I J K
Line Assets Allocation Allocation Basis Base Max Day Max Hour Meters Customer Fire Protection Conservation General Total 1 Source of Supply Base 95% 0% 0% 5% 0% 0% 0% 0% 100%
2 Wells Max Day 59% 41% 0% 0% 0% 0% 0% 0% 100%
3 Pumping Max Day 59% 41% 0% 0% 0% 0% 0% 0% 100%
4 Treatment Max Day 59% 41% 0% 0% 0% 0% 0% 0% 100%
5 Transmission Max Day Fire 47% 33% 0% 5% 0% 15% 0% 0% 100% 6 Distribution Max Hour Fire 25% 18% 27% 15% 0% 15% 0% 0% 100% 7 Storage Max Day Fire 47% 33% 0% 5% 0% 15% 0% 0% 100%
8 Meters Meters 0% 0% 0% 100% 0% 0% 0% 0% 100%
9 Fire Protection Fire Service 0% 0% 0% 0% 0% 100% 0% 0% 100% 10 Customer Billing Billing & Customer Service 0% 0% 0% 0% 100% 0% 0% 0% 100% 11 Land Max Day Fire 47% 33% 0% 5% 0% 15% 0% 0% 100%
12 Building and Improvements General 0% 0% 0% 0% 11% 0% 0% 89% 100% 13 Rolling Stock (Vehicles) Base 95% 0% 0% 5% 0% 0% 0% 0% 100% 14 General Plant Max Day 59% 41% 0% 0% 0% 0% 0% 0% 100% 15 16 Source of Supply Base $9,387,387 $0 $0 $494,073 $0 $0 $0 $0 $9,881,460 17 Wells Max Day $1,504,123 $1,056,951 $0 $0 $0 $0 $0 $0 $2,561,074 18 Pumping Max Day $329,162 $231,303 $0 $0 $0 $0 $0 $0 $560,466 19 Treatment Max Day $42,208 $29,660 $0 $0 $0 $0 $0 $0 $71,867 20 Transmission Max Day Fire $29,223,535 $20,535,457 $0 $3,109,937 $0 $9,329,811 $0 $0 $62,198,740 21 Distribution Max Hour Fire $2,240,016 $1,574,065 $2,348,990 $1,320,658 $0 $1,320,658 $0 $0 $8,804,388 22 Storage Max Day Fire $2,815,532 $1,978,482 $0 $299,626 $0 $898,878 $0 $0 $5,992,518 23 Meters Meters $0 $0 $0 $0 $0 $0 $0 $0 $0
24 Fire Protection Fire Service $0 $0 $0 $0 $0 $0 $0 $0 $0 25 Customer Billing Billing & Customer Service $0 $0 $0 $0 $0 $0 $0 $0 $0 26 Land Max Day Fire $3,307,469 $2,324,167 $0 $351,977 $0 $1,055,932 $0 $0 $7,039,545 27 Building and Improvements General $0 $0 $0 $0 $1,562,036 $0 $0 $12,638,289 $14,200,325 28 Rolling Stock (Vehicles) Base $383,718 $0 $0 $20,196 $0 $0 $0 $0 $403,913 29 General Plant Max Day $0 $0 $0 $0 $0 $0 $0 $0 $0
30 Total Assets $49,233,150 $27,730,086 $2,348,990 $5,596,467 $1,562,036 $12,605,279 $0 $12,638,289 $111,714,296 31 Asset Allocation 44% 25% 2% 5% 1% 11% 0% 11% 100%
Redlands Regular Meeting of 5-7-2024 842 of 1013

4.5. Allocation of Fire Protection Costs – Public vs.

Private
Water systems provide two types of fire protection: public fire protection for firefighting, which is generally visible as hydrants on a street, and private fire protection which provides fire flow to building and other structure sprinkler systems for fire suppression within private improvements. To determine the share of total fire costs responsible to each, Raftelis performs an analysis of the public hydrants and private fire lines.

Table 4-6 shows the steps of allocating costs between public and private fire service Each fire connection size has a fire flow demand factor similar to a hydraulic capacity factor of a water meter. The diameter of the connection is raised to the 2.63 power to determine the fire flow demand factor2. The number of connections of a specific size is multiplied by the fire flow demand factor to derive total equivalent fire connections. Total fire costs are allocated based on the percentage share of total equivalent fire connections between public and private. The analysis estimates that 75 percent of fire costs relate to public fire and will be included and recovered on the monthly fixed charges. The remaining 25 percent is attributable to private fire service and will be recovered through private fire service charges.

Table 4-6: Fire Analysis

A B C D
Line Fire Line/Hydrant
Size Fire Ratio Number of Lines/Hydrants
Equivalent
Demand
1 Private Fire Line Size
2 2" 6.19 10 64
3 3" 17.98 0 0
4 4" 38.32 153 5,868
5 6" 111.31 151 16,817
6 8" 237.21 183 43,394
7 10" 426.58 127 54,363
8 12" 689.04 0 0
9 Total Fire Lines 0.00 625 120,505
10 25%
11 Public Fire Hydrant Size
12 6" 111.31 3,236 360,202
13 75%

4.6. Final Cost Allocation of Revenue Requirement
The total revenue recoverable from each cost causation component through water rates is shown in 2 Hazen-Williams equation via AWWA M1 Manual
Redlands Regular Meeting of 5-7-2024 843 of 1013
Table 4-7 using the revenue requirement from
Table 4-1, the O&M and Capital allocations in
Redlands Regular Meeting of 5-7-2024 844 of 1013
Table 4-4 and
Redlands Regular Meeting of 5-7-2024 845 of 1013
Table 4-5, and the fire cost analysis in Table 4-6. Since public fire protection costs are a function of system capacity, they are reallocated to the Meter component. Interest earnings, shown separately, will be used to offset some rates. Five percent of Base costs and 33 percent of Peaking costs (Max Day plus Max Hour) are allocated to the meter charge to preserve the utility’s current fixed revenue recovery of 30 percent.

Redlands Regular Meeting of 5-7-2024 846 of 1013
Table 4-7: Revenue Requirement by Cost Component

A B C D E F G H I J K
Line Cost Allocation Base Max Day Max Hour Meters Customer Fire Protection Conservation General Offset Total
1 Operating Revenue
Requirement $7,596,460 $4,974,127 $1,641,661 $950,239 $842,549 $922,981 $412,437 $6,816,988 $0 $24,157,443 2 Capital Revenue Requirement $3,105,589 $1,749,192 $148,172 $353,021 $98,532 $795,131 $0 $797,213 $0 $7,046,850 3 Revenue Offset $0 $0 $0 $0 $0 $0 $0 $0 -$286,933 -$286,933 4 Total Cost of Service $10,702,049 $6,723,320 $1,789,834 $1,303,259 $941,081 $1,718,112 $412,437 $7,614,201 -$286,933 $30,917,361 5 Allocation of General Cost $3,597,842 $2,260,262 $601,711 $438,133 $0 $577,599 $138,654 -$7,614,201 $0 $0 6 Allocation to Public Fire $0 $0 $0 $1,720,216 $0 -$1,720,216 $0 $0 $0 $0 7 Allocation of Base to Meter -$714,995 $0 $0 $714,995 $0 $0 $0 $0 $0 $0 8 Allocation of Peak to Meter $0 -$2,964,582 -$789,210 $3,753,792 $0 $0 $0 $0 $0 $0 9 Total Adjusted Cost of
Service $13,584,896 $6,019,000 $1,602,335 $7,930,394 $941,081 $575,496 $551,092 $0 -$286,933 $30,917,361 Redlands Regular Meeting of 5-7-2024 847 of 1013

4.7. Unit Cost Components
Unit costs for each component must be calculated, which starts by assessing the total water demand (or equivalent service units) for each cost component. Projected water use (base units of service) for FY 2025 is shown in Table 4-8. Daily use is calculated as annual use is divided by 365 days. Demand is detailed by rate class. Values are rounded to the nearest ccf and may not be equal to the exact values shown.

Table 4-8: FY 2025 Projected Water Usage by Class
A B C
Line Customer Class Annual Use
(ccf)
Average Daily Use
(ccf/day)
1 Building Water Usage
2 Tier 1 3,215,034 8,808
3 Tier 2 282,597 774
4 Tier 3 4,665,284 12,782
5 Non-Building Water
Usage
6 Tier 1 76,156 209
7 Tier 2 1,119,180 3,066
8 Total 9,358,251 25,639
Table 4-9 shows the total equivalent meters and annual number of bills. Table 4-10 shows the total equivalent fire line connections. These totals are used as the denominator in developing unit costs for the rate components of the monthly fixed service charges and private fire service charges.

Table 4-9: Derivation of Equivalent Meters

A B C D E
Line Meter
Size
Meter
Count
Hydraulic
Capacity
Factor
Equivalent
Meters
Annual Bimonthly Bills
1 5/8" 179 1.00 179 1,073
2 3/4" 8,284 1.43 11,804 49,703
3 1" 11,981 2.25 26,957 71,884
4 1 1/2" 778 4.25 3,307 4,668
5 2" 775 6.40 4,960 4,650
6 3" 78 11.25 879 469
7 4" 54 17.50 953 327
8 6" 28 32.50 902 166
9 8" 13 48.00 641 80
10 10" 0 114.00 0 0
11 12" 1 150.00 154 6
12 Total 22,171 50,735 133,026
Redlands Regular Meeting of 5-7-2024 848 of 1013
Table 4-10: Derivation of Equivalent Fire Lines

A B C D E
Line Fire Line
Size
Fire Line
Count
Demand
Factor
Equivalent Fire
Lines
Annual Bimonthly Bills
1 2" 10 6.19 64 62
2 3" 0 17.98 0 0
3 4" 153 38.32 5,868 919
4 6" 151 111.31 16,817 906
5 8" 183 237.21 43,394 1,098
6 10" 127 426.58 54,363 765
7 12" 0 689.04 0 0
8 Total 625 120,505 3,749
Redlands Regular Meeting of 5-7-2024 849 of 1013
Table 4-11 shows the total and extra capacity calculation by class and tier for maximum day and maximum hour demand. The class and tier specific maximum day peaking factors were calculated by dividing the maximum billing period usage by the average billing period usage. The class and tier specific maximum hour peaking factors were calculated by multiplying the maximum day peaking factors by the ratio of the systemwide maximum hour to maximum day peaking factors shown in Table 4-3.

Redlands Regular Meeting of 5-7-2024 850 of 1013
Table 4-11: Calculation of Peak Capacity

A B C D E F G H I
Max Day Max Hour
Line Customer
Class
Annual
Use (ccf)
Average Daily
Use (ccf/day)
Capacity
Factor
Total Capacity
(ccf/day)
Extra Capacity
(ccf/day)
Capacity
Factor
Total Capacity
(ccf/day)
Extra Capacity
(ccf/day)
1 Building Water
Usage
2 Tier 1 3,215,034 8,808 1.33 11,683 2,875 2.14 18,879 7,195 3 Tier 2 282,597 774 1.48 1,149 375 2.40 1,856 708
4 Tier 3 4,665,284 12,782 2.41 30,742 17,961 3.89 49,676 18,933 5 Non-Building
Water Usage
6 Tier 1 76,156 209 1.55 322 114 2.50 521 199
7 Tier 2 1,119,180 3,066 2.26 6,923 3,857 3.65 11,187 4,264 Redlands Regular Meeting of 5-7-2024 851 of 1013
Utilizing the final cost of service from
Redlands Regular Meeting of 5-7-2024 852 of 1013
Table 4-7 as the numerator and Table 4-8, Table 4-9, Table 4-10, and Redlands Regular Meeting of 5-7-2024 853 of 1013
Table 4-11 as the denominators allows us to derive the unit costs of service in Redlands Regular Meeting of 5-7-2024 854 of 1013
Table 4-12. The total cost of service is divided by the respective units of service to calculate the unit cost of each cost component.

Meter costs are divided by the total meter equivalencies from Table 4-9 multiplied by 6 bi-monthly bills to determine a cost per equivalent meter and annual customer costs are divided by the estimated number of annual monthly bills, also from Table 4-9. Fire protection costs are divided by total fire line equivalencies from Table 4-10 to determine a cost per equivalent inch of fire line. Base delivery costs are divided by total annual water demand from Table 4-8 to determine a cost per unit of water usage. Similarly, Conservation costs are divided by annual Tier 3 water demand and Offset savings are divided by Building Tier 1 usage as those are the units from Table 4-8 over which those costs and savings, respectively, are being recovered. The unit costs are used to distribute the cost components to the meter classes and commodity classes and tiers.

Redlands Regular Meeting of 5-7-2024 855 of 1013
Table 4-12: Cost Causation Component Unit Cost Calculation

A B C D E F G H I
Line Cost of
Service Base Max Day Max Hour Meters Customer Fire Protection Conservation Offset 1 Cost of Service $13,584,896 $6,019,000 $1,602,335 $7,930,394 $941,081 $575,496 $551,092 ($286,933) 2 Units of
Service 9,358,251 25,181 31,299 304,412 136,775 723,031 4,665,284 3,215,034 3 Unit of
Measure ccf ccf/day ccf/day
equiv.
meter/yr bills/yr equiv. line/yr ccf
4 Unit Cost $1.45 $239.03 $51.19 $26.05 $6.88 $0.80 $0.12 ($0.09) Redlands Regular Meeting of 5-7-2024 856 of 1013

4.8. Distribution of Cost Components to Customer
Classes
The final step in a cost-of-service analysis is to distribute the cost components to the customer classes using the unit costs derived in
Redlands Regular Meeting of 5-7-2024 857 of 1013
Table 4-12. This is the end goal of a cost-of-service analysis and yields the cost to serve each class.

Redlands Regular Meeting of 5-7-2024 858 of 1013
Table 4-13 shows the derivation of the costs to serve each class. The supply, base, max day, max hour, conservation, and offset cost components are collected through the commodity charges ($/ccf). Fire protection, meters, and customer cost components are collected through the City’s bi-monthly fixed service charge ($/2 months) and private fire service charge ($/2 months). The interest revenue, which is a non-rate revenue and over which the City Council has discretion, is applied as an offset to Tier 1 rate for building usage to provide affordability for low volume customers. All building users will benefit from the lower rate in Tier 1.

To derive the cost to serve each class, the unit costs from Redlands Regular Meeting of 5-7-2024 859 of 1013
Table 4-12 are multiplied by the respective units of service for each class (Table 4-8, Table 4-9, Table 4-10, and
Redlands Regular Meeting of 5-7-2024 860 of 1013
Table 4-11). With the cost to serve each user class calculated, we can proceed to derive rates to collect the cost to serve each commodity class, tier, and meter size.

Redlands Regular Meeting of 5-7-2024 861 of 1013
Table 4-13: Derivation of Costs to Serve Each Class

A B C D E F G H I J
Line Customer Class Base Max Day Max Hour Meters Customer Fire Protection Conservation Offset Total
1 Building Water Usage $7,930,394 $915,285 $8,845,679
2 Tier 1 $4,667,102 $687,190 $368,367 ($286,933) $5,435,726 3 Tier 2 $410,232 $89,549 $36,224 $536,005
4 Tier 3 $6,772,354 $4,293,149 $969,294 $551,092 $12,585,888 5 Non-Building Water
Usage
6 Tier 1 $110,551 $27,213 $10,168 $147,933
7 Tier 2 $1,624,657 $921,899 $218,282 $2,764,838
8 Fire Protection $0 $0 $0 $25,796 $575,496 $601,292
9 Total Cost of Service $13,584,896 $6,019,000 $1,602,335 $7,930,394 $941,081 $575,496 $551,092 ($286,933) $30,917,361 Redlands Regular Meeting of 5-7-2024 862 of 1013

4.9. Rate Calculation

4.9.1. Proposed Bi-Monthly Fixed Charges
Table 4-14 shows the bi-monthly service charge calculation, which consists of the Meter and Customer cost components. The Meter cost component is derived based on total equivalent meters. Therefore, the meter unit cost (Table 4-12, Column E, Line 4) is multiplied by the capacity ratio for each meter size (Column B) to appropriately reflect the share of cost by meter size (Column C). The Customer cost does not vary with meter size, and therefore the Customer unit cost (Table 4-12, Column F, Line 4) is applied uniformly across all meter sizes (Column D). These components added together determine the proposed bi-monthly service charge (Column E).

Table 4-14: Proposed Bi-Monthly Service Charge (FY 2025)

A B C D E F
Line Bi-Monthly Service
Charge
Capacity
Ratio Meter Customer Proposed Charge
Current
Charge
1 5/8" 1.00 $26.05 $6.88 $32.94 $32.10
2 3/4" 1.43 $37.12 $6.88 $44.01 $43.17
3 1" 2.25 $58.62 $6.88 $65.50 $64.67
4 1 1/2" 4.25 $110.72 $6.88 $117.60 $116.79
5 2" 6.40 $166.73 $6.88 $173.62 $172.83
6 3" 11.25 $293.08 $6.88 $299.97 $299.23
7 4" 17.50 $455.90 $6.88 $462.79 $462.10
8 6" 32.50 $846.67 $6.88 $853.56 $853.02
9 8" 48.00 $1,250.47 $6.88 $1,257.36 $1,256.97
10 10" 114.00 $2,969.87 $6.88 $2,976.76 $2,977.00
11 12" 150.00 $3,907.73 $6.88 $3,914.61 $3,915.20

4.9.2. Proposed Bi-Monthly Fire Service Charges
Table 4-15 shows the bi-monthly service charge calculation, which consists of the Private Fire and Customer cost components. The Private Fire unit cost (Table 4-12, Column G, Line 4) is multiplied by the fire ratio for each fire line diameter (Column B) to appropriately reflect the share of cost by fire line (Column C). A connection’s share of the Customer cost does not vary with fire line size, and therefore the Customer unit cost (Table 4-12, Column F, Line 4) is applied uniformly across all meter sizes (Column D). These components added together arrive at the proposed bi-monthly fire service charge (Column E).

Redlands Regular Meeting of 5-7-2024 863 of 1013
Table 4-15: Proposed Bi-Monthly Fire Service Charge (FY 2025)

A B C D E F
Line Bi-Monthly Fire Service
Charge
Capacity
Ratio Fire Customer Proposed Charge
Current
Charge
1 2" 6.19 $4.93 $6.88 $11.81 $10.19
2 3" 17.98 $14.31 $6.88 $21.20 $18.10
3 4" 38.32 $30.50 $6.88 $37.39 $31.75
4 6" 111.31 $88.60 $6.88 $95.48 $80.73
5 8" 237.21 $188.80 $6.88 $195.69 $165.22
6 10" 426.58 $339.54 $6.88 $346.42 $292.32
7 12" 689.04 $548.44 $6.88 $555.33 $468.46

4.9.3. Proposed Water Usage Rates
The City’s water usage rates consist of five components: Base, Peaking, Supply, Conservation, and Offset.

The following subsections will present the calculations for each of the components.

4.9.3.1. Base Component
The Base component is applied uniformly across all units of water and is equal to the Base unit cost (Table 4-12, Column B, Line 4).

4.9.3.2. Peaking Component
Table 4-16 shows the Peaking unit cost calculation for each customer class and tier. Peaking costs (Column C) are the sum of Max Day and Max Hour costs for each class and tier (Table 4-13, Columns C and D).

Peaking costs are divided by annual use (Column B) to determine the Peaking unit cost for each class and tier (Column D).

Table 4-16: Peaking Unit Cost Calculation

A B C D
Line Customer Class Annual Use
(ccf)
Peaking
Costs
Unit
Cost
1 Building Water Usage
2 Tier 1 3,215,034 $1,055,557 $0.33
3 Tier 2 282,597 $125,773 $0.45
4 Tier 3 4,665,284 $5,262,443 $1.13
5 Non-Building Water
Usage
6 Tier 1 76,156 $37,381 $0.49
7 Tier 2 1,119,180 $1,140,181 $1.02

4.9.3.3. Supply Component
Table 4-17 shows the calculation of the unit cost for each source of water (Line 6). The percentage from each source (Line 2) is determined by the proportion of volume purchased from each source in Line 1. These proportions are used to determine the proportion of demand from each source (Line 3). The direct water Redlands Regular Meeting of 5-7-2024 864 of 1013
purchase costs (provided by City staff) on Line 4 are divided by the estimated potable demand (Line 3) to calculate the unit costs in Line 6.

Redlands Regular Meeting of 5-7-2024 865 of 1013
Table 4-18 shows supply component unit cost calculation for each customer class and tier. The lowest cost water source is used for Tier 1, if that source does not meet the demand, then water from the next lowest source is used and so on. Once the Tier 1 demand is met then Tier 2 is allocated the remaining lowest cost water and so on. The uses for each class and tier from each source (Columns E through H) are multiplied by their respective unit costs (Table 4-17, Line 6) to calculate the total supply cost for each class and tier in Column J. The total costs (Column J) are divided by the total use (Column I) to calculate the supply unit cost for each class and tier (Column K).

Table 4-17: Potable Water Supply Cost

A B C D E F
Line Potable Water Supply
Cost
MC
Surface
SAR Surface
(BV) Groundwater SWP Water Total
1 Volume (AF) 5,700 5,466 10,767 1,342 23,275
2 % from Source 24% 23% 46% 6% 100%
3 Estimated Potable
Demand 2,291,939 2,197,531 4,329,091 539,690 9,358,251
4 Direct Water Purchase
Costs $148,209 $431,779 $1,453,551 $200,000 $2,233,539
5 % of Water Purchase Costs 7% 19% 65% 9% 100%
6 Unit Cost ($/ccf) $0.06 $0.20 $0.34 $0.37 $0.24
Redlands Regular Meeting of 5-7-2024 866 of 1013
Table 4-18: Supply Component Calculation

A B C D E F G H I J K
Line Customer Class Tier
Definitions
Annual Use
(ccf)
% of
Annual Use
MC
Surface
SAR
Surface
(BV)
Groundw
ater
SWP
Water
Total Use
(ccf)
Total Cost Supply
Unit Cost
1 Building Water
Usage
2 Tier 1 16 3,215,034 34% 1,999,188 1,215,847 0 0 3,215,034 $368,173 $0.11 3 Tier 2 27 282,597 3% 0 282,597 0 0 282,597 $55,526 $0.20 4 Tier 3 Over 27 4,665,284 50% 0 418,395 3,776,134 470,755 4,665,284 $1,524,549 $0.33 5 Non-Building
Water Usage
6 Tier 1 27 76,156 1% 76,156 0 0 0 76,156 $4,925 $0.06
7 Tier 2 Over 27 1,119,180 12% 216,595 280,692 552,958 68,935 1,119,180 $280,367 $0.25 8 Total Potable
Use 9,358,251 100% 2,291,939 2,197,531 4,329,091 539,690 9,358,251 $2,233,539 Redlands Regular Meeting of 5-7-2024 867 of 1013

4.9.3.4. Conservation Component
The Conservation component is applied to Building Tier 3 use and is equal to the Conservation unit cost (Table 4-12, Column H, Line 4) for that class and tier only.

4.9.3.5. Offset Component
The Offset component is applied to Building Tier 1 use and is equal to the Offset unit cost (Table 4-12, Column I, Line 4) for that class and tier only. The offset helps to provide affordability in Tier 1 and benefits all building customers.

4.9.3.6. Water Usage Rates
Table 4-19 shows the calculation of proposed water usage rates (Column H) for each customer class and tier based on the five rate components (Columns C through G) described previously.

Table 4-19: Proposed Water Usage Rates (FY 2025)

A B C D E F G H
Line Customer
Class
Bi-monthly
Tiers, ccf Supply Base Delivery Peaking Conservation Offset Proposed Rate 1 Building Water Usage
2 Tier 1 16 $0.11 $1.21 $0.33 $0.00 ($0.09) $1.57
3 Tier 2 27 $0.20 $1.21 $0.45 $0.00 $0.00 $1.86
4 Tier 3 Over 27 $0.33 $1.21 $1.13 $0.12 $0.00 $2.79
5 Non-Building Water Usage
6 Tier 1 27 $0.06 $1.21 $0.49 $0.00 $0.00 $1.77
7 Tier 2 Over 27 $0.25 $1.21 $1.02 $0.00 $0.00 $2.49

4.9.3.7. Proposed Rate Schedule
Table 4-20 and Table 4-21 show the proposed bi-monthly water service charges, private fire service charges, and water usage rates, respectively. The proposed water rates after the FY 2025 test year are increased across the board by the revenue adjustments in Table 3-7.

Redlands Regular Meeting of 5-7-2024 868 of 1013
Table 4-20: Proposed Bi-Monthly Service Charges

A B C D E F G
Line Bi-Monthly Water Service
Charges
Current
Rates July 2024 July 2025 July 2026 July 2027 July 2028 1 Water Service
2 5/8" $32.10 $32.94 $33.60 $34.28 $34.97 $35.67
3 3/4" $43.17 $44.01 $44.90 $45.80 $46.72 $47.66
4 1" $64.67 $65.50 $66.81 $68.15 $69.52 $70.92
5 1 1/2" $116.79 $117.60 $119.96 $122.36 $124.81 $127.31 6 2" $172.83 $173.62 $177.10 $180.65 $184.27 $187.96
7 3" $299.23 $299.97 $305.97 $312.09 $318.34 $324.71
8 4" $462.10 $462.79 $472.05 $481.50 $491.13 $500.96
9 6" $853.02 $853.56 $870.64 $888.06 $905.83 $923.95
10 8" $1,256.97 $1,257.36 $1,282.51 $1,308.17 $1,334.34 $1,361.03 11 10" $2,977.00 $2,976.76 $3,036.30 $3,097.03 $3,158.98 $3,222.16 12 12" $3,915.20 $3,914.61 $3,992.91 $4,072.77 $4,154.23 $4,237.32 13 14 Fire Protection Service
15 2" $10.19 $11.81 $12.05 $12.30 $12.55 $12.81
16 3" $18.10 $21.20 $21.63 $22.07 $22.52 $22.98
17 4" $31.75 $37.39 $38.14 $38.91 $39.69 $40.49
18 6" $80.73 $95.48 $97.39 $99.34 $101.33 $103.36
19 8" $165.22 $195.69 $199.61 $203.61 $207.69 $211.85
20 10" $292.32 $346.42 $353.35 $360.42 $367.63 $374.99
21 12" $468.46 $555.33 $566.44 $577.77 $589.33 $601.12
22 23 Fire Hydrant Service
24 All Meters $73.60 $299.97 $305.97 $312.09 $318.34 $324.71 Table 4-21: Proposed Water Usage Rates

A B C D E F G H
Line Water Usage Rates
BiMonthly
Tiers
Current
Rates July 2024 July 2025 July 2026 July 2027 July 2028 1 Building Water Usage
2 Tier 1 16 $1.46 $1.57 $1.61 $1.65 $1.69 $1.73
3 Tier 2 27 $1.78 $1.86 $1.90 $1.94 $1.98 $2.02
4 Tier 3 Over 27 $2.69 $2.79 $2.85 $2.91 $2.97 $3.03
5 6 Non-Building Water Usage
7 Tier 1 27 $1.78 $1.77 $1.81 $1.85 $1.89 $1.93
8 Tier 2 Over 27 $2.69 $2.49 $2.54 $2.60 $2.66 $2.72
9 10 Fire Protection Water Usage
11 All Units $2.69 $2.79 $2.85 $2.91 $2.97 $3.03
Redlands Regular Meeting of 5-7-2024 869 of 1013

5. Wastewater – Financial Plan
This section of the report details the wastewater enterprise’s long-term financial plan, based on the projected revenues, expenses, debt service, and capital project costs. Raftelis modeled the financial plan without revenue adjustments (status quo) and with proposed revenue adjustments to ensure the financial sustainability and solvency of the wastewater utility. The result of the wastewater financial plan is the total revenue requirement utilized as the basis for the cost-of-service analysis and resulting rates in the next section of the report.

5.1. Customer Accounts and Usage
Table 5-1 shows the projected wastewater customer accounts and water usage for the study period. City staff provided wastewater customer accounts and usage data for FY 2022, which are then projected based on the customer account growth rates from Table 2-1. Typical types of users that fall within the non-residential classes include:
» Low Strength I – Car Wash
» Low Strength II – Office Building
» Low Strength III – Hotel (rooms only, no restaurant)
» Medium Strength I – Laundromat (linen & general)
» Medium Strength II – Mini-Mall
» Medium Strength III – Hotel (with restaurant)
» High Strength I – Laundry (industrial)
» High Strength II - Bakery
Redlands Regular Meeting of 5-7-2024 870 of 1013
Table 5-1: Projected Wastewater Customer Accounts and Usage

A B C D E F G
Line Wastewater Customer Data FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Residential (dwelling units)
2 Single Family 16,661 16,752 16,842 16,932 17,022 17,113 3 Multiple Family 10,017 10,072 10,126 10,180 10,234 10,289 4 Total - Residential 26,678 26,824 26,967 27,111 27,256 27,402 5 6 Non-Residential (ccf)
7 Low Strength I 43,850 44,091 44,328 44,567 44,806 45,047 8 Low Strength II 411,018 413,274 415,497 417,732 419,979 422,239 9 Low Strength III 89,331 89,821 90,305 90,790 91,279 91,770 10 Medium Strength I 26,055 26,198 26,339 26,480 26,623 26,766 11 Medium Strength II 37,882 38,090 38,295 38,501 38,708 38,916 12 Medium Strength III 19,582 19,689 19,795 19,902 20,009 20,117 13 High Strength I 10,217 10,273 10,328 10,383 10,439 10,495 14 High Strength II 135,769 136,514 137,248 137,987 138,729 139,475 15 Large Volume User 33,116 33,298 33,477 33,657 33,838 34,020 16 Total - Non-Residential 806,821 811,248 815,612 820,000 824,411 828,846 17 18 Schools (students)
19 Elementary 4,821 4,848 4,874 4,900 4,927 4,953
20 Secondary & High 8,145 8,189 8,233 8,278 8,322 8,367 21 Total - Schools 12,966 13,037 13,107 13,178 13,249 13,320

5.2. Current Rates
The City’s current wastewater rates include bi-monthly wastewater service charges for residential customers by type of dwelling unit, a non-residential wastewater usage rate based on ccf of water usage per customer class, and for schools by 100 students. Table 5-2 shows the current wastewater rates effective July 1, 2021.

Redlands Regular Meeting of 5-7-2024 871 of 1013
Table 5-2: Current Bi-Monthly Wastewater Service Charges and Usage Rates A B
Line Current Wastewater Rates FY 2024
1 Bi-Monthly Residential Rate ($/dwelling unit)
2 Single Family $62.43
3 Multiple Family $48.08
4 5 Non-Residential Rate ($/ccf)
6 Low Strength I $2.42
7 Low Strength II $2.87
8 Low Strength III $3.32
9 Medium Strength I $3.77
10 Medium Strength II $4.22
11 Medium Strength III $4.67
12 High Strength I $5.12
13 High Strength II $5.56
14 Large Volume User $3.32
15 16 Bi-Monthly Schools Rate ($/100 students)
17 Elementary $134.38
18 Secondary & High $215.02

5.3. Calculated Rate Revenues at Current Rates
Table 5-3 shows the calculated wastewater rate revenues by customer class. To calculate rate revenues, the current wastewater rates (Table 5-2) are multiplied by the customer account and usage data (Table 5-1) for all years of the study.

Residential rate revenues (Lines 2-3) = Residential wastewater service charge x Residential dwelling units x 6 billing periods
Non-residential rate revenues (Lines 7-15) = Non-residential wastewater usage rate x Non-residential water usage in ccf Schools rate revenues (Lines 19-20) = Schools wastewater service charge x (Number of students / 100 students) x 6 billing periods
Redlands Regular Meeting of 5-7-2024 872 of 1013
Table 5-3: Calculated Wastewater Rate Revenues at Current Rates

A B C D E F G
Line Calculated Rate Revenues FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Residential (dwelling units)
2 Single Family $6,240,804 $6,275,056 $6,308,577 $6,342,276 $6,376,156 $6,410,216 3 Multiple Family $2,889,669 $2,905,522 $2,921,037 $2,936,634 $2,952,315 $2,968,079 4 Total - Residential $9,130,473 $9,180,579 $9,229,613 $9,278,910 $9,328,470 $9,378,295 5 6 Non-Residential (ccf)
7 Low Strength I $106,118 $106,700 $107,274 $107,851 $108,432 $109,015 8 Low Strength II $1,179,622 $1,186,095 $1,192,476 $1,198,891 $1,205,340 $1,211,825 9 Low Strength III $296,580 $298,207 $299,811 $301,424 $303,046 $304,676 10 Medium Strength I $98,227 $98,765 $99,297 $99,831 $100,368 $100,908 11 Medium Strength II $159,863 $160,740 $161,605 $162,474 $163,348 $164,227 12 Medium Strength III $91,448 $91,949 $92,444 $92,941 $93,441 $93,944 13 High Strength I $52,309 $52,596 $52,879 $53,163 $53,449 $53,737 14 High Strength II $754,876 $759,018 $763,101 $767,206 $771,334 $775,483 15 Large Volume User $109,946 $110,549 $111,144 $111,741 $112,343 $112,947 16 Total - Non-Residential $2,848,988 $2,864,620 $2,880,031 $2,895,524 $2,911,101 $2,926,762 17 18 Schools (students)
19 Elementary $38,875 $39,088 $39,298 $39,510 $39,722 $39,936 20 Secondary & High $105,076 $105,652 $106,221 $106,792 $107,367 $107,944 21 Total - Schools $143,950 $144,740 $145,519 $146,302 $147,089 $147,880 22 23 Total - Non-Residential and
Schools $2,992,938 $3,009,360 $3,025,550 $3,041,826 $3,058,190 $3,074,642

5.4. Projected Revenues at Current Rates
Table 5-4 shows the projected wastewater revenues for the study period. City staff provided actual revenues for FY 2022 and budgeted revenues for FY 2023 and FY 2024. The wastewater rate revenues (Lines 3-4) from FY 2024 and beyond are from the rate revenue calculations (Table 5-3, Lines 4 and 23). Investment income (Lines 8, 16, 23, and 27) are calculated using the reserve interest rate (Table 2-2, Line 2). All other revenues are inflated for future years based on the non-rate revenue inflation factor (Table 2-2, Line 1).

Redlands Regular Meeting of 5-7-2024 873 of 1013
Table 5-4: Projected Wastewater Revenues at Current Rates

A B C D E F G
Line Projected Revenues FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Wastewater Service (521)
2 Cost Recover/Reimb
Expenditure $3,100 $3,100 $3,100 $3,100 $3,100 $3,100
3 Sewer Residential $9,130,473 $9,180,579 $9,229,613 $9,278,910 $9,328,470 $9,378,295 4 Sewer Non-Residential $2,992,938 $3,009,360 $3,025,550 $3,041,826 $3,058,190 $3,074,642 5 Recycled Water Usage $330,000 $330,000 $330,000 $330,000 $330,000 $330,000 6 Septage Charge $48,000 $48,000 $48,000 $48,000 $48,000 $48,000 7 Frontage Charge $69,000 $69,000 $69,000 $69,000 $69,000 $69,000 8 Investment Income $164,714 $137,328 $104,710 $83,431 $79,585 $75,754 9 Miscellaneous Receipts $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 10 Total - Wastewater Service
(521) $12,763,225 $12,802,367 $12,834,973 $12,879,268 $12,941,345 $13,003,791 11 12 Wastewater Project (523)
13 State Grants $0 $0 $0 $0 $0 $0
14 Federal Grants $0 $0 $0 $0 $0 $0
15 Other Grants $0 $0 $0 $0 $0 $0
16 Investment Income $0 $0 $0 $0 $0 $0
17 Sale of Surplus Property $0 $0 $0 $0 $0 $0
18 Miscellaneous Receipts $0 $0 $0 $0 $0 $0
19 Misc Taxable Sales $0 $0 $0 $0 $0 $0
20 Total - Wastewater Project
(523) $0 $0 $0 $0 $0 $0
21 22 Wastewater Debt Service (526)
23 Investment Income $0 $0 $0 $0 $0 $0
24 Total - Wastewater Debt
Service (526) $0 $0 $0 $0 $0 $0
25 26 Wastewater Capital
Improvement (529)
27 Investment Income $18,297 $18,480 $18,665 $18,852 $19,040 $19,231 28 Total - Wastewater Capital
Improvement (529) $18,297 $18,480 $18,665 $18,852 $19,040 $19,231 29 30 Total - Revenues $12,781,523 $12,820,848 $12,853,639 $12,898,120 $12,960,385 $13,023,022

5.5. Projected O&M Expenses
Table 5-5 shows the projected wastewater O&M expenses for the study period. City staff provided the actual O&M expenses for FY 2022 and budgeted O&M expenses for FY 2023 and FY 2024, which are escalated for future years of the study based on the expense inflation factors (Table 2-3).

Redlands Regular Meeting of 5-7-2024 874 of 1013
Table 5-5: Projected Wastewater O&M Expenses

A B C D E F G
Line Projected O&M Expenses FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Wastewater Service (521)
2 Salaries and Benefits $4,660,205 $4,846,613 $5,040,478 $5,242,097 $5,451,781 $5,669,852 3 Services - Power $850,000 $897,270 $947,169 $999,687 $1,055,118 $1,113,621 4 Services $5,440,159 $5,500,364 $5,665,375 $5,835,336 $6,010,396 $6,190,708 5 Supplies - Treatment $1,054,400 $1,113,037 $1,174,936 $1,240,083 $1,308,842 $1,381,414 6 Supplies $1,353,450 $1,394,054 $1,435,875 $1,478,951 $1,523,320 $1,569,019 7 Total - Wastewater Service
(521) $13,358,214 $13,751,338 $14,263,832 $14,796,154 $15,349,457 $15,924,615 8 9 Wastewater Project (523)
10 Services $250,000 $257,500 $265,225 $273,182 $281,377 $289,819 11 Supplies $0 $0 $0 $0 $0 $0
12 Total - Wastewater Project
(523) $250,000 $257,500 $265,225 $273,182 $281,377 $289,819 13 14 Wastewater Debt Service
(526)
15 Services $17,590 $18,117 $18,661 $19,221 $19,797 $20,391 16 Total - Wastewater Debt
Service (526) $17,590 $18,117 $18,661 $19,221 $19,797 $20,391 17 18 Total - O&M Expenses $13,625,804 $14,026,955 $14,547,718 $15,088,557 $15,650,631 $16,234,825

5.6. Debt Service
The City currently has one existing debt issue for the wastewater utility. Table 5-6 shows the annual principal and interest payments for the existing debt. This debt will be paid off in FY 2025.

Table 5-6: Existing Wastewater Debt Service

A B C D E F G
Line Existing Debt Service FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 CA Recycled Water Project
2 Principal $347,449 $356,136 $0 $0 $0 $0
3 Interest $17,590 $8,903 $0 $0 $0 $0
4 Total - CA Recycled Water
Project $365,039 $365,039 $0 $0 $0 $0
5 6 Total - Existing Debt Service $365,039 $365,039 $0 $0 $0 $0 To fund the wastewater capital program, the City plans on obtaining an SRF loan in FY 2026. The SRF loan is a 30-year term at 2.1% interest. The proposed loan proceeds would be used to fund most of the wastewater treatment plant rehabilitation capital costs. The proposed annual debt service is shown in Table 5-7. Because the SRF loan is paid off after completion of the project it is funding, repayment will start in FY 2028.

Redlands Regular Meeting of 5-7-2024 875 of 1013
Table 5-7: Proposed Wastewater Debt Service

A B C D E F G
Line Proposed Debt Service FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Proposed Loan Issuance $0 $0 $45,000,000 $0 $0 $0
2 Loan Proceeds $0 $0 $45,000,000 $0 $0 $0
3 4 Annual Debt Service
5 FY 2024 Bond Issuance $0 $0 $0 $0 $0 $0
6 FY 2025 Bond Issuance $0 $0 $0 $0 $0
7 FY 2026 Bond Issuance $0 $0 $2,036,979 $2,036,979
8 FY 2027 Bond Issuance $0 $0 $0
9 FY 2028 Bond Issuance $0 $0
10 FY 2029 Bond Issuance $0
11 12 Total - Proposed Debt
Service $0 $0 $0 $0 $2,036,979 $2,036,979

5.7. Capital Projects
City staff provided the CIP for the wastewater utility for the study period.

Redlands Regular Meeting of 5-7-2024 876 of 1013
Table 5-8 shows the CIP costs for the study period, escalated by the capital expense inflation factor (Table 2-3, Line 7) to determine CIP costs in future years’ dollars. The CIP provided consists of projects totaling $66.3 million for the five years FY 2025 through FY 2029. Projects are funded through a combination of wastewater rate revenues, cash reserves, DIF revenues, and debt proceeds.

Redlands Regular Meeting of 5-7-2024 877 of 1013
Table 5-8: Inflated Wastewater Capital Projects

A B C D E F G
Line Capital Projects (Inflated) FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Replacement
2 Annual Citywide Sewer Pipeline Replacement $3,090,000 $3,182,700 $3,278,181 $3,376,526 $3,477,822 $3,582,157 3 Citywide Sewer Manhole Adjustment $0 $318,270 $0 $0 $0 $0 4 WWTP Rehabilitation - MBR System Equipment - Phase 1 $0 $0 $0 $0 $0 $0 5 WWTP Rehabilitation - MBR System Equipment Installation- Phase 1A $0 $0 $0 $0 $0 $0
6 WWTP Rehabilitation - MBR & Digester Improvements - Phase 1B $0 $0 $0 $0 $0 $0 7 WWTP Rehabilitation - Phase 2 (Design) $0 $0 $0 $0 $0 $0 8 WWTP Rehabilitation - Phase 2A, 2B, 2C & 2D (Construction) $0 $0 $48,565,640 $0 $0 $0 9 Alabama Septage Pond Remediation $0 $0 $0 $0 $0 $0
10 WWTP Drying bed leachate remediation $0 $0 $0 $0 $0 $0 11 Brine Cap Rehabilitation $0 $0 $0 $112,551 $0 $0
12 Storm water-Hillside stabilization and parking lot rehab/expansion $103,000 $0 $0 $0 $0 $0 13 WW Composite Samplers $0 $0 $0 $0 $0 $0
14 Laboratory Instruments $56,650 $63,654 $71,027 $78,786 $86,946 $95,524 15 Centrifuge Conveyor $0 $0 $0 $0 $0 $0
16 Chemical Tank Lining Project $0 $0 $0 $0 $0 $0
17 Centrifuge HMI Upgrade Phase 1&2 $0 $0 $0 $0 $0 $0
18 WWTP Sign- Front Entrance $0 $31,827 $0 $0 $0 $0
19 Chemical Feed Skids (Polymer/Sodium Hypochlorite/Ferric) $0 $0 $0 $0 $0 $0 20 WW Operations Facility Improvement $0 $0 $0 $0 $0 $0 21 Climate Controlled Storage Units $0 $0 $0 $0 $0 $0
22 Chemical Storage Tank (Ferric) $0 $0 $0 $0 $0 $0
23 Citywide Sewer Manhole REHAB $515,000 $0 $0 $0 $0 $0 24 Total - Replacement $3,764,650 $3,596,451 $51,914,848 $3,567,863 $3,564,768 $3,677,681 Redlands Regular Meeting of 5-7-2024 878 of 1013
Table 5-9 shows the proposed wastewater capital financing plan based on the CIP ( Redlands Regular Meeting of 5-7-2024 879 of 1013
Table 5-8). The City plans to fully fund its wastewater CIP for all years of the study (Line 1). The debt proceeds (Line 11) are from the proposed Debt issues (Table 5-7, Line 2).

Table 5-9: Proposed Wastewater Capital Financing Plan

A B C D E F G
Line Capital Financing Plan FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 CIP to Spend 100% 100% 100% 100% 100% 100%
2 3 Inflated Project Costs $3,764,650 $3,596,451 $51,914,848 $3,567,863 $3,564,768 $3,677,681 4 5 Bond Proceeds $0 $0 $0 $0 $0 $0
6 Balance $0 $0 $0 $0 $0 $0
7 8 Capital Financing
9 Rate Funded $3,764,650 $3,596,451 $6,914,848 $3,567,863 $3,564,768 $3,677,681 10 Bond Funded $0 $0 $0 $0 $0 $0
11 Loan Funded $0 $0 $45,000,000 $0 $0 $0

5.8. Current Financial Plan – Status Quo
Table 5-10 shows the projected wastewater financial plan under the status quo scenario. Revenues (Lines 2-7) are equal to projected revenues (Table 5-4). The O&M expenses (Lines 10-18) are equal to projected O&M expenses for the study period (Table 5-5). Existing debt service (Line 21) is equal to the principal and interest payments for the City’s outstanding wastewater debt (Table 5-6). Rate funded CIP (Line 23) is derived from the capital financing plan (Table 5-9).

The net cash flow (Line 27) is negative for all years of the Study under the status quo scenario, signifying that the City’s current wastewater rate revenues are not sufficient to fund the operating expenses, debt and capital costs associated with the proposed CIP. In addition, the calculated debt coverage (Line 30) is well below the required coverage (Line 31), which will put the City’s wastewater utility into technical default. In FY 2026 and FY 2027, there is no calculated debt coverage because the wastewater utility will not have any debt service payments.

Redlands Regular Meeting of 5-7-2024 880 of 1013
Table 5-10: Projected Wastewater Financial Plan (Status Quo)

A B C D E F G
Line Wastewater Financial Plan FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Revenues
2 Rate Revenues $12,171,411 $12,237,939 $12,303,163 $12,368,736 $12,434,660 $12,500,937 3 Revenue Adjustments $0 $0 $0 $0 $0 $0
4 Investment Income $183,011 $149,690 $98,158 $43,425 $19,040 $19,231 5 Sale of Surplus Property $0 $0 $0 $0 $0 $0
6 Other Revenues $2,152,100 $2,152,100 $2,152,100 $2,152,100 $2,152,100 $2,152,100 7 Total - Revenues $14,506,523 $14,539,729 $14,553,421 $14,564,261 $14,605,801 $14,672,268 8 9 O&M Expenses
10 Salaries and Benefits $4,660,205 $4,846,613 $5,040,478 $5,242,097 $5,451,781 $5,669,852 11 Services - Power $850,000 $897,270 $947,169 $999,687 $1,055,118 $1,113,621 12 Services $5,707,749 $5,775,981 $5,949,261 $6,127,738 $6,311,570 $6,500,918 13 Supplies - Purchased Water $0 $0 $0 $0 $0 $0
14 Supplies - Treatment $1,054,400 $1,113,037 $1,174,936 $1,240,083 $1,308,842 $1,381,414 15 Supplies $1,353,450 $1,394,054 $1,435,875 $1,478,951 $1,523,320 $1,569,019 16 Fixed Assets $0 $0 $0 $0 $0 $0
17 Debt Service $0 $0 $0 $0 $0 $0
18 Total - O&M Expenses $13,625,804 $14,026,955 $14,547,718 $15,088,557 $15,650,631 $16,234,825 19 20 Debt and Capital
21 Existing Debt Service $365,039 $365,039 $0 $0 $0 $0
22 Proposed Debt Service $0 $0 $0 $0 $2,036,979 $2,036,979 23 Rate Funded Capital Projects $3,764,650 $3,596,451 $6,914,848 $3,567,863 $3,564,768 $3,677,681 24 DIF Funded Capital Projects $0 $0 $0 $0 $0 $0
25 Total - Debt and Capital $4,129,689 $3,961,490 $6,914,848 $3,567,863 $5,601,747 $5,714,660 26 27 Net Cash Flow ($3,248,970) ($3,448,717) ($6,909,145) ($4,092,158) ($6,646,577) ($7,277,217) 28 Net Operating Revenue $880,719 $512,773 $5,703 ($524,295) ($1,044,830) ($1,562,557) 29 30 Calculated Debt Coverage 2.41 1.40 #N/A #N/A (0.51) (0.77) 31 Required Debt Coverage 1.25 1.25 1.25 1.25 1.25 1.25 32 33 Beginning Balances $20,017,133 $16,768,163 $13,319,447 $6,410,302 $2,318,143 ($4,328,434) 34 Ending Balances $16,768,163 $13,319,447 $6,410,302 $2,318,143 ($4,328,434) ($11,605,650) Figure 5-1 shows the proposed wastewater capital financing plan in graphical format, based on the capital projects shown in
Redlands Regular Meeting of 5-7-2024 881 of 1013
Table 5-8. The dark teal bars represent the portion of CIP funded by rates.

Figure 5-1: Proposed Wastewater Capital Financing Plan
Figure 5-2 shows the projected wastewater financial plan without revenue adjustments in graphical format.

The turquoise line, representing current wastewater revenues, is well below the stacked bars representing the O&M (light grey), treatment and power (teal), debt service (yellow), and capital (dark grey) expenses. The green bars, which are below the stacked bars, show that the City will be drawing down its wastewater cash balances significantly without revenue adjustments.

Figure 5-2: Projected Wastewater Financial Plan (Status Quo) Redlands Regular Meeting of 5-7-2024 882 of 1013
Figure 5-3 shows the projected wastewater fund cash balance without revenue adjustments in graphical format. In FY 2028, the wastewater unrestricted cash balance (shown as turquoise bars) will be negative and become further depleted at the end of the study period. The grey bars represent the restricted reserves including operating, capital, equipment replacement and treatment plant reserves.

Figure 5-3: Projected Wastewater Fund Balances (Status Quo)

5.9. Proposed Financial Plan
Table 5-11 shows the proposed revenue adjustments necessary to maintain the financial sufficiency of the City’s wastewater utility. The revenue adjustments will be effective starting July 2024 and in July every year thereafter.

Table 5-11: Proposed Wastewater Revenue Adjustments
A B C
Line Fiscal Year Revenue
Adjustment Month Effective
1 FY 2025 10.0% July
2 FY 2026 10.0% July
3 FY 2027 10.0% July
4 FY 2028 10.0% July
5 FY 2029 8.0% July
Table 5-12 shows the projected wastewater financial plan with the proposed revenue adjustments (Table 5-11). The net cash flow (Line 27) is negative in some years of the study period but will reduce the wastewater cash balances significantly less than under the status quo scenario. With the proposed revenue adjustments and debt issuance, the wastewater utility will meet its debt coverage ratio requirements (Line 30) and have positive ending balances (Line 34).

Redlands Regular Meeting of 5-7-2024 883 of 1013
Table 5-12: Projected Wastewater Financial Plan (Proposed Revenue Adjustments)

A B C D E F G
Line Wastewater Financial Plan FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Revenues
2 Rate Revenues $12,171,411 $12,237,939 $12,303,163 $12,368,736 $12,434,660 $12,500,937 3 Revenue Adjustments $0 $1,223,794 $2,583,664 $4,094,052 $5,770,926 $7,265,895 4 Investment Income $183,011 $155,809 $123,375 $102,283 $98,625 $94,985 5 Sale of Surplus Property $0 $0 $0 $0 $0 $0
6 Other Revenues $2,152,100 $2,152,100 $2,152,100 $2,152,100 $2,152,100 $2,152,100 7 Total - Revenues $14,506,523 $15,769,642 $17,162,303 $18,717,171 $20,456,311 $22,013,917 8 9 O&M Expenses
10 Salaries and Benefits $4,660,205 $4,846,613 $5,040,478 $5,242,097 $5,451,781 $5,669,852 11 Services - Power $850,000 $897,270 $947,169 $999,687 $1,055,118 $1,113,621 12 Services $5,707,749 $5,775,981 $5,949,261 $6,127,738 $6,311,570 $6,500,918 13 Supplies - Purchased Water $0 $0 $0 $0 $0 $0
14 Supplies - Treatment $1,054,400 $1,113,037 $1,174,936 $1,240,083 $1,308,842 $1,381,414 15 Supplies $1,353,450 $1,394,054 $1,435,875 $1,478,951 $1,523,320 $1,569,019 16 Fixed Assets $0 $0 $0 $0 $0 $0
17 Debt Service $0 $0 $0 $0 $0 $0
18 Total - O&M Expenses $13,625,804 $14,026,955 $14,547,718 $15,088,557 $15,650,631 $16,234,825 19 20 Debt and Capital
21 Existing Debt Service $365,039 $365,039 $0 $0 $0 $0
22 Proposed Debt Service $0 $0 $0 $0 $2,036,979 $2,036,979 23 Rate Funded Capital
Projects $3,764,650 $3,596,451 $6,914,848 $3,567,863 $3,564,768 $3,677,681 24 DIF Funded Capital Projects $0 $0 $0 $0 $0 $0
25 Total - Debt and Capital $4,129,689 $3,961,490 $6,914,848 $3,567,863 $5,601,747 $5,714,660 26 27 Net Cash Flow ($3,248,970) ($2,218,804) ($4,300,263) $60,752 ($796,066) $64,432 28 Net Operating Revenue $880,719 $1,742,686 $2,614,585 $3,628,615 $4,805,680 $5,779,092 29 30 Calculated Debt Coverage 2.41 4.77 #N/A #N/A 2.36 2.84 31 Required Debt Coverage 1.25 1.25 1.25 1.25 1.25 1.25 32 33 Beginning Balances $20,017,133 $16,768,163 $14,549,359 $10,249,096 $10,309,848 $9,513,781 Redlands Regular Meeting of 5-7-2024 884 of 1013
34 Ending Balances $16,768,163 $14,549,359 $10,249,096 $10,309,848 $9,513,781 $9,578,214 Figure 5-4 shows the proposed wastewater capital financing plan in graphical format, based on the capital financial plan shown in Table 5-9. The dark teal bars represent the portion of replacement CIP funded by rates and the turquoise bars represent the portion of replacement CIP funded by bond proceeds. Most of the capital projects in FY 2026 are funded from SRF Loan proceeds.

Figure 5-4: Proposed Wastewater Capital Financing Plan
Figure 5-5 shows the projected wastewater financial plan with the proposed revenue adjustments. Although the net cash flow is still negative in some years of the study, shown by the green bars under the stacked grey, yellow, and teal bars, the additional revenue will allow the wastewater utility to meet its debt coverage requirements and fund its operating and capital costs for the Study period.

Redlands Regular Meeting of 5-7-2024 885 of 1013
Figure 5-5: Projected Wastewater Financial Plan (Proposed Revenue Adjustments) Figure 5-6 shows the projected wastewater fund balances with the proposed revenue adjustments. The cash balances are positive for all years of the Study. These balances are drawn down to fund the City’s capital projects in FY 2025, FY 2026, and FY 2028.

Figure 5-6: Projected Wastewater Fund Balances (Proposed Revenue Adjustments) Redlands Regular Meeting of 5-7-2024 886 of 1013

6. Wastewater – Cost of Service
Analysis and Rates
This section of the report details the cost-of-service analysis and rate calculation process to determine the proposed wastewater rates. The goal of this process is to determine the cost of providing wastewater service to each of the City’s wastewater customer classes and to ensure equity and fairness among the various classes.

6.1. Process and Approach
The cost-of-service analysis utilized to develop the wastewater rates followed the guidelines for allocating costs outlined in the WEF Manual No. 27. The cost-of-service analysis and rate design process consists of eight major steps, as outlined below:

1. Determine the revenue requirement, equal to the revenue to be recovered from rates.

2. Conduct a treatment plant mass balance analysis to estimate the flows and strength characteristics of each customer class.

3. Functionalize O&M expenses and capital assets into functional categories such as treatment, laboratory, collection, engineering, etc.

4. Allocate each functional category into cost components such as wastewater flow and strength, which includes BOD and TSS.

5. Develop customer class characteristics and units of service by cost component.

6. Calculate the cost component unit rates by dividing the total cost in each cost component by the total units of service for that component. For example, wastewater flow is measured in ccf and BOD and TSS are measured in lbs per year.

7. Calculate the cost for each customer class by multiplying the unit cost by the units of service for each customer class.

8. Design rates to meet City’s objectives.

6.2. Revenue Requirement
The first step of the cost-of-service analysis is to determine the revenue requirement for the test year, or ratemaking year. The test year of this study is FY 2025. Table 6-1 shows the revenue requirement calculation for the wastewater utility.

The revenue requirements (Lines 2-4) are equal to the O&M expenses and debt and capital costs for FY 2025 (Table 5-12, Column C, Lines 18 and 25). The revenues from other sources (Lines 7-11), also known as nonrate revenues or revenue offsets, are equal to all non-rate revenues (Table 5-12, Column C, Lines 4-6). The adjustment for cash from/(to) reserves (Line 15) is equal to the negative value of net cash flow (Table 5-12, Column C, Line 27).

The revenue to be recovered from rates (Line 19) is divided between operating (Column B) and capital (Column C) based on the function of each line item. For example, debt and capital costs (Line 3) are allocated to capital, while O&M expenses (Line 2) are allocated to operating. Note that the total revenue requirement (Column D, Line 19) is equal to rate revenues for a full year of the revenue adjustment for FY 2025.

Redlands Regular Meeting of 5-7-2024 887 of 1013
Table 6-1: Wastewater Revenue Requirement Calculation

A B C D
Line Revenue Requirement (FY 2025) Operating Capital Total 1 Revenue Requirements
2 O&M Expenses $14,008,838 $0 $14,008,838
3 Debt and Capital $0 $3,979,607 $3,979,607
4 Total - Revenue Requirements $14,008,838 $3,979,607 $17,988,445 5 6 Revenue from Other Sources
7 Investment Income $0 $137,328 $137,328
8 Sale of Surplus Property $0 $0 $0
9 Other Revenues $0 $0 $0
10 Wastewater Service (521) $427,100 $0 $427,100
11 Wastewater Project (523) $0 $0 $0
12 Total - Revenue from Other Sources $427,100 $137,328 $564,428 13 14 Adjustments
15 Cash from Reserves $0 $3,962,284 $3,962,284
16 Midyear Increase $0 $0 $0
17 Subtotal - Adjustments $0 $3,962,284 $3,962,284
18 19 Revenue to be Recovered from Rates $13,581,738 ($120,005) $13,461,733

6.3. Plant Mass Balance
The second step of the cost-of-service analysis is to conduct a plant mass balance analysis. The plant mass balance analysis is used to estimate and validate the wastewater loadings (flow and strength) generated by each customer class. While wastewater discharged into sewers for most users is not metered when it enters the wastewater system, the total amount of flow and strength entering the treatment plant is a known quantity.

The quantity entering into the wastewater system is called total plant influent.

From the total plant influent, a portion is subtracted for inflows and infiltration (I&I). Non-residential customer flows can be estimated based on their water usage and using industry-accepted return factors. From there, residential customer loadings can be calculated by subtracting I&I and estimated non-residential loadings from total plant influent to determine the reasonableness of residential loadings.

Table 6-2 shows the wastewater flow estimates for elementary and secondary schools. The estimated wastewater flow per student (Line 1) in gallons per capita per day (gpcd) is based on industry standards, with some conservation factored in for secondary schools. This is multiplied by the projected number of students for FY 2025 (Table 5-1, Column D, Lines 19-20). The annual flow in gallons (Line 3) is converted to ccf (Line 4) to determine the total wastewater flow in ccf for elementary and secondary schools.

Redlands Regular Meeting of 5-7-2024 888 of 1013
Table 6-2: Schools Wastewater Flow Estimate
A B C
Line Schools Elementary Secondary
1 Per Student Flow (gcpd) 5 8
2 Students 4,848 8,189
3 Annual Flow (gal) 7,962,732 22,418,316
4 Annual Flow (ccf) 10,645 29,971
Redlands Regular Meeting of 5-7-2024 889 of 1013
Table 6-3 shows the plant balance analysis for all customer classes. There is no change to the customer classes which are grouped by the strength of their wastewater flow. The left-most columns (Columns B to D) represent the same values as the right-most columns (Columns F to H) in converted values. Flow is measured in million gallons per day (MGD) and converted to ccf per year. BOD and TSS are measured in milligrams per liter (mg/L) and converted to lbs per year.

City staff provided total plant influent (Line 1) and estimated approximately 7 percent of total influent to be from I&I (Line 2). Customers are grouped based on their strength and estimated strength - BOD and TSS in mg/L (Columns C and D, Lines 2-17) - are based on industry standards. The non-residential return factors (Column E) are estimated for the City’s characteristics. The wastewater flows for non-residential customers (Column F, Lines 6-14) are calculated by multiplying the non-residential water usage (Table 5-1, Column C, Lines 7-15) by the return factors. The estimated wastewater flows for schools (Column D, Lines 16-17) were calculated in
Table 6-2. Septage loadings (Line 20) represent a small portion of total plant loadings; flow is derived from data provided by City staff, and strength is based on industry standards.

The net residential loadings (Line 22) are determined by subtracting non-residential loadings (Lines 5-17), septage (Line 20), and I&I (Line 2) from total plant influent (Line 1).

Redlands Regular Meeting of 5-7-2024 890 of 1013
Table 6-3: Wastewater Plan Balance Calculation

A B C D E F G H
Line Plant Balance Flow (MGD) BOD (mg/L) TSS (mg/L) Return Factor Flow (ccf) BOD (lbs/yr) TSS (lbs/yr)
1 Total Plant Influent 5.85 329 248 2,852,760 5,863,450 4,423,940 2 Less: I&I 0.41 100 100 199,693 124,656 124,656
3 Net Plant Influent 5.44 346 260 2,653,067 5,738,795 4,299,284 4 5 Non-Residential
6 Low Strength I 0.08 50 50 84% 37,036 11,560 11,560
7 Low Strength II 0.71 150 150 84% 347,150 325,055 325,055 8 Low Strength III 0.15 250 250 84% 75,450 117,747 117,747 9 Medium Strength I 0.05 350 350 84% 22,006 48,079 48,079 10 Medium Strength II 0.07 450 450 84% 31,996 89,878 89,878 11 Medium Strength III 0.03 550 550 84% 16,539 56,784 56,784 12 High Strength I 0.02 650 650 84% 8,629 35,013 35,013 13 High Strength II 0.23 750 750 84% 114,672 536,867 536,867 14 Large Volume User 0.06 250 250 84% 27,970 43,650 43,650 15 16 Elementary School 0.02 130 130 100% 10,645 8,639 8,639 17 Secondary & High School 0.06 130 130 100% 29,971 24,322 24,322 18 Subtotal Non-Residential Flow 1.48 288 288 722,064 1,297,592 1,297,592 19 20 Septage 0.001 5,400 12,000 583 19,665 43,700
21 22 Net Residential Flow 3.96 367 245 1,930,419 4,421,538 2,957,993 Redlands Regular Meeting of 5-7-2024 891 of 1013
The plant mass balance analysis in
Redlands Regular Meeting of 5-7-2024 892 of 1013
Table 6-3 results in total estimated residential loadings. Table 6-4 shows the number of total single family and multiple family dwelling units. To allocate the total flow and strength between single and multiple family customers, the dwelling units (Table 5-1, Column D, Lines 2-3) are multiplied by the dwelling unit (DU) ratio (Column C) to determine the adjusted units (Column D). The dwelling unit ratio represents the amount of wastewater flow compared to the average flow from a single family customer. The ratio for multiple family dwelling units is lower than that of single family because multiple family units tend to have a smaller household size based on housing density data. The proportion of adjusted units (Column E), or equivalent dwelling units (EDU), is used to allocate the estimated residential loadings between single and multiple family.

Table 6-4: Residential Proportion of Wastewater Flow

A B C D E
Line Residential Customer
Classes
Dwelling
Units DU Ratio Adjusted Units
Proportion of
Total Units
1 Single Family 16,752 1.00 16,752 67.7%
2 Multiple Family 10,072 0.79 7,991 32.3%
3 Total - Residential 26,824 24,744 100.0%
Table 6-5 shows the estimated residential wastewater loadings, allocated using the EDU ratios (Table 6-4, Column E). The total residential flow (Line 3) is equal to that calculated in the plant mass balance analysis ( Redlands Regular Meeting of 5-7-2024 893 of 1013
Table 6-3, Columns F to H, Line 22). To validate the results of the plant mass balance analysis, the total estimated residential flow is divided by the total population estimate, equal to 70,130 people, to determine that each resident in the City uses 56 gpcd. The residential wastewater strength shown in Table 6-3, Line 22, is also reasonable given the reduced wastewater flow. This is a reasonable estimate based on industry standard wastewater flow and strength estimates.

Table 6-5: Estimated Residential Wastewater Loadings

A B C D
Line Residential Customer
Classes Flow (ccf) BOD (lbs/yr) TSS (lbs/yr)
1 Single Family 1,306,953 2,993,516 2,002,651
2 Multiple Family 623,467 1,428,022 955,342
3 Total - Residential 1,930,419 4,421,538 2,957,993
The estimated flow from a single family dwelling unit is 160 gpd. The wastewater strength is higher because of lower wastewater flow due to conservation. This is now common for residential flow and strength. The estimated flow is calculated as follows:
1,306,953 ccf per year / 16,752 units x 748 ccf per gallon / 365 days per year = 160 gpd

6.4. Operating and Capital Cost Allocation
The next step in the cost-of-service analysis is to determine the operating and capital cost allocations by cost component. The cost components in this Study include flow, BOD, TSS, and general.

Table 6-6 shows the wastewater operating cost allocation. The flow cost component represents costs associated with wastewater flow, such as collection. The BOD and TSS cost components represent costs associated with wastewater strength, such as treatment and laboratory analyses. General costs, such as administration or engineering costs, do not have a specific function.

For the purpose of allocating operating costs, City staff provided the O&M expense budget estimates by function (Column F, Lines 13-21). This is representative of the distribution of operating costs shown in Table 5-5. Functions include administration, engineering, treatment and operations, treatment plant maintenance, quality control, industrial waste monitoring, collection, and laboratory. The operating costs are allocated to each cost component based on the percentage allocation (Lines 2-10) for each component. The final O&M expense allocation (Line 23) is determined by taking the weighted proportion of total operating costs by cost component based on the percentage allocations.

Redlands Regular Meeting of 5-7-2024 894 of 1013
Table 6-6: Wastewater Operating Cost Allocation

A B C D E F
Line O&M Expense Allocation Flow BOD TSS General Total
1 Percentage Allocation
2 Wastewater Admin & General 100% 100%
3 Wastewater Engineering 100% 100%
4 Wastewater Treatment and Operations 50% 25% 25% 100%
5 Wastewater Treatment Plant
Maintenance 50% 25% 25% 100%
6 Wastewater Quality Control 50% 50% 100%
7 Wastewater Industrial Waste
Monitoring 100% 100%
8 Wastewater Collection System -
General 100% 100%
9 WW Joint Laboratory - Water 50% 50% 100%
10 WW Joint Laboratory - Solid Waste 50% 50% 100%
11 12 Dollar Allocation
13 Wastewater Admin & General $0 $0 $0 $3,365,775 $3,365,775 14 Wastewater Engineering $0 $0 $0 $734,148 $734,148
15 Wastewater Treatment and Operations $2,372,907 $1,186,454 $1,186,454 $0 $4,745,814 16 Wastewater Treatment Plant
Maintenance $604,593 $302,297 $302,297 $0 $1,209,186
17 Wastewater Quality Control $0 $361,003 $361,003 $0 $722,006 18 Wastewater Industrial Waste
Monitoring $930,789 $0 $0 $0 $930,789
19 Wastewater Collection System -
General $1,990,298 $0 $0 $0 $1,990,298
20 WW Joint Laboratory - Water $0 $160,103 $160,103 $0 $320,206 21 WW Joint Laboratory - Solid Waste $0 $4,366 $4,366 $0 $8,732 22 Total - O&M Expenses $5,898,587 $2,014,222 $2,014,222 $4,099,924 $14,026,955 23 O&M Expense Allocation 42.1% 14.4% 14.4% 29.2% 100.0% Table 6-7 shows the wastewater capital cost allocation. To minimize fluctuations in the capital cost allocation as capital projects change from year to year, capital costs are allocated on the basis of capital assets. For the purpose of allocating capital costs, City staff provided the wastewater capital assets listed by function (Column F, Lines 10-15). This is representative of the distribution of capital costs shown in Redlands Regular Meeting of 5-7-2024 895 of 1013
Table 5-8. Functions include land, wastewater facilities, construction in progress, machinery and equipment, collection system, and vehicles. The capital asset costs are allocated into each cost component based on the percentage allocation (Lines 2-7) for each component. The final capital expense allocation (Line 17) is determined by taking the weighted proportion of total capital asset costs by cost component.

Table 6-7: Wastewater Capital Allocation

A B C D E F
Line Capital Expense Allocation Flow BOD TSS General Total 1 Percentage Allocation
2 Land (For WWTP and Perc Ponds) 50% 25% 25% 100%
3 Wastewater Facilities/Plant 50% 25% 25% 100%
4 Construction in Progress 100% 100%
5 Machinery and Equipment 50% 25% 25% 100%
6 Collection System 100% 100%
7 Vehicles 100% 100%
8 9 Dollar Allocation
10 Land (For WWTP and Perc Ponds) $2,219,416 $1,109,708 $1,109,708 $0 $4,438,832 11 Wastewater Facilities/Plant $5,307,140 $2,653,570 $2,653,570 $0 $10,614,280 12 Construction in Progress $0 $0 $0 $0 $0
13 Machinery and Equipment $82,840 $41,420 $41,420 $0 $165,680 14 Collection System $18,220,858 $0 $0 $0 $18,220,858
15 Vehicles $186,819 $0 $0 $0 $186,819
16 Total - Capital Assets $26,017,073 $3,804,698 $3,804,698 $0 $33,626,469 17 Capital Expense Allocation 77% 11% 11% 0% 100%

6.5. Unit Cost Components
Table 6-8 shows the wastewater service units by cost component, which are from the plant mass balance analysis (
Redlands Regular Meeting of 5-7-2024 896 of 1013
Table 6-3).

Redlands Regular Meeting of 5-7-2024 897 of 1013
Table 6-8: Wastewater Service Units by Cost Components

A B C D
Line Customer Class Flow (ccf) BOD (lbs/yr) TSS (lbs/yr) 1 Residential
2 Single Family Residence 1,306,953 2,993,516 2,002,651 3 Multi-Family Residence 623,467 1,428,022 955,342
4 Total - Residential 1,930,419 4,421,538 2,957,993
5 6 Non-Residential
7 Low Strength I 37,036 11,560 11,560
8 Low Strength II 347,150 325,055 325,055
9 Low Strength III 75,450 117,747 117,747
10 Medium Strength I 22,006 48,079 48,079
11 Medium Strength II 31,996 89,878 89,878
12 Medium Strength III 16,539 56,784 56,784
13 High Strength I 8,629 35,013 35,013
14 High Strength II 114,672 536,867 536,867
15 Large Volume User 27,970 43,650 43,650
16 Total - Non-Residential 681,448 1,264,632 1,264,632
17 18 Schools
19 Elementary School 10,645 8,639 8,639
20 Secondary & High School 29,971 24,322 24,322
21 Total - Schools 40,616 32,960 32,960
22 23 Septage 583 19,665 43,700
24 25 Total 2,653,067 5,738,795 4,299,284
Table 6-9 shows the calculation of unit costs by cost component. The operating revenue requirement (Table 6-1, Column B, Line 19) is allocated based on the O&M expense allocation (Table 6-6, Line 23) for each cost component. Similarly, the capital revenue requirement (Table 6-1, Column C, Line 19) is allocated based on the capital asset allocation (Table 6-7, Line 17). Then, the general costs (Column E, Line 3) are reallocated to the flow, BOD, and TSS cost components proportionately to the remaining cost of service. The adjusted cost of service for each cost component (Line 5) is divided by the units of service (Line 7) derived from Table 6-8, resulting in the unit cost component.

Redlands Regular Meeting of 5-7-2024 898 of 1013
Table 6-9: Wastewater Cost of Service and Unit Costs

A B C D E F
Line Cost of Service Allocation Flow BOD TSS General Total 1 Operating Cost $5,711,365 $1,950,291 $1,950,291 $3,969,792 $13,581,738 2 Capital Cost ($92,849) ($13,578) ($13,578) $0 ($120,005) 3 Total Cost of Service $5,618,516 $1,936,713 $1,936,713 $3,969,792 $13,461,733 4 Allocation of General Costs $2,349,818 $809,987 $809,987 ($3,969,792) $0 5 Adjusted Cost of Service $7,968,335 $2,746,699 $2,746,699 $0 $13,461,733 6 7 Units of Service 2,653,067 5,738,795 4,299,284
8 ccf lbs/yr lbs/yr
9 10 Unit Cost $3.00 $0.48 $0.64
11 ccf lbs/yr lbs/yr

6.6. Revenue Requirement Allocation
The final step in the cost-of-service analysis is to allocate the revenue requirement to each customer class based on their share of burden in the wastewater system. Table 6-10 shows the revenue requirement allocated to each customer class based on the cost components, which is calculated by multiplying the unit costs of each cost component (Table 6-9, Line10 ) by the units of service for each customer class (Table 6-8). Note that the total cost of service (Column E, Line 25) is equal to the total revenue required from rates (Table 6-1, Column D, Line 19). The calculations in the table may not be equal to the precise number shown due to rounding within the tables.

Redlands Regular Meeting of 5-7-2024 899 of 1013
Table 6-10: Allocation of Wastewater Revenue Requirement to Customer Classes

A B C D E
Line Customer Class Flow BOD TSS Total
1 Residential
2 Single Family Residence $3,925,357 $1,432,755 $1,279,441 $6,637,553 3 Multi-Family Residence $1,872,546 $683,479 $610,342 $3,166,368 4 Total - Residential $5,797,903 $2,116,234 $1,889,783 $9,803,921 5 6 Non-Residential
7 Low Strength I $111,237 $5,533 $7,385 $124,155
8 Low Strength II $1,042,644 $155,578 $207,669 $1,405,891 9 Low Strength III $226,610 $56,356 $75,225 $358,191
10 Medium Strength I $66,094 $23,012 $30,717 $119,823
11 Medium Strength II $96,097 $43,017 $57,421 $196,535
12 Medium Strength III $49,674 $27,178 $36,278 $113,130 13 High Strength I $25,917 $16,758 $22,369 $65,043
14 High Strength II $344,410 $256,955 $342,990 $944,355 15 Large Volume User $84,007 $20,892 $27,887 $132,785
16 Total - Non-Residential $2,046,690 $605,277 $807,940 $3,459,907 17 18 Schools
19 Elementary School $31,973 $4,135 $5,519 $41,627
20 Secondary & High School $90,016 $11,641 $15,538 $117,196 21 Total - Schools $121,989 $15,776 $21,058 $158,822
22 23 Septage $1,752 $9,412 $27,918 $39,083
24 25 Total $7,968,335 $2,746,699 $2,746,699 $13,461,733

6.7. Rate Calculation
Table 6-11 shows the rate calculation for the City’s proposed wastewater rates for the FY 2025 test year.

Bi-monthly residential service charge = Residential cost of service / dwelling units / 6 billing periods Non-residential wastewater usage rate = Non-residential cost of service / ccf of water usage Bi-monthly schools service charge = Schools cost of service / students x 100 students / 6 billing periods The City’s wastewater utility incurs additional costs (Line 22) to serve septage customers above and beyond the allocated cost of service. These additional costs are equal to the total burdened labor cost for administrative work related to collecting septage. Note that the revenues from septage charges were estimated in the projected wastewater revenues (Table 5-4, Line 5). The additional costs are calculated as follows:

Redlands Regular Meeting of 5-7-2024 900 of 1013
$30 per hour x 0.25 hours x 2 for overhead costs / 2,000 gallons per load x 363,636 gallons of septage per year Table 6-11: Wastewater Bi-Monthly Rate Calculation

A B C D
Line Customer Class Cost of Service FY 2025 Units Proposed BiMonthly Rate 1 Residential dwelling units per dwelling unit
2 Single Family Residence $6,637,553 16,752 $66.04
3 Multi-Family Residence $3,166,368 10,072 $52.40
4 5 Non-Residential ccf of water per ccf
6 Low Strength I $124,155 44,091 $2.82
7 Low Strength II $1,405,891 413,274 $3.41
8 Low Strength III $358,191 89,821 $3.99
9 Medium Strength I $119,823 26,198 $4.58
10 Medium Strength II $196,535 38,090 $5.16
11 Medium Strength III $113,130 19,689 $5.75
12 High Strength I $65,043 10,273 $6.34
13 High Strength II $944,355 136,514 $6.92
14 Large Volume User $132,785 33,298 $3.99
15 16 Schools students per 100 students
17 Elementary School $41,627 4,848 $143.11
18 Secondary & High School $117,196 8,189 $238.52
19 20 Septage gallons per gallon
21 Cost of Service $39,083 436,364 $0.09
22 Additional Costs $3,273 436,364 $0.01
23 Total Septage $42,355 436,364 $0.10
Redlands Regular Meeting of 5-7-2024 901 of 1013
Table 6-12 shows the bi-monthly rate comparison between the proposed rates calculated in Table 6-11 and the City’s current wastewater rates.

Redlands Regular Meeting of 5-7-2024 902 of 1013
Table 6-12: Wastewater Bi-Monthly Rate Comparison

A B C D
Line Customer Class Proposed BiMonthly Rate
Current BiMonthly Rate Difference ($)
1 Residential per dwelling unit
2 Single Family Residence $66.04 $62.43 $3.61
3 Multi-Family Residence $52.40 $48.08 $4.32
4 5 Non-Residential per ccf
6 Low Strength I $2.82 $2.42 $0.40
7 Low Strength II $3.41 $2.87 $0.54
8 Low Strength III $3.99 $3.32 $0.67
9 Medium Strength I $4.58 $3.77 $0.81
10 Medium Strength II $5.16 $4.22 $0.94
11 Medium Strength III $5.75 $4.67 $1.08
12 High Strength I $6.34 $5.12 $1.22
13 High Strength II $6.92 $5.56 $1.36
14 Large Volume User $3.99 $3.32 $0.67
15 16 Schools per 100 students
17 Elementary School $143.11 $134.38 $8.73
18 Secondary & High School $238.52 $215.02 $23.50
19 20 Septage per gallon
21 Septage Charge * $0.10 $0.11 ($0.01)
* minimum septage charge is $15

6.8. Proposed Rates
Table 6-13 and Table 6-14 show the proposed bi-monthly wastewater service charges and the non-residential wastewater rates, respectively. The proposed wastewater rates for July 2024 are from Table 6-11. The proposed wastewater rates in the following years are increased across the board by the revenue adjustments in Table 5-11.

Table 6-13: Proposed Bi-Monthly Wastewater Service Charges

A B C D E F G
Line Bi-Monthly Wastewater
Service Charges
Current
Rates July 2024 July 2025 July 2026 July 2027 July 2028 1 Residential ($/dwelling unit)
2 Single Family $62.43 $66.04 $72.65 $79.92 $87.92 $94.96 3 Multiple Family $48.08 $52.40 $57.64 $63.41 $69.76 $75.35 4 5 Schools ($/100 students)
6 Elementary $134.38 $143.11 $157.43 $173.18 $190.50 $205.74 7 Secondary & High $215.02 $238.52 $262.38 $288.62 $317.49 $342.89 Redlands Regular Meeting of 5-7-2024 903 of 1013
Table 6-14: Proposed Non-Residential Wastewater Rates

A B C D E F G
Line Wastewater Usage Rates Current
Rates
July 2024 July 2025 July 2026 July 2027 July 2028
1 Non-Residential Usage ($/ccf)
2 Low Strength I $2.42 $2.82 $3.11 $3.43 $3.78 $4.09
3 Low Strength II $2.87 $3.41 $3.76 $4.14 $4.56 $4.93
4 Low Strength III $3.32 $3.99 $4.39 $4.83 $5.32 $5.75
5 Medium Strength I $3.77 $4.58 $5.04 $5.55 $6.11 $6.60 6 Medium Strength II $4.22 $5.16 $5.68 $6.25 $6.88 $7.44 7 Medium Strength III $4.67 $5.75 $6.33 $6.97 $7.67 $8.29 8 High Strength I $5.12 $6.34 $6.98 $7.68 $8.45 $9.13
9 High Strength II $5.56 $6.92 $7.62 $8.39 $9.23 $9.97
10 Large Volume User $3.32 $3.99 $4.39 $4.83 $5.32 $5.75 11 Minimum Charge ($) $48.08 $52.40 $57.64 $63.41 $69.76 $75.35 12 13 Septage Charge ($/gal) $0.11 $0.10 $0.11 $0.13 $0.15 $0.17 14 Minimum Septage Charge $15.00 $16.50 $18.15 $19.97 $21.57 Redlands Regular Meeting of 5-7-2024 904 of 1013

7. Non-Potable Water – Financial
Plan
This section of the report details the non-potable enterprise’s long-term financial plan, based on the projected revenues, expenses, debt service, and capital project costs. Raftelis modeled the financial plan without revenue adjustments (status quo) and with proposed revenue adjustments to ensure the financial sustainability and solvency of the non-potable water utility.

7.1. Projected Revenues
City staff provided the actual FY 2022 revenues and budgeted FY 2023 and FY 2024 revenues for the nonpotable water utility, which were used to project revenues for the remainder of the Study period. Table 7-1 shows the projected water revenues for each of the non-potable water funds.

The non-potable water rate revenues (Lines 2-3) are inflated for future years based on the weighted customer account growth assumptions for each customer class (Table 2-1). The City expects modest increases in nonpotable water rate revenues for all years of the Study. The investment incomes (Lines 4 and 9) are calculated using the reserve interest rate (Table 2-2, Line 2). The remaining revenues are inflated using the non-rate revenue inflation factor (Table 2-2, Line 1).

Table 7-1: Projected Non-Potable Water Revenues

A B C D E F G
Line Projected Revenues FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Non-Potable Water Service (531)
2 Non-Potable Water Usage $360,000 $608,911 $612,105 $615,315 $618,542 $621,785 3 Non-Potable Water Service Chrg $230,000 $47,990 $48,241 $48,494 $48,749 $49,004 4 Investment Income $21,034 $17,488 $17,202 $15,547 $13,559 $11,281 5 Total - Non-Potable Water Service
(531) $611,034 $674,389 $677,548 $679,356 $680,850 $682,071 6 7
Non-Potable Capital Improvement
(549)
8 Capital Improv Chrg Non-Res $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 9 Investment Income $12,987 $13,117 $13,248 $13,381 $13,515 $13,650 10 Total - Non-Potable Capital
Improvement (549) $92,987 $93,117 $93,248 $93,381 $93,515 $93,650 11 12 Total - Revenues $704,022 $767,506 $770,796 $772,737 $774,364 $775,721 Redlands Regular Meeting of 5-7-2024 905 of 1013

7.2. Projected O&M Expenses
City staff provided the non-potable water O&M actual expenses for FY 2022 and budgeted O&M expenses for FY 2023 and FY 2024. Table 7-2 shows the projected O&M expenses for the study period, inflated for FY 2025 and beyond using the expense inflation factors (Table 2-3).

Table 7-2: Projected Non-Potable Water O&M Expenses

A B C D E F G
Line Projected O&M Expenses FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Non-Potable Water Service (531)
2 Salaries and Benefits $100,356 $104,370 $108,545 $112,887 $117,402 $122,098 3 Services - Power $20,200 $21,323 $22,509 $23,757 $25,075 $26,465 4 Services $175,740 $181,012 $186,443 $192,036 $197,797 $203,731 5 Supplies $50,000 $51,500 $53,045 $54,636 $56,275 $57,964 6 Total - Non-Potable Water Service
(531) $346,296 $358,206 $370,542 $383,316 $396,549 $410,258 7 8 Non-Potable Projects (543)
9 Salaries and Benefits $0 $0 $0 $0 $0 $0
10 Services - Power $0 $0 $0 $0 $0 $0
11 Services $150,000 $154,500 $159,135 $163,909 $168,826 $173,891 12 Supplies $44,542 $45,878 $47,255 $48,672 $50,132 $51,636 13 Total - Non-Potable Projects (543) $194,542 $200,378 $206,390 $212,581 $218,959 $225,527 14 15 Total - O&M Expenses $540,838 $558,584 $576,931 $595,898 $615,508 $635,785

7.3. Debt Service
The City does not have any existing debt for the non-potable water utility and does not plan to incur new debt to fund capital projects for the study period.

7.4. Capital Projects
Table 7-3 shows the inflated non-potable water capital project costs, based on CIP provided from City staff inflated by the capital expense inflation factor (Table 2-3, Line 7). The City plans to fund all CIP for the nonpotable water system through rates.

Redlands Regular Meeting of 5-7-2024 906 of 1013
Table 7-3: Inflated Non-Potable Water Capital Projects

A B C D E F G
Line Capital Projects (Inflated) FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Replacement
2 Texas St. Reservoir & booster station $51,500 $0 $0 $0 $0 $0 3 Recycled Water Reservoirs $824,000 $0 $0 $0 $0 $0
4 Well 31A maintenance rehab $0 $0 $0 $0 $0 $0
5 Redlands Heights Well Rehabilitation $77,250 $0 $0 $0 $0 $0 6 California Street Well Rehab $0 $106,090 $0 $0 $0 $0
7 Citywide Non-Potable Water Meter
Replacements $0 $0 $0 $0 $0 $0
8 Chicken Hill Well Rehabilitation $0 $0 $109,273 $0 $0 $0 9 Well #30A Rehabilitation $0 $0 $109,273 $0 $0 $0
10 Well 32 liner rehab $0 $0 $109,273 $348,908 $0 $0
11 Projection $0 $0 $0 $0 $359,375 $370,156
12 Total - Replacement $952,750 $106,090 $327,818 $348,908 $359,375 $370,156

7.5. Current Financial Plan – Status Quo
Table 7-4 shows the projected non-potable water financial plan under the status quo scenario. Revenues (Line 6) are derived from Table 7-1. O&M expenses (Line 15) are from Table 7-2. Rate funded capital projects (Line 12) are from Table 7-3. The net cash flow (Line 18) is positive for FY 2025 through FY 2029, indicating that the City’s non-potable water revenues are sufficient to fund operating and capital project costs and the cash balance at or above the target over the Study period. Therefore, Raftelis does not recommend any rate increases for the Non-Potable water rates for the next five years.

Redlands Regular Meeting of 5-7-2024 907 of 1013
Table 7-4: Projected Non-Potable Water Financial Plan (Status Quo)

A B C D E F G
Line Non-Potable Water
Financial Plan FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 1 Revenues
2 Rate Revenues $590,000 $656,901 $660,346 $663,809 $667,290 $670,790 3 Revenue Adjustments $0 $0 $0 $0 $0 $0
4 Investment Income $34,022 $30,605 $30,450 $28,928 $27,074 $24,931 5 Other Revenues $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 6 Total - Revenues $704,022 $767,506 $770,796 $772,737 $774,364 $775,721 7 8 O&M Expenses
9 Salaries and Benefits $100,356 $104,370 $108,545 $112,887 $117,402 $122,098 10 Services - Power $20,200 $21,323 $22,509 $23,757 $25,075 $26,465 11 Services $325,740 $335,512 $345,578 $355,945 $366,623 $377,622 12 Total - O&M Expenses $446,296 $461,206 $476,632 $492,589 $509,100 $526,185 13 14 Debt and Capital
15 Rate Funded Capital
Projects $952,750 $106,090 $327,818 $348,908 $359,375 $370,156 16 Total - Debt and Capital $952,750 $106,090 $327,818 $348,908 $359,375 $370,156 17 18 Net Cash Flow ($789,566) $102,832 ($133,953) ($172,069) ($200,519) ($230,221) 19 Net Operating Revenue $163,184 $208,922 $193,865 $176,839 $158,856 $139,935 20 21 Beginning Balances $3,853,955 $3,064,389 $3,167,221 $3,033,268 $2,861,199 $2,660,680 22 Ending Balances $3,064,389 $3,167,221 $3,033,268 $2,861,199 $2,660,680 $2,430,460 Figure 7-1 shows the proposed non-potable water capital financing plan in graphical format, based on the capital projects shown in Table 7-3 and with no debt issues. The dark teal bars represent the rate funded replacement CIP costs.

Redlands Regular Meeting of 5-7-2024 908 of 1013
Figure 7-1: Proposed Water Capital Financing Plan (Status Quo) Figure 7-2 shows the projected non-potable water financial plan under the status quo scenario. The green bars, which represent net cash flow, are below the stacked gray bars from FY 2025 to FY 2029, which represents the reduction to the cash balance in those years of the study.

Figure 7-2: Projected Non-Potable Water Financial Plan (Status Quo) Figure 7-3 shows the projected non-potable water fund cash balance under the status quo scenario. The turquoise bars, which represent the ending cash balance for the non-potable water system, fall above target in FY 2025 through FY 2029.

Redlands Regular Meeting of 5-7-2024 909 of 1013
Figure 7-3: Projected Non-Potable Water Fund Balances (Status Quo)

7.6. Proposed Financial Plan
Table 7-5 shows the proposed non-potable water revenue adjustments over the study period. Currently, Raftelis does not recommend any revenue adjustments.

Table 7-5: Proposed Non-Potable Water Revenue Adjustments A B C
Line Fiscal Year Revenue
Adjustment
Month
Effective
1 FY 2025 0.0% July
2 FY 2026 0.0% July
3 FY 2027 0.0% July
4 FY 2028 0.0% July
5 FY 2029 0.0% July

7.7. Proposed Rates
Since there are no revenue adjustments proposed for the non-potable system, the current non-potable water rates will remain in effect as shown in in Table 7-6 and Table 7-7.

Redlands Regular Meeting of 5-7-2024 910 of 1013
Table 7-6: Proposed Bi-Monthly Non-Potable Water Service Charges ($/meter size)

A B C D E F G
Line Bi-Monthly Non-Potable
Water Service Charges
Current
Rates July 2024 July 2025 July 2026 July 2027 July 2028 1 Non-Potable Water Service
2 3/4" $13.81 $13.81 $13.81 $13.81 $13.81 $13.81
3 1" $20.65 $20.65 $20.65 $20.65 $20.65 $20.65
4 1 1/2" $37.29 $37.29 $37.29 $37.29 $37.29 $37.29
5 2" $55.16 $55.16 $55.16 $55.16 $55.16 $55.16
6 3" $95.50 $95.50 $95.50 $95.50 $95.50 $95.50
7 4" $147.45 $147.45 $147.45 $147.45 $147.45 $147.45
8 6" $272.16 $272.16 $272.16 $272.16 $272.16 $272.16
9 8" $401.04 $401.04 $401.04 $401.04 $401.04 $401.04
Table 7-7: Proposed Non-Potable Water Usage Rates ($/ccf of water)

A B C D E F G
Line Non-Potable Water Usage
Rates
Current
Rates July 2024 July 2025 July 2026 July 2027 July 2028 1 Non-Potable Water Usage
2 Non-Potable Water $0.99 $0.99 $0.99 $0.99 $0.99 $0.99 3 Conversion Customer $0.64 $0.64 $0.64 $0.64 $0.64 $0.64 Redlands Regular Meeting of 5-7-2024 911 of 1013

8. Appendix A – Alternative
Wastewater Rate Scenario
Raftelis is proposing a second financial plan and rates scenario for the wastewater utility. This scenario includes an additional $3 million bond issuance in FY 2025 to pay for capital expenditures. The purpose of this scenario is to spread costs out over a longer period of time to reduce the necessary rate increase. This scenario would lower the rate revenue increase in FY 2027 and FY 2028 from 10 percent to 8 percent. Table 8-1 and Table 8-2 show the proposed wastewater rates under this alternative scenario.

Table 8-1: Proposed Bi-Monthly Residential and Schools Wastewater Service Charges

A B C D E F G
Line Bi-Monthly Wastewater
Service Charges
Current
Rates July 2024 July 2025 July 2026 July 2027 July 2028 1 Residential ($/dwelling unit)
2 Single Family $62.43 $66.04 $72.65 $78.47 $84.75 $91.53 3 Multiple Family $48.08 $52.40 $57.64 $62.26 $67.25 $72.63 4 5 Schools ($/100 students)
6 Elementary $134.38 $143.11 $157.43 $170.03 $183.64 $198.34 7 Secondary & High $215.02 $238.52 $262.38 $283.38 $306.06 $330.55 Table 8-2: Proposed Non-Residential Wastewater Usage Rates ($/ccf of water)

A B C D E F G
Line Wastewater Usage Rates Current
Rates July 2024 July 2025 July 2026 July 2027 July 2028 1 Non-Residential Usage ($/ccf)
2 Low Strength I $2.42 $2.82 $3.11 $3.36 $3.63 $3.93
3 Low Strength II $2.87 $3.41 $3.76 $4.07 $4.40 $4.76
4 Low Strength III $3.32 $3.99 $4.39 $4.75 $5.13 $5.55
5 Medium Strength I $3.77 $4.58 $5.04 $5.45 $5.89 $6.37 6 Medium Strength II $4.22 $5.16 $5.68 $6.14 $6.64 $7.18 7 Medium Strength III $4.67 $5.75 $6.33 $6.84 $7.39 $7.99 8 High Strength I $5.12 $6.34 $6.98 $7.54 $8.15 $8.81
9 High Strength II $5.56 $6.92 $7.62 $8.23 $8.89 $9.61
10 Large Volume User $3.32 $3.99 $4.39 $4.75 $5.13 $5.55 11 Minimum Charge ($) $48.08 $52.40 $57.64 $62.26 $67.25 $72.63 12 13 Septage Charge ($/gal) $0.11 $0.10 $0.11 $0.12 $0.13 $0.15 Redlands Regular Meeting of 5-7-2024 912 of 1013
RESOLUTION NO. 7128

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF REDLANDS

ESTABLISHING A POLICY FOR THE SUBMISSION AND TABULATION OF PROTESTS WITH

RESPECT TO PUBLIC HEARINGS FOR PROPOSED UTILITY RATE ADJUSTMENTS WHEREAS, Article XIIID, section 6 of the Califomia Constitution requires the City to consider written protests to certain proposed increases to utility rates; and WHEREAS, the California Constitution does not offer specific guidance as to who is allowed to submit protests, how written protests are submitted, or how the city is to tabulate the protests;
BE IT RESOLVED by the City Council ofthe City of Redlands as follows:

Section 1. When notice of a public hearing with respect to a utility or other rate adjustments has been given by the City pursuant to Article XIIID, Section 6 of the California Constitution, the following guidelines shall apply:

A. Submission of Protests

1. Any property owner or utility customer may submit a written protest to the City Clerk, either by mail or delivery to the City Clerk's Office, 35 Cajon Street, Suite #4, Redlands, CA 92373 or by submitting the protest at the public hearing.

Protests must be received by the end of the public hearing.

2. Each protest must state that it is a protest (or indicate opposition to the proposed rates). Ifthe City has given notices for the public hearings regarding rates for both sewer and water service, and those hearings are to be held on the same date, then the protest may indicate whether it is made (i) with respect only to water rates, (ii) with respect only to sewer rates, or (iii) with respect to both water and sewer rates. If no limitation is indicated. the City will interpret the protest as covering all rates to be considered on the hearing date. Email or facsimile protests cannot be accepted. Although oral comments at the public hearing will not qualify as a formal protest unless accompanied by a written protest, the City Council welcomes input from the community during the public hearing on proposed fees.

3. A protest by a property owner that is a trust must be signed by the Trustee and identified as such with the signature (i.e_ John Smith. Trustee for Smith Family trust). Protests by property owners that are corporations, partnerships, or similar entitles must be signed by a person authorized to execute documents on behalf of the property owner.

4. If a parcel served by the City is owned by more than a single record owner, or more than one name appears on the City's records as the customer for the property, or the customer is not the record owner, each owner or customer may I:\cclerk\Resolutions\Res 7100-7200\7128 Guidelines Submission Tabulation Protests.doc Redlands Regular Meeting of 5-7-2024 913 of 1013
submit a protest, but only one protest will be counted per parcel and any one protest submitted in accordance with these rules will be sufficient to count as a protest for that property.

5. In order to be valid, a protest must bear date. designation of parcel address or parcel number, printed name. and original signature of the record owner or customer of record with respect to the property identified on the protest. The customer of record is the name of the person whose name is printed on the utility bills for the parcel. Except as set forth in paragraph 3 above, protests not bearing the original signature of a record owner or customer of record shall not be counted. Protests which have been altered by someone other than the person who signed them shall not be counted.

6. Any person who submits a protest may withdraw it by submitting to the City Clerk a dated. written request that the protest be withdrawn. The withdrawal of a protest shall contain sufficient information to identify the affected parcel and the name of the record owner or record customer who submitted both the protest and the request that it be withdrawn.

7. A fee protest proceeding is not an election.

8. To ensure transparency and accountability in the fee protest tabulation, protests shall constitute disclosable public records from and after the close of the public hearing.

B. Tabulation ofProtests

1. The City Clerk shall determine the validity of all protests. The City Clerk shall not accept as valid any protest if the City Clerk determines that any of the following conditions exist:
a. The protest does not identify a property that will be subject to proposed fees.
b. The protest does not bear an original signature of a record owner or identified as trustee of the parcel identified on the protest or of a record customer of that parcel.
c. The protest does not state its opposition to the proposed fees or is illegible. d. The protest has been altered in any way by someone other than the person who is signed to it.
e. The protest was not received by the City Clerk before close of the public hearing on the proposed fees.
f. A request to withdraw the protest was received by the City Clerk prior to the close of the public hearing on the proposed fees.

2. The City Clerk's decision that a protest is not valid shall constitute a final action ofthe City and shall not be subjected to any internal appeal.

I:\cclerk\Resolutions\Res 7100-7200\7128 Guidelines Submission Tabulation Protests.doc 2 Redlands Regular Meeting of 5-7-2024 914 of 1013

3. A majority protest exists (50% plus one) if written protests are timely submitted and not withdrawn by the record owners. trustee. or customers with respect to, a majority of the properties subject to the proposed fee. If both water and sewer rates are being considered, a separate determination will be made for with respect to each ofthese two types of fees.

4. At the conclusion of the public hearing, the City Clerk shall count all protests received, including those received during the public hearing, and shall report the results to the City Council upon completion. If review of the protests received demonstrates that the number received is manifestly less than one-half of the parcels served by the City with respect to the fee which is the subject of the protest, then the City Clerk may advise the City Council of the absence of a majority protest without determining the validity of all protests.

5. If, at the conclusion of the public hearing, the City Clerk determines that the City Clerk will require additional time to count the protests, the City Clerk shall so advise the City Council, which may adjourn the meeting to allow the count to be completed on another day or days. If so, the City Council shall declare the time and place of the count, which shall be conducted in a place where interested members of the public may observe the counting, and the City Council shall declare the time at which its meeting shall be resumed to receive an act in the report ofthe City Clerk.

Section 2. The City Council hereby directs City staff to include the requirements described in Section 1.A of this Resolution, which govern the submission of written protests, within all notices of protest hearings that are mailed to property owners and customers of City utility services.

ADOPTED, SIGNED AND APPROVED this 6* day of March, 2012.

Peté Aguilar, Mayor
ATTEST:

Sam Irwin ity'Clerk
I celerk R emlutions\Res 7100-7200\7128 Guidelines Submission Tabulation Protests.doc 3 Redlands Regular Meeting of 5-7-2024 915 of 1013
I, Sam Irwin, City Clerk of the City of Redlands, hereby certify that the foregoing Resolution was duly adopted by the City Council at a regular meeting thereof, held on the 6* day of March 2012. by the following vote:

AYES: Councilmembers Harrison, Bean, Gardner; Mayor Aguilar NOES: Councilmember Foster
ABSTAIN: None
ABSENT: None
Sam Irwin, City Clerk
I:\cclerk\Resolutions\Res 7100-7200\7128 Guidelines Submission Tabulation Protests.doc 4 Redlands Regular Meeting of 5-7-2024 916 of 1013
ORDINANCE NO. 2964
AN ORDINANCE OF THE CITY OF REDLANDS AMENDING CHAPTER 3.52

OF THE REDLANDS MUNICIPAL CODE RELATING TO WATER FUND
Section 1. Chapter 3.52 of the Redlands Municipal Code, titled “Water Fund,” is hereby amended to read as follows:
“CHAPTER 3.52

WATER FUND
SECTION:

3.52.010: Establishment

3.52.040: Water Service Rate Schedule

3.52.010: ESTABLISHMENT:

There is established a water fund to provide for administration, operation and maintenance of the Redlands domestic water system and its capacity to serve its existing users. The following rules shall apply:

A. All service charges and all miscellaneous charges not otherwise designated shall be credited to the water fund. The water fund shall be operated as an enterprise fund. All interest on the cash balance of the fund shall accrue to the water fund.

B. Established within the water fund are a reserve for capital and a reserve for legal.

1. The reserve for capital shall be in addition to the annual capital replacement budget, to establish a fund for capital expenditures necessary due to unforeseen or unusual capital costs in any year, necessary to maintain the existing system and its capacity.

2. The reserve for legal shall be in addition to the annual budget for legal costs, to establish a fund for legal expenditures due to unforeseen or unusual legal costs in any one year.

3.62.040: WATER SERVICE RATE SCHEDULE:

Amounts of charges are set out in table 3.52.040 of this section.

TABLE 3.52.040

WATER SERVICE RATE SCHEDULE

BIMONTHLY RATES
A. Potable water rates effective August 5, 2024:

1. Water Usage Charge:
a. Building water use:

Tiers Units1 Rate
Tier 1 1 to 16 hcf $1.57
Redlands Regular Meeting of 5-7-2024 917 of 1013
Tier 2 17 to 27 hcf $1.86
Tier 3 > 27 hcf $2.79
Note: 1 unit equals 100 cubic feet (hcf).
b. Nonbuilding water use:

Tiers Units1 Rate
Tier 1 1 to 27 hcf $1.77
Tier 2 > 27 hcf $2.49
Note: 1 unit equals 100 cubic feet (hcf)

2. Bimonthly Water Service Charge:

Meter Size (inches) Total Water Service
Charge1
Customer Service
Component1
5/8 $32.94 $6.85
¾ $44.01 $6.85
1 $65.50 $6.85
1 ½ $117.60 $6.85
2 $173.62 $6.85
3 $299.97 $6.85
4 $462.79 $6.85
6 $853.56 $6.85
8 $1,257.36 $6.85
10 $2,976.76 $6.85
12 $3,914.61 $6.85
Note: Prior agriculture irrigation customers are charged the customer service component of the water service charge only.

3. Fire Protection Water Service Charge:

Meter Size (inches) Total Fire Protection Water Service Charge (Bimonthly)
2 $11.81
3 $21.20
4 $37.39
6 $95.48
8 $195.69
10 $346.42
12 $555.33
Redlands Regular Meeting of 5-7-2024 918 of 1013

4. Fire Hydrant Construction Water Service:

Water Usage Charge $2.79/100 cubic feet
Monthly water service charge1$299.97
Fire hydrant construction meter prepayment1,2 $1,200.00 Notes: 1. Minimum water service charge (if less than 30 days) will be $299.97. Repairs to damaged fire hydrant construction meters shall be charged at prevailing time and material rates to repair the meter.

2. Lost or stolen fire hydrant construction meters shall be charged a $1,200.00 replacement charge.

5. Water Meter Installation Charge:

Meter Size (inches) Installation Charge
¾ $175.00
1 $225.00
1 ½ $430.00
2 $595.00

6. Outside City Service Review:
$50.00/unit, $500.00 maximum

7. Miscellaneous Fees:

After hours request for turn on service
(standby call)
$60.00
Broken angle meter stop $75.00
Broken lock $15.00
Remove meter after illegal turn on $50.00
Remove straight connection $75.00
Cut service at main Time and Materials
Water meter test charge $40.00, plus cost of new meter
Turn off for nonpayment $46.00
Recheck after turn off for nonpayment $20.00
Returned check $35.00
Check by phone $6.00
Establish new municipal services account $15.00
Failure to notify change of ownership $35.00
Request for same day water turn on after 3:00
P.M.
$26.00
Redlands Regular Meeting of 5-7-2024 919 of 1013
Obstructed meter resulting in an estimated
read or reread trip
$15.00
Jumper fee (for use on buildings under
construction – prelandscape)
$50.00
Submittal to collection agency 40% of outstanding balance submitted for collection action
Unauthorized fire protection water usage $40.00, plus full nonfire protection meter service charge and any applicable wastewater
charge at the prevailing rate
Unauthorized fire hydrant connection $150.00, plus estimated water usage charge at the prevailing usage rate
B. Potable water rates effective July 1, 2025:

1. Water Usage Charge:
a. Building water use:

Tiers Units1 Rate
Tier 1 1 to 16 hcf $1.61
Tier 2 17 to 27 hcf $1.90
Tier 3 > 27 hcf $2.85
Note: 1 unit equals 100 cubic feet (hcf).
b. Nonbuilding water use:

Tiers Units1 Rate
Tier 1 1 to 27 hcf $1.81
Tier 2 > 27 hcf $2.54
Note: 1 unit equals 100 cubic feet (hcf)

2. Bimonthly Water Service Charge:

Meter Size (inches) Total Water Service
Charge1
Customer Service
Component1
5/8 $33.60 $6.99
¾ $44.90 $6.99
1 $66.81 $6.99
1 ½ $119.96 $6.99
2 $177.10 $6.99
3 $305.97 $6.99
4 $472.05 $6.99
Redlands Regular Meeting of 5-7-2024 920 of 1013
6 $870.64 $6.99
8 $1,282.51 $6.99
10 $3,036.30 $6.99
12 $3,992.91 $6.99
Note: Prior agriculture irrigation customers are charged the customer service component of the water service charge only.

3. Fire Protection Water Service Charge:

Meter Size (inches) Total Fire Protection Water Service Charge (Bimonthly)
2 $12.05
3 $21.63
4 $38.14
6 $97.39
8 $199.61
10 $353.35
12 $566.44

4. Fire Hydrant Construction Water Service:

Water Usage Charge $2.85/100 cubic feet
Monthly water service charge1$305.97
Fire hydrant construction meter prepayment1,2 $1,200.00 Notes: 1. Minimum water service charge (if less than 30 days) will be $305.97. Repairs to damaged fire hydrant construction meters shall be charged at prevailing time and material rates to repair the meter.

2. Lost or stolen fire hydrant construction meters shall be charged a $1,200.00 replacement charge.

5. Water Meter Installation Charge:

Meter Size (inches) Installation Charge
¾ $175.00
1 $225.00
1 ½ $430.00
2 $595.00

6. Outside City Service Review:
$50.00/unit, $500.00 maximum

7. Miscellaneous Fees:

Redlands Regular Meeting of 5-7-2024 921 of 1013
After hours request for turn on service
(standby call)
$60.00
Broken angle meter stop $75.00
Broken lock $15.00
Remove meter after illegal turn on $50.00
Remove straight connection $75.00
Cut service at main Time and Materials
Water meter test charge $40.00, plus cost of new meter
Turn off for nonpayment $46.00
Recheck after turn off for nonpayment $20.00
Returned check $35.00
Check by phone $6.00
Establish new municipal services account $15.00
Failure to notify change of ownership $35.00
Request for same day water turn on after 3:00
P.M.
$26.00
Obstructed meter resulting in an estimated
read or reread trip
$15.00
Jumper fee (for use on buildings under
construction – prelandscape)
$50.00
Submittal to collection agency 40% of outstanding balance submitted for collection action
Unauthorized fire protection water usage $40.00, plus full nonfire protection meter service charge and any applicable wastewater
charge at the prevailing rate
Unauthorized fire hydrant connection $150.00, plus estimated water usage charge at the prevailing usage rate
Section 2. If any section, sentence, clause or phrase of this ordinance or the application thereof to any entity, person or circumstance is held for any reason to be invalid or unconstitutional, such invalidity or unconstitutionality shall not affect other provisions or applications of this ordinance which can be given effect without the invalid provisions or application, and to this end the provisions of this ordinance are severable. The City Council of the City of Redlands hereby declares that it would have adopted this ordinance and each section, sentence, clause or phrase thereof, irrespective of the fact that any one or more section, subsections, sentences, clauses or phrases be declared invalid or unconstitutional.

Section 3. Resolution No. 2830 is rescinded effective August 5, 2024.

Redlands Regular Meeting of 5-7-2024 922 of 1013
Section 4. The Mayor shall sign this ordinance and the City Clerk shall certify to the adoption of this ordinance and shall cause it, or a summary of it, to be published once in a newspaper of general circulation within the City, and thereafter, this ordinance shall take effect as provided by law.
__________________________
Eddie Tejeda, Mayor
ATTEST:
__________________________
Jeanne Donaldson, City Clerk
Redlands Regular Meeting of 5-7-2024 923 of 1013
I, Jeanne Donaldson, City Clerk, City of Redlands, hereby certify that the foregoing Ordinance was duly adopted by the City Council at the regular meeting thereof, held on the ____day of ____, 2024, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:
__________________________________
Jeanne Donaldson, City Clerk
Redlands Regular Meeting of 5-7-2024 924 of 1013
ORDINANCE NO. 2965
AN ORDINANCE OF THE CITY OF REDLANDS AMENDING CHAPTER 3.62

OF THE REDLANDS MUNICIPAL CODE RELATING TO SEWER SERVICE FUND
Section 1. Chapter 3.62 of the Redlands Municipal Code, titled “Sewer Service Fund,” is hereby amended to read as follows:
“CHAPTER 3.62

SEWER SERVICE FUND
SECTION:

3.62.010: Establishment

3.62.020: Definitions

3.62.030: Charges

3.62.040: Amount of Charges

3.62.010: ESTABLISHMENT:

There is established the sewer service fund to provide for administration, operation and maintenance of the Redlands domestic sewerage system and its capacity to serve its existing users.

All interest on the cash balance of the fund shall accrue to the sewer service fund. The following rules shall apply:

A. All service charges and all miscellaneous charges not otherwise designated shall be credited to the sewer service fund.

B. Established within the sewer service fund is a reserve for capital. The reserve for capital shall be in addition to annual capital replacement budget, to establish a fund for capital expenditures necessary due to unforeseen or unusual capital costs in any year, necessary to maintain the existing system and its capacity.

3.62.020: DEFINITIONS:

For the purpose of carrying out the intent of this chapter, the following definitions shall apply:

MULTIPLE-FAMILY DWELLING UNIT: A structure designed and used for occupancy of two (2) or more families, but does not include motels, hotels, or rest homes, nursing homes, with common cooking facilities.

PREMISES: A lot, parcel of land, building or establishment.

SEWER CONNECTION OR CONNECTION: Physically tapping into sewer mains or their laterals for the purpose of serving a private sewer line or building sewer from a property or premises.

Redlands Regular Meeting of 5-7-2024 925 of 1013
SEWER RATES: The sewer rates, rate structures and rate classes to be established by the city council to be used as a basis for charging users for service from the sewerage system.

SEWER SERVICE CHARGE: Service charges for the use of the sewerage system based on sewer rates.

SEWERAGE SYSTEM: Those pipelines and appurtenances maintained and operated by the city for the collection and conveyance of sewage to the plant owned and operated by the city, wastewater treatment, and treatment and discharge of such wastewater to required standards.

SINGLE-FAMILY DWELLING UNIT: A structure or portion thereof used exclusively for the occupancy of one family.

3.62.030: CHARGES:

The wastewater service charges for the following categories shall be paid for wastewater service.

Every person whose premises in the city is served by a connection with the wastewater system of the city, whereby the sewage or industrial wastes, or either or both, are disposed of by the city, either through the facilities of the wastewater treatment and sewage disposal works owned by the city, or otherwise, shall pay a sewer service charge which shall be as specified in section 3.62.040 of this chapter.

A. Residential Rates: For all residential dwelling units, including single-family and multiplefamily dwelling units, there shall be a bimonthly charge.

B. Nonresidential Rates: For all nonresidential users there shall be a bimonthly charge based upon the strength of the wastewater discharged for each one hundred (100) cubic feet or fraction thereof. Wastewater strength data is adapted from state water resources control board's "Revenue Program Guidelines for Wastewater Agencies".

1. Large volume users are classified as users with greater than twenty-five thousand (25,000) gallons per day discharge.

2. A minimum bimonthly charge equivalent to the multiple-family dwelling unit rate shall apply to any nonresidential user whose wastewater discharge per one hundred (100) cubic feet or fraction thereof results in a total charge less than the equivalent of the multiple-family dwelling unit rate.

C. School Rates: Each school shall pay a bimonthly charge for each one hundred (100) average daily attendance or part thereof.

3.62.040: AMOUNT OF CHARGES:

Amounts of bimonthly charges are as follows:

Wastewater rates effective August 5, 2024:

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City Customers
A. Residential:

Single-family dwelling unit $66.04
Multiple-family dwelling unit $52.40
B. Nonresidential:

Low strength I $2.82/100 cubic feet
Low strength II $3.41/100 cubic feet
Low strength III $3.99/100 cubic feet
Medium strength I $4.58/100 cubic feet
Medium strength II $5.16/100 cubic feet
Medium strength III $5.75/100 cubic feet
High strength I $6.34/100 cubic feet
High strength II $6.92/100 cubic feet

1. Large volume user:
>25,000 gallons per day $3.99/100 cubic feet

2. Nonresidential minimum charge:

All strengths $52.40
C. Schools:

Elementary $143.11/100 ADA
Secondary and high school $238.52/100 ADA
D. Septage:

Tank dumping $0.10/gallon
$15.00 minimum
Note:
 ADA: Average Daily Attendance
Wastewater rates effective July 1, 2025:

City Customers
A. Residential:

Single-family dwelling unit $72.65
Multiple-family dwelling unit $57.64
B. Nonresidential:

Low strength I $3.11/100 cubic feet
Low strength II $3.76/100 cubic feet
Low strength III $4.39/100 cubic feet
Medium strength I $5.04/100 cubic feet
Medium strength II $5.68/100 cubic feet
Medium strength III $6.33/100 cubic feet
High strength I $6.98/100 cubic feet
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High strength II $7.62/100 cubic feet

1. Large volume user:
>25,000 gallons per day $4.39/100 cubic feet

2. Nonresidential minimum charge:

All strengths $57.64
C. Schools:

Elementary $157.43/100 ADA
Secondary and high school $262.38/100 ADA
D. Septage:

Tank dumping $0.11/gallon
$16.50 minimum
Note:
 ADA: Average Daily Attendance
Section 2. If any section, sentence, clause or phrase of this ordinance or the application thereof to any entity, person or circumstance is held for any reason to be invalid or unconstitutional, such invalidity or unconstitutionality shall not affect other provisions or applications of this ordinance which can be given effect without the invalid provisions or application, and to this end the provisions of this ordinance are severable. The City Council of the City of Redlands hereby declares that it would have adopted this ordinance and each section, sentence, clause or phrase thereof, irrespective of the fact that any one or more section, subsections, sentences, clauses or phrases be declared invalid or unconstitutional.

Section 3. Resolution No. 8335 is rescinded effective August 5, 2024.

Section 4. The Mayor shall sign this ordinance and the City Clerk shall certify to the adoption of this ordinance and shall cause it, or a summary of it, to be published once in a newspaper of general circulation within the City, and thereafter, this ordinance shall take effect as provided by law.
__________________________
Eddie Tejeda, Mayor
ATTEST:
__________________________
Jeanne Donaldson, City Clerk
Redlands Regular Meeting of 5-7-2024 928 of 1013
I, Jeanne Donaldson, City Clerk, City of Redlands, hereby certify that the foregoing Ordinance was duly adopted by the City Council at the regular meeting thereof, held on the ____ day of ____, 2024, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:
_________________________________
Jeanne Donaldson, City Clerk
Redlands Regular Meeting of 5-7-2024 929 of 1013
City Council Meeting L. 3.

DATE: 05/07/2024
TO: Honorable Mayor and City Council Members
SUBJECT: Consideration of the Professional Services Agreement with Richard C. Slade & Associates, LLC to design and provide construction coordination/support services for a new groundwater production well for an amount not-to-exceed $290,000, and determine that approval of the Agreement is exempt from environmental review pursuant to Section 15061(b)(3) of the State's guidelines implementing the California Environmental Quality Act (Municipal Utilities and Engineering Director Harris)
MOTION(S):

If City Council determines the staff recommendation is appropriate, the following motions are provided:

I move that City Council determine approval of a Professional Services Agreement with Richard C. Slade & Associates, LLC to design and provide construction coordination/support services for a new groundwater production well is exempt from environmental review pursuant to Section 15061(b)(3) of the State's guidelines implementing the California Environmental Quality Act; and

1. Approve a Professional Services Agreement for an amount not-to-exceed $290,000.

2. RECOMMENDATION:

Staff recommends that City Council determine approval of a Professional Services Agreement with Richard C. Slade & Associates, LLC to design and provide construction coordination/support services for a new groundwater production well is exempt from environmental review pursuant to Section 15061(b)(3) of the State’s Guidelines implementing the California Environmental Quality Act. Staff further recommends City Council approval of a Professional Services Agreement with Richard C. Slade & Associates, LLC for an amount not-to-exceed $290,000.

Redlands Regular Meeting of 5-7-2024 930 of 1013
DISCUSSION:

The City operates and maintains a system of groundwater wells that produce water to supply the potable water distribution system. Five (5) of these wells operate seasonally during peak demand periods. The City also operates and maintains a separate system of groundwater wells that produce water to supply the non-potable water distribution system. These wells are located throughout the Bunker Hill Groundwater Basin and are typically located adjacent to the Santa Ana River and Mill Creek. The wells provide nearly forty percent (40%) of the City’s water supply. The newest groundwater well was constructed in 2002.

Contractors routinely inspect and rehabilitate groundwater wells to maximize production capacity and extend service life. The City's aging groundwater well system must soon be supplemented by the construction of an additional, new groundwater well to ensure potable water is available to meet customer needs.

On October 30, 2023, staff issued a Request for Proposals (RFP) for professional services to provide hydrogeological and engineering services for the design and construction management of a new groundwater production well.

On December 12, 2023, staff received proposals from the following six (6) firms:

1. Dudek, Encinitas, CA

2. ENGEO Incorporated, Irvine, CA

3. GeoLogic Associates, Inc., Ontario, CA

4. Geoscience Support Services, Inc., San Dimas, CA

5. KYLE Groundwater, Inc., Pomona, CA

6. Richard C. Slade & Associates, LLC (RCS), Sherman Oaks, CA In accordance with Chapter 2.16.180 of the City's Municipal Code, a selection committee reviewed the proposals based on each firm's demonstrated competence and professional qualifications in accordance with specific evaluation criteria identified in the RFP. The selection committee interviewed the three (3) highest-ranked firms in February 2024 and determined that Richard C.

Slade & Associates, LLC (RCS) is the most qualified consultant to complete the tasks listed in the RFP. RCS has successfully completed projects of similar scope and size for municipalities, regional water agencies, and special districts throughout southern California. Staff negotiated a reasonable consultant fee of $290,000 and recommends City Council approval of a Professional Services Agreement with RCS for this amount.

Approval of the Professional Services Agreement with RCS is exempt from environmental review pursuant to Section 15061(b)(3) of the State's Guidelines implementing the California Environmental Quality Act as there is no possibility this action will result in a significant impact on the environment.

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ALTERNATIVES:

City Council may deny the staff recommendation and provide alternate direction.

STRATEGIC PLAN:

N/A
SUBMITTED BY:

John R. Harris, Municipal Utilities and Engineering Director RECOMMENDED BY:

Charles M. Duggan Jr., City Manager
REVIEWED BY:

Yvette M. Abich Garcia, City Attorney
Janice McConnell, Assistant City Manager
Danielle Garcia, Management Services/Finance Director
Goutam K. Dobey, City Engineer
Dana Abramovitz-Daniel, Procurement Manager
PREPARED BY:

Veronica Medina, Associate Engineer
Fiscal Impact
Fiscal Year: FY 23/24
Appropriation Required Y/N: No
Budgeted Y/N: Yes
Account No.: 501910
Discussion:

Funding for this project is included in the FY 23/24 Water Projects Budget.

Attachments
RCS Professional Service Agreement
Agreement Fee Schedule
Redlands Regular Meeting of 5-7-2024 932 of 1013

AGREEMENT TO PERFORM PROFESSIONAL SERVICES
This agreement for the provision of Design and Construction Management Services for Well Drilling (“Agreement”) is made and entered in this 7 th day of May, 2024 (“Effective Date”),
by and between the City of Redlands, a municipal corporation (“City”) and Richard C. Slade & Associates, LLC a California limited liability company (“Consultant”). City and Consultant are sometimes individually referred to herein as a “Party” and, together, as the “Parties.” In consideration of the mutual promises contained herein, City and Consultant agree as follows:

ARTICLE 1 – ENGAGEMENT OF CONSULTANT

1.1 City hereby engages Consultant to provide Design and Construction Management Services for Well Drilling services for City (the “Services”).

1.2 The Services shall be performed by Consultant in a professional manner, and Consultant represents that it has the skill and the professional expertise necessary to provide the Services to City at a level of competency presently maintained by other practicing professional consultants in the industry providing like and similar types of Services.

ARTICLE 2 – SERVICES OF CONSULTANT

2.1 The Services that Consultant shall perform are more particularly described in Exhibit “A,” titled “Scope of Services,” which is attached hereto and incorporated herein by this reference.

2.2 Consultant shall comply with applicable federal, state, and local laws and regulations in the performance of this Agreement including, but not limited to, any applicable State prevailing wage laws.

ARTICLE 3 – RESPONSIBILITIES OF CITY

3.1 City designates John R. Harris, Municipal Utilities and Engineering Department Director, as City’s representative with respect to performance of the Services, and such person shall have the authority to transmit instructions, receive information, interpret, and define City’s policies and decisions with respect to performance of the Services.

ARTICLE 4 – PERFORMANCE OF SERVICES

4.1 Consultant shall perform and complete the Services in a prompt and diligent manner in accordance with the schedule set forth in Exhibit “B,” titled “Project Schedule,” which is attached hereto and incorporated herein by reference.

4.2 Consultant shall complete the Services by June 30, 2026, unless the Services are terminated earlier as provided for herein.

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4.3 If Consultant’s Services include deliverable electronic visual presentation materials, such materials shall be delivered in a form, and made available to City, consistent with City Council-adopted policy for the same. It shall be the obligation of Consultant to obtain a copy of such policy from City staff.

ARTICLE 5 – PAYMENTS TO CONSULTANT

5.1 Compensation: Total compensation for the Consultant’s performance of the Services shall not exceed the amount of Two Hundred Ninety Thousand Dollars ($290,000). City shall pay Consultant on a time and materials basis up to the not to exceed amount in accordance with Exhibit “C,” titled “Fee Schedule” which is attached hereto and incorporated herein by reference.

5.2 Consultant shall submit monthly invoices to City describing the Services performed during the preceding month. Consultant’s invoices shall include a brief description of the Services performed, the dates the Services were performed, the number of hours spent and by whom, and a description of reimbursable expenses related to the Services. City shall pay Consultant no later than thirty (30) days after receipt and approval by City of Consultant’s invoice.

5.3 Any notice or other communication required, or which may be given, pursuant to this Agreement, shall be in writing. Any such notice shall be deemed delivered (i) on the date of delivery in person; (ii) five (5) days after deposit in first class registered mail, with return receipt requested; (iii) on the actual delivery date if deposited with an overnight courier; or (iv) on the date sent by facsimile or electronic mail transmission (including PDF), if confirmed with a copy sent contemporaneously by first class, certified, registered or express mail; in each case properly posted and fully prepaid to the appropriate address set forth below, or such other address as a Party may provide notice in accordance with this section:

CITY: CONSULTANT:

City Clerk Richard C. Slade, President
City of Redlands Richard C. Slade & Associates, LLC
35 Cajon Street 14051 Burbank Blvd., Ste. 300
P.O. Box 3005 (mailing) Sherman Oaks, CA 91401
Redlands, CA 92373 [email protected]
[email protected] Phone: (818) 506-0418
Phone: (909) 798-7531 Fax: (818) 506-1343
ARTICLE 6 – INSURANCE AND INDEMNIFICATION

6.1 The following insurance coverage required by this Agreement shall be maintained by Consultant for the duration of its performance of the Services. Consultant shall not perform any Services unless and until the required insurance listed below is obtained by Consultant.

Consultant shall provide City with certificates of insurance and endorsements evidencing Redlands Regular Meeting of 5-7-2024 934 of 1013
such insurance prior to commencement of the Services. Insurance policies shall include a provision prohibiting cancellation or modification of the policy except upon thirty (30) days prior written notice to City.

A. Workers’ Compensation and Employer’s Liability insurance in the amount that meets statutory requirements with an insurance carrier acceptable to City, or certification to City that Consultant is self-insured or exempt from the workers’ compensation laws of the State of California. Consultant shall execute and provide City with Exhibit “D,” titled “Workers’ Compensation Insurance Certification,” which is attached hereto and incorporated herein by this reference, prior to performance of the Services.

B. Comprehensive General Liability insurance with carriers acceptable to City in the minimum amount of One Million Dollars ($1,000,000) per occurrence and Two Million Dollars ($2,000,000) aggregate, for public liability, property damage and personal injury is required. City shall be named as an additional insured and such insurance shall be primary and non-contributing to any insurance or self-insurance maintained by City.

C. Consultant shall secure and maintain professional liability insurance throughout the term of this Agreement in the amount of One Million Dollars ($1,000,000) per claim made.

D. Business Auto Liability coverage, with minimum limits of One Million Dollars ($1,000,000) per occurrence, combined single limit bodily injury liability and property damage liability. This coverage shall include all Consultant owned vehicles used in connection with Consultant’s provision of the Services, hired and non-owned vehicles, and employee non-ownership vehicles. City shall be named as an additional insured and such insurance shall be primary and non-contributing to any insurance or selfinsurance maintained by City.

E. Consultant is expressly prohibited from assigning or subcontracting any of the Services without the prior written consent of City. In the event of mutual agreement by the Parties to assign or subcontract a portion of the Services, Consultant shall add such assignee or subcontractor as an additional insured to the insurance policies required hereby and provide City with the insurance endorsements prior to any Services being performed by the assignee or subcontractor.

6.2 Consultant shall defend, indemnify and hold harmless City and its elected and appointed officials, employees and agents from and against any and all claims, losses or liability, including attorneys’ fees, arising from injury or death to persons or damage to property occasioned by any negligent act or omission by, or the willful misconduct of, Consultant, or its officers, employees and agents in performing the Services.

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ARTICLE 7 – CONFLICTS OF INTEREST

7.1 Consultant covenants and represents that it does not have any investment or interest in any real property that may be the subject of this Agreement or any other source of income, interest in real property or investment that would be affected in any manner or degree by the performance of Consultant’s Services. Consultant further covenants and represents that in the performance of its duties hereunder, no person having any such interest shall perform any Services under this Agreement.

7.2 Consultant agrees it is not a designated employee within the meaning of the Political Reform Act because Consultant:

A. Does not make a governmental decision whether to:
(i) approve a rate, rule or regulation, or adopt or enforce a City law; (ii) issue, deny, suspend or revoke any City permit, license, application, certification, approval, order or similar authorization or entitlement; (iii) authorize City to enter into, modify or renew a contract; (iv) grant City approval to a contract that requires City approval and to which City is a party, or to the specifications for such a contract; (v) grant City approval to a plan, design, report, study or similar item; (vi) adopt, or grant City approval of, policies, standards or guidelines for City or for any subdivision thereof.

B. Does not serve in a staff capacity with City and in that capacity, participate in making a governmental decision or otherwise perform the same or substantially the same duties for City that would otherwise be performed by an individual holding a position specified in City’s Conflict of Interest Code under Government Code section 87302.

7.3 In the event City determines that Consultant must disclose its financial interests, Consultant shall complete and file a Fair Political Practices Commission Form 700, Statement of Economic Interests, with the City Clerk’s office pursuant to the written instructions provided by the City Clerk.

ARTICLE 8 – GENERAL CONSIDERATIONS

8.1 In the event any action is commenced to enforce or interpret any of the terms or conditions of this Agreement the prevailing Party shall, in addition to any costs and other relief, be entitled to the recovery of its reasonable attorneys’ fees, including fees for the use of inhouse counsel by a Party.

8.2 Consultant shall not assign any of the Services, except with the prior written approval of City and in strict compliance with the terms and conditions of this Agreement. Any assignment or attempted assignment without such prior written consent may, in the sole discretion of City, result in City’s immediate termination of this Agreement.

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8.3 Consultant is for all purposes under this Agreement an independent contractor and shall perform the Services as an independent contractor. Neither City nor any its agents shall have control over the conduct of Consultant or Consultant’s employees, except as herein set forth. Consultant shall supply all necessary tools and instrumentalities required to perform the Services. Assigned personnel employed by Consultant are for its account only, and in no event shall Consultant or personnel retained by it be deemed to have been employed by City or engaged by City for the account of, or on behalf of City. Consultant shall have no authority, express or implied, to act on behalf of City in any capacity whatsoever as an agent, nor shall Consultant have any authority, express or implied, to bind City to any obligation.

8.4 This Agreement may be terminated by City, in its sole discretion, by providing not less than five (5) days prior written notice to Consultant of City’s intent to terminate. If this Agreement is terminated by City, an adjustment to Consultant’s compensation shall be made, but (1) no amount shall be allowed for anticipated profit or unperformed Services, and (2) any payment due Consultant at the time of termination may be adjusted to the extent of any additional costs to City occasioned by any default by Consultant. Upon receipt of a termination notice, Consultant shall immediately discontinue its provision of the Services and, within five (5) days of the date of the termination notice, deliver or otherwise make available to City, copies (in both hard copy and electronic form, where applicable) of project related data, design calculations, drawings, specifications, reports, estimates, summaries and such other information and materials as may have been accumulated by Consultant in performing the Services. Consultant shall be compensated on a pro-rata basis for Services completed up to the date of termination.

8.5 Consultant shall maintain books, ledgers, invoices, accounts and other records and documents evidencing costs and expenses related to the Services for a period of three (3) years, or for any longer period required by law, from the date of final payment to Consultant pursuant to this Agreement. Such books shall be available at reasonable times for examination by City at the office of Consultant.

8.6 This Agreement, including the Exhibits incorporated herein by reference, represents the entire agreement and understanding between the Parties as to the matters contained herein, and any prior negotiations, written proposals or verbal agreements relating to such matters are superseded by this Agreement. Except as otherwise provided for herein, any amendment to this Agreement shall be in writing, approved by City and signed by City and Consultant.

8.7 This Agreement shall be governed by and construed in accordance with the laws of the State of California, without regard to its conflicts of laws provisions. The Parties agree that all actions or proceedings arising in connection with this Agreement shall be tried and litigated only in the state courts located in San Bernardino County, California, and the federal courts located in Riverside County, California.

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8.8 If one or more of the sentences, clauses, paragraphs or sections contained in this Agreement is declared invalid, void or unenforceable by a court of competent jurisdiction, the same shall be deemed severable from the remainder of this Agreement and shall not affect, impair or invalidate the remaining sentences, clauses, paragraphs or sections contained herein, unless to do so would deprive a Party of a material benefit of its bargain under this Agreement.

IN WITNESS WHEREOF, duly authorized representatives of City and Consultant have signed in confirmation of this Agreement.

CITY OF REDLANDS RICHARD C. SLADE & ASSOCIATES, LLC
By: ___________________________ By: _________________________ Eddie Tejeda, Mayor Richard C. Slade, President
ATTEST:
____________________________
Jeanne Donaldson, City Clerk
Redlands Regular Meeting of 5-7-2024 938 of 1013
EXHIBIT "A"

SCOPE OF SERVICES
The following Scope of Work details the tasks that the Consultant shall complete with respect to preparing and completing the Design Services for Well Drilling.

This scope of work shall be completed within the schedule period listed in Exhibit “B.” Task 1 – Project Management & Kickoff Meeting
o Subtask 1.1 - Kick-off Meeting. The Consultant shall attend an initial, in-person Kick-off meeting with City staff and subconsulting staff. The basic purpose of this meeting shall be to discuss and review the scope and approach of the project. During this meeting, the Consultant and the City shall discuss and identify target project goals including, but not limited to, the following:
• Obtain a basic understanding of the City’s distribution system. The City shall provide the Consultant with an overall understanding of the City’s system, including pressure areas, wells that feed certain portions of the system, wells that require treatment at this time, etc.
• Discuss well production parameters and the City’s expectations for the proposed well.
• Identify key water quality parameter goals for a new well. • List other factors that may be applicable to wellsite consideration. At the City’s discretion, this may include other factors outside of typical hydrogeologic or logistical concern, including areas of “political” concern, if any. • Discuss the available City-owned properties to include as part of the study. For the purposes of this proposal, the Consultant shall assume the City has a maximum of eight (8) candidate sites to evaluate.
• Discuss project timeline goals, data submission dates, and deliverable due dates. • Set dates for future update meetings.
o Subtask 1.2 – Additional Meetings and Project Management. The Consultant shall assume there will be a maximum of an additional seven (7) meetings, each of which is assumed to be virtual. The Consultant shall participate in a few of these meetings on an as-needed basis.

Project management tasks shall include data management and preservation, billing preparation and support, creation of short-term schedules and upcoming work outlooks, preparation/review of meeting agendas, and various other project management related tasks. Monthly invoices shall be provided to help the City also monitor ongoing costs.

The Consultant shall be committed to providing direct, timely, and succinct project management and coordination for this project. Project communications shall be primarily through email correspondence. The Consultant’s project management team shall be performing the proposed work and shall not be substituted without the City’s prior Redlands Regular Meeting of 5-7-2024 939 of 1013
approval. The Consultant’s management team shall keep an updated budget and expenditures record and shall notify the City when costs exceed 80% of the budgeted amount per task.

Deliverables:
• Meeting Agenda
• Meeting Minutes
• Project Schedule
Task 2 – Water Well Feasibility Study & Well Site Ranking Matrix The Consultant shall evaluate as many as eight (8) potential well sites in the subbasin; these specific sites have not yet been identified but shall be provided by the City in coordination with the Consultant. Initially, the City and the Consultant shall jointly review and discuss candidate sites to include as part of the feasibility Study and well site matrix. This determination shall be based on available properties, the general hydrogeology of the subbasin and other factors. A “Sample Assessment Ranking Matrix” shall be provided. The results of Task 2 hydrogeologic evaluation of the eight (8) potential well sites before determining which of the eight (8) sites in Bunker Hill Subbasin shall be the one upon which the subsequent Task 4 “Preliminary Design Report” is to be based.

As such, Task 2 work is described below.
o Subtask 2.1 – Development of Ranking/Evaluation Criteria. The Consultant shall provide hydrogeologic analysis of the data and information generated to date and collaborate with the City (via email or virtual meetings) with regard to evaluation of up to eight (8) potential well sites for the future construction of a new municipal-supply well for the City. From this assessment, the eight (8) potential sites shall be assessed based on anticipated subsurface geologic/hydrogeologic conditions and water quality constraints for further review and ranking using the evaluation criteria developed herein.

The Consultant shall develop an initial list of evaluation criteria for the City. The Consultant shall attend a virtual meeting with City staff to finalize this list, following City review of the list. The information generated during this subtask shall be used to help finalize the selection of the most suitable well site for the City. Parameters to be used as criteria to select a new well location could include, but will not be limited to:
• Estimated potential future well construction and performance details, including:
o pumping rate
o ability to meet the needs of the City’s system
o water quality character (including estimated nitrate, fluoride, and possible VOCS, possible PFAS, etc.)
• Logistical issues, such as:
o Size of site for the placement of drill rig equipment and accessories and for storage of well construction materials.

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o Proximity of site to residences, schools, etc. (for noise mitigation & safety issues).
o The presence of above ground and below ground utilities (e.g., electrical, water and sewer services) need to be identified. Particularly important will be a source of water for drilling operations for the drilling and reaming of the final well bore.
o Distance to possible fluid discharge locations required for well development and well testing, including the distance to and capacity of a nearby storm drain, if any.
o Proximity of former (or possibly still active) nearby water-supply wells owned by others; any new well location must also not be within fifty (50) feet minimum of any known former City-owned wells in the region (due, for example, to lack of a sanitary seal and to sanding conditions in those former City wells).
• Regulatory concerns
o Clearance for the fifty (50) feet protection (control) zone around the site (per Division of Drinking Water regulations).
o Proximity to industrial areas and residences and associated sewer laterals (if a site is located in such areas).
o Proximity to potentially contaminating activities (PCAs) and known contaminant plumes.
o Subtask 2.2 – Well Site Reconnaissance Visits. The Consultant shall perform field reconnaissance visits to each of the maximum eight (8) potential well sites. The candidate well sites shall be arranged in order of priority, from most favorable to least favorable via a ranking matrix. Criteria used in the matrix shall be those criteria developed and approved jointly by the City in Subtask 2.1; the City shall review and approve the ranking matrix. o Subtask 2.3 – Water Well Siting Document. The Consultant shall work promptly and efficiently with the City staff to discuss the maximum eight (8) potential sites for the new well. The final location of the new well shall be selected in Task 4.

Data and information obtained during the above tasks/subtasks along with review of the substantial amount of previous hydrogeologic work in the Bunker Hill Subbasin, shall be analyzed for local subsurface geologic and hydrogeologic conditions. The findings of this hydrogeologic analysis shall be presented in the Water Well Feasibility Siting document.

The primary objectives of this hydrogeologic analysis are as follows:
• Discuss anticipated subsurface geologic conditions.
• Collect and review historical water quality data for City wells and other nearby wells.
• Assess whether selecting other aquifers to be perforated in the new well might be different than those perforated in existing nearby City wells, based on the review of the historic water quality and water level data.
• Estimate groundwater flow directions.
• Identify the spatial extents of possible local and upgradient water quality issues.

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• Identify known potential contaminating activities (PCAs). • Evaluate potential water level drawdown interference between existing nearby wells (and select other nearby municipal-supply wells owned and operated by others) and the proposed new well, and vice versa.
• Assess possible flow rates from a new well relative to its location in the Bunker Hill Subbasin.
• Identify logistical items at each of the maximum eight (8) potential well sites • Possible distances from each potential site to existing water transmission pipelines; nearby active or inactive (even abandoned) water wells; diameters of and distances to the City’s water distribution system.
• Provide a first order estimate of the cost to construct, equip, and connect a new well at each of the maximum eight (8) potential well sites, exclusive of possible water treatment and property acquisition.

The Consultant shall use the specific in-house knowledge and database in the matrix to help assess the feasibility of each of the estimated eight (8) potential well sites.

The different criteria to be established for the site ranking matrix shall be provided to the City in Draft form for comments before it is finalized. Thereafter, that matrix can be used to help rank each of the eight (8) potential sites across the City.

Deliverables:
• Draft Ranking Matrix
• The document to be prepared for Task 2 shall be a detailed Technical Memorandum (TM), with attendant figures, tables, and hydrographs, to help document the work (including the ranking matrix). The TM shall provide a recommended timeline for well drilling and construction activities, including estimated timelines for Preliminary Design Report preparation, creation of Technical Specifications, and the monitoring of the drilling, design, constructing, and testing of the new well. Approximate construction costs, based on the Consultant’s recent well experience on similar projects, shall also be included.

Task 3 – Utilities Research
The Consultant shall conduct research and obtain utility records from the City and other local utility companies regarding the locations and currently proposed locations for utilities that may impact or adversely affect the selection of a possible site for the City’s new production well.

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Task 4 – Preliminary Design Report (PDR)
The Consultant shall prepare the PDR for the new well that has been ranked first of the maximum eight (8) potential well sites that were evaluated in Task 2. The site matrix criteria developed by the Consultant and approved by the City in Task 2 shall be used. This PDR is needed before the Task 5 environmental document (the IS-MND).

The preliminary design criteria that the Consultant shall provide in the PDR for the new well shall include, but will not necessarily be limited to, the following:
• The anticipated extent and geologic nature of water-bearing and nonwater-bearing strata beneath the final selected site.
• Information of nearby City wells pertaining to production, water quality, well construction, and water levels.
• Preferred drilling method and sequence of drilling operations. • A water supply source for “make-up” water needed during drilling. • Dust suppression and possible noise mitigation methods (e.g. sound attenuation) to be used, as needed.
• The approximate recommended depth of the pilot hole, which shall clearly depend on the location of this final well site in the Subbasin.
• Anticipated diameter(s) for the pilot hole and borehole ream(s). • Testing methods and sample analyses to be performed downhole in the pilot hole (including isolated aquifer zone testing in the open pilot hole, and types of electric logs to be performed).
• Type, diameter, and wall thickness of well casing(s) recommended for use. • Recommended type and material for the casing perforations and their preliminary depth settings.
• Anticipated gradations of the gravel (filter) pack.
• Anticipated footage lengths for the cement seal(s), gravel pack, and possible intra-annular well seal.
• Mechanical, chemical, and pumping development criteria. • Disposal options for fluids generated during well development and testing and treatment of monitoring of discharge.
• Downwell surveying and testing methods following installation of the casing (alignment surveys, spinner surveys, depth-specific sampling, and pumping tests). • A listing of the permits needed during the project.
• Estimated range of costs of construction and testing of the new well.

Deliverables:
• A Draft copy of the Preliminary Design Report shall be provided to the City staff for review. The Final PDR shall then be provided to the City.

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Task 5 – Environmental Study
The Consultant shall prepare an Initial Study-Mitigated Negative Declaration (IS-MND). Once the project site is selected, the specific level of CEQA documentation shall be confirmed in consultation with the City as CEQA lead agency and may include a Categorical Exemption (e.g., Class 32 – Infill Development Projects) or an Environmental Impact Report. If an alternative CEQA approach becomes necessary, this scope and cost can be adjusted accordingly. In addition, if during the course of preliminary research and technical analysis, it is determined through the environmental review process that the project may result in significant and unavoidable environmental impacts, the City shall be notified immediately to determine the necessary course of action. The following sections describe the scope of work for each task involved in preparation of an IS-MDN and supporting technical studies.
o Subtask 5.1 – Project Management and Meeting Attendance. The Consultant shall provide overall project management and coordination for Task 5 work. Within five (5) days of Notice to Proceed, the Consultant shall attend one (1), two (2) hour, in-person kickoff meeting with the City to confirm project details, review the proposed deliverable schedule for the project, share and discuss preliminary data requests, and establish a communication protocol. It is anticipated that up to two (2) additional coordination with the City shall occur to ensure regular communication and status updates.
• Deliverables: Meeting agenda and minutes for one (1) kickoff meeting and up to two (2) coordination meetings.
• Assumptions:
o Project management shall be required over an approximately twelve (12) month period, starting at Notice to Proceed.
o Subtask 5.2 – Consultation with City of Redlands on CEQA Approach. The decision on the appropriate level of CEQA documentation for the project is ultimately the responsibility of the City, as CEQA lead agency. Under this task, the Consultant shall attend one (1) virtual meeting with the City, to confirm the appropriate level of CEQA documentation.
• Deliverables: Meeting agenda and minutes for one (1) consultation meeting. o Subtask 5.3 – Technical Studies. The Consultant anticipates a Cultural Resources Assessment shall be necessary to support preparation of an IS-MND for the proposed project. In addition, a Phase 1 Environmental Site Assessment (ESA) shall be included as a task in accordance with the City’s request in the RFP. • Subtask 5.3.1 – Cultural Resources Assessment. The Consultant shall prepare a Cultural Resources Assessment in support of the project’s CEQA documentation, which will include the following tasks:

1. California Historical Resources Information System Records Search.

The Consultant shall conduct a California Historical Resources Information Redlands Regular Meeting of 5-7-2024 944 of 1013
System (CHRIS) records search of the project site and a 0.5-mile radius at the South Central Coastal Information Center (SCCIC) located at California State University, Fullerton. In addition to the resource records and reports, an examination shall be made of historical maps, the National Register of Historic Places, California Register of Historical Resources, the Built Environment Resources Directory, the Archaeological Determinations of Eligibility list, and the listing of California Historical Landmarks.

2. Native American Heritage Commission Sacred Lands File Request. On behalf of the City, the Consultant shall contact the Native American Heritage Commission (NAHC) to request a Sacred Lands File (SLF) search.

No outreach to Native Americans shall be completed as part of this task, and this task does not constitute Native American consultation under Assembly Bill 52 (AB 52), which is performed by the CEQA lead agency (i.e., the City).

3. Cultural Resources Pedestrian Survey. Upon completion of the records search, the Consultant shall conduct an archaeological pedestrian survey of the project site using transects spaced at maximum intervals of fifteen (15) meters over all exposed ground surface within the project site. Transect accuracy shall be maintained through use of a hand-held global positioning system (GPS) unit.

4. Cultural Resources Letter Report. Upon completion of the tasks outlined above, the Consultants shall prepare a Cultural Resources Letter Report.

The report shall summarize the methods and results of the records search and survey, as well as a review of historical topographic maps, aerial photographs, and geologic and soils maps to provide an assessment of the project site’s development history and subsurface and archaeological sensitivity. The report’s findings shall include recommendations for additional work or mitigation measures, if any are deemed necessary. Once reviewed and approved by the City, a copy of the final report shall be submitted to the SCCIC for their records.
o Deliverables: Draft and Final Cultural Resources Assessment Letter Report o Assumptions:
▪ Direct expenses associated with the CHRIS records search shall not exceed $1,200, and the results shall be obtained within eight (8) to ten (10) weeks of notice-to-proceed.
▪ If the record search results have schedule or budget ramifications, it shall be communicated to the City in a timely manner to effectively maintain the project schedule and allow the Consultant and the City to manage project risk effectively.
▪ The NAHAC shall provide the SLF search results within eight (8) to ten (10) weeks.
▪ A map depicting the limits of the project site and permission to enter this area shall be provided at notice-to-proceed.

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▪ The cultural resources pedestrian survey shall be completed by one (1) cultural resource specialist in one (1), eight (8) hour field day, including travel time.
▪ No testing or excavation for cultural resources shall be conducted, and no artifacts, samples, or specimens shall be collected during the cultural resources pedestrian survey.
▪ If ground visibility is limited (e.g. by landscaping) to the extent that surficial archaeological deposits cannot be observed during the pedestrian survey, additional studies may be required.
▪ No cultural resources (including archaeological and historic-period build environmental resources) that require recordation, updating, or evaluation for California Register of Historical Resources eligibility shall be identified within the project site during the records search or pedestrian survey.
▪ Due to the sensitive nature of archaeological resource information, cultural resources reports are typically considered confidential. The Consultant assumes the technical report shall be considered confidential and shall not be suitable for public review. • Subtask 5.3.2 – Phase 1 Environmental Site Assessment. The Consultant shall perform a Phase I Environmental Site Assessment (ESA) to identify potential impacts from hazardous materials and wastes associated with the project. This study shall include an examination of potential hazards associated with the existing site that may affect the proposed project. The Phase I ESA shall include a site reconnaissance, environmental database search, regulatory records review, interviews with property owners (as available) and regulatory agencies, and historical records review to identify areas of past industrial or hazardous material land uses on site or in the vicinity. Specific information regarding Cortese sites, landfills, hazardous material pipelines, per- and polyfluoroalkyl substances (PFAS), and California Geologic Energy Management Division oil well records shall be included.
o Deliverables: Draft and Final Phase 1 ESA
o Assumptions:
▪ The site reconnaissance visit can be completed by a single staff person in three (3) hours, inclusive of travel time.
▪ Up to four (4) on-site/adjacent/nearby release sites shall be identified during the historical records and environmental database search.
▪ The City shall obtain and/or grant legal site access within two (2) weeks (10 business days) of notice to proceed. The City shall transmit interview questionnaires to the current site owner or a designated representative of the site owner and/or
operators/occupants (as identified by the City) on behalf of the Consultant. The City shall return completed User and Owner questionnaires and provide environmental lien and title reports for Redlands Regular Meeting of 5-7-2024 946 of 1013
the Consultant’s review, within two (2) weeks (10 business days) of project authorization. If documents are submitted for review after three (3) weeks (15 business days) of authorization, additional time and materials fees will apply to revise and re-review the Phase I ESA report.
▪ This scope of work does not include in-person file reviews by the Consultant.
o Subtask 5.4 – Initial Study-Mitigated Negative Declaration. • Subtask 5.4.1 – Administrative Draft IS-MND. The Consultant shall prepare an Administrative Draft (internal review) IS-MND for the proposed project.

The Administrative Draft IS-MND shall discuss existing conditions, thresholds of significance for CEQA, methodology for impact assessments, project-specific impacts and mitigation measures, cumulative impacts, and residual impacts for the proposed project. The focus of the analysis shall be to avoid or minimize potential impacts and to propose appropriate mitigation where potential impacts may occur.

The IS-MND shall incorporate the results of the technical studies prepared under Task 5.3 as well as other project studies provided by the Consultant, and additional information shall be gathered from the various online databases and other documents on file with the City and other agencies. Furthermore, the Consultant shall conduct a biological resources reconnaissance survey, a paleontological resources records search with the San Bernardino County Museum, and two (2) short-term (15-minute) noise measurements and one (1) long-term (24-hour) noise measurement to characterize existing ambient noise within the project area. o Deliverables: Draft and Final Project Description, and Administrative Draft IS-MND.
o Assumptions:
▪ Long-term operational air quality and greenhouse gas emissions shall be discussed qualitatively because anticipated project components would result in negligible long-term emissions. ▪ The biological resources reconnaissance survey shall be completed by a single biologist in a single, eight (8) hour field day, inclusive of travel time.
▪ No protected trees will be located on site, and the identification and evaluation of protected trees, pursuant to Redlands Municipal Code Chapter 12.52, by a certified arborist will not be necessary. ▪ No special-status species or sensitive biological resources will be present on the project site.
▪ The direct cost associated with the paleontological resources records search shall not exceed $360. No fossils shall be identified on the project site by the literature search and records review, and no paleontological field survey shall be conducted.

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▪ Supporting hydrogeologic analysis to provide substantial evidence in support of the findings of the IS-MND with regard to project impacts to groundwater supplies and sustainable groundwater management shall be provided by the Consultant as part of the well siting evaluation. No additional hydrogeologic analysis shall be conducted by the Consultant.
▪ The transportation analysis for the IS-MND shall utilize construction traffic estimates provided by the Consultant along with standard construction traffic control measures. Additional traffic modeling shall not be conducted as part of this scope of work. • Subtask 5.4.2 - Public Review Draft IS-MND. The Consultant shall respond to comments from the City on the Administrative Draft IS-MND and incorporate revisions as needed. For the purposes of CEQA, the Consultant shall also prepare a Notice of Intent (NOI) to Adopt the MND for submittal to the San Bernardino County Clerk and State Clearinghouse, as well as a Notice of Completion and Summary Form for submittal to the State Clearinghouse. The Consultant shall also provide an electronic version (PDF) of the Public Review Draft IS-MND for posting on the City’s website and with the State Clearinghouse. The Consultant shall file the NOI with the San Bernardino County Clerk and State Clearinghouse.

If needed, the Consultant shall also assist in developing a mailing list for the City to use in distributing the NOI to responsible/trustee agencies and interested parties. o Deliverables: Public Review Draft IS-MND, NOI, Notice of Completion, and Summary Form
o Assumptions:
▪ The City shall be responsible for completing the public noticing procedures described in CEQA Guidelines Section 15072(b). • Subtask 5.4.3 - Responses to Comments and Final IS-MND. Upon receipt of public comments on the Draft IS-MND, the Consultant shall prepare and submit an electronic copy of the draft responses to comments for review by the City, including any added or substantially revised sections of the Draft IS-MND that may be necessary. The Final IS-MND shall also include a mitigation monitoring and reporting program (MMRP) in accordance with the City’s requirements. The MMRP shall be provided in an easily digestible format. The Consultant shall provide an electronic version (PDF) of the Final IS-MND.

The Consultant shall complete a Notice of Determination (NOD) form for filing with the San Bernardino County Clerk and State Clearinghouse. Following adoption of the IS-MND and project approval, the Consultant shall file the NOD with the State Clearinghouse. However, because of the need for original signatures and the inclusion of filing fees, it is assumed the City will be responsible for filing the NOD with the San Bernardino County Clerk along with the required filing fees with guidance from the Consultant.

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o Deliverables: Administrative Final and Final IS-MND, including Responses to Comments, MMRP, and NOD
o Assumptions:
▪ The City shall be responsible for filing the NOD with the San Bernardino County Clerk and for payment of the associated filing fees.
• Subtask 5.4.4 – Public Hearing. If desired by the City, the Consultant shall attend one (1) public hearing for the proposed project to answer questions related to the CEQA process.
o Assumptions:
▪ No presentation materials shall be prepared by the Consultant for the public hearing.
▪ The public hearing shall be held in-person at a location in Redlands and shall not exceed three (3) hours in length.
• Subtask 5.4.5 – AB 52 Consultation Assistance. Under AB 52, the City, as CEQA lead agency, is required to begin consultation with California Native American tribes that are traditionally and culturally affiliated with the project area prior to the release of an IS-MND. the Consultant shall assist the City with consultation under AB 52 by providing the City with letter templates, checklists, and detailed instructions to facilitate meaningful consultation with interested Native American groups can be completed in accordance with AB 52.
o Deliverables: AB 52 Consultation Assistance Package.
o Assumptions:
▪ Costs for mailings, outreach, or additional consultation by the Consultant are not included in this scope of work.
▪ Attendance at meetings with interested tribes is not included in this scope of work.

Task 6 – Plans, Technical Specifications, & Construction Cost Estimate (PS&E) o Subtask 6.1 – Technical Specifications. For this task, the Consultant shall prepare one (1) set of Technical Specifications (and appropriate bid sheets and drawings) for the drilling, development, construction, and testing of the new well.

These Technical Specifications (i.e., the PS&E) for the new well shall provide the technical requirements for the following well construction issues for the proposed well:
• Site preparation activities (clearing, grubbing, grading). • Drilling/construction method for the well and drilling fluids control parameters and methods, along with parameters for plumbness and alignment of the pilot hole and final reamed borehole.
• Types and materials for sound attenuation for noise mitigation, if necessary. • The pilot hole drilling depth.

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• Details for performing isolated aquifer zone testing in three (3) selected zones. • Depth(s) and diameter(s) of borehole ream(s).
• Casing material types, casing diameters and casing depths. • The type and size of casing perforations and lengths of such casing. • The depth(s) of possible deep cement annular sanitary seal(s) or aquifer seals. • The anticipated gravel pack gradation and depth placement. • Mechanical, chemical and pumping development criteria. • Water quality sampling and analysis for isolated aquifer zone testing and for the Final wellblend water quality samples.
• NPDES permit requirements, sampling, analysis, treatment, and compliance measures.
• Step drawdown test and constant rate pumping test details. • Criteria and equipment for the final dynamic and static spinner surveys and depth discrete sampling in the newly-constructed well.
• Final video survey, alignment survey and completion of the wellhead. • Selection of casing materials, borehole and casing diameters, required noise mitigation measures, onsite treatment and/or disposal of drilling fluids for the construction of the proposed well and other aspects of the construction project will be specifically tailored to the final site selected for the new well. o Subtask 6.2 – Estimate of Probable Construction Costs. The Consultant shall prepare a detailed estimate for the probable cost of the drilling, construction, and testing (PS&E) of the new proposed well, exclusive of the permanent pump, the wellhead, pipelines, aboveground appurtenances, and property acquisition (if needed).

Deliverables:
• The PS&E, including illustrations/plans, shall include a Draft in electronic format for City review; finalization of the PS&E, after inputting possible City comments, and preparing the Consultant’s independent detailed Estimate of the Probable Cost of Construction for the new well on a line-item basis.

Task 7 – Drinking Water Source Assessment and Protection Document (DWSAP) The work shall consist of preparing a Drinking Water Source Assessment and Protection (DWSAP) document for the new well, in accordance with the Division of Drinking Water (DDW) requirements for well permitting. It is assumed that only a “standard” DWSAP assessment shall be required, and not require a “Process Memo 97-005” analysis for contaminated sites. The work necessary to complete the DWSAP report shall consist of the following tasks:
o Subtask 7.1 - Collect and Review Data. This task shall entail conducting research and review of available data with regard to contaminant sources/plumes in the area surrounding the selected well site.

In addition, the Consultant shall use water quality data collected via the final wellblend from the new well at the end of its final testing; a summary of that data shall be included in the DWSAP work.

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o Subtask 7.2 - Data Analysis/Capture Zone. The Consultant shall conduct a basic capture zone analysis of the future pumping of the well to determine the possible impact of the pumping of the well on groundwater in the vicinity of the well site. o Subtask 7.3 - Preparation of DWSAP Report. After conducting review and analysis of the available data, the Consultant shall assess the vulnerability of the new well to currently known potential sources of contamination to determine their vulnerability ranking based on the DWSAP program. The Consultant shall include in the DWSAP report the following items:

1. An inventory of potential contaminating activities (PCAs) in the region of the well.

2. An analysis of the vulnerability of these drinking water sources to contamination.

3. Preparation of a capture zone map for the well (based on the calculation performed in Subtask 7.2).

4. Compilation of the results of the assessment and a summary for the groundwater source(s) at the site.

Deliverables:
• Once completed, the Consultant shall submit an electronic copy of the Draft DWSAP Report to the City for review. Following receipt of possible comments, the Consultant shall provide the City with the final DWSAP document for the new well for submittal to DDW. • The Consultant shall prepare portions of the DWSAP report that discuss treatment planning, technologies, etc.

Task 8 – Pre-Bid Meeting & Permit Assistance
The Consultant shall attend and provide support to the pre-bid meeting with potential drilling contractors and the City. The Consultant shall promptly provide pre-bid clarifications and/or addenda, to possible items in the Technical Specifications or Bid Sheets. The Consultant shall also assist in the review of contractor bids for well construction received by the City.

Once the basic well design parameters such as depth, casing material, etc. have been established, the County drilling permit application shall be completed and submitted for processing. A preliminary technical report by the City may be required six (6) months prior to water well construction as a component of the DDW well operation permit (California Health and Safety Code (CHSC), Section 116527). The Consultant shall prepare supporting documents to assist the City in the preparation of this permit prior to the six (6) month report deadline.

The Consultant shall assist in obtaining or preparing for permitting support include:
• Well chlorination/data sheets
• DWR Well Completion Report (WCR)
• Pumping development and aquifer testing data
• Chemical and bacteriological water quality analyses
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• Single discharge event monitoring forms prepared for NPDES compliance (by the Contractor)
The Consultant shall assist in obtaining the permits, as follows:
• To drill the new well, the drilling contractor needs to apply to San Bernardino County Environmental Health Services to obtain the drilling permit. The Consultant shall provide information from the PDR to the driller to identify the final site, the drilling method, and the anticipated pilot hole depth.
• The City shall have a viable NPDES permit from the local RWQCB office to allow discharges from the drilling and construction of the new well. The Consultant shall provide the City and/or the RWQCB with the timing of and the approximate durations and volumes of discharge during the drilling, zone testing, well development, and final pumping test operations for the new well.
• The Consultant shall provide assistance with any possible permits from the San Bernardino County Flood Control District and/or the San Bernardino Valley Water Conservation District for the drilling, construction, and testing of the new well.

As a result of the currently changing DDW practices for new wells, the Consultant shall conduct the following:
o Subtask 8.1 – Attend three (3) meetings with DDW. The Consultant shall attend as many as three (3) meetings with the City and DDW: one (1) during the water well feasibility work (Task 2); one (1) during the PDR work (Task 4); and the third during the PS&E work (Task 6).

Any additional in-person or virtual meetings between the Consultant and the City with DDW shall be performed by the Consultant on a time and expense basis.

Task 9 – Bidding Assistance
This task shall be performed immediately after the City has received the detailed bids from the responsive drilling contractors for construction of the new well. Bidding assistance shall include detailed review of each bid received and one (1) virtual meeting with the City to discuss the bids and the review of bids by RCS
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Task 10 – Construction Monitoring Services
o Subtask 10.1 – Pre-Construction Meeting. Following the award of construction to the drilling contractor by the City, the Consultant shall prepare for and attend the preconstruction meeting with that contractor and the City. The Consultant shall also review information provided by the contractor.

At this pre-construction meeting, key items to be discussed shall be issues in the Technical Specifications and review the Contractor-proposed mobilization and scheduling of personnel and equipment to the site.

Other items to be performed by the Consultant for Task 10.1 includes: respond to questions; review of Contractor submittals; review of any requests for information submitted by the Contractor; assess possible change orders during the work; and review/comment upon the project schedule submitted by the Contractor.
o Subtask 10.2 – Conductor Casing and Rig Mobilization. The Consultant shall observe the installation of the conductor casing into its borehole; log the drill cuttings collected by the driller; and maintain telephone coordination with the driller during drill rig mobilization, drilling of the conductor casing, and the possible installation of sound barrier walls.

Installation of the cement seal shall be observed by the San Bernardino County Division of Environmental Health Services inspector, who is to be contacted to inspect by the drilling company prior to pumping that cement seal into place. o Subtask 10.3 – Geologic Logging of Pilot Hole. During drilling, the Consultant shall be present on a part-time basis to geologically log the cuttings (formation samples) collected by the driller. The Consultant shall be available to discuss drilling conditions and the results of in-progress geologic logging with City personnel; frequent emails will also be provided. o Subtask 10.4 – Downhole Geophysical Survey Log Analysis. The Consultant shall observe and review the downhole geophysical surveys (i.e., electric logs) of the pilot borehole at the drill site. The Consultant shall review and compare data from nearby geophysical logs (and the temperature log), along with the geologic log, to help select specific depth zones for as many as three (3) isolated aquifer zone tests in the open borehole. o Subtask 10.5 – Isolated Aquifer Zone Testing (If Performed). The Consultant shall observe downhole isolated aquifer zone testing of groundwater in three (3) selected aquifers in the pilot hole at the drill site. The Consultant shall select specific depth zones on the basis of review and analysis of drill cuttings, the new E-log, other E-logs for wells and test holes drilled in the Subbasin for the City, and other subsurface data compiled by the Consultant for the Subbasin.

The Consultant shall be present during the latter stages of zone development during temporary pumping with a submersible pump to collect samples for water quality testing.

During pumping, the Consultant shall observe/monitor the following field parameters in each test zone:

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• Temperature
• pH
• Electrical conductivity (EC)
• Turbidity
• Possible odors
• Static water levels
• Pumping water levels
• Pumping rates
• Calculations of possible specific capacity values
The Consultant shall obtain representative groundwater samples for water quality analysis from the collected samples.
o Subtask 10.6 – Final Well Design Memorandum, Monitor Borehole Ream(s) and Caliper Survey. The Consultant shall communicate in-progress findings to the City and prepare a DRAFT of the Final Construction Design Memorandum for the new well. A Draft of the Final Well Design Memorandum shall be submitted the City for review. Following receipt of any City comments, the Consultant shall prepare the Final Design Memorandum and submit it to the City and the driller. This Final Well Design Memorandum shall provide the Final recommendations for the following elements:
• Casing lengths and diameters.
• Type and depths of the perforations.
• Perforation sizes (slot sizes).
• Accessory tubing.
• The type and gradation of the gravel pack, based on testing of actual samples of selected drill cuttings.
• Depth of the cement seal(s) and bottom-hole seal (if needed). • Recommended depth of the test pump intake for pumping development and final well testing.

Also, during this task, the Consultant shall maintain telephone communication with the driller during the final reaming of the borehole at the well site and shall make one (1) site visit to check on reaming operations. When reaming operations have been completed, the Consultant shall review the results of the caliper survey of the final reamed borehole at the well site to help verify the appropriate depths and diameters for the ream have been attained.
• Deliverables: The Consultant shall provide the City with a Draft for review and then a Final Well Design Memorandum. The Memorandum, including requisite drawings, tables, and appendices, shall be provided to the City and the driller. o Subtask 10.7 – Casing, Gravel Pack and Cement Seal Installation. The Consultant shall be present on a full-time basis to monitor, record and check for Contractor compliance with Redlands Regular Meeting of 5-7-2024 954 of 1013
the final well design during the installation of the recommended well blank and perforated casing, gravel pack, and cement seal for the initial well.

During casing installation, the Consultant shall spot check the slot width of the casing perforations, observe and record the lengths of the blank and perforated casing being installed, and observe and record the type and amount of gravel pack and cement being emplaced downhole.
o Subtask 10.8 – Well Development (Mechanical and Chemical Methods). The Consultant shall monitor well development by mechanical and chemical methods for the new well.

The Consultant shall spot check Contractor compliance with NPDES discharge requirements, and other discharge requirements as necessary. o Subtask 10.9 – Well Development (Pumping Methods). The Consultant shall be present on a part-time basis to monitor well development of pumping methods. The Consultant shall also be present during start-up of pumping development and at other occasional time intervals to spot-check the progress of this pumping development. o Subtask 10.10 – Step Drawdown Testing. Following the development of the new well by chemical/mechanical methods, the Consultant shall install a pressure transducer and monitor step drawdown testing at the new well site.
o Subtask 10.11 – Constant Rate Pumping Test. The Consultant shall provide a geologist, on a part-time basis, in order to monitor water level drawdown and recovery after the final constant rate pumping test (aquifer test).

Field water quality values of pH, EC, temperature, and turbidity of the well discharge shall be obtained by the Consultant during both of the pumping tests. Water samples of the final wellblend from the new well shall be collected near the end of the constant rate test and delivered to a UWCD-approved laboratory for water quality analysis.

At the end of aquifer testing, the Consultant shall require the Contractor to perform a “dynamic” flow meter (spinner) survey of the well to help identify the current flow regime of the various perforated zones in the new well. In addition, the Consultant shall be present to collect depth-specific samples and a complete suite of Title 22 analysis, and the drilling Contractor will transport and have the samples analyzed at a State-Certified testing laboratory (which shall be required by the Technical Specifications). o Subtask 10.12 – Casing Alignment Testing, Video Survey, Static Spinner Survey, and Well Disinfection. The Consultant shall be present to observe a gyroscopic survey for the alignment/plumbness testing of the well casing, a video survey, and a static spinner survey. o Subtask 10.13 – Recommended Pumping Rate and Pump Depth Setting Memorandum.

Based on the step drawdown and constant rate pumping test data, the Consultant shall promptly provide a Memorandum to discuss static and pumping water levels, and the current specific capacity for the new well. The Memorandum shall also provide Redlands Regular Meeting of 5-7-2024 955 of 1013
recommendations to the City for the final operational pumping rate and pump depth setting for the permanent pump; these parameters shall include factors for anticipated declines in specific capacity over time and anticipated seasonal variations in water levels. • Deliverables: The Consultant shall provide the City with a Draft for review and then a Final Recommended Pumping Rate and Pump Depth Setting Memorandum for a new permanent pump for the well. The memorandum, including all drawings, tables, and appendices, shall be provided to the City.
o Subtask 10.14 – Preparation of Summary of Well Construction Operations Report. A Summary of Well Construction Operations Report shall be prepared to help document the drilling, construction, testing activities, and materials used during the construction.

This report shall include the following items:
• A basic chronology of well construction and testing.
• Description of earth materials encountered during drilling, including a copy of the geologic log.
• Copies of all geophysical logs, including caliper and spinner surveys. • Results of sieve analysis, including plots of grain size curves. • Table of well construction materials and depths.
• As-built well design drawings.
• Field water quality results, water levels and discharge rates during zone testing and constant rate discharge tests.
• Analytical reports showing water quality results for isolated aquifer zone testing and the final wellblend sample.
• Well development logs from the drilling contractor.
• Pumping test data for the step drawdown test, constant rate test and water level recovery measurements.
• Analysis of pumping test data, including well performance and plots of drawdown relationships as a function of flow rate and time.
• Evaluation of the spinner log data and depth specific water quality sampling under pumping conditions.
• Plumbness and alignment data.
• Other pertinent data relating to materials used.
• Conclusions and recommendations for basic operational use. • Deliverables: The Consultant shall provide the City with a Draft for review (without all supporting appendices) and then a Final Summary of Well Construction Operations Report. The report, including all drawings, tables, and appendices, shall be provided to the City.
o Subtask 10.15 – Task-Specific Project Management Services. The Consultant shall provide frequent project emails and overall weekly project management services to help keep City staff informed of events and details during each Subtask of well construction.

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These project management services shall include:
• Provide weekly status/update reports to City staff during the construction of the well. In addition, the Consultant shall keep the City informed, via email or telephone, of events on a semi-daily basis during construction activities. • Conduct two (2) virtual meetings with City staff during the project. • Assist City with Request for Information (RFIs) from the Contractor during the well construction process.
• Review of Contractor submittals for materials to be used in the well construction process.
• Evaluate possible change orders from the drilling contractor, if any, and provide recommendations to the City to approve/disapprove these requests, as applicable. • Review of progress billings submitted by the Contractor in order to check that the drilling contractor has provided the City with an accurate accounting and billing for time and materials used in conducting work associated with the drilling, installation, and testing of the new well.
• Provide a final “punch list” at the end of construction activities to identify construction deficiencies, if any, and to help resolve those deficiencies between the Contractor and the City.

Redlands Regular Meeting of 5-7-2024 957 of 1013
EXHIBIT "B"

PROJECT SCHEDULE
Redlands Regular Meeting of 5-7-2024 958 of 1013
EXHIBIT "C"

FEE SCHEDULE
[Attached]
Redlands Regular Meeting of 5-7-2024 959 of 1013
EXHIBIT "D"
WORKERS’ COMPENSATION INSURANCE CERTIFICATION
Every employer, except the State, shall secure the payment of compensation in one or more of the following ways:
(a) By being insured against liability to pay compensation by one or more insurers duly authorized to write compensation insurance in this State. (b) By securing from the Director of Industrial Relations, a certificate of consent to self-insure, either as an individual employer, or as one employer in a group of employers, which may be given upon furnishing proof satisfactory to the Director of Industrial Relations of ability to self-insure and to pay any compensation that may become due to his or her employees.

CHECK ONE
_____I am aware of the provisions of Section 3700 of the Labor Code which requires every employer to be insured against liability for Workers’ Compensation or to undertake self-insurance in accordance with the provisions of that Code, and I will comply with such provisions before commencing the performance of the work and activities required or permitted under this Agreement. (Labor Code §1861).
_____I affirm that at all times, in performing the work and activities required or permitted under this Agreement, I shall not employ any person in any manner such that I become subject to the workers’ compensation laws of California. However, at any time, if I employ any person such that I become subject to the workers’ compensation laws of California, immediately I shall provide the City with a certificate of consent to self-insure, or a certification of workers’ compensation insurance.

I certify under penalty of perjury under the laws of the State of California that the information and representations made in this certificate are true and correct.

RICHARD C. SLADE & ASSOCIATES, LLC
By: Date: ___________________
Richard C. Slade, President
Redlands Regular Meeting of 5-7-2024 960 of 1013

HOURS COST HOURS COST HOURS COST HOURS COST HOURS COST HOURS COST TASK 1: Project Management & Meetings
Task 1.1 1 $309 1 $264 4 $908 $0 $0 $0 $37 $100 $1,618
Task 1.2 4 $1,236 4 $1,056 16 $3,632 $0 $0 4 $404 $158 $0 $6,486 Task 1.3 2 $618 2 $528 4 $908 3 $588 $0 2 $202 $71 $0 $2,915 Task 1.4 1 $309 1 $264 4 $908 $0 $0 2 $202 $42 $0 $1,725 8 $ 2,472 8 $ 2,112 28 $ 6,356 3 $ 588 0 $ - 8 $ 808 $ 308 $ 100 $ 12,744 TASK 2: Water Well Feasibility Study
Task 2.1 2 $618 2 $528 8 $1,816 8 $1,568 $0 4 $404 $123 $0 $5,057 Task 2.2 $0 $0 2 $454 $0 12 $1,584 $0 $51 $125 $2,214
Task 2.3 3 $927 2 $528 8 $1,816 46 $9,016 $0 $0 $307 $0 $12,594 5 $ 1,545 4 $ 1,056 18 $ 4,086 54 $ 10,584 12 $ 1,584 4 $ 404 $ 481 $ 125 $ 19,865 Task 3: Utility Research
$0 $0 2 $454 6 $1,176 $0 2 $202 $46 $0 $1,878
0 $ - 0 $ - 2 $ 454 6 $ 1,176 0 $ - 2 $ 202 $ 46 $ - $ 1,878 Task 4: Preliminary Design Report (PDR)
3 $792 2 $528 8 $1,816 48 $9,408 $0 2 $202 $319 $0 $13,065 3 $ 792 2 $ 528 8 $ 1,816 48 $ 9,408 0 $ - 2 $ 202 $ 319 $ - $ 13,065 Task 5: Environmental Study - Rincon Associates
$ 90,674
Task 6: Plans, Technical Specifications, & Construction Cost Estimate (PSE) Task 6.1 3 $792 2 $528 4 $908 54 $10,584 $0 2 $202 $325 $0 $13,339 Task 6.2 $0 $0 2 $454 4 $784 $0 $0 $31 $0 $1,269
3 $ 792 2 $ 528 6 $ 1,362 58 $ 11,368 0 $ - 2 $ 202 $ 356 $ - $ 14,608 Task 7: Drinking Water Source Assessment and Protection Document (DWSAP) Task 7.1 $0 $0 2 $454 6 $1,176 $0 2 $202 $46 $0 $1,878
Task 7.2 4 $1,236 4 $1,056 8 $1,816 45 $8,820 $0 $0 $323 $0 $13,251 4 $ 1,236 4 $ 1,056 10 $ 2,270 51 $ 9,996 0 $ - 2 $ 202 $ 369 $ - $ 15,129 Task 8: Pre-Bid Meeting & Permit Assistance
Task 8.1 3 $927 12 $3,168 12 $2,724 $0 $0 2 $202 $176 $0 $7,197 3 $ 927 12 $ 3,168 12 $ 2,724 0 $ - 0 $ - 2 $ 202 $ 176 $ - $ 7,197 Task 9: Bidding Assistance
1 $309 $0 2 $454 4 $784 $0 $0 $39 $0 $1,586
1 $ 309 0 $ - 2 $ 454 4 $ 784 0 $ - 0 $ - $ 39 $ - $ 1,586 Task 10: Construction Monitoring Services (OPTIONAL Task per RFP) 21 $6,489 16 $4,224 51 $11,577 157 $30,772 230 $30,360 13 $1,313 $2,120 $2,678 $89,533 21 $6,489 16 $4,224 51 $11,577 157 $30,772 230 $30,360 13 $1,313 $2,120 $2,750 $89,533 $175,605
NOTE: Costs for (Optional) Task 10 are an estimate and will be finalized after all subtasks for Optional Task 10 are conceptualized and approved. $101,395 To be conservative, RCS Costs assume the final well depth to be 1,200 ft for Optional Task No. 10. $13,000 $290,000
TOTAL ESTIMATED COSTS FOR RCS SERVICES (TASKS 1 through 10)>> SUBCONTRACTOR COST (RINCON)>>
SUBTOTAL OPTIONAL TASK 10>
SUBCONTRACTOR COST (KENNEDY JENKS)>>
TOTAL PROJECT COST (TASKS 1 through 9)>>
TABLE 1A
For detailed cost breakdown of (Optional) Task 10, refer to Table 1C SUBTOTAL TASK 5>

RCS COST ESTIMATE DETAIL

PROPOSAL FOR WATER WELL PROJECT - CITY OF REDLANDS
MARCH 13, 2024
SUBTOTAL TASK 3>
SUBTOTAL TASK 4>
Deliverables
Technical Specifications
Estimate of Probable Construction Costs
SUBTOTAL TASK 6>
Not Applicable
Not Applicable
Preparation of DWSAP Report
SUBTOTAL TASK 7>
For detailed cost breakdown of Task 5, refer to Table 1B TOTAL Task
COST $101
FIELD

GEOLOGIST CLERICAL PERSONNEL

PRESIDENT

GROUNDWATER

GEOLOGIST
$309

ADMIN FEE
DIRECT
COSTS $264 $227 $196 $132

PHASE AND TASK LISTINGS

PRINCIPAL

GROUNDWATER

GEOLOGIST
SENIOR

GROUNDWATER

GEOLOGIST

STAFF GROUNDWATER

GEOLOGIST
SUBTOTAL TASK 1>
Kick-off Meeting
Additional Meetings (up to 7) & Project Management (Task 1 through 9) Quality Control
Development of Ranking/Evaluation Criteria
Well Site Reconnaissance Visits
Water Well Siting Document
SUBTOTAL TASK 2>
Attend Three (3) Meetings with DDW
SUBTOTAL TASK 8>
SUBTOTAL TASK 9>
Collect and Review Data
Redlands Regular Meeting of 5-7-2024 961 of 1013
City Council Meeting L. 4.

DATE: 05/07/2024
TO: Honorable Mayor and City Council Members
SUBJECT: Consideration of Resolution No. 8594 approving acceptance of Grant Funds from the California Natural Resources Agency (CNRA), approval of the Grant Project Information Package, approval of the Grant Agreement between the City of Redlands and CNRA and a corresponding additional appropriation in the amount of $2 million, approval of Memorandum of Understanding with the Redlands Historical Museum Association (RHMA), and the promissory note with the RHMA (A.K. Smiley Library Director McCue)
MOTION(S):

Should the City Council desire to secure California Natural Resources Agency funding to pass through to the Redlands Historical Museum Association in order to complete the construction of the Museum of Redlands, the following motions are provided:

I move to adopt Resolution No. 8594 Approving Acceptance of the Grant Funds from the California Natural Resources Agency in connection with the Museum of Redlands Project; and

1. 2. Approve the Grant Project Information Package; and Approve the Grant Agreement between the City of Redlands and the California Natural Resources Agency for the $2 Million Dollar Grant for the Completion of the Museum of Redlands Project and an Additional Appropriation for the same; and

3. Approve the Memorandum of Understanding with the Redlands Historical Museum Association to advance the $2 Million Dollar Grant Proceeds to the Redlands Historical Museum Association for the completion of the Museum of Redlands Project.

4. Redlands Regular Meeting of 5-7-2024 962 of 1013
RECOMMENDATION:

It is recommended that the City Council review the report and attachments and approve Resolution No. 8594, the Project Information Package, the Grant Agreement, Additional Appropriation, and Memorandum of Understanding.

DISCUSSION:

In 2014, the Redlands Historical Museum Association (RHMA) acquired the property located at 700 Brookside Avenue for the future site of the Museum of Redlands (MOR). Following this effort, the City Council passed Resolution 7445 in September 2014 agreeing to take possession of the museum once constructed and designated A.K. Smiley Library Board of Trustees as the future administrators. The City Council made these commitments based upon their finding that a historical museum serves a future public benefit by providing cultural enrichment to the Redlands community and contributes to the City's goals of enhancing tourism and economic development.

Construction was divided into three phases and began in January 2021. Phase 1 included the renovation of the exterior of the main building (formerly the Redlands Daily Facts building). Phase 2 included the interior of the main building. Phase 3 included the Event Pavilion space just west of the main building. The RHMA continued fundraising throughout the construction process.

By January 2022, the RHMA was within $9 million of their approximate $25 million total cost. RHMA received a $1 million grant from the City of Redlands in April 2022, a $1 million grant from the AK Smiley Public Library Endowment Fund in May 2022, and a $1 million loan from the AK Smiley Public Library Endowment Fund in July 2022 to help narrow the gap.

In the spring of 2023, the City of Redlands (City) collaborated with the RHMA to apply for a $2 million state grant from the California Natural Resources Agency (CNRA) to be used for the construction of the MOR. In October 2023, the City and the RHMA were informed by California assembly majority leader emeritus Eloise Gomez Reyes that the City’s application had been approved by the Legislature. In order to release the promised funds to the City of Redlands, the CNRA in January 2024 directed the City of Redlands to complete a Project Information Form, a Memorandum of Understanding between the RHMA and the City, a Resolution approving the acceptance of grant funds for the Museum of Redlands, as well as a Grant Agreement between the City and the CNRA.

City Council approval of all of these documents is required to move the project forward.

To facilitate the completion of construction, the City and the RHMA have negotiated a promissory note, which will advance the $2 million grant funds from the City to the RHMA. These funds will be reimbursed to the City through the Redlands Regular Meeting of 5-7-2024 963 of 1013
CNRA grant, either through an advance from the CRNA or as RHMA's construction invoices are forwarded through the City to the state during the construction process. The promised $2 million grant from the CNRA, combined with $3.3 million in contributions from donors large and small, and finally the recent $1 million City loan approved by the City Council at the March 5, 2024 Council meeting, will enable the RHMA to begin the final phase of construction of the Museum of Redlands. Construction is scheduled to be completed by December 2024.

Should the City Council approve the MOU and promissory note, staff would be authorized to issue a check payable to the RHMA in the amount of $2 million. An advance receivable in the same amount would be booked into the City's financial records to record and track the loan.

ALTERNATIVES:

Declining to accept the California Natural Resources Agency grant.

STRATEGIC PLAN:

When opened, the Museum of Redlands will be a significant contributor to strategic priority A (Quality of Life), as it honors our community's heritage and provides a broad range of recreational and educational opportunities for our residents.

SUBMITTED BY:

Don McCue, A.K. Smiley Library Director
RECOMMENDED BY:

Charles M. Duggan Jr., City Manager
REVIEWED BY:

Yvette M. Abich Garcia, City Attorney
Janice McConnell, Assistant City Manager
Danielle Garcia, Management Services/Finance Director
PREPARED BY:

Don McCue, A.K. Smiley Library Director
Fiscal Impact
Fiscal Year: FY2023-24
Revenue Generating: Yes
Appropriation Required Y/N: Yes
Redlands Regular Meeting of 5-7-2024 964 of 1013
Budgeted Y/N: No
Discussion:

An additional appropriation is necessary to accept the grant and account for its activity in the General Government Grants Fund (200).

The $2 million advance to the RHMA will be funded from the City's General Fund. An advance receivable in the same amount will be added to the City's general ledger to track the loan. The unassigned fund balance at June 30, 2024 is projected at $26,952,281.

Attachments
Additional Appropriation Form - RHMA $2M
Resolution No. 8594
MOU - Grant - Redlands Historical Museum
Exhibit A to MOU: Promissory Note re Advance of Grant Funds Exhibit B to MOU: April 2022 MOU between RHMA and Library Board CNRA Draft Agreement
Project Information Sheet
Redlands Regular Meeting of 5-7-2024 965 of 1013
DATE OF REQUEST:

An additional appropriation is hereby requested as follows:

Department:

JUSTIFICATION:

Requested By:

Recommended By Finance Director: Recommended:

Yes No Signed
Comments: Approved by City Council:

Date:

Signed:

City Clerk
REVENUE APPROPRIATION INCREASE (if applicable)
EXPENDITURE APPROPRIATION INCREASE (if applicable)
$ -
$ -
TRANSACTION NO:

ACCOUNTING PERIOD:

Account Description Orgkey Object Code Job Ledger (If
applicable) Amount
Job Ledger (If
applicable) Account Description Orgkey Object Code Amount Department Head
City Manager

CITY OF REDLANDS

REQUEST FOR ADDITIONAL APPROPRIATION

FINANCE USE ONLY

Redlands Regular Meeting of 5-7-2024 966 of 1013
RESOLUTION NO. 8594

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

REDLANDS APPROVING THE ACCEPTANCE OF GENERAL

FUND GRANT FUNDS FOR THE MUSEUM OF REDLANDS
WHEREAS, the Legislature and Governor of the State of California have approved a grant for the project shown above; and
WHEREAS, the California Natural Resources Agency has been delegated the responsibility for the administration of the grant project, setting up necessary procedures; and WHEREAS, said procedures established by the California Natural Resources Agency require the Grantee to certify by resolution the approval of a Project Information Package before submission of said package to the State; and
WHEREAS, the City of Redlands as Grantee will enter into an agreement with the State of California for the above project.

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF REDLANDS AS FOLLOWS:

Section 1. Approves the acceptance of a general fund allocation for local assistance for the above project.

Section 2. Certifies that said agency understands the assurances and certification in the Project Information Form.

Section 3. Certifies that said agency will have sufficient funds to complete the project or will secure the resources to do so.

Section 4. Certifies that said agency will comply with the provisions of Section 1771.5 of the California Labor Code.

Section 5. If applicable, certifies that the project will comply with any laws and regulation including, but not limited to, the California Environmental Quality Act (CEQA), legal requirements for building codes, health and safety codes, disabled access laws, environmental laws and, that prior to commencement of construction, all applicable licenses and permits will have been obtained.

Section 6. Certifies that said agency has reviewed and understands the General Provisions contained in the sample Grant Agreement contained in the Procedural Guide.

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Section 7. Appoints Charles M. Duggan, Jr., City Manager of the City of Redlands as agent to conduct all negotiations, execute and submit all documents including, but not limited to the Project Information Form, agreements, payment requests and so on, which may be necessary for the completion of the aforementioned project.

ADOPTED, SIGNED AND APPROVED this 7
th day of May, 2024.
________________________
Eddie Tejeda, Mayor
ATTEST:
____________________________
Jeanne Donaldson, City Cler
Redlands Regular Meeting of 5-7-2024 968 of 1013
I, Jeanne Donaldson, City Clerk of the City of Redlands, hereby certify that the foregoing resolution was duly adopted by the City Council at a regular meeting thereof held on the 7 th day of March,
2024, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:
______________________________
Jeanne Donaldson, City Clerk
Redlands Regular Meeting of 5-7-2024 969 of 1013

MEMORANDUM OF UNDERSTANDING
This Memorandum of Understanding ("Agreement") is made and entered into this 7th day of May, 2024 ("Effective Date"), by and between the CITY OF REDLANDS, a California municipal corporation and general law city ("City"), and the REDLANDS HISTORICAL MUSEUM ASSOCIATION, a California nonprofit public benefit corporation ("Museum"). City and Museum are sometimes individually referred to herein as a "Party" and, together, as the "Parties."

RECITALS
WHEREAS, the Museum is the owner of that certain property located at 700 Brookside Ave., Redlands, California (the “Property”), upon which the Museum is constructing the proposed "Museum of Redlands;"
WHEREAS, the State of California has authorized a grant in the amount of Two Million Dollars ($2,000,000) (the “Grant Funds”) to the City to provide funding for the completion of certain improvements associated with the construction of the proposed "Museum of Redlands;" WHEREAS, the City is expected to enter into a Grant Agreement with the State of California Natural Resources Agency which will contain the terms and conditions of the grant to the City for the construction of certain improvements relating to the proposed "Museum of Redlands” (the “Grant Agreement”);
WHEREAS, the Museum has requested that the City advance funds in an amount equal to the Grant Funds to the Museum, and that the City obtain reimbursement for such advance from the Grant Funds;
WHEREAS, the City has found and determined that the advancing of funds to the Museum for the improvements to the "Museum of Redlands" serves a public purpose for the reason that the funds will facilitate the opening of a historical museum that will provide cultural enrichment to the Redlands community and contribute to the City's goals of enhancing tourism and economic development; and
NOW, THEREFORE, in consideration of the mutual promises contained herein, the Parties agree as follows:

AGREEMENT
Section 1. Advance of Grant Funds. Subject to the City’s entering into a fully executed Grant Agreement, in a form and substance satisfactory to City, in City’s sole discretion, which provides for a grant to the City in the amount of the Grant Funds, City shall advance to Museum the sum of Two Million Dollars ($2,000,000) (the "Advance") within ten (10) business days of the execution of the Grant Agreement. The Advance shall be evidenced by that certain Promissory Note dated as of the date hereof, in the form attached hereto as Exhibit "A" and incorporated herein by this reference (the “Advance Note”). The terms of the Advance, including the interest rate, the terms of repayment, and the maturity date, shall be as set forth in the Note.

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Section 2. Restrictions on Use of Advance Funds. Museum warrants and represents that the Advance shall not be used for any activity that would violate City, state, or federal statutory or decisional law, and shall be expended solely for the purpose of completion of certain construction relating to the "Museum of Redlands" as will be more particularly described in the Grant Agreement (the "Improvement Work"). In addition, funds shall only be expended during the performance period set forth in the Grant Agreement. Any funds spent prior to and/or after the performance period will be deemed ineligible uses of funds, and Museum shall not use any of the Advance funds for such ineligible uses. Museum shall furnish City with such information regarding the project scope and activities, project schedule and project budget as may be necessary to permit the completion of the Grant Agreement.

Section 3. Completion of Construction. Museum shall use commercially reasonable efforts to complete the Improvement Work in accordance with the project schedule and project budget as set forth in the Grant Agreement. Museum shall submit to City on a monthly basis, by not later than the last day of each month with respect to the preceding month, a detailed report, in form and substance satisfactory to City, of: (a) all Improvement Work performed during such preceding month; (b) copies of all invoices for the Improvement Work received during such preceding month; and (c) evidence of all payments for the Improvement Work paid during such preceding month. In addition to the foregoing, Museum shall promptly (and in any event within ten (10) business days) furnish to the City all other information as may be reasonably requested from time to time by City to permit City to seek reimbursement under the terms of the Grant Agreement. Museum shall pay all invoices for Improvement Work within thirty (30) days of receipt, unless such invoice is being contested in good faith. Museum shall obtain lien releases in connection with payments for the Improvement Work, and shall keep the Property free and clear of all liens and encumbrances, including, but not limited to, all mechanics’ liens.

Section 4. Reimbursement From Grant Funds. City shall use reasonable efforts to submit from time to time for reimbursement from Grant Funds the costs relating to the Improvement Work in accordance with the Grant Agreement. Museum shall promptly take any and all actions as may be required or reasonably requested by City to permit the City to obtain the receipt of, or reimbursement from, the Grant Funds, including, but not limited to, providing any invoices, financial records, progress reports, or other documentation or information relating to the Improvement Work as may be required to obtain the Grant Funds pursuant to the Grant Agreement, but not less often than quarterly. Museum acknowledges and agrees that any payment of Grant Funds received by the City shall be applied to repay the Advance. In consideration of the receipt of the Advance, Museum assigns any right to receive Grant Funds to the City, and, in the event the Museum receives any Grant Funds, the Museum shall promptly deliver such Grant Funds to the City to be applied to the repayment of the Advance.

Section 5. Repayment of Advance. In the event that by March 1, 2027 (a) Museum fails to expend all of the Advance on the Improvement Work, (b) Museum fails to provide City with sufficient documentation in a timely manner to permit the City to obtain reimbursement from Grant Funds under the Grant Agreement, or (c) despite reasonable efforts on the party of City, City is unable to obtain receipt or reimbursement of the full amount of the Grant Funds under the Grant Agreement, Museum shall, upon written demand from City, immediately repay the entire amount of the Advance, less any receipt or reimbursements from Grant Funds actually received by City.

Redlands Regular Meeting of 5-7-2024 971 of 1013
Section 6. Transfer of Property to City; Operation of Museum.

A. City and Museum acknowledge and reaffirm that, as set forth in the City’s Resolution No. 7445 (adopted by the City Council on September 16, 2014) (“Resolution No. 7445”), the Museum will deed the Property to the City. City and Museum further acknowledge that a Memorandum of Understanding/Division of Responsibilities dated April 19, 2022, was previously entered between the Museum and the Board of Trustees of the A.K. Smiley Public Library (the “Library Board”), a copy of which is attached hereto as Exhibit B (the “2022 MOU”), which 2022 MOU further recites that the Museum will deed the Property to the City. City and Museum further acknowledge that Resolution No. 7445 affirms that the Library Board has been designated by the City to be the administrator of the Museum of Redlands.

B. The City reaffirms that, as set forth in Resolution No. 7445, (i) upon the Museum’s occupancy of the building on the Property for museum purposes, the City shall be responsible for funding the costs of providing utilities including all water, sewer, gas, light, power, and landscape irrigation and maintenance, reasonably required or necessary for the Property; provided the City shall have no other responsibility or liability for the Property; and (ii) from and after the City obtaining title to the Property, the City shall be responsible for funding the costs of providing utilities including all water, gas, light, power, telephone, internet access, and landscape irrigation and maintenance, and janitorial services, reasonably required or necessary for the operation of the Museum of Redlands.

C. City agrees to use reasonable efforts to perform, or cause the Library Board to perform, and the Museum agrees to use reasonable efforts to perform, their respective responsibilities as set forth in the 2022 MOU. The City and the Museum further acknowledge that matters relating to the operation and administration of the Museum of Redlands may arise that were not fully contemplated or delineated in the 2022 MOU. In the event any such matters arise, the City and the Museum agree to mutually cooperate with each other, and in coordination with the Library Board, to reach an agreement satisfactory to the City, the Library Board and the Museum as to the resolution of such matters, consistent whenever reasonably possible with the delineation of responsibilities as set forth in the 2022 MOU (to the extent such matters were generally contemplated by the 2022 MOU). Upon the parties’ reaching any agreement(s) relating to the resolution of any matters relating to the operation and administration of the Museum of Redlands, such agreement shall be memorialized in writing through an amendment to the 2022 MOU or such other agreement that amends, restates, supplements or supersedes the 2022 MOU.

D. In the event the Property has not been deeded or otherwise conveyed by the Museum to the City by the six month anniversary of the issuance of the certificate of occupancy with respect to the Property, including the completion of the Improvement Work constructed thereon, the Museum and the City agree to promptly meet and develop a mutually acceptable plan which will result in the transfer of the Property to the City within a reasonable time period. Each Party agrees to cooperate and act in good faith to develop said plan of transfer.

E. Notwithstanding anything herein to the contrary, pursuant to the requirements of the Grant Agreement, for a period of not less than twenty-five (25) years from the completion of the Improvement Work (or until such time as the Museum transfers the Property to the City), the Museum shall own and operate the Museum of Redlands as a museum for the benefit of the public.

From the date of this Agreement until the Property is transferred to the City, the Museum shall not Redlands Regular Meeting of 5-7-2024 972 of 1013
execute or otherwise permit a mortgage or deed of trust to be recorded or remain as a lien against all or any portion of the Property (including the Improvement Work). Pursuant to the requirements of the Grant Agreement, after the transfer of the Property to the City, the City agrees to operate the Museum of Redlands as a museum for the benefit of the public for a period of not less than 25 years from the completion of the Improvement Work.

Section 7. Representations and Warranties. As an inducement to City to execute this Agreement and to disburse the proceeds of the Advance, Museum represents and warrants to City that the following statements set forth in this Section 7 are true, correct and complete in all material respects as of the date hereof and will be true, correct and complete in all material respects until the Advance is paid in full:
(a) Museum is a nonprofit public benefit corporation, duly organized and validly existing under the laws of the State of California, and is qualified to transact business in the State of California and in each jurisdiction where it is required to conduct its operations, and is in good standing in the State of California;
(b) Museum is an organization exemption from taxation under Section 501(c)(3) of the Internal Revenue Code;
(c) The execution, delivery and performance of this Agreement, the Note and any other documents entered into in connection with the Advance (collectively, the “Advance Documents”) by Museum are within the Museum’s powers and have been duly authorized by all necessary action by Museum;
(d) The Advance Documents have been duly executed by Museum, and are legally valid and binding obligations of Museum, enforceable against Museum in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general principles of equity; and
(e) The execution, delivery and performance of the Advance Documents by Museum will not violate (i) Museum’s articles of incorporation or bylaws; (ii) any legal requirement affecting Museum or any of its properties; or (iii) any agreement to which Museum is bound or to which it is a party and will not result in or require the creation (except as provided in or contemplated by any of the Advance Documents) of any lien upon any of such properties.

Section 8. Compliance with California Labor Code. In performing the Improvement Work, Museum shall comply with all applicable federal, state, and local laws, including, but not limited to, Section 1771.5 of the California Labor Code and any other applicable provisions of the California Labor Code. Museum acknowledges that the Improvement Work constitutes a "Public Work" as that term is defined by California Labor Code section 1720. Museum shall defend, indemnify, and hold harmless City and its elected and appointed officials, officers, and employees from and against any and all losses, damages, costs, claims, causes of action and liability based upon the assertion that City or Museum has failed to comply with any applicable provision of the California Labor Code in connection with Museum's undertaking of the Improvement Work.

Redlands Regular Meeting of 5-7-2024 973 of 1013
Section 9. Compliance with Grant Agreement. All Improvement Work shall comply with the terms and conditions of the Grant Agreement, and shall be performed in such manner to ensure City’s compliance with the Grant Agreement. Museum shall comply with the nondiscrimination provisions of the Grant Agreement in the manner that would be applicable to Museum if the Museum was the grantee under the GrantAgreement.

Section 10. Reporting and Accounting Requirements.

A. Museum shall maintain true, proper, and complete books, records and accounts (collectively, "Books and Records") in which shall be entered fully and accurately all transactions taken with respect to the Improvement Work and the expenditure of the Advance. Museum shall maintain the Books and Records in accordance with Generally Accepted Accounting Principles.

Additionally, Museum shall submit to the City quarterly progress reports on a template provided by the City no later than twenty (20) calendar days after the end of each quarter until final reimbursement of the Advance is received by theCity.

B. City reserves the right to designate its employee representatives, or its contracted representatives with a Certified Public Accounting firm, who shall have the right to audit Museum's Books and Records as they relate to the Advance, and to examine any cost, revenue, payment, claim or other records or supporting documentation relating to Museum's use and expenditure of the Advance. Any such audit shall be undertaken by City or its representatives at mutually agreed upon reasonable times, and in conformance with generally accepted auditing standards. Museum agrees to fully cooperate with any such audit.

C. City's right to audit shall extend for a period of four (4) years following the date of City's final payment pursuant to the Grant Agreement. If any audit relating to the Grant Funds by the State of California is started before the expiration of the four (4) year period, the City’s right to audit shall extend until all audit findings, if any, have been resolved and final action taken.

Museum agrees to retain all records and documentation relating to the Improvement Work and the Museum's expenditure of the Advance for such period. Museum agrees to fully cooperate with any such audit by the State of California.

Section 11. Event of Default. The occurrence of any of the following shall be deemed to be a default hereunder (each an “Event of Default”):
(a) failure by Museum to pay any monetary amount when due under the Note or any other Advance Document;
(b) use of funds provided under this Agreement for any purpose other than the Improvement Work;
(c) failure to submit any necessary documentation or information requested by the City to obtain reimbursement of funds from the State of California pursuant to the Grant Agreement; and
(d) any other default or breach of any of the terms, provisions, and obligations of the Museum or any guarantor pursuant to any Advance Document, and such default or breach is not cured by Museum within thirty (30) days from the receipt of written notice thereof from City.

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Section 12. Remedies. Notwithstanding any provision to the contrary herein or any of the other Advance Documents, during a continuance of any Event of Default under this Agreement or any of the other Advance Documents, then City shall, at its option, have the remedies provided in the Advance Document breached by Museum, including, without limitation, the option to declare the outstanding balance of the Advance to be immediately due and payable without presentment, demand, protest or notice of any kind, and City may exercise all rights and remedies available to it under any or all of the Advance Documents or under applicable law.

Section 13. Indemnification. To the fullest extent permitted by law, Museum shall indemnify, defend and hold harmless City, and its elected and appointed officials, officers, employees and agents, (collectively, the "Indemnified Parties") from and against any and all claims (including, without limitation, claims for bodily injury, death or damage to property), demands, obligations, damages, actions, causes of action, suits, losses, judgements, fines, penalties, liabilities, costs and expenses (including, without limitation, attorney's fees, disbursements and court costs) of every kind and nature whatsoever (individually, a "Claim;" collectively, "Claims"), which may arise from or in any manner relate (directly or indirectly) to this Agreement, the Museum's undertaking of the Improvement Work (including the negligent and/or willful acts, error and/or omission of Museum, its principals, officers, agents, employees, vendors, suppliers, consultants, subcontractors, anyone employed directly or indirectly by any of them or for whose acts they may be liable for any or all of them), the Museum’s failure to comply with the Grant Agreement, and the Museum’s acts or omissions which cause City to fail to comply with the Grant Agreement. Notwithstanding the foregoing, nothing herein shall be construed to require Museum to indemnify the Indemnified Parties from any Claim arising from the sole negligence or willful misconduct of the Indemnified Parties. This indemnity shall apply to all claims and liability regardless of whether any insurance policies are applicable. The policy limits do not act as a limitation upon the amount of indemnification to be provided by Museum.

Section 14. Museum Independence. In the performance of this Agreement, Museum, and the employees and agents of Museum, shall act in an independent capacity and are not officers, employees, or agents of City. The manner and means of performing the Improvement Work are under the control of Museum, except to the extent they are limited by statute, rule, or regulation.

Nothing in this Agreement shall be deemed to constitute approval for Museum, or any of Museum's employees or agents, to be the employees or agents of City. City shall not be liable to any contractor, subcontractor, supplier, laborer, architect, engineer or any other party for services performed or materials supplied in connection with the Improvement Work. City shall not be liable for any debts or claims accruing in favor of any such parties against Museum or others or against the Improvement Work or the premises where any such Improvement Work is performed. Museum is not and shall not be an agent of City for any purpose. City is not a joint venture partner with Museum or with any person having an ownership or other interest in Museum in any manner whatsoever.

Section 15. Assignment. Museum shall not assign or transfer this Agreement, directly or indirectly, by operation of law or otherwise, without the prior written consent of City. Any attempt to do so without such written consent of City shall be null and void.

Section 16. Notices. Any notice or other communication required, or which may be given, pursuant to this Agreement, shall be in writing. Any such notice shall be deemed delivered (i) on the date of delivery in person; (ii) four (4) days after deposit in first class registered mail, with Redlands Regular Meeting of 5-7-2024 975 of 1013
return receipt requested; or (iii) on the actual delivery date if deposited with an overnight courier; or such other address as a Party may provide notice in accordance with this section:

CITY OF REDLANDS REDLANDS HISTORICAL MUSEUM

ASSOCIATION
City Manager c/o Mundell, Odlum & Haws, LLP
City of Redlands 650 E. Hospitality Lane, Suite 470
300 East State Street, Suite 690 San Bernardino, California 92408 P.O. Box 3005 (mailing)
Redlands, CA 92373
Section 17. General Considerations.

A. Waiver. A waiver by either Party of any breach, or of any term, covenant, or condition contained herein, shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant, or condition contained herein, whether of the same or a different character.

B. Entire Agreement. This Agreement represents the full and complete understanding of every kind or nature whatsoever between the Parties with respect to its subject matter, and all preliminary negotiations and agreements of whatsoever kind or nature relating to the same are merged herein. No verbal agreement or implied covenant shall be held to vary the provisions herein.

C. Interpretation. The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either Party by reason of the authorship of the Agreement or any other rule of improvements which might otherwise apply.

D. Amendment. This Agreement may be modified or amended only by a written document executed by both Museum and City.

E. Severability. If any term or provision of this Agreement is held to be invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall continue in full force and effect.

F. Controlling Law and Venue. The Agreement shall be governed by and construed in accordance with the laws of the State of California, without regard to its conflicts of law provisions. The Parties agree that all actions or proceedings arising in connection with this Agreement shall be tried and litigated only in the state courts located in San Bernardino County, California, and the federal courts located in Riverside County, California.

G. Equal Opportunity Employment. Museum represents that it is an equal opportunity employer, and it shall not discriminate against any contractor, employee, or applicant for employment because of race, religion, color, national origin, handicap, ancestry,sex, age or on any other basis prohibited by law.

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H. Attorney's Fees. In the event any action is commenced to enforce or interpret any term or provision of this Agreement, the prevailing Party in such action, in addition to costs and any other relief, shall be entitled to the recovery of its reasonable attorneys' fees, including fees for a Party's use of in-house counsel.
[Signatures on Following Page]
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of its Effective Date.

CITY OF REDLANDS REDLANDS HISTORICAL MUSEUM

ASSOCIATION
By:

Eddie Tejeda, Mayor
By:
, President
ATTEST By:
, Secretary
Jeanne Donaldson, City Clerk
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EXHIBIT A

FORM OF PROMISSORY NOTE
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EXHIBIT B
COPY OF 2022 MOU
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