RiversideCA.gov1
RiversideCA.gov
Proposed Five-year Sewer Service Rate Plan – Set Public HearingCity CouncilSeptember 22, 2026Public Works Department RiversideCA.gov2
4.2% average increase in January 2027 followed by average increases of 7.2% each July thereafterPROPOSED 5-YEAR SEWER RATE PLAN$1.78per month (maximum) for residential customers in first fiscal yearHighest monthly increase for residential customersYear 2 Year 3 Year 4 Year 5$3.26 $3.49 $3.73 $3.98 RiversideCA.gov3
CURRENT OUTLOOK What we are trying to do…•Ensurereliableand continuous service•Repairand replace deteriorating and failing infrastructure•Prevent spills and remain preparedfor sewer emergencies•Ensure capacity for growth and development•100%regulatorycomplianceto avoid penalties RiversideCA.gov4
CURRENT OUTLOOK Where we are at…Sewer Fund under significant financial strainDebt service coverage and reserves projected to decline sharply ALL PRACTICAL OPERATIONAL EFFICIENCIES AND CREATIVE DEBT RESTRUCTURING SOLUTIONS HAVE BEEN EXHAUSTED Risk falling below legally required debt covenants this fiscal yearCapital Improvement Program woefully underfunded and delayedSewer spills are increasing while capacity to respond is diminishing RiversideCA.gov5
OVERVIEW OF SEWER
Sewer Collection SystemRiverside Water Quality Control Plant RiversideCA.gov6
RIVERSIDE WATER QUALITY CONTROL PLANT
RWQCPConstructed1947100K
SewerCustomers
Highest State-assigned Plant Classificationdue to size and complexity10 BillionGallons of wastewatertreated per yearThis Building Still In Use As RWQCP Warehouse FacilityRiverside Water Quality Control Plant - 1947 RiversideCA.gov7
SEWER COLLECTION SYSTEMAverage age of system: 55 years67 milesare80+ years old Maintain813 milesGravity Sewers424 milesLower Laterals62%over50 years old 0-50 Years (37.5%) 50-80 (54.25%) 80-100 (6.78%)100+ (1.47%)Typical Service Life: 60-80 Years RiversideCA.gov8
REGULATORY & POLICY OVERSIGHTSewer Collection System - Statewide General Requirements•Maintain all necessary revenues for the sanitary sewer system, and•Allocate necessary resources to:•Implement Sewer System Management Plan & associated CIP•Repair the systemRWQCP 2013 NPDES “discharge” Permit; New permit anticipated early 2027•More stringent requirements highly likely including prioritized rehabilitation and replacement of treatment assets2016 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 targetDebt Service Covenants•City maintain at least 110% debt service coverage•Cannot issue bonds w/o demonstrating compliance•Falling below 110% requires immediate rate increases RiversideCA.gov9
BACKGROUND2019 SEWER MASTER PLAN•Identified Projects of $542M–2/3 for the Sewer Collection System–1/3 for the Treatment Plant•$86.6M CompletedOutstanding Projects of $382M in 2017 Dollars Translates to a 20-year CIP of $29.4M/yr in 2026 dollars RiversideCA.gov10
CHALLENGES
2018 rate increase was rescindeddue to favorable financial position at that timeSewer Rate History Since 2014Date: 7/1/14 7/1/15 7/1/16 7/1/17 7/1/18 7/1/19 7/1/20 7/1/21 7/1/22 7/1/23 7/1/24 7/1/25 7/1/26Adopted8.5% 8.5% 8.5% 8.5%8.5%- - - - - - - -Implemented8.5% 8.5% 8.5% 8.5%0%0% 0% 0% 0% 0% 0% 0% 0% RiversideCA.gov11
RISING COSTS & PRESSURES•General Inflation & Labor•Higher costs for chemicals, disposal, and construction•Aging facilities across treatment plant and collection system•Ability to protect Public Health & Environment consistent with regulatory expectations Accumulating reserves & cash-funding projectsDepleting reserves to fund critical projects & offset cost increases & inflation RiversideCA.gov12
INTERVENTIONS TO DELAY RATE INCREASESIntervention Date From Measure Estimated Savings/RevenuesCapital ProjectsOngoingSewerPared project listing to minimum mandatory & delayed others TBDBond Restructuring2018FinanceRefi 2009B Bonds; Principal deferral to avoid rate increases & meet bond covenants$17.5M total savings from FY 2019 to FY 2026Non-rate Revenue2019SewerUnused WQCP Property Lease (5 yr.) $150,000 totalDefine Reserve Policy Goal & Use Reserves 2022City CouncilCity Council defined reserve minimum level. Allowed reserves above the minimum to be used for projectsProjects completed 35% below estimated costsSettlement Funds2022City CouncilAuthorized use of held settlement funds for projects $15.0MGrant Award2022SewerDigester 5 Rehabilitation $2.0MGrant Award2023SewerRiverside Bioenergy Facility Development $10.0MChemical Costs2025SewerRe-bid bulk chemicals $620,000 / yrChlorine Contact Study & Approval2025SewerOptimized disinfection process & received State authorization to reduce chemical useEst. $1.0M / yrNon-rate Revenue2025SewerUnused WQCP Property Lease (3 yr.) $120,000 totalBond Restructuring2025FinanceRefi 2015A Bonds; Principal deferral to avoid rate increases & meet bond covenants$21M total savings ($8M from FY 2026 to FY 2028)Rate Stabilization Fund2026Finance$4M withdrawal from RSF to ensure debt coverage requirements are met $4M additional revenue applied to coverage calculation RiversideCA.gov13
LEVERAGING P3 MODELS FOR FUTURE STABILITY•The Riverside Public Works Department Wastewater Division has established a Public-Private Partnership (P3) with AnaergiaInc. to significantly expand organic waste processing at the Riverside Water Quality Control Plant (RWQCP).•Under a long-term lease, the project will co-digest source-separated food and organic waste with wastewater sludge using advanced anaerobic digestion technology. •The facility will produce pipeline-quality renewable natural gas (RNG) for direct injection into the SoCalGas system and convert Class B biosolids into high-quality biochar suitable for unrestricted use as fertilizer or soil amendment.•Total revenues are to be determined RiversideCA.gov14
LEVERAGING P3 MODELS FOR FUTURE STABILITY
RiversideCA.gov15
TREATMENT PLANT NEEDSAGING TREATMENT ASSETS
•Activated Treatment Plant•Compliance upgrades for ammonia and nitrogen removal •MBR Treatment Plant•Original membrane cassettes at the end of service life•Headworks Facility •Complete replacement due to obsolete and failing equipment•Solids Handling•Digester cleaning to preserve capacity and efficiency RiversideCA.gov16
COLLECTION SYSTEM NEEDSSewer Video Inspection ProgramVideo inspections identify defects needing repairDefects Lead to FailuresPipe cracks, offsets, collapses, and deteriorating manholesRepairsReplacement or liningTotal Outstanding Repairs = 123~$2M/yr needed to repair leaks & prevent failures
RiversideCA.gov17
EMERGENCY PREPAREDNESS•2016/17 Allesandro Force Main Failure• 2,000,000-gallon spill• $6.5M repair ($2026)•2020 Magnolia Force Main Failure• 300,000-gallon spill• $6.6M repair ($2026)
SEWER FUND NOT POSITIONED TO ABSORB MAJOR EMERGENCIES WITHOUT DEFERRING PROJECTS OR DESTABILIZING RESERVES RiversideCA.gov18
CITY COUNCIL DISCUSSIONSForum Topic DateMobility & Infrastructure Committee Sewer Financial Model Update August 11, 2022City Council Sewer Financial Model Update. Approve capital funding approach, use of settlement funds and reservesOctober 4, 2022Mobility & Infrastructure Committee Sewer Fund and Rate Plan Alternatives June 12, 2025City Council (Finance Department) Bond Refinance August 5, 2025City Council Workshop: Sewer Fund Financial Position and rate scenariosAugust 19, 2025 RiversideCA.gov19
PROPOSED RATE PLANFiscal Year Effective Date Average Increase Across all Customers1 Jan 1, 2027 4.2%2 July 1, 2027 7.2%3 July 1, 2028 7.2%4 July 1, 2029 7.2%5 July 1, 2030 7.2%Financial Assistance via SHAREProgram not included in current proposal. Subject to City Council Approval & General Fund Availability RiversideCA.gov20
PROPOSED RATE PLANEffective(Non-pumping)(Pumping)Current $39.59 $45.73 Jan 1, 2027 $41.46 $47.51Increase (%) 4.47% 3.89%July 1, 2027 $44.45 $50.77Increase (%) 7.47% 6.86%July 1, 2028 $47.78 $54.26Increase (%) 7.49% 6.87%July 1, 2029 $51.35 $57.99Increase (%) 7.47% 6.87%July 1, 2030 $55.19 $61.97Increase (%) 7.48% 6.86%Proposed Sewer Service RateSingle Family Residential ($/Month)Basic Single Family
RiversideCA.gov21
A surcharge (~15%)isapplied across all customers where sewage must be pumpedSEWER PUMPING ZONES Costs to operate and maintain sewer pump stations
RiversideCA.gov22
PROJECTED STATE OF THE FUNDReserves drop below policy minimum in FY 30/31Revenues fall short of O&M and debt coverage needs starting FY 27/28Operating Fund depleted sometime in FY 28/29Without Rate Increases, Revenues will not sustain servicelevels while also funding repair and replacement projects needed for reliabilityand compliance Cease CIP due to inability to pursue bonds
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PROPOSED SEWER 5-YEAR RATE PLANRESIDENTIALResidential Customer ExamplesCount Fiscal Year 1% IncreaseFiscal Year 2% IncreaseFiscal Year 3% IncreaseFiscal Year 4% IncreaseFiscal Year 5% IncreaseMulti-Family 24625 4.42% 7.40% 7.44% 7.41% 7.42%Single Family 447754.47% 7.47% 7.49% 7.47% 7.48%Single Family –Pumping Zone19259 3.89% 6.86% 6.87% 6.87% 6.86%Multi-Family – Pumping Zone70523.83% 6.82% 6.82% 6.83% 6.82% The picture can't be display ed.$1.78Highest monthly increase year 1Highest Monthly IncreaseYear 2 Year 3 Year 4 Year 5$3.26 $3.49 $3.73 $3.98 RiversideCA.gov24
PROPOSED SEWER 5-YEAR RATE PLANCOMMERCIAL(RATE PER CCF)Commercial Customer Class Count Fiscal Year 1% IncreaseFiscal Year 2% IncreaseFiscal Year 3% IncreaseFiscal Year 4% IncreaseFiscal Year 5% IncreaseBasic Flat Rate 1174.47% 7.47% 7.49% 7.47% 7.48%Pumping 123.89% 6.86% 6.87% 6.87% 6.86%Dept. & Retail Stores2593.85% 6.73% 6.94% 6.78% 6.91%Pumping 753.83% 6.82% 6.91% 6.72% 6.76%Hotels & Motels363.71% 6.61% 6.72% 6.78% 6.80%Pumping 63.99% 6.71% 6.97% 6.93% 6.88%Laundromats173.83% 7.10% 6.63% 6.97% 6.98%Pumping 64.00% 6.97% 6.97% 6.93% 6.88%Laundries23.97% 7.12% 6.97% 6.97% 6.94%Pumping 14.06% 7.02% 7.00% 6.95% 7.01%Markets624.16% 7.08% 7.09% 7.07% 7.13%Pumping 144.08% 7.01% 7.10% 7.05% 7.07% RiversideCA.gov25
PROPOSED SEWER 5-YEAR RATE PLANCOMMERCIAL – CONTINUED (RATE PER CCF)Commercial Customer Class Count Fiscal Year 1% IncreaseFiscal Year 2% IncreaseFiscal Year 3% IncreaseFiscal Year 4% IncreaseFiscal Year 5% IncreaseMortuaries64.23% 7.16% 7.13% 7.28% 7.17%Pumping 14.16% 7.10% 7.25% 7.14% 7.03%Professional Offices2933.81% 6.53% 6.90% 6.81% 6.71%Pumping 373.52% 6.80% 6.69% 6.87% 6.42%Repair Shops & Service Stations2604.15% 7.03% 7.00% 6.95% 7.07%Pumping 284.03% 7.14% 7.05% 7.12% 6.98%Restaurants2224.45% 7.52% 7.46% 7.48% 7.57%Pumping 834.38% 7.46% 7.38% 7.37% 7.43%Other Commercial16443.85% 6.84% 6.93% 6.98% 6.76%Pumping 2344.01% 6.99% 6.98% 6.95% 6.89%Hospitals363.84% 6.86% 6.91% 6.93% 6.91%Pumping 74.04% 6.85% 7.05% 6.99% 7.09% RiversideCA.gov26
PROPOSED SEWER 5-YEAR RATE PLANCOMMERCIAL – CONTINUED (RATE PER CCF)$0.36Highest single monthly increase per CCF - year 1 Commercial Customer Class Count Fiscal Year 1% IncreaseFiscal Year 2% IncreaseFiscal Year 3% IncreaseFiscal Year 4% IncreaseFiscal Year 5% IncreaseChurches & Halls1253.76% 6.74% 6.31% 6.85% 6.41%Pumping 213.70% 6.70% 6.69% 6.67% 6.99%Schools “B”983.85% 6.48% 6.96% 6.50% 6.87%Pumping 304.03% 6.98% 6.52% 6.80% 7.01%Other Commercial “A”463.98% 6.81% 6.77% 6.72% 6.64%Pumping 93.73% 6.83% 6.73% 6.94% 6.49%Other Commercial “B”1873.51% 6.78% 7.14% 5.93% 6.99%Pumping 333.65% 6.34% 5.96% 6.25% 6.47%Highest Monthly Increase per CCFYear 2 Year 3 Year 4 Year 5$0.64 $0.68 $0.73 $0.79 RiversideCA.gov27
PROPOSED SEWER 5-YEAR RATE PLANINDUSTRIAL USERSIndustrial UsersCustomerCountFiscal Year 1% IncreaseFiscal Year 2% IncreaseFiscal Year 3% IncreaseFiscal Year 4% IncreaseFiscal Year 5% IncreaseFlow (per ccf)154.55% 7.57% 7.58% 7.55% 7.56%Pumping0.68% 7.48% 7.47% 7.48% 7.51%COD (per pound)3.41% 6.37% 6.40% 6.41% 6.39%Pumping3.41% 6.37% 6.40% 6.41% 6.39%TSS (per pound)7.73% 10.55% 10.50% 10.36% 10.33%Pumping7.73% 10.55% 10.50% 10.36% 10.33% Highest Monthly IncreaseYear 1Year 2 Year 3 Year 4 Year 5Flow (per CCF)$0.11$0.24 $0.26 $0.28 $0.30COD (per pound)$0.02$0.03 $0.03 $0.03 $0.03TSS (per pound)$0.03$0.05 $0.05 $0.06 $0.07 RiversideCA.gov28
ALTERNATIVE STRATEGIESForego 4.2% Increase on January 1, 2027:Escalating Increase After January 1, 2027:FY 26/27 FY 27/28 FY 28/29 FY 29/30 FY 30/31 FY 31/32Effective Date:Jan 1, 2027 July 1, 2027 July 1, 2028 July 1, 2029 July 1, 2030 July 1, 2031Rate Increase- 12.5%7.5% 7.5% 7.5% 7.5%•12.5% increase July 1, 2027, followed by 7.5% each July thereafter•Fully funds CIP and Operations and Maintenance program•Significant reduction in CIP through FY 28/29, costs reallocated to following 3 •Additional debt issuance toward end of rate plan•Evaluate comfort level of additional debt vs. debt coverage through 28/29 •Increased risk of regulatory exposure from reduced CIPRate Increase4.5%6.0% 6.0%7.5% 7.5% 7.5% RiversideCA.gov29
FIVE-YEAR RATE PLANImmediate Increases Driven by Need to:•Quickly catch up to inflation•Preserve ability to meet debt coverage requirements/bond obligations•Generate revenues to cover additional debt for the CIP•Maintain reserves close to Council defined Reserve Goal (min. +10%)Additional Revenue Would:•Sustain service levels, maintain debt service coverage, and deliver projects to protect public health and facilitate growth•Allow CIP to again be cash funded by FY 30/31 RiversideCA.gov30
FINANCIAL FORECAST WITH INCREASENew rates would:
Sustain consistent and continuous sewer serviceFund projects for reliability, compliance, and to reduce riskPreserve City Council Reserve Goal, debt service, and bond obligations
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40NEXT STEPSConsider Proposed Rates & Set Public Hearing(Today)Prepare & Mail Public NoticeCommunityEngagementEngagementwith Industrial UsersCity Council PublicHearing and RateAdoptionNov. 17, 2026 RiversideCA.gov32
RECOMMENDATIONSThat the City Council:1. Receive a report on a proposed five-year rate plan for residential, commercial, institutional, and industrial sewer services through July 1, 2031;and2. Direct staff to prepare all documents necessary for public noticing and set a public hearing for sewer rate increases for residential, commercial, institutional, and industrial sewer services through July 1, 2031, on a date at least 45 days after mailing said notice in accordance with Proposition 218.