Attachment 1_06-25-2024_Doc. No. TAB2_Agenda Report with Attachments.pdf — Rialto City Council, July 23, 2024 (part 1 of 2)

City of Rialto
Legislation Text
File #: 24-1518, Version: 1, Agenda #: TAB2
FOR: City Council and Rialto Utility Authority Meeting June 25, 2024 TO: Honorable Mayor and City Council
APPROVAL: G. Michael Milhiser, Interim City Manager
FROM: Toyasha Sebbag, Assistant to the City Manager
Staff recommends that the City Council and Rialto Utility Authority Board Conduct a Public Hearing, as Required Under Proposition 218, to Consider and Approve Resolution No. 8254 and RUA Resolution No. 08-37 Approving the Proposed Adjustments for Water and Wastewater Services as supported by the May 2024 FG Solutions Financial Planning Analysis Report.
(ACTION)
RECOMMENDATION:

Staff recommends that the City Council and Rialto Utility Authority Board Conduct a Public Hearing, as Required Under Proposition 218, to Consider and Approve Resolution No. 8254 and RUA Resolution No. 08-37 Approving the Proposed Adjustments for Water and Wastewater Services as supported by the May 2024 FG Solutions Financial Planning Analysis Report.

BACKGROUND:

In 2012, the City Council/Rialto Utility Authority (RUA) adopted resolutions approving a Concession Agreement with Rialto Water Services (RWS). The Concession Agreement outsourced the operations and maintenance of the City’s Water and Wastewater enterprise to a private contractor for a term of thirty years.

Per the Concession Agreement, the City maintains ownership of all assets and the authority and responsibility for setting utility rates subject to contractual obligations and financial performance standards.

In 2012, the City adopted a five-year rate schedule through the Proposition 218 (Prop. 218) process. From the rate schedule developed in 2012, the water and wastewater rates were last adjusted on January 1, 2018. The multi-year rate adjustments approved in 2012 allowed for the financing and implementation of $41 million in improvements and repairs that improved system reliability and efficiencies for both the water and wastewater systems.

ANALYSIS/DISCUSSION
On April 11, 2023, the City Council/RUA authorized a sole source Professional Services Agreement Contract with F.G. Solutions, LLC to complete Phase 1: Water/Wastewater Revenue Analysis of the Water and Wastewater Rate Study. Staff presented the results of the City of Rialto Printed on 6/20/2024Page 1 of 12
powered by Legistar™
1 File #: 24-1518, Version: 1, Agenda #: TAB2
Revenue Analysis of the Water and Wastewater Rate Study. Staff presented the results of the Revenue Analysis to the Water Subcommittee on June 28, 2023, and again on July 26, 2023, to provide answers to questions from the June meeting.

On August 22, 2023, the City Council/RUA authorized staff to proceed with Phase 2, the Water and Wastewater Rate Study.

On December 12, 2023, the City Council adopted Resolution No. 8172 and the Rialto Utility Authority Board adopted Resolution No. 08-25 to set a Public Hearing for February 27, 2024, to consider the proposed water and wastewater utility services rate adjustments.

At the February 27, 2024, City Council/Rialto Utility Authority Board Meeting staff requested that the item pertaining to a public hearing under Proposition 218 to adjust water and wastewater rates be tabled until a future date to be determined. It was further explained that staff would bring back for City Council and Board consideration to set a new public hearing with new and proper 218 notification materials.

Subsequently, staff requested a 2023 Water and Wastewater Rate Study Amendment No. 1 to a professional services agreement with FG Solutions, LLC with a timeline to update the rate calculations with rates effective January 1, 2025, 2026, 2027, 2028, and 2029.

On March 26, 2024, the Water Subcommittee provided feedback on the proposed Water and Wastewater Rate Model.

At the April 16, 2024, Utilities Commission Meeting, the Commission recommended that the item be placed on the City Council/Rialto Utility Authority Board Agenda to set a Public Hearing.

On April 23, 2024, the City Council/Rialto Utility Authority Board approved Resolution No. 8204 and RUA Resolution No. 08-31 to set a Public Hearing for June 25, 2024, as Required Under Proposition 218 to Consider the Proposed Water and Wastewater Utility Services Rate Adjustments as supported by the FG Solutions, LLC Financial Rate Analysis Proposed Water Rate Adjustment
The proposed Water rates are established to support the operation and maintenance of the water system, support capital improvements and system replacements, provide adequate reserves, and maintain Concession Agreement debt service coverage ratios. The water rates are structured to comply with Proposition 218, American Water Works Association (AWWA) industry standard guidelines, and state water conservation requirements. Water rates include a fixed charge based on meter size and consumption rates based on the water source, customer class, and delivery costs.

The proposed Water Rate Structure for the 5-year planning period takes the following into account:

1. Financing $6 million capital improvements (CIPs): RUA, mirroring the challenges encountered by similar utilities, grapples with the pressing issue of capital improvement needs surpassing the available funds generated through the rate-setting City of Rialto Printed on 6/20/2024Page 2 of 12
powered by Legistar™
2 File #: 24-1518, Version: 1, Agenda #: TAB2
improvement needs surpassing the available funds generated through the rate-setting process. Adding to the complexity, the water fund faces the critical challenge of prioritizing Concession Agreement debt coverage ratios before addressing high-priority CIP funding. In response, we have diligently compiled a roster of high-priority, fiscally sound CIPs, creating indispensable benchmarks to inform a prudent and economically viable rate increase.

The table below identifies the high-priority CIP to be completed during the rate study period. Of the $20.9 million in proposed CIP costs, $6 million, or 29% of the CIP is proposed to be funded through water rates with coverage of 30-year bond financing at 6% interest. The final bond financing documents have yet to be determined; however, as recommended by the City’s Bond Consultant, Urban Futures, the 30-year bond scenario is the most advantageous to RUA in today’s financial market and necessary to meet revenue debt coverage requirements under the Concession Agreement. The remainder of the project financing is through grant funds and development impact fees.

Table 1: Proposed Water Capital Improvement Financing

2. Collection of Depreciation Expenses Through Rates: The collection of depreciation expenses through rates would allow RUA to fund a portion of capital improvements with cash. Cash funding is considered advantageous because it eliminates interest costs and the need for bond coverage on new capital projects. An additional consideration is that much of a utility system’s infrastructure is underground and difficult to inspect material failures; therefore, specific local conditions or catastrophic events may cause infrastructure to wear out or fail sooner than expected. For these reasons, it is proposed that RUA begin collecting depreciation costs and setting them aside for future capital improvement program (CIP) funding. Collection of depreciation expense through rates is being phased in starting in FY 2028-2029 and will be fully phased in by FY 2031-2032. Should the proposed water rates include establishing a CIP Reserve Policy for RUA then staff will return with a Resolution for City Council City of Rialto Printed on 6/20/2024Page 3 of 12
powered by Legistar™
3 File #: 24-1518, Version: 1, Agenda #: TAB2
CIP Reserve Policy for RUA then staff will return with a Resolution for City Council consideration that will require an affirmative supermajority vote to set aside deprecation reserves for future CIP costs.

3. Changes Since the 2023 Rate Proposal: As mentioned, on March 26, 2024, the City Council/Rialto Utility Authority Board authorized a $5.3 million interfund loan for the Water System from the General Fund. The new proposed rates take into account a 4% interest rate in rate projections to be repaid by FY 2032-2033.

The proposed water Monthly Minimum Charge increase on single-family residential using a 1/2" x 5/8” meter and a 3/4" meter is $4.11, or 13.5% starting January 1, 2025, then one

14.4% increase on January 1, 2026, followed by three 7.5% annual increases starting on January 1, 2027, on each January 1 thereafter through 2029. These meter sizes account for 94% of all Rialto residential water customers. The additional revenue generated from the proposed rate increases over the five years is primarily to support increased operating costs that have increased over the last five years without an adjustment to the water rates, high- priority water system capital projects, and repayment of the general fund loan. These increases are partially offset by using non-rate revenues to lower the cost of Tier 1 and Tier 2 water consumption rates.

Currently, the City has 4-Tiers for single-family residential customers’ water consumption and City of Rialto Printed on 6/20/2024Page 4 of 12
powered by Legistar™
4 File #: 24-1518, Version: 1, Agenda #: TAB2
Currently, the City has 4-Tiers for single-family residential customers’ water consumption and proposes to move to 3-Tiers. The proposed 3-Tiers consumption rate structure will better align with the State of California’s indoor and outdoor water-efficient standards as a component of the 2018 Legislation of Making Water Conservation a Way of Life.

1. Tier 1: 0-9 ccf aligns with Senate Bill (SB) 1147, which requires California's water agencies to limit residential indoor water use to 47 gallons per person per day starting in 2025 and 42 gallons in 2030. The calculation of 47 gallons equates to 0.063 ccf per person per day. Furthermore, 0.063 ccf per person per day times 30 days in a month equals 1.89 ccf per person per month. Rounded to the nearest whole number from the 2020 census of 4 persons per household living in Rialto, equals a standard monthly household indoor total water use of 7.56 ccf per month. This is below the Tier 1 proposed rate of up to 9 ccf per month for household water use.

2. Tier 2: Aligns with the state’s Water Code, Division 6, Part 2.55, Chapter 9: Urban Water Use Objectives and Water Use Reporting. The 10 - 30 ccf aligns with efficient outdoor water use for single-family. Similarly, dedicated irrigation meters for commercial, industrial, and institutional customers equate to efficient outdoor water use of 0 - 30 ccf per month and carry the same proposed outdoor irrigation use rate schedule over the 5-year planning period as single-family residential.

3. Tier 3: Aligns with the state’s Water Code, Division 6, Part 2.55, Chapter 9: Urban Water Use Objectives and Water Use Reporting. The >31 ccf aligns with less efficient outdoor water use for single-family. Similarly, dedicated irrigation meters for commercial, industrial, and institutional customers equate to less efficient outdoor water use of >31 ccf monthly and carry the same proposed outdoor irrigation use rate schedule over the 5-year planning period as single-family residential.

4. Multiple Apartments: For Multiple Apartments with over 49 units and mobile homes, the City is maintaining its policy of having a single rate tier for all water use. The water cost -of-service analysis uses this single rate tier to provide equitable cost recovery from the Multiple Apartments with > 49 units customer class.

City of Rialto Printed on 6/20/2024Page 5 of 12
powered by Legistar™
5 File #: 24-1518, Version: 1, Agenda #: TAB2
City of Rialto Printed on 6/20/2024Page 6 of 12
powered by Legistar™
6 File #: 24-1518, Version: 1, Agenda #: TAB2
Proposed Wastewater Rate Adjustment
The proposed Wastewater rates are established to support the operation and maintenance of the wastewater system, support capital improvements and system replacements, provide adequate reserves, and maintain debt service coverage ratios of the Concession Agreement.

The goal of the design of rates is to achieve fairness while ensuring that each customer class pays its fair share of costs. Rates should be simple to administer, easy to understand, and comply with regulatory requirements. The proposed Wastewater rates include a flat rate service charge based on customer classes.

The proposed Wastewater rates are adjusted to account for increases in operating expenses City of Rialto Printed on 6/20/2024Page 7 of 12
powered by Legistar™
7 File #: 24-1518, Version: 1, Agenda #: TAB2
and high-priority wastewater system capital improvements. Wastewater revenue from rates for single-family residences is increased by $4.95, or 8% starting January 1, 2025, then annual increases of 6% each January 1 thereafter through 2029. The additional revenue generated from the proposed rate increases over the five years is due primarily to support for increases in operations and maintenance expenses and support for high-priority wastewater system capital projects.

The proposed Wastewater Rate Structure for the 5-year planning period takes the following into account:

1. Financing $31.1 million capital improvements: RUA is not unlike similar utilities in that we have more capital improvement needs than cash readily available through the rate- setting process. Therefore, a list of high-priority capital improvement projects (CIP) was compiled to establish benchmarks for an affordable rate increase.

The table below identifies the high-priority CIP to be completed during the rate study period. Of the $50.5 million in proposed CIP costs, $31.1 million, or 62% of the CIP is proposed to be funded through wastewater rates with coverage of 30-year bond financing at 6% interest. The final bond financing documents have yet to be determined; however, as recommended by the City’s Bond Consultant, Urban Futures, the 30-year bond scenario is the most advantageous to RUA in today’s financial market and necessary to meet revenue debt coverage requirements under the Concession Agreement. The remainder of the project financing is through grant funds and development impact fees. The remainder of the project financing is through grant funds, the drawdown of Wastewater Reserve Funds, and development impact fees.

City of Rialto Printed on 6/20/2024Page 8 of 12
powered by Legistar™
8 File #: 24-1518, Version: 1, Agenda #: TAB2

2. Collection of Depreciation Expenses Through Rates: The collection of depreciation expenses through rates would allow RUA to fund a portion of capital improvements with cash. Cash funding is considered advantageous because it eliminates interest costs and the need for bond coverage on new capital projects. An additional consideration is that much of a utility system’s infrastructure is underground and difficult to inspect material failures. Additionally, specific local conditions or catastrophic events may cause infrastructure to wear out or fail sooner than expected. For these reasons, it is proposed that RUA begin collecting depreciation costs and setting them aside for future capital improvement program (CIP) funding. Collection of depreciation expense through rates is being phased in starting in FY 2025-2026 and will be fully phased in by FY 2030-2031. Should the proposed wastewater rates include establishing a CIP Reserve Policy for RUA then staff will return with a Resolution for City Council consideration that will require an affirmative supermajority vote to set City of Rialto Printed on 6/20/2024Page 9 of 12
powered by Legistar™
9 File #: 24-1518, Version: 1, Agenda #: TAB2
City Council consideration that will require an affirmative supermajority vote to set aside deprecation reserves for future CIP costs.

3. Extraterritorial Rates: Following the City Council policy established by Resolutions No. 4746 and 6209, extraterritorial customers will continue to pay the 1.3X rate charged to in-City customers.

4. Non-residential Group II Commercial Proposed Rate Decrease: Based on today's cost- of-service analysis of wastewater rates, Non-residential Group II Commercial customers would see an initial rate decrease on January 1, 2024. This is because these customers discharge lower-strength wastewater that costs less to treat than other customer classes. This methodology is important for compliance with the requirements of California’s Prop. 218, such that each customer class pays its proportion of the cost to provide services.

The City of Rialto last increased water rates on January 1, 2018. The Revenue Analysis presented to the City Council on August 22, 2023, showed that with no rate increase and no capital improvements in the water system infrastructure over the five-year revenue planning period, there is a $26 million revenue shortfall.

Furthermore, on March 26, 2024, to remain in compliance with all contractual and credit requirements of the Concession Agreement, the City/RUA authorized the transfer of an additional $5.3 million from the unrestricted general fund reserves to address the water fund cash flow shortage for the remainder of the fiscal year 2023-2024 and fiscal year 2024-2025.

Per City Resolution No. 8196 and RUA Resolution No. 08-30 authorizing the repayment of the $5.3 million, the updated water rate schedule includes the interest rate on this loan from the City of Rialto’s General Fund that is equivalent to the rate of return earned by the City on City of Rialto Printed on 6/20/2024Page 10 of 12
powered by Legistar™
10 File #: 24-1518, Version: 1, Agenda #: TAB2
the City of Rialto’s General Fund that is equivalent to the rate of return earned by the City on funds invested in the Local Agency Investment Fund (LAIF) and the repayment is structured to align with the water fund's cash flow and financial obligations of a loan term of 10 years.

Findings and Alternatives
The City Council/Rialto Utility Authority Board has the following alternatives to staff recommendation to consider that will be presented during the Public Hearing:

1. Adopt 2025 water and/or wastewater/sewer rate adjustment with a commitment to review proposed 2026 through 2029 rates again in 2025;

2. Adopt the 2025, 2026, and 2027 water and/or wastewater/sewer rate adjustments with a commitment to review proposed 2028 through 2029 rates again by 2026; or

3. Provide alternative direction to staff.

Proposition 218 (Prop. 218) Notification Process
The City/RUA is committed to a transparent public rate-setting process. Proposition 218 requires all property owners to be notified by mail at least 45 days before the public hearing date. The City/RUA went above the minimum requirement and conducted extensive community outreach by:

1. Mailing Prop. 218 notices to property owners as well as to the utility customer of record in English and Spanish.

2. Making available the Final Draft Water and Wastewater Report for public review on the City’s website.

3. Dedicating a section of the city website’s homepage to link to information about the Rate Study, Proposition 218 Protest Process, and Proposition 218 Mailed Notification in English and Spanish.

ENVIRONMENTAL IMPACT:

The requested City Council action is not a “Project” as defined by the California Environmental Quality Act (CEQA). Pursuant to Section 15378(a), a “Project” means the whole of an action, which has the potential to result in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment.

According to Section 15378(b), a Project does not include (5) Organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment.

GENERAL PLAN CONSISTENCY:

Approval of this action complies with the following:

Our City government will lead by example and will operate in an open, transparent, and responsive manner that meets the needs of the citizens and is a good place to do City of Rialto Printed on 6/20/2024Page 11 of 12
powered by Legistar™
11 File #: 24-1518, Version: 1, Agenda #: TAB2
and responsive manner that meets the needs of the citizens and is a good place to do business.

In addition, approval of this action complies with the City of Rialto General Plan Goals and related Policies:

Policy 3-6.3: Require an increasing level of public safety infrastructure and service capability tied to population increase and increasing service demand.

LEGAL REVIEW:

The City Attorney has reviewed this staff report.

FINANCIAL IMPACT:

Operating Budget Impact
The proposed water and wastewater rates will provide resources that will create operating and capital budget impacts for the Water and Wastewater Enterprise Funds. Over the five years, the water rate adjustments are projected to generate $22.9 million in needed revenue, and the wastewater rate adjustments are projected to generate $23.1 million in needed revenue.

If the proposed rate adjustments are adopted, the projected RUA water reserve balance will be an estimated $1.9 million by the end of Fiscal Year 2028/29. The projected wastewater reserve revenues are estimated at $9.5 million for the same period.

Capital Improvement Budget Impact
Without rate increases, the City’s ability to complete capital improvement projects will be limited to development impact fees and reserves.

City of Rialto Printed on 6/20/2024Page 12 of 12
powered by Legistar™
12 2024 Water and Wastewater
Rate Study Report

City of Rialto

May 2024

Prepared by:

FG SOLUTIONS
697 Grand St #118
Brooklyn, NY 11211
www.fg-solutions.com

13 697 Grand St #118
Brooklyn, NY 11211

2024 Water and Wastewater Rate Study Report
Prepared for
City of Rialto
150 S Palm Avenue Rialto, CA 92376
May 16, 20 24

This report has been prepared for the use of the client for the specific purposes identified in the report. The conclusions, observations and recommendations contained herein attributed to FG Solutions, LLC constitute the opinions of FG Solutions, LLC. To the extent that statements, information, and opinions provided by the client or others have been used in the preparation of this report, FG Solutions, LLC has relied upon the same to be accurate, and for which no assurances are intended, and no representations or warranties are made. FG Solutions, LLC makes no certification and gives no assurances except as explicitly set forth in this report. © 2024 FG Solutions, LLC
All rights reserved.

14 ii
05162024 RIALTO Water and Wastewater Rate Study Report
Table of Contents
Table of Contents
List of Tables
List of Figures
List of Abbreviations ............................................................................................................................... v Executive Summary ................................................................................................................................ 1

1. Background and Report Organization .......................................................................................... 1-1

1.1 Introduction ........................................................................................................................ 1-1

1.2 Current Water and Wastewater Rates ............................................................................... 1-2

1.2.1 Water .................................................................................................................... 1-2

1.2.2 Wastewater .......................................................................................................... 1-2

1.3 RUA Financial Structure ..................................................................................................... 1-3

1.4 Overview of Trust Account Structure .................................................................................. 1-4

1.5 Rate Study Process ............................................................................................................ 1-6

2. Revenue Requirement Analysis ................................................................................................... 2-1

2.1 Introduction ........................................................................................................................ 2-1

2.2 Overview of Methodology and Key Assumptions ............................................................... 2-1

2.3 Water Revenue Requirement............................................................................................. 2-2

2.3.1 Water System Revenues ...................................................................................... 2-2

2.3.2 Projected Water System Expenses ...................................................................... 2-2

2.3.3 Projected Reserves .............................................................................................. 2-5

2.3.4 Projected RUA Operating Statement .................................................................... 2-5

2.3.5 Projected Operating Statement for Water System Trust Accounts ...................... 2-6

2.3.6 Financial Performance Criteria ............................................................................ 2-7

2.4 Wastewater Revenue Requirement ................................................................................... 2-8

2.4.1 Wastewater System Revenues ............................................................................. 2-8

2.4.2 Projected Wastewater Expenses .......................................................................... 2-9

2.4.3 Projected Reserves ........................................................................................... 2- 11

2.4.4 Projected RUA Operating Statement ................................................................. 2- 12

2.4.5 Projected Operating Statement for Wastewater System Trust Accounts .......... 2-13

2.4.6 Financial Performance Criteria ......................................................................... 2- 14

3. Cost of Service Analysis and Rate Design.................................................................................... 3-1

3.1 Water Cost-of-Service Analysis ........................................................................................... 3-1

3.2 Proposed Water Rates ....................................................................................................... 3-1

3.3 Wastewater Cost-of-Service Analysis ................................................................................. 3-3

3.4 Proposed Wastewater Rates.............................................................................................. 3-1

4. Comparison With Other Utilities ................................................................................................... 4-1 15 2024 Water and Wastewater Rate Study – City of Rialto Table of Contents

ES-iii
05162024 RIALTO Water and Wastewater Rate Study Report

4.1 Introduction ........................................................................................................................ 4-1

4.2 Comparison with Other Utilities ......................................................................................... 4-1

5. Ongoing Considerations ............................................................................................................... 5-1 Appendix A: Revenue Requirement ........................................................................................................ 1 Appendix B: Water Cost-of-Service Analysis ........................................................................................... 1 Appendix C: Water Rate Design .............................................................................................................. 1 Appendix D: Wastewater Cost of Service Analysis.................................................................................. 1 Appendix E: Wastewater Rate Design .................................................................................................... 1

List of Tables
Table ES-1 ............................................................................................................... Existing Water Rates Table ES-2 ..................................................................................................... Existing Wastewater Rates Table ES-3 .................................................................. Projected Water Revenues Under Existing Rates Table ES-4 ......................................................... FY 24/25 - FY 28/29 Water Capital Improvement Plan Table ES-5 ..............................................Projected Uses of Funds for the Water System Trust Accounts Table ES-6 .......................................................... Projected Wastewater Revenues Under Existing Rates Table ES-7 ............................................... FY 24/25 - FY 28/29 Wastewater Capital Improvement Plan Table ES-8 .................................... Projected Uses of Funds for the Wastewater System Trust Accounts Table ES-9 ........................................................................... Proposed Monthly Minimum Charge, Water Table ES-10 .................................................................................................... Proposed Volume Charges Table ES-11 ................................................................................... Proposed Fireline and Hydrant Rates Table ES-12 ................................................................................................. Proposed Wastewater Rates Table ES-13 .............................................................................................Monthly Water Bill Comparison Table ES-14 ................................................................................... Monthly Wastewater Bill Comparison Table 1-1 ................................................................................................................ Existing Water Rates Table 1-2 ...................................................................................................... Existing Wastewater Rates Table 2-1 .................................................................... Projected Water Revenues Under Existing Rates Table 2-2 .................................................................................... Projected Water Waterfall 1 Expenses Table 2-3 ................................................................................ Projected RUA Water Retained Expenses Table 2-4 .......................................................... FY 24/25 - FY 28/29 Water Capital Improvement Plan Table 2-5 .................................................................................... P rojected Water Depreciation Expense
Table 2-6 .................................................................... Projected RUA Water Fund Operating Statement Table 2-7 .......................................... Projected Sources of Funds for the Water System Trust Accounts Table 2-8 ................................................Projected Uses of Funds for the Water System Trust Accounts 16 Table of Contents 2024 Water and Wastewater Rate Study – City of Rialto

iv
05162024 RIALTO Water and Wastewater Rate Study Report
Table 2-9 .................................................................................... Projected Water Coverage Calculation Table 2-10 .......................................................... Projected Wastewater Revenues Under Existing Rates Table 2-11 .......................................................................... Projected Wastewater Waterfall 1 Expenses Table 2-12 ..................................................................... Projected RUA Wastewater Retained Expenses Table 2-13 ............................................... FY 24/25 - FY 28/29 Wastewater Capital Improvement Plan Table 2-14 ......................................................................... Projected Wastewater Depreciation Expense Table 2-15 ..........................................................Projected RUA Wastewater Fund Operating Statement Table 2-16 ............................... Projected Sources of Funds for the Wastewater System Trust Accounts Table 2-17 .................................... Projected Uses of Funds for the Wastewater System Trust Accounts Table 2-18 .......................................................................... Projected Wastewater Coverage Calculation Table 3-1 ..........................................................Functionalization of Water Rate Revenue Requirement Table 3-2 ..................................................................... Allocation of Water Rate Revenue Requirement Table 3-3 .............................. Relationship Between Water Service Characteristics and Rate Structure Table 3-4 ............................................................................. Proposed Monthly Minimum Charge, Water Table 3-5 ....................................................................................................... Proposed Volume Charges Table 3-6 ....................................................................................... Proposed Fireline and Hydrant Rates Table 3-7 ................................................. Functionalization of Wastewater Rate Revenue Requirement Table 3-8 ............................................................. Allocation of Wastewater Rate Revenue Requirement Table 3-9 ...................... Relationship Between Wastewater Service Characteristics and Rate Structure Table 3-10 ...................................................................................................Proposed Wastewater Rates Table 4-1 ................................................................................................. Monthly Water Bill Comparison Table 4-2 ....................................................................................... Monthly Wastewater Bill Comparison Figure 1-1 ............................................................................................Operating Expense Flow of Funds Figure 1-2 ................................................................................................ Capital Expense Flow of Funds

17 2024 Water and Wastewater Rate Study – City of Rialto Table of Contents

ES-v
05162024 RIALTO Water and Wastewater Rate Study Report
List of Abbreviations
AF Acre-Foot or Acre-Feet
AWWA American Water Works
Association
AWWA M1 Manual AWWA Ratemaking
Manual
cf cubic feet
CIMIS California Irrigation
Management Information
System
CIP Capital Improvement
Program
COSA Cost-of-Service Analysis
CPI Consumer Price Index
DIF Development Impact Fees
DSCR Debt Service Coverage
Ratio
FTE full-time equivalent
FY fiscal year (July 1–June
30)
GPM Gallons per Minute
hcf hundred cubic feet
IEUA Inland Empire Utilities
Agency
kgal thousand gallon(s)
MG Million Gallons
MGD Million Gallons per Day
MIPP Municipal Industrial
Pretreatment Program
MWD Metropolitan Water District
O&M operations and
maintenance
OR&R Operating Repair &
Replacement
PUC Public Utilities Commission
RA Replenishment
Assessment
RHNC Rialto Habitat Nature
Center
RUA Rialto Utilities Authority
RWS Rialto Water Services
SBMWD San Bernardino Municipal
Water District
SWRCB State Water Resources
Control Board
T&D Transmission and
distribution
WIFIA Water Infrastructure
Finance and Innovation
Act
WVWD West Valley Water District
WWTP wastewater treatment
plant

18 vi
05162024 RIALTO Water and Wastewater Rate Study Report
19 ES-1
05162024 RIALTO Water and Wastewater Rate Study Report
Executive Summary
The City of Rialto (“City”) provides water and wastewater services to residences and businesses in the City limits.

The wastewater service area is approximately the entire City limits with additional service outside the City limits from portions of Fontana and Bloomington. The water service area is approximately the central portion of the City.

The City provides these services through the Rialto Utility Authority (“RUA”).

In 2012, the City entered into a Concession Agreement with Rialto Water Services (“RWS”), where RWS operates the water and wastewater system. Additionally, RWS is responsible for capital project delivery.

The Concession Agreement outlines the roles and responsibilities of each party. The City retains the responsibility to set water and wastewater rates. In 2012, the City adopted a five-year schedule of rates through a process compliant with Proposition 218. Water and wastewater rates were last increased on February 1, 2018.

As part of its ongoing responsibility to provide safe and reliable water and wastewater service as the owner of the water and wastewater systems, the City has determined the need to evaluate the utility’s future financial needs.

This rate study projects the ongoing financial needs of the water and wastewater utilities and includes proposed water and wastewater rates through FY 28/29.

This report describes the results of the analysis that support the proposed water and wastewater rates. Specifically, this report:
• Describes current water and wastewater rates.
• Describes the financial structure of the City’s water and wastewater utilities. • Provides an overview of the trust account structure.
• Outlines the projected expenses and revenues of the water and wastewater utilities. • Shows the proposed wastewater and sewer rates.
• Compares an example residential monthly water and wastewater bill with neighboring utilities. • Describes ongoing considerations that the City should monitor with financial implications.

Throughout this report, information for the water and wastewater utilities are shown separately.

Historical and budgeted financial and operational data were provided by the City and used by FG Solutions to develop the projected revenue requirement for the five-year study period. The revenue requirement analysis was an iterative process and draft versions were revised based on comments and input provided by City staff. Next, the revenue requirement was compared with the revenues generated by the existing rates, to c alculate how much additional revenues are needed from rate increases. A cost -of-service analysis consistent with industry standards was performed. This analysis is the basis for developing water and wastewater rates.

Key assumptions used in the Revenue Requirement analysis are summarized in Section 2. Section 3 summarizes the cost-of-service analysis and shows the proposed water and wastewater rates. There are five appendices to this report. Report appendices contain the Revenue Requirement Analysis, the Cost- of-Service Analysis and rate calculations for both the Water and Wastewater utilities. The Revenue Requirement Analysis included in the Appendix covers a 9-year period through FY 32/33. The first five years of the Revenue Requirement Analysis (through FY 28/29) form the basis of the proposed water and wastewater rates described in this Rate Study report.

Table ES-1 shows existing water rates for all meter sizes and customer classes. This includes Monthly Minimum Charges and Volume Charges ins $/ccf. Table ES-2 shows existing wastewater rates for all customer classes.

20 Executive Summary 2024 Water and Wastewater Rate Study – City of Rialto

ES-2
05162024 RIALTO Water and Wastewater Rate Study Report
Table ES-1 Existing Water Rates

Line Existing
No. Water Rate Component Rate (1)
1 Monthly Minimum Charge
2 Single Family Residences, Multiple Family
Connections, Commercial, Landscape, and Industrial
Service Customers
3 1/2 " & 5/8" meter $30.42
4 3/4" meter $30.42
5 1" meter $44.01
6 1 1/2" meter $53.04
7 2" meter $152.54
8 3" meter $324.45
9 4" meter $550.59
10 6" meter $1,138.62
11 8" meter $1,636.17
12 Fire Hydrant Water $324.45
13 14 Volume Charges, $/ccf
15 All Customers Except those Noted Below
16 1 - 5 Units $1.07
17 6 - 30 Units $1.69
18 31 - 60 Units $2.70
19 61 - Over units $3.32
20 Multiple Apartments
21 Over 49 Units and Mobile Homes $2.40
22 Landscape
23 1 to 30 Units $2.70
24 31 and over units $3.32
25 26 Fireline ($/month/inch diameter)
27 Rate $27.91
28 29 Hydrant
30 Water Use, $/ccf $3.33
31 Per Day $10.81
Notes:
(1) Existing rates have been effective since 2/1/18. Rates do not include the City's Utility Users Tax. 21 2024 Water and Wastewater Rate Study – City of Rialto Executive Summary

ES-3
05162024 RIALTO Water and Wastewater Rate Study Report
Table ES-2 Existing Wastewater Rates

Current water rates are shown in Table ES -1. These rates were used to project the revenues shown in Table ES -3.

Revenue estimates under current rates shown in Table ES-3 for FY 24/25 through FY 28/29 are projected to remain at FY 24/25 values, after adjusting for the projected 0.5 percent annual system growth rate. FY 24/25 revenues are calculated based on actual Calendar Year 2023 revenues.

Line Existing
No. Wastewater Rate Component Rate (1) (2)
1 Group I ($/month/residential unit)
2 Residential $62.19
3 Residential X 1.3 $80.84
4 Residential Multi. $62.19
5 6 Group II, $/ccf metered water use
7 Commercial $6.77
8 (includes - Softwater Service, Car Wash, Office Buildings, Cleaners, 9 Department/Retail Stores, Warehouse, Car lots, Equipment Rental, Storage Units, 10 Hospitals, Manufacturing, Indoor Theater, Day Care, Pre School, 11 Disabled Care, Nail/Hair Salon, Church)
12 13 Group III, $/ccf metered water use
14 Commercial $7.96
15 (includes - Hotels /Motels (no restaurant), repair and Service Station, 16 Shopping Center, Recreation Park, Nursery/Florist,
17 Manufacturing - Non-Domestic, Lumber Yard, Nightclub, Bar, Hall) 18 19 Group IV, $/ccf metered water use
20 Commercial $10.17
21 (includes - Hotels /Motels (w/restaurants), Bakeries, Dairy, 22 Supermarkets, Dairy, Meat Market, Mom & Pop, Mortuary, Restaurants, 23 Fast Food, Catering)
24 25 Group V, $/student/month
26 Schools -
27 Elementary $0.85
28 Junior High $2.03
29 High $2.03
30 Continuation $0.85
31 Adult Education $0.85
32 33 Group VI, $/ccf water use
34 Large Volume $6.77
35 Hospital $6.77
36 Commercial Building $6.77
Notes:
(1) Existing rates have been effective since 2/1/18. Rates do not include the City's Utility Users Tax. (2) Group II, III, IV, and VI extraterritorial customers are charged 1.3 times the corresponding rates shown in this table for in-city customers.
22 Executive Summary 2024 Water and Wastewater Rate Study – City of Rialto

ES-4
05162024 RIALTO Water and Wastewater Rate Study Report

Table ES-3. Projected Water Revenues Under Existing Rates

Table ES-4 shows the projected Capital Improvement Plan through FY 2 8/29. The capital improvements shown in Table ES-4 represent the highest priority capital projects, prioritized by City staff from a longer list of potential capital projects developed by RWS. The City has been successful in pursuing grant funding, which reduces the financial impact of these projects to the City’s ratepayers. The total cost of the Capital Improvement Plan is $20.9 million, of which $12 million (or 57 percent) is grant funded.

Table ES-4. FY 24/25 - FY 28/29 Water Capital Improvement Plan

Table ES-5 shows the Projected Uses of Funds for the Water System Trust Accounts. The table shows details of how funds flow through the Waterfalls, resulting in the Total Uses of Funds.

Projected
Revenue FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29
Rate Revenues Subject to Rate Increases (1) $12,760,562 $12,799,701 $12,838,841 $12,877,980 $12,917,119 Development Impact Fees (2) 200,000 200,000 200,000 200,000 200,000 County Contract - SBCO Water Order 349,264 366,727 385,064 404,317 424,533 Rents & Concessions 50,000 51,250 52,531 53,845 55,191
Trustee Water Reserve Interest Income (3) 215,285 215,285 215,285 215,285 215,285 Turn On/Off 73,000 73,000 73,000 73,000 73,000
Delinquent Water Service Fees 12,000 12,000 12,000 12,000 12,000 Grant Revenue (4) 0 0 0 0 0
Miscellaneous Revenues (5) 94,000 96,350 98,759 101,228 103,758 RUA Investment Income (6) 116,084 72,525 66,072 40,809 31,595 Total $13,870,196 $13,886,839 $13,941,552 $13,978,463 $14,032,481 Notes:
(1) FY 24/25 per draft RWS Budget. Increased in subsequent years for system growth. Refer to Section 3 for system growth projections (2) FY 24/25 per FY 23/24 RUA Budget. Development Impact Fee revenues are deposited into the Trust Water Construction Reserve. (3) 50% of draft RWS FY 24/25 budget. The RWS budget value is reduced to excludes interest income in the Trust Water Construction Reserve and to anticipate future lowering of interest rates. (4) Grant revenues for capital projects are not shown in this table and are considered in developing the capital project funding strategy See Table 2-5 for more detail.
(5) FY 24/25 per draft RWS Budget, increased in subsequent years for inflation. Primarily labor reimbursement from .

San Bernardino County
(6) Interest income is projected to be 1.5% of the previous fiscal year ending fund balance.

Funding Sources
Project Grants DIF RUA Reserves Debt T otal Cost
Watermain Replacement - Etiwanda $2,900,000 $3,800,000 $6,700,000 AMI Project 8,000,000 8,000,000
W-WW Security Upgrade Project 2,000,000 2,000,000
Arsenic Treatment Well 3A 2,000,000 4,200,000
Total $12,000,000 $2,900,000 $0 $3,800,000 $20, 900,000 23 2024 Water and Wastewater Rate Study – City of Rialto Executive Summary

ES-5
05162024 RIALTO Water and Wastewater Rate Study Report
Table ES-5. Projected Uses of Funds for the Water System Trust Accounts

Table ES-6 describes Projected Wastewater Revenues under existing rates. Revenue estimates under current rates are shown for FY 24/25 through FY 28/29. These estimates are based on CY 2023 actual revenues adjusted for projected annual system growth of 0.5 percent.

Table ES-6: Projected Wastewater Revenues Under Existing Rates

Projected
FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29
Waterfall 1: Water Service Fee (1)
Fixed, Routine R&R, and Labor Components $6,882,388 $7,054,448 $7,260,809 $7, 442,329 $7,628,387 Chemical Component 89,198 91,428 93,714 96,056 98,458
Waterfall 1: Reimbursements (1)
Insurance Reimbursement 1,028,000 1,053,700 1,080,043 1, 107,044 1,134,720 Independent Engineer 127,000 130,175 133,429 136,765 140,184 Maintenance 300,000 307,500 315,188 323,067 331,144
Waterfall 1: Retained RUA Expenses (2) 5,365,000 5,559,590 5,763,367 5, 976,862 6,200,643 Waterfall 2: Annual Operating R&R Payment (3) 680,000 697,000 714,425 732,286 750,593 Waterfall 3: Capital Charges 2,900,000 2,900,000 2,900,000 2, 900,000 2,900,000 Waterfall 3: New Debt Service (4) 0 455,708 455,708 455,708 455,708 Waterfall 4: Water Reserve Account Deposits (5) 221,141 219,491 116,783 113,359 117,430 Waterfall 5: RUA Lease Payment 400,000 400,000 400,000 400,000 400,000 Transfer to RUA (6) 297,287 349,713 544,933 492,204 1,331,573 Total Uses of Funds $18,290,013 $19,218,752 $19,778,397 $20, 175,679 $21,488,839 Notes:
(1) See Table 2-2.
(2) See Table 2-3.
(3) FY 24/25 from draft FY 24/25 RWS Budget. Projected to increase with inflation in subsequent years. (4) Based on 30-year debt at 6% interest, per City's Financial Advisor, 10/05/23. Includes approximately capitalized bond reserve and costs of issuance.
(5) This row represents the amount of contributions from RUA to maintain the minimum required balance in the Water Reserve Accou held in trust.
(6) This transfer is intended to cover depreciation expense and the Interfund Loan. Collection of depreciation expense through rates is being phased in over time. This number differs from what is shown in Table 2-6 because some transfers out of the waterfall are recorded on the last day of the fiscal year; they appear in RUA accounts in the subsequent fiscal year.

Projected
Revenue FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29
Sewer Service Fees (1) $26,426,992 $26,524,381 $26,621,771 $26,719,160 $26,816,550 Extraterritorial Sewer Service Fees (1) 1,950,000 1,950,000 1,950,000 1,950,000 1,950,000 Development Impact Fees (2) 350,000 350,000 350,000 350,000 350,000 Fines/Forfeitures/Penalties (3) 0 0 0 0 0
Rents and Concessions (Anaergia Lease) (4) 279,000 279,000 279,000 279,000 279,000 Trustee Wastewater Reserve Interest Income (5) 269,500 269,500 269,500 269,500 269,500 Delinquent Sewer Service Fees (3) 15,315 15,315 15,315 15,315 15,315 Grants (6) 0 0 0 0 0
Effluent Sale to IEUA (7) 144,375 144,375 144,375 144,375 0 RUA Investment Income (8) 269,642 258,811 103,809 91,986 99,188 Total $29,704,823 $29,791,382 $29,733,769 $29,819,336 $29,779,553 24 Executive Summary 2024 Water and Wastewater Rate Study – City of Rialto

ES-6
05162024 RIALTO Water and Wastewater Rate Study Report

Table ES-7 is a detailed breakdown of the funding for the Wastewater Capital Improvement Plan. Grants have been obtained for the Sewer System Security Upgrades and the Rialto Habitat Nature Center. Other projects, such as the Sycamore Sewer Upsize, Acacia Sewer Upsize, and the Rialto Biosolids Project are funded partially or entirely with Development Impact Fees. Much of the Capital Improvement Plan is being funded by debt.

Table ES-7. FY 24/25 - FY 28/29 Wastewater Capital Improvement Plan

Table ES-8 shows projected uses of funds for the Wastewater System Trust Accounts. Each of the Waterfalls are explained in detail in Section 2. Additional details can be found in Appendix A.

Table ES-8. Projected Uses of Funds for the Wastewater System Trust Accounts

Notes:
(1) FY 24/25 per draft RWS Budget. Increased in subsequent years for system growth. Refer to Section 5 for system growth projections. (2) FY 24/25 per FY 23/24 RUA budget. Development Impact Fee revenues are deposited into the Trust Wastewater Construction Reserve (3) Projected to remain at FY 24/25 budgeted values in subsequent years. (4) Per FY 24/25 RWS Budget. Revenues from the Anaergia lease are projected to continue at this level in subsequent years. (5) 50% of draft RWS FY 24/25 budget. The RWS budget value is reduced to exclude interest income in the Trust Wastewater Constructio Reserve and to anticipate future lowering of interest rates. (6) Grant revenues for capital projects are not shown in this table and are considered in developing the capital project funding strategy.

See Table 2-14 for more detail.
(7) Source: City staff, 7/12/23. 3,500 AFY @ $275/AF in FY 23/24 dollars. $/AF adjusted with inflation, and payment starts 1/1/29.

Prepayment of 15% of total revenues starting FY 23/24.
(8) Interest income is projected to be 1.5% of the previous fiscal year ending fund balance.

Projected Funding Sources (1)
Project Grants (2) DIF RUA Reserves Debt Total Cost
Sewer System Security Upgrades $2,000,000 $2,000,000
Sycamore Sewer Upsize 5,000,000 5,000,000
Acacia Sewer Upsize 2,000,000 2,000,000
Digester No. 1 Activation & Digester No. 2 Rehabilitation 1,800,000 1,800,000 Rialto Biosolids Project (3) 854,000 9,546,000 16,000,000 26,400,000 Agua Mansa Lift Station Upgrades 2,000,000 2,000,000
Plant 5 Secondary Clarifier A&B Overhaul 500,000 500,000 Ayala Lift Station Upgrade and Repair 2,000,000 2,000,000 Electrical Upgrade 8,800,000 8,800,000
Rialto Habitat Nature Center 5,250,000 3,000,000 8,250,000 Total $7,250,000 $7,854,000 $9,546,000 $34,100,000 $58,750,000 Notes:
(1) Source: City of Rialto staff report for 12/12/2023 City Council meeting, except for Rialto Habitat Nature Center per City staff, June 202 (2) Grants shown in this table are those that have been received by the City as of April 2024. The City has applied for additional grant funding that if received, would be used in lieu of DIF funding, RUA Reserves, or debt issuance. (3) DIF funds used for the Rialto Biosolids Project include $454,000 used in 2023 and projected $400,000 future use of DIF funds.

ES-7
05162024 RIALTO Water and Wastewater Rate Study Report

Section 3 details the Cost- of-Service Analysis for both water and wastewater. Table ES -9 is the Proposed Monthly Minimum Charge for the Water system. The Monthly Minimum Charge increases with meter size. 94 percent of residential customers have a ¾” or smaller water meter and would pay, staring on 1/1/2025, a Monthly Minimum Charge of $34.53 per month.

Table ES-9. Proposed Monthly Minimum Charge, Water

Table ES -10 shows the proposed volume charges for water. The tier structure for Residential and Commercial customers changed, reduced from four tiers to three tiers. Note 1 for Table ES-10 provides the existing rate structure for comparison. The new tier structure allows for more water in the first tier. 9 ccf is approximately the typical indoor water use per household.

Table ES-10: Proposed Volume Charges

Notes:
(1) See Appendix A for more detail.
(2) See Table 2-12.
(3) FY 24/25 from draft RWS FY 24/25 budget. Projected to increase with inflation in subsequent years. (4) Based on 30-year debt at 6% interest, per City's Financial Advisor, 10/05/23. Includes a capitalized bond reserve and costs of issuance (5) This row represents the amount of contributions from RUA to maintain the minimum required balance in the Wastewater Reserve Account held in trust.
(6) This transfer is intended to cover depreciation expense, and collection of depreciation expense through rates is being phased in over time. The drop in the transfer from FY 25/26 to FY 26/27 is to meet cash flow requirements as the projected new debt service payments are required. By FY 30/31, the transfer is sufficient to cover depreciation expense. This number differs from what is shown in Table 2-15 because some transfers out of the waterfall are recorded on the last day of the fiscal year; they appear in RUA accounts in the subsequent fiscal year.

Meter Proposed Monthly Minimum Charges
Size Existing 1/1/2025 1/1/2026 1/1/2027 1/1/2028 1/1/2029 3/4" and Smaller $30.42 $34.53 $39.51 $42.46 $45.63 $49.03 1" $44.01 $53.03 $60.68 $65.21 $70.07 $75.30
1-1/2" $53.04 $99.28 $113.61 $122.08 $131.19 $140.98
2" $152.54 $154.79 $177.12 $190.33 $204.53 $219.79
3" $324.45 $302.80 $346.48 $372.33 $400.10 $429.95
4" $550.59 $469.31 $537.01 $577.07 $620.12 $666.38
6" $1,138.62 $931.84 $1,066.26 $1,145.81 $1,231.28 $1,323.14 8" $1,636.17 $1,486.88 $1,701.37 $1,828.29 $1,964.68 $2,111.24 Proposed Volume Charges
Existing 1/1/2025 1/1/2026 1/1/2027 1/ 1/2028 1/1/2029
Residential and Commercial
0 - 9 ccf per month See Note 1 $1.95 $2.20 $2.36 $2.54 $2.73 10 - 30 ccf per month See Note 1 $2.19 $2.47 $2.66 $2.85 $3.07 >31 ccf per month See Note 1 $3.19 $3.62 $3.89 $4.18 $4.49 Multiple Apartments Over 49 Units and Mobile Homes
All water use $2.40 $2.35 $2.66 $2.86 $3.07 $3.30
Landscape
0 - 30 ccf per month $2.70 $2.19 $2.47 $2.66 $2.85 $3.07 >31 ccf per month $3.32 $3.19 $3.62 $3.89 $4.18 $4.49
Notes:
(1) The current tiered volume charges for Residential and Commercial customers is:
0 - 5 ccf per month: $1.07/ccf
6 - 30 ccf per month: $1/69/ccf
31 - 60 ccf/month: $2.70/ccf
> 61 ccf/month: $3.32/ccf
26 Executive Summary 2024 Water and Wastewater Rate Study – City of Rialto

ES-8
05162024 RIALTO Water and Wastewater Rate Study Report
Table ES-11 describes the proposed Fireline and Hydrant rates. Fireline rates are for customers that have separate meters that provide fire protection. Most residential customers do not pay this. Hydrant rates are for meters that attach to fire hydrants, often used by construction contractors during construction projects.

Table ES-11. Proposed Fireline and Hydrant Rates

Table ES-12 shows the proposed Wastewater Rates for the study period. The existing rate struc ture is retained, where residential customers pay a flat monthly fee for wastewater service. Commercial customers continue to pay a wastewater volume charge, based on metered water consumption. Extraterritorial customers, located outside of Rialto city limits, will continue to pay 1.3 times the rate of a customer within the Rialto City limits. More information can be found in Section 3 and Appendix D and E.

Proposed Rates
Existing 1/1/2025 1/1/2026 1/ 1/2027 1/1/2028 1/1/2029
Fireline
3" meter $83.73 $21.56 $24.80 $26.78 $28.92 $31.24
4" meter $111.64 $45.95 $52.84 $57.07 $61.63 $66.56
6" meter $167.46 $133.47 $153.49 $165.77 $179.03 $193.35 8" meter $223.28 $284.43 $327.09 $353.26 $381.52 $412.04 10" meter $279.10 $511.50 $588.22 $635.28 $686.10 $740.99 Hydrant
Rate, $/ccf $3.33 $2.70 $3.10 $3.35 $3.62 $3.91
Per Day $10.81 $3.43 $3.51 $3.60 $3.69 $3.78
27 2024 Water and Wastewater Rate Study – City of Rialto Executive Summary

ES-9
05162024 RIALTO Water and Wastewater Rate Study Report
Table ES-12. Proposed Wastewater Rates

Section 4 of the report provides a comparison of the City’s existing and proposed water and wastewater rates with comparator local utilities. This comparison was completed by City Staff and included in this report. Table ES-13 is the Monthly Water Bill Comparison. Existing water rates in the City are in the bottom half of the comparator list.

Proposed water rates are in the middle of the pack.

Proposed Rates
Customer Type Existing 1/1/2025 1/1/2026 1/1/2027 1/1/2028 1/1/2029 Group I ($/month/residential unit)
Residential $62.19 $67.14 $71.07 $75.23 $79.64 $84.31
Residential X 1.3 $80.84 $87.28 $92.39 $97.80 $103.53 $109.60 Residential Multi. $62.19 $67.14 $71.07 $75.23 $79.64 $84.31 Group II, $/ccf metered water use
Commercial $6.77 $5.80 $6.10 $6.40 $6.70 $6.85
(includes - Softwater Service, Car Wash, Office Buildings, Cleaners, Department/Retail Stores, Warehouse, Car lots, Equipment Rental, Storage Units, Hospitals, Manufacturing, Indoor Theater, Day Care, Pre School, Disabled Care, Nail/Hair Salon, Church)
Group III, $/ccf metered water use
Commercial $7.96 $8.32 $8.80 $9.32 $9.87 $10.44
(includes - Hotels /Motels (no restaurant), repair and Service Station, Shopping Center, Recreation Park, Nursery/Florist, Manufacturing - Non-Domestic, Lumber Yard, Nightclub, Bar, Hall) Group IV, $/ccf metered water use
Commercial $10.17 $12.06 $13.00 $14.08 $15.33 $17.59
(includes - Hotels /Motels (w/restaurants), Bakeries, Dairy, Supermarkets, Dairy, Meat Market, Mom & Pop, Mortuary, Restaurants, Fast Food, Catering)
Group V, $/student/month
Schools -
Elementary $0.85 $1.00 $1.15 $1.25 $1.35 $1.48
Junior High $2.03 $2.30 $2.60 $2.80 $2.99 $3.16
High $2.03 $2.30 $2.60 $2.80 $2.99 $3.16
Continuation $0.85 $1.00 $1.15 $1.25 $1.35 $1.48
Adult Education $0.85 $1.00 $1.15 $1.25 $1.35 $1.48
Group VI, $/ccf water use
Large Volume $6.77 $5.80 $6.10 $6.40 $6.70 $6.85
Hospital $6.77 $5.80 $6.10 $6.40 $6.70 $6.85
Commercial Building $6.77 $5.80 $6.10 $6.40 $6.70 $6.85 Notes:
(1) Existing rates have been effective since 2/1/18. Rates do not include the City's Utility Users Tax. (2) Group II, III, IV, and VI extraterritorial customers are charged 1.3 times the corresponding rates shown in this table for in-city customers.
28 Executive Summary 2024 Water and Wastewater Rate Study – City of Rialto

ES-10
05162024 RIALTO Water and Wastewater Rate Study Report
Table ES-13. Monthly Water Bill Comparison

Table ES-14 is the Monthly Wastewater Bill Comparison, Wastewater. The City’s wastewater rates, both existing and proposed, are at the top of the pack. The City’s wastewater rates for residential customers are the highest of the comparators. It should be noted that each utility in the comparator list has a capital improvement plan, debt schedules and O&M costs that differ from the City of Rialto. Additionally, none of the comparators are parties to a Concession Agreement. The Concession Agreement has specific reserve coverage requirements and has unique agreements with the City for capital projects and the debt associated with those projects. Additionally, the City of Rialto recently completed a major upgrade to its wastewater treatment plant. The City inves ted considerable resources into this capital project, and the debt associated with this project is reflected in both existing and proposed rates.

Table ES-14. Monthly Wastewater Bill Comparison

There are several factors that could change over the next few years that have financial implications. The extent to which these factors change may influence the financial condition of the water and wastewater systems and the City’s ongoing reviews of water and wastewater rates. Section 5 discusses Ongoing Considerations and things the City Comparator Utility
Monthly Bill as of
1/1/2025 (1)
Fontana Water Company (Water) 105.79
Marygold Water 82.53
City of Banning 82.98
Jurupa Community Services District 69.77
City of Rialto, PROPOSED 67.41
Cucamonga Valley Water District (CVWD) 65.47
City of Corona DWP 64.69
East Valley Water District 63.38
West Valley Water District (WVWD) 57.31
Loma Linda, City of 55.95
City of Rialto, EXISTING 54.36
City of Colton 53.10
City of Riverside Public Utilities 52.19
San Bernardino Municipal Water Department 49.69
City of Redlands Municipal Utilities 46.93
Comparator Utility
Monthly Bill as of
1/1/2025 (1)
City of Rialto, PROPOSED 67.14
City of Rialto, EXISTING 62.19
City of Banning 49.01
San Bernardino Municipal Water District 48.98
Loma Linda, City of 46.46
Jurupa Community Services District 46.37
City of Corona DWP 45.60
East Valley Water District 43.09
City of Riverside Public Utilities 39.59
City of Fontana (Sewer) 35.14
City of Colton 34.33
City of Redlands Municipal Utilities 33.02
Cucamonga Valley Water District (CVWD) 32.02
29 2024 Water and Wastewater Rate Study – City of Rialto Executive Summary

ES-11
05162024 RIALTO Water and Wastewater Rate Study Report
should continue to monitor its financial status on an ongoing basis. Below is the list of items that should be monitored. More details are shown in Section 5.
• Water consumption. Water system revenues depend on water consumption. • Long-Term Water Use Objectives Legislation. Recent changes to California state law may result in additional water conservation efforts and reduced water consumption. • Changing Conditions. Water and wastewater utility conditions change on an ongoing basis. o Increased wastewater chemical costs.
o Uncollectable debt reimbursement from the State of California. o 2024 Labor Reset. Every four years, the Labor Component of the Concession Agreement RWS Service Charge is renegotiated to account for inflation and changes in staffing. • Capital project spending and financing.
• As capital project construction bids are awarded, the City will have greater certainty regarding capital costs and schedule.
• The proposed water and wastewater rates are based on capital improvement debt with an interest rate of 6 percent.
• The proposed water and wastewater rates are based on 25 percent coverage criteria, as specified by the City, for planning purposes.
• Inflation rates.
• Many expenses, including the RWS Service Fees, are tied to actual changes in inflation rates. • Development activity in the Division’s service area. If system growth through FY 2 8/29 is higher than expected, this will result in more revenues than projected in this analysis, from both Development Impact Fees and utility rate revenues paid by the future customers. The City should monitor system growth and make any appropriate adjustments to budgeting and spending plans.

Detailed calculations for the Revenue Requirement, the Cost of Service Analysis, and Rate Calculations can be found Ihe Appendices, at the end of the report.

30 1-1
05162024 RIALTO Water and Wastewater Rate Study Report
Section 1
Background and Report Organization

1.1 Introduction
The City of Rialto (“City”) provides water and wastewater services to residences and businesses in the City limits.

The City provides these services through the Rialto Utility Authority (“RUA”).

This rate study projects the ongoing financial needs of the water and wastewater utilities and includes proposed water and wastewater rates through FY 28/29.

This report describes the results of the analysis that support the proposed water and wastewater rates. Specifically, this report:
• Describes current water and wastewater rates.
• Describes the financial structure of the City’s water and wastewater utilities. • Provides an overview of the trust account structure.
• Outlines the projected expenses and revenues of the water and wastewater utilities. • Shows the proposed water and wastewater rates.
• Compares an example residential monthly water and wastewater bill with neighboring utilities. • Describes ongoing considerations that the City should monitor with financial implications.

Throughout this report, information for the water and wastewater utilities are shown separately.

Historical and budgeted financial and operational data were provided by the City and used by FG Solutions to develop the projected revenue requirement for the five-year study period. The revenue requirement analysis was an iterative process and draft versions were revised based on comments and input provided by City staff. Next, the revenue requirement was compared with the revenues generated by the existing rates, to calculate how much additional revenues are needed from rate increases. A cost-of-service analysis consistent with industry standards was performed. This analysis is the basis for developing water and wastewater rates.

Key assumptions used in the Revenue Requirement analysis are summarized in Section 2. Section 3 summarizes the cost-of-service analysis and shows the proposed water and wastewater rates. There are five appendices to this report. Report appendices contain the Revenue Requirement Analysis, the Cost-of-Service Analysis and rate calculations for both the Water and Wastewater utilities. The Revenue Requirement Analysis included in the Appendix covers a 9-year period through FY 32/33. The first five years of the Revenue Requirement Analysis, through FY 28/29, form the basis of the proposed water and wastewater rates described in this Rate Study report. 31 Section 1 2024 Water and Wastewater Rate Study – City of Rialto

1-2
05162024 RIALTO Water and Wastewater Rate Study Report

1.2 Current Water and Wastewater Rates

1.2.1 Water
Table 1-1 shows current water rates. Table ES-1 shows existing water rates for all meter sizes and customer classes, which were last adjusted on February 1, 2018. This includes Monthly Minimum Charges and Volume Charges in $/ccf.

Table 1-1. Existing Water Rates

Notes:
(1) Existing rates have been effective since 2/1/18. Rates do not include the City's Utility Users Tax.

1.2.2 Wastewater
Table 1-2 shows current wastewater rates for all customer classes. These rates were last adjusted on February 1, 2018.

Line Existing
No. Water Rate Component Rate (1)
1 Monthly Minimum Charge
2 Single Family Residences, Multiple Family
Connections, Commercial, Landscape, and Industrial
Service Customers
3 1/2 " & 5/8" meter $30.42
4 3/4" meter $30.42
5 1" meter $44.01
6 1 1/2" meter $53.04
7 2" meter $152.54
8 3" meter $324.45
9 4" meter $550.59
10 6" meter $1,138.62
11 8" meter $1,636.17
12 Fire Hydrant Water $324.45
13 14 Volume Charges, $/ccf
15 All Customers Except those Noted Below
16 1 - 5 Units $1.07
17 6 - 30 Units $1.69
18 31 - 60 Units $2.70
19 61 - Over units $3.32
20 Multiple Apartments
21 Over 49 Units and Mobile Homes $2.40
22 Landscape
23 1 to 30 Units $2.70
24 31 and over units $3.32
25 26 Fireline ($/month/inch diameter)
27 Rate $27.91
28 29 Hydrant
30 Water Use, $/ccf $3.33
31 Per Day $10.81
32 2024 Water and Wastewater Rate Study – City of Rialto Section 1

1-3
05162024 RIALTO Water and Wastewater Rate Study Report
Table 1-2. Existing Wastewater Rates

Notes:
(1) Existing rates have been effective since 2/1/18. Rates do not include the City's Utility Users Tax. (2) Group II, III, IV, and VI extraterritorial customers are charged 1.3 times the corresponding rates shown in this table for in-city customers.

1.3 RUA Financial Structure
The City maintains three funds where water and wastewater utility revenues and expenses are recorded. Fund 670 is the Water Fund, Fund 660 is the Wastewater Fund, and Fund 680 records the City’s RUA Administration expenses.

All water revenues are recorded in Fund 670, and nearly all water expenses are paid from Fund 670. Similarly, all wastewater revenues are recorded in Fund 660 and nearly all wastewater expenses are paid from Fund 660. Certain costs associated with City staff who are assigned to the water and wastewater utilities are paid from Fund 680 and the funding source for Fund 680 is transfers from the Water and Wastewater Funds.

In addition, there are two types of transfers from the Water Fund and the Wastewater Fund to the City’s General Fund:
• A transfer to cover the costs incurred by the General Fund that support the water and wastewater utilities, and
Line Existing
No. Wastewater Rate Component Rate (1) (2)
1 Group I ($/month/residential unit)
2 Residential $62.19
3 Residential X 1.3 $80.84
4 Residential Multi. $62.19
5 6 Group II, $/ccf metered water use
7 Commercial $6.77
8 (includes - Softwater Service, Car Wash, Office Buildings, Cleaners, 9 Department/Retail Stores, Warehouse, Car lots, Equipment Rental, Storage Units, 10 Hospitals, Manufacturing, Indoor Theater, Day Care, Pre School, 11 Disabled Care, Nail/Hair Salon, Church)
12 13 Group III, $/ccf metered water use
14 Commercial $7.96
15 (includes - Hotels /Motels (no restaurant), repair and Service Station, 16 Shopping Center, Recreation Park, Nursery/Florist,
17 Manufacturing - Non-Domestic, Lumber Yard, Nightclub, Bar, Hall) 18 19 Group IV, $/ccf metered water use
20 Commercial $10.17
21 (includes - Hotels /Motels (w/restaurants), Bakeries, Dairy, 22 Supermarkets, Dairy, Meat Market, Mom & Pop, Mortuary, Restaurants, 23 Fast Food, Catering)
24 25 Group V, $/student/month
26 Schools -
27 Elementary $0.85
28 Junior High $2.03
29 High $2.03
30 Continuation $0.85
31 Adult Education $0.85
32 33 Group VI, $/ccf water use
34 Large Volume $6.77
35 Hospital $6.77
36 Commercial Building $6.77
33 Section 1 2024 Water and Wastewater Rate Study – City of Rialto

1-4
05162024 RIALTO Water and Wastewater Rate Study Report
• The RUA Lease payment, as RUA leases the assets of the water and wastewater utilities from the City.

1.4 Overview of Trust Account Structure
The Concessionaire, Rialto Water Services, (RWS), is required to operate and maintain the water and wastewater systems and deliver capital projects. The Concession Agreement established a series of accounts held in trust for these purposes, where water and wastewater system revenues are deposited, and fr om which expenses are paid.

Water and wastewater revenues and expenses are accounted for separately within the series of trust accounts.

In an abbreviated form, Figure 1-1 shows the flow of funds to pay operating expenses. The Concession Agreement calls for all water and wastewater revenues to be deposited with the Trustee. The revenues are deposited into a Master Revenue Account held in trust, then transferred to various accounts established by the Concession Agreement and not shown in Figure 1 -1. From these accounts, expenses are paid to RWS, the contract operator (Veolia), and third parties.

Figure 1-1. Operating Expense Flow of Funds

At the end of each fiscal year, if there is more cash in the trust accounts than is necessary to meet the Concession Agreement financial performance criteria described in Section 2, the excess cash is returned to RUA.

From time to time, particularly to meet Coverage Requirements established by the Concession Agreement, additional revenue from the City is required. The City and RWS collaborate to estimate, in advance, if additional revenues from the City are expected to be required. If additional revenue is required , a “Revenue Stabilization” payment is made from RUA Water Fund reserves or RUA Wastewater Fund reserves to the Trustee. Revenue Stabilization payments refers to funds provided by the City to the Trustee, to me et the Concession Agreement Coverage Requirement. Refer to Section 2 for a discussion on Concession Agreement Coverage Requirements.

The Concession Agreement also established a priority system for classifying operating expenses paid from the trust accounts, referred to colloquially and in this report as “the Waterfall”. As noted above, separate accounts are maintained for water and wastewater expenses. There are separate Waterfalls for the Water and Wastewater utilities. Below are descriptions of each Waterfall.

Waterfall 1
Waterfall 1 includes the following items, in no particular order of relative priority:

Excess
Cash
Revenue
Stabilization
As Needed
Concession
Agreement
Trust Accounts
RUA Accounts
All Revenues Operating
Expenses
RUA Lease
Payment to City
34 2024 Water and Wastewater Rate Study – City of Rialto Section 1

1-5
05162024 RIALTO Water and Wastewater Rate Study Report
• RWS Wastewater Service Fee. This is the amount paid to RWS for operating and maintaining the water and wastewater systems.
• RWS Reimbursable Payments. These payments reimburse RWS for its insurance, an Independent Engineer required by the Concession Agreement, and maintenance expenses in excess of contractual limits specified in the Concession Agreement.
• Retained RUA Expenses. These are expenses including (but not limited to) electricity, natural gas, wages and benefits of City employees, biosolids disposal, and other services provided by the City.

Waterfall 2
Waterfall 2 are payments into the Operating Repair and Replacement (“OR&R”) accounts. OR&R is a term defined in the Concession Agreement referring to a category of maintenance expenses that are more expensive than “Routine Repair & Replacement” but less expensive than a capital project.

Waterfall 3
Waterfall 3 are Capital Charges. Capital Charges are similar to a debt service payment. RWS used debt and equity funding at the initiation of the Concession Agreement for items including:
• Capital Improvements funded by RWS
• Refinancing existing City water and wastewater debt
• Project development costs
• Capitalizing a lump sum RUA Lease Payment to the City • Revenue Stabilization over the first five years of the Concession Agreement to allow water and wastewater rate increases to be phased in.

Future capital projects, whether funded by the City or by RWS that result in debt service payments, are also a Waterfall 3 expense.

Waterfall 4
Waterfall 4 are payments to meet trust account minimum reserve balance requirements as established in the Concession Agreement.

Waterfall 5
Waterfall 5 is the RUA Lease Payment, payable to the City’s General Fund.

Figure 1-2 shows the flow of funds to pay capital expenses, also in an abbreviated form. Separate sets of accounts are maintained for the water and wastewater utilities. All revenues , including Development Impact Fees (DIF) revenues, are deposited into the Concession Agreement Trust Accounts, from which capital expenses are paid.

Concessionaire and City financing could include loan proceeds or grants. At the City’s discretion, the City may choose to use RUA reserves to fund capital projects.

35 Section 1 2024 Water and Wastewater Rate Study – City of Rialto

1-6
05162024 RIALTO Water and Wastewater Rate Study Report

Figure 1-2. Capital Expense Flow of Funds

1.5 Rate Study Process
The 2024 Water and Wastewater Rate Study was initiated in April 2023 and was completed in two phases. Phase 1, authorized by City Council on April 11, 2023, consisted of a Revenue Analysis. The focus of Phase 1 was to develop a revenue requirement, by preparing a 10 -year water and wastewater financial projection . The financial analysis developed projected revenue needs. The Revenue Analysis was discussed with the City Council Water Subcommittee in June, July, and August 2023. The Revenue Analysis was also presented to the Rialto Utilities Commission in August 2023 and the City Council in September 2023.

On September 12, 2023, the City Council authorized Phase 2, which was the completion of the Rate Study and development of proposed water and wastewater rates. Water and wastewater rates were developed and presented to the Rialto Utilities Commission in April 2024.

The City conducted a series of public meetings in January and February for public outreach. Proposition 218 notices were mailed in April 2024, and the Proposition 218 Public Hearing is scheduled for June 25, 2024. The City Council is expected to consider the proposed water and wastewater rates on June 25, 2024. If adopted by City Council, the first rate increase would be effective January 1, 2025 and subsequent rate increases would be effective on January 1 of successive years through 2029.

Concessionaire
Financing
Concession
Agreement
Trust Accounts
RUA Accounts
DIF Revenues Capital
Expenses
City Financing RUA
Reserves
36 2024 Water and Wastewater Rate Study – City of Rialto Section 2

2-1
05162024 RIALTO Water and Wastewater Rate Study Report
Section 2
Revenue Requirement Analysis

2.1 Introduction
To provide for the continued operation of a utility on a sound financial basis, revenues must be sufficient to meet the cash requirements for operation and maintenance (O&M) expense, debt service requirements, debt service coverage requirements, reserves, and cash-funded capital expenditures not financed with debt. The sum of these cost components for a given year is referred to as a utility’s Revenue Requirement.

Historical and budgeted financial and operational data were provided by the City and used by FG Solutions to develop the projected revenue requirement for the five -year study period. The revenue requirement analysis was an iterative process and draft versions were revised based on comments and input provided by City staff. Next, the revenue requirement was compared with the revenues generated by the existing rates to generate additional revenues needed from rate increases. The reserve requirement, described below, is met throughout the five-year projection period. Revenue projections are a critical part of the revenue requirement analysis. The three aspects of revenue projections described in the sections below are non -rate revenues, rate revenues under the current rate schedule, and rate revenues from proposed rate increases.

Key assumptions used in the Revenue Requirement analysis are listed below. Additional assumptions are provided in the Revenue Requirement calculations that comprise Appendix A.

2.2 Overview of Methodology and Key Assumptions
The methodology used to generate the proposed revenue requirement is based on meeting the cash needs of the water and wastewater utilities. It consists of:
• Projecting expenses over the five-year period beginning in FY 24/25 and ending in FY 28/29. The expenses include those in all five Waterfall positions described above and are described below. • Projecting water and wastewater rate revenues under the current rate structure. • Projecting water and wastewater system revenues from sources other than rates . Examples of which are Development Impact Fees (DIF), interest income, delinquent service fees, rental income, and grants. • Projecting the amount of revenue from rate increases.

The most significant assumptions include the following:
• The majority of projected revenues and expenses are based on the draft RWS FY 24/25 Budget. RWS’s FY 24/25 Budget was in turn based on factors including known contractual requirements, projected work needs, and recent historical expenses.
• Most expenses escalated for inflation at 2.5 percent per year. Exceptions include certain contractual payments (such as the RWS Capital Charges) that are not escalated for inflation , and the RUA Lease Payment.
• Electricity expenses are projected to increase at 7% per year for the entirety of the five-year study period, corresponding to the average cost increase over the last six years. • A 0.5% annual system growth rate.
• Water use will remain at levels observed in Calendar Year 2023. 37 Section 2 2024 Water and Wastewater Rate Study – City of Rialto

2-2
05162024 RIALTO Water and Wastewater Rate Study Report

2.3 Water Revenue Requirement

2.3.1 Water System Revenues
Revenue projections are a critical part of the Revenue Requirement analysis. The three aspects of revenue projections described in the sections below are non-rate revenues, rate revenues under the current rate schedule, and rate revenues from proposed rate increases.

2.3.1.1 Non-Rate Revenues
The key sources of water revenues other than rate revenues are predominantly Development Impact Fees (DIF), rents and concession, turn on/turn off fees, and interest income. The City also receives revenues from San Bernardino County for water rights leases and reimbursement for costs incurred by the City.

2.3.1.2 Rate Revenues under Current Rates
Current water r ates are shown in Tabl e 1-1. These rates were used to pr oject the revenues shown in Table 2 -1.

Revenue estimates under current rates shown in Table 2-1 for FY 24/25 through FY 28/29 are projected to remain at FY 24/25 values, after adjusting for the projected 0.5 percent annual system growth rate. FY 24/25 revenues are calculated based on actual Calendar Year 2023 revenues.

Table 2-1. Projected Water Revenues Under Existing Rates

2.3.2 Projected Water System Expenses

2.3.2.1 Projected Waterfall 1 Expenses
Projected Waterfall 1 expenses are shown in Table 2-2. The largest single expense component is the Water Service Fee which is the City’s payment to RWS for the operation and maintenance services they provide. The Service Fee currently has four separate components, and the Concession Agreement specifies the amounts of the Service Fee and how the fee components are escalated for inflation. The Fixed, Routine Repair and Replacement (“R&R”), and Labor Components are escalated for inflation on Janua ry 1 of each year, and the Chemical Component is not escalated for inflation.

Projected
Revenue FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 27/28
Rate Revenues Subject to Rate Increases (1) $12,760,562 $12,799,701 $12,838,841 $12,877,980 $12, 917,119 Development Impact Fees (2) 200,000 200,000 200,000 200,000 200, 000 County Contract - SBCO Water Order 349,264 366,727 385,064 404,317 424, 533 Rents & Concessions 50,000 51,250 52,531 53,845 55, 191 Trustee Water Reserve Interest Income (3) 215,285 215,285 215,285 215,285 215, 285 Turn On/Off 73,000 73,000 73,000 73,000 73, 000
Delinquent Water Service Fees 12,000 12,000 12,000 12,000 12, 000 Grant Revenue (4) 0 0 0 0 0
Miscellaneous Revenues (5) 94,000 96,350 98,759 101,228 103, 758 RUA Investment Income (6) 116,084 72,525 66,072 40,809 31, 595 Total $13,870,196 $13,886,839 $13,941,552 $13,978,463 $14, 032,481 Notes:
(1) FY 24/25 per draft RWS Budget. Increased in subsequent years for system growth. Refer to Section 3 for system growth projections. (2) FY 24/25 per FY 23/24 RUA Budget. Development Impact Fee revenues are deposited into the Trust Water Construction Reserve. (3) 50% of draft RWS FY 24/25 budget. The RWS budget value is reduced to excludes interest income in the Trust Water Construction Reserve and to anticipate future lowering of interest rates. (4) Grant revenues for capital projects are not shown in this table and are considered in developing the capital project funding strategy.

See Table 2-5 for more detail.
(5) FY 24/25 per draft RWS Budget, increased in subsequent years for inflation. Primarily labor reimbursement from San Bernardino County. (6) Interest income is projected to be 1.5% of the previous fiscal year ending fund balance. 38 2024 Water and Wastewater Rate Study – City of Rialto Section 2

2-3
05162024 RIALTO Water and Wastewater Rate Study Report
Table 2-2. Projected Water Waterfall 1 Expenses

Table 2-3 provides more detail on Retained RUA Expenses. Some of the items in Table 2 -3 with the highest cost to the City include:
• Water Purchases. The City purchases water from San Bernardino Valley Municipal Water District (“Valley District”) and the West Valley Water District (“WVWD”). Purchased water costs are established primarily by the terms of agreements with Valley District and WVWD.
• Electricity. Electricity costs are for the City’s wells and booster pump stations. • City Reimbursement (680 Admin). The amounts shown in Table 2-3 pay the portion of the City’s 680 Fund expenses attributed to the water system.
• City Contract. This covers the costs incurred by the City’s General Fund related to the water system. • Perchlorate Treatment. The City contracts with Veolia, outside the scope of services provided in the Concession Agreement, to operate perchlorate treatment systems at the City’s Chino 2 Well . Costs associated with the Combined Remedy are not included in this rate study, as they are entirely reimbursed by third parties.

Table 2-3. Projected RUA Retained Expenses

Projected (1)
FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29
Waterfall 1: Water Service Fee
Fixed, Routine R&R, and Labor Components $6,882,388 $7,054,448 $7,260,809 $7,442,329 $7, 628,387 Chemical Component 89,198 91,428 93,714 96,056 98,458
Waterfall 1: Reimbursements
Insurance Reimbursement 1,028,000 1,053,700 1,080,043 1,107,044 1, 134,720 Independent Engineer 127,000 130,175 133,429 136,765 140,184 Maintenance 300,000 307,500 315,188 323,067 331,144
Waterfall 1: Retained RUA Expenses (2) 5,365,000 5,559,590 5,763,367 5,976,862 6, 200,643 Total, Projected Waterfall 1 Expenses $13,791,586 $14,196,840 $14,646,548 $13,798,473 $13, 798,473 Notes:
(1) Most projected expenses are based on the FY 23/24 Budget and escalated for inflation. See Appendix A for more detail. (2) See Table 2-3 and Appendix A for more detail.

Projected (1)
Retained Expense FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 Electricity (2) $1,372,000 $1,468,040 $1,570,803 $1,680,759 $1,798,412 Perchlorate, Not Combined Remedy (3) 78,000 79,950 81,949 83,997 86,097 City Contract (Transfer to General Fund) (4) 505,000 517,625 530,566 543,830 557,426 Water Purchase, Baseline Feeder (5) 642,000 658,050 674,501 691,364 708,648 WVWD Purchases (5) 1,086,000 1,113,150 1,140,979 1,169,503 1,198,741 IT Services (5) 73,000 74,825 76,696 78,613 80,578
City Reimbursement (680 Admin) (5) 828,000 848,700 869,918 891,665 913,957 Consulting Fees: Engineering (5) 300,000 307,500 315,188 323,067 331,144 Miscellaneous Fees and Permits (5) 430,000 440,750 451,769 463,063 474,640 Rebates 51,000 51,000 51,000 51,000 51,000
Total $5,365,000 $5,559,590 $5,763,367 $5,976,862 $6,200,643 Notes:
(1) Most projected expenses are based on the draft FY 24/25 RWS Budget and escalated for inflation. See Appendix A for more detail. (2) Increases with the rate of electricity inflation. Electricity inflation of 7 percent is the six-year 2017 - 2023 average annual Southern California Edison commercial bill increase for a sample of Rialto's wells, rounded to the nearest 1 percent. (3) Resin replacement for perchlorate treatment not covered by the Combined Remedy. Cost increases with inflation. (4) For services provided by the City's General Fund. Projected to increase with inflation. (5) Projected to increase with inflation
39 Section 2 2024 Water and Wastewater Rate Study – City of Rialto

2-4
05162024 RIALTO Water and Wastewater Rate Study Report

2.3.2.2 Projected Waterfall 2 Expenses
Waterfall 2 expenses are the OR&R payments. The amount of the OR&R payment is mutually agreed to by the City and RWS. It was established initially in the Concession Agreement and has been adjusted from time to time. The estimated annual OR&R is $680,000 in FY 24/25 and is adjusted for inflation in subsequent years.

2.3.2.3 Projected Waterfall 3 Expenses
Waterfall 3 expenses are the RWS Capital Charges. The amount of the Capital Charges is $2,900,000 per year. Capital Charges are not adjusted for inflation.

The City is planning on completing additional capital improvements in the next five years. As described below in Table 2-4, the City is planning on using a combination of grants, DIFs, and debt to fund these capital improvements.

Future debt service payments are also a Waterfall 3 expense.

2.3.2.4 Projected Waterfall 4 Expenses
Waterfall 4 expenses are deposits into the trust to meet required reserve account balances. The Concession Agreement established a Water Reserve Account. The funds in this account are restricted and cannot be used to pay operating or capital expenses. According to the Concession Agreement, the account must contain 25 percent of the sum of Waterfall 1 through Waterfall 3 expenses. As these expenses increase each year due to factors such as inflation or new debt service, the required balance in the Water Reserve Account must also increase. This Rate Study contains projected annual deposits into the Water Reserve Account to reach the minimum balance requirement.

2.3.2.5 Projected Waterfall 5 Expenses
Waterfall 5 expenses are the RUA Lease Payment, which for the purposes of this analysis is projected to remain at $400,000 per year through FY 28/29.

2.3.2.6 Expenses Outside of the Waterfall
In FY 23/24, RUA borrowed $5.3 million from the City’s General Fund. The purpose of this Interfund Loan is to provide revenue to meet the RWS Coverage Criteria described below in Section 2.3.6. The interest rate on this Interfund Loan is 4%, and the City intends to repay this loan by FY 32/33. Appendix A Table 5 outlines the repayment plan for this loan, showing projected principal and interest payments. Interfund Loan repayment will begin in FY 26/27.

A second Interfund Loan of $2 million is anticipated in FY 25/26. The interest rate used in this Rate Study is 4 percent, and the loan would also be repaid by FY 32/33.

2.3.2.7 Projected Capital Expenses
Table 2-4 shows the projected Capital Improvement Plan through FY 2 8/29. The capital improvements shown in Table 2-4 represent the highest priority capital projects, prioritized by City staff from a longer list of potential capital projects developed by RWS. The City has been successful in pursuing grant funding, which reduces the financial impact of these projects to the City’s ratepayers. The total cost of the Capital Improvement Plan is $20.9 million, of which $12 million (or 57 percent) is grant funded.

The City anticipates using $2.9 million of DIF revenues held in the Trust Accounts to pay for capital projects, and the remainder will be debt financed. The specific type of loan to be used to fund the Capital Improvement Plan has not yet been identified, though the City is pursuing low- interest Water Infrastructure Finance and Innovation Act (“WIFIA”) loans. For the purposes of this Rate Study, the City has provided direction to assume a 30-year loan at an interest rate of 6%.

40 2024 Water and Wastewater Rate Study – City of Rialto Section 2

2-5
05162024 RIALTO Water and Wastewater Rate Study Report
Table 2-4. FY 24/25 – FY 28/29 Water Capital Improvement Plan

2.3.3 Projected Reserves
There are three different types of reserves related to Rialto’s water utility, which are described below.

1. RUA Reserves. These are reserves held by the City, not held by the Trustee, and recorded in the City’s 670 Fund. RUA reserves are generally unrestricted but must be sufficient to cover variations in receivables and payables over the course of the year. For example, many water utility expenses (such as RWS Service Fees and Capital Charges) are the same every month, but water system revenues increase during the summer months when water consumption is highest. As of the second quarter of 2023, RUA held approximately $1.6 million in water reserves.

2. Trust Reserves. These reserves are also recorded in the City’s 670 Fund (in account 670 -108-0000-0000) but are held by the Trustee. These reserves are restricted for designated uses specified in the Concession Agreement.

3. DIF Reserves. DIF revenues are deposited into a dedicated Trust Accounts (the Water Construction Reserve) as they are received. The City anticipates using approximately $2.9 million in DIF reserves for capital improvements.

The City recognizes that the RUA water reserves are low . Through the proposed water rate increases , the City is implementing a policy that will increase the RUA water reserves over the long-term. The proposed water rates were developed to phase -in collection of depreciation expense through rates. From an accounting perspective, deprecation is considered a “non- cash” expense – meaning that there is no cash expenditure associated with the collection of depreciation expense through rates. Instead, collecting depreciation expense would rebuild RUA water reserves over time.

The water rate revenues that would cover depreciation expense would be returned to RUA from the Trust Accounts at the end of each fiscal year as “excess cash” (See Figure 1-1). Collection of depreciation expense through rates will be phased-in over time, beginning FY 28/29. Table 2-5 shows projected depreciation expense through FY 28/29.

Table 2-5. Projected Water Depreciation Expense

2.3.4 Projected RUA Operating Statement
Table 2-6 is a projected Operating Statement from the perspective of RUA. Because revenues go directly into the trust, RUA’s sources of funds are the funds from the Trustee to cover the RUA Lease payment plus any additional Funding Sources
Project Grants DIF RUA Reserves Debt T otal Cost
Watermain Replacement - Etiwanda $2,900,000 $3,800,000 $6,700,000 AMI Project 8,000,000 8,000,000
W-WW Security Upgrade Project 2,000,000 2,000,000
Arsenic Treatment Well 3A 2,000,000 4,200,000
Total $12,000,000 $2,900,000 $0 $3,800,000 $20, 900,000 Projected
FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29
Depreciation, Existing Assets (1) $888,100 $888,100 $888,100 $888,100 $888,100 Estimated Depreciation, Capital Expenditures (2) 0 222,000 222,000 222,000 222,000 Total Estimated Deprecation Expense $888,100 $1,110,100 $1,110,100 $1,110,100 $1,110,100 Notes:
(1) Source: FY 23/24 RUA budget.
(2) Based on proposed CIP, using a 50-year life for distribution facilities and a 25-year life for treatment facilities. Depreciation expense is also based on the current CIP schedule and cost. After the projects are completed, City staff will assign useflul lives and calculate depreciation expense corresponding to the actual project cost and construction schedule. 41 Section 2 2024 Water and Wastewater Rate Study – City of Rialto

2-6
05162024 RIALTO Water and Wastewater Rate Study Report
funds left over after other expenses have been paid from the trust and the trust reserve requirements are met.

Additionally, RUA earns interest income on RUA’s reserves.

Table 2-6. Projected RUA Operating Statement, Water

2.3.5 Projected Operating Statement for Water System Trust Accounts Table 2-7 shows the projected revenues for the water system trust accounts through FY 28/29. The first line of Table 2-7 is water sales under existing rates, and the second line is water sales under the proposed rate increases.

Other sources of funds are the non-rate revenues shown in Table 2-1 and Revenue Stabilization from RUA reserves required to meet the Concession Agreement Coverage Requirement. Projected Revenue Stabilization payments shown in Table 2-7 decrease over time, and are projected to be $300,000 in FY 27/28, $0 by FY 28/29.

Table 2-7. Projected Sources of Funds for the Water System Trust Accounts

Table 2-8 shows the projected uses of funds. The individual lines in Table 2-8 are shown in more detail earlier in this section.

Projected
FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29
RUA Sources of Funds
Beginning Cash Balance (1) $7,738,945 $4,834,993 $4,404,805 $2,720,590 $2,106,332 From Trustee: Funds Dropping Out of Waterfall
Funds to Cover Annual Lease Payment (2) 400,000 400,000 400,000 400,000 400,000 Transfers from Waterfall (3) 979,964 297,287 349,713 544,933 1,047,254 Other Revenues
Interfund Loans 0 2,000,000 0 0 0
RUA Investment Income (4) 116,084 72,525 66,072 40,809 31,595 Total Revenues $1,496,048 $2,769,812 $815,786 $985,742 $1,478,849 RUA Uses of Funds
Lease Payments (2) 400,000 400,000 400,000 400,000 400,000 Repayment of Interfund Loans 0 0 700,000 900,000 1,300,000 Revenue Stabilization From RUA Reserves (5) 4,000,000 2,800,000 1,400,000 300,000 0 Total Expenses $4,400,000 $3,200,000 $2,500,000 $1,600,000 $1,700,000 Ending RUA Cash Balance $4,834,993 $4,404,805 $2,720,590 $2,106,332 $1,885,181 Notes:
(1) FY 24/25 beginning balance calculated from actual 670 Fund Cash in Bank balance as of 5/10/23, adjusted for projected FY 23/24 revenues and expenses, plus the FY 23/24 $5.3M Interfund Loan. (2) FY 23/24 per RUA FY 23/24 Budget, and projected to remain at this value through the 10-year planning period. (3) This transfer is intended to cover depreciation expense, and collection of deprecation expense through rates is being phased in over time.
(4) FY 23/24 Interfund Loan of $5.3 million not shown in this table. Interfund Loans are planned to be repaid by FY 32/33. (5) FY 23/24 interest income from the FY 23/24 RUA budget. In subsequent years, interest income is projected to be 1.5% of the previous fiscal year ending fund balance.
(6) If needed, pre-existing reserves are used to provide supplemental revenue stabilization to meet the RWS coverage requirement.

Projected
FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29
Water Sales (Existing Rates) $12,760,562 $12,799,701 $12,838,841 $12,877,980 $12,917,119 Water Sales (Proposed Rate Increases) 957,042 3,023,929 4,819,701 6,251,384 7,805,383 Other Revenues Deposited into Trust Accounts 793,549 814,613 836,639 859,674 883,767 Revenue Stabilization from RWS Reserves 4,000,000 2,800,000 1,400,000 300,000 0 Total $18,511,154 $19,438,243 $19,895,181 $20,289,038 $21,606,269 42 2024 Water and Wastewater Rate Study – City of Rialto Section 2

2-7
05162024 RIALTO Water and Wastewater Rate Study Report
Table 2-8. Projected Uses of Funds for the Water System Trust Accounts

2.3.6 Financial Performance Criteria
There are three separate financial performance criteria that define water rates through FY 28/29 and influence the financial performance of the water utility.

1. Trust Water Account Reserve Balance. The Concession Agreement established a Water Reserve Account in the trust. The minimum balance in this account must be 25% of the sum of Waterfall 1 through 3 expenses.

2. RUA Reserve Balance. Neither the City nor RUA have specific reserve account requirements for a minimum balance in the RUA 670 Fund. As described above, the City is phasing in the collection of depreciation expense through rates that will result, in the long-term, in a larger RUA water reserve balance.

3. RWS Coverage Criteria. The Concession Agreement establishes a Coverage Criteria that is shown in Table 2-9.
a. The Coverage Criteria is based on the total water system revenues excluding DIF revenues plus Revenue Stabilization payments, less Waterfall 1 and Waterfall 2 expenses and less Capital Charges including future debt service payments. This total is referred to in the Concession Agreement as “Free Cash Flow”. The Concession Agreement requires that Free Cash Flow exceed 17.7 percent of the total Capital Charges including future debt service payments). b. The City is anticipating future debt service to pay for the Capital Improvement Plan, as described above in Table 2-4. Lenders are also expected to have a debt coverage requirement, but that coverage requirement is not yet known. For the purposes of this Rate Study, the City has directed FG Solutions to use a 25 percent coverage factor to calculate the proposed water rates.

Projected
FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29
Waterfall 1: Water Service Fee (1)
Fixed, Routine R&R, and Labor Components $6,882,388 $7,054,448 $7,260,809 $7,442,329 $7,628,387 Chemical Component 89,198 91,428 93,714 96,056 98,458
Waterfall 1: Reimbursements (1)
Insurance Reimbursement 1,028,000 1,053,700 1,080,043 1,107,044 1,134,720 Independent Engineer 127,000 130,175 133,429 136,765 140,184 Maintenance 300,000 307,500 315,188 323,067 331,144
Waterfall 1: Retained RUA Expenses (2) 5,365,000 5,559,590 5,763,367 5,976,862 6,200,643 Waterfall 2: Annual Operating R&R Payment (3) 680,000 697,000 714,425 732,286 750,593 Waterfall 3: Capital Charges 2,900,000 2,900,000 2,900,000 2,900,000 2,900,000 Waterfall 3: New Debt Service (4) 0 455,708 455,708 455,708 455,708 Waterfall 4: Water Reserve Account Deposits (5) 221,141 219,491 116,783 113,359 117,430 Waterfall 5: RUA Lease Payment 400,000 400,000 400,000 400,000 400,000 Transfer to RUA (6) 297,287 349,713 544,933 492,204 1,331,573 Total Uses of Funds $18,290,013 $19,218,752 $19,778,397 $20,175,679 $21,488,839 Notes:
(1) See Table 2-2.
(2) See Table 2-3.
(3) FY 24/25 from draft FY 24/25 RWS Budget. Projected to increase with inflation in subsequent years. (4) Based on 30-year debt at 6% interest, per City's Financial Advisor, 10/05/23. Includes approximately capitalized bond reserve and costs of issuance.
(5) This row represents the amount of contributions from RUA to maintain the minimum required balance in the Water Reserve Accou held in trust.
(6) This transfer is intended to cover depreciation expense and the Interfund Loan. Collection of depreciation expense through rates is being phased in over time. This number differs from what is shown in Table 2-6 because some transfers out of the waterfall are recorded on the last day of the fiscal year; they appear in RUA accounts in the subsequent fiscal year. 43 Section 2 2024 Water and Wastewater Rate Study – City of Rialto

2-8
05162024 RIALTO Water and Wastewater Rate Study Report
Table 2-9. Projected Water Coverage Calculation

2.4 Wastewater Revenue Requirement

2.4.1 Wastewater System Revenues
The three aspects of wastewater revenue projections described in the sections below are non -rate revenues, rate revenues under the current rate schedule, and rate revenues from proposed rate increases.

2.4.1.1 Non-Rate Revenues
The key sources of wastewater revenues other than rate revenues are predominately DIFs, delinquent sewer service fees, interest income, and effluent sales to the Inland Empire Utilities Agency (IEUA). Because of uncertainty associated with lease revenue from Anaergia, receipt of this lease revenue is not included in the Revenue Requirement projections.

2.4.1.2 Rate Revenues Under Current Rates
Current wastewater rates are shown in Table 1-2. Revenue estimates under current rates shown in Table 2-10 for FY 24/25 through FY 28/29 are based on CY 2023 actual revenues adjusted for annual system growth of 0.5 percent.

Table 2-10. Projected Wastewater Revenues Under Existing Rates

Projected
FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29
Revenues Going into Trust Excluding DIF (1) $14,295,868 $16,422,958 $18,279,895 $19, 773,753 $21,390,984 Plus Revenue Stabilization 4,000,000 2,800,000 1,400,000 300, 000 0 Less Waterfall 1-2 ($14,471,586) ($14,893,840) ($15,360,973) ($15,814,409) ($16,284,128) Balance, Available for Capital Charge $3,824,282 $4,329,117 $4,318,922 $4, 259,344 $5,106,856 Balance, Available for Capital Charge $3,824,282 $4,329,117 $4,318,922 $4, 259,344 $5,106,856 Less Capital Charges and Parity Debt Service ($2,900,000) ($3,355,708) ($3,355,708) ($3,355,708) ($3,355,708) Free Cash Flow Before Lease Payment $924,282 $973,409 $963,214 $903,636 $1,751,148 Ratio (Free Cash Flow Divided by Capital Charges
and Parity Debt Service) (2)

31.9% 29.0% 28.7% 26.9% 52.2%
Notes
(1) Excludes Revenue Stabilization, interest income on RUA reserves, and interest income within the trust accounts. (2) The Concession Agreement requires coverage of at least 17.7%. With the addition of new parity debt, City staff (per 8/14/23 email) has provided direction to use 25% coverage for the purposes of this Rate Study.

Projected
Revenue FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29
Sewer Service Fees (1) $26,426,992 $26,524,381 $26,621,771 $26, 719,160 $26,816,550 Extraterritorial Sewer Service Fees (1) 1,950,000 1,950,000 1,950,000 1, 950,000 1,950,000 Development Impact Fees (2) 350,000 350,000 350,000 350, 000 350,000 Fines/Forfeitures/Penalties (3) 0 0 0 0 0
Rents and Concessions (Anaergia Lease) (4) 279,000 279,000 279,000 279, 000 279,000 Trustee Wastewater Reserve Interest Income (5) 269,500 269,500 269,500 269, 500 269,500 Delinquent Sewer Service Fees (3) 15,315 15,315 15,315 15, 315 15,315 Grants (6) 0 0 0 0 0
Effluent Sale to IEUA (7) 144,375 144,375 144,375 144, 375 0 RUA Investment Income (8) 269,642 258,811 103,809 91, 986 99,188 Total $29,704,823 $29,791,382 $29,733,769 $29, 819,336 $29,779,553 44 2024 Water and Wastewater Rate Study – City of Rialto Section 2

2-9
05162024 RIALTO Water and Wastewater Rate Study Report

2.4.2 Projected Wastewater Expenses

2.4.2.1 Projected Waterfall 1 Expenses
Projected Waterfall 1 expenses are shown in Table 2- 11. The largest single expense component is the Wastewater Service Fee which is the City’s payment to RWS for the operation and maintenance services they provide. The Service Fee currently has four separate components, and the Concession Agreement specifies the amounts of the Service Fee and how the fee components are escalated for inflation. The Fixed, Routine Repair and Replacement (“R&R”), and Labor Components are escalated for inflation on Janua ry 1 of each year, and the Chemical Component is not escalated for inflation.

Table 2-11. Projected Wastewater Waterfall 1 Expenses

Table 2-12 provides more detail on Retained RUA Expenses. Some of the items in Table 2 -12 with the highest cost to the City include:
• City Reimbursement (680 Admin). The amounts shown in Table 2-2 pay the portion of the City’s 680 Fund expenses attributed to the wastewater system.
• City Contract. This covers the costs incurred by the City’s General Fund related to the wastewater system. • Electricity. This covers electricity costs at the Wastewater Treatment Plant and sewage lift stations in the collection system.
• Biosolids. This covers the costs for disposal of biosolids generated at the Wastewater Treatment Plant.

See Table 2-14 for more detail.
(7) Source: City staff, 7/12/23. 3,500 AFY @ $275/AF in FY 23/24 dollars. $/AF adjusted with inflation, and payment starts 1/1/29.

Prepayment of 15% of total revenues starting FY 23/24.
(8) Interest income is projected to be 1.5% of the previous fiscal year ending fund balance.

Projected (1)
FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29
Waterfall 1: Wastewater Service Fee
Fixed, Routine R&R, and Labor Components $7,120,579 $7,359,148 $7,543,127 $7,731,705 $7,924,998 Chemical Component 1,350,000 1,383,750 1,418,344 1,453,802 1,490,147 Waterfall 1: Reimbursements
Insurance Reimbursement 1,038,000 1,063,950 1,090,549 1,117,812 1,145,758 Independent Engineer 118,000 120,950 123,974 127,073 130,250 Waterfall 1: Retained RUA Expenses (2) 5,692,073 6,038,375 6,247,114 6,465,117 6,692,897 Total, Projected Waterfall 1 Expenses $15,318,652 $15,966,173 $16,423,108 $13,798,473 $13,798,473 Notes:
(1) Most projected expenses are based on the draft RWS FY 24/25 Budget and escalated for inflation. See Appendix A for more detail. (2) See Table 2-12 and Appendix A for more detail.
45 Section 2 2024 Water and Wastewater Rate Study – City of Rialto

2-10
05162024 RIALTO Water and Wastewater Rate Study Report
Table 2-12. Projected RUA Retained Expenses

2.4.2.2 Projected Waterfall 2 Expenses
Waterfall 2 expenses are the OR&R payments. The amount of the OR&R payment is mutually agreed to by the City and RWS. It was established initially in the Concession Agreement and has been adjusted from time to time. The estimated annual OR&R is $930,000 in FY 24/25, with adjustments for inflation in subsequent years.

2.4.2.3 Projected Waterfall 3 Expenses
Waterfall 3 expenses are the RWS Capital Charges. The amount of the Capital Charges is $12,682,000 per year, and Capital Charges are not adjusted for inflation.

The City is planning on completing additional capital improvements in the next five years. As described below in Table 2-13, the City is planning on using a combination of grants, DIFs, RUA wastewater reserves, and debt to fund these capital improvements. Future debt service payments are also a Waterfall 3 expense.

2.4.2.4 Projected Waterfall 4 Expenses
Waterfall 4 expenses are deposits into the trust to meet required reserve account balances. The Concession Agreement established a Wastewater Reserve Account. The funds in this account are restricted and can’t be used to pay operating or capital expenses. According to the Concession Agreement, the account must contain 25 percent of the sum of Waterfall 1 through Waterfall 3 expenses. As these expenses increase each year due to factors such as inflation or new debt service, the required balance in the Wastewater Reserve Account must also increase. This Rate Study contains projected annual deposits into the W astewater Reserve Account to reach the minimum balance requirement.

2.4.2.5 Projected Waterfall 5 Expenses
Waterfall 5 expenses are the RUA Lease Payment, which for the purposes of this analysis is projected to remain at $1,600,000 per year through FY 28/29
Projected (1)
Retained Expense FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 Electricity $1,200,000 $1,284,000 $1,373,880 $1,470,052 $1,572,955 Gas 104,000 106,600 109,265 111,997 114,797
Contracted Services
City Contract (Transfer to General Fund) 710,000 727,750 745,944 764,592 783,707 Biosolids 1,194,000 1,223,850 1,254,446 1,285,807 1,317,953 City Reimbursement (680 Admin) 1,112,000 1,139,800 1,168,295 1,197,502 1,227,440 Consulting Services 500,000 512,500 525,313 538,445 551,906 IT Services: Tyler and Paymentus 136,000 139,400 142,885 146,457 150,119 Other Services and Supplies
Rialto Habitat Nature Center O&M 0 150,000 153,750 157,594 161,534 Other Retained Services 500,000 512,500 525,313 538,445 551,906 Inland Empire Brine Line Fees (SBVMWD) 92,490 94,802 97,172 99,602 102,092 Wastewater Services (Colton) 9,583 9,823 10,068 10,320 10,578 MIPP Services (Veolia) 134,000 137,350 140,784 144,303 147,911 Total $5,692,073 $6,038,375 $6,247,114 $6,465,117 $6,692,897 Notes:
(1) Most retained expenses are based on the draft RWS FY 24/25 Budget and escalated for inflation. See Appendix A for more detail. (2) Increases with the rate of electricity inflation. Electricity inflation of 7 percent is the six-year 2017 - 2023 average annual Southern California Edison commercial bill increase for a sample of Rialto's wells, rounded to the nearest 1 percent. (3) For services provided by the City's General Fund. Projected to increase with inflation. (4) Projected to increase with inflation.
(5) Estimated by City staff, with expenses beginning FY 25/26. Projected to increase with inflation in subsequent years. Only includes O&M expenses to be funded by RUA and does not include O&M expenses funded by other City departments. 46 2024 Water and Wastewater Rate Study – City of Rialto Section 2

2-11
05162024 RIALTO Water and Wastewater Rate Study Report

2.4.2.6 Expenses Outside the Waterfall
In FY 28/29, the City anticipates start- up of a well that will pump recycled water to Inland Empire Utilities Agency (IEUA). The well is a component of the Recycled Water Purchase Agreement between the City and IEUA. The City will operate and pay the O&M expense for the well, concurrent with recycled water sales to IEUA. The City’s O&M expenses are expected to consist of power, maintenance, and depreciation.

2.4.2.7 Projected Capital Expenses
Table 2-13 shows the projected Capital Improvement Plan through FY 2 8/29. The capital improvements shown in Table 2-13 represent the highest priority capital projects, prioritized by City staff from a longer list of potential capital projects developed by RWS. The City has been successful in pursuing grant funding, which reduces the financial impact of these projects to the City’s ratepayers. The total cost of the Capital Improvement Plan is $58.75 million, of which $7.25 million is grant funded.

The City anticipates using $ 7.4 million of DIF revenues held in the Trust Accounts to pay for capital projects and approximately $9.55 million from RUA wastewater reserves. The remainder will be debt financed. The specific type of loan to be used to fund the Capital Improvement Plan has not yet been identified, though the City is pursuing low- interest Water Infrastructure Finance and Innovation Act (“WIFIA”) loans. For the purposes of this Rate Study, the City has provided direction to assume a 30-year loan at an interest rate of 6%.

Table 2-13. FY 24/25 - FY 28/29 Wastewater Capital Improvement Plan

2.4.3 Projected Reserves
There are three different types of reserves related to Rialto’s wastewater utility, which are described below.

1. RUA Reserves. These are reserves held by the City, not held by the Trustee, and recorded in the City’s 660 Fund. RUA reserves are generally unrestricted but must be sufficient to cover variations in receivables and payables over the course of the year. As of June 30 2023, RUA held approximately $14.9 million in water reserves. An additional $2.8 million of unrestricted Wastewater reserves is currently held in the Concession Agreement Trust Accounts, that could be transferred to RUA.

2. Trust Reserves. These reserves are also recorded in the City’s 6 60 Fund (in account 6 60-108-0000-0000) but are held by the Trustee. These reserves are restricted for designated uses specified in the Concession Agreement.

2-12
05162024 RIALTO Water and Wastewater Rate Study Report

3. DIF Reserves. DIF revenues are deposited into a dedicated Trust Accounts (the Water Construction Reserve) as they are received. The City anticipates using approximately $ 7.4 million in DIF reserves for capital improvements.

The City recognizes that the need to maintain RUA wastewater reserves and develop the ability to pay a greater percentage of future capital improvements on a pay -as-you-go basis from reserves. Through the proposed wastewater rate increases the City is implementing a policy that will increase the RUA wastewater reserves over the long-term. The proposed wastewater rates were developed to phase-in collection of depreciation expense through rates. From an accounting perspective, deprecation is considered a “non-cash” expense – meaning that there is no cash expenditure associated with the collection of deprec iation expense through rates. Instead, collecting depreciation expense would build RUA water reserves over time.

The wastewater rate revenues that would cover depreciation expense would be returned to RUA from the Trust Accounts at the end of each fiscal year as “excess cash” (See Figure 1-1). Collection of depreciation expense through rates will be phased-in over time. Table 2-14 shows projected depreciation expense through FY 28/29. The estimated depreciation expense associated with the wastewater capital improvements will be calculated by the City in the future after the final cost of the improvements is known.

Table 2-14. Projected Wastewater Depreciation Expense

2.4.4 Projected RUA Operating Statement
Table 2-15 is a projected Operating Statement from the perspective of RUA. Because revenues go directly into the trust, RUA’s sources of funds are the funds from the Trustee to cover the RUA Lease payment plus any additional funds left over after other expenses have been paid from the trust and the trust reserve requirements are met.

Additionally, RUA earns interest income on RUA’s reserves.

Projected
FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29
Depreciation, Existing Assets (1) $2,306,390 $2,306,390 $2,306,390 $2,306,390 $2,306,390 Estimated Depreciation, Capital Expenditures
Sewer Main Projects (2) 140,000 140,000 140,000 140,000 WWTP and Lift Station Projects, Except Biosolids (2) 696,000 696,000 696,000 696,000 WWTP Biosolids (2) 660,000 660,000 660,000 660,000
Total Estimated Deprecation Expense $2,306,390 $3,802,390 $3,802,390 $3,802,390 $3,802,390 Notes:
(1) Source: FY 23/24 RUA budget.
(2) Based on proposed CIP, using a 50-year life for sewer main projects, a 25-year life for treatment facilities, and a 40-year life for bioso facilities. Depreciation expense is also based on the current CIP schedule and cost. After the projects are completed, City staff will assig useful lives and calculate depreciation expense corresponding to the actual project cost and construction schedule. 48 2024 Water and Wastewater Rate Study – City of Rialto Section 2

2-13
05162024 RIALTO Water and Wastewater Rate Study Report
Table 2-15. Projected RUA Wastewater Fund Operating Statement

2.4.5 Projected Operating Statement for Wastewater System Trust Accounts Table 2-16 shows the projected revenues for the wastewater system trust accounts through FY 28/29. The first line of Table 2-16 is wastewater sales under existing rates, and the second line is wastewater sales under the proposed rate increases. In Table 2-16, wastewater sales revenues includes revenues from extraterritorial customers.

Other sources of funds are the non-rate revenues shown in Table 2-10 and Revenue Stabilization from RUA reserves required to meet the Concession Agreement Coverage Requirement. Projected Revenue Stabilization payments shown in Table 2 -16 increase in FY 26/27 as the new debt service associated with the Capital Improvement Plan begins.

Table 2-16. Projected Sources of Funds for the Wastewater System Trust Accounts

Table 2-17 shows the projected uses of funds. The individual lines in Table 2-17 are shown in more detail earlier in this section.

Projected
FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29
RUA Sources of Funds
Beginning Cash Balance (1) $17,976,143 $17,254,097 $6,920,599 $6,132,398 $6,612,549 From Trustee: Funds Dropping Out of Waterfall
Funds to Cover Annual Lease Payment (2) 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 Transfers from Waterfall (3) 1,008,312 953,690 2,707,990 2,388,165 3,673,687 Other Revenues
RUA Investment Income (4) 269,642 258,811 103,809 91,986 99,188 Total Revenues $2,877,954 $2,812,502 $4,411,799 $4,080,151 $5,372,876 RUA Uses of Funds
Lease Payments (2) $1,600,000 $1,600,000 $1,600,000 $1,600,000 $1,600,000 Use of Reserves for Capital Projects 0 9,546,000 0 0 0
RUA Expenses Outside Waterfall: IEUA Well (5) 0 0 0 0 357,500 Revenue Stabilization From RUA Reserves (6) 2,000,000 2,000,000 3,600,000 2,000,000 500,000 Total Expenses $3,600,000 $13,146,000 $5,200,000 $3,600,000 $2,457,500 Ending RUA Cash Balance $17,254,097 $6,920,599 $6,132,398 $6,612,549 $9,527,925 Notes:
(1) FY 23/24 Source: City staff, 5/10/23. Fund balance shown is 660 Fund Cash in Bank balance as of 5/10/23. (2) FY 23/24 per RUA FY 23/24 Budget, and projected to remain at this value through the Rate Study planning period. (3) This transfer is intended to cover depreciation expense, and collection of deprecation expense through rates is being phased in over time.

The drop in the transfer from FY 25/26 to FY 26/27 is to meet cash flow requirements as the projected new debt service payments are required. By FY 30/31, the transfer is sufficient to cover depreciation expense. (4) FY 23/24 interest income from the FY 23/24 RUA budget. In subsequent years, interest income is projected to be 1.5% of the previous fiscal year ending fund balance.
(5) Beginning in FY 28/29, the City anticipates the start-up of a well that will deliver water to IEUA. The City is responsible for the O&M expenses of this well, in conjunction with revenues from recycled water sales to IEUA. See Appendix Table B-11 for more detail. (6) If needed, pre-existing reserves are used to provide supplemental revenue stabilization to meet the RWS coverage requirement.

Projected
FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29
Sewer Sales Fees (Existing Rates) (1) $28,376,992 $28,474,381 $28,571,771 $28,669,160 $28,766,550 Sewer Sales Fees (Proposed Rate Increases) 851,000 2,613,000 4,494,000 6,500,000 8,641,000 Other Revenues Deposited into Trust Accounts 793,549 814,613 836,639 859,674 883,767 Revenue Stabilization from RWS Reserves 2,000,000 2,000,000 3,600,000 2,000,000 500,000 Total $32,021,541 $33,901,994 $37,502,410 $38,028,835 $38,791,317 Notes:
(1) Includes Extraterritorial Sewer Service Fees.
49 Section 2 2024 Water and Wastewater Rate Study – City of Rialto

2-14
05162024 RIALTO Water and Wastewater Rate Study Report
Table 2-17. Projected Uses of Funds for the Wastewater System Trust Accounts

2.4.6 Financial Performance Criteria
There are three separate financial performance criteria that define wastewater rates through FY 28/29 and influence the financial performance of the water utility.

1. Trust Water Account Reserve Balance. The Concession Agreement established a W astewater Reserve Account in the trust. The minimum balance in this account must be 25% of the sum of Waterfall 1 through 3 expenses.

2. RUA Reserve Balance. Neither the City nor RUA have specific reserve account requirements for a minimum balance in the RUA 6 60 Fund. As described above, the City is phasing in the collection of depreciation expense through rates that will result, in the long -term, in a larger RUA w astewater reserve balance and less reliance on debt service to fund future capital improvements.

3. RWS Coverage Criteria. The Concession Agreement establishes a Coverage Criteria that is shown in Table 2-

18. a. The Coverage Criteria is based on the total water system revenues excluding DIF revenues plus Revenue Stabilization payments, less Waterfall 1 and Waterfall 2 expenses and less Capital Charges including future debt service payments. This total is referred to in the Concession Agreement as “Free Cash Flow”. The Concession Agreement requires that Free Cash Flow exceed 15.0 percent of the total Capital Charges including future debt service payments). b. The City is anticipating future debt service to pay for the Capital Improvement Plan, as described above in Table 2 -13. Lenders are expected to also have a debt coverage requirement, but that coverage requirement is not yet known. For the purposes of this Rate Study, the City has directed FG Solutions to use a 25 percent coverage factor after issuance of new debt to calculate the proposed wastewater rates.

Projected
FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29
Waterfall 1: Wastewater Service Fee (1)
Fixed, Routine R&R, and Labor Components $7,120,579 $7,359,148 $7,543,127 $7,731,705 $7, 924,998 Chemical Component 1,350,000 1,383,750 1,418,344 1,453,802 1, 490,147 Waterfall 1: Reimbursements (1)
Insurance Reimbursement 1,038,000 1,063,950 1,090,549 1,117,812 1, 145,758 Independent Engineer 118,000 120,950 123,974 127,073 130,250 Waterfall 1: Retained RUA Expenses (2) 5,692,073 6,038,375 6,247,114 6,465,117 6, 692,897 Waterfall 2: Annual Operating R&R Payment (3) 930,000 953,250 977,081 1,001,508 1, 026,546 Waterfall 3: Capital Charges 12,682,000 12,682,000 12,682,000 12,682,000 12, 682,000 Waterfall 3: New Debt Service (4) 0 0 2,589,940 2,589,940 2, 589,940 Waterfall 4: Water Reserve Account Deposits (5) 456,159 169,568 769,598 126,177 130,414 Waterfall 5: RUA Lease Payment 1,600,000 1,600,000 1,600,000 1,600,000 1, 600,000 Transfer to RUA (6) 193,212 1,947,512 1,247,448 2,532,970 2, 596,858 Total Uses of Funds $31,480,023 $33,626,003 $36,604,362 $37,751,173 $38, 340,951 Notes:
(1) See Appendix A for more detail.
(2) See Table 2-12.
(3) FY 24/25 from draft RWS FY 24/25 budget. Projected to increase with inflation in subsequent years. (4) Based on 30-year debt at 6% interest, per City's Financial Advisor, 10/05/23. Includes a capitalized bond reserve and costs of issuance (5) This row represents the amount of contributions from RUA to maintain the minimum required balance in the Wastewater Reserve Account held in trust.
(6) This transfer is intended to cover depreciation expense, and collection of depreciation expense through rates is being phased in over time. The drop in the transfer from FY 25/26 to FY 26/27 is to meet cash flow requirements as the projected new debt service payments are required. By FY 30/31, the transfer is sufficient to cover depreciation expense. This number differs from what is shown in Table 2-15 because some transfers out of the waterfall are recorded on the last day of the fiscal year; they appear in RUA accounts in the subsequent fiscal year.
50 2024 Water and Wastewater Rate Study – City of Rialto Section 2

2-15
05162024 RIALTO Water and Wastewater Rate Study Report
Table 2-18. Projected Wastewater Coverage Calculation

Projected
FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29
Revenues Going into Trust Excluding DIF (1) $29,522,306 $31,381,696 $33,360,085 $35,463,475 $37,701,865 Plus Revenue Stabilization 2,000,000 2,000,000 3,600,000 2,000,000 500,000 Less Waterfall 1-2 ($16,548,652) ($17,226,923) ($17,715,376) ($18,220,085) ($18,741,740) Balance, Available for Capital Charge $14,973,654 $16,154,773 $19,244,709 $19,243,390 $19,460,125 Balance, Available for Capital Charge $14,973,654 $16,154,773 $19,244,709 $19,243,390 $19,460,125 Less Capital Charges and Parity Debt Service ($12,682,000) ($12,682,000) ($15,271,940) ($15,271,940) ($15,271,940) Free Cash Flow Before Lease Payment $2,291,654 $3,472,773 $3,972,769 $3,971,450 $4,188,185 Ratio (Free Cash Flow Divided by Capital Charges and
Parity Debt Service) (2)

18.1% 27.4% 26.0% 26.0% 27.4%
Notes
(1) Excludes Revenue Stabilization, interest income on RUA reserves, and interest income within the trust accounts. (2) The Concession Agreement requires coverage of at least 15%. With the addition of new debt, City staff (per 8/14/23 email) has provided direction to use 25% coverage after the new debt is issued for the purposes of this Rate Study. 51 2024 Water and Wastewater Rate Study – City of Rialto

3-1
05162024 RIALTO Water and Wastewater Rate Study Report
Section 3
Cost of Service Analysis and Rate
Design
This section outlines the proposed water rate structure. The rate structure is developed using a Cost- of-Service Analysis, completed in a consistent manner with industry standards. This Cost-of-Service Analysis uses methodology from the American Water Works Association’s M1 Manual, Principles of Water Rates, Fees, and Charges (7th Edition).

A Cost-of-Service Analysis (COSA) is used to equitably distribute the revenue requirements to the various customer classes served by the utility. The COSA is also used to allocate costs to the various customer classes served (i.e. residential, commercial, industrial, etc.) corresponding to the level of service provided. Many costs are incurred for the joint benefit of all customers, some costs benefit certain customers more than others, and other costs may benefit only specific customers.

3.1 Water Cost-of-Service Analysis
The first step in a COSA is functionalization, where water system expenses are grouped according to the functions of a water system. Water functions include pumping, storage, transmission, and distribution (T&D), customer, meter, and administration. Table 3 -1 shows the functionalization of the City’s Division’s O&M expenses for FY 24 /25.

Additional detail is available in Appendix B. Table 3-1 functionalizes the water rate revenue requirement. • The labor component of the Water Service Fee was functionalized based on actual 2022 labor costs reported by RWS.
• The Fixed and Routine Repair & Replacement components of the Water Service Fee was functionalized based on net plant.
• Capital charges are functionalized based on a review of the items financed by RWS in 2012 at the initiation of the Concession Agreement.
• Within the Retained RUA Expenses, well electricity and purchased water expenses are carried into the Rate Tier calculations.
• Electricity was functionalized between treatment and collection based on a review of Southern California Edison (SCE) power bills.
• Biosolids expenses were functionalized to treatment.

Many other retained expenses were functionalized as administration, including the transfer to the City’s General Fund for services provided to the water utility; the Fund 680 Admi nistrative expenses, consulting services, and IT services.

The second step in a COSA is allocation, where functionalized expenses are allocated to water system characteristics of average day demand, peak day demand, peak hour demand, and customer and water meter size. In addition, source of supply costs are carried through the allocation step to be used in the rate tier calculations described later in this section. Table 3-2 shows the Allocation of FY 24/25 Rate Revenue Requirement. Some of the key aspects of the allocation calculations are:
52 Section 3 2024 Water and Wastewater Rate Study – City of Rialto

3-2
05162024 RIALTO Water and Wastewater Rate Study Report

1. Pumping, treatment, and storage costs are allocated to base (also referred to as average day), demand and maximum day demand. This is because these facilities are sized to meet peak day demands, and they also are in use every day on a 24/7 basis.

2. A portion of storage costs are attributed to providing fire protection, based on an assessment of the amount of reservoir storage that is needed for fire protection, as described in the City’s Water Master Plan.

3. Transmission and distribution system expenses are allocated to base, maximum day, and maximum hour demands because sixing of pipes also considers maximum hour demands. A portion of transmission and distribution expenses is also allocated to fire protection, recognizing that pipes are sized to provide fire flow.

4. Water supply costs are carried through to the rate tier calculations. In the Volume Charge calculations described below, the charges for each rate tier are based on water supply costs.

5. Administrative expenses are allocated based on a weighted average of all other expenses.

6. Fire protection expenses and the reallocation of public fire protection expenses are discussed in further detail in Appendix C of this report.

53 2024 Water and Wastewater Rate Study – City of Rialto Section 3

3-3
05162024 RIALTO Water and Wastewater Rate Study Report
Table 3-1 Functionalization of Water Rate Revenue Requirement

Functionalized Amount (1)
FY 24/25 Rate Tier Public Fire
Total Pumping Treatment Storage T&D Customer Meter Admin Calculation Protection Waterfall 1: Water Service Fee (2) 6,971,586 958,724 57,256 1,708,227 3,356,711 775,985 0 0 89,198 25,486 Waterfall 1: Reimbursements (3) 1,200,108 184,906 12,205 309,993 619,600 1,260 2,596 64,886 0 4,662 Waterfall 1: Retained RUA Expenses (4) 5,365,000 184,318 0 0 0 0 0 2,136,000 3,044,682 0 Waterfall 2: Annual Operating R&R Payment (3) 680,000 106,762 6,376 190,226 373,798 0 0 0 0 2,838 Waterfall 3: Capital Charges (5) 2,900,000 362,037 52,462 128,573 530,071 33,425 68,884 1,721,644 0 2,905 Waterfall 4: Water Reserve Account Deposits 221,141 0 0 0 0 0 0 221,141 0 0 Waterfall 5: RUA Lease Payment 400,000 0 0 0 0 0 0 400,000 0 0 Less Water Rights Revenue From SBCO (349,264) (42,970) (3,068) (55,891) (116,713) (19,388) (1,709) (108,665) 0 (858) Less Grant Revenue (6) 0 0 0 0 0 0 0 0 0 0
Less Other Non-Rate Revenues (560,370) 0 0 0 0 0 0 0 (560,369) 0 Less Revenue Stabilization, Changes in Reserves (6) (3,110,596) (382,701) (27,327) (497,778) (1,039,463) (172,670) (15,225) (967,788) 0 (7,645) Total Rate Revenue Requirement 13,717,604 1,371,076 97,904 1,783,350 3,724,004 618,612 54,546 3,467,218 2,573,511 27,388 Notes:
(1) See Appendix B for more detail. Discrepancies in total functionalized costs are due to rounding in the cost-of-service analysis. (2) Labor portions of the Water Service Fee are functionalized based on RWS organization charts and 2022 labor expenses. Chemical costs are incorporated into the rate tier calculations Other components functionalized by net plant.
(3) Primarily functionalized by net plant.
(4) Well electricity and purchased water are incorporated into the rate tier calculations. Most of the remaining costs are functionalized as administration. (5) Functionalized based on what the 2012 Concession Agreement Funding, upon which the Capital Charges are based, paid for. (6) Functionalized based on other components of the rate revenue requirement except for what was incorporated into the rate tier calculations. 54 Section 3 2024 Water and Wastewater Rate Study – City of Rialto

3-4
05162024 RIALTO Water and Wastewater Rate Study Report
Table 3-2 Allocation of Water Rate Revenue Requirement

Public Public &
FY 24/25 Extra Capacity Rate Tier Fire Private Fire Private Fire Projection Base Max Day Max Hour Customer Meter Calculation Protection Protection Protection Water System Function
Pumping $1,371,076 $788,658 $582,418 $0 $0 $0 $0 $0 $0 $0 Treatment 97,904 56,315 41,589 0 0 0 0 0 0 0
Storage 1,783,350 357,317 1,266,381 0 0 0 0 0 159,652 0 Transmission & Distribution 3,724,004 631,916 466,665 1,098,581 0 0 0 0 1,526,842 0 Customer 618,612 0 0 0 618,612 0 0 0 0 0
Meter 54,546 0 0 0 0 54,546 0 0 0 0
Administration 3,467,218 828,408 1,064,549 496,168 279,392 24,635 0 12,370 761,695 0 Rate Tier Calculations 2,573,511 0 0 0 0 0 2,573,511 0 0 0 Fire Protection 27,388 0 0 0 0 0 0 27,388 0 0
Reallocate Public FP (2,448,189) 0 0 0 0 0 0 0 (2,448,189) 0 Reallocate Public FP 2,448,189 0 0 0 0 0 0 2,080,546 0 367,643 Total $13,717,608 $2,662,614 $3,421,602 $1,594,749 $898,004 $79,181 $2,573,511 $2,120,304 $0 $367,643 Some of the key aspects of the allocation calculations are:

1. Pumping, treatment, and storage costs are allocated to base (also referred to as average day) demand and maximu day demand. This is because these facilities are sized to meet peak day demands, and they also are in use every day on a 24/7 basis.

3. Transmission and distribution system expenses are allocated to base, maximum day, and maximum hour demands because sizing of pipes also considers maximum hour demands. A portion of transmission and distribution expenses is also allocated to fire protection, recognizing that pipes are sized to provide fire flows.

4. Water supply costs are carried through to the rate tier calculations. In the Volume Charge calculations described below, the charges for each rate tier are based on water supply costs.

5. Administrative expenses are allocated based on a weighted average of all other expenses.

6. Fire protection expenses, and the reallocation of public fire protection expenses, are discussed in further detail in Appendix C of this report.
55 2024 Water and Wastewater Rate Study – City of Rialto Section 3

3-5
05162024 RIALTO Water and Wastewater Rate Study Report
Table 3 -3 defines terms and clarifies the relationship between Water Service Characteristics and how costs are recovered in the proposed rate structure. The terms base, max-day, and max-hour demand are used in the industry standard publication, AWWA M1 Manual, Principals of Water Rates, Fees, and Charges, 7th Edition.

Customer-related costs are recovered in the Monthly Minimum Charge on a per -customer basis. All other costs incorporated into the Monthly Minimum Charge are recovered based on meter size, where the cost increases with increasing meter size.

Table 3-3: Relationship Between Water Service Characteristics and Rate Structure

3.2 Proposed Water Rates
Proposed water rates are shown below in Table 3-4. Proposed Monthly Minimum Charges increases with meter size. 94 percent of residential customers have a ¾” or smaller water meter and would pay, staring on 1/1/25, a Monthly Minimum Charge of $34.53 per month.

Table 3-4. Proposed Monthly Minimum Charge, Water

Water Service Characteristic
How Costs are Allocated
Among Customer Classes
How Costs are Recovered in Rate
Structure
Base Demand Meter Equivalents and Average
Water Use (1)
Mostly Through Monthly Minimum
Charge, Partially Through Volume
Charges
Max Day and Max Hour Peak Water Use Volume Charges
Customer On a Per-Customer Basis Monthly Service Charges Meter Meter Equivalents Monthly Service Charges
Rate Tier Calculations Water Use Volume Charges
Public Fire Protection Costs Meter Equivalents Monthly Service Charges Private Fire Protection Fire Protection Equivalents (2) Fireline Rates Notes:
(1) The number of meter equivalents for each water meter size is based on the capacity of the water meter.
(2) Fire protection equivalents for each size of fireline account are based on the size of the water meter, weighted according to engineering formulas described in Appendix C.

3-6
05162024 RIALTO Water and Wastewater Rate Study Report

Table 3-5: Proposed Volume Charges

Most customers will see their water bills change from a four -tier to a three-tier water rate structure. The first tier will contain 0 –9 ccf per month. This is an approximate amount of indoor water use for most residential customers.

The second tier, from 10 to 30 ccf per month, is meant to capture most residential outdoor irrigation use. The third tier is for large water users and residential customers that use more than approximately twice the citywide average.

Multi-family customers with more than 49 units and landscape customers retain their current tier structure.

The cost of water in each tier is calculated by first calculating the cost of water from each individual source. The City has five primary production wells. The City buys water from SBMVD through the baseline feeder and baseline feeder wells. The City also buys water from the West Valley Water District that is treated at the Roemer Water Filtration Facility. The least expensive water for the City to produce is from the City’s Well 4A, Rialto 3, and Miro 3 wells. The Tier 1 cost is based on the cost of water from these wells. The most expensive water is from the Roemer Water Filtration Facility, the Baseline Feeder, and the Chino 2 well. The cost of water in the third tier is based on the cost from these water sources. The cost of water in the second tier is from the City’s remaining sources. Full rate calculations can be found in Appendix C.

Table 3-6. Proposed Fireline and Hydrant Rates

Fireline and Hydrant Rate s are applicable to customers with separate fire service accounts. Table 3-6 shows the proposed Private Fire Service rates. These rates recover costs associated with transmission, distribution and storage that are related to providing fire protection services to private fire service connections.

Proposed Volume Charges
Existing 1/1/2025 1/1/2026 1/1/2027 1/ 1/2028 1/1/2029
Residential and Commercial
0 - 9 ccf per month See Note 1 $1.95 $2.20 $2.36 $2.54 $2.73 10 - 30 ccf per month See Note 1 $2.19 $2.47 $2.66 $2.85 $3.07 >31 ccf per month See Note 1 $3.19 $3.62 $3.89 $4.18 $4.49 Multiple Apartments Over 49 Units and Mobile Homes
All water use $2.40 $2.35 $2.66 $2.86 $3.07 $3.30
Landscape
0 - 30 ccf per month $2.70 $2.19 $2.47 $2.66 $2.85 $3.07 >31 ccf per month $3.32 $3.19 $3.62 $3.89 $4.18 $4.49
Notes:
(1) The current tiered volume charges for Residential and Commercial customers is:
0 - 5 ccf per month: $1.07/ccf
6 - 30 ccf per month: $1/69/ccf
31 - 60 ccf/month: $2.70/ccf
> 61 ccf/month: $3.32/ccf
Proposed Rates
Existing 1/1/2025 1/1/2026 1/1/2027 1/1/2028 1/1/2029
Fireline
3" meter $83.73 $21.56 $24.80 $26.78 $28.92 $31.24
4" meter $111.64 $45.95 $52.84 $57.07 $61.63 $66.56
6" meter $167.46 $133.47 $153.49 $165.77 $179.03 $193.35 8" meter $223.28 $284.43 $327.09 $353.26 $381.52 $412.04 10" meter $279.10 $511.50 $588.22 $635.28 $686.10 $740.99 Hydrant
Rate, $/ccf $3.33 $2.70 $3.10 $3.35 $3.62 $3.91
Per Day $10.81 $3.43 $3.51 $3.60 $3.69 $3.78
57 2024 Water and Wastewater Rate Study – City of Rialto Section 3

3-7
05162024 RIALTO Water and Wastewater Rate Study Report

3.3 Wastewater Cost-of-Service Analysis
Similar to the Water COSA, the first step in determining the wastewater COSA is functionalization, where wastewater system expenses are grouped according to the functions of a sewer system. Wastew ater functions include treatment, collection, customer, admin, Direct Assign Commercial, and Direct Assign Rialto Habitat Nature Center (RHNC).

Table 3-7 shows the Functionalization of the Wastewater Rate Revenue Requirement, for FY 24/25 Included in the rate revenue requirement are O&M expenditures, debt service payments, capital improvements and replacement expenditures. In FY 24/25, these expenditures are partially offset by non-rate revenues and use of reserves. Refer to Appendix D for more detail on the wastewater COSA.

Table 3-7 functionalizes each Waterfall. Waterfall 1 is divided into the Wastewater Service Fee and Reimbursements.

58 2024 Water and Wastewater Rate Study – City of Rialto Section 3

3-8
05162024 RIALTO Water and Wastewater Rate Study Report
Table 3-7 Functionalization of Wastewater Rate Revenue Requirement

The second step in a COSA is allocation, where functionalized expenses are allocated to water system characteristics of average day demand, peak day demand, peak hour demand, and customer and water meter size. In addition, source of supply costs are carried through the allocation step to be used in the rate tier calculations described later in this section. Table 3 -8 shows the Allocation of FY 2 4/25 Rate Revenue Requirement. Some of the key aspects of the allocation calculations are:

1. Treatment expenses are allocated equally to flow, BOD, and TSS.

2. Collection system expenses are allocated to flow.

3. Commercial III and IV expenses are related to the City’s pretreatment program and are carried into the rate design calculations, to be recovered from Commercial II and IV wastewater rates.

4. The negative RHNC cost represents effluent sales to IEUA, and are allocated to flow.

Functionalized Amount (1)
FY 24/25 Direct Assign Direct Assign
Total Treatment Collection Customer Admin Commercial RHNC Waterfall 1: Wastewater Service Fee (2) $8,470,579 $6,504,409 $1,642,550 $323,620 $0 $0 $0 Waterfall 1: Reimbursements (3) 1,456,000 1,077,102 313,940 0 64,958 0 0 Waterfall 1: Retained RUA Expenses (4) 5,692,073 2,533,737 56,753 0 2,967,583 134, 000 0 Waterfall 2: Annual Operating R&R Payment (3) 930,000 0 930,000 0 0 0 0 Waterfall 3: Capital Charges (5) 12,682,000 4,981,436 719,199 0 6,981,365 0 0 Waterfall 4: Wastewater Reserve Account Deposits 456,159 0 0 0 456,159 0 0 Waterfall 5: RUA Lease Payment 1,600,000 0 0 0 1,600,000 0 0 Less Non-Rate Revenues (977,832) (279,000) 0 0 (554,457) 0 (144, 375) Plus Change Reserve Balances (7) (1,080,987) (528,481) (130,623) (11,542) ( 410,711) (4,779) 5,149 Total Rate Revenue Requirement $29,227,992 $14,289,203 $3,531,819 $312,078 $11,104, 897 $129,221 ($139,226) Notes:
(1) See Appendix D for more detail. Discrepancies in total functionalized costs are due to rounding in the cost-of-service analysis. (2) Labor portions of the Wastewater Service Fee are functionalized based on RWS organization charts and 2022 labor expenses. Chemical costs are treatment-related. Other components functionalized by net plant. (3) Primarily functionalized by net plant.
(4) Electricity is assigned to treatment and collection based on a review of power bills. Biosolids and brine line fees are assigned to treatment. Most remaining costs are functionalized to administration. Pretreatment costs are assigned to high-strength commercial customers (Classes III and IV) (5) Functionalized based on what the 2012 Concession Agreement Funding, upon which the Capital Charges are based, paid for. (6) Grants assigned to treatment. Effluent sales revenues are assigned to the Rialto Nature Habitat Center. The remaining non-rate revenues are functionalized to administration.
(7) Functionalized based on other components of the rate revenue requirement except for what was incorporated into the rate tier calculations. 59 Section 3 2024 Water and Wastewater Rate Study – City of Rialto

3-9
05162024 RIALTO Water and Wastewater Rate Study Report

5. Administrative expenses are allocated based on a weighted average of other items.

Table 3-8 Allocation of Wastewater Rate Revenue Requirement

Some of the key aspects of the allocation calculations are:

1. Treatment costs are split between flow, BOD, TSS

2. Collection system costs are allocated to flow

3. Administration costs are allocated based on the total revenue requirement, net of the effluent sales to RNHC.

Table 3-9 defines terms and clarifies the relationship between Wastewater Service Characteristics and rate structure. The table shows how costs are recovered in the proposed rate structure.

Each customer class is assigned BOD and TSS strengths consistent with published data from other Southern California utilities, the City of Rialto’s Development Impact Fees, and other industry standard publications. See Appendix D for more detail.

Residential wastewater flow is estimated using indoor water use of 50 gallons per capita per day and 3.86 people per household. The people per household value is reported by the US Census Bureau for the City of Rialto between 2018 and 2022. Commercial wastewater flow is based on water consumption data, and is recorded by the City of Rialto or the West Valley Water District, depending on customer location.

FY 24/25
Total Flow BOD TSS Customer Direct: CIII,CIV
Wastewater System Function
Treatment $14,289,203 $4,763,068 $4,763,068 $4,763,068 $0 $0 Collection 3,531,819 3,531,819 0 0 0 0
Customer 312,078 0 0 0 312,078 0
Administration 11,104,897 4,997,368 2,918,562 2,918,562 191,225 79,180 Direct Assign: Commercial III and IV 129,221 0 0 0 0 129,221 Direct Assign: RNHC (139,226) (139,226) 0 0 0 0
Total Rate Revenue Requirement $29,227,992 13,153,028 7,681,630 7,681,630 503,303 208,401 60 2024 Water and Wastewater Rate Study – City of Rialto Section 3

3-10
05162024 RIALTO Water and Wastewater Rate Study Report
Table 3-9. Relationship Between Wastewater Service Characteristics and Rate Structure

The COSA calculates, for each customer class shown in Table 3-10, a revenue requirement based on the estimated sewer flow, BOD loading, TSS loading, and number of customers for each class.

The residential fixed charge is calculated by dividing the residential revenue requirement by the number of customers. The commercial volume charges are calculated by dividing the revenue requirement for each commercial customer class by metered water consumption.

Wastewater Service
Characteristic
How Costs are Allocated
Among Customer Classes
Flow Wastewater Flow
BOD BOD Discharge
TSS TSS Discharge
Customer On a Per-Customer Basis
Direct: CIII, CIV Directly to These Two Customer
Classes
61 2024 Water and Wastewater Rate Study – City of Rialto Section 3

3-11
05162024 RIALTO Water and Wastewater Rate Study Report

3.4 Proposed Wastewater Rates

Table 3-10. Proposed Wastewater Rates

Proposed Rates
Customer Type Existing 1/1/2025 1/1/2026 1/1/2027 1/1/2028 1/1/2029 Group I ($/month/residential unit)
Residential $62.19 $67.14 $71.07 $75.23 $79.64 $84.31
Residential X 1.3 $80.84 $87.28 $92.39 $97.80 $103.53 $109.60 Residential Multi. $62.19 $67.14 $71.07 $75.23 $79.64 $84.31 Group II, $/ccf metered water use
Commercial $6.77 $5.80 $6.10 $6.40 $6.70 $6.85
(includes - Softwater Service, Car Wash, Office Buildings, Cleaners, Department/Retail Stores, Warehouse, Car lots, Equipment Rental, Storage Units, Hospitals, Manufacturing, Indoor Theater, Day Care, Pre School, Disabled Care, Nail/Hair Salon, Church)
Group III, $/ccf metered water use
Commercial $7.96 $8.32 $8.80 $9.32 $9.87 $10.44
(includes - Hotels /Motels (no restaurant), repair and Service Station, Shopping Center, Recreation Park, Nursery/Florist, Manufacturing - Non-Domestic, Lumber Yard, Nightclub, Bar, Hall) Group IV, $/ccf metered water use
Commercial $10.17 $12.06 $13.00 $14.08 $15.33 $17.59
(includes - Hotels /Motels (w/restaurants), Bakeries, Dairy, Supermarkets, Dairy, Meat Market, Mom & Pop, Mortuary, Restaurants, Fast Food, Catering)
Group V, $/student/month
Schools -
Elementary $0.85 $1.00 $1.15 $1.25 $1.35 $1.48
Junior High $2.03 $2.30 $2.60 $2.80 $2.99 $3.16
High $2.03 $2.30 $2.60 $2.80 $2.99 $3.16
Continuation $0.85 $1.00 $1.15 $1.25 $1.35 $1.48
Adult Education $0.85 $1.00 $1.15 $1.25 $1.35 $1.48
Group VI, $/ccf water use
Large Volume $6.77 $5.80 $6.10 $6.40 $6.70 $6.85
Hospital $6.77 $5.80 $6.10 $6.40 $6.70 $6.85
Commercial Building $6.77 $5.80 $6.10 $6.40 $6.70 $6.85 Notes:
(1) Existing rates have been effective since 2/1/18. Rates do not include the City's Utility Users Tax. (2) Group II, III, IV, and VI extraterritorial customers are charged 1.3 times the corresponding rates shown in this table for in-city customers.
62 3-11
05162024 RIALTO Water and Wastewater Rate Study Report

Section 4
Comparison With Other Utilities

4.1 Introduction
Section 4 describes a comparison of the City of Rialto’s monthly water and wastewater bills with the utilities listed below. The example monthly water and wastewater bills are shown for a typical single-family household consuming 16 hundred cubic feet (hcf) per month.

The City of Rialto’s monthly water bill includes the Monthly Minimum Charge and Volume Charges. Both the current rates and proposed rates are shown in the comparison, see Table 4-1. The City of Rialto monthly wastewater bill is a flat charge that is the same for all single -family residences. Table 4 -2 provides both current and proposed wastewater rates for Rialto, in addition to the utilities listed below.

The comparisons shown in Table 4-1 and Table 4-2 below were developed by City staff and are based on comparator rates effective as of January 1, 2025.

4.2 Comparison with Other Utilities
This section shows comparisons of existing monthly water and wastewater bills developed by City staff for the following utilities:
• City of Rialto
• City of Banning
• City of Colton
• City of Corona
• City of Fontana (wastewater only)
• City of Loma Linda
• City of Redlands
• City of Riverside
• Cucamonga Valley Water District (“CVWD”)
• East Valley Water District
• Fontana Water Company (water only)
• Jurupa Community Services District
• Marygold Water (water only)
• San Bernardino Municipal Water Department (“SBMWD”)
• West Valley Water District (water only)
Table 4-1 is the Monthly Water Bill Comparison for the utilities named above, for residential single-family customers consuming 16 hcf a month, based on a ½” x 5/8” or a similar size meter, typical for single family dwellings. This table shows that Rialto’s current monthly water bill for the typical example customer is lower than most of the comparators. The proposed water rates for the City of Rialto 1/1/2025 monthly bill is in the middle of the table. 63 Section 4 2024 Water and Wastewater Rate Study – City of Rialto

3-9
05162024 RIALTO Water and Wastewater Rate Study Report
Table 4-1. Monthly Water Bill Comparison

Table 4-2 is the Monthly Wastewater Bill Comparison for the wastewater utilities named above, for residential single- family customers consuming 16 hcf of water per month. The table shows that the City of Rialto’s current wastewater rates and the proposed wastewater rates are the highest of the comparators.

Table 4-2. Monthly Wastewater Bill Comparison

It can be noted that each utility in the comparator list has a capital improvement plan , debt schedules and O&M costs that differ from the City of Rialto. Additionally, none of the comparators are parties to Concession Agreements.

The Concession Agreement has specific reserve coverage requirements and has unique agreements with the City for capital projects and the debt associated with those projects. Additionally, the City of Rialto recently completed a Comparator Utility
Monthly Bill as of
1/1/2025 (1)
Fontana Water Company (Water) 105.79
Marygold Water 82.53
City of Banning 82.98
Jurupa Community Services District 69.77
City of Rialto, PROPOSED 67.41
Cucamonga Valley Water District (CVWD) 65.47
City of Corona DWP 64.69
East Valley Water District 63.38
West Valley Water District (WVWD) 57.31
Loma Linda, City of 55.95
City of Rialto, EXISTING 54.36
City of Colton 53.10
City of Riverside Public Utilities 52.19
San Bernardino Municipal Water Department 49.69
City of Redlands Municipal Utilities 46.93
Notes:
(1) Rates are based on a 1/2" x 5/8" or similar sized meter, for single family residences consuming 16 hcf per month. Includes monthly bills for utilities with adopted rate increases between the date of this report and 1/1/25.

Comparator Utility
Monthly Bill as of
1/1/2025 (1)
City of Rialto, PROPOSED 67.14
City of Rialto, EXISTING 62.19
City of Banning 49.01
San Bernardino Municipal Water District 48.98
Loma Linda, City of 46.46
Jurupa Community Services District 46.37
City of Corona DWP 45.60
East Valley Water District 43.09
City of Riverside Public Utilities 39.59
City of Fontana (Sewer) 35.14
City of Colton 34.33
City of Redlands Municipal Utilities 33.02
Cucamonga Valley Water District (CVWD) 32.02
Notes:
(1) Rates are based on a 1/2" x 5/8" or similar sized meter, for single family residences consuming 16 hcf per month. Includes monthly bills for utilities with adopted rate increases between the date of this report and 1/1/25.

Some utilities, including the City of Rialto, charge a flat rate for residential sewer services. 64 Water Rate Study – Garden Grove Water Services Division Section 4

3-7
05162024 RIALTO Water and Wastewater Rate Study Report
major upgrade to its wastewater treatment plant. The City invested considerable resources into this capital project, and the debt associated with this project is reflected in both existing and proposed rates.

65 3-11
05162024 RIALTO Water and Wastewater Rate Study Report
Section 5
Ongoing Considerations
The 2024 Water and Wastewater Rate Study Report and the projected rate schedules shown in Section 3 cover the planning period from FY 2 4/25 through FY 28/29. There are several factors that could change over the next few years that have financial implications. The extent to which these factors change may influence the financial condition of the water and wastewater systems and the City’s ongoing reviews of water and wastewater rates.

The City should continue to monitor its financial status on an ongoing basis, and should continue to monitor the following:
• Water consumption. Water system revenues depend on water consumption. Water consumption in this Rate Study is based on Calendar Year 202 3 actual data. Precipitation levels in 2023 were higher than average. When precipitation levels are high, customers tend to use less water . The precipitation levels in summer 2022 were also above average, affecting consumption levels in the summer when irrigation use is highest. Lower water consumption, whether resulting from additional conservation or higher precipitation levels during months where outdoor irrigation is lower, will result in pumping less water, which reduces costs, but it will also result in reduced revenues.
• Long-Term Water Use Objectives Legislation. Recent changes to California state law may result in additional water conservation efforts and reduced water consumption. These changes in law will be phased in over time and may impact water demands approaching 2030.
• Changing Conditions. Water and wastewater utility conditions change on an ongoing basis. The City should anticipate the following future developments that may have financial impacts that are not known at the time this report was prepared. There are several items that have arisen since the proposed water and wastewater rates were calculated in April 2024:
o 2024 Labor Reset. Every four years, the Labor Component of the Concession Agreement RWS Service Charge is renegotiated to account for inflation and changes in staffing. The projected RWS Service Charge may differ from what is projected in this Rate Study, depending on the results of the 2024 Labor Reset negotiations.

• Capital project spending and financing.
• The proposed water and wastewater rates are based on an estimated capital project cost and schedule.

As capital project construction bids are awarded, the City will have greater certainty regarding capital costs and schedule. Deviations in costs and schedule will affect the financial projections that form the basis of this rate study.
• The proposed water and wastewater rates are based on capital improvement debt with an interest rate of 6 percent. The actual interest rate the City can obtain will affect the debt service payment the City is required to pay.
• The proposed water and wastewater rates are based on 25 percent coverage criteria , as specified by the City, for planning purposes. The actual coverage criteria will be established by a lender. This criteria is not yet known. Deviations from the 25 percent coverage factor will affect the financial projections and the projected Revenue Stabilization payments from RUA reserves. • Inflation rates.
66 Section 5 2024 Water and Wastewater Rate Study – City of Rialto

3-9
05162024 RIALTO Water and Wastewater Rate Study Report
• Many expenses, including the RWS Service Fees, are tied to actual changes in inflation rates. Projected expenses are based on a 2.5 percent annual inflation rate for most items. A notable exception is electricity costs, which are projected in this Rate Study to increase at 7 percent per year. • Development activity in the Division’s service area. The financial calculations incorporate a 0.5% annual system growth rate . If system growth through FY 28/29 is higher than expected, this will result in more revenues than projected in this analysis, from both Development Impact Fees and utility rate revenues paid by the future customers. The City should monitor system growth and make any appropriate adjustments to budgeting and spending plans.

67 2024 Water and Wastewater Rate Study – City of Rialto

A-1
05162024 RIALTO Water and Wastewater Rate Study Report
Section 6

Appendix A: Revenue Requirement

68 Water and Wastewater Revenue Requirement Analysis
TABLE A-1 Key Assumptions TABLE A-5 Projected Operating Statement - Water TABLE A-2 Projected Revenues Under Existing Rates TABLE A-6 Projected Operating Statement - Wastewater TABLE A-3 Projected RUA Expenses TABLE A-7 Capital Improvement Plan TABLE A-4 Projected Depreciation Expense TABLE A-8 Projected Debt Service Water Cost-of-Service Analysis (COSA) and Rate Design
TABLE B-1 Water COSA - Functionalization Factors TABLE B-7 Water COSA - Allocation Factors TABLE B-2 Water COSA - Functionalization of Water System Plant TABLE B-8 Water COSA - Allocation of Rate Revenue Requirement TABLE B-3 Water COSA - Functionalization of CIP by Percentage TABLE B-9 Water COSA - Distribution of Revenue Requirement TABLE B-4 Water COSA - Functionalization of CIP Projects by Dollar TABLE B-10 Identification of Costs to be Included in Rate Tier Calculations TABLE B-5 Water COSA - Functionalization of Existing Capital Charge TABLE B-11 Water and Wastewater Supporting Calculations TABLE B-6 Water COSA - Functionalization of Rate Revenue Requirement TABLE C-1 Water Rate Design Calculations Wastewater Cost-of-Service Analysis (COSA) and Rate Design TABLE D-1 Wastewater COSA - Functionalization Factors TABLE D-6 Wastewater COSA - Functionalization of Rate Revenue Requirement TABLE D-2 Wastewater COSA - Functionalization of Wastewater System Plant TABLE D-7 Wastewater COSA - Allocation of Rate Revenue Re quirement TABLE D-3 Wastewater COSA - Functionalization of CIP by Percentage TABLE D-8 Wastewater COSA - Distribution of Rate Revenue Requir ement TABLE D-4 Wastewater COSA - Functionalization of CIP by Dollar Amount TABLE E-1 Wastewater Rate Design Calculations TABLE D-5 Wastewater COSA - Functionalization of Capital Charge Fiscal Years FY 24/25 to FY 32/33
2024 Water and Wastewater Rate Study
City of Rialto
Model prepared by FG Solutions, LLC in May 2024
05162024 2024 Updates Rialto Rate Model MainPage
Copyright 2024 All Rights Reserved

Page 1 of 21 ends

Printed on 5/16/2024
69 Revenue Requirement Analysis: Key Assumptions
TABLE A-1
City of Rialto - 2024 Water and Wastewater Rate Study
Key Assumptions
Key Assumptions
1 FY 23/24 Draft RUA Budget used for O&M expenses.
2 RWS Core and Special Capital Improvement Plan used for the cost potential capital expenses. Source: 04/12/2023 RWS Model 3 Debt financing assumptions
4 WIFIA terms
5 Interest rate 6.00% Per Mike Busch, Urban Futures, 10/03/23 email. 6T e r m 30 year repayment period
7 Principal repayment deferral 0 years, per discussions with City staff and Urban Futures in 4Q 2023. 8 Coverage requirement 1.25 years, per discussions with City staff and Urban Futures in 4Q 2023. 9 Capitalized Bond Reserve requirement 6 months of debt service payment, per 04/12/2023 RWS model 10 11 Financial Performance Criteria
12 Water Coverage 17.7% Existing Concession Agreement Requirement, in absence of future debt. 13 Wastewater Coverage 15% Existing Concession Agreement Requirement, in absence of future debt. 14 15 Customer Growth and DIF Revenues
16 Water
17 DIF Revenues $200,000 Per City staff, 5/3/23 email. Less projected revenue than the City's FY 23/24 draft budget. 18 DIF, $/EDU $3,352 FY 22 Rate, per City's website
19 Number of New Connections 60
20 21 Sewer Collection
22 DIF Revenues $150,000 FY 23/24 Budget
23 DIF, $/EDU $900 FY 22 Rate, per City's website
24 Number of New Connections 167 Calculated by dividing budgeted DIF Revenues by DIF per EDU 25 26 Sewer Treatment
27 DIF Revenues $200,000 FY 23/24 Budget
28 DIF, $/EDU $2,124 FY 22 Rate, per City's website
29 Number of New Connections 94 Calculated by dividing budgeted DIF Revenues by DIF per EDU 30 31 Rate Revenue Growth from New Development, Existing Rates 32 Water Wastewater
33 Number of New Connections Per Year 60 131 Water: connections predicted by DIF revenues; 34 Wastewater: average number of new collection and treatment connections predicted by FY 23/24 DIF budget. 35 Monthly Bill, 16 ccf/month $54.36 $62.19
36 Annual Increase in Rate Revenue $39,139.20 $97,389.54 37 Number of Jul-Dec 2022 Connections 11,690 20,639 Water: exclude fire hydrant connections 38 Annual Percent Growth 0.500% 0.500% Wastewater: adjusted down to 0.5% 39 40
General Assumptions Used in Revenue Requirement Analysis 41 Rounding (3) For Calculation of Certain Revenues and Expenses 42 Interest Income on RUA Reserves, %/ Year 1.5% Does not apply to reserves held in trust 43 Electricity Inflation 7.0% Rounded to nearest 1%, the 6-year 2017 - 2023 average annual SCE commercial rate increase. See MiscCalcs worksheet. 44 Direction to use historical average per City staff.
05162024 2024 Updates Rialto Rate Model
A1Assumptions
FG Solutions, LLC
Copyright 2024 All Rights Reserved

Page 2 of 21 ends

5/16/2024
70 Revenue Requirement Analysis: Revenues
TABLE A-2
City of Rialto - 2024 Water and Wastewater Rate Study
Projected Revenues Under Existing Rates
Water Utility
RWS Budget Projected Projected Projected Projected Projected Projected Projected Projected Line Account Number Description FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 FY 29/30 FY 30/31 FY 31/32 FY 32/33 Notes 1 670-400-7150-7799 Miscellaneous Revenues $0 $0 $0 $0 $0 $0 $0 $0 $0 1 2 670-400-7150-7672 Meter Installation and Service
3 670-400-7952-7677 Fire Line Installation $0 $0 $0 $0 $0 $0 $0 $0 $0 4 670-400-7953-7679 Development Impact Fees $200, 000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 2 5 670-400-7959-7659 Recycled/Reclaimed Water Sales
6 670-400-7960-7401 RUA Investment Income INTEREST INCOME IS PROJECTED IN THE OPERATING STATEMENT 3 7 670-400-7960-7402 Rents & Concessions $50,000 $51,250 $52,531 $53,845 $55,191 $56,570 $57,985 $59,434 $60,920 4 8 670-400-7960-7404 Trustee Interest Income
9 670-400-7960-7536 Grant Funding $ 0$ 0$ 0 0 $ 0$ 0$ 0$ 0$ 0 5 10 670-400-7960-7560 Misc Grant Revenue
11 670-400-7960-7585 County Contract - SBCO Water Order $349,264 $366,727 $385,064 $404,317 $424,533 $445,759 $468,047 $491,450 $516,022 6 12 670-400-7960-7659 Water Sales (Existing Rates) 12,721,522 $12,760,662 $12,799,801 $12,838,940 $12,878,079 $12,917,218 $12,956,358 $12,995,497 $13,034,636 7 13 670-400-7960-7667 Municipal Water Sales County Contract 14 670-400-7960-7673 Turn On/Of
f $73,000 $73,000 $73,000 $73,000 $73,000 $73,000 $73,000 $73,000 $73,000 8 15 670-400-7960-7689 Delinquent Water Service Fees $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 8 16 670-400-7960-7699 Other Charges for Current Services 17 Perchlorate Charges Combined Remedy $0 $0 $0 $0 $0 $0 $0 $0 $0 4, 9 18 Miscellaneous Revenues $94,000 $96,350 $98,759 $101,228 $103,758 $106,352 $109,011 $111,736 $114,530 4 1 9 E m h a r t ( E l e c t r i c i t y R e i m b u r s e m e n t ) $ 0$ 0$ 0$ 0$ 0$ 0$ 0$ 0$ 0 4 20 670-400-7960-7720 Other Charges for Current Services 21 670-400-7960-7799 Miscellaneous Revenue
22 Total, Water Revenues $13,499,786 $13,559,989 $13,621, 154 $13,683,329 $13,746,561 $13,810,900 $13,876,401 $13,943,117 $14,011,108 Notes, Water:
(1) Water meter damage/lost/replacement fee. Not included in draft RWS FY 24/25 Budget. (2) Per City staff via email, May 2023. Same value as RUA FY 23/24 Budget. (3) Interest income is calculated each year in Table A5, Operating Statement. FY 23/24 per RUA draft FY 23/24 budget. (4) FY 24/25 per draft RWS FY 24/25 Budget. Projected to increase with inflation in subsequent years. Emhart Electricity Reimbursement is a Combined Remedy revenue and is not included in the Rate Study. (5) Grants are non-recurring.
(6) Through FY 24/25 per City Staff at 5/3/23 meeting. This is payment by County for use of Rialto water rights for water that is produced for Fontana Water Company. Agreement through 2025 in place.

Extension of the agreement (and revenues) requires future Regional Board decision whether, after FY 24/25, County has met its obligations. Increases after FY 24/25 at 5% per year per City staff 5/16/23. (7) FY 24/25 per draft RWS FY 24/25 budget. Increases in subsequent years based on projected growth based on DIF fees of $200,000 per year and resulting number of new EDUs. (8) FY 24/25 per RWS draft FY 24/25 Budget. Projected to remain at this value through the Rate Study planning period. (9) Pass through revenues to pay for Combined Remedy O&M expenses are included in the 680 Fund and are not part of this Rate Study. 05162024 2024 Updates Rialto Rate Model A2 Revenues
FG Solutions, LLC
Copyright 2024 All Rights Reserved

Page 3 of 21 ends

Printed on 5/16/2024
71 Revenue Requirement Analysis: Revenues
TABLE A-2
City of Rialto - 2024 Water and Wastewater Rate Study
Projected Revenues Under Existing Rates
Wastewater Utility
RWS Budget Projected Projected Projected Projected Projected Projected Projected Projected Line Account Number Description FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 FY 29/30 FY 30/31 FY 31/32 FY 32/33 Notes 23 660-400-7860-7303 Fines/Forfeitures/Penalties $0 $0 $0 $0 $0 $0 $0 $0 $0 1 24 660-400-7860-7401 RUA Interest Income INTEREST INCOME IS PROJECTED IN THE OPERATING STATEMENT 4 25 660-400-7860-7402 Rents and Concessions (Anaergi a) $279,000 $279,000 $279,000 $279,000 $279,000 $279,000 $279,000 $279,000 $279,000 2 27 660-400-7860-7405 Grants 3
29 660-400-7860-7661 Sewer Service Fees (Existing Rate s) $26,426,992 $26,524,381 $26,621,771 $26, 719,160 $26,816,550 $26,913,939 $27,011,329 $27,108,718 $27,206,108 4 31 660-400-7860-7666 Delinquent Sewer Service Fees $15,315 $15,315 $15,315 $15,315 $15,315 $15,315 $15,315 $15,315 $15,315 1 32 660-400-7860-7699 Other Charges for Current Svcs (Extraterritorial) $1,950,000 $1,950,000 $1,950,000 $1,950,000 $1,950,000 $1,950,000 $1,950,000 $1,950,000 $1,950,000 1 33 660-400-7860-7703 Sewage Collection Fees $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 5 34 660-400-7860-7705 Sewer Treatment Fees $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 5 35 660-400-7860-7729 Cash Over/Short
36 660-400-7860-7799 Miscellaneous Revenue
37 660-400-7860-9010 Transfers General Fund
38 660-400-7959-7659 Reclaimed/Recycled Water Sales
39 Effluent Sale to IEUA $144,375 $144,375 $144, 375 $144,375 $0 $1,024,205 $1,144,110 $1,172,713 $1,202,031 6 40 Total, Wastewater Revenues $29,021,306 $29,118,696 $29,216,085 $29,313,475 $29,410,865 $29,508,254 $29,605,644 $29,703,033 $29,800,423 Notes, Wastewater:
(1) Per draft RWS FY 24/25 budget.
(2) FY 24/25 per John Maher, 3/18/24 email. $10,750 per month plus $37,500 pe quarter. (3) Grants are non-recurring.
(4) FY 24/25, per draft FY 24/25 RWS Budget, which equals actual revenues from FY 22/23. (5) Per RUA FY 23/24 Budget.
(6) Source: City staff, 7/12/23. 3,500 AFY @ $275/AF in FY 23/24 dollars. $/AF adjusted with inflation, and payment starts 1/1/29. Prepayment of 15% of total revenues starting FY 23/24. Prepayment subtracted from revenues received starting 1/1/29. Prepayment results in $0 income in FY 28/29 and approximately $92,000 credit in FY 29/30. (7) Interest income is calculated each year in Table A5, Operating Statement. 05162024 2024 Updates Rialto Rate Model A2 Revenues
FG Solutions, LLC
Copyright 2024 All Rights Reserved

Page 4 of 21 ends

Printed on 5/16/2024
72 REVENUE REQUIREMENT ANALYSIS - PROJECTED RUA EXPENSES TABLE A-3
City of Rialto - 2024 Water and Wastewater Rate Study
Projected RUA Expenses
RUA Water Expenses Type RUA Budget RWS Budget Projected Account Number Description (1) FY 23/24 FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 FY 29/30 FY 30/31 FY 31/32 FY 32/33 Notes 1 670-500-7954-2021 Other Services and Supplies (Perchlo rate) R $87,300 $78,000 $79,950 $81,949 $83,997 $86,097 $88,250 $90,456 $92,717 $95, 035 2 2 670-500-7960-2002 Electricity R $1,540,932 $1,372,000 $1,468,040 $1,570,803 $1,680,759 $1,798,412 $1,924,301 $2,059,002 $2,203,132 $2,357, 351 3 3 670-500-7960-2011 Contract Services R
4 City Contract (Transfer to General Fund) R $479,023 $505,000 $517,625 $530,566 $543,830 $557,426 $571,361 $585,645 $600,286 $615,293 4 5 Water Production, Baseline Feeder R $500,749 $642,000 $658,050 $674,501 $691,364 $708,648 $726,364 $744,523 $763,136 $782,215 4 6 Water Production, Other R $671,129 $1,086,000 $1,113,150 $1, 140,979 $1,169,503 $1,198,741 $1,228,709 $1,259,427 $1,290,913 $1,323,186 4 7 Auditor Fees R
8 IT Services R $66,395 $73,000 $74,825 $76,696 $78,613 $80,578 $82,593 $84,658 $86,774 $88,943 4 9 Allowance for Maintenance > $250 W1 $221,300 $300, 000 $307,500 $315,188 $323,067 $331,144 $339,422 $347,908 $356,606 $365,521 4 10 Rebates R
11 City Reimbursement (680 Admin) R $799,560 $828, 000 $848,700 $869,918 $891,665 $913,957 $936,806 $960,226 $984,232 $1,008,838 4 12 Consulting Fees R $235,935 $300,000 $307,500 $315,188 $323,067 $331,144 $339,422 $347,908 $356,606 $365,521 4 13 CONSULTING WSC BOR GRANT DCP FY 23 R $330,050 5
14 CA: Independent Engineer W1 $109,296 $127,000 $130,175 $133,429 $136,765 $140,184 $143,689 $147,281 $150,963 $154,737 4 15 RWS Insurance W1 $869,512 $1,028,000 $1,053,700 $1,080,043 $1,107,044 $1,134,720 $1,163,088 $1,192,165 $1,221,969 $1,252,518 4 16 RWS Service Fee
17 Fixed Component W1 $2,782,235 $2,894,995 $2,967,369 $3,041, 554 $3,117,592 $3,195,532 $3,275,421 $3,357,306 $3,441,239 $3,527,270 4 18 Routine R&R Component W1 $275,249 $286,393 $293,553 $300,892 $308,414 $316,125 $324,028 $332,128 $340,432 $348,943 4 19 Chemical Component W1 $63,096 $89,198 $91,428 $93,714 $96,056 $98,458 $100,919 $103,442 $106,028 $108,679 4 20 Labor Component W1 $3,533,470 $3,701,000 $3,793,525 $3,918,363 $4,016,322 $4,116,730 $4,219,649 $4,325, 140 $4,433,268 $4,544,100 4, 6 21 Water Operating Repair & Replacement W2 $680,000 $680,000 $697,000 $714,425 $732,286 $750,593 $769,358 $788,592 $808,306 $828,514 4 22 670-500-7960-2021 Other Services and Supplies R
23 Miscellaneous Fees and Permits R $291,792 $430,000 $440,750 $451,769 $463,063 $474,640 $486,506 $498,668 $511,135 $523,913 4 24 Rebates R $50,000 $51,000 $51,000 $51,000 $51,000 $51,000 $51,000 $51,000 $51,000 $51,000 7 25 600-500-7960-2024 Operating Lease Payments W5 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 $400,000 7 26 670-500-7960-2080 Allowance for Doubtful Accounts
27 670-500-7960-3001 Capital Improvements
28 …7960-4001, 4010, 40 Capital Lease Payments W3 $2,900,000 $2,900,000 $2,900,000 $2,900,000 $2,900,000 $2,900,000 $2,900,000 $2,900,000 $2,900,000 $2,900,000 7 30 Total $16,887,024 $17,771,586 $18,193,840 $18,660,973 $19,114,409 $19,584,128 $20,070,885 $20,575,475 $21,098,742 $21,641,577 Notes, Projected Water Expenses:
(1) "R" in this columns means the expense is an RUA Retained Expense. All entries beginning with W note the waterfall position as described in the Concession Agreement. (2) Resin replacement for perchlorate treatment not covered by the Combined Remedy. Cost increases with inflation. (3) Increases with the rate of electricity inflation. See Table A-1 for more detail on electricity inflation. (4) Increases with inflation. See Table A-1 for more detail. (5) Grants are non-recurring.
(6) Also includes $30K increase in FY 26/27 for labor reclassification following AMI implementation. Labor reclassification will cost, per Veolia staff, $5-$10/hr salary increase for 1 FTE, plus benefits, plus 18%.

FY 25/26 increased by 4% given notes in RWS Draft Budget, received 3/11/24 from Toyasha, tab WW Budget, cell L26 (7) Projected to remain constant at this amount for the 10-year Rate Study planning period. 05162024 2024 Updates Rialto Rate Model A3 RUAExpenses FG Solutions, LLC
Copyright 2024 All Rights Reservved

Page 5 of 21 ends

Printed on 5/16/2024
73 REVENUE REQUIREMENT ANALYSIS - PROJECTED RUA EXPENSES TABLE A-3
City of Rialto - 2024 Water and Wastewater Rate Study
Projected RUA Expenses
Type RUA Budget RWS Budget Projected
Line Wastewater RUA Expenses (1) FY 23/24 FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 FY 29/30 FY 30/31 FY 31/32 FY 32/33 Notes 1 660-500-7860-2002 Electricity R $1,167,308 $1,200,000 $1,284,000 $1,373,880 $1,470,052 $1,572,955 $1,683,062 $1,800,876 $1,926,938 $2,061, 823 2 2 660-500-7860-2003 Gas R $188,520 $104,000 $106,600 $109,265 $111,997 $114,797 $117,666 $120,608 $123,623 $126,714 3 3 660-500-7860-2011 Contract Services
4 City Contract (Transfer to General Fund) R $685,000 $710,000 $727,750 $745,944 $764,592 $783,707 $803,300 $823,382 $843,967 $865,066 3 5 Biosolids R $887,285 $1,194,000 $1,223,850 $1,254,446 $1,285,807 $1,317,953 $1,350,901 $1,384,674 $1,419,291 $1,454,773 3 6 City Reimbursement (680 Admin) R $1,072,830 $1,112,000 $1, 139,800 $1,168,295 $1,197,502 $1,227,440 $1,258,126 $1,289,579 $1,321,819 $1,354,864 3 7 Consulting Services R $75,000 $500,000 $512,500 $525,313 $538,445 $551,906 $565,704 $579,847 $594,343 $609,201 3 8 Consulting SWRCB Grant BDP R $370,000 4
9 Consulting CEQA for Micro Grid R $50,000 4
10 Consulting Auditor R $5,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 3 11 IT Services: Tyler and Paymentus R $124, 746 $136,000 $139,400 $142,885 $146,457 $150,119 $153,872 $157,718 $161,661 $165,703 3 12 Independent Engineer W1 $109,349 $118,000 $120, 950 $123,974 $127,073 $130,250 $133,506 $136,844 $140,265 $143,772 3 13 Insurance Reimbursement W1 $999,756 $1,038,000 $1,063,950 $1, 090,549 $1,117,812 $1,145,758 $1,174,402 $1,203,762 $1,233,856 $1,264,702 3 14 Maintenance > $250 W1 $0 $300,000 $307,500 $315,188 $323,067 $331,144 $339,422 $347,908 $356,606 $365,521 3 15 Operating Repair and Replacement W2 $930,000 $930,000 $953,250 $977,081 $1,001,508 $1,026,546 $1, 052,210 $1,078,515 $1,105,478 $1,133,11 53 16 RWS Service Fees
17 Fixed Component W1 $2,680,967 $2,796,482 $2,866,394 $2,938, 054 $3,011,505 $3,086,793 $3,163,962 $3,243,061 $3,324,138 $3,407,241 3 18 Routine R&R Component W1 $275,238 $287,097 $294,274 $301,631 $309,172 $316,901 $324,824 $332,945 $341,268 $349,800 3 19 Chemical Component W1 $729,932 $1,350,000 $1,383,750 $1, 418,344 $1,453,802 $1,490,147 $1,527,401 $1,565,586 $1,604,726 $1,644,844 3 20 Labor Component W1 $3,847,946 $4,037,000 $4,198,480 $4,303,442 $4,411,028 $4,521,304 $4,634,336 $4,750, 195 $4,868,950 $4,990,673 3, 4 21 660-500-7860-2021 Other Services and Supplies
22 Other Retained Services R $275,930 $500,000 $512,500 $525,313 $538,445 $551,906 $565,704 $579,847 $594,343 $609,201 3 23 Inland Empire Brine Line Fees (SBVMWD) R $125,290 $92,490 $94,802 $97,172 $99,602 $102,092 $104,644 $107,260 $109,942 $112,690 3 24 Wastewater Services (Colton) R $12,000 $9,583 $9,823 $10,068 $10,320 $10,578 $10,842 $11,113 $11,391 $11,676 3 25 MIPP Services (Veolia) R $111,920 $134,000 $137,350 $140,784 $144,303 $147,911 $151,609 $155,399 $159,284 $163,266 3 26 660-500-7860-2024 Operating Lease Payment R $1,600,000 $1,600,000 $1,600,000 $1,600,000 $1,600,000 $1,600,000 $1,600,000 $1,600,000 $1,600,000 $1,600,000 6 27 660-500-7860-2080 Allowance for Doubtful Accounts R $0 28 No Acct. Number Yet Rialto Habitat Nature Center O&M R $150,000 $153,750 $157,594 $161,534 $165,572 $169,711 $173,954 $178,303 7 29 …7960-4001, 4010 Capital Lease Payments W3 $12,682,000 $12,682,000 $12,682,000 $12,682,000 $12,682,000 $12,682,000 $12,682,000 $12,682,000 $12,682,000 $12,682,000 5 30 Total $29,006,018 $30,830,652 $31,508,923 $31,997,376 $32,502,085 $33,023,740 $33,563,066 $34,120,831 $34,697,841 $35,294,949 Notes, Projected Wastewater Expenses:
(1) "R" in this columns means the expense is an RUA Retained Expense. All entries beginning with W note the waterfall position as described in the Concession Agreement. (2) Increases with the rate of electricity inflation. See Table A-1 for more detail on electricity inflation. (3) Increases with inflation. See Table A-1 for more detail. (4) Grants are non-recurring.
(5) FY 25/26 increased by 4% given notes in RWS Draft Budget, received 3/11/24 from Toyasha, tab WW Budget, cell L26 (6) Projected to remain constant at this amount for the 10-year Rate Study planning period. (7) Per City staff, 7/12/2023 email.
05162024 2024 Updates Rialto Rate Model A3 RUAExpenses FG Solutions, LLC
Copyright 2024 All Rights Reservved

Page 6 of 21 ends

Printed on 5/16/2024
74 REVENUE REQUIREMENT ANALYSIS - PROJECTED DEPRECIATION EXPENSE TABLE A-4
City of Rialto - 2024 Water and Wastewater Rate Study
Projected Depreciation Expense
RUA Budget Projected
Line Water FY 23/24 FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 FY 29/30 FY 30/31 FY 31/32 FY 32/33 Notes 1 Depreciation, Existing Assets $888,100 $888,100 $888,100 $888,100 $888,100 $888,100 $888,100 $888,100 $888,100 $888,100 2 Depreciation, Capital Expenditures $222,000 $222,000 $222,000 $222,000 $222,000 $222,000 $222,000 $222,000 1 3 Total Deprecation Expense $888,100 $888,100 $1,110,100 $1,110,100 $1,110,100 $1,110,100 $1,110,100 $1,110,100 $1,110,100 $1,110,100 4 5 Phase in Collection of Depreciation Expense 0% 0% 0% 0% 0% 50% 80% 100% 100% 100% 2 6 7 Deprecation Expense Collected Through Rates $0 $0 $0 $0 $555,050 $888,080 $1,110,100 $1,110,100 $1,110,100 Notes:
(1) Based on proposed CIP, using a 50-year life for distribution facilities and a 25-year life for treatment facilities. (2) Phasing in the collection of depreciation expense through rates is a City policy decision discussed at Water Subcommittee meetings in 3Q 2023.

RUA Budget Projected
Line Wastewater FY 23/24 FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 FY 29/30 FY 30/31 FY 31/32 FY 32/33 Notes 1 Depreciation, Existing Assets $2,306,390 $2,306,390 $2, 306,390 $2,306,390 $2,306,390 $2,306,390 $2,306,390 $2,306,390 $2,306,390 $2,306, 390 2 Depreciation, Capital Expenditures
3 Sewer Main Projects $140,000 $140,000 $140,000 $140,000 $140,000 $140,000 $140,000 $140,000 1 4 Treatment Plant and Lift Station Projects, Exce pt Biosolids $696,000 $696,000 $696,000 $696,000 $696,000 $696,000 $696,000 $696,000 1 5 Treatment Plant Biosolids $660,000 $660,000 $660,000 $660,000 $660,000 $660,000 $660,000 $660,000 1 6 Total Deprecation Expense $2,306,390 $2,306,390 $3,802, 390 $3,802,390 $3,802,390 $3,802,390 $3,802,390 $3,802,390 $3,802,390 $3,802,390 7 8 Phase in Collection of Depreciation Expense 0% 0% 20% 40% 70% 100% 100% 100% 100% 100% 2 9 10 Deprecation Expense Collected Through Rates $0 $0 $760,478 $1,520,956 $2,661,673 $3,802,390 $3,802,390 $3,802,390 $3,802,390 $3,802,390 Notes:
(1) Based on proposed CIP, using a 50-year life for sewer main projects, a 25-year life for treatment facilities, and a 40-year life for biosolids facilities. (2) Phasing in the collection of depreciation expense through rates is a City policy decision discussed at Water Subcommittee meetings in 3Q 2023. 05162024 2024 Updates Rialto Rate Model A4 Depreciation FG Solutions, LLC
Copyright 2024 All Rights Reservved

Page 7 of 21 ends

Printed on 5/16/2024
75 REVENUE REQUIREMENT ANALYSIS - WATER OPERATING STATEMENT TABLE A-5
City of Rialto - 2024 Water and Wastewater Rate Study
Projected Operating Statement - Water
Projected
Line Item FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 FY 29/30 FY 30/31 FY 31/32 FY 32/33 Notes 1 RIALTO UTILITY AUTHORITY
2 RUA Sources of Funds
3 Beginning Cash Balance $7,738,945 $4,834,993 $4,404,805 $2,720,590 $2,106,332 $1,885,181 $1,978,062 $2,785,172 $3,845,046 1 4 Coverage ==> 31.9% 29.0% 28.7% 26.9% 52.2% 77.0% 91.0% 105.8% 121.3% 5 From Trustee: Funds Dropping Out of Waterfall
6 Funds to Cover Retained Expenses 000000000
7 Funds to Cover Annual Lease Payment 400,000 400,000 400,000 400,000 400,000 400,000 400,000 400,000 400,000 2 8 D e p r e c i a t i o n E x p e n s e T h r o u g h R a t e s 0000 555,050 888,080 1,110,100 1,110,100 1,110,100 3 9 Deposits From Waterfall 979,964 297,287 349,713 544,933 492,204 776,523 1,267,339 1,507,997 1,993,552 4 10 11 Other Revenues
12 RUA Investment Income 116,084 72,525 66,072 40,809 31,595 28,278 29,671 41,778 57,676 5 13 Interfund Loan 0 2,000,000 0 6
13 Revenues Not Coming Through the Waterfal 000000000 7 14 Total Revenues $1,496,048 $2,769,812 $815,786 $985,742 $1,478,849 $2,092,881 $2,807,109 $3,059,875 $3,561,328 15 16 RUA Uses of Funds
1 7 R e t a i n e d E x p e n s e s 000000000
18 Lease Payments 400,000 400,000 400,000 400,000 400,000 400,000 400,000 400,000 400,000 2 19 Repayment of Interfund Loan 0 0 700,000 900,000 1,300,000 1,600,000 1,600,000 1,600,000 1,479,547 6 2 0 R U A R e s e r v e s U s e d f o r R W S C o r e o r S p e c i a l 000000000 21 Revenue Stabilization From RUA Reserves 4,000,000 2,800,000 1,400,000 300,000 0 0000 8 22 Total Expenses 4,400,000 3,200,000 2,500,000 1,600,000 1,700,000 2,000,000 2,000,000 2,000,000 1,879,547 23 24 Ending RUA Cash Balance 4,834,993 4,404,805 2,720,590 2,106,332 1,885,181 1,978,062 2,785,172 3,845,046 5,526,828 05162024 2024 Updates Rialto Rate Model A5 OS W
FG Solutions, LLC
Copyright 2024 All Rights Reservved

Page 8 of 21 ends

Printed on 5/16/2024
76 REVENUE REQUIREMENT ANALYSIS - WATER OPERATING STATEMENT TABLE A-5
City of Rialto - 2024 Water and Wastewater Rate Study
Projected Operating Statement - Water
Line Item FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 FY 29/30 FY 30/31 FY 31/32 FY 32/33 Notes 25 TRUSTEE
26 Trustee Sources of Funds Excluding Construction Reserve 27 Beginning Year RWS Water Reserve Fund Balanc $4, 121,756 $4,342,896 $4,562,387 $4,679,170 $4,792,529 $4,909,959 $5,031,648 $5,157,796 $5,288,613 9 28 29 Rate Revenues Subject to Rate Increases
30 Water Sales (Existing Rates) 12,760,562 12,799,701 12,838,841 12,877,980 12,917,119 12,956,258 12,995,397 13,034,537 13,073,676 10 31 Subtotal $12,760,562 $12,799,701 $12,838,841 $12,877,980 $12,917,119 $12,956,258 $12,995,397 $13,034,537 $13,073,676 32 33 Rate Revenues from Future Rate Increases
34 Monthly Water Bill
35 (15 hcf/month) %
36 Effective Date FY Increase
37 1/1/2024 FY 23/24 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 11 38 1/1/2025 FY 24/25 15.00% 957,042 1,919,955 1,925,826 1,931,697 1,937,568 1,943,439 1,949,310 1,955,180 1,961,051 39 1/1/2026 FY 25/26 15.00% 1,103,974 2,214,700 2,221,452 2,228,203 2,234,955 2,241,706 2,248,457 2,255,209 40 1/1/2027 FY 26/27 8.00% 679,175 1,362,490 1,366,631 1,370,772 1,374,913 1,379,054 1,383,195 41 1/1/2028 FY 27/28 8.00% 735,745 1,475,962 1,480,434 1,484,906 1,489,378 1,493,850 42 1/1/2029 FY 28/29 8.00% 797,019 1,598,869 1,603,699 1,608,528 1,613,358 11 43 1/1/2030 FY 29/30 4.00% 431,695 865,997 868,605 871,214 11 44 1/1/2031 FY 30/31 4.00% 450,319 903,350 906,062 11
45 1/1/2032 FY 31/32 4.00% 469,742 942,305 11
46 1/1/2033 FY 32/33 4.00% 489,998 11
47 Subtotal Rate Revenue from Future Rate Increa
s $957,042 $3,023,929 $4,819,701 $6,251,384 $7,805,383 $9,060,164 $9,970,850 $10,922,294 $11,916,242 48 11
49 50 Other Revenues Not Subject to Rate Increases 10
51 County Contract - SBCO Water Order 349,264 366,727 385,064 404,317 424,533 445,759 468,047 491,450 516,022 52 Rents & Concessions 50,000 51,250 52,531 53,845 55,191 56,570 57,985 59,434 60,920 53 Trustee Water Reserve Interest Income 215,285 215,285 215,285 215,285 215,285 215,285 215,285 215,285 215,285 FY 23/2 4 54 Turn On/Off 73,000 73,000 73,000 73,000 73,000 73,000 73,000 73,000 73,000 55 Delinquent Water Service Fees 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 56 G rant Revenue 000000000 12
57 Other Charges for Current Services
58 P erchlorate Charges Combined Remedy 000000000
59 Miscellaneous Revenues 94,000 96,350 98,759 101,228 103,758 106,352 109,011 111,736 114,530 60 M iscellaneous Revenues 000000000
61 Revenue Stabilization from RWS Reserves 4,000,000 2,800,000 1,400,000 300,000 0 0000 8 62 New Revenue Stabilization Not from RUA Reserves 00000000 8 63 Total Revenue $18,511,154 $19,438,243 $19,895,181 $20,289,038 $21,606,269 $22,925,390 $23,901,576 $24,919,736 $25,981,675 05162024 2024 Updates Rialto Rate Model A5 OS W
FG Solutions, LLC
Copyright 2024 All Rights Reservved

Page 9 of 21 ends

Printed on 5/16/2024
77 REVENUE REQUIREMENT ANALYSIS - WATER OPERATING STATEMENT TABLE A-5
City of Rialto - 2024 Water and Wastewater Rate Study
Projected Operating Statement - Water
Line Item FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 FY 29/30 FY 30/31 FY 31/32 FY 32/33 Notes 64 TRUSTEE
65 Construction Reserve
66 Beginning Balance $2,480,152 ($182,646) $14,614 $214,834 $418,056 $624,327 $833,692 $1,046,197 $1,261,890 13 67 Interest Income $37,202 ($2,740) $219 $3,223 $6,271 $9,365 $12,505 $15,693 $18,928 68 DIF Revenues $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 69 Less Use of DIF Revenues for Capital Expend $2,900,000 $0 $0 $0 $0 $0 $0 $0 $0 13 70 Ending Balance ($182,646) $14,614 $214,834 $418,056 $624,327 $833,692 $1,046,197 $1,261,890 $1,480,819 14 71 72 Trustee Uses of Funds
73 Waterfall 1: Water Service Fee 15
74 Fixed, Routine R&R, and Labor Components $6,882,388 $7,054,448 $7,260,809 $7,442,329 $7,628,387 $7,819,097 $8,014,574 $8,214,939 $8,42 0,312 75 Chemical Component 89,198 91,428 93,714 96,056 98,458 100,919 103,442 106,028 108,679 76 Waterfall 1: Reimbursements 15
77 Insurance Reimbursement 1,028,000 1,053,700 1,080,043 1,107,044 1,134,720 1,163,088 1,192,165 1,221,969 1,252,518 78 Independent Engineer 127,000 130,175 133,429 136,765 140,184 143,689 147,281 150,963 154,737 79 Maintenance 300,000 307,500 315,188 323,067 331,144 339,422 347,908 356,606 365,521 80 Waterfall 1: Retained RUA Expenses 5,365,000 5,559,590 5,763,367 5,976,862 6,200,643 6,435,312 6,681,513 6,939,931 7,211,296 81 Waterfall 2: Annual Operating R&R Payment 680,000 697,000 714,425 732,286 750,593 769,358 788,592 808,306 828,514 15 82 Waterfall 3: Capital Charges 2,900,000 2,900,000 2,900,000 2,900,000 2,900,000 2,900,000 2,900,000 2,900,000 2,900,000 15 83 Waterfall 3: New Capital Charges
84 Future Parity Debt Service 0 455,708 455,708 455,708 455,708 455,708 455,708 455,708 455,708 16 85 Waterfall 4: Water Reserve Account Deposits 221,141 219,491 116,783 113,359 117,430 121,689 126,148 130,817 135,709 17 86 Waterfall 5: RUA Lease Payment 400,000 400,000 400,000 400,000 400,000 400,000 400,000 400,000 400,000 2 8 7 T r a n s f e r t o R U A : D e p r e c i a t i o n E x p e n s e 0000 555,050 888,080 1,110,100 1,110,100 1,110,100 3 88 Total Uses of Funds $17,992,726 $18,869,039 $19,233,464 $19,683,475 $20,712,316 $21,536,362 $22,267,431 $22,795,367 $23,343,093 89 90 Additional $ Out the Waterfall 297,287 349,713 544,933 492,204 776,523 1,267,339 1,507,997 1,993,552 2,502,873 4 91 92 Ending RWS Water Reserve Balance 4,342,896 4,562,387 4,679,170 4,792,529 4,909,959 5,031,648 5,157,796 5,288,613 5,424,321 Line Item FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 FY 29/30 FY 30/31 FY 31/32 FY 32/33 Notes 93 TRUSTEE
94 COVERAGE CALCULATION (Criterion: Free Cash Flow After Waterfall 1 -3 Paid > 17.7% of Capital Charges) 95 Revenues Going into Trust Net of DIF $14,295,868 $16,422,958 $18,279,895 $19,773,753 $21,390,984 $22,710,104 $23,686,290 $24,704,451 $ 25,766,390 96 Plus Revenue Stabilizatio n 4,000,000 2,800,000 1,400,000 300,000 0 0000 97 Less Waterfall 1-2 ($14,471,586) ($14,893,840) ($15,360,973) ($15,814,409) ($16,284,128) ($16,770,885) ($17,275,475) ($17,798,742) ($18,341,577) 98 Balance, Available for Capital Charge $3,824,282 $4,329,117 $4,318,922 $4,259,344 $5,106,856 $5,939,219 $6,410,815 $6,905,708 $7,424,8 13 99 Less Capital Charges and Parity Debt ($2,900,000) ($3,355,708) ($3,355,708) ($3,355,708) ($3,355,708) ($3,355,708) ($3,355,708) ($3,355,708) ($3,355,708) 100 Free Cash Flow Before Lease Payment $924,282 $973,409 $963,214 $903,636 $1,751,148 $2,583,512 $3,055,107 $3,550,001 $4,069,105 101 Ratio (Free Cash Flow Divided by Capital Charge
s 31.9% 29.0% 28.7% 26.9% 52.2% 77.0% 91.0% 105.8% 121.3% 18 102
05162024 2024 Updates Rialto Rate Model A5 OS W
FG Solutions, LLC
Copyright 2024 All Rights Reservved

Page 10 of 21 ends

Printed on 5/16/2024
78 REVENUE REQUIREMENT ANALYSIS - WATER OPERATING STATEMENT TABLE A-5
City of Rialto - 2024 Water and Wastewater Rate Study
Projected Operating Statement - Water
103
104 REQUIRED WATER FUND RESERVE CALCULATION
105 (Criteria: 25% service fees, reimbursable pmts, facility auth expenses, ORR pmts, Capital Charges (waterfall 1 - 3)) 106 Required Water Reserve Fund Reserve Balance
107 Sum of required items $17,371,586 $17,793,840 $18,260,973 $18,714,409 $19,184,128 $19,670,885 $20,175,475 $20,698,742 $21,241,577 108 25% of the sum of required items $4,342,896 $4,448,460 $4,565,243 $4,678,602 $4,796,032 $4,917,721 $5,043,869 $5,174,686 $5,310,394 109
110
111 CALCULATED DAYS OF RESERVES (Criteria: Ending Year RUA Reserve Balance Divided by Waterfall 1 - 5 Expenses * 365) 112 Days of Reserves 98 85 52 39 33 34 46 62 86 18
113 30 Days of Waterfall 1-5 Expenses $1,478,854 $1,550,880 $1,580,833 $1,617,820 $1,702,382 $1,770,112 $1,830,200 $1,873,592 $1,918,610 114
115
RUA: ADDITIONAL RETAINED EXPENSE DETAIL
116
117 Item FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 FY 29/30 FY 30/31 FY 31/32 FY 32/33 Notes 118 Electricity $1,372,000 $1,468,040 $1,570,803 $1,680,759 $1,798,412 $1,924,301 $2,059,002 $2,203,132 $2,357,351 14 119 Perchlorate, Not Combined Remedy $78,000 $79,950 $81,949 $83,997 $86,097 $88,250 $90,456 $92,717 $95,035 14 120 City Contract (Transfer to General Fund) $505,000 $517,625 $530,566 $543,830 $557,426 $571,361 $585,645 $600,286 $615,293 14 121 Water Purchase, Baseline Feeder $642,000 $658,050 $674,501 $691,364 $708,648 $726,364 $744,523 $763,136 $782,215 14 122 WVWD and Misc Water Purchase Fees $1,086,000 $1,113,150 $1,140,979 $1,169,503 $1,198,741 $1,228,709 $1,259,427 $1,290,913 $1,323,186 1 4 123 IT Services $73,000 $74,825 $76,696 $78,613 $80,578 $82,593 $84,658 $86,774 $88,943 14 124 City Reimbursement (680 Admin) $828,000 $848,700 $869,918 $891,665 $913,957 $936,806 $960,226 $984,232 $1,008,838 14 125 Consulting Fees: Engineering $300,000 $307,500 $315,188 $323,067 $331,144 $339,422 $347,908 $356,606 $365,521 14 126 Consulting Services, Grant Funded $0 $0 $0 $0 $0 $0 $0 $0 $0 11 127 Miscellaneous Fees and Permits $430,000 $440,750 $451,769 $463,063 $474,640 $486,506 $498,668 $511,135 $523,913 14 128 Rebates $51,000 $51,000 $51,000 $51,000 $51,000 $51,000 $51,000 $51,000 $51,000 14 129
130
131
2024 Interfund Loan
132
133 Item FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 FY 29/30 FY 30/31 FY 31/32 FY 32/33 Notes 134 Proceeds $0 $2,000,000 $0 $0 $0 $0 $0 $0 $0 6
135 Principal Repaid $0 $0 ($390,701) ($606,329) ($1,030,582) ($1,371,805) ($1,426,677) ($1,483,745) ($1,422,641) 6 136 End of Year Principal $5,512,000 $7,732,480 $7,341,779 $6,735,450 $5,704,868 $4,333,063 $2,906,386 $1,422,641 $0 6 137
138 Interest @4% $212,000 $220,480 $309,299 $293,671 $269,418 $228,195 $173,323 $116,255 $56,906 6 139 Interest Paid $0 $0 $309,299 $293,671 $269,418 $228,195 $173,323 $116,255 $56,906 6 140 Capitalized Interest $212,000 $220,480 $0 $0 $0 $0 $0 $0 $0 6 Math check, should = $0 $0 $0 $0 $0 $0 $0 $0
05162024 2024 Updates Rialto Rate Model A5 OS W
FG Solutions, LLC
Copyright 2024 All Rights Reservved

Page 11 of 21 ends

Printed on 5/16/2024
79 REVENUE REQUIREMENT ANALYSIS - WATER OPERATING STATEMENT TABLE A-5
City of Rialto - 2024 Water and Wastewater Rate Study
Projected Operating Statement - Water
Notes:
(1) Beginning Year FY 23/24 balance: Per City staff, 3/14/24, filename 5670 Balance Sheet 06-30-23.xls. Fund balance shown is 660 Fund Cash in Bank balance as of 5/10/23. (2) FY 24/25 per draft FY 24/25 RWS Budget, and projected to remain at this value through the 10-year planning period. (3) The City is implementing a policy of collecting depreciation expense through rates. Collecting deprecation expense through rates will be phased in. (4) If revenues exceed the amount needed to meet the RWS reserve requirement, then these revenues will "drop out" of the waterfall and be returned to RUA.

FY 23/24 amount obtained from John Maher Accountancy, 5/8/23. (5) FY 23/24 interest income from the FY 23/24 RUA budget. In subsequent years, interest income is projected to be 1.5% of the previous fiscal year ending fund balance. (6) RUA obtained an Interfund Loan from the General Fund in FY 23/24. A subsequent Interfund Loan is anticipated in FY 25/26. (7) For the purposes of this Rate Study, all revenues are assumed to go into the waterfall. (8) $2.785 million of the FY 23/24 Revenue Stabilization is the remaining funds left in the Trustee Water Rate Stabilization Fund as of 6/30/23, per John Maher, 5/5/23.

If needed, pre-existing reserves are used to provide supplemental revenue stabilization to meet the RWS coverage requirement. (9) Beginning FY 23/24 Balance equals actual RWS Water Construction Reserve Balance as of 1/31/24. (10) See Table A-2 for more detail.
(11) Rate increases will be effective on January 1 of each year. No additional CIP for FY 28/29 - FY 32/33 has yet been identified and no CIP spending for these years is included in this analysis. (12) Grant revenues are non-recurring. Grant revenues are used for consulting services for specific grant-funded purposes. (13) FY 24/25 balance is that of the Trust Construction Restricted Fund as of 3/1/2024 per RWS on 3/19/24. Negative values are the result of drawdown of the Construction Restricted Fund after May 2023, after the capital funding strategy outlined in Table A-6 was identified. (14) The City may have to use more RUA reserves than anticipated for capital improvements if Construction Restricted Funds are not available to fund capital improvements. (15) See Table A-3 for more detail.
(16) See Table A-8 for more detail.
(17) This row represents the amount, if required, of contributions from RUA to maintain the minimum required balance in the Water Reserve Account held in trust. (18) The Concession Agreement requires coverage of at least 17.7%. With the addition of new debt, City staff (per 8/14/23 email) has provided direction to use 25% coverage for the purposes of this Rate Study. (19) There is no City policy for a minimum RUA reserve balance. 05162024 2024 Updates Rialto Rate Model A5 OS W
FG Solutions, LLC
Copyright 2024 All Rights Reservved

Page 12 of 21 ends

Printed on 5/16/2024
80 REVENUE REQUIREMENT ANALYSIS - WASTEWATER OPERATING STATEMENT TABLE A-6
City of Rialto - 2024 Water and Wastewater Rate Study
Projected Operating Statement - Wastewater
Projected
Line Item FY 23/24 FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 FY 29/30 FY 30/31 FY 31/32 FY 32/33 Notes 1 RIALTO UTILITY AUTHORITY
2 RUA Sources of Funds
3 Beginning Fund Balance $17,738,504 $17,976,143 $17,254,097 $6,920,599 $6,132,398 $6,612,549 $9,527,925 $11,901,264 $15,979,474 $20,775,779 1 4 5 From Trustee: Funds Dropping Out of Waterfall
6 Funds to Cover Retained Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 7 Funds to Cover Annual Lease Payment $1,600,000 $1,600,000 $1,600,000 $1,600,000 $1,600,000 $1,600,000 $1,600,000 $1,600,000 $1,600,000 $ 1,600,000 2 8 Depreciation Expense Through Rates $0 $0 $760,478 $1,520,956 $2,661,673 $3,802,390 $3,802,390 $3,802,390 $3,802,390 $3,802,390 3 9 Deposits From Waterfall $1,000,000 $1,008,312 $193,212 $1,187,034 ($273,508) ($128,703) ($1,205,532) $472,900 $1,139,211 $1,724,570 4 10 11 Other Revenues
12 Interest Income on RUA Reserves $3,930 $269,642 $258,811 $103,809 $91,986 $99,188 $142,919 $178,519 $239,692 $311,637 5 13 R evenues Not Coming Through the Waterfall $0$ 0$ 0$ 0$ 0$ 0$ 0$ 0$ 0$ 0 6 14 Total Revenues $2,603,930 $2,877,954 $2,812,502 $4,411,799 $4,080,151 $5,372,876 $4,339,777 $6,053,809 $6,781,293 $7,438,597 15 16 RUA Uses of Funds
17 Retained Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
18 Lease Payments $1,600,000 $1,600,000 $1,600,000 $1,600,000 $1,600,000 $1,600,000 $1,600,000 $1,600,000 $1,600,000 $1,600,000 2 19 Uses of Reserves for Capital Projects $0 $0 $9,546,000 $0 $0 $0 $0 $0 $0 $0 7 20 RUA Expenses Outside Waterfall: IEUA Well $0 $0 $0 $0 $0 $357,500 $366,438 $375,598 $384,988 $394,613 8 21 Revenue Stabilization from RUA Reserves $766,291 $2,000,000 $2,000,000 $3,600,000 $2,000,000 $500,000 $0 $0 $0 $0 9 22 Total Expenses $2,366,291 $3,600,000 $13,146,000 $5,200,000 $3,600,000 $2,457,500 $1,966,438 $1,975,598 $1,984,988 $1,994,613 23 24 Ending RUA Fund Balance $17,976,143 $17,254,097 $6,920,599 $6,132,398 $6,612,549 $9,527,925 $11,901,264 $15,979,474 $20,775,779 $26,219,762

14.61% 18.07% 27.38% 26.01% 26.00% 27.42% 31.77% 35.40% 39.11% 42.91% 05162024 2024 Updates Rialto Rate Model
A6 OS WW
FG Solutions, LLC
Copyright 2023 All Rights Reservved

Page 13 of 21 ends

Printed on 5/16/2024
81 REVENUE REQUIREMENT ANALYSIS - WASTEWATER OPERATING STATEMENT TABLE A-6
City of Rialto - 2024 Water and Wastewater Rate Study
Projected Operating Statement - Wastewater
Line Item FY 23/24 FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 FY 29/30 FY 30/31 FY 31/32 FY 32/33 Notes 25 TRUSTEE
26 Trustee Sources of Funds Excluding Construction Reserve 27 Beginning Year RWS Wastewater Reserve Fund Balance $6,923,986 $6,851,504 $7,307,663 $7,477,231 $8,246,829 $8,373,006 $8,503,420 $8,638,251 $8,777,693 $8,921,945 10 28 29 Rate Revenues Subject to Rate Increases
30 Sewer Service Fees (Existing Rates) $26,080,285 $26,426,992 $26,524,381 $26,621,771 $26,719,160 $26,816,550 $26,913,939 $27,011,329 $2 7,108,718 $27,206,108 11 31 Other Charges for Current Svcs (Extraterritorial) 1,839,898 1,950,000 1,950,000 1,950,000 1,950,000 1,950,000 1,950,000 1,950,000 1,95 0,000 1,950,000 11 32 Total Rate Revenues, Existing Rates, (Subject to Rate Increases) $27,920,183 $28,376,992 $28,474,381 $28,571,771 $28,669,160 $28,76 6,550 $28,863,939 $28,961,329 $29,058,718 $29,156,108 33 34 Future Increases
35 Monthly Water Bill Months
36 (15 hcf/month) % Effective in
37 Effective Date FY Increase Initial Year
38 1/1/2024 FY 23/24 0.00% 6 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 12 39 1/1/2025 FY 24/25 6.00% 6 851,000 1,708,000 1,714,000 1,720,000 1,726,000 1,732,000 1,738,000 1,744,000 1,749,000 40 1/1/2026 FY 25/26 6.00% 6 905,000 1,817,000 1,823,000 1,830,000 1,836,000 1,842,000 1,848,000 1,854,000 41 1/1/2027 FY 26/27 6.00% 6 963,000 1,933,000 1,939,000 1,946,000 1,952,000 1,959,000 1,966,000 42 1/1/2028 FY 27/28 6.00% 6 1,024,000 2,056,000 2,063,000 2,070,000 2,077,000 2,084,000 43 1/1/2029 FY 28/29 6.00% 6 1,090,000 2,186,000 2,194,000 2,201,000 2,209,000 44 1/1/2030 FY 29/30 2.50% 6 483,000 969,000 972,000 975,000 12 45 1/1/2031 FY 30/31 2.50% 6 497,000 996,000 1,000,000 12 46 1/1/2032 FY 31/32 2.50% 6 511,000 1,025,000 12
47 1/1/2033 FY 32/33 2.50% 6 525,000 12
48 Subtotal Rate Revenue from Future Rate Increases $0 $851,000 $2,613,000 $4,494,000 $6,500,000 $8,641,000 $10,246,000 $11,262,000 $12,3 08,000 $13,387,000 49 12
50 51 Other Revenues Not Subject to Rate Increases 13
52 F ines/Forfeitures/Penalties 2,000000000000
53 Rents and Concessions (Anaergia Lease) 0 279,000 279,000 279,000 279,000 279,000 279,000 279,000 279,000 279,000 13 54 Trustee Interest Income 539,000 269,500 269,500 269,500 269,500 269,500 269,500 269,500 269,500 269,500 14 55 Delinquent Sewer Service Fees 200,000 15,315 15,315 15,315 15,315 15,315 15,315 15,315 15,315 15,315 13 56 G rants 370,000000000000 1 3
57 Effluent Sale to IEUA 144,375 144,375 144,375 144,375 144,375 0 1,024,205 1,144,110 1,172,713 1,202,031 15 58 Subtotal, Other Revenues Not Subject to Rate Increases 1,255,375 708,190 708,190 708,190 708,190 563,815 1,588,020 1,707,925 1,736,528 1,765,845 59 60 Revenue Stabilization from RUA Reserves 766,291 2,000,000 2, 000,000 3,600,000 2, 000,000 500,00 00000 9 61 New Revenue Stabilization Not from RUA Reserves 0000000000 62 63 Total Revenue $29,941,849 $31,936,181 $33,795,571 $37,373,960 $37,877,350 $38,471,365 $40,697,959 $41,931,254 $43,103,246 $44,308,953 05162024 2024 Updates Rialto Rate Model
A6 OS WW
FG Solutions, LLC
Copyright 2023 All Rights Reservved

Page 14 of 21 ends

Printed on 5/16/2024
82 REVENUE REQUIREMENT ANALYSIS - WASTEWATER OPERATING STATEMENT TABLE A-6
City of Rialto - 2024 Water and Wastewater Rate Study
Projected Operating Statement - Wastewater
Projected
Line Item FY 23/24 FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 FY 29/30 FY 30/31 FY 31/32 FY 32/33 Notes 64 TRUSTEE
65 Construction Reserve
66 Beginning Balance $5,661,827 $6,011,827 ($1,038,173) ($688,173) ($338,173) $11,827 $361,827 $711,827 $1,061,827 $1,411,827 16 67 DIF Revenues 350,000 350,000 350,000 350,000 350,000 350,000 350,000 350,000 350,000 350,000 68 Less Use of DIF Revenues for Capital Expenditure 7,400,00000000000 1 6 69 Ending Balance $6,011,827 ($1,038,173) ($688,173) ($338,173) $11,827 $361,827 $711,827 $1,061,827 $1,411,827 $1,761,827 16 70 71 Trustee Uses of Funds
72 Waterfall 1: Wastewater Service Fee 17
73 Fixed, Routine R&R, and Labor Components $6,804,152 $7,120,579 $7,359,148 $7,543,127 $7,731,705 $7,924,998 $8,123,123 $8,326,201 $8,53 4,356 $8,747,715 74 Chemical Component $729,932 $1,350,000 $1,383,750 $1,418,344 $1,453,802 $1,490,147 $1,527,401 $1,565,586 $1,604,726 $1,644,844 75 Waterfall 1: Reimbursements 17
76 Insurance Reimbursement 999,756 1,038,000 1,063,950 1,090,549 1,117,812 1,145,758 1,174,402 1,203,762 1,233,856 1,264,702 77 Independent Engineer 109,349 118,000 120,950 123,974 127,073 130,250 133,506 136,844 140,265 143,772 78 Maintenance 0 300,000 307,500 315,188 323,067 331,144 339,422 347,908 356,606 365,521 79 Waterfall 1: Retained RUA Expenses 5,150,829 5,692,073 6,038,375 6,247,114 6,465,117 6,692,897 6,931,003 7,180,015 7,440,555 7,713,281 80 Waterfall 2: Annual Operating R&R Payment 930,000 930,000 953,250 977,081 1,001,508 1,026,546 1,052,210 1,078,515 1,105,478 1,133,115 1 7 81 Waterfall 3: Capital Charges 12,682,000 12,682,000 12,682,000 12,682,000 12,682,000 12,682,000 12,682,000 12,682,000 12,682,000 12,682 ,000 17 82 Waterfall 3: New Capital Charges
83 Future Parity Debt Service 0 0 2,589,940 2,589,940 2,589,940 2,589,940 2,589,940 2,589,940 2,589,940 18 84 Waterfall 4: Wastewater Reserve Account Deposits 0 456,159 169,568 769,598 126,177 130,414 134,832 139,441 144,253 149,277 19 85 Waterfall 5: RUA Lease Payment 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 2 86 Transfer to RUA: Depreciation Expense 760,478 1,520,956 2,661,673 3,802,390 3,802,390 3,802,390 3,802,390 3,802,390 3 87 Total Uses of Funds $29,006,018 $31,286,811 $32,438,969 $36,877,870 $37,879,875 $39,546,483 $40,090,228 $40,652,602 $41,234,423 $41,836 ,556 88 89 Additional $ Out the Waterfall $1,008,312 $193,212 $1,187,034 ($273,508) ($128,703) ($1,205,532) $472,900 $1,139,211 $1,724,570 $2,323, 120 20 90 91 Ending Wastewater Reserve Balance $6,851,504 $7,307,663 $7,477,231 $8,246,829 $8,373,006 $8,503,420 $8,638,251 $8,777,693 $8,921,945 $9 ,071,222 Projected
Line Item FY 23/24 FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 FY 29/30 FY 30/31 FY 31/32 FY 32/33 Notes 92 TRUSTEE COVERAGE CALCULATION (Criterion: Free Cash Flow After Waterfall 1 -3 Paid > 15% of Capital Charges) 93 Revenues Going into Trust Net of DIF Revenues $28,492,183 $29,522,306 $31,381,696 $33,360,085 $35,463,475 $37,701,865 $39,404,254 $40 ,517,644 $41,661,033 $42,837,423 94 Plus Use of Rev. Stabilization Already in Trust
95 Plus Revenue Stabilization f rom RUA Reserves 766,291 2,000,000 2,000, 000 3,600,000 2,000,000 500,0000000 96 Plus Revenue Stabilization not from RUA Reserves 0000000000 97 Less Waterfall 1-2 (14,724,018) (16,548,652) (17,226,923) (17,715,376) (18,220,085) (18,741,740) (19,281,066) (19,838,831) (20,415,841 ) (21,012,949) 98 Balance, Available for Capital Charge $14,534,456 $14,973,654 $16,154,773 $19,244,709 $19,243,390 $19,460,125 $20,123,188 $20,678,813 $21,245,192 $21,824,473 99 Less Capital Charges and Parity Debt Service ($12,682,000) ($12,682,000) ($12,682,000) ($15,271,940) ($15,271,940) ($15,271,940) ($1 5,271,940) ($15,271,940) ($15,271,940) ($15,271,940) 100 Free Cash Flow Before RUA Lease Payment $1,852,456 $2,291,654 $3,472,773 $3,972,769 $3,971,450 $4,188,185 $4,851,248 $5,406,873 $5,97 3,252 $6,552,534 101 Ratio (Free Cash Flow Divided by Capital Charge s) 14.61% 18.07% 27.38% 26.01% 26.00% 27. 42% 31.77% 35.40% 39.11% 42.91% 21 05162024 2024 Updates Rialto Rate Model
A6 OS WW
FG Solutions, LLC
Copyright 2023 All Rights Reservved

Page 15 of 21 ends

Printed on 5/16/2024
83 REVENUE REQUIREMENT ANALYSIS - WASTEWATER OPERATING STATEMENT TABLE A-6
City of Rialto - 2024 Water and Wastewater Rate Study
Projected Operating Statement - Wastewater
102
05162024 2024 Updates Rialto Rate Model
A6 OS WW
FG Solutions, LLC
Copyright 2023 All Rights Reservved

Page 16 of 21 ends

Printed on 5/16/2024
84 REVENUE REQUIREMENT ANALYSIS - WASTEWATER OPERATING STATEMENT TABLE A-6
City of Rialto - 2024 Water and Wastewater Rate Study
Projected Operating Statement - Wastewater
103 TRUSTEE REQUIRED WASTEWATER FUND RESERVE CALCULATION 104 (Criteria: 25% service fees, reimbursable pmts, facility auth expenses, ORR pmts, Capital Charges (waterfall 1 - 3)) 105 Required Water Reserve Fund Reserve Balance
106 Sum of above items $27,406,018 $29,230,652 $29,908,923 $30,397,376 $30,902,085 $31,423,740 $31,963,066 $32,520,831 $33,097,841 $33,694 ,949 107 25% of the sum of above items $6,851,504 $7,307,663 $7,477,231 $7,599,344 $7,725,521 $7,855,935 $7,990,767 $8,130,208 $8,274,460 $8,42 3,737 108
109 CALCULATED DAYS OF RESERVES (Criteria: Ending Year RUA Reserve Balance Divided by Waterfall 1 - 5 Expenses * 365) 22 110 Days of Reserves 226 201 78 61 64 88 108 143 184 229 111 90 Days of Waterfall 1-5 Expenses $7,152,169 $7,714,556 $7,998,650 $9,093,173 $9,340,243 $9,751,188 $9,885,262 $10,023,929 $10,167,39 2 $10,315,863 112
113
RUA: ADDITIONAL RETAINED EXPENSE DETAIL
114 Projected
115 Item FY 23/24 FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 FY 29/30 FY 30/31 FY 31/32 FY 32/33 Notes 116 Electricity $1,167,308 $1,200,000 $1,284,000 $1,373,880 $1,470,052 $1,572,955 $1,683,062 $1,800,876 $1,926,938 $2,061,823 17 117 Gas $188,520 $104,000 $106,600 $109,265 $111,997 $114,797 $117,666 $120,608 $123,623 $126,714 17 118 Contracted Services
119 City Contract (Transfer to General Fund) $685,000 $710,000 $727,750 $745,944 $764,592 $783,707 $803,300 $823,382 $843,967 $865,066 17 120 Biosolids $887,285 $1,194,000 $1,223,850 $1,254,446 $1,285,807 $1,317,953 $1,350,901 $1,384,674 $1,419,291 $1,454,773 17 121 City Reimbursement (680 Admin) $1,072,830 $1,112,000 $1,139,800 $1,168,295 $1,197,502 $1,227,440 $1,258,126 $1,289,579 $1,321,819 $1,3 54,864 17 122 Consulting Services $75,000 $500,000 $512,500 $525,313 $538,445 $551,906 $565,704 $579,847 $594,343 $609,201 17 123 C onsulting SWRCB Grant BDP $370,000$ 0$ 0$ 0$ 0$ 0$ 0$ 0$ 0$ 0 1 7 124 C onsulting CEQA for Micro Grid $50,000$ 0$ 0$ 0$ 0$ 0$ 0$ 0$ 0$ 0 1 7 125 Consulting Auditor $5,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 17 126 IT Services: Tyler and Paymentus $124,746 $136,000 $139,400 $142,885 $146,457 $150,119 $153,872 $157,718 $161,661 $165,703 17 127 Other Services and Supplies
128 Rialto Habitat Nature Center O&M $0 $0 $150,000 $153,750 $157,594 $161,534 $165,572 $169,711 $173,954 $178,303 17 129 Other Retained Services $275,930 $500,000 $512,500 $525,313 $538,445 $551,906 $565,704 $579,847 $594,343 $609,201 17 130 Inland Empire Brine Line Fees (SBVMWD) $125,290 $92,490 $94,802 $97,172 $99,602 $102,092 $104,644 $107,260 $109,942 $112,690 17 131 Wastewater Services (Colton) $12,000 $9,583 $9,823 $10,068 $10,320 $10,578 $10,842 $11,113 $11,391 $11,676 17 132 MIPP Services (Veolia) $111,920 $134,000 $137,350 $140,784 $144,303 $147,911 $151,609 $155,399 $159,284 $163,266 17 133 Total $5,150,829 $5,692,073 $6,038,375 $6,247,114 $6,465,117 $6,692,897 $6,931,003 $7,180,015 $7,440,555 $7,713,281 05162024 2024 Updates Rialto Rate Model
A6 OS WW
FG Solutions, LLC
Copyright 2023 All Rights Reservved

Page 17 of 21 ends

Printed on 5/16/2024
85 REVENUE REQUIREMENT ANALYSIS - WASTEWATER OPERATING STATEMENT TABLE A-6
City of Rialto - 2024 Water and Wastewater Rate Study
Projected Operating Statement - Wastewater
Notes:
(1) FY 23/24 RUA Fund balance as of 6/30/23, per City staff 3/14/24, plus $2.8M that is in the Trust Excess Fund that could be transferred to the RUA per John Maher 3/14/24 (2) FY 23/24 per RUA FY 23/24 Budget and FY 24/25 per draft RWS FY 24/25 Budget, and projected to remain at this value through the 10-year planning period. (3) The City is implementing a policy of collecting depreciation expense through rates. Collecting deprecation expense through rates will be phased in. (4) If revenues exceed the amount needed to meet the RWS reserve requirement, then these revenues will "drop out" of the waterf all and be returned to RUA.

FY 23/24 amount obtained from John Maher Accountancy, 5/8/23. Negative amount means that depreciation expense noted in the line above will not be fully returned to RUA. (5) FY 23/24 interest income from the FY 23/24 RUA budget. In subsequent years, interest income is projected to be 1.5% of the previous fiscal year ending fund balance. (6) For the purposes of this Rate Study, all revenues are assumed to go into the waterfall. (7) The City anticipates using a portion of the RUA reserves to fund capital projects. See Table A-8. (8) Beginning in FY 28/29, the City anticipates the start-up of a well that will deliver water to IEUA. The City is responsible for the O&M expenses of this well, in conjunction with revenues from recycled water sales to IEUA.

See Table B-11 for more detail.
(9) As needed, pre-existing reserves are used to provide supplemental revenue stabilization to meet the RWS coverage requiremen t. FY 23/24 per John Maher 3/8/24, which excludes use of funds already in the Trust for Revenue Stabilization. (10) Beginning FY 23/24 Balance equals actual RWS Wastewater Construction Reserve Balance as of 1/31/24 (11) See Table A-2 for more detail.
(12) Rate increases will be effective on January 1 of each year. FY 29/30 - FY 32/33 revenue increases will be higher than what is shown. No additional CIP for FY 28/29 - FY 32/33 has yet been identified and no CIP spending for these years is included in this analysis. (13) See Table A-2 for more detail.
(14) FY 23/24 Per RWS. Revenue cut 50% in subsequent years because (a) some of the interest-earning reserves are is in restrict ed accounts and the interest income is not available for use, and (b) future interest rates may be lower than 2024 interest rates. (15) Source: City staff, 7/12/23. 3,500 AFY @ $275/AF in FY 23/24 dollars. $/AF adjusted with inflation, and payment starts 1/1/29. Prepayment of 15% of total revenues starting FY 23/24. Prepayment subtracted from revenues received starting 1/1/29. Prepayment results in $0 income in FY 28/29 and approximately $92,000 credit in FY 29/30 (16) FY 23/24 balance is that of the Trust Construction Restricted Fund as of 3/1/2024 per RWS on 3/19/24. Negative values in s ubsequent years are the result of drawdown of the Construction Restricted Fund after May 2023, after the capital funding strategy outlined in Table A-6 was identified. Also note that DIF revenues exceeded $1.3M between Mar ch 2023 and March 2024, and the projected $350K/year DIF revenues may be conservative, especially in the near-term. If $7.4M is not available in the Construction Restricted Fund for the high-priority CIP, RUA may h ave to use more of its reserves for CIP funding than projected in this Rate Study. (17) See Table A-3 for more detail.
(18) See Table A-8 for more detail.
(19) This row represents the amount, if required, of contributions from RUA to maintain the minimum required balance in the Was tewater Reserve Account held in trust. (20) A negative value in this row added to the deprecation expense will be the net amount transferred to RUA. (21) The Concession Agreement requires coverage of at least 15%. With the addition of new debt, City staff (per 8/14/23 email f rom City staff with Bond Counsel coverage requirements) has provided direction to use 25% coverage for the purposes of this Rate Study. (22) There is no City policy for a minimum RUA reserve balance. 05162024 2024 Updates Rialto Rate Model
A6 OS WW
FG Solutions, LLC
Copyright 2023 All Rights Reservved

Page 18 of 21 ends

Printed on 5/16/2024
86 REVENUE REQUIREMENT ANALYSIS - CAPITAL IMPROVEMENT PLAN TABLE A-7
City of Rialto - 2024 Water and Wastewater Rate Study
Capital Improvement Plan
Estimated Dashboard Funds Funded Funded Funded Total Remaining Year Remaining Cost CIP Input: Expended Cost from Cost from Debt-Financed Funded Cost Per RWS Line Water Capital Projects FY 23/24 $ (1) Category Funded? Prior to 4/1/24 RUA DIFs Cost FY 23/24 $ Apr 2023 CIP 1 RWS Defined Core Water Capital Projects
2 Aged Watermain Replacement Etiwanda from Riverside to Eucalyptus (Pavement Project)
$6,700,000 Highest Priority - W Yes $2,900,000 $3,800,000 $6,700,000 2024 3 Pressure Relief Valves (PRVs) Zone 2 to Zone 3 along Merrill Ave. $250,000 Other Core CIP - W No $0 2025 4 Service line replacements on South Alice, South Palm, West Godden and Alu St. $1,200,000 Other Core CIP - W No $0 2025 5 Main and service line replace; Bonnie View between Acacia and Eucalyptus $2,400,000 Other Core CIP - W No $0 2025 6 Mainline Valve Replacements $250,000 Other Core CIP - W No $0 2025 7 Cedar Reservoir 2, Overhaul, and Dome Preservation $1,000,000 Other Core CIP - W No $0 2026 8 4” South Oakdale and South Marcella between East Rialto Ave and Allen St $3,000,000 Other Core CIP - W No $0 2026 9 Mainline Valve Replacements $250,000 Other Core CIP - W No $0 2026 10 Mainline and Service Line, Hydrant Laterals, and Mainline Replacement Below Etiwanda between Lilac and Sycamore Streets: Cornell and Victoria $2,500,000 Other Core CIP - W No $0 2027
11 Service Line Replacement, Hydrant Lateral for Woodcrest, Yucca, Miramonte, Arrowhead, and Althea
$1,300,000 Other Core CIP - W No $0 2027
12 Mainline Valve Replacements $250,000 Other Core CIP - W No $0 2027 13 Service Line Replacement between Cedar and Larch below Etiwanda on Streets Victoria, Cornell, Rosewood, Church, and Folk
$2,200,000 Other Core CIP - W No $0 2028
14 Service Line Replacement, Hydrant Laterals for Palm, Orange, Olive, Date Between Foothill to Train Tracks (Part 1)
$3,300,000 Other Core CIP - W No $0 2028
15 Mainline Valve Replacements $250,000 Other Core CIP - W No $0 2028 16 Subtotal RWS Defined Core Water Capital Projects $24,850,000 $0 $0 $2,900,000 $3,800,000 $6,700,000 17 18 RWS Defined Special Water Capital Projects
19 AMI Project (Project Cost Excluding Grants) (2) $0 AMI No $0 2025 20 W-WW Security Upgrade Project $0 Other Special CIP - W No $0 2026 21 Install a arsenic treatment system at City Well 3A $2,200,000 Highest Priority - W Yes $2,200,000 $2,200,000 2027 22 Subtotal RWS Defined Special Water Capital Projects $2,200,000 $0 $0 $0 $2,200,000 $2,200,000 23 24 Total Water Capital Improvement Plan $27,050,000 $0 $0 $2,900,000 $6,000,000 $8,900,000 05162024 2024 Updates Rialto Rate Model
A7 CIP List
Copyright 2024 All Rights Reserved

Page 19 of 21 ends

Printed: 5/16/2024
87 REVENUE REQUIREMENT ANALYSIS - CAPITAL IMPROVEMENT PLAN TABLE A-7
City of Rialto - 2024 Water and Wastewater Rate Study
Capital Improvement Plan
Estimated CIP Category Dashboard Funds Funded Funded Funded Total Remaining Year Remaining Cost Highest Priority per Input: Expended Cost from Cost from Debt-Financed Funded Cost Per RWS Line Wastewater Capital Projects FY 23/24 $ (1) City staff, 5/17/23 Funded? Prior to 4/1/24 RUA Reserves DIFs Cost FY 23/24 $ Apr 2023 CIP 1 RWS Defined Core Wastewater Capital Projects (5)
2 Sycamore Sewer Lift Station (2) Other Core CIP - WW No $0 2024 3 Sycamore Sewer Upsize 1 (3) $5,000,000 Highest Priority - WW Yes $5,000,000 2024 4 Acacia Sewer Upsize 1 $2,000,000 Highest Priority - WW Yes $2,000,000 2024 5 Digester No. 1 Activation & Digester No. 2 Rehabilitation $1,800,000 Highest Priority - WW Yes $1,800,000 2024 6 Rialto Biosolids Project (4) $26,400,000 Highest Priority - WW Yes $454,000 $25,946,000 2025 7 Agua Mansa Lift Station Upgrades $2,000,000 Highest Priority - WW Yes $2,000,000 2025 13 P5 SEC 1 & 2 Upgrades $500,000 Highest Priority - WW Yes $500,000 2026 17 Ayala Lift Station Upgrade & Repair $2,000,000 Highest Priority - WW Yes $2,000,000 2027 23 Subtotal RWS Defined Core Wastewater Capital Projects $49,750,000 $39,246,000 24 25 RWS Defined Special Wastewater Capital Projects (5) 26 Rialto Microgrid Project $20,000,000 Microgrid and Related Projects No $0 2024 27 Rialto WWTP P1 & P2 Demo $2,300,000 Microgrid and Related Projects No $0 2024 28 Rialto WWTP Electrical Upgrade for Microgrid $8,800,000 Highest Priority - WW Yes $8,800,000 2024 29 Rialto Habitat Nature Center $3,000,000 Rialto Habitat Nature Center Yes $3,000,000 2024 30 Rialto Sewer LS SCADA Project $750,000 Other Special CIP - WW No $0 2024 31 Rialto WWTP Additional Disk Filter project $500,000 Other Special CIP - WW No $0 2024 32 WWTP Sewer LS Generator project $900,000 Other Special CIP - WW No $0 2025 33 AMI Project $0 Other Special CIP - WW No 2025
34 W-WW Security Upgrade Project $0 Other Special CIP - WW No 2027 35 Subtotal RWS Defined Special Wastewater Capital Projects $36,250,000 $11,800,000 36 37 Capitalized Construction Interest, Microgrid $2,721,000 Microgrid and Related Projects No $0 2024 38 39 Total Wastewater Capital Improvement Plan (5) $88,721,000 $454,000 $9,546,000 $7,400,000 $34,100,000 $51,046,000 Notes:
(1) Project cost shown excludes grant funds received by the City. (2) Funding for this project was identified prior to the time period covered by this Rate Study. (3) Project cost revised per City staff, 8/15/23, after receipt of $4.8M Engineer's Estimate. (4) Expenditures prior to 4/1/24 include development of the Guaranteed Maximum Price, per City staff 3/25/24. (5) Use of RUA reserves and DIF funds held in trust is not identified on a project-by-project basis for the wastewater system. 05162024 2024 Updates Rialto Rate Model
A7 CIP List
Copyright 2024 All Rights Reserved

Page 20 of 21 ends

Printed: 5/16/2024
88 REVENUE REQUIREMENT ANALYSIS - PROJECTED DEBT SERVICE TABLE A-8
City of Rialto - 2024 Water and Wastewater Rate Study
Projected Debt Service
1 WIFIA/I-Bank: Water
2 WIFIA Proceeds for Capital Projects, 2023 Dollars $6,000,000 See Table A-7 3 4 WIFIA Proceeds for Capital Projects, Date of Construction $6,000,00 0 No inflationary adjustment required if projects built within five-year period, per RWS. 5 Costs of Issuance $44,88 8
6 Capitalized Interest $0
7 Capitalized Bond Reserve $227,854 Equal to 1/2 of an annual debt service payment 8 Bond Proceeds $6,272,74 2
9 12 Interest Rate 6.00%
13 Principal Deferral, Years 0
14 Annual Debt Service Payment $455,70
8 17
18 Projected Debt Service Paymen
t
19 FY 23/24 FY 24/25 FY 25/2 6 FY 26/27 FY 27/2 8 FY 28/29 FY 29/3 0 FY 30/31 FY 31/32 FY 32/33 20 WIFIA/I-Bank Water Debt Service Payment $455,70 8 $455,708 $455,708 $455,708 $455,708 $455,708 $455,708 $455,708 21 42
43 WIFIA/I-Bank: Wastewater
44 WIFIA Proceeds for Capital Projects, 2023 Dollars $34,100,000 See Table A-7 45 46 WIFIA Proceeds for Capital Projects, Date of Construction $34,100,00 0 No inflationary adjustment required if projects built within five-year period, per RWS. 47 Costs of Issuance $255,112
48 Capitalized Interest $0
49 Capitalized Bond Reserve $1,294,97
0 50 Bond Proceeds $35,650,082
51 54 Interest Rate 6.00%
55 Principal Deferral, Years 0
56 Annual Debt Service Payment $2,589,94
0 59
60 Projected Debt Service Paymen
t
61 FY 23/24 FY 24/25 FY 25/2 6 FY 26/27 FY 27/2 8 FY 28/29 FY 29/3 0 FY 30/31 FY 31/32 FY 32/33 62 WIFIA Water Debt Service Payment $2,589,94 0 $2,589,940 $2,589,940 $2,589,940 $2,589,940 $2,589,940 $2,589,940 05162024 2024 Updates Rialto Rate Model
A8 CIPSum&Debt
Copyright 2024 All Rights Reserved

Page 21 of 21 ends

Printed: 5/16/2024
89 90
2024 Water and Wastewater Rate Study – City of Rialto

A-1
05162024 RIALTO Water and Wastewater Rate Study Report
Appendix B: Water Cost-of-Service Analysis

91 APPENDIX B: WATER COST-OF-SERVICE ANALYSIS
City of Rialto - 2024 Water and Wastewater Rate Study
Cost-of-Service Analysis Tables: Functionalization
TABLE B-1
Water COSA - Functionalization Factors
Line Functionalization Wells & Rate Tier Public Fire Public & Priv. Math No. Factors Total Pumping Treatment Storage T&D Customer Meter Admin Calculation Protection Fire Prot. Check 1 Direct: Wells and Pumping 100.0% 95.0% 5.0% TRUE
2 Direct: Treatment 100.0% 100.0% TRUE
3 Direct: Storage w/ FP 100.0% 100.0% TRUE
4 Direct: T&D w/ FP 100.0% 100.0% TRUE
5 Direct: Customer 100.0% 100.0% TRUE
6 Direct: Meter 100.0% 100.0% TRUE
7 Direct: Admin 100.0% 100.0% TRUE
8 Direct: Rate Tier Calculation 100.0% 100.0% TRUE
9 Direct: Fire Protection 100.0% 100.0% TRUE
10 Direct: Wells, Treatment, Reservoirs 100.0% 33.3% 33.3% 33.3% TRUE 11 Direct: Water Plan 100.0% 20.0% 20.0% 20.0% 40.0% TRUE 12 Direct: T&D and Meter Equivalent 100.0% 50.0% 50.0% TRUE 13 Net Plant: % (1) 100.0% 15.7% 0.9% 28.0% 55.0% 0.0% 0.0% 0.0% 0.0% 0.4% 0.0% 100.0000% 14 2012 Capital Charge: % (2) 100.0% 12.5% 1.8% 4.4% 18.3% 1.2% 2.4% 59.4% 0.0% 0.1% 0.0% 100.0000% 15 WIFIA/I-Bank Debt Service 100.0% 0.0% 0.0% 0.0% 75.3% 0.0% 0.0% 0.0% 24.7% 0.0% 0.0% TRUE 19 Labor: % (3) 100.0% 12.4% 0.7% 22.1% 43.4% 21.0% 0.0% 0.0% 0.0% 0.3% 0.0% 100.0000% 20 Water Production (from Ot her Utilities), Amount $1,171,878 $1,171,878 $0 TRUE 21 Water Production (from Other Utilities), Amo unt 100.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% TRUE 22 Electricity, Percentage (4) 100.0% 13.4% 86.6% TRUE
23 Indirect: Per Rate Revenue Req Excl Tier $, as % 100.0% 12.3% 0.9% 16.0% 33.4% 5.6% 0.5% 31.1% 0.2% 0.0% 100.0000% Notes:
(1) Refer to Table B-2
(2) Refer to Table B-5
(3) Refer to Table B-13. Based on W-2 wage totals provided by City staff, 8/1/23. (4) Based on a review of SCE bills from 2022. Wells & Pumping are booster pumps. All other power costs are source production wh ich goes into rate tier calculation.

TABLE B-2
Water COSA - Functionalization of Water System Plant
Table B-1
Line Wells & Rate Tier Public Fire Public & Priv. Line No.

No. Total Pumping Treatment Storage T&D Customer Meter Admin Calculation Protection Fire Prot. Reference 1 Source $8,591,128 8,161,572 429,556 0 0 000000 1
2 Storage $14,590,178 0 0 14,590,178 0 000000 3
3 Distribution $28,791,008 0 0 0 28,791,00 8000000 4
4 General/SCADA $184,611 61,537 61,537 61,537 0 000000 1 0 5 Fire Hydrants $218,597 0 0 0 0 0000 218,597 0 9
6 Total $52,375,522 $8,223,109 $491,093 $14,651,715 $28,791,008 $0 $0 $0 $0 $218,597 $0 7 As Percent 100.00% 15.70% 0.94% 27.97% 54.97% 0.00% 0.00% 0.00% 0.00% 0.42% 0.00% Source: Asset data provided by City staff, 7/17/23. Data as of 6/30/23. 05162024 2024 Updates Rialto Rate Model
B1-B6
FG Solutions, LLC
Copyright 2024 All Rights Reservved

Page 1 of 14 ends

Printed: 5/16/2024
92 APPENDIX B: WATER COST-OF-SERVICE ANALYSIS
City of Rialto - 2024 Water and Wastewater Rate Study
Cost-of-Service Analysis Tables: Functionalization
TABLE B-3
Water COSA - Functionalization of CIP by Percentage
Line FY 23/24 - Wells & Rate Tier Public Fire Public & Priv.

No. Capital Project FY 27/28 $ Pumping Treatment Storage T&D Customer Meter Admin Calculation Protection Fire Prot. 1 Aged Watermain Replacement Etiwanda from Riverside to E $6,700,000 100.0% 2 Pressure Relief Valves (PRVs) Zone 2 to Zone 3 along Merrill A $0 100.0% 3 Service line replacements on South Alice, South Palm, West G $0 100.0% 4 Main and service line replace; Bonnie View between Acacia a $0 50.0% 50.0% 5 Mainline Valve Replacements $0 100.0%
6 Cedar Reservoir 2, Overhaul, and Dome Preservation $0 100.0% 7 4” South Oakdale and South Marcella between East Rialto A v $0 100.0% 8 Mainline Valve Replacements $0 100.0%
9 Mainline and Service Line, Hydrant Laterals, and Mainline Re $0 50.0% 25.0% 25.0% 10 Service Line Replacement, Hydrant Lateral for Woodcrest, Y u $0 50.0% 25.0% 25.0% 11 Mainline Valve Replacements $0 100.0%
12 Service Line Replacement between Cedar and Larch below E $0 50.0% 25.0% 25.0% 13 Service Line Replacement, Hydrant Laterals for Palm, Orang e $0 50.0% 25.0% 25.0% 14 Mainline Valve Replacements $0 100.0%
15 AMI Project (Project Cost Excluding Grants) (2) $0 50.0% 50.0% 16 W-WW Security Upgrade Project $0 75.0% 25.0%
17 Install a arsenic treatment system at City Well 3A $2,200,000 100.0% 18 Total $8,900,000
TABLE B-4
Water COSA - Functionalization of CIP Projects by Dollar Line FY 23/24 - Wells & Rate Tier Public Fire Public & Priv.

No. Capital Project FY 27/28 $ Pumping Treatment Storage T&D Customer Meter Admin Calculation Protection Fire Prot. 1 Aged Watermain Replacement Etiwanda from Riverside to E $6,700,000 $0 $0 $0 $6,700,000 $0 $0 $0 $0 $0 $0 2 Pressure Relief Valves (PRVs) Zone 2 to Zone 3 along Merrill A $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 3 Service line replacements on South Alice, South Palm, West G $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 4 Main and service line replace; Bonnie View between Acacia a $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 5 Mainline Valve Replacements $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 6 Cedar Reservoir 2, Overhaul, and Dome Preservation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 7 4” South Oakdale and South Marcella between East Rialto A v $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 8 Mainline Valve Replacements $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 9 Mainline and Service Line, Hydrant Laterals, and Mainline Re $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 10 Service Line Replacement, Hydrant Lateral for Woodcrest, Y u $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 11 Mainline Valve Replacements $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 12 S ervice Line Replacement between Cedar and Larch below E $ 0$ 0$ 0$ 0$ 0$ 0$ 0$ 0$ 0$ 0$ 0 13 Service Line Replacement, Hydrant Laterals for Palm, Orang e $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 14 Mainline Valve Replacements $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 15 A MI Project (Project Cost Excluding Grants) (2) $0$ 0$ 0$ 0$ 0$ 0$ 0$ 0$ 0$ 0$ 0 16 W -WW Security Upgrade Project $0$ 0$ 0$ 0$ 0$ 0$ 0$ 0$ 0$ 0$ 0 17 Install a arsenic treatment system at City Well 3A $2,200,000 $0 $0 $0 $0 $0 $0 $0 $2,200,000 $0 $0 18 Total $8,900,000 $0 $0 $0 $6,700,000 $0 $0 $0 $2,200,000 $0 $0 As Percent 0.00% 0.00% 0.00% 75.28% 0.00% 0.00% 0.00% 24.72% 0.00% 0.00% 05162024 2024 Updates Rialto Rate Model
B1-B6
FG Solutions, LLC
Copyright 2024 All Rights Reservved

Page 2 of 14 ends

Printed: 5/16/2024
93 APPENDIX B: WATER COST-OF-SERVICE ANALYSIS
City of Rialto - 2024 Water and Wastewater Rate Study
Cost-of-Service Analysis Tables: Functionalization
TABLE B-5
Water COSA - Functionalization of Existing Capital Charge Line
No. Component of Concession Funding
Total
Capitalized
Amount (1)
(2)
Wells &
Pumping Treatment Storage T&D Customer Meter Admin
Rate Tier
Calculation
Public Fire
Protection
Public and
Private Fire
Protection Total
1 Water Capital Projects
2 SCADA Improvements $1,820,618 33% 33% 33% 100%
3 Chino Well 1 Nitrate Blending $0 100% 100%
4 Booster 3 Improvements $0 100% 100%
5 Booster 4/5 Improvements $704,043 100% 100%
6 Seismic Improvements $137,807 100% 100%
7 City Well 1/2 Improvements $1,690,246 100% 100%
8 Water Main and Valve Replacement on W. Baseline $243,355 100% 100% 9 Meter Replacement $825,622 100% 100%
10 Service Line Replacement $25,500 100% 100%
11 Small Main Replacement $1,262,960 100% 100%
12 Dead End Line Replacement $198,300 100% 100%
13 Large Valves $203,341 100% 100%
14 Hydrant Replacement $23,500 100% 100%
15 Studies (3) $67,558 20.0% 20.0% 20.0% 40.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100% 16 Rialto Well 2 Site Rehab $61,243 100% 100%
17 CIS Software Update $413,000 100% 100%
18 Willow Booster Value Replacement $319,800 100% 100%
19 Riverside Central Water Line Improvements $2,982,691 100% 100% 20 City Well 4A and Chino Well 2 Improvements $684,305 100% 100% 21 Remaining FIP $1,307,112 30.9% 5.7% 6.9% 44.8% 3.8% 7.8% 0.0% 0.0% 0.2% 0.0% 100% 22 Rate Stabilization Fund $10,479,000 100% 100%
23 Lease Payment $5,000,000 100% 100%
24 Refinance Existing Debt $3,322,000 15.7% 0.9% 28.0% 55.0% 0.0% 0.0% 0.0% 0.0% 0.4% 0.0% 100% 25 Trustee Reserves (3) $5,678,000 100% 100%
26 Debt Service Reserves $1,340,000 12.5% 1.8% 4.4% 18.3% 1.2% 2.4% 59.4% 0.0% 0.1% 0.0% 100% 27 Due Diligence/Transition Costs (4) $2,648,000 100% 100% 28 C
osts of Issuance (5) $2,165,000 12.5% 1.8% 4.4% 18.3% 1.2% 2.4% 59.4% 0.0% 0.1% 0.0% 100% 29 Total $43,603,000 $5,443,407 $788,796 $1,933,157 $7,969,885 $502,566 $1,035,702 $25,885,815 $0 $43,673 $0 30 As Percent 12.5% 1.8% 4.4% 18.3% 1.2% 2.4% 59.4% 0.0% 0.1% 0.0% Notes:
(1) Source: Staff report to March 12, 2012 Council Meeting, Table 2, except Capital Improvements, described in Note 2. (2) Capital Project funding per City's 2023 analysis of Facility Improvement Plan actual spending. FIP spending presented at 4/11/23 Council Meeting.

FIP spending is $35,000 higher than shown in the 2012 Staff Report. (3) Consists of Working Capital, Operating R&R account capitalization, and a reserve held by the Trustee. (4) Includes Technical, Due Diligence, and Commercial Development Costs, and Transition Costs (5) Includes development and financing costs of issuance, underwriter's discount 05162024 2024 Updates Rialto Rate Model
B1-B6
FG Solutions, LLC
Copyright 2024 All Rights Reservved

Page 3 of 14 ends

Printed: 5/16/2024
94 APPENDIX B: WATER COST-OF-SERVICE ANALYSIS
City of Rialto - 2024 Water and Wastewater Rate Study
Cost-of-Service Analysis Tables: Functionalization
TABLE B-6
Water COSA - Functionalization of Rate Revenue Requirement Functionalized Amount Table B-1
Line FY 24/25 Rate Tier Public Fire Public & Priv. Line No.

No. Total (1) Pumping Treatment Storage T&D Customer Meter Admin Calculation Protection Fire Prot. Reference 1 Waterfall 1: Water Service Fee
2 Fixed Component $2,894,995 $454,523 $27,145 $809,856 $1,591,389 $0 $0 $0 $0 $12,083 $0 13 3 Routine R&R Component $286,393 44,965 2,685 80,117 157,43 10000 1 ,1950 1 3 4 Chemical Component $89,198 0 0 0 0 0 0 0 89,198 0 0 8 5 Labor Component $3,701,000 459,236 27,426 818,254 1,607,891 775,98 5000 1 2,2080 1 9 6 Waterfall 1: Reimbursements
7 Insurance Reimbursement $869,512 136,516 8,153 243,240 477,97 40000 3 ,6290 1 3 8 Independent Engineer $109,296 13,645 1,977 4,846 19,977 1,260 2,596 64,886 0 109 0 14 9 Maintenance $221,300 34,745 2,075 61,907 121,64 90000 9 240 1 3 10 Waterfall 1: Retained RUA Expenses
11 Electricity $1,372,000 184,318 0 0 0 0 0 0 1,187,682 0 0 22 12 Perchlorate, Not Combined Remedy $78,000 0 0 0 0 0 0 0 78,000 0 0 8 13 City Contract (Transfer to General Fund) $505,000 0 0 0 0 0 0 505,00 0000 7 14 Water Purchase $1,728,000 0 0 0 0 0 0 0 1,728,000 0 0 21 16 IT Services $73,000 0 0 0 0 0 0 73,00 0000 7
17 City Reimbursement (680 Admin) $828,000 0 0 0 0 0 0 828,00 0000 7 18 Consulting Fees: Engineering $300,000 0 0 0 0 0 0 300,000000 7 19 Consulting Services, Grant Funded $0 0 0 0 0 000000 7 20 Miscellaneous Fees and Permits $430,000 0 0 0 0 0 0 430,00 0000 7 21 Rebates $51,000 0 0 0 0 0 0 0 51,000 0 0 8
22 Waterfall 2: Annual Operating R&R Payment $680,000 106,762 6,376 190,226 373,79 80000 2 ,8380 1 3 23 Waterfall 3: Capital Charges
24 Amount $2,900,000 362,037 52,462 128,573 530,071 33,425 68,884 1,721,644 0 2,905 0 14 26 F uture Parity Debt Service 00000000000 1 4
27 Waterfall 4: RWS Water Reserve Account Deposits $221,141 0 0 0 0 0 0 221,14 1000 7 28 Waterfall 5: RUA Lease Payment $400,000 0 0 0 0 0 0 400,00 0000 7 29 RUA Spending Not Through Waterfall
30 Less Water Rights Revenue From SBCO (349,264) (42,970) (3,068) (55,891) (116,713) (19,388) (1,709) (108,665) (858) 0 23 31 L ess Grant Revenue 00000000000 7
32 Less Certain Non-Rate Revenues Applied to Tiers 1 and 2 33 RUA Investment Income (116,084) 0 0 0 0 0 0 0 (116,084) 0 0 8 34 Rents & Concessions (50,000) 0 0 0 0 0 0 0 (50,000) 0 0 8 35 Trustee Interest Income (215,285) 0 0 0 0 0 0 0 (215,285) 0 0 8 36 Turn On/Off (73,000) 0 0 0 0 0 0 0 (73,000) 0 0 8
37 Delinquent Water Service Fees (12,000) 0 0 0 0 0 0 0 (12,000) 0 0 8 38 Other Charges for Current Services…mostly perchlorate re i (94,000) 0 0 0 0 0 0 0 (94,000) 0 0 8
39 M iscellaneous Revenues 00000000000 8
40 Less Revenue Stabilization and Changes in Reserves (3,110,596) (382,701) (27,327) (497,778) (1,039,463) (172,670) (15,225) (967,788) (7,645) 0 23 41 Total $13,717,604 $1,371,076 $97,904 $1,783,350 $3,724,004 $618,612 $54,546 $3,467,218 $2,573,511 $27,388 $0 42 43 Math Check: Columns = Total ($5)
05162024 2024 Updates Rialto Rate Model
B1-B6
FG Solutions, LLC
Copyright 2024 All Rights Reservved

Page 4 of 14 ends

Printed: 5/16/2024
95 APPENDIX B: WATER COST-OF-SERVICE ANALYSIS
City of Rialto - 2024 Water and Wastewater Rate Study
Cost-of-Service Analysis Tables: Allocation
TABLE B-7
Water COSA - Allocation Factors
Public Public
Line Extra Capacity Customer Rate Tier Fire Private Fire No. Classification Method Base Max Day Max Hour Customer Meter Calculation Protection Protection 1 Direct: Base 100% Direct: Base
2 Direct: Max Day 100% Direct: Max Day
3 Direct: Max Hour 100% Direct: Max Hour
4 Direct: Customer 100% Direct: Customer
5 Direct: Meters & Services 100% Direct: Meters & Services 6 Direct: Rate Tier Calculation 100% Direct: Rate Tier Calculation 7 Direct: Public Fire Protection 100% Direct: Fire Protection 8 Direct: Purchased Source (1) 50% 50% Direct: Purchased Source 9 Base and Max Day (gpm) (1) 5,483 4,049
10 Base and Max Day: % 57.52% 42.48% Base and Max Day
11 Weighted Average: % 23.89% 30.70% 14.31% 8.06% 0.71% 0.00% 0.36% 21.97% Weighted Avg ex Rate Tier 12 Base, Max Day, Max Hour (gpm) (1) 5,483 4,049 9,533
13 Base, Max Day, Max Hour: % 28.76% 21.24% 50.00% Base, Max Day, Max Hour 14 Storage (2) 20.04% 71.01% 8.95% Storage
15 Transmission and Distribution (3) 16.97% 12.53% 29.50% 41.00% Transmission and Distribution Notes:
(1) Refer to Table B-11 for further details. Based on actual production data from FY 15/16 provided by RWS to FG Solutions in December 2016. (2) Refer to Table B-11 for further details
(3) 40% allocated to fire protection, remaining 60% allocated based on the Base, Max Day, and Max Hour classification factor 05162024 2024 Updates Rialto Rate Model
B7-B9
FG Solutions, LLC
Copyright 2024 All Rights Reservved
5/16/2024

Page 5 of 14 ends

96 APPENDIX B: WATER COST-OF-SERVICE ANALYSIS
TABLE B-8
Water COSA - Allocation of Rate Revenue Requirement
Rate Tier Public Public & T COS- 6
Line FY 24/25 Extra Capacity Calculation Fire Private Fire Line No.

No. Test Year Base Max Day (2) Max Hour(2) Customer Meter (2) Protection Protection Reference 1 Water System Expenses (1)
1 Pumping $1,371,076 $788,658 $582,418 $0 $0 $0 $0 $0 $0 10 2 Treatment $97,904 $56,315 $41,589 $0 $0 $0 $0 $0 $0 10 3 Storage $1,783,350 $357,317 $1,266,381 $0 $0 $0 $0 $0 $159,652 14 4 T&D $3,724,004 $631,916 $466,665 $1,098,581 $0 $0 $0 $0 $1,526,842 15 5 Custome
r $618,612 $0 $0 $0 $618,612 $0 $0 $0 $0 4
6 Mete r $54,546 $0 $0 $0 $0 $54,546 $0 $0 $0 5
7 Administration $3,467,218 $828,408 $1,064,549 $496,168 $279,392 $24,635 $0 $12,370 $761,695 11 8 Rate Tier Calculations $2,573,511 $0 $0 $0 $0 $0 $2,573,511 $0 $0 6 9 Public Fire Protection $27,388 $0 $0 $0 $0 $0 $0 $27,388 $0 7 10 11
12 Total $13,717,609 $2,662,614 $3,421,602 $1,594,749 $898,004 $79,181 $2,573,511 $39,758 $2,448,189 13 Percent of Total 100% 19% 25% 12% 7% 1% 19% 0% 18%
14 Check, Table B-5 $13,717,604
15 Rate Tier Public Public Private
16 Calculation Fire Fire Fire
17 Base Max Day (2) Max Hour(2) Customer Meter (2) Protection Protection Protection 18 Redistribution of F
P $2,080,546 $367,643
19 Total $13,717,608 $2,662,614 $3,421,602 $1,594,749 $898,004 $79,181 $2,573,511 $39,758 $2,080,546 $367,643 Notes:
(1) Refer to Table B-5 for Functionalization totals.
(2) Peaking costs associated with Max-Day and Max-Hour extra capacity are also included in the Rate Tier Calculation in Table C1 Extra Capacity Customer
05162024 2024 Updates Rialto Rate Model
B7-B9
FG Solutions, LLC
Copyright 2024 All Rights Reservved
5/16/2024

Page 6 of 14 ends

97 APPENDIX B: WATER COST-OF-SERVICE ANALYSIS
TABLE B-9
Water COSA - Distribution of Revenue Requirement
Public Private
Line Extra Capacit y Customer (3) Rate Tier Fire Fire
No. Item Base (1) Max Day (2) Max Hour (2) Customer Meter Calculation Protection Protection Total 1 Total System
2 Cost of Service $2,662,614 $3,421,602 $1,594,749 $898,004 $79,181 $2,573,511 $2,120,304 $367,643 $13,717,609 3 Units of Service 3,539,451 9,533 19,066 11,808 15,523 3,538,638 14,228 4 Units ccf gpm gpm customers meter equiv. ccf meter equiv. equiv. fire 5 base units of service should be based on metered consumption not production except connections 6 landscape & per year (2)
7 hydrants
8 Unit Cost of Servic e $0.75 $358.93 $83.65 $76.05 $5.10 $0.73 $149.02 9 10 Single Family Residential and MF < 50 Units
11 Units of servic e 2,238,017 5,901 11,802 10,305 10,815 2,238,017 10,815 0 12 Allocated Cost of Servic e $1,683,587 $2,118,027 $987,175 $783,700 $55,167 $1,627,621 $1,611,688 $0 $8,866,966 13 14 Multiple Apartments > 50 Units
15 Units of servic e 252,835 662 1,324 446 1,219 252,835 1,219 0 16 Allocated Cost of Servic e $190,200 $237,683 $110,780 $33,919 $6,216 $183,877 $181,610 $0 $944,284 17 18 Commercial, Industrial, and Governmental
19 Units of servic
e 470,338 1,250 2,500 685 2,194 470,338 2,194 0
20 Allocated Cost of Servic e $353,820 $448,576 $209,073 $52,095 $11,193 $342,058 $327,006 $0 $1,743,821 21 2,708,355
22 Landscape
23 Units of servic e 540,178 1,657 3,314 372 1,295 540,178 0 0 24 Allocated Cost of Servic e $406,358 $594,664 $277,162 $28,291 $6,604 $392,850 $0 $0 $1,705,929 25 26 Private Fire Protection (Excludes Hydrant and Hydrant No Charge Connection) 27 Units of servic
e 813 2 4
28 Allocated Cost of Servic e $612 $673 $314 $0 $0 $0 $0 $367,643 $369,242 29 30 Hydrant
31 Units of servic
e 37,270 61 122 37,270
32 Allocated Cost of Servic e $28,037 $21,980 $10,244 $0 $0 $27,105 $0 $87,366 33 34 Total:
35 Units of servic
e 3,539,451 9,533 19,066 11,808 15,523 3,538,638 14,228 0 36 Allocated Cost of Servic e $2,662,614 $3,421,602 $1,594,749 $898,004 $79,181 $2,573,511 $2,120,304 $367,643 $13,717,608 math check Table B-5 Above ==> $13,717,604
(1) CY 22 Consumption
(2) CY 22 Consumption multiplied by max day peaking factor from CY 22 actual, and max hour peaking factor from 2013 Water Master Pla n
(3) Projected FY 24/25 number of customers and meter equivalents 05162024 2024 Updates Rialto Rate Model
B7-B9
FG Solutions, LLC
Copyright 2024 All Rights Reservved
5/16/2024

Page 7 of 14 ends

98 APPENDIX B: WATER COST-OF-SERVICE ANALYSIS
TABLE B-10
City of Rialto - 2024 Water and Wastewater Rate Study
Identification of Costs to be Included in Rate Tier Calculations Step 1. Identify Costs Included in Rate Tier Calculations Projected Amount Data Used
FY 24/25 Included in Unit
Cost Included in Rate Tier Calculations Amount in Unit Costs Difference Cost Calcs How Considered in Rate Tier Costs 1 Chemical Component of RWS Service Fee $89,198 $63,096 $26,102 FY 23/24 FY 23/24: All of Rialto's wells using chlorine, based on pro duction volume. 2 SCE Energy Direct Bills $1,187,682 $1,333,919 ($146,237) FY 23/24 FY 23/24: Direct allocation to specific wells, based on review of electric bills 3 Perchlorate, Not Combined Remedy $78,000 $87,300 ($9,300) FY 23/24 FY 23/24: Direct allocation to Rialto 3 and Chino 2 wells 4 $0
5 Water Production from Other Utilities $0
6 Water Production, Roemer WWTP $1,086,000 $671,129 $414,871 FY 23/24 FY 23/24: Direct Allocation to Roemer WTP 7 Water Production, BLF Wells, $ $642,000 $500,749 $141,251 FY 23/24 FY 23/24: Direct allocation to BLF Wells 8 Rebates $51,000 $50,000 $1,000 FY 23/24 FY 23/24: Direct allocation to Tier 3 9 Less Certain Non-Rate Revenues $0
10 Rents & Concessions ($50,000) ($50,000) FY 24/25 FY 24/25: Direct Allocation to Tiers 1 and 2 11 Trustee Interest Income ($215,285) ($215,285) FY 24/25 FY 24/25: Direct Allocation to Tiers 1 and 2 12 Turn On/Of f ($73,000) ($73,000) FY 24/25 FY 24/25: Direct Allocation to Tiers 1 and 2 13 Delinquent Water Service Fees ($12,000) ($12,000) FY 24/25 FY 24/25: Direct Allocation to Tiers 1 and 2 14 Other Charges for Current Services…mostly perchlorate r e ($94,000) ($94,000) FY 24/25 FY 24/25: Direct Allocation to Tiers 1 and 2 15 Miscellaneous Revenues $0 $0 FY 24/25 FY 24/25: Direct Allocation to Tiers 1 and 2 16 Water Rebates $0 $0 FY 24/25 FY 23/24: Direct allocation to third (top) tier 17 Total $2,689,595 $2,261,908 $427,687 Difference between FY 23/24 and FY 24/25 assigned to all tiers 18 19
05162024 2024 Updates Rialto Rate Model
B10SourceCalcs
FG Solutions, LLC
Copyright 2024 All Rights Reservved

Page 8 of 14 ends

5/16/2024
99 APPENDIX B: WATER COST-OF-SERVICE ANALYSIS
TABLE B-10
City of Rialto - 2024 Water and Wastewater Rate Study
Identification of Costs to be Included in Rate Tier Calculations 20 Step 2. Summarize Water Production Data
21 Step 2a. Show Data from Multiple Sources
22 23 Production, Acre-Feet
24 Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 Nov-22 Dec-22 Total 25 Source: RWS Monthly Operations Reports, in a table titled "Daily Production Totals in Acre Feet" 26 Chino 2 0.00 101.92 152.06 153.50 116.29 77. 75 136.86 162.22 154.26 160.87 155.38 160.94 1,532.05 27 City 2 161.03 73.20 81.98 75.68 78.78 171. 99 135.88 159.32 134.76 144.60 42.25 13.70 1,273.17 28 Rialto 3 (1) 52.68 0.00 0.00 31.52 32. 94 18.64 0.00 0.00 0.00 0.00 0.00 0.00 135.78 29 Rialto 5 0.00 0.00 0.00 0.00 0.00 0 .00 0.00 0.00 0.00 0.00 0.00 0.00 1.00 30 Miro 3 (1) 30.28 117.62 106.76 69.30 149.74 207.06 240.13 215.36 162.20 232. 15 210.72 235.06 1,976.38 31 City 4A (2) (3) 128.54 133.24 122.74 144.79 213. 73 250.82 258.21 243.88 235.07 0.00 0.25 2.27 1,733.54 32 Booster 6-9 115.58 116.82 90.03 117.21 238.02 163.49 200.97 171.98 105.48 90.97 98.20 108.95 1,617.70 33 Cactus (2) (5) 126.12 195.34 154.65 140.60 81. 74 129.89 125.84 137.95 260.15 75.89 63.43 29.43 1,521.03 34 Roemer (4) 44.60 40.30 68.40 74.06 76.15 71.42 70.99 32.94 55.79 88.30 82.77 82.45 788.17 35 Total 530.29 645.20 653.88 661.87 773.66 840.24 910.67 879.77 872.64 792.78 652.75 630.53 8,845.28 36 Peak Day 30.13 89.38 32.46 35.07 29. 79 37.66 40.79 42.13 39.76 32.25 34.38 25.69 37 Date of Peak Day 1/10/22 2/17/22 3/29/22 4/9/22 5/17/22 6/22/22 7/24/22 8/23/22 9/14/22 10/15/22 11/2/22 12/28/23 38 Source: RWS Monthly Operations Reports, in the narrative preceding the table titled "Daily Production Totals in Acre Feet" 39 BLF Wells 113.16 178.92 121.94 113.02 106.03 42. 56 68.60 66.05 130.56 166.86 161.38 136.11 1,405.19 40 Booster 3A-1 0.04 0.00 80.27 154.40 72.75 5.63 14.68 31.13 23.38 9.05 9.19 23.19 423.71 41 42 Step 2b. Merge Data from Multiple Sources
43 Chino 2 0.00 101.92 152.06 153.50 116.29 77. 75 136.86 162.22 154.26 160.87 155.38 160.94 1,532.05 44 City 2 161.03 73.20 81.98 75.68 78.78 171. 99 135.88 159.32 134.76 144.60 42.25 13.70 1,273.17 45 Rialto 3/Miro 3 82.96 117.62 106.76 100.82 182. 68 225.70 240.13 215.36 162.20 232.15 210.72 235.06 2,112.16 46 Rialto 5 0.00 0.00 0.00 0.00 0.00 0 .00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 47 City 4A 128.54 133.24 122.74 144.79 213.73 250. 82 258.21 243.88 235.07 0.00 0.25 2.27 1,733.54 48 BLF Wells 113.16 178.92 121.94 113.02 106.03 42. 56 68.60 66.05 130.56 166.86 161.38 136.11 1,405.19 49 Roemer 44.60 40.30 68.40 74.06 76.15 71.42 70.99 32.94 55.79 88.30 82.77 82.45 788.17 50 Total 530.29 645.20 653.88 661.87 773.66 840.24 910.67 879.77 872.64 792.78 652.75 630.53 8,844.28 51 Notes:
52 (1) Rialto 3 and Miro 3 wells are at the airport. For purposes of rate tier calculations, the production and the costs for t hese two wells should be combined. 53 San Bernardino County owns the Miro 3 well and pays for everything except power and normal wear and tear. 54 (2) Cactus total includes City 4A. The total column at the right of the table includes Cactus, and does not include City 4A. 55 (3) Pump Station 3A-1 boosts City Well 4A water into the Baseline Feeder. The cost to produce water from City 4A includes co sts from PS 3A-1, but does not include the volume 56 of water pumped from 3A-1.
57 05162024 2024 Updates Rialto Rate Model
B10SourceCalcs
FG Solutions, LLC
Copyright 2024 All Rights Reservved

Page 9 of 14 ends

5/16/2024
100
APPENDIX B: WATER COST-OF-SERVICE ANALYSIS
TABLE B-10
City of Rialto - 2024 Water and Wastewater Rate Study
Identification of Costs to be Included in Rate Tier Calculations 58 Step 3. Allocate Certain FY 23/24 Rate Tier Costs to Specific Water Sources 59 Cactus and
60 Miro 3/ BPS 3A-1
61 Cost Chino 2 City 2 Rialto 3 Rialto 5 City 4A Encanto BLF Wells Roemer Total Note 62 RWS Chemical Component, % 23.0% 19.1% 31.8% 0.0% 26.1% 100.0% 1 63 RWS Chemical Component, $ $14,534 $12,078 $20,038 $0 $16,446 $0 $0 $0 $63,096 1 64 Perchlorate Treatment, $ $87,300 $87,300 2
65 SCE Electricity Direct Billed, $ $506,375 $236,170 $216,524 $63,432 $311,418 $1,333,919 3 66 Water Production, BLF Wells, $ $500,749 $500,749
67 Water Production, Roemer WTP, $ $671,129 $671,129
68 Total $608,209 $248,248 $236,562 $63,432 $327,864 $0 $500,749 $671,129 $2,656,193 69 math check: total from Step 1 less items that are directly added to top tier commodity charge or subtracted from bottom tier . $2,656,193 70 71 Notes:
72 (1) Allocated among all Rialto wells using chlorine, based on production volume. 73 (2) This is related to Chino 2. This is the perchlorate expense not related to the Combined Remedy. 74 (3) Miro 3/Rialto 3 includes $772 in 2022 power costs from non-active Chino 1 well. This cost was assigned to Miro 3/Rialto 3 because this well forms Tier 1, and the Tier 1 rate is 75 partially offset by non-rate revenues.
76 77
Step 4. Unit Cost Calculations for Each Water Source
78 79 Miro 3/
80 Chino 2 City 2 Rialto 3 Rialto 5 City 4A Encanto BLF Wells Roemer Total 81 Cost Allocated to Each Source $608,209 $248,248 $236,562 $63,432 $327,864 $0 $500,749 $671,129 $2,656,193 82 Production, acre-feet 1,532.05 1,273.17 2,112.16 0.37 1,733.54 1,319.24 788.17 8,758.70 83 Production, cc
f 667,361 554,593 920,057 161 755,130 0 574,663 343,327 3,815,291 84 % Adj to Match Projected Water Sales -7.23% -7 .23% -7.23% -7.23% -7.23% -7.23% -7.23% -7.23% -7.23% 85 Adjusted FY 23/24 Production 619,112 514,497 853,538 150 700,535 0 533,115 318,505 3,539,451 86 Cost per cc
f $0.98 $0.48 $0.28 $424.24 $0.47 $0.94 $2.11 $0.75
87 88 Notes regarding unit costs, per a conversation with Tom Crowley 11/9/23, asking if these unit costs are reasonable:
89 - Chino 2 unit cost is higher than average. Chino is a deeper well, and it has treatment. So well pump has to overcome head loss in the treatment unit. 90 - City Well 2 is not as deep.
91 - Rialto 5 power expense is incurred only to collect water samples for water quality testing. The power expense is SCE's dema nd charge. 92 - Baseline Feeder deliveries from San Bernardino Municipal Water Department from City staff, 11/09/2023. 05162024 2024 Updates Rialto Rate Model
B10SourceCalcs
FG Solutions, LLC
Copyright 2024 All Rights Reservved

Page 10 of 14 ends

5/16/2024
101
APPENDIX B: WATER AND WASTEWATER SUPPORTING CALCULATIONS TABLE B-11
City of Rialto - 2024 Water and Wastewater Rate Study
Water and Wastewater Supporting Calculations
1 1. CY 2022 Labor Costs (Water and Wastewater)
2 3 W2 Labor by Categories
4 Source: Labor Reset Data provided by City staff, 8/1/23 5 CY 22 Reallocate Reallocate
6 Amount Admin. Subtotal WW Admin Subtotal Function
7 Wastewater Treatment $1,048,029 $208,818 $1,256,847 $337,826 $1,594,673 WW Treatment 8 Wastewater Collection $352,419 $70,219 $422,638 $113,600 $536,238 WW Collection 9 Water Operations $1,361,988 $271,374 $1,633,362 $1,633,362 W, Split by Plant 10 Customer Service $516,179 $102,848 $619,027 $619,027 70% Water, to Customer; 30% Wastewater to Customer 11 WW Administration $376,425 $75,002 $451,427 ($451,427) $0 12 Administration $728,261 ($728,261) $0 $0
13 Total $4,383,301 $0 $4,383,301 $0 $4,383,301
14 15
16 2. IEUA Well O&M Costs, 4/year (Wastewater)
17 18 O&M $50,000
19 Depreciation $62,500
20 Power Cost $245,000
21 22 Source: City staff, approximately September 2023
23 24
25 3. CY 22 Average, Max Day, and Max Hour Demand
26 27 Average Day Demand (See Table B10)
28 Acre Feet per Year 8,845.28 CY 22
29 Acre Feet per Day 24.23
30 Million Gallons per Day 7.90
31 Gallons per Minute 5,483
32 ccf per year 3,853,004
33 Maximum Day Demand
34 Acre Feet 42.13
35 Gallons per Minute 9,533
36 Maximum Day/Average Day Ratio 1.74
37 38 Note: Page 3-4, 2013 Water Master Plan "peak day of record was approximately twice the average daily water use" 39 This may show that conservation since 2013 has shaved the peak 40 05162024 2024 Updates Rialto Rate Model
B11MiscCalcs
FG Solutions, LLC
Copyright 2024 All Rights Reservved

Page 11 of 14 ends

5/16/2024
102
APPENDIX B: WATER AND WASTEWATER SUPPORTING CALCULATIONS TABLE B-11
City of Rialto - 2024 Water and Wastewater Rate Study
Water and Wastewater Supporting Calculations
41 Peak Hourly Demand
42 The City of Rialto SCADA system doesn't have the ability to permit accurate calculation of the peak hourly water demand in th e system. 43 Our experience with other, similar water systems is that the peak hourly demand in water systems is typically approximately 44 twice the peak daily demand (i.e. four times the average daily demand). 45 Page 3-5, 2013 Water Master Plan
46 Max Hour/Max Day Ratio 2.0
47 Max Hour Demand, Gallons Per Minute 19,066
48 49

4. Fire Protection Equivalents
50 Projected
51 Projected FY 23/24
52 FY 23/24 Private
53 Public Fire Svc Number of Equivalent Fire
54 Connection Demand Connections Connections Total Protection Connections 55 Size (in) Factor (1) (2) (3) Connections Public Private Total 56 0.75 1.00 0 0 00 0
57 1 1.00 0 0 00 0
58 1.5 2.90 0 0 00 0
59 2 6.19 0 0 00 0
60 3 17.98 0 33 05 4 5 4
61 4 38.32 0 14 14 0 536 536
62 6 111.31 1,500 88 1,588 166,966 9,795 176,762
63 8 237.21 0 77 77 0 18,265 18,265
64 10 426.58 0 22 0 853 853
65 12 689.04 0 0 00 0
66 Total 1,500 184 1,684 166,966 29,504 196,470
67 % of Total 84.98% 15.02%
68 Notes:
69 (1) AWWA M1, page 152 (5th edition page 224; demand factor = diameter ^ 2.63; exponent based on 70 Hazen-Williams equation for flow through pressure conduits. 71 (2) Source: City of Rialto GIS data. Assume all hydrants on 6" service lines. 72 (3) Source: customer data from December 2022. See Table C-1. 73 (4) Hydrant connections assumed to be 6".
74 75
05162024 2024 Updates Rialto Rate Model
B11MiscCalcs
FG Solutions, LLC
Copyright 2024 All Rights Reservved

Page 12 of 14 ends

5/16/2024
103
APPENDIX B: WATER AND WASTEWATER SUPPORTING CALCULATIONS TABLE B-11
City of Rialto - 2024 Water and Wastewater Rate Study
Water and Wastewater Supporting Calculations
76 5. Calculation: Fire Protection Demand (1), and Fire Protection Allocation for Supply, Storage, and T&D 77 Fire Demand (gpm) = 1020*sqrt(population) / (1-0.01*sqrt(population)) 78 where population is in thousands
79 Fire Protection Allocation = Fire Demand /(Fire Demand + Maximum Daily Demand) 80 81 Population for Rialto's Water Service Area = 54,453 (2) 82 Fire Demand (gpm) = 6,971
83 Average Daily Demand (mgd) = 7.90 (3)
84 Ratio of Peak Day to Average Daily Demand = 1.7 (3) 85 Maximum Daily Demand (mgd) = 13.73
86 Maximum Daily Demand (gpm) = 9,533
87 Therefore, Fire Protection Allocation = 42%
88 89 Fire Protection Allocation for COS 42%
90 Calculation notes:
91 (1) Calculation based on AWWA M1 6th edition, page 143. Calculation published by the American Insurance Association, 92 formerly National Fire Underwriters Association.
93 (2) Source: Final Draft, 2015 San Bernardino Valley Regional Urban Water Management Plan, page 14-3, for 2015 94 (3) See calculation above in this worksheet
95 96

6. Allocation of Storage to Average Day, Peak Day, and Fire Flow Components 97 Operating
98 Overflow Zones Diameter, Height, Storage, ft Operating Useable 99 Reservoir MG Elevation, ft Served feet feet in Reservoir Storage, mg Storage, mg 100 Cedar 1 6.00 1565 1A, 1B, 1C 186.00 30.00 4.00 0.80 5.20 101 Cedar 2 6.00 1565 1A, 1B, 1C 186.00 30.00 4.00 0.80 5.20 102 Highland 5.00 1417 2 174.00 28.00 4.00 0.71 4.29
103 Easton 5.00 1417 2 174.00 28.00 4.00 0.71 4.29
104 Cactus 6.00 1370 3A, 3B 215.00 24.00 4.00 1.00 5.00 105 Total 28.00 4.03 23.97
106
107 Notes:
05162024 2024 Updates Rialto Rate Model
B11MiscCalcs
FG Solutions, LLC
Copyright 2024 All Rights Reservved

Page 13 of 14 ends

5/16/2024
104
APPENDIX B: WATER AND WASTEWATER SUPPORTING CALCULATIONS TABLE B-11
City of Rialto - 2024 Water and Wastewater Rate Study
Water and Wastewater Supporting Calculations
108 (1) Source of MG, Overflow Elevation, Zones Served, Diameter, Height: 2013 Water Master Plan, page 2-5 109
110 Peak Day Fire Flow
111 Demand Requirement
112 Zone mg mg (2)
113 1A, 1B, 1C Note 1 0.63
114 2 Note 1 0.63
115 3A, 3B Note 1 0.54
116 Total 13.73 1.80
117
118 Notes:
119 (1) Peak day demands are based on a peak day/average day ratio of 1.74 (see above calculations on this worksheet) 120 (2) Fireflow demands per zone based on SFR criteria of 1,500 gpm for 2 hours; commercial/MFR criteria of 3,000 gpm for 3 hou rs; 121 and light industry criteria of 3, 500 gpm for 3 hours (2012 Water Master Plan, Table 3-8) 122 Fire flow requirement for Zones 3A and 3B based on the commercial/MFR criteria. For other zones, based on the light industr y criteria. 123
124 Storage Cost Classification Avg Day Peak Day
125 Function of Reservoir Volume (1) MG Demand Demand Fireflow Total 126 Storage for Peak Day Demand 13.73 100% 100%
127 Fire Flow Storage 1.80 100% 100%
128 Operational Storage 4.03 100% 100%
129 Remainder (2) 8.44 20.60% 70.20% 9.20% 100%
130 Total 28.00 20.60% 70.20% 9.20% 100.00%
131
132 Notes:
133 (1) Criteria in Master Plan is that storage volume exceeds peak day demand plus fire flow storage. It is assumed that stor age volume must 134 also exceed peak day plus fire flow plus operational storage. 135 (2) Remainder of storage allocated indirectly based on the classification of the other storage components 136
137
138

7. Average Metered Consumption per Residential Account, CY 22 139
140 Total metered consumption per residential account (Customer Type = RE) 141 Bill Code W00 (metered water consumption) 1,999,896 Source : Billing data compiled by FG Solutions. Source: Veolia, 6/5/23 142 Number of meter reads 126,610 Sour ce: Billing data compiled by FG Solutions. Source: Veolia, 6/5/23 143 Metered consumption per residential account, ccf/mo 15.8005162024 2024 Updates Rialto Rate Model B11MiscCalcs
FG Solutions, LLC
Copyright 2024 All Rights Reservved

Page 14 of 14 ends

5/16/2024
105
106
2024 Water and Wastewater Rate Study – City of Rialto

A-1
05162024 RIALTO Water and Wastewater Rate Study Report
Appendix C: Water Rate Design

107
APPENDIX C: WATER RATE DESIGN
TABLE C-1
City of Rialto - 2024 Water and Wastewater Rate Study
Water Rate Design Calculations
Step 1. Estimated Calendar Year 2022 Number of Customers by Customer Class and Meter Size 1 Single Family Residential and Multi-Family < 50 Units 2 July - Dec 2022 Jan - Jun 2022
3 Base Charge Base Charge Monthly No. of Base Charge Base Charge Monthly No. of 4 Meter Size Cycle Bill $ Total $ Rate Customers Cycle Bill $ Total $ Rate Customers 5 1/2 " & 5/8" meter 147 179 $30.42 1 WB1, RE 183 179 $30.42 1 6 3/4" meter 1,750,826 1,755,879 $30.42 9,593 WB2, RE 1,750,153 1,755,879 $30.42 9,589 7 1" meter 156,258 157,222 $44.01 592 WB3, RE 141,403 157,222 $44.01 535 8 1 1/2" meter 955 955 $53.04 3 WB4, RE 955 955 $53.04 3 9 2" meter 9,829 9,981 $152.54 11 WB5, RE 9,305 9,981 $152.54 10 10 3" meter 1,947 1,947 $324.45 1 WB6, RE 1,947 1,947 $324.45 1 11 4" meter 9,360 9,360 $550.59 3 WB7, RE 9,911 9,360 $550.59 3 12 6" meter $1,138.62 0 $1,138.62 0
13 8" meter $1,636.17 0 $1,636.17 0
14 Total
15 16 Multi-Family 50 + Units
17 July - Dec 2022 Jan - Jun 2022
18 Base Charge Base Charge Monthly No. of Base Charge Base Charge Monthly No. of 19 Meter Size Cycle Bill $ Total $ Rate Customers Cycle Bill $ Total $ Rate Customers 20 1/2 " & 5/8" meter $30.42 0 $30.42 0
21 3/4" meter 37,380 37,380 $30.42 205 WB2, MF 37,493 37,380 $30.42 205 22 1" meter 46,725 46,747 $44.01 177 WB3, MF 46,428 46,747 $44.01 176 23 1 1/2" meter 5,410 5,458 $53.04 17 WB4, MF 5,463 5,458 $53.04 17 24 2" meter 16,190 16,718 $152.54 18 WB5, MF 16,474 16,718 $152.54 18 25 3" meter 11,680 11,680 $324.45 6 WB6, MF 11,680 11,680 $324.45 6 26 4" meter 43,497 43,497 $550.59 13 WB7, MF 42,946 43,497 $550.59 13 27 6" meter 13,663 13,663 $1,138.62 2 WB8, MF 13,663 13,663 $1,138.62 2 28 8" meter 35,450 38,941 $1,636.17 4 WB9, MF 39,268 38,941 $1,636.17 4 29 Total
30 31 Commercial
32 July - Dec 2022 Jan - Jun 2022
33 Base Charge Base Charge Monthly No. of Base Charge Base Charge Monthly No. of 34 Meter Size Cycle Bill $ Total $ Rate Customers Cycle Bill $ Total $ Rate Customers 35 1/2 " & 5/8" meter $30.42 0 $30.42 0
36 3/4" meter 40,142 40,320 $30.42 220 WB2, CO 40,297 40,320 $30.42 221 37 1" meter 36,860 36,968 $44.01 140 WB3, CO 37,087 36,968 $44.01 140 38 1 1/2" meter 30,975 30,991 $53.04 97 WB4, CO 30,866 30,991 $53.04 97 39 2" meter 144,384 145,615 $152.54 158 WB5, CO 142,391 145,615 $152.54 156 40 3" meter 23,360 23,360 $324.45 12 WB6, CO 39,268 23,360 $324.45 20 41 4" meter 13,214 13,214 $550.59 4 WB7, CO 13,214 13,214 $550.59 4 42 6" meter 13,663 13,663 $1,138.62 2 WB8, CO 13,663 13,663 $1,138.62 2 43 8" meter $1,636.17 0 WB9, CO $1,636.17 0
44 Total
4505162024 2024 Updates Rialto Rate Model
C1WaterRateDesign
FG Solutions, LLC
Copyright 2024 All Rights Reserved

Page 1 of 23 ends

5/16/2024
108
APPENDIX C: WATER RATE DESIGN
TABLE C-1
City of Rialto - 2024 Water and Wastewater Rate Study
Water Rate Design Calculations
46 Governmental
47 July - Dec 2022 Jan - Jun 2022
48 Base Charge Base Charge Monthly No. of Base Charge Base Charge Monthly No. of 49 Meter Size Cycle Bill $ Total $ Rate Customers Cycle Bill $ Total $ Rate Customers 50 1/2 " & 5/8" meter $30.42 0 $30.42 0
51 3/4" meter 1,460 1,460 $30.42 8 WB2, GO 1,643 1,460 $30.42 9 52 1" meter 1,320 1,320 $44.01 5 WB3, GO 1,320 1,320 $44.01 5 53 1 1/2" meter 1,591 1,591 $53.04 5 WB4, GO 1,591 1,591 $53.04 5 54 2" meter 9,152 9,152 $152.54 10 WB5, GO 9,152 9,152 $152.54 10 55 3" meter 29,201 29,201 $324.45 15 WB6, GO 29,201 29,201 $324.45 15 56 4" meter 9,911 9,911 $550.59 3 WB7, GO 9,911 9,911 $550.59 3 57 6" meter $1,138.62 0 WB8, GO $1,138.62 0
58 8" meter $1,636.17 0 WB9, GO $1,636.17 0
59 Total
60 61 Landscape
62 July - Dec 2022 Jan - Jun 2022
63 Base Charge Base Charge Monthly No. of Base Charge Base Charge Monthly No. of 64 Meter Size Cycle Bill $ Total $ Rate Customers Cycle Bill $ Total $ Rate Customers 65 1/2 " & 5/8" meter $30.42 LS1 $30.42
66 3/4" meter 8,777 8,777 $30.42 48 LS2 8,791 8,791 $30.42 48 67 1" meter 37,023 37,023 $44.01 140 LS3 36,010 36,010 $44.01 136 68 1 1/2" meter 17,358 17,358 $53.04 55 LS4 16,976 16,976 $53.04 53 69 2" meter 97,021 97,021 $152.54 106 LS5 95,993 95,993 $152.54 105 70 3" meter 21,414 21,414 $324.45 11 LS6 21,414 21,414 $324.45 11 71 4" meter 26,428 26,428 $550.59 8 LS7 26,942 26,942 $550.59 8 72 6" meter $1,138.62 LS8 $1,138.62
73 8" meter $1,636.17 LS9 $1,636.17
74 75 Source of Data: water customer data from FY 21/22, received by FG Solutions 6/5/2023 from Veolia staff. 76 Methodology: discussed with Robert Lee, Veolia, 11/1/23 remote meeting; 77 Appropriate to use cycle bill revenues instead of total bill revenues to estimate number of connections. Total bill = cycle + final charges etc. 78 79
80 Fireline (Private)
81 See Approximately Row 1300 for calculation of Fireline Connection Data from December 2022 82 83 Hydrant Service
84 Jan 2022 - June 2022 Revenues from Hydrant Meter Daily Charges and Consumption Charges $80,196.97 85 July 2022 - December 2022 Revenues from Hydrant Meter Daily Charges and Consumption Charges $96,384.72 86 Total Calendar Year 2022 Revenues from Hydrant Meter Daily Charges $176,581.69 87 88 CY 22 Revenues from Daily Charges Only 67,161
89 Daily Rate for Hydrant Meter $10.81
90 91 Hydrant Meter Rental Days 6,213
92 93
05162024 2024 Updates Rialto Rate Model
C1WaterRateDesign
FG Solutions, LLC
Copyright 2024 All Rights Reserved

Page 2 of 23 ends

5/16/2024
109
APPENDIX C: WATER RATE DESIGN
TABLE C-1
City of Rialto - 2024 Water and Wastewater Rate Study
Water Rate Design Calculations
94 Step 2. Projected Number of Customers by Customer Class and Meter Size 95 96 Single Family Residential and Multi-Family < 50 Units 97 Jul-Dec Projected (1) Projected (1)
98 Meter Size 2022 FY 23/24 FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 9 9 1 / 2 " & 5 / 8 " m e t e r 1111111
100 3/4" meter 9,593 9,640 9,688 9,736 9,785 9,834 9,883 101 1" meter 592 595 598 601 604 607 610
1 0 2 1 1 / 2 " m e t e r 3333333
1 0 3 2 " m e t e r 1 11 11 11 11 11 11 1
1 0 4 3 " m e t e r 1111111
1 0 5 4 " m e t e r 3333333
1 0 6 6 " m e t e r 0000000
1 0 7 8 " m e t e r 0000000
108 Total 10,203 10,254 10,305 10,356 10,408 10,460 10,512 109
110 Multi-Family 50 + Units
111 Jul-Dec Projected (1)
112 Meter Size 2022 FY 23/24 FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 1 1 3 1 / 2 " & 5 / 8 " m e t e r 0000000
114 3/4" meter 205 206 207 208 209 210 211
115 1" meter 177 178 179 180 181 182 183
1 1 6 1 1 / 2 " m e t e r 1 71 71 71 71 71 71 7
1 1 7 2 " m e t e r 1 81 81 81 81 81 81 8
1 1 8 3 " m e t e r 6666666
1 1 9 4 " m e t e r 1 31 31 31 31 31 31 3
1 2 0 6 " m e t e r 2222222
1 2 1 8 " m e t e r 4444444
122 Total 441 444 446 448 450 452 454
123
124 Commercial
125 Jul-Dec Projected (1)
126 Meter Size 2022 FY 23/24 FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 1 2 7 1 / 2 " & 5 / 8 " m e t e r 0000000
128 3/4" meter 220 221 222 223 224 225 226
129 1" meter 140 140 141 142 143 144 145
1 3 0 1 1 / 2 " m e t e r 9 79 89 89 89 89 89 8
131 2" meter 158 159 160 161 162 163 164
1 3 2 3 " m e t e r 1 21 21 21 21 21 21 2
1 3 3 4 " m e t e r 4444444
1 3 4 6 " m e t e r 2222222
1 3 5 8 " m e t e r 0000000
136 Total 633 636 639 642 645 648 651
137
05162024 2024 Updates Rialto Rate Model
C1WaterRateDesign
FG Solutions, LLC
Copyright 2024 All Rights Reserved

Page 3 of 23 ends

5/16/2024
110
APPENDIX C: WATER RATE DESIGN
TABLE C-1
City of Rialto - 2024 Water and Wastewater Rate Study
Water Rate Design Calculations
138 Governmental
139 Jul-Dec Projected (1)
140 Meter Size 2022 FY 23/24 FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 1 4 1 1 / 2 " & 5 / 8 " m e t e r 0000000
1 4 2 3 / 4 " m e t e r 8888888
1 4 3 1 " m e t e r 5555555
1 4 4 1 1 / 2 " m e t e r 5555555
1 4 5 2 " m e t e r 1 01 01 01 01 01 01 0
1 4 6 3 " m e t e r 1 51 51 51 51 51 51 5
1 4 7 4 " m e t e r 3333333
1 4 8 6 " m e t e r 0000000
1 4 9 8 " m e t e r 0000000
1 5 0 T o t a l 4 64 64 64 64 64 64 6
151
152 Landscape
153 Jul-Dec Projected (1)
154 Meter Size 2022 FY 23/24 FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 1 5 5 1 / 2 " & 5 / 8 " m e t e r 0000000
1 5 6 3 / 4 " m e t e r 4 84 84 84 84 84 84 8
157 1" meter 140 141 142 143 144 145 146
1 5 8 1 1 / 2 " m e t e r 5 55 55 55 55 55 55 5 1 7 7 159 2" meter 106 107 108 109 110 111 112
1 6 0 3 " m e t e r 1 11 11 11 11 11 11 1
1 6 1 4 " m e t e r 8888888
1 6 2 6 " m e t e r 0000000
1 6 3 8 " m e t e r 0000000
164 Total 368 370 372 374 376 378 380
165
166 Fireline (Private)

167 December Projected (1)
168 Meter Size 2022 FY 23/24 FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 169 1/2 " & 5/8" meter
170 3/4" meter
171 1" meter
172 1 1/2" meter
173 2" meter
1 7 4 3 " m e t e r 3333333
1 7 5 4 " m e t e r 1 41 41 41 41 41 41 4
1 7 6 6 " m e t e r 8 88 88 88 88 88 88 8
1 7 7 8 " m e t e r 7 77 77 77 77 77 77 7
1 7 8 1 0 " m e t e r 2222222
179 Total 184 184 184 184 184 184 184
180
181
182 Hydrant Meter Connections
183 The number of hydrant meter rental days is not projected to change through FY 28/29. 184 The number of hydrant meter rental days depends on co nstruction activity, which is projected to remain at 185 current levels through FY 28/29.
05162024 2024 Updates Rialto Rate Model
C1WaterRateDesign
FG Solutions, LLC
Copyright 2024 All Rights Reserved

Page 4 of 23 ends

5/16/2024
111
APPENDIX C: WATER RATE DESIGN
TABLE C-1
City of Rialto - 2024 Water and Wastewater Rate Study
Water Rate Design Calculations
186 Total, All Customer Classes, Excluding Potable Hydrant Connections and Fireline Connections 187 Jul-Dec Projected (1)
188 Meter Size 2022 FY 23/24 FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 1 8 9 1 / 2 " & 5 / 8 " m e t e r 1111111
190 3/4" meter 10,073 10,123 10,173 10,223 10,274 10,325 10,376 191 1" meter 1,053 1,059 1,065 1,071 1,077 1,083 1,089
192 1 1/2" meter 177 178 178 178 178 178 178
193 2" meter 302 305 307 309 311 313 315
1 9 4 3 " m e t e r 4 54 54 54 54 54 54 5
1 9 5 4 " m e t e r 3 13 13 13 13 13 13 1
1 9 6 6 " m e t e r 4444444
1 9 7 8 " m e t e r 4444444
198 Total 11,690 11,750 11,808 11,866 11,925 11,984 12,043 199
200
201 Note:
202 (1) Projected water system growth is 0.5% per year, see Table A-1, Assumptions. 203
204
205
Step 3. Projected Number of Meter Equivalents by Customer Class and Meter Size 206
207 Single Family Residential and Multi-Family < 50 Units 208 Jul-Dec Projected (1) Capacity, Equivalent
209 Meter Size 2022 FY 23/24 FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 gpm (1) Ratio (2) 2 1 0 1 / 2 " & 5 / 8 " m e t e r 1111111 30 1.00
211 3/4" meter 9,593 9,640 9,688 9,736 9,785 9,834 9,883 30 1.00 212 1" meter 986 992 997 1,002 1,007 1,012 1,017 50 1.67 2 1 3 1 1 / 2 " m e t e r 1 01 01 01 01 01 01 0 100 3.33 2 1 4 2 " m e t e r 5 75 95 95 95 95 95 9 160 5.33
2 1 5 3 " m e t e r 1 11 11 11 11 11 11 1 320 10.67
2 1 6 4 " m e t e r 4 75 05 05 05 05 05 0 500 16.67
2 1 7 6 " m e t e r 0000000 1,000 33.33
2 1 8 8 " m e t e r 0000000 1,600 53.33
219 Total 10,705 10,762 10,815 10,868 10,922 10,976 11,030 220
221 Multi-Family 50 + Units
Meter Meter
222 Jul-Dec Projected (1) Capacity, Equivalent
223 Meter Size 2022 FY 23/24 FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 gpm (1) Ratio (2) 2 2 4 1 / 2 " & 5 / 8 " m e t e r 0000000 30 1.00
225 3/4" meter 205 206 207 208 209 210 211 30 1.00
226 1" meter 295 297 298 300 302 303 305 50 1.67
2 2 7 1 1 / 2 " m e t e r 5 75 75 75 75 75 75 7 100 3.33 2 2 8 2 " m e t e r 9 49 69 69 69 69 69 6 160 5.33
2 2 9 3 " m e t e r 6 46 46 46 46 46 46 4 320 10.67
230 4" meter 219 217 217 217 217 217 217 500 16.67
2 3 1 6 " m e t e r 6 76 76 76 76 76 76 7 1,000 33.33
232 8" meter 193 213 213 213 213 213 213 1,600 53.33
233 Total 1,193 1,216 1,219 1,221 1,224 1,227 1,229
234 Commercial
Meter Meter
235 Jul-Dec Projected (1) Capacity, Equivalent
05162024 2024 Updates Rialto Rate Model
C1WaterRateDesign
FG Solutions, LLC
Copyright 2024 All Rights Reserved

Page 5 of 23 ends

5/16/2024
112
APPENDIX C: WATER RATE DESIGN
TABLE C-1
City of Rialto - 2024 Water and Wastewater Rate Study
Water Rate Design Calculations
236 Meter Size 2022 FY 23/24 FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 gpm (1) Ratio (2) 2 3 7 1 / 2 " & 5 / 8 " m e t e r 0000000 30 1
238 3/4" meter 220 221 222 223 224 225 226 30 1
239 1" meter 233 234 235 237 239 240 242 50 1.67
240 1 1/2" meter 324 326 326 326 326 326 326 100 3.33
241 2" meter 841 847 853 858 863 869 874 160 5.33
242 3" meter 128 128 128 128 128 128 128 320 10.67
2 4 3 4 " m e t e r 6 76 76 76 76 76 76 7 500 16.67
2 4 4 6 " m e t e r 6 76 76 76 76 76 76 7 1,000 33.33
2 4 5 8 " m e t e r 0000000 1,600 53.33
246 Total 1,879 1,890 1,898 1,906 1,914 1,922 1,930
247
248 Governmental
Meter Meter
249 Jul-Dec Projected (1) Capacity, Equivalent
250 Meter Size 2022 FY 23/24 FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 gpm (1) Ratio (2) 2 5 1 1 / 2 " & 5 / 8 " m e t e r 0000000 30 1.00
2 5 2 3 / 4 " m e t e r 8888888 30 1.00
2 5 3 1 " m e t e r 8888888 50 1.67
2 5 4 1 1 / 2 " m e t e r 1 71 71 71 71 71 71 7 100 3.33 2 5 5 2 " m e t e r 5 35 35 35 35 35 35 3 160 5.33
256 3" meter 160 160 160 160 160 160 160 320 10.67
2 5 7 4 " m e t e r 5 05 05 05 05 05 05 0 500 16.67
2 5 8 6 " m e t e r 0000000 1,000 33.33
2 5 9 8 " m e t e r 0000000 1,600 53.33
260 Total 296 296 296 296 296 296 296
261
262 Landscape
Meter Meter
263 Jul-Dec Projected (1) Capacity, Equivalent
264 Meter Size 2022 FY 23/24 FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 gpm (1) Ratio (2) 2 6 5 1 / 2 " & 5 / 8 " m e t e r 0000000 30 1.00
2 6 6 3 / 4 " m e t e r 4 84 84 84 84 84 84 8 30 1.00
267 1" meter 234 235 237 238 240 242 243 50 1.67
268 1 1/2" meter 182 183 183 183 183 183 183 100 3.33
269 2" meter 565 571 576 581 587 592 597 160 5.33
270 3" meter 117 117 117 117 117 117 117 320 10.67
271 4" meter 133 133 133 133 133 133 133 500 16.67
2 7 2 6 " m e t e r 0000000 1,000 33.33
2 7 3 8 " m e t e r 0000000 1,600 53.33
274 Total 1,280 1,288 1,295 1,302 1,309 1,316 1,323
275
276 Total System 15,353 15,452 15,523 15,593 15,665 15,737 15,808 277
278 Notes:
279 (1) AWWA M1 Manual, Table B-1 (Sixth Edition).
280 (2) Where meters 3/4" or smaller are assigned a meter equivalent ratio of 1.0 by definition. Rounded to nearest 0.01. 05162024 2024 Updates Rialto Rate Model
C1WaterRateDesign
FG Solutions, LLC
Copyright 2024 All Rights Reserved

Page 6 of 23 ends

5/16/2024
113
APPENDIX C: WATER RATE DESIGN
TABLE C-1
City of Rialto - 2024 Water and Wastewater Rate Study
Water Rate Design Calculations
281 Step 4. Calendar Year 2022 Water Consumption, ccf/month 282
283 Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 Nov-22 Dec-22 Total 284 Residential & MF < 50
U 159,285 140,780 154,223 187,016 184,187 185,780 255,056 210,176 214,083 239,077 163,802 144,552 2,238,017 285 MF > 50 Units 19,672 18,680 18,719 22,751 18,293 19,142 25,167 22,436 22,494 26,829 18,614 20,038 252,835 286 Commercial 27,859 23,980 26,143 31,343 26,990 26,141 36,095 27,713 29,445 33,818 26,347 24,722 340,596 287 Governmental 5,359 5,756 7,470 9,553 10,503 12,393 16,995 14,922 14,469 16,816 9,267 6,239 129,742 288 Landscape 19,206 29,923 35,086 46,066 47,568 51,731 66,237 57,210 58,034 67,124 35,911 26,082 540,178 289 Fireline 71 59 45 150 57 49 74 36 56 76 74 66 813
290 Hydrant Meter 9,835 3,854 240 962 526 563 4,086 1,004 11,480 2,481 1,114 1,125 37,270 291 Total 241,287 223,032 241,926 297,841 288,124 295,799 403,710 333,497 350,061 386,221 255,129 222,824 3,539,451 292
293 % of consumption from July through December 55%
294 % of consumption from January through June 45%
295
296
297 Check with Bill Frequency Data Total
298 Consumption Bill Freq
299 Data Data
300 W00 2,708,355 2,719,808
301 WM0 252,835 252,696
302 Landscape 540,178 516,067 use consumption data
303
304
Step 5. Estimated Peak Day and Peak Hour Units of Service 305 Methodology: Peak day of FY 22/23 occurred in October 2022. Use monthly consumption during October 2022 to calculate 306 October % o f % of
307 2022 hcf Peak Day Peak Hour
308 Residential & MF < 50 U 239,077 62% 62%
309 MF > 50 Units 26,829 7% 7%
310 Commercial 33,818 9% 9%
311 Governmental 16,816 4% 4%
312 Landscape 67,124 17% 17%
313 Fireline 76 0% 0%
314 Hydrant Meter 2,481 1% 1%
315 Total 386,221 100% 100%
316
317
318
Step 6. Adjust CY 22 Metered Consumption for Projected FY 24/25 Consumption 319
320 2024 Rate Study Update Notes:
321 The rate proposal developed in 4Q2023 used CY 22 metered consumption data. Revenues under existing rates (using the CY 22 metered consumption data) backcalculated well to the FY 23/24 322 budget for water sales revenues.
323
324 Actual CY 23 water sales revenues were lower than projected, and lower than calculated using CY 22 metered consumption data. The actual CY 23 water sales revenues were used in RWS's 325 draft FY 24/25 budget.
326
327 The CY 22 water consumption data can no longer be used to develop rates, as it will lead to undercollection of revenues. With the CY 22 water consumption data, the resulting volume charges will be 328 too low, resulting in undercollection of revenues.
329
330 An Adjusted Projected Consumption is calculated based on the projected decrease in revenues (CY 23 actuals vs FY 23/24 budge t). Because the City has prioritized schedule in completing this 2024 Rate Study Update, 05162024 2024 Updates Rialto Rate Model
C1WaterRateDesign
FG Solutions, LLC
Copyright 2024 All Rights Reserved

Page 7 of 23 ends

5/16/2024
114
APPENDIX C: WATER RATE DESIGN
TABLE C-1
City of Rialto - 2024 Water and Wastewater Rate Study
Water Rate Design Calculations
331 updated water consumption data from CY 23 was not compiled as it normally would have been in a Water Rate Study. The percent age adjustment is applied to all customer classes for this Rate Study. 332
333 Decrease in Revenue
334 FY 23/24 Budget $13,053,423
335 RWS FY 24/25 Budget $12,721,522
336 Decrease in Revenue $331,901
337 Math Check: estimated FY 24/25 ccf/year
338 Estimated Composite Volume Charge $2.70 MF>49 244,054 339 Note: The expectation is that water conservation will result in reductions in Tier 2, 3, and 4 water use but not Tier 1 wate r use. SFR 2,160,290 340 Comm 454,003
341 Decease in ccf/year (122,926) Landscape 521,417
342 as percent of CY 22 ccf/year -3.47% Private FP 785
343 Hydrant 35,976
344 Estimated FY 24/25 ccf/year 3,416,525 cc
f Total 3,416,525
345 Delta 0
346 The percentage adjustment will applied equally to all customer classes, absent ability to compile data indicating otherwise. 347
348
349
350
Step 7. Define Costs to Be Recovered by Monthly Minimum Charges and Volume Charges 351 Public Private
352 Fire Fire
353 Customer Meter Protection Base Peaking Rate Tiers Hydrant Protection Total 354 Total FY 24/25 Revenue Requirement $898,004 $79,181 $2,120,304 $2,662,614 $5,016,351 $2,573,511 $367,643 $13,717,608 355 Less Costs for Hydrant Customers $0 $0 $0 ($28,037) ($32,224) $60,261 $0 356 Less Costs for Fire Protection Customers $0 $0 $0 ($612) ($987) $1,599 $0 357 Subtotal $898,004 $79,181 $2,120,304 $2,633,965 $4,983,140 $2,573,511 $60,261 $369,242 $13,717,608 358 As Percent 6.55% 0.58% 15.46% 19.20% 36.33% 18.76% 0.44% 2.69% 100.00% 359
360
05162024 2024 Updates Rialto Rate Model
C1WaterRateDesign
FG Solutions, LLC
Copyright 2024 All Rights Reserved

Page 8 of 23 ends

5/16/2024
115
APPENDIX C: WATER RATE DESIGN
TABLE C-1
City of Rialto - 2024 Water and Wastewater Rate Study
Water Rate Design Calculations
361 Adjustment: Revenue Collected if Rates Were In Effect for the Full FY 362 Rates Effective for Six Months $898,004 $79,181 $2,120,304 $2,633,965 $4,983,140 $2,573,511 $60,261 $369,242 $13,717,608 363 Adjustment $62,651 $5,524 $147,928 $183,765 $347,661 $179,547 $4,204 $25,761 $957,042 364 Full-Year Implementation Rate Revenue $960,655 $84,705 $2,268,232 $2,817,730 $5,330,801 $2,753,058 $64,465 $395,003 $14,674,650 365
366
367 Costs Recovered from Monthly Minimum Charge
368 % Recovered Through Monthly Minimum Charge 100% 100% 100% 100% 0.00% 369 $ Recovered Through Monthly Minimum Charge $960,655 $84,705 $2,268,232 $2,817,730 $0 $6,131,323 370 Number of Billing Determinants (3) 11,808 15,523 15,523 15,523 15,523 371 Unit Cost, $/month $6.78 $0.45 $12.18 $15.13 $0.00
372 Units $/mo/cust. $/mo/ME $/mo/ME $/mo/ME $/mo/ME
373
374 Costs Recovered from Volume Charge (Except Hydrant and Private Firelines) 375 % Recovered Through Volume Charge 0% 0% 0% 0% 100.00% 376 $ Recovered Through Volume Charge $0 $0 $0 $0 $5,330,801 $2,753,058 $8,083,859 377
378 Other Costs Recovered from Hydrant and Fireline Charges $64,465 $395,003 $459,468 379 Total $960,655 $84,705 $2,268,232 $2,817,730 $5,330,801 $2,753,058 $64,465 $395,003 $14,674,650 380
381 Notes:
382 (1) See AWWA M1, 7th edition, page 227, last paragraph on page 383 (2) Private Fire Protection and Hydrant Rates Shown Below 384 (3) See Table B-9, excludes hydrant and private fire protection customers 385
386
Step 8. Calculate Cost-of-Service Monthly Service Charge, FY 24/25 387
388 Meter Total COS Revenue Revenue
389 Customer Equivalent Monthly Backcalc Reported Backcalc 390 Allocated Allocated Service Billing Current CY 22 COS 391 Meter Size Component Component Charge Current Determinants Rates Revenues Rates 392 1/2 " & 5/8" meter $6.78 $27.76 $34.54 $30.42 1 365 359 414 393 3/4" meter $6.78 $27.76 $34.54 $30.42 10,173 3,713,552 3,687,647 4,216,310 394 1" meter $6.78 $46.26 $53.04 $44.01 1,065 562,448 557,549 677,905 395 1 1/2" meter $6.78 $92.53 $99.31 $53.04 178 113,293 112,325 212,123 396 2" meter $6.78 $148.05 $154.83 $152.54 307 561,957 555,947 570,380 397 3" meter $6.78 $296.09 $302.87 $324.45 45 175,203 175,203 163,551 398 4" meter $6.78 $462.65 $469.42 $550.59 31 204,819 205,333 174,626 399 6" meter $6.78 $925.29 $932.07 $1,138.62 4 54,654 54,654 44,739 400 8" meter $6.78 $1,480.46 $1,487.24 $1,636.17 4 78,536 77,882 71,388 401 Total 5,464,828 5,426,898 6,131,437
402 6,131,323 math check
402
05162024 2024 Updates Rialto Rate Model
C1WaterRateDesign
FG Solutions, LLC
Copyright 2024 All Rights Reserved

Page 9 of 23 ends

5/16/2024
116
APPENDIX C: WATER RATE DESIGN
TABLE C-1
City of Rialto - 2024 Water and Wastewater Rate Study
Water Rate Design Calculations
432 Step 9. Calculate Revenues from Monthly Service Charge by Customer Class (Cost of Service Based Rates) 433
434 FY 24/25 FY 24/25 FY 24/25 FY 24/25
435 Commercial,
436 Single-Family Multi-Family Institutional,
437 Residential > 50 Units Governmental Landscape Total 438 $390 $0 $0 $0
439 $3,775,414 $80,668 $89,631 $18,706
440 $348,184 $104,222 $85,008 $82,679
441 $2,742 $15,537 $94,137 $50,267
442 $20,284 $33,191 $313,475 $199,149
443 $3,763 $22,581 $101,614 $41,398
444 $18,358 $79,552 $42,836 $48,955
445 $0 $24,846 $24,846 $0
446 $0 $74,953 $0 $0
447 $4,169,135 $435,551 $751,547 $441,154 $5,797,388
448
449
450
451 FY 25/26 FY 25/26 FY 25/26 FY 25/26 FY 26/27 FY 26/27 FY 26/27 FY 26/27 452 Commercial, Commercial,
453 Single-Family Multi-Family Institutional, Single-Family Multi-Family Institutional, 454 Meter Size Residential > 50 Units Governmental Landscape Total Residential > 50 Units Governmental Landscape Total 455 1/2 " & 5/8" meter $444 $0 $0 $0 $492 $0 $0 $0
456 3/4" meter $4,325,178 $92,403 $102,621 $21,324 $4,812,426 $102,790 $114,101 $23,607 457 1" meter $410,047 $122,809 $100,294 $97,565 $456,222 $136,715 $111,789 $108,768 458 1 1/2" meter $3,832 $21,715 $131,567 $70,254 $4,242 $24,040 $145,655 $77,777 459 2" meter $21,906 $35,846 $340,535 $217,066 $24,251 $39,684 $379,205 $242,515 460 3" meter $3,896 $23,374 $105,183 $42,852 $4,313 $25,877 $116,446 $47,441 461 4" meter $18,114 $78,493 $42,265 $48,303 $20,053 $86,898 $46,791 $53,476 462 6" meter $0 $23,977 $23,977 $0 $0 $26,545 $26,545 $0 463 8" meter $0 $76,518 $0 $0 $0 $84,712 $0 $0
464 $4,783,416 $475,135 $846,442 $497,365 $6,602,358 $5,322,000 $527,261 $940,533 $553,584 $7,343,378 465
466 FY 27/28 FY 27/28 FY 27/28 FY 27/28 FY 28/29 FY 28/29 FY 28/29 FY 28/29 467 Commercial, Commercial,
468 Single-Family Multi-Family Institutional, Single-Family Multi-Family Institutional, 469 Meter Size Residential > 50 Units Governmental Landscape Total Residential > 50 Units Governmental Landscape Total 470 1/2 " & 5/8" meter $529 $0 $0 $0 $568 $0 $0 $0
471 3/4" meter $5,197,330 $110,986 $123,142 $25,368 $5,612,880 $119,834 $132,896 $27,261 472 1" meter $492,691 $147,726 $120,941 $117,694 $532,062 $159,619 $130,835 $127,346 473 1 1/2" meter $4,559 $25,834 $156,521 $83,579 $4,899 $27,761 $168,197 $89,814 474 2" meter $26,061 $42,645 $409,863 $262,975 $28,005 $45,826 $442,984 $285,139 475 3" meter $4,635 $27,807 $125,133 $50,980 $4,980 $29,882 $134,468 $54,783 476 4" meter $21,549 $93,381 $50,282 $57,465 $23,157 $100,347 $54,033 $61,752 477 6" meter $0 $28,525 $28,525 $0 $0 $30,653 $30,653 $0 478 8" meter $0 $91,031 $0 $0 $0 $97,822 $0 $0
479 $5,747,353 $567,935 $1,014,406 $598,062 $7,927,756 $6,206,551 $611,743 $1,094,067 $646,095 $8,558,456 480
481
Step 10. Compile CY 22 Water Use Data by Customer Class and Rate Tier 05162024 2024 Updates Rialto Rate Model
C1WaterRateDesign
FG Solutions, LLC
Copyright 2024 All Rights Reserved

Page 10 of 23 ends

5/16/2024
117
APPENDIX C: WATER RATE DESIGN
TABLE C-1
City of Rialto - 2024 Water and Wastewater Rate Study
Water Rate Design Calculations
482
483 Calculated from Bill Frequency Data Provided by RWS from CY 22 A nnual Water Sales 484 Commercial, Private
485 Single-Family MF>49 Institutional, Fire Hydrant
486 Proposed Tier Structur
e Residential Units Government Landscape Protection Connections Total 487 Tier 1 972,498 48,837 1,021,335 0 - 9 cc f
488 Tier 2 918,325 69,276 75,227 1,062,828 9 - 30
489 Tier 3 347,194 352,225 464,951 1,164,370 >30
490 "Uniform Block" (No Tiers) 252,835 813 37,270 290,918 491 Total 2,238,017 252,835 470,338 540,178 813 37,270 3,539,451 492
493 Commercial, Private
494 Single-Family MF>49 Institutional, Fire Hydrant
495 Existing Tier Structure Residential Units Government Landscape Protection Connections Total 496 Tier 1 582,807 29,963 612,770
497 Tier 2 1,308,016 88,150 75,227 1,471,393
498 Tier 3 216,800 58,520 464,951 740,271
499 Tier 4 130,394 293,705 424,099
500 "Uniform Block" (No Tiers) 252,835 813 37,270 290,918 501 Total 2,238,017 252,835 470,338 540,178 813 37,270 3,539,451 502
503
504
Step 11. Compile Estimated FY 24/25 Water Use Data by Customer Class and Rate Tier 505 2024 Rate Study Update: estimate FY 24/25 water use by applying adjustment calculated in Step 6. 506
507 SFR and MF < 49 Units
508 Total CY 22 Consumption 2,238,017
509 SFR: total % adjustment -3.47%
510 Decrease in SFR Consumption 77,727
511 Estimated FY 24/25 Consumption 2,160,290
512
513 Existing Tiers
514 No projected change to Tier 1 Use
515 Total Tiers 2, 3, and 4 ccf/year 1,655,210
516 Decrease in ccf/year 77,727
517 % Decrease in Tiers 2, 3, and 4 ccf/year -4.70%
518
519 Proposed Tiers
520 No projected change to Tier 1 use
521 Total Tier 2 and Tier 3 ccf/year 1,265,519
522 Decrease in ccf/year 77,727
523 % Decrease in Tier 2 and Tier 3 ccf/yr -6.14%
524
525 MFR > 49 Units
526 CY 22 Water Consumption 252,835
527 % Adjustment for FY 24/25 -3.47%
528 Estimated FY 24/25 Consumption 244,054
529
05162024 2024 Updates Rialto Rate Model
C1WaterRateDesign
FG Solutions, LLC
Copyright 2024 All Rights Reserved

Page 11 of 23 ends

Rialto City CouncilJuly 23, 2024

Rialto City Council
July 23, 2024