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1 RiversideCA.gov1
RiversideCA.gov
SEWER ENTERPRISE FUND FINANCIAL MODEL AND FINANCIAL POSITION UPDATECity CouncilAugust 19, 2025Public Works Department RiversideCA.gov2
WHAT WE DOServe 100Kcustomers & 3 community service districts Operate24/7∙365
Ensurecompliancewith Federal & State regulations
Protect public health &environment
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2 RiversideCA.gov3
WHAT WE’VE DONE IN A YEAR10 Billion gallons of wastewater treated 417 Million gallons of recycled water produced
9.5M kw∙hclean energy from biogas
550 miles of sewer cleanedand inspected
RiversideCA.gov4
SEWER: ALL DAY EVERY DAYSewer team members work 24/7 to keep flow flowing and treatment treating
ALL DAY EVERY DAY RIVERSIDE PUBLIC WORKS
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3 RiversideCA.gov5
REGULATORY OVERSIGHTSewer Collection System - Statewide General Requirements•The City shall:•Maintain a means to manage all necessary revenues for the sanitary sewer system; and•Allocate necessary resources to:•Comply with the regulation•Implement Sewer System Management Plan & associated CIP•Repair the systemRWQCP 2013 NPDES “discharge” Permit; New permit anticipated in 2026•More stringent requirements highly likely including:•PFAS monitoring•Biosolids disposal•Prioritized rehabilitation and replacement of treatment assets•Compliance will require additional investmentThird-Party Entities - Actively Monitor State Data to File Citizen Enforcement Suits RiversideCA.gov6
STATE WATER QUALITY ENFORCEMENT POLICYState Water Quality Enforcement Policy Perspective•Compliancewith regulations is critical to protecting public health and the environment•A point where cooperative approaches should make way for more forceful ones•Formal enforcement should alwaysresult when non-compliance leads toa competitive economic advantage•Improves public confidence when government is ready, willing, and able to back up its requirements with action.State Water Board – Water Quality Enforcement Policy Applicable to Discharges to Waters of the State including the Santa Ana RiverWater Quality Control PlantSewer Collection System5 6 7/21/2025
4 RiversideCA.gov7
POLICY OVERSIGHT2016 Sewer Fund Reserve Policy•Fiscal stability & guidance to staff on financial management of Sewer Fund •“Reserve Goal” is annual ending balance 10% above policy minimum target•Reserves below the minimum target, Wastewater and/or Finance will implement plan to return reserves to target levels within three years upon City Council approvalBond Legal Covenants•The Additional Bonds Test•Bond Covenants•City maintain at least 110%debt service coverage•Cannot issue any Additional Bonds unless it can demonstrate this minimum coverage metric will be met •If ever falls below 110%, required to raise sewer rates immediately RiversideCA.gov8
HISTORY OF SEWER RATESImplemented Rate IncreaseAdopted Rate IncreaseSewer Service8.5%8.5%7/1/20148.5%8.5%7/1/20158.5%8.5%7/1/20168.5%8.5%7/1/20170%8.5%7/1/20180%-7/1/20190%-7/1/20200%-7/1/20210%-7/1/20220%-7/1/20230%-7/1/2024No Rate Increases since 2017Final increase of prior rate plan was paused due to favorable financial position at that time$580M in CIP projects remaining from 2019 Sewer Master Plan7 8 7/21/2025
5 RiversideCA.gov9
RESIDENTIAL SEWER RATE SURVEYResidential rates remain competitive
27.7%72.3%Survey Avg.*$51.71* Average of non-Riverside agencies RiversideCA.gov10
SEWER PLANT INFLUENT FLOW
68%12%20%RWQCP Influent Contributions
City Residential
City Commercial
Community Service DistrictsRates do not impact Community Service Districts-pay annually based on actual current-day costs City residential customers pay 2017 ratesCity industrial & commercial customers pay 2017 rates9 10 7/21/2025
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COSTS AND CAPITAL NEEDS OUTPACING REVENUEInflation
Higher costs•Chemicals (135%)•Biosolids disposal (56%)•Construction (57%)•Labor RegulationsSewer Fund has absorbed 29.1% in O&M increases RiversideCA.gov12
Reserves, Settlements, & Grants for Projects•Utilized reserves and settlement funds for projects to reduce sewer rate pressures•Since 2018 executed $65M in projects 35% below estimated costs ($65M vs. $101M) Process Efficiencies, Innovation, & Chemicals•Optimized disinfection process. Received State approval to reduce chemical use•Re-bid bulk chemicals•Estimated savings up to $1.6M per yearWHATS BEEN DONE TO ADAPT & MAINTAIN 11 12
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TREATMENT PLANT ACCOMPLISHMENTS
HVAC ReplacementAdministration, Laboratory, and Operations Center HVAC and control systems replacement ($3M)Membrane Bioreactor Treatment Expansion6 MGD capacity increase for MBR treatment plant($5.1M)Phase I Levee RehabilitationIncrease height to protect WQCP from extreme storm events in Santa Ana River($5M) RiversideCA.gov14
COLLECTION SYSTEM ACCOMPLISHMENTS
Magnolia Force Main Rehabilitation 2.6-mile lining of City’s second- largest pressurized sewer pipe($8M)Priority Pipeline ReplacementsCitywide replacements due to failing condition and/or capacity limitation($8.6M)Van Buren SewerExtension of sewer service to unserved portions of City and County of Riverside(City Share $11.7M) 13 14
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WHAT WE ARE TRYING TO DO100% RegulatoryCompliance
Position for growth by improving system capacity and replacing deteriorating infrastructure Proactive yet conservative Capital Improvement Program that ensures continuous reliable service Strong financial fundamentals & high-grade credit rating RiversideCA.gov16
TREATMENT PLANT NEEDSAGING TREATMENT ASSETS
•Activated Treatment Plant•Compliance upgrades for ammonia and nitrogen removal •MBR Treatment Plant•By 2027, 75% of the membrane cassettes will be out of warranty •Headworks Facility •Complete replacement due to obsolete and failing equipment 15 16
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COLLECTION SYSTEM NEEDS• Average age of sewer system is 50 years old; 55% over 50•57 miles over 80 years old•Regulations require prioritized corrective action & capital improvement planAGING SEWER SYSTEM RiversideCA.gov18
WHERE WE’RE CURRENTLY ATFail to maintain the minimum reserve goal defined by City Council Be unable to fund any Capital Improvement ProgramIf unchanged, by 2027 the fund will:
Reserve Goal17
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WHAT IF SCENARIOS
5-year, 6% rate plan starting Jan. 1, 2027Escalating 5-year (3.5-9%) rate plan starting Jan. 1, 2027Maintains Reserves above goalFails to maintain Reserves above goal RiversideCA.gov20
FUTURE CONSIDERATIONS
Emergency Reserves & Reserve Policy Goal
Regulatory Compliance & Risks of Non-Compliance
Capital Improvement Program
Bond Obligations & Credit Rating19
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RECOMMENDATIONThat the City Council:Receive a report on the Sewer Enterprise FundFinancial Model and provide input on theSewer Fund financial position.21