City of San Leandro
2024 Wastewater Rate Study
March 2025
Presentation
Overview
Rate Study Objectives
Rate Study Process
Proposition 218
Capital Needs
Financial Plan & Rates
Next Steps
Questions and Discussion
2 Rate Study
Objectives
Financial Sufficiency
Legal Compliance (Prop. 218)
Rates Aligned with City Objectives
Customer Focus
3 Rate Study
Overview
4 • 5-Year Financial Plans
• Fund long-term operating, debt service and capital
needs
•Cost of Service Rate Analysis
• Evaluate rate alternatives
• Develop updated rates that reflect the cost of service and meet annual revenue requirements
•Worked closely with the City throughout project
• Goal: Build consensus for final recommendations
Rate Study Process
Kick-Off Demand
Analysis
Financial
Plan
Cost
Allocation
Rate
Design
Prop. 218
Process
5 Proposition
218
Voter-approved constitutional amendment 1996
◦ Added Articles 13C & 13D to the California
Constitution
Substantive requirements for property-related charges
◦ Rates cannot exceed cost of providing service
◦ Proportionate cost recovery (fair and equitable)
Procedural requirements for rate increases
◦ Mail notice of rate increases to all property
owners/customers
◦ Hold public hearing at least 45 days after the mailing ◦ Rates are subject to “majority protest”
6 Sewer
Enterprise
Overview
• Sewer utility is a financially self-supporting
enterprise
• Rates are the main source of revenues for each
enterprise and need to be set at levels adequate to
fund the cost of providing service
• Sewer facilities include 125 miles of sewer line, 12
remote sewage pump stations, and a Wastewater
Treatment Plant (the facility cleans about 5 million
gallons of wastewater a day, with spikes up to 14
million gallons per day)
• The City collects sewage from approximately 18,500
residential customers, over 1,300 businesses, and 9
major industrial customers
7 Sewer
Capital Plan
• Objective: Maintain and improve wastewater
infrastructure
• Five-year capital spending about $55 million
• No additional financing
• Partially funded by $6.7 MM in grants
8 $10.4
$15.9
$14.6
$8.2
$10.1
$6.1
$0.0
$3.0
$6.0
$9.0
$12.0
$15.0
$18.0
FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 Sewer Capital Improvements Plan ($ millions)
Future $; includes annual
construction cost inflation.
Financial
Drivers
• BWA developed updated financial projections to identify funding needs & evaluate rate increases
• Aging infrastructure & capital improvement needs
• Sewer system upgrades, repairs & replacements needed maintain safe & reliable operations
• Approximately $55 million over the next 5 years
• Debt service
• 2015 SRF payments of $2.98MM ending in FY 2034/35
• 2021 loan payments of $593k ending FY 2035/36
• Operating cost inflation
• 8.0% for FY 2025/26, and 3.5% per year over the remaining 4 years • Annual rate adjustments needed to keep rates in line with escalating costs (electricity, staffing, materials, insurance, etc.)
• Maintain Prudent Reserves
• Emergencies, demand fluctuation, cash funding capital, etc. • Establishment of a Nutrient Optimization Project savings account ($2MM per year)
9 Sewer
Enterprise
Cashflow
10 FY 2025/26* FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 Rate Revenue Increase (%): 8.0% 9.0% 9.0% 9.0% 9.0%
Total Rate Revenue ($): $20,227,251 $22,152,728 $24,261,867 $26,572,220 $29,103,021 *Due to rate structure
adjustments, actual bill impacts
will vary the first year. $0.0
$10.0
$20.0
$30.0
$40.0
$50.0
FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 Sewer Enterprise Cashflow ($ millions)
Proposed Rates
11 Current
Proposed Rates FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 Classification A (Residential) - Fixed Monthly Rate per Unit Single Family $53.20 $57.12 $62.26 $67.86 $73.97 $80.63 Multi Family 37.40 42.19 45.99 50.13 54.64 59.56
Accessory Dwelling 37.40 42.19 45.99 50.13 54.64 59.56
Classification B (Commercial & Institutional) - Volumetric Rates per Hundred Cubic Feet (hcf) of Water Use Low Strength $4.91 $5.42 $5.91 $6.44 $7.02 $7.65
Medium Strength 5.51 6.17 6.73 7.34 8.00 8.72
High Strength 10.03-12.47 11.41 12.44 13.56 14.78 16.11 Classification C (Industrial & Other Large Users) - Volumetric Rates Volume, per million gallons of water use $4,766 $5,305 $5,782 $6,302 $6,869 $7,487 BOD (Biochemical Oxygen Demand), per thousand pounds 659 736 802 874 953 1,039 SS (Suspended Solids), per thousand pounds 1,142 1,263 1,377 1,501 1,636 1,783 Classification B & C - Monthly Fixed Rate per Connection Class B & C Connections $9.65 $10.71 $11.67 $12.72 $13.86 $15.11 Proposed
$35.26
$43.02 $44.19 $45.89 $46.59 $50.97 $53.20 $57.12
$65.50 $70.03 $71.65
$77.12 $80.58
$87.46
$92.53
$61.41
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
Oro Loma
SD
Dublin San
Ramon SD
City of
Hayward
Castro
Valley SD
City of
Emeryville
Union SD City of San
Leandro
(Existing)
City of San
Leandro
(Proposed)
City of
Alameda
Stege SD City of
Livermore
City of
Berkeley
City of
Oakland
City of
Albany
City of
Piedmont
Agency Charges EBMUD Charge Average Charge
12 Monthly Residential Sewer Rate Survey
Average Residential Water Use: 6 CCF
Summary
• The City has historically provided good
financial stewardship, leaving the sewer
enterprise fund in good shape.
• Rate increases are needed to support
rising operating costs, debt service and
capital needs.
• Updated commercial rate structure to
reflect industry norms.
• Proposed rates updated to reflect the cost
of service to each customer class.
13 Next Steps
14 Finance
Committee
Meeting
1.22.25 City Council
Meeting
3.3.25 Send Prop.
218 Notices
by 3.21.25
Prop. 218
Notice
Period
March –
May 2025
Public
Hearing
5.5.2025
Rates
Effective
7.1.25 BARTLE WELLS
ASSOCIATES
Commercial
Rate Structure
Change
16 Strength Classifications into Low, Medium/Domestic, and High Strength Dischargers Low Strength Schools
Medium/Commercial/ Residential - All
Domestic Strength Auto Services
Laundries
Mixed Use
All Other
High Strength Bakery, Wholesale
Markets/Foods
Restaurants
Note: Wastewater users who have Fats, Oils, and Grease (FOG) waste will be put into the High Strength user category.